Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending June 30, 2022
(Six Months Ended December 31, 2021)[Japanese GAAP]
February 14, 2022

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 14, 2022
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, 2022
(July 1, 2021 to December 31, 2021)(1) Consolidated results of operations
Net sales(Percentages represent year-on-year changes)
Profit attributable toOrdinary profit
owners of parent

Operating profit

Millions of yen%

Millions of yen%

74.8(6,982)(7,026)259
243
Six months ended Dec. 31, 2021: (7,044) (-%)
Six months ended Dec. 31, 2020:
159 (-%)
Diluted net income
Net income per shareper share%

Millions of yen%

Millions of yen(7,044)158-

Six months ended Dec. 31, 2021
24,546Six months ended Dec. 31, 2020
14,044
Note: Comprehensive income (millions of yen)

Yen

Yen

Six months ended Dec. 31, 2021
(738.62)
Six months ended Dec. 31, 2020
26.29
24.16
Note: Diluted net income per share is not presented because net loss was posted although there were outstanding dilutive shares forthe six months ended December 31, 2021.

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

As of Dec. 31, 2021
As of Jun. 30, 2021
Reference: Shareholders’ equity (millions of yen)

Equity ratio

Millions of yen%

10,624(8,047)
10,964(2,498)
As of Dec. 31, 2021: (8,061)(75.9)(23.1)
As of Jun. 30, 2021: (2,530)

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

Yen

Year-end

Total

Yen

Yen

Yen

Fiscal year ended Jun. 30, 2021
0.00
Fiscal year ending Jun. 30, 2022
0.00
Fiscal year ending Jun. 30, 2022
(forecast)
Notes: 1. Revisions to the most recently announced dividend forecast: None
2. The dividend forecast for the fiscal year ending June 30, 2022 is to be determined.

0.00

0.00

-

-

3. Consolidated Earnings Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 to June 30, 2022)
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

Full year
34,8500.7
Note: Revisions to the most recently announced earnings forecast: None-%

Millions of yen

%

Yen

-

-

-

-

* 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: (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: 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 “2. Quarterly Consolidated Financial Statements and Notes, ( 4) Notes to Quarterly
Consolidated Financial Statements, Changes in Accounting Policies, Application of the Accounting Standard for
Revenue Recognition” on page 12 of the attachments for further information.

(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, 2021:

11,236,700 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 Dec. 31, 2021:

24,981 shares

3) Average number of outstanding shares during the period
Six months ended Dec. 31, 2021:

9,536,797 shares

Six months ended Dec. 31, 2020:

6,031,488 shares* 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 Consolidated Financial Performance, (3) Explanation ofConsolidated Earnings Forecast and Other Forward-looking Statements” on page 6 of the attachments regarding
preconditions or other related matters for the forecasts.

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

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

2(2) Explanation of Financial Position

5(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements

6

2. Quarterly Consolidated Financial Statements and Notes

7(1) Quarterly Consolidated Balance Sheet

7(2) Quarterly Consolidated Statements of Income and Comprehensive Income

8

Quarterly Consolidated Statement of Income

8

For the Six-month Period

8

Quarterly Consolidated Statement of Comprehensive Income

9

For the Six-month Period9(3) Quarterly Consolidated Statement of Cash Flows

10(4) Notes to Quarterly Consolidated Financial Statements

11

Going Concern Assumption

11

Changes in the Scope of Consolidation or Application of the Equity Method

12

Significant Changes in Shareholders’ Equity

12

Changes in Accounting Policies

12

Additional Information

13

Segment and Other Information

15

Business Combinations

16

Material Subsequent Events

17

1

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
The COVID-19 pandemic continued to severely impact the Japanese economy during the first half of the current
fiscal year. There are expectations for a slow recovery as economic activity resumes as more people receive
vaccinations and government measures to support the economy produce benefits. Despite these positive signs, theoutlook for the economy remains unclear, due in part to the rapid increase in infections caused by the omicron
variant.
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. Moreover, 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 started HOPE NEXT 3, a three-year medium-term management plan beginning in thefiscal year that ended in June 2021. To accomplish the goals of this plan, many business activities with the aim of
medium-term growth are under way. Between the middle of December 2020 and late January 2021, the price ofelectricity 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 2.4 billion yen at t he end of June 2021.
Negative equity decreased by about 700 million yen during the first quarter to 1.7 billion yen at the end of
September 2021. In December 2021, we completed making imbalance fee payments of about 6.5 billion yen,including taxes, to electric utilities. These fees resulted mainly from the inability of HOPE to supply the required
amount of electricity in January 2021, resulting in the purchase of electricity from a utility. These payments were
the primary cause of the negative equity. Since October 2021, the price of electricity on the JEPX has been higher
than we expected and negative equity increased to more than 8 billion yen as of the end of December 2021. Dueto the high cost of electricity, as was announced on November 15, 2021 in a r elease titled “Notice concerning
Consolidated Forecast for the Fiscal Year Ending June 2022,” we decided not to announce some parts of theearnings for fiscal year results of operations until a reliable forecast can be determined. In addition, because
payments of amounts owed by the energy business have increased much more than anticipated, some bank loan
repayments that were planned for the end of January 2022 have not yet been made. Activities are under way withthe goal of completing these delayed payments by no later than the end of February 2022.
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 imple ment
strategies involving finances and equity. One step was the transfer on December 1, 2021 of the electricity retailsales business to wholly owned subsidiary HOPE ENERGY, INC. Another step was the establishment on
December 1, 2021 of two subsidiaries to operate businesses transferred from HOPE. JICHITAI AD, INC. is now
operating the advertising business and JICHITAI WORKS, INC. is now operating the Jichitai Works business.
Due to the spinoff of these businesses, HOPE became a holding company on December 1, 2021. As the HOPE
Group’s holding company, HOPE handles fund procurement activities and measures to provide funds required bygroup companies, such as relationships with business partners and the establishment of equity and businessalliances. Activities for returning to positive equity are the highest priority. While taking actions to accomplish
this goal, HOPE will also work on the establishment of a new HOPE NEXT 3 business plan.
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 in the fourth quarter. Thes e

2

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

steps are aimed at making the advertising business more cost efficient and receiving higher rates for advertising
services. In the energy business, we will continue our policy of not submitting bids for public-sector electricity
supply contracts in order to prevent any further increase in exposure to risk to buy electricity. We plan todownsize the energy business by lowering the amount of electricity supplied. In the Jichitai Works business, themarket 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 ourselves at the very top of upstream
information flows in order to capitalize on opportunities involving this potential. This busine ss is upgrading
content, strengthening 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 the HOPE Group 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, incr easing activities for
B-to-G solutions (former B-to-G marketing) and making extensive use of Jichitai Works HA×SH, which is aninternet platform for supporting public-private sector collaboration.
In the first half, net sales were 24,546 million yen, up 74.8% year on year. The operating loss was 6,982 million
yen, compared with 259 million yen a profit one year earlier, the ordinary loss was 7,026 million yen, comparedwith a 243 million yen profit one year earlier and there was a loss attributable to owners of parent of 7,044
million yen, compared with a 158 million yen profit one year earlier.
Business segment performance was as follows.
1) Advertising BusinessIn this business, the Smart Resource service purchases a variety of advertising space from loc al governments bysubmitting competitive bids and then sells this space to companies. The Smart Creation service jointly produces
with local governments Machilet publications for residents at no cost and sells advertising space in thesepublications to companies. As was explained earlier, activities are under way to achieve the proper size of thisbusiness in order to improve profitability. Machilet, which is a major medium of the HOPE Group, is published in
all areas of Japan with content centered mainly on six themes: marriage, raising children, senior nursing care,abandoned houses, end-of-life messages, and condolence messages.
In November 2021, the advertising business started operating on a trial basis the Jichitai Design Consultation
Office. Local governments throughout Japan can use this office to receive information and services at a fixedprice for designs of publications. This business will continue to seek more ways to broaden its lineup of services
for local governments.
Segment sales were 615 million yen, down 6.5% year on year and the segment profit was 53 million yen, up
138.5% from one year earlier.
2) Energy BusinessThis business operates the retail sale of electricity and 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 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 a big increase in the price of electricity on the JEPX between the
middle of December 2020 and late January 2021. After this spike in the cost of electricity had largely ended, we
determined measures to take for the stability of energy business earnings, stronger governance and other revisions
to the framework for operating this business. One measure was the transfer of the electricity retail sales businessto HOPE ENERGY, INC. on December 1, 2021. This was announced on August 11, 2021 in a news release titled“Notice of Company Split (Absorption-type Split).” We believe HOPE ENERGY, INC. should directly operate all

3

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

energy operations because of the quantitative and qualitative importance of the energy business and thespecialized 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, the JEPX price of electricity
again increased more than we expected starting in October 2021 and the high cost of purchasing electricity again
had a severe impact on business operations. We have decided to suspend our participation in bidding for local
government electricity supply contracts to preserve our financial soundness. Although we are not seeking newcontracts, the business climate for the energy business remained continued to be challenging in the second quarterof this fiscal year.
Segment sales were 23,785 million yen, up 78.6% year on year and the segment loss was 6,843 million yen,
compared with a 390 million yen profit one year earlier.
HOPE ENERGY, INC. will continue to operate the electricity retail sales business and, to prevent an increase inrisk exposure concerning the cost of purchasing electricity, plans to reduce the amount of electricity supplied by
no longer submitting bids for new contracts and using other measures. In addition, we believe that we need toperform a thorough study to determine if we should continue to operate the energy business.
3) Jichitai Works Business
The media business was renamed the Jichitai Works business beginning with the first quarter of the current fiscal
year. This For about four years, this business has been distributing Jichitai Works magazine, which is the HOPE
Group’s original publication. This publication contains information, recommendations, ideas, stories about
innovations and other useful information for local government employees. As these activities have made the
Jichitai Works name well known among these employees, the decision was made to change the name of thisbusiness to more clearly reflect the nature of its operations.
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.”
In addition to the Jichitai Works magazine, this business has three order-made media to meet the budgets andrequirements of individual companies: (1) Special editions; (2) PICKS; and (3) INFO. This diversity allows us tooffer 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), whichuses our relationships with local governments to match the needs of these governments and companies.
Two issues of Jichitai Works magazine, volumes 16 and 17, were issued during the second quarter of the fiscal
year. In addition, as part of B-to-G solution activities, this business started a service that uses a short message
service (SMS, see note) to assist local governments with pandemic safety and response operations. The newservice is provided with partner companies media4u inc. and CENTRIC Co., Ltd. This service helps local
governments be prepared for a possible new wave of COVID-19 cases. Support for monitoring the health ofpeople recovering at home and others can reduce the volume of work by government employees for these types oftasks.
Segment sales were 143 million yen, up 104.2% year on year and the segment profit was 36 million yen, up
196.1% from one year earlier.
Note: A short message service is a service for exchanging brief text messages between smartphones and othermobile devices.
4) Other businesses
There are several new services in this segment: One is a corporate version of the hometown tax payment support
service. This service raises awareness among companies of this tax system and has information about local
governments that handle these payments. Another example of a new service is the “akisol” comprehensive

4

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

platform, which has started on a trial basis with the goal of providing solutions for problems concerning vacantand abandoned houses. Other businesses include Machiiro, Jichitai Works HA×SH and other services that are notpart of the reportable segments. Jichitai Works HA×SH has been operated by the Jichitai Works business but thisactivity is included in this category because Jichitai Works HA×SH is still in the investment phase.
Segment sales were 1 million yen, down 5.7% year on year and the segment loss was 46 million yen, comparedwith a 17 million yen loss one year earlier.
(2) Explanation of Financial Position
AssetsTotal assets amounted to 10,624 million yen at the end of the second quarter of the current fiscal year, a decreaseof 339 million yen from the end of the previous fiscal year. Current assets amounted to 10,419 million yen, an
increase of 22 million yen from the end of the previous fiscal year. This was mainly due to increases of 211
million yen in cash and deposits, 336 million yen in accounts receivable-trade and contract assets, and 5 million
yen in work in process, while there were decreases of 208 million yen in merchandise and finished goods and 325
million yen in other under current assets. Non-current assets amounted to 205 million yen, a decrease of 362
million yen from the end of the previous fiscal year. This was mainly due to an increase of 18 million yen in
intangible assets and a decrease of 379 million yen in leasehold an d guarantee deposits.
Liabilities
Liabilities totaled 18,672 million yen, an increase of 5,209 million yen over the end of the previous fiscal year.
Current liabilities amounted to 18,210 million yen, an increase of 5,330 million yen from the end of the p revious
fiscal year. This was mainly due to an increase of 5,442 million yen in accounts payable -trade, while there weredecreases of 49 million yen in current portion of long-term borrowings and 40 million yen in other under current
liabilities. Non-current liabilities amounted to 461 million yen, a decrease of 121 million yen from the end of theprevious fiscal year. This was mainly due to a decrease of 121 million yen in long-term borrowings.
Net assets
At the end of the second quarter, there were negative net assets of 8,047 million yen while there was a decrease of
5,549 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 i ssuance of shares through third-party
allotment and exercise of share acquisition rights, while there was the loss attributable to owners of parent of
7,044 million yen.
Cash flows
Cash and cash equivalents (hereinafter “net cash”) at the end of the secon d quarter amounted to 2,133 million yen.
The cash flow components and the main reasons for changes are as described below.
Cash flows from operating activities
Net cash used in operating activities totaled 1,066 million yen. The main factors include loss before income taxesof 7,026 million yen and an increase of 336 million yen in trade receivables, while there were decreases of 203
million yen in inventories and 384 million yen in sales deposit, and increases of 5,442 million yen in trade
payables and 201 million yen in consumption taxes receivable/payable.
Cash flows from investing activities
Net cash used in investing activities totaled 23 million yen. This was mainly due to purchase of intangible assetsof 22 million yen.

5

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

Cash flows from financing activities
Net cash provided by financing activities totaled 1,301 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 171 million yen
and dividends paid of 21 million yen.
(3) Explanation of Consolidated Earnings Forecast and Other Forward -looking Statements
As was announced on November 15, 2021 in a release titled “Notice concerning Consolidated Forecast for the
Fiscal Year Ending June 2022,” HOPE no longer has fiscal year forecasts for earnings at all levels and earnings
per share. This decision was made because it is not possible at this time to determine a reliable forecast because
the price of electricity on the JEPX has been far higher than we anticipated since October 2021.
The cost of electricity is still high. Also, at an extraordinary shareholders meeting to be held on March 24, 2022,
we plan to submit a proposal for amendments to the Articles of Incorporation. One amendment, if approved byshareholders, will change the fiscal year end from June 30 to March 31. This would result in a transitional
nine-month fiscal period beginning on July 1, 2021 and ending on March 31, 2022.
A forecast will be announced promptly when it becomes possible to determine a reliable forecast due to theconfirmation of these amendments and other items affecting business operations in this fiscal year.

6

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Thousands of yen)
Second quarter of FY6/22(As of Dec. 31, 2021)

FY6/21(As of Jun. 30, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Trade receivables and contract asset
Merchandise and finished goods
Work in process
Supplies
Other
Allowance for doubtful accounts
Total current assets

1,932,991
7,336,855
427,4971,717
193
701,753(4,012)

2,144,823
7,673,844
218,6667,604
94375,982(1,527)

10,396,997

10,419,488

Non-current assets
Property, plant and equipment
Intangible assets
Investments and other assets
Leasehold and guarantee deposits
Other
Allowance for doubtful accounts

18,912
83,881

17,756
102,007458,279
18,330(11,864)

79,061
18,945(12,491)

Total investments and other assets

464,745

85,515567,539
10,964,536

205,278
10,624,767

Advances received
Contract liabilities
Other

11,290,446
950,000
366,952
42,242
71,367
159,036

16,732,923
950,000
316,972
31,88760,073
118,890

Total current liabilities

12,880,045

18,210,747

Non-current liabilities
Bonds payable
Long-term borrowings
Deferred tax liabilities

100,000
482,658
221

100,000
361,408217

Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable-trade
Short-term borrowings
Current portion of long-term borrowings

Income taxes payable

582,879

461,625

Total liabilities

13,462,924

18,672,372

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares

1,959,676
1,913,476(6,333,191)(70,902)2,716,164
2,669,964(13,377,226)(70,902)(2,530,939)(8,061,999)

504
504

496
496

Total non-current liabilities

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

7

32,047

13,897(2,498,387)(8,047,605)

10,964,536

10,624,767

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)First six months of FY6/21(Jul. 1, 2020 – Dec. 31, 2020)(Thousands of yen)First six months of FY6/22(Jul. 1, 2021 – Dec. 31, 2021)

Net sales

14,044,510

24,546,047

Cost of sales

13,306,014

30,987,909

Gross profit (loss)

738,495(6,441,862)

Selling, general and administrative expenses

479,427

540,664

Operating profit (loss)

259,068(6,982,526)

Interest income

108

Subsidy income

1,034

-

Penalty income

860

3,216

-

2,621

Non-operating income

Gain on sale of investment securities

-

2,339

250

1,079

2,155

9,265

Interest expenses

4,073

26,978Commission expenses

1,347

4,858

Share issuance costs

10,481

21,226

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

Other

1,403

65

Total non-operating expenses

17,30653,129Ordinary profit (loss)

243,917(7,026,390)

Profit (loss) before income taxes

243,917(7,026,390)

Income taxes-current

75,946

17,643

Income taxes-deferred

9,383

-

Total income taxes

85,32917,643

Profit (loss)

158,587(7,044,034)

Profit (loss) attributable to owners of parent

158,587(7,044,034)

8

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)First six months of FY6/21(Jul. 1, 2020 – Dec. 31, 2020)(Thousands of yen)First six months of FY6/22(Jul. 1, 2021 – Dec. 31, 2021)

158,587(7,044,034)

561

(8)

Profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests

9

561

(8)

159,148(7,044,043)

159,148(7,044,043)--

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22(3) Quarterly Consolidated Statement of Cash FlowsFirst six months of FY6/21(Jul. 1, 2020 – Dec. 31, 2020)(Thousands of yen)First six months of FY6/22(Jul. 1, 2021 – Dec. 31, 2021)

Cash flows from operating activities
243,917(7,026,390)

Depreciation

8,708

8,170

Loss (gain) on sale and valuation of investment securities

1,394(2,621)

Share-based payment expenses

2,221

1,265

(2,304)(1,857)

Profit (loss) before income taxes

Increase (decrease) in allowance for doubtful accounts
Interest and dividend income

(10)

(8)

Interest expenses

4,073

26,978

10,481

21,226

Decrease (increase) in trade receivables(117,501)(336,989)

Decrease (increase) in advance payments to suppliers

225,466(46,060)

Decrease (increase) in inventories

152,329

203,044

Decrease(increase) in sales deposit

272,067

384,687

Increase (decrease) in trade payables

1,962,583

5,442,476

Increase (decrease) in accrued expenses(115,644)(49,104)

Increase (decrease) in advances received
Decrease/increase in consumption taxes
receivable/payable
Other, net(15,718)(11,293)(129,983)

201,486(12,140)

30,296

Subtotal

2,489,941(1,154,693)

Share issuance costs

Interest and dividends received
Interest paid
Income taxes refund (paid)
Other, net
Net cash provided by (used in) operating activities

98(4,008)(26,088)(287,121)

114,648

2,107

(846)

2,200,928(1,066,972)

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Proceeds from collection of long-term loans receivablefrom employees
Proceeds from refund of leasehold and guarantee deposits
Net cash provided by (used in) investing activities(2,499)(3,167)-(22,539)

(282)

-

-

2,621

117

-

4

16

(2,660)(23,069)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings(433,000)-

Repayments of long-term borrowings(231,230)(171,230)

Proceeds from issuance of bonds-

1,000,000

Redemption of bonds-(1,000,000)

Proceeds from issuance of shares-

150,079

Payments for issuance of shares(10,481)(21,226)

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

6,653

12,0501,617,070

1,332,200(75)-

Dividends paid

(89,491)-

Net cash provided by (used in) financing activities

859,445

1,301,873

Net increase (decrease) in cash and cash equivalents

3,057,713

211,832

Cash and cash equivalents at beginning of period

1,289,856

1,921,974

Cash and cash equivalents at end of period

4,347,569

2,133,807

10

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22(4) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
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 a very large increase in the JEPX price of electricity between the middle of December
2020 and late January 2021, there was a 6,895 million yen operating loss and 6,978 million yen loss attributableto owners of parent in the previous fiscal year and negative equity of 2,498 million yen at the end of June 2021.
Furthermore, since October 2021, the price of electricity on the JEPX has been higher than we expected, there
was a 6,982 million yen operating loss and 7,044 million yen loss attributable to owners of parent in the first halfmonths of the current fiscal year. As a result, HOPE continued to record a negative equity of 8,047 million yen at
the end of December 2021. Due to these events, the much larger than expected level of payments for amounts
owed by the energy business has resulted in the delay of some bank loan repayments scheduled for the end ofJanuary 2022. Consequently, there are reasons for significant doubts about the going concern assumption.
The HOPE Group is taking the following actions to end these problems.
1. Minimization of risk in the energy business
The performance of the energy business is extremely vulnerable to changes in t he price of electricity on the JEPX.
Furthermore, changes in the performance of this business directly affect the results of operations and financial
condition of the HOPE Group. We plan to take the following actions with regard to this issue.
The energy business is an important component of the HOPE Group in qualitative and quantitative terms.
Moreover, this business requires considerable specialized knowledge. As a result, the decision was made to use
wholly owned subsidiary HOPE ENERGY, INC. to operate this business. Resolutions for the transfer of thisbusiness to HOPE ENERGY, INC. were approved on August 11 by the HOPE Board of Directors and on
September 28 at the annual general meeting of shareholders. On December 1, 2021, HOPE spun off the energy
business and the business was transferred to HOPE ENERGY, INC.
The HOPE Group has no electricity generation facilities. As a result, this business is vulnerable to changes in thecost of electricity. As a surge in the market prices in the previous fiscal year caused a significant capital deficit,
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 th e JEPX
and one-to-one transactions for each area and season. Since October 2021, prices on the JEPX have been
consistently higher than we anticipated. Furthermore, it is currently difficult to purchase the expected amount ofelectricity in line with our risk management policy by using direct purchases from suppliers. One reason for thisdifficulty is the inability to make these direct purchases while using payment terms that meet our requirements.
Due to this situation, we have stopped submitting bids for local government electricity supply contracts in orderto preserve the soundness of our business operations. Although we suspended bids, the business climate for thisbusiness is still extremely challenging because of the large volume of electricity we are required to supply basedon existing contracts.
We will continue to operate the energy business, which is now managed by HOPE ENERGY, INC. We plan tocontinue the suspension of bids for new contracts and reduce the volume of electricity we supply in order toprevent a further increase in risk exposure involving the procurement of electricity. Furthermore, due to thedifficultly of the current business climate, we believe that we need to perform a thorough study to determine if weshould continue to operate the energy business.
2. Procurement of funds
HOPE is maintaining sound relationships with financial institutions, primarily its main banks, and management
believes these institutions will continue to provide assistance. Furthermore, HOPE received proceeds ofapproximately 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 andproceeds of about 150 million yen from the September 21, 2021 issuance of new shares through third-party
allotment and 780 million yen from the exercise of the eleventh share acquisition rights with an exercise price11

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

adjustment clause. However, the exercise of the eleventh share acquisition rights has not been progressing
because the price of HOPE stock has been below the exercise price since early December 2021. Consequently, weplan to conduct studies and discussions concerning a variety of fund procurement methods, including new loan sfrom banks, in order to procure the funds required to continue business operations.
The HOPE Group’s advertising business and Jichitai Works business were each spun off and transferred toseparate newly established wholly owned subsidiaries on December 1 , 2021. Based on the assumption that wewill continue to operate these businesses, we plan to use equity and business alliances and other forms ofpartnerships with companies that can help these businesses create even more value. These partnerships will al so
contribute to increasing the HOPE Group’s equity.
All of these initiatives are still under way or have just started. As of the date the second quarter business report
was submitted, there were no specific plans concerning the procurement of funds. We have been working hard on
finding ways to use loans from financial institutions and other channels to procure the funds required for the
repayment of about 5.8 billion yen of the energy business debt on the consolidated balance sheet at the end of thesecond quarter. However, we may not be able to make full repayments of loans that become due beginning in the
middle of March 2022. There are no guarantees or other forms of supplementary backing for this debt. In addition,
as of the day the second quarter business report was submitted, we do not expect that negative equity will end
within a short time. Consequently, the HOPE Group believes that there are significant uncertainties about thegoing 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.
Changes in the Scope of Consolidation or Application of the Equity Method
Important changes in the scope of consolidation
Newly established subsidiaries JICHITAI AD, INC. and JICHITAI WORKS, INC. were included in the scope of
consolidation beginning on December 1, 2021.
Significant Changes in Shareholders’ Equity
In the first half, share capital and legal capital surplus increased by 756 million yen each due to the issuance of
new shares through third-party allotment and the issuance of shares due to the exercise of the second shareacquisition rights (stock options) and the ninth and eleventh share acquis ition rights with exercise priceadjustment clause in the fiscal year 2018. As a result, share capital was 2,716 million yen and legal capital surplus
was 2,669 million yen at the end of the second quarter.
In the first half of the current fiscal year, there was a net loss attributable to owners of parent of 7,044 million yen
because of the severe negative impact of the high price of electricity on the JEPX. Due to this loss, there wasnegative equity of 8,047 million yen at the end of December 2021.
Changes in Accounting Policies
Application of the Accounting Standard for Revenue Recognition
HOPE 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 first quarter of the current fiscal year.
Based on this standard, revenue expected to be received in exchange for the provision of goods and services isrecognized when the control of the goods and services is transferred to customers. In the energy business, fees
received from customers as part of their electricity bills for supporting the development of renewable energy
sources are classified as money collected for a third party. Accordingly, these fees were included in net sales inprior years and payments based on the Act on Special Measures Concerning Procurement of Electricity from
Renewable Energy Sources were recorded as cost of sales. However, this fee is now not included in transaction
prices based on the new revenue recognition standard and the corresponding payments are deducted from the costof sales.

12

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

As a result, net sales and cost of sales for the first half of the current fiscal year decreased by 5,628 million yen
each, but there was no change in operating profit, ordinary profit and profit 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, “ Accounts receivable-trade” thatwas presented in the current assets section of the consolidated balance sheet in the previous fiscal year ispresented as “Accounts receivable-trade and contract assets,” and “Advances received” that was presented in thecurrent liabilities section is presented as “Contract liabilities” from the first quarter of 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 the prior year’s consolidated financial statements toconform to the new presentation.
Furthermore, in accordance with the transitional treatment prescribed in Paragraph 28 -15 of the AccountingStandard for Quarterly Financial Reporting (ASBJ Statemen t No. 12, March 31, 2020), HOPE has not presented
information on revenue from contracts with customers broken down for the first half of the previous fiscal year.
Application of the Accounting Standard for Fair Value Measurement
HOPE has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019)from the beginning of the first quarter of the current fiscal year, and has applied the new accounting policies in
the Accounting Standard for Fair Value Measurement prospectively in accordance with the transitional measuresin Paragraph 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 quarterly consolidated financial statements.
Additional Information
Progress with Plan for Elimination of Negative Equity
1. Basic policy for the elimination of negative equity
In the fiscal year that ended in June 2021, the HOPE Group recorded an ordinary loss of 6,935 million yen
because of a big increase in the cost of sales in the energy business caused by high electricity on the JPEX
between the middle of December 2020 and late January 2021. As a result, there was negative equity of 2,498
million yen at the end of June 2021. As was announced by HOPE Group on September 27, 2021 in a new release
titled “Measures to End Negative Equity,” we are implementing a number of equity-related measures along withactions for improving business operations in order to stabilize earnings. Our goal is to end negative equity by theend of the current fiscal year. However, JEPX prices have been higher than the group anticipated since October
2021. Consequently, the business climate for the energy business is still challenging.
The HOPE Group has established the basic policy of ending negative equity by taking the following actions:perform a thorough study to determine if the group should continue to operate the energy business, minimize
exposure to electricity price volatility risk, and the business value of other growing businesses will be increased.
In addition, equity financing will be used to procure the funds required to restore the group’s financial soundness,
which declined during the previous fiscal year.
Since October 2021, the JEPX price of electricity has again been much higher than we anticipated. As a result, theoperating loss was 6,982 million yen, the ordinary loss was 7,026 million yen and loss attributable to owners ofparent was 7,044 million yen. Negative equity was 8,047 million yen at the end of the second quarter.
2. Activities based on the basic policy and schedule(1) Equity financing
HOPE received proceeds of approximately 2.2 billion yen as of August 31, 2021 due to the May 17, 2021 sale ofstock through a third-party allotment and the exercise of the ninth share acquisition rights with an exercise price

13

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

adjustment clause. On September 21, 2021, HOPE procured about 150 million yen by selling stock through athird-party allotment. There are also proceeds of about 780 million yen from the exercise of the eleventh shareacquisition rights with exercised price adjustment clause.
(2) Establishment of subsidiaries using spinoffs and activities for possible alliances and other measures
The advertising business and Jichitai Works business of the HOPE Group were spun off on December 1, 2021 andtransferred to two newly established wholly owned subsidiaries. Based on the assumption that we will continue tooperate these businesses, we plan to use equity and business alliances and other forms of partnerships withcompanies that can help these businesses create even more value. These partnerships will also contribute toincreasing the HOPE Group’s equity.
(3) Management improvements for stability of earnings
a. Reduce risk in the electricity retail sales business and take actions concerning business risk
Currently, there is an excessive level of risk (determination of a suitable risk appetite using VaR and EaR for
assessing risk is not possible at this time) due to the negative equity from the standpoint of achieving the properbalance in the future between capital and the risk appetite of the HOPE Group concerning business operations. To
prevent a further increase in market risk in the electricity retail sales business involving purchases of electricity
using the JEPX, the amount of electricity supplied will be reduced. Furthermore, we will adjust the balance
between electricity purchased by using the JEPX and one-to-one transactions in different areas and seasons. All
these measures are aimed at reducing exposure to market price volatility risk. As was explained before, the JEPX
price of electricity has been higher than we anticipated since October 2021 and we have often been un able topurchase electricity using terms that match our requirements. As a result, the use of one -to-one transactions topurchase the amount of electricity originally planned is currently difficult. For these reasons, in order to prevent
any further increases in market risk and working capital as equity remains negative, the electricity retail sales
business will not participate in bidding for selling electricity to local governments until this business has clearlyreached the point where JEPX market risk no longer has a significant effect on the HOPE’s business operations.
In fact, the submission of bids is currently suspended. Taking these actions will lower the demand for working
capital for purchasing electricity and reduce the level of exposure to marke t risk. In addition, due to the difficultyof the current business climate, we believe that we need to perform a thorough study to determine if we should
continue to operate the energy business.
b. Use of a spinoff and absorption to transfer the electricity retail sales business to a subsidiary
In addition to these measures to reduce risk involving electricity retail sales by downsizing this business, wetransferred this business to wholly owned subsidiary HOPE ENERGY, INC. on December 1, 2021. This action
was taken following the approval of a resolution for this transfer at the annual general meeting of shareholders
held on September 28, 2021.
The HOPE Group is taking actions for transitioning to a framework for business operations with speed andflexibility. These actions will be accompanied by measures to control business risk as much as possible to prevent
this risk from becoming excessive in relation to the level of liquidity. Our priorities are the timely and proper
management of risk involving business operations and the efficient and effective allocation of the group’s
resources.
c. Earnings of current and new businesses
The advertising business and Jichitai Works business are consistently profitable and there are many activities in
the current fiscal year with the goal of ensuring that these two businesses generate earnings as planned. There arealso numerous activities for starting new businesses that can contribute to earnings. One example is theestablishment on August 27, 2021 of an equity and business alliance with media4u inc. (Head office: Chuo-ku,
Tokyo; President: Masahiko Okuoka) concerning a short message service (see note) for local governments.
Note: A short message service is a service for exchanging brief text messages between smartph ones and othermobile devices.
14

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

On January 31, 2022, the HOPE Board of Directors approved a resolution to submit at an extraordinary
shareholders meeting to be held on March 24, 2022 a proposal for amending the Articles of Incorporation. Ifshareholders approve this proposal, HOPE plans to change its fiscal year. The HOPE Group transitioned to aholding company structure on December 1, 2021. In conjunction with this change, there were measures toestablish internal systems and management frameworks for the entire group. This process led to the conclusion
that, to operate our businesses more effectively, we should change the fiscal year for consistency of our business
management and group budgeting and oversight with the activities and budgeting and operation cycles of local
governments in Japan, which are the primary users of HOPE Group products and services. Furthermore, thischange will result in the conformity of employee evaluation and other internal systems. Consequently, we believe
the new fiscal year will facilitate the establishment of an infrastructure for strengthening business activities andthe management of business operations. If shareholders approve the proposal at the extraordinary shareholders
meeting, we believe that the probation period for delisting our stock due to negative equity will be extended toMarch 31, 2023, which is the last day of the first fiscal year following the change in the fiscal year. By continuing
initiatives to increase equity and improve business operations to increase f inancial soundness and profitability, weare determined to return to positive equity.
Segment and Other Information
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 Jichitai Works, which are based on HOPE’s core
advertising, energy, and Jichitai Works businesses.
(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

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

Advertising

EnergyJichitaiWorks

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 m ainly includes
Machiiro and Jichitai Works HA×SH services.

15

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

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 sellin g, 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 loss shown on the quarterly consolidated statementof income.
II First six months of FY6/22 (Jul. 1, 2021 – Dec. 31, 2021)
Reportable segment

Advertising

EnergyJichitaiWorks

Subtotal

Other(Note 1)

Total

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

Net sales
1,282 24,546,047
24,546,047
External sales
615,167 23,785,796 143,800 24,544,765
Inter-segment
sales and transfers
Total
615,167 23,785,796 143,800 24,544,765
1,282 24,546,047
24,546,047
Segment profit
53,839 (6,843,585)
36,347 (6,753,398) (46,534) (6,799,932) (182,594)(6,982,526)(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 182,594 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 loss shown on the quarterly consolidated statementof income.

3. Information related to changes in reportable segments, etc.
Change in segment name
From the first quarter of 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 namehas been changed. The segment information for the first half of 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 has applied the Accounting Standard for Revenue
Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the first quarter of the current fiscal
year and changed the accounting method for revenue recognition. Accordingly, the method for calculating
segment profit or loss has been changed as well. Compared with the prev ious method, net sales decreased 5,628
million yen in the energy business in the first half of the current fiscal year.
Business Combinations
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 to HOPE ENERGY, INC. on December 1, 2021. Thistransfer was approved by shareholders at the General Meeting of Shareholders on September 28, 2021 and thespinoff 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 became a holding company on December 1 ,
2021.

16

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

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 to wholly
owned subsidiary HOPE ENERGY, INC. A simple spinoff with the establishment of new companies was used forthe 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.
(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).
Material Subsequent Events
Start of preparations for a change in the fiscal year (fiscal year end)
On January 31, 2022, the HOPE Board of Directors approved a resolution to submit a p roposal at theextraordinary shareholders meeting to be held on March 24, 2022 for amending the Articles of Incorporation. The
proposed amendments include a change in the fiscal year.
1. Reason for change in the fiscal year
HOPE plans to change its fiscal year from July 1 to June 30 of the following year to April 1 to March 31 of thefollowing year for the purpose of increasing the efficiency of business operations by improving the HOPE
Group’s management and administrative activities. The HOPE Group trans itioned to a holding company structureon December 1, 2021. In conjunction with this change, there were measures to establish internal systems andmanagement frameworks for the entire group. This process led to the conclusion that, to operate our businesse smore effectively, we should change the fiscal year for consistency of our business management and groupbudgeting and oversight with the activities and budgeting and operation cycles of local governments in Japan,
which are the primary users of HOPE Group products and services. Furthermore, this change will result in theconformity of employee evaluation and other internal systems. Consequently, we believe the new fiscal year will
facilitate the establishment of an infrastructure for strengthening busines s activities and the management ofbusiness operations.

17

HOPE, INC. (6195) Consolidated Financial Results for the Second Quarter of FY6/22

2. Change in the fiscal year
Current fiscal year end: June 30
New fiscal year end:
March 31
The fiscal year ending on March 31, 2022 is a 9-month transitional fiscal period due to the change in the fiscal
year.
3. Partial revision to the Articles of Incorporation(1) Reason for amendments
The proposed amendments are for the purposes of revising the fiscal year and the business activities (to include
management and other activities for subsidiaries, etc.). There is also a supplementary rule as a transitional
measure for changing to the new fiscal year.
(2) Articles to be amended(The underlined parts indicate the proposed amendments.)
Current Articles of Incorporation

Proposed Changes(Purposes)
Article 2. The purposes of the Company are to engage in thefollowing business activities:(Purposes)
Article 2. The purposes of the Company are to engage in thefollowing business activities and to support and administer
the business activities of other companies, etc. (including
foreign companies), which are engaged in these businessactivities, in which the Company owns stock or otherownership interest.
Articles (1) to (12) (No changes)(Business Year)
Article 42. The business year of the Company is a one-year
period starting on April 1 of each year and ending on March
31 of the following year.
(Interim Dividends)
Article 44. The Company may pay dividends toshareholders or registered pledgees of shares recorded in theshareholder registry as of the last day of September 30 eachbusiness year in accordance with resolutions by the Boardof Directors.
(Supplementary Provision)
Article 1. Irrespective of the provisions of Article 42(Business year), the 29th business year is a 9-monthtransitional fiscal period from July 1, 2021 to March 31,
2022.

Articles (1) to (12) (Omitted)(Business Year)
Article 42. The business year of the Company is a one-year
period starting on July 1 of each year and ending on June 30of the following year.
(Interim Dividends)
Article 44. The Company may pay dividends toshareholders or registered pledgees of shares recorded in theshareholder registry as of the last day of December 31 eachbusiness year in accordance with resolutions by the Boardof Directors.
(Newly established)

Article 2. Irrespective of the provisions of Article 44(Interim Dividends), the record date for the interim
dividend of the 29th business year is December 31, 2021.
Article 3. These supplementary provisions will be deleted at
the conclusion of the Company’s 29th annual general
meeting of shareholders.

(3) Schedule
General Meeting of Shareholders to approve revisions to the Articles of Incorporation (tentative): Thursday,
March 24, 2022
Effective date of revisions to the Articles of Incorporation (tentative): Thursday, March 24, 2022
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.

18