MUGEN ESTATE : Summary of Consolidated Financial Results for the First Quarter ended March 31, 2021

Note: The accompanying consolidated financial statements were not audited since they have been prepared only for reference purposes only. All statements are based on "Kessan Tanshin" report prepared in accordance with the provisions set forth in the accounting regulations and principals generally accepted in Japan.

Summary of Consolidated Financial Results for the First Quarter ended March 31, 2021 [Based on Japanese GAAP]

Listed company name: MUGEN ESTATE Co., Ltd	Listed Stock Exchange:	May 14, 2021
Tokyo Stock Exchange
Securities code:	3299	URL https://www.mugen-estate.co.jp/en/
Representative:	Shinichi Fujita, President
Contact:	Akira Okubo, Director, General Manager of Administrative Division	[e-mail]

Scheduled date of quarterly securities report filing:	May 14, 2021	Scheduled date of dividend payment: －
Supplementary material for financial results:	Yes
Quarterly financial results briefing:	No

(fractions of one million yen are rounded off)

1. Consolidated financial results for the first quarter ended March 31, 2021 (January 1 to March 31, 2021)

(1) Consolidated financial results (cumulative)			(Percentages represent changes from the previous year)
	Net sales		Operating income	Ordinary income	Profit attributable to
		owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
1Q ended March 31, 2021	10,241	10.1	657	18.8	516	36.8	348	38.5
1Q ended March 31, 2020	9,298	5.4	553	(23.9)	377	(32.9)	251	(34.8)

(Note) Comprehensive income:	1Q ended March 31, 2021	348	million yen (	38.5%)
		1Q ended March 31, 2020	251	million yen (	-34.8%)
		Net Income		Diluted net income
		per share			per share
			Yen			Yen
1Q ended March 31, 2021			14.55		14.47
1Q ended March 31, 2020			10.49		10.45

(2) Consolidated financial position

			Total assets		Net assets		Equity ratio
			Million yen		Million yen	%
	As of March 31, 2021		57,774		22,714	39.2
	As of December 31, 2020		62,487		22,605	36.0
	(Reference) Shareholders' equity:	As of March 31, 2021	22,627	million yen
			As of December 31, 2020 22,518	million yen

2. Dividends

				Annual dividends per share
	End of 1st		End of 2nd	End of 3rd	Year-end	Total
	quarter			quarter	quarter
		Yen		Yen	Yen	Yen	Yen
Year ended December 31, 2020		－		0.00	－	10.00	10.00
Year ending December 31, 2021		－
Year ending December 31, 2021				0.00	－	10.00	10.00
(forecast)
(Note) Revision of the latest dividend	forecast:	None

3. Forecast of consolidated financial results for the fiscal year ending December 31, 2021

(January 1, 2021 to December 31, 2021)				(Percentages represent changes from the previous year)
	Net sales		Operating income	Ordinary income	Profit attributable to	Net income per
		owners of parent	share
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
FY2021 (Full year)	35,412		1.6	1,916	(22.3)	1,315	(26.3)	651	8.8	27.17
(Note) Revision of the latest consolidated financial results forecast:	None

* Notes

1. Changes in significant subsidiaries during the period: None
2. Application of any accounting procedures specific to preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement

(i)	Changes in accounting policies due to revisions to accounting standards and other regulations	: None
(ii)	Changes in accounting policies other than (i)	: None
(iii)	Changes in accounting estimates	: None
(iv)	Restatement of prior period financial statements after error corrections	: None

1. Number of shares issued (common stock)
2. 1. Number of shares outstanding at end of the period (including treasury stock)

As of March 31, 2021	24,361,000 shares
As of December 31, 2020	24,361,000 shares
(ii) Number of treasury stock held at end of the period
As of March 31, 2021	382,309 shares
As of December 31, 2020	382,309 shares

(iii) Average number of shares outstanding during the period (cumulative)

As of March 31, 2021	23,978,691 shares
As of March 31, 2020	23,995,155 shares

*The current quarterly financial results are not subject to the quarterly review procedures.

* Explanation of the proper use of financial forecasts and other important notes

(1) Financial forecasts

The statements about the future included in this report, including financial forecasts, are based on information currently available to the Company and certain assumptions that are considered reasonable, which do not guarantee the achievement of such projected results. Actual results may vary considerably from these projections due to a range of factors. See "(3) Information on future forecasts including consolidated financial forecasts" under "1. Operating Results and Financial Position" on page 1 of the Accompanying Materials for the assumptions of the financial forecasts and points to note in the use of financial forecasts

(2) Access to presentation materials for financial results

Presentation materials are disclosed through TDnet and on the Company's website on the day on which the presentation is made.

1. Qualitative Information on Operating Results for the First Quarter Ended March 31, 2021

(1) Analysis of Operating Results

During the first quarter of the consolidated fiscal year under review (January 1, 2021 through March 31, 2021), in the real estate industry where the MUGEN ESTATE Group operates, the average price of land for all purposes in Japan as of January 1, 2021 announced by the Ministry of Land, Infrastructure, Transport and Tourism fell 0.5%, which was the first decrease in six years. In the Tokyo metropolitan area, the appraised value of land, especially that of commercial area, declined significantly due to the COVID-19 pandemic. Meanwhile, the fluctuation of land prices in residential areas was more moderate than in commercial areas, and steady transactions were observed primarily for residential-type properties in the real estate market.

Because of the resurgence of COVID-19 infections which triggered another state of emergency, the outlook is still uncertain. However, it is projected that the inflow of funds into the real estate market will continue due to global financial and monetary easing policies. As a result, firm demand from real estate investors in Japan and abroad is expected to continue. Because the ways that people live and work have been drastically changing in association with new lifestyles during the COVID-19 pandemic, demand has been increasing for properties in areas other than urban centers and properties with wider exclusive spaces. According to the Real Estate Information Network for East Japan (East Japan REINS), strong demand has continued and there was a 16.1% year-on-year increase in the number of contracts concluded for used condominium units in the metropolitan area in the fiscal year ended March 31, 2021, a record high since the establishment of the organization. Due to these strong sales, the number of inventory properties continued to decrease, 24.9% year on year.

In this business environment, the MUGEN ESTATE Group has endeavored in its core Real Estate Trading Business to increase the occupancy rates of investment type properties and improve inventory turnover by boosting sales with the measures such as increasing the added value provided by properties. Competition for purchasing residential type properties increased while steady demand was maintained, so we committed ourselves to enhance purchase and sales activities strictly considering profitability.

As a result, consolidated net sales increased 10.1% year on year, to 10,241 million yen, consolidated operating income rose 18.8% year on year, to 657 million yen, consolidated ordinary income climbed 36.8% year on year, to 516 million yen, and consolidated profit attributable to owners of parent grew 38.5% year on year, to 348 million yen in the first three months under review.

The following is an overview of the results by segment. [Real Estate Trading Business]

In the Real Estate Trading Business, the number of units sold in investment-type properties came to 45 (up 6 units year on year) and the average unit selling price was 171 million yen (up 1.5% year on year), registering net sales of 7,701 million yen (up 17.1% year on year). Meanwhile, the number of units sold in residential-type properties came to 49 (0 units year on year) and the average unit selling price was 39 million yen (up 1.5% year on year), registering net sales of 1,939 million yen (up 1.5% year on year).

As a result, net sales for the segment increased 13.4% year on year, to 9,668 million yen, and the segment profit (operating income for the segment) increased 13.3% year on year, to 771 million yen.

[Real Estate Leasing and Other Business]

In the Real Estate Leasing and Other Business, revenue from real estate leasing came to 546 million yen (down 27.4% year on year). As a result, net sales for the segment decreased 25.9% year on year, to 573 million yen, and segment profit (operating income for

the segment) down 15.0% year on year, to 207 million yen.

Note: The "investment-type properties" are classified as real estate generating rental income, including rental condominiums, and office blocks, which are used by buyers for the purpose of investment. The "residential-type properties" are classified as real estate used by buyers as their housing units, most of which are owned condominiums.

(2) Analysis of Financial Position

The financial position at the end of the first quarter of the consolidated fiscal year under review included assets of 57,774 million yen (down 7.5% from the end of the previous fiscal year), liabilities of 35,059 million yen (down 12.1% from the end of the previous fiscal year), and net assets of 22,714 million yen (up 0.5% from the end of the previous fiscal year).

Principal factors contributing to the decrease in assets included a decrease of 6,425 million yen in real estate properties for sale. The decrease in liabilities was attributable primarily to the decrease of 4,328 million yen in long-term debt.

The increase in net assets resulted in large part from a decrease of 239 million yen in retained earnings attributable to dividends paid, and a rise of 348 million yen in retained earnings due to the recording of profit attributable to owners of parent.

(3) Information on future forecasts including consolidated financial forecasts

No changes have been made to the full-year forecasts of the consolidated results for the fiscal year ending December 31, 2021, as announced on February 15, 2021. However, if the COVID-19 pandemic or other factors affect the real estate trading market, it is possible that the MUGEN ESTATE Group's performance may worsen.

The descriptions of business forecasts presented in this document are based on the future assumptions, outlook, and plans as of the date of the publication of this document, which include risks and uncertain factors. Actual results may vary significantly from the forecasts presented in this document due to the economic environment, market trends, and other factors that affect the business of the Group.

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2. Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheets

				(Million yen)
			FY2020	FY2021 1Q
			(As of December 31, 2020)	(As of March 31, 2020)
Assets
	Current assets
	Cash and deposits	16,065	17,371
	Accounts receivable - trade	16	12
	Real estate for sale	41,337	34,912
	Real estate for sale in process	283	405
	Other	242	551
	Allowance for doubtful accounts	(8)	(5)
	Total current assets	57,937	53,247
	Non-current assets
	Property, plant and equipment
	Buildings	2,292	2,302
	Accumulated depreciation	(397)	(420)
	Buildings, net	1,895	1,881
	Land	1,908	1,908
	Other	114	140
	Accumulated depreciation	(79)	(74)
	Other, net	34	65
	Total property, plant and equipment	3,838	3,856
	Intangible assets	83	81
	Investments and other assets
	Deferred tax assets	241	208
	Other	342	336
	Total investments and other assets	583	544
	Total non-current assets	4,504	4,482
	Deferred assets	45	43
	Total assets	62,487	57,774

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				(Million yen)
			FY2020	FY2021 1Q
			(As of December 31, 2020)	(As of March 31, 2021)
Liabilities
	Current liabilities
	Accounts payable - trade	216	223
	Short-term borrowings	2,050	2,236
	Current portion of bonds payable	860	780
	Current portion of long-term borrowings	6,192	5,484
	Income taxes payable	573	152
	Provision for bonuses	23	52
	Construction warranty reserve	42	46
	Other	1,178	1,160
	Total current liabilities	11,137	10,135
	Non-current liabilities
	Bonds payable	3,307	3,172
	Long-term borrowings	24,713	21,092
	Retirement benefit liability	101	100
	Other	622	558
	Total non-current liabilities	28,744	24,924
	Total liabilities	39,882	35,059
Net assets
	Shareholders' equity
	Share capital	2,552	2,552
	Capital surplus	2,475	2,475
	Retained earnings	17,790	17,899
	Treasury shares	(300)	(300)
	Total shareholders' equity	22,518	22,627
	Share acquisition rights	86	86
	Total net assets	22,605	22,714
Total liabilities and net assets		62,487	57,774

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