Hope : Results of Operations for the Cumulative 2Q of the Fiscal Year Ending June 30, 2021 (FY2021)

Cumulative 2Q of the Fiscal Year Ending June 30, 2021 (FY2021)

Results of Operations

Explanatory Material

February 12, 2021

HOPE, INC.

[6195]

Corporate Philosophy

Providing new value to citizens through local governments, and promoting growth of the company and its people

Company Overview

Company name

HOPE, INC.

Established

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

Representative

Takayasu Tokitsu, CEO

Securities code

6195 (listed on the TSE-Mothers/FSE Q-Board on Jun. 15, 2016)

Employees

(consolidated)

173 (as of the end of Dec. 2020, including temporary employees)

Business

Services created specifically for local governments

(Advertising Business, Energy Business, Media Business)

Head office

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

History

Feb. 2005Founded

Jun. 2006Launched SMART RESOURCE SERVICE

Sep. 2013Launched SMART CREATION SERVICE "Machilet"

Jul. 2014

Launched "Machiiro," an app that connects local governments and local residentsAug. 2014Started B-to-G marketing business

Jun. 2016Listed on TSE-Mothers and FSE Q-Board

Dec. 2017Issued the first edition of"Jichitai Works"

Mar. 2018Registered as an electricity retailer and launched "GENEWAT"

May 2020Started Jichitai Works HAxSH

Aug. 2020Announced the medium-term management plan [HOPE NEXT 3]

Oct. 2020Established a wholly owned subsidiary HOPE ENERGY, INC.

Nov. 2020Developed AI for forecasting market prices of electricity (energy business) Started supplying Kai, a web conferencing tool created in Japan

Contents

• I. Cumulative 2Q FY2021 Financial Highlights

• II. Topics

• III. FY2021 Outlook

• IV. Growth Strategies

• V. 2020 VISION

• VI. Appendices

I. Cumulative 2Q FY2021 Financial Highlights

Application of the netting method in the energy business

• • Unless specified otherwise, all figures in this presentation use the netting method* that is expected to be used due to the application of the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan Statement No. 29).

• • The use of this standard is required beginning with the fiscal year ending in Jun. 2022. However, because the performance of the energy business, which is a major component of consolidated results of operations, has a significant effect on investment decisions, both net and gross figures are shown in this presentation in order to facilitate easy comparisons with performance in prior years and to provide a thorough explanation of results of operations.

• • The application of the netting method will have no effect on earnings at all levels.

• • With the netting method, in accordance with the renewable energy feed-in tariff system in Japan, fees received from customers (sales) and payments to the cost adjustment organization (cost of sales), which are equal to fees received, offset each other, resulting in the recognition of net revenue. Figures that do not use netting are designated in this presentation as using the gross recognition method.

Start of consolidated financial statements

• • Due to the establishment of HOPE ENERGY, INC., which is a wholly owned subsidiary, HOPE, INC. changed from non-consolidated to consolidated financial statements beginning with the second quarter of the fiscal year ending in Jun. 2021. As a result, this presentation has both consolidated and non-consolidated financial information.

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

Impact of COVID-19

Response to COVID-19

Started a COVID-19 Response Team

Monitors health of employees and makes preparations for responses to outbreaks.

Established a teleworking infrastructure

Created an environment that facilitates teleworking for a broad range of tasks.

Online activities and no outings for business

As a rule, the internet is used for all meetings with people outside the company.

Effect on business operations

Advertising/Media Business

No significant effect at this time, but some companies may start to reduce their advertising activities. There is also a risk that financial difficulties at advertisers may delay payments for some receivables or make it impossible to collect some receivables.

Energy Business

Although the downturn in the demand for electricity associated with temporary closings of schools and other public-sector buildings has stopped, the COVID-19 crisis may continue to have effects on electricity demand and the purchases of electricity.

Cumulative 2Q FY2021 Financial Summary (Jul. - Dec. 2020)

Sales were up 177.9% from one year earlier to an all-time cumulative 2Q high. Big negative impact on operating

Cumulative 2Q

profit from the sharp increase in the cost of electricity

Results

˙Net sales ¥11,718 million (up 177.9% YoY)

(consolidated)

ʪGross recognition method: ¥14,044 millionʫ

(¥(40) million in cumulative 2Q FY2020)

˙Operating profit ¥259 million

Advertising Business

Sales down due to measures to achieve the proper size of this business but segment profit improved

Energy Business

Big increases due to the higher cost of purchasing electricity as the price on the Japan Electricity Power Exchange (JEPX) increased rapidly in the second half of December

Media Business

Sales and earnings growth due to an increase in B-to-G marketing orders

˙Net sales

¥657 million (down 19.1% YoY)

˙Segment profit

¥22 million (up 154.3% YoY)

˙Net sales ¥10,989 million (up 226.6% YoY)

ʪGross recognition method: ¥13,314 millionʫ

˙Segment profit

¥390 million (up 297.5% YoY)

˙ Net sales

¥70 million (up 85.8% YoY)

˙ Segment profit

¥12 million

(¥(110) thousand in cumulative 2Q FY2020)

Cumulative 2Q FY2021 Income Statement Highlights: YoY Change

• • Changed to consolidated financial statements in the second quarter following the establishment of wholly owned subsidiary HOPE ENERGY.

(Millions of yen)

Cumulative 2Q FY2020

Results (non-consolidated)	Comp.
4,216 ʪ4,832ʫ
422	10.0% ʪ8.7%ʫ
462	11.0% ʪ9.6%ʫ
(40)	(1.0)% ʪ (0.8)%ʫ
(42)	(1.0)% ʪ (0.9)%ʫ
(50)	(1.2)% ʪ (1.0)%ʫ
(9.01) yen * Adjusted to reflect the 1-to-4 stock split effective on Jan. 1, 2020

Cumulative 2Q FY2021

Results (consolidated)	Comp.	YoY change
11,718 ʪ14,044ʫ	+177.9%
738	6.3% ʪ5.3%ʫ	+74.8%
479	4.1% ʪ3.4%ʫ	+3.6%
259	2.2% ʪ1.8%ʫ
243	2.1% ʪ1.7%ʫ
158	1.4% ʪ1.1%ʫ
26.29 yen

*ʪ ʫis figures using the gross recognition method. *Cumulative 2Q FY2020 (non-consolidated) figures are the revised figures announced on May 13, 2020.

Cumulative 2Q FY2021 Income Statement Highlights: Performance vs. Forecasts

• • Although the earnings forecasts were increased on Dec. 14 because of the performance of the energy business, the sharp increase in the price of electricity on the JEPX that started on Dec. 16 caused the cost of sales to increase dramatically. As a result, earnings at all levels ended up at the bottom of the initial forecast range.

Cumulative 2Q FY2021

(Millions of yen)

Net sales

Gross profit

SG&A expenses

Operating profit

Ordinary profit

Profit attributable to owners of parent

Net income per share

Results (consolidated)	Initial forecast (non-consolidated) (announced on Aug. 11, 2020)	Revised forecast (non-consolidated) (announced on Dec. 14, 2020)
11,718ʪ14,044ʫ	12,200ʪ14,450ʫ	11,610ʪ13,970ʫ
738
479
259	250 - 490	900 - 950
243	230 - 470	886 - 936
158	150 - 320	620 - 655
26.29 yen	25.09 - 53.53 yen	102.79 - 108.60 yen

*ʪ ʫis figures using the gross recognition method.

(Reference) More information is in the Jan. 15, 2021 news release titled "Effect on HOPE, INC. of the Rapid Increase in the JEPX Price of Electricity and Upcoming Actions" (Japanese version only).https://ssl4.eir-parts.net/doc/6195/tdnet/1919946/00.pdf

Quarterly Sales

1Q

1Q

2Q

3Q

4Q

FY2019 (non-consolidated)

*ʪ ʫis figures using the gross recognition method.

1Q

2Q

3Q

4Q

FY2020 (non-consolidated)

(non-consolidated)

2Q

(consolidated)

FY2021

Quarterly Operating Profit

• • A ¥427 million operating loss in 2Q FY2021 because of the significant negative impact of the higher cost of electricity in the energy business.

• • Corporate expenses were about the same as in 2Q FY2020.

1,200

1,000

800

(Millionsofyen)

600

400

200

0

(200)

(400)

(600)

*Standards for the allocation of corporate expenses were revised to more accurately show segment earnings. As a result, segment earnings and corporate expenses have changed beginning with 1Q FY2020. The changes were not applied to FY2019 because the effect is negligible. The new standards have no effect on total earnings.

Sales by Segment

• • Productivity continues to improve because of measures to achieve the proper size of this business.

(Millionsofyen)

1Q

2Q

3Q

4Q

FY2019 (non-consolidated)

1Q

2Q

3Q

4Q

FY2020 (non-consolidated)

1Q

(non-consolidated)

2Q

(consolidated)

FY2021

Energy Business Sales by Segment

1Q

1Q

2Q

3Q

4Q

FY2019 (non-consolidated)

˙ Winning Bids

*As of confirmation of result of bids

FY2019

FY2020

FY2021

ˎ ˎ

1Q (Jul.-Sep.)

2Q (Oct.-Dec.)

3Q (Jan.-Mar.)

4Q (Apr.-Jun.)

Total

1Q

2Q

3Q

4Q

FY2020 (non-consolidated)

(non-consolidated)

2Q

(consolidated)

FY2021

*ʪ ʫis figures using the gross recognition method.

Not disclosed	Not disclosed	Not disclosed	Not disclosed	142
70	96	337	77	580
177	201	378

Media Business Sales by Segment

• • Orders from companies for online seminars and other services increased because of activities to strengthen the Jichitai Works brand.

90

(Millionsofyen)

80

70

60

50

40

30

20

10

0

1Q

1Q

2Q

3Q

4Q

FY2019 (non-consolidated)

1Q

2Q

3Q

FY2020 (non-consolidated)

*The first issue of Jichitai Works magazine was Dec. 22, 2017 and the magazine's new design and format started in Jun. 2020.

4Q

(non-consolidated)

2Q

(consolidated)

FY2021

2Q FY2021 Balance Sheet Highlights

2Q FY2020

2Q FY2021

(Millions of yen)

Results

(non-consolidated)

Comp.

Results (consolidated)

Comp.

Change

Cash and deposits

48.4% +3,606

Accounts receivable-trade

752 1,365

23.0% 41.8% 9.1%

4,358 3,746

41.6% +2,381

Inventories

298

252

2.8% (46)

Current assets

2,580

78.9% 21.1% 100.0%

8,515

94.5% +5,934

Non-current assets

5.5% (196)

Total assets

690 3,270

493 9,008

100.0% +5,737

Accounts payable-trade

1,437

4,710

52.3% +3,272

Short-term borrowings

Current portion of long-term borrowings

266

3.0% (13)

Current liabilities

326 279

43.9% 10.0% 8.6%

ʔ

ʔ (326)

2,271

69.4%

5,389

59.8%

+3,118

Bonds payable

ʔ

ʔ

1.1% +100

Long-term borrowings

520

15.9%

100 563

6.3% +43

Non-current liabilities

7.4% +143

Total liabilities

520 2,791

15.9% 85.3%

663 6,053

67.2%

+3,261

Total net assets

Total liabilities and net assets

479 3,270

14.7% 100.0%

2,955 9,008

32.8% 100.0%

+2,475 +5,737

*2Q FY2020 (non-consolidated) figures are the revised figures announced on May 13, 2020.

• • Operating cash flows were positive in the first and second quarters.

• 1 Cash flows

Cumulative 2Q FY2020

Cumulative 2Q FY2021

(Millions of yen)

(non-consolidated)

(consolidated)

Change

2

Exercise of share acquisition rights sold through a third-party allotment

HOPE, INC. announced on Aug. 11, 2020 the sale of 4,000 share acquisition rights (400,000 shares of stock) through a third-party allotment. As of the end of Dec. 2020, 3,000 rights had been exercised (300,000 shares of stock), resulting in proceeds of about ¥1.6 billion.

(Reference) • Jan. 4, 2021 news release "Notice of Monthly Exercise of the Seventh Issue of Share Acquisition Rights Sold Through a Third-party Allotment

(with Provisions for Exercise Price Revisions and Permission for Exercise of Rights)" (Japanese version only)https://ssl4.eir-parts.net/doc/6195/tdnet/1916857/00.pdf

• • Dec. 1, 2020 news release "Notice of Monthly Exercise of the Seventh Issue of Share Acquisition Rights Sold Through a Third-party Allotment

(with Provisions for Exercise Price Revisions and Permission for Exercise of Rights)" (Japanese version only)https://ssl4.eir-parts.net/doc/6195/tdnet/1910320/00.pdf

• • Actions under consideration to improve financial soundness.

Assumptions and Major Expected Risk Factors

• • Expect a large operating loss in the third quarter because of the rapid increase in the JEPX price of electricity that started in the middle of Dec. 2020

• • Financial risk will increase because of the upcoming need to make pay power shortage imbalance fees. These fees are required when a company selling electricity is unable to supply the required amount of electricity over any 30-minute period and must purchase electricity from a utility to cover the shortfall.

Actions

1 Stabilize energy business earnings

2 Stabilize cash flows

• • Market price volatility risk

  Proposals for new risk management policies to reduce vulnerability to the volatility of market prices of electricity, such as by adjusting the volume of electricity purchased on the JEPX and other sources for each area and season

• • Installment payments of the Jan. 2021 imbalance fee

  After meeting the requirements of the Ministry of Economy, Trade and Industry program for imbalance fee payments, we plan to apply for this program and pay the imbalance fee in five installments beginning in Apr. 2021

* For more information about the Ministry of Economy, Trade and Industry response on Jan. 29, 2021 to the sudden increase in the price of wholesale electricityhttps://www.meti.go.jp/press/2020/01/20210129002/20210129002.html

• • Measures concerning debt covenants

  Discussions are under way with financial institutions to prevent the exercise of the acceleration clause, requiring the immediate repayment of all debt

• • Procurement of funds

  Discussions are under way with financial institutions to increase the overdraft facility and receive additional loans. We are also considering many other ways to procure funds, including the sale of stock using a third-party allotment.

II. Topics

Topic 1. Kai - A web conferencing system created in Japan for local governments

The Kai web conferencing service started on Nov. 16, 2020

Conferences / Interviews / Meetings

Digital support for many types of local government meetings and other activities

Main feature	Easy to start using - No registrations and only a single link This system increases the convenience of local government services and other activities for residents and is expected to become widely used. The goal is expansion to nationwide use

Contributes to the local government digital transformation and functions as an information infrastructure

The first step of the Government Employee Platform Concept

(Reference) More information is in the Nov. 16, 2020 news release titled "HOPE, INC. Formed a Business Alliance with NEOLAB for Supporting the Local Government Digital Transformation - Aiming for the Widespread Use of the Kai Web Conferencing Tool Created in Japan that Local Governments Can Use with Confidence" (Japanese version only).https://ssl4.eir-parts.net/doc/6195/tdnet/1906927/00.pdf

Topic 2. HOPE, INC.'s First Alliance with a Local Government

• • A private-public sector alliance agreement between HOPE, INC. and the city of Ogori (Fukuoka prefecture) was signed on Dec. 23, 2020.

• • This was HOPE, INC.'s first public-sector alliance and activities will continue to establish more alliances.

˙ Planned alliance activities

• 1 Trial for Kai

  Trial for using Kai for online government services,meetings with people in other locations, and other purposes

• 2 Assistance for efficient data collection involving public-private sector alliances

  Use of Jichitai Works HAxSH by all employees of the city of Ogori

• 3 Seminars

  Seminars led by HOPE INC.'s employees for employees of the city of Ogori

4 Distribution of information about the alliance with Ogori

An interview with the mayor, activities based on this alliance and other information will be distributed using Jichitai Works, and Jichitai Works Web

(Reference) More information is in the Dec. 23, 2020 news release titled "HOPE, INC. and City of Ogori in Fukuoka Prefecture Sign a Public-Private Sector Alliance Agreement - The First HOPE INC.'s Public-Private Sector Alliance with Activities for More Alliances" (Japanese version only).https://ssl4.eir-parts.net/doc/6195/tdnet/1915113/00.pdf

III. FY2021 Outlook

FY2021 Forecast

• • We are no longer announcing earnings forecasts for FY2021 because of the difficulty of determining an outlook due to the effects of the sharp increase in the price of electricity on the JEPX that started in Dec. 2020.

(Millions of yen)

FY2021 non-consolidated forecast

(announced on Aug. 11, 2020)

FY2021 consolidated forecast

(announced on Jan. 29, 2021)

(Reference) FY2020 results

Net sales	Operating profit	Ordinary profit	Profit attributable to owners of parent
25,300 ʪ29,900ʫ	1,250 r 1,750	1,230 r 1,730	830 r 1,170
25,320 ʪ29,920ʫ
12,470 ʪ14,407ʫ	1,020	1,012	665

*ʪ ʫis figures using the gross recognition method.

* There are no differences between the consolidated and non-consolidated forecasts for FY2021.

(Reference) More information is in the Jan. 29, 2021 news release titled "Revisions to Non-consolidated Forecast and Announcement of Consolidated Forecast Due to Start of Consolidated Financial Statements" (Japanese version only).https://ssl4.eir-parts.net/doc/6195/tdnet/1924250/00.pdf

FY2021 Plan (Income Statement)

FY2019

FY2020

FY2021

(Millions of yen)

Plan (consolidated)	YoY change
25,320 ʪ29,920ʫ	+103.0% ʪ+107.7%ʫ

* More information is in the Jan. 29, 2021 news release titled "Revisions to Non-consolidated Forecast and Announcement of Consolidated Forecast Due to Start of Consol-idated Financial Statements" (Japanese version only).https://ssl4.eir-parts.net/doc/6195/tdnet/1924250/00.pdf *ʪ ʫis figures using the gross recognition method.

* Net income per share is adjusted to reflect the 1-to-4 stock split effective on Jan. 1, 2020.

Consistent Sales Growth

30,000

25,000

(Millionsofyen)

20,000

15,000

10,000

5,000

0

ʪ14,407ʫ

3,654 ʪ3,862ʫ

87 142 198 331 512 695 635 1,142 1,592 2,269 1,774

FY2008

FY2009

FY2010

FY2011

FY2012

Non-consolidated

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

*ʪ ʫis figures using the gross recognition method.

25,320

ʪ29,920ʫ

Consolidated

FY2021 Business Segment Sales Plan

30

25

(Billionsofyen)

20

15

10

5

0

FY2021

*ʪ ʫis figures using the gross recognition method.

FY2020

IV. Growth Strategies

Business Development and Growth Phases

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 16 years.

• • HOPE, INC's share of this market is about 12.8%.

*1 Source: Survey of Selected Service Industries (Nov. 2020), Ministry of Economy, Trade and Industry *2 Estimate of target market size assuming that all local governments used advertising services

Approx. ¥1.8 billion *3

*3 FY2020 advertising business sales (excluding contract production of public info publications)

Target market

About 12.8% of the target market

FY2021 Policy

• • Continuing to achieve the proper size of this business to make advertising a profit-generating business.

• • Gross profit per medium is decreasing, but the goal is to use SG&A expenses more efficiently.

˙ Gross profit per medium

Net sales*

Gross profit per medium

(Millionsofyen)

2,500

2,000

1,500

1,000

500

0

FY2018 Non-consolidated

FY2016

FY2017

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

FY2019

FY2020

FY2021

Consolidated

0.6

0.5

0.4

0.3

(Millionsofyen)

0.2

0.1

0

Advertising Business Business Strategy

• • Achieve the proper size of this business (sales, people) to continue improving profitability ‎ Make advertising a profit-generating business

• • Over a medium term, reduce the tendency for the 4Q to account for most sales and earnings, use expenses more efficiently, and increase the unit price of individual orders in this business

(Millionsofyen)

FY2016

(Millionsofyen)

FY2017

FY2018

FY2019

FY2020

FY2021

FY2022

FY2023

Non-consolidated

Consolidated

*FY2016 and FY2017 segment profit are provisional figures using the same basis as for the current segment profit because no segment profit was announced in these two fiscal years.

Energy Business Market Summary

Leverage current business with local governments

Submit bids for new contracts by taking advantage of existing vendor registrations with the local governments and other measures

Approx. ¥33.8 billion *3 target market

Target market

HOPE, INC. serves less

than 3.3% of the

*1 Source: Electricity and Gas Market Surveillance Commission *2 The target market as defined by HOPE, INC.

*3 Expected total sales of energy supplied for contracts received in FY2020

FY2021 Policy

• • In FY2020, the number of energy contracts open for bidding was much higher than expected.

• • In FY2021, we expect only a small increase in the number of energy contracts open for bidding.

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

FY2020 plan/actual (contracts)

FY2021 plan (contracts)

Successful bids

Plan

Total : Approx. 4,500

Bids submitted

Did not submit bids

Total : Approx. 6,000

Total : Approx. 6,300(estimate)

Media Business Market Summary

• • Substantial public-sector demand and still considerable growth potential

*3 FY2020 media business sales

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

Local govt.

Companies

Approx. ¥8.68 trillion * 1

Approx. ¥1.52 trillion * 2

Approx. ¥0.13 billion * 3

1%

Assumes about 1% is used for promotional activities

(market for promotions targeting local governments)

Approx. ¥15.2 billion

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

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

Communications

Position this business at the very top of upstream information flows to serve as a link for public-private sector collaboration and for ties between local governments

Contribute to market growth

Provide many types of services

• • Broad range of activities using the Jichitai Works brand

• • More matching by using the internet, telemarketing and other methods

Business Strategy

The preeminent upstream source of local government information

Business strengthening, support and creation made possible by the local government database

Use the Jichitai Works brand to distribute information

Reexamination of the HOPE NEXT 3 Medium-term Management Plan

• • We plan to create a new HOPE NEXT 3.

• ˙ Assumption

  • • The original HOPE NEXT 3 (announced on Aug. 11, 2020) was based on the assumption that the energy business will be a very significant component of HOPE, INC.'s business portfolio.

• ˙ Reason and stance for a new plan

  • • Although the Dec. 2020 surge in the JEPX price of electricity was a highly unusual event, we must revise our plans to incorporate the possibility of a reoccurrence of this type of event.

  • • We will reinforce energy business risk management and build business and governance frameworks with the goal of consistent profitability of the energy business.

• ˙ Other items

  • • There is no change at this time in the 2020 VISION goals for FY2030: sales of ¥100 billion, operating profit of ¥10 billion, and a business portfolio with at least 10 services.

  • • There are no revisions to the expected business environment changes or business policies regarding the advertising business and the media business.

(Reference) More information is in "Medium-term Management Plan HOPE NEXT 3" announced on Aug. 11, 2020.https://ssl4.eir-parts.net/doc/6195/tdnet/1873672/00.pdf

FY2021 Investor Relations Activities

• • Plan to continue increasing the number of meetings with institutional investors by using online meetings and expanding English-language disclosure activities.

˙ Number of institutional investor meetings

.FFUJOHT

FY2017

FY2018

*Includes online meetings and telephone calls

FY2019

FY2020

FY2021

V. 2020 VISION

2020 VISION Expansion of Core Competence

• • Enlarge local government relations, HOPE, INC.'s core competence, to encompass the entire government employee sector.

Local govt.

Current corecompetence

Local govt.

Local govt.

Core competence enlargement

39

Expansion of Core Competence

Positioning of Business Units

• • Enlarge every business domain and increase actions for the expansion of HOPE, INC.'s core competence.

Measures for providing value

Additional local government revenuePublic-private sector collaborationLocal government DX

…

Enlargement of targeted domains

2020 VISION

FY2030

¥ 100 billion

¥ 10 billion

10 services

2020 VISION Initiatives

• • Start and implement initiatives for accomplishing the FY2030 goals of the 2020 VISION: Sales of ¥100 billion, operating profit of ¥10 billion and a business portfolio with at least 10 services.

FY2021 3 services

FY2030

More than 10 services

Actions

• • Improve profitability of existing businesses

• • Develop new businesses

• • Use all existing businesses as a base for new businesses

• • M&A

• • Financial and investment strategies

VI. Appendices

Business Segments and Servicest

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

Advertising Business

Corporate Philosophy

Providing new value to citizens through local governments

•Public info publications, local govt. websites

•Information distributed to residents

•Use of media space

•Free joint local government/ HOPE, INC. publications

Additional localgovernment revenue

Advertising Business 1 SMART RESOURCE SERVICE

Local governments sell ad space in their publications

A new source of revenue for local governments

˙ Business model

Purchase of ad space

Payment for ad space

Sale of ad space

Payment for ad space

˙ Examples of media

Public info publications

˙ Ad in a public info publication

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໊Ờͷબ೚ܧଓͷ࠾ܾ͕ߦ ΘΕỏࢍ੒ଟ਺ͰՄܾ͞Ε· ͨ͠Ố ·ͨỏגओ૯ձͱͯ͠ͷඞཁ ࣄ߲Ͱ͋Δ֤ใࠂ΍ܾٞͷޙ ʹ ͸ ỏୈ ೋ ෦ ͱ ͠ ͯ ỏΑ Γ ϗ ồ ϓ΁ͷཧղΛਂΊ͍ͯͨͩ͘ ͨΊͷύồτ΋༻ҙ͞Ε·͠ ͨỐ · ͣ ͸ ỏ ֤ ෦ ॺ ͷ ௕ Ͱ ͋ Δ $5

ͷ෦ॺͷࠓظ໨ඪ͕ỏτỽϓࣗ Βͷݴ༿Ͱגओͷօ͞ΜʹޠΒ Ε·ͨ͠Ố ଓ͍ͯͷ ৽ ଔ ͷ ѫ ࡰ Ͱ ͸ỏ ೥໨ͷօ͞Μ͕ࣗݾ঺հͱ ࠲ ӈ ͷ ໏ Λ ỏ ۓ ு ͷ ໘ ࣋ ͪ ͳ ͕Β΋͠ỳ͔Γͱ࿩ͯ͘͠Ε ·ͨ͠Ố ࣾ௕ͱ৿͞Μ͕୆ຊͳ͠ͷΞ υϦϒͰ౴͍͑ͯ͘ͱ͍͏ܗ Ͱỏϗ ồ ϓ ͷủࠓỨΛ ג ओ ͷ օ͞Μ΁཰௚ʹ఻͑Δ৔ͱͳ Γ·ͨ͠Ố ্ ஍ ͞ Μ ࢘ ձ ͷ ΋ ͱ ỏ ࣾ ௕ ͷ ѫ ࡰ Ͱ ࢝ · ỳ ͨ ג ओ ૯ ձ Ố দ ࢁ ؂ ࠪ ໾ ͔ Β ͷ ؂ ࠪ ใ ࠂ ỏ ֤ αồϏεͷݱگΛ఻͑Δࣄۀ ใࠂͷޙỏ ࠓճͷٞ୊Ͱ͋Δऔక໾ ໊ ớࣾ಺औక໾ ໊wࣾ֎औక໾ ໊ Ờ ͷ બ ೚ ܧ ଓ ͷ ࠾ ܾ ͕ ߦ Θ Ε ỏ ࢍ ੒ ଟ ਺ Ͱ Մ ܾ ͞ Ε · ͨ͠Ố

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໊Ờͷબ೚ܧଓͷ࠾ܾ͕ߦ ΘΕỏࢍ੒ଟ਺ͰՄܾ͞Ε· ͨ͠Ố ·ͨỏגओ૯ձͱͯ͠ͷඞཁ ࣄ߲Ͱ͋Δ֤ใࠂ΍ܾٞͷޙ ʹ ͸ ỏୈ ೋ ෦ ͱ ͠ ͯ ỏΑ Γ ϗ ồ ϓ΁ͷཧղΛਂΊ͍ͯͨͩ͘ ͨΊͷύồτ΋༻ҙ͞Ε·͠ ͨỐ · ͣ ͸ ỏ ֤ ෦ ॺ ͷ ௕ Ͱ ͋ Δ $5

݄ ೔ ớ ਫ Ờỏ ά ϥ ϯ υ ϋ Π Ξỽτ෱Ԭʹ͓͍ͯỏגࣜձ ࣾϗồϓୈ ճఆ࣌גओ૯ձ ͕ࣥΓߦΘΕ·ͨ͠Ố ্஍͞Μ࢘ձͷ΋ͱỏࣾ௕ͷ ѫࡰͰ࢝·ỳͨגओ૯ձỐদ ࢁ؂ࠪ໾͔Βͷ؂ࠪใࠂỏ֤ αồϏεͷݱگΛ఻͑Δࣄۀ ใࠂͷޙỏ ࠓճͷٞ୊Ͱ͋Δऔక໾ ໊ ớࣾ಺औక໾ ໊wࣾ֎औక໾

ͦ ͠ ͯ ࠷ ޙ ʹ ͸ ỏ ࣾ ௕ ͱ ৿ ͞ Μ ʹ Α Δ ର ஊ Ố લ ظ ͱ ࠓ ظ ͷ มԽ΍ݱࡏͷ՝୊౳͍͔ͭ͘ ͷ ς ồ Ϛ ʹ ͭ ͍ ͯ ỏ ࣾ ௕ ͱ ৿ ͞Μ͕୆ຊͳ͠ͷΞυϦϒͰ ౴ ͑ ͯ ͍ ͘ ͱ ͍ ͏ ܗ Ͱ ỏ ϗ ồ ϓ ͷủࠓỨΛ ג ओ ͷ օ ͞ Μ ΁ ཰௚ʹ఻͑Δ৔ͱͳΓ·ͨ͠Ố ্ ஍ ͞ Μ ࢘ ձ ͷ ΋ ͱ ỏ ࣾ ௕ ͷ ѫ ࡰ Ͱ ࢝ · ỳ ͨ ג ओ ૯ ձ Ố দ ࢁ ؂ ࠪ ໾ ͔ Β ͷ ؂ ࠪ ใ ࠂ ỏ ֤ αồϏεͷݱگΛ఻͑Δࣄۀ ใࠂͷޙỏ ࠓճͷٞ୊Ͱ͋Δऔక໾ ໊ ớࣾ಺औక໾ ໊wࣾ֎औక໾ ໊ Ờ ͷ બ ೚ ܧ ଓ ͷ ࠾ ܾ ͕ ߦ Θ Ε ỏ ࢍ ੒ ଟ ਺ Ͱ Մ ܾ ͞ Ε · ͨ͠Ố · ͨ ỏ ג ओ ૯ ձ ͱ ͠ ͯ ͷ ඞ ཁ ࣄ߲Ͱ͋Δ֤ใࠂ΍ܾٞͷޙ ʹ͸ỏୈೋ෦ͱͯ͠ỏΑΓϗồ ϓ΁ͷཧղΛਂΊ͍ͯͨͩ͘ ͨΊͷύồτ΋༻ҙ͞Ε·͠ ͨỐ

ଓ͍ͯͷ ͨ͠Ố

৽ ଔ ͷ ѫ ࡰ Ͱ ͸ỏ

Ad

Advertising Business 2 SMART CREATION SERVICE (Machilet)

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

Free joint production of pamphlets with even more useful info

˙ Business model

Agreement

Production and supply of pamphlets

Sale of ad space

Payment for ad space

Energy Business

Corporate Philosophy

Providing new value to citizens through local governments

Lower cost of electricity

Energy Business

Start of the electricity sales business

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.

Electricity

• • Sale of electricity

*Business does not include generation and distribution

˙ Business model

Payments

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

Media Business

Corporate Philosophy

Providing new value to citizens through local governments

Public-privatesector collaboration

Media Business 1 Jichitai Works

A HOPE, INC. publication with useful info and ideas for the jobs of local government employees

Collect

information

Provide information

Interaction with local govt.

Payment for ad space

˙ Issued four times every year (Standard editions)

1 One of the largest circulations in Japan

A comprehensive info magazine for local government employees; circulation of up to 70,000, one of the largest in Japan in this category

2 Extensive coverage

Distributed at no charge to 1,788 municipalities and all 47 prefectural governments

3 Upgrading sharing of knowledge

Magazines include examples of innovative ideas, a variety of know-how and other content for improving government services throughout Japan

˙ Issued as needed

(Special editions)

Each special edition has a single advertiser and all

˙ Jichitai Works Web

content involves the advertis- er's products and services

Articles in the printed edition of Jichitai Works magazine are also posted on the internet.

Market need survey, holding seminars and sales services for local governments

Leveraging our relationships with local governments

Support for companies with products and services for local governments.

Seminars, sales agent, research, other services

Reports, other info

Requests for assistance

˙ 2Q contracted services

• • Seminars for local government employees and other services

  Employee seminar x 2 times 320 people Seminar on attracting people x 4 times 108 people

• • Distribution of e-magazines

1,000 municipalities x 1 time 360 municipalities x 1 time 286 municipalities x 1 time

• • Direct mail marketing

  300 municipalities x 3 times 100 municipalities x 4 times 1,500; 1,100; 338; 200 municipalities x 1 time

• • Telemarketing

  100 municipalities x 9 times 333; 300; 165; 110; 66; 50 municipalities x 1 time

• • Distribution of marketing materials and others

1,000 municipalities x 4 times 1,788; 216 municipalities x 2 times 3,576; 498 municipalities x 1 time

Seminars for local government employees Government-company collaboration

Support for companies with products and services for local governments

˙ Outline of the seminars (including planned seminars)

• • B-to-G seminar

  What types of results do residents want to see from "local government x company" co-creation?

• • B-to-G seminar

  What approaches are best for leading-edge benefits from local government business?

  A discussion for obtaining ideas for solving various issues

• • Online seminar for local government employees

  Regional revitalization by using "private sector x e-commerce site digital innovation" - Reform local industries by using simple e-commerce platforms

• • Only for local government employees

  Free on-line Jichitai Works seminar

  Seminar for explaining revised guidelines for data security measures for local governments

Seminars are held online for safety during the COVID-19 crisis. Seminars covering themes that reflect current events have been very successful.

More seminars will take place on a regular basis.

Jichitai Works HAxSH

Jichitai Works

Companies providing services

Register their own servicesSharing of information of person who downloaded their documentsService searches and examinations

Payment of fees

Local governments personnel

Collaboration with local	Solve problems by
governments creates new	using private-sector
opportunities	services

Media Business 4 Machiiro

•Nationwide local government public info publications

•Sends the latest info from the registered local governments •Content for local governments and regions

Contracts with Local Governments and Number of Pamphlets Issued

SMART RESOURCE SERVICE

SMART CREATION SERVICE (Machilet)

(Contracts)

500

400

300

200

100

0

FY2018

(Pamphlets)

1,000

800

600

400

200

FY2019

FY2020

0

Cumulative2Q

FY2021

*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. A different definition is now used to count the number of pamphlets in each fiscal year and the numbers have changes as a result.

SMART RESOURCE SERVICE

SMART CREATION SERVICE (Machilet)

1 Bids used to purchase products

•Big swings in bids (cost of purchases)

•Risk of inability to purchase a sufficient volume due to bids of other companies, etc.

1

Most production and sales at the same time of the year

The production and sales period starts after signing contracts with local governments

• 2 Seasonal nature of purchases and inventory risk

  •Most SMART RESOURCE purchases are single transactions for an entire year (Apr. to Mar.), resulting in risk for holding large inventories

• 3 Effect on the next fiscal year

•Most purchases using bids submitted during the peak season for governments contract bids will have an effect on the next fiscal year all the way to Mar.

2 Large pct. of sales in the fourth quarter

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

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

300

(Pamphlets)

200

250

100

150

50

0

Pamphlets issued in FY2020

Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

Apr. May. Jun.

2019

2020

Apx.3 Energy Business

1 Contracts are received by submitting bids

• • Business may be lost to competing bids of other companies when new bidding takes place every year

• 2 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

• 3 A low-cost business

  • • When determining bids, the energy business utilizes bidding expertise acquired over many years in the advertising business

Media Business Jichitai Works Magazine Issues

(Issue)

10

12

2

8

4

• • 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

5

6

3

4

2

0

Cumulative 2Q FY2021

FY2019

FY2020

Apx.5 Additional Local Government Revenue

Since HOPE, INC.'s inception, the advertising business has

generated revenue of about ¥ 8.29 billion for clients

•SMART RESOURCE SERVICE has paid local governments about ¥7.52 billion

•Machilet has reduced local government costs by about ¥ 0.76 billion

(From HOPE, INC.'s inception through 2Q FY2021)

Cost reduction of about ¥ 23.8 billion since the start of the energy business

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

Apx.6 Main Shareholders

(As of Dec. 31, 2020)

˙ Number of shares and shareholders

Total number of authorized shares	18,848,000 shares
Number of shares issued	6,002,800 shares
Number of shareholders (with voting rights)	5,616

˙ Shareholder distribution by category

˙ Top 10 shareholders

No.	Name of shareholders	Number of shares held
1	E.T. Co., Ltd.	1,340,000 shares
2	Takayasu Tokitsu	1,253,000 shares
3	Masaki Kuge	240,000 shares
4	Custody Bank of Japan, Ltd. (Trust Account)	211,400 shares
5	Shimpei Mori	119,000 shares
6	SBI Securities Co., Ltd.	114,094 shares
7	BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)	96,797 shares
8	Individual shareholder	91,600 shares
9	JAPAN SECURITIES FINANCE CO., LTD.	74,800 shares
10	NOMURA PB NOMINEES LIMITED OMNIBUS-MARGIN (CASHPB)	62,000 shares

Apx.7 Stock Information

Period Jun. 15, 2016 to Dec. 31, 2020

IPO price

¥350

Initial price

¥805 (Jun. 15, 2016)

Highest price since IPO* 7,910 (Nov. 11, 2020)

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	FY2020
ROE	23.7%	23.9%	3.2%	(25.4)%	15.7%	75.4%

FY2016	FY2017	FY2018	FY2019	FY2020
PER*	27.9x	116.3x	32.3x	30.5x

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

FY2019

FY2020

FY2021

Apx.8 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 October 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
Feb. 15, 2018	Information about the Machiiro app for 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
Oct. 31, 2018	Information about a HOPE, INC.'s Halloween event on NHK TV programs Rokuichi! Fukuoka, NHK News 7, News Watch 9, and News 11
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
Sep. 4, 2020	Interview with the HOPE, INC. president on the Nikkei CNBC program Hiru Express

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:[e-mail]

URL:https://www.zaigenkakuho.com/en/ir