ＳＥＲＩＯホールディングス（6567） – [Delayed]Summary of Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending May 31, 2022

April 13, 2022 Summary of Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending May 31, 2022 (Nine Months Ended February 28, 2022) 6567 Company name: SERIO HOLDINGS CO., LTD. Securities code: Representative: Hisashi Wakahama, President and CEO Contact: Scheduled date of filing of Quarterly Report: Scheduled date of dividend payment: Preparation of supplementary materials for quarterly financial results: Yes Holding of quarterly financial results meeting: None April 13, 2022 – Koji Gotani, Director, General Manager, Management Division Tel: +81-6-6442-0500 [Japanese GAAP] Listing: Tokyo Stock Exchange URL: https://www.serio-holdings.co.jp/ 1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending May 31, 2022 (All amounts are rounded down to the nearest million yen) (June 1, 2021 – February 28, 2022) (1) Consolidated results of operations Net sales Operating profit (Percentages represent year-on-year changes) Profit attributable to owners of parent Ordinary profit Million yen % Million yen 208 296 6,786 11.7 6,076 19.6 Nine months ended Feb. 28, 2022: 137 million yen Nine months ended Feb. 28, 2021: 199 million yen (29.7) 325.2 % Million yen 211 299 % Million yen 137 199 (29.4) 340.1 % (31.0) 329.0 (down 31.0%) (up 329.0%) Nine months ended Feb. 28, 2022 Nine months ended Feb. 28, 2021 Note: Comprehensive income Earnings per share Diluted earnings per share Yen – – Yen 21.81 31.55 Nine months ended Feb. 28, 2022 Nine months ended Feb. 28, 2021 Notes: 1. SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. Earnings per share are calculated as if this stock split had taken place at the beginning of the previous fiscal year. 2. Diluted earnings per share are not shown because there were no dilutive common stock equivalents. Total assets Net assets Equity ratio Million yen 4,387 4,495 Million yen 2,026 1,931 As of Feb. 28, 2022: 2,026 million yen As of May 31, 2021: 1,931 million yen (2) Consolidated financial position As of Feb. 28, 2022 As of May 31, 2021 Reference: Shareholders’ equity 2. Dividends 1Q-end 2Q-end Year-end Total Dividend per share 3Q-end Fiscal year ended May 31, 2021 Fiscal year ending May 31, 2022 Fiscal year ending May 31, 2022 (forecast) Note: Revision to the most recently announced dividend forecast: None Note: SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. The dividend per share for the fiscal Yen – – Yen 0.00 0.00 Yen 7.00 7.00 Yen – – year ended May 31, 2021 is the amount paid after the common stock split. 3. Consolidated Forecast for the Fiscal Year Ending May 31, 2022 (June 1, 2021 – May 31, 2022) Net sales Operating profit Ordinary profit % Million yen Full year 270 Note: Revision to the most recently announced consolidated forecast: None % Million yen 275 Million yen 9,000 (18.5) 9.5 (Percentages represent year-on-year changes) Earnings per share Profit attributable to owners of parent % Million yen 175 (21.7) % (21.5) Yen 27.80 % 46.2 43.0 Yen 7.00 7.00 * Notes scope of consolidation): None (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in (2) Application of special accounting methods for presenting quarterly consolidated financial statements: None (3) Changes in accounting policies and accounting-based estimates, and restatements 1) Changes in accounting policies due to revisions in accounting standards, others: Yes 2) Changes in accounting policies other than 1) above: 3) Changes in accounting-based estimates: None None 4) Restatements: Note: Please refer to page 9 “2. Quarterly Consolidated Financial Statements and Notes, (3) Notes to Quarterly Consolidated None Financial Statements, Changes in Accounting Policies” for details. (4) Number of issued shares (common stock) 1) Number of shares issued at the end of the period (including treasury shares) As of Feb. 28, 2022 6,329,400 shares As of May 31, 2021: 6,329,400 shares 2) Number of treasury shares at the end of the period 3) Average number of shares during the period As of Feb. 28, 2022: 8,627 shares As of May 31, 2021: – shares Nine months ended Feb. 28, 2022: 6,315,276 shares Nine months ended Feb. 28, 2021: 6,329,400 shares Note: SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. The number of issued shares (common stock) is calculated as if this stock split had taken place at the beginning of the previous fiscal year. * The quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms. * Explanation of appropriate use of earnings forecasts and other special items Cautionary statement with respect to forward-looking statements Forecasts of future performance in these materials are based on assumption judged to be valid and information available to the SERIO Holdings management at the time the materials were prepared, but are not promises by SERIO Holdings regarding future performance. Actual results may differ materially from the forecasts for a number of reasons. Please refer to page 4 “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecast and Other Forward-looking Statements” for forecast assumptions and notes of caution for usage. How to view supplementary materials for quarterly financial results Supplementary materials for the quarterly financial results will be disclosed today ( April 13, 2022), using the Timely Disclosure network (TDnet). SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 Contents of Attachments 1. Qualitative Information on Quarterly Consolidated Financial Performance (1) Explanation of Results of Operations (2) Explanation of Financial Position (3) Explanation of Consolidated Forecast and Other Forward-looking Statements 2. Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheet (2) Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statement of Income For the Nine-month Period Quarterly Consolidated Statement of Comprehensive Income For the Nine-month Period (3) Notes to Quarterly Consolidated Financial Statements Going Concern Assumption Significant Changes in Shareholders’ Equity Changes in Accounting Policies Segment Information 2 2 4 4 5 5 7 7 8 9 9 9 9 10 1 SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 1. Qualitative Information on Quarterly Consolidated Financial Performance Forward-looking statements are based on the judgments of the SERIO Holdings Group (SERIO Holdings and its consolidated subsidiaries) as of February 28, 2022. SERIO Holdings has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and other standards from the beginning of the first quarter of the current fiscal year. As a result, prior-year comparisons are based on figures in the previous fiscal year that use different accounting standards. More information is in “2. Quarterly Consolidated Financial Statements and Notes, (3) Notes to Quarterly Consolidated Financial Statements, Changes in Accounting Pol icies.” (1) Explanation of Results of Operations In the first nine months of the current fiscal year (June 1, 2021 to February 28, 2022), the outlook for the economy remained unclear because of states of emergency and other safety measures as the pandemic continued. There is no significant negative impact of the pandemic on the employment assistance business in part because of consistent demand at companies involving workforce flexibility. Although operations were suspended from time to time in the after-school day-care and nursery school businesses because of the pandemic, operations are gradually returning to normal. We continued to operate after-school day-care facilities and nursery schools while taking actions to prevent infections in order to meet the child care needs of working parents and guardians. In December 2020, the Japanese government announced a New Child-raising Confidence Plan that has the goal of establishing an infrastructure of nursery schools for approximately 140,000 children by the end of 2024. Demand for child care is increasing because of the rising percentage of women in the workforce and demand is expected to continue to climb. During the first nine months, we continued to take actions aimed at creating jobs in order to provide an e ven larger number of people with opportunities to work while caring for children. We also continued to strengthen the administrative infrastructures of the after-school day-care and nursery school businesses to accommodate the growth of these two operations. Sales increased because of the contribution to sales of after-school day-care facilities and nursery schools that opened in April 2021. The application of the new revenue recognition standard raised sales by 5 million yen. Operating profit decreased primarily for two reasons. First is higher than in the first nine months of the previous fiscal year when operating hours of after-school day-care facilities were reduced significantly and the number of nursery school children decreased because of the pandemic. Second is up-front expenditures associated with the receipt of large orders in the employment assistance business. As a result, net sales in the first nine months increased 11.7% year on year to 6,786 million yen. Operating profit was 208 million yen, down 29.7% and ordinary profit was 211 million yen, a decrease of 29.4%. Profit attributable to owners of parent decreased 31.0% to 137 million yen. Business segment performance was as follows. 1) Employment assistance As a company dedicated to enabling people to continue working while caring for a family, we are a source of jobs that enable more women to work in a manner that matches each stage of their lives. We submit proposals to companies in a variety of industries for personnel support that makes it possible to reduce expenses by using people in the most productive ways possible. There was a large volume of sales activities during the first nine months of the fiscal year with no difficulties despite the pandemic due to the use of online sales meetings a nd the gradual recovery in the number of opportunities for face-to-face sales meetings. Segment sales increased because of an increase in orders from current customers and large orders for operating public-sector call centers. Segment profit decreased because of increases in the cost of sales and selling, general and administrative expenses that were the result of hiring salespeople for the new child care worker placement business and up-front expenditures associated with new orders from the public sector. As a result, net sales of this business were 2,042 million yen, up 4.2% year on year, and segment profit was 72 million yen, a decrease of 26.0%. 2 2) After-school day care SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 We are continuing to operate after-school day-care facilities while strictly following the guidelines for protection against COVID-19 infections in order to allow people to use these facilities with confidence. During the first half of 2020, all elementary schools in Japan were closed and there were other actions in response to the pandem ic. Since then, there have been no large-scale school closings even during states of emergency or the enactment of other pandemic safety measures. As of July 2021, there were 13,416 children on waiting lists for after-school day-care facilities nationwide according to the Ministry of Health, Labour and Welfare. Although this is slightly lower than one year earlier, the number of children registered at these facilities increased by 37,267 from one year earlier to a record -high 1,348,275. This growth demonstrates the consistently strong demand for after-school day-care services. The number of after-school day-care facilities operated by the SERIO Holdings Group at the end of February 2022 was 133 for public facilities (operated for local governments), 10 for private elementary schools and one in the private sector. The result was a total of 144, an increase of one from the end of the previous fiscal year. Preparations are under way to open more locations beginning in April 2022. Sales increased because of the inclusion of the sales of 10 locations opened during the previous fiscal year. Due to the new revenue recognition standard, this segment has started using more reasonable estimates of progress with fulfilling obligations to provide services and then using these estimates to recognize sales in specific periods. Earnings decreased as the return to normal operations following the impact of the pandemic in the previous fiscal year raised personnel expenses. As a result, net sales of this business were 2,092 million yen, up 13.0% year on year, and segment profit was 91 million yen, a decrease of 31.4%. 3) Nursery schools Although some nursery schools temporarily closed because of the pandemic, operations are gradually returning to normal. We continued operating nursery schools while taking numerous actions to protect children and instructors from infections in accordance with government guidelines. As of April 1, 2021, there were 5,634 preschool children in Japan who were waiting for a nursery school opening. This is a decrease of 6,805 from one year earlier probably because parents are reluctant to use nursery schools during the pandemic. As the percentage of women who have jobs climbs, demand for child care is remaining very strong. The number of children using nursery schools and other care facilities has increased to 2,740,000, 4,712 more than one year earlier. The number of children using SERIO Holdings Group nursery schools has been increasing steadily. At the end of February 2022, there were 23 certified nursery schools, 11 small certified nursery schools, three nursery schools for companies, and three community child development support facilities, a total of 40 locations. There was no increase in the number of locations during the first nine months, but preparations are under way to open more locations beginning in April 2022. Sales benefited from the increasing number of children at nursery schools newly opened in places where there is not enough nursery school capacity to meet demand. An increase in the number of children at existing locations also contributed to strong sales growth. Nursery school earnings increased even though the return to normal operations caused personnel expenses to increase. However, segment profit was down because of higher selling, general and administrative expenses at SERIO Garden Co., Ltd., which operates a greenery business for nursery schools and other schools. As a result, net sales of this business were 2,650 million yen, up 17.1% year on year, and segment profit was 166 million yen, a decrease of 2.0%. 3 Assets (2) Explanation of Financial Position SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 Total assets at the end of the third quarter decreased 108 million yen from the end of the previous fiscal year to 4,387 million yen. This was mainly due to decreases of 274 million yen in cash and deposits and 45 million yen in buildings and structures, while there were increases of 163 million yen in accounts receivable-trade and contract assets and 109 million yen in construction in progress. Liabilities Total liabilities at the end of the third quarter decreased 202 million yen from the end of the previous fiscal year to 2,360 million yen. This was mainly due to decreases of 119 million yen in accrued expenses, 89 million yen in long-term advances received and 87 million yen in income taxes payable, while there was an increase of 116 million yen in provision for bonuses. Net assets Total net assets at the end of the third quarter increased 94 million yen from the end of the previous fiscal year to 2,026 million yen. This was mainly due to an increase of 137 million yen in retained earnings resulting from profit attributable to owners of parent and a decrease of 44 million yen in retained earnings due to payment of dividends. (3) Explanation of Consolidated Forecast and Other Forward-looking Statements There are no revisions to the fiscal year consolidated forecast announced on July 14, 2021 in “Summary of Consolidated Financial Results for the Fiscal Year Ended May 31, 2021.” At this time, we believe that the pandemic will not have a significant negative effect on business operations and sales and earnings. The consolidated forecast is based on assumption judged to be valid and information available when the forecast was announced. Actual results may differ from the forecasts for a number of reasons. 4 2. Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheet SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 FY5/21 (As of May 31, 2021) (Thousands of yen) Third quarter of FY5/22 (As of Feb. 28, 2022) Assets Current assets Cash and deposits Accounts receivable-trade Accounts receivable-trade and contract assets Prepaid expenses Accounts receivable-other Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Tools, furniture and fixtures, net Land Leased assets, net Construction in progress Total property, plant and equipment Intangible assets Right to use facilities Software Leased assets Software in progress Other Total intangible assets Investments and other assets Investments in capital Guarantee deposits Long-term prepaid expenses Deferred tax assets Insurance funds Construction assistance fund receivables Other Total investments and other assets Total non-current assets Total assets – 1,897,424 570,304 86,965 12,681 12,324 (324) 2,579,375 1,112,829 47,048 161,735 3,484 538 1,325,635 11,543 10,268 7,718 – 1,132 30,663 10 170,696 120,424 53,287 34,312 127,801 53,469 560,001 1,916,300 4,495,676 – 1,622,764 734,272 95,673 25,926 34,243 (471) 2,512,408 1,067,387 42,363 161,735 2,881 109,920 1,384,287 10,823 4,214 5,055 1,650 1,038 22,781 10 178,258 44,051 46,644 35,673 122,627 40,624 467,891 1,874,960 4,387,369 5 Liabilities Current liabilities Accounts payable-trade Short-term borrowings Lease obligations Accounts payable-other Current portion of long-term borrowings Accounts payable for equipment investment Accrued expenses Income taxes payable Accrued consumption taxes Advances received Contract liabilities Deposits received Provision for bonuses Total current liabilities Non-current liabilities Long-term borrowings Lease obligations Asset retirement obligations Long-term advances received Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Total net assets Total liabilities and net assets SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 FY5/21 (As of May 31, 2021) (Thousands of yen) Third quarter of FY5/22 (As of Feb. 28, 2022) – – – – 8,362 81,600 10,781 85,232 1,340 645,763 111,143 126,705 131,855 144,719 1,347,502 880,336 8,183 238,586 89,293 1,216,399 2,563,902 693,263 671,433 567,078 1,931,774 1,931,774 4,495,676 – – 7,904 83,720 81,600 5,960 90,561 11,779 526,246 23,645 106,432 113,616 130,574 116,530 1,298,571 819,136 4,060 239,207 1,062,404 2,360,976 693,263 671,753 668,148 (6,772) 2,026,393 2,026,393 4,387,369 6 SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 (2) Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statement of Income (For the Nine-month Period) First nine months of FY5/21 (Jun. 1, 2020 – Feb. 28, 2021) First nine months of FY5/22 (Jun. 1, 2021 – Feb. 28, 2022) (Thousands of yen) Selling, general and administrative expenses Net sales Cost of sales Gross profit Operating profit Non-operating income Interest income Subsidy income Subsidy income Miscellaneous income Total non-operating income Non-operating expenses Interest expenses Amortization of share issuance costs Miscellaneous losses Total non-operating expenses Ordinary profit Extraordinary income Subsidy income Total extraordinary income Extraordinary losses Loss on tax purpose reduction entry of non-current assets Loss on retirement of non-current assets Total extraordinary losses Profit before income taxes Income taxes-current Income taxes-deferred Total income taxes Profit Profit attributable to owners of parent 6,076,182 4,851,807 1,224,374 928,046 296,327 14 8,027 1,849 1,431 11,322 6,262 1,975 0 8,238 299,411 950 950 950 2,116 3,066 297,295 99,902 (2,300) 97,602 199,692 199,692 6,786,117 5,544,032 1,242,085 1,033,720 208,364 17 6,606 2,265 1,603 10,493 6,438 990 7,428 211,429 – – – – – – 211,429 71,085 2,608 73,694 137,734 137,734 7 SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 Quarterly Consolidated Statement of Comprehensive Income (For the Nine-month Period) Profit Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent First nine months of FY5/21 (Jun. 1, 2020 – Feb. 28, 2021) First nine months of FY5/22 (Jun. 1, 2021 – Feb. 28, 2022) (Thousands of yen) 199,692 199,692 199,692 137,734 137,734 137,734 8 SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 (3) Notes to Quarterly Consolidated Financial Statements Going Concern Assumption Not applicable. Significant Changes in Shareholders’ Equity Following the resolution of the Board of Directors meeting on July 19, 2021, SERIO Holdings purchased 30,000 treasury shares of common stock on July 20, 2021 through an off-auction own share repurchase trading system (ToSTNeT-3) of the Tokyo Stock Exchange. In addition, following the resolution of the Board of Directors meeting on September 21, 2021, SERIO Holdings sold 21,373 treasury shares as restricted stock compensation on October 18, 2021. As a result, treasury shares amounted to 6,772 thousand yen as of the end of the third quarter of the current fiscal year. Changes in Accounting Policies Application of Accounting Standard for Revenue Recognition SERIO Holdings has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March 26, 2021) from the beginning of the first quarter of the current fiscal year. Based on these standard and guidance, revenue expected to be received in exchange for the provision of goods and services is recognized when the control of the promised goods and services is transferred to customers. The most significant change resulting from this application is in the after-school day-care segment, which now uses more reasonable estimates of progress with fulfilling obligations to provide services and then uses these estimates to recognize sales in specific periods. For the application of the Accounting Standard for Revenue Recognition , in accordance with the transitional treatment prescribed in the proviso to Paragraph 84 of this standard, the cumulative effect of the retrospective application of the new accounting standard, if it is applied prior to the first quarter of the current fi scal year, is added to or subtracted from retained earnings at the beginning of the first quarter of the current fiscal year. The new standard is then applied beginning with this amount of retained earnings. As a result, in the first nine months of the current fiscal year, net sales increased 5,725 thousand yen, cost of sales decreased 6,974 thousand yen, and operating profit, ordinary profit and profit before income taxes increased 12,700 thousand yen each. There is no effect of the application of the new standards on retained earnings at the beginning of the current fiscal year. Due to the application of the Accounting Standard for Revenue Recognition, “ accounts receivable-trade” in the current assets section of the consolidated balance sheet in the previous fiscal year is, from the first quarter of the current fiscal year, included in “accounts receivable-trade and contract assets.” In addition, “advances received” in the current liabilities section is now “contract liabilities.” In accordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Revenue Recognition, no reclassification has been made to the prior year’s consolidated financial statements to conform to the new presentation. Application of the Accounting Standard for Fair Value Measurement SERIO Holdings has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019) and other standards from the beginning of the first quarter of the current fiscal year, and has applied the new accounting policies set forth by the Accounting Standard for Fair Value Measurement prospectively in accordance with the transitional treatment prescribed in Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). There is no effect of the application of these standards on the quarterly consolidated financial statements. 9 SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/22 Segment Information Net sales External sales Inter-segment sales and transfers – – – – I. First nine months of FY5/21 (Jun. 1, 2020 – Feb. 28, 2021) 1. Information related to net sales and profit or loss for each reportable segment Reportable segment Employment assistance After-school day care Nursery schools Total Adjustment (Note 1) (Thousands of yen) Amounts shown on quarterly consolidated statement of income (Note 2) 1,961,100 1,851,892 2,263,188 6,076,182 6,076,182 – – – – – 653 – 653 Total 1,961,100 1,851,892 2,263,188 6,076,182 6,076,182 296,327 Segment profit Notes: 1. The negative adjustment of 105,562 thousand yen to segment profit is mainly selling, general and administrative (105,562) 133,294 401,889 170,116 98,479 expenses that cannot be attributed to any reportable segments. 2. Segment profit is adjusted to be consistent with operating profit in the quarterly consolidated statement of income. II. First nine months of FY5/22 (Jun. 1, 2021 – Feb. 28, 2022) 1. Information related to net sales and profit or loss for each reportable segment Reportable segment Employment assistance After-school day care Nursery schools Total Adjustment (Note 1) (Thousands of yen) Amounts shown on quarterly consolidated statement of income (Note 2) 2,042,810 2,092,614 2,650,039 6,785,464 6,786,117 Net sales External sales Inter-segment sales and transfers Total 2,042,810 2,092,614 2,650,039 6,785,464 6,786,117 Segment profit Notes: 1. The 653 thousand yen adjustment to net sales is sales that cannot be attributed to any reportable segments. The (122,707) 166,725 331,072 72,864 91,483 208,364 negative adjustment of 122,707 thousand yen to segment profit is mainly selling, general and administrative expenses that cannot be attributed to any reportable segments. 2. Segment profit is adjusted to be consistent with operating profit in the quarterly consolidated statement of income. This summary report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation. – – – – 10