Aucnet : Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending December 31, 2021

Consolidated Financial Statements for the Second Quarter of

the Fiscal Year Ending December 31, 2021

[Japanese GAAP]

August 10, 2021

Company name: AUCNET INC.

Stock exchange listing: Tokyo Stock Exchange

Code number: 3964

URL: https://www.aucnet.co.jp/

Representative: Mr. Shinichiro Fujisaki, President & COO

Contact: Mr. Hiroki Taniguchi, Director & Managing Executive Officer, DM, Corporate Management Division

Phone: [phone]

Scheduled date of filing quarterly report: August 10, 2021

Scheduled date of commencing dividend payments: September 1, 2021

Preparation of supplementary explanatory materials: Yes

Quarterly financial results meeting: Yes (for institutional investors and analysts)

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

1. Consolidated Results for the Second Quarter of the Fiscal Year Ending December 31, 2021 (January 1, 2021 - June 30, 2021)

(1) Consolidated Operating Results (cumulative)	(% 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	%
	June 30, 2021	18,611	78.7	3,515	98.8	3,718	106.3	2,383	125.0
	June 30, 2020	10,416	4.6	1,768	32.9	1,803	36.5	1,059	60.6

(Note) Comprehensive income:	Six months ended June 30, 2021: ¥2,546 million [153.3%]
			Six months ended June 30, 2020: ¥1,005 million [28.7%]
		Basic earnings	Diluted earnings
		per share	per share
	Six months ended		Yen	Yen
	June 30, 2021		85.95	85.25
	June 30, 2020		38.33	37.99

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	Million yen	Million yen	%
As of June 30, 2021	38,142	21,955	56.7
As of December 31, 2020	33,280	19,637	58.1

(Reference) Equity: As of June 30, 2021: ¥21,611 million

As of December 31, 2020: ¥19,324 million

2. Cash Dividends

				Annual dividends
		1st quarter-end	2nd quarter-end		3rd quarter-end	Year-end	Total
Year ended December		Yen	Yen		Yen	Yen	Yen
	-	10.00		-	11.00		21.00
31, 2020
Year ending		-	19.00
December 31, 2021
Year ending December					-	19.00		38.00
31, 2021 (Forecast)
(Note) Revision to the forecast for dividends announced most recently: Yes

3. Forecast of Consolidated Results for the Fiscal Year Ending December 31, 2021 (January 1, 2021 - December 31, 2021)

(% indicates changes from the previous corresponding period.)

							Profit			Basic earnings
	Net sales	Operating profit	Ordinary profit	attributable to
	per share
							owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%		Yen
Full year	36,655	52.2	5,600	51.1	5,756	58.0	3,471	83.0		124.36

(Note) Revision to the forecast of consolidated results announced most recently: Yes

* Notes:

1. Changes in significant subsidiaries during the period under review: None
2. Accounting methods adopted particularly for the preparation of quarterly consolidated financial statements: Yes
3. Changes in accounting policies, changes in accounting estimates and retrospective restatement
4. 1. Changes in accounting policies due to the revision of accounting standards: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
5. Total number of issued and outstanding shares (common shares)
6. 1. Total number of issued and outstanding shares at the end of the period (including treasury shares):

June 30, 2021:	27,917,100 shares
December 31, 2020:	27,863,500 shares
2) Total number of treasury shares at the end of the period:
June 30, 2021:	140,516 shares
December 31, 2020:	147,316 shares
3) Average number of shares during the period:
Six months ended June 30, 2021:	27,730,374 shares
Six months ended June 30, 2020:	27,641,633 shares

• These quarterly consolidated financial results are outside the scope of quarterly review by certified public accountants or an audit firm.
• Explanation of the proper use of performance forecast and other notes

The earnings forecast and other forward-looking statements herein are based on the information currently available and certain assumptions deemed reasonable by the Company, and the Company does not guarantee their achievement. In addition, actual results may differ significantly from these forecasts due to a wide range of factors. For cautionary notes on assumptions that form the basis of the performance forecast and the use of performance forecast, please see "1. Qualitative Information on Quarterly Financial Results (3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information" on page 5 of the attachments.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results .............................................................................	2
(1)	Explanation of Operating Results ...........................................................................................................	2
(2)	Explanation of Financial Position ..........................................................................................................	4
(3)	Explanation of Consolidated Performance Forecast and Other Forward-looking Information ..............	5
2. Quarterly Consolidated Financial Statements and Primary Notes ..............................................................	6
(1)	Quarterly Consolidated Balance Sheets .................................................................................................	6
(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 ........................................................................	10
	(Notes on going concern assumption) .............................................................................................	10
	(Notes in case of significant changes in amount of shareholders' equity) ......................................	10
	(Accounting methods adopted particularly for the preparation of quarterly consolidated
	financial statements) .......................................................................................................................	10
	(Segment information, etc.) ............................................................................................................	10

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

Forward-looking statements in this document are based on the judgments of the Group (the Company and its consolidated subsidiaries) as of the end of the second quarter of the fiscal year under review.

During the six months ended June 30, 2021, the Japanese economy continued to face a severe condition due to the impact of the novel coronavirus (COVID-19). Going forward, the effects of an array of government policies are expected to put the economy back on track. With the spread of infections both in and outside of Japan, and with the ongoing unpredictability of fluctuations in financial capital markets, however, there will continue to be the need to keep a close eye on trends and to have in place measures to prevent the spread of infections. Under these circumstances, in line with our brand statement, "Shaping the Future of Commerce," the Company has worked to further improve its social and economic value by providing competitive value-added products and services to promote information distribution in addition to its B2B information distribution intermediary businesses.

As a result, for the six months ended June 30, 2021, net sales were ¥18,611,426 thousand (up 78.7% from the same period of the previous fiscal year), operating profit was ¥3,515,918 thousand (up 98.8% from the same period of the previous fiscal year), ordinary profit was ¥3,718,852 thousand (up 106.3% from the same period of the previous fiscal year), and profit attributable to owners of parent was ¥2,383,490 thousand (up 125.0% from the same period of the previous fiscal year).

Performance results by business segment are as follows.

In view of the growing scale of business in auctions for pre-owned luxury brand items and other services, the Company has changed its segments from the fiscal year ended December 31, 2020. The "Other Information Distribution Business" segment, which comprised auctions for pre-owned luxury brand items, used motorcycles, and flowers, has been discontinued. Auctions for pre-owned luxury brand items are now included in the new "Consumer Product Business" segment, while auctions for used motorcycles and flowers have been consolidated into the existing "Others" segment.

For the following comparison with the previous year, the figures are compared by restating the figures of the previous year to match the new segment classification.

(Automobile Business)

The Automobile Business comprises the Company's mainstay used vehicle auctions (*1), shared inventory market (*2), live linked auctions (*3), proxy bidding service (*4), used vehicle inspection service (*5), and other services.

In the Japanese automotive sector, which has close connections with our business, total new-vehicle registrations

(*6) increased 11.6% year-on-year to 2.46 million units in the six months ended June 30, 2021. The total number of used-vehicle registrations (*7) increased 4.0% year-on-year to 3.60 million units, and the number of vehicles listed (*8) at auctions around Japan increased 1.8% year-on-year to 3.74 million units. The total number of vehicles sold at auction (*8) increased 14.7% year-on-year to 2.52 million units.

In addition to online auctions and proxy services becoming more prevalent in the industry, demand for used vehicles is rising against the backdrop of prolonged delivery lead times for new vehicles caused by a shortage of semiconductors and a recovery of used car exports, which led to a trend of persistent supply shortages. Under these circumstances, for our used vehicle auctions, although the number of vehicles listed fell below that of the same period in the previous fiscal year, the number of vehicles sold rose year on year. For the same reason, the number of vehicles sold in the shared inventory market also increased. For our live linked auctions and proxy bidding service, the number of vehicles bought increased significantly from the same period of the previous fiscal year, due to the continued rise in the need for remote participation in live linked auctions. As a result of these solid results, auction-related sales increased by 12.1% year on year.

Furthermore, in the used vehicle inspection service as well, the number of vehicles inspected for outside customers remained favorable as in the first quarter, thus contributing to the improvement of business performance.

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