Note: This document has been translated from 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.

July 6, 2022

Consolidated Financial Results
for the Six Months Ended May 31, 2022
(Under Japanese GAAP)

Company name:
SALA Corporation
Listing:
Tokyo Stock Exchange / Nagoya Stock Exchange
Securities code:
2734
URL:
https://www.sala.jp/
Representative:
Goro Kamino, President and Representative Director, Group Representative and CEO
Inquiries:
Shinichi Ichikawa, Manager of General Affairs Group, General Affairs Department
Telephone:+81-532-51-1182
Scheduled date to file quarterly securities report:
July 8, 2022
Scheduled date to commence dividend payments:
July 29, 2022
Preparation of supplementary material on quarterly financial results: None
Holding of quarterly financial results briefing:
Yes (for institutional investors andanalysts)(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the six months ended May 31, 2022 (from December 1, 2021 to
May 31, 2022)(1) Consolidated operating results (cumulative)
Net sales
Six months ended
May 31, 2022
May 31, 2021

Operating profit

Millions of yen

3.9
2.8

% Millions of yen

(1.0)
12.8

7,030
6,941

For the six months ended May 31, 2022:
For the six months ended May 31, 2021:

Basic earnings
per share
Six months ended
May 31, 2022
May 31, 2021

6,243
6,307

Profit attributable toowners of parent

Ordinary profit% Millions of yen

118,277
113,816

Note: Comprehensive income(Percentages indicate year-on-year changes.)% Millions of yen

1.3
(0.1)

%

4,801
4,765

0.8
2.9

¥5,199 million [3.8%]¥5,009 million [10.5%]

Diluted earnings
per share
Yen

Yen

75.36
75.51

–
–

Note: The Company has applied the “Accounting Standard for Revenue Recognition” (Accounting Standards Board ofJapan (ASBJ) Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the firstquarter of the current fiscal year, and each figure for the six months ended May 31, 2022, is the figure after applying
the accounting standard and relevant ASBJ regulations.

(2) Consolidated financial position
Total assets
As of
May 31, 2022
November 30, 2021
Reference:

Net assets

Equity-to-asset ratio

Millions of yen

Millions of yen%

184,935
187,481

71,72566,69938.1
34.9

EquityAs of May 31, 2022:
As of November 30, 2021:¥70,379 million¥65,425 million

Note: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31,2020) and relevant ASBJ regulations from the beginning of the first quarter of the current fiscal year, and each figure
as of May 31, 2022, is the figure after applying the accounting standard and relevant ASBJ regulations.

2. Cash dividends
Annual dividends per shareFirst
quarter-end
Fiscal year ended
November 30, 2021
Fiscal year ending
November 30, 2022

Secondquarter-end

Thirdquarter-end

Fiscal year-end

Total

Yen

Yen

Yen

Yen

Yen

–

10.00

–

13.00

23.00

–

11.00

Fiscal year ending
November 30, 2022
–
14.00
25.00
(Forecast)
Note: Revisions to the forecast of cash dividends most recently announced: Yes
For the revisions to the dividend forecast, please refer to the “Notice Concerning Revisions to the Dividend Forecast
Due to the Implementation of Commemorative Dividends” announced today (July 6, 2022).

3. Consolidated earnings forecasts for the fiscal year ending November 30, 2022 (from December 1,
2021 to November 30, 2022)
Net sales

Fiscal year ending
November 30, 2022

(Percentages indicate year-on-year changes.)
Basic
Profit attributable
Ordinary profit
earnings per
to owners of parent
share

Operating profit

Millions ofyen%Millions ofyen%Millions ofyen%Millions of
yen

%

Yen

224,000

(1.7)

6,800

3.2

7,600

(8.6)

4,900

(6.9)

76.99

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 thechange in scope of consolidation): None
(2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial
statements: None
(3) Changes in accounting policies, changes in accounting estimates, and restatement(i) Changes in accounting policies due to revisions to accounting standards and other regulations: Yes(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: None(iv) Restatement: None
Note: For details, please refer to “(4) Notes to quarterly consolidated financial statements (Changes in accounting
policies)” of “2. Quarterly consolidated financial statements and significant notes thereto” on page 11 of theattachment.

(4) Number of issued shares (common shares)(i) Total number of issued shares at the end of the period (including treasury shares)
As of May 31, 2022

66,041,147 shares

As of November 30, 2021

66,041,147 shares(ii) Number of treasury shares at the end of the period
As of May 31, 2022

2,239,067 shares

As of November 30, 2021

2,396,033 shares(iii) Average number of shares outstanding during the period (cumulative from the beginning of the
fiscal year)
Six months ended May 31, 2022

63,712,083 shares

Six months ended May 31, 2021

63,104,849 shares* Quarterly financial results reports are exempt from quarterly review conducted by certified public
accountants or an audit corporation.
* Proper use of earnings forecasts, and other special matters(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 by
the Company. Consequently, any statements herein do not constitute assurances regarding actual resultsby the Company. Actual business and other results may differ significantly due to various unforeseen
factors.

SALA Corporation (2734)○Attachment Index
Index
1. Qualitative information on quarterly consolidated financial results ......................................................... 2(1) Explanation of operating results ......................................................................................................... 2(2) Explanation of financial position........................................................................................................ 4(3) Explanation of consolidated earnings forecasts and other forward-looking statements ..................... 4
2. Quarterly consolidated financial statements and significant notes thereto ............................................... 5(1) Quarterly consolidated balance sheet ................................................................................................. 5(2) Quarterly consolidated statement of income and quarterly consolidated statement of comprehensive
income ................................................................................................................................................ 7
Quarterly consolidated statement of income (cumulative) ................................................................. 7
Quarterly consolidated statement of comprehensive income (cumulative) ........................................ 8(3) Quarterly consolidated statement of cash flows .................................................................................. 9(4) Notes to quarterly consolidated financial statements ....................................................................... 11
Uncertainties of entity’s ability to continue as going concern ......................................................... 11
Notes on significant changes in the amount of shareholders’ equity ................................................ 11
Changes in accounting policies ........................................................................................................ 11
Additional information ..................................................................................................................... 12
Segment information ........................................................................................................................ 14
Significant events after reporting period .......................................................................................... 17-1-

SALA Corporation (2734)

1. Qualitative information on quarterly consolidated financial results(1) Explanation of operating results
During the six months ended May 31, 2022, the Japanese economy saw an increase in uncertainties
regarding the economic outlook due to factors such as rising raw material prices and the progression of
inflation due to the impact of situation in Ukraine, etc., while efforts to both prevent the spread of thenovel coronavirus disease (COVID-19) and to revitalize socioeconomic activities continued toprogress.
Under these conditions, the Group (hereinafter referred to as the “SALA Group”) focused on initiatives
for “new developments by SALA in life,” “SALA’s penetration” and “transformation and challenge,”
which are its priority issues in the fourth medium-term management plan with the fiscal year ended
November 30, 2020 as the first fiscal year. The SALA Group is unified in pressing ahead with eachmeasure in the fiscal year ending November 30, 2022, as it is the final year to complete the fourth
medium-term management plan.
During the first six months of the current fiscal year, SALA ENERGY CO., LTD., which operates theEnergy & Solutions business, worked to prepare to rebuild a core system in order to provide optimalhigh quality services to customers through the use of digital technologies. In March 2022, the company
entered into an agreement related to the “project to introduce renewable energy to city-owned
facilities” with Toyohashi City and started initiatives that systematically entrust services from theinstallation of solar power generation equipment, etc. at 15 facilities owned by Toyohashi City to theoperation, maintenance, and management of the equipment. ASCO Co., Ltd., in the animal health carebusiness, has decided to integrate its subsidiaries A.M.I. Co., Ltd. and Daiwa Pharmaceutical co,. ltd.
through an absorption-type merger on December 1, 2022 in order to further strengthen profitability andexpand its market share, following the integration of its subsidiary Hokuyaku Co., Ltd., in December
2021. Moreover, emCAMPUS Co.,Ltd., a new company established in December 2021, is working torevitalize local communities by working with governments, such as those in Aichi Prefecture andToyohashi City, companies, universities, etc., and working to provide learning programs for working
people and support entrepreneurs.
As for operating results for the first six months of the current fiscal year, net sales increased by 3.9%
year on year to ¥118,277 million due to increases in revenue mainly in the Energy & Solutions businessand the Housing business amid a decrease in revenue of ¥7,282 million compared with the previous
accounting method due to the application of the Accounting Standard for Revenue Recognition andrelevant ASBJ regulations. As for profit, despite increases in profit in the Energy & Solutions businessand the Housing business, operating profit decreased by 1.0% year on year to ¥6,243 million due todecreases in profit mainly in Engineering & Maintenance business. Meanwhile, as gain on valuation ofderivatives on forward exchange contracts increased, ordinary profit increased by 1.3% year on year to¥7,030 million. As a result, profit attributable to owners of parent increased by 0.8% year on year to¥4,801 million.
Operating results of each segment are as follows.
Energy & Solutions businessNet sales¥59,723 million (up 14.2% year on year)

Operating profit ¥4,519 million (up 9.2% year on year)
With regard to city gas, sales volume for home use, industrial use and commercial use increased.
Net sales increased due to the upwardly adjustment of the selling price of city gas based on asystem to adjust raw material costs, and due to the revision of the selling price of LP gas was inresponse to higher raw material prices. In terms of profit, operating profit increased due to higher
gross profit from city gas sales.

-2-SALA Corporation (2734)

Engineering & Maintenance businessNet sales¥15,749 million (down 9.4% year on year)

Operating profit ¥1,409 million (down 18.8% year on year)
Net sales decreased as completed projects decreased in the equipment work department and thecivil engineering department. As for profit, despite efforts to reduce cost of sales by thoroughprocess management, operating profit decreased due to the declined profit margin of completed
construction in the equipment work department and the construction department.
Housing businessNet sales¥18,509 million (up 6.3% year on year)

Operating profit ¥211 million (up 151.5% year on year)
In the housing sales department, the number of custom-built houses and lot houses sold increased.
In the housing components and materials processing and sales department, orders received
increased as a result of its efforts to expand transactions mainly in the existing business partners.
Consequently, net sales and operating profit both increased.
Car Life Support businessNet sales¥7,525 million (up 2.9% year on year)

Operating profit ¥5 million (down 93.2% year on year)
Both Volkswagen and Audi experienced a decrease in the number of new cars sold, but net sales
increased as the number of used cars sold increased due to the Company focusing on used car sales.
As for profit, operating profit decreased due to an increase in selling, general and administrative
expenses, such as promotion expenses.
Animal Health Care businessNet sales¥13,512 million (down 14.0% year on year)

Operating profit ¥514 million (down 3.1% year on year)
In the livestock farming department, orders for veterinary medical products, etc. received fromexisting business partners decreased year on year due to the impact of high feed prices, etc. Net
sales decreased due to the inclusion of a revenue decreasing factor of ¥2,186 million from theapplication of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations. As
for profit, operating profit decreased despite efforts to reduce selling, general and administrative
expenses.
Properties businessNet sales¥2,064 million (up 9.6% year on year)

Operating loss
fiscal year)¥188 million (operating loss of ¥250 million for the same period of the previous

In the asset management department managing real estate properties, etc., net sales increased due tostrong performance, such as an increase in revenue from asset management due to an increase in
the number of properties handled. As for profit, operating loss was recorded owing to the continued
effect of a decrease in the number of customers of banquets, bridal services, hotel stays, etc. in thehospitality department stemming from the impact of COVID-19.

-3-

SALA Corporation (2734)(2) Explanation of financial position(i) Assets, liabilities and net assets
AssetsAssets amounted to ¥184,935 million, down ¥2,546 million from November 30, 2021. This was mainly
due to decreases in “work in process” by ¥2,042 million, “property, plant and equipment” by ¥972
million, “deferred tax assets” by ¥647 million and “other” under current assets by ¥464 million, despite
an increase in “notes and accounts receivable - trade, and contract assets” by ¥1,440 million.
Liabilities
Liabilities were ¥113,210 million, down ¥7,571 million from November 30, 2021. This was mainly due
to decreases in “long-term borrowings (including current portion)” by ¥4,142 million, “other” undercurrent liabilities by ¥2,926 million and “provision for bonuses” by ¥1,321 million, despite increases in“electronically recorded obligations - operating” by ¥550 million and “notes and accounts payable trade” by ¥253 million.
Net assets
Net assets were ¥71,725 million, up ¥5,025 million from November 30, 2021. This was mainly due toan increase in “retained earnings” of ¥4,544 million (increased by ¥4,801 million due to recording of
profit attributable to owners of parent, decreased by ¥858 million due to payment of dividends, andincreased by ¥601 million due to the application of the Accounting Standard for Revenue Recognition
and relevant ASBJ regulations).
(ii) Cash flows
Cash and cash equivalents (hereinafter referred to as “cash”) in the six months ended May 31, 2022
decreased by ¥280 million in total, resulting from net cash provided by operating activities of ¥7,276
million, net cash used in investing activities of ¥2,747 million, and net cash used in financing activitiesof ¥4,809 million. As a result, cash and cash equivalents at the end of the six months ended May 31,
2022 were ¥23,947 million.
Cash flows from operating activities
Net cash provided by operating activities was ¥7,276 million (¥4,643 million provided in the same
period of the previous fiscal year). This was mainly due to increase factors such as “profit before
income taxes” of ¥7,084 million, “depreciation” of ¥3,291 million and “increase in trade payables” of¥680 million, and decrease factors including “income taxes paid” of ¥1,547 million, “decrease inprovision for bonuses” of ¥1,321 million, “increase in inventories” of ¥640 million and “gain on
valuation of derivatives” of ¥286 million.
Cash flows from investing activities
Net cash used in investing activities was ¥2,747 million (¥2,133 million used in the same period of theprevious fiscal year). This was mainly due to “purchase of property, plant and equipment” of ¥2,875
million.
Cash flows from financing activities
Net cash used in financing activities was ¥4,809 million (¥2,303 million used in the same period of theprevious fiscal year). This was mainly due to decrease factors such as “repayments of long-termborrowings” of ¥5,230 million and “dividends paid” of ¥870 million, and increase factors including“proceeds from long-term borrowings” of ¥1,100 million and “net increase in short-term borrowings”
of ¥223 million.
(3) Explanation of consolidated earnings forecasts and other forward-looking statements
There is no change to the consolidated earnings forecasts for the full-year earnings forecasts announced
on January 12, 2022.

-4-

SALA Corporation (2734)

2. Quarterly consolidated financial statements and significant notes thereto(1) Quarterly consolidated balance sheet(Millions of yen)
As of November 30, 2021
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Notes and accounts receivable - trade, and contract
assetsElectronically recorded monetary claims - operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Gas pipe, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets-5-

As of May 31, 2022

24,754
26,52824,475––27,9691,458
12,618
11,135
405
4,781
(196)
81,487

1,803
12,485
9,093
305
4,317
(203)
80,247

20,768
8,821
17,15833,858841
1,475
82,923

20,551
8,475
16,53433,477
1,501
1,409
81,950

338
1,149
1,488

268
1,220
1,488

7,552
3,939
4,920
5,599
(428)
21,583105,994
187,481

7,943
3,570
4,272
5,885
(423)
21,249104,688
184,935

SALA Corporation (2734)(Millions of yen)
As of November 30, 2021
Liabilities
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Provision for warranties for completed construction
Provision for loss on construction contracts
Provision for point card certificates
Provision for loss on guarantees
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Provision for retirement benefits for directors (andother officers)
Provision for share-based compensation
Provision for repairs
Retirement benefit liability
Other
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
Deferred gains or losses on hedges
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets-6-

As of May 31, 2022

24,656
4,289
6,791
9,845
1,301
2,639

24,910
4,840
7,015
8,425
1,528
1,317

7

4

64
175
280
193
14,16364,407

61
166
224
–
11,23659,73140,369198

37,647
271

195

179

417
83
11,782
3,327
56,374
120,782405
93
11,634
3,246
53,478113,210

8,025
25,26933,365(1,585)65,074

8,025
25,28337,909(1,479)69,738

441
356
(446)
351
1,273
66,699187,481

550
552
(461)
641
1,345
71,725
184,935

SALA Corporation (2734)(2) Quarterly consolidated statement of income and quarterly consolidated statement ofcomprehensive income
Quarterly consolidated statement of income (cumulative)
Six months ended
May 31, 2021
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Gain on valuation of derivatives
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Reversal of provision for loss on guarantees
Total extraordinary income
Extraordinary losses
Loss on sale and retirement of non-current assets
Loss on valuation of investment securities
Impairment losses
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent-7-(Millions of yen)Six months ended
May 31, 2022

113,816
81,59132,22425,917
6,307

118,277
86,98731,28925,045
6,243

46
33
178

37
30
286

123

163

385
766

416
934

80
52
132
6,941

68
79
148
7,030

43
24
–
67

34
29
22
85

36
–
43
80
6,928
1,444
586
2,031
4,896
131
4,765

14
0
17
32
7,084
1,804
370
2,174
4,909
107
4,801

SALA Corporation (2734)

Quarterly consolidated statement of comprehensive income (cumulative)
Six months ended
May 31, 2021
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
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-8-(Millions of yen)Six months ended
May 31, 2022

4,896

4,909

112
97
(97)
112
5,009

108
195
(14)
289
5,199

4,876

5,091

133

108

SALA Corporation (2734)(3) Quarterly consolidated statement of cash flows(Millions of yen)Six months ended
May 31, 2021
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses for
directors (and other officers)
Increase (decrease) in provision for warranties forcompleted construction
Increase (decrease) in provision for loss on construction
contracts
Increase (decrease) in provision for point cardcertificates
Increase (decrease) in provision for retirement benefits
for directors (and other officers)
Increase (decrease) in provision for share-based
compensation
Increase (decrease) in provision for repairs
Increase (decrease) in provision for loss on guarantees
Increase (decrease) in retirement benefit liability
Interest and dividend income
Interest expenses
Share of loss (profit) of entities accounted for using
equity method
Loss (gain) on valuation of derivatives
Loss (gain) on sale and retirement of non-current assets
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in long-term accounts payable other
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities-9-

Six months ended
May 31, 2022

6,928
3,370
43
81
(26)
(1,117)

7,084
3,291
17
83
2
(1,321)

(2)

(2)

0

(3)

(48)

1

0

(6)

(19)

(15)

14

(12)

10
–
(193)
(79)
81

10
(193)
(153)
(68)
69

(123)

(163)

(178)
(23)
(24)
–
(421)
(1,559)
849

(286)
(29)
(29)
0
196
(640)
680

(75)

(54)

(1,475)
6,011
78
(100)
(1,346)
4,643

376
8,832
69
(78)
(1,547)
7,276

SALA Corporation (2734)(Millions of yen)Six months ended
May 31, 2021
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Loan advances
Proceeds from collection of loans receivable
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Purchase of treasury shares
Proceeds from sale of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Repayments of finance lease obligations
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 10 -

Six months ended
May 31, 2022

(2,433)
87
(62)
(71)
165
(51)
409
(175)
(2,133)(2,875)
75
(271)
(114)
91
(43)
419
(29)
(2,747)732
1,600(4,157)
(0)
300
(660)
(7)

223
1,100
(5,230)
(0)
105
(870)
(5)

(6)

(16)

(105)
(2,303)
206
21,59821,805(115)(4,809)(280)
24,22723,947

SALA Corporation (2734)(4) Notes to quarterly consolidated financial statements
Uncertainties of entity’s ability to continue as going concern
Not applicable.
Notes on significant changes in the amount of shareholders’ equity
Not applicable.
Changes in accounting policies
Application of accounting standard for revenue recognition, etc.
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 31, 2020) and relevant ASBJ regulations from the beginning of the first quarter of thecurrent fiscal year, and it has recognized revenue at the time the control of promised goods or services
is transferred to the customer at the amount expected to be received upon exchange of said goods orservices.
Major changes due to the application of the Accounting Standard for Revenue Recognition and relevant
ASBJ regulations are as follows.
(i) Revenue recognition related to sales of LP gas and electricity
In relation to sales of LP gas and electricity, the Company changed the method of revenue
recognition whereby, of revenues previously recognized on the basis of the date of reading theelectricity meter, revenue arising between the date of reading the meter in the settlement month andthe settlement date is recognized based on the reasonable estimates.
(ii) Revenue recognition related to agent transactions
In relation to revenue for some direct transactions of principally sales of LP gas and veterinary
medical products, the Company previously had recognized the entire amount of consideration
received from customers as revenue, and that has been changed to a method that recognizes
revenue at the net amount after deducting the amount paid to suppliers from the amount received
from customers for transactions in which the SALA Group acts as an agent for the provision of
goods or services to customers.
(iii) Revenue recognition related to construction contracts
With respect to construction contracts, the Company previously had applied the percentage-ofcompletion method to construction work whose outcome from the completed portion was deemeddefinite, and had applied the completed-contract method to other construction work. As a result of
this application, however, the Company has changed the method to recognize revenue over acertain period of time in alignment with its satisfaction of performance obligations to transfer
goods or services to customers when control over a good or service is to be transferred to thecustomer over a certain period of time. In measuring progress made in satisfying a performanceobligation, construction costs incurred as of the last day of each reporting period are to be
calculated based on the ratio of the total estimated construction costs. Furthermore, revenue isrecognized on a cost recovery basis when it is not possible to reasonably estimate progress towards
satisfaction of performance obligations, but it is probable that the costs incurred will be recovered.
The application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations issubject to the transitional treatment provided for in the proviso to paragraph 84 of the AccountingStandard for Revenue Recognition. The cumulative effect of the retrospective application, assuming the
new accounting policy had been applied to periods prior to the beginning of the first quarter of the- 11 -

SALA Corporation (2734)

current fiscal year was added to or deducted from the opening balance of retained earnings of the firstquarter of the current fiscal year, and thus the new accounting policy was applied from such opening
balance; provided, however, that the new accounting policy was not retrospectively applied to contracts
for which nearly all the revenue amounts had been recognized according to the previous treatment inperiods prior to the beginning of the first quarter of the current fiscal year, by applying the method
provided for in paragraph 86 of the Accounting Standard for Revenue Recognition. Furthermore, byapplying the method set forth in item (1) of the supplementary provisions of paragraph 86 of the
Accounting Standard for Revenue Recognition, modifications to contracts carried out prior to thebeginning of the first quarter of the current fiscal year were accounted for based on the contractual
terms after all contract modifications were reflected. Consequently, this cumulative effect was added toor deducted from the opening balance of retained earnings of the first quarter of the current fiscal year.
As a result of this change, for the first six months of the current fiscal year, net sales decreased by¥7,282 million, cost of sales decreased by ¥7,226 million, selling, general and administrative expenses
decreased by ¥197 million, while operating profit, ordinary profit and profit before income taxes eachincreased by ¥142 million. In addition, the opening balance of retained earnings increased by ¥601
million.
Due to the application of the Accounting Standard for Revenue Recognition and relevant ASBJ
regulations, “notes and accounts receivable - trade” under current assets of the consolidated balance
sheet as of the end of the previous fiscal year has been included in “notes and accounts receivable trade, and contract assets” under current assets from the quarterly consolidated balance sheet as of theend of the first quarter of the current fiscal year. In accordance with the transitional treatment provided
for in paragraph 89-2 of the Accounting Standard for Revenue Recognition, figures for the previous
fiscal year have not been restated in accordance with the new approach to presentation. Furthermore,
the information on disaggregation of revenue from contracts with customers during the first six monthsof the previous fiscal year has not been disclosed as allowed by the transitional treatment provided forin paragraph 28-15 of the Accounting Standard for Quarterly Financial Reporting (ASBJ Statement No.
12, March 31, 2020).
Application of accounting standard for fair value measurement, etc.
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement
No. 30, July 4, 2019) and relevant ASBJ regulations from the beginning of the first quarter of thecurrent fiscal year, and it has applied the new accounting policy provided for by the AccountingStandard for Fair Value Measurement, etc. prospectively in accordance with the transitional measuresprovided for in paragraph 19 of the Accounting Standard For Fair Value Measurement, and paragraph44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019).
There is no impact on the quarterly consolidated financial statements.
Additional information
Impact of the spread of COVID-19
There has been no material change in the assumptions regarding the impact of the spread COVID-19
described in Impairment loss on non-current assets in Significant accounting estimates in the annual
securities report for the previous fiscal year.
Application of tax effect accounting for transition from consolidated taxation system to group tax sharing
system
As for items regarding the transition to the group tax sharing system introduced in the “Act Partially
Amending the Income Tax Act” (Act No. 8 of 2020) and items revised on non-consolidated taxation
system in connection with the transition to the group tax sharing system, the Company and someconsolidated subsidiaries have not applied the provisions of paragraph 44 of the “Guidance on
Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018) asallowed by the provisions of paragraph 3 of the “Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31,- 12 -

SALA Corporation (2734)

2020). Accordingly, amounts of deferred tax assets and deferred tax liabilities are determined inaccordance with the provisions of the tax law before revision.

- 13 -

SALA Corporation (2734)

Segment information
I For the six months ended May 31, 2021
1. Disclosure of sales and profit (loss) for each reportable segment(Millions of yen)
Reportable segments
Energy &SolutionsbusinessEngineering &Maintenancebusiness

Net sales
Revenues from externalcustomers
Intersegment sales or transfers

52,287

17,383

872

2,037

66

5

8

Total

53,15919,42017,472

7,320

15,713

Segment profit (loss)

4,139

1,736

83

86

531

Adjustment(Note 2)

Reportable segments

Car Life
Supportbusiness

Housingbusiness

17,406

Animal HealthCare business

7,315

15,704

Properties
business

Total

Other
(Note 1)Total

Net sales
Revenues from externalcustomers
Intersegment sales or transfers

1,883

111,979

1,836

113,816–

113,816

236

3,226

652

3,878

(3,878)

–

Total

2,119

115,205

2,489

117,694(3,878)113,816

Segment profit (loss)

(250)

6,326

91

6,418

(110)

6,307

Consolidated(Note 3)(Notes) 1. The “other” category represents operating segments that are not included in reportable segments, and includes
manufacturing auto parts, installment sale and lease.
2. Adjustment to segment profit (loss) of ¥(110) million includes intersegment eliminations of ¥570 million andcorporate expenses of ¥(681) million. Corporate expenses are mainly general and administrative expenses, which
are not attributable to the reportable segments.
3. Segment profit (loss) was adjusted with operating profit in the quarterly consolidated statement of income.

2. Disclosure of impairment losses on non-current assets or goodwill for each reportablesegment(Significant impairment losses on non-current assets)
Impairment losses on assets for business use were recorded in the Animal Health Carebusiness. The recorded amount of such impairment losses was ¥43 million in the first six
months of the previous fiscal year.

- 14 -

SALA Corporation (2734)

II For the six months ended May 31, 2022
1. Disclosure of sales and profit (loss) for each reportable segment and disaggregation ofrevenue(Millions of yen)
Reportable segments

Net sales
City gas
LP gasElectric power
Civil engineering work,
construction work, equipment
work
Housing, construction materials
Automotive sales andmaintenance
Veterinary medical products
Lease, sale and purchase, andbrokerage of real estate, hotel
Other
Revenue from contracts withcustomers
Other revenue (Note 4)
Revenues from externalcustomers
Intersegment sales or transfers

Energy &SolutionsbusinessEngineering &Maintenancebusiness

Car Life
Supportbusiness

23,28916,140
6,989

–
–
–

–
–
–

–
–
–

–
–
–

–

15,749

–

–

–

–

–

18,509

–

–

–

–

–

7,525

–

–

–

–

–

13,512

–

–

–

–

–

13,303––––59,723

15,74918,5097,525

13,512

–

–

–

–

–

59,723

15,74918,5097,525

13,512

Housingbusiness

Animal HealthCare business

1,185

2,482

3

5

0

Total

60,90818,232

18,512

7,531

13,512

Segment profit (loss)

4,519

1,409

211

5

514

- 15 -

SALA Corporation (2734)
Reportable segments
Properties
business
Net sales
City gas
LP gasElectric power
Civil engineering work,
construction work, equipment
work
Housing, construction materials
Automotive sales andmaintenance
Veterinary medical products
Lease, sale and purchase, andbrokerage of real estate, hotel
Other
Revenue from contracts withcustomers
Other revenue (Note 4)
Revenues from externalcustomers
Intersegment sales or transfers

Total

Other
(Note 1)

Total

Adjustment(Note 2)

Consolidated(Note 3)–––23,28916,140
6,989

–
–
–

23,28916,140
6,989

–
–
–

23,28916,1406,989–

15,749–15,749–15,749–18,509–18,509–18,509

–

7,525

–

7,525

–

7,525

–

13,512–

13,512–

13,512

2,064

2,064

–

2,064

–

2,064

–

13,3031,010

14,31367

14,381

2,064

117,084

1,010

118,09467

118,162

–

–

114

114

–

114

2,064

117,084

1,124

118,20967

118,277

246

3,924

962

4,886

(4,886)

–

Total

2,311

121,009

2,086

123,095(4,818)118,277

Segment profit (loss)

(188)

6,471

61

6,533

(289)

6,243

(Notes) 1. The “other” category represents operating segments that are not included in reportable segments, and includes
manufacturing auto parts, installment sale and lease.
2. Adjustment to segment profit (loss) of ¥(289) million includes intersegment eliminations of ¥571 million andcorporate expenses of ¥(861) million. Corporate expenses are mainly general and administrative expenses, which
are not attributable to the reportable segments.
3. Segment profit (loss) was adjusted with operating profit in the quarterly consolidated statement of income.
4. “Other revenue” includes revenue on lease, etc.

2. Disclosure of impairment losses on non-current assets or goodwill for each reportablesegment(Significant impairment losses on non-current assets)
Impairment losses on assets for business use were recorded in the Energy & Solutions
business. The recorded amount of such impairment losses was ¥17 million in the first six
months of the current fiscal year.
3. Information related to revisions to reportable segments
As stated under “Changes in accounting policies,” the Company has applied the
Accounting Standard for Revenue Recognition and relevant ASBJ regulations from the
beginning of the first quarter of the current fiscal year, and accordingly changed its method
for calculating net sales, profit and loss for operating segments given that it has changed
accounting methods for revenue recognition.
For the first six months of the current fiscal year, as a result of this change, and comparedwith the figures obtained by the previous method, net sales decreased by ¥4,527 million
and segment profit increased by ¥83 million for the “Energy & Solutions business.” Netsales and segment profit increased by ¥145 million and ¥61 million, respectively, for the“Engineering & Maintenance business.” Net sales and segment profit decreased by ¥4
million and ¥2 million, respectively, for the “Housing business.” Net sales decreased by¥166 million for the “Car Life Support business,” but there is no effect on segment profit.
- 16 -

SALA Corporation (2734)

Net sales decreased by ¥2,186 million for the “Animal Health Care business,” but there isno effect on segment profit. Net sales decreased by ¥1 million for the “Properties
business,” but there is no effect on segment profit. Net sales decreased by ¥542 million for“Other,” but there is no effect on segment profit.
Significant events after reporting period
Not applicable.

- 17 -