Jp : Summary of Business Results for the Third Quarter Ended December 31, 2021 (Consolidated)

Summary of Business Results for the Third Quarter Ended December 31, 2021

[Japan GAAP] (Consolidated)

		February 10, 2022
Company	JP-HOLDINGS, INC.	Listed on the TSE 1
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 filing of annual securities report: February 10, 2022		Expected starting date of dividend payment: -
Preparation of supplementary financial document: None
Results briefing: None
						（Rounded down to million yen）
1. Consolidated business results for the nine months ended December 2021
(April 1, 2021 through December 31, 2021)
(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	%
Nine months ended Dec. 2021	25,382	2.8	2,151	18.6	2,170	18.5	1,405	22.9
Nine months ended Dec. 2020	24,679	3.8	1,813	39.1	1,831	36.8	1,143	34.6
(Note) Comprehensive income
Nine months ended December 2021: 1,427 million yen (12.0%)
Nine months ended December 2020: 1,274 million yen (41.0%)
	Net income	Diluted net income per
	per share		share
		Yen		Yen
Nine months ended Dec. 2021		16.07		-
Nine months ended Dec. 2020		13.07		-

(Note) In the first quarter of the current fiscal year, 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 third quarter of the previous fiscal year are based on the indices after this reclassification.

(2) Consolidated financial position

	Total assets		Net assets	Shareholders' equity
		ratio
	Million yen	Million yen	%
As of Dec. 31, 2021		33,973	11,094	32.7
As of Mar. 31, 2021		29,740	10,007	33.7
(Reference) Shareholders' equity
As of December 31, 2021: 11,094 million yen
As of March 31 2021: 10,007 million yen

2. Dividends

			Annual dividend
	End of 1Q	End of 2Q		End of 3Q	Year-end	Total
	Yen	Yen		Yen	Yen	Yen
Year ended Mar. 2021	-	0.00		-		3.90	3.90
Year ending Mar. 2022	-	0.00		-
Year ending Mar. 2022 (forecast)						4.50	4.50

(Notes) Revisions to dividend forecast for the current quarter: None

3．Forecast of consolidated business results for the fiscal year ending March 2022

(April 1, 2021 through March 31, 2022)		(% change from the previous corresponding period)
	Net sales		Operating income	Ordinary income	Net income attributable to	Net income
		owners of parent	per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Year ending Mar. 2022	33,900	1.2	2,730	-4.5	2,760	-6.4	1,760	227.4	20.12

(Notes) Revisions to business forecast for the current quarter: None

*Notes

1. Changes in significant subsidiaries during the period: None
2. Application of accounting procedures specific to preparation of the consolidated quarterly financial statements: None

1. Changes in accounting policies, accounting estimates and restatement
   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)

① Number of shares outstanding at the end of period (treasury stock included)

As of December 31, 2021	87,849,400 shares
As of March 31, 2021	87,849,400 shares
②Treasury stock at the end of period
As of December 31, 2021	380,707 shares
As of March 31, 2021	380,707 shares

③Average number of stock during period (quarterly cumulative period)

Nine months ended December 2021	87,468,693 shares
Nine months ended December 2020	87,468,693 shares

• Yes
• None
• None
• None

*Quarterly financial summary is not subject to the quarterly review procedures by certified public accountants or auditing firms.

*Appropriate use of financial forecasts and other important matters

• 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 assumptions that form the basis for the business results forecasts and notes about using business forecasts, please refer to "1. Qualitative Information on Quarterly Financial Results (3) Consolidated Earnings Forecasts" (Page 4).

• Table of Contents of the Appendix
• 1. Qualitative Information on Quarterly Financial Results………………………………………………….. 2
  2. 1. Results of Operations…………………………………………………………………………………. 2
     2. Financial Position……………………………………………………………………………………… 4
     3. Consolidated Earnings Forecasts……………………………………………………………………… 4
  3. Quarterly Consolidated Financial Statements……………………………………………………………… 5
  4. 1. Quarterly Consolidated Balance Sheets……………………………………………………………….. 5
     2. Quarterly Consolidated Statements of Income and Statements of Comprehensive Income…………… 7
     3. Notes on Quarterly Consolidated Financial Statements………………………………………………... 9 (Notes on going concern assumption)…………………………………………………………………. 9 (Notes if there is a significant change in the amount of shareholders' equity)………………………… 9 (Changes in accounting policies)………………………………………………………………………. 9

1

1. Results of Operations

(1) Results of Operations

In the third quarter of the fiscal year under review, the Japanese economy showed signs of recovery, reflecting the continued impact of COVID-19 and progress in the development of vaccinations and treatment drugs, as well as the effects of various policies. However, the outlook remains uncertain, as there are indications that the infection may spread again due to the spread of the Omicron variant.

Meanwhile, in the child-raising support business, despite the acceleration of the declining birth rate society due to the sharp decrease in birth rate and the decrease in the number of children on waiting lists because of people refraining from using the facilities due to COVID-19, the environment surrounding childcare is rapidly changing. These factors include 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 social role of the childcare support business will become increasingly important as the government established Children's Agency early in 2023 and is encouraged to improve the environment for childcare by raising government spending on children and strengthening cooperation with local governments.

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 respond to changes in the social environment, in terms of "improve profitability and efficiency," we will take these initiatives: 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, 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, and accelerate operational efficiency by promoting the use of ICT in facilities. 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 and products that provide added value. Through these efforts, we will differentiate ourselves from our competitors and "create facilities that would be selected by customers". In addition, we are focusing on new business development to create new value. The new business intends to provide a wide range of products and services related to childcare during the infant, early childhood and school child ages. We aim to make children and parents of the more than 300 childcare support facilities (nursery schools, school clubs, and children's houses) we operate nationwide, as members of the service.

In parallel with increasing members of the service, our group will develop a membership-based platform aimed at achieving both child-rearing support, effective use of resources, and environmental conservation (SDGs). As the first service, we will launch the "Childcare Product Matching Service" in April 2022. 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 will promote this initiatives 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 third quarter of the fiscal year ending March 2022 according to the plan, including 3 nursery schools (3 in Tokyo) and 8 school clubs and children's houses (8 in Tokyo).

(Nursery school)

Asc Kami-Shakujii Nursery School (Apr. 1, 2021)

Asc Kanamachi Nursery School	(Apr. 1, 2021)
Asc Higashikasai Nursery School	(Apr. 1, 2021)

(School club/Children's house)

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)

2

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 September 2021.

As a result, the Group's consolidated net sales were 25,382 million yen (up 2.8% year on year), operating income was 2,151 million yen (up 18.6% year on year), ordinary income was 2,170 million yen (up 18.5% year on year), and net income attributable to owners of parent was 1,405 million yen (up 22.9% 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 2.8% 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 increased by 18.6% year-on-year. This was attributable to the introduction of new facilities, increase in sales thanks to the increase in the number of children accepted through above mentioned measures and our efforts to curb expenses and improve profitability by efficient operation through reallocation of personnel at each facility, recruitment activities, and reviewing the ordering system for various supplies and equipment, despite an increase in expenses due to special factors, such as an increase in accrued bonuses reflecting a change in the eligible period for bonuses due to the introduction of the new personnel system and an increase in expenses related to the new system introduction.

As operating income significantly increased owing to the establishment of the above-mentioned efficient management system, ordinary income increased by 18.5% year-on-year, and net income attributable to owners of parent increased by 22.9% year-on- year, despite the recording of 168 million yen in income taxes-deferred as a result of the reversal of deferred tax assets.

With regard to subsidies, etc. received from local governments for rental company housing for nursery school teachers, the amount was previously recorded as "subsidy income" under non-operating income, but from the first quarter of the current fiscal year, such subsidies, etc. are now recorded as "net sales." This change in presentation is due to the fact that the qualitative importance of such subsidies, etc. to the childcare business has increased, and also as a result of confirming and organizing the subsidy system related to the childcare business as a result of investigating and studying the "Accounting Standard for Revenue Recognition: we made the judgment that it would be possible to present the actual status of the business more appropriately if the relevant amounts were recorded in the same category as other subsidies. Due to this change in presentation, reclassifications have been made for the third quarter of the previous fiscal year.

3