Funai Soken Incorporated : Consolidated Financial Results for the First Half of the Fiscal Year Ending December 31, 2022

August 4, 2022

Consolidated Financial Results

for the First Half of the Fiscal Year Ending December 31, 2022

(January 1, 2022 - June 30, 2022)

Company name:	Funai Soken Holdings, Inc	Stock Exchange listing: Tokyo Stock Exchange
Stock code:	9757	URL: https://hd.funaisoken.co.jp
President & CEO:	Takayuki Nakatani
Contact:	Tatsuro Ono, Director and Executive Vice President,
	Head of Workforce Administration Divisional Headquarters
	Telephone: [phone]
Scheduled date of filing quarterly report:	August 10, 2022
Scheduled date of payment of dividend:	August 29, 2022
Supplementary materials compiled to explain 1st-half financial statements:	Yes
Briefing to be held to explain 1st-half financial results:	Yes (For institutional investors and analysts)

(Figures are rounded to the nearest million yen; fractions of one million discarded rather than rounded up or down)

1. 2022 1st Half Consolidated Financial Results (January 1, 2022 - June 30, 2022)

(1)	Consolidated Results of Operations										(Percentages represent year-on-year change)
																		Net income
			Net sales				Operating income		Ordinary income	attributable to owners
																		of the parent
Six months ended		Million yen		%	Million yen		%		Million yen	%	Million yen		%
Jun. 30, 2022		12,258		10.9		3,749		14.3			3,779	13.9		2,596		15.0
Jun. 30, 2021		11,055					3,279						3,317				2,257
Notes: Comprehensive income:	2,566 million yen (up 12.6%) in six months ended Jun. 30, 2022
		2,278 million yen (-%) in the six months ended Jun. 30, 2021
			Earnings per share	Earnings per share
			(basic)				(diluted)
Six months ended				Yen			Yen
Jun. 30, 2022				52.52				51.88
Jun. 30, 2021				45.71				45.20

Note: From the first quarter of the fiscal year ending December 2022, we apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020). In accordance with basic handling, we have applied the new accounting standard retroactively.

Furthermore, we do not indicate the year-on-year rate of change compared to the second quarter of the fiscal year ended December 31, 2021. This is due to the fact that we retroactively revised figures to reflect this change in accounting standards.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	million yen	million yen	%
As of Jun. 30, 2022	31,798	27,005	82.8
As of Dec. 31, 2021	30,928	25,710	80.7

Reference: Shareholders' equity: 26,331 million yen as of Jun. 30, 2022 24,962 million yen as of Dec. 31, 2021

Note: From the first quarter of the fiscal year ending December 2022, we apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020). In accordance with basic handling, we have applied the new accounting standard retroactively.

2. Dividends

				Dividend per share
	1Q-end	2Q-end	3Q-end	Year end	Total
	Yen	Yen	Yen	Yen	Yen
Year ended Dec. 31, 2021			21.00			27.00	48.00
Year ending Dec. 31, 2022			25.00
Forecast for year ending						28.00	53.00
Dec. 31, 2022
Note: Amendments to dividend numbers compared to most recently announced forecasts: None

3. Forecast for Consolidated Financial Results for FY2022 (January 1, 2022 - December 31, 2022)

								(Percentages represent year-on-year change)
								Net income		Earnings per
	Net sales		Operating income	Ordinary income	attributable to owners
		share
								of the parent
	Million yen		%	Million yen	%	Million yen	%	Million yen		%	Yen
Full year	25,300		10.9	7,100	11.7	7,150	10.9	4,800		9.6	97.05

Note: Amendments to performance numbers compared to most recently announced forecasts: None

From the first quarter of the fiscal year ending December 2022, we apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020). In accordance with basic handling, we have applied the new accounting standard retroactively.

Furthermore, the year-on-year rate of change is a comparison with figures adjusted to reflect the new accounting standard.

Remarks

(1) Changes in consolidated subsidiaries during the period:	None
(Changes in scope of consolidation:)
No. of new companies added:	None
Names of new companies added:	None
No. of companies removed:	None
Names of companies removed:	None

1. Application of specific accounting procedures when compiling quarterly consolidated financial statements: None
2. Changes in accounting policies; changes in estimates; re-statement of amendments

1)	Changes in accounting policies caused by revision of accounting standards:	Yes
2)	Other changes in accounting policies:	None
3)	Changes in accounting estimates:	None
4)	Re-statement of amendments:	None

1. Number of issued shares (common stock)
2. 1. Number of shares issued at end of six- month period (including treasury stock)
   2. Number of treasury shares at end of six- month period
   3. Average number of shares during six- month period (cumulative total)

Jun. 30, 2022	52,500,000	Dec. 31, 2021	52,500,000
Jun. 30, 2022	3,016,156	Dec. 31, 2021	3,120,936
Jun. 30, 2022	49,432,797	Jun. 30, 2021	49,388,207

Note: This financial summary is excluded from quarterly review by a CPA or auditing company.

Statement Regarding the Use of Forward-Looking Statements

Forecasts in these materials regarding future performance are based on reasonable judgments made in accordance with information currently available. Actual results may differ greatly from these forecasts for a number of factors. Please refer to "(1) Results of Operations" on page 2 of the appendix for further information concerning the conditions on which these forecasts are based and further cautions with respect to the use of forward-looking statements.

Appendix Contents
1. Qualitative Information Regarding the Six Months Ended June 30, 2022	.................................................................... 2
(1)	Results of Operations............................................................................................................................................	2
(2)	Financial Position .................................................................................................................................................	5
(3)	Consolidated Forecast and Other Forward-Looking Information.........................................................................	6
2. Quarterly Consolidated Financial Statements and Main Notes.....................................................................................	7
(1)	Consolidated Balance Sheet .................................................................................................................................	7
(2)	Consolidated Statements of Income and Comprehensive Income ........................................................................	9
(3)	Consolidated Cash Flow Statement ....................................................................................................................	11
(4)	Notes to Quarterly Consolidated Financial Statements ......................................................................................	12
	(Notes on Going Concern Assumptions) ............................................................................................................	12
	(Notes on Significant Changes to Shareholders' Equity) ...................................................................................	12
	(Changes in Accounting Policies).......................................................................................................................	12
	(Segment Information)........................................................................................................................................	13
3. Other Information .......................................................................................................................................................	15
(1)	Orders and Sales .................................................................................................................................................	15

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1. Qualitative Information Regarding the Six Months Ended June 30, 2022

1. Results of Operations

As of the beginning of the first quarter of the current consolidated fiscal year, we apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020). For the Accounting Standard for Revenue Recognition, we apply this new accounting policy retroactively to all past fiscal years in accordance with the basic handling stipulated in Paragraph 84 of the Accounting Standard for Revenue Recognition. As such, our analysis and year-on-year comparisons of consolidated cumulative quarterly and full-year periods are based on figures for which this accounting standard have been applied retroactively.

For details on the impact on financial position and results of operations, refer to "2. Quarterly Consolidated Financial Statements and Main Notes (4) Notes to Quarterly Consolidated Financial Statements (Changes in Accounting Policy)" and "2. Quarterly Consolidated Financial Statements and Main Notes (4) Notes to Quarterly Consolidated Financial Statements (Segment information)".

During the six months under review (January 1, 2022 to June 30, 2022), the Japanese economy saw a gradual resumption of economic activities with the easing of measures against COVID-19. However, SMEs continue to face difficult conditions despite some signs of improvement in certain areas. Looking to the future, we continue to face a lack of transparency due to the prolonged Russian invasion of Ukraine and interest rate hikes in the US have caused rapid yen depreciation that has driven up the cost of living.

In this situation, our Group has worked to flexibly respond to customer needs, mainly by providing online seminars while also conducting in-person business management study groups in certain cases. The government resuming acceptance of applications for the SME Digitalization Support Project (Phase II) also contributed to improved performance.

As a result, the Group posted 12,258 million yen in net sales (up 10.9% year on year), 3,749 million yen in operating income (up 14.3% year on year), 3,779 million yen in ordinary income (up 13.9% year on year), 2,596 million yen in net income attributable to owners of the parent (up 15.0% year on year) for the period under review, achieving record results.

1. Net sales: 12,258 million yen (up 10.9% over the same period of the previous fiscal year)

Net sales increased in the monthly consulting support service and project consulting of the business consulting business segment. Net sales also continued to increase for online ad listing sales. The logistics business also steadily increased sales of logistics BPO services.

Consequently, net sales rose 10.9% year on year to 12,258 million yen.

1. Operating income: 3,749 million yen (up 14.3% over the same period of the previous fiscal year)
   Looking at operating income, cost of sales was 7,035 million yen (compared to 6,338 million yen in the same period of the previous fiscal year). Travel expenses for consulting activities increased as we gradually resumed activities, and personnel expenses of consulting increased. SG&A expenses were 1,473 million yen (1,436 million yen in the same period of the previous fiscal year).

Consequently, operating income rose 14.3% year on year to 3,749 million yen.

1. Ordinary income: 3,779 million yen (up 13.9% over the same period of the previous fiscal year)
   Ordinary income resulted in non-operating income of 36 million yen (compared to 44 million yen in the same period of the previous fiscal year) and non-operating expenses of 5 million yen (compared to 7 million yen in the same period of the previous fiscal year).

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