ジンズホールディングス（3046） – [Delayed]Consolidated Financial Results for the Three Months Ended Novmber30, 2021

Consolidated Financial Results for the Three Months Ended November 30, 2021 [Japanese GAAP] January 14, 2022 Company name: JINS HOLDINGS Inc. Stock exchange listing: Tokyo Stock Exchange Code number: 3046 URL: https://jinsholdings.com Representative: Hitoshi Tanaka, CEO and Representative Director Contact: Mikiya Yamawaki, Executive Officer and General Manager, Investor Relations Division Phone: +81-3-5275-7001 Scheduled date of filing quarterly securities report: January 14, 2022 Scheduled date of commencing dividend payments: – Availability of supplementary briefing material on quarterly financial results: Not available Schedule of quarterly financial results briefing session: Not scheduled (Amounts of less than one million yen are rounded down.) 1. Consolidated Financial Results for the Three Months Ended November 30, 2021 (September 1, 2021 to November 30, 2021) (1) Consolidated Operating Results Net sales (% indicates changes from the previous corresponding period.) Profit attributable to owners of parent Ordinary profit Operating profit Three months ended Million yen 15,275 November 30, 2021 14,813 November 30, 2020 % Million yen 577 781 3.1 (0.8) % Million yen 691 705 (26.0) (42.0) % Million yen 433 369 (2.1) (48.4) % 17.4 (55.7) (Note) Comprehensive income: Three months ended November 30, 2021 ¥437 million [(1.9)%] Three months ended November 30, 2020: ¥445 million [(38.0)%] Earnings per share Diluted earnings per share Yen 18.56 15.82 Yen 16.47 14.02 Three months ended November 30, 2021 November 30, 2020 (2) Consolidated Financial Position As of November 30, 2021 As of August 31, 2021 Total assets Net assets Equity ratio Million yen 52,684 53,007 Million yen 20,176 20,219 % 38.3 38.1 (Reference) Equity: As of November 30, 2021: ¥20,176 million 2. Dividends As of August 31, 2021: ¥20,219 million Fiscal year ended August 31, 2021 Fiscal year ending August 31, 2022 Fiscal year ending August 31, 2022 (Forecast) Annual dividends 1st quarter-end Yen 2nd quarter-end Yen 25.00 3rd quarter-end Yen 17.00 Year-end Total Yen 20.00 37.00 Yen 45.00 54.00 (Note) Revision to the forecast for dividends announced most recently: Yes 3. Forecast of Consolidated Financial Results for the Fiscal Year Ending August 31, 2022 (September 1, 2021 to August 31, 2022) (% indicates changes from the previous corresponding period.) Net sales Operating profit Ordinary profit Million yen 32,755 3.5 71,155 11.4 % Million yen 1,977 7,177 (20.2) Half year Full year 39.6 (Note) Revision to the financial results forecast announced most recently: Yes (25.8) 42.1 % Million yen 2,061 7,011 Profit attributable to owners of parent % (30.3) 22.5 % Million yen 1,333 4,033 Earnings per share Yen 57.12 172.80 * Notes: (1) Changes in significant subsidiaries during the three months ended November 30, 2021 (changes in specified subsidiaries resulting in changes in scope of consolidation): None (2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates and retrospective restatement (4) Total number of issued shares (common shares) 1) Changes in accounting policies due to the revision of accounting standards: Yes 2) Changes in accounting policies other than 1) above: None 3) Changes in accounting estimates: Yes 4) Retrospective restatement: None 1) Total number of issued shares at the end of the period (including treasury stock): November 30, 2021: 23,980,000 shares August 31, 2021: 23,980,000 shares 2) Total number of treasury stock at the end of the period: November 30, 2021: 639,784 shares August 31, 2021: 639,784 shares 3) Average number of shares during the period (Accumulated total of the quarter): Three months ended November 30, 2021: 23,340,216 shares Three months ended November 30, 2020: 23,340,218 shares *This quarterly financial report is outside the scope of quarterly review by Certified Public Accountants or an Audit firm. *Explanation of the proper use of financial results forecast and other notes Forward-looking statements in this document, such as the financial results forecast, are based on information currently available to the Group and certain assumptions that the Group has deemed reasonable. These statements are not intended as the Group’s commitment to achieve them, and actual performance may differ significantly due to various factors. For the assumptions for financial results forecast and precautions for using financial results forecast, please refer to “Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information” on page 4 of the attached document. Table of Contents 1. Qualitative Information on Quarterly Financial Results for the Period under Review ……………………. 2 (1) Explanation of Business Results …………………………………………………………………………………………. 2 (2) Explanation of Financial Position ……………………………………………………………………………………….. 4 (3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information . 4 2. Quarterly Consolidated Financial Statements and Primary Notes ……………………………………………….. 5 (1) Quarterly Consolidated Balance Sheets ……………………………………………………………………………….. 5 (2) Quarterly Consolidated Statements of Income and Comprehensive Income ……………………………… 7 (3) Notes to Quarterly Consolidated Financial Statements …………………………………………………………… 9 (Notes on going concern assumption) ………………………………………………………………………………… 9 (Notes in the case of significant changes in shareholders’ equity) ………………………………………….. 9 (Changes in accounting policies) …………………………………………………………………………………………. 9 (Changes in accounting estimates) …………………………………………………………………………………….. 10 (Segment information) ……………………………………………………………………………………………………. 10 (Additional information) …………………………………………………………………………………………………. 11 1 1. Qualitative Information on Quarterly Financial Results for the Period under Review (1) Explanation of Business 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 more convenient 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). Business results by segment are as follows. Net sales by business segment Segment Domestic eyewear business Overseas eyewear business Total For the three months ended November 30, 2021 (September 1, 2021 to November 30, 2021) ¥11,890 million ¥3,384 million ¥15,275 million Percentage to the Company’s net sales Year-on-year change 77.8% 22.2% 100.0% 1.7% 8.6% 3.1% 2 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, 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 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). end of the period under review. 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 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). 3 Total assets Liabilities Net assets (a) Assets (b) Liabilities lease obligations. (c) Net Assets (2) Explanation of Financial Position (Status of Assets, Liabilities and Net Assets) Assets, liabilities and net assets at the end of the first quarter of the fiscal year under review are as follows. End of the previous fiscal year (August 31, 2021) End of 1st quarter of the fiscal year under review (November 30, 2021) (Millions of yen) Change (million yen) Change (%) 53,007 32,787 20,219 52,684 32,508 20,176 (322) (279) (43) (0.6) (0.9) (0.2) 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. 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 As a result, total liabilities decreased ¥279 million from the end of the previous fiscal year to ¥32,508 million. 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) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information For the first-half and full-year consolidated financial results forecasts for the fiscal year ending August 31, 2022, please see the “Notice of Revision of First-half and Full-year Consolidated Financial Results Forecast for the Fiscal Year Ending August 31, 2022 and Revision of Dividend Forecast,” which we announced on January 14, 2022. 4 2. Quarterly Consolidated Financial Statements and Primary Notes (1) Quarterly Consolidated Balance Sheets As of August 31, 2021 As of November 30, 2021 Assets Current assets Cash and deposits Notes and accounts receivable – trade Merchandise and finished goods Raw materials and supplies Other Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Other, net Total property, plant and equipment Intangible assets Investments and other assets Leasehold and guarantee deposits Other Total investments and other assets Total non-current assets Total assets 23,206 3,794 4,515 359 1,328 33,205 7,139 1,753 8,892 2,244 4,514 4,150 8,664 19,801 53,007 (Millions of yen) 21,781 4,087 4,549 420 1,374 32,213 7,367 1,906 9,273 2,272 4,741 4,183 8,925 20,471 52,684 5 Liabilities Current liabilities Accounts payable – trade Short-term borrowings Current portion of long-term borrowings Accounts payable – other, and accrued expenses Provision for bonuses Provision for product warranties Income taxes payable Other Total current liabilities Non-current liabilities Convertible bond-type bonds with share acquisition rights Long-term borrowings Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Foreign currency translation adjustment Total accumulated other comprehensive income Total net assets Total liabilities and net assets As of August 31, 2021 As of November 30, 2021 (Millions of yen) 1,763 2,203 48 4,469 75 141 291 1,306 10,300 20,115 197 537 1,356 22,207 32,508 3,202 3,228 18,700 (5,002) 20,128 47 47 20,176 52,684 1,506 2,121 53 4,410 49 – 657 1,702 10,501 20,135 217 528 1,404 22,285 32,787 3,202 3,228 18,747 (5,002) 20,176 43 43 20,219 53,007 6 (2) Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statements of Income Three Months Ended November 30, 2020 and November 30, 2021 For the three months ended November 30, 2020 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Commission income Rental income Foreign exchange gains Subsidy income Other Total non-operating income Non-operating expenses Interest expenses Share of loss of entities accounted for using equity method Commission expenses Rental expenses on real estate Other Total non-operating expenses Ordinary profit Extraordinary losses Loss on retirement of non-current assets Impairment loss Loss on store closings Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent (Millions of yen) For the three months ended November 30, 2021 15,275 3,341 11,934 11,356 577 21 6 1 130 73 3 237 39 22 0 56 5 124 691 37 － 3 40 650 162 53 216 433 – 433 14,813 3,047 11,766 10,985 781 20 9 1 1 19 10 63 40 – 0 81 16 139 705 15 27 1 44 660 94 197 291 369 – 369 7 Quarterly Consolidated Statements of Comprehensive Income Three Months Ended November 30, 2020 and November 30, 2021 Profit Other comprehensive income Foreign currency translation adjustment Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests For the three months ended November 30, 2020 369 76 76 445 445 – (Millions of yen) For the three months ended November 30, 2021 433 4 4 437 437 – 8 (3) Notes to Quarterly Consolidated Financial Statements (Notes on going concern assumption) (Notes in the case of significant changes in shareholders’ equity) Not applicable. Not applicable. (Changes in accounting policies) (Application of Accounting Standard for Revenue Recognition and other standards) The Company has decided to apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020; hereinafter the “Revenue Recognition Accounting Standard”), etc., from the beginning of the first quarter of the fiscal year under review and recognize revenue from goods or services which the Company promised to provide at an amount expected to be received in exchange for the goods or services at the time when control over the promised goods or services has been transferred to a customer. Major changes due to the application of Revenue Recognition Accounting Standard, etc., are shown below. (1) Sales with right of return The Company has changed the accounting treatment of sales with a right of return to the method of recognizing revenue and cost of sales after excluding amounts equivalent to revenue and cost of sales for products expected to be returned. Accordingly, any consideration for products expected to be returned is included in “Other” under “Current liabilities” as refund liabilities, and any assets for which the Company recognizes the right to recover products from customers on settling refund liabilities are included in “Other” under “Current assets” as return assets. (2) Revenue recognition for points from other companies Previously the Company recorded amounts equivalent to points granted to customers in accordance with the sale of products based on points programs operated by other companies as selling, general and administrative expenses. However, the Company has changed to the method of recognizing revenue after subtracting an amount equivalent to points granted from the transaction price. The application of the Revenue Recognition Accounting Standard, etc., follows the provisional treatment stipulated in the proviso of Paragraph 84 of the Revenue Recognition Accounting Standard. The cumulative effects in the case of retroactively applying the new accounting policy to before the beginning of the first quarter of the fiscal year under review were adjusted in retained earnings at the beginning of the first quarter of the fiscal year under review, and the new accounting policy is applied from this initial balance. As the impacts on profit and loss for the three months ended November 30, 2021, and retained earnings at the beginning of the period are not significant, this information has been omitted. Furthermore, in accordance with the provisional treatment stipulated in Paragraph 89-2 of the Revenue Recognition Accounting Standard, information for previous consolidated fiscal years has not been reclassified based on the new method of presentation. In addition, in accordance with the provisional treatment stipulated in Paragraph 28-15 of the Accounting Standard for Quarterly Financial Reporting (ASBJ Statement No. 12, March 31, 2020), the disaggregation of revenue from contracts with customers is not provided for the three months ended November 30, 2020. (Application of Accounting Standard for Fair Value Measurement) The Company has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019, hereinafter the “Fair Value Measurement Accounting Standard”) from the beginning of the first quarter of the fiscal year under review. Accordingly, the Company will apply new accounting policies prescribed in the Fair Value Measurement Accounting Standard and the like in the future in accordance with the provisional treatment stipulated 9 in Paragraph 19 of the same Standard and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). The application of the accounting standard has no impact on the quarterly consolidated financial statements. (Changes in accounting estimates) As announced in the “Notice of Relocation of the Tokyo Head Office” on January 14, 2022, we plan to relocate the Tokyo head office in February 2023. In accordance with this, the Company has shortened the useful lives of non-current assets that it does not expect to use after the relocation. This change will be applied going forward. In addition, the Company has made changes to asset retirement obligations for restoration costs in accordance with fixed-term building lease contracts such that the recording of expenses associated with asset retirement obligations will end by the planned relocation date. Furthermore, the impact of this change on profit and loss for the three months ended November 30, 2021, is not significant. (Segment information) I. For the three months ended November 30, 2020 1. Information about net sales and profit (loss) by reportable segment Net sales: Sales to outside customers Intersegment sales or transfers Domestic eyewear business 11,696 Reportable segment Overseas eyewear business Subtotal 3,117 14,813 (Millions of yen) Adjustments Consolidated (Note) – 14,813 – 121 2 123 (123) Total Segment profit (Note) Segment profit is reconciled to operating profit in the quarterly consolidated statements of income. 14,937 781 11,817 558 3,119 222 (123) – 14,813 781 2. Information about loss on impairment of non-current assets and goodwill by reportable segment (Significant loss on impairment of non-current assets) This is primarily an impairment loss in an amount of ¥27 million recorded in the “domestic eyewear business” segment. (Significant changes in goodwill) Not applicable. (Significant gain on negative goodwill) Not applicable. 10 II. For the three months ended November 30, 2021 1. Information about net sales and profit (loss) by reportable segment, and breakdown of revenue Net sales: Revenue from contracts with customers Sales to outside customers Intersegment sales or transfers Domestic eyewear business Reportable segment Overseas eyewear business Subtotal 11,890 3,384 15,275 11,890 3,384 15,275 (Millions of yen) Adjustments Consolidated (Note) – – 15,275 15,275 – 85 0 85 (85) Total Segment profit (Note) Segment profit is reconciled to operating profit in the quarterly consolidated statements of income. 15,361 577 11,975 518 3,385 59 (85) – 15,275 577 2. Information about loss on impairment of non-current assets and goodwill by reportable segment (Significant loss on impairment of non-current assets) Not applicable. (Significant changes in goodwill) Not applicable. (Significant gain on negative goodwill) Not applicable. 3. Changes in reportable segments As described in Changes in accounting policies, the Company has changed its accounting treatment methods in relation to revenue recognition with the application of the Accounting Standard for Revenue Recognition and other standards from the beginning of the three months ended November 30, 2021. Accordingly, the Company has made similar changes to methods of calculating business segment profit and loss. Furthermore, the impact of these changes on segment information is not significant. (Additional information) (Accounting estimates pertaining to the novel coronavirus disease (COVID-19)) Regarding the impact of COVID-19, the declaration of a state of emergency, etc., was lifted across the country in October 2021, partly owing to a decline in the number of infections in line with an increase in the vaccination rate. However, there are concerns that the number of cases will increase again as more people move around the country, etc., and therefore, we believe that it is still impossible to predict future developments. Although it is difficult to forecast accurately factors including the timing when the disease is brought under control, the Group has made accounting estimates such as impairment of non-current assets and the recoverability of deferred tax assets, based on an assumption that the impact will continue for a certain period in the fiscal year ending August 31, 2022. 11