ストライク（6196） – ［Delayed］Non-consolidated Financial Results for the Six Months Ended March 31, 2022

Non-Consolidated Financial Results For the Six Months Ended March 31, 2022 [Japanese GAAP] MEMBERSHIP April 27, 2022 Strike Co., Ltd. Company name: Stock exchange listing: Prime Market, Tokyo Stock Exchange Code number: URL: Representative: Contact: Phone: Scheduled date of filing quarterly securities report: Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: Available Schedule of quarterly financial results briefing session: 6196 https://www.strike.co.jp/ Kunihiko Arai, President and CEO Koichi Nakamura, Director, Executive Officer and CFO +81-3-6895-6196 May 13, 2022 None No physical session planned (video of briefing session to be distributed) 1. Financial Results for the Six Months Ended March 31, 2022 (October 1, 2021 to March 31, 2022) (1) Operating Results (Amounts of less than one million yen are rounded down.) (Percentages indicate year-on-year change.) Net sales Operating profit Ordinary profit Profit Six months ended March 31, 2022 February 28, 2021 Millions of yen 5,216 3,899 % Millions of yen 1,994 ― 1,481 11.1 % Millions of yen 1,994 ― 1,484 -4.5 % Millions of yen 1,349 ― 999 -4.3 % ― -15.4 Basic earnings per share Diluted earnings per share Six months ended March 31, 2022 February 28, 2021 (Note) Operating results for the first six months of the fiscal year ended September 30, 2021 covers the period from Yen 70.60 52.33 Yen 70.28 52.02 September 1, 2020 to February 28, 2021, as the fiscal year ended September 30, 2021 was a 13-month accounting period from September 1, 2020 to September 30, 2021 due to a change in fiscal year-end. Accordingly, year-on-year percentage changes for the first six months of the fiscal year ending September 30, 2022 (six months ended March 31, 2022) are not shown as the period for comparison differs. (2) Financial Position 2. Dividends Total assets Net assets Equity ratio As of March 31, 2022 As of September 30, 2021 (Reference) Equity: As of March 31, 2022: ¥9,360 million Millions of yen 11,260 10,958 Millions of yen 9,363 9,077 As of September 30, 2021: ¥9,073 million % 83.1 82.8 Fiscal year ended September 30, 2021 Fiscal year ending September 30, 2022 Fiscal year ending September 30, 2022 (forecast) (Note) Changes in dividend forecast subsequent to most recent announcement: None 1st quarter-end Yen ― ― 2nd quarter-end Yen 0.00 0.00 Annual dividends 3rd quarter-end Yen ― ― Fiscal year-end Total Yen 32.00 36.00 Yen 32.00 36.00 ―1― 3. Earnings Forecasts for the Fiscal Year Ending September 30, 2022 (October 1, 2021 to September 30, 2022) (Percentages indicate year-on-year change.) Net sales Operating profit Ordinary profit Profit Full year (Note) Changes in earnings forecasts subsequent to most recent announcement: None % Millions of yen 4,211 ― % Millions of yen 4,210 ― Millions of yen 11,208 % Millions of yen 2,729 ― % ― Basic earnings per share Yen 143.10 Note: Year-on-year percentage changes are not shown as the fiscal year ended September 30, 2021 was a 13-month accounting period from September 1, 2020 to September 30, 2021 due to a change in fiscal year-end. The Company acquired 116,200 treasury shares in accordance with a resolution passed at the Board of Directors meeting held on January 28, 2022. The basic earnings per share presented in the earnings forecast reflects the impact of this share repurchase. Notes: (1) Application of special accounting treatment in preparing the quarterly financial statements: None (2) Changes in accounting policies, changes in accounting estimates, and retrospective restatement 1) Changes in accounting policies due to the revision of accounting standards: Applicable 2) Changes in accounting policies other than 1) above: None 3) Changes in accounting estimates: None 4) Retrospective restatement: None (3) Total number of issued shares (common shares) 1) Total number of issued shares at the end of the period (including treasury shares): As of March 31, 2022: 19,354,200 shares As of September 30, 2021: 19,354,200 shares 2) Total number of treasury shares at the end of the period: As of March 31, 2022: 324,059 shares As of September 30, 2021: 228,021 shares 3) Average number of shares outstanding during the period: For the six months ended March 31, 2022: 19,116,130 shares For the six months ended February 28, 2021: 19,108,527 shares * The quarterly financial statements are outside the scope of quarterly review by a certified public accountant or auditing firm. * Explanation of the proper use of earnings forecasts and other notes The earnings forecasts and other forward-looking statements herein are based on information currently available to the Company and certain assumptions deemed reasonable by the Company, and are not intended to be construed as assurance that they will be accomplished in the future. Actual results may differ significantly from these forecasts due to a wide range of factors. ―2― Contents of Attached Materials 1. Qualitative Information on Quarterly Financial Results ………………………………………………………………………………………… 4 (1) Explanation of Business Results …………………………………………………………………………………………………………………. 4 (2) Explanation of Financial Condition ………………………………………………………………………………………………………………. 5 (3) Explanation of Earnings Forecasts and Other Forward-Looking Information ……………………………………………………… 6 2. Quarterly Financial Statements and Primary Notes …………………………………………………………………………………………….. 7 (1) Balance Sheet ………………………………………………………………………………………………………………………………………….. 7 (2) Statement of Income …………………………………………………………………………………………………………………………………. 8 (3) Statement of Cash Flows …………………………………………………………………………………………………………………………… 9 (4) Notes to the Quarterly Financial Statements ……………………………………………………………………………………………….. 10 (Notes on going concern assumption) ………………………………………………………………………………………………………….. 10 (Notes in the event of significant changes in shareholders’ equity) …………………………………………………………………… 10 (Changes in accounting policies) ………………………………………………………………………………………………………………… 10 ―3― 1. Qualitative Information on Quarterly Financial Results (1) Explanation of Business Results Due to a change in fiscal year-end, the previous fiscal year was an irregular 13-month accounting period from September 1, 2020 to September 30, 2021. As a result, we have not made comparisons between the first six months of the current fiscal year (October 1, 2021 to March 31, 2022) and the first six months of the previous fiscal year (September 1, 2020 to February 28, 2021) as the period for comparison differs. However, we have included the actual results for the first six months of the previous fiscal year as a reference. During the first six months of the fiscal year ending September 30, 2022, the Japanese economy showed signs of a pickup after the state of emergency declaration triggered by the spread of COVID-19 was lifted at the end of September 2021. However, the economic outlook remains uncertain with the emergence of the sixth wave of the COVID-19 infections in Japan, concerns of stagnation in economic activities due to the global pandemic, and heightened geopolitical risks. The market for M&A involving small and medium-sized enterprises (SMEs), which is our area of business, is continuing to expand over the medium to long term in part thanks to the success of aggressive measures and promotion by the Japanese government to support SMEs struggling with the search for successors. According to the “2021 White Paper on Small and Medium Enterprises in Japan,” approximately 60% of the 49,000 companies that were shuttered or dissolved in 2020 had reported profits during their most recent financial years. This underlines the importance of facilitating a smooth passage of business into the hands of a subsequent generation of motivated managers to avoid squandering precious management resources for lack of appropriate successors. In April 2021, the Small and Medium Enterprise Agency formulated its “Promotion Plan for M&A among Small and Medium-sized Enterprises” to promote improved production through expansion in the scales of SMEs and encourage the establishment of businesses through the acquisition of third-party management resources. The formulation of this plan demonstrates that efforts to promote M&A among SMEs are underway in both the public and private sectors. Moving forward, M&A will likely play an increasingly prominent role as a solution for management issues facing SMEs. Against this backdrop, in October 2021 we realigned our operations by sourcing route to enhance the organization. In addition, we aim to achieve further growth by introducing a team-based system to respond systematically to new contracts and improve project efficiency. Furthermore, we established an Innovation Support Office to strengthen cultivation of M&A market for startups and launched a new service, S venture Lab., to promote partnerships between startups and large companies. On the sales front, we worked to attract new customers and close deals by hosting online seminars and making use of meetings via online conferencing systems. We also worked to uncover a wide range of M&A needs by carrying out industry-specific online advertising and proposal-based marketing. Furthermore, we strengthened our service offerings in collaboration with our partners, including the launch of a joint M&A brokerage service with Zeimu Kenkyukai Inc., which commands overwhelming name recognition among accounting firms, and the full-scale rollout of an M&A brokerage service for the medical industry through a business partnership with M3, Inc., which operates m3.com, a website dedicated to medical professionals. In addition, we strengthened our M&A support system through collaboration. We accepted personnel from partner financial institutions and trained them so that they would be able to execute M&A operations with greater effectiveness once they return to their respective companies. In terms of recruitment, we actively strove to add new employees with the goal of expanding our business performance and successfully recruited 19 new M&A consultants during the first six months of the fiscal year under review. (versus 176). As a result, during the six months ended March 31, 2022, there were 99 deals closed (Note 1) (versus 63 during the six months ended February 28, 2021) and 192 contracts closed (Note 2) (versus 120). We closed eight large M&A deals (generating ¥100 million or more in sales per deal) (versus 10). Additionally, we accepted 354 new contracts (Note 3) ―4― Number of M&A transactions in which Strike provides brokerage or advisory services (i.e., number of (Note 1) Number of deals closed: deals). (Note 2) Number of contracts closed: Number of contracts on closed M&A deals in which Strike provides brokerage or advisory services (i.e., number of companies). In brokerage services, each deal counts as two contracts (one for the seller and one for the buyer), while in advisory services, each deal counts as one contract. (Note 3) New contracts: Number of new brokerage service contracts signed with sellers (or in the case of advisory services, contracts signed and services effectively commenced). In the six months ended March 31, 2022, net sales amounted to ¥5,216 million (versus ¥3,899 million in the six months ended February 28, 2021). Cost of sales came to ¥1,748 million (versus ¥1,476 million) due to the recording of ¥1,219 million in personnel expenses that reflected incentive compensation associated with sales and the addition of M&A consultants, as well as ¥410 million in introduction fees paid in connection with new contracts. Meanwhile, SG&A expenses totaled ¥1,473 million (versus ¥942 million), reflecting ¥633 million in personnel expenses and ¥189 million in rent expenses on land and buildings. As a result, operating profit reached ¥1,994 million (versus ¥1,481 million), and ordinary profit also came to ¥1,994 million (versus ¥1,484 million). Bottom-line profit amounted to ¥1,349 million (versus ¥999 million). Net sales, the number of deals closed, contracts closed, and new contracts recorded during the six months ended March 31, 2022, as well as the corresponding targets we plan to achieve for the full year, are provided below. Six months ended March 31, 2022 (actual) Six months ended March 31, 2022 (target) Fiscal year ending September 30, 2022 (target) Achievement of the full-year target Number of deals closed Number of contracts closed Number of new contracts 99 192 354 Net sales (millions of yen) 5,216 98 191 315 5,625 206 407 660 11,208 48.1% 47.2% 53.6% 46.5% Business results by segment are omitted, as the Company includes only the single M&A brokerage business (2) Explanation of Financial Condition segment. (Assets) As of March 31, 2022, current assets stood at ¥9,409 million, down ¥571 million from September 30, 2021. This mainly reflected a decrease of ¥793 million in accounts receivable–trade. Non-current assets amounted to ¥1,850 million, up ¥872 million from September 30, 2021. This was primarily the result of a ¥55 million increase in property, plant and equipment owing to the purchase of facilities attached to buildings and a ¥818 million rise in investments and other assets due to increases in leasehold deposits and investment securities. (Liabilities) Current liabilities came to ¥1,896 million as of March 31, 2022, up ¥14 million from September 30, 2021. This was mainly attributable to a ¥236 million increase in provision for bonuses, which was partially offset by a ¥210 million decrease in other current liabilities due to the payment of accrued consumption taxes for the previous fiscal year. ―5― As of March 31, 2022, net assets totaled ¥9,363 million, up ¥286 million from September 30, 2021. This primarily reflected changes in retained earnings—which declined ¥612 million owing to the payment of dividends and grew ¥1,349 million due to the recording of bottom-line profit—and a ¥456 million increase in treasury shares as a result of (Net assets) market purchases. (2) Cash Flows taxes paid. deposits. As of March 31, 2022, cash and cash equivalents stood at ¥8,677 million, up ¥110 million from September 30, 2021. Principal factors affecting changes in cash flows during the six months ended March 31, 2022 are as follows. (Cash flows from operating activities) Net cash provided by operating activities amounted to ¥1,956 million (compared to ¥617 million provided by these activities in the first six months of the previous fiscal year). Main sources of cash were ¥1,994 million in profit before income taxes and a ¥793 million decrease in trade receivables, which were partially offset by ¥596 million in income (Cash flows from investing activities) Net cash used in investing activities totaled ¥783 million (compared to ¥107 million used in these activities in the first six months of the previous fiscal year). This primarily reflected ¥637 million in payments of leasehold and guarantee (Cash flows from financing activities) Net cash used in financing activities came to ¥1,062 million (compared to ¥434 million used in these activities in the first six months of the previous fiscal year). Main uses of cash were dividends paid of ¥611 million and purchase of treasury shares of ¥501 million. (3) Explanation of Earnings Forecasts and Other Forward-Looking Information Our earnings forecasts for the fiscal year ending September 30, 2022 are unchanged from the figures announced on October 29, 2021. ―6― 2. Quarterly Financial Statements and Primary Notes (1) Balance Sheet (Thousands of yen) As of September 30, 2021 As of March 31, 2022 Assets Current assets Cash and deposits Accounts receivable–trade Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Intangible assets Investments and other assets Total non-current assets Total assets Liabilities Current liabilities Accounts payable–trade Income taxes payable Provision for bonuses Other Total current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Valuation and translation adjustments Valuation difference on available-for-sale securities Total valuation and translation adjustments Share acquisition rights Total net assets Total liabilities and net assets 10,958,966 11,260,059 8,567,428 1,181,143 244,574 (11,559) 9,981,586 335,291 4,229 637,858 977,379 186,890 640,693 ― 1,054,346 1,881,930 1,881,930 823,741 810,377 7,911,295 (473,397) 9,072,017 1,544 1,544 3,474 9,077,036 10,958,966 8,677,437 387,391 363,219 (18,228) 9,409,820 390,547 2,912 1,456,779 1,850,239 106,651 709,616 236,980 843,369 1,896,617 1,896,617 823,741 816,487 8,648,919 (929,605) 9,359,542 788 788 3,110 9,363,441 11,260,059 ―7― (2) Statement of Income Net sales Cost of sales Gross profit Operating profit Non-operating income Interest income Selling, general and administrative expenses Compensation for damage received Other Total non-operating income Non-operating expenses Commission for purchase of treasury shares Total non-operating expenses Ordinary profit Profit before income taxes Income taxes–current Income taxes–deferred Total income taxes Profit (Thousands of yen) For the six months ended February 28, 2021 (September 1, 2020 to February 28, 2021) For the six months ended March 31, 2022 (October 1, 2021 to March 31, 2022) 3,899,390 1,476,012 2,423,378 942,057 1,481,321 3,310 ― 185 3,496 ― ― 1,484,817 1,484,817 464,906 19,921 484,828 999,989 5,216,169 1,748,718 3,467,450 1,473,320 1,994,130 92 1,200 150 1,442 999 999 1,994,573 1,994,573 662,192 (17,280) 644,912 1,349,661 ―8― (3) Statement of Cash Flows Cash flows from operating activities Profit before income taxes Depreciation Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Interest and dividend income Decrease (increase) in trade receivables Increase (decrease) in trade payables Increase (decrease) in accounts payable–other Increase/decrease in consumption taxes payable/consumption taxes refund receivable Other, net Subtotal Interest and dividends received Income taxes paid Net cash provided by (used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Purchase of investment securities Payments for investments in capital Payments of leasehold and guarantee deposits Proceeds from refund of leasehold and guarantee deposits Other, net Cash flows from financing activities Purchase of treasury shares Proceeds from disposal of treasury shares Dividends paid Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (Thousands of yen) For the six months ended February 28, 2021 (September 1, 2020 to February 28, 2021) For the six months ended March 31, 2022 (October 1, 2021 to March 31, 2022) 1,484,817 23,465 730 110,656 (3,310) (120,603) 49,211 1,522 (168,424) (11,844) 1,366,219 86 (748,716) 617,588 (107,584) ― ― ― ― ― ― 24,088 (458,440) (434,351) 75,652 7,871,870 7,947,522 1,994,573 29,316 6,669 236,980 (92) 793,752 (80,238) 29,132 (455,957) (1,013) 2,553,122 92 (596,509) 1,956,704 (91,118) (200,000) (10,000) (637,226) 172,521 (18,044) (783,867) (501,113) 49,651 (611,365) (1,062,828) 110,009 8,567,428 8,677,437 Net cash provided by (used in) investing activities (107,584) ―9― (4) Notes to the Quarterly Financial Statements (Notes on going concern assumption) There is no relevant information. (Notes in the event of significant changes in shareholders’ equity) The Company acquired 116,200 treasury shares in accordance with a resolution passed at the Board of Directors meeting held on January 28, 2022. As a result of this acquisition, treasury shares increased by ¥456,208 thousand during the first six months of the current fiscal year and amounted to ¥929,605 thousand as of March 31, 2022. (Changes in accounting policies) Standards Board of Japan [ASBJ]) (Application of Accounting Standard for Revenue Recognition and relevant regulations issued by the Accounting The Company has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the first quarter of the current fiscal year and recognizes revenue at the amount expected to be received in exchange for the promised goods or services when control of the goods or services is transferred to the customer. In applying the Accounting Standard for Revenue Recognition and relevant regulations, the Company has followed the transitional measures stipulated in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition. Accordingly, the cumulative effect of retroactively applying the new accounting policy prior to the beginning of the first quarter of the current fiscal year has been reflected in retained earnings at the beginning of the first quarter of the current fiscal year, and the new accounting policy has been applied from the resulting beginning balance. However, the Company has applied the method prescribed in Paragraph 86 of the Accounting Standard for Revenue Recognition and has not applied the new accounting policy to contracts for which almost all the revenue amounts have been recognized in accordance with the previous method prior to the beginning of the first quarter of the current fiscal year. current fiscal year is minimal. The impact of this change on profits and the beginning balance of retained earnings for the first six months of the (Application of Accounting Standard for Fair Value Measurement and relevant ASBJ regulations) The Company has adopted the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019) and relevant ASBJ regulations from the beginning of the first quarter of the current fiscal year and will apply the new accounting policy set forth by the Accounting Standard for Fair Value Measurement and relevant regulations going forward in accordance with the transitional measures stipulated in Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement There is no impact from this change on the quarterly financial statements for the first six months of the current fiscal No. 10, July 4, 2019). year. ―10―