Summary of Consolidated Financial Results for the Nine Months Ended December 31, 2019

February 14, 2020

Company name:

Japan Post Holdings Co., Ltd.

Stock exchange listing:

Tokyo Stock Exchange

Code number:

6178

URL:

https://www.japanpost.jp/en/

Representative:

MASUDA Hiroya, President & CEO (Representative Executive Officer)

Contact:

TSURUDA Nobuo, Executive Officer, Head of IR Office

Phone:

+81-3-3477-0206

Scheduled date of filing interim securities report:

February 14, 2020

Scheduled date of commencing dividend payments:

-

Trading accounts:

Unestablished

Availability of supplementary briefing material on interim financial results:

Available

Schedule of interim financial results briefing session:

Scheduled (for institutional investors and analysts)

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

1. Consolidated Financial Results for the Nine Months Ended December 31, 2019

(April 1, 2019 to December 31, 2019)

(1) Consolidated Results of Operations

(% indicates changes from the previous corresponding period.)

Ordinary income

Net ordinary income

Net income attributable to

Japan Post Holdings

Million yen

%

Million yen

%

Million yen

%

Nine months ended

9,054,558

(5.5)

688,879

7.8

422,006

7.6

December 31, 2019

Nine months ended

9,582,902

(1.6)

638,839

(13.4)

392,190

4.5

December 31, 2018

(Note) Comprehensive income: Nine months ended December 31, 2019: ¥ 812,826

million [- %]

Nine months ended December 31, 2018: ¥ (589,368) million [- %]

Net income per share

Diluted net income per share

Yen

Yen

Nine months ended

104.37

-

December 31, 2019

Nine months ended

97.00

-

December 31, 2018

(Note) Because there was no potential common stock, the amount for diluted net income per share is omitted.

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio (Note)

Million yen

Million yen

%

As of December 31, 2019

291,271,032

15,655,457

4.7

As of March 31, 2019

286,170,709

14,788,654

4.6

(Reference) Equity: As of December 31, 2019: ¥13,544,581 million

As of March 31, 2019:

¥13,293,508 million

(Note) Equity ratio = [(Net assets - Non-controlling interests) / Total assets] x 100

2. Dividends

Annual dividend

1st

2nd

3rd

Year-end

Total

quarter-end

quarter-end

quarter-end

Yen

Yen

Yen

Yen

Yen

Fiscal year ended March 31, 2019

-

25.00

-

25.00

50.00

Fiscal year ending March 31, 2020

-

25.00

-

Fiscal year ending March 31, 2020

25.00

50.00

(Forecast)

(Note) Revision of dividends forecast to the latest announcement: None

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2020 (April 1, 2019 to March 31, 2020)

(% indicates changes from the previous corresponding period.)

Ordinary income

Net ordinary income

Net income attributable

Net income per share

to Japan Post Holdings

Fiscal year ending

Million yen

%

Million yen

%

Million yen

%

Yen

11,880,000

(7.0)

710,000

(14.5)

420,000

(12.4)

103.87

March 31, 2020

(Note) Revision of financial results forecast to the latest announcement: None

* Notes:

  1. Changes in significant subsidiaries during the fiscal period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): No
  2. Adoption of accounting method specific to preparation of interim consolidated financial statements: No
  3. Changes in accounting policies, changes in accounting estimates and retrospective restatement
    1. Changes in accounting policies due to the revision of accounting standards: Yes
    2. Changes in accounting policies other than 1) above: No
    3. Changes in accounting estimates: No
    4. Retrospective restatement: No

(Note) For details, please refer to [Attachment] "2. Interim Consolidated Financial Statements and Primary Notes (3) Notes to Interim Consolidated Financial Statements (Changes in Accounting Policies)" on page 7.

  1. Total number of shares issued (common stock)
    1. Total number of shares issued at the end of the fiscal period (including treasury stock): As of December 31, 2019: 4,500,000,000 shares

As of March 31, 2019:

4,500,000,000 shares

  1. Total number of treasury stock at the end of the fiscal period: As of December 31, 2019: 456,769,701 shares

As of March 31, 2019:

456,796,001 shares

3) Average number of shares during the fiscal period:

Nine months ended December 31, 2019: 4,043,227,218 shares

Nine months ended December 31, 2018: 4,043,193,975 shares

(Note) The total number of treasury stock at the end of the fiscal period includes the shares of the Company held by the management board benefit trust of 630,500 shares and 656,800 shares as of December 31, 2019 and March 31, 2019, respectively. The number of treasury stock excluded from calculation of the average number of shares during the fiscal period includes the shares of the Company held by the management board benefit trust of 633,581 shares and 666,824 shares for the nine months ended December 31, 2019 and 2018, respectively.

  • This summary of interim consolidated financial results is outside the scope of interim audit procedures by Certified Public Accountants or Audit Firm.
  • Explanation on appropriate use of financial results forecast and other specific matters

Forecasts and other forward-looking statements presented in this document are based on information available to the Company at present and certain assumptions that the Company has deemed reasonable, and the Company provides no assurance that the forecasts will be achieved or with respect to any other forward-looking statements. The actual future results may vary considerably depending upon various factors, such as interest rate fluctuations, stock price fluctuations, foreign exchange fluctuations, asset value fluctuations, changes in the economic and financial environment, changes in the competitive environment, the occurrence of large-scale disasters, etc. and changes in laws and regulations. The company disclaims any responsibility to update any forward-looking statements contained herein to the extent permitted by law or stock exchange rule.

Japan Post Holdings Co., Ltd

[Attachment]

Table of Contents

1. Qualitative Information on Interim Consolidated Financial Results for the Fiscal Period under Review..............

2

(1)

Explanation of Results of Operations.........................................................................................................

2

(2)

Explanation of Financial Position ..............................................................................................................

2

(3)

Explanation of Consolidated Financial Results Forecast and Other Future Projections ............................

2

2. Interim Consolidated Financial Statements and Primary Notes .............................................................................

3

(1)

Interim Consolidated Balance Sheets.........................................................................................................

3

(2)

Interim Consolidated Statements of Income and Interim Consolidated Statements of Comprehensive

Income ........................................................................................................................................................

5

(3)

Notes to Interim Consolidated Financial Statements .................................................................................

7

(Notes on Going-Concern Assumption) .....................................................................................................

7

(Changes in Accounting Policies)...............................................................................................................

7

(Additional Information) ............................................................................................................................

7

(Segment Information) ...............................................................................................................................

9

Supplementary Briefing Material:

Materials for Consolidated Financial Results for the Nine Months Ended December 31, 2019

1

Japan Post Holdings Co., Ltd

1. Qualitative Information on Interim Consolidated Financial Results for the Fiscal Period under Review

(1) Explanation of Results of Operations

Consolidated ordinary income for the nine months ended December 31, 2019 amounted to ¥9,054,558 million (down ¥528,344 million year-on-year), of which the postal and domestic logistics business segment accounted for ¥1,603,644 million (up ¥10,930 million year-on-year); the post office business segment accounted for ¥1,005,632 million (down ¥34,199 million year-on-year); the international logistics business segment accounted for ¥486,696 million (down ¥48,488 million year-on-year); the banking business segment accounted for ¥1,358,473 million (down ¥26,228 million year-on-year); and the life insurance business segment accounted for ¥5,461,552 million (down ¥451,757 million year-on-year). Consolidated net ordinary income amounted to ¥688,879 million (up ¥50,040 million year-on-year) as a result of net ordinary income of ¥120,464 million in the postal and domestic logistics business segment (up ¥30,996 million year-on-year); net ordinary income of ¥52,115 million in the post office business segment (up ¥3,799 million year-on-year); net ordinary loss of ¥15,605 million in the international logistics business segment (net ordinary income of ¥2,759 million for the same period of the previous fiscal year) ; net ordinary income of ¥289,255 million in the banking business segment (up ¥7,422 million year-on-year); and net ordinary income of ¥233,976 million in the life insurance business segment (up ¥19,906 million year-on-year).

As a result of the above, net income attributable to Japan Post Holdings amounted to ¥422,006 million (up ¥29,816 million year-on-year), which comprises consolidated net ordinary income after adjusting for items including extraordinary gains (losses) and provision for reserve for policyholder dividends.

  1. Explanation of Financial Position
    1. Assets

Consolidated total assets were ¥291,271,032 million, up ¥5,100,323 million from the end of the previous fiscal year.

Major factors include an increase in receivables under securities borrowing transactions of ¥3,202,323 million, an increase in receivables under resale agreements of ¥1,991,225 million and an increase in cash and due from banks of ¥1,491,003 million, as well as a decrease in securities of ¥2,010,906 million.

2) Liabilities

Consolidated total liabilities were ¥275,615,575 million, up ¥4,233,520 million from the end of the previous fiscal year.

Major factors include an increase in deposits of ¥2,751,514 million and an increase in payables under repurchase agreements of ¥3,919,200 million, as well as a decrease in policy reserves of ¥1,976,329 million.

3) Net Assets

Consolidated total net assets were ¥15,655,457 million, up ¥866,802 million from the end of the previous fiscal year.

Major factors include an increase in non-controlling interests of ¥615,730 million and an increase in net unrealized gains (losses) on available-for-sale securities of ¥209,886 million.

(3) Explanation of Consolidated Financial Results Forecast and Other Future Projections

The consolidated financial results forecast for the fiscal year ending March 31, 2020 remains unchanged from the full year forecast announced on May 15, 2019.

2

Japan Post Holdings Co., Ltd

2. Interim Consolidated Financial Statements and Primary Notes

(1) Interim Consolidated Balance Sheets

(Millions of yen)

As of March 31, 2019

As of December 31, 2019

Assets

Cash and due from banks

52,244,467

53,735,470

Call loans

550,000

680,000

Receivables under resale agreements

8,368,139

10,359,364

Receivables under securities borrowing transactions

2,792,202

5,994,525

Monetary claims bought

650,638

650,557

Trading account securities

2

45

Money held in trust

6,778,335

8,158,101

Securities

195,647,107

193,636,201

Loans

12,083,499

10,769,958

Foreign exchanges

80,396

89,626

Other assets

2,419,069

2,591,635

Tangible fixed assets

3,155,062

3,267,629

Intangible assets

321,964

304,155

Asset for retirement benefits

50,214

49,987

Deferred tax assets

1,035,930

990,352

Reserve for possible loan losses

(6,323)

(6,580)

Total assets

286,170,709

291,271,032

3

Japan Post Holdings Co., Ltd

(Millions of yen)

As of March 31, 2019

As of December 31, 2019

Liabilities

Deposits

179,625,834

182,377,349

Payables under repurchase agreements

11,569,371

15,488,572

Policy reserves and others

67,093,751

64,966,307

Reserve for outstanding claims

519,568

429,179

Policy reserves

65,060,549

63,084,219

Reserve for policyholder dividends

1,513,634

1,452,908

Payables under securities lending transactions

5,896,268

5,527,802

Commercial papers

28,029

81,985

Borrowed money

281,021

308,835

Foreign exchanges

628

832

Bonds

100,000

100,000

Other liabilities

2,474,349

2,505,792

Reserve for bonuses

122,665

33,519

Liability for retirement benefits

2,236,273

2,253,075

Reserve for employee stock ownership plan trust

839

348

Reserve for management board benefit trust

1,033

1,050

Reserve for reimbursement of deposits

88,332

81,728

Reserve under the special laws

897,492

887,657

Reserve for price fluctuations

897,492

887,657

Deferred tax liabilities

966,160

1,000,717

Total liabilities

271,382,054

275,615,575

Net assets

Capital stock

3,500,000

3,500,000

Capital surplus

4,135,429

4,084,759

Retained earnings

3,799,974

3,995,360

Treasury stock

(831,887)

(831,850)

Total shareholders' equity

10,603,516

10,748,269

Net unrealized gains (losses) on available-for-sale

2,580,765

2,790,651

securities

Net deferred gains (losses) on hedges

(55,415)

(121,819)

Foreign currency translation adjustments

(89,350)

(91,667)

Accumulated adjustments for retirement benefits

253,992

219,147

Total accumulated other comprehensive income

2,689,992

2,796,311

Non-controlling interests

1,495,145

2,110,876

Total net assets

14,788,654

15,655,457

Total liabilities and net assets

286,170,709

291,271,032

4

Japan Post Holdings Co., Ltd

  1. Interim Consolidated Statements of Income and Interim Consolidated Statements of Comprehensive Income
    Interim Consolidated Statements of Income Nine months ended December 31

(Millions of yen)

Nine months ended

Nine months ended

December 31, 2018

December 31, 2019

Ordinary income

9,582,902

9,054,558

Postal business income

2,086,553

2,052,823

Banking business income

1,383,328

1,356,644

Life insurance business income

5,913,265

5,461,523

Other ordinary income

199,753

183,566

Ordinary expenses

8,944,062

8,365,678

Operating expenses

6,754,047

6,183,986

Personnel expenses

1,968,795

1,929,521

Depreciation and amortization

200,689

220,232

Other ordinary expenses

20,530

31,939

Net ordinary income

638,839

688,879

Extraordinary gains

11,025

20,914

Gains on sales of fixed assets

1,389

2,811

Gains on negative goodwill

-

48

Reversal of reserve under the special laws

9,096

9,835

Reversal of reserve for price fluctuations

9,096

9,835

Compensation for transfer

110

406

Gains on transfer of business

-

6,245

Other extraordinary gains

428

1,569

Extraordinary losses

15,059

9,871

Losses on sales and disposal of fixed assets

3,297

2,203

Losses on impairment of fixed assets

3,746

1,408

Post office refurbishment expenses

6,027

3,685

Other extraordinary losses

1,988

2,573

Provision for reserve for policyholder dividends

86,643

81,314

Income before income taxes

548,160

618,608

Income taxes current

191,236

196,659

Income taxes deferred

(68,804)

(64,722)

Total income taxes

122,432

131,936

Net income

425,728

486,671

Net income attributable to non-controlling interests

33,538

64,664

Net income attributable to Japan Post Holdings

392,190

422,006

5

Japan Post Holdings Co., Ltd

Interim Consolidated Statements of Comprehensive Income

Nine months ended December 31

(Millions of yen)

Nine months ended

Nine months ended

December 31, 2018

December 31, 2019

Net income

425,728

486,671

Other comprehensive income (loss)

(1,015,096)

326,154

Net unrealized gains (losses) on available-for-sale

(957,702)

438,665

securities

Net deferred gains (losses) on hedges

(15,625)

(74,619)

Foreign currency translation adjustments

(4,677)

(3,624)

Adjustments for retirement benefits

(37,089)

(34,262)

Share of other comprehensive loss of affiliates

(1)

(4)

Comprehensive income (loss)

(589,368)

812,826

Total comprehensive income (loss) attributable to:

Japan Post Holdings

(515,275)

641,146

Non-controlling interests

(74,092)

171,680

6

Japan Post Holdings Co., Ltd

  1. Notes to Interim Consolidated Financial Statements (Notes on Going-Concern Assumption)

None

(Changes in Accounting Policies)

Toll Holdings Limited and its subsidiaries and affiliates

Effective from the beginning of the three months ended June 30, 2019, "Leases" (IFRS 16, January 13, 2016; hereinafter referred to as "IFRS 16") was applied. Accordingly, lessees are required to, in principle, record assets and liabilities for all leases on the balance sheet. IFRS 16 is applied in accordance with transitional treatments, whereby the cumulative amount of impact resulting from this change in the accounting policy is recorded under retained earnings at the beginning of the three months ended June 30, 2019.

As a result, tangible fixed assets increased by ¥176,939 million, other assets decreased by ¥113 million, other liabilities increased by ¥201,252 million, and retained earnings decreased by ¥24,426 million at the beginning of the three months ended June 30, 2019. The effect of this change on profit and loss for the nine months ended December 31, 2019 is immaterial.

(Additional Information)

Japan Post Group promotes thoroughgoing customer-first business operation as one of its critical management priorities. However, at Japan Post Insurance Co., Ltd. (hereinafter referred to as "Japan Post Insurance"), a consolidated subsidiary of the Company, following the internal investigation into the handling of customers' revision of their insurance coverage, it was discovered that in some cases, such revision was carried out in a manner that may have caused disadvantages to customers, not in line with their intentions. Consequently, Japan Post Insurance has been conducting investigations using appropriate procedures, by providing explanations to and receiving advice from the Special Investigative Committee composed of neutral and fair external experts, regarding the methods for confirming customers' intentions as well as for analyzing the information obtained.

The investigations included the investigation of specified rewriting cases to grasp the situation of customers likely to have suffered disadvantages from the rewriting of policies, as well as the investigation of all insurance policies where Japan Post Insurance sent notification documents with reply cards to customers of all other policies that were not subject to the investigation of specified rewriting cases, asking them to reconfirm their intentions and to let Japan Post Insurance know of any points it should be aware of, whereby Japan Post Insurance made necessary responses and investigations according to the results of the reconfirmation.

In conjunction with the progress made in these investigations until December 31, 2019, the Company, with regard to the investigation of specified rewriting cases, has reasonably estimated the amounts equivalent to the refund of premiums or payments of insurance claims and others that are necessary for the reinstatement of policies and other actions, and recorded a provision under other liabilities. Furthermore, with regard to the cases which have been discovered, as a result of the investigation of all insurance policies, likely to have caused disadvantages to customers based on their replies and opinions, the Company has reasonably estimated the expenses to be incurred in order to make payments to customers to compensate for their disadvantages, and recorded a provision under other liabilities. These amounts totaled ¥4,053 million.

Due to the investigation of all insurance policies, the Company grasped cases where the intentions of customers were not confirmed, such as cases where sales personnel repeatedly made many new policy applications and cancellations, which may not have been in line with the intentions of customers. The impact of these cases on the financial results of the Company could not be reasonably estimated, and accordingly, such impact has not been reflected on the interim consolidated financial statements for the nine months ended December 31, 2019.

On December 27, 2019, the Company and its consolidated subsidiary Japan Post Co., Ltd. received administrative dispositions pursuant to the Insurance Business Act, etc. from the Minister for Internal Affairs and Communications and the Financial Services Agency of Japan, on account of improper solicitation actions and underlying systematic problems. In addition, Japan Post Insurance received administrative dispositions

7

Japan Post Holdings Co., Ltd

pursuant to the Insurance Business Act from the Financial Services Agency of Japan. Following the administrative dispositions, a business improvement plan was formulated and it was submitted to the Minister for Internal Affairs and Communications and the Financial Services Agency of Japan as of January 31, 2020. Japan Post Group accepts the seriousness of administrative dispositions and is resolved to treat the implementation of the business improvement plan that it formulated as its top-priority management issue, and is making group-wide efforts. Furthermore, the progress in the investigations to be conducted based on the business improvement plan and other factors may affect the financial results of Japan Post Group in the future.

8

Japan Post Holdings Co., Ltd

(Segment Information)

1. Ordinary income and segment profit (loss) of reportable segments

(Millions of yen)

Reportable Segments

Postal and

International

Life

Other

Total

domestic

Post office

Banking

logistics

insurance

Subtotal

business

logistics

business

business

business

business

business

Ordinary income

Ordinary income from

1,567,704

141,960

486,575

1,356,644

5,461,523

9,014,408

39,368

9,053,777

third parties

Intersegment ordinary

35,939

863,672

121

1,828

29

901,591

286,345

1,187,936

income

Total

1,603,644

1,005,632

486,696

1,358,473

5,461,552

9,915,999

325,713

10,241,713

Segment profit (loss)

120,464

52,115

(15,605)

289,255

233,976

680,208

229,886

910,094

(Notes) 1. Ordinary income is presented instead of net sales which is typical for companies in other industries.

2. "Other business" includes the hotel business and hospital business. Segment profit in "Other business" includes dividend income from subsidiaries and affiliates recorded by the Company in the amount of ¥219,083 million.

2. Reconciliation between total segment profit (loss) of reportable segments and net ordinary income on the interim consolidated statements of income

(Millions of yen)

Items

Amount

Total segment profit (loss) of reportable segments

680,208

Segment profit in other business

229,886

Eliminations of intersegment transactions

(218,972)

Adjustments

(2,242)

Net ordinary income on the interim consolidated

688,879

statements of income

(Note) "Adjustments" are primarily due to differences in the calculation methods used for segment loss for the international logistics business segment and net ordinary income on the interim consolidated statements of income.

9

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Japan Post Holdings Co. Ltd. published this content on 14 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 February 2020 07:53:08 UTC