CRE : Summary of Consolidated Financial Statements for the Fiscal Year ending July 31, 2021

September 9, 2021

CRE Inc.

Summary of Consolidated Financial Statements (Unaudited)

For the Fiscal Year ending July 31, 2021 (Translated from the Japanese original)

Corporate Information

Code: 3458 Listing: First Section of the Tokyo Stock Exchange (URL https://www.cre-jpn.com/english/)

Representative: Tadahide Kameyama, Representative Director, President

Contact: Hidetoshi Nagahama, Director

E-mail:[e-mail]

Anticipated date of annual general meeting of shareholders: October 28, 2021

Expected date of payment for dividends: October 11, 2021

Anticipated date for filing Yuka Shoken Hokokusho (a Japanese-language business report): October 28, 2021

Preparation of supplementary explanation material for financial results: Yes

Presentation meeting for financial results: Yes

(Rounded down to the nearest million)

1. Consolidated Performance for Fiscal 2021 (August 1, 2020 through July 31, 2021)

(1) Consolidated Operating Results

(Percentages represent changes from corresponding period of previous year)

												Net income attributable to
	Net sales			Operating profit		Recurring profit		owners of the parent
														company
	Millions of yen		%	Millions of yen	%		Millions of yen	%	Millions of yen		%
Fiscal 2021	47,556		15.4	5,772	36.5			5,313	31.2		3,574		36.9
Fiscal 2020	41,194		72.1	4,228	156.1			4,049	193.0		2,611		274.9
(Note) Comprehensive income: 4,040 million yen (28.6 %) (Fiscal 2021), 3,141 million yen (224.9%) (Fiscal 2020)
	Net income per		Fully diluted net		Return (net	Return (recurring		Return (operating
	share		income per share		income) on equity	profit) on assets		profit) on sales
	Yen			Yen			%		%			%
Fiscal 2021	130.40			130.19			15.3			6.3				12.1
Fiscal 2020	103.72			103.40			13.9			6.5				10.3

(Reference) Equity in earnings or losses of affiliates: 87 million yen (Fiscal 2021), 112 million yen (Fiscal 2020)

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio		Net assets per share
	Millions of yen	Millions of yen	%		Yen
Fiscal 2021	99,041	26,746		26.9	970.80
Fiscal 2020	70,142	20,004		28.5	792.31

(Reference) Equity capital: 26,662 million yen (July 31, 2021), 20,002 million yen (July 31, 2020)

(3) Consolidated Cash Flows

	Cash flows from operating	Cash flows from	Cash flows from	Cash and cash equivalents
	activities	investing activities	financing activities	at end of period
	Millions of yen	Millions of yen	Millions of yen	Millions of yen
Fiscal 2021	(22,754)	(285)	28,040	19,457
Fiscal 2020	7,725	(471)	(1,820)	14,466

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2. Payment of Dividends

		Dividends per share				Dividend
							Total dividends		Dividends on net
	First	At end	Third
		For the		payout ratio
	quarter-	of first	quarter-	Year-end		(For the year)		assets (Consolidated)
	year		(Consolidated)
	end	half	end
	yen	yen	yen	yen	yen		Millions of yen	%	%
Fiscal 2020	―	0.00	―	22.00	22.00	555	21.2	3.0
Fiscal 2021	―	0.00	―	23.00	23.00	631	17.6	2.6
Fiscal 2022	―	0.00	―	24.00	24.00			13.2
(Estimated)

3. Anticipated Consolidated Results for Fiscal 2022 (August 1, 2021 through July 31, 2022)

(Percentages represent changes from corresponding period of previous year)

		Net sales			Operating profit			Recurring profit
		Millions of yen			%		Millions of yen		%		Millions of yen		%
Full year	61,600			29.5	8,600		49.0		7,600		43.0
		Net income attributable to owners		Net income per share
		of the parent company
		Millions of yen		%		Yen
Full year		5,000			39.9				182.05

*Notes:

1. Major reclassifications of subsidiaries during the term (changes in specified subsidiaries resulting in change in scope of consolidation): None
2. Changes in accounting policy, changes in accounting estimate and retrospective restatement

1. Changes associated with revision of accounting standards, etc: None
2. Changes other than 1: None
3. Changes in accounting estimates: None
4. Restatements: None

(3) Number of outstanding shares (common stock)

1. Number of outstanding shares, including treasury stock, at end of term: 27,468,800 shares (July 31, 2021)
   26,309,200 shares (July 31, 2020)
2. Number of shares of treasury stock at end of term:

4,311 shares (July 31, 2021)

1,063,311 shares (July 31, 2020)

3. Average outstanding number of shares (during the fiscal year): 27,414,611 shares (July 31, 2021)

25,181,574 shares (July 31, 2020)

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(Reference) Non-consolidated Financial Results for Fiscal 2021 (August 1, 2020 through July 31, 2021)

1. Non-consolidated Performance for Fiscal 2021 (August 1, 2020 through July 31, 2021)

(1) Non-consolidated Operating Results

		Net sales			Operating profit					Recurring profit			Net income
	Millions of yen		%		Millions of yen		%		Millions of yen		%		Millions of yen	%
Fiscal 2021	44,786		25.4			5,515		41.2			4,873		45.8		3,234	72.9
Fiscal 2020	35,720		74.4			3,905		131.7			3,341		153.6		1,870	214.4
		Net income per share		Fully diluted net income
			per share
				Yen					Yen
Fiscal 2021					117.98				117.80
Fiscal 2020					74.29					74.06
(2) Non-consolidated Financial Position
		Total assets				Net assets				Equity ratio	Net assets per share
		Millions of yen				Millions of yen			%				Yen
Fiscal 2021					96,531				25,137				26.0		915.28
Fiscal 2020					66,445				18,871				28.4		747.49

(Reference) Equity capital: 25,137 million yen (July 31, 2021), 18,871 million yen (July 31, 2020)

*Audit Status

These materials are not subject to audit procedure requirements under Japan's Financial Instruments and Exchange Act which require auditing by certified public accountants or an accounting firm.

*Cautionary Note on Forward-Looking Statements and Other Important Matters

This report contains forward-looking statements about plans and expectations pertaining to CRE's business activities, based on information available to management at the time of preparation and on certain assumptions that management believes to be reasonable. These forward-looking statements are not guarantees of future performance, and actual results, performance, achievements and financial position may differ materially from statements expressed or implied herein due to various factors.

Ratios for cash flow analysis are as follows:

	Fiscal 2017	Fiscal 2018	Fiscal 2019	Fiscal 2020	Fiscal 2021
Equity ratio (%)	42.7	39.9	31.9	28.5	26.9
Equity ratio (market value basis) (%)	52.9	56.4	52.2	51.5	41.9
Cash flow to interest-bearing debt	4.9	4.4	―	3.2	―
ratio (years)
Interest coverage ratio (times)	20.0	27.5	―	40.7	―

Equity ratio: Equity capital / Total assets

Equity ratio (market-value basis): Total market value of stocks / Total assets

Cash flow to interest-bearing debt: Interest-bearing debt / Cash flow

Interest coverage ratio: Cash flow / Interest payments

(Notes) 1. All indicators were calculated using consolidated financial statement data.

1. Total market value of stocks is based on the number of shares issued and outstanding, excluding treasury stock.
2. Cash flow draws on cash flow from operating activities.
3. "Interest-bearingdebt" is all debt on the consolidated balance sheet on which interest in payable.
4. Neither cash flow to interest-bearing debt ratio nor interest coverage ratio for fiscal 2019 and fiscal 2021 are provided because CRE posted negative cash flow from operating activities.

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Consolidated Financial Statements
(1) Consolidated Balance Sheets
	Fiscal 2020	Fiscal 2021
	As of July 31, 2020	As of July 31, 2021
	Thousands of yen	Thousands of yen
Assets
Current assets
Cash and deposits	14,466,126	19,473,538
Accounts receivable-trade	485,405	709,241
Notes receivable-trade and Accounts receivable from	143,033	473,439
completed construction contracts
Real estate for sale	20,395,781	24,920,736
Real estate for sale in process	8,715,918	27,342,795
Advance payments-trade	3,374,710	1,983,583
Prepaid expenses	1,055,477	1,360,180
Others	703,577	551,631
Allowance for doubtful accounts	(15,963)	(25,004)
Total current assets	49,324,066	76,790,140
Fixed assets
Tangible fixed assets
Buildings and structures	4,155,207	4,308,442
Accumulated depreciation	(1,927,543)	(2,062,448)
Buildings and structures (net)	2,227,664	2,245,993
Machinery, equipment and vehicles	417,449	416,481
Accumulated depreciation	(246,911)	(274,968)
Machinery, equipment and vehicles (net)	170,538	141,513
Tools, furniture and fixtures	147,500	214,140
Accumulated depreciation	(96,202)	(139,967)
Tools, furniture and fixtures (net)	51,297	74,172
Land	1,877,030	1,896,210
Lease assets	472,388	493,268
Accumulated depreciation	(251,183)	(285,501)
Lease assets (net)	221,205	207,767
Construction in progress	14,013	―
Total tangible fixed assets	4,561,749	4,565,657
Intangible fixed assets
Goodwill	1,296,836	1,290,586
Others	144,898	340,217
Total intangible assets	1,441,735	1,630,803
Investments and other fixed assets
Investment securities	7,210,680	7,884,936
Claims provable in bankruptcy, claims provable in	62,468	33,445
rehabilitation and other
Long-term prepaid expenses	1,245,391	1,014,752
Deferred tax assets	60,348	24,236
Lease and guarantee deposits	6,218,658	7,022,059
Others	83,564	85,647
Allowance for doubtful accounts	(65,718)	(36,695)
Total investments and other fixed assets	14,815,392	16,028,382
Total fixed assets	20,818,877	22,224,844
Deferred assets
Bond issuance cost	―	26,765
Total deferred assets	―	26,765
Total assets	70,142,943	99,041,749

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	Fiscal 2020	Fiscal 2021
	As of July 31, 2020	As of July 31, 2021
	Thousands of yen	Thousands of yen
Liabilities
Current liabilities
Accounts payable-trade	11,994,136	7,018,394
Accounts payable for construction contracts	135,032	157,050
Short-term loans payable	1,000,000	600,000
Current portion of long-term loans payable	9,752,331	2,050,792
Lease obligations	28,804	36,834
Accrued corporate and other taxes	1,377,803	1,027,989
Deposits received	1,484,492	1,498,234
Unearned revenue	1,620,977	1,808,125
Allowance for employees' bonuses	49,799	68,726
Allowance for directors' bonuses	250,000	300,000
Allowance for sublease losses	70,275	13,104
Allowance for loss on construction contracts	―	9,619
Asset retirement obligations	587	―
Others	274,689	386,964
Total current liabilities	28,038,929	14,975,835
Fixed liabilities
Bonds payable	―	3,000,000
Long-term loans payable	13,703,300	44,002,073
Lease obligations	286,955	267,899
Liability for retirement benefits	238,808	255,412
Allowance for loss on guarantees	30,661	30,569
Asset retirement obligations	253,361	274,777
Allowance for sublease losses	21,552	15,625
Lease and guarantee deposits received	7,115,073	7,931,971
Deferred tax liabilities	―	234,950
Investment deposit in silent partnership	201,760	1,064,945
Others	248,457	241,275
Total fixed liabilities	22,099,930	57,319,500
Total liabilities	50,138,860	72,295,336
Net assets
Shareholders' equity
Common stock	2,240,348	3,071,660
Capital surplus	3,612,271	5,031,293
Retained earnings	14,170,090	17,157,485
Treasury stock	(955,171)	(288)
Total shareholders' equity	19,067,539	25,260,150
Accumulated other comprehensive income
Unrealized gain (loss) on available-for-sale securities	1,070,359	1,470,111
Deferred gains (losses) on hedges	(30,919)	(25,795)
Foreign currency translation adjustment	(104,317)	(41,924)
Total accumulated other comprehensive income	935,122	1,402,391
Non-controlling interests
1,420	83,871
Total net assets	20,004,083	26,746,413
Total liabilities and net assets	70,142,943	99,041,749

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