T Gaia : Full version of Consolidated Financial Results for 1Q of the FY Ending March 31,2022

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, 2022

(Three Months Ended June 30, 2021) (Based on J-GAAP)

			August 2, 2021
Company name:	T-Gaia Corporation	Listing:	Tokyo Stock Exchange, First Section
Stock code:	3738	URL:	https://www.t-gaia.co.jp/
Representative:	Nobutaka Kanaji, President & CEO
Contact:	Kaoru Hayashi, Managing Officer & General Manager of Corporate Planning & Strategy Dept.
	Tel: [phone]

Scheduled date of filing Quarterly Securities Report: August 3, 2021

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, 2022 (April 1, 2021 - June 30, 2021)

(1) Consolidated results of operations (three months)			(Percentages represent year-over-year changes)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
1Q FY 2022	Million yen		%	Million yen		%	Million yen	%	Million yen	%
111,173		45.7	3,199		39.2	4,876	(3.2)	3,224	(5.1)
1Q FY 2021	76,291		-	2,299		-	5,036	-	3,399	-
Note: Comprehensive	income (million	yen): 1Q FY 2022: 3,222 / (7.6%)	1Q FY 2021: 3,490 / (-)
	Earnings per share	Diluted earnings
			per share
1Q FY 2022		Yen		Yen
57.85		-
1Q FY 2021	60.99		-

Note: As the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and relevant revised ASBJ regulations have been applied from the beginning of the first quarter of FY 2022, the figures for the first quarter of FY 2021 are those after retrospectively applying the accounting standard and relevant revised ASBJ regulations. Therefore, year-over-year changes for the first quarter of FY 2021 are not shown.

(2) Consolidated financial position
				Total assets		Net assets	Equity ratio
1Q FY 2022			Million yen			Million yen	%
				227,981			65,158	28.6
FY 2021					233,826			64,026	27.4
Reference: Shareholders' equity (million yen): 1Q FY 2022: 65,129	FY 2021: 63,998
2. Dividends
				Annual dividends
	1Q-end	Interim		3Q-end	Year-end	Annual
FY 2021		Yen	Yen		Yen		Yen	Yen
		-	37.50		-		37.50	75.00
FY 2022			-
FY 2022				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, 2022 (April 1, 2021 - March 31, 2022)

								(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	453,000		7.1	13,400	(4.6)	18,400	(7.1)	12,000	(8.0)	215.30

Note 1: Revisions to the financial forecast most recently announced: None

Note 2: As the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and relevant revised ASBJ regulations have been applied from the beginning of the first quarter of FY 2022, the above consolidated forecasts are the amounts after applying the accounting standard and relevant revised ASBJ regulations. The percentage of year-over-year change in net sales was calculated as if the accounting standard and relevant revised ASBJ regulations had been applied in FY 2021.

Notes

1. Changes in significant subsidiaries during the period (three months) under review (Changes in subsidiaries accompanying change in the scope of consolidation): None
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.: Yes
   2. Changes in accounting principles other than those mentioned above: None
   3. Changes in accounting estimates: None
   4. Restatement: None

Note: For more details, please refer to "2. Quarterly Consolidated Financial Statements and Notes (3) Notes to quarterly consolidated financial statements (Changes in accounting principles)" on page 6.

(4) 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 2022	56,074,000 shares	FY 2021	56,074,000 shares
1Q FY 2022	338,866 shares	FY 2021	338,866 shares
1Q FY 2022	55,735,134 shares	1Q FY 2021	55,732,173 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 2, 2021.

*English version of Financial results supplementary explanatory documents will be posted on the English site for Investors of T-Gaia Corporation within days.

*English account title is based on Account List available at website of Financial Service Agency.

T-Gaia Corporation (3738) / Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2022 (Three Months Ended June 30, 2021) (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
	(Changes in accounting principles) .......................................................................................................................................	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, 2022 (Three Months Ended June 30, 2021) (Based on J-GAAP)

1. Qualitative Information Concerning the First Quarter Financial Results

The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and relevant revised ASBJ regulations from the beginning of the first quarter of the current fiscal year. As for applying the accounting standard and relevant revised ASBJ regulations, the Company, in accordance with the general rules for accounting treatment as set forth in paragraph 84 of the accounting standard, retrospectively applies the new accounting principles to all of the prior periods. Therefore, the Company compares its performance with the same period of the previous fiscal year and with the previous fiscal year and analyzes the data using the figures after applying the accounting standard and relevant revised ASBJ regulations.

1. Explanation of operating performance
   In the period under review (April to June 2021), the Japanese economy continued to face difficult conditions due to the impact from

the spread of the COVID-19 infection. It is necessary to continue to take into consideration the downside risk that infection trends are posing in the domestic and overseas economies and the fluctuations in 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), the steady popularization of handsets compatible with 5G (5th-generation mobile communication system) has begun. The market is also being energized by each telecommunications carrier reducing telecommunication fees, etc. On the other hand, the provision of online-only plans for services started in March 2021, which has caused a dramatic change to the role of shops and the competitive environment.

Under this business environment, the Group's unit sales of mobile handsets, etc. (below, "unit sales") during the period under review jumped significantly from the same period of the previous fiscal year to 1,020,000. The shortening of operating hours and suspension of operation at carrier shops due to the first declaration of the state of emergency, and the measures taken to limit services available at shops in the first three months of the previous fiscal year (April to June 2020), and the increase in the number of shops by making TF Mobile Solutions Corporation (below, "TFM") a subsidiary in November 2020 (and later absorbing it through an absorption-type merger in February 2021) contributed to increasing the unit sales.

As a result, consolidated business results for the period under review marked net sales of 111,173 million yen (+45.7% compared with the year-earlier period), with operating profit of 3,199 million yen (+39.2%). However, as a result of a significant year-on-year decrease in the recognized amount of income from hoarded cards, ordinary profit marked 4,876 million yen (-3.2%) and profit attributable to owners of parent posted 3,224 million yen (-5.1%).

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

				(Millions of yen)
	Consumer Mobile	Enterprise Solutions	Payment Service
	Business and Other	Total
	Business Segment	Business Segment
	Business Segment
Net sales	95,095	8,546	7,531	111,173
54.7%	18.7%	(1.1%)	45.7%
Profit attributable to	1,723	378	1,122	3,224
owners of parent	78.8%	(24.9%)	(41.9%)	(5.1%)
Supplementary	2,599	624	(23)	3,199
information -
81.1%	(24.2%)	-%	39.2%
Operating profit (loss)

* Percentages refer to changes compared with the year-earlier period.

[Consumer Mobile Business Segment]

In Consumer Mobile Business Segment, unit sales jumped considerably year on year due to the reasons mentioned above. In addition, efforts were continued to realize synergies from the integration with the former TFM shops.

In addition to selling handsets, shops are playing an important role in the area of offering value in the non-telecommunications field, which each telecommunications carrier is focusing on, such as content from various services and payment services using smartphones. Moreover, through such services as our on-site sales service, we have newly created opportunities for sales and service provision and are expanding our points of contact with customers.

Due to the state of emergency declared in April 2021 in response to the resurgence in infections, shops located in large retail complexes, etc. were subject to partial suspension of operation, but the effect on the Company's business results was slight.

As a result, net sales marked 95,095 million yen (+54.7% compared with the year-earlier period), with profit attributable to owners of parent of 1,723 million yen (+78.8%).

[Enterprise Solutions Business Segment]

In mobile solutions for enterprise clients' business, there are not only active investments in ICT as part of reforms in working styles, but also a wide-spread purchasing of smart devices as a result of the shift to telework due to the impact of COVID-19. Due to the impact of the inclusion of the corporate sales channel of the former TFM, sales units jumped considerably year on year. Selling, general and administrative expenses increased year on year due to staff expansion and system investments, etc. with the aim to expand business scale and improve productivity.

On the other hand, delays were experienced regarding the delivery of some products that had been ordered due to a global supply shortage of semiconductors, etc.

The Group is expanding products and services for its Life Cycle Management operations revolving 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. Moreover, the Group focused on proposing the building, operation, maintenance, etc. of networks that use edge solutions.

In products related to fixed-line telecommunications, the Company has continued to work to improve the quality of support for resale wholesalers and clients for the Company's own "TG Hikari" fiber-optics access service, and to improve business efficiency and strengthen direct sales through the introduction of systems.

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T-Gaia Corporation (3738) / Consolidated Financial Results for the First Quarter of Fiscal Year Ending March 31, 2022 (Three Months Ended June 30, 2021) (Based on J-GAAP)

As a result, net sales marked 8,546 million yen (+18.7% compared with the year-earlier period), with profit attributable to owners of parent of 378 million yen (-24.9%).

[Payment Service Business and Other Business Segment]

In Payment Service Business and Other Business Segment, the transaction volume in PIN and gift cards was down compared with the same period of the previous fiscal year, which was characterized by special demand from the nationwide voluntary lockdown during the first declaration of the state of emergency in April 2020. The demand for a variety of digital content, including games, music, and video streaming, has continued to be strong.

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. On the other hand, one-time costs were recorded in relation to measures to address mislabeling of the manufacturing country in some products.

With respect to other new business, we continued to work on such areas as the operation of ICT schools for children and the hosting of online events for the e-Sports business. Regarding the latter, in April 2021, we formed a capital and business alliance with JCG Co., Ltd., which provides an online competition platform for e-Sports.

QUO CARD Co., Ltd., a consolidated subsidiary, is steadily expanding the number of member stores which accept QUO Card and QUO Card Pay, and it achieved a year-on-year increase in the amount of issuance. However, as mentioned above, the income from hoarded cards decreased significantly compared to the same month last year.

As a result, net sales marked 7,531 million yen (-1.1% compared with the year-earlier period), with profit attributable to owners of parent of 1,122 million yen (-41.9%).

1. Explanation of financial position (Assets)
   Current assets at the end of the period under review were 179,524 million yen, which was 4,088 million yen lower than at the end of the previous fiscal year. This was mainly due to a 9,516 million yen decrease in notes and accounts receivable - trade and a 4,770 million yen increase in guarantee deposits reflecting a rise in statutory cash deposits. Non-current assets at the end of the period under review were 48,457 million yen, which was 1,757 million yen lower than at the end of the previous fiscal year. This was mainly due to a 1,129 million yen decrease in deferred tax assets.
   As a result, total assets posted 227,981 million yen, which was 5,845 million yen lower than at the end of the previous fiscal year.
   (Liabilities)
   Current liabilities at the end of the period under review were 151,539 million yen, which was 3,064 million yen higher than at the end of the previous fiscal year. This was mainly due to a 9,000 million yen increase in current portion of long-term borrowings, a 1,948 million yen decrease in accounts payable - trade, and a 2,859 million yen decrease in accounts payable - other. Non-current liabilities at the end of the period under review were 11,283 million yen, which was 10,042 million yen lower than at the end of the previous fiscal year. This was mainly due to a 9,937 million yen decrease in long-term borrowings.
   As a result, total liabilities posted 162,822 million yen, which was 6,978 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 65,158 million yen, which was 1,132 million yen higher than at the end of the previous fiscal year. This was mainly due to a 3,224 million yen recognized in profit attributable to owners of parent and a 2,090 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 7, 2021.

Three months (April to June 2021) net sales represent 24.5% of the full-year estimate, with percentages for operating profit, ordinary profit, and profit attributable to owners of parent at 23.9%, 26.5%, and 26.9%, respectively.

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