Phil : Summary of Earnings Report for the First Two Quarters of Fiscal Year Ending Nov. 2022

Summary of Earnings Report for the First Two Quarters of Fiscal Year Ending Nov. 2022

							July 14, 2022
Name of listed company	Phil Company, Inc.				TSEs
Code	3267				URL http://philcompany.jp/
Representative:		CEO and Representative	Yuichi Nomi
Contact:		Operating Manager	Yosuke Nishimura	(TEL)	[phone]
Scheduled date of quarterly filing	July 14, 2022	Scheduled date of dividend payment	-
Additional material of financial result:	No
Result meeting			Yes	(For analyst and institutional investors)
						(Millions yen, rounded down)

1. Consolidated Results for the First half of the Fiscal Year Ending Nov. 30, 2022 (Dec. 1, 2021-May.31, 2022)

(1) Consolidated Business Results							(%: Quarter-on-quarter comparison)
		Net Sales		Operating Income		Ordinary Income		Net Income Attributable
					to Owners of Parent
		¥ millions		%	¥ millions		%	¥ millions		%	¥ millions		%
Q2 Ended May. 2022		1,399		(33.7)	(77)		―	(77)		―	(50)		―
Q2 Ended May. 2021		2,111		97.5	234		―	227		―	146		―

(note) Comprehensive

Q2 Ended

-50

Millions yen ( ―%)

Q2 Ended

146

Millions yen ( ―%)

income

May. 2022

May. 2021

Net income per share

Diluted net income per

share

Yen

Yen

Q2 Ended May. 2022

(9.47)

―

Q2 Ended May. 2021

25.71

25.44

(2) Consolidated Financial Conditions

Total assets

Net Assets

Shareholders' Equity

Ratio

¥ millions

¥ millions

%

Q2 Ended May. 2022

4,473

2,249

50.2

FY Ended Nov. 2021

5,450

2,774

50.8

2．Dividend information

Dividend per Share

Q1

Q2

Q3

Q4

Total

Yen

Yen

Yen

Yen

Yen

Year Ended Nov. 2021

―

0.00

―

10.00

0.00

Year Ending Nov. 2022

―

0.00

Year Ending Nov. 2022 (plan)

―

0.00

0.00

3．Consolidated Business Plan for the year ending Nov. 2022	(Dec. 1, 2021 to Nov. 30, 2022)
							(%: Comparison with the previous period)
								Net Income	Net Income per
	Net Sales		Operating Income	Ordinary Income	Attributable to
		Share
								Owners of Parent
	¥ millions		%	¥ millions	%	¥ millions	%	¥ millions	%	Yen
Full year	5,500		1.2	140	(80.7)	130	(81.8)	90	(77.9)	16.18

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1．Overview of business result

（1）Overview of business results for this fiscal year

During the consolidated first two quarters of this fiscal year (December 1, 2021 - May 31, 2022), the economy of Japan saw signs of a recovery after coronavirus infections peaked and began to slowly subside. However at the same time, factors such as soaring global material prices and energy prices, and the worsening situation in Ukraine, mean that the future economic outlook remain uncertain.

Under these conditions, the Phil Company Group is operating the Phil Park aerial shop business that aims to benefit all three parties involved - the land owner, tenant, and the community - and the Premium Garage House business for rental housing that includes a garage. These businesses are guided by the Phil corporate philosophy of prosperous coexistence. We provide solutions through two businesses: the "contracted orders scheme" in which we provide land owners with proposals for Phil Park aerial shops, and the "development and sales scheme" for real estate investors in which our company performs all work from buying land to Phil Park aerial shop development and sales.

The number of contracted orders during second quarter of this consolidated fiscal year was 10 and orders received reached 821,087 thousand yen. As for the breakdown, the Phil Park aerial shop business was 2 and orders received reached 346,374 thousand yen and the Premium Garage House business was 8 and orders received reached 474,713 thousand yen. As a result, the number of contracted orders during these two quarters of this consolidated fiscal year was 15 and orders received reached 1,334,756 thousand yen. As for the breakdown, the Phil Park aerial shop business was 5 and orders received reached 666,533 thousand yen and the Premium Garage House business was 10 and orders received reached 668,223 thousand yen.

In the Phil Park aerial shop business, we have seen a gradual recovery in orders as society continues a slow recovery from the coronavirus pandemic. Following the start of this fiscal year, we received three orders during the consolidated first quarter, and two during the consolidated second quarter. Among the orders which we received were some which had been planned and proposed prior to the pandemic, but the projects had been postponed due to pandemic concerns. However the contracts were revived in recognition of our company's excellent planning capabilities making maximum use of site characteristics, and our success in attracting tenants even during the pandemic.

In the Premium Garage House business, resident needs have expanded into an increasingly wide range, backed by the increase in remote working and other elements of diversifying lifestyle changes resulting from the pandemic. Because the garage space can be used in a large variety of ways, not only as a garage but also as a place for hobbies or work, or as a second house, these houses have experienced growing demand from residents. Land owners have also recognized the high occupancy rate resulting from use of our original tenant waiting list registration system, and we received a steady supply of orders during the first two quarters of this consolidated fiscal year.

We handed over 7 properties of contracted orders scheme and sales figures of development and sales scheme was none during these two quarters of this consolidated fiscal year.

In the development and sales scheme, as prescribed in the mid-term management plan that was formulated in January 2022, our policy for this fiscal year is to actively acquire high-quality properties for development, and we concluded contracts for acquiring two properties during the first two quarters of this consolidated fiscal year.

The Phil Company Group in these first two quarters of this fiscal year recorded sales of 1,399,135 thousand yen (-33.7% compared to the previous quarters), operating loss of 77,245 thousand yen (234,576 thousand yen for previous quarters), ordinary loss of 77,769 thousand yen (227,828 thousand yen for previous quarters), and net loss attributable to the owners of the parent of 50,161 thousand yen (146,864 thousand yen for previous quarters).

―2―

During these first two quarters of fiscal year, sales, cost of sales, gross profit and gross profit margin are as follows.

	Services		GPM of each	First quarter	Second quarter	First two quarters
		service
	Planning and design		90%～100%	37,022 thousand yen	42,634 thousand yen	79,657 thousand yen
	Design and management		50%～60%	23,599 thousand yen	50,034 thousand yen	73,634 thousand yen
Sales	Construction		13%～18%	390,114 thousand yen	664,362 thousand yen	1,054,476 thousand yen
	Development and sales		―	―	―	―
	Others		―	95,049 thousand yen	96,318 thousand yen	191,367 thousand yen
	Total Sales		545,785 thousand yen	853,350 thousand yen	1,399,135 thousand yen
	Cost of Sales		431,980 thousand yen	661,241 thousand yen	1,093,221 thousand yen
	Gross Profit on sales		113,804 thousand yen	192,110 thousand yen	305,914 thousand yen
	Gross Profit Margin		20.9%	22.5%	21.9%

※Gross profit margin of contracted orders scheme per order is approximately 25%.

During these first two quarters of fiscal year, number of properties for contracted orders scheme, and number of properties for development and sales scheme, those shows the growth potentials are as follows.

"Contracted orders scheme"

No. of ordered		Q1			Q2		Q3		Q4	Total
properties
Year Ending Nov. 2022			3		4			―		―	7
Year Ended Nov. 2021			0		3			4	9	16
"Development and sales scheme"
						Q1		Q2
Orders received *1
	No.	(thousand yen)	No.	(thousand yen)
	Phil Park aerial shop	3	320,159	2		346,374
	business
Year Ending Nov.
Premium Garage	2	193,510	8		474,713
2022	House
	Total		5	513,669	10		821,087
	Phil Park aerial shop	2	1,227,283	2		370,721
	business
Year Ended Nov.
Premium Garage	5	236,390	3		234,440
2021
House
	Total		7	1,463,673	5		605,161

―3―

	Orders received *1		Q3		Q4		Total
	No.	(thousand yen)	No.	(thousand yen)	No.	(thousand yen)
		Phil Park aerial shop business	―	―	―	―	5	666,533
Year Ending
	Premium Garage House	―	―	―	―	10	668,223
Nov. 2022
		Total	―	―	―	―	15	1,334,756
		Phil Park aerial shop business	1	78,328	0	17,567	5	1,693,900
Year Ended
	Premium Garage House	6	311,869	12	577,470	26	1,360,169
Nov. 2021
		Total	7	390,197	12	595,037	31	3,054,069

*1: The amount of orders received is the total amount (sales base) of new orders received in the "contracted orders scheme" of the Phil Park aerial shop business during the above consolidated fiscal year (including ground stabilization, piling work and additional work).

Through the fiscal year ended November 30, 2021, orders received by cooperating companies in the Premium Garage Houses business were included in the total number of orders. (In such orders, the construction work is contracted by the cooperating company, and Phil Company provides the Premium Garage House trademark, proposal, design, and other expertise, acquiring sales income as a price for use of this expertise and as consulting fees.) However because this system made it impossible to appropriately calculate a unit price per order in the contracted orders scheme, orders received by cooperating companies are no longer included in the total number of orders beginning from the fiscal year ending November 30, 2022. (In the fiscal year ended November 30, 2021, there were a total of four orders received by cooperating companies: one in the first quarter and three in the fourth quarter.) Both sales and balance of order (*2) include orders received by cooperating companies.

Balance of order *2	(thousand yen)
May. end 2022	2,467,324
Nov. end 2021	2,587,870

*2: The balance of order is the total remaining balance (future sales base) of orders which have not yet been completed and delivered in the "contracted orders scheme" of the Phil Park aerial shop business during the above consolidated fiscal year (including ground stabilization, piling work and additional work)..

The specific amount of "Development and sales scheme" and balance which handles everything from the acquisition of land to the development and sale of Phil Park aerial shops including the number of delivered properties, amount of developing projects and the number of acquired lands are shown in the table below.

"Development and sales scheme"

Number of development and	Q1		Q2		Q3		Q4	Total
sales scheme
	Land		0		0		―	―	0
Year Ending
Land+Bldgs		0		0		―	―	0
Nov. 2022
	Total		0		0		―	―	0
	Land		0		0		0	0	0
Year Ended Nov.
Land+Bldgs		0		1		1	1	3
2021
	Total		0		1		1	1	3

―4―

"Development and sales scheme"

Amount of development and sales scheme *3	No.	(thousand yen)
May. end 2022	9	1,883,301
Nov. end 2021	3	403,381

*3: The amount of development is the total amount (future sales base) expended on land and buildings for Phil Park aerial shops developed as part of the "development and sales scheme" during the above period.

Number of acquired land	Q1		Q2	Q3	Q4	Total
for development *4
Year Ending Nov. 2022		5	2	―	―	6
	-1
Year Ended Nov. 2021		0	0	1	0	1

*4: Contracts for acquisition of two properties were concluded in the second quarter of this fiscal year. Of the contracts for property acquisition that were concluded during the first quarter, because delivery for one order was not completed during the second quarter, this property acquisition contract is entered as "-1".

One important issue that we face is reinforcing our personnel, and the number of consolidated employees at the end of May was 59 (compared to 48 at the end of the fiscal year ended November 30, 2021).

In order to achieve continual growth in the Phil Company Group, we will continue to hire the top-grade personnel and expert personnel, and will also continue training of existing employees as mentioned on a mid-term management plan .

(2) Explanation of financial status

(Assets)

Total assets at the end of 2nd quarter of this fiscal year decreased by 976,346 thousand yen to reach 4,473,965 thousand yen. Primary factors affecting this result included the decrease of 1,568,996 thousand yen in cash and savings, an increase of 81,270 thousand yen in real estate for sale and an increase of 543,866 thousand yen in real estate for sale in progress.

(Liabilities)

Liabilities at the end of 2nd quarter of this fiscal year decreased by 451,892 thousand yen to reach 2,224,305 thousand yen. Primary factors affecting this result included the decrease of 237,034 thousand yen in unpaid corporate tax and a decrease in 220,763 thousand yen in advance payment.

(Net assets)

Net assets at the end of 2nd quarter of this fiscal year decreased by 524,454 thousand yen from the end of the previous fiscal year to reach 2,249,659 thousand yen. Primary factors affecting this result included the increase of 499,879 thousand yen in treasury stock by an acquisition of a stock from market, a decrease of 56,127 thousand yen in paying out the dividend to shareholders and a decrease of 50,161 thousand yen in net income attributable to owners of the parent. As for retained earnings at the beginning of this fiscal year, it increased 48,657 thousand yen due to the change of revenue recognition accounting standards..

（3）Prospects for the future

Regarding the results forecast for the full consolidated fiscal year, plan was unchanged as released on January 14, 2022. We will continue to carefully monitor the progress of projects in the contracted orders scheme and the sales conditions in the development and sales scheme, and will promptly disclose the information in the event that corrections to the results forecast become necessary.

―5―