Jowa Holdings Company, Limited
Summary of Consolidated Financial Results
for the Nine Months ended December 31, 2014
This document is an English summary translation of a statement written initially in Japanese.
The original Japanese should be considered the primary version.
1
February 2, 2015
Jowa Holdings Company, Limited
Consolidated Financial Results for the Nine Months ended December 31, 2014
(Japanese GAAP)
Stock listing: Tokyo Stock Exchange (First Section)
Securities code: 3258
URL: http://www.jowa-hd.co.jp
Representative: Tetsuji Kosaki, President and Chief Executive Officer
Information contact: Masato Yamamoto, Senior Managing Executive Officer
Tel: +81-3-3523-7536
Scheduled dates
Filing of statutory quarterly financial report (Shihanki hokokusho):
February 6, 2015 (Japanese version only)
Dividend payout:
-
Supplementary materials to quarterly financial results available:
Yes (Japanese version only)
Quarterly earnings presentation held:
No
(Amounts rounded down to the nearest million yen)
1. Consolidated Financial Results for the Nine Months ended December 31, 2014 (April 1, 2014 to December 31, 2014)
(1) Consolidated Operating Results (Percentages indicate year-on-year changes)
Revenue from operations
million yen
%
Operating income
million yen
%
Nine Months ended
21,018
26.6
6,853
December 31, 2014
Nine Months ended
16,599
52.5
5,230
December 31, 2013
Note: Comprehensive income: Nine Months ended December 31, 2014:
Nine Months ended December 31, 2013:
Diluted net income
per share
Net income per share
yen
yen
Nine Months ended
199.86
December 31, 2014
Nine Months ended
154.74
December 31, 2013
Ordinary income
million yen
%
December 31, 2014
324,439
March 31, 2014
277,943
Reference: Total equity: As of December 31, 2014:
As of March 31, 2014:
*Equity ratio = Total equity ÷ Total assets
5,840
32.2
3,386
32.4
39.2
4,417
58.7
2,558
63.0
¥6,994 million, 48.9%
¥4,696 million, 139.5%
Net assets
million yen
50,744
33,374
¥50,744 million
¥33,374 million
2
%
31.0
(2) Consolidated Financial Position
Total assets
million yen
Net income
million yen
Equity ratio*
%
15.6
12.0
2. Dividends
Dividend per share
End-Q1
End-Q2
yen
yen
Year ended
30.00
March 31, 2014
Year ending
30.00
March 31, 2015
Year ending
March 31, 2015 (forecast)
Note: Revision from the latest release of dividend forecasts: None
End-Q3
Year-end
Total
yen
yen
yen
-
30.00
60.00
30.00
60.00
-
3. Earnings Forecast for the Year ending March 31, 2015 (April 1, 2014 to March 31, 2015)
Revenue from
operations
million yen
%
Operating income
million yen
%
Ordinary income
million yen
%
Year ending
27,000 23.1
8,500 23.1
March 31, 2015
Note: Revision from the latest release of earnings forecasts: None
7,100
(Percentages indicate year-on-year changes)
Net income per
Net income
share
million yen
%
yen
24.0
4,000
29.9
226.53
*Notes
(1) Changes in the scope of consolidation among significant subsidiaries during the period: Yes
(Changes in specified subsidiaries resulting in changes in the scope of consolidation)
Newly added: 1 (Name) Jowa Holdings NY, LLC
(2) Adoption of accounting methods specific to quarterly consolidated financial statements: None
(3) Changes in accounting policy, changes in accounting estimates, and retrospective restatement:
1) Changes in accordance with revisions to accounting and other standards: None
2) Changes other than 1) above: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(4) Number of shares issued (common stock)
December 31, 2014
1) Number of shares issued (including treasury stock)
19,833,000
2) Number of shares held in treasury
223
Nine Months ended
December 31, 2014
16,945,504
3) Average number of shares outstanding during the
period
March 31, 2014
16,533,000
223
Nine Months ended
December 31, 2013
16,532,820
*Quarterly Review Status
This report is not subject to the review requirements of Japan’s Financial Instruments and Exchange Act. As of the
release date of this report, a quarterly review of the consolidated quarterly financial statements in accordance with the Act
had not been completed.
*Appropriate Use of Earnings Forecast and Other Important Information
The above forecasts are based on the assumptions of management in the light of information available as of the release
date of this report. Actual results may differ from forecasts due to changes in the business environment. For information
related to the earnings forecast, see “1. 3 Consolidated Earnings Forecast for the Year Ending March 31, 2015” on page
5.
Net income per share above is calculated based on the average number of outstanding shares during the period, which
includes 3,300,000 shares issued through the public offering carried out on November 25, 2014, and the third-party
allotment carried out on December 15, 2014.
3
I. Analysis of Operating Results
1. Operating Results for the Nine Months Ended December 31, 2014
In the first three quarters of the fiscal year ending March 31, 2015 (April 1, 2014 – December 31, 2014), the
Japanese economy continued to recover gradually despite the backlash from last-minute demand prior to the
consumption tax hike. However, the economy currently faces various risks, including the rapid depreciation of
the yen, the significant decline in crude oil prices, uncertain outlooks for European economies and the US
economy, and economic trends in emerging and resource-rich countries. In light of such risks, changes in the
business environment continue to warrant close attention.
In the office building market, the overall supply-demand balance has been steadily improving, with the vacancy
rate in Tokyo's five central wards falling from the upper to middle 6% range to the middle 5% range during the
period. While rents have bottomed out and remained mostly flat, there are signs of improvement in the market as
offered rents in the five central Tokyo wards have started to turn upward slightly.
In the hotel industry, occupancy rates and revenue per room are both recovering, supported by a significant
increase in demand reflecting Japan’s economic recovery and an increase in visitors from abroad.
In the golf course industry, although demand seems to be partly recovering, the level of demand remains low.
Competition among golf courses is expected to continue to intensify.
Consolidated revenue from operations for the first three quarters ended December 31, 2014, totaled ¥21,018
million, an increase of 26.6% from ¥16,599 million in the same period of the previous fiscal year. Consolidated
operating income totaled ¥6,853 million, an increase of 31.0% from ¥5,230 million in the same period of the
previous year. Consolidated ordinary income was ¥5,840 million, an increase of 32.2% from ¥4,417 million in the
same period of the previous year. Consolidated net income totaled ¥3,386 million, an increase of 32.4% from
¥2,558 million in the same period of the previous fiscal year, despite posting an extraordinary loss due to loss
related to disposal of non-current assets.
Results for the first three quarters of the fiscal year under review are presented by segment below.
Real Estate Business
Revenue from operations during the nine months ended December 31, 2014, increased 35.6% to ¥16,285 million
from ¥12,008 million for the same period of the previous fiscal year, and operating income increased 20.1% to
¥5,754 million from ¥4,790 million in the same period of the previous fiscal year. This was the result of newly
acquired domestic and overseas properties' contributions to revenue, the sale of residential properties, and
exhaustive efforts to acquire new tenants and forestall lower rents and vacancies in existing properties.
Hotel Business
Revenue from operations during the nine months ended December 31, 2014, increased 4.4% to ¥4,332 million from
¥4,149 million for the same period of the previous fiscal year. Operating income declined 14.9% to ¥1,056 million
from ¥1,241 million in the same period of the previous fiscal year. Although both revenue and income from
existing hotels increased with higher room rates than those in the same period of the previous fiscal year despite the
decrease in the occupancy rate, the segment was impacted by the closing of an existing hotel for remodeling and
the initial loss incurred in conjunction with the opening of a new hotel.
Golf Course Business
Revenue from operations during the nine months ended December 31, 2014, increased 2.2% to ¥531 million from
¥519 million for the same period of the previous fiscal year, while operating income increased 9.8% to ¥64 million
from ¥58 million in the same period of the previous fiscal year. These results were attributable to the year-on-year
increase in the number of rounds despite a drop in revenue per customer.
4
2. Analysis of Financial Position
Total assets as of December 31, 2014, amounted to ¥324,439 million, an increase of ¥46,495 million from March
31, 2014. This was attributable to a ¥45,124 million increase in property and equipment due to acquisitions of
office buildings and other assets.
Total liabilities as of December 31, 2014, amounted to ¥273,694 million, an increase of ¥29,125 million from
March 31, 2014. The total loan balance increased ¥29,855 million from March 31, 2014.
Net assets as of December 31, 2014, amounted to ¥50,744 million, an increase of ¥17,370 million from March
31, 2014. The increase was the result of a ¥5,683 million increase in capital stock obtained through the public
offerings carried out in November and December 2014, a ¥5,683 million increase in capital surplus, a ¥2,394
million increase in retained earnings, and other factors.
3. Consolidated Earnings Forecast for the Year Ending March 31, 2015
There is no change to the forecast announced on May 9, 2014.
The Company plans to pay a fiscal year-end dividend of ¥30 per share in accordance with the previously
announced basic policy on profit distribution.
Ⅱ. Other Information
1. Changes among significant subsidiaries during the nine-month period:
The Company’s consolidated subsidiary, Jowa Holdings NY, LLC, was established in the United States of
America on December 11, 2014. On December 18, 2014, it became a specified subsidiary with an additional
capital contribution to this subsidiary.
2. Adoption of accounting methods specific to quarterly consolidated financial statements: None
3. Changes in accounting policy, changes in accounting estimates, and retrospective restatement: None
5
Ⅲ. Consolidated Financial Statements
1. Consolidated Balance Sheets
As of
March 31, 2014
Amount
Assets
Current assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise
Real estate held for sale
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property and equipment
Buildings and structures in trust, net
Land
Golf courses
Land in trust
Construction in progress
Other, net
Total property and equipment
Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
6
(Thousands of yen)
As of
December 31, 2014
Amount
2,433,238
548,220
3,212
2,490,321
13,549
367,758
791,014
(281)
6,647,035
2,107,050
580,324
5,881
279,040
16,232
390,609
4,747,612
(293)
8,126,458
66,459,497
17,963,803
1,489,299
137,357,006
1,844,111
18,162,676
243,276,394
11,290,205
75,233,425
22,047,610
1,489,299
154,240,513
10,513,959
24,876,235
288,401,043
11,271,047
15,762,007
72,636
905,754
(10,405)
16,729,992
271,296,593
277,943,628
15,608,790
109,406
932,211
(9,925)
16,640,484
316,312,575
324,439,033
As of
March 31, 2014
Amount
Liabilities
Current liabilities
Notes and accounts payable – trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for employees’ bonuses
Provision for loss on relocation of head office
Provision for point card certificates
Provision for shareholder special benefit
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Deferred tax liabilities
Provision for directors’ and corporate auditors’
retirement benefits
Provision for environmental measures
Provision for retirement benefits
Security and guarantee deposits received from tenants
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized gains on investment securities
Deferred gains on hedges
Foreign currency translation adjustments
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets
7
(Thousands of yen)
As of
December 31, 2014
Amount
2,531
27,166,280
36,766,668
1,677,939
109,924
44,574
5,331
39,192
4,601,358
70,413,801
2,557
34,181,400
46,550,232
827,995
58,274
4,913
36,416
3,257,358
84,919,148
158,241,113
2,319,455
171,298,012
2,485,218
359,758
426,523
193,741
717,126
12,299,506
24,630
174,155,330
244,569,132
193,741
688,984
13,673,562
8,948
188,774,989
273,694,138
7,838,744
7,754,150
14,310,581
(376)
29,903,099
13,522,664
13,438,070
16,705,303
(376)
43,665,662
3,630,690
(159,293)
3,471,397
33,374,496
277,943,628
3,513,555
179,200
3,386,478
7,079,233
50,744,895
324,439,033
2. Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income
Revenue from operations
Cost of revenue from operations
Gross profit
Selling, general and administrative expenses
Sales commission
Advertising expenses
Directors’ compensation
Salaries and allowances
Provision for bonuses
Retirement benefit expenses
Provision for directors’ and corporate auditors’ retirement benefits
Provision for shareholder special benefit
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on insurance adjustment
Total extraordinary income
Extraordinary loss
Loss related to disposal of fixed asset
Total extraordinary loss
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Income before minority interests
Minority interests
Net income
8
Nine Months ended
December 31, 2013
Amount
16,599,709
9,304,881
7,294,827
(Thousands of yen)
Nine Months ended
December 31, 2014
Amount
21,018,683
11,755,812
9,262,870
6,939
18,389
334,406
611,286
36,331
27,675
64,741
44,069
920,866
2,064,707
5,230,120
6,742
23,266
363,014
740,005
42,907
32,119
75,708
30,780
1,094,418
2,408,963
6,853,907
345
254,689
67,924
322,958
235
295,458
27,340
323,035
1,127,125
8,752
1,135,878
4,417,200
1,246,390
90,047
1,336,437
5,840,505
-
23,990
5,209
29,200
114,849
114,849
4,302,350
1,679,854
64,213
1,744,068
2,558,281
2,558,281
401,503
401,503
5,468,202
1,964,728
116,784
2,081,513
3,386,689
3,386,689
Consolidated Statements of Comprehensive Income
Income before minority interests
Other comprehensive income
Unrealized gains (losses) on investment securities
Deferred gains on hedges
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent company
Minority interests
9
Nine Months ended
December 31, 2013
Amount
2,558,281
(Thousands of yen)
Nine Months ended
December 31, 2014
Amount
3,386,689
1,549,575
588,748
2,138,324
4,696,606
(117,135)
179,200
3,545,771
3,607,836
6,994,525
4,696,606
-
6,994,525
-
3. Notes on Financial Statements
(Notes on the Going-concern Assumption)
Nine Months ended December 31, 2014 (April 1 to December 31, 2014)
Not applicable
(Notes on Significant Changes in Shareholders’ Equity)
Nine Months ended December 31, 2014 (April 1 to December 31, 2014)
The Company carried out a public offering with a payment date of November 25, 2014, and a third-party allotment
with a payment date of December 15, 2014. As a result, capital stock increased ¥5,683,920 thousand to ¥13,522,664
thousand, and capital surplus increased ¥5,683,920 thousand to ¥13,438,070 thousand in the nine months ended
December 31, 2014.
10
(Segment and Other Information)
I. Nine Months ended December 31, 2013 (April 1- December 31, 2013)
1. Information regarding revenue from operations and income/loss by reportable segment
(Thousands of yen)
Reportable segment
Real Estate
Business
Revenue from operations
Revenue from operations
to external customers
Hotel
Business
Golf Course
Business
Total
Adjustments Consolidated
(Note 1)
(Note 2)
11,949,547
4,141,152
509,008
16,599,709
-
16,599,709
58,782
8,581
10,550
77,914
(77,914)
-
Total
12,008,330
4,149,734
519,559
16,677,623
(77,914)
16,599,709
Segment income
4,790,882
1,241,596
58,947
6,091,426
(861,305)
5,230,120
Intra-segment revenue and
transfers
Notes: 1. Details of adjustments are as follows:
Included in the segment income adjustment of ¥(861,305) thousand are an intra-segment elimination of
¥378,730 thousand and corporate expenses of ¥(1,240,035) thousand not allocated to each reportable
segment. Corporate expenses mainly comprise general administrative expenses not attributable to
reportable segments.
2. Segment income data is adjusted and matches the operating income noted in the consolidated
statements of income.
2. Information regarding impairment loss on non-current assets or goodwill by reportable segment
Not applicable
II. Nine Months ended December 31, 2014 (April 1 - December 31, 2014)
1. Information regarding revenue from operations and income/loss by reportable segment
(Thousands of yen)
Reportable segment
Real Estate
Business
Revenue from operations
Revenue from operations to
external customers
Intra-segment revenue and
transfers
Total
Segment income
Hotel
Business
16,174,640
4,323,706
111,055
9,105
16,285,696
4,332,811
5,754,570
1,056,559
Golf Course
Business
Total
520,337 21,018,683
10,822
130,983
531,159 21,149,667
64,725
6,875,854
Adjustments Consolidated
(Note 1)
(Note 2)
- 21,018,683
(130,983)
-
(130,983) 21,018,683
(21,947)
6,853,907
Notes: 1. Details of adjustments are as follows:
Included in the segment income adjustment of ¥(21,947) thousand are an intra-segment elimination of ¥1,377,632
thousand and corporate expenses of ¥(1,399,579) thousand not allocated to each reportable segment. Corporate expenses
mainly comprise general administrative expenses not attributable to reportable segments.
2. Segment income data is adjusted and matches the operating income noted in the consolidated statements of income.
3. The Group has introduced a management and administrative charge system effective April 1, 2014.
2. Information regarding impairment loss on non-current assets or goodwill by reportable segment
Not applicable
11
(Significant subsequent event)
Nine Months ended December 31, 2014 (April 1 - December 31, 2014)
Purchase of Non-Current Assets
(1) The Group’s consolidated subsidiary, EEJRE 321 W 44 Owner, LLC, purchased the following non-current
asset as part of our investment in prime income-generating properties.
Overview of the property
(Name) 321 West 44th Street
(Address) 321 West 44th Street, New York,
New York, USA
Offices / Commercial facility
Land area: 2,185.47m2
Rentable area: 22,035.14 m2
¥ 19,697 million ($165 million)
December 19, 2014 (Local time)
January 21, 2015 (Local time)
Purchased price
Date of contract
Date of delivery
(2) The Group’s consolidated subsidiary, Jowa Real Estate NY One, LLC, purchased the following
non-current asset as part of our investment in prime income-generating properties.
Overview of the property
(Name) 40 West 25th Street
(Address) 40 West 25th Street, New York,
New York, USA
Offices / Commercial facility
Land area: 949.53m2
Rentable area: 12,655.40 m2
¥ 12,800 million ($106 million)
December 19, 2014 (Local time)
March 3, 2015 (Local time)
Purchased price
Date of contract
Date of delivery (planned)
(3) The Group’s consolidated subsidiary, Jowa Real Estate NY Two, LLC, purchased the following
non-current asset as part of our investment in prime income-generating properties.
Overview of the property
(Name) 24-28 West 25th Street
(Address) 24-28 West 25th Street, New York,
New York, USA
Offices / Commercial facility
Land area: 917.39m2
Rentable area: 12,371.49m2
¥ 12,511 million ($103 million)
December 19, 2014 (Local time)
March 3, 2015 (Local time)
Purchased price
Date of contract
Date of delivery (planned)
12