NEOJAPAN : Consolidated Financial Results for the Three Months Ended April 30, 2022

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Consolidated Financial Results

for the Three Months Ended April 30, 2022

[Japanese GAAP]

June 10, 2022

Company name: NEOJAPAN Inc.

Stock exchange listing: Tokyo Stock Exchange

Code number: 3921

URL: https://www.neo.co.jp/en/

Representative: Akinori Saito, Representative Director

Contact: Makoto Tokiwa, Director in Charge of Accounting and Finance

Phone: [phone]

Scheduled date of filing quarterly securities report: June 10, 2022

Scheduled date of commencing dividend payments: -

Preparation of supplementary materials on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: No

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

1. Consolidated Financial Results for the Three Months Ended April 30, 2022 (February 1, 2022-April 30,

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	%
	April 30, 2022	1,496	9.8		309	12.2		327	(6.3)	221	(6.8)
	April 30, 2021	1,362	3.1		275	(2.5)		349	18.8	237	18.3
(Note) Comprehensive income: Three months ended April 30, 2022: ¥262 million [5.0%]
			Three months ended April 30, 2021: ¥249 million [39.5%]
			Basic earnings		Diluted earnings
			per share		per share
	Three months ended			Yen			Yen
	April 30, 2022			14.83			14.79
	April 30, 2021			15.92			15.87

(Note) As the Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the first quarter of the fiscal year under review, the figures for the three months ended April 30, 2022 represent the figures after the application of the accounting standard, etc.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	Million yen	Million yen	%
As of April 30, 2022	7,294	5,213	71.3
As of January 31, 2022	7,287	5,165	70.7

(Reference) Equity: As of April 30, 2022: ¥5,199 million As of January 31, 2022: ¥5,151 million

(Note) As the Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the first quarter of the fiscal year under review, the figures for the three months ended April 30, 2022 represent the figures after the application of the accounting standard, etc.

2. Dividends

				Annual dividends
		1st quarter-end	2nd quarter-end		3rd quarter-end	Year-end	Total
		Yen	Yen		Yen	Yen	Yen
Fiscal year ended		-	0.00		-	14.00	14.00
January 31, 2022
Fiscal year ending		-
January 31, 2023
Fiscal year ending
January 31, 2023			0.00		-	19.00	19.00
(Forecast)

(Note) Revision to the dividend forecast announced most recently: Yes

3. Consolidated Financial Results Forecast for the Fiscal Year Ending January 31, 2023 (February 1, 2022- January 31, 2023)

(% indicates changes from the previous corresponding period.)

							Profit attributable	Basic earnings
	Net sales		Operating profit	Ordinary profit	to owners of
		per share
							parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	6,271	5.9	1,271	1.9	1,359	(0.1)	920	6.3	61.77

(Note) Revision to the financial results forecast announced most recently: None

• Notes:

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

1. Accounting methods adopted particularly for the preparation of quarterly consolidated financial statements: Yes
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
4. Total number of issued and outstanding shares (common shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares):

April 30, 2022:	14,908,800 shares
January 31, 2022:	14,908,800 shares
2) Total number of treasury shares at the end of the period:
April 30, 2022:	223 shares
January 31, 2022:	223 shares
3) Average number of shares during the period:
Three months ended April 30, 2022:	14,908,577 shares
Three months ended April 30, 2021:	14,891,777 shares

• These quarterly consolidated financial results are outside the scope of quarterly review by certified public accountants or an audit firm.

• Explanation of the proper use of financial results forecast and other notes
  The earnings forecasts and other forward-looking statements herein are based on information currently available to the Group and certain premises that the Group deems to be reasonable, and are not guarantees of future performance. Actual results may differ significantly from these forecasts due to a wide range of factors.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results .....................................................................	2
(1)	Explanation of Operating Results ....................................................................................................	2
(2)	Explanation of Financial Position ...................................................................................................	5
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information . 6
2. Quarterly Consolidated Financial Statements and Principal Notes .....................................................	7
(1)	Quarterly Consolidated Balance Sheets ..........................................................................................	7
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income ..................................	9
(3)	Notes to Quarterly Consolidated Financial Statements .................................................................	11
	(Notes on going concern assumption) ......................................................................................	11
	(Notes in case of significant changes in shareholders' equity) .................................................	11
	(Accounting methods adopted particularly for the preparation of quarterly consolidated
	financial statements) ...............................................................................................................	11
	(Changes in accounting policies) ..............................................................................................	11
	(Segment information, etc.) ......................................................................................................	12
	(Revenue recognition) ..............................................................................................................	13

1

1. Qualitative Information on Quarterly Financial Results

The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March

31, 2020; hereinafter referred to as the "Revenue Recognition Accounting Standard"), etc. from the first quarter

of the fiscal year under review. Accordingly, the figures for the same period of the previous fiscal year and with the end of the previous fiscal year stated in (1) Explanation of Operating Results and (2) Explanation of Financial Position are calculated based on the consolidated financial results of the previous fiscal year before the application of said accounting standard, etc.

1. Explanation of Operating Results
   The Japanese economy in the three months ended April 30, 2022 saw signs of recovery as the challenging environment has weakened following the full lifting of the quasi-emergency measures against COVID-19 infection in March 2022, despite a temporary rebound of COVID-19 cases. However, the projected rate of economic growth was revised downward in IMF's World Economic Outlook published in April 2022, due to such an impact as Russia's incursion into Ukraine, and the economic outlook remains uncertain.
   The IT industry, to which the Group belongs, is expected to continue to see investments in IT for productivity improvement in association with the promotion of digital transformation (DX) and continued initiatives toward workstyle reforms undertaken by the government.
   Under such circumstances, desknet's NEO version 7.0 was released in March 2022, as an updated version with a "presence" function which visualizes the teleworking status within organizations.
   In addition, in March 2022, desknet's NEO was selected as an "IT Trend Good Product," which is selected by "IT Trend," a website that compares IT products and services for enterprises, and on top of that, the Company was certified for the 3rd consecutive year as an enterprise working on health and productivity management under the "Certified Health & Productivity Management Outstanding Organizations Recognition Program (large enterprise category)." In April 2022, our groupware desknet's NEO was recognized as "Leader" for the 13th consecutive period in the Groupware Category and Workflow Category of the ITreview Grid Award 2022 Spring, organized by IT product comparison and review website ITreview. Our business chat tool ChatLuck was recognized as "High Performer" for the 7th consecutive period in the Business Chat Category.
   As a result, for the three months ended April 30, 2022, the Company robustly posted net sales of ¥1,496,923 thousand (up 9.8% year on year) and operating profit of ¥309,176 thousand (up 12.2% year on year), while ordinary profit was ¥327,767 thousand (down 6.3% year on year), due to a decrease of ¥57,649 thousand in non-operating income which is mainly attributable to a decrease in surrender value of insurance policies, and profit attributable to owners of parent was ¥221,086 thousand (down 6.8% year on year).
   As a result of the application of the Revenue Recognition Accounting Standard, etc., for the three months ended April 30, 2022, net sales increased by ¥2,435 thousand and cost of sales increased by ¥1,888 thousand, while operating profit, ordinary profit, and profit before income taxes increased by ¥547 thousand, respectively. Details are explained in "2. Quarterly Consolidated Financial Statements and Principal Notes, (3) Notes to Quarterly Consolidated Financial Statements (Changes in accounting policies)."
   Operating results for the three months ended April 30, 2022 by segment are as follows.

2