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

Consolidated Financial Statements for the Third Quarter of

the Fiscal Year Ending December 31, 2021

[Japanese GAAP]

November 9, 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: November 9, 2021

Scheduled date of commencing dividend payments: --

Preparation of supplementary explanatory materials: Yes

Quarterly financial results meeting: None

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

1. Consolidated Results for the Third Quarter of the Fiscal Year Ending December 31, 2021 (January 1, 2021 - September 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
Nine months ended		Million yen	%	Million yen	%		Million yen	%		Million yen	%
September 30, 2021			27,263	72.9		4,797	73.8		5,013	82.5		3,049	88.3
September 30, 2020			15,763	6.5		2,760	50.7		2,746	47.0		1,619	69.0
(Note) Comprehensive income: Nine months ended September 30, 2021: ¥3,264 million [105.6%]
			Nine months ended September 30, 2020: ¥1,587 million [42.6%]
		Basic earnings		Diluted earnings
			per share			per share
Nine months ended			Yen				Yen
September 30, 2021			109.89			108.95
September 30, 2020			58.58			58.06
(2) Consolidated Financial Position
			Total assets			Net assets	Equity ratio
			Million yen			Million yen		%
As of September 30, 2021		37,078			22,155		58.8
As of December 31, 2020		33,280			19,637		58.1

(Reference) Equity: As of September 30, 2021: ¥21,794 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
		Yen	Yen		Yen	Yen	Yen
Year ended		-	10.00			-	11.00	21.00
December 31, 2020
Year ending		-	19.00			-
December 31, 2021
Year ending
December 31, 2021							19.00	38.00
(Forecast)
(Note) Revision to the forecast for dividends announced most recently: None

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: None

* Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in the change in scope of consolidation): 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):

September 30, 2021:	27,952,900 shares
December 31, 2020:	27,863,500 shares
2) Total number of treasury shares at the end of the period:
September 30, 2021:	140,516 shares
December 31, 2020:	147,316 shares
3) Average number of shares during the period:
Nine months ended September 30, 2021:	27,753,340 shares
Nine months ended September 30, 2020:	27,653,327 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 4 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 ..................	4
2. Quarterly Consolidated Financial Statements and Primary Notes .................................................................	5
(1)	Quarterly Consolidated Balance Sheets .....................................................................................................	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income .............................................	6
(3)	Notes to Quarterly Consolidated Financial Statements ..............................................................................	8
	(Notes on going concern assumption) ...................................................................................................	8
	(Notes in case of significant changes in amount of shareholders' equity) .............................................	8
	(Accounting methods adopted particularly for the preparation of quarterly consolidated
	financial statements) ..............................................................................................................................	8
	(Segment information, etc.) ...................................................................................................................	9

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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 third quarter of the fiscal year under review.

During the nine months ended September 30, 2021, under a severe condition due to the impact of the novel coronavirus (COVID-19), the Japanese economy saw visible signs of a gradual recovery as a result of an array of government policies including measures to prevent the spread of infections. Nonetheless, there will continue to be the need to keep a close eye on trends of the infections both in and outside of Japan and fluctuations in financial capital markets, etc. 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 nine months ended September 30, 2021, net sales were ¥27,263,383 thousand (up 72.9% from the same period of the previous fiscal year), operating profit was ¥4,797,056 thousand (up 73.8% from the same period of the previous fiscal year), ordinary profit was ¥5,013,436 thousand (up 82.5% from the same period of the previous fiscal year), and profit attributable to owners of parent was ¥3,049,687 thousand (up 88.3% 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 2.3% year-on-year to 3.48 million units in the nine months ended September 30, 2021. The total number of used-vehicle registrations (*7) decreased 0.0% year-on-year to 5.17 million units, and the number of vehicles listed (*8) at auctions around Japan increased 1.2% year-on-year to 5.36 million units. The total number of vehicles sold at auction (*8) increased 8.6% year-on-year to 3.64 million units.

Demand for used vehicles continued to rise from the second quarter due to prolonged delivery lead times for new vehicles caused by a shortage of semiconductors and insufficient supply of new vehicles mainly stemming from reduced production by automakers. Entering the third quarter, the supply shortages of used vehicles became even more obvious. Under these circumstances, the number of vehicles sold in our used vehicle auctions, as well as the number of vehicles bought in our live linked auctions and proxy bidding service remained at low levels, although surpassing the year-earlier results that showed significant declines due to the impact of the spread of COVID-19.

In the used vehicle inspection service, the number of vehicles inspected in the physical auction sites and AUCNET-hosted auctions slowed down due to the market conditions, while the number of vehicles inspected

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