Ｈａｍｅｅ（3134） – Fiscal Year Ending April 30, 2022 Financial Results [Japanese Standards]

Consolidated Financial Results FY04/22 [Japanese GAAP] 3134 Name of listed company Hamee Corp. Code Number Representative (Title) President and CEO Contact person (Title) Officer,Corporate Planning Dept.Manager (Name) Ippei Takahashi Scheduled date of Annual General Meeting July 28, 2022 July 29, 2022 Date to file Securities Report Supplementary materials for financial Result: Yes Results briefing Listed stock exchanges URL https://hamee.co.jp/ : Yes (Name) Ikuhiro Mizushima (TEL) +81-465-42-9181 Date of dividends payment July 29, 2022 ( Scheduled to be held for institutional investors and analysts on June 14,2022) (Millions of yen are rounded down) June 13, 2022 East FY04/2022 consolidated results (May 1, 2021-April 30, 2022) (1)Consolidated operating results Net sales Operating income (Percentages indicate year-on-year change.) Attributable to owners of parent Net income Ordinary income FY04/22 FY04/21 Millions of yen 13,413 12,363 % Millions of yen 2,202 2,179 8.5 9.2 (NOTE) Comprehensive income FY04/22 1,865 Millions of yen (5.3 %) 1.0 24.9 % Millions of yen 2,329 2,148 FY04/21 % Millions of yen 1,743 1,556 8.4 22.3 1,771 Millions of yen (90.7 %) % 12.0 45.5 Earnings Per share Diluted Earning Per Share Shareholders’ equity Net income margin Total assets Profit ratio Operating income FY04/22 FY04/21 Yen 109.72 98.38 Yen 109.43 97.62 (Reference) Equity in earnings of affiliates FY04/22 (2)Consolidated Financial Position % 23.9 28.0 % 24.7 26.1 FY04/21 % 16.4 17.6 5 Millions of yen 0 Millions of yen Total assets Net assets Equity Ratio Net assets per share FY04/22 FY04/21 Millions of yen 10,518 8,338 Millions of yen 8,252 6,528 (Reference) Shareholders’ equity FY04/22 8,157 Millions of yen (3)Consolidated Cash Flows % 77.6 77.1 Yen 513.06 404.97 6,429 Millions of yen FY04/21 Cash Flows from operating activities Millions of yen 1,186 1,941 Cash Flows from investing activities Cash Flows from financing activities Cash and cash equivalents Balance at end of year Millions of yen △886 △412 Millions of yen 298 △1,736 Millions of yen 4,025 3,354 FY04/22 FY04/21 2.Dividends FY04/21 FY04/22 End of first quarter End of second quarter Yen – – – Yen 0.00 0.00 0.00 Annual dividend per share End of the third quarter Year end Total Total dividends (Total) Dividend payout ratio (Consolidated) Net assets Dividend rate (Consolidated) Yen – – – Yen 10.00 10.00 22.50 22.50 22.50 22.50 Yen Millions of yen 158 357 % 10.2 20.5 22.7 % 2.9 4.9 FY04/23 (Forecast) Forecast of consolidated results for FY04/23 (May 1, 2022 to April 30, 2023) Net sales Ordinary income Operating income (Percentages indicate year-on-year changes.) Attributable to owners of parent Net income Earning Per Share Full year Millions of yen Yen 99.10 (NOTE) As we manage our business performance on an annual basis, our business performance forecasts are only for the full fiscal year. % Millions of yen 1,575 % Millions of yen % Millions of yen 15,932 18.8 2,295 △1.5 % △9.6 2,293 4.1 ※ Notes (1) Significant Changes in Subsidiaries during the Fiscal Year (Changes in specified subsidiaries affecting the scope of consolidation) : None – Company 、 Removed – Company (2)Changes in accounting policies and changes or restatement of accounting estimates ① Changes in accounting policies caused by revision of accounting standards : Yes : None : None : None ② Changes in accounting policies other than ① ③ Changes in accounting estimates ④ Restatement (3)Number of shares outstanding(common stock) ①Number of shares outstanding at the end of the period(including treasury stock) ② Number of treasury stock at the end of the period FY04/22 369,516 Shares FY04/21 377,523 Shares ③ Average number of shares during the period FY04/22 15,893,560 Shares FY04/21 15,819,780 Shares FY04/22 16,268,800 Shares FY04/21 16,255,200 Shares (Reference) Summary of Non-consolidated Financial Results Non-consolidated Performance for the Fiscal Year Ended FY04/22 (May 1, 2021-April 30, 2022) (1) Explanation of Non-Consolidated Results of Operation (Percentages indicate year-on-year changes.) Net sales Operating income Ordinary income Net income Millions of yen 11,451 10,840 % Millions of yen 1,488 1,320 5.6 5.6 % Millions of yen 1,667 32.2 1,261 △0.6 % Millions of yen 1,208 854 12.7 3.5 % 41.5 13.6 Earnings Per Share Diluted Earning Per Share Yen 76.04 53.99 Yen 75.85 53.57 New FY04/22 FY04/21 FY04/22 FY04/21 (2)Non-Consolidated Financial Position Total assets Net assets Equity Ratio Net assets per share FY04/22 FY04/21 Millions of yen 7,459 5,731 Millions of yen 5,416 4,350 (Reference) Shareholders’ equity FY04/22 5,321 Millions of yen % 71.3 74.2 Yen 334.69 267.81 FY04/21 4,252 Millions of yen ※ This financial summary is not subject to the audit by a certified public accountant or auditing firm. ※ Disclaimer regarding to Forward Looking Statements (Precautions on forward-looking statements) The earnings forecasts and other forward-looking statements presented in these materials reflect information available to the company and assumptions as of the date of this announcement that are based on uncertain factors that may affect future results, and the Company does not guarantee the achievement of these targets. Actual results may differ significantly as a consequence of numerous factors. Please refer to “1. Overview of Operating Results, (4) Future Outlook” on page 5 of the attachments for the assumptions used in the forecasts and cautionary statements regarding the use of the forecasts. (Video for financial briefing) We plan to distribute a video on our financial results on our website (https://hamee.co.jp/ir/library/video). 1 ○Accompanying Materials – Contents 1.Overview of Operating Results……………………………………………………………………………………….2 (1)Overview of Operating Results for the Fiscal Year under Review…………………………………………..2 (2)Overview of Financial Position for the Fiscal Year under Review……………………………………………5 (3)Overview of Cash Flows for the Fiscal Year under Review……………………………………………………5 (4)Future Outlook………………………………………………………………………………………………………7 2. Basic Approach to the Selection of Accounting Standards……………………………………………………..11 3. Consolidated Financial Statements and Major Notes……………………………………………………………12 (1)Consolidated Balance Sheets……………………………………………………………………………………12 (2)Consolidated Statement of Income and Consolidated Statement of Comprehensive Income………..14 (3)Consolidated Statements of Changes in Net Assets…………………………………………………………16 (4)Consolidated Statements of Cash Flows……………………………………………………………………..20 (5)Notes fo consolidated financial statements…………………………………………………………………..22 (Notes on the Going Concern Assumption)…………………………………………………………………….22 (Basis of Presenting Consolidated Financial Statements)…………………………………………………..22 (Changes in Accounting Policies)………………………………………………………………………………..23 (Segment information, etc.)……………………………………………………………………………………..24 (Per Share Information)………………………………………………………………………………………….27 (Significant Subsequent Events)…………………………………………………………………………………28 1 1.Overview of Operating Results. (1)Overview of Operating Results for the Fiscal Year under Review During the fiscal year under review, in Japan, restrictions on actions due to COVID-19 continued, and while there was no significant recovery in consumption at physical stores, there was no significant reactionary decline against the expansion of the EC market, which showed a significant rise in the previous fiscal year, the first year of COVID-19. Turning to the global economy, we felt the headwinds throughout the year, including the sharp depreciation of the yen, the disruption in the supply chain triggered by the global shortage of semiconductors, the sharp rise in marine freight rates caused by the shortage of containers and the shortage of labor due to lock-downs, and the soaring price of crude oil and other resources. ① Commerce Business a. Domestic business In this environment, the status of each segment was as follows. In the first quarter of the consolidated fiscal year under review, although there was no backlash like the increase in demand seen in the previous fiscal year due to the launch of iPhone SE2 and other factors, in the new iPhone shopping season in September, the release of new products, particularly iFace series, progressed steadily, and sales and marketing measures that accurately grasped market trends were successful. As a result, we remained at a level above that of the previous fiscal year, and it was again confident that iFace’s brand power was high. In retailing, we won the Rakuten Shop of the Year 2021 Smartphone, Tablet, and Peripheral Equipment Genre Award for the third consecutive year. In wholesaling, we launched full-scale transactions with new carriers, and we were able to achieve results that will lead to future growth in each of our sales channels. In the fourth quarter of the fiscal year under review, retail sales fell short of the previous fiscal year due to the headwinds of an extension of the period of restrictions on behavior during COVID-19 to the new lifestyle shopping season. On the other hand, in April, real consumption recovered and wholesale sales recovered its momentum. This was a period in which we were able to demonstrate stable profitability in our business of maintaining a strong brand of iFace by maintaining a balanced distribution channel of wholesale, retail, and two sales channels. This year, iFace celebrated its 10th anniversary since its launch. Going forward, we will continue to firmly grow this brand as a mainstay brand. In addition, the gaming monitor business, which started in the fiscal year under review, continued to be unable to meet demand in the first half of the fiscal year under review due to a supply shortage caused by a worldwide shortage of semiconductors and other factors. However, supply recovered from the second half of the fiscal year, and average monthly sales rose to more than JPY50 million. In the Cosmetics Business launched in the third quarter of the fiscal year under review, we will continue to make upfront investments for the time being because of aggressive marketing and branding measures. However, we are expanding our sales channels utilizing wholesale and other sales channels in the Commerce Business, and we will firmly link this to the next fiscal year. b. Overseas Business In the U.S., the largest market, various e-commerce sales measures were successful by strengthening the organizational capabilities related to e-commerce sales, which had been undertaken in the past, and contributed to boosting sales, particularly in Otamatone. In addition, our organizational strength grew enough to enable us to roll out localized products in the U.S. market. As a result, sales were robust, particularly for squeezes, which were featured in character rollouts. In line with this development, we were able to accelerate the development of tech accessories, particularly in iFace. As a result, net sales in the Commerce Business were JPY10,189,693 thousand (up 4.8% year on year) and operating income was JPY2,186,985 thousand (down 12.5%). 2 ② Platform Business a. Next Engine For the internally developed cloud computing (SaaS) EC Attractions Next Engine, although the pace of customer acquisition stabilized compared to the previous fiscal year, when there was special demand for e-commerce because of COVID-19, we continued to strengthen customer success activities. In September, we reached 5,000 clients, and the number of clients remained at a high level compared to the level prior to COVID-19. We are investing in infrastructure to improve the efficiency of server operations and ensure stable operation. Although this investment has a slight impact on the profit margin, the increase in revenues from the acquisition of more clients contributed to solid growth in operating income. b. Hamee Consulting Corp. (hereafter, Hamee Consulting) In Hamee consulting, which provides sales support consulting for e-commerce businesses, we were able to continuously win EC consulting contracts with major customers, and our sales base grew significantly. In addition, we added new store production and renovation and other production projects that were newly launched as business divisions in the second half of the fiscal year as focus areas, resulting in significant increases in sales and profits. As a result, net sales in the Platform Business were JPY2,769,297 thousand (up 20.0% year on year) and operating income was JPY1,144,063 thousand (up 19.8%). ③ Others This is related to new services that cannot be clearly categorized into either the Commerce Business or the Platform Business, and includes the Hometo Tax Payment Support Service, Hamic POCKET mobile device for elementary school students, and RUKAMO ethical net shop. The Hometown Tax Payment Business recorded significant increases in both sales and profits, supported by the expansion of the hometown tax payment market, in addition to sales activities that have been undertaken since the beginning of the fiscal year, centered on the development of new businesses for returns and return home items, the use and enhancement of Next Engine, and strengthened efforts on the front side, such as the conversion and renovation of local government portal sites and advertising production. With regard to Hamic POCKET, in order to resolve the battery issues in Hamic Pocket that had been on the market since the beginning of the fiscal year, in February 2022 we began sales of a Hamic Pocket L with a larger battery capacity. However, the difficulty of developing and manufacturing smartphones by ourselves is high, and we continue to be unable to produce products that meet user expectations. We will continue to develop these products within the scope of our annual investment ceilings. In the fiscal year under review, net sales were JPY454,490 thousand(up 37.9% year on year), and segment income (operating loss) was JPY231,659 thousand (compared with an operating loss of JPY273,208 thousand in the previous fiscal year) due to the upfront investment phase other than the “Hometown Tax Payment Support Service.” As a result, net sales for the fiscal year under review were JPY13,413,481 thousand (up 8.5% year on year), operating income was JPY2,202,385 thousand (up 1.0%), ordinary income was JPY2,329,611 thousand (up 8.4%), and attributable to owners of parent net income was JPY1,743,821 thousand (up 12.0%). As a result of comprehensively considering consolidated sales of JPY13.8 billion or more and consolidated operating profit margin of 16% or more, which are targets for the current consolidated fiscal year under the medium-term management plan (from the fiscal year ending April 2020 to the fiscal year ending April 2022), we believe that we have achieved this target, and the year-end dividend payout ratio is 20% or more, subject to a resolution of the shareholders meeting. 3 As a change in accounting policy, we have applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and other standards from the beginning of the fiscal year under review. For more information, please refer to “3. Consolidated Financial Statements and Major Notes, (5) Notes to Consolidated Financial Statements (Changes in Accounting Policies).” 4 (2)Overview of Financial Position for the Fiscal Year under Review (Assets, Liabilities and Net Assets) ① Current assets The balance of current assets at the end of the fiscal year under review increased by JPY1,701,502 thousand from the end of the previous fiscal year to JPY8,158,236 thousand, up 26.4% from the end of the previous fiscal year. This was mainly attributable to an increase of JPY671,141 thousand in cash and deposits due to borrowings, an increase of JPY76,900 thousand in notes and accounts receivable-trade due to an increase in net sales, an increase of JPY465,794 thousand in merchandise, and an increase of JPY366,427 thousand in advances paid. ② Fixed assets The balance of fixed assets at the end of the fiscal year under review increased by JPY477,936 thousand from the end of the previous fiscal year to JPY2,359,956 thousand (up 25.4%). This was mainly due to an increase of JPY500,109 thousand in buildings and structures and JPY331,201 thousand in land as a result of the relocation of offices of Hamee Global Inc, etc., and a decrease of JPY203,907 The balance of current liabilities at the end of the fiscal year under review increased by JPY486,253 thousand from the end of the previous fiscal year to JPY2,232,316 thousand (up 27.8%). This was mainly due to an increase of JPY487,822 thousand in short-term loans payable and an increase of JPY91,291 thousand in accounts payable-other, offset by a decrease of JPY117,133 thousand in income thousand in goodwill. ③ Current liabilities taxes payable. ④ Long-term liabilities The balance of non-current liabilities at the end of the fiscal year under review decreased by JPY31,677 thousand from the end of the previous fiscal year to JPY32,960 thousand (down 49.0%). This was mainly due to a decrease of JPY43,853 thousand in long-term loans payable. ⑤ Net assets The balance of net assets at the end of the fiscal year under review increased by JPY1,724,864 thousand from the end of the previous fiscal year to JPY8,252,916 thousand (up 26.4%). This was mainly due to an increase of JPY1,585,501 thousand in retained earnings and an increase of JPY120,758 thousand in foreign currency translation adjustments. (3)Overview of Cash Flows for the Fiscal Year under Review (Cash Flows) Cash and cash equivalents (hereinafter referred to as “funds”) at the end of the fiscal year under review increased by JPY671,141 thousand from the end of the previous fiscal year to JPY4,025,758 thousand. The status of each cash flow for the current consolidated fiscal year and their factors are as follows. Cash flows from operating activities Net cash provided by operating activities was JPY1,186,178 thousand (compared with JPY1,941,111 thousand provided in the previous fiscal year). This was mainly due to cash outflows JPY425,444 thousand increase in inventories, JPY356,306 thousand increase in advance payments, and JPY919,631 thousand yen in income taxes paid, which outweighed cash inflows such as income before income taxes of JPY2,462,979 thousand, depreciation of JPY432,421 thousand, and amortization of goodwill of JPY205,197 thousand. 5 Cash flows from investing activities Net cash used in investing activities was JPY886,457 thousand (compared with JPY412,081 thousand used in the previous fiscal year). This was mainly due to expenditure factors such as purchase of property, plant and equipment of JPY824,443 thousand and purchase of intangible assets of JPY193,183 thousand, which outweighed income factors such as proceeds from sales of shares of subsidiaries and associates of JPY182,354 thousand. 6 Cash flows from financing avtivities Net cash provided by financing activities was JPY298,055 thousand (compared with JPY1,736,346 thousand used in the previous fiscal year). This was mainly due to outflow factors such as repayment of long-term loans payable of JPY48,036 thousand and dividend payments of JPY158,776 thousand, which outweighed inflow factors such as an increase of JPY500,000 thousand in short-term loans payable. (Reference) Cash flow indicators Equity Ratio (%) FY04/18 FY04/19 FY04/20 FY04/21 FY04/22 68.8 70.3 57.9 77.1 77.6 Equity ratio based on market value (%) 530.7 213.7 256.7 302.2 171.5 Ratio of interest-bearing debt to cash flow(years) 0.2 0.8 0.9 0.1 0.5 Interest coverage ratio (Times) 450.2 313.0 581.6 202.9 400.6 Equity ratio : Equity capital/Total assets Equity ratio based on market capitalization: Market capitalization/Total assets Interest-bearing debt to cash flow ratio: Interest-bearing debt/Cash flow Interest coverage ratio: Cash flows/Interest payments (NOTE) 1. All figures are calculated based on consolidated financial figures. 2.Market capitalization is calculated based on the number of shares outstanding. 3.Cash flows from operating activities are used for cash flows. 4. Interest-bearing debt includes all debt on the consolidated balance sheet for which interest is paid. (4)Future Outlook (Future Outlook) ① Spin-off of Platform Business and absorption-type merger of Hamee Consulting The Commerce Business, which was launched as an EC specializing in the strap of mobile phones, is the foundation of the Group’s business. The Next Engine of the Platform Business is the services created to resolve various issues that arise in operating EC stores in this business. The fact that the Next Engine was born from the field of EC management, the Commerce Business, is the biggest differentiator from the services of other companies. On the other hand, based on the trust of customers, the Next Engine can be used by many users, enabling it to incorporate EC management know-how other than in-house, and has achieved growth for the Group as a whole while leveraging the mutual synergy between the Commerce Business and the Platform Business. Nonetheless, the number of Next Engine users in the Platform Business currently exceeds 5,400 clients, and we are growing into an infrastructure that supports the distribution of a wide variety of products and the businesses of EC businesses of various sizes. Although the Commerce Business continues to be one of a client of Next Engine, the perspective of improving the functions of services themselves by solving problems at a single company is fading. More than 5,400 clients, and beyond that, there is a need to develop services to solve problems at all EC operators in Japan. On the other hand, in the Commerce Business, whereas initially the purchase and sale of products from other companies was the primary focus, at present approximately 90% of total sales are from our own products, and we have evolved into a business model in which we have the functions of planning, developing and manufacturing products within the group, and can complete everything from upstream to downstream in the supply chain on our own. In light of these facts, we have come to the recognition that each of the growth phases has changed significantly in both the Platform Business and the Commerce Business. When based on this assumption, we believe that in the process in which the two businesses grow as a single organization, there will be a variety of challenges, including the increasing complexity and inefficiency of management operations and the difficulty of maintaining and improving employee motivation through a single personnel system. 7 Our mission is to “Ignite your creativity” We believe that this will be achieved by creating an environment in which each member of Hamee can continue to maintain high calorific value. We have concluded that the means to maintain and realize our mission over the super-long term is the spin-off of the Platform Business (name of the successor company: NE Corp.)(*1). For details on the spin-off, please refer to the “Notice of Business Succession of Platform Business through Corporate Split (Absorption-type Split)” announced today. As a concrete effect of the spin-off, we expect that the streamlining of each organization will enable flexible and flexible decision-making. Generally speaking, there are no cases in which there are concerns that the spin-off will result in the loss of a sense of unity as a group. However, we intend to continue to maintain our growth potential with a sense of unity by continuing to have a shared mission of “Ignite your creativity” and by continuing to have a culture that strongly links to it across the group. In addition, as provided in the “Notice of Absorption-type Merger of Sub-subsidiaries by Consolidated Subsidiaries” on today, Hamee Consulting is scheduled to be absorbed by NE Corp., the successor company in the spin-off, on September 1 (*1). (*1) The spin-off and the absorption-type merger of Hamee Consulting are subject to approval at our annual meeting of stockholders to be held on July 28, 2022. ② Changes in reportable segments In line with our new management structure, we changed the reporting segments from the year ending April 2023, and the major changes are as follows. Hamic RUKAMO NE Korea (Note) Localco (Hometown Tax Payment) Others Others Existing segments (until the fiscal year ended April 2022) Revised segment (from the fiscal year ended April 2023) (NOTE) In the future, Next Engine Korea will independently develop and develop services suitable for the South Korean EC market under Hamee Global, and will calculate and disclose them in the Commerce Segment in order to seek new forms of services. Commerce Commerce Platform Platform Platform Others Corporate expenses will continue to be tabulated and disclosed as “Adjustments.” We will also compile and disclose highly important assets and liabilities by segment. ③ Changes in institutional design At the same time as the spin-off, we will shift from a company with an Audit & Supervisory Board to a company with an Audit & Supervisory Committee (*2). With the response to the Corporate Governance Code, the requirements for outside directors have become stricter, and as one of the measures to deal with this, we will make the transition to a company with an Audit and Supervisory Committee structure that is in line with the Corporate Governance Code. At the same time, we will review the roles of the Board of Directors and directors, the roles of outside directors, and the roles of the president and other executive officers, and delegate authority to the president and other executive officers, thereby enabling more flexible corporate management in line with the front lines of business. (*2) Changes in the design of the institution are subject to a resolution of the shareholders. ④ Mid-Term Management Plan Under the Medium-Term Management Plan (from the fiscal year ended April 2023 to the fiscal year ended April 2025), the Medium-Term Management Plan for each of the Commerce Segment and the Platform Segment is as follows, assuming the spin-off of the Platform Business for the purpose of the Group’s super-long-term growth. 8 ・Commerce segment As a result of the aforementioned “② Changes in reportable segments,” the Commerce Segment will consist of the Mobile Life Business, which handles smartphone accessories mainly in iFace, Salisty, the Gaming Accessories Business, which handles gaming monitor brand Pixio, the Cosmetics Business, which operates under ByUR brand, and the Global Business, which is centered on the U.S. Our dependence on the domestic market and the smartphone accessories field is a major challenge. To address this challenge, we will aggressively expand our categories and create new businesses by leveraging our strengths in the following areas: ① EC management knowledge; ② supply chain, in which we plan, development, and manufacture in-house, and maintain a well-balanced network of two sales channels: wholesale and e-commerce retail; and ③ highly recognized iFace brands. As a new management strategy, 1.Category Expansion and New Business Creation (New Business Strategy) 2.DX•SX (DX•SX Strategy) 3.Expanding Overseas Sales Share (Global Strategy) We will work on the aforementioned pillars. 1.Category Expansion and New Business Creation In areas where we can leverage the strengths we have cultivated in our existing businesses (smartphone accessories), we will aggressively expand categories and create new businesses. We will aggressively invest in the cosmetics business, centered on cosmetics brand ByUR, and the gaming accessories business, centered on gaming monitor brand Pixio, as our core businesses, centered on the mobile life business, centered on smartphone accessories. In other areas as well, we will work to expand categories and create new businesses through in-house new business creation systems and M&A. 2.DX・SX We will work on DX for the entire business so that touchpoints with customers that have increased as a result of category expansion and the creation of new businesses can be connected digitally and strongly for a long time, and those points can be linked together to generate even more revenue. In addition, we will further strengthen our in-house control of the supply chain, from upstream to downstream, which is one of our strengths, and promote DX throughout the organization to create an improvement cycle that can accurately reflect customer needs for each function. In addition, we will strive to build a supply chain that reduces unused inventory, which always occurs in manufacturing, and build a system for reuse of our own plastic products. In this way, we will improve profitability, success reproduction, and sustainability of growth. 3.Increase share of overseas sales In order to overcome our dependence on the domestic market, we will leverage the management know-how and resources we have cultivated in Japan⇔South Korea to expand our overseas sales shares, mainly targeting the U.S. market, with Hamee Global as the core. In the United States, we will plan and develop low rebound general merchandises(squeezes, etc.) and music toys (otamatone) for local markets. While expanding retail and wholesale sales, we will develop smartphone accessories centered on iFace, a proprietary product, with the aim of achieving a 20% share of overseas sales in three years. Based on these measures, we will build a business model that will enable sustained growth in the commercial segment for the year ending April 2025, with sales of JPY19,383 million and a segment margin of 22%. ・Platform segment 9 As a result of the aforementioned “② Changes in reportable segments,” the Platform segment is expected to continue to grow steadily, and in addition to Next Engine, the main businesses are the Consulting Business (currently Hamee Consulting) and the Localco Business (currently the Hometown Tax Payment Business). Realizing a Strong Customer Base and a Virtuous Business Structure Next Engine is mainly services supported by (e-commerce transaction value) medium-sized businesses. Building a strong customer base as Next Engine business is the key to further growth. Focusing on the growing number of small businesses (e-commerce transaction value) in COVID-19, we will expand and strengthen services for small businesses over the next three years and aim to significantly increase the total number of clients. We anticipate that micro businesses will be interested in expanding sales and EC knowledge, which are the top management themes. We will focus on the development of services and functions for micro businesses and the formation of Next Engine communities, and build a solid customer base. In this customer base, we will provide production, EC consulting, and other services through the consulting business to businesses that have the same challenge of expanding sales, which is of interest to micro businesses, and even medium businesses that have the same challenge. In addition, we will further pursue synergies, such as the consulting business, which acts as the initial setting agent for Next Engine, with the aim of realizing a “virtuous cycle business structure.” In order to realize these goals, NE Corp. will conduct an absorption-type merger of Hamee Consulting, as disclosed today in the ” Notice of Absorption-type Merger of Sub-subsidiaries by Consolidated Subsidiaries,” aiming to build an integrated service flow that can respond to the various management issues faced by EC operators and further expand its customer base. In the Consulting Business, we will promote the efficiency of consulting resources by organizationally leveling client responses and introducing chat consulting. In addition, growth has accelerated in recent years, and by strengthening the design functions (e-commerce site construction projects, etc.) that we commercialized in the previous fiscal year, we intend to accelerate the growth of the consulting business as a whole by strengthening our lead from design (one-time orders) to e-commerce consulting contracts (stock). revitalization. In the localco business, we aim to increase the amount of donations by acquiring new municipalities and increasing the number of websites handled through continuous sales enhancements, and by developing new businesses for returns and returns. In addition, we will seek initiatives other than individual version hometown tax payment and consider implementing new initiatives for regional Based on the above, in the medium-term management plan (from the fiscal year ending April 2023 to the fiscal year ending April 2025), the platform segment is targeting net sales of JPY5,441 million and an operating income margin of 46% or more for the entire segment in April 2025. In addition, the consolidated group as a whole is targeting consolidated net sales of JPY24,824 million and consolidated operating income of JPY5,459 million in the fiscal year ending April 2025. ⑤ Forecast for the Fiscal Year Ending April 2023 Consistent with the aforementioned medium-term management plan, we currently forecast the following consolidated results for the fiscal year ending April 2023. Net sales Operating income Ordinary income 15,932 Millions of yen (Year on year Up 18.8%) 2,293 Millions of yen (Year on year Up 4.1%) 2,295 Millions of yen (Year on year Down 2.2%) 10 Attributable to owners of parent Net income 1,575 Millions of yen (Year on year Down 9.6%) ※Cautionary Statement with Respect to Forward-Looking Statements The forecasts of consolidated financial results for the fiscal year under review for the group presented in this document are based on judgments and assumptions using information available as of the date of this document. Actual results may differ depending on various factors. 2. Basic Approach to the Selection of Accounting Standards Our group intends to prepare consolidated financial statements under Japanese GAAP for the foreseeable future, considering the comparability of consolidated financial statements between periods and between businesses. With regard to the adoption of International Financial Reporting Standards, the group intends to respond appropriately, taking into account various domestic and overseas circumstances. 11 3.Consolidated Financial Statements and Major Notes (1)Consolidated Balance Sheets (Thousands of yen) End of previous fiscal year (As of April 30, 2021) End of current fiscal Year (As of April 30, 2022) – – – – 3,354,616 1,590,162 962,612 4,674 5,800 185,560 386,439 △33,133 6,456,733 208,420 △60,667 147,753 638,447 △501,983 136,464 334,921 619,139 340,255 235,794 14,002 13,720 603,772 34,407 46,749 15,197 417,860 150,945 △6,052 659,108 1,882,020 8,338,753 4,025,758 1,667,063 1,428,407 9,556 5,507 551,987 501,449 △31,493 8,158,236 738,271 △90,409 647,862 2,370 △712 1,657 859,869 △628,646 231,223 331,201 664 1,212,610 136,347 302,343 15,424 3,093 457,208 32,302 39,232 473,990 144,611 – – 690,137 2,359,956 10,518,193 Assets Current assets Cash and deposits Notes and accounts receivable Inventory Work in process Supplies Advance payments Others Allowance for doubtful accounts Total current assets Fixed assets Property, plant and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Automotive equipment Accumulated depreciation Vehicles, net Tools, furniture and fixtures Accumulated depreciation Tools, furniture, and fixtures, net Land Construction in progress Total property, plant and equipment Intangible assets Goodwill Software Trademark right Others Total intangible assets Investments and other assets Investment securities Stocks of subsidiaries and affiliates Net defined benefit asset Deferred tax assets Others Allowance for doubtful accounts Total investments and other assets Total noncurrent assets Total assets 12 long-term loans Liabilities Current liabilities Accounts payable Short-term loans Current portion of payable Accounts payable-other Accrued expenses Income taxes payable Provision for bonuses Reserve for sales returns Provision for discount points Others Total current liabilities Non current liabilities Long-term loans Obligations for retirement pay Asset retirement obligations Others Total Non current liabilities Total liabilities Net assets Shareholders’ equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Other accumulated comprehensive income Valuation difference on securities Adjustments on foreign currency statement translation Total other accumulated comprehensive income Stock Option Total net assets Total liabilities and net assets End of previous fiscal year (As of April 30, 2021) (Thousands of yen) Current Consolidated Fiscal Year (As of April 30, 2022) 208,741 12,177 48,036 729,990 185,142 478,607 51,096 6,938 217 25,114 43,853 – 20,785 64,638 1,746,062 594,043 532,785 5,612,726 △363,636 6,375,918 54,009 54,009 98,124 6,528,052 8,338,753 – – – – – 173,579 500,000 43,853 821,281 221,240 361,473 41,824 69,063 2,232,316 19,000 11,143 2,817 32,960 597,803 541,753 7,198,228 △355,971 7,981,813 727 174,767 175,494 95,608 8,252,916 10,518,193 1,810,701 2,265,227 13 (2)Consolidated Statement of Income and Consolidated Statement of Comprehensive Income (Thousands of yen) Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal year (May 1, 2021 to April 30, 2022) Consolidated income statement Net sales Cost of sales Gross profit Reversal of provision for sales returns Provision for sales returns Gross profit after adjustment of reserve for sales returns Selling, general and administrative expenses Equity in earnings of associated companies Operating income Non-operating income Interest income Compensation income Foreign exchange gains Others Total non-operating income Non-operating expenses Interest expenses Payment Guarantee Fee Foreign exchange losses Settlement money Others Total non-operating expenses Ordinary income Extraordinary income Gain on sales of noncurrent assets Gain on sales of investment securities Gain on sales of stock of affiliates Gain on sales of stock of affiliates Others Total extraordinary income Extraordinary loss Loss on retirement of noncurrent assets Loss on sales of noncurrent assets Loss on valuation of investment securities foreign currency Loss on reversal of translation adjustments Total extraordinary loss Income before income taxes and minority interests Income taxes Income taxes-deferred Total income taxes Net income Net Profit attributable to owners of parent 14 12,363,688 4,801,731 7,561,956 6,716 6,938 7,561,735 5,382,026 2,179,708 11,590 52,008 2,148,786 – – – – 1,021 244 15,466 4,352 21,086 9,564 6,839 24,013 372 4,999 1,258 6,630 489 80 10,164 868 11,602 2,143,813 705,987 △118,500 587,486 1,556,327 1,556,327 13,413,481 4,891,728 8,521,753 8,521,753 6,319,367 2,202,385 – – – – – – – 1,290 5,337 16,327 90,158 38,317 151,432 2,960 7,527 8,457 5,260 24,207 917 172,307 18,006 191,231 3,166 54,696 2,329,611 57,862 2,462,979 768,136 △48,977 719,158 1,743,821 1,743,821 Consolidated Comprehensive Income Statement (Thousands of yen) Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal Year (May 1, 2021 to April 30, 2022) Net income 1,556,327 1,743,821 Other comprehensive income Valuation difference on securities Foreign currency translation adjustments Total other comprehensive income Comprehensive income (Details) Comprehensive income attributable to owners of parent Comprehensive noncontrolling interests income attributable to 215,202 215,202 1,771,529 – – 727 120,758 121,485 1,865,306 – 1,771,529 1,865,306 15 (3)Consolidated Statements of Changes in Net Assets Previous fiscal year (May 1, 2020, to April 30, 2021) (Thousands of yen) Shareholders’ equity Opening balance 536,677 456,677 4,166,941 △313,117 4,847,178 Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity 57,366 57,366 △110,541 1,556,327 18,741 14,637 33,379 △65,156 △65,156 Closing balance 594,043 532,785 5,612,726 △363,636 57,366 76,108 1,445,785 △50,519 Other accumulated comprehensive income Foreign Currency Translation Adjustment account In addition Comprehensive income Total accumulated amount Stock Option Total net assets Opening balance △161,192 △161,192 138,380 4,824,365 114,733 △110,541 1,556,327 – 1,528,740 6,375,918 – 114,733 △110,541 1,556,327 △65,156 33,379 Cumulative effect of changes in accounting policies Issuance of new shares Dividends of Net profit attributable to owners of parent Purchase treasury stock Disposal of treasury stock Net change in items other than shareholders’ equity Total changes during the year Cumulative effect of changes in accounting policies Issuance of new shares Dividends Net profit attributable to owners of parent Purchase of treasury stock Disposal of treasury stock Net change in items than other shareholders’ equity Total current year changes in Closing balance 215,202 215,202 △40,256 174,946 215,202 54,009 215,202 △40,256 1,703,687 54,009 98,124 6,528,052 16 Current fiscal year (from May 1, 2021 to April 30, 2022) (Thousands of yen) Shareholders’ equity Opening balance 594,043 532,785 5,612,726 △363,636 6,375,918 Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity △1,826 △1,826 594,043 532,785 5,610,899 △363,636 6,374,092 3,759 3,759 5,208 △135 7,800 △158,776 1,743,821 1,685 599 7,519 △158,776 1,743,821 △135 13,008 1,685 599 Closing balance 597,803 541,753 7,198,228 △355,971 7,981,813 3,759 8,967 1,587,328 7,665 1,607,721 Other accumulated comprehensive income Other securities Variance from valuation Foreign Currency Translation Adjustment account In addition Comprehensive income Total accumulated amount Stock Option Total net assets 54,009 54,009 98,124 6,528,052 54,009 54,009 98,124 6,526,225 △1,826 7,519 △158,776 1,743,821 △135 13,008 1,685 Cumulative effect of changes in accounting policies at Balance the beginning of the year reflecting changes in accounting policies Change during year the Issuance of new shares Dividends of Net profit attributable to owners of parent Purchase treasury stock Disposal of treasury stock Change in scope of equity method Net change in items other than shareholders’ equity Total changes during the year Opening balance Cumulative effect of in changes accounting policies at Balance the beginning of the year reflecting changes in accounting policies Change during year the Issuance of new shares Dividends of Net profit attributable to owners of parent Purchase treasury stock Disposal of treasury stock Change in scope of equity method Net change in items other than shareholders’ equity – – 727 120,758 121,485 △2,516 119,568 17 Stock Option Total net assets Other accumulated comprehensive income Other securities Variance from valuation Foreign Currency Translation Adjustment account In addition Comprehensive income Total accumulated amount Total current year changes in Closing balance 727 727 120,758 121,485 △2,516 1,726,690 174,767 175,494 95,608 8,252,916 18 (4)Consolidated Statements of Cash Flows (Thousands of yen) Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal year (May 1, 2021 to April 30, 2022) Net cash provided by (used in) operating activities Income before income taxes and minority interests Depreciation and amortization Amortization of goodwill Loss on retirement of property, plant and equipment Loss (gain) on sales of property, plant and equipment (△are gains) Gain on sales of stock of affiliates Loss (gain) on sales of marketable equity securities (△are gains) Loss (gain) on revaluation of marketable securities (△are gains) Increase (decrease) in allowance for doubtful accounts (△decreased) Increase (decrease) in provision for point card certificates (△decreased) Increase (decrease) in provision for sales returns(△decreased) Increase (decrease) in accrued bonuses (△ decreased) Increase (decrease) in net defined benefit asset and liability Interest and dividend income Interest expenses Share of profit (loss) of entities accounted for using equity method (△are gains) Foreign exchange gains (losses) (△ are gains) Decrease (increase) in notes and accounts receivabletrade (△increased) (Increase) decrease in inventories (△ increased) Increase (decrease) in notes and accounts payable-trade (△decreased) Increase (decrease) in advances paid ( △ increased) Increase (decrease) in accounts payable (△ decreased) Increase (decrease) in accrued expenses (△ decreased) Others Subtotal Interest and dividend received Interest expenses paid Income taxes paid Net cash provided by (used in) operating activities Cash flow from investing activities Consideration paid for contingent acquisition of business acquisition Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sale of investment securities from sale of investments in Proceeds subsidiaries 19 2,143,813 316,546 197,554 489 △291 – 10,164 △4,999 25,813 △2,197 221 45,172 △23,308 △1,021 9,564 △244 367 △318,805 118,543 27,008 △26,458 96,604 760 16,103 2,631,310 1,021 △8,711 △682,509 1,941,111 △50,490 △181,581 313 △169,897 △29,450 5,000 – 2,462,979 432,421 205,197 3,166 △917 △172,307 54,696 – △8,072 △217 △6,938 △10,618 33,232 △1,290 2,960 △5,337 △469 △54,340 △425,444 △44,108 △356,306 111,433 34,333 △146,317 2,107,734 1,290 △3,214 △919,631 1,186,178 – – △824,443 276 △193,183 △45,815 182,354 (Thousands of yen) Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal year (May 1, 2021 to April 30, 2022) Others Cash flow from investing activities Cash flow from financing activities Increase (decrease) in short-term borrowings, net (△decreased) Repayment of long-term loans payable Proceeds from issuance of common stock Purchase of treasury stock Dividends paid Cash flow from financing activities Effect of exchange rate change on cash and cash equivalents NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (△decreased) Cash and cash equivalents at beginning of term Cash and cash equivalents at end of period 14,023 △412,081 △1,588,347 △48,036 75,735 △65,156 △110,541 △1,736,346 108,636 △98,680 3,453,297 3,354,616 △5,646 △886,457 500,000 △48,036 5,003 △135 △158,776 298,055 73,364 671,141 3,354,616 4,025,758 20 (5)Notes fo consolidated financial statements (Notes on the Going Concern Assumption) Not applicable. (Basis of Presenting Consolidated Financial Statements) Scope of consolidation 1、 Number of group companies: 6 (Note) Names of consolidated subsidiaries Hamee Global Inc. Hamee US,Corp. Hamee India Pvt.Ltd. Hamee Shanghai Tech & Trading Co., Ltd. Hamee Shanghai Trade Co.,Ltd Hamee Consulting Co., Ltd. 2.Application of the equity method (1) Equity method affiliates: 1 (Note) Name of equity-method affiliate Root Co., Ltd (NOTE)During the fiscal year under review, we sold a portion of its shares in Sippino Co., Ltd. and excluded it from the scope of application of the equity method. 21 (Changes in Accounting Policies) (Application of Accounting Standard for Revenue Recognition) The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020, hereinafter referred to as the “Accounting Standard for Revenue Recognition”) and other standards are applied from the beginning of the fiscal year under review to recognize revenue when control of promised goods or services is transferred to customers in an amount that is expected to be received in exchange for those goods or services. As a result, sales discounts, which were previously recorded as non-operating expenses, have been reduced from net sales. In the Commerce segment, we changed its method of recognizing as income and cost of sales the allowance for sales returns, which was recorded as a current liability based on the amount equivalent to gross profit, excluding the amount equivalent to revenue and cost of sales of products expected to be returned. Consequently, the consideration for products expected to be returned is included in “Other” in current liabilities as a refund liability, and assets recognized as the right to recover products from customers when the refund liability is settled are included in “Other” in current assets as a return asset. In the past, the unused portion of the in-house points granted to customers was recorded as “Provision for points.” However, due to the immateriality of the amount of these points, we have changed to a method that does not identify separate performance obligations. The Commerce business applies the alternative treatment set forth in Item 98 of “Guidance on Accounting Standards for income Recognition” and recognizes revenue upon shipment for domestic sales of merchandise when the period between the time of shipment and the time when control of the merchandise is transferred to the customer is normal. With regard to the application of the revenue recognition accounting standards, in accordance with the transitional treatment stipulated in the provisions of paragraph 84 of the Accounting Standard for Revenue Recognition, the cumulative effect of retrospective application of a new accounting policy prior to the beginning of the fiscal year under review has been adjusted to retained earnings at the beginning of the fiscal year under review, and a new accounting policy has been applied from the beginning of the fiscal year under review. However, the new accounting policy has not been applied retrospectively to contracts for which the method set forth in paragraph 86 of the Accounting Standard for income Recognition has been applied and substantially all revenue amounts have been recognized in accordance with previous treatment prior to the beginning of the current fiscal year. In addition, we apply the method stipulated in paragraph 86 and paragraph (1) of the Revenue Recognition Accounting Standards. Contract modifications made prior to the beginning of the current fiscal year are accounted for based on the contractual terms after reflecting all contract modifications, and the cumulative effect of these modifications is added to or deducted from retained earnings at the beginning of the current fiscal year. As a result, net sales for the fiscal year under review decreased by JPY5,561 thousand, cost of sales decreased by JPY1,093 thousand, operating income decreased by JPY4,468 thousand, and ordinary income and income before income taxes increased by JPY386 thousand, respectively. In addition, the balance of retained earnings at the beginning of the fiscal year decreased by 1,826 thousand. The impact on per share information is stated in the relevant section. In accordance with the transitional treatment set forth in paragraph 89-3 of the Revenue Recognition Accounting Standard, we have not presented information disaggregating revenue from contracts with customers for the prior fiscal year. 22 (Segment information, etc.) [Segment Information] 1.The outline of any Reporting Segment The reportable segments of the group are constituent units of the group for which separate financial information is available and which are subject to periodic review by the Board of Directors in deciding how to allocate resources and in assessing performance. The group consists of segments classified by products and services based on business activities. The two reportable segments are the Commerce Business and the Platform Business. Those related to new services that cannot be clearly classified into the two segments are presented as Other. The Commerce segment plans, manufactures, purchases, and sells mobile accessory-related products and services. The Platform Business provides “Next Engine,” a cloud (SaaS) type EC Attractions that supports sales and inventory management by e-commerce operators, and sales support consulting services. “Others” is a new service that cannot be clearly categorized into both existing businesses, such as the “Hometown Tax Payment Support Service” and the “Hamic POCKET” watch mobile terminal for elementary school students. 2.Methods of calculating net sales, income or loss, assets, liabilities, and other items by reportable segment The accounting treatment of the reportable segments is generally the same as that described in ” Basis of Presenting Consolidated Financial Statements.” Profits of reportable segments are figures based on operating income. Inter-segment sales and transfers are based on prevailing market prices. (Application of Accounting Standard for Revenue Recognition) As stated in “Changes in Accounting Policies,” we have applied the revenue recognition accounting standards, etc. from the consolidated financial statements for the fiscal year under review, and changed the accounting method for revenue recognition. As a result, the method of calculating income or loss for business segments has been changed in the same manner. As a result of this change, compared to the previous method, net sales in the Commerce Business for the fiscal year under review decreased by JPY5,779 thousand, segment income decreased by JPY4,686 thousand, net sales in the Other Business increased by JPY217 thousand, and segment income increased by JPY217 thousand. 23 Net sales external To customers Net sales Inter-segment Sales Or reclasses Segment profit (Loss) (△) Other items Goodwill amortization Net sales external Income from contracts with customers To customers Net sales Inter-segment Sales Or reclasses Segment profit (Loss) (△) Goodwill amortization 3.Information on net sales, income or loss, assets, liabilities and other items by reportable segment Previous fiscal year (May 1, 2020, to April 30, 2021) (Thousands of yen) Reportable segments Commerce Business Platform Business Total Others Total Adjusted amount Carrying value (NOTE)2 9,726,740 2,307,370 12,034,110 329,577 12,363,688 – 12,363,688 – 680 680 – 680 △680 Total 9,726,740 2,308,050 12,034,791 329,577 12,364,368 △680 12,363,688 2,498,624 954,876 3,453,501 △273,208 3,180,292 △1,000,584 2,179,708 Depreciation 150,954 136,457 287,411 287,411 29,135 316,546 137,562 59,992 197,554 197,554 – 197,554 (NOTE) 1. Segment assets are omitted because we do not allocate assets to reportable segments. 2.Segment income (△) is consistent with operating income in the consolidated financial statements. Current fiscal year (May 1, 2021 to April 30, 2022) (Thousands of yen) Reportable segments Commerce Business Platform Business Total Others Total Adjusted amount Carrying value (NOTE)2 10,189,693 2,769,297 12,958,991 454,490 13,413,481 – 13,413,481 10,189,693 2,769,297 12,958,991 454,490 13,413,481 – 13,413,481 – – – – – – – Total 10,189,693 2,769,297 12,958,991 454,490 13,413,481 – 13,413,481 2,186,985 1,144,063 3,331,049 △231,659 3,099,389 △897,003 2,202,385 Other items Depreciation 259,699 133,886 393,585 393,585 38,835 432,421 145,204 59,992 205,197 205,197 – 205,197 (NOTE) 1. Segment assets are omitted because we do not allocate assets to reportable segments. 2.Segment income (△) is consistent with operating income in the consolidated financial statements. – – – – – 24 [Related Information] Previous fiscal year (May 1, 2020, to April 30, 2021) 1.Information for each product and service This information is omitted because the same information is disclosed in the segment information. 2.Information for each region (1) Net sales consolidated statements of income. (2) Property, plant and equipment Japan Disclosure is omitted because net sales to external customers in Japan exceed 90% of net sales in the South Korea United States Other Asian countries Total (Thousands of yen) 170,202 445,864 2,798 274 619,139 3.Information for each major customer consolidated statements of income. This information is omitted because no external customer accounts for 10% or more of net sales on the Current fiscal year (from May 1, 2021 to April 30, 2022) 1.Information for each product and service This information is omitted because the same information is disclosed in the segment information. 2.Information for each region (1) Net sales Japan North America Asia and Oceania Other regions Total (Thousands of yen) 11,942,724 1,194,355 236,045 40,355 13,413,481 (NOTE) Net sales are classified by country or region based on the location of customers. (2) Property, plant and equipment Japan South Korea United States Other Asian countries Total 169,847 1,025,381 16,977 404 1,212,610 (Thousands of yen) 3.Information for each major customer consolidated statements of income. This information is omitted because no external customer accounts for 10% or more of net sales on the [Information on impairment loss on noncurrent assets and goodwill by reportable segment] Previous fiscal year (May 1, 2020, to April 30, 2021) Not applicable. Not applicable. Current fiscal year (May 1, 2021 to April 30, 2022) 25 [Information on Amortization of Goodwill and Unamortized Balance by Reportable Segment] Previous fiscal year (May 1, 2020, to April 30, 2021) Unamortized balance of goodwill JPY340,255 thousand Amortization of goodwill is omitted because the same information is disclosed in the segment information. The unamortized balance of goodwill is not allocated to reportable segments. Current fiscal year (from May 1, 2021 to April 30, 2022) Unamortiz