Global Kids : Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending September 30, 2021

*Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None
2. Application of special accounting methods for presenting quarterly consolidated financial statements: None
3. Changes in accounting policies and accounting-based estimates, and restatements
4. 1. Changes in accounting policies due to revisions in accounting standards, others: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting-based estimates: None
   4. Restatements: None
5. Number of shares issued (common stock)
6. 1. Number of shares issued as of the end of the period (including treasury shares)

2) Number of treasury shares as of the end of the period

3) Average number of shares issued during the period

• The current quarterly 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 and other forward-looking statements in these materials are based on assumptions judged to be valid and information available to the Company's management at the time these materials were prepared, but 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 the section "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements" on page 3 of the attachments for details on the above forecasts.

Global Kids Company Corp. (6189) Consolidated Financial Results for the Third Quarter of FY9/21

Contents of Attachments

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Global Kids Company Corp. (6189) Consolidated Financial Results for the Third Quarter of FY9/21

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

During the first nine months of the fiscal year ending September 30, 2021 (hereinafter, "the period under review"), the outlook of the Japanese economy continues to be uncertain due to the impact of the novel coronavirus infection, despite signs of recovery, including a partial recovery in corporate earnings.

As for the child-rearing support business in this economic environment above, a change in awareness of the social advancement of women and government efforts to encourage them to take active roles have helped to maintain high levels in the number of double- income households and the employment rate of women. Accordingly, demand for childcare services has remained at a high level.

In response to this increase in demand for childcare services, both the central and local governments are implementing measures to secure childcare workers and develop nursery schools to expand service capacity. Specifically, free early childhood education and preschool programs began in October 2019, and in December 2020, the government announced the New Child-rearing Security Plan, setting a goal of securing additional capacity for approximately 140,000 children over the four years from fiscal 2021 to the end of fiscal 2024.

Due to these measures undertaken by the government, demand for establishing new nursery schools is expected to continue for the time being, which reflects a continued growth in demand for childcare services in central Tokyo, where we have focused our efforts. Given the concern over Japan's declining workforce due to its aging population and a decrease in its total population, the development of a sound child-rearing environment and improvement of the quality of childcare services are issues to be addressed in the course of promoting the social advancement of women to boost the country's economic vitality. In this context, the child-rearing support service providers are playing an increasingly important social role.

Under such circumstances, the Group opened nine central government licensed nursery schools during the period under review as a result of our continued efforts to develop new facilities in Tokyo, Kanagawa and Chiba.

Consequently, at the end of the period under review, the Group operates a total of 183 facilities: 134 central government licensed nursery schools (97 in Tokyo, 27 in Kanagawa, four in Chiba, one in Saitama and five in Osaka); 22 local government licensed nursery schools or centers for early childhood education and care; 11 employer-sponsored nurseries; 12 after-school day care centers or children's houses; and four child developmental support facilities. In addition, we are planning to open one central government licensed nursery school in September.

(Central government licensed nursery schools) Tokyo

Global Kids Ikegami Global Kids Kamata No. 2 Global Kids Magome

Global Kids Morishita 5-Chome Global Kids Hirano

Global Kids Shimo No. 2 Kanagawa

Global Kids Mitsukyo

Global Kids Hiyoshi 5-Chome

Chiba

Global Kids Urayasu

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Global Kids Company Corp. (6189) Consolidated Financial Results for the Third Quarter of FY9/21

Net sales for the period under review increased attributable to a rise in the number of nursery school children mainly due to an increase in the number of facilities under operation, despite the occupancy rates falling short of expectations as a result of the temporary suspension of nursery admissions of mainly 0 to 1 year olds due to the impact of the novel coronavirus infection. In terms of expenses, variable costs increased because there were no facility closures and normal facility operations were achieved during the period under review, whereas in April 2020, variable costs were curbed due to the impact of children refraining from attending nursery schools and facility closures. In addition, the cost to sales ratio rose due to the increase in personnel expenses reflecting the increase in the number of childcare workers, etc., in conjunction with the increase in the number of facilities. Meanwhile, the selling, general and administrative expenses ratio improved as a result of the establishment of online internal events, training and meetings and the promotion of enhanced efficiency in hiring employees.

The Group recognizes subsidy income as non-operating income when it receives municipal subsidies to cover part of capital expenditures (mainly for interior construction costs) to open new facilities. As opening of the Group's new nurseries concentrates in April, the recognition of subsidy income tends to be heavily skewed in the third quarter (from April 1 to June 30). For this reason, the Group reported a large amount of subsidy income for this quarter as a result of opening new nursery schools.

Consequently, the Group reported net sales for the period under review of 17,531 million yen (up 5.9% year on year) with operating profit of 352 million yen (down 15.2% year on year), ordinary profit of 856 million yen (down 1.0% year on year), and profit attributable to owners of parent of 326 million yen (down 27.6% year on year).

1. Explanation of Financial Position Assets
   Total assets amounted to 18,013 million yen at the end of the period under review, a decrease of 548 million yen from the end of the previous fiscal year.
   Current assets decreased 284 million yen to 3,909 million yen. This was mainly attributable to a decrease of 371 million yen in accounts receivable-other.
   Non-current assets decreased 263 million yen to 14,103 million yen. This was mainly attributable to decreases in property, plant and equipment of 619 million yen due to depreciation and 258 million yen due to impairment loss, despite an increase of 731 million yen due to the opening of new nurseries in April, as well as a decrease of 62 million yen in investment securities as a result of the booking of loss on valuation of investment securities and a decrease of 14 million yen in construction assistance fund receivables.

Liabilities

Total liabilities amounted to 9,502 million yen at the end of the period under review, a decrease of 911 million yen from the end of the previous fiscal year.

Current liabilities decreased 467 million yen to 2,999 million yen. This was mainly attributable to a decrease of 325 million yen in income taxes payable and a decrease of 276 million yen in provision for bonuses due to the payment of bonuses in June.

Non-current liabilities decreased 444 million yen to 6,503 million yen. This was mainly attributable to a decrease of 587 million yen in long-term loans payable.

Net assets

Net assets amounted to 8,510 million yen at the end of the period under review, an increase of 363 million yen from the end of the previous fiscal year. This was mainly attributable to an increase of 326 million yen in retained earnings as a result of the booking of profit attributable to owners of parent.

(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements

The Company maintains its consolidated forecasts for the fiscal year ending September 30, 2021 that was announced on November 12, 2020.

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