共立メンテナンス（9616） – [Delayed]Summary of Consolidated Financial Results for the Fiscal Year Ending March 31, 2022

Kyoritsu Maintenance Co., Ltd. (Securities Code: 9616) Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 ［JGAAP］ May 2022 1 Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 [based on Japanese GAAP] Kyoritsu Maintenance Co., Ltd. 9616 (Title) (Title) Name of listed company Code Representative Contact Scheduled date for ordinary general meeting of shareholders: Scheduled filing date of Quarterly Report: Scheduled date of start of dividend payment: Supplementary materials for the quarterly financial results: Yes Investor conference for the quarterly financial results: Yes (For Institutional Investors) URL https://www.kyoritsugroup.co.jp/ President Managing Director June 28, 2022 June 28, 2022 June 29, 2022 May 13, 2022 Listed exchange: Tokyo (Name) Koji Nakamura (Name) Manabu Takaku Tel +81-3-5295-7778 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Consolidated Operating Results Net sales Operating profit Ordinary profit (Rounded down to the nearest million yen) (Percentage figures represent year-over-year changes) Profit (loss) attributable to owners of parent Year ended March 31, 2022 Year ended March 31, 2021 (Note) Comprehensive income: 173,701 121,281 43.2 -28.6 1,431 -9,057 Year ended March 31, 2022: 791 million yen (–%) Year ended March 31, 2022: -11,887 million yen (–%) Million yen % Million yen Million yen Million yen % － － 1,814 -9,116 % － － 539 -12,164 Profit per share Diluted net income per share Return on equity Ordinary profit to total assets Operating profit to net sales Year ended March 31, 2022 Year ended March 31, 2021 Yen 13.83 -311.98 Yen – – % 0.8 – % 0.8 – (Reference) Gain/loss on equity-method investments Year ended March 31, 2022: – million yen (–%) Year ended March 31, 2021: – million yen (–%) (Note) Diluted net income per share is not shown as the Company reported net loss and had no residual shares for previous fiscal year, and has no % － － % 0.8 – residual shares for current fiscal year under review. (2) Consolidated Financial Position Total assets Total net assets Equity ratio Net assets per share Million yen Million yen % 29.2 29.6 As of March 31, 2022: 70,586 million yen As of March 31, 2021: 70,784 million yen 241,723 239,032 70,586 70,784 Yen 1,810.40 1,815.45 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period Million yen 25,721 -17,835 Million yen -16,731 -10,006 Million yen 4,130 34,239 Million yen 37,565 24,212 (Record date) Year-end Annual Dividend per share Third quarter Yen First quarter Yen – – – Second quarter Yen 10.00 10.00 10.00 Total dividend amount (annual) Dividend payout ratio (consolidated) Dividend to net assets (consolidated) – – – Yen 10.00 10.00 Yen 20.00 20.00 10.00 20.00 Million yen 779 779 % – 144.6 78.0 % 1.0 1.1 2. Forecasted Consolidated Results for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March 31, 2023) Net sales Operating profit Ordinary profit (Percentage figures represent year-over-year changes) Profit attributable to owners of parent Profit per share Full Year Million yen 174,000 % 0.2 Million yen 3,000 % 109.6 Million yen 2,200 % 21.3 Million yen 1,000 % 85.5 Yen 25.65 As of March 31, 2022 As of March 31, 2021 (Reference) Shareholders’ Equity: (3) Consolidated Cash Flows Year ended March 31, 2022 Year ended March 31, 2021 2. Dividend Payments Year ended March 31, 2021 Year ended March 31, 2022 Year ending March 31, 2023 (Forecast) 2 Notes (1) Changes in major subsidiaries during the period under review (changes in specific subsidiaries accompanied by changes in the scope of consolidation): None (2) Changes in accounting policies, changes in accounting estimates, and restatements (i) Changes in accounting policies due to revision of accounting standards, etc.: (ii) Changes in accounting policies other than those under (i) above: (iii) Changes in accounting estimates: (iv) Retrospective restatements: Yes None None None (3) Number of issued shares (common stock) (i) Number of issued shares at the end of the period (including treasury shares) (ii) Number of treasury shares at the end of the period (iii) Average number of shares during the period Year ended March 31, 2022 Year ended March 31, 2022 Year ended March 31, 2022 39,219,818 shares Year ended March 31, 2021 230,499 shares Year ended March 31, 2021 38,989,870 shares Year ended March 31, 2021 39,219,818 shares 229,475 shares 38,990,301 shares (Reference) Summary of Non-Consolidated Financial Results Results of the Non-Consolidated Fiscal Year Ended March 31, 2022 (From April 1, 2021 to March 31, 2022) (1) Non-Consolidated Results of Operations (Figures in percentages denote the year-on-year change.) Year ended March 31, 2022 Year ended March 31, 2021 Net sales Million yen 140,947 102,698 % 37.2 -29.4 Operating profit Million yen -4,488 -10,105 % – – Ordinary profit Million yen -3,836 -9,635 % – – Profit Million yen -3,958 -13,038 % – – Year ended March 31, 2022 Year ended March 31, 2021 Profit per share Diluted net income per share Yen Yen -101.53 -334.41 – – (Note) Diluted net income per share is not shown as Kyoritsu Maintenance reported net loss and had no residual shares (2) Non-Consolidated Financial Position As of March 31, 2022 As of March 31, 2021 (Reference) Shareholders’ equity: Total assets Total net assets Net assets per share Shareholders’ equity ratio Million yen 224,161 219,555 Million yen 62,142 66,634 % 27.7 30.3 Yen 1,593.83 1,709.00 As of March 31, 2022: 62,142 million yen As of March 31, 2021:66,634 million yen *Summaries of financial results are not subject to auditing by a certified public accountant or auditing firm. *Explanation of the appropriate use of earnings forecasts and other special notes (Note concerning forward-looking statements) The forward-looking statements, including earnings forecasts and other future projections contained in this document are based on information available to the Company at the time of preparation and on certain assumptions deemed reasonable by the Company. As such, they do not constitute an assurance that the Company promises to achieve these projected results. Actual business results may differ materially from the forecasts due to various factors. Please see “(4) Future outlook” under “1. Overview of Operating Results, etc.” on page “9” for the assumptions used for the forecast of financial results and notes concerning the use of the forecast of financial results. (How to obtain supplementary materials of financial results) The Company will post supplementary materials and video clip of financial results briefing on the Company website. 3 Table of contents for attatched materials 1. Overview of Operating Results, etc. …………………………………………………………………………………………………………………………………… 5 (1) Overview of operating results ………………………………………………………………………………………………………………………………………. 5 (2) Overview of financial position ……………………………………………………………………………………………………………………………………… 7 (3) Cash flow position ……………………………………………………………………………………………………………………………………………………… 8 (4) Future outlook ……………………………………………………………………………………………………………………………………………………………. 9 2. Basic Policy on Selection of Accounting Standards ……………………………………………………………………………………………………………. 10 3. Consolidated Financial Statements and Major Notes ………………………………………………………………………………………………………….. 11 (1) Consolidated balance sheets ………………………………………………………………………………………………………………………………………. 11 (2) Consolidated income statement and consolidated statement of comprehensive income ………………………………………………………. 13 Consolidated income statement ……………………………………………………………………………………………………………………………………. 13 Consolidated statement of comprehensive income ………………………………………………………………………………………………………….. 15 (3) Consolidated statement of changes in equity ………………………………………………………………………………………………………………… 16 (4) Consolidated statement of cash flows ………………………………………………………………………………………………………………………….. 18 (5) Notes on consolidated financial statement ……………………………………………………………………………………………………………………. 20 Notes on the going concern assumption ………………………………………………………………………………………………………………………… 20 Change in accounting policies …………………………………………………………………………………………………………………………………. – 20 – Additional information …………………………………………………………………………………………………………………………………………… – 20 – Segment Information etc. ……………………………………………………………………………………………………………………………………………. 21 Per-share information …………………………………………………………………………………………………………………………………………………. 27 Significant subsequent event …………………………………………………………………………………………………………………………………… – 27 – 4. Other ……………………………………………………………………………………………………………………………………………………………………………. 28 4 1. Overview of Operating Results, etc. (1) Overview of operating results 1). Overview of general financial position (Consolidated Financial Results) (in million yen) Fiscal Year ended March 31, Fiscal Year ended March 31, 2021 2022 Change (%) Net sales Operating profit Ordinary profit Net income attributable to owners of parent 121,281 -9,057 -9,116 -12,164 173,701 1,431 1,814 539 43.2 – – – During the fiscal year under review, the Japanese economy showed signs of gradual recovery in economic activities amid the prolonged impact of the spread of COVID-19, but the timing of its end was still unclear, and the outlook remained uncertain due to the new situation in Ukraine. Under these circumstances, the Group continued to take extensive measures to prevent the spread of infection (such as temperature checks, disinfection, photocatalysis, and non-contact measures) at all Group offices so that customers can use the facilities safely. In addition, as the financial support for dormitory students, the Group has implemented the “Program to Support School Attendance (interest-free loans for dormitory fees), ” etc. In addition, the Company endeavored to improve the financial soundness through the real-estate sale and leaseback and utilizing support programs such as Employment Adjustment Subsidy etc., while also strengthening sales by offering new services such as “WORK PLACE DORMY (offices and hotels where people can stay and reside),” which responds to new ways of working, and a comprehensive membership program “Kyoritsu General Corporate Membership Program: Shiki Club,” which is designed to be used for expanding welfare services. As a result, the Company’s operating results for the current fiscal year under review show net sales of 173,701 million yen (up 43.2% YoY). As for profits, the Dormitory Business secured stable profits despite a decrease in profit , and profits from the real-estate sale and leaseback also contributed to operating profit of 1,431 million yen (vs. loss of 9,057 million yen in the previous year), ordinary profit of 1,814 million yen (vs. loss of 9,116 million yen in the previous year), and net income attributable to owners of the parent of 539 million yen (vs. loss of 12,164 million yen in the previous year). The Company recovered profitability despite under mobility restrictions for most of the fiscal year. Pertaining to the gaps between the forecast announced on November 9, 2021 and the actual results for the fiscal year ended March 31, 2022, kindly refer to the “Notice Concerning Differences between the Consolidated Earnings Forecast for the Fiscal Year Ended March 31, 2022 and the Actual Figures” released today (May 13, 2022). 5 2) Overview of financial position by major business segment (in million yen) Fiscal Year ended March 31, Fiscal Year ended March 31, 2021 2022 Change (%) Net sales Operating profit 46,246 -13,130 62,772 -9,451 35.7 – In the Hotel Business for the current fiscal year under review, the Dormy Inn Business has opened two hotels “Natural Hot Springs Kaga no Hozen Onyado Nono Kanazawa” and “Natural Hot Springs Geishu no Yu Dormy Inn Hiroshima ANNEX,” and the Resorts Business opened “La Vista Kusatsu Hills.” Despite the declaration of a state of emergency and the intermittent issuance of priority measures to prevent the spread of COVID-19, the Dormy Inn business actively worked to capture leisure demand, especially on weekends, and sales promotions such as “NEW LOCAL STAY PLAN (local-only plan)” and the new product such as “WORK PLACE DORMY” and “Kyoritsu General Corporate Membership Program: Shiki Club” contributed to a significant increase in profits. As a result, the Hotel Business as a whole has 122 facilities (1 increase YoY ) with 18,675 rooms (321 increase YoY), reported net sales of 62,772 million yen (35.7% increase YoY), and operating loss of 9,451 million yen (vs. loss of 13,130 million yen in the previous fiscal year). In the previous fiscal year, the Company temporarily closed a large number of hotels in response to requests for closures following the declaration of a state of emergency, and posted the loss as extraordinary loss. However, after reclassifying them to ordinary accounts, it improved by 6,552 million yen compared to the previous fiscal year (operating loss of 16,004 million yen). 6 (in million yen) Fiscal Year ended March 31, 2021 Fiscal Year ended March 31, 2022 Change (%) Net sales Operating profit 16,012 624 15,108 258 The Comprehensive Building Management Business reported net sales of 15,108 million yen (5.6% decrease YoY) and 258 million yen operating profit (58.6% decrease YoY) mainly due to a decrease in construction projects, despite an increased cleaning services in line with a rise in the number of hotel rooms in operation. (in million yen) Fiscal Year ended March 31, Fiscal Year ended March 31, 2021 2022 Change (%) Net sales Operating profit 5,291 -10 6,827 -74 The Food Service Business reported net sales of 6,827 million yen (29.0% increase YoY) and an operating loss of 74 million yen (vs. loss of 10 million yen in the previous fiscal year) mainly due to the suspension of serving alcoholic beverages, shortened hours, and temporary closings at restaurants to prevent the spread of infection, despite an increase in the number of hotel restaurant contracts. (in million yen) Fiscal Year ended March 31, Fiscal Year ended March 31, 2021 2022 Change (%) The Development Business reported net sales of 40,661 million yen (222.5% increase YoY) and an operating profit of 8,608 million yen (1,223.9.% increase YoY) as a result of the real-estate sale and leaseback and other factors. (in million yen) Fiscal Year ended March 31, 2021 Fiscal Year ended March 31, 2022 Change (%) 12,610 650 15,510 606 40,661 8,608 15,195 459 Net sales Operating profit Net sales Operating profit -5.6 -58.6 29.0 – 222.5 1,223.9 -2.0 -24.2 Other Businesses consist of the Senior Life Business (management and operation of senior residences), the Public Kyoritsu Partnership (PKP) Business (services provided under contract to local governments), support business for people who live alone, the insurance agency business, comprehensive human-resource services, the financial business and the administrative outsourcing business. The reported net sales of these businesses decreased to 15,195 million yen (2.0% decrease YoY) and operating profit decrease to 459 million yen (24.2% decrease YoY). (2) Overview of financial position (Assets) (Liabilities) (Net Assets) The total assets as of the end of current fiscal year under review were 241,723 million yen, an increase of 2,691 million yen from the end of the previous fiscal year. This was mainly due to an increase in cash and deposits. The liabilities as of the end of current fiscal year under review were 171,137 million yen, an increase of 2,889 million yen from the end of the previous fiscal year. This was mainly due to increases in short-term borrowings and long-term borrowings. The net assets as of the end of current fiscal year under review were 70,586 million yen, a decrease of 198 million yen from the end of the previous fiscal year. This was mainly due to an decrease of retained earnings. As a result, the equity ratio became 29.2%, a decrease of 0.4 points from the end of the previous fiscal year. 7 Cash and cash equivalent balance as of the end of current fiscal year under review were 37,565 million yen, an increase of 13,353 (3) Cash flow position million yen from the end of the previous fiscal year. (Cash Flows from Operating Activities) fiscal year due to the effect of increase/decrease in inventories. (Cash Flows from Investment Activities) due to the impact of payments for lease and guarantee deposits. (Cash Flows form Financing Activities) Net cash provided by operating activities was 25,721 million yen, increased by 43,556 million yen compared to the previous Net cash used in investing activities was 16,731 million yen, increased by 6,725 million yen compared to the previous fiscal year Net cash provided by financing activities was 4,130 million yen, decreased by 30,108 million yen compared to the previous fiscal year due to the impact of proceeds from long-term borrowings. (Reference) Trends in Cash Flow-related Indicators Fiscal Year ended Fiscal Year ended Fiscal Year ended Fiscal Year ended Fiscal Year ended March 31, 2018 March 31, 2019 March 31, 2020 March 31, 2021 March 31, 2022 Equity ratio (%) 37.6 39.3 Equity ratio on a market value basis (%) Cash flow to interest-bearing debt ratio (annual): Interest coverage ratio (times): 103.9 105.7 6.1 26.1 4.6 45.3 38.7 42.8 5.7 47.2 29.6 59.8 -7.3 -39.1 29.2 74.5 5.3 43.4 Equity ratio: Equity capital / total assets Equity ratio on a market value basis: Market capitalization / total assets Cash flow to interest-bearing debt ratio: Interest-bearing debt / cash flow Interest coverage ratio: Cash flow / interest payments (Note) 1. Each indicator is calculated based on the consolidated financial figures. 2.Market capitalization is calculated based on the number of outstanding shares not including treasury shares. 3.Cash flow used to calculate this indicator is operating cash flow. 4.Interest-bearing debts used to calculate this indicator are all debts recorded on the consolidated balance sheet that are subject to interest payments. 5.Interest payments used to calculate this indicator are the interest expenses paid that are stated on the consolidated statement of cash flows. 8 (4) Future outlook (Consolidated Financial Results) (in million yen) Results for the Fiscal Year ended Outlook for the Fiscal Year March 31, 2022 ending March 31, 2023 Change (%) 173,701 174,000 Net sales Operating profit Ordinary profit Net income attributable to owners of parent 1,431 1,814 539 3,000 2,200 1,000 0.2 109.6 21.3 85.5 As for the outlook, COVID-19 global convergence is unpredictable and the situation in Ukraine and other factors are expected to continue to make the situation uncertain. On the other hand, positive signs are beginning to emerge, such as openings of various events, the lifting of mobility restrictions, and reports that the government is considering easing border security measures against COVID-19 and reopening the country to foreign tourists. The Dormitory Business reported an initial occupancy rate of 93.5% in April 2022 (1.4 points increase YoY). The Dormitory Business will continue to focus on capturing domestic demand to fill vacancies caused by the postponement of international students coming to Japan, and also promote the strengthening of partnerships with major universities. In addition, to meet new housing needs, the Company will strengthen sales promotion of new products such as “NOMADormy” a monthly plan that offers fixed-rate access to dormitories nationwide. In addition, the Company is actively addressing the SDGs by introducing “Rentastic!,” a support service for free rental and transfer of possessions to promote a circular economy that aims to “curb excessive consumption” and “eliminate waste,” as well as reducing food loss and paper waste with “Domico,” an application dedicated to dormitory life support. The Hotel Business segment has started April 2022 with no mobility restriction for the first time in three years since 2019, and both the Dormy Inn Business and the Resorts Business started the year with occupancy rates that were significantly higher than the previous year. In the Dormy Inn Business, since April 2022, the Company opened “Natural Hot Springs Hana-Nami-No-Yu Onyado NONO Yodoyabashii” and “Natural Hot Springs Fuji Zakura NO Yu Dormy Inn EXPRESS Fujisan Gotemba.” The Company is steadily preparing for future growth, with plans to open five additional facilities by March 2023, and five new facilities in the Resorts Business. Also, the Company has newly started offering our hotels through “TsugiTsugi ,” a subscription-based turnover residing service operated by Tokyu Corporation, and “goodroom Hotel Pass,” a subscription service operated by goodroom co., ltd. Furthermore, the Company is actively working on SDGs, such as promoting the reduction of one-way plastic products in amenity goods. The Comprehensive Building Management Business will actively enhance its market competitiveness by improving its technological capability and product values including the expertise for gaining further trust from customers as well as providing quality building-related services through its new, integrated organizational structure. The Food Service Business will seek to develop products and services that achieve higher levels of customer satisfaction and improve its earning structure by implementing a strict control over expenses. The Development Business will support Kyoritsu Group with its development and expansion plan as well as thoroughly develop new clients and strengthen its cost management system. In Other Businesses, the Company positions the Senior Life Business and the Public Kyoritsu Partnership (PKP) Business as development businesses, and will work to quickly establish their business models and realize further earnings growth in the future. Based on the above, for the next fiscal year, the Group forecast net sales of 174,000 million yen (0.2% increase YoY), operating profit of 3,000 million yen (109.6% increase YoY), ordinary profit of 2,200 million yen (21.3% increase YoY), and profit attributable to owners of parent of 1,000 million yen (85.5% increase YOY). In addition, the forecast includes 3,800 million yen in expenses for preparation for new openings of 19 facilities in the Dormitory Business (1,921 rooms) and 12 facilities in the Hotel Business (2,140 rooms), as well as 800 million yen in expenses related to large-scale renovation work aimed at maintaining and improving customer satisfaction. The above forecasts are based on information available as of the date of publication of this document, and actual results may differ from the forecasts due to various factors. 9 2. Basic Policy on Selection of Accounting Standards The Group’s policy for the time being is to prepare its consolidated financial statements in accordance with Japanese GAAP, taking into consideration the comparability of consolidated financial statements over time and across companies. The Group will properly deal with the application of IFRS taking into account domestic and international situations. 10 3. Consolidated Financial Statements and Major Notes (1) Consolidated balance sheets (in million yen) As of March 31, 2021 As of March 31, 2022 24,588 9,702 – 15,959 1,670 513 9,562 -52 61,944 89,488 -36,079 53,408 45,827 11,278 16,463 -12,070 4,393 114,907 4,235 4,499 1,388 16,489 16,912 7,029 11,144 -119 57,344 176,487 600 – 600 239,032 37,942 – 11,856 7,681 7,719 61 7,769 -76 72,953 85,313 -38,276 47,037 39,359 13,173 16,984 -13,335 3,648 103,218 3,384 3,151 1,709 18,826 19,033 6,928 12,133 -122 61,660 168,264 502 2 505 241,723 Assets Current assets Cash and deposits Notes and accounts receivable – trade Notes, accounts receivable – trade and contract assets Real estate for sale Real estate for sale in process Costs on uncompleted construction contracts Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Land Construction in progress Other Accumulated depreciation Other, net Total property, plant and equipment Intangible fixed assets Investments and other assets Investment securities Long-term loans receivable Guarantee deposits Lease deposits Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Deferred assets Bond issuance costs Other Total deferred assets Total assets 11 (in million yen) As of March 31, 2021 As of March 31, 2022 Liabilities Current liabilities Notes and accounts payable – trade Short-term borrowings Current portion of bonds payable Income taxes payable Provision for bonuses Provision for directors’ bonuses Provision for warranties for completed construction Other Total current liabilities Non-current liabilities Bonds payable Convertible bonds with share acquisition rights Long-term loans payable Long-term guarantee deposited Deferred tax liabilities Net defined benefit liability Provision for directors’ retirement benefits Asset retirement obligations Other Total non-current liabilities Total liabilities Net Assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred hedge gain (loss) Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Total net assets Total liabilities and net assets 4,667 12,702 5,280 1,764 714 37 3 24,677 49,848 28,540 30,142 53,003 3,367 350 1,045 252 699 997 118,398 168,247 7,964 12,821 50,831 -357 71,259 55 – -555 24 -474 70,784 239,032 6,202 14,820 5,080 1,035 979 76 5 21,234 49,433 23,460 30,112 61,961 2,992 7 1,013 254 610 1,291 121,703 171,137 7,964 12,821 50,383 -361 70,807 82 225 -583 53 -221 70,586 241,723 12 (2) Consolidated income statement and consolidated statement of comprehensive income Consolidated income statement (in million yen) Year Ended March 31, 2021 (April 1, 2020 – March 31, 2021) Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) Net sales Cost of sales Gross profit Selling, general and administrative expenses Salaries, allowances and bonuses Employee benefits expenses Provision for bonuses Provision for directors’ bonuses Retirement benefit expenses Provision for directors’ retirement benefits Sales promotion expenses Fees payable Provision for allowance for doubtful accounts Business consignment expenses Rent expenses Depreciation and amortization Other Total selling, general and administrative expenses Operating income (loss) Non-operating income Interest income Dividend income Subsidy income Income from cancelled security deposits Compensation income Other Total non-operating income Non-operating expenses Interest expenses Expenses for measures for COVID-19 Settlement money Other Total non-operating expenses Ordinary income (loss) 121,281 111,293 9,987 5,162 1,029 140 35 149 1 1,822 4,917 7 1,829 1,338 345 2,264 19,044 -9,057 83 99 777 129 937 262 2,290 455 502 29 1,362 2,349 -9,116 173,701 151,659 22,042 5,309 991 293 77 136 1 1,916 6,839 32 1,813 751 413 2,035 20,610 1,431 108 86 600 105 465 342 1,708 603 195 147 378 1,326 1,814 13 (in million yen) Year Ended March 31, 2021 (April 1, 2020 – March 31, 2021) Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) Extraordinary income Gain on sale of shares of subsidiaries and associates Subsidy income Total extraordinary income Extraordinary losses Impairment loss Loss on disaster Loss on store closings Loss on temporary closing, etc. Other Total extraordinary losses Net income (loss) before income taxes Income taxes – current Income taxes – deferred Total income taxes Net income (loss) Net income (loss) attributable to owners of parent – 153 153 442 – 2,531 2,886 45 5,907 -14,870 1,012 -3,718 -2,705 -12,164 -12,164 196 – 196 51 65 453 – 40 611 1,399 1,233 -372 860 539 539 14 Consolidated statement of comprehensive income (in million yen) Year Ended March 31, 2021 (April 1, 2020 – March 31, 2021) Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) Net income (loss) Other comprehensive income Valuation difference on available-for-sale securities Deferred hedge gain (loss) Foreign currency translation adjustment Remeasurements of defined benefit plans Total other comprehensive income Comprehensive income (Breakdown) Comprehensive income attributable to owners of parent -12,164 173 – 42 61 277 -11,887 -11,887 539 26 225 -28 29 252 791 791 15 (3) Consolidated statement of changes in equity Year ended March 31, 2021 (From April 1, 2020 to March 31, 2021) (in million yen) Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Shareholders’ equity Balance at beginning of period 7,961 12,817 64,281 -355 84,706 Changes during period Issuance of new shares (Exercise of share acquisition rights) Dividends from surplus Net income (loss) attributable to owners of parent Change in scope of consolidation Share buybacks Disposal of treasury stock Net changes of items other than shareholders’ equity Total changes during period Balance at end of period 3 -1,286 -12,164 3 0 3 3 7,964 12,821 -13,450 50,831 Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred hedge gain (loss) Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Total net assets Balance at beginning of period -117 – -597 -36 -751 83,954 Changes during period Issuance of new shares (Exercise of share acquisition rights) Dividends from surplus Net income (loss) attributable to owners of parent Change in scope of consolidation Share buybacks Disposal of treasury stock Net changes of items other than shareholders’ equity Total changes during period Balance at end of period 173 173 55 42 42 -555 61 61 24 – 16 -2 0 -2 -357 277 277 -474 -1,286 -12,164 6 -2 0 -13,447 71,259 6 -1,286 -12,164 -2 0 277 -13,169 70,784 Year ended March 31, 2022 (From April 1, 2021 to March 31, 2022) (in million yen) Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Shareholders’ equity Balance at beginning of period 7,964 12,821 50,831 -357 71,259 Balance at end of period 7,964 12,821 Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred hedge gain (loss) Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Total net assets Balance at beginning of period 55 – -555 24 -474 70,784 26 26 82 -779 539 -206 -447 50,383 -28 -28 -583 29 29 53 -4 -4 -361 252 252 -221 -779 539 -206 -4 -451 70,807 -779 539 -206 -4 252 -198 70,586 Changes during period Issuance of new shares (Exercise of share acquisition rights) Dividends from surplus Net income attributable to owners of parent Change in scope of consolidation Share buybacks Disposal of treasury stock Net changes of items other than shareholders’ equity Total changes during period Changes during period Issuance of new shares (Exercise of share acquisition rights) Dividends from surplus Net income attributable to owners of parent Change in scope of consolidation Share buybacks Disposal of treasury stock Net changes of items other than shareholders’ equity Total changes during period Balance at end of period 225 225 225 17 (4) Consolidated statement of cash flows (in million yen) Year Ended March 31, 2021 (April 1, 2020 – March 31, 2021) Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) -14,870 4,962 445 304 -1,389 -182 455 -931 -129 -937 502 2,886 2,531 29 – – 1,356 -28 -6,059 -5,457 240 1,516 7 608 -114 490 -13,763 103 -455 0 -1,223 931 937 -502 -2,521 -1,312 -29 -17,835 1,399 6,070 470 322 264 -195 603 -600 -105 -465 195 – 453 147 65 -196 -2,140 2,048 17,100 1,526 -191 -2,273 4,633 -629 -299 -425 27,780 90 -592 2 -1,956 600 465 -195 – -325 -147 25,721 Cash flows from operating activities Net income (loss) before taxes Depreciation and amortization Amortization of long-term prepaid expenses Amortization of guarantee deposits Increase (decrease) in provision for bonuses Interest and dividend income Interest expenses Subsidy income Proceeds from cancelled security deposits Compensation income Expenses for measures for COVID-19 Loss on temporary closing, etc. Loss on store closings Settlement money Loss on disaster Loss (gain) on sale of affiliated company shares Decrease (increase) in notes and accounts receivable – trade Decrease (increase) in accounts receivable – other Decrease (increase) in inventories Increase (decrease) in notes and accounts payable – trade Increase (decrease) in accrued expenses Increase (decrease) in accounts payable – other Increase (decrease) in accrued consumption taxes Increase (decrease) in deposits received Increase (decrease) in guarantee deposits received Other Subtotal Interest and dividends received Interest expenses paid Income taxes refund Income taxes paid Proceeds from subsidy income Compensation income received Expenses for measures for COVID-19 Loss on temporary closing, etc. Loss on store closings Settlement money paid Net cash provided by (used in) operating activities 18 (in million yen) Year Ended March 31, 2021 (April 1, 2020 – March 31, 2021) Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) Cash flows from investing activities Purchase of investment securities Proceeds from sale of investment securities Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of intangible assets Purchase of long-term prepaid expenses Payments of loan receivable Collection of loans receivable Payments for lease and guarantee deposits Proceeds from collection of lease and guarantee deposits Purchase of insurance funds Proceeds from cancellation of insurance funds Other Net cash provided by (used in) investing activities Cash flows from financing activities Net increase (decrease) in short-term loans payable Proceeds from long-term loans payable Repayments of long-term loans payable Proceeds from issuance of bonds Redemption of convertible bonds Share buybacks Cash dividend paid Other Net cash provided by (used in) financing activities s Effect of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Balance of cash and cash equivalents at beginning of period Increase in cash and cash equivalents resulting from merger Increase (decrease) in cash and cash equivalents resulting from change of consolidation Balance of cash and cash equivalents at end of period -776 1,243 -7,099 12 -533 -607 -763 912 -1,503 116 -1,018 24 -14 -10,006 950 34,900 -4,101 30,043 -25,268 -2 -1,285 -996 34,239 22 6,419 17,792 – – 24,212 – 1,056 -10,594 6 -352 -133 -530 167 -5,869 480 -991 30 0 -16,731 2,400 12,480 -4,643 – -5,280 -4 -781 -40 4,130 -1 13,118 24,212 – 234 37,565 19 (5) Notes on consolidated financial statement Notes on the going concern assumption Not applicable Change in accounting policies Application of Accounting Standard for Revenue Recognition, etc. The Company decided to apply the Accounting Standard for Revenue Recognition (ASBJ Statement No.29, March 31, 2020) and other standards from the beginning of current fiscal year to recognize revenues in the amount expected to be received in exchange for promised goods or services when the control over the goods or services is transferred to customers. As a result, the Company reports the sales from hotels’ courier services on a net basis which is the fees received from customers less the fees paid to carriers. It used to be reported at the total amount. The same applies to sales from the consignment sale of transportation tickets and retail goods. It used to report the total amount, but now it reports the net amount, which is the fees received from customers less the fees paid to the contractors. The Company follows the transitional treatment under Paragraph 84 of the Accounting Standard for Revenue Recognition in relation to the application of the accounting standard and others. The Company adjusted the retained earnings at the beginning of current fiscal year by adding or deducting the amount of cumulative effects resulting from the retrospective application of the new accounting policies before the beginning of current fiscal year, and applied the new accounting policies from the beginning of current fiscal year. As a result, the net sales and cost of sales for current fiscal year have decreased by 611 million yen and 611 million yen, respectively, compared to net sales and cost of sales calculated using the previous accounting standards. However the impact on the operating loss is minor. This has no impact on the amount of the retained earnings at the beginning of current fiscal year. Due to the application of the Accounting Standard for Revenue Recognition and others, the Company has changed the presentation of “notes and accounts receivable” under the “current assets” in the previous fiscal year to the “notes and accounts receivable, and contract assets” for current fiscal year on the balance sheet. However, the Company has not reclassified the item using the new presentation method for the previous fiscal year in accordance with the transitional treatment under Paragraph 89-2 of the Accounting Standard for Revenue Recognition. Application of Accounting Standards for Fair Value Measurement, etc. The Company decided to apply the “Accounting Standards for Fair Value Measurement” (ASBJ Statement No.30, July 4, 2019) etc. from the beginning of the fiscal year under review. Accordingly, it prospectively adopts accounting policies prescribed in the Fair Value Measurement Accounting Standard and the like in accordance with the provisional treatment stipulated in Paragraph 19 of the Fair Value Measurement Accounting Standard and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). This has no impact on the consolidated financial statements. Additional information Application of consolidated taxation system The Company and its domestic consolidated subsidiaries have applied the consolidated tax return filing system since current fiscal year. Application of tax effect accounting concerning the shift from consolidated taxation system to group tax sharing system With respect to items subject to the review of the Non-Consolidated Taxation System conducted to coincide with transition from the Consolidated Taxation System to the Group Tax Sharing System, which was created under the Act for Partial Revision of the Income Tax Act, etc. (Act No. 8 of 2020), the Company and some of its domestic consolidated subsidiaries have not applied the provisions of Paragraph 44 of the Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28 issued on February 16, 2018) in accordance with the treatment set out in Paragraph 3 of Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System (ASBJ PITF No.39, March 31, 2020). Accordingly, the Company reports the deferred tax assets and deferred tax liabilities based on tax laws before amendment. 20 Segment Information etc. [Segment Information] 1. Summary of Reportable Segments The Group’s reportable segments are structural units of the Group, for which disaggregated financial information is available, that are subject to periodic review by the Board of Directors to make decisions on allocation of management resources and evaluate business performance. The Group establishes business units for individual services (or subsidiaries for some services) within the Group. Each business unit or subsidiary formulates strategies for its services and engages in business activities. Accordingly, the Group consists of service-specific segments based on these business units and subsidiaries. The Group’s five reportable segments are the Dormitory Business, the Hotel Business, the Comprehensive Building Management Business, the Food Service Business, and the Development Business. Each reporting segment is summarized below. Comprehensive Building Management Business: Dormitory Business: Hotel Business: Food Service Business: Development Business: Operation and management of student dormitories, employee dormitories, Domeal, and subcontracted dormitories The Dormy Inn (limited-service hotel) and resorts (resort hotel) businesses The office-building management and residential-building management businesses The businesses dealing with restaurants, contracted food service, and hotel restaurants and other facilities operated under contract The construction, planning, design, and brokerage businesses, the condominium business, the real-estate sale and leaseback business, and other development-related businesses, other development-related businesses 2. Calculation methods for net sales, profits or losses, assets, and other amounts for each reporting segment The accounting method for the reported business segments is the same as that described in “Significant Matters that Form the Basis for Preparing Consolidated Financial Statements.” Profit of the reportable segments is based on operating income. Intersegment sales and transfers are based on market prices. 21 3. Information on net sales, profits or losses, assets and other items by reporting segment Year ended March 31, 2021 (From April 1, 2020 to March 31, 2021) Net sales Net sales to external customers Intersegmental sales or transfers Other items Depreciation and amortization Increase in tangible fixed assets and intangible fixed assets Dormitory Hotel Food Service Development Total Other Note 1 Total Adjustment Note 2 Segment Information Comprehensive Building Management 46,190 46,159 7,166 657 6,082 106,256 15,024 121,281 121,281 298 86 8,846 4,634 6,527 20,393 486 20,879 -20,879 － Total 46,489 46,246 16,012 5,291 12,610 126,650 15,510 142,160 -20,879 121,281 Segment profit or loss 4,903 -13,130 624 -10 650 -6,961 606 -6,355 -2,701 -9,057 Segment assets 54,074 105,849 11,349 1,893 28,530 201,698 12,344 214,042 24,989 239,032 1,355 3,353 4,888 131 5,020 Impairment loss 41 364 442 － 442 78 － 58 37 42 － 1,967 10,431 26 3 3 12,432 75 12,507 -66 12,440 Notes: 1. The Other Business segment consists of the following businesses which are not included in the other reportable segments: the Senior Life Business (management and operation of senior residences), the Public Kyoritsu Partnership (PKP) Business (services provided under contract to local governments), support business for people who live alone, the insurance agency business, comprehensive human-resource services, the financial business, the administrative outsourcing business, and other related businesses. 2. Details of adjustments are described below. * Corporate expenses mainly consist of expenses related to the Accounting Department and other administrative Segment profits Segment assets Elimination of intersegment transactions Corporate expenses Total departments of the head office. Elimination of intersegment transactions Corporate assets * Total deferred tax assets retained by the head office. 22 * Corporate assets refer to cash and deposits, investment securities, assets related to administrative sections, and 3. Segment profit or loss is adjusted against operating loss on the consolidated financial statements. (in million yen) Amount recorded on consolidated consolidated financial statements Note 3 － -58 － 4,962 442 (in million yen) -213 -2,488 -2,701 -13,857 38,846 24,989 (in million yen) Net sales Net sales to external customers Intersegmental sales or transfers Other items Depreciation and amortization Increase in tangible fixed assets and intangible fixed assets Year ended March 31, 2022 (From April 1, 2021 to March 31, 2022) (in million yen) Dormitory Hotel Food Service Development Total Other Note 1 Total Adjustment Note 2 Segment Information Comprehensive Building Management 46,924 62,660 7,487 789 41,126 158,988 14,713 173,701 173,701 322 111 7,621 6,038 -464 13,628 481 14,109 -14,109 － Total 47,246 62,772 15,108 6,827 40,661 172,616 15,195 187,811 -14,109 173,701 Segment profit or loss 4,554 -9,451 258 -74 8,608 3,894 459 4,354 -2,922 1,431 Segment assets 55,778 100,361 18,811 2,245 22,024 199,222 15,991 215,213 26,471 241,723 1,410 4,387 5,981 130 6,112 Impairment loss 49 － 51 － 51 70 － 71 2 42 － 2,373 6,985 39 130 － 9,528 55 9,584 -64 9,519 Notes: 1. The Other Business segment consists of the following businesses which are not included in the other reportable segments: the Senior Life Business (management and operation of senior residences), the Public Kyoritsu Partnership (PKP) Business (services provided under contract to local governments), support business for people who live alone, the insurance agency business, comprehensive human-resource services, the financial business, the administrative outsourcing business, and other related businesses. 2. Details of adjustments are described below. * Corporate expenses mainly consist of expenses related to the Accounting Department and other administrative departments of the head office. Segment profits Segment assets Elimination of intersegment transactions Corporate expenses Total Elimination of intersegment transactions Corporate assets * Total * Corporate assets refer to cash and deposits, investment securities, assets related to administrative sections, and deferred tax assets retained by the head office. 3. Segment profit or loss is adjusted against operating loss on the consolidated financial statements. Amount recorded on consolidated financial statements Note 3 6,070 51 － -41 － (in million yen) 18 -2,941 -2,922 -18,535 45,006 26,471 (in million yen) 23 4. Information on changes in reportable segments, etc. Application of Accounting Standard for Revenue Recognition, etc. As stated in “Changes in accounting policies”, the Company has applied the Accounting Standard for Revenue Recognition and other standards from the beginning of the current fiscal year, and changed the accounting method related to revenue recognition. Accordingly, the Company has also changed the calculation method for business segment profits and losses. Due to these changes, net sales and cost of sales of the Hotel Business for the current fiscal year have decreased by 305 million yen and 305 million yen, respectively, and net sales and cost of sales of the Other Business decreased by 305 million yen and 305 million yen, respectively, compared to the net sales and cost of sales calculated using the previous accounting method. However, the impact on the segment loss is minor. [Relevant Information] Year ended March 31, 2021 (From April 1, 2020 to March 31, 2021) 1. Information by product and service Student Employee Subcontractedormitories dormitories d dormitories Domeal Dormy Inn Resorts Food Service Development Other Total Office Residential building building custodial custodial services services (in million yen) external 23,558 13,765 4,809 4,058 25,233 20,926 3,885 3,281 657 6,082 15,024 121,281 This item is omitted because the net sales to external customers in Japan account for more than 90% of the net sales on the consolidated income statement. This item is omitted because the amount of the tangible fixed assets located in Japan accounts for more than 90% of the amount of the tangible fixed assets on the consolidated balance sheet. 3. Information by major customer This item is omitted because no single customer accounts for 10% or more of the net sales on the consolidated income statement. Year ended March 31, 2022 (From April 1, 2021 to March 31, 2022) 1. Information by product and service Student Employee Subcontractedormitories dormitories d dormitories Domeal Dormy Inn Resorts Food Service Development Other Total Office Residential building building custodial custodial services services (in million yen) external 25,193 12,938 4,732 4,059 35,249 27,411 4,017 3,469 789 41,126 14,713 173,701 Net sales to customers 2. Information by region (1) Net sales (2) Tangible fixed assets Net sales to customers 2. Information by region (1) Net sales on the consolidated income statement. (2) Tangible fixed assets This item is omitted because the net sales to external customers in Japan account for more than 90% of the net sales This item is omitted because the amount of the tangible fixed assets located in Japan accounts for more than 90% of the amount of the tangible fixed assets on the consolidated balance sheet. 24 3. Information by major customer This item is omitted because no single customer accounts for 10% or more of the net sales on the consolidated income statement. 25 [Information on impairment loss on non-current assets by reporting segment] Year ended March 31, 2021 (From April 1, 2020 to March 31, 2021) This item is omitted because the same information is disclosed in the Segment Information. Year ended March 31, 2022 (From April 1, 2021 to March 31, 2022) This item is omitted because the same information is disclosed in the Segment Information. [Information on the amortization of goodwill and the unamortized balance by reporting segment] Year ended March 31, 2021 (From April 1, 2020 to March 31, 2021) Not applicable Year ended March 31, 2022 (From April 1, 2021 to March 31, 2022) Not applicable [Information on gain from negative goodwill by reporting segment] Year ended March 31, 2021 (From April 1, 2020 to March 31, 2021) Not applicable Year ended March 31, 2022 (From April 1, 2021 to March 31, 2022) Not applicable 26 1,810.40 13.83 － 539 － 539 Year ended March 31, 2021 (From April 1, 2020 to March 31, 2021) Year ended March 31, 2022 (From April 1, 2021 to March 31, 2022) Per-share information Net assets per share (yen) Net income (loss) per share Diluted net income per share (yen) 1,815.45 -311.98 － (Note) 1. For previous fiscal year, diluted net income per share is not shown due to the recording of net loss per share and the absence of potential shares with dilutive effects. For the current fiscal year under review, diluted net income per share is not shown due to the absence of potential shares with dilutive effects. 2. The bases for the calculation of net income per share or net loss per share are described below. Year ended March 31, 2021 (April 1, 2020 – March 31, 2021) Year ended March 31, 2022 (April 1, 2021 – March 31, 2022) Net income (loss) per share Net income (loss) attributable to owners of parent (in million yen) Amount not attributable to common shareholders (in million yen) Net income (loss) attributable to owners of parent related to common shares (in million yen) -12,164 － -12,164 Average number of common shares during the period (shares) 38,990,301 38,989,870 Summary of potential shares not included in the calculation of diluted net income per share due to the absence of dilutive effects Euro-yen denominated Euro-yen denominated convertible bonds that will mature in 2026 based on a convertible bonds that will mature in 2026 based on a resolution (of the Board of Directors) dated January 13, resolution (of the Board of Directors) dated January 13, 2021 (3,000 units of share option) 2021 (3,000 units of share option) Significant subsequent event Introduction of restricted stock units The Company reviewed its executive compensation plan and resolved to introduce restricted stock units (the “Plan”) at the Board of Directors meeting on May 13, 2022. It decided to refer the Plan to the 43rd ordinary general shareholders’ meeting scheduled for June 28, 2022. For details, please see “Notice on introduction of restricted stock units” published today (May 13, 2022). 27 4. Other (Status of production, order and sale) Segment sales performances for current fiscal year are shown below: Segment Amount (in million yen) Year-on-year comparison (%) Dormitory Student dormitories Employee dormitories Domeal Subcontracted dormitories Hotel Dormy Inn Business Resorts Business Comprehensive Building Management Office Building Custodial Services Business Residential Building Custodial Services Business Food Service Development Other Adjustment Total of Reportable Segments Total (Note) Amount does not include consumption taxes. 47,246 25,306 13,109 4,756 4,074 62,772 35,294 27,478 15,108 4,215 10,892 6,827 40,661 172,616 15,195 -14,109 173,701 1.6 7.0 -5.9 -1.6 0.0 35.7 39.7 31.0 -5.6 1.8 -8.2 29.0 36.3 -2.0 － 43.2 222.5 28