Pasona : Consolidated Financial Report FY2021 (June 1, 2021 to May 31, 2022)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

July 15, 2022

CONSOLIDATED FINANCIAL REPORT (Japanese GAAP)

FY2021 (June 1, 2021 to May 31, 2022)

Listed company name:	Pasona Group Inc.
Listing stock exchange:	The Prime Section of the Tokyo Stock Exchange
Securities code number:	2168
URL:	https://www.pasonagroup.co.jp
Representative:	Yasuyuki Nambu, Group CEO and President

For further information contact: Yuko Nakase, Senior Managing Executive Officer and CFO Tel. [phone]

Date of Annual General Meeting of Shareholders: August 19, 2022

Scheduled payment date of cash dividends: August 5, 2022

Scheduled filing date of the securities report: August 22, 2022

Supplemental materials prepared for financial results: Yes

Holding of financial results meeting: Yes (for analysts and institutional investors)

(All amounts are in millions of yen rounded down unless otherwise stated.)

1. CONSOLIDATED BUSINESS RESULTS

1. Consolidated Financial Results

Percentage figures are the increase / (decrease) for the corresponding period of the previous fiscal year.

			Operating		Ordinary	Profit
	Net Sales			attributable to
		Income		Income
					owners of parent
		%		%		%		%
FY2021	366,096	9.4	22,083	10.7	22,496	10.4	8,621	27.1
FY2020	334,540	2.9	19,940	88.5	20,379	99.1	6,784	-

(Note) Comprehensive income	FY2021: ¥14,433 million (40.8%)	FY2020: ¥10,251 million (204.3%)
		Net Income			Diluted				Ordinary Income	Operating Income
			Net Income		Return on Equity
			per Share			to Total Assets		to Net Sales
					per Share
			Yen			Yen			%	%	%
FY2021			220.19		219.63			19.6	12.7		6.0
FY2020			173.36			-			19.4	14.0		6.0
(Reference) Equity in earnings of unconsolidated subsidiaries and affiliates
FY2021: ¥142 million FY2020: ¥(110) million
(2) Consolidated Financial Position
			Total Assets		Net Assets	Equity Ratio (%)		Net Assets per Share
						(Yen)
May 31, 2022		203,746			67,146		24.5			1,276.00
May 31, 2021		151,641			49,779		25.2			974.85

(Reference) Equity As of May 31, 2022: ¥49,986 million As of May 31, 2021: ¥38,155 million

(Note) Total assets for the fiscal years ended May 31, 2021 and May 31, 2022 include temporary "deposits received" from customers for contracted projects and the corresponding "cash and deposits" in assets and liabilities. For details, please refer to "1. Summary of Business Results, etc. (2) Summary of Financial Position for the Fiscal Year under Review."

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(3) Consolidated Cash Flows

					Cash Flows from			Cash Flows from			Cash Flows from		Cash and Cash
										Equivalents,
					Operating Activities		Investing Activities		Financing Activities
								End of Period
	FY2021					10,115			(29,624)				23,543				56,578
	FY2020					18,868			(9,665)				(5,147)				52,298
2. DIVIDENDS
						Dividends per Share (Yen)				Total				Dividend		Ratio of
		End of		End of			End of							Dividend				Dividends to
						Fiscal						Payout Ratio
		First		Second			Third		Annual		Payment				Net Assets
						Year-End				(Consolidated)
		Quarter		Quarter			Quarter					(Annual)				(Consolidated)
	FY2020		-		0.00		-		30.00		30.00	1,196			17.3%		3.4%
	FY2021		-		0.00		-		35.00		35.00	1,396			15.9%		3.1%
	FY2022(Forecast)		-		0.00		-		35.00		35.00							15.8%
	(Note) Breakdown of year-end dividend for the fiscal year ending May 31, 2022
	Ordinary dividend ¥30.00	Special dividend ¥5.00
3. FORECAST OF RESULTS FOR THE FISCAL YEAR ENDING MAY 31, 2023
					Percentage figures are the increase / (decrease) for the corresponding period of the previous fiscal year.
																		Profit attributable to			Net
					Net Sales			Operating Income		Ordinary Income			Income per
									owners of parent
																					Share
							%					%				%					%			Yen
	FY2022 First Half	189,000	3.6	7,800	(35.0)		8,000	(34.2)			3,000	(37.5)		76.58
	FY2022 Full Fiscal Year	385,000	5.2	22,300	1.0		22,500	0.0			8,700	0.9		222.08

4. NOTES

1. Changes in significant subsidiaries during the fiscal year under review: None
   (Changes in specified subsidiaries that caused changes in the scope of consolidation)
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies in line with revisions to accounting and other standards: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
4. Number of shares issued and outstanding (common shares)
5. 1. Number of shares issued and outstanding as of the period-end (including treasury shares)

May 31, 2022:	41,690,300 shares	May 31, 2021: 41,690,300 shares
2) Number of treasury shares as of the period-end
May 31, 2022:	2,516,094 shares	May 31, 2021: 2,550,899 shares
3) Average number of shares for the period
FY2021: 39,154,774 shares	FY2020: 39,132,377 shares

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eference) NON-CONSOLIDATED BUSINESS RESULTS

1. FY2021 (June 1, 2021 to May 31, 2022)

(1) Non-consolidated Financial Results

								Percentage figures represent year-on-year increase / (decrease).
		Net Sales		Operating Income (Loss)	Ordinary Income (Loss)	Net Income
			%					%				%		%
	FY2021	10,060	(30.5)		(3,655)	-	(4,231)	-	1,338	3.3
	FY2020	14,477	52.4		3,312	-	2,846	-	1,295	(17.5)
		Net Income per Share			Diluted Net Income per Share
			34.18			Yen				Yen
	FY2021								-
	FY2020		33.10							-
(2) Non-Consolidated Financial Position
		Total Assets			Net Assets		Equity Ratio (%)		Net Assets per Share (Yen)
	May 31, 2022		89,955				18,758		20.9			478.85
	May 31, 2021		80,170				18,578		23.2			474.67
(Reference) Equity as of May 31, 2022: ¥18,758 million	As of May 31, 2021: ¥18,578 million

(Note)

The Company has introduced "Board Benefit Trust (BBT)" and "Employment Stock Ownership Plan (J-ESOP)." The Company's shares in BBT and J-ESOP, which are reported as treasury shares under Shareholders' equity, are counted as the number of treasury shares as of the average number of shares outstanding for the period for the purpose not including computing earnings and net assets per share.

This Financial Report is not subject to a review conducted by CPA or audit firm.

Cautionary statement and other explanatory notes

The aforementioned forecasts are based on assumptions and beliefs in light of information available to management at the time of document preparation and accordingly include certain unconfirmed factors. As a result, readers are advised that actual results might differ materially from forecasts for a variety of reasons. Please refer to (Attachment) "1. Summary of Business Results, etc., (4) Future Outlook" on page 11 for the assumptions used in the forecast of business results.

We are planning to hold a financial results online meeting for analysts and institutional investors on July 21, 2022. Supplemental materials for the financial results will be posted on the Company's website (https://www.pasonagroup.co.jp/ir/) immediately after the meeting.

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FY2021 Consolidated Financial Report

INDEX

1. Summary of Business Results, etc.	・・・・・	p.5
(1)	Summary of Business Results for the Fiscal Year under Review	・・・・・	P 5
(2)	Summary of Financial Position for the Fiscal Year under Review	・・・・・	P.10
(3)	Summary of Cash Flows for the Fiscal Year under Review	・・・・・	P.10
(4)	Future Outlook	・・・・・	P.11
(5)	Policy on the Appropriation of Profits and Dividends for FY2021 and	・・・・・	P.12
	FY2022
2. Basic Consideration on Selecting our Accounting Standard	・・・・・	p.12
3. Consolidated Financial Statements and Primary Notes	・・・・・	P.13
(1)	Consolidated Balance Sheets	・・・・・	p.13
(2)	Consolidated Statements of Income & Comprehensive Income	・・・・・	p.16
(3)	Consolidated Statements of Changes in Shareholders' Equity	・・・・・	p.18
(4)	Consolidated Statements of Cash Flows	・・・・・	p.20
(5)	Note to Consolidated Financial Statements	・・・・・	p.22
	(Notes to Going Concern Assumption)	・・・・・	p.22
	(Important Items Considered Fundamental	・・・・・	p.22
	to the Preparation of Consolidated Financial Statements)
	(Changes in Accounting Policies)	・・・・・	P.23
	(Changes in Presentation Method)	・・・・・	P24
	(Additional Information)	・・・・・	P24
	(Business Combinations, etc.)	・・・・・	p.24
	(Segment Information, etc.)	・・・・・	p.27
	(Per Share Information)	・・・・・	p.32
	(Important Subsequent Event)	・・・・・	p.33

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1. Summary of Business Results, etc.

1. Summary of Business Results for the Fiscal Year under Review i) Business results for the fiscal year ended March 31, 2022
   During the fiscal year under review, the Japanese economy continued to face an uncertain outlook due to the recurring re-expansion of COVID-19 infections. However, there was a trend toward returning to full socio- economic activities, and a sign of recovery has been seen in economic conditions.
   In this environment, the Group continued to capture demand for BPO (Business Process Outsourcing) services from the corporate and public sectors, while Expert Services (Temporary Staffing) and Career Solutions (Placement / Recruiting) also expanded business steadily against the backdrop of recovering demand for human resources.
   As a result, all business segments reported year-on-year revenue growth in the fiscal year under review, with consolidated net sales of ¥366,096 million (up 9.4% year-on-year).
   Although the gross profit margin declined slightly from the previous fiscal year, gross profit amounted to ¥89,671 million (up 8.1% year-on-year) due, in part, to the contribution of higher revenue from BPO services. SG&A expenses rose due to an increase in personnel expenses in line with business expansion, but efforts to curb costs by improving operational efficiency resulted in operating income of ¥22,083 million (up 10.7% year-on-year).
   Ordinary income amounted to ¥22,496 million (up 10.4% year-on-year), and profit attributable to owners of parent amounted to ¥8,621 million (up 27.1% year-on-year).

Consolidated Business Results			(Millions of yen)
			FY2020	FY2021	YoY
	Net sales		334,540	366,096	9.4%
	Operating income		19,940	22,083	10.7%
	Ordinary income		20,379	22,496	10.4%
	Profit attributable to		6,784	8,621	27.1%
	owners of parent

ⅱ) Business Segment Information (before elimination of intersegment transactions)

HR Solutions

Expert Services (Temporary staffing), BPO Services (Contracting and outsourcing), etc.

	Net sales ¥308,093 million Operating income ¥18,793 million
[Expert Services]	Net sales: ¥152,067 million

In this business, the Group provides a wide range of human resource services, including office work support, clerical work, the provision of highly specialized skilled personnel, engineers, sales, and marketing personnel, and Expert Services (Temporary Staffing) for a wide range of age groups and job types, from new graduates to senior citizens.

Although sales in relation to certain industries, such as airlines, and some occupations, such as sales and marketing, continued to decline from the previous year, the temporary staffing business continued to recover moderately from May 31, 2021, amid a recovery in economic conditions, mainly among manufacturers and trading companies, as well as in a wide range of other industries. In addition, demand increased from the corporate and public sectors for time-limited work related to COVID-19 countermeasures in fiscal year 2021.

As a result, net sales amounted to ¥152,067 million (up 2.0% year-on-year).

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