Summary of Business Results

Net sales increased 3.6% year on year to 34,101 million yen, thanks to the strong performance of the medical business, the elderly care business and the children business.

Operating profit increased 43.5% year on year to 1,714 million yen due to the increase in profit due to higher sales, improved profitability resulting from the restructuring of the Smart hospital business and the reduction of selling, general and administrative expenses as a result of increased efficiency.

EBITDA increased by 25.0% year on year to 2,478 million yen.

Ordinary profit increased 47.7% year on year to 1,596 million yen.

Profit attributable to owners of parent for the period amounted to 853 million yen. It decreased 74.8% from the same period of the previous year due to the effect of a gain on negative goodwill of 2,828 million yen recorded in the same period of the previous year following the acquisition of subsidiaries Solasto Care Corporation (former name: Mitsui Sumitomo Insurance Care Net Co., Ltd.) and Solasto Care Network Corporation (former name: Sogo Care Network Co., Ltd.) in June 2023.

Net sales decreased 0.4% year on year to 17,741 million yen, almost the same as the first quarter of the previous year, due to the contributions of new orders for contracted services and worker dispatching services received during the previous fiscal year and the effect of price revisions, despite a decrease of approximately 670 million yen in sales due to the end of COVID-19 related services. Operating profit increased 7.5% year on year to 1,158 million yen, mainly due to an increase in profit from an increase in sales of contracted services and worker dispatching services and the absence of the new start-up costs that were higher than expected that were recorded in the previous fiscal year which exceeded the negative impact of the decrease in profit due to the decline of sales of COVID-19 related services.

Net sales increased 9.1% year on year to 13,763 million yen due to the continued recovery following the COVID-19 pandemic, as well as the contributions of a total of four companies that became subsidiaries in FY2023, including Possible Medical Science Corporation and Solasto Care Corporation, and newly opened business centers. Operating profit rose 43.9% year on year to 529 million yen, a significant increase due to the increase in sales, efficiency improvements including the consolidation and closing of elderly care centers and the impact of lower depreciation expenses following the recording of impairment losses in the previous fiscal year.

Net sales increased 3.8% year on year to 2,540 million yen, mainly due to an increase in the number of children attending the company’s child-care facilities. Operating profit increased significantly year on year to 52 million yen, mainly due to an increase in sales and a decrease in recruiting expenses.

Total assets increased by JPY 5,346 million compared to the end of FY2022, mainly due to an increase in property, plant and equipment which includes land as a result of M&A activities, as well as an increase in cash and deposits and accounts receivable.

Total liabilities increased by JPY 6,434 million, mainly due to an increase in long-term and short-term borrowings and an increase in accounts payable and deposits received due to the payment of social insurance contributions being carried over to FY2024, as the end of FY2023 was a bank holiday.

Net assets decreased by JPY 1,087million due to dividend payments of JPY 1,887 million and the acquisition of treasury shares of JPY 1,499 million, despite the recording of net income of JPY 2,257 million.

Net cash provided by operating activities amounted to 7,858 million yen as a result of adjusting income before income taxes and minority interests of 4,141 million yen for impairment loss, recording of non-cash items such as amortization of goodwill and gain on bargain purchase, and an increase in accounts payable and deposits due to the fact that payments of social insurance premiums were carried forward due to the impact of the financial institution holiday, and income taxes paid. Net cash provided by operating activities in FY2022 totaled 9,012 million yen.

Net cash used in investing activities amounted to 2,762 million yen due to M&A and purchases of property, plant and equipment. Net cash used in investing activities was 2,171 million yen in FY2022.

Net cash used in financing activities was 1,837 million yen due to cash dividends paid and the purchase of treasury stock, while net cash provided by financing activities was 1,765 million yen due to the net inflow of new loans and repayment of loans payable. Net cash used in investing activities was 5,211 million yen in FY2022.

As a result, the year-end balance of cash and cash equivalents increased by 3,258 million yen from the end of FY2022 to 15,115 million yen.