[Japanese GAAP] Listing: Tokyo Stock Exchange Company name:  KOSHIDAKA HOLDINGS Co., LTD. Stock code: URL: https://www.koshidakaholdings.co.jp/ 2157 Representative: Hiroshi Koshidaka, Representative Director and President Contact: Yoshihito Doi, Managing Director Tel: +81-3-6403-5710 Scheduled date of filing of Quarterly Report: July 12, 2023 Scheduled date of payment of dividend: Preparation of supplementary materials for quarterly financial results: None Holding of quarterly financial results meeting: None (All amounts are rounded down to the nearest million yen) 1. Consolidated Financial Results for the Third Quarter Ended May 31, 2023 (Sep. 1, 2022 – May 31, 2023) (1) Consolidated results of operations (Percentages are year-on-year changes)
Breakdown of dividends for the fiscal year ending Aug. 31, 2023: Ordinary dividends: 10.00 yen; Commemorative dividends to celebrate 33rd founding anniversary: 2.00 yen For more information, see the July 11, 2023 press release titled "Notice of Revisions to Dividend Forecast for the Fiscal Year Ending Aug. 31, 2023" (Japanese version only). 3. Consolidated Earnings Forecast for the Fiscal Year Ending August 31, 2023 (Sep. 1, 2022 – Aug. 31, 2023) (Percentages are year-on-year changes)
* Notes (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None Newly added: - Excluded: - (2) Application of special accounting methods in the preparation of the quarterly consolidated financial statements: None (3) Changes in accounting policies and accounting-based estimates, and restatements 1) Changes in accounting policies due to revisions in accounting standards, others: Yes 2) Changes in accounting policies other than 1) above: None 3) Changes in accounting-based estimates: None 4) Restatements: None
(4) Number of outstanding shares (common stock)
1) Number of shares outstanding at the end of the period (including treasury shares) As of May 31, 2023: 82,300,000 shares As of Aug. 31, 2022:
* The current financial report is not subject to quarterly review by certified public accountants or auditing firms. * Explanation of appropriate use of earnings forecasts, and other special items Forecasts of future performance in these materials are based on assumptions judged to be valid and information available to the Company's management at the time the materials were prepared. These materials are not promises by the Company regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons. Please refer to page 3 of the attachments "(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements" for forecast assumptions and notes of caution for usage.
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1. Qualitative Information on Quarterly Consolidated Financial Performance
(1) Explanation of Results of Operations
In the first nine months of the current fiscal year, the Japanese economy was largely at a standstill against a backdrop several concerns, such as continuing inflation caused by shortages of energy and food products in many countries due to the protracted Ukraine crisis. The pace of price increases in Japan, driven by the yen's depreciation, has recently slowed down as the market assesses potential changes in monetary policy and price situation on both sides of the North Pacific. The Category V shift of the COVID-19 pandemic has greatly influenced consumer behavior, making the pent-up demand, which has been seen since the beginning of the year, even more noticeable particularly in the third quarter . Business segment performance was as follows.
Karaoke
In the core karaoke business, although sales were sluggish in the peak season from late-November through December as consumers refrained from going out due to the 8th wave of the pandemic, same-store sales rebounded and stayed above the pre-pandemic level after January. In May, customer traffic on the same-store basis have rebounded to surpass the level seen before the pandemic. Aggressive store openings during the pandemic continued in the first nine months with 41 new Karaoke Manekineko locations in Japan. Many activities are under way to accomplish the medium-term management vision of "Entertainment as Infrastructure," which was started in September 2019. Major initiatives are forms of entertainment other than karaoke, such as PlayGarden (an amusement facility with billiards, darts and other games) and Mirror Pon! (use of karaoke screen and speakers to watch content in the personal devices), many types of content collaboration, and measures to upgrade and expand recruiting and training activities. In addition, we have been preparing to develop and introduce DX to enhance operating efficiency and offer new types of entertainment. We are implementing a new DX-based PER (Private Entertainment Rooms) initiative called "Metacara" at select stores. In other countries, we restarted opening new stores in Southeast Asia, four in Malaysia and two in Thailand during the first nine months. At the end of May 2023, the number of karaoke locations in Japan was 613, 31 more than at the end of the previous fiscal year. The number of overseas karaoke stores was 17 in four countries, consisting of four in South Korea, ten in Malaysia, two in Thailand and one in Indonesia, six more than at the end of the previous fiscal year. Sales in the Karaoke segment were 38,234 million yen, up 48.7% year on year, and there was a profit of 6,757 million yen, up 265.4% year on year.
Bath House
As in the Karaoke segment, customer footfall has been gradually recovering since the start of the year, following the impact of the 8th wave of the Corona pandemic. However, it has yet to reach pre-pandemic levels. On the other hand, soaring utility costs have exerted pressure on profits. Sales in the Bath House segment were 788 million yen, up 18.9% year on year, and the segment profit improved 74 million yen from one year earlier to a profit of 19 million yen.
Real Estate Management
Occupancy was almost 100% at both of the major properties in this segment, the AQERU Maebashi commerce & business complex and the Fleuret Hanasaki Building in Yokohama. Furthermore, alongside our property acquisitions, we have also divested "Sport Nagoya," a property that was owned by us, resulting in a gain on sales of non-current assets of 4,333 million yen in the third quarter. Sales in the Real Estate Management segment were 1,131million yen, up 38.9% year on year, and the segment profit was 203 million yen, up 96.5% year on year. Overall, the Koshidaka Group (KOSHIDAKA HOLDINGS Co., LTD. and its consolidated subsidiaries) had sales of 39,981 million yen, up 47.9% year on year. The operating profit was 5,955 million yen, up 356.4% year on year, the ordinary profit was 6,143 million yen, up 46.4% year on year, and the profit attributable to owners of parent was 6,843 million yen, up 175.5% year on year.
(2) Explanation of Financial Position
Assets Current assets increased 2,087 million yen (21.1%) to 11,998 million yen. This was mainly due to increases of 1,264 million yen in cash and deposits and 338 million yen in other current assets. Property, plant and equipment increased 5,088 million yen (18.8%) to 32,190 million yen. This was mainly due to increases of 2,456 million yen in land and 2,142 million yen in buildings and structures. Intangible assets increased 97 million yen (22.2%) to 536 million yen. Investments and other assets increased 1,184 million yen (12.1%) to 11,005 million yen. This was mainly due to increases of 1,156 million yen in leasehold and guarantee deposits, 598 million yen in long-term prepaid expenses, 412 million yen in long-term loans receivable, while there was a decrease of 924 million yen in deferred tax assets. Total non-current assets increased 6,371 million yen (17.1%) to 43,733 million yen. As a result, total assets increased 8,458 million yen (17.9%) to 55,731 million yen.
Liabilities
Current liabilities increased 2,925 million yen (30.3%) to 12,568 million yen. This was mainly due to increases of 1,511 million yen in income taxes payable, 207 million yen in other current liabilities, 341 million yen in deposits received and 832 million yen in accounts payable-other. Non-current liabilities decreased 177 million yen (1.0%) to 17,943 million yen. This was mainly due to an increase of 696 million yen in asset retirement obligations and a decrease of 854 million yen in long-term borrowings. As a result, total liabilities increased 2,748 million yen (9.9%) to 30,512 million yen. Net assets Net assets increased 5,710 million yen (29.3%) to 25,219 million yen. This was mainly due to an increase of 5,770 million yen in retained earnings.
(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements
Uncertainties such as the prolonged war in Ukraine, price hikes due to the resulting shortages of energy and food, and the global economic slowdown due to monetary tightening to combat inflation are likely to continue. However, policies to restrict movement of people that were introduced to fight the successive outbreaks of the pandemic and had a significant impact on consumer behavior over the past three years are being lifted. Inbound demand was recovered as border controls were also eased, and on May 2023 COVID will be reclassified to infection category V, the same as seasonal influenza, etc., under the Infection Control Law. Demand had been suppressed due to policy measures to contain the pandemic and by voluntary restraints by consumers during the pandemic. The phenomenon known as "revenge consumption" is emerging in earnest. Since we had assumed at the time of releasing the initial forecast that the pandemic would subside and that a reactionary demand surge would emerge, we maintain the forecast announced in the second quarter earnings report. Overall, we forecast consolidated net sales of 53,830 million yen, up 41.7% year on year, operating profit of 7,570 million yen, up 243.2% year on year, ordinary profit of 7,700 million yen, up 44.4% year on year, and profit attributable to owners of parent of 7,470 million yen, up 105.0% year on year. We have positioned (1) expansion of the store network and increase in the number of karaoke rooms, (2) provision of various types of entertainment, and (3) recruitment and training of human resources as our three priority tasks under our medium-term management vision, "Entertainment Infrastructure Plan". Toward these goals, we are (1) actively recruiting of high-level human resources and building an organizational structure capable of sustaining growth, (2) leveraging DX to Create new customer experiences that transcend the limitations of location and space by fusing real and digital entertainment and increase the number of Private Entertainment Rooms (PER), and (3) developing "well-tainment", a new business model, that combines entertainment and wellness. We are introducing in the current fiscal year "Metacara", a new DX-based PER initiative, and taking actions to enhance operating efficiency. Furthermore, to enhance the acquisition and growth of our human resources, which serve as the foundation for implementing various initiatives, we have decided to reform our personnel system. This includes raising salary levels, with an average annual increase of 25% for the entire company over the two-year period ending August 2024 and August 2025. The revised system will be implemented starting from the fiscal year ending in August 2024. Moreover, to celebrate the 33rd anniversary of our karaoke business, we have resolved to distribute a commemorative dividend of 2 yen per share for the fiscal year ending August 31, 2023 (subject to approval at the upcoming ordinary general meeting of shareholders in late November 2023). This commemorative dividend is intended as a token of appreciation to our shareholders for their unwavering support. Consequently, the total dividend per share for the fiscal year ending August 31, 2023, inclusive of the ordinary dividend, will amount to 12 yen per share.
2. Quarterly Consolidated Financial Statements and Notes

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income

Quarterly Consolidated Statement of Comprehensive Income

(3) Notes to Quarterly Consolidated Financial Statements Going Concern Assumption Not applicable. Significant Changes in Shareholders' Equity Not applicable.
Changes in Accounting Policies
Koshidaka Holdings has applied the Implementation Guidance on Accounting Standard for Fair Value Measurement (Accounting Standards Board of Japan (ASBJ) Guidance No. 31, June 17, 2021) from the beginning of the first quarter of the fiscal year, and has applied the new accounting policies set forth by the Implementation Guidance on Accounting Standard for Fair value Measurement prospectively in accordance with the transitional treatment prescribed in Paragraph 27-2 of the Implementation Guidance on Accounting Standard for Fair Value Measurement. There is no effect of the application of this guidance on the quarterly consolidated financial statements.
Segment and Other Information
Segment Information I. First nine months of FY8/22 (Sep. 1, 2021 – May 31, 2022) 1. Information related to net sales and profit/loss and disaggregation of revenue for each reportable segment
expenses that cannot be attributed to reportable segments. 2. Segment profit (loss) is adjusted to be consistent with operating profit shown on the quarterly consolidated statement of income. 2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment No applicable items. II. First nine months of FY8/23 (Sep. 1, 2022 – May 31, 2023) 1. Information related to net sales and profit/loss and disaggregation of revenue for each reportable segment
Notes:  1. The -1,025,524 thousand yen adjustment to segment profit mainly includes general and administrative expenses that cannot be attributed to reportable segments. 2. Segment profit is adjusted to be consistent with operating profit shown on the quarterly consolidated statement of income. 2. Information related to impairment losses on non-current assets, goodwill, etc. for each reportable segment No applicable items.
Revenue Recognition
Information related to disaggregation of revenue from contracts with customers is described in the Segment and Other Information section. Material Subsequent Events Not applicable. This summary report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation.