Mitsubishi HC Capital : Consolidated Financial Highlights for the First Quarter Ended June 30, 2023

Consolidated Financial Highlights for the First Quarter Ended June 30, 2023

[Based on J-GAAP]

August 10, 2023

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:

Taiju Hisai, Representative Director, President & CEO

For Inquiry:

Haruhiko Sato, Director, Managing Executive Officer

TEL: [phone]

Scheduled Date of Submission of Financial Reports:

August 10, 2023

Scheduled Commencement of Dividend Payment:

－

Supplemental Material for Financial Results:

Available

Holding of Financial Results Meeting:

No

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

1. Consolidated Results for the First Quarter Ended June 30, 2023 (April 1, 2023 - June 30, 2023)

(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, 2023

476,814

3.6

36,289

(10.3)

37,754

(10.0)

35,108

9.6

June 30, 2022

460,347

12.9

40,471

95.2

41,931

103.3

32,046

(3.4)

(Note) Comprehensive income:

For the three months ended June 30, 2023:

¥96,193 million

(17.7%)

For the three months ended June 30, 2022:

¥116,914 million

145.4%

Earnings per share

Diluted

earnings per share

For the three months ended

(Yen)

(Yen)

June 30, 2023

24.44

24.37

June 30, 2022

22.32

22.26

(2) Consolidated Financial Position

Total assets

Total equity

Equity ratio

As of

(Millions of yen)

(Millions of yen)

%

June 30, 2023

11,146,942

1,615,972

14.3

March 31, 2023

10,726,196

1,551,029

14.3

(Reference) Shareholders' equity:

As of June 30, 2023:

¥1,590,569 million

As of March 31, 2023: ¥1,528,773 million

2. Dividends

Dividends per share

1st Quarter end

2nd Quarter end

3rd Quarter end

Fiscal year - end

Annual

For the fiscal year

(Yen)

(Yen)

(Yen)

(Yen)

(Yen)

ended March 31, 2023

－

15.00

－

18.00

33.00

ending March 31, 2024

－

ending March 31, 2024

18.00

－

19.00

37.00

(Forecast)

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

3. Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2024 (April 1, 2023 - March 31, 2024)

(Year-on-year change %)

	Net income attributable to	Earnings per share
	owners of the parent
	(Millions of yen)		%	(Yen)
Full year	120,000		3.2	83.55

(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)	:	Yes
Excluded: Japan Infrastructure Initiative Company Limited
(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 June 30, 2023	1,466,912,244	shares	As of March 31, 2023	1,466,912,244	shares
As of June 30, 2023	30,645,630	shares	As of March 31, 2023	30,718,231	shares
For the three months	1,436,244,628	shares	For the three months	1,435,962,386	shares
ended June 30, 2023	ended June 30, 2022

• This "Consolidated Financial Highlights" is outside the scope of review procedure 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. ("Company" or "we") 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 First Quarter Ended June 30, 2023	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	11
Comprehensive Income
Quarterly Consolidated Statements of Income
For the Three Months ended June 30, 2023 and 2022	11
Quarterly Consolidated Statements of Comprehensive Income
For the Three Months ended June 30, 2023 and 2022	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

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1. Qualitative Information concerning Financial Results for the First Quarter Ended June 30, 2023

1. Summary of Operating Results

1. Overview of Financial Results, etc.

Gross profit increased by ¥1.3 billion, or 1.5% year on year, to ¥94.6 billion.

・Gross profit increased by ¥1.3 billion, or 1.5% year on year, to ¥94.6 billion mainly thanks to the business growth in the Aviation segment and the positive effects in the Global Business segment by adjusting fiscal period associated with the reorganization of subsidiaries in the Americas, while lowered profitability caused by rising cost of funds in subsidiaries mainly in Europe and the Americas in the Global Business segment and the negative effects by the deconsolidation of Diamond Asset Finance Company Limited and Mitsubishi HC Capital Auto Lease Corporation in the fiscal year ended March 31, 2023.

Recurring income decreased by ¥4.1 billion, or 10.0% year on year, to ¥37.7 billion.

・Recurring income decreased by ¥4.1 billion, or 10.0% year on year, to ¥37.7 billion mainly due to an increase in expenses associated with the promotion of business activities in subsidiaries mainly in Europe and the Americas and an increase in credit costs in the Americas in line with the worsening market condition in the Global Business segment.

Net income attributable to owners of the parent increased by ¥3.0 billion, or 9.6% year on year, to ¥35.1 billion.

・Net income attributable to owners of the parent increased by ¥3.0 billion, or 9.6% year on year, to ¥35.1 billion mainly thanks to posting of extraordinary income in the Real Estate segment as a result of making CenterPoint Development Inc. our wholly-owned subsidiary.

・The progress of net income for the three months ended June 30, 2023 against the financial forecast for the fiscal year ending March 31, 2024 (net income attributable to owners of the parent of ¥120.0 billion) was 29.3%.

			(Billions of yen)
	For the three months	For the three months	Change (%)
	ended June 30, 2022	ended June 30, 2023
Revenues	460.3	476.8	3.6
Gross profit	93.2	94.6	1.5
Operating income	40.4	36.2	(10.3)
Recurring income	41.9	37.7	(10.0)
Quarterly net income
attributable to owners	32.0	35.1	9.6
of the parent

2) Major topics

Formulation and announcement of the Medium-term Management Plan for FY2023 - FY2025 ("2025 MTMP")

The Company formulated the Medium-term Management Plan covering the three-year period from the fiscal year ending March 31, 2024 to the fiscal year ending March 31, 2026 (the "2025 MTMP"), which was announced in May 2023. The 2025 MTMP is positioned as the "hop" plan of our three Medium-term Management Plans ("hop," "step," and "jump") toward Our 10-year Vision (Together we innovate, challenge and explore the frontiers of the future). We set the financial targets at FY2025 (the fiscal year ending March 31, 2026), the final fiscal year of the 2025 MTMP, as net income attributable to owners of the parent of ¥160.0 billion, ROA of approximately 1.5%, ROE of approximately 10%, and dividend payout ratio during the 2025 MTMP of 40% or higher. Net income attributable to owners of the parent is used in the calculations of ROA and ROE.

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Please refer to "Medium-term Management Plan for FY2023 - FY2025 ("2025 MTMP")" posted on the Company's website for more details of the 2025 MTMP.

(Medium-term Management Plan Page URL on our website)

https://www.mitsubishi-hc-capital.com/english/investors/managementplan/index.html

Major business topics

Apr. 2023:  Announced the conclusion of a virtual PPA (an agreement to transfer non-fossil certificates related to renewable electricity) between Mitsubishi HC Capital Energy Inc., engaged in the renewable energy generation business, and Tokyo Metro Co., Ltd.

• Made CenterPoint Development Inc., a group company engaged in development of logistics facilities and asset management business specializing in logistics facilities, a wholly-owned subsidiary.

May 2023:  Announced the participation in the "GX League" established by Japan's Ministry of Economy, Trade and Industry aiming at transforming economic and social systems towards the realization of carbon neutrality by 2050.

• HSE Ltd., engaged in renewable energy power generation business, launched the renewable energy aggregation business whereby the company predicts renewable energy power generation and prepares power generation plans as well as supply electricity and non-fossil value.

June 2023:  Announced the establishment of "Innovation Investment Fund" with a total of ¥10 billion of funds available for investment in startups with an aim to promote creation of new services and development of new businesses (started operation in April 2023).

July 2023:  Together with Hitachi, Ltd. and Tamakawa Village in Fukushima Prefecture, we launched the second phase of the "Empty-handed cashless verification project" using Hitachi's unique integrated biometric certification infrastructure service.

• Announced the merger of Mitsubishi HC Capital Property Inc. and Mitsubishi HC Capital Community Corporation, engaged mainly in real estate rental business (the merger is scheduled in October 2023).
• Announced the commencement of offering self-consignment service for solar power generation to MinebeaMitsumi Inc. and MITSUMI ELECTRIC CO., LTD. through Godo Kaisha RenetS, which was jointly established with Chuo Electric Power Co., Ltd.

Aug. 2023:  Announced to establish a hub in Silicon Valley in the U.S.A. to strengthen the business intelligence function as part of the innovation initiatives.

3) Operating results by reportable segments

Operating results by reportable segments were as follows.

Following the organizational changes effective April 1, 2023, the name of the reportable segment "Environment, Energy & Infrastructure" was changed to "Environment & Energy" from April 1, 2023.

(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.)

(Customer Solutions)

Segment profit decreased by ¥3.0 billion, or 27.4% year on year, to ¥8.2 billion mainly due to an absence of large gains on sales related to real estate leasing and insurance claim income for a certain deal, both recorded in the three months ended June 30, 2022.

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