Flash Report on the Consolidated Financial Results
for the First Half of the Fiscal Year Ending February 28, 2021
October 8, 2020
Listed Company Name: Lawson, Inc.
Tokyo Stock Exchange (First Section)
Code No.: 2651
(URL http://www.lawson.jp/en/ir)
Company Representative: Sadanobu Takemasu, President and CEO, Representative Director,
Chairman of the Board
Contact: Tomoki Takanishi, Deputy Senior Vice President, Financial Administration Division Director
Tel.: +81-3-5435-2773
Scheduled date for submission of quarterly securities report: October 13, 2020
Scheduled date for payment of dividend: November 10, 2020
Supplementary materials for quarterly financial results: Yes
Holding of presentation of quarterly results: Yes(Amounts less than one million yen are truncated)
1. Consolidated operating results for the first half ended August 31, 2020 (from March 1, 2020 to August 31,
2020)(1) Consolidated operating results (cumulative)
Note: Percentages represent increases (decreases) compared with the corresponding period of the previous fiscal
year.
Gross operating
revenue
Millions%of yen322,890 (12.5)
369,131
4.9

For the first half ended

August 31, 2020
August 31, 2019
Note: Comprehensive income:Operating income

Ordinary income

Millionsof yen16,69036,763

Millionsof yen14,86235,147%(54.6)
6.6

For the first half ended August 31, 2020
For the first half ended August 31, 2019%(57.7)
4.8

6,758 million yen
18,687 million yen

Profit per share

Diluted profit per share

Yen
33.05
200.95Yen
33.03
200.83For the first half ended
August 31, 2020
August 31, 2019

Profit attributable toowners of parent
Millions%of yen3,307(83.6)
20,107
12.1(63.8)%(2.8)%(2) Consolidated financial position

Millions of yen

Millions of yen

Shareholders’ equity
ratio%

August 31, 2020

1,294,573

274,417

20.9

February 29, 2020

1,357,732

275,347

20.0

As of

Total assets

Net assets

Reference: Shareholders’ equity:
As of August 31, 2020
As of February 29, 2020

270,028 million yen
270,877 million yen

2. Dividends
1Q
Yen
2019 fiscal year

－

1H
Yen
75.00

2020 fiscal year

－

75.00

Annual dividends per share
3Q
Year-end
Yen
Yen
－
75.00

Total
Yen
150.0075.00

150.002020 fiscal year (forecast)
Note: Revision of the most recent dividends forecast: None－

3. Forecast of consolidated operating results for the 2020 fiscal year ending February 28, 2021 (from March 1,
2020 to February 28, 2021)
Note: Percentages represent increases (decreases) compared with the corresponding period of the previous fiscal
year.
Gross operating
Profit attributable Profit per
Operating income
Ordinary income
revenueto owners of parent
shareMillions
Millions
Millions
Millions
%
%
%
%
Yen
of yenof yenof yenof yen2020 fiscal year
670,000(8.2)
35,000(44.4)
30,000(46.8)
5,000(75.1)
49.96
Note: Revision of the most recent consolidated operating results forecast: None
4. Notes(1) Change in significant subsidiaries during the quarterly consolidated period (Changes in certain specified
subsidiaries resulting in changes in scope of consolidation): None
Added: None

Excluded: None

(2) Adoptions of specific accounting methods for preparing quarterly financial statements: None
(3) Changes in accounting policies, changes in accounting estimates or restatements
1. Changes in accounting policies associated with revision in accounting standards: None
2. Changes in accounting policies other than 1. above: None
3. Changes in accounting estimates: None
4. Retrospective restatements: None
(4) Number of shares outstanding (common stock)
1. Number of shares outstanding at the end of period (including treasury shares)
As of August 31, 2020:
100,300,000
As of February 29, 2020:
2. Number of treasury shares at the end of period
As of August 31, 2020:
232,805

100,300,000

As of February 29, 2020:

237,762

3. Average number of shares during the period (cumulative three months)
As of August 31, 2020:
100,064,618
As of August 31, 2019:

100,060,603

Note: This flash report is exempt from quarterly review.
Note: Descriptions on appropriate use of financial performance forecasts and other special notes
Forward-looking statements presented herein such as financial forecasts are based on currently available
information and certain presumptions deemed to be reasonable as of the date of announcement. The
achievement of said forecasts cannot be guaranteed. Actual results may be materially different from those in
the forecast as a result of various factors. For preconditions of these financial forecasts and notes concerning
their use, please refer to “1. Qualitative Information Regarding Quarterly Financial Results, (3) Explanation
Regarding Forward-looking Statements” on page 8.

Contents

1. Qualitative Information Regarding Quarterly Financial Results ·····························································

2(1) Explanation Regarding Consolidated Operating Results ······································································

2(2) Explanation Regarding Consolidated Financial Position ·····································································

8(3) Explanation Regarding Forward-looking Statements ···········································································

8

2. Consolidated Financial Statements and Main Notes ··················································································

9(1) Consolidated Balance Sheet ···············································································································

9(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ·················

11

Consolidated Statement of Income ······································································································

11

Consolidated Statement of Comprehensive Income ·············································································

12(3) Consolidated Statement of Cash Flows ·······························································································

13(4) Notes to Consolidated Financial Statements ························································································

14(Going Concern Assumption) ·············································································································

14(Notes to Significant Changes in the Amount of Shareholders’ Equity) ···············································

14(Additional Information) ····················································································································

141

1．Qualitative Information Regarding Quarterly Financial Results(1) Explanation Regarding Consolidated Operating Results
During the first half of fiscal 2020, six months from March 1 to August 31, 2020, the novel coronavirus
disease (COVID-19) spread across the world. In Japan, a temporary state of emergency was declared, exerting
immense pressure on the nation’s economic and social activities and the daily lives of the public, withbusinesses closing and people staying at home in response to requests from the government. The epidemic
also had a considerable effect on the trends in customer visits and buying patterns, significantly reducing thenet sales of the Lawson Group.
As a result, for the first half of fiscal 2020 on a consolidated basis, gross operating revenue decreased to322,890 million yen (down 12.5% from previous fiscal year), operating income decreased to 16,690 million
yen (down 54.6% from previous fiscal year) and ordinary income decreased to 14,862 million yen (down
57.7% from previous fiscal year). Profit attributable to owners of parent decreased to 3,307 million yen (down
83.6% from previous fiscal year).
Against such a backdrop, we considered what Lawson could do, and took rigorous precautionary measures
to protect our customers and employees from infection and flexibly responded to changing customer needs
while continuing with our business operations. Notwithstanding the increasingly challenging businessenvironment surrounding Lawson, Inc. and its franchise stores, our headquarters and franchise stores aremaking unified efforts toward our shared goal, “Creating Happiness and Harmony in Our Communities,”
under Lawson’s Way, our new action guideline set forth this fiscal year.
Furthermore, we also focused on improving our group-wide internal control system and addressing
operating risks based on the 2020 Basic Policy for Improvement of Internal Control Systems. We willcontinue promoting internal control going forward.

Operating results by business segment were as follows.
It should be noted that new reportable segments have been applied since the first quarter of fiscal 2020 andthat the comparison and analysis of figures for the six months from March 1 to August 31, 2020 were basedon the new reportable segments.
(Domestic Convenience Store Business)
Owing to the prevalence of remote working and reduced opportunities to go out amid the spread of COVID19, the number of customers and sales decreased significantly at LAWSON stores. The state of emergency waslifted in late May, and signs of recovery in store sales were seen in June. However, July saw a marked rising
trend in the number of new cases of COVID-19 infections, which prompted the government to request the
public to refrain from visiting nightlife districts and traveling across prefectures, increasing the alert level. In
addition, heavy rains hit a vast area spanning west and east Japan in July, and the rainy season was also
prolonged. Such negative factors had an immense impact on customer visits. Against this backdrop, asprecautionary store measures against COVID-19, we installed transparent plastic barriers at cash registers;
ensured social distancing; encouraged customers to visit our stores during less crowded hours; and made sureemployees practiced rigorous hand washing and gargling, disinfected their hands with alcohol-based

2

disinfectant, and wore face masks.
In store operations, we are striving to establish LAWSON stores as convenience stores endorsed by all ourcustomers. To this end, we are continuing to implement measures to achieve our three commitments, namely,
to pursue compelling taste, to be considerate to people, and to be environmentally friendly. By developing
distinctive products that are compellingly delicious and health-conscious, we are aiming to further reinforce
our product lineup, while rigorously working to offer thoughtful customer service at our stores and ensure
environmental friendliness by reducing food waste, the use of plastics and CO2 emissions, etc.
Lawson Sanin, Inc., a wholly-owned subsidiary of Lawson, Inc., was merged into Lawson, Inc. effective
March 1, 2020.

[Store Operations]
In store operations, we continued to focus on reinforcing adherence to the Three Essential Practices, whichemphasizes (1) serving customers courteously; (2) offering a merchandise assortment focused on basic itemswith high demand; and (3) keeping our stores and communities clean.

As part of Japan’s endeavor to protect

the global environment, the government required store operators nationwide to charge for plastic shopping bags
starting July 2020. In response, LAWSON stores started providing the bags for three yen each and replaced thebags with those containing 30% vegetable-derived materials in their ongoing efforts to reduce the use of plastic.

[Merchandising and Service Strategies]
Net sales decreased significantly owing to a decline in the number of customers. However, as a result of
expanding the assortment of fresh vegetables and frozen foods in response to the rise in home cooking insteadof dining out, sales of such products increased. We will continue with our efforts to create stores that cater tocustomers’ lifestyles and needs that are changing in line with the spread of COVID-19 infection.
In the rice range, we launched three new products using some unique ingredients in our “Kinshari Onigiri
Rice Ball” series— “Sweet-soy-sauce-grilled Kobe beef” and “Green-chili-miso-flavored Kirishima Kurobuta
pork”—which were hugely popular.
In the counter fast food range, “GU-BO,” a new hot snack range that can be enjoyed in a variety of ways,
and a limited-time-only product, Karaage-Kun series, were in high demand.
In our dessert range, we developed and released more “novel dessert” products, which were well received
along with our BASCHEE Basque-style cheesecake and other regular products, contributing to sales of our“Uchi Café SWEETS” series.
The Uber Eats food delivery service, which Lawson introduced in August 2019 initially within Tokyo, isavailable at more than 1,000 stores in 12 prefectures nationwide as of August 2020.

3

[Breakdown of Sales by Merchandise Category at Chain Stores in Domestic Convenience Store Business]
Fiscal year

Product group
Processed foods

Previous fiscal year
From March 1, 2019
To August 31, 2019
Sales
Percentage(Millions of yen)of total (%)
634,499
52.8

Current fiscal year
From March 1, 2020
to August 31, 2020
Sales
Percentage(Millions of yen) of total (%)
583,479
53.4

Fast foods

281,405

23.4

233,105

21.3

Daily delivered foods

181,146

15.1

176,478

16.2

Nonfood products

104,924

8.7

98,8349.1

1,201,975

100.0

1,091,898

100.0

Total

[Store Development]
In opening new stores, the Group continued to focus on developing profitable stores.
During the first half under review, the total number of LAWSON, NATURAL LAWSON and LAWSONSTORE100 stores opened in Japan stood at 236 stores. Meanwhile, we closed a total of 180 such stores in the
country as a result of shutting down stores with low earnings and for other reasons. As of the end of August
2020, the total number of domestic stores was 14,500.*
In an effort to establish convenience store models catered to an aging population and a trend toward selftreatment, we are building partnerships with dispensing pharmacy and drug store chains to operate healthcareoriented LAWSON stores that offer over-the-counter pharmaceuticals and prescription drugs, as well as a wider
assortment of cosmetics and daily necessities than conventional LAWSON stores. The number of stores
offering non-prescription drugs has reached 242 stores (includes 52 pharmacy LAWSON stores equipped withdrug-dispensing pharmacies) as of the end of August 2020. Moreover, the number of stores offering nursing
care consultation services has reached 25 as of the end of August 2020. Furthermore, we have also been
expanding our chain of “in-hospital LAWSON stores,” which feature strengthened focus on medical, sanitary,
nursing and rehabilitation supplies in addition to merchandise and services offered at standard convenience
stores. The number of such stores has reached 333 as of the end of August 2020. Building on our expertisedeveloped through operation of in-hospital LAWSON stores, we will continue to support the lives of all peopleinteracting with hospitals.
With the aim of supporting our customers’ beauty, health, and comfortable lifestyles, our NATURALLAWSON stores offer an exclusive assortment of items including original products adopting select ingredients
as well as products produced in collaboration with renowned brand names. Meanwhile, our LAWSONSTORE100 meets customers’ needs with a wide-ranging assortment of products sold at the value-for-money
price of 100 yen, including fresh fruit and vegetables, daily delivered fresh foods, prepared dishes, beverages,
and daily necessities. As of the end of August 2020, we operate 146 NATURAL LAWSON stores and 687
LAWSON STORE100 stores.
* The numbers of store openings and closings and total number of stores in Japan include stores operatedby Lawson, Inc. and equity-method affiliates, Lawson Kochi, Inc., Lawson Minamikyushu, Inc. and
Lawson Okinawa, Inc.

4

[Change in the Total Number of Domestic Stores]
Total stores as ofFebruary 29, 2020

Change during
periodTotal stores as ofAugust 31, 2020

13,557110

13,667

NATURAL LAWSON

145

1

146

LAWSON STORE100

742

(55)

687

14,44456

14,500LAWSON

Total[Number of LAWSON stores by prefecture (As of August 31, 2020)]
Prefecture

Numberof stores

Hokkaido683

Ibaraki

225

Kyoto

324

Ehime

213

Aomori

275

Tokyo

1,701

Shiga

155

Tokushima

135

Akita

184

Kanagawa

1,082

Nara

138

Kochi

139

Iwate

180

Shizuoka283

Wakayama

152

Fukuoka

517

Miyagi257

Yamanashi

135

Osaka

1,111

Saga

75

Yamagata

114

Nagano

174

Hyogo

662

Nagasaki

113

Fukushima

166

Aichi

727

Okayama

208

Oita

192

Niigata

227

Gifu

183

Hiroshima

247

Kumamoto

160

Tochigi

201

Mie

137

Yamaguchi

119

Miyazaki

109

Gunma

245

Ishikawa

105

Tottori

139

Kagoshima

198

Saitama688

Toyama187

Shimane144

Okinawa

243

Chiba

605

Fukui

110

Kagawa133

Total(domestic)

14,500Prefecture

Numberof stores

Prefecture

Numberof stores

Prefecture

Numberof stores(Note) These figures include stores operated by Lawson, Inc. and equity-method affiliates, Lawson Kochi,Inc., Lawson Minamikyushu, Inc. and Lawson Okinawa, Inc.

[Other]We jointly develop products with regional business operators nationwide that have been affected by COVID19. Through such initiatives, we aim to support local businesses and producers through our LAWSON stores.
As part of our measures to enhance the financial stability of our franchise stores, we are proceeding with a rangeof short-, medium- and long-term initiatives to support them with multiple store ownership, store manager
development, and measures for new franchise owners. In addition, we provide support for stores facing
considerable sales declines due to the spread of COVID-19, restrictions on operating hours or temporary closures.
Our aim is to further improve the profits generated by franchise stores and strengthen our partnerships with them.

As a result, Domestic Convenience Store Business posted gross operating revenue of 212,735 million yen(down 12.3% from previous fiscal year) and segment profit of 13,752 million yen (down 53.5% from previous
fiscal year).

5

(Seijo Ishii Business)
At stores of Seijo Ishii, a high-end supermarket chain offering quality foods, we provide our customers withwell-selected, safe, and reliable foods. The number of directly operated Seijo Ishii stores reached 162 as of theend of August 2020. On the back of heightened demand at supermarkets amid the spread of COVID-19, demandfor perishables including fruits and vegetables, meat and fish grew markedly, resulting in strong overall sales. By
continuing to leverage the company’s strengths including its product development expertise, know-how acquired
as a manufacturing retailer, and retailing techniques, we will endeavor to enhance the brand capacity of Seijo Ishii.

As a result, Seijo Ishii Business posted gross operating revenue of 49,824 million yen (up 10.4% from previous
fiscal year) and segment profit of 4,819 million yen (up 24.1% from previous fiscal year).

(Entertainment-related Business)
With regard to our Entertainment-related Business, the ticketing business of Lawson Entertainment, Inc., weexperienced a precipitous drop in ticket transaction value as a result of event cancellations and postponements
owing to the spread of COVID-19. Hosting of large-scale events continues to be restricted, but we are striving to
expand the ticket transactions to live streaming events by prominent artists, along with tickets for leisure facilities
and sports events that have resumed. In our product sales business, a total of 57 stores are in operation nationwide
as of August 31, 2020, including our mainstay HMV stores dedicated to selling music and video software,
HMV&BOOKS, which markets books, CDs and DVDs, and HMB record shop stores specializing in analog
records.
United Cinemas Co., Ltd., an operator of cinema complexes, resumed operations of its theaters in phases
following the lifting of the state of emergency declaration. As of August 31, 2020, all 43 sites nationwide offering
389 screens including those operated on commission are in operation while taking rigorous measures to protect
their customers and employees from infection.

As a result, Entertainment-related Business posted gross operating revenue of 24,992 million yen (down 44.5%
from previous fiscal year) and segment loss of 1,037 million yen (segment profit was 3,681 million yen in previous
fiscal year).
(Financial Services Business)
With respect to our Financial Services Business, in our ATM business, the foundation of our banking business,
we expanded our network of financial institution partners, while working to expand the ATM service of Lawson
Bank, Inc.
As of the end of August 2020, the number of ATMs installed nationwide reached 13,465 (up 112 from previous
fiscal year), with each ATM used 41.8 times a day on average, decreasing as a result of the decline in the numberof customers visiting LAWSON stores due to the spread of COVID-19. The total number of our financial
institution partners was 126 nationwide (up 2 from previous fiscal year), including online banks.
By harnessing Lawson Bank’s ATMs and their transaction network, we are striving to enhance the bank’s
functions and convenience. In June 2020, we started offering an “instant bank account settlement service,” in6

which money can be withdrawn from a user’s bank account to top up a mobile payment app. Furthermore, othernew services have been launched including the “ATM charge service,” where cash can be charged to the user’s
mobile payment app at an ATM, and the “smartphone ATM service,” which allows the user to deposit andwithdraw cash at an ATM without using the user’s bank card by reading a QR code with the bank’s smartphoneapp.

As a result, Financial Services Business posted gross operating revenue of 15,810 million yen (down 8.4% fromprevious fiscal year) and segment profit of 740 million yen (down 41.3% from previous fiscal year).
(Overseas Business)
With regards to Overseas Business, the Group’s operating companies opened LAWSON stores in the People’s
Republic of China, Thailand, Indonesia, the Philippines, and the United States of America (Hawaii).
In the People’s Republic of China, we have expanded mainly into Shanghai, as well as into Chongqing, Dalian,Beijing, Wuhan, Hefei, Changsha, Shenyang, and other cities. In August 2020, we advanced into Tangshan, Hebei
province. The number of LAWSON stores in the entire country reached 2,854 as of the end of August 2020.
In response to the spread of COVID-19, we closed some stores or shortened their opening hours overseas, but
normal operations at almost all stores have now resumed.

[Distribution of LAWSON Brand Stores Overseas by Region]
Country/Region

Number of stores(As of February 29,
2020)

Changeduring fiscal
year

Number of stores(As of August 31,
2020)

1,574

20

1,594

China

Shanghai and surrounding area

China

Chongqing

235

49

284

China

Dalian

192

27

219

China

Beijing and surrounding area

153

27

180

China

Shenyang

26

27

53

China

Wuhan

401

13

414

China

Hefei

50

23

73

China

Changsha

15

22

37

Thailand

133

7

140

Indonesia

72

(4)

68

Philippines

65

1

66

2

―

2

2,918

212

3,130

United States of America

Hawaii

Total

Note: The number of stores in Beijing and surrounding area includes the number of stores in Tangshan.

As a result, Overseas Business posted gross operating revenue of 24,548 million yen (up 2.1% from previous
fiscal year) and segment loss of 1,371 million yen (down 18.6% from previous fiscal year).

7(2) Explanation Regarding Consolidated Financial Position① Assets, liabilities and net assets at the end of the first half of fiscal year 2020
Current assets decreased by 47,323 million yen from the end of the previous fiscal year to 589,373 million
yen, mainly reflecting a decrease of 16,717 million yen in cash and deposits and a decrease of 14,280 million
yen in current assets-other due to the movement in call loans for banking business. Non-current assets
decreased by 15,835 million yen from the end of the previous fiscal year to 705,199 million yen, mainlyreflecting decreases of 8,841 million yen in property and store equipment, 5,470 million yen in intangible
assets and 1,523 million yen in investments and other assets. Consequently, total assets decreased by 63,159
million yen from the end of the previous fiscal year to 1,294,573 million yen.
Current liabilities increased by 27,189 million yen from the end of the previous fiscal year to 589,153
million yen, mainly reflecting an increase of 87,950 million yen in current liabilities-other due to the
movement in call money for banking business, and a decrease of 50,924 million yen in deposits received.
Non-current liabilities decreased by 89,418 million yen from the end of the previous fiscal year to 431,002
million yen, mainly reflecting a decrease of 80,000 million yen in long-term loans payable. Consequently,
total liabilities decreased by 62,229 million yen from the end of the previous fiscal year to 1,020,156 million
yen.
Net assets decreased by 930 million yen from the end of the previous fiscal year to 274,417 million yen,mainly reflecting a decrease of 4,459 million yen in retained earnings and an increase of 3,786 million yen invaluation difference on available-for-sale securities. Consequently, shareholders’ equity ratio was 20.9%, up
from 20.0% as of the end of the previous fiscal year.
② Cash flows during the first half of fiscal year 2020
Cash and cash equivalents at August 31, 2020 decreased by 16,717 million yen from the end of the previous
fiscal year to 326,865 million yen.
Net cash provided by operating activities was 118,353 million yen, a decrease of 17,684 million yen fromthe corresponding period of the previous fiscal year, mainly because of the movement in deposits received
and call money for banking business.
Net cash used in investing activities was (17,779) million yen, a decrease of (8,423) million yen from thecorresponding period of the previous fiscal year, mainly because of decreases in purchase of property andstore equipment and guarantee deposits.
Net cash used in financing activities was (117,194) million yen, an increase of (27,687) million yen fromthe corresponding period of the previous fiscal year, mainly because of a decrease in long-term loans payable
and the movement in short-term loans payable.

(3) Explanation Regarding Forward-looking Statements
Regarding the financial forecasts for the full fiscal year ending February 28, 2021, the financial forecasts
remain unchanged from those announced on July 9, 2020.

8

2. Consolidated Financial Statements and Main Notes(1) Consolidated Balance Sheet
As of February 29, 2020 and August 31, 2020
(Millions of yen)

AssetsCurrent assets:
Cash and deposits
Accounts receivable-due from franchised stores
Lease receivables
Merchandise
Accounts receivable-other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property and store equipment:
Buildings and structures, net
Tools, furniture and fixtures, net
Leased assets, net
Other, net
Total property and store equipment
Intangible assets:
Software
Goodwill
Trademark right
Other
Total intangible assets
Investments and other assets:Long-term loans receivable
Guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

9Previous fiscal year
As of
February 29, 2020

Current 1st Half
As of
August 31, 2020

343,587
47,366
17,876
20,985
159,12247,802(42)636,697

326,869
40,23017,25421,019150,508
33,521(30)
589,373

201,526
20,093
146,235
25,082392,938

201,461
18,799140,197
23,638384,096

45,151
42,381
8,849
680
97,06342,17140,1998,541
680
91,593

42,488107,193
34,37847,604(630)
231,033
721,035
1,357,732

42,548104,098
30,69552,750(584)
229,509705,199
1,294,573

(Millions of yen)

Liabilities
Current liabilities:
Accounts payable-trade
Short-term loans payable
Lease obligations
Accounts payable-other
Income taxes payable
Deposits received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities:
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for retirement benefits to executive officers
and audit and supervisory board members
Net defined benefit liability
Asset retirement obligations
Other
Total 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
Revaluation reserve for land
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

10Previous fiscal year
As of
February 29, 2020

Current 1st Half
As of
August 31, 2020

129,397
39,85045,61094,848
7,915
193,096
4,667
46,577561,963

137,388
36,35044,34187,024
3,177
142,171
4,171
134,527
589,153

310,000
136,665521

230,000
127,537
503

282

255

16,24535,335
21,370520,421
1,082,385

16,54735,55920,599431,0021,020,156

58,50644,605
165,081(1,011)
267,181

58,50644,608160,621(990)
262,746

1,496
(207)
3,341
(934)
3,695
255
4,214
275,347
1,357,732

5,282
(207)
3,051
(844)
7,282
333
4,054
274,417
1,294,573

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)For the first half of the fiscal year ended February 29, 2020 and the first half of the fiscal year ending February
28, 2021(Millions of yen)

Gross operating revenue
Net sales
Cost of sales
Gross profit
Operating revenue:
Income from franchised stores
Other operating revenue
Total operating revenue
Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Share of profit of entities accounted for using equity
methodEmployment adjustment subsidy due to novel
coronavirus disease
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Loss on cancellation of leases
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses:
Loss on retirement of non-current assets
Impairment loss
Loss on novel coronavirus disease
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Profit (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent

11

Previous 1st Half
From March 1, 2019
to August 31, 2019
369,131
151,426
102,794
48,631

Current 1st Half
From March 1, 2020
to August 31, 2020
322,890
129,683
88,65841,025

160,610
57,095
217,705
266,337
229,573
36,763145,908
47,298193,206
234,232
217,541
16,690

336

327

522

270

―

409

998
1,858

1,092
2,100

1,975
770
727
3,474
35,147

1,943
957
1,028
3,929
14,862

163
163

―
―

2,253
1,870
―
554
4,678
30,632
9,932
644
10,577
20,055(51)
20,107

1,832
2,099
2,910
635
7,478
7,383
2,231
1,954
4,185
3,198
(109)
3,307

(Consolidated Statement of Comprehensive Income)For the first half of the fiscal year ended February 29, 2020 and the first half of the fiscal year ending February
28, 2021(Millions of yen)

Profit (loss)
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 parent
Non-controlling interests

12

Previous 1st Half
From March 1, 2019
to August 31, 2019
20,055Current 1st Half
From March 1, 2020
to August 31, 2020
3,198

(916)
(535)
84
(1,367)
18,687

3,786
(316)
90
3,560
6,758

18,722
(34)

6,894
(135)

(3) Consolidated Statement of Cash Flows
For the first half of the fiscal year ended February 29, 2020 and the first half of the fiscal year ending February
28, 2021
Previous 1st Half
From March 1, 2019
to August 31, 2019
Net cash provided by (used in) operating activities:
Profit before income taxes
Depreciation and amortization
Impairment loss
Interest income
Interest expenses
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in accounts receivable-other
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable-other
Increase (decrease) in deposits received
Increase (decrease) in net defined benefit liability
Net decrease (increase) in call loans for banking business
Net increase (decrease) in call money for banking business
Other
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities:
Purchase of property and store equipment
Purchase of intangible assets
Purchase of shares of subsidiaries and associates
Payments of long-term loans receivableCollection of long-term loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Purchase of long-term prepaid expenses
Other
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities:
Net increase (decrease) in short-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Cash dividends paid
Payments from changes in ownership interests in subsidiaries that
do not result in change in scope of consolidation
Other
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(Millions of yen)
Current 1st Half
From March 1, 2020
to August 31, 2020

30,632
38,417
1,870
(336)
1,975
2,253
(737)
(43,833)
28,7104,178
45,389443
20,000―13,562
142,525305(1,964)(4,828)136,0387,383
40,500
2,099
(327)
1,943
1,832
7,111
8,511
8,234
(7,482)(50,920)303(10,000)
73,00043,212
125,403343(1,958)(5,435)
118,353(16,626)(6,653)(675)(2,883)
2,555(8,863)
8,292
(468)
(880)
(26,203)(13,203)(4,692)(1,203)(2,231)
2,444(5,995)9,047(135)(1,809)(17,779)(48,450)―(24,719)(12,757)(3,500)(80,000)(26,165)(7,504)(3,521)―(58)(89,506)(389)
19,937354,236
374,173(24)(117,194)(96)(16,717)343,583
326,865

(4) Notes to Consolidated Financial Statements(Going Concern Assumption)
Not Applicable.
(Notes to Significant Changes in the Amount of Shareholders’ Equity)
Not Applicable.

(Additional Information)(Adoption of Tax Effect Accounting for the Transition from the Consolidated Taxation System to theGroup Tax Sharing System)
With respect to items subject to review under the Non-Consolidated Taxation System conducted to coincidewith the transition from the Consolidated Taxation System to the Group Tax Sharing System stipulated underthe Act on Partial Revision of the Income Tax Act, etc. (Act No. 8 of 2020), the Company and certain domestic
consolidated subsidiaries have not applied the provisions of Paragraph 44 of the Implementation Guidanceon Tax Effect Accounting (ASBJ Guidance No. 28 issued February 16, 2018) in accordance with the treatment
set out in Paragraph 3 of Practical Solution on the Treatment of Tax Effect Accounting for the Transition fromthe Consolidated Taxation System to the Group Tax Sharing System (PITF No.39 issued March 31, 2020).
Accordingly, the amounts of deferred tax liabilities and deferred tax assets have been calculated based on theprovisions of tax laws in effect before the revision.

14