Third Quarter of the Fiscal Year Ending June 30, 2020 (FY2020)

Results of Operations

Explanatory Material

May 13, 2020

HOPE, INC.

[6195]

Local Governments in Japan (1)

Governments need to secure funds on their own as more extraordinary financial measures loans(deficit-covering local government loans) are issued.

Outstanding local government bonds (purposes) and loans (sources)

160

140

137,398.5 139,786.7 142,125.5 143,231.9 144,705.2 145,918.9 145,999.6 145,526.4 144,908.1 144,289.1 ¥143,654.9 billion

Extraordinary financial measures loan

Revenue deficit covering loan

15.7%

18.2%

22.1%

25.2%

28.1%

30.8%

33.2%

(115,824.0)

34.8%

35.8%

36.8%

37.6%

120

(114,383.1)

(110,714.6)

13.6%

(107,181.7)

13.1%

(104,100.8)

12.4%

(100,955.4)

11.7%

11.0%

(97,496.6)

(94,864.7)

100

4.1%

4.7%

10.3%

(93,011.5)

(911,980.0)

4.5%

9.8%

(¥89,675.7billion)

4.4%

4.2%

9.1%

8.5%

4.0%

3.6%

4.1%

3.8%

8.0%

7.6%

3.2%

3.5%

3.3%

11.3%

10.9%

2.8%

3.2%

3.2%

2.9%

10.5%

10.4%

2.4%

2.1%

1.9%

60

10.3%

10.1%

9.8%

1.7%

1.5%

1.3%

8.2%

9.9%

9.7%

9.5%

10.5%

8.2%

7.8%

7.8%

7.9%

3.0%

2.9%

8.2%

2.7%

8.4%

8.6%

9.1%

2.5%

9.4%

8.8%

40

5.9%

5.6%

2.4%

2.3%

5.4%

5.2%

2.2%

2.1%

2.1%

2.0%

2.0%

4.9%

4.7%

4.6%

4.6%

4.6%

4.8%

4.9%

20

33.8%

32.4%

31.0%

29.8%

28.5%

27.4%

26.4%

25.7%

25.3%

24.8%

24.4%

0

End of

End of

End of

End of

End of

End of

End of

End of

End of

End of

End of

(¥trillion)

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

Revenue decrease compensation loan

Tax cut compensation loan

Others

Subsidized general public works loan

(public works loan since FY2011)

Public housing loan

Education and social welfare facilities improvement loan

Unsubsidized general public works loan

Notes: 1. Outstanding local government bonds do not include special fund public investment loans.

  1. Government funds during FY2008-FY2018 are financial loan funds.
  2. Revenue deficit covering loans are the sum of these bonds associated with subsidized general public works and public works loans and these bonds associated with corporate bonds.
  3. Outstanding local government bonds do not include payments to a sinking fund for the lump-sum repayment of the principal upon maturity.
  4. Numbers in parentheses are outstanding local government bonds minus outstanding loans for extraordinary financial measures.

*Prepared by HOPE,INC. based on the March 2020 White Paper on Local Public Finance, Ministry of Internal Affairs and Communications

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

02

Local Governments in Japan (2)

Local governments need to become stronger in order to adapt to Japan's declining population, resulting in an older population and fewer children. The national government is urging local governments to merge. Many municipalities with weak finances have merged with other municipalities.

Number of local governments in Japan

4,000

Period of many mergers note1

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Note 1: Mergers started in 1995 with enactment of a law to permit local government mergers and the number of mergers peaked in 2005 and 2006.

The first period of many mergers was in Meiji era following the establishment of the local government system in 1888. There was a four-fifth decline from about 70,000 municipalities. The second period of many mergers was 1955-1959 as the establishment of a postwar political system sparked a two-thirds decline from about 10,000 municipalities.

The most recent merger peak was the result of reforms for giving more authority to local governments.

* Prepared by HOPE,INC. using data on the National Statistics Center website (except counties and small islands)

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

03

The Local Government Financial Cycle

New fiscal years start in April 1 because local governments use a fiscal year ending in March 31.

Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May. Jun.

Preparation

Assessment

Start of

Request

by Finance

Appr-

of

the new

for

Department

estimated

ovals

fiscal year

budgets

Assessment

budgets

budget

by managers

Start of the new fiscal year

▼

Summer

Autumn

Winter

Spring

Summer

HOPE, INC.FY

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May.

Jun.

1Q

2Q

3Q

4Q

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

04

Contracts with Local Governments (FY2019)

This is an approximate map of Japan. In FY2019,

there were contracts with a variety of local governments in Japan's 47 prefectures.

1,116note1 Approx.

1,969note2 57％

Notes: 1. Number of contracts for all HOPE,INC. services with local governments in FY2019

2. Source: Population, Demography and Number of Households Based on the Basic Resident Registers; 2019 Resident Register Population, Households; 2018 Population Trends (for cities, towns and villages), Ministry of Internal Affairs and Communications website Local governments

are cities, towns and villages in all prefectures, special wards in Tokyo, and wards in ordinance-designated cities (excludes counties and small islands)

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

05

Amendments to Laws Affecting Local Governments

Government in Japan has reached a turning point due to amendments to

laws and regulations and social change. The result is many opportunities for HOPE,INC.

2005

Plan for More Efficient Government/National government

｜Feb. 2005 Started the Smart Resource service

2007

Start of the Hello Baby Project (home visits)/Ministry of Health, Labour and Welfare

｜Sep. 2013 Issued Child Raising Pamphlet

Feb. 2015

Special Measures for Empty House Countermeasures/ Ministry of Land, Infrastructure, Transport and Tourism

｜Oct. 2015 Issued Empty House Pamphlet

Apr. 2016

Full Liberalization of Retail Electricity Sales/Ministry of Economy, Trade and Industry ｜Mar. 2018 Started GENEWAT

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

06

Contents

Ⅰ．3Q FY2020 Financial Highlight

Ⅱ．FY2020 Outlook and Growth Strategies Ⅲ．Company overview

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

07

Ⅰ．3Q FY2020 Financial Highlight

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

08

3Q FY2020 Financial Summary (July 2019 ‒ March 2020)

1Q-3Q

FY2020 Results

The energy business remains the primary source of growth with a big YoY increase in sales. Although financial information was corrected, there was an operating profit for the first three quarters.

Net sales

Operating profit

¥8,082million（up 388.6% YoY）

¥82million（(¥(245) million in 1Q-3Q FY2019）

Advertising Business

Media Business

Energy Business

Sales down due to measures to achieve the proper size of this business but earnings are improving from one year earlier

Temporary decline in earnings growth due to a substantial sales recognition shift to the fourth quarter

New orders include electricity services that started in the third quarter; rapid sales growth (+12.5% over previous quarter) and consistent profitability; contributed to third quarter earnings

Net sales

Net sales

Net sales

¥1,244million

¥53million

¥6,774million

（down 13.4% YoY）

（up 10.5% YoY）

（¥167 million in 1Q-3Q FY2019）

Segment profit

Segment profit

Segment profit

¥64million（¥(11) million in 1Q-3Q FY2019）

¥(2)million（¥(12) million in 1Q-3Q FY2019）

¥250million（¥(11) million in 1Q-3Q FY2019）

*Numbers are rounded down and percentages are rounded up or down to the first decimal place.

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

09

3Q FY2020 Income Statement Highlight

1Q-3Q FY2019

1Q-3Q FY2020

（Millions of yen）

Results

Comp.

Results

Comp.

YoY change

Net sales

1,654

8,082

+388.6％

Gross profit

422

25.6％

782

9.7％

+85.0％

SG&A expenses

667

40.4%

699

8.7％

+4.7％

Operating profit

(245)

(14.8)%

82

1.0%

Ordinary profit

(230)

(14.0)%

75

0.9%

Profit

(237)

(14.3)%

50

0.6%

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

10

Quarterly Sales

（Millions of yen）

Sales increased 383% YoY due to the growth in the energy business.

Up

383.0%

YoY

Others

3,500

3,249

Energy Business

2,934

3,000

Media Business

Advertising Business

2,500

2,208

2,000

1,897

2,793

2,483

1,244

1,500

943

1,496

1,000

6

560

672

54

500

11

420

447

378

44

106

500

20

12

924

17

11

30

909

23

15

3

14

435

480

6

505

535

431

375

386

426

396

0

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

FY2018

FY2019

FY2020

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

11

Quarterly Operating Profit

Record-high quarterly earnings in the third quarter because of energy business growth and steady improvement of advertising business profitability. Corporate expense level remains unchanged.

（Millions of yen）

500

400

300

200

100

0

(100)

(200)

Adjustments (corporate expenses)

Others

Energy Business

105

Media Business

23

Advertising Business

266

295

332

150

164

(11)

2

80

122

(20)

(5)

6

(43)

(7)

43

19

2

16

53

(17)

0

(19)

14

(2)

(16)

(3)

(56)

(14)

(107)

(14)

(85)

(8)

(5)

(124)

(7)

(100)

(66)

(72)

(74) (93)

(75)

(77)

(7)

(74)

(87)

(2)

(78)

(78)

(68)

(68)

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

FY2018

FY2019

FY2020

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

12

Advertising Business Sales by Segment

Sales continue to decline due to measures to achieve the proper size of this business in order to become more profitable.

（Millions of yen）

1,000

900

800

700

600

500

400

300

200

100

0

Others

924

909

37

Smart Creation Service

82

Smart Resource Service

Down

19.5%

505

535

YoY

480

505

482

435

38

396

60

426

431

375

39

89

386

50

38

58

33

52

95

42

29

12

73

82

5

37

17

331

355

382

381

350

391

407

345

295

293

305

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

FY2018

FY2019

FY2020

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

13

Media Business Sales by Segment

Sales increased 10.5% YoY in the first three quarters but were down 49.0% YoY in

the third quarter. The fourth quarter is expected to be a large percentage of fiscal year sales.

60

50

）

40

of yen

（Millions

30

54

Down

49.0%

YoY

20

30

10

20

23

15

12

11

11

14

6

3

0

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

FY2018

FY2019

FY2020

*The first issue of Jichitai Works, magazine for local governments employees was on Dec. 22, 2017.

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

14

Energy Business Sales by Segment

Third quarter sales were 12.5% higher than in the second quarter, in part because of orders with the start of electricity services in the third quarter.The number of winning bids was 70, 83 and 329 in the first, second and third quarters, respectively.

Up

12.5%

QoQ

3,000

2,500

yen）

2,000

of

Millions

1,500

2,793

（

2,483

1,000

1,244

1,496

500

6

17

44

106

0

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

FY2018

FY2019

FY2020

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

15

3Q FY2020 Balance Sheet Highlight

Increase in

energy business

transaction

security deposits

Funds procured for the growth of working capital and other reasons

3Q FY2019

3Q FY2020

（Millions of yen）

Results

Comp.

Results

Comp.

Change

Cash and deposits

245

18.9%

526

13.8%

+280

Accounts

258

19.8%

1,497

39.4%

+1,239

receivable - trade

Inventories

476

36.6%

438

11.5%

(37)

Current assets

1,047

80.5%

2,772

72.9%

+1,724

Non-current assets

253

19.5%

1,029

27.1%

+776

Total assets

1,300

100.0%

3,802

100.0%

+2,501

Accounts payable - trade

583

44.9%

1,412

37.2%

+828

Short-term borrowings

－

－

356

9.4%

+356

Current portion of

86

6.7%

386

10.2%

+300

long-term borrowings

Current liabilities

830

63.9%

2,383

62.7%

+1,553

－

－

100

2.6

+100

Bonds payable

％

Long-term borrowings

256

19.7%

741

19.5%

+484

Non-current liabilities

256

19.7%

841

22.1%

+584

Total liabilities

1,087

83.6%

3,225

84.8%

+2,137

Total net assets

213

16.4%

576

15.2%

+363

Total liabilities

1,300

100.0%

3,802

100.0%

+2,501

and net assets

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

16

Ⅱ．FY2020 Outlook and Growth Strategies

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

17

FY2020 Plan (Income Statement)

The sales plan has been raised again and an earnings forecast has been announced. A very big increase in earnings is expected.

FY2018

FY2019

（Millions of yen）

Results

Results

YoY change

Net sales

2,269

3,862

+70.2％

Gross profit

759

1,039

+36.9％

SG&A expenses

881

952

+8.1％

Operating profit

(121)

87

Ordinary profit

(114)

95

Profit

(128)

75

FY2020

Plan

YoY change

14,300 +270.2％

850- 950 +876.7％ -

991.6％

840- 940 +781.1％ -

886.0％

600- 675 +693.9％ -

793.1％

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

18

Trend in Sales

16,000

14,300

14,000

12,000

）

10,000

of yen

（Millions

8,000

6,000

4,000

3,862

1,774

2,269

2,000

1,142

1,592

695

635*

512

87

142

198

331

0

FY2020

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019

（Plan）

*FY2014 was an irregular nine-month period because of a change in fiscal year-end.

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

19

FY2020 Sales Plan By Segment

16,000

Approx.

¥14.3billion

14,000

12,000

）

10,000

of yen

Millions（

8,000

Approx. ¥12.2billion

6,000

Approx.

¥3.8billion

4,000

Energy Business

Approx. ¥1.4billion

Media Business

2,000

Approx. ¥0.1billion

Approx. ¥0.13billion

Approx. ¥2.3billion

Advertising Business

Approx. ¥2.0billion

0

FY2019

FY2020

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

20

Growth Strategy (Summary)

  • Redefine the positioning of each business

Advertising Business

Media Business

Energy Business

Achieve the proper size to make this a profit-generating business

Position this business at the very top of upstream information flows

Continue growth and aim for consistent profitability, making this business the primary source of growth

  • Optimization of human resources

Reallocation of people, HOPE, INC's largest and most valuable resource

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

21

Business Development and Growth Phases

Business creation

Launch

Growth

Maturity

Decline

Earnings

Advertising Business

Energy Business

Media Business

Time

10-100

100

-110

110-

0-1 creation

1-10 search

seek new

expansion

profit creation

innovations

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

22

Trend in Operating Profit

（Millions of yen）

1,050

850- 950

850

650

Make investments

Generate earnings

450

250

145

56

87

3

23

50

(32)

0

(121)

(150)

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019

FY2020

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

23

Advertising Business Market Summary

HOPE, INC. created a new market with its advertising business, the company's original activity, and has provided advertising services to local governments for about 15 years.

HOPE, INC's share of this market is about 16%.

The advertising market in Japan

Approx. ¥5.9 trillion note1

The local government advertising market

Approx. ¥14.0 billion

Target market

note2

Approx. ¥2.2 billion note3 About 16% of the target market

Note 1: Source: Survey of Selected Service Industries (May. 2019), Ministry of Economy, Trade and Industry

Note 2: Estimate of target market size assuming that all local governments used advertising services

Note 3: FY2019 advertising business sales (excluding contract production of public info publications)

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

24

Advertising Business Growth Strategies

Achieving the proper size of this business by accepting orders for a smaller number of media while raising the gross profit of each medium with the goal of making advertising a "profit-generating business."

  • Gross profit per medium

Net sales

（Millions of yen）

Gross profit per medium

2,500

0.6

Approx. ¥0.51 million

Approx. ¥0.55million

2,000

Approx. ¥0.43 million

0.5

）

Approx. ¥0.37million

0.4

yen

1,500

of

（Millions

0.3

1,000

Approx. ¥0.30million

0.2

500

0.1

Net sales note

Gross profit per medium

0

0

FY2016

FY2017

FY2018

FY2019

FY2020

Note: Advertising business sales (excluding contract production of public information publications)

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

25

Media Business Market Summary

Substantial public-sector demand and still considerable growth potential

The market for promotions targeting local governments

still has much more potential,including public-private sector matching and measures to become more competitive

Market for promotions targeting local governments

Approx. ¥15.2 billion

Approx. ¥0.1 billion note 3

Potential market

Note 1:

Note 2:

Note 3:

Local govt.

Public-sector demand

Company

(except national govt., construction)

note

1

Approx. ¥8.68 trillion

Approx. ¥1.52 trillion

note 2

Portion for companies operating nationwide

1%

Assumes about 1% is used for promotional activities

(market for promotions targeting local governments)

Approx. ¥15.2 billion

Calculated by HOPE, INC. using Summary of Guide to Contracts in the Public Sector ‒ FY2018, The Small and Medium Enterprise Agency

HOPE, INC. estimates based on FY2018 Administrative Project Review, Ministry of Internal Affairs and Communications

FY2019 media business sales

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

26

Media Business Growth Strategies

Position this business at the very top of upstream information flows to serve as

  • link for public-private sector collaboration and for ties between local governments

Monitor/

Local govt.

collect info

･ Social issues

･ Need for the use

of private sector

partners

Contribute to market growth

Monitor

Companies

Need for ways to contact local governments

Actively provide various services

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

27

Energy Business Market Summary

Energy is the driver of growth ‒ The goals are more business volume growth and consistent profitability

＋

Leverage current

Submit bids for many new contracts by using company

business with local

registrations and other measures

governments

Japan's electricity market

Approx. ¥15trillion note 1

Electricity sales to local governments

Approx. ¥1trillion note 2

Target market

Approx. ¥7.3 billion note 3

HOPE, INC. serves less than 1%

of the target market

Note 1: Source: Electricity and Gas Market Surveillance Commission

Note 2: The target market as defined by HOPE, INC.

Note 3: Expected total sales of energy supplied for contracts received in FY2019

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

28

Energy Business Growth Strategies

HOPE, INC. made a full-scale start of the energy business in FY2019 but was unable to bid for many contracts because of the inability to meet past experience and other requirements. The number of bids increased in FY2020 due to the ability to meet the requirements for submitting bids for more contracts.

  • Number of bids submitted (only contracts where HOPE, INC. was eligible)

FY2019 actual (contracts)

FY2020 plan (contracts)

1,266

142

3,230

Successful bids

Bids submitted

Did not submit bids

Approx. 1,000

Approx. 3,500

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

29

Total Growth Strategies

Optimization of human resources

Reallocation of people, HOPE, INC's largest and most valuable resource

■ Number of employees (regular employees)

180

169

162

162

160

144

10

9

14

160

9

140

128

12

119

8

140

120

7

10

7

120

6

(Employees)

(Employees)

100

(Employees)

6

(Employees)

8

100

80

5

80

60

4

6

60

3

4

40

40

2

2

20

20

1

0

8

9

0

8

9

0

8

9

0

2020

2020

2020

201

201

201

201

201

201

Y

Y

Y

Y

Y

FY

Y

FY

FY

F

F

F

F

F

F

*Number of regular employees at the end of FY2018 and FY2019 and at the beginning of FY2020

12

5

3

8

9

2020

201

201

Y

FY

Y

F

F

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

30

Operating an advertising business specializing in local governments gives HOPE, INC. valuable experience and knowledge for developing and providing new services that precisely match the needs and issues of local governments.

Local government

Issues

A source of revenue Public-private sector

Cost reduction

collaboration

……

……

A source of value for society

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

31

FY2020 Investor Relations Activities

Overseas IR activities have been canceled because of COVID-19, but the FY2020 goal for meetings with institutional investors has been achieved.

  • Number of institutional investor visits

70

Achieved the goal of 50 visits

60

50

）

（Visits

40

30

60

20

10

15

9

6

0

FY2017

FY2018

FY2019

FY2020

（plan）

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

32

Ⅲ．Company overview

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

33

Corporate Philosophy

Providing new forms of value to citizens through local governments and

aim for more growth of our business and our people

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

34

Company Overview

Company name Established Representative Securities code Employees Business

Head office

History

HOPE, INC.

Feb. 2005 (fiscal year-end: Jun.)

Takayasu Tokitsu, CEO

6195 (listed on the TSE-Mothers/FSEQ-Board on Jun. 15, 2016) 170 (as of the end of March 2020, including temporary employees)

Providing services specializing in local governments

(Advertising Business, Media Business, Energy Business)

MG Yakuin Building 1-14-5, Yakuin, Chuo-ku, Fukuoka, Japan

Feb. 2005

Founded

Aug. 2014

Started BtoG marketing business

Jun. 2006

Launched Smart Resource Service

Jun. 2016

Listed on TSE-Mothers and FSE Q-Board

Sep. 2013

Launched Smart Creation Service

Dec. 2017

Issued the first edition of"Jichitai Works"

"Machilet"

Mar. 2018

Registered as an electricity retailer and

Jul. 2014

Launched"Machiiro,"an app that

launched"GENEWAT"

connects local governments and

local

residents

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

35

Business Segments and Services

Advertising Business

Smart Resource Service

Smart Creation Service

mamaro

Machilet

Media Business

Energy Business

Jichitai Works

Jichitai Clip

*Beginning with FY2020, Machiiro has been moved from the media segment to others.

*The mamaro baby care cubicle service is provided by Trim Inc., which developed and manufactures this cubicle. HOPE, INC. has an alliance with Trim that allows submitting proposals to local governments for the use of mamaro. Trim owns the intellectual property rights for mamaro.

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

36

Advertising Business

Providing new forms of value to citizens

Corporate Philosophy

through local governments

Local

government

Utilization

assets

・Public info publications,

・Use of media space

local govt. websites

・Free joint local govt/

・Information distributed to residents

HOPE, INC. publications

Additional local government revenue

Local govt.

A source of

Opportunities

Companies

revenue

for PR

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

37

Advertising Business 1 Smart Resource Service

Local governments sell ad space

A new source of revenue for local governments

in their publications

Purchase of

Sale of

Local govt.

ad space

ad space

Companies

■ Business model

Payment for

Payment for

ad space

ad space

Ad

■ Ad in a public info publication

報

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上地さん司会のもと、社長の挨拶で始まっ た株主総会。松山監査役からの監査報告、 各サービスの現況を伝える事業報告の後、 今回の議題である取締役 5 名（社内取締役 4 名・社外取締役 1 名

上地さん司会のもと、社長の挨拶で始まっ た株主総会。松山監査役からの監査報告、 各サービスの現況を伝える事業報告の後、 今回の議題である取締役 5 名（社内取締役 4 名・社外取締役 1 名

Ad

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

38

Advertising Business 2 Smart Creation Service(Machilet)

Production and supply of local governments. pamphlets for various fields with space for ads

Free joint production of pamphlets with even more useful info

Agreement

Sale of ad space

Local govt.

Companies

■ Business model

Production

Payment for

and supply

ad space

of pamphlets

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

39

Advertising Business Contracts with Local Governments

Smart Resource Service

500

449

458

462

400

309

(Contracts)

300

240

200

100

0

FY2016

FY2017

FY2018

FY2019

3Q

FY2020

Smart Creation Service (Machilet)

1,000

839

Approx.

800

693

730

(Pamphlets)

600

400

325

544

200

111

(1Q-3Qorders)

0

FY2016

FY2017

FY2018

FY2019

FY2020

plan

*For two or more different contracts with the same local government, each contract is counted separately.

*The number of Machilet pamphlets is the number issued during each fiscal year, including pamphlets planned to be issued.

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

40

Advertising Business Major Business Characteristics

Smart Resource Service

Smart Creation Service (Machilet)

Bids used to purchase products

Most production and sales

1

1

・Big swings in bids (cost of purchases)

at the same time of the year

・Risk of inability to purchase a sufficient volume

The production and sales period starts

due to bids of other companies, etc.

after signing contracts with local governments

Large pct. of sales in the fourth quarter

2

Seasonal nature of purchases

2

and inventory risk

About 80% of pamphlets are issued between Apr. and Jun.

・Most Smart Resource purchases are single

▶ Most sales and cost of sales are recorded in the fourth quarter

transactions for an entire year (Apr. to Mar.),

resulting in risk for holding large inventories

Pamphlets issued in FY2019

400

3

Effect on the next fiscal year

Production and sales period

300

・Most purchases using bids submitted during

(Pamphlets)

the peak season for governments. contract bids will have

200

an effect on the next fiscal year all the way to Mar.

100

0

.2018

.2018

.2018

.2018

.2018

.2019

.2019

.2019

.2019

2019

.2019

.2018

May

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

Jun

2018

2019

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

41

Media Business

Providing new forms of value to citizens

Corporate Philosophy

through local governments

Local govt.

Access

information

points

Public-private sector collaboration

Use the private

Opportunity to

Local govt.

sector to

collaborate with

Companies

solve issues

public sector

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

42

Media Business 1 Jichitai Works

A govt. magazine with new info and ideas

A HOPE, INC. publication with useful info and ideas relating for jobs

for local govt. employees

Collect

Interaction

Local govt.

information

withlocal govt.

Companies

Provide

Payment

information

for ad space

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

43

Media Business 2 BtoG Marketing

Market need survey and sales

Leveraging our relationships with local governments

services for local governments

Support for companies with products and services for local govt.

Reports,

Local govt.

other info

Companies

Sales agent,

Requests for

research, other

services

assistance

  • Contracted Services (Examples)

● Sales agent for translation tool ………………… 100 municipalities

● Disaster response product market survey ……… 154 municipalities

● Sales agent for office efficiency tool ………… 100 municipalities

● Smart city market survey ………………………………………… 500 municipalities

● Production and distribution

……………………… 1,788 municipalities

● Emergency response service …………………………………… 31 municipalities

of marketing materials

market survey

● Emergency preparedness item

● Direct marketing telemarketing …………100 municipalities x 4 times

packaging

…… 11,000 departments in charge

600 municipalities x 1 time

● Employee communication tool …………………………… 500 municipalities

● Medical services market survey …………………100 municipalities

sales agent

● Sales agent for welfare services …………………… 60 municipalities

● Production of marketing flyers for local governments

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

44

Media Business 3 Machiiro Jichitai Clip

An app linking local governments and residents

● Sends the latest info from the registered local govt.

● Nationwide local govt. public info publications

Machiiro

● Content for local governments and regions

■ 541,849

■ 897cumulative

Local govt.

cumulative downloads

local govt. contracts

share of about 50％

* Machiiro screen sample

Owned media

Jichitai Clip

  • Roundup posts involving local govt.
  • Unique activities

and public info publication profiles

  • Articles about HOPE, INC. business activities

*The Machikago app, which distributes local information about raising children, will stop operating on Jun. 30, 2020.

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

45

Media Business Jichitai Works Magazine Issues

(Issue)

12

10

8

6

Special editions

Topic-specific editions

Standard editions

11

4

3

・Tourism/Foreign Tourist Edition

・Disaster Readiness/

Crisis Management Edition

・Home Town Taxes Edition

7

・Tourism/Foreign Tourist Edition Vol. 2

・Disaster Readiness/

Crisis Management Edition Vol. 2

・Education and ICT Edition

・Tourism/Foreign Tourist Edition Vol. 3

・Disaster Readiness/

Crisis Management Edition Vol. 3

4

2

0

5

4

2

2

FY2018

FY2019

1Q-3Q FY2020

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

46

Energy Business

Corporate Philosophy

Providing new forms of value to citizens

through local governments

Local govt.

New electricity

electricity use

service

Lower cost of

electricity

Local govt.

Cost reduction

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

47

Energy Business

Start of the electricity sales business

■ Business model

GENEWAT uses the new perception of"electricity as a generic product"for supplying electricity at a lower price in order to help local governments reduce costs.

・Sale of electricity

Electricity

*Business does not include

generation and distribution

Local govt.

Payments ・HOPE, INC. posts sales/cost of sales based on monthly utilization

Sewage

Schools

City halls

plants

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

48

Energy Business Main Business Characteristics

  • Contracts are received by submitting bids
    • Business may be lost to competing bids of other companies when new bidding takes place every year
  • Vulnerability to the economy and weather
    • Electricity sales may vary depending on the health of the economy, unseasonable summer or winter weather, and other weather events
    • Wholesale prices of electricity may vary depending on the cost of buying electricity, the cost of fuel,
      and the balance between the supply and demand of electricity
  • A low-cost business
    • When determining bids, the energy business utilizes bidding expertise acquired over many years in the advertising business

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

49

Additional Local Govt. Revenue

Since HOPE, INC's inception, the advertising business has generated revenue of about ¥7.66 billion for clients

(From HOPE, INC's inception through 3Q FY2020)

Cost reduction of about ¥11.5 billion since the start of the energy business

(Estimated cost reduction during the entire length of all current contracts)

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

50

Main Shareholders

(As of the end of 2Q FY2020)

  • Number of shares and shareholders

Total number of authorized shares

4,712,000 shares

Number of shares issued

1,394,200 shares

Number of shareholders

1,126

(with voting rights)

  • Shareholder distribution by type of shareholders

Other Japanese entities 1.1%

Overseas entities 7.9%

Financial institutions/ securities companies

7.2%

Company

executives*

  • Top 10 shareholders

No.

Name of shareholders

Number of shares held

321,100shares

267,500shares

72,000shares

51,100shares

41,058shares

28,700shares

Individual shareholder

25,100shares

Individuals,

others

40.8%

* Includes their private asset managers

43.1%

20,965shares

Individual shareholder

20,600shares

Individual shareholder

15,700shares

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

51

Stock Information

Period

Jun. 15, 2016 to Mar. 31, 2020

IPO price

¥350

Initial price

¥805（Jun. 15, 2016）

Highest price since IPO *

¥3,585（Dec. 30, 2019）

Lowest price since IPO *

¥220（Dec. 25, 2018）

*Including stock prices during trading hours.

*Stock prices are adjusted to reflect a 1-to-4 stock split.

FY2015

FY2016

FY2017

FY2018

FY2019

ROE

23.7％

23.9％

3.2％

（25.4）％

15.7％

PER*

―

27.9x

116.3x

―

32.3x

*Calculated based on the stock price on the settlement date.

■ Stock price (from the listing date to Mar. 31, 2020)

(¥)

3,500

Dec. 10

Announcement

3,000

May 29

of 1-to-4 stock split

May 7

2,500

Business alliance

Announcement

with en-japan

of the 2nd shareholder benefits

Aug. 8

2,000

Jul. 20

Mar. 22

Earnings

Aug. 9

Apr. 14

Sep. 3

announcement

Announcement

Sales partner

Launched

May 17

Nov. 24

1,500

Earnings

of the 1st

agreement

GENEWAT,

Changed names

Announcement of the 3rd

announcement

Alliance with

shareholder

with COLOPL, Inc.

an electricity

of business segments

PR Times

benefits

retailer business

and services

shareholder benefits

1,000

500

Feb. 6

Commemorative

dividend

0

Jun. 19

Mar. 23

Aug. 9

Mar. 29

Aug. 9

May 27

Sep. 26

Feb. 10

Announcement

Comprehensive business

of downward

Earnings

Joint investment in Yame

Earnings

Announcement

Renewal of

Business alliance

alliance with Trim

earnings forecast

announcement

Satoyamachintai Co., Ltd.

announcement

of upward earnings forecast

corporate logo

with Eltes

FY2017

FY2018

FY2019

FY2020

Jun. 15, 2016

Jun. 30, 2017

Jun. 30, 2018

Jun. 30, 2019

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

52

HOPE, INC. Major Media Exposure

Date

Summary

Jun. 7, 2016

Investment Information ‒ New IPO Stocks,

Nihon Keizai Shimbun

Sep. 1, 2016

Included in an article in the Oct. issue

of Project Design magazine

Sep. 25, 2016

Information about HOPE, INC. on the TBS TV

program Gacchiri Monday!

Nov. 7, 2016

Interview with the HOPE, INC. president in

Michishirube, Nihon Keizai Shimbun

Jan. 10, 2017

Interview with the HOPE, INC. president in

Dash Venture, Nihon Sangyo Shimbun

Jan. 16, 2017

Interview with the HOPE, INC. president in

Fuji Sankei Business i.

Feb. 23, 2017

Interview with the HOPE, INC. president in

God of Happiness Diary, Kabushiki Shimbun

Mar. 24, 2017

Included in The First Companies 2017,

an article about newly listed companies

May 12, 2017

Included in Gatchiri Monday! The Secret of

Making Money on 40 Little Known Companies

Aug. 3, 2017

Interview with the HOPE, INC. president in CEOs Explain

Management Strategies, Nikkei Sangyo Shimbun

Date

Summary

Aug. 7, 2017

Information about HOPE, INC. in Japan Digest,

Nihon Keizai Shimbun

Jan. 18, 2018

Information about HOPE, INC's electricity sales business

in the economy section of the Yomiuri Shimbun

Information about the Machiiro app for

Feb. 15, 2018

checking how much money is coming,

Nonstop TV program of Fuji Television

Apr. 23, 2018

Information about HOPE, INC. on the TV Asahi

Bakumon Fund! Money Success Graph

May 21, 2018

HOPE, INC. president featured in a daily column on

business executives in the Nihon Keizai Shimbun

Information about a HOPE, INC. Halloween event on

Oct. 31, 2018

NHK TV programs Rokuichi! Fukuoka, NHK News 7,

News Watch 9, and News 11

Jan. 5, 2019

Information about the mamoro baby care

cubicle on Kyodo Tsushin

Dec. 1, 2019

Information about HOPE, INC. in an article

about innovative companies in Nikkei Veritas

Dec. 31, 2019

Included in an article about companies

with the biggest market cap increases of 2019,

Nihon Keizai Shimbun

Jan. 31, 2020

Information about the condolence guidebook

of HOPE, INC's Machilet, Chunichi Shimbun

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

53

Disclaimer

Information in this presentation includes forward-looking statements that are based on the current outlook, forecasts and assumptions vulnerable to risk factors. As a result, this information incorporates uncertainties that may cause actual performance to differ from these statements.

Risk factors and uncertainties include economic trends in Japan and other countries, such as changes in industries and markets, interest rates, and foreign exchange rates.

HOPE, INC. has no obligation to update or revise forward-looking statements in this presentation even in the event of new information or events.

－ IR contact －

HOPE, INC.

E-Mail: ir@zaigenkakuho.com

URL: https://www.zaigenkakuho.com

Copyright (C) 2020 HOPE, INC. All Rights Reserved.

54

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Hope Inc. published this content on 31 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2020 07:05:15 UTC