LEOPALACE21 : Consolidated Financial Statements (Japanese Accounting Standard, for the year ended March 31, 2016)

Microsoft Word - Consolidated Financial Statements (Japanese Accoun Consolidated Financial Statements (Japanese Accounting Standard) May 13, 2016 (For the year ended March 31, 2016)

Name of Company Listed: Leopalace21 Corporation Stock Listing: Tokyo Stock Exchange Code Number: 8848 URL: http://eg.leopalace21.com/ Location of Head Office: Tokyo Representative: Position: President and CEO Name: Eisei Miyama

Name of Contact Person: Position: Executive Officer Name: Bunya Miyao Telephone: +81-3-5350-0216 Scheduled Date of Filing of Securities Report (Japanese only): June 29, 2016

Scheduled Date of Commencement of Dividend Payments: June 29, 2016

Supplemental Explanatory Material Prepared: Yes Results Briefing Held: Yes

1. Results for the Fiscal Year ended March 31, 2016 (April 1, 2015 through March 31, 2016)

2. Consolidated financial results (Amounts less than one million yen are omitted) (The percentage figures indicate rate of gain or loss compared with the same period last year)

   Net sales		Operating profit		Recurring profit		Net income attributable to shareholders of the parent
   FY ended March 31, 2016 FY ended March 31, 2015	Million yen 511,424 483,188	% 5.8 2.6	Million yen 20,996 14,763	% 42.2 8.0	Million yen 19,820 13,424	% 47.6 16.0	Million yen 19,432 14,507	% 33.9 -4.7

   (Note) Comprehensive income as of March 31, 2016: 19,716 million yen (-0.9%); as of March 31, 2015: 19,904 million yen (-9.3%)

   Net income per share		Diluted net income per share	Return on equity		Recurring income / Total capital		Operating income / Net sales
   FY ended March 31, 2016	Yen		Yen	%	%	%
   	73.92	-	14.3	6.2	4.1
   FY ended March 31, 2015	55.19	-	12.5	4.5	3.1

   (Reference) Equity in earnings of affiliates in FY ended March 31, 2016: (9) million yen, FY ended March 31, 2015: (8) million yen.

3. Consolidated financial position

   Total assets	Net assets	Equity ratio		Equity per share
   As of March 31, 2016	Million yen	Million yen	%	Yen
   	326,890	146,211	44.7	556.06
   As of March 31, 2015	308,274	126,473	41.0	481.05

   (Reference) Shareholders' equity as of March 31, 2016: 146,173 million yen; as of March 31, 2015: 126,455 million yen

4. Consolidated cash flows

5. Cash flows from operating activities		Cash flows from investing activities	Cash flows from financing activities	Cash and cash equivalents at end of year
   FY ended March 31, 2016 FY ended March 31, 2015	Million	yen 22,104 15,715	Million yen (11,087) (17,550)	Million yen 1,374 1,747	Million	yen 86,826 74,504

6. Dividend Status

   Dividend per share					Total cash dividends (annual)	Dividend payout ratio (consolidated)		Dividend on equity ratio (consolidated)
   End of Q1	End of Q2	End of Q3	End of FY	Annual
   FY ended March 31, 2015	Yen	Yen	Yen	Yen	Yen	Million yen ― 2,628	%	%
   	―	0.00	―	0.00	0.00		―		―
   FY ended March 31, 2016	―	0.00	―	10.00	10.00		13.5	1.9
   FY ending March 31, 2017 (Estimate)	―	10.00	―	12.00	22.00	31.3

7. Estimation of Consolidated Business Results for the Fiscal Year ending March 31, 2017 (April 1, 2016 through March 31, 2017)

   (The percentage figures for full year indicate rate of gain or loss compared with the previous FY, while those for the interim

   period indicate rate of gain or loss compared with the same term in the previous FY)

   Net sales		Operating profit		Recurring profit		Net income attributable to shareholders of the parent		Net income per share
   Six months ending September 30, 2016	Million yen	%	Million yen 10,000 22,500	%	Million yen 9,800 21,500	%	Million yen 8,500 18,500	%	Yen
   	253,500	0.5		-3.9		1.6		3.5	32.33
   FY ending March 31, 2017	528,000	3.2		7.2		8.5		-4.8	70.38

8. Other

10. Changes in major subsidiaries during the subject period (change in specific subsidiaries resulting in a change in the scope of consolidation): None

11. Changes in accounting principles, procedures or reporting methods used in preparation of financial statements

12. Changes in accounting policies accompanying revision of accounting standards, etc.: Yes

13. Changes in accounting policies other than (i) above: None

14. Changes in accounting estimates: None

15. Restatements: None

    (Note) For details, please refer to pg.20 "4. Consolidated Financial Statements (5) Notes Regarding Consolidated Financial Statements (Changes in Accounting Policies)"

16. Total number of outstanding shares (common stock)

17. Total number of outstanding shares at term end (including treasury stock)

    As of March 31, 2016: 267,443,915 shares, As of March 31, 2015: 267,443,915 shares

18. Total treasury stock at term end

    As of March 31, 2016: 4,569,520 shares, As of March 31, 2015: 4,569,430 shares

19. Average number of outstanding shares during the period

20. As of March 31, 2016: 262,874,470 shares, As of March 31, 2015: 262,874,579 shares

    (Reference) Summary of Non-Consolidated Financial Statements
21. Results of the Fiscal Year Ended March 31, 2016 (April 1, 2015 through March 31, 2016)

22. Non-consolidated financial results (The percentage figures indicate rate of gain or loss compared with the previous FY)

    Net sales		Operating income		Recurring income		Net income
    FY ended March 31, 2016 FY ended March 31, 2015	Million yen 495,146 484,360	% 2.2 3.1	Million yen 20,444 15,595	% 31.1 17.0	Million yen 19,825 14,546	% 36.3 28.1	Million yen 19,422 15,327	% 26.7 4.5

    Net income per share	Diluted net income per share
    FY ended March 31, 2016 FY ended March 31, 2015	Yen 73.88 58.31	Yen ― ―

23. Non-consolidated financial position

24. Total assets	Net assets	Equity ratio		Equity per share
    As of March 31, 2016	Million yen	Million yen	%	Yen
    	294,962	136,732	46.3	520.07
    As of March 31, 2015	284,927	117,254	41.1	445.98

    (Reference) Shareholders' equity as of March 31, 2016: 136,714 million yen; as of March 31, 2015: 117,236 million yen

25. Estimation of Non-consolidated Business Results for the Fiscal Year Ending March 31, 2017 (April 1, 2016 through March 31, 2017)

26. (The percentage figures for full year represent the change compared with the previous FY, while those for the interim

    period represent the change compared with the same term in the previous FY)

    Net sales		Recurring profit		Net income		Net income per share
    Six months ending September 30, 2016	Million yen	%	Million yen 8,900 21,500	%	Million yen 7,600 18,900	%	Yen
    	244,000	-0.7		-7.9		-6.8	28.91
    FY ending March 31, 2017	510,000	3.0		8.4		-2.7	71.90

    *Indication regarding the status of auditing:

    These financial statements are not subject to auditing under the Financial Instruments and Exchange Act. The review of these financial statements in accordance with the Financial Instruments and Exchange Act are not completed at the time of disclosure.

    *Explanation on the proper use of the business forecasts, and other special notices: (Note on the business forecasts and other forward-looking statements)

    The business forecasts and other forward-looking statements contained in this report are based on information currently available to the Company and on certain assumptions that Leopalace21 has judged to be reasonable. Readers should be aware that a variety of factors might cause actual results to differ significantly from these forecasts.

    For assumptions of business forecasts and notes on the proper use of these forecasts, please refer to pg. 5 "1. Business Results (1) Analysis of Business Results (Outlook for the next fiscal year).

    (Method for the acquisition of supplemental explanatory material)

    Supplemental Explanatory Material on quarterly financial statements is scheduled to be posted on the Company's web site on May 13, 2016.

    【Table of Contents】
27. Business Results 4

28. Analysis of Business Results 4

29. Analysis of Consolidated Financial Position 5

30. Fundamental Policy on the Distribution of Earnings and Dividends for the Fiscal Year under Review and Next Fiscal Year ...6 (4) Business and Other Risks 6

31. Management Policy 8

32. Fundamental Policy of Company Management 8

33. Management Indicator Goals 8

34. Company Management Strategy for the Medium to Long-Term 8

35. Issues to be Addressed by the Group 8

36. Basic Approach to Selection of Accounting Standards 9
37. Consolidated Financial Statements 10

38. Consolidated Balance Sheets 10

39. Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income 13

    Consolidated Statements of Operations 13

    Consolidated Statements of Comprehensive Income 15

40. Consolidated Statements of Changes in Net Assets 16

41. Consolidated Statements of Cash Flows 18

42. (5) Notes Regarding Consolidated Financial Statements 20

    (Notes Regarding the Premise of the Company as a Going Concern) 20

    (Significant Items Fundamental to the Preparation of Consolidated Financial Statements) 20

    (Changes in Accounting Policies) 20

    (Segment Information) 21

    1. Business Results (1) Analysis of Business Results

    (Million yen)

    Net sales	Operating profit	Recurring profit	Net income attributable to shareholders of the parent
    FY ended March 31, 2016	511,424	20,996	19,820	19,432
    FY ended March 31, 2015	483,188	14,763	13,424	14,507
    Difference	28,236	6,233	6,396	4,924

    During the subject year, the domestic economy showed gradual progression supported by improvements in corporate earnings, employment, income, and individual consumption, despite prospects being uncertain due to the downturn in the Chinese economy as well as the drastic appreciation of the yen.

    In the rental housing industry, recovery from the negative effects of the consumption tax increase has progressed, and new housing starts of leased units has improved for the first time in two years (up 7.1% year-on-year). On the other hand, while the number of vacant houses continues to increase and recovery in nationwide demand becomes difficult, achieving stable occupancy rates requires constructing apartments in areas with high demand, in addition to providing high-quality products and services that meet tenants' needs.

    Under these conditions, the Leopalace21 Group (the "Group") aims to achieve targets of the Medium-term Management Plan "EXPANDING VALUE," which is in its second year, by building a solid management structure focusing on the core businesses, made up of Leasing and Construction. In addition, the Group aims to establish new businesses that will contribute to future growth.

    As a result, consolidated net sales for the fiscal year under review came to 511,424 million yen (up 5.8% year-on-year). Operating profit was 20,996 million yen (up 42.2% year-on-year), recurring profit was 19,820 million yen (up 47.6% year-on-year), and net income attributable to shareholders of the parent was 19,432 million yen (up 33.9% year-on-year).

    On a non-consolidated basis, net sales were 495,146 million yen (up 2.2% year-on-year), operating income was 20,444 million yen (up 31.1%), recurring income was 19,825 million yen (up 36.3%), and net income was 19,422 million yen (up 26.7%).

    (Actual figures by segment) (Million yen)

    Net sales			Operating profit
    FY ended March 31, 2015	FY ended March 31, 2016	Difference	FY ended March 31, 2015	FY ended March 31, 2016	Difference
    Leasing Business	399,316	410,552	11,235	20,532	22,760	2,228
    Construction Business	61,312	74,160	12,847	210	3,339	3,128
    Elderly Care Business	10,608	10,798	190	(606)	(1,354)	(748)
    Hotels & Resort Business	8,951	11,427	2,476	(1,289)	(697)	591
    Others	2,999	4,485	1,485	31	337	306
    Adjustments	－	－	－	(4,116)	(3,388)	727
    Total	483,188	511,424	28,236	14,763	20,996	6,233

    (i) Leasing Business

    The occupancy rate at the end of the fiscal year was 90.53% (up 1.24 points from the end of the previous fiscal year) and the average occupancy rate for the period was 87.95% (up 1.38 points year-on-year).

    In the Leasing Business, to establish stable profits led by occupancy improvement, the Group implemented measures to promote longer rent periods such as expanding tenant services including "Room Customize" and providing a website for tenants, as well as further strengthening sales for female and corporate customers by security system installations. In addition, the Group aims to increase foreign tenants by refining customer support.

    The number of units under management at the end of the fiscal year was 561,000 (increasing 7,000 from the end of the previous fiscal year), the number of direct offices was 189 (increasing 1 from the end of the previous fiscal year), and the number of franchise offices was 130 (decreasing 11 from the end of the previous fiscal year).

    As a result, net sales amounted to 410,552 million yen (up 2.8% year-on-year), and operating profit was 22,760 million yen (up 10.9% year-on-year).