Tsuruha : Consolidated Financial Results for the First Quarter of the Fiscal Year Ending May 15, 2021

Consolidated Financial Results for the First Quarter of the Fiscal Year Ending May 15, 2021 [J-GAAP]

			September 14, 2020
Name of listed company: TSURUHA Holdings, Inc.	Listed on: Tokyo Stock Exchange, 1st Section
Securities code:	3391	URL: http://www.tsuruha-hd.co.jp
Representative:	Jun Tsuruha, President and Representative Director
Contact:	Makoto Murakami, Executive Officer and Chief Administrative Officer	TEL: [phone]

Scheduled date of filing quarterly financial report:	September 29, 2020
Scheduled date to start dividends distribution:	―
Supplementary quarterly materials prepared:	Yes
Quarterly results information meeting held:	Yes (for institutional investors and financial analysts)
	(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the first quarter ended August 15, 2020 (May 16, 2020 - August 15, 2020)

(1) Consolidated operating results

(Percentage figures show changes from the same period in the previous year.)

		Net Sales		Operating Income		Ordinary Income	Net Income Attributable
				to Owners of the Parent
		Millions of yen		%	Millions of yen		%		Millions of yen	%	Millions of yen	%
	Three months ended	224,623		7.6	15,162		20.1		15,328	19.1	9,137	4.7
	August 15, 2020
	Three months ended	208,805		9.3	12,623		11.8		12,868	10.5	8,727	20.8
	August 15, 2019
Note: Comprehensive income:	Three months ended August 15, 2020: 14,554 million yen (30.2%)
		Three months ended August 15, 2019: 11,178 million yen (50.7%)
		Net Income per Share	Diluted Net Income
		per Share
				Yen			Yen
	Three months ended			188.75			187.84
	August 15, 2020
	Three months ended			180.50			179.90
	August 15, 2019

(2) Consolidated financial position

	Total Assets	Net Assets	Equity Ratio	Net Assets per Share
	Millions of yen	Millions of yen	%	Yen
As of August 15, 2020	527,280	264,501	46.1	5,018.45
As of May 15, 2020	414,002	250,934	56.4	4,821.26

Reference: Equity capital:As of August 15, 2020: 243,098 million yen As of May 15, 2020: 233,332 million yen

2. Dividends

Annual Dividends (Yen)

First Quarter-end

Second Quarter-end

Third Quarter-end

Year-end

Annual

Year ended May 15, 2020

―

74.00

―

93.00

167.00

Year ending May 15, 2021

―

Year ending May 15, 2021

83.50

―

83.50

167.00

(Forecast)

Note: Revisions to the most recently announced dividend forecast during the period: None

3. Consolidated financial forecasts for the year ending May 15, 2021 (May 16, 2020 - May 15, 2021)

(Percentage figures show changes from the same period in the previous year.)

	Net Sales		Operating Income	Ordinary Income	Net Income Attributable	Net Income
		to Owners of the Parent	per Share
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
First six months	424,400		1.9	21,550	(9.3)	22,193	(9.2)	13,480	(13.3)	278.53
Full year	860,000		2.3	45,200	0.4	46,484	0.4	27,000	(3.2)	557.89

Note: Revisions to the most recently announced earnings forecasts during the period: None

Notes

1. Significant changes to subsidiaries during the period (Transfers of specific subsidiaries with changes in the scope of consolidation): None
2. Application of the specific accounting methods for preparing the quarterly consolidated financial statements: Yes
3. Changes in accounting policies, changes in accounting estimates and restatement of revisions
4. 1. Changes in accounting policies due to revision of accounting standard, etc.: None

2)	Changes in accounting policies other than 1):	Yes
3)	Changes in accounting estimates:	None
4)	Restatement of revisions:	None

(4) Number of shares issued and outstanding (common shares)

1. Number of shares issued and outstanding (including treasury stock)
2. Number of treasury stock
3. Average number of shares issued and outstanding in each period (quarterly consolidated cumulative period)

As of August 15, 2020	49,327,268 shares	As of May 15, 2020	49,282,868 shares
As of August 15, 2020	886,255 shares	As of May 15, 2020	886,255 shares
Three months ended	48,409,879 shares	Three months ended	48,351,862 shares
August 15, 2020	August 15, 2019

• This financial results report is outside the scope of audit procedures conducted by certified public accountants or the independent auditor.
• Explanation of appropriate use of financial forecasts and other special items

This document contains projections of performance based on information currently available. Actual performance may differ from these projections due to changes in the economic environment and other uncertainties. Please refer to page 2 of the supplementary materials for further details about the above financial forecasts.

TSURUHA Holdings, Inc. (3391) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending May 15, 2021

Contents

1. Qualitative information on quarterly financial results ......................................................................................................	2
(1)	Explanation of consolidated financial results..................................................................................................................	2
(2)	Explanation of consolidated financial position ...............................................................................................................	2
(3)	Explanation of consolidated financial forecasts and other forward-looking statements .................................................	2
2. Quarterly consolidated financial statements and related notes .........................................................................................	3
(1)	Quarterly consolidated balance sheets.............................................................................................................................	3
(2)	Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income...........	5
	(Quarterly consolidated statements of income)...............................................................................................................	5
	(Quarterly consolidated statements of comprehensive income)......................................................................................	6
(3)	Notes on quarterly consolidated financial statements .....................................................................................................	7
	(Notes on premise of a going concern) ...........................................................................................................................	7
	(Application of the specific accounting methods for preparing the quarterly consolidated financial statements)..................	7
	(Change in accounting policy) ........................................................................................................................................	7
	(Notes on significant changes in the amount of shareholders' equity)............................................................................	7

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TSURUHA Holdings, Inc. (3391) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending May 15, 2021

1. Qualitative information on quarterly financial results

1. Explanation of consolidated financial results

In the first three months of the current fiscal year (May 16, 2020 to August 15, 2020), the Japanese economy witnessed a notable decline in consumer sentiment, largely reflecting the government's declaration of a state of emergency in April due to the COVID-19 pandemic. While economic activity showed gradual signs of restarting once the state of emergency was lifted, concerns of a resurgence of the virus linger, leaving the economic future shrouded in extreme uncertainty.

In the drugstore sector, with competition to open stores and reduce prices continuing to intensify, the pace of consolidation and realignment grew more pronounced, including among major firms and listed companies.

Against this backdrop, the TSURUHA Group continued to offer a high level of customer service, mainly through advice- based sales, and worked to address the shrinking market caused by Japan's aging population and intensifying competition. Specifically, the Group pushed ahead with store renovations that included the introduction of meat and fresh produce, aimed at improving convenience for customers, while in private brands, the Group reinforced product development and sales structures and worked to renew and expand the private brand business by launching two new brands - Kurashi Rhythm and Kurashi Rhythm Medical. Targeting improvements in the operational efficiency of stores and enhancement of productivity, the Group also worked on introducing new support systems for staff allocation, inventory management and other functions. In terms of impact of the COVID-19 pandemic, while there was a decline in inbound demand, as well as lower demand particularly for cosmetics, demand for goods designed to prevent the spread of infection rose, as did demand for daily-use items, consumable goods and food, in line with stay-at-home requests following the state of emergency declaration.

In store openings, the Group targeted specific areas for multiple store openings as part of its area dominance store-opening strategy and implemented a scrap and build approach for existing stores. In the first three months of the fiscal year under review, the Group opened 29 new stores and closed 26 existing stores. In addition, 206 stores were added to the Group after JR KYUSHU DRUG ELEVEN CO., LTD. became a subsidiary of TSURUHA Holdings, Inc. on May 28, 2020, resulting in a total of 2,359 directly managed stores as of the end of the first quarter.

TSURUHA Group store openings and closures	(Number of stores)
	End of	Store		Became	Store	Net	End of	Of which
	previous		current	dispensing
	openings		subsidiary	closures	change
	fiscal year		period	pharmacies
Hokkaido	404	2		－	5	(3)	401	98
Tohoku	506	8		－	1	7	513	99
Kanto,	473	8		3	3	8	481	163
Koshinetsu
Chubu, Kansai	233	3		－	5	(2)	231	113
Chugoku	300	3		1	－	4	304	93
Shikoku	211	5		－	5	0	211	55
Kyushu,	23	－		202	7	195	218	25
Okinawa
Total	2,150	29		206	26	209	2,359	646

(The figure at the end of the current period excludes 21 overseas stores and four franchise stores.)

As a result of the above, in the first three months of the current fiscal year, TSURUHA Holdings reported net sales of ¥224,623 million (up 7.6% year on year), operating income of ¥15,162 million (up 20.1%), ordinary income of ¥15,328 million (up 19.1%), and net income attributable to owners of the parent of ¥9,137 million (up 4.7%).

1. Explanation of consolidated financial position
   As of the end of the first quarter, assets totaled ¥527,280 million, an increase of ¥113,278 million compared with the end of

the previous fiscal year. This mainly reflected increases in cash and deposits and accounts receivable - trade, as the settlement date for the first quarter fell on a non-business day for financial institutions, and the purchase of shares of JR KYUSHU DRUG ELEVEN CO., LTD.

Liabilities totaled ¥262,779 million, an increase of ¥99,711 million compared with the end of the previous fiscal year. This mainly reflected an increase in accounts payable - trade, as the settlement date for the first quarter fell on a non-business day for financial institutions, and the purchase of shares of JR KYUSHU DRUG ELEVEN CO., LTD.

Net assets totaled ¥264,501 million, an increase of ¥13,566 million compared with the end of the previous fiscal year. As a result, the equity ratio was 46.1%, down 10.3 points from the previous fiscal year-end.

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