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

March 14, 2022

CRE Inc.

Summary of Financial Statements (Unaudited)

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

(Translated from the Japanese original)

Corporate Information

Code: 3458 Listing: First Section 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): March 16, 2022

Expected date of payment for dividends: ―

Preparation of supplementary explanation material for quarterly financial results: Yes

Presentation meeting for quarterly financial results: Yes (Video presentation of financial results will be available on the Company's website.)

(Rounded down to the nearest million)

1. Consolidated Performance for the first two quarters of Fiscal 2022 (August 1, 2021 through January 31, 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 two quarters of Fiscal 2022	37,194		7.0	6,106	4.3	5,656	(0.5)	4,168	3.4
First two quarters of Fiscal 2021	34,752		204.1	5,853	956.4	5,684	―	4,032	―

(Note) Comprehensive income: 4,065 million yen (9.6%) for the first two quarters of fiscal 2022 3,710 million yen (448.4%) for the first two quarters of fiscal 2021

	Net income per share	Fully diluted net
	income per share
	Yen	Yen
First two quarters of Fiscal 2022	145.06	144.87
First two quarters of Fiscal 2021	147.37	147.12

(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 two 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 two quarters of Fiscal 2022		98,331	34,482	35.0
Fiscal 2021		99,041	26,746	26.9

(Reference) Equity capital: 34,407 million yen for the first two 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 two 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: Yes

Please refer to "Notice Concerning Revision of Earnings Forecast" announced on March 14, 2022 about anticipated consolidated results for Fiscal 2022.

*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 January 31, 2022
   27,468,800 shares at July 31, 2021
2. Number of shares of treasury stock at end of term:

5,245 shares at January 31, 2022

4,311 shares at July 31, 2021

3. Average outstanding number of shares (quarterly cumulative period): 28,736,334 shares at January 31, 2021

27,366,994 shares at January 31, 2020

*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

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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 January 31, 2022
	Millions of yen	Millions of yen
Assets
Current assets
Cash and deposits	19,473	26,880
Accounts receivable-trade	709	―
Notes and accounts receivable - trade, and contract assets	―	558
Notes receivable-trade and accounts receivable from	473	―
completed construction contracts
Accounts receivable from completed construction contracts	―	243
Real estate for sale	24,920	9,251
Real estate for sale in process	27,342	36,958
Advance payments-trade	1,983	1,754
Prepaid expenses	1,360	1,408
Others	551	665
Allowance for doubtful accounts	(25)	(23)
Total current assets	76,790	77,697
Fixed assets
Tangible fixed assets
Buildings and structures	4,308	3,384
Accumulated depreciation	(2,062)	(2,006)
Buildings and structures (net)	2,245	1,378
Machinery, equipment and vehicles	416	78
Accumulated depreciation	(274)	(73)
Machinery, equipment and vehicles (net)	141	4
Tools, furniture and fixtures	214	232
Accumulated depreciation	(139)	(150)
Tools, furniture and fixtures (net)	74	81
Land	1,896	1,041
Lease assets	493	546
Accumulated depreciation	(285)	(302)
Lease assets (net)	207	244
Total tangible fixed assets	4,565	2,750
Intangible fixed assets
Goodwill	1,290	1,161
Others	340	402
Total intangible assets	1,630	1,563
Investments and other fixed assets
Investment securities	7,884	7,810
Claims provable in bankruptcy, claims provable in	33	26
rehabilitation and other
Long-term prepaid expenses	1,014	938
Deferred tax assets	24	31
Lease and guarantee deposits	7,022	7,434
Others	85	84
Allowance for doubtful accounts	(36)	(29)
Total investments and other fixed assets	16,028	16,296
Total fixed assets	22,224	20,610
Deferred assets
Bond issuance cost	26	23
Total deferred assets	26	23
Total assets	99,041	98,331

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	Fiscal 2021	Fiscal 2022
	As of July 31, 2021	As of January 31, 2022
	Millions of yen	Millions of yen
Liabilities
Current liabilities
Accounts payable-trade	7,018	6,803
Accounts payable for construction contracts	157	205
Short-term loans payable	600	300
Current portion of long-term loans payable	2,050	2,755
Lease obligations	36	48
Accrued corporate and other taxes	1,027	2,156
Deposits received	1,498	371
Unearned revenue	1,808	1,849
Allowance for employees' bonuses	68	71
Allowance for directors' bonuses	300	―
Allowance for sublease losses	13	18
Allowance for loss on construction contracts	9	8
Others	386	1,294
Total current liabilities	14,975	15,884
Fixed liabilities
Bonds payable	3,000	3,000
Long-term loans payable	44,002	35,128
Lease obligations	267	294
Liability for retirement benefits	255	268
Allowance for loss on guarantees	30	31
Asset retirement obligations	274	286
Allowance for sublease losses	15	12
Lease and guarantee deposits received	7,931	8,087
Deferred tax liabilities	234	182
Investment deposit in silent partnership	1,064	449
Others	241	223
Total fixed liabilities	57,319	47,965
Total liabilities	72,295	63,849
Net assets
Shareholders' equity
Common stock	3,071	5,217
Capital surplus	5,031	7,177
Retained earnings	17,157	20,704
Treasury stock	(0)	(0)
Total shareholders' equity	25,260	33,099
Accumulated other comprehensive income
Unrealized gains (losses) on investment securities	1,470	1,340
Deferred gains (losses) on hedges	(25)	(26)
Foreign currency translation adjustment	(41)	(6)
Total accumulated other comprehensive income	1,402	1,308
Non-controlling interests
83	75
Total net assets	26,746	34,482
Total liabilities and net assets	99,041	98,331

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