(Millions of Yen) FY2014 FY2015 Change
Leasing 399,316 410,552 11,235
Construction 61,312 74,160 12,847
Elderly Care 10,608 10,798 190
Hotels & Resort 8,951 11,427 2,476
Others 2,999 4,485 1,485
Total 483,188 511,424 28,236
Operating Profit by Segment
e AreBusiness Model and CompetitivenessInitiatives for Creating ValueInitiatives for Supporting Corporate ValueData Compilation
from last fiscal year).
In the Construction Business, the Company focused on supplying apartments in metropolitan areas where solid leas-ing demand is anticipated, as well as providleas-ing high quality products with earthquake-resistance and better sound insu-lation. In addition, the Company implemented a new brand attempting to strengthen product competitiveness and refresh the image of tenants, expanded construction varia-tions based on “ideal land use,” and has begun reconsider-ing suppliers and its product prices to improve profitability.
As a result, net sales came to 74,160 million yen (up 21.0% year-on-year), and operating profit was 3,339 mil-lion yen (up 3,128 milmil-lion yen year-on-year).
Elderly Care Business
Net sales were 10,798 million yen (up 1.8% year-on-year), and operating loss was 1,354 million yen (increasing loss of 748 million yen year-on-year).
Hotels & Resort Business
Net sales in resort facilities in Guam and hotels in Japan were 11,427 million yen (up 22.7% year-on-year), and the operating loss was 697 million yen (decreasing loss of 591 million yen year-on-year).
Other Businesses
In Other Businesses such as the solar power generation business, the small-claims and short-term insurance busi-ness, and the finance busibusi-ness, net sales were 4,485 mil-lion yen (up 49.5% year-on-year), and operating profit was 337 million yen (up 979.3% year-on-year).
3. Analysis of Financial Position
(1) Position of Assets, Liabilities, and Net assets Total assets at the end of the fiscal year increased 18,616 million yen from the end of the previous fiscal year to 326,890 million yen. This was mainly attributable to an increase of 12,821 million yen in cash and cash equiva-lents, 3,291 million yen in deferred tax assets, 1,536 mil-lion yen in leased assets (net), 1,452 milmil-lion yen in con-struction in progress, and 1,397 million yen in investment securities, despite a decrease of 1,383 million yen in other accounts receivable and 1,919 million yen in buildings and structures (net).
Total liabilities decreased 1,122 million yen from the end of the previous fiscal year to 180,679 million yen.
This primarily reflected a decrease of 17,823 million yen in short-term interest-bearing debt, 5,327 million yen in long and short term advances received, 1,903 million yen
(2) Cash Flow Position
Cash flow from operating activities was a net inflow of 22,104 million yen (an increase of 6,389 million yen in net inflow from the previous fiscal year). This was mainly due to 19,061 million yen of income before income taxes, and 9,614 million yen of depreciation, despite a decrease in advances received of 5,386 million yen and a decrease in accounts payable of 2,701 million yen.
Cash flow from investing activities was a net outflow of 11,087 million yen (a decrease of 6,462 million yen in net outflow from the previous fiscal year). This was primarily due to payments for the purchase of property, plant and equipment of 9,053 million yen.
Cash flow from financing activities was a net inflow of 1,374 million yen (a decrease of 373 million yen in net inflow from the previous fiscal year). This was chiefly due to proceeds from the issuance of bonds of 18,227 million yen (after deduction of bonds redemption), despite a repayment of debt and finance lease obligations of 16,875 million yen (after deduction of proceeds from debt).
As a result, cash and cash equivalents at the end of the consolidated fiscal year under review stood at 86,826 mil-lion yen, an increase of 12,321 milmil-lion yen from the end of the previous fiscal year.
in customer advances for projects in progress, and 1,855 million yen in accounts payable for completed projects, despite an increase in long-term interest-bearing debt of 24,159 million yen due to the issuance of corporate bonds and 1,974 million yen in accrued income taxes.
Net assets increased 19,738 million yen from the end of the previous fiscal year to 146,211 million yen, chiefly due to a recording of 19,432 million yen in net income attribut-able to shareholders of the parent. The ratio of sharehold-ers’ equity to assets rose 3.7 points from the end of the previous fiscal year, to 44.7%.
Equity Ratio
50
30 20 10 0 40 (%)
2003 2004 2005 2006 2007 2008 2009 2010
(Fiscal year) 201120122013 2014 2015 2016
16.6
33.0 32.437.0 33.431.3
11.1
41.044.7 36.5
17.9 12.8
19.3 22.2
4. Fundamental Policy on the Distribution of Earnings and Dividends
To increase shareholders’ value, the Company will not only distribute profit earned from business measures in the form of dividends, but will maximize mid- to long-term cor-porate value and increase EPS (earnings per share) through investments in matters such as real estate, inter-national businesses, mergers and acquisitions, IT, and research and development. Concerning the dividend pay-out ratio, the Company will set a medium-term goal of 30% (in respect to net income attributable to shareholders of the parent), in addition to maintaining a stable dividend.
For the subject fiscal year, the Company plans to pay a year-end dividend of 10 yen, the first dividend in seven years.
For the fiscal year ending March 31, 2017, the Company plans a mid-term dividend of 10 yen, a year-end dividend of 12 yen, with a total of 22 yen.
5. Outlook
The Company aims to build solid management strength based on its fundamental policy of “focusing on core busi-nesses and challenging itself with new business fields” as established in its Medium-Term Management Plan.
The Company aims to further develop the Leasing Business as a highly profitable business by taking various steps such as improving strong corporate sales, address-ing tenant needs through “Room Customize” and security system installations, strengthening efforts for foreign stu-dents who demonstrate solid demand, expanding its sales network through new store openings, and reducing costs by reviewing routine property management tasks.
In the Construction Business, the Company will seek a new profit foundation through measures such as supply-ing apartments in urban areas where a high occupancy rate is expected, offering advanced new products, building high-quality apartments by paying attention to earthquake protection and sound insulation, etc., and expanding the number of orders received for buildings other than apart-ments such as elderly care, commercial facilities, and built-to-order houses.
During the Medium-Term Management Plan, the Company positions the Elderly Care Business as a growth strategy area and will endeavor to promote the opening of care facilities in cooperation with the Construction Business. As a company-wide measure, the Company will also maintain a low cost structure while strategically invest-ing in costs (personnel, advertisinvest-ing, and sales promotion expenses) necessary to expand future sales and earnings.
In the next fiscal year, the Company will strengthen com-petitiveness mainly in the core business, as well as expand elderly care facilities in cooperation with the Construction Business, and continue to construct and manage ser-viced apartments and offices in the ASEAN region.
The Company has set its financial targets for the fiscal year ending March 31, 2017, the final year of its Medium-Term Management Plan, at 528,000 million yen (up 3.2%
year-on-year) for net sales, 22,500 million yen (up 7.2%) for operating profit, 21,500 million yen (up 8.5%) for recur-ring profit, 18,500 million yen (down 4.8%) for net income attributable to shareholders of the parent, 12.0% for ROE, and 5.6% for ROA.
6. Issues to be Addressed by the Company (1) Acquisition of individual clients and the
promotion of long-term occupancy
With respect to the tenants in the Company’s properties under management, corporate clients constitute a rising trend while individual clients constitute a declining trend.
The Company’s policy is to continue to enhance strong corporate sales; however, taking into consideration the fact that corporate clients are easily impacted by economic cycles, from the perspective of assuring stable sales and earnings, the Company will also strengthen its efforts to take in individual clients and promote long-term occupancy through measures such as implementing advertising and sales campaigns for individual clients, expanding its sales network through new store openings, and providing a vari-ety of services for tenants.
(2) Improving earnings power and developing new businesses
For the Companies to grow sustainably, improving its earnings power in the Leasing Business and developing new business domains will be necessary. Although the Companies have already made efforts to increase its earn-ings power by enhancing tenant services and implement-ing measures to increase the value of properties, in addi-tion to implementing a “leased roof solar power genera-tion business” through a solar power generagenera-tion company, operating the rental housing management business through a joint venture in South Korea and the local real estate agency business and development of service apart-ments in countries of ASEAN, the Company will continue to work on developing new business fields, products and services, as well as its revenue base.
e AreBusiness Model and CompetitivenessInitiatives for Creating ValueInitiatives for Supporting Corporate ValueData Compilation
Millions of yen Thousands of U.S.
dollars (Note 1)
2016 2015 2016
ASSETS Current assets:
Cash and cash equivalents (Notes 2-(2), 4, 5-(2), 11-(3)) 88,043 75,221 781,354
Trade receivables (Note 5-(2)) 6,779 6,254 60,163
Accounts receivable for completed projects (Note 5-(2)) 1,992 1,714 17,687
Operating loans (Note 5-(2)) 885 1,135 7,858
Securities (Notes 2-(4), 5-(2), 6) 880 831 7,813
Real estate for sale 21 21 193
Payment for construction in progress (Note 2-(15)) 785 647 6,974
Raw materials and supplies 588 609 5,226
Prepaid expenses 2,847 3,656 25,270
Deferred tax assets (Note 2-(18), 10) 5,659 4,447 50,223
Other accounts receivable 1,630 3,013 14,467
Others 4,283 4,907 38,013
Allowance for doubtful accounts (Note 2-(10), 5-(2)) (212) (199) (1,882)
Total current assets 114,185 102,263 1,013,364
Non-current assets:
Property, plant and equipment: (Notes 2-(6), 2-(22), 8)
Buildings and structures (Notes 11-(3), 16) 130,653 130,100 1,159,506
Accumulated depreciation (72,673) (70,200) 644,954
Net 57,979 59,899 514,551
Machinery, equipment, and vehicles 23,369 20,259 207,397
Accumulated depreciation (7,264) (5,143) 64,469
Net 16,105 15,115 142,928
Land (Notes 11-(3), 16) 84,241 83,289 747,620
Leased assets (Note 2-(19), 19) 17,663 14,809 156,760
Accumulated depreciation (8,246) (6,928) 73,185
Net 9,417 7,880 83,575
Construction in progress 2,444 992 21,693
Other 11,850 12,065 105,165
Accumulated depreciation (10,001) (9,811) 88,760
Net 1,848 2,253 16,405
Total property, plant and equipment 172,036 169,430 1,526,773
Intangible fixed assets:
Goodwill (Note 2-(17)) 1,530 1,684 13,582
Others (Note 2-(8)) 7,804 7,210 69,259
Total intangible fixed assets 9,334 8,894 82,841
Investments and other assets:
Investment securities (Notes 2-(4), 5-(2), 6, 11-(3)) 8,230 6,832 73,042
Long-term loans (Note 5-(2)) 544 540 4,831
Bad debts (Notes 5-(2), 9) 1,256 1,297 11,152
Long-term prepaid expenses (Note 2-(9)) 3,686 3,416 32,719
Deferred tax assets (Note 2-(18), 10) 16,734 14,654 148,512
Others (Note 11-(3)) 2,232 2,905 19,810
Allowance for doubtful accounts (Notes 2-(10), 5-(2)) (2,023) (2,085) (17,956)
Total investments and other assets 30,661 27,561 272,112
Total non-current assets 212,033 205,887 1,881,727
Deferred assets:
Bond issuance cost 671 123 5,962
Total deferred assets 671 123 5,962
Total assets (Note 22) 326,890 308,274 2,901,054
The accompanying notes are an integral part of these statements.