Cresco : ［Delayed］Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2021 (Based on Japanese GAAP)

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 Consolidated Financial Results for the Fiscal Year Ended March 31, 2021

(Based on Japanese GAAP)

May 10, 2021

Company name:

CRESCO LTD.

Stock exchange listing:

Tokyo

Stock code:

4674

URL https://www.cresco.co.jp/

Representative:

President, Executive Officer

Hiroyuki Nemoto

Inquiries:

Director, Managing Executive Officer

Kazuo Sugiyama

TEL [phone]

Scheduled date of Ordinary General Meeting of Shareholders:

June 18, 2021

Scheduled date to commence dividend payments:

June 21, 2021

Scheduled date to file annual securities report:

June 21, 2021

Preparation of supplementary material on financial results:

No

Holding of financial results meeting:

Yes

for analysts

(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)

(1) Consolidated operating results

Percentages indicate year-on-year changes

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Fiscal year ended

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

March 31, 2021

39,706

0.9

3,484

(2.0)

4,101

10.5

2,634

8.8

March 31, 2020

39,337

11.7

3,556

10.9

3,712

1.5

2,421

5.9

Note:

Comprehensive

income

Fiscal year ended March 31, 2021: ¥4,024 million

[92.6%]

Fiscal year ended March 31, 2020: ¥2,088 million

[11.8%]

Earnings per share

Diluted earnings per

Return on equity

Ordinary profit

Operating profit

share

on total assets

on net sales

Fiscal year ended

Yen

Yen

%

%

%

March 31, 2021

125.43

-

14.8

14.4

8.8

March 31, 2020

114.30

114.24

15.0

14.2

9.0

Reference: Share of profit (loss) of entities accounted for using equity method:
	Fiscal year ended March 31, 2021: ¥18 million	Fiscal year ended March 31, 2020: ¥41 million
Note:	The Company implemented a 2-for-1 share split of common shares with an effective date of February 1, 2020. Earnings per share
	have been calculated under the assumption that the share split was conducted at the beginning of the previous fiscal year.
(2) Consolidated financial position
			Total assets		Net assets	Equity ratio	Net assets per share
As of			Millions of yen		Millions of yen	%		Yen
March 31, 2021		30,342		19,485	64.2		926.96
March 31, 2020		26,770		16,185	60.4		770.72
Reference: Equity
	As of March 31, 2021:	¥19,485 million	As of March 31, 2020: ¥16,177 million
Note:	The Company implemented a 2-for-1 share split of common shares with an effective date of February 1, 2020. Net assets per share
	have been calculated under the assumption that the share split was conducted at the beginning of the previous fiscal year.
(3) Consolidated cash flows
			Cash flows from			Cash flows from		Cash flows from		Cash and cash equivalents
		operating activities			investing activities		financing activities		at end of period
Fiscal year ended		Millions of yen			Millions of yen		Millions of yen		Millions of yen
March 31, 2021		3,155			(47)		(1,479)		11,015
March 31, 2020		3,693			2		(511)		9,384

2. Cash dividends

			Annual dividends per share		Total	Dividend	Dividend
							dividend	payout ratio	on equity
		1st quarter-	2nd quarter-	3rd quarter-	Fiscal year-	Total
		end	end	end	end	payments	(Consolidated)	(Consolidated)
		Yen	Yen	Yen	Yen	Yen	Millions of	%	%
		yen
Fiscal year ended March 31,
-	36.00	-	18.00	-	750	31.5	4.8
2020
Fiscal year ended March 31,	-	18.00	-	20.00	38.00	798	30.3	4.5
2021
Fiscal year ending March	-	20.00	-	20.00	40.00		29.5
31, 2022 (Forecast)
Note:	The Company	implemented a 2-	for-1 share split of common shares with an effective date	of February 1,	2020. For the	2nd quarter-
	end of the fiscal year ended March 31, 2020, actual dividend values before the share split are stated. For the fiscal year ended March
	31, 2020, total dividends per share is not stated because the implementation of the share split makes it impossible to perform a simple
	calculation.

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2022 (from April 1, 2021 to March 31, 2022)

Percentages indicate year-on-year changes

	Net sales		Operating profit	Ordinary profit		Profit attributable to	Earnings
			owners of parent	per share
	Millions of		%	Millions of	%	Millions of		%	Millions of		%	Yen
Six months ending	yen			yen		yen				yen
20,500		6.8	1,720	25.8	1,900		3.0		1,380		5.5	65.65
September 30, 2021
Full year	42,400		6.8	3,850	10.5	4,200		2.4		2,850		8.2	135.58
4. Notes
(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the	No
change in scope of consolidation):
(2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations:		No
Changes in accounting policies due to other reasons:						No
Changes in accounting estimates:								No
Restatement of prior period financial statements:						No

(3) Number of issued shares (common shares)

Total number of issued shares at the end of the period (including treasury shares)

	As of March 31, 2021	23,000,000	shares	As of March 31, 2020	24,000,000	shares
Number of treasury shares at the end of the period
	As of March 31, 2021	1,978,723	shares	As of March 31, 2020	3,009,560	shares
Average number of shares during the period
	Fiscal year ended March 31, 2021	21,002,402	shares	Fiscal year ended March 31, 2020	21,181,025	shares
	Note:	The Company implemented a 2-for-1 share split of common shares with an effective date of February 1, 2020. "Total number
		of issued shares at the end of the period (including treasury shares)," "number of treasury shares at the end of the period," and

"average number of shares during the period" have been calculated under the assumption that the share split was conducted at the beginning of the previous fiscal year.

(Reference) Summary of non-consolidated financial results

1. Non-consolidated financial results for the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)

(1) Non-consolidated operating results							Percentages indicate year-on-year changes
	Net sales				Operating profit	Ordinary profit		Profit
Fiscal year ended	Millions of yen			%	Millions of yen	%	Millions of yen		%	Millions of yen	%
March 31, 2021	22,837		(0.9)	2,211	(11.2)	2,937		8.3	2,144	18.2
March 31, 2020	23,034		10.1	2,491	12.9	2,712		(1.7)	1,815	(2.1)
	Earnings per share	Diluted earnings per
		share
Fiscal year ended		Yen		Yen
March 31, 2021	102.12		-
March 31, 2020	85.69		85.65

(2) Non-consolidated financial position

		Total assets	Net assets		Equity ratio		Net assets per share
As of		Millions of yen	Millions of yen		%	Yen
March 31, 2021		25,205	15,997		63.5	761.01
March 31, 2020		22,203	13,205		59.4	628.72
Reference: Equity
As of March 31, 2021	¥15,997 million	As of March 31, 2020	¥13,197 million

2. Forecast of non-consolidated financial results for the fiscal year ending March 31, 2022 (from April 1, 2021 to March 31, 2022) Percentages indicate year-on-year changes

	Net sales		Ordinary profit	Profit		Earnings per share
	Millions of		%	Millions of	%	Millions of	%	Yen
	yen		yen	yen
Six months ending	11,900		7.3	1,480	(5.5)	1,200	(2.1)	57.09
September 30, 2021
Full year	24,300		6.4	2,900	(1.3)	2,110	(1.6)	100.37

• Financial results reports are exempt from audit conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters

(Warning on forward-looking statements)

The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. The Company makes no promise regarding achievement of any content in the forward-looking statements. Actual business and other results may differ substantially due to various factors. Please refer to "(4) Outlook for the coming year, 1. Overview of operating results and others" on page 6 of the attached materials for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use of business results forecasts.

(Cash dividends after share split)

The Company implemented a 2-for-1 share split of common shares with an effective date of February 1, 2020. Dividends for the fiscal year ended March 31, 2020, that were converted prior to this share split, dividends for the fiscal year ended March 31, 2021, and the forecast of dividends for the fiscal year ending March 31, 2022 are as follows.

1. Cash dividends for the fiscal year ended March 31, 2020 Dividends per share

2nd quarter-end: ¥36.00

Fiscal year-end: ¥36.00

Total: ¥72.00

2． Cash dividends for the fiscal year ended March 31, 2021

Dividends per share
2nd quarter-end: ¥36.00	Fiscal year-end: ¥40.00	Total: ¥76.00

3． Cash dividends for the fiscal year ending March 31, 2022 (Forecast)

Dividends per share
2nd quarter-end: ¥40.00	Fiscal year-end: ¥40.00	Total: ¥80.00

Contents
1. Overview of operating results and others............................................................................................................................	2
(1)	Overview of operating results for the fiscal year under review.......................................................................................	2
(2)	Overview of financial position for the fiscal year under review......................................................................................	5
(3)	Overview of cash flows for the fiscal year under review ................................................................................................	5
(4)	Outlook for the coming year............................................................................................................................................	6
2. Basic policy on the selection of accounting standards ........................................................................................................	7
3. Consolidated financial statements and significant notes thereto.........................................................................................	8
(1)	Consolidated balance sheets ............................................................................................................................................	8
(2)	Consolidated statements of income and consolidated statements of comprehensive income........................................	10
(3)	Consolidated statements of changes in equity ...............................................................................................................	13
(4)	Consolidated statements of cash flows ..........................................................................................................................	15
(5)	Notes on consolidated financial statements ...................................................................................................................	17
(Notes on the premise of going concern) ..........................................................................................................................	17
(Segment information, etc.)...............................................................................................................................................	17
(Per share information) .....................................................................................................................................................	21

1

1. Overview of operating results and others

1. Overview of operating results for the fiscal year under review
   In order to achieve sustainable growth and greater corporate value by capitalizing on business opportunities, the Group started to uphold a new five-year vision, "CRESCO Ambition 2020," adopting "Lead the Digital Transformation (DX)" as the corporate slogan, in April 2016. The fiscal year under review is its final year.
   Three Themes of "CRESCO Ambition 2020"
2. • An enterprise group willing to take on challenges
   • Sophisticated technological capabilities and reliable quality
   • Each person shines at CRESCO

• Corporate Slogan >> Lead the Digital Transformation

Management Policy for FY2020

• Management in accordance with "CRESCO Ambition 2020"
• Securing orders by acquiring new customers and optimizing the business portfolio
• Expanding profits through the creation of high value-added businesses that utilize advanced technology
• Improving productivity and employee satisfaction by continuously taking on the challenge of work style reform
• Accelerating growth potential by promoting alliances

Thebusiness environment for the fiscal year under review (from April 1, 2020 to March 31, 2021) was severe, especially in the first half, due to the global spread of COVID-19. Although the execution of corporate IT strategies was accelerated gradually in the second half, uncertainty about the future and a risk of economic downturn, caused by the "third wave of COVID-19" since the New Year holidays and the second declaration of a state of emergency, could not be eliminated, and the momentum of corporate activities did not reach its previous level. In accordance with the business policy, the Group devoted its efforts to reviewing its customer portfolio and business structure in response to changes in the environment, securing orders mainly from existing customers and developing new businesses and services incorporating advanced technology (AI, cloud computing, etc.), and the Group also implemented aggressive measures, such as constructing a working from home system, promoting internal digital transformation (developing a teleworking system, making effective use of online communication tools, and reinforcing digital marketing) and optimizing office spaces. Nevertheless, following events occurred in operating activities and development operations to weigh on the financial results.

• Failure to cultivate new customers due to limitations on face-to-face sales activities
• Cancellations/suspensions/postponements of existing and new projects and requests for a reduction in unit price
• Temporary occurrence of standby employees and a decline in productivity during the period of transition to a teleworking system
• Occurrence of unprofitable projects

On the other hand, as a result of a rebound in stock prices year on year owing to the effects of the global injection of large-scale fiscal stimulus as reflation measures, the market value of financial instruments held by the Company rose in general, as a positive side effect.

As an initiative launched in the fiscal year under review, the Company made Enisias Co., Ltd. a new consolidated subsidiary on April 1, 2020 in order to expand cloud-related business, where further demand is

2