MarkLines : Consolidated financial Results for the Six Months Ended June 30, 2020

Note:This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Six Months Ended June 30, 2020

[Japanese GAAP]

Company name: MarkLines Co., Ltd.	August 03, 2020
Stock exchange listing: Tokyo
Code number: 3901
URL: https://www.marklines.com
Representative: Makoto Sakai	President, CEO
Contact: Kenichi Sakai	Director, General Manager, Administration Dept.
Phone: [phone]

Scheduled date of filing quarterly securities report: August 03, 2020

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: Yes

(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Six Months Ended June 30, 2020 (January 01, 2020 to June 30, 2020)

(1) Consolidated Operating Results			(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Six months ended	Million yen		%	Million yen	%	Million yen	%	Million yen	%
June 30, 2020	1,308		9.1	448	2.3	449	1.6	277	(11.0)
June 30, 2019	1,199		19.8	438	22.3	441	26.8	311	31.8

(Note) Comprehensive income:	Six months ended June 30, 2020:
	Six months ended June 30, 2019:

¥	277 million	[	(8.6) %]
¥	304 million	[	38.8%]

	Basic earnings		Diluted earnings per
	per share		share
Six months ended		Yen	Yen
June 30, 2020		21.03	20.97
June 30, 2019		23.70	23.58

(2) Consolidated Financial Position

	Total assets	Net assets	Capital adequacy ratio
As of	Million yen		Million yen	%
June 30, 2020	3,610		2,553	70.7
December 31, 2019	3,484		2,509	72.0
(Reference) Equity: As of	June 30, 2020:	¥	2,553 million
As of	December 31, 2019:	¥	2,509 million

2. Dividends

					Annual dividends
		1st	2nd		3rd		Year-end	Total
	quarter-end	quarter-end	quarter-end
		Yen		Yen	Yen		Yen	Yen
Fiscal year ended December 31, 2019		-		0.00	-		18.00	18.00
Fiscal year ending December 31, 2020		-		0.00
Fiscal year ending December 31, 2020					-		21.00	21.00
(Forecast)
(Note) Revision to the forecast for dividends	announced most	recently:	No
(Note) Breakdown of the 2nd quarter dividend for the fiscal year ending December 31, 2020 :
Commemorative dividend	-	yen
Special dividend	-	yen

3. Consolidated Financial Results Forecast for the Fiscal Year Ending December 31, 2020(January 01, 2020 to December 31, 2020) (% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	2,900		21.8	1,000	14.4	1,000	13.0	705	15.2	53.29
(Note) Revision to the financial results forecast announced most recently:	No

• Notes:

1. Changes in significant subsidiaries during the six months ended June 30, 2020

(changes in specified subsidiaries resulting in changes in scope of consolidation):	Yes
New	1	(Company name:		)
Exclusion:	-	(Company name:		)
(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements:	No

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

June 30, 2020:	13,187,200	shares
December 31, 2019:	13,169,600	shares
2) Total number of treasury shares at the end of the period:
June 30, 2020:	229	shares
December 31, 2019:	229	shares

3) Average number of shares during the period:
Six months ended June 30, 2020:	13,182,931	shares
Six months ended June 30, 2019:	13,149,348	shares

Quarterly Consolidated Financial Statements

Quarterly Consolidated Balance Sheets

				(Thousand yen)
			As of December 31,2019	As of June 30,2020
Assets
	Current assets
		Cash and deposits	2,883,357	3,018,752
		Accounts receivable - trade	87,536	97,293
		Merchandise	364	-
		Prepaid expenses	16,638	19,221
		Other	18,826	17,005
		Allowance for doubtful accounts	(731)	(899)
		Total current assets	3,005,992	3,151,373
	Non-current assets
		Property, plant and equipment
		Buildings and structures	43,197	54,686
		Accumulated depreciation	(17,891)	(10,681)
		Buildings and structures, net	25,305	44,004
		Land	5,634	5,634
		Other	29,639	35,920
		Accumulated depreciation	(22,816)	(24,609)
		Other, net	6,823	11,311
		Total property, plant and equipment	37,763	60,951
		Intangible assets
		Software	95,711	79,197
		Total intangible assets	95,711	79,197
		Investments and other assets
		Investment securities	226,914	168,335
		Leasehold deposits	82,068	99,857
		Deferred tax assets	34,344	46,507
		Other	2,954	5,637
		Allowance for doubtful accounts	(1,250)	(1,206)
		Total investments and other assets	345,032	319,131
		Total non-current assets	478,507	459,280
	Total assets	3,484,500	3,610,653

				(Thousand yen)
			As of December 31,2019	As of June 30,2020
Liabilities
	Current liabilities
		Accounts payable - trade	9,162	10,753
		Accounts payable - other	22,864	22,865
		Accrued expenses	36,694	31,678
		Income taxes payable	161,503	128,160
		Accrued consumption taxes	33,852	21,525
		Advances received	681,444	799,573
		Deposits received	17,108	17,754
		Provision for bonuses	11,635	14,439
		Accounts payable - facilities	-	1,711
		Other	750	4,295
		Total current liabilities	975,015	1,052,759
	Non-current liabilities
		Retirement benefit liability	-	4,105
		Total non-current liabilities	-	4,105
	Total liabilities	975,015	1,056,864
Net assets
	Shareholders' equity
		Share capital	366,791	368,551
		Capital surplus	284,598	286,358
		Retained earnings	1,913,724	1,953,975
		Treasury shares	(182)	(182)
		Total shareholders' equity	2,564,932	2,608,702
	Accumulated other comprehensive income
		Valuation difference on available-for-sale	(54,476)	(49,642)
		securities
		Foreign currency translation adjustment	(970)	(5,270)
		Total accumulated other comprehensive income	(55,447)	(54,913)
	Total net assets	2,509,485	2,553,789
Total liabilities and net assets	3,484,500	3,610,653

Quarterly Consolidated Statements of Income and Comprehensive Income

Quarterly Consolidated Statements of Income (For the six months)

		(Thousand yen)
	For the six months	For the six months
	ended June 30,2019	ended June 30,2020
Net sales	1,199,538	1,308,623
Cost of sales	389,014	453,034
Gross profit	810,524	855,588
Selling, general and administrative expenses
Promotion expenses	7,679	5,829
Sales commission	1,342	619
Advertising expenses	6,558	5,324
Remuneration for directors (and other officers)	28,002	28,636
Salaries and allowances	168,256	183,292
Provision for bonuses	8,845	8,427
Retirement benefit expenses	2,468	4,187
Legal welfare expenses	27,054	28,589
Depreciation	6,064	8,297
Provision of allowance for doubtful accounts	(149)	1,705
Rent expenses	19,765	25,871
Other	96,386	106,460
Total selling, general and administrative expenses	372,275	407,244
Operating profit	438,248	448,344
Non-operating income
Interest income	983	943
Dividend income	5,927	2,610
Other	1,264	1,895
Total non-operating income	8,175	5,449
Non-operating expenses
Foreign exchange losses	4,237	4,687
Other	330	8
Total non-operating expenses	4,568	4,696
Ordinary profit	441,855	449,097
Extraordinary losses
Loss on valuation of investment securities	-	65,546
Total extraordinary losses	-	65,546
Profit before income taxes	441,855	383,550
Income taxes - current	127,824	120,547
Income taxes - deferred	2,387	(14,296)
Total income taxes	130,212	106,251
Profit	311,643	277,299
Profit attributable to owners of parent	311,643	277,299

Quarterly Consolidated Statements of Comprehensive Income (For the six months)

			(Thousand yen)
		For the six months	For the six months
		ended June 30,2019	ended June 30,2020
Profit	311,643	277,299
Other comprehensive income
	Valuation difference on available-for-sale securities	(3,778)	4,833
	Foreign currency translation adjustment	(3,829)	(4,300)
	Total other comprehensive income	(7,608)	533
Comprehensive income	304,035	277,832
Comprehensive income attributable to
	Comprehensive income attributable to owners of	304,035	277,832
	parent
	Comprehensive income attributable to non-controlling	-	-
	interests