Serio : Summary of Consolidated Financial Results for the Fiscal Year Ending May 31, 2021

July 14, 2021

Summary of Consolidated Financial Results for the Fiscal Year Ended May 31, 2021

		[Japanese GAAP]
Company name:	SERIO HOLDINGS CO., LTD.	Listing: Tokyo Stock Exchange, Mothers
Securities code:	6567	URL: https://www.serio-holdings.co.jp/
Representative:	Hisashi Wakahama, President and CEO
Contact:	Koji Gotani, Director, General Manager,
	Management Division and Human Resources & General Affairs Division Tel: [phone]
Scheduled date of Annual General Meeting of Shareholders:	August 27, 2021
Scheduled date of payment of dividend:	August 30, 2021
Scheduled date of filing of Annual Securities Report:	August 27, 2021
Preparation of supplementary materials for financial results:	Yes
Holding of financial results meeting:	Yes (for institutional investors and analysts)

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended May 31, 2021 (June 1, 2020 - May 31, 2021)

(1) Consolidated results of operations										(Percentages represent year-on-year changes)
	Net sales			Operating profit		Ordinary profit		Profit attributable to
						owners of parent
	Million yen		%		Million yen			%	Million yen		%	Million yen	%
Fiscal year ended May 31, 2021		8,218		18.3		337		147.1		344		105.5			223	121.3
Fiscal year ended May 31, 2020		6,948		11.0		136		115.0		167		152.2			101	146.6
Note: Comprehensive income	Fiscal year ended May 31, 2021:	223 million yen	(up 121.3%)
		Fiscal year ended May 31, 2020:	101 million yen	(up 146.6%)
	Earnings per share	Diluted earnings		Return on equity	Ordinary profit on	Operating profit to
		per share		total assets		net sales
		Yen			Yen					%				%			%
Fiscal year ended May 31, 2021		35.34		-					12.2				8.2			4.1
Fiscal year ended May 31, 2020		15.97		-					6.0				4.7			2.0
Reference: Equity in earnings of affiliates	Fiscal year ended May 31, 2021: -		Fiscal year ended May 31, 2020: -

Notes: 1. SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. Earnings per share are calculated as if this stock split had taken place at the beginning of the previous fiscal year.

1. 2. Diluted earnings per share are not shown because there were no dilutive common stock equivalents.

2. Consolidated financial position

	Total assets		Net assets		Equity ratio	Net assets per share
	Million yen		Million yen		%	Yen
As of May 31, 2021	4,495		1,931		43.0	305.21
As of May 31, 2020	3,906		1,727		44.2	272.87
Reference: Shareholders' equity	As of May 31, 2021:	1,931 million yen	As of May 31, 2020: 1,727 million yen

Note: SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. Net assets per share are calculated as if this stock split had taken place at the beginning of the previous fiscal year.

(3) Consolidated cash flows

	Cash flows from	Cash flows from	Cash flows from	Cash and cash equivalents
	operating activities	investing activities	financing activities	at end of period
	Million yen	Million yen	Million yen	Million yen
Fiscal year ended May 31, 2021	585	(265)	44	1,897
Fiscal year ended May 31, 2020	258	(295)	307	1,531

2. Dividends

		Dividend per share			Total	Dividend		Dividend on
							payout ratio		net assets
	1Q-end	2Q-end	3Q-end	Year-end	Total		dividends
		(consolidated)	(consolidated)
	Yen	Yen	Yen	Yen	Yen		Million yen	%	%
Fiscal year ended May 31, 2020	-	0.00	-	6.00	6.00	18	18.8	1.1
Fiscal year ended May 31, 2021	-	0.00	-	7.00	7.00	44	19.8	2.3
Fiscal year ending May 31, 2022	-	0.00	-	7.00	7.00			25.2
(forecast)

Note: SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. The dividend per share for the fiscal year ended May 31, 2020 is the amount paid before the common stock split on October 1, 2020. The dividend per share for the fiscal year ended May 31, 2021 is the amount paid after the common stock split.

3. Consolidated Forecast for the Fiscal Year Ending May 31, 2022 (June 1, 2021 - May 31, 2022)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Earnings per
		owners of parent	share
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	9,000		9.5	275	(18.5)	270	(21.7)	175	(21.5)	27.73

* Notes

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

1)	Changes in accounting policies due to revisions in accounting standards, others:	None
2)	Changes in accounting policies other than 1) above:	None
3)	Changes in accounting-based estimates:	None
4)	Restatements:	None

(3) Number of issued shares (common stock)

1)	Number of shares issued at the end of the period (including treasury shares)
	As of May 31, 2021	6,329,400 shares	As of May 31, 2020:	6,329,400 shares
2)	Number of treasury shares at the end of the period
	As of May 31, 2021:	- shares	As of May 31, 2020:	- shares
3) Average number of shares during the period
	Fiscal year ended May 31, 2021:	6,329,400 shares	Fiscal year ended May 31, 2020:	6,329,400 shares

Note: SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. The number of issued shares (common stock) is calculated as if this stock split had taken place at the beginning of the previous fiscal year.

Reference: Summary of Non-consolidated Financial Results

1. Non-consolidated Financial Results for the Fiscal Year Ended May 31, 2021 (June 1, 2020 - May 31, 2021)

(1) Non-consolidated results of operations						(Percentages represent year-on-year changes)
	Net sales	Operating profit			Ordinary profit	Profit
	Million yen	%	Million yen	%		Million yen	%	Million yen	%
Fiscal year ended May 31, 2021	435	4.5	137	103.3		142	95.8	95	129.5
Fiscal year ended May 31, 2020	416	11.0	67	16.4		73	18.0	41	(3.7)
	Earnings per share		Diluted earnings per share
		Yen				Yen
Fiscal year ended May 31, 2021		15.14				-
Fiscal year ended May 31, 2020		6.60				-

Notes: 1. SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. Earnings per share are calculated as if this stock split had taken place at the beginning of the previous fiscal year.

1. 2. Diluted earnings per share are not shown because there were no dilutive common stock equivalents.

2. Non-consolidatedfinancial position

	Total assets		Net assets		Equity ratio	Net assets per share
	Million yen		Million yen		%	Yen
As of May 31, 2021	1,811		1,710		94.4	270.19
As of May 31, 2020	1,729		1,633		94.4	258.05
Reference: Shareholders' equity	As of May 31, 2021:	1,710 million yen	As of May 31, 2020: 1,633 million yen

Note: SERIO Holdings conducted a two-for-one common stock split on October 1, 2020. Net assets per share are calculated as if this stock split had taken place at the beginning of the previous fiscal year.

• The financial report is not subject to audit by certified public accountants or auditing firms.
• Explanation of appropriate use of earnings forecasts and other special items Cautionary statement with respect to forward-looking statements
  Forecasts of future performance in these materials are based on assumption judged to be valid and information available to th e SERIO Holdings management at the time the materials were prepared, but are not promises by SERIO Holdings regarding future performance. Actual results may differ materially from the forecasts for a number of reasons. Please refer to " 1. Overview of Results of Operations, (4) Outlook" for forecast assumptions and notes of caution for usage.
  How to view supplementary materials for financial results
  Supplementary materials for the financial results will be disclosed today (July 14, 2021), using the Timely Disclosure network (TDnet). SERIO Holdings plans to hold a web conference information meeting for institutional investors and analysts on July 20, 2021. Materials to be distributed at this event will be posted on the SERIO Holdings website on July 19, 2021.

	SERIO Holdings Co., Ltd. (6567) Financial Results for FY5/21
Contents of Attachments
1. Overview of Results of Operations	2
(1)	Results of Operations	2
(2)	Financial Position	5
(3)	Cash Flows	5
(4)	Outlook	6
(5)	Basic Policy for Profit Distribution and Dividends for the Current and Next Fiscal Years	7
2. Basic Approach to the Selection of Accounting Standards	7
3. Consolidated Financial Statements and Notes	8
(1)	Consolidated Balance Sheet	8
(2)	Consolidated Statements of Income and Comprehensive Income	10
	Consolidated Statement of Income	10
	Consolidated Statement of Comprehensive Income	11
(3)	Consolidated Statement of Changes in Equity	12
(4)	Consolidated Statement of Cash Flows	13
(5)	Notes to Consolidated Financial Statements	14
	Going Concern Assumption	14
	Significant Accounting Policies in the Preparation of Consolidated Financial Statements	14
	Segment Information	16
	Per Share Information	18
	Subsequent Events	18

1

SERIO Holdings Co., Ltd. (6567) Financial Results for FY5/21

1. Overview of Results of Operations

(1) Results of Operations

In the fiscal year that ended on May 31, 2021, there were several states of emergency in Japan because of the COVID-19 pandemic. Due to this crisis, the outlook for the Japanese economy remained uncertain. Widespread precautions to prevent the spread of COVID-19 affected some activities of the employment assistance business. However, this business has been performing well partially because of the firm demand at companies for workforce flexibility. Normal operations continued in the after-schoolday-care business and nursery school business, along with measures to protect participants from COVID -19, in order to fulfill the role of these businesses of caring for children while a parent or other guardian is at work.

In July 2020, the Japanese government announced the 2020 Key Policies for Accelerating the Empowerment of Women. There have been numerous activities in accordance with these policies for the establishment of a framework that allows women to play an active role in workplaces. In December 2020, the Japanese government announced a New Child-raising Confidence Plan that has the goal of establishing an infrastructure of nursery schools for approximately 140,000 children by the end of 2024. Demand for child care is increasing because of the rising percentage of women in the workforce and demand is expected to continue to climb.

During the fiscal year, we continued to take actions aimed at creating jobs in order to provide an even larger number of people with opportunities to work while caring for children. We also continued to strengthen the administrative infrastructures of the after-schoolday-care and nursery school businesses to accommodate the growth of these two operations.

Sales increased because of the contribution to sales from newly opened nursery schools and after-schoolday-care facilities and a faster than expected recovery in sales in the employment assistance business following the downturn caused by the COVID-19 outbreak. Operating profit increased because the pandemic reduced expenses for instructors in the after-schoolday-care business, in addition to benefits from higher sales. There were expenditures for recruiting activities for more personnel, IT systems in order to reinforce security and other activities to strengthen our infrastructure that support the growth in the number of locations in the after -schoolday-care and nursery school businesses. In addition, to establish a base for consistent growth, we started new businesses such as the employment service for child care workers and the provision of greenery service mainly at nursery schools, kindergartens and other locations that care for children. Government employment adjustment subsidies and other payments received in association with employee furloughs were recorded as non -operating income.

As a result, net sales increased 18.3% year on year to 8,218 million yen. Operating profit was 337 million yen, up 147.1% and ordinary profit was 344 million yen, an increase of 105.5%. Profit attributable to owners of parent increased 121.3% to 223 million yen.

The following is a summary of business segment performance.

1) Employment assistance

As a company dedicated to enabling people to continue working while caring for a family, we are a source of jobs that enable more women to work in a manner that matches each stage of their lives. We submit proposals to companies in a variety of industries for personnel support that makes it possible to reduce expenses by using people in the most productive ways possible. The business climate changed during the fiscal year because of several declarations of a state of emergency by the Japanese government. By using online sales meetings, we were able to focus on sales activities for adding new customers.

In the beginning of the current fiscal year, some current customers adjusted working hours for temporary staffing personnel due to COVID-19. However, the recovery in sales following these adjustments and working hour reductions was faster than expected. In the subcontracting business, sales increased because of the expanding breadth of call center operations, expansion in office work operations in our temporary staffing business and more new contracts. Earnings in this segment increased significantly because of the higher sales, a more streamlined infrastructure in the subcontracting business, a decline in the cost of sales ratio resulting mainly from higher productivity and revisions to temporary staffing contract rates, and an improvement of operational efficiency in

2

SERIO Holdings Co., Ltd. (6567) Financial Results for FY5/21

our back-office department.

As a result, net sales of this business were 2,585 million yen, up 16.4% year on year, and segment profit was 101 million yen, an increase of 113.0%.

2) After-school day care

We are continuing to operate after-schoolday-care facilities while strictly following the guidelines for protection against COVID-19 infections in order to allow people to use these facilities with confidence. In March 2020, all elementary schools in Japan closed in response to a request by the Japanese government due to the COVID -19 pandemic. In June, after the state of emergency ended, schools have slowly started to resume operations. Schools shortened summer vacation to offset the school days that were lost earlier in the year. As a result, there were revisions to the plans for days of operation and operating times of the after-schoolday-care facilities operated by the SERIO Holdings Group for local governments. In addition, the number of children using these facilities was smaller than the number initially registered as some parents kept children home because of the COVID -19 pandemic. Although there were more states of emergency in 2021, there was no significant impact on the business climate for after-school day care, such as shutting down all elementary schools in Japan.

As of July 2020, the number of children on waiting lists for the after -schoolday-care club nationwide, as announced by the Ministry of Health, Labour and Welfare, was 15,995. The demand for after-schoolday-care facilities also remains high due to the increase in percentage of women in the workforce.

As shown in the table below, the SERIO Group opened 13 locations and added an outsourcing contract fr om one local government agency during the fiscal year. Three locations were closed because of elementary school consolidations, contract completions and other reasons. The result was a net increase of 10 locations. The number of after-schoolday-care facilities operated by the SERIO Group at the end of May 2021 was 132 for public facilities (operated for local governments), 10 for private elementary schools and one in the private sector, a total of 143.

Although sales were negatively affected by a decline in the number of children using after-schoolday-care facilities and shorter operating hours of these facilities because of the pandemic, segment sales increased because of the net increase in the number of new facilities. Earnings were higher too. One reason was the increase in sales. Earnings also benefited from a decline in expenses for instructors because of reduced operating hours due to a shorter summer vacation at elementary schools caused by the pandemic, a decline in personnel and recruiting expenses as fewer instructors were hired because of this shorter summer vacation, and a decline in expenses for instructors because of the smaller average number of children at all locations.

As a result, net sales of this business were 2,547 million yen, up 15.2% year on year, and segment profit was 157 million yen, an increase of 360.8%.

3