Bushiroad : Summary of Consolidated Financial Results for the Second Quarter of the Fiscal Year 2022 (Consolidated)

FOR TRANSLATION PURPOSE ONLY

Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes.

In the event of any discrepancy between this translated version and the original Japanese version, the latter shall prevail.

February 14, 2022

Summary of Consolidated Financial Results for the Second Quarter of the Fiscal Year 2022

			[Japanese standards] (Consolidated)
Company name	Bushiroad Inc.
Stock exchange listing	Tokyo
Securities code	7803		URL:https://bushiroad.co.jp/
Representative	President and COO	Yoshitaka Hashimoto
Inquiries:	Director and General Manager of Business Administration

	Toshiyuki Muraoka	TEL:[phone]
Scheduled date to file Quarterly Securities Report	February 14, 2022
Scheduled date to commence dividend payments	N/A
Preparation of supplementary material on financial results: Yes
Holding of financial results meeting:	Yes

(Amounts less than one million yen are rounded down)

1. Consolidated financial results of the second quarter of FY2022 (July 1, 2021 - December 31, 2021)

(1) Consolidated operating results (cumulative)					(Percentages indicate year-on-year changes)
	Net sales		Operating profit		Ordinary profit		Net profit attributable to
				owners of parent
	million yen		%	million yen		%	million yen		%	million yen		%
2Q of FY2022	19,574		-	1,703		-	2,581		-	1,837		-
2Q of FY2021	18,026		3.4	158		−92.9	162		−92.8	−191		-

(Note) Comprehensive income	2Q of FY2022:	1,784 million yen [−%]
		2Q of FY2021: -178 million yen [−%]
		Net profit per share		Diluted net profit per share
			yen		yen
2Q of FY2022			57.70		53.41
2Q of FY2021			−5.93		-

(Notes) 1. The Company has since FY2021 changed its fiscal year end from July 31 to June 30, and unified the whole Group's fiscal year end as June 30. With this change, the previous and current second quarter fiscal periods were different: previous period was from August 1, 2020 to January 31, 2021, and current period was from July 1, 2021 to December 31, 2021. Therefore, year-on-year quarterly increase/decrease (%) are not given.

1. 2. The Company carried out share splitting to split one share into two shares, on October 1, 2021. Net profit per share and diluted net profit per share are calculated assuming that such share splitting was carried out at the beginning of the previous consolidated fiscal year.

2. Consolidated financial position

Total assets

Net assets

Equity ratio

million yen

million yen

%

2Q of FY2022

42,020

13,122

29.8

FY2021

37,515

13,894

35.3

(Reference) Shareholders equity

2Q of FY2022: 12,511 million yen

FY2021:

13,241 million yen

2. Cash dividends

Annual dividends per share

1Q-end

2Q-end

3Q-end

Year-end

Total

yen

yen

yen

yen

yen

FY2021

-

0.00

-

0.00

0.00

FY2022

-

0.00

FY2022 (forecasts)

-

0.00

0.00

(Note) Revisions to dividend forecasts published most recently: No

The Company has since FY2021 (previous term) changed its fiscal year end from July 31 to June 30. Therefore, for FY2021 being a transitional period, the Company set its record dates of interim dividend and year-end dividend as January 31 and June 30, respectively.

FOR TRANSLATION PURPOSE ONLY

3. Consolidated performance forecasts for FY2022 (July 1, 2021 - June 30, 2022)

(Percentages indicate year-on-year increase/decrease)

	Net sales		Operating profit		Ordinary profit		Net profit attributable to	Profit per share
				owners of parent
	million yen		%	million yen		%	million yen		%	million yen		%	yen
Full-term	38,700		-	2,200		-	3,100		-	2,200		-	68.27

(Notes) 1. Revisions to performance forecasts published most recently: No

1. The Company has since FY2021 changed its fiscal year end from July 31 to June 30, and unified the whole Group's fiscal year end as June 30. The previous consolidated fiscal year was a transitional period for changing fiscal year end, and its term was irregularly 11 months from August 1, 2020 to June 30, 2021. Therefore, year-on-year increase/decrease (%) are not given.
2. The Company carried out share splitting to split one share into two shares, on October 1, 2021. Forecast of net profit per share for FY2022 was calculated taking effects of such share splitting into account.

*Notes

1. Changes in significant subsidiaries during the current quarter consolidated cumulative period

(changes in specified subsidiaries resulting in the change in scope of consolidation) :	No
(2) Application of special accounting methods to the preparation of quarterly consolidated financial statement:	Yes

1. Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements ① Changes in accounting policies due to revisions to accounting standards and other regulations: Yes

②	Changes in accounting policies due to other reasons:	No
③	Changes in accounting estimates:	No
④	Restatement of prior period financial statements:	No

1. Number of issued shares (common shares)

• Total number of issued shares at the end of the period (including treasury stock)

2Q of FY2022:

33,250,800 shares

FY2021:

33,038,800 shares

• Number of treasury stock at the end of the period

2Q of FY2022:

1,659,752shares

FY2021:

361,052shares

• Average number of shares during the period (quarterly cumulative)

2Q of FY2022:

31,854,571shares

2Q of FY2021:

32,307,454shares

(Note) The Company carried out share splitting to split one share into two shares, on October 1, 2021. "Total number of issued shares at the end of the period", "Number of treasury stock at the end of the period", and "Average number of shares during the period" were calculated assuming that such share splitting had been carried out at the beginning of the previous consolidated fiscal year.

• Quarterly summary of financial results is not included in a quarterly review by a certified public accountant or an auditing firm.
• Explanation regarding appropriate use of the earnings forecast and other special notes

Descriptions about the future such as performance forecasts contained in this document are based on information currently available to the Company and certain presumptions considered as reasonable, and those are not intended to indicate the Company should assure that it would realize such forecasts. Meanwhile, actual performance in the future may differ substantially, influenced by a wide variety of factors.

(How to obtain materials for quarterly financial results briefing)

Video streaming will be provided on the Company's website (scheduled on February 16, 2022, Wednesday, after 15:30 (JST)).

FOR TRANSLATION PURPOSE ONLY

Bushiroad Inc. (7803)

Summary of Consolidated Financial Results for the Second Quarter of FY2022

○ Table of Contents: Appendix

1. Qualitative Information regarding the Current Quarter ..................................................................................	2
(1)	Descriptions regarding operating results ...................................................................................................	2
(2)	Descriptions regarding financial position..................................................................................................	3
(3)	Cash flow status.........................................................................................................................................	3
(4)	Descriptions regarding future prospects such as consolidated performance forecasts ..............................	4
2. Quarterly Consolidated Financial Statements and Principal Notes.................................................................	5
(1)	Quarterly Consolidated Balance Sheets ....................................................................................................	5
(2)	Quarterly Consolidated Statements of Income and Statements of Comprehensive Income .....................	7
	Quarterly Consolidated Statements of Income
	For the second quarter consolidated cumulative period....................................................................	7
	Quarterly Consolidated Statements of Comprehensive Income
	For the second quarter consolidated cumulative period....................................................................	8
(3)	Quarterly Consolidated Cash Flow Statements .........................................................................................	9
(4)	Notes on Quarterly Consolidated Financial Statements ...........................................................................	11
(Going Concern Assumption).....................................................................................................................	11
(Notes in Case of Significant Changes in the Amount of Shareholders' Equity).......................................	11
(Application of Special Accounting Methods to the Preparation of Quarterly Consolidated Financial
Statements) .................................................................................................................................................	11
(Change in Accounting Principles) ............................................................................................................	11
(Segment Information, etc.) ......................................................................................................................	12
(Per share data)..........................................................................................................................................	14

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FOR TRANSLATION PURPOSE ONLY	Bushiroad Inc. (7803)
	Summary of Consolidated Financial Results for the Second Quarter of FY2022

1. Qualitative Information regarding the Current Quarter

1. Descriptions regarding operating results

It should be noted that descriptions concerning the future in the text are based on judgement of the Company as of the end of the current quarter consolidated fiscal period.

"Partial amendments to the articles of incorporation" was approved at the 14th regular shareholders meeting on October 27, 2020. So the Company has changed its fiscal year end from July 31 to June 30, and unified the whole Group's fiscal year end as June 30. With this change, the previous and current second quarter consolidated fiscal/cumulative periods were different: previous second quarter period was from November 1, 2020 to January 31, 2021 and its cumulative period was from August 1, 2020 to January 31, 2021; current second quarter period was from October 1, 2021 to December 31, 2021 and its cumulative period was from July 1, 2021 to December 31, 2021. Therefore, year-on-year comparison of operating results and cash flow status is omitted.

Japan's economy has experienced price increases due to various rising material prices besides persistent new coronavirus infection impact during the current second quarter consolidated cumulative period. Although the spread of the coronavirus was relatively contained as the vaccination progressed, the appearance of a new variant caused concern for a rebound of the infection spread making the outlook unclear. Under these circumstances, our Group endeavored to maximize our entertainment activities with multiple events held with risk avoidance measures against the spread of infection. Moreover, overseas sales of Bushiroad International Pte. Ltd. grew exponentially during the current period. Also, subsidy income is recorded as non-operating profit reflecting the subsidy obtained through such programs as J-LODlive.

As a result, operating results of the current second quarter consolidated cumulative period were as follows: Net sales of 19,574,540,000 yen; Operating profit of 1,703,134,000 yen; Ordinary profit of 2,581,447,000 yen; and Net quarterly profit attributable to owners of parent of 1,837,966,000 yen.

Operating results of individual business segments are as follows. Meanwhile, segmental net sales include sales to external customers.

1. Digital IP business

Digital IP business segment has four departments: TCG (Trading Card Games) Dept., Games Dept., MD (Merchandising) Dept., and Media Dept. Former MOG (Mobile Online Games) Dept. has been renamed to Games Dept. since the first quarter consolidated fiscal period.

(1) TCG Dept.

A strong performance has been maintained following the first quarter which registered record-high sales in terms of quarterly performance. Notably, overseas sales such as shipment of English version products is growing exponentially.

Regarding "CARDFIGHT!! VANGUARD", Season 2 of the TV animation "CARDFIGHT!! VANGUARD overDress" was aired from October through December, 2021 leading to a strong sales of the animation-related product "Kakusei suru Tenrin." In addition, starting with the "Tenth anniversary VANGUARD WGP (world grand prix)" held at Bellesalle Shinjuku Grand from December 25 and 26, 2021, ten national conventions were conducted across Japan.

With respect to "Weiss Schwarz" and "Rebirth for you", a large-scale real event called "Weiss Schwarz & Rebirth for you presents Hololive Production Festival" was held in October 2021 attracting 3,931 visitors in total. In relation to "Weiss Schwarz", many large IP products were released including booster pack "Marvel" and "Love Live! Superstar!!." Regarding English version "Weiss Schwarz", "The Quintessential Quintuplets (Gotobun no Hanayome)", which is the English version of "Weiss Schwarz" registered a record sales. With the English-version-only title "RWBY (Rubi)" achieving a same level, both English and Japanese versions fared well.

Additionally, in a new development, we released a new TCG called "Shadowverse EVOLVE" created in collaboration with Cygames, Inc.

(2) Games Dept.

The current second quarter consolidated cumulative period saw strong sales as it was an anniversary year for "D4DJ Groovy Mix", The Prince of Tennis II RisingBeat", and "VANGUARD ZERO."

However, due to the ongoing extreme competition and excessive competitors in the mobile online game market, Games Dept. as a whole had been languishing including "D_CIDE TRAUMEREI" released on September 30, 2021.

(3) MD Dept.

The capsule toys business boosted the sales basis bringing it back to near its pre-COVID-19 pandemic level. An original brand of capsule toy "TAMA-KYU" is growing as the mainstay while "Kiritai Majanhi", "Office Hanko (seal) vol.4", a popular series, and "Sauna Kit" which is a collaborated product with "Want to go to a sauna" were hot topics on TV and SNS media. In addition, goods related to "Genshin" and "The Quintessential Quintuplets" that are external IP contributed significantly.

(4) Media Dept.

Distribution revenue for the production committee of the animation "BanG Dream!" and books and electronic books published by Bushiroad Media Co., Ltd. expanded. At the same time, "Man-Baito Aozoraryoiki" a series on the COMIC BUSHIROAD WEB

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FOR TRANSLATION PURPOSE ONLY	Bushiroad Inc. (7803)
	Summary of Consolidated Financial Results for the Second Quarter of FY2022

was nominated for the 5th MANGA WE WANT TO SEE ANIMATED RANKING conducted by AmineJapan. Also, on October 27, 2021, Bushiroad Move Co., Ltd. announced to set up a new business of "Bushiroad Card" which is a credit card business.

These operations resulted in Net sales of 14,820,231,000 yen and Segment profit of 1,812,403,000 yen for the Digital IP segment.

2. Live IP business

Live IP business segment has two departments: Music Dept. and Sports Dept.

1. Music Dept.

During the current second quarter consolidated cumulative period, several live events were conducted including:

"Edelstein" of Roselia held at Nagoya Century Hall, and Photon Maiden "1st LIVE First Contact" and "ARGONAVIS LIVE 2021 COVER FESTIVAL" held at Zepp Yokohama. In addition, sales from packages and streaming delivery were strong making the overall performance of Bushiroad Music steady.

On the other hand, Hikosen Theater Company which performs mask musical ended up in a poor result due to a number of cancellations and limitations based on voluntary criteria of associations of kindergartens and nurseries.

(2) Sports Dept.

New Japan Pro-Wrestling held "G1 CLIMAX31" from September to October, 2021. As a result, sales of tickets, goods, and contents such as "New Japan Pro-Wrestling World" streaming delivery and "New Japan Collection" application software were better than the first quarter consolidated fiscal period.

Regarding "STARDOM", a women's pro-wrestling brand, two games are conducted that contributed substantially to the sales enabling Bushiroad Fight Co., Ltd. to achieve two consecutive record net sales for the quarterly period.

Those were: "10th Anniversary GRAND FINAL OSAKA DREAM CINDERELLA 2021- Osaka Mecha STARDOM" held at the Osaka-Jo Hall on October 9, 2021 and "STARDOM DREAM QUEENDOM 2021" held at the Ryogoku Kokugikan on December 29, 2021.

These operations resulted in Net sales of 4,754,308,000 yen and Segment loss of 102,404,000 yen for the Live IP segment.

1. Descriptions regarding financial position
   (Assets)

Total assets was 42,020,272,000 yen at the end of the current second quarter consolidated fiscal period, i.e. increase by 4,504,922,000 yen as compared to the end of the previous consolidated fiscal year. This is mainly due to increases in cash and deposits by 1,703,001,000 yen, accounts receivable - trade by 831,559,000 yen, buildings and structures (net) by 719,054,000 yen, and land by 815,366,000 yen, respectively

(Liabilities)

Total liabilities was 28,898,173,000 yen at the end of the current second quarter consolidated fiscal period, i.e. increase by 5,277,307,000 yen as compared to the end of the previous consolidated fiscal year. This is mainly due to increase in accounts payable - trade by 1,008,733,000 yen, income taxes payable by 722,563,000 yen, current portion of long-term loans payable by 559,065,000 yen, and long-term loans payable by 1,780,779,000 yen.

(Net assets)

Net assets was 13,122,098,000 yen at the end of the current second quarter consolidated fiscal period, i.e. decrease by 772,384,000 yen as compared to the end of the previous consolidated fiscal year. This is mainly due to increase in retained earnings by 1,181,208,000 yen from the recording of net quarterly profit attributable to owners of parent, etc., one hand, and increase in treasury stock by 1,999,897,000 yen because of purchase of treasury stock and decrease in retained earnings at the beginning of the current period by 656,758,000 yen because of the application of the Accounting Standard for Revenue Recognition, etc., on the other.

1. Cash flow status

Cash and cash equivalents (hereinafter, "business fund") at the end of the current second quarter consolidated fiscal period was 23,162,128,000 yen (increase by 715,679,000 yen from the end of the previous consolidated fiscal year).

Each cash flow status and factors thereof in the current second quarter consolidated cumulative period are as follows. (Cash flows from operating activities)

Business fund provided by operating activities was 3,118,884,000 yen. Main sources of income were net quarterly profit before adjustment for taxes, etc. of 2,581,447,000 yen, increase in notes and accounts payable-trade of 991,896,000 yen, and subsidy received of 730,347,000 yen; and main source of spending was increase in notes and accounts receivable-trade of 811,071,000 yen.

(Cash flows from investing activities)

Business fund used for investment activities was 2,868,828,000 yen. Main source of spending was purchase of non-current assets of 1,846,635,000 yen

(Cash flows from financing activities)

Business fund provided by financial activities was 378,047,000 yen. Main source of income was long-term loans payable of 4,295,000,000 yen; and main source of spending was purchase of treasury stock of 2,022,341,000 yen.

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