Return to profitability from losses and higher earnings

「The upward revision to the consolidated earnings forecast for the six-month period ending September, announced after trading ended on the 29th, has been well received. Net profit was revised upward from ¥30 million to ¥85 million, or 2.7 times the year-earlier level.」

「A portion of the dividends received had been incorporated into the full-year consolidated earnings forecast as second-half earnings. However, because the dividends will now be recognized in the cumulative consolidated results for the second quarter, earlier than initially expected, following an extraordinary financial settlement by the investee company, the Company is revising its consolidated earnings forecast for the second quarter, including operating profit for the period and net income attributable to owners of the parent.」

「As a result, despite the COVID-19 pandemic, the company secured profitability at the operating profit, ordinary profit and net income levels. It has maintained profitability at every earnings level on both a consolidated and non-consolidated basis for nine consecutive periods through the present, and in June 2023 resumed dividend payments for the first time in 22 years. The company is working further to enhance corporate value over the medium to long term in order to deliver stable dividends going forward.」

「As a result, during the interim consolidated accounting period, revenue was ¥1,919 million, down 4.0% year on year. Operating profit was ¥132 million, down 22.9%, and ordinary profit, after taking into account interest paid and other items, was ¥36 million, down 50.7%. After taking into account deferred income taxes, interim net income attributable to owners of the parent was ¥31 million, down 17.1%.」

「As a result, during the interim consolidated accounting period, revenue increased 6.2% year on year to ¥2,000 million. Operating profit increased 20.4% to ¥171 million, despite higher retirement benefit expenses due to revisions to the retirement allowance plan, helped by a lower depreciation burden. Ordinary profit increased 27.5% to ¥73 million, resulting in higher revenue and profit, and interim income before income taxes increased 27.5% to ¥73 million. However, income taxes increased due to the reversal of deferred tax assets as the expiration of the carryforward period for tax loss carryforwards was expected. As a result, interim net income attributable to owners of the parent decreased 21.0% year on year to ¥38 million.」

「As a result, during the nine months ended the third quarter, revenue decreased 3.8% year on year to ¥2,906 million. This was mainly due to the suspension of operations at the consolidated subsidiary in China, while domestic revenue excluding overseas operations increased 5.2% year on year as domestic market conditions recovered. In terms of earnings, improved gross margins across all businesses resulted in operating profit of ¥237 million, up 46.4% year on year, and ordinary profit of ¥103 million, up 374.6%, after taking into account interest paid and other items. After taking into account the income tax burden, quarterly net income attributable to owners of the parent increased 353.6% to ¥85 million.」

「As a result, during the six months ended the second quarter, revenue decreased 3.2% year on year to ¥1,883 million, but operating profit increased 58.4% to ¥142 million, helped by significant improvement in profitability and despite the additional depreciation burden in the commercial facilities business. Following the increase in operating profit, ordinary profit, after taking into account interest paid and other items, was ¥57 million, compared with an ordinary loss of ¥0 million in the same period of the previous year, marking a return to profit from loss for the second quarter. After taking into account the income tax burden, quarterly net income attributable to owners of the parent was ¥48 million, approximately 22 times the level in the same period of the previous year.」

「As a result, during the three months ended the first quarter, revenue decreased 6.1% year on year to ¥897 million, while operating profit increased 142.6% to ¥80 million. After taking into account interest paid and other items, ordinary profit was ¥44 million, compared with an ordinary loss of ¥10 million in the same period of the previous year. After taking into account the income tax burden, quarterly net income attributable to owners of the parent was ¥31 million, compared with a quarterly net loss attributable to owners of the parent of ¥11 million in the same period of the previous year, marking the first profitable first quarter in four periods.」

「As a result, the company has achieved net income attributable to owners of the parent for eight consecutive periods through the current period and is working to further enhance corporate value.」

「As a result, during the nine months ended the third quarter, revenue decreased 3.0% year on year to ¥3,021 million. Operating profit was limited to ¥162 million, down 4.0%, partly due to non-recurring costs for renovation work. After taking into account higher interest expense associated with fixing interest rates, ordinary profit was ¥21 million, down 44.1%. After taking into account the income tax burden, quarterly net income attributable to owners of the parent was ¥18 million, down 42.8% year on year.」

「As a result, the company has achieved net income attributable to owners of the parent for seven consecutive periods through the current period and is working to further enhance corporate value.」

「As a result, during the nine months ended the third quarter, revenue was ¥3,114 million, compared with ¥3,252 million in the same period of the previous year. Operating profit increased 13.8% year on year to ¥168 million, while ordinary profit, after taking into account interest paid and other items, was ¥38 million, compared with an ordinary loss of ¥38 million in the same period of the previous year. After taking into account the income tax burden, quarterly net income attributable to owners of the parent was ¥32 million, compared with a quarterly net loss attributable to owners of the parent of ¥47 million in the same period of the previous year, resulting in higher profit and a net profit for the period.」

「As a result, during the six months ended the second quarter, revenue was ¥1,938 million, compared with ¥2,072 million in the same period of the previous year, while operating profit increased 72.0% to ¥95 million. After taking into account interest paid and other items, ordinary profit improved to ¥6 million, compared with an ordinary loss of ¥48 million in the same period of the previous year. After taking into account the income tax burden, quarterly net income attributable to owners of the parent was ¥4 million, compared with a quarterly net loss attributable to owners of the parent of ¥53 million in the same period of the previous year, securing net profitability for the cumulative period.」

「As a result, during the three months ended the first quarter, revenue decreased to ¥875 million from ¥1,014 million in the same period of the previous year. However, operating profit increased to ¥19 million, up 1,624.8% year on year, partly because the rent-reduction burden recorded in the same period of the previous year did not recur. After taking into account interest paid and other items, the ordinary loss was ¥22 million, compared with an ordinary loss of ¥50 million in the same period of the previous year. After taking into account income taxes and the recognition of deferred tax assets under tax-effect accounting, quarterly net loss attributable to owners of the parent was ¥30 million, compared with a quarterly net loss attributable to owners of the parent of ¥56 million in the same period of the previous year.」

「As a result, the company has achieved net income attributable to owners of the parent for six consecutive periods through the current period and is working to further enhance corporate value.」

「As a result, although the third quarter consolidated accounting period (October-December) returned to net profitability, the loss caused by the spread of COVID-19 during the first quarter was not fully eliminated, and the results for the nine months ended the third quarter were as follows.」

「As a result, although the second quarter consolidated accounting period returned to net profitability, the impact of the spread of COVID-19 during the first quarter was substantial, and the results for the six months ended the second quarter were as follows.」

「Higher depreciation expense for the new "Sun-to-Moon Oasis" building, which opened in the previous fiscal year, and other factors reduced operating profit to ¥1 million, down 98.9% year on year. In addition, higher interest expense on borrowings for construction of "Sun-to-Moon Oasis" resulted in an ordinary loss of ¥50 million, compared with ordinary profit of ¥60 million in the same period of the previous year. After taking into account the income tax burden, quarterly net loss attributable to owners of the parent was ¥56 million, compared with quarterly net income attributable to owners of the parent of ¥57 million in the same period of the previous year.」

「For the fiscal year under review, revenue increased 7.2% year on year to ¥4,819 million, helped by the revenue contribution from the acquisition of the healthcare business. In addition to improved gross margins in the healthcare and textiles and apparel business segments, the impact of non-recurring expenses related to investment in the commercial facilities business in the previous fiscal year fell away, and operating profit increased 24.3% to ¥407 million. The company achieved operating profitability in all business segments for the first time in 13 periods.」

「As a result, during the nine months ended the third quarter, revenue increased 9.1% year on year to ¥3,592 million, helped by the revenue contribution from the acquisition of the healthcare business. In addition to improved gross margins across all business segments, the impact of non-recurring expenses related to investment in the commercial facilities business in the same period of the previous year fell away, and operating profit increased 38.9% to ¥339 million. After taking into account non-operating expenses, including interest paid, ordinary profit increased 41.7% to ¥189 million. Although income tax expense increased because the temporary tax expense benefit associated with the reduction of capital in the same period of the previous year did not recur, quarterly net income attributable to owners of the parent increased 13.0% to ¥183 million, resulting in higher revenue and profit year on year.」

「As a result, during the six months ended the second quarter, revenue increased 11.1% year on year to ¥2,385 million, helped by the revenue contribution from the acquisition of the healthcare business. In addition to improved gross margins across all business segments, the impact of non-recurring expenses related to investment in the commercial facilities business in the same period of the previous year fell away, and operating profit increased 32.2% to ¥249 million. After taking into account non-operating expenses, including interest paid, ordinary profit increased 38.3% to ¥152 million. Although income tax expense increased because the temporary tax expense benefit associated with the reduction of capital in the same period of the previous year did not recur, quarterly net income attributable to owners of the parent increased 3.2% to ¥148 million, resulting in higher revenue and profit year on year.」

「As a result, during the three months ended the first quarter, revenue increased 7.6% year on year to ¥1,067 million, mainly due to the revenue contribution from the acquisition of the healthcare business. In addition to higher revenue, gross profit increased due to an improved gross margin, while the non-recurring expenses associated with Phase 4 development in the commercial facilities business recorded in the same period of the previous year did not recur. As a result, operating profit increased 603.2% to ¥106 million. After taking into account non-operating expenses, including interest paid, ordinary profit was ¥60 million, compared with an ordinary loss of ¥14 million in the same period of the previous year. After taking into account the income tax burden, quarterly net income attributable to owners of the parent was ¥57 million, compared with a quarterly net loss attributable to owners of the parent of ¥22 million in the same period of the previous year, representing an improvement year on year.」

「As a result, for the fiscal year under review, revenue increased 1.6% to ¥4,496 million, marking the first increase in six years. Despite construction costs associated with Phase 4 development in the commercial facilities business and non-recurring expenses related to the execution of a syndicated loan, operating profit increased 0.6% to ¥327 million, helped by improved profitability. After taking into account non-operating income and expenses, including relocation compensation received and interest paid, ordinary profit increased 53.8% to ¥236 million. After taking into account the income tax burden, including improved tax expense associated with the reduction of capital, net income attributable to owners of the parent increased 184.1% to ¥294 million.」

「After deducting selling, general and administrative expenses, including construction costs associated with Phase 4 development in the commercial facilities business and non-recurring expenses related to the execution of a syndicated loan, operating profit was ¥244 million, down 29.9% year on year. After taking into account non-operating expenses, including ¥22 million in syndicated loan fees, ordinary profit was ¥133 million, down 52.5%. After taking into account the income tax burden, including the improvement in tax expense associated with the reduction of capital dated 31 August 2018, quarterly net income attributable to owners of the parent was ¥162 million, down 26.9% year on year.」

「As a result, during the six months ended the second quarter, revenue increased 1.6% year on year to ¥2,147 million. Although profitability improved in the health business and commercial facilities rental income, gross profit decreased 6.0% to ¥582 million, as ¥53 million in depreciation expense associated with Phase 4 development in the commercial facilities business weighed on results. After deducting selling, general and administrative expenses, including non-recurring expenses such as registration costs related to the execution of a syndicated loan, operating profit was ¥188 million, down 17.2% year on year. After taking into account non-operating expenses, including ¥22 million in syndicated loan fees, ordinary profit was ¥110 million, down 35.0%. However, after taking into account the recognition of deferred tax assets associated with the reduction of capital and the income tax burden, quarterly net income attributable to owners of the parent increased 10.5% year on year to ¥144 million.」

「During the three months ended the first quarter, the increase in non-recurring expenses totaling ¥69 million, including ¥53 million in higher depreciation expense associated with the start of Phase 4 development and ¥16 million in mortgage registration costs, weighed on results, resulting in a net loss. However, the non-recurring increase in expenses related to Phase 4 development was already incorporated into the earnings forecast for the fiscal year ending March 2019, and the company expects to report net profit for the six months ending the second quarter and for the full fiscal year, in line with its forecast.」

「For the fiscal year under review, revenue was ¥4,427 million, down 5.8% from the previous fiscal year. Operating profit was ¥325 million, down 21.9%, ordinary profit was ¥153 million, down 42.5%, and net income attributable to owners of the parent was ¥103 million, down 33.5%.」

「Revenue decreased 5.0% year on year to ¥3,218 million, but operating profit increased 7.1% to ¥348 million, helped by lower selling, general and administrative expenses and an improved gross margin. Ordinary profit also increased 43.9% to ¥282 million, due to the absence of the non-recurring non-operating expense incurred in the same period of the previous year and the recognition of a gain on the disposal of idle real estate. In addition, neither extraordinary income nor extraordinary loss recorded in the same period of the previous year recurred. After taking into account the income tax burden, quarterly net income attributable to owners of the parent increased 39.5% to ¥222 million.」

「As a result, during the six months ended the second quarter of the fiscal year, revenue decreased 7.2% year on year to ¥2,113 million, mainly due to the absence of temporary income recorded in the commercial facilities business in the same period of the previous year and sluggish sales to some OEM customers in the health-related and apparel-related businesses. However, operating profit increased 14.9% to ¥227 million, and ordinary profit increased 81.7% to ¥169 million as the non-recurring non-operating expense incurred in the same period of the previous year did not recur. In addition, neither extraordinary income nor extraordinary loss recorded in the same period of the previous year recurred. After taking into account the income tax burden, quarterly net income attributable to owners of the parent rose 105.7% year on year to ¥130 million, almost doubling from the same period of the previous year.」

「Ordinary profit increased to ¥66 million, up 32.6% year on year, as the non-recurring non-operating expense incurred in the same period of the previous year did not recur. After taking into account the income tax burden, net income attributable to owners of the parent increased 33.8% year on year to ¥42 million, marking an increase for the period.」

「As a result, for the fiscal year under review, the decline in revenue caused by the "structural reform of the textiles and apparel business" implemented in the previous fiscal year weighed on performance, with revenue falling to ¥4,701 million, down 13.0% year on year. However, helped by an improved gross margin and lower selling, general and administrative expenses, operating profit rose 10.1% to ¥417 million, ordinary profit rose 257.8% to ¥267 million, and net income attributable to owners of the parent rose 25.0% to ¥156 million.」

「In terms of earnings, despite the effects of an improved gross margin and reductions in selling, general and administrative expenses, the decline in revenue weighed on results, and operating profit was ¥325 million, down 3.4% year on year. Ordinary profit was ¥196 million, up 10.0% year on year, despite higher initial costs associated with the execution of the syndicated loan, as interest expenses were substantially reduced. Taking into account extraordinary losses, including losses on the early cancellation of borrowings related to the syndicated loan, and income taxes, quarterly net income attributable to owners of the parent was ¥159 million, down 25.9% year on year.」

「In terms of earnings, despite the effects of an improved gross margin and reductions in selling, general and administrative expenses, the decline in revenue weighed on results. Operating profit was ¥198 million, down 5.2% year on year, while ordinary profit was ¥93 million, down 26.2%, due mainly to the burden of initial costs associated with the execution of the syndicated loan. Taking into account extraordinary losses, including losses on the early cancellation of borrowings related to the syndicated loan, and income taxes, quarterly net income attributable to owners of the parent was ¥63 million, down 63.3% year on year.」

「As a result, revenue for the current fiscal year was ¥5,407 million, down 8.9% year on year, as increased revenue from the healthcare business and uniform division was offset by a decline associated with the structural reform of the textile and apparel business. Operating profit was ¥378 million, compared with an operating loss of ¥232 million in the previous fiscal year, partly reflecting the effect of reductions in selling, general and administrative expenses, including personnel costs. Ordinary profit, after deducting gains on the sale of held shares and the initial costs associated with the execution of the syndicated loan, as well as interest expenses on borrowings and other items, was ¥74 million, compared with an ordinary loss of ¥519 million in the previous fiscal year. In addition, the recognition of a ¥64 million extraordinary gain from the transfer of part of the menswear retail subsidiary's business resulted in net income attributable to owners of the parent of ¥124 million, compared with a net loss attributable to owners of the parent of ¥644 million in the previous fiscal year, resulting in a profitable financial year with higher earnings year on year. In terms of earnings, the company recorded higher year-on-year earnings and remained profitable at each level in the cumulative periods of every quarter from the first quarter onward.」