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

Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2022 [J-GAAP]

			July 30, 2021
Name of listed company:	ARTNATURE INC.	Listed on: Tokyo Stock Exchange
Securities code:	7823	URL: https://www.artnature.co.jp/english/index.html
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:	August 10, 2021
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 quarter ended June 30, 2021 (April 1, 2021 - June 30, 2021)

(1) Consolidated operating results

(Percentage figures show changes from the previous year.)

Net income (loss)

Net sales

Operating income (loss)

Ordinary income (loss)

attributable to owners of

the parent company

Three months ended

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

June 30, 2021

9,513

75.7

904

―

842

―

488

―

June 30, 2020

5,414

(37.0)

(1,971)

―

(1,963)

―

(1,439)

―

Note: Comprehensive income:

Three months ended June 30, 2021: ¥584 million (―%)

Three months ended June 30, 2020: ¥-1,398 million (―%)

	Net income (loss)	Diluted net income
	per share	per share
Three months ended	Yen	Yen
June 30, 2021	15.22	15.07
June 30, 2020	(44.46)	―

(2) Consolidated financial position

	Total assets	Net assets	Shareholders' equity ratio	Net assets per share
	Millions of yen	Millions of yen	%
As of June 30, 2021	44,515	24,318	54.2	751.82
As of March 31, 2021	44,919	25,255	55.8	781.00

(Reference) Equity capital: As of June 30, 2021: ¥24,131 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	―
	Year ending March 31, 2022		14.00		―	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 per
	Net sales		Operating income	Ordinary income	attributable to owners
		share
							of the parent company
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	40,363	12.5	2,023	4.7	2,088	4.1	1,045	24.3	32.56

Note: Revisions to most recently announced results forecasts: None

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 and 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 7 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 June 30, 2021	34,393,200 shares	As of March 31, 2021	34,393,200 shares
2)	Number of treasury shares
	As of June 30, 2021	2,295,239 shares	As of March 31, 2021	2,297,539 shares
3)	Average number of shares issued and outstanding in each period
	Three months ended June 30, 2021	32,097,256 shares	Three months ended June 30, 2020	32,367,442 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 2 of the supplementary materials, "1. Analysis of operating results and financial position, (3) Quarterly information on consolidated financial forecasts."

ARTNATURE INC. (7823) Financial Results for the First Quarter 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 Quarter 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 three months of fiscal 2022

In the first three months of fiscal 2022 (April-June 2021), economic activities were restricted in Japan due to the impact of the prolonged COVID-19 pandemic, which had continued since the previous fiscal year, and the declaration of a state of emergency. As consumer spending is sluggish, the outlook for the Japanese economy remains uncertain because there are still no prospects for the end of the COVID-19 pandemic, despite vaccination and other measures taken to prevent the spread of infections.

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 three months under review increased 75.7% year on year to ¥9,513 million. In terms of profits, operating income stood at ¥904 million (compared with an operating loss of ¥1,971 million in the first quarter of the previous fiscal year), and ordinary income came to ¥842 million (compared with an ordinary loss of ¥1,963 million in the first quarter of the previous fiscal year) due to an increase in net sales. Net income attributable to owners of the parent company was ¥488 million (compared with a net loss attributable to owners of the parent company of ¥1,439 million in the first quarter of the previous fiscal year).

Business results by segment are as follows.

< Men's business >

Sales in the men's business increased 62.7% year on year, to ¥5,313 million, as a result of eliminating the significant fall in sales in the first quarter 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 the sale of new products and the promotion of measures to retain customers, etc.

< Ladies' business >

Sales in the ladies' business rose 124.0% year on year, to ¥2,981 million, as a result of eliminating the significant fall in sales in the first quarter 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 the sale 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 63.3% year on year to ¥851 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 quarter of the previous fiscal year.

1. Analysis of financial position Assets, liabilities and net assets
   (Assets)
   As of the end of the first quarter, total assets were ¥44,515 million, a decrease of ¥404 million compared with the end of the previous fiscal year. Current assets decreased ¥998 million, mainly due to a fall in cash and deposits, while non-current assets increased ¥594 million, primarily reflecting an increase in investments and other assets.

(Liabilities)

As of the end of the first quarter, liabilities totaled ¥20,196 million, an increase of ¥532 million compared with the end of the previous fiscal year. Although accounts payable - other, income taxes payable and advances received decreased, current liabilities increased ¥425 million mainly due to increases in provision for bonuses and other current liabilities associated with the application of the accounting standard for revenue recognition.

(Net Assets)

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

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

Consolidated financial forecasts for the fiscal year ending March 31, 2022 remain the same as those announced on May 15, 2021.

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