Mitsui Fudosan : Financial Reporting Document

About this update from Mitsui Fudosan Co., Ltd.

Note : This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. Consolidated Financial Results for the Fiscal Year Ended March 31, 2025 (Under Japanese GAAP) Company name: Mitsui Fudosan Co., Ltd. Listing: Tokyo Stock Exchange Securities code: 8801 URL: https://www.mitsuifudosan.co.jp/ Representative: (Name) Takashi Ueda, (Title) President and Chief Executive Officer Inquiries: (Name) Hideto Hirahara, (Title) Head of Corporate Communications Department Telephone: +81-03-3246-3155 Scheduled date of the Ordinary General Shareholders’ Meeting: June 27, 2025 Scheduled date to commence dividend payments: June 30, 2025 Scheduled date to file annual securities report: June 25, 2025 Preparation of supplementary material on financial results: Yes Holding of financial results briefing: Yes (for institutional investors and analysts) May 9, 2025 (Yen amounts are rounded down to millions, unless otherwise noted) Consolidated financial results for the year ended March 31, 2025 Consolidated operating results (Percentages indicate year-on-year changes) Revenue from operations Operating income Business income Ordinary income Net income attributable to shareholders of the Company For the year ended (Yen in millions) (%) (Yen in millions) 372,732 339,690 (%) (Yen in millions) 398,688 346,166 (%) (Yen in millions) 290,262 267,890 (%) (Yen in millions) 248,799 224,647 (%) March 31, 2025 2,625,363 10.2 9.7 15.2 8.4 10.8 March 31, 2024 2,383,289 5.0 11.2 — 1.0 14.0 Note: Comprehensive income For the year ended March 31, 2025: ¥160,756 million, decreased by 51.2% For the year ended March 31, 2024: ¥329,733 million, increased by 47.5% Business income = Operating income + Equity in earnings/losses of affiliates (including Gain/loss on sales of shares of affiliates for the purpose of real estate sales) + Gain/loss on sales of fixed assets Basic earnings per share Diluted earnings per share Return on equity Ratio of ordinary income to total assets Ratio of operating income to revenue from operations For the year ended (Yen) (Yen) (%) (%) (%) March 31, 2025 89.26 89.22 8.0 3.0 14.2 March 31, 2024 80.19 80.14 7.5 2.9 14.3 Reference: Equity in net income (loss) of affiliated companies For the year ended March 31, 2025: (¥2,472) million For the year ended March 31, 2024: ¥3,973 million Note: The Company has conducted a three-for-one stock split of its common shares as of April 1, 2024. We have calculated the “basic earnings per share” and the “diluted earnings per share” based on the assumption that the stock split was commenced at the beginning of the previous fiscal year. Consolidated financial position Total assets Net assets Equity ratio Net assets per share As of (Yen in millions) (Yen in millions) (%) (%) March 31, 2025 9,859,856 3,270,723 31.9 1,135.07 March 31, 2024 9,489,527 3,234,656 32.8 1,109.89 Reference: Shareholders' Equity As of March 31, 2025: ¥3,146,837 million As of March 31, 2024: ¥3,110,088 million Note: The Company has conducted a three-for-one stock split of its common shares as of April 1, 2024. We have calculated the “Net assets per share” based on the assumption that the stock split was commenced at the beginning of the previous fiscal year. Consolidated cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of year For the year ended March 31, 2025 March 31, 2024 (Yen in millions) 599,252 241,697 (Yen in millions) (321,970) (286,987) (Yen in millions) (269,367) 59,988 (Yen in millions) 163,272 179,249 Cash dividends Annual dividends per share Total cash dividends Payout ratio, consolidated basis Ratio of dividends to net assets, consolidated basis First quarter-end Second quarter-end Third quarter-end Fiscal year-end Total For the year ended (Yen) (Yen) (Yen) (Yen) (Yen) (Yen in millions) 78,459 86,152 (%) (%) March 31, 2024 — 35.00 — 49.00 84.00 34.9 2.6 March 31, 2025 — 15.00 — 16.00 31.00 34.7 2.8 For the year ending March 31, 2026 (Forecast) — 16.50 — 16.50 33.00 35.2 Note: The Company has conducted a three-for-one stock split of its common shares as of April 1, 2024. For the year ended March 31, 2024, the actual dividends before the stock split are disclosed. For the year ending March 31, 2025, dividends after the stock split are disclosed. Furthermore, the annual dividends for the year ending March 31, 2026 (forecast), without considering the stock split, are forecasted to be ¥99. Consolidated earnings forecasts for the year ending March 31, 2026 (Percentages indicate year-on-year changes) Revenue from operations Operating income Business income Ordinary income Net income attributable to shareholders of the Company Basic earnings per share For the year ending March 31, 2026 (Forecast) (Yen in millions) 2,700,000 (%) 2.8 (Yen in millions) 380,000 (%) 1.9 (Yen in millions) 425,000 (%) 6.6 (Yen in millions) 285,000 (%) (1.8) (Yen in millions) 260,000 (%) 4.5 (Yen) 93.78 * Notes Significant changes in consolidation scope: None Newly included into consolidation scope: None Excluded from consolidation scope: None Changes in accounting policies, accounting estimates, and restatement Changes in accounting policies due to revised accounting standards: Yes Changes in accounting policies due to other reasons: None Changes in accounting estimates: None Restatement: None Number of shares outstanding (common shares) As of and for the year ended March 31, 2025 2024 (i) Total number of shares outstanding at the end of the year (including treasury stocks) 2,782,189,711 shares 2,810,633,721 shares (ii) Number of treasury stocks at the end of the year 9,818,498 shares 8,481,600 shares (iii) Average number of shares outstanding during the year 2,787,231,606 shares 2,801,512,734 shares Note: 1. The Company conducted a 3-for-1 stock split of its common shares on April 1, 2024. We have calculated the “Net assets per share” based on the assumption that the stock split was commenced at the beginning of the previous fiscal year. 2. For the number of shares used as the basis for calculating net income per share (consolidated), please refer to page 33, "Per Share Information." This report of financial results is exempt from audit by certified public accountants or an audit firm. Proper use of earnings forecasts, and other special matters The earnings forecasts contained in this document are based on information available as of the date of release of this document and assumptions concerning uncertain factors that could affect future performance as of the date of release of this document. They are not intended to be our commitment to achieve. Furthermore, actual performance may differ significantly due to various factors in the future. For matters related to earnings forecasts, please refer to "1. Overview of Operating Results (4) Outlook for the Future" on page 12. -Table of Contents 1 ． Overview of Operating Results……………………………………………………………………………………………… 2 (1) Summary of Operating Results for the Current Fiscal Year……………………………………………………………… 2 (2) Summary of Financial Position for the Current Fiscal Year …………………………………………………………… 10 (3) Summary of Cash Flows for the Current Fiscal Year…………………………………………………………………… 11 (4) Outlook for the Future…………………………………………………………………………………………………… 12 (5) Basic Policy on Profit Distribution and Dividends for the Current and Next Year……………………………………… 13 2 ． Basic Policy on the Selection of Accounting Standards……………………………………………………………………… 13 3 ． Consolidated Financial Statements and Accompanying Notes……………………………………………………………… 14 (1) Consolidated Balance Sheets …………………………………………………………………………………………… 14 (2) Consolidated Statements of Income and Comprehensive Income……………………………………………………… 16 Consolidated Statements of Income……………………………………………………………………………………… 16 Consolidated Statements of Comprehensive Income…………………………………………………………………… 17 (3) Consolidated Statements of Changes in Equity………………………………………………………………………… 18 (4) Consolidated Statements of Cash Flows………………………………………………………………………………… 22 (5) Notes to the Consolidated Financial Statements………………………………………………………………………… 24 (Notes on Going Concern Assumption) ………………………………………………………………………………… 24 (Changes in Accounting Policies) ……………………………………………………………………………………… 24 (Consolidated Balance Sheets) ………………………………………………………………………………………… 24 (Consolidated Statements of Income) …………………………………………………………………………………… 25 (Leasing Properties) ……………………………………………………………………………………………………… 26 (Segment Information) ……….………………………………………………………………………………………… 27 (Per Share Information) ………………………………………………………………………………………………… 33 (Subsequent Events) ……………………………………………………………………………………………………… 33 - 1 - １． Overview of Operating Results Summary of Operating Results for the Current Fiscal Year Summary of Consolidated Financial Performance For the year ended March 31, Increase/(Decrease) (Yen in millions, except for percentage) 2025 2024 Amount Rate Revenue from operations 2,625,363 2,383,289 242,074 10.2% Business income 398,688 346,166 52,522 15.2% Ordinary income 290,262 267,890 22,371 8.4% Net income attributable to shareholders of the Company 248,799 224,647 24,152 10.8% For the current fiscal year, revenue from operations increased by ¥242.0 billion, or 10.2%, compared to the previous fiscal year, business income increased by ¥52.5 billion, or 15.2%, ordinary income increased by ¥22.3 billion, or 8.4%, and net income attributable to shareholders of the Company increased by ¥24.1 billion, or 10.8%. Furthermore, revenue from operations, business income, ordinary income, and net income attributable to shareholders of the Company all reached record highs. Revenue from operations has achieved record highs for 13 consecutive years, while ordinary income, and net income attributable to shareholders of the Company have achieved record highs for three consecutive years. Consolidated Financial Performance by Segment For the year ended March 31, 2025 2024 Increase/(Decrease) (Yen in millions) Revenue from operations Business income Revenue from operations Business income Revenue from operations Business income Leasing 872,331 176,429 815,002 169,097 57,329 7,332 Property sales 758,069 167,078 627,611 135,187 130,458 31,891 Management 486,291 71,642 462,857 66,289 23,434 5,352 Facility operations 224,054 38,610 194,512 26,333 29,542 12,277 Others 284,616 6,569 283,306 4,151 1,310 2,417 Corporate Expenses and Eliminations — (61,641) — (54,892) — (6,749) Total 2,625,363 398,688 2,383,289 346,166 242,074 52,522 Overview of Performance by Segment The revenue from operations for each segment represents revenue from operations to external customers. ① Leasing For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) Revenue from operations 872,331 815,002 57,329 Business income 176,429 169,097 7,332 "Leasing" segment recorded an increase in revenue of ¥57.3 billion and an increase in income of ¥7.3 billion mainly due to the leasing revenue growth of domestic and oversea offices and the sales growth of existing Retail facilities. The vacancy rate for our office buildings in the Tokyo metropolitan (on a non-consolidated basis) at the end of the year was 1.3% (Improved by 1.2 percentage points from 2.5% at the end of the third quarter). ＜ Breakdown of Revenue from Operations ＞ For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) Office 466,601 446,087 20,513 Retail facilities 299,100 286,553 12,547 Others 106,628 82,360 24,268 Total 872,331 815,002 57,329 ・ Leased floor space For the year ended March 31, Increase/ (Square meter in thousands) 2025 2024 (Decrease) Office Owned 2,059 2,060 (1) Subleased 1,573 1,545 28 Retail facilities Owned 2,005 2,010 (5) Subleased 708 667 41 ・ End-of-Year Trend of Vacancy Rate As of March 31, (%) 2025 2024 2023 2022 2021 2020 2019 2018 Office / Retail facilities, consolidated basis 3.5 3.8 4.3 3.0 2.9 2.3 1.8 2.4 Metropolitan office, non-consolidated basis 1.3 2.2 3.8 3.2 3.1 1.9 1.7 2.2 Local area office, non-consolidated basis 3.4 3.2 2.8 3.7 3.5 1.3 1.8 2.3 ＜ Significant New and Operating Properties during the period ＞ ・ Properties Started in Operation during the Current Fiscal Year Property name Location Status Type PARK WELLSTATE Makuhari Bay-Park Chiba, Chiba Opened in September 2024 Senior residence PARK WELLSTATE Nishiazabu Minato-ku, Tokyo Opened in October 2024 Senior residence PARK WELLSTATE Shonan Fujisawa SST MITSUI OUTLET PARK MARINE PIA KOBE MITSUI OUTLET PARK LINKOU Building II Fujisawa, Kanagawa Opened in October 2024 Senior residence Kobe, Hyogo Opened in November 2024 Retail facility New Taipei City, Taiwan Opened in November 2024 Retail facility ・ Properties Started in Operation during the Previous Fiscal Years (and still in operation at the end of current fiscal year) Property name Location Status Type LaLaport KADOMA ・ MITSUI OUTLET PARK OSAKA KADOMA Kadoma, Osaka Opened in April 2023 Retail facility LaLaport TAICHUNG Taichung City, Taiwan Opened in May 2023 Retail facility LaLa Terrace TOKYO-BAY Funabashi, Chiba Opened in November 2023 Retail facility LaLa Terrace HARUMI FLAG Chuo-ku, Tokyo Opened in March 2024 Retail facility ・ Overall For the year ended March 31, (Yen in millions, except for percentage) 2025 2024 Revenue from operations 732,733 702,491 Gross profit 132,015 121,904 Gross profit margin (%) 18.0 17.4 ・ Office and Retail facilities Office Retail facilities Metropolitan Local area Total Metropolitan Local area Total Revenue from operations (yen in millions) 320,873 24,075 344,948 174,165 96,454 270,620 Leased floor space (square meter in thousands) 2,581 279 2,860 1,440 915 2,355 Buildings in service (number of units) 93 22 115 70 28 98 Vacancy rate (%) 1.3 3.4 1.5 1.8 3.0 2.3 ② Property Sales For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) Revenue from operations 758,069 627,611 130,458 Business income 167,078 135,187 31,891 Residential property sales to individuals (domestic) experienced an increase in revenue and business income mainly due to the deliveries of properties such as "PARK TOWER KACHIDOKI SOUTH" and "Mita Garden Hills". Property sales to investors and residential property sales to individuals (overseas), etc. experienced an increase in revenue and decrease in business income mainly due to the sales of high-profit margin properties in the previous fiscal year, despite the progress in property sales by accelerating the asset turnover by capturing both real property for sale - completed and fixed assets. Overall, "Property Sales" segment reported an increase of ¥130.4 billion in revenue and ¥31.8 billion in business income. Additionally, the contract progress rate for the 2,800 units scheduled to be recorded in the next fiscal year for new condominium developments in Japan was 88.4%. ＜ Breakdown of Revenue from Operations and Business Income ＞ For the year ended March 31, Increase/ (Yen in millions) Residential property sales to individuals (domestic) 2025 2024 (Decrease) Revenue from operations 413,574 314,400 99,174 Business income 96,431 49,788 46,643 Property sales to investors and residential property sales to individuals (overseas), etc. Revenue from operations 344,495 313,210 31,284 Business income 70,647 85,399 (14,752) Total revenue from operations 758,069 627,611 130,458 Total business income 167,078 135,187 31,891 ＜ Residential Property Sales to Individuals (Domestic) ＞ ・ Breakdown of Revenue from Operations For the year ended March 31, 2025 2024 Increase/(Decrease) (Yen in millions, except for number of unit) Condominiums Metropolitan Others Single-family homes Metropolitan Others Total revenue from operations Amount Quantity Amount Quantity Amount Quantity 377,592 3,693 units 280,561 3,280 units 97,031 413 units 346,925 3,182 units 253,923 2,665 units 93,002 517 units 30,667 511 units 26,638 615 units 4,029 (104) units 35,981 417 units 33,839 420 units 2,142 (3) units 33,908 388 units 33,839 420 units 69 (32) units 2,072 29 units — 0 units 2,072 29 units 413,574 4,110 units 314,400 3,700 units 99,174 410 units Contracts outstanding at beginning of year (A) 4,425 59 4,484 Contracted during the year (B) 3,112 401 3,513 Number of units delivered (C) 3,693 417 4,110 Contracts outstanding at end of year (A) ＋ (B) － (C) 3,844 43 3,887 Completed inventory 32 22 54 Newly released during the year 3,072 402 3,474 ・ Status of Contracts (Number of unit) Condominiums Single-family homes Total (Note) The number of contracted units and newly released units includes units that are scheduled to be delivered in subsequent years. ・ End-of-Year Trend of Completed Inventory As of March 31, (Number of unit) 2025 2024 2023 2022 2021 2020 2019 2018 Condominium 32 24 55 82 150 128 141 108 Single-family homes 22 22 0 7 17 58 30 40 Total 54 46 55 89 167 186 171 148 ・ Significant Properties for the Current Fiscal Year (Residential Property Sales to Individuals (Domestic)) Property name Location Type PARK TOWER KACHIDOKI SOUTH Chuo-ku, Tokyo Condominium Mita Garden Hills Minato-ku, Tokyo Condominium PARK TOWER NISHISHINJUKU Shinjuku-ku, Tokyo Condominium PARK TOWER KACHIDOKI MID Chuo-ku, Tokyo Condominium ・ Significant Properties for the Current Fiscal Year (Property Sales to Investors and Residential Property Sales to Individuals (Overseas)) Property name Location Type Yokohama Mitsui Building Yokohama, Kanagawa Office Otemachi One Tower Chiyoda-ku, Tokyo Office MFIP Tama Tama, Tokyo Data Center Cortland New York, U.S.A. Condominiums 200 Amsterdam New York, U.S.A. Condominiums ③ Management For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) Revenue from operations 486,291 462,857 23,434 Business income 71,642 66,289 5,352 Property Management experienced an increase in revenue due to improved operations in Repark (car park leasing) compared to previous year. In contrast, business income slightly decreased mainly due to the increase in system-related expenses. Brokerage and Asset Management, etc. experienced an increase in revenue and business income mainly due to the increase in unit prices in Rehouse (brokerage for individuals) and expansion of Assets Under Management (AUM). Overall, "Management" segment reported an increase of ¥23.4 billion in revenue and ¥5.3 billion in business income. ＜ Breakdown of Revenue from Operations and Business Income ＞ For the year ended March 31, Increase/ (Yen in millions) Property management 2025 2024 (Decrease) Revenue from operations (*1) 361,400 347,025 14,375 Business income Brokerage & asset management, etc. Revenue from operations 38,464 124,891 38,554 115,831 (89) 9,059 Business income 33,177 27,735 5,442 Total revenue from operations 486,291 462,857 23,434 Total business income 71,642 66,289 5,352 *1 Status of Repark (car park leasing) Management Units at the End of the Current Fiscal Year: Repark Management Units: 247,740 units (At the End of Previous Fiscal Year: 247,046 units) ・ Mitsui Fudosan Realty's Brokerage Business (included in Brokerage and Asset Management, etc.) For the year ended March 31, Increase/ (Yen in millions, 2025 2024 (Decrease) except for number of deal) Transaction volume Number of transactions Transaction volume Number of transactions Transaction volume Number of transactions Brokerage 2,218,842 38,103 deals 1,934,599 38,680 deals 284,242 (577) deals ・ Mitsui Fudosan Residential's Consignment Sales Business (included in Brokerage and Asset Management, etc.) For the year ended March 31, Increase/ (Yen in millions, 2025 2024 (Decrease) except for number of deal) Transaction volume Number of transactions Transaction volume Number of transactions Transaction volume Number of transactions Consignment sales 116,045 1,056 deals 67,951 870 deals 48,094 186 deals ④ Facility Operations For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) Revenue from operations 224,054 194,512 29,542 Business income 38,610 26,333 12,277 "Facility Operations" segment recorded an increase in revenue of ¥29.5 billion and an increase in business income of ¥12.2 billion, due to a significant rise in the ADR (average daily rate) of hotels and resorts, as well as an increase in the number of operating days and visitors at Tokyo Dome. ＜ Breakdown of Revenue from Operations ＞ For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) Hotel & resorts 162,105 140,577 21,528 Sports & entertainment 61,948 53,934 8,013 Total 224,054 194,512 29,542 Hotel Occupancy Rate For the year ended March 31, Increase/ 2025 2024 (Decrease) Lodging-focused hotel 82% 83% (1) pt ＜ Significant New and Operating Properties during the period ＞ ・ Properties Started in Operation during the Current Fiscal Year Property name Location Status Type LaLa arena TOKYO-BAY Funabashi, Chiba Opened in May 2024 Arena Mitsui Garden Hotel Kyoto Sanjo PREMIER Kyoto, Kyoto Opened in July 2024 Hotel Mitsui Garden Hotel Ginza Tsukiji Chuo-ku, Tokyo Opened in September 2024 Hotel Properties Started in Operation during the Previous Fiscal Years (and still in operations at the end of current fiscal year) Property name Location Status Type Bulgari Hotel Tokyo Chuo-ku, Tokyo Opened in April 2023 Hotel Mitsui Garden Hotel Yokohama Minatomirai PREMIER Yokohama, Kanagawa Opened in May 2023 Hotel ⑤ Others For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) Revenue from operations 284,616 283,306 1,310 Business income 6,569 4,151 2,417 ＜ Breakdown of Revenue from Operations ＞ For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) New construction under consignment & renovations 244,370 245,948 (1,577) Others 40,245 37,357 2,887 Total 284,616 283,306 1,310 ・ Amount of Orders Received For the year ended March 31, Increase/ (Yen in millions) 2025 2024 (Decrease) New construction under consignment 138,680 131,792 6,888 Summary of Financial Position for the Current Fiscal Year Assets, Liabilities, and Net Assets at the End of the Current Fiscal Year For the year ended March 31, Increase/ (Yen in millions, except for ratio) 2025 2024 (Decrease) Total assets 9,859,856 9,489,527 370,329 Total liabilities 6,589,133 6,254,870 334,263 Interest-bearing debt included 4,416,086 4,430,422 (14,336) Net assets 3,270,723 3,234,656 36,066 Shareholders' equity included 3,146,837 3,110,088 36,748 D/E ratio 1.40 1.42 (0.02) (Note) Interest-bearing debt: The total of short-term debt, non-recourse short-term debt, commercial paper, bonds payable due within one-year, non-recourse bonds payable due within one year, bonds payable, non-recourse bonds payable, long-term debt, and non-recourse long-term debt recorded on the consolidated balance sheets. D/E ratio: Interest-bearing debt / shareholders' equity Of the interest-bearing debt, non-recourse debt amounted to ¥462,741million at the end of the current fiscal year and ¥463,067 million at the end of the previous fiscal year. Overview of Significant Assets and Liabilities Real Property for Sale The balance of real property for sale (including real property for sale - completed, real property for sale - in progress, real property for sale - land held for development, and advances paid for purchases) at the end of the current fiscal year was ¥2,500.7 billion, an increase of ¥125.4 billion compared to the end of the previous fiscal year. The net increase was derived from the following multiple factors: a decrease of ¥561.2 billion from cost recovery, an increase from new investments of ¥607.4 billion, as well as an increase from the impact of foreign exchange differences due to depreciation of the yen. Tangible and Intangible Fixed Assets The balance of tangible and intangible fixed assets at the end of the current fiscal year was ¥4,707.4 billion, an increase of ¥301.8 billion compared to the end of the previous fiscal year. The net increase was derived from the following multiple factors: a decrease of ¥140.5 billion due to depreciation, an increase due to new investments of ¥362.7 billion in projects such as “LaLaport ANJO” by Mitsui Fudosan and “PARK WELLSTATE Nishiazabu” by Mitsui Fudosan Residential Co., Ltd., as well as the impact of foreign exchange differences due to the depreciation of the yen. Interest-Bearing Debt The balance of interest-bearing debt at the end of the current fiscal year decreased by ¥14.3 billion compared to the end of the previous fiscal year, resulting in ¥4,416.0 billion. This increase was due to cash inflows of ¥599.2 billion from operating activities, cash outflows of ¥321.9 billion from investment activities such as new investments in tangible and intangible fixed assets, cash outflows of ¥129.6 billion from dividend payments and acquisition of treasury stock, and the impact of foreign exchange differences due to the depreciation of the yen. Summary of Cash Flows for the Current Fiscal Year Current Fiscal Year Cash Flows The balance of cash and cash equivalents at the end of the current fiscal year decreased by ¥15.9 billion compared to the end of the previous fiscal year, resulting in ¥163.2 billion. Cash Flows from Operating Activities In the current fiscal year, operating activities resulted in a cash increase of ¥599.2 billion. This was mainly due to the income before income taxes and non-controlling interests of ¥363.0 billion and depreciation expense of ¥140.5 billion. On the other hand, there was a decrease due to payments of income taxes of ¥100.2 billion. Cash Flows from Investing Activities In the current fiscal year, investing activities resulted in a cash decrease of ¥321.9 billion. This was mainly due to payments for acquisition of tangible and intangible fixed assets of ¥271.4 billion and payments for acquisition of investment securities of ¥137.0 billion. On the other hand, there was an increase due to sale of investment securities of ¥103.5 billion, proceeds from acceptance of deposits and security deposits received of ¥49.3 billion, among others. Cash Flows from Financing Activities In the current fiscal year, financing activities resulted in a cash decrease of ¥269.3 billion. This was mainly due to dividend payments and repayment of borrowings. Trend of Cash Flow-Related Indicators For the year ended March 31, 2022 2023 2024 2025 Equity ratio 34.1% 32.8% 32.8% 31.9% Fair value-based equity ratio 30.3% 26.2% 48.6% 37.4% Cash flow to interest-bearing debt ratio 13.5 years 13.6 years 18.3 years 7.4 years Interest coverage ratio 11.3 7.8 6.4 6.2 (Note) 1. The criteria for each indicator are as follows. All are calculated based on consolidated financial figures. Equity ratio: Shareholders' equity / total assets Fair value-based equity ratio: Market capitalization / total assets Market capitalization: End-of-year closing share price × number of shares issued at year-end (after deducting treasury stocks) Due to the application of the "Accounting Standard for Fair Value Measurement", the share price used for market capitalization has been changed from the "average share price during the month of the year-end" to the "end-of-year closing share price" starting from the year ended March 31, 2022. Cash flow to interest-bearing debt ratio: Interest-bearing debt / operating cash flow Interest coverage ratio: EBITDA / interest payments EBITDA: Operating income + depreciation expense Interest payments: Interest expense as reported on the consolidated statements of income Outlook for the Future (Outlook for the Next Year) Outlook for Consolidated Financial Performance Projection Actual results Increase/(Decrease) (Yen in millions, except for percentage) for the year ending March 31, 2026 for the year ended March 31, 2025 Amount % Revenue from operations 2,700,000 2,625,363 74,636 2.8 Operating income 380,000 372,732 7,267 1.9 Business income 425,000 398,688 26,311 6.6 Ordinary income 285,000 290,262 (5,262) (1.8) Net income attributable to shareholders of the Company 260,000 248,799 11,200 4.5 For the next year, revenue from operations are expected to reach ¥2.7 trillion, an increase of ¥74.6 billion compared to the current fiscal year, operating income is expected to be ¥380.0 billion, an increase of ¥7.2 billion, business income is expected to be ¥425.0 billion, an increase of ¥26.3 billion, and ordinary income is expected to be ¥285.0 billion, a decrease of ¥5.2 billion. Additionally, net income attributable to shareholders of the Company is expected to reach ¥260.0 billion, an increase of ¥11.2 billion. Outlook for Consolidated Financial Performance by Segment (Yen in millions, except for percentage) Outlook for the year ending March 31, 2026 Revenue from Business operations income Actual results for the year ended March 31, 2025 Revenue from Business operations income Increase/(Decrease) Revenue from operations Business income Amount % Amount % Leasing 940,000 175,000 872,331 176,429 67,668 7.8 (1,429) (0.8) Property sales 710,000 190,000 758,069 167,078 (48,069) (6.3) 22,921 13.7 Management 500,000 75,000 486,291 71,642 13,708 2.8 3,357 4.7 Facility operations 240,000 45,000 224,054 38,610 15,945 7.1 6,389 16.5 Others 310,000 5,000 284,616 6,569 25,383 8.9 (1,569) (23.9) Corporate Expenses and Eliminations — (65,000) — (61,641) — — (3,358) 5.4 Total 2,700,000 425,000 2,625,363 398,688 74,636 2.8 26,311 6.6 "Leasing" segment anticipates the same income level due to the newly constructed properties and floor expansion of domestic retail facilities, such as LaLaport ANJO and MITSUI OUTLET PARK MARINEPIA KOBE, and increase in leasing revenue from TOKYO MIDTOWN YAESU, offset by the additional expenses from completion of leasing properties in the U.S.A. "Property Sales" segment expects to achieve a significant increase in income mainly due to the residential property sales to individuals (domestic) of properties that are centrally located, high-priced and large-scaled. Also, a significant increase in overall segment income is expected from property sales to investors as a result of accelerating the asset turnover by capturing both real property for sale - completed and fixed assets. "Management" segment anticipates an increase in revenue and business income mainly due to the increase in management fee as results of increase in number of residence management and expansion in facility sales. In "Facility Operations" segment, revenue and business income are expected to increase mainly due to the expansion of revenue and business income resulting from robust demand at hotels and resorts. Outlook for the Financial Position for the Next Year The full-year investment on property and equipment is expected to be ¥200.0 billion, depreciation expenses are projected to be ¥140.0 billion, and the year-end balance of interest-bearing debt is anticipated to be ¥4.6 trillion. (5) Basic Policy on Profit Distribution and Dividends for the Current and Next year The Company is committed to boosting shareholder value by reinvesting profits with a medium - to long-term outlook and strategically distributing earnings to shareholders after a thorough analysis of the business climate, performance, and financial health. Regarding the redistribution of profits, we recognize the importance of a stable and continuous return policy based on sustainable growth. For the period from fiscal year 2024 to 2026, we have, and we will carry out stable dividend increases (progress dividend payout) and flexible/continuous acquisition of treasury stocks. We aim for an annual payout ratio of "50% or more" and an annual dividend payout ratio of "approximately 35%" based on the Group long-term vision "& INNOVATION 2030". Considering the favorable performance of the current fiscal year and the above shareholder return policy, the annual dividend for the current fiscal year will be ¥ 31 per share, an increase of ¥ 1 from the annual dividend announced at the beginning of the period. The interim cash dividends have already been paid at ¥ 15 per share, and the year-end cash dividends will be ¥ 16 per share. In the next year, we intend to distribute an annual dividend of ¥33 per share, with an interim dividend of ¥16.5 per share, after a thorough evaluation of future outlook and our shareholder return policy. Basic Policy on the Selection of Accounting Standards We currently apply Generally Accepted Accounting Principles in Japan (JGAAP), and we have not decided to adopt International Financial Reporting Standards (IFRS) in the future. Consolidated Financial Statements and Accompanying Notes Consolidated Balance Sheets As of March 31, (Yen in millions) 2024 2025 ASSETS CURRENT ASSETS Cash and deposits 184,192 164,106 Notes and accounts receivable - trade and contract assets 77,592 78,990 Marketable securities 91 60 Real property for sale - completed 1,404,141 1,474,044 Real property for sale - in progress 552,658 461,641 Real property for sale - land held for development 394,194 542,796 Expenditure on contracts in progress 8,937 11,894 Other inventories 8,184 7,723 Advances paid for purchases 24,285 22,274 Short-term loans receivable 13,760 9,396 Equity investments in properties for sale 5,524 5,516 Others 367,658 391,421 Allowance for doubtful accounts (1,986) (1,432) Total current assets 3,039,235 3,168,436 NON-CURRENT ASSETS Tangible fixed assets Buildings and structures 2,842,660 3,076,819 Accumulated depreciation (1,093,512) (1,176,140) Buildings and structures, net 1,749,147 1,900,679 Machinery, equipment, and vehicles 160,819 175,971 Accumulated depreciation (83,052) (95,571) Machinery, equipment, and vehicles, net 77,766 80,400 Land 2,155,656 2,209,205 Construction in progress 138,603 148,932 Others 348,967 433,877 Accumulated depreciation (169,641) (188,728) Other, net 179,325 245,148 Total tangible fixed assets 4,300,499 4,584,366 Intangible fixed assets Leasehold rights 56,532 63,555 Others 48,493 59,497 Total intangible fixed assets 105,026 123,052 Investments and other assets Investment securities 1,469,467 1,334,510 Long-term loans receivable 13,903 37,073 Deposits and security deposits paid 172,878 176,617 Net defined retirement benefit assets 85,445 81,361 Deferred tax assets 25,211 32,176 Deferred tax assets for land revaluation 609 349 Others 278,469 323,102 Allowance for doubtful accounts (1,219) (1,190) Total investments and other assets 2,044,765 1,984,001 Total non-current assets 6,450,291 6,691,420 Total assets 9,489,527 9,859,856 As of March 31, LIABILITIES (Yen in millions) 2024 2025 CURRENT LIABILITIES Notes and accounts payable - trade 131,202 197,043 Short-term debt 540,185 573,164 Non-recourse short-term debt 47,177 66,902 Commercial paper 27,000 108,000 Bonds payable due within one year 70,000 30,000 Non-recourse bonds payable due within one year 9,802 53,100 Accrued income taxes 63,542 75,694 Contract liabilities 196,675 210,864 Allowance for warranty repair on completed construction 846 884 Others 353,581 533,897 Total current liabilities 1,440,014 1,849,551 NON-CURRENT LIABILITIES Bonds payable 824,492 822,428 Non-recourse bonds payable 84,200 45,360 Long-term debt 2,505,677 2,419,751 Non-recourse long-term debt 321,887 297,379 Deposits and security deposits received 463,953 490,351 Deferred tax liabilities 308,501 248,571 Deferred tax liabilities for land revaluation 78,715 81,082 Defined retirement benefit obligations 39,106 34,996 Allowance for directors’ retirement benefits 559 672 Others 187,761 298,988 Total non-current liabilities 4,814,856 4,739,581 Total liabilities 6,254,870 6,589,133 NET ASSETS Shareholders' equity Common stock 341,000 341,800 Capital surplus 311,428 313,835 Retained earnings 1,658,821 1,782,181 Treasury stock (7,256) (12,210) Total shareholders' equity 2,303,994 2,425,606 Accumulated other comprehensive income Net unrealized holding gains (losses) on securities 480,100 311,043 Deferred gains (losses) on hedging instruments 17,200 12,007 Reserve on land revaluation 167,068 165,439 Foreign currency translation adjustments 105,580 201,744 Cumulative adjustments for retirement benefit obligations 36,144 30,994 Total accumulated other comprehensive income 806,093 721,230 Subscription rights to shares 880 652 Non-controlling interests 123,688 123,234 Total net assets 3,234,656 3,270,723 Total liabilities and net assets 9,489,527 9,859,856 Consolidated Statements of Income and Comprehensive Income (Consolidated Statements of Income) For the year ended March 31, (Yen in millions) Note 2024 2025 Revenue from operations 2,383,289 2,625,363 Cost of revenue from operations 1,790,164 1,990,236 Gross profit 593,124 635,126 Selling, general and administrative expenses 253,433 262,393 Operating income 339,690 372,732 Non-operating income Interest income 2,223 3,027 Dividend income 7,408 8,743 Equity in net income of affiliated companies 3,973 － Foreign exchange gains 2,662 2,145 Others 5,275 3,373 Total non-operating income 21,542 17,290 Non-operating expenses Interest expenses 74,535 82,349 Equity in losses of affiliated companies － 2,472 Others 18,807 14,939 Total non-operating expenses 93,342 99,761 Ordinary income 267,890 290,262 Extraordinary income Gain on sale of fixed assets 4,433 29,186 Gain on sale of investment securities 54,120 54,505 Pension fund subrogation return gain 7,620 － Total extraordinary income 66,174 83,692 Extraordinary losses Impairment loss on fixed assets *1 － 10,894 Total extraordinary losses － 10,894 Income before income taxes and non-controlling interests 334,065 363,060 Income taxes – current 112,599 111,567 Income taxes – deferred (6,221) 5,426 Total income taxes 106,377 116,994 Net income 227,687 246,066 Net income (loss) attributable to non-controlling shareholders 3,040 (2,733) Net income attributable to shareholders of the Company 224,647 248,799 (Consolidated Statements of Comprehensive Income) For the year ended March 31, (Yen in millions) 2024 2025 Net income 227,687 246,066 Other comprehensive income Net unrealized holding gains (losses) on securities 52,934 (169,409) Deferred gains (losses) on hedging instruments 732 (5,706) Reserve on land revaluation — (2,321) Foreign currency translation adjustments 13,340 52,884 Adjustments for retirement benefit obligations 9,545 (4,932) Equity in other comprehensive income of affiliated companies 25,493 44,176 Total other comprehensive income 102,046 (85,309) Comprehensive income 329,733 160,756 (Breakdown) Comprehensive income attributable to shareholders of the Company 326,222 163,244 Comprehensive income attributable to non-controlling shareholders 3,511 (2,487) Consolidated Statements of Changes in Equity Previous Fiscal year (From April 1, 2023 to March 31, 2024) (Yen in millions) Shareholders' equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders' equity Balance at beginning of year 340,552 366,604 1,499,572 (38,354) 2,168,374 Cumulative effect of changes in accounting policies 27 27 Balance at beginning of year reflecting changes in accounting policies 340,552 366,604 1,499,599 (38,354) 2,168,401 Changes for the year Restricted stock compensation 447 447 895 Dividends from retained earnings (62,563) (62,563) Net income attributable to shareholders of the Company 224,647 224,647 Reversal of reserve on land revaluation, net of tax 27,832 27,832 Acquisition of treasury stock (22) (22) Disposal of treasury stock (209) 635 426 Retirement of treasury stock (30,484) 30,484 — Changes in the Company's equity due to transactions with non-controlling shareholders — — Capital transactions with non-controlling shareholders (55,623) (55,623) Changes in the scope of equity method — Transfer of retained earnings to capital surplus 30,694 (30,694) — Changes in items other than shareholders' equity for the year, net — Total changes for the year 447 (55,175) 159,222 31,098 135,592 Balance at end of year 341,000 311,428 1,658,821 (7,256) 2,303,994 (Yen in millions) Accumulated other comprehensive income Subscription rights to shares Non-controlling interests Total net assets Net unrealized holding gains (losses) on securities Deferred gains (losses) on hedging instruments Reserve on land revaluation Foreign currency translation adjustments Cumulative adjustments for retirement benefit obligations Total accumulated other comprehensive income Balance at beginning of year 426,950 16,072 194,900 67,710 26,717 732,351 1,291 129,202 3,031,220 Cumulative effect of changes in accounting policies 27 Balance at beginning of year reflecting changes in accounting policies 426,950 16,072 194,900 67,710 26,717 732,351 1,291 129,202 3,031,247 Changes for the year Restricted stock compensation 895 Dividends from retained earnings (62,563) Net income attributable to shareholders of the Company 224,647 Reversal of reserve on land revaluation, net of tax 27,832 Acquisition of treasury stock (22) Disposal of treasury stock 426 Retirement of treasury stock — Changes in the Company’s equity due to transactions with non-controlling shareholders — Capital transactions with non-controlling shareholders (55,623) Changes in the scope of equity method — Transfer of retained earnings to capital surplus — Changes in items other than shareholders' equity for the year, net 53,150 1,127 (27,832) 37,870 9,426 73,741 (411) (5,514) 67,816 Total changes for the year 53,150 1,127 (27,832) 37,870 9,426 73,741 (411) (5,514) 203,408 Balance at end of year 480,100 17,200 167,068 105,580 36,144 806,093 880 123,688 3,234,656 Current Fiscal year (From April 1, 2024 to March 31, 2025) (Yen in millions) Shareholders' equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders' equity Balance at beginning of year 341,000 311,428 1,658,821 (7,256) 2,303,994 Cumulative effect of changes in accounting policies — Balance at beginning of year reflecting changes in accounting policies 341,000 311,428 1,658,821 (7,256) 2,303,994 Changes for the year Restricted stock compensation 800 800 1,600 Dividends from retained earnings (87,563) (87,563) Net income attributable to shareholders of the Company 248,799 248,799 Reversal of reserve on land revaluation, net of tax (692) (692) Acquisition of treasury stock (42,094) (42,094) Disposal of treasury stock (192) 420 228 Retirement of treasury stock (36,719) 36,719 — Changes in the Company’s equity due to transactions with non-controlling shareholders 1,606 1,606 Capital transactions with non-controlling shareholders — Changes in the scope of equity method (273) (273) Transfer of retained earnings to capital surplus 36,911 (36,911) — Changes in items other than shareholders' equity for the year, net Total changes for the year 800 2,406 123,359 (4,954) 121,612 Balance at end of year 341,800 313,835 1,782,181 (12,210) 2,425,606 (Yen in millions) Accumulated other comprehensive income Subscription rights to shares Non-Controlling Interests Total net assets Net unrealized holding gains (losses) on securities Deferred gains (losses) on hedging instruments Reserve on land revaluation Foreign currency translation adjustments Cumulative adjustments for retirement benefit obligations Total accumulated other comprehensive income Balance at beginning of year 480,100 17,200 167,068 105,580 36,144 806,093 880 123,688 3,234,656 Cumulative effect of changes in accounting policies — Balance at beginning of year reflecting changes in accounting policies 480,100 17,200 167,068 105,580 36,144 806,093 880 123,688 3,234,656 Changes for the year Restricted stock compensation 1,600 Dividends from retained earnings (87,563) Net income attributable to shareholders of the Company 248,799 Reversal of reserve on land revaluation, net of tax (692) Acquisition of treasury stock (42,094) Disposal of treasury stock 228 Retirement of treasury stock — Changes in the Company’s equity due to transactions with non-controlling shareholders 1,606 Capital transactions with non-controlling shareholders — Changes in the scope of equity method (273) Transfer of retained earnings to capital surplus — Changes in items other than shareholders' equity for the year, net (169,056) (5,192) (1,628) 96,164 (5,149) (84,863) (228) (453) (85,545) Total changes for the year (169,056) (5,192) (1,628) 96,164 (5,149) (84,863) (228) (453) 36,066 Balance at end of year 311,043 12,007 165,439 201,744 30,994 721,230 652 123,234 3,270,723 Consolidated Statements of Cash Flows For the year ended March 31, Cash flows from operating activities Income before income taxes and non-controlling interest 334,065 363,060 Depreciation expenses 133,726 140,516 Impairment loss on fixed assets — 10,894 Interest and dividend income (9,631) (11,770) Interest expenses 74,535 82,349 Equity in net (income) loss of affiliated companies (3,973) 2,472 (Gain) loss on sale of investment securities (54,120) (54,505) Gain on sale of fixed assets (4,433) (29,186) (Increase) decrease in notes and accounts receivable - trade and contract assets (5,770) 1,072 Increase (decrease) in notes and accounts payable - trade 6,302 9,410 (Increase) decrease in real property for sale (193,644) 40,302 Others 113,847 204,094 Subtotal 390,903 758,708 Interests and dividends received 15,230 19,625 Interests paid (74,328) (78,873) (Payments) refunds of income taxes (90,108) (100,208) Net cash provided by (used in) operating activities 241,697 599,252 Cash flows from investing activities Payments for acquisition of tangible fixed assets and intangible fixed assets (220,832) (271,480) Proceeds from sale of tangible fixed assets and intangible fixed assets 39,544 43,965 Payments for acquisition of investment securities (131,835) (137,092) Proceeds from sale of investment securities 77,370 103,574 Payments for deposits and security deposits paid (13,093) (11,269) Proceeds from recovery of deposits and security deposits paid 11,823 8,678 Payments for refund of deposits and security deposits received (39,865) (24,836) Proceeds from acceptance of deposits and security deposits received 46,528 49,377 Payments for execution of loans receivable (11,352) (72,641) Proceeds from collection of loans 13,716 42,609 Payments for deposits to time deposits (4,341) (1,729) Proceeds from withdrawal from time deposits 1,627 5,967 (Yen in millions) 2024 2025 Payments for acquisition of subsidiary shares involving changes in scope of consolidation (37,617) (8,082) Proceeds from acquisition of subsidiary shares involving changes in scope of consolidation — 41 Proceeds from sale of subsidiary shares involving changes in scope of consolidation — 180 Others (18,658) (49,232) Net cash provided by (used in) investing activities (286,987) (321,970) For the year ended March 31, (Yen in millions) 2024 2025 Cash flows from financing activities Proceeds from short-term debt 2,535,117 4,396,385 Repayment of short-term debt (2,486,419) (4,364,429) Proceeds from long-term debt 617,176 427,268 Repayment of long-term debt (576,420) (545,025) Proceeds from issuance of bonds 243,360 45,060 Payments for redemption of bonds (104,850) (80,602) Payments of dividends (62,551) (87,534) Proceeds from contributions from non-controlling shareholders 2,870 3,780 Payments of dividends to non-controlling shareholders (14,109) (8,447) Payments for refunds to non-controlling shareholders (2,555) (1,865) Payments for capital transactions with non-controlling shareholders (81,440) — Repayment of finance lease obligations (10,467) (11,862) (Payments for acquisition of) proceeds from sales of treasury stocks (21) (42,093) Others 300 — Net cash provided by (used in) financing activities 59,988 (269,367) Effects of exchange rate changes on cash and cash equivalents 32,240 (24,312) Net increase (decrease) in cash and cash equivalents 46,938 (16,397) Cash and cash equivalents at beginning of year 132,310 179,249 Decrease in cash and cash equivalents due to exclusion of subsidiaries from consolidation — 421 Cash and cash equivalents at end of year 179,249 163,272 Notes to the Consolidated Financial Statements (Notes on Going Concern Assumption) Not applicable. (Changes in Accounting Policies) (Adoption of Accounting Standard for Current Income Taxes, etc.) “Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27, October 28, 2022, here by referred as “ Revised Accounting Standards 2022 ” ) etc. have been adopted from the beginning of the current fiscal year. Regarding the revision related to the classification of income taxes (taxation on other comprehensive income), the Company has adopted the transitional provisions set forth in Paragraph 20-3 of the Revised Accounting Standards 2022 and Paragraph 65-2 (2) of "Guidance on Accounting Standard for Tax Effect Accounting" (ASBJ Guidance No. 28, October 28, 2022, here by referred as "Revised Guidance 2022"). The change has no impact on the consolidated financial statements. In addition, regarding the revision related to the treatment in the financial statements when gain/loss on sales of subsidiary shares with the consolidated group companies is deferred under tax, the Revised Guidance 2022 has been adopted from the beginning of the current fiscal year. The changes in accounting policies have been retrospectively applied and consolidated financial statements for the previous fiscal year have been presented after the retrospective application. The change has no impact on the consolidated financial statements for the previous fiscal year. (Consolidated Balance Sheets) (Contingent liabilities) Mitsui Fudosan Residential Co., Ltd. (hereinafter referred to as "Residential Company"), a consolidated subsidiary of the Company, presumed some defects in the piles forming the foundation of a condominium located in Yokohama City (hereinafter referred to as "the Condominium"). On April 11, 2016, the Residential Company was informed by Sumitomo Mitsui Construction Co., Ltd.., the construction company, that the current condition survey revealed some of the piles failed to reach the supporting layer. Furthermore, on August 26, 2016, the Residential Company received a notice from Yokohama City stating that the Condominium was in violation of the Building Standards Act and that the Residential Company was required to discuss corrective measures for the violation with the unit owners of the Condominium and to take necessary actions to resolve the issue. On May 8, 2016, the Residential Company entered into an agreement with the management association of the Condominium regarding several corrective plans, including the reconstruction of the Condominium due to the pile defects, and the policy on compensation, as well as an agreement that the Residential Company would bear the costs related to the incident (hereinafter referred to as "the Agreement"). Additionally, on September 19, 2016, the management association of the Condominium made a resolution based on the Act on Building Unit Ownership, as a corrective method, and decided to reconstruct the entire building, which was completed on February 25, 2021. The Residential Company has received a report from Sumitomo Mitsui Construction Co., Ltd.., the construction company, stating that the construction records were manipulated for the data of pile installation, and it has been confirmed that some of the piles did not reach the supporting layer and that the Condominium was in violation of the Building Standards Act. Therefore, the Residential Company has been seeking compensation from Sumitomo Mitsui Construction Co., Ltd.., Hitachi High-Technologies Corporation (currently Hitachi High-Tech Corporation), and ASAHI KASEI CONSTRUCTION MATERIALS CORPORATION, the companies responsible for the pile installation, based on tort liability, warranty against defects, for all costs incurred, including the reconstruction costs of the Condominium and temporary housing expenses during the construction period. Following this compensation policy, on November 28, 2017, the Residential Company filed a lawsuit against the three companies for damages. The amount claimed at the end of the year is approximately ¥50.5 billion. The amount that the Residential Company has provisionally paid by the end of the year for the costs is recorded as current assets in our consolidated balance sheets. In the future, depending on the progress of this incident, there is a possibility that it may affect the consolidated results of operations of our group. At present, however, it is difficult to reasonably estimate the amount of the impact. (Consolidated Statements of Income) *1 The company has recognized impairment losses on the following asset groups. Previous Fiscal year (From April 1, 2023 to March 31, 2024) Not applicable. Current Fiscal year (From April 1, 2024 to March 31, 2025) Purpose of use Classification Location Leasing facilities, others Building, land, etc. Chuo-ku Tokyo, others The Company groups its assets based on the smallest cash generating unit that is largely independent of the cash flows of other assets or asset groups. The head quarter office building, etc. are categorized as common assets. Impairment losses for an amount of ¥10,894 million were recognized as extraordinary losses by reducing the carrying amount to the recoverable amount for the asset group which expected to decrease profitability due to market conditions. The impairment losses consist of ¥385 million for land, ¥7,475 million for buildings and structures, ¥1,459 million for software, and ¥1,573 million for others. The recoverable amount of the asset group is mainly measured by value in use. The value in use is set as zero if the value in use based on the future cash flow is negative. (Leasing Properties) The Company and some of its consolidated subsidiaries own properties such as office buildings and retail facilities for rent in Tokyo and other regions. Leasing revenue and expenses related to such leasing properties for the fiscal year ended March 31, 2024 amounted to ¥157,338 million (leasing revenue is recorded in revenue from operations, and leasing expenses are recorded in cost of revenue from operations), and the gain on sale of fixed assets was ¥3,516 million (gain on sale of fixed assets is recorded in extraordinary income). For the year ended March 31, 2025, the leasing revenue and expenses related to such leasing properties amounted to ¥169,456 million (leasing revenue is recorded in revenue from operations, and leasing expenses are recorded in cost of revenue from operations), and the gain on sale of fixed assets was ¥25,882 million (gain on sale of fixed assets is recorded in extraordinary income). Furthermore, the carrying amount on the consolidated balance sheets, the increase or decrease during the year, and the fair value at the end of the year for such leasing properties are as follows. Previous Fiscal year (From April 1, 2023 to March 31, 2024) Carrying amount on the consolidated balance sheets (Yen in millions) Beginning of the year Increase/(Decrease) during the year End of the year Fair value at the end of the year Leasing properties 3,433,199 159,536 3,592,735 6,961,694 (Note) The carrying amount on the consolidated balance sheets is the amount of acquisition cost, net of accumulated depreciation and accumulated impairment losses. The increase or decrease during the year mainly comprises of an increase due to the acquisition of real estate in the amount of ¥143,062 million and a decrease due to the sale of real estate in the amount of ¥27,722 million. The fair value at the end of the year is generally calculated by the company's appraisal department based on the "Real Estate Appraisal Standards". Current Fiscal year (From April 1, 2024 to March 31, 2025) Carrying amount on the consolidated balance sheets (Yen in millions) Beginning of the year Increase/(Decrease) during the year End of the year Fair value at the end of the year Leasing properties 3,592,735 214,520 3,807,255 7,492,787 (Note) The carrying amount on the consolidated balance sheets is the amount of acquisition cost, net of accumulated depreciation and accumulated impairment losses. The increase or decrease during the year mainly comprises an increase due to the acquisition of real estate in the amount of ¥216,413 million and a decrease due to the sale of real estate in the amount of ¥12,583 million. The fair value at the end of the year is generally calculated by the company's appraisal department based on the "Real Estate Appraisal Standards". (Segment Information) 【 Segment Information 】 Overview of Reportable Segments The Company's reportable segments are components of the Company for which separate financial information is available and which are regularly reviewed by the chief operating decision maker to make decisions about resource allocation and performance assessment. The Company has departments for each product at the head office, and together with the subsidiaries managed by each department, it conducts business activities mainly focused on "Leasing Business", "Property Sales Business", "Management Business", and "Facility Operations Business". Therefore, the Company is composed of product-based departments and a matrix of service-based segments, and it reports five segments: "Leasing", "Property Sales", "Management", "Facility Operations", and "Others" which are aggregated by the services provided in the matrix. The "Leasing Business" involves leasing office buildings and retail facilities. The "Property Sales Business" involves the development and sale of condominiums and single-family homes for individual customers, as well as the development and sale of leasing housing and office buildings for investors. The "Management Business" conducts non-asset businesses such as property management and brokerage and asset management, etc. The "Facility Operations Business" operates hotel and resort businesses and sports & entertainment businesses. "Others" mainly includes new construction under consignment. Method of Calculation of Revenue from Operations, Income or Loss, Assets, Liabilities, and Other Items for Each Reportable Segment The accounting practices for the reported business segments are consistent with the accounting policy adopted for the preparation of Consolidated Financial Statements. Inter-segment sales or transfers are based on market prices. "Business Income" was newly established in the group long-term vision as the profit indicator considering both real property for sale - completed and fixed assets to comprehensively capture the asset turnover and growth in oversea equity businesses. As current fiscal year being the first year of the group long-term vision, segment income was changed from operating income to business income. Revenue from operations, income or loss, assets, liabilities and other items of each reportable segment for the previous fiscal year has been prepared and disclosed based on the calculation method after the change.

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