Cacco : 【Delayed】Summary of Financial Results (Japanese GAAP) for the Fiscal Year Ended December 31, 2021 (Non-consolidated)

Summary of Financial Results (Japanese GAAP) for the Fiscal Year Ended

December 31, 2021 (Non-consolidated)

February 14, 2022

Name of the listed company: Cacco Inc. Stock exchange listings: Tokyo Stock Exchange

Code number: 4166 URLhttps://cacco.co.jp

Representative: (Title) Representative Director, President and CEO (Name) Hiroyuki Iwai

Person in charge of inquiries: (Title) Senior Managing Director, CFO in charge of administration unit Name: Kentaro Sekine

TEL [phone]

Scheduled date of the Ordinary General Meeting of Shareholders: March 29, 2022 Scheduled date of commencing dividend payments: -

Scheduled date of Securities Report filing: March 31, 2022

Preparation of supplementary explanatory materials for financial results: Yes Holding of financial results briefing: Yes (for institutional investors and analysts)

(Amounts less than one million yen have been omitted)

1. Results for the Fiscal Year Ended December 31, 2021 (January 1, 2021 to December 31, 2021)

(1) Operating Results

(% figures represent changes from the previous fiscal year)

Net sales	Operating income	Ordinary income	Net income
FY2021 FY2020	Millions of yen 951 831	% 14.4 11.5	Millions of yen 178 138	% 29.5 39.5	Millions of yen 170 115	% 47.9 26.2	Millions of yen 120 130	% -7.5 13.6

Net income per share	Diluted net income per share	Ratio of net income to shareholders' equity	Ratio of ordinary income to total assets	Ratio of operating income to net sales
FY2021 FY2020	Yen 45.90 55.37	Yen 42.26 49.97	% 10.0 15.9	% 10.5 8.5	% 18.8 16.6

(Reference) Share of loss (profit) of equity method entities: FY2021 0 million yen FY2020 - million yen

(Note) 1. The Company conducted a 3-for-1 stock split of common stock on September 9, 2020. Net income per share and diluted net income per share are calculated based on the assumption that the stock split was conducted at the beginning of the previous fiscal year.

2. Since the Company's shares were listed on the Mothers market of the Tokyo Stock Exchange on December 17, 2020, the diluted net income per share for the previous fiscal year is calculated by deeming the average share price from the date of initial listing to the end of the previous fiscal year as the average share price during the fiscal year.

(2) Financial Position

Total assets	Net assets	Capital ratio	Net assets per share
FY2021 FY2020	Millions of yen 1,417 1,822	Millions of yen 1,273 1,148	% 89.6 62.8	Yen 483.07 437.15

(Reference) Equity capital: FY2021 1,268 million yen FY2020 1,145 million yen

(Note) The Company conducted a 3-for-1 stock split of common stock on September 9, 2020. Net assets per share are calculated based on the assumption that the stock split was conducted at the beginning of the previous fiscal year.

(3) Status of Cash Flow

Cash flow from operating activities	Cash flow from investing activities	Cash flow from financing activities	Cash and cash equivalents at end of period
FY2021 FY2020	Millions of yen 149 166	Millions of yen -134 -197	Millions of yen -507 734	Millions of yen 800 1,293

2. Dividends

Annual dividend	Total amount of dividends (total)	Dividend payout ratio	Ratio of dividends to net assets
1Q-end	2Q-end	3Q-end	FY-end	Total
FY2020 FY2021	Yen - -	Yen 0.00 0.00	Yen - -	Yen 0.00 0.00	Yen 0.00 0.00	Millions of yen - -	% - -	% - -
FY2022 (Forecast)	-	0.00	-	0.00	0.00	-

3. Financial Forecasts for the Fiscal Year Ending December 31, 2022 (January 1, 2022 to December 31, 2022)

(% figures represent changes from the previous fiscal year)

Net sales	Operating income	Ordinary income	Net income	Net income per share
Full Year	Millions of yen 1,102	% 15.9	Millions of yen 191	% 7.1	Millions of yen 195	% 14.5	Millions of yen 137	% 14.3	Yen 52.28

(Note)

Since the Company manages its operations on an annual basis, the forecast for the first half of the fiscal year has been omitted. For details, please refer to 1. Business Results, (4) Future Outlook on page 3 of the attached document.

*Notes

(1) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements

(i)	Changes in accounting policies due to revisions in accounting standards, etc.	: None
(ii)	Changes in accounting policies other than (i)	: None
(iii)	Changes in accounting estimates	: None
(iv)	Restatements	: None

(2) Number of shares issued (common stock)

• (i) Number of issued shares at the end of the period (including treasury shares)

• (ii) Number of treasury shares at the end of the period

• (iii) Average number of shares during the period

FY2021 2,629,382 shares	FY2020 2,619,581 shares
FY2021 - shares	FY2020 - shares
FY2021 2,621,245 shares	FY2020 2,348,611 shares

(Note) The Company conducted a 3-for-1 stock split of common stock on September 9, 2020. The number of shares is shown based on the assumption that the said stock split was conducted at the beginning of the previous fiscal year.

* Financial statements are not subject to auditing by certified public accountants or auditing firms.

*Explanation regarding the appropriate use of financial forecasts and other special notes (Cautionary note regarding forward-looking statements, etc.)

The forward-looking statements, including business forecasts, etc., contained in this document are based on the information currently available to us and on certain assumptions deemed reasonable, and are not intended as a guarantee by the Company that they will be achieved. Actual results may differ significantly from these forecasts due to various factors. Please refer to 1. Business Results, (4) Future Outlook on page 3 of the attached document for matters related to the forecast.

(How to obtain supplementary explanatory materials and explanations of financial results)

Supplementary explanatory materials to the Presentation Materials for the Financial Results for the Fiscal Year Ended December 31, 2021, will be disclosed on TDnet on the same day and then posted on the Company's website. In addition, we are scheduled to hold a briefing session for institutional investors and analysts on Monday, February 14, 2022. Video of this briefing session and the materials for the financial results briefing to be distributed on that day will be promptly posted on our website after the briefing.

 Contents of attached documents

1. Business Results ............................................................................................................................................................................ 2

(1) Summary of Business Results for FY2021 .............................................................................................................................. 2

(2) Financial Position Summary for FY2021 ................................................................................................................................ 2

(3) Cash Flow Summary for FY2021 ............................................................................................................................................ 3

(4) Future Outlook ........................................................................................................................................................................ 3

2. Basic Approach to the Selection of Accounting Standards ............................................................................................................ 4

3. Financial Statements and Significant Notes Thereto ..................................................................................................................... 5

(1) Balance Sheet .......................................................................................................................................................................... 5

(2) Statement of Income ................................................................................................................................................................ 7

(3) Statement of Changes in Equity .............................................................................................................................................. 9

(4) Statement of Cash Flows ....................................................................................................................................................... 10

(5) Notes to the Financial Statements .......................................................................................................................................... 11

(Notes on going concern assumption) ................................................................................................................................... 11

(Equity method profit or loss, etc.) ........................................................................................................................................ 11

(Segment information, etc.) ................................................................................................................................................... 11

(Information on per share data) ............................................................................................................................................. 12

(Significant subsequent events) ............................................................................................................................................. 12

1. Business Results

• (1) Summary of Business Results for FY2021

  During the current fiscal year (January 1, 2021 to December 31, 2021), the Japanese economy faced a severe economic environment with deteriorating corporate performance and declining personal consumption due to the economic stagnation caused by the COVID-19 pandemic. Although the severe situation caused by COVID-19 has gradually eased with the promotion of vaccination and has shown signs of a recovery, the future still remains uncertain due to the rapid spread of the new variant.

  According to the FY2020 Report on Commissioned Industrial and Economic Research (Market Research on Electronic Commerce) published by the Ministry of Economy, Trade and Industry in 2020, the size of the business-to-consumer EC (BtoC-EC) market as a whole was 19.3 trillion yen, shrinking by 0.43% year on year due to the significant decrease in the service-related areas mainly caused by the shrinkage of travel services. However, product sales-related areas expanded significantly by 21.71% year on year as a result of people being encouraged to stay at home and using EC as part of the measures to control COVID-19. The BtoC-EC market continues to grow steadily, as shown by the increase of 1.32 percentage points to 8.08% of the EC ratio (the ratio of the size of the EC market to the size of the entire commerce market).

  On the other hand, there has been a sharp increase in damages caused in recent years by the theft and unauthorized use of credit card numbers and other information. In response to this trend, the amended Installment Sales Act mandates that necessary measures be taken to prevent the fraudulent use of credit card numbers and the like. In addition, the "Credit Card Security Guidelines Version 2.0 (Credit Card Transaction Security Council)," which serve as practical guidelines for such responses, require member businesses to introduce measures according to the risk situation, such as "attribute and behavior analysis (fraud detection system)," as countermeasures against the fraudulent use of credit cards in non-face-to-face transactions. As such, social demands for anti-fraud measures have been increasing more than ever.

  In this current business environment, we have been offering a business that engages in the provision of SaaS-type algorithms to support companies in solving problems and coping with challenges by developing and providing algorithms and software based on our security payment data science technology and know-how in a way that aligns with our management vision of "Shaping the 'Let's Do It' mentality into the next game changer."

  As for our fraud detection services, we expanded the lineup of O-PLUX, our fraudulent order detection service, by releasing "O-PLUX Premium Plus (shipping decision agent service)," which compensates for damages caused by the fraudulent use of credit cards with no upper limit, and Fraud Checker, a fraudulent order detection service available from 4,000 yen per month. In addition, and thanks to our efforts to promote alliances such as system integration with EC packages and shopping carts and the conclusion of partner agreements with credit card companies, the number of new customers has increased and existing customers have continued to grow. As a result, the amount of O-PLUX's recurring revenue (the sum of the monthly fee, which is a flat-rate charge, and the examination fee, which is a pay-as-you-go fee based on the number of examinations) for the current fiscal year has increased to 690,008 thousand yen (up 16.0% year-on-year). Also, with regard to our O-MOTION unauthorized access detection services, we continued to expand those services through measures such as the release of "O-MOTION Light," a new lineup available at lower prices, and worked to develop sales channels in various fields.

  In our payment consulting services, we worked to secure orders for system development projects. In our data science services, we strived to expand sales of SAKIGAKE KPI, a new data analysis service that aggregates, analyzes, and reports up to 100 million records in 30 business days.

  As a result of the above, net sales for the current fiscal year were 951,141 thousand yen (up 14.4% year on year), operating income was 178,928 thousand yen (up 29.5% year on year), ordinary income was 170,844 thousand yen (up 47.9% year on year), and net income was 120,311 thousand yen (down 7.5% year on year).

  Segment information is omitted because the Company has a single segment involved with the provision of SaaS-type algorithms.

• (2) Financial Position Summary for FY2021 (Assets)

Current assets at the end of the current fiscal year were 944,516 thousand yen, a decrease of 458,249 thousand yen from the end of the previous fiscal year. This was mainly due to a decrease of 492,530 thousand yen in cash and deposits. Non-current assets were 472,942 thousand yen, an increase of 52,769 thousand yen from the end of the previous fiscal year. This was mainly due to an increase of 371,629 thousand yen in software and a decrease of 295,730 thousand yen in software in progress, which reflects the development of software for the system architecture reform of our fraud detection services.

As a result, total assets amounted to 1,417,458 thousand yen, a decrease of 405,479 thousand yen from the end of the previous fiscal year.

(Liabilities)

Current liabilities at the end of the current fiscal year were 142,180 thousand yen, a decrease of 241,302 thousand yen from the end of the previous fiscal year. This was mainly due to a decrease of 184,893 thousand yen in the current portion of long-term borrowings, a decrease of 30,000 thousand yen in the current portion of bonds payable, and a decrease of 48,667 thousand yen in accounts payable-other. Non-current liabilities were 1,797 thousand yen, a decrease of 289,212 thousand yen from the end of the previous fiscal year. This was mainly due to a decrease of 214,212 thousand yen in long-term borrowings and a decrease of 75,000 thousand yen in bonds payable, which arose from prepayments of interest-bearing debt undertaken for the purpose of improving financial structure and management efficiency.

As a result, total liabilities amounted to 143,977 thousand yen, a decrease of 530,514 thousand yen from the end of the previous fiscal year.

(Net assets)

Total net assets at the end of the current fiscal year were 1,273,480 thousand yen, an increase of 125,034 thousand yen from the end of the previous fiscal year. This was mainly due to an increase of 120,311 thousand yen in retained earnings resulting from the recording of net income.

As a result, the capital ratio was 89.6% (62.8% at the end of the previous fiscal year).

• (3) Cash Flow Summary for FY2021

  Cash and cash equivalents (hereinafter referred to as "cash") at the end of the current fiscal year decreased by 492,530 thousand yen to 800,647 thousand yen. The status of each cash flow and its factors during the current fiscal year are as follows:

  (Cash flows from operating activities)

  Net cash provided by operating activities amounted to 149,656 thousand yen (166,755 thousand yen provided in the previous fiscal year). This was mainly due to a net income before taxes of 170,844 thousand yen.

  (Cash flows from investing activities)

  Net cash used in investing activities amounted to 134,248 thousand yen (197,669 thousand yen used in the previous fiscal year). This was mainly due to the expenditure of 122,972 thousand yen for the purchase of intangible assets.

  (Cash flows from financing activities)

  Net cash used in financing activities amounted to 507,938 thousand yen (734,080 thousand yen provided in the previous fiscal year). This was mainly due to the repayment of long-term borrowings payable of 399,105 thousand yen and redemption of bonds of 105,783 thousand yen.

• (4) Future Outlook

As for the outlook for the future, we believe that the needs for our fraud detection services will continue to increase in the business environment where the EC market is experiencing sustained growth, the number of victims of fraud in online payments is rapidly increasing, and there is a growing social demand for legal and other fraud prevention measures.

With regard to O-PLUX, our fraudulent order detection service, we will strive to eliminate the barriers to introducing the service by linking the system with our EC packages and shopping carts and launching a low-priced lineup, etc. We will also strive to achieve further growth by enhancing the added value of the product through the expansion of functions and service areas and by increasing sales channels through the promotion of alliances, etc. In addition, concerning the unauthorized access detection service O-MOTION, the Company will strive to further expand its sales by further strengthening its products and promoting alliances.

As for payment consulting services, the Company will make preparations for the provision of a SaaS-type BNPL Settlement System, while with our data science services, the Company will strive to capture new revenue opportunities by expanding sales of SAKIGAKE KPI.

Based on the above, for the fiscal year ending December 31, 2022 (January 1, 2022 to December 31, 2022), we forecast net sales of 1,102 million yen (up 15.9% year on year), operating income of 191 million yen (up 7.1% year on year), ordinary income of 195 million yen (up 14.5% year on year), and net income of 137 million yen (up 14.3% year on year).

For details of the financial forecast, please refer to the Briefing Materials on Financial Results for the Year Ended December 31, 2021 posted on TDnet and our website.

Since the future impact of the spread of COVID-19 is uncertain, the above forecast may change depending on the timing of its cessation and social conditions. The above forecasts are based on the information available as of the date of publication of this document, and actual results may differ from the forecasts due to various factors.