Full Year Results of MOH

Statement of Comprehensive Income for MINNADEOOYASAN-HANBAI Co., Ltd.

For the years ended 31 March 2023 and 31 March 2024

Statement of Financial Position for MINNADEOOYASAN-HANBAI Co., Ltd.

As at 31 March 2023 and 31 March 2024

Statement of Cash Flows for MINNADEOOYASAN-HANBAI Co., Ltd.

For the years ended 31 March 2023 and 31 March 2024

Statement of Changes in Equity for MINNADEOOYASAN-HANBAI Co., Ltd.

For the years ended 31 March 2023 and 31 March 2024

Notes to the financial information

1.    General Information

MINNADEOOYASAN-HANBAI Co., Ltd. ("MOH") was incorporated in August 1998 as a limited company, and has its registered office at 3F Grace Kojimachi, 12-3, Nibancho, Chiyoda-ku, Tokyo. Tokyo, Japan.

MOH's primary business activity revolves around serving as a funding platform that facilitates and arranges real estate crowdfunding activities in Japan. Real estate crowdfunding is a fundraising method limited to operators authorised under the "Act on Specified Joint Real Estate Ventures." Through this method, businesses can raise funds from investors online and utilise the accumulated funds as capital for engaging in real estate transactions. This segment accounted for 67 per cent. of the total revenues as of 31 March 2024.

Commencing from the fiscal year 2022 (01/04/2021-31/03/2022), MOH has broadened its operations to encompass the independent preparation, development, purchase, and sale of real estate properties.

Beginning in the fiscal year 2023 (01/04/2022-31/03/2023), MOH has entered into a "Joint Business Agreement" with its group company, TSIB and TSIF, wherein MOH will engage in the development, purchase, and sale of real estate properties in collaboration with TSIB, and sell the real estate to TSIF. This segment is referred to as "Revenue from Real Estate Joint Development Business."

During the 2023 fiscal year, MOH shared 2 per cent. of the revenue generated from the Real Estate Joint Development Business, and MOH's share increases to 5 per cent. for the 2024 fiscal year, with a further increase in its share to 10 per cent. commencing from the 2025 fiscal year. As of 31 March 2024, the revenue from Real Estate Joint Development Business constituted 33 per cent. of the total revenues.

2.    Accounting policies

2.1 Basis of Accounting

Currency

MOH maintains its books and records in its local currency, Japanese YEN ("JPY"), which is a functional currency as being the primary currency of the economic environment in which its operation is conducted. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of profit or loss.

Statement of compliance

The financial statements of MOH for each of the two years ended 31 March 2024 were prepared in accordance with accounting principles generally accepted in Japan (J GAAP) as issued by the Accounting Standards Board of Japan and were audited by AKASAKA・KAIO Certified Public Accountants Joint Firm, 307 Ichigaya Hoso Building, 4-1-5 Kudan-kita, Chiyoda-Ku, Tokyo.

Adjustments were made where necessary to present this financial information in accordance with International Financial Reporting Standards (IFRS), including IFRIC interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union and with those parts of the Act applicable to companies reporting under IFRS. The financial information has been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

These policies have been consistently applied.

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying MOH's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Although these estimates are based on management's experience and knowledge of current events and actions, actual results may ultimately differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

2.2 Going concern

This financial information has been prepared on the assumption that MOH is a going concern. When assessing the foreseeable future, the MOH Directors, being Makoto Oguma, Hoken Yanase and Hiromitsu Sakai, have looked at a period of at least twelve months from the date of approval of this report and the working capital requirements of MOH.

After making enquiries, the MOH Directors firmly believe that together with their support, MOH has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial information.

2.3 New and amended standards adopted by MOH

New, amended standards, interpretations not adopted by MOH.

Management has not yet fully assessed the impact of these standards but does not believe they will have a material impact on the financial statements.

2.4 Segmental Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the MOH Directors. MOH's primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently only one geographic reporting segment, which is Japan. All revenue and costs are derived from the single geographic segment.

2.5 Leases

MOH leases buildings and equipment.

Right-of-use assets

The right-of-use asset is recognised at the commencement date of the lease (when the asset is ready for use) and initially measured at cost. The cost includes the balance of the lease liability recognised, initial direct costs and lease payments made at or before the commencement date. In subsequent periods, the value of the right-of-use assets is adjusted for accumulated depreciation, impairment losses and remeasurement of the lease liability, if any. The depreciation is on a straight-line basis over the shorter of the estimated useful life of the underlying asset and the lease term.

Lease liabilities

At the commencement date, lease liabilities are measured at the net present value of the remaining lease payments, discounted using the interest rate implicit in the lease or, when not available, the incremental borrowing rate computed for a group of leases with similar characteristics as regards to type of asset, lease term, contract currency and economic environment. The carrying amount of the lease liabilities is subsequently increased to reflect the interest on the lease liability and decreased by the lease payments made during the period. Lease payments are split between principal elements and interest and are allocated to net cash flows from financing activities and operating activities, respectively. The carrying amount is subject to remeasurement in subsequent periods to reflect any lease modifications.

2.6 Revenue recognition

Revenue is recognised in accordance with the requirements of IFRS 15 'Revenue from Contracts with Customers'.

MOH recognises revenue at the amount to which it expects to be entitled when control of the real estate or services is transferred to its customers. Control is generally transferred when MOH has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers.

Specifically, MOH's revenue consists of Fundraising Commission Fee and Sales of Real Estate or Real Estate Joint Development Business. Concerning the Fundraising Commission Fee, control is transferred when customers sign the agreement, and funds are subsequently transferred by the customers. For Sales of Real Estate or Real Estate Joint Development Business, control is transferred on the effective date of the Transaction Contract for real estate. Payments for Fundraising Commission Fee, Sales of Real Estate, or Real Estate Joint Development Business are collected within a short period following the transfer of control which is deemed to be the fulfilment of the performance obligations or the commencement of the delivery of services, as applicable.

Cost of sales related to delivered real estate, including land development costs, and building construction costs are recognised as cost of sales as incurred.

MOH adopted IFRS 15-Revenue from contracts with customers: (1) Identify the contract; (2) Identify separate performance obligations; (3) Determine the transaction price; (3) Allocate transaction price to performance obligations; (5) Recognise revenue when each performance obligation is satisfied.

2.7 Financial assets and liabilities

Recognition and initial measurement

MOH initially recognises loans and advances, trade and other receivables/payables, and borrowings plus or minus transactions costs when and only when MOH becomes party to the contractual provisions of the instruments.

Financial assets at amortised cost

MOH's financial assets at amortised cost comprise trade and other receivables. These represent debt instruments with fixed or determinable payments that represent principal or interest and where the intention is to hold to collect these contractual cash flows.

They are initially recognised at fair value, included in current and non-current assets, depending on the nature of the transaction, and are subsequently measured at amortised cost using the effective interest method less any provision for impairment.

Financial liabilities at amortised cost

Financial liabilities at amortised cost comprise trade and other payables. They are classified as current and non-current liabilities depending on the nature of the transaction and are subsequently measured at amortised cost using the effective interest method.

Financial assets

MOH derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which MOH neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Financial liabilities

MOH derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

2.8 Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less from acquisition and subject to insignificant risk of changes in value and bank overdrafts.

2.9 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.10 Property, plant, equipment and software

Property, plant, equipment and software are stated at historical cost less subsequent accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to MOH and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation on Property, plant, equipment and software are calculated using the straight-line method to write off their cost over their estimated useful lives.

Non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Value in use is based on the present value of the future cash flows relating to the asset and is determined over periods which are deemed to appropriately reflect the minimum expected period that the cash generating unit will operate for.

The estimated useful lives of assets are as follows:

Buildings: 47 years

Plant and equipment: 10 years

Furniture and fixtures: 3 - 15 years

lump-sum depreciable asset: 3 years

2.11 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income and expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. MOH's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences.

Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where MOH is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which MOH expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current or deferred tax for the year is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

2.12 Trade and other receivables

MOH assesses on a forward-looking basis the expected credit losses associated with its receivables carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, MOH applies the simplified approach permitted by IFRS 9, resulting in trade receivables recognised and carried at original invoice amount less an allowance for any uncollectible amounts based on expected credit losses. The simplified approach uses a lifetime expected loss allowance. Expected credit losses are recognised from initial recognition based on MOH's historical credit loss experience, factors specific to each receivable, the current economic climate and expected changes in forecasts of future events.

Changes in expected credit losses are recognised in the Statement of Profit or Loss and Comprehensive Income.

2.13 Intangible assets

Intangible fixed assets are stated at cost, whether purchased or developed internally, net of amortisation and any provision for impairment. Amortisation is calculated to write down the cost of all intangible fixed assets to their estimated residual value by equal annual instalments over their expected useful economic lives.

Software 3 - 15 years

Amortisation is charged to the Statement of Comprehensive Income.

3. Critical accounting estimates and judgements

MOH makes certain judgements and estimates which affect the reported amount of assets and liabilities. Critical judgements and the assumptions used in calculating estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In the process of applying MOH's accounting policies, which are described above, the MOH Directors do not believe that they have had to make any assumptions or judgements that would have a material effect on the amounts recognised in the financial information.

4. Financial Risk Management

MOH's activities may expose it to some financial risks. MOH's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on MOH's financial performance.

(a) Liquidity risk

Liquidity risk is the risk that MOH will encounter difficulty in meeting obligations associated with financial liabilities. The responsibility for liquidity risks management rest with the board of directors of MOH, which has established appropriate liquidity risk management framework for the management of MOH's short term and long-term funding risks management requirements. During the period under review, MOH has not utilised any borrowing facilities. MOH manages liquidity risks by maintaining adequate reserves by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.

(b) Capital risk

MOH takes great care to protect its capital investments. Significant due diligence is undertaken prior to making any investment. The investment is closely monitored.

Financial risk management of financial instruments

All financial instruments are measured at amortised cost. Fair value hierarchy all the financial assets and financial liabilities recognised in the financial statements which are short-term in nature are shown at the carrying value which also approximates the fair values of those financial instruments. Therefore, no separate disclosure for fair value hierarchy is required.

MOH's activities expose it to a variety of financial risks, mainly credit risk and liquidity risk.

Market risk is defined as the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. MOH's market risks arise from open positions in (a) interest bearing assets and liabilities, and (b) foreign currencies; to the extent that these are exposed to general and specific market movements (see details below).

(i) Interest rate risk: MOH's interest-bearing assets comprise of only cash and cash equivalents. As MOH's interest-bearing assets do not generate significant amounts of interest; changes in market interest rates do not have any significant direct effect on its income.

Credit risk: Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to MOH. Credit risk arises from cash balances (including bank deposits, cash and cash equivalents) and credit exposures to trade receivables. MOH's maximum exposure to credit risk is represented by the carrying value of cash and cash equivalents and other receivables.

Liquidity risk: Trade and other payables are monitored as part of normal management routine. Borrowings and other liabilities mature according to the following schedule:

5. Revenues and cost of revenues

From 1 April 2022 to 31 March 2024, MOH generated 100 per cent. of its revenues in Japan.

6. Expenses by nature and personnel

7. Personnel

The cost of employees (including MOH Directors) during the period was made up as follows:

The number of employees and retirees of MOH are as follows:

Key management personnel are as follows:

Hiromitsu Sakai

Takehiko Oshima

Yusuke Shigetomi

Aggregate remuneration for key management personnel amounts to 2024: JPN 35,336,601 (2023: JPN 38,743,396).

8. Taxation

Deferred tax liabilities

The deferred tax liability occurred when the interim corporate income tax payment was declared on 29 November 2022. When the corporate income tax finalisation was filed on 30 June 2023, MOH revealed the occurrence of an overpayment of interim tax returns. Therefore, when the tax return was filed, it was allocated to the deferred tax liability and the business tax refund was processed at the rate of 34.59 per cent.

Tax rate

Notes:

Tax amount on final tax return omits amount numbers below JPY1,000;

Tax amount on final tax return include the income tax deduction of JPY4,278;

"The nominal tax rate is simply the sum of the tax rates for corporate taxes and other taxes specified by law. In contrast, the effective tax rate is used to calculate a tax payment amount that is more in line with the actual situation based on the nominal tax rate."

1. The tax rate of 30.62 per cent. is the statutory tax rate for corporations subject to pro forma standard taxation (ordinary corporations with paid-in capital exceeding JPY 100 million), assuming that they have offices in the 23 wards of Tokyo, but MOH applies the effective tax rate for corporations with paid-in capital of JPY 100 million or less (based on excess tax rate), so the tax rates are different.

2. Regarding the difference in tax rates in 2024, according to the corporate tax return, MOH's taxable income in 2024 is JPY 3,192,288,573. The taxes incurred by MOH are calculated at the effective tax rate (based on excess tax rate) for corporations with capital of JPY 100 million or less in Japan, using the following tax rates

- Corporate tax rate of 23.2 per cent. (Small and medium-sized corporations with capital of JPY 100 million or less and income of JPY 8 million or less are subject to a reduced tax rate of 15 per cent.). JPY 1,200,000 for corporate tax on taxable income of JPY 8 million or less, JPY 739,950,500 for corporate tax on taxable income of JPY 8 million or more.

- Local corporate tax rate of 2.39 per cent.: JPY 76,215,200

- Prefectural corporate tax rate 2.41 per cent.: JPY 75,433,200

-Business tax rate of 7.48 per cent.: JPY 238,560,500

- Special corporate business tax rate of 2.59 per cent.: JPY 82,602,900

- The total was JPY 1,212,762,300. Adding the income tax deduction and municipal tax, the total tax amount is JPY 1,214,944,800. This was the tax amount before any adjustments were made. Therefore, this tax rate was correctly calculated without applying tax effect accounting.

9. Earnings per share

Basic earnings per share is calculated by dividing the income attributable to equity holders of MOH by the weighted average number of ordinary shares in issue during the period.

10. Capital risk management

The MOH Directors' objectives when managing capital are to safeguard MOH's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. At the date of this financial information, MOH had been financed by the introduction of capital. In the future, the capital structure of MOH is expected to consist of borrowings and equity attributable to equity holders of MOH.

11. Property, plant, equipment and software

12. Cash and cash equivalents

13. Trade and other payables