Global Kids : Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending September 30, 2022

*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: Yes
   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 FY9/22

Contents of Attachments

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Global Kids Company Corp. (6189) Consolidated Financial Results for the Third Quarter of FY9/22

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

In Japan, dealing with the declining workforce due to the low birthrate and aging population has become an issue of the utmost urgency, and the significance of the child-rearing business is growing year by year, as an infrastructure to support the social advancement and active participation of women who are expected to boost the country's economic vitality.

To reduce the number of wait-listed children at nursery schools, both the central and local governments are implementing measures that aim to expand service capacity by securing childcare workers and developing nursery schools. 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.

While the number of wait-listed children is decreasing, thanks to these initiatives taken by the government, the situation is still far from the government's goal of zero wait-listed children. The demand for establishing new nursery schools is expected to continue to a certain extent to achieve the goal of expanding service capacity under the government's New Child-rearing Security Plan. Furthermore, in an effort to unify its measures regarding children, the government plans to create a new "Agency for Children and Families" in April 2023, under the banner of a "child-centered society" which centrally positions child-related initiatives and policies within society. The establishment of Agency for Children and Families is expected to raise the percentage of childcare-related expenditures against GDP to the latter 3% levels, comparable to European countries, and to improve the compensation and social standing of childcare workers, and the stance of promoting children-centric policies has become increasingly marked.

Under such circumstances, the Group opened six central government licensed nursery schools (including one facility that was transitioned from local government licensed nursery school status), as indicated below, during the period under review as a result of our continued efforts to develop new facilities in Tokyo and Kanagawa.

As a result, at the end of the period under review, the Group operates a total of 174 facilities: 141 central government licensed nursery schools (103 in Tokyo, 28 in Kanagawa, four in Chiba, one in Saitama and five in Osaka); 20 local government licensed nursery schools or centers for early childhood education and care; 10 after-school day care centers or children's houses; and three child developmental support facilities.

(Central government licensed nursery schools) Tokyo

Global Kids Shoinjinjamae Global Kids Hamacho Global Kids Toyosu Global Kids Matsushima Global Kids Higashifushimi

Kanagawa

Global Kids Shinkoyasu No. 2

Net sales for the period under review increased attributable to the opening of new nursery schools during the period under review and a rise in the number of nursery school children at nursery schools in their second year of operation. In terms of expenses, although personnel expenses and company housing rent expenses rose year on year in conjunction with the hiring of additional personnel during the period under review, the cost to sales ratio rose by 0.5 points, primarily due to the Group's efforts to keep recruiting expenses down. In addition, in terms of selling, general and administrative expenses, although the amount of investment in operation efficiency improvements rose, head office personnel expenses fell, and the selling, general and administrative expenses ratio improved by 0.3 points over the previous fiscal year.

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). The Group reported 642 million yen in subsidy income for this quarter as a result of opening new nursery schools.

The Group also recorded, under extraordinary losses, 1,677 million yen in impairment loss on non-current assets in the form of facilities for which the effectiveness of future profit/loss improvements remains unclear. The Group recorded extraordinary losses totaling 1,721 million yen, including 36 million yen of system failure handling expense incurred for responding to malware infection. Consequently, the Group reported net sales for the period under review of 18,264 million yen (up 4.2% year on year) with operating

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Global Kids Company Corp. (6189) Consolidated Financial Results for the Third Quarter of FY9/22

profit of 502 million yen (up 42.6% year on year), ordinary profit of 978 million yen (up 14.2% year on year), and loss attributable to owners of parent of 482 million yen (down 247.7% year on year).

1. Explanation of Financial Position Assets
   Total assets amounted to 16,443 million yen at the end of the period under review, a decrease of 1,666 million yen from the end of the previous fiscal year.
   Current assets increased 41 million yen to 4,171 million yen. This was mainly attributable to an increase of 601 million yen in cash and deposits, despite a decrease of 490 million yen in accounts receivable-other and contract assets (indicated as "accounts receivable- other" until the previous fiscal year).
   Non-current assets decreased 1,707 million yen to 12,271 million yen. This was mainly attributable to decreases in property, plant and equipment of 637 million yen due to depreciation and 1,677 million yen due to impairment loss, despite an increase of 774 million yen due to the opening of new nurseries in April, as well as a decrease of 11 million yen in software due to amortization and a decrease of 22 million yen in lease and guarantee deposits, and decreases due to recording expenses of 56 million yen in long-term prepaid expenses and 14 million yen in construction assistance fund receivables.

Liabilities

Total liabilities amounted to 8,233 million yen at the end of the period under review, a decrease of 1,218 million yen from the end of the previous fiscal year.

Current liabilities decreased 303 million yen to 2,908 million yen. This was mainly attributable to a decrease of 316 million yen in provision for bonuses due to the payment of bonuses.

Non-current liabilities decreased 915 million yen to 5,324 million yen. This was mainly attributable to a decrease of 565 million yen in long-term loans payable due to repayments, as well as a decrease of 374 million yen in deferred tax liabilities.

Net assets

Net assets amounted to 8,210 million yen at the end of the period under review, a decrease of 447 million yen from the end of the previous fiscal year. This was mainly attributable to a decrease of 482 million yen in retained earnings as a result of the booking of loss attributable to owners of parent.

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

With regard to the Company's consolidated forecasts for the fiscal year ending September 30, 2022, please see the "Notice regarding booking of non-operating income (subsidy income), non-operating expenses (capital expenses), and extraordinary losses (impairment loss), and revisions to the Company's earnings forecast," issued today (July 29, 2022).

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