Mitsubishi HC Capital : Consolidated Financial Highlights for the Second Quarter Ended September 30, 2022

Consolidated Financial Highlights for the Second Quarter Ended September 30, 2022

	[Based on J-GAAP]
			November 10, 2022
Company Name:	Mitsubishi HC Capital Inc.
Stock Exchange Listed on:	Tokyo (Prime Market), Nagoya (Premier Market)
Company Code:	8593	URL: https://www.mitsubishi-hc-capital.com/english/
Representative:	Takahiro Yanai, Representative Director, President & CEO
For Inquiry:	Satoshi Inoue, Senior Managing Executive Officer TEL: [phone]
Scheduled Date of Submission of Financial Reports:	November 10, 2022
Scheduled Commencement of Dividend Payment:		December 12, 2022
Supplemental Material for Financial Results:		Available
Holding of Quarterly Financial Results Meeting:		Scheduled (for Institutional Investors and Analysts)

(Amounts of less than one million yen are rounded down)

1. Consolidated Results for the Second Quarter Ended September 30, 2022 (April 1, 2022 - September 30, 2022)

(1) Consolidated Operating Results (Cumulative)	(% represents the change from the same period in the previous fiscal year)
	Revenues		Operating income	Recurring income	Net income attributable to
		owners of the parent
For the six months ended	(Millions of yen)		%	(Millions of yen)	%	(Millions of yen)	%	(Millions of yen)	%
September 30, 2022			13.4
944,732		74,139	27.5	75,771	28.2	63,176	4.5
September 30, 2021	833,358		83.3	58,151	80.6	59,089	75.7	60,482	146.0
(Note) 1. Comprehensive income:	For the six months ended September 30, 2022:	¥249,371 million	235.6%
	For the six months ended September 30, 2021:	¥74,310 million	517.5%

2. Mitsubishi HC Capital Inc. (the former Mitsubishi UFJ Lease & Finance Company Limited) executed the business integration with Hitachi Capital Corporation on April 1, 2021. The year-on-year percentage change for the six months ended September 30, 2021 represents the comparison with the results of Mitsubishi UFJ Lease & Finance Company Limited.

	Earnings per share	Diluted
	earnings per share
For the six months ended	(Yen)	(Yen)
September 30, 2022	44.00	43.87
September 30, 2021	42.13	42.03

(2) Consolidated Financial Position

	Total assets			Total equity	Equity ratio
As of	(Millions of yen)		(Millions of yen)		%
September 30, 2022	11,154,540		1,558,866		13.8
March 31, 2022	10,328,872		1,333,467		12.7
(Reference) Shareholders' equity:	As of September 30, 2022:	¥1,534,543 million
	As of March 31, 2022:			¥1,309,769 million
2. Dividends
						Dividend per share
	1st Quarter end		2nd Quarter end	3rd Quarter end	Fiscal Year - end	Annual
For the year	(Yen)				(Yen)		(Yen)	(Yen)	(Yen)
ended March 31, 2022	－				13.00		－	15.00	28.00
ending March 31, 2023	－				15.00
ending March 31, 2023							－	16.00	31.00
(Forecast)
(Note) Changes from the latest released dividend forecast: No

3. Consolidated Financial Forecast for the Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(Year-on-year change %)

	Net income attributable to	Earnings per share
	owners of the parent
	(Millions of yen)	%	(Yen)
Full year	110,000	10.7	76.60

(Note) Changes from the latest released financial forecast: No

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* Notes
(1) Significant changes in subsidiaries during the period
(Change of specific subsidiaries accompanying the change of scope of consolidation)	:	No
(2) Application of accounting treatments specific to the preparation of the quarterly
consolidated financial statements	:	Yes

(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements and Major Notes, (3) Notes to the Quarterly Consolidated Financial Statements (Application of accounting treatments specific to the preparation of the quarterly consolidated financial statements)" on page 15.

(3) Changes in accounting policies, changes in accounting estimates, and restatement of revisions

(ⅰ) Changes in accounting policies with revision of accounting standards, etc.	:	Yes
(ⅱ) Changes in accounting policies other than (ⅰ) above	:	No
(ⅲ) Changes in accounting estimates	:	No
(ⅳ) Restatement of revisions	:	No

(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements and Major Notes, (3) Notes to the Quarterly Consolidated Financial Statements (Changes in accounting policies)" on page 15.

(4) Number of outstanding shares (common shares)

(ⅰ) Number of outstanding

shares (including treasury shares)

(ⅱ) Number of treasury shares

(ⅲ) Weighted average number of shares outstanding

As of September 30, 2022	1,466,912,244	shares	As of March 31, 2022	1,466,912,244	shares
As of September 30, 2022	30,865,860	shares	As of March 31, 2022	31,056,401	shares
For the six months ended	1,435,989,160	shares	For the six months ended	1,435,598,327	shares
September 30, 2022	September 30, 2021

• This "Consolidated Financial Highlights" is outside the scope of an audit by certified public accountants or an audit firm.
• Explanation regarding the appropriate use of the forecasts, etc. (Remarks on forward-looking statements)
  The forward-looking statements in this report, including financial forecast, have been prepared by using information available to Mitsubishi HC Capital Inc. (the "Company") on the date of release and the certain assumptions deemed reasonable by the Company, and are not intended to assure that the Company will achieve such results. Actual earnings may differ significantly from the forecasts for various reasons.
• This "Consolidated Financial Highlights" is made in Japanese and translated into English. The Japanese text is the original and the English text is for reference purposes. If there is any conflict or inconsistency between these two texts, the Japanese text shall prevail.

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Contents

1．Qualitative Information concerning Financial Results for the Second Quarter Ended September 30, 2022	4
(1) Summary of Operating Results	4
(2) Summary of Consolidated Financial Position	8
(3) Explanation on Future Forecast Information including Consolidated Financial Forecast	8
2．Quarterly Consolidated Financial Statements and Major Notes	9
(1) Quarterly Consolidated Balance Sheets	9
(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income	11
Quarterly Consolidated Statements of Income
For the Six Months ended September 30, 2022 and 2021	11
Quarterly Consolidated Statements of Comprehensive Income
For the Six Months ended September 30, 2022 and 2021	12
(3) Notes to the Quarterly Consolidated Financial Statements	13
(Segment information)	13
(Notes concerning going concern assumption)	15
(Notes concerning significant changes in shareholders' equity)	15
(Application of accounting treatments specific to the preparation of the quarterly consolidated	15
financial statements)
(Changes in accounting policies)	15
(Additional information)	15

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1. Qualitative Information concerning Financial Results for the Second Quarter Ended September 30, 2022

1. Summary of Operating Results

1. Overview of Financial Results, etc.

Quarterly net income attributable to owners of the parent increased by 4.5% year on year mainly thanks to the profit contribution from CAI International, Inc., and the business growth of the subsidiaries in Europe and Americas.

・Gross profit for the six months ended September 30, 2022 increased by ¥16.7 billion, or 10.4% year on year, to ¥177.9 billion mainly thanks to 1) the profit contribution from CAI International, Inc., a marine container leasing company in the U.S. that became the Company's wholly-owned subsidiary in November 2021, 2) the business growth of the subsidiaries mainly in Europe and Americas in the Global Business segment, and 3) an increase in gains on sales related to real estate business, and other factors.

・Quarterly net income attributable to owners of the parent for the six months ended September 30, 2022 increased by ¥2.6 billion, or 4.5% year on year, to ¥63.1 billion thanks to a decrease in credit costs in addition to an increase in gross profit, despite the absence of large gains on sales of strategic shareholdings (¥26.7 billion as extraordinary income), which were recorded for the six months ended September 30, 2021.

The progress of net income against the consolidated financial forecast was 57.4%. The forecast remains unchanged due to the uncertainties in the external environment.

・The progress of net income for the six months ended September 30, 2022 against the consolidated financial forecast for the year ending March 31, 2023 (net income attributable to owners of the parent of ¥110.0 billion) was 57.4%.

・The forecast remains unchanged taking into account the growing uncertainties in the external environment, such

as the risk of recession mainly in Europe and the U.S., in the second half of this fiscal year.
				(Billions of yen)
	For the six months	For the six months		Change (%)
	ended September 30, 2021	ended September 30, 2022
Revenues	833.3	944.7		13.4
Gross profit	161.1	177.9		10.4
Operating income	58.1	74.1		27.5
Recurring income	59.0	75.7		28.2
Quarterly net income
attributable to owners	60.4	63.1		4.5
of the parent

2) Major topics

In May 2022, the Company released the "Medium- to Long-term Management Direction" which describes "Our 10-year Vision (Together we innovate, challenge and explore the frontiers of the future)" and shows how the Company wants to be recognized by the Company's stakeholders and how the Company should transform to become such a company to realize "Our 10-year Vision". The Company defined the three-phaseMedium-term Management Plans covering the next ten years as "hop," "step," and "jump," and are now discussing specific management and business strategies and KPIs for the new Medium-term Management Plan covering the three-year period from the year ending March 31, 2024 to the year ending March 31, 2026 ("2025 M-T Plan") defined as "hop," during the process of developing the plan.

In accordance with the United Nations "Guiding Principles on Business and Human Rights," the Company established the "Human Rights Policy" and announced it in October 2022. The Company will proactively and continuously conduct its business activities in consideration of internationally recognized standards related to human rights, in order to fulfill its duty to respect human rights as expected of global companies, for achieving a society where human rights are respected.

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(Major business topics)

・May 2022: Announced the acquisition of partial stake of distributed solar power generation project in Massachusetts, the U.S.

Also completed an eco-friendlymulti-tenants logistics facility "CPD Nagoya Minato".

・Jul. 2022: Built a new solar power plant next to the Akita Tenbinno Wind Power Plant which was built in Akita city, Akita prefecture in September 2015 and started commercial operation as a wind and solar hybrid power plant which enables stable power supply throughout the year because wind and solar power generate electricity efficiently at different times of the day and year.

Also invested in a newly established subsidiary of Mitsubishi Corporation, which undertakes the warehouse DX operations that have been developed by Mitsubishi Corporation, with an aim to solve social issues in the logistics industry such as labor shortages and environmental impact through the cross-industrial partnership.

・Sep. 2022: Completed an eco-friendly logistics facility "CPD Nishiyodogawa"

・Oct. 2022: Resolved the merger of CAI International, Inc. and Beacon Intermodal Leasing, LLC (scheduled to come into effect in January 2023), both operating marine container leasing business, with an aim to enhance the competitiveness of the business in the global market by enforcing group governance, effectively using management resources, and creating additional value as a result of accelerated integration of technology and know-how. Also intend to further strengthen and expand the business to make it as a leading force that supports the mid- to long-term growth of the Company by incorporating the growth opportunity of marine container leasing business.

3) Operating results by reportable segments

Operating results by reportable segments were as follows.

Following the organizational changes effective April 1, 2022, the reportable segments were changed to the following seven segments.

(For details of new reportable segments, please refer to "2. Quarterly Consolidated Financial Statements and Major Notes, (3) Notes to the Quarterly Consolidated Financial Statements (Segment information)" on page 13.)

Figures for the six months ended September 30, 2021 and for the year ended March 31, 2022 were converted into new reportable segments.

(Customer Solutions)

Segment profit increased by ¥2.2 billion, or 12.4% year on year, to ¥20.6 billion mainly thanks to large gains on sales related to real estate leasing and a decrease in credit costs.

(Global Business)

Segment profit decreased by ¥5.7 billion, or 19.7% year on year, to ¥23.6 billion due to the absence of large gains on sales of strategic shareholdings posted for the six months ended September 30, 2021 despite the factors contributing to profit increase such as the business growth of the subsidiaries mainly in Europe and Americas, a decrease in credit costs, and posting of gains on valuation of securities at an European subsidiary.

(Environment, Energy & Infrastructure)

Segment profit increased by ¥4.2 billion, or 382.2% year on year, to ¥5.4 billion mainly thanks to an increase in profits from equity-method investments accompanied with starting commercial operation of a wind power generation project in Europe and gains on sales of equity interests in certain projects in the infrastructure business.

(Aviation)

Segment profit decreased by ¥6.9 billion year on year to a loss of ¥2.7 billion mainly due to exchange revaluation losses related to foreign currency-denominated borrowings in JOLCO (Japanese Operating Lease with Call Option) resulted from the weakening yen, an absence of gains on valuation of certain receivables from bankrupt debtors recorded for the six months ended September 30, 2021 and posting of an impairment loss, despite the recovery trend in the business that are shown by an increase in lease revenues, a decrease in credit costs and so on.

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