パルグループホールディングス（2726） – [Delayed] Consolidated Financial Results for the Fiscal Year Ended February 28, 2022 [Japanese GAAP]]

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: +81-6-6227-0308 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) 1. Consolidated Financial Results for the Fiscal Year Ended February 28, 2022 (March 1, 2021 to February 28, (Amounts of less than one million yen are rounded down.) 2022) (1) Consolidated Operating Results (% indicates changes from the previous corresponding period.) Net sales Operating profit Ordinary profit % 134,200 million yen million yen Fiscal year ended February 28, 2022 Fiscal year ended February 28, 2021 (Note) Comprehensive income: Fiscal year ended February 28, 2022: ¥4,038 million [―%] Fiscal year ended February 28, 2021: ¥7 million [(99.9)%] 7,520 443.5 million yen 108,522 (88.5) (17.9) (84.7) 627.5 1,383 7,660 1,052 23.7 % % Profit attributable to owners of parent million yen % 4,001 ― 270 (96.1) Basic earnings per share Diluted earnings per share Rate of return on equity Ordinary profit to total assets Operating profit to net sales yen yen 91.10 Fiscal year ended February 28, 2022 Fiscal year ended February 28, 2021 (Reference) Equity in earnings of affiliates: Fiscal year ended February 28, 2022: ¥(146) million Fiscal year ended February 28, 2021: ¥(287) million 6.16 8.7 0.6 ― ― % 7.6 1.0 % % 5.6 1.3 Total assets (2) Consolidated Financial Position As of February 28, 2022 As of February 28, 2021 (Reference) Equity: As of February 28, 2022: ¥47,328 million As of February 28, 2021: ¥44,351 million Net assets million yen 108,186 93,728 47,389 44,351 million yen (3) Consolidated Cash Flows Equity ratio Net assets per share yen % 50.5 41.0 1,077.47 1,009.69 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 million yen million yen 7,970 1,450 (679) (1,188) million yen (18,128) 10,098 million yen 52,250 63,088 Fiscal year ended February 28, 2022 Fiscal year ended February 28, 2021 2. Dividends Annual dividends 3rd quarter-end 2nd quarter-end Year-end 1st quarter-end Total Total dividends paid (annual) yen million yen Payout ratio (consolidated) Dividends to net assets (consolidated) yen yen yen yen ― ― 0.00 25.00 Fiscal year ended February 28, 2021 Fiscal year ended February 28, 2022 Fiscal year ending February 28, 2023 (Forecast) 3. Consolidated Financial Results Forecast for the Fiscal Year Ending February 28, 2023 (March 1, 2022 to 50.00 50.00 25.00 1,098 405.8 50.00 2,196 50.00 54.9 47.7 0.00 0.00 ― ― ― ― % % 2.4 4.8 February 28, 2023) Net sales Operating profit million yen 70,000 150,000 % million yen 3,200 8,700 10.8 11.8 Ordinary profit (% indicates changes from the previous corresponding period) Profit attributable to owners of parent % 10.8 15.0 % million yen 1,600 4,600 % million yen 3,000 8,300 Basic earnings per share yen 36.43 104.72 7.4 8.3 12.7 15.7 First half Full year * 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): 2) Total number of treasury shares at the end of the period: As of February 28, 2022 As of February 28, 2021 As of February 28, 2022 As of February 28, 2021 46,272,000 shares 46,272,000 shares 2,346,244 shares 2,346,134 shares 3) Average number of shares during the period: Fiscal year ended February 28, 2022 Fiscal year ended February 28, 2021 43,925,767 shares 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 (1) Overview of Consolidated Operating Results for the Period under Review (2) Overview of Consolidated Financial Position for the Period under Review (3) Overview of Consolidated Cash Flows for the Period under Review (4) Outlook for Fiscal 2023 2. Consolidated Financial Statements (1) Consolidated Balance Sheets (2) Consolidated Statements of Income and Comprehensive Income (3) Consolidated Statements of Changes in Net Assets (4) Consolidated Statements of Cash Flows 2 2 2 3 4 5 5 7 10 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 Miscellaneous Goods/Accessories Business Other Total 87,109 46,997 93 134,200 115.3 142.8 121.7 123.7 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 ¥2,352 million compared with the end of the previous fiscal year, due primarily to decreases in buildings and structures by ¥1,254 million, guarantee deposits by ¥861 million, and deferred tax assets by ¥198 million, despite an increase in leased assets by ¥339 million. (Liabilities) Current liabilities decreased by ¥15,847 million compared with the end of the previous fiscal year, due mainly to decreases in short-term borrowings by ¥14,750 million and notes and accounts payable – trade by ¥4,321 million, despite an increase in income taxes payable by ¥1,852 million. Non-current liabilities decreased by ¥1,648 million compared with the end of the previous fiscal year, due primarily to a decrease in long-term borrowings by ¥1,971 million, despite an increase in lease obligations by ¥306 million. (Net assets) Net assets increased by ¥3,037 million compared with the end of the previous fiscal year, due mainly to an increase in retained earnings by ¥2,903 million. (3) Overview of Consolidated Cash Flows for the Period under Review Cash and cash equivalents (hereinafter “cash”) at the end of the fiscal year ended February 28, 2022 decreased by ¥10,838 million compared with the end of the previous fiscal year to ¥52,250 million, due mainly to cash used in financing activities in the amount of ¥18,128 million, despite cash provided by operating activities in the amount of ¥7,970 million. Cash flows for the fiscal year ended February 28, 2022 are as follows. (Net cash provided by (used in) operating activities) While cash provided by operating activities was ¥1,450 million for the previous fiscal year, cash provided by operating activities amounted to ¥7,970 million for the fiscal year ended February 28, 2022, due mainly to an increase in profit before income taxes by ¥5,565 million to ¥6,070 million after recording impairment losses of ¥1,659 million. (Net cash provided by (used in) investing activities) While cash used in investing activities was ¥1,188 million for the previous fiscal year, cash used in investing activities amounted to ¥679 million for the fiscal year ended February 28, 2022, due mainly to proceeds from sale of property, plant and equipment of ¥453 million, purchase of property, plant and equipment of ¥1,478 million, proceeds from refund of guarantee deposits of ¥1,687 million, payments of guarantee deposits of ¥832 million, and payments for asset retirement obligations of ¥348 million. (Net cash provided by (used in) financing activities) While cash provided by financing activities was ¥10,098 million for the previous fiscal year, cash used in financing activities amounted to ¥18,128 million for the fiscal year ended February 28, 2022, due mainly to dividends paid of ¥1,098 million, a net decrease in short-term borrowings of ¥14,750 million, and repayments of long-term borrowings of ¥1,811 million. 3 (Reference) Cash flow-related indicators Fiscal year ended February 28, 2018 Fiscal year ended February 28, 2019 Fiscal year ended February 29, 2020 Fiscal year ended February 28, 2021 Fiscal year ended February 28, 2022 46.4 84.3 47.5 83.2 49.1 70.6 41.0 69.4 50.5 78.8 382.2 175.7 111.2 2,004.3 162.5 43.1 83.1 129.1 12.2 75.9 Equity ratio (%) Equity ratio based on market value (%) Interest-bearing debt to cash flows ratio (%) Interest-coverage ratio (times) Equity ratio: Equity / Total assets Equity ratio based on market value: Market capitalization of shares / Total assets Interest-bearing debt to cash flows ratio: Interest-bearing debt / Operating cash flows Interest-coverage ratio: Operating cash flows / Interest payments (4) Outlook for Fiscal 2023 While rising raw material prices have started affecting the economy, contributing to worsening consumer sentiment, all of priority preventative measures implemented in several prefectures were lifted in late March, and the impact on economic activities caused by COVID-19 is diminishing. Furthermore, it is expected that the government will introduce measures to normalize the economy, and it is assumed that personal consumption will recover gradually. Accordingly, for the fiscal year ending February 28, 2023, we forecast net sales to increase by 11.8% year on year to ¥150,000 million, operating profit to increase by 15.7% to ¥8,700 million, ordinary profit to increase by 8.3% to ¥8,300 million, and profit attributable to owners of parent to increase by 15.0% to ¥4,600 million. 4 As of February 28, 2021 As of February 28, 2022 (Millions of yen) 2. Consolidated Financial Statements (1) Consolidated Balance Sheets Assets Current assets Cash and deposits Notes and accounts receivable – trade Merchandise and finished goods Raw materials and supplies Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Machinery, equipment and vehicles, net Land Leased assets, net Other, net Total property, plant and equipment Intangible assets Investments and other assets Investment securities Guarantee deposits Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 63,088 7,310 9,709 31 1,826 (0) 81,966 6,078 2 546 843 206 7,677 549 1,728 12,925 2,813 804 (279) 17,992 26,220 108,186 52,250 6,342 10,736 30 500 － 69,859 4,823 2 397 1,183 202 6,608 467 1,594 12,064 2,615 783 (265) 16,792 23,868 93,728 5 As of February 28, 2021 As of February 28, 2022 (Millions of yen) Liabilities Current liabilities Notes and accounts payable – trade Short-term borrowings Current portion of long-term borrowings Accrued expenses Income taxes payable Provision for bonuses Provision for bonuses for directors (and other officers) Provision for sales returns Provision for point card certificates Other Total current liabilities Non-current liabilities Long-term borrowings Retirement benefit liability Provision for retirement benefits for directors (and other officers) Long-term accounts payable – other Lease obligations Asset retirement obligations Deferred tax liabilities Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets 24,688 15,000 5,198 2,482 88 1,642 14 0 468 2,599 52,181 7,766 1,250 126 29 667 1,795 2 13 11,652 63,834 3,181 4,469 39,040 (2,172) 44,518 (0) (21) (144) (166) － 44,351 108,186 20,366 250 5,382 2,198 1,940 1,777 204 0 681 3,531 36,334 5,794 1,312 130 15 974 1,753 1 21 10,004 46,339 3,181 4,478 41,943 (2,173) 47,430 (0) (16) (85) (101) 60 47,389 93,728 6 (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income Net sales Cost of sales Gross profit Provision for sales returns Gross profit – net Selling, general and administrative expenses Advertising and promotion expenses Provision for point card certificates Transportation and storage costs Provision of allowance for doubtful accounts Salaries, allowances and bonuses Provision for bonuses Provision for bonuses for directors (and other officers) Retirement benefit expenses Provision for retirement benefits for directors (and other officers) Welfare expenses Rent expenses Lease expenses Other Total selling, general and administrative expenses Operating profit Non-operating income Interest income Royalty income Rental income Foreign exchange gains Subsidy income related to COVID Other Total non-operating income Non-operating expenses Interest expenses Provision of allowance for doubtful accounts Share of loss of entities accounted for using equity method Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of non-current assets Gain on sale of golf membership Gain on sale of investment securities Total extraordinary income Fiscal year ended February 28, 2021 108,522 49,284 59,237 (0) 59,237 3,537 153 4,302 0 15,982 1,642 14 161 4 3,345 15,841 123 12,745 57,853 1,383 1 25 12 － 33 61 135 117 32 287 28 465 1,052 － － 333 333 (Millions of yen) Fiscal year ended February 28, 2022 134,200 59,886 74,314 (0) 74,314 4,827 213 5,925 － 17,953 1,777 204 191 3 3,507 17,414 127 14,645 66,793 7,520 1 13 6 4 327 63 416 106 － 146 23 276 7,660 270 1 － 272 7 Extraordinary losses Loss on retirement of non-current assets Impairment losses Other 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 Fiscal year ended February 28, 2021 87 793 1 882 504 682 (448) 233 270 － 270 (Millions of yen) Fiscal year ended February 28, 2022 202 1,659 － 1,862 6,070 1,927 170 2,097 3,973 (28) 4,001 8 Consolidated Statements of Comprehensive Income Profit Other comprehensive income Valuation difference on available-for-sale Foreign currency translation adjustment Remeasurements of defined benefit plans, net of securities tax Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests Fiscal year ended February 28, 2021 (Millions of yen) Fiscal year ended February 28, 2022 3,973 0 5 56 2 65 4,038 4,066 (28) 270 (184) 0 (59) (19) (262) 7 7 － 9 (3) Consolidated Statements of Changes in Net Assets Fiscal year ended February 28, 2021 Shareholders’ equity Share capital Capital surplus Treasury shares Retained earnings (Millions of yen) Total shareholders’ equity 3,181 4,469 40,969 (2,088) 46,531 Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Capital increase of consolidated subsidiaries Net changes in items other than shareholders’ equity Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Capital increase of consolidated subsidiaries Net changes in items other than shareholders’ equity Total changes during period Balance at end of period (184) (184) (0) Total changes during period Balance at end of period － 3,181 － 4,469 (1,929) 39,040 (83) (2,013) (2,172) 44,518 Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests 183 (22) (65) 96 － 46,627 (2,199) 270 (83) (2,199) 270 (83) － (79) (79) (144) (262) (262) (166) (Millions of yen) Total net assets － － － (2,199) 270 (83) － (262) (2,276) 44,351 1 1 (21) 10 Fiscal year ended February 28, 2022 Shareholders’ equity Share capital Capital surplus Treasury shares Retained earnings (Millions of yen) Total shareholders’ equity 3,181 4,469 39,040 (2,172) 44,518 Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Capital increase of consolidated subsidiaries Net changes in items other than shareholders’ equity Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Capital increase of consolidated subsidiaries Net changes in items other than shareholders’ equity Total changes during period Balance at end of period Total changes during period Balance at end of period － 3,181 4,478 (2,173) 47,430 (0) 2,911 Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests (0) (21) (144) (166) － 44,351 (0) (1,098) 4,001 (0) 8 (Millions of yen) Total net assets 89 (28) 60 60 (1,098) 4,001 (0) 97 36 3,037 47,389 (1,098) 4,001 2,903 41,943 8 8 11 5 5 (16) 59 65 59 (85) 65 (101) 0 0 (0) (4) Consolidated Statements of Cash Flows Cash flows from operating activities Profit before income taxes Depreciation Impairment losses Increase (decrease) in allowance for doubtful accounts Interest and dividend income Interest expenses Subsidies for employment adjustment, etc. Share of loss (profit) of entities accounted for using equity method Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Increase (decrease) in provision for bonuses Increase (decrease) in provision for retirement benefits for directors (and other officers) Increase (decrease) in provision for bonuses for directors (and other officers) Increase (decrease) in retirement benefit liability Increase (decrease) in provision for sales returns Increase (decrease) in provision for point card certificates Loss on retirement of property, plant and equipment Loss (gain) on sale of investment securities Loss (gain) on sale of property, plant and equipment Increase (decrease) in consumption taxes receivable payable Other, net Subtotal Interest and dividends received Interest paid Proceeds from subsidies for employment adjustment, etc. Payments of retirement benefits for directors (and other officers) Income taxes refund (paid) Net cash provided by (used in) operating activities (Millions of yen) Fiscal year ended February 28, 2022 Fiscal year ended February 28, 2021 504 1,896 793 32 (10) 117 (1,021) 287 (875) (1,892) 3,947 (94) 4 (413) 123 (0) 153 88 (333) – (1,728) 147 1,726 10 (118) 1,021 (12) (1,176) 1,450 6,070 1,756 1,659 (14) (1) 106 (618) 146 968 (1,025) (4,327) 134 3 190 145 (0) 213 202 – (270) 1,728 (31) 7,037 1 (105) 618 – 417 7,970 12 Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Proceeds from sale of investment securities Loan advances Purchase of intangible assets Payments of guarantee deposits Proceeds from refund of guarantee deposits Payments for asset retirement obligations Net cash provided by (used in) investing activities Cash flows from financing activities Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Purchase of treasury shares Dividends paid Proceeds from share issuance to non-controlling shareholders Repayments of installment payables Repayments of finance lease obligations Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Fiscal year ended February 28, 2021 (Millions of yen) Fiscal year ended February 28, 2022 (1,747) – 830 (50) (84) (674) 741 (204) (1,188) 13,206 1,052 (1,301) (83) (2,199) – (79) (495) 10,098 10,360 52,727 63,088 (1,478) 453 – – (161) (832) 1,687 (348) (679) (14,750) 23 (1,811) (0) (1,098) 97 (14) (576) (18,128) (10,838) 63,088 52,250 13