T Gaia : Full Version of Consolidated Financial Results for the 1Q of Fiscal Year Ending March 31, 2023

(Percentages represent year-over-yearchanges)

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.

Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2023

(Three Months Ended June 30, 2022) (Based on J-GAAP)

			August 1, 2022
Company name:	T-Gaia Corporation	Listing:	Tokyo Stock Exchange
Stock code:	3738	URL:	https://www.t-gaia.co.jp/
Representative:	Masato Ishida, President & CEO
Contact:	Kaoru Hayashi, Senior Managing Officer & General Manager of Corporate Planning & Strategy Dept.
	Tel: [phone]
Scheduled date of filing Quarterly Securities Report: August 2, 2022
Scheduled commencement date of dividend payout: -

Quarterly financial results supplementary explanatory documents: Yes

Quarterly financial results presentation: None

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2023 (April 1, 2022 - June 30, 2022)

(1) Consolidated results of operations (three months)

		Net sales					Operating profit			Ordinary profit	Profit attributable to
								owners of parent
1Q FY 2023	Million yen					%	Million yen				%		Million yen	%	Million yen	%
108,497					(2.4)	2,271		(28.9)	3,268	(32.9)	2,388	(25.9)
1Q FY 2022	111,173					45.7	3,194				39.0	4,871	(3.3)	3,224	(5.1)
Note: Comprehensive	income (million	yen):			1Q FY	2023: 2,438 /		[(24.3)%]		1Q	FY 2022: 3,222 /	[(7.6)%]
		Earnings per			Diluted earnings
		share			per share
1Q FY 2023			Yen					Yen
42.82					-
1Q FY 2022	57.85					-
(2) Consolidated financial position
		Total assets			Net assets			Equity ratio
1Q FY 2023			Million yen					Million yen				%
229,727					71,382				30.8
FY 2022	241,277					70,483				29.2
Reference: Shareholders'	equity (million yen):	1Q FY	2023: 70,793	FY 2022:	70,448
2. Dividends
								Annual dividends
		1Q-end		Interim		3Q-end		Year-end		Annual
FY 2022		Yen				Yen		Yen				Yen		Yen
	-				37.50				-			37.50		75.00
FY 2023		-
FY 2023							37.50				-			37.50		75.00
(forecasts)
Note: Revisions to the dividend forecast most recently announced: None

3. Consolidated Forecasts for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

										(Percentages represent year-over-year changes)
	Net sales		Operating profit		Ordinary profit		Profit attributable to	Earnings per
				owners of parent	share
	Million yen		%	Million yen		%	Million yen		%	Million yen	%	Yen
Full year	483,000		1.4	11,200		6.0	15,400		0.1	10,000	(5.5)	179.32

Note: Revisions to the financial forecast most recently announced: None

Notes

1. Changes in significant subsidiaries during the period (three months) under review (Changes in subsidiaries accompanying change in the scope of consolidation): Yes Newly included: 2 companies (Relay2, Inc. and TG Solutions Corporation)
2. Application of accounting procedures specific to creation of quarterly consolidated financial statements: None
3. Changes in accounting principles, estimates and restatements
4. 1. Changes in accounting principles caused by revision of accounting standards, etc.: None
   2. Changes in accounting principles other than those mentioned above: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of shares issued and outstanding (shares of common stock)

1. Number of shares outstanding (including treasury shares) at the end of the period
2. Number of treasury shares at the end of the period
3. Average number of shares outstanding during the period (three months)

1Q FY 2023	56,074,000 shares	FY 2022	56,074,000 shares
1Q FY 2023	308,866 shares	FY 2022	308,866 shares
1Q FY 2023	55,765,134 shares	1Q FY 2022	55,735,134 shares

• Quarterly financial results reports are exempt from quarterly reviews conducted by certified public accountants or an audit corporation.
• Cautionary statement with respect to forward-looking statements

(Disclaimer on forward-looking statements, etc.)

These materials contain forward-looking information including earnings projections based on information currently available to the Company and certain assumptions considered reasonable in the judgment of the Company. Nothing contained in these materials is meant to suggest that the Company promises to attain the said projections. Moreover, due to various factors, actual results may materially differ from projections.

(Concerning quarterly financial results supplementary explanatory documents)

Financial results supplementary explanatory documents will be posted in Japanese on August 1, 2022.

T-Gaia Corporation (3738) / Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2023 (Three Months Ended June 30, 2022) (Based on J-GAAP)

• Attachment: Table of Contents

1. Qualitative Information Concerning the First Quarter Financial Results............................................................................................	2
(1)	Explanation of operating performance .........................................................................................................................................	2
(2)	Explanation of financial position..................................................................................................................................................	3
(3)	Explanation of forward-looking information including the consolidated financial forecasts .......................................................	3
2. Quarterly Consolidated Financial Statements and Notes ....................................................................................................................	4
(1)	Quarterly consolidated balance sheets..........................................................................................................................................	4
(2)	Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income.........................	5
	(Quarterly consolidated statements of income)
	(Consolidated three months period)..........................................................................................................................................	5
	(Quarterly consolidated statements of comprehensive income)
	(Consolidated three months period)..........................................................................................................................................	5
(3)	Notes to quarterly consolidated financial statements....................................................................................................................	6
	(Notes on the going-concern assumption) ....................................................................................................................................	6
	(Notes on significant changes in shareholders' equity) ................................................................................................................	6
	(Segment information, etc.) ..........................................................................................................................................................	6

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T-Gaia Corporation (3738) / Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2023 (Three Months Ended June 30, 2022) (Based on J-GAAP)

1. Qualitative Information Concerning the First Quarter Financial Results

1. Explanation of operating performance

In the period under review (April to June 2022), the Japanese economy was faced with concerns including the prolongation of the situation in Ukraine and the impact of restrictions to economic activity in China. Careful attention needs to be paid to factors such as supply side limitations and rises in raw material and other prices, as well as fluctuations in the financial and capital markets.

In the market for mobile phone handsets, which is the main business field of the Group (the Company, its consolidated subsidiaries, and its equity-method affiliates), gradual progress was made on the shift to 5G (5th-generation mobile communication system), including in March 2022 when KDDI CORPORATION ended its 3G (3rd-generation mobile communication system) service. However, commission terms and conditions for some telecommunications carriers were revised in the second quarter of the previous fiscal year (July to September 2021). In addition to this, great change is underway in the role played by mobile phone distributors, including the Company, and the competitive environment, including plans to consolidate or abolish carrier shops in the medium to long term.

Also, delays to the delivery of some products caused by a global supply shortage of semiconductors, etc., continued, as the outlook remains unclear.

Under this business environment, the Group steadily worked toward the realization of the TG Universe (the ecosystem within T- Gaia), the Group-wide strategy in our medium-term management plan, and initiatives to achieve the TG Material Issues (eight priority issues). With the aim of transforming our business portfolio so that it is not dependent on the Consumer Mobile Business Segment, we are actively considering growth investments, particularly in the Enterprise Solutions Business Segment and Payment Service Business and Other Business Segment. We have also established a specialist division that will operate on a Group-wide basis to further grow sales of original products and enhance the productivity of store operations.

The number of contracts for mobile phone numbers (below, "mobile phone contracts") agreed during the period under review was 900,000 (87.6% of the number recorded in the same period of the previous fiscal year), mainly due to a fall in the number of model change contracts that accompanied a change in the direction of sales measures by telecommunications carriers.

Also, the revisions to commission terms and conditions for some telecommunications carriers mentioned above led to a decline in commission income compared with the same period of the previous fiscal year. However, we are gradually starting to see the effects of efforts to enhance productivity by improving operational efficiency that have been carried out since the second quarter of the previous fiscal year, including an improvement in the operating profit margin.

As a result, consolidated business results for the period under review marked net sales of 108,497 million yen (-2.4% compared with the year-earlier period), with operating profit of 2,271 million yen (-28.9%). Due to a year-on-year decrease in the hoard profit of prepaid card, ordinary profit marked 3,268 million yen (-32.9%) and profit attributable to owners of parent posted 2,388 million yen (- 25.9%). Additionally, gain on step acquisitions from consolidated subsidiaries accounted for using equity method was recorded as extraordinary income.

Results by business segment for the period under review are described below.

						(Millions of yen)
	Consumer		Enterprise	Payment Service	Others and
		Solutions	Business and	Consolidated
	Mobile Business		adjustment
		Business	Other Business	financial results
	Segment		amounts
		Segment	Segment
Net sales	91,647		8,602	8,225	21	108,497
(3.6%)		0.7%	9.2%	-	(2.4%)
Profit attributable to	1,058		629	653	47	2,388
owners of parent	(38.6%)		66.2%	(41.8%)	-	(25.9%)
Supplementary	1,504		510	202	53	2,271
information -
(42.0%)		(18.2%)	-	-	(28.9%)
Operating profit
* Percentages represent	year-over-year changes

[Consumer Mobile Business Segment]

The Consumer Mobile Business Segment is engaged in intermediary services specializing in contracts for telecommunications services, including mobiles, and other types of contracts provided by each telecommunications carrier, as well as the sales of mobile phones, etc. For the Group's shops across Japan, we are aiming to realize shops that are "regional ICT hubs" rather than mere "points of sale," and which please customers and win their trust through high quality services and proposals with utility value that meets customer requirements.

As mentioned above, the number of mobile phone contracts and commission income declined compared with the same period of the previous fiscal year. However, our shops are creating opportunities to make sales and provide services not only at shopping malls, etc., but also by providing sales support for remote locations where there are no local shops, and they are also contributing to the vitalization of regional communities.

Also, we are working to make our operations more efficient by gradually expanding the number of shops that can handle remote initial setup support and to increase customer satisfaction through the provision of support tailored to each customer by specialist staff.

As a result, net sales marked 91,647 million yen (-3.6% compared with the year-earlier period), with profit attributable to owners of parent of 1,058 million yen (-38.6%).

[Enterprise Solutions Business Segment]

The Enterprise Solutions Business Segment is engaged in the sale of mobile phone to corporate customers, the provision of solution services related to devices and network management services, etc., and sales and intermediary services specializing in optical communication line service contracts for corporate and individual customers. The Group is expanding products and services to create a one-stop channel for meeting customers' requirements through its Life Cycle Management (LCM) business which revolves around administrative and support services for device life cycles spanning from procurement, propositions, and introduction support for smart devices including PCs, to building Wi-Fi environment, maintenance, operations, and updating services.

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T-Gaia Corporation (3738) / Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2023 (Three Months Ended June 30, 2022) (Based on J-GAAP)

As mentioned above, the number of mobile phone contracts declined compared with the same period of the previous fiscal year due to continued delays to the delivery of some ordered products caused by a global supply shortage of semiconductors, etc.

On the other hand, we expanded products and services in the LCM business and the number of management IDs for network administrative services, helpdesks, and the like surpassed the same period of the previous fiscal year. Moreover, the Group focused on proposing new business areas such as proposing the building, operation and maintenance of networks that use edge solutions.

In products related to fixed-line telecommunications, the cumulative number of lines owned by the Company's own "TG Hikari" fiber-optics access service rose steadily.

As a result, net sales marked 8,602 million yen (+0.7% compared with the year-earlier period), with profit attributable to owners of parent of 629 million yen (+66.2%).

[Payment Service Business and Other Business Segment]

The Payment Service Business and Other Business Segment is mainly engaged in sales of PIN (prepaid codes), sales of gift cards, and sales of smartphone accessories through major nationwide convenience store chains. It also includes the consolidated subsidiary QUO CARD Co., Ltd. which is tasked with the issuance and settlement of "QUO Card" and "QUO Card Pay" and the sales and repair/maintenance of card-handling equipment, etc.

PIN and gift card transaction volumes were down compared with the same period of the previous fiscal year but there continued to be high levels of demand for a variety of digital content, including games, music, and video streaming. Sales in the wholesale of smartphone accessories mainly to convenience stores were robust due to the expansion of sales channels and the broadening of the merchandise lineup.

With respect to other new business, we continue to work on such areas as the operation of ICT schools for children and the hosting of online events for the e-Sports business.

The amount of issuance for QUO Card and Quo Card Pay declined compared to the same period of the previous fiscal year, when there was the special demand related to the COVID-19 pandemic, but we are continuing to focus on expanding the number of member stores which accept these cards.

As a result, net sales marked 8,225 million yen (+9.2% compared with the year-earlier period), with profit attributable to owners of parent of 653 million yen (-41.8%) due to the year-on-year decrease in the hoard profit of prepaid card mentioned above.

1. Explanation of financial position (Assets)
   Current assets at the end of the period under review were 182,696 million yen, which was 11,846 million yen lower than at the end of the previous fiscal year. This was mainly due to a 13,087 million yen decrease in cash and deposits. Non-current assets at the end of the period under review were 47,031 million yen, which was 295 million yen higher than at the end of the previous fiscal year. This was mainly due to an 824 million yen increase in goodwill and a 672 million yen decrease in deferred tax assets.
   As a result, total assets posted 229,727 million yen, which was 11,550 million yen lower than at the end of the previous fiscal year.
   (Liabilities)
   Current liabilities at the end of the period under review were 150,843 million yen, which was 11,447 million yen lower than at the end of the previous fiscal year. This was mainly due to a 9,000 million yen decrease in current portion of long-term borrowings and a 2,207 million yen decrease in accounts payable - trade. Non-current liabilities at the end of the period under review were 7,500 million yen, which was 1,003 million yen lower than at the end of the previous fiscal year. This was mainly due to a 937 million yen decrease in long-term borrowings.
   As a result, total liabilities posted 158,344 million yen, which was 12,450 million yen lower than at the end of the previous fiscal year.
   (Net assets)
   Net assets at the end of the period under review were 71,382 million yen, which was 899 million yen higher than at the end of the previous fiscal year. This was mainly due to 2,388 million yen recognized in profit attributable to owners of parent and 2,091 million yen in payment of dividends of surplus.
2. Explanation of forward-looking information including the consolidated financial forecasts

There is no change to the full-year consolidated financial forecasts announced on May 2, 2022.

Three months (April to June 2022) net sales represent 22.5% of the full-year estimate, with percentages for operating profit, ordinary profit, and profit attributable to owners of parent at 20.3%, 21.2%, and 23.9%, respectively.

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