PAL : Consolidated Financial Results for the Six Months Ended August 31,2021

Consolidated Financial Results

for the Six Months Ended August 31, 2021

[Japanese GAAP]

October 12, 2021

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 and General Manager of Finance and Accounting Department

Phone: [phone]

Scheduled date of filing quarterly securities report: October 13, 2021

Scheduled date of commencing dividend payments: ―

Availability of supplementary briefing material on quarterly financial results: Not available

Schedule of quarterly 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 Six Months Ended August 31, 2021 (March 1, 2021 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
			million yen	%	million yen	%	million yen	%	million yen	%
	Six months ended	63,195	39.9	2,838	―	2,793	―	1,444	―
	August 31, 2021
	Six months ended	45,165	(32.5)	(1,761)	―	(1,983)	―	(1,518)	―
	August 31, 2020
	(Note) Comprehensive income: Six months ended August 31, 2021: ¥1,460 million [-%]
			Six months ended August 31, 2020: ¥(1,567) million [-%]
			Basic earnings per	Diluted earnings per
			share	share
				yen		yen
	Six months ended		32.89		―
	August 31, 2021
	Six months ended		(34.57)		―
	August 31, 2020
(2) Consolidated Financial Position
			Total assets	Net assets	Equity ratio
			million yen	million yen		%
	As of August 31,			86,596		44,713		51.6
	2021
	As of February 28,			108,186		44,351		41.0
	2021

(Reference) Equity: As of August 31, 2021: ¥44,713 million As of February 28, 2021: ¥44,351 million

2. Dividends

				Annual dividends
		1st quarter-end	2nd quarter-end		3rd quarter-end	Year-end	Total
		yen	yen		yen	yen	yen
Fiscal year ended		―	0.00		―	25.00	25.00
February 28, 2021
Fiscal year ending		―	0.00
February 28, 2022
Fiscal year ending
February 28, 2022					―	50.00	50.00
(Forecast)
(Note) Revision of dividend forecast: No

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

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	million yen	%	million yen	%	million yen	%	million yen	%	yen
Full year	131,000	20.7	7,400	434.8	7,100	574.3	3,900	1,340.4	88.79

(Note) Revision of consolidated financial results forecast: Yes

* Notes

1. Changes in significant subsidiaries during the period under review: No
2. Adoption of special accounting methods for preparing quarterly consolidated financial statement: No
3. Changes in accounting policies, changes in accounting estimates and corrections of errors
4. 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
5. Total number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares):

	As of August 31, 2021	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 August 31, 2021	2,346,244 shares
	As of February 28, 2021	2,346,134 shares
3) Average number of shares during the period:
	Six months ended August 31, 2021	43,925,778 shares
	Six months ended August 31, 2020	43,931,996 shares

• These quarterly consolidated financial results are not covered by the quarterly review conducted by certified public accountants or audit corporations.
• 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. For the premises of financial results forecast and the notes concerning the use of financial results forecast, please refer to "Explanation of Consolidated Financial Results Forecast and Other
  Future Projections" on page 3 of the Appendix to this report.

Appendix
1. Qualitative Information on Consolidated Financial Results for the Period under Review	2
(1)	Explanation of Operating Results	2
(2)	Explanation of Financial Position	2
(3)	Explanation of Consolidated Financial Results Forecast and Other Future Projections	3
2. Consolidated Financial Statements	4
(1)	Consolidated Balance Sheets	4
(2)	Consolidated Statements of Income and Comprehensive Income	6
3. Additional Information	8
(1)	Sales Results by Segment (Consolidated)	8
(2)	Status of Stores (Consolidated)	8

1

1. Qualitative Information on Consolidated Financial Results for the Period under Review

(1) Explanation of Operating Results

During the six months ended August 31, 2021 (March 1, 2021 to August 31, 2021), the Japanese economy suffered from the declaration of a state of emergency across several prefectures and the implementation of priority preventative measures, which had a significant impact on personal consumption. Regarding the outlook for the future, the continuing downward trend in new cases of COVID-19 since mid-August and the lifting of the state of emergency and all priority preventative measures on September 30 have raised expectations of a recovery. However, it is anticipated that each prefecture will implement only a phased loosening of restrictions. Under these conditions, it remains necessary to monitor the trend in personal consumption.

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. As a result, net sales in the Apparel Business increased by 24.2% year on year to ¥39,824 million, and net sales in the Miscellaneous Goods/Accessories Business increased by 78.3% year on year to ¥23,325 million. In addition, EC sales increased by 39.1% year on year. In particular, sales of PAL CLOSET, our own e-commerce website, increased by 58.1% year on year.

As a result of the above, as for operating results for the six months ended August 31, 2021, the Company recorded net sales of ¥63,195 million (39.9% increase year on year), operating profit of ¥2,838 million (operating loss of ¥1,761 million for the previous corresponding period), ordinary profit of ¥2,793 million (ordinary loss of ¥1,983 million for the previous corresponding period), and profit attributable to owners of parent of ¥1,444 million (loss attributable to owners of parent of ¥1,518 million for the previous corresponding period).

1. Explanation of Financial Position (Assets)
   Current assets decreased by ¥20,302 million compared with the end of the previous fiscal year, due mainly to decreases in cash and deposits by ¥18,352 million and notes and accounts receivable - trade by ¥839 million. Non-current assets decreased by ¥1,287 million compared with the end of the previous fiscal year, due primarily to decreases in guarantee deposits by ¥647 million, buildings and structures, net by ¥269 million and investment securities by ¥124 million.
   (Liabilities)
   Current liabilities decreased by ¥21,527 million compared with the end of the previous fiscal year, due mainly to decreases in short-term borrowings by ¥15,000 million and notes and accounts payable - trade by ¥6,959 million, despite an increase in income taxes payable by ¥681 million.
   Non-current liabilities decreased by ¥424 million compared with the end of the previous fiscal year, due primarily to a decrease in long-term borrowings by ¥576 million, despite an increase in retirement benefit liability by ¥69 million.
   (Net assets)
   Net assets increased by ¥362 million compared with the end of the previous fiscal year, due mainly to an increase in retained earnings by ¥346 million.

2