Financial Section [PDF : 86KB]

Financial Section

Analysis of Financial Condition and

Business Performance

Five-Year Summary

Haseko Corporation and its Consolidated Subsidiaries (Years ended March 31, 2017, 2018, 2019, 2020 and 2021)

			Millions of Yen
	2017	2018	2019	2020	2021
For the Year:					¥809,438
Net sales	¥772,328	¥813,276	¥890,981	¥846,029
Cost of sales	629,454	656,031	733,130	699,268	673,207
Selling, general and administrative expenses	53,842	56,440	59,421	60,837	63,322
Operating income	89,032	100,805	98,430	85,925	72,909
Ordinary income	88,827	100,497	100,369	85,253	71,832
Income before income taxes	78,256	101,021	121,241	87,155	70,866
Net income attributable to owners of parent	58,762	72,289	87,391	59,851	48,258
For the Year:					31,876
Cash flows from operating activities	109,536	56,516	33,064	(15,263)
Cash flows from investing activities	(19,824)	(16,351)	(14,473)	(37,222)	(35,772)
Cash flows from financing activities	(40,213)	(34,743)	(12,379)	(8,356)	66,799
Cash and cash equivalents at end of the year	201,456	206,866	212,980	151,754	214,299
At Year-end:					¥689,527
Total current assets	¥478,611	¥505,271	¥568,303	¥572,334
Total assets	630,937	687,706	773,219	799,319	953,659
Total current liabilities	270,002	280,896	287,317	247,346	271,963
Total long-term liabilities	122,469	109,975	117,851	164,291	287,331
Total shareholders' equity	245,358	301,245	373,645	401,187	402,855
Net assets	238,467	296,835	368,051	387,682	394,365
			Yen
Per Share Data:
				¥168.62
Net income attributable to owners of parent	¥195.48	¥241.98	¥293.87	¥201.36
Net assets	791.24	995.44	1,234.13	1,323.51	1,425.93
Ratios:					17.0
Profit ratio of construction contracts (%)	19.2	21.1	18.6	17.6
Operating income ratio (%)	11.5	12.4	11.0	10.2	9.0
Equity ratio (%)	37.7	43.0	47.5	48.5	41.4
Return on equity (%)	27.8	27.1	26.4	15.9	12.3
Price/Earnings ratio (times)	6.16	6.69	4.74	5.75	9.19
Payout ratio (%)	15.3	20.7	27.2	34.8	41.5
Number of employees	6,602	6,816	6,974	7,315	7,415

Financial Section

1. Business Performance for the Fiscal Year Ended March 2021

In the fiscal year ended March 2021, the Japanese economy remained in a severe situation under the impact of the spread of COVID-19 continuing from the latter half of the previous fiscal year. Under such circumstances, new supply of condominium units in the fiscal year under review stood at 29,032 units (up 1.6% year on year) in the Tokyo metropolitan area and 16,239 units (down 7.0% year on year) in the Kinki area. Impacted by the spread of COVID- 19, new supply in the first quarter of the fiscal year decreased significantly year on year. It made an upward turn, however, in the second quarter and thereafter, with the annual figure surpassing the year-earlier results in the Tokyo metropolitan area. The initial-month sales rate, which serves as the benchmark for the status of sales, was 67.9% (up 6.6 percentage points year on year) in the Tokyo metropolitan area. Although it remained at the 60% level for the fifth consecutive year, the rate turned to an increase from the previous fiscal year. In the Kinki area, the figure surpassed 70% to stand at 72.5% (down 0.6 percentage points year on year). The number of for-sale units being marketed as of the end of March 2021 decreased to 7,357 units (down 6.7%) in the Tokyo metropolitan area, where inventory sales also remained strong, while the figure increased to 3,528 units (up 29.2%) in the Kinki area, partly due to recovery in new supply of condominium units in the second quarter and thereafter. An analysis of products supplied in the fiscal year shows that the unit price stayed almost flat at 905 thousand yen/m2 (up 0.4%) in the Tokyo metropolitan area, but the average market price dropped to 59.94 million yen (down 1.0%) as the average unit space decreased to 66.20 m2 (down 1.5%), compared with the previous fiscal year. In the Kinki area, the average market price rose to 41.60 million yen (up 6.6%), as the unit price increased to 698 thousand yen/m2 (up 1.0%) and the average unit space expanded to 59.62 m2 (up 5.5%) due to a significant decrease in the supply of condominiums with studio units.

Operating income and Operating income ratio

Operating income Operating income ratio

(Billions of yen)		(%)
120.0		16
	100.8	98.4

Given such situations, for the fiscal year under review, which represents the first year of the "Haseko Next Stage Plan" (Plan NS), the Company's medium-term business plan, the Haseko Group steadily accumulated profits as deliveries of new for-sale condominiums by consolidated companies in the Real Estate- Related Business progressed smoothly, although the gross profit margin of completed construction contracts in the Construction- Related Business decreased and the Service-Related Business saw the volume of construction works in large-scale repairs, interior remodeling and management of for-sale condominiums significantly impacted by COVID-19. Consequently, the Haseko Group achieved ordinary income of 71.8 billion yen, surpassing 70.0 billion yen forecast at the beginning of the fiscal year.

As a result of the above, both sales and profits for the fiscal year ended March 2021 decreased year on year. Net sales fell by 4.3% to 809.4 billion yen mainly due to a decrease in the volume of condominium construction works. Operating income was down 15.1% at 72.9 billion yen due to the decrease in the volume of condominium construction works as well as a decrease in profit on construction associated with lowered gross profit margin of completed construction contracts for condominium construction works. Ordinary income stood at 71.8 billion yen, down 15.7%, and net income attributable to owners of parent decreased 19.4% to 48.3 billion yen, both compared with the previous fiscal year. The operating income ratio was 9.0% (down 1.2 percentage points) and ordinary income ratio came to 8.9% (down 1.2 percentage points)

(2) Performance by Segment

As the Company positioned "expansion of investment in real estate-related business" as one of its new focused strategies in the medium-term business plan that started in the current fiscal year, it changed the classification of its reportable segments, in which

Profit ratio of construction contracts

(%)

24

21.1

19.2

18.6 17.6

89.0			85.9
90.0																						12
					12.4								72.9
11.5
					11.0
					10.2
60.0																		9.0		8
30.0																						4

18

12

6

17.0

0						0
2017	2018	2019	2020	2021

Years ended in March

0

2017 2018 2019 2020 2021

Years ended in March

Financial Section

Analysis of Financial Condition and

Business Performance

Performance by segment is described below.

											Billions of yen
	Construction-Related Business		Real Estate-Related Business	Service-Related Business		Overseas-Related Business
Net sales	611.9	(-19.0)	74.3	(+4.7)		185.7	(-8.4)	0.7	(+0.3)
Operating income	64.6	(-9.3)	8.5	(-0.0)		7.0	(-4.8)	-1.1	(+2.6)

Figures in parenthesis represent the amount of increase or decrease from the previous fiscal year.

part of the Construction-Related Business and the Service-Related Business has been separated as the Real Estate-Related Business, starting in the first quarter of the fiscal year.

Furthermore, the period-on-period changes stated below represent comparisons with the figures in the previous fiscal year after reclassifying them as categories of the new reporting segments.

Construction-Related Business

For construction works, project owners have had high regard for the Company's ability in gathering land information as well as product planning, its attitude regarding construction quality and maintaining construction schedules, efficient production system, and such. Meanwhile, the gross profit margin of completed construction contracts lowered due to worsened construction profitability upon receiving orders and higher costs of material and labor, among other factors.

In terms of orders for new construction of for-sale condominiums, the Company won orders for 93 projects in total throughout Japan consisting of 67 in the Tokyo metropolitan area including 17 large projects of at least 200 units and 26 in the Kinki and Tokai areas including 11 large projects of at least 200 units. In addition, aside from construction of for-sale condominiums, the Company received orders for 11 projects including non-residential properties.

As for construction completion, the Company completed construction of 107 projects including 13 projects for rental housing, etc.

The segment posted sales of 611.9 billion yen, a year-on- year decrease of 3.0%, mainly due to the decrease in the volume of

Sales breakdown by reportable segment

condominium construction works. Operating income totaled 64.6 billion yen, a year-on-year decrease of 12.6%, due to the decrease in the volume of condominium construction works as well as a decrease in profit on construction associated with lowered gross profit margin of completed construction contracts for condominium construction works.

Real Estate-Related Business

The Company saw a drop in the real estate handling volume, partly because of the reaction to the sale of large rental properties conducted in the previous fiscal year. However, the segment posted sales of 74.3 billion yen, a year-on-year increase of 6.8%, as deliveries of new for-sale condominiums by consolidated companies progressed smoothly. Operating income remained flat from the previous fiscal year at 8.5 billion yen, down 0.0%.

Service-Related Business

Sales and profits for large-scale repair work and interior remodeling decreased year on year, partly due to management associations suspending their activities in accordance with the first declaration of a state of emergency (issued in April 2020). Orders received surpassed the year-earlier results, however, as management associations gradually resumed activities in the second quarter of the fiscal year and thereafter.

In the management of rental condominiums and corporate housing management agency services, the number of units Haseko operates reached a combined total of 169,235 units, an increase of 3.5% from the end of the previous fiscal year, due to a steady increase in new consignment of these services and continuation of ongoing consignment.

In consigned sales of newly built condominiums, although model rooms for condominium sales were closed in accordance with the first declaration of a state of emergency, the number of

(Billions of yen)

1,000

750

630.9611.9

500

250	69.5	74.3
	194.1	185.7
0	0.4	0.7
	2020	2021
		Years ended in March

Construction-related business

Real estste-related business

Service-related business

Overseas-related business

contracted units increased year on year as the number of visitors to the model rooms gradually returned to a recovery trend.

In real estate brokerage operations, the number of brokered units and the number of sold units in the renovation business had remained lower than the year-earlier results through the end of the second quarter of the fiscal year, but both increased year on year for the entire fiscal year as they picked up in the third quarter and thereafter.

In for-sale condominium management operations, the number of units the Haseko Group is consigned to manage reached 410,412 units (up 0.6% year on year) as new consignment remained strong partly thanks to reinforced marketing activities in Kyushu and other regional areas.

Financial Section

In the senior services business, the number of paid facilities for the elderly and housing for the elderly in operation totaled 2,281 units (down 1.3% year on year) due to restrictions on sales activities in accordance with the first declaration of a state of emergency, among other factors.

As a result of the above, the segment posted sales of 185.7 billion yen, or down 4.3%, and operating income of 7.0 billion yen, or down 40.8%, both on a year-on-year basis.

Overseas-Related Business

Real estate sales increased as the Company sold the land for wedding facilities adjacent to retail facilities under development in Oahu, Hawaii. As for the new for-sale detached housing business, progress was made in the procedures required for starting construc- tion. The segment posted sales of 0.7 billion yen, up 60.9% year on year, and operating loss of 1.1 billion yen (in contrast to operating loss of 3.8 billion yen in the previous fiscal year).

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Major Customers

Construction		Design and supervision		Sales of real estate
	Construction
Construction and sales of
		Lease of real estate
	Sales of real estate
detached house
				Lease of real estate
			Haseko Corporation
		Construction					Design and supervision
			Design and supervision			Construction
		Planning, design				Consignment sales and
		and supervision		Construction			brokerage of real estate
		Sales and lease of					Condominium management
		construction materials					Rental apartment
								management

Interior improvement Extensive refurbishment Rental apartment management

Consignment sales and brokerage of real estate

Condominium management Lease of real estate

Senior housing management

Sales of detached house

Construction-related		Real estate-related		Service-related
Business		Business		Business
5 consolidated subsidiaries		3 consolidated subsidiaries		18 consolidated subsidiaries
		Haseko Anesis Corporation	Haseko Community, Inc.
Fujikensetsu Co., Ltd.		Haseko Real Estate
		Haseko Reform Inc.	Haseko Community Kyushu Inc.
Hasec Inc.		Development Holdings Inc.		Haseko Livenet, Inc.	Haseko Community Nishinihon Inc.
Foris Corporation		Haseko Real Estate		Haseko Business Proxy, Inc.	Haseko Community Okinawa Inc.
Hosoda Corporation		Development, Inc.		Haseko Urbest Inc.	Joint Property Co., Ltd.
HC Katsushimacho Jutaku		Sohgoh Real Estate Co., Ltd.		Haseko Real Estate Inc.	Haseko Senior Holdings Co., Ltd.
Co., Ltd.		2 non-consolidated		Haseko Intech Inc.	Century Life Co., Ltd.
			Haseko Systems Inc.	Seikatsu Kagaku Un-Ei Co., Ltd.
9 non-consolidated		subsidiaries
		Haseko Property Management	Other 1 consolidated subsidiary
subsidiaries
				Holdings Inc.
1 affiliate
				7 non-consolidated subsidiaries
					Overseas-related
					Business
			34 consolidated subsidiaries	3 affiliates accounted for by
				Haseko America, Inc.	the equity method
				Haseko Homeloans, LLC
				Other 33 consolidated subsidiaries
				Duarte Multifamily, LLC
			1 non-consolidated subsidiaries	Duarte Multifamily II, LLC
			1 affiliate

Financial Section

(3) Financial Position	Construction-Related Business
	Assets of the Construction-Related Business amounted to 324.1
Total assets at the end of the consolidated fiscal year ended March	billion yen as of the end of the fiscal year under review, up 23.4
2021 increased by 154.3 billion yen from the end of the previous	billion yen from the end of the previous fiscal year, due to such
fiscal year to 953.7 billion yen. This is attributable to an increase in	factors as increase in real estate for sale in accordance with the
cash and bank deposits as well as an increase in real estate for sale	acquisition of real estate for the purpose of construction orders.
and costs and advances for real estate operations in accordance with

the acquisition of real estate for the purpose of construction orders	Real Estate-Related Business
and acquisition of land for for-sale condominiums, among other	Assets of the Real Estate-Related Business amounted to 304.7
reasons.	billion yen as of the end of the fiscal year under review, up 71.4
Total liabilities were 559.3 billion yen, an increase of	billion yen from the end of the previous fiscal year, as real estate
147.7 billion yen from the end of the previous fiscal year. This	for sale and costs and advances for real estate operations increased
is primarily attributable to borrowing of debt and issuance of	in accordance with steady progress in the purchase of for-sale
corporate bonds.	condominiums, among other factors.
Net assets were 394.4 billion yen, an increase of 6.7 billion yen

from the end of the previous fiscal year, stemming from such factors	Service-Related Business
as increase in retained earnings due to the recording of net income	Assets of the Service-Related Business totaled 186.7 billion yen as
attributable to owners of parent despite payment of cash dividends	of the end of the fiscal year under review, up 25.7 billion yen from
and purchase of treasury stock.	the end of the previous fiscal year, mainly because cash and bank
As a result, the equity ratio was 41.4% compared with 48.5%	deposits increased in accordance with an increase in deposits.
at the end of the previous fiscal year.

The real estate owned by the Haseko Group increased due	Overseas-Related Business
to such factors as acquisition of real estate on a short-term basis	Assets of the Overseas-Related Business increased 8.9 billion yen
for the purpose of construction orders and purchase of for-sale	from the end of the previous fiscal year to 49.0 billion yen as of the
real estate. In this regard, the Company conducts appropriate risk	end of the fiscal year under review due to an increase in real estate for
management in implementing its business operations.			development in accordance with the development of retail facilities as
					well as equity investment in affiliates, among other factors.
Assets by segment are described below.										Billions of yen
	Construction-Related Business		Real Estate-Related Business	Service-Related Business		Overseas-Related Business
Segment assets	324.1	(+23.4)	304.7	(+71.4)		186.7	(+25.7)	49.0	(+8.9)
Figures in parenthesis represent the amount of increase or decrease from the previous fiscal year.

Total assets and Net assets

Net assets Total assets Equity ratio

(Bilions of yen)				(%)
1,000					50
					48.5
			47.5		953.7
			43.0		41.4
800
			799.3	40
		37.7	773.2
600		688.3			30
630.9
400					20
			368.1	387.7	394.4
200		296.8			10
238.5
0					0
	2017	2018	2019	2020	2021

Years ended in March

Real-estate balance

		Inventories		Property and equipment,
(Bilions of yen)		Land leasehold rights

500				480.6
			405.7
400
		325.9
300	289.7			305.7
241.2			250.5
		189.4
200	162.7
128.9
100			155.3	174.9
112.3	127.0	136.6
0
2017	2018	2019	2020	2021

Years ended in March