Beaglee : Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2021

August 13, 2021

Consolidated Financial Results

for the Second Quarter of the Fiscal Year Ending December 31, 2021

[Japanese GAAP]

Company name:	Beaglee Inc.	Listed on: Tokyo Stock Exchange
Stock code:	3981	URL: https://www.beaglee.com/
Representative:	Jimpei Yoshida	President and Representative Director
Contact:	Yuichi Sakurai	Director, Director of Administration Department,
		General Manager of Corporate Communication and Investor Relations Office
		Tel.: [phone]
Scheduled date of quarterly report submission:	August 13, 2021
Date for commencement of dividend payments:	−
Supplementary notes to quarterly financial statements:	Yes
Briefing on quarterly financial statements:	Yes (For institutional investors and analysts)

(Rounded down to nearest million yen)

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2021 (January 1 to June 30, 2021)

(1) Consolidated Operating Results (cumulative)

(Percentages represent year-on-year changes)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of the parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Second quarter of the fiscal year

9,249

‒

723

‒

651

‒

272

‒

ending December 31, 2021

Second quarter of the fiscal year

‒

‒

‒

‒

‒

‒

‒

‒

ended December 31, 2020

For reference: Comprehensive income

Second quarter of the fiscal year ending December 31, 2021:

272 million yen (- %)

Second quarter of the fiscal year ended December 31, 2020:

−million yen (- %)

Net income per share

Net income per share fully

diluted

Yen

Yen

Second quarter of the fiscal year

45.95

45.36

ending December 31, 2021

Second quarter of the fiscal year

‒

‒

ended December 31, 2020

Note: Figures for the second quarter of the fiscal year ended December 31, 2020 and year-on-year change have been omitted because the Company began preparing consolidated financial statements from the end of the fiscal year ended December 31, 2020.

(2) Consolidated Financial Position

		Total assets	Net assets	Capital-to-asset ratio
		Millions of yen	Millions of yen	%
June 30, 2021		19,675	5,516	28.0
December 31, 2020		19,741	5,224	26.5
For reference: Shareholders' equity
As of June 30, 2021	5,516 million yen
As of December 31, 2020	5,224 million yen

2. Dividends

			Annual dividends
	End of 1st quarter	End of 2nd quarter	End of 3rd quarter		Year-end		Full year
	Yen	Yen	Yen		Yen		Yen
Fiscal year ended December	−	0.00	−	0.00	0.00
31, 2020
Fiscal year ending December	−	0.00
31, 2021
Fiscal year ending December			−		−		−
31, 2021 (Forecast)
Note: Revisions from the most recently announced dividend forecast: None

3. Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2021 (January 1 to December 31, 2021)

(Percentages represent year-on-year changes)

Net sales

Operating profit

Ordinary profit

Profit attributable to

Net income per

owners of the parent

share

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Yen

Full year

19,682

−

1,350

−

1,210

−

524

−

84.87

Note:

Revisions from the most recently announced earnings forecast: None

Note:

Year-on-year changes have been omitted because the Company began preparing consolidated financial statements from the end of the fiscal

year ended December 31, 2020.

* Notice

1. Changes in important subsidiaries during the consolidated cumulative second quarter under review (change in specified subsidiaries which accompanies a change in the scope of consolidation): None

New: None

Exclusion: None

1. Application of special accounting treatment for the preparation of the quarterly financial statements: Yes
   Note: For details, refer to page 11 of the attached materials "(4) Notes to Quarterly Consolidated Financial Statements."
2. Changes in accounting policy and changes and restatements of accounting estimates
3. 1. Changes in accounting policy accompanying the revision of accounting standards: None
   2. Changes in accounting policy other than those listed in (a): None
   3. Changes in accounting estimates: None
   4. Restatements: None
4. Number of shares issued (common stock)
5. 1. Number of shares issued at end of period (including treasury shares)

	June 30, 2021	6,200,850 shares	December 31, 2020	6,175,661 shares
(b) Number of treasury shares at end of period
	June 30, 2021	243,228 shares	December 31, 2020	246,723 shares
(c) Average number of shares during the period (cumulative from the beginning of the fiscal year)
	June 30, 2021	5,936,314 shares	June 30, 2020	5,904,921 shares

• The Company's quarterly financial statements are not subject to quarterly review by a certified public accountant or audit corporation.
• Appropriate use of earnings forecasts and other pertinent information (Cautionary Statement with Respect to Forward-Looking Statements)

These materials contain various forward-looking statements and other forecasts regarding performance and other matters. Such statements are based on information available at the time of preparation as well as certain reasonable assumptions. Actual results may differ materially from those expressed or implied by forward-looking statements due to a range of factors. For notices concerning underlying assumptions of the earnings forecast and the use of the earnings forecast, refer to page 5 of the Supplemental Materials "(3) Explanation of Forward-Looking Information including Consolidated Earnings Forecast."

• Supplemental Materials

1. Qualitative Information on the Quarterly Financial Results .........................................................................................	2
(1)	Explanation of Operating Results .........................................................................................................................	2
(2)	Explanation of Financial Condition for the Second Quarter Under Review.........................................................	4
(3)	Explanation of Forward-Looking Information including Consolidated Earnings Forecast ..................................	5
2. Quarterly Consolidated Financial Statements and Notes ..............................................................................................	6
(1)	Quarterly Consolidated Balance Sheet .................................................................................................................	6
(2)	Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of
	Comprehensive Income ........................................................................................................................................	8
(3)	Consolidated Quarterly Statement of Cash Flows ..............................................................................................	10
(4)	Notes to Quarterly Consolidated Financial Statements ......................................................................................	11
	(Notes on the Going-Concern Assumption) .......................................................................................................	11
	(Notes on Significant Changes in the Amount of Shareholders' Equity) ...........................................................	11
	(Application of Special Accounting Treatment for Preparation of Quarterly Consolidated
	Financial Statements)........................................................................................................................................	11
	(Segment Information, etc.) ................................................................................................................................	11
	(Additional Information) ....................................................................................................................................	12

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1. Qualitative Information on the Quarterly Financial Results

Forward-looking statements made below have been determined by the Company as of the final day of the consolidated second quarter under review.

Furthermore, the Group has not carried out comparison analysis with the previous cumulative second quarter because it began preparing consolidated financial statements from the end of the previous fiscal year.

(1) Explanation of Operating Results

During the consolidated cumulative second quarter under review, Japan's economy continued to experience a recovery amid countermeasures to stop the spread of COVID-19 including the rollout of vaccinations from April 2021, but uncertainty remains concerning the future.

Amidst this situation, the e-book market, mainly comics, continues to see an increase in customer traffic and higher average purchases. The e-book and e-comic markets are expected to continue growing. Furthermore, the COVID-19 pandemic has spurred on consumption at home, and it is expected to increase user numbers further and contribute to the retention of users. (Source: Impress Corporation estimates, "eBook Marketing Report 2020")

However, the e-book market is expected to gradually become saturated as e-book business models diversify and mature.

In addition, although damages to the e-book market from pirated comic websites are growing, the Group believes that it is only minimally impacted. The Group will continue to gather information while closely monitoring the situation and take necessary measures after coordinating with relevant industry groups.

Given this market climate, the Group focused on building and growing the Manga Kingdom brand, as well as reinforcing editing functions aimed at expansion of the product lineup through serialized works and first to distribute titles and the creation of hits, striving to develop contents. Also, the Group continued to deepen collaboration with Bunkasha Group Co., Ltd. to maximize synergies.

Moreover, in light of the growing COVID-19 pandemic, following similar efforts in the previous fiscal year, the Group is implementing countermeasures for preventing the occurrence and spread of infections and securing the safety of suppliers, employees, and other stakeholders, and striving to balance these initiatives with business growth.

In this management environment, Manga Kingdom recorded its highest ever net sales following a similar result in the first quarter.

As a result, consolidated net sales for the cumulative second quarter under review totaled 9,249,577 thousand yen, consolidated operating profit came in at 723,810 thousand yen, consolidated ordinary profit was 651,094 thousand yen and profit attributable to owners of the parent totaled 272,791 thousand yen.

The management results for each segment are presented below.

(Platform Segment)

In terms of the comic distribution service "Manga Kingdom," a mainstay service in the Platform Segment, the Group focused on promotional campaigns appealing a sense of value and branding activities, in order to increase subscribers and customer spending by promoting the flow of visit, retention and purchase. In addition to the loyalty points program provided on the Manga Kingdom website that rebates up to 50% of spending every day for both the purchase of points and works, the Group actively carried out sales promotion activities for acquiring a broad range of users and appealing a sense of value, which included holding a number of campaigns to commemorate is 15th anniversary in April 2021. Additionally, the Group is actively deploying a broad range of advertising activities to drive traffic to the site and promote greater interest among users, such as TV commercials and tie-ups with

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