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, 2023
(Based on Japanese GAAP)
October 16, 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
October 16, 2023

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

November 8, 2023
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, 2023 (from March 1, 2023 to August 31, 2023)(1) Consolidated operating results (cumulative)
Net sales
Six months ended August 31, 2023
Six months ended August 31, 2022

Millions of yen
292,201
281,249

Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
owners of parent% Millions of yen% Millions of yen% Millions of yen%
3.9
7,935
7.1
8,810
6.8
5,799
5.1
–
7,409
–
8,249 (10.8)
5,519(7.9)

Earnings per share

Diluted earnings per shareYen
104.2898.35

Six months ended August 31, 2023
Six months ended August 31, 2022

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

Net assets

Millions of yen
274,185
266,155

Equity ratio

Millions of yen
174,421
171,686

%
63.6
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
29.00

Yen–

Yen
30.00

Yen
58.00

–

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 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
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 six months ended August 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
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, 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 August 31, 2023

2,676,972 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)
Six months ended August 31, 2023

55,611,549 shares Six months ended August 31, 2022

256,122,639 shares

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

As of August 31, 2023

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade

72,662
6,232

76,941
6,961

Inventories
Accounts receivable - other

17,183
5,971

18,197
4,867

Other
Allowance for doubtful accounts

3,743
(64)

3,949
(72)

105,729

110,846

Buildings and structures, net
Land45,121
72,30144,36874,378

Leased assets, net
Other, net

3,535
6,199

3,336
7,232

127,158

129,316

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

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

140

93

7,955
17

6,871
338

3353338,448

7,637

Investment securities
Leasehold and guarantee deposits

9,720
11,006

11,13911,077

Deferred tax assets
Other

3,270
833

3,297
878

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(12)

(6)

Total investments and other assets

24,81926,385

160,426

163,338

266,155

274,185

Total non-current assets
Total assets3

(Millions of yen)
As of February 28, 2023

As of August 31, 2023

Liabilities
Current liabilities
Accounts payable - trade29,92236,809

Short-term borrowings
Lease liabilities

7,890
1,149

6,556
1,061

Accounts payable - otherAccrued expenses

5,815
5,200

5,058
6,216

Income taxes payable
Accrued consumption taxes

3,232
1,048

3,529
1,396

Provision for bonuses
Provision for point card certificates

2,745
530

3,518
621

Contract liabilities
Other

3,612
1,751

3,990
1,619

Total current liabilities

62,89970,377

Non-current liabilities
Long-term borrowings

14,917

13,201

Lease liabilities
Retirement benefit liability

3,576
1,975

3,371
1,487

Provision for retirement benefits for directors (and otherofficers)

1,020

499

Long-term guarantee deposits
Asset retirement obligations

4,033
5,505

4,197
5,779

Other

540

848

31,56929,385

94,46999,763

Share capital
Capital surplus

21,20524,996

21,20524,996

Retained earnings
Treasury shares

129,491(3,775)

133,611(6,274)

Total shareholders' equity

171,917

173,538106

1,159(337)(276)

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

4(230)

882

171,686

174,421266,155

274,185

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, 2022

August 31, 2023

Net sales
Cost of sales

281,249
211,684

292,201
218,853

Gross profit

69,56473,348

2,184
3,647
536
364
26,106
3,253

2,204
3,644
596
336
26,760
3,539

34

32

622
5,470
1,492
4,248
46
14,146

554
6,245
1,539
4,693
46
15,21962,15565,412

7,409

7,935

20
114
36
387
386

17
113
40
375
447

945

994

73
31

71
48

105

119

8,249

8,810

0
55
–
02
–
5–

56

852
13

21
7

65

28

Profit before income taxes

8,240

8,790

Income taxes

2,724

2,991

Profit

5,516

5,799

(3)

–

5,519

5,799

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 dues
Depreciation
Amortization of goodwill
Other
Total 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
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
Other
Total extraordinary income
Extraordinary losses
Loss on sale and retirement of non-current assets
Other
Total extraordinary losses

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

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 accountedfor using equity method
Total other comprehensive income
Comprehensive income

Six months ended

Six months ended

August 31, 2022

August 31, 2023
5,516

5,799

(1,021)
(258)

1,052
60(0)

0(1,280)

1,113

4,235

6,912

4,239

6,912

(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)Six months ended

Six months ended

August 31, 2022

August 31, 2023

Cash flows from operating activities
Profit before income taxes

8,240

8,790

Depreciation
Interest and dividend income

4,252
(134)

4,716
(131)

73616

71773

Increase (decrease) in provision for point card certificates
Increase (decrease) in contract liabilities(3,413)
3,911

91
378

Decrease (increase) in trade receivables
Decrease (increase) in inventories(2,141)(1,271)(729)(1,013)

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

5,724
335

6,886
347

Other, net

1,555273

Subtotal

17,74820,453140

139

Interest paid
Income taxes paid

(70)
(1,926)(68)(2,712)

Net cash provided by (used in) operating activities

15,891

17,811(2,480)(5,266)

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

0(408)

13(495)

Payments of guarantee deposits
Proceeds from refund of guarantee deposits

(109)
68

(76)
92

Refund of guarantee deposits received
Guarantee deposits received(53)
32(52)
217

Payments into time deposits
Proceeds from withdrawal of time deposits

(46)
108

(43)
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

(57)

(42)

(2,946)(5,605)

Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings(850)
5,200(450)–

Repayments of long-term borrowings
Purchase of treasury shares(4,302)(681)(2,600)(2,504)

Dividends paid
Repayments to non-controlling shareholders(1,683)(81)(1,679)–Net cash provided by (used in) investing activities
Cash flows from financing activities

Other, net
Net cash provided by (used in) financing activities

(624)

(688)

(3,024)(7,922)

Net increase (decrease) in cash and cash equivalents

9,921

4,282

Cash and cash equivalents at beginning of period

66,17572,594

Cash and cash equivalents at end of period

76,09676,877

7