Tosei : Script of FY2023 Financial Results Presentation held on July 5, 2023

Tosei Corporation

FY2023 2Q Financial Results Presentation

July 5, 2023

Event Summary

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or whose questions were read by moderator/company representatives.

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Presentation

Moderator: Ladies and gentlemen, thank you very much for taking time out of your busy schedule to join us today. Tosei Corporation will begin its financial results meeting for Q2 of the fiscal year ending November 30, 2023.

We are pleased to inform you about today's proceedings. First, the Company will provide an explanation in line with the documentation, followed by five minutes to receive questions, and then we will begin the Q&A session. Please send your questions to the email address shown in the caption at the bottom of the screen.

Please refer to our website for the documents. The financial results briefing is scheduled to end around 5:00 PM.

We would like to continue by introducing today's attendees from the Company. Seiichiro Yamaguchi, President and CEO, and Noboru Hirano, CFO and Senior Executive Officer of Administrative Division. These two people will be in attendance.

Mr. Hirano will now provide an overview of the financial results for H1 of the fiscal year ending November 30, 2023, beginning on page three of the financial results presentation materials.

Hirano: I am Hirano. Thank you for taking time out of your busy schedule to listen today. I would like to begin by providing an overview of the financial results for H1 of FY2023.

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Please see page four of the document. This page shows the financial highlights for H1 of FY2023.

Revenue for H1 totaled JPY52.8 billion, 121.4% of the previous year's level and 62% of the annual forecast. Revenue increased in all six segments. Operating profit was JPY12.5 billion, 133.8% of the previous year's level and 84% of the annual forecast. In particular, we were able to achieve significant increases in profits in the four segments of the revitalization business, development business, fund and consulting business, and the hotel business. Profit before tax was JPY12 billion in H1, 134.1% of the previous year's level and 86% of the annual forecast, showing extremely steady progress.

Before beginning the explanation of each segment, I would like to make one point about the overall P/L on page five.

This table includes selling, general, and administrative expenses. JPY6,565 million was recorded in H1, up 15.6%, or JPY885 million, from the same period last year, mainly due to personnel expenses, which was 109.2% of the previous year's level, or increased about JPY260 million from the same period last year. This is an increase of 6.5% compared with the same period of the previous year, including salary increases and base increases associated with personnel evaluations, as a result of base and salary increases of more than 6% for three consecutive years.

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Next, let's go to page six. The first segment is the revitalization business.

Revenue for H1 were JPY34 billion, 117.5% of the same period last year. Operating profit was JPY7.1 billion, 118.1% of the same period last year and 83% of the annual forecast. Centering on the properties shown in the photo, we sold 26 whole buildings and 64 pre-owned condo units. Although the number of sales of both whole buildings and condo units was slightly lower than the same period last year, the unit price per building or per condo unit was higher than last year, resulting in a 17% increase in revenue compared to the same period last year.

The gross profit margin for each is shown in the blue-lined box between the picture and the bar chart. It compares the gross profit margins for condo units and whole buildings YoY. The gross profit margin for both whole buildings and pre-owned condo units increased compared to the previous fiscal year.

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