Consolidated Financial Results for the Fiscal Year Ended March 31, 2022
[Japanese GAAP]
June 8, 2022

Company name: HOPE, INC.
Stock code:
6195
Representative: Takayasu Tokitsu, CEOContact:
Kensuke Ohshima, CFO
Scheduled date of Annual General Meeting of Shareholders:
Scheduled date of filing of Annual Securities Report:
Scheduled date of payment of dividend:
Preparation of supplementary materials for financial results:
Holding of financial results meeting:

Listing: TSE /FSE Q-Board
URL: https://www.zaigenkakuho.com/en/ir
Tel: +81-(0)92-716-1404
June 30, 2022
June 30, 2022
Yes
Yes (for institutional investors and analysts)(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (July 1, 2021 to March 31, 2022)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales

Operating profit

Profit attributable toowners of parent

Ordinary profit

Millions of yen%

Millions of yen

Fiscal year ended Mar. 31, 2022
35,630Fiscal year ended Jun. 30, 2021
34,615
Note: Comprehensive income (millions of yen)-

(16,651)(16,731)(6,895)(6,935)
Fiscal year ended Mar. 31, 2022: (19,731) (-%)
Fiscal year ended Jun. 30, 2021: (6,976) (-%)

Net income per
share

%

Millions of yen%

Millions of yen(19,730)(6,978)%-

Diluted net
Ordinary profit to Operating profit to
Return on equity
income per sharetotal assets
net sales

Yen

Yen

%

%

%

Fiscal year ended Mar. 31, 2022
(1,952.73)
Fiscal year ended Jun. 30, 2021
(1,109.09)
Reference: Equity in earnings of affiliates (millions of yen)(269.9)(46.7)(63.3)(19.9)
Fiscal year ended Mar. 31, 2022: Fiscal year ended Jun. 30, 2021: Notes: 1. Diluted net income per share is not presented because net loss was posted although there were outstanding dilutive shares.
2. Year-on-year changes for the fiscal years ended Jun. 30, 2021 are not presented because HOPE,INC. started preparing
consolidated financial statements from the fiscal year ended Jun. 30, 2021. In addition, ordinary profit to total assets were
calculated based on total assets at the end of the fiscal year, respectively, since the fiscal year ended Jun. 30, 2021 is thefirst fiscal year the consolidated financial statements were prepared.
3. With the change of the business year, the fiscal year ended Mar. 31, 2022 is a period of nine months, from Jul.1, 2021
through Mar. 31, 2022. Accordingly, comparisons with the previous fiscal year are not presented.
4. HOPE,INC. has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan(ASBJ) Statement No. 29, Mar. 31, 2020) from the beginning of the current fiscal year.

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

Net assets per share%

As of Mar. 31, 2022
1,432
(5,602)As of Jun. 30, 2021
10,964(2,498)Reference: Shareholders’ equity (millions of yen)
As of Mar. 31, 2022: (5,615)

Yen(391.9)(500.72)(23.1)(326.50)
As of Jun. 30, 2021: (2,530)(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents at
end of period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

266(2,847)

(24)
4

1,176
3,475

906
1,921

Total
dividends

Dividend
Dividends on
payout ratio
equity(consolidated) (consolidated)

Fiscal year ended Mar. 31, 2022
Fiscal year ended Jun. 30, 2021

2. Dividends
Dividend per share
1Q-end2Q-endYen

Yen

3Q-end Year-end
Yen

Yen

Total

Yen Millions of yen%%

Fiscal year ended Jun. 30, 2021
0.00
0.00
0.00
Fiscal year ended Mar. 31, 2022
0.00
0.00
0.00
Fiscal year ending Mar. 31, 2023
(forecasts)
Notes: 1. The dividend forecast for the fiscal year ending Mar. 31, 2023 is to be determined.
2. With the change of the business year, the fiscal year ended Mar. 31, 2022 is a period of nine months, from Jul. 1, 2021
through Mar. 31, 2022.
3. The dividend reference date is altered to Mar. 31 due to the change in the fiscal year end effective from the fiscal year
ended Mar. 31, 2022.

3. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March 31, 2023)
Net sales
Millions of yen(Percentages represent year-on-year changes)
Profit attributable to
Net income
Ordinary profit
owners of parent
per share

Operating profit%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

First half
1,076
88
82
61
5.52
Full year
1,995
126
105
76
6.80
Note: With the change of the business year, the fiscal year ended Mar. 31, 2022 is a period of nine months, from Jul. 1, 2021 throughMar. 31, 2022. Accordingly, comparisons with the previous fiscal year are not presented.

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): Yes
Newly added: 2 (JICHITAI AD, INC., JICHITAI WORKS, INC.) Excluded: 1 (HOPE ENERGY, INC.)(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 the section “3. Consolidated Financial Statements and Notes, (5) Notes to Consolidated Financial
Statements, Changes in Accounting Policies, Application of the Accounting Standard for Revenue Recognition” onpage 19 of the attachments for further information.

(3) Number of shares outstanding (common shares)
1) Number of outstanding shares as of the end of the period (including treasury shares)

As of Mar. 31, 2022:

11,239,500 shares

As of Jun. 30, 2021:

7,775,100 shares

As of Jun. 30, 2021:

24,981 shares

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

As of Mar. 31, 2022:

24,981 shares

3) Average number of outstanding shares during the period
Fiscal year ended Mar. 31, 2022:

10,104,289 sharesFiscal year ended Jun. 30, 2021:

6,292,514 shares(Reference) Overview of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (July 1, 2021 to March 31, 2022)(1) Non-consolidated results of operations(Percentages represent year-on-year changes)
Net sales
Millions of yen

Fiscal year ended Mar. 31, 2022
Fiscal year ended Jun. 30, 2021

20,61834,615

Operating profit% Millions of yen

140.3

Ordinary profit%

Millions of yen-(4,485)(6,924)(4,453)(6,892)

Net income per share

Diluted net income
per share

Yen

Yen

Profit% Millions of yen

%

-

-

(4,501)(6,967)

Fiscal year ended Mar. 31, 2022
(445.48)
Fiscal year ended Jun. 30, 2021
(1,107.25)
Note: With the change of the business year, the fiscal year ended Mar. 31, 2022 is a period of nine months, from Jul. 1, 2021
through Mar. 31, 2022. Accordingly, comparisons with the previous fiscal year are not presented.

(2) Consolidated financial position
Total assets
Millions of yen

Net assets
Millions of yen

As of Mar. 31, 2022
1,201
(5,493)As of Jun. 30, 2021
10,975(2,486)
Reference: Shareholders’ equity (millions of yen)
As of Mar. 31, 2022: (5,506)

Equity ratio

Net assets per share%Yen(458.2)(491.01)(22.9)(325.01)
As of Jun. 30, 2021: (2,518)* The current financial report is not subject to the audit by certified public accountants or auditing firms.
* Explanation of appropriate use of earnings forecasts, and other special items- Forecasts of future performance in these materials are based on assumptions judged to be valid and information available tothe management of HOPE,INC. at the time these materials were prepared. Actual results of operations may differ fromforecasts due to uncertainty involving these judgments and assumptions or to changes in business operations and market
conditions. HOPE,INC. does not guarantee the certainty of any forward-looking statements.
- The "Business Plan and Growth Potential" (Dec. 6, 2021) was scheduled to be updated between mid-Aug. to the end of Sep.
2022. However, because of the change in our fiscal year end (from Jun. 30 to Mar. 31) which was approved at theextraordinary shareholders' meeting held on Mar. 24, 2022 the update was released simultaneously with the announcementof financial results for the fiscal year ended Mar.2022.

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

5(3) Cash Flows

6(4) Outlook

7(5) Significant events regarding premise of a going concern

8

2. Basic Approach to the Selection of Accounting Standards

9

3. Consolidated Financial Statements and Notes

10(1) Consolidated Balance Sheet

10(2) Consolidated Statements of Income and Comprehensive Income

12

Consolidated Statement of Income

12

Consolidated Statement of Comprehensive Income13(3) Consolidated Statement of Changes in Equity

14(4) Consolidated Statement of Cash Flows

16(5) Notes to Consolidated Financial Statements

18

Going Concern Assumption

18

Reclassifications

18

Business Combinations

18

Changes in Accounting Policies

19

Additional Information

20

Segment and Other Information

22

Per-share Information

24

Material Subsequent Events

25

1

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

1. Overview of Results of Operations(1) Results of Operations
The extraordinary shareholders meeting held on March 24, 2022 approved a proposal for amendment to the
Articles of Incorporation to change the fiscal year end from Ju ne 30 to March 31. This resulted in a transitional
nine-month fiscal period beginning on July 1, 2021 and ending on March 31, 2022.
Year-to-year percentage changes are not presented because the period of the current fiscal year differs from thatof the previous fiscal year.
The drawn-out effects of the COVID-19 pandemic continued to impact the Japanese economy during the current
fiscal year (July 1, 2021 to March 31, 2022). While the restrictions on movement of people were eased graduallyfollowing the lifting of all emergency declarations nationwide at the end of September 2021, the outlook forJapan’s economy remains unclear.
Translating the HOPE Group’s corporate philosophy into actions and achieving more growth of corporate value
will require an intent focus on our relationships with local governments. We have been using our businessactivities since our inception to increase the number of these relationships, which are a key strength of ours. Our
objectives are the growth of existing businesses and creation of new businesses in two ways. The first is creating
new businesses that can be easily reproduced in many fields while accurately responding to new and amended
laws. The second is the easy reproduction of business expansion in the local government business domain. Taking
these actions will allow us to support local governments as they create a self-reliant and sustainable social
framework that utilize the distinctive strength and characteristics of individual communities. M oreover, we
believe these actions will result in the realization of the HOPE Group’s corporate philosophy accompanied by thegrowth of corporate value.
On August 11, 2020, HOPE,INC. started HOPE NEXT 3, a three-year medium-term management plan beginningin the fiscal year that ended in June 2021. To accomplish the goals of this plan, many business activities with theaim of medium-term growth are under way. Between the middle of December 2020 and late January 2021, theprice of electricity on the Japan Electric Power Exchange (JEPX) was very high. This big increase in the cost ofelectricity had an enormous negative impact on the performance of the energy business, which is the HOPE
Group’s largest business segment. There was negative equity of about 2.5 billion yen at the end of June 2021.
Subsequently, there was an imbalance fee of approximately 6.5 billion yen (tax inclusive) for January 2021 andthis was the primary cause of the negative equity. In response, the Company raised funds through equity finance,
including the issuance of shares by third-party allotment announced on August 27, 2021, and the issuance andsubsequent exercise of the eleventh share acquisition rights with a clause to amend exercise price. We were thus
able to perform our obligations on schedule and make progress toward eliminating negative equity. Payments toutilities were also completed in December 2021. However, since mid-October 2021, the price of electricity on the
JEPX has been higher than what the Group expected. As a result, the cost of sales and accounts payable-trade in
the energy business increased significantly and negative equity rose to more than 8 billion yen at the end of thesecond quarter. The price of electricity has remained largely unchanged from January 2022 onward.
In this environment, we took actions to ensure business continuity in the energy business, considering thesignificant impact this business has on the Group's operations. These included suspension of bidding on energy
contracts from August 2021 and reduction of risk volume. Simulta neously we conducted an absorption-typedemerger of the energy business to HOPE ENERGY, INC. effective December 1, 2021, in order to set up a
flexible and agile group management structure. Elsewhere, a capital tie-up with a potential sponsor company did
not materialize but we continued to review options on the premise of business continuity.
Despite the measures taken on all fronts to ensure business continuity, as described in the March 22, 2022 press
release titled "Termination of the Consigned Supply Agreement at HOPE ENERGY, INC., our Subsidiary
Engaged in the Electricity Retail Sales Business" (Japanese version only), it has become difficult to purchaseelectricity due to the unparalleled electricity purchase price hikes since mid -October 2021, resulting in imbalancefees. In mid-March 2022, HOPE ENERGY, INC. failed to pay these imbalance fees and other charges due under
the Wheeling Supply Agreement, and based on such default, the Wheeling Supply Agreements with all
2

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

transmission and distribution utilities with whom HOPE ENERGY, INC. does business were terminated at
midnight on March 22, 2022. The cancellation penalty and compensation for damages due to the termination ofthese contracts are recorded as an extraordinary loss.
As it became practically impossible for HOPE ENERGY, INC. to continue operations, we came to the conclusionthat filing a petition for commencement of court-ordered bankruptcy proceedings would be most appropriate
option. As stated in the "Notice of Decision to Commence Bankruptcy Proceedings for Consolidated Subsidiary"
released on March 28, we filed petition for commencement of bankruptcy proceedings on March 25, and the court
ordered commencement of bankruptcy proceedings on the same day.
Business operations have been reorganized for the purposes of maintaining speed and agility and of establishing amanagement framework that can allocate the HOPE Group’s resources in a suitable manner and implement
strategies involving finances and equity. One step was the establishment on December 1, 2021 of two subsidiaries
to operate businesses transferred from HOPE,INC.. JICHITAI AD, INC. is now operating the advertising businessand JICHITAI WORKS, INC. is now operating the Jichitai Works business. Due to the spinoff of these businesses,
HOPE,INC. became a holding company on December 1, 2021.
We continue to position the advertising business as a profit-generating business of the HOPE Group and arecontinuing to work on achieving the proper size of this business to improve profitability. One goal is reducing
over the medium term the high percentage of fiscal year earnings of this business by season. These steps are
aimed at making the advertising business more cost efficient and receiving higher rates for advertising services.
In the Jichitai Works business, the market for promotions targeting local governments still has much potential for
more public-private sector collaboration and measures to increase competition. Our goal is to position ourselvesat the very top of upstream information flows in order to capitalize on opportunities involving this potential. Thisbusiness is upgrading content, strengthening information dissemination capabilities and reinforcing the abi lity tokeep up with the latest information. The objective is firmly establishing the value of the Jichitai Works brand inorder to stimulate more growth of the market for promotions targeting local governments. In addition, we believethat these activities will make possible even more public-private sector collaboration based on government
information circulation centered on the HOPE Group as well as the use of local government information
databases for strengthening, supporting and creating business activ ities. We will use many activities toaccomplish these goals. These measures will include upgrading and expanding our content production capabilities,
increasing activities for B-to-G solutions (former B-to-G marketing) and making extensive use of Jichitai WorksHA×SH, which is an internet platform for supporting public-private sector collaboration.
In addition, the Extraordinary General Meeting of Shareholders held on March 24, 202 2 approved "Partial
Amendment to the Articles of Incorporation." Accordingly, the probation period for delisting due to forinsolvency will expire on March 31, 2023. We will continue to place the highest priority on eliminating negative
equity. To secure funds for the entire Group, in addition to the fund procurement actions announced andimplemented to date, we plan to maintain sound relationships with financial institutions, our main bank inparticular, and strive to secure funds while at the same time weighing multiple options to restructure "HOPE
NEXT 3" eliminate negative equity.
In the fiscal year ended March 31, 2022, net sales were 35,630 million yen. The operating loss was 16,651 million
yen, the ordinary loss was 16,731 million yen, and there was a loss attributable to owners of parent of 19,730
million yen.
Business segment performance was as follows.
As stated above, HOPE ENERGY, INC. is excluded from the scope of consolidation following the approval of ourpetition to commence bankruptcy proceedings on March 25, 2022. Only its income statement from July 1, 2021 toMarch 25, 2022 are included in the consolidation. The results of operation of HOPE ENERGY, INC’s energy
business are therefore in the consolidated income statement.
The media business was renamed the Jichitai Works business from the current fiscal year. There is no effect on
the segment information because only the segment name has been changed.

3

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

1) Advertising BusinessIn this business, the Smart Resource service purchases a variety of advertising space from local governments bysubmitting competitive bids and then sells this space to companies. In addition, we jointly produce with local
governments Machilet publications for residents at no cost and sell advertising space in these publications tocompanies. As was explained earlier, activities are under way to achieve the proper size of this business in orderto improve profitability. Machilet, which is a major medium of the HOPE Group, is published in all areas ofJapan with content centered mainly on themes: raising children, senior nursing care, abandoned houses,
end-of-life messages, and condolence messages.
A decision has also been made that JICHITAI AD, INC. will continue to provide operational support for JMA
website advertisements for one year from April 2022. Another initiative is a "Proposal-based Naming Rights
Partnership Agreement" with Kitakyushu City in which we will work with the city to publicize the project,support sponsor companies, develop proposals, and take other relevant actions. We aim to present a broad rangeof advertising proposals through the naming rights system and invite private companies to name facilities owned
by local governments.
Segment sales were 935 million yen and the segment profit was 101 million yen.
2) Energy BusinessWe entered the electricity retail sales business in March 2018 with the goal of reducing the expenses of local
governments by providing new forms of value based on the concept of electricity as a generic product. The
business has been growing steadily. On October 22, 2020, HOPE,INC. established wholly owned subsidiary
HOPE ENERGY, INC. with the goals of the growth of the energy business, more business flexibility concerning
various transactions, and conducting activities involving clean energy. As was explained earlier, there was anabnormal increase in the purchase price of electricity on JEPX between the middle of December 2020 and late
January 2021 and as a result, there was a significant temporary loss. After this spike in the cost of electricity hadlargely ended, we determined measures to take for the stability of energy business earnings, stronger governanceand other revisions to the framework for operating this business. One measure was the transfer of the electricity
retail sales business to HOPE ENERGY, INC. on December 1, 2021. This was announced on August 11, 2021 in anews release titled “Notice of Company Split (Absorption-type Split).” We believe HOPE ENERGY, INC. should
directly operate all energy operations because of the quantitative and qualitative importance of the energy
business and the specialized knowledge required by this business. In addition, the spinoff of the retail electricity
gives the HOPE Group a management structure with more speed and flexibility that is expected to contribute to
the group’s sustained growth and the medium to long-term growth of corporate value. However, starting in
October 2021, electricity purchase prices on JEPX stayed at levels higher than we expected and the high co st ofpurchasing electricity had a severe impact on our business operations. In response, we decided to suspend ourparticipation in bidding for local government electricity supply contracts to reduce risk volume since August 2021.
As explained above, the business climate for the energy business stayed challenging until it became impossible tocontinue operations. This led to the decision by HOPE ENERGY, INC. on March 25, 2022 to submit a petition forcommencement of bankruptcy proceedings.
Segment sales were 34,459 million yen and the segment loss was 16,416 million yen.
As noted above, HOPE ENERGY, INC. submitted a petition for commencement of bankruptcy proceedings on
March 25, 2022, and a decision to commence bankruptcy proceedings was made on the same day. Therefore, theaforementioned net sales and segment loss of the energy business are from July 1, 2021, the beginning of theconsolidated fiscal year, to March 25, 2022, the date of the decision to commence bankruptcy proceedings.
3) Jichitai Works Business
Jichitai Works is positioned as a brand that encompasses a variety of HOPE Group’s services for facilitating
cooperation between the public and private sectors based on the concept of “invigoration for experiences andpeople concerning local government jobs.”

4

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

For about four years, this business has been distributing Jichitai Works magazine, which is the HOPE Group’s
original publication. This publication contains hints, ideas information, stories about innovations and other useful
information for local government employees. In addition to the Jichitai Works magazine, this business has threeorder-made media to meet the budgets and requirements of individual companies: (1) Special editions; (2)PICKS; and (3) INFO. This diversity allows us to offer a broad range of advertising media to private-sector
companies with products and services for local governments. Another important element of this business is
B-to-G solutions (formerly B-to-G marketing), which uses our relationships with local governments to match theneeds of these governments and companies.
Starting with the regular issue (Vol. 18) of "Jichitai Works" published on March 1, 2022, we have increased thecirculation from 70,000 to 115,000 and started distributing the magazine not only to local government officials
but also to local assembly members.
Segment sales were 223 million yen and the segment profit was 37 million yen.
4) Other businesses
Other businesses include Machiiro, Jichitai Works HA×SH and other services that are not part of the reportablesegments. Jichitai Works HA×SH has been operated by the Jichitai Works business but this activity is included inthis category because Jichitai Works HA×SH is still in the investment phase.
Segment sales were 12 million yen and the segment loss was 69 million yen.
(2) Financial Position
AssetsTotal assets amounted to 1,432 million yen at the end of the current fiscal year, a decrease of 9,531 million yen
from the end of the previous fiscal year. This is mainly because HOPE ENERGY, INC. was excluded from theconsolidation as its petition for commencement of bankruptcy proceedings was approved on March 25, 2021.
Current assets amounted to 1,347 million yen, a decrease of 9,049 million yen from the end of the previous fiscal
year. This was mainly due to decreases of 1,015 million yen in cash and deposits, 7,168 million yen in accounts
receivable-trade, 184 million yen in advance payments-trade and 479 million yen in other under current assets
mainly resulting from the effect of excluding HOPE ENERGY, INC. from the scope of consolidation. Non-current
assets amounted to 85 million yen, a decrease of 481 million yen from the end of the previous fiscal year. Thiswas mainly due to decreases of 55 million yen in other under intangible assets and 420 million yen in other underinvestments and other assets mainly resulting from the effect of excluding HOPE ENERGY, INC. from the scopeof consolidation.
Liabilities
Liabilities totaled 7,035 million yen, a decrease of 6,427 million yen over the end of the previous fiscal year. Thisis mainly because HOPE ENERGY, INC. was excluded from the consolidation as its petition for commencementof bankruptcy proceedings was approved on March 25, 2021. Current liabilities amounted to 949 million yen, adecrease of 11,931 million yen from the end of the previous fiscal year. This was mainly due to decreases of 750
million yen in short-term borrowings, 202 million yen in current portion of long-term borrowings and 11,034
million yen in accounts payable-trade mainly resulting from the effect of excluding HOPE ENERGY, INC. fromthe scope of consolidation. Non-current liabilities amounted to 6,086 million yen, an increase of 5,503 million
yen from the end of the previous fiscal year. This was mainly due to increases of 656 million yen in long-termborrowings and 4,846 million yen in special account for shares resulting from reorganization ("Special Account").
The special account was created at the time of the absorption-type demerger in compliance with the "Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ
Guidance No. 10)" ("Guidance on Business Divestitures"), because the difference (equivalent to shareholders'equity) after deducting liabilities from assets of the business transferred from the Company to HOPE ENERGY,
INC. was negative. The aforementioned special account is an equity account and is recorded as a liability since
the value of the assets carried on the balance sheet is not negative.
5

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

Net assets
At the end of the current fiscal year, there were negative net assets of 5,602 million yen while there was adecrease of 3,104 million yen from the end of the previous fiscal year. This was mainly due to increases of 756
million yen in share capital and 756 million yen in legal capital surplus resulting from issuance of shares throughthird-party allotment and exercise of share acquisition rights, while there was the loss attributable to owners ofparent of 19,730 million yen. There was an increase of 15,132 million yen in retained earnings mainly resulting
from the effect of excluding HOPE ENERGY, INC. from the scope of consolidation.
(3) Cash Flows
Cash and cash equivalents (hereinafter “net cash”) as of the end of the current fiscal year amounted to 906 million
yen, a decrease of 1,015 million yen from the end of the previous fiscal year. Net cash declined 2,433 million yen
because HOPE ENERGY, INC. was excluded from the consolidation.
The cash flow components and the main reasons for changes are as described below.
Cash flows from operating activities
Net cash provided by operating activities totaled 266 million yen. The main factors include loss before income
taxes of 19,713 million yen and a decrease of 11,034 million yen in trade payables, while there were decreases of
7,168 million yen in trade receivables, cancellation penalty of 2,542 million yen, compensation for damage of
363 million yen, an increase of 15,675 million yen in other under cash flows from operating activities, a decreaseof 393 million yen in sales deposit, 4,846 million yen in the special equity account resulting from organizational
restructuring. The difference between assets and liabilities resulting from the exclusion of HOPE ENERGY, INC.
from the consolidation, except the special equity account resulting from organizational restructuring, is included
in “Other” under cash flows from operating activities.
Cash flows from investing activities
Net cash used in investing activities totaled 24 million yen. This was mainly due to purchase of intangible assetsof 22 million yen.
Cash flows from financing activities
Net cash provided by financing activities totaled 1,176 million yen. This was mainly due to proceeds fromissuance of shares of 150 million yen and proceeds from issuance of shares resulting from exercise of shareacquisition rights of 1,332 million yen, while there were repayments of long-term borrowings of 295 million yen
and payments for issuance of shares of 22 million yen.
Other
The balance of funds at HOPE ENERGY, INC. was 2,433 million yen at the time of its exclusion from theconsolidation. This amount is accounted as “Decrease in cash and cash equivalents resulting from exclusion ofsubsidiaries from the consolidation" in the consolidated cash flow statement.

6

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(4) Outlook
Drawn out effects of the COVID-19 pandemic continues to impact the Japanese economy. Following the lifti ng of
all emergency declarations nationwide at the end of September 2021, economi c activities are expected to resume
and a gradual recovery is anticipated. Nevertheless, the outlook for Japan’s economy remains unclear. To ensure
the safety of employees and reduce the impact of this crisis on business activities, we are using teleworkin g andrigorous measures to prevent infections at our workplaces. We expect at this time that there will be no problem
concerning the continuity of business operations. Since it is difficult to predict when the COVID-19 pandemic
will end, we assume that there will be a certain level of impact of the pandemic on our business performance inthe fiscal year ending March 2023.
Translating the corporate philosophy into actions and achieving more growth of corporate value will require an
intent focus on our relationships with local governments. We have been using our business activities since our
inception to increase the number of the relationships, which are a key strength of ou rs. Our objective is thegrowth of existing businesses and creation of new businesses in two ways. The first is creating new businesses
that can be easily reproduced in many fields while accurately responding to new and amended laws. The second is
the easy reproduction of business expansion in the local government business domain.
HOPE ENERGY, INC., which operates the energy business that accounts for the majority of consolidated sales,
was excluded from the scope of consolidation on March 25, 2022 due to the start of bankruptcy proceedings.
Consequently, we forecast a large decline in sales in the fiscal year ending in March 2023.
The advertising business and Jichitai Works business are now capable of generating consistently strong earnin gs
due to measures to build a more powerful profit structure. For example, there have been activities t o improve
productivity and launch new services. As a result, we expect that the HOPE Group’s earnings will increase.
The advertising business is positioned as a profit-generating business and there have been numerous measures toraise profitability by achieving the proper scale of operations. Another goal is consistently generating earnings bymaintaining sales at a sufficient level and increasing productiv ity per employee. Due to these activities, we
believe that the goal of raising profitability by revising the size of this business to the proper level has beenmostly accomplished. Consequently, the goal for this business in the fiscal year ending in March 2023 is steady
growth by continuing to raise productivity per employee and aiming for carefully plann ed renewed growth as aprofit-generating business.
The Jichitai Works business has good prospects for growth because of the large volume of public -sector demand
for the services of this business and the substantial potential for the enlargement of this mar ket. One goal isgenerating earnings from the expansion of the B-to-G solutions sector while making the Jichitai Works brand for
public-sector magazines even more powerful. Another goal is using multi-faceted business operations in order toraise the volume of services with significant added value.
From a medium to long-term perspective, we also plan to start new businesses that can become additional corebusinesses of the HOPE Group in the future.
In the fiscal year ending on March 31, 2023, we forecast net sales of 1,995 million yen, operating profit of 126
million yen, ordinary profit of 105 million yen, and profit attributable to owners of parent of 76 million yen.
Year-to-year percentage changes are not presented because the fiscal year to March 2022 i s a transitional period
due to change of the fiscal year end.
At the end of March 2022, the HOPE Group still had negative equity and was subject to the negative equity
provisions of Securities Listing Rules Article 601, Paragraph 1-5 of the Tokyo Stock Exchange and the Stock
Delisting Standards Article 2-2, Paragraph 1-4 of the Fukuoka Stock Exchange. As a result, HOPE,INC. iscurrently in a probation period for delisting. Due to the change in the fiscal year end from June 30 to March 31,
the delisting probation period has been changed from the year ending June 30, 2022 to the period from July 1,
2021 to March 31, 2023. Ending negative equity before the end of the delisting probation period remains ourhighest priority.

7

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(5) Significant events regarding premise of a going concern
Operating cash flows of the HOPE Group have been negative every year since the fiscal year that ended in June
2017. In addition, due to an abnormally large increase in the JEPX price of electricity between the middle ofDecember 2020 and late January 2021, there was negative equity of 2,498 million yen at the end of June 2021.
Furthermore, the JEPX price of electricity was higher than we expected beginning in October 2021 and has
remained high. As a result, in the transitional fiscal period that ended in March 2022, there was an operating lossof 16,651 million yen and a loss attributable to owners of parent of 19,730 million yen. Due to these losses, as is
explained in “1. Termination of the energy business,” HOPE ENERGY, INC., which operates the energy business,started bankruptcy proceedings on March 25, 2022. As of March 31, 2022, there was negative equity of 5,602
million yen. Consequently, there are reasons for significant doubts abo ut the going concern assumption.
However, for the following reasons, we believe that there are no significant uncertainties involving the reasonsfor these significant doubts.
1. Termination of the energy business
The JPEX electricity price was very high between the middle of December 2020 and late January 2021 a nd has
been consistently high since October 2021. The high cost of electricity greatly increased the cost of sales in theenergy business, resulting in consistently significant negative effects on the HOPE Group’s financial soundness.
In August 2021, the energy business stopped submitting bids for new contracts and took actions to reduce its
exposure to risk. Furthermore, to establish a management framework w ith speed and flexibility, the energy
business was transferred to HOPE ENERGY, INC., which was divested from HOPE,INC. on December 1, 2021
based on resolutions approved by the board of directors on August 11, 2021 and shareholders on September 28,
2021 at the annual shareholders meeting. Creating a separate company and other actions had the goal of ena bling
the energy business to continue operating as thorough studies about the viability of this business were conducted.
Despite these measures, the cost of sales continued to increase and purchasing electricity became difficult. As aresult, HOPE ENERGY, INC. was required to pay imbalance fees. In the middle of March 2022, payments
involving the imbalance fee and other amounts due in accordance with contracts to supply electricity to customers
became due. As HOPE ENERGY, INC. was unable to make these payments, all electricity supply contracts withgeneral electricity transmission and distribution utilities were terminated on March 22. This resulted in thedecision that HOPE ENERGY, INC. can no longer operate an energy business and an application to the Tokyo
District Court on March 25 to initiate bankruptcy proceedings, which began on the same day. Due to the startbankruptcy proceedings, HOPE ENERGY, INC. was removed from the scope of consolidation.
When the divestiture for the establishment of HOPE ENERGY, INC. took place, HOPE,INC. transferredliabilities to HOPE ENERGY, INC. by using the concomitant liability assumption method. As a result,
HOPE,INC. is obligated to make payments for the transferred liabilities. However, for liabilities incurred by
HOPE ENERGY, INC. following its establishment, HOPE,INC., JICHITAI AD, INC. and JICHITAI WORKS,
INC. have no debt guarantees or other obligations. Consequently, there is no reserve or contingencies concerningthese subsequent liabilities. Furthermore, the loss of customers and other negative effects of the HOPE ENERGY,
INC. bankruptcy are negligible at this time. For these reasons, we believe that this bankruptcy will have only avery small effect on the results of operations of the HOPE Group.
2. Stabilization of financing
HOPE,INC. is maintaining sound relationships with financial institutions, primar ily its main banks, andmanagement believes these institutions will continue to provide assistance. As of the end of January 2022,
repayments on a portion of its bank loans (200 million yen) were in arrears. To ease repayment terms for theperiod to the end of March 2023, the Company negotiated agreements with all correspondent financial institutions,
including the bank in question, to restructure the repayment plan that included a review of repayment schedules.
Furthermore, HOPE,INC. received proceeds of approximately 2.2 billion yen as of August 31, 2021 due to the
May 17, 2021 sale of stock through a third-party allotment and the exercise of the ninth share acquisition rights
with an exercise price adjustment clause and proceeds of about 150 million yen from the September 21, 2021

8

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

issuance of new shares through third-party allotment and 780 million yen from the exercise of the eleventh shareacquisition rights with an exercise price adjustment clause. The exercise of the eleventh share acquisition rights
has not been progressed satisfactorily because HOPE,INC.’s stock has hovered below the exercise price since
early December 2021. Nevertheless, we do not intend at this stage to acquire or retire the existing eleventh shareacquisition rights to enable them to be exercised when the stock price recovers in the future.
HOPE,INC. will continue to actively consider various fund procurement methods to procure the funds required toeliminate negative equity.
2. Basic Approach to the Selection of Accounting Standards
All of the operations of HOPE,INC. are in Japan and there are no plans to start operations in other countries in thenear future. Consequently, consolidated financial statements are based on accounting standards used in Japan.

9

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet
FY6/21(As of Jun. 30, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Accounts receivable-trade
Merchandise and finished goods
Work in process
Supplies
Advance payments-trade
Prepaid expenses
Other
Allowance for doubtful accounts(Thousands of yen)
FY3/22(As of Mar. 31, 2022)

1,932,991
7,336,855
427,497
1,717
193
185,594
14,230501,928(4,012)

917,132
168,325
211,680
7,459
82
1,375
19,75022,775(1,520)

10,396,997

1,347,061

9,895(5,903)

9,895(6,226)

3,992

3,668

VehiclesAccumulated depreciation
Vehicles, net

1,630(1,191)438

1,630(1,300)329

Tools, furniture and fixtures
Accumulated depreciation

35,700(21,218)

38,547(25,667)

Tools, furniture and fixtures, net

14,481

12,880Total property, plant and equipment

18,912

16,87827,95855,922

24,866-

83,881

24,866

Investments and other assets
Investment securities
Distressed receivables
Other
Allowance for doubtful accounts

6,447
11,864458,298(11,864)

6,258
12,487
37,844(12,487)

Total investments and other assets

464,745

44,102567,539

85,848

10,964,536

1,432,909

Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net

Intangible assets
Software
Other
Total intangible assets

Total non-current assets
Total assets

10

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(Thousands of yen)
FY3/22(As of Mar. 31, 2022)

FY6/21(As of Jun. 30, 2021)
Liabilities
Current liabilities
Accounts payable-trade

11,290,446

256,359

Short-term borrowings

950,000

200,000

Current portion of long-term borrowings

366,952

164,801

Accounts payable-other

30,74524,073

Accrued expenses

119,088

112,846

Income taxes payable

42,242

29,120-71,778

Accrued consumption taxes
Advances received

71,367-

Deposits received

8,535

4,897

-

69,160666

16,004

12,880,045

949,041

Bonds payable

100,000

100,000

Long-term borrowings

482,658

1,139,595

221

163

-

4,846,528

582,879

6,086,287

13,462,924

7,035,328

1,959,676

2,716,601

Contract liabilities
Other
Total current liabilities
Non-current liabilities

Deferred tax liabilities
Special account for shares resulting fromreorganization
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus

1,913,476

2,670,401

Retained earnings(6,333,191)(10,931,834)

Treasury shares(70,902)(70,902)(2,530,939)(5,615,732)

504

373

504

373

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Total accumulated other comprehensive income
Share acquisition rights
Total net assets
Total liabilities and net assets

11

32,047

12,939(2,498,387)(5,602,419)

10,964,536

1,432,909

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income(Thousands of yen)
FY3/22(Jul. 1, 2021 – Mar. 31, 2022)

FY6/21(Jul. 1, 2020 – Jun. 30, 2021)
34,615,567

Net sales

35,630,649

Cost of sales

40,457,415

51,420,938

Gross loss

(5,841,847)(15,790,288)

1,053,572

861,112(6,895,420)(16,651,400)

Interest income

22

15

Dividend income

6-

Penalty income

3,774

3,494

Subsidy income

1,532

-

Gain on sale of investment securities

16,067

2,621

-

2,339

642

1,165

22,0459,636Interest expenses

11,176

61,772

Commission expenses

3,530

5,434

Share issuance costs

43,782

22,837

Loss on sales of investment securities

1,763

-

Other

1,999

168

Selling, general and administrative expenses
Operating loss
Non-operating income

Interest on tax refund
Other
Total non-operating income
Non-operating expenses

Total non-operating expenses
Ordinary loss

62,252

90,214(6,935,626)(16,731,978)

Extraordinary losses
Impairment loss-

75,099Cancellation penalty-

2,542,770

Compensation for damage-363,235

Total extraordinary losses-

2,981,105(6,935,626)(19,713,083)

Income taxes-current

27,98917,883

Income taxes-deferred

15,334-

Loss before income taxes

43,323

17,883Loss(6,978,950)(19,730,966)

Loss attributable to owners of parent(6,978,950)(19,730,966)

Total income taxes

12

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

Consolidated Statement of Comprehensive Income(Thousands of yen)
FY3/22(Jul. 1, 2021 – Mar. 31, 2022)

FY6/21(Jul. 1, 2020 – Jun. 30, 2021)(6,978,950)(19,730,966)

Valuation difference on available-for-sale securities

2,394

(131)

Total other comprehensive income

2,394

(131)

(6,976,556)(19,731,098)(6,976,556)(19,731,098)

-

-

Loss
Other comprehensive income

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests

13

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(3) Consolidated Statement of Changes in Equity
FY6/21 (Jul. 1, 2020 – Jun. 30, 2021)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodChanges during period
Issuance of new shares
Issuance of newshares-exercise of shareacquisition rights
Dividends of surplus
Loss attributable to ownersof parent
Increase due to decrease inconsolidated subsidiaries
because of change in scopeof consolidation
Purchase of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

Totalshareholders’equityCapital surplus Retained earnings Treasury shares

315,149

268,949

735,427(70,827)

1,248,698

250,091

250,091

500,182

1,394,436

1,394,436

2,788,872(89,667)(89,667)(6,978,950)(6,978,950)

(75)

(75)

1,644,527

1,644,527(7,068,618)(75)(3,779,638)

1,959,676

1,913,476(6,333,191)(70,902)(2,530,939)

Accumulated other comprehensive income
Valuation
Total accumulated Share acquisition Total net assets
difference onrightsother comprehensive
available-for-saleincomesecurities
Balance at beginning of
periodChanges during period
Issuance of new shares
Issuance of newshares-exercise of shareacquisition rights
Dividends of surplus
Loss attributable to ownersof parent
Increase due to decrease inconsolidated subsidiaries
because of change in scopeof consolidation
Purchase of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period(1,889)(1,889)13,011

1,259,820

500,1822,788,872(89,667)(6,978,950)

(75)
2,394

2,394

19,035

21,429

2,394

2,394

19,035(3,758,208)

504

504

32,047(2,498,387)

14

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

FY3/22 (Jul. 1, 2021 – Mar. 31, 2022)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus Retained earnings Treasury shares

1,959,676

1,913,476(6,333,191)

Total
shareholders’equity(70,902)(2,530,939)-

1,959,676

1,913,476(6,333,191)(70,902)(2,530,939)

75,03975,039150,079

681,885

681,885

1,363,770

Changes during period
Issuance of new shares
Issuance of newshares-exercise of shareacquisition rights
Dividends of surplus
Loss attributable to ownersof parent
Increase due to decrease inconsolidated subsidiaries
because of change in scopeof consolidation
Purchase of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period(19,730,966)(19,730,966)

15,132,324

15,132,324

756,924756,924(4,598,642)-(3,084,792)

2,716,601

2,670,401(10,931,834)(70,902)(5,615,732)

Accumulated other comprehensive income
Valuation
Total accumulated Share acquisition Total net assets
difference onrightsother comprehensive
available-for-saleincomesecurities
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

504

504

32,047(2,498,387)
-

504

504

32,047(2,498,387)

Changes during period
Issuance of new shares
Issuance of newshares-exercise of shareacquisition rights
Dividends of surplus
Loss attributable to ownersof parent
Increase due to decrease inconsolidated subsidiaries
because of change in scopeof consolidation
Purchase of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

150,079
1,363,770(19,730,966)

15,132,324

(131)

(131)

(19,107)(19,238)

(131)

(131)

(19,107)(3,104,031)

373

373

12,939(5,602,419)

15

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(4) Consolidated Statement of Cash FlowsFY6/21(Jul. 1, 2020 – Jun. 30, 2021)(Thousands of yen)
FY3/22(Jul. 1, 2021 – Mar. 31, 2022)(6,935,626)(19,713,083)

17,524

12,700-75,099Cash flows from operating activities
Loss before income taxes
Depreciation
Impairment loss
Share-based payment expenses

4,406

1,265

Increase (decrease) in allowance for doubtful accounts

3,276(1,868)

Share issuance costs

43,782

22,837(28)(15)

Interest and dividend income

11,176

61,772-(2,621)

204-

Cancellation penalty-

2,542,770

Compensation for damage-363,235

Interest expenses
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities(3,707,409)

7,168,529

Decrease (increase) in inventories

83,793

210,186

Decrease (increase) in advance payments-trade48,222

184,219

Decrease (increase) in trade receivables

Decrease(increase) in sales deposit

181,714393,399

Increase (decrease) in trade payables

8,543,004(11,034,087)

Increase (decrease) in accrued expenses(69,237)(5,125)

Increase (decrease) in advances received
Decrease/increase in consumption taxes
receivable/payable
Other, net

9,828(2,206)(601,057)(522,944)(43,016)

15,675,511(2,409,442)(4,570,424)

29

15

SubtotalInterest and dividends received
Interest paid
Special account for shares resulting from reorganization
Income taxes refund (paid)
Other, net
Net cash provided by (used in) operating activities(12,258)(61,120)-

4,846,528(428,964)

51,741

3,315

(591)

(2,847,320)

266,149(11,016)(11,017)

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits

11,015

11,016

Purchase of property, plant and equipment(8,720)(4,946)

Purchase of intangible assets(12,176)(22,539)

Purchase of investment securities

(282)

-

Proceeds from sale of investment securities
Proceeds from collection of long-term loans receivablefrom employees
Proceeds from refund of leasehold and guarantee deposits

25,027

2,621

202

-

8

22

Net cash provided by (used in) investing activities

4,057(24,842)

16

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(Thousands of yen)
FY3/22(Jul. 1, 2021 – Mar. 31, 2022)

FY6/21(Jul. 1, 2020 – Jun. 30, 2021)
Cash flows from financing activities
Net increase (decrease) in short-term borrowings

517,000-

Proceeds from long-term borrowings

200,000-

Repayments of long-term borrowings(411,952)(295,214)

Proceeds from issuance of bonds

600,000

1,000,000(600,000)(1,000,000)

Proceeds from issuance of shares

500,182

150,079

Payments for issuance of shares(43,782)(22,837)

Redemption of bonds

Proceeds from issuance of share acquisition rights
Proceeds from issuance of shares resulting fromexercise of share acquisition rights
Purchase of treasury shares

25,91912,0502,777,582

1,332,203(75)-

Dividends paid

(89,492)-

Net cash provided by (used in) financing activities

3,475,382

1,176,281

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents at end of period

17632,118

1,417,588

1,289,856

1,921,974-(2,433,447)

1,921,974

906,115

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Reclassifications
Consolidated balance sheet“Leasehold and guarantee deposits” under “investments and other assets” presented as a separate line item in theprevious fiscal year is included in “other” under “investments and other assets” in the current fiscal year due to adecrease in the materiality of impact in the context of consolidated financial statements.
Accordingly, “leasehold and guarantee deposits” of 458 million yen under “investments and other assets” in the
consolidated balance sheet for the previous fiscal year has been reclassified as “other”.
Business Combinations
Transaction under common control
Conversion to a holding company structure using a divestiture
In accordance with a resolution approved by the HOPE Board of Directors on August 11, 2021, anabsorption-type spinoff agreement was signed with wholly owned subsidiary HOPE ENERGY, INC. for thetransfer of the electricity retail sales business from HOPE,INC. to HOPE ENERGY, INC. on December 1, 2021.
This transfer was approved by shareholders at the General Meeting of Shareholders on September 28, 2021 andthe spinoff and transfer took place on December 1.
On October 26, 2021, the HOPE Board of Directors approved a resolution for the spinoff and transfer of theadvertising business to JICHITAI AD, INC., a newly established wholly owned subsidiary, and the spinoff andtransfer of the Jichitai Works business to JICHITAI WORKS, INC., a newly established wholly owned subsidiary.
The spinoff and transfer of these two businesses took place on December 1, 2021.
Due to the transfer of these two businesses to subsidiaries, HOPE,INC. became a holding company on December
1, 2021.
1.

Overview of business transaction(1) Transferred businesses and activities
Electricity retailer business: Purchase and sale of electricity and other energy
Advertising business:
Advertising business and other activities to generate revenue and reduce expenses
for local governments
Jichitai Works business:
Issuance of publications, support for promotions and other activities to facilitate
public-private sector cooperation and cooperation among local governments(2) Date
December 1, 2021
(3) Legal form of acquisition
A spinoff and absorption was used for the transfer of the electricity retail sales busi ness from HOPE,INC. towholly owned subsidiary HOPE ENERGY, INC. A simple spinoff with the establishment of new companies wasused for the transfer of the advertising business and Jichitai Works business to wholly owned subsidiaries
JICHITAI AD, INC. and JICHITAI WORKS, INC. Businesses were transferred to the following companies.
Electricity retail sales business: HOPE ENERGY, INC.
Advertising business: JICHITAI AD, INC.
Jichitai Works business: JICHITAI WORKS, INC.

18

HOPE, INC. (6195) Consolidated Financial Results for FY3/22(4) Other information
These businesses were transferred in order to establish a management framework for enabling the appropriate
allocation of the resources of the HOPE Group and the implementation of financial strategies and equity policies.
2.

Summary of accounting method

Accounting methods as a transaction under common control are based on “Accounting Standard for Business
Combination” (Accounting Standards Board of Japan (ASBJ) Statement No. 21, January 16, 2019) and “Guidanceon Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures.” (ASBJ
Statement No. 10, January 16, 2019).
In addition, a special stock account in the amount of 4,846 million yen was recorded in the consolidated balance
sheet. This was made necessary because of organizational restructuring following the abs orption-type demerger to
HOPE ENERGY, INC. with an effective date of December 1, 2021. The account was also created because, at thetime divesture, the balance of assets (equivalent to shareholders' equity) of the business transferred from theCompany to HOPE ENERGY, INC., net of liabilities, was negative calculated based on the “Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures.” This
special account is a stock valuation account and is recorded as a liability since the balance sheet value of theassets is not negative.
Changes in Accounting Policies
Application of the Accounting Standard for Revenue Recognition
HOPE,INC. has applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan(ASBJ) Statement No. 29, March 31, 2020) from the beginning of the current fiscal year. Based on this standard,
revenue expected to be received in exchange for the provision of goods and services is recognized when thecontrol of the goods and services is transferred to customers. In accordance with the feed-in tariff system forrenewable energy of the Japanese government, electricity users pay a renewable energy generation promotion feethat covers part of the cost incurred by general electricity transmission and distribution utilities when purchasing
renewable energy. These fees are collected by retail electricity businesses as a third party. In prior years, thesefees were recognized as sales and the corresponding payments of these fees by the energy business in accordancewith the Act on Special Measures Concerning Procurement of Electricity from Renewable Ene rgy Sources wererecognized as cost of sales. Due to the application of the new accounting standard, these renewa ble energy
promotion fees are no longer included in transaction prices and the corresponding payments of these fees are
deducted from the cost of sales.
For the application of the Accounting Standard for Revenue Recognition, in accordance with the transit ional
measures in the proviso to paragraph 84 of this standard, net sales and cost of sales for the current fiscal year
decreased by 7,842 million yen each, but there was no change in operating loss, ordinary loss and loss before
income taxes. In addition, there is no cumulative effect of the application of this standard on retained earnings at
the beginning of the fiscal year.
Due to the application of the Accounting Standard for Revenue Recognition, “Advances received” that waspresented in the current liabilities section of the consolidated balance sheet in the previous fiscal year is presented
as “Contract liabilities” from the current fiscal year. In accordance with the transitional measures prescribed in
Paragraph 89-2 of the Accounting Standard for Revenue Recognition, no reclassification has been made to theprior year’s consolidated financial statements to conform to the new presentation.
Furthermore, in accordance with the transitional treatment prescribed in Paragraph 89-3 of the AccountingStandard for Revenue Recognition, HOPE,INC. has not presented information on revenue from contracts withcustomers broken down for the previous fiscal year.
Application of the Accounting Standard for Fair Value Measurement
HOPE,INC. has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4,2019) from the beginning of the current fiscal year, and has applied the new accounting policies in the19

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

Accounting Standard for Fair Value Measurement prospectively in accordance with the transitional measures inParagraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the AccountingStandard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). There is no effect of the application ofthis standard on the consolidated financial statements.
Additional Information(Significant Accounting Policies for the Preparation of Consolidated Financial Statements)
1. Matters concerning the scope of consolidation
Number of consolidated subsidiaries: 2Name of principal consolidated subsidiary: JICHITAI AD, INC., JICHITAI WORKS, INC.
2. Matters concerning application of the equity method
Not applicable.
3. Matters concerning the scope of consolidation or application of the equity method
Newly established subsidiaries JICHITAI AD, INC. and JICHITAI WORKS, INC. were included in the scope of
consolidation in the current fiscal year.
Beginning in about the middle of October 2021, HOPE ENERGY, INC. has had difficulties purchasing electricity
because of the unprecedented increase in the cost of electricity. These difficulties resulted in the obligation to pay
imbalance fees. In the middle of March 2022, payments involving the imbalance fee and other amounts due inaccordance with contracts to supply electricity to customers became due. As HOPE ENERGY, INC. was unable to
make these payments, all electricity supply contracts with general electricity transmission and distribution
utilities were terminated by midnight March 22, 2022. This action made it impossible for HOPE ENERGY, INC.
to continue operating its energy business. Based on the decision that asking a court to conduct bankruptcy
proceedings is the best course of action, HOPE ENERGY, INC. submitted an application on March 25 to begin
the bankruptcy process, which began on the same day. Due to the start bankruptcy proceedings, HOPE ENERGY,
INC. was removed from the scope of consolidation. The removal of HOPE ENERGY, INC. from the consolidatedbalance sheet reduced current assets by 11,459 million yen and current liabilities by 31,437 million yen. There
was no effect on non-current assets and non-current liabilities. The consolidated income statement includes theresults of operations of HOPE ENERGY, INC. up to the date this company was removed from consolidation. The
difference between assets and liabilities removed from the consolidated balance sheet w as recognized in the stock
special account as an amount resulting from a reorganization. With the exception of this figure, an adjustment wasmade in the consolidated statement of changes in equity as an item called “Increase due to decrease inconsolidated subsidiaries because of change in scope of consolidation.”
HOPE,INC.’s obligations due to the use of the concomitant liability assumption method for liabilities transferred
to HOPE ENERGY, INC. when the divestiture took place on December 1, 2021 ended in the middle of February
2022. These obligations involved short-term loans and the collection of HOPE ENERGY, INC’s trade receivables.
However, for liabilities incurred by HOPE ENERGY, INC. following its establishment, HOPE,INC., JICHITAIAD, INC. and JICHITAI WORKS, INC. have no debt guarantees or other obligations. Consequently, there is noreserve concerning these subsequent liabilities. Furthermore, we believe that HOPE,INC., JICHITAI AD, INC.
and JICHITAI WORKS, INC. are unlikely to incur contingent liabilities in conjunction with the bankruptcy of
HOPE ENERGY, INC.
4. Matters concerning accounting period of consolidated subsidiary
The fiscal year of a consolidated subsidiary ends on the consolidated balance sheet date.
5. Matters concerning change in the consolidated fiscal year (fiscal year end)
The extraordinary shareholders meeting held on March 24, 2022 approved a proposal for amendment to the
Articles of Incorporation to change the fiscal year end from June 30 to March 31. This resulted in a transitional
nine-month fiscal period beginning on July 1, 2021 and ending on March 31, 2022.
6. Accounting standards(1) Valuation criteria and methods for significant assets
a. Securities

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HOPE, INC. (6195) Consolidated Financial Results for FY3/22

Other securities
Securities excluding non-marketable shares, etc.
Stated at market value method (valuation difference is comprehensively reported as a component of net assets
and the cost of securities sold is computed using the moving-average method.)
Non-marketable shares, etc.
Stated at cost by the moving-average method.
b. Inventories
Merchandise and finished goods and work in process
Stated at cost on an individual specified cost basis (the balance sheet value is computed by the method ofdevaluing book price to reflect declines in profitability).
Supplies
Stated at cost, cost being determined by the last purchased cost method (the balance sheet value is computedby the method of devaluing book price to reflect declines in profitability).
(2) Depreciation and amortization methods for significant depreciable assets
a. Property, plant and equipment
Declining-balance method except for buildings (excluding attached structures) acquired on or after April 1,
1998, which are accounted for by the straight-line method.
Useful lives of principle assets are as follows:
Buildings: 10 years
Vehicles: 5 to 6 years
Tools, furniture and fixtures: 2 to 8 years
b. Intangible assets
The straight-line method. Software for internal use is amortized over an expected useful life of five years.
(3) Recognition of allowances
Allowance for doubtful accounts
To prepare for losses on doubtful accounts such as notes and account receivables-trade and loans receivable,
allowances equal to the estimated amount of uncollectible receivables are booked for general receivables basedon the historical write-off ratio, and bad receivables based on case-by-case determination of collectibility.
(4) Basis for recording significant revenue and expenses(Description of the main performance obligation in the main business and the usual time at which revenue isrecognized)
a. Advertising BusinessIn the advertising business, revenue is derived from a variety of med ia purchased from local governments or
produced by the HOPE Group and sales of advertising space and advertising services for publications issued by
local governments for their residents. Revenue is recognized during the period that advertisements are plac ed inmedia or when media or publications with advertisements are issued. So-called agency sales (transactions where
the HOPE Group does not have the right to determine sale prices and has no inventory risk) are recognized as a
net amount by deducting the cost of sales from the amount of each sale.
Revenue is measured by using transaction prices specified in contracts with customers. In addition, payments fortransactions are received within one year of the fulfillment of the associated obligations. Consequ ently, thesepayments do not incorporate any significant financial component.
b. Jichitai Works Businessi. Jichitai Works (a magazine for government employees): The HOPE Group receives revenue from sales ofadvertising space and the provision of associated advertising services involving the production and issuance of
publications. This revenue is recognized when each publication is issued.

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HOPE, INC. (6195) Consolidated Financial Results for FY3/22

Revenue is measured by using transaction prices specified in contracts with customers. In addition, payments fortransactions are received within one year of the fulfillment of the associated obligations. Consequently, thesepayments do not incorporate any significant financial component.
ii. B-to-G promotions: Revenue is received for the provision of services involving collaboration between the
public and private sectors. Revenue is recognized at the time of a custom er’s final acceptance of services received
and the HOPE Group has received the acceptance form from the customer.
Revenue is measured by using transaction prices specified in contracts with customers. In addition, payments fortransactions are received within one year of the fulfillment of the associated obligations. Consequently, thesepayments do not incorporate any significant financial component.
c. Energy Business
The HOPE Group receives revenue for the supply of electricity to customers by using electricity that waspurchased on the electricity wholesale market or directly from companies that sell electricity. Revenue isrecognized when electricity is supplied to customers.
Revenue is measured by using transaction prices specified in contracts with customers. In addition, payments fortransactions are received within one year of the fulfillment of the associated obligations. Consequently, thesepayments do not incorporate any significant financial component.
(5) Cash and cash equivalents in the Consolidated Statement of Cash Flows
Cash and cash equivalents consist of cash on hand, bank deposits which can be withdrawn at any time, andshort-term investments with the duration of three months or less which can be easily converted to cash and are
exposed to little risk of change in value.
Segment and Other Information
Segment information
1. Overview of reportable segment(1) Method for identifying reportable segments
Segments used for financial reporting are the HOPE Group’s constituent units for which separate financial
information is available and for which the Board of Directors performs periodic studies for the purposes ofdetermining the allocation of resources and evaluating performance.
The Company has adopted a holding company structure. There are no w three major operating companies,
JICHITAI AD, INC., HOPE ENERGY, INC., and JICHITAI WORKS, INC. under the holding company and threereportable segments: Advertising, Energy, and Jichitai Works, which are based on HOPE,INC.’s core advertising,energy, and Jichitai Works businesses.
HOPE ENERGY, INC. was ordered to commence bankruptcy proceedings on March 25, 2022 and withdrew fromthe energy business on the same day and was excluded from the consolidatio n. As a result, now there are two core
operating companies, JICHITAI AD, INC. and JICHITAI WORKS, INC. under the holding company. The income
statement of HOPE ENERGY, INC. from July 1, 2021 to March 25, 2022 is consolidated as the decision tocommence bankruptcy proceedings came on March 25, 2022.
(2) Types of products and services in each reportable segment
Products and services in the reportable segments are as follows.
Reportable segments

Products and services

Advertising

Smart Resource service
Ads in public info publications, banner ads, etc.
Smart Creation service
MachiletEnergyElectricity retail sales business

Jichitai Works

Jichitai Works, B-to-G solutions

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HOPE, INC. (6195) Consolidated Financial Results for FY3/22

2. Calculation methods for net sales, profit or loss, assets, liabilities and other items for each reportable segment
The accounting treatment of reportable segments generally complies with the "Significant Accounting Policies for
the Preparation of Consolidated Financial Statements.” Profits of reportable segments represent operating profit.
3. Information related to net sales, profit or loss, assets, liabilities and other items for each reportable segment
FY6/21 (Jul. 1, 2020 – Jun. 30, 2021)
Reportable segment
Advertising

EnergyJichitaiWorks

Subtotal

Other

Total

(Thousands of yen)Amounts shownon consolidated
Adjustment
financialstatements

Net sales
External sales
1,719,457 32,663,973 228,944 34,612,376
3,191 34,615,567
34,615,567
Inter-segment
sales and transfers
Total
1,719,457 32,663,973 228,944 34,612,376
3,191 34,615,567
34,615,567
Segment profit
328,200 (6,924,860)
58,425 (6,538,234) (47,821) (6,586,055) (309,364)(6,895,420)(loss)
Segment assets
800,142
7,652,970
64,0058,517,119
24 8,517,144 2,447,392
10,964,536
Other items
Depreciation
8,416
114
8,531
8,531
8,993
17,524
Increase inproperty, plantand equipment
12,726
12,726
12,726
8,245
20,971and intangible
assets
Notes: 1. Other consists of the businesses which are not included in any of the reportable segments and m ainly includes
Machiiro and Jichitai Works HA×SH services.
2. The negative 309,364 thousand yen adjustment to segment profit (loss) is corporate expenses that are not allocatedto any of the reportable segments. Corporate expenses mainly consist of genera l and administrative expenses thatare not attributable to any of the reportable segments.
3. Segment profit (loss) is adjusted to be consistent with operating loss shown on the consolidated statement ofincome.
4. Segment liabilities are not presented as they are not used for making decisions about allocation of management
resources and evaluating results of operations.
FY3/22 (Jul. 1, 2021 – Mar. 31, 2022)
Reportable segment
Advertising

EnergyJichitaiWorks

Subtotal

Other

Total

(Thousands of yen)Amounts shownon consolidated
Adjustment
financialstatements

Net sales
35,630,649
External sales
935,638 34,459,655 223,125 35,618,419 12,230 35,630,649
Inter-segment
sales and transfers
Total
935,638 34,459,655 223,125 35,618,419 12,230 35,630,649
35,630,649
Segment profit
101,059 (16,416,083) 37,439 (16,277,584) (69,014) (16,346,598) (304,802)(16,651,400)(loss)
Segment assets
523,727- 100,907
624,635
5,868
630,503
802,405
1,432,909
Other items
Depreciation
5,643
343
427
6,413
6,413
6,359
12,773
Increase inproperty, plantand equipment
4,275
4,275
4,275
4,426
8,701
and intangible
assets
Notes: 1. Other consists of the businesses which are not included in any of the reportable segments and mainly includes
Machiiro and Jichitai Works HA×SH services.
2. The negative 304,802 thousand yen adjustment to segment profit (loss) is corporate expenses that are not allocatedto any of the reportable segments. Corporate expenses mainly consist of general and administrative expenses thatare not attributable to any of the reportable segments.
3. Segment profit (loss) is adjusted to be consistent with operating loss shown on the consolidated statement ofincome.
4. Segment liabilities are not presented as they are not used for making decisions about allocation of manag ement

23

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

resources and evaluating results of operations.
5. FY3/22 is a transitional period due to change of the fiscal year end. This resulted in a transitional nine -month fiscal
period beginning on Jul. 1, 2021 and ending on Mar. 31, 2022.

3. Information related to changes in reportable segments, etc.
Change in segment name
From the current fiscal year, the previous Media business segment has been changed to the Jichitai Works
business segment. There is no effect on the segment information because only the segment name has beenchanged. The segment information for FY6/21 is prepared and disclosed using the new segment name.
Application of the Accounting Standard for Revenue Recognition
As described in Changes in Accounting Policies, HOPE,INC. has applied the Accounting Standard for Revenue
Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the current fiscal year and changed
the accounting method for revenue recognition. Accordingly, the method for calcula ting segment profit or loss
has been changed as well. Compared with the previous method, net sales decreased 7,842 million yen in theenergy business in the current fiscal year.
Related information
Information related to impairment losses on non-current assets for each reportable segment
FY6/21 (Jul. 1, 2020 – Jun. 30, 2021)
Not applicable.
FY3/22 (Jul. 1, 2021 – Mar. 31, 2022)
The Company's subsidiary HOPE ENERGY, INC., which was engaged in the Group’s electricity retail sales
business, has terminated operations due to the commencement of bankruptcy proceedings on March 25, 2022. The
Company recorded impairment losses of 272 thousand yen for tools, furniture and fixtures, 640 thousand yen forsoftware, and 74,186 thousand yen for emission credits.
Per-share Information
FY6/21(Jul. 1, 2020 – Jun. 30, 2021)(Yen)
FY3/22(Jul. 1, 2021 – Mar. 31, 2022)

Net assets per share(326.50)(500.72)

Net loss per share(1,109.09)(1,952.73)

Notes: 1. Diluted net income per share is not presented because net loss was posted although there were outstanding dilutive
shares.
2. The basis for calculating net assets per share is as follows.
(Thousands of yen, unless otherwise stated)
FY6/21
FY3/22(As of Jun. 30, 2021)(As of Mar. 31, 2022)
Total net assets(2,498,387)(5,602,419)

Amount deducted from total net assets

32,047

12,939[of which share acquisition rights][32,047][12,939](2,530,435)(5,615,359)

7,750,119

11,214,519

Net assets at the end of the fiscal year applicable tocommon shares
Number of common shares at the end of the fiscal year
used for the calculation of net assets per share (shares)

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HOPE, INC. (6195) Consolidated Financial Results for FY3/22

3. The basis for calculating net loss per share is as follows.
(Thousands of yen, unless otherwise stated)
FY6/21
FY3/22(Jul. 1, 2020 – Jun. 30, 2021)(Jul. 1, 2021 – Mar. 31, 2022)
Net loss per share
Loss attributable to owners of parent(6,978,950)(19,730,966)--(6,978,950)(19,730,966)

6,292,514

10,104,289

Amount not attributable to common shareholders
Loss attributable to owners of parent applicable tocommon shares
Average number of common shares outstanding
during the period (shares)

Summary of dilutive shares not included in thecalculation of diluted net income per share since there
was no dilutive effect

The Eighth Share Acquisition
Rights (Number of shareacquisition rights: 600)
The Ninth Share Acquisition
Rights (Number of shareacquisition rights: 22,370)
The Tenth Share Acquisition
Rights (Number of shareacquisition rights: 579)

The Eighth Share Acquisition
Rights (Number of shareacquisition rights: 270)
The Tenth Share Acquisition
Rights (Number of shareacquisition rights: 485)
The Eleventh Share Acquisition
Rights (Number of shareacquisition rights: 26,259)

Material Subsequent Events
Reduction of capital and capital surplus and appropriation of retained earnings
The Board of Directors on May 31, 2022, resolved to submit a proposal to the 29th Ordinary General Meeting of
Shareholders to be held on June 30, 2022, regarding the reduction of capital and capital surplus and theappropriation of retained earnings.
1．Purpose of reduction of capital and capital surplus and appropriation of retained earnings
In order to dispose of the current deficit in retained earnings brought forward and to improve financial soundness
through the application of appropriate taxation, the Company has decided to reduce the amount of capital andcapital surplus pursuant to the provisions of Article 447, Paragr aph 1 and Article 448, Paragraph 1 of theCompanies Act. Other capital surplus will be transferred to retained earnings carried forward, and in accordancewith Article 452 of the Companies Act, other capital surplus will be transferred to dispose of the de ficit inretained earnings brought forward.
Since this is a transfer between accounts in the net assets sectio n of the balance sheet there will be no change in
the net assets and in the total number of shares issued and outstanding.
2. Details of reduction in capital(1) Amount of reduction of capital
The company will reduce 2,706,633,182 yen from its capital of 2,716,633,182 yen as of May 31, 2022 (the"Proposal Resolution Date"), the date on which the Company's Board of Directors resolved to submit the
Proposal to the 29th Ordinary General Meeting of Shareholders. As a result, the Company’s capital will be
10,000,000 yen.
In the event the share acquisition rights issued by the Company are exercised by the effective date, the amount of
capital and the amount of capital after reduction will change.
(2) Method of reduction of capital
The capital reduction will be made without refund, the total number of outstanding shares will not be changed,
and the amount of capital reduction of 2,706,633,182 yen will be transferred to other capital surplus.
(3) Effective date of capital reduction
August 5, 2022

25

HOPE, INC. (6195) Consolidated Financial Results for FY3/22

3. Details of reduction of capital surplus(1) Amount of decrease in capital surplus
The capital surplus of 2,670,433,178 yen as of the date of approval of the proposal will be reduced to 0 yen. If theshare acquisition rights issued by the Company are exercised by the effective dat e, the amount of capital surplus
and the amount of capital reserve after reduction will change.
(2) Method of reducing capital surplus
The amount of the capital surplus 2,670,433,178 yen to be reduced will be appropriated to other capital surplus.
(3) Effective date of reduction of capital surplus
August 5, 2022
4. Details of appropriation of retained earnings
Pursuant to Article 452 of the Companies Act, other capital surplus will be transferred to retained earnings
brought forward for disposition of loss. This appropriation of surplus is conditional on the reduction of capitaland capital surplus.
(1) Account and amount of surplus to be reduced
Other capital surplus
5,377,066,360 yen(2) Account and amount of surplus to be increased
Retained earnings brought forward
5,377,066,360 yen
5. Schedule
(1)
(2)
(3)
(4)
(5)

Board of Directors’ resolution
Annual General Meeting of Shareholders’ resolution
Public notice for creditors to file objection
Deadline for filing objections by creditors
Effective date

May 31, 2022
June 30, 2022 (tentative)
July 1, 2022 (tentative)
August 1, 2022 (tentative)
August 5, 2022 (tentative)

6. Outlook
As this accounting treatment is a transfer between accounts in the net assets section, ther e will be no change innet assets, and the impact on the Company's business performance will be negligible. However, this transfer issubject to approval at the 29th Ordinary General Meeting of Shareholders.

This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been
prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers
who prefer an English translation.

26