Consolidated Financial Results
for the Six Months Ended June 30, 2022 (Japanese GAAP)
August 5, 2022
Company name:
Stock code:

Earth Corporation
4985

Representative:

Katsunori Kawabata, President and Representative Director, Chairman of the Board of Directors ofeach group company
Tsuyoshi Mitsuzuka, Senior Executive Officer, Director General, Group Management Headquarters+81-3-5207-7458

Contact:
Tel:

Listing Stock Exchange: Tokyo
URL: https://corp.earth.jp/en/index.html

Scheduled date for quarterly report submission:
Scheduled date for dividend payment:
Preparation of supplemental explanatory materials:
Results briefing to be held:
1.

August 10, 2022—
Yes
Yes (for institutional investors and analysts)

Consolidated Financial Results for the Six Months Ended June 30, 2022
(January 1 to June 30, 2022)(1) Consolidated operating results
Sales(Percentages indicate YoY change)
Net income attributable
Ordinary income
to owners of parent

Operating income

Million yen%

Million yen%

Million yen%

Million yen%

Six months ended
89,305
11,941
12,714
8,587
－
－
－
－
June 30, 2022
Six months ended
115,821
4.7
18,56615.9
18,90717.2
12,75916.5
June 30, 2021
Note: Comprehensive income for the six months ended June 30, 2022 was 9,658 million yen (－% YoY), and comprehensive income
for the six months ended June 30, 2021 was 12,460 yen (-7.1% YoY)
Net income per share

Diluted net income
per share

Yen

Yen

Six months ended
389.53－June 30, 2022
Six months ended
578.41－
June 30, 2021
Note: Due to the adoption of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29), etc. from the beginning of
the fiscal year ending December 31, 2022, the figures for the second quarter of the fiscal year under review reflect impact
stemming from the adoption of this standard, and hence, no year-on-year comparison figures have been provided.

(2) Consolidated financial position
Total assets
Million yen

Net assets
Million yen

Equity ratio%

Six months ended
140,125
70,95647.2
June 30, 2022
Fiscal year ended
120,715
64,596
49.7
December 31, 2021
Reference: Equity capital amounted to 66,205 million yen as of June 30, 2022 and 59,958 million as of December 31, 2021.

2.

Dividends
Dividend per share
End of Q1

End of Q2

Yen

End of Q3

Yen

Year-end

Yen

Total
Yen

Yen

Fiscal year ended
0.00
118.00－－December 31, 2021
Fiscal year ending
0.00－
December 31, 2022
Fiscal year ending
December 31, 2022
118.00－(forecast)
Note: No revisions have been made to the Company’s most recently announced dividend forecast.

3.

118.00118.00Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2022
(January 1, 2022 to December 31, 2022)

Sales
Full-year

Operating income(Percentages indicate YoY change)
Net income
per share

Net income attributableto owners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

Yen155,000－

10,750－

11,150

－

7,280

－

330.30Note: No revisions have been made to the Company’s most recently announced dividend forecast.
Note: Due to the adoption of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29), etc. from the beginning of
the fiscal year ending December 31, 2022, the consolidated earnings forecast above reflects impact stemming from the adoptionof this standard, and hence, no year-on-year comparison figures have been provided.

*Notes(1) Changes in significant subsidiaries during the period under review:
None(Transfers of specified subsidiaries associated with changes in the Company’s scope of consolidation)
Newly subsidiaries added:
None
Subsidiaries excluded:
None(2) Distinctive accounting methods applied when preparing quarterly consolidated financial statements: None
(3) Changes in accounting policies and accounting estimates and retrospective restatements
1. Accounting policy changes due to accounting standard revisions, etc.:Yes
2. Other accounting policy changes:
None
3. Changes in accounting estimates:
None
4. Retrospective restatements:
None(4) Number of shares outstanding (common stock)
1. Shares outstanding(including treasury stock)

As of June 30,
2022

22,077,500

As of December
31, 2021

22,077,500

2. Treasury shares outstanding

As of June 30,
2022

13,749As of December
31, 2021

36,939

3. Cumulative average number ofsharesSix months ended
June 30, 202

22,047,142

Six months ended
June 30, 2021

22,059,386*The financial information in this quarterly report is not subject to review by certified public accountants or auditing firms.
*Appropriate use of earnings forecast and other special notes
The earnings forecasts and other forward-looking statements contained in this document are based on information currently available
to the Company, and certain assumptions it considers reasonable, but are not intended to be a promise that the Company will achieve.
Actual results may vary materially from forecasts due to a variety of factors. For more information regarding assumptions made when
formulating earnings projections and matters to note when using these projections, please see “1. Qualitative Information on Quarterly
Financial Performance (3) Explanation of Consolidated Earnings Forecasts and Other Projections” on page five of the accompanying
materials.

Accompanying Materials ― Contents
1. Qualitative Information on Quarterly Financial Performance ............................................................................................................ 2(1) Explanation of Operating Results..................................................................................................................................................... 2(2) Explanation of Financial Position .................................................................................................................................................... 5(3) Explanation of Consolidated Earnings Forecasts and Other Projections .......................................................................................... 5
2. Quarterly Consolidated Financial Statements and Primary Notes ..................................................................................................... 6(1) Consolidated Balance Sheet ............................................................................................................................................................. 6(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income........................................................... 8
Consolidated Statement of Income .................................................................................................................................................... 8
Consolidated Statement of Comprehensive Income........................................................................................................................... 9(3) Quarterly Statement of Cash Flows ................................................................................................................................................ 10(4) Notes to Quarterly Financial Statements ........................................................................................................................................ 11(Notes to going concern assumptions) ............................................................................................................................................. 11(Notes in the event of significant changes in shareholders’ equity) ................................................................................................. 11(Changes to accounting policies) ..................................................................................................................................................... 11(Application of Accounting Standard for Fair Value Measurement, etc.) ........................................................................................ 12―1―

1. Qualitative Information on Quarterly Financial Performance(1) Explanation of Operating Results
Effective from the beginning of the first three months (hereafter, “Q1”) of the fiscal year ending December 31, 2022, the Company
has adopted the Accounting Standard for Revenue Recognition (Accounting Standard Board of Japan [ASBJ] Statement No. 29;
March 31, 2020), etc. As a result, revenue recognition standards applied to results for the first six months (hereafter, “Q2”) of the
fiscal year under review differ from those applied to results for the same period of the previous fiscal year, and hence, no year-onyear comparison figures (% changes) have been provided in the explanation of operating results below.
During Q2 of the fiscal year ending December 31, 2022, the Japanese economy showed signs indicating that economic activities
were returning to a normal pace following the lifting of semi-emergency measures that were previously reinstated in response to an
additional wave of COVID-19 infections. At the same time, future prospects remain uncertain due to persisting conflict in Ukraine,soaring resource prices, and depreciation of the yen caused by monetary policy. In the Asian region, where the Group is focusing
on business expansion, supply chain disruptions continue after China's zero-COVID policy caused urban blockades. At the sametime, economic recovery is seen in Thailand, Vietnam, and other countries as a result of efforts aimed at balancing infection control
measures with economic activities to facilitate adaptation to the COVID-19 era and the post-pandemic era.
Under these economic conditions, the Company announced its medium-term management plan, “Act For SMILE – COMPASS
2023 –” in February 2021. In accordance with the Company’s corporate philosophy, “We act to live in harmony with the Earth,”the plan includes four fundamental policies: “Reform Corporate Compass & Infrastructure,” “Expand Profit Foundation in Asia,”“ESG/Open Innovation,” and “Generate Cost Synergies.” The Company strove to implement priority measures associated withthese policies in the fiscal year ending December 31, 2022.
Sales generated during Q2 of the fiscal year ending December 31, 2022 amounted to 89,305 million yen. The Company observed
sluggish sales of domestic insecticides and repellents in the Household Products Business due to unfavorable weather conditions
but also reported growth in the General Environment and Sanitation Business. Meanwhile, due to such factors as surging raw
material prices, FOREX impact, and an increase in promotion expenses, operating income came to 11,941 million yen, ordinary
income 12,714 million yen, net income before income taxes 12,668 million yen, and net income attributable to owners of parent
8,587 million yen.
Consolidated results for Q2 of the fiscal year ending December 31, 2022

(Millions of yen)(Ref.)
Consolidated Q2
Consolidated Q2
Consolidated Q2
YoY change, excl. theresults for the fiscal results for the fiscal
results, excl. theimpact of accounting
year ended December year ending December
impact of accounting
standard change
31, 2021
31, 2022
standard change

Sales

115,82189,305

119,340

3.0%

Operating income

18,566

11,941

16,267(12.4%)

Ordinary income

18,907

12,714

17,040(9.9%)Net income before income taxes
18,895
12,66816,993(10.1%)
Note: Due to the adoption of the Accounting Standard for Revenue Recognition, etc. from the beginning of Q1of the fiscal year
under review, sales were reduced by 30,035 million yen and all profit categories from the operating income line down werereduced by 4,325 million yen.
Results by segment were as follows.
[Household Products Business]
Through its Household Products Business, the Company endeavored to rejuvenate corresponding markets through advertising,
the creation of appealing sales areas, and other means of communicating with customers while pursuing new customers with thelaunch of new products and updating existing products to improve their value. The Company strove to improve profitability andreduce manufacturing costs and costs for sales. Overseas, the Company is proactively and effectively investing management
resources in Southeast Asia, particularly in Thailand and Vietnam, while conducting initiatives aimed at expanding its operations inthis region.
Sales generated through the Household Products Business in Q2 of the fiscal year ending December 31, 2022 amounted to 82,553―2―

million yen. Insecticides and repellents produced sluggish sales due to unfavorable weather conditions, but the Company achieved
sales growth primarily through household products. Meanwhile, operating income in the Household Products Business came to
11,154 million yen. The Company primarily attributes this result to changes in the business's sales mix, impact of surging raw
material prices, a substantial decline in gross profit margin caused by and rapid yen depreciation, and an increase in promotional
spending.
Results in the Household Products Business(Millions of yen)

Consolidated Q2 results
for the fiscal year ended
December 31, 2021

Sales

(Ref.)
Consolidated Q2 YoY change,
Consolidated Q2 results
results, excl. the excl. the impact
for the fiscal year ending
impact ofof accounting
December 31, 2022
accounting standard change
standard change

109,224

82,553

112,567

3.1%

Segment income (operating income)
17,870
11,154
15,465(13.5%)
Notes: 1. Sales include internal sales and transfers made within and between segments, which amounted to 6,880 million yen
during Q2 of the fiscal year ended December 31, 2021 and 6,969 million yen during Q2 of the fiscal year ending
December 31, 2022.
2. Due to the adoption of the Accounting Standard for Revenue Recognition, etc. from the beginning of Q1 of the fiscal
year under review, sales decreased by 30,013 million yen and segment income decreased by 4,310 million yen.
Insecticides and repellents
In Japan, temperatures were lower year on year in May through the first half of June, when sales typically reach their peak,
and although they picked up in the second half of June due to rising temperatures nationwide, performance throughout the market
fell off compared to the previous year. Due in part to these circumstances, sales of insecticides and repellents for flies andmosquitoes and those for cockroaches (top sales products in the insecticide and repellent category) were weak. However, salesof insecticides and repellents for ticks and other unpleasant insect pests were strong thanks primarily to contributions from MAMO
ROOM and Iyana Mushi ZEROdeKNIGHT, which were recently launched as new high-end products. Overseas, sales grew
substantially in Thailand and Vietnam, where economic activity is recovering.
As a result of the above, sales in this category totaled 44,086 million yen.
Household products
Oral hygiene products generated sales of 3,950 million yen thanks to strong performance from Mondahmin Premium Care.
Meanwhile, conditions in the market for bath salts, which has expanded as a result of COVID-19, remained favorable.
Additionally, amid ongoing change in customer needs related to bath salts, the Company observed strong performance fromproducts such as Onpo tablets, the granular form of Kikiyu, and Nihon no Meito offered in small packages for each use.
Consequently, sales generated through bath salts amounted to 11,865 million yen.
Concurrently, sales of other household products amounted to 17,941 million yen. The Company attributes this result tocontributions from its Kaiteki Guard protective face masks and items in its Sukki-ri! series of deodorizing air fresheners and its
Raku Hapi series of cleaning products.
As a result of the above, sales in this category totaled 33,757 million yen.
Pet products and others
In the pet products category, sales of insecticides and repellents remained sluggish as the market fell below the previous year's
level. Meanwhile, sales of pet care products, including cat litter sand, towels, and cleaners, rose to 4,709 million yen as morecustomers began to keep pets during the COVID-19 pandemic and people spent more time at home to develop deeper
communication with their pets.
[General Environment and Sanitation Business]
In the General Environment and Sanitation Business, the Company is enhancing its in-house hygiene management as relevant―3―laws in Japan are revised and safety standards for food, pharmaceutical products, and medical care are adjusted on an international
scale. Accordingly, the Company observed growth in demand among core customers (food, pharmaceutical, and packing material
factories) for its high-quality hygiene management services, which leverage the Company's specialized knowledge, skills, andexpertise.
Under these circumstances, we endeavored to maintain and expand our contracts by providing standout quality assurance services
through the enhancement of our technological development capabilities. At the same time, we actively invested in the constructionof an internal framework that facilitates the prompt fulfillment of customer needs associated primarily with software development
aimed at improving operational efficiency and recruiting and training human resources. Along with these efforts, we intensified our
initiatives in the pharmaceutical and regenerative medicine industries and efforts associated with auditing and consulting services
related to food safety management.
Consequently, sales in the General Environment and Sanitation Business amounted to 13,800 million yen, while segment income(operating income) was 790 million yen due to increases in personnel expenses for more hiring.
Results in the General Environment and Sanitation Business(Millions of yen)

Consolidated Q2 results
for the fiscal year ended
December 31, 2021

(Ref.)
Consolidated Q2 YoY change,
Consolidated Q2 results
results, excl. the excl. the impact
for the fiscal year ending
impact ofof accounting
December 31, 2022
accounting standard change
standard change

Sales

13,546

13,80013,8222.0%

Segment income (operating income)

898

790

776

(13.6%)

Notes: 1. Sales include internal sales and transfers made within and between segments, which amounted to 68 million yen in Q2of the fiscal year ended December 31, 2021 and 78 million yen in Q2 of the fiscal year ending December 31, 2022.
2. Due to the adoption of the Accounting Standard for Revenue Recognition, etc. from the beginning of Q1 of the fiscal
year under review, sales decreased by 21 million yen and segment income increased by 14 million yen.

―4―(2) Explanation of Financial Position(1) Assets, Liabilities and Net Assets
As of June 30, 2022, total assets amounted to 140,125 million yen, up 19,410 million yen from December 31, 2021 due primarily
to an increase in trade receivables.
Meanwhile, despite a downturn in accounts payable, total liabilities as of June 30, 2022 came to 69,168 million yen, up 13,050
million yen from December 31, 2021, mainly as a result of growth in accounts payable-trade and income taxes payable.
Net assets amounted to 70,956 million yen as of June 30, 2022, rising 6,359 million yen compared to December 31, 2021, mainly
because of an increase in retained earnings that occurred due to the Company’s booking of net income attributable to owners ofparent.
Consequently, the Company’s equity ratio was 47.2% as of June 30, 2022, down 2.5 points from December 31, 2021.
(2) Cash Flows
As of June 30, 2022, cash and cash equivalents (below, “cash”) stood at 21,739 million yen, up 711 million yen compared to
December 31, 2021.
The status of each cash flow and their factors during the six months ended June 30, 2022 are as follows.
Net cash provided by operating activities amounted to 6,686 million yen (versus net cash of 6,729 million yen provided during
the six months ended June 30, 2021). The primary sources of this net cash were 12,668 million yen in profit before income taxes(18,895 million yen during the six months ended June 30, 2021), an increase of 14,353 million yen in accounts receivable (increaseof 13,926 million ye during the six months ended June 30, 2021), and growth of 998 million yen in inventories (increase of 3,987
million yen during the six months ended June 30, 2021).
Net cash used in investing activities during the same period was 3,173 million yen (versus 2,308 million yen used during the six
months ended June 30, 2021). This figure primarily consisted of 1,908 million yen in purchase of property, plant, and equipment(versus 1,980 million yen during the six months ended June 30, 2021).
Meanwhile, net cash used in financing activities was 3,642 million yen (versus 4,175 million yen used during the six months
ended June 30, 2021). This amount primarily comprised 2,600 million yen in cash dividends paid (versus 2,536 million yen paid
during the six months ended June 30, 2021).

(3) Explanation of Consolidated Earnings Forecasts and Other Projections
The Company has made no changes to its full-year earnings forecast for the financial year ending December 31, 2022, which
was announced on February 14, 2022.
This forecast is based on information available to the Company at the time of its formulation. Actual results may differ
substantially from the projections included within due to potential changes affecting a variety of factors.

―5―

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet
Fiscal year ended
December 31, 2021
(as of December 31, 2021)(Millions of yen)Six months ended
June 30, 2022
(as of June 30, 2022)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Electronically recorded monetary
operatingMerchandise and finished goods

21,027
21,21021,73933,256

1,730

3,967

21,622

24,032Work in process
Raw materials and supplies

1,315
4,564

910
4,204

Other
Allowance for doubtful accounts

2,568
(20)

2,845
(36)

Total current assets

74,01890,91929,489(15,884)

30,153(16,570)

Buildings and structures, net

13,604

13,582

Machinery, equipment and vehicles

16,536

17,123(12,426)(12,993)

claims-Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation and impairment

Accumulated depreciation and impairment

4,110

4,129

Land

Machinery, equipment and vehicles, net

7,873

7,793

Leased assets
Accumulated depreciation and impairment

255
(79)

300
(106)

Leased assets, net

176

194

Construction in progress
Other

253
9,198

1,219
9,429

Accumulated depreciation and impairment(7,666)(7,849)Other, net

1,532

1,580

27,551

28,501

Total property, plant and equipment
Intangible assets
Goodwill

423

596

Other

3,853

4,192

Total intangible assets

4,276

4,788

Investments and other assets
Investment securities

6,025

5,745

Retirement benefit asset
Deferred tax assets

6,114
1,132

6,296
1,689

Other
Allowance for doubtful accounts

1,612
(16)

2,202
(16)

Total investments and other assets

14,86815,916

46,69649,206

120,715140,125

Total non-current assets
Total assets―6―

Fiscal year ended
December 31, 2021
(as of December 31, 2021)(Millions of yen)Six months ended
June 30, 2022
(as of June 30, 2022)

Liabilities
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating

22,617
9,832

23,141
15,693

Short-term borrowings
Current portion of long-term borrowings

1,480
1,018

1,314
970

Accounts payable - other
Income taxes payable

10,721
1,520

6,476
5,091

Accrued consumption taxes
Provision for bonuses

526
255

1,571
370

Provision for sales returns
Refund liabilities

434

－
1,834

Other

－
3,892

10,080Total current liabilities

52,30066,545

Non-current liabilities
Long-term borrowings

1,200

720

Deferred tax liabilities
Retirement benefit liability

1,178
382

489
358

Asset retirement obligations
Other

516
540

518
537

Total non-current liabilities

3,818

2,623

56,11869,168

Shareholders' equity
Share capital

9,895

9,895

Capital surplus
Retained earnings

9,928
37,9299,917
43,182

Treasury shares

(215)

(78)

Total shareholders' equity

Total liabilities
Net assets

57,53762,916

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment

1,297

1,091

(22)

1,192

Remeasurements of defined benefit plans

1,146

1,005

Total accumulated other comprehensive income

2,421

3,289

Non-controlling interests

4,638

4,750

Total net assets

64,59670,956

120,715140,125

Total liabilities and net assets―7―

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income
Six months ended
June 30, 2021
(from January 1, 2021
to June 30, 2021)
115,82164,21851,603(Millions of yen)Six months ended
June 30, 2022
(from January 1, 2022
to June 30, 2022)
89,30549,37239,933

3,375
4,201
7,161
17
8,016
228
506
619
954
707
1,346
5,900
33,036

3,629
4,276
594
14
8,487
270
590
715
423
733
1,426
6,828
27,991

Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Commission income
Rental income from buildings
Other

18,566

11,941

30
103
68
14
23
145

54
36
529
9
23
143

Total non-operating income
Non-operating expenses
Interest expenses
Compensation for damage
Other

385

796

10
27
6

17
－
6

Total non-operating expenses
Ordinary income

45
18,90723
12,714

1

23

1

23

6
5
1

3
65
0

Total extraordinary losses
Net income before income taxes

13
18,89569
12,668

Income taxes - current
Income taxes - deferred
Total income taxes

5,486
399
5,885

4,771
(900)
3,870

Net income
Net income attributable to non-controlling interests

13,009
250

8,797
209

Net income attributable to owners of parent

12,759

8,587

Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Transportation and storage costs
Advertising expenses
Promotion expenses
Provision of allowance for doubtful accounts
Salaries and allowances
Provision for bonuses
Travel and transportation expenses
Depreciation
Amortization of goodwill
Rent expenses on land and buildings
Research and development expenses
Other
Total selling, general and administrative expenses

Extraordinary income
Gain on sale of non-current assets
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities―8―

Consolidated Statement of Comprehensive Income
Six months ended
June 30, 2021
(from January 1, 2021
to June 30, 2021)
13,009(Millions of yen)Six months ended
June 30, 2022
(from January 1, 2022
to June 30, 2022)
8,797

(920)
439

(206)
1,215

Remeasurements of defined benefit plans, net of tax

(68)

(147)

Total other comprehensive income

(549)

861

Comprehensive income

12,4609,658(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

12,202

9,456

258

202

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment―9―(3) Quarterly Statement of Cash Flows(Millions of yen)Six months ended
June 30, 2022
(from January 1, 2022
to June 30, 2022)

Six months ended
June 30, 2021
(from January 1, 2021
to June 30, 2021)
Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill

18,895

12,668

1,687
954

1,846
423

563
－

(434)
1,834

Increase (decrease) in provision for sales returns
Increase (decrease) in refund liabilities
Increase in retirement benefit assets (increase inretirement benefit liabilities)
Decrease (increase) in trade receivables

(298)

(429)

(13,926)(14,353)

Decrease (increase) in inventories
Increase (decrease) in trade payables(3,987)
8,099

(998)
6,237

Other

(2,046)

1,002

Subtotal

9,940

7,796

134

91

Interest paid
Income taxes paid

(10)
(3,334)(17)(1,184)

Net cash provided by (used in) operating activities

6,729

6,686

(1,980)(9)(1,908)
(9)

－

(163)

－

(722)

(345)

(624)

27

254

Net cash provided by (used in) investing activities(2,308)(3,173)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings

(619)

(224)

(757)
(0)

(532)
(99)

Purchase of treasury shares of subsidiaries
Dividends paid

(86)
(2,536)(3)(2,600)

Dividends paid to non-controlling interests
Other

(158)
(17)

(155)
(26)

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(4,175)(3,642)

192

713

438

584

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from
inclusion of subsidiaries in consolidation
Cash and cash equivalents at end of period

23,71621,027－

126

24,154

21,739Interest and dividends received

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment securities
Purchase of shares of subsidiaries and associates
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Other payments
Other proceeds

Repayments of long-term borrowings
Purchase of treasury shares―10―(4) Notes to Quarterly Financial Statements(Notes to going concern assumptions)None to be reported.

(Notes in the event of significant changes in shareholders’ equity)
None to be reported.

(Changes to accounting policies)(Adoption of the Accounting Standard for Revenue Recognition, etc.)
Effective from the beginning of Q1 of the fiscal year ending December 31, 2022, the Earth Group has adopted the
Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020) and Implementation Guidance on
Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30; March 26, 2021). As a result, the Group now
recognizes revenue at the time of transfer of control of promised goods or services to the customer, in the amount it expects
to receive in exchange for said goods or services.
In light of this, the Group has made the following changes.
(1) Change in the timing of revenue recognition
In the Household Products Business, the Company (parent) and some of its consolidated subsidiaries previously recognizedrevenue for sales of products at the time the products were shipped. Under the new accounting standards, however, revenue
is recognized when the products are shipped to the destination designated by the customer and handed over to the customer,
as this is when control of the products is transferred to the customer.
Under the previous accounting standards, for some transactions in the General Sanitary Management Business, revenue
was recognized over the period in which services promised in the contract were provided. Under the new accounting
standards, however, the Group identifies services that are performance obligations as promised in the contract, and since theperformance obligations are deemed satisfied when the services identified as such have been provided in full, the Group
recognizes revenue at the time of the completion of the services.
(2) Considerations payable to customers
From the fiscal year under review, the Group deducts a portion of sales promotion expenses and other considerations
payable to customers from revenue as it has identified performance obligations in contracts with customers. Under theprevious accounting standards, some sales promotion expenses and other considerations payable to customers were recorded
as SG&A expenses at the time the Group determined these payables were highly likely to occur. However, under the new
accounting standards, the Group makes a reasonable estimate of the variable portion of the transaction price based on pastrecords and only deducts from revenue the portion that is highly likely to not result in a substantial reduction in revenue.
(3) Products sales with rights of return
Under the previous accounting standards, the Group recorded provisions for product returns in the amount equivalent toanticipated losses resulting from the product returns based on the past rate of returns and gross profit margin. Under the new
accounting standards, however, the Group deducts from revenue the estimated amount of refunds payable to customers as an
obligation to refund the amount of consideration received for the products expected to be returned and recognizes refund
liabilities for the products in questions. Further, the Group records return assets and makes corresponding adjustments(deductions) to the cost of sales for its right to recover products from customers when the refund liabilities are settled.
(4) Revenue recognition for agent transactions
For the purchase and sales transactions involving denture-related products and toothpaste and toothbrush-related productswith GlaxoSmithKline Consumer Healthcare Japan Co., Ltd. (hereafter “GSKCHJ”), the Company previously recorded thetotal amount of consideration it expected to receive from customers as revenue. However, under the new accounting standards,
since the Company’s role of providing these products to customers is classified as that of an agent, the Company records a
net amount obtained by subtracting the amount it pays to GSKCHJ, the supplier, from the amount billed to the customer as―11―

revenue.
The Group has applied the Accounting Standard for Revenue Recognition, etc. in accordance with the transitional treatment
stipulated in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition. The cumulative amount of
impact of retroactively applying the new accounting policy to periods prior to the beginning of Q1 of the fiscal year underreview has been added to or subtracted from retained earnings at the beginning of said period, and the new accounting policy
has been applied from the balance at the beginning of said period.
However, in accordance with the methods prescribed in Paragraph 86 of the Accounting Standard for Revenue Recognition,
the Group has not retroactively applied the new accounting policy to contracts prior to Q1 of the fiscal year under review
where nearly all revenue amounts were recorded based on the previous accounting standards.
As a result, in Q2 of the fiscal year under review, sales were reduced by 30,035 million yen, cost of sales by 17,944 million
yen, and SG&A expenses by 7,764 million yen, and operating income, ordinary income, and net income before income taxes
were each reduced by 4,325 million yen. Further, the balance of retained earnings at the beginning of the period under review
was down by 608 million yen.
As a result of the application of the Accounting Standard for Revenue Recognition, etc., provisions for sales returns shown
under the current liabilities section of the consolidated balance sheet for the fiscal year ended December 31, 2021 are shown
as return assets included in other under the current assets section and as refund liabilities under the current liabilities sectionof the balance sheet for Q1 of the fiscal year under review. Note that in accordance with the transitional treatment stipulated
in Paragraph 89-2 of the Accounting Standard for Revenue Recognition, the Group has not reclassified the amounts reported
in the previous fiscal year using the new representation method. Further, in accordance with the transitional treatment set
forth in Paragraph 28-15 of the Accounting Standard for Quarterly Financial Reporting (ASBJ Statement No. 12; March 31,2020), the Group has not included the breakdown of revenue from contracts with customers in Q2 of the previous fiscal year.
(Application of Accounting Standard for Fair Value Measurement, etc.)
Effective from the beginning of Q1 of the fiscal year under review, the Group has adopted the Accounting Standard for
Fair Value Measurement (ASBJ Statement No. 30; July 4, 2019). In accordance with the transitional treatment stipulated in
Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the Accounting Standard for
Financial Instruments (ASBJ Statement No. 10; July 4, 2019), the Group has decided to prospectively apply the new
accounting policy prescribed in the Accounting Standard for Fair Value Measurement, etc. Please note that this has no impact
on the Group’s quarterly consolidated financial results.

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