Summary of Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending August 31, 2022

(Three Months Ended November 30, 2021)

[Japanese GAAP]

January 13, 2022

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: +81-(0)3-3227-2321

Scheduled date of filing of Quarterly Report:

January 14, 2022

Scheduled date of payment of dividend:

-

Preparation of supplementary materials for quarterly financial

Yes

results:

Holding of quarterly financial results meeting:

Yes

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

1. Consolidated Financial Results for the First Quarter Ended November 30, 2021 (Sep. 1, 2021 to Nov. 30, 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

%

Three months ended Nov. 30, 2021

4,110

16.8

197

(26.5)

318

(34.5)

170

(40.4)

Three months ended Nov. 30, 2020

3,520

11.4

268

27.7

486

130.2

286

137.0

Note: Comprehensive income (millions of yen)

Three months ended Nov. 30, 2021:

170

(down 40.2 %)

Three months ended Nov. 30, 2020:

285

(up 134.3 %)

Net income per share

Diluted net income

per share

Yen

Yen

Three months ended Nov. 30, 2021

12.28

12.19

Three months ended Nov. 30, 2020

20.79

20.56

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen

%

As of Nov. 30, 2021

9,040

4,715

52.1

As of Aug. 31, 2021

8,730

4,616

52.8

Reference: Shareholders' equity (millions of yen)

As of Nov. 30, 2021: 4,711

As of Aug. 31, 2021:4,612

2. Dividends

Dividend per share

1Q-end

2Q-end

3Q-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended Aug. 31, 2021

－

0.00

－

5.60

5.60

Fiscal year ending Aug. 31, 2022

－

Fiscal year ending Aug. 31, 2022 (forecast)

0.00

－

8.60

8.60

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

3. Consolidated Earnings Forecast for the Fiscal Year Ending August 31, 2022 (Sep. 1, 2021 to Aug. 31, 2022)

(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

First half

8,750

20.4

440

(38.6)

640

(42.4)

400

(43.1)

28.77

Full year

19,000

24.5

1,550

14.3

1,900

3.4

1,250

0.7

89.91

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
    1. Changes in accounting policies due to revisions in accounting standards, others: Yes
    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)
    1. Number of shares issued as of the end of the period (including treasury shares)

As of Nov. 30, 2021: 13,902,400 shares

As of Aug. 31, 2021: 13,902,400 shares

2) Number of treasury shares as of the end of the period

As of Nov. 30, 2021: 130 shares

As of Aug. 31, 2021: 130 shares

3) Average number of shares during the period

Three months ended Nov. 30, 2021: 13,902,270 shares

Three months ended Nov. 30, 2020: 13,767,118 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 reasonable and information available to the management of Seraku at the time these materials were prepared and do not represent guarantees of future performance. Actual results may differ materially from these forecasts for various 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 First Quarter of FY8/22

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 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

8

(3)

Notes to Quarterly Consolidated Financial Statements

10

Going Concern Assumption

10

Additional Information

10

Significant Changes in Shareholders' Equity

10

Changes in Accounting Policies

10

Segment and Other Information

11

Material Subsequent Events

12

1

SERAKU Co., Ltd. (6199) Consolidated Financial Results for the First Quarter of FY8/22

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

In the first quarter of the fiscal year ending in August 2022, the COVID -19 pandemic continued to have a severe impact on the Japanese economy, including signs of a resurgence in some regions of other countries. The domestic economy and corporate earnings remain affected by uncertainty about the future caused by semiconductor supply shortages, a steep rise in the prices of raw materials, and other concerns. However, the number of new COVID -19 cases can be expected to gradually decrease going forward and economic a ctivities may resume thanks to mass vaccination and the effects of measures to curb infections.

In Japan's IT sector, which is the primary business field where the Seraku Group provides its services, investor confidence in IT for digitalization continues to be strong, and demand for IT investment associated with an increase in digital transformation (DX) using advanced technologies such as cloud computing, AI, IoT, big data, and RPA will likely remain strong.

An optimal IT infrastructure plays an important role in supporting companies' business strategies, and the need for recruiting and cultivating high-quality IT engineers to respond to corporate demand is increasing.

In this environment, the Group sought to enhance the value of its services by actively re cruiting and cultivating high-quality engineers. The Group also continued to focus on increasing share in the agricultural IT sector through Midori Cloud, which is intended to introduce digital transformation (DX) in primary industry.

As a result, the Seraku Group/ Net sales increased 16.8% year on year, to 4,110,324 thousand yen, operating profit fell 26.5% year on year, to 197,220 thousand yen, and ordinary profit declined 34.5% year on year, to 318,517 thousand yen. Profit attributable to owners of parent decreased 40.4% year on year, to 170,693 thousand yen.

Results by business segment were as follows.

With the addition of Midori Cloud as a reportable segment in the first quarter of the fiscal year under review, the reportable segments have been changed from the conventional three segments, including System Integration, Digital Transformation, and Mechanical Design and Engineering, to four segments consisting of System Integration, Digital Transformation, Midori Cloud, and Mechanical Design and Engineering. Accordingly, in the year-on-year comparisons below, the figures for the first quarter of the previous year have been restated to reflect the new segment classification.

1) System Integration

The System Integration segment supports IT technologies in the existing technical domains and provides services such as IT infrastructure and cloud technologies constituting a long -term stable business, digital creative services requiring advanced technologies, on-demand application development, and platform system operation.

During the first quarter of the fiscal year under review, the Group work to increase human resources in growth segments such as operation and maintenance of infrastructure systems, project management, programming development, and digital marketing.

System design and development projects and network platform operation projects that account for a large part of the business remained steady without a significant adverse effect.

Net sales in this segment stood at 3,002,521 thousand yen, up 15.9% year on year. Segment profit was 130,950 thousand yen, down 37.0% year on year.

2) Digital Transformation

The Digital Transformation business provides services such as cyber security to protect companies' information assets and customer success solutions centering on support for the widespread use of Salesforce.

In the first quarter of the fiscal year under review, the Group continued to promote the DX shift of engineers engaging in the System Integration business while also focusing on organizational expansion through active recruitment of human resources.

2

SERAKU Co., Ltd. (6199) Consolidated Financial Results for the First Quarter of FY8/22

In the customer success solution business, the Group worked to expand its human resource development scheme to respond to an increase in demand for support for the widespread u se of Tableau, a leading analysis platform.

Net sales in this segment came to 887,798 thousand yen, up 16.8% year on year. Segment profit was 70,311 thousand yen, down 0.7% year on year.

3) Midori Cloud Business

The Midori Cloud business provides a platform service that delivers Midori Cloud and Farm Cloud to support the DX of agriculture, livestock raising, and fishery using IT and solution service to solve individual issues faced by farm producers and distributors.

Of the platform services, the Midori Cloud segment for agriculture has been accumulating orders received by strengthening alliances with agencies having nationwide sales networks.

The Farm Cloud segment for livestock raising worked to increase service value by expanding the function of collaboration with barn facilities.

The solution service segment strived to increase orders received by proposing joint development with agricultural machinery and material manufacturers and analysis of agricultural data using AI and machine learning. At the same time, the Group actively recruited engineers with the expectation of future business growth.

Net sales in this segment amounted to 86,028 thousand yen, up 66.5% year on year. The segment loss was 2,775 thousand yen (segment loss of 21,092 thousand yen in the same period of the previous year).

4) Mechanical Design and Engineering

In the Mechanical Design and Engineering business, P's Engineering, a consolidated subsidiary, provides 3D CAD technologies, designs machines, dies and other items for other companies, and provides technologies for the quality control of experiments and performance tests.

In the first quarter of the fiscal year under review, the Group continued to approach new industries such as communication infrastructure construction and information and communication for carriers in the machinery design field while the market was yet to fully recover to support project development due to stagnation caused by the COVID-19 pandemic.

Projects have been gradually increasing in the new fields, and the Group is actively working on its recruitment and development model.

Net sales in the Mechanical Design and Engineering segment were 135,716 thousand yen, up 17.1% year on year. Segment loss was 151 thousand yen (segment profit of 10,410 thousand yen in the same period of the previous year).

5) Others

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

Because the market continues to slow due to the impact of COVID -19 in the first quarter of the fiscal year under review, the Group has allocated resources of this business to other focal businesses while paying attention to the timing of market recovery.

This resulted in zero net sales in this segment (segment net sales of 2,035 thousand yen in the same period of the previous fiscal year). Segment loss was1,114 thousand yen (segment profit in the same period of the previous year was 528 thousand yen.)

3

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Seraku Co. Ltd. published this content on 21 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 January 2022 09:31:06 UTC.