Heiwa Real Estate : January 31, 2023Consolidated Financial Results for the Nine Months Ended December 31, 2022(174KB)

Consolidated Financial Results for the Nine Months Ended December 31, 2022 [JGAAP]

Company Name: Heiwa Real Estate Co., Ltd.

Code Number:	8803 https://www.heiwa-net.co.jp/english/index.html
Representative:	Representative Director and President

Scheduled date for submitting the Quarterly Securities Report:

February 13, 2023

Availability of supplementary briefing materials on quarterly results: No

Quarterly results briefing sessions: No

January 31, 2023

Stock Exchange Listing:

Tokyo, Nagoya, Sapporo, Fukuoka

Kiyoyuki Tsuchimoto

Scheduled date to commence dividend payments:

-

(Figures are rounded down to the nearest million yen)

Consolidated Financial Results for the Nine Months of the Fiscal Year Ending March 31, 2023 (April 1 to December 31, 2022)

(1) Consolidated Results of Operations (cumulative)										(% indicates changes from the previous term)
	Operating revenue	Operating income		Ordinary income		Net income attributable to
				owners of parent
Nine months ended	Millions of yen	%	Millions of yen		%	Millions of yen		%		Millions of yen		%
		32,133	-33.6			6,840		-26.6		6,109		-29.5		5,669		-11.4
December 31, 2022
Nine months ended			48,386	73.1			9,317		4.4		8,671		4.3		6,396		11.2
December 31, 2021
(Note) Comprehensive income:
Nine months ended December 31, 2022: ¥3,508 million (-41.5%)
Nine months ended December 31, 2021: ¥6,002 million (-45.2%)
					Earnings per share		Fully diluted net income per share
									Yen										Yen
Nine months ended December 31, 2022				157.57										-
Nine months ended December 31, 2021				173.57										-
(2) Consolidated Financial Position
				Total assets				Net assets		Equity ratio			Net assets per share
				Millions of yen			Millions of yen							%				Yen
As of December 31, 2022				385,307					116,321							30.2			3,250.41
As of March 31, 2022				376,210					119,278							31.7			3,269.74
(Reference) Equity:
As of December 31, 2022: ¥116,321 million
As of March 31, 2022: ¥119,278 million
2. Dividends
												Annual dividends per share
					End of 1Q		End of 2Q		End of 3Q						Year-end	Total
						Yen					Yen			Yen			Yen		Yen
Year ended March 31, 2022				-				41.00				-		54.00		95.00
Year ending March 31, 2023				-				50.00				-
Year ending March 31, 2023 (Forecast)																		50.00		100.00

(Note) Revision of most recently announced planned dividend: None

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2023 (From April 1, 2022 to March 31, 2023)

(% indicates changes from the previous term)

	Operating revenue	Operating income	Ordinary income	Net income attributable	Earnings per share
							to owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	41,800	-27.7	10,000	-20.7	8,800	-24.0	8,800	1.1	244.89

(Note) Revision of most recently announced forecast of financial results: None

Notes:

1. Significant changes in subsidiaries during the period under review (changes in specified subsidiaries accompanying changes in scope of consolidation): Not applicable
   Subsidiaries added to the scope of consolidation: None
   Subsidiaries removed from the scope of consolidation: None
2. Application of specific accounting treatment in the preparation of the consolidated financial statements for the period under

review: Yes

For details, please refer to the section on page 8 entitled, "Application of specific accounting treatment in the preparation of consolidated financial statements," under "2. Consolidated Financial Statements and Notes," in "(3) Notes to Consolidated Financial Statements."

1. Changes in accounting policies, changes in accounting estimates and corrections of errors
2. 1. Changes in accounting policies accompanying the revisions to items such as accounting standards: Yes
   2. Changes in accounting policies other than 1) above: Not applicable
   3. Changes in accounting estimates: Not applicable
   4. Corrections of errors: Not applicable

Note: For more information, refer to the section on page 8 entitled, "Changes in accounting policies," under "2. Consolidated Financial Statements and Notes," in "(3) Notes to Consolidated Financial Statements."

(4) Total number of issued shares (common stock)
1)	Total number of issued shares at end of	As of December 31,	38,859,996 shares	As of March 31,	38,859,996 shares
	period (including treasury stock)	2022	2022
2)	Total number of treasury stock at end of	As of December 31,	3,073,124 shares	As of March 31,	2,380,419 shares
	period	2022	2022
3)	Average number of shares during period	As of December 31,	35,983,524 shares	As of December 31,	36,852,594 shares
2022	2021

Note: Treasury stock includes the Company's shares held in a trust account for a stock compensation plan for executive officers and managing officers of the Company and certain subsidiaries, and for a trust account for the Company's employee stock ownership plan.

Notes:

・This report of financial results was not subject to a quarterly audit by certified public accountants or auditing firms. ・Explanations for the appropriate use of the forecast of financial results and other points to note

The forecast amounts and other forward-looking statements contained in this document are based on information available and certain assumptions deemed reasonable by the Company at the time of preparing this report. Actual results may differ substantially from these forecasts.

For more information concerning the forecast of financial results, please refer to the section on page 3 entitled, "(3) Overview of Financial Results Forecast and Future Expectations," under "1. Qualitative Information Related to Financial Results."

Table of Contents

1. Qualitative Information Related to Financial Results…………………………………………………………………………
2. 1. Overview of Operating Results……………………………………………………………………………………………
   2. Overview of Financial Position……………………………………………………………………………………………
   3. Overview of Financial Results Forecast and Future Expectations ………………………………………………………
3. Consolidated Financial Statements and Notes ………………………………………………………………………………
4. 1. Consolidated Balance Sheets ……………………………………………………………………………………………
   2. Consolidated Statements of Income and Comprehensive Income ………………………………………………………
      Consolidated Statements of Income
      Nine months ended December 31, 2021 and 2022………………………………………………………………… Consolidated Statements of Comprehensive Income
      Nine months ended December 31, 2021 and 2022…………………………………………………………………
   3. Notes to Consolidated Financial Statements……………………………………………………………………………… Going concern assumption………………………………………………………………………………………………

Notes in case of significant changes in shareholders' equity……………………………………………………………

Application of specific accounting treatment in the preparation of the consolidated financial statements

for the period under review………………………………………………………………………………………………

Changes in accounting policies …………………………………………………………………………………………

Additional Information …………………………………………………………………………………………………

Segment Information ……………………………………………………………………………………………………

- 1 -

2

2

3

3

4

4

6

6

7

8

8

8

8

8

8

9

1. Qualitative Information Related to Financial Results

(1) Overview of Operating Results

During the first nine months of the fiscal year ending March 31, 2023, the Japanese economy was expected to recover moderately following various measures implemented by the government for co-existing with COVID-19. Nevertheless, volatility and risks in financial and capital markets, economic downturns in other countries, and rising prices of commodities will need to be closely monitored going forward.

In this operating environment, the Company's consolidated revenue and income declined in the nine-month period under review compared with the same period of the previous fiscal year. Operating revenue totaled ¥32,133 million, a decrease of ¥16,252 million (33.6%). Operating income came to ¥6,840 million, down ¥2,477 million (26.6%), and ordinary income totaled ¥6,109 million, a decrease of ¥2,562 million (29.5%). Net income attributable to owners of parent amounted to ¥5,669 million, down ¥726 million (11.4%) year on year.

Consolidated financial results by business segment are as follows.

						(Millions of yen)
	Nine months ended	Nine months ended	Difference
	December 31, 2021	December 31, 2022
Segment
Operating	Operating	Operating	Operating	Operating	Operating
	revenue	income	revenue	income	revenue	income
Building Business	46,236	9,368	29,767	6,941	-16,469	-2,426
Asset Management Business	2,150	1,228	2,366	1,265	216	37
Adjustments	-	(1,279)	-	(1,367)	-	-88
Total	48,386	9,317	32,133	6,840	-16,252	-2,477

1) Building Business

In the Building Business segment, although KABUTO ONE (Chuo-ku, Tokyo) contributed to leasing revenue following its opening in the previous fiscal year, leasing revenue as a whole decreased 91 million (0.5%) year on year to ¥18,217 million, mainly because some building tenants moved out and prior contributions from penalties for tenant contract cancellations were absent in the period under review. Revenue from sales and acquisitions of properties fell by ¥16,520 million (61.7%) to ¥10,250 million, largely due to decreased sales of inventories. These results combined with other revenues in this segment brought total operating revenue to ¥29,767 million, a decrease of ¥16,469 million (35.6%) year on year. Segment operating income totaled ¥6,941 million, down ¥2,426 million (25.9%) compared with the same period of the previous fiscal year.

Breakdown of operating revenue			(Millions of yen)
Classification	Nine months ended	Nine months ended	Difference
December 31, 2021	December 31, 2022
Leasing revenue	18,309	18,217	-91
Revenue from sales of	26,770	10,250	-16,520
properties
Other	1,156	1,299	142
Total	46,236	29,767	-16,469

2) Asset Management Business

In the Asset Management Business segment, asset management revenue rose by ¥210 million (14.7%) to ¥1,640 million, and brokerage commissions increased by ¥5 million (0.8%) to ¥726 million. As a result, operating revenue totaled ¥2,366 million, up ¥216 million (10.1%) year on year. Segment operating income came to ¥1,265 million, an increase of ¥37 million (3.0%) compared with the first nine months of the previous fiscal year.

- 2 -

Breakdown of operating revenue			(Millions of yen)
Classification	Nine months ended	Nine months ended	Difference
December 31, 2021	December 31, 2022
Asset management revenue	1,429	1,640	210
Brokerage commissions	720	726	5
Total	2,150	2,366	216

1. Overview of Financial Position Assets, liabilities and net assets
   Total assets, total liabilities, and net assets as of March 31 and December 31, 2022, were as follows:

			(Millions of yen)
	March 31, 2022	December 31, 2022	Difference
Total assets	376,210	385,307	9,097
Total liabilities	256,931	268,985	12,054
Net assets	119,278	116,321	-2,956
Interest-bearing liabilities	206,236	221,107	14,871

(Note) Interest-bearing liabilities are comprised of short-term loans payable, current portion of bonds, current portion of long-term loans, bonds, long-term loans payable, and long-term accounts payable.

Total assets

As of December 31, 2022, total assets amounted to ¥385,307 million, an increase of ¥9,097 million compared with March 31, 2022. Among the main factors underlying this result, tangible fixed assets rose by ¥22,615 million, largely due to the acquisition of the Higashi-Yaesu City Building (Chuo-ku, Tokyo) and the Daiei Building (Nagoya, Aichi). These and other items more than offset a decrease in real estate for sale of ¥9,279 million and a decrease in investment securities of ¥3,358 million.

Total liabilities

As of December 31, 2022, total liabilities came to ¥268,985 million, an increase of ¥12,054 million compared with March 31, 2022. This mainly reflected an increase in interest-bearing liabilities of ¥14,871 million.

Net assets

As of December 31, 2022, net assets totaled ¥116,321 million, a decrease of ¥2,956 million compared with March 31, 2022. This was mainly the result of the Company's purchase of treasury shares totaling ¥2,690 million and a decrease in unrealized gain on securities amounting to ¥2,161 million, respectively, which more than offset an increase in retained earnings of ¥1,894 million.

(3) Overview of Financial Results Forecast and Future Expectations

No revisions have been made to the forecast of consolidated financial results for the full fiscal year announced on April 28, 2022.

- 3 -