Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending June 30, 2021
(Six Months Ended December 31, 2020)[Japanese GAAP]
February 12, 2021

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

Listing: TSE-Mothers/FSE Q-Board
URL: https://www.zaigenkakuho.com/
Tel: +81-(0)92-716-1404
February 15, 2021
Yes
Yes (for institutional investors and analysts)(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending June 30, 2021
(July 1, 2020 to December 31, 2020)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales
Millions of yen

Operating profit%

Six months ended Dec. 31, 2020
14,044Six months ended Dec. 31, 2019
Note: Comprehensive income (millions of yen)

Millions of yen

Profit attributable toowners of parent

Ordinary profit%

Millions of yen

%

259
243
Six months ended Dec. 31, 2020: 159(-%)
Six months ended Dec. 31, 2019:
(-%)

%

158
-

-

Net income per share

Diluted net income
per share

Yen

Yen

Millions of yen

Six months ended Dec. 31, 2020
26.29
24.16
Six months ended Dec. 31, 2019
Note: Year-on-year changes and figures for the six months ended December 31, 2019 are not presented because HOPE started
preparing consolidated financial statements from the second quarter of the fiscal year ending June 30, 2021.

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen%

As of Dec. 31, 2020
9,008
2,955
32.6
As of Jun. 30, 2020
Reference: Shareholders’ equity (millions of yen)
As of Dec. 31, 2020: 2,937
As of Jun. 30, 2020: Note: Figures as of June 30, 2020 are not presented because HOPE started preparing consolidated financial statements from thesecond quarter of the fiscal year ending June 30, 2021.

2. Dividends
1Q-endDividend per share
3Q-end2Q-endYen

Yen

Year-end

Yen

Total
Yen

Yen

Fiscal year ended Jun. 30, 2020
0.00
15.00
15.00
Fiscal year ending Jun. 30, 2021
0.00
Fiscal year ending Jun. 30, 2021
(forecast)
Notes: 1. Revisions to the most recently announced dividend forecast: None
2. Breakdown of year-end dividend for the fiscal year ended June 30, 2020: Commemorative dividend of 15.00 yen
3. The dividend forecast for the fiscal year ending June 30, 2021 is to be determined.

3. Consolidated Earnings Forecast for the Fiscal Year Ending June 30, 2021 (July 1, 2020 to June 30, 2021)
Net sales
Millions of yen

Operating profit% Millions of yen

Ordinary profit% Millions of yen(Percentages represent year-on-year changes)
Profit attributable to
Net income perowners of parent
share% Millions of yen%

Full year
29,920Notes: 1. Revisions to the most recently announced earnings forecast: None
2. Year-on-year changes are not presented because HOPE started preparing consolidated financial statements from thesecond quarter of the fiscal year ending June 30, 2021.

Yen-

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): Yes
Newly added: 1 (HOPE ENERGY, INC.)

Excluded: -(2) Application of special accounting methods for presenting quarterly consolidated financial statements: None
(3) Changes in accounting policies and accounting estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting estimates: None
4) Restatements: None

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

As of Dec. 31, 2020:

6,302,800 shares

As of Jun. 30, 2020:

6,002,800 shares

As of Jun. 30, 2020:

24,960 shares

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

As of Dec. 31, 2020:

24,981 shares

3) Average number of outstanding shares during the period
Six months ended Dec. 31, 2020:

6,031,488 shares

Six months ended Dec. 31, 2019:

5,576,080 shares

Note: HOPE conducted a 4-for-1 common stock split effective on January 1, 2020. The number of outstanding shares as of theend of the period, the number of treasury shares as of the end of the period and the average number of outstanding shares
during the period have been calculated as if this stock split had taken place at the beginning of the previous fiscal year.

* The current quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
* Explanation of appropriate use of earnings forecasts, and other special items- Forecasts of future performance in these materials are based on assumptions judged to be valid and information available tothe management of HOPE at the time these materials were prepared. Actual results of operations may differ from forecasts
due to uncertainty involving these judgments and assumptions or to changes in business operations and market conditions.
HOPE does not guarantee the certainty of any forward-looking statements.
- Please refer to the section “1. Qualitative Information on Quarterly Financial Performance, (3) Explanation of Consolidated
Earnings Forecast and Other Forward-looking Statements” on page 4 of the attachments regarding preconditions or otherrelated matters for the forecasts.

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

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

4

2. Quarterly Consolidated Financial Statements and Notes

5(1) Quarterly Consolidated Balance Sheet

5(2) Quarterly Consolidated Statements of Income and Comprehensive Income

6

Quarterly Consolidated Statement of Income

6

For the Six-month Period

6

Quarterly Consolidated Statement of Comprehensive Income

7

For the Six-month Period7(3) Quarterly Consolidated Statement of Cash Flows

8(4) Notes to Quarterly Consolidated Financial Statements

9

Going Concern Assumption

9

Significant Changes in Shareholders’ Equity

9

Additional Information

10

Segment Information

11

1

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
The COVID-19 pandemic severely restricted economic activity in Japan and other countries in the first half of the
fiscal year ending June 30, 2021 and the outlook for the Japanese economy remains unclear.
On August 11, 2020, HOPE announced HOPE NEXT 3, a three-year medium-term management plan beginning in
the current fiscal year. The plan is based on our philosophy of “providing new forms of value to citizens throughlocal governments and aiming for more growth of our business and our people.” To a ccomplish the goals of thisplan, many business activities with the aim of medium-term growth are under way. There was a rapid andenormous increase in the price of electricity on the Japan Electric Power Exchange (JEPX) that started in the
middle of December 2020. One reason was higher demand for electricity due to an unexpectedly strong cold wave.
Other causes are insufficient inventories of liquefied natural gas (LNG), which accounts for a large share ofJapan’s electricity generation, the growth of LNG purchases by East Asian countries, problems with facilities innatural gas producing countries, and delays at the Panama Canal caused by the COVID -19 pandemic. The
simultaneous occurrence of these events involving the supply of electricity triggered an unp recedented surge inthe price of electricity in Japan, which had a serious impact on first half earnings. We are currently reexamining
our plans and goals for the energy business and plan to revise the HOPE NEXT 3 management plan.
HOPE has several core strengths. One is the expertise to reproduce new businesses in a broad range of fields
based on a large number of relationships with local governments established over many years of business
operations and legal frameworks consisting of new and amended laws a nd regulations. Another is the expertise toeasily reproduce business expansion in the local government business domain. Our objective is to use these twophases for growth of the three existing businesses and creation of new businesses. Making advertising a
profit-generating business is one goal. We are continuing to improve profitability by making changes to achieve
the proper size of this business and working on reducing over the next several years the high percentage of fiscal
year earnings of this business in the fourth quarter. These steps are aimed at making this business more cost
efficient and increasing the rates we charge for advertising services. In the energy business, which we position asa driver of growth, our goals are more growth in the sca le of this business and consistent profitability. Our shortand medium-term strategy has two elements. First is to continue existing measures for growth centered on using
competitive bids to capture new contracts. Second is to reduce vulnerability to the price volatility risk involving
the cost of electricity we purchase. This involves achieving the most suitable combination of fixed -priceprocurement using one-to-one transactions and the purchase of electricity at current market prices on thewholesale market. However, the sharp increase in the price of electricity on the JEPX had a severe impact on theperformance of this business. In the media business, the market for promotions targeting local governments still
has much potential for more public-private sector collaboration and measures to become more competitive. Our
goal is to position ourselves at the very top of upstream information flows in order to capitalize on opportunities
involving this potential. This business is upgrading content, strengthenin g information dissemination capabilities
and reinforcing the ability to keep up with the latest information. The objective is firmly establishing the value of
the Jichitai Works brand in order to stimulate more growth of the market for promotions targeting local
governments. In addition, we believe that these activities will make possible even more public -private sector
collaboration based on government information circulation centered on HOPE as well as the use of local
government information databases for strengthening, supporting and creating business activities. We will use
many activities to accomplish these goals. These measures will include upgrading and expanding our content
production capabilities and making extensive use of Jichitai Works HA×SH, wh ich is an internet platform forsupporting public-private sector collaboration.
In the first half of the fiscal year ending June 30, 2021, net sales were 14,044 million yen, operating profit was
259 million yen, ordinary profit was 243 million yen and profit attributable to owners of parent was 158 million
yen.

2HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21

Business segment performance was as follows.
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. The Machilet service jointly produces withlocal governments publications for residents at no cost and sells advertising space in these publications tocompanies. During the first half, there were measures to achieve the proper size of the Machilet service.
Segment sales were 657 million yen and segment profit was 22 million yen.
2) Energy BusinessThis business, which uses the Genewat brand for the sale of electricity, has 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. On
October 22, 2020, Hope Energy, Inc. was established as a wholly owned subsidiary of HOPE. Preparations areunder way to transfer part of the operations of the energy business to this subsidiary.
Segment sales were 13,314 million yen and segment profit was 390 million yen.
3) Media BusinessOne element of this business is extensive B-to-G marketing activities aimed at matching the needs of local
governments and companies. These activities leverages our relationships with local governments. This businessalso includes the Jichitai Works magazine, which contains ideas, examples of local government innovations andother useful information for government employees.
Segment sales were 70 million yen and segment profit was 12 million yen.
4) Other businesses
Other businesses include Machiiro, Jichitai Works HA×SH and other services that are not part of the reportablesegments. In prior years, Jichitai Works HA×SH was included in the media business. Beginning with the current
fiscal year, this activity is included in this category because Jichitai Works HA×SH is still in the investment
phase.
Segment sales were 1 million yen and segment loss was 17 million yen.
(2) Explanation of Financial Position
AssetsTotal assets amounted to 9,008 million yen at the end of the second quarter of the current fiscal year. Current
assets amounted to 8,515 million yen. Major items are cash and deposits of 4,358 million yen and accounts
receivable-trade of 3,746 million yen. Non-current assets amounted to 493 million yen. Major items areintangible assets of 75 million yen and leasehold and guarantee deposits of 380 million yen.
Liabilities
Liabilities totaled 6,053 million yen. Current liabilities amounted to 5,389 million yen. Major items are accounts
payable-trade of 4,710 million yen, current portion of long-term borrowings of 266 million yen and other undercurrent liabilities of 279 million yen. Non-current liabilities amounted to 663 million yen. Major items are bonds
payable of 100 million yen and long-term borrowings of 563 million yen.
Net assets
Net assets totaled 2,955 million yen. Shareholders’ equity was 2,938 million yen and major items include sharecapital of 1,125 million yen, capital surplus of 1,079 million yen and retained earnings of 804 million yen.

3

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21

Cash flows
Cash and cash equivalents (hereinafter “net cash”) at the end of the second quarter amounted to 4,347 million
yen.
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 2,200 million yen. The main factors include profit before income
taxes of 243 million yen, a decrease of 152 million yen in inventories, a decrease of 225 million yen in advancepayments-trade, a decrease of 272 million yen in sales deposit and an increase of 1,962 million yen in trade
payables, while there were an increase of 117 million yen in trade receivables, a decrease of 115 million yen in
accrued expenses, a decrease of 129 million yen in accrued consumption taxes and income taxes paid of 287
million yen.
Cash flows from investing activities
Net cash used in investing activities totaled 2 million yen. This was mainly due to purchase of property, plant andequipment of 2 million yen.
Cash flows from financing activities
Net cash provided by financing activities totaled 859 million yen. This was mainly due to proceeds from issuanceof shares resulting from exercise of share acquisition rights of 1,617 million yen, while there were a net decreaseof 433 million yen in short-term borrowings, repayments of long-term borrowings of 231 million yen anddividends paid of 89 million yen.
(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements
There are no revisions to the forecast for the current fiscal year that was announced in the press release
concerning revision of non-consolidated earnings forecast and consolidated forecasts in association with the startof consolidated financial statements (Japanese version only), which was announced on January 29, 2021.

4

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Thousands of yen)
Second quarter of FY6/21(As of Dec. 31, 2020)
AssetsCurrent assets
Cash and deposits

4,358,585

Accounts receivable-trade

3,746,947

Merchandise and finished goods

241,846

Work in process

10,182135

Supplies

158,392

Other

(946)

Allowance for doubtful accounts

8,515,143

Total current assets
Non-current assets
Property, plant and equipment

17,098Intangible assets

75,904

Investments and other assets
Leasehold and guarantee deposits

380,400

Other

29,245

Allowance for doubtful accounts(9,348)

Total investments and other assets

400,296493,299

Total non-current assets

9,008,443

Total assets
Liabilities
Current liabilities

4,710,025

Accounts payable-trade
Current portion of long-term borrowings

266,952

Income taxes payable

87,150

Advances received

45,819Other279,943
5,389,891

Total current liabilities
Non-current liabilities
Bonds payable

100,000

Long-term borrowings

563,380
663,380

Total non-current liabilities

6,053,271

Total liabilities
Net assets
Shareholders’ equity
Share capital

1,125,712

Capital surplus

1,079,512

Retained earnings

804,347

Treasury shares(70,902)

Total shareholders’ equity

2,938,669

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Total accumulated other comprehensive income(1,328)(1,328)
17,830Share acquisition rights

2,955,172

Total net assets

9,008,443

Total liabilities and net assets

5

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)(Thousands of yen)First six months of FY6/21(Jul. 1, 2020 – Dec. 31, 2020)
Net sales

14,044,510

Cost of sales

13,306,014

Gross profit

738,495

Selling, general and administrative expenses

479,427

Operating profit

259,068

Non-operating income
Interest income

10

Subsidy income

1,034

Penalty income

860
250

Other

2,155

Total non-operating income
Non-operating expenses
Interest expenses

4,073

Commission expenses

1,347

Share issuance costs

10,481

Other

1,403

Total non-operating expenses

17,306

Ordinary profit

243,917

Profit before income taxes

243,917

Income taxes-current

75,946

Income taxes-deferred

9,383

Total income taxes

85,329Profit158,587

Profit attributable to owners of parent

158,587

6

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)(Thousands of yen)First six months of FY6/21(Jul. 1, 2020 – Dec. 31, 2020)
158,587

ProfitOther comprehensive income

561

Valuation difference on available-for-sale securities

561

Total other comprehensive income

159,148

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

159,148-

7

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21(3) Quarterly Consolidated Statement of Cash Flows(Thousands of yen)First six months of FY6/21(Jul. 1, 2020 – Dec. 31, 2020)
Cash flows from operating activities
243,917

Profit before income taxes
Depreciation

8,708

Loss (gain) on sales and valuation of investment securities

1,394

Share-based remuneration expenses

2,221

Share issuance costs

10,481

Increase (decrease) in allowance for doubtful accounts(2,304)(10)

Interest and dividend income

4,073Interest expenses
Decrease (increase) in trade receivables(117,501)

Decrease (increase) in inventories

152,329

Decrease (increase) in advance payments-trade225,466

Decrease (increase) in sales deposit

272,067

Increase (decrease) in trade payables

1,962,583

Increase (decrease) in accrued expenses(115,644)

Increase (decrease) in advances received(15,718)

Increase (decrease) in accrued consumption taxes(129,983)

Other, net(12,140)

Subtotal

2,489,941
9Interest and dividends received(4,008)Interest paid

(287,121)

Income taxes (paid) refund

2,107

Other, net

2,200,928

Net cash provided by (used in) operating activities
Cash flows from investing activities(2,499)Purchase of property, plant and equipment(282)

Purchase of investment securities
Collection of long-term loans receivable from employees

117

Proceeds from refund of leasehold and guarantee deposits

4(2,660)Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings(433,000)

Repayments of long-term borrowings(231,230)

Payments for issuance of shares(10,481)
6,653

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

1,617,070

Dividends paid

(89,491)

Net cash provided by (used in) financing activities

859,445

Net increase (decrease) in cash and cash equivalents

3,057,713

Cash and cash equivalents at beginning of period

1,289,856

Cash and cash equivalents at end of period

4,347,569(75)

8

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21(4) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
There are reasons for significant doubts concerning the going concern assumption due to consistently negative
cash flows in prior years. In addition, a large operating loss is expected in the third quarter of the current fiscal
year because of the very large increase in the JEPX price of electricity since the middle of December 2020.
HOPE, which is a company that prepares quarterly consolidated financial statements, is taking the following
actions to end these problems.
1. Stabilize earnings of business operations(1) Management of risk involving volatility of market prices
The HOPE Group has no electricity generation facilities and therefore purchases most of the ele ctricity sold to its
customers by using the JEPX. As a result, this business is vulnerable to changes in the cost of electricity. Many
actions have been taken in order to reduce exposure to this price volatility risk. Major initiatives include
establishing new risk management policies and adjusting the amount of electricity purchased by using the JEPX
and one-to-one transactions for each area and season.
(2) Payment in installments of imbalance fees associated with the insufficient supply of electricity in January
2021 and other events
On January 29, 2021, the Ministry of Economy, Trade and Industry announced that companies meeting certain
requirements will be allowed to pay January 2021 imbalance fees in equal installments over a period of up to fivemonths. As HOPE’s business operations are believed to meet these requirements, HOPE plans to submit anapplication for installment payments and subsequently pay imbalance fees in five monthly installments beginningin April 2021.
2. Stabilize cash flows(1) Financial covenants
HOPE is holding discussions with financial institutions in order to prevent the exercise of the acceleration clause,
which would require the immediate repayment of all applicable debt, due to HOPE’s inability to continue tofulfill the obligations of its debt covenants.
(2) Procurement of funds
The payment of imbalance fees started in January 2021 and the amount of these fees will increase in thefollowing months. We are holding discussions with financial institutions concerning an increase in its overdraft
facility that would be used when the amount of these payments increases. We are also holding discussions withfinancial institutions concerning an additional loan of several billion yen in order to meet its subsequent funding
requirements. We plan to use loans from financial institutions as the primary source of funding, but are also
considering many other methods for procuring funds, including the sale of stock or other securities through athird-party allotment.
The goal of these actions is the stabilization of the earnings of business operations and of cash flows. However,
we are only at the beginning of these actions. Moreover, there is a limit to the degree to which we can reduce ourvulnerability to the volatility of the price of electricity. Consequently, there are significant uncertainties
concerning the going concern assumption.
The going concern assumption was used as the basis for the quarterly consolidated financial statements and thesestatements do not reflect the significant uncertainties concerning this assumption.
Significant Changes in Shareholders’ Equity
Between November 11, 2020 and December 11, 2020, Mizuho Securities Co., Ltd. purchased share acquisitionrights issued by HOPE and sold through a third-party allotment. In the first half, share capital and capital surplus
increased by 810,563 thousand yen each. As a result, share capital was 1,125,712 thousand yen and capitalsurplus was 1,079,512 thousand yen at the end of the second quarter.
9

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21

Additional Information(Significant Accounting Policies for the Preparation of Quarterly Consolidated Financial Statements)
HOPE started preparing quarterly consolidated financial statements from the second quarter of the fiscal year
ending June 30, 2021. Basis of preparation of the quarterly consolidated financial statements is as follows.
1. Matters concerning the scope of consolidation
Number of consolidated subsidiaries: 1
Name of principal consolidated subsidiary: HOPE ENERGY, INC.
2. Matters concerning application of the equity method
Not applicable.
3. Matters concerning accounting period of consolidated subsidiary
The fiscal year of consolidated subsidiary ends on the quarterly consolidated balance sheet date .
4. Accounting standards(1) Valuation criteria and methods for marketable securities
Other securities
Securities with market quotations
Stated at market value at the accounting closing date (valuation difference is comprehensively reported as acomponent of net assets and the cost of securities sold is computed using the mo ving-average method.)
Securities without market quotations
Stated at cost by the moving-average method.
(2) Valuation criteria and methods for inventories
a. 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).
b. 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).
(3) Depreciation and amortization methods for non-current assets
a. Property, plant and equipment
Declining-balance method except for buildings (excluding attached structures) acquired on or aft er 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.
(4) 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.
(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.
10

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/21(6) Other significant accounting policies in the preparation of consolidated financial statements
Accounting for consumption taxes
National and local consumption taxes are accounted by the tax-exclusion method. Non-deductible national andlocal consumption taxes are charged to expenses for the fiscal year when they were incurred.
Segment Information
1. Overview of reportable segment(1) Method for identifying reportable segments
Segments used for financial reporting are HOPE’s constituent units for which separate financial information isavailable and for which the Board of Directors performs periodic studies for the purposes of determining theallocation of resources and evaluating performance.
There are three reportable segments: advertising, energy, and media, which are based on HOPE’s core advertising,energy, and media businesses.
(2) Information related to changes in reportable segments, etc.
Change in method for measuring profit (loss) of reportable segments
Beginning in the first quarter of FY6/21, the standards used for the allocation of corporate expenses have beenrevised for the purpose of more accurately showing the actual profitability of each segment.
(3) 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
MachiletEnergyGenewatMedia

Jichitai Works, B-to-G marketing

2. Information related to net sales and profit or loss for each reportable segment
First six months of FY6/21 (Jul. 1, 2020 – Dec. 31, 2020)
Reportable segment

Advertising

EnergyMedia

Subtotal

Other(Note 1)

Total

(Thousands of yen)Amounts shownon quarterly
Adjustment consolidated(Note 2)statement ofincome(Note 3)

Net sales
External sales
657,736 13,314,990
70,423 14,043,150
1,360 14,044,510
14,044,510
Inter-segment
sales and transfers
Total
657,736 13,314,990
70,423 14,043,150
1,360 14,044,510
14,044,510
Segment profit
22,576
390,726
12,275425,579 (17,444)
408,134 (149,065)
259,068(loss)
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 149,065 thousand yen adjustment to segment profit (loss) is corporate expenses that are not allocatedto any of the reportable segments. Corporate expenses mainly consist of selling, general and administrative
expenses that are not attributable to any of the reportable segments.
3. Segment profit (loss) is adjusted to be consistent with operating profit shown on the quarterly consolidated
statement of income.
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.

11