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

April 13, 2021

Summary of Consolidated Financial Results

for the Third Quarter of the Fiscal Year Ending May 31, 2021

(Nine Months Ended February 28, 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 filing of Quarterly Report:	April 13, 2021
Scheduled date of dividend payment:	-
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:	None

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

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending May 31, 2021 (June 1, 2020 - February 28, 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	%
Nine months ended Feb. 28, 2021	6,076		19.6	296	325.2	299		340.1		199	329.0
Nine months ended Feb. 29, 2020	5,079		9.9	69	68.3	68		54.0		46	83.4
Note: Comprehensive income	Nine months ended Feb. 28, 2021: 199 million yen	(up 329.0%)
	Nine months ended Feb. 29, 2020: 46 million yen	(up 83.4%)
	Earnings per share	Diluted earnings per share
			Yen			Yen
Nine months ended Feb. 28, 2021			31.55			-
Nine months ended Feb. 29, 2020			7.35			-

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
	Million yen		Million yen	%
As of Feb. 28, 2021	4,446		1,907	42.9
As of May 31, 2020	3,906		1,727	44.2
Reference: Shareholders' equity	As of Feb. 28, 2021: 1,907 million yen	As of May 31, 2020: 1,727 million yen

2. Dividends

			Dividend per share
	1Q-end	2Q-end		3Q-end		Year-end	Total
	Yen	Yen		Yen		Yen	Yen
Fiscal year ended May 31, 2020	-	0.00		-		6.00	6.00
Fiscal year ending May 31, 2021	-	0.00		-
Fiscal year ending May 31, 2021 (forecast)						4.00	4.00

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

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 forecast for the dividend per share for the fiscal year ending May 31, 2021 is the amount to be paid after the common stock split. Consequently, the dividend forecast of 4.00 yen per share is equivalent to 8.00 yen per share prior to the stock split, which is an increase of 2.00 yen over the dividend paid for the fiscal year ended May 31, 2020.

3. Consolidated Forecast for the Fiscal Year Ending May 31, 2021 (June 1, 2020 - May 31, 2021)

(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	8,200		18.0	319	134.0	320	90.9	208	106.1	32.90
Note: Revision to the most recently announced consolidated forecast: Yes

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None
2. Application of special accounting methods for presenting quarterly consolidated financia l statements: None
3. 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

(4) Number of issued shares (common stock)

1) Number of shares issued at the end of the period (including treasury shares)

As of Feb. 28, 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 Feb. 28, 2021:	- shares	As of May 31, 2020:	- shares
3) Average number of shares during the period
Nine months ended Feb. 28, 2021:	6,329,400 shares	Nine months ended Feb. 29, 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.

* The quarterly financial report is not subject to quarterly review by certified public accounta nts 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 v alid and information available to the 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. P lease refer to "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecast and Other Forward-looking Statements" for forecast assumptions and notes of caution for usage.
  How to view supplementary materials for quarterly financial results
  Supplementary materials for the quarterly financial results will be disclosed today ( April 13, 2021), using the Timely Disclosure network (TDnet).

SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/21

Contents of Attachments

1. Qualitative Information on Quarterly Consolidated Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	4
(3)	Explanation of Consolidated 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
	Quarterly Consolidated Statement of Income
	For the Nine-month Period	7
	Quarterly Consolidated Statement of Comprehensive Income
	For the Nine-month Period	8
(3)	Notes to Quarterly Consolidated Financial Statements	9
	Going Concern Assumption	9
	Significant Changes in Shareholders' Equity	9
	Segment Information	9

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SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/21

1. Qualitative Information on Quarterly Consolidated Financial Performance

Forward-looking statements are based on the judgments of the SERIO Holdings Group (SERIO Holdings and its consolidated subsidiaries) as of February 28, 2021.

(1) Explanation of Results of Operations

In the first nine months of the current fiscal year (June 1, 2020 to February 28, 2021), 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 large percentage of women in the workforce and demand is expected to continue to climb.

During the first nine months, 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 in the first nine months increased because of the contribution to sales from nursery schools and after-schoolday-care facilities that opened in April and May 2020 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 of sales growth. In addition, earnings in the previous fiscal year 's first nine months were held down by one-time expenses for the replacement of personal computers. Earnings also benefited from more efficient sales meetings and recruiting interviews due to the use of internet meetings and other new formats. There were expenses for building an infrastructure capable of supporting the consistent growth of business operations. This includes expenditures for more personnel to strengthen administrative operations, for IT systems to upgrade security, and for new businesses, such as employment services for child care workers and the provision of grass-covered areas for nursery schools, kindergartens and other locations that care for children. In addition, we are continuing to strengthen our infrastructure in order to support the growth of the number of locations in the after-schoolday-care and nursery school businesses. Government employment adjustment subsidies and other payments received in association with employee furloughs were recorded as non -operating income.

As a result, net sales for the first nine months of the fiscal year ending May 31, 2021 increased 19.6% year on year to 6,076 million yen. Operating profit was 296 million yen, up 325.2% and ordinary profit was 299 million yen, an increase of 340.1%. Profit attributable to owners of parent increased 329.0% to 199 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 women to work in a manner that matches each stage of their lives. To provide these jobs, we create proposals for companies in many business sectors for the use of temporary staffing, employment services and subcontracting in order to cut costs by using people in the most productive ways possible. In January 2021, the government issued a state of emergency. As a result, the business environment in which we operate changed again, but we were still able to keep focus on new business development through business negotiations conducted online.

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

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SERIO Holdings Co., Ltd. (6567) Financial Results for the Third Quarter of FY5/21

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 several new orders. Earnings in this segment increased because of the higher sales, a decline in the cost of sales ratio resulting mainly from a more streamlined operating structure, higher productivity for subcontracting and revisions to temporary staffing contract rates, and improving operational efficiency in our back -office department.

As a result, net sales of this business were 1,961 million yen, up 17.4% year on year, and segment profit was 98 million yen, an increase of 105.9%.

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 t he after-schoolday-care facilities operated 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. However, there have been no events since September that had a major negative impact on the business climate for after -school day care, such as an order to close all elementary schools in Japan or the suspension of operations at all of the locations of this business.

As of July 2020, the number of children on waiting lists for the after -school'day-care club nationwide, as announced by the Ministry of Health, Labor 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.

The number of after-schoolday-care facilities operated by the SERIO Group at the end of February 2021 was 123 for public facilities (operated for local governments), nine for private elementary schools and o ne in the private sector, a total of 133. Given the nature of our business, new openings are concentrated in the fourth quarter. Preparations are therefore under way to open more locations beginning in April 2 021.

Sales were less than expected because of the reduction in operating hours during summer vacation and the decline in the number of children using after-schoolday-care facilities, both due to COVID-19. Nevertheless, total sales increased because of the contribution to sales from six locations that started operations in the previous fiscal year. Earnings were higher due to sales growth and a decrease in expenses for instructors resulting from summer vacation as well as lower expenses for standard operations. One-time expenses for the replacement of personal computers that held down earnings in the previous fiscal year was another reason for the increase in earnings in the first nine months.

As a result, net sales of this business were 1,851 million yen, up 15.0% year on year, and segment profit was 133 million yen, an increase of 1806.2%.

3) Nursery schools

Even after the end of the state of emergency in association with COVID-19, there was a decrease in June 2020 in the percentage of registered children who attended the nursery schools of this busine ss at some locations because of government requests for parents to provide care for their children at home. Since July, the ratio of registered children attending nursery schools has returned to almost the normal level. As in the previous period, there were numerous measures in accordance with COVID-19 prevention guidelines in order to ensure the safety of children and instructors.

As of April 2020, there were 12,439 preschool children in Japan who were waiting for a nursery school opening, down by 4,333 from one year earlier. Despite this decline, nursery school demand remains high. The number of nursery school applications increased to a record-high 2.84 million in April because of the rising percentage of women who have jobs.

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