Fancl : Consolidated Financial Statements for the First Quarter of the Fiscal Year Ending March 31, 2022

Consolidated Financial Statements for the

First Quarter of the Fiscal Year

Ending March 31, 2022

April 1, 2021 to June 30, 2021

This document has been translated from the original Japanese as a guide for non-Japanese investors. It contains forward-looking statements based on a number of assumptions and beliefs made by management in light of information currently available. Actual financial results may differ materially depending on a number of factors, including changing economic conditions, legislative and regulatory developments, delay in new product launches, and pricing and product initiatives of competitors.

1

SUMMARY OF FINANCIAL STATEMENTS (consolidated)

First Quarter Results for the Fiscal Year Ending March 31, 2022

FANCL CORPORATION

August 4, 2021

Stock exchange listings: Tokyo 1st section, code number 4921

https://www.fancl.jp/en/Contact:Koichi Matsumoto

Executive Officer, General Manager, Corporate

Planning Office

Telephone: [phone]

President, Representative Director: Kazuyuki Shimada

Scheduled date for submission of first quarter hokokusho (securities report): August 13, 2021

Scheduled date for distribution of dividends: --

Availability of supplementary explanatory material for the first quarter results: Available

Presentation meeting for the first quarter results: Scheduled (for institutional investors and analysts)

1. Consolidated results for the first quarter period (April 1, 2021 to June 30, 2021) of the fiscal year ending March 31, 2022

(1) Consolidated Operating Results			(Millions of yen, rounded down)
	Three months ended	Three months ended
	June 30, 2021		June 30, 2020
Net sales		% change			% change
25,176	(4.3)	26,298		(19.2)
..........................................Operating income	3,010	23.1	2,445		(44.1)
............................................Ordinary income	3,242	29.3	2,507		(42.8)
Net income attributable to owners of the
...........................................parent company	2,227	50.8	1,476		(43.4)
...................................Earnings per share (¥)	18.46	--	12.25		--
......................Earnings per share (diluted) (¥)	18.38	--	12.19		--

Notes: 1. The percentages shown above are a comparison with the same period in the previous fiscal year.

1. Comprehensive income: Three months ended June 30, 2021: ¥2,327 million (58.7%) Three months ended June 30, 2020: ¥1,466 million (-43.8%)
2. From the beginning of the first quarter period under review, the Company has adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. As a result, net sales are ¥2,251 million lower, and operating income and ordinary income are each ¥185 million higher. If the figures for the fiscal year ending March 2021 were estimated on the same basis, the year-on-year increase in net sales would be 3.2%.

(2) Consolidated Financial Position			(Millions of yen, rounded down)
		As of June 30, 2021		As of March 31, 2021
...................................................Total assets		96,723			97,533
.....................................................Net assets		70,889			71,215
..............................................Equity ratio (%)		72.6			72.3
Shareholders' equity: As of June 30, 2021: ¥70,249 million
As of March 31, 2021: ¥70,554 million
2) Dividends per share
		FY ended		FY ending
		March 31, 2021		March 31, 2022
...........................................Interim period (¥)		17.00		17.00	(forecast)
..................................................Year-end (¥)		17.00	17.00	(forecast)
......................................................Annual (¥)		34.00		34.00	(forecast)

Note: Changes to the dividend forecast during the period under review: None

3) Consolidated forecasts for the fiscal year ending March 31, 2022 (April 1, 2021 to March 31, 2022)

				（Millions of yen）
	Interim period ending	FY Ending
	September 30, 2021	March 31, 2022
Net sales		Change %			Change %
52,450	(3.3)	109,000		(5.1)
........................................................Operating income	5,000	2.5	12,000		3.7
Ordinary income ..........................................................	5,100	2.3	12,200		3.5
..................Profit (loss) attributable to owners of parent	3,500	(2.1)	8,100		1.0
..............................................Net income per share (¥)	29.01	--	67.13		--

Notes: 1. Percentage figures for sales, operating income, etc. represent changes compared to the previous fiscal year. 2. Changes to the consolidated forecasts during the period under review: None

2

3. As the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc. has been adopted from the beginning of the first quarter of the fiscal year ending March 31, 2022, the above consolidated forecast reflects the application of this accounting standard. If the same standard is applied to the fiscal year ended March 31, 2021, net sales would be 3.7% higher year on year. There is no change in the operating income, ordinary income and net income forecasts before and after the application of the new accounting standard.

1. Other

1. Transfer of important subsidiaries during the period: None

Note: Indicates transfers of specified subsidiaries resulting in changes in the scope of consolidation during the period under review.

1. Use of simplified accounting methods or special accounting procedures: None
2. Changes in accounting policy, changes in accounting estimates, and restatements:
3. 1. Changes following revisions to accounting standards: Yes
   2. Other changes: None
   3. Changes in accounting estimates: None
   4. Restatements: None
4. Number of outstanding shares (common stock)

1. Number of shares outstanding (including treasury shares)
2. Number of treasury shares
3. Average number of shares during the three-month period

June 30, 2021	130,353,200 shares	March 31, 2021	130,353,200 shares
June 30, 2021	9,677,218 shares	March 31, 2021	9,690,356 shares
Three months to	120,665,289 shares	Three months to	120,568,609 shares
June 30, 2021		June 30, 2020

*This quarterly financial report is not subject to audit procedures by a certified public accountant or auditor.

• Appropriate use of financial forecasts, other special notes (Cautionary note regarding forward-lookingstatements)
  Forecasts, etc., recorded in this document include forward-looking statements that are based on management's estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations. For further detail, please see Page 7: 1. Operating Results, Section 3, Forecasts for the fiscal year ending March 31, 2022.

3

Contents

1. Operating Results
(1) Summary of business performance…………………………………………………….……………	5
(2) Summary of consolidated financial position…………………………………………………………	7
(3) Forecasts for the fiscal year ending March 31, 2022…………………………….…………………	7

2. Consolidated Financial Statements

1. Consolidated balance sheets………….…………………………………………………………….. 8
2. Consolidated statement of income and Consolidated statement of comprehensive income…. 10 Consolidated statement of income…………………………………..………………………………. 10 Consolidated statement of comprehensive income……………..…………………………………. 11
3. Notes to the consolidated financial statements…………………………………………………….. 12

Items related to going concern………………………………………………………………………..	12
Note on significant change in shareholders' equity………………………………….……………..	12
Changes in accounting policy………………………………….…………….. …………………	12
Additional information………………………………….…………….. ………………………………	12
Segment information…………………………………………………………………………………..	13

4

1. Operating Results

(1) Summary of business performance (consolidated)

(All comparisons are with the three-month period of the previous fiscal year, unless stated otherwise.)

During the three-month period under review, consolidated sales decreased 4.3% to ¥25,176 million, operating income increased 23.1% to ¥3,010 million, ordinary income increased 29.3% to ¥3,242 million, and net income attributable to owners of the parent company increased 50.8% to ¥2,227 million.

From the beginning of the first quarter period under review, the Company has adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. (hereafter "Accounting Standard for Revenue Recognition"). As a result, sales are ¥2,251 million lower, and operating income and ordinary income are each ¥185 million higher.

To provide a more realistic analysis of the operating results, the results of the same period of the previous fiscal year have been reclassified to reflect the adoption of this new accounting standard (hereafter "after reclassification").

During the three-month period under review, while the FANCL Group continued to be impacted by the COVID- 19 pandemic, the degree of impact was limited in comparison to the same period of the previous fiscal year, when a state of emergency was in place. Sales in the core cosmetics and nutritional supplements businesses increased, resulting in a 3.2% increase in overall sales to ¥25,176 million. Operating income increased 23.1% ¥3,010 million due to an increase in gross profit on higher sales, despite an increase in depreciation expenses following the launch of operations at the Mishima Factory (supplements factory) and the Kansai Logistics Center, and the effect of the recording of personnel expenses associated with store closures as an extraordinary loss in the same period of the previous fiscal year. Ordinary income increased 29.3% to ¥3,242 million, and net income attributable to owners of the parent company increased 50.8% to ¥2,227 million.

Segment results are as follows:

1. Cosmetics Business Sales
   Sales from the Cosmetics business increased 7.0% to ¥14,506 million.

							(Millions of yen, rounded down)
	Three months ended		Three months ended
	June 30, 2021		June 30, 2020
					(After reclassification)		Change (%)
	Amount in		Percent of		Amount in		Percent of
	¥ million		total		¥ million		total
FANCL Cosmetics	10,507	72.5		10,041		74.1	4.6
ATTENIR Cosmetics	3,456	23.8		2,935		21.6	17.8
boscia	321	2.2		377		2.8	(14.9)
Others	221	1.5		197		1.5	11.9
Totals	14,506		100.0		13,552		100.0		7.0
	Three months ended		Three months ended
	June 30, 2021		June 30, 2020
					(After reclassification)		Change (%)
	Amount in		Percent of		Amount in		Percent of
	¥ million		total		¥ million		total
Online and catalogue sales	7,508	51.7	8,268	61.0	(9.2)
Direct store sales	3,249	22.4	2,070	15.3	56.9
Wholesales and others	1,998	13.8	1,671	12.3	19.6
Overseas sales	1,751	12.1	1,541	11.4	13.6
Totals	14,506		100.0	13,552	100.0		7.0

Sales of FANCL Cosmetics increased 4.6% to ¥10,507 million, due to strong sales of Mild Cleansing Oil, DEEP CLEAR WASHING POWDER and CORE EFFECTOR.

Sales of ATTENIR Cosmetics increased 17.8% to ¥3,456 million, due to contributions from Dress snow basic skin care which launched in April and cross-bordere-commerce sales in China.

Sales of boscia decreased 14.9% to ¥321 million due to sluggish wholesale sales to real stores, despite a strong performance in e-commerce channels.

Results by sales channels were: online and catalogue sales declined 9.2% to ¥7,508 million, direct store sales increased 56.9% to ¥3,249 million, wholesale sales through other sales channels increased 19.6% to ¥1,998 million, and overseas sales increased 13.6% to ¥1,751 million.

5