Ohsho Food Service : 〔Delayed〕 Consolidated Financial Results for the second Quarter of the Fiscal Year Ended March 31, 2022

		October 29, 2021
	Summary of Consolidated Financial Results
	for the Second Quarter of the Fiscal Year Ending March 31, 2022 (FY3/22)
	(Six Months Ended September 30, 2021)
		[Japanese GAAP]
Company name:	OHSHO FOOD SERVICE CORP.	Listing: Tokyo Stock Exchange, First Section
Stock code:	9936	URL: https://www.ohsho.co.jp
Representative:	Naoto Watanabe, President
Contact:	Masahiro Inagaki, Director, Executive Officer, General Manager of Administration Division
	Headquarters
	Tel: [phone]

Scheduled date of filing of Quarterly Report:				November 12, 2021
Scheduled date of payment of dividend:				December 2, 2021
Preparation of supplementary materials for quarterly financial results:	Yes
Holding of quarterly financial results meeting:				Yes (for institutional investors and analysts)
			(All amounts are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Second Quarter (April 1, 2021 - September 30, 2021) of FY3/22
(1) Consolidated results of operations				(Percentages represent year-on-year changes)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
Six months ended Sep. 30, 2021	40,463	3.4	3,192	33.5	5,982	121.3	4,274	151.7
Six months ended Sep. 30, 2020	39,142	(8.0)	2,391	(40.5)	2,703	(36.3)	1,698	(39.0)

Note: Comprehensive income (millions of yen)	Six months ended Sep. 30, 2021:	4,419	(up 135.2%)
	Six months ended Sep. 30, 2020:	1,878	(down 54.4%)
Net income per share Diluted net income per share
	Yen	Yen
Six months ended Sep. 30, 2021	227.64	-
Six months ended Sep. 30, 2020	90.48	-

Note: Beginning with the first quarter of the current fiscal year, the Company has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and other standards. All figures for the six months ended September 30, 2021 incorporate this accounting standard.

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
As of Sep. 30, 2021	90,871	56,361	62.0
As of Mar. 31, 2021	91,154	52,952	58.1

Reference: Shareholders' equity (millions of yen) As of Sep. 30, 2021: 56,361 As of Mar. 31, 2021: 52,952

Note: Beginning with the first quarter of the current fiscal year, the Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other standards. All figures as of September 30, 2021 incorporate this accounting standard.

2. Dividends

				Dividend per share
	1Q-end	2Q-end			3Q-end	Year-end	Total
	Yen	Yen			Yen	Yen	Yen
Fiscal year ended Mar. 31, 2021	-		50.00	-		50.00	100.00
Fiscal year ending Mar. 31, 2022	-		50.00
Fiscal year ending Mar. 31, 2022 (forecasts)					-		50.00	100.00

Note: Revisions to the most recently announced dividend forecast: None

3. Consolidated Forecasts for the Fiscal Year Ending March 31, 2022 (April 1, 2021 - March 31, 2022)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Net income per
		owners of parent	share
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	83,854		4.0	6,989	15.1	11,465	66.9	7,799	81.9	415.30

Note: Revisions to the most recently announced consolidated forecasts: Yes

For more details, please refer to the press release titled "Notice of Differences between the First Half Forecast and Actual Performance, and Revisions to Consolidated Forecasts for the Fiscal Year Ending March 31, 2022" (Japanese version only) that was announced today (October 29, 2021).

* Notes

1. Changes in consolidated subsidiaries during the period (changes in specified subsidiaries resulting in changes in the scope of consolidation): None

Newly added: -

Excluded: -

1. Application of special accounting methods for presenting quarterly consolidated financial statements: None
2. Changes in accounting policies and accounting 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 estimates:	None
4)	Restatements:	None

Note: Please refer to "Notes to Quarterly Consolidated Financial Statements" on page 11 of the attachments for further information.

(4) Number of outstanding shares (common shares)

1)	Number of shares outstanding at the end of the period (including treasury shares)
	As of Sep. 30, 2021:	23,286,230 shares	As of Mar. 31, 2021:	23,286,230 shares
2)	Number of treasury shares at the end of the period
	As of Sep. 30, 2021:	4,506,163 shares	As of Mar. 31, 2021:	4,514,166 shares
3) Average number of shares outstanding during the period
	Six months ended Sep. 30, 2021:	18,775,494 shares	Six months ended Sep. 30, 2020:	18,767,561 shares

• The current quarterly financial report is not subject to quarterly review procedures by certified public accountants or auditing firms.
• Explanation of appropriate use of earnings forecasts, and other special items
  Forecasts of future performance in this document are based on assumption judged to be valid and information currently available to the Company's management, but are not promises by the Company regarding future performance. Actual results may differ materially from the forecasts for a number of reasons. Please refer to "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts and Other Forward-looking Statements" on page 5 for forecast assumptions and notes of caution for usage.
  How to view supplementary materials for quarterly financial results
  The Company plans to hold the following financial results meeting for institutional investors and analysts. Materials to be used at this event will be available on the Company's website immediately thereafter.
  - Friday, November 26, 2021: Financial results meeting for institutional investors and analysts

	OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the Second Quarter of FY3/22
Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	4
(3)	Explanation of Consolidated Forecasts and Other Forward-looking Statements	5
2. Quarterly Consolidated Financial Statements and Notes	6
(1)	Quarterly Consolidated Balance Sheet	6
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	8
	Quarterly Consolidated Statement of Income
	For the Six-month Period	8
	Quarterly Consolidated Statement of Comprehensive Income
	For the Six-month Period	9
(3)	Quarterly Consolidated Statement of Cash Flows	10
(4)	Notes to Quarterly Consolidated Financial Statements	11
	Changes in Accounting Policies	11
	Going Concern Assumption	11
	Significant Changes in Shareholders' Equity	11

1

OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the Second Quarter of FY3/22

1. Qualitative Information on Quarterly Consolidated Financial Performance

1. Explanation of Results of Operations

Summary of consolidated results of operations (April 1, 2021 to September 30, 2021)

	Amount	% to sales	12-month change	24-month change
	(millions of yen)
Net sales	40,463	100.0%	Up	3.4%	Down	4.9%
Operating profit	3,192	7.9%	Up	33.5%	Down 20.6%
Ordinary profit	5,982	14.8%	Up	121.3%	Up	40.8%
Profit attributable to owners of	4,274	10.6%	Up	151.7%	Up	53.6%
parent

During the first half of the current fiscal year, the Japanese economy continued to see weak personal consumption with spending on services particularly slowing as its economic activities were significantly affected by the country's fourth and fifth waves of COVID-19 infections, which has prompted the central government to put in place the state of emergency and quasi-emergencyCOVID-19 measures nationwide.

In the restaurant industry, restaurants have been urged to shorten operating hours and suspend serving alcohol. Such restrictions caused a substantial drop in store traffic, except that of fast food restaurant chains, especially in August and September in which the number of COVID-19 new cases increased rapidly. This dealt a severe blow to the restaurant industry.

Under such circumstances, the Group, continuing from the previous fiscal year, has taken thorough measures against the COVID-19 pandemic, giving its highest priority to the protection of the safety and health of our customers and employees. The Group has been engaged in offering safer environment in order to cater our customers delicious meals that are essential part of everyday life.

At the same time, the Group was able to tap into the strong demand for takeout and delivery services during the COVID-19 crisis, increase production efficiency within shorter operating hours, and conduct sales promotions in a timely manner, allowing it to increase both revenue and profit year on year during the first half of the current fiscal year.

The following is an overview of our initiatives and achievements during the first half, described in line with three primary strategies in our medium-term management plan which has newly started with the current fiscal year as the first year. The three primary strategies include sales strategy, restaurant opening strategy, and franchise chain promotion strategy.

1. Sales strategy
   Under the challenging operating environment amid the COVID-19 crisis, we have focused on further improving the level of quality, service, and cleanliness, further expanding takeout and delivery services, and stimulating sales promotions while having taken thorough infection prevention measures for our customers and employees.
   To improve the level of quality, service, and cleanliness, we have expanded and improved online cooking training programs of Ohsho Cooking Dojo, an in-house training program, and improved the system that allows not only employees but also part-timers to participate the training programs. They demonstrate not only series of cooking methods but also how to wipe down hot griddles to cook gyoza and how to maintain cookware, allowing trainees to get back to basics. Meanwhile, we have provided a variety of curricula including a suitable way of cooking for takeout orders. A total of 28,000 staff members participated in the online cooking training programs. Cooking skill testing conducted concurrently with the training programs is now targeted at assistant managers and other employees in addition to restaurant managers to further improve their cooking skills.
   Besides the above initiatives, we have improved our customer service by providing online customer service training programs. We have also identified focus places inside the stores and ensured these places are sterilized and cleaned so that customers can enjoy dining in the stores with peace of mind even during the COVID-19 pandemic.
   For delivery services, we added "Gyoza with Extra Garlic" to our delivery menu, which was released in March and has been well received by customers. Depending on their tastes, customers place delivery orders for normal gyoza, "Ginger Gyoza with No Garlic," or "Gyoza with Extra Garlic." We have also enhanced the appeal of

2

OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the Second Quarter of FY3/22

delivery services by increasing delivery menu items and making the "Goku-Oh series" (Goku-Oh fried rice, Goku-Oh Tianjin rice, Goku-Oh Tianjin noodles, and Goku-Oh Yakisoba) available at more stores, which uses well-selected ingredients and cooking methods. We have also increased the number of stores that can provide delivery services from 366 at the end of March 2021 to 424 for directly operated stores. Including franchised stores, the number of such stores rose from 413 to 484. Meanwhile, we have increased stores providing the delivery services with the three food delivery operators: Demae-Can, Uber Eats, and menu, which significantly increased the percentage of delivery menu items out of in-store menu items.

For sales promotions, we launched the annual campaign "Gyoza Club customer appreciation campaign for 2022" in June, and held the "double stamp campaign" for a limited time. We also launched an uncooked gyoza stamp campaign, during which customers collect stamps and exchange them for two small plates with a logo of Gyoza no Ohsho as a gift, and a sale of uncooked gyoza. We uploaded videos demonstrating how to perfectly cook our uncooked gyoza and posted recipes for creative dishes that use our uncooked gyoza on YouTube and our homepage in an effort to allow customers to enjoy gyoza hot from the pan at home.

While restaurants have been urged to suspend serving alcohol, we offered a 50-yen discount to customers ordering a mug of Asahi Dry Zero non-alcoholic drink. In September, we started and focused on selling Asahi Beery that contains 0.5 percent alcohol but tastes like typical beer. Through such efforts, we broadened the appeal of these products as a substitute for beer.

As one of the cashless payment methods, we made a QR code payment option available at almost all directly operated stores, offering more convenience to customers and helping alleviate congestion at cashiers.

1. Restaurant opening strategy
   We opened a store in a new restaurant format, "Joy-Naho," which specializes in takeout and delivery services. As the first store in the new format, Joy-Naho-Ikejiri-ohashi opened on the first floor of an office building in Setagaya-ku, Tokyo. Joy-Naho offers a wide variety of takeout menus served in microwavable containers. Customers can pre-order takeout and receive it without waiting. For delivery services, they can place orders through the platform run by three food delivery operators. Such efforts have made the Joy-Naho store, specializing in takeout and delivery services, a place that can be utilized on various occasions.
   We opened two roadside Gyoza no Ohsho stores named 463go-bypass-Tokorozawa-Hayashi store in May and Kokudo-293go-Ashikaga-Minami store in September. Both of which were set up in East Japan, where the number of our stores is not large enough, and have been designed with the highest priority on COVID-19 infection prevention measures.
   In an effort with a local supermarket chain supported in Fukuoka Prefecture, we opened a new store named SunLiveCity-Kokura store in a shopping mall in Kokuraminami-ku, Kitakyushu City. The store is located on the first floor of the shopping mall, which is convenient for customers to use takeout and delivery services. The store near the supermarket has a takeout-only section, allowing it to smoothly deliver our products to customers after they shop in the supermarket. Unlike the conventional general merchandise stores, we expect synergistic effects from being in a location near the supermarket.
2. Franchise chain promotion strategy
   We have established the internal system to strengthen partnership with our franchised stores and enhance the brand value of Gyoza no Ohsho. Under this internal system, franchised stores receive Group-wide support that will help them find a solution to issues they are facing.
   We made training sessions available to franchise owners, restaurant managers, and future candidates for such posts for the purpose of allowing them to acquire know-how about store operations and improve their cooking skills. Such training sessions have been so far targeted at employees of directly operated stores and are held by Ohsho University, our in-house educational institution, and Ohsho Cooking Dojo. Many people from franchised stores participated in the training sessions.
   In addition, our franchise consultants periodically make the rounds of franchised stores to check the level of quality, service, and cleanliness of each franchised store and clarify areas for improvement. We sought to make quality standards of Ohsho penetrating into the stores by working on the areas for improvement in cooperation with franchise owners. We have lifted the service level of franchised stores to the same level of directly operated stores by, for example, conducting sales promotions in line with those conducted in directly operated stores,

3