関通（9326） – [Delayed]Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2022

April 14, 2022 [Japanese GAAP] Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2022 Listing: Tokyo Stock Exchange URL: https://www.kantsu.com/ Company name: KANTSU CO., LTD. Securities code: 9326 Representative: Hisahiro Tatsushiro, Representative Director and President Contact: Tadashi Katayama, Managing Director Scheduled date of Annual General Meeting of Shareholders: May 27, 2022 May 30, 2022 Scheduled date of filing of Annual Securities Report: May 30, 2022 Scheduled date of payment of dividend: Yes Preparation of supplementary materials for financial results: Yes (for institutional investors and securities Holding of financial results meeting: analysts) (All amounts are rounded down to the nearest million yen) Tel: +81-6-6224-3361 1. Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2022 (March 1, 2021 – February 28, 2022) (1) Results of operations Fiscal year ended Feb. 28, 2022 Fiscal year ended Feb. 28, 2021 Net sales Million yen 10,099 9,530 % 6.0 30.5 Operating profit Million yen 729 418 Ordinary profit % Million yen 687 383 74.5 43.5 % 79.4 50.0 Profit Million yen 463 283 % 63.9 66.0 (Percentages represent year-on-year changes) Net income per share Diluted net income per share Yen 44.01 30.00 Yen 45.74 31.66 Return on equity Ordinary profit on total assets % 8.1 5.5 % 21.5 25.5 Operating profit on net sales % 7.2 4.4 Fiscal year ended Feb. 28, 2022 Fiscal year ended Feb. 28, 2021 Reference: Equity in earnings of affiliates (million yen) Fiscal year ended Feb. 28, 2022: – Fiscal year ended Feb. 28, 2021: – Notes: 1. KANTSU conducted a 3-for-1 common stock split effective on September 1, 2021. Net income per share and diluted net income per share have been calculated as if this stock split had taken place at the beginning of the fiscal year ended February 28, 2021. 2. Equity in earnings of affiliates is not shown because KANTAU has no affiliates. (2) Financial position Total assets Net assets Equity ratio As of Feb. 28, 2022 As of Feb. 28, 2021 Reference: Shareholders’ equity (million yen) Note: KANTSU conducted a 3-for-1 common stock split effective on September 1, 2021. Net assets per share has been calculated As of Feb. 28, 2021: As of Feb. 28, 2022: 2,726 1,591 Million yen 9,484 7,532 Million yen 2,726 1,595 Net assets per share Yen 265.71 167.12 % 28.7 21.1 as if this stock split had taken place at the beginning of the fiscal year ended February 28, 2021. (3) Cash flows Fiscal year ended Feb. 28, 2022 Fiscal year ended Feb. 28, 2021 2. Dividends Cash flows from operating activities Million yen 805 187 Cash flows from investing activities Million yen (1,093) (650) Cash flows from financing activities Million yen 900 675 Cash and cash equivalents at end of period Million yen 3,012 2,400 Dividend on equity 1Q-end 2Q-end 3Q-end Year-end Total Dividend per share Total dividends Yen Million yen – 0.00 102 10.00 Dividend payout ratio % – 21.9 Fiscal year ended Feb. 28, 2021 Fiscal year ended Feb. 28, 2022 Fiscal year ending Feb. 28, 2023 (forecast) 3. Earnings Forecast for the Fiscal Year Ending February 28, 2023 (March 1, 2022 – February 28, 2023) Yen – – Yen 0.00 10.00 Yen 0.00 0.00 Yen – – 10.00 10.00 16.9 0.00 – – % – 4.6 On March 1, 2022, KANTSU established wholly owned subsidiary KANTSU Business Services Co., Ltd. As a result, KANTSU will begin preparing consolidated financial statements in the first quarter of the fiscal year ending February 28, 2023. Please refer to “1. Overview of Results of Operations, (4) Outlook” on page 5 and the press release dated today titled “Notice of Consolidated Forecast and Start of Consolidated Financial Reports” for more details. * Notes (1) Changes in accounting policies and accounting-based estimates, and restatements 1) Changes in accounting policies due to revisions in accounting standards, others: 2) Changes in accounting policies other than 1) above: 3) Changes in accounting-based estimates: 4) Restatements: (2) Number of outstanding shares (common shares) None None None None 1) Number of shares outstanding at the end of the period (including treasury shares) As of Feb. 28, 2022: 10,262,400 shares As of Feb. 28, 2021: 9,546,000 shares 2) Number of treasury shares at the end of the period As of Feb. 28, 2022: 93 shares As of Feb. 28, 2021: – shares 3) Average number of shares outstanding during the period Fiscal year ended Feb. 28, 2022: 10,143,729 shares Fiscal year ended Feb. 28, 2021: 8,938,673 shares Note: KANTSU conducted a 3-for-1 common stock split effective on September 1, 2021. The number of shares outstanding at the end of the period (including treasury shares), the number of treasury shares at the end of the period and the average number of shares outstanding during the period have been calculated as if this stock split had taken place at the beginning of the fiscal year ended February 28, 2021. This financial report is not subject to audit 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 Earnings forecasts and other forward-looking statements in this document are based on information that was available when this information was announced and on assumptions as of the announcement date concerning uncertainties that may affect results of operations in the future. Consequently, these statements are not promises by KANTSU regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons. Please refer to “1. Overview of Results of Operations, (4) Outlook” on page 5 for forecast assumptions and notes of caution for usage. How to view supplementary information materials for financial results The supplementary information materials for financial results will be available on KANTSU’s website (https://www.kantsu.com/ir/) on April 14, 2022. Announcement of information concerning business plan and growth potential “Information concerning business plan and growth potential” that was announced on July 28, 2021, included the plan for the next provision of this information in late April 2022. The announcement of this information is now planned for approximately late May 2022. Contents of Attachments 1. Overview of Results of Operations (1) Results of Operations (2) Financial Position (3) Cash Flows (4) Outlook 2. Basic Approach to the Selection of Accounting Standards 3. Non-consolidated Financial Statements and Notes (1) Non-consolidated Balance Sheet (2) Non-consolidated Statement of Income (3) Non-consolidated Statement of Changes in Equity (4) Non-consolidated Statement of Cash Flows (5) Notes to Non-consolidated Financial Statements Going Concern Assumption Equity in Earnings of Affiliates Segment Information Per Share Information Subsequent Events KANTSU CO., LTD. (9326) Financial Results for FY2/22 2 2 4 4 5 5 6 6 8 10 12 13 13 13 13 15 15 1 KANTSU CO., LTD. (9326) Financial Results for FY2/22 2. Overview of Results of Operations This section is a summary of the financial position, results of operations and cash flows of KANTSU in the fiscal year that ended on February 28, 2022. Forward-looking statements are based on the judgments of KANTSU as of February 28, 2022. (2) Results of Operations During the current fiscal year (March 1, 2021 to that ended on February 28, 2022), restrictions on some economic activities in Japan continued because of the pandemic. Although the number of COVID-19 cases declined around September 2021, another upturn of the pandemic occurred beginning in January 2022. As a result, the outlook for the economy is still uncertain. In the logistics sector, the business climate remains challenging as the pandemic continues along with worries about the possibility of another wave of infections. Companies are increasing the use of the e-commerce to sell products and services. All of these trends continued throughout the fiscal year. To meet the demand for logistics, we continued to add and expand distribution centers for establishing an infrastructure for receiving orders from new customers. We also increased search engine optimization (SEO) measures and took other actions for effectively using the internet to start providing services to new customers. The current fiscal year is the first year of the medium-term business plan that ends in February 2024. Based on this plan, there have been many activities to provide services for the growing e-commerce market. Two major strategies for growth are the construction of large refrigerated and frozen warehouses and measures to grow rapidly as an IT vendor. Due to these activities, sales increased 6.0% year-on-year to 10,099 million yen, operating profit increased 74.5% to 729 million yen, ordinary profit increased 79.4% to 687 million yen and profit increased 63.9% to 463 million yen. Business segment performance was as follows. Business segment sales are sales to external customers and segment profit or loss is based on operating profit in the income statement. In prior years, there was the single reportable segment of logistics services and all other activities were categorized as others. Beginning with the fiscal year ended in February 2022, the software sales and use services category which was previously included in the logistic services segment has been separately disclosed in a reportable segment called IT automation. Results of operations in the previous fiscal year have been restated to facilitate direct comparisons with performance in the current fiscal year. Previous reportable segments Reportable segment Logistics services business Main services EC/catalog logistics support services, Rakuten Super Logistics servic es, the Cloud Thomas warehouse management system, the Annie check list system, outso urced order processing services, logistics consulting services, sub-leasing services, etc. Note: In addition to the logistics services business, there was a segment calle d others for activities not included in this reportable segment. Others was primarily technology education services for foreign trainees and other education services. Revised reportable segments Reportable segment Logistics services business IT automation business Main services EC/catalog logistics support services, Rakuten Super Logistics services, outsourced order processing services and logistics consulting services, sub-leasing services, etc. The Cloud Thomas warehouse management system, the Annie check list system, the e.can system for the automatic processing of orders received and the ippo! Service for outsourced robotic process automation (RPA) production, etc. Note: In addition to the above businesses, there is a segment called others for activities not included in these reportable segments. Others is primarily technology education services for foreign trainees and other education services. 2 KANTSU CO., LTD. (9326) Financial Results for FY2/22 Logistics services business To increase customer satisfaction, improvement activities aimed at raising prod uctivity continued with emphasis on EC/catalog logistics support services. Sales decreased in some categories of this business, mainly due to a shift to different freight rate contracts for some customers, a review of business relationships with low profit margins, and a decline in shipment volumes of some customers caused by the pandemic. Meanwhile, we conducted many activities to receive orders from new customers. Most significant are the April 2021 completion of a new EC/Catalog Distribution Center in the city of Amagasaki in Hyogo prefecture (about 18,500 square meters) and the June 2021 completion of a D-to-C (direct-to-consumer) Distribution Center in Amagasaki (about 17,200 square meters). In addition, we started operating a refrigerated and frozen warehouse at the EC/Catalog Distribution Center in Amagasaki in February 2022 and the Tokyo Primary Center in the city of Niiza in Saitama prefecture (about 27,400 square meters). To receive orders involving the use of these two centers from new customers, we reinforced SEO and other measures for the effective use of the internet. As a result, net sales increased 4.6% year-on-year to 9,568 million yen and segment profit increased 92.9% to 613 million yen. IT automation business There were strong sales of the Cloud Thomas warehouse management system to new customers. In addition, there were sales of logistics automation hardware associated with new Cloud Thomas users . We also strengthened capabilities for support services, including by increasing the number o f support service personnel, to build an even stronger framework for sales activities. Although there was no big change in the number of companies using the Annie check list system, the number of orders increased for the e.can system for the automatic proc essing of orders received and for the ippo! Service for outsourced RPA production. As a result, net sales increased 46.0% year-on-year to 433 million yen and segment profit increased 10.3% to 122 million yen. Other businesses Technology education services for foreign trainees were unable to operate mainly because of the suspension of operations of schools in Myanmar due to the COVID-19 crisis. However, other educational services performed well because the pandemic did not have a significant impact on these activities. As a result, sales, including the employment assistance service for people with developmental disabilities that was launched in December 2020, were firm. As a result, net sales increased 11.6% year-on-year to 96 million yen and segment loss was 6 million yen, compared with a loss of 11 million yen one year earlier. Results by business segment for the fiscal year ended February 28, 2022 (Thousands of yen) Segment Net sales Segment profit (loss) (operating profit (loss)) Services Amount Comp. (%) Amount YoY change (%) Operating profit on net sales (%) YoY change (%) EC/catalog logistics support services Outsourced order processing services Others Logistics services business IT automation business Other businesses 9,393,087 111,863 63,955 9,568,907 433,530 96,597 4.7 20.5 (25.3) 4.6 46.0 11.6 6.0 613,598 122,712 (6,957) 729,353 – – – 6.4 28.3 – 7.2 92.9 10.3 – 74.5 Total for reportable segments 10,099,035 100.0 Note: Rakuten Super Logistics services are included in EC/catalog logistics support services. 93.0 1.1 0.6 94.8 4.3 1.0 3 KANTSU CO., LTD. (9326) Financial Results for FY2/22 Total assets at the end of the current fiscal year were 9,484 million yen, an increase of 1,951 million yen from the end of the previous fiscal year. Liabilities were 6,757 million yen, an increase of 820 million yen and net assets were 2,726 million yen, an increase of 1,131 million yen. (2) Financial Position The major changes are as follows. Current assets Current assets increased 531 million yen to 4,673 million yen. This was attributable primarily to a decrease of 160 million yen in accounts receivable-trade and an increase of 625 million yen in cash and deposits due to procurement of funds, mainly using long-term borrowings and the exercise of share acquisition rights. Non-current assets Non-current assets increased 1,420 million yen to 4,810 million yen. There were increases of 407 million yen in buildings mainly due to the new refrigerated and frozen warehouse, 50 million yen in tools, furniture and fixtures due to the installation of material handling equipment at distribution centers, 93 million yen in construction in progress due to the construction of the new refrigerated and frozen warehouse, 247 million yen in lease assets because of the new automated warehouse, and 320 million yen in guarantee deposits for new distribution centers. Current liabilities Current liabilities increased 171 million yen to 2,007 million yen. This was attributable mainly to increases of 261 million yen in other under current liabilities mainly due to accounts payable involving equipment at the refrigerated and frozen warehouse, and 67 million yen in income taxes payable, while there was a decrease of 168 million yen in accounts payable-trade. Non-current liabilities Non-current liabilities increased 648 million yen to 4,750 million yen. There were increases of 224 million yen in long-term borrowings, 156 million yen in asset retirement obligations due to the new refrigerated and frozen warehouse and automated warehouse, and 231 million yen in lease obligations at the automated warehouse. Net assets Net assets increased 1,131 million yen to 2,726 million yen. Share capital and the capital surplus each increased 335 million yen because of the exercise of share acquisition rights. In addition, retained earnings increased 463 million yen because of profit. (3) Cash flows Cash and cash equivalents (hereinafter, “cash”) at the end of the current fiscal year increased 611 million yen from the end of the previous fiscal year to 3,012 million yen. The cash flow components during the fiscal year and the main reasons for changes are as described below. Cash flows from operating activities Net cash provided by operating activities totaled 805 million yen, compared with 187 million yen provided in the previous fiscal year. Major positive factors include profit before income taxes of 675 million yen, depreciation of 304 million yen and a decrease in trade receivables of 120 million yen. Major negative factors include a decrease in trade payables of 168 million yen and income taxes paid of 163 million yen. 4 Cash flows from investing activities KANTSU CO., LTD. (9326) Financial Results for FY2/22 Net cash used in investing activities totaled 1,093 million yen, compared with 650 million yen used in the previous fiscal year. Major negative factors include purchase of property, plant and equipment of 422 million yen, purchase of intangible assets of 114 million yen and payments of leasehold and guarantee deposits of 557 million yen. Cash flows from financing activities Net cash provided by financing activities totaled 900 million yen, compared with 675 million yen provided in the previous fiscal year. Major positive factors include proceeds from long-term borrowings of 1,130 million yen and proceeds from issuance of shares of 653 million yen. Major negative factors include repayments of long -term borrowings of 876 million yen. (4) Outlook On March 1, 2022, KANTSU established wholly owned subsidiary KANTSU Business Services Co., Ltd. As a result, KANTSU will begin preparing consolidated financial statements in the first quarter of the fiscal y ear ending February 28, 2023. This subsidiary was established for the purposes of optimizing expenses by performing internally the management of equipment at logistics facilities operated by KANTSU and of providing greater speed and flexibility for handling changes in the volume of work at distribution centers, such as during periods when the volume peaks, for the entire group. The consolidated forecast for the fiscal year ending February 28, 2023 is as follows. More information about the forecast is in the press release dated today titled “Notice of Consolidated Forecast and Start of Consolidated Financial Reports. Consolidated Forecast for the Fiscal Year Ending February 28, 2023 (March 1, 2022 – February 28, 2023) Net sales Operating profit Ordinary profit Net income per share First half Full year 5,516 12,002 311 943 Profit attributable to owners of parent 196 608 290 902 (Millions of yen) 19.11 yen 59.33yen Note: No prior-year comparisons are shown because there are no consolidated financial figure s for the previous fiscal year. The consolidated forecast is based on information available to the KANTSU’s management at the time the materials were prepared. Actual results may differ from these forecasts for a number of reasons. 2. Basic Approach to the Selection of Accounting Standards KANTSU has a policy of preparing its financial statements using Japanese GAAP to p ermit comparisons with other fiscal years as well as comparisons with the performance of other Japanese companies. 5 KANTSU CO., LTD. (9326) Financial Results for FY2/22 FY2/21 (As of Feb. 28, 2021) (Thousands of yen) FY2/22 (As of Feb. 28, 2022) 2,592,792 155,419 1,100,638 108,835 181,868 20,371 (17,700) 4,142,224 948,103 (254,839) 693,263 330,562 (114,956) 215,606 13,288 (12,969) 318 329,864 (164,028) 165,836 1,125,087 109,111 17,843 (956) 16,886 2,326,110 259,583 349 259,933 511 36,000 24,253 584,074 1,467 24,139 136,520 (2,243) 804,721 3,390,765 7,532,989 3,218,563 196,539 940,263 99,347 209,775 23,315 (14,037) 4,673,767 1,431,211 (330,206) 1,101,005 369,333 (167,696) 201,636 22,344 (14,022) 8,322 443,580 (227,261) 216,318 1,125,087 202,256 271,727 (7,066) 264,660 3,119,288 293,276 1,896 295,173 511 24,000 22,669 904,839 385 37,739 407,429 (1,161) 1,396,412 4,810,874 9,484,642 3. Non-consolidated Financial Statements and Notes (1) Non-consolidated Balance Sheet Assets Current assets Cash and deposits Electronically recorded monetary claims-operating Accounts receivable-trade Advance payments to suppliers Prepaid expenses Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings Accumulated depreciation and impairment Buildings, net Machinery and equipment Accumulated depreciation Machinery and equipment, net Vehicles Accumulated depreciation Vehicles, net Tools, furniture and fixtures Accumulated depreciation Tools, furniture and fixtures, net Land Construction in progress Leased assets Accumulated depreciation Leased assets, net Total property, plant and equipment Intangible assets Software Other Total intangible assets Investments and other assets Investments in capital Long-term loans receivable Long-term prepaid expenses Leasehold and guarantee deposits Distressed receivables Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 6 Liabilities Current liabilities Accounts payable-trade Current portion of long-term borrowings Accounts payable – other Accrued expenses Income taxes payable Advances received Deposits received Provision for bonuses Lease obligations Provision for bonuses for directors (and other officers) Other Total current liabilities Non-current liabilities Long-term borrowings Asset retirement obligations Lease obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Legal capital surplus Other capital surplus Total capital surplus Retained earnings Other retained earnings Total retained earnings Treasury shares Total shareholders’ equity Share acquisition rights Total net assets Total liabilities and net assets Retained earnings brought forward KANTSU CO., LTD. (9326) Financial Results for FY2/22 FY2/21 (As of Feb. 28, 2021) (Thousands of yen) FY2/22 (As of Feb. 28, 2022) 472,002 813,820 240,011 24,997 109,726 50,121 24,254 30,272 3,893 – 66,907 1,836,007 3,852,065 73,177 15,042 161,406 4,101,691 5,937,699 449,606 429,606 6,000 435,606 706,285 706,285 – 1,591,498 3,792 1,595,290 7,532,989 303,249 842,710 177,849 18,644 176,742 69,703 8,643 38,088 26,763 16,531 328,892 2,007,818 4,076,578 229,315 246,494 197,674 4,750,062 6,757,881 785,299 765,299 6,000 771,299 1,170,272 1,170,272 (109) 2,726,761 – 2,726,761 9,484,642 7 (2) Non-consolidated Statement of Income KANTSU CO., LTD. (9326) Financial Results for FY2/22 FY2/21 (Mar. 1, 2020 – Feb. 28, 2021) (Thousands of yen) FY2/22 (Mar. 1, 2021 – Feb. 28, 2022) Selling, general and administrative expenses Net sales Cost of sales Gross profit Operating profit Non-operating income Interest income Dividend income Reversal of allowance for doubtful accounts Rental income from land and buildings Subsidy income Gain on sale of goods Other Total non-operating income Non-operating expenses Interest expenses Going public expenses Settlement package Other Total non-operating expenses Ordinary profit Extraordinary income Share acquisition rights issuance costs Gain on sale of investment securities Gain on sale of non-current assets Total extraordinary income Extraordinary losses Loss on sale of non-current assets Loss on retirement of non-current assets Impairment losses Total extraordinary losses Profit before income taxes Income taxes-current Income taxes-deferred Total income taxes Profit 9,530,453 8,424,806 1,105,646 687,574 418,072 614 302 6,336 2,280 13,289 2,011 5,603 30,436 43,451 4,936 9,565 – – – 7,202 65,156 383,353 17,226 17,226 6,978 1,582 8,561 392,019 138,321 (29,317) 109,003 283,015 10,099,035 8,527,449 1,571,585 842,231 729,353 579 4 921 2,160 13,406 3,791 1,527 22,390 44,916 – 825 9,818 8,353 63,914 687,830 – 2 2 – 11,457 615 12,072 675,760 225,372 (13,600) 211,772 463,987 8 I II Cost of Sales Statement Item Labor cost Expenses Cost of products manufactured Beginning merchandise inventory Cost of purchased goods Total Ending merchandise inventory Cost of goods sold Total cost of sales Note: Major breakdown of expenses is as follows: Note KANTSU CO., LTD. (9326) Financial Results for FY2/22 FY2/21 (Mar. 1, 2020 – Feb. 28, 2021) (Thousands of yen) FY2/22 (Mar. 1, 2021 – Feb. 28, 2022) Amount % Amount % 1,603,746 6,814,470 8,418,216 6,590 6,590 – – 19.0 80.9 99.9 1,975,344 6,503,491 8,478,835 48,614 48,614 – – 23.2 76.3 99.4 6,590 8,424,806 0.1 100.0 48,614 8,527,449 0.6 100.0 Item FY2/21 (Mar. 1, 2020 – Feb. 28, 2021) FY2/22 (Mar. 1, 2021 – Feb. 28, 2022) Freight-out and transportation expenses Outsourcing expenses Rent expenses Depreciation 3,776,878 274,675 1,617,684 211,263 (Thousands of yen) 3,214,531 283,490 1,719,910 264,184 9 (3) Non-consolidated Statement of Changes in Equity FY2/21 (Mar. 1, 2020 – Feb. 28, 2021) KANTSU CO., LTD. (9326) Financial Results for FY2/22 (Thousands of yen) Shareholders’ equity Capital surplus Retained earnings Share capital Legal capital surplus Other capital surplus Total capital surplus Other retained earnings Retained earnings brought forward Total retained earnings Treasury shares Total shareholders’ equity 110,750 90,750 6,000 96,750 423,269 423,269 – 630,769 Changes during period 338,856 338,856 338,856 283,015 283,015 677,713 283,015 – – 338,856 338,856 – 338,856 283,015 283,015 960,728 449,606 429,606 6,000 435,606 706,285 706,285 1,591,498 Valuation and translation adjustments Valuation difference on available-for-sale securities Total valuation and translation adjustments (4,673) (4,673) (Thousands of yen) Share acquisition rights Total net assets 4,673 4,673 – – 3,792 3,792 3,792 626,096 677,713 283,015 – 8,465 969,194 1,595,290 Balance at beginning of period Issuance of new shares Profit Purchase of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period Balance at beginning of period Changes during period Issuance of new shares Profit Purchase of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 4,673 4,673 – 10 FY2/22 (Mar. 1, 2021 – Feb. 28, 2022) KANTSU CO., LTD. (9326) Financial Results for FY2/22 Shareholders’ equity Capital surplus Retained earnings (Thousands of yen) Share capital Legal capital surplus Other capital surplus Total capital surplus Total retained earnings Treasury shares Total shareholders’ equity Other retained earnings Retained earnings brought forward 449,606 429,606 6,000 435,606 706,285 706,285 – 1,591,498 335,692 335,692 335,692 463,987 463,987 671,384 463,987 (109) (109) 335,692 335,692 – 335,692 463,987 463,987 (109) 1,135,262 785,299 765,299 6,000 771,299 1,170,272 1,170,272 (109) 2,726,761 Valuation and translation adjustments Valuation difference on available-for-sale securities Total valuation and translation adjustments (Thousands of yen) Share acquisition rights Total net assets Balance at beginning of period Changes during period Issuance of new shares Profit Purchase of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period Balance at beginning of period Changes during period Issuance of new shares Profit Purchase of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 3,792 1,595,290 671,384 463,987 (109) (3,792) (3,792) (3,792) 1,131,470 － 2,726,761 – – – – – – – – 11 KANTSU CO., LTD. (9326) Financial Results for FY2/22 FY2/21 (Mar. 1, 2020 – Feb. 28, 2021) (Thousands of yen) FY2/22 (Mar. 1, 2021 – Feb. 28, 2022) (4) Non-consolidated Statement of Cash Flows Cash flows from operating activities Profit before income taxes Depreciation Impairment losses Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Increase (decrease) in provision for bonuses for directors (and other officers) Interest and dividend income Interest expenses Loss (gain) on sale of non-current assets Loss on retirement of non-current assets Loss (gain) on sale of investment securities Decrease (increase) in trade receivables Decrease (increase) in advance payments to suppliers Increase (decrease) in trade payables Increase (decrease) in accounts payable – other Other, net Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by (used in) operating activities Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of intangible assets Proceeds from sale of investment securities Loan advances Proceeds from collection of loans receivable Payments of leasehold and guarantee deposits Proceeds from refund of leasehold and guarantee deposits Purchase of insurance funds Proceeds from long-term deposits received Other, net Net cash provided by (used in) investing activities Cash flows from financing activities Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of lease obligations Proceeds from issuance of shares Proceeds from issuance of share acquisition rights Purchase of treasury shares Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 12 392,019 239,229 – (1,447) (3,145) – (916) 43,451 6,978 1,582 (17,226) (416,643) (37,225) 91,887 (21,345) 57,177 334,373 916 (43,135) (104,609) 187,545 (48,813) 120,000 (539,067) 57 (130,569) 44,794 – 1,000 (115,125) – (3,594) 27,842 (6,963) (650,438) 800,000 (805,051) (717) 675,362 6,143 – 675,737 – 212,843 2,188,148 2,400,992 675,760 304,350 615 (4,745) 7,815 16,531 (583) 44,916 (2) 11,457 – 120,337 9,487 (168,752) (37,399) 34,089 1,013,876 583 (45,652) (163,344) 805,463 (13,808) – (422,527) 191 (114,503) – (35,000) 48,000 (557,999) 10,176 (44,406) 36,268 – 1,130,000 (876,597) (6,234) 653,049 – (109) 900,108 – 611,962 2,400,992 3,012,955 (1,093,609) (5) Notes to Non-consolidated Financial Statements KANTSU CO., LTD. (9326) Financial Results for FY2/22 Going Concern Assumption Not applicable. Equity in Earnings of Affiliates Not applicable. Segment Information 1. Overview of reportable segments The KANTSU’s reportable segments are components for which discrete financial information is available and whose operating results are regularly reviewed by the Board of Directors to make decisions about resource allocation and to assess performance. Beginning with the fiscal year ended in February 2022, the software sales and use services category which was previously included in the logistic services segment has been separately disclosed in a reportable segment called IT automation. Segment information for the previous fiscal year have been restated to facilitate direct comparisons with performance in the current fiscal year. The main services of this segment are as follows. (Logistic services) ⚫ EC/catalog logistics support services ⚫ Outsourced order processing services ⚫ Rakuten Super Logistics services ⚫ Logistics consulting services ⚫ Sub-leasing services (IT automation) ⚫ Cloud Thomas warehouse management system ⚫ Annie check list system ⚫ ⚫ e.can system for the automatic processing of orders received ippo! service for outsourced robotic process automation (RPA) production, and others 2. Calculation method for net sales, profit or loss, assets, liabilities, and other items for each reportable segment The accounting policies for reportable segments are generally the same as those described in the “Significant Accounting Policies”. Segment profit for reportable segments are based on operating profit. There are no inter-segment transfers. 13 Net sales External sales Inter-segment sales and transfers Other items KANTSU CO., LTD. (9326) Financial Results for FY2/22 3. Information related to net sales, profit or loss, assets, liabilities, a nd other items for each reportable segment FY2/21 (Mar. 1, 2020 – Feb. 28, 2021) Reportable segment Logistics services IT automation Sub-total Others (Note 1) Total Adjustment (Note 2) (Thousands of yen) Amounts shown on non-consolidated financial statements 9,146,901 297,033 9,443,935 86,518 9,530,453 9,530,453 Total 9,146,901 297,033 9,443,935 86,518 9,530,453 Segment profit (loss) 318,018 111,205 429,224 (11,151) 418,072 9,530,453 418,072 Segment assets 4,350,248 184,928 4,535,177 78,162 4,613,339 2,919,650 7,532,989 48,076 190,253 Depreciation Increase in property, plant and equipment and intangible assets Notes: 1. Others are businesses that are not included in the reportable segments and mainly consist of technology 592,797 238,329 239,229 654,040 657,319 61,242 3,279 899 – – 239,229 657,319 education services for foreign trainees and other education services. 2. The 2,792,927 thousand yen adjustment to segment assets is corporate assets that are not allocated to any of the reportable segments. Corporate assets mainly consist of cash and deposits that cannot be attributed to reportable segments. FY2/22 (Mar. 1, 2021 – Feb. 28, 2022) Reportable segment Logistics services IT automation Sub-total Others (Note 1) Total Adjustment (Note 2) (Thousands of yen) Amounts shown on non-consolidated financial statements 9,568,907 433,530 10,002,438 96,597 10,099,035 10,099,035 Total 9,568,907 433,530 10,002,438 96,597 10,099,035 Segment profit (loss) 613,598 122,712 736,310 (6,957) 729,353 10,099,035 729,353 Segment assets 5,690,137 219,339 5,909,477 74,332 5,983,809 3,500,832 9,484,642 39,490 263,717 Depreciation Increase in property, plant and equipment and intangible assets Notes: 1. Others are businesses that are not included in the reportable segments and mainly consist of technology 1,086,465 1,143,483 1,143,483 303,207 304,350 57,018 1,142 – – – 304,350 1,143,483 education services for foreign trainees and other education services. 2. The 3,500,832 thousand yen adjustment to segment assets is corporate assets that are not a llocated to any of the reportable segments. Corporate assets mainly consist of cash and deposits th at cannot be attributed to reportable segments. Net sales External sales Inter-segment sales and transfers Other items – – – – – – – – – – – – – – – – – – – – 14 Diluted net income per share 44.01 Notes: 1. In accordance with a resolution approved at the Board of Directors on July 14, 2021, KANTSU conducted a 3-for-1 common stock split on September 1, 2021. Net assets per share, net income per share and diluted net income per share have been calculated as if this stock split had taken place at the beginning of the fi scal year ended February 28, 2021. 30.00 2. The basis of calculating the net income per share and the diluted net income per share is as follows: Per Share Information Net assets per share Net income per share (1) Net income per share [Basis for calculation] Profit Amounts not attributable to common shareholders Profit applicable to common shares Average number of common shares outstanding during the period (shares) (2) Diluted net income per share [Basis for calculation] Adjustment to profit Increase in number of common shares (shares) [of which share acquisition rights (shares)] Summary of dilutive shares not included in the calculation of diluted net income per share since there was no dilutive effect Subsequent Events KANTSU CO., LTD. (9326) Financial Results for FY2/22 FY2/21 (Mar. 1, 2020 – Feb. 28, 2021) FY2/22 (Mar. 1, 2021 – Feb. 28, 2022) 167.12 31.66 (Yen) 265.71 45.74 FY2/21 (Mar. 1, 2020 – Feb. 28, 2021) FY2/22 (Mar. 1, 2021 – Feb. 28, 2022) (Thousands of yen) 283,015 463,987 – 283,015 8,938,673 – – 495,549 [495,549] – 463,987 10,143,729 – – 399,416 [399,416] Capital and Business Alliance and Secondary Offering of Stock The KANTSU Board of Directors approved a resolution on April 14, 2022 to establish a capital and business alliance with Canon IT Solutions Inc. and an alliance contract was signed with this company. In conjunction with this alliance, Hisahiro Tatsushiro, the Representative Director and President of KANTSU, will sell part of his holding of KANTSU common shares to Canon IT Solutions. The summary is as follows. I. Summary of the alliance 1. Purpose and reason for the alliance The logistics services business provides EC/catalog logistics support services, including merchandise receipt, inventory management, picking, packaging and other services primarily for companies that sell merchandise. The IT automation business provides services involving the use of the Cloud Thomas warehouse management system and other logistics services primarily to companies that sell merchandise. As the e-commerce market grew, KANTSU has provided EC/catalog logistics support services by supplying customized logistics services that precisely match the requirements of each customer. By creating the ideal environment for every customer, KANTSU has focused on providing services with emphasis on i mprovements and other aspects of quality. At the same time, KANTSU has increased the scale of its operations by adding and expanding distribution centers. Cloud Thomas, a warehouse management system developed by KANTSU, is provided as part of EC/catalog logistics support services for the purposes of reducing erroneous logistics tasks and improving the quality and productivity of logistics activities. KANTSU has revised and upgraded this software many times to further increase its performance. Due to these activities, Cloud Thomas is used as part of e-commerce and catalog sales logistics services as well as by companies in many other market sectors. Furthermore, the number of companies with contracts for using Cloud Thomas is increasing steadily. KANTSU has the growth strategy of “growing rapidly as an IT vendor,” As one step to accomplish this goal, KANTSU 15 KANTSU CO., LTD. (9326) Financial Results for FY2/22 developed Cloud Thomas Pro in February 2021, which is a system that allows providing customized services to individual customers involving the use of relatively large distribution centers. In August 2021, KANTSU announced its own API (Application Programming Interface) in order to provide an environment that facilitates the easy linkage with the core IT systems used by customers. In October 2021, KANTSU released three versions of Cloud Thomas Pro designed for specific industries: Cloud Thomas Pro for Food, Cloud Thomas Pro for Medical and Cloud Thomas Pro for Apparel. Adding these new versions of Cloud Thomas Pro reduces the cost and lead time required for creating functions required by specific industries. More software development activities are planned with the goal of enabling even more companies to use Cloud Thomas Pro. KANTSU is placing priority on the following two goals for progress with the growt h strategy of “growing rapidly as an IT vendor” in order to further increase corporate value. (i) To increase the number of high-volume customers, use easy linkage of Cloud Thomas Pro and the core IT systems of customers to enlarge the use of this software to more companies and industries. The aim is to increase the number of companies using Cloud Thomas Pro as well as sales per company using this software. (ii) Further differentiate the capabilities of Cloud Thomas Pro by reinforcing and improving functions to m eet customers’ requests. The aim is to make this a warehouse management system that more companies will consider using while making this product even easier to use. With these issues and goals in mind, KANTSU signed a Cloud Thomas sales agent contract with Canon IT Solutions. This company started selling Cloud Thomas on April 27, 2021. In addition, in response to a proposal by Canon IT Solutions, KANTSU and this company held discussions concerning ways to strengthen their relationship as business partners. Canon IT Solutions provides system integration and consulting services and develops and sells software. The company uses these activities to create many types of solutions for customers. Solutions for the manufacturing and retail sector s are a key strength. Canon IT Solutions provides services for solving a variety of issues at companies in these sectors and a large number of manufacturing and retail companies have used these solutions. One of these services is AvantStage, a total soluti on for accounting, production management/planning, sales logistics/purchasing management, and supply and demand planning. The best -of-breed approach is used in order to create the best possible package for each customer by using only components that are needed. Using this approach allows customers to make IT system investments with the desired benefits and no wasted expenditures or functions. tasks. AvantStage has many finance/management core business capabilities: Cloud Thomas raises the efficiency of all distribution center operations, from the receipt of merchandise to the picking, packaging and shipment steps. This software also has the functions required for inventory management, location management and other warehouse tasks. When Cloud Thomas is provided to a new customer, KANTSU utilizes knowledge acquired from using this software at its logistics bases in order to provide assistance that enables each customer to fully utilize the capabilities of Cloud Thomas at its own business sites. KANTSU and Canon IT Solutions expect the following synergies from the capital and business alliance. (i) Make Cloud Thomas Pro even more competitive and strengthen ties with AvantStage Canon IT Solutions is working on upgrading services that can be offered to medium to semi-large companies in the manufacturing and retail sectors. As part of these activities, Canon IT Solutions plans to create linkage between Cloud Thomas Pro and AvantStage. This is expected to result in opportunities for submitting proposals to companies th at are thinking about purchasing or replacing a core IT system. In addition, linkage with AvantStage will make it possible to add capabilities required for warehouse operations in addition to inventory management functions. The aim is to enlarge the lineup of services that can be provided, including KANTSU’s support services for starting to use software, for solving the logistics issues of customers. For these reasons, KANTSU and Canon IT Solutions believe that this capital and business alliance will increase opportunities for both companies to add new customers. (ii) Joint promotional activities by KANTSU and Canon IT Solutions KANTSU and Canon IT Solutions will conduct joint promotional activities for the sale of AvantStage with linkage to Cloud Thomas Pro, such as participation at trade shows and exhibitions and holding webinars. This cooperation is expected to expand the breadth of solution services that both companies can offer their customers. (iii) Combined product/service proposals that utilize the customer bases of both companies The alliance makes it possible for KANTSU and Canon IT Solutions to provide the products and services of both company to their customers, including the Cloud Thomas Pro users of KANTSU and the AvantStage users of Canon IT Solutions as well as users of other products and services. This capability is expected to result in the provision of comprehensive solutions and growth in the number of customers at both companies. 2. Overview of the capital and business alliance (1) Summary of capital alliance 16 KANTSU CO., LTD. (9326) Financial Results for FY2/22 KANTSU Representative Director and President Hisahiro Tatsushiro will sell part of his holding of KANTSU common shares to Canon IT Solutions. Please refer to “II. Sale of KANTSU stock” for details of this sale. (2) Details of business alliance Following the sale of stock by Mr. Tatsushiro to Canon IT Solutions, KANTSU and Canon IT Solutions will take actions based on the capital and business alliance contract for benefiting from the three synergies listed in the preceding section “I. Summary of the alliance 1. Purpose and reason for the alliance.” These joint actions will be determined by a separate agreement of the two companies and will have the goal of generating syn ergies as quickly as possible. As a provider of EC/catalog logistics support services and Cloud Thomas, KANTSU has accumulated considerable expertise involving ways to improve and raise the efficiency of warehouse operations. Canon IT Solutions has considerable expertise involving a broad spectrum of solution services, particularly for the man ufacturing and retail sectors. This company’s strengths also include its AvantStage, which is a well-known brand, and the ability to provide many categories of services. By leveraging their strengths to create and supply services with new types of value, KANTSU and Canon IT Solutions are determined to increase their corporate value by maximizing the value that they provide to their customers. (3) Terms of the alliance contract (i) Capital alliance The capital and business alliance contract includes a provision for an equ ity relationship between KANTSU and Canon IT Solutions. The main purpose is to support business alliance activities in order to enable the two companies to understand each other’s management issues and aim for the growth of corporate value. An equity relat ionship is also expected to strengthen the framework for cooperation. To establish this relationship, Mr. Tatsushiro, the Representative Director and President of KANTSU, will sell 125,000 shares of KANTSU common shares to Canon IT Solutions. The payment by Canon IT Solutions for this stock will be made after fulfilling conditions such as the seller’s declaration, the credibility and accuracy of the guarantee, and other items stipulated in the contract for the sale of this stock. (ii) Business alliance Following the effectiveness of the purchase of KANTSU stock by Canon IT Solutions, the two companies will conduct joint activities in the following areas. a. Making Cloud Thomas Pro more competitive and strengthening its linkage with AvantStage b. Joint promotional activities c. Proposals for products and services using the customer bases of the two companies 3. Profile of Canon IT Solutions Inc. (1) (2) (3) (4) (5) (6) (7) (8) Company name Location Representative Business Capital stock Established Major shareholders and shareholding ratios Relationships between KANTSU and Canon IT Solutions Canon IT Solutions Inc. CANON S TOWER. 16-6, Konan 2-chome, Minato-ku, Tokyo Akira Kanazawa, President & CEO System integration and consulting services, development and sales of software 3,617 million yen (as of December 31, 2021) July 1, 1982 Capital Personnel Business Wholly owned by Canon Marketing Japan Inc. Not applicable. Not applicable. Canon IT Solutions has a sales agent contract with KANTSU for the sale of KANTSU’s Cloud Thomas warehouse management system Related parties Not applicable. 17 (9) Results of operations and financial conditions for the last three (3) years (millions of yen) Fiscal year ends December 2019 December 2020 December 2021 KANTSU CO., LTD. (9326) Financial Results for FY2/22 50,719 79,284 91,583 8,213 8,379 5,382 53,905 78,249 87,106 7,503 8,137 5,812 55,673 79,314 97,571 9,440 9,654 6,708 Net assets Total assets Net sales Operating profit Ordinary profit Profit 4. Schedule (1) Board of Directors’ resolution April 14, 2022 Signing of agreement Payment date (tentative) (2) (3) Ⅱ. Sale of KANTSU stock Summary of the sale of KANTSU stock April 14, 2022 April 21, 2022 (1) (2) (3) (4) (5) Class of shares Number of shares Selling price Total selling price Seller (6) Method of sale (7) (8) (9) (10) Subscription period Payment date Subscription deposit Method for determining the selling price (11) Purpose of sale of shares (12) Subscription unit (13) Other 125,000 shares (1.22% of the total number of shares outstanding) 846 yen Common shares 105,750,000 yen Hisahiro Tatsushiro April 21, 2022 Not applicable. Transfer of KANTSU common shares to Canon IT Solutions by using an off-market negotiated sale Not applicable. The price of 846 yen per share is the Tokyo Stock Exchange closing price on April 13, 2022. Mr. Tatsushiro, Representative Director and President of KANTSU, and Canon IT Solutions have signed a contract for the off-market negotiated sale of KANTSU common shares to Canon IT Solutions. In accordance with procedures required by associated laws and regulations, the purpose is to use this sale to transfer ownership of the stock. 100 shares In accordance with the Financial Instruments and Exchange Act, KANTSU has submitted a Securities Notice concerning this sale of stock to the Director of the Kinki Finance Bureau. 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. 18