Summary of Financial Results

For the First Half of the Fiscal Year Ending December 31, 2023 (Consolidated)

These financial statements have been prepared in accordance with accounting principles and practices generally accepted in Japan. The following English translation is based on the original Japanese-language document.

July 31, 2023

POLA ORBIS HOLDINGS INC.

Listing:

Tokyo Stock Exchange, Prime Market (Code No.: 4927)

URL:

https://www.po-holdings.co.jp/

Representative:

Yoshikazu Yokote, Representative Director And President

Contact:

Naoki Kume, Director, Finance

Tel: +81-3-3563-5517

Filing Date of Quarterly Securities Report:

August 10, 2023

Start of Cash Dividend Payment:

September 8, 2023

Supplemental Materials Prepared for Quarterly Financial Results:

Yes

Conference Presentation for Quarterly Financial Results:

Yes(for analysts)

(Amounts less than one million yen have been truncated)

1. Consolidated Performance for the First Half of Fiscal 2023 (January 1, 2023-June30, 2023)

(1) Consolidated Operating Results

(Percentage figures indicate year-on- year change)

Net Sales

Operating Income

Ordinary Income

Profit Attributable to

Owners of Parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

FY2023 First Half

85,836

9.0

8,966

82.3

11,389

28.3

7,404

(32.1)

FY2022 First Half

78,748

(11.6)

4,917

(45.9)

8,876

(15.3)

10,904

53.9

Note: Comprehensive income: ¥6,470 million (-27.7%) for the first half ended June 30, 2023;

¥8,951 million (36.7%) for the first half ended June 30, 2022

Net Income

Diluted Net Income

Per Share

Per Share

Yen

Yen

FY2023 First Half

33.47

33.43

FY2022 First Half

49.29

49.24

(2) Consolidated Financial Position

Total Assets

Net Assets

Equity Ratio

Net Assets

Per Share

Millions of yen

Millions of yen

%

Yen

FY2023 Second Quarter

206,996

171,053

82.4

770.60

FY2022

205,935

171,459

83.0

772.60

Reference: Equity capital:

FY2023 Second Quarter: ¥170,486 million; FY2022: ¥170,924 million

2. Dividends

Annual Cash Dividends Per Share

Q1-end

Q2-end

Q3-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

FY2022

－

21.00

－

31.00

52.00

FY2023

－

21.00

FY2023 (Forecast)

－

31.00

52.00

Note: Revisions to the cash dividends forecast announced most recently: none

3. Consolidated Performance Forecast for Fiscal Year Ending December 31, 2023 (January 1, 2023-December31, 2023)

(Percentage figures indicate year-on-year change)

Profit

Net Income

Net Sales

Operating Income

Ordinary Income

Attributable to

Per Share

Owners of Parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Yen

Full year

180,000

8.2

16,000

27.2

17,500

17.2

11,600

1.3

52.43

Note: Revisions to the consolidated performance forecast announced most recently: yes

Notes to Summary Information

(1) Changes in significant subsidiaries during the current period

(Changes in specific subsidiaries resulting in changes in the scope of consolidation)

: None

  1. Application of special accounting methods for the preparation of the quarterly consolidated financial: None statements
  2. Changes in accounting policies, accounting estimates, and restatement

1)

Changes in accounting policies associated with revision of accounting standards

: Yes

2)

Changes other than (3)-1)

: None

3)

Changes in accounting estimates

: None

4)

Restatements

: None

  1. Number of shares issued and outstanding (common stock)
    1. Number of shares issued and outstanding at the end of each period (including treasury stock)

At June 30, 2023

229,136,156 shares

At December 31, 2022

229,136,156 shares

2) Number of shares of treasury stock at the end of each period

At June 30, 2023

7,897,963 shares

At December 31, 2022

7,904,513 shares

3) Average number of shares issued and outstanding in each period

Six months ended June 30, 2023

221,235,929 shares

Six months ended June 30, 2022

221,229,559 shares

Note: The number of shares of treasury stock at June 30, 2023 includes the Company's shares held by the officer compensation Board Incentive Plan (BIP) trust (235,910 shares). The number of shares of treasury stock deducted in the calculation of average number of shares outstanding during the first half of fiscal 2023 includes the Company's shares held by BIP trust (238,174 shares).

Information Regarding Quarterly Review Procedures

The quarterly financial results report is exempt from quarterly review by certified public accountants or accounting firms.

Explanation of Appropriate Use of Performance Forecast and Other Special Items

This report contains projections of performance and other projections based on information currently available and certain assumptions judged to be reasonable. Actual performance may differ materially from these projections resulting from changes in the economic environment and other risks and uncertainties. For performance projections, please refer to "1. Qualitative Information on Consolidated Performance for the First Half of Fiscal 2023 (3) Explanation of Consolidated Performance Forecast and Other Predictive Information" on page 5.

POLA ORBIS HOLDINGS INC. (4927) FY2023 First Half Financial Summary

Table of Contents

1. Qualitative Information on Consolidated Performance for the First Half of Fiscal 2023………………

2

(1)

Explanation of Consolidated Operating Results …………………………………………………………

2

(2)

Explanation of Consolidated Financial Position …………………………………………………………

4

(3)

Explanation of Consolidated Performance Forecast and Other Predictive Information ………………

5

2. Quarterly Consolidated Financial Statements …………………………………………………………………

6

(1)

Consolidated Balance Sheets ………………………………………………………………………………

6

(2)

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ……….

8

(3)

Notes to Consolidated Financial Statements ………………………………………………………………

10

(Going concern Assumptions) ……………………………………………………………………………….

10

(Significant Changes in Shareholders' Equity) ……………………………………………………………

10

(Changes in Accounting Policies)……………………………………………………………………………

10

(Additional Information)…………………………………………………………………………………….

10

(Segment Information) ……………………………………………………………………………………....

11

(Subsequent Events) …………………………………………………………………………………………

12

1

POLA ORBIS HOLDINGS INC. (4927) FY2023 First Half Financial Summary

1．Qualitative Information on Consolidated Performance for the First Half of Fiscal 2023

(1) Explanation of Consolidated Operating Results

During the first half of fiscal 2023 (January 1-June 30, 2023), the Japanese economy showed signs of moderate recovery, supported by the normalization of economic and social activities after COVID-19 was moved to Class V under the Infectious Diseases Control Law, and the increase in foreign visitors to Japan. Meanwhile, although the sharp rises in resource and energy prices slowed, there was a continued trend to shift these prices to selling prices, and personal consumption growth remained somewhat lackluster against a backdrop of price hikes that exceeded wage increases.

In the domestic cosmetics market, in addition to an increase in opportunities to go out due to the normalization of economic activities, the weak yen and the recent trend toward higher stock prices also provided a boost to expanding personal consumption. Moreover, there was a return of inbound demand due to an increase in the number of foreign visitors to Japan. Meanwhile, situations such as changes in consumer behavior and the composition of consumption due to the transformation of people's lifestyles, structural changes in sales channels, and soaring advertising costs in the EC market are being observed, and more ingenuity is required to cope with these changes.

In the overseas cosmetics market, while economic and social activities are recovering from the turmoil caused by the COVID-19 pandemic, there are signs of weakness in some regions due to various downward pressures on the economy and consumption, including the chronic high prices and high inflation, financial instability due to interest rate hikes in Europe and the United States, and growing uncertainty about the economy in the United States. In the Chinese market, the lifting of the zero-COVID policy has brought economic activity toward normalization, and although there are signs of recovery, particularly in service consumption as the flow of people increases, the current economic recovery is showing increasing signs of slowdown due to employment uncertainty and other factors.

Within this market environment, the POLA ORBIS Group (the "Group") has worked to achieve the key objectives-"evolving domestic direct sales," "growing overseas businesses profitably," "profit contribution from brands under development," "strengthening operations," and "expanding new brands and domains of 'beauty'." These objectives are in line with the medium-term management plan (from 2021 to 2023) that started in 2021. As a result, the Group achieved the following consolidated operating results for the first half of fiscal 2023.

Consolidated net sales for the first half of fiscal 2023 increased 9.0% year on year to ¥85,836 million, reflecting a recovery from the turmoil caused by the COVID-19 pandemic in Japan and overseas. Operating income increased 82.3% year on year to ¥8,966 million due to an increase in gross profit from higher sales, and ordinary income increased 28.3% year on year to ¥11,389 million due to the impact of a decrease in foreign exchange gains. As a result of the factors noted above and the impact of decrease in income taxes - deferred recorded in the previous year, profit attributable to owners of parent decreased 32.1% year on year to ¥7,404 million.

Operating Results Overview

(Millions of yen)

Six Months Ended June 30

2022

2023

Year-on-Year

Amount Change

Percent Change (%)

Net Sales

¥78,748

¥85,836

¥7,088

9.0

Operating Income

4,917

8,966

4,049

82.3

Ordinary Income

8,876

11,389

2,513

28.3

Profit Attributable

to

¥10,904

¥7,404

¥(3,499)

(32.1)

Owners of Parent

2

POLA ORBIS HOLDINGS INC. (4927) FY2023 First Half Financial Summary

Operating Results by Segment

Net Sales (Segment Sales to External Customers)

(Millions of yen)

Six Months Ended June 30

2022

2023

Year-on-Year

Amount Change

Percent Change (%)

Beauty Care

¥76,420

¥83,529

¥7,108

9.3

Real Estate

1,039

1,036

(3)

(0.3)

Others

1,287

1,270

(17)

(1.4)

Total

¥78,748

¥85,836

¥7,088

9.0

Segment Profit (Loss) (Operating Income (Loss))

(Millions of yen)

Six Months Ended June 30

2022

2023

Year-on-Year

Amount Change

Percent Change (%)

Beauty Care

¥5,246

¥8,713

¥3,467

66.1

Real Estate

316

277

(39)

(12.4)

Others

71

30

(40)

(56.7)

Reconciliations of Segment

(716)

(55)

661

－

Profit (Note)

Total

¥4,917

¥8,966

¥4,049

82.3

Note: Reconciliations of segment profit refer to elimination of profits arising from inter-company transactions and expenses not allocated to reportable segments. Please see note 2 in "1. Information about Net Sales and Profit (Loss) by Reportable Segment" on page 11 and 12 for the details of reconciliations of segment income during the period.

Beauty Care

The Beauty Care segment consists of the flagship brands POLA and ORBIS, the overseas brand Jurlique, and the brands under development THREE, DECENCIA, FIVEISM × THREE and FUJIMI.

POLA is working to further improve the value of its brand and build a medium- to long-term customer base by launching highly functional products mainly in the field of anti-aging and skin-brightening. In the domestic business, we are promoting the integration of online and offline channels (OMO: Online Merges with Offline) to realize a high lifetime-value business that leverages the features and strengths of each channel. In April 2023, we launched a new membership program, POLA Premium Pass, which integrates customer IDs from all sales channels and delivers a common service experience to all customers in Japan. In addition to the resumption of the flow of people due to the normalization of economic activities and the return of foreign visitors to Japan, all domestic businesses in the country recorded year-on-year growth thanks to new products such as B.A MILK FOAM and strong sales of esthetic treatment. In the overseas business, we are continually working to expand customer contact points for establishing a brand presence in China, a top priority market. Although it takes time for demand to recover after COVID-19 is quenched, the overall performance of the overseas business exceeded that of the previous year, with the success of marketing activities centered on the new products. As a result, POLA brand net sales and operating income increased year on year.

ORBIS is proceeding with enhancing its presence through creation of brand differentiation, improvement of customer loyalty, and acquisition of skincare product users, with a focus on the ORBIS U anti-aging skincare series for improving wrinkle and brightening skin, with the aim of regrowing into a highly profitable business. In the domestic business, we are making efforts to further boost the number of customers, which is on a recovery trend, and to maximize customer lifetime value by providing close communication that accompanies customers throughout their lives in our one-stop app, a cornerstone of the brand experience. In the direct selling channel, the number of customers exceeded the previous year due to the acquisition of new customers by expanding the recognition of ORBIS U., the pinnacle of the ORBIS U series, and the favorable reception of the special care line for UV which has been renewed. In addition, the external channels grew significantly year on year, mainly in the EC platform, contributing to the expansion of customer contact points. In the overseas business, we are working to accelerate growth and return to profitability particularly in China, a priority market. ORBIS continued to work on strengthening investments to expand customer contact points and raise brand recognition, and achieved the growth exceeding from last year. As a result of the above, ORBIS brand net sales

3

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POLA ORBIS Holdings Inc. published this content on 31 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2023 06:09:46 UTC.