Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 [J-GAAP]May 13, 2022
Name of listed company:
Securities code:
Representative:
Contact:

ARTNATURE INC.
Listed on: Tokyo Stock Exchange
7823
URL: https://www.artnature.co.jp/english/index.html
Yoshikata Igarashi, Chairman and President
Hiroaki Inoue, General Manager, Finance & Accounting Division
TEL: +81-3-3379-3334
Senior Corporate Officer
Scheduled date of the ordinary general meeting of shareholders:June 23, 2022
Scheduled date of the start of dividends distribution:
June 24, 2022
Scheduled date of the filing of the financial report:
June 24, 2022
Supplementary documents for this summary of financial statements:
None
Financial results explanatory meeting:Yes (for institutional investors and analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated results for the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)(Percentage figures show change from the previous year.)(1) Consolidated operating results
Net sales

Operating income

Ordinary income

Millions of yen%

Millions of yen%

Millions of yen%

40,43735,868

12.7
(9.2)

3,020
1,932

56.3
(33.8)

3,038
2,005

51.5
(33.3)

Year ended March 31, 2022
Year ended March 31, 2021

Note: Comprehensive income: Year ended March 31, 2022: ¥1,259 million (28.5%)

1,204
840

43.3
(45.5)

Year ended March 31, 2021: ¥980 million (-37.7%)

Yen

Diluted net income
per share
Yen

Return on shareholders’equity%Ordinary income tototal assets%

Operating income to
net sales
%

37.51
25.99

37.09
25.75

4.9
3.3

6.6
4.6

7.5
5.4

Net income per share
Year ended March 31, 2022
Year ended March 31, 2021

Net income attributable toowners of the parent
company
Millions of yen%(Reference) Equity in earnings of affiliates: Year ended March 31, 2022: ¥‒ million
Year ended March 31, 2021: ¥‒ million
Note: The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. effective from the beginning of the fiscal year
under review and the figures for the year ended March 31, 2022 are figures after application of the standard.

(2) Consolidated financial position
Total assets
Millions of yen

Net assets
Millions of yen

Shareholders’ equity ratio%

46,51044,91924,59625,25552.4
55.8

As of March 31, 2022
As of March 31, 2021

Net assets per shareYen

758.47781.00(Reference) Equity capital: As of March 31, 2022: ¥24,367 million
As of March 31, 2021: ¥25,066 million
Note: The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. effective from the beginning of the fiscal year
under review and the figures for the year ended March 31, 2022 are figures after application of the standard.

(3) Consolidated cash flows
Cash flows from operating
activities
Millions of yen

Cash flows from investing
activities
Millions of yen

Cash flows from financing
activities
Millions of yen

Cash and cash equivalents
at end of year
Millions of yen

2,505
4,232

(1,183)
(885)

(924)
(1,112)

19,452
18,984

Year ended March 31, 2022
Year ended March 31, 2021

2. Dividends
Dividends per share
SecondThird
quarterquarterYear-end
end
end

First
quarterend
Year ended March 31, 2021
Year ended March 31, 2022
Year ending March 31, 2023
(forecast)

AnnualDividend
payout ratio(consolidated)

Total dividends(annual)Dividends on
net assets(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

‒
‒

14.00
14.00

‒
‒

14.00
14.00

28.00
28.00

902
899

107.7
74.7

3.6
3.6

‒

14.00

‒

14.00

28.00

79.1

3. Consolidated financial forecast for the fiscal year ending March 31, 2023 (April 1, 2022 – March 31, 2023)
Net sales

Full year

Operating income

Millions of yen%

Millions of yen%

41,9913.8

2,105(30.3)(Percentage figures show changes from the previous year.)
Net income attributable
Net income per
to owners of the parent
Ordinary income
sharecompany
Millions of yen% Millions of yen
%
Yen

2,155

(29.1)

1,137

(5.6)

35.40

Notes:(1) Significant changes to subsidiaries during the term (Transfers of specific subsidiaries with changes in the scope of consolidation): None
(2) Changes in accounting policies, accounting estimates and restatement of revisions
1) Changes in accounting policies due to revision of accounting standards, etc.: Yes
2) Changes in accounting policies other than 1):
None3) Changes in accounting estimates:
None4) Restatement of revisions:
None
Note: More information is provided on page 14 of the supplementary materials, “4. Consolidated financial statements and related notes, (5)Notes on consolidated financial statements (Changes in accounting policies).”(3) Number of outstanding shares (common stock):1) Number of shares issued andAs of March 31, 2022
outstanding (including treasury
shares)
As of March 31, 2022
2) Number of treasury shares
3) Average number of shares issued
Year ended March 31, 2022
and outstanding in each period

34,393,200

shares

As of March 31, 2021

34,393,200

shares2,266,339

shares

As of March 31, 2021

2,297,539

shares32,110,073

sharesYear ended March 31, 2021

32,340,543

shares*This kessan tanshin document is outside the scope of the audit procedures conducted by certified public accountantsor the independent auditor.

*

Explanation of the appropriate use of financial results forecasts; other important items(Cautionary statement regarding forward-looking statements, etc.)
Forward-looking statements in this document, including forecasts, are based on information available at the time of disclosure and on
certain assumptions deemed reasonable by the Company. Actual results may differ materially from forward-looking statements due to anumber of factors. For more information about these assumptions and other conditions that form the basis of these forecasts, please see
page 3 of the supplementary materials, “1. Analysis of operating results, etc., (4) Business forecasts.”

Contents
1. Analysis of operating results, etc. ............................................................................................................................................ 2(1) Analysis of operating results ............................................................................................................................................... 2(2) Analysis of financial position.............................................................................................................................................. 2(3) Analysis of cash flows ........................................................................................................................................................ 3(4) Business forecasts ............................................................................................................................................................... 3(5) Basic policy for the distribution of profits and dividends for fiscal 2022 and fiscal 2023 .................................................. 3
2. Management policies ................................................................................................................................................................ 4(1) Basic management policy ................................................................................................................................................... 4(2) Management indicators and targets ..................................................................................................................................... 4(3) Medium- and long-term management strategy ................................................................................................................... 4(4) Issues to be resolved ........................................................................................................................................................... 4
3. Basic position on the selection of accounting standards ........................................................................................................ 5
4. Consolidated financial statements and related notes............................................................................................................. 6(1) Consolidated balance sheets ................................................................................................................................................ 6(2) Consolidated statements of income and comprehensive income ........................................................................................ 8(Consolidated statements of income) .................................................................................................................................. 8(Consolidated statements of comprehensive income) ......................................................................................................... 9(3) Consolidated statements of changes in net assets ............................................................................................................. 10(4) Consolidated statements of cash flows.............................................................................................................................. 12(5) Notes on consolidated financial statements ...................................................................................................................... 14(Notes on the going concern assumption) ......................................................................................................................... 14(Changes in accounting policies) ...................................................................................................................................... 14(Segment information, etc.)............................................................................................................................................... 14(Per share information) ..................................................................................................................................................... 17(Significant subsequent events) ......................................................................................................................................... 171

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022

1. Analysis of operating results, etc.
(1) Analysis of operating results
In fiscal 2022, which ended March 31, 2022, the Japanese economy saw a gradual recovery in economic activity, despite
the effects of the COVID-19 pandemic, which has raged since last fiscal year, mainly thanks to the rollout of vaccinations.
However, the outlook remains more uncertain than ever due to the global instability caused by Russia’s invasion of Ukraine,concerns about inflation fueled by rising energy prices and the sudden depreciation of the yen, and other factors.
Against this backdrop, ARTNATURE INC. and its consolidated subsidiaries (the ARTNATURE Group) saw the
ARTNATURE Challenge Plan, the medium-term management plan, mark its second year. Under the plan, we have been
implementing six priority challenge initiatives, as we did in the first year: (1) grow the Group’s earnings, (2) develop new
business fields, (3) reinforce recruitment, (4) cultivate human resources, (5) encourage dialogue with capital markets, and (6)drive business innovation, with the aim of strengthening the ARNATURE Group’s position in existing businesses and further
expanding new businesses to build the foundations for a new ARTNATURE capable of opening up the next phase in theGroup’s history. At the same time, we have continued to take comprehensive measures to prevent COVID-19 infections in ourbusiness activities since the previous fiscal year.
As a result, consolidated net sales in fiscal 2022 increased 12.7% year on year to ¥40,437 million. In terms of profits,
operating income stood at ¥3,020 million (increasing 56.3% year on year), and ordinary income came to ¥3,038 million(increasing 51.5% year on year) due to an increase in net sales. Net income attributable to owners of the parent company was¥1,204 million (increasing 43.3% year on year).
Men’s business
Sales in the men’s business increased 6.3% year on year, to ¥22,660 million, as a result of eliminating the significant fall insales in the previous fiscal year that had been caused by the temporary closure of production sites in the Philippines associatedwith the COVID-19 pandemic and other factors, in addition to strong sales of new products.
Ladies’ business
Sales in the ladies’ business rose 26.1% year on year, to ¥11,786 million, as a result of eliminating the effect in the previous
fiscal year that had been caused by the temporary closure of production sites and other factors, similarly to sales in men’sbusiness, in addition to strong sales of new products and the holding of exhibition and trial fitting events, among other measures.
Ladies’ ready-made wigs business
Sales in the ladies’ ready-made wigs business increased 19.5% year on year to ¥4,441 million, despite the impact of thetemporary closure of the retail facilities in which the Company’s stores are located due to the spread of COVID-19, because
the impact was relatively limited compared with the previous fiscal year.
(2) Analysis of financial position(Assets)
As of the fiscal year-end, total assets were ¥46,510 million, an increase of ¥1,590 million compared with the end of theprevious fiscal year. Current assets increased ¥1,435 million, mainly due to increases in cash and deposits and merchandiseand finished goods, and non-current assets increased ¥155 million, primarily reflecting an increase in investments and otherassets.
(Liabilities)
As of the fiscal year-end, liabilities totaled ¥21,914 million, an increase of ¥2,249 million compared with the end of theprevious fiscal year. Current liabilities rose ¥2,089 million, mainly due to increases in contract liabilities and refund liabilities
associated with application of the Accounting Standard for Revenue Recognition, and non-current liabilities increased ¥159
million, primarily reflecting an increase in net defined benefit liability.
(Net Assets)
As of the fiscal year-end, net assets totaled ¥24,596 million, a decrease of ¥658 million compared with the end of theprevious fiscal year. This largely reflected a decrease in retained earnings.

2

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(3) Analysis of cash flows
As of the fiscal year-end, cash and cash equivalents (cash) totaled ¥19,452 million, an increase of ¥468 million comparedwith the end of the previous fiscal year. The Company’s cash flow position and factors behind the changes in cash flows wereas follows:(Cash flows from operating activities)
Operating activities provided net cash of ¥2,505 million, compared with ¥4,232 million in the previous fiscal year. This
mainly reflected income before income taxes of ¥2,322 million, depreciation of ¥911 million, impairment loss of ¥545 million,
increase in net defined benefit liability of ¥185 million, versus income taxes paid of ¥1,433 million, increase in inventories of¥754 million, and increase in note and accounts receivable-trade of ¥147 million.
(Cash flows from investing activities)
Investing activities used net cash of ¥1,183 million, compared with ¥885 million in the same period a year earlier. That
mainly reflected purchase of property, plant and equipment of ¥787 million, payments for lease and guarantee deposits of¥170 million, payments for long-term loans receivable of ¥150 million, and purchase of intangible assets of ¥96 million.
(Cash flows from financing activities)
Financing activities used net cash of ¥924 million, compared with ¥1,112 million in the previous fiscal year. This mainlyreflected cash dividends paid of ¥898 million.
The Group’s cash flow-related indicators are as follows:Year ended March 31,
2018

2019

2020

2021

2022

Equity ratio (%)

58.6

57.4

58.3

55.8

52.4

Market value-based equity ratio (%)

57.0

48.0

48.2

50.4

49.7

Cash flows to interest-bearing debt (%)

21.7

9.0

‒

‒

‒

Interest coverage ratio (times)

566.6

1,161.7

1,980.5

492.6‒

Notes: The above indicators are calculated as follows:
Equity ratio:
Equity capital / total assets
Market value-based equity ratio:
Market capitalization / total assets
Cash flow to interest-bearing debt:
Interest-bearing debt / cash flow from operating activities
Interest coverage ratio:
Cash flows from operating activities / interest payments* All indicators are calculated using consolidated financial data.
* Market capitalization is calculated by multiplying the number of shares outstanding at the fiscal year end (excluding treasury
shares) by the closing share price at the fiscal year end.
* Cash flow is “Cash flows from operating activities” shown on the consolidated statements of cash flows.
* Interest-bearing debt is all liabilities on which interest is paid shown under liabilities on the consolidated balance sheet.
Interest payments are “Interest paid” shown on the consolidated statement of cash flows.

(4) Business forecasts
In fiscal 2023, which ends March 31, 2023, the Group’s operating environment is likely to remain challenging, due mainly
to intensifying competition from companies in the same sector and from new market entrants from peripheral and other sectors.
Against this backdrop, the Group has formulated a new medium-term management plan, the ARTNATURE Challenge Plan,
and began to implement it in fiscal 2021. During the three years of the plan, the Group aims to enhance our position in existing
business fields and expand the reach of new businesses to build the foundation for a new ARTNATURE capable of opening up
the next phase in the Group’s history.
For fiscal 2023, we forecast consolidated net sales of ¥41,991 million, up 3.8% year on year, operating income of ¥2,105
million, down 30.3%, ordinary income of ¥2,155 million, down 29.1%, and net income attributable to owners of the parent
company of ¥1,137 million, down 5.6%.
(5) Basic policy for the distribution of profits and dividends for fiscal 2022 and fiscal 2023
ARTNATURE Group believes that returning profits to shareholders is one of the most important management issues. The
Company’s basic policy is to pay stable dividends to shareholders while ensuring it retains sufficient internal reserves toreinforce the Group’s management base and financial position and to invest in the future expansion of business.
In line with this policy, the Company will pay a full-year dividend of ¥28 per share for fiscal 2022, comprised of an interim
dividend of ¥14 per share and a year-end dividend of ¥14 per share.
For fiscal 2023, the Company plans to pay a full-year dividend of ¥28 per share, comprised of an interim dividend of ¥14 pershare and a year-end dividend of ¥14 per share.

3

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022

2. Management policies(1) Basic management policy
As a comprehensive hair consultancy business, ARTNATURE strives to aid all of our customers and address their concerns
about their hair by providing them with the highest-quality products and services that are tailored to their needs. Our
management philosophy is to foster a culture of hair that satisfies customers.
To ensure the realization of this philosophy, the Group is reinforcing its product development capabilities, upgrading its
manufacturing framework, and improving its sales service system in areas such as counseling, customer support and stylingskills, while also striving to operate its business in a way that earns the trust of shareholders, investors and all other stakeholders
by strengthening its compliance system and actively disclosing information about the Group.
(2) Management indicators and targets
The Group is working to expand its comprehensive hair consultancy business and boost profitability and capital efficiency
by increasing sales and promoting efficient management, and focuses on three key performance indicators: sales, ordinary
margin (ratio of ordinary income to net sales) and return on equity (ROE).
Our goal is to increase sales steadily by steadily upgrading our sales structure. We also aim to steadily increase the ordinary
margin by overhauling our earnings structure to create an efficient and effective framework for earnings. Regarding ROE, wewill make efficient use of the capital entrusted to us by shareholders with the goal of improving corporate value.
(3) Medium- and long-term management strategy
Based on the above management indicators and targets, the Group has formulated the ARTNATURE Challenge Plan, its new
three-year medium-term management plan that began to be implemented in fiscal 2021. Specifically, the Group will steadily
implement six priority challenge initiatives to build the foundations for a new ARTNATURE capable of opening up the next
phase in the Group’s history: (1) grow the Group’s earnings, (2) develop new business fields, (3) reinforce recruitment, (4)cultivate human resources, (5) encourage dialogue with capital markets, and (6) drive business innovation. Based on these
initiatives, the Group aims to achieve consolidated net sales of ¥41,991 million, an ordinary margin of 5.1%, and ROE of 4.7%
in fiscal 2023, which ends March 31, 2023.
(4) Issues to be resolved
In the domestic hair products and services market, the ARTNATURE Group’s main business field, we forecast rising demand
due to trends such as the aging of the population, delayed retirement, growth in the number of women in the workplace andrising interest in anti-aging treatments. However, we anticipate intensifying competition from companies in the same sector andfrom companies in peripheral sectors. In this environment, we plan to work on the following key issues to generate stable
growth and boost corporate value.
First, we will increase the number of customers in domestic and overseas markets. We will generate new demand by
developing and regularly launching the highest-quality products and services in line with customer needs, and by devising
advertising campaigns that resonate more closely with customers. In both the men’s category and the ladies’ category, our goal
is to generate stable growth by focusing on improving customer satisfaction to increase the number of true ARTNATURE fans,while also implementing a range of initiatives to strengthen customer retention. The ladies’ ready-made wigs business aims toincrease earnings by stepping up its efforts to provide personalized products and services to each customer. In hair dressing
product sales, we also plan to increase earnings by broadening the lineup with new products and widening the choice that we
provide, and by expanding sales channels, such as increasing the number of e-commerce sites that sell our products. In overseas
markets, we will work to expand our business by increasing brand awareness and implementing sales initiatives tailored to local
markets in China, Singapore, Thailand and Malaysia to capture potential demand.
Second, we will target business opportunities in new fields outside the Group’s existing businesses. We will continue to workto put new businesses on track, such as the affordable wig business, pharmaceutical sales business and medical support business,while also seeking M&A opportunities in Japan and overseas and launching new businesses as part of our efforts to establish
our presence in new fields that will drive the Group’s future growth.
Third, we aim to retain high-level human resources. We have developed a range of initiatives to increase the motivation of
all our employees and ensure they reach their maximum potential. We are implementing diversity management, including
acquiring Kurumin Mark certification as a company supporting childcare under the Act on Advancement of Measures to Support
Raising Next-Generation Children. Also, amid the current focus on workstyle reforms, we emphasize work-life balance throughinitiatives such as eliminating long overtime hours and providing support that enables employees to balance work with family
commitments, while also actively promoting health management. We plan to introduce more initiatives to foster a shared senseof unity with our employees and create more rewarding workplaces.
4

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
Fourth, we are working to enhance our ability to meet the diverse needs of our customers and strengthen the planning andmanagement capabilities of our head office departments. As of March 31, 2022, 1,832 employees, or roughly 80% of theCompany’s permanent employees, were qualified barbers or hairdressers. We aim to improve the basic capabilities of these
employees – their technical skills, customer service skills and product proposal capabilities – to better address customer needs
and cultivate human resources who empathize with and earn the trust of customers. It is our goal to cultivate a workforce of
employees working in non-sales divisions that are capable of formulating a wide range of business plans and managing theGroup companies. To develop experts in these fields, we will establish training programs and create a framework that supports
employees in their own education and improvement efforts.
Fifth, our goal is to increase the value of the ARTNATURE Group over the medium- and long-term. The Group is already
implementing a range of initiatives related to the SDGs, but we will also begin reducing the use of plastic in our business andbuild a new customer service framework, while also increasing dialogue with capital markets through IR activities and otherapproaches.
Sixth, we will switch to a business structure that enables the Group to generate stronger earnings. We will overhaul theGroup’s earnings structure and rigorously eliminate waste in all areas of our business to reduce fixed costs and lower the
breakeven point, resulting in an efficient and effective earnings structure. We will also drive innovation in our business byadopting paperless processes, systemization and other approaches to improve productivity.

3. Basic position on the selection of accounting standards
The Group uses Japanese accounting standards, as many of its shareholders, creditors, business partners and otherstakeholders are based in Japan, and there is limited need for the Group to procure funds from overseas.

5

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022

4. Consolidated financial statements and related notes(1) Consolidated balance sheets(Millions of yen)

AssetsCurrent assets
Cash and deposits
Accounts receivable – trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery equipment and vehicle
Accumulated depreciation
Machinery equipment and vehicle, net
LandConstruction in progress
Others
Accumulated depreciation
Others, net
Total property, plant and equipment
Intangible assets
Goodwill
OthersTotal intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Lease and guarantee deposits
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

6

As of March 31,
2021

As of March 31,
2022

19,073
2,914
22
2,394
172
1,084
930
(5)
26,586

19,546
3,066
23
3,050
182
1,195
964
(5)
28,021

13,199(8,444)
4,755
162
(111)
51
3,488
1
3,073
(2,694)378
8,674

13,604(8,825)
4,779
186
(126)
60
3,491
7
3,183
(2,827)
356
8,694

602
519
1,121

233
441
674

2,319
3,291
2,451
709
(235)
8,536
18,332
44,919

2,099
3,944
2,551
917
(393)
9,119
18,48846,510ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(Millions of yen)
As of March 31,
2021
Liabilities
Current liabilities
Accounts payable – trade
Accounts payable – other
Income taxes payable
Contract liabilities
Refund liabilities
Advances received
Provision for bonuses
Provision for directors’ bonuses
Provision for product warranties
Provision for point card certificates
OthersTotal current liabilities
Non-current liabilities
Net defined benefit liability
Asset retirement obligations
OthersTotal non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

7

As of March 31,
2022

327
1,947
1,053
‒
‒
6,464
996
130
31
107
1,088
12,147

320
2,288
929
1,378
475
6,502
1,053
145
36
‒
1,108
14,237

4,078
1,511
1,927
7,517
19,664

4,170
1,547
1,959
7,676
21,914

3,667
3,558
19,075(1,289)25,011

3,667
3,557
18,307(1,272)
24,260

96
(5)
(35)
55
180
8
25,25544,919

62
14
29
106
217
12
24,596
46,510ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(2) Consolidated statements of income and comprehensive income(Consolidated statements of income)(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Foreign exchange gains
Commission fee
Subsidy income
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Provision of allowance for doubtful accounts
Guarantee commission
OthersTotal non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Loss on valuation of investment securities
Total extraordinary losses
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent company

8Year ended
March 31, 2021
35,868
11,95623,911
21,9791,932

Year ended
March 31, 2022
40,437
12,69827,73924,719
3,020

53
29
13
168
45
310

46
83
13
19
56
219

8
180
30
17
237
2,005

‒
157
27
16
201
3,038

1
1

0
0

0
359
‒
359
1,647
1,001
(189)
811
835
(4)
840

0
545
171
716
2,322
1,312
(197)
1,114
1,207
3
1,204

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(Consolidated statements of comprehensive income)(Millions of yen)

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)
Owners of the parent company
Non-controlling interests

9

Year ended
March 31, 2021
835

Year ended
March 31, 2022
1,207

146
(42)
40
144
980

(33)
20
65
51
1,259

985
(4)

1,255
3

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(3) Consolidated statements of changes in net assets
Year ended March 31, 2021
(Millions of yen)
Shareholders’ equity
Capital stock
Balance at the beginning of theperiodCapital surplus

Retained earnings

3,558

19,141

3,667

Treasury shares

Total shareholders’equity(1,099)25,268Change of items during the period
Dividends from surplus

(906)

(906)

Net income attributable toowners of the parent company

840

840

Purchase of treasury shares(0)

Disposal of treasury shares

(206)

(206)

15

15

Net changes of items other thanshareholders’ equity
Total change of items during theperiod

‒

(0)

(65)

(190)

(257)

Balance at the end of the period

3,667

3,558

19,075(1,289)25,011

Accumulated other comprehensive income

Balance at the beginning of theperiodValuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustment

Remeasurements of defined
benefit plans

Total
accumulated
othercomprehensive
income

(49)

37

(76)

(89)

Subscription
rights toshares

Noncontrollinginterests

Total net
assets145

1325,337

Change of items during the period
Dividends from surplus(906)

Net income attributable toowners of the parent company

840

Purchase of treasury shares(206)

Disposal of treasury shares

15

Net changes of items other thanshareholders’ equity

146

(42)

40

144

34

(4)

174

Total change of items during theperiod

146

(42)

40

144

34

(4)

(82)

Balance at the end of the period

96

(5)

(35)

55

180

8

25,25510

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
Year ended March 31, 2022
(Millions of yen)
Shareholders’ equity
Capital stock
Balance at the beginning of theperiodCapital surplus

Retained earnings

3,558

19,075

3,667

Cumulative effects of changes inaccounting policies

Treasury shares

Total shareholders’equity(1,289)25,011(1,072)
3,667

Restated balance

3,558(1,072)18,002(1,289)23,938Change of items during the period
Dividends from surplus

(898)

(898)

Net income attributable toowners of the parent company

1,204

1,204

(0)

Disposal of treasury shares

17

16

Net changes of items other thanshareholders’ equity
Total change of items during theperiod

‒

(0)

305

17

321

Balance at the end of the period

3,667

3,557

18,307(1,272)

24,260

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities

Balance at the beginning of theperiod96

Foreigncurrencytranslation
adjustment

Remeasurements of defined
benefit plans

Total
accumulated
othercomprehensive
income

(35)

55

(5)

Subscription
rights toshares

Noncontrollinginterests

Total net
assets180

825,255

Cumulative effects of changes inaccounting policies
Restated balance(1,072)
96

(5)

(35)

55

180

8

24,182

Change of items during the period
Dividends from surplus(898)

Net income attributable toowners of the parent company

1,204
16

Disposal of treasury shares
Net changes of items other thanshareholders’ equity

(33)

20

65

51

37

3

92

Total change of items during theperiod

(33)

20

65

51

37

3

414

Balance at the end of the period

62

14

29

106

217

12

24,596

11

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(4) Consolidated statements of cash flows(Millions of yen)
Year ended
March 31, 2021
Cash flows from operating activities
Income before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors’ bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for point card certificates
Increase (decrease) in net defined benefit liability
Interest income
Interest expenses
Loss on retirement of non-current assets
Loss (gain) on sales of non-current assets
Decrease (increase) in notes and accounts receivable – trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable – trade
Loss (gain) on valuation of investment securities
Subsidy income
Increase (decrease) in advances received
OthersSubtotalInterest income received
Interest expenses paid
Income taxes paid
Income taxes refund
Subsidies received
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Long-term loan advances
Collection of long-term loans receivable
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
OthersNet cash provided by (used in) investing activities

12

Year ended
March 31, 2022

1,647

2,322

937

911

359

545

172

172

178

157

42

57

30

15

(6)

4

11

(107)

201

185

(53)

(46)

8

‒

0

0

(1)

(0)

(27)

(147)

(100)

(754)

109

(9)

‒

171

(168)

(19)

1,194

37

(26)

377

4,508

3,871

55

48

(8)

‒

(539)

(1,433)

48

0

168

19

4,232

2,505

(111)

(116)

374

115

(720)

(787)

54

0

(134)

(96)

(180)

‒

(50)

(150)

0

0

(78)

(170)

37

70

(76)

(50)

(885)

(1,183)

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(Millions of yen)
Year ended
March 31, 2021
Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Repayments of lease obligations
Purchase of treasury shares
Cash dividends paid
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
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

13

3,000

Year ended
March 31, 2022‒

(3,000)

‒

‒

(26)

(206)

‒

(905)

(898)

(1,112)

(924)

12

70

2,247

468

16,73618,984

18,984

19,452

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(5) Notes on consolidated financial statements(Notes on the going concern assumption)
There is no related information.
(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition, etc.)
The Group has decided to apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31,
2020; hereinafter the “Revenue Recognition Accounting Standard”), etc. from the beginning of the fiscal year under review
and recognize revenue from goods or services which the Group promised to provide at an amount expected to be received in
exchange for the goods or services at the time when control over the promised goods or services has been transferred to acustomer. Major changes as a result of the application are as follows.
(1) Sales of hair-addition products
With regard to sales of hair-addition products, in the past we recognized revenue for unused hair-addition products at thetime of sale and revised the amount if products were returned subsequently. However, for the products that are expected tobe returned, we have changed it to a method of not recognizing revenue at the time of sale but recognizing refund liabilities
at the amount of consideration received for the products, in accordance with the provisions for variable consideration.
(2) Periodic check service of custom-made wigs for ladies and ready-made wigs for ladies
For the periodic check service of custom-made wigs for ladies and ready-made wigs for ladies, in the past we recognizedrevenue including consideration for the service at the time of sale of products, but we have changed it to a method of
identifying the service separately from the sale of products and recording net sales when we provide customers with thecheck service.
(3) Points
For points given to customers at the time of selling products and providing services, in the past we recorded unused points
which were expected to be used in the future as provision for point card certificates and recognized expenses, but we havechanged it to a method of identifying the given points as performance obligations separately from the sale of products andthe provision of services and recognizing them as net sales when customers used the points (or when the points disappeared).
The application of the Revenue Recognition Accounting Standard follows the provisional treatment provided for in theproviso of Paragraph 84 of the Revenue Recognition Accounting Standard. The cumulative effects in case of retroactively
applying the new accounting policy to before the beginning of the fiscal year under review are adjusted in retained earnings
at the beginning of the fiscal year, and the new accounting policy is applied from this initial balance.
As a result, net sales in the fiscal year under review decreased ¥199 million, and operating income, ordinary income andincome before income taxes decreased ¥199 million, respectively. In addition, the beginning balance of retained earnings
decreased ¥1,072 million.
As a result of applying the Revenue Recognition Accounting Standard, we have decided to present the provision for point
card certificates and others, which were presented in current liabilities in consolidated balance sheet for the previous fiscal
year, by including them in contract liabilities, refund liabilities and others of current liabilities from the fiscal year underreview. However, in accordance with the provisional treatment stipulated in Paragraph 89-2 of the Revenue Recognition
Accounting Standard, no reclassification has been made to the consolidated financial statements for the previous fiscal year
based on the new presentation method.
(Application of Accounting Standard for Fair Value Measurement, etc.)
The Group has decided to apply the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4,
2019; hereinafter the “Fair Value Measurement Accounting Standard”), etc. from the beginning of the fiscal year under review
and apply the new accounting policy stipulated in the Fair Value Measurement Accounting Standard, etc. according to theprovisional treatment provided for in Paragraph 19 of the Fair Value Measurement Accounting Standard and Paragraph 44-2of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019) into the future. The applicationof the Fair Value Measurement Accounting Standard, etc. has no impact on the financial statements.
(Segment information, etc.)
Segment information
1. Overview of reportable segments
The Group’s reportable segments are the components of the Group for which separate financial information is available.
These segments are regularly reviewed to enable the Company’s Board of Directors to decide how to allocate resources
and assess operating performance.
The Group develops business strategies and conducts business activities related to hair products and services forgeneral customers based on the gender of the customer.
Consequently, the Group has classified its operations into three reportable segments: the men’s business, the ladies’
14

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
business and the ladies’ ready-made wigs business. In the men’s business, the Company supplies male customers withcustom-made wigs and other products and services. In the ladies’ business, the Company supplies female customers withcustom-made wigs and other products and services. In the ladies’ ready-made wigs business, the Company supplies
female customers with ready-made wigs and other products and services.
2. Method used to calculate sales, income (loss), assets, liabilities and other items by reportable segment
Accounting policies for the reportable segments are the same as those described in “Basic important matters for
preparing the consolidated financial statements.”
Intersegment sales are based on prices determined through negotiations.
As stated in “Changes in Accounting Policies,” the Company began applying the Revenue Recognition AccountingStandard, etc., and changed the method of accounting in connection with revenue recognition from the consolidated
financial statements for the fiscal year under review. Accordingly, the Company changed the method of calculating
income and losses for its business segments. As a result, net sales in the men’s business for the fiscal year under review
were decreased ¥25 million, and the segment income was reduced ¥25 million, compared with the values obtained using
the previous method. Net sales in the ladies’ business were reduced ¥189 million, and the segment income was reduced¥189 million; net sales in the ladies’ ready-made wigs business were reduced ¥7 million, and the segment income was
reduced ¥7 million; and net sales in the others business were increased ¥22 million, and the segment income was increased¥22 million, all compared with the values obtained using the previous method.
3. Information regarding sales, income (loss), assets, liabilities and other items by reportable segment
Year ended March 31, 2021
(Millions of yen)
Reportable segment
Ladies’Ladies’ready-madebusinesswigs
businessMen’sbusiness
Net sales
Sales toexternalcustomers
Intersegment
sales andtransfers
Total
Segment income

Others
Note 1

Total

Total

Carried on
consolidated
Adjustment
financial
Note 2statements
Note 3

21,322

9,344

3,715

34,382

1,485

35,868‒35,868

‒

‒

‒

‒

1,831

1,831

(1,831)‒

21,322
13,590

9,344
6,038

3,715
3,227

34,38222,857

3,316
1,128

37,69923,985(1,831)(73)

35,86823,911

15

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
Year ended March 31, 2022
(Millions of yen)
Reportable segment
Ladies’Ladies’ready-madebusinesswigs
businessMen’sbusiness
Net sales
Sales toexternalcustomers
Intersegment
sales andtransfers
Total
Segment income

Others
Note 1

Total

Total

Carried on
consolidated
Adjustment
financial
Note 2statements
Note 3

22,66011,786

4,441

38,8881,548

40,437‒40,437

‒

‒

‒

‒

2,230

2,230

(2,230)‒22,66014,775

11,786
8,106

4,441
3,645

38,88826,527

3,779
1,331

42,667
27,858(2,230)(119)

40,437
27,739Notes: 1. Others is not a reportable segment and mainly includes manufacturing subsidiaries.
2. Details of adjustments are as follows:
Segment income
Year ended March 31, 2021
Intersegment eliminations*(73)(Millions of yen)
Year ended March 31, 2022
(119)

Total
(73)
(119)
* Intersegment eliminations are the elimination of inventory asset adjustments related to intersegment transactions, etc.
3. Segment income has been adjusted to reconcile with the gross profits in the consolidated financial statements.
4. Assets and liabilities have not been shown, as they are not allocated to each segment.
5. Adjustments to reconcile total segment income for reportable segments with operating income in the consolidated financial
statements(Millions of yen)
IncomeYear ended March 31, 2021
Year ended March 31, 2022
Total for reportable segments
Others Note 1
Total
Adjustment Note 2
Gross profit in consolidated financial statements
Selling, general and administrative expenses
Operating income in consolidated financial statements

16

22,857
1,128
23,985(73)

26,5271,331
27,858(119)

23,911

27,73921,97924,719

1,932

3,020

ARTNATURE INC. (7823) Financial Results for the Fiscal Year Ended March 31, 2022
(Per share information)(Yen)
Year ended March 31, 2021
Net assets per share
Net income per share
Diluted net income per share

Year ended March 31, 2022
781.00 Net assets per share
25.99 Net income per share
25.75 Diluted net income per share

758.4737.51
37.09

Note: The basis for calculating net income per share and diluted net income per share is as follows:Year ended March 31, 2021

Year ended March 31, 2022

840

1,204

–

–

840

1,204

32,34032,110

–

–

300

356

(300)

(356)

Net income per share
Net income attributable to owners of the parent company(millions of yen)Amounts not attributable to owners of common stock(millions of yen)
Net income attributable to owners of the parent company
associated with common stock (millions of yen)
Average number of shares of common stock during fiscal year
(thousands of share)

Diluted net income per share
Adjustment to net income attributable to owners of the parent
company (millions of yen)
Increase in number of shares of common stock (thousands ofshare)[of which, subscription rights to shares]
Summary of residual shares not included in calculations ofdiluted net income per share due to no dilutive effect––Note: 1. Treasury shares, which are excluded from the number of shares issued and outstanding at the end of the fiscal year for the purposesof calculating “Net assets per share,” include shares of the Company held by Custody Bank of Japan, Ltd. (trust account E)(528,000 shares as of March 31, 2021, 515,400 shares as of March 31, 2022).
In addition, treasury shares, which are excluded from the average number of shares during the fiscal year for the purposes ofcalculating “Net income per share” and “Diluted net income per share,” include shares of the Company held by Custody Bank ofJapan, Ltd. (trust account E) (513,428 shares during fiscal year ended March 31, 2021, 522,898 shares during fiscal year ended
March 31, 2022).
2.As stated in “Changes in Accounting Policies,” the Company has applied the Accounting Standard for Revenue Recognition (ASBJ
Statement No. 29, March 31, 2020), etc. effective from the beginning of the fiscal year under review and has followed theprovisional treatment provided for in the proviso of Paragraph 84 of the Revenue Recognition Accounting Standard. As a result,net assets per share, net income per share and diluted net income per share for the fiscal year under review decreased by ¥6.20,¥6.20 and ¥6.13 respectively.

(Significant subsequent events)
There is no related information.

17