Jp : Summary of Business Results for the Fiscal Year Ended March 31, 2022 (Consolidated)

(% change from the previous corresponding period)

Summary of Business Results for the Fiscal Year Ended March 31, 2022

[Japan GAAP] (Consolidated)

		May 12, 2022
Company	JP-HOLDINGS, INC.	Listed on the TSE Prime
Stock Code	2749	URL: https://www.jp-holdings. co.jp
Representative	Tohru Sakai, President and Representative Director
Contact	Ryoji Tsutsumi, Director	T E L: [phone]

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)
	（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

	Net sales			Operating income			Ordinary income		Net income attributable to
							owners of parent
	Million yen	%	Million yen	%	Million yen	%		Million yen	%
Year ended Mar. 2022	34,373	2.6	3,344		17.1		3,358	13.9			2,279	324.1
Year ended Mar. 2021	33,500	4.1	2,857		43.6		2,947	47.1			537	-52.1
(Note) Comprehensive income:
Year ended March 2022: 2,308 million yen (224.0%)
Year ended March 2021: 712 million yen (-31.3%)
	Net income		Diluted net income		Return on		Ratio of ordinary	Ratio of operating
					income to total
	per share			per share		equity			income to net sales
						assets
	Yen			Yen				%			%		%
Year ended Mar. 2022	26.06			-			20.7			10.5		9.7
Year ended Mar. 2021	6.15			-				5.5			10.6		8.5

(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

(2) Consolidated financial position

		Total assets	Net assets	Shareholders' equity	Net assets per
		ratio	share
		Million yen	Million yen	%	Yen
As of Mar. 31, 2022		34,274	11,975	34.9	136.91
As of Mar. 31, 2021		29,740	10,007	33.7	114.42
(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	Cash flows from	Cash flows from	Cash and cash equivalents
	operating activities	investing activities	financing activities	at the end of period
	Million yen	Million yen	Million yen	Million yen
Year ended Mar. 2022	3,884	413	1,978	17,296
Year ended Mar. 2021	2,469	190	2,155	11,020

2. Dividends

		Annual dividend				Total	Dividend		Rate of total
								dividend	payout ratio		dividend to
	End of	End of	End of		Year-end	Total
			(Total)	(Consolidated)		net assets
	1Q	2Q	3Q
								(Consolidated)
	Yen	Yen	Yen		Yen	Yen		Million yen	%	%
Year ended Mar. 2021	-	0.00	-		3.90	3.90	341	63.4	3.5
Year ended Mar. 2022	-	0.00	-		4.50	4.50	393	17.3	3.6
Year ending Mar. 2023	-	0.00	-		6.00	6.00			22.6
(forecast)

Breakdown of year-end dividend for the fiscal year ending March 2023

Ordinary dividend: 5.00 yen, Commemorative dividend: 1.00 yen

(% change from the previous corresponding period)

3．Forecast of consolidated business results for the fiscal year ending March 2023 (April 1, 2022 through March 31, 2023)

	Net sales		Operating income	Ordinary income	Net income attributable	Net income
		to owners of parent	per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Year ending Mar. 2023	35,640	3.7	3,560	6.4	3,580	6.6	2,325	2.0	26.58

*Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries accompanying changes in the scope of consolidation): None
2. Changes in accounting policies, accounting estimates and restatement

① Changes in accounting policies associated with revision of accounting standards:	: Yes
②Changes in accounting policies other than ①	: None
③Changes in accounting estimates	: None
: None
④Restatement

1. Shares outstanding (common stock)

• Number of shares outstanding at the end of period (treasury stock included)

As of March 31, 2022	87,849,400 shares
As of March 31, 2021	87,849,400 shares

• Treasury stock at the end of period:

As of March 31, 2022	380,707 shares
As of March 31, 2021	380,707 shares

• Average number of stock during period

Year ended March 31, 2022	87,468,693 shares
Year ended March 31, 2021	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)
	Net sales			Operating income		Ordinary income	Net income
	Million yen	%		Million yen	%		Million yen	%	Million yen	%
Year ended Mar. 2022	3,066	19.3	1,396	57.4		1,523	46.9	1,338	887.5
Year ended Mar. 2021	2,570	8.9	886	42.9		1,037	14.6	135	-81.6
	Net income			Diluted net income per
	per share			share
		Yen			Yen
Year ended Mar. 2022		15.30			-
Year ended Mar. 2021		1.55			-
(2) Non-consolidated financial position
	Total assets			Net assets			Shareholders' equity	Net assets per
					ratio		share
	Million yen		Million yen			%		Yen
As of Mar. 31, 2022		23,124			6,166			26.7		70.50
As of Mar. 31, 2021		19,496			5,129			26.3		58.65

(Reference) Shareholders' equity:

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.

• Table of Contents of the Appendix
• 1. Summary of Operating Results…………………………………………………………………..…. 2
  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
  3. Basic Policies regarding the Selection of Accounting Standards ……………………….……………. 7
  4. Consolidated Financial Statements and Major Notes………………………………………………… 8
  5. 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

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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).

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(Nursery school)
Asc Kami-Shakujii Nursery School	(Apr. 1, 2021)
Asc Kanamachi Nursery School	(Apr. 1, 2021)
Asc Higashikasai Nursery School No. 2	(Apr. 1, 2021)
(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	(Apr. 1, 2021)
Niji-iro Kids Club	(Apr. 1, 2021)
Bancho Elementary School After School No. 1	(Apr. 1, 2021)
Bancho Elementary School After School No. 2	(Apr. 1, 2021)
Bancho Elementary School After School Kids'Club (Play school)	(Apr. 1, 2021)
Jindaiji Children's House	(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.

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