明豊エンタープライズ（8927） – [Delayed]Consolidated Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 (Japanese GAAP)

Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. Consolidated Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 (Japanese GAAP) Name of listed company:Meiho Enterprise Co., Ltd. Code Representative: 8,927 (Position) Chairman & Representative Director (Position) Management Dept. Manager, General Contact for inquiries: Scheduled date for submission of quarterly report: Creation of supplementary explanatory materials: None Holding of accounts briefing meeting: None Listing exchange: URL https://www.meiho-est.com March 17, 2022Tokyo Stock Exchange (Name) Mitsuru Yabuki (Name) Ayako Iwasaki (TEL)03(5434)7653 March 17, 2022 Scheduled date dividend payment: for start of – 1. Consolidated results for the second quarter of fiscal year ending July 2022 (from August 1, 2021 to January 31, 2022) (Amounts are rounded down to the nearest million yen) (1) Consolidated operating results (cumulative) Net sales Million yen % Second quarter of fiscal year ending July 2022 Second quarter of fiscal year ending July 2021 (Note) Comprehensive Second quarter of fiscal income year ending July 2022(% figures show the rate of increase (decrease) compared with the same period of the previous fiscal year)Profit attributable to owners of parent Profit attributable to owners of parent Million yen Ordinary profit Million yen Operating profit Million yen % % % 2,897 (7.5) 73 (57.7) 6 (96.2) (39) – 3,131 (46.0) 172 (46.8) 177 (36.9) 150 48.2 (39) Million yen (-%)154 Million yen(53.6%)Second quarter of fiscal year ending July 2021 Basic profit per share Basic profit per share (diluted) Second quarter of fiscal year ending July 2022 Second quarter of fiscal year ending July 2021 yen sen (1.69) 6.37 yen sen – – (2) Consolidated financial position Total assets Net assets Equity-to-asset ratio Million yen 12,885 11,607 Million yen 4,854 5,085 % 37.6 43.7 (Reference) Equity capital 4,841Million yen Fiscal year ended July 2021 5,071 Million yenSecond quarter of fiscal year ending July 2022 Second quarter of fiscal year ending July 2022 Fiscal year ended July 2021 2. Dividends Fiscal year ended July 2021 Annual dividend End of first quarter End of second quarter End of third quarter Year-end Total yen sen yen sen yen sen yen sen yen sen – 0.00 – 8.00 8.00 Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. Fiscal year ended July 2022 Fiscal year ending July 2022 (Forecast) – 0.00 – 8.00 8.00 (Note) Revisions to the most recent dividend forecast: None 3. Consolidated earnings forecast for fiscal year ending July 2022 (from August 1, 2021 to July 31, 2022) (% figures show the rate of increase (decrease) compared with the same period of the previous fiscal year) Basic profit per share Profit attributable to owners of parent Operating profit Ordinary profit Net sales Full year Million yen 12,300 % 20.8 Million yen % 820 (16.6) Million yen % 620 (35.5) Million yen % 380 (54.0) yen sen 16.09 (Note) Revisions to the most recent earnings forecast: None Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. * Explanatory notes (1) Changes in significant subsidiaries during the period : None (Changes in specified subsidiaries resulting in change in scope of consolidation) Newly included: ― companies (Company name), Excluded: ― companies (Company name) (2) Application of accounting method specific to preparation of quarterly consolidated financial statements (3) Changes in accounting policies, changes in accounting estimates, and restatement 1) Changes in accounting policies with revision of accounting standards 2) Changes in accounting policies other than 1) 3) Changes in accounting estimates 4) Restatement (4) Number of shares issued and outstanding (ordinary shares) : None : : Yes : None : None : None 1) Number of shares issued and outstanding 2Q of FY ending 24,661,000 Fiscal year ended 24,661,000 (including treasury shares) at end of the period July 2022 shares July 2021 shares 2) Number of treasury shares at end of the period 2Q of FY ending 1,047,160 Fiscal year ended 1,047,160 July 2022 shares July 2021 shares 3) Average number of shares during the period 2Q of FY ending 23,613,840 2Q of FY ending 23,613,840 (quarterly cumulative) July 2022 shares July 2021 shares * Quarterly Financial Summary is outside the scope of the quarterly review by a certified public accountant or audit firm. * Explanation regarding appropriate use of earnings forecasts, and other notes The earnings outlook and other forward-looking statements contained herein are based on information currently available and certain assumptions that are thought to be reasonable by the Company. Accordingly, actual business performance and other results may differ materially due to various factors. For the conditions forming the assumptions on which earnings forecasts are based and explanatory notes for use of earnings forecasts, etc., please see “Attachment 1. Qualitative Information on Quarterly Financial Results (3) Explanation of Consolidated Earnings Forecasts and Other Forward-Looking Information” on page 2. Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. ○ Contents of Attachments 1. Qualitative Information on Quarterly Financial Results ………………………………………………………………….. 1 (1) Explanation of Operating Results ……………………………………………………………………………………………………………….. 1 (2) Explanation of Financial Position ……………………………………………………………………………………………………………….. 2 (3) Explanation of Consolidated Earnings Forecasts and Other Forward-Looking Information ……………………………….. 2 2. Quarterly Consolidated Financial Statements and Main Notes ………………………………………………………… 4 (1) Quarterly Consolidated Balance Sheet ………………………………………………………………………………………………………… 4 (2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income….. 6 (3) Consolidated Statement of Cash Flows for the Quarter…………………………………………………………………………………… 8 (4) Notes to Quarterly Consolidated Financial Statements…………………………………………………………………………………… 9 (Notes Related to Going Concern Assumption) …………………………………………………………………………………………….. 9 (Notes on Substantial Changes in Amount of Shareholders’ Equity) ………………………………………………………………… 9 (Changes in Accounting Policies) ………………………………………………………………………………………………………………… 9 (Additional Information) …………………………………………………………………………………………………………………………… 10 (Segment Information, etc.) ……………………………………………………………………………………………………………………….. 11 (Significant Events After Reporting Period) …………………………………………………………………………………………………. 12 Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. 1. Qualitative Information on Quarterly Financial Results (1) Explanation of Operating Results During the current consolidated cumulative second quarter, economic and social activities in Japan have repeated stagnancy and resumption due to the impact of the COVID-19 infection. Since the second half of last year, there have been signs that the Japanese economy has been on a gradual recovery path due to various support measures implemented by the government and various administrative agencies, as well as the promotion of vaccination against infectious diseases. However, the future remains uncertain due to the current global outbreak of a new mutant strain of this disease. In the real estate industry, the environment for home acquisition has been supported by the continuation of the low interest rate environment and various government measures, including the re-extension of mortgage tax breaks. Although there has been continued strong housing demand, the situation remains unpredictable, as concerns about the economic recession and delayed recovery caused by the prolonged infection and the resulting decline in home acquisition. In addition, the procurement environment for building materials remains unstable due to a global shortage of lumber, soaring distribution prices, a shortage of semiconductors, and rising energy prices. Under these business circumstances, the Group made the following efforts in each business segment. In the real estate sales business, we handed over two properties in the second quarter, the “MIJAS Nishi Yokohama” (Nishi-ku, Yokohama City, Kanagawa Prefecture) and “MIJAS Sangenjaya III” (Setagaya-ku, Tokyo). In the current situation where the market for rental housing real estate is showing a growing appetite for purchasing, we plan to set up a seminar room facility in our head office to further strengthen our sales activities by holding real estate investment seminars for individual investors. In the real estate leasing business, in order to maximize profits for existing owners, in addition to area marketing, we aim to eliminate vacancies by setting the optimal rent based on the AI assessment system and contract execution examples and by proposing leasing strategies utilizing our network of brokerage firms in the Tokyo metropolitan area, thereby achieving high occupancy rates in the properties managed by the Group. We have also introduced an application for information exchange with owners and continue to share and exchange information through CS surveys and other measures. For its main brands, the MIJAS and EL FARO series, the Group offers a one-stop service, from the creation of products to their management, thereby endeavoring to maintain high quality and high occupancy rates. Consequently, the series is creating synergies within the Group, with their good recognition as highly profitable real estate investment products, triggering repeated purchases of real estate investment In the real estate brokerage business, the Group is working to increase revenues by introducing properties in line with customer needs through the use of its unique information network comprising real estate sales business and other businesses. In the contracting business, the Group worked to increase earnings through the design and construction of five properties in the MIJAS and EL FARO series and remodeling and renovations suiting the characteristics of other properties under management. In addition, we have introduced a customer proposal application for large-scale repairs to uncover potential customers and further product series. expand earnings. As a result of the above, in the first two quarters of the fiscal year, consolidated net sales stood at 2,897 million yen (down 7.5% year on year), operating income stood at 73 million yen (down 57.7% year on year, ordinary profit stood at 6 million yen (down 96.2% year on year), and loss attributable to owners of parent amounted to 39 million yen (compared to net income attributable to owners of the parent of 150 million yen year on year). The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the first quarter of the current fiscal year. For details, please refer to 2. Quarterly Consolidated Financial Statements and Main Notes and (3) Notes to Quarterly Consolidated Financial Statements (Changes in Accounting Policies). The performance of each segment is as follows. [Real estate sales business] million yen (down 74.9% year on year). [Real estate leasing business] In the real estate sales business, we handed over two properties in the MIJAS series (apartment development project) in the second quarter. As a result, net sales totaled 1,690 million yen (down 13.6% year on year) and segment income totaled 20 In the real estate leasing business, due to property management fees and other factors, net sales totaled 997 million yen -1- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. (down 4.9% year on year) and segment income totaled 115 million yen (down 35.9% year on year). [Real estate brokerage business] In the real estate brokerage business, net sales totaled 25 million yen (up 2,551.5% year on year) and segment income totaled 21 million yen (up 2,381.8% year on year), reflecting real estate brokerage fees. [Contracting business] Regarding the contracting business, due to the execution of construction contracts as well as renovation work and such, net sales totaled 171 million yen (up 46.2% year on year) and segment income totaled 2 million yen (up 168.7% year on year). [Other] (Assets) (Liabilities) This section refers to business segments not included in the reportable segments. Mainly due to insurance agency services, net sales totaled 14 million yen (up 5.3% year on year) and segment income totaled 13 million yen (up 3.5% year on year). (2) Explanation of Financial Position Total assets at the end of the second quarter of the current fiscal year increased 1,278 million yen from the end of the previous consolidated fiscal year to 12,885 million yen. Liabilities increased 1,509 million yen from the end of the previous consolidated fiscal year to 8,031 million yen. This was mainly due to a 1,201 million yen increase in long-term borrowings (including the current portion of long-term borrowings. The same applies hereafter.) and a 265 million yen increase in short-term borrowings payable to fund the acquisition of land for new Net assets decreased by 230 million yen from the end of the previous fiscal year to 4,854 million yen while the equity ratio decreased by 6.1 percentage points from the end of the previous consolidated fiscal year to 37.6%. development projects, etc. (Net assets) (Cash flow status) Cash and cash equivalents at the end of the second quarter of the current fiscal year decreased 668 million yen from the end of the previous consolidated fiscal year to 2,714 million yen. [Cash flows from (used in) operating activities] Net cash used in operating activities amounted to 2,650 million yen (versus an inflow of 1 million in the same period of the previous year) mainly due to a decrease of 2,500 million yen resulting from an increase in inventories, despite an increase of 100 million yen in advances received due to receipt of sales contract deposits related to property sales. [Cash flows from (used in) investing activities] Net cash provided by investing activities amounted to 724 million yen (versus 39 million yen in the same period of the previous year), mainly due to a 730 million yen increase from the collection of loans receivable. [Cash flows from (used in) financing activities] Net cash provided by financing activities amounted to1,257 million yen (versus an outflow of 932 million yen in the same period of the previous fiscal year) due to a 1,783 million yen increase in long-term borrowings and 265 million yen increase in short-term borrowings to fund land acquisition for development projects, despite a 582 million yen decrease in long-term borrowings due to property sales and 188 million yen decrease by the payments of dividends. (3) Explanation of Consolidated Earnings Forecasts and Other Forward-Looking Information Regarding the outlook for the future, we will actively promote lot purchasing activities and sales activities in the real estate sales business with a planned annual supply target of around 25 properties, focusing on the rental apartment project under the brand name MIJAS, which performed well (18 properties were supplied in the fiscal year ended July 2021) and the rental apartment project EL -2- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. FARO (three properties were supplied in the fiscal year ended July 2021), as a “comprehensive developer focusing on manufacturing” in order to become a partner for life, our corporate philosophy. With the aim to secure a more stable income, we will work on the development of products that will meet a range of customer needs and promote business activities such as the rental apartment series “EL FARO” project, the real estate revitalization “ME BLD.” project, and the real estate securitization business, in addition to our mainstay “MIJAS” project. As for the earnings forecast for the next fiscal year (ending July 2022), net sales of 12,300 million yen (up 20.8% from the previous consolidated fiscal year), operating profit of 820 million yen (down 16.6% from the previous consolidated fiscal year), ordinary profit of 620 million yen (down 35.5% from the previous consolidated fiscal year), and net income attributable to owners of parent of 380 million yen (down 54.0% from the previous consolidated fiscal year) are projected. As stated in the “Notice of Differences between Consolidated Earnings Forecast and Actual Results for the Second Quarter of the Fiscal Year Ending July 2022” released today, there are differences between the consolidated earnings forecast and actual results for the second quarter of the current fiscal year. However, there are no changes from the full-year earnings forecast announced on September 14, 2021. The Company has actively introduced a range of measures to prevent the spread of COVID-19, including staggering working hours, urging employees to work from home and promoting teleworking, and is putting health considerations for its officers, employees, and customers at the forefront of its operating activities. At this point, it is difficult to predict the impact of COVID-19 on the Group’s consolidated earnings, including the outlook for the real estate market. However, if we determine revisions to the full-year consolidated earnings forecasts are necessary in the light of changing circumstances, we will make a timely announcement of such decisions. -3- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. 2. Quarterly Consolidated Financial Statements and Main Notes (1) Quarterly Consolidated Balance Sheet Previous consolidated fiscal year (July 31, 2021) (Unit: thousand yen) Second quarter of the current fiscal year (January 31, 2022) Assets Current assets Cash and deposits Accounts receivable Accounts receivable – trade and contract assets Real estate for sale Real estate for sale in process Short-term loans receivable Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Intangible assets Investments and other assets Investment securities Long-term loans receivable Long-term accounts receivable Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 3,404,314 31,669 – 1,730,826 3,969,645 1,450,000 100,147 (188) 10,686,414 597,976 160 36,900 428,815 405,440 40,438 241,309 (830,440) 322,463 920,600 11,607,015 2,740,700 – 50,702 1,919,287 6,281,805 720,000 250,130 (390) 11,962,236 592,065 85 36,550 428,583 400,420 20,121 271,246 (825,420) 331,500 923,651 12,885,888 -4- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. Previous consolidated fiscal year (July 31, 2021) (Unit: thousand yen) Second quarter of the current fiscal year (January 31, 2022) Liabilities Current liabilities Accounts payable – trade Short-term borrowings Current portion of long-term borrowings Current portion of bonds payable Lease obligations Income taxes payable Provision for bonuses Other Total current liabilities Non-current liabilities Long-term borrowings Corporate bonds Lease obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets 105,544 487,500 1,012,839 26,000 1,759 14,848 70,552 527,818 2,246,863 4,024,839 32,000 3,173 215,133 4,275,146 6,522,009 100,000 1,495,610 3,854,929 (380,474) 5,070,065 1,100 1,100 13,840 5,085,005 11,607,015 178,429 753,400 2,718,817 16,000 1,783 25,656 22,457 555,829 4,272,373 3,520,193 24,000 2,276 212,792 3,759,261 8,031,635 100,000 1,495,610 3,626,034 (380,474) 4,841,170 750 750 12,332 4,854,252 12,885,888 -5- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. (2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income Quarterly Consolidated Statement of Income Consolidated cumulative second quarter Selling, general and administrative expenses Net sales Cost of sales Gross profit Operating profit Non-operating income Interest income Penalty income Compensation received Other Total non-operating income Non-operating expenses Interest expenses Commissions expenses Other Total non-operating expenses Ordinary profit Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Quarterly profit (loss) Profit attributable to non-controlling interests Profit (loss) attributable to owners of parent First two quarters of fiscal year ended July 2021 (August 1, 2020 to January 31, 2021) (Unit: thousand yen) First two quarters of fiscal year ending July 2022 (August 1, 2021 to January 31, 2022) 3,131,640 2,466,624 665,016 492,358 172,657 23,485 328 41,800 19,084 84,697 63,564 13,983 2,347 79,896 177,458 177,458 16,432 9,514 25,946 151,512 1,122 150,389 2,897,146 2,290,764 606,381 533,300 73,081 18,015 3,275 – 5,998 27,289 68,635 24,596 477 93,708 6,662 6,662 25,837 20,316 46,153 (39,491) 492 (39,984) -6- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. Quarterly Consolidated Statement of Comprehensive Income Consolidated cumulative second quarter Profit of Loss ( ) Other comprehensive income Valuation difference on available-for-sale securities Total other comprehensive income Comprehensive income (Breakdown) Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests First two quarters of fiscal year ended July 2021 (August 1, 2020 to January 31, 2021) (Unit: thousand yen) First two quarters of fiscal year ending July 2022 (August 1, 2021 to January 31, 2022) 151,512 3,075 3,075 154,588 153,465 1,122 (39,491) (350) (350) (39,841) (40,334) 492 -7- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. First two quarters of fiscal year ended July 2021 (August 1, 2020 to January 31, 2021) (Unit: thousand yen) First two quarters of fiscal year ending July 2022 (August 1, 2021 to January 31, 2022) 177,458 6,443 (10,470) (23,507) 63,730 (25,238) (9,678) (117,252) 57,309 460,032 (113,001) (403,787) 62,039 15,608 (57,055) (39,132) 20,502 1,963 (2,330) 41,206 227 (100) 39,004 (995,107) (850) 1,114,665 (912,963) (18,000) (118,069) (2,000) (932,325) (891,357) 2,277,337 1,385,979 6,662 5,986 (4,818) (18,015) 68,732 (48,094) (19,033) (2,500,592) 72,884 100,884 14,485 (236,047) (2,556,966) (2,650,293) 18,015 (76,720) (55,604) 20,983 (11,870) 7,200 730,229 (1,000) 724,559 265,900 (873) 1,783,500 (582,167) (18,000) (188,910) (2,000) 1,257,448 (668,284) 3,382,474 2,714,190 (3) Quarterly consolidated statement of cash flows Cash flows from (used in) operating activities Profit before income taxes Depreciation Increase (decrease) in allowance for doubtful accounts Interest and dividend income Interest expenses on borrowings and bonds Increase (decrease) in provision of bonuses Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Increase (decrease) in advances received Increase (decrease) in deposits received Other Subtotal Interest and dividends received Interest paid Income taxes paid Income taxes refund Cash flows from (used in) operating activities Cash flows from (used in) investing activities Other payments into deposits Other proceeds from withdrawal of deposits Proceeds from collection of loans receivable Payments for investment Cash flows from (used in) investing activities Cash flows from (used in) financing activities Net increase (decrease) in short-term borrowings Repayments of lease obligations Proceeds from long-term borrowings Repayments of long-term borrowings Redemption of bonds Dividends paid Dividends paid to non-controlling interests Cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Beginning balance for cash and cash equivalents Ending balance for cash and cash equivalents -8- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. (4) Notes to Quarterly Consolidated Financial Statements (Notes Related to Going Concern Assumption) Not applicable. (Notes on Substantial Changes in Amount of Shareholders’ Equity) First two quarters of fiscal year ended July 2021 (August 1, 2020 to January 31, 2021) 1. Dividends paid Resolution 28, October Ordinary meeting shareholders 2020 general of Ordinary shares Classes of shares Total amount of dividends (thousand yen) Dividend paid per share (yen) Record date Effective date 118,069 5.00 July 31, 2020 October 29, 2020 Source of Dividends Retained earnings 2. For dividends for which the record date belongs to the current consolidated cumulative second quarter but the effective date comes after the end of the second quarter of the current fiscal year Not applicable. 3. Substantial Changes in Shareholders’ Equity Not applicable. First two quarters of fiscal year ending July 2022 (August 1, 2021 to January 31, 2022) 1. Dividends paid Resolution 27, October Ordinary meeting shareholders 2021 general of Ordinary shares Classes of shares Total amount of dividends (thousand yen) Dividend paid per share (yen) Record date Effective date 188,910 8.00 July 31, 2021 October 28, 2021 Source of Dividends Retained earnings 2. For dividends for which the record date belongs to the current consolidated cumulative second quarter but the effective date comes after the end of the second quarter of the current fiscal year Not applicable. 3. Substantial Changes in Shareholders’ Equity Not applicable. (Changes in Accounting Policies) (Application of Accounting Standard for Revenue Recognition, etc.) From the beginning of the first quarter of the current fiscal year, the Company has adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020. (hereinafter referred to as the “Revenue Recognition Accounting Standard”) , and recognizes revenue at the amount expected to be received in exchange for the promised goods or services when control of the goods or services is transferred to the customer. In applying the Revenue Recognition Accounting Standard, etc., the Company has followed the transitional handling as stipulated in the proviso of Paragraph 84 of the Revenue Recognition Accounting Standard, and the cumulative effect of retroactively applying the new accounting policy prior to the beginning of the first quarter of the current fiscal year has been added to or deducted from retained earnings at the beginning of the first quarter of the current fiscal year, and the new accounting policy was applied from the balance at the beginning of the current period. However, the Company has applied the method set forth in Paragraph 86 of the Revenue Recognition Accounting Standard and not applied the new accounting policy retrospectively to contracts in which almost all the revenue amounts were recognized in accordance with the previous treatment prior to the beginning of the first quarter of the current fiscal year. The Company has also applied the method stipulated in -9- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. Paragraph 86, clause (1) of the Revenue Recognition Accounting Standard, and performed accounting based on the contract terms after reflecting all contractual changes for contractual changes made prior to the beginning of the first quarter of the current fiscal year. The cumulative impact was added to or deducted from the retained earnings at the beginning of the first As a result, there has been no impact on profit and loss and the beginning balance of retained earnings for the current quarter of the current fiscal year. consolidated cumulative second quarter. Due to the application of the Revenue Recognition Accounting Standard, etc., “Accounts receivable – trade” in “Current assets” in the consolidated balance sheet for the previous consolidated fiscal year is presented as “Accounts receivable – trade and contract assets” from the first quarter of the current fiscal year. In accordance with the transitional handling stipulated in Paragraph 89-2 of the Revenue Recognition Accounting Standard, no reclassification has been made to the consolidated financial statements for the previous consolidated fiscal year to conform to the new presentation method. Furthermore, in accordance with the transitional handling stipulated in Paragraph 28-15 of the “Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No. 12, March 31, 2020), the Company has not presented disaggregated information of revenues from contracts with customers for the previous consolidated cumulative second quarter. (Application of Accounting Standards for Calculation of Fair Value, etc.) The Company has applied the Accounting Standard for Calculation of Fair Value (ASBJ Statement No. 30, July 4, 2019, hereinafter referred to as the “Accounting Standard for Calculation of Fair Value”) from the beginning of the first quarter of the current fiscal year. The new accounting policy stipulated in the Accounting Standard for Calculation of Fair Value, etc. will be applied continuously in the future in accordance with the transitional handling stipulated in Paragraph 19 of the Accounting Standard for Calculation of Fair Value and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). The application of this accounting standard has had no impact on the Quarterly Consolidated Financial Statements for the current consolidated cumulative second quarter. (Additional Information) (Application of tax effect accounting for the transition from a consolidated tax payment system to a group aggregation system) As for the transition to a group aggregation system established by the Act for Partial Amendment to the Income Tax Act, etc. (Act No. 8 of 2020) and the items for which the non-consolidated tax payment system was reviewed in conjunction with the transition to the group aggregation system, in line with Paragraph 3 of the Treatment of Application of Tax Effect Accounting for Transition from a Consolidated Taxation System to a Group Aggregation System (PITF No. 39, March 31, 2020), the Company has not applied the provisions of Paragraph 44 of the Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, February 16, 2018), and decided the amount of deferred tax assets and deferred tax liabilities based on the provisions of the tax law before the revision. -10- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. (Segment Information, etc.) [Segment information] I. First two quarters of fiscal year ended July 2021 (August 1, 2020 to January 31, 2021) 1. Information on Net Sales and Income or Loss Amounts by Reporting Segment Reportable segment Real estate sales business Real estate leasing business Real estate brokerage business Contracting business Total Other (* 3) Total Reconciliation (* 1) (Unit: thousand yen) Amount recorded in quarterly consolidated statement of income (* 2) – – – – – – – – – – Net sales sales Net customers to external Transactions with other segments – 1,956,260 1,048,863 952 111,600 3,117,677 13,963 3,131,640 3,131,640 – 5,774 5,774 5,774 (5,774) – Total 1,956,260 1,048,863 952 117,374 3,123,451 13,963 3,137,414 (5,774) 3,131,640 Segment profit 83,141 179,901 881 1,029 264,954 13,521 278,475 (105,817) 172,657 (Note) 1. The segment income adjustment of (105,817) thousand yen consists of the elimination of inter-segment transactions of (3,910) thousand yen and corporate expenses of (101,907) thousand yen not distributed to the reportable segments. Corporate expenses consist primarily of general and administrative expenses not attributable to the reportable segments. 2. Segment income is adjusted to the operating profit in quarterly consolidated statement of income. 3. The “Other” section represents business segments not included in the reporting segments and is primarily comprised of the insurance agency operations. Not applicable. 2. Information on Impairment Loss on Non-Current Assets or Goodwill, etc. by Reporting Segment II. First two quarters of fiscal year ending July 2022 (August 1, 2021 to January 31, 2022) 1. Information on Net Sales and Income or Loss Amounts by Reportable Segment and Revenue Disaggregation Reportable segment Real estate sales business Real estate leasing business Real estate brokerage business Contracting business Total Other (* 3) Total Reconciliation (* 1) (Unit: thousand yen) Amount recorded in quarterly consolidated statement of income (* 2) Net sales MIJAS EL FARO 1,331,001 1,331,001 1,331,001 1,331,001 Other 359,579 237,682 25,249 168,861 791,372 14,704 806,077 806,077 1,690,581 237,682 25,249 168,861 2,122,374 14,704 2,137,079 2,137,079 Other revenue – 760,067 – 760,067 – 760,067 760,067 1,690,581 997,749 25,249 168,861 2,882,441 14,704 2,897,146 2,897,146 – – 2,793 2,793 – 2,793 (2,793) – Revenue from contracts with customers sales Net customers to external Transactions with other segments Total 1,690,581 997,749 25,249 171,655 2,885,235 14,704 2,899,940 (2,793) 2,897,146 Segment profit 20,832 115,373 21,874 2,765 160,845 13,998 174,843 (101,762) 73,081 (Note) 1. The segment income adjustment of (101,762) thousand yen consists of the elimination of inter-segment transactions of 1,507 thousand yen and corporate expenses of (103,269) thousand yen not distributed to the reportable segments. Corporate expenses consist primarily of general and administrative expenses not attributable to the reportable segments. 2. Segment income is adjusted to the operating profit in quarterly consolidated statement of income. – – – – -11- Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022 Meiho Enterprise Co., Ltd. 3. The “Other” section represents business segments not included in the reporting segments and is primarily comprised of the insurance agency operations. 2. Disclosure of changes, etc. in reportable segments As described in the Changes in Accounting Policies, the Company has applied the Revenue Recognition Accounting Standard, etc., and changed its accounting method for revenue recognition since the beginning of the first quarter of the current fiscal year. Accordingly, the method for calculating profit or loss in the business segments has been changed. The effect of this change is as described in the Changes in Accounting Policy. 3. Information on Impairment Loss on Non-Current Assets or Goodwill, etc. by Reporting Segment Not applicable. (Significant events after reporting period) A consolidated subsidiary of the Company collected 14,500 thousand yen from our major shareholder, House Saison Co. Ltd. on March 8, 2022, as a partial recovery of short-term loans receivable. This recovery will not have a material impact on the statement of income for the next consolidated accounting period. As of the release date of this Consolidated Financial Summary for the Second Quarter of the Fiscal Year Ending July 2022, the remaining balance of short-term loans receivable is 705,500 thousand yen. -12-