PAL : Consolidated Financial Results for the Fiscal Year Ended February 28, 2022 ]

Consolidated Financial Results for the Fiscal Year Ended February 28, 2022

[Japanese GAAP]

April 12, 2022

Company name: PAL GROUP Holdings CO., LTD.

Stock exchange listing: Tokyo Stock Exchange Code number: 2726

URL:http://www.palgroup.holdings/

Representative: Ryuta Inoue, President and Representative Director Contact: Toshio Fujii, Executive Officer in charge of finance and accounting Phone: [phone]

Scheduled date of ordinary general meeting of shareholders: May 25, 2022 Scheduled date of commencing dividend payments: May 26, 2022 Scheduled date of filing securities report: May 26, 2022

Availability of supplementary briefing material on financial results: Not available

Schedule of financial results briefing session: Scheduled (for analysts and institutional investors)

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

1. Consolidated Financial Results for the Fiscal Year Ended February 28, 2022 (March 1, 2021 to February 28, 2022)

(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 February 28, 2022 Fiscal year ended February 28, 2021	million yen % 134,200 23.7 108,522 (17.9)	million yen % 7,520 443.5 1,383 (84.7)	million yen % 7,660 627.5 1,052 (88.5)	million yen 4,001 % ― 270 (96.1)

(Note) Comprehensive income: Fiscal year ended February 28, 2022: ¥4,038 million [―%]

Fiscal year ended February 28, 2021: ¥7 million [(99.9)%]

Basic earnings per share	Diluted earnings per share	Rate of return on equity	Ordinary profit to total assets	Operating profit to net sales
Fiscal year ended February 28, 2022 Fiscal year ended February 28, 2021	yen 91.10 6.16	yen ― ―	% 8.7 0.6	% 7.6 1.0	% 5.6 1.3

(Reference) Equity in earnings of affiliates: Fiscal year ended February 28, 2022: ¥(146) million

Fiscal year ended February 28, 2021: ¥(287) million

(2) Consolidated Financial Position

Total assets	Net assets	Equity ratio	Net assets per share
As of February 28, 2022 As of February 28, 2021	million yen 93,728 108,186	million yen 47,389 44,351	% 50.5 41.0	yen 1,077.47 1,009.69

(Reference) Equity: As of February 28, 2022: ¥47,328 million

As of February 28, 2021: ¥44,351 million

(3) Consolidated Cash Flows

Net cash provided by (used in) operating activities	Net cash provided by (used in) investing activities	Net cash provided by (used in) financing activities	Cash and cash equivalents at end of period
Fiscal year ended February 28, 2022 Fiscal year ended February 28, 2021	million yen 7,970 1,450	million yen (679) (1,188)	million yen (18,128) 10,098	million yen 52,250 63,088

2. Dividends

Annual dividends	Total dividends paid (annual)	Payout ratio (consolidated)	Dividends to net assets (consolidated)
1st quarter -end	2nd quarter -end	3rd quarter -end	Year-end	Total
Fiscal year ended February 28, 2021 Fiscal year ended February 28, 2022	yen ― ―	yen 0.00 0.00	yen ― ―	yen 25.00 50.00	yen 25.00 50.00	million yen 1,098 2,196	% 405.8 54.9	% 2.4 4.8
Fiscal year ending February 28, 2023 (Forecast)	―	0.00	―	50.00	50.00	47.7

3. Consolidated Financial Results Forecast for the Fiscal Year Ending February 28, 2023 (March 1, 2022 to

February 28, 2023)

(% indicates changes from the previous corresponding period)

Net sales	Operating profit	Ordinary profit	Profit attributable to owners of parent	Basic earnings per share
First half Full year	million yen % 70,000 10.8 150,000 11.8	million yen % 3,200 12.7 8,700 15.7	million yen % 3,000 7.4 8,300 8.3	million yen % 1,600 10.8 4,600 15.0	yen 36.43 104.72

* Notes

• (1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): No

• (2) Changes in accounting policies, changes in accounting estimates and corrections of errors

  • 1) Changes in accounting policies due to the revision of accounting standards: No

  • 2) Any changes other than 1) above: No

  • 3) Changes in accounting estimates: No

  • 4) Corrections of errors: No

• (3) Total number of issued shares (common shares)

  1) Total number of issued shares at the end of the period (including treasury shares):

  As of February 28, 2022	46,272,000 shares
  As of February 28, 2021	46,272,000 shares

  2) Total number of treasury shares at the end of the period:

  As of February 28, 2022	2,346,244 shares
  As of February 28, 2021	2,346,134 shares

  3) Average number of shares during the period:

Fiscal year ended February 28, 2022	43,925,767 shares
Fiscal year ended February 28, 2021	43,928,952 shares

* These consolidated financial results are not covered by the audit procedure conducted by a certified public accountant or audit corporation.

* Explanation of the proper use of financial results forecast and other notes

The statements regarding financial results forecast in this report are based on the information that is available, as well as estimates, assumptions and projections that are believed to be reasonable at the time of publication, and do not guarantee the achievement of the projections. Therefore, there might be cases in which actual results differ from forecast values.

Appendix

1. Overview of Consolidated Operating Results 2

(1) Overview of Consolidated Operating Results for the Period under Review 2

(2) Overview of Consolidated Financial Position for the Period under Review 2

(3) Overview of Consolidated Cash Flows for the Period under Review 3

(4) Outlook for Fiscal 2023 4

2. Consolidated Financial Statements 5

(1) Consolidated Balance Sheets 5

(2) Consolidated Statements of Income and Comprehensive Income 7

(3) Consolidated Statements of Changes in Net Assets 10

(4) Consolidated Statements of Cash Flows 12

1

1. Overview of Consolidated Operating Results

(1) Overview of Consolidated Operating Results for the Period under Review

1) Overview for the Fiscal Year Ended February 28, 2022

During the fiscal year ended February 28, 2022 (March 1, 2021 to February 28, 2022), the Japanese economy suffered from the declaration of a state of emergency across many prefectures and the implementation of priority preventative measures due to the ongoing spread of COVID-19 from the year before last, which had a significant impact on personal consumption activities. Personal consumption was on a recovery trend after the end of September when the restrictions were lifted, encouraged by a low level of COVID-19 cases, but the economic outlook became uncertain as a result of the subsequent emergence of new variants, rising raw material prices, and other factors.

Under such a business environment, the Company made every effort to strengthen EC sales to make up for the decline in customer traffic, while securing the health and safety of its employees. At the same time, the Company focused on the lifestyle miscellaneous goods/accessories brand centered on 3COINS to respond to stay-at-home demand. As a result of these measures, net sales in the Apparel Business increased by 15.3% year on year to ¥87,109 million, and net sales in the Miscellaneous Goods/Accessories Business increased by 42.8% year on year to ¥46,997 million. In addition, EC sales increased by 38.4% year on year. In particular, sales of PAL CLOSET, our own e-commerce website, increased by 55.2% year on year.

As a result of the above, net sales for the fiscal year ended February 28, 2022 increased by 23.7% year on year to ¥134,200 million. In terms of profit, the gross profit margin increased by 0.8 percentage point year on year to 55.4%. Operating profit increased by ¥6,136 million year on year to ¥7,520 million, ordinary profit increased by ¥6,607 million year on year to ¥7,660 million, and profit attributable to owners of parent increased by ¥3,730 million year on year to ¥4,001 million.

2) Sales Results by Segment for the Fiscal Year Ended February 28, 2022

Segment	Amount (million yen)	Changes from the previous fiscal year (%)
Apparel Business	87,109	115.3
Miscellaneous Goods/Accessories Business	46,997	142.8
Other	93	121.7
Total	134,200	123.7

3) Status of Stores for the Fiscal Year Ended February 28, 2022 (March 1, 2021 to February 28, 2022)

Number of stores as of February 28, 2021 Number of new stores Number of closed stores Number of stores as of February 28, 2022

932 stores 47 stores 77 stores 902 stores

(2) Overview of Consolidated Financial Position for the Period under Review

(Assets)

Current assets decreased by ¥12,106 million compared with the end of the previous fiscal year, due mainly to decreases in cash and deposits by ¥10,838 million and notes and accounts receivable - trade by ¥968 million, despite an increase in merchandise and finished goods by ¥1,027 million. Non-current assets decreased by

2