SERAKU : Summary of Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending August 31, 2021

	SERAKU_Summary of Consolidated Financial Results
	for the Third Quarter of the Fiscal Year Ending August 31, 2021
	(Nine Months Ended May 31, 2021)
		[Japanese GAAP]
		July 14, 2021
Company name: SERAKU Co., Ltd.	Listing: Tokyo Stock Exchange (First Section)
Stock code:	6199	URL: http://www.seraku.co.jp
Representative:	Tatsumi Miyazaki, Representative Director
Contact:	Tomoharu Kozeki, Executive Director, General Manager of Corporate Management Division
	Tel: [phone]

Scheduled date of filing of Quarterly Report:	July 15, 2021
Scheduled date of payment of dividend:	-
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:	Yes

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

1. Consolidated Financial Results for the Third Quarter Ended May 31, 2021 (Sep. 1, 2020 to 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
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
Nine months ended May 31, 2021	11,313	12.0	1,155	55.7	1,582	111.7	963	107.8
Nine months ended May 31, 2020	10,096	22.1	742	71.5	747	69.5	463	81.9

Note: Comprehensive income (millions of yen)	Nine months ended May 31, 2021:	961	(up 112.3%)
		Nine months ended May 31, 2020:	452	(up 77.9%)
	Net income per share		Diluted net income per
			share
	Yen		Yen
Nine months ended May 31, 2021	69.82		69.18
Nine months ended May 31, 2020	33.67		33.65

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
As of May 31, 2021	8,611	4,331	50.2
As of Aug. 31, 2020	7,342	3,429	46.7

Reference: Shareholders' equity (millions of yen) As of May 31, 2021:4,327 As of Aug. 31, 2020: 3,425

2. Dividends

			Dividend per share
	1Q-end	2Q-end		3Q-end	Year-end	Total
	Yen	Yen		Yen	Yen	Yen
Fiscal year ended Aug. 31, 2020	-	0.00	-		4.60	4.60
Fiscal year ending Aug. 31, 2021	-	0.00	-
Fiscal year ending Aug. 31, 2021 (forecast)						5.60	5.60

Note: Revisions to the most recently announced dividend forecast: None

3. Consolidated Earnings Forecast for the Fiscal Year Ending August 31, 2021 (Sep. 1, 2020 to Aug. 31, 2021)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Net income per share
		owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	15,020	9.1	1,370	20.8	1,650	41.6	957	46.3	69.51

Note: Revisions to the most recently announced consolidated earnings forecast: None

* Notes

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

Newly added: -

Excluded: -

1. Application of special accounting methods in the preparation of the quarterly consolidated financial statements: None
2. Changes in accounting policies and accounting estimates, and restatements
3. 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 estimates: None
   4. Restatements: None
4. Number of shares issued (common shares)
5. 1. Number of shares issued as of the end of the period (including treasury shares)

As of May 31, 2021:

13,834,800 shares

As of Aug. 31, 2020:

13,767,200 shares

1. Number of treasury shares as of the end of the period

As of May 31, 2021:	84 shares	As of Aug. 31, 2020:	62 shares
3) Average number of shares during the period
Nine months ended May 31, 2021:	13,800,333 shares	Nine months ended May 31, 2020:	13,767,161 shares

• The current financial report is not subject to quarterly review by certified public accountants or auditing firms.
• Explanation of appropriate use of earnings forecasts and other special items
  Forecasts of future performance in these materials are based on assumptions judged to be valid and information available to the management of Seraku at the time these materials were prepared, but are not promised by Seraku regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons. For discussion of the assumptions and other factors considered by Seraku in preparing the above projections, please refer to page 4 of the attachments "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements."

	SERAKU Co., Ltd. (6199) Consolidated Financial Results for the Third Quarter of FY8/21
Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements	4
2. Quarterly Consolidated Financial Statements and Notes	5
(1)	Quarterly Consolidated Balance Sheet	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	7
(3)	Notes to Quarterly Consolidated Financial Statements	9
	Going Concern Assumption	9
	Additional Information	9
	Significant Changes in Shareholders' Equity	9
	Segment and Other Information	9
	Material Subsequent Events	10

1

SERAKU Co., Ltd. (6199) Consolidated Financial Results for the Third Quarter of FY8/21

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

In the first nine months of the fiscal year ending in August 2021, the worldwide COVID-19 pandemic continued to have a negative impact on the Japanese economy. The state of emergency has ended and many regions of Japan have shifted their focus to preventing the spread of infections. There is also progress with vaccinations. Although these developments are creating hopes for an economic recovery, the economic outlook is expected to remain unclear.

In Japan's IT services industry, which is the primary business sector of the Seraku Group, there is increasing use of tools for creating remote working environments that give people flexibility for doing their jobs. There is also a large volume of IT investments for increasing the efficiency of business processes, upgrading information security and other improvements.

Although the business climate will remain uncertain for the time being, the digital transformation (DX) is expected to continue to gain momentum. For example, governments are increasing the use of digital technologies and companies are using these technologies for business process improvements and innovations. As a result, recruiting and training skilled engineers who can meet the requirements of IT service companies are becoming increasingly important.

To provide services with even greater value, the Seraku Group is recruiting and training many highly skilled engineers. There are also even more activities aimed at increasing our market share in the agricultural IT sector by using Midori Cloud with the goal of achieving the digital transformation of a primary industry.

Net sales increased 12.0% year-on-year to 11,313 million yen, operating profit increased 55.7% year on year to 1,155 million yen, ordinary profit increased 111.7% year on year to 1,582 million yen, and profit attributable to owners of parent increased 107.8% year on year to 963 million yen.

Results by business segment were as follows.

1) System Integration

System Integration includes IT infrastructure and cloud technologies, a business sector with long-term stability that primarily involves IT support in existing technology domains. This segment also provides digital creative services, web operations, web system development and many other services.

In the fiscal year's first nine months, recruitment and training activities were a priority and there were many initiatives to increase the utilization of external resources by strengthening ties with all of our business partners. The reason is the good prospects for continuing to capture new business involving system development and operation, design and construction of IT infrastructure, project management and other business domains.

To enable engineers with no experience to become productive workers quickly, we started operating a project room for training with equipment that faithfully recreates actual workplaces. We will utilize this project room to give people at all levels, from younger engineers to experienced people and individuals in leadership positions, expertise concerning the latest technologies.

Sales in the System Integration segment were 8,048 million yen, up 0.4% year on year, and the segment profit was 815 million yen, up 22.4% year on year.

2) Digital Transformation

This segment encompasses many services that utilize advanced technologies. Activities include cybersecurity for protecting the information assets of companies, customer success services that solve the unsolvable problem for Salesforce.com users, the use of robotic process automation (RPA) to make business processes more efficient, and Midori Cloud, which uses IT for the profitability of agricultural businesses.

In the fiscal year's first nine months, sales increased significantly because of the continuing growth of customers' needs in all technology categories of this segment.

2

SERAKU Co., Ltd. (6199) Consolidated Financial Results for the Third Quarter of FY8/21

In the customer success business, existing Salesforce retention support services posted strong growth and performance also benefited from meeting the need for multi-faceted retention support, including Pardot, a marketing tool for B-to-B, and Tableau, an analysis platform. In addition, we have started Salesforce retention services in collaboration with NTT DATA Corporation.

In the agricultural services sector, we are creating many proposals concerning the use of Midori Cloud and Farm Cloud for the digital transformation of agriculture, both crops and livestock, for prospective customers to capture orders. Sales activities target farms, livestock operations, local governments, and other potential users of these services. In April 2021, Midori Cloud was selected as an Innovative Agricultural Business Support Model Development project by the Japanese Ministry of Agriculture, Forestry and Fisheries. We are using this as a base for activities aimed at increasing the value of Midori Cloud assets.

Sales in the Digital Transformation segment were 2,920 million yen, up 65.6% year on year, and the segment profit was 305 million yen, up 166.9% year on year.

3) Mechanical Design and Engineering

This segment is the operations of consolidated subsidiary P's Engineering. This company provides 3D CAD technologies, designs machines, dies and other items for other companies, and provides technologies for experiments, performance tests and other aspects of quality assurance activities.

Although the COVID-19 pandemic impacted market conditions during the first nine months, there has been a slow recovery in the need for the services of P's Engineering. The resulting increase in the company's capacity utilization contributed to higher sales. Due to the outlook for more opportunities to receive orders, this company is continuing to conduct recruiting and training activities to build a base for more growth.

Sales in the Mechanical Design and Engineering segment were 348 million yen, up 10.4% year on year, and the segment profit was 35 million yen, compared with a loss of 32 million yen in the same period of the previous fiscal year.

4) Others

This segment is the operations of consolidated subsidiary Seraku ECA, which is primarily engaged in job placement and temporary staffing services and services for training IT engineers.

During the first nine months, the business climate continued to decline because of the COVID-19 pandemic. Due to this downturn, we are examining the outlook for Seraku ECA and its role within the Seraku Group.

Sales in the Other segment were 2 million yen, down 89.8% year on year, and the segment loss was 925 thousand yen, compared with a loss of 5 million yen in the same period of the previous fiscal year.

1. Explanation of Financial Position Assets

Total assets increased 1,269 million yen from the end of the previous fiscal year to 8,611 million yen as of the end of the third quarter. The main reasons were increases of 1,157 million yen in cash and deposits, 96 million yen in deferred tax assets, 85 million yen in other under investments and other assets, 46 million yen in work in process and 33 million yen in buildings, net, while there were decreases of 130 million yen in notes and accounts receivable-trade and 30 million yen in other under current assets.

Liabilities

Total liabilities increased 368 million yen from the end of the previous fiscal year to 4,280 million yen. The main reasons were increases of 804 million yen in accounts payable-other, 160 million yen in current portion of long-term borrowings and 129 million yen in income taxes payable, while there were decreases of 260 million yen in provision for bonuses, 249 million yen in long-term borrowings and 222 million yen in accrued consumption taxes.

3