Consolidated Financial Results for the First 2 Quarters Ended September 30, 2013 [Japanese GAAP]

abidingbasinManagement

Nov 20, 2013 (3 years and 6 months ago)

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Please note that this document is a translation of the official announcement that was released on
November
14,2013.The translation is prepared and
provided for the purpose of the reader

s convenience only.All readers are strongly recommended to refer t
o the original Japanese version of the
news release for complete and accurate information.
Consolidated Financial Results
for
the
First
2
Quarter
s
Ended
September
30
,
2013
[J
apanese
GAAP]
November
14,2013
Company
n
ame:
Raysum Co.,
Ltd.
Stock exchange
listing:
Tokyo
Securities Exchange
Code
n
umber:8890
URL:http://www.raysum.co.jp/
Representative:Takeshi Tanaka,President
and Representative Director
Contact:
Kiyohiko Ishii
,
Division
Manager
of
Administration Division
Phone:
+81
-
3
-
5157
-
8881
Sched
uled date
for filing
of
annual
securities report
:
November
14
,2013
Availability of supplementary briefing material on
financial
results:
Yes
Schedule of
financial
results briefing session:
Yes (for institutional investors and analysts)
(Figures are round
ed down to the nearest million yen)
1.Consolidated Financial Results for
the
First
2
Quarter
s
Ended
September
30
,
2013
(
April
1,
201
3
to
September
3
0
,
2013
)
(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
%
First
2
q
uarter
s
e
nded
September
3
0
,
2013
11,718
66.1
2,398
98.3
2,361
103.6
1,057

2.3
First
2 q
uarter
s
ended
September
3
0
,
2012
7,056

1,209

1,159

1,082

(Note) Comprehensive income:
First
2 q
uarter
s
ended
September
3
0
,
2013

1
,
1
33
million (
2.6
%)
First
2 q
uarter
s
ended
September
3
0
,
2012

1,105
million (
-
%
)
Net income
pe
r share
D
iluted net
income per
share
y
en
y
en
Fi
rst
2 q
uarter
s
e
nded
September
30
,
2013
2,294.32

Fi
rst
2 q
uarter
s
ended
September
30
,
2012
2,349.40

(Note) Year
-
on
-
year comparisons with the previous fiscal year are not provided as the fiscal year en
ded March 31,
201
2
lasted only seven months due to the changes to the reporting period.
(2) Consolidated Financial Position
Total assets
Net assets
Equity ratio
m
illion
y
en
m
illion
y
en
%
As of
September
30
,
2013
2
7,591
23,812
8
6.3
As of
March
3
1
,201
3
46,303
22,671
49.0
(Reference) Equity:
As of
September
3
0
,
2013
:
¥
2
3,804
million
As of
March 31
,
201
3
:
¥2
2
,
671
million
2.Dividends
Annual Dividends
1
st quarter end
2nd quarter end
3rd quarter end
Year end
Total
y
en
y
en
y
en
y
en
y
en
Fiscal
y
ear
e
nded
March 31,2013

0.00

0.00
0.00
Fiscal
y
ear
ended
March 31,2014

0.00
Fiscal
y
ear
e
nding
March 31
,
2014
(Forecast)

0.00
0.00
(
Note
)
Changes to the most recent dividend forecast announced:Not applicable
3.Consolidated Financial Result
s
Forecast
for
the
Fiscal Year Ending
March 31
,
2014
(
April
1,
2013
to
March 31
,
2014
)
(%indicates changes from the previous corresponding
period
)
Net sales
Operating income
Ordinary income
Net income
Net income
per share
m
illion
y
en
%
m
illion
y
en
%
m
illion
y
en
%
m
illion
y
en
%
y
en
Full year
25,2
0
0
64.
1
4,3
0
0
9
5
.
5
4,2
0
0
9
7
.
4
3,
6
00
74.8
7,
812
.2
6
(
Note
)
Changes to the most recent
results
forecast announced:No
t applicable
*Notes
(1)
C
hanges
in
s
ignificant
subsidiaries
in
consolidated
fiscal year
to date
(a
ffecting specified subsidiaries
resulting
in
changes in scope of consolidation):
Yes
New
ly included
SOKNAPARTNERS CO.,LTD
.
Excluded
None
(2)
Application of accounting method specific to preparation of quarterly consolidated
financial statement:Not a
pplicable
(
3
)
Changes in accounting
policies
,
changes in accounting estimates and restatements
1) Changes
in accounting policies
due to the revision of accounting standards:
No
t applicable
2) Any changes
in accounting policies
other than 1) above:
Not
applicable
3) Changes in accounting estimates:
Not applicable
4) Restatements:
Not applicable
(
4
)
Total number of issued shares (common stock)
1) Total number of issued shares at the end of the
period
(including treasury stock):
September
3
0
,2013
460
,814 shares
March 31,201
3
460,81
4
shares
2) Total number of treasury s
tock
at the end of the
period
:
September
3
0
,2013

shares
March 31,201
3

shares
3) Average number of shares during the
period
:
Fi
rst
2
q
uarter
s
ended
September
3
0
,
2013
460,814
shares
Fi
rst
2
q
uarter
s
ended
September
3
0
,
2012
460,814
shares
* Presentation
r
egarding the
i
mplementation
s
tatus of the audit
process
At the time of disclosure of this report,audit procedures of the financial statements pursuant to the Financial
In
struments and Exchange Act were completed
.
* Explanation of the proper use of performance forecast and other notes
Performance forecasts and other forward
-
looking statements presented in this report are based on information
currently available to the Co
mpany and certain assumptions deemed to be reasonable,and are not to be read as
guarantees of future performance by the Company.Actual performance may differ substantially due to various
factors.
Financial briefing for institutional investors and analyst
s will be held on November 27,2013.
Presenta
tion
materials
provided at the briefing will be available on our website afterward
without delay.

1

Appendix
Table of Contents
1.Qualitative Information on Quarterly Financial Results
................................
.............................
2
(1) Explanation of Results of Operations
................................
................................
....................
2
(2) Explanation of Financial Position
................................
................................
.......................
10
(3) Explanation of Consolidated Financial Results Forecast and
Other Inf
ormation on Future Forecasts
................................
................................
...............
11
2.Matters Concerning Summary Information
................................
................................
..............
11
(1) Changes in Significant Subsidiaries in Consolidated Fiscal Year to Date11
.......................
11
(2) Application of Accounting Method Specific to
Preparation of Quarterly Consolidated Financ
ial Statement
................................
...............
11
(3) Changes in Accounting Policies,Changes in Accounting Estimates,
and Restatements
................................
................................
................................
................
11
3.Quarterly Consolidated Financial Statements
................................
................................
...........
12
(1) Quarterly Consolidated Balance Sheets
................................
................................
..............
12
(2) Quarterly Consolidated Statements of Income an
d
Quarterly Consolidated Statements of Comprehensive Income
................................
........
14
(3) Quarterly Consolidated Statements of Cash Flows
................................
.............................
15
(4) Notes on Quarterly Consolidated Financial Statements
................................
......................
16
(Notes on the Going Concern Assumption)
................................
................................
16
(Notes in the Eve
nt of Material Change in
the Amount of Shareholders’ Equity)
................................
................................
........
16
(Segment Information,Etc.)
................................
................................
........................
16

2

1.Qualitative Information on Quarterly Financial Results
(1) Explanation of Results of Operations
<Summary of Consolidated Financial Results for the First Two Quarters of th
e Fiscal Year>
[Unit:million yen]
Consolidated
financial results
First 2 quarters
(April to September
of fiscal year ended
March 31,2013)
First 2 quarters
(April to September
of fiscal year ending
March 31,2014)
Amount of
increase
(decrease)
Rate of
i
ncrease
(decrease)
Net sales
7,056
11,718
4,661
66.1%
Operating income
1,209
2,398
1,188
98.3%
Net income
1,082
1,057

25

2.3%
The Group’s consolidated financial results for the second quarter of the fiscal year under review
achieved substantial increase in net sal
es and operating income.
Consolidated net sales were 11,718 million yen,a 66.1% increase compared to the same period of
the previous fiscal year,and consolidated operating income was 2,398 million yen,a 98.3% increase
compared to the same period of the
previous fiscal year.As a result,the Company absorbed the 3,737
million yen of loss on sales of noncurrent assets from the sale of land it had owned as noncurrent
assets in the first quarter and net income recovered to 1,057 million yen.
(Progress on ta
rgets for the fiscal year)
Looking at the rates of progress in terms of the numerical targets for the fiscal year under review,
which is the first fiscal year of the medium
-
term three
-
year business plan that was developed at the
beginning of the fiscal yea
r under review,the progress was 46.5% of the 25,200 million yen net sales
target and 55.8% of the 4,300 million yen operating income target. While the plan’s sales targets for
the first fiscal year expected sales of 6,000 million yen for large properties
of 3,000 million yen or
more and 12,000 million yen for properties less than 3,000 million yen,the Company has exceeded
the half year target of operating income with the sales of properties less than 3,000 million yen alone.
As stated in the section “Wh
y monetize problems?” below, the major factors for this achievement
are the significant increase in the income ratio of the Real Estate Trading Business due to focusing on
the sales of properties that are difficult to handle and whose added value is high (
operating income
ratio of sales: 15.7% in first two quarters of previous fiscal year → 21.6% in first two quarters of
fiscal year under review) and sales with 80%of used properties in the fiscal year to date being in stock
for less than 90 days,a better
pace than the 120 days of the plan.
As a result of accumulating sales with “problem
-
solving” initiatives and strengthening the financial
base,much information on sales of large properties with problems has been gathered as of recent and
the Company is co
ncurrently considering purchases.Regarding the second half of the fiscal year as
well,the Company will maintain profitability and the rate of inventory rotation of handling properties
regardless of the size,accumulate specific projects and review its ou
tlook for the full
-
year
performance.
(Relationship with clients)
In the past few years the Company has focused on high
-
net
-
worth individuals and,especially for tax
measures,has been accumulating transactions with clients that wish to acquire individual
properties or
property portfolios of around 1,000 million to 3,000 million yen.

3

Such clients are experienced in real estate investment for tax measures and many have experienced
cases involving inheritance tax that have led to capital loss of even more
than the effects of such.
Since these clients know first
-
hand that properties deemed excellent based on surface qualities that
can easily receive loans from financial institutions actually have low yields and intense volatility due
to their high liquidity
and that these properties therefore invite anxiety,they seek properties that can
achieve target results within more of a medium
-
to long
-
term time span.
The ratio of sales of properties priced at 200 million yen or more to clients with the abovemention
ed
demand increased to 92.6% in the consolidated financial results for the second quarter of the fiscal
year under review (57.8%in the previous fiscal year).
As a departure from the Company’s previous history, the results of the consolidated financial re
sults
for the second quarter of the fiscal year under review indicates that the “problem
-
solving” products
the Company has been really working with in the past few years have been coming through to high
-
net
-
worth individuals.
Four specific examples of sal
es in the second quarter of the fiscal year under review are discussed in
the Real Estate Trading Business segment below.These examples show that the Company maximizes
investment returns of clients using all sectors (offices,residences and commercial pro
perties) in order
to answer to their individual needs as well as by mobilizing both new and old properties to commodify
properties that exhibit potential.
(Why monetize problems?)
In central Tokyo,there are many low
-
rise properties where floor area rati
os are underutilized and
which are in a difficult position to acquire loans from financial institutions due to various problems.
The demands of clients can be flexibly met if the Company can select from among such properties
those which have potential and
then appropriately commodify them.In other words,central Tokyo is
an extremely attractive market granted the skills of selecting and commodifying properties,and the
potential of the market is massive.
As the situation surrounding easy
-
to
-
understand pr
operties that any person can plainly see are good
and sophisticated properties that REITs incorporate is becoming overheated,opportunities where
clients and financial institutions which whom they transact become interested in the Company’s
“problem
-
solvin
g” products are increasing.
The Company identifies the risks and relation of rights of target properties,makes a decision on
whether or not to acquire them,clarifies contract details and makes smooth settlements.That is,
specialized teams examine blue
prints and backgrounds of repairs from the early stages of purchasing
activities and conduct on
-
site surveys to see if there are any issues with smoke emission,evacuation
routes and such.Also,with frequent on
-
site visits by team members,examinations ar
e conducted to
check whether the type of tenants and their actual usage meet legal requirements in terms of usage and
check if there are any differences with the lease agreements as well as if property lines are clear and
such.
A characteristic of “probl
em
-
solving” products is that added value of properties is extracted in the
long term with property management that continues even after the sale.This is where clients may have
certain concerns; “Is Raysum a fitting partner that will stick with me in manag
ing the property in the
medium
-
to long
-
term according to my goals?” “They say that renovating an old property has its limits
and that they will construct a new property,but can they really build a property that satisfies my
demands?”
Regarding these poin
ts,the Company has found that more and more clients are satisfied when
specifically given the Company’s track record with “problem
-
solving” products up until the second

4

quarter of the fiscal period under review.
Also, the Company’s staff that has been i
nvolved in building the track record has become more
confident and able to more accurately answer to the questions of clients.
The increase of the equity ratio to 84.5% at the end of the first quarter (86.3% at the end of the
second quarter) and the esta
blishment of a firm financial standing has also contributed to
demonstrating potential in terms of bringing a sense of security to clients.
In monetizing immediate problems as well,the track record has become a major driving force in
advancing fast and e
ffective purchasing activities for properties with potential.

5

The following are the financial results of each segment in the second quarter of the fiscal year under
review.
1) Real Estate Trading Business
<Summary of Segment Business for the First Two Q
uarters of the Fiscal Year>
[Unit:million yen]
Real estate trading
business
First 2 quarters
(April to September
of fiscal year ended
March 31,2013)
First 2 quarters
(April to September
of fiscal year ending
March 31,2014)
Amount of
increase
(decrease)
Rate of
increase
(decrease)
Segment net sale
s
4,849
9,964
5,114
105.5%
Segment income
762
2,151
1,388
182.1%
The real estate trading business segment net sales were 9,964 million yen for sales increase of
105.5% compared to the same period of the previous fiscal year,and segment income was 2,15
1
million yen for income increase of 182.1%compared to the same period of the previous fiscal year.
(Examples of sale)
Some of the properties handled in the first two quarters of the fiscal year are given below.
Example 1:For client seeking upside of
profitability with rebuilding by utilizing surplus floor area
in the future
This is a case of a sale of an old office building next to Hatchobori Station in Chuo Ward.
The property is located next to a station with good transportation access that is one st
ation away
(two
-
minute ride) to JR Tokyo Station and three stations away (five
-
minute ride) to Tokyo Metro
Ginza Station.Even so,the Company focused on the point of complacency regarding the modest
positioning between large developments nearby.
The prop
erty was commodified as a property whose latent value can be monetized in the medium
to long term,with the option of rebuilding into a single condominium building utilizing Chuo
Ward’s unique floor area ratio easing measures or in the future as a resident
ial area where work and
residence match.
Example 2:For client wanting to continue to secure stable profits for the time being and sell the
property after ten years or so
The Company sold a luxury service apartment (site area of 1,755m
2
and total of 101
units)
located in the bay area of Yokohama.
Transportation access is excellent for the property as JR Yokohama Station is one station away
(two
-
minute ride) and Shin
-
Yokohama Station on the Tokaido Shinkansen Line is three stations
away (seven
-
minute ride)
.Also,as access to industrial bases of marine transport,energy,etc.at
Yokohama’s bay is excellent, the property is being commodified as a luxury service apartment
targeting middle managers employed in these companies so as to exhibit competitiveness f
or the
coming 10 or more years,and the Company will engage in medium
-
to long
-
term management.
Another point of focus was the future potential of surrounding regular land of 1,755m
2
with
historic temples and a good environment for for
-
sale condominiums
that will be close to the
residents’ work places.
Example 3:For client emphasizing safety and seeking both stable profits for 10 or so years and
depreciation effect
The Company advanced development of a new commercial building next to Tokyo Metro Toyosu

6

Station.
In this prime area that is becoming commercialized with the rapid change of the cityscape,the
Company saw that the capital investment of former owners had not caught up, nor had the area’s
public services.
It was concluded after considering prop
erty development plans given the client’s goals of
ownership that building a new building would be the best course,and the investment became such
that depreciation effect would also be significantly generated.
For the target tenant,it was narrowed down
to a licensed nursery which would receive
government support and would continue for a long time as a tenant,given that there are many
children on waiting lists in the Toyosu area and the demand to resolve this is high.Taking in the
inclinations of the cl
ient as well,a lease agreement was concluded before the stage of construction
and conditions to guarantee stable cash flow were established.The construction of a new building
with necessary specifications then began.
The building was completed in this f
iscal year and handed over to the client.
The client has been familiar with the area and knew first hand that it was a respectable vibrant
area.However,it was difficult to see a tenant continuing at the property for a long time as
competition was inten
sifying for normal restaurant tenants.Due to this,the client wanted to avoid
the trouble of dealing with frequent interchange of tenants.Given this inclination,the target tenant
was narrowed down to one with strong demand in the area,and a sense of gr
eater security was
ensured with commodification that incorporated continuation of income into the lease agreement.
The product’s qualities also take into consideration an exit strategy given the prospects of future
redevelopment surrounding the area as we
ll as the client’s inclinations. The infrastructure for living
is being developed day by day in the Toyosu area overall,and the Company will focus on the
changes in districts surrounding the properties as it manages the client’s property given that Toyosu
is a candidate for the Olympic Village for the 2020 Tokyo Olympics and has excellent access to the
arenas.
Similarly,the Company acquired land near Haneda Airport as it saw that foreigners involved in
aviation are bringing about change in the areas nea
r Haneda since Haneda Airport has transformed
into a global hub airport.In anticipation of an increase of demand near the airport for serviced
apartments where cabin attendants of domestic and foreign airlines will be comfortable,in an
attempt to commodi
fy this demand as a profitable property,the Company is using the know
-
how it
has nourished with serviced apartments so far and is developing a new product plan that is globally
feasible.
Example 4:For client seeking ultra
-
long
-
term stable profits withou
t any trouble
While actualized cash flow of
sokochi
rights (rights to ownership of land with land leasehold
right) of retail facilities in downtown Yokohama are low with an annualized rate in real terms of 6%,
the client wanted to secure stability in the l
ong term without trouble and the property was sold to
answer to such needs.
Many leaseholds in Japan have been established long in the past and in many cases are low
compared to current market value.On the other hand,leasehold owners who pay land rent o
ffset the
values of their leaseholds if they fail to pay the land rent,so there is a feature of very low risk of
leasehold owners failing to pay rent.
The Company proceeded with commodification upon carefully inspecting leasehold owner and
tenant types,
contract details,history of the land and rights relations with adjacent land.The result
was a product that could generate cash flow in the long term,although modest,without troubles
such as repair expenses since the building is not owned.

7

2) Proper
ty Management Business
<Summary of Segment Business for the First Two Quarters of the Fiscal Year>
[Unit:million yen]
Property management
business
First 2 quarters
(April to September
of fiscal year ended
March 31,2013)
First 2 quarters
(April to Septem
ber
of fiscal year ending
March 31,2014)
Amount of
increase
(decrease)
Rate of
increase
(decrease)
Segment net sales
623
581

41

6.6%
Segment income
180
133

46

25.9%
For the properties purchased by clients in the real estate trading business,the property
management business pursues property management suited to long
-
term and individual
management policies by,for exam
ple,providing a management structure tailored to the
circumstances of the decedent,etc.in the event that investment was made as an inheritance tax
measure.
The property management business segment net sales were 581 million yen for sales decrease of
6.
6% compared to the same period of the previous fiscal year,and segment income was 133 million
yen for income decrease of 25.9% compared to the same period of the previous fiscal year.The
primary factor of the decrease in sales and income was that,with a
n office building in Ikebukuro
held by the Company since 2007 being sold in March 2013,there is no longer rent income from the
concerned property in the fiscal year under review (total for April to September 2012:128 million
yen).
3) Servicing Busines
s
<Summary of Segment Business for the First Two Quarters of the Fiscal Year>
[Unit:million yen]
Servicing business
First 2 quarters
(April to September
of fiscal year ended
March 31,2013)
First 2 quarters
(April to September
of fiscal year ending
March 31,2014)
Amount of
increase
(decrease)
Rate of
increase
(decrease)
Segment net sales
1,285
878

407

31.7%
Segment income
426
311

115

27.0%
In the servicing business,principally,consolidated subsidiary Global Asset Management Co.,Ltd.
purchases receivables from banks and other financial institutions in its own account or by
cofounding
with institutional investors,and engages in management,collection and other business
affairs of these receivables.
In the first two quarters of fiscal year,better
-
than
-
projected collection performance managed to be
achieved through progress in meticulo
us collection activities from purchased receivables held.
Segment net sales were 878 million yen,a rate of progress of 60.6% in relation to the full
-
year plan
of 1,450 million yen,and segment income was 311 million yen,already exceeding the full
-
year pl
an
of 280 million yen with a rate of progress of 111.1%.
Furthermore,as the original business plan for the servicing business is too conservative the

8

Company is reevaluating the business plan.Collection plans of individual receivables are being
reviewed
so as not to amend the plan hastily.Collateral value and collection plans of secured
receivables are being reviewed and,for unsecured receivables as well,the feasibility of continuation
of payment and adequacy of the amount of payment are being evaluat
ed.Collection activities based
on the revised business plan will gradually bear fruit going forward as a result.The Company aims
to revise the business plan as to contribute to an increase of profitability in the medium to long term.
4) Other B
usiness
<Summary of Segment Business for the First Two Quarters of the Fiscal Year>
[Unit:million yen]
Other business
First 2 quarters
(April to September
of fiscal year ended
March 31,2013)
First 2 quarters
(April to September
of fiscal year ending
March 31,2014)
Amount of
increase
(decrease)
Rate of
increase
(decrease)
Segment net sales
298
293

4

1.5%
Segment income

3
6
10

The other business segment involves Raysum Golf & Spa Resort,a golf course owned by
consolidated subsidiary Asset Holdings,Ltd.Ten years have elapsed since its purchase in July 2003.
The facility is situated in Gunma
Prefecture in the northern Kanto region,where the economy is
sagging,and is particularly seeing intensifying competition over low prices due to excess supply of
golf courses.In such a location where the conditions are challenging,the Group continues t
o run the
golf course with strong conviction.In a way,the golf course represents the real estate investment
stance of the Company.
The Company believes that working with a location in an environment that is considered to be
very difficult and to succe
ed in bringing many customers to that location on an ongoing basis is a
way to win true recognition as a business.Conversely,locations that anybody can be successful with
tend to be costly and have intense volatility as the liquidity increases too much,
leading to damaging
the business’s balance sheet.
While the location of the golf course makes it difficult, it is the Company’s goal to generate
income by continually devising ways to operate there,for example,by assuming greater social
momentum for era
dication of driving under the influence of alcohol leading to a new golfing
lifestyle,and in light of the location being a ten
-
minute ride via shuttle bus from An’naka
-
haruna
Station on the Hokuriku Shinkansen Line and the possibilities of the course as i
t is very open and
spacious with 1.4 times the area of an average golf course.
Also,the Company is tirelessly devising ways of acquiring the course management skills to
respond to the recent sudden climate changes.Such meticulous management know
-
how is
spreading
among the staff and enhancement of course conditions is starting to show results in the first two
quarters of the fiscal year.
Taking this example to
real estate investment
,it is similar to efforts of finding a property in
locations that are n
ot exactly full of pedestrian traffic,but where the openness can be surprisingly
comfortable for tenants and improve its occupancy rate by devising ways to draw out its maximum
value,or efforts of visiting the property over and over in pursuit of ways of
preventing water
leakage damage under typhoons that bring about historic amounts of rain.

9

As such, it is the Company’s wish to convey to customers coming to the golf course its intention
of direct connection to its main business,the Real Estate Trading
Business.
The other business segment net sales were 293 million yen for sales decrease of 1.5% compared
to the same period of the previous fiscal year.While play net sales decreased 9.2%due to the impact
of typhoons,it was offset by restaurant net sal
es which increased 6.9%compared to the same period
of the previous fiscal year and membership net sales which increased 52.2% compared to the same
period of the previous fiscal year for favorable performance.Segment income was net income of 6
million yen
with thorough cost management of utilities and administrative expenses.

10

(2) Explanation of Financial Position
1) Changes in Financial Position
[Assets]
Current assets increased 10,907 million yen (82.3%) compared to the end of the previous
consolidated
fiscal year to 24,155 million yen.This was primarily attributed to cash and deposits
increasing 9,909 million yen and deferred tax assets increasing 1,553 million yen while real estate for
sale decreased 304 million yen,real estate for sale in process d
ecreased 69 million yen and purchased
receivables decreased 349 million yen.
The primary factors to the increase in cash and deposits were proceeds from sale of the land of
Omotesando Project and related repayment of loans,leading to increase in deposits
of 8,060 million
yen.
In addition,increase in deferred tax assets due to recording 1,645 million yen as future revenue is
expected,decrease in real estate for sale due to sale of properties in stock,decrease in real estate for
sale in process due to sel
ling some of several development projects upon their completion and the
decrease in purchased receivables due to collections exceeding the amount of purchases of receivables.
Noncurrent assets decreased 29,619 million yen (89.6%) compared to the end of the
previous
consolidated fiscal year to 3,436 million yen,due primarily to sale of the land of Omotesando Project.
As a result,total assets at the end of the second quarter of the fiscal year under review were 27,591
million yen (decreased 40.4%compared t
o the previous consolidated fiscal year).
[Liabilities]
Liabilities decreased 19,852 million yen (84.0%) compared to the end of the previous consolidated
fiscal year to 3,779 million yen.This was primarily attributed to 18,940 million yen in loans from
f
inancial institutions being repaid with sale of the land of Omotesando Project,leading to interest
-
bearing liabilities decreasing a total of 19,424 million yen.
[Net Assets]
Net assets increased 1,141 million yen (5.0%) compared to the end of the previou
s consolidated
fiscal year to 23,812 million yen.This was primarily attributed to recording of net income,leading to
retained earnings increasing 1,057 million yen.
2) Analysis of Cash Flows
Cash and cash equivalents (hereinafter, “net cash”) at the end
of the second quarter of the fiscal year
under review increased 9,809 million yen compared to the end of the previous consolidated fiscal year
to 14,058 million yen.
The following outlines the cash flows and the factors of changes in such in the first tw
o quarters of
the consolidated fiscal year.
[Net Cash Provided by (Used in) Operating Activities]
The primary factors of increase in cash flows from operating activities were sales in the real estate
trading business of 9,964 million yen and collections
in the servicing business of 878 million yen,
while the primary factors of decrease were purchases in the real estate trading business of 7,105
million yen and purchases of purchased receivables in the servicing business of 305 million yen,
payments for se
lling,general and administrative expenses,etc.The result of these in total was net cash
provided by operating activities of 2,352 million yen.
[Net Cash Provided by (Used in) Investing Activities]
Payments into time deposits of 100 million yen and proc
eeds from sales of land of 27,000 million
yen were the primary factors leading to the increase in net cash provided by investing activities of
26,876 million yen.

11

[Net Cash Provided by (Used in) Financing Activities]
Interest
-
bearing liabilities decreasin
g 19,424 million yen with repayments of loans from financial
institutions were the primary factor leading to the decrease in net cash used in financing activities of
19,417 million yen.
(3) Explanation of Consolidated Financial Results Forecast and Othe
r Information on Future Forecasts
The figures for the consolidated financial results forecast for the fiscal year ending March 31,2014
announced on June 28,2013 remain unchanged at this point in time.
2.Matters Concerning Summary Information
(1) Chan
ges in Significant Subsidiaries in Consolidated Fiscal Year to Date
SOKNAPARTNERS CO.,LTD.established in the first quarter was made a consolidated subsidiary.
(2) Application of Accounting Method Specific to Preparation of
Quarterly Consolidat
ed Financial Statement
Not applicable.
(3) Changes in Accounting Policies,Changes in Accounting Estimates,and Restatements
Not applicable.
3.Quarterly Consolidated Financial Statements
(1) Quarterly Consolidated Balance Sheets
Assets
Current assets
Cash and deposits
4,249
14,158
Operating accounts receivable
90
102
Operational investment securities
567
537
Real estate for sale
2,151
1,846
Real estate for sale in process
1,919
1,850
Purchased receivables
4,746
4,396
Deferred tax assets
413
1,967
Income taxes receivable
3
0
Other
206
350
Allowance for doubtful accounts

1,100

1,055
Total current assets
13,248
24,155
Noncurrent assets
Property,plant and equipment
Buildings,net
800
767
Land
31,195
656
Other,net
110
112
Total property,plant and equipment
32,106
1,536
Intangible assets
Other
280
276
Total intangible assets
280
276
Investments and other assets
Investment securities
254
254
Deferred tax assets
169
1,057
Investments in capital
11
9
Other
232
301
Total investments and other assets
668
1,622
Total noncurrent assets
33,055
3,436
Total assets
46,303
27,591
(Millions of Yen)
Mar.31,2013
Sep.30,2013
― 12 ―
Liabilities
Current liabilities
Short-termloans payable
19,040

Current portion of long-termloans payable
246
178
Income taxes payable
55
22
Advances received
103
99
Provision for bonuses
10
11
Other
718
771
Total current liabilities
20,174
1,083
Noncurrent liabilities
Long-termloans payable
1,755
1,440
Provision for adjustments of securitization
23
36
Provision for maintenance costs for sold property
45
44
Asset retirement obligations
4
4
Deposits received fromtenants
1,121
897
Deposits received fromsilent partnership investors
507
272
Total noncurrent liabilities
3,457
2,696
Total liabilities
23,632
3,779
Net assets
Shareholders'equity
Capital stock
100
100
Capital surplus
12,253
12,253
Retained earnings
10,355
11,412
Total shareholders'equity
22,708
23,765
Accumulated other comprehensive income
Valuation difference on available-for-sale securities

37
41
Foreign currency translation adjustment


1
Total accumulated other comprehensive income

37
39
Subscription rights to shares

7
Minority interests
0
0
Total net assets
22,671
23,812
Total liabilities and net assets
46,303
27,591
(Millions of Yen)
Mar.31,2013
Sep.30,2013
― 13 ―
(Quarterly Consolidated Statements of Income)
Net sales
7,056
11,718
Cost of sales
4,843
8,190
Gross profit
2,212
3,527
Selling,general and administrative expenses
1,003
1,129
Operating income
1,209
2,398
Non-operating income
Interest income
0
0
Interest on refund

0
Penalty income
3

Other
1
0
Total non-operating income
4
1
Non-operating expenses
Interest expenses
42
23
Subscription rights to shares issuance cost

6
Cost of loans payable
1
4
Other
10
4
Total non-operating expenses
54
38
Ordinary income
1,159
2,361
Extraordinary loss
Loss on sales of noncurrent assets

3,740
Loss on valuation of investments in capital
12

Total extraordinary loss
12
3,740
Income (loss) before income taxes
1,147

1,378
Income taxes-current
50
21
Income taxes-deferred
14

2,456
Total income taxes
64

2,435
Income (loss) before minority interests
1,082
1,057
Minority interests in income
0
0
Net income (loss)
1,082
1,057
(Quarterly Consolidated Statements of Comprehensive Income)
Income (loss) before minority interests
1,082
1,057
Other comprehensive income
Valuation difference on available-for-sale securities
22
78
Foreign currency translation adjustment


1
Total other comprehensive income
22
76
Comprehensive income
1,105
1,133
(Comprehensive income attributable to)
1,105
1,133
0
0
(Millions of Yen)
First 2 quarters ended
Sep.30,2012
First 2 quarters ended
Sep.30,2013
(Millions of Yen)
First 2 quarters ended
Sep.30,2012
First 2 quarters ended
Sep.30,2013
Comprehensive income attributable to owners
of the parent
Comprehensive income attributable to
minority interests
(2) Quarterly Consolidated Statements of Income and
Quarterly Consolidated Statements of Comprehensive Income
― 14 ―
(3) Quarterly Consolidated Statements of Cash Flows
Net cash provided by (used in) operating activities
Income (loss) before income taxes
1,147

1,378
Depreciation and amortization
89
59
Increase (decrease) in provision for bonuses

0
0
Increase (decrease) in allowance for doubtful accounts

10

44

3

0
3
13
Loss on sales of noncurrent assets

3,740
Interest and dividends income

0

0
Interest expenses
42
23
Loss on valuation of investments in capital
12

Decrease (increase) in notes and accounts receivable-trade
28

11
Decrease (increase) in investment securities for sale
139
131
Decrease (increase) in real estate for sale
950
304
Decrease (increase) in real estate for sale in process

442
63
Decrease (increase) in purchased receivables
904
349
Increase (decrease) in advances received

7

3
Increase (decrease) in accrued consumption taxes

68
69
Increase (decrease) in leace deposits received
4

291

221

234
Other,net
82

196
Subtotal
2,649
2,594
Interest and dividends income received
0
0
Interest expenses paid

392

186
Income taxes (paid) refund

229

49
Net cash provided by (used in) operating activities
2,028
2,358
Net cash provided by (used in) investing activities
Payment into time deposits


100
Purchase of property,plant and equipment

38

18
Proceeds fromsales of property,plant and equipment

27,000
Purchase of intangible assets


4
Purchase of investments and other assets

0

0
Proceeds fromcancellation of investments and other assets
0
0
Other,net


1
Net cash provided by (used in) investing activities

39
26,876
Net cash provided by (used in) financing activities
Net increase (decrease) in short-termloans payable

420

19,040
Proceeds fromlong-termloans payable
100
300
Repayment of long-termloans payable

586

684
Proceeds fromissuance of subscription rights to shares

1
Net cash provided by (used in) financing activities

906

19,423
Effect of exchange rate change on cash and cash equivalents

10

2
Net increase in cash and cash equivalents
1,072
9,809
Cash and cash equivalents at the beginning of the period
2,653
4,249
Cash and cash equivalents at the end of the period
3,725
14,058
(Millions of Yen)
First 2 quarters ended
Sep.30,2012
First 2 quarters ended
Sep.30,2013
Increase (decrease) in provision for maintenance costs
for sold property
Increase (decrease) in deposits received from
silent partnership investors
Increase (decrease) in provision for adjustment
of securitization
― 15 ―
― 16 ―
(4) Notes on Quarterly Consolidated Financial Statements
(Notes on the Going Co
ncern Assumption)
Not applicable.
(Notes in the Event of Material Change in the Amount of Shareholders’ Equity)
First 2 quarters of consolidated fiscal year (April 1,2013 to September 30,2013):Not applicable.
(Segment Information,Etc.)
Segment Inform
ati
on
I First 2 quarters of previous consolidated fiscal year (April 1,2012 to September 30,2012)
1.Information about net sales,income (loss) by reporting segment
[Unit:million yen]
Reporting Segment
Real Estate
Trading
Property
Management
Servicing
Other
Businesses
Total
Adjustments
(Note 1)
Amoun
t
recorded on
the consolidat
ed financial
statements
(Note 2)
Net sales
Sales fromoutside
clients
4,849
623
1,285
298
7,056

7,056
Intersegment sales
or transfers



12
12

12

Total
4,849
623
1,285
310
7,069

12
7,056
Segment profit (loss)
762
180
426

3
1,366

156
1,209
(Note) 1.The adjustment of segment profit of
-
156 million yen is the corporate expenses of
-
156
million
not distribute
d in the reporting segments.Corporate expenses are general management
costs,etc.
that are not attributable to any of the segments.
2.The amounts of segment profit (loss) are the same as the operating income in the quarterly
consolidated
sta
tements of income.
II First 2 quarters of consolidated fiscal year (April 1,2013 to September 30,2013)
1.Information about net sales,income (loss) by reporting segment
[Unit:million yen]
Reporting Segment
Real Estate
Trading
Property
Management
Servicing
Other
Businesses
Total
Adjustments
(Note 1)
Amount
recorded on
the consolidat
ed
financial
statements
(Note 2)
Net sales
Sales from outside
clients
9,964
581
878
293
11,718

11,718
Inter
segment sales
or
transfers



12
12

12

Total
9,964
581
878
306
11,730

12
11,718
Segment profit (loss)
2,151
133
311
6
2,603

205
2,398
(Note) 1.The adjustment of segment profit of
-
205 million yen is the corporate expenses of
-
205
million
n
ot distributed in the reporting segments.Corporate expenses are general management
costs,etc.
that are not attributable to any of the segments.
2.The amounts of segment profit (loss) are the same as the operating income in the quarterly
cons
olidated
statements of income.