Socialwire : Consolidated Financial Results for the Fiscal Year Ending March 2021

Translation

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 document and the original Japanese document, the latter shall prevail.

Consolidated Financial Results for the Fiscal Year Ending March 2021 [Japanese GAAP]

		May 10, 2021
Listed company name	SOCIALWIRE CO., LTD.	Stock Listing: TSE
Code number	3929 URL https://www.socialwire.net/
Representative	Mineyuki Yata, President and CEO
Contact person	Tomoko Ogisu, Director, Executive Officer, General Manager of Finance and Accounting Department
Scheduled date for the Annual Ordinary General Meeting of Shareholders	June 18, 2021
Scheduled dividend payment start date	June 21, 2021
Scheduled filing date of annual securities report	June 18, 2021
Availability of supplementary explanation materials for financial results: Yes

Availability of financial results briefing: Yes (Available online from the perspective of preventing the spread of new coronavirus infections)

					(Amounts less than one million yen have been omitted.)
1. Consolidated financial results for the fiscal year ending March 2021 (April 1, 2020 - March 31, 2021)
(1) Consolidated business results			(% shows the rate of increase/decrease from the previous fiscal year)
	Sales		Operating income	Ordinary income		Net income attributable to
			owners of the parent
Fiscal year ended	million yen	%	million yen	%	million yen		%	million yen	%
March 2021	4,566	16.3	125	(37.7)	109		(31.3)	(143)	-
March 2020	3,924	20.2	201	(50.3)	159		(59.8)	72	(69.7)

(Note) Comprehensive income

FY ended March 2021

(166) million yen [-%]

FY ended March 2020

66 million yen

[(69.3)%]

Diluted net income

Total assets

Sales

Net income per share

Return on equity

Ordinary income

Operating income

per share

margin

margin

Fiscal year ended

yen

yen

%

%

%

March 2021

(23.83)

-

(12.1)

2.1

2.7

March 2020

12.23

12.10

5.6

3.8

5.1

(Reference) Equity method investment earnings (losses)

FY ended March 2021

- million yen FY ended March 2020

- million yen

(2) Consolidated financial position

Total assets

Net assets

Equity-to-asset ratio

Net assets per share

Fiscal year ended

million yen

million yen

%

yen

March 2021

5,172

1,080

20.6

176.88

March 2020

5,010

1,318

25.8

214.86

(Reference) Equity capital

FY ended March 2021

1,066 million yen

FY ended March 2020

1,294 million yen

(3) Consolidated cash flows

Cash flow from operating

Cash flow from investing

Cash flows from financing

Cash and cash equivalents

activities

activities

activities

at the end of the fiscal year

Fiscal year ended

million yen

million yen

million yen

million yen

March 2021

659

(817)

164

942

March 2020

699

(973)

340

942

2. Dividend status

		Annual dividend		Total	Dividend	Net Asset
						dividends	payout ratio	Dividend Rate
	End of 1Q	End of 2Q	End of 3Q	End-of-FY	Total
	(Annual)	(Consolidated)	(Consolidated)
Fiscal year ended	yen	yen	yen	yen	yen	million yen	%	%
March 2020	-	6.00	-	6.00	12.00	71	98.6	5.4
March 2021	-	6.50	-	2.50	9.00	54	-	4.5
Fiscal year ending March 2022 (forecast)	-	-	-	-	-		-

(Note) Dividends for the fiscal year ending March 2022 (forecast) are "to be determined". The expected dividend amount will be disclosed promptly when it becomes possible to calculate it.

3. Consolidated Earnings Forecast for the Fiscal Year Ending March 2022 (April 1, 2021 to March 31, 2022)

The earnings forecast for the fiscal year ending March 2022 is "to be determined" because the impact of market fluctuations caused by the spread of coronavirus infection on the business is still significant and it is difficult to reasonably calculate the impact at this time. We will promptly disclose the consolidated earnings forecast when it becomes possible to calculate it. For details, see "(4) Future outlook" on "1. Overview of business results, etc." on page 6 of the material.

- 1 -

• Notes
• 1. Important Changes in subsidiaries during the fiscal year (changes in specified subsidiaries accompanying changes in the scope of consolidation): None
  2. Changes in accounting policies, changes in accounting estimates, and restatements
  3. • Changes in accounting policy due to revision of accounting standards, etc. : None

• Changes in accounting policies other than ① : None
  ③ Changes in accounting estimates: None
  ④ Restatements: None

.

(3) Number of issued shares (ordinary shares)

• Number of shares issued at the end of fiscal year (including treasury shares)

• Number of treasury shares at the end of the fiscal year

• Average number of shares during the fiscal year

FY ended March 2021	6,108,600	stock	FY ended March 2020	6,103,200	stock
FY ended March 2021	77,106	stock	FY ended March 2020	77,060	stock
FY ended March 2021	6,030,120	stock	FY ended March 2020	5,950,416	stock

(Reference) Overview of individual business results
1. Individual results for the fiscal year ended March 2021 (April 1, 2020 - March 31, 2021)
(1) Individual management results			(% shows the rate of increase/decrease compared to the previous fiscal year)
		Sales			Operating income	Ordinary income			Net income
Fiscal year ended		million yen	%		million yen	%	million yen		%		million yen		%
March 2021		3,953	30.8		94	(41.3)	76		(49.4)		(149)		-
March 2020		3,021	22.1		161	(59.3)	151		(61.6)		79		(62.4)
		Net income per share	Diluted net income per share
Fiscal year ended			yen			yen
March 2021			(24.72)			-
March 2020			13.34			13.20
(2) Individual financial status
		Total assets		Net assets	Equity-to-asset ratio		Net assets per share
Fiscal year ended			million yen			million yen			%				yen
March 2021			4,704			1,094			23.2				180.98
March 2020			4,184			1,317			31.3				217.80
(Reference) Equity capital	Fiscal year ended March 2021	1,091 million yen	Fiscal year ended March 2020	1,312 million yen

• Financial statements are not subject to audit by a certified accountant or an auditing firm.
• Explanation of proper use of earnings forecasts and other special notes

(Notes on future descriptions)

The statements regarding the future, such as the business forecasts, described in this material are based on the information currently available to the Company and certain assumptions that the Company deems reasonable, and are not intended to be a commitment by the Company to be achieved. In addition, actual business results may differ from the figures in this material due to changes in internal and external conditions. For matters related to the forecast of this material, see "(4) Future outlook" under "1. Overview of business results, etc." on page 6 of the attached document.

(How to obtain supplementary materials of financial results)

Supplementary materials of financial results were disclosed on TDnet on the same day. They were also posted on our website on the same day.

- 2 -

• Table of contents of attached materials

1.	Overview of business results, etc. ....................................................................................................................................	4
	(1)	Overview of business results for the current fiscal year .............................................................................................	4
	(2)	Overview of the financial condition for the current fiscal year ..................................................................................	5
	(3)	Overview of cash flow for the current fiscal year ......................................................................................................	5
	(4)	Future outlook ............................................................................................................................................................	6
2.	Basic concept regarding the selection of accounting standards .......................................................................................	6
3.	Consolidated financial statement and main notes ............................................................................................................	7
	(1)	Consolidated balance sheet ........................................................................................................................................	7
	(2)	Consolidated statement of income and consolidated statement of comprehensive income ........................................	9
		Consolidated statement of income .......................................................................................................................	9
		Consolidated statement of comprehensive income ..............................................................................................	10
	(3)	Consolidated statement of changes in equity .............................................................................................................	11
	(4)	Consolidated statement of cash flows ........................................................................................................................	13

- 3 -

1. Overview of business results, etc.

(1) Overview of business results for the current fiscal year

In the current consolidated fiscal year, the Japanese economy slowed down sharply due to the stagnation of economic and social activities affected by the spread of the new coronavirus infection. Although the resumption of economic activity is being promoted in stages, the situation remains uncertain in certain industries due to the resurgence of infection and the accompanying declaration of emergency and priority measures to prevent its spread.

Under such a market environment, the Group has a vision of "Creating a business platform -BUILDING A BETTER ADVANCE-", focusing on expanding all businesses and maximizing sales, and growing the current business performance.

As a result, sales for the current consolidated fiscal year increased to 4,566,083 thousand yen (up 16.3% from the previous fiscal year). Regarding profits, operating income was 125,313 thousand yen (down 37.7% from the previous fiscal year), and ordinary income was 109,287 thousand yen (down 31.3% from the previous fiscal year). In addition, while a gain on sales of investment securities of 70,183 thousand yen was recorded as extraordinary income, an impairment loss on fixed assets, etc. of 323,479 thousand yen was recorded as an extraordinary loss. As a result, the net loss attributable to owners of the parent was 143,670 thousand yen (compared to the net income attributable to owners of the parent of 72,785 thousand yen in the previous fiscal year).

The business results for each segment are as follows. The figures are after the elimination of transactions between segments.

(Digital PR business)

The digital PR business manages influencer PR services, clipping (investigation and reporting) services of various media such as newspapers, magazines, WEB, and SNS, and press release distribution services for products, services, and businesses to companies, government agencies, and organizations.

In the current consolidated fiscal year, we strengthened our sales personnel, and although influencer PR service was affected by cancellations and postponements of events and projects due to the spread of the new coronavirus infection, there was a recovery in demand in July onward, and the number of projects increased significantly (up 49.7% year-on-year). While the number of media clipping service projects remained flat (up 0.9% year-on-year), the number of press release distribution services increased by 57.9% and the number of corporate users increased by 42.0%, both of which increased significantly.

As a result, sales in the digital PR business increased by 401,608 thousand yen from the previous consolidated fiscal year to 2,390,285 thousand yen (up 20.1% from the previous fiscal year), and segment income decreased by 74,249 thousand yen from the previous consolidated fiscal year to 464,059 thousand yen (down 13.7% from the previous fiscal year).

(Shared office business)

The shared office business operates shared office services and cloud translation services in eight major Asian cities (Tokyo (2 bases in Shinjuku, Roppongi, Aoyama, Shibuya, Shimbashi), Yokohama, Sendai, Singapore, Indonesia (*), India, Vietnam, Thailand).

In the current consolidated fiscal year, the cumulative number of occupied seats in operation increased significantly (up 19.7% year-on-year) at domestic bases, partly due to the effect of opening new shared office locations last year. In addition, we opened a new location, "CROSSCOOP Yokohama," in January 2021. On the other hand, with regard to overseas locations, the business environment has deteriorated significantly in some countries due to the spread of the new coronavirus infection, and it is extremely difficult to identify the timing of recovery. The cumulative number of seats in operation decreased (down 6.3% year-on-year), partly due to the decision to withdraw from operations in India and the Philippines in November 2020.

As a result, sales in the shared office business (excluding inter-segment sales) increased by 239,479 thousand yen from the previous consolidated fiscal year to 2,175,798 thousand yen (up 12.3% from the previous consolidated fiscal year), and segment income increased by 53,713 thousand yen from the previous consolidated fiscal year to 62,362 thousand yen (up 621.0% from the previous consolidated fiscal year) due to the effect of establishing new locations.

(*) The Indonesian base is operated by a franchise.

- 4 -

1. Overview of the financial condition for the current fiscal year (Assets)
   The amount of assets at the end of the current consolidated fiscal year was 5,172,912 thousand yen and increased by 161,974 thousand yen from the end of the previous consolidated fiscal year. The main reason for the increase in assets was that the right-of-use assets decreased by 344,672 thousand yen, while the increase in guarantee deposits of 499,894 thousand yen and others.

(Liabilities)

The amount of liabilities at the end of the current consolidated fiscal year was 4,092,535 thousand yen, an increase of

400,319 thousand yen from the end of the previous consolidated fiscal year. The main reasons for the increase in liabilities were lease obligations (including current liabilities) decreased by 292,970 thousand yen, while the long-term borrowings (including current portion of long-term borrowings) increased by 440,500 thousand yen, asset retirement obligations (including current liabilities) increased by 120,999 thousand yen and others.

(Net Assets)

The amount of net assets at the end of the current consolidated fiscal year was 1,080,376 thousand yen, a decrease of 238,344 thousand yen from the end of the previous consolidated fiscal year. The main reasons for the decrease in net assets were a decrease in retained earnings of 219,027 thousand yen due to the recording of a net loss attributable to owners of the parent of 143,670 thousand yen, the payment of dividends of 75,356 thousand yen and others.

(3) Overview of cash flow for the current fiscal year

The amount of cash and cash equivalents at the end of the consolidated fiscal year under review (hereinafter "capital") was increased by 136 thousand yen from the end of the previous consolidated fiscal year to 942,914 thousand yen. Below are the status of each cash flow and its factors in the consolidated fiscal year under review.

（Cash flow from operating activities）

The amount of capital gained as a result of operating activities was 659,130 thousand yen (699,807 thousand yen in the previous consolidated fiscal year). This is mainly due to loss before income taxes of 171,747 thousand yen, depreciation and goodwill amortization of 479,040 thousand yen, and impairment loss of 323,479 thousand yen.

（Cash flow from investing activities）

The amount of capital used as a result of investing activities was 817,230 thousand yen (973,962 thousand yen used in the previous consolidated fiscal year). This was mainly due to the proceeds from sale of investment securities of 143,121 thousand yen as well as due to the purchase of property, plant and equipment of 317,249 thousand yen, the payment of guarantee deposits of 577,201 thousand yen and others.

（Cash flow from financing activities）

The amount of capital gained as a result of financing activities was 164,004 thousand yen (340,328 thousand yen in the previous consolidated fiscal year). This was mainly due to the proceeds from long-term borrowings of 763,000 thousand yen, the proceeds from short-term borrowings 363,000 thousand yen and the proceeds from issuance of shares resulting from exercise of share acquisition rights of 4,393 thousand yen as well as the repayments of long-term borrowings of 322,112 thousand yen, the repayments of short-term borrowings 363,000 thousand yen, the repayments of lease obligations of 206,049 thousand yen, the dividends paid of 75,356 thousand yen and others.

- 5 -