Tsukuruba : Non-consolidated Financial Results for the Year Ended July 31,2020

tsukuruba inc.

Note:This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Non-consolidated Financial Results

for the Year Ended July 31, 2020

[Japanese GAAP]

Company name: tsukuruba inc.	September 14, 2020
Stock exchange listing: Tokyo
Code number: 2978
URL: https://tsukuruba.com/
Representative: Hiroki Murakami	Representative Director, CEO
Contact: Ryohei Koike	Director, CFO

Phone: [phone]

Scheduled date of Annual General Meeting of Shareholders: October 29, 2020

Scheduled date of commencing dividend payments: ー

Scheduled date of filing annual securities report: October 29, 2020

Availability of supplementary briefing material on annual financial results: Yes

Schedule of annual financial results briefing session: Yes (For institutional investors and analysts)

(Amounts of less than one million yen are rounded down)

1. Non-consolidated Financial Results for the Fiscal Year Ended July 31, 2020 (August 01, 2019 to July 31, 2020)

(1) Non-consolidated Operating Results					(% indicates changes from the previous corresponding period.)
	Net sales			Operating profit		Ordinary profit			Net income
Fiscal year ended	Million yen		%	Million yen	%		Million yen		%		Million yen		%
July 31, 2020	1,718			13.4	(150)	-		(159)		-		(431)		-
July 31, 2019	1,515		185.3	19	-		7		-		10		-
	Basic earnings per		Diluted earnings per	Rate of return on	Ordinary profit to	Operating profit to
	share					share	equity		total assets ratio	net sales ratio
Fiscal year ended			Yen			Yen			%			%			%
July 31, 2020	(46.81)			-			(33.9)			(7.9)			(8.8)
July 31, 2019		1.34			1.17			1.1			0.5			1.3

(Reference) Equity in earnings (losses) of affiliated companies: Fiscal year ended July 31, 2020: Fiscal year ended July 31, 2019:

(2) Non-consolidated Financial Position

• - million
• - million

	Total assets	Net assets	Capital adequacy ratio	Net assets per share
As of	Million yen		Million yen	%	Yen
July 31, 2020	2,162		1,074	49.6	113.43
July 31, 2019	1,869		1,475	78.9	163.84
(Reference) Equity: As of	July 31, 2020:	¥	1,073 million
As of	July 31, 2019:	¥	1,473 million
(3) Non-consolidated Cash Flows
	Cash flows from	Cash flows from	Cash flows from	Cash and cash
	equivalents at the end
	operating activities	investing activities	financing activities
	of period
Fiscal year ended	Million yen		Million yen	Million yen	Million yen
July 31, 2020	(78)		(526)	753	1,519
July 31, 2019	399		(169)	837	1,371

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								tsukuruba inc.
2. Dividends
		Annual dividends			Total	Payout	Dividends
							to net
	1st	2nd	3rd				dividends	ratio
		Year-end	Total	assets
	quarter-end	quarter-end	quarter-end
Fiscal year ended	Yen	Yen	Yen		Yen	Yen	Million yen	%	%
July 31, 2019	-	-	-		0.00	0.00	-	-	-
July 31, 2020	-	0.00	-		0.00	0.00	-	-	-
Fiscal year ending
July 31, 2021	-	0.00	-		0.00	0.00		-
(Forecast)

3. Non-consolidated Financial Results Forecast for the Fiscal Year Ending July 31, 2021 (August 01, 2020 to July 31, 2021)

(% indicates changes from the previous corresponding period.)

	Net sales	Operating profit		Ordinary profit		Net income		Basic earnings per
				share
	Million yen	%	Million yen		%	Million yen		%	Million yen		%	Yen
Full year	1,472	(14.3)	(563)		-	(573)		-	(587)		-	(62.0)

(Note)In the fiscal year ending July 2021, we would like to make an investment to maximize the value of our cowcamo business.

In the fiscal year ending July 2021, the total platform profit is expected to increase due to the growth of the gross merchandise value of

the cowcamo platform. However, we expect revenue of 1,472 million yen (-14.3% from the previous fiscal year) and gross profit of

1,237 million yen (+3.6% from the fiscal year), because labor-intensive services for businesses will be temporary decreased due to

business-model conversion and partial outsourcing will increase in order to control risk and improve profitability.

Operating profit, ordinary profit and net profit are expected to be in deficit due to investment to build competitiveness of the cowcamo

platform over the medium- to long-term, conversion of some business models, and the introduction cost of stock incentives for growth

in the medium- to long-term. Based on the above, we expect operating profit of -563 million yen from the previous year, ordinary

profit of -573 million yen from the previous year, and net profit of -587 million yen from the previous year. These profits include 75

million yen as stock-based compensation expenses.

The above forecast of financial results is conservatively estimated because the outlook for the economic environment is uncertain due

to the prolonged trade friction between the US and China and the spread of COVID-19.

In addition, the above forecast does not assume that a large-scale stagnation of economic activity due to COVID-19 will occur. Actual

financial results may fluctuate due to various factors.

* Notes:

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

July 31, 2020:	9,799,700	shares
July 31, 2019:	9,331,700	shares
2) Total number of treasury shares at the end of the period:
July 31, 2020:	335,600	shares
July 31, 2019:	335,600	shares

3) Average number of shares during the period:
Fiscal Year ended July 31, 2020:	9,223,821	shares
Fiscal Year ended July 31, 2019:	8,010,711	shares

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tsukuruba inc.

• These financial results are unaudited by certificated public accountants or audit firms. *Explanation about appropriate usage of business forecasts and other special notes
  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.
  Annual financial results briefing session for institutional investors and analysts is planned to be held on September 14th , 2020. The presentation materials for the session will be posted on TDnet (Company Announcements Disclosure Service) and the company's website today.

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				tsukuruba inc.
Non-consolidated Financial Statements
Non-consolidated Balance Sheets
				(Thousand yen)
			As of July 31,2019	As of July 31,2020
Assets
	Current assets
		Cash and deposits	1,420,974	1,613,625
		Accounts receivable - trade	54,487	20,847
		Work in process	2,261	3,161
		Advance payments - trade	173	-
		Prepaid expenses	27,117	17,102
		Other	3,278	5,652
		Allowance for doubtful accounts	(2,800)	(300)
		Total current assets	1,505,492	1,660,089
	Non-current assets
		Property, plant and equipment
		Buildings, net	59,056	195,908
		Structures, net	1,779	1,659
		Tools, furniture and fixtures, net	19,418	22,096
		Land	-	161,215
		Total property, plant and equipment	80,254	380,880
		Intangible assets
		Software	127,827	-
		Total intangible assets	127,827	-
		Investments and other assets
		Investment securities	45,170	15,150
		Shares of subsidiaries and associates	2,000	2,000
		Leasehold and guarantee deposits	88,702	101,916
		Long-term loans receivable	3,963	-
		Long-term time deposits	2,000	-
		Long-term prepaid expenses	4,125	2,315
		Deferred tax assets	9,466	-
		Other	60	20
		Total investments and other assets	155,488	121,401
		Total non-current assets	363,570	502,281
	Total assets	1,869,062	2,162,370

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				tsukuruba inc.
				(Thousand yen)
			As of July 31,2019	As of July 31,2020
Liabilities
	Current liabilities
		Current portion of bonds payable	-	40,000
		Current portion of long-term borrowings	64,540	115,407
		Accounts payable - other	74,020	83,371
		Accrued expenses	16,088	30,495
		Income taxes payable	17,886	7,788
		Accrued consumption taxes	68,793	5,770
		Advances received	1,393	4,950
		Deposits received	13,722	8,938
		Unearned revenue	13,387	8,845
		Total current liabilities	269,832	305,565
	Non-current liabilities
		Bonds payable	-	160,000
		Long-term borrowings	116,340	602,799
		Other	7,697	19,198
		Total non-current liabilities	124,037	781,997
	Total liabilities	393,870	1,087,562
Net assets
	Shareholders' equity
		Share capital	594,505	610,183
		Capital surplus
		Legal capital surplus	850,780	866,458
		Other capital surplus	456,319	456,319
		Total capital surpluses	1,307,099	1,322,777
		Retained earnings
		Other retained earnings
		Retained earnings brought forward	(365,266)	(797,006)
		Total retained earnings	(365,266)	(797,006)
		Treasury shares	(62,421)	(62,421)
		Total shareholders' equity	1,473,916	1,073,531
	Share acquisition rights	1,276	1,276
	Total net assets	1,475,192	1,074,807
Total liabilities and net assets	1,869,062	2,162,370

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		tsukuruba inc.
Non-consolidated Statements of Income
		(Thousand yen)
	For the fiscal year	For the fiscal year
	ended July 31,2019	ended July 31,2020
Net sales	1,515,187	1,718,876
Cost of sales	455,285	524,855
Gross profit	1,059,901	1,194,020
Selling, general and administrative expenses	1,040,468	1,344,525
Operating profit (loss)	19,432	(150,504)
Non-operating income
Interest income	74	688
Dividend income	0	2
Subsidy income	8,479	-
Compensation income	-	2,860
Other	793	712
Total non-operating income	9,347	4,262
Non-operating expenses
Interest expenses	3,382	2,759
Interest on bonds	-	226
Bond issuance costs	-	8,237
Share issuance costs	8,415	-
Commission expenses	8,759	1,610
Other	770	168
Total non-operating expenses	21,327	13,002
Ordinary profit (loss)	7,451	(159,244)
Extraordinary losses
Loss on liquidation of investments	-	9,951
Loss on valuation of investment securities	-	5,920
Impairment loss	-	244,456
Total extraordinary losses	-	260,327
Profit (loss) before income taxes	7,451	(419,572)
Income taxes - current	6,182	2,701
Income taxes - deferred	(9,466)	9,466
Total income taxes	(3,283)	12,168
Profit (loss)	10,735	(431,740)

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tsukuruba inc.

Non-consolidated Statements of Changes in Net Assets

For the fiscal year ended July 31,2019

						(Thousand yen)
			Shareholders' equity
			Capital surplus		Retained earnings
					Other retained
	Share capital	Legal capital	Other capital	Total capital	earnings	Total retained
	Retained
		surplus	surplus	surplus	earnings
		earnings brought
					forward
Balance at beginning	90,000	346,275	451,611	797,886	(376,002)	(376,002)
of period
Changes during
period
Issuance of new	504,505	504,505		504,505
shares
Profit (loss)					10,735	10,735
Disposal of treasury			4,708	4,708
shares
Total changes during	504,505	504,505	4,708	509,213	10,735	10,735
period
Balance at end of	594,505	850,780	456,319	1,307,099	(365,266)	(365,266)
period
	Shareholders' equity
	Treasury shares	Total	Share acquisition	Total net assets
	shareholders'	rights
		equity
Balance at beginning	(66,513)	445,370	1,276	446,646
of period
Changes during
period
Issuance of new		1,009,010		1,009,010
shares
Profit (loss)		10,735		10,735
Disposal of treasury	4,092	8,800		8,800
shares
Total changes during	4,092	1,028,545	-	1,028,545
period
Balance at end of	(62,421)	1,473,916	1,276	1,475,192
period

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						tsukuruba inc.
For the fiscal year ended July 31,2020
						(Thousand yen)
			Shareholders' equity
			Capital surplus		Retained earnings
					Other retained
	Share capital	Legal capital	Other capital	Total capital	earnings	Total retained
	Retained
		surplus	surplus	surplus	earnings
		earnings brought
					forward
Balance at beginning	594,505	850,780	456,319	1,307,099	(365,266)	(365,266)
of period
Changes during
period
Issuance of new
shares - exercise of	15,678	15,678		15,678
share acquisition
rights
Profit (loss)					(431,740)	(431,740)
Total changes during	15,678	15,678		15,678	(431,740)	(431,740)
period
Balance at end of	610,183	866,458	456,319	1,322,777	(797,006)	(797,006)
period
	Shareholders' equity
			Share acquisition
	Treasury shares	Total	Total net assets
	shareholders'	rights
		equity
Balance at beginning	(62,421)	1,473,916	1,276	1,475,192
of period
Changes during
period
Issuance of new
shares - exercise of		31,356		31,356
share acquisition
rights
Profit (loss)		(431,740)		(431,740)
Total changes during		(400,384)		(400,384)
period
Balance at end of	(62,421)	1,073,531	1,276	1,074,807
period

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		tsukuruba inc.
Non-consolidated Statements of Cash Flows
		(Thousand yen)
	For the fiscal year	For the fiscal year
	ended July 31,2019	ended July 31,2020
Cash flows from operating activities
Profit (loss) before income taxes	7,451	(419,572)
Depreciation	43,804	64,834
Impairment loss	-	244,456
Increase (decrease) in allowance for doubtful accounts	1,506	(2,500)
Interest and dividend income	(74)	(690)
Subsidy income	(8,479)	-
Interest expenses	3,382	2,759
Interest expenses on bonds	-	226
Bond issuance costs	-	8,237
Share issuance costs	8,415	-
Commission expenses	8,759	1,610
Loss on valuation of investment securities	-	5,920
Loss on liquidation of investments	-	9,951
Decrease (increase) in trade receivables	(36,741)	33,640
Decrease (increase) in inventories	268,937	(900)
Increase (decrease) in accounts payable - other	(67,170)	16,179
Increase (decrease) in accrued consumption taxes	68,793	(57,512)
Increase (decrease) in advances received	(12,527)	3,556
Other, net	109,191	23,132
Subtotal	395,250	(66,670)
Interest and dividends received	11	816
Interest paid	(3,308)	(3,288)
Proceeds from subsidy income	8,479	-
Income taxes (paid) refund	(690)	(9,392)
Net cash provided by (used in) operating activities	399,741	(78,533)

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			tsukuruba inc.
			(Thousand yen)
		For the fiscal year	For the fiscal year
		ended July 31,2019	ended July 31,2020
Cash flows from investing activities
	Payments into time deposits	(20,002)	(45,733)
	Proceeds from withdrawal of time deposits	3,000	3,000
	Purchase of property, plant and equipment	(57,825)	(226,579)
	Purchase of intangible assets	(74,688)	(98,399)
	Purchase of investment securities	(5,250)	(9,900)
	Proceeds from redemption of investment securities	-	34,000
	Payments for investments in silent partnerships	-	(300,000)
	Proceeds from withdrawal of investments in silent	-	128,548
	partnerships
	Payments of leasehold and guarantee deposits	(16,038)	(15,302)
	Collection of loans receivable	1,260	3,972
	Other payments	-	(250)
	Net cash provided by (used in) investing activities	(169,543)	(526,644)
Cash flows from financing activities
	Proceeds from long-term borrowings	-	627,000
	Repayments of long-term borrowings	(170,354)	(89,674)
	Proceeds from issuance of bonds	-	193,214
	Proceeds from exercise of employee share options	-	31,356
	Proceeds from issuance of shares	1,003,425	-
	Proceeds from disposal of treasury shares	8,800	-
	Payment of commission	(4,400)	(5,969)
	Other payments	-	(2,831)
	Net cash provided by (used in) financing activities	837,471	753,095
Net increase (decrease) in cash and cash equivalents	1,067,669	147,917
Cash and cash equivalents at beginning of period	304,302	1,371,971
Cash and cash equivalents at end of period	1,371,971	1,519,889

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