DAIICHIKOSHO

CO.,

LTD.

Translation
This report is a translation of excerpts from original Japanese Flash Report and for reference purpose only. In case of discrepancy between this reportand original Japanese Flash Report, the latter shall prevail.

FY2021, the year ending March 31, 2022

Flash Report on the Consolidated Results for the Third Quarter Ended December
31, 2021 [JGAAP]
February 14, 2022

Company Name:
DAIICHIKOSHO CO., LTD.
Stock Exchange Listing: Tokyo Stock Exchange
Code Number:
7458
URL:
https://www.dkkaraoke.co.jp/
Representative:
Tadahiro Hoshi, President
Contact:
Yasuhisa Nishihara, General Manager, Accounting Department
Phone:+81-3-3280-2151
Date to Submit the Quarterly Securities Report: February 10, 2022
Start Date for Dividend Payment: ―Availability of Supplementary Briefing Material on Quarterly Financial Results: None
Schedule of Quarterly Financial Results Briefing Session: None
(Amounts below one million yen are truncated.)

1. Consolidated Performance for the Nine Months Ended December 31, 2021 (From April 1, 2021, toDecember 31, 2021)(1) Consolidated operating results(Percentage figures indicate increase/decrease from a year earlier.)Net sales
Nine months ended
December 31, 2021
Nine months ended
December 31, 2020

Operating income

Ordinary income

Millions of yen%

Millions of yen%

Millions of yen%

69,927

(1.8)

1,356

―

2,377

―

71,232(36.3)(1,171)―93(99.5)

Net income attributable toowners of parent
Millions of yen%

Yen

Fully diluted net income
per share
Yen

94.51

94.37(59.32)―

Basic earnings per share

Nine months ended
5,157―
December 31, 2021
Nine months ended(3,305)―
December 31, 2020
(Note) Comprehensive income:Nine months ended December 31, 2021: 5,042 million yen ― %Nine months ended December 31, 2020: (2,493) million yen ― %(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Millions of yen

As of December 31, 2021
182,414
As of March 31, 2021
186,795(Reference) Shareholders’ equity:
As of December 31, 2021: 103,423 million yen
As of March 31, 2021:
104,258 million yen

1

105,014106,030

Equity ratio
%
56.7
55.8

DAIICHIKOSHO

CO.,

LTD.

2. Dividend
First Quarter
Yen――Second Quarter
Yen
56.00
56.00

Annual dividendThird Quarter
Yen――

Year ended March 31, 2021
Year ending March 31, 2022
Year ending March 31, 2022
(forecast)(Note) Changes in dividends forecast from most recently announced figures: None

Year-end
Yen
57.00

AnnualYen
113.0057.00

113.003. Forecast of Consolidated Performance for FY2021, the Year Ending March 31, 2022 (From April
1, 2021, to March 31, 2022)(Percentage figures indicate increase/decrease from a year earlier.)
Net salesYear ending March 31,2022 (full year)

Operating income

Ordinary income

Millions of yen%

Millions of yen%

Millions of yen%94,300

1.1(1,000)

―

100―

Net income attributable toowners of parent
Millions of yen%

Basic earnings per share

Yen
Year ending March 31,4,300―
78.76
2022 (full year)(Note) Changes in forecast of consolidated performance from most recently announced figures: Yes*Notes(1) Significant changes in subsidiaries during the period under review (changes to specific subsidiaries resulting inchanges in scope of consolidation): None
(2) Adoption of special accounting policies for quarterly financial statements: None
(3) Changes in accounting standard, accounting estimation change and error correction
1) Changes due to changes in accounting standard: Yes
2) Changes due to changes in accounting standard except (3) 1): None
3) Changes due to accounting estimation change: None
4) Error correction: None(Note) For details, please refer to “Changes in Accounting Policies” on page 9.
(4) Number of common shares issued
1) Number of shares issued
As of54,734,200 As of
57,234,200(including treasury shares)
December 31, 2021
shares March 31, 2021
shares2) Number of shares of treasury
As of141,239 As of2,711,167
shares
December 31, 2021
Shares March 31, 2021
shares3) Average number of shares
Nine months ended
54,570,086 Nine months ended
55,731,042
during the period
December 31, 2021
shares December 31, 2020
shares* These consolidated financial results are outside the scope of quarterly review by Certified Public Accountants orauditing corporations.
* Explanation for the appropriate use of performance forecasts and other special notes:
The earnings forecast and other forward-looking statements herein are based on the information available to theCompany and certain assumptions deemed reasonable at the time of publication. The Company does not in any way
guarantee the achievement of the projections. Actual results may significantly differ from the forecast values due toa wide range of factors.

2

DAIICHIKOSHO

CO.,

LTD.

Quarterly Consolidated Financial Statements and PrimaryNotes(1) Quarterly Consolidated Balance Sheets(Millions of yen)

FY2020(As of March 31, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Inventories
OtherAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Karaoke equipment for rental, net
Karaoke cabin and restaurant facilities, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Leasehold and guarantee deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

3

Current Third quarter(As of December 31, 2021)

68,508
3,546
8,946
6,722
(944)
86,78065,966
5,304
7,981
6,147(983)
84,416

6,705
11,68540,681
6,611
65,683

6,301
11,84940,356
6,345
64,852

92
6,140
6,232

850
5,625
6,475

4,811
14,2249,194(131)
28,098100,014
186,795

4,567
13,7298,437(65)
26,66997,997
182,414DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Provision for retirement benefits for directors (andother officers)
Retirement benefit liabilityOther
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

4FY2020(As of March 31, 2021)

Current Third quarter(As of December 31, 2021)

2,591
17,996
1,736
1,168
13,21936,712

2,833
7,587
1,535
1,146
10,55423,65632,08541,940

899

949

7,556
3,511
44,05280,765

7,868
2,984
53,742
77,39912,3504,114
98,783(10,958)
104,289

12,3504,114
87,694(570)
103,589810(733)
32(140)
(31)
388
1,383
106,030
186,795

651(733)
24(108)
(165)
200
1,390
105,014
182,414DAIICHIKOSHO

CO.,

LTD.

(2) Quarterly Consolidated Statements of Income and Comprehensive Income(Quarterly Consolidated Statements of Income)(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Insurance claim income
Cooperative monetary aid received
Compensation income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Provision of allowance for doubtful accounts
Cancellation penalty
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Subsidies income
Total extraordinary income
Extraordinary losses
Loss on disposal of non-current assets
Impairment losses
Loss on sale of investment securities
Loss on valuation of investment securities
Loss on COVID-19
Total extraordinary losses
Income (loss) before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income (loss)
Net income attributable to non-controlling interests
Net income (loss) attributable to owners of parent

5

Nine months ended
December 31, 2020
(From April 1, 2020, toDecember 31, 2020)

Nine months ended
December 31, 2021
(From April 1, 2021, toDecember 31, 2021)

71,23250,76020,472
21,643(1,171)

69,92747,013
22,913
21,557
1,356

35
147
200
420
820
1,624

17
339
201－
789
1,347

151
956
7
133
359
93

154
33－
57
80
326
2,377

314
0
2,746
3,061

22－
11,554
11,577

118
731
0
1
6,258
7,110
(3,954)637(1,344)(707)(3,247)58(3,305)

40
131
0108
6,452
6,733
7,221
1,640
403
2,044
5,176
19
5,157

DAIICHIKOSHO

CO.,

LTD.

(Quarterly Consolidated Statements of Comprehensive Income)(Millions of yen)

Net income (loss)Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

6

Nine months ended
December 31, 2020
(From April 1, 2020, toDecember 31, 2020)

Nine months ended
December 31, 2021
(From April 1, 2021, toDecember 31, 2021)(3,247)

5,176

671
35
47754
(2,493)

(159)
(8)
32
(134)
5,042

(2,551)

5,022

58

19

DAIICHIKOSHO

CO.,

LTD.

Notes to the Quarterly Consolidated Financial Statements(Changes in Accounting Policies)(Adoption of the Accounting Standard for Revenue Recognition, etc.)
The Company started to adopt the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31,
2020; hereinafter referred to as the “Revenue Recognition Accounting Standard”), etc. at the beginning of the three months
ended June 30, 2021. Accordingly, the Company recognized revenue at an amount it expected to receive in exchange for apromised good or service at a time when control over such good or service was transferred to a customer. Main changes
attributable to the adoption of the Revenue Recognition Accounting Standard, etc. are as follows:(1) Revenue recognition with regard to customer loyalty programs
As for the provision of services under customer loyalty programs, which grant points at the time of sales at karaokecabins and restaurants, etc., the Company had previously recognized revenue at the time of sales. The Company
changed the method and identified granted points as performance obligations and allocated transaction prices based onstandalone selling prices calculated with factors taken into consideration, such as the number of points expected toexpire in the future without being redeemed.
(2) Revenue recognition with regard to installment sales
As for installment sales, the Company had previously recognized revenue on the installment method. The Company
changed the method and recognized revenue at the time when goods or services were transferred to customers andperformance obligations were satisfied.
(3) Revenue recognition with regard to agent transactions
As for transactions in which the Company acts as an agent in providing products to customers, the Company had
previously recognized revenue at gross amounts received from customers. The Company changed the method andrecognized revenue at amounts received from customers, net of amounts paid to suppliers.
In adopting the Revenue Recognition Accounting Standard, etc., the Company followed the transitional treatment
stipulated in the proviso of Paragraph 84 of the Revenue Recognition Accounting Standard. Accordingly, the Company
adjusted retained earnings as of the beginning of the three months ended June 30, 2021 with the cumulative effect thatwould be obtained if the Company retrospectively adopted the new accounting policy prior to the beginning of the threemonths ended June 30, 2021, and adopted the new accounting policy with the adjusted balance.
As a result, net sales during the nine months ended December 31, 2021 decreased 185 million yen, cost of sales
decreased 165 million yen, selling, general and administrative expenses decreased 39 million yen, and operating income,ordinary income, and income before income taxes increased 20 million yen, respectively. In addition, the balance ofretained earnings as of the beginning of the nine months ended December 31, 2021 increased 65 million yen.
(Adoption of the Accounting Standard for Fair Value Measurement, etc.)
The Company started to adopt the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4,
2019; hereinafter referred to as the “Fair Value Measurement Accounting Standard”), etc. at the beginning of the threemonths ended June 30, 2021. According to the transitional treatment stipulated in Paragraph 19 of the Fair Value
Measurement Accounting Standard and Paragraph 44-2 of Accounting Standard for Financial Instruments (ASBJ
Statement No. 10, July 4, 2019), the Company will continue to adopt new accounting policies set forth by the Fair Value
Measurement Accounting Standard, etc. in the future. There is no impact on the quarterly consolidated financial
statements.

7

DAIICHIKOSHO

CO.,

LTD.

(Segment Information)
Nine months ended December 31, 2020 (From April 1, 2020, to December 31, 2020)(Millions of yen)
Reportable segments

Sales
Segment income or
Segment loss
(Operating income or
Operating loss)

Commercial
karaokeKaraokecabin andrestaurantMusic
softwareSubtotal

38,582

20,882

4,748

8,463(8,508)

229

Adjusted
amount(Note)

Postedamount to theconsolidated
quarterlystatements ofincome

Other

Total

64,213

7,018

71,232－71,232

184

485

670

(1,841)(1,171)

Note: The (1,841) million yen adjustment posted to segment income or segment loss is primarily composed of generaland administrative expenses incurred by the administrative department at the head office that are not attributable toany particular reportable segment.

Nine months ended December 31, 2021 (From April 1, 2021, to December 31, 2021)(Millions of yen)
Reportable segments

Sales
Segment income orSegment loss
(Operating income or
Operating loss)

Commercial
karaokeKaraokecabin andrestaurantMusic
softwareSubtotal

39,383

17,834

4,359

9,182

(6,914)47

Adjusted
amount(Note)

Postedamount to theconsolidated
quarterlystatements ofincome

Other

Total

61,5778,350

69,927－

69,927

2,315

769

3,084

(1,728)1,356

Note: The (1,728) million yen adjustment posted to segment income or segment loss is primarily composed of generaland administrative expenses incurred by the administrative department at the head office that are not attributable toany particular reportable segment.

(Additional Information)
Concerning the impairment of non-current assets, tax effect accounting, etc., the Company estimated future cash flows,
recoverability of deferred tax assets, etc. on the assumption that the performance of the Company will recover to the level
before the COVID-19 pandemic in the medium term, though the impact of COVID-19 will continue to have a negative
impact on our performance throughout the fiscal year ending March 31, 2022, due to factors, such as voluntary restraints ongoing out to prevent the spread of the infection and various requests from the governments.
No significant changes have been made to the assumptions made at the end of the previous fiscal year.

8DAIICHIKOSHO

CO.,

LTD.

(Notes to the Quarterly Consolidated Statements of Income)Subsidies income
Following the issuance of the declaration of state of emergency due to the spread of COVID-19, employment
adjustment subsidies, which are subsidies that are provided to cover salaries, etc. for the period during which employees arefurloughed, as well as subsidies, etc. that are received from the national government, local municipalities, etc., have beenposted to “subsidies income.”
Loss on COVID-19
Following the issuance of the declaration of state of emergency due to the spread of COVID-19, we implemented ameasure to furlough (special leave of absence) employees in predetermined areas. In addition, karaoke cabins andrestaurants operated by the Company as well as those operated by our clients closed temporarily or opened for shorter
hours, following the requests from the national government and local municipalities.
In light of these events, fixed costs of karaoke cabins and restaurants operated by the Company during the period ofclosure and fixed costs in relation to leasing of commercial karaoke equipment, including salaries for the period during
which employees were furloughed, have been posted to “loss on COVID-19.”9