QB Net : Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2021 (Consolidated)

Financial Results for the Third Quarter

of the Fiscal Year Ending June 30, 2021 [IFRS] (Consolidated)

		May 14, 2021
Company name:	QB Net Holdings Co., Ltd.	Listed on: Tokyo Stock Exchange
Code number:	6571	URL: http://www.qbnet.jp/
Representative:	Yasuo Kitano, President CEO
Contact:	Osamu Matsumoto, Director and General Manager of Administration Department
	Tel.: [phone]
Scheduled date for quarterly report submission: May 14, 2021
Scheduled date for commencement of dividend payment: ―

Supplementary explanatory materials for quarterly financial results: Yes

Quarterly financial results briefings: No

(Rounded down to the nearest million yen)

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year ending June 30, 2021 (July 1, 2020 to March 31, 2021)

	(1) Consolidated Operating Results (Cumulative)	(Percentages indicate changes from the same period of the previous fiscal year.)
																			Profit attributable	Total
			Revenue		Operating profit	Profit before tax		Profit		to owners of	comprehensive
																			parent	income
			million yen		%	million yen	%	million yen		%	million yen		%	million yen		%	million yen		%
	Q3 FYE June 2021	13,951	(13.7)	281		(79.2)	146		(88.3)		160		(80.6)	160		(80.6)	240		(71.0)
	Q3 FYE June 2020	16,162		6.2	1,353		3.5	1,252		0.1			829		(0.6)	829		(0.6)	830		(1.5)
			Basic earnings per share		Diluted earnings per share
							yen						yen
	Q3 FYE June 2021				12.61					12.07
	Q3 FYE June 2020				66.01					62.10
(2) Consolidated Financial Position
			Total assets		Total equity		Equity attributable to		Ratio of equity attributable
					owners of parent			to owners of parent
					million yen				million yen				million yen						%
	Q3 FYE June 2021				31,132					10,061					10,061						32.3
	FYE June 2020				32,721					9,786					9,786						29.9
2. Dividends
												Annual dividends
			End-Q1					End-Q2				End-Q3			Year-end				Total
					yen			yen						yen					yen				yen
	FYE June 2020				－			0.00						－				0.00				0.00
	FYE June 2021				－			0.00						－
	FYE June
	2021(Forecast)																		0.00				0.00
(Note)	1. Revision from the last announcement of dividend forecast: Yes

1. 2. For details of the revision to the year-end dividend forecast, please refer to the "Notice of Revision of Earnings and Dividend Forecasts" announced today (May 14, 2021).

2. Consolidated Earnings Forecast for the Fiscal Year Ending June 30, 2021 (July 1, 2020 to June 30, 2021)

(Percentages indicate changes from the previous fiscal year.)

													Profit attributable	Basic earnings
			Revenue	Operating profit	Profit before tax	Profit		to owners of
				per share
													parent
			million yen	%	million yen	%	million yen		%	million yen		%	million yen		%	yen
	Full year		18,796	(1.5)	321	34.3	141		44.3	154		48.2	154		48.2	12.12
(Note)	1. Revision from the last announcement of earnings forecast: Yes

2. For details of the revision to the earnings forecast, please refer to the "Notice of Revision of Earnings and Dividend Forecasts" announced today (May 14, 2021).

• 1 -

*Notes

1. Changes in significant subsidiaries during the period (Changes in specific subsidiaries with changes in the scope of consolidation): No
   Newly consolidated - companies (Company names) -, Excluded - companies (Company names) -
2. Changes in accounting policies and accounting estimates
3. 1. Changes in accounting policies required by IFRS: No
   2. Changes in accounting policies other than (i): Yes
   3. Changes in accounting estimates: No

(Note) For details, see "2. Condensed Quarterly Consolidated Financial Statements and Main Notes, (6) Notes on the Condensed Quarterly Consolidated Financial Statements (Changes in accounting policies)" on page 12 of the Attachment.

1. Number of shares outstanding (common stock)

(i)	Number of shares outstanding at the end	Q3 FYE June	12,778,400	shares	FYE June 2020	12,735,300	shares
	of the period (including treasury shares)	2021
(ii)	Number of treasury shares at the end of	Q3 FYE June	123	shares	FYE June 2020	123	shares
	the period	2021
(iii)	Average number of shares outstanding
Q3 FYE June	12,762,530	shares	Q3 FYE June	12,570,840	shares
	during the period (cumulative)	2021	2020

• Quarterly financial results are not subject to quarterly review by certified public accountants or audit firms
• Explanation on the appropriate use of earnings forecasts and other special notes (Notes on forward-looking statements)
  Forward-looking statements and others included in this document, including earnings forecasts, are based on information currently available to and certain premises deemed to be rational by the Company, which is not committed to achieving such. Actual earnings and others may differ due to various factors. For matters related to earnings forecasts, please refer to "1. Qualitative Information Regarding the Quarterly Financial Results Under Review, (3) Explanation of Information on Future Forecasts including Consolidated Earnings Forecast" on page 5 of the Attachment.
  (How to obtain supplementary explanatory materials for financial results)
  Supplementary explanatory materials for financial results were disclosed on TDnet on the same day. They will also be posted on the Company website.

- 2 -

QB Net Holdings Co., Ltd. (6571) Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2021

• Table of Contents for the Attachment

1. Qualitative Information Regarding the Quarterly Financial Results Under Review ...........................................................	4
(1)	Explanation of Operating Results.................................................................................................................................	4
(2)	Explanation of Financial Position .................................................................................................................................	5
(3)	Explanation of Information on Future Forecasts Including Consolidated Earnings Forecast .......................................	5
2. Condensed Quarterly Consolidated Financial Statements and Main Notes......................................................................	6
(1)	Condensed Quarterly Consolidated Statement of Financial Position ...........................................................................	6
(2)	Condensed Quarterly Consolidated Statement of Profit or Loss ..................................................................................	7
(3)	Condensed Quarterly Consolidated Statement of Comprehensive Income .................................................................	8
(4)	Condensed Quarterly Consolidated Statement of Changes in Equity ..........................................................................	9
(5)	Condensed Quarterly Consolidated Statement of Cash Flows ..................................................................................	11
(6)	Notes on the Condensed Quarterly Consolidated Financial Statements ...................................................................	12

- 3 -

QB Net Holdings Co., Ltd. (6571) Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2021

1. Qualitative Information Regarding the Quarterly Financial Results Under Review

(1) Explanation of Operating Results

During the consolidated first nine months of the fiscal year under review (July 1, 2020 to March 31, 2021), the spread of the novel coronavirus could not be contained, causing economic activities to stagnate and consumer confidence to decline. Under these circumstances, the Company Group has been operating its stores while taking all possible measures to prevent infection.

Revenue decreased by 2,211 million yen year on year due to a decline in the number of customers visiting our stores caused by the impact of the novel coronavirus. The status of the novel coronavirus and its impact on revenue in each country is as described below.

New infections continue to occur, causing us to remain taking measures such as telework and self-restraint from going out. The number of customers visiting the Company's stores is decreasing year on year due to the impact of lengthening of hair-cut cycle and other factors under the circumstances.

Year-on-year comparison of the number of customers in Japan

										(Unit: %)
			2020					2021
	July	Aug	Sept		Oct	Nov	Dec	Jan	Feb	Mar
All	74.5	83.4	81.1		86.7	86.0	82.6	81.8	85.7	100.0
Existing	73.9	82.5	79.8		85.3	84.8	81.6	80.8	84.6	98.7
stores

Although the number of newly infected persons has been almost contained, preventive measures, such as teleworking and self-restraint from going out, have continued, causing some impact on the business. Consequently, the number of customers visiting our stores has declined compared with the level of the previous year.

Although the number of newly infected persons has been almost contained, preventive measures, such as teleworking and self-restraint from going out, have continued, causing some impact on the business. Consequently, the number of customers visiting our stores has declined compared with the level of the previous year.

The number of newly infected persons has been almost contained, and preventive measures are limited. Therefore, the impact of teleworking, self-restraint on going out and others is minor, and the number of customers visiting our stores has increased compared with the level of the previous year.

New infections continue to occur and preventive measures, such as telework and self-restraint from going out, remain intact, causing a significant impact on the business, and the number of customers visiting our stores has been declining considerably compared to the level of the previous year. However, the impact on the consolidated results is minimal.

Cost of sales decreased by 291 million yen year on year. This was mainly due to a fall in the number of subcontracted stores and a decrease in outsourcing fees due to lower sales, although personnel expenses increased due to an increase in staff members at stores in Japan and abroad.

Selling, general and administrative expenses decreased by 225 million yen year on year mainly due to a decrease in the amount of provision for year-end allowances in Japan.

As a result, consolidated earnings in the first nine months of the fiscal year under review were as follows: Revenue amounted to 13,951 million yen (down 13.7% year on year), operating profit was 281 million yen (down 79.2%), profit before tax was 146 million yen (down 88.3%), and profit attributable to owners of parent came to 160 million yen (down 80.6%).

In terms of our store network, we opened 22 stores. The breakdown is 12 stores in Japan, and overseas, one in Singapore, four in Hong Kong, and five in Taiwan. Moreover, since we closed 21 stores mainly due to integration and abolition of non-profitable stores, we had 716 stores as of the end of the third quarter of the fiscal year under review.

The description by segment is omitted because the Company Group engages in a single segment of the haircut business.

- 4 -

QB Net Holdings Co., Ltd. (6571) Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2021

1. Explanation of Financial Position

1. Assets, liabilities and equity
   Assets, liabilities and equity at the end of the third quarter under review were as follows:
   Current assets decreased by 1,064 million yen from the end of the previous fiscal year to 5,480 million yen. This was mainly due to a decrease of 844 million yen in cash and cash equivalents and a decrease of 214 million yen in income taxes receivable. Non-current assets decreased by 524 million yen from the end of the previous fiscal year to 25,652 million yen. This was mainly due to a decrease of 169 million yen in property, plant and equipment and a decrease of 319 million yen in right-of-use assets. As a result, assets decreased by 1,589 million yen from the end of the previous fiscal year to 31,132 million yen.
   Non-current liabilities decreased by 962 million yen from the end of the previous fiscal year to 7,821 million yen. This was mainly due to a decrease of 977 million yen in borrowings and an increase of 67 million yen in lease obligations. Non-current liabilities decreased by 901 million yen from the end of the previous fiscal year to 13,249 million yen. This was mainly due to a decrease of 514 million yen in borrowings and a decrease of 381 million yen in lease obligations. As a result, liabilities decreased by 1,864 million yen from the end of the previous fiscal year to 21,071 million yen.
   Equity increased by 274 million yen from the end of the previous fiscal year to 10,061 million yen. This was mainly due to an increase in retained earnings of 160 million yen.
2. Cash flows

Cash and cash equivalents (hereinafter referred to as "Cash") at the end of the third quarter under review decreased by 844 million yen from the end of the previous fiscal year to 4,272 million yen. Individual cash flows for the first nine months of the fiscal year under review and the factors behind them were as follows:

(Cash flows from operating activities)

Cash provided by operating activities was 2,884 million yen (3,052 million yen provided in the same period of the previous fiscal year). This was mainly attributable to factors causing an increase in Cash, such as depreciation and amortization of 2,462 million yen and income taxes refund of 271 million yen, in contrast to decreasing factors, such as interest paid of 115 million yen.

(Cash flows from investing activities)

Cash used in investing activities was 327 million yen (652 million yen used in the same period of the previous fiscal year). This was mainly attributable to factors causing a decrease in Cash, such as purchase of property, plant and equipment of 303 million yen and payments of guarantee deposits of 42 million yen.

(Cash flows from financing activities)

Cash used in financing activities was 3,464 million yen (2,518 million yen used in the same period of the previous fiscal year). This was mainly attributable to factors causing a decrease in Cash, such as a net decrease in short-term borrowings of 1,000 million yen and repayments of lease obligations of 2,017 million yen.

(3) Explanation of Information on Future Forecasts Including Consolidated Earnings Forecast

The impact of novel coronavirus infections has lasted longer than initially expected, and we have revised our full- year consolidated earnings forecast and dividend forecast for the fiscal year ending June 30, 2021, announced on August 13, 2020. We have done this while taking into account particularly the decline in revenue and other factors resulting from the third and fourth waves of infections and repeated declarations of states of emergency in Japan. For details, please refer to the "Notice of Revision of Earnings and Dividend Forecasts" announced today (May 14, 2021).

- 5 -