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 Three Months of the Fiscal Year Ending November 30, 2022

April 5, 2022

Company name: TOSEI CORPORATION Securities code number: 8923 / S2D

TSE / SGX

Representative: Seiichiro Yamaguchi, President and CEO URL:

https://www.toseicorp.co.jp/english/

Contact: Noboru Hirano, Director and CFO Phone:

+81-3-5439-8807

Submission of Quarterly Securities Report (Shihanki-Houkokusho):

April 8, 2022 (scheduled)

Commencement of dividend payments:

Preparation of supplementary materials for quarterly financial results:

Yes

Holding of quarterly financial results meeting:

No

Stock listing:

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

1. Consolidated Financial Results for the Three Months Ended February 28, 2022

(December 1, 2021 – February 28, 2022)

(1) Consolidated Operating Results (cumulative)

(Percentages indicate year-on-year changes.)

Revenue

Operating profit

Profit before tax

Profit for the period

Three months ended February 28, 2022 Three months ended February 28, 2021

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

Profit attributable to owners of the parent

Total comprehensive income for the period

Basic earnings per share

Diluted earnings per share

Three months ended February 28, 2022 Three months ended February 28, 2021

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

(¥)

76.10 65.31

(¥)

76.07 65.23

(2) Consolidated Financial Position

Total assets

Total equity

Equity attributable to owners of the parent

Ratio of equity attributable to owners of the parent to total assets

As of

February 28, 2022 As of

November 30, 2021

(¥ million)

188,621 195,010

(¥ million)

67,334 65,958

(¥ million)

67,334 65,958

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

35.7

33.8

attributable to owners of

2. Dividends

Annual dividends per share

1Q-end

2Q-end

3Q-end

Year-end

Total

Fiscal year ended November 30, 2021

Fiscal year ending November 30, 2022

(¥)

– –

(¥) 0.00

(¥)

(¥) 38.00

(¥) 38.00

Fiscal year ending November 30, 2022 (Forecast)

0.00

47.00

47.00

Note:

Revision to the most recently released dividend forecasts: No

3. Consolidated Earnings Forecasts for the Fiscal Year Ending November 30, 2022

(December 1, 2021 – November 30, 2022)

(Percentages indicate year-on-year changes.)

Revenue

Operating profit

Profit before tax

Profit attributable to owners of the parent

Basic earnings per share

Fiscal year ending November 30, 2022

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

80,000

29.6

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

12,762

16.4

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

12,000

16.5

(¥ million)

({4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5})

7,954

18.3

(¥)

166.47

Note:

Revision to the most recently released earnings forecasts: No

* Notes

  • (1) Changes in significant subsidiaries during the period

    (changes in specified subsidiaries resulting in changes in the scope of consolidation): NoNewly added: –

    Excluded: –

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

(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 February 28, 2022

48,683,800 shares

As of November 30, 2021

48,683,800 shares

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

As of February 28, 2022

1,217,722 shares

As of November 30, 2021

900,022 shares

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

Three months ended February 28, 2022

47,639,028 shares

Three months ended February 28, 2021

47,152,020 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 7 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) ……………………………………………………………………….. 5

    (1) Changes in Significant Subsidiaries during the Period ………………………………………………………………….. 5

    (2) Changes in Accounting Policies and Changes in Accounting Estimates ………………………………………….. 5

    (3) Additional information ……………………………………………………………………………………………………………… 5

  • 3. Condensed Quarterly Consolidated Financial Statements and notes ……………………………………………… 6

    • (1) Condensed Quarterly Consolidated Statement of Financial Position ……………………………………………….. 6

    • (2) Condensed Quarterly Consolidated Statement of Comprehensive Income ………………………………………. 7

    • (3) Condensed Quarterly Consolidated Statement of Changes in Equity ………………………………………………. 8

    • (4) Condensed Quarterly Consolidated Statement of Cash Flows ………………………………………………………… 9

    • (5) Notes on Going Concern Assumption ……………………………………………………………………………………….. 10

    • (6) Notes on Condensed Quarterly Consolidated Financial Statements ………………………………………………. 10

    • (7) Notes on Significant Subsequent Events ……………………………………………………………………………………. 12

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 three months ended February 28, 2022, the Japanese economy remained on a weak recovery trend, due to a resurgence of COVID-19. Furthermore, the unstable international situation stemming from Russia’s invasion of Ukraine has heightened geopolitical risk and it is necessary to monitor multiple factors such as the ensuing turmoil of the global economy and the soaring prices of natural resources in industrialized countries.

In the real estate industry where Tosei Group operates, domestic real estate investments for the whole of 2021 decreased approximately 2{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year to approximately ¥4.5 trillion. Although investments slightly decreased against the backdrop of the shortage of properties supplied on the market, real estate transactions remained active, reflecting the continuing proactive investment stance of the investors. Meanwhile, office buildings entered an adjustment phase in the leasing market, but they have held up their prices in the investment market, and transaction volume remained steady and exceeded that of 2020 (according to a survey by a private research institute).

The overall housing market throve and the number of newly built units in the Tokyo metropolitan area condominium market for the whole of 2021 increased 23.5{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year to 33,636 units. The average contract rate for the first month also reached 73.3{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}, recording the 70{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} threshold for the first time since 2015. In addition, in the pre-owned condominium market, the number of units contracted for the whole of 2021 increased 11.1{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year to 39,812. In the build-for-sale detached house market, housing starts for the whole of 2021 came to 57,000 units (up 5.0{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year) (according to a survey by a private research institute).

Regarding construction costs for the whole of 2021, average costs per tsubo for reinforced concrete structure were ¥953 thousand per tsubo (1 tsubo = 3.30 square meters) (an increase of 4.5{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year), and average costs per tsubo for wooden structure were ¥569 thousand (unchanged from the previous year). A rise in the price of building materials is affecting 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 January 2022 was 6.3{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} (an increase of 1.4 percentage points year on year), and the average asking rent was ¥20,508 per tsubo (a decrease of ¥1,338 year on year), demonstrating a downward trend in the office leasing market in the Tokyo metropolitan area, but it seems to have bottomed out in certain areas. A massive supply of new office buildings is expected in 2023 and it remains necessary to continue monitoring the trends in supply and demand (according to a survey by a private research institute).

Meanwhile, the condominium leasing market remained robust and the average asking rent of apartments in the Tokyo metropolitan area as of January 2022 was ¥10,899 per tsubo (an increase of 3.1{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year) and the average occupancy rate at condominiums held by J-REIT in the Tokyo Area as of November 30, 2021 was 97.0{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} (an increase of 0.6 percentage points year on year). As for studio apartments, two distinct trends have emerged for the Tokyo metropolitan area and the Tokyo suburbs where single persons’ preference for the suburbs has brought down the rent in the 23 wards of Tokyo (according to a survey by a private research institute).

In the Tokyo metropolitan area’s logistics facility leasing market, leasable stock in January 2022 amounted to 7.40 million tsubo (an increase of 14.9{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year). The vacancy rate was 2.5{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}. Although this was an increase from the level of 1.7{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} observed in October 2021, rent continues to gradually increase. Supply and demand remain tight, but new supplies are expected in future, and it remains necessary to monitor the balance of supply and demand (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 January 2022 totaled ¥21.2 trillion (an increase of ¥0.7 trillion year on year) and assets under management in private placement funds totaled ¥23.4 trillion (as of June 2021, an increase of ¥2.3 trillion year on year). Combining the two, the real estate securitization market scale grew to ¥44.6 trillion (according to a survey by a private research institute).

In the Tokyo business hotel market, the average guest room occupancy rate in the whole of 2021 was 41.8{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} (85.1{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} in the whole of 2019, prior to the COVID-19 pandemic), and the total number of hotel guests in Tokyo encompassing all types of accommodation in the whole of 2021 amounted to 36.56 million (78.98 million overnight stays in the whole of 2019). The number of new cases of the COVID-19 variant has been climbing in Japan and the hotel market will still need more time until it recovers (according to a survey by the Japan Tourism Agency).

Amid this operating environment, in the Fund and Consulting Business, the Group increased its balance of assets under management, while in the Revitalization Business and the Development Business, the Group proceeded with property sales and the acquisition of income-generating properties and various types of land for development as future sources of income.

As a result, consolidated revenue for the three months ended February 28, 2022 totaled ¥26,315 million (up 4.8{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year), operating profit was ¥5,685 million (up 22.5{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}), profit before tax was ¥5,420 million (up 21.3{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}), and profit attributable to owners of the parent was ¥3,625 million (up 17.7{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}).

Performance by business segment is shown below.

From the three months ended February 28, 2022, the Company changed the name of its “Real Estate

Securitization Business” (in Japanese. In English, the segment has been known as the “Revitalization Business” and remains the same) to the “Revitalization Business.” As this is merely a change of the segment name, there will be no impact on segment information.

Revitalization Business

During the three months ended February 28, 2022, the segment sold 24 properties it had renovated and 41 pre-owned condominium units, including Ochanomizu Tosei Building (Chiyoda-ku, Tokyo), Hon- Atsugi Building Ⅱ (Atsugishi, Kanagawa), Akihabara Tosei Building Ⅲ (Taito-ku, Tokyo).

During the three months ended February 28, 2022, it also acquired a total of eight income-generating office buildings and apartments and and 37 pre-owned condominium units.

In addition, the Group reviewed the valuation of its income-generating properties, recording a reversal of inventories valuation loss of ¥456 million.

As a result, revenue in this segment was ¥18,719 million (up 30.9{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year) and the segment profit was ¥4,133 million (up 27.5{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}).

Development Business

During the three months ended February 28, 2022, the segment sold TS BRIGHTIA Minami-Aoyama EAST (Minato-ku, Tokyo). In addition, the segment focused on the sale of detached houses, for which there was firm demand. The segment sold 17 detached houses at such properties as THE Palms Court Hibarigaoka (Nishitokyo-shi, Tokyo) and THE Palms Court Kamakura Shiromeguri (Kamakura-shi, Kanagawa).

During the fiscal year under review, it also acquired one land lot for apartment project and land lots for 27 detached houses.

In addition, the Group reviewed the valuation of its income-generating properties, recording a reversal of inventories valuation loss of ¥66 million.

As a result, revenue in this segment was ¥3,140 million (down 56.3{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year) and the segment profit was ¥616 million (down 5.9{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}) .

Rental Business

During the three months ended February 28, 2022, while the segment sold 19 buildings of its inventory assets held for leasing purposes, it newly acquired four 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 ¥1,446 million (up 4.7{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year) and the segment profit was ¥733 million (up 0.7{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5}).

Fund and Consulting Business

During the three months ended February 28, 2022, while ¥20,839 million was subtracted due mainly to property dispositions by funds, ¥109,223 million added due to new asset management contracts, from the balance of assets under management (Note) ¥1,420,867 million for the end of the previous fiscal year. The balance of assets under management as of February 28, 2022, was ¥1,509,252 million.

As a result, revenue in this segment was ¥1,167 million (up 24.4{4e908c29df01d999f087e4f922633998e2ded1c72f05851cd6252034960daee5} year on year) and the segment profit

link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *