Change in the method of recognizing revenue due to the adoption of the Revenue Recognition Accounting Standard

「As a result, compared with before application of the revenue recognition accounting standards and related standards, the consolidated income statement for the current consolidated fiscal year shows that net sales decreased by ¥88.788 million and cost of sales decreased by ¥96.563 million, while operating income, ordinary income and net income before income taxes each increased by ¥7.774 million.」

「As a result, for the nine months ended the third quarter of the current consolidated fiscal year, net sales decreased by ¥68.422 million and cost of sales decreased by ¥71.158 million, while operating income, ordinary income and quarterly net income before income taxes each increased by ¥2.735 million. The beginning balance of retained earnings also decreased by ¥128.321 million.」

「As a result, for the six months ended the second quarter of the current consolidated fiscal year, net sales decreased by ¥64.438 million and cost of sales decreased by ¥62.140 million, while operating income, ordinary income and quarterly net income before income taxes each decreased by ¥2.298 million. The beginning balance of retained earnings also decreased by ¥128.321 million.」

「The Company applied the “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No. 29, 31 March 2020) and other standards from the beginning of the first quarter of the current consolidated fiscal year, and began recognising revenue at the amount expected to be received in exchange for the goods or services when control of the promised goods or services is transferred to the customer. Accordingly, membership fee revenue, which was previously recognised when members joined, is now recognised over the period in which the services are provided. For sales with a right of return in the early childhood education business, consideration was previously recognised in full as revenue at the time of sale, with a provision for returns recorded based on historical return performance. The Company now recognises revenue at the consideration excluding the consideration for products expected to be returned. In addition, for certain transactions arranging camps and other services in the personality and character development camp education business, when the Company acts as an agent in providing goods or services to customers, revenue is recognised on a net basis after deducting the amount paid to suppliers from the amount received from customers.」