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 Three Months Ended May 31, 2023
(Based on Japanese GAAP)
July 4, 2023
Company name:
ARCS COMPANY,LIMITED
Stock exchange listing: Tokyo, Sapporo
Stock code:
Representative:

9948
President

URL

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

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

Koichi Furukawa
July 14, 2023

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

Holding of quarterly financial results meeting:

NoTEL

011-530-1000(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the three months ended May 31, 2023 (from March 1, 2023 to May 31, 2023)(1) Consolidated operating results (cumulative)
Net sales
Three months ended May 31, 2023
Three months ended May 31, 2022

Millions of yen
142,900
138,297

Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
owners of parent% Millions of yen% Millions of yen% Millions of yen%
3.3
3,982
3.5
4,455
5.8
3,008
4.7
–
3,845
–
4,209
(9.6)
2,872
(0.4)

Earnings per share

Diluted earnings per share

Yen
53.81
51.06

Three months ended May 31, 2023
Three months ended May 31, 2022

Yen––(2) Consolidated financial position
Total assets
As of May 31, 2023
As of February 28, 2023

Net assets

Millions of yen
269,566
266,155

Equity ratio

Millions of yen
172,849
171,686

%
64.1
64.5

2. Cash dividends
Annual dividends per share

Year ended February 28, 2023
Year ending February 29, 2024

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Yen––

Yen
28.00

Yen–

Yen
30.00

Yen
58.00

29.00

–

29.00

58.00

Year ending February 29, 2024 (Forecast)Total

3. Forecast of consolidated financial results for the year ending February 29, 2024 (from March 1, 2023 to February 29, 2024)
Percentages indicate year-on-year changesProfit 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
Six months ending
290,000
3.1
7,200(2.8)
7,800(5.5)
5,200(5.8)
92.89
August 31, 2023
Full year
582,000
2.8
14,800(0.2)
16,200(1.5)
9,950
0.0
177.741

4. Notes(1) Changes in significant subsidiaries during the three months ended May 31, 2023
(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
No

Changes 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 May 31, 2023

57,649,868 shares As of February 28, 2023

57,649,868 shares

Number of treasury shares at the end of the period
As of May 31, 2023

1,944,885 shares As of February 28, 2023

1,668,699 shares

Average number of shares during the period (cumulative from the beginning of the fiscal year)
Three months ended May 31, 2023

55,905,575 shares Three months ended May 31, 2022

256,263,893 shares

Quarterly consolidated financial statements
Consolidated balance sheets(Millions of yen)
As of February 28, 2023

As of May 31, 2023Assets
Current assets
Cash and deposits
Accounts receivable - trade

72,662
6,232

73,488
6,852

Inventories
Accounts receivable - other

17,183
5,971

17,946
4,881

Other
Allowance for doubtful accounts

3,743
(64)

3,862
(68)

105,729

106,963

Buildings and structures, net
Land45,121
72,30144,702
74,375

Leased assets, net
Other, net

3,535
6,199

3,341
6,390

127,158

128,809

Total current assets
Non-current assets
Property, plant and equipment

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

140116

7,955
177,443
181

335

334

8,448

8,076

Investment securities
Leasehold and guarantee deposits

9,720
11,006

10,455
11,117

Deferred tax assets
Other

3,270
833

3,349
807

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(12)

(12)

Total investments and other assets

24,81925,717

160,426

162,603

266,155

269,566

Total non-current assets
Total assets3

(Millions of yen)
As of February 28, 2023

As of May 31, 2023

Liabilities
Current liabilities
Accounts payable - trade29,922

33,796

Short-term borrowingsLease liabilities

7,890
1,149

7,005
1,096

Accounts payable - otherAccrued expenses

5,815
5,200

4,945
6,029

Income taxes payable
Accrued consumption taxes

3,232
1,048

1,740
1,772

Provision for bonuses
Provision for point card certificates

2,745
530

3,490
580

Contract liabilities
Other

3,612
1,751

3,619
2,389

Total current liabilities

62,89966,466

Non-current liabilities
Long-term borrowings

14,917

14,015

Lease liabilities
Retirement benefit liability

3,576
1,975

3,379
1,683

Provision for retirement benefits for directors (and otherofficers)

1,020

487

Long-term guarantee deposits
Asset retirement obligations

4,033
5,505

4,170
5,721

Other

540

792

31,56930,25094,46996,717

Share capital
Capital surplus

21,20524,996

21,20524,996

Retained earnings
Treasury shares

129,491(3,775)130,820(4,462)

Total shareholders' equity

171,917

172,560

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

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

4106

596(337)

(306)

(230)

289

171,686

172,849

266,155

269,566

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

Three months ended

May 31, 2022

May 31, 2023

Net sales
Cost of sales

138,297
103,822

142,900
106,718

Gross profit

34,47536,181

1,069
1,822
284
184
12,9191,6051,076
1,823
320
180
13,189
1,695

17

18

313
2,616
735
2,096
23
6,941

279
3,161
755
2,350
23
7,325

30,62932,199

3,845

3,982

10
37
15
194
18
144

8
37
14
188
108
170

420

528

37
1936
18

Selling, general and administrative expenses
The advertising decoration costa store rental
Provision for point card certificates
Remuneration for directors (and other officers)
Salaries and allowances
Provision for bonuses
Provision for retirement benefits for directors (and otherofficers)
Retirement benefit expenses
Utilities expenses
Taxes and duesDepreciation
Amortization of goodwill
OtherTotal selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Outsourcing service income
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Subsidy income
Gain on reversal of asset retirement obligations
Total extraordinary income
Extraordinary losses
Loss on sale and retirement of non-current assets
Loss on store closings
OtherTotal extraordinary losses

5654

4,209

4,455

055
–

2–
555

711–
–

450

1110

Profit before income taxes

4,254

4,453

Income taxes

1,385

1,444

ProfitLoss attributable to non-controlling interests

2,869
(3)

3,008
–

Profit attributable to owners of parent

2,872

3,008

5

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

Three months ended

Three months ended

May 31, 2022

May 31, 2023
2,869

3,008(868)
(349)

489
30(0)

0(1,218)

520

1,650

3,528

1,654

3,528

(3)

–

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

6

Consolidated statements of cash flows(Millions of yen)Three months ended

Three months ended

May 31, 2022

May 31, 2023

Cash flows from operating activities
Profit before income taxes

4,254

4,453

Depreciation
Interest and dividend income

2,098(48)2,361(46)

37687

36745

Increase (decrease) in provision for point card certificates
Increase (decrease) in contract liabilities(3,455)
3,578

49
7

Decrease (increase) in trade receivables
Decrease (increase) in inventories(877)(1,296)

(620)
(762)

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

3,477
822

3,873
723

Other, net

2,593

499

Subtotal

11,872

11,321

61

60

Interest paid
Income taxes paid

(35)
(2,100)(34)(2,712)

Net cash provided by (used in) operating activities

9,797

8,634

(1,463)(3,200)

Proceeds from sale of property, plant and equipment
Purchase of intangible assets0(171)

14(263)

Payments of guarantee deposits
Proceeds from refund of guarantee deposits(18)
44(33)
68

Refund of guarantee deposits received
Guarantee deposits received(31)
12(18)
161

Payments into time deposits
Proceeds from withdrawal of time deposits(46)
108(46)46

Interest expenses
Increase (decrease) in provision for bonuses

Interest and dividends received

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

Other, net

(15)

(32)

(1,579)(3,305)

(100)
700

(500)
–

Repayments of long-term borrowings
Purchase of treasury shares(1,368)(681)(1,286)(687)

Dividends paid
Other, net(1,622)(315)(1,623)(404)

Net cash provided by (used in) financing activities

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings(3,388)(4,502)

Net increase (decrease) in cash and cash equivalents

4,829

826

Cash and cash equivalents at beginning of period

66,17572,594

Cash and cash equivalents at end of period

71,00573,4207