Legal : Non-consolidated Financial Results for the Third Quarter of the Fiscal Year Ending July 31,2020(Nine Months Ended April 30,2020)

Non-consolidated Financial Results

for the Third Quarter of the Fiscal Year Ending July 31, 2020

(Nine Months Ended April 30, 2020)

		[Japanese GAAP]
		July 14, 2020
Company name:	LEGAL CORPORATION	Listing: Tokyo Stock Exchange (Mothers)
Stock code:	3497	URL: https://www.legal-corp.co.jp/
Representative:	Tetsuji Hirano, President and Representative Director
Contact:	Takashi Mizumukai, Director, General Manager of Administration Division
	Tel: [phone]

Scheduled date of filing of Quarterly Report:				July 14, 2020
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. Non-consolidated Financial Results for the Third Quarter of the Fiscal Year Ending July 31, 2020
(August 1, 2019 - April 30, 2020)
(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	%
Nine months ended Apr. 30, 2020	18,505		3.0	1,369	(20.9)		464	(46.5)	0	(100.0)
Nine months ended Apr. 30, 2019	17,959		10.4	1,730	(12.5)		869	(30.2)	536	(32.0)
	Net income per share	Diluted net income per share
			Yen				Yen
Nine months ended Apr. 30, 2020			0.01			0.01
Nine months ended Apr. 30, 2019			206.09		197.63

Note: The stock of Legal Corp. was listed on the Tokyo Stock Exchange Mothers Market on October 23, 2018. Diluted net income per share for the nine months ended April 30, 2019 was determined by using an average stock price during the period between the listing and the end of April 2019.

(2) Financial position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
As of Apr. 30, 2020	45,668	3,907	8.6
As of Jul. 31, 2019	48,416	3,649	7.5

Reference: Shareholders' equity (millions of yen) As of Apr. 30, 2020: 3,907 As of Jul. 31, 2019: 3,649

2. Dividends

			Dividend per share
	1Q-end	2Q-end	3Q-end		Year-end	Total
	Yen	Yen	Yen		Yen	Yen
Fiscal year ended Jul. 31, 2019	-	0.00	-		5.00	5.00
Fiscal year ending Jul. 31, 2020	-	0.00	-
Fiscal year ending Jul. 31, 2020 (forecast)					6.00	6.00

Notes: 1. Revisions to the most recently announced dividend forecast: Yes

2. Please refer to the press release "Notice of Revisions to Dividend Forecast for the Fiscal Year Ending July 31, 2020"

(Japanese version only) that was announced today (July 14, 2020).

3. Earnings Forecasts for the Fiscal Year Ending July 31, 2020 (August 1, 2019 - July 31, 2020)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit		Net income per share
	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	26,652		12.3	1,719	(25.8)	575	(48.5)	71	(89.7)	23.50

Notes: 1. Revisions to the most recently announced earnings forecasts: None

2. Legal Corp. expects a high percentage of sales in the fiscal year ending July 31, 2020 in the fourth quarter.

* Notes

1. Application of special accounting methods for presenting quarterly financial statements: None
2. Changes in accounting policies and accounting estimates, and restatements
3. 1. Changes in accounting policies due to revisions in accounting standards, others: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Restatements: None
4. Number of shares outstanding (common shares)
5. 1. Number of shares outstanding as of the end of the period (including treasury shares)

As of Apr. 30, 2020:	3,139,978 shares	As of Jul. 31, 2019:	2,885,200 shares
2) Number of treasury shares as of the end of the period
As of Apr. 30, 2020:	1,200 shares	As of Jul. 31, 2019:	- shares
3) Average number of outstanding shares during the period
Nine months ended Apr. 30, 2020:	3,003,758 shares	Nine months ended Apr. 30, 2019:	2,603,359 shares

• This quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
• 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, but are not promises by Legal Corp. regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons. Please refer to "1. Qualitative Information on Quarterly Financial Performance, (3) Explanation of Earnings Forecasts and Other Forward-looking Statements" on page 3 for forecast assumptions and precautions concerning the use of forecasts.
  The net income per share forecast for the fiscal year ending July 31, 2020 is diluted to reflect the effects of exercise of share acquisition rights and purchase of treasury shares.

LEGAL CORPORATION (3497) Financial Results for the Third Quarter of FY7/20

Contents of Attachments
1. Qualitative Information on Quarterly Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Earnings Forecasts and Other Forward -looking Statements	3
2. Quarterly Non-consolidated Financial Statements and Notes	4
(1)	Quarterly Non-consolidated Balance Sheet	4
(2)	Quarterly Non-consolidated Statement of Income	5
(3)	Notes to Quarterly Non-consolidated Financial Statements	6
	Going Concern Assumption	6
	Significant Changes in Shareholders' Equity	6

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LEGAL CORPORATION (3497) Financial Results for the Third Quarter of FY7/20

1. Qualitative Information on Quarterly Financial Performance

(1) Explanation of Results of Operations

The Japanese economy continued to recover slowly during the first nine months of the fiscal year ending July 31, 2020 as corporate earnings remained strong and the labor market and personal income improved. But consumer spending has been declining following the October 2019 consumption tax hike. Furthermore, U.S. -China trade friction is continuing, and the COVID-19 outbreak has severely impacted the economy. As a result, the outlook for the economy remains extremely uncertain.

In Japan's real estate industry, the environment for buying homes is still favorable because of government measures to assist homebuyers and low interest rates on mortgages. On the other hand, there are negative effects of the rising cost of land, intense competition for purchasing land and the consistently high cost of constructing residences. In addition, COVID-19 may have a big impact on the real estate market by disrupting supply chains, increasing the time needed for construction projects, and reducing the interest in buying properties due to the need to stay home and to economic downturns in Japan and other countries.

During the first nine months, there were many activities for achieving the targets of the current business plan. Activities were also focused on financial soundness, the consistent growth of corporate value and becoming a provider of a comprehensive line of real estate services. Net sales increased 3.0% year on year to 18,505 million yen, with operating profit of 1,369 million yen (down 20.9%), ordinary profit of 464 million yen (down 46.5%), and profit of 0 million yen (down 100.0%). In the fiscal year's first half, Legal Corp. was required to pay a tax on undistributed earnings. In the third quarter, Legal Corp. became exempt from this undistributed earnings tax due to the issuance of restricted stock as remuneration for employees on February 14, 2020.

Business segment performance was as follows:

1) Real Estate Solutions

Segment sales increased 4.7% to 16,456 million yen and earnings increased 9.5% to 1,713 million yen. There was a large volume of purchases of real estate for sale as well as sales of real estate in accorda nce with the initial business plan for Real Estate Solutions. Due to the increasing cost of purchasing real estate, we took full advantage of our real estate market insight and knowledge when selecting properties to acquire. Most of our purchases were real estate that comes on the market only infrequently, such as properties near railway stations.

Sales and earnings were higher than one year earlier as properties were sold as planned.

Orders received were generally as expected in relation to the outlook for sales. Orders in the first nine months totaled 20,464 million yen and the order backlog at the end of the third quarter was 3,614 million yen.

2) Real Estate Leasing

Segment sales decreased 20.9% to 1,380 million yen and earnings were down 35.0% to 505 million yen. This segment is a source of consistent income that is primarily from leasing income -producing properties owned by Legal Corp. and properties that are held temporarily until they are sold. During the first nine months, occupancy rates at leased properties remained high. However, sales and earnings were lower than one year earlier because of sales of real estate for sale in the previous fiscal year due to considerations involving long-term earnings and the high level of interest among buyers in purchasing this real estate.

We expect to build an even stronger basis for sales and earnings in this segment by increasing the volume of income-producing properties we own while maintaining high occupancy rates.

3) Other business

Segment sales increased 33.4% to 668 million yen and earnings increased 544.6% to 77 million yen. Real estate consulting is the main activity in this segment. One major component of this segment is brokerage services, mostly for voluntary sales of properties where owners are unable to make loan payments. This segment also

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LEGAL CORPORATION (3497) Financial Results for the Third Quarter of FY7/20

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 provi sion of home nursing care service.

In the nursing care business, a newly opened location has performed well and the occupancy rates at other locations remained high. Consequently, sales and earnings in this segment increased.

1. Explanation of Financial Position Assets

Total assets were 45,668 million yen, 2,747 million yen lower than at the end of the previous fiscal year.

Current assets increased 154 million yen to 39,801 million yen. The main changes in current assets were a 2,131 million yen increase in real estate for sale in process, chiefly the result of an increase in acquisitions of real estate for development projects, a 397 million yen increase in cash and deposits, and a 2,441 million yen decrease in real estate for sale.

Non-current assets decreased 2,902 million yen to 5,867 million yen. This was mainly due to a 1,218 million yen decrease in buildings and a 1,980 million yen decrease in land because of new purchases and a reclassification due to the change in the purpose of ownership, a 192 million yen increase in deferred tax assets mainly due to an adjustment related to a joint development project, and a 100 million yen increase in an investment in a special purpose company.

Liabilities

Total liabilities decreased 3,005 million yen to 41,761 million yen.

Current liabilities increased 9,885 million yen to 22,666 million yen. Current portion of long-term borrowings increased 10,163 million yen because of transfer from long-term borrowings, and income taxes payable decreased 235 million yen after the payment of income taxes.

Non-current liabilities decreased 12,890 million yen to 19,094 million yen. The main reason was the 12,674 million yen decrease in long-term borrowings mainly because of transfer to current portion of long-term borrowings.

Net assets

Total net assets increased 257 million yen to 3,907 million yen. This was mainly due to increases in share capital and capital surplus of 136 million yen each due to the issuance of restricted stock as remuneration. The equity ratio increased to 8.6% from 7.5% at the end of the previous fiscal year.

(3) Explanation of Earnings Forecasts and Other Forward -looking Statements

In the real estate solutions business, there are big changes in sales and earnings regardless of the number of sales contracts signed in each quarter. Since sales are recorded only when a sale closes, sales and earnings are high when a large number of sales are completed and ownership is transferred to buyers. As a result, there may be significant differences in the quarterly performance of this business in each fiscal year and from one fiscal year to the next. In the fiscal year ending July 31, 2020, we expect a large number of sales to close in the second quarter and also in the fourth quarter.

We revised the earnings forecasts for the fiscal year ending July 31, 2020 following the current performance trends. Please refer to the press release "Notice of Revisions to Earnings Forecasts for the Fiscal Year Ending July 31, 2020" (Japanese version only) that was announced on June 2 5, 2020. Actual results may differ significantly from the forecasts for a number of reasons.

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LEGAL CORPORATION (3497) Financial Results for the Third Quarter of FY7/20

2. Quarterly Non-consolidated Financial Statements and Notes

(1) Quarterly Non-consolidated Balance Sheet

			(Thousands of yen)
		FY7/19	Third Quarter of FY7/20
		(As of Jul. 31, 2019)	(As of Apr. 30, 2020)
Assets
Current assets
Cash and deposits	1,054,026	1,451,910
Trade accounts receivable	129,300	173,050
Real estate for sale	18,486,617	16,045,367
Real estate for sale in process	19,511,235	21,642,562
Other	467,839	493,118
Allowance for doubtful accounts	(2,681)	(4,951)
Total current assets	39,646,337	39,801,058
Non-current assets
Property, plant and equipment
Buildings, net	3,463,792	2,245,255
Land	4,749,132	2,769,086
Other, net	39,596	34,705
Total property, plant and equipment	8,252,521	5,049,046
Intangible assets	42,168	37,903
Investments and other assets	475,763	780,881
Total non-current assets	8,770,453	5,867,830
Total assets	48,416,791	45,668,888
Liabilities
Current liabilities
Trade accounts payable	270,235	148,773
Short-term borrowings	8,193,869	8,009,603
Current portion of bonds	53,000	28,000
Current portion of long-term borrowings	2,893,037	13,057,013
Income taxes payable	273,293	37,713
Provision for bonuses	32,672	55,926
Other	1,065,142	1,329,265
Total current liabilities	12,781,250	22,666,295
Non-current liabilities
Bonds payable	102,000	74,000
Long-term borrowings	31,274,989	18,600,414
Other	608,576	420,330
Total non-current liabilities	31,985,565	19,094,744
Total liabilities	44,766,816	41,761,039
Net assets
Shareholders' equity
Share capital	651,924	788,066
Capital surplus	561,924	698,066
Retained earnings	2,436,125	2,421,716
Total shareholders' equity	3,649,975	3,907,849
Total net assets	3,649,975	3,907,849
Total liabilities and net assets	48,416,791	45,668,888

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LEGAL CORPORATION (3497) Financial Results for the Third Quarter of FY7/20

1. Quarterly Non-consolidated Statement of Income (For the Nine-month Period)

			(Thousands of yen)
		First nine months of FY7/19	First nine months of FY7/20
		(Aug. 1, 2018 - Apr. 30, 2019)	(Aug. 1, 2019 - Apr. 30, 2020)
Net sales	17,959,415	18,505,999
Cost of sales	13,886,886	14,800,760
Gross profit	4,072,528	3,705,239
Selling, general and administrative expenses	2,342,337	2,336,050
Operating profit	1,730,190	1,369,188
Non-operating income
Interest income	356	68
Dividend income	35	151
Insurance claim income	7,905	3,073
Surrender value of insurance policies	2,011	30,073
Other	1,988	3,441
Total non-operating income	12,297	36,806
Non-operating expenses
Interest expenses	770,047	840,674
Commission expenses	81,994	91,563
Other	21,264	8,854
Total non-operating expenses	873,306	941,092
Ordinary profit	869,181	464,902
Extraordinary losses
Cancellation penalty	-	410,000
Loss on retirement of non-current assets	-	18,143
Total extraordinary losses	-	428,143
Profit before income taxes	869,181	36,759
Income taxes-current	302,562	229,036
Income taxes-deferred	30,090	(192,293)
Total income taxes	332,653	36,742
Profit	536,527	16

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LEGAL CORPORATION (3497) Financial Results for the Third Quarter of FY7/20

1. Notes to Quarterly Non-consolidated Financial Statements Going Concern Assumption

Not applicable.

Significant Changes in Shareholders' Equity

Legal Corp. issued restricted stock as remuneration on December 20, 2019. As a result, share capital and capital surplus increased 90 million yen each.

In addition, Legal Corp. issued restricted stock as remuneration on February 14, 2020. As a result, share capital and capital surplus increased 40 million yen each.

As of the end of the third quarter of the current fiscal year, share capital was 788 million yen and capital surplus was 698 million yen.

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.

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