MUGEN ESTATE : Summary of Consolidated Financial Results for the Third Quarter ended September 30, 2021

Note: The accompanying consolidated financial statements were not audited since they have been prepared only for reference purposes only. All statements are based on "Kessan Tanshin" report prepared in accordance with the provisions set forth in the accounting regulations and principals generally accepted in Japan.

Summary of Consolidated Financial Results for the Third Quarter ended September 30, 2021 [Based on Japanese GAAP]

Listed company name: MUGEN ESTATE Co., Ltd	Listed Stock Exchange:	November 12, 2021
Tokyo Stock Exchange
Securities code:	3299	URL https://www.mugen-estate.co.jp/en/
Representative:	Shinichi Fujita, President
Contact:	Akira Okubo, Director, General Manager of Administrative Division	[e-mail]

Scheduled date of quarterly securities report filing:	November 12, 2021	Scheduled date of dividend payment: －
Supplementary material for financial results:	Yes
Quarterly financial results briefing:	No

(fractions of one million yen are rounded off)

1. Consolidated financial results for the third quarter ended September 30, 2021 (January 1 to September 30, 2021)

(1) Consolidated financial results (cumulative)

(Percentages represent changes from the previous year)

Net sales

Operating income

Ordinary income

Profit attributable to

owners of parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

3Q ended September 30, 2021

26,541

1,853

1,442

58.6

1,071

－

3Q ended September 30, 2020

21,857

)

1,419

)

909

.1)

(32)

－

21.4

30.6

(Note)

ሺ27.2

ሺ48.6

ሺ60

Comprehensive income:

3Q ended September 30, 2021

1,071

million yen (

－%)

3Q ended September 30, 2020

(32)

million yen (

－%)

Net Income

Diluted net income

per share

per share

Yen

Yen

3Q ended September 30, 2021

44.68

44.44

3Q ended September 30, 2020

(1.38)

－

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

As of September 30, 2021

61,728

23,442

37.8

As of December 31, 2020

62,487

22,605

36.0

(Reference) Shareholders' equity: As of September 30, 2021

23,350 million yen

As of December 31, 2020

22,518 million yen

2. Dividends

Annual dividends per share

End of 1st

End of 2nd

End of 3rd

Year-end

Total

quarter

quarter

quarter

Yen

Yen

Yen

Yen

Yen

Year ended December 31, 2020

－

0.00

－

10.00

10.00

Year ending December 31, 2021

－

0.00

－

Year ending December 31, 2021 (forecast)

15.00

15.00

(Note)

Revision of the latest dividend

forecast:

No

3. Forecast of consolidated financial results for the fiscal year ending December 31, 2021

(January 1, 2021 to December 31, 2021)

(Percentages represent changes from the previous year)

Net sales

Operating income

Ordinary income

Profit attributable to

Net income per

owners of parent

share

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

FY2021 (Full year)

34,315

(1.6)

2,434

(1.3)

1,865

4.5

1,268

111.6

52.88

(Note)

Revision of the latest consolidated financial results forecast:

No

* Notes

1. Changes in significant subsidiaries during the period: None
2. Application of any accounting procedures specific to preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement

(i)	Changes in accounting policies due to revisions to accounting standards and other regulations	: None
(ii)	Changes in accounting policies other than (i)	: None
(iii)	Changes in accounting estimates	: None
(iv)	Restatement of prior period financial statements after error corrections	: None

1. Number of shares issued (common stock)
2. 1. Number of shares outstanding at end of the period (including treasury stock)

As of September 30, 2021	24,361,000 shares
As of December 31, 2020	24,361,000 shares
(ii) Number of treasury stock held at end of the period
As of September 30, 2021	382,309 shares
As of December 31, 2020	382,309 shares

(iii) Average number of shares outstanding during the period (cumulative)

As of September 30, 2021	23,978,691 shares
As of September 30, 2020	23,984,192 shares

*The current quarterly financial results are not subject to the quarterly review procedures.

• Explanation of the proper use of financial forecasts and other important notes
• 1. The statements about the future included in this report, including financial projections, are based on information currently available to the Company and certain assumptions that are considered reasonable, which do not guarantee the achievement of such projected results. Actual results may vary considerably from these projections due to a range of factors. See "(3) Information on future forecasts including consolidated financial forecasts under "1. Qualitative Information on Operating Results for the Third Quarter Ended September 30, 2021" on page 2 of the Accompanying Materials for the assumptions of the financial forecasts and points to note in the use of financial forecasts.
  2. How to obtain the Presentation Material for financial results
     The presentation material for financial results is disclosed through together with these financial statements. This information also is posted on the Company's website on the same day.

1. Qualitative Information on Operating Results for the Third Quarter Ended September 30, 2021

(1) Analysis of Operating Results

During the first nine months of the consolidated fiscal year under review (January 1, 2021 through September 30, 2021), in the real estate industry, where the MUGEN ESTATE Group operates, there were continued signs of recovery despite challenging conditions such as the repeated declaration of a state of emergency due to the spread of COVID-19.

In addition, the inflow of funds into the real estate market is expected to continue into the future, supported by the effects of policies and improvements in overseas economies, in addition to measures to prevent the spread of COVID-19 including vaccinations.

According to the Real Estate Information Network for East Japan (East Japan REINS), the number of contracts concluded for used condominium units in the Tokyo metropolitan area decreased 4.6% year on year in September 2021, falling short of the year- ago level for the third consecutive month. However, the average unit price per square meter of contracted condominium units recorded a double-digit increase of 11.0% from the same month a year earlier, showing a year-on-year increase for the 17th consecutive month from May 2020. The average unit price rose 7.9% from the same month a year earlier, recording a year-on-year rise for the 16th consecutive month from June 2020.

The level of inventory, which recorded a double-digit decline of 15.5% year on year, has been continuously declining for the 22nd consecutive month since December 2019.

In this business environment, the Real Estate Trading Business, the core business of the MUGEN ESTATE Group, has been performing strongly in residential properties in particular amid growing demand for used housing properties in the Tokyo metropolitan area.

On the other hand, rent income has been decreasing due to the delay in the completion of real estate development projects and a decline in the inventory of real estate for sale.

The Company is in the process of opening sales offices in target areas in the Tokyo metropolitan area to swiftly respond to a rise in demand for residential type properties.

The Company opened the Kitasenju sales office in September 2021 and Funabashi sales office in October 2021. It plans to open five offices in total by the end of the year including those to be established in other areas.

It will seek to increase the business of residential type properties by stepping up marketing efforts in respective areas and expediting payment procedures for purchases and sales.

In its core Real Estate Trading Business, the MUGEN ESTATE Group has endeavored to increase the occupancy rates of investment type properties and improve inventory turnover by boosting sales with the measures such as increasing the added value provided by properties.

Competition for purchasing residential type properties increased while steady demand was maintained, so we committed ourselves to enhance purchase and sales activities strictly considering profitability.

As a result, consolidated net sales increased 21.4% year on year, to 26,541 million yen, consolidated operating income rose 30.6% year on year, to 1,853 million yen, consolidated ordinary income climbed 58.6% year on year, to 1,442 million yen, and consolidated

profit attributable to owners of parent to 1,071 million yen. (Loss attributable to owners of parent of 32 million yen in the same period of the previous year)

The following is an overview of the results by segment. [Real Estate Trading Business]

In the Real Estate Trading Business, the number of units sold in investment-type properties came to 114 (up 5 units year on year) and the average unit selling price was 170 million yen (up 25.4% year on year), registering net sales of 19,444 million yen (up 31.1% year on year). Furthermore, the number of units sold in residential-type properties came to 131 (up 22 units year on year) and the average unit selling price was 40 million yen (down 4.6% year on year), registering net sales of 5,288 million yen (up 14.6% year on year).

As a result, net sales for the segment increased 27.7% year on year, to 24,960 million yen, and the segment profit (operating income for the segment) grew 46.4% year on year, to 2,404 million yen.

[Real Estate Leasing and Other Business]

In the Real Estate Leasing and Other Business, revenue from real estate leasing came to 1,506 million yen (down 33.0% year on year). As a result, net sales for the segment decreased 31.5% year on year, to 1,581 million yen, and segment profit (operating income for the segment) fell 36.3% year on year, to 552 million yen.

Note: The "investment-type properties" are classified as real estate generating rental income, including rental condominiums, and office blocks, which are used by buyers for the purpose of investment. The "residential-type properties" are classified as real estate used by buyers as their housing units, most of which are owned condominiums.

(2) Qualitative information on financial position

The financial position of the MUGEN ESTATE Group at the end of the third quarter of the consolidated fiscal year under review included assets of 61,728 million yen (down 1.2% from the end of the previous fiscal year), liabilities of 38,285 million yen (down 4.0% from the end of the previous fiscal year), and net assets of 23,442 million yen (down 3.7% from the end of the previous fiscal year).

Principal factors contributing to the decrease in assets included a decrease of 6,720 million yen in real estate properties for sale. The decrease in liabilities was attributable primarily to decrease of 2,356 million yen in Current portion of long-term borrowings . The increase in net assets resulted in large part from a rise of 1,071 million yen in retained earnings due to the recording of profit

attributable to owners of parent, and a decrease of 239 million yen in retained earnings attributable to dividends paid.

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(3) Information on future forecasts including consolidated financial forecasts

Forecasts for consolidated financial results and dividends for the fiscal year ending December 31, 2021 remain unchanged from the Notice Regarding Revisions to Forecasts for Financial Results and Dividend announced on October 14, 2021.

The descriptions of business forecasts presented in this document are based on the future assumptions, outlook, and plans as of the date of the publication of this document, which include risks and uncertain factors. Actual results may vary significantly from the forecasts presented in this document due to the economic environment, market trends, and other factors that affect the business of the Group.

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2. Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheets

				(Million yen)
			FY2020	FY2021 3Q
			(As of December 31, 2020)	(As of September 30, 2021)
Assets
	Current assets
	Cash and deposits	16,065	18,392
	Accounts receivable - trade	16	21
	Real estate for sale	41,337	34,617
	Real estate for sale in process	283	498
	Other	242	483
	Allowance for doubtful accounts	(8)	(5)
	Total current assets	57,937	54,007
	Non-current assets
	Property, plant and equipment
	Buildings	2,292	3,610
		Accumulated depreciation	(397)	(482)
		Buildings, net	1,895	3,127
	Land	1,908	3,824
	Other	114	121
		Accumulated depreciation	(79)	(80)
		Other, net	34	41
	Total property, plant and equipment	3,838	6,992
	Intangible assets	83	77
	Investments and other assets
	Investment securities	―	21
	Deferred tax assets	241	228
	Other	342	355
	Total investments and other assets	583	605
	Total non-current assets	4,504	7,676
	Deferred assets	45	44
	Total assets	62,487	61,728

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