Consolidated Financial Results for the Nine Months ended September 30, 2021 [Japanese GAAP]

Consolidated Financial Results for the Nine Months ended September 30, 2021 [Japanese GAAP]

				November 10, 2021
Company name	Sun* Inc.
Stock Exchange listing	Tokyo
Code	4053	URL http://sun-asterisk.com/
Representative	(Title)	CEO	(Name) Taihei Kobayashi
Contact	(Title)	Director	(Name) Yusuke Hattori	TEL [phone]

Scheduled date for filing the quarterly report: November 10, 2021

Scheduled date for commencement of dividend payment: －

Availability of supplementary briefing material on quarterly financial results: Yes

Holding of financial result presentation: Yes (For institutional investors and analysts,)

(Amounts less than one million yen are rounded down)

1. Consolidated Financial Results for the Nine Months Ended September 30, 2021 (January 1, 2021- September 30, 2021)

(1) Consolidated Operating Results (Accumulated)	(% indicates changes from the previous corresponding period)
									Net income attributable
	Net sales		Operating income	Ordinary income	to shareholders of
									parent company
Nine months ended	million yen		%	million yen	%	million yen	%	million yen	%
September 30, 2021	5,723		44.2		1,129	62.8	1,206	67.2	1,034	59.2
September 30, 2020	3,969		－		694	－	721	－	649	－

(Note) Comprehensive income:	Nine months ended September 30, 2021:	1,181	million yen	(86.7%)
		Nine months ended September 30, 2020:	632	million yen	(－%)
	Net income per share	Net income per share
	(diluted)
Nine months ended		yen	yen
September 30, 2021		27.74	25.57
September 30, 2020		18.84	17.05

(Note) 1. Since the Company has not prepared consolidated financial statements for the third quarter of the fiscal year ending December 31, 2019, the percentage change from the same period of the previous fiscal year for the third quarter of the fiscal year ending December 31, 2020, is not shown.

1. 1. On March 31, 2020, the Company conducted a 20-for-1 stock split of common stock. Net income per share is calculated on the assumption that the said stock split was conducted at the beginning of the previous fiscal year.
   2. Since the Company was listed on the Mothers market of the Tokyo Stock Exchange on July 31, 2020, diluted net income per share for the previous fiscal year has been calculated by deeming the average share price from the date of initial listing to the end of the third quarter consolidated accumulated period as the average share price during the period.
2. Consolidated Financial Position

		Total assets	Net assets		Equity ratio
		million yen	million yen		%
As of September 30, 2021		8,295		6,266		75.5
As of December 31, 2020		6,216		5,017		80.7
(Reference) Shareholders' Equity	As of September 30, 2021	6,265	million yen
		As of December 31, 2020	5,017	million yen

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2. Cash Dividends

		Cash dividends per share for the fiscal year (yen)
	1Q-end	2Q-end	3Q-end	Year-end	Total
	yen	yen	yen	yen	yen
Year ended December 31, 2020	－	0.00	－	0.00		0.00
Year ending December 31, 2021	－	0.00	－
Year ending December 31, 2021				0.00		0.00
(forecast)
(Note) Revisions of the latest forecast for cash dividend: None

3. Consolidated Financial Forecast for the Fiscal Year Ending December 31, 2021 (January 1, 2021 - December 31, 2021) (% indicates changes from the previous corresponding period.)

								Net income attributable	Net income
	Net sales	Operating income	Ordinary income	to shareholders of
	per share
								parent company
	million yen	%	million yen		%	million yen	%	million yen	%	yen
Full year	8,081	50.6	1,239		39.8	1,346	45.3	1,168	45.2	30.95
(Note) Revisions of the latest financial results forecast: Yes

• Notes

1. Significant changes in subsidiaries during the current quarter

(Changes in specified subsidiaries due to changes in the scope of consolidation): Yes

Addition: 1

Company name: Trys Inc.

(Note) For details, please refer to "2. Consolidated Financial Statements and Primary Notes (3) Notes to Consolidated Financial Statements (Business Combinations)" on page 8 of the attached materials.

(2) Application of special accounting methods for the preparation of quarterly consolidated financial statements: Yes

(Note) For details, please refer to "2. Consolidated Financial Statements and Primary Notes (3) Notes to Consolidated Financial Statements (Application of Special Accounting Treatment in Preparing Quarterly Consolidated Financial Statements)" on page7 of the attached materials.

1. Changes in accounting policies, changes in accounting estimates, revisions, and restatements

• Changes in accounting policies due to revision of accounting standards, etc.: None
  ② Changes in accounting policies other than (1): None
  ③ Change of accounting estimates: None
  ④ Restatement: None

1. Number of shares outstanding (common shares)

• Number of shares outstanding at the end of the period (including treasury shares)

Third Quarter of the Fiscal	37,682,600 shares	As of December 31, 2020	36,840,000 shares
Year ended December 2021

• Number of treasury shares at the end of the period

Third Quarter of the Fiscal	58 shares	As of December 31, 2020	－shares
Year ended December 2021

• Average number of shares during the period (Cumulative total for the quarter)

Third Quarter of the Fiscal	37,305,298 shares	Third Quarter of the Fiscal	34,495,956 shares
Year ended December 2021	Year ended December 2020

(Note) On March 31, 2020, the Company conducted a 20-for-1 stock split of common stock. The number of shares outstanding at the end of the fiscal year and the average number of shares outstanding during the fiscal year are calculated on the assumption that the stock split was conducted at the beginning of the previous fiscal year.

• The report is not subject to quarterly review by a certified public accountants or audit firms.
• Information about the proper usage of forecast financial results, and other special instructions

The forward-looking statements, including business forecasts, contained in this document are based on information currently available to the Company and certain assumptions deemed reasonable, and are not intended as a promise by the Company that they will be achieved. Actual results may differ materially due to a variety of factors. Please refer to "1. Qualitative Information on Consolidated Financial Results, (3) Explanation of Consolidated Earnings Forecasts and Other Forward- looking Statements" on page 2 of the attached materials for the conditions that form the assumptions for earnings forecasts and cautions concerning the use of earnings forecast.

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• TABLE OF CONTENTS

1．Qualitative Information on the Consolidated Financial Results ..............................................................................	2
(1)	Explanation of Consolidated Financial Results ....................................................................................................	2
(2)	Explanation of Consolidated Financial Position...................................................................................................	2
(3)	Explanation of Consolidated Earnings Forecasts and Other Forward-looking Statements ..................................	2
2．Consolodated Financial Statements and Primary Notes ..........................................................................................	3
(1)	Consolidated Balance Sheet .................................................................................................................................	3
(2) Consolidated Statements of Income and Comprehensive Income ........................................................................	5
	Consolidated Statements of Income .................................................................................................................	5
	Consolidated Statements of Comprehensive Income .......................................................................................	6
(3)	Notes on the Consolidated Financial Statements ..................................................................................................	7
	(Change in Scope of Consolidation and Application of the Equity Method)......................................................	7
	(Notes on Going-Concern Assumptions) ............................................................................................................	7
	(Notes in Case of Significant Changes to Shareholders' Equity) ........................................................................	7
	(Application of Special Accounting Treatment in Preparing Quarterly Consolidated Financial Statements) ....	7
	(Additional Information) .....................................................................................................................................	7
	(Segment Information, etc.) ................................................................................................................................	7
	(Business Combinations) ....................................................................................................................................	8

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1．Qualitative Information on the Consolidated Financial Results for the Nine Months Ended September 30, 2021

(1) Explanation of Consolidated Financial Results

The Group is a digital creative studio that promotes the digitalization of all industries by assembling the best teams that can utilize digital technology and creativity, with the vision of "Create a world where everyone has the freedom to make awesome things that matter.".

In the market related to digital creative studios, where the Group provides services, while the market for big data, artificial intelligence (AI), blockchain, etc. is expected to continue to expand, there is a concern about the shortage of human resources in Japan to take charge of these developments. In addition, in the world since the spread of the new coronavirus, services have become increasingly digitalized, and digital transformation is taking place in various aspects of our lives.

In such a business environment, the Group has developed two service lines within the single segment of "Digital Creative Studio Business" to provide the services necessary to meet the challenges of our clients: "Creative & Engineering" to create digital products together with our clients, and "Talent Platform" to discover, train and produce the human resources necessary for the creation of digital products for our clients.

In the "Creative & Engineering" service, the number of stock-type clients was 92, ARPU was 4,629 thousand yen, and net sales were 4,826,533 thousand yen in the third quarter of the current fiscal year due to an increase in orders from existing clients. In the "Talent Platform" service, sales were 897,037 thousand yen as companies' willingness to hire has been recovered.

As a result, in the third quarter of the current consolidated fiscal year, net sales were 5,723,571 thousand yen (up 44.2% year-on-year), gross profit was 2,944,493 thousand yen (up 39.5% year-on-year), operating income was 1,129,923 thousand yen (up 62.8% year-on-year), ordinary income was 1,206,726 thousand yen (up 67.2% year-on-year), and net income attributable to owners of the parent was 1,034,862 thousand yen (up 59.2% year on year).

Segment information is omitted because Group operates in a single segment - i.e., Digital Creative Studio Business.

1. Explanation of Consolidated Financial Position (Assets)
   Total assets at the end of the third quarter of the current fiscal year were 8,295,535 thousand yen, an increase of 2,078,627 thousand yen compared to the end of the previous fiscal year. This was mainly due to an increase of 707,020 thousand yen in cash and cash equivalents, 458,356 thousand yen in accounts receivable, and 533,861 thousand yen in goodwill resulting from an increase of sales in "Creative & Engineering" and the acquisition of shares of Trys Inc., as well as an increase of 139,348 thousand yen due to the acquisition of investment securities.

(Liabilities)

Total liabilities at the end of the third quarter of the current fiscal year were 2,029,299 thousand yen, an increase of 830,216 thousand yen compared to the end of the previous fiscal year. This was mainly due to an increase of 144,694 thousand yen in accounts payable-trade, 178,358 thousand yen in provision for bonuses, 102,814 thousand yen in advances received, 102,035 thousand yen in long-term loans payable, and a decrease of 30,000 thousand yen in short-term loans payable due to repayment.

(Net Assets)

Net assets at the end of the third quarter of the current fiscal year were 6,266,236 thousand yen, an increase of 1,248,410 thousand yen compared to the end of the previous fiscal year. This was mainly due to an increase in retained earnings of 1,034,862 thousand yen resulting from the recording of net income attributable to shareholders of the parent company, an increase in the capital stock of 33,746 thousand yen resulting from the exercise of stock subscription rights, and an increase in the capital surplus of 33,746 thousand yen.

(3) Explanation of Consolidated Earnings Forecasts and Other Forward-looking Statements

Consolidated business forecast for the fiscal year ending December 31, 2021, has been revised based on the business trend in the third quarter of the current fiscal year. For details, please refer to the "Notice Concerning Revision of Earnings Forecast for the Fiscal Year Ending December 31, 2021" released today.

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2．Consolidated Financial Statements and Primary Notes
	(1) Consolidated Balance Sheet		(Unit: thousand yen)
		As of	As of
		December 31, 2020	September 30, 2021
	Assets
	Current assets
	Cash and cash equivalent	5,073,055	5,780,076
	Notes and accounts receivable - trade	583,546	1,041,902
	Work in process	15,733	51,523
	Other	133,065	218,645
	Allowance for doubtful accounts	(9,951)	(18,522)
	Total current assets	5,795,449	7,073,625
	Noncurrent assets
	Property, plant, and equipment	72,134	104,119
	Intangible assets
	Goodwill	80,760	614,621
	Other	37	4,327
	Total intangible assets	80,797	618,948
	Investments and other assets
	Investment securities	169,776	309,124
	Deferred tax assets	8,567	29,163
	Other	110,367	184,899
	Allowance for doubtful accounts	(20,185)	(24,671)
	Total investments and other assets	268,526	498,516
	Total noncurrent assets	421,458	1,221,584
	Deferred assets	－	325
	Total assets	6,216,907	8,295,535

LIABILITIES

Current liabilities

Notes and accounts payable - trade

Short-term loans payable

Current portion of long-term loans payable Accounts payable - other

Accrued expenses

Income taxes payable

Advance received

Provisions for bonuses

Accrued warranty costs

Other

Total current liabilities

Noncurrent liabilities

Long-term loans payable

Asset retirement obligations

Other

Total noncurrent liabilities

Total liabilities

141,908	286,603
30,000	－
179,133	155,038
23,894	149,305
188,441	180,132
70,428	138,910
154,042	256,856
28,479	206,837
	9,010
194,437	318,453
1,010,765	1,701,146
153,327	279,457
20,027	32,403
14,962	16,292
188,316	328,152
1,199,082	2,029,299

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