Net Marketing : Summary of Non-consolidated Financial Results for the First Half Ended December 31, 2021

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 Non-consolidated Financial Results for the First Half Ended December 31, 2021

(Based on Japanese Accounting Standards)

	February 10, 2022
Company Name:	Net Marketing Co. Ltd.
Stock Exchange Listing:	Tokyo Stock Exchange
Code Number:	6175
URL:	https://www.net-marketing.co.jp/
Representative:	Kunihisa Miyamoto, Representative Director and CEO
Contact:	Koji Mimura, Director and CFO
(TEL)	[phone]

Scheduled date to submit the quarterly report:	February 10, 2022
Scheduled date of the start of dividend payments:	‒
Supplementary documents for quarterly results:	Yes
Quarterly results briefing:	Yes (for institutional investors, securities analysts, the press)
	(Amounts of less than one million yen are rounded down.)

1. Financial Results for the First Half Ended December 31, 2021 (from July 1, 2021 to December 31, 2021)

(1) Financial Results							(Percentages show year-on-year changes.)
	Net sales		Operating income	Ordinary income	Net income
	Million yen		%	Million yen		%	Million yen	%	Million yen		%
First half ended	2,592		-	308		-	315	-	253		-
December 31, 2021
First half ended	6,671		(13.9)	247		(51.3)	255	(50.1)	172		(51.0)
December 31, 2020
	Net income		Diluted net income
	per share		per share
			Yen			Yen
First half ended			16.96			16.86
December 31, 2021
First half ended			11.65			11.47
December 31, 2020

Because the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29), and other regulations have been applied from the beginning of the fiscal year ending June 30, 2022, year-on-year changes in the aforementioned net sales, operating income, ordinary income and net income are not stated.

(2) Financial Position
		Total assets	Net assets	Ratio of shareholders'
		equity to total assets
		Million yen	Million yen	%
As of December 31, 2021		5,700	3,178	55.8
As of June 30, 2021		5,321	3,012	56.6
(Reference) Shareholders' equity:		As of December 31, 2021:	3,178 million yen
			As of June 30, 2021:	3,012 million yen

2. Dividends

			Dividends per share
	End of 1st quarter	End of 2nd quarter	End of 3rd quarter	Year end	Annual
	Yen	Yen	Yen	Yen	Yen
Year ended June 30, 2021	-	0.00	-	6.00	6.00
Year ending June 30, 2022	-	0.00
Year ending June 30, 2022			-	6.00	6.00
(forecast)
(Note) Revisions to dividend forecasts published most recently: No

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3. Financial Results Forecasts for the Fiscal Year Ending June 30, 2022 (from July 1, 2021 to June 30, 2022)

(Percentages show year-on-year changes.)

	Net sales		Operating income	Ordinary income		Net income		Net income
				per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Year ending June 30, 2022	5,785	-	500	-	500	-	375	-	25.11

(Note) Revisions to results forecasts published most recently: No

Because the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29), and other regulations have been applied from the beginning of the fiscal year ending June 30, 2022, the financial results forecasts above reflect the application of the Accounting Standard and other regulations. Therefore, year-on-year changes are not stated.

* NOTE

1. Application of Particular Accounting Treatment Concerning Preparation of Quarterly Financial Statements: None
2. Changes in Accounting Principles, Changes in Accounting Estimates, and Retrospective Restatements
3. 1. Changes in accounting principles accompanying the amendment of accounting standards: Yes
   2. Changes other than those in (i) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatements: None
4. Number of Shares Issued (Common shares)
5. 1. Number of shares issued at the end of the period (including treasury stock)

As of December 31, 2021:	14,942,200 shares
As of June 30, 2021:	14,934,800 shares
(ii) Number of treasury stock at the end of the period
As of December 31, 2021:	188 shares
As of June 30, 2021:	188 shares
(iii) Average number of shares issued during the period
First half ended December 31, 2021:	14,939,445 shares
First half ended December 31, 2020:	14,796,612 shares

• The summaries of financial results are positioned outside the scope of a quarterly review by certified public accountants and audit firm.
• Explanations Regarding the Appropriate Use of Financial Results Forecasts and Other Items Worthy of Special Mention Forward-Looking Statements>
  Forward-looking statements in this summary, such as financial results forecasts, are based on information available to the Company at present and certain assumptions the Company judges to be rational. Those descriptions do not mean that the Company promises their achievement. Actual financial results and the like may also differ significantly from those descriptions depending on various factors.

The Company will hold a results briefing (online) for institutional investors, securities analysts and news media on Tuesday, February 22, 2022. The Company will publish supplementary materials for explaining the financial results through the Company Announcements Disclosure Service of the Tokyo Stock Exchange and on its official website on Thursday, February 10, 2022.

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Quarterly Financial Statements

(1) Quarterly Balance Sheets

(Unit: Thousand yen)

		Previous fiscal year		End of first half of the
			fiscal year under review
		(As of June 30, 2021)
			(As of December 31, 2021)
	Assets
	Current assets
	Cash and deposits	3,365,770		3,895,635
	Accounts receivable - trade	1,297,360	1,146,692
	Other	145,959		161,492
	Allowance for doubtful accounts	(10)	(9)
	Total current assets	4,809,080		5,203,811
	Non-current assets
	Property, plant and equipment	99,453		92,838
	Intangible assets	113,808	104,930
	Investments and other assets	299,548		298,760
	Total non-current assets	512,810	496,528
	Total assets	5,321,891		5,700,340
	Liabilities
	Current liabilities
	Accounts payable - trade	1,560,138	1,627,321
	Income taxes payable	32,759		129,490
	Other	716,006	765,246
	Total current liabilities	2,308,904		2,522,059
	Total liabilities	2,308,904	2,522,059
	Net assets
	Shareholders' equity
	Capital stock	414,539		415,331
	Capital surplus	404,539	405,331
	Retained earnings	2,194,043		2,357,753
	Treasury shares	(135)	(135)
	Total shareholders' equity	3,012,986		3,178,281
	Total net assets	3,012,986	3,178,281
	Total liabilities and net assets	5,321,891		5,700,340

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(2) Quarterly Statement of Income (First six-month period)

					(Unit: Thousand yen)
		First half of the		First half of the
		previous fiscal year		fiscal year under review
		(From July 1, 2020		(From July 1, 2021
		to December 31, 2020)		to December 31, 2021)
	Net sales	6,671,548			2,592,613
	Cost of sales	4,454,028		634,697
	Gross profit	2,217,520			1,957,915
	Selling, general and administrative expenses	1,970,009		1,649,747
	Operating income	247,511			308,168
	Non-operating income
	Interest income	15			15
	Rewards income	1,731		2,878
	Subsidy income	6,630			-
	Insurance claim income	-	4,499
	Other	309			225
	Total non-operating income	8,686		7,620
	Non-operating expenses
	Interest expenses	153			-
	Foreign exchange losses	68			73
	Other	3		0
	Total non-operating expenses	224			74
	Ordinary income	255,972		315,714
	Extraordinary income
	Insurance claim income	-	100,000
	Total extraordinary income	-			100,000
	Extraordinary losses
	Information security expenses	-			45,660
	Total extraordinary losses	-	45,660
	Net income before income taxes	255,972			370,053
	Income taxes - current	62,661		117,588
	Income taxes - deferred	20,939			(852)
	Total income taxes	83,601		116,736
	Net income	172,371			253,317

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(3) Quarterly Statement of Cash Flows (First six-month period)

				(Unit: Thousand yen)
			First half of the	First half of the
			previous fiscal year	fiscal year under review
			(From July 1, 2020	(From July 1, 2021
			to December 31, 2020)	to December 31, 2021)
	Cash flows from operating activities
	Net income before income taxes	255,972	370,053
	Depreciation		8,152	14,484
	Amortization of goodwill	5,256	5,256
	Insurance claim income		-	(104,499)
	Information security expenses		-	45,660
	Increase (decrease) in allowance for doubtful accounts		(2)	(1)
	Interest income	(15)	(15)
	Interest expenses		153	-
	Decrease (increase) in notes and accounts receivable - trade	329,807	150,667
	Increase (decrease) in notes and accounts payable - trade		(135,691)	67,182
	Other, net	258,471	80,179
	Subtotal		722,103	628,968
	Interest income received	15	15
	Interest paid		(150)	-
	Income taxes paid	(201,043)	(25,456)
	Proceeds from insurance income		-	104,499
	Information security expenses paid		-	(84,060)
	Net cash provided by (used in) operating activities		520,925	623,966
	Cash flows from investing activities
	Purchase of property, plant and equipment		(2,419)	(1,477)
	Purchase of intangible assets	(43,704)	(4,641)
	Other, net		(10,500)	-
	Net cash provided by (used in) investing activities	(56,623)	(6,119)
	Cash flows from financing activities
	Repayments of long-term loans payable	(39,996)	-
	Dividends paid		(88,468)	(89,566)
	Proceeds from issuance of shares resulting from exercise of		-	1,584
	share acquisition rights
	Net cash provided by (used in) financing activities		(128,464)	(87,982)
	Net increase (decrease) in cash and cash equivalents	335,836	529,864
	Cash and cash equivalents at beginning of period		3,214,015	3,365,770
	Cash and cash equivalents at end of period	3,549,852	3,895,635

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