Download - Crossfor Co., Ltd. Results of Operations
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A company dedicated to making people worldwide happy
JASDAQ (Standard) Stock code: 7810
Crossfor Co., Ltd.Results of Operations for the Fiscal Year Ended July 31, 2020
September 28, 2020
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Precautions regarding This Presentation
This presentation contains outlooks, plans, targets and other forward-looking statements. These statements are
based on current assumptions regarding upcoming events and trends. There is no assurance that these
assumptions are accurate. Consequently, actual results of operations may differ significantly from these
forward-looking statements for a number of reasons.
Unless otherwise stated, financial data in this presentation is based on generally accepted accounting principles
in Japan.
Crossfor has no obligation to revise forward-looking statements that have been announced, irrespective of the
occurrence of any events in the future, except in cases where required by disclosure rules.
Information in this presentation about companies other than Crossfor is based on sources available to the
public.
This presentation does not constitute a solicitation for the purchase or sale of securities of any type, even if
there are statements to this effect. Furthermore, this presentation cannot be used as the basis for a contract or
obligation of any type.
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Contents
I. Company Overview
II. FY7/20 Financial Results
III. FY7/21 Outlook
IV. Growth Strategy
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I. Company Overview
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Company name Crossfor Co., Ltd.
Foundation August 1987
Head office/BranchHead office: 7-11-4, Kokubo, Kofu-shi, YamanashiTokyo branch: T&T Okachimachi Building, 4-8-5, Taito, Taito-ku, Tokyo
Representative President Hidetaka Dobashi
Capital 683 million yen (As of July 31, 2020)
Fiscal year end End of July
Number of employees 110 (All group companies, as of July 31, 2020)
Group companiesCrossfor H.K. Limited (Hong Kong)Crossfor (Shenzhen) Co., Ltd. D.Tech Co., Ltd. (As of July 31, 2020)
Listed exchange Tokyo Stock Exchange JASDAQ Standard
BusinessManufacturing and sales of jewelry and accessories using Dancing Stone and of parts for overseasDevelopment, manufacturing and sales of original new products
Auditor KPMG AZSA LLC
Company Overview
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March 1977
August 1977
September 1978
September 1979
June 1980
August 1980
August 1987
March 1989
January 1999
October 2002
September 2007
November 2010
January 2013
March 2017
March 2017
October 2018
January 2019
March 2019
October 2019
March 2020
Career of President Hidetaka Dobashi
Graduated from School of Marine Science and Technology, Tokai University (Oceanography)
Went to the United States
Entered Bluefield College (Business Accounting)
Entered Gemological Institute of America (Gemology)
Earned Graduate Gemologist (G.G) degree
Returned to Japan after graduation
Started a gemstone import and wholesale distribution company called Dobashi Jewelry Trading
Established Shibado Co., Ltd. (current Crossfor Co., Ltd.)
Established Gold Supply Co., Ltd., a jewelry manufacturer
Invented “Crossfor cut”
Merged with Shibado and renamed the company Crossfor Co., Ltd.
Established subsidiary Crossfor H.K. in Hong Kong
Invented the Dancing Stone®
Obtained a patent for Dancing Stone® in Japan
Relocated the head office to the city of Kofu in Yamanashi prefecture
Winner in demand acquisition category of Vibrant Habataku Small and Medium Enterprises 300 Program of the Ministry of Economy, Trade and Industry
One of 14 EY Entrepreneurs of the Year 2018 Japan
Invention and commercialization of the EZ Clasp
Became a member of Keidanren (Japan Business Federation)
Elected a No. 1 delegate of the Kofu Chamber of Commerce
Japan Patent Office Commissioner’s Award, Intellectual Property Achievement Category
August 22, 1954Place of birth: Yamanashi prefecture
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History
1980 1987 2000 2010 2015 2020
1987 Established
1999Invented
Crossfor cut*
2001
Started selling
Crossfor New
York brand
2011
Started selling
Dancing Stone
2012
Started selling
Dancing Stone
overseas
2017
Listed on Tokyo
Stock Exchange
JASDAQ market
* Original diamond cut with a central crossImport of jewelry
2010Developed
Dancing Stone
1980Founded
■Dancing Stone■Tennis Bracelets ■EZ Clasp
Expand earnings through these three pillars
Crossfor created the Dancing Stone market and is now enlarging this market worldwide
Used Dancing Stone to create a
new market
Established the Dancing Stone brand
Now
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The patented Dancing Stone has cumulative sales of more than 30 million items
What is Dancing Stone?
In November 2010, our President Hidetaka Dobashi invented a new jewelry setting in which the slightest movement of the wearer is converted into energy that makes the diamond swing incessantly, to the extent that
“it never stops glittering on your neckline.”
Being minute, gentle and elegant, the movement looks as if it is dancing. Thus, we named it Dancing Stone.
The center stone swings and flickers along with a person's heart beat and breath.
Dancing movement of the stone
A revolutionary technique for jewelry
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Used a “dancing” capability to create a new market
Obtained a patent for Dancing Stone in Europe and 8 countries
No movement More movement
Basic technology
Advanced technology
Existing products
Existing products
Existing products
Dancing Stone= New market
◆Patent pending in more than 10 countries◆Obtained a design right in Japan, China, USA, India, etc.
Japan China USA
Russia
South Korea
Australia Canada
Taiwan
Europe
European Patent
Convention includes
38 countries (Note)
Note: Germany, France, UK, Italy, Netherlands, Austria, Spain, Switzerland, Turkey, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, Greece, Croatia, Hungary, Ireland, Iceland, Albania, Liechtenstein, Lithuania, Luxembourg, Latvia, Monaco, Macedonia, Malta, Norway, Poland, Portugal, Romania, Serbia, Sweden, Slovakia, Slovenia and San Marino
An entirely new market
Complex cut and attachment of
gemstones
Simple cut and attachment method
Suspended design by using a ring
New technology
The patented Dancing Stone has cumulative sales of more than 30 million items
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Minute stone movement adds value to any design and gemstone
Compatible with conventional designs Suitable for a variety of motifs
Dancing Stone can add a dynamic element to jewelry and other fashion products regardless of the design and price range.
Advantages of the Dancing Stone More design flexibility Stones look larger More sparkle
The patented Dancing Stone has cumulative sales of more than 30 million items -Unlimited possibilities-
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Japan Jewelry Best Dresser Award Gift Item
Used by many brands and gift items
Rank Brand Rank Brand
1 Tiffany & Co. 14 DE BEERS
2 BVLGARI 15 Vendome
3 Cartier 16 Sweet10
4 MIKIMOTO 17 PIAGET
5 SWAROVSKI 18 agete
6 TASAKI 19 Van Cleef & Arpels
7 4℃ 20 BLOOM
8 Folli Follie 21 Ponte Vecchio
9 HARRY WINSTON 22 AHKAH
10 STAR JEWELRY 23 Canal 4℃
11 Samantha Tiara 24 ete
12 GINZA TANAKA 25 THE KISS
13 CHAUMET
■Most Recognized Jewelry Brands in Japan (2015)
Dancing Stone is used by about 30% of the most recognized jewelry brands in Japan
Source: Yano Research Institute Gift for 2012 awardsTwinkle Tear pierced earrings
Gift for 2015 awardsJupiter lapel pin
Selected every year since 2001 (19 consecutive years) as a gift item given to winners of the Japan Jewelry Best Dresser Award
Gift to the winner of the age 20s category of the 2017 Jewelry Best Dresser Awards
The patented Dancing Stone has cumulative sales of more than 30 million items -Use and awards-
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Price structure at other companies
Brand value= Loyalty
Crossfor Other companies
Goods for sale Framework, functions Parts
Substitutes None (a patented exclusive technology) Many
Competitors None (patent keeps out competitors) Many
Added value Possible (provision of new designs) Difficult
Creation of brand value No brand value (price competition)
Selling price=Brand value is
added at a fixed rateto the retail price
Crossfor’s price structure
ブランド価値=ロイヤリティー
Brand value= Loyalty
Cost
Margin
High profit margins are secured because supplying added value creates brand value
Higher retail priceLower retail price Higher retail priceLower retail price
Cost
Margin
Selling price(Cost plus a fixed
amount of margin)
Unable to add brand value to prices
The patented Dancing Stone has cumulative sales of more than 30 million items -Sale of parts-
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Sales contracts with about 350 large jewelry manufacturers, including Swarovski, 70 companies in India and 23
companies in the United States
Sales in other countries, mainly jewelry parts, are 35% of sales
Sales in Japan, mainly finished products, are 65% of sales
Sales contracts with about 1,000 companies, including Mikimoto and 4℃
The patented Dancing Stone has cumulative sales of more than 30 million items -Sales network-
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II. FY7/20 Financial Results
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Sales and earnings decreased for the third consecutive
year as sales fell sharply in Japan and other countries because of COVID-19
Highlights
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Consolidated Income Statement
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3,493
2,324
0
1,000
2,000
3,000
4,000
5,000
FY7/19 FY7/20
61
(413)-1,000
-500
0
500
1,000
FY7/19 FY7/20
49
(424)
(1,000)
(500)
0
500
1,000
FY7/19 FY7/20
Net sales Operating profit
Ordinary profitProfit attributable to
owners of parent
13
(611)(1,000)
(500)
0
500
1,000
FY7/19 FY7/20
Consolidated Income Statement Summary
(Millions of yen)
(Millions of yen) (Millions of yen)
(Millions of yen)
(500)
(1000)
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FY7/19 FY7/20 Change Change (%)
Net sales 3,493 2,324 -1,170 -33.5%
Japan 2,296(65.7%)
1,649(71.0%)
-647 -28.2%
Overseas 1,197(34.3%)
674(29.0%)
-523 -43.7%
Gross profit 1,479(42.3%)
754(32.4%)
-726 -49.0%
Selling, general and administrative expenses
1,417(40.6%)
1,168(50.3%)
-250 -17.6%
Operating profit (loss) 61(1.8%)
(413)(-17.8%)
-476 -%
Ordinary profit (loss) 49(1.4%)
(424)(-18.2%)
-474 -%
Profit (loss)attributable to owners of parent
13(0.4%)
(611)(-26.3%)
-626 -%
(Millions of yen)
* ( ): % to sales
Consolidated Income Statement Summary
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FY7/19 FY7/20 Change Major factors
Net sales 3,493 2,324 -1,170
Japan 2,296 1,649 -647Department stores and other stores temporarily closed or reduced operating hours
Overseas 1,197 674 -523Lockdowns of major cities caused cancelations and postponements of trade shows and sales events
Gross profit 1,479 754 -726
Gross profit margin 42.3% 32.4% -
Selling, general and administrative expenses
1,417 1,168 -250
Promotion expenses 108 52 -53 Trade shows were canceled or postponed
Salaries and allowances 321 298 -22Temporarily suspended operations, reduced overtime
Operating profit (loss) 61 (413) -476
Ordinary profit (loss) 49 (424) -474
Profit (loss)attributable to owners of parent
13 (611) -626
Changes in Consolidated Income Statement
(Millions of yen)
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Japan65.7%
2,296 million yen
China 14.6%
Thailand
11.9%
7.8%
Others
Japan71.0%
1,649 million yen
China 8.7%
Thailand
12.6%
7.7%
Others
Total 2,324 million yenTotal 3,493 million yen
FY7/19 FY7/20
Sales by Region (YoY Change)
Overseas sales1,197 million yen
34.3%
Overseas sales675 million yen
29.0%
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FY7/19 FY7/20
Change Change (%)
Net sales Comp. Net sales Comp.
Japan 2,296 65.7% 1,649 71.0% -647 -28.2%
Overseas 1,197 34.3% 675 29.0% -523 -43.7%
China 510 14.6% 201 8.7% -309 -60.6%
Thailand 414 11.9% 292 12.6% -122 -29.4%
Others 272 7.8% 180 7.7% -92 -33.8%
Sales by Region (YoY Change)
(Millions of yen)
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Consolidated Balance Sheet
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3,4753,588
0
1,000
2,000
3,000
4,000
5,000
FY7/19 FY7/20
1,252 1,576
0
1,000
2,000
3,000
4,000
5,000
FY7/19 FY7/20
1,802 1,612
0
1,000
2,000
3,000
4,000
5,000
FY7/19 FY7/20
1,437
1,648
0
1,000
2,000
3,000
4,000
5,000
FY7/19 FY7/20
Changes in Consolidated Balance Sheet
Current assets Current liabilities
Non-current assets Non-current liabilities
(Millions of yen)
(Millions of yen) (Millions of yen)
(Millions of yen)
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FY7/19 FY7/20 Change Change (%) Remarks
Current assets 3,475 3,588 +113 +3.2%
Cash and deposits 710 1,347 +636 +89.5% Fund procurement
Finished goods 1,402 921 -480 -34.2%Maintain the proper level of inventories
Non-current assets 1,802 1,612 -190 -10.5%
Property, plant and equipment
1,552 1,384 -168 -10.9%
Intangible assets 85 57 -27 -31.9%
Investments and other assets
164 170 +6 +3.7%
Total assets 5,277 5,201 -77 -1.5%
Consolidated Balance Sheet: Assets
(Millions of yen)
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FY7/19 FY7/20 Change Change (%) Remarks
Current liabilities 1,252 1,576 +324 +25.9%
Notes and accounts payable-trade
78 45 -33 -42.6%
Short-term borrowings
500 1,000 +500 +100% For fund procurement
Non-current liabilities 1,437 1,648 +211 +14.7%
Long-term borrowings
1,435 1,647 +211 +14.7% For fund procurement
Total liabilities 2,689 3,224 +536 +19.9%
Total net assets 2,588 1,976 -612 -23.7%
Total liabilities and net assets
5,277 5,201 -76 -1.5%
(Millions of yen)
Consolidated Balance Sheet: Liabilities and Net Assets
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Consolidated Cash Flows
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FY7/19 FY7/20 Change Remarks
Cash flows from
operating activities655 136 -519
Decrease in trade receivables and inventories
Cash flows from
investing activities(172) (104) +67
Free cash flows 828 241 -587
Cash flows from
financing activities(207) 610 +818 Increase in borrowings
Net increase (decrease) in cash and cash equivalents
266 633 +367
Cash and cash equivalents
at end of period 708 1,342 +633
Consolidated Cash Flows
(Millions of yen)
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III. FY7/21 Outlook
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FY7/20 FY7/21 Change Change (%)
Net sales 2,324 2,790 +465 +20.0%
Japan 1,649 1,722 +73 +4.43%
Overseas 674 1,068 +394 +58.5%
Operating profit (loss) (413) 68 +481 -%
Ordinary profit (loss) (424) 58 +482 -%
Profit (loss)attributable to owners of parent
(611) 39 +650 -%
Goal is a return to profitability by using many initiatives for improving performance Aiming to create a new standard for jewelry Reduce slow-selling inventory items, cut cost of sales and operating expenses, and
implement other structural reforms
FY7/21 Outlook
(Millions of yen)
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IV. Growth Strategy
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The global jewelry market is growing steadily and sales are forecast to rise to 48 trillion yen in 2022
The Global Business Climate
Source: Prepared by Crossfor based on “Global Gems and Jewelry Market, Competition, Forecast and Opportunities, 2012-2022,” TechSci Research (India)
5 trillion yen
24 trillion yen
5 trillion yen
2 trillion yen
12 trillion yen
*Does not reflect the impact of the COVID-19 pandemic
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The VIRUS BLOCK™ Antiviral Coating Technology
Jewelry purchases by consumers are declining
1. Fewer opportunities to go outDecrease in the need to use jewelry as well as makeup products
2. Concerns about jewelry and hygienePeople think disinfecting jewelry every day is troublesome, that wearing something on a finger could be a source of an infection, that sanitizing products may damage jewelry, and have other concerns
3. Visiting stores has become much more difficultPeople are afraid to go inside a store, afraid to try on jewelry and have other concerns about stores
The concept behind Crossfor products: What can we do to make people happy precisely at a difficult time like this?1. We want to be a source of jewelry that makes people happy and can be worn with confidence.2. We want to work with retailers and other business partners to create new directions in the currently
stagnant jewelry market.3. We want to share our technologies with others to contribute to the vitality of the entire jewelry industry.
With Hardolass Co., Ltd., we developed VIRUS BLOCK™, a virus and bacteria resistant coating
for jewelry.
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Primary feature Fights viruses + Prevents odorsThe combination of antiviral and antimicrobial substances that are harmless to the human body (which is slightly alkaline) and a high-
purity glass coating shuts out a variety of viruses, bacteria and other microbes that cause odors.
Quality guaranteed for 5 years
*Antiviral and antibacterial properties have been confirmed by a third party
*The Society of International Sustaining Growth for Antimicrobial Articles (SIAA) promotes the use of products treated to fight microbes and mold so that these products can be used with confidence. The society consists of about 500 companies in Japan and other countries that manufacture antiviral and anti-mold solutions or products with an antimicrobial or anti-mold capability. Members also include antimicrobial testing organizations.
The JP numbers are the conference registration numbers for VIRUS BLOCK.
The VIRUS BLOCK™ Antiviral Coating Technology
Antiviral coatingReduction of viruses specific to
certain productsInorganic antiviral coating for jewelry
Antibacterial coatingInorganic antibacterial coating
for jewelry
1) Fights viruses, bacteria and odors
2) Prevents soiling
3) Prevents discoloration
How the antiviral/antibacterial coating works
Virus/bacteria
Lower infection risk
Antiviral/antibacterial substance combined
with glass coatingChain
Metal base1. The antiviral/antibacterial substances, which are an integral part of the glass
coating, activate oxygen, moisture and other airborne particles.2. These energized airborne particles attack the outer walls of viruses and bacteria.3. Destroying the outer walls deactivates (kills) viruses and bacteria, which greatly
lowers the risk of an infection.
–
–
Virus/bacteria
Deactivates (kills) viruses and bacteria
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Amulets for Temples and Shrines
Rough diamonds
An amulet with a rough diamondA gold lasting relationship amulet
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Already chosen by many temples and shrines in Japan
Yamanashi Ichinomiya Asama JinjaKanagawa Kamakura KenchojiToyama Takase Jinja, etc.
*Only temples and shrines that have given permission for the use of their names are shown.
*Asama Jinja currently sells Crossfor amulets and the other two locations listed here plan to start selling these amulets in late November.
Ichinomiya Asama Jinja
Amulets for Temples and Shrines
Examples of locations selling Crossfor amulets
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Brilliant Bracelet
Launch timing is undetermined but preparations are continuing
The launch has been pushed back because of the COVID-19 crisis
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Dancing Stone
Problems with counterfeit Dancing Stone products
Fought back by using patents and other intellectual property rights
Legal actions to stop the production and sale of counterfeit products
Cooperation with Chinese customs to prevent exports of these products, and other activities
In the past
Result
Now Receipt of patents makes manufacturing techniques public knowledge
Emergence of counterfeit products targeting gaps in patents and other rights, other problems
Emergence of even more counterfeit products
Growth of the Dancing Stone market, including counterfeits
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Dancing Stone
Upcoming actions
Shut out counterfeits by using automation to reduce production expenses
Automate processes by replacing single action with progressive stamping
Progressive die
An automated stamping machine uses a single die for punching, bending and other processes.
Single action die
One die is used for each process, requiring the manual replacement of the die for every step.
Supply low-cost, high-quality Dancing Stone parts while maintaining profitability by holding down the cost of labor for manufacturing
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Dancing Stone
Stage 1
Manual fabrication of castings
Stage 2Manual fabrication using single action stamping
Stage 3Automated production using progressive stamping
Extend automation technologies (progressive
stamping) to finished products in order to use automation to produce finished Dancing Stone products
Now
Next Stage
Stamped parts
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Dancing Stone Our latest patent applications
Production labor cost Cost of metal Total cost of production
Use at least one Dancing Stone part in every product.
Comparison with conventional cast products
Made by stamping Made by casting
1/2 1/31/5
Big cost reduction may allow selling products outside Japan too
In addition
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Dancing Stone Stamped products
Stamped products: Currently four items
Overseas sales
Export as parts
Finished products
Assemble overseas
+
Stamped parts
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Dancing Stone Create new designs using stamping techniques
Use stamping to make original Dancing Stone products sold using overseas brands
• Positioning Dancing Stone as a core item of brands will ensure consistent sales for many years.
• Using overseas brands will result in reliable sources of earnings.• The goal is a strategy for the worldwide success of the
Dancing Stone.
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What is Crossfor?
A jewelry industry innovator
A source of creative and original jewelry ideas
A supplier of high-quality jewelry parts
A company dedicated to making people worldwide happy
Closing Message