BeNext Yumeshin : Summary of Business Results for the Fiscal Year Ended June 2022 (Consolidated)

Summary of Business Results for the Fiscal Year Ended June 2022

[Japan GAAP] (Consolidated)

		August 5, 2022
Company	BeNext-Yumeshin Group Co.	Listed on the TSE
Stock Code	2154 URL https://www.yumeshin-benext.co.jp/
Representative	Yutaka Nishida, Chairperson and Representative Director
Contact	Hiroshi Sato, Director	T E L: [phone]

Expected date of annual shareholders' meeting: September 27, 2022	Expected starting date of dividend payment: September 9, 2022
Expected date of filing of annual securities report: September 28, 2022
Preparation of supplementary financial document: Yes
Results briefing: Yes (for institutional investors and analysts)
												（Rounded down to million yen）
1. Consolidated business results for the fiscal year ended June 2022
(July 1, 2021 through June 30, 2022)
(1) Consolidated results of operations		(% change from the previous corresponding period)
			Net sales		Operating income		Ordinary income	Net income attributable to
					owners of parent
			Million yen	%	Million yen	%	Million yen	%		Million yen	%
Year ended Jun. 2022		156,620		64.7	5,317	58.4		6,680	35.3		3,837	46.9
Year ended Jun. 2021		95,110		16.3	3,356	-28.1		4,935	3.4		2,611	95.5
(Note) Comprehensive income
Year ended June 2022: 3,878 million yen (29.6%)
Year ended June 2021: 2,992 million yen (153.0%)
		Net income		Diluted net income		Return on		Ratio of ordinary		Ratio of operating
					income to total		income to net
			per share		per share		equity
						assets			sales
			Yen			Yen		%			%		%
Year ended Jun. 2022		43.08			42.93		4.1			5.4		3.4
Year ended Jun. 2021		47.65			47.49		4.7			6.1		3.5

(Reference) Investment earnings/loss on equity-method: Year ended June 2022: 60 million yen

Year ended June 2021: 66 million yen

(Note) The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and others from the beginning of the current fiscal year, and each figure for the fiscal year ended June 2022 is after applying the said accounting standard and others.

(2) Consolidated financial position

		Total assets	Net assets	Shareholders' equity	Net assets per
		ratio	share
		Million yen	Million yen	%	Yen
As of Jun. 2022		116,833	91,821	78.4	1,035.83
As of Jun. 2021		129,374	96,169	74.2	1,057.43
(Reference) Shareholders' equity

As of June 2022: 91,548 million yen

As of June 2021: 95,938 million yen

(Note) The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and others from the beginning of the current fiscal year, and each figure for the fiscal year ended June 2022 is after applying the said accounting standard and others.

(3) Consolidated results of cash flows

	Cash flows from	Cash flows from investing	Cash flows from	Cash and cash equivalents
	operating activities	activities	financing activities	at the end of period
	Million yen	Million yen	Million yen	Million yen
Year ended Jun. 2022	12,127	-2,168	-18,590	12,404
Year ended Jun. 2021	3,510	-1,350	-5,155	21,044

2. Dividends

		Annual dividend				Total	Dividend		Rate of total
						dividend to
	End of	End of	End of					dividend	payout ratio
		Year-end	Total			net assets
			(Total)	(Consolidated)
	1Q	2Q	3Q				(Consolidated)
	Yen	Yen	Yen		Yen	Yen		Million yen	%	%
Year ended Jun. 2021	-	17.00	-		27.00	44.00	3,186	92.3	6.3
Year ended Jun. 2022	-	17.00	-		28.00	45.00	3,988	104.5	4.3
Year ending Jun. 2023	-	17.00	-		30.00	47.00			52.6
(forecast)

(Note) The breakdown of the year-end dividend for the fiscal year ended June 2021 is ordinary dividend of 25.00 yen and commemorative dividend of 2.00 yen (absorption-type merger commemorative dividend).

(% change from the previous corresponding period)

3．Forecast of consolidated business results for the fiscal year ending June 2023 (July 1, 2022 through June 30, 2023)

	Revenue		Business profit		Operating profit	Profit before taxes	Profit attributable to	Basic profit
			owners of parent		per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Year ending	164,000	-	11,300	-	11,600	-	11,600	-	7,900	-	89.39
Jun. 2023

(Note) 1. Since the Company manages its operations on an annual basis, the Company has omitted a forecast of consolidated business results for the second quarter (cumulative). For details, please refer to "1. Overview of Results of Operations, etc. (4) Future Outlook" on page 4 of the attached material.

1. The Company voluntarily adopted the International Financial Reporting Standards (IFRS) from the consolidated financial statements for the year ended June 2022. For this reason, the consolidated business forecasts for the fiscal year ending June 2023 are based on IFRS, and the rate of change from the previous fiscal year is not presented.
2. Business profit is calculated by subtracting "Selling, general and administrative expenses" from "Gross profit." This is our original profit indicator, excluding the effects of special items posted in "Other income" and "Other expenses," such as employment adjustment subsidies and impairment loss.

*Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries accompanying changes in the scope of consolidation): None

1. Changes in rules, procedures and indication methods of accounting procedures
   ① Changes in accounting policies associated with revision of accounting standards ②Changes in accounting policies other than ①
   ③Changes in accounting estimates
   ④Restatement
2. Shares outstanding (common stock)

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

As of June 2022	91,280,119 shares
As of June 2021	91,000,534 shares

• Treasury stock at the end of period

As of June 2022	2,898,753 shares
As of June 2021	272,768 shares

• Average number of stock during period (cumulative period)

Year ended June 2022	89,079,222 shares
Year ended June 2021	54,809,570 shares

• Yes
• None
• None
• None

*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. The Company does not make promises about the achievements. Actual results may differ significantly from the forecasts due to various factors.

(Method for obtaining financial results briefing materials)

On Fryday, August 5, 2022, the Company plans to hold results briefing for institutional investors and analysts. Financial results briefing materials will be disclosed on our website promptly after this event.

Table of Contents

1. Overview of Results of Operations, etc.…………………………………………………………………………………	2
(1) Overview of Results of Operations for the Fiscal Year under Review………………………………………………	2
(2) Overview of Financial Position for the Fiscal Year under Review …………………………………………………	3
(3) Overview of Cash Flows for the Fiscal Year under Review …………………………………………………………	3
(4) Future Outlook ………………………………………………………………………………………………………	4
2. Basic Policy for Selecting Accounting Standards ………………………………………………………………………	4
3. Consolidated Financial Statements and Notes on Important Matters ……………………………………………………	5
(1) Consolidated Balance Sheets …………………………………………………………………………………………	5
(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ……………………	7
Consolidated Statements of Income ………………………………………………………………………………	7
Consolidated Statements of Comprehensive Income ……………………………………………………………	8
(3) Consolidated Statements of Changes in Equity ………………………………………………………………………	9
(4) Consolidated Statements of Cash Flows ………………………………………………………………………………	11
(5) Notes on the Consolidated Financial Statements ……………………………………………………………………	12
(Notes on the Premise of a Going Concern) …………………………………………………………………………	12
(Changes in Significant Subsidiaries during the Period under Review) ……………………………………………	12
(Changes to Items Related to the Fiscal Year, etc. of a Consolidated Subsidiary)…………...……………………	12
(Changes in Accounting Policies) …………………………………………………………………………………	12
(Changes in the Method of Presentation) ……………………………………………………………………………	13
(Additional Information) ……………………………………………………………………………………………	13
(Matters Related to Business Combinations, Etc.) …………………………………………………………………	15
(Segment and Other Information) …………………………………………………………………………………	17
(Matters concerning Revenue Recognition) …………………………………………………………………………	21
(Per Share Information) ……………………………………………………………………………………………	21
(Significant Subsequent Events) ……………………………………………………………………………………	23

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1. Overview of Results of Operations, etc.

(1) Overview of Results of Operations for the Fiscal Year under Review

We have been applying the "Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020)," etc. since the beginning of the fiscal year ended June 2022, and the details of effects on our financial standing and business performance are written in "3. Consolidated Financial Statements and Major Notes, (5) Notes on Consolidated Financial Statements (Changes in Accounting Policies)."

Results of operations for the fiscal year under review

Net sales for the consolidated fiscal year under review increased 64.7% year on year, to 156,620 million yen. This increase in net sales is largely attributable to the full-year contribution of earnings of former Yumeshin Holdings Co., Ltd. to the Machinery, Electronics and IT Software Segment and the Construction Segment as a result of management integration on April 1, 2021, growth of earnings in the Manufacturing Segment due to economic recovery, and the recording of earnings for 15 months in the Overseas Segment associated with the change in fiscal year end. On the profit front, although profit growth due to factors such as increased net sales and general improvement in utilization rates in every segment was seen, Amortization of goodwill and intangible assets through PPAs due to management integration was recorded mainly in the Construction Segment. In addition, subsidy income including employment adjustment subsidies of approximately 1.1 billion yen was reported under non-operating income. As a result, operating profit was 5,317 million yen (up 58.4% year on year), ordinary profit was 6,680 million yen (up 35.3% year on year), and net income attributable to owners of parent was 3,837 million yen (up 46.9% year on year).

A summary of the results of each segment is as follows. The net sales of each segment are sales to external customers. Since the Company is a holding company responsible for Group corporate management, the Company's results have been included in corporate expenses since the previous fiscal year.

[Machinery, Electronics and IT Software Segment]

(Temporary staffing, contracting and consigning business for the development, design, operation and maintenance sectors of the IT software, machinery and electronics domain)

During the fiscal year under review, the business performance of several companies, including Yume Technology Co., Ltd., which was included in this segment through the business merger on April 1, 2021, contributed to the full-year results. In terms of profits, although the profit margin was slightly lower because the Company sought to further increase the number of assigned employees and made aggressive investments in the recruitment and training of unskilled individuals and in the sales activities, the utilization rate showed improvement from the start of the period and steady progress was also made in maintaining and improving the hourly rate against the backdrop of rising demand for engineers.

As a result, net sales and segment profit increased 44.0% and 19.4% year on year, to 70,646 million yen and 6,029 million yen, respectively, in the fiscal year under review.

[Construction Segment]

(Temporary staffing business supplying construction managers and CAD operators to the construction industry)

During the fiscal year under review, the business results of Yumeshin Co., Ltd., which was included in this segment through the business merger on April 1, 2021, were posted in full-year results, the number of employees in service increased from the end of the previous fiscal year, and utilization rate was relatively high, so profit grew. However, amortization of goodwill and intangible assets through PPAs due to the business integration was allocated to each area in proportion to the expected future earnings of each area, with the Construction Segment recording approximately 3.8 billion yen in amortization of these assets.

As a result, net sales of this segment for the fiscal year under review came to 36,921 million yen (up 323.4% year on year) and segment profit was 1,272 million yen (517 million yen of loss in the same period of the previous fiscal year).

[Manufacturing Segment]

(Temporary staffing business, contracting and consigning for the manufacturing processes, etc. of clients)

During the fiscal year under review, differences among domains and customers were observed, with demand for human resources weakening in some sectors due to component and semiconductor supply constraints while a relaxation of COVID-19 restrictions prompted a boost in consumer spending and a rebound in production for materials and other goods. However, the Company made progress winning orders by paying attention to detail in its sales activities and continued to maintain profit margins in the contracting business by controlling the cost ratio.

As a result, net sales increased 11.8% year on year, to 9,682 million yen, and segment profit decreased 0.6% year on year, to 547 million yen in the fiscal year under review.

[Overseas Segment]

(Temporary staffing and contracting for engineering and manufacturing sectors and human resource services, such as paid job introduction, outside of Japan)

During the fiscal year under review, demand for temporary staffing and paid job introduction in the UK remained on a recovery path as the effects of the COVID-19 pandemic began to dissipate. However, workers from outside of the UK

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decreased because of Brexit and the resulting increase in recruitment costs combined with other factors such as the end of government subsidies provided since last year put the squeeze on profits.

In addition, the UK operating company changed its fiscal -year end from the end of March to the end of June to align it with the Group's fiscal year end. Accordingly, the earnings for the fifteen-month period from April 2021 to June 2022 were recognized for the fiscal year under review.

As a result, net sales and segment profit increased 34.8% and 304.7% year on year, to 38,154 million yen and 116 million yen, respectively, in the fiscal year under review.

[Others]

As domains not included in the reportable segments, SAMURAI, Inc., which joined the Group as a result of the management integration, provides an online programming learning service, whilst BeNEXT With Inc., a special subsidiary of the Group, employs persons with disabilities to provide various types of services within the Group.

During the fiscal year under review, the online programming learning service performed solidly but COVID-19 put certain constraints on the various types of services provided within the Group. As a result, in the fiscal year under review, net sales, including internal transactions increased 188.2% year on year, to 1,523 million yen and segment loss came to 442 million yen (compared with a segment loss of 310 million yen in the same period of the previous fiscal year).

1. Overview of Financial Position for the Fiscal Year under Review Assets / Liabilities / Net assets
   (Assets)
   Assets totaled 116,833 million yen at the end of the fiscal year under review after a decrease of 12,540 million yen (9.7%)
   from the end of the previous consolidated fiscal year. This change was largely attributable to a decrease of 8,691 million yen in cash and deposits, a decrease of 3,260 million yen in goodwill, a decrease of 1,648 million yen in other under current assets, and an increase of 828 million yen in other under investments and other assets.

(Liabilities)

Liabilities at the end of the fiscal year under review totaled 25,012 million yen, a decrease of 8,192 million yen (24.7%) from the end of the previous fiscal year. This change was largely attributable to a decrease of 5,495 million yen in long-term borrowings, a decrease of 2,724 million yen in the current portion of long-term borrowings, a decrease of 1,197 million yen in short-term borrowings, and an increase of 767 million yen in accrued expenses.

(Net assets)

Net assets at the end of the fiscal year under review totaled 91,821 million yen, a decrease of 4,348 million yen (4.5%) from the end of the previous fiscal year. This change was largely attributable to an increase of 124 million yen in capital due to the issuance of shares and an increase of 124 million yen in capital surplus, a decrease of 242 million yen in capital surplus associated with the acquisition of additional shares in a subsidiary, and a decrease of 407 million yen in retained earnings reflecting profit attributable to owners of parent of 3,837 million yen, dividends of surplus of 3,962 million yen and a decrease of 282 million yen due to the recognition of NCI put options liabilities, and acquisition of treasury stock of 3,976 million yen.

1. Overview of Cash Flows for the Fiscal Year under Review
   Status of cash flow
   At the end of the fiscal year under review, cash and cash equivalents ("Cash") decreased 8,640 million yen from the end of the previous fiscal year, to 12,404 million yen. The status of cash flows at the end of the fiscal year under review and the primary factors responsible for those results are as follows:

(Cash flows from operating activities)

Net cash provided by operating activities was 12,127 million yen (proceeds of 3,510 million yen in the previous year). This was primarily because an inflow of 6,784 million yen due to the recording of profit before income taxes and non-cash adjustments such as amortization of goodwill of 4,410 million yen and depreciation of 1,710 million yen exceeded income taxes paid of 1,860 million yen.

(Cash flows from investing activities)

Net cash used in investing activities was 2,168 million yen (expenditure of 1,350 million yen in the previous year). The expenditure is primarily attributable to an outlay of 646 million yen mainly associated with making Nihon Axis Co.,Ltd. into a subsidiary, expenditure of 483 million yen due to sale of shares of subsidiary due to change in scope of consolidation, purchase of property, plant and equipment of 449 million yen, and expenditure of 365 million yen due to the contingent consideration payment of shares of subsidiaries.

(Cash flows from financing activities)

Net cash used in financing activities was 18,590 million yen (expenditure of 5,155 million yen in the previous year). The expenditure is primarily attributable to repayments of long-term borrowings of 8,485 million yen, purchase of treasury shares

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