Feedforce : ［Delayed］Consolidated Financial Results for FY2022 Q2

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 Six months ended November 30, 2021
	[Japanese GAAP]
			January 7, 2022
Company name:	Feedforce Group Inc．
Listing:	Tokyo Stock Exchange
Securities code:	7068
URL:	https://feedforcegroup.jp
Representative:	Representative Director and President	Koji Tsukada
Inquiries:	Director and CFO	Shingo Nishiyama	TEL [phone]

Scheduled date to file quarterly securities report:			January 14, 2022
Scheduled date to commence dividend payment:			－
Preparation of supplementary materials on financial results:		Yes
Holding of financial results meeting:				Yes
						(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the first six months of the fiscal year ending May 31, 2022(from June 1, 2021 to November 30, 2021)
(1) Consolidated operating results						(Percentages indicate year-on-year changes.)
	Net sales		EBITDA		Operating profit	Ordinary profit	Profit attributable to
			owners of parent
Six months ended	Millions of yen	％	Millions of yen	％	Millions of yen	％	Millions of yen	％	Millions of yen	％
November 30, 2021	1,372	－	591	48.3	507	60.7	507	66.0	311	124.6
November 30, 2020	1,145	－	339	－	315	－	305	－	138	－

Note:	Comprehensive income	Six months ended November 30, 2021:	¥309 million [83.2%]
			Six months ended November 30, 2020:	¥168 million [-%]
		Basic earnings	Diluted earnings
			per share	per share
Six months ended		Yen	Yen
November 30, 2021		12.01	11.68
November 30, 2020		5.73	5.49

Note: 1. As the Company has not prepared consolidated financial statements for the Six months ended November 30, 2019, the percentage indicating year-on-year changes is not shown for the Six months ended November 30, 2020.

1. 1. As the "Accounting Standard for Revenue Recognition" will be applied from the fiscal year ending May 31, 2022, the percentage change from the previous fiscal year is not shown for net sales.
   2. EBITDA is a sum of operating profit, depreciation, and amortization.
   3. The Company conducted a 4-for-1 stock split of common stocks as of December 1, 2020. The "Basic earnings per share" and "Diluted earnings per share" is calculated assuming that the said stock split was conducted at the beginning of the previous consolidated fiscal year.
2. Consolidated financial position

		Total assets		Net assets	Equity-to-asset ratio
As of			Millions of yen		Millions of yen	Millions of yen
November 30, 2021		6,790		2,735	39.5
May 31, 2021			6,467		2,401	36.6
Reference:	Equity
	As of November 30, 2021:	¥2,680 million
	As of May 31, 2021:	¥2,366 million

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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.

2. Cash dividends

Annual dividends

First quarter-end

Second quarter-end

Third quarter-end

Fiscal year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended

－

0.00

－

0.00

0.00

May 31, 2021

Fiscal year ended

－

May 31, 2022

Fiscal year ended

May 30,

0.00

－

0.00

0.00

2022(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: No

3. Consolidated earnings forecasts for the fiscal year ending May 31, 2022 (from June 1, 2021 to May 31, 2022)

(Percentages represent year-on-year changes)

Net sales

EBITDA

Operating profit

Ordinary profit

Profit attributable to

Basic

earnings

owners of parent

per share

Millions of yen

％

Millions of yen

％

Millions of yen

％

Millions of

％

Millions of yen

％

Yen

yen

Fiscal year ending

May 31, 2022

2,966

－

1,093

3.3

859

△3.4

853

△2.5

517

9.5

19.95

(Forecast)

Note: 1. Revisions to the earnings forecasts most recently announced: Yes

1. Effective from the fiscal year ending May 31, 2022, the "Accounting Standard for Revenue Recognition" will be applied, and the above forecasts are based on figures after the application of the standard. Due to the adoption of this standard, the percentage of net sales increase/decrease from the previous year is not shown.
2. EBITDA is a sum of operating profit, depreciation, and amortization.

• Notes
• 1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): Yes please refer to the "Notes on significant changes in the amount of shareholders' equity（P10)".
  2. Application of specific accounting for preparing the quarterly consolidated financial statements: None
  3. Changes in accounting policies, changes in accounting estimates, and restatement
  4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
     2. Changes in accounting policies due to other reasons: None
     3. Changes in accounting estimates: None
     4. Restatement: None
  5. Number of issued shares (Common shares)
     a. Total number of issued shares at the end of the period (including treasury shares)

As of November 30, 2021	25,950,400 shares		May 31, 2021	25,910,400 shares
b. Number of treasury shares at the end of the period
As of November 30, 2021	42 shares		May 31, 2021	42 shares
c. Average number of outstanding shares during the period
As of November 30, 2021	25,943,027 shares		As of November 30, 2020	24,203,178 shares

Note: The Company conducted a 4-for-1 stock split of common stocks as of December 1, 2020. The "Average number of outstanding shares" is calculated assuming that the said stock split was conducted at the beginning of the previous consolidated fiscal year.

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters

Forward-looking statements, including the consolidated forecasts stated in these materials, are based on information currently available to the Company and certain assumptions deemed reasonable. Results may differ materially from the consolidated forecasts due to various factors.

The Company changed its corporate name from Feedforce, Inc. to Feedforce Group, Inc. as of September 1, 2021, following the transition to a holding company structure.

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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.

Attached Material

Index

1. Qualitative information on quarterly consolidated financial results ………………………………………………………………………………….	4
(1) Explanation of operating results ……………………………………………………………………………………………………………………………….	4
(2) Explanation of financial position ………………………………………………………………………………………………………………………………	5
(3) Explanation of cash-flow …………………………………………………………………………………………………………………………………………	5
(4) Explanation of consolidated financial results forecasts and other forward-looking statements ……………………………………….	5
2. Quarterly Consolidated Financial Statements and Key Notes…………………………………………………………………….………………………	6
(1) Quarterly Consolidated Balance Sheets …………………………………………………………………………………………………………………….	6
(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income………….	7
(3) Quarterly Consolidated Statement of Cash Flows……………………………………………………………………………………………………….	9
(4) Notes to Quarterly Consolidated Financial Statements……………………………………………………………………………………………….	10
(Notes on premise of going concern) ………………………………………………………………………………………………………………………	10
(Notes on significant changes in the amount of shareholders' equity) ……………………………………………………………………….	10
(Changes in significant subsidiaries during the period under review) …………………………………………………………………………	10
(Change in accounting policy) ……………………………………………………………………………………………………………………………….	11
(Segment Information) ………………………………………………………………………………………………………………………………………….	12
(Significant subsequent events) ………………………………………………………………………………………………………………………………	13

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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.

1. Qualitative information on quarterly consolidated financial results

(1) Explanation of operating results

Japan's economy during the first half of the fiscal year ended May 31, 2022 remained severe due to restrictions on economic activity because of the new coronavirus (COVID-19). Although vaccinations are progressing and there are moves toward normalization of economic activity, the outlook remains uncertain, as there are concerns about the spread of infection by new mutant viruses at present. On the other hand, the size of the Internet advertising market, which is the Group's main business area, increased by 5.9% year on year to 2,229 billion yen in 2020, and while total advertising expenses decreased by 11.2% year on year, with the acceleration of digital transformation (DX), continued to grow (Source: DENTSU INC., "Advertising expenses in Japan in 2020").

Under these economic circumstances, the Group has been providing optimization of information distribution and effective advertising operation services under the mission of" Feed a force for good and change- continuing to innovate in the B2B field". Based on the vast amount of data accumulated by the Group to build a data feed and its conversion and update knowledge, we have processed the information of companies into an optimal form and provided appropriate information to target users at the right time and to the appropriate devices. In addition, the Group has built good relationships with each digital platformer, and by leveraging its relationship, we link the Group's multiple services to develop corporate customers and promote in addition to supporting, we have been working to develop apps and comprehensive DX support that contribute to the continuous strengthening of relationships with target users.

In addition, from the consolidated accounting period of the second quarter of the fiscal year under review, the Group has separated the holding companies and operating companies that execute strategies with holding companies responsible for group strategic functions in order to further enhance the mobility and flexibility of group management, develop and promote new businesses, and promote capital and business alliances and alliances with various partner companies related to EC support. We have shifted to a holding company structure because we judge that it is necessary for holding companies to formulate strategies from the group-wide optimal perspective, allocate management resources, and promote business through prompt decision- making at operating companies.

As a result, the Group's operating results for the first half of the fiscal year ended May 31, 2022 were net sales of ¥1,372,855 thousand, EBITDA (operating profit + depreciation + amortization) ¥591,961 thousand (up 48.3% year on year), operating income ¥507,116 thousand(up 60.7% year on year), ordinary income ¥507,594 thousand (up 66.0% year on year) and net income attributable to owners of parent of ¥311,437thousand(up 124.6% year on year).

The results of the segment are as follows: (Professional Services Business)

"Anagrams", which provides internet advertising operation agency business and marketing support, "Feedmatic", an advertising operation consignment service for platforms, "DF PLUS", a service for building data feeds according to individual needs, for enterprise-based customers. We provide "Contents Feeder", an SEO support service that generates and automatically operates satellite sites.

During the first half of the fiscal year ended May 31, 2022, Anagrams and Feedmatic acquired new projects.

As a result, the consolidated operating results for the first half of the fiscal year ended May 31, 2022 were ¥1,023,026 thousand in net sales and segment profit of ¥461,166 thousand (up 71.8% year on year).

(SaaS business)

"EC Booster", an ad distribution service that can automatically advertise based on product information on EC sites, "dfplus.io", a data feed integrated management service that allows advertisers to create, manage and optimize data feeds themselves, In addition, we provide "Social PLUS", a support service for customer reach by registering, logging in and sending direct messages on the web using SNS registration information.

During the first half of the fiscal year ended May 31, 2022, we steadily increased sales, through the acquisition of new customers in dfplus.io and Social PLUS.

As a result, the operating results for the first half of the fiscal year ended May 31, 2022 were net sales of ¥342,369 thousand and segment profit of ¥130,059 thousand (up 105.9%year on year).

(DX Business)

In the DX business, we are developing new services that support dx of companies by "building a foundation for the utilization of digital assets using technology".

During the consolidated cumulative period of the second quarter, we have been developing and investing in new businesses, such as the development of apps for Shopify. In addition, during the second quarter of the fiscal year ended May 31, 2022, the Company made Shippinno Inc., which provides "Shippinno", a service that automates shipping-related operations to EC

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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.

operators, and "TēPs", a no-code tool specialized in e-commerce, as a consolidated subsidiary, but in preparing the second quarter consolidated financial statements, only the balance sheet is consolidated.

As a result, the consolidated operating results for the first half of the fiscal year ended May 31, 2022 were net sales of ¥7,458 thousand and segment loss of ¥84,110 thousand (a segment loss of ¥15,952 thousand in the same period of the previous year).

(2) Explanation of financial position

As of November 30, 2021, assets amounted to ¥6,790,332 thousand, up ¥322,824 thousand from their level on May 31, 2021.

(Current assets)

As of November 30, 2021, current assets amounted to ¥4,824,550 thousand, down ¥90,863 thousand from their level on May 31, 2021. This was due to a decrease in accounts receivable by ¥86,052 thousand.

(Non-current assets)

As of November 30, 2021, non-current assets amounted to ¥1,965,782 thousand, up ¥413,688 thousand from their level on May 31, 2021. This was due to the acquisition of a new subsidiary resulted in an increase of goodwill by ¥348,187 thousand

(Current liabilities)

As of November 30, 2021, current liabilities amounted to ¥2,200,825 thousand, down ¥54,184 thousand from their level on May 31, 2021. This was primarily due to a decrease of ¥71,312 thousand in accounts payable - trade.

(Non-current liabilities)

As of November 30, 2021, non-current liabilities amounted to ¥1,853,589 thousand, up ¥42,634 thousand from their level on May 31, 2021. This was primarily due to an increase of long-term borrowings increased by ¥60,006 thousand.

(Net assets)

As of November 30, 2021, net assets amounted to ¥2,735,916 thousand, up ¥334,374 thousand from their level on May 31, 2021. This was due to an increase of retained earnings by ¥311,437thousand.

(3) Explanation of cash-flow

As of November 30, 2021, Cash and cash equivalents increased by ¥16,041 thousand to ¥3,209,097 thousand.

The status of cash flows and their factors during the cumulative consolidated period for the second quarter are as follows: (Cash flow from operating activities)

Cash in flow from operating activities was ¥385,316 thousand (cash inflow ¥678,347 thousand in the same period of the previous year). This was due to Profit before income taxes was recorded at ¥498,657 thousand and depreciation and amortization of ¥61,278 thousand.

(Cash flow from investment activities)

Cash out flow from investment activities was ¥286,595 thousand (cash out flow ¥7,540 thousand in the same period of the previous year). This was due to expenditures of ¥105,104 thousand from the acquisition of investment securities and ¥178,460 thousand from the acquisition of shares of subsidiaries accompanying changes in the scope of consolidation.

(Cash flow from financial activities)

Cash out flow from financial activities was ¥82,680 thousand (cash out flow ¥191,804 thousand in the same period of the previous year). This was due to ¥85,000 thousand was spent on repayment of long-term loans payable.

(4) Explanation of consolidated financial results forecasts and other forward-looking statements

The consolidated earnings forecast for the fiscal year ending May 31, 2022 has been revised from the consolidated earnings forecast announced in the Financial Results for the Fiscal Year Ending May 31, 2021 on June 30, 2021. For details, please refer to the "Notice Concerning Revision of Earnings Forecasts" released today (December 28, 2021).

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