Translation
Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any
discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Summary of Consolidated Financial Results
for the Six Months Ended August 31, 2022
(Based on Japanese GAAP)
October 14, 2022
Company name:
ARCS COMPANY,LIMITED
Stock exchange listing: Tokyo, Sapporo
Stock code:
Representative:

9948
President

URL

http://www.arcs-g.co.jp/Kiyoshi Yokoyama

Inquiries:
Director,Executive Vice PresidentScheduled date to file Quarterly Securities Report:

Koichi Furukawa
October 14, 2022

Scheduled date to commence dividend payments:
Preparation of supplementary material on quarterly financial results:

November 8, 2022
Yes

Holding of quarterly financial results meeting:

Yes

TEL

011-530-1000(for institutional investors and analysts)(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the six months ended August 31, 2022 (from March 1, 2022 to August 31, 2022)(1) Consolidated operating results (cumulative)
Net sales
Six months ended August 31, 2022
Six months ended August 31, 2021

Millions of yen
281,249
291,250

Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
owners of parent% Millions of yen% Millions of yen% Millions of yen
%
–
7,409
–
8,249 (10.8)
5,519(7.9)
3.2
8,373 (19.4)
9,253 (18.8)
5,989 (21.4)

Earnings per share

Diluted earnings per share

Yen
98.35
106.05Six months ended August 31, 2022
Six months ended August 31, 2021

Yen––(2) Consolidated financial positionTotal assets
As of August 31, 2022
As of February 28, 2022

Net assets

Millions of yen
267,723
258,025

Equity ratio

Millions of yen
165,958
163,995

%
62.0
63.5

2. Cash dividends
Annual dividends per share

Year ended February 28, 2022
Year ending February 28, 2023

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Yen––

Yen
27.00
28.00

Yen–

Yen
30.00

Yen
57.00

–

29.00

57.00

Year ending February 28, 2023 (Forecast)Total

3. Forecast of consolidated financial results for the year ending February 28, 2023 (from March 1, 2022 to February 28, 2023)
Percentages indicate year-on-year changes
Profit attributable toNet sales
Operating profit
Ordinary profit
Earnings per shareowners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Yen
Full year
563,000–
15,900–17,3500.3
10,9005.8
193.731

4. Notes(1) Changes in significant subsidiaries during the six months ended August 31, 2022
(changes in specified subsidiaries resulting in the change in scope of consolidation):No(2) Application of special accounting methods for preparing quarterly consolidated financial statements:

Yes(3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations:
Changes in accounting policies due to other reasons:

Yes
NoChanges in accounting estimates:
Restatement of prior period financial statements:

NoNo(4) Number of issued shares (common shares)
Total number of issued shares at the end of the period (including treasury shares)
As of August 31, 2022

57,649,868 shares As of February 28, 2022

57,649,868 shares

Number of treasury shares at the end of the period
As of August 31, 2022

1,668,493 shares As of February 28, 2022

1,330,903 shares

Average number of shares during the period (cumulative from the beginning of the fiscal year)
Six months ended August 31, 2022

56,122,639 shares Six months ended August 31, 2021

256,478,611 shares

Quarterly consolidated financial statements
Consolidated balance sheets(Millions of yen)
As of February 28, 2022

As of August 31, 2022

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade66,305
4,768

76,164
6,910

Inventories
Accounts receivable - other

15,821
5,524

17,093
4,443

Other
Allowance for doubtful accounts

3,576
(48)

3,238
(56)

Total current assets

95,949107,793

Buildings and structures, net
Land44,256
71,832

43,322
71,867

Leased assets, net
Other, net

4,268
5,190

3,835
5,968

125,547

124,994

Non-current assets
Property, plant and equipment

Total property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Other233

187

9,535
43

8,716
78

33333010,146

9,312

Investment securities
Leasehold and guarantee deposits

10,048
11,2108,851
11,402

Deferred tax assets
Other

4,363
770

4,475
907

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(12)

(12)

Total investments and other assets

26,38025,624

162,075

159,930

258,025

267,723

Total non-current assets
Total assets3

(Millions of yen)
As of February 28, 2022

As of August 31, 2022

Liabilities
Current liabilities
Accounts payable - trade30,97536,699

Short-term borrowings
Lease obligations

8,699
1,211

6,008
1,155

Accounts payable - otherAccrued expenses

6,950
3,040

4,778
5,740

Income taxes payable
Accrued consumption taxes

2,548
878

3,250
1,214

Provision for bonuses
Provision for point card certificates

2,640
3,978

3,256
564

Contract liabilities
Other–
1,739

3,911
1,880

Total current liabilities

62,664

68,461

Non-current liabilities
Long-term borrowings

11,64914,387

Lease obligations
Retirement benefit liability

4,282
5,295

3,806
5,443

Provision for retirement benefits for directors (and otherofficers)1,165

989

Long-term guarantee deposits
Asset retirement obligations

4,245
4,172

4,198
4,233

Other

554

245

31,36533,304

94,029101,765

Share capital
Capital surplus

21,20524,996

21,20524,996

Retained earnings
Treasury shares

122,622(3,094)

126,631(3,775)

Total shareholders' equity

165,730

169,057

Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

373

(648)

Remeasurements of defined benefit plans(2,192)(2,451)

Total accumulated other comprehensive income(1,819)(3,099)84–

163,995

165,958

258,025

267,723

Non-controlling interests
Total net assets
Total liabilities and net assets

4Consolidated statements of income (cumulative) and consolidated statements of comprehensive income(cumulative)
Consolidated statements of income (cumulative)(Millions of yen)Six months ended

Six months ended

August 31, 2021

August 31, 2022

Net sales
Cost of sales

291,250
216,953

281,249
211,684

Gross profit

74,296

69,564

Selling, general and administrative expensesThe advertising decoration cost

1,914

2,184

a store rental
Provision for point card certificates

3,738
3,629

3,647
536

Remuneration for directors (and other officers)
Salaries and allowances386
25,900364
26,106

Provision for bonuses
Provision for retirement benefits for directors (and other

3,269

3,253

32

34615

622

Utilities expenses
Taxes and dues

4,261
1,502

5,470
1,492

Depreciation
Amortization of goodwill

4,268
70

4,248
46

Other

16,33314,146

Total selling, general and administrative expenses

65,92362,155

8,373

7,409

officers)Retirement benefit expenses

Operating profit
Non-operating income
Interest income

2220

Dividend income
Share of profit of entities accounted for using equity method

110
61

114
36

Outsourcing service income
Income from point cord

302
177

387–

Other

336

386

1,009

945

Interest expenses
Other

85
43

73
31

Total non-operating expenses

129

105

9,253

8,249

Total non-operating income
Non-operating expenses

Ordinary profit
Extraordinary income
Gain on sale of non-current assets

540

Subsidy income
Surrender value of insurance policies–14155–

Other

250

Total extraordinary income

22056

5

(Millions of yen)Six months ended

Six months ended

August 31, 2021

August 31, 2022

Extraordinary losses
Loss on sale and retirement of non-current assets

3952

Loss on cancellation of insurance policies
Other

108
21

–
13

Total extraordinary losses

169

65

Profit before income taxes

9,304

8,240

Income taxes

3,313

2,724

Profit

5,991

5,516

1(3)

5,989

5,519

Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

6

Consolidated statements of comprehensive income (cumulative)(Millions of yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income
Comprehensive income

Six months ended

Six months ended

August 31, 2021

August 31, 2022
5,991

5,516(103)(16)(1,021)
(258)

0(0)

(120)

(1,280)

5,870

4,235

5,869

4,239

1(3)

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

7Consolidated statements of cash flows(Millions of yen)Six months ended

Six months ended

August 31, 2021

August 31, 2022

Cash flows from operating activities
Profit before income taxes

9,304

8,240

Depreciation
Interest and dividend income

4,272
(133)

4,252
(134)

Interest expenses
Increase (decrease) in provision for bonuses

85363

73616

Increase (decrease) in provision for point card certificates
Increase (decrease) in contract liabilities

382–(3,413)
3,911

Decrease (increase) in trade receivables
Decrease (increase) in inventories(1,192)(552)(2,141)(1,271)

Increase (decrease) in trade payables
Increase (decrease) in accrued consumption taxes

6,328(1,178)

5,724
335

Other, net(468)1,555Subtotal

17,21017,748135140Interest paid
Income taxes paid

(80)
(4,278)(70)(1,926)

Net cash provided by (used in) operating activities

12,987

15,891(2,125)(2,480)

Proceeds from sale of property, plant and equipment
Purchase of intangible assets

211(292)0(408)

Payments of guarantee deposits
Proceeds from refund of guarantee deposits(19)
74(109)68

Refund of guarantee deposits received
Guarantee deposits received(116)
14(53)
32

Payments into time deposits
Proceeds from withdrawal of time deposits

(96)
174

(46)
108

Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation

341–

Proceeds from cancellation of insurance funds
Other, net

704
(40)

–
(57)

Net cash provided by (used in) investing activities(1,169)(2,946)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings(1,550)(850)

Proceeds from long-term borrowings
Repayments of long-term borrowings–(2,898)

5,200(4,302)

Purchase of treasury shares
Dividends paid

(0)
(1,692)(681)(1,683)–(807)(81)(624)(6,949)(3,024)

Interest and dividends received

Cash flows from investing activities
Purchase of property, plant and equipment

Repayments to non-controlling shareholders
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents

4,868

9,921

Cash and cash equivalents at beginning of period

63,76766,175

Cash and cash equivalents at end of period

68,63676,0968