Raksul : Summary of Financial Results for the Year Ended July 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 July 31, 2021 (Based on Japanese GAAP)

				September 10, 2021
Company name:	RAKSUL INC.
Listed stock exchange : Tokyo
Stock code:	4384	https://corp.raksul.com/
Representative:	Representative Director, President and CEO	Yasukane Matsumoto
Inquiries:	Director, CFO	Yo Nagami	TEL [phone]
Scheduled date of ordinary general meeting of shareholders:	October 21, 2021
Scheduled date to file securities Report:	October 22, 2021
Scheduled date of dividend payments:	-
Supplementary materials:			Yes
Meeting for institutional investors and analysts:	Yes

(Figures are rounded down to the nearest million yen)

1. Financial Results for the Year Ended July 31, 2021 (August 1, 2020 - July 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 July 31, 2021		30,261		40.8			220				－				130		－				160	－
		Year ended July 31, 2020		21,494		25.2			(244)				－				(368)		－				(494)	－
								Diluted earnings	Profit attributable to			Ordinary profit		Operating profit
			Earnings per share						owners of
							per share								/total assets		/net sales
													parent/equity
					Yen						Yen								%						%			%
		Year ended July 31, 2021		5.62					4.98								2.3						0.6			0.7
		Year ended July 31, 2020		(17.64)					－								(7.3)				(2.6)			(1.1)
		(2) Financial position
				Total assets						Net assets						Equity ratio			Net assets per share
					Millions of yen			Millions of yen							%					Yen
		As of July 31, 2021		21,916						7,996							34.1					260.02
		As of July 31, 2020		19,379						6,801							34.5					236.73
		Reference: Shareholders' equity		July 31, 2021:	7,467 million yen			July 31, 2020: 6,692 million yen
		(3) Cash flows
			Cash flows from operating		Cash flows from investing	Cash flows from financing	Cash and cash equivalents
					activities						activities							activities					at end of period
					Millions of yen			Millions of yen				Millions of yen				Millions of yen
		Year ended July 31, 2021					1,539						(3,618)							75					13,447
		Year ended July 31, 2020					(126)							(283)							9,956					15,451
2. Cash dividends
																	Dividends per share
					1Q-end			2Q-end							3Q-end					Year-end	Annual
								Yen			Yen						Yen				Yen		Yen
		Year ended July 31, 2020							-			0.00							-			0.00		0.00
		Year ended July 31, 2021							-			0.00							-			0.00		0.00
		Year ending July 31, 2022 (forecast)							-			0.00							-			0.00		0.00

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3. Forecast for the Fiscal Year Ending July 31, 2022 (August 1, 2021 - July 31, 2022)

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

	Net sales		Operating profit		non-GAAP
			Operating profit
Full year	Millions of yen		%	Millions of yen		%	Millions of yen		%
39,400		30.2	250		13.4	1,000		20.0

In the fiscal year ending July 2022, there is no change in the management stance of placing the highest priority on growth in order to realize our vision "Better Systems, Better World", and based on our medium-to-long term financial policy, our target growth for RAKSUL INC. (the "Company") is 30% or more in gross profit.

The policies for each business segment are as follows: In the Raksul business segment, the Company sets gross profit and segment profit as the financial focus, and the policy is to continue to increase these profits. In Novasell business segment and Hacobell business segment, while strengthening investment governance and controlling of losses, we will allow for limited losses towards growth and focus on expanding revenue and gross profit.

Based on the policies above, the Company expects revenue of ¥39,400 million or more (up 30% or higher from the previous fiscal year) and gross profit of ¥9,300 million or more (up 30% or higher from the previous fiscal year). Operating profit is expected to be ¥250 million or more, and non-GAAP operating profit (stock-based compensation expenses added back) is expected to be ¥1,000 million or more; the basic policy for operating profit is to increase profit every year while continuing to focus on growth and reinvest a certain amount towards such growth. This financial forecast is based on the assumption that the business impact of the state of emergency declarations due to the spread of COVID-19 will continue to a certain extent.

4.Others

(1) 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:	None
Changes in accounting policies due to other reasons:	None
Changes in accounting estimates:	None
Restatement of prior period financial statements:	None

(2) Number of shares outstanding (common shares)

1)Number of shares outstanding at the end of period (including treasury stock)

July 31, 2021	28,729,220 shares	July 31, 2020
2)Number of treasury stock at the end of period
July 31, 2021	12,180 shares	July 31, 2020
3)Average number of shares outstanding during the period
Year ended July 31, 2021	28,491,806 shares	Year ended July 31, 2020

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

* Cautionary statement with respect to forward-looking statements

28,270,090 shares

1,171 shares

28,014,294 shares

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.

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Quarterly Financial Statements

Balance Sheets

			(Thousands of yen)
		As of July 31, 2020	As of July 31, 2021
Assets
Current assets
Cash and deposits	15,451,377	13,447,522
Notes receivable - trade	22,915	23,297
Electronically recorded monetary claims - operating	12,452	8,085
Accounts receivable - trade	2,157,262	2,922,841
Raw materials and supplies	36,983	5,396
Prepaid expenses	188,673	348,716
Other	154,246	160,856
Allowance for doubtful accounts	(637)	(358)
Total current assets	18,023,273	16,916,358
Non-current assets
Property, plant and equipment
Buildings	207,716	208,031
Accumulated depreciation	(62,411)	(79,530)
Buildings, net	145,305	128,500
Machinery and equipment	751,336	751,336
Accumulated depreciation	(372,851)	(447,985)
Machinery and equipment, net	378,484	303,350
Tools, furniture and fixtures	72,003	79,489
Accumulated depreciation	(41,802)	(54,436)
Tools, furniture and fixtures, net	30,200	25,052
Total property, plant and equipment	553,990	456,904
Intangible assets
Software	297,625	329,547
Software in progress	47,659	40,996
Total intangible assets	345,285	370,543
Investments and other assets
Investment securities	124,256	203,384
Shares of subsidiaries and associates	31,683	3,447,680
Long-term prepaid expenses	126,665	211,456
Guarantee deposits	174,662	140,139
Long-term deposits	－	12,000
Deferred tax assets	－	157,803
Total investments and other assets	457,267	4,172,464
Total non-current assets	1,356,543	4,999,912
Total assets		19,379,817	21,916,271

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			(Thousands of yen)
		As of July 31, 2020	As of July 31, 2021
Liabilities
Current liabilities
Accounts payable - trade	1,654,786	2,347,182
Short-term borrowings	40,000	－
Current portion of long-term borrowings	－	1,287,220
Accounts payable - other	500,595	771,949
Income taxes payable	30,902	164,905
Accrued consumption taxes	63,715	258,286
Advances received	70,473	121,497
Other	45,273	117,231
Total current liabilities	2,405,745	5,068,273
Non-current liabilities
Convertible-bond-type bonds with share acquisition rights	5,043,333	5,033,333
Long-term borrowings	5,000,000	3,712,780
Asset retirement obligations	104,495	105,280
Deferred tax liabilities	24,714	－
Total non-current liabilities	10,172,543	8,851,393
Total liabilities	12,578,288	13,919,667
Net assets
Shareholders' equity
Share capital	2,152,347	2,452,848
Capital surplus
Legal capital surplus	4,959,686	5,260,187
Total capital surplus	4,959,686	5,260,187
Retained earnings
Other retained earnings
Retained earnings brought forward	(409,078)	(249,073)
Total retained earnings	(409,078)	(249,073)
Treasury shares	(249)	(485)
Total shareholders' equity	6,702,705	7,463,476
Valuation and translation adjustments
Valuation difference on available-for-sale securities	(10,542)	3,640
Total valuation and translation adjustments	(10,542)	3,640
Share acquisition rights	109,364	529,487
Total net assets	6,801,528	7,996,604
Total liabilities and net assets		19,379,817	21,916,271

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Statements of Income (cumulative)

			(Thousands of yen)
		Fiscal year ended	Fiscal year ended
		July 31, 2020	July 31, 2021
Net sales	21,494,598	30,261,212
Cost of sales	16,566,457	23,109,405
Gross profit	4,928,140	7,151,807
Selling, general and administrative expenses	5,172,422	6,931,251
Operating profit (loss)	(244,281)	220,555
Non-operating income
Interest income	6,886	10,169
Dividend income	780	－
Miscellaneous income	5,835	10,011
Total non-operating income	13,502	20,181
Non-operating expenses
Interest expenses	29,193	32,989
Bond issuance costs	59,414	－
Loss on investments in investment partnerships	3,451	4,226
Listing expenses	9,111	－
Move out fee of office	21,527	－
Loss on extinguishment of stock-based compensation expenses	－	64,469
Miscellaneous losses	14,951	9,009
Total non-operating expenses	137,649	110,694
Ordinary profit (loss)	(368,429)	130,041
Extraordinary losses
Loss on retirement of non-current assets	20,292	7,960
Loss on valuation of shares of subsidiaries and associates	－	16,741
Total extraordinary losses	20,292	24,702
Profit (loss) before income taxes	(388,722)	105,339
Income taxes - current	6,383	129,458
Income taxes - deferred	99,029	(184,123)
Total income taxes	105,413	(54,665)
Profit (loss)		(494,135)	160,005

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