August 8, 2014 Summary of Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2015 (FY3/15) (Three Months Ended June 30, 2014) [Japanese GAAP] Company name: Sanyo Homes Corporation Listing: Tokyo Stock Exchange, First Section Securities code: 1420 URL: http://www.sanyohomes.co.jp Representative: Yasusuke Tanaka, Executive Director & Chairman of the Board and President Contact: Fumio Matsumoto, Member of the Board, Managing Director and General Manager of Administration Division Tel: +81-(0) 6-6578-3403 Scheduled date of filing of Quarterly Report: August 8, 2014 Scheduled date of payment of dividend: - Preparation of supplementary materials for quarterly financial results: None Holding of quarterly financial results meeting: None (All amounts are rounded down to the nearest million yen) 1. Consolidated Financial Results for the First Quarter of FY3/15 (April 1, 2014 June 30, 2014) (1) Consolidated results of operations (Percentages represent year-on-year changes) Net sales Operating income Ordinary income Net income Million yen % Million yen % Million yen % Million yen % Three months ended Jun. 30, 2014 8,458 33.4 (510) - (544) - (362) - Three months ended Jun. 30, 2013 6,339 - (802) - (878) - (561) - Note: Comprehensive income (million yen) Three months ended Jun. 30, 2014: (362) (n.a.) Three months ended Jun. 30, 2013: (561) (n.a.) Net income per share Diluted net income per share Yen Yen Three months ended Jun. 30, 2014 (28.74) - Three months ended Jun. 30, 2013 (45.41) - (2) Consolidated financial position Total assets Net assets Equity ratio Net assets per share Million yen Million yen % Yen As of Jun. 30, 2014 42,247 14,526 34.4 1,151.04 As of Mar. 31, 2014 46,640 15,076 32.3 1,194.66 Reference: Shareholders equity (million yen) As of Jun. 30, 2014: 14,538 As of Mar. 31, 2014: 15,089 2. Dividends Dividend per share 1Q-end 2Q-end 3Q-end Year-end Total Yen Yen Yen Yen Yen FY3/14-0.00-15.00 15.00 FY3/15 - FY3/15 (forecasts) 0.00-15.00 15.00 Note: Revisions to the most recently announced dividend forecast: None 3. Consolidated Forecast for FY3/15 (April 1, 2014 March 31, 2015) (Percentages represent year-on-year changes) Net sales Operating income Ordinary income Net income Net income per share Million yen % Million yen % Million yen % Million yen % Yen First half 30,500 57.3 310-180 - 90-7.13 Full year 71,800 23.9 2,700 (0.2) 2,400 (3.2) 1,500 8.0 118.86 Note: Revisions to the most recently announced consolidated forecast: None
* Notes (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in the scope of consolidation): None (2) Application of special accounting methods for presenting quarterly consolidated financial statements: None (3) Changes in accounting policies and accounting-based estimates, and restatements 1) Changes in accounting policies due to revisions in accounting standards, others: Yes 2) Changes in accounting policies other than 1) above: None 3) Changes in accounting-based estimates: None 4) Restatements: None (4) Number of outstanding shares (common shares) 1) Number of shares outstanding at end of period (including treasury shares) As of Jun. 30, 2014: 12,620,000 shares As of Mar. 31, 2014: 12,620,000 shares 2) Number of treasury shares at end of period As of Jun. 30, 2014: - shares As of Mar. 31, 2014: - shares 3) Average number of shares outstanding during the period Three months ended Jun. 30, 2014: 12,620,000 shares Three months ended Jun. 30, 2013: 12,371,758 shares * Information regarding the implementation of quarterly review procedures The current quarterly financial report is exempted from quarterly review procedures based on the Financial Instruments and Exchange Act. At the time of disclosure, the review procedures for the quarterly consolidated financial statements have been completed. * Cautionary statement with respect to forward-looking statements, and other special items Forecasts regarding future performance in this report are based on assumptions judged to be valid and information available to the Company at the time this report was prepared. This report is not promises by the Company regarding future performance. Actual performance may differ significantly from these forecasts for a number of reasons.
Contents of Attachments 1. Qualitative Information on Quarterly Consolidated Financial Performance 2 (1) Explanation of Results of Operations 2 (2) Explanation of Financial Position 3 (3) Explanation of Consolidated Forecast and Other Forward-looking Statements 3 2. Matters Related to Summary Information (Notes) 4 (1) Changes in Significant Subsidiaries during the Period 4 (2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements 4 (3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements 4 3. Quarterly Consolidated Financial Statements 5 (1) Quarterly Consolidated Balance Sheet 5 (2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income 7 Quarterly Consolidated Statement of Income For the Three-month Period 7 Quarterly Consolidated Statement of Comprehensive Income For the Three-month Period 8 (3) Notes to Quarterly Consolidated Financial Statements 9 Going Concern Assumption 9 Significant Changes in Shareholders Equity 9 Segment and Other Information 9 4. Supplementary Information 10 1
1. Qualitative Information on Quarterly Consolidated Financial Performance (1) Explanation of Results of Operations In the first quarter of the current fiscal year, the modest recovery of the Japanese economy continued despite a drop in demand following the rush to make purchases before the April 2014 consumption tax hike. Corporate earnings increased and there were other improvements, in part because of monetary and financial measures by the Japanese government. In the housing and real estate sector, the operating environment was challenging despite the continuation of low interest rates because of slow sales caused by lower demand following the consumption tax hike. Sanyo Homes is working even harder on enhancing corporate value and building a sound base of operations after its stock was moved to the first section of the Tokyo Stock Exchange on April 9, 2014. Based on the corporate slogan for the best life, we undertake all our business activities, including the associated services, in order to supply residences that precisely match the needs and life style of each customer and achieve our goal to become a source of new ideas for good homes and good living. In Japan s housing sector, a medium- to long-term decline in the size of the new housing market is under way because of Japan s aging and declining population. To succeed, companies must be able to adapt to changes in this market. In May 2014, we started a condominium purchasing and reselling (after renovations) business under the new SANRENO brand to expand our presence in the market for existing residences, where we already have a business that sells existing houses. For activities involving raising children, we opened the San Friends Nursery School in April 2014 and are taking other actions to build a foundation for growth. To build an even stronger base of operations, we are creating new business models by establishing alliances with other companies. In May 2014, we established e-kurashi Co., Ltd. with Chubu Electric Power Co., Inc. In addition, we forged a business alliance with Hitachi Consumer Marketing, Inc. that gives us access to its distinctive technologies, sales network and other resources and gives this partner access to our resources. We plan to use this alliance to offer a diverse array of services involving housing and living. In the first quarter, net sales increased 33.4% year on year to 8,458 million yen. There was an operating loss of 510 million yen, down 292 million yen, an ordinary loss of 544 million yen, down 334 million yen, and a net loss of 362 million yen, down 199 million yen. Overview by Segment 1) Housing Business To capture more synergies across the entire housing business, there were a number of events in the first quarter. One was a large-scale sales promotion event Eco & Safety Housing Festival. We also conducted the Best Life Concierge Campaign, which gives customers the best ideas for meeting requirements ranging from a new house to refurbishing and replacing a current residence with a better one. All these activities were aimed at increasing the number of prospective customers and receiving more orders. In association with national and local government measures to improve disaster preparedness in large cities, we started selling in April a new fire-resistant house called the life style KURASI TE Urban. This house is for the fire preventive district. We are using this new product to increase orders and sales by conducting sales activities in new areas. In the asset unitization sector, orders and sales were strong due to activities to stimulate demand that included seminars about Japan s revisions to inheritance taxes. In the residential remodeling sector, we held Open House events for sales of existing residences. In addition, our existing residence purchase and resale business is using the Fiscal 2013 Home and New Building CO2 Reduction Pace-setter Project of Japan s Ministry of Land, Infrastructure, Transport and Tourism. The objective is to expand the business that is in line with the policy trend which places emphasis on increasing values pf existing residences through remodeling. 2
In the first quarter, sales in this segment were 5,384 million yen, up 13.8% year on year and the operating loss increased 141 million yen to 315 million yen. 2) Condominium Business In the first quarter, construction and ownership transfer was completed as planned at SANMAISON Otsu Eldo. All condominium units in this building were sold prior to the June 2014 completion. To expand beyond the sale of new condominiums, we started an existing condominium purchase, renovation and resale business that uses the new SANRENO brand. Furthermore, we are involved in the creation of multi-faceted development-type communities that are based on the Japanese government s concept of smart wellness housing and cities. We acquired land formerly used by the Osaka Municipal Waterworks Bureau (the Mizusakura Hall site) through a competition in which companies submitted proposals for developments. On this acquired land, we prepared for the creation of a town that will be home to people of all ages. The development will include condominiums for families and seniors, a nursing care facility, and a child care facility. Sales in this segment increased 88.3% year on year to 2,997 million yen and operating income was 64 million yen, an improvement of 411 million yen compared with the loss in the same period of previous fiscal year. 3) Other Businesses In this segment, which consists primarily of lifestyle support services, sales were up 316.1% year on year to 76 million yen. (2) Explanation of Financial Position Total assets decreased 4,393 million yen from the end of the previous fiscal year to 42,247 million yen at the end of the first quarter of the current fiscal year on a consolidated basis. The main factors were decreases of 4,580 million yen in cash and deposits, 1,189 million yen in notes receivable, accounts receivable from completed construction contracts and other, 1,046 million yen in real estate for sale, and an increase of 2,147 million yen in costs on real estate business. Total liabilities decreased 3,842 million yen from the end of the previous fiscal year to 27,720 million yen. The main factors were a decrease of 5,716 million yen in notes payable, accounts payable for construction contracts and other, a net increase of 3,126 million yen in total loans payable and bonds payable. Total net assets decreased 550 million yen from the end of the previous fiscal year to 14,526 million yen. The main factors were net loss of 362 million yen and cash dividends paid of 189 million yen. (3) Explanation of Consolidated Forecast and Other Forward-looking Statements There are no revisions to the first half and full year consolidated forecast for the fiscal year ending March 31, 2015, which was disclosed in the Summary of Consolidated Financial Results for the Fiscal Year Ended March 31, 2014 dated May 9, 2014. 3
2. Matters Related to Summary Information (Notes) (1) Changes in Significant Subsidiaries during the Period Not applicable. (2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements Not applicable. (3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements Changes in Accounting Policies Application of the accounting standard for retirement benefits The Company has applied the Accounting Standard for Retirement Benefits (Accounting Standards Board of Japan (ASBJ) Statement No. 26, May 17, 2012) and the Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012) from the first quarter of the current fiscal year, for provisions set forth in the main clauses of Paragraph 35 of the Accounting Standard for Retirement Benefits and Paragraph 67 of the Guidance on Accounting Standard for Retirement Benefits. Accordingly, the Company reviewed the methods for calculating retirement benefit obligations and service costs, and revised the method of attributing estimated retirement benefit obligations to periods from the straight-line basis to the benefit formula basis, and revised the method of determining the discount rate from the method using the approximate number of years of expected average length of the remaining service period of employees to the method using a single weighted average discount rate reflecting the estimated period and amount of benefit payment. For the application of these accounting standards, etc. in accordance with the transitional accounting treatments set forth in Paragraph 37 of the Accounting Standard for Retirement Benefits, the adjustments associated with the change in calculation methods of retirement benefit obligations and service costs are recorded in retained earnings at the beginning of the first quarter. The effect of this change on total assets, liabilities and net assets, as well as an operating loss, ordinary loss, and loss before income taxes and minority interests in the first quarter is insignificant. 4
3. Quarterly Consolidated Financial Statements (1) Quarterly Consolidated Balance Sheet Assets Current assets FY3/14 (As of Mar. 31, 2014) First quarter of FY3/15 (As of Jun. 30, 2014) Cash and deposits 12,365,132 7,784,166 Notes receivable, accounts receivable from completed construction contracts and other 3,181,280 1,991,839 Real estate for sale 6,034,193 4,987,764 Costs on uncompleted construction contracts 166,904 141,810 Costs on real estate business 20,829,754 22,977,709 Other inventories 256,987 278,566 Prepaid expenses 352,416 369,309 Deferred tax assets 475,239 687,942 Other 244,164 272,230 Allowance for doubtful accounts (9,999) (990) Total current assets 43,896,074 39,490,348 Non-current assets Property, plant and equipment Buildings and structures, net 923,214 904,975 Land 254,626 254,626 Other, net 77,497 73,962 Total property, plant and equipment 1,255,338 1,233,563 Intangible assets Software 33,018 29,874 Other 3,932 3,932 Total intangible assets 36,951 33,807 Investments and other assets Investment securities 442,024 443,157 Deferred tax assets 621,982 599,484 Other 418,047 476,800 Allowance for doubtful accounts (29,974) (30,040) Total investments and other assets 1,452,079 1,489,403 Total non-current assets 2,744,368 2,756,774 Total assets 46,640,442 42,247,123 5
Liabilities Current liabilities Notes payable, accounts payable for construction contracts and other FY3/14 (As of Mar. 31, 2014) First quarter of FY3/15 (As of Jun. 30, 2014) 12,122,148 6,405,898 Short-term loans payable 1,230,000 5,026,000 Current portion of long-term loans payable 6,143,000 5,918,000 Current portion of bonds 80,000 40,000 Accrued expenses 764,178 618,010 Income taxes payable 847,723 14,595 Advances received on uncompleted construction contracts 778,521 879,709 Advances received 684,762 905,324 Provision for bonuses 352,143 166,579 Provision for warranties for completed construction 158,600 159,600 Other 1,087,939 707,749 Total current liabilities 24,249,016 20,841,466 Non-current liabilities Long-term loans payable 5,394,000 4,989,000 Provision for directors' retirement benefits 160,401 144,626 Net defined benefit liability 1,477,209 1,462,108 Other 283,261 283,740 Total non-current liabilities 7,314,872 6,879,475 Total liabilities 31,563,888 27,720,942 Net assets Shareholders' equity Capital stock 5,945,162 5,945,162 Capital surplus 3,611,796 3,611,796 Retained earnings 5,532,144 4,981,133 Total shareholders' equity 15,089,103 14,538,092 Accumulated other comprehensive income Remeasurements of defined benefit plans (12,549) (11,911) Total accumulated other comprehensive income (12,549) (11,911) Total net assets 15,076,554 14,526,180 Total liabilities and net assets 46,640,442 42,247,123 6
(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income Quarterly Consolidated Statement of Income (For the Three-month Period) First three months of FY3/14 (Apr. 1, 2013 Jun. 30, 2013) First three months of FY3/15 (Apr. 1, 2014 Jun. 30, 2014) Net sales 6,339,703 8,458,324 Cost of sales 5,006,430 6,754,841 Gross profit 1,333,272 1,703,483 Selling, general and administrative expenses 2,136,154 2,213,984 Operating loss (802,882) (510,500) Non-operating income Interest income 4,320 4,698 Rent income 8,632 8,976 Other 9,178 18,951 Total non-operating income 22,130 32,625 Non-operating expenses Interest expenses 67,501 38,072 Other 30,655 28,649 Total non-operating expenses 98,156 66,722 Ordinary loss (878,908) (544,597) Extraordinary income Gain on sales of non-current assets 275 - Total extraordinary income 275 - Extraordinary losses Loss on retirement of non-current assets 3,573 - Total extraordinary losses 3,573 - Loss before income taxes and minority interests (882,206) (544,597) Income taxes-current 9,741 9,243 Income taxes-deferred (330,089) (191,117) Total income taxes (320,348) (181,873) Loss before minority interests (561,858) (362,723) Net loss (561,858) (362,723) 7
Quarterly Consolidated Statement of Comprehensive Income (For the Three-month Period) First three months of FY3/14 (Apr. 1, 2013 Jun. 30, 2013) First three months of FY3/15 (Apr. 1, 2014 Jun. 30, 2014) Loss before minority interests (561,858) (362,723) Other comprehensive income Remeasurements of defined benefit plans, net of tax - 637 Total other comprehensive income - 637 Comprehensive income (561,858) (362,085) Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to minority interests (561,858) (362,085) - - 8
(3) Notes to Quarterly Consolidated Financial Statements Going Concern Assumption Not applicable. Significant Changes in Shareholders Equity Not applicable. Segment and Other Information Segment information First three months of FY3/14 (Apr. 1, 2013 Jun. 30, 2013) 1. Information related to net sales and profit or loss for each reportable segment Reportable segment Amounts shown on Other Adjustment quarterly consolidated Housing Condominium Total Subtotal (Note 1) (Note 2) statement of income business business (Note 3) Net sales Sales to external customers Inter-segment sales or transfers 4,729,436 1,591,920 6,321,356 18,346 6,339,703-6,339,703 27,650-27,650-27,650 (27,650) - Total 4,757,087 1,591,920 6,349,007 18,346 6,367,353 (27,650) 6,339,703 Segment loss (173,392) (346,848) (520,241) (557) (520,798) (282,083) (802,882) Notes: 1. Other segment represents the businesses which are not included in any of the reportable segments and mainly consist of the lifestyle support services. 2. The negative adjustment of 282,083 thousand yen to segment loss includes company-wide costs that are not allocated to any of the reportable segments. Company-wide costs consist of general and administrative expenses that cannot be attributed to any of the reportable segments. 3. Segment loss is adjusted with operating loss shown on the quarterly consolidated statement of income. 2. Information related to impairment losses on non-current assets or goodwill, etc. for each reportable segment Not applicable. First three months of FY3/15 (Apr. 1, 2014 Jun. 30, 2014) 1. Information related to net sales and profit or loss for each reportable segment Reportable segment Amounts shown on Other Adjustment quarterly consolidated Housing Condominium Total Subtotal (Note 1) (Note 2) statement of income business business (Note 3) Net sales Sales to external customers Inter-segment sales or transfers 5,384,437 2,997,546 8,381,983 76,340 8,458,324-8,458,324 776 824 1,600-1,600 (1,600) - Total 5,385,214 2,998,370 8,383,584 76,340 8,459,925 (1,600) 8,458,324 Segment profit (loss) (315,064) 64,526 (250,538) (3,381) (253,919) (256,581) (510,500) Notes: 1. Other segment represents the businesses which are not included in any of the reportable segments and mainly consist of the lifestyle support services. 2. The negative adjustment of 256,581 thousand yen to segment profit (loss) includes company-wide costs that are not allocated to any of the reportable segments. Company-wide costs consist of general and administrative expenses that cannot be attributed to any of the reportable segments. 3. Segment profit (loss) is adjusted with operating loss shown on the quarterly consolidated statement of income. 2. Information related to impairment losses on non-current assets or goodwill, etc. for each reportable segment Not applicable. 9
4. Supplementary Information 1) Orders Received Orders received in in the first three months of FY3/15 broken down by segment as follows. Reportable segment Orders received Year-on-year (%) Order backlog Year-on-year (%) Housing business 5,100,439 78.9 11,171,175 94.7 Condominium business 4,716,920 70.2 12,101,097 77.8 Other businesses 76,340 416.1 - - Total 9,893,700 74.9 23,272,272 85.1 Notes: 1. Inter-segment transactions have been eliminated. 2. The above amounts do not include consumption taxes. 3. No order backlog is shown in the other businesses segment net because net sales are the same as the orders received. Orders received by region are as follows. Kanto area Chubu area Kinki area Kyushu area Total 4,008,531 1,465,164 3,374,029 1,045,975 9,893,700 2) Sales Sales in the first three months of FY3/15 are broken down by segment as follows. First three months of FY3/15 Reportable segment Year-on-year (%) (Apr. 1, 2014 Jun. 30, 2014) Housing business 5,384,437 113.8 Condominium business 2,997,546 188.3 Other businesses 76,340 416.1 Total 8,458,324 133.4 Notes: 1. Inter-segment transactions have been eliminated. 2. The above amounts do not include consumption taxes. Sales by region are as follows. Kanto area Chubu area Kinki area Kyushu area Total 2,233,800 1,313,945 4,167,006 743,571 8,458,324 This financial report is solely a translation of Kessan Tanshin (in Japanese, including attachments), which has been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation. 10