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 Year Ended February 28, 2023
(Based on Japanese GAAP)
April 14, 2023
Company name:

ARCS COMPANY,LIMITED

Stock exchange listing: Tokyo, Sapporo
Stock code:
9948
URL
Representative:
Inquiries:

https://www.arcs-g.co.jp/

President
Director,Executive Vice President

Kiyoshi YokoyamaKoichi Furukawa

Scheduled date of ordinary general meeting of shareholders:
Scheduled date to file Securities Report:

May 23, 2023
May 23, 2023

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

May 24, 2023
Yes

Holding of financial results meeting:

Yes

TEL

011-530-1000(for institutional investors and Investment analysts)(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the year ended February 28, 2023 (from March 1, 2022 to February 28, 2023)(1) Consolidated operating results
Percentages indicate year-on-year changes
Profit attributable toNet sales
Operating profit
Ordinary profit
owners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Year ended February 28, 2023
566,209–
14,835–
16,444
(5.0)
9,947
(3.5)
Year ended February 28, 2022
577,568
3.7
15,562(12.3)
17,306(11.3)
10,304(20.5)
Profit attributable toOrdinary profit/total Operating profit/net
owners ofassets
sales
parent/equity
Yen%%%
–
5.9
6.3
2.6
–
6.4
6.8
2.7Diluted earnings pershare

Earnings per share
Yen
177.47182.47

Year ended February 28, 2023
Year ended February 28, 2022
(2) Consolidated financial position

Total assets
As of February 28, 2023
As of February 28, 2022

Net assets

Equity ratio

Millions of yen
266,155
258,025

Millions of yen
171,686
163,995

Cash flows fromoperating activities
Millions of yen
16,98914,215

Cash flows frominvesting activities
Millions of yen(7,768)(4,385)

Net assets per share%
64.5
63.5

Yen
3,066.86
2,910.41(3) Consolidated cash flows

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

Cash flows from
Cash and cash equivalents
at end of period
financing activities
Millions of yen
Millions of yen(2,801)
72,594(7,422)
66,175

2. Cash dividends
Annual dividends per share
1st quarter-end 2nd quarter-end 3rd quarter-end Fiscal year-end

Year ended February 28, 2022
Year ended February 28, 2023
Year ending February 29, 2024
(Forecast)of dividends
Total cash
Dividend payout Ratio
to net assets
dividends (Total) ratio (Consolidated) (Consolidated)

Total

Yen

Yen

Yen

YenYenMillions of yen

%%

––

27.00
28.00

––

30.00
30.00

57.00
58.00

3,214
3,247

31.2
32.7

2.0
1.9

–

29.00

–

29.00

58.00

132.6

3. Forecast of consolidated financial results for the year ending February 29, 2024 (from March 1, 2023 to February 29, 2024)
Net sales
Millions of yen
Six months ending
August 31, 2023
Full year

Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
Earnings per shareowners of parent% Millions of yen% Millions of yen% Millions of yen%Yen

290,000

3.17,200(2.8)

7,800(5.5)

5,200(5.8)

92.89

582,000

2.8

14,800(0.2)

16,200(1.5)

9,950

0.0

177.74

4. Notes(1) Changes in significant subsidiaries during the year ended February 28, 2023
(changes in specified subsidiaries resulting in the change in scope of consolidation):No(2) 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:
Yes
Changes in accounting policies due to other reasons:
Changes in accounting estimates:

NoYes

Restatement of prior period financial statements:

No(3) Number of issued shares (common shares)
Total number of issued shares at the end of the period (including treasury shares)
As of February 28, 2023

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 February 28, 2023

1,668,699 shares As of February 28, 2022

1,330,903 shares

56,052,540 shares Year ended February 28, 2022

56,472,836 shares

Average number of shares during the period
Year ended February 28, 2023

2

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

As of February 28, 2023

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

72,662
6,232

Inventories
Other

15,821
9,101

17,183
9,715

Allowance for doubtful accounts
Total current assets

(48)

(64)

95,949105,729

Non-current assets
Property, plant and equipment
Buildings and structures

142,029

146,353

Accumulated depreciation and impairment(97,773)(101,231)

Buildings and structures, net

44,25645,121

Land

71,83272,301

Leased assets
Accumulated depreciation and impairment

11,879(7,610)10,866(7,331)

Leased assets, net

4,268

3,535

Construction in progress
Other

180
28,821

239
31,405(23,811)(25,445)

5,009

5,959

125,547

127,158

Accumulated depreciation and impairment
Other, net
Total property, plant and equipment
Intangible assets
Goodwill

233

140

9,535
43

7,955
17333

335

10,146

8,448

Investment securities
Long-term loans receivable

10,048
57

9,720
47

Retirement benefit asset
Leasehold and guarantee deposits3211,210

182
11,006

Deferred tax assets
Other

4,363
680

3,270
603

Software
Software in progress
Other
Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(12)

(12)

Total investments and other assets

26,38024,819162,075

160,426

258,025

266,155

Total non-current assets
Total assets3

(Millions of yen)
As of February 28, 2022

As of February 28, 2023

Liabilities
Current liabilities
Accounts payable - trade30,97529,922

Short-term borrowings
Lease liabilities

8,699
1,211

7,890
1,149

Accounts payable - otherAccrued expenses

6,950
3,040

5,815
5,200

Income taxes payable
Accrued consumption taxes

2,548
878

3,232
1,048

Provision for bonuses
Provision for point card certificates

2,640
3,978

2,745
530

Contract liabilities
Other

–
1,739

3,612
1,751

Total current liabilities

62,66462,899Non-current liabilities
Long-term borrowings

11,64914,917

4,282
5,295

3,576
1,975

278

372

1,165

1,020

4,245

4,033

Asset retirement obligations
Other

4,172
275

5,505
168

Total non-current liabilities

31,36531,56994,02994,469

Shareholders' equity
Share capital

21,205

21,205

Capital surplus
Retained earnings

24,996
122,622

24,996
129,491

Lease liabilities
Retirement benefit liability
Deferred tax liabilities
Provision for retirement benefits for directors (and otherofficers)
Long-term guarantee deposits

Total liabilities
Net assets

Treasury shares(3,094)(3,775)

Total shareholders' equity

165,730

171,917

Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans373(2,192)

106(337)

Total accumulated other comprehensive income(1,819)(230)

Accumulated other comprehensive income

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

484–

163,995

171,686

258,025

266,155

Consolidated statements of income and consolidated statements of comprehensive income
Consolidated statements of income(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Net sales

577,568

566,209

Cost of sales

429,198

424,408

Gross profit

148,370

141,800

The advertising decoration costa store rental

3,761
7,464

4,457
7,292

Remuneration for directors (and other officers)
Salaries and allowances

757
55,253724
55,554

Provision for bonuses
Provision for retirement benefits for directors (and other2,563

2,735

Selling, general and administrative expenses

officers)
Provision for point card certificates

63

65

7,372

1,078

Retirement benefit expenses
Utilities expenses

1,194
9,403

1,240
11,607

Taxes and dues
Depreciation

2,902
8,745

2,951
8,709

Amortization of goodwill
Other

116
33,20793
30,454

Total selling, general and administrative expenses

132,807

126,965

15,562

14,835Interest incomeDividend income

48200

44204

Share of profit of entities accounted for using equity method
Outsourcing service income

69600

46763

Income from point cord
Subsidy income

372
19–
35

Other

659

749

1,970

1,843

Interest expenses
Provision of allowance for doubtful accounts

161
17145
15

Other

47

73

Operating profit
Non-operating income

Total non-operating income
Non-operating expenses

Total non-operating expenses

227

234

17,306

16,444Gain on sale of non-current assets
Subsidy income

55–1455

Surrender value of insurance policies
Gain on bargain purchase141––84

Gain on cancellation of leasehold contracts
Other

28
4222

Total extraordinary income

230

179

Ordinary profit
Extraordinary income5(Millions of yen)
Fiscal year ended

Fiscal year ended

February 28, 2022

February 28, 2023

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

5634

Loss on cancellation of insurance policies
Impairment losses

133
489

–
1,043

Loss on valuation of investment securities
Other

96
14–
51

Total extraordinary losses

790

1,129

Profit before income taxes

16,746

15,495

Income taxes - current5,141

5,216

Income taxes - deferred

1,294

334

Total income taxes

6,435

5,550

Profit10,310

9,944

5(3)

10,304

9,947

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

6Consolidated statements of comprehensive income(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

Fiscal year ended

Fiscal year ended

February 28, 2022

February 28, 2023

10,310

9,944

(155)
(98)

(267)
1,855

(0)

(0)

(253)

1,588

10,056

11,532

10,051

11,5355(3)Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

7

Consolidated statements of changes in equity
Fiscal year ended February 28, 2022
(Millions of yen)
Shareholders' equity
Share capital
Balance at beginning of period

Capital surplus

Retained earnings

Total shareholders'equity

Treasury shares

21,20524,996

115,537(2,752)

158,987

21,20524,996

115,537(2,752)

158,987

Cumulative effects ofchanges in accounting
policies
Restated balance
Changes during period
Dividends of surplus(3,219)(3,219)Profit attributable to ownersof parent

10,304

10,304Purchase of treasury shares
Disposal of treasury shares

(342)

(342)

000

Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period–

07,085

(342)

6,743

21,20524,996

122,622(3,094)

165,730

Accumulated other comprehensive income

Balance at beginning of period

Non-controllinginterests

Valuation difference
on available-for-salesecurities

Remeasurements ofdefined benefit plans

Total accumulated
other comprehensive
income528(2,094)(1,565)82

157,504

528(2,094)(1,565)82

157,504

Total net assets

Cumulative effects ofchanges in accounting
policies
Restated balance
Changes during period
Dividends of surplus(3,219)Profit attributable to ownersof parent

10,304Purchase of treasury shares(342)

Disposal of treasury shares

0Net changes in items otherthan shareholders' equity(155)

(98)

(253)

1(252)

Total changes during period

(155)

(98)

(253)

1

6,491

373

(2,192)(1,819)84

163,995

Balance at end of period8

Fiscal year ended February 28, 2023
(Millions of yen)
Shareholders' equity
Share capital
Balance at beginning of period

Capital surplus

21,205Retained earnings

24,996

122,622

Cumulative effects ofchanges in accounting
policies
Restated balance

Total shareholders'equity

Treasury shares(3,094)

178
21,20524,996

122,801

165,730
178(3,094)

165,908

Changes during period
Dividends of surplus(3,257)(3,257)

Profit attributable to ownersof parent

9,947

9,947

Purchase of treasury shares
Disposal of treasury shares

(681)

(681)

00(0)

Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period

–(0)

6,690

(681)

6,008

21,20524,996

129,491(3,775)

171,917

Accumulated other comprehensive income

Balance at beginning of period

Valuation difference
on available-for-salesecurities

Remeasurements ofdefined benefit plans

Total accumulated
other comprehensiveincome

373(2,192)(1,819)Non-controllinginterests

Total net assets

84

Cumulative effects ofchanges in accounting
policies
Restated balance

163,995
178

373(2,192)(1,819)84

164,173

Changes during period
Dividends of surplus(3,257)

Profit attributable to ownersof parent

9,947

Purchase of treasury shares(681)

Disposal of treasury shares0

Net changes in items otherthan shareholders' equity

(267)

1,855

1,588

(84)

1,503

Total changes during period

(267)

1,855

1,588

(84)

7,512

106(337)(230)–

171,686

Balance at end of period

9Consolidated statements of cash flows(Millions of yen)

Cash flows from operating activities
Profit before income taxes

Fiscal year ended

Fiscal year ended

February 28, 2022

February 28, 2023

16,746

15,495

8,752
489

8,729
1,043

Amortization of goodwill
Gain on bargain purchase116–93(84)

Interest and dividend income
Interest expenses

(248)
161

(248)
145

Loss (gain) on sale and retirement of non-current assets
Loss (gain) on sale of investment securities

0–20(2)

Loss (gain) on valuation of investment securities
Share of loss (profit) of entities accounted for using equity

96–

(69)

(46)

Depreciation
Impairment losses

methodIncrease (decrease) in provision for retirement benefits for
directors (and other officers)
Increase (decrease) in retirement benefit liability

33

(144)

(627)

(1,613)

Increase (decrease) in provision for bonuses
Increase (decrease) in allowance for doubtful accounts

(263)
16105
15

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

79–(3,448)
3,612

Decrease (increase) in trade receivables
Decrease (increase) in inventories(552)(334)(1,463)(1,360)Decrease (increase) in other current assets
Increase (decrease) in trade payables

(260)
454

(665)
(1,052)(1,952)(1,403)

777
169

37
301

(7)
472

21,573

20,540

234
(154)

241
(139)

Increase (decrease) in other current liabilities
Increase (decrease) in accrued consumption taxes
Decrease (increase) in guarantee deposits
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid

(7,437)(3,652)

Net cash provided by (used in) operating activities

14,215

16,98910(Millions of yen)

Cash flows from investing activities
Payments into time deposits

Fiscal year ended

Fiscal year ended

February 28, 2022

February 28, 2023
(96)

(46)

234
(5,092)

108(6,934)

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

220(759)

22(818)Proceeds from sale of investment securities
Purchase of investment securities

113
(1)

120
(0)

Loan advances
Proceeds from collection of loans receivable

(4)
12(1)
11

Payments of guarantee deposits
Proceeds from refund of guarantee deposits

(129)
183

(240)233

Refund of guarantee deposits received
Guarantee deposits received

(229)
72

(196)
53

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

373–

Payments for acquisition of businesses
Proceeds from cancellation of insurance funds

–
795

(33)
–

Other, net

(79)

(47)

(4,385)(7,768)Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings(1,400)
4,400

(200)
9,450

Repayments of long-term borrowings
Purchase of treasury shares(5,400)(342)(6,791)(682)

Dividends paid
Dividends paid to non-controlling interests(3,210)(3)(3,259)–

Repayments to non-controlling shareholders
Other, net–(1,464)(81)(1,237)

Net cash provided by (used in) financing activities(7,422)(2,801)

Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment

Net cash provided by (used in) investing activities
Cash flows from financing activities

Net increase (decrease) in cash and cash equivalents

2,407

6,418

Cash and cash equivalents at beginning of period

63,767

66,175

Cash and cash equivalents at end of period

66,17572,59411