REG - MOH Nippon PLC - Full Year Results of MOH
23/09/2024 07:00
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RNS Number : 2039F MOH Nippon PLC 23 September 2024
This announcement contains inside information for the purposes of Article 7 of
Regulation 2014/596/EU which is part of domestic UK law pursuant to the Market
Abuse (Amendment) (EU Exit) regulations (SI 2019/310).
23 September 2024
MOH Nippon Plc
(the "Company")
Full Year Results of MINNADEOOYASAN-HANBAI Co., Ltd. ("MOH")
MOH Nippon Plc (formerly Bowen Fintech plc) (LSE: MOH), a crowdfunding
services provider for real estate investment in Japan, announces the results
for the 12 months ended 31 March 2024 for MOH, the Japan incorporated
operating entity of the Company following the completion of the acquisition of
97.41% of the issued share capital, via a reverse takeover, of MOH by the
Company on 19 August 2024. Accordingly, these results are for a period prior
to the acquisition of MOH by the Company and do not represent consolidated
accounts of the Company and MOH.
The results set out below do not constitute MOH's statutory IFRS accounts but
are derived from MOH's financial statements for the 12-month period to 31
March 2024 audited locally under Japanese GAAP and adjusted for IFRS as
described in Note 2.1 of the Notes to the Financial Information set out below.
The Japan audit was unqualified.
Highlights
· Revenue increased by 99% to JPY 11.11 billion (c. £58.7 million)
(2023: JPY 5.59 billion (c. £29.5 million))
o Crowdfunding services revenue grew to JPY 7.41 billion (2023: JPY 3.72
billion) and accounted for 67% of total revenue
o Real estate development revenue grew to JPY 3.70 billion (2023: JPY 1.86
billion) and accounted for 33% of total revenue
· Profit before tax increased by over 4 times to JPY 3.17 billion (c.
£16.8 million) (2023: JPY 0.73 billion (c. £3.9 million)) and total
comprehensive incomes increased by almost 4 times to JPY 2.08 billion (c.
£11.0 million) (2023: JPY 0.53 billion (c. £2.8 million))
· Net assets of JPY 5.58 billion at 31 March 2024 (c. £29.5 million)
(31 March 2023: JPY 3.50 billion (c. £18.5 million))
* All GBP figures based on an exchange rate of JPY 189.17: GBP 1.00
Further details regarding the acquisition of MOH can be found in the Company's
prospectus dated 31 July 2024, which is available, alongside the Company's
annual report and accounts for the year ended 30 April 2024, on the Company's
website here (https://mohnippon.com/wp-content/uploads/Annual-Report-2024.pdf)
.
Enquiries
MOH Nippon Plc
Hoken Yanase, Chief Executive Officer c/o +44 (0)20 4582 3500
Frankie Leung, Chief Financial Officer c/o +44 (0)20 4582 3500
Cairn Financial Advisers LLP
Emily Staples +44 (0)20 7213 0897
Jo Turner +44 (0)20 7213 0885
Gracechurch Group
Harry Chathli, Claire Norbury +44 (0)20 4582 3500
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.
Review of results for the year
MOH achieved record highs in both its revenue and net profit. For the fiscal
year ending 31 March 2024, MOH reported revenue of JPY 11,107 million and a
profit before tax of JPY 3,174 million, reflecting substantial year-on-year
growth of 99% and 334%, respectively. MOH's financial results reflect change
in the revenue model from 1 April 2023 as described below and management's
clear operational priorities centered around driving revenue and controlling
costs.
Following the period under review, on 19 August 2024, the Company achieved a
significant milestone with its shares being successfully readmitted to the
Official List of the Financial Conduct Authority and recommencing trading on
the Main Market of the London Stock Exchange pursuant to a reverse takeover of
the Company by MOH.
Revenue
Fees from Crowdfunding:
Revenue from crowdfunding fees increased by 98%, rising from JPY 3,732 million
in FY23 to JPY 7,404 million in FY24. This surge is primarily due to the
change in the revenue model, which took place on 1 April 2023, from MOH
receiving a fixed fee of JPY 120 million per month to it receiving 10% of the
land transfer price paid by Toshi-Souken Invest Fund Inc. ("TSIF"). The land
transfer price represents the estimated costs of the commercialisation work
performed by MOH as well as construction costs outsourced by Toshi-Souken
Invest Bank Inc. ("TSIB") and/or MOH to finalise the project and any ancillary
fees and expenses incurred and expected to be incurred.
Fees from Real Estate Development:
During FY24, MOH collaborated with TSIB on the commercialisation, development,
and sale of land from the 'Narita No.16 series', 'Narita No.17 series' and
'Narita No.18 series'. MOH retained a 5% (FY23: 2%) share of total land
sales, contributing JPY 3,702 million in revenue, almost doubling the amount
compared to FY23. The corresponding cost of land sold in FY23 was JPY 2,648
million.
Selling, general, and administrative expenses ("SG&A")
SG&A for FY24 amounted to JPY 5,354 million (FY23: JPY 4,903 million), an
increase of 9.2% compared to the prior fiscal year. SG&A was predominantly
driven by advertising and promotional expenses, which totaled JPY 4,908
million (FY23: JPY 4,550 million), representing 92% of total SG&A (FY23:
92%). Personnel expenses, accounting for 4% of SG&A (FY23: 4%), rose to
JPY 189 million, reflecting MOH's ongoing business expansion. The significant
increase in advertising costs is aligned with MOH's higher fundraising
activities during the period under review.
Profit before tax
Combined, the above gave rise to an underlying profit before tax for the year
of JPY 3,174 million, an increase of 4.3 times on the prior year (FY23: JPY
731 million) and resulting in a profit margin of 28.6%, up by 15.5 points on
last year's margin of 13.1%.
Non-current assets
Non-current assets, including property, plant, equipment, software, guarantee
deposits, and lease assets, decreased by 22% in FY24 compared to FY23. The
primary driver for this decline was the refund of guarantee deposits amounting
to JPY 500 million, as MOH was no longer required to place deposits to secure
credit limits.
Cash and cash equivalents
Cash and cash equivalents experienced a notable increase, rising from JPY 349
million in FY23 to JPY 7,251 million in FY24. This growth was predominantly
driven by the strong net profit generated by MOH during the fiscal year. This
in turn was a result of the change in contractual terms from a fixed fee of
JPY 120 million per month to 10% of the land transfer price paid by TSIF for
MOH's crowdfunding activities mentioned earlier in this report.
Advance payments
The balance primarily includes prepayments for upcoming advertising campaigns
amounting to JPY 177 million, alongside gift card expenses totaling JPY 5
million. The increase is largely attributable to forthcoming marketing
initiatives.
Prepaid expenses
The increase in prepaid expenses from JPY48 million in FY23 to JPY 320 million
in FY24 was mainly driven by the prepayment for establishment of the
industrial real estate cold-chain logistics business of JPY 191 million and
purchase of gift cards of JPY 81 million.
Income tax payable
The increase in taxable income in FY24 resulted in a significant increase in
the corporate income tax charge for the year and the year-end creditor
position.
Cash flow
Net cash increased from JPY 349 million in FY23 to JPY 7,251 million in FY24.
The main components of the change in net cash position were:
· a JPY 6,395 million net cash inflow from operating activities (FY23:
JPY 1521 million net cash outflow); and
· a JPY 506 million net cash inflow from investing activities (FY23:
outflow of JPY 1,103 million), with the refund of guarantee deposits of JPY
500 million.
The major driver of the increase in JPY 6,395 million net cash inflow from
operating activities in the year was the increase in the profit from
operations, which contributed a JPY 1,963 million increase in cash. This was
further increased by net cash inflow from working capital and provisions of
JPY 4,431 million.
Earnings per share
Basic earnings per share for MOH in FY24 was JPY 6,333, representing an
increase of 3.9 times on the prior year (FY23: JPY 1,630) driven by the
substantial increase in underlying profits. (Details on the basic and diluted
earnings per share are provided in Note 9 in the Notes to the financial
information).
Risks
The principal risks and uncertainties associated with the business and
operations of MOH are set out in the prospectus of the Company dated 31 July
2024. The Directors believe that these risks and uncertainties remain relevant
to the business at the time of finalising these FY24 accounts.
Statement of Comprehensive Income for MINNADEOOYASAN-HANBAI Co., Ltd.
For the years ended 31 March 2023 and 31 March 2024
In JPY Notes 31 March 2023 31 March 2024
Revenues 5 5,587,263,363 11,106,750,000
Cost of revenues 5 - (2,647,844,739)
Gross profit 5,587,263,363 8,458,905,261
Other income 46,366,241 68,873,197
Donation income - -
Gain on forgiveness of debts - -
General and administrative expenses 6 (4,902,505,461) (5,353,526,007)
Other expenses - (121,994)
Operating profit 731,124,143 3,174,130,457
Loss on retirement of property - (436,509)
Extraordinary expenses - (436,509)
Profit before tax 731,124,143 3,173,693,948
Tax expense 8 (183,546,595) (1,214,944,800)
Income taxes adjustment 8 (12,945,000) 118,057,000
Profit for the year from continuing operations 534,632,548 2,076,806,148
Profit for the year 534,632,548 2,076,806,148
Earnings per share
Basic earnings per share 9 1,630.25 6,332.79
Diluted earnings per share 9 1,589.54 6,174.63
BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 327,945 327,945
DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 336,345 336,345
Total comprehensive income for the year 534,632,548 2,076,806,148
Statement of Financial Position for MINNADEOOYASAN-HANBAI Co., Ltd.
As at 31 March 2023 and 31 March 2024
In JPY Notes 31 March 2023 31 March 2024
Assets
Non-current
Property, plant, equipment 11 9,092,183 10,197,836
Software 11 6,390,485 3,877,252
Contribution 130,100 130,100
Guarantee deposits 19 1,802,262,905 1,302,162,660
Membership rights 20 8,875,000 8,875,000
Lease asset 16 37,819,821 22,744,716
Deferred tax asset - 105,112,000
Non-current assets 1,864,570,494 1,453,099,564
Current
Accounts receivable 20,987 424,173
Advance payments 21 61,764,132 177,014,954
Prepaid expenses 22 48,407,021 320,163,968
Other deposits 3,380 503,000
Amounts due from group companies 2,446,444,947 753,516,881
Corporate tax receivable 58,988,285 -
Sales tax receivables - 270,097,100
Cash and cash equivalents 12 349,351,052 7,250,521,845
Current assets 2,964,979,804 8,772,241,921
Total assets 4,829,550,298 10,225,341,485
Equity and liabilities
Equity
Share capital - Common stock 14 97,500,000 97,500,000
Share capital - Preferred stock 14 2,500,000 2,500,000
Other components of equity 14 721,900,000 475,500,000
Retained earnings 15 2,925,141,258 5,001,947,406
Treasury stock 14 (246,400,000) -
Total equity 3,500,641,258 5,577,447,406
Liabilities
Non-current
Long-term lease liability 16 21,221,957 15,118,962
Deferred tax liabilities 8 12,945,000 -
Non-current liabilities 34,166,957 15,118,962
Current
Accounts payable 13 644,437,575 792,920,972
Income taxes payable 355,000 1,231,690,815
Sales tax payables 103,869,600 -
Other creditors 4,126,662 2,595,273
Accruals 11,615,698 -
Amounts due to group companies 507,787,607 2,593,737,524
Short-term lease liability 16 16,451,436 7,575,892
Reserve for paid leave 18 6,098,505 4,254,641
Current liabilities 1,294,742,083 4,632,775,117
Total liabilities 1,328,909,040 4,647,894,079
Total Equity and liabilities 4,829,550,298 10,225,341,485
Statement of Cash Flows for MINNADEOOYASAN-HANBAI Co., Ltd.
For the years ended 31 March 2023 and 31 March 2024
In JPY 31 March 2023 31 March 2024
Operating activities
Operating profit 731,124,143 3,173,693,948
Adjustments for:
Depreciation and amortisation expense 3,234,326 4,638,061
Tax expense (183,546,595) (1,214,944,800)
Changes in operating assets and liabilities:
Accounts receivable (20,987) (403,186)
Advance payment (55,958,882) (115,250,822)
Prepaid expenses 98,762,357 (271,756,947)
Other deposits - (499,620)
Amounts due from group companies (2,043,745,189) 1,692,928,066
Short-term lease liability 2,073,331 (8,875,544)
Corporation tax receivable (52,294,617) 58,988,285
Other debtors - (83,006,800)
Accounts payable 200,827,274 148,483,397
Income taxes payable (575,038,320) 1,231,335,815
Sales tax payables 2,368,900 (103,869,600)
Other deposits 278,381 (1,531,389)
Accruals 525,371 (11,615,698)
Amounts due to group companies 349,014,892 2,085,949,917
Reserve for paid leave 1,325,294 (1,843,864)
Sales tax receivables - (270,097,100)
Cash (used in) provided by operating activities (1,521,070,321) 6,395,328,919
Cash flows from investing activities
Guarantee deposits (1,100,000,000) 500,100,245
Property, plant, equipment and software (1,171,200) (3,230,481)
ROU asset/ liability (2,104,752) 8,972,110
Net cash (used in) provided by investing activities (1,103,275,952) 505,841,874
Net Change in Cash and Cash Equivalents (2,624,346,273) 6,901,170,793
Cash and cash equivalents - beginning of period 2,973,697,325 349,351,052
Cash and cash equivalents - end of period 349,351,052 7,250,521,845
Statement of Changes in Equity for MINNADEOOYASAN-HANBAI Co., Ltd.
For the years ended 31 March 2023 and 31 March 2024
Notes Share capital Common Share capital Preferred stock Other components of equity Treasury stock Retained earnings Total equity
stock
In JPY
Balance at 31 March 2022 97,500,000 2,500,000 100,000,000 721,900,000 (246,400,000) 2,390,508,710 2,966,008,710
Total comprehensive income - - - - - 534,632,548 534,632,548
Balance at 31 March 2023 14 97,500,000 2,500,000 100,000,000 721,900,000 (246,400,000) 2,925,141,258 3,500,641,258
Balance at 31 March 2023 97,500,000 2,500,000 100,000,000 721,900,000 (246,400,000) 2,925,141,258 3,500,641,258
Total comprehensive income - - - - - 2,076,806,148 2,076,806,148
Amortisation of treasury stock - - - (246,400,000) 246,400,000 - -
Balance at 31 March 2024 14 97,500,000 2,500,000 100,000,000 475,500,000 - 5,001,947,406 5,577,447,406
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.
Standard Description Effective date
IFRS 17 Insurance contracts *1 January 2023
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.
Fees from crowdfunding Revenues from real estate business
1. Identify the contract
Approval Joint Business Agreement
Real Estate Purchase and Sale Agreement
Rights Assist TSIF in the operations related to the Real Estate Specified Joint Develop the subject real estate and transfer the developed subject real estate
Business conducted to TSIF
Payment Terms Stated in the Real Estate Purchase and Sale Agreement
Commercial Substance Revenue from service Revenue from selling goods
Collectability Yes: Stated in the Real Estate Purchase and Sale Agreement
2. Identify separate performance obligations
Good or service Service: operational support, mainly formation, design and selling fund Goods: Selling Real Estates
products
Entity's promise Promises made in contracts and agreements
3. Determine the transaction price
Prorated from the sale price of the real estate The sale of real estate price is determined by negotiation between seller and
buyer based on the market price
4. Allocate transaction price to performance obligations N/A
5. Recognise revenue when each performance obligation is satisfied
A point in time or over time A point over time A point over time
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:
31 March 2023 31 March 2024
JPY JPY
Within 1 year
Accounts payable 644,437,575 792,920,972
Other creditors 4,126,662 2,595,273
5. Revenues and cost of revenues
From 1 April 2022 to 31 March 2024, MOH generated 100 per cent. of its
revenues in Japan.
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Revenues
Service over time
Revenues from commission 3,732,000,000 7,404,500,000
3,732,000,000 7,404,500,000
Service at a point in time
Revenues from real estate business - -
Revenues from real estate business JV 1,855,263,363 3,702,250,000
1,855,263,363 3,702,250,000
Total 5,587,263,363 11,106,750,000
Cost of revenues
Purchases-real estate business - (2,647,844,739)
- (2,647,844,739)
Gross Profit 5,587,263,363 8,458,905,261
6. Expenses by nature and personnel
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Advertising expenses 4,549,961,807 4,908,387,002
Personnel expenses 189,252,323 188,819,389
Charge expenses 40,303,188 114,293,865
Consumables 16,263,458 12,819,927
Taxes and dues 563,486 5,660,665
Office rent 12,281,952 13,526,539
Communication expenses 59,384,273 57,010,466
Other administrative expenses 34,494,974 53,008,154
Total administrative expenses 4,902,505,461 5,353,526,007
7. Personnel
The cost of employees (including MOH Directors) during the period was made up
as follows:
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Salaries 157,910,968 152,963,928
Legal welfare expenses 23,380,318 26,948,886
Commutation expenses 4,547,509 6,057,848
Welfare expenses 3,413,528 2,848,727
Personnel expenses 189,252,323 188,819,389
The number of employees and retirees of MOH are as follows:
Monthly average Annual
employees retirees
April 2022 - March 2023 25 8
April 2023 - March 2024 25 8
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
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Tax expense 183,546,595 1,214,944,800
Income taxes adjustment 12,945,000 (118,057,000)
Total current tax 196,491,595 1,096,887,800
Deferred tax liabilities/ (assets) 12,945,000 (105,112,000)
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
Tax rate on Tax amount
Nominal Nominal tax Final on Final Effective Effective
JPY tax rate amount Tax Return Tax Return tax rate tax amount
Profit 3,173,693,948 3,173,693,948 3,173,693,948
Taxable income 3,192,288,573 3,192,288,573 3,192,288,573
1). Corporate income tax (15% tax rate for income up to 8,000,000; 23.2% tax 23.20% 740,610,949 23.18% 739,950,500 23.20% 740,610,949
rate for income over 8,000,000)
2). Local corporate tax 2.39% 76,295,697 2.39% 76,215,200 2.39% 76,295,697
3). Prefectural inhabitant tax 2.41% 76,934,155 2.36% 75,433,200 2.41% 76,934,155
4). Enterprise tax 7.48% 238,783,185 7.47% 238,560,500 7.48% 238,783,185
5). Special corporate enterprise tax 2.59% 82,680,274 2.59% 82,602,900 2.59% 82,680,274
Total (tax rate for companies with capital of 100 million or less (exceed tax 1)+2)+3)+ 4)+5)= 38.07% 1,215,304,260 1,212,762,300 1)+2)+3)+4) +5)/ 1,104,212,617
rate))
(1+4+5)=
34.59%
Municipal inhabitant tax 2,182,500
Total Tax Expense 38.07% 1,215,304,260 37.99% 1,214,944,800 34.59% 1,104,212,617
Income taxes adjustment (118,057,000) (118,057,000) -
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
Year to Year to
31 March 2023 31 March 2024
Basic loss per share is calculated by dividing the loss attributable to equity JPY JPY
shareholders by the weighted average number of ordinary shares in issue during
the period:
Income after tax attributable to equity holders shares in issue during the 534,632,548 2,076,806,148
period:
Basic weighted average number of common shares outstanding 327,945 327,945
Diluted weighted average number of common shares outstanding 336,345 336,345
Basic earnings per share 1,630.25 6,332.79
Diluted earnings per share 1,589.54 6,174.63
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
Property,
plant, Software
and equipment Total
JPY JPY JPY
Cost
At 1 April 2023 17,663,171 13,389,087 31,052,258
Additions 3,666,990 - 3,666,990
Disposals (4,880,571) - (4,880,571)
At 31 March 2024 16,449,590 13,389,087 29,838,677
Depreciation and amortisation
At 1 April 2023 8,570,988 6,998,602 15,569,590
Depreciation and amortisation 2,124,828 2,513,233 4,638,061
(4,444,062) - (4,444,062)
At 31 March 2024 6,251,754 9,511,835 15,763,589
Net book value
At 31 March 2023 9,092,183 6,390,485 15,482,668
At 31 March 2024 10,197,836 3,877,252 14,075,088
12. Cash and cash equivalents
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Cash-JPY 482,485 861,318
Ordinary account 348,868,567 7,249,660,527
349,351,052 7,250,521,845
13. Trade and other payables
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Accounts payable, other 644,437,575 792,920,972
644,437,575 792,920,972
14. Equity
Series 1 Preferred Stock
The authorised Series 1 Preferred Stock of MOH consists of 10,000 shares with
no par value. There were 8,400 shares of preferred stock issued and
outstanding at 31 March 2023 and 2024. The holders of Series 1 Preferred Stock
are entitled to receive dividends prior to the holders of common stock. The
shareholders of Series 1 Preferred Stock receive a dividend of 5 per cent. of
the amount paid. The shareholders of Series 1 Preferred Stock have no voting
rights.
On 16 January 2024, the 8,400 preferred stock in issue was acquired (and
cancelled) by MOH in exchange for common stock.
Common stock
The authorised common stock of MOH consists of 1,300,000 shares with no par
value. There were 327,945 shares of common stock issued and outstanding at 31
March 2023 and 2024. MOH has not yet set aside a dividend reserve.
The number of shares in issue were as follows:
Share capital
Common stock Preferred stock
Number Number
At 31 March 2023 327,945 8,400
At 31 March 2024 327,945 8,400
Other
Share premium components Treasury Retained Total
Common stock Preferred stock of equity stock earnings equity
Number Number JPY JPY JPY JPY
At 31 March 2023 97,500,000 2,500,000 721,900,000 (246,400,000) 2,925,141,258 3,500,641,258
At 31 March 2024 97,500,000 2,500,000 475,500,000 - 5,001,947,406 5,577,447,406
15. Accumulated earnings
Year to Year to
31 March 2023 31 March 2024
JPY JPY
At start of period 2,390,508,710 2,925,141,258
Profit for the period 534,632,548 2,076,806,148
At 31 March 2,925,141,258 5,001,947,406
16. Lease assets and liabilities
Balance sheet classification 31 March 2023 31 March 2024
JPY JPY
Right-of-use assets Lease assets 37,819,821 22,744,716
Current lease liabilities Short-term lease liability 16,451,436 7,575,892
Non-current lease liabilities Long-term lease liability 21,221,957 15,118,962
Lease assets
Unit: JPY
Lease assets Depreciation
31 March 2023
Epic Tokyo 8,766,902 (8,647,854)
Xymax Osaka 12,285,258 (3,229,822)
Fuji Xerox 5570 3,429,490 (881,483)
Fuji Xerox 5571, 2271 1,387,787 (1,366,512)
Fuji Xerox 5570 692,309 (289,151)
Fuji Xerox 5570 (2) 3,058,342 (128,801)
Fuji Xerox 5570 Addition 7,423,160 (312,625)
Pitney Bowes Postal charges measure 776,574 (93,010)
31 March 2024
Epic Tokyo - (8,766,902)
Xymax Osaka 9,004,427 (3,280,831)
Fuji Xerox 5570 2,534,292 (895,198)
Fuji Xerox 5571, 2271 - (1,387,787)
Fuji Xerox 5570 398,658 (293,651)
Fuji Xerox 5570 (2) 2,537,893 (520,449)
Fuji Xerox 5570 Addition 6,159,935 (1,263,225)
Pitney Bowes Postal charges measure 636,615 (139,959)
Stage First Kagurazaka 802 Tokyo 1,472,896 (714,939)
Lease liabilities
Unit: JPY
Interest rate Lease liabilities
31 March 2023
Epic Tokyo 1.37% 8,766,902
Xymax Osaka 1.57% 12,285,258
Fuji Xerox 5570 1.57% 3,380,434
Fuji Xerox 5571, 2271 1.57% 1,368,350
Fuji Xerox 5570 1.57% 682,513
Fuji Xerox 5570 (2) 1.57% 3,013,950
Fuji Xerox 5570 Addition 1.57% 7,315,413
Pitney Bowes Postal charges measure 1.57% 860,574
31 March 2024
Epic Tokyo 1.57% -
Xymax Osaka 1.57% 9,004,427
Fuji Xerox 5570 1.57% 2,498,318
Fuji Xerox 5571, 2271 1.57% -
Fuji Xerox 5570 1.57% 393,060
Fuji Xerox 5570 (2) 1.57% 2,501,335
Fuji Xerox 5570 Addition 1.57% 6,071,202
Pitney Bowes Postal charges measure 1.57% 753,615
Stage First Kagurazaka 802 Tokyo 2.96% 1,472,896
Maturities of lease liabilities as of 31 March 2024 are as follows:
JPY
2025 7,575,892
2026 6,753,032
2027 and beyond 8,365,930
Total 22,694,854
Add (Less): Imputed interest (820,914)
Present value of lease liabilities 21,873,940
17. Contingent liabilities
MOH has no contingent liabilities in respect of claims arising from the
ordinary course of business.
18. Reserve for paid leave
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Reserve for paid leave 6,098,505 4,254,641
19. Guarantee deposits
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Osaka Housing land and building dealer Guaranty society 600,000 600,000
Tokyo Housing land and building dealer Guaranty society 300,000 300,000
Tokyo Baycourt Club 1,362,905 1,168,660
JCB 800,000,000 300,000,000
Tokyu Livable-Company Housing Deposit - 94,000
TSIB 1,000,000,000 1,000,000,000
Guarantee deposits 1,802,262,905 1,302,162,660
20. Membership rights
Year to Year to
31 March 2023 31 March 2024
JPY JPY
Tokyo Baycourt Club 8,875,000 8,875,000
Membership rights 8,875,000 8,875,000
21. Advance payments
Year to Year to
31 March 2023 31 March 2024
JPY JPY
AMEX-Advertising expenses 58,708,882 172,479,954
Gift card-SMCC - 4,535,000
TSIB 3,008,490 -
TSIF 6,280 -
Kyosei Bank Co., Ltd 40,480 -
Advance payments 61,764,132 177,014,954
22. Prepaid expenses
Year to Year to
31 March 2023 31 March 2024
JPY JPY
TSIF-Osaka 316,245 316,245
Salesforce 22,987,240 29,023,719
SSI Laboratory 1,320,000 812,107
Commutation expense 1,475,739 -
Rent-Kyosei Bank Co., Ltd 809,600 -
Housing Construction Industries Association 50,000 50,000
Hakusyusya 5,280,000 5,280,000
Legal Force 1,407,879 -
Sansan 4,945,600 2,478,664
Agreed 1,138,500 439,747
JCS - 3,748,824
NTT DATA - 124,372
Other 8,676,218 277,890,290
Prepaid expenses 48,407,021 320,163,968
23. Capital commitments
There was no capital expenditure contracted for at the end of the reporting
periods but not yet incurred.
24. Ultimate controlling party
As at the balance sheet date, MOH is 97.41 per cent. owned by Kyosei Bank Co.,
Ltd. ("KBC"), and KBC is 100 per cent. owned by Mr. Kenichi Yanase, so the
ultimate controlling party of MOH is Mr. Kenichi Yanase. Since KBC owns 97.41
per cent. of MOH, KBC is the parent company of MOH as at the balance sheet
date.
25. Events after the reporting period
(a) Business suspension
MOH has been subject to one (30 day) suspension ruling from 21 June 2024 to 20
July 2024. The ruling was stayed following an appeal but the suspension period
was reinstated and commenced on 28 June 2024 with the end date remaining 20
July 2024.
MOH was notified of the 30-day suspension by the relevant Tokyo Government
department on 17 June 2024. It was with regard to the provision of a TSIF FTK
product concerning a specific land parcel ("Narita 16") within the Narita
Project in May 2023 where, following a review of the development plan, TSIF
and MOH sent an updated "Status Report on the Tomoiki Japan Gateway Narita
Project" to investors. However, this document was deemed by the Governor of
Osaka Prefecture and the Governor of Tokyo not to constitute an adequate
explanation of the change in plan and therefore the decision to impose a
penalty in the form of a suspension.
TSIF was also subject to suspension from 18 June 2024 to 17 July 2024 (being
the operator and asset manager that sold the FTK products to investors). TSIF
also experienced a short stay of execution but is also suspended until 17 July
2024.
Following the incident, MOH and TSIF continue to improve regular employee
training and ongoing educational programmes, as well as thoroughly
implementing refresher courses relating to the directives of regulatory
authorities to prevent the issues going forward. The MOH Directors believe
that the three-week suspension is not expected to have any material adverse
impact on working capital.
(b) The Company was successfully admitted to the Official List of the
Financial Conduct Authority and commenced trading on the Main Market of the
London Stock Exchange through a reverse takeover by MOH. Full details of the
transaction including terms of the sale and purchase agreement, related party
transactions and ancillary transaction documents entered into by MOH can be
found in Part X of the Company's prospectus dated 31 July 2024.
26. Financial Information
The financial information does not constitute Statutory Accounts as defined.
27. Related party transactions
The list of transactions with related parties is presented below.
Year to Year to
Related Parties Transaction 31 March 2023 31 March 2024
JPY'000 JPY'000
TSIB (Toshi-Souken Invest Bank Inc) Commission income 3,732,000 7,404,500
Real estate sales 1,855,263 3,702,250
Operations 6,145,989 -
Reimbursed expenses (advances and accruals) 188,366 161,346
Reimbursed expenses (unpaid) 1,351,404 1,351,404
Guarantee deposit 1,000,000 1,000,000
Capital loan 5,000,663 5,078,000
19,273,685 18,697,500
TSIF (Toshi-Souken Invest Fund Inc) Real estate sales - -
Reimbursed expenses - -
Advances and accruals 756,422 746,259
Reimbursed expenses (unpaid) 2,317 -
758,739 746,259
KBC (Kyosei Bank Co., Ltd) Loans borrowed 12,080,000 40,000
Capital loan - 72,838
Reimbursed expenses 500,000 79,507
(advances and accruals) 87,076 -
Reimbursed expenses (unpaid) 6,755 -
12,673,831 192,345
The list of balances with related parties outstanding at each period end is
presented below.
Amounts owed by related parties
Year to Year to
Related Parties 31 March 2023 31 March 2024
JPY JPY
TSIB (Toshi-Souken Invest Bank Inc) 2,385,898,187 674,094,267
TSIF (Toshi-Souken Invest Fund Inc) 60,506,280 66,067,278
KBC (Kyosei Bank Co., Ltd) 40,480 13,355,336
2,446,444,947 753,516,881
Amounts owed to related parties
Year to Year to
Related Parties 31 March 2023 31 March 2024
JPY JPY
TSIB (Toshi-Souken Invest Bank Inc) 6,596,352 2,591,602,760
TSIF (Toshi-Souken Invest Fund Inc) 254,284 215,822
KBC (Kyosei Bank Co., Ltd) 500,936,971 1,918,942
507,787,607 2,593,737,524
All of the above balances with related parties are unsecured, repayable on
demand and do not attract interest.
Ownership relationship of related parties
As at the balance sheet date, the relationship between Kyosei Bank Co., Ltd
("KBC") and Minnadeooyasan-Hanbai Co., Ltd is known as a "parent-subsidiary
relationship," where KBC directly owns 97.26 per cent. (as of 31 March 2024)
of MOH's outstanding common shares, making MOH a subsidiary of KBC.
Toshi-Souken Invest Bank Inc ("TSIB") directly owns 100 per cent. of the
outstanding common stock of Toshi-Souken Invest Fund Inc ("TSIF"), and TSIF is
a subsidiary of TSIB. Since TSIB is also a subsidiary of KBC, TSIF is
recognised as a subsidiary of KBC as well.
As at the balance sheet date, MOH, TSIB, and TSIF are all considered
subsidiaries of KBC because KBC directly or indirectly owns more than 50 per
cent. of their outstanding shares.
Transactions with related parties during and subsequent to the reporting
period
Joint Business Agreement and Addendum to the Joint Business Agreement
On 1 January 2024 MOH, TSIF and TSIB entered into the Joint Business Agreement
which sets out the terms and conditions pursuant to which MOH and TSIB may
purchase and develop real estate to be purchased by TSIF ("Subject Property")
as well as the right to provide other services to TSIF including crowdfunding
services and other assistance work including agent sales activities,
management of participants and new customers, advertising and marketing,
keeping of records and other incidental work (together, "TSIF Assistance
Work") in connection with specified joint real estate ventures ("FTKs")
governed by the Act on Specified Joint Real Estate Ventures (1994) (Japan)
("FTK Act") to raise funds from investors for TSIF for the Subject Property.
This agreement sets out the responsibilities of each of MOH and TSIB in
connection with such services.
The Joint Business Agreement requires that TSIB either solely or jointly with
MOH purchase real estate and carry out development and other work (together,
"Commercialisation Work") to prepare the real estate for sale to TSIF for it
to become Subject Property. If either MOH or TSIB carry out the
Commercialisation Work solely then that party alone effects the sale of the
Subject Property to TSIF.
In addition, the Joint Business Agreement authorises MOH to carry out TSIF
Assistance Work for and on behalf of TSIF. TSIF is then entitled to enter into
contracts ("FTK Contracts"), to raise funds for the purchase of real estate,
that stipulate that: (1) one party contributes to (or invests into) the real
estate property transactions being executed by the other party; (2) that the
other party undertakes real estate property transactions using the investment;
and (3) and that the returns generated from those real estate property
transactions will be distributed. TSIF is required to then own, manage and
operate such real estate. The purchase price paid for the real estate is to be
agreed by the parties on a case by case basis.
The Joint Business Agreement ratifies and confirms the exclusive right granted
to TSIB for TSIB and/or MOH to sell real estate to TSIF (Exclusive Sales
Rights). In terms of profit distribution the Joint Business Agreement provides
that if TSIB and MOH jointly provide Commercialisation Work, TSIB and MOH
shall jointly sell such Subject Property to TSIF with the profit (being the
sum of the sale price of the real estate less the purchase cost of such real
estate) being allocated 90 per cent. to TSIB and 10 per cent. to MOH. For
sales effected between 1 April 2023 to 31 March 2024 the profit allocation was
95 per cent. to TSIB and 5 per cent. to MOH. The payment of such profit shall
be made on the same date that TSIF is required to pay the purchase price for
the real estate as set out in the relevant sale agreement.
MOH shall also be entitled to be paid for TSIF Assistance Work which is
contracted to MOH by TSIF. TSIB shall pay (on behalf of TSIF) MOH an amount
equivalent to 10 per cent. of the sale price of the real estate paid by TSIF.
This fee is due and payable at the end of the month falling 3 months after the
conclusion of the sale contract of the relevant real estate.
In addition, the agreement provides that MOH is entitled to exclusively
develop cold-chain facilities (including food processing facilities and
frozen/refrigerated warehouses utilising the HybridICE patented freezing
technology owned by FrostiX, a technology company based in Tokyo that is 75.8
per cent. owned by KBC). In such case, MOH is not required to share any of the
profits or commissions paid to it by TSIF with TSIB or any other party.
Pursuant to an addendum to the Joint Business Agreement dated 11 June 2024
made between MOH, TSIF and TSIB, the parties have agreed that in the event
TSIF receives any funding directly from investors through a software
application known as "Minnadeooyasan Mini" or "MINI", which is owned and
operated by TSIF and was developed in conjunction with MOH to target smaller
size investors and introduce them to the FTK product range: (i) any capital
raised by TSIF will be used to acquire real estate from only MOH and/or TSIB;
and (ii) MOH will continue to receive fees in relation to Commercialisation
Work and TSIF Assistance Work. MOH has also been granted an option to acquire
the application from TSIF at any time during the duration of the Joint
Business Agreement at a price equal to the development costs, application fees
and any maintenance fees paid by TSIF in respect of MINI.
The Joint Business Agreement cannot be assigned by any party without the prior
consent of the other parties. The term of the Joint Business Agreement is 30
years from the date of the agreement which cannot be terminated by any party
save in the event that a party has breached the provision relating to
anti-social forces. The Tokyo District Court shall have exclusive jurisdiction
for any disputes in relation to this agreement.
The Supplemental Agreement to the Joint Business Agreement ("Supplemental
Agreement")
On 5 March 2024 MOH, TSIF and TSIB entered into the Supplemental Agreement
which provided that if; (i) TSIB ceases to exist as a legal entity by reason
of insolvency, dissolution or liquidation or otherwise ceases to trade; (ii)
TSIB loses its status as a party to the Joint Business Agreement; or (iii) any
other circumstances occur that extinguish or restrict TSIB's Exclusive Sales
Rights to TSIF and/or restricts MOH's ability to participate under the terms
of the Joint Business Agreement, TSIF shall automatically following written
notice from MOH to TSIF, directly and irrevocably and fully grant to MOH the
Exclusive Sales Rights (on the same terms as granted to TSIB) to sell real
estate to TSIF. The Joint Business Agreement as amended and supplemented by
the Supplemental Agreement is governed by the laws of Japan and the Tokyo
District Court shall have exclusive jurisdiction for any disputes in relation
to this agreement.
As TSIB is MOH's primary customer and partner, MOH receives commissions and a
share of the selling of real estate from TSIB. In the fiscal year 2024, the
guarantee deposit balance of 1 billion JPY made by MOH to TSIB for the
'Exclusive Sales Rights' remains unchanged. Despite an increase in transaction
amounts between TSIB and MOH, the accounts receivable balance decreased from
JPY 2.38 billion at the end of March 2023 to JPY 633.9 million in the 2024
fiscal year.
The transactions between TSIF and MOH mainly involve reimbursed expenses for
shared services. Details of related party shared services agreements can be
found at paragraph 10.13 of Part X of the Company's prospectus dated 31 July
2024.
In the 2024 fiscal year, the transactions between KBC and MOH consist of
reimbursed expenses for shared services.
MOH has developed the "Regulations on Related Party Transactions," which were
approved by the Board on 31 January 2024, and became effective on 1 February
2024. It is expected that there will be fewer related party transactions in
the future.
Related party note disclosures:
Receivables from related parties arising from MOH's trading activity are
stated net of expected credit loss ('ECL') provisions where necessary, which
are calculated using the simplified approach grouping receivables and contract
assets on the basis of their shared credit risk characteristics and the
similar nature of their underlying contracts as well as the days past due of
the debts.
As a result, receivables are recognised and carried at original invoice amount
less an allowance for any uncollectible amounts based on expected credit
losses. Where the carrying value of an assets exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable
amount. Impairment losses are taken to the income statement and are presented
as losses within operating profit. Subsequent recoveries of amounts previously
written off are credited to operating profit.
MOH monitors the level of receivables on a monthly basis, continually
assessing the risk of default by any counterparty.
The MOH Directors believe the credit risk attached to its customer base is
relatively low. Debts from MOH's trading activity which reach 6 months overdue
are considered to be in default. Based on their assessment as described above,
management consider that a policy of providing for all receivables more than 6
months old provides a sufficient basis to provide for expected credit losses.
The maturity analysis of trade receivables is:
< 1 month 1-3 months 4-6 months > 6months Total
JPY JPY JPY JPY JPY
ECL provision applied 0% 0% 0% 100%
31 March 2023 405,655,250 685,009,707 1,355,779,990 - 2,446,444,947
31 March 2024 119,616,881 633,900,000 - - 753,516,881
28. Auditors fees
Year to Year to
31 March 2023 31 March 2024
JPY JPY
CPA Mitsuaki Akasaka 6,320,000 5,220,000
6,320,000 5,220,000
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