Scroll : Summary of Consolidated Financial Results for the Three Months Ended June 30,2023(full version)

Translation

Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

		Summary of Consolidated Financial Results
		for the Three Months Ended June 30, 2023
		(Based on Japanese GAAP)
		July 28, 2023
Company name:	Scroll Corporation
Stock exchange listing:	Tokyo
Stock code:	8005	URL https://www.scroll.jp/
Representative:	President	Tomohisa Tsurumi

Inquiries:	Director, General Manager of Corporate	Yasunori Sugimoto	TEL [phone] (from overseas)
Management Dept.
Scheduled date to file Quarterly Securities Report:	August 8, 2023
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results:	Yes
Holding of quarterly financial results meeting:	No

(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the three months ended June 30, 2023 (from April 1, 2023 to June 30, 2023)

(1) Consolidated operating results (cumulative)				Percentages indicate year-on-year changes
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
Three months ended June 30, 2023	20,791	0.1	2,057	1.9	2,103	7.5	1,463	10.5
Three months ended June 30, 2022	20,768	(4.9)	2,019	(31.7)	1,955	(34.4)	1,324	(34.1)

	Earnings per share	Diluted earnings per share
		Yen				Yen
Three months ended June 30, 2023		41.85				-
Three months ended June 30, 2022		37.98				-
(2) Consolidated financial position
	Total assets			Net assets		Equity ratio
	Millions of yen		Millions of yen		%
As of June 30, 2023	52,232		32,604		62.4
As of March 31, 2023	53,200		31,997		60.1
2. Cash dividends
				Annual dividends per share
	1st quarter-end	2nd quarter-end		3rd quarter-end	Fiscal year-end
	Yen			Yen			Yen	Yen
Year ended March 31, 2023	-			10.00			-	38.00
Year ending March 31, 2024	-
Year ending March 31, 2024 (Forecast)				24.00			-	24.00

Total

Yen 48.00

48.00

3. Forecast of consolidated financial results for the year ending March 31, 2024 (from April 1, 2023 to March 31, 2024)

Percentages indicate year-on-year changes

	Net sales		Operating profit	Ordinary profit		Profit attributable to	Earnings per share
			owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen		%	Millions of yen		%	Yen
Full year	83,000	2.4	6,100	(0.4)	6,200		0.1	4,200		0.7	119.79

4. Notes

1. Changes in significant subsidiaries during the three months ended June 30, 2023 (changes in specified subsidiaries resulting in the change in scope of consolidation):
2. Application of special accounting methods for preparing quarterly consolidated financial statements:

No

No

(3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations:	No
Changes in accounting policies due to other reasons:	No
Changes in accounting estimates:	No
Restatement of prior period financial statements:	No

(4) Number of issued shares (common shares)

Total number of issued shares at the end of the period (including treasury shares)

	As of June 30, 2023	35,098,550	shares	As of March 31, 2023	34,981,050	shares
Number of treasury shares at the end of the period
	As of June 30, 2023	9,231	shares	As of March 31, 2023	9,181	shares
Average number of shares during the period (cumulative from the beginning of the fiscal year)
	Three months ended June 30, 2023	34,973,154	shares	Three months ended June 30, 2022	34,865,766	shares

Contents of Exhibit
1.	Qualitative information on quarterly consolidated financial results for the three months ended June 30, 2023	2
	(1)	Explanation of operating results	2
	(2)	Explanation of financial position	3
	(3)	Explanation of consolidated earnings forecasts and other forward-looking statements	3
2.	Quarterly consolidated financial statements	4
	(1)	Consolidated balance sheets	4
	(2)	Consolidated statements of income (cumulative) and consolidated statements of comprehensive income (cumulative)	6
		Consolidated statements of income (cumulative)	6
		Consolidated statements of comprehensive income (cumulative)	7
	(3)	Notes to quarterly consolidated financial statements	8
		(Notes on going concern assumption)	8
		(Notes on significant changes in the amount of shareholders' equity)	8
		(Segment information)	8

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1. Qualitative information on quarterly consolidated financial results for the three months ended June 30, 2023

1. Explanation of operating results

In the period covered by the year to quarter end consolidated statement of comprehensive income for the three months ended June 30, 2023, there were signs that economic activity is starting to return to normal in Japan following the reclassification of COVID-19 to Class 5 under the Act on the Prevention of Infectious Diseases and Medical Care for Patients with Infectious Diseases. However, due to factors such as high raw material and resource prices, sharp fluctuations in exchange rates and the prolonged Ukraine situation, the future outlook remains uncertain. In the retail industry, in addition to an increase in various costs, such as purchasing prices and logistics costs, consumer sentiment is on the decline due to concerns about rapid price increases, resulting in a harsh business environment. Amidst the continued growth of the EC and mail-order markets, the competition across industries and business categories is intensifying due to an increasing number of companies entering the industry.

In this environment, the Group has formulated a new Medium-term Management Plan called "Direct Marketing Solution 2025," of which the goal is to transform into a direct marketing solutions company (DMSC). With two stated main policies of "promoting growth strategies by optimizing our business portfolio" and "promoting effective responsibility management," the Group has focused on accelerating the growth of the Solutions Business segment while also promoting efforts aimed at solving environmental and social issues.

As a result, net sales for the three months ended June 30, 2023 amounted to ¥20,791 million (up 0.1% from the three months ended June 30, 2022). As for profits, operating profit was ¥2,057 million (up 1.9% from the three months ended June 30, 2022), ordinary profit was ¥2,103 million (up 7.5% from the three months ended June 30, 2022), and profit attributable to owners of parent was ¥1,463 million (up 10.5% from the three months ended June 30, 2022).

Operating results by segment are as follows.

Net sales for each segment include intersegment sales or transfers.

Furthermore, the order in which reportable segments are listed has been changed as of the year to quarter end consolidated statement of comprehensive income for the three months ended June 30, 2023.

1. Solutions Business
   In the Solutions Business, support is provided to EC and mail order businesses as a one-stopmail-order solution menu provider. With regards to distribution agency services, a nationwide mail-order third party logistics (3PL) strategy has been set out, and the Group's work has included sales activities to acquire new customers and distribution center efficiency enhancement. Furthermore, with regards to payment agency services, transaction volume remained steady as a result of work for new clients. With regards to marketing support business, strong performance was achieved by expanding the genres handled by the affiliate program.
   As a result, net sales amounted to ¥5,775 million (up 12.7% from the three months ended June 30, 2022), and segment profit was ¥211 million (up 66.8% from the three months ended June 30, 2022).
2. Mail-orderBusiness
   In the Mail-order Business, in a severe cost environment as a result of high raw material and resource prices and the continued weakness of the yen, gross profits were maintained through efforts to control the sales prices and an improvement in the product supply ratio. Efforts were also made to maximize business efficiency, including by limiting increases in sales promotion costs through efforts to reduce catalog paper use.
   As a result, net sales amounted to ¥10,916 million (up 0.7% from the previous fiscal year), and segment profit was ¥1,997 million (up 12.7% from the previous fiscal year).
3. E-commerceBusiness
   In the E-commerce Business, results were challenging. In addition to sluggish sales of outdoor and camping products due to a slowdown in demand and the impact of intensifying competition across industries and business categories, this included a slowdown in order numbers for brand merchandise and everyday goods.
   As a result, net sales amounted to ¥4,245 million (down 16.6% from the three months ended June 30, 2022), and segment loss was ¥118 million (segment profit of ¥33 million in the three months ended June 30, 2022).

2

1. HBT Business
   In the HBT Business, the Group made efforts to develop new products in the cosmetics and health foods business. In the travel business, demand for travel showed recovery following the reclassification of COVID-19 to Class 5, and revenue increased.
   As a result, net sales amounted to ¥365 million (up 6.9% from the three months ended June 30, 2022), and segment loss was ¥32 million (segment loss of ¥40 million in the three months ended June 30, 2022).
2. Group Jurisdiction Business
   In the Group Jurisdiction Business, the Group's rental of real estate including its own logistics facilities, Group logistics operations, and overseas subsidiaries management have been conducted. In its logistics operations, the Group reinforced its center operations in the Tokai, Kansai, and Kanto areas and strove to create a stable operating system by strengthening.
   As a result, net sales amounted to ¥848 million (down 1.3% from the three months ended June 30, 2022), and segment profit was ¥45 million (up 3.1% from the three months ended June 30, 2022).

(2) Explanation of financial position

(Assets)

Total assets as of June 30, 2023 were ¥52,232 million, down by ¥968 million compared with March 31, 2023. This is mainly due to a decrease in cash and deposits, an increase in accounts receivable - trade, and an increase in inventories.

(Liabilities)

Liabilities were ¥19,627 million, down by ¥1,576 million compared with March 31,2023. This is principally due to a decrease in income taxes payable and a decrease in accounts payable - other.

(Net assets)

Net assets were ¥32,604 million, up by ¥607 million compared with March 31, 2023, and the equity ratio stood at 62.4%.

(3) Explanation of consolidated earnings forecasts and other forward-looking statements

As for consolidated earnings forecasts, there is no change in the full-year consolidated earnings forecasts for the fiscal year ending March 31, 2024 announced in the "Summary of Consolidated Financial Results for the Year Ended March 31, 2023" as of May 9, 2023.

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