Please note that this document is a translation of the official announcement that was released on May 15, 2015. The translation is prepared and provided for the purpose of the reader’s convenience only. All readers are strongly recommended to refer to the original Japanese version of the news release for complete and accurate information.
Consolidated Financial Results
for the Fiscal Year Ended March 31, 2015
[Japanese GAAP]
May 15, 2015 Company name: Raysum Co., Ltd. Stock exchange listing: Tokyo Securities Exchange
Code number: 8890 URL: http://www.raysum.co.jp/
Representative: Takeshi Tanaka, President and CFO
Contact: Nobuyuki Matsukura, Managing Director, Division Manager of Administration Division Phone: +81-3-5157-8881
Scheduled date of Ordinary General Meeting of Shareholders: June 24, 2015 Scheduled date of commencing dividend payments: June 25, 2015
Scheduled date for filing of annual securities report: June 25, 2015
Availability of supplementary briefing material on financial results: Available
Schedule of financial results briefing session: Available (for institutional investors and analysts)
(Figures are rounded down to the nearest million yen) 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2015 (April 1, 2014 to March 31, 2015) (1) Consolidated Results of Operations (% indicates changes from the previous corresponding period)
Net sales Operating income Ordinary income Net income million yen % million yen % million yen % million yen % Fiscal year ended
March 31, 2015 30,919 54.4 5,964 73.8 6,013 77.8 5,899 139.1
Fiscal year ended
March 31, 2014 20,027 30.4 3,432 56.0 3,382 58.9 2,467 19.8
(Note) Comprehensive income: Fiscal year ended March 31, 2015: ¥6,034 million (132.2%) Fiscal year ended March 31, 2014: ¥2,598 million (16.3%)
Net income per share
Diluted net income per
share
Return on equity
Ordinary income to total
assets
Operating income to net
sales
yen yen % % %
Fiscal year ended
March 31, 2015 128.01 127.94 20.9 14.2 19.3
Fiscal year ended
March 31, 2014 53.54 – 10.3 8.4 17.1
(Reference) Equity in earnings (losses) of affiliates: Fiscal year ended March 31, 2015: ¥ – million Fiscal year ended March 31, 2014: ¥ – million
(Note) The Company conducted a 100 for 1 stock split for its common shares on April 1, 2014. “Net income per
share” and“Diluted net income per share” are calculated assuming that the stock split was conducted at the beginning of the previous fiscal year.
(2) Consolidated Financial Position
Total assets Net assets Equity ratio Net assets per share
million yen million yen % yen
As of March 31,
2015 50,548 31,427 61.9 679.36
As of March 31,
2014 34,219 25,377 73.8 548.39
(Reference) Equity: As of March 31, 2015: ¥31,305 million As of March 31, 2014: ¥25,270 million
(Note) The Company conducted a 100 for 1 stock split for its common shares on April 1, 2014. “Net assets per
(3) Consolidated Cash Flows
Net cash provided by (used in) operating
activities
Net cash provided by (used in) investing
activities
Net cash provided by (used in) financing
activities
Cash and cash equivalents at end of
period million yen million yen million yen million yen Fiscal year ended
March 31, 2015 (5,976) (632) 9,678 11,449
Fiscal year ended
March 31, 2014 (8,056) 26,860 (14,741) 8,318
2. Dividends
Annual Dividends Total
dividends paid (annual) Payout ratio (consolidated) Dividends to net assets (consolidated) 1st quarter end 2nd quarter end 3rd quarter end Year
end Total
yen yen yen yen yen million yen % %
Fiscal year ended
March 31, 2014 – 0.00 – 0.00 0.00 – – –
Fiscal year ended
March 31, 2015 – 0.00 – 18.00 18.00 829 14.1 2.9
Fiscal year ending March 31, 2016 (Forecast)
– 0.00 – 32.00 32.00 20.5
3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2016 (April 1, 2015 to March 31, 2016)
(% indicates changes from the previous corresponding period)
Net sales Operating income Ordinary income
Net income attributable to owners of parent
Net income per share million yen % million yen % million yen % million yen % yen
Full year 41,500 34.2 7,900 32.5 7,800 29.7 7,200 22.1 156.25
*Notes
(1) Significant changes of subsidiaries during the year under review (affecting specified subsidiaries resulting in changes in scope of consolidation): No
(2) Changes in accounting policies, changes in accounting estimates and restatements 1) Changes in accounting policies due to the revision of accounting standards: No 2) Any changes in accounting policies other than 1) above: No
3) Changes in accounting estimates: No 4) Restatements: No
(3) Total number of issued shares (common stock)
1) Total number of issued shares at the end of the period (including treasury stock):
March 31, 2015 46,081,400 shares
March 31, 2014 46,081,400 shares
2) Total number of treasury stock at the end of the period:
March 31, 2015 – shares
March 31, 2014 – shares
3) Average number of shares during the period:
Fiscal year ended March 31, 2015 46,081,400 shares Fiscal year ended March 31, 2014 46,081,400 shares
(Note) The Company conducted a 100 for 1 stock split for its common shares on April 1, 2014. “Total number of
(Reference) Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2015 (April 1, 2014 to March 31, 2015) (1) Non-consolidated Results of Operations (% indicates changes from the previous corresponding period)
Net sales Operating income Ordinary income Net income million yen % million yen % million yen % million yen % Fiscal year ended
March 31, 2015 28,503 59.2 5,196 69.2 5,375 74.3 5,391 141.2
Fiscal year ended
March 31, 2014 17,905 40.1 3,070 85.6 3,084 89.7 2,235 34.0
Net income per share Diluted net income per share
yen yen
Fiscal year ended
March 31, 2015 117.00 116.94
Fiscal year ended
March 31, 2014 48.51 –
(Note) The Company conducted a 100 for 1 stock split for its common shares on April 1, 2014. “Net income per
share” and “Diluted net income per share” are calculated assuming that the stock split was conducted at the beginning of the previous fiscal year.
(2) Non-consolidated Financial Position
Total assets Net assets Equity ratio Net assets per share
million yen million yen % yen
As of March 31,
2015 40,137 26,118 65.0 566.31
As of March 31,
2014 24,509 20,711 84.5 449.31
(Reference) Equity: As of March 31, 2015: ¥26,096 million As of March 31, 2014: ¥20,704 million
(Note) The Company conducted a 100 for 1 stock split for its common shares on April 1, 2014. “Net assets per
share” is calculated assuming that the stock split was conducted at the beginning of the previous fiscal year.
* Presentation regarding the implementation status of the audit process
At the time of disclosure of this report, audit procedures of the financial statements pursuant to the Financial Instruments and Exchange Act were not completed.
* Explanation of the proper use of performance forecast and other notes (Note on forward-looking statements, etc.)
Performance forecasts and other forward-looking statements presented in this report are based on information currently available to the Company and certain assumptions deemed to be reasonable, and are not to be read as guarantees of future performance by the Company. In addition, actual performance may differ substantially due to various factors. For the assumptions and other matters constituting the preconditions for the performance forecast,
please refer to “1. Results of Operations and Analysis of Financial Position (1) Analysis of Results of Operations
2) Outlook for the Next Fiscal Year” on page 3 of the Appendix.
(How to access financial results briefing session materials)
- 1 - Contents of Appendix
1. Analysis of Results of Operations and Financial Position ……… 2
(1) Analysis of Results of Operations ……… 2
(2) Analysis of Financial Position ……… 6
(3) Principles of Appropriation of Profits and Dividend Payment ……… 7
for the Current Fiscal Year and the Next Fiscal Year (4) Risks Related to Business ……… 7
2. Management Policy ……… 9
(1) Basic Policy of Raysum Management ……… 9
(2) Management Indicators that are our Targets ……… 10
(3) The Company’s Mid-to-long-term Management Strategy ……… 10
(4) Issues to be Addressed of the Company ……… 10
3. Reasoning Behind Selection of Accounting Standards ……… 12
4. Quarterly Consolidated Financial Statements ……… 13
(1) Quarterly Consolidated Balance Sheets ……… 13
(2) Consolidated Statements of Income and Comprehensive Income ……… 15
(3) Consolidated Statements of Changes in Net Assets ……… 16
(4) Consolidated Statements of Cash Flows ……… 17
(5) Notes on Consolidated Financial Statements ……… 18
(Note on the Going Concern Assumption) ……… 18
(Basis of Presenting the Consolidated Financial Statements) ……… 18
(Change of Presentation Method) ……… 20
(Additional Information) ……… 20
(Matters related to Consolidated Balance Sheets) ……… 20
(Matters related to Consolidated Statements of Income) ……… 22
(Matters related to Consolidated Statements of Changes in Net Assets) ……… 22
(Matters related to Consolidated Statements of Cash Flows) ……… 24
(Segment Information, etc.) ……… 24
(Information per share) ……… 26
(Important subsequent events) ……… 26
5. Other ……… 27
1. Analysis of Results of Operations and Financial Position (1) Analysis of Results of Operations
1) Results of Operations for the Fiscal Year under Review
In the fiscal year ended March 31, 2015, the Company posted an increase in both sales and income, net sales was 30,919 million yen (54.4% year-on-year increase), operating income was 5,964 million yen (73.8% year-on-year increase), ordinary income was 6,013 million yen (77.8% year-on-year increase), and net income was 5,899 million yen (139.1% year-on-year increase).
The 54.4% year-on-year increase in net sales is mainly due to net sales of 27,295 million yen for the fiscal year under review in our core property management business compared to net sales of 16,824 million yen for the preceding fiscal year. The increases in operating income and ordinary income are mainly due to an increase in property management business segment income from 3,193 million yen to 5,372 million yen, and an increase in servicing business segment income from 422 million yen to 774 million yen.
Business results by segment are as follows.
(Wealth Management Business)
In this business, we conduct wealth management consulting based on income property, targeting primarily high-net-worth individuals in Japan. In order to devise specific income property products that match the wealth management needs of each client, we add value to existing properties and sell them, or conduct development from the ground up, enabling us to offer truly valuable investment opportunities for clients.
Net sales for this segment for the fiscal year ended March 31, 2015 were 27,295 million yen (62.2% year-on-year increase), and segment income was 5,372 million yen (68.2% year-year-on-year increase).
The table below shows the status of progress of this business from the beginning to the end of the fiscal year, quarter by quarter. One of the characteristics of the fiscal year ended March 31, 2015 is that as progress has been made in securing an inventory of large-scale properties each valued in excess of 3,000 million yen and properties valued at approximately 2,000 million yen since the beginning of the fiscal year, sales performance targeting clients with needs for products in these price ranges rose dramatically.
Sales were concentrated in the fourth quarter. In addition to existing commercial and residential properties near major stations on the JR Yamanote Line in central Tokyo, and dormitories/company housing in the Tokyo Bay area – where demand increased – the sale of newly completed hotels near train stations located in tourist spots in the Yokohama Bay area and residential properties featuring superior access to Haneda Airport – which is operational 24 hours a day – were all executed in the fourth quarter.
- 3 - (Property Management Business)
This business provides services including rental management and building management to the property purchased and held by the clients mainly under the wealth management business of the Company.
In the fiscal year under review, net sales was 1,247 million yen (6.4％year-on-year increase) and segment income was 217 million yen (1.9％year-on-year increase).
In preparation for an increase in the number of properties requiring superior technical and operational capabilities, we augmented staff in the property management business in order to provide optimum customer support and added construction and facility specialists. As a result, segment income was roughly the same level as the preceding fiscal year due to a preceding increase in selling, general and administrative expenses.
(Servicing Business)
In this business, principally Global Asset Management Co., Ltd. a consolidated subsidiary of the Company purchases receivables from financial institutions such as banks mainly in its own account and engages in collection and management of these receivables.
In the fiscal year under review, progress was made in the careful collection of purchased receivables held by the Company with net sales in the segment registering at 1,748 million yen (21.5％year-on-year
increase) and segment income at 774 million yen (83.4％year-on-year increase).
This figure surpasses the initial projection of 550 million yen for annual sales for the segment.
(Other Business)
This segment mainly runs Raysum Golf & Spa Resort, a golf course owned by Asset Holdings, Ltd., a consolidated subsidiary of the Company.
In the fiscal year under review, net sales in the segment registering was 627 million yen (6.1％ year-on-year increase) and segment income was 29 million yen (196.9％year-on-year increase).
The condition of the greens is now on par with that considered acceptable under normal circumstances. With regard to hospitality, environment (greenery, landscaping), cleaning and food and beverage services, there is still room for improvement when compared with the high standard provided at golf courses in Tokyo. Achieving the necessary improvements will require time, and once these improvements have been accomplished and spending per visit has increased, we believe there is potential for increased earnings for this golf course.
2) Outlook for the Next Fiscal Year
In the outlook for consolidated financial results for the fiscal year ending March 31, 2016, net sales is forecast at 41,500 million yen (34.2% year-on-year increase), operating income at 7,900 million yen (32.5% year-on-year increase), ordinary income at 7,800 million yen (29.7% year-on-year increase) and net income attributable to owners of parent at 7,200 million yen (22.1% year-on-year increase).
Operation policies and business outlooks for the next fiscal year by segment are as follows:
(Wealth Management Business)
For the wealth management business, we aim to earn 38,000 million yen net sales for the next fiscal year (ending March 2016). Net sales for the fiscal year ended March 31, 2015 were 27,295 million yen, of which more than 24,000 million yen was accounted for by projects valued at less than 3,000 million yen. For the fiscal year ending March 31, 2016, we forecast net sales for projects valued at less than 3,000 million yen of 22,000 million yen. Additionally, with net sales of large-scale projects valued in excess of 3,000 million yen expected to be 16,000 million yen, we forecast net sales for the segment of 38,000 million yen.
Going forward, we will continue to work to secure a sufficient inventory of properties valued at around 2,000 million yen as well as large-scale properties valued in excess of 3,000 million yen, and to then
The image below illustrates the status of our product inventory as of the end of March 2015, and their relation to the sales forecast.
On the left, “Product Inventory Status” indicates the inventory of properties already acquired as well as properties scheduled for acquisition. In the left bar, “Contract Closed/Contracted for Purchase” indicates the range of products scheduled to become part of inventory within the fiscal year ending March 31, 2016;
“Inventory Quantity”indicates inventory quantity as of the end of March 2015; and “Future Construction
Costs for Development Projects, etc.” indicates costs to be incurred through completion of existing
development projects. In the right bar, common projects (renovations, etc. excluding development projects) and development projects are indicated as part of product inventory.
On the right, “Products Salable in Fiscal Year Ending March 2016” indicates forecast sales value for products within product inventory salable in the coming fiscal year, divided into common projects and development projects.
As the graphic illustrates, we have secured approximately 43,300 million yen in salable products against forecast net sales of 38,000 million yen, and will focus efforts on sales activities toward achieving our net sales forecast for the coming fiscal year.
As a result of our dedication and strict adherence to one of our guiding principles in place since the founding of the company in the asset management business – offering properties that best match client needs – we could achieve the level of inventory above and could respond to a wide variety of demands of customers.
healthcare-- 5 healthcare--
related properties in line with the aging population, service apartments, hotels and dormitories responding to inbound demand – particularly from Asia – responding to various forms of ownership from single-building ownership to large-scale sectional ownership. Furthermore, in addition to the improvement of existing properties, we undertake a variety of projects utilizing our development method based on our sound financial foundation including development from the land acquisition phase.
Beginning from the fiscal year ended March 2015, as the commercialization of projects ranging from those valued at around 2,000 million yen to large-scale projects valued in excess of 3,000 million yen, for interests with which, though common ground exists, we have not yet had the opportunity to conduct a transaction, we are applying our accumulated product competitiveness and power to the presentation of more concrete proposals. Furthermore, as transactions with high-net-worth individuals involving projects in the aforementioned price ranges has increased, we have gained understanding with regard to our business model from our external network including financial institutions, accountants, major brokers and others involved in financing property purchases, and as a result we have created a virtuous cycle in which
transaction density has deepened, and opportunities for introductions to potential new clients have increased. Additionally, with a focus on high-net-worth individuals in Asia, we are making proposals concerning our development projects directly to such individuals visiting Japan, and opportunities to provide tours and introductions are rising dramatically. Until now we have cultivated direct relationships, and in the case of high-net-worth individuals from Asia – with whom we are conducting transactions – demand is mainly for properties in the 2,000 million yen to 3,000 million yen range. Going forward we will strive to achieve concrete transactions based on our varied lineup of products.
(Property Management Business)
In the property management business, we do not purse only short-term profits focused on the features of properties. Rather, the business serves as a support function for clients who purchased income property through our wealth management business for their purposes and to achieve their long-term management plans.
In the fiscal year ending March 31, 2016, we will strengthen the segment both in terms of the quality and quantity of staff in the business, improve and optimize operations to increase the ability to respond to clients as well as implement system reforms.
(Servicing Business)
For the servicing business, we plan to attentively focus on the collection of existing purchased receivables so that we can steadily secure collections and profits.
Furthermore, going forward we intend to increase our research capabilities as well enhance the value of real estate loan security.
(Other Business)
With respect to Raysum Golf & Spa Resort, we will focus on fine-tuned lawn and course management so that the course condition can be always maintained in the best condition, and we will continue to seek to further improve levels of service and performance.
On the basis of the aforementioned assumptions, consolidated financial results forecast for the fiscal year ending March 31, 2016 is as follows.
(million yen)
Net sales Operating income Ordinary income
Net income attributable to owners of parent Fiscal year ending
March 31, 2016 41,500 7,900 7,800 7,200
The forecast figures above were set forth in the three-year medium-term management plan released in May 2014, and are the same as the performance forecast figures for the fiscal year ending March 2016.
(million yen) Wealth
Management Business
Property Management
Business
Servicing Business
Other
Business Total Adjustment
Amount on Statements of Income
Net sales 38,000 1,400 1,300 800 41,500 (0) 41,500
Segment
income 7,800 300 300 100 8,500 (600) 7,900
(2) Analysis of Financial Position 1) Change in Financial Position
(A) Assets
Current assets increased 17,167 million yen (57.6%) year on year, to 46,978 million yen. This was due primarily to 3,130 million yen increase in cash and deposits year on year, to 11,549 million yen, 2,110 million yen increase in real estate for sale year on year, to 8,145 million yen, 695 million yen increase in real estate for sale in process year on year, to 10,352 million yen and 10, 467 million yen increase in advance payments year on year, to 10,810 million yen, which were overwhelmed by 472 million yen decrease in purchased receivables year on year, to 3,292 million yen.
The breakdown of the increase in cash and deposits of 3,130 million yen includes an increase of 9,622 million yen in the difference between newly procured funds and repayments, an increase in sales of real estate for sale of 27,253 million yen, a decrease in purchases of real estate for sale of 29,808 million yen due to advance payment for real estate for sale designated for purchase, a decrease of 3,616 million yen due to payment for construction in line with the progressing development of real estate for sale in process, and an increase of 1,748 million yen through collection activities in the servicing business.
Noncurrent assets decreased 838 million yen (19.0%) from the end of the previous consolidated fiscal year to 3,569 million yen.
As a result, total assets as at the end of the fiscal year under review increased 16,328 million yen (47.7%) year on year, to 50,548 million yen.
(B) Liabilities
Liabilities increased 10,278 million yen (116.2%) year on year to 19,120 million yen. This was primarily attributed to new funding conducted in response to purchases.
(C) Net assets
Total net assets increased 6,050 million yen (23.8%) year on year, to 31,427 million yen. This was due primarily to 5,899 million yen increase in retained earnings following the recording of net income for the fiscal year under review.
2) Cash Flows
Cash and cash equivalents (hereinafter, “funds”) at the end of the fiscal year under review increased 3,130 million yen year on year, to 11,449 million yen.
Cash flows in the fiscal year under review and the major contributory factors are as follows. (A) Net cash provided by (used in) operating activities
Net cash used in operating activities decreased 5,976 million yen. The main factors for increase were 27,295 million yen of sales in the wealth management business and 1,748 million yen in collection of receivables in the servicing business.
The main factors for decrease were advance payments of 29,808 million yen for real estate for sale designated for purchase in the property management business, a decrease of 3,616 million yen due to payment for construction in line with the progressing development of real estate for sale in process, 364 million yen in purchased receivables in the servicing business, and decrease in funds related to expenditure of selling, general and administrative expenses.
(B) Net cash provided by (used in) investing activities
Net cash used in investing activities decreased 632 million yen.
The main factor for decrease was an increase of 345 million yen for long-term loans receivable related to business, and expenditure of 266 million yen from acquisitions of stocks of affiliated companies.
(C) Net cash provided by (used in) financing activities
- 7 -
This was a result of an increase of 11,783 million yen from new loans payable, and a decrease of 2,161 million yen from repayment of interest-bearing liabilities.
(Reference) Indicators relative to cash flows
Fiscal year ended March
31, 2012
Fiscal year ended March
31, 2013
Fiscal year ended March
31, 2014
Fiscal year ended March
31, 2015
Equity ratio (%) 44.8 49.0 73.8 61.9
Equity ratio on a market value basis (%) 16.9 165.2 140.9 112.7
Interest-bearing liabilities/Cash flow ratio (%) 872.7 582.0 — —
Interest coverage ratio (multiple) 6.4 4.7 — —
Equity ratio: Equity/Total assets
Equity ratio on a market value basis: Total market capitalization/Total assets Interest-bearing liabilities/Cash flow ratio: Interest-bearing liabilities/Cash flows Interest coverage ratio: Cash flows/Interest expenses paid
(Note 1) All indicators are calculated using consolidated financial results.
(Note 2) Cash flows used as basis of the above calculation are net cash provided by operating activities, and Interest-bearing liabilities/Cash flow ratio as well as Interest coverage ratio is not provided in the case of negative cash flows.
(3) Principles of Appropriation of Profits and Dividend Payment for the Current Fiscal Year and the Next Fiscal Year
Under the company’s Medium-term Three Year Business Plan (FY ended March 2014 – FY ending March
2016), during the first two years, by ensuring a financial foundation and inventory sufficient to meet our clients’
diverse needs, we are confident we will remain on a steady, medium-term growth path beyond the fiscal year ending March 2016. As our goal is to normalize the dividend payout to our shareholders as early as possible, we have established a new dividend payout policy as outlined below, and will recommence payment of dividends as of the end of this fiscal year (ended March 2015).
We will recommence payment of dividends as of the end of this fiscal year at the rate of 18 yen per share, and intend to maintain this steady rate of dividend payout. Furthermore, beginning in the fiscal year ending March 2016, we will adopt a performance-based approach under which dividends each year will be based on a consolidated dividend payout ratio in excess of 20%, and we will increase dividends in accordance with the status of consolidated net income. With regard to retained earnings, in addition to product development in the current main areas of business, we will apply them to activities to enhance corporate value such as the fostering of new growth businesses.
In accordance with the policy outlined above, the dividend for this fiscal period will be 18 yen per share, and the dividend to be paid at the end of the coming fiscal year will be 32 yen per share.
(4) Risks Related to Business
Principal matters with potential impact on results of operations, financial position, share price, etc. of the Group are as follows. Forward looking statements in this section are based on the judgment of the Group as at the end of the fiscal year under review.
(Economic trend)
As the Group engages primarily in arranging and selling investment products not least those involving real estate for investment, along with physical management of such real estate, severe deterioration of the funding environment, increase in vacancy rate, or decline in rents resulting from an economic downturn, may have an
adverse impact on the Group’s business results and financial position.
(Interest rate risk)
Increase in short-term interest rate may cause increase in funding cost, while increase in medium-to-long-term interest rate may cause increase in expected return in real estate investment and decline in real estate market. All
(Risks associated with changes in various regulations)
The Group engages in business in compliance with the current regulations, and thus exposed to associated regulatory risks (including impact from the changes in laws, taxation, regulations, government policies, business practices, interpretations, and fiscal policies). In the future, changes in laws, taxation, regulations, government policies, business practices, interpretations, and fiscal policies or other public policies, and associated
developments may have an adverse impact on the Group’s business performance, results and financial position.
(Risks associated with human resources)
Each business within the Group is run on the basis of human capital. In each aspect of the Group’s business
including sales, procurement and rental of real estate, pricing of receivables, due diligence, collection, it makes a huge difference to the outcome whether there is a commitment backed up by profound knowledge and
experience, along with accumulation of effort in detail, and thus it is critical that each staff maintains basic discipline to accomplish his/her job responsibly and keeps up such accomplishment. As such, securing excellent
staff capable to catch up with the Group’s rapid growth is believed to be a critical challenge. However, if we
cannot secure sufficient staff up to the standard required within the Group, or if there is a significant increase in
resignation of such qualified staff, that may have an adverse impact on the Group’s business promotion as well
as results.
(Risks associated with natural and man-made disasters)
In the event of storm, flood, earthquake and other natural disasters, or accident, fire, riot, terrorism, war and other man-made disasters, value of the Group’s assets may decline, which may have an adverse impact on the
- 9 - 2. Management Policy
(1) Basic Policy of Raysum Management
The company’s primary goals in achieving customer satisfaction are the maximization of real estate value over
the long term without being sidetracked by stereotypes; the creation of new markets; and contributing to the development of a rich society –our aim is to become a “real estate value creation company” unlike any the industry has ever seen.
For the 23 years since our founding in 1992, we have consistently attended to the varying philosophies of high-net-worth individual clients who have purchased our products, and have also been entrusted with the management of those properties. Through that time we have remained steadfastly dedicated to providing real estate products that are not available anywhere else on the market; products incorporating a well thought out long-term vision.
We haven’t relied on superficial factors such as a reasonable price, favorable cap rate, superior construction
and design, and ease of explanation of appraisal and similar transactions in the surrounding area. What have been important to us are the specific characteristics of the property itself, tenant attributes, a comprehensive study of the surrounding environment and the rental market, and hearings with local government authorities in crafting methods for maximizing value toward commercialization. Product plans that are not influenced by market stereotypes, and solutions that are not slave to past examples and to customs, a thorough, hands-on approach, an aggressive, uncompromising attitude that refuses to leave issues and concerns unresolved, and specialized knowledge in all related fields are what drive our success. Our style is to cultivate individual human resources inside and outside the company with high awareness and extensive specialized knowledge.
One example would be a building in the Toyosu area of Koto Ward, about a 1 minute walk from Toyosu Station. Thinking along traditional lines, one would assume that this location would be ideal for an office, commercial or residential property, but we proceeded with the commercialization of a product centered on a childcare facility. The reason was that, as a result of the completion of numerous luxury condominium projects in the area, childcare capabilities in the area could not keep up with the rapid increase in the number of residents – the area became known for extremely long waiting lists for registration at existing childcare facilities. By attracting a licensed childcare center to lease a major portion of one of the buildings, we succeeded in creating a product that will generate stable earnings over the long term. Additionally, after numerous detailed discussions with local government and childcare-related parties, we also devised a plan to create a rooftop garden despite the limited space. This is one example of a product offering a high degree of customer satisfaction.
There are in fact no limits to the domain of real estate types we handle. In order to maximize the value of real estate our clients hold, it is necessary to flexibly select the use, property type, and whether the project will be a new development or a renovation. Should we renovate the property?; Can we use the property in its present state?; Should we develop an entirely new property on the site?; Is the site best suited for an office building, a commercial facility, a residential property, a hotel, or a warehouse?; What price range would be suitable for the property, somewhere in the tens of millions of yen, or in the billions? – We must first assess the possibilities of the project in an unbiased manner.
Our clients are high-net-worth individuals, and generally invest for periods from 10 to 30 years. However, we must look at the cash flow to be generated not “past and present”, but “present on into the future” and conduct an in-depth investigation to determine the proper risk-return balance for such a long-term investment.
Given that our real estate operational proposals are not influenced by past examples and customs, it can be a challenge to achieve understanding on the part of our clients – it takes time until our clients are able to
Today, the revitalization of existing real estate is drawing considerable attention. Compared to Europe and the U.S., Japan is a particular market with a low circulation rate for existing real estate and a “rebuild-first”
mentality, but we are at a point now where the value of such existing assets is being reassessed. The
revitalization of existing real estate in specific fields such as homes, residential complexes and townhouses has emerged, as has government support for such efforts.
With regard to improvement of real estate of advanced age, while it is easy to understand that fields such as those mentioned above would attract attention, it is important to realize that it does not even scratch the surface
concerning the problems facing Japan’s society. It is sites located in a commercial district within a five-minute walk of major central Tokyo or metropolitan terminal stations (Yokohama Station, Chiba Station, Omiya Station) that were built 40 or 50 years ago, with low occupancy and obsolete usage and management – there is no shortage of buildings such as this that are facing repair and renovation.
In the Tokyo Metropolitan area, which has a vast stock of existing real estate, we have spent 23 years creating value for such assets, and as a company that has gained valuable knowledge over that time, we hope to serve as a tailwind to this societal trend and to enhance our presence as a real estate value creation company.
(2) The Management Indicators that are our Targets
While responding flexibly to the external environment, we aim for an ROE of 10 to 20% based on a capital ratio of 60 to 80%.
(3) The Company’s Mid-to-long-term Management Strategy
Over the 23 years of the company’s existence, we have poured considerable time, energy and know-how into
our continuous efforts to break through Japan’s conventional thinking of “new construction as the key for success.” At long last, society has begun to recognize the value of existing real estate and move toward capitalizing on it, and from our perspective we have realized that this constitutes an ideal opportunity to offer optimized services to a wide range of services. We will aim to double our value creation capabilities over the next five to 10 years.
Meanwhile, it is vital to be able to respond in an agile manner to changes in the external environment, and as such while appointing non-executive directors and bolstering cooperative efforts with our external, highly aware human network, we must exercise a fiscally conservative approach by shifting borrowings to the long term, prepare for risk due to market fluctuation, and distance ourselves from simply chasing the market, acquiring products based only on cap rate and leverage, and focus on conducting business that organically generates concrete value.
Furthermore, in order to offer our clients attractive investment opportunities abroad, we will also strengthen our international business. In concrete terms, in developing countries in ASEAN where explosive economic growth has led to demand far outpacing supply, and in countries where building quality and services lag behind, we intend to invest 10 to 30% of our assets over the next five to 10 years in real estate development.
In our core property management business segment, against our net sales forecast of 38,000 million yen for the fiscal year ending March 2016, we have secured a range of products salable during that fiscal year valued at approximately 43,300 million yen. Secured through a “conservative approach” in accordance with the
aforementioned basic management policy, as a result of having developed products to suit our clients’ needs, we
have recorded achievements in a wide range of fields, developing office and commercial buildings,
condominiums and detached housing, in configurations ranging from individual buildings to residential and commercial sectional ownership.
(4) Issues to be Addressed of the Company
- 11 -
Our focus will be on those who specialize in commercial tenant placement or excel at developing new enterprises; people who can devise tax plans based on individual clients’ requirements; people who have the capability to aid us in expanding our acquisition pipeline and are skilled at sourcing new high-net-worth clients; and people with specialized legal knowledge and rights adjustment capability.
For instance, we have the unique ability to offer comprehensive services to our clients. As the functional structure supporting acquisition and sales for our property management business, we have established property management (tenant management), property engineering (internal architectural engineers), leasing, new
development, and legal/rights adjustment teams which, while approaching projects from an owner’s perspective and working in a cooperative, unified manner, will proceed with the commercialization of existing and newly developed real estate, and provide one-stop services and support after the sale to aid our clients in maximizing operational value. Moreover, while we do have the personnel in place to provide such comprehensive services, we do need to address the issue of establishing core personnel to cultivate our younger personnel.
Until now, concerning employees from major corporations who possess superior technical capability and knowledge, there are cases in which they were unable to fully exhibit their capabilities in such a highly specialized structure. We will proactively look to recruit such resources and give them the opportunity to work directly with our core staff and realize their true capabilities to the fullest possible extent.
Over the next five years, we intend to double our core staff – the personnel that are the key to our ability to offer one-stop service to our property management business clients – through both internal cultivation and external mid-career recruiting.
Furthermore, in line with the strengthening of our international business, we are increasing the proportion of foreign employees. Initially with this new area of business, our focus was on meeting the needs of high-net-worth individual clients in Japan, but with the possibility of further depreciation of the yen going forward we have also considered that this is an opportunity to offer our singular property management products to high-net-worth individual clients from Asia. At present, about 10 percent of the workforce at our Tokyo headquarters are from abroad, we intend to increase the proportion, including the appointment of more foreign personnel to positions with responsibility and decision-making power. We have developed relationships with high-net-worth individual clients in Taiwan, Hong Kong and the coastal areas of China, and over the next few years we will look to do the same with clients in the inland areas of mainland China and ASEAN. With the accelerated development of our international business, we must also fortify our management structure – accounting, finance and
compliance must all be staffed with personnel with vast experience, and we will supplement our executive ranks with people with executive management capability.
As part of the process of growth as a real estate value creation company, we will attempt to cope with issues existing in the fields noted below.
With regard to property management, we have positioned this as an important field given the common ground existing with our clients, but in order to deal with the increase in volume we will look to enhance efficiency and precision, and revamp the system into one that is more productive.
In fortifying our ability to maintain high returns for our clients, we will enrich our tenant marketing capability.
Concerning capturing new clients, we will create opportunities for accountants, finance professionals and parties related to regional banks to become aware of our performance, and seek to create new client relationships in regional areas.
The potential in the market right before our eyes today is extremely large, and amidst all that, locating the gems, proceeding with commercialization in line with the needs of a wide variety of clients, giving our maximum effort to espouse the virtues of the products in selling them, and cultivating personnel who are
company, as a leader in this field, refuses to be content with what we have already accomplished. Going forward, in order to offer optimum services to as many clients as possible, we will communicate more closely with them, further evolve our technical capabilities and know-how, and do all we can to develop the human resources that will be the driving force behind these efforts.
3. Reasoning behind Selection of Accounting Standards
- 13 - 4. Quarterly Consolidated Financial Statements
(1) Quarterly Consolidated Balance Sheets
(Millions of Yen) Mar. 31, 2014 Mar. 31, 2015 Assets
Current assets
Cash and deposits ※3,※4 8,418 ※3,※4 11,549
Operating accounts receivable 73 136
Operational investment securities 483 360
Real estate for sale ※3 6,034 ※3 8,145
Real estate for sale in process ※3,※4 9,656 ※3,※4 10,352
Purchased receivables 3,764 3,292
Advance payments 343 10,810
Deferred tax assets 1,383 2,824
Income taxes receivable 44 0
Other ※3,※4 388 ※3,※4 220
Allowance for doubtful accounts (780) (714)
Total current assets 29,811 46,978
Noncurrent assets
Property, plant and equipment
Buildings, net 741 676
Land 656 656
Other, net 106 123
Total property, plant and equipment ※1 1,503 ※1 1,456
Intangible assets
Other 280 269
Total intangible assets 280 269
Investments and other assets
Investment securities ※2 254 ※2 733
Deferred tax assets 1,995 501
Investments in capital 9 10
Other 363 598
Total investments and other assets 2,623 1,843
Total noncurrent assets 4,408 3,569
(Millions of Yen) Mar. 31, 2014 Mar. 31, 2015 Liabilities
Current liabilities
Short-term loans payable － 50
Current portion of long-term loans payable ※3 120 ※3,※5 2,694
Income taxes payable 4 76
Advances received 97 108
Provision for bonuses 12 11
Other 749 1,107
Total current liabilities 983 4,048
Noncurrent liabilities
Corporate bonds ※3,※4 800 ※3,※4 800
Long-term loans payable ※3,※4 5,280 ※3,※4,※5 12,327
Provision for adjustment of securitization 28 6
Provision for compensation for maintenance 43 －
Asset retirement obligations 4 4
Deposits received from tenants 1,701 1,933
Total noncurrent liabilities 7,858 15,071
Total liabilities 8,842 19,120
Net assets
Shareholders' equity
Capital stock 100 100
Capital surplus 12,253 12,253
Retained earnings 12,822 18,721
Total shareholders' equity 25,175 31,074
Accumulated other comprehensive income
Valuation difference on available-for-sale securities 94 174
Foreign currency translation adjustment 0 56
Total accumulated other comprehensive income 95 231
Subscription rights to shares 7 22
Minority interests 99 99
Total net assets 25,377 31,427
- 15 -
(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
(Consolidated Statements of Income - Consolidated Fiscal Year)
(Millions of Yen) Fiscal year ended
Mar. 31, 2014
Fiscal year ended Mar. 31, 2015
Net sales 20,027 30,919
Cost of sales 14,298 22,235
Gross profit 5,729 8,683
Selling, general and administrative expenses ※1 2,297 ※1 2,719
Operating income 3,432 5,964
Non-operating income
Interest income 1 7
Foreign exchange gains 2 119
Other 3 4
Total non-operating income 7 131
Non-operating expenses
Interest expenses 43 65
Issuance cost of subscription rights to shares 6 8
Commission for a financial loan 6 8
Other 0 0
Total non-operating expenses 57 82
Ordinary income 3,382 6,013
Extraordinary loss
Loss on sales of noncurrent assets ※2 3,740 －
Office relocation expenses － 15
Total extraordinary losses 3,740 15
Income (loss) before income taxes and minority interests (358) 5,997
Income taxes-current 5 71
Income taxes-deferred (2,829) 27
Total income taxes (2,824) 99
Income before minority interests 2,466 5,898
Minority interests in income (loss) (0) (0)
Net income 2,467 5,899
(Consolidated Statements of Comprehensive Income - Consolidated Fiscal Year)
(Millions of Yen) Fiscal year ended
Mar. 31, 2014
Fiscal year ended Mar. 31, 2015
Income before minority interests 2,466 5,898
Other comprehensive income
Valuation difference on available-for-sale securities 131 80
Foreign currency translation adjustment 0 56
Total other comprehensive income 132 136
Comprehensive income 2,598 6,034
(Comprehensive income attributable to)
Comprehensive income attributable to owners
of parent 2,599 6,035
Comprehensive income attributable to
(3) Consolidated Statements of Changes in Net Assets
Fiscal year ended March 31, 2014 (April 1, 2013 to March 31, 2014)
(million yen))
Shareholders' equity Accumulated other comprehensive income Stock acquisition rights Minority interests Total net assets Common stock Capital surplus Retained earnings Total owners' equity Unrealized gain on available-for-sale securities Foreign currency translation adjustments Total accumulated other comprehensive income
Balance at beginning of
current period 100 12,253 10,355 22,708 (37) － (37) － 0 22,671
Changes of items during the period
Net income 2,467 2,467 2,467
Net changes in items other than shareholders' equity
131 0 132 7 99 238
Total changes of items
during the period － － 2,467 2,467 131 0 132 7 99 2,705
Balance at end of current
period 100 12,253 12,822 25,175 94 0 95 7 99 25,377
Fiscal year ended March 31, 2015 (April 1, 2014 to March 31, 2015)
(million yen) Shareholders' equity Accumulated other comprehensive income
Stock acquisition rights Minority interests Total net assets Common stock Capital surplus Retained earnings Total owners' equity Unrealized gain on available-for-sale securities Foreign currency translation adjustments Total accumulated other comprehensive income
Balance at beginning of
current period 100 12,253 12,822 25,175 94 0 95 7 99 25,377
Changes of items during the period
Net income 5,899 5,899 5,899
Net changes in items other than shareholders' equity
80 56 136 15 (0) 151
Total changes of items
during the period － － 5,899 5,899 80 56 136 15 (0) 6,050
Balance at end of current
- 17 - (4) Consolidated Statements of Cash Flows
(Millions of Yen) Fiscal year ended
Mar. 31, 2014
Fiscal year ended Mar. 31, 2015 Cash flows from operating activities
Income (loss) before income taxes and minority interests (358) 5,997
Depreciation and amortization 120 126
Increase (decrease) in provision for bonuses 1 (0)
Increase (decrease) in allowance for doubtful accounts (320) (65)
Increase (decrease) in allowance for maintenance incurred for sold
property (1) (43)
Increase (decrease) in provision for adjustment of securitization 4 (21)
Interest and dividends income (1) (7)
Interest expenses 43 65
Loss on sales of noncurrent assets 3,740 －
Decrease (increase) in notes and accounts receivable-trade 17 (63)
Decrease (increase) in investment securities for sale 269 241
Decrease (increase) in real estate for sale (3,899) (2,102)
Decrease (increase) in real estate for sale in process (7,732) (662)
Decrease (increase) in purchased receivables 981 472
Decrease (increase) in advance payments (340) (10,423)
Increase (decrease) in advances received (5) 6
Increase (decrease) in accounts payable 33 130
Increase (decrease) in accrued consumption taxes (24) 164
Increase (decrease) in lease deposits received 506 250
Increase (decrease) in silent partnership investment deposits payable (506) －
Decrease (increase) in silent partnership investments － (200)
Other, net (288) 177
Subtotal (7,761) (5,958)
Interest and dividends income received 1 2
Interest expenses (203) (58)
Income taxes paid (93) 37
Net cash provided by (used in) operating activities (8,056) (5,976)
Cash flows from investing activities
Payments into time deposits (100) －
Purchase of property, plant and equipment (28) (79)
Proceeds from sales of property, plant and equipment 26,995 3
Purchase of intangible assets (7) (4)
Purchase of investments and other assets (0) (28)
Proceeds from cancellation of investments and other assets 0 50
Purchase of investment securities － (13)
Purchase of stocks of subsidiaries and affiliates － (266)
Payments of loans receivable (3) (345)
Collection of loans receivable 3 50
Other, net 1 (0)
Net cash provided by (used in) investing activities 26,860 (632)
Cash flows from financing activities
Net increase (decrease) in short-term loans payable (19,040) 50
Proceeds from long-term loans payable 4,400 11,783
Repayment of long-term loans payable (1,002) (2,161)
Proceeds from issue of corporate bonds 800 －
Proceeds from minority shareholders 100 －
Proceeds from issuance of subscription rights to shares 1 7
Net cash provided by (used in) financing activities (14,741) 9,678
Effect of exchange rate change on cash and cash equivalents 6 60
Net increase (decrease) in cash and cash equivalents 4,069 3,130
Cash and cash equivalents at beginning of period 4,249 8,318
(5) Notes on Consolidated Financial Statements (Note on the Going Concern Assumption)
Not applicable.
(Basis of Presenting the Consolidated Financial Statements) 1. Matters related to the scope of consolidation
(1) Number of consolidated subsidiaries: 9 Names of consolidated subsidiaries: Global Asset Management Co., Ltd.
Tsubame Investment Co., Ltd. Raysum Capital Investment Co., Ltd. Asset Holdings Co., Ltd.
Raysum Create Co., Ltd.
Kasumigaseki Frontier 1 Co., Ltd. SOKNA PARTNERS CO., LTD. Raysum Philippines, Inc. Shinjuku Second Property TMK
(2) Names, etc. of major non-consolidated subsidiaries: Platinum Investment Kona Inc.
Wellness Arena Corporation
(Reason for excluding from the scope of consolidation)
Both of non-consolidated subsidiaries are small in scale and each company’s total assets, net sales, current fiscal year net profit or loss (amount corresponding to equity), and retained earnings
(amount corresponding to equity) do not have a material effect on the consolidated financial statements. 2. Matters related to the application of equity method
(1) Number of non-consolidated subsidiaries accounted for by equity method and affiliated companies: - (2) Names, etc. of major non-consolidated subsidiaries not accounted for by equity method and major
affiliated companies
Names, etc. of non-consolidated subsidiaries: Platinum Investment Kona Inc.
Wellness Arena Corporation
(Reason for not applying equity method)
The companies are excluded from the application of equity method because they are small in scale and do not have a material effect on the consolidated net profit or loss and the consolidated accumulated income, etc.
3. Matters related to the fiscal year, etc. of consolidated subsidiaries
Out of the consolidated subsidiaries, the accounting closing date of SOKNA PARTNERS CO., LTD. and Raysum Philippines, Inc. is December 31, and consolidating accounting is conducted based on their financial statements as of March 31 through the temporary settlement of accounts.
4. Matters relating to the accounting treatment and standards (1) Standards and method of valuation of important assets
1) Marketable securities
(a) Other marketable securities (including operational investment securities) Marketable securities with fair market value
Stated at market value based on fair market value, etc. as of fiscal closing date (any valuation
gain or loss to be reported in a designated component of shareholders’ equity; cost of sale to be
computed by the moving-average method). Marketable securities without fair market value
Stated using the cost based on the moving-average method.
Accounting treatment for the investments in the investment enterprise limited liability association and similar associations
- 19 - 2) Inventories
(a) Real estate for sale and real estate for sale in process
Stated using the cost method based on the actual cost method (the book value reduction method based on decreased profitability).
(b) Purchased receivables
Stated using the cost method based on the actual cost method. (c) Supplies
Stated using the last cost method (the book value reduction method based on decreased profitability). (2) Depreciation method for important depreciable assets
1) Tangible asset
(a) Assets acquired on March 31, 2007 or before
Stated using the former declining-balance method. However, buildings held by some of consolidated subsidiaries are stated using the former straight-line method.
(b) Assets acquired on April 1, 2007 or after
Stated using the declining-balance method. However, buildings are stated using the straight-line method. 2) Intangible asset
Capitalized software for internal use is amortized by the straight-line method over the estimated internal useful life (5 years).
(3) Accounting standards for major allowances 1) Allowance for doubtful accounts
To prepare for uncollectible credits, general allowance is recorded based on the actual bad debt ratio, and specific allowance is recorded based on the amount deemed to the uncollectible considering the collectibility.
2) Allowance for bonus
Provisions for future employee bonus payments are recorded on an accrual basis. 3) Provision for adjustment of securitization
Upon transactions with clients, there is a case in which an agreement for bearing risks for a certain amount for a certain period is concluded in order to adjust the investment yields that the clients expect. Thus loss estimated based on consideration of said agreement of each is recorded.
4) Allowance for maintenance and indemnification
To prepare for maintenance and indemnification expenses based on maintenance indemnification clause for real estate for sale, expenses loss estimated based on consideration of said agreement of each is recorded.
(4) Major foreign currency assets or standards for converting debts to Japanese currency
Assets, liabilities, earnings and expenditures of overseas subsidiaries are converted according to the spot exchange rate on the consolidated closing date, and translation differences are included in “Foreign currency
translation adjustment” as part of net assets.
Assets and liabilities denominated in foreign currencies are converted according to the spot exchange rate on the consolidated closing date, and translation differences are processed as income and expenditures. (5) Scope of cash and cash equivalents in the consolidated statements of cash flows
These comprise cash on hand, demand deposits, and short-term investments that are readily convertible into cash, are exposed to insignificant risk of changes in value and are redeemable in three months. (6) Other important matters for preparation of consolidated financial statements
1) Accounting treatment of consumption tax and other taxes
Stated using the tax-excluded method. Non-deductible consumption taxes and others are recognized as income or expenses under current consolidated fiscal year.
2) Accounting treatment of investments in the investment enterprise limited liability association and similar associations
For the investment in a silent partnership (deemed to be securities pursuant to Article 2, Paragraph 2 of the Financial Instruments and Exchange Act), an amount equivalent to the equity interest in the property held by the Company, out of net asset and net profit or loss of the silent partnership, is recorded as investment securities and net sales.
Interest costs for a normal development period for real estate development projects that are expected to require a long development period (from the start to completion) and project cost over a certain amount are capitalized. Interest costs included in real estate for sale in process at the end of the current consolidated fiscal year is 296 million yen.
(7) Application of consolidated tax payment system Consolidated tax payment system is applied.
(Change of Presentation Method)
(Quarterly Consolidated Balance Sheets)
Advance payments, which in the previous consolidated fiscal year was included in “Others” of “Current assets”,
is stated independently starting the current consolidated fiscal year as the significance of the amount has increased. In order to reflect this change of presentation method, reclassification of the consolidated financial statements of the previous consolidated fiscal year is underway.
As a result, 731 million yen which was stated under “Others” of “Current assets” in “Quarterly Consolidated Balance Sheets” in the previous consolidated fiscal year is reclassified as (343 million yen) in “Advance
Payments” and 388 million yen in “Others”.
(Consolidated Cash Flow Statements)
“Increase (decrease) in accounts payable” which was included in “Others” of “Cash flows from operating activities” in the previous consolidated fiscal year is stated independently starting in the current consolidated fiscal year since significance of the amount has increased. In order to reflect this change of presentation method, reclassification of the consolidated financial statements of the previous consolidated fiscal year is underway.
As a result, (254 million yen) which was stated under “Others” of Cash flow from operating activities” on the
consolidated statement of cash flows in the previous consolidated fiscal year is reclassified as 33 million yen in
“Increase (decrease) in accounts payable” and (288 million yen) in “Others”.
Additionally, “Payments of loans receivable” and “Collection of loans receivable”, which in the previous
consolidated fiscal year was included in “Others” of “Net cash provided by (used in) investing activities”, are
stated independently starting the current consolidated fiscal year as the significance of the amount has increased. In order to reflect this change of presentation method, reclassification of the consolidated financial statements of the previous consolidated fiscal year is underway.
As a result, 1 million yen which was stated under “Others” of “Net cash provided by (used in) investing
activities” in “Consolidated Cash Flow Statements”, is reclassified as (3 million yen) in “Payments of loans
receivable”, 3 million yen in “Collection of loans receivable” and 1 million yen in “Others”.
(Additional Information)
(Revision to Amounts of Deferred Tax Asset and Deferred Tax Liability Due to Changes in Taxation Rate of Corporate Tax and Others)
With the promulgation of the “Act on Partial Revision of the Income Tax Act” (Act No. 9, 2015) and “Act for
Partial Revision of the Local Taxation Act (Act. No. 2, 2015)” on March 31, 2015, the effective tax rate used in
calculating deferred tax assets and deferred tax liabilities for the current consolidated fiscal year is changed from 35.6% of the previous consolidated fiscal year to 35.36% for the temporary differences that are expected to be eliminated during the consolidated fiscal year started on April 1, 2015.
With this change in rate, the amount of deferred tax assets decreased by 35 million yen, the amount of income taxes-deferred increased by the same amount, and valuation difference on securities for sale increased by 4 million yen.
(Matters related to Consolidated Balance Sheets) *1 Accumulated depreciation for tangible asset
Previous consolidated fiscal year
(Ended March 31, 2014)
Current consolidated fiscal year
(Ended March 31, 2015)
- 21 -
*2 Investment securities related to non-consolidated subsidiaries and affiliates are as follows. Previous consolidated fiscal
year
(Ended March 31, 2014)
Current consolidated fiscal year
(Ended March 31, 2015) Investment securities (equity, investment) 253 million yen 519 million yen
(Of which, invested in jointly controlled entities) (－ million yen ) (266 million yen)
*3 Assets pledged as security and corresponding liabilities (1) Assets pledged as security
Previous consolidated fiscal year
(Ended March 31, 2014)
Current consolidated fiscal year
(Ended March 31, 2015)
Cash and deposits 1,096 million yen 1,074 million yen
Real estate for sale 1,747 million yen 4,667 million yen
Real estate for sale in process 8,918 million yen 9,803 million yen
Current assets and others 19 million yen 0 million yen
Total 11,782 million yen 15,546 million yen
(2) Corresponding liabilities
Previous consolidated fiscal year
(Ended March 31, 2014)
Current consolidated fiscal year
(Ended March 31, 2015) Current portion of long-term loans payable 120 million yen 2,254 million yen
Corporate bonds 800 million yen 800 million yen
Long-term loans 5,280 million yen 5,803 million yen
Total 6,200 million yen 8,858 million yen
In addition to the above, with regard to 6,963 million yen in borrowings from financial institutions, land and properties scheduled for acquisition by the Company have been provided as collateral by the seller. Furthermore, with regard to a real guarantee for the aforementioned land and properties, the Company has neither paid a guarantee fee nor offered collateral in any other form.
*4 Non-recourse debt is as follows.
Previous consolidated fiscal year
(Ended March 31, 2014)
Current consolidated fiscal year
(Ended March 31, 2015)
Corporate bonds 800 million yen 800 million yen
Long-term loans payable 3,100 million yen 3,100 million yen
Total 3,900 million yen 3,900 million yen
Corresponding assets for said non-recourse debt is 974 million yen of cash and deposit, 8,025 million yen of real estate for sale in process, and 0 million yen of others under current asset in the current consolidated fiscal year.
*5 Financial restrictions
Current consolidated fiscal year (Ended March 31, 2015)
For the first five years, in the Consolidated Financial Statements released at the end of each consolidated fiscal year,
Net assets must be maintained at no less than 10 billion yen; Equity ratio must be maintained at no less than 25%
(Ordinary income + Depreciation and amortization + Amortization of goodwill – (Corporate tax / residence tax / enterprise tax)) must not fall below 100 million yen for three consecutive consolidated fiscal years
(Matters related to Consolidated Statements of Income)
*1 Main items and amounts in selling and general administrative expenses Fiscal year ended March 31,
2014 (April 1, 2013 to March 31, 2014)
Fiscal year ended March 31, 2015 (April 1, 2014 to March
31, 2015)
Advertising expense 17 million yen 6 million yen
Sales promotion expense 81 million yen 178 million yen
Directors’ remuneration 259 million yen 293 million yen
Salaries and allowances 692 million yen 810 million yen
Bonuses 114 million yen 141 million yen
Provision of bonuses 12 million yen 11 million yen
Legal welfare expenses 123 million yen 142 million yen
Rent 161 million yen 172 million yen
Commission paid 402 million yen 425 million yen
Provision of allowance for doubtful
accounts (51 million yen) (56 million yen)
*2 Breakdown on loss on sales of noncurrent assets
Fiscal year ended March 31, 2014 (April 1, 2013 to
March 31, 2014)
Fiscal year ended March 31, 2015 (April 1, 2014 to March
31, 2015)
Land 3,740 million yen － million yen
(Matters related to Consolidated Statements of Changes in Net Assets) Fiscal year ended March 31, 2014 (April 1, 2013 to March 31, 2014) 1. Matters related to the class and total number of issued shares
Class of shares
No. of shares at the beginning of the fiscal year ended March 31, 2014
No. of shares increased during the
fiscal year ended March 31, 2014
No. of shares decreased during the
fiscal year ended March 31, 2014
No. of shares at the end of the fiscal year
ended March 31, 2014
Common share 460,814 － － 460,814
The Company conducted a 100 for 1 stock split of common shares on April 1, 2014.
2. Matters related to treasury shares Not applicable.
3. Matters related to stock acquisition rights
Items for stock acquisition rights Class of shares subject to stock acquisition rights
No. of shares subject to stock acquisition rights (shares)
Balance at end of the fiscal
year ended March 31, 2014 (million
yen) Beginning
of the fiscal year ended March 31, 2014 Increase during the fiscal year ended March 31, 2014 Decrease during the fiscal year ended March 31, 2014
End of the fiscal year ended March
31, 2014
First to third stock acquisition rights
Common
share － 100,000 － 100,000 7
Total － － 100,000 － 100,000 7
(Notes) 1. The above table is as at the submitting company.
2. The increase in first to third stock acquisition rights for the current consolidated fiscal year is attributable to proceeds from issuance of subscription rights to shares.
