Pressance : Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2021

This document has been translated from a part of the Japanese original for the convenience of non-Japanese shareholders. In the event of any discrepancy between this translation and the Japanese original, the original shall prevail.

August 11, 2020

Consolidated Financial Results

for the First Three Months of the Fiscal Year Ending March 31, 2021

	J-GAAP>
Company name: Pressance Corporation Co., Ltd.
Listing:	First Section of the Tokyo Stock Exchange
Section code:	3254
URL:	http://www.pressance.co.jp/
Representative:	Yutaka Doi, President and Representative Director
Contact:	Kyosuke Ichikawa, Executive Officer, Deputy General Manager of Management Division,
	and General Manager of Accounting Department
	TEL: [phone]
Scheduled date of filing of quarterly securities report:	August 12, 2020
Scheduled starting date for dividend payments:	-

Preparation of supplementary quarterly materials for financial results: Yes

Holding of quarterly financial results presentation meeting: No

(Values of less than one million rounded down)

1. Consolidated operating results for the first three months of the fiscal year ending March 31, 2021 (from April 1, 2020 to June 30, 2020)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year
	changes compared to the same
					period of the previous FY)
	Net sales		Operating profit	Ordinary profit		Profit attributable to
			owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen		%	Millions of yen	%
First three months of the fiscal
year ending March 31, 2021	65,901	(3.4)	11,906	(15.4)	11,962	(14.1)	8,181	(14.8)
First three months of the fiscal
year ended March 31, 2020	68,240	(16.3)	14,066	(27.0)	13,926	(27.3)	9,603	(26.8)

Note: Comprehensive income First three months of the fiscal year ending March 31, 2021:	8,239 million yen [(13.8) %]
First three months of the fiscal year ended March 31, 2020:	9,556 million yen [(27.4) %]

	Basic earnings	Diluted earnings per
	per share	share
	Yen	Yen
First three months of the fiscal
year ending March 31, 2021	127.19	127.15
First three months of the fiscal
year ended March 31, 2020	154.69	149.46

(2) Consolidated financial position

		Total assets		Net assets	Equity ratio
		Millions of yen		Millions of yen	%
As of June 30, 2020		298,974		124,140	41.0
As of March 31, 2020		310,779		116,690	37.1
Reference: Equity
As of June 30, 2020:	122,659 million yen
As of March 31, 2020:	115,253 million yen

1

2. Dividends

		Annual dividends per share
	1st quarter-end	2nd quarter-end	3rd quarter-end		Year-end	Annual total
	Yen	Yen	Yen		Yen	Yen
Fiscal year ended
March 31, 2020	-	26.00	-		13.00	39.00
Fiscal year ending
March 31, 2021	-
Fiscal year ending
March 31, 2021 (Forecast)		-	-		-	-

Note: Revisions to the dividends forecasts most recently announced: None

Note: According to the Article of Incorporation of the Company, the record dates for dividends are the end of the second quarter and the end of the fiscal year; however, at the time of the release of this document, the dividend forecast amounts for these record dates have yet to be determined. At the point when disclosure becomes possible, the Company will promptly release the amount of the interim and year-end dividends for the fiscal year ending March 31, 2021.

3. Forecasts of consolidated operating results for the fiscal year ending March 31, 2021

(from April 1, 2020 to March 31, 2021)

(Percentages indicate year-on-year changes.)

								Profit attributable to	Basic
	Net sales		Operating profit	Ordinary profit	earnings
		owners of parent
								per share
	Millions of yen		%	Millions of	%	Millions of	%	Millions of	%	Yen
		yen	yen	yen
Half year	102,288		(18.4)	16,080	(32.1)	15,469	(33.9)	10,665	(31.9)	165.79
Full year	-		-	-	-	-	-	-	-	-

Note: Revisions to the results forecasts most recently announced: None

Note: The impact of the COVID-19 outbreak is reflected in the consolidated results forecasts for the first half of the fiscal year ending March 31, 2021 based on the information available to the Company at the time of disclosure; however, the forecasts may change substantially. For the full fiscal year ending March 31, 2021, the consolidated results forecasts are not provided given that, at the time of disclosure, it is difficult to rationally estimate the impact of the future influence of the virus outbreak and the timing of when the epidemic will dissipate. At the point when estimation becomes possible, the Company will promptly release the full year forecasts.

• Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Adoption of specific accounting policies for quarterly consolidated financial statements: Yes
   (Corporate Income Tax Calculation Standards)
   Regarding taxes, a reasonable estimate of the effective tax rate for the projected full-year pretax income for the current fiscal year, including the actual income figure for the first three months of the fiscal year, has been arrived at using the tax-effect accounting method.
3. Changes in accounting policies, changes in accounting estimates and restatement after error corrections
4. 1. Changes in accounting policies due to amendments to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons than a. above: None
   3. Changes in accounting estimates: None
   4. Restatement after error corrections: None
5. Number of issued shares (common stock)
6. 1. Number of issued shares at the end of each period (including treasury shares)

As of June 30, 2020	65,198,961 shares
As of March 31, 2020	65,198,961 shares

1. Number of treasury shares at the end of each period

As of June 30, 2020	870,054 shares
As of March 31, 2020	870,054 shares

2

c. Average number of shares during the period

First three months of the fiscal year ending March 31,2021	64,328,907 shares
First three months of the fiscal year ended March 31,2020	62,077,641 shares

Notes:

Due to the introduction of the share-based payment type ESOP, a certain number of shares of the Company held in the trust account is included in the "Number of treasury shares at the end of period" (313,320 shares for the 1st quarter of the fiscal year ending March 31, 2021 and 313,320 shares for the fiscal year ended March 31, 2020). And a certain number of shares held in the trust account is included in the treasury shares that were deducted in the calculation of the "Average number of outstanding shares during the period" (313,320 shares for the 1st quarter of the fiscal year ending March 31, 2021 and 313,980 shares for the 1st quarter of the fiscal year ended March 31, 2020).

• Quarterly financial results report by public accountants or auditing firms are not required
• Explanations about the proper use of financial forecasts and other important notes (Caution Concerning Forward-looking Statements)

Forward-looking statements in this document, including the results forecasts, are based on the information available to the Company at the time of disclosure and on certain assumptions deemed to be practicable by the Company. These statements do not purport that the Company pledges or ensures to achieve such statements. Actual business and other results may differ substantially due to various factors. For preconditions to the assumptions and other important notes concerning the financial forecasts, please refer to "1. Quarterly Qualitative Information (3) Explanation for the Forecast of Consolidated Financial Results ending March 31, 2021 on page 5 of the attachment.

(Method of Obtaining Supplementary Materials for Quarterly Financial Results)

Supplementary materials for quarterly financial results are available on the Company's website.

3

1. Quarterly Qualitative Information

(1) Business Results

During the first three months of the consolidated fiscal year, the Japanese economy plummeted due to the impact of the COVID-19 pandemic, and the business environment remained challenging.

In the real estate industry, the interest rates on housing loans remain low while the Japanese government's ongoing measures to support homebuyers, such as mortgage tax breaks, remain on track, and more people have tended to move into the center of cities seeking the convenience of urban living. Although these and other factors are supporting the demand for condominiums, the outlook is uncertain due to the impact of the COVID-19 pandemic.

In these business circumstances, Pressance Corporation Co, Ltd. (the "Company") has focused on supplying condominiums in selected areas in the central part of major cities in the Kinki and Tokai/Chukyo and other core regions, which are our major sales areas.

Under such business condition, the Company posted the following consolidated performance for the first three months of the fiscal year ending March 31, 2021: net sales amounted to 65,901 million yen (down 3.4% year on year), operating profit amounted to 11,906 million yen (down 15.4% year on year), ordinary profit amounted to 11,962 million yen (down 14.1% year on year) and profit attributable to shareholders of the parent company amounted to 8,181 million yen (down 14.8% year on year).

An overview of operating results by product segment is as follows:

Real Estate Sale Business

In the real estate sales business, Pressance Loger Kyoto Nishioji Gojo (64 units), a family-type condominium in the Pressance Loger series, and Pressance OSAKA DOMECITY BEATS (154 units), a Pressance series studio condominium, have performed favorably.

However, as economic activities have been constrained by the COVID-19 pandemic, the Company's business has also been impacted, resulting in a significant decline in the sales of studio condominiums, among others. The sales of studio condominium amounted to 17,413 million yen (1,018 units), sales of family-type condominium amounted to 42,668 million yen (1,202 units), sales of other type of housing amounted to 824 million yen (38 units), sales of other real estate amounted to 2,302 million yen, business accompanying real estate sales amounted to 509 million yen. Total sales of real estate sale business posted 63,719 million yen (down 4.2% year on year) and, operating profit amounted to 11,595 million yen (down 15.5% year on year). Starting from the first three months of the fiscal year ending March 31, 2021, "sales of condominium building" is included in "sales of studio condominiums.

Since sales from the condominium business, our main business, are recorded on a delivery basis that is later than completion, there may be fluctuation in the quarterly sales results depending on the timing of land acquisition, development plans and/or construction schedules.

Other Business

The sales of other business, such as the Rental property business and the Real estate management fee business, amounted to 2,182 million yen (up 25.9% year on year) due to an increase in rents revenue with an increase in guaranteed rent properties, while segment profit amounted to 676 million yen (down 2.7% year on year) due to an increase in rent payments related to rent guarantees.

1. Financial Position Current Assets
   Total current assets as of the end of the first three months of the fiscal year amounted to 284,230 million yen (down 4.0%), which represents a decrease of 11,836 million yen compared to the end of the previous fiscal year. This was mainly due to a decrease in inventory of 16,524 million yen, while there was an increase in cash and deposits of 3,990 million yen.

Fixed Assets

Total fixed assets as of the end of the first three months of the fiscal year amounted to 14,743 million yen (up 0.2%), which represents an increase of 31 million yen compared to the end of the previous fiscal year. This increase was mainly due to an increase in loans to affiliates of 381 million yen, while there was a decrease in real estate for rent by 337 million yen, selling a self-owned real estate for rent.

4

Liabilities

Total liabilities as of the end of the first three months of the fiscal year amounted to 174,833 million yen (down 9.9%), which represents a decrease of 19,255 million yen compared to the end of the previous fiscal year. This was mainly due to decreases in "Loan payable to bank" of 10,958 million yen and "Advances received" of 5,422 million yen along with the delivery of the condominiums.

Net Assets

Total net assets as of the end of the first three months of the fiscal year amounted to 124,140 million yen (up 6.4%), which represents an increase of 7,499 million yen compared to the end of the previous fiscal year. This was principally due to the increase in retained earnings by 7,341 million yen because of the posting of quarterly profit attributable to the shareholders of the parent company.

Analysis on Cash Flows

Cash and cash equivalents as of the end of the first three months of the fiscal year ending March 31, 2021, totaled 45,674 million yen (up 9.6%), which represents an increase of 3,990 million yen compared to the end of the previous fiscal year.

The status and factors in each cash flow for the first three months of the fiscal year are as follows:

Cash Flows from Operating Activities

Net cash provided by operating activities came to 15,857 million yen (Compared with 7,184 million yen provided in the first quarter of the previous fiscal year).

This was mainly due to cash inflow resulting from a decrease in inventories by 16,530 million following the delivery of condominiums and the posting of 11,962 million yen in profit before income taxes, while there were cash outflows as a result of a decrease in advances received by 5,435 million yen following the delivery of condominiums and a decrease in notes and accounts payable - trade by 3,956 million yen reflecting an increase in the settlement of electronically recorded obligations - operating.

Cash Flows from Investment Activities

Net cash used in investment activities came to 90 million yen (Compared with 104 million yen used in the same period of the previous fiscal year).

The decrease was mainly due to cash outflows by 383 million yen of loans to affiliates, while there were cash inflows by 302 million yen of revenue from the sale of fixed assets.

Cash Flows from Financing Activities

Net cash used in financing activities came to 11,776 million yen (Compared with 12,679 million yen used in the same period of the previous fiscal year).

The decrease was due to the net decrease in bank loans by 10,958 million yen and the dividend payment of 818 million yen, resulting in a decrease in capital.

1. Explanation for the Forecast of Consolidated Financial Results ending March 31, 2020
   Condominium sales, our major business, have a tendency to give an excessive skewness or deformations in a specific quarter results due to the timing of delivery of condominium, since sale of condominium is to be posted on the basis of delivery of the condominium unit.
   With respect to the results forecasts, it is extremely difficult to foresee the magnitude of the impacts caused by the COVID-19 outbreak and the timing of when the epidemic will dissipate, and uncertainty is clouding the economic and market outlook. Under such circumstances, it is difficult to rationally estimate the results forecasts. Therefore, the Company has suspended full year forecasting for the fiscal year ending March 31, 2021 but is announcing forecasts limited to the first half of the fiscal year, for which we can obtain a relatively clearer picture. At the point when estimation becomes possible, we will promptly release the results forecasts for the full fiscal year.

5

Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheets

			(Millions of yen)
		As of March 31, 2020	As of June 30, 2020
	Assets
	Current assets
	Cash and deposits	44,774	48,764
	Accounts receivable - trade	142	196
	Real estate for sale	27,074	31,385
	Real estate for sale in process	217,964	197,185
	Raw materials and supplies	293	236
	Other	5,817	6,461
	Total current assets	296,066	284,230
	Non-current assets
	Property, plant and equipment
	Real estate for rent, net	6,993	6,655
	Other, net	647	597
	Total property, plant and equipment	7,640	7,253
	Intangible assets	254	225
	Investments and other assets	6,817	7,264
	Total non-current assets	14,712	14,743

Total assets

Liabilities

Current liabilities

Notes and accounts payable - trade Electronically recorded obligations - operating Short-term loans payable

Current portion of long-term loans payable

Income taxes payable

Advances received

Provision for bonuses

Other

Total current liabilities

Non-current liabilities

Long-term loans payable

Provision for share-based payment

Other

Total non-current liabilities

Total liabilities

Net assets

Shareholders' equity

Capital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders' equity

Accumulated other comprehensive income Valuation difference on available-for-salesecurities Foreign currency translation adjustment

310,779	298,974
324	864
8,923	4,638
1,904	5,610
71,180	65,909
7,428	10,830
10,788	5,365
254	370
6,514	3,909
107,318	97,499
85,903	76,511
196	196
669	626
86,770	77,334
194,088	174,833
4,290	4,290
5,292	5,292
106,609	113,951
(887)	(887)
115,306	122,647
(1)	(2)
(50)	14

Total accumulated other comprehensive income	(52)	11
Subscription rights to shares	264	315
Non-controlling interests	1,172	1,166
Total net assets	116,690	124,140
Total liabilities and net assets	310,779	298,974

6

1. Quarterly Consolidated Statements of Income and Comprehensive Income
   Quarterly Consolidated Statements of Income

			(Millions of yen)
		First three months of the	First three months of the
		fiscal year ended	fiscal year ending
		March 31, 2020	March 31, 2021
	Net sales	68,240	65,901
	Cost of sales	48,436	48,935
	Gross profit	19,804	16,966
	Selling, general and administrative expenses	5,737	5,060
	Operating profit	14,066	11,906
	Non-operating income
	Interest income	0	0
	Dividend income	0	0
	Purchase discounts	0	1
	Share of profit of entities accounted for using equity	31	11
	method
	Commission fee	13	21
	Penalty income	34	240
	Other	30	88
	Total non-operating income	110	364
	Non-operating expenses
	Interest expenses	227	209
	Foreign exchange losses	23	14
	Commission fee	0	0
	Other	0	83
	Total non-operating expenses	250	307
	Ordinary profit	13,926	11,962
	Profit before income taxes	13,926	11,962
	Income taxes	4,324	3,786
	Net income	9,601	8,176
	(Loss) attributable to non-controlling interests	(1)	(5)
	Profit attributable to owners of parent	9,603	8,181

7

Quarterly Consolidated Statements of Comprehensive Income

						(Millions of yen)
				First three months of the		First three months of the
				fiscal year ended		fiscal year ending
				March 31, 2020		March 31, 2021
	Net income			9,601		8,176
	Other comprehensive income
	Valuation difference on available-for-sale securities			1		(1)
	Foreign currency translation adjustment	(49)	46
	Share of other comprehensive income of entities			2		18
	accounted for using equity method
	Total other comprehensive income	(45)	63
	Comprehensive income			9,556		8,239
	Comprehensive income attributable to
	Comprehensive income attributable to owners of parent			9,557		8,245
	Comprehensive income attributable to non-controlling	(1)	(5)
	interests

8

(3) Quarterly Consolidated Statements of Cash Flows

						(Millions of yen)
				First three months of the		First three months of the
				fiscal year ended		fiscal year ending
				March 31, 2020		March 31, 2021
	Cash flows from operating activities
	Income before income taxes	13,926	11,962
	Depreciation			118		66
	Amortization of goodwill	25	25
	Interest and dividend income			(0)		(1)
	Interest expenses	227	209
	Foreign exchange losses (gains)			20		14
	Share of (profit) loss of entities accounted for using	(31)	(11)
	equity method
	Decrease (increase) in inventories			579		16,530
	Increase (decrease) in notes and accounts payable - trade	(381)	(3,956)
	Share-based remuneration expenses			－		60
	Increase (decrease) in provision for bonuses	82	116
	Increase (decrease) in provision for directors' retirement			(623)		－
	benefits
	Increase (decrease) in advances received	(1,806)	(5,435)
	Decrease (increase) in consumption taxes refund			59		280
	receivable
	Increase (decrease) in accrued consumption taxes	(178)	148
	Other			592		(3,690)
	Subtotal	12,610	16,320
	Interest and dividend income received			0		1
	Interest expenses paid	(204)	(211)
	Income taxes paid			(5,221)		(252)
	Net cash provided by (used in) operating activities	7,184	15,857
	Cash flows from investing activities
	Purchase of non-current assets	(49)	(8)
	Proceeds from sales of non-current assets			－		302
	Purchase of investment securities	(0)	(0)
	Payments for investments in capital of subsidiaries and			(54)		(383)
	associates
	Net cash provided by (used in) investing activities	(104)	(90)
	Cash flows from financing activities
	Proceeds from long-term loans payable	15,226	948
	Repayments of long-term loans payable			(26,572)		(15,612)
	Cash dividends paid	(1,409)	(818)
	Net increase (decrease) in short-term loans payable			77		3,706
	Net cash provided by (used in) financing activities	(12,679)	(11,776)
	Effect of exchange rate change on cash and cash equivalents			(4)		0
	Net increase (decrease) in cash and cash equivalents	(5,602)	3,990
	Cash and cash equivalents at beginning of period			39,400		41,684
	Cash and cash equivalents at end of period	33,797	45,674

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Others

1. Orders and sales a. Actual orders

First three months of the fiscal year ended March 31, 2020 (from April 1, 2019 to June 30, 2019)

			Total amount of contracts		Outstanding balance of contracts
Name of	Category	Number of	Year on	Amount	Year on	Number of	Year on	Amount		Year on
segment	(Millions	(Millions
	units	year (%)	year (%)	units	year (%)		year (%)
		of yen)	of yen)
	Studio	883	59.7	17,269	71.0	3,345	137.3	58,604		151.5
	condominiums
	Family-type	604	144.8	22,448	145.2	2,016	144.3	73,901		144.9
	condominiums
Real
Sale of hotel	126	26.5	2,050	16.1	1,054	98.5	25,708		106.2
estate sale
property
business
Sale of other	60	333.3	1,170	509.4	36	600.0	867		721.2
	type of housing
	Sale of other real	－	－	976	594.2	－	－	5,176		－
	estate
Total amount of	1,673	70.0	43,914	83.0	6,451	131.4	164,258		144.1
reportable segments

First three months of the fiscal year ending March 31, 2021 (from April 1, 2020 to June 30, 2020)

			Total amount of contracts		Outstanding balance of contracts
Name of	Category	Number of	Year on	Amount	Year on	Number of	Year on	Amount		Year on
segment	(Millions	(Millions
	units	year (%)	year (%)	units	year (%)		year (%)
		of yen)	of yen)
	Studio	785	88.9	12,618	73.1	3,238	96.8	55,761		95.1
	condominiums
	Family-type	381	63.1	14,386	64.1	1,236	61.3	47,432		64.2
Real	condominiums
Sale of hotel		－		－
estate sale	(240)	(3,935)	330	31.3	9,920		38.6
property
business
Sale of other	42	70.0	844	72.1	47	130.6	1,249		144.1
	type of housing
	Sale of other	－	－	2,296	235.1	－	－	4,966		95.9
	real estate
Total amount of	968	57.9	26,209	59.7	4,851	75.2	119,331		72.6
reportable segments

Notes:

1. In the table above, "total amount of orders" has been replaced with "total amount of contracts.
2. Consumption taxes are not included in the above amounts.
3. Amounts of additional constructions are included in the above amounts.
4. Number of units in total amount of contracts and the outstanding balance of contracts may fluctuate due to change of business plan and others.
5. The sale of other type of housing refers to the sale of houses other than newly built condominiums, including used houses and detached houses.
6. The sale of other real estate refers to the sale of real estate other than housing, including commercial stores and lands for development.
7. Starting from the first three months of the fiscal year ending March 31, 2021, "sale of condominium building" is included in "studio condominiums." For ease of comparison, the figures for the first three months of the fiscal year ended March 31, 2020 have been recast to conform to the current presentation.
8. The total amount of contracts for the sale of hotel property in the first three months of the fiscal year ending March 31, 2021 turned out to be negative as a result of cancellation during the first three months under review of the sale contracts recorded in or before the fiscal year ended March 31, 2020.
9. The contract amounts of other real estate sales for the first three months of the previous fiscal year are related to land for development (335 million yen) and office buildings (641 million yen), while outstanding contract amounts are related to land for development (4,535 million yen) and office buildings (641 million yen). Amounts of contracts and the outstanding balance of contracts for sale of other real estate for the first three months of the fiscal year ending March 31, 2021 refer to lands for development.

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b. Actual sales

			The first three months of FY ended March 31, 2020	The first three months of FY ending March 31, 2021
Name of			(from April 1, 2019 to June 30, 2019)	(from April 1, 2020 to June 30, 2020)
	Category			Amount				Amount
segment		Number of	Year on	Year on	Number of	Year on	Year on
		(Millions	(Millions
			units	year (%)	year (%)	units	year (%)	year (%)
			of yen)	of yen)
		Studio	1,680	99.7	32,235	109.1	1,018	60.6	17,413	54.0
		condominiums
		Family-type	711	61.1	26,135	58.3	1,202	169.1	42,668	163.3
		condominiums
		Sale of hotel	126	52.5	2,050	44.5	－	－	－	－
Real estate		property
sale		Sale of other	43	215.0	760	321.6	38	88.4	824	108.4
business		type of housing
		Sale of other	－	－	5,000	3,041.4	－	－	2,302	46.1
		real estate
		Business	－	－			－	－
		accompanying	325	84.2	509	156.5
		real estate sale
Total amount of	2,560	82.3	66,506	83.3	2,258	88.2	63,719	95.8
reportable segments
	Other	－	－	1,734	100.8	－	－	2,182	125.9
	Total	2,560	82.3	68,240	83.7	2,258	88.2	65,901	96.6

Notes:

1. Consumption taxes are not included in the above amounts.
2. Amounts of additional constructions are included in the above amounts.
3. The sale of other type of housing refers to the sale of houses other than newly built condominiums, including used houses and detached houses.
4. The sale of other real estate refers to the sale of real estate other than housing, including commercial stores and lands for development.
5. Business accompanying real estate sale includes income from post-delivery optional construction work such as floor coating and income from intermediation fees from real estate sales.
6. Other real estate sales for the first three months of the previous fiscal year and for the first three months of the fiscal year ending March 31, 2021 are related to land for development.
7. Starting from the first three months of the fiscal year ending March 31, 2021, "sale of condominium building" is included in "studio condominiums." For ease of comparison, the figures for the first three months of the fiscal year ended March 31, 2020 have been recast to conform to the current presentation.

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