CURVES : Consolidated Financial Results for the Fiscal Year Ended August 31, 2021

Consolidated Financial Results for the Fiscal Year

Ended August 31, 2021 [Japanese GAAP]

		October 8, 2021
Company name: CURVES HOLDINGS Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange Section 1
Stock code: 7085	URL: https://www.curvesholdings.co.jp/
Representative: Takeshi Masumoto, Representative Director and President
Contact: Shinya Matsuda, Director and General Manager, Administration Division	Tel: [phone]
Scheduled date of Ordinary General Meeting of Shareholders: November 25, 2021
Scheduled date of commencing dividend payments: November 26, 2021

Scheduled date of filing annual securities report: November 26, 2021

Availability of supplementary briefing material on annual financial results: Available

Schedule of annual financial results briefing session: Scheduled

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Fiscal Year Ended August 31, 2021 (September 1, 2020 to August 31, 2021)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Fiscal year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
August 31, 2021	24,681	(1.6)	1,622	39.0	1,716	47.4	1,129	47.7
August 31, 2020	25,082	(10.5)	1,167	(78.5)	1,165	(77.8)	764	(79.4)

(Note) Comprehensive income:	Fiscal year ended August 31,	2021:	1,490 million yen [96.2%]
	Fiscal year ended August 31,	2020:	759 million yen [down 77.6%]

	Earnings per share	Diluted earnings	Return on equity	Ordinary profit to	Operating profit to
	per share	total assets	net sales
Fiscal year ended	Yen	Yen	%	%	%
August 31, 2021	12.04	-	13.1	4.7	6.6
August 31, 2020	8.73	-	9.6	3.3	4.7

(Reference) Equity in earnings (losses) of affiliates:

Fiscal year ended August 31, 2021: - million yen

Fiscal year ended August 31, 2020: - million yen

(2) Consolidated Financial Position

		Total assets			Net assets		Equity ratio		Net assets per share
As of			Million yen			Million yen			%				Yen
August 31, 2021			36,284				9,163			25.3				97.63
August 31, 2020			36,837				8,142			22.1				86.76
(Reference) Equity:		As of August 31, 2021: 9,163 million yen
				As of August 31, 2020: 8,142 million yen
(3) Consolidated Cash Flows
	Cash flows from			Cash flows from		Cash flows from			Cash and cash equivalents
	operating activities		investing activities		financing activities		at end of period
Fiscal year ended			Million yen			Million yen			Million yen			Million yen
August 31, 2021			3,240				(733)			(2,309)				9,760
August 31, 2020			1,882				(464)			2,765				9,533
2. Dividends
						Annual dividends		Total	Payout	Dividends
		1st		2nd	3rd	Year-end	Total	dividends	ratio	to net assets
		quarter-end	quarter-end	quarter-end	(consolidated)	(consolidated)
Fiscal year ended		Yen			Yen	Yen	Yen	Yen	Million yen	%	%
August 31, 2020		-		0.00	-	5.00	5.00	469			57.3	5.5
August 31, 2021		-		0.00	-	5.00	5.00	469			41.5	5.4
Fiscal year ending August		-		3.50	-	3.50	7.00				41.1
31, 2022 (Forecast)
(Note) Breakdown of the year-end dividends for the fiscal year ended August 31, 2020:
				Ordinary dividend: 3.00 yen	Commemorative dividend: 2.00 yen

3. Consolidated Financial Results Forecast for the Fiscal Year Ending August 31, 2022 (September 1, 2021 to August 31, 2022)

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Earnings per share
		owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
First half	13,050	9.7	1,400	60.6	1,380	106.2	899	158.8	9.58
Full year	26,550	7.6	2,500	54.1	2,450	42.7	1,598	41.5	17.03

* Notes:

(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope

of consolidation): No
Newly added: ― (Name:	)	Excluded: ― (Name:	)

1. Changes in accounting policies, changes in accounting estimates and restatements
2. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Restatements: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares): August 31, 2021: 93,857,493 shares
      August 31, 2020: 93,857,493 shares
   2. Total number of treasury shares at the end of the period:

August 31, 2021: 121 shares

August 31, 2020: 121 shares

3) Average number of shares during the period:

Fiscal year ended August 31, 2021: 93,857,372 shares

Fiscal year ended August 31, 2020: 87,633,268 shares

• This summary of the financial results is outside the scope of audit by certified public accountants or audit firms.
• Explanation of the proper use of financial results forecast and other notes

(Note on forward-looking statements, etc.)

The financial results forecast and other forward-looking statements contained in this document are based on information currently available to the Company and certain assumptions deemed reasonable by the Company. Such forward-looking statements are not intended to represent a commitment on the part of the Company to achieve them. Actual results may vary significantly due to various factors. Please refer to "1. Overview of Operating Results, etc.

1. Future Outlook," on page 5 of the attached material for the assumptions used in the financial results forecast, as well as precautions for using the financial results forecast.

(How to obtain supplementary briefing material on the financial results)

Amid the coronavirus disease (COVID-19) pandemic, the Company will provide explanations of its annual financial results by posting videos, filmed in advance, on the Company's website (https://www.curvesholdings.co.jp/) on Friday, October 15, 2021.

The Company will post supplementary briefing material on annual financial results featured in the video on TDnet and the Company's website on the same day.

Table of Contents
1. Overview of Operating Results, etc. ................................................................................................................	2
(1)	Overview of Operating Results for the Year under Review.........................................................................	2
(2)	Overview of Financial Position for the Year under Review ........................................................................	4
(3)	Overview of Cash Flows for the Year under Review...................................................................................	4
(4)	Future Outlook .............................................................................................................................................	5
2. Basic Policy for the Selection of Accounting Standards..................................................................................	6
3. Consolidated Financial Statements and Primary Notes....................................................................................	7
(1)	Consolidated Balance Sheets .......................................................................................................................	7
(2)	Consolidated Statements of Income and Comprehensive Income ...............................................................	9
(3)	Consolidated Statements of Changes in Equity .........................................................................................	11
(4)	Consolidated Statements of Cash Flows ....................................................................................................	13
(5)	Notes to Consolidated Financial Statements ..............................................................................................	14
	(Notes on going concern assumption) ........................................................................................................	14
	(Segment information, etc.) ........................................................................................................................	14
	(Per share information) ...............................................................................................................................	14
	(Significant subsequent events) ..................................................................................................................	14

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1. Overview of Operating Results, etc.

(1) Overview of Operating Results for the Year under Review

The Group (the Company and consolidated subsidiaries, hereinafter referred to as the "Group") has been striving to contribute to the extension of health life expectancy through its core business, "Curves," a 30-minute fitness club for women. The Group has endeavored to enhance the satisfaction of its members and expand membership by strengthening customer services as "community-oriented health infrastructure" that contributes to solving social issues.

It is the Group's understanding that the market environment during and after the COVID-19 pandemic will change dramatically in the following two ways:

1. Growth of the health market: The pandemic forced people to focus on their lives and health, and the trend toward taking care of their own health will gain momentum over the medium and long terms, promoting substantial growth of the disease-prevention and health market.
2. Growing demand for contactless services: Extending beyond the end of the COVID-19 pandemic, consumer sentiment, society and the economy will remain "scared" by COVID-19, and qualitative changes will occur, such as an increase in demand for non-contact services.

Under these operating conditions, the Group aims to achieve business recovery and establish business models in the new management environments in about two years, or, by the end of 2022. It pursued strategies positioning the fiscal year ended August 31, 2021 (from September 1, 2020, to August 31, 2021) as the fiscal year for getting firmly on track towards this goal.

The net increase in the number of members, the most important indicator of the Group's business recovery, was 92K from 600K as of the end of the previous fiscal year and totaled 693K (including online members).

Amid the repeated issuance of a declaration of a state of emergency and other alerts throughout the fiscal year, the Group continued to operate its business while taking thorough measures to prevent COVID-19 infections and worked to increase service quality and customer satisfaction. As a result, the Group has already reduced the monthly rate of membership termination to a level lower than that before the COVID-19 outbreak.

In the solicitation of new members, the Group carried out a free trial campaign three times in the year, and the word-of-mouth marketing, which is one of its strengths, and a media mix of TV and online ads resulted in an increase in membership. In particular, the Group's priority strategy of targeting younger seniors (50 to 64 years old) in marketing is making steady progress, resulting in an increase in the number of new members aged 64 years or below and the percentage of such members in the overall new members.

In April 2021, the Group started soliciting new members for Ouchi de Curves (Curves at Home), an online fitness program released in advance to special absent members in September 2020. The Group is working to build a new business model that combines online and offline programs.

In merchandise sales, the number of new subscription buyers increased thanks to promotion of protein and other products through consultations on daily diet. Sales of the new product targeting the existing protein users, which was launched in December 2020, remained strong. As a result, sales per customer increased and net sales of merchandise to members recovered to a level very close to that before COVID-19.

Some clubs operating in large commercial facilities subject to business suspension due to the declaration of a state of emergency and other alerts issued on and after April 23, 2021, were temporarily closed (31 stores the most). Meanwhile, approximately 70% of the members at these clubs have been able to continue doing exercise by attending nearby Curves clubs or taking online programs, Ouchi de Curves (Curves at Home), minimizing the impact such as refunds of membership fees.

The Group also proceeded with the closure and merging of the clubs that have been severely affected by COVID-19, and approximately 70% of the members of closed and merged clubs have moved to other clubs.

Accordingly, the number of Curves facilities (excluding Men's Curves) and membership in Japan as of the end of the fiscal year under review were as follows:

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1. Number of Curves facilities in Japan

	As of August 31,		As of August 31, 2021
	2020			Changes from end of previous fiscal year
Number of facilities	2,020 facilities	1,958 facilities		A decrease of		(3.1)%
	62 facilities
Of which, number of	70 facilities	75 facilities		An increase of		7.1%
corporate operated facilities		5 facilities
Number of franchisee	1,950 facilities	1,883 facilities		A decrease of		(3.4)%
facilities		67 facilities

2. Curves membership in Japan

	As of August 31,		As of August 31, 2021
	2020			Changes from end of previous fiscal year
Active memberships	600K	693K		92K		15.5%
excluding absentee members

(Notes) 1. In the fiscal year under review, the number of new clubs opened was 17 and the number of clubs closed and merged was 79.

1. Special Absentee Program ended as of March 31, 2021.
2. Curves membership in Japan include the number of members of online fitness program, Ouchi de Curves (Curves at Home).

The fitness club for men, Men's Curves, opened two new locations during the fiscal year under review, making the total number of clubs to seven.

In overseas business, the Group considers Europe where it acquired the franchiser operations in July 2019 to be its priority market. As of the end of the fiscal year under review (June 30, 2021 (two-month lag in the inclusion into the consolidated results due to difference in fiscal year end)), there were 157 Curves facilities in Europe (UK, Italy, Spain, and five other countries) (all of which were franchisees' facilities). Of these, 154 facilities gradually resumed business after the lifting of city lockdowns in their respective countries.

In terms of cost and expenses, selling, general, and administrative expenses increased 779 million yen year on year largely due to active spending on marketing and continuous investment in the development of the online fitness program, Ouchi de Curves (Curves at Home), which was partly offset by a decrease in the payment of financial support to franchisee clubs subject to business suspension.

As a result, net sales for the fiscal year under review were 24,681 million yen (down 1.6% year on year), leading to operating profit of 1,622 million yen (up 39.0% year on year). Ordinary profit was 1,716 million yen (up 47.4% year on year) due to foreign exchange gains at Curves International, Inc., which did not have an impact on changes in cash. Profit attributable to owners of parent was 1,129 million yen (up 47.7% year on year) mainly due to the posting of income taxes - current of 1,011 million yen.

Since the Group operates in a single business segment, the Curves business, the segment information is omitted.

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