SRE : Consolidated Financial Results for the Fiscal Year Ended March 31, 2021 (JGAAP)

Consolidated Financial Results for the Fiscal Year Ended March 31, 2021 (JGAAP)

			May 14, 2021
Company name: SRE Holdings Corporation	Stock exchange listing:	Tokyo
Stock code:	2980	URL:	https://sre-group.co.jp/
Representative:	Kazuo Nishiyama, Representative Director and President
Contact:	Osamu Mashiko, Executive Officer, CFO and General Manager, Corporate Headquarters
			TEL: [phone]

Scheduled date of Annual General Meeting of Shareholders: June 14, 2021

Scheduled date of dividend payment ‒

Scheduled date to submit the Securities Report (Yukashoken Hokokusho): June 15, 2021

Earnings Supplementary Explanatory Documents: Yes

Holding of financial results presentation meeting: Yes (for institutional investors, analysts)

					(Figures of less than one million are rounded down.)
1. Consolidated Results for the Fiscal Year Ended March 31, 2021 (April 1, 2020 - March 31, 2021)
(1) Consolidated operating results					(% shows the year-on-year change)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
March 31, 2021	7,339	90.6	1,056	41.5	1,023	42.6	667	40.9
March 31, 2020	3,850	32.9	746	75.2	717	64.9	473	82.4

(Note) Comprehensive income:	Year ended March 31, 2021: ¥667 million (40.9%)
	Year ended March 31, 2020: ¥473 million (82.4%)
Basic profit per	Diluted profit per	Return on equity	Ratio of ordinary	Operating profit
share		share	profit to total assets	margin
Year ended	Yen	Yen	%	%	%
March 31, 2021	43.81	42.16	8.9	10.0	14.4
March 31, 2020	33.50	32.10	9.2	11.8	19.4

(Reference) Share of profit (loss) of entities accounted for using equity method

Year ended March 31, 2021: ¥5 million Year ended March 31, 2020: ¥15 million (Notes) 1. The Company conducted a 3-for-1 share split on August 20, 2019. "Basic profit per share" and "Diluted profit per

share" have, therefore, been calculated on the assumption that the share split was conducted at the beginning of the fiscal year ended March 31, 2020.

1. 2. Since the Company listed its shares on the Mothers market of the Tokyo Stock Exchange on December 19, 2019, "Diluted profit per share" for the fiscal year ended March 31, 2020 is calculated by deeming the average share price from the date of initial listing to March 31, 2020 as the average share price during the period.

2. Consolidated financial condition

	Total assets	Net assets		Equity ratio	Net assets per share
As of		Million yen	Million yen		%	Yen
March 31, 2021		12,341	7,879		63.5	510.95
March 31, 2020		8,054	7,090		88.0	468.06
(Reference) Equity	capital:	As of March 31, 2021: ¥7,842 million	As of March 31, 2020: ¥7,085 million

(Note) The Company conducted a 3-for-1 share split on August 20, 2019. "Basic profit per share" and "Net assets per share" have, therefore, been calculated on the assumption that the share split was conducted at the beginning of the fiscal year ended March 31, 2020.

(3) Consolidated cash flow position

	Cash flows from	Cash flows from	Cash flows from	Ending balance of cash
	operating activities	investing activities	financing activities	and cash equivalents
Year ended	Million yen	Million yen	Million yen	Million yen
March 31, 2021	(3,566)	(253)	3,275	2,637
March 31, 2020	(2,348)	(351)	3,398	3,182

2. Dividends

		Annual dividend per share				Ratio of
	End of	End of	End of			Total dividends	Payout ratio	dividends to net
	first	second	third	Year end	Total	(Annual)	(Consolidated)	assets
	quarter	quarter	quarter					(Consolidated)
Year ended	Yen	Yen	Yen	Yen	Yen	Million yen	%	%
March 31, 2020	‒	0.00	‒	0.00	0.00	‒	‒	‒
March 31, 2021	‒	0.00	‒	0.00	0.00	‒	‒	‒
Year ending
March 31, 2022	‒	0.00	‒	0.00	0.00		‒
(forecast)

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

(% shows the year-on-year change)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic profit per
		owners of parent	share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	11,800	60.8	1,350	27.8	1,280	25.1	835	25.2	54.40

(Note) For details, please refer to "1. Overview of Operating Results and Financial Condition (4) Outlook" on page 7 of the Accompanying Materials.

* Notes

1. Changes in significant subsidiaries during the fiscal year ended March 31, 2021 (changes of specified subsidiaries with change of the scope of consolidation): No
2. Changes in accounting principles, changes in accounting estimates, and retrospective restatements
3. 1. Changes in accounting principles accompanying the amendment of accounting standards: None
   2. Changes in accounting policies other than (i): None
   3. Changes in accounting estimates: None
   4. Restatement: None
4. Number of issued shares (common shares)
5. 1. Number of shares outstanding at end of the period (including treasury shares)

Year ended March 31, 2021	15,348,151 shares	Year ended March 31, 2020	15,138,200 shares
(ii) Number of treasury shares at end of the period
Year ended March 31, 2021	31 shares	Year ended March 31, 2020	‒ shares
(iii) Average number of shares during the period
Year ended March 31, 2021	15,224,158 shares	Year ended March 31, 2020	14,131,614 shares

(Note) The Company conducted a 3-for-1 share split on August 20, 2019. "Number of shares outstanding at end of the period (including treasury shares)" and "Average number of shares during the period" have, therefore, been calculated on the assumption that the share split was conducted at the beginning of the fiscal year ended March

31, 2020.
(Reference) Overview of non-consolidated financial results
Non-consolidated results for the fiscal year ended March 31, 2021 (April 1, 2020 - March 31, 2021)
(1) Non-consolidated operating results						(% shows the year-on-year change)
		Net sales		Operating profit		Ordinary profit		Profit
Year ended		Million yen		%	Million yen		%		Million yen	%		Million yen		%
March 31, 2021		6,926		98.9	705		63.5	666	72.6		420		66.2
March 31, 2020		3,482		22.0	431		13.2	386	1.6		252		14.5
		Basic profit per share	Diluted profit per share
Year ended			Yen			Yen
March 31, 2021			27.59			26.55
March 31, 2020			17.88			17.13

(Note) 1. The Company conducted a 3-for-1 share split on August 20, 2019. "Basic profit per share" and "Diluted profit per share" have, therefore, been calculated on the assumption that the share split was conducted at the beginning of the fiscal year ended March 31, 2020.

(2) Non-consolidated financial position

	Total assets	Net assets		Equity ratio	Net assets per share
As of		Million yen	Million yen		%	Yen
March 31, 2021		11,700	7,351		62.5	476.49
March 31, 2020		7,609	6,809		89.4	449.44
(Reference) Equity	capital:	As of March 31, 2021: ¥7,313 million	As of March 31, 2020: ¥6,803 million

• The results are not subject to an audit by a certified public accountant or an auditing firm.
• Explanation concerning the appropriate use of financial result forecasts and other special notes (Note on forward-looking statements)
  Forward-looking statements such as results forecasts provided in this document are prepared based on currently available information and assumptions that are deemed reasonable, but the Company does not intend to guarantee their achievement. A variety of factors could cause actual results to differ materially from forecasts. For details about the assumptions in the financial forecasts and other related matters, please see "1. Overview of Operating Results and Financial Condition (4) Outlook" on page 7 of the Accompanying Materials.
  (Availability of earnings supplementary explanatory documents and information on earnings results briefings)
  The Company plans to hold a briefing on financial results (online conference) for institutional investors and analysts on May 17, 2021 (Monday). The Company plans to disclose the supplementary explanatory documents used on the day of the financial results briefing via TDnet on May 14 (Friday) as well as publishing them on the Company's website.

• Index for Supplementary Information

1. Overview of Operating Results and Financial Condition.......................................................................................	2
(1)	Overview of operating results ..........................................................................................................................	2
(2)	Overview of financial condition ........................................................................................................................	4
(3)	Overview of cash flows for the fiscal year........................................................................................................	4
(4)	Outlook ............................................................................................................................................................	4
2. Basic Policy for Selecting Accounting Standards .................................................................................................	5
3. Consolidated Financial Statements and Important Notes.....................................................................................	6
(1)	Consolidated balance sheets ..........................................................................................................................	6
(2)	Consolidated statements of income and consolidated statements of comprehensive income ........................	8
(Consolidated statements of income) ...............................................................................................................	8
(Consolidated statements of comprehensive income) ......................................................................................	9
(3)	Consolidated statements of changes in net assets..........................................................................................	10
(4)	Consolidated statements of cash flows ...........................................................................................................	11
(5)	Notes to consolidated financial statements .....................................................................................................	12
(Note to going concern assumptions) ...............................................................................................................	12
(Additional information).....................................................................................................................................	12
(Segment information, etc.) ..............................................................................................................................	12
(Per share information) .....................................................................................................................................	13
(Significant subsequent events)........................................................................................................................	14

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1. Overview of Operating Results and Financial Condition
   (1) Overview of operating results
   In the fiscal year under review, consumer spending and corporate activities substantially fell due to the COVID-19 pandemic which seriously affected the Japanese economy. The resumption of economic activity was observed in certain sectors following the declaration of the ending of the state of emergency. However, the real GDP declined 4.8% in 2020, reflecting the continuing difficult conditions. Meanwhile, industry reacted to the pandemic, with various sectors beginning initiatives to accelerate growth or recover from the difficult conditions, with the digital transformation (DX) trend growing across industries. In these conditions, SRE Holdings Corporation and its consolidated subsidiaries (the "Group") undertook two main businesses under its stated mission: A decade ahead - today's cutting edge technology to shape the future. The first of the Group's businesses is the AI Cloud & Consulting business, through which the Group offers packaged cloud tools and tailor- made algorithms based on modules that leverage machine learning and other advanced technologies to improve operations in many industries centered on the real estate industry. The Group's second business is the Real Estate business. This business consists of real estate distribution operations, including the real estate brokerage business that has been advanced and streamlined through the aggressive introduction of technology by a group of real estate professionals, and smart home services developing and selling high added-value condominiums applying IoT technologies.
   SRE Holdings Corporation (the "Company") is identifying potential applications for machine learning and other advanced technologies in its real estate business where it encounters operational inefficiencies and problems. The Company is working to increase its efficiency and competitiveness by introducing these technologies in its internal operations. At the same time, the Company is creating tools that promote and streamline the industry. These tools, born out of digital innovation in the real estate business and polished by the feedback of internal use in the Company, are provided to other customers in the real estate and financial industry. The Company is also developing a distinct business model to provide differentiated consulting services to customers in a wide range of industries, by applying the modules, which are the basis of the tools.
   The Company's close involvement in its own real estate business practices help effectively the Company provide very useful AI solutions and cloud tools. The Company contributes to the DX and expansion of businesses in many industries, including real estate and finance, by maximizing customer value through the hybridization of technology and its "real business".
   In regards to the operating conditions surrounding the Group's AI Cloud & Consulting business, there have been visible efforts to speed up digitalization in a bid to address Japan's delayed digitalization which has been highlighted by the COVID-

1. pandemic, including the Yoshihide Suga cabinet's decision to seek the establishment of a Digital Agency after Suga became Prime Minister in September 2020. Those efforts have also been a tailwind for the Company's businesses. Turning to the operating conditions surrounding the Group's Real Estate business, demand has been firm for rental condominiums for individuals, which the Company is developing and selling under the AIFLAT brand name. A rise in demand for residential real estate investments has also been observed. Further, the brokerage business is seeing a gradual recovery in the housing market for individual owners, even though the business stayed sluggish in April and May 2020 due to COVID-

1. The longer hours spent at home have given rise to new demand, including demand triggered by the reconsideration of housing conditions. However, the end of the COVID-19 pandemic remains impossible to predict. Uncertainty is growing under these conditions.
   In this operating environment, the Group aggressively offered cloud services, such as its Contract Creation Cloud Service, which makes the online preparation of the contracts possible, to real estate and financial business operators, and provided a wide range of consulting services enabling customers in other industries to apply proprietary AI modules. The Company has also advanced data alliances toward its goal of developing AI modules for diverse industries beyond real estate, including its alliance for the verification of power generation and demand forecasts with Nihon Unisys, Ltd., and its alliances to participate in the planning of Grid Databank Laboratories, based on a hard look at its medium- and long-term growth. At the same time, the Company smoothly developed systems through the employment of a greater number of excellent engineers and consultants than it had planned.
   As a result, consolidated revenues and profits for the fiscal year under review rose sharply, reflecting the substantial increase in the number of contracts acquired for both its cloud and consulting services, the steady expansion of annual recurring revenue (ARR), the recovery of its real estate brokerage services from the effects of temporarily stagnant demand in the first half due to COVID-19, and the improved profitability of smart home services. Net sales amounted to 7,339,626 thousand yen (up 3,489,273 thousand yen or 90.6% from the previous fiscal year). Operating profit came to 1,056,663 thousand yen (up 309,916 thousand yen. Ordinary profit reached 1,023,205 thousand yen (up 305,738 thousand yen or 42.6% year on year). Profit attributable to owners of parent was 667,021 thousand yen (up 193,579 thousand yen or 40.9% year on year).

Operating results by segment for the fiscal year under review are as follows:

The Company changed reportable segments in the fiscal year under review as stated in (5) Notes to consolidated financial

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