Welcia : Consolidated Financial Results for the Nine Months Ended November 30, 2021

Consolidated Financial Results

for the Nine Months Ended November 30, 2021

[Japanese GAAP]

January 7, 2022

Company name: WELCIA HOLDINGS CO., LTD.

Stock exchange listing: Tokyo Stock Exchange

Code number: 3141

URL: https://www.welcia.co.jp/

Representative: Tadahisa Matsumoto, President and Representative Director

Contact: Norimasa Sato, Vice President, Director, Executive Officer and Chief Financial Officer

Phone: [phone]

Scheduled date of filing quarterly securities report: January 7, 2022

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Scheduled (for institutional investors)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Nine Months Ended November 30, 2021 (March 1, 2021 - November 30, 2021)

(1) Consolidated Operating Results (cumulative)	(% indicates changes from the previous corresponding period.)
			Net sales		Operating income		Ordinary income	Net income
					attributable to
											owners of parent
		Nine months ended	Million yen	%		Million yen	%		Million yen	%	Million yen	%
		November 30, 2021	756,403	6.5		29,815	(9.6)	32,943	(6.1)	20,208	(6.8)
		November 30, 2020	710,408	10.8		32,971	34.1	35,095	32.3	21,692	36.2
	(Note) Comprehensive	income: Nine months	ended November 30,	2021: ¥20,184 million	[(7.6)%]
			Nine months ended November 30, 2020: ¥21,842 million [37.2%]
			Net income	Diluted net income
			per share		per share
		Nine months ended		Yen			Yen
		November 30, 2021		97.04			96.96
		November 30, 2020		103.90			103.80

(Note) A two-for-one stock split of the Company's common stock was executed on September 1, 2020. "Net income per share" and "diluted net income per share" are calculated assuming that the stock split was executed at the beginning of the fiscal year ended February 28, 2021.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	Million yen	Million yen	%
As of November 30, 2021	436,913	196,161	44.6
As of February 28, 2021	435,685	180,351	41.2

(Reference) Equity: As of November 30, 2021: ¥194,991 million As of February 28, 2021: ¥179,490 million

2. Dividends

				Annual dividends
		1st quarter-end	2nd quarter-end		3rd quarter-end	Year-end		Total
Fiscal year ended		Yen	Yen		Yen	Yen		Yen
	-	27.00		-	15.00		-
February 28, 2021
Fiscal year ending		-	15.00		-
February 28, 2022
Fiscal year ending
February 28, 2022						15.00	30.00
(Forecast)
(Notes) 1. Revision to	the forecast for dividends announced most recently: None

2. A two-for-one stock split of the Company's common stock was executed on September 1, 2020. The figure for the "2nd quarter-end" of the fiscal year ended February 28, 2021 is the actual dividend amount paid before the stock split was executed. The annual dividend for the fiscal year ended February 28, 2021 is not presented, because it is impossible to simply aggregate the amounts for each quarter-end due to the stock split. In pre-split terms, the year-end dividend would come to ¥30, making the annual dividend for the year ¥57.

3. Consolidated Financial Results Forecast for the Fiscal Year Ending February 28, 2022 (March 1, 2021 - February 28, 2022)

(% indicates changes from the previous corresponding period.)

							Net income		Net income
	Net sales		Operating income	Ordinary income	attributable to owners
		per share
							of parent
Full year	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
1,021,000	7.5	44,300	3.1	47,600	3.9	27,000	(3.6)	129.79

(Note) Revision to the financial results forecast announced most recently: None

* Notes:

(1) Changes in significant subsidiaries during the period under review: None (Changes in specified subsidiaries resulting in changes in scope of consolidation):

Newly included: - (

), Excluded: - (

)

1. Accounting methods adopted particularly for the preparation of quarterly consolidated financial statements: None
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
4. Total number of issued and outstanding shares (common shares)
5. 1. Total number of issued and outstanding shares at the end of the period (including treasury stock):

November 30, 2021:	209,633,676 shares
February 28, 2021:	209,633,676 shares
2) Total number of treasury stock at the end of the period:
November 30, 2021:	1,181,120 shares
February 28, 2021:	1,606,772 shares

3) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year):

Nine months ended November 30, 2021:	208,256,343 shares
Nine months ended November 30, 2020:	208,790,627 shares

(Notes) 1. The number of shares of the Company held in the Employees' Stock Ownership ESOP Trust (February 28, 2021: 1,050,200 shares; November 30, 2021: 728,100 shares) and the number of shares of the Company held in the Directors' Remuneration BIP Trust (February 28, 2021: 502,238 shares; November 30, 2021: 440,442 shares) were included in the total number of treasury stock at the end of the period. The number of shares of the Company held in the Employees' Stock Ownership ESOP Trust and the Directors' Remuneration BIP Trust, was included in the number of treasury stock, which was to be deducted from the calculation of the average number of shares outstanding during the period (November 30, 2020: 787,822 shares; November 30, 2021: 1,356,609 shares).

• 2. A two-for-one stock split of the Company's common stock was executed on September 1, 2020. The figures for the "total number of issued and outstanding shares (common shares)" are calculated assuming that the stock split was executed at the beginning of the fiscal year ended February 28, 2021.

• These quarterly consolidated financial results are 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
  The earnings forecasts and other forward-looking statements provided herein are based on information available to the Company and certain assumptions deemed reasonable, and the Company does not promise the achievement of those forecasts. Actual results may differ significantly from these forecasts due to a wide range of factors. For the assumptions underlying the forecasts and the notes on the use of the forecasts, please refer to "1. Qualitative Information on Quarterly Financial Results (3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" on page 4 of the attached document.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results .........................................................................	2
(1)	Explanation of Operating Results ........................................................................................................	2
(2)	Explanation of Financial Position .......................................................................................................	4
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-lookingInformation	....4
2. Quarterly Consolidated Financial Statements and Principal Notes .........................................................	5
(1)	Quarterly Consolidated Balance Sheets ..............................................................................................	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income ......................................	7
	Quarterly Consolidated Statements of Income
	Nine Months Ended November 30..............................................................................................	7
	Quarterly Consolidated Statements of Comprehensive Income
	Nine Months Ended November 30..............................................................................................	8
(3)	Notes to Quarterly Consolidated Financial Statements .......................................................................	9
	(Notes on going concern assumption) ............................................................................................	9
	(Notes in case of significant changes in shareholders' equity) .......................................................	9
	(Significant subsequent events) ......................................................................................................	9

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

During the nine months ended November 30, 2021 (from March 1, 2021 to November 30, 2021), all the state of emergency and semi-emergency coronavirus measures issued to 27 prefectures due to the impact of the coronavirus disease (COVID-19) were lifted on September 30, 2021, and signs of a recovery resulting from gradually lifting the request for restriction on movement have been expected. However, the signs have been weak, and the Japanese economy continued to face difficulties. In addition, although the number of new cases of infection confirmed in Japan remains low, concerns associated with a potential resurgence of COVID-19 by a new variant have not been dispelled and uncertainty continues to prevail.

In the drugstore industry, the primary market for the Group's business, competition intensified, as the industry underwent reorganization even among the major players and entrants from other industries entered the market. Moreover, while demand continued for products to prevent infectious diseases as well as for foods, alcohol, and other products due to the ongoing restriction on movement to avoid the risk of infection, impacts of the restriction such as fewer people catching colds as a result of regularly wearing masks and washing their hands, and a drop in demand for cosmetics persist. Meanwhile, in the dispensing market, there are signs that the number of prescriptions will recover due to fewer people refraining from visiting doctors.

Under such circumstances, the Group made efforts to operate its business to provide products and services, while continuing to implement measures to prevent COVID-19 infections and thorough hygiene management. In terms of the sale of goods, the Cosmetics segment has not recovered the levels prior to COVID-19, while the Food Products segment reported a reactionary decline from a spike in special demand in the previous fiscal year. In terms of dispensing pharmacy sales, the number of prescriptions handled increased due primarily to the increase in the number of stores with dispensing pharmacies (1,797 stores as of November 30, 2021), despite the effects of the NHI drug price revision. Additionally, the Group managed to optimize selling, general and administrative expenses, mainly in terms of its labor costs by thoroughly managing store man-hours for optimization and improving store operational efficiency through the promotion of automatic ordering, while seeking to properly place pharmacists by promoting the addition of dispensing pharmacies to existing stores.

The Group also made efforts toward the improvement of business efficiency by carrying out an absorption- type merger, effective March 1, 2021, whereby Neo Pharma Co., Ltd. and Summit Co., Ltd., wholly-owned subsidiaries engaged in the dispensing business in Shikoku area mainly in Ehime Prefecture, were absorbed and WELCIA YAKKYOKU Co., Ltd., a consolidated subsidiary became the surviving company.

As for store openings and closures, the Group as a whole opened 115 stores and closed 21 stores, for a total of 2,312 stores Group-wide as of November 30, 2021. As of December 1, 2021, the Group converted Kabushiki Kaisha Pupule Himawari (132 stores), which operates stores mainly in Hiroshima Prefecture, into a subsidiary through the acquisition of shares.

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