Proto : Consolidated Financial Results for the Year Ended March 31, 2021

1. Business Performance Overview

Business Performance Overview for the Current Term

(1) Business Performance Overview for the Current Term

In the current consolidated fiscal year, the Japanese economy showed a sign of recovery thanks to economic-stimulus measures against the impact of COVID-19, the resumption of economic activities adopting new lifestyles, etc., but the waves of COVID-19 come successively without subsiding, causing negative impacts on some industries. There is still concern over the impact of the fourth wave on social and economic activities, and the outlook remains uncertain.

In this economic environment, the automobile sale industry, including major clients of the PROTO Group, witnessed a recovery in sales volume of new cars, which was sluggish in the first half, as it exceeded that in the previous year from October, and the number of registered used cars was favorable, as the demand for them as a means of transportation in new lifestyles grew.

In this situation, the PROTO Group has been offering private brand products and services to mainly used car dealers, maintenance shops, and new car dealers, in order to actualize comprehensive support for a life with cars by "establishing a service platform" set as a vision in the "mid-term management plan (FY 3/2020 to FY 3/2022)," which was formulated while considering diversifying needs from users and the future market environment.

As a result, the company earned net sales of 60,097 million yen (up 1.6% year on year) in the current consolidated fiscal year. The major reasons for the sales growth include the healthy performance of provision of services related to the service platform, including MOTOR GATE, and the growth of sales of tires and wheels. Operating profit was 5,941 million yen (up 15.7% year on year) and ordinary profit was 6,118 million yen (14.3% year on year), thanks to the above-mentioned sales growth, the sale and withdrawal from business of loss-making overseas subsidiaries in the previous consolidated fiscal year, etc. Profit attributable to owners of parent was 4,853 million yen (down 2.8% year on year), due to the posting of gain on sale of fixed assets through the sale of real estate in the previous consolidated fiscal year. In addition, ROE was 14.3% (the target value set in our mid-term management plan: 12%).

The performance of each business segment is as described below.

1. Overview of each segment Automobile-related information
   With the aim of establishing the largest service platform in this industry, we have strived to expand its share in each business field, maintain and increase the average spending per customer, and have strengthened services covering needs from users in their lives with cars. In the current consolidated fiscal year, we have been developing and offering DX products to meet diversifying needs from users, while the novel coronavirus remains rampant. In the field of used cars, we have engaged in the maximization of the content volume of "Goo-net," the increase of affiliated firms and productivity through the provision of "MOTOR GATE," which is the background system for "Goo-net" and the improvement of its functions, the optimization of roles of information magazines and websites, the reform of the cost structure, etc. As a measure for improving the functions of "MOTOR GATE," we have supported the business administration of used car dealers by offering services utilizing big data and AI technologies, including "MOTOR GATE AI," which is an AI-based analysis tool for increasing orders. As the needs for non- contact communication are growing, we have offered new services in response to environmental changes, including "Goo-net Live" as a online business talk tool that can be used by users, automobile dealers, and others for consultation and negotiations.

In the car maintenance field, we have strived to increase the number of fee-paying maintenance shops by improving the convenience for users through the enrichment of content of "Goo-net Pit," the installation of the AI chatbot function in "Goo- net Pit Smart Booking," etc. In the field of new cars, we have continued the sales promotion of "DataLine SalesGuide." As an optional function of this product, we started offering "DataLine SalesGuide－Car replacement Proposal Movie" which can predict the asset value of vehicles owned by users 3 years from now, automatically simulate the change of cars, compare costs, and so on with videos. Like this, we have provided optional products, to facilitate DX and improve the value of its services. As for the sale of tires, wheels, etc., we have continued the enhancement of the sale of high-end products and the combined sale of tires and wheels, and pursued synergy with "Goo-net,""Goo-net Pit," "MOTOR GATE Shopping," etc. to increase sales opportunities. In the business of export of used cars, we have made efforts to strengthen our business models by cementing the alliances with leading used car exporters, etc. As a result, net sales were 53,679 million yen (up 1.5% year on year). The major reasons for the sales growth include the healthy performance of the business related to service platforms, including "MOTOR GATE," and the recovery of the sales of tires and wheels in AUTOWAY Co., Ltd. from the downturn in the previous consolidated fiscal year. Operating profit was 7,036 million yen (up 6.9% year on year), due to the growth of the service platform-related business, the sales growth of tires and wheels, etc.

Lifestyle-related information

As for the business related to nursing care, medicine, and welfare, we strived to increase the number of our business partners through continuing to improve the brand power of products and services and fortifying its business base by enhancing the website functions and expanding the content and services. As for the business of Goo Home at PROTO SOLUTION Co., Ltd., we kept improving profitability, enriching their contents, and increasing business partners. Consequently, net sales were 3,914 million yen (down 6.1% year on year). The major reasons for the drop in sales include the decline in sales from the home-visiting dentist support business, which was discontinued in the previous consolidated fiscal year, in PROTO MEDICAL CARE Operating profit was 273 million yen (up 61.9% year on year), as sales decreased, but the company reduced the costs for personnel and advertisement, etc.

Real estate

As PROTO CORPORATION conducted the lease management for its real estate, net sales were 157 million yen (down 1.9% year on year), and operating profit was 140 million yen (up 3.8% year on year).

Others

Net sales were 2,345 million yen (up 21.6% year on year), and operating profit was 130 million yen (up 121.6% year on year). This was attributed to the growth of PROTO SOLUTION Co., Ltd. in software development and sales to external customers, and the growth of performance of existing consolidated subsidiaries for the worker dispatch business, in addition to Associe Co., Ltd. becoming a subsidiary in October 2019.

(2) Financial Standing Overview for Current Term

Total assets at the end of the current consolidated fiscal year were 49,388 million yen, up 4,662 million yen from the end of the previous consolidated fiscal year. The situation of assets, liabilities, and net assets is as follows.

i. Assets

Current assets stood at 31,623 million yen, up 3,392 million yen from the end of the previous consolidated fiscal year, due to the increases in cash, deposits and accounts receivable.

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