Heiwa Real Estate : October 31, 2022Consolidated Financial Results for the Six Months Ended September 30, 2022(196KB)

(% indicates changes from the previous term)

Consolidated Financial Results for the Six Months Ended September 30, 2022 [JGAAP]

		October 31, 2022
Company Name: Heiwa Real Estate Co., Ltd.	Stock Exchange Listing:
Tokyo, Nagoya, Sapporo, Fukuoka
Code Number: 8803	https://www.heiwa-net.co.jp/english/index.html
Representative:	Representative Executive Officer, President and CEO	Kiyoyuki Tsuchimoto
Scheduled date for submitting the Quarterly Securities Report:	Scheduled date to commence dividend
November 11, 2022		payments: December 1, 2022

Availability of supplementary briefing material on quarterly results: Yes

Quarterly results briefing session: Yes (For institutional investors and analysts)

(Figures are rounded down to the nearest million yen)

Consolidated Financial Results for the First Half of the Fiscal Year Ending March 31, 2023 (April 1 to September 30, 2022)

(1) Consolidated Results of Operations (cumulative)

			Operating revenue		Operating income		Ordinary income		Net income attributable to
							owners of parent
Six months ended		Millions of yen	%	Millions of yen	%	Millions of yen		%				Millions of yen		%
	24,954	-39.6		5,067	-30.6		4,589		-33.1		4,240		-11.0
September 30, 2022
Six months ended		41,281	92.8		7,299	9.0		6,860		9.4			4,765		10.7
September 30, 2021
(Note) Comprehensive income:
Six months ended September 30, 2022: ¥2,612 million (-58.2%)
Six months ended September 30, 2021: ¥6,253 million (-27.8%)
						Earnings per share		Fully diluted net income per share
								Yen						Yen
Six months ended September 30, 2022				117.53						-
Six months ended September 30, 2021				128.90						-
(2) Consolidated Financial Position
				Total assets	Net assets	Equity ratio		Net assets per share
				Millions of yen	Millions of yen			%					Yen
As of September 30, 2022					372,440			117,226			31.5				3,275.64
As of March 31, 2022					376,210			119,278			31.7				3,269.74
(Reference) Equity:
As of September 30, 2022: ¥117,226 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 11 entitled, "Application of specific accounting treatment in the preparation of the consolidated financial statements for the period under review," under "2. Consolidated Financial Statements and Notes," in "(4) 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 11 entitled, "Changes in accounting policies," under "2. Consolidated Financial Statements and Notes," in "(4) Notes to Consolidated Financial Statements."

1. Total number of issued shares (common stock)
2. 1. Total number of issued shares at end of period (including treasury stock)
   2. Total number of treasury stock at end of period
   3. Average number of shares during period

As of September 30,	38,859,996 shares	As of March 31,	38,859,996 shares
2022		2022
As of September 30,	3,072,690 shares	As of March 31,	2,380,419 shares
2022	2022
As of September 30,	36,081,783 shares	As of September 30,	36,967,737 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 4 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
(2) Overview of Financial Position……………………………………………………………………………………………	3
(3) Overview of Financial Results Forecast and Future Expectations ………………………………………………………	4
2. Consolidated Financial Statements and Notes ………………………………………………………………………………	5
(1) Consolidated Balance Sheets ……………………………………………………………………………………………	5
(2) Consolidated Statements of Income and Comprehensive Income ………………………………………………………	7
Consolidated Statements of Income
Six months ended September 30, 2021 and 2022 …………………………………………………………………	7
Consolidated Statements of Comprehensive Income
Six months ended September 30, 2021 and 2022 …………………………………………………………………	8
(3) Consolidated Statements of Cash Flows …………………………………………………………………………………	9
(4) Notes to Consolidated Financial Statements………………………………………………………………………………	11
Going concern assumption………………………………………………………………………………………………	11
Notes in case of significant changes in shareholders' equity……………………………………………………………	11
Application of specific accounting treatment in the preparation of the consolidated financial statements	11
for the period under review ……………………………………………………………………………………………
Changes in accounting policies …………………………………………………………………………………………	11
Additional Information …………………………………………………………………………………………………	11
Segment Information ……………………………………………………………………………………………………	12

- 1 -

1. Qualitative Information Related to Financial Results

(1) Overview of Operating Results

During the first six months of the fiscal year ending March 31, 2023, Japan's economy was expected to recover following various measures implemented by the government as it promoted a shift to a new stage of co-existence 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 revenues and income declined in the six-month period under review compared with the same period of the previous fiscal year. Operating revenue totaled ¥24,954 million, a decrease of ¥16,327 million (39.6%). Operating income was ¥5,067 million, down ¥2,232 million (30.6%), and ordinary income came to ¥4,589 million, a decrease of ¥2,271 million (33.1%). Net income attributable to owners of parent amounted to ¥4,240 million, down ¥524 million (11.0%) year on year.

Consolidated financial results by business segment are as follows.

						(Millions of yen)
	Six months ended	Six months ended	Difference
	September 30, 2021	September 30, 2022
Segment
Operating	Operating	Operating	Operating	Operating	Operating
	revenue	income (loss)	revenue	income (loss)	revenue	income (loss)
Building Business	39,666	7,173	23,081	4,917	-16,585	-2,256
Asset Management Business	1,614	993	1,872	1,105	258	112
Adjustments	-	(868)	-	(956)	-	-88
Total	41,281	7,299	24,954	5,067	-16,327	-2,232

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 by ¥172 million (1.4%) year on year to ¥11,978 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 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 ¥23,081 million, a decrease of ¥16,585 million (41.8%) year on year. Segment operating income totaled ¥4,917 million, down ¥2,256 million (31.4%) compared with the same period of the previous fiscal year.

Breakdown of operating revenue			(Millions of yen)
Classification	Six months ended	Six months ended	Difference
September 30, 2021	September 30, 2022
Leasing revenue	12,150	11,978	-172
Revenue from sales of	26,770	10,250	-16,520
properties
Other	746	853	106
Total	39,666	23,081	-16,585

2) Asset Management Business

In the Asset Management Business segment, asset management revenue rose by ¥231 million (21.8%) to ¥1,296 million, and brokerage commissions increased by ¥26 million (4.8%) to ¥576 million. As a result, operating revenue totaled ¥1,872 million, up ¥258 million (16.0%) year on year. Segment operating income came to ¥1,105 million, an increase of ¥112 million (11.3%) compared with the first six months of the previous fiscal year.

- 2 -

Breakdown of operating revenue			(Millions of yen)
Classification	Six months ended	Six months ended	Difference
September 30, 2021	September 30, 2022
Asset management revenue	1,064	1,296	231
Brokerage commissions	549	576	26
Total	1,614	1,872	258

1. Overview of Financial Position
2. 1. Assets, liabilities and net assets

Total assets, total liabilities, and net assets as of March 31 and September 30, 2022, were as follows:

			(Millions of yen)
	March 31, 2022	September 30, 2022	Difference
Total assets	376,210	372,440	-3,769
Total liabilities	256,931	255,214	-1,717
Net assets	119,278	117,226	-2,052
Interest-bearing liabilities	206,236	207,197	960

(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 September 30, 2022, total assets amounted to ¥372,440 million, a decrease of ¥3,769 million compared with March 31, 2022. Among the main factors underlying this result, real estate for sale decreased by ¥9,213 million and investment securities decreased by ¥2,570 million. These and other items more than offset an increase in tangible fixed assets of ¥8,834 million, which reflected acquisitions of new buildings, including the Higashi-Yaesu City Building (Chuo-ku, Tokyo), and construction cost outlays for already owned buildings.

Total liabilities

As of September 30, 2022, total liabilities came to ¥255,214 million, a decrease of ¥1,717 million compared with March 31, 2022. This mainly reflected decreases in accounts payable-trade of ¥1,741 million and income taxes payable of ¥1,233 million, respectively, which more than offset an increase in interest-bearing liabilities of ¥960 million.

Net assets

As of September 30, 2022, net assets totaled ¥117,226 million, a decrease of ¥2,052 million compared with March 31, 2022. This was mainly the result of the Company's purchase of treasury shares totaling ¥2,688 million and a decrease in unrealized gain on securities amounting to ¥1,627 million, respectively, which more than offset an increase in retained earnings of ¥2,263 million.

(2) Cash Flows

As of September 30, 2022, cash and cash equivalents amounted to ¥26,112 million, a decrease of ¥1,998 million compared with March 31, 2022.

Consolidated results in the first six months of the fiscal year ending March 31, 2023, for each category of cash flows and the main factors underlying the results are as follows.

Cash flows from operating activities

Net cash provided by operating activities came to ¥15,487 million, compared with ¥27,035 million in the same period of the previous fiscal year. Main factors underlying this result were income before income taxes of ¥6,325 million and a decrease in inventories of ¥9,213 million.

- 3 -