Mitsubishi HC Capital : Consolidated Financial Highlights for the Third Quarter Ended December 31, 2022

Consolidated Financial Highlights for the Third Quarter Ended December 31, 2022

	[Based on J-GAAP]
			February 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:	Takahiro Yanai, Representative Director, President & CEO
For Inquiry:	Satoshi Inoue, Senior Managing Executive Officer TEL: [phone]
Scheduled Date of Submission of Financial Reports:	February 10, 2023
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 Third Quarter Ended December 31, 2022 (April 1, 2022 - December 31, 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 nine months ended	(Millions of yen)		%	(Millions of yen)	%	(Millions of yen)		%		(Millions of yen)	%
December 31, 2022			7.4					33.3		85,927
1,410,472		106,384	30.3	109,666			13.4
December 31, 2021	1,312,987		86.5	81,659	62.3	82,252		55.8		75,748	85.8
(Note) 1. Comprehensive income:	For the nine months ended December 31, 2022:	¥278,478 million	161.8%
	For the nine months ended December 31, 2021:	¥106,367 million	343.3%

2. Mitsubishi HC Capital Inc. (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 nine months ended December 31, 2021 represents the comparison with the results of Mitsubishi UFJ Lease & Finance Company Limited.

	Earnings per share	Diluted
	earnings per share
For the nine months ended	(Yen)	(Yen)
December 31, 2022	59.84	59.66
December 31, 2021	52.76	52.63

(2) Consolidated Financial Position

	Total assets		Total equity	Equity ratio
As of	(Millions of yen)	(Millions of yen)		%
December 31, 2022	11,125,962	1,566,019		13.9
March 31, 2022	10,328,872	1,333,467		12.7
(Reference) Shareholders' equity:	As of December 31, 2022:	¥1,541,956 million
	As of March 31, 2022:		¥1,309,769 million
2. Dividends
					Dividend 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, 2022	－			13.00		－	15.00	28.00
ending March 31, 2023	－			15.00		－
ending March 31, 2023							16.00	31.00
(Forecast)
(Note) Changes from the latest released dividend forecast: No

3. Consolidated Financial Forecast for the Fiscal 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 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)	:	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 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 December 31, 2022	1,466,912,244	shares	As of March 31, 2022	1,466,912,244	shares
As of December 31, 2022	30,835,571	shares	As of March 31, 2022	31,056,401	shares
For the nine months ended	1,436,009,363	shares	For the nine months ended	1,435,622,733	shares
December 31, 2022	December 31, 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 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 Third Quarter Ended December 31, 2022	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 Comprehensive Income	11
	Quarterly Consolidated Statements of Income
	For the Nine Months ended December 31, 2022 and 2021	11
	Quarterly Consolidated Statements of Comprehensive Income
	For the Nine Months ended December 31, 2022 and 2021	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
	(Additional information)	15

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1. Qualitative Information concerning Financial Results for the Third Quarter Ended December 31, 2022

1. Summary of Operating Results

1. Overview of Financial Results, etc.

Quarterly net income attributable to owners of the parent increased by 13.4% year on year mainly thanks to the profit contribution from CAI International, Inc., and a decrease in credit costs.

・Quarterly net income attributable to owners of the parent for the nine months ended December 31, 2022 increased by ¥10.1 billion, or 13.4% year on year, to ¥85.9 billion mainly thanks to 1) the profit contribution from CAI International, Inc., a marine container leasing company in the U.S.A. that became the Company's wholly-owned subsidiary in November 2021, 2) a decrease in credit costs including the Aviation segment, and 3) the business growth of the subsidiaries mainly in Americas in the Global Business segment.

・The progress of net income for the nine months ended December 31, 2022 against the consolidated financial forecast for the fiscal year ending March 31, 2023 (net income attributable to owners of the parent of ¥110.0 billion) was 78.1%.

The Company has been promoting reorganization of domestic and overseas business branches/ group companies and "Business Portfolio Transformation".

・Since the business integration in April 2021, we have been promoting reorganization of domestic and overseas business branches/group companies to enhance our competitiveness through effective utilization of management resources and integrating our know-how.

• As part of "Business Portfolio Transformation", we have resolved to conduct a transfer of the shares of Diamond Asset Finance Company Limited, which mainly operates residential real estate-related finance. (scheduled to transfer in March 2023).

・The new Medium-term Management Plan is scheduled to be started from the fiscal year ending March 31, 2024.

			(Billions of yen)
	For the nine months	For the nine months	Change (%)
	ended December 31, 2021	ended December 31, 2022
Revenues	1,312.9	1,410.4	7.4
Gross profit	239.2	264.6	10.6
Operating income	81.6	106.3	30.3
Recurring income	82.2	109.6	33.3
Quarterly net income
attributable to owners	75.7	85.9	13.4
of the parent

2) Major topics

In May 2022, the Company 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)" and shows how we want to be recognized by our stakeholders and how we should transform to become such a company to realize "Our 10-year Vision". We defined the three-phaseMedium-term Management Plans covering the next ten years as "hop," "step," and "jump," and are now discussing specific management strategy, business strategy, KPIs and others for the new 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 defined as "hop," during the process of developing the plan.

In accordance with the United Nations "Guiding Principles on Business and Human Rights," we established the "Human Rights Policy" and announced it in October 2022. We will proactively and continuously conduct our business activities in consideration of internationally recognized standards related to human rights, in order to fulfill our responsibility to respect human rights as is expected of global companies, for achieving a society where human rights are respected.

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(Major business topics)

May 2022: ・Announced the acquisition of partial stake of distributed solar power generation project in Massachusetts, the U.S.A.

・Completed an eco-friendlymulti-tenants logistics facility "CPD Nagoya Minato".

Jul. 2022: ・Built a new solar power plant next to the Akita Tenbinno Wind Power Plant which was built in Akita city, Akita prefecture in September 2015 and started commercial operation as a wind and solar hybrid power plant.

・Invested in a newly established subsidiary of Mitsubishi Corporation, which undertakes the warehouse DX operations that have been developed by Mitsubishi Corporation.

Sep. 2022: ・Completed an eco-friendly logistics facility "CPD Nishiyodogawa".

Dec. 2022: ・Announced to conclude a capital and business alliance agreement with Connected Robotics Inc., engaging in research and development of robotics services designed for the food industry.

・Announced to transfer shares of Diamond Asset Finance Company Limited, a group company mainly operating the residential real estate-related finance, in order to concentrate resources on prioritized businesses in the Real Estate segment, and to improve profitability in the segment (scheduled to come into effect in March 2023).

Jan. 2023: ・ Commenced the business operation under the new management structure following the completion of the merger of CAI International, Inc. and Beacon Intermodal Leasing, LLC, operating the marine container leasing business.

・Announced to merge Mitsubishi HC Capital Energy Inc. and HGE Ltd., operating solar power generation business (scheduled to come into effect in April 2023).

Feb. 2023: ・Announced to reach an agreement to establish an auto leasing joint venture in Thailand with ALD S.A., a global leading company in the auto leasing industry based in France.

・Announced to absorb and merge Japan Infrastructure Initiative Company Limited ("JII"), a group company making investments and providing loans in the overseas infrastructure sector, after making JII a wholly-owned subsidiary on the premise that MUFG Bank, Ltd. would assign all of JII shares which it holds to the Company (scheduled to come into effect in April 2023).

・Announced the business integration of group companies in the U.S.A., Mitsubishi HC Capital America, Inc., Mitsubishi HC Capital (U.S.A.) Inc., and ENGS Commercial Finance Co. (scheduled to come into effect in April 2023).

3) 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 13.)

Figures for the nine months ended December 31, 2021 and for the year ended March 31, 2022 were converted into new reportable segments.

(Customer Solutions)

Despite the large gains on sales related to real estate leasing, a decrease in credit costs, and other factors, segment profit remained flat year on year at ¥28.8 billion due to a reactionary fall in multiple sales by cancellation of certain large deals recorded in the nine months ended December 31, 2021.

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