ASKUL : Summary of Consolidated Financial Result for the Six Months Ended November 20, 2021

Disclaimer

This document is a translation of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail in all respects.

Summary of Consolidated Financial Results for the Six Months Ended November 20, 2021 [Japanese GAAP]*

December 16, 2021

Company name: ASKUL Corporation

Stock exchange listing: Tokyo

Code number: 2678

URL: https://www.askul.co.jp/kaisya/ir/

Representative: Akira Yoshioka, President and chief executive officer

Contact: Tsuguhiro Tamai, Director and chief financial officer

Phone: [phone]

Scheduled date of filing quarterly securities report: December 28, 2021

Scheduled date of commencing dividend payments: January 17, 2022

Availability of supplementary briefing material on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: Yes (for institutional investors and analysts)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Six Months Ended November 20, 2021 (May 21, 2021 to November 20, 2021)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
		Net sales		Operating profit	Ordinary profit	Profit attributable to
				owners of parent
Six months ended		Million yen		%	Million yen	%	Million yen	%		Million yen	%
November 20, 2021		209,038		1.3	6,696	13.0	6,716	13.7		4,546	31.6
November 20, 2020		206,452		3.4	5,926	70.9	5,908	74.1		3,453	57.5
(Note) Comprehensive income:	Six months ended November 20, 2021:	¥4,598 million	[34.7%]
		Six months ended November 20, 2020:	¥3,413 million	[54.3%]
		Basic earnings	Diluted earnings per
		per share		share
Six months ended				Yen		Yen
November 20, 2021				44.37		44.31
November 20, 2020				33.81		33.66

(Notes) 1 The Group has applied "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc., effective the beginning of the current period. Accordingly, the above figures for the six months ended November 20, 2021 indicates the amounts after the application of the said accounting standard, etc.

When calculating the figures for the six months ended November 20, 2020 in accordance with the same Accounting Standard, change ratio of net sales would be 2.5%.

1. 2 ASKUL Corporation conducted a 2-for-1 stock split of common stock on May 21, 2021. "Basic earnings per share" and "Diluted earnings per share" are calculated on the assumption that the said stock split was implemented at the beginning of the preceding fiscal year.

2. Consolidated Financial Position

	Total assets	Net assets	Capital adequacy ratio
As of	Million yen	Million yen	%
November 20, 2021	193,091	62,287	32.0
May 20, 2021	190,107	59,203	30.9
(Reference) Equity: As of November 20, 2021:	¥61,827 million
As of May 20, 2021:	¥58,777 million

(Note) The Group has applied "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc., effective the beginning of the current period. Accordingly, the above figures as of November 20, 2021 indicates the amounts after the application of the said accounting standard, etc.

Disclaimer

This document is a translation of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail in all respects.

2. Dividends

			Annual dividends
	1st	2nd		3rd		Year-end	Total
	quarter-end	quarter-end	quarter-end
	Yen	Yen		Yen		Yen	Yen
Fiscal year ended May 20, 2021	-	19.00		-		30.00	49.00
Fiscal year ending May 20, 2022	-	15.00
Fiscal year ending May 20, 2022 (Forecast)				-		15.00	30.00

(Notes) 1 Revision to the forecast for dividends announced most recently: No

2 ASKUL Corporation conducted a 2-for-1 stock split of common stock on May 21, 2021. The actual amounts of dividends before the said stock split are described for the fiscal year ended May 2021.

3. Consolidated Financial Results Forecast for the Fiscal Year Ending May 20, 2022 (May 21, 2021 to May 20, 2022)

(% indicates changes from the previous corresponding period.)

								Profit attributable	Basic earnings
	Net sales		Operating profit	Ordinary profit	to owners of
		per share
								parent
	Million yen		%	Million yen	%	Million yen	%	Million yen		%	Yen
Full year	430,000		1.9	14,000	0.5	13,900	0.4	9,000		16.0	87.82

(Note) Revision to the financial results forecast announced most recently: No

* Notes:

(1) Changes in significant subsidiaries during the period under review

(changes in specified subsidiaries resulting in changes in scope of consolidation): No

1. Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: No
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
4. Total number of issued shares (common shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares):

November 20, 2021:	102,518,800	shares
May 20, 2021:	102,518,800	shares
2) Total number of treasury shares at the end of the period:
November 20, 2021:	71,796	shares
May 20, 2021:	41,874	shares

3) Average number of shares during the period:
Six months ended November 20, 2021:	102,463,511	shares
Six months ended November 20, 2020:	102,149,706	shares

(Note) ASKUL Corporation conducted a 2-for-1 stock split of common stock on May 21, 2021.

"Total number of issued shares," "Total number of treasury shares," and "Average number of shares during the period" are calculated on the assumption that the said stock split was implemented at the beginning of the preceding fiscal year.

• This Summary of Consolidated Financial Results is not subject to quarterly review.
• Notes for using forecasted information and others

Earnings forecasts and other forward-looking statements contained in this document are based on the information ASKUL has obtained to date and on certain assumptions it considers reasonable. As such, these forecasts and statements are not intended as a commitment by the Company to achieve them. Note also that actual results and other future events may differ materially from these forecasts and statements due to a variety of factors. For the assumptions on which earnings forecasts are based and notes and information on the use of earnings forecasts, see "1. Qualitative Information on Financial Results

(3) Explanation of Consolidated Forecasts and Other Forward-Looking Information" on Page 4 of Attached Materials.

Disclaimer

This document is a translation of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail in all respects.

• Table of Contents for Attached Materials

1. Qualitative Information on Financial Results .....................................................................................................................	2
(1)	Explanation of Operating Results .................................................................................................................................	2
(2)	Explanation of Financial Position..................................................................................................................................	4
(3)	Explanation of Consolidated Forecasts and Other Forward-Looking Information.........................................................	4
2. Quarterly Consolidated Financial Statements ...................................................................................................................	5
(1)	Quarterly Consolidated Balance Sheets.......................................................................................................................	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income ...............................................................	7
(3)	Quarterly Consolidated Statements of Cash Flows ......................................................................................................	9
(4)	Notes to Quarterly Consolidated Financial Statements ...............................................................................................	11
(Notes to Going Concern Assumption) ..........................................................................................................................	11
(Notes to Significant Changes in Shareholders' Equity) ..............................................................................................	111
(Change in Accounting Policies)....................................................................................................................................	11
(Segment Information, etc.)..........................................................................................................................................	12
3. Others ...........................................................................................................................................................................	134
Details of Selling, General and Administrative Expenses (Consolidated).....................................................................	13

1

Disclaimer

This document is a translation of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail in all respects.

1. Qualitative Information on Financial Results

(1) Explanation of Operating Results

During the first six months of the fiscal year under review (from May 21, 2021 to November 20, 2021), Japan saw signs of economic recovery in some fields as states of emergency and other measures, taken intermittently in the face of COVID-19, were completely lifted at the end of September 2021. However, the outlook for the Japanese economy remains uncertain due to the fear of the spread of a new variant.

The e-commerce market, in which the Group operates, keeps growing as it is strongly hoped that the market will play the role of allowing shopping activities where there is reduced contact among people with new lifestyles, which has been necessitated by the spread of COVID-19. On the other hand, competition in the industry for better service quality has continued. As a result, it has become a business management issue to realize sustainable growth in sales and profits while accommodating diverse customer demands.

Under such circumstances, the Group positions the fiscal year ending May 20, 2022 as the time to cement the foothold to fulfil the Medium-term Management Plan (from the fiscal year ending May 20, 2022 to the fiscal year ending May 20, 2025). To this end, the Group will strive to secure operating profit and simultaneously and proactively make investments. The B-to-B business in the mainstay e-commerce business, taking the expansion of the e-commerce market as an opportunity, is pushing forward with its operations steadily. For example, it is expanding the range of products handled and constructing a new website, toward the fulfilment of the Medium-term Management Plan. The B-to-C business has been engaged in improving its earnings to ensure that LOHACO starts generating operating profit in the fiscal year ending May 20, 2023 and subsequently, continues growth.

In the first six months of the fiscal year under review, the B-to-B business managed to secure a net sales increase due to growth in sales of living supplies and MRO (Note 1), which are growth fields, despite a decline in special demand for infection-prevention products and sluggish demand for office supplies. On the other hand, profit decreased due to a fall in gross profit margin, resulting from the special demand decrease and others, though the result is in line with the initial plan set at the start of the fiscal year. In the B-to-C business, net sales increased due to strengthened collaboration mainly with the Z Holdings Group, and the effort to improve earnings has made steady progress thanks to a reduction in fixed costs accompanying the renewal of "LOHACO Main Store" in addition to an improvement in the variable cost ratio (real value excluding the effects of adopting "Accounting Standard for Revenue Recognition" etc.).

In the logistics business, earnings improved significantly primarily due to an expansion of the contract business of logistics.

As a result, the financial performance of the Group for the first six months of the fiscal year under review was net sales of 209,038 million yen, a 1.3% increase year on year and a 2.5% increase year on year in real terms (Note 2), operating profit of 6,696 million yen, a 13.0% increase year on year, ordinary profit of 6,716 million yen, up 13.7% year on year, and profit attributable to owners of parent of 4,546 million yen, a 31.6% increase year on year. They each reached record highs for the first six months of a fiscal year.

The Group has applied the "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020; hereinafter referred to as the "Accounting Standard for Revenue Recognition"), etc. since the beginning of the first quarter of the current fiscal year. Accordingly, net sales for the first six months of the fiscal year under review decreased by 2,737 million yen.

Operating results by segment are outlined below. <> business>

In the B-to-B business, the mainstay business of the Group, net sales remained solid. Net sales in the first six months of the fiscal year under review increased as sales grew in living supplies, such as beverages consumed in diverse workplaces; MRO products, such as packing materials, whose demand rose due to increasing demand for e-commerce; and long tail products whose lineups are reinforced as a key effort although special demand for products to combat COVID-19, such as hand sanitizers and face masks, declined, and demand for office suppliers stagnated.

With the customer base too on an expanding trend, the Group strives to add specialized products required by each area of medical care and nursing care, and manufacturing, in particular, that the Group focuses on strategically, thereby ensuring that customers continue to use the Group's services.

As a result, net sales in the B-to-B business grew by 678 million yen from a year earlier to 169,594 million yen, a 0.4% increase year on year and up 1.6% year on year in real terms.

The B-to-C business relocated LOHACO Main Store to the system infrastructure that Yahoo Japan Corporation provided, and renewed and opened a new main store in June 2021. By utilizing the Z Holdings Group's infrastructure, including the capacity to attract customers, site platforms, and payment systems, the Group will expand its customers

2

Disclaimer

This document is a translation of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail in all respects.

and reduce costs. At the same time, it will further concentrate management resources on its strengths, which are original products, logistics and communication with customers, thereby boosting further growth. During the first six months of the fiscal year under review, the functions of the renewed "LOHACO Main Store" were improved, and simultaneously, large-scale sales promotions were carried out in coordination with SoftBank Corporation and Yahoo Japan Corporation.

As a result, LOHACO sales increased 919 million yen from a year earlier to 26,571 million yen, up 3.6% year on year and a 5.2% increase year on year in real terms. Consequently, net sales of the B-to-C business in total rose by 1,067 million yen from a year earlier to 34,819 million yen, a 3.2% increase year on year and up 4.7% year on year in real terms.

As a result, net sales of the e-commerce business, combining the two businesses above, stood at 204,413 million yen, a 0.9% increase year on year and up 2.2% year on year in real terms. Gross profit-net stood at 50,604 million yen, down 1.2% year on year and a 0.2% decrease year on year in real terms, as the gross profit margin fell 0.5 points year on year (a 0.5 points decrease year on year in real terms), caused by lower sales of products with high profit ratios, including infection-prevention products.

Operating profit increased to 6,752 million yen, a 1.8% increase year on year, as the ratio of selling, general and administrative expenses to net sales declined by 0.5 points year on year, a 0.5 points decrease year on year in real terms, resulting in selling, general and administrative expenses standing at 43,852 million yen. The decrease in the expenses was mainly due to improvements in the logistics costs of the B-to-B business, LOHACO and Charm, a consolidated subsidiary, and a cut in fixed costs accompanying the renewal of LOHACO Main Store. As a result of the application of the Accounting Standard of Revenue Recognition, etc., net sales decreased by 2,737 million yen.

Net sales increased due to an expansion of the contracted business of logistics that ASKUL LOGIST Co., Ltd. received from outside the Group. In the first six months of the fiscal year under review, the operating profit and loss situation improved significantly year on year because of the reduced burden of expenses, such as rent for a distribution center in connection with the preparation period for the contracted business of logistics.

As a result, net sales in the first six months of the fiscal year under review were 4,224 million yen, a 23.4% increase year on year, and operating loss was 78 million yen as opposed to an operating loss of 742 million yen a year earlier. There are no effects from the application of the Accounting Standard for Revenue Recognition, etc.

Tsumagoimeisui Corporation increased net sales due to strong sales of its bottled water including LOHACO, but profits fell partly because of the cost for testing that occurred prior to the operation of a new production line.

As a result, net sales for the first six months of the fiscal year under review were 735 million yen, a 5.4% increase year on year, and operating profit was 43 million yen, down 40.1% year on year. There are no effects from the application of the Accounting Standard for Revenue Recognition, etc.

(Notes) 1. MRO is an acronym for Maintenance, Repair and Operations, and the term "MRO supplies" denotes indirect materials including consumables and repair supplies for use at factories, construction sites, and warehouses and others.

2. A year-on-year comparison assuming that the Accounting Standard for Revenue Recognition, etc. have been applied since the fiscal year ended May 20, 2021.

3