ASKUL : Summary of Consolidated Financial Results for the Three Months Ended August 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.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

September 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: September 28, 2021

Scheduled date of commencing dividend payments: -

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 Three Months Ended August 20, 2021 (May 21, 2021 to August 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

Three months ended

Million yen

%

Million yen

%

Million yen

%

Million yen

%

August 20, 2021

102,442

2.3

3,272

9.4

3,240

8.5

2,153

43.3

August 20, 2020

100,180

2.3

2,989

102.1

2,986

105.1

1,502

65.0

(Note) Comprehensive income:

Three months ended August 20, 2021:

¥2,174

million

[50.7%]

Three months ended August 20, 2020:

¥1,442

million

[52.6%]

Basic earnings

Diluted earnings per

per share

share

Three months ended

Yen

Yen

August 20, 2021

21.01

20.99

August 20, 2020

14.72

14.65

(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 three months ended August 20, 2021 indicates the amounts after the application of the said accounting standard, etc.

When calculating the figures for the three months ended August 20, 2020 in accordance with the same Accounting Standard, change ratio of net sales would be 3.4%.

1. 1. A provisional accounting treatment regarding the business combination was finalized in the second quarter of the fiscal year ended May 2021, and the figures for the three months ended August 20, 2020 have been based on the finalized provisional accounting treatment.
   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	%
August 20, 2021		180,242	59,828	33.0
May 20, 2021		190,107	59,203	30.9
(Reference) Equity: As of August 20, 2021:	¥59,396 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 August 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.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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		-
Fiscal year ending May 20, 2022			15.00		-		15.00	30.00
(Forecast)
(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):

August 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:
August 20, 2021:	42,028	shares
May 20, 2021:	41,874	shares

3) Average number of shares during the period:
Three months ended August 20, 2021:	102,476,782	shares
Three months ended August 20, 2020:	102,103,813	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" on Page 2 and (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.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 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)	Notes to Quarterly Consolidated Financial Statements ..................................................................................................	9
	(Notes to Going Concern Assumption) .............................................................................................................................	9
	(Notes to Significant Changes in Shareholders' Equity) ...................................................................................................	9
	(Change in Accounting Policies).......................................................................................................................................	9
	(Segment Information, etc.) ............................................................................................................................................	10
3.	Other ..................................................................................................................................................................................	11
	Details of Selling, General and Administrative Expenses (Consolidated) ........................................................................	11

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.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1. Qualitative Information on Financial Results

(1) Explanation of Operating Results

During the first quarter of the fiscal year under review (from May 21, 2021 to August 20, 2021), Japan saw another wave of COVID-19 due to the arrival of a more infectious new variant and other reasons. This led to multiple prefectures continuing with the state of emergency declaration or quasi-emergency measures. Consequently, the outlook for the Japanese economy remains uncertain.

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 quarter of the fiscal year under review, the B-to-B business posted higher sales due to a recovery from the plunge in demand for office supplies in the same period of the previous year. This was despite a recoil from special demand for COVID-19infection-prevention products that took place in the same period of the previous year. In the B-to- C business, earnings continued to improve as planned due to a better gross profit margin and variable cost ratio (real value excluding the effects of adopting "Accounting Standard for Revenue Recognition," etc.) and reduced fixed costs. This was despite lower sales, caused by a temporary curb of sales promotional activities, accompanying the renewal of LOHACO Main Store.

As a result, the financial performance of the Group for the first quarter of the fiscal year under review was net sales of 102,442 million yen, a 2.3% increase year on year and a 3.4% increase year on year in real terms (Note 1), operating profit of 3,272 million yen, a 9.4% increase year on year, ordinary profit of 3,240 million yen, up 8.5% year on year, and profit attributable to owners of parent of 2,153 million yen, a 43.3% increase year on year. They each reached record highs for the first quarter 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 fiscal year under review. Accordingly, net sales for the first quarter of the fiscal year under review decreased by 1,204 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. By product category, net sales in the first quarter of the fiscal year under review increased as sales grew in living supplies, such as beverages consumed in diverse workplaces; MRO (Note 2) products, such as packing materials, whose demand rose due to increasing demand for e-commerce; and long tail products whose number of items handled exceeded 8.91 million resulting from the effort to expand the product lineups. On the other hand, special demand for products to combat COVID-19, such as hand sanitizers and face masks, which took place in the same period of the previous year, settled down and this caused sales to shrink after the boom.

With the customer base expanding steadily, 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 strategically on to ensure that customers continue to use the Group's services.

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.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As a result, net sales in the B-to-B business grew by 2,284 million yen from a year earlier to 83,406 million yen, a 2.8% increase year on year and up 3.9% year on year in real terms.

In the B-to-C business, the Group relocated LOHACO Main Store to the system infrastructure that Yahoo Japan Corporation provided, and renewed and opened as a new main store in June 2021. By utilizing the Z Holdings Group's infrastructure, including the capacity to attract customers, website platforms, and payment systems, the Group will expand its customers 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 quarter of the fiscal year under review, net sales decreased as sales promotional activities were curbed accompanying the renewal of LOHACO Main Store. However, net sales returned to another growth path in August, resulting from the restart of a large-scale sales promotion carried out in coordination with SoftBank Corporation and Yahoo Japan Corporation.

As a result, LOHACO sales decreased 311 million yen from a year earlier to 12,618 million yen, down 2.4% year on year and a 1.1% decrease year on year in real terms. Consequently, net sales of the B-to-C business in total also fell by 143 million yen from a year earlier to 16,736 million yen, a 0.9% decrease year on year and up 0.5% year on year in real terms.

As a result, net sales of the E-commerce business, combining the two businesses above, stood at 100,142 million yen, a 2.2% increase year on year and up 3.4% year on year in real terms. Gross profit-net stood at 24,841 million yen, down 0.0% year on year, as the gross profit margin fell 0.6 points year on year, a 0.6 point decrease year on year in real terms, caused by lower sales of products with high profit ratios, including infection-prevention products.

Operating profit fell to 3,308 million yen, a 3.9% decrease year on year. The ratio of selling, general and administrative expenses to net sales declined by 0.3 points year on year, a 0.3 point decrease year on year in real terms. This was mainly due to improvements in the logistics costs of the B-to-B business and LOHACO and a cut in fixed costs with the renewal of LOHACO Main Store, which reduced selling, general and administrative expenses to 21,533 million yen. Nonetheless, the reduction was not large enough to cover the fall in gross profit margin. In addition, as a result of the application of the Accounting Standard of Revenue Recognition, etc., net sales decreased by ¥1,204 million.

Net sales increased due to an expansion of the contracted business of logistics that ASKUL LOGIST Co., Ltd. received from outside the Group. In addition to the business expansion, ecohai Co., Ltd., which had been a consolidated subsidiary in the previous fiscal year, was excluded from the scope of consolidation, resulting in operating profit/loss improving considerably year on year.

As a result, net sales in the first quarter of the fiscal year under review were 2,088 million yen, a 4.8% increase year on year, and operating loss was 59 million yen, as opposed to an operating loss of 480 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 quarter of the fiscal year under review were 394 million yen, a 10.5% increase year on year, and operating profit was 44 million yen, down 18.0% year on year. There are no effects from the application of the Accounting Standard for Revenue Recognition, etc.

(Notes) 1. A year-on-year comparison assuming that Accounting Standard for Revenue Recognition, etc. has been applied since the fiscal year ended May 20, 2021.

2. 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, warehouses and others.

3