Daiwa House Industry : Financial Results for FY2015-3Q released

Microsoft Word - ★★原本【0204】20160205_DaiwaHouseFResultFY2015-3Q.docx

Summary of Financial Results (Unaudited) for the First Nine Months of the Fiscal Year Ending March 31, 2016 [Consolidated] (From April 1, 2015 to December 31, 2015) [Japanese GAAP]

February 5, 2016

Name of Listed Company: Daiwa House Industry Co., Ltd. Code No.: 1925

URL: http://www.daiwahouse.com/English/ Listed Exchanges: First section of the Tokyo Stock Exchange Representative: Naotake Ohno, President and COO

Contact: Yuji Yamada, Executive Officer and General Manager, IR Department Phone No.: 06-6342-1400

E-mail to: [e-mail]

Scheduled Date of Filing Quarterly Securities Report: February 9, 2016 Scheduled Date of Commencement of Dividend Payment: -

Supplemental documents for the financial results provided: Yes

Results briefing for the period under review provided: Yes (for institutional investors and securities analysts)

(Amounts below one million yen are omitted)

1. Consolidated Results of Operation for the First Nine Months Ended December 31, 2015 (From April 1, 2015 to December 31, 2015)

   
   
2. Consolidated Business Results (% figures represent year-on-year change)

   
   

   Net sales		Operating income		Ordinary income		Net income attributable to owners of the parent
   Nine months ended:	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
   December 31, 2015	2,242,336	13.5	170,062	46.5	170,826	43.0	119,575	40.2
   December 31, 2014	1,976,032	4.2	116,101	11.2	119,423	11.1	85,281	38.6

   Note: Comprehensive income: Nine months ended December 31, 2015: 118,856 million yen (4.9%)

   Nine months ended December 31, 2014: 113,251 million yen (42.9%)

   
   

   Basic net income per share	Diluted net income per share
   Nine months ended:	Yen	Yen
   December 31, 2015	180.71	180.05
   December 31, 2014	129.39	―

   
   

3. Consolidated Financial Conditions

   
   

   
   

   Total assets	Net assets	Net assets ratio
   As of	Millions of yen	Millions of yen	%
   December 31, 2015	3,215,982	1,204,641	37.2
   March 31, 2015	3,021,007	1,112,817	36.6

   (Reference) Net assets ratio = (Net assets - Minority interests)/Total assets×100

   (Net assets - Minority interests) is as follows. December 31, 2015: 1,194,920 million yen; March 31, 2015: 1,105,628 million yen

   
   

4. Dividends

   Dividend per share
   End of 1st quarter (June 30)	End of 2nd quarter (Sept. 30)	End of 3rd quarter (Dec. 31)	Fiscal year-end (March 31)	Annual
   Fiscal year ended March 31, 2015 Fiscal year ending March 31, 2016	Yen - -	Yen 25.00 35.00	Yen - -	Yen 35.00	Yen 60.00
   Fiscal year ending March 31, 2016 (forecasts)	45.00	80.00

   Note: Revision made to the dividend forecast announcement on November 6, 2015: None

   Cash dividends (forecasts) for the fiscal year ending March 31, 2016 is comprised of ¥35.00 per share as an ordinary dividend and ¥10.00 per share as the 60th anniversary commemorative dividend.

5. Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2016 (From April 1, 2015 to March 31, 2016)

   (% figures represent year-on-year change)

   Net sales		Operating income		Ordinary income		Net income attributable to owners of the parent		Basic net income per share
   Fiscal year ending	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
   March 31, 2016	3,180,000	13.1	240,000	33.1	228,000	12.5	154,000	31.5	232.50

   Note: Revision made to the business forecast announcement on November 6, 2015: None

   Notes:
6. Changes in Significant Subsidiaries during the Period under Review (This refers to changes in specified subsidiaries associated with changes in the scope of consolidation): None
7. Application of Accounting Methods Unique to the Preparation of the Quarterly Consolidated Financial Statements: None
8. Changes in Accounting Policies Applied, Changes in Accounting Estimates and Retrospective Restatement
9. Changes in accounting policies applied due to amendment of accounting standards: Yes
10. Changes in accounting policies due to reasons other than 1): None
11. Changes in accounting estimates: None
12. Retrospective restatement: None
13. Number of Issued and Outstanding Shares (Common Stock)
14. Number of shares at the end of the period (including treasury stock)

    As of December 31, 2015 666,238,205 shares As of March 31, 2015 660,421,851 shares

15. Number of treasury stock at the end of the period

    As of December 31, 2015 1,627,835 shares As of March 31, 2015 1,619,741 shares

16. Average number of shares during the period

Nine months ended

December 31, 2015 661,706,731 shares

Nine months ended

December 31, 2014 659,079,180 shares




• Presentation of implementing the quarterly review procedures

  As of the time when the quarterly financial results are disclosed, the Group have not completed the reviewing (checking) procedures for quarterly consolidated financial statements as laid down by the Financial Instruments and Exchange Law.

• Remarks on appropriate use of forecasted results of operation and other special matters (Notes regarding forward-looking statements)

Consolidated earnings forecasts are based on assumptions in light of the information available as of the date of announcement of this material and the factors of uncertainty that may possibly impact the future results of operation. These statements do not mean that the Company pledges to realize such statements. Actual results may differ significantly from those presented herein as a consequence of numerous factors such as the financial market, economic conditions, competitor situations and fluctuations in land prices.

Please refer to the section of "1. Qualitative Information regarding Consolidated Results for the First Nine Months under Review (3) Earnings Forecasts" of "the Attached Material" on page 5 for the suppositions that form the assumptions for earnings forecasts.

(Obtaining supplementary explanatory materials)

The Company plans to hold a briefing for institutional investors and securities analysts on February 5, 2016. Relevant financial statements to be handed out at the briefing will be posted on our official website at the same time.

Contents of the Attached Material

1. Qualitative Information regarding Consolidated Results for the First Nine Months under Review 4

2. Earnings Results 4

3. Financial Conditions 4

4. Earnings Forecasts 5

5. Summary Information (Notes) 5

   (1) Changes in Accounting Policies Applied, Changes in Accounting Estimates and Retrospective

   Restatement 5

6. Consolidated Financial Statements 6

1. Consolidated Balance Sheets 6

2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income 8

   Consolidated Statements of Income 8

   Consolidated Statements of Comprehensive Income 9

3. Notes 10

Notes on Premise of Going Concern 10

Notes on Significant Changes in the Amount of Shareholders' Equity 10

1. Qualitative Information regarding Consolidated Results for the First Nine Months under Review

   
   
2. Earnings Results

   
   

   The Japanese economy continued to experience a gradual recovery throughout the first nine months of the fiscal year ending March 2016. Government economic policies and lower oil prices have played a part in improved employment environment and higher payrolls. However, the deceleration of the Chinese economy has caused a downward swing in exports and certain production, indicating some weakness.

   
   

   The housing industry has been experiencing inconsistent performance, repeating an alternating cycle of year-on-year growth and decline in new housing starts in the months since September

   2015, despite continued signs of recovery from the lull following the surge in demand in advance of the April 2014 consumption tax rate increase. Although the general construction market has experienced 11 consecutive months of lower year-on-year results since February 2015 for public works construction orders, private construction orders have shown 15 straight months of higher

   year-on-year performance since October 2014, owing to increased corporate capital investments caused by a recovery in the domestic manufacturing industry.

   
   

   In light of these circumstances, the Daiwa House Group expanded its investment plan from the original plan in our Fourth Medium-Term Management Plan (ending March 2016). The Group is actively engaged in real estate development investment and other projects to grow earnings in our core domestic and other businesses.

   
   

   As another measure toward stronger competitive ability, Daiwa LifeNext Co., Ltd. and Daiwa Service Co., Ltd., both companies dealing mainly in the condominium management business, merged in April 2015. Further, Fujita Corporation and Daiwa Odakyu Construction Co., Ltd. merged in October 2015, serving as yet another measure toward building a strong foundation for growth.

   
   

   As a result, net sales for the first nine months of the fiscal year ending March 2016 was 2,242,336 million yen (+13.5% year on year). Ordinary income was 170,826 million yen (+43.0% year on year), while net income attributable to owners of the parent amounted to 119,575 million yen (+40.2% year on year).

   
   

3. Financial Conditions




Total assets as of the end of the consolidated nine-month reporting period was 3,215,982 million yen, an increase of 194,975 million yen compared to the 3,021,007 million yen in total assets at the end of the prior consolidated fiscal year. This result was mainly due to an increase in property, plant, and equipment via acquisitions of investment properties, despite a decrease in cash and deposits.




Total liabilities as of the end of the consolidated nine-month reporting period amounted to 2,011,341 million yen, representing a 103,151 million yen increase compared to the 1,908,190 million yen in total liabilities at the end of the prior consolidated fiscal year. This result was mainly due to the issuance of commercial paper and an increase in advances received on uncompleted construction contracts.




Total net assets as of the end of the consolidated nine-month reporting period amounted to 1,204,641 million yen, representing a 91,824 million yen increase compared to 1,112,817 million yen in total net assets at the end of the prior consolidated fiscal year. This result was mainly due to recording of net income attributable to owners of the parent of 119,575 million yen, offset in part by payments of dividends related to the prior consolidated fiscal year.

(3) Earnings Forecasts




The Company has not revised consolidated earnings forecasts for the fiscal year ending March 2016 subsequent to the forecasts in Announcement of Dividend Payment (Interim Dividend) and Revision of Earnings and Dividend Forecast for the Fiscal Year Ending March 2016, as published on November 6, 2015.




1. Summary Information (Notes)

   
   
2. Changes in Accounting Policies Applied, Changes in Accounting Estimates and Retrospective Restatement

   
   

   Change in Accounting Policies

   
   

   (Application of Accounting Standard for Business Combinations)

   
   

   Beginning with the first three months of the consolidated fiscal year under review, the Company has adopted the Accounting Standard for Business Combinations (ASBJ Statement No. 21, September 13, 2013), the Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22, September 13, 2013), and the Accounting Standard for Business Divestitures (ASBJ Statement No. 7, September 13, 2013). Under these changes, the Company now records differences due to equity changes in subsidiaries subject to ongoing control to capital surplus. In addition, the Company now records acquisition-related costs as costs in the consolidated fiscal year in which they occurred. With respect to business combinations occurring after the beginning of the first three months of the consolidated fiscal year under review, the Company now revises acquisition cost allocation based on provisional accounting estimates, reflecting these costs in the quarterly consolidated financial statements for the date on which the business combination occurred.

   
   

   The Company has changed its presentation with respect to quarterly net income, as well as changing the presentation from "minority interests" to "non-controlling interests." To reflect these changes in presentation, the Company has reclassified its financial statements for the first nine months of the prior consolidated fiscal year and its financial statements for the prior consolidated fiscal year.

   
   

   In accordance with the transitional treatment based on the provisions of section 58-2 (4) of the Accounting Standard for Business Combinations, section 44-5 (4) of the Accounting Standard for Consolidated Financial Statements, and section 57-4 (4) of the Accounting Standard for Business Divestitures, the effects of the application of these changes have been applied as of the beginning of the first three months of the consolidated fiscal year under review and for periods thereafter.

   
   

   As a result, the Company does not expect this transaction to have a material impact on operating income, ordinary income, or income before income taxes for the first nine months of the consolidated fiscal year under review.

3. Consolidated Financial Statements
1. Consolidated Balance Sheets

   
   

   
   

   Assets

   Current assets

   (Millions of yen) As of March 31, 2015 As of December 31, 2015

   
   

   Cash and deposits 238,776 185,385

   Notes and accounts receivable from completed construction contracts and other

   244,045 291,577

   Short-term investment securities 16 16

   Costs on uncompleted construction contracts

   31,778 39,565

   
   

   Real estate for sale 423,869 449,207

   Real estate for sale in process

   114,915 145,263

   
   

   Land for development 647 647

   Merchandise and finished goods

   14,984 16,105

   
   

   Work in process 6,709 10,496

   Raw materials and supplies

   5,785 6,874

   
   

   Other 192,067 211,140

   Allowance for doubtful accounts

   (3,347) (4,741)

   
   

   Total current assets 1,270,247 1,351,540

   Noncurrent assets

   
   

   Property, plant and equipment
   Buildings and structures	782,817	821,346
   Accumulated depreciation	(365,178)	(386,425)
   Buildings and structures, net	417,638	434,921
   Land	566,139	622,004
   Other	199,303	216,297
   Accumulated depreciation	(112,960)	(116,468)
   Other, net	86,342	99,829
   Total property, plant and equipment	1,070,121	1,156,755
   Intangible assets
   Goodwill	48,136	55,221
   Other	32,441	32,112
   Total intangible assets	80,578	87,334
   Investments and other assets
   Investment securities	252,982	274,055
   Lease and guarantee deposits	199,562	202,286
   Other	150,944	147,726
   Allowance for doubtful accounts	(3,430)	(3,715)
   Total investments and other assets	600,059	620,353
   Total noncurrent assets	1,750,759	1,864,442
   Total assets	3,021,007	3,215,982

   
   

   Liabilities

   Current liabilities

   (Millions of yen) As of March 31, 2015 As of December 31, 2015

   
   

   Notes and accounts payable for construction contracts and other	309,261	303,520
   Short-term loans payable	70,892	85,476
   Current portion of bonds payable	110	10,083
   Current portion of long-term loans payable	34,803	38,237
   Commercial papers	72,000	120,000
   Income taxes payable	27,415	24,974
   Advances received	39,732	50,133
   Advances received on uncompleted construction contracts	90,487	114,574
   Provision for bonuses	39,249	23,528
   Provision for warranties for completed construction	6,819	6,820
   Asset retirement obligations	1,617	1,640
   Other	223,713	231,962
   Total current liabilities	916,104	1,010,953
   Noncurrent liabilities
   Bonds payable	110,595	100,054
   Long-term loans payable	275,128	290,482
   Long-term lease and guarantee deposited	241,355	245,946
   Net defined benefit liability	179,470	184,556
   Asset retirement obligations	29,434	31,715
   Other	156,100	147,632
   Total noncurrent liabilities	992,085	1,000,388
   Total liabilities	1,908,190	2,011,341
   Net assets
   Shareholders' equity
   Capital stock	161,699	161,699
   Capital surplus	294,632	311,226
   Retained earnings	534,639	607,656
   Treasury stock	(1,965)	(1,991)
   Total shareholders' equity	989,005	1,078,590

   Accumulated other comprehensive income

   
   

   Valuation difference on available-for-sale

   securities

   84,678

   89,385

   Deferred gains or losses on hedges

   84 (9)

   
   

   Revaluation reserve for land (457) (217)

   Foreign currency translation adjustment

   32,318 27,170

   
   

   Total accumulated other comprehensive income 116,623 116,329

   Non-controlling interests 7,149 9,682

   Subscription rights to shares 38 38

   Total net assets

   Total liabilities and net assets

   1,112,817 1,204,641

   3,021,007 3,215,982

2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated Statements of Income)

   (Millions of yen)

   
   

   Nine months ended December 31, 2014 (From April 1, 2014 to December 31, 2014)	Nine months ended December 31, 2015 (From April 1, 2015 to December 31, 2015)
   Net sales	1,976,032	2,242,336
   Cost of sales	1,595,613	1,786,899
   Gross profit	380,419	455,437
   Selling, general and administrative expenses	264,318	285,375
   Operating income	116,101	170,062
   Non-operating income
   Interest income	2,926	2,719
   Dividends income	2,498	2,910
   Equity in earnings of affiliates	352	－
   Miscellaneous income	5,862	3,916
   Total non-operating income	11,641	9,546
   Non-operating expenses
   Interest expenses	3,840	3,714
   Taxes and dues	808	1,534
   Equity in losses of affiliates	－	415
   Miscellaneous expenses	3,669	3,117
   Total non-operating expenses	8,318	8,781
   Ordinary income	119,423	170,826
   Extraordinary income
   Gain on sales of noncurrent assets	1,222	545
   Gain on sales of investment securities	3,362	4,363
   Gain on revision of retirement benefit plan	9,394	－
   Gain on step acquisitions	5	4,147
   Other	8	－
   Total extraordinary income	13,993	9,056

   Extraordinary losses

   Loss on sales of noncurrent assets

   Loss on retirement of noncurrent assets Impairment loss

   
   

   57 41

   1,538 620

   210 346

   Loss on sales of investment securities － 116

   Loss on valuation of investment securities Merger expenses

   69 187

   － 826

   Other 64 23

   Total extraordinary losses Income before income taxes Income taxes-current

   Income taxes-deferred Total income taxes

   1,940 2,162

   131,477 177,720

   30,998 53,656

   15,688 4,401

   46,686 58,057

   Net income 84,790 119,662

   Net income (loss) attributable to non-controlling interests Net income attributable to owners of the parent

   (490) 87

   85,281 119,575

   (Consolidated Statements of Comprehensive Income)

   
   

   
   

   Net income

   Other comprehensive income

   
   

   (Millions of yen) Nine months ended Nine months ended December 31, 2014 December 31, 2015

   (From April 1, 2014 (From April 1, 2015

   to December 31, 2014) to December 31, 2015)

   84,790 119,662

   Valuation difference on available-for-sale securities 26,152 5,042 Deferred gains or losses on hedges 93 (93)

   Foreign currency translation adjustment 598 (4,026)

   1,616	(1,728)
   28,460	(806)
   113,251	118,856
   113,731	119,042
   (480)	(185)

   Share of other comprehensive income of associates accounted for using equity method

   Total other comprehensive income Comprehensive income (Comprehensive income attributable to)

   Comprehensive income attributable to owners of the parent

   Comprehensive income attributable to non-coutrolling interests

3. Notes
Notes on Premise of Going Concern

No items to report.




Notes on Significant Changes in the Amount of Shareholders' Equity

No items to report.







Disclaimer:

This English translation has been prepared for general reference purposes only. The Company shall not be responsible for any consequence resulting from the use of the English translation in place of the original Japanese text. In any legal matter, readers should refer to and rely upon the original Japanese text released on February 5, 2016.