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

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Summary of Financial Results (Consolidated)

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

(Japanese GAAP)

August 31, 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: September 13, 2021

Scheduled date of commencement of dividend payment: -

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 quarter of fiscal year ending April 30, 2022 (May 1, 2021 through July 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 quarter of fiscal year

1,134

4.6

294

(23.0)

259

(24.8)

257

(23.1)

169

(23.2)

ending April 30, 2022

First quarter of fiscal year

1,084

32.5

382

80.6

344

96.1

334

91.1

220

97.6

ended April 30, 2021

(Note) Comprehensive income

First quarter of fiscal year ending April 30, 2022

¥169 million ((23.2)%)

First quarter of fiscal year ended April 30, 2021

¥220 million (97.6%)

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

Net income per

Net income per share

share

(diluted)

First quarter of fiscal year

Yen

Yen

7.62

7.59

ending April 30, 2022

First quarter of fiscal year

10.69

10.34

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 July 31, 2021

12,639

5,364

42.1

239.72

As of April 30, 2021

12,452

5,342

42.6

239.23

(Reference) Shareholders' equity				As of July 31, 2021			¥5,324 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		-
Fiscal year ending April 30, 2022					10.00			-			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
First half	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	940	17.4	42.35
5,300	21.4	~	~		~	~	~	~	~	~	~
					1,680	25.4		1,530	27.9	1,530	25.7	1,000	24.8	45.05

(Notes) Revisions to financial forecasts announced most recently: None

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* Notes

1. Important changes in subsidiaries during the quarter 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

(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements and Major Notes, (3) Notes on quarterly consolidated financial statements, (Changes in accounting policies)" on page 10 of the accompanying materials.

1. Number of issued shares (common shares)
2. 1. Number of issued shares (including treasury stock) at the end of the quarter

July 31, 2021	22,361,043	April 30, 2021	22,361,043
(ii) Number of treasury stock shares at the end of the quarter
July 31, 2021	148,455	April 30, 2021	163,668
(iii) Average number of issued shares during the quarter
First quarter ended July 31, 2021	22,204,607	First quarter ended July 31, 2020	20,632,216

*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 5 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 Quarter under Review ...........................................................................................................	4
(1)	Explanation on operating results...........................................................................................................................................................	4
(2)	Explanation on the financial status .......................................................................................................................................................	5
(3)	Explanation on forecasts including consolidated results forecasts......................................................................................................	5
2. Quarterly Consolidated Financial Statements and Major Notes ...............................................................................................................	6
(1)	Quarterly consolidated balance sheets..................................................................................................................................................	6
(2)	Quarterly consolidated statements of income and comprehensive income.........................................................................................	8
(Quarterly consolidated statements of income)......................................................................................................................................	8
	(First quarter of the consolidated fiscal year) ....................................................................................................................................	8
(Quarterly consolidated statements of comprehensive income)............................................................................................................	9
	(First quarter of the consolidated fiscal year) ....................................................................................................................................	9
(3)	Notes on quarterly consolidated financial statements........................................................................................................................	10
(Notes regarding going concern assumptions).....................................................................................................................................	10
(Notes in the case of significant changes in amount of shareholders' equity)....................................................................................	10
(Changes in accounting policies)..........................................................................................................................................................	10
(Segment information) ..........................................................................................................................................................................	11
(Significant subsequent events) ............................................................................................................................................................	11

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1. Qualitative Information on Results for the Quarter under Review

(1) Explanation on operating results

During the first quarter under review (May 1, 2021 through July 31, 2021), the Japanese economy continued to suffer from prolonged stagnation of economic activity as the government declared the fourth state of emergency to respond to a resurgence of the novel coronavirus (COVID-19) due to the spread of variants, etc., which came on the heels of a temporary decrease in cases that had been seen after the third state of emergency was declared in some regions of the country in an attempt to control a wider spread. While economic activity is expected to return to normal as the vaccine rollout progresses, the outlook remains uncertain as the U.S. and Europe, which have high vaccination rates, are currently experiencing a resurgence of new cases.

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." The growth in demand for the Company's services spurred by the spread of COVID-19 infections continued during the quarter under review, resulting in an increase in sales for all services. As a result, consolidated net sales for the first quarter under review were 1,134,133,000 yen (up 4.6% year on year). The increase in net sales from the first quarter of the previous fiscal year was moderate as the results for the quarter one year earlier reflect a large impact of a temporary, dramatic increase in transactions for masks and sterilization goods, which are products of special demand in Super Delivery of the EC business.

In terms of expenditures, advertising expenses increased by 57.9% year on year as the Company continued efforts to enhance promotional activities as it did during the second half of the previous fiscal year, and personnel cost increased by 18.0% due to reinforcement of personnel. Consequently, selling, general and administrative expenses increased by 22.4% year on year. As a result, the Company posted operating income of 259,324,000 yen (down 24.8%), EBITDA of 294,108,000 yen (down 23.0%), ordinary income of 257,628,000 yen (down 23.1%), and net income attributable to owners of parent of 169,276,000 yen (down 23.2%) for the first quarter under review, all compared on a year-on-year basis.

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 quarter 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, and consequently, both the number of members and the number of participating companies significantly increased. As a result, as of the end of the first quarter under review, the number of Super Delivery members stood at 233,530 (up 13,419), the number of participating companies at 2,904 (up 271), and the number of items displayed at 1,477,423 (up 19,514), all compared with a year-on-year basis.

Regarding the transaction value for the first quarter under review, the value of transactions in Japan was affected by the resurgence of COVID-19 infections due to the spread of variants, etc., which led to repeated issuance and extension of a state of emergency and left the country under a state of emergency during the majority of the first quarter under review. As business activities remained unstable for a prolonged period, many of companies in Japan became cautious in procurement activities; average sale per customer decreased while the number of domestic retail customers and non-retail business customers steadily increased. As a result, the value of transactions in Japan declined by 12.5% year on year. Meanwhile, the value of transactions significantly increased for the first quarter of the previous fiscal year owing to products of special demand in relation to COVID-19. The value of transactions in Japan for the first quarter under review, excluding transactions in masks and sterilization goods, which are products of special demand, increased by 4.1% year on year despite lower average sale per customer.

The value of transactions overseas increased by 50.3% year on year, with steady increases in both the number of customers and sales per customer. Sales per customer for transactions overseas exceeded that for transactions in Japan for the first time. Consequently, the value of transactions for the first quarter under review totaled 5,072,675,000 yen (down 1.1% year on year, or up 13.9% 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 697,548,000 yen (up 1.3% 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 47.6% year on year, while personnel cost increased by 21.8% year on year due to reinforcement of personnel for business expansion. Consequently, segment profit was 266,643,000 yen (down 19.9% year on year).

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(ii) Financial business

In the Paid service, the Company has continued its endeavors to improve the operating rate of the acquired member companies and increase sales per company. The number of member companies steadily increased to surpass 4,200, supported by the need for a digital shift in billing operations. As the state of emergency continued for the majority of the first quarter under review, sales per customer decreased for some member companies that suffered sluggish sales, as was the case with Super Delivery in the EC business. Despite these circumstances, the value of transactions outside the Group totaled 5,847,946,000 yen (up 19.5%) and the overall value of transactions (including 2,063,159,000 yen of transactions within the Group) stood at 7,911,105,000 yen (up 8.3%), both compared on a year-on-year basis.

In Guarantee services, the Company has continued to actively work on business collaborations with local financial institutions for the T&G Credit Guarantee service and the URIHO service, and the number of collaborations steadily increased. Inquiries from small- to medium-sized companies, the targets for these services, have kept the pace of increase, and demand for credit guarantee services remains high against the backdrop of the COVID-19 pandemic.

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, while also enhancing sales activities for the "re-guarantee plan" to expand the target market from business properties to include residential properties.

Guarantees outstanding at the end of the first quarter under review amounted to 86,628,359,000 yen (24,328,307,000 yen for RACCOON FINANCIAL, Inc. and 62,300,051,000 yen for RACCOON RENT, Inc.), up 2.7% from the end of the previous fiscal year. As a result, sales in the Financial business stood at 490,296,000 yen (up 7.0% year on year). In terms of expenditures, the ratio of cost of sales remained at a low level due to the ongoing low level of the amount of guarantees provided. Advertising expenses for the first quarter under review increased by 72.9% year on year. The increase in advertising expenses, which had continued since the second quarter of the previous fiscal year, tapered off to some degree because the Company did not implement large-scale promotional activities in the first quarter under review, but the Company has maintained its policy of performing aggressive promotional activities. Personnel cost increased by 15.1% year on year due to reinforcement of personnel for business expansion. Consequently, segment profit totaled 116,433,000 yen (down 2.8% year on year).

(2) Explanation on the financial status

Total assets at the end of the first quarter under review amounted to 12,639,318,000 yen, up 187,133,000 yen from the end of the previous fiscal year. Current assets increased 202,297,000 yen to 10,075,039,000 yen. The main factor for the increase is the increase of 363,617,000 yen in cash and deposits due to an increase in net income attributable to owners of parent for the first quarter under review, while accounts receivable - trade decreased by 126,402,000 yen due to decreased transactions. Non-current assets decreased 15,163,000 yen to 2,564,278,000 yen. The main factors for the decrease are the recording of 8,195,000 yen in amortization of goodwill and the decrease of 15,515,000 yen in deferred tax assets, while software and software in progress increased by 4,987,000 yen.

Liabilities at the end of the first quarter under review totaled 7,274,518,000 yen, up 164,609,000 yen from the end of the previous fiscal year. Current liabilities increased 210,048,000 yen to 6,069,210,000 yen. The main factor for the increase is the increase of 907,092,000 yen in accounts payable - trade, while accounts payable - other decreased by 514,628,000 yen and income taxes payable decreased by 134,232,000 yen due to taxes paid. Non-current liabilities decreased 45,438,000 yen to 1,205,307,000 yen. The main factor for the decrease is the decrease of 44,583,000 yen in long-term borrowings due to repayment.

Net assets at the end of the first quarter under review increased 22,524,000 yen from the end of the previous fiscal year to 5,364,799,000 yen. The main factor for the increase is the increase in retained earnings due to the recording of 169,276,000 yen in net income attributable to owners of parent for the first quarter under review, while retained earnings decreased by 201,248,000 yen due to cash dividends paid.

(3) Explanation on forecasts including consolidated results forecasts

Consolidated results for the Company generally progressed according to the forecasts. For this reason, the Company made no changes to the results forecasts announced in the previous Summary.

The forward-looking statements above are based on information available to the Company at the time of the announcement and certain assumptions that the Company considers reasonable. Actual results may differ significantly due to a variety of uncertain factors.

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