8897.T

Overall Financial Result

• YoY decrease in both revenue and profit for the first half, driven primarily by the core newly-built condominium business, where completion and handover are concentrated in the second half of the fiscal year, resulting in just 30% of the prior year's first half completion and sales volume.
• Contract progress rate for newly-built condominiums is 76.1%, which is lower than the prior year but roughly on track with plan, with total contracted units already exceeding prior year levels at 2,147 units.

Cost Management

• Selling, general and administrative (SG&A) expenses reduced by 0.64 billion yen YoY, driven primarily by advertising cost optimization; offset by 0.145 billion yen increase in personnel costs from base pay raises and headcount expansion, plus 0.172 billion yen increase in other SG&A from higher public duties tied to renovation resale business growth.

Balance Sheet and Asset Structure

• Inventory assets increased 28 billion yen compared to end of prior fiscal year, driven by land purchases for condominium development and unhanded completed units concentrated in the second half, leading to a corresponding increase in borrowings.
• 66% of tangible fixed assets are power generation facilities, serving as a stable source of income. Liquidation segment assets total 45.128 billion yen, accounting for 27% of total fixed assets; 51% of liquidation assets are residential, 22% are office, totaling 73% of the segment, aligned with market demand.
• 35.4 billion yen in unsegmented borrowings for corporate working capital, of which 8 billion yen is corporate bonds.

New Business and Strategic Updates

• The "Leven Higashikawaguchi GRANDEST" condominium won the Good Design Award for its integrated station-administration-housing complex that addresses local community challenges. The "L.Biz Matsuyama Ichibanchō" office building earned ZEB Ready certification and top 6-star BELS rating for 59% non-renewable energy reduction, scheduled for December completion.
• MIRARTH led a corporate group to win the first Park-PFI public-private partnership project for Sakuragawa Park in Chuo Ward, Tokyo, to redevelop and operate the park under three community-focused concepts.
• Group subsidiary Leben Community co-exhibited a new cable theft prevention solution for solar power plants with Mitsui Sumitomo Insurance at PV EXPO, which has received strong interest from industry operators.
• Group-owned auberge "Nasu Muku no Oto" retained its Michelin key award for the second consecutive year. The group has launched a cross-segment synergy initiative to supply renewable power from group-owned generation facilities to group-managed rental residences, with more synergy initiatives planned.

• Full-year fiscal 2026 March guidance is maintained unchanged, as all segments are progressing in line with plan despite first half revenue dips from scheduling timing.
• The full-year sales target of 2,820 newly-built condominium units remains on track, with 82.8% progress for Q3 planned units and 71% progress for Q4 planned units as of the end of Q2.
• A progressive dividend policy is introduced to maintain stable dividends; the full-year dividend is planned at 21 yen per share, with a 5 yen interim dividend and 16 yen year-end dividend, for a planned payout ratio of 35.7%.
• Management continues to target achievement of all key performance indicators under the new medium-term management plan.

1. Newly-built condominium (for-sale): Sales revenue of 13.5 billion yen, down 67.8% year-over-year (YoY); gross profit of 2.5 billion yen, down 73.9% YoY. 2. Securitization (liquidation): Sales revenue of 12.5 billion yen, down 17.8% YoY; gross profit of 2.5 billion yen, down 11.2% YoY. 3. Newly-built detached housing for-sale: Sales revenue up 30.2% YoY, gross profit up 54.9% YoY; 92 units sold in H1, 250 units full-year target. 4. Renovation and resale: Sales revenue down 28.4% YoY, gross profit up 8.6% YoY; 112 units sold in H1, 167 units full-year target. 5. Real estate leasing: Sales revenue up 9.9% YoY, gross profit up 53.8% YoY. 6. Real estate management: Sales revenue up 10.3% YoY, gross profit up 28.7% YoY. 7. Energy business: Sales revenue up 10.5% YoY, gross profit up 34.5% YoY. 8. Asset management: Sales revenue down 17.5% YoY, gross profit down 32.6% YoY due to no public capital raising in the period. Total consolidated sales revenue for the second quarter: 56.561 billion yen, operating profit of 12 million yen, ordinary loss of 1.598 billion yen, net loss of 0.878 billion yen.

• Soft listed REIT share prices have made equity-funded property purchases more challenging than in prior periods, creating headwinds for the liquidation segment's sales to REITs.
• Cable theft at solar power generation facilities was a significant cost issue in the prior year, though the company has now implemented effective countermeasures that eliminated theft and related additional costs in the reporting quarter.

Q: Newly-built condominium second half performance is clear from existing contracted inventory, but what is the outlook for liquidation segment sales in the second half, given soft REIT share prices that make REIT equity-funded purchases difficult? Can you confirm if full-year liquidation targets can still be met, including alternative sale channels like private funds? / A: Liquidation sales are progressing as planned, with sales activities ongoing for the second half. The company does not rely solely on REIT sales; if REIT secondary offerings do not proceed, the company will divest portions via bridge sales to other third-party buyers or private funds as appropriate. Management expects the liquidation segment will hit full-year targets roughly in line with plan.

Q: Can you explain how overseas business revenue and profit are reflected in MIRARTH's financials, and is this business growing? Most overseas projects I understand are in the Philippines, mostly associated with the condominium segment, are these not consolidated? / A: Overseas business is treated as an investment activity, with results reflected as equity method investment gains/losses in non-operating income, not in segment revenue. All currently listed overseas projects are equity-method investments, not consolidated subsidiaries, so they are not included in consolidated sales revenue, which matches the questioner's understanding.