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March 5, 2002 |
Revision of Forecasts for the Fiscal Year Ending March 31, 2002
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March 5, 2002 (Tokyo)Mitsubishi Estate Co., Ltd. announced the decision of its board of directors to write off unrealized losses on real estate holdings on a consolidated basis in order to make its balance sheet more transparent and sound. The action, which is to be introduced in the settlement for the fiscal year ending March 31, 2002, will be completed in accordance with the Land Revaluation Law and making valuation losses on fixed assets. Following this decision, Mitsubishi Estate expects to post an extraordinary loss of 162 billion yen for the current fiscal year. Additionally, with regard to land revaluation, the company will introduce a more clearly structured property tax base to value its land holdings.
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The above changes bring the valuations of Mitsubishi Estate’s
real estate holdings closer to market values, and plans are
underway to restructure its real estate portfolio to raise
asset efficiency in the future.
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Details of Real Estate Revaluation
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| 1. Land Revaluation |
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In accordance with the Land Revaluation Law, Mitsubishi Estate will revalue land holdings in fixed assets based on the property tax base. This land revaluation will apply only to fixed assets on a parent basis.
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| Assets |
Book value before land revaluation |
approx. |
555 billion yen |
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Book value after land revaluation |
approx. |
1.246 trillion yen |
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(Difference) |
approx. |
691 billion yen |
| Liabilities |
Deferred tax liabilities due to land revaluation |
approx. |
291 billion yen |
| Shareholder’s equity |
Gains on the land revaluation |
approx. |
400 billion yen |
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| Please note that this revaluation
will be reflected only in the balance sheet. |
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| 2. Fixed Asset Valuation Losses |
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After the revaluation of land holdings, fixed assets
(land and buildings) are revaluated using the discounted
cash flow method. Mitsubishi Estate will realize valuation
losses if values of fixed assets are more than 30% lower
than their book values. This method will be applied
to all fixed assets on a consolidated basis. Valuation
losses will be approximately 158 billion yen.
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| 3. Revision of Valuation Standard for Inventories |
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With regard to inventories, Mitsubishi Estate has previously
posted valuation losses if values of inventories fell
more than 50% below their book values. However, following
today’s decision, valuation losses on inventories
will be recognized if values fall more than 30% below
their book values, the same standard applied to fixed
assets. This method will be applied to all inventories
on a consolidated basis. Valuation losses from this
category will be approximately 5 billion yen.
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Combined valuation losses from fixed assets and inventories
will thus amount to approximately 162 billion yen.
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In accordance with the above-stated valuation losses,
Mitsubishi Estate has revised its forecasts for the
fiscal year ending March 31, 2002 as follows:
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Revised Consolidated Forecasts for the Fiscal Year Ending March 31, 2002 (April 1, 2001March 31, 2002)
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| Millions of Yen |
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Revenue from operations |
Income before taxes
and special items |
Net income |
| Previous forecast
(A) |
641,000 |
45,000 |
20,500 |
| Current forecast
(B) |
631,000 |
44,000 |
(72,500) |
| Difference (B-A) |
(10,000) |
(1,000) |
(93,000) |
| Percentage change
(%) |
(1.6) |
(2.2) |
(453.7) |
| Previous year results
(ended March 31, 2001) |
630,990 |
43,583 |
19,831 |
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Note: The previous operating income forecast
of 75 billion yen has been reduced to 71 billion yen. |
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The above revisions are mainly the result of the downward
revision of forecasts of Mitsubishi Estate, Cushman
& Wakefield, Inc. (a subsidiary of Rockefeller Group,
Inc.) and Mitsubishi Estate Home Co., Ltd.
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Revised Non-consolidated Forecasts for the Fiscal Year Ending March 31, 2002 (April 1, 2001March 31, 2002) |
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| Millions of Yen |
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Revenue from operations |
Income before taxes
and special items |
Net income |
| Previous forecast
(A) |
382,000 |
30,000 |
14,500 |
| Current forecast
(B) |
380,500 |
30,000 |
(76,500) |
| Difference (B-A) |
(1,500) |
0 |
(91,000) |
| Percentage change
(%) |
(0.4) |
0 |
(627.6) |
| Previous year results
(ended March 31, 2001) |
389,995 |
20,477 |
6,403 |
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Note: The previous operating income forecast
of 55.0 billion yen has been reduced to 54.5 billion. |
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The above revisions are mainly the result of valuation
losses on fixed assets and the downward revision of
condominium sales in its residential development operation.
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