CURVES : Consolidated Financial Results for the Six Months Ended February 28 2022

Consolidated Financial Results for the Six Months Ended February 28, 2022

[Japanese GAAP]

April 8, 2022

Company name: CURVES HOLDINGS Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange Prime Market Stock code: 7085

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

Representative: Takeshi Masumoto, Representative Director and President Contact: Shinya Matsuda, Director and General Manager, Administration Division Tel: [phone]

Scheduled date of filing quarterly securities report: April 12, 2022 Scheduled date of commencing dividend payments: May 12, 2022

Availability of supplementary briefing material on quarterly financial results: Available Schedule of quarterly financial results briefing session: Scheduled

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

1. Consolidated Financial Results for the Six Months Ended February 28, 2022 (September 1, 2021 to February 28, 2022)

(1) Consolidated Operating Results

(% indicates changes from the previous corresponding period.)

Net sales	Operating profit	Ordinary profit	Profit attributable to owners of parent
Six months ended February 28, 2022 February 28, 2021	Million yen % 13,443 13.0 11,891 (17.6)	Million yen % 1,729 871 98.4 (70.8)	Million yen % 1,850 669 176.5 (78.0)	Million yen % 1,207 347 247.5 (83.1)

(Note) Comprehensive income: Six months ended February 28, 2022: 1,706 million yen [‒%]

Six months ended February 28, 2021: (121) million yen [‒%]

Earnings per share	Diluted earnings per share
Six months ended February 28, 2022 February 28, 2021	Yen 12.90 3.70	Yen - -

(2) Consolidated Financial Position

Total assets	Net assets	Equity ratio
As of February 28, 2022 August 31, 2021	Million yen 34,559 36,284	Million yen 9,153 9,163	% 26.5 25.3

(Reference) Equity: As of February 28, 2022: 9,153 million yen

As of August 31, 2021: 9,163 million yen

2. Dividends

Annual dividends
1st quarter-end	2nd quarter-end	3rd quarter-end	Year-end	Total
Fiscal year ended August 31, 2021 Fiscal year ending August 31, 2022	Yen - -	Yen 0.00 3.50	Yen -	Yen 5.00	Yen 5.00
Fiscal year ending August 31, 2022 (Forecast)	-	3.50	7.00

(Note) Revision to the forecast for dividends announced most recently: No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending August 31, 2022 (September 1, 2021 toAugust 31, 2022)

(% indicates changes from the previous corresponding period.)

Net sales	Operating profit	Ordinary profit	Profit attributable to owners of parent	Earnings per share
Full year	Million yen % 26,550 7.6	Million yen % 2,500 54.1	Million yen % 2,450 42.7	Million yen % 1,598 41.5	Yen 17.20

(Note) Revision to the financial results forecast announced most recently: No

* Notes:

• (1) Changes in significant subsidiaries during the six months ended February 28, 2022 (changes in specified subsidiaries resulting in changes in scope of consolidation): No

  Newly added: ― (Name: ) Excluded: ― (Name: )

• (2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: No

• (3) Changes in accounting policies, changes in accounting estimates and restatements

  • 1) Changes in accounting policies due to the revision of accounting standards: Yes

  • 2) Changes in accounting policies other than 1) above: No

  • 3) Changes in accounting estimates: No

  • 4) Restatements: No

• (4) Total number of issued shares (common shares)

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

February 28, 2022:

August 31, 2021:

93,857,493 shares 93,857,493 shares

• 2) Total number of treasury shares at the end of the period:February 28, 2022:

  August 31, 2021:

  1,800,121 shares 121 shares

• 3) Average number of shares during the period (cumulative from the beginning of the fiscal year): Six months ended February 28, 2022: 93,600,229 shares

  Six months ended February 28, 2021: 93,857,372 shares

(Note) The total number of treasury shares at the end of the period include shares of the Company (1,800,000 shares on

February 28, 2022 and 0 shares on August 31, 2021) held by Custody Bank of Japan, Ltd. (Trust Account E). In addition, shares of the Company held by Custody Bank of Japan, Ltd. (Trust Account E) are included in treasury shares that are subtracted in calculating the average number of shares during the period. (257,143 shares during the six months ended February 28, 2022 and 0 shares during the six months ended February 28, 2021)

* This summary of the quarterly financial results is outside the scope of quarterly review by certified public accountants or audit firms.

* Explanation of the proper use of financial results forecast and other notes

(Note on forward-looking statements, etc.)

The financial results forecast and other forward-looking statements contained in this document are based on information currently available to the Company and certain assumptions deemed reasonable by the Company. Such forward-looking statements are not intended to represent a commitment on the part of the Company to achieve them. Actual results may vary significantly due to various factors. See "(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" in the section, "1. Qualitative Information on Quarterly Financial Results for the Period under Review," on page 4 of the attached material for the assumptions used in the financial results forecast and precautions for using the financial results forecast.

(How to obtain supplementary briefing materials on the financial results and the content of the financial results briefing session)

In light of the COVID-19 pandemic, the Company's results briefing will be held by posting video recorded in advance on its website (https://www.curvesholdings.co.jp/) on Friday, April 15, 2022.

The Company will post supplementary briefing material on annual financial results featured in the video on TDnet and the Company's website on the same day.

Table of Contents

1. Qualitative Information on Quarterly Financial Results for the Period under Review .................................. 2

(1) Explanation of Operations Results ............................................................................................................. 2

(2) Explanation of Financial Position .............................................................................................................. 3

(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information .......... 4

2. Quarterly Consolidated Financial Statements and Primary Notes ................................................................. 6

(1) Quarterly Consolidated Balance Sheets ..................................................................................................... 6

(2) Quarterly Consolidated Statements of Income and Comprehensive Income ............................................. 8

(3) Quarterly Consolidated Statement of Cash Flows ................................................................................... 10

(4) Notes to Quarterly Consolidated Financial Statements ............................................................................ 11

(Notes on going concern assumption) ...................................................................................................... 11

(Notes in the case of significant changes in shareholders' equity) ........................................................... 11

(Changes in accounting policies) .............................................................................................................. 11

(Additional information) ........................................................................................................................... 12

1. Qualitative Information on Quarterly Financial Results for the Period under Review

(1) Explanation of Operations Results

The Group (the Company and consolidated subsidiaries, hereinafter referred to as the "Group") has been striving to contribute to the extension of health life expectancy through its core business, Curves, a 30-minute fitness club for women. The Group has endeavored to enhance the satisfaction of its members and expand membership by strengthening customer services as "community-based health infrastructure" that contributes to solving social issues.

It is the Group's understanding that the market environment during and after the COVID-19 pandemic will change dramatically in the following two ways:

(i) Growth of the health market: The pandemic forced people to focus on their lives and health, and the trend toward taking care of their own health will gain momentum over the medium- to long-term, promoting substantial growth of the disease-prevention and health market.

(ii) Growing demand for contactless services: Extending beyond the end of the COVID-19 pandemic, consumer sentiment, society and the economy will remain "scared" by COVID-19, and qualitative changes will occur, such as an increase in demand for non-contact services.

In this management environment, the Group aims to achieve a business recovery and establish business models in the new management environment by the end of December 2022. It is pursuing strategies positioning the fiscal year ending August 31, 2022 (from September 1, 2021, to August 31, 2022) as the fiscal year for ensuring that such goals are achieved.

The net increase in the number of members, the most important indicator of the Group's business recovery, was 25K from 693K as of the end of the previous fiscal year and totaled 718K (including online members).

Due to seasonal factors, the number of new members remains low and membership declines during the second quarter (the period from December through February) every year.

During the second quarter of the fiscal year under review (from December 2021 to February 2022), COVID-19 quasi-emergency measures (priority preventative measures) were in place in some areas in response to the spread of the Omicron variant, which slightly affected new membership acquisition. However, the monthly membership attrition rate held below the pre-COVID-19 level, reflecting service quality improvement measures that the Group continued to take to raise customer satisfaction. In addition, the Group worked to expand sales of merchandise such as protein through diet consultations for members.

Despite the prolonged COVID-19 pandemic, the Group continued working to increase customer satisfaction by improving the quality of services provided to members. As a result, the Group was ranked first in the fitness club category in the Japanese Customer Satisfaction Index (JCSI) survey, which was conducted by the Service Productivity & Innovation for Growth (SPRING) of the Japan Productivity Center, for seven consecutive years (during 2014 to 2021, excluding 2020 when the survey of five industries including fitness clubs was not conducted in consideration of the impact of the COVID-19 pandemic). The Group is the first in the fitness club industry to be ranked first in the survey for seven or more consecutive years.

The Group proceeded with the closure and merging of the clubs that have been severely affected by COVID-19, and approximately 70% of the members of closed and merged clubs have moved to other clubs.

Accordingly, the number of Curves facilities (excluding Men's Curves) and membership in Japan as of February 28, 2022 were as follows.

Number of Curves facilities (excluding Men's Curves) and membership in Japan

As of August 31, 2021	As of February 28, 2022 Changes from end of previous fiscal year
Number of facilities	1,958 facilities	1,951 facilities	A decrease of 7 facilities	(0.4)%
Of which, number of corporate operated facilities	75 facilities	75 facilities	‒	‒
Number of franchisee facilities	1,883 facilities	1,876 facilities	A decrease of 7 facilities	(0.4)%
Membership	693K	718K	25K	3.6%

* Reference: Numbers

before COVID-19

As of February 29,

2020

2,014 facilities

65 facilities

1,949 facilities

832K

(Notes) 1. In the second quarter of the fiscal year under review, the number of new club opening was zero and the number of clubs closed and merged was 2.

2. Curves membership in Japan includes the number of members of online fitness program, Ouchi de

Curves (Curves at Home).

The fitness club for men, Men's Curves, opened two new locations, making the total number of clubs to nine.

In overseas business, the Group considers Europe where it acquired the franchiser operations in July 2019 to be its priority market. As of the end of the first six months of the fiscal year under review (December 31, 2021 (two-month lag due to difference in fiscal year end)), there were 152 Curves facilities in Europe (UK, Italy, Spain and five other countries, all facilities are franchisees' facilities).

Selling, general and administrative expenses decreased 496 million yen from the first quarter of the fiscal year under review due in part to the containment of marketing expenses reflecting seasonal factors. Compared to the second quarter of the previous fiscal year, when the state of emergency was in place, both marketing expenses and ordinary expenses increased, up 266 million yen year on year.

As a result, net sales for the first six months of the fiscal year under review were 13,443 million yen (up 13.0% year on year), leading to operating profit of 1,729 million yen (up 98.4% year on year). Ordinary profit was 1,850 million yen (up 176.5% year on year) due to the generation of foreign exchange gains at Curves International, Inc., which did not have an impact on changes in cash. Profit attributable to owners of parent was 1,207 million yen (up 247.5% year on year) mainly due to the posting of income taxes - current of 748 million yen.

Since the Group operates in a single business segment, the Curves business, the segment information is omitted.

(2) Explanation of Financial Position

(Assets)

Total assets as of February 28, 2022 decreased by 1,725 million yen, compared to the end of the previous fiscal year to 34,559 million yen (down 4.8% from the end of the previous fiscal year).

Current assets decreased by 1,829 million yen to 13,131 million yen (down 12.2% year on year). This was mainly due to a decrease of 2,450 million yen in cash and deposits.

Property, plant and equipment decreased by 12 million yen to 493 million yen (down 2.4% year on year).

Intangible assets increased by 136 million yen to 20,264 million yen (up 0.7% year on year). This was primarily due to an increase of 158 million yen in trademark right, which resulted from currency exchange fluctuations.

Investments and other assets decreased by 20 million yen to 669 million yen (down 3.0% year on year). Total non-current assets increased by 104 million yen to 21,427 million yen (up 0.5% year on year).

(Liabilities)

Current liabilities decreased by 206 million yen to 8,723 million yen (down 2.3% year on year). This was