Mitsubishi HC Capital : Consolidated Financial Highlights for the First Quarter Ended June 30, 2022

Consolidated Financial Highlights for the First Quarter Ended June 30, 2022

[Based on J-GAAP]

August 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:

August 10, 2022

Scheduled Commencement of Dividend Payment:

－

Supplemental Material for Financial Results:

Available

Holding of Quarterly Financial Results Meeting:

No

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

1. Consolidated Results For the First Quarter Ended June 30, 2022 (April 1, 2022 - June 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 three months ended

(Millions of yen)

%

(Millions of yen)

%

(Millions of yen)

%

(Millions of yen)

%

June 30, 2022

460,347

12.9

40,471

95.2

41,931

103.3

32,046

(3.4)

June 30, 2021

407,735

73.6

20,733

(3.8)

20,622

(7.1)

33,169

132.8

(Note) 1. Comprehensive income:

Three Months Ended June 30, 2022:

¥116,914 million

145.4%

Three Months Ended June 30, 2021:

¥47,643 million

780.4%

1. As the provisional accounting treatment for the business combination executed in the Three Months ended June 30, 2021 was finalized during the Three Months ended September 30, 2021, the net income attributable to owners of the parent for the Three Months ended June 30, 2021 has been adjusted to reflect a significant review of the initial allocation of the acquisition costs.
2. The Company (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 Three Months ended June 30, 2022 represents the comparison with the results of Mitsubishi UFJ Lease & Finance Company Limited.

	Earnings per share	Diluted
	earnings per share
For the three months ended	(Yen)	(Yen)
June 30, 2022	22.32	22.26
June 30, 2021	23.11	23.05

(2) Consolidated Financial Position

	Total assets		Total equity	Equity ratio
As of	(Millions of yen)	(Millions of yen)		%
June 30, 2022	10,733,690	1,426,825		13.1
March 31, 2022	10,328,872	1,333,467		12.7
(Reference) Shareholders' equity:	As of June 30, 2022:		¥1,403,629 million
	As of March 31, 2022:		¥1,309,769 million
2. Dividends
					Dividends per share
	1st Quarter end		2nd Quarter end	3rd Quarter end	Fiscal Year - end	Annual
For the year ended	(Yen)			(Yen)		(Yen)	(Yen)	(Yen)
March 31, 2022	－			13.00		－	15.00	28.00
March 31, 2023	－
March 31, 2023				15.00		－	16.00	31.00
(Forecast)
(Note) Changes from the latest released dividend forecasts: No

3. Consolidated Earnings Forecasts 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 performance forecasts: 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 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 14.

(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 14.

(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 June 30, 2022	1,466,912,244	shares	As of March 31, 2022	1,466,912,244	shares
As of June 30, 2022	30,914,491	shares	As of March 31, 2022	31,056,401	shares
For the Three Months	1,435,962,386	shares	For the Three Months	1,435,570,617	shares
ended June 30, 2022			ended June 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 earnings forecasts, have been prepared using information available to the Company on the date of release and 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 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 First Quarter Ended June 30, 2022	4
(1) Summary of Operating Results	4
(2) Summary of Consolidated Financial Position	7
(3) Explanation on Future Forecast Information including Consolidated Earnings Forecasts	7
2．Quarterly Consolidated Financial Statements and Major Notes	8
(1) Quarterly Consolidated Balance Sheets	8
(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income	10
Quarterly Consolidated Statements of Income
For the Three Months ended June 30, 2022 and 2021	10
Quarterly Consolidated Statements of Comprehensive Income
For the Three Months ended June 30, 2022 and 2021	11
(3) Notes to the Quarterly Consolidated Financial Statements	12
(Segment information)	12
(Notes concerning going concern assumption)	14
(Notes concerning significant changes in shareholders' equity)	14
(Application of accounting treatments specific to the preparation of the quarterly consolidated	14
financial statements)
(Changes in accounting policies)	14
(Additional information)	14

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1. Qualitative Information concerning Financial Results for the First Quarter Ended June 30, 2022

1. Summary of Operating Results

1. Summary of operating results and topics

Summarized results for the Three Months ended June 30, 2022 were as follows.

Net income attributable to owners of the parent decreased by ¥1.1 billion, or 3.4% year on year, to ¥32.0 billion mainly due to an absence of large gain on sales of strategic shareholdings recorded in the Three Months ended June 30, 2021 despite the business growth mainly of the subsidiaries in Europe and the U.S. in Global Business segment, the profit contribution from CAI International, Inc., a marine container leasing company that became our wholly-owned subsidiary in November 2021, and an increase in gain on sales related to real estate business.

In May 2022, the Company has 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)" toward the realization of Our Mission and shows how we want to be recognized by our stakeholders and how we should transform to become such a company. We 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.

Major business topics include (a) an investment in the distributed solar power generation business in Massachusetts, the U.S. in May 2022, (b) the completion of an eco-friendlymulti-tenant logistics facility "CPD Nagoya Minato", (c) the starting operation of the Akita Tenbinno Hybrid Solar Power Plant in Akita in July 2022, which is a solar power plant newly built next to the Akita Tenbinno Wind Power Plant built in September 2015 to enable stable power supply throughout the year because wind and solar power generate electricity efficiently at different times of the day and year, and (d) also in July 2022, an investment 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 this cross-industrial partnership.

			(Billions of yen)
	Three Months Ended	Three Months Ended	Change (%)
	June 30, 2021	June 30, 2022
Revenues	407.7	460.3	12.9
Gross profit	71.3	93.2	30.8
Operating income	20.7	40.4	95.2
Recurring income	20.6	41.9	103.3
Net income attributable to	33.1	32.0	(3.4)
owners of the parent

(Note) As the provisional accounting treatment for the business combination executed in the Three Months ended June 30, 2021 was finalized during the Three Months ended September 30, 2021, net income attributable to owners of the parent for the Three Months ended June 30, 2021 has been adjusted to reflect a significant review of the initial allocation of the acquisition costs.

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2) 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 12.)

Figures for the Three Months ended June 30, 2021 and for the Year ended March 31, 2022 are converted into new reportable segments.

(Customer Solutions)

Segment profit increased by ¥2.9 billion, or 35.5% year on year, to ¥11.2 billion mainly thanks to large gain on sales related to real estate leasing.

(Global Business)

Segment profit decreased by ¥14 billion, or 57.7% year on year, to ¥10.2 billion mainly due to an absence of large gain on sales of strategic shareholdings posted in the Three Months ended June 30, 2021 despite a business growth mainly of the subsidiaries in Europe and the U.S. and a decrease in credit costs.

(Environment, Energy & Infrastructure)

Segment profit increased by ¥1.0 billion, or 117.0% year on year, to ¥1.9 billion mainly thanks to an increase in profits from equity-method investments accompanied with starting operation of a wind power generation project in Europe.

(Aviation)

Segment loss decreased by ¥1.5 billion year on year to ¥0.9 billion mainly due to an increase in lease revenue and a decrease in credit costs although the weakening yen resulted in exchange revaluation losses related to foreign currency-denominated borrowings in JOLCO (Japanese Operating Lease with Call Option).

(Logistics)

Segment profit increased by ¥4.6 billion year on year to ¥4.6 billion mainly thanks to profit contribution from CAI International, Inc. a marine container leasing company that became our wholly-owned subsidiary in November 2021 and steady performance of Beacon Intermodal Leasing, LLC, which also conducts marine container leasing business.

(Real Estate)

Segment profit increased by ¥1.4 billion, or 122.6% year on year, to ¥2.6 billion mainly thanks to an increase in gain on sales despite credit costs posted for a certain project in the U.S.

(Mobility)

Segment profit increased by ¥0.3 billion, or 38.1% year on year, to ¥1.3 billion mainly thanks to an increase in gain on sales of vehicles for which the lease term matured, against a backdrop of strong used car market in Japan.

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