Beaglee : Consolidated Financial Results for the Fiscal Year Ended December 31, 2021

February 14, 2022

Consolidated Financial Results

for the Fiscal Year Ended December 31, 2021

[Japanese GAAP]

Company name:	Beaglee Inc.		Listed on:	Tokyo Stock Exchange
Securities 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 General Meeting of Shareholders:	March 29, 2022
Date for commencement of dividend payments:	March 30, 2022
Scheduled date of Securities Report submission:	March 31, 2022
Supplementary notes to financial statements:	Yes
Briefing on financial statements:	Yes	(For institutional investors and analysts)

(Rounded down to nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended December 31, 2021 (January 1 to December 31, 2021)

(1) Consolidated Operating Results

(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

%

Fiscal year ended

18,637

50.6

1,345

21.8

1,202

25.4

444

(1.7)

December 31, 2021

Fiscal year ended

12,378

‒

1,104

‒

959

‒

452

‒

December 31, 2020

For reference:

Comprehensive income

Fiscal year ended December 31, 2021:

444 million yen (1.7%)

Fiscal year ended December 31, 2020:

452 million yen (-%)

Net income per

Net income

Operating profit

per share fully

Return on equity

Return on asset

share

margin

diluted

Yen

Yen

%

%

%

Fiscal year ended

74.81

73.92

8.2

6.1

7.2

December 31, 2021

Fiscal year ended

76.51

75.30

8.7

4.8

8.9

December 31, 2020

For reference:

Share of loss (profit) of entities accounted for using equity method

Fiscal year ended December 31, 2021:

‒ million yen

Fiscal year ended December 31, 2020:

‒ million yen

Note: The Company finalized provisional accounting treatment related to business combinations in the third quarter. Numerical figures for the fiscal year ended December 21, 2020 reflect the finalized provisional accounting treatment. Year-on-year changes for the fiscal year ended December 2020 have been omitted because the Company began preparing consolidated financial statements from the fourth quarter of the fiscal year ended December 31, 2020.

(2) Consolidated Financial Position

		Total assets		Net assets	Capital-to-asset ratio	Net income per share
		Millions of yen		Millions of yen	%	Yen
December 31, 2021		19,458		5,671	29.1	951.73
December 31, 2020		20,036		5,206	26.0	878.19
For reference: Shareholders' equity
As of December 31, 2021:	5,671 million yen
As of December 31, 2020:	5,206 million yen

Note: The Company finalized provisional accounting treatment related to business combinations in the third quarter. Numerical figures for the fiscal year ended December 21, 2020 reflect the finalized provisional accounting treatment.

1. Consolidated Cash Flow Position

	Cash flows from	Cash flows from	Cash flows from	Cash and cash
	equivalents
	operating activities	investing activities	financing activities
	at end of period
	Millions of yen	Millions of yen	Millions of yen	Millions of yen
Fiscal year ended	1,574	(330)	(929)	3,545
December 31, 2021
Fiscal year ended	901	(3,938)	4,302	3,230
December 31, 2020

2. Dividends

		Annual dividends		Cash	Dividend	Dividend-
						payout	to-net-asset
	End of	End of	End of			dividends
	Year-end	Full year	ratio	ratio
	1st quarter	2nd quarter	3rd quarter	(total)
			(consolidated)	(consolidated)
	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
Fiscal year ended	−	0.00	−	0.00	0.00	−	−	−
December 31, 2020
Fiscal year ended	−	0.00	−	8.00	8.00	47	10.7	0.9
December 31, 2021
Fiscal year ending	−	0.00	−	12.00	12.00		10.3
December 31, 2022 (Forecast)

3. Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2022 (January 1 to December 31, 2022)

(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
		owners of the parent	per share
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
First half	9,224		(0.3)	719	8.9	655	11.5	312	31.9	52.50
Full year	18,791		0.8	1,536	14.2	1,416	17.8	695	56.3	116.97

* Notice

1. Changes in important subsidiaries during the period (change in specified subsidiaries which accompanies a change in the scope of consolidation): None

New: None

Exclusion: None

1. Changes in accounting policy and changes and restatements of accounting estimates
2. 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
3. Number of shares issued (common stock)
4. 1. Number of shares issued at end of period (including treasury shares)

December 31, 2021	6,202,522 shares	December 31, 2020	6,175,661 shares

(b) Number of treasury shares at end of period

December 31, 2021	243,228 shares	December 31, 2020	246,723 shares

(c) Average number of shares during the period

December 31, 2021	5,947,296 shares	December 31, 2020	5,914,179 shares

• The Company's financial statements are not subject to audits by 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 five of the attachment entitled "1. Explanation of Operating Results, etc., (4) Future Outlook."

(How to access the supplementary notes to financial statements and briefing on financial statements)

The Company plans to hold a briefing on financial statements for institutional investors and analysts on Tuesday, February 15, 2022. The Company will publish the presentation materials used during this meeting on its website immediately after the meeting.

• Supplemental Materials

1. Explanation of Operating Results, etc. ..........................................................................................................................	2
(1)	Explanation of Operating Results for the Fiscal Year Under Review ..................................................................	2
(2)	Explanation of Financial Condition for the Fiscal Year Under Review ...............................................................	4
(3)	Explanation of Cash Flows for the Fiscal Year Under Review ............................................................................	4
(4)	Future Outlook......................................................................................................................................................	5
2. Basic Approach Concerning Selection of Accounting Standards .................................................................................	5
3. Consolidated Financial Statements and Notes ..............................................................................................................	6
(1)	Consolidated balance sheet ...................................................................................................................................	6
(2)	Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ...........................	8
(3)	Consolidated statement of changes in equity ......................................................................................................	10
(4)	Consolidated statement of cash flows.................................................................................................................	12
(5)	Notes to Consolidated Financial Statements.......................................................................................................	13
	(Notes on the Going-Concern Assumption) .......................................................................................................	13
	(Changes in Presentation Method)......................................................................................................................	13
	(Segment Information, etc.) ................................................................................................................................	13
	(Per Share Information) ......................................................................................................................................	15
	(Significant Subsequent Events) .........................................................................................................................	15

1

1. Explanation of Operating Results, etc.

1. Explanation of Operating Results for the Fiscal Year Under Review

During the fiscal year under review (January 1 to December 31, 2021), Japan's economy continued to see a recovery amid the rising vaccination rate against COVID-19 and countermeasures to stop the spread of infections. However, the future economic outlook remains one of uncertainty due to the spread of new variants and Japan's issuance of states of emergencies covering the Greater Tokyo area and other regions on multiple occasions.

Amidst this situation, the e-book market, mainly comics, continued to see an increase in customer traffic and higher average purchases while last year the market experienced substantial growth. The e-book and e-comic markets are expected to continue growing. (Source: Impress Corporation estimates, "Ebook Business Survey Report 2021")

However, the reactionary bounce from people voluntarily staying at home is beginning to appear as the number of COVID-19 cases eases. The e-book market is expected to gradually become saturated as e-book business models diversify and mature. Furthermore, impacts on the market from pirated websites continue to grow. Going forward, the Group will continue to carefully gather information and take the necessary response after collaborating with relevant industry groups.

Given this market environment, in the Platform Segment, the Group actively invested to expand scale and establish its brand, and in the Contents Segment, the Group is generating stable profits driven by the ongoing digital shift.

Furthermore, to strengthen functions as a content production company and accelerate growth, in November 2021 the Company concluded a capital and business partnership agreement with Nippon Television Network Corporation, which excels in different domains.

Moreover, in light of the growing COVID-19 pandemic, the Group continued to implement countermeasures for preventing the occurrence and spread of infections and securing the safety of suppliers, employees, and other stakeholders throughout the fiscal year under review, and endeavored to balance these initiatives with business growth.

In this management environment, the Group posted record high net sales for the full year.

As a result, net sales for the fiscal year under review totaled 18,637,202 thousand yen (up 50.6% over the previous year), operating profit came in at 1,345,394 thousand yen (up 21.8% over the previous year), ordinary profit was 1,202,335 thousand yen (up 25.4% over the previous year) and profit attributable to owners of parent totaled 444,923 thousand yen (down 1.7% over the previous year).

The management results for each segment are presented below.

(Platform Segment)

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 and the use of points, the Group actively carried out sales promotion activities for acquiring a broad range of users and appealing a sense of value. 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 this manner, Manga Kingdom promoted various events both on and off the site to promote its "No. 1 Value" (the Group received 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) as a comic streaming service.

2