Urbanet : 【Delayed】Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending June 30, 2022

Consolidated Financial Results for the Second Quarter

of the Fiscal Year Ending June 30, 2022

(Six Months Ended December 31, 2021)

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

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending June 30, 2022 (July 1, 2021 to December 31, 2021)

Reference: Shareholders' equity (millions of yen) As of Dec. 31, 2021: 11,916 As of Jun. 30, 2021: 12,036

2. Dividends

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

3. Consolidated Earnings Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 to June 30, 2022)

(Percentages represent year-on-year changes.)

* Notes

1. Changes in consolidated subsidiaries during the period (changes in specified subsidiaries res ulting in changes in the scope of consolidation): None

1. Application of special accounting methods for presenting quarterly consolidated financial statements: None
2. Changes in accounting policies and accounting estimates, and restatements
3. 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 shares outstanding (common shares)
5. 1. Number of outstanding shares as of the end of the period (including treasury shares)

1. Number of treasury shares as of the end of the period

• The current quarterly consolidated financial results are not subject to the quarterly review by certified public accountants or auditing firms.
• Explanation of appropriate use of earnings forecasts, and other special items Cautionary statement with respect to forecasts
• • Forecasts of future performance in these materials are based on assumptions judged to be valid and information available to the Urbanet Group's management at the time these materials were prepared. Actual results may differ significantly from these forecasts for a number of reasons. Please refer to "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Earnings Forecast and Other Forward -looking Statements" on page 3 of the attachments for assumptions for forecasts and notes of caution for usage.

How to view supplementary information at the financial results meeting

• Materials to be distributed at the meeting will be disclosed on the Timely Disclosure network (TDnet) and available on the Urbanet website at the same time as this financial summary.
  For safety during the COVID-19 pandemic, Urbanet Corporation plans to post a video of the financial results meeting for institutional investors and analysts on Friday, February 4, 2022 instead of holding a financial results meeting.

URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Second Quarter of FY6/22

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URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Second Quarter of FY6/22

1. Qualitative Information on Quarterly Consolidated Financial Performance

The Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and other standards are applied from the first quarter of the fiscal year ending June 30, 2022. As a result, net sales, operating profit, ordinary profit and profit before income taxes for the first half of the current fiscal year (hereinafter "the period under review") each decreased by 12 million yen. In addition, retained earnings at the beginning of the fiscal year increased by 8 million yen.

(1) Explanation of Results of Operations

For the period under review, the Urbanet Group companies (hereinafter "the Urbanet Group" or "the Group") reported net sales of 6,236 million yen (down 23.5% year-on-year), operating profit of 400 million yen (down 64.1% year-on-year), ordinary profit of 309 million yen (down 68.9% year-on-year), and profit attributable to owners of parent of 184 million yen (down 72.5% year-on-year).

The year-on-year significant decrease in net sales and profits are mainly attributable to many high-margin projects delivered in the second quarter of the previous fiscal year. It is also because the revenue recognition for one project scheduled for the period under review has been postponed to the third quarter. Note that in the business of development and sale of one-room apartments buildings for investors, which is the main business of the Group, quarterly sales and profit margins fluctuate significantly from year to year since the timing of the compl etion-based revenue recognition, as well as the amount and profit margin, is different for each project and each year. Revenue recognition for projects scheduled for the current fiscal year is skewed to the third quarter or later.

The performance by each business segment is explained below.

(Real Estate Business)

Net sales in the Real Estate Business were 6,206 million yen (down 23.8% year-on-year) and segment profit was 901 million yen (down 45.4% year-on-year).

Total amount of sales from the real estate development sales category was 5,860 million yen (down 23.9% year-on-year) with revenues from sale of 199 units in a total of four one-room apartment buildings for investors. Net sales in the real estate purchase and sales category were 62 million yen (down 68.9% year-on-year) with revenues from purchase and resale of one unit of pre-owned condominium and those of one pre-owned house. Net sales in the others real estate business category were 283 million yen (up 17.8% year-on-year) with revenues from real estate brokerage and real estate leasing among others.

(Hotel Business)

Net sales in the Hotel Business were 30 million yen (up 312.3% year-on-year) and segment loss was 31 million yen (compared with a loss of 69 million yen for the same period of the previous fiscal year) mainly with room fee revenues from Hotel Asyl Tokyo Kamata.

(2) Explanation of Financial Condition

1) Analysis of Financial Position

Total assets, total liabilities and net assets on a consolidated basis amounted to 34,801 million yen (a decrease of 374 million yen over the end of the previous fiscal year), 21,307 million yen (a decrease of 276 million yen), and 13,493 million yen (a decrease of 98 million yen), respectively.

The decrease in total assets was mainly due to decreases of 1,271 million yen in cash and deposits and 374 million yen in income taxes receivable, while there were increases of 790 million yen in inventories as a result of active land purchasing efforts in a very competitive land purchase environment and 296 million yen in property, plant and equipment mainly due to the purchase of income properties.

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URBANET CORPORATION Co., Ltd. (3242) Consolidated Financial Results for the Second Quarter of FY6/22

The decrease in total liabilities was mainly due to a decrease of 277 million yen in advances received due to the completion and transfer of properties.

The decrease in net assets was mainly due to a decrease from the payment of year-end dividends and other factors, which outweighed an increase in profit attributable to owners of parent.

2) Analysis of Cash Flows

Cash and cash equivalents (hereinafter "net cash") at the end of the period under review amounted to 5,921 million yen, a decrease of 1,271 million yen over the end of the previous fiscal year. This was mainly due to neg ative cash flows from operating, investing and financing activities.

Cash flows from operating activities

Net cash used in operating activities for the period under review totaled 389 million yen (compared with net cash used of 346 million yen in the same period of the previous fiscal year). This was mainly due to an increase in inventories.

Cash flows from investing activities

Net cash used in investing activities for the period under review totaled 398 million yen (compared with net cash used of 20 million yen in the same period of the previous fiscal year). This was mainly due to the purchase of property, plant and equipment.

Cash flows from financing activities

Net cash used in financing activities for the period under review totaled 484 million yen (compared with net cash used of 1,367 million yen in the same period of the previous fiscal year). This was mainly because of the repayments of long-term borrowings resulting from completed construction projects, and the payment of dividends , which was partially offset by proceeds from long-term borrowings for the procurement of land for development on our own in the Real Estate Business.

(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements

The Urbanet Group reported net sales of 6,236 million yen, operating profit of 400 million yen, ordinary profit of 309 million yen and profit attributable to owners of parent of 184 million yen for the period under review. As a result, compared to the consolidated earnings forecast for the current fiscal year (fiscal year ending June 30, 202 2) announced on August 5, 2021 in "Consolidated Financial Results for the Fiscal Year Ended June 30, 2021," the progress rates have remained at a low level: 27.1 % in net sales, 18.0% in operating profit, 15.9% in ordinary profit, and 14.2% in profit attributable to owners of parent. This is because our main business is development and sale (wholesale) of one-room apartments buildings for investors, in which quarterly sales and profit margins significantly fluctuate since the timing, amount, or profit margin of the completion-based revenue recognition are different from project to project and from year to year. The low progress rates for the period under review are also attributable to the postponement of one project scheduled to be delivered in the period under review to the third quarter.

We have decided to maintain the consolidated earnings forecast for the current fiscal year that was announced on August 5, 2021, partly because sales for the current fiscal year are weighted toward the third quarter and beyond.

We will promptly announce any revisions to the consolidated earnings forecast as necessary, paying sufficient attention to the uncertain factors such as the resurgence of COVID-19 and the emergence of new problems including supply chain disruptions that may affect construction periods or sales activities.

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