JINS : Quarterly Securities Report 1Q

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Quarterly Securities Report

Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act

Director-General of the Kanto Local Finance Bureau

January 14, 2022

First quarter of the 35th term (from September 1, 2021 to November 30, 2021)

JINS HOLDINGS Inc.

JINS HOLDINGS Inc.

Hitoshi Tanaka, CEO and Representative Director

26-4 Kawaharamachi 2-chome,Maebashi-shi, Gunma

(This is the address of the registered head office, but the actual business is conducted at the nearest place of contact.)

Not applicable.

Not applicable.

Iidabashi Grand Bloom 30th Flr., 10-2 Fujimi 2-chome,Chiyoda-ku, Tokyo

[phone] (main number)

Yukinori Arakawa, Executive Officer and General Manager of Administration Division

Tokyo Stock Exchange, Inc.

(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

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Part I Company Information

I. Overview of Company

1. Key financial data

		34th term	35th term
Term		Three months ended	Three months ended	34th term
		November 30, 2020	November 30, 2021
Accounting period	From September 1, 2020	From September 1, 2021	From September 1, 2020
to November 30, 2020	to November 30, 2021	to August 31, 2021
Net sales	(millions of yen)	14,813	15,275	63,898
Ordinary profit	(millions of yen)	705	691	5,020
Profit attributable to	(millions of yen)	369	433	3,292
owners of parent
Comprehensive income	(millions of yen)	445	437	3,623
Net assets	(millions of yen)	17,625	20,176	20,219
Total assets	(millions of yen)	51,261	52,684	53,007
Earnings per share	(yen)	15.82	18.56	141.07
Diluted earnings	(yen)	14.02	16.47	127.35
per share
Equity ratio	(%)	34.4	38.3	38.1

(Notes) 1. As the Company prepares the quarterly consolidated financial statements, the description of key financial data of the submitting company is omitted.

2. Description of business

There are no significant changes in the description of business which the Company group (the Company and the Company's affiliates. Hereinafter, the "Group") operates during the three months ended November 30, 2021.

In addition, there are no changes in major affiliates.

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II. Overview of Business

1. Business risks

In the three months ended November 30, 2021, there were no matters that may have a significant impact on the judgment of investors in the overview of business, financial information and other matters stated in this Quarterly Securities Report or no significant changes in "Business Risks" stated in the Annual Securities Report for the previous fiscal year.

The impact of COVID-19 is as stated in "2. Management analysis of financial position, operating results and cash flows" and we will continue to monitor the situation.

In addition, there were no material events.

2. Management analysis of financial position, operating results and cash flows

Forward-looking statements in this document are based on the Group's judgments as of the end of this quarter of the fiscal year under review.

(1) Financial position and operating results

During the three months ended November 30, 2021 (September 1, 2021 to November 30, 2021), the Japanese economy showed signs of a recovery in personal consumption as social and economic activities began to normalize following the complete lifting from October onward of the state of emergency, etc., which had been repeatedly declared due to the spread of the novel coronavirus disease (COVID-19), mainly in urban areas. Looking at the global economy, the number of cases is rising once again in some regions partly owing to the impact of COVID-19 variants, and infection prevention measures, including travel restrictions, remain in place. In addition, there are concerns about a possible worsening of economic conditions owing to factors such as a rapid increase in crude oil prices around the world, the Chinese government's measures to restrict investment, and the impact of electric power shortages on the manufacturing industry.

In the domestic retail eyewear market (eyeglasses for vision correction), although the state of emergency, etc., which had been declared due to the spread of COVID-19 was lifted, the market size continued to trend at a level lower than the same period of the previous year.

Under this market environment, in the eyewear business, the Company and its consolidated subsidiaries (collectively, the "Group") took such initiatives as promoting digital transformation, and strengthening development of innovative products, which they identified as management issues. In the domestic eyewear business, the Company worked to offer consumers a more convenient purchasing experience, including introducing "JINS BRAIN2," a service that uses AI to assess the extent to which pairs of glasses will suit customers with an enhanced level of accuracy, as an initiative to seamlessly connect online and in-store experiences, making it easier for customers to select glasses and creating a trouble-free purchasing experience. With regard to product development, as part of our initiatives to realize "the world free from myopia," we conducted a joint project to develop an eyeglass-shaped,violet-light-emitting medical device designed to suppress progress of myopia, and total research and development expenses were ¥55 million for the three months ended November 30, 2021.

In terms of store development, the number of eyewear stores as of November 30, 2021, was 674, including 448 stores in Japan and 226 stores overseas (172 in China, 42 in Taiwan, 6 in Hong Kong, and 6 in the United States).

As a result, for the three months ended November 30, 2021, the Company posted net sales of ¥15,275 million (up 3.1% year- on-year) partly thanks to the impact of new store openings, despite the fact that we have yet to fully recover from the impact of COVID-19. Operating profit was ¥577 million (down 26.0% year-on-year) owing to the effect of changes to revenue recognition standards, etc. Ordinary profit was ¥691 million (down 2.1% year-on-year), and profit attributable to owners of parent was ¥433 million (up 17.4% year-on-year).

1. Analysis and examination of operating results, etc. from management perspective
2. 1. Business results by segment

In the domestic eyewear business, we launched a next-generation version of JINS MEME, eyewear that captures mental and physical conditions with sensors using proprietary technology to visualize those conditions on a connected mobile app, with a more compact and lighter sensor and battery. Sales were also driven by the strong performance of high-value-added products,

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including "Airframe Hingeless," for which we eliminated the hinges connecting the front of the frame with the temples, creating a unique new fit and comfort for users. In addition, membership of the JINS app reached approximately 9.48 million people as of the end of November 2021, and e-commerce sales continued to grow at a steady pace. Regarding the impact of COVID-19, there were signs of a recovery in footfall to levels prior to the outbreak of the pandemic from October onward, when the declaration of a state of emergency, etc., was lifted.

In terms of store development, the number of stores in Japan was 448 (14 openings and no closures) as of the end of the period under review.

As a result, net sales of the domestic eyewear business were ¥11,890 million (up 1.7% year-on-year), and segment operating profit was ¥518 million (down 7.2% year-on-year).

In the overseas eyewear business, in China, personal consumption stalled, owing partly to the strengthening of restrictions on individual movement imposed by the government as a measure to combat COVID-19 from the summer onward. Performance in the country was also impacted by factors such as a fallback from the previous year, when there were exemptions to social security fees.

In Taiwan, performance recovered steadily from the rapid increase in COVID-19 infections in May, but our business was impacted by factors such as an increase in personnel expenses to secure opticians as required by the proposed Optometric Personnel Act.

In Hong Kong, the slump in consumption due to the effects of protests resulting from political unrest and COVID-19 is on a recovery track, and business performance is also recovering steadily.

In the United States, we have reopened all of our brick-and-mortar stores, which had been closed due to the impact of COVID- 19, and business performance is on a recovery track.

In terms of store development, the total number of stores overseas was 226 as of the end of the period under review, including 172 stores in China (6 openings and 4 closures), 42 in Taiwan (4 openings and no closures), 6 in Hong Kong (no openings or closures), and 6 in the United States (no openings or closures).

As a result, net sales of the overseas eyewear business were ¥3,384 million (up 8.6% year-on-year), and segment operating profit was ¥59 million (down 73.2% year-on-year).

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1. Analysis of financial position
   (a) Assets
   Current assets decreased ¥992 million from the end of the previous fiscal year to ¥32,213 million.
   This was mainly due to a decrease of ¥1,424 million in cash and deposits, despite an increase of ¥292 million in notes and accounts receivable - trade.
   Non-current assets increased ¥669 million from the end of the previous fiscal year to ¥20,471 million.
   This was mainly due to an increase of ¥380 million in property, plant and equipment such as buildings and structures as a result of the Group's expansion of retail stores and an increase of ¥227 million in leasehold and guarantee deposits.
   As a result, total assets decreased ¥322 million from the end of the previous fiscal year to ¥52,684 million.

(b) Liabilities

Current liabilities decreased ¥201 million from the end of the previous fiscal year to ¥10,300 million. This was mainly due to a decrease of ¥366 million in income taxes payable.

Non-current liabilities decreased ¥77 million from the end of the previous fiscal year to ¥22,207 million.

This was mainly due to a decrease of ¥20 million in long-term borrowings and a decrease of ¥37 million in lease obligations. As a result, total liabilities decreased ¥279 million from the end of the previous fiscal year to ¥32,508 million.

(c) Net assets

Net assets decreased ¥43 million from the end of the previous fiscal year to ¥20,176 million.

This was mainly due to a decrease of ¥466 million due to the payment of dividends, despite the recording of ¥433 million in profit attributable to owners of parent.

(3) Research and development activities

Total research and development expenses were ¥55 million for the three months ended November 30, 2021.

There was no material change in the Group's research and development activities during the three months ended November 30, 2021.

3. Material contracts, etc.

There was no decision or conclusion of material management contracts, etc. during the three months ended November 30, 2021.

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