Aucnet : Consolidated Financial Statements for the Fiscal Year Ended December 31, 2021

Consolidated Financial Statements for the Fiscal Year Ended December 31, 2021 [Japanese GAAP]

February 14, 2022

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 & CFO

Phone: [phone]

Scheduled date of general shareholders meeting: March 29, 2022

Scheduled date of commencing dividend payments: March 8, 2022

Scheduled date of filing securities report: March 30, 2022

Preparation of supplementary explanatory materials: Yes

Financial results briefing: Yes (for institutional investors and analysts)

			(Amounts of less than one million yen are rounded down.)
1. Consolidated Results for the Fiscal Year Ended December 31, 2021
(January 1, 2021 - December 31, 2021)
(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
December 31, 2021	36,710	52.5	5,846	57.8	6,113	67.8	3,625	91.1
December 31, 2020	24,078	22.4	3,705	46.7	3,643	38.5	1,896	35.1

(Note) Comprehensive income: Year ended December 31, 2021: ¥3,803 million [103.4%] Year ended December 31, 2020: ¥1,870 million [15.2%]

	Basic earnings	Diluted earnings	Return on	Ratio of	Ratio of
	ordinary profit	operating profit
	per share	per share	equity
	to total assets	to net sales
Year ended	Yen	Yen	%	%	%
December 31, 2021	130.56	129.58	17.4	17.4	15.9
December 31, 2020	68.56	68.01	10.1	11.6	15.4

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

							Year ended December 31, 2021: ¥5 million
							Year ended December 31, 2020: ¥13 million
(2) Consolidated Financial Position
			Total assets			Net assets		Equity ratio	Net assets per share
			Million yen		Million yen		%	Yen
As of December 31, 2021		36,822		22,701		60.6	802.38
As of December 31, 2020		33,280		19,637		58.1	697.22
(Reference) Equity: As of	December 31, 2021: ¥	22,319 million
As of December 31, 2020: ¥19,324 million
(3) Consolidated Cash Flows
	Cash flows from		Cash flows from			Cash flows from		Cash and cash
					equivalents
	operating activities	investing activities		financing activities
			at year-end
Year ended		Million yen			Million yen			Million yen		Million yen
December 31, 2021		4,249		388		(825)		19,565
December 31, 2020		4,119		549		(2,873)		15,766

2. Cash Dividends

		Annual dividends			Total			Ratio of
							Payout ratio		dividends to
	1st	2nd	3rd	Year-			dividends
	Total		(consolidated)		net assets
	quarter-	quarter-	quarter-	end		(annual)
	end	end	end						(consolidated)
Year ended	Yen	Yen	Yen	Yen	Yen		Million yen	%	%
-	10.00	-	11.00	21.00	584	30.6	3.1
December 31, 2020
Year ended	-	19.00	-	21.00	40.00	1,117	30.6	5.3
December 31, 2021
Year ending
December 31, 2022	-	22.00	-	22.00	44.00			30.3
(Forecast)

3. Forecast of Consolidated Results for the Fiscal Year Ending December 31, 2022 (January 1, 2022 - December 31, 2022)

(% indicates changes from the previous corresponding period.)

							Profit		Basic earnings
	Net sales		Operating profit	Ordinary profit	attributable to
		per share
							owners of parent
Full year	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
38,329	-	6,000	2.6	6,150	0.6	4,054	11.8	145.03

• As for net sales of consolidated financial results forecast for the fiscal year ending December 31, 2022, the Company will adopt the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and the related standards from the beginning of the first quarter of the consolidated fiscal year ending December 31, 2022. Accordingly, the figures presented for the consolidated fiscal year ending December 31, 2022 are those after the adoption of the said standards, and changes from the previous corresponding period are not stated.
• 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. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 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
4. Total number of issued and outstanding shares (common shares)
5. 1. Total number of issued and outstanding shares at the end of the period (including treasury shares):

December 31, 2021:	27,957,100 shares
December 31, 2020:	27,863,500 shares
2) Total number of treasury shares at the end of the period:
December 31, 2021:	140,516 shares
December 31, 2020:	147,316 shares
3) Average number of shares during the period:
Year ended December 31, 2021:	27,768,925 shares
Year ended December 31, 2020:	27,667,087 shares

(Reference) Summary of Non-consolidated Results

1. Non-consolidated Results for the Fiscal Year Ended December 31, 2021 (January 1, 2021 - December 31, 2021)

(1) Non-consolidated Operating Results		(% indicates changes from the previous corresponding period.)
		Net sales				Operating profit		Ordinary profit		Net income
Year ended	Million yen	%	Million yen	%		Million yen	%		Million yen	%
December 31, 2021		16,073	15.5		3,359	54.2		3,361	36.0		1,933	89.7
December 31, 2020		13,916	19.6		2,178	326.9		2,472	80.1		1,019	(76.7)
	Basic earnings		Diluted earnings
		per share			per share
Year ended		Yen			Yen
December 31, 2021		69.62			69.10
December 31, 2020		36.84			36.54
(2) Non-consolidated Financial Position
		Total assets		Net assets	Equity ratio	Net assets per share
		Million yen		Million yen		%		Yen
As of December 31, 2021		26,679		15,221		57.1		547.21
As of December 31, 2020		25,232		13,947		55.3		503.21

(Reference) Equity: As of December 31, 2021: ¥15,221 million As of December 31, 2020: ¥13,947 million

• These financial results are outside the scope of audit procedures 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. Overview of Business Results, etc. (4) Future Outlook" on page 5 of the attachments.

Table of Contents - Attachments
1. Overview of Business Results, etc. ................................................................................................................ 2
(1)	Overview of Business Results for the Fiscal Year under Review	.............................................................. 2
(2)	Overview of Financial Position for the Fiscal Year under Review	............................................................ 4
(3)	Overview of Cash Flows for the Fiscal Year under Review .......................................................................	4
(4)	Future Outlook ...........................................................................................................................................	5
2. Basic Policy on Selecting Accounting Standards ...........................................................................................	5
3. Consolidated Financial Statements and Primary Notes ..................................................................................	6
(1)	Consolidated Balance Sheets .....................................................................................................................	6
(2)	Consolidated Statements of Income and Comprehensive Income	............................................................. 8
(3)	Consolidated Statements of Changes in Equity .......................................................................................	10
(4)	Consolidated Statements of Cash Flows ..................................................................................................	12
(5)	Notes to Consolidated Financial Statements ............................................................................................	14
	(Notes on going concern assumption) .................................................................................................	14
	(Segment information, etc.) .................................................................................................................	14
	(Per share information) ........................................................................................................................	17
	(Significant subsequent events) ...........................................................................................................	18

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1. Overview of Business Results, etc.

1. Overview of Business Results for the Fiscal Year under Review

1. Business Results

During the fiscal year ended December 31, 2021 (from January 1, 2021 to December 31, 2021), the Japanese economy showed signs of a gradual recovery with efforts to achieve economic activity while also preventing the spread of novel coronavirus (COVID-19) infections. Severe conditions persisted however, with prolonged limitations on economic activity due to the spread of infections. It will continue to be necessary to keep a close eye on the spread of infections and its impact on the economy both in and outside of Japan, and the outlook remains uncertain.

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 fiscal year ended December 31, 2021, the Group's net sales were ¥36,710,088 thousand (up 52.5% from the previous fiscal year), operating profit was ¥5,846,440 thousand (up 57.8% from the previous fiscal year), ordinary profit was ¥6,113,012 thousand (up 67.8% from the previous fiscal year), and profit attributable to owners of parent was ¥3,625,527 thousand (up 91.1% from the previous fiscal year).

Performance results by business segment are as follows.

(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) decreased 3.3% year-on-year to 4.44 million units in the fiscal year ended December 31, 2021. The total number of used-vehicle registrations (*7) fell 2.0% year-on-year to 6.73 million units, and the number of vehicles listed (*8) at auction around Japan declined 2.4% year-on-year to 6.93 million units. The total number of vehicles sold at auction (*8) increased 4.0% year-on-year to 4.74 million units.

Demand for used vehicles continued to rise during the fiscal year ended December 31, 2021 due to prolonged delivery lead times for new vehicles, influenced by a shortage of semiconductors and insufficient supply of new vehicles mainly stemming from reduced production by automakers. From the third quarter onward, the supply shortages of used vehicles became even more obvious. Under these circumstances, the number of vehicles listed at AUCNET-hosted used vehicle auctions declined year-on-year, but the number of vehicles sold in AUCNET-hosted auctions, as well as the number of vehicles bought in our live-linked auctions and proxy bidding service, surpassed the previous year's results.

In the used vehicle inspection service, the number of vehicles inspected in AUCNET-hosted auctions declined due to the market conditions, while the number of vehicles inspected for a used vehicle listing platform continued to progress favorably, thus contributing to segment net sales and income.

As a result, net sales of the Automobile Business (including inter-segment net sales) were ¥12,104,593 thousand (up 3.6% from the previous fiscal year), and operating profit was ¥3,717,069 thousand (up 3.8% from the previous fiscal year).

(*1) The used vehicle auctions are real-time,members-only online auctions run by the Company.

(*2) The shared inventory market is a system that allows Aucnet Group member sellers to share inventory with other members online. The inventory remains at the seller's premises while other members access it via the online system.

(*3) The live-linked auctions use an online live-link system that enables real-time remote access to participate at physical auction sites, through partnerships between AUCNET and the physical auction sites.

(*4) The proxy bidding service is an agency service provided by i-Auc, Inc. to buy, sell, settle payment for

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