RACCOON : Summary of Financial Results (Consolidated)For the First Half of Fiscal Year Ending April 30, 2022(Japanese GAAP)

valuation deposits

Summary of Financial Results (Consolidated)

For the First Half of Fiscal Year Ending April 30, 2022

(Japanese GAAP)

December 2, 2021

Listed company: Raccoon Holdings, Inc.

Stock Exchange: Tokyo Stock Exchange

Code:

3031

URL: http://www.raccoon.ne.jp/

Representative:

Isao Ogata, President and Representative Director

Contact:

Satoshi Konno, Executive Vice President of Finance and Director

Tel. [phone]

Scheduled date of submission of quarterly report: December 15, 2021

Scheduled date of commencement of dividend payment: January 11, 2022

Supplementary documents for quarterly financial results: Yes

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

(Rounded down to the nearest million yen)

1. Consolidated results for the first six months ended October 31, 2021 (May 1, 2021 through October 31, 2021)

(1) Consolidated operating results

(The percentages are year-on-year changes)

Net income

Net sales

EBITDA

Operating income

Ordinary income

attributable to owners

of parent

Million

%

Million

%

Million

%

Million

%

Million

%

yen

yen

yen

yen

yen

First half of fiscal year

2,295

6.8

573

(22.1)

504

(23.9)

495

(25.2)

(2)

-

ending April 30, 2022

First half of fiscal year

2,149

28.9

736

68.7

662

81.4

662

79.2

428

80.7

ended April 30, 2021

(Note) Comprehensive income

First half of fiscal year ending April 30, 2022

¥(2) million (-%)

First half of fiscal year ended April 30, 2021

¥428 million (80.7%)

(Note) EBITDA = Operating income + Depreciation + Amortization of goodwill (+ Equity in earnings of affiliates)

Net income per

Net income per share

share

(diluted)

First half of fiscal year

Yen

Yen

(0.12)

-

ending April 30, 2022

First half of fiscal year

20.19

19.62

ended April 30, 2021

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

%

Yen

As of October 31, 2021

12,994

5,205

39.7

232.06

As of April 30, 2021

12,452

5,342

42.6

239.23

(Reference) Shareholders' equity				As of October 31, 2021	¥5,154 million
							As of April 30, 2021			¥5,310 million
2. Dividends
							Dividend per share
			End of Q1		End of Q2		End of Q3		Year end	Annual
				Yen			Yen			Yen			Yen	Yen
Fiscal year ended April 30, 2021		-		8.00			-			9.00	17.00
Fiscal year ending April 30, 2022		-		10.00
Fiscal year ending April 30, 2022									-			10.00	20.00
(forecast)
(Notes) Revisions to dividend		forecasts announced most recently: None
3. Forecast of consolidated results for the fiscal year ending April 30, 2022 (May 1, 2021 through April 30, 2022)
														(The percentages are year-on-year changes)
																Net income	Net income
	Net sales				EBITDA	Operating income	Ordinary income	attributable to
				per share
																owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year					1,580	18.0		1,430	19.5	1,430	17.5	690	(13.9)	31.07
5,300	21.4	~	~		~	~	~	~	~	~	~
					1,680	25.4		1,530	27.9	1,530	25.7	760	(5.1)	34.22

(Notes) Revisions to financial forecasts announced most recently: Yes

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* Notes

1. Important changes in subsidiaries during the first half under review (changes in specified subsidiaries resulting in change in the scope of consolidation): None
2. Application of accounting specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting principles and changes or restatements of accounting estimates
4. 1. Changes in accounting policies associated with revisions to accounting standards, etc.: Yes
   2. Changes in accounting policies other than those specified in (i): None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Number of issued shares (including treasury stock) at the end of the quarter

October 31, 2021	22,361,043	April 30, 2021	22,361,043
(ii) Number of treasury stock shares at the end of the quarter
October 31, 2021	147,878	April 30, 2021	163,668
(iii) Average number of issued shares during the first half
First half ended October 31, 2021	22,208,713	First half ended October 31, 2020	21,207,239

*This financial summary is not subject to the statutory quarterly review by a certified public accountant or audit corporation.

• Explanation about the proper use of results forecasts, and other special notes (Cautionary note on forward-looking statements)
  The forward-looking statements, including results forecasts, contained in this document are based on information the Company has obtained as of today and certain assumptions the Company considers reasonable. The Company does not guarantee its achievement of the forward-looking statements. Actual results may differ significantly depending on a variety of factors. For the assumptions underlying the results forecasts and notes on their use, please refer to "1. Qualitative Information on Results for the Quarter Under Review, (3) Explanation on forecasts including consolidated results forecasts" on page 6 of the accompanying materials.

(How to obtain supplementary information for quarterly financial results)

Supplementary documents for the quarterly financial results will be disclosed on the TDnet (Timely Disclosure network operated by the Tokyo Stock Exchange) shortly.

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• Contents of Accompanying Materials

1. Qualitative Information on Results for the First Half under Review ........................................................................................................	4
(1)	Explanation on operating results...........................................................................................................................................................	4
(2)	Explanation on the financial status .......................................................................................................................................................	5
(3)	Explanation on forecasts including consolidated results forecasts......................................................................................................	6
2. Quarterly Consolidated Financial Statements and Major Notes ...............................................................................................................	7
(1)	Quarterly consolidated balance sheets..................................................................................................................................................	7
(2)	Quarterly consolidated statements of income and comprehensive income.........................................................................................	9
(Quarterly consolidated statements of income)......................................................................................................................................	9
	(First half of the consolidated fiscal year)..........................................................................................................................................	9
(Quarterly consolidated statements of comprehensive income)..........................................................................................................	10
	(First half of the consolidated fiscal year)........................................................................................................................................	10
(3)	Quarterly consolidated statements of cash flows ...............................................................................................................................	11
(4)	Notes on quarterly consolidated financial statements........................................................................................................................	12
(Notes regarding going concern assumptions).....................................................................................................................................	12
(Notes in the case of significant changes in amount of shareholders' equity)....................................................................................	12
(Changes in accounting policies)..........................................................................................................................................................	12
(Segment information) ..........................................................................................................................................................................	13
(Significant subsequent events) ............................................................................................................................................................	13

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1. Qualitative Information on Results for the First Half under Review

(1) Explanation on operating results

During the first half under review (May 1, 2021 through October 31, 2021), the Japanese economy remained in an extremely difficult situation, including the extension of the declaration of a state of emergency owing to the impact of the novel coronavirus (COVID-19), as well as restrictions on economic activities. The COVID-19 vaccination rate has been increasing, the number of cases is falling, and the declaration of a state of emergency has been lifted, resulting in growing expectations that the economy will trend toward recovery going forward. However, there has been a renewed spread of infections in an increasing number of countries overseas, and it is impossible to eliminate concerns that the virus will begin to spread again in Japan. As such, the outlook remains uncertain.

Under such circumstances, the Raccoon Group worked to expand the infrastructure services it offers for business-to-business transactions based on the management philosophy of "making corporate activities more efficient and convenient." In the first half of the fiscal year under review, the Group continued to face difficult circumstances, particularly in transactions in Japan, owing to the impact of the continuous spread of COVID-19 from the start of the fiscal year, but in October 2021, there appeared signs of a recovery in domestic business-to-business transactions, as the declaration of a state of emergency was lifted and the domestic economy re-opened. As a result, consolidated net sales for the first half under review were 2,295,303,000 yen (up 6.8% year on year).

In terms of expenditures, advertising expenses increased by 54.3% year on year as the Company continued efforts to enhance promotional activities, and personnel cost increased by 14.1% due to reinforcement of personnel. Consequently, selling, general and administrative expenses increased by 19.8% year on year. As a result, the Company posted EBITDA of 573,950,000 yen (down 22.1%), operating income of 504,398,000 yen (down 23.9%), and ordinary income of 495,576,000 yen (down 25.2%), for the first half under review, all compared on a year-on-year basis. In addition, the Company recorded a loss on valuation of investment securities of 325,750,000 yen, caused by poor performance at some investment targets, as extraordinary losses. As a result, the Company posted loss attributable to owners of parent of 2,707,000 yen for the first half under review.

Results by segment are as follows:

(i) EC business

In Super Delivery, the mainstay service in the EC business, efforts have been made to increase both new membership and transaction value through improvement in average sale per customer. In the first half under review, the Company strengthened promotional activities aimed at enhancing awareness and increasing the number of customer acquisitions to actively capitalize on the growth in demand on the back of the digital shift of B2B transactions. Additionally, the Company also focused on collaborations with regional banks, etc., successfully concluding business-matching agreements with three regional banks in the first half under review, and thus creating systems that enable the Company to smoothly offer Super Delivery and SD export, the cross-border version, to customers of each regional bank. Furthermore, in September 2021, the Company began collaborating with the Sabae Chamber of Commerce and Industry concerning the SD export cross-border EC service, and started participating in CROSS BORDER "SABAE," a project operated by the Sabae Chamber of Commerce and Industry since January 2021, aimed at supporting the sale of local products overseas. As a result, as of the end of the second quarter under review, the number of Super Delivery members stood at 246,873 (up 26,762), the number of participating companies at 3,019 (up 386), and the number of items displayed at 1,408,067 (down 49,842), all compared with the numbers at the end of the previous fiscal year.

Regarding the transaction value for the first half under review, the value of transactions significantly increased for the first half of the previous fiscal year owing to products of special demand in relation to COVID-19, which resulted in the value of transactions in Japan declining by 6.3% year on year, but the value of transactions in Japan for the first half under review, excluding transactions in masks and sterilization goods, which are products of special demand, increased by 5.3% year on year. The value of transactions overseas increased by 50.3% year on year, with steady increases. Consequently, the value of transactions for the first half under review totaled 10,243,381,000 yen (up 4.6% year on year, or up 14.9% year on year excluding the transactions of masks and sterilization goods, which are products of special demand in relation to COVID-19).

As a result, sales in the EC business stood at 1,411,777,000 yen (up 5.0% year on year). In terms of expenditures, the Company implemented aggressive promotional activities, such as the expansion of the scope of target audience for listing advertisement and on-line advertisement placements, resulting in an increase in advertising expenses of 49.5% year on year, while personnel cost increased by 17.6% year on year due to reinforcement of personnel for business expansion. Consequently, segment profit was 519,339,000 yen (down 15.8% year on year).

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(ii) Financial business

In the Paid service, the number of member companies steadily increased to surpass 4,300. The Company has continued its endeavors to improve the operating rate of the acquired member companies and increase sales per company. The value of transactions outside the Group totaled 11,869,287,000 yen (up 17.7%) and the overall value of transactions (including 4,143,660,000 yen of transactions within the Group) stood at 16,012,948,000 yen (up 8.7%), both compared on a year-on-year basis.

In Guarantee services, the Company has continued to actively work on business collaborations with regional banks, etc., for the T&G Credit Guarantee service and the URIHO service, and the number of collaborations steadily increased. Demand for credit guarantee services remains high, with a particularly strong increase in the number of companies using the URIHO service.

Regarding rent guarantee services, the Company continued its efforts to increase name recognition of its services for both business and residential properties among real estate companies. The Company has been working to reach real estate companies through tenant/residential rental application services and the number of collaborating companies has also steadily increased. Furthermore, the Company started offering a new free attorney consultation service for real estate companies, which act as agents for the Company's services.

Guarantees outstanding at the end of the second quarter under review amounted to 88,826,841,000 yen (26,046,103,000 yen for RACCOON FINANCIAL, Inc. and 62,780,737,000 yen for RACCOON RENT, Inc.), up 5.3% from the end of the previous fiscal year. As a result, sales in the Financial business stood at 991,400,000 yen (up 7.0% year on year). In terms of expenditures, the amount of guarantees provided increased slightly quarter on quarter, but the ratio of cost of sales remained at a low level. In the second quarter, the upward trend in advertising expenses was relatively limited as the Company did not conduct any large- scale promotional activities, but the Company continued its policy of performing aggressive promotional activities, resulting in advertising expenses for the first half under review increasing by 57.3% year on year. Personnel cost increased by 13.8% year on year due to reinforcement of personnel for business expansion. Consequently, segment profit totaled 220,213,000 yen (down 18.1% year on year).

1. Explanation on the financial status

1. Financial status

Total assets at the end of the second quarter under review amounted to 12,994,400,000 yen, up 542,215,000 yen from the end of the previous fiscal year. Current assets increased 846,113,000 yen to 10,718,855,000 yen. The main factors causing the increase were the increase of 586,576,000 yen in cash and deposits and the increase of 326,917,000 yen in accounts receivable - trade due to increased transactions despite recording a loss attributable to owners of parent, but the loss was caused by a loss on valuation of investment securities that was not accompanied by any outflows of cash and deposits. Non-current assets decreased 303,897,000 yen to 2,275,544,000 yen. The main factors for the decrease include the decrease of 295,502,000 yen in investment securities due to recording a loss on valuation of investment securities.

Liabilities at the end of the second quarter under review totaled 7,789,248,000 yen, up 679,339,000 yen from the end of the previous fiscal year. Current liabilities increased 765,960,000 yen to 6,625,123,000 yen. The main factor for the increase is the increase of 1,323,873,000 yen in accounts payable - trade due to increased transactions, while accounts payable - other decreased by 502,913,000 yen. Non-current liabilities decreased 86,621,000 yen to 1,164,125,000 yen. The main factor for the decrease is the decrease of 89,166,000 yen in long-term borrowings due to repayment.

Net assets at the end of the second quarter under review decreased 137,124,000 yen from the end of the previous fiscal year to 5,205,151,000 yen. The main factor for the decrease is the decrease of 201,248,000 yen in retained earnings due to cash dividends paid.

(ii) Cash flows

Cash and cash equivalents (the "funds") at the end of the second quarter under review increased 585,094,000 yen from the end of the previous fiscal year to 5,387,963,000 yen. Cash flows from each activity for the first half under review and their primary factors are as follows:

(Cash flows from operating activities)

Net cash provided by operating activities during the first half under review amounted to 1,488,692,000 yen (the funds increased 828,428,000 yen year on year). The main factor for this is the increase of 1,323,873,000 yen in notes and accounts payable - trade.

(Cash flows from investing activities)

Net cash used in investing activities during the first half under review amounted to 90,504,000 yen (the funds decreased

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