T Gaia : Full version of Consolidated Financial Results for the First Half of Fiscal Year Ending March 31, 2021

Consolidated Financial Results for the First Half of Fiscal Year Ending March 31, 2021 (Six Months Ended September 30, 2020) (Based on J-GAAP)

			November 5, 2020
Company name:	T-Gaia Corp.	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 Securities Report: November 6, 2020

Scheduled commencement date of dividend payout: December 2, 2020

Financial results supplementary explanatory documents: Yes

Financial results presentation: Yes (for institutional investors & analysts)

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

1. Consolidated Financial Results for the First Half of Fiscal Year Ending March 31, 2021 (April 1, 2020 -September 30, 2020)

(1) Consolidated results of operations (six months)		(Percentages represent year-over-year changes)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Million yen			%	Million yen	%	Million yen	%	Million yen	%
1H FY 2021	182,398			(25.4)	5,612	(19.4)	9,384	(9.7)	6,411	(8.3)
1H FY 2020	244,549			2.0	6,965	1.3	10,389	1.8	6,992	1.6
(Note) Comprehensive income (million yen):		1H FY 2021: 6,483 / (6.8%)	1H FY 2020: 6,959 / 1.0%
	Earnings per		Diluted earnings
	share		per share
		Yen			Yen
1H FY 2021	115.03			-
1H FY 2020	125.48			-

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

1H FY 2021

207,343

59,402

28.6

FY 2020

181,378

55,102

30.4

Reference: Shareholders' equity (million yen): 1H FY 2021: 59,383

FY 2020: 55,076

2. Dividends

Annual dividends

1Q-end

Interim

3Q-end

Year-end

Annual

Yen

Yen

Yen

Yen

Yen

FY 2020

-

37.50

-

37.50

75.00

FY 2021

-

37.50

FY 2021

-

37.50

75.00

(forecasts)

Note: Revisions to the dividend forecast in the current quarter: None

3. Consolidated forecasts for the Fiscal Year Ending March 31, 2021(April 1, 2020 - March 31, 2021) (Percentages represent year-over-yearchanges)

	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	451,000		(4.9)	12,700	(7.5)	18,600	(3.1)	12,500	(1.0)	224.27

Note: Revisions to the financial forecast in the current quarter: None

Notes

1. Changes in significant subsidiaries during the consolidated period (six months) under review (changes in subsidiaries accompanying change in the scope of consolidation): None
2. Changes in accounting procedures specific to creation of quarterly consolidated financial statements: None
3. Changes in accounting principles, estimates and restatement
4. 1. Changes in accounting principles caused by revision of accounting standards: 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 stock) at end of period
2. Number of treasury stock at end of period
3. Average number of shares outstanding during the period (six months)

1H FY 2021	56,074,000 shares	FY 2020	56,074,000 shares
1H FY 2021	338,866 shares	FY 2020	341,827 shares
1H FY 2021	55,733,224 shares	1H FY 2020	55,729,811 shares

• The summary of business results is not subject to audit.
• Cautionary statement with respect to forward-looking statements
  (Disclaimer on forward-looking statements)
  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 financial results supplementary explanatory documents and financial results presentation) Financial results supplementary explanatory documents will be posted in Japanese on November 5, 2020.

The financial results on-line presentation for investment institute and analysists is scheduled on November 5, 2020.

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

T-Gaia Corporation (3738) / Consolidated Financial Results for the First Half of Fiscal Year Ending March 31, 2021 (Six Months Ended September 30, 2020) (Based on J-GAAP)

• Attachment: Table of Contents

1. Qualitative Information Concerning the First Half 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...................................................	4
2. Quarterly Consolidated Financial Statements and Notes...............................................................................................................	5
(1)	Quarterly consolidated balance sheets .....................................................................................................................................	5
(2)	Quarterly consolidated statements of income and Quarterly consolidated statements of comprehensive income ...................	6
	Quarterly consolidated statements of income
	Consolidated first half period ........................................................................................................................................	6
	Quarterly consolidated statements of comprehensive income
	Consolidated first half period ........................................................................................................................................	6
(3)	Quarterly consolidated statements of cash flows .....................................................................................................................	7
(4)	Notes to quarterly consolidated financial statements ...............................................................................................................	8
	(Notes on the going-concern assumption) .............................................................................................................................	8
	(Notes on significant changes in shareholders' equity) .........................................................................................................	8
	(Segment information)...........................................................................................................................................................	8
	(Significant subsequent events) .............................................................................................................................................	9

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T-Gaia Corporation (3738) / Consolidated Financial Results for the First Half of Fiscal Year Ending March 31, 2021 (Six Months Ended September 30, 2020) (Based on J-GAAP)

1. Qualitative Information Concerning the First Half Financial Results

(1) Explanation of operating performance

In the period under review (April to September 2020), although the Japanese economy continued to face difficult conditions due to the impact from the spread of the novel coronavirus infection (below, "COVID-19"), the economy is showing signs of recovery, especially in personal consumption. However, COVID-19 trends and fluctuations in financial and capital markets need to continue to be taken into consideration.

In the market for mobile phone handsets, which forms the core business field of the Group (the Company and its consolidated subsidiaries and equity-method affiliates), revised rate plans were released and provided by telecommunications carriers in preparation for the Revised Telecommunications Business Act (hereinafter referred to as "the Revised Act") taking effect in October 2019. Under the Revised Act, while mobile phone handset prices and communication fees were completely separated and discounts on mobile phone handset prices were regulated from October of last year, competition among telecommunications carriers continues to be blunted.

In addition, in response to the spread of COVID-19, a state of emergency was declared in April 2020, and measures such as shortened hours of operation and closure of shops were taken and the services available at carrier shops were limited. Subsequently, with the lifting of the declaration, shops have been gradually returning to normal operations since June of this year. We continue to take measures against COVID-19, such as an advance reservation system, to ensure that customers can visit our shops with peace of mind.

On the other hand, telecommunications carriers have continued to focus on maintaining and expanding their customer bases over the long term through efforts such as supplementing their service offerings with enhanced point schemes, service contents and mobile payments. Three major telecommunications carriers launched commercial 5G (5th-generation mobile communications system) services in March 2020, which Rakuten Mobile, Inc. launched respectively in this September. In addition, major changes in the competitive environment have begun to occur again, such as the government's request for further telecommunications fee reductions and the acquisition of NTT DOCOMO, INC. by Nippon Telegraph and Telephone Corporation as a wholly owned subsidiary.

In this business environment, sales of mobile handsets, etc. (below, "unit sales") during the period under review at the Group posted 1,420,000 units, marking a decline from the previous fiscal year due to the following factors. However, both the Mobile Telecommunications Business Segment and Enterprise Solutions Business Segment have performed as planned.

A. Decreased sales opportunities, including shortened sales hours due to the spread of COVID-19 during the first quarter of the current fiscal year

B. Impact of last-minute demand prior to the enforcement of the Revised Act and before the consumption tax hike during the second quarter of the previous fiscal year

C. Impact of the new iPhone launch being carried over to October 2020 and beyond, resulting in new iPhone unit sales that are usually included in the second quarter of a fiscal year not being included

Net sales were significantly impacted by this decrease in unit sales and a decline in average sales prices of mobile handsets compared to the year-earlier period. Selling, general and administrative expenses continued to decrease compared with the year- earlier period due to factors including refraining from activities such as promotional events in response to the spread of COVID- 19, reductions in overtime due to shortened hours of operation, restrictions on discounting in accordance with the Revised Act, and restrictions on movement.

As a result, consolidated business results for the period under review marked net sales of 182,398 million yen (-25.4% compared with the year-earlier period), with operating profit of 5,612 million yen (-19.4%). Ordinary profit marked 9,384 million yen (-9.7%) including 3,622 million yen (+6.8%) in income from hoarded cards recognized in non-operating income. Profit attributable to owners of parent posted 6,411 million yen (-8.3%).

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

				(Millions of yen)
	Mobile	Enterprise Solutions	Payment Service
	Telecommunications	Business and Other	Total
	Business Segment
	Business Segment	Business Segment
Net sales	138,478	13,862	30,056	182,398
(32.2%)	(1.3%)	14.6%	(25.4%)
Profit attributable to	2,826	932	2,652	6,411
owners of parent	(29.5%)	8.1%	24.9%	(8.3%)
Supplementary	3,981	1,450	180	5,612
information -
(32.8%)	17.8%	―	(19.4%)
Operating profit
* Percentages refer to changes compared with the year-earlier period

[Mobile Telecommunications Business Segment]

In Mobile Telecommunications Business Segment, although there was a decline in unit sales from the year-earlier period as mentioned above, the impact of the COVID-19 has begun to be contained and business was on the road to recovery during the period under review.

In addition, it was possible to minimize the impact on profit thanks to the receipt of financial support from telecommunications carriers related to COVID-19 countermeasures during the first quarter of the current fiscal year and the continued control of selling, general and administrative expenses described above.

As a result, net sales marked 138,478 million yen (-32.2% compared with the year-earlier period), with profit attributable to owners of parent of 2,826 million yen (-29.5%).

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