POLA Orbis : Summary of Financial Results for Fiscal 2020 Nine Months

Summary of Financial Results

For the Nine Months of the Fiscal Year Ending December 31, 2020 (Consolidated)

These financial statements have been prepared in accordance with accounting principles and practices generally accepted in Japan. The following English translation is based on the original Japanese-language document.

		October 30, 2020
POLA ORBIS HOLDINGS INC.
Listing:	Tokyo Stock Exchange, First Section (Code No.: 4927)
URL:	https://www.po-holdings.co.jp/
Representative:	Satoshi Suzuki, Representative Director And President
Contact:	Akira Fujii, Director, Finance	Tel: [phone]

Filing Date of Quarterly Securities Report:	November 13, 2020
Start of Cash Dividend Payment:	-
Supplemental Materials Prepared for Quarterly Financial Results:	Yes
Conference Presentation for Quarterly Financial Results:	Yes(for analysts)
	(Amounts less than one million yen have been truncated)

1. Consolidated Performance for the Nine Months of Fiscal 2020 (January 1, 2020-September30, 2020)

(1) Consolidated Operating Results

																		(Percentage figures indicate year-on-year change)
				Net Sales				Operating Income		Ordinary Income	Profit Attributable to
								Owners of Parent
		Millions of yen			%		Millions of yen	%		Millions of yen	%		Millions of yen	%
FY2020 Nine Months		125,814	(24.0)			9,222	(63.7)	7,775	(68.1)		1,565	(90.2)
FY2019 Nine Months		165,530		(10.4)			25,411		(21.4)	24,370	(24.3)		15,898	(29.0)
Note: Comprehensive income: ¥1,476 million (-90.9%) for the nine months ended September 30, 2020;
		¥16,271 million (-24.4%) for the nine months ended September 30, 2019
			Net Income				Diluted Net Income
				Per Share						Per Share
								Yen							Yen
FY2020 Nine Months						7.08					7.07
FY2019 Nine Months				71.88					71.79
(2) Consolidated Financial Position																	Net Assets
			Total Assets			Net Assets		Equity Ratio
						Per Share
				Millions of yen				Millions of yen				%		Yen
FY2020 Third Quarter				197,612					166,867				84.2		752.55
FY2019				227,256					191,069				83.9		862.00
Reference: Equity capital: FY2020 Third Quarter: ¥166,480 million; FY2019: ¥190,690 million
2. Dividends			Annual Cash Dividends Per Share
	Q1-end		Q2-end		Q3-end		Year-end	Total
		Yen			Yen				Yen				Yen			Yen
FY2019	－		35.00				－		81.00		116.00
FY2020	－		35.00				－
FY2020 (Forecast)												15.00		50.00

Note1: Revisions to the cash dividends forecast announced most recently: none

3. Consolidated Performance Forecast for Fiscal Year Ending December 31, 2020 (January 1, 2020-December31, 2020)

							(Percentage figures indicate year-on-year change)
							Profit	Net Income
	Net Sales	Operating Income	Ordinary Income	Attributable to
	Per Share
							Owners of Parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	175,000	(20.4)	10,000	(67.9)	8,500	(72.3)	1,200	(93.9)	5.42

Note: Revisions to the consolidated performance forecast announced most recently: yes

Notes to Summary Information

(1) Changes in significant subsidiaries during the current period
(Changes in specific subsidiaries resulting in changes in the scope of consolidation)	: None

1. Application of special accounting methods for the preparation of the quarterly consolidated: None financial statements
2. Changes in accounting policies, accounting estimates, and restatement

1)	Changes in accounting policies associated with revision of accounting standards	: None
2)	Changes other than (3)-1)	: None
3)	Changes in accounting estimates	: None
4)	Restatements	: None

1. Number of shares issued and outstanding (common stock)
2. 1. Number of shares issued and outstanding at the end of each period (including treasury stock)

	At September 30, 2020	229,136,156 shares
	At December 31, 2019	229,136,156 shares
2)	Number of shares of treasury stock at the end of each period
	At September 30, 2020	7,915,453 shares
	At December 31, 2019	7,916,253 shares
3)	Average number of shares issued and outstanding in each period
	Nine months ended September 30, 2020	221,220,063 shares
	Nine months ended September 30, 2019	221,196,075 shares

Note: The number of shares of treasury stock at September 30, 2019 includes the Company's shares held by the officer compensation Board Incentive Plan (BIP) trust (148,600 shares). The Company's shares held by the officer compensation BIP trust are included in shares of treasury stock that are deducted in the calculation of the average number of shares of treasury stock during the period.

Information Regarding Quarterly Review Procedures

The quarterly financial results report is exempt from quarterly review by certified public accountants or accounting firms.

Explanation of Appropriate Use of Performance Forecast and Other Special Items

This report contains projections of performance and other projections based on information currently available and certain assumptions judged to be reasonable. Actual performance may differ materially from these projections resulting from changes in the economic environment and other risks and uncertainties. For performance projections, please refer to "1. Qualitative Information on Consolidated Performance for the Nine Months of Fiscal 2020 (3) Explanation of Consolidated Performance Forecast and Other Predictive Information" on page 5.

	POLA ORBIS HOLDINGS INC. (4927) FY2020 Nine Months Financial Summary
Table of Contents
1. Qualitative Information on Consolidated Performance for the Nine Months of Fiscal 2020………………	2
(1)	Explanation of Consolidated Operating Results …………………………………………………………	2
(2)	Explanation of Consolidated Financial Position …………………………………………………………	4
(3)	Explanation of Consolidated Performance Forecast and Other Predictive Information ………………	5
2. Quarterly Consolidated Financial Statements …………………………………………………………………	6
(1)	Consolidated Balance Sheets ………………………………………………………………………………	6
(2)	Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ………	8
(3)	Notes to Consolidated Financial Statements ………………………………………………………………	10
(Going Concern Assumptions) ………………………………………………………………………………	10
(Significant Changes in Shareholders' Equity) ……………………………………………………………	10
(Segment Information) ………………………………………………………………………………………	10

(Subsequent Events) ………………………………………………………………………………………..… 11

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POLA ORBIS HOLDINGS INC. (4927) FY2020 Nine Months Financial Summary

1. Qualitative Information on Consolidated Performance for the Nine Months of Fiscal 2020

(1) Explanation of Consolidated Operating Results

During the nine months of fiscal 2020 (January 1-September 30, 2020), the Japanese economy experienced a rapid decline and extremely difficult conditions due to the impact of requests to people to refrain from going out and to suspend business activities because of the spread of COVID-19 (the novel coronavirus), as well as the impact of the declaration of a state of emergency in April, which led to severe restrictions on economic activity. Currently, there have been signs of a gradual recovery in consumer spending, with April and May having been the worst months, thanks in part to the government's economic stimulus measures, in addition to the lifting of the declaration of a state of emergency in May, followed by the lifting of restrictions on movement within Japan in June. However, fears of a re-emergence of the infection still persist, and the situation is expected to remain difficult for the time being as downward pressures on the economy continue.

The domestic cosmetics market saw a significant decrease in inbound demand and the impact from a cooling down in consumer sentiment due to a period of store closures and self-restraint from going out as a result of the spread of COVID-19, and the current outlook for the economy remains uncertain. However, as a new way of life continues to take root, the importance of e-commerce and other mail-order sales channels as highly convenient services is increasing, driven by the change in contactless behavior that has been brought about by the COVID-19 pandemic.

In the overseas cosmetics market, the outlook has also remained uncertain mainly due to the global spread of COVID-19. However, consumption is returning to levels before the COVID-19 pandemic in the Chinese market as economic activity resumes.

Within this market environment, the POLA ORBIS Group (the "Group") continued its efforts to achieve further improved profitability in Japan, a solid shift toward profitability from overseas operations and creations of brands for next-generation growth. The efforts were in line with the four-yearmedium-term management plan (from 2017 to 2020) that started in fiscal 2017.

As a result of these factors, the Group achieved the following consolidated operating results for the nine months of fiscal 2020.

Consolidated net sales for the nine months of fiscal 2020 decreased 24.0% year on year, to ¥125,814 million.Operating income declined 63.7% year on year, to ¥9,222 million, resulting from lower gross profit accompanying the decrease in net sales. Ordinary income decreased 68.1% year on year, to ¥7,775 million, resulting from the recording of non-operating expenses including foreign exchange losses. In addition to these results, due to the effect of recording impairment loss on Jurlique brand and an extraordinary loss for expenses associated with the temporary closure of business following the declaration of a state of emergency due to the spread of COVID-19, profit attributable to owners of parent decreased 90.2% year on year, to ¥1,565 million.

Operating Results Overview				(Millions of yen)
		Nine Months Ended September 30
	2019	2020	Year-on-Year
	Amount Change	Percent Change (%)
Net Sales	¥165,530	¥125,814	¥(39,715)	(24.0)
Operating Income	25,411	9,222	(16,189)	(63.7)
Ordinary Income	24,370	7,775	(16,595)	(68.1)
Profit Attributable to	¥15,898	¥1,565	¥(14,332)	(90.2)
Owners of Parent

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