アーバネットコーポレーション（3242） – 【Delayed】Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2022 [Japanese GAAP]

Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2022 (Nine Months Ended March 31, 2022) [Japanese GAAP] May 12, 2022 Listing: Tokyo Stock Exchange URL: https://www.urbanet.jp/ 3242 Wataru Akai, Director, General Manager of Administration Division Tel: +81-(0)3-6630-3051 Company name: URBANET CORPORATION Co., Ltd. Stock code: Representative: Shinji Hattori, President and Representative Director Contact: Scheduled date of filing of Quarterly Report: Scheduled date of payment of dividend: Preparation of supplementary materials for financial results: Yes Holding of financial results meeting: 1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2022 May 12, 2022 – Yes (for institutional investors and analysts) (All amounts are rounded down to the nearest million yen) (July 1, 2021 to March 31, 2022) (1) Consolidated results of operations Net sales Operating profit (Percentages represent year-on-year changes.) Profit attributable to owners of parent Ordinary profit Nine months ended Mar. 31, 2022 Nine months ended Mar. 31, 2021 Note: Comprehensive income (millions of yen) Nine months ended Mar. 31, 2022: Nine months ended Mar. 31, 2021 % Millions of yen (43.4) 1,285 2,273 112.4 Millions of yen 14,737 17,400 (15.3) 56.1 % Millions of yen (46.4) 1,124 2,097 149.8 769 (down 42.6%) % Millions of yen 736 1,306 1,339 (up 132.9%) % (43.6) 127.2 Net income per share Diluted net income per share Yen 23.48 41.65 Yen – – Nine months ended Mar. 31, 2022 Nine months ended Mar. 31, 2021 (2) Consolidated financial condition As of Mar. 31, 2022 As of Jun. 30, 2021 Reference: Shareholders’ equity (millions of yen) 2. Dividends Total assets Net assets Equity ratio Millions of yen 36,430 35,175 Millions of yen 13,804 13,591 % 33.5 34.2 As of Mar. 31, 2022: 12,217 As of Jun. 30, 2021: 12,036 1Q-end 2Q-end Year-end Total Dividend per share 3Q-end Fiscal year ended Jun. 30, 2021 Fiscal year ending Jun. 30, 2022 Fiscal year ending Jun. 30, 2022 (forecast) Note: Revision to the most recently announced dividend forecast: None 3. Consolidated Earnings Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 to June 30, 2022) Yen – – Yen 10.00 9.00 Yen 17.00 17.00 Yen 7.00 8.00 Yen – – Net sales Operating profit Ordinary profit Millions of yen 23,000 Full year Note: Revisions to the most recently announced earnings forecast: None % Millions of yen 2,220 % Millions of yen 1,950 (4.4) 9.8 (Percentages represent year-on-year changes.) Profit attributable to owners of parent Net income per share % Millions of yen 1,300 (6.3) % 1.4 Yen 41.44 (1) Changes in consolidated subsidiaries during the period (changes in specified subsidiaries resulting in changes in * Notes the scope of consolidation): None Newly added: – Excluded: – (2) Application of special accounting methods for presenting quarterly consolidated financial statements: None (3) Changes in accounting policies and accounting estimates, and restatements 1) Changes in accounting policies due to revisions in accounting standards, others: Yes 2) Changes in accounting policies other than 1) above: None 3) Changes in accounting estimates: None 4) Restatements: None (4) Number of shares outstanding (common shares) 1) Number of outstanding shares as of the end of the period (including treasury shares) As of Mar. 31, 2022: 31,374,100 shares As of Jun. 30, 2021: 31,374,100 shares 2) Number of treasury shares as of the end of the period 3) Average number of outstanding shares during the period As of Mar. 31, 2022: 62 shares As of Jun. 30, 2021: 62 shares Nine months ended Mar. 31, 2022: 31,374,038 shares Nine months ended Mar. 31, 2021: 31,374,038 shares * The current quarterly consolidated financial results are not subject to the quarterly review by certified public accountants or auditing firms. * Explanation of appropriate use of earnings forecasts, and other special items Cautionary statement with respect to forecasts – Forecasts of future performance in these materials are based on assumptions judged to be valid and information available to the Urbanet Group’s management at the time these materials were prepared. Actual results may differ significantly from these forecasts for a number of reasons. Please refer to “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Earnings Forecast and Other Forward -looking Statements” on page 3 of the attachments for assumptions for forecasts and notes of caution for usage. How to view supplementary information at the financial results meeting – Materials to be distributed at the meeting will be disclosed on the Timely Disclosure network (TDnet) and available on the Urbanet website at the same time as this financial summary. The Urbanet Group plans to hold the financial results meeting for investors as follows. Materials distributed and video recorded at this event are to be posted promptly on the Urbanet website following the meeting. – Friday, May13, 2022: Financial results meeting for institutional investors and analysts URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 Contents of Attachments 1. Qualitative Information on Quarterly Consolidated Financial Performance (1) Explanation of Results of Operations (2) Explanation of Financial Condition (3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements 2. Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheet (2) Quarterly Consolidated Statements of Income and Comprehensive Income (3) Quarterly Consolidated Statement of Cash Flows (4) Notes to Quarterly Consolidated Financial Statements Going Concern Assumption Significant Changes in Shareholders’ Equity Changes in Accounting Policies Segment and Other Information 2 2 2 3 4 4 5 7 8 8 8 8 9 1 URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 1. Qualitative Information on Quarterly Consolidated Financial Performance The Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and other standards are applied from the first quarter of the fiscal year ending June 30, 2022. As a result, net sales, operating profit, ordinary profit and profit before income taxes for the first nine months of the current fiscal year (hereinafter “the period under review”) each decreased by 12 million yen. In addition, retained earnings at the beginning of the fiscal year increased by 8 million yen. (1) Explanation of Results of Operations For the period under review, the Urbanet Group companies (hereinafter “the Urbanet Group” or “the Group”) reported net sales of 14,737 million yen (down 15.3% year-on-year), operating profit of 1,285 million yen (down 43.4% year-on-year), ordinary profit of 1,124 million yen (down 46.4% year-on-year), and profit attributable to owners of parent of 736 million yen (down 43.6% year-on-year). The year-on-year decrease in net sales and profits are mainly attributable to many high -margin projects as well as other projects that were included in the net sales for the first nine months of the previous fiscal year. It is also because the revenue recognition for the resale projects scheduled for the period under review has been postponed to the fourth quarter. Note that in the business of development and sale of one-room apartments buildings for investors, which is the main business of the Group, quarterly sales and profit margins fluctuate significantly from year to year since the timing of the completion-based revenue recognition, as well as the amount and profit margin, is different for each project and each year. Revenue recognition for projects scheduled for the current fiscal year is skewed to the third quarter or later. The performance by each business segment is explained below. (Real Estate Business) Net sales in the Real Estate Business were 14,691 million yen (down 15.5% year-on-year) and segment profit was 2,024 million yen (down 33.8% year-on-year). Total amount of sales from the real estate development sales category was 14,222 million yen (down 15.5% year-on-year) with revenues from sale of 534 units in a total of nine one-room apartment buildings for investors. Net sales in the real estate purchase and sales category were 62 million yen (down 68.9% year-on-year) with revenues from purchase and resale of one unit of pre-owned condominium and those of one pre-owned house. Net sales in the others real estate business category were 407 million yen (up 13.2% year-on-year) with revenues from real estate brokerage and real estate leasing among others. (Hotel Business) Net sales in the Hotel Business were 46 million yen (up 191.2% year-on-year) and segment loss was 39 million yen (compared with a loss of 86 million yen for the same period of the previous fiscal year) mainly with room fee revenues from Hotel Asyl Tokyo Kamata. (2) Explanation of Financial Condition 1) Analysis of Financial Position Total assets, total liabilities and net assets on a consolidated basis amounted to 36,430 million yen (an increase of 1,255 million yen over the end of the previous fiscal year), 22,626 million yen (an increase of 1,042 million yen), and 13,804 million yen (an increase of 213 million yen), respectively. The increase in total assets was mainly due to a decrease of 374 million yen in income taxes receivable, while there were increases of 886 million yen in cash and deposits as a result of the accumulation of profits due to the progressed property sales, 560 million yen in inventories as a result of active land purchasing efforts in a very competitive land purchase environment and 174 million yen in property, plant and equipment mainly due to the purchase of income properties. The increase in total liabilities was mainly due to a decrease of 349 million yen in advances received due to the completion and transfer of properties, while there were increases of 366 million yen in accounts payable-trade and 2 URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 894 million yen in borrowings mainly for the land purchases. The increase in net assets was mainly due to an increase in profit attributable to owners of parent, which outweighed a decrease in the payment of year-end dividends and other factors. 2) Analysis of Cash Flows Cash and cash equivalents (hereinafter “net cash”) at the end of the period under review amounted to 8,079 million yen, an increase of 886 million yen over the end of the previous fiscal year. This was mainly due to a decrease in net cash used in investing activities, while there was an increase in net cash provided by operating and financing activities. Cash flows from operating activities Net cash provided by operating activities for the period under review totaled 921 million yen (compared with net cash provided of 1,049 million yen in the same period of the previous fiscal year). This was mainly due to the booking of profit before income taxes. Cash flows from investing activities Net cash used in investing activities for the period under review totaled 398 million yen (compared with net cash used of 20 million yen in the same period of the previous fiscal year). This was mainly due to the purchase of property, plant and equipment. Cash flows from financing activities Net cash provided by financing activities for the period under review totaled 363 million yen (compared with net cash used of 2,220 million yen in the same period of the previous fiscal year). This was mainly because proceeds from the long-term borrowings for the procurement of land for development on our own in the Real Estate Business outweighed the decrease in cash due to the repayments of long-term borrowings resulting from the sale of units and the payment of dividends. (3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements The Urbanet Group reported net sales of 14,737 million yen, operating profit of 1,285 million yen, ordinary profit of 1,124 million yen and profit attributable to owners of parent of 736 million yen for the period under review. As a result, compared to the consolidated earnings forecast for the current fiscal year (fiscal year ending June 30, 2022) announced on August 5, 2021 in “Consolidated Financial Results for the Fiscal Year Ended June 30, 2021,” the progress rates have remained at a low level: 64.1 % in net sales, 57.9% in operating profit, 57.7% in ordinary profit, and 56.7% in profit attributable to owners of parent. This is because our main business is development and sale (wholesale) of one-room apartments buildings for investors, in which quarterly sales and profit margins significantly fluctuate since the timing, amount, or profit margin of the completion-based revenue recognition are different from project to project and from year to year, as the timing, amount, or scale of land purchase are different for each project, depending on its construction period and the buyer. The low progress rates for the period under review are also attributable to the postponement of a land resale of one property scheduled to be included in the sales in the period under review to the fourth quarter. We have decided to maintain the consolidated earnings forecast for the current fiscal year that was anno unced on August 5, 2021, at the time these materials were prepared, partly because sales for the current fiscal year are weighted toward the period under review and beyond. We will promptly announce any revisions to the consolidated earnings forecast as ne cessary, paying sufficient attention to the uncertain factors such as the resurgence of COVID-19 and supply chain disruptions that may affect construction periods or sales activities as well as the transfer of resale properties. 3 URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 2. Quarterly Consolidated Financial Statements and Notes (1) Quarterly Consolidated Balance Sheet FY6/21 (As of Jun. 30, 2021) Third quarter of FY6/22 (As of Mar. 31, 2022) (Thousands of yen) Accounts payable-trade Short-term borrowings Current portion of long-term borrowings Assets Current assets Cash and deposits Real estate for sale Real estate for sale in process Other Total current assets Non-current assets Property, plant and equipment Intangible assets Investments and other assets Total non-current assets Total assets Liabilities Current liabilities Lease obligations Income taxes payable Provision for bonuses Other Total current liabilities Non-current liabilities Long-term borrowings Lease obligations Retirement benefit liability Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Non-controlling interests Total net assets Total liabilities and net assets 7,203,312 2,225,450 18,686,211 640,297 28,755,271 5,858,073 4,140 557,772 6,419,986 35,175,257 1,400,124 400,000 6,674,560 15,246 – – 888,488 9,378,419 21,231 57,038 37,701 12,205,434 21,583,854 2,693,701 2,191,829 7,151,425 (17) 12,036,938 1,554,464 13,591,403 35,175,257 4 8,089,773 2,149,187 19,322,743 226,591 29,788,294 6,032,710 3,390 606,492 6,642,593 36,430,888 1,766,587 570,000 4,540,740 16,136 116,788 28,377 527,484 7,566,113 15,847 59,660 36,407 15,060,109 22,626,223 2,693,701 2,191,829 7,332,032 (17) 12,217,545 1,587,119 13,804,664 36,430,888 12,089,464 14,948,194 URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 (2) Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statement of Income (For the Nine-month Period) First nine months of FY6/21 (Jul. 1, 2020 – Mar. 31, 2021) First nine months of FY6/22 (Jul. 1, 2021 – Mar. 31, 2022) (Thousands of yen) 17,400,488 14,036,496 3,363,991 1,090,438 2,273,553 67 – 3,668 3,736 122,340 42,235 14,865 179,441 2,097,847 7,700 7,700 – 116,677 116,677 1,988,870 608,213 41,276 649,489 1,339,381 32,654 1,306,726 14,737,551 12,506,364 2,231,187 945,356 1,285,830 65 1,818 5,156 7,040 127,504 39,965 634 168,103 1,124,767 113 113 – – – 1,124,881 401,375 (45,690) 355,684 769,196 32,654 736,542 Selling, general and administrative expenses Net sales Cost of sales Gross profit Operating profit Non-operating income Interest income Commission income Other Total non-operating income Non-operating expenses Interest expenses Commission expenses Other Total non-operating expenses Ordinary profit Extraordinary income Extraordinary losses Impairment losses Total extraordinary losses Profit before income taxes Income taxes-current Income taxes-deferred Total income taxes Profit Gain on reversal of share acquisition rights Gain on sale of golf membership Total extraordinary income Profit attributable to non-controlling interests Profit attributable to owners of parent 5 URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 Quarterly Consolidated Statement of Comprehensive Income (For the Nine-month Period) Profit Other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests First nine months of FY6/21 (Jul. 1, 2020 – Mar. 31, 2021) First nine months of FY6/22 (Jul. 1, 2021 – Mar. 31, 2022) (Thousands of yen) 1,339,381 1,339,381 – 1,306,726 32,654 769,196 769,196 – 736,542 32,654 6 URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 (3) Quarterly Consolidated Statement of Cash Flows First nine months of FY6/21 (Jul. 1, 2020 – Mar. 31, 2021) First nine months of FY6/22 (Jul. 1, 2021 – Mar. 31, 2022) (Thousands of yen) 1,988,870 103,356 116,677 29,559 8,399 (67) 122,340 20,277 294,968 16,178 77,273 (4,637) (261,631) 2,511,564 68 (124,103) (1,337,687) 1,049,843 (19,982) (472) (400) (20,854) 344,980 6,262,000 (8,326,020) (12,467) (489,435) (2,220,942) (1,191,954) 8,898,267 7,706,313 1,124,881 108,700 – 28,377 2,622 (65) 127,504 22,445 (449,415) 366,462 (349,024) 2,108 (15,091) 969,504 66 (129,773) 81,366 921,163 (390,132) (3,102) (4,886) (398,121) 170,000 6,549,000 (5,824,090) (11,773) (519,717) 363,418 886,461 7,193,312 8,079,773 Cash flows from operating activities Profit before income taxes Depreciation Impairment losses Increase (decrease) in provision for bonuses Increase (decrease) in retirement benefit liability Interest and dividend income Interest expenses Decrease (increase) in investments in leases Decrease (increase) in inventories Increase (decrease) in trade payables Increase (decrease) in advances received Increase (decrease) in accrued consumption taxes Other, net Subtotal Interest and dividends received Interest paid Income taxes refund (paid) Net cash provided by (used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Purchase of intangible assets Other, net Net cash provided by (used in) investing activities Cash flows from financing activities Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of lease obligations Dividends paid Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 7 URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 (4) Notes to Quarterly Consolidated Financial Statements Going Concern Assumption Not applicable. Significant Changes in Shareholders’ Equity Not applicable. Changes in Accounting Policies Application of the Accounting Standard for Revenue Recognition Urbanet started to apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) at the beginning of the first quarter of the current fiscal year. Based on this standard, revenue expected to be received in exchange for the provision of goods and services is recognized when the control of the goods and services is transferred to customers. For the application of the Accounting Standard for Revenue Recognition, in accordance with the transitional measures in the proviso to Paragraph 84 of this standard, the cumulative effect of the retrospective application of the new accounting standard, if it is applied prior to the first quarter of the current fiscal year, is added to or subtracted from retained earnings at the beginning of the first quarter of the current fiscal year. The new standard is then applied beginning with this amount of retained earnings. As a result, the application of the new standard resulted in reductions of 12,680 thousand yen in sales, operating profit, ordinary income and profit before income taxes, respectively. There is an increase of 8,797 thousand yen in retained earnings at the beginning of the current fiscal year. 8 URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Third Quarter of FY6/22 Segment and Other Information Segment Information I. First nine months of FY6/21 (Jul. 1, 2020 – Mar. 31, 2021) 1. Information related to net sales and profit or loss for each reportable segment Reportable segment Real Estate Hotel Total Adjustment (Note 1) Net sales External sales Inter-segment sales and transfers Total 17,384,660 15,828 17,400,488 17,384,660 15,828 17,400,488 (Thousands of yen) Amounts shown on quarterly consolidated statement of income (Note 2) – 17,400,488 17,400,488 Segment profit (loss) Notes: 1. The negative 697,023 thousand yen adjustment to segment profit (loss) is corporate expenses that are not allocated to any of the reportable segments. Corporate expenses mainly consist of general and administrative expenses that are not attributable to any of the reportable segments. (697,023) (86,429) 3,057,006 2,970,577 2,273,553 2. Segment profit (loss) is adjusted to be consistent with operating profit shown on the quarterly consolidated statement of income. 2. Information related to impairment losses on non-current assets or goodwill, etc. for each reportable segment (Significant impairment losses on non-current assets) In the Real Estate Business segment, the Group recognized impairment losses on non-current assets (a real estate for leasing). The amount of such impairment losses recognized was 116,677 thousand yen for the period under review. II. First nine months of FY6/22 (Jul. 1, 2021 – Mar. 31, 2022) 1.Information related to net sales and profit or loss for each reportable segment Reportable segment Real Estate Hotel Total Adjustment (Note 1) Net sales External sales Inter-segment sales and transfers Total 14,691,453 46,097 14,737,551 14,691,453 46,097 14,737,551 (Thousands of yen) Amounts shown on quarterly consolidated statement of income (Note 2) – 14,737,551 14,737,551 – – – – – – – – – – – – Segment profit (loss) Notes: 1. The negative 699,287 thousand yen adjustment to segment profit (loss) is corporate expenses that are not allocated to (699,287) (39,860) 2,024,978 1,985,118 1,285,830 any of the reportable segments. Corporate expenses mainly consist of general and administrative expenses that are not attributable to any of the reportable segments. 2. Segment profit (loss) is adjusted to be consistent with operating profit shown on the quarterly consolidated statement of income. 2. Information related to impairment losses on non-current assets or goodwill, etc. for each reportable segment (Significant impairment losses on non-current assets) Not applicable. This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation. 9