Kaonavi : Summary of Financial Results for the 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 Financial Results for the Year Ended March 31, 2021

(Based on Japanese GAAP)

				May 13, 2021
Company name:	kaonavi, inc.
Listed stock exchange:	Tokyo
Stock code:	4435	URL https://corp.kaonavi.jp/en
Representative:	Representative Director, President & CEO	Hiroki Yanagihashi
Inquiries:	Director & CFO	Kimitaka Hashimoto	TEL [phone]
Scheduled date of ordinary general meeting of shareholders:	June 24, 2021
Scheduled date to file Securities Report:	June 25, 2021
Scheduled date to commence dividend payments:	－
Supplementary materials:			Yes
Meeting for institutional investors and analysts:	Yes

(Figures are rounded to the nearest million yen)

1. Financial results for the year ended March 31, 2021 (April 1, 2020 - March 31, 2021)

(1) Operating results (cumulative)

(Percentages show the change from the same period of previous fiscal year)

	Net sales	Operating profit	Ordinary profit		Net profit
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%
Year ended March 31, 2021	3,402		29.6	(11)	－	(16)	－		(131)	－
Year ended March 31, 2020	2,625		55.3	(278)	－	(280)	－		(357)	－
	Earnings per share	Diluted earnings per	Net profit/	Ordinary profit/	Operation profit/
	share		equity	total assets	net sales
			Yen		Yen	%		%		%
Year ended March 31, 2021		(11.59)		－	(13.4)		(0.6)		(0.3)
Year ended March 31, 2020	(32.89)		－	(30.5)		(12.3)		(10.6)

Note: "Diluted earnings per share" is not presented because of the current net loss.

Note: On January 1, 2020, the Company conducted a two-for-one stock split of common stock. "Earnings per share" calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

(2) Financial position

	Total assets		Net assets	Equity ratio	Net asset per share
	Millions of	yen		Millions of yen	%	Yen
As of March 31, 2021	3,014		961	31.9	84.43
As of March 31, 2020	2,398		995	41.5	90.94
Reference: Shareholders' equity	March 31, 2021: 961 million yen	March 31, 2020: 995 million yen

(3) 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
	Millions of	yen	Millions of yen	Millions of yen	Millions of yen
Year ended March 31, 2021		384	(236)	173	1,955
Year ended March 31, 2020		(53)	(430)	331	1,635

2. Dividends

		Dividends per share		Total cash	Dividend	Ratio of
						Dividends	payout	dividends to
	1Q-end	2Q-end	3Q-end		Total
	Fiscal year-end	(Total)	ratio	net assets
	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
Year ended March 31, 2020	－	0.00	－	0.00	0.00	－	－	－
Year ended March 31, 2021	－	0.00	－	0.00	0.00	－	－	－
Year ending March 31, 2022 (forecast)	－	0.00	－	0.00	0.00		－

－ 1 －

3. Forecast for the fiscal year ending March 31, 2022 (April 1, 2021 - March 31, 2022)

(Percentages show the change from the same period of previous fiscal year)

	Net sales		Operating profit		Ordinary profit		Net profit		Earnings
					per share
	Millions of yen	%	Millions of yen		%	Millions of yen		%	Millions of yen	%	Yen
Full year	4,540	33.4	100		－	93		－	26	－	2.28

Note: The recent business trends have been and will likely continue to be uncertain due to the ongoing pandemic. Under the circumstances the shift to remote work has become prevalent, which generates a bigger demand for supporting diverse work style. As most companies started turning to talent management system to adapt to a new norm in addition to streamline or efficiency of HR operations, our business environment has been gradually improving.

Net sales are expected to increase by +33.4% YoY, which is a higher growth rate than the previous fiscal year. Gross profit margin is expected to be 72.2%, which is at the same level as last fiscal year due to continued investment in the product development.

There is no change in our policy of focusing more on future business growth than immediate profitability from the mid-to-long term perspective of enhancing corporate value. The Company intends to balance disciplined expense management with flexible growth investments in marketing and hiring based on market trends and competitive environment, ensuring stable business and financial operations.

Note: As "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc. are to be applied in the beginning of fiscal year ending March 31, 2022, the above financial forecast complies with the new standards. For reference, the net sales of the forecast before adjustment are 4,520 million yen, and the impact caused by the adoption of the new revenue recognition standard is estimated to be 20 million yen. Please refer to the investor presentation for more details.

4. Notes

1. Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
2. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None

2)	Changes in accounting policies due to other reasons:	None
3)	Changes in accounting estimates:	None
4)	Restatement of prior period financial statements:	None

1. Number of shares outstanding (common shares)
2. 1. Total number of issued shares at the end of the period (including treasury shares)

As of March 31, 2021:

11,382,000 shares

As of March 31, 2020:

10,945,000 shares

1. Number of treasury stock at the end of period

As of March 31, 2021:

208 shares

As of March 31, 2020:

134 shares

1. Average number of shares outstanding during the period

Year ended March 31, 2021: 11,282,644 shares

Year ended March 31, 2020: 10,852,267 shares

Note: On January 1, 2020, the Company conducted a two-for-one stock split of common stock. "Average number of shares outstanding during the period" calculated assuming the stock split was conducted at the beginning of the previous fiscal year.

This report of financial results is out of scope of review procedures conducted by independent auditors.

* Cautionary statement with respect to forward-looking statements

The forecasts above are based on the judgments made in accordance with information currently available. Forecasts therefore include risks and uncertainties. Actual figures may differ from these forecasts due to subsequent changes in the circumstances.

－ 2 －

Quarterly Financial Statements

1. Balance Sheets

		(Thousands of yen)
	As of March 31, 2020	As of March 31, 2021
Assets
Current assets
Cash and deposits	1,634,775	1,955,069
Accounts receivable - trade	173,650	178,600
Prepaid expenses	55,436	123,585
Other	59	5,526
Allowance for doubtful accounts	(681)	(173)
Total current assets	1,863,239	2,262,608
Non-current assets
Property, plant and equipment
Buildings	7,765	192,746
Accumulated depreciation	(7,765)	(13,372)
Buildings, net	－	179,375
Tools, furniture and fixtures	32,543	84,520
Accumulated depreciation	(17,628)	(27,980)
Tools, furniture and fixtures, net	14,916	56,540
Total property, plant and equipment	14,916	235,914
Intangible assets
Software	18,583	14,076
Total intangible assets	18,583	14,076
Investments and other assets
Investment securities	20,600	96,146
Guarantee deposits	480,178	386,710
Long-term prepaid expenses	130	18,098
Claims provable in bankruptcy, claims	97	－
provable in rehabilitation and other
Allowance for doubtful accounts	(97)	－
Total investments and other assets	500,908	500,954
Total non-current assets	534,406	750,945
Total assets	2,397,645	3,013,552

－ 3 －

		(Thousands of yen)
	As of March 31, 2020	As of March 31, 2021
Liabilities
Current liabilities
Accounts payable - trade	30,746	45,288
Current portion of long-term loans payable	122,066	127,164
Accounts payable - other	133,661	147,085
Accrued expenses	120,807	211,072
Income taxes payable	16,174	20,694
Deposits received	13,807	10,353
Deferred revenue	599,925	961,557
Provision for share-based compensation	－	26,113
Other	24,513	48,422
Total current liabilities	1,061,699	1,597,747
Non-current liabilities
Long-term loans payable	340,590	454,545
Deferred tax liabilities	－	313
Total non-current liabilities	340,590	454,858
Total liabilities	1,402,289	2,052,605
Net assets
Shareholders' equity
Capital stock	1,018,269	1,066,270
Capital surplus
Legal capital surplus	1,008,269	1,056,270
Total capital surplus	1,008,269	1,056,270
Retained earnings
Other retained earnings
Retained earnings brought forward	(1,030,761)	(1,161,509)
Total retained earnings	(1,030,761)	(1,161,509)
Treasury stock	(422)	(792)
Total shareholders' equity	995,356	960,238

Valuation and translation adjustments Valuation difference on available-for-sale securities

Total Valuation and translation adjustments

Total net assets

Total liabilities and net assets

－	709
－	709
995,356	960,947
2,397,645	3,013,552

－ 4 －

2. Statements of Income (cumulative)

		(Thousands of yen)
	Fiscal year ended	Fiscal year ended
	March 31, 2020	March 31, 2021
Net sales	2,624,792	3,402,279
Cost of sales	652,444	941,143
Gross profit	1,972,348	2,461,136
Selling, general and administrative expenses	2,249,997	2,472,176
Operating profit (loss)	(277,649)	(11,040)
Non-operating income
Interest income	18	21
Subsidy income	－	623
Miscellaneous income	145	865
Total non-operating income	163	1,509
Non-operating expenses
Interest expenses	1,935	4,497
Share issuance cost	－	882
Loss on sales and retirement of non-current	381	1,237
assets
Other	2	2
Total non-operating expenses	2,317	6,618
Ordinary profit (loss)	(279,803)	(16,148)
Extraordinary losses
Impairment loss	72,348	－
Headquarters relocation expenses	－	108,957
Total extraordinary losses	72,348	108,957
Profit (loss) before income taxes	(352,151)	(125,105)
Income taxes - current	4,760	5,643
Total income taxes	4,760	5,643
Net Profit (loss)	(356,911)	(130,748)

－ 5 －