Serverworks : Summary of Non-Consolidated Financial Results for the Three Months Ended May 31, 2021

Translation

Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Summary of Non-Consolidated Financial Results

for the Three Months Ended May 31, 2021

(Based on Japanese GAAP)

					July 15, 2021
Company name:	Serverworks Co.,Ltd.
Stock exchange listing:	Tokyo
Stock code:	4434	URL https://www.serverworks.co.jp/
Representative:	Representative Director, President	Ryo Oishi
Inquiries:	Director		Hiroyuki Oshio	TEL [phone]
Scheduled date to file Quarterly Securities Report:	July 15, 2021
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results:	Yes
Holding of quarterly financial results meeting:	Yes	(for institutional investors and analysts)

(Amounts less than one million yen are rounded down)

1. Non-consolidated financial results for the three months ended May 31, 2021 (from March 1, 2021 to May 31, 2021)

(1) Non-consolidated operating results (cumulative)								Percentages indicate year-on-year changes
	Net sales				Operating profit	Ordinary profit		Profit
	Millions of yen		%	Millions of yen	%	Millions of yen		%	Millions of yen		%
Three months ended May 31, 2021	2,509		30.5		171	146.0		168		119.7		110		98.6
Three months ended May 31, 2020	1,922		33.5		69	(30.5)		76		(16.8)		55		(40.9)
	Earnings per share		Diluted earnings per share
			Yen					Yen
Three months ended May 31, 2021			14.43					13.89
Three months ended May 31, 2020			8.16					7.66
(2) Non-consolidated financial position
	Total assets				Net assets		Equity ratio
	Millions of yen			Millions of yen				%
As of May 31, 2021		10,697					8,914				83.3
As of February 28, 2021		10,717					8,855				82.6
2. Cash dividends
						Annual dividends per share
	1st quarter-end	2nd quarter-end		3rd quarter-end	Fiscal year-end	Total
	Yen				Yen			Yen			Yen			Yen
Year ended February 28, 2021		-			0.00			-			0.00			0.00
Year ending February 28, 2022		-
Year ending February 28, 2022 (Forecast)					0.00			-			0.00			0.00

3. Forecast of non-consolidated financial results for the year ending February 28, 2022 (from March 1, 2021 to February 28, 2022)

Percentages indicate year-on-year changes

	Net sales		Operating profit		Ordinary profit	Profit		Earnings per share
	Millions of yen	%	Millions of yen		%	Millions of yen	%	Millions of yen	%	Yen
Full year	9,300	15.8	446		6.4	471	14.8	326	(32.3)	45.17

1

4. Notes

1. Application of special accounting methods for preparing quarterly non-consolidated financial statements: Yes
2. Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements

Changes in accounting policies due to revisions to accounting standards and other regulations:	No
Changes in accounting policies due to other reasons:	No
Changes in accounting estimates:	No
Restatement of prior period financial statements:	No

(3) Number of issued shares (common shares)

Total number of issued shares at the end of the period (including treasury shares)

	As of May 31, 2021	7,656,188	shares	As of February 28, 2021	7,588,044	shares
Number of treasury shares at the end of the period
	As of May 31, 2021	340	shares	As of February 28, 2021	340	shares
Average number of shares during the period (cumulative from the beginning of the fiscal year)
	Three months ended May 31, 2021	7,629,924	shares	Three months ended May 31, 2020	6,791,742	shares

2

Quarterly non-consolidated financial statements

Non-consolidated balance sheets

			(Thousands of yen)
		As of February 28, 2021	As of May 31, 2021
Assets
Current assets
Cash and deposits	7,426,126	6,804,652
Accounts receivable - trade	1,196,926	1,249,105
Work in process	40,740	54,080
Other	337,955	383,089
Allowance for doubtful accounts	(2,148)	(1,917)
Total current assets	8,999,600	8,489,010
Non-current assets
Property, plant and equipment	72,971	70,464
Intangible assets	112,679	109,368
Investments and other assets
Investment securities	1,402,808	1,900,757
Shares of subsidiaries and associates	50,000	50,000
Other	79,840	78,216
Total investments and other assets	1,532,649	2,028,974
Total non-current assets	1,718,299	2,208,807
Total assets	10,717,899	10,697,817
Liabilities
Current liabilities
Accounts payable - trade	846,369	892,722
Income taxes payable	166,497	62,136
Provision for bonuses	57,168	29,883
Provision for loss on order received	1,814	4,672
Other	447,809	482,378
Total current liabilities	1,519,659	1,471,794
Non-current liabilities
Deferred tax liabilities	328,596	297,377
Asset retirement obligations	14,310	14,310
Total non-current liabilities	342,906	311,687
Total liabilities	1,862,566	1,783,481
Net assets
Shareholders' equity
Share capital	3,201,973	3,211,800
Capital surplus	3,191,973	3,201,800
Retained earnings	1,592,212	1,702,298
Treasury shares	(1,866)	(1,866)
Total shareholders' equity	7,984,292	8,114,033
Valuation and translation adjustments
Valuation difference on available-for-sale securities	871,041	800,303
Total valuation and translation adjustments	871,041	800,303
Total net assets	8,855,333	8,914,336
Total liabilities and net assets		10,717,899	10,697,817

3

Non-consolidated statements of income (cumulative)

			(Thousands of yen)
		Three months ended	Three months ended
		May 31, 2020	May 31, 2021
Net sales	1,922,963	2,509,960
Cost of sales	1,678,259	2,086,363
Gross profit	244,703	423,596
Selling, general and administrative expenses	175,049	252,279
Operating profit	69,654	171,316
Non-operating income
Foreign exchange gains	6,626	-
Other	643	-
Total non-operating income	7,269	-
Non-operating expenses
Share issuance costs	56	-
Foreign exchange losses	-	2,656
Guarantee commission	165	156
Other	0	20
Total non-operating expenses	222	2,833
Ordinary profit	76,701	168,483
Extraordinary losses
Special executive bonuses	-	10,000
Total extraordinary losses	-	10,000
Profit before income taxes	76,701	158,483
Income taxes	21,269	48,398
Profit		55,432	110,085

4