Members : Summary of Consolidated Financial Results for the first quarter 2023

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

July 29, 2022

Consolidated Financial Results

for the First Three Months of Fiscal Year Ending March 31, 2023

(Under IFRS)

Company name:	Members Co., Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	2130
URL:	https://www.members.co.jp/
Representative:	Tadashi Kenmochi, Representative Director and President
Inquiries:	Akihiko Takano, Director and Senior Managing Executive Officer
Telephone:	[phone]

Scheduled date to file quarterly securities report:	August 4, 2022
Scheduled date to commence dividend payments:	―
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the first three months of fiscal year ending March 31, 2023 (from April 1, 2022 to June 30, 2022)

(1) Consolidated operating results (cumulative)

(Percentages indicate year-on-year changes.)

Revenue

Operating profit

Profit before tax

Profit

Three months ended

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

June 30, 2022

3,831

23.3

(67)

―

(93)

―

(67)

―

June 30, 2021

3,108

24.9

9

―

7

―

17

―

Profit attributable to

Total comprehensive

Basic earnings

Diluted earnings

owners of parent

income

per share

per share

Three months ended

Millions of yen

%

Millions of yen

%

Yen

Yen

June 30, 2022

(67)

―

(67)

―

(5.10)

(5.10)

June 30, 2021

17

―

17

―

1.38

1.34

(2) Consolidated financial position

Equity attributable to

Ratio of equity

Total assets

Total equity

attributable to owners of

owners of parent

parent to total assets

As of

Millions of yen

Millions of yen

Millions of yen

%

June 30, 2022

9,707

5,568

5,568

57.4

March 31, 2022

10,404

5,895

5,895

56.7

2. Cash dividends

		Annual dividends per share
	First quarter-end	Second quarter-end		Third quarter-end		Fiscal year-end	Total
	Yen	Yen		Yen		Yen	Yen
Fiscal year ended	―	0.00		―		25.00	25.00
March 31, 2022
Fiscal year ending	―
March 31, 2023
Fiscal year ending
March 31, 2023		0.00		―		30.00	30.00
(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Consolidated earnings forecast for the fiscal year ending March 31, 2023 (from April 1, 2022 to March

31, 2023)							(Percentages indicate year-on-year changes.)
	Revenue		Operating profit		Profit before tax		Profit
	Millions of yen		%	Millions of yen	%		Millions of yen	%		Millions of yen	%
First half(cumulative)	8,280		21.9	450	22.8		445	22.2		320	23.2
Full year	18,200		21.8	2,200	17.3		2,185	15.2		1,573	12.0
	Profit attributable to	Basic earnings
	owners of parent	per share
	Millions of yen		%		Yen
First half(cumulative)	320		23.2		24.55
Full year	1,573		12.0		120.65

(Note) Changes from the latest financial forecast: None

1. The above consolidated earnings forecast is based on IFRS.
2. "Basic earnings per share" was calculated based on the average number of shares in FY 3/2022 (13,037,276).

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
   Newly included: ―
   Excluded: ―
2. Changes in accounting policies and changes in accounting estimates
3. 1. Changes in accounting policies required by IFRS: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: Yes
4. Number of issued shares (ordinary shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares)

As of June 30, 2022	13,346,400 shares
As of March 31, 2022	13,217,900 shares

(ii) Number of treasury shares at the end of the period

As of June 30, 2022	90,124 shares
As of March 31, 2022	90,124 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Three months ended June 30, 2022	13,216,614 shares
Three months ended June 30, 2021	12,983,331 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters

(Notes regarding the description, etc. related to the future)

The descriptions about the future, such as the business forecast, in this document are based on the information the company has obtained so far and certain assumptions that are considered reasonable, and our company does not guarantee that the results will be as forecasted. There is a possibility that actual business performance, etc. will be considerably different from the forecast due to various factors. For the assumptions for the earnings forecast, notes for the use of the forecast, etc., please refer to "1, Qualitative Information Regarding the Financial Results for the Current Quarter, (3) Explanation Regarding the Future Forecast Information such as Consolidated Earnings Forecast" on page 4 of the Appendix.

(How to obtain the material for supplementary explanations on financial results and the contents of the session for briefing financial results)

The material for supplementary explanations on financial results will be uploaded to the website of our company on Friday, July 29, 2022.

○Table of contents of the appendix

1. Qualitative Information Regarding the Financial Results for the Current Quarter…………………………………………..	2
(1) Explanation Regarding Business Results…………………………………………………………………………………	2
(2) Explanation Regarding the Financial Standing……………………………………………………………………………	4
(3) Explanation Regarding the Future Forecast Information such as Consolidated Earnings Forecast………………………	4
2. Summary of Consolidated Financial Statements and Major Notes………………………………………………………….	5
(1) Summary of Quarterly Consolidated Balance Sheets…………………………………………………………………….	5
(2) Summary of Quarterly Consolidated Statements of Income………………………………………………………………	7
(3) Summary of Quarterly Consolidated Statements of Comprehensive Income……………………………………………	8
(4) Summary of Quarterly Consolidated Statements of Changes in Equity…………………………………………………	9
(5) Summary of Quarterly Consolidated Statements of Cash Flows…………………………………………………………	10
(6) Notes to Summary of Consolidated Financial Statements………………………………………………………………	11
(Notes on Going Concern Assumption) ……………………………………………………………………………………	11
(Revision to Accounting Estimates)	11
(Significant Subsequent Events) …...………………………………………………………………………………………	11

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1. Qualitative Information Regarding the Financial Results for the Current Quarter

(1) Explanation Regarding Business Results Management's Explanation and Analysis of Business Results

Due to the climate change caused by global warming, severe natural disasters have been occurring frequently all over the world. As the Sixth Assessment Report of Intergovernmental Panel on Climate Change (IPCC) mentions "there is no doubt that human activities have warmed the atmosphere, ocean, and land areas" (Japan Meteorological Agency, The Sixth Assessment Report of IPCC, the first working group report Climate Change 2021: Scientific grounds, Summary for Policymakers [SPM] Provisional Translation [the Sep. 1, 2021 version]), the entire society is at a crossroads to survive.

In Japan, the Carbon-Neutral policy to virtually eliminate the emission of greenhouse gases such as carbon dioxide, which are a major cause of global warming, by 2050 was announced. We are expecting businesses, including marketing activities, to transform into a model for decarbonization or resolving societal issues by accelerate corporate transformations through the utilization of digital technologies for continuous value creation.

As the digital business becomes more active, each company is having difficulty to recruit and train creative personnel who are versed in the Internet and digital technology on its own, and such personnel shortage is now a huge hurdle to digitalization. About 80% of Japanese enterprises recognize the qualitative and quantitative insufficiency of personnel who can take charge of innovation in business strategies. It has been reported that the ratio of enterprises that answered that their initiatives for digitalization called "digital transformation (DX)" was successful was less than 50% (Information-technology Promotion Agency: White Paper on DX 2021; issued on Oct. 11, 2021).

Under such circumstances, we uphold to create a spiritually rich society through "MEMBERSHIP" as its mission, and aims to convert our customer companies' management style, marketing activities, services, and products into "Sustainable Ones for the Earth and Society."

Our corporate group focuses on the following two social issues: "environmental changes due to global warming and climate change" and "failure of the pension and medical systems due to population decline, the disappearance of local governments due to the local decline, and financial bankruptcy," and will work to realize a spiritually rich society in which people and companies not only pursue their self-interest, but also have the hope for the future and the willingness to participate in society, and cooperate with each other for a better sustainable future.

We are primarily developing two businesses (EMC business and PGT business) centered around the digital domain.

In the EMC business centered on EMC Company, we have organized the Engagement Marketing Center (EMC), which consists of teams dedicated to continuously improve business results and user engagement for the customers of large companies by using digital means. It offers a comprehensive support service from discovering issues and requirement definition from the point of view of customer companies, to the development and operation of digital services and products.

In the fiscal year ending March 2023, we will focus on customer success and set a policy of supporting the in-house development of digital organizations of client companies. We will provide long-term operational support by a digital creator team dedicated to customers, mainly in the digital marketing area for the marketing departments of large companies and create CSV*1 and decarbonization case examples.

In this consolidated cumulative first quarter, transactions with existing customers grew steadily thanks to the acceleration of digital shift among enterprises, so the sales revenue was as healthy as 2,486 million yen (IFRS*Reference Value: Up 16.8% year on year). Although we have actively proposed the EMC model to new customers, the number of customers to whom we provide the EMC model was 53 (down 1 from the end of the previous fiscal year) due to the transfer of some projects to the PGT business, etc., value-added sales per client company reaching 36,659 thousand yen, and the number of digital creators belonging to the EMC business was 876 (down 24 from the end of previous fiscal year).

In the PGT (Product Growth Team) business, since this fiscal year ended March 31, 2022, we have shifted the focus of its services from "the conventional business that was offering creators with specialized skills," to "supporting customer's product growth in the field of new technology."

The PGT business mainly provide services to Internet and start-up companies that have high growth potential and are also proactive in digital and IT technology investment, by sending autonomous teams of our digital creators supporting these clients' product growth.

In this business, we will also focus on customer success in the fiscal year ending March 2023. Our team of digital creators dedicated

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