Advance Create : Summary of Consolidated Financial Results for the Year Ended September 30, 2021(Based on Japanese GAAP)

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.

Summary of Consolidated Financial Results

for the Year Ended September 30, 2021

(Based on Japanese GAAP)

November 12, 2021

Company name:

Advance Create Co., Ltd.

Stock exchange listing:

Tokyo

Stock code:

8798

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

Representative:

President&Chief Executive Officer

Yoshiharu Hamada

Inquiries:

General Manager

Akira Iwai

TEL [phone]

Scheduled date of ordinary general meeting of shareholders:

December 17, 2021

Scheduled date to file Securities Report:

December 20, 2021

Scheduled date to commence dividend payments:

December 20, 2021

Preparation of supplementary material on financial results:

Yes

Holding of financial results meeting:

Yes (for institutional investors)

(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the year ended September 30, 2021 (from October 1, 2020 to September 30, 2021)

(1) Consolidated operating results

Percentages indicate year-on-year changes

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Year ended September 30, 2021

11,019

4.8

2,041

72.4

1,925

75.7

1,295

85.0

Year ended September 30, 2020

10,510

1.4

1,184

(12.0)

1,095

(15.6)

700

(17.1)

(Note) Comprehensive income

Year ended September 30, 2021:

¥1,277 million

[61.7 %]

Year ended September 30, 2020:

¥790 million

[16.9 %]

Diluted earnings per

Profit attributable to

Ordinary profit/total

Operating profit/net

Earnings per share

owners of

share

parent/equity

assets

sales

Yen

Yen

%

%

%

Year ended September 30, 2021

59.66

-

21.0

17.4

18.5

Year ended September 30, 2020

33.37

33.34

13.7

11.9

11.3

(Reference) Share of profit (loss) of entities accounted for using equity method

Year ended September 30, 2021:

¥- million

Year ended September 30, 2020:

¥- million

(Note) The Company conducted a 2-for-1 stock split of its common shares on April 1, 2021. Earnings per share and diluted earnings per share have been calculated based on the assumption that the stock split was carried out at the beginning of the previous fiscal year.

(2) Consolidated financial position

		Total assets	Net assets	Equity ratio	Net assets per share
		Millions of yen	Millions of yen	%	Yen
As of September 30, 2021		11,808	6,723	56.9	305.59
As of September 30, 2020		10,312	5,610	54.4	261.07
(Reference) Equity
As of September 30, 2021:	¥6,723 million
As of September 30, 2020:	¥5,606 million

(Note) The Company conducted a 2-for-1 stock split of its common shares on April 1, 2021. Net assets per share has been calculated based on the assumption that the stock split was carried out at the beginning of the previous fiscal year.

(3) Consolidated cash flows

	Cash flows from	Cash flows from	Cash flows from	Cash and cash
	equivalents at end of
	operating activities	investing activities	financing activities
	period
	Millions of yen	Millions of yen	Millions of yen	Millions of yen
Year ended September 30, 2021	1,643	(485)	(488)	3,206
Year ended September 30, 2020	1,351	(527)	1,097	2,537

2. Cash dividends

		Annual dividends per share		Total cash	Dividend payout	Ratio of dividends
						to net assets
	1st quarter-end	2nd quarter-end	3rd quarter-end	Fiscal year-end	Total	dividends (Total)	ratio (Consolidated)	(Consolidated)
	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
Year ended September 30, 2020	-	25.00	-	25.00	50.00	547	74.9	10.3
Year ended September 30, 2021	-	30.00	-	15.00	-	671	50.3	10.6
Year ending September 30, 2022	-	15.00	-	15.00	30.00		45.5
(Forecast)

(Note) The Company conducted a 2-for-1 stock split of ordinary shares on April 1, 2021. The amounts stated for dividends for the first six months of the fiscal year ended September 30, 2021 and for prior periods are stated at the actual amount paid per share based on the number of shares before the stock split. Without factoring in the stock split, the year-end dividend for the fiscal year ended September 30, 2021 would have been ¥30.00 and the annual dividend per share would have been ¥60.00. Furthermore, the total dividend amount for the fiscal year is presented as "-" as simple addition is not appropriate.

3. Forecast of consolidated financial results for the year ending September 30, 2022 (from October 1, 2021 to September 30, 2022)

Percentages indicate year-on-year changes

	Net sales		Operating profit	Ordinary profit		Profit attributable to	Earnings per share
			owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	12,500	13.4	2,300	12.7	2,200	14.2		1,450	11.9	65.90
4. Notes
(1) Changes in significant subsidiaries during the year ended September 30, 2021			No
(changes in specified subsidiaries resulting in the change in scope of consolidation):
(2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations:	No
Changes in accounting policies due to other reasons:					No
Changes in accounting estimates:							No
Restatement of prior period financial statements:					No

(3) Number of issued shares (common shares)

Total number of issued shares at the end of the period (including treasury shares)

	As of September 30, 2021	22,557,200	shares	As of September 30, 2020	22,075,200	shares
Number of treasury shares at the end of the period
	As of September 30, 2021	556,878	shares	As of September 30, 2020	600,478	shares
Average number of shares during the period
	Year ended September 30, 2021	21,709,989	shares	Year ended September 30, 2020	20,991,110	shares

(Notes) 1. The Company conducted a 2-for-1 stock split of ordinary shares on April 1, 2021. Total number of issued shares at the end of the period, number of treasury shares at the end of the period, and average number of shares during the period have been calculated based on the assumption that the stock split was carried out at the beginning of the previous fiscal year.

2. The number of treasury shares excluded from the calculation of the number of treasury shares at the end of the period and average number of shares during the period, includes the Company's shares held by Custody Bank of Japan, Ltd. (Trust Account) as trust assets pertaining to the "Employee Stockholding Association linked Trust ESOP" and the Company's shares held by Custody Bank of Japan, Ltd. (Trust Account E) as trust assets pertaining to "Stock Benefit Trust (J-ESOP)."

(Reference) Overview of non-consolidated financial results
Non-consolidated financial results for the year ended September 30, 2021 (from October 1, 2020 to September 30, 2021)
(1) Non-consolidated operating results				Percentages indicate year-on-year changes
	Net sales		Operating profit	Ordinary profit		Profit
	Millions of yen	%	Millions of yen	%	Millions of yen	%		Millions of yen	%
Year ended September 30, 2021	9,298	2.1	1,522	72.7	1,408	33.5		937	27.1
Year ended September 30, 2020	9,107	2.4	881	2.5	1,055	4.5		737	4.1
	Earnings per share	Diluted earnings per share
		Yen		Yen
Year ended September 30, 2021		43.18		-
Year ended September 30, 2020		35.13		35.10

(Note) The Company conducted a 2-for-1 stock split of ordinary shares on April 1, 2021. Earnings per share and diluted earnings per share have been calculated based on the assumption that the stock split was carried out at the beginning of the previous fiscal year.

(2) Non-consolidated financial position

	Total assets		Net assets	Equity ratio	Net assets per share
	Millions of yen		Millions of yen	%	Yen
As of September 30, 2021		9,761		5,650	57.9	256.85
As of September 30, 2020		8,868		4,895	55.2	227.80
(Reference) Equity
As of September 30, 2021:	¥5,650 million
As of September 30, 2020:	¥4,892 million

(Note) The Company conducted a 2-for-1 stock split of ordinary shares on April 1, 2021. Net assets per share has been calculated based on the assumption that the stock split was carried out at the beginning of the previous fiscal year.

• Financial results reports are exempt from audit conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters

The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. These statements do not purport that the Company pledges to realize such statements. Actual business and other results may differ substantially due to various factors. For the suppositions that form the assumptions for earnings forecasts and cautions concerning the use thereof, please refer to page 2 of the Attached Materials, "1. Overview of operating results and others (1) Overview of operating results for the fiscal year."

Table of Contents of Appendix
1. Overview of operating results and others............................................................................................................	2
(1)	Overview of operating results for the fiscal year.........................................................................................	2
(2)	Overview of financial position for the fiscal year .......................................................................................	4
(3)	Basic policy on distribution of profits and dividends for the fiscal year under review/next fiscal year......	5
2. Basic approach concerning the selection of accounting standards......................................................................	5
3. Consolidated financial statements and significant notes thereto .........................................................................	6
(1)	Consolidated balance sheets ........................................................................................................................	6
(2)	Consolidated statements of income and consolidated statements of comprehensive income .....................	8
	Consolidated statements of income................................................................................................................	8
	Consolidated statements of comprehensive income.......................................................................................	9
(3)	Consolidated statements of changes in equity ...........................................................................................	10
(4)	Consolidated statements of cash flows ......................................................................................................	12
(5)	Notes for consolidated financial statements ..............................................................................................	13
	(Notes regarding the assumption of going concern) ....................................................................................	13
	(Notes regarding significant changes in the amount of shareholders' equity) .............................................	13
	(Segment information) .................................................................................................................................	13
	(Information per share) ................................................................................................................................	16
	(Significant subsequent events) ...................................................................................................................	17

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1. Overview of operating results and others

1. Overview of operating results for the fiscal year

1. Operating results
   In the fiscal year ended September 30, 2021 (From October 1, 2020 to September 30, 2021), the challenging conditions for the Japanese economy continued, mainly due to restrictions on economic activity because of the novel coronavirus disease (COVID-19). Despite signs of improvement in some areas associated with the drop in new cases, the outlook remains uncertain.
   Concurrent with ongoing diversification and growing sophistication of insurance products amid progress in IT and medical technology, the insurance industry needs to fulfill its customer-oriented business management (fiduciary duty) by providing truly helpful information and consulting to customers.
   Under such circumstances, our Group advocates to be "a company that promotes the deepening and the evolution of people and technology," forging ahead daily to build "an insurance industry platform" able to deal with all types of insurance needs and a business ecosystem that fits the OMO (Online Merges with Offline) era.
   Specifically, through our video conference system "Dynamic OMO," which we developed in-house, we are achieving online insurance consultations that are equivalent to offline consultations, eliminating the barriers between face-to-face and non-face-to-face interactions. "Dynamic OMO" is a video conference system that the Company independently developed based on the know-how we have accumulated through online insurance consultations that number at the high end for the industry. Since commencing operations at our directly managed Consulting Plaza in October 2020, we have received comments from many satisfied customers about the convenience, which is contributing to the improvement in profitability of online insurance consultation.
   We also commenced external sales of "Dynamic OMO" in March this year. Apart from insurance agencies, the system has also been installed at major insurance companies and we are aiming to position it as a standard system for the entire insurance industry. We have also made progress with installation in other sectors such as credit card companies, and will continue to rollout our active sales campaigns.
   Moreover, we will continue to develop a common platform system for the insurance industry (Advance Create Cloud
   Platform, hereinafter, "ACP"). We have received high praise from customers who have installed any of the customer management system "GOYOKIKI," the common platform system for applications "DECHI," or the insurance and securities management app "folder," which are key functions of ACP, and we are making further enhancements to the functions. We aim for a subscription model that secures stock revenue and expansion of our collaborative business by providing these systems to insurance agencies.
   While also enhancing these measures, we are proactively investing management resources into enhancing the governance and compliance structures, continuing to reinforce the information security structure, and implementing company-wide initiatives to strengthen the structure for management of insurance solicitation in compliance with relevant laws and regulations such as the Insurance Business Act and the Act on Protection of Personal Information as well as management structures.
   As a result, we recorded net sales of ¥11,019 million (+4.8% YoY), operating profit of ¥2,041 million (+72.4% YoY), ordinary profit of ¥1,925 million (+75.7% YoY) and profit attributable to owners of parent of ¥1,295 million (+85.0% YoY).

(Millions of yen, Year-on-year changes (%))

	Consolidated basis		Non-consolidated basis
Net sales	11,019		104.8	9,298		102.1
Operating profit	2,041		172.4	1,522		172.7
Ordinary profit	1,925		175.7	1,408		133.5
Profit attributable to owners of parent	1,295		185.0	937		127.1

The operating results by segment were as follows.

The heightened importance of "Media representative business," which had to date been included in the "Media business," led to this being treated as a separate reporting segment from the previous fiscal year.

Therefore, from the previous fiscal year, we are disclosing five reporting segments being "Insurance agency business," "ASP business," "Media business" "Media representative business" and "Reinsurance business."

2