Tosei : Consolidated Financial Results for the First Six Months of the Fiscal Year Ending November 30, 2021

This English document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translation and the Japanese original, the Japanese original shall prevail. Tosei Corporation assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Consolidated Financial Results

for the First Six Months of the Fiscal Year Ending November 30, 2021

					July 5, 2021
Company name: TOSEI CORPORATION		Stock listing:	TSE / SGX
Securities code number: 8923 / S2D
Representative: Seiichiro Yamaguchi, President and CEO	URL:	https://www.toseicorp.co.jp/english/
Contact:	Noboru Hirano, Director and CFO		Phone:	[phone]
Submission of Quarterly Securities Report (Shihanki-Houkokusho):	July 9, 2021 (scheduled)
Commencement of dividend payments:				―
Preparation of supplementary materials for quarterly financial results:	Yes
Holding of quarterly financial results meeting:	Yes (for institutional investors and analysts)

Note: All amounts are rounded down to the nearest million yen.

1. Consolidated Financial Results for the Six Months Ended May 31, 2021 (December 1, 2020 - May 31, 2021)

(1) Consolidated Operating Results (cumulative)		(Percentages indicate year-on-year changes)
	Revenue		Operating profit	Profit before tax	Profit for the period
	(¥ million)	(%)	(¥ million)	(%)	(¥ million)	(%)	(¥ million)	(%)
Six months ended	40,932	(9.1)	9,232	325.4	8,959	373.8	6,122	433.5
May 31, 2021
Six months ended	45,050	30.8	2,170	(72.7)	1,890	(75.2)	1,147	(78.1)
May 31, 2020
	Profit attributable to	Total comprehensive	Basic earnings	Diluted earnings
	owners of the parent	income for the period	per share	per share
	(¥ million)	(%)	(¥ million)	(%)		(¥)		(¥)
Six months ended	6,120	433.3	6,754	－		130.06	129.90
May 31, 2021
Six months ended	1,147	(78.1)	592	(88.9)		24.14		24.06
May 31, 2020
(2) Consolidated Financial Position
					Equity attributable to	Ratio of equity
	Total assets	Total equity	attributable to owners of
	owners of the parent
					the parent to total assets
	(¥ million)	(¥ million)	(¥ million)		(%)
As of	170,923	64,585	64,465		37.7
May 31, 2021
As of	161,684	58,969	58,969		36.5
November 30, 2020

2.	Dividends
				Annual dividends per share
			1Q-end	2Q-end	3Q-end	Year-end	Total
			(¥)	(¥)	(¥)	(¥)	(¥)
Fiscal year ended November 30, 2020	-	0.00	-	19.00	19.00
Fiscal year ending November 30, 2021	-	0.00
Fiscal year ending November 30, 2021			-	38.00	38.00
(Forecast)
Note:	Revision to the most recently released dividend forecasts: Yes

3. Consolidated Earnings Forecasts for the Fiscal Year Ending November 30, 2021 (December 1, 2020 - November 30, 2021)

(Percentages indicate year-on-year changes)

							Profit attributable to	Basic earnings
	Revenue		Operating profit	Profit before tax	owners of the
		per share
							parent
	(¥ million)	(%)	(¥ million)	(%)	(¥ million)	(%)	(¥ million)	(%)	(¥)
Fiscal year ending	61,657	(3.6)	11,036	71.7	10,376	75.8	6,846	90.1	146.21
November 30, 2021
Note: Revision to the most recently released earnings forecasts: Yes

• Notes
• 1. Changes in significant subsidiaries during the period
     (changes in specified subsidiaries resulting in changes in the scope of consolidation): No

Newly added: -Excluded: -

(2) Changes in accounting policies and changes in accounting estimates

(a) Changes in accounting policies required by IFRS:

No

1. Changes in accounting policies due to other reasons: No

(c) Changes in accounting estimates:

No

(3) Number of issued shares (ordinary shares)

(a) Number of issued shares at the end of the period (including treasury shares)

As of May 31, 2021	48,683,800 shares
As of November 30, 2020	48,683,800 shares

(b) Number of treasury shares at the end of the period

As of May 31, 2021	1,856,922 shares
As of November 30, 2020	1,508,353 shares

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

Six months ended May 31, 2021	47,058,545 shares
Six months ended May 31, 2020	47,545,895 shares

• These consolidated Financial Results are not subject to quarterly review procedures by a certified public accountant or an audit corporation.
• Proper use of earnings forecasts and other notes

The forward-looking statements, including outlook of future performance, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable by the Company. Actual performance and other results may differ substantially from these statements due to various factors. For the assumptions on which the earnings forecasts are based and cautions concerning the use thereof, please refer to "1. Qualitative Information on Quarterly Consolidated Financial Performance (3) Qualitative Information Regarding Consolidated Earnings Forecasts" on page 5 of the attached materials.

Contents of Attached Materials
1. Qualitative Information on Quarterly Consolidated Financial Performance.........................................	2
(1)	Qualitative Information Regarding Consolidated Operating Results........................................................	2
(2)	Qualitative Information Regarding Consolidated Financial Positions ......................................................	4
(3)	Qualitative Information Regarding Consolidated Earnings Forecasts ......................................................	5
2. Matters Related to Summary Information (Notes) ...................................................................................	6
(1)	Changes in Significant Subsidiaries during the Period .............................................................................	6
(2)	Changes in Accounting Policies and Changes in Accounting Estimates ..................................................	6
(3)	Additional information..............................................................................................................................	6
3. Condensed Quarterly Consolidated Financial Statements and notes......................................................	7
(1)	Condensed Quarterly Consolidated Statement of Financial Position........................................................	7
(2)	Condensed Quarterly Consolidated Statement of Comprehensive Income ..............................................	8
(3)	Condensed Quarterly Consolidated Statement of Changes in Equity .......................................................	9
(4)	Condensed Quarterly Consolidated Statement of Cash Flows................................................................	10
(5)	Notes on Going Concern Assumption.....................................................................................................	11
(6)	Notes on Condensed Quarterly Consolidated Financial Statements .......................................................	11
(7)	Notes on Significant Subsequent Events.................................................................................................	12

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1. Qualitative Information on Quarterly Consolidated Financial Performance

1. Qualitative Information Regarding Consolidated Operating Results

1. Recognition, analysis and contents for discussion of business environment and business performance

During the six months ended May 31, 2021, the Japanese economy continued to face a harsh environment due to the impact of COVID-19. While indications continue of an upturn in the domestic economy, it remains necessary to monitor factors such as economic downside risks due to the renewed spread of the virus in Japan and overseas, as well as movements in global financial markets.

In the real estate industry where Tosei Group operates, domestic real estate investments for the three months from January to March 2021 amounted to ¥1.2 trillion, decreasing by 28% year on year. However, Tokyo ranked second in the world ranking by city for the three months from January to March 2021, and it appears that investment demand remains high among overseas investors, who value Japan's highly stable real estate market. There are also signs of a recovery in the purchase and sale of office buildings, for which a decline in profitability was feared, and transactions are expected to be lively throughout 2021 (according to a survey by a private research institute).

In the Tokyo metropolitan area condominium market, the number of newly supplied units from January to April 2021 increased 57.5% year on year to 8,760 units. This appears to be the result of a rebound after a substantial decline under the state of emergency introduced in April last year. Since February 2021, the average contract rate for the first month has remained above the 70% threshold from which market conditions are viewed as favorable, and a steady recovery is underway. However, in the build-for-sale detached house market, housing starts for the three months from January to March 2021 numbered 12,000 units, a decrease of 6.0% year on year (according to a survey by a private research institute).

Regarding construction costs for the four months from January to April 2021, average costs per tsubo

for reinforced concrete structure were ¥915 thousand per tsubo (1 tsubo = 3.30 square meters) (an increase of 0.1% year on year), and average costs per tsubo for wooden structure were ¥567 thousand (an increase of 0.4% year on year). The current increase in the price of steel materials due to the global economic recovery, particularly in China, has raised fears of a future hike in construction costs (according to a survey by the Ministry of Land, Infrastructure, Transportation and Tourism).

In the office leasing market of Tokyo's five business wards, the average vacancy rate as of April 2021 was 5.65% (an increase of 4.09 percentage points year on year), against the backdrop of tenants cutting back on office space as a result of the spread of teleworking lifestyle in certain areas, and a slowdown in expansion. The average asking rent was ¥21,415 per tsubo (a decrease of ¥1,405 year on year), which has continued to fall from August 2020, and it remains necessary to monitor future trends in supply and demand (according to a survey by a private research institute).

In the Tokyo metropolitan area's logistics facility leasing market, leasable stock in April 2021 amounted to 6.60 million tsubo (an increase of 9.5% year on year). The vacancy rate was 0.5%. Although this was a slight increase from the level of 0.2% observed in January 2021, supply remains tight. The vacancy rate is expected to remain low, with leasing activity progressing strongly overall (according to a survey by a private research institute).

In the real estate fund market, the market scale continues to expand. J-REIT assets under management in April 2021 totaled ¥20.7 trillion (an increase of ¥1.0 trillion year on year) and assets under management in private placement funds totaled ¥22.5 trillion (as of December 2020, an increase of ¥2.3 trillion year on year). Combining the two, the real estate securitization market scale grew to ¥43.2 trillion (according to a survey by a private research institute).

In the Tokyo business hotel market, the average guest room occupancy rate in the three months from January to March 2021 was 33.6%, due to the continuing impact of COVID-19. The total number of hotel guests in Tokyo encompassing all types of accommodation amounted to 7.04 million overnight stays (a decrease of 45.7% year on year). The environment is forecasted to remain harsh for the hotel market, despite the daily progress of vaccinations in Japan (according to a survey by the Japan Tourism Agency).

Amid this operating environment, in the Revitalization Business, the Group made steady progress in selling assets such as income-generating office buildings and apartments, while in the Development Business, the Group pushed ahead with sales of detached houses and logistics facilities. In addition, the Group also proceeded with the acquisition of income-generating properties and various types of land for development as future sources of income.

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As a result, consolidated revenue for the six months ended May 31, 2021 totaled ¥40,932 million (down 9.1% year on year), operating profit was ¥9,232 million (up 325.4%), profit before tax was ¥8,959 million (up 373.8%), and profit attributable to owners of the parent was ¥6,120 million (up 433.3%).

Performance by business segment is shown below.

Revitalization Business

During the six months ended May 31, 2021, the segment sold 35 properties which had been renovated, including T's garden Kiyose (Kiyose-shi, Tokyo), Ichikawashimamura Building (Ichikawa-shi, Chiba), Tokyo-interior Minamiaoyama Building (Minato-ku, Tokyo). In addition, the segment sold one unit in the Restyling Business from Rune Kamakura Ueki Residence (Kamakura-shi, Kanagawa).

It also acquired a total of 21 income-generating office buildings, apartments and a logistic facility for renovation and sales purposes and two land lots.

In addition, the Group reviewed the valuation of its income-generating properties, recording a reversal of Inventories valuation loss of ¥895 million.

As a result, revenue in this segment was ¥24,185 million (down 12.6% year on year) and the segment profit was ¥6,437 million (up 15.7%).

Development Business

During the six months ended May 31, 2021, the segment sold a new logistic facility T's Logi Hasuda (Hasuda-shi, Saitama) and a new commercial facility THE Palms Sagamihara Park Brighter (Store section) (Sagamihara-shi, Kanagawa). In addition, the segment focused on the sale of detached houses, for which there was firm demand. The segment sold 41 detached houses at such properties as THE Palms Court Kamakura Shiromeguri (Kamakura-shi, Kanagawa) and THE Palms Court Hibarigaoka (Nishitokyo-shi, Tokyo).

During the six months ended May 31, 2021, it also acquired one land lot for logistic facility project, one land lot for commercial facility project, two land lots for income-generating office buildings and land lots for 56 detached houses.

In addition, the Group reviewed the valuation of its income-generating properties, recording a reversal of Inventories valuation loss of ¥255 million.

As a result, revenue in this segment was ¥9,043 million (down 8.8% year on year) and the segment profit was ¥1,211 million (in comparison with segment loss of ¥4,720 million in the same period of the previous fiscal year).

Rental Business

During the six months ended May 31, 2021, while the segment sold 19 buildings of its inventory assets held for leasing purposes, it newly acquired 14 properties including income-generating office buildings and apartments. In addition, the segment made efforts to lease vacancies out following acquisitions and also focused on leasing activities for its holding non-current assets and inventory assets.

As a result, revenue in this segment was ¥2,760 million (up 1.0% year on year) and the segment profit was ¥1,447 million (up 39.3%).

Fund and Consulting Business

During the six months ended May 31, 2021, while ¥191,799 million was added due to new asset management contracts, ¥59,405 million was subtracted due mainly to property dispositions by funds, from the balance of assets under management (Note) ¥1,123,406 million for the end of the previous fiscal year. The balance of assets under management as of May 31, 2021, was ¥1,255,800 million.

As a result, revenue in this segment was ¥2,271 million (up 4.2% year on year) and the segment profit was ¥1,565 million (up 5.7%).

Note: The balance of assets under management includes the balance of assets that were subject to consulting contracts, etc.

Property Management Business

During the six months ended May 31, 2021, the segment made efforts to win new contracts and maintain existing contracts. Consequently, the total number of properties under management was 701 as of May 31, 2021, an increase of 12 from May 31, 2020, with the total comprising 452 office buildings, hotels, logistic

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