Ki Star Real Estate : Summary of Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2022

August 12, 2021

Summary of Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending March 31, 2022

(Three Months Ended June 30, 2021)

		[Japanese GAAP]
Company name: KI-STAR REAL ESTATE CO., LTD.	Listing: Tokyo Stock Exchange, First Section
Securities code:	3465	URL: https://www.ki-group.co.jp/
Representative:	Keiji Hanawa, President and CEO
Contact:	Osamu Matsuzawa, Executive Officer, General Manager of Accounting & Finance Division
	Tel: [phone]
Scheduled date of filing of Quarterly Report:	August 13, 2021
Scheduled date of payment of dividend:	-
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:	None

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Three Months (April 1, 2021 - June 30, 2021) of the Fiscal Year Ending March 31, 2022

(1) Consolidated results of operations				(Percentages represent year-on-year changes)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Million yen		%	Million yen	%	Million yen	%	Million yen	%
Three months ended Jun. 30, 2021	43,261		53.8	5,274	419.6	5,179	458.5	3,289	481.5
Three months ended Jun. 30, 2020	28,129		8.1	1,015	(20.9)	927	(24.3)	565	(20.9)

Note: Comprehensive income (million yen)

Three months ended Jun. 30, 2021:	3,474	(up 450.4%)
Three months ended Jun. 30, 2020:	631	(down 21.7%)

	Net income per share	Diluted net income per share
	Yen	Yen
Three months ended Jun. 30, 2021	231.58	231.44
Three months ended Jun. 30, 2020	39.86	-

Notes: 1. Diluted net income per share for the three months ended June 30, 2020 is not presented because there were no potential shares with dilutive effects.

1. 2. KI-STAR REAL ESTATE CO., LTD. ("the Company") has established a performance-linked stock compensation plan for directors. Shares for this plan held by the trust are recorded as treasury shares in the quarterly consolidated balance sheet and included in treasury shares for calculating the average number of shares during the period for determining net income per share.

2. Consolidated financial position

	Total assets	Net assets	Equity ratio
		Million yen	Million yen	%
As of Jun. 30, 2021		115,268	30,612	23.0
As of Mar. 31, 2021		110,127	29,218	22.3
Reference: Shareholders' equity (million yen)	As of Jun. 30, 2021: 26,475	As of Mar. 31, 2021: 24,528

Note: The Company has established a performance-linked stock compensation plan for directors. Shares for this plan held by the trust are recorded as treasury shares in the quarterly consolidated balance sheet.

2. Dividends

				Dividend per share
	1Q-end		2Q-end	3Q-end		Year-end	Total
		Yen	Yen	Yen		Yen	Yen
Fiscal year ended Mar. 31, 2021		-	44.00	-		95.00	139.00
Fiscal year ending Mar. 31, 2022		-
Fiscal year ending Mar. 31, 2022 (forecasts)			115.00	-		115.00	230.00

Note: Revisions to the most recently announced dividend forecast: Yes

3. Consolidated Forecast for the Fiscal Year Ending March 31, 2022 (April 1, 2021 - March 31, 2022)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Net income per share
		owners of parent
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	185,000		18.8	20,000	59.2	20,000	56.5	13,000	70.7	912.58
Note: Revisions to the most recently announced consolidated forecast: Yes

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in the cope of consolidation): None

Newly added: -

Excluded: -

1. Application of special accounting methods for presenting quarterly consolidated financial statements: None
2. 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 issued shares (common shares)

1) Number of shares issued at the end of the period (including treasury shares)

As of Jun. 30, 2021:	14,245,300 shares	As of Mar. 31, 2021:	14,232,500 shares
2) Number of treasury shares at the end of the period
As of Jun. 30, 2021:	41,433 shares	As of Mar. 31, 2021:	41,392 shares
3) Average number of shares during the period
Three months ended Jun. 30, 2021:	14,202,767 shares	Three months ended Jun. 30, 2020:	14,191,156 shares

Note: The Company has established a performance-linked stock compensation plan for directors. Shares for this plan held by the trust are included in treasury shares for calculating the number of treasury shares at the end of the period and the average number of shares during the period.

• The current quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
• Cautionary statement with respect to forward-looking statements, and other special items

Cautionary statement with respect to forecasts

Forecasts of future performance in this report are based on assumptions judged to be valid and information currently available to the Company. Actual results may differ significantly from these forecasts for a number of factors.

KI-STAR REAL ESTATE CO., LTD. (3465) Financial Results for the First Quarter of FY3/22

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	4
(3)	Explanation of Consolidated Forecast and Other Forward-looking Statements	4
2. Quarterly Consolidated Financial Statements and Notes	5
(1)	Quarterly Consolidated Balance Sheet	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	7
	Quarterly Consolidated Statement of Income
	For the Three-month Period	7
	Quarterly Consolidated Statement of Comprehensive Income
	For the Three-month Period	8
(3)	Notes to Quarterly Consolidated Financial Statements	9
	Going Concern Assumption	9
	Significant Changes in Shareholders' Equity	9
	Changes in Accounting Policies	9
	Segment and Other Information	10

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KI-STAR REAL ESTATE CO., LTD. (3465) Financial Results for the First Quarter of FY3/22

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

In the first quarter of the current fiscal year, there were signs of an upturn of the Japanese economy, such as an increase in exports due to the recovery of the global economy. However, the restaurant and travel sectors are still severely impacted by the pandemic because of a series of states of emergency and other restrictions on various activities. The result is a clear division in Japan between relatively strong and weak business sec tors.

In the Japanese housing sector, where the KI-STAR Group operates, interest in owning a home continues to climb due to rising global demand linked to the need to stay home for safety during the pandemic. However, the strong demand for houses in Japan and other countries has created a global shortage of lumber. In Japan, there is an insufficient supply of imported lumber and prices of this lumber have increased sharply. This so -called "wood shock" has even created turmoil in the housing market at times.

By supplying design houses with outstanding quality at low prices, the Group continued to concentrate on the growth strategy for its core homebuilding and sales business. Activities are guided by the management philosophy of "creating lives that are fulfilling, enjoyable and pleasant." For more progress with combining real estate and IT, we conducted research involving the use of IT and created systems for many of our operations. The objective is to build houses incorporating concepts that look into the fu ture in order to provide outstanding comfort and convenience to residents.

Our highest priority is improving inventory turnover, which is the time from purchasing land to the sale of a house on that land, in order to properly manage and improve the level o f financial soundness. By using the recently launched KEIAI Platform, a system for optimizing every step from purchasing land to the sale of houses to consumers, we are working on making the inventory turnover even shorter.

The Group is continuing to take many actions to contribute to achieving the SDGs. To lower carbon emissions generated during the transport of lumber, we switched to using only lumber produced in Japan for some of our products. In addition, KI-STAR and two other homebuilding companies agreed to establish the Japan Wood-housing Association. Two central goals of the association are increasing the construction of quality wood houses where people can live with confidence and increasing the use of lumber produced in Japan for building houses. The aim is the preservation and recovery of the ability of forests in Japan to fulfill multiple roles.

First quarter sales increased 15,132 million yen (53.8%) to 43,261 million yen, which was a record -high for first-quarter sales. Operating profit increased 4,259 million yen (419.6%) to 5,274 million yen. The 6.8 percentage point increase from one year earlier in the gross profit margin to 21.9% backed by rising demand for detached houses was a major reason for the higher earnings. Ordinary profit increased 4,251 million yen (458.5%) to 5,179 million yen even though non-operating expenses increased 111 million yen primarily due to commission expenses associated with a new syndicated loan to give group companies quick access to funds required for initiatives for growth. Profit attributable to owners of parent was up 2,723 million yen (481.5%) to 3,289 million yen.

Results of operations by business segment are as follows:

Beginning with the first quarter of the current fiscal year, the pre -owned home business segment has been terminated purchases and the operations of this business included in others. This change was made because the pre-owned home business is no longer a significant component of consolidated results of operations as the Group focuses resources on the homebuilding and sales business. Segment information for the first quarter of the previous fiscal year has been revised for consistency with this change.

In addition, the Fresco business segment has been deleted because the Company sold all of its holding of Fresco Inc. stock in the first quarter of the current fiscal year and this company is no longer included in the consolidated financial statements.

i) Homebuilding and sales business

In this business, there were many activities during the first quarter involving the market share growth strategy,

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KI-STAR REAL ESTATE CO., LTD. (3465) Financial Results for the First Quarter of FY3/22

primarily in the Tokyo area. Backed by marketing activities that link the KEIAI brand with outstanding designs, we continued to supply design houses with outstanding quality at low prices. Prices of houses are set at a level that makes the monthly mortgage payments less expensive than renting a residence. We placed priority on the turnover ratio by shortening the time between the purchase of land and sale of houses. Building houses faster and improving construction processes also contributed to lowering expenses in this business. In addition, we continued to upgrade our sales capabilities by building stronger ties with real estate brokers throughout Japan, increasing purchases of land and increasing the use of outsourced sales activities.

During the first quarter, 873 houses (including land sale) were sold, up by 281 from one year earlier. Sales increased 13,173 million yen to 31,000 million yen. Although earnings were negatively affected by higher brokerage commissions (increase of the variable cost) as sales increased, segment profit was up 3,776 million yen to 5,248 million yen.

ii) Custom-built housing business

This custom-built housing business is concentrating on increasing the number of orders from re al estate companies for its Fit-Procustom-built houses. Increasing orders for the single-storyIKI semi custom-built

houses is another priority.

The number of houses sold during the first quarter decreased by two from one year earlier to 18. Sales were up 153 million yen to 385 million yen but there was a segment loss of 15 million yen, down 54 million yen from the profit one year earlier. The loss was primarily attributable to up -front selling, general and administrative expenses incurred because of the increasing number of orders for the single-story IKI semi custom-built houses

iii) Yokatown business

Subsidiary Yokatown Co., Ltd. sells built-for-sale houses, land and custom-built houses mainly in Fukuoka prefecture. Yokatown has been working on strengthening its built-for-sale house sales business.

The number of built-for-sale houses sold during the first quarter was 180 (including land sale), the same as one year earlier. The number of custom-built houses sold decreased by 10 to 18 because built-for-sale houses are the main activity of this business. Sales increased 230 million yen to 5,191 million yen and segment profit increased 404 million yen to 562 million yen.

iv) Asahi Housing business

Subsidiary Asahi Housing Co., Ltd. sells built-for-sale houses mainly in Kanagawa prefecture. There have been many activities at this company involving development projects for built -for-sale houses.

The number of built-for-sale houses sold during the first quarter increased by 23 to 69 (including land sale). Sales increased 1,179 million yen to 2,922 million yen and segment profit increased 390 million yen to 472 million yen.

v) Kensin business

Subsidiary Kensin Construction inc. primarily sells built -for-sale houses, land and custom-built houses and performs building site preparation work mainly in Kanagawa prefecture. The company has been involved with many real estate development projects that required the preparation of building sites at locations with big differences between high and low areas. Kensin plans to increase sales of built-for-sale houses.

The number of built-for-sale houses sold during the first quarter increased by 29 to 55 (including land sale) and custom-built houses sold increased by five to 25. Sales increased 1,588 million yen to 2,911 million yen and segment profit increased 234 million yen to 160 million yen (a loss of 73 million yen one year earlier).

vi) Tokyo Big House business

The main activities of Tokyo Big House, Inc., which are mainly in Tokyo, are the sale of built -for-sale houses, the sale of renovated condominium units and residential remodeling. Tokyo Big House plans to increase activities involving development projects for built-for-sale houses.

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