Ki Star Real Estate : Summary of Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023

August 12, 2022

Summary of Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending March 31, 2023

(Three Months Ended June 30, 2022)

		[Japanese GAAP]
Company name: KI-STAR REAL ESTATE CO., LTD.	Listing: Tokyo Stock Exchange
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 12, 2022
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, 2022 - June 30, 2022) of the Fiscal Year Ending March 31, 2023

(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, 2022	50,035		15.7	5,073	(3.8)	4,883	(5.7)	3,191	(3.0)
Three months ended Jun. 30, 2021	43,261		53.8	5,274	419.6	5,179	458.5	3,289	481.5

Note: Comprehensive income (million yen)

Three months ended Jun. 30, 2022:	3,261	(down 6.1%)
Three months ended Jun. 30, 2021:	3,474	(up 450.4%)

	Net income per share	Diluted net income per share
	Yen	Yen
Three months ended Jun. 30, 2022	201.80	201.68
Three months ended Jun. 30, 2021	231.58	231.44

Note: 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 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, 2022		172,909	49,629	25.9
As of Mar. 31, 2022		163,240	49,037	27.0
Reference: Shareholders' equity (million yen)	As of Jun. 30, 2022: 44,765	As of Mar. 31, 2022: 44,026

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 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, 2022		-	115.00	-		150.00	265.00
Fiscal year ending Mar. 31, 2023		-
Fiscal year ending Mar. 31, 2023 (forecasts)		-	140.00	-		140.00	280.00

Note: Revisions to the most recently announced dividend forecast: None

3. Consolidated Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(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	220,000		19.3	25,500	7.8	25,000	7.7	16,000	8.5	1,059.53
Note: Revisions to the most recently announced consolidated forecast: None

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in the scope 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, 2022:	15,857,300 shares	As of Mar. 31, 2022:	15,857,200 shares
2) Number of treasury shares at the end of the period
As of Jun. 30, 2022:	41,433 shares	As of Mar. 31, 2022:	41,433 shares
3) Average number of shares during the period
Three months ended Jun. 30, 2022:	15,815,801 shares	Three months ended Jun. 30, 2021:	14,202,767 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 FY3/23

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	3
(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
	Additional Information	11

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KI-STAR REAL ESTATE CO., LTD. (3465) Financial Results for the First Quarter of FY3/23

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

In the first quarter of the current fiscal year, while crude oil prices continued to soar and the depreciation of the yen increased inflationary pressure, consumer spending on services increa sed as restrictions on economic activity were eased and inbound demand improved because the government raised the daily cap on the number of persons entering Japan. As a result, the Japanese economy showed signs of recovery but the outlook remains unclear due to resurgence of COVID-19 infections.

In the Japanese housing sector, where the KI-STAR Group operates, even though the rapid rise of interest in owning a home has paused due to the spread of the COVID -19 pandemic, demand on the whole remains steady. On the other hand, prices of parts and materials are soaring due to inflation and other factors and shortages of housing equipment have started to appear due to global semiconductor supply shortages.

By supplying design houses with outstanding quality at low prices based on our mission of "house ownership for everyone," 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." We have expanded operations to new areas and are working to further develop the markets in which we already operate with the aim of increasing our market share.

The Group is also committed to improving management efficiency through the use of DX (Digital Transformation). One activity is the use of MITSUKARU Pro and other information technologies to operate with even greater efficiency, raise productivity, and optimize profit.

Sales increased 6,774 million yen (15.7%) to a record-high 50,035 million yen. Operating profit decreased 201 million yen (3.8%) to 5,073 million yen due to higher cost of sales. Ordinary profit decreased 295 million yen (5.7%) to 4,883 million yen because of non-operating expenses increased 143 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 down 97 million yen (3.0%) to 3,191 million yen.

Results by business segment are as follows:

The Tokyo Big House business segment has been deleted because the Company sold part of its holding of Tokyo Big House, Inc. stock in the previous 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 involving the market share growth strategy. We have expanded operations to new areas while strengthening operations in areas where we currently operates. 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, 993 houses (including land sale) were sold, up 120 from one year earlier. Sales increased 3,166 million yen to 34,167 million yen. Segment profit was down 662 million yen to 4,585 million yen primarily due to higher cost of sales.

ii) Custom-built housing business

This custom-built housing business is concentrating on increasing the number of orders from Fit-Procustom-built houses for real estate companies and the single-story IKI semi custom-built houses.

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KI-STAR REAL ESTATE CO., LTD. (3465) Financial Results for the First Quarter of FY3/23

The number of houses sold during the first quarter increased by 47 from one year earlier to 65. Sales were up 567 million yen to 953 million yen. Segment profit increased 29 million yen to 13 million yen, compared with a loss of 15 million yen one year earlier. There were up-front 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 increased by 32 to 212 (including land sale). The number of custom-built houses sold were 18, the same as one year earlier because built-for-sale houses are the main activity of this business. Sales increased 787 million yen to 5,978 million yen and segment profit decreased 299 million yen to 262 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 the built-for-sale house sales business.

The number of built-for-sale houses sold during the first quarter increased by 12 to 81 (including land sale). Sales increased 708 million yen to 3,631 million yen and segment profit increased 73 million yen to 545 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 sloped ground. Kensin plans to strengthen its built-for-sale house sales business.

The number of built-for-sale houses sold during the first quarter increased by 18 to 73 (including land sale) and custom-built houses sold decreased by 11 to 14 as Kensin has been working on strengthening its built-for-sale house sales business. Sales increased 1,558 million yen to 4,469 million yen and segment profit increased 55 million yen to 215 million yen.

vi) KEIAI Presto business

The main activities of KEIAI Presto K.K. are the sales of built-for-sale houses mainly in Saitama prefecture.

There have been many activities at this company involving development projects for the built-for-sale house sales business.

The number of built-for-sale houses sold during the first quarter increased by 9 to 16 (including land sale). Sales increased 311 million yen to 428 million yen and segment profit increased 71 million yen to 40 million yen, compared with a loss of 30 million yen one year earlier.

(2) Explanation of Financial Position

Assets

Total assets increased by 9,668 million yen from the end of the previous fiscal year to 172,909 million yen at the end of first quarter of the current fiscal year. This was mainly due to an increase of 15,593 million yen in inventories, which include real estate for sale, real estate for sale in proce ss and costs on uncompleted construction contracts, and a decrease of 6,459 million yen in cash and deposits resulting mainly from income taxes paid.

Liabilities

Total liabilities increased by 9,076 million yen to 123,279 million yen. The main reasons include an increase of 11,506 million yen in borrowings, which include short-term borrowings, current portion of long-term borrowings

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