DISCLAIMER
This English translation is only for reference purpose. When they are any discrepancies between original Japaneseversion and English translation version, the original Japanese version always prevails.
May 18, 2020

Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2020
[Japanese GAAP]
Company name: SRS HOLDINGS CO., LTD.

Listing: Tokyo Stock Exchange, First Section

Securities code:

8163

URL: https://srs-holdings.co.jp/

Representative:

Masahiko Shigesato, President & Chief Executive Officer

Contact:

Masahiro Tanaka, Director & Head of Administration Division

Tel: +81-6-7222-3101

Scheduled date of ordinary general meeting of shareholders:June 25,2020

Scheduled date of filling of Securities Report:

June 26,2020

Scheduled date of payment of dividend:-

Preparation of supplementary references regarding quarterly results:

No

Holding of quarterly results briefing:No(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2020 (April 1, 2019 – March 31, 2020)(1) Consolidated operating results(Percentages represent year-on-year changes)
Net sales

Operating profit

Million yen%

Fiscal year ended Mar. 31, 2020
44,643Fiscal year ended Mar. 31, 2019
44,512
Note: Comprehensive income (million yen)

Million yen%

Million yen

0.3
186(81.7)
0.8
1,019
37.5
Fiscal year ended Mar. 31, 2020:
Fiscal year ended Mar. 31, 2019:

Net income per
share

Profit attributable toowners of parent

Ordinary profit%

Million yen%

246(74.7)
976
64.7(2,566) (- %)228 (29.3%)(2,486)282

160.3

Diluted net income
Ratio of ordinary Ratio of operating
Return on equity
per share
profit to total assets
profit to sales

Yen

Yen

%

Fiscal year ended Mar. 31, 2020
(74.37)(18.6)
Fiscal year ended Mar. 31, 2019
8.51
2.0
Reference: Equity in earnings of affiliates (million yen) Fiscal year ended Mar. 31, 2020: Fiscal year ended Mar. 31, 2019: -

%

%

0.8
3.3

0.4
2.3

(2) Consolidated financial position
Total assets

Net assets

Million yen

As of Mar. 31,2020
As of Mar. 31,2019
Reference: Shareholders’ equity (million yen)

Net assets per share

Equity ratio
%

Yen

38.4
48.3
As of Mar. 31, 2019: 14,141

365.01425.83

Million yen

32,921
12,802
29,274
14,277
As of Mar. 31, 2020: 12,647(3) Consolidated cash flow
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Million yen

Million yen

Million yen

Million yen

1,243
2,084

(4,461)(1,842)

2,751(1,635)

8,877
9,339

Fiscal year ended Mar. 31, 2020
Fiscal year ended Mar. 31, 2019

2. Dividends
Dividends per share
1Q-endFiscal year ended Mar. 31, 2019
Fiscal year ended Mar. 31, 2020
Fiscal year ending Mar. 31, 2021
(forecast)

Dividend
Dividends topayout ratio net assets ratio(Consolidated) (Consolidated)

Total

Total
dividends

Yen

Yen

Million yen

%

%

6.00
0.00

6.00
0.00

199
-

70.5
-

1.4
-

2Q-end3Q-endYear-end

Yen

Yen

Yen

-

0.00
0.00

-

-

-

-

-

-

Note: Dividends for the fiscal year ending March 31, 2021 have not been determined at this time.

-3. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2021 (April 1, 2020– March 31, 2021)
The consolidated earnings forecasts for the fiscal year ending March 31, 2021 have not been determined because it is difficult toreasonably calculate the effects of the new coronavirus (COVID-19) infection at this stage. In the future, we will announce the forecast
as soon as it becomes possible to make a reasonable forecast.

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in thescope of consolidation): Yes
New companies: KAZOKUTEI CO., LTD., SUNROLLY CO., LTD.
Excluded companies: (2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others:
2) Changes in accounting policies other than 1) above:3) Changes in accounting-based estimates:
4) Restatements:

None
None
None
None

(3) Number of outstanding shares (common shares)
1) Number of shares outstanding at the end of period (including treasury shares)
As of Mar. 31, 2020:
34,770,184 shares
As of Mar. 31, 2019:33,209,080 shares
2) Number of treasury shares at the end of period
As of Mar. 31, 2020:
119,343shares
As of Mar. 31, 2019:343 shares
3) Average number of shares outstanding during the period
Fiscal year ended Mar. 31, 2020:
33,439,753 sharesFiscal year ended Mar. 31, 2019:33,208,768 shares(Reference) Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2020 (April 1, 2019 – March 31, 2020)(1) Non-consolidated operating results(Percentages represent year-on-year changes)
Net sales
Fiscal year ended Mar. 31, 2020
Fiscal year ended Mar. 31, 2019

Operating profit

Ordinary profit

ProfitMillion yen%

Million yen%

Million yen%

Million yen%

18,43618,193

1.3(29.8)

885
681

30.0
251.2

816
637

28.1
235.9

(2,244)
186

830.1

Net income per share

Diluted net income per share

Yen

Yen

(67.11)
5.61-

Fiscal year ended Mar. 31, 2020
Fiscal year ended Mar. 31, 2019(2) Non-consolidated financial position
Total assets
Million yen

As of Mar. 31, 2020
As of Mar. 31, 2019
Reference: Shareholders’ equity (million yen)

Net assets
Million yen

29,063
12,54925,416
13,799As of Mar. 31, 2020: 12,549

Net assets per share

Equity ratio
%

Yen

43.2
54.3
As of Mar. 31, 2019: 13,799

362.18415.55* This financial report is not subject to audit by certified public accountants or auditing firms.
* Explanation regarding appropriate use of the earnings forecasts and other special notes
Forecasts regarding future performance in this document are based on certain assumptions judged to be valid andinformation currently available to us. Actual performance may differ significantly from these forecasts for a numberof factors

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

4(3) Cash Flows

4(4) Outlook

5(5) Basic Policy for Profit Distribution and Dividends for the Current and Next Fiscal Years5

2. Corporate Group6

3. Basic Approach to the Selection of Accounting Standards

6

4. Consolidated Financial Statements and Notes

7(1) Consolidated Balance Sheet

7(2) Consolidated Statements of Income and Comprehensive Income

9

Consolidated Statement of Income

9

Consolidated Statement of Comprehensive Income

10(3) Consolidated Statement of Changes in Equity

11(4) Consolidated Statement of Cash Flows

13(5) Notes to Consolidated Financial Statements

15(Going Concern Assumption)

15(Notes to Consolidated Balance Sheet)

15(Notes to Consolidated Statement of Income)16(Notes to Consolidated Statement of Comprehensive Income)

19(Notes to Consolidated Statement of Changes in Equity)

20(Notes to Consolidated Statement of Cash Flows)21(Business Combinations, etc.)

23(Segment and Other Information)

26(Per Share Information)

27

1

1．Overview Results of Operations(1) Results of Operations
1) Consolidated Performance(Millions of yen)
FY3/19FY3/20(Apr. 1, 2018 - Mar. 31, 2019)(Apr. 1, 2019 - Mar. 31, 2020)

Results

YoY change(Amount)

YoY change(%)

Results

YoY change(Amount)

YoY change(%)

Net Sales

44,512356

0.8%

44,643130

0.3%Operating profit

1,019

277

37.5%

186

(832)

(81.7%)

Ordinary profit

976

383

64.7%

246

(729)

(74.7%)

Profit attributable toowners of parent

282

174

160.3%(2,486)(2,769)-In the FY2020, net sales increased compared with the FY2019 due to an increase in the number of stores resulting from new store
openings, despite the negative impact of large-scale typhoons and the consumption tax hike, as well as the spread of the newcoronavirus (COVID-19).
In terms of profits, operating income decreased compared with the previous fiscal year due to a decrease in sales at existing storesand due to the impact of the new coronavirus (COVID-19) infections disease and an increase in personnel expenses, despite
reductions in utility and other expenses.
Net loss attributable to the parent company was 2,486 million yen because, regarding Miyamoto Munashi Co., Ltd., a consolidated
subsidiary of the Company, the book value of goodwill was reduced to a recoverable amount and 1,348 million yen was recorded as
an extraordinary loss as a result of considering its financial content and future business outlook. In addition to that, the profitabilityof business assets held by the Group declined, an impairment loss of 870 million yen was recorded as an extraordinary loss.
At a meeting of the Board of Directors held on December 26, 2019, the Company resolved to implement a share exchange in which
Company will become the wholly-owned parent company of the Company through a share exchange. ''KAZOKUTEI Co., Ltd.'' and''SUNROLLY Co., Ltd.'' will become wholly-owned subsidiaries of the Company. The share exchange was taken on February 1,
2020.
For details, please refer to "4. Consolidated Financial Statements and Notes (5) Notes to Consolidated Financial Statements(Business Combinations, etc.)."22) Opening and closure of restaurants(Number of restaurants)
Name

Restaurants

FY 3/19

Newly opened

ClosedFY 3/20(As of Mar.31, 2019)restaurants

restaurants(As of Mar.31, 2020)

planned to open
during FY 3/20

Washoku Sato

204 (-)

3 (-)

3 (-)

204 (-)

3 (-)

Kazokutei*- (-)

80 (9)- (-)

80 (9)-(-)

Tokutoku*- (-)

80 (64)1 (1)79 (63)-(-)

Nigiri Chojiro*

60 (-)

8 (-)

- (-)

68 (-)

5 (-)

Meshiya Miyamoto Munashi

63 (5)

- (-)

8 (1)

55 (4)

2 (-)

Tendon Tempura Honpo Santen

43 (1)

- (-)

- (-)

43 (1)

2 (-)

Katsuya39 (16)

1 (-)

2 (2)

38 (14)3 (2)Himawari*- (-)

14 (-)

1 (-)

13 (-)-(-)

Sushi delivery business*

20 (13)2 (1)

11 (10)11 (4)

2 (-)

SUNROLLY FC Business*- (-)

35 (-)

3 (-)

32 (-)-(-)

Others3 (-)

24 (-)

1 (-)

26 (-)

3 (-)

Domestic total

432 (35)247 (74)30 (14)649 (95)

20 (2)

Overseas stores

10 (6)

8 (5)

2 (2)

16 (9)

11 (6)

Worldwide totals

442 (41)255 (79)

32 (16)665 (104)

31 (8)

Note: Numbers in parentheses represent FC restaurants (domestic) and joint venture restaurants (overseas).
* Store openings and closures include the stores of KAZOKUTEI Co., Ltd. and SUNROLLY Co., Ltd., which were acquired on February
1, 2020.
* Nigiri Chojiro includes CHOJIRO restaurants.
* Kazokutei includes Kashunan, Sanpoan, Kazokuan, Kyoshun, and Kyosai restaurants.
* Tokutoku includes Tokutoku and Dondontei.
* Himawari includes Sabo-Himawari.
* SUNROLLY FC Business is the total number of stores operated by SUNROLLY Co., Ltd. in the Popolamama, Mister Donut, Doutor
Coffee, and Oogamaya restaurants.
* The results of opening and closing of Sushi delivery business include a shift from direct management to FC stores.
3) Other measures
Washoku Sato restaurants continued to refine Sato-Shabu (all-you-can-eat shabu-shabu) and Sato-Suki (all-you-can-eat sukiyaki), which
are this restaurant’s primary menu items. We also continued to implement initiatives to increase the frequency of visits to our stores,
such as strengthening sales of takeout products and holding store-specific "tuna fairs."
Tendon Tempura Honpo Santen restaurants have begun selling products that use fried chicken as a new standard product, as well as
selling limited-time menu items such as Sakura prawns and Sayori, in order to increasing customers can visit more frequency.
We also worked on cultivating a new customer base by conducting a photo posting campaign on official Instagram.
Nigiri Chojiro restaurants conducted campaigns using seasonal ingredients such as sea bream, sword tip squid and snow crabs. In
addition, CHOJIRO Shijokiyamachi store received the Travelers Choice Award, the most honorable award given by the Trip Advisor.
Miyamoto Munashi restaurants continued to actively implement product measures such as selling a set meal of 600 yen for lunch only
on weekdays for the purpose of increasing the number of customers, while selling a set meal using salmon roe, beef Misuji for a limited
time.
Katsuya restaurants changed the grand menu and strengthen the variety katsudon menu. In addition, we also sold a limited-time menu
such as spice chicken's corn flakes cutlet bowls and sauce cutlet bowls that use chicken breast characterized by a secret sauce thatmoisturizes.
The segment information is not provided because the SRS Group has only a single segment of food service business3

(2) Financial Position
Total assets increased by 3,647 million yen to 32,921 million yen at the end of FY2020 compared with the end of FY2019. Current
assets increased by 70 million yen to 11,796 million yen at the end of FY2020 compared with the end of FY 2019. This was mainly
due to the decrease of 462 million yen in cash and deposits, an increase of 348 million yen in accounts receivable-trade associatedwith the acquisition of a consolidated subsidiary, and an increase of 279 million yen in raw materials and supplies.
Non-current assets increased by 3,475 million yen to 20,913 million yen at the end of FY2020 compared with the end of FY2019. Thiswas mainly due to the increase of 1,549 million yen in guarantee deposits associated with the acquisition of consolidated subsidiaries
and the increase of 1,437 million yen in land.
Current liabilities increased by 890 million yen to 7,891 million yen at the end of FY2020 compared with the end of FY2019. This was
mainly due to the increase of 410 million yen in current portion of bonds and the increase of 302 million yen in accounts payableother.
Non-current liabilities increased by 4,232 million yen to 12,227 million yen at the end of FY2020 compared with the end of FY2019.
This was mainly due to the increase of 3,055 million yen in bonds payable and an increase of 568 million yen in asset retirement
obligations associated with the acquisition of a consolidated subsidiary.
Net assets decreased by 1,475 million yen to 12.802 million yen at the end of FY2020 compared with the end of FY2019.
(3) Cash Flows
Cash and cash equivalents (hereinafter, "net cash") decreased by 462 million yen to 8,877 million yen at the end of FY2020 comparedwith the end of FY2019.
The cash flow components and the main reasons for changes are as described below.
Net cash provided by operating activities was 1,243 million yen at the end of FY2020 compared with 2,084 million yen at the end of
FY2019. This was mainly due to the loss before income taxes of 2,075 million yen, depreciation and amortization of 1,707 million
yen, and impairment loss of 2,325 million yen.
(Cash flows from investing activities)
Net cash used in investing activities was 4,461 million yen at the end of FY2020, compared with 1,842 million yen at the end of
FY2019. This was mainly due to the payments of 2,228 million yen for purchase of property and due to the payments of 2,084 million
yen for acquisition of subsidiary shares resulting in change in scope of consolidation.
(Cash flows from financing activities)
Net cash used in financing activities was 2,751 million yen at the end of FY2020 compared with 1,635 million yen at the end of
FY2019. This was mainly due to the issuing corporate bond amount 4,033 million yen and repayment of long-term debt amount 1,041
million yen.
(Reference)Trends in cash flow indicators
FY3/16

FY3/17

FY3/18

FY3/19FY3/20Equity ratio (%)

51.8

45.1

45.8

48.3

38.4

Equity ratio based on market
value (%)

94.1

89.0

103.2

112.3

95.0

Interest-bearing debt to cash flow
ratio(years)

6.0

6.6

5.1

4.2

9.7

Interest coverage ratio (times)

9.1

12.6

15.5

19.3

12.4

Equity ratio: Shareholders’ equity / Total assets
Equity ratio based on market value: Market capitalization / Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest payments
Note: 1. Market capitalization is calculated by the number of shared outstanding at the end of the period, excluding treasury shares.
2. Operating cash flows are the figures for operating cash flows in the consolidated statement of cash flows.
3. Interest-bearing debt includes all debts on the consolidated balance sheet that incur interest.

4(4) Outlook
Since the spread of new coronavirus infections poses a global threat, there is concern that the decline in consumption and sluggish
production activities due to going out and refraining from events, it is expected that the outlook for the domestic and overseas economies
will remain extremely uncertain.
At the end of FY2020, 125 of the Group's stores, mainly commercial facilities, had been temporarily closed, and most of the other stores
were also shortening their business hours. Under these circumstances, we will focus on cash flow management in FY2021. In order tominimize the outflow of funds, we will reduce fixed costs by reduction of rent and review of delivery frequency to stores and temporarily
curbing new investment. At the same time, we will strengthen our business for the future by strengthening takeout and delivery sales
and further promoting initiatives in the prepared meal business. As soon as the rational forecasts become possible, we will promptly
announce the forecast of business results for the FY2021, the measures to open stores, and the revision of the medium-term management
plan.
(Risk information associated with the spread of new coronavirus (COVID-19) infections)
Business performance and financial situation may be affected due to the expansion of new coronavirus infections, the number ofcustomers visiting the store has been affected by the refraining from going out, temporary closure of stores and shortened working hours,
and a decrease in inbound demand.
(Financial measures)
The Company raised 4 billion yen by issuing unsecured bonds and borrowing in March 2020, we have approximately 8.8 billion yen of
consolidated cash and cash equivalents at the end of FY2020. In the FY2021, the Company is working to ensure sufficient liquidity byraising 5 billion yen and concluding a commitment line agreement of 4 billion yen.
(Forecast)
The consolidated financial forecast for the FY2021 has not been decided because it is difficult to reasonably calculate the impact of the
new coronavirus infection at this stage. We will announce it as soon as a reasonable forecast becomes possible.
(5) Basic policy on profit distribution and dividends for the current and next fiscal years
Our basic policy on profit distribution is to maintain a stable dividend as much as possible, not to maintain a certain dividend payout
ratio depending on business results.
However, we will post a net loss for the FY2020, and we regret to say that we will not pay a year-end dividend. Also, the dividend for
the FY 2021 has not been decided.

52. Corporate GroupOur group composed of the Company and its eight affiliates whose main business is operating restaurants.
We do not provide segment because we have only a single business segment of food service business.
Our group’s business content and relationship with the Company are described below with a systematic chart of the business.
(1) Our group’s business content and relationship with the Company
Restaurants management: SATO FOODSERVICE CO., LTD., FOODSNET CORPORATION, KAZOKUTEI CO., LTD.,MIYAMOTO MUNASHI CO., LTD., SUNROLLY CO., LTD., SATO・ARCLAND FOODSERVICE CO., LTD., and SRS TAIWAN COMPANY LIMITED operate restaurants that serve
mainly Japanese food.
SPACE SUPPLY CO., LTD. is primarily involved in the leasing of real estate.

Others:(2) Systematic diagram of the business

Customers
Provideproducts

Provide Provide
products products

SUNROLLY CO., LTD.
(consolidated subsidiary)

SATO・ARCLAND FOOD SERVICE
CO., LTD.
(consolidated subsidiary)
Provideproducts

Provideproducts
KAZOKUTEI CO., LTD.
(consolidated subsidiary)

SRS TAIWAN COMPANY LIMITED(consolidated subsidiary)
Provideproducts

SATO FOODSERVICE CO., LTD.
(consolidated subsidiary)

FOODSNET CORPORATION(consolidated subsidiary)

Selling raw materials
products
Real estate leasing
Facilities leasing

Selling raw
materials
products

Provideproducts
MIYAMOTO MUNASHI CO., LTD.
(consolidated subsidiary)
Selling raw
materials
products

SRS HOLDINGS CO., LTD.
Real estate leasing

SPACE SUPPLY CO., LTD.

3. Basic Approach to the Selection of Accounting Standards
The Group expects to employ Japanese accounting standards for the time being. However, we intend to consider the future
adoption of International Financial Reporting Standards (IFRS) depending on the ratio of foreign shareholders and adoption
trends among other companies in Japan.

6

4. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet(Thousands of yen)
FY 3/19(As of Mar. 31, 2019)
AssetsCurrent assets
Cash and deposits
Accounts receivable-trade
Merchandise
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets asset
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Land
Leased assets
Accumulated depreciation
Lease assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Total assets

7

FY 3/20(As of Mar. 31, 2020)

9,339,721
842,705
37,525669,858
836,339
11,726,151

8,877,696
1,191,318
45,509949,574
737,651(5,168)
11,796,584

18,127,336*3 (14,528,548)*2 3,598,788
777,291*3 (660,268)
117,023*2,*4 2,832,185
2,235,187*3 (1,365,043)
870,143
23,606
4,435,414*3 (3,293,626)
1,141,787
8,583,534

24,288,988*3 (19,711,742)*2 4,577,245
875,864*3 (708,436)
167,428*2,*4 4,270,075
2,186,647*3 (1,514,329)
672,317
59,1206,062,147*3 (4,686,874)
1,375,273
11,121,461

2,277,467
862,042
3,139,509

1,821,892
839,449
2,661,342*1,*2 609,408
956,4313,189,265
594,539
374,657(9,121)
5,715,181
17,438,225
109,686
29,274,063*1,*2 486,482
930,976
4,738,731
629,398
360,816(15,454)
7,130,950
20,913,754
210,90932,921,247

(Thousands of yen)
FY 3/19(As of Mar. 31, 2019)
Liabilities
Current liabilities
Accounts payable - trade
Current portion of bonds
Current portion of long - term loans payable
Lease obligations
Accounts payable - other
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities for land revaluation
Deferred tax liabilities
Provision for retirement benefits for
directors (and other officers)
Provision for directors' stock benefits
Liability for retirement benefits
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
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
Revaluation reserve for land
Foreign currency translation adjustment
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

8

FY 3/20(As of Mar. 31, 2020)

1,360,759
685,000*2 1,031,224
84,7782,005,408
285,691
366,6311,181,930
7,001,422

1,503,966
1,095,000*2 771,323
96,831
2,308,386
252,740
402,7021,460,575
7,891,526

3,995,000*2 1,778,606
1,176,782*4 82,947-

7,050,000*2 1,847,386
1,198,785*4 82,947
168,273

27,75347,893

703,696
230,326
7,995,112
14,996,535

850
189,725
1,272,015
369,782
12,227,660
20,119,186

8,532,856
4,981,675
1,363,313(295)
14,877,549

8,532,856
6,391,352(1,322,741)(120,009)
13,481,457

190,195
23,928*4 (962,306)
12,010(736,172)
136,150
14,277,528
29,274,063

84,92532,731*4 (962,306)
11,070(833,578)
154,182
12,802,060
32,921,247

(2) Consolidated Statements of Income and of Comprehensive Income(Consolidated Statements of Income)(Thousands of yen)
FY 3/19(Apr. 1, 2018 – Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 – Mar. 31, 2020)

44,512,381
15,134,020
29,378,361

44,643,353
15,521,822
29,121,531

215,820
13,215,515
278,512357,091
1,256,414
153,124
1,844,019
1,153,005
4,511,365
483,153
1,551,367
3,167,708
172,061
28,359,161
1,019,200

207,290
850
13,739,504
275,548
308,629
1,318,532
156,277
1,614,246
1,221,637
4,615,658
468,558
1,700,695
3,135,526
172,061
28,935,016
186,514

12,655
15,07872,21934,34450,772
185,069

11,142
137,490
68,5607,459
56,090280,742

108,060
58,601
61,310227,972
976,297

100,71549,01570,773
220,503
246,753

11,809*4 86,963
98,772

3,999
186*3 24,134
153
42,74871,223*1 37,240
3,780*2 330,563*5 50,157
421,741
653,329454,282(84,761)
369,520
283,808
1,261
282,547*1 45,792
21,977*2 2,325,433
2,393,203(2,075,226)
416,332(22,787)
393,544(2,468,771)
18,031(2,486,802)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Remuneration for directors (and other officers)
Provision for directors' stock benefits
Salaries and allowances
Employees’ bonuses
Provision for bonuses
Welfare expenses
Retirement benefit expenses
Utility expenses
Supplies expenses
Rent expenses
Repair expenses
Depreciation
Miscellaneous expenses
Amortization of goodwill
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
House rent income
Foreign exchange gains
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses on real estates
Miscellaneous loss
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of shares of non-current assets
Gain on sales of investment securities
The gain from negative goodwill
Gain on cancellation of leasehold contracts
Insurance income
Compensation income
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on cancellation of rental contracts
Impairment loss
Loss on disaster
Total extraordinary losses
Profit(loss) before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit(loss)
Profit attributable to non-controlling interests
Profit(loss) attributable to owners of parent

9

(Consolidated Statements of Comprehensive Income)(Thousands of yen)
FY 3/19(Apr. 1, 2018 – Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 – Mar. 31, 2020)

283,808(2,468,771)(71,496)
23,928(7,250)* (54,819)
228,989
227,727(105,270)
8,803
(939)
* (97,406)(2,566,177)(2,584,209)

1,261

18,031

Profit(loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests10

(3) Consolidated Statements of Changes in Equity
FY 3/19 (Apr. 1, 2018 - Mar. 31, 2019)(Thousands of yen)
Shareholders' equity
Capital stock
Balance at beginning of current period

Capital surplus

8,532,856

Retained earnings

4,981,675

Total shareholders'equityTreasury shares

1,246,810(245)

14,761,096

Changes of items during period
Issuance of new shares-

Dividends of surplus(166,043)(166,043)

Profit attributable to owners of parent

282,547

282,547

Purchase of treasury shares

(50)

(50)

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period--

116,503(50)

116,452

8,532,856

4,981,675

1,363,313(295)

14,877,549(Thousands of yen)
Accumulated other comprehensive income
Valuation
Foreign Currency
difference on
Deferred gains or
Revaluation
Translation
available-for-sale losses on hedges reserve for land
adjustment
securities
Balance at beginning ofcurrent period
Changes of items during
period261,692-(962,306)

19,260Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets(681,352)

134,889

14,214,633

Issuance of new shares-

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items otherthan shareholders' equity
Total changes of items
during period
Balance at end of current
period(166,043)
282,547(50)(71,496)

23,928-(7,250)(54,819)

1,261(53,557)(71,496)

23,928-(7,250)(54,819)

1,261

62,894

190,195

23,928(962,306)

12,010(736,172)

136,150

14,277,528

11

FY 3/20 (Apr. 1, 2019 – Mar. 31, 2020)(Thousands of yen)
Shareholders' equity
Capital stock
Balance at beginning of current
periodCapital surplus

8,532,856

Retained earnings

4,981,675

Total shareholders'equityTreasury shares

1,363,313(295)

14,877,549

Changes of items during period
Issuance of new shares

1,409,676

1,409,676

Dividends of surplus
Profit attributable to owners ofparent(199,252)(199,252)(2,486,802)(2,486,802)

Purchase of treasury shares(119,714)(119,714)

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period-

1,409,676(2,686,055)(119,714)(1,396,092)

8,532,856

6,391,352(1,322,741)(120,009)

13,481,457(Thousands of yen)
Accumulated other comprehensive income

Valuation
Deferred gains Revaluationdifference onor losses onreserve foravailable-forhedges
landsale securities
Balance at beginning ofcurrent period
Changes of items during
period190,195

23,928Foreigncurrencytranslation
adjustment(962,306)

12,010Total
accumulated Non-controllinginterests
othercomprehensive
income(736,172)

136,150

Total net assets

14,277,528

Issuance of new shares

1,409,676

Dividends of surplus(199,252)

Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items otherthan shareholders' equity
Total changes of items
during period
Balance at end of current
period(2,486,802)(119,714)(105,270)

8,803

-

(939)

(97,406)

18,031(79,374)(105,270)

8,803

-

(939)

(97,406)

18,031(1,475,467)

84,92532,731(962,306)

11,070(833,578)

154,182

12,802,060

12

(4) Consolidated Statements of Cash Flows(Thousands of yen)
FY 3/19(Apr. 1, 2018 – Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 – Mar. 31, 2020)

653,329
1,564,858
172,061
330,563
65,713928(27,733)
108,060
37,240(115,168)
117,287
7,419
267(18,199)(39,883)(38,215)
2,818,530
15,362(108,630)
86,963(727,411)
2,084,814(2,075,226)
1,707,555
172,061
2,325,433(24,134)(50,269)(2,674)(148,632)
100,715(42,748)(186)(3,999)45,792(75,178)(127,030)(237,589)(110,412)(45,665)
266,484(92,599)
1,581,693
137,098(100,850)
68,161(506,431)
64,303
1,243,974

106,240(1,755,836)(112,815)(2,228,077)
4,000
1,889
(247,096)-*2 (2,084,642)-*2 50,069(114,725)(76,887)

Cash flows from operating activities
Profit (loss) before income taxes
Depreciation
Amortization of goodwill
Impairment loss
The gain from negative goodwill
Increase (decrease) in provision for bonuses
Increase (decrease) in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Compensation income
Loss (gain) on sales of investment securities
Gain on sales of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable-trade
Decrease(increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable -other
Increase (decrease) in accrued consumption taxes
Decrease (increase) in consumption taxes refund receivable
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Proceeds from insurance income
Compensation received
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
Cash flow from investing activities
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Proceeds from sales of investment securities
Purchase of intangible assets
Purchase of share of subsidiaries resulting in change in scopeof consolidation
Income of purchase of share of subsidiaries resulting inchange in scope of consolidation
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Payments for construction assistance fund receivables
Collections of construction assistance fund receivables
Other, net
Net cash provided by (used in) investing activities

13

90,09969,589(70,000)
93,910(79,101)(1,842,229)(49,007)
94,9203,806(4,461,436)

(Thousands of yen)
FY 3/19(Apr. 1, 2018 – Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 – Mar. 31, 2020)

300,000(1,687,649)(149,495)
683,033(615,000)(50)(166,043)(1,635,206)
81(1,392,540)
10,732,262*1 9,339,721

1,500,000(1,500,000)
850,000(1,041,568(86,213)
4,033,143(685,000)(119,714)(199,252)
2,751,395
4,042(462,024)
9,339,721*1 8,877,696

Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of finance lease obligations
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Cash dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period14(5) Note to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Notes to Consolidated Balance Sheets*1. The following items are applicable to a non-consolidated subsidiaries.
(Thousands of yen)
FY 3/19(As of Mar. 31, 2019)
Investment securities (stocks)

50,000FY 3/20(As of Mar. 31, 2020)
50,000*2. Assets pledged as collateral and liabilities with collateral
Assets pledged as collateral(Thousands of yen)
FY 3/19(As of Mar. 31, 2019)

FY 3/20(As of Mar. 31, 2020)

Buildings and structures
Land

65,4392,804,319

57,1522,804,319

Investment securities

258,500

189,410

3,128,258

3,050,881

Total
Liabilities with collateral(Thousands of yen)
FY 3/19(As of Mar. 31, 2019)
Long-term loans payable(including current portion of long-term loans payable)

1,937,850

FY 3/20(As of Mar. 31, 2020)
1,312,000*3. Accumulated depreciation includes accumulated impairment losses.
*4. Revaluation of Land
The Company revalued land used for business operations pursuant to the Act on Revaluation of Land (Act No. 34, March 31, 1998) andthe Act for Partial Revision of the Act on Revaluation of Land (Act No. 24, revised on March 31, 1999), and recorded “deferred tax
liabilities for land revaluation” under liabilities and “revaluation reserve for land” under net assets.
- Method of revaluation:

Land is revalued by using the method stipulated in “Basic Notice on Asset Valuations for Determining theValue of Land Used for Calculating Land Value Tax” as provided for in Article 16 of the Land Value Tax
Act in accordance with Article 2, Item 4 of the Enforcement Regulations for the Act on Revaluation ofLand (Ordinance No. 119, March 31, 1998).

- Date of revaluation: March 31, 2000
(Thousands of yen)
FY 3/19(As of Mar. 31, 2019)
The difference between the market value ofland and book value after revaluation(1,186,561)

15

FY 3/20(As of Mar. 31, 2020)(1,153,313)

Notes to Consolidated Statements of Income*1. Breakdown of loss on retirement of non-current assets(Thousands of yen)
FY 3/19(Apr. 1, 2018 – Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 – Mar. 31, 2020)

Buildings and structures

28,747

Machinery, equipment and vehicles

1,430

772

Property, plant and equipment, others

6,999

10,000Intangible assets, others-

13,980Investment and other assets

64-

37,24045,792

Total

21,038*2. Impairment loss
FY 3/19 (Apr. 1, 2018 – Mar. 31, 2019)
The Group recognized an impairment loss on the following groups of assets.
(1) Overview of groups of assets for which impairment losses have been recognizedPrimary use

Class

Location
Nerima, Tokyo
Ichikawa, Chiba
Noda, Chiba
Saitama, Saitama
Koshigaya, Saitama
Kawagoe, Saitama
Kawaguchi, Saitama
Soka, Saitama
Nagoya, Aichi
Komaki, Aichi

Stores, etc.

Buildings and structures
Machinery, equipment and vehicles

Otsu, Shiga
Kusatsu, Shiga

Leased assets
Property, plant and equipment, others

Uji, Kyoto
Kyoto, Kyoto

Intangible assets, others
Investment and other assets

Osakasayama, Osaka
Osaka, Osaka
Daito, Osaka
Higashi-osaka, Osaka
Yao, Osaka
Hirakata, Osaka
Amagasaki, Hyogo
Kobe, Hyogo
Nishinomiya, Hyogo
Okayama, Okayama(Overseas)
Taoyuan, Taiwan(2) Reason for decision to recognize impairment losses
The book values of assets associated with stores that have been consistently unprofitable and assets associated with stores that are to beclosed have been reduced to the amounts that can be recovered. These reductions have been recognized as an impairment loss under
extraordinary losses.

16

(3) Amount of impairment losses(Thousands of yen)Primary use

Class

AmountBuildings and structures

115,925

Machinery, equipment and vehicles

1,082

Leased assets

161,799

Property, plant and equipment, others

47,904

Stores, etc.
Intangible assets, others

570

Investment and other assets

3,281

Total

330,563(4) Method used to group assets
The Group regards each store as the base unit in identifying the smallest group of assets that generate cash flows. Assets for leased andidle assets, however, are grouped on an individual asset basis.
(5) Method for calculating recoverable amountThe recoverable amount for the asset group is measured by using utility value which is calculated by discounting future cash flows by
5.0%.
FY 3/20 (Apr. 1, 2019 – Mar. 31, 2020)
The Group recognized an impairment loss on the following groups of assets.
(1) Overview of groups of assets for which impairment losses have been recognizedPrimary use

Class

Location
Katsushika, Tokyo
Tama, Tokyo
Hachioji, Tokyo
Saitama, Saitama
Koshigaya, Saitama
Niiza, Saitama
Kawagoe, Saitama
Kawaguchi, Saitama
Asaka, Saitama
Ichikawa, Chiba

Buildings and structures

Stores, etc.

Shizuoka, Shizuoka
Hamamatsu, Shizuoka

Machinery, equipment and vehicles
Leased assets
Property, plant and equipment, others
Intangible assets, others
Investment and other assets, other

Nagoya, Aichi
Gifu, Gifu
Mie, Mie
Kusatsu, Shiga
Uji, Kyoto
Kyotanabe, Kyoto
Kyoto, Kyoto
Ibaraki, Osaka
Sakai, Osaka
Shijonawate, Osaka
Moriguchi, Osaka
Neyagawa, Osaka
Izumisano, Osaka

17

Primary use

Class

Location
Osaka, Osaka
Daito, Osaka
Higashiosaka, Osaka
Yao, Osaka
Toyonaka, Osaka
Hirakata, Osaka
Kadoma, Osaka
Ikeda, Osaka
Takatsuki, Osaka
Kashiba, Nara
Nara, Nara

Buildings and structures
Machinery, equipment and vehicles
Stores, etc.

Leased assets
Property, plant and equipment, others
Intangible assets, others
Investment and other assets, others

Katsuragi, Nara
Kitakatsuragi, Nara
Kako, Hyogo
Kobe, Hyogo
Amagasaki, Hyogo
Himeji, Hyogo
Akashi, Hyogo
Kawanishi, Hyogo
Okayama, Okayama(Overseas)
Taoyuan, Taiwan
New Taipei, Taiwan
Taichung, Taiwan
Taipei, Taiwan

OthersGoodwill-

Intangible assets, others(2) Reason for decision to recognize impairment losses
The book values of assets associated with stores that have been consistently unprofitable and assets associated with stores that are to
be closed have been reduced to the amounts that can be recovered. These reductions have been recognized as an impairment loss under
extraordinary losses.
In addition, the goodwill, intangible fixed assets and others that occurred during the shares of Miyamoto Munashi Co., Ltd., aconsolidated subsidiary, the book value was reduced to the recoverable value in consideration of its financial conditions and future
outlook, and the amount of the reduction was recorded as an impairment loss and extraordinary losses.
(3) Amount of impairment losses(Thousands of yen)Primary use

Class

AmountBuildings and structures

486,348

Machinery, equipment and vehicles

6,946

Leased assets

184,861

Property, plant and equipment, others

188,184

Stores, etc.
Intangible assets, others

2,168

Investment and other assets, others

2,254

Goodwill

1,348,669

OthersIntangible assets, others

106,000

Total

2,325,433

18

(4) Method used to group assets
The Group regards each store as the base unit in identifying the smallest group of assets that generate cash flows. Assets for leased andidle assets, however, are grouped on an individual asset basis.
(5) Method for calculating recoverable amountThe recoverable amount for an asset group is measured by using utility value which is calculated by discounting future cash flows by
5.1%. The value in use of goodwill, intangible fixed assets, and other items incurred during the acquisition of shares of Miyamoto
Munashi Co., Ltd., a consolidated subsidiary, is calculated by discounting future cash flows by 9.6%.
*3. Details of Gain on negative goodwill are as follows.
(Thousands of yen)
FY 3/19(Apr. 1, 2018 – Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 – Mar. 31, 2020)-

24,134Gain on negative goodwill arising from the acquisition ofshares of SUNROLLY Co., Ltd.

*4. Insurance income
Insurance income is mainly for damage caused by the Typhoon No. 21 in 2018.
*5. Loss on disaster
Loss on disaster mainly includes the amount losses on damage caused by the Typhoon No. 21 in 2018.
Notes to Consolidated Statements of Comprehensive Income* Reclassification adjustments and tax effects with respect to other comprehensive income(Thousands of yen)
FY 3/19(Apr. 1, 2018 – Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 – Mar. 31, 2020)

Amount incurred during the year
Reclassification adjustments(89,359)-(121,036)(186)

Before-tax effect adjustments(89,359)(121,222)

Tax effect

17,863

15,952

Valuation difference on available-for-sale securities(71,496)(105,270)

Amount incurred during the year
Reclassification adjustments

34,478-

12,684-

Before-tax effect adjustments
Tax effect34,478(10,550)

12,684(3,881)

Deferred gains or losses on hedges

23,9288,803

Valuation difference on available-for-sale securities :Deferred gains or losses on hedges :Foreign currency translation adjustment :Amount incurred during the year
Total other comprehensive income

19(7,250)(939)(54,819)(97,406)

Notes to Consolidated Statements of Changes in Equity
FY 3/19 (April 1, 2018 – March 31, 2019)
1. Type and number of outstanding shares and treasury shares(Shares)Number of shares
as of Apr. 1, 2018

Type of shares

Increase

Number of shares
as of Mar. 31, 2019

Decrease

Outstanding shares
Common shares

33,209,080--

33,209,080

294

49

-

343

Treasury shares
Common shares (Note)

Note: The number of treasury shares of common shares increased 49 shares due to the acquisition of odd-lot shares.
2. Share acquisition rights
Not applicable.
3. Dividends(1) Dividends payment
Resolution

Type of shares

Board of Directors
Meeting on May 11,

Commonshares2018

Total dividends
Dividend per
Source of funds(Thousands of yen)share (Yen)Record date

Effective date

5.00

Mar. 31, 2018

Jun. 29, 2018

Total dividends
Dividend per
Source of funds(Thousands of yen)share (Yen)Record Date

Effective dateMar. 31, 2019

Jun. 28, 2019

166,043

Retainedearnings(2) Dividends with a record date in FY3/19 but an effective date in FY3/20
Resolution

Type of shares

Board of Directors
Meeting on May 10,
2019Commonshares

199,252

Retainedearnings

6.00

FY 3/20 (April 1, 2019 – March 31, 2020)
1. Type and total number of outstanding shares and treasury shares(Shares)
Type of shares

Number of shares
as of Apr. 1, 2019

Increase

Number of shares
as of Mar. 31, 2020

Decrease

Outstanding shares
Common shares

33,209,080

1,561,104-

34,770,184

343

119,000-

119,343

Treasury shares
Common shares (Note)

NOTE: 1. The increase in issued shares of common stock is due to the common stock exchange in which SRS Holdings Co., Ltd. is
the wholly-owning parent company in the share exchange and KAZOKUTEI Co., Ltd. is the wholly owned subsidiary anddue to the common stock exchange in which SRS Holdings Co., Ltd. is the wholly-owning parent company in the shareexchange and SUNROLLY Co., Ltd. is the wholly owned subsidiary.
2. The increase of 119,000 shares of common stock in treasury stock is due to a market purchase as a trust asset of the
Officer's Share Benefit Trust. The number of shares at the end of the Fy2020 under review includes our shares (shares atthe beginning of the fiscal year under review and 119,000 shares at the end of the fiscal year under review) held by Japan
Trustee Services Bank, Ltd. (trust account).
2. Share acquisition rights
Not applicable.

203. Dividends(1) Dividend payment

Resolution

Type of shares

Board of Directors
Meeting on May 10,
2019CommonsharesTotal dividends
Dividend per
Source of funds(Thousands of yen)share (Yen)

199,252

Retainedearnings

6.00

Record Date

Effective dateMar. 31, 2019

Jun. 28, 2019(2) Dividends for which the base date belongs to the current consolidated fiscal year and for which the effective date of distribution
falls in the following consolidated fiscal year
Not applicable
Notes to Consolidated Statements of Cash Flows*1. Reconciliation of cash and cash equivalents at the end of the fiscal year and the balance sheet amount(Thousands of yen)
FY 3/19(Apr. 1, 2018 - Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 - Mar. 31, 2020)

Cash and deposits

9,339,721

8,877,696

Cash and cash equivalents

9,339,721

8,877,696*2. Main breakdown of assets and liabilities of the company that became a new consolidated subsidiary through a share exchange(1) The breakdown of assets and liabilities at the time of the start of consolidation due to the newly consolidation of KAZOKUTEI
Co., Ltd. as a result of a stock exchange and the relationship with the amount of subsidiary fund received by the stock exchange are as
follows.
(Thousands of yen)641,739

Current assets
Non-current assets asset
Goodwill

3,913,981
1,065,156

Current liabilities
Non-current liabilities(1,527,033)(2,685,033)

Acquisition cost
Cash and cash equivalents of newly consolidated subsidiaries

1,408,810(82,719)

Loans to such companies performed between the acquisition date and the deemed acquisition date
Our issue price as a result of the share exchanges

2,167,361(1,408,810)

Deduction: Net payments for purchase of investments in subsidiaries resulting in change in scope of consolidation

2,084,642(2) The breakdown of assets and liabilities at the time of consolidation accompanying the consolidation SUNROLLY Co., Ltd. as aresult of the share exchange, and the relationship with the amount of funds received by the subsidiary through the share exchange, areas follows.
(Thousands of yen)
Current assets
Non-current assets asset

150,020
346,857

Amount of negative goodwill
Current liabilities(24,134)(229,244)

Non-current liabilities
Acquisition cost

(242,632)
866

Cash and cash equivalents of newly consolidated subsidiaries
Loans from such companies performed between the acquisition date and the deemed acquisition date
Our issue price as a result of the share exchanges
Deduction: Proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation

21

38,486
11,583(866)
5 0,069

*3. Material non-cash transactions(1) Assets and obligations applicable to finance lease transactions(Thousands of yen)
FY 3/19(Apr. 1, 2018 - Mar. 31, 2019)
Assets and obligations applicable to finance lease

FY 3/20(Apr. 1, 2019 - Mar. 31, 2020)

130,339transactions

63,338(2) Increase in capital surplus due to share exchange
FY 3/19(Apr. 1, 2018 - Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 - Mar. 31, 2020)-

Increase in capital surplus due to share exchange

22

1,409,676

Business Combinations, etc.
(Business Combination through Simplified Share Exchange)
Effective February 1st, 2020, we conducted a share exchange in which we became the wholly-owned parent company and
KAZOKUTEI Co., Ltd. ("KAZOKUTEI") as the wholly-owned subsidiary of the share exchange, and a share exchange in which we
became the wholly-owned subsidiary of the share exchange and SUNROLLY Co., Ltd. ("SUNROLLY") as the wholly-owned
subsidiary of the share exchange ("Share Exchange").
1. The outline of the Business Combination(1) Name of the acquired company and the content of its business
Name of the acquired company

Description of business

KAZOKUTEISUNROLLY

Business of restaurants and sales ofBusiness of restaurants and sales offoodstuffs, etc.

foodstuffs, etc.

(2) Major reasons for the business combination
We are a food service corporate group that operates 455 stores (as of February 1st, 2020), mainly in the Kansai region, including Washoku
Sato, Tendon Tempura Honpo Santen, Nigiri Chojiro, and Meshiya Miyamoto Munashi and so on. In May 2018, we announced our"Project MIRAI" medium-term management plan. We will accelerate organic growth by further improving the profitability of existing
formats, opening new stores, and constructing a store system that looks ahead to the future. At the same time, we aim to achieve net
sales of 100 billion in fiscal 2022 through M&A in the restaurant business, mainly in western Japan.
Kazokutei operates 168 restaurants (as of February 1st, 2020) primarily consisting of soba and udon restaurants. SUNROLLY operates
62 restaurants (as of February 1st, 2020), primarily directly managed and franchised restaurants in the Kansai region. Through this stock
swap, the Company aims to further expand its presence and retain customers in areas where the Group excels, particularly in the Kansai
region, and to reduce raw material costs, logistics costs, and promotional costs through volume merits. We also aims to expand its
portfolio from a suburban business model to an urban business model and acquire expertise to strengthen the opening of shopping centersin existing formats.
(3) Date of business combination
February 1, 2020 (deemed acquisition date: March 31, 2020)(4) Legal form of business combination
Share exchange(5) Name following business combination
No change.
(6) Percentage of voting rights acquired
100%(7) Major reasons for deciding the acquirer
We obtained 100% of the voting rights of KAZOKUTEI and SUNROLLY through this stock exchange, and each company became afull subsidiary.
2. Period of business results of the acquired company included in the consolidated financial statements
The business results of the acquired company are not included in the consolidated fiscal year under review because the deemed
acquisition date is March 31, 2020.

23

3. Acquisition cost of the acquired company and breakdown by type of consideration(Thousands of yen)
Name of the acquired company
Consideration for acquisition

KAZOKUTEISUNROLLY

Our common stock 1,408,810

Our common stock 866

1,408,810

866

Acquisition cost

4. Exchange Ratio by Type of Shares, Calculation Method, and Number of Shares Delivered(1) Exchange ratio by class of shares
One share of common stock of the company: 0.2219 of our common stock
One share of SUNROLLY common stock: 0.0024 shares of our common stock(2) Method of calculation of share exchange ratio
We referred to the results of the calculation of the share value by Duff & Phelps Co., Ltd., a third-party organization independent fromKAZOKUTEI and SUNROLLY, and based on the advice of Mercury General, a legal advisor, and the results of the due diligence we
conducted on KAZOKUTEI and SUNROLLY, after careful discussion and consideration, we have determined that it is appropriate to
execute this share exchange using the Share Exchange Ratio.
(3) Number of shares delivered
1,561,104 shares
5. Details and amount of major acquisition-related costs (Thousands of yen)
Advisory expenses, etc. 68,779
6. Amount and causes of negative goodwill arising, and the amount of goodwill arising, factors causing goodwill and amortization
period(Thousands of yen)
Acquired Enterprise
Negative goodwill arising
Amount of goodwill arising

Cause of occurrence

KAZOKUTEISUNROLLY-

24,134

1,065,156-

This is mainly attributable to the excess
earning power expected from cost reductions

The net amount of assets received andresulting from volume merits and otherfactors in the development of Kazokutei

liabilities received exceeded the acquisitioncost.

business.
Method and term to amortize
goodwill

Straight-line method over 15 years-* At the end of the consolidated fiscal year under review, the identification of identifiable assets and liabilities and the calculation offair value at the date of the business combination have not been completed, and the allocation of acquisition costs has not been
completed. Therefore, the provisional accounting treatment is conducted based on reasonable information available at the time of thebusiness combination.

24

7. Amounts and breakdown of assets acquired and liabilities assumed on the date of the business combination(Thousands of yen)
Acquired Enterprise

KAZOKUTEISUNROLLY

Current assets

641,739150,020

Non-current assets asset

3,913,981

346,857

Total assets

4,555,720

496,877

Current liabilities

1,527,033

229,244

Non-current liabilities

2,685,033

242,632

Total liabilities

4,212,067

471,876

8. Approximate amount and calculation method of the impact on the consolidated statement of income for the current fiscal year
assuming that the business combination has been completed on the first day of the current fiscal year
(Thousands of yen)
Acquired Enterprise
Sale
Operating profit

KAZOKUTEISUNROLLY

8,464,968

2,480,909(190,770)(106,390)(Calculation Method of Estimated Amounts and Important Assumptions)
The estimated amount is calculated by adding or subtracting the amount of amortization of goodwill from the amount of goodwill
recognized at the beginning of the fiscal year under review to the net sales and profit and loss information for the period from April 1,
2019 to March 31, 2020, assuming that the goodwill recognized at the time of the business combination occurred at the beginning of
the fiscal year under review.
The notes have not been audited.

25

Segment and Other Information
Segment information
FY3/19 (Apr. 1, 2018 – Mar. 31, 2019) and FY3/20 (Apr. 1, 2019 – Mar. 31, 2020)
Omitted since the Group has only a single business segment of food service business.
Related information
FY3/19 (Apr. 1, 2018 – Mar. 31, 2019) and FY3/20 (Apr. 1, 2019 – Mar. 31, 2020)
1. Information by product and service
Omitted since sales to external customers which account for more than 90% of net sales shown on the consolidated statement ofincome are derived from a single product or service category.
2. Information by region(1) Net sales
Omitted since sales to external customers in Japan exceeded 90% of net sales on the consolidated statement of income.
(2) Property, plant and equipment
Omitted since property, plant and equipment in Japan exceeded 90% of property, plant and equipment on the consolidated balance
sheet.
3. Information by major client
Omitted since no external customer accounts for more than 10% of net sales on the consolidated statement of income.
Information related to impairment losses on non-current assets for each reportable segment
FY3/19 (Apr. 1, 2018 – Mar. 31, 2019) and FY3/20 (Apr. 1, 2019 – Mar. 31, 2020)
Omitted since the Group has only a single business segment of food service business.
Information related to goodwill amortization and the unamortized balance for each reportable segment
FY3/19 (Apr. 1, 2018 – Mar. 31, 2019) and FY3/20 (Apr. 1, 2019 – Mar. 31, 2020)
Omitted since the Group has only a single business segment of food service business.
Information related to gain on bargain purchase for each reportable segment
FY3/19 (Apr. 1, 2018 – Mar. 31, 2019) and FY3/20 (Apr. 1, 2019 – Mar. 31, 2020)
Not applicable.

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Per-share information(Yen)
FY 3/19(Apr. 1, 2018 - Mar. 31, 2019)
Net assets per share
Net income( loss )per share

FY 3/20(Apr. 1, 2019 - Mar. 31, 2020)

425.83365.01

8.51(74. 37 )NOTE:1. Diluted net income per share is not presented since the Company has no outstanding dilutive securities.
2. The Company's shares held by Japan Trustee Services Bank, Ltd. (Trust Account) as trust assets of the Officer's Share
Benefit Trust are included in treasury shares, which are deducted from the total number of outstanding shares at the end of
the fiscal year for the purpose of calculating net assets per share (119,000 shares for the previous fiscal year and the current
fiscal year).
For calculation of net income per share or loss per share, treasury stock is included in treasury stock, which is deductedfrom the calculation of the average number of shares during the period (shares for the previous consolidated fiscal year119,000 shares for the current consolidated fiscal year).
3. Basis for calculating net assets per share is as follows.
FY 3/19(As of Mar. 31, 2019)
Total net assets (Thousands of yen)

FY 3/20(As of Mar. 31, 2020)

14,277,528

12,802,060

136,150

1 54,182[of which non-controlling interests (Thousands of yen)](136,150)(154,182)

Net assets applicable to common shares (Thousands of yen)

14,141,377

12,647,878

33,208,737

34,650,841

Deduction on total net assets(Thousands of yen)

Number of common shares at end of period used in calculation of net
assets per share (Shares)
4. Basis for calculating net income per share is as follows.

FY 3/19(Apr. 1, 2018 - Mar. 31, 2019)

FY 3/20(Apr. 1, 2019 - Mar. 31, 2020)

282,547(2,486,802)--

282,547(2,486,802)

33,208,768

33,439,753

Profit attributable to owners of parent (Thousands of yen)Amounts not available to common shareholders (Thousands ofyen)Profit attributable to owners of parent applicable to commonshares(Thousands of yen)
Average number of shares outstanding during the period(Shares)27