summary of consolidated financial results for the fiscal year...

15
Summary of Consolidated Financial Results for the Fiscal Year Ended July 31, 2018 [Japanese GAAP] September 14, 2018 Company name: Crossfor Co., Ltd. Listing: Tokyo Stock Exchange (JASDAQ) Stock code: 7810 URL: https://crossfor.co.jp/ Representative: Hidetaka Dobashi, President Contact: Tsuyoshi Yamaguchi, CFO Tel: +81-(0)57-008-9640 Scheduled date of Annual General Meeting of Shareholders: October 26, 2018 Scheduled date of filing of Annual Securities Report: October 26, 2018 Scheduled date of payment of dividend: October 29, 2018 Preparation of supplementary materials for financial results: Yes Holding of financial results meeting: Yes (for institutional investors and analysts) (All amounts are rounded down to the nearest million yen.) 1. Consolidated Financial Results for the Fiscal Year Ended July 31, 2018 (August 1, 2017 to July 31, 2018) (1) Consolidated results of operations (Percentages represent year-on-year changes.) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % Fiscal year ended Jul. 31, 2018 4,063 (3.5) 234 (71.3) 220 (72.2) 117 (78.0) Fiscal year ended Jul. 31, 2017 4,211 2.4 816 (17.8) 793 (18.5) 532 56.8 Note: Comprehensive income (millions of yen) Fiscal year ended Jul. 31, 2018: 117 (down 77.9%) Fiscal year ended Jul. 31, 2017: 533 (up 58.6%) Net income per share Diluted net income per share Return on equity Ordinary profit on total assets Operating profit to net sales Yen Yen % % % Fiscal year ended Jul. 31, 2018 7.02 6.97 4.4 4.0 5.8 Fiscal year ended Jul. 31, 2017 41.99 41.46 29.1 18.7 19.4 Reference: Equity in earnings of affiliates (millions of yen) Fiscal year ended Jul. 31, 2018: - Fiscal year ended Jul. 31, 2017: - Notes: 1. Crossfor conducted a 1,000-for-1 common stock split effective on May 23, 2017 and a 2-for-1 common stock split effective on February 1, 2018. Net income per share and diluted net income per share have been calculated as if th ese stock splits had taken place at the beginning of the fiscal year ended July 31, 2017. 2. The Crossfor stock was listed on the Tokyo Stock Exchange JASDAQ (standard) Market on July 20, 2017. Diluted net income per share for the fiscal year ended July 31, 2017 was determined by using an average stock price during the period between the listing and the end of July 2017. (2) Consolidated financial position Total assets Net assets Equity ratio Net assets per share Millions of yen Millions of yen % Yen As of Jul. 31, 2018 5,572 2,677 47.8 159.29 As of Jul. 31, 2017 5,498 2,667 48.5 160.09 Reference: Shareholders’ equity (millions of yen) As of Jul. 31, 2018: 2,663 As of Jul. 31, 2017: 2,667 Note: Crossfor conducted a 1,000-for-1 common stock split effective on May 23, 2017 and a 2-for-1 common stock split effective on February 1, 2018. Net assets per share have been calculated as if these stock splits had taken place at the beginning of the fiscal year ended July 31, 2017. (3) Consolidated cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period Millions of yen Millions of yen Millions of yen Millions of yen Fiscal year ended Jul. 31, 2018 (1,290) (81) 171 442 Fiscal year ended Jul. 31, 2017 100 (973) 1,929 1,646 2. Dividends Dividend per share Total dividends Payout ratio (consolidated) Dividend on equity (consolidated) 1Q-end 2Q-end 3Q-end Year-end Total Yen Yen Yen Yen Yen Millions of yen % % Fiscal year ended Jul. 31, 2017 - 0.00 - 15.00 15.00 124 17.9 9.4 Fiscal year ended Jul. 31, 2018 - 0.00 - 7.20 7.20 120 102.5 4.5 Fiscal year ending Jul. 31, 2019 (forecast) - 0.00 - 2.50 2.50 20.4 Note: Crossfor conducted a 2-for-1 common stock split effective on February 1, 2018. Dividend per share for the fiscal year ended July 31, 2017 is the actual amount paid before the stock split. Year-end dividend per share forecast for the fiscal year ended July 31, 2018 is the amount after the stock split. Prior to this adjustment, the year-end dividend forecast was 14.40 yen per share. 3. Consolidated Earnings Forecast for the Fiscal Year Ending July 31, 2019 (August 1, 2018 to July 31, 2019) (Percentages represent year-on-year changes.) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Net income per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen First half 2,379 6.9 247 425.2 241 519.5 152 - 9.13 Full year 4,344 6.9 350 49.2 341 55.2 204 74.7 12.24

Upload: others

Post on 20-Sep-2020

0 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Summary of Consolidated Financial Results for the Fiscal Year Ended July 31, 2018 [Japanese GAAP]

September 14, 2018

Company name: Crossfor Co., Ltd. Listing: Tokyo Stock Exchange (JASDAQ)

Stock code: 7810 URL: https://crossfor.co.jp/

Representative: Hidetaka Dobashi, President

Contact: Tsuyoshi Yamaguchi, CFO

Tel: +81-(0)57-008-9640

Scheduled date of Annual General Meeting of Shareholders: October 26, 2018

Scheduled date of filing of Annual Securities Report: October 26, 2018

Scheduled date of payment of dividend: October 29, 2018

Preparation of supplementary materials for financial results: Yes

Holding of financial results meeting: Yes (for institutional investors and analysts)

(All amounts are rounded down to the nearest million yen.)

1. Consolidated Financial Results for the Fiscal Year Ended July 31, 2018 (August 1, 2017 to July 31, 2018)

(1) Consolidated results of operations (Percentages represent year-on-year changes.)

Net sales Operating profit Ordinary profit Profit attributable to

owners of parent

Millions of yen % Millions of yen % Millions of yen % Millions of yen %

Fiscal year ended Jul. 31, 2018 4,063 (3.5) 234 (71.3) 220 (72.2) 117 (78.0)

Fiscal year ended Jul. 31, 2017 4,211 2.4 816 (17.8) 793 (18.5) 532 56.8

Note: Comprehensive income (millions of yen) Fiscal year ended Jul. 31, 2018: 117 (down 77.9%) Fiscal year ended Jul. 31, 2017: 533 (up 58.6%)

Net income per

share Diluted net income

per share Return on equity

Ordinary profit on total assets

Operating profit to net sales

Yen Yen % % %

Fiscal year ended Jul. 31, 2018 7.02 6.97 4.4 4.0 5.8

Fiscal year ended Jul. 31, 2017 41.99 41.46 29.1 18.7 19.4

Reference: Equity in earnings of affiliates (millions of yen) Fiscal year ended Jul. 31, 2018: - Fiscal year ended Jul. 31, 2017: -

Notes: 1. Crossfor conducted a 1,000-for-1 common stock split effective on May 23, 2017 and a 2-for-1 common stock split effective

on February 1, 2018. Net income per share and diluted net income per share have been calculated as if th ese stock splits had

taken place at the beginning of the fiscal year ended July 31, 2017.

2. The Crossfor stock was listed on the Tokyo Stock Exchange JASDAQ (standard) Market on July 20, 2017. Diluted net income

per share for the fiscal year ended July 31, 2017 was determined by using an average stock price during the period between

the listing and the end of July 2017.

(2) Consolidated financial position Total assets Net assets Equity ratio Net assets per share

Millions of yen Millions of yen % Yen

As of Jul. 31, 2018 5,572 2,677 47.8 159.29

As of Jul. 31, 2017 5,498 2,667 48.5 160.09

Reference: Shareholders’ equity (millions of yen) As of Jul. 31, 2018: 2,663 As of Jul. 31, 2017: 2,667 Note: Crossfor conducted a 1,000-for-1 common stock split effective on May 23, 2017 and a 2-for-1 common stock split effective on

February 1, 2018. Net assets per share have been calculated as if these stock splits had taken place at the beginning of the fiscal

year ended July 31, 2017.

(3) Consolidated cash flows

Cash flows from

operating activities Cash flows from

investing activities Cash flows from

financing activities Cash and cash equivalents

at end of period

Millions of yen Millions of yen Millions of yen Millions of yen

Fiscal year ended Jul. 31, 2018 (1,290) (81) 171 442 Fiscal year ended Jul. 31, 2017 100 (973) 1,929 1,646

2. Dividends

Dividend per share Total dividends

Payout ratio (consolidated)

Dividend on equity

(consolidated) 1Q-end 2Q-end 3Q-end Year-end Total

Yen Yen Yen Yen Yen Millions of yen % %

Fiscal year ended Jul. 31, 2017 - 0.00 - 15.00 15.00 124 17.9 9.4

Fiscal year ended Jul. 31, 2018 - 0.00 - 7.20 7.20 120 102.5 4.5

Fiscal year ending Jul. 31, 2019 (forecast)

- 0.00 - 2.50 2.50 20.4

Note: Crossfor conducted a 2-for-1 common stock split effective on February 1, 2018. Dividend per share for the fiscal year ended July

31, 2017 is the actual amount paid before the stock split. Year-end dividend per share forecast for the fiscal year ended July 31,

2018 is the amount after the stock split. Prior to this adjustment, the year-end dividend forecast was 14.40 yen per share.

3. Consolidated Earnings Forecast for the Fiscal Year Ending July 31, 2019 (August 1, 2018 to July 31, 2019)

(Percentages represent year-on-year changes.)

Net sales Operating profit Ordinary profit Profit attributable to

owners of parent Net income per share

Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen

First half 2,379 6.9 247 425.2 241 519.5 152 - 9.13

Full year 4,344 6.9 350 49.2 341 55.2 204 74.7 12.24

Page 2: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

* Notes

(1) Significant changes in subsidiaries during the period: None

(2) Changes in accounting policies and accounting estimates, and restatements

1) Changes in accounting policies due to revisions in accounting standards, others: None

2) Changes in accounting policies other than 1) above: None

3) Changes in accounting estimates: None

4) Restatements: None

(3) Number of shares issued (common shares)

1) Number of shares issued as of the end of the period (including treasury shares)

As of Jul. 31, 2018: 17,518,000 shares As of Jul. 31, 2017: 17,458,000 shares

2) Number of treasury shares as of the end of the period

As of Jul. 31, 2018: 798,000 shares As of Jul. 31, 2017: 798,000 shares

3) Average number of shares during the period

Fiscal year ended Jul. 31, 2018: 16,680,712 shares Fiscal year ended Jul. 31, 2017: 12,672,087 shares

Note: Crossfor conducted a 1,000-for-1 common stock split effective on May 23, 2017 and a 2-for-1 common stock split effective on February 1, 2018. Number of shares issued (common shares) has been calculated as if these stock splits had taken place at the beginning of the fiscal year ended July 31, 2017.

Reference: Summary of Non-consolidated Financial Results 1. Non-consolidated Financial Results for the Fiscal Year Ended July 31, 2018 (August 1, 2017 to July 31, 2018) (1) Non-consolidated results of operations (Percentages represent year-on-year changes.)

Net sales Operating profit Ordinary profit Profit attributable to

owners of parent

Millions of yen % Millions of yen % Millions of yen % Millions of yen %

Fiscal year ended Jul. 31, 2018 4,005 (3.3) 290 (63.7) 277 (64.2) 173 (66.6)

Fiscal year ended Jul. 31, 2017 4,141 1.1 798 (15.7) 776 (16.6) 517 71.4

Net income per share Diluted net income per share

Yen Yen

Fiscal year ended Jul. 31, 2018 10.37 10.29

Fiscal year ended Jul. 31, 2017 40.88 40.36

Notes: 1. Crossfor conducted a 1,000-for-1 common stock split effective on May 23, 2017 and a 2-for-1 common stock split effective

on February 1, 2018. Net income per share and diluted net income per share have been calculated as if these stock splits had

taken place at the beginning of the fiscal year ended July 31, 2017.

2. The Crossfor stock was listed on the Tokyo Stock Exchange JASDAQ (standard) Market on July 20, 2017. Diluted net income

per share for the fiscal year ended July 31, 2017 was determined by using an average stock price during the period between

the listing and the end of July 2017.

(2) Non-consolidated financial position Total assets Net assets Equity ratio Net assets per share

Millions of yen Millions of yen % Yen

As of Jul. 31, 2018 5,599 2,688 47.8 159.96

As of Jul. 31, 2017 5,427 2,623 48.3 157.46

Reference: Shareholders’ equity (millions of yen) As of Jul. 31, 2018: 2,674 As of Jul. 31, 2017: 2,623 Note: Crossfor conducted a 1,000-for-1 common stock split effective on May 23, 2017 and a 2-for-1 common stock split effective on

February 1, 2018. Net assets per share have been calculated as if these stock splits had taken place at the beginning of the fiscal

year ended July 31, 2017.

2. Non-consolidated Earnings Forecast for the Fiscal Year Ending July 31, 2019 (August 1, 2018 to July 31, 2019) (Percentages represent year-on-year changes.)

Net sales Ordinary profit Profit Net income per share

Millions of yen % Millions of yen % Millions of yen % Yen

First half 2,379 8.5 230 240.7 141 314.2 8.48

Full year 4,344 8.5 336 21.0 198 15.0 11.90

* The current financial report is not subject to audit by certified public accountants or auditing firms.

* Explanation of appropriate use of earnings forecasts and other special items

Cautionary statement with respect to forecasts Forecasts of future performance in these materials are based on assumptions judged to be valid and information available to the management of Crossfor at the time these materials were prepared, but are not promised by Crossfor regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons. For discussion of the assumptions and other factors considered by Crossfor in preparing the above projections, please refer to page 3 of the attachments “1. Overview of Results of Operations, (4) Outlook.” How to view supplementary information at the financial results meeting Crossfor plans to hold a financial results meeting for institutional investors and analysts on Wednesday, September 27, 2018. Materials to be distributed at this meeting will be available on Crossfor’s website immediately thereafter.

Page 3: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

1

Contents of Attachments

1. Overview of Results of Operations 2

(1) Results of Operations 2

(2) Financial Position 2

(3) Cash Flows 3

(4) Outlook 3

(5) Basic Policy for Profit Distribution and Dividends for the Current and Next Fiscal Years 5

2. Basic Approach to the Selection of Accounting Standards 5

3. Consolidated Financial Statements and Notes 6

(1) Consolidated Balance Sheet 6

(2) Consolidated Statements of Income and Comprehensive Income 8

(3) Consolidated Statement of Changes in Equity 10

(4) Consolidated Statement of Cash Flows 12

(5) Notes to Consolidated Financial Statements 13

Going Concern Assumption 13

Segment and Other Information 13

Per Share Information 13

Material Subsequent Events 13

Page 4: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

2

1. Overview of Results of Operations

(1) Results of Operations

The Japanese economy continued to recover slowly during the fiscal year that ended on July 31, 2018 due to

continuing improvements in jobs and personal income as well as the benefits of government economic stimulus

measures. However, the economic outlook remains unclear because of the effects of international trade problems

on the global economy and the overall uncertainty about the upcoming direction of the global economy.

The business climate in Japan’s jewelry industry remained challenging because people continue to be reluctant to

make purchases due to uncertainty about the future.

There were many activities during the fiscal year, mainly involving the Dancing Stone*, in order to improve

customer satisfaction.

In Japan, there were TV commercials during the Christmas shopping season in order to raise awareness of the

Dancing Stone brand. In addition, there were advertisements in magazines. Due to these activities, performance in

Japan was good in relative terms.

Crossfor HK Limited, a Hong Kong subsidiary of Crossfor, has become the primary component of overseas

operations. This company used participation in jewelry exhibitions to increase the number of license contracts

and conducted follow-up sales activities with companies that have already signed contracts.

In China, subsidiary Crossfor (Shenzhen) Co., Ltd. continued to work on expanding its presence in the jewelry

market. However, increasing consumer awareness of the Crossfor brand has been accompanied by a big increase

in the volume of imitation Crossfor products. Crossfor (Shenzhen) is working with attorneys in China to stop the

sale of counterfeit merchandise.

Jewelry parts sold in India are used primarily to fabricate pendants and other types of jewelry within India that is

sold mainly in the United States. Demand for merchandise at large U.S. jewelry retailers is soft because of slow

sales of jewelry and accessories in the United States. Consequently, sales of jewelry parts in India were lower

than the initial plan.

As a result, sales were down 3.5% from one year earlier to 4,063 million yen. Operating profit decreased 71.3%

to 234 million yen, ordinary profit decreased 72.2% to 220 million yen and profit attributable to owners of parent

decreased 78.0% to 117 million yen.

* Dancing Stone is a patented technology of Crossfor that makes it possible to create a gemstone setting that

allows the stone to move with no need to make a hole in the stone.

(2) Financial Position

Assets

Total assets increased 74 million yen from the end of the previous fiscal year to 5,572 million yen as of the end of

the current fiscal year. The main reasons were a decrease of 1,204 million yen in cash and deposits and increases

of 797 million yen in finished goods, 235 million yen in raw materials and supplies and 106 million yen in work

in process.

Liabilities

Total liabilities increased 64 million yen to 2,895 million yen. The main reasons were a decrease of 133 million

yen in income taxes payable and an increase of 311 million yen in loans payable.

Net assets

Total net assets increased 10 million yen to 2,677 million yen. The main reasons were a decrease of 124 million

yen because of dividends from surplus and the booking of profit attributable to owners of parent of 117 million

yen.

Page 5: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

3

(3) Cash Flows

Cash and cash equivalents at the end of the current fiscal year decreased 1,204 million yen from the end of the

previous fiscal year to 442 million yen. Cash flows and the main reasons for changes are as follows.

Cash flows from operating activities

Net cash used in operating activities totaled 1,290 million yen, compared with 100 million yen provided in the

previous fiscal year.

Main uses of cash include a 1,139 million yen increase in inventories and income taxes paid of 252 million yen,

while there was profit before income taxes of 218 million yen.

Cash flows from investing activities

Net cash used in investing activities totaled 81 million yen, compared with 973 million yen used in the previous

fiscal year.

Main uses of cash include purchase of property, plant and equipment of 86 million yen.

Cash flows from financing activities

Net cash provided by financing activities totaled 171 million yen, compared with 1,929 million yen provided in

the previous fiscal year.

Net increase in short-term loans payable of 124 million yen and proceeds from long-term loans payable of 700

million yen were the main source of cash. Main uses of cash include repayments of long-term loans payable of

513 million yen and cash dividends paid of 124 million yen.

(4) Outlook

In Japan’s jewelry industry, sales are expected to increase slowly over the next few years for several reasons. One

reason is the expected rush to make purchases prior to the planned consumption tax hike in 2019. Expectations for

the price of gold to increase are also likely to support demand for jewelry. There are also expectations for a large

volume of jewelry purchases in Japan and by foreign tourists leading up to the 2020 Tokyo Olympics. (Source:

2018 Jewelry Market Survey by Yano Research Institute)

As in the past fiscal year, Crossfor will continue to launch new designs periodically and create new ideas for

OEM* products for our current business partners. In addition, we plan to create ideas for eyeglasses, leather

products and other products that can incorporate the Dancing Stone technology. Our goals are to establish ties

with new business partners and make inroads in new market categories.

Developing a core product in addition to Dancing Stone is another goal. Research and development programs are

under way in order to start manufacturing items that can become new major products. Crossfor plans to begin

selling tennis bracelets and other new products during the fiscal year ending on July 31, 2019.

The overseas jewelry market has been growing steadily, chiefly in China. Growth is expected to continue until at

least about 2020. Due to this outlook, global jewelry sales are forecast to climb to about 50 trillion yen in 2020

from about 25 trillion yen in 2013. (Source: 2013 Cool Japan Strategy Development and Collaboration Pr omotion

Project, Ministry of Economy Trade and Industry)

Many activities are planned in order to increase sales as the jewelry market grows. Led by subsidiary Crossfor

H.K. Ltd., the Crossfor Group will continue to participate in jewelry exhibitions in China, the United States,

Southeast Asia and Europe, which are all regions where the jewelry market is expected to grow. Plans also

include participation for the first time in jewelry exhibitions in the Middle East. By operating booths at these

events, Crossfor plans to expand its presence in overseas markets by working with its sales agents in order to

increase sales to overseas jewelry manufacturers.

Page 6: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

4

To preserve and enhance the value of the Crossfor brand, there will be more activities to prevent the growth of

counterfeit merchandise in Japan and other countries. Sales of unauthorized products in China are a particularly

serious problem. Crossfor (Shenzhen) will continue to take actions aimed at blocking the production and sale of

counterfeit products.

* Abbreviation for Original Equipment Manufacturing (Manufacturer), producing products with business partner

brands

Based on this outlook and planned actions, the forecast for sales and earnings in the fiscal year ending on July 31,

2019 is as follows.

Sales

The Crossfor Group operates in the single segment of the jewelry business. But sales and the cost of sales are

provided separately for the domestic sales (sales of finished products) and overseas sales (sales of jewelry parts)

categories.

Domestic sales (Sales of finished jewelry)

Domestic sales consist of sales of OEM products using the brands of partner companies and the manufacture and

sale of products using Crossfor’s own brand.

The fiscal year sales plan is determined by first performing a survey of buyers for both OEM products and

Crossfor-brand products. Then sales personnel for each buyer or buyer category submit sales forecasts that are

combined to obtain the total domestic sales forecast.

Overseas sales (Sales of jewelry parts)

Overseas sales consist of the sale of parts required to fabricate products that incorporate Crossfor’s patented

Dancing Stone technology. Crossfor receives orders for parts through consolidated subsidiary Crossfor H.K. Ltd.

The parts are then fabricated by outsourcing manufacturers in Japan and sold to overseas jewelry manufacturers.

The fiscal year sales plan is determined by first performing a survey of buyers and then combining the sales

forecasts for each buyer. For regions where it is not possible to use a survey to establish a sales forecast, forecasts

are determined by using prior-year sales and making adjustments to reflect changes in consumer spending in

individual countries.

Cost of sales, selling, general and administrative expenses, operating profit

The cost of sales forecast is determined by using the fiscal year sales plan and the cost of sales ratio for each

product category in the previous fiscal year.

The selling, general and administrative expenses forecast is determined by using the previous fiscal year’s

expenses and then factoring in growth in personnel expenses, advertising and marketing expenses, increases in

store POP materials and equipment associated with sales growth, increases in jewelry exhibition expenses and

sales commissions, and other items. For personnel expenses, which is the largest component of selling, general

and administrative expenses, the forecast reflects planned salary increases and the plan for the size of the

workforce in the fiscal year.

Non-operating income/expenses, ordinary profit

The non-operating income/expense forecast is determined mainly by using the plan for interest expenses and

other expenses associated with plans for procuring funds as needed.

Extraordinary income and losses, profit attributable to owners of parent

These forecasts are based on the expectation for no extraordinary income or losses in the fiscal year ending on

July 31, 2019.

Page 7: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

5

Based on this outlook, Crossfor forecasts its operating results for the fiscal year ending July 31, 2019 as follows:

consolidated net sales to increase by 6.9% year-on-year to 4,344 million yen; operating profit to increase by

49.2% year-on-year to 350 million yen; ordinary profit to increase by 55.2% year-on-year to 341 million yen; and

profit attributable to owners of parent to increase by 74.7% to 204 million yen.

Due to the characteristics of the jewelry business, demand for products of the Crossfor Group is very high during

the Christmas shopping season. As a result, sales in the first and second quarters of each fiscal year (Augus t to

December), during preparations for the Christmas shopping season and the season itself, are higher than in the

other two quarters.

The overseas sales forecast assumes average exchange rates of 110 yen to the U.S. dollar and 17 yen to the

Chinese yuan.

(5) Basic Policy for Profit Distribution and Dividends for the Current and Next Fiscal Years

The Crossfor Group views the distribution of earnings to shareholders as one of its greatest obligations. The

fundamental policy is to maintain a consolidated dividend payout ratio of 20% in order to pay dividends that

reflect results of operations.

To pay a steady dividend in each fiscal year, group companies are dedicated to improving financial soundness,

making investments for future growth and further increasing corporate value. The policy is to continue taking

actions that are suitable and flexible while taking into consideration the stock price, financial soundness and other

factors.

As was announced on March 13, 2018 in a press release titled “Notice of Revisions to First-half and Full-year

Forecasts for the Fiscal year Ending July 31, 2018 and Partial Reduction in Compensation of Executives”

(Japanese version only), Crossfor plans to pay a dividend of 7.20 yen per share* for the fiscal year that ended on

July 31, 2018.

Based on the consolidated payout ratio guideline of 20%, Crossfor plans to pay a dividend of 2.50 yen per share

for the fiscal year ending on July 31, 2019.

* Crossfor conducted a 2-for-1 common stock split on February 1, 2018. All dividend figures in this section

reflect this split.

2. Basic Approach to the Selection of Accounting Standards

The Crossfor Group currently prepares consolidated financial statements using Generally Accepted Accounting

Principles in Japan to permit comparisons with prior years and with the financial data of other companies. We will

take suitable actions with regard to the application of International Financial Reporting Standards (IFRS) by

taking into account associated factors in Japan and other countries.

Page 8: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

6

3. Consolidated Financial Statements and Notes

(1) Consolidated Balance Sheet

(Thousands of yen)

FY7/17

(As of Jul. 31, 2017)

FY7/18

(As of Jul. 31, 2018)

Assets

Current assets

Cash and deposits 1,646,641 442,296

Notes and accounts receivable-trade 496,025 588,934

Finished goods 996,999 1,794,424

Work in process 55,828 162,322

Raw materials and supplies 362,594 598,350

Deferred tax assets 31,795 32,273

Income taxes receivable - 39,323

Other 169,714 160,630

Allowance for doubtful accounts (3,063) (1,887)

Total current assets 3,756,534 3,816,668

Non-current assets

Property, plant and equipment

Buildings and structures 1,297,384 1,281,458

Accumulated depreciation (185,548) (203,959)

Buildings and structures, net 1,111,836 1,077,498

Machinery, equipment and vehicles 15,280 36,029

Accumulated depreciation (12,484) (17,743)

Machinery, equipment and vehicles, net 2,795 18,285

Land 343,347 331,347

Construction in progress - 44,822

Other 136,535 142,615

Accumulated depreciation (88,099) (108,032)

Other, net 48,435 34,583

Total property, plant and equipment 1,506,414 1,506,537

Intangible assets 117,767 110,438

Investments and other assets

Investment securities 245 258

Long-term loans receivable 1,655 -

Deferred tax assets 22,269 12,585

Other 101,327 133,862

Allowance for doubtful accounts (7,789) (7,524)

Total investments and other assets 117,707 139,182

Total non-current assets 1,741,889 1,756,158

Total assets 5,498,424 5,572,826

Page 9: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

7

(Thousands of yen)

FY7/17

(As of Jul. 31, 2017)

FY7/18

(As of Jul. 31, 2018)

Liabilities

Current liabilities

Notes and accounts payable-trade 223,540 190,016

Short-term loans payable 259,074 383,334

Current portion of long-term loans payable 449,884 576,459

Income taxes payable 139,588 6,524

Other 177,880 98,550

Total current liabilities 1,249,967 1,254,885

Non-current liabilities

Long-term loans payable 1,578,780 1,639,039

Deferred tax liabilities 2,619 831

Other - 1,000

Total non-current liabilities 1,581,399 1,640,870

Total liabilities 2,831,366 2,895,755

Net assets

Shareholders’ equity

Capital stock 681,640 683,290

Capital surplus 775,306 776,956

Retained earnings 1,235,553 1,227,777

Treasury shares (20,349) (20,349)

Total shareholders’ equity 2,672,151 2,667,675

Accumulated other comprehensive income

Valuation difference on available-for-sale

securities 5 14

Foreign currency translation adjustment (5,100) (4,306)

Total accumulated other comprehensive income (5,094) (4,291)

Share acquisition rights - 13,687

Total net assets 2,667,057 2,677,071

Total liabilities and net assets 5,498,424 5,572,826

Page 10: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

8

(2) Consolidated Statements of Income and Comprehensive Income

Consolidated Statement of Income

(Thousands of yen)

FY7/17

(Aug. 1, 2016 – Jul. 31, 2017)

FY7/18

(Aug. 1, 2017 – Jul. 31, 2018)

Net sales 4,211,451 4,063,230

Cost of sales 2,187,210 2,229,800

Gross profit 2,024,240 1,833,429

Selling, general and administrative expenses 1,207,727 1,598,880

Operating profit 816,512 234,549

Non-operating income

Interest income 240 390

Dividend income 10 19

Foreign exchange gains 11,011 -

Rent income - 4,899

Subsidy income 1,428 3,088

Other 1,324 1,377

Total non-operating income 14,014 9,775

Non-operating expenses

Interest expenses 11,756 11,974

Foreign exchange losses - 3,587

Going public expenses 23,713 -

Issuance cost of share acquisition rights - 2,291

Other 1,228 6,130

Total non-operating expenses 36,699 23,985

Ordinary profit 793,828 220,339

Extraordinary losses

Loss on sales and retirement of non-current assets 1,807 1,871

Impairment loss 5,413 -

Total extraordinary losses 7,220 1,871

Profit before income taxes 786,607 218,468

Income taxes-current 266,151 93,877

Income taxes-deferred (11,696) 7,417

Total income taxes 254,455 101,295

Profit 532,152 117,173

Profit attributable to owners of parent 532,152 117,173

Page 11: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

9

Consolidated Statement of Comprehensive Income

(Thousands of yen)

FY7/17

(Aug. 1, 2016 – Jul. 31, 2017)

FY7/18

(Aug. 1, 2017 – Jul. 31, 2018)

Profit 532,152 117,173

Other comprehensive income

Valuation difference on available-for-sale securities 28 9

Foreign currency translation adjustment 1,046 793

Total other comprehensive income 1,075 802

Comprehensive income 533,227 117,975

Comprehensive income attributable to:

Owners of parent 533,227 117,975

Non-controlling interests - -

Page 12: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

10

(3) Consolidated Statement of Changes in Equity

FY7/17 (Aug. 1, 2016 – Jul. 31, 2017)

(Thousands of yen)

Shareholders’ equity

Capital stock Capital surplus Retained earnings Treasury shares Total shareholders’

equity

Balance at beginning of

current period 84,125 177,791 760,630 (20,349) 1,002,198

Changes of items during

period

Issuance of new shares 597,515 597,515 1,195,030

Dividends of surplus (57,228) (57,228)

Profit attributable to

owners of parent 532,152 532,152

Net changes of items

other than shareholders’

equity

Total changes of items

during period 597,515 597,515 474,923 - 1,669,953

Balance at end of current

period 681,640 775,306 1,235,553 (20,349) 2,672,151

Accumulated other comprehensive income

Total net assets

Valuation

difference on

available-for-sale

securities

Foreign currency

translation

adjustment

Total accumulated

other

comprehensive

income

Balance at beginning of

current period (22) (6,146) (6,169) 996,028

Changes of items during

period

Issuance of new shares 1,195,030

Dividends of surplus (57,228)

Profit attributable to

owners of parent 532,152

Net changes of items

other than shareholders’

equity

28 1,046 1,075 1,075

Total changes of items

during period 28 1,046 1,075 1,671,029

Balance at end of current

period 5 (5,100) (5,094) 2,667,057

Page 13: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

11

FY7/18 (Aug. 1, 2017 – Jul. 31, 2018)

(Thousands of yen)

Shareholders’ equity

Capital stock Capital surplus Retained earnings Treasury shares Total shareholders’

equity

Balance at beginning of

current period 681,640 775,306 1,235,553 (20,349) 2,672,151

Changes of items during

period

Issuance of new shares 1,650 1,650 3,300

Dividends of surplus (124,950) (124,950)

Profit attributable to

owners of parent 117,173 117,173

Net changes of items

other than shareholders’

equity

Total changes of items

during period 1,650 1,650 (7,776) - (4,476)

Balance at end of current

period 683,290 776,956 1,227,777 (20,349) 2,667,675

Accumulated other comprehensive income

Share acquisition

rights Total net assets

Valuation

difference on

available-for-sale

securities

Foreign currency

translation

adjustment

Total accumulated

other

comprehensive

income

Balance at beginning of

current period 5 (5,100) (5,094) - 2,667,057

Changes of items during

period

Issuance of new shares 3,300

Dividends of surplus (124,950)

Profit attributable to

owners of parent 117,173

Net changes of items

other than shareholders’

equity

9 793 802 13,687 14,490

Total changes of items

during period 9 793 802 13,687 10,013

Balance at end of current

period 14 (4,306) (4,291) 13,687 2,677,071

Page 14: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

12

(4) Consolidated Statement of Cash Flows

(Thousands of yen)

FY7/17

(Aug. 1, 2016 – Jul. 31, 2017)

FY7/18

(Aug. 1, 2017 – Jul. 31, 2018)

Cash flows from operating activities

Profit before income taxes 786,607 218,468

Depreciation 51,093 104,457

Impairment loss 5,413 -

Increase (decrease) in allowance for doubtful accounts (17,583) (1,441)

Interest and dividend income (251) (410)

Interest expenses 11,756 11,974

Foreign exchange losses (gains) (605) 5,694

Going public expenses 23,713 -

Loss (gain) on sales and retirement of non-current assets 1,807 1,871

Share-based compensation expenses - 13,687

Decrease (increase) in notes and accounts receivable-trade (59,626) (92,624)

Decrease (increase) in inventories (269,662) (1,139,600)

Increase (decrease) in notes and accounts payable-trade 59,392 (33,523)

Increase (decrease) in advances received (76,238) (15,675)

Decrease/increase in consumption taxes receivable/payable (131,260) 11,265

Other, net (20,228) (110,996)

Subtotal 364,329 (1,026,851)

Interest and dividend income received 195 522

Interest expenses paid (12,490) (11,983)

Income taxes paid (251,818) (252,059)

Net cash provided by (used in) operating activities 100,214 (1,290,372)

Cash flows from investing activities

Purchase of property, plant and equipment (860,072) (86,177)

Proceeds from sales of property, plant and equipment - 12,000

Purchase of intangible assets (103,521) (5,339)

Purchase of shares of subsidiaries resulting in change in

scope of consolidation (5,829) -

Other, net (3,890) (2,111)

Net cash provided by (used in) investing activities (973,314) (81,628)

Cash flows from financing activities

Net increase (decrease) in short-term loans payable 28,308 124,260

Proceeds from long-term loans payable 1,155,400 700,000

Repayments of long-term loans payable (387,179) (513,164)

Proceeds from issuance of common shares 1,195,030 3,300

Payments for going public expenses (4,911) (18,802)

Cash dividends paid (57,228) (124,006)

Net cash provided by (used in) financing activities 1,929,418 171,586

Effect of exchange rate change on cash and cash equivalents 3,882 (4,130)

Net increase (decrease) in cash and cash equivalents 1,060,202 (1,204,544)

Cash and cash equivalents at beginning of period 586,438 1,646,641

Cash and cash equivalents at end of period 1,646,641 442,096

Page 15: Summary of Consolidated Financial Results for the Fiscal Year …mw2pemthym.bizmw.com/wordpress/wp-content/uploads/2019/... · 2019. 3. 6. · Holding of financial results meeting:

Crossfor Co., Ltd. (7810) Consolidated Financial Results for FY7/18

13

(5) Notes to Consolidated Financial Statements

Going Concern Assumption

Not applicable.

Segment and Other Information

There is no business segment information because the Crossfor Group operates in the single segment of the

jewelry business.

Per Share Information

(Yen)

FY7/17

(Aug. 1, 2016 – Jul. 31, 2017)

FY7/18

(Aug. 1, 2017 – Jul. 31, 2018)

Net assets per share 160.09 159.29

Net income per share 41.99 7.02

Diluted net income per share 41.46 6.97

Notes: 1. Crossfor conducted a 1,000-for-1 common stock split effective on May 23, 2017 and a 2-for-1 common stock split

effective on February 1, 2018. Net assets per share, net income per share and diluted net income per share have been

calculated as if these stock splits had taken place at the beginning of FY7/17.

2. The Crossfor stock was listed on the Tokyo Stock Exchange JASDAQ (standard) Market on July 20, 2017. Diluted

net income per share for FY7/17 was determined by using an average stock price during the period between the

listing and the end of FY7/17.

3. The basis of calculating the net income per share is as follows:

(Thousands of yen)

FY7/17

(Aug. 1, 2016 – Jul. 31, 2017)

FY7/18

(Aug. 1, 2017 – Jul. 31, 2018)

Net income per share

Profit attributable to owners of parent 532,152 117,173

Amounts not attributable to common shareholders - -

Profit attributable to owners of parent applicable to

common shares 532,152 117,173

Average number of common shares outstanding during

the period (Shares) 12,672,087 16,680,712

Diluted net income per share

Adjustment to profit attributable to owners of parent - -

Increase in the number of common shares (Shares) 162,246 139,756

[of which share acquisition rights (Shares)] [162,246] [139,756]

Summary of potential stock not included in the

calculation of diluted net income per share since there

was no dilutive effect

-

Share acquisition rights No. 5

Number of share acquisition

rights: 799

(Common shares: 159,800

shares)

Material Subsequent Events

Not applicable.

This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been

prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation.