DAIKYO INCORPORATED : 2Q Financial Results

Consolidated Financial Results for the Second Quarter Ended September 30, 2018 (J-GAAP)

(Unaudited)

October 26, 2018

Listed company: Securities code:DAIKYO INCORPORATED 8840

Listed stock exchange: Tokyo URL:http://www.daikyo.co.jp

Representative: Contact:Kazuo Kojima, President and Representative Executive Officer Hideki Morimoto, General Manager, Group Corporate Planning Dept.

Planned date of the filing of quarterly report:	November 7, 2018
Planned dividends payment commencement date:	-
2Q earnings presentation materials:	Yes
Holding of 2Q earnings announcement:	Yes (for institutional investors and analysts)
(Amounts of less than one million yen are truncated)

1. Consolidated Performance for the Six Months Ended September 30, 2018 (April 1, 2018 to September 30, 2018)

(1) Consolidated operating results (Cumulative)			(% figures show year-on-year change) (Millions of yen)
Net sales	Operating income		Ordinary income	Profit attributable to owners of parent
Six months ended September 30, 2018 Six months ended September 30, 2017	130,645 (2.2)% 133,640 (8.9)%	1,165 (24.8)% 1,550 (76.5)%		1,023 (25.5)% 1,373 (78.3)%	(297) - 650 (83.7)%

(Note) Comprehensive income: Six months ended September 30, 2018: ¥(224) million / -%

Six months ended September 30, 2017: ¥686 million / (83.0)%

Net income per share	Fully diluted net income per share
Six months ended September 30, 2018 Six months ended September 30, 2017	(¥3.69) ¥7.76	- ¥7.66

(Note) The Company consolidated common stock and Class 1 preferred stocks at a ratio of 10 shares to one with an effective date of

October 1, 2017. As a result, net income per share and fully diluted net income per share were calculated on the assumption that this share consolidation took place at the beginning of the previous consolidated fiscal year.

(2) Consolidated financial position		(Millions of yen except for %)
Total assets		Net assets	Shareholders' equity ratio
As of September 30, 2018 As of March 31, 2018	259,789 276,417		172,823 180,356	66.5 65.2

(Reference) Shareholders' equity:

As of September 30, 2018: ¥172,816 million; As of March 31, 2018: ¥180,356 million

2. State of Dividends

Annual dividends (Yen)
1Q-end	2Q-end	3Q-end	Year-end	Total
Fiscal year ended March 31, 2018 Fiscal year ending March 31, 2019	- -	0.00	-	60.00	60.00
		0.00
Fiscal year ending March 31, 2019 (Forecast)	-	0.00	0.00

(Notes)

• 1. Revisions to the latest performance forecast: Yes

• 2. The above "State of Dividends" is only the status of dividends from common stock. Please refer to "State of Dividends from Class Stock" for the state of dividends from class stock (unlisted) issued by DAIKYO INCORPORATED ("the Company") with different rights from common stock.

3. Consolidated Performance Forecast for the Fiscal Year Ending March 31, 2019 (April 1, 2018 to March 31, 2019)

(% figures show year-on-year change) (Millions of yen)

Net sales	Operating income	Ordinary income	Profit attributable to owners of parent	Net income per share
Full-year	365,000 8.9%	22,000 9.0%	20,500 3.6%	14,000 1.1%	174.20

(Note) Revisions to the latest performance forecast: None

Disclaimer

This document was prepared in English for convenience purposes only. The original Japanese document shall take precedence in the event of any discrepancies arising from the translations or interpretations contained in this document.

* Notes

• (1) Changes in significant subsidiaries during the six months under review (changes in specified subsidiaries resulting in change in scope of consolidation): None

• (2) Application of special accounting treatment for the preparation of quarterly consolidated financial statements: None

• (3) Changes in accounting policies and estimates, or retrospective restatements

  • (i) Change in accounting policies in accordance with revision of accounting standards: None

  • (ii) Change in accounting policies other than item (i) above: None

  • (iii) Change in accounting estimates: None

  • (iv) Retrospective restatements: None

• (4) Number of shares issued (common stock)

(Unit: share)

1) Number of issued shares at end of period (including treasury stock):	Sep. 30, 2018	84,354,273	Mar. 31, 2018	84,354,273
2) Number of shares of treasury stock at end of period:	Sep. 30, 2018	4,354,872	Mar. 31, 2018	3,292,427
3) Average number of shares during period	Apr.-Sep. 2018	80,679,974	Apr.-Sep. 2017	83,884,168

(Note) The Company consolidated common stock at a ratio of ten shares to one with an effective date of October 1, 2017. As a result, average number of shares during period was calculated on the assumption that this share consolidation took place at the beginning of the previous consolidated fiscal year.

* This summary report is not subject to audit by a certified public accountant or an audit corporation.

* Explanation of the appropriate use of performance forecasts; other points to note

• 1. Forward-looking statements in this document, including the performance outlook, etc. were written based on information the Company has at this time and certain assumptions the Company considers to be reasonable. Actual performance may differ from the forecast figures due to various factors.

• 2. Earnings presentation materials for the second quarter (Fact sheet) will be posted on TDnet on the day of the earnings announcement, and also on the Company's website.

• 3. On October 29, 2018, the Company plans to hold an earnings announcement for institutional investors and analysts regarding results for the second quarter. The earnings presentation materials used on that day will be posted on the Company's website after the announcement.

State of Dividends from Class Stock

The breakdown of the dividends per share from class stock with different rights from common stock is as follows:

(Class 1 preferred stock)

Annual dividends (Yen)
1Q-end	2Q-end	3Q-end	Year-end	Total
Fiscal year ended March 31, 2018 Fiscal year ending March 31, 2019	- -	- -	-	75.12	75.12
Fiscal year ending March 31, 2019 (Forecast)	0.00	0.00
			-

1. Qualitative Information on Consolidated Performance in the Second Quarter

(1) Explanation of the consolidated operating results

During the six months ended September 30, 2018, net sales decreased ¥2,994 million, or 2.2% year on year, to ¥130,645 million. Operating income was ¥1,165 million, down ¥385 million, or 24.8% year on year, and ordinary income was ¥1,023 million, down ¥350 million, or 25.5%. Loss attributable to owners of parent was ¥297 million, while in the previous year profit attributable to owners of parent was ¥650 million.

(Millions of yen)

Category	Six months ended September 30, 2017	Six months ended September 30, 2018	Change
Net sales	133,640	130,645	(2,994)
Operating income	1,550	1,165	(385)
Ordinary income	1,373	1,023	(350)
Profit (loss) attributable to owners of parent	650	(297)	(948)

Performance by segment is described below. Please note that amounts for each segment include intersegment transactions.

Performance by Segment

(Millions of yen)

Category	Six months ended September 30, 2017		Six months ended September 30, 2018		Change
	Net sales	Operating income	Net sales	Operating income	Net sales	Operating income
Real Estate Management	77,519	4,174	75,769	4,153	(1,749)	(20)
Real Estate Brokerage	29,419	1,239	31,080	1,769	1,661	529
Real Estate Development and Sales	29,963	(2,234)	26,071	(2,672)	(3,892)	(437)
Adjustments (Eliminations or Corporate Assets/Expenses)	(3,261)	(1,629)	(2,275)	(2,085)	985	(456)
Total	133,640	1,550	130,645	1,165	(2,994)	(385)

1) Real Estate Management

Net sales increased ¥1,577 million over the previous year to ¥23,941 million for building and facility management, but net sales for repair and maintenance work for condominiums decreased by ¥4,554 million to ¥14,179 million. As a result, net sales in the real estate management business decreased ¥1,749 million to ¥75,769 million and operating income fell ¥20 million to ¥4,153 million.

Beginning with the first quarter of this consolidated fiscal year, we have changed business classifications from a breakdown by product and service to a breakdown in company units based on the main products and services ("condominium management," "repair and maintenance work for condominiums," and "building and facility management") in order to augment information disclosure. For this reason, comparisons are made using figures for the same period in the previous year which have been restated to match the reported segment classification after the change.

Category	Six months ended September 30, 2017	Six months ended September 30, 2018	Change
Condominium Management	37,227	38,269	1,042
Condominium Repair and Maintenance Work, etc.	18,734	14,179	(4,554)
Building and Facility Management	22,363	23,941	1,577
Eliminations	(806)	(620)	185
Total	77,519	75,769	(1,749)

Category	As of September 30, 2017		As of September 30, 2018	Change
Number of Condominium Units under Management	531,798		534,645	2,847

Category	As of September 30, 2017	As of September 30, 2018	Change
Orders	5,888	6,307	418
Sales	5,483	5,930	446
Backlog of Orders*	2,286	2,334	48

Breakdown of Net Sales	(Millions of yen)
Condominium Management
・Number of Condominium Units under Management	(units)
・Contract Work	(Millions of yen)
*The backlog of order is the balance at the end of the fiscal period.
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