Serverworks : Consolidated Financial Results for the Three Months Ended May 31, 2022

Note:This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Three Months Ended May 31, 2022

[Japanese GAAP]

Company name: Serverworks Co.,Ltd.	July 15, 2022
Stock exchange listing: Tokyo
Code number: 4434
URL: https://www.serverworks.co.jp/
Representative: Ryo Oishi	Representative Director, President
Contact: Hiroyuki Oshio	Director

Phone: [phone]

Scheduled date of filing quarterly securities report: July 15, 2022

Scheduled date of commencing dividend payments: ー

Availability of supplementary briefing material on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: Yes

(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Three Months Ended May 31, 2022 (March 01, 2022 to May 31, 2022)

(1) Consolidated Operating Results			(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit	Ordinary profit		Profit attributable to
			owners of parent
Three months ended	Million yen		%	Million yen	%	Million yen		%	Million yen		%
May 31, 2022	3,345		-	148	-	139		-	110		-
May 31, 2021	-		-	-	-	-		-	-		-

(Note) Comprehensive income:	Three months ended May 31, 2022:
	Three months ended May 31, 2021:

¥	(12) million	[	-%]
¥	- million	[	-%]

	Basic earnings		Diluted earnings per
	per share		share
Three months ended		Yen	Yen
May 31, 2022		14.40	14.02
May 31, 2021		-	-

(2) Consolidated Financial Position

	Total assets	Net assets	Capital adequacy ratio
As of	Million yen		Million yen	%
May 31, 2022	12,190		9,042	73.9
February 28, 2022	11,673		9,088	77.4
(Reference) Equity: As of	May 31, 2022:	¥	9,013 million
As of	February 28, 2022:	¥	9,035 million

2. Dividends

					Annual dividends
		1st	2nd		3rd		Year-end	Total
	quarter-end	quarter-end	quarter-end
		Yen		Yen	Yen		Yen	Yen
Fiscal year ended February 28, 2022		-		0.00	-		0.00	0.00
Fiscal year ending February 28, 2023		-
Fiscal year ending February 28, 2023				0.00	-		0.00	0.00
(Forecast)
(Note) Revision to the forecast for dividends	announced most	recently:	No
(Note) Breakdown of the 1st quarter dividend for the fiscal year ending February 28, 2023 :
Commemorative dividend	-	yen
Special dividend	-	yen

3. Consolidated Financial Results Forecast for the Fiscal Year Ending February 28, 2023(March 01, 2022 to February 28, 2023)

(% indicates changes from the previous corresponding period.)

			Net sales	Operating profit	Ordinary profit	Profit attributable	Basic earnings per
			to owners of parent	share
			Million yen	%	Million yen	%	Million yen		%	Million yen	%	Yen
Full year			13,485	23.5	429	(32.8)		453		(30.5)	373	(15.6)	48.74
(Note) Revision to the financial results forecast announced most recently:	No
* Notes:
(1) Changes in significant subsidiaries during the three months ended May 31, 2022
(changes in specified subsidiaries resulting in changes in scope of consolidation):	No
New	-	(Company name:									)
Exclusion:	-	(Company name:									)
(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements:	Yes

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

May 31, 2022:	7,726,444	shares
February 28, 2022:	7,681,948	shares
2) Total number of treasury shares at the end of the period:
May 31, 2022:	372	shares
February 28, 2022:	372	shares

3) Average number of shares during the period:
Three months ended May 31, 2022:	7,709,144	shares
Three months ended May 31, 2021:	7,629,924	shares

Quarterly Consolidated Financial Statements

Quarterly Consolidated Balance Sheets

				(Thousand yen)
			As of February 28,2022	As of May 31,2022
Assets
	Current assets
		Cash and deposits	6,798,191	6,344,541
		Notes and accounts receivable - trade	1,607,300	-
		Notes and accounts receivable - trade, and contract	-	1,738,215
		assets
		Work in process	82,344	-
		Advance payments to suppliers	828,486	1,510,388
		Other	95,157	455,222
		Allowance for doubtful accounts	(1,717)	(1,517)
		Total current assets	9,409,762	10,046,851
	Non-current assets
		Property, plant and equipment	63,794	62,398
		Intangible assets	115,283	113,144
		Investments and other assets
		Investment securities	1,921,333	1,805,044
		Shares of subsidiaries and associates	86,643	87,655
		Other	76,264	75,630
		Total investments and other assets	2,084,241	1,968,330
		Total non-current assets	2,263,318	2,143,873
	Total assets	11,673,081	12,190,724
Liabilities
	Current liabilities
		Accounts payable - trade	1,274,414	1,436,834
		Income taxes payable	161,350	67,006
		Advances received	605,406	-
		Contract liabilities	-	1,276,751
		Provision for bonuses	69,467	39,564
		Provision for loss on order received	19,814	6,927
		Other	259,415	190,500
		Total current liabilities	2,389,867	3,017,584
	Non-current liabilities
		Deferred tax liabilities	180,084	116,273
		Asset retirement obligations	14,310	14,310
		Total non-current liabilities	194,394	130,583
	Total liabilities	2,584,261	3,148,168
Net assets
	Shareholders' equity
		Share capital	3,218,069	3,223,990
		Capital surplus	3,208,795	3,214,716
		Retained earnings	2,065,262	2,129,808
		Treasury shares	(1,994)	(1,994)
		Total shareholders' equity	8,490,132	8,566,521
	Accumulated other comprehensive income
		Valuation difference on available-for-sale	544,952	447,356
		securities
		Total accumulated other comprehensive income	544,952	447,356
	Non-controlling interests	53,735	28,679
	Total net assets	9,088,819	9,042,556

Total liabilities and net assets

11,673,081

12,190,724

Quarterly Consolidated Statements of Income and Comprehensive Income

Quarterly Consolidated Statements of Income (For the three months)

		(Thousand yen)
		For the three months
		ended May 31,2022
Net sales	3,345,857
Cost of sales	2,883,600
Gross profit	462,257
Selling, general and administrative expenses	314,008
Operating profit	148,248
Non-operating income
	Dividend income	8,300
	Share of profit of entities accounted for using equity	1,012
	method
	Other	1,783
	Total non-operating income	11,096
Non-operating expenses
	Loss on investments in investment partnerships	7,525
	Foreign exchange losses	11,412
	Other	453
	Total non-operating expenses	19,392
Ordinary profit	139,953
Profit before income taxes	139,953
Income taxes	54,548
Profit	85,404
Loss attributable to non-controlling interests	(25,593)
Profit attributable to owners of parent	110,997