Beaglee : Consolidated Financial Results for the First Quarter of the Fiscal Year Ending December 31, 2021

May 14, 2021

Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending December 31, 2021

[Japanese GAAP]

Company name:	Beaglee Inc.	Listed on: Tokyo Stock Exchange
Stock code:	3981	URL: https://www.beaglee.com/
Representative:	Jimpei Yoshida	President and Representative Director
Contact:	Yuichi Sakurai	Director, Director of Administration Department,
		General Manager of Corporate Communication and Investor Relations Office
		Tel.: [phone]

Scheduled date of quarterly report submission:	May 14, 2021
Date for commencement of dividend payments:	−
Supplementary notes to quarterly financial statements:	None
Briefing on quarterly financial statements:	None
	(Rounded down to nearest million yen)

1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending December 31, 2020 (January 1 to March 31, 2021)

(1) Consolidated Operating Results (cumulative)

(Percentages represent year-on-year changes)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of the parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

First quarter of the fiscal year

4,422

‒

463

‒

426

‒

224

‒

ending December 31, 2021

First quarter of the fiscal year

‒

‒

‒

‒

‒

‒

‒

‒

ended December 31, 2020

For reference: Comprehensive income

First quarter of the fiscal year ending December 31, 2021:

224 million yen (−%)

First quarter of the fiscal year ended December 31, 2020:

− million yen (−%)

Net income per share

Net income per share fully

diluted

Yen

Yen

First quarter of the fiscal year

37.88

37.35

ending December 31, 2021

First quarter of the fiscal year

‒

‒

ended December 31, 2020

Note: Figures for the first quarter of the fiscal year ended December 31, 2020 and year-on-year change have been omitted because the Company began preparing consolidated financial statements from the end of the fiscal year ended December 31, 2020.

(2) Consolidated Financial Position

		Total assets	Net assets	Capital-to-asset ratio
		Millions of yen	Millions of yen	%
March 31, 2021		19,495	5,452	28.0
December 31, 2020		19,741	5,224	26.5
For reference: Shareholders' equity
As of March 31, 2021	5,452 million yen
As of December 31, 2020	5,224 million yen

2. Dividends

				Annual dividends
	End of 1st quarter	End of 2nd quarter		End of 3rd quarter	Year-end	Full year
	Yen	Yen		Yen	Yen	Yen
Fiscal year ended December	−	0.00		−	0.00	0.00
31, 2020
Fiscal year ending December	−
31, 2021
Fiscal year ending December
31, 2021		−		−	−	−
(Forecast)

Note: Revisions from the most recently announced dividend forecast: None

Note: The Company's date of record for dividends is the final day of the second quarter and final day of the fiscal year per the provisions of the Articles of Incorporation. The dividend forecast amount for the applicable date of record is undetermined at the current point in time.

3. Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2021 (January 1 to December 31, 2021)

(*Percentage indicates the rate of change year on year for full-year figures and year on year of the same quarter for quarterly figures)

Net sales

Operating profit

Ordinary profit

Profit attributable to

Net income per

owners of the parent

share

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Yen

First half

9,374

−

660

−

586

−

241

−

40.78

Full year

19,682

−

1,350

−

1,210

−

524

−

84.87

Note:

Revisions from the most recently announced earnings forecast: Yes

Note:

Figures for the previous fiscal year and the rate of change year on year have been omitted because the Company began preparing

consolidated financial statements from the end of the fiscal year ended December 31, 2020.

Note: For the earnings forecast, refer to the timely disclosure document released today (May 14, 2021) "Notice Concerning Revisions to the Earnings Forecast for the First Half of the Fiscal Year Ending December 31, 2021."

* Notice

(1) Changes in important subsidiaries during the first quarter under review (change in specified subsidiaries which accompanies a

change in the scope of consolidation): None
New: None	Exclusion: None

1. Application of special accounting treatment for the preparation of the quarterly financial statements: Yes
   Note: For details, refer to page 9 of the attached materials "(3) Notes to Quarterly Consolidated Financial Statements."
2. Changes in accounting policy and changes and restatements of accounting estimates
3. 1. Changes in accounting policy accompanying the revision of accounting standards: None
   2. Changes in accounting policy other than those listed in (a): None
   3. Changes in accounting estimates: None
   4. Restatements: None
4. Number of shares issued (common stock)
5. 1. Number of shares issued at end of period (including treasury shares)

	March 31, 2021	6,182,180 shares	December 31, 2020	6,175,661 shares
(b) Number of treasury shares at end of period
	March 31, 2021	246,728 shares	December 31, 2020	246,723 shares

(c) Average number of shares during the period (cumulative from the beginning of the fiscal year)

March 31, 2021	5,930,388 shares	March 31, 2020	5,902,004 shares

• The Company's quarterly financial statements are not subject to quarterly review by a certified public accountant or audit corporation.
• Appropriate use of earnings forecasts and other pertinent information (Cautionary Statement with Respect to Forward-Looking Statements)
  These materials contain various forward-looking statements and other forecasts regarding performance and other matters. Such statements are based on information available at the time of preparation as well as certain reasonable assumptions. Actual results may differ materially from those expressed or implied by forward-looking statements due to a range of factors. For notices concerning underlying assumptions of the earnings forecast and the use of the earnings forecast, refer to page 4 of the
  Supplemental Materials "1. Qualitative Information on the Quarterly Financial Results (3) Explanation of Forward-Looking Information including Consolidated Earnings Forecast."

• Supplemental Materials

1. Qualitative Information on the Quarterly Financial Results .........................................................................................	2
(1)	Explanation of Operating Results .........................................................................................................................	2
(2)	Explanation of Financial Condition for the First Quarter Under Review .............................................................	3
(3)	Explanation of Forward-Looking Information including Consolidated Earnings Forecast ..................................	4
2. Quarterly Consolidated Financial Statements and Notes ..............................................................................................	5
(1)	Quarterly consolidated balance sheet ...................................................................................................................	5
(2)	Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of
	Comprehensive Income ........................................................................................................................................	7
(3)	Notes to Quarterly Consolidated Financial Statements ........................................................................................	9
	(Notes on the Going-Concern Assumption) .........................................................................................................	9
	(Notes on Significant Changes in the Amount of Shareholders' Equity) .............................................................	9
	(Application of Special Accounting Treatment for Preparation of Quarterly Consolidated
	Financial Statements)..........................................................................................................................................	9
	(Segment Information, etc.) ..................................................................................................................................	9
	(Business combinations) .....................................................................................................................................	10
	(Additional Information) ....................................................................................................................................	10

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1. Qualitative Information on the Quarterly Financial Results

1. Explanation of Operating Results

During the first quarter under review, Japan's economy experienced a moderate recovery in some parts driven by the effects of the national government's various economic stimulus measures, but the resurgence of COVID-19 cases from January to March culminated in Japan's second state of emergency, resulting in restrictions on economic activities. As a result, the future economic outlook remains one of uncertainty.

Amidst this situation, the e-book market, mainly comics, continues to see an increase in customer traffic and higher average purchases. The e-book and e-comic markets are expected to continue growing. Furthermore, the COVID-19 pandemic has spurred on consumption at home, and it is expected to increase user numbers further and contribute to the retention of users. (Source: Impress Corporation estimates, "eBook Marketing Report 2020")

However, the e-book market is expected to gradually become saturated as e-book business models diversify and mature.

In addition, there is growing damages from pirated comic websites. The Group will continue to gather information while closely monitoring the situation and take necessary measures after coordinating with relevant industry groups.

Given this market climate, the Group focused on building and growing the Manga Kingdom brand and worked to develop content by promoting a product lineup and strengthening its editing functions through creating serialized works and being the first to distribute titles. Also, the Group is deepening collaboration to generate synergies with Bunkasha Group Co., Ltd. which it acquired in October 2020.

Moreover, in light of the growing COVID-19 pandemic, following similar efforts in the previous fiscal year, the Group is implementing countermeasures for preventing the occurrence and spread of infections and securing the safety of suppliers, employees, and other stakeholders, and striving to balance these initiatives with business growth.

As a result, consolidated net sales in the first quarter totaled 4,400 million yen, as Manga Kingdom recorded its highest ever net sales.

The following section discusses the main activities of the Group's Platform Segment and Contents Segment in the first quarter under review.

In terms of the comic distribution service "Manga Kingdom," a mainstay service in the Platform Segment, the Group focused on promotional campaigns appealing a sense of value and branding activities, in order to increase subscribers and customer spending by promoting the flow of visit, retention and purchase. In addition to the loyalty points program provided on the Manga Kingdom website that rebates up to 50% of spending every day for both the purchase of points and works, the Group actively carried out sales promotion activities for acquiring a broad range of users and appealing a sense of value. Also, the Group received the distinction of "No. 1 Value" (number one ranking in services with the greatest sense of value) in a survey of e-comic services conducted by a third-party research institution from October to November 2020. Additionally, the Group is actively deploying a broad range of advertising activities to drive traffic to the site and promote greater interest among users. In the television commercials commenced on January 1, 2021, the Group captured the top share (No. 1) in Twitter reactions to TV commercials by an e-book company for the first three days of the New Year.

Furthermore, in February 2021, jointly held auditions were broadcast for four consecutive weeks on THE TOKIWA, a documentary and variety program to find up-and-coming manga artist talent produced by the Nippon Television Network Corporation. This program, which will identify the next generation of manga artist stars, aims to produce the manga of participants who make it past the audition through a collaborative effort with original authors and then post the works to Manga Kingdom. In this manner, the Group is promoting not just the expansion of contents on Manga Kingdom, but also supporting the debut of new artists and differentiation of contents. These initiatives have enabled

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