WingArc1st : Consolidated Financial Results for the Three Months Ended May 31, 2022 (under IFRS)

Note: This document has been translated from a part of 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 May 31, 2022

(under IFRS)

	July 13, 2022
Company name:	WingArc1st Inc.
Listing:	Tokyo Stock Exchange
Securities code:	4432
URL:	https://www.wingarc.com/en/
Representative:	Jun Tanaka, President, Executive Officer and CEO
Inquiries:	Taisuke Fujimoto, Director, Executive Officer and CFO
TEL:	[phone]

Scheduled date to file quarterly securities report:	July 13, 2022
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results:	Yes
Holding of quarterly financial results presentation meeting:	Yes (for institutional investors and
	analysts)

(Amounts are rounded down to the nearest million yen.)

1. Consolidated financial results for the three months ended May 31, 2022 (from March 1, 2022 to May 31, 2022)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)
		Revenue		Operating profit	Profit before income	Profit
			taxes
	Three months ended	Millions of yen		%	Millions of yen		%	Millions of yen		%	Millions of yen		%
	May 31, 2022	5,723		21.4	1,935		37.2	1,908		39.0	1,440		43.0
	May 31, 2021	4,713		11.2	1,410		17.6	1,372		18.3	1,007		20.9
		Profit attributable to	Total comprehensive	Basic earnings	Diluted earnings
		equity holders of the
		income		per share		per share
		parent
	Three months ended	Millions of yen		%	Millions of yen		%			Yen			Yen
	May 31, 2022	1,447		43.6	1,621		60.7			42.68			42.05
	May 31, 2021	1,007		20.9	1,009		22.6			32.49			29.65

Note: Effective the fiscal year ended February 28, 2022, the Company has adopted a share-based remuneration system which utilizes an officer remuneration BIP trust, and shares of the Company held by the trust are included in treasury shares. In line with this, for the calculation of basic earnings per share and diluted earnings per share, the number of the Company's own shares held by the trust was included in the number of treasury shares, which are excluded from the calculation for the weighted average number of ordinary shares outstanding during the period.

(Reference)

	EBITDA		Adjusted EBITDA	Adjusted profit attributable to
		equity holders of the parent
Three months ended	Millions of yen		%	Millions of yen	%	Millions of yen	%
May 31, 2022	2,259		31.0	2,259	30.2	1,447	42.5
May 31, 2021	1,724		14.4	1,735	14.0	1,015	20.3

Note: The Company uses EBITDA, adjusted EBITDA and adjusted profit attributable to equity holders of the parent as important management indicators. For information about each indicator, refer to "(Notes when referring to summary information)" below.

(2) Consolidated financial position
				Equity attributable to	Ratio of equity
		Total assets	Total equity	equity holders of the	attributable to equity
				parent	holders of the parent
	As of	Millions of yen	Millions of yen	Millions of yen	%
	May 31, 2022	60,258	31,536	31,448	52.2
	February 28, 2022	58,919	30,619	30,543	51.8

2. Cash dividends

		Dividends per share
	First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Annual total
	Yen	Yen	Yen	Yen	Yen
Fiscal year ended	0.00	20.60	0.00	22.00	42.60
February 28, 2022
Fiscal year ending	0.00
February 28, 2023
Fiscal year ending
February 28, 2023		21.30	0.00	21.30	42.60
(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Consolidated earnings forecasts for the fiscal year ending February 28, 2023 (from March 1, 2022 to February 28, 2023)

(Percentages indicate year-on-year changes.)

								Adjusted profit
	Revenue		Operating profit	Adjusted EBITDA	attributable to equity
								holders of the parent
Fiscal year ending	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%
February 28, 2023	21,000		5.9	4,750	(20.6)	6,000	(18.0)	3,450	(21.5)

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

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Changes in accounting policies and changes in accounting estimates

(i)	Changes in accounting policies required by IFRS:	None
(ii)	Changes in accounting policies due to other reasons:	None
(iii)	Changes in accounting estimates:	None

(3) Number of issued shares (ordinary shares)

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

As of May 31, 2022	34,394,770 shares
As of February 28, 2022	34,372,370 shares

b. Number of treasury shares at the end of the period

As of May 31, 2022	479,459 shares
As of February 28, 2022	500,000 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

For the three months ended May 31, 2022	33,898,164 shares
For the three months ended May 31, 2021	31,009,747 shares

• Quarterly financial results reports are exempt from quarterly reviews conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special items
  (Caution concerning forward-looking statements)
  The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. Actual business and other results may differ substantially due to various factors.
  (Notes when referring to summary information)
• 1. EBITDA = Operating profit + Depreciation and amortization expenses
  2. From the fiscal year ended February 29, 2020, due to the adoption of IFRS 16, the right of use related to office leases is recognized as a right-of-use asset, and depreciation related to this asset is also recorded. However, in the calculation of EBITDA, depreciation related to this right-of-use asset is excluded from
     "Depreciation and amortization expenses."
  3. Adjusted EBITDA = EBITDA + One-time expenses
  4. Adjusted profit attributable to equity holders of the parent = Profit attributable to equity holders of the parent + One-time expenses - Tax effect adjustment
  5. EBITDA, Adjusted EBITDA and Adjusted profit attributable to equity holders of the parent are not measures prescribed by IFRS, but rather are financial measures that the Group believes are useful for investors to evaluate the Group's performance.
  6. EBITDA, Adjusted EBITDA and Adjusted profit attributable to equity holders of the parent should not be considered as alternative measures to other measures presented in accordance with IFRS, as they exclude some of the items that affect quarterly profit and have significant limitations as a means of analysis.
     EBITDA, Adjusted EBITDA, and Adjusted profit attributable to equity holders of the parent for the Group may not be comparable to the measures used by other companies in the industry due to different calculation methods from those used for the same or similar measures. As a result, their usefulness may be reduced.

WingArc1st Inc. Consolidated Financial Results

Condensed Quarterly Consolidated Financial Statements

1. Condensed quarterly consolidated statements of financial position

			(Unit: thousand yen)
	As of February 28, 2022		As of May 31, 2022
Assets
Current assets
Cash and cash equivalents	9,016,639	9,940,808
Trade and other receivables	1,495,336	1,733,591
Other financial assets	32,215	42,225
Other current assets	396,721	609,484
Total current assets	10,940,914	12,326,109
Non-current assets
Property and equipment	1,481,054	1,369,307
Goodwill	27,249,587	27,309,490
Other intangible assets	16,636,995	16,462,467
Other financial assets	2,597,678	2,777,490
Other non-current assets	13,141	14,014
Total non-current assets	47,978,457	47,932,771
Total assets	58,919,371	60,258,881
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables	636,663	711,210
Contract liabilities	5,746,468	6,702,616
Current portion of long-term borrowings	1,997,478	1,998,318
Income taxes payable	840,301	401,328
Other financial liabilities	383,667	556,570
Other current liabilities	1,798,507	1,433,251
Total current liabilities	11,403,085	11,803,296
Non-current liabilities
Long-term borrowings, net of current portion	12,191,351	12,196,618
Provisions	90,297	90,355
Other financial liabilities	57,041	39,131
Deferred tax liabilities	4,558,135	4,593,409
Total non-current liabilities	16,896,826	16,919,515
Total liabilities	28,299,912	28,722,812
Equity
Issued capital	1,084,100	1,089,851
Capital surplus	12,061,694	12,064,687
Other components of equity	778,173	952,119
Retained earnings	17,269,118	17,964,998
Treasury shares	(650,000)	(623,296)
Equity attributable to equity holders of the parent	30,543,086	31,448,360
Non-controlling interests	76,372	87,708
Total equity	30,619,458	31,536,069
Total liabilities and equity	58,919,371	60,258,881

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WingArc1st Inc. Consolidated Financial Results

1. Condensed quarterly consolidated statements of profit or loss and condensed quarterly consolidated statements of comprehensive income
   (Condensed quarterly consolidated statements of profit or loss)

(Unit: thousand yen, unless otherwise stated)

	Three months ended		Three months ended
	May 31, 2021		May 31, 2022
Revenue	4,713,690	5,723,872
Personnel expenses except those included in research	(1,261,216)	(1,314,711)
and development costs
Research and development costs	(603,755)	(644,866)
Outsourcing expenses	(419,660)	(534,268)
Commission expenses	(193,751)	(270,954)
Other operating income	3,486	3,811
Other operating expenses	(828,585)	(1,027,427)
Operating profit	1,410,206	1,935,456
Finance income	1,405	11,955
Finance costs	(38,953)	(39,326)
Profit before income taxes	1,372,658	1,908,084
Income taxes	(364,995)	(467,359)
Profit	1,007,663	1,440,725
Profit attributable to:
Equity holders of the parent	1,007,475	1,447,045
Non-controlling interests	187	(6,320)
Profit	1,007,663	1,440,725
Earnings per share
Basic earnings per share (yen)	32.49	42.68
Diluted earnings per share (yen)	29.65	42.05

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