Ohsho Food Service : 〔Delayed〕 Consolidated Financial Results for the First Quarter of the Fiscal Year Ended March 31, 2022

July 30, 2021

Summary of Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending March 31, 2022 (FY3/22)

(Three Months Ended June 30, 2021)

		[Japanese GAAP]
Company name:	OHSHO FOOD SERVICE CORP.	Listing: Tokyo Stock Exchange, First Section
Stock code:	9936	URL: https://www.ohsho.co.jp
Representative:	Naoto Watanabe, President
Contact:	Koji Uchida, Director of Public and Investor Relations
	Tel: [phone]
Scheduled date of filing of Quarterly Report:	August 13, 2021
Scheduled date of payment of dividend:	-
Preparation of supplementary materials for quarterly financial results:	None
Holding of quarterly financial results meeting:	None

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

1. Consolidated Financial Results for the First Quarter (April 1, 2021 - June 30, 2021) of FY3/22

(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 Jun. 30, 2021	20,213	11.4	1,706	309.1		3,151	430.7	2,144	546.1
Three months ended Jun. 30, 2020	18,142	(13.0)	416	(77.9)		593	(70.3)	331	(74.5)
Note: Comprehensive income (millions of yen)	Three months ended Jun. 30, 2021:	2,227	(up 540.8%)
		Three months ended Jun. 30, 2020:	347	(down 80.4%)
	Net income per share	Diluted net income per share
		Yen				Yen
Three months ended Jun. 30, 2021		114.22				-
Three months ended Jun. 30, 2020		17.69				-

Note: Beginning with the first quarter of the current fiscal year, the Company has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and other standards. All figures for the three months ended June 30, 2021 incorporate this accounting standard.

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
As of Jun. 30, 2021	92,653	54,122	58.4
As of Mar. 31, 2021	91,154	52,952	58.1

Reference: Shareholders' equity (millions of yen) As of Jun. 30, 2021: 54,122 As of Mar. 31, 2021: 52,952

Note: Beginning with the first quarter of the current fiscal year, the Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other standards. All figures as of June 30, 2021 incorporate this accounting standard.

2. Dividends

				Dividend per share
	1Q-end	2Q-end		3Q-end	Year-end	Total
	Yen	Yen		Yen	Yen	Yen
Fiscal year ended Mar. 31, 2021	-		50.00	-		50.00	100.00
Fiscal year ending Mar. 31, 2022	-
Fiscal year ending Mar. 31, 2022 (forecasts)			50.00	-		50.00	100.00

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

3. Consolidated Forecasts for the Fiscal Year Ending March 31, 2022 (April 1, 2021 - March 31, 2022)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Net income per
		owners of parent	share
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
First half	40,950		4.6	2,888	20.8	4,022	48.8	2,815	65.8	150.01
Full year	83,854		4.0	6,685	10.1	7,915	15.3	5,167	20.5	275.26

Note: Revisions to the most recently announced consolidated forecasts: None

Note: Beginning with the first quarter of the current fiscal year, the Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other standards. The above consolidated forecasts incorporate this accounting standard.

* Notes

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

Newly added: -

Excluded: -

1. Application of special accounting methods for presenting 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

Note: Please refer to "Notes to Quarterly Consolidated Financial Statements" on page 10 of the attachments for further information.

(4) Number of outstanding shares (common shares)

1)	Number of shares outstanding at the end of the period (including treasury shares)
	As of Jun. 30, 2021:	23,286,230 shares	As of Mar. 31, 2021:	23,286,230 shares
2)	Number of treasury shares at the end of the period
	As of Jun. 30, 2021:	4,514,166 shares	As of Mar. 31, 2021:	4,514,166 shares
3) Average number of shares outstanding during the period
	Three months ended Jun. 30, 2021:	18,772,064 shares	Three months ended Jun. 30, 2020:	18,763,990 shares

• The current quarterly financial report is not subject to quarterly review procedures by certified public accountants or auditing firms.
• Explanation of appropriate use of earnings forecasts, and other special items
  Forecasts of future performance in this document are based on assumption judged to be valid and information currently available to the Company's management, but are not promises by the Company regarding future performance. Actual results may differ materially from the forecasts for a number of reasons. Please refer to "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts and Other Forward-looking Statements" on page 4 for forecast assumptions and notes of caution for usage.

	OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the First Quarter of FY3/22
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 Forecasts 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 Three-month Period	7
	Quarterly Consolidated Statement of Comprehensive Income
	For the Three-month Period	8
(3)	Quarterly Consolidated Statement of Cash Flows	9
(4)	Notes to Quarterly Consolidated Financial Statements	10
	Changes in Accounting Policies	10
	Going Concern Assumption	10
	Significant Changes in Shareholders' Equity	10

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OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the First Quarter of FY3/22

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

Summary of consolidated results of operations (April 1, 2021 to June 30, 2021)

	Amount	% to sales	12-month change	24-month change
	(millions of yen)
Net sales	20,213	100.0%	Up	11.4%	Down	3.1%
Operating profit	1,706	8.4%	Up	309.1%	Down	9.5%
Ordinary profit	3,151	15.6%	Up	430.7%	Up	57.9%
Profit attributable to owners of	2,144	10.6%	Up	546.1%	Up	64.4%
parent

During the first quarter of the current fiscal year, the Japanese economy continued to see weak personal consumption with service consumption particularly slowing as its economic activities were significantly influenced by the deteriorating situation of COVID-19 infections in the country. Since April 2021, the central government's state of emergency and quasi-emergencyCOVID-19 measures were and have been in place in a total of 20 prefectures in Japan. As such, the outlook for the economy remains uncertain.

Restaurants mainly in urban areas have been urged to shorten operating hours and restrict serving alcohol, and people were requested to stay home and refrain from dining outside at any time of the day or night. Due to such restrictions, the restaurant industry has been facing an extremely severe operating environment.

Under such circumstances, the Group, continuing from the previous fiscal year, has addressed the urgent issue of the COVID-19 pandemic, giving its highest priority to the protection of the safety and health of our customers and employees. The Group has also sought to offer safe environment and delicious meals that are essential part of everyday life by following the guidelines established by the Japan Food Service Association.

At the same time, the Group was able to tap into the strong demand for takeout and delivery services during the COVID-19 crisis and conducted sales promotion in a timely manner, allowing it to considerably increase both revenue and profit year on year during the first quarter of the current fiscal year. These financial results are comparable to those of the same period two years ago without the impact from COVID-19.

The following is an overview of our initiatives and achievements during the first quarter, described in line with three primary strategies in our medium-term management plan which has newly started with the current fiscal year as the first year. The three primary strategies include sales strategy, restaurant opening strategy, and franchise chain promotion strategy.

1. Sales strategy
   In March 2021, we started offering "Gyoza with Extra Garlic," new menu that uses more than twice as much garlic as our normal gyoza, which is produced in Aomori Prefecture. Since its release, this new gyoza is well received by customers, pushing up the entire sales volume of gyoza.
   For sales promotion, we held the "double stamp campaign" for a limited time during the Gyoza Club customer appreciation campaign that is well received by customers every year. The 2022 version of this Gyoza Club customer appreciation campaign has started from June with a variety of Ohsho limited gifts. The lineup this year includes new gifts such as an original apron and a gyoza-shaped digital clock.
   Also, in response to the government's state of emergency and quasi-emergency measures, we broadened the appeal of alcohol-free beer as a substitute for beer by offering a 50-yen discount (including tax) to customers ordering a mug of Asahi Dry Zero non-alcoholic drink.
   In addition, we held a "limited period sale of uncooked gyoza" in an effort to enable customers to enjoy gyoza hot from the pan at home.
   As such, we constantly carried out promotional campaigns, which drove store traffic and enabled us to increase sales even under the challenging operating environment.
   We were also able to increase the number of stores that can provide delivery services from 366 at the end of March 2021 to 400 for directly operated stores. Including franchised stores, the number of such stores rose from 413 to 458 stores. Consequently, we were able to offer more convenience to customers including young people,

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OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the First Quarter of FY3/22

single persons, and housewives and to make our stores available for more people.

1. Restaurant opening strategy
   As for directly operated stores, we opened a Gyoza no Ohsho store named 463go-bypass-Tokorozawa-Hayashi store in May 2021. In June, we opened another store in a new restaurant format, "Joy-Naho," which specializes in takeout and delivery services. As the first store in the new format, Joy-Naho-Ikejiri-ohashi opened on the first floor of an office building in Setagaya-ku, Tokyo.
   The 463go-bypass-Tokorozawa-Hayashi store was set up in East Japan, where the number of our stores is not large enough. It is a roadside store on the corner of an intersection, which enables the store to attract customers coming from all directions by car. It is also in a suburb, where night-time population is dense. This means that we can avoid dense daytime population in the urban area amid the COVID-19 crisis. At the roadside store, we implemented the same COVID-19 infection prevention measures as other existing stores along with the guidelines of the Japan Food Service Association. We implemented an ingenious idea to allow the store to smoothly deliver our products to customers using take-out services.
   In addition, through the name of the Joy-Naho-Ikejiri-ohashi store, we propose a new way of enjoying Chinese dishes. Joy-Naho is a coined word. "Joy" originates in "enjoy" while "Naho" is a Osho jargon meaning "for takeout," used by staff members when they call orders to the kitchen. We offer a wide variety of takeout menus served in microwavable containers. Customers can pre-order takeout and receive it without waiting. For delivery services, they can place orders through the platform run by any of the three food delivery operators: Demae-Can, Uber Eats, and menu. Such efforts have made the Joy-Naho store, specializing in takeout and delivery services, a place that can be utilized on various occasions. Since its opening, the store is highly supported by customers.
2. Franchise chain promotion strategy
   We have established the internal system to strengthen partnership with our franchised stores and enhance the brand value of Gyoza no Ohsho. Under this internal system, franchised stores receive strong support that will help them find a solution to issues they are facing. Specifically, we offer educational opportunities to franchise owners, restaurant managers, and future candidates for such posts by holding training sessions, aimed at allowing them to acquire knowledge and skills for the store operation. Such training sessions are originally for directly operated stores and are held by Ohsho University, our in-house educational institution, as well as Ohsho Cooking Dojo, an in-house training program. In addition, our franchise consultants periodically make the rounds of franchised stores to check the level of quality, service, and cleanliness of each franchised store and clarify areas for improvement. We have sought to make quality standards of Ohsho penetrate into the stores by working on the areas for improvement by mutual agreement with franchise owners.
   Furthermore, we encouraged franchise owners to conduct various promotional campaigns that have been in place at directly operated stores. Thanks to such efforts we were able to attract customers to our stores, driving store traffic even under the challenging operating environment. As we were able to increase sales by franchised stores, sales generated by shipping goods from our factories to franchised stores remained strong.

As a result, net sales increased 2,070 million yen or 11.4% year-on-year to 20,213 million yen.

Operating profit increased 1,289 million yen or 309.1% year-on-year to 1,706 million yen. This is due to an increase in net sales as well as the efforts to keep personnel expenses under control and to cut down utilities expenses.

Ordinary profit increased 2,557 million yen or 430.7% year-on-year to 3,151 million yen mainly due to the above reasons as well as subsidy income and other factors.

Profit attributable to owners of parent increased 1,812 million yen or 546.1% year-on-year to 2,144 million yen mainly due to the above reasons.

Regarding the store network during the first quarter of the current fiscal year, we opened two directly operated stores and two franchised stores, and closed one directly operated store and four franchised stores. The result was a total network of 529 directly operated stores and 204 franchised stores at the end of the first quarter.

Beginning with the first quarter of the current fiscal year, the Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other standards.

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