Hope : Consolidated Financial Results for the First Quarter of the Fiscal Year Ending June 30, 2022

• Notes
• 1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None

1. Application of special accounting methods for presenting quarterly consolidated financial statement s: None
2. Changes in accounting policies and accounting estimates, and restatements
3. 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, (3) Notes to Quarterly Consolidated Financial Statements, Changes in Accounting Policies, Application of the Accounti ng Standard for Revenue Recognition" on page 10 of the attachments for further information.

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

1. Number of treasury shares as of the end of the period

• 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 to the 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 of Consolidated Earnings Forecast and Other Forward-looking Statements" on page 5 of the attachments regarding preconditions or other related matters for the forecasts.

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

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

1. Qualitative Information on Quarterly Consolidated Financial Performance

There are no prior-year comparisons because HOPE started preparing consolidated financial statements in the first half of the fiscal year ended June 30, 2021.

(1) Explanation of Results of Operations

The fifth wave of the COVID-19 pandemic severely restricted economic activities in Japan and other countries during the first quarter of the current fiscal year. Although the number of infections is declining as people are vaccinated and other actions are taken to combat the pandemic, there is an urgent need to be prepared for a possible sixth wave. Due to this situation, the outlook for an economic recovery remains unclear.

Translating the corporate philosophy into actions and achieving more growth of corporate value will require an intent focus on our relationships with local governments. We have been using our business activities si nce 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 our corporate philosophy accompanied by the growth of cor porate value.

On August 11, 2020, HOPE established HOPE NEXT 3, a three-yearmedium-term management plan beginning in the fiscal 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 of electricity on the Japan Electric Power Exchange (JEPX) was very high. This big increase in the cost of electricity 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 the end of June 2021. We plan to reexamine HOPE NEXT 3 due to these events and make a return to positive equity by the end of the current fiscal year the highest priority.

Negative equity was more than 1.7 billion yen at the end of the first quarter, an improvement of about 700 million yen from the end of the previous fiscal year. Returning to positive equity will remain the highest priority and, in conjunction with actions needed to accomplish this goal, we plan to establish a new HOPE NEXT 3.

We continue to position the advertising business as a profit-generating business of the HOPE Group and are continuing 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. These steps are aimed at making the advertising business more cost efficient and receiving higher rates for advertising services. In the energy business, the electricity retail sales business will be comprehensively succeeded to a HOPE's consolidated subsidiary to enable this company to focus on operating this business. In addition, we will no longer submit bids for public-sector electricity supply contracts in order to prevent any further increase in exposure to market risk associated with using the JEPX to buy electricity. We plan to downsize the energy business by lowering the amount of electricity supplied. In the Jichitai Works business (former 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, 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 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, increasing activities for B-to-G promotions (former B-to-G solutions) and making extensive use of Jichitai Works HA×SH, which is an internet platform for supporting public-private sector collaboration.

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

In the first quarter, net sales were 12,978 million yen. The operating loss was 126 million yen, the ordinary loss was 136 million yen, and there was a loss attributable to owners of parent of 143 million yen.

Business segment performance was as follows.

Beginning with the first quarter of the current fiscal year, as described in "2. Quarterly Consolidated Financial Statements and Notes, (3) Notes to Quarterly Consolidated Financial Statements (Segment Information), " the previous Media business segment has been changed to the Jichitai Works business segment. There is no effect on the segment information because only the segment name has changed.

1) Advertising Business

In this business, the SMART RESOURCE service purchases a variety of advertising space from local governments by submitting 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 these publications to companies. During the first quarter, there were measures to achieve the proper size of the Machilet service. Machilet, which is the primary medium of the advertisi ng business, is operating in all areas of Japan while concentrating on six themes: marriage, raising children, senior nursing care, measures involving vacant houses, end-of-life messages, and condolence messages.

We started providing the SMART FR (Financial Resources) CONSULTING service in June 2021. This service encompasses consulting for every step from assistance for attracting advertisements to the creation and utilization of media. We have received consultation contracts from two local governments inc luding the city of Fukuoka.

Our goal is to use this new service to take the advertising business beyond simply providing assistance for advertisements in order to become a source of a broad range of ideas and support concerning advertisements for the purpose of creating sources of revenue.

Segment sales were 272 million yen and the segment profit was 7 million yen.

2) Energy Business

This business, which uses the GENEWAT brand for the retail 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. As was explained earlier, the sharp increase in the cost of purchasing electricity due to the higher cost of electricity on the JEPX had a significant negative impact on the energy business. 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. As was announced on August 11, 2021 in the news release titled "Notice of Company Split (Absorption-type Split)," one of these measures is the use of an absorption and split for the transfer of the electricity retail sales business to HOPE ENERGY. We believe that HOPE ENERGY should directly operate of all energy operations because of the quantitative and qualitative importance of this business within the HOPE Group and due to the specialized knowledge required by this business.

To provide more information about the performance of the energy business, we are beginning in th e first quarter the monthly announcement of preliminary data for the cost of market purchases of electricity, the volume of electricity supplied and the selling price of this electricity. These announcements will give investors more detailed and timely information with respect to the HOPE Group's financial position and other aspects of operations.

In the electricity retail sales business, we will reduce the volume of electricity supplied for the purpose of preventing any further increase in exposure to market risk associated with market purchases of electricity. During the first quarter, the number of bids submitted for retail electricity supply contracts was reduced to 39 and the submission of all bids was subsequently suspended.

Segment sales were 12,651 million yen and the segment loss was 41 million yen.

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