Aug 6, 2020

Non-Consolidated Financial Results (Excerpt) for the Third Quarterof Fiscal 2020

[J-GAAP basis]

Listed Company Name:SHL-JAPAN Ltd.
Registered on Tokyo Stock Exchange
Securities Code:4327
URL:http://www.shl.co.jp/
Representative:
Manabu Nara, Managing Director
Contact:
Naohiro Nakamura, Executive Director        Tel: +81-3-5385-8781
Date to submit the Quarterly Securities Report:
Aug 6, 2020
Date to start distributing dividends:
㸫Supplementary documents for this summary of financial statements:
NoneResults briefing for financial results:
NoneThe original disclosure in Japanese was released on July 29, 2020 at 15:15 (GMT+9)
1. Non-Consolidated Financial Results for the Third Quarter of Fiscal 2020 (October 1, 2019 to June 30, 2020)(1) Non-consolidated Business Results(The percentages indicate the rate of increase or decrease compared with the same period of the previous fiscal year.)Net sales

Operating income

Millions of Yen%

Millions of Yen

Ordinary income%Millions of Yen

Net income%Millions of Yen%First nine monthsof Fiscal 2020

2,485

0.4

1,280

6.5

1,279

6.4873

5.1

First nine monthsof Fiscal 2019

2,474

8.9

1,202

12.5

1,202

12.6

830

13.5

Fully diluted net income
per share

Net income per share
YenYenFirst nine monthsof Fiscal 2020

145.77

㸫First nine monthsof Fiscal 2019139.28138.94(2) Non-consolidated Financial Position
Total assets

Net assets

Millions of Yen

Equity ratio

Millions of Yen

Jun 30, 2020
6,056
Sep 30, 2019
5,539
(Reference) Equity capital: June 30, 2020: ¥5,199 million

%

5,199
4,761
September 30, 2019: ¥4,761 million

85.9
85.9

2. Dividends
Q1 EndFiscal 2019
Fiscal 2020
Fiscal 2020 (forecast)

Q2 EndDividend per share
Q3 EndYear-End

AnnualYenYenYenYenYen㸫㸫

34.00
36.00

㸫㸫

37.00

71.00

36.00

72.00

(Note) Revisions to recent dividends forecast: None
3. Non-Consolidated Forecast for the Year Ending September 30, 2020 (October 1, 2019 to September 30, 2020)
Net sales

Fiscal 2020

Operating income

Ordinary income

Net incomeper share

Net income

Millions of Yen%

Millions of Yen%

Millions of Yen%

Millions of Yen%

Yen

3,022

3.7

1,269

3.2

1,267

3.0861

2.5

143.74(Note) Revisions to recent business forecast: None
Net income per share has been adjusted based on the average number of shares outstanding (5,990,175 shares) for the year ending September 30, 2020,
which was calculated taking into account the number of shares issued during the third quarter of the year ending September 30, 2020 through thenumber of treasury shares held.

1*Note(1) Application of particular accounts procedures to the preparation of quarterly non-consolidated financial statements: Yes(2) Changes in accounting policies and changes or restatement of accounting estimates(i) Changes in accounting policies caused by revision of accounting standards:
None(ii) Changes in accounting policies other than(ხ):None(iii) Changes in accounting estimates:
None(iv) Restatement:
None(3) Number of shares outstanding (common stock)(i) Number of shares outstanding(including treasury shares)

As of Jun 30, 2020

6,141,158

As of Sep 30, 2019

6,141,158(ii) Number of treasury shares

As of Jun 30, 2020

151,006

As of Sep 30, 2019

150,972(iii) Average Number of shares outstanding

First nine monthsof Fiscal 2020

5,990,183

First nine monthsof Fiscal 2019

5,963,509* Implementation status of quarterly review proceduresThis financial results summary is not subject to quarterly review procedures.

* Explanations and other special notes concerning the appropriate use of financial results forecasts
1.
2.

The forward-looking statements regarding financial results forecasts, etc., appearing in this financial results summary have been prepared basedon information currently available to the Company and certain assumptions that the Company believes to be reasonable. The Company makes
no guarantee as to their realization. Actual financial results may differ substantially from the forecasts due to various factors.
As the Company’s services are often used for the screening of new graduates to be employed by corporate customers, our sales inevitably
involve seasonal fluctuations. Accordingly, the Company’s performance management is conducted on an annual basis.

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Qualitative information regarding the quarterly settlement of accounts(1) Explanation of operating results
During the first nine months of the year ending September 30, 2020 (October 1, 2019, through June 30, 2020),
net sales of SHL-JAPAN Ltd. (the “Company”) increased ¥10 million, or 0.4%, year over year to ¥2,485 million.
By business segment, “Product sales” increased 3.7% to ¥1,616 million, “Consultancy sales” declined 5.0% to ¥800
million, and “Training sales” declined 7.7% to ¥67 million.
“Product sales” increased ¥58 million compared with the same period of the previous fiscal year. This wasprimarily attributable to the favorable sales of “GAB,” Web test of general abilities, and “CAB,” Web test ofcomputer aptitude. However, “Consultancy sales” decreased ¥41 million compared with the same period of theprevious fiscal year. This was primarily due to sluggish orders for some services including customized versions of
the tests, analysis assessment projects, and analysis projects. “Training sales” decreased ¥5 million compared withthe same period of the previous fiscal year, primarily due to the decrease in orders received for in-house seminars
and open training courses.
In the nine-month period under review, screening activities by companies, seeking to hire new graduates who areset to graduate next spring, initially began earlier compared with last year due to the substantial termination ofself-imposed controls pertaining to employment PR activities and screening activities as well as the Tokyo 2020
Olympics and Paralympics Games, which were scheduled to be held this summer. The declaration of a state ofemergency in response to the spread of the novel coronavirus, however, led to conditions where companies wereunavoidably forced to suspend their screening activities for new graduates. For the same reason, we had no choice
but to postpone providing our services including employee assessment services. After the state of emergency waslifted, corporate screening activities were gradually resumed, but customers avoided using services with a high riskof creating a “Three Cs” (Closed spaces, Crowded places, and Close-contact settings) environment, such as halltests, multiple choice tests, analysis assessment services, and interviewer training programs. Under thesecircumstances, the Company believes that it was able to achieve an increase, although only slightly, in net sales, by
successfully shifting customers’ needs to the services with a low risk of “Three Cs,” including online assessment
tools.
Operating income for the nine-month period under review increased 6.5% year over year to ¥1,280 million.
Although selling, general and administrative expenses increased ¥25 million, or 2.8%, year over year, to ¥935
million primarily due to an increase in royalties, operating income increased ¥77 million year over year thanks to
the year-over-year decrease in the cost of goods sold by ¥93 million, or 25.7%, to ¥269 million as well as theincrease in net sales. The decrease in cost of goods sold was mainly attributable to a decrease in subcontracting
costs and printing costs for provision of hall tests resulting from the shift of customers' needs, as well as a decreasein manufacturing expenses and product master amortization resulting from postponement of the provision ofservices.
Ordinary income for the nine-month period under review increased ¥77 million, or 6.4%, year over year to¥1,279 million due to a decrease in non-operating income by ¥1 million year over year, despite non-operating
expenses remaining essentially unchanged from the previous fiscal year.
Income before income taxes for the nine-month period under review was equal to ordinary income, because noextraordinary gains or extraordinary losses were recorded, and increased ¥76 million, or 6.4%, year over year to¥1,279 million.
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After taking into account the above factors and income taxes—current and income taxes—deferred, net income
for the nine-month period under review increased ¥42 million, or 5.1%, year over year to ¥873 million.
<Reference 1: Sales by business segment>
Product
Consultancy
Training
Total

First nine months of Fiscal 2019
Millions of Yen
Component ratio
1,558
63.0
84234.1732.9
2,474
100.0

<Reference 2: Sales by quarterly basis>
First Quarter
Millions of Yen

Second Quarter

First nine months of Fiscal 2020
Millions of Yen
Component ratio
1,616
65.1
800
32.2
67
2.7
2,485
100.0

Rate of increase(decrease)
3.7
ᶭ5.0
ᶭ7.7
0.4

Third Quarter

Year-End

AnnualMillions of Yen nMillions of Yen

Millions of Yen

Millions of Yen

Fiscal 2018
299
987
986
431
2,704
Fiscal 2019
345
1,190
938
439
2,914
Fiscal 2020
405
1,233
845
㸫
㸫
*Note: As the Company’s services are often used for the screening of new graduates to be employed by corporate customers, oursales inevitably involve seasonal fluctuations. In recent years, sales have tended to concentrate in the second and thirdquarters of the fiscal year.

(2) Explanation about future prospects such as business forecasts
The operating results for the nine-month period under review slightly exceeded those of the same period of theprevious fiscal year. However, with regards to the operating results for the fourth quarter (July 1, 2020, throughSeptember 30, 2020), there is growing uncertainty about the company trends for screening and internship related
activities for new graduates, which were gradually resumed, due to concerns of another outbreak of the novel
coronavirus. In light of this, the business forecast for the year ending September 30, 2020 will remain unchanged.

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