Artnature : Consolidated Financial Results for the First Nine Months of the Fiscal Year Ending March 31, 2022

Consolidated Financial Results for the First Nine Months of the Fiscal Year Ending March 31, 2022

	[J-GAAP]
			January 27, 2022
Name of listed company:	ARTNATURE INC.	Listed on: Tokyo Stock Exchange
Securities code:	7823	URL: https://www.artnature.co.jp/english/index.htm
Representative:	Yoshikata Igarashi, Chairman and President
Contact:	Hiroaki Inoue, General Manager, Finance & Accounting Division	TEL: [phone]
	Senior Corporate Officer
Scheduled date of filing the quarterly financial report:	February 14, 2022
Scheduled date of the start of dividends distribution:	―
Supplementary quarterly materials prepared:	None
Explanation meeting for quarterly financial results:	None

(Figures shown are rounded down to the nearest million yen.)

1. Consolidated results for the first nine months ended December 31, 2021 (April 1, 2021 - December 31, 2021)

(1) Consolidated operating results						(Percentage figures show changes from the previous year.)
												Net income attributable to
			Net sales		Operating income		Ordinary income	owners of the parent
												company
	Nine months ended	Millions of yen		%	Millions of yen			%	Millions of yen	%	Millions of yen		%
	December 31, 2021		30,075		18.5	2,782		151.3	2,757	117.8	1,674		151.0
	December 31, 2020		25,387		(12.6)	1,106		(52.1)	1,266	(46.5)	667		(54.0)
Note: Comprehensive income:	Nine months ended December 31, 2021:	¥1,738 million (106.1%)
			Nine months ended December 31, 2020:	¥843 million (-43.7%)
		Net income per share	Diluted net income
		per share
	Nine months ended				Yen				Yen
	December 31, 2021				52.15			51.59
	December 31, 2020				20.61			20.42
(2) Consolidated financial position
			Total assets		Net assets			Shareholders' equity ratio	Net assets per share
	As of		Millions of yen	Millions of yen		%			Yen
	December 31, 2021				45,676			25,073		54.4			773.73
	March 31, 2021				44,919			25,255		55.8			781.00

(Reference) Equity capital: As of December 31, 2021: ¥24,850 millionAs of March 31, 2021: ¥25,066 million

2. Dividends

				Dividends per share
		First quarter-end	Second quarter-end	Third quarter-end	Year-end	Annual
		Yen	Yen	Yen	Yen	Yen
	Year ended March 31, 2021	―	14.00	―	14.00	28.00
	Year ending March 31, 2022	―	14.00	―
	Year ending March 31, 2022				14.00	28.00
	(forecast)
Note: Revisions to dividend forecasts published most recently: None

3. Consolidated financial forecast for the fiscal year ending March 31, 2022 (April 1, 2021 - March 31, 2022)

(Percentage figures show changes from the previous year.)

							Net income		Net income
	Net sales		Operating income	Ordinary income	attributable to owners
		per share
							of the parent company
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	40,219	12.1	2,798	44.8	2,759	37.6	821	(2.2)	25.60

Note: Revisions to most recently announced results forecasts: Yes

For the revision to the results forecast, see the Notice Regarding the Revision of the Financial Forecast for the Fiscal Year Ending March 31, 2022 announced on January 27, 2022.

Notes:

1. Significant changes to subsidiaries during the period (Transfers of specific subsidiaries with changes in the scope of consolidation): None
2. Application of specific accounting methods for preparing the quarterly consolidated financial statements: None
3. 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):	None
3)	Changes in accounting estimates:	None
4)	Restatement of revisions:	None

Note: More information is provided on page 8 of the supplementary materials, "2. Quarterly consolidated financial statements and related notes, (3) Notes on quarterly consolidated financial statements (Changes in accounting policies)."

(4) Number of outstanding shares (common stock):

1)	Number of shares issued and outstanding (including treasury shares)
	As of December 31, 2021	34,393,200 shares	As of March 31, 2021	34,393,200 shares
2)	Number of treasury shares
	As of December 31, 2021	2,274,939 shares	As of March 31, 2021	2,297,539 shares
3)	Average number of shares issued and outstanding in each period
	Nine months ended December 31, 2021	32,106,053 shares	Nine months ended December 31, 2020	32,373,456 shares

• This quarterly kessan tanshin document is outside the scope of audit procedures conducted by certified public accountants or 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 a number 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 and financial position, (3) Qualitative information on consolidated financial forecasts."

ARTNATURE INC. (7823) Financial Results for the First Nine Months of the Fiscal Year Ending March 31, 2022

Contents
1. Analysis of operating results and financial position ..............................................................................................................	2
(1)	Analysis of operating results ................................................................................................................................................	2
(2)	Analysis of financial position ...............................................................................................................................................	2
(3)	Qualitative information on consolidated financial forecasts ................................................................................................	3
2. Quarterly consolidated financial statements and related notes............................................................................................	4
(1)	Quarterly consolidated balance sheets..................................................................................................................................	4
(2)	Quarterly consolidated statements of income and comprehensive income ..........................................................................	6
	(Quarterly consolidated statements of income) ....................................................................................................................	6
	(Quarterly consolidated statements of comprehensive income) ...........................................................................................	7
(3)	Notes on quarterly consolidated financial statements ..........................................................................................................	8
	(Notes on the going concern assumption) ............................................................................................................................	8
	(Notes on significant fluctuation in amounts of shareholders' equity) .................................................................................	8
	(Changes in accounting policies)..........................................................................................................................................	8

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ARTNATURE INC. (7823) Financial Results for the First Nine Months of the Fiscal Year Ending March 31, 2022

1. Analysis of operating results and financial position

(1) Analysis of operating results

Operating results for the first nine months of fiscal 2022

In the first nine months of fiscal 2022 (April-December 2021), economic activity began to recover as progress was made in COVID-19 vaccination despite the impact of the prolonged pandemic, which had continued since the previous fiscal year. However, the emergence of a new variant led to concern about stagnation due to a resurgence of COVID-19, and the outlook for the Japanese economy remains uncertain.

Against this backdrop, ARTNATURE INC. and its consolidated subsidiaries (the ARTNATURE Group) saw the ARTNATURE Challenge Plan, the three-yearmedium-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 the Group's history. At the same time, we have continued to take comprehensive measures to prevent COVID-19 infections in our business activities since the previous fiscal year.

As a result, consolidated net sales in the first nine months under review increased 18.5% year on year to ¥30,075 million. In terms of profits, operating income stood at ¥2,782 million (increasing 151.3% year on year), and ordinary income came to ¥2,757 million (increasing 117.8% year on year) due to an increase in net sales. Net income attributable to owners of the parent company was ¥1,674 million (increasing 151.0% year on year).

Business results by segment are as follows.

< Men's business >

Sales in the men's business increased 11.2% year on year, to ¥16,963 million, as a result of eliminating the significant fall in sales in the first nine months of the previous fiscal year that had been caused by the temporary closure of production sites in the Philippines associated with the COVID-19 pandemic and other factors, in addition to strong sales of new products and the promotion of measures to retain customers, etc.

< Ladies' business >

Sales in the ladies' business rose 33.7% year on year, to ¥8,813 million, as a result of eliminating the significant fall in sales in the first nine months of the previous fiscal year that had been caused by the temporary closure of production sites in the Philippines associated with the COVID-19 pandemic and other factors, similarly to sales in men's business, 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 29.1% year on year to ¥3,230 million, despite the impact of the temporary 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 first nine months of the previous fiscal year.

1. Analysis of financial position Assets, liabilities and net assets
   (Assets)
   As of the end of the third quarter, total assets were ¥45,676 million, an increase of ¥756 million compared with the end of the previous fiscal year. Current assets increased ¥392 million, mainly due to increases in accounts receivable - trade and merchandise and finished goods and non-current assets increased ¥364 million, primarily reflecting an increase in investments and other assets.

(Liabilities)

As of the end of the third quarter, liabilities totaled ¥20,602 million, an increase of ¥938 million compared with the end of the previous fiscal year. Although accounts payable - other, income taxes payable and provision for bonuses decreased, current liabilities increased ¥754 million mainly due to an increase in other current liabilities associated with the application of the accounting standard for revenue recognition.

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ARTNATURE INC. (7823) Financial Results for the First Nine Months of the Fiscal Year Ending March 31, 2022

(Net Assets)

As of the end of the third quarter, net assets were ¥25,073 million, a decrease of ¥181 million from the end of the previous fiscal year. This largely reflected a decrease in retained earnings associated with the application of accounting standard for revenue recognition.

(3) Qualitative information on consolidated financial forecasts

The Company revised its consolidated financial forecasts for the fiscal year ending March 31, 2022 on January 27, 2022. For details of the revision, see the Notice Regarding the Revision of the Financial Forecast for the Fiscal Year Ending March 31, 2022 announced on January 27, 2022.

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