ＪＰホールディングス（2749） – [Delayed]Summary of Business Results for the Fiscal Year Ended March 31, 2022 [Japan GAAP] (Consolidated)

Summary of Business Results for the Fiscal Year Ended March 31, 2022 [Japan GAAP] (Consolidated) May 12, 2022 JP-HOLDINGS, INC. 2749 Tohru Sakai, President and Representative Director Ryoji Tsutsumi, Director Company Stock Code Representative Contact Expected date of annual shareholders’ meeting: June 28, 2022 Expected starting date of dividend payment: June 29, 2022 Expected date of filing of annual securities report: June 29, 2022 Preparation of supplementary financial document: Yes Results briefing: Yes (for media members, institutional investors, analysts) Listed on the TSE Prime URL: https://www.jp-holdings. co.jp T E L: +81-52-933-5419 （Rounded down to million yen） 1. Consolidated business results for the fiscal year ended March 2022 (April 1, 2021 through March 31, 2022) (1) Consolidated results of operations (% change from the previous corresponding period) Operating income Ordinary income Net sales Net income attributable to owners of parent % Million yen 3,358 2,947 17.1 43.6 % Million yen 2,279 537 13.9 47.1 % 324.1 -52.1 Million yen 34,373 33,500 Year ended Mar. 2022 Year ended Mar. 2021 (Note) Comprehensive income: Year ended March 2022: 2,308 million yen (224.0%) Year ended March 2021: 712 million yen (-31.3%) % Million yen 2.6 4.1 3,344 2,857 Net income per share Diluted net income per share Return on equity Ratio of ordinary income to total assets Ratio of operating income to net sales % Year ended Mar. 2022 9.7 8.5 Year ended Mar. 2021 (Note) In the fiscal year under review, the Company changed the presentation of “subsidy income” related to the childcare business, which was previously included in non-operating income, to “net sales.” As a result of this change, major management indices for the previous fiscal year are based on the indices after this reclassification Yen 26.06 6.15 % 20.7 5.5 % 10.5 10.6 Yen – – (2) Consolidated financial position Total assets Net assets Million yen 34,274 29,740 Million yen 11,975 10,007 Shareholders’ equity ratio Net assets per share % 34.9 33.7 Yen 136.91 114.42 As of Mar. 31, 2022 As of Mar. 31, 2021 (Reference) Shareholders’ equity: As of March 31, 2022: 11,975 million yen As of March 31, 2021: 10,007 million yen (3) Consolidated results of cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at the end of period Million yen 3,884 2,469 Million yen 413 190 Million yen 1,978 2,155 Million yen 17,296 11,020 Year ended Mar. 2022 Year ended Mar. 2021 2. Dividends Annual dividend End of 1Q End of 2Q End of 3Q Year-end Total Total dividend (Total) Dividend payout ratio (Consolidated) Year ended Mar. 2021 Year ended Mar. 2022 Year ending Mar. 2023 (forecast) Yen – – Yen 0.00 0.00 – 0.00 Yen – – – Yen 3.90 4.50 6.00 Yen 3.90 4.50 6.00 Million yen 341 393 Rate of total dividend to net assets (Consolidated) % 3.5 3.6 % 63.4 17.3 22.6 Breakdown of year-end dividend for the fiscal year ending March 2023 Ordinary dividend: 5.00 yen, Commemorative dividend: 1.00 yen 3．Forecast of consolidated business results for the fiscal year ending March 2023 (April 1, 2022 through March 31, 2023) (% change from the previous corresponding period) Net sales Operating income Ordinary income Net income attributable to owners of parent Net income per share Million yen Year ending Mar. 2023 *Notes (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries accompanying changes % Million yen 3,560 % Million yen % Million yen % 2.0 35,640 3,580 2,325 3.7 6.4 6.6 Yen 26.58 in the scope of consolidation): None (2) Changes in accounting policies, accounting estimates and restatement ①Changes in accounting policies associated with revision of accounting standards: ②Changes in accounting policies other than ① ③Changes in accounting estimates ④Restatement : Yes : None : None : None (3) Shares outstanding (common stock) ① Number of shares outstanding at the end of period (treasury stock included) ② Treasury stock at the end of period: As of March 31, 2022 As of March 31, 2021 As of March 31, 2022 As of March 31, 2021 87,849,400 shares 87,849,400 shares 380,707 shares 380,707 shares ③ Average number of stock during period Year ended March 31, 2022 Year ended March 31, 2021 87,468,693 shares 87,468,693 shares (Reference) Summary of non-consolidated business results 1. Non-consolidated business results for the fiscal year ended March 2022 (April 1, 2021 through March 31, 2022) (1) Non-consolidated results of operations (% change from the previous corresponding period) Operating income Ordinary income Net income Net sales Million yen 3,066 2,570 % Million yen 1,396 886 19.3 8.9 % Million yen 1,523 1,037 57.4 42.9 % 46.9 14.6 Million yen 1,338 135 % 887.5 -81.6 Year ended Mar. 2022 Year ended Mar. 2021 Net income per share Diluted net income per share Year ended Mar. 2022 Year ended Mar. 2021 (2) Non-consolidated financial position Yen 15.30 1.55 Yen – – Total assets Net assets Shareholders’ equity ratio Net assets per share Million yen 6,166 5,129 % 26.7 26.3 Yen 70.50 58.65 As of Mar. 31, 2022 As of Mar. 31, 2021 (Reference) Shareholders’ equity: Million yen 23,124 19,496 As of March 31, 2022: 6,166 million yen As of March 31, 2021: 5,129 million yen * Financial summary is not subject to auditing procedures by certified public accountants or auditing firms. * Explanation regarding appropriate use of business forecasts and other special instructions ・Forecasts regarding future performance in this material are based on information currently available to the Company and certain assumptions that the company deems to be reasonable at the time this report was prepared. Actual results may differ significantly from the forecasts due to various factors. For information regarding the business forecasts, etc., please refer to “1. Summary of Operating Results (4) Future outlook” (Page 5). ・On Wednesday, May 20, 2022, the Company plans to hold results briefing for media members, institutional investors and analysts via a webcast. The Company has suspended its results briefing for individual investors in order to prevent the spread of new coronavirus (COVID-19) infections.〇 Table of Contents of the Appendix 1. Summary of Operating Results…………………………………………………………………..…. 2 (1) Summary of operating results for the current fiscal year……………………………….…….…. 2 (2) Summary of financial condition in the current fiscal year………………………………….…… 4 (3) Summary of cash flow in the current fiscal year………………………………………………… 5 (4) Future outlook……………………………………………………………………….……………. 5 2. Basic Policies regarding the Selection of Accounting Standards……………………….……………. 7 3. Consolidated Financial Statements and Major Notes………………………………………………… 8 (1) Consolidated Balance Sheet………………………………………………………………………. 8 (2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income……. 10 (3) Consolidated Statements of Changes in Shareholders’ Equity……………………………………. 12 (4) Consolidated Statement of Cash Flows……………………………………………………………. 14 (5) Notes on the Consolidated Financial Statements……………………………………………………. 16 (Notes on going concern assumption)……………………………………………………………… 16 (Changes in accounting policies)…………………………………………………………………… 16 (Segment information)……………………………………………………………………………… 16 (Per-stock information)…………………………………………………………………………….. 16 (Significant subsequent events)…………………………………………………………………….. 16 1 1. Summary of Operating Results (1) Summary of operating results for the current fiscal year During the fiscal year under review, the Japanese economy showed some movement toward normalization of economic and social activities against the backdrop of global economic recovery and the relaxation of various restrictions due to progress in vaccination, despite the continuing stagnation of economic activities reflecting the impact of COVID-19. Nevertheless, the outlook remains uncertain due to a combination of geopolitical risks associated with the growing pressure on the situation in Ukraine, in addition to the re-expansion of infections due to new variant stocks, and concerns over an economic slowdown and a slowdown in corporate performance due to soaring resource prices. Meanwhile, in the child-raising support business, the environment surrounding childcare is rapidly changing. These factors include the acceleration of the declining birth rate society due to the sharp decrease in birth rate, the decrease in the number of children on waiting lists because of people refraining from using the facilities due to COVID-19, a continuing shortage of childcare workers, rising demand for childcare reflecting an increase in the female employment rate, and the need to respond to changes in working styles and lifestyles due to the expansion of COVID-19. The government has been promoting various measures to improve the childcare environment, such as the development of childcare services based on the “New Childcare Security Plan” and the further acceleration of the development of after-school children’s clubs under the “New Comprehensive Plan for After-school Children” in order to eliminate the waiting list for children. In addition, the bill for establishment of the Children’s Agency was approved by the Cabinet. The government plans to establish the Agency in April next year and is promoting to create a better environment for childcare. In such circumstances, the social role of the child-raising support business will become increasingly important. Under these situations, as measures against COVID-19, our group, in collaboration with local governments, has established our own response standards and implemented thorough safety measures with giving top priority to ensuring the safety of children, parents, business partners, and employees. At the same time, we also have been taking prompt measures such as staggered work hours and remote working at the head office and Tokyo headquarters. In addition, in order to further improve the quality of child-raising support services and expand the scope of our business, we are capturing changes in the social environment and have set three priority goals of “improve profitability and efficiency,” “improve soundness,” and “improve growth potential.” By effectively allocating and investing management resources, we have built a solid management foundation. Specifically, with digital transformation (DX) as the pillar of reform to promptly respond to changes in the social environment, in terms of “improve profitability and efficiency,” we took these initiatives to promote operational efficiency and improvements and reforms at our facilities: improve early learning programs to increase the number of children accepted at existing childcare support facilities as our existing business, developing and introducing new content, the introduction of online learning programs (English, gymnastics, eurhythmics, and dance) and online facility tours ahead of other companies, developing online international exchange programs with overseas child care facilities, etc., improve profitability by further optimizing staffing. In terms of “improve soundness,” as the key of childcare support is “human resources,” we have been working to establish a new personnel system, expand our human resource education and training systems and improve operational efficiency through systemization. As for the “improve growth potential,” we introduced a new early learning program “Mojikazu Land” through a business alliance with GAKKEN HOLDINGS CO., LTD., and worked to reduce costs and improve on-site operations through joint purchasing, as well as to develop services that provide added value. Through these efforts, we will differentiate ourselves from our competitors and promote the slogan of “create facilities that would be selected by customers”. Furthermore, we are focusing on developing new businesses to create new value. We have launched “codomel,” a childcare support platform for children at more than 300 childcare support facilities nationwide (nursery schools, school clubs, and children’s houses) and their parents, and other people raising children, to provide a wide range of products and services related to childcare during infancy, childhood, and school age. As the first service, we launched the “Childcare Product Matching Service,” which aims to balance childcare support with effective use of resources and environmental preservation (SDGs), while increasing the number of members of this service. Based on our Group’s management philosophy of “Through childcare support, we will contribute in creating smiles for everyone,” we will thoroughly make effective use of resources by promoting the reuse and recycling of childcare products, and promote this initiative, which takes into consideration the conservation of the global environment, including the reduction of environmental impact and treatment costs. We are promoting this initiative as a new pillar outside of our existing businesses. In the future, we will expand this business overseas and further expand its services and content. As for the new facility openings, the Group has opened a total of 11 facilities during the fiscal year ended March 2022 according to the plan, including 3 nursery schools (3 in Tokyo) and 8 school clubs and children’s houses (8 in Tokyo). 2 (Nursery school) Asc Kami-Shakujii Nursery School Asc Kanamachi Nursery School Asc Higashikasai Nursery School No. 2 (School clubs) Wakuwaku Takinogawa Momiji Hiroba/Takinogawa Momiji Genkikko Club No. 2 (Apr. 1, 2021) Wakuwaku Takinogawa Momiji Hiroba/Takinogawa Momiji Genkikko Club No. 3 (Apr. 1, 2021) Mitaka City Rokusho School Club A Niji-iro Kids Club Bancho Elementary School After School No. 1 Bancho Elementary School After School No. 2 Bancho Elementary School After School Kids’Club (Play school) Jindaiji Children’s House (Apr. 1, 2021) (Apr. 1, 2021) (Apr. 1, 2021) (Apr. 1, 2021) (Apr. 1, 2021) (Apr. 1, 2021) (Apr. 1, 2021) (Apr. 1, 2021) (Apr. 1, 2021) *1: As of April 1, 2021, Tokyo Licensed Nursery Schools named Asc Ontake Nursery School, which had been running since August 1, 2003 and Asc Shimomaruko Nursery School, which had been running since April 1, 2010, were changed into licensed nursery school. *2: April 1, 2021, with the opening of the Wakuwaku Takinogawa Momiji Hiroba/Takinogawa Momiji Genkikko Club No. 1 above, Wakuwaku Takinogawa Momiji Hiroba was renamed as Wakuwaku Takinogawa Momiji Hiroba/Takinogawa Momiji Genkikko Club No. 1. *3: As of March 31, 2021, the Company closed Tokyo Licensed Nursery Schools named Asc Iidabashi Nursery School, Asc Nishishinjuku Nursery School, Asc Ikebukuro Nursery School, Asc Yukigaya-Otsuka Nursery School, and a private school club named AEL Yokohama Business Park. In addition, due to the expiration of the contract, the Company withdrew from school clubs named Nakano- ku Kids Plaza Yato, Kita-ku Sakura Club No. 1, Kita-ku Daini Sakura Club No. 2, and a children’s house named Sayama City Chuo Children’s House on March 31, 2021. As a result, the Group came to have 211 nursery schools, 81 school clubs, 11 children’s houses, making a total of 303 facilities for supporting child-raising at the end of March 2022. As a result, the Group’s consolidated net sales were 34,373 million yen (up 2.8% year on year), operating income was 3,344 million yen (up 17.1% year on year), ordinary income was 3,358 million yen (up 13.9% year on year), and net income attributable to owners of parent was 2,279 million yen (up 324.1% year on year). Both sales and profits increased year-on-year and reached record-high profits. The major factors are as follows: Despite a decrease in the number of children accepted at the beginning of the fiscal year since the State of Emergency was declared due to the spread of COVID-19, net sales increased by 2.6% year-on-year reflecting an increase in the number of children accepted for the full year and the introduction of new facilities. The increase in number of children accepted was attributable to our efforts to create facilities that would be selected by customers, through implementing online facility tours and online learning programs such as English, gymnastics, eurhythmics and dance, as well as introducing a new early learning program even under the COVID-19 crisis. Operating income and ordinary income increased by 17.1% year-on-year, while ordinary income increased by 13.9% year-on-year. This was attributable to an increase in sales due to an increase in the number of children accepted during the fiscal year as a result of the various measures mentioned above, as well as to efforts to improve profits and restrain expenses at each facility through efficient operations through the reallocation of personnel at each facility, as well as the review of recruitment activities and the ordering system for various equipment. In net income attributable to owners of parent, ordinary income increased significantly due to the establishment of an efficient management system. In the previous fiscal year, our Group closed facilities, where profits deteriorated due to changes in the regional environment, and 10 nursery schools, which have land and buildings in the past and operate them as a foothold for the childcare support business. To avoid the risks of owning these land and buildings, we decided to move them off the balance sheet with a view to future sales and other measures, and recorded impairment losses associated with the use of fixed assets and other factors. As a result, we incurred extraordinary losses. However, we recorded an extraordinary profit of 183 million in the fiscal year under review. This was mainly due to a significant decrease in impairment losses due to improved profitability at each facility and the sale of fixed assets (land and buildings) at 3 of the 10 facilities that own the above-mentioned land and buildings. As a result, operating income increased by 324.1% year-on-year. 3 With regard to subsidies, etc. received from local governments for rental company housing for nursery school teachers, the amount was previously recorded as “subsidy income” under non-operating income, but from the current fiscal year, such subsidies, etc. are now recorded as “net sales.” This change in presentation is due to the fact that the qualitative importance of such subsidies, etc. to the childcare business has increased, and also as a result of confirming and organizing the subsidy system related to the childcare business as a result of investigating and studying the “Accounting Standard for Revenue Recognition: we made the judgment that it would be possible to present the actual status of the business more appropriately if the relevant amounts were recorded in the same category as other subsidies. Due to this change in presentation, reclassification has been made for the previous fiscal year. (2) Summary of financial condition in the current fiscal year As for the financial position at the end of the current fiscal year, the total assets amounted to 34,274 million yen (up 4,534 million yen from the end of the previous fiscal year). Current assets totaled 20,931 million yen (up 5,791 million yen), mainly reflecting an increase of 6,275 million yen in cash and deposits, while there were decreases of 300 million yen in accounts receivable. Fixed assets totaled 13,343 million yen (down 1,257 million yen). This was mainly due to an increase of 70 million yen in investment securities, while there were decreases of 537 million yen in buildings and structures, 337 million yen in construction in progress, 180 million yen in long-term loans receivable, 149 million yen in land. Total liabilities amounted to 22,299 million yen (up 2,566 million yen). Current liabilities totaled 7,891 million yen (up 62 million yen). This was mainly due to increases of 361 million yen in provision for bonuses and 89 million yen in income taxes payable, while there were decreases of 194 million yen in current portion of long-term loans payable, 72 million yen in accounts payable-other, 53 million yen in notes and accounts payable-trade, and 50 million yen in other. Fixed liabilities were 14,407 million yen (up 2,504 million yen). This was mainly due to an increase of 2,510 million yen in long- term loans payable. Total net assets at the end of the current fiscal year totaled 11,975 million yen (up 1,967 million yen). This was mainly due to an increase of 1,938 million yen in retained earnings. 4 (3) Summary of cash flow in the current fiscal year Cash and cash equivalents (hereinafter referred to as “the funds”) for the current consolidated fiscal year were 3,884 million yen from the funds obtained through operating activities; 413 million yen obtained through investing activities; and 1,978 million yen obtained through financing activities, totaling 17,296 million yen, up 6,275 million yen from the end of the previous fiscal year. The cash flow situations and their reasons for the current consolidated fiscal year are as follows: [Cash flows from operating activities] The funds provided by operating activities were 3,884 million yen (2,469 million yen was provided during the previous consolidated fiscal year). This was mainly due to income before income taxes and minority interests of 3,495 million yen, depreciation and amortization of 708 million yen, an increase in allowance for bonuses of 361 million yen, a decrease in accounts receivable-other of 300 million yen, and a decrease in other non-current assets of 208 million yen, which were partly offset by income taxes paid of 1,071 million yen, gain on sales of property, plant and equipment of 148 million yen, and a decrease in advances received of 113 million yen. [Cash flows from investing activities] The funds provided by investing activities were 413 million yen (190 million yen during the previous consolidated fiscal year). This was mainly due to proceeds from sales of property, plant and equipment of 461 million yen, proceeds from receipt of subsidy of 449 million yen, and proceeds from collection of long-term loans receivable of 277 million yen, while there were payments for purchase of property, plant and equipment of 687 million yen, other payments of 72 million yen, and payments for guarantee deposits of 37 million yen. [Cash flows from financing activities] The funds provided by financing activities were 1,978 million yen (2,155 million yen during the previous consolidated fiscal year). This was mainly due to the following: proceeds from long-term loans payable of 6,030 million yen, repayment of long-term loans payable of 3,714 million yen, and cash dividends paid of 338 million yen. The related index of our Group’s cash flow is as follows: FY3/20 FY3/21 FY3/22 Shareholders’ equity ratio (%) Shareholders’ equity ratio against current price (%) Cash flow to interest-bearing debts ratio (years) Interest coverage ratio (x) 36.9 86.7 4.8 38.8 33.7 83.8 5.5 41.6 34.9 55.4 4.1 54.8 Notes: Shareholders’ equity ratio = shareholders’ equity/total assets Shareholders’ equity ratio against current price = total current stock price/total assets Cash flow to interest-bearing debts ratio = interest-bearing debts/cash flow Cash flow to interest-bearing debts ratio = interest-bearing debts/cash flow Interest coverage ratio = cash flow/interest payment. [Note 1] All calculated based on consolidated financial amounts. [Note 2] Total current stock price calculated based on the total number of stocks issued minus treasury shares. [Note 3] Cash flow here signifies operating cash flow. [Note 4] Interest-bearing debts here include all the debts that incur interests and appropriated on the consolidated balance sheet. (4) Future outlook Looking ahead, we anticipate an increase in the number of dual-income households, problems with children on waiting lists in some areas, a continuing shortage of childcare workers, a further acceleration of the declining birthrate society due to a sharp drop in the birth rate, and continued uncertainty about the future due to the spread of COVID-19. Under such circumstances, rather than prioritizing quantitative expansion through the opening of new facilities, we must transform ourselves into “facilities that would be selected by customers” by further improving the quality of our childcare support in response to changes in the social environment and the needs of parents. Taking advantage of this situation, we will make our efforts by setting more attainable management targets in the medium-term plan. Our Group’s medium-term management plan will be revised on a rolling basis based on the conditions in the previous fiscal year. At the same time, we will continue to take advantage of changes in the social environment and maintain the management policies formulated in the previous fiscal year with the key objectives of “improve profitability and efficiency,” “improve soundness,” and “improve growth potential.” We will effectively allocate and invest management resources to build a solid management foundation 5 and aim for sustainable growth through the creation of new businesses. Specifically, with DX as the pillar of reform to respond to changes in the social environment, in terms of “improve profitability and efficiency,” we will take these initiatives: improve early learning to increase the number of children accepted at existing childcare support facilities as our existing business, develop and introduce new content, improve profitability by further optimizing staffing. With regard to “improve soundness”, we will expand our human resource education and training systems as the key to childcare support is “human resources.” At the same time, we will improve the sophistication of operations by improving operational efficiency. In addition, we will further improve the quality of our childcare support and promote the creation of facilities that would be selected by customers by disseminating and implementing both internally and externally the Group’s Management Philosophy, Corporate Message, Operational Philosophy, Childcare and Nurturing Philosophy, and Childcare and Nurturing Policy, which were renewed and formulated last year. In terms of “improve growth potential,” we launched a new business, “codomel,” a child-raising support platform. This is an online matching service where users sell and purchase reused products, mainly baby items, clothing, and other child-raising related items. Going forward, in addition to collaborating with various companies, we will expand our services not only domestically but also globally, including BtoC business that provides various services and BtoB business that introduces and dispatches professional human resources and provides on-demand broadcasting of professional training programs, etc. In addition, the Group has provided support for children with developmental concerns through its response to developmental support services and providing visiting support services at childcare facilities. To expand support for children with potential developmental disabilities, we will develop a new business of multi-functional facilities and visiting services based on our experience in providing highly specialized developmental support based on our expertise in childcare support. We will provide such childcare support that is closer to more children and their parents. For the above reasons, as for the consolidated performance for the next fiscal year, the Company forecasts net sales of 35,640 million yen (up 3.7% year on year), operating income of 3,560 million yen (up 6.4%), ordinary income of 3,580 million yen (up 6.6%), and net income attributable to owners of parent was 2,325 million yen (up 2.0%). The following is a breakdown of the childcare facilities that the Group has entrusted with the opening of new facilities during the fiscal year ended March 2022 and has started new operations on April 1, 2022. (Nursery school) (School club/Children’s house) Takenotsuka School Club Asc Musashi-Koganei Minamiguchi Nursery School Mitaka City Flexible Childcare Center Hinata (Apr. 1, 2022) (Apr. 1, 2022) Takaban Elementary School Club Wakuwaku Nishi-Ukima Hiroba/Nishi-Ukima Club No. 1 Wakuwaku Nishi-Ukima Hiroba/Nishi-Ukima Club No. 2 Wakuwaku Nishi-Ukima Hiroba/Nishi-Ukima Club No. 3 Wakuwaku Akabane Hiroba/Akabane Children’s Club No. 1 Wakuwaku Akabane Hiroba/Akabane Children’s Club No. 2 Wakuwaku Akabane Hiroba/Akabane Children’s Club No. 3 Wakuwaku Kirigaoka-sato Hiroba/Kirigaoka-satokko Club No. 1 Wakuwaku Kirigaoka-sato Hiroba/Kirigaoka-satokko Club No. 2 Wakuwaku Kirigaoka-sato Hiroba/Kirigaoka-satokko Club No. 3 *1: “Mitaka City Part-time Childcare Center Hinata” began operation on May 1, 2022. *2: As of March 31, 2022, the Company closed Tokyo Licensed Nursery Schools named Asc Itabashi-honcho Nursery School, Asc Shiodome Nursery (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) (Apr. 1, 2022) School, Asc Takadanobaba Nursery School, Asc Yanokuchi Nursery School. In addition, due to the expiration of the contract, the Company withdrew from school clubs named Rinsen Elementary School After School Club, Hiroo Elementary School After School Club, Sarugaku Elementary School After School Club, and a children’s house named Fukuro Children’s House on March 31, 2022. 6 2. Basic Policies regarding the Selection of Accounting Standards Our Group produces the financial statements based on the Japanese standard, while taking into consideration the comparabilities of various financial statement terms as well as those of various companies. Incidentally, the application of international accounting standards will be appropriately enforced, in consideration of various situations inside and outside Japan. 7 3. [Consolidated Financial Statements and Major Notes] (1) [Consolidated Balance Sheet] (Thousand yen) Previous Fiscal Year (March 31, 2021) Current Fiscal Year (March 31, 2022) Assets Current assets Cash and deposits Notes and accounts receivable-trade Inventories Accounts receivable – other Other Allowance for doubtful accounts Total current assets Fixed assets Property, plant and equipment Buildings and structures Accumulated depreciation and impairment Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Tools, furniture and fixtures Accumulated depreciation and impairment Tools, furniture and fixtures, net Land Construction in progress Total tangible fixed assets Intangible assets Goodwill Other Total intangible assets Investments and other assets Investment securities Long-term loans receivable Guarantee deposits Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total fixed assets Total assets 11,020,922 88,259 167,481 3,009,655 858,136 -5,057 15,139,399 12,853,109 -7,439,556 5,413,552 203 -92 111 998,658 -770,948 227,710 585,678 474,178 6,701,231 167,122 47,307 214,430 382,394 3,170,376 1,906,868 1,631,311 603,466 -8,871 7,685,546 14,601,208 29,740,607 17,296,668 68,650 63,900 2,708,806 794,924 -1,766 20,931,185 12,326,804 -7,450,666 4,876,138 203 -121 82 1,106,051 -820,246 285,804 435,909 137,030 5,734,966 136,736 37,904 174,640 453,084 2,989,672 1,903,902 1,579,652 513,833 -6,123 7,434,021 13,343,629 34,274,814 8 Liabilities Current liabilities Notes and accounts payable-trade Current portion of long-term loans payable Accounts payable – other Income taxes payable Accrued consumption taxes Reserve for bonuses Asset retirement obligation Other Total current liabilities Fixed liabilities Long-term debt Retirement benefit liability Asset retirement obligation Other Total fixed liabilities Total liabilities Net assets Shareholders’ equity Capital Capital surplus Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for- sale securities Deferred gains or losses on ledges Remeasurements of defined benefit plans Total accumulated other comprehensive income Total net assets Total liabilities and net assets (Thousand yen) Previous Fiscal Year (March 31, 2021) Current Fiscal Year (March 31, 2022) 219,266 3,307,412 1,634,568 551,678 160,836 544,474 51,900 1,359,619 7,829,755 10,305,896 839,667 747,503 10,012 11,903,079 19,732,834 1,603,955 1,449,544 7,178,942 -107,515 10,124,926 -84,960 -6,948 -25,245 -117,154 10,007,772 29,740,607 165,552 3,113,291 1,561,978 641,517 143,892 906,420 49,652 1,309,498 7,891,803 12,816,466 940,313 647,127 3,650 14,407,557 22,299,361 1,603,955 1,449,544 9,117,409 -107,515 12,063,393 -49,918 -2,533 -35,488 -87,940 11,975,452 34,274,814 9 (2) [Consolidated Statement of Income and Consolidated Statement of Comprehensive Income] Previous Fiscal Year (Apr. 1, 2020 – March 31, 2021) (Thousand yen) Current Fiscal Year (Apr. 1, 2021 – March 31, 2022) [Consolidated Statement of Income] Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Non-operating income Interest income Other Total non-operating income Non-operating expenses Interest expenses Handicapped employment levy Other Total non-operating expenses Ordinary income Extraordinary income Gain on sales of fixed assets Gain on reversal of asset retirement obligations Gain on sales of affiliates Recoveries of written off receivables Extraordinary income Extraordinary loss Loss (gain) on retirement of fixed assets Impairment loss (on facilities) Loss on sales of investment securities Total extraordinary loss Income before income taxes and minority interests Corporate, inhabitant and enterprise taxes Income taxes-deferred Total income tax Net income Net income attributable to owners of parent 2,947,807 3,358,596 33,500,908 27,687,332 5,813,575 2,956,223 2,857,352 89,805 84,132 173,938 58,203 9,550 15,729 83,482 3,606 11,100 13,735 5,866 34,308 3,648 2,020,772 67,718 2,092,140 889,976 936,449 -584,017 352,431 537,544 537,544 34,373,668 28,052,451 6,321,216 2,976,295 3,344,921 77,203 25,225 102,429 69,138 13,500 6,115 88,754 148,715 34,896 – – 183,611 389 43,610 3,052 47,051 3,495,156 1,175,928 39,633 1,215,561 2,279,594 2,279,594 10 [Consolidated Statement of Comprehensive Income] Net income Total accumulated other comprehensive income Valuation difference on available-for- sale securities Deferred gains or losses on ledges Foreign currency translation adjustments Remeasurements of defined benefit plans Total other comprehensive income Comprehensive income Breakdown Comprehensive income attributable to owners of parent Previous Fiscal Year (Apr. 1, 2020 – March 31, 2021) (Thousand yen) Current Fiscal Year (Apr. 1, 2021 – March 31, 2022) 537,544 139,477 -1,410 -2,610 39,650 175,107 712,651 712,651 2,279,594 35,041 4,415 – -10,242 29,214 2,308,808 2,308,808 11 (3) [Consolidated Statements of Changes in Shareholders’ Equity] Previous Fiscal Year (April 1, 2020 – March 31, 2021) Shareholders’ equity Capital Capital surplus Retained earnings Treasury stock (Thousand yen) Total shareholders’ equity 1,603,955 1,449,544 6,982,526 -107,515 9,928,510 Balance at the beginning of current period Changes of items during the period Dividends from surplus Net income attributable to owners of parent Net changes of items other than shareholders’ equity Total changes of items during the period Balance at the end of current period Balance at the beginning of current period Changes of items during the period Dividends from surplus Net income attributable to owners of parent Net changes of items other than shareholders’ equity Total changes of items during the period Balance at the end of current period -341,127 537,544 -341,127 537,544 – – – 1,603,955 1,449,544 7,178,942 -107,515 10,124,926 196,416 196,416 Accumulated other comprehensive income Valuation difference on available-for- sale securities Deferred gains or losses on ledges Foreign currency translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Total net assets -224,438 -5,537 2,610 -64,895 -292,261 9,636,249 -341,127 537,544 139,477 -1,410 -2,610 39,650 175,107 175,107 139,477 -84,960 -1,410 -6,948 -2,610 39,650 175,107 371,523 – -25,245 -117,154 10,007,772 12 Previous Fiscal Year (April 1, 2021 – March 31, 2022) Shareholders’ equity Capital Capital surplus Retained earnings Treasury stock (Thousand yen) Total shareholders’ equity 1,603,955 1,449,544 7,178,942 -107,515 10,124,926 -341,127 2,279,594 -341,127 2,279,594 – 1,938,466 – 1,938,466 1,603,955 1,449,544 9,117,409 -107,515 12,063,393 Accumulated other comprehensive income Valuation difference on available-for- sale securities Deferred gains or losses on ledges Foreign currency translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Total net assets -84,960 -6,948 -25,245 -117,154 10,007,772 -341,127 2,279,594 – 35,041 4,415 -10,242 29,214 29,214 35,041 -49,918 4,415 -2,533 -10,242 29,214 1,967,680 -35,488 -87,940 11,975,452 – – – – Balance at the beginning of current period Changes of items during the period Dividends from surplus Net income attributable to owners of parent Net changes of items other than shareholders’ equity Total changes of items during the period Balance at the end of current period Balance at the beginning of current period Changes of items during the period Dividends from surplus Net income attributable to owners of parent Net changes of items other than shareholders’ equity Total changes of items during the period Balance at the end of current period 13 (4) [Consolidated Statement of Cash Flows] Net cash provided by (used in) operating activities Income before income taxes and minority interests Depreciation and amortization Amortization of goodwill Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Increase (decrease) in liabilities relating to retirement benefits Loss (gain) on sale of investment securities Interest and dividends income Interest expenses Loss (gain) on retirement of fixed assets Loss (gain) on sales of fixed assets Gain on reversal of asset retirement obligations Gain on sales of affiliates Recoveries of written off receivables Impairment loss Decrease (increase) in notes and accounts receivable-trade Decrease (increase) in inventories Decrease (increase) in accounts receivable – other Decrease (increase) in accrued consumption taxes Decrease (increase) in notes and accounts payable-trade Decrease (increase) in accounts payable – other and accrued expenses Increase (decrease) in accrued consumption taxes Increase (decrease) in advances received Decrease (increase) in other current assets Decrease (increase) in other fixed assets Increase (decrease) in other current liabilities Increase (decrease) in other fixed liabilities Subtotal Interest and dividends income received Interest expenses paid Income taxes (paid) refund Net cash provided by (used in) operating activities Previous Fiscal Year (Apr. 1, 2020 – March 31, 2021) (Thousand yen) Current Fiscal Year (Apr. 1, 2021 – March 31, 2022) 889,976 729,258 30,385 4,068 -10,361 143,058 67,718 -89,805 58,203 3,648 -3,606 -11,100 -13,735 -5,866 2,020,772 -14,075 -56,221 -592,079 89,524 19,429 -9,876 43,210 -117,554 -39,341 158,109 28,122 3,033 3,324,895 17,338 -59,340 -813,724 2,469,167 3,495,156 708,752 30,385 -6,039 361,945 85,032 3,052 -77,203 69,138 389 -148,715 -34,896 – – 43,610 19,608 103,580 300,848 13,275 -53,713 -55,507 -16,943 -113,090 88,986 208,446 -5,068 5,553 5,026,584 288 -70,909 -1,071,534 3,884,429 14 Net cash provided by (used in) investing activities Purchase of property, plant and equipment Purchase of intangible assets Proceeds from sales of property, plant and equipment Proceeds from subsidy income Proceeds from sales of investment securities Payments for guarantee deposits Proceeds from collection of guarantee deposits Payments of long-term loans receivable Collection of long-term loans receivable Proceeds from sales of investments in affiliates resulting in change in scope of consolidation Other Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Proceeds from long-term loans payable Repayments of long-term loans payable Cash dividends paid 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 Previous Fiscal Year (Apr. 1, 2020 – March 31, 2021) (Thousand yen) Current Fiscal Year (Apr. 1, 2021 – March 31, 2022) -634,740 -9,360 5,120 443,436 222,153 -63,469 18,846 -110,000 264,716 73,538 -19,403 190,839 4,400,000 -1,906,063 -338,733 2,155,203 -775 4,814,435 6,206,487 11,020,922 -687,204 -4,512 461,310 449,115 17,481 -37,710 44,864 -35,000 277,591 – -72,936 413,000 6,030,880 -3,714,431 -338,133 1,978,315 – 6,275,745 11,020,922 17,296,668 15 (5) Notes on the consolidated financial statements (Notes on going concern assumption) None applicable (Changes in accounting policies) (Application of the accounting standard for revenue recognition, etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. effective from the beginning of the current fiscal year and it recognizes revenue when it satisfies a performance obligation by transferring promised goods or services (an asset) to a customer. An asset is transferred when the customer obtains control of that asset. It recognizes as revenue the amount expected to be received upon exchange of goods or services. There is no impact on the consolidated financial statements for the current and previous fiscal years. (Application of accounting standard for fair value measurement, etc.) The Company has applied the Accounting Standard for Fair Value Measurement, etc.” (ASBJ Statement No. 30, July 4, 2019) from the beginning of the current fiscal year, and it has applied the accounting policies stipulated in the “Accounting Standard for Fair Value Measurement, etc.” prospectively in accordance with the transitional treatment provided in Paragraph 19 of the “Accounting Standard for Fair Value Measurement” and paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 of July 4, 2019). The application of this standard has no effect on the consolidated financial statement. As our group operates within one single segment (nursery service), we have omitted the descriptions as such. (Segment Information) (Per-stock Information) Net assets per share Net income per share Net income attributable to owners of parent (thousand yen) Net income not attributable to common shareholders (thousand yen) Net income attributable to owners of parent related to common shares (thousand yen) Average number of common stock during period (shares) (Significant events after the reporting period) None applicable. (Note) 1. Diluted net income per share is omitted as there are no dilutive shares. 2. The basis for calculating net income per share is as follows: Previous Fiscal Year (Apr. 1, 2020 – March 31, 2021) Current Fiscal Year (Apr. 1, 2021 – March 31, 2022) 114.42 yen 6.15 yen 136.91 yen 26.06 yen Previous Fiscal Year (Apr. 1, 2020 – March 31, 2021) Current Fiscal Year (Apr. 1, 2021 – March 31, 2022) 537,544 – 537,544 87,468,693 2,279,594 – 2,279,594 87,468,693 16