CRE : Summary of Consolidated Financial Statements for the First Three Quarters of the Fiscal Year ending July 31, 2022

June 10, 2022

CRE Inc.

Summary of Financial Statements (Unaudited)

For the First Three Quarters of the Fiscal Year ending July 31, 2022

(Translated from the Japanese original)

Corporate Information

Code: 3458 Listing: Prime Market of the Tokyo Stock Exchange (URL https://www.cre-jpn.com/english/)

Representative: Tadahide Kameyama, Representative Director, President

Contact: Hidetoshi Nagahama, Director

E-mail:[e-mail]

Anticipated date for filing Shihanki Hokokusho (a Japanese-language quarterly business report): June 13, 2022

Expected date of payment for dividends: ―

Preparation of supplementary explanation material for quarterly financial results: Yes

Presentation meeting for quarterly financial results: No

(Rounded down to the nearest million)

1. Consolidated Performance for the first three quarters of Fiscal 2022 (August 1, 2021 through April 30, 2022)

(1) Consolidated Operating Results (accumulated total)

(Percentages represent changes from corresponding period of previous year)

								Net income
	Net sales		Operating profit	Recurring profit	attributable to owners
								of the parent company
	Millions of		%	Millions of	%	Millions of	%	Millions of	%
	yen			yen		yen		yen
First three quarters of Fiscal 2022	50,706		23.9	9,092	49.7	8,339	43.2	5,964	43.9
First three quarters of Fiscal 2021	40,933		132.4	6,074	416.2	5,825	444.7	4,144	421.6

(Note) Comprehensive income: 5,881 million yen (39.3%) for the first three quarters of fiscal 2022 4,222 million yen (322.4%) for the first three quarters of fiscal 2021

	Net income per share	Fully diluted net
	income per share
	Yen	Yen
First three quarters of Fiscal 2022	204.71	204.45
First three quarters of Fiscal 2021	151.27	151.03

(Note) CRE applies "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, issued March 31, 2020), effective from the first quarter of fiscal 2022, ending July 31, 2022. All numbers presented in this report for the first three quarters of fiscal 2022 reflect application of this accounting standard.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
First three quarters of Fiscal 2022	102,488	36,298	35.4
Fiscal 2021	99,041	26,746	26.9

(Reference) Equity capital: 36,240 million yen for the first three quarters of fiscal 2022, 26,662 million yen for fiscal 2021

(Note) CRE applies "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, issued March 31, 2020), effective from the first quarter of fiscal 2022, ending July 31, 2022. All numbers presented in this report for the first three quarters of fiscal 2022 reflect application of this accounting standard.

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2. Payment of Dividends

					Dividends per share
		First quarter-		At end of first			Third quarter-		Year-end		For the year
		end		half			end
		yen		yen			yen		yen		yen
Fiscal 2021		―	0.00			―		23.00	23.00
Fiscal 2022		―	0.00			―
Fiscal 2022									24.00	24.00
(Estimated)
(Note) Change in the latest release of dividend forecast: None

3. Anticipated Consolidated Results for Fiscal 2022 (August 1, 2021 through July 31, 2022)

(Percentages represent changes from corresponding period of previous year)

		Net sales			Operating profit			Recurring profit
		Millions of yen			%		Millions of yen		%		Millions of yen		%
Full year	61,600			29.5	9,300		61.1		8,200		54.3
		Net income attributable to owners		Net income per share
		of the parent company
		Millions of yen		%		Yen
Full year		5,600			56.7				190.82

(Note) Change in the latest release of consolidated results forecast: None

*Notes:

1. Changes in significant subsidiaries during this quarter: None
   (Changes in specified subsidiaries involving change in consolidation scope)
2. Adoption of accounting methods specific to quarterly consolidated financial statements: Yes
3. Changes in accounting policy, changes in accounting estimate and retrospective restatement 1. Changes associated with revision of accounting standards, etc: Yes
   2. Changes other than 1: None
   3. Changes in accounting estimates: None
   4. Restatements: None
4. Number of outstanding shares (common stock)

1. Number of outstanding shares, including treasury stock, at end of term: 29,971,800 shares at April 30, 2022
   27,468,800 shares at July 31, 2021
2. Number of shares of treasury stock at end of term:

6,996 shares at April 30, 2022

4,311 shares at July 31, 2021

3. Average outstanding number of shares (quarterly cumulative period): 29,137,057 shares at April 30, 2022

27,397,745 shares at April 30, 2021

*This quarterly financial report falls outside the quarterly review procedures.

*Information concerning proper use of forward-looking statements and other important matters

This report contains forward-looking statements about plans and expectations pertaining to CRE's business activities, based on information available to management at the time of preparation and on certain assumptions that management believes to be reasonable. These forward-looking statements are not guarantees of future performance, and actual results, performance, achievements and financial position may differ materially from statements expressed or implied herein due to various factors.

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Quarterly Consolidated Financial Statements
(1) Quarterly Consolidated Balance Sheets
	Fiscal 2021	Fiscal 2022
	As of July 31, 2021	As of April 30, 2022
	Millions of yen	Millions of yen
Assets
Current assets
Cash and deposits	19,473	27,943
Accounts receivable-trade	709	―
Notes, accounts receivable - trade and contract assets	―	417
Notes and accounts receivable from completed construction	473	―
contracts
Accounts receivable from completed construction contracts	―	357
Real estate for sale	24,920	6,246
Real estate for sale in process	27,342	38,024
Advance payments-trade	1,983	6,040
Prepaid expenses	1,360	1,478
Others	551	414
Allowance for doubtful accounts	(25)	(26)
Total current assets	76,790	80,896
Fixed assets
Tangible fixed assets
Buildings and structures	4,308	3,430
Accumulated depreciation	(2,062)	(2,021)
Buildings and structures (net)	2,245	1,409
Machinery, equipment and vehicles	416	78
Accumulated depreciation	(274)	(74)
Machinery, equipment and vehicles (net)	141	3
Tools, furniture and fixtures	214	236
Accumulated depreciation	(139)	(157)
Tools, furniture and fixtures (net)	74	78
Land	1,896	1,355
Lease assets	493	547
Accumulated depreciation	(285)	(312)
Lease assets (net)	207	234
Total tangible fixed assets	4,565	3,081
Intangible fixed assets
Goodwill	1,290	1,096
Others	340	398
Total intangible assets	1,630	1,495
Investments and other fixed assets
Investment securities	7,884	7,795
Claims provable in bankruptcy, claims provable in	33	25
rehabilitation and other
Long-term prepaid expenses	1,014	1,145
Deferred tax assets	24	34
Lease and guarantee deposits	7,022	7,589
Others	85	431
Allowance for doubtful accounts	(36)	(28)
Total investments and other fixed assets	16,028	16,993
Total fixed assets	22,224	21,570
Deferred assets
Bond issuance cost	26	21
Total deferred assets	26	21
Total assets	99,041	102,488

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	Fiscal 2021	Fiscal 2022
	As of July 31, 2021	As of April 30, 2022
	Millions of yen	Millions of yen
Liabilities
Current liabilities
Accounts payable-trade	7,018	7,095
Accounts payable for construction contracts	157	325
Short-term loans payable	600	300
Current portion of long-term loans payable	2,050	2,986
Lease obligations	36	49
Accrued corporate and other taxes	1,027	2,171
Deposits received	1,498	191
Unearned revenue	1,808	1,825
Allowance for employees' bonuses	68	113
Allowance for directors' bonuses	300	―
Allowance for sublease losses	13	16
Allowance for loss on construction contracts	9	11
Others	386	2,091
Total current liabilities	14,975	17,178
Fixed liabilities
Bonds payable	3,000	3,000
Long-term loans payable	44,002	36,265
Lease obligations	267	282
Net defined benefit liability	255	265
Allowance for loss on guarantees	30	34
Asset retirement obligations	274	253
Allowance for sublease losses	15	10
Lease and guarantee deposits received	7,931	8,051
Deferred tax liabilities	234	181
Deposits received from silent partnerships	1,064	445
Others	241	220
Total fixed liabilities	57,319	49,011
Total liabilities	72,295	66,190
Net assets
Shareholders' equity
Common stock	3,071	5,217
Capital surplus	5,031	7,177
Retained earnings	17,157	22,500
Treasury stock	(0)	(0)
Total shareholders' equity	25,260	34,895
Accumulated other comprehensive income
Unrealized gains (losses) on investment securities	1,470	1,343
Deferred gains (losses) on hedges	(25)	(23)
Foreign currency translation adjustment	(41)	25
Total accumulated other comprehensive income	1,402	1,345
Non-controlling interests
83	58
Total net assets	26,746	36,298
Total liabilities and net assets	99,041	102,488

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

	First Three Quarters of	First Three Quarters of
	Fiscal 2021	Fiscal 2022
	(August 1, 2020 through	(August 1, 2021 through
	April 30, 2021)	April 30, 2022)
	Millions of yen	Millions of yen
Net sales	40,933	50,706
Cost of sales	31,899	37,696
Gross profit	9,034	13,010
Selling, general and administrative expenses	2,959	3,918
Operating profit	6,074	9,092
Non-operating income
Interest received	2	2
Insurance income	5	20
Equity in income of affiliates	123	―
Others	20	4
Total non-operating income	152	27
Non-operating expenses
Interest paid	140	227
Commission fee	229	358
Equity in loss of affiliates	―	124
Others	31	68
Total non-operating expenses	401	779
Recurring profit	5,825	8,339
Extraordinary income
Gain on sales of investment securities	148	―
Real estate sales contract penalty	―	565
Others	19	―
Total extraordinary income	168	565
Extraordinary expenses
Loss on disposal of fixed assets	0	8
Loss on sales of investment securities	―	16
Others	―	0
Total extraordinary expenses	0	25
Profit before dividend distribution from silent partnerships and
5,993	8,880
income taxes
Dividends distribution from silent partnerships	10	9
Income before income taxes	5,982	8,870
Total income taxes	1,838	2,932
Net income	4,144	5,938
Net income attributable to non-controlling interests	―	(25)
Net income attributable to owners of the parent company	4,144	5,964

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