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, 2022
(Based on Japanese GAAP)
July 5, 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
July 15, 2022

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, 2022 (from March 1, 2022 to May 31, 2022)(1) Consolidated operating results (cumulative)
Net sales
Three months ended May 31, 2022
Three months ended May 31, 2021

Millions of yen
138,297
142,615

Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
owners of parent% Millions of yen% Millions of yen% Millions of yen
%
–
3,845
–
4,209(9.6)
2,872
(0.4)
1.5
4,256 (27.2)
4,658 (26.1)
2,883 (32.2)

Earnings per share

Diluted earnings per share

Yen
51.06
51.05

Three months ended May 31, 2022
Three months ended May 31, 2021

Yen––(2) Consolidated financial position
Total assets
As of May 31, 2022
As of February 28, 2022

Net assets

Millions of yen
262,153
258,025

Equity ratio

Millions of yen
163,454
163,995

%
62.3
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

Yen–

Yen
30.00

Yen
57.00

28.00

–

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
Six months ending
283,000–
8,280–
9,000(2.7)
5,950
(0.7)
105.75
August 31, 2022
Full year
563,000–
15,900–17,3500.3
10,9005.8
193.731

4. Notes(1) Changes in significant subsidiaries during the three months ended May 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 May 31, 202257,649,868 shares As of February 28, 2022

57,649,868 shares

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

1,668,484 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)
Three months ended May 31, 2022

56,263,893 shares Three months ended May 31, 2021

256,478,625 shares

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

As of May 31, 2022

AssetsCurrent assetsCash and deposits
Accounts receivable - trade66,305
4,768

71,073
5,645

Inventories
Accounts receivable - other

15,821
5,524

17,117
4,244

Other
Allowance for doubtful accounts

3,576
(48)

3,301
(52)

Total current assets

95,949101,330

Buildings and structures, net
Land44,256
71,832

43,773
71,867

Leased assets, net
Other, net

4,268
5,190

4,042
5,676

125,547

125,360

Non-current assets
Property, plant and equipment

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

210

9,535
43

9,092
83333

33210,146

9,719

Investment securities
Leasehold and guarantee deposits

10,048
11,210

9,004
11,397

Deferred tax assets
Other

4,363
770

4,540
812

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(12)

(12)

Total investments and other assets

26,38025,743

162,075

160,822

258,025

262,153

Total non-current assets
Total assets3

(Millions of yen)
As of February 28, 2022

As of May 31, 2022

Liabilities
Current liabilities
Accounts payable - trade30,97534,452

Short-term borrowings
Lease obligations

8,699
1,211

8,190
1,183

Accounts payable - otherAccrued expenses

6,950
3,040

4,870
5,765

Income taxes payable
Accrued consumption taxes

2,548
878

1,670
1,701

Provision for bonuses
Provision for point card certificates

2,640
3,978

3,328
522

Contract liabilities
Other–
1,739

3,578
2,639

Total current liabilities

62,664

67,903

Non-current liabilities
Long-term borrowings

11,64911,389Lease obligations
Retirement benefit liability

4,282
5,295

4,034
5,666

Provision for retirement benefits for directors (and otherofficers)

1,165

972

Long-term guarantee deposits
Asset retirement obligations

4,245
4,172

4,212
4,222

Other

554

296

31,36530,79594,02998,699

Share capital
Capital surplus

21,20524,996

21,20524,996

Retained earnings
Treasury shares

122,622(3,094)

123,984(3,775)

Total shareholders' equity

165,730

166,410

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

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

373

(495)

Remeasurements of defined benefit plans(2,192)(2,542)

Total accumulated other comprehensive income(1,819)(3,037)8480

163,995

163,454

258,025

262,153

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)Three months ended

Three months ended

May 31, 2021

May 31, 2022

Net sales
Cost of sales

142,615
105,828

138,297
103,822

Gross profit

36,787

34,475

Selling, general and administrative expenses
The advertising decoration cost

970

1,069

a store rental
Provision for point card certificates

1,841
1,698

1,822
284

Remuneration for directors (and other officers)
Salaries and allowances200
12,817

184
12,919Provision for bonuses
Provision for retirement benefits for directors (and other

1,658

1,605

14

17312

313

Utilities expenses
Taxes and dues

2,020
754

2,616
735

Depreciation
Amortization of goodwill

2,118
46

2,096
23

Other

8,076

6,941

Total selling, general and administrative expenses

32,531

30,629

4,256

3,845

officers)
Retirement benefit expenses

Operating profit
Non-operating income
Interest income

1110

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

34
1437
15

Outsourcing service income
Income from point cord

149
88

194–

Other

172

162

Total non-operating income

470

420

Interest expenses
Other

44
22

37
19

Total non-operating expenses

67

56

4,658

4,209

Non-operating expenses

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

180

Subsidy income
Surrender value of insurance policies

–141

55
–

Total extraordinary income

15955

5(Millions of yen)Three months ended

Three months ended

May 31, 2021

May 31, 2022

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

1611

Loss on cancellation of insurance policies
Other108
18––

Total extraordinary losses

144

11

Profit before income taxes

4,674

4,254

Income taxes

1,791

1,385

Profit

2,883

2,869

(0)

(3)

2,883

2,872

Loss attributable to non-controlling interests
Profit attributable to owners of parent

6

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

ProfitOther comprehensive incomeValuation 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, 2021

May 31, 2022
2,883

2,869(527)
(92)

(868)
(349)

0(0)

(619)

(1,218)

2,263

1,650

2,263

1,654(0)(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)Three months ended

Three months ended

May 31, 2021

May 31, 2022

Cash flows from operating activities
Profit before income taxes

4,674

4,254

Depreciation
Interest and dividend income

2,120(46)

2,098
(48)

Interest expenses
Increase (decrease) in provision for bonuses

44586

37687

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

Decrease (increase) in trade receivables
Decrease (increase) in inventories(1,497)
(545)

(877)
(1,296)

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

4,439(573)

3,477
822

Other, net236

2,593

Subtotal

9,435

11,872

58

61

Interest paid
Income taxes paid

(42)
(4,412)(35)(2,100)Net cash provided by (used in) operating activities

5,039

9,797

(1,091)(1,463)

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

76(113)0(171)

Payments of guarantee deposits
Proceeds from refund of guarantee deposits(15)
50(18)
44

Refund of guarantee deposits received
Guarantee deposits received

(91)
8(31)
12

Payments into time deposits
Proceeds from withdrawal of time deposits

(96)
148

(46)
108

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

341–

Proceeds from cancellation of insurance funds
Other, net

703
(10)

–
(15)

Net cash provided by (used in) investing activities(90)(1,579)Cash flows from financing activities
Net increase (decrease) in short-term borrowings

(950)

(100)

Proceeds from long-term borrowings
Repayments of long-term borrowings–(1,493)700(1,368)Purchase of treasury shares
Dividends paid

(0)
(1,658)(681)(1,622)

(406)

(315)

Interest and dividends received

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

Other, net(4,507)(3,388)Net increase (decrease) in cash and cash equivalents

Net cash provided by (used in) financing activities

441

4,829

Cash and cash equivalents at beginning of period

63,767

66,175

Cash and cash equivalents at end of period

64,20871,0058