LeTech : Non-consolidated Financial Results for the Fiscal Year Ended July 31,2021

Non-consolidated Financial Results for the Fiscal Year Ended July 31, 2021

		[Japanese GAAP]
		September 14, 2021
Company name:	LeTech Corporation	Listing: Tokyo Stock Exchange
Stock code:	3497	URL: https://www.letech-corp.net/
Representative:	Tetsuji Hirano, President and Representative Director
Contact:	Takashi Mizumukai, Director, General Manager of Administration Division
	Tel: [phone]
Scheduled date of Annual General Meeting of Shareholders: October 28, 2021
Scheduled date of payment of dividend:	October 29, 2021
Scheduled date of filing of Quarterly Report:	October 29, 2021
Preparation of supplementary materials for financial results: Yes
Holding of financial results meeting:	Yes (for analysts)
		(All amounts are rounded down to the nearest million yen)

1. Non-consolidated Financial Results for the Fiscal Year Ended July 31, 2021 (August 1, 2020 - July 31, 2021)

(1) Results of operations																(Percentages represent year-on-year changes.)
			Net sales				Operating profit			Ordinary profit				Profit
			Millions of yen	%		Millions of yen				%		Millions of yen		% Millions of yen	%
Fiscal year ended Jul. 31, 2021	19,057	(28.6)		1,223	(31.3)	281		(54.8)			609	506.7
Fiscal year ended Jul. 31, 2020	26,703		12.5			1,780	(23.2)		624		(44.2)			100	(85.5)
			Net income	Diluted net income Return on equity		Ordinary profit on		Operating profit to
			per share				per share										total assets					net sales
						Yen						Yen					%							%					%
Fiscal year ended Jul. 31, 2021	196.05					192.32					14.1							0.8					6.4
Fiscal year ended Jul. 31, 2020			33.07					32.35					2.6							1.4					6.7
Reference:	Equity in earnings of			Fiscal year ended		－ Millions of yen		Fiscal year ended		－ Millions of yen
	affiliated companies				Jul. 31, 2021												Jul. 31, 2020
(2) Financial position
			Total assets					Net assets				Equity ratio				Net assets per share
				Millions of yen			Millions of yen							%							Yen
Fiscal year ended Jul. 31, 2021			33,564					4,655							13.9							1,491.99
Fiscal year ended Jul. 31, 2020				40,981					4,012							9.8							1,273.45
Reference:	Shareholders' equity (millions of yen) As of Jul. 31, 2021: 4,655		As of Jul. 31, 2020: 4,012
(3) Cash flows
			Cash flows from				Cash flows from			Cash flows from		Cash and cash
								equivalents at end of
			operating activities	investing activities			financing activities
							period
				Millions of yen			Millions of yen					Millions of yen					Millions of yen
Fiscal year ended Jul. 31, 2021			7,505					516				(8,463)							1,197
Fiscal year ended Jul. 31, 2020				9,479					(787)				(7,542)							1,639
2. Dividends
						Dividend per share									Total		Dividend		Net assets to
												dividends
			1Q-end	2Q-end			3Q-end		Year-end	Total	(Total)		Payout ratio		dividend ratio
			Yen		Yen	Yen		Yen			Yen Millions of yen		%			%
Fiscal year ended Jul. 31, 2020	－	0.00			－	6.00			6.00		18				18.1			0.5
Fiscal year ended Jul. 31, 2021	－	0.00			－	7.00			7.00		21				3.6			0.5
Fiscal year ending Jul. 31, 2022		－		0.00			－			－				－										－
(forecasts)

Notes 1. For the year-end dividend for the fiscal year ended July 31, 2021, please refer to the "Notice of Revision to Dividend Forecast" announced September 14, 2021.

2. There is currently no forecast for the year-end dividend for the fiscal year ending July 31, 2022.

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3. Earnings Forecast for the Fiscal Year Ending July 31, 2022 (August 1, 2021 to July 31, 2022)

(Percentages represent year-on-year changes.)

		Net sales		Operating profit		Ordinary profit		Profit		Net income
						per share
	Full year	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	yen
	18,634		(2.2)	(653)		－	(1,476)		－	(1,477)	－	(514.28)

Note: Only the full fiscal year forecast is shown because LeTech manages performance on a fiscal year basis.

* Notes

1. Changes in accounting policies and accounting estimates, and restatements
2. 1. Changes in accounting policies due to amendment of accounting standards, etc.: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Restatements: None
3. Number of shares outstanding (common shares)
4. 1. Number of shares outstanding at end of period (including treasury shares)

As of Jul. 31, 2021:

3,162,178 shares

As of Jul. 31, 2020:

3,152,978 shares

2) Number of treasury shares at end of period

Fiscal year ended Jul. 31, 2021:	41,908 shares	Fiscal year ended Jul. 31, 2020:	2,332 shares
3) Average number of shares during the period
Fiscal year ended Jul. 31, 2021:	3,109,691 shares	Fiscal year ended Jul. 31, 2020:	3,038,500 shares

• This summary of financial results is not subject to audit procedures by a public accountant or audit corporation.
• Explanation of appropriate use of earnings forecasts, and other special items
  Forecasts of future performance in these materials are based on assumptions judged to be valid and information available at the time these materials were prepared, and such statements do not guarantee future performance. Actual business performance and other results may differ materially due to various factors. For the conditions forming the assumptions on which financial forecasts are based, notes for use of financial forecasts, and the like, please refer to the explanations on the forecast information described in "1. Overview of Operating Results, Etc.; (4) Future Outlook" of the Attachment.
  The net income per share forecast for the fiscal year ending July 31, 2022, is diluted to reflect the effects of purchase of restricted stock at no cost.
  The Company plans to hold a financial results briefing session for analysts via video webcast on Tuesday, September 14, 2021. Materials to be distributed at this event will be posted on the Company's website immediately afterward.

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Contents of the Attachment

1. Overview of Results of Operations, Etc.	4
(1)	Overview of Results of Operations for the Fiscal Year Under Review	4
(2)	Overview of Financial Position for the Fiscal Year Under Review	5
(3)	Overview of Cash Flows for the Fiscal Year Under Review	5
(4)	Future Outlook	6
2. Basic Policy Regarding Selection of Accounting Standards	6
3. Non-consolidated Financial Statements and Notes	7
(1)	Non-consolidated Balance Sheet	7
(2)	Non-consolidated Statement of Income	9
(3)	Non-consolidated Statement of Changes in Equity	10
(4)	Non-consolidated Statement of Cash Flows	11
(5)	Notes to Non-consolidated Financial Statements	12
(Notes on Going Concern Assumption)	12
(Additional Information)	12
(Segment Information, Etc.)	12
(Equity in Earnings of Affiliates)	15
(Per Share Information)	15
(Material Subsequent Events)	15

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1. Overview of Results of Operations, Etc.

(1) Overview of Results of Operations for the Fiscal Year Under Review

The Japanese economy still faced challenging circumstances as economic and social activities were highly restricted due to the effects of the novel coronavirus (COVID-19) during the fiscal year ended July 31, 2021. As for the outlook for the economy, given that measures to curb the spread of infection have been taken along with efforts to promote COVID-19 vaccination, various measures have produced results, and overseas economies show signs of improvement, the Japanese economy is expected to keep recovering. With the state of emergency that has been repeatedly declared and preventive measures in place, the tourism and restaurant industries continue to be affected; the economy thus remains uncertain.

In the real estate industry where the Company is active, while the environment for buying homes remains favorable and, simultaneously, real estate investments centered on residential properties have become overheated, supply has been unable to keep up with growing demand, creating a sense of shortage of properties. With land prices remaining high and intensifying competition for purchasing land, the business environment remains challenging.

Under these business circumstances, the Company carried out numerous activities for achieving the numerical targets of the current business plan, bolstered the financial foundation, and promoted the business to continuously enhance corporate value and become a provider of a comprehensive line of real estate services. However, some real estate sales plans were postponed due to market uncertainty; the market remained challenging during the period under review.

Net sales decreased 28.6% year on year to 19.057 billion yen, with operating profit down 31.3% to 1.223 billion yen, ordinary profit down 54.8% to 281 million yen, and profit up 506.7% to 609 million yen. As net sales fell, operating profit and ordinary profit each decreased year on year, but extraordinary income was posted as the nursing care business was transferred and a contract cancelation penalty was recognized as extraordinary loss in the previous fiscal year. Consequently, increased profit year on year was posted.

Business segment performance was as follows:

1) Real Estate Solutions

Segment sales decreased 29.9% year on year to 16.813 billion yen and profit decreased 9.6% to 2.036 billion yen.

Real estate transactions for the core LEGALAND residential property brand remained strong, and accumulation of sales of highly profitable properties underpinned profit. However, due to market uncertainty stemming from the COVID-19 pandemic, in part because some sales plans, including a large-scale development project, were postponed, the segment saw both sales and profit decrease from a year earlier.

2) Real Estate Leasing

Segment sales decreased 26.3% year on year to 1.326 billion yen and profit was down 55.2% to 298 million yen.

This segment is a source of consistent income that is primarily from revenue-producing properties owned by the Company and properties that are held temporarily until they are sold.

During the fiscal year under review, occupancy rates at leased properties remained high. However, sales and profit were lower than the previous year because the number of properties decreased as real estate for sale was sold due to considerations involving long-term earnings and the high level of interest among buyers in purchasing these properties as well as weaker demand for vacation rentals attributable to a decline in inbound tourism due to the COVID-19 pandemic.

While keeping a close watch on the market condition, the Company intends to select properties and increase the volume of properties it owns while maintaining high occupancy rates.

3) Other Business

Segment sales increased 0.4% from year on year to 917 million yen and profit decreased 33.6% to 61 million yen. Real estate consulting is the main activity in this segment. One major component of this segment is brokerage services, mostly for short sales of properties. This segment also includes the operation of private nursing homes and, in accordance with Japan's Long-term Care Insurance Law, the provision of services for helping seniors prevent conditions that require nursing care and the provision of home nursing care service.

Regarding the nursing care business, as the Company could not anticipate synergy with its core business composed of Real Estate Solutions and Information and Communication Technology, it transferred the business to a company that can grow it further to meet the most basic objective of providing stables services to users of the facilities.

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(2) Overview of Financial Position for the Fiscal Year Under Review

1) Assets

Total assets were 33.564 billion yen, 7.417 billion yen lower than at the end of the previous fiscal year.

Current assets decreased 6.459 billion yen year on year to 27.336 billion yen. The main changes in current assets were a decrease of 12.715 billion yen in real estate for sale in process, chiefly the result of the completion of real estate for development projects, and an increase of 6.308 billion yen in real estate for sale.

Non-current assets decreased 958 million yen from a year earlier to 6.228 billion yen. This was mainly due to a decrease of 843 million yen in land, a decrease of 321 million yen in buildings because of the change in the purpose of ownership, and a decrease of 90 million yen in long-term prepaid expenses due to amortization in non-recoverable consumption taxes paid on certain non-current assets transactions, as well as an increase of 268 million yen in deferred tax assets due to an increased temporary difference through application of tax effect accounting.

2) Liabilities

Liabilities decreased 8.06 billion yen year on year to 28.909 billion yen.

Current liabilities decreased 3.418 billion yen year on year to 17.42 billion yen. This was mainly due to a decrease of 3.014 billion yen in short-term borrowings because of repayment on sale, a decrease of 951 million yen in long-term borrowings, and an increase of 756 million yen in advances received.

Non-current liabilities decreased 4.641 billion yen year on year to 11.488 billion yen. This was mainly due to a decrease of 4.445 billion yen in long-term borrowings because of transfer to current portion of long-term loans payable and repayment on sale.

3) Net assets

Net assets increased 643 million yen year on year to 4.655 billion yen. This was mainly due to 609 million yen in profit, an increase of 49 million yen in other capital surplus due to disposal of treasury shares, and a decrease of 18 million yen in dividends of surplus. The equity ratio increased to 13.9% from 9.8% at the end of the previous fiscal year.

(3) Overview of Cash Flows for the Fiscal Year Under Review

Cash and cash equivalents (hereinafter, "cash") at the end of the fiscal year under review decreased 441 million yen from the end of the previous fiscal year to 1.197 billion yen.

Cash flows from operating activities

Net cash provided by operating activities was 7.505 billion yen, compared with 9.479 billion yen provided in the previous fiscal year. The increase is mainly attributable to the decrease in inventories of 7.563 billion yen.

Cash flows from investing activities

Net cash provided by investing activities was 516 million yen, compared with 787 million yen used in the previous fiscal year. The increase is mainly attributable to proceeds from sales of shares of subsidiaries and associates of 775 million yen. The decrease is mainly attributable to purchase of property, plant and equipment (mainly real estate for leasing) of 209 million yen.

Cash flows from financing activities

Net cash used in financing activities totaled 8.463 billion yen, compared with 7.542 billion yen used in the previous fiscal year. The decrease is mainly attributable to repayments of long-term borrowings of 9.174 billion yen and a decrease in short-term borrowings of 3.014 billion yen. The increase is mainly attributable to proceeds from long-term borrowings of 3.777 billion yen.

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