Consolidated Results for the first half of FY11/21

Consolidated Operating results

Net sales

24,193 Millions of yen

year-on-year increase/ (decrease)
(11.5%)

Operating income

3,599 Millions of yen

year-on-year increase/ (decrease)
(36.9%)

Ordinary income

5,114 Millions of yen

year-on-year increase/(decrease)

(10.3%)

Profit attributable to owners of parent

7,393 Millions of yen

year-on-year increase/ (decrease)
133.1%

Net income per share

183.73 yen

year-on-year increase/ (decrease)

Explanation of Business Results

Due to a resurgence of COVID-19 infections, during the subject second quarter cumulative period in the Japanese economy a state of emergency and priority measures such as quasi states of emergency were officially announced and imposed. Currently, vaccinations for people aged 65 or over and occupational vaccinations at some companies are progressing, day by day raising expectations for the normalization of socio-economic activities by means of an accelerated vaccination rollout.
    In the real estate industry, of which the Samty Group is a part, with regard to rental apartments, occupancy rates, rent levels, and property sales prices have remained favorable, because they are not easily affected by economic trends or the effects of the COVID-19 pandemic. The buying and selling of profitable properties in BtoB (business-to-business), which is the main transaction form of the Group, was not affected by the COVID-19 pandemic, and in addition to the stability of the financial system, against the backdrop of global low interest rates continues to be strong. Also, although rent adjustments have been seen in some commercial areas, the prices of sites for development have also remained at pre-COVID levels.
    Under such conditions, the Samty Group launched initiatives designed to maximize income gain, such as the selling of a rental condominium in the latter half of the fiscal year, in accordance with the strategy of the medium-term management plan announced in January 2021. With regard to the purchase of properties, favorable progress was made with the purchases of sites for development and of profitable properties. In May 2021, as a hotel investment initiative we entered into a capital and business alliance agreement with Wealth Management, Inc. (hereinafter “WMI”), which is listed on the Second Section of the Tokyo Stock Exchange, and plan to make WMI an equity-method affiliate during the current fiscal year. One of the basic policies under the medium-term management plan is to continue efforts to establish a hotel REIT with an eye toward the post-COVID hotel market. We will accelerate the investment of carefully selected hotels by collaborating with WMI, a developer that possesses strengths in hotel revitalization and development and information routes for investment projects. In addition, during the second quarter cumulative period negative goodwill equivalent to approximately \2.3 billion equivalent was recorded as non-operating income by making R&K—a limited liability company that holds and manages trust beneficiary rights in Aloft Osaka Dojima as a trust property—an equity-method affiliate. Also, by making R&K a consolidated subsidiary through the additional acquisition of equity interests, an additional approximately \2.4 billion was recorded as extraordinary income.
    As a result, for the subject second quarter cumulative period, net sales amounted to \24,193 million (down 11.5% from the same period of the previous fiscal year), with operating income of \3,599 million (down 36.9%), ordinary income of \5,114 million (up 10.3%), and profit attributable to owners of parent of \7,393 million (up 133.1%).

Segment information

(Unit:Millions of yen)(cumulative total)

The performance of  each segment is as follows.

Real Estate Business

The Real Estate business comprises the planning, development, and sales of real estate properties, including the Samty brand S-RESIDENCE series, as well as the planning, development, revitalization and sales of income properties and other real estate.
 During the subject second quarter cumulative period, in addition to having sold “SAMTY Residence N21” (Higashi-ku, Sapporo-shi), “SAMTY Residence Kasugai” (Kasugai-shi, Aichi), “SAMTY Horitatori Residence” (Mizuho-ku, Nagoya-shi), “SAMTY Itami Nishidai” (Itami-shi, Hyogo), “SAMTY Tsukaguchi Residence” (Amagasaki-shi, Hyogo), “GRANDUKE Kanayama Ferio” (Atsuta-ku, Nagoya-shi), “Livre Toneyama” (Toyonaka-shi, Osaka) as profitable condominiums, and “Agora Kyoto Shijo” (Shimogyo-ku, Kyoto-shi) as well as “Agora Kyoto Karasuma” (Shimogyo-ku, Kyoto-shi) as hotel assets, properties sold in lots were “SAMTY Himejima FELICETO” (Nishiyodogawa-ku, Osaka-shi) and “Isle grande Kawasaki” (Kawasaki-ku, Kawasaki-shi).
 As a result, net sales in the Real Estate Business segment amounted to \19,099 million (down 13.6% from the same period of the previous fiscal year), with operating income of \5,974 million (down 10.4%).

Property Leasing Business

The Property Leasing business comprises the leasing and management of rental apartments, office buildings, commercial facilities, hotels, and other properties.
    The Samty Group continued its efforts to expand its area of business operations and strengthen the purchase and development of income properties. These efforts included completing “S-RESIDENCE Souen” (Chuo-ku, Sapporo-shi), “S-RESIDENCE Maruyama Omotesando” (Chuo-ku, Sapporo-shi), “S-RESIDENCE Meieki (Nishi-ku, Nagoya-shi), “S-RESIDENCE Hongo II” (Meito-ku, Nagoya-shi), “S-RESIDENCE Nippombashi Qualier” (Naniwa-ku, Osaka-shi), “SAMTY Kotoni” (Nishi-ku, Sapporo-shi) and “SAMTY Tsukisamu” (Toyohira-ku, Sapporo-shi) and acquiring “S-FORT Sagamihara” (Chuo-ku, Sagamihara-shi) and “S-FORT Shizuoka Hontori” (Aoi-ku, Shizuoka-shi) and others.
    As a result, net sales in the Property Leasing Business segment amounted to \3,809 million (down 3.1% from the same period of the previous fiscal year), with operating income of \1,419 million (down 15.1%).

Other Business

In addition to the holding and operating of (including those preparing to open) 16 hotel buildings, which also includes “S-PERIA Hotel Kyoto” (Shimogyo-ku, Kyoto-shi), in its other business operations the Company also has a condominium management business and construction/renovation business.
    As a result, net sales in the Other Business segment amounted to \1,284 million (down 0.7% from the same period of the previous fiscal year), with an operating loss of ¥1,429 million (compared with operating loss of \285 million in the same period of the previous fiscal year).

Consolidated Financial condition

Total assets

329,392 Millions of yen

YOY

131.3%

Net assets

89,961 Millions of yen

YOY
115.8%

Equity ratio

25.3

YOY
-5.4point

Qualitative Information on the Consolidated Financial Position

Assets
Total assets at the end of the subject second quarter cumulative period amounted to \329,392 million, an increase of \78,528 million compared with the end of the previous fiscal year. Of this amount, current assets increased \73,178 million to \231,786 million, and non-current assets increased \5,349 million to \97,605 million. The main factors for the increase in current assets were increases of ¥74,649 million in real estate for sale and \25,647 million in real estate for sale under construction; against a decrease of ¥14,675 million in cash and deposits. The main factors for the increase in non-current assets were increases of \3,261 million in net property and equipment; and \2,091 million in investments and other assets.

Liabilities
Total liabilities at the end of the subject second quarter cumulative period amounted to \239,430 million, an increase of \66,265 million compared with the end of the previous fiscal year. Of this amount, current liabilities decreased \2,555 million to \36,941 million, while non-current liabilities increased \68,821 million to \202,488 million. The main factors for the decrease in current liabilities were decreases of \4,533 million in short-term borrowings and ¥3,125 in accrued income taxes, while the current portion of long-term debt increased by \4,017 million. The main factor for the increase in non-current liabilities was an increase of \61,461 million in long-term debt.

Net Assets
Total net assets at the end of the subject second quarter cumulative period amounted to \89,961 million, an increase of \12,262 million compared with the end of the previous fiscal year. This was due mainly to increases of \7,393 million in retained earnings; of \959 million in valuation difference on available-for-sale securities from market valuation of held shares; and of \5,866 million in non-controlling interests against a decrease of \1,776 million in retained earnings from dividend payments.