ブックオフグループホールディングス（9278） – [Delayed]Consolidated Summary Report For the Third Quarter of the Fiscal Year Ending May 31, 2022 [Japanese GAAP]

Consolidated Summary Report For the Third Quarter of the Fiscal Year Ending May 31, 2022 [Japanese GAAP] April 8, 2022 9278 Company Name: BOOKOFF GROUP HOLDINGS LIMITED Code Number: Representative: Yasutaka Horiuchi, President and CEO Inquiries: Quarterly Report issue date: Dividend payment date: Supplementary materials of quarterly financial results: Quarterly Financial results briefing: April 8, 2022 – Yes None Ryotaro Hara, General Manager of Corporate Planning Department Tel: +81-42-750-8588 Stock Exchange: Tokyo URL: https://www.bookoffgroup.co.jp/en/ (Amounts less than one million yen are rounded down) 1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending May 31, 2022 (June 1, 2021 – February 28, 2022) (1) Consolidated Results of Operations Net sales Operating profit (Percentage figures represent year-on-year changes) Profit attributable to owners of parent Ordinary profit Nine months ended Feb. 28, 2022 Nine months ended Dec. 31, 2020 (Note) Comprehensive income Million yen Million yen Million yen YoY change % – (6.5) YoY change % – (11.1) 1,595 737 67,340 58,268 2,041 1,113 Nine months ended Feb. 28, 2022: Nine months ended Dec. 31, 2020: Million yen YoY change % – (7.6) 1,290 (44) ¥1,337 million (-%) ¥(11) million (-%) YoY change % – – Net income per share Fully diluted net income per share Yen 73.94 Nine months ended Feb. 28, 2022 Nine months ended Dec. 31, 2020 (2.53) (Note) BOOKOFF GROUP HOLDINGS changed its fiscal year end from March 31 to May 31 beginning with the fiscal year Yen – – that ended on May 31, 2021. No year-on-year changes are shown for the nine months ended February 28, 2022 because the first nine months are different. The first nine months of the current fiscal year ended on February 28, 2022 and the first nine months of the previous fiscal year, which was a transitional fiscal year, ended on December 31, 2020. (2) Consolidated Financial Condition As of Feb. 28, 2022 As of May 31, 2021 (Reference) Shareholders’ equity 2. Dividends Total assets Net assets Equity ratio Million yen 41,076 40,321 As of Feb. 28, 2022: ¥14,082 million Million yen 14,188 12,944 % 34.3 31.9 As of May 31, 2021: ¥12,854 million Dividend per share End of 1Q Yen – – End of 2Q Yen 0.00 0.00 End of 3Q Yen – – End of 4Q Yen – – End of FY Yen 6.00 20.00 Fiscal year ended May 31, 2021 Fiscal year ending May 31, 2022 Fiscal year ending May 31, 2022 (est.) (Note) Revisions to the most recently announced dividend forecast: Yes 3. Consolidated Forecast for the Fiscal Year Ending May 31, 2022 (June 1, 2021 – May 31, 2022) Full year Yen 6.00 20.00 Net sales Operating profit Million yen Million yen Million yen YoY change % – YoY change % – Full year (Notes) 1. Revisions to the most recently announced consolidated earnings forecasts: Yes 89,000 1,800 2,300 (Percentage figures represent year-on-year changes) Net income Profit attributable to per share owners of parent Ordinary profit YoY change % – Million yen 1,400 YoY change % – Yen 80.21 2. No prior-year comparisons are shown because the fiscal year ended on May 31, 2021 was a 14-month transitional fiscal period due to the change in the fiscal year. 3. BOOKOFF GROUP HOLDINGS disposed of its treasury shares on October 21, 2021 as restricted stock remuneration. Net income per share in the consolidated forecast for the fiscal year ending May 31, 2022 reflects the effect of disposal of these treasury shares. Notes: the scope of consolidation): None 1. Significant changes in subsidiaries during the period (changes in specific subsidiaries accompanied by changes in New: – (company name) Excluded: – (company name) 2. Application of special accounting methods for presenting quarterly consolidated financial statements: None 3. Changes in accounting policies and accounting-based estimates, and restatements (1) Changes due to revision of accounting standards: Yes (2) Changes due to other reasons: None (3) Changes in accounting-based estimates: None (4) Restatements: None (Note) Please see “2. Quarterly Consolidated Financial Statements and Notes, ( 3) Notes to Quarterly Consolidated Financial Statements, Changes in Accounting Policies” on page 9 of the attachments for further information. 4. Number of shares outstanding (common shares) (1) Shares outstanding (including treasury shares) As of Feb. 28, 2022 20,547,413 As of May 31, 2021 20,547,413 (Shares) (2) Treasury shares As of Feb. 28, 2022 3,088,900 As of May 31, 2021 3,100,000 (3) Average number of shares outstanding Nine months ended Feb. 28, 2022 17,452,739 Nine months ended Dec. 31, 2020 17,447,413 * The current summary report is not subject to the quarterly review by certified public accountants or auditing firms. * Cautionary statement regarding forecasts of operating results and special notes (Forward-looking statements) Forward-looking statements in these materials are based on information available to management at the time this report was prepared and assumptions that management believes are reasonable. This report is not promises by BOOKOFF GROUP HOLDINGS regarding future performance. Actual results may differ materially from those projected in the forward -looking statements due to a variety of factors. (How to view supplementary materials for quarterly financial results) Supplementary materials for the quarterly financial results will be disclosed today (April 8, 2022), using the Timely Disclosure network (TDnet). BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year Table of Contents 1. Qualitative Information on Quarterly Consolidated Financial Performance (1) Explanation of Results of Operations (2) Explanation of Financial Position (3) Explanation of Consolidated Earnings Forecasts and Other Forward-looking Statements 2. Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheet (2) Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statement of Income For the Nine-month Period Quarterly Consolidated Statement of Comprehensive Income For the Nine-month Period (3) Notes to Quarterly Consolidated Financial Statements (Notes Concerning the Going-Concern Premise) (Significant Changes in Shareholders’ Equity) (Changes in Accounting Policies) (Segment Information) 2 2 4 4 5 5 7 7 8 9 9 9 9 10 1 1. Qualitative Information on Quarterly Consolidated Financial Performance (1) Explanation of Results of Operations BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year Forward-looking statements in this Consolidated Summary Report are based on information available to management as of the end of the third quarter. The previous fiscal year was a 14-month transitional fiscal year from April 1, 2020 to May 31, 2021 due to the change in the fiscal year end. Consequently, no year-on-year comparisons are shown because of the different first nine months of the current fiscal year (June 1, 2021 to February 28, 2022) and previous fiscal year (April 1 to December 31, 2020). Since the start of operations, the BOOKOFF Group has always been guided by the two corporate philosophies of “contributing to society through our business activities” and “the pursuit of employees’ material and spiritual wellbeing.” In addition, the Group has established the following mission for business activities in accordance with these philosophies: Be a source of an enjoyable and prosperous life for as many people as possible. Based on this mission, we will use our strengths in Japan’s growing reuse market to become the leading reuse company with books as the core category. Our goal is to become the reuse store chain used by the largest number of customers as we adapt to changes in market conditions. We have established two core strategies in order to accomplish this goal. Core strategy I: Upgrade individual stores We believe that upgrading reuse services provided at stores in all of our businesses, whether in Japan or other countries, to reflect the needs of regions served and targeted customer segments is the starting point for becoming a leading reuse company that serves the largest number of customers. To accomplish this goal, we are making upgrades in a manner that matches the format packages and services of individual stores. 1) BOOKOFF operations in Japan BOOKOFF operations in Japan are the Group’s core business and have consistent sales and earnings that account for a large share of consolidated sales and earnings. As a result, this business generates funds for investments for activities for growth. There are separate management policies for the two categories of stores, which are based mainly on floor area, and for online stores, primarily BOOKOFF Online, and e-commerce distribution centers. 2) Business for affluent customers This sector consists of two services that target mainly affluent and high-net-worth customers. One is the operation of purchasing desks at department stores using the hugall brand. The other is the operation of jewelry repair, restoration and sales locations at department stores and shopping centers using the name aidect brand. Both services are valuable channels for serving customer segments that are not covered by BOOKOFF stores. The hugall service uses its improved efficient operations extending from purchases to sales in order to generate earnings by purchasing quality reuse items primarily at purchasing desks located at department stores. To continue increasing earnings, the hugall service is focusing on adding more locations, mainly at department stores, and constantly increasing the number of customers. At the aidect service, the main goal is becoming profitable. To accomplish this, the highest priorities are operating existing stores more efficiently and increasing the volume of services for order-made items, which have a high profit margin. 3) Overseas business The BOOKOFF Group operates stores in the United States and France. In addition, the Group started operating stores in Malaysia under the name Jalan Jalan Japan in 2016 to create a channel for selling surplus merchandise in Japan. Core strategy II: Use all the BOOKOFF Group’s strengths In the past, the BOOKOFF Group provided separate services at stores and through channels other than stores. As the digital shift alters the spending patterns of customers of the BOOKOFF operations in Japan, we need to leverage all of our strengths in order to continue growing. In addition, we must continue expanding our businesses for affluent customers and our overseas operations as our group’s business activities become more 2 BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year diverse. Our growth will also be backed by the use of operational expertise acquired over many years, our highly talented workforce and the linkage of merchandise among different business units. The most important initiative within this core strategy is the “One BOOKOFF” concept for our core BOOKOFF operations in Japan. This concept has the following objective. “One BOOKOFF” Our goal is to seamlessly integrate our member base, sales and purchasing platforms, the systems that underpin these operations, and other resources. We want to allow all of our services to utilize our assets including information and expertise concerning members, merchandise, operations and other items acquired by individual operations. By facilitating this widespread sharing of resources, we plan to increase the volume of business for the entire BOOKOFF chain of stores in Japan while improving the earnings of every store. To accomplish this goal, we are making strategic IT and marketing investments in the current fiscal year to increase the consistency of earnings in the BOOKOFF operations in Japan as the pandemic continues to impact the business climate. We are also making investments in remodeling BOOKOFF SUPER BAZAAR stores with the goal of achieving a recovery in the earnings of these stores. In addition, we are positioning this fiscal year as a time for taking on new challenges in order to improve the profitability of s ervices for affluent customers and of our overseas operations, which are business sectors with good prospects for growth. We are continuously making investments for activities involving the “One BOOKOFF” concept. These activities include measures to increase the number of members using our official app, distributing coupons and conducting special sales exclusively for members, allowing customers to pick up at stores merchandise purchased using the app, and other convenient and valuable services. Investments have been also used to create an omni-channel structure that utilizes the BOOKOFF Online website and to move forward with our O2O (online-to-offline) strategy. In BOOKOFF operations in Japan, we actively renovated existing BOOKOFF SUPER BAZAAR and BOOKOFF PLUS stores during the first nine months. Sales of books, which are the largest components of sales, were lower than the very high level of one year earlier with demand associated with the need to stay home during the pandemic. But there were big increases from one year earlier in sales in the trading card and hobby goods category because of numerous activities for raising the sales of these products , such as the expansion of trading card sales areas and the establishment of space for trading card duels. At businesses for affluent and high-net-worth customers, sales were higher than one year earlier despite the negative effect of the pandemic on purchasing desks at department stores and other business operations. In Malaysia, Jalan Jalan Japan stores were forced to suspend operations due to a pandemic lockdown. However, as the lockdown was lifted the number of customers remained steady, and sales recovered to the pre -pandemic level. In the United States, we actively used SNS and other media to raise awareness, and as a result, purchases and sales at BOOKOFF stores were at high levels. In particular, sales of local books and anime goods were significantly higher than one year earlier. During the first nine months, we opened BOOKOFF KAKA’AKO store in the U.S. and Jalan Jalan Japan Masai store in Malaysia. In the city of Musashino in Tokyo, we opened Japan TCG Center Kichijoji-eki-kitaguchi store. This is the BOOKOFF Group’s first store specializing in trading cards. Customers can buy and sell trading cards at the store and purchase new card packs as well as many types of merchandise associated with trading cards. The store also has a space for trading card duels. As a result, consolidated net sales amounted to ¥67,340 million. The BOOKOFF Group recorded an operating profit of ¥1,595 million, an ordinary profit of ¥2,041 million, and a profit attributable to owners of parent of ¥1,290 million. There is no business segment information because the BOOKOFF Group has only a single segment. 3 BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year (2) Explanation of Financial Position (Current Assets) Current assets at the end of the third quarter were ¥25,053 million, an increase of ¥1,035 million compared with ¥24,017 million at the end of the previous fiscal year. There were increases of ¥621 million in merchandise and ¥554 million in cash and deposits. (Non-current Assets) Non-current assets at the end of the third quarter were ¥16,022 million, a decrease of ¥281 million compared with ¥16,304 million at the end of the previous fiscal year. This was mainly attributable to decreases of ¥110 million in property, plant and equipment and ¥432 million in investments and other assets, while there was an increase of ¥261 million in intangible assets. (Liabilities) Liabilities at the end of the third quarter were ¥26,888 million, a decrease of ¥488 million compared with ¥27,377 million at the end of the previous fiscal year. This was mainly attributable to a decrease of ¥418 million in borrowings. (Net Assets) Net assets at the end of the third quarter were ¥14,188 million, an increase of ¥1,243 million compared with ¥12,944 million at the end of the previous fiscal year. Major components were dividend payments and the profit attributable to owners of parent. (3) Explanation of Consolidated Earnings Forecasts and Other Forward-looking Statements For information about the consolidated forecast for the fiscal year ending May 31, 2022, please refer to the press release titled “Notice of Revisions to Consolidated Forecasts and Dividend Forecasts” (Japanese version only) dated April 8, 2022. 4 BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year 2. Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheet (Unit: million yen) FY5/2021 (As of May 31, 2021) Third quarter of FY5/2022 (As of Feb. 28, 2022) Assets Current assets Cash and deposits Accounts receivable-trade Merchandise Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Leased assets, net Other, net Total property, plant and equipment Intangible assets Goodwill Other Total intangible assets Investments and other assets Guarantee deposits Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 5,837 2,120 13,778 2,282 (0) 24,017 3,974 1,126 747 5,848 136 1,084 1,220 7,492 1,803 (60) 9,234 16,304 40,321 6,392 2,055 14,399 2,206 (0) 25,053 3,801 1,087 849 5,738 99 1,382 1,482 7,296 1,565 (60) 8,801 16,022 41,076 5 Liabilities Current liabilities Accounts payable-trade Short-term borrowings Current portion of long-term borrowings Lease obligations Income taxes payable Provision for sales rebates Provision for bonuses Other provisions Other Total current liabilities Non-current liabilities Long-term borrowings Asset retirement obligations Lease obligations 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 Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year (Unit: million yen) FY5/2021 (As of May 31, 2021) Third quarter of FY5/2022 (As of Feb. 28, 2022) 560 7,232 3,952 297 115 421 582 93 4,328 17,584 6,133 2,383 939 337 9,793 27,377 100 6,485 8,603 (2,343) 12,845 75 (66) 8 90 12,944 40,321 722 6,554 2,785 255 401 – 396 202 4,446 15,763 7,560 2,401 921 241 11,124 26,888 100 6,487 9,789 (2,335) 14,042 77 (36) 40 105 14,188 41,076 6 (2) Quarterly Consolidated Statements of Income and Comprehensive Income BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year Quarterly Consolidated Statement of Income (For the Nine-month Period) Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Rent revenues on facilities Gain from installment of vending machine Gain on sales of recycling goods Subsidy income Other Total non-operating income Non-operating expenses Interest expenses Share of loss of entities accounted for using equity method Rent costs on facilities Other Total non-operating expenses Ordinary profit Extraordinary income Compensation for forced relocation Gain on forgiveness of debts Total extraordinary income Extraordinary losses Loss on retirement of non-current assets Impairment losses Loss on COVID-19 Other Total extraordinary losses Profit before income taxes Income taxes-current Income taxes-deferred Total income taxes Profit (loss) Profit attributable to non-controlling interests Profit (loss) attributable to owners of parent (Unit: million yen) First nine months of FY5/2021 (Apr. 1, 2020 – Dec. 31, 2020) 58,268 22,521 35,747 35,010 737 242 87 155 190 77 754 120 First nine months of FY5/2022 (Jun. 1, 2021 – Feb. 28, 2022) 67,340 27,340 39,999 38,404 1,595 115 93 164 203 100 677 107 5 228 23 378 1,113 – – – 35 31 778 12 858 255 347 (57) 289 (34) 10 (44) 1 103 19 231 2,041 58 69 127 21 – 70 0 92 2,076 549 224 774 1,302 11 1,290 7 BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year Quarterly Consolidated Statement of Comprehensive Income (For the Nine-month Period) (Unit: million yen) First nine months of FY5/2021 (Apr. 1, 2020 – Dec. 31, 2020) First nine months of FY5/2022 (Jun. 1, 2021 – Feb. 28, 2022) Profit (loss) Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment 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 (34) 14 (19) 27 22 (11) (18) 6 1,302 (11) 33 13 35 1,337 1,322 15 8 BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year (3) Notes to Quarterly Consolidated Financial Statements (Notes Concerning the Going-Concern Premise) Not applicable. (Significant Changes in Shareholders’ Equity) Not applicable. (Changes in Accounting Policies) Application of Accounting Standard for Revenue Recognition The BOOKOFF Group has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and other standards from the beginning of the first quarter of the current fiscal year. Based on these standards, revenue expected to be received in exchange for the provision of promised goods and services is recognized when the control of the goods and services is transferred to customers. The primary change due to the application of this standard is a revision in the method for recognizing sales for some transactions where net rather than gross sales were recognized in prior years. Beginning in the current fiscal year, gross sales are recognized for these transactions based on the determination of the role of the BOOKOFF Group (directly or to an agent) concerning sales to customers. For loyalty points granted to customers for sales of merchandise to customers and items purchased from customers, a provision for sales rebates, which is the value of the points expected to be used, was deducted from sales in prior years. This method has been changed to the classification of points granted for sales of merchandise to customers as a performance obligation. Transaction prices are allocated based on independent sales prices calculated to reflect the amount of points th at are not expected to be used. Points granted for items purchased from customers are recognized as an allowance for the cost of points. For the application of the Accounting Standard for Revenue Recognition, in accordance with the transitional treatment in the proviso to Paragraph 84 of this standard, the cumulative effect of the retrospective application of the new accounting standard, if it is applied prior to the first quarter of the current fiscal year, is added to or subtracted from retained earnings at the beginning of the first quarter of the current fiscal year. The new standard is then applied beginning with this amount of retained earnings. However, the BOOKOFF Group has applied the method prescribed in Paragraph 86 of this standard and has not retrospectively applied the new accounting policy to contracts in which almost all revenue were recognized in accordance with the previous measures prior to the beginning of the first quarter of the current fiscal year. Furthermore, the method prescribed in proviso (1) to Paragraph 86 of the new accounting standard is used. For contract revisions to contracts that were made prior to the beginning of the first quarter of the current fiscal year, accounting procedures are p erformed based on the contract terms that reflect all revisions. The cumulative effect is added to or subtracted from retained earnings at the beginning of the first quarter of the current fiscal year. As a result, net sales increased ¥639 million, and selling, general and administrative expenses increased ¥637 million during the first nine months of the current fiscal year. Operating profit, ordinary profit and profit before income taxes increased ¥1 million yen each in the first nine months. There is no effect of the application of these standards on retained earnings at the beginning of the current fiscal year. Due to the application of the Accounting Standard for Revenue Recognition, “provision for sales rebates” in the current liabilities section of the consolidated balance sheet in the previous fiscal year is, from the first quarter of the current fiscal year, included in “other” and “other provisions.” In accordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Revenue Recognition, no reclassification has been made to the consolidated financial statements for the previous first nine months and full fiscal year to conform to the new presentation. 9 BOOKOFF GROUP HOLDINGS LIMITED (9278) Summary Report for the Third Quarter of May 2022 Fiscal Year Application of the Accounting Standard for Fair Value Measurement The Group has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019) and other standards from the beginning of the first quarter of the current fiscal year, and has a pplied the new accounting policies set forth by the Accounting Standard for Fair Value Measurement, etc. prospectively in accordance with the transitional treatment in Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). There is no effect of the application of these standards on the quarterly consolidated financial statements. (Segment Information) I. First nine months of FY5/2021 (Apr. 1, 2020 – Dec. 31, 2020) This information is omitted because the Group has only a single segment. II. First nine months of FY5/2022 (Jun. 1, 2021 – Feb. 28, 2022) This information is omitted because the Group has only a single segment. This financial report is solely a translation of the Company’s Kessan Tanshin (including attachments) in Japanese, which has been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation. 10