Please note that this document is a translation of the official announcement that was released on January 10, 2012. The translation is prepared andprovided for the purpose of the readers’ convenience only. All readers are strongly recommended to refer to the original Japanese version of the news
release for complete and accurate information.

Summary of Consolidated Financial Statements for the Year Ended November 30, 2011

January 10, 2012

Tosei Corporation
Stock exchange listings: Tokyo, First Section
Code number: 8923
URL:http://www.toseicorp.co.jp/english/
Representative: Seiichiro Yamaguchi, President and CEO
Contact: Noboru Hirano, Director and CFO
Phone: +81-3-3435-2864
Ordinary general shareholders’ meeting: February 24, 2012 (scheduled)Start of distribution of dividends: February 27, 2012 (scheduled)
Submission of Securities Report (Yuka Shoken Hokokusho): February 28, 2012 (scheduled)
Preparation of supplementary materials for quarterly financial results:
Yes
Holding of quarterly financial results meeting:Yes (for institutional investors and analysts)

1. Consolidated Operating Results for the Year Ended November 30, 2011 (December 1, 2010- November 30, 2011)
Note: All amounts are rounded down to the nearest million yen.
(1) Revenues and Income(Percentages represent change compared with the previous fiscal year.)

Revenues(¥ million)

Year ended Nov. 30, 2011
Year ended Nov. 30, 2010

Change(%)

Operating income

Ordinary income(¥ million)(¥ million)

24,759 (6.4)
26,449 (21.4)

Change
(%)

2,389
1,726

38.4
7.5

(Note) Comprehensive income: Year ended November 30, 2011: ¥748 million (77.1%)

Net income

Change
(%)

1,574
803

(¥ million)

Change
(%)

96.0
22.4

751 78.4
421 289.5
Year ended November 30, 2010: ¥422 million (－%)

Ordinary income Operating income
Earnings per
Return on equity/Total assets/Revenues
share (diluted)
(%)
(%)
(%)
(¥)
Year ended Nov. 30, 2011
3.0
2.6
9.6
－
Year ended Nov. 30, 2010
1.8
1.3
6.5
－
(Reference) Equity in earnings of affiliates: Year ended November 30, 2011: ¥－ million Year ended November 30, 2010: ¥ － million
Earnings
per share(¥)
1,646.05
974.63(2) Financial Position
Total assets(¥ million)
59,967
62,682As of Nov. 30, 2011
As of Nov. 30, 2010

Net assets(¥ million)

Equity ratio(%)
24,97624,455(Reference) Equity: As of November 30, 2011: ¥24,976 million

Book value per share(¥)
54,671.33
53,532.16

41.6
39.0

As of November 30, 2010: ¥24,455 million(3) Cash Flows
Cash flows fromoperating activities(¥ million)
Year ended Nov. 30, 2011
Year ended Nov. 30, 2010

Cash flows frominvesting activities(¥ million)

6,017(1,625)

Cash and cash
equivalents at
end of period(¥ million)
8,306
6,821

Cash flows fromfinancing activities(¥ million)

(116)
(178)

(4,416)735

2. Dividends
Dividends per share (¥)

Year ended Nov. 30, 2010
Year ended Nov. 30, 2011
Year ended Nov. 30, 2012
(Projected)

1Q-end2Q-end3Q-endYear-end

Total

－
－

0.00
0.00

－
－

500.00500.00500.00500.00－0.00－

500.00500.00Total dividends(¥ million)

Payout ratio(%)

Dividend
on equity ratio
(%)

228
228

51.3
30.4

0.9
0.9

17.9

3. Projected Results for the Year Ending November 30, 2012 (December 1, 2011 – November 30, 2012）（Percentages represent change compared with the same period of the previous fiscal year.）

Revenues(¥ million)

Six months ending
May 31, 2012
Year ending
November 30, 2012

Operating income(%)(¥ million)(%)

Ordinary income(¥ million)(%)

Net income(¥ million)(%)

Earnings
per share
(¥)

9,719

(9.2)

759

(31.6)

311(52.1)

116(69.5)

254.4429,063

17.4

3,079

28.9

2,226

41.4

1,278

70.1

2,799.12

1

4. Other(1) Changes in major subsidiaries during the period:
Newly added: -No
Excluded: -(2) Changes in accounting rules, procedures, presentation methods, etc.
(a) Changes in consolidated accounting methods:
Yes(b) Changes other than (a) aboveNo(3) Number of shares issued and outstanding (common stock)(a) Number of shares issued andAs of Nov. 30, 2011
outstanding at end of period (including
treasury stock)(b) Treasury stock at end of period
As of Nov. 30, 2011(c) Average number of issued shares during As of Nov. 30, 2011
the period:

456,840 As of Nov. 30, 2010
shares456,840
shares－ As of Nov. 30, 2010
456,840 As of Nov. 30, 2010
shares－432,579
shares(Reference) Summary of Nonconsolidated Results
1. Nonconsolidated Results for the Year Ended November 30, 2011 (December 1, 2010- November 30, 2011)(Percentages represent change compared with the previous fiscal year.)(1) Revenues and Income
Revenues
Operating income
Ordinary income
Net income(¥ million)

Change(%)

Year ended Nov. 30, 2011
Year ended Nov. 30, 2010

20,71923,230(10.8)(23.9)

Year ended Nov. 30, 2011
Year ended Nov. 30, 2010

Earnings
per share(¥)
2,174.76
1,001.81(¥ million)

Change (¥ million) Change
(%)
(%)

2,345
1,666

40.7
7.7

1,601
809

(¥ million)

Change
(%)

97.9
20.5

993
433

129.3
224.1

43.3
40.1

Book value per share(¥)
53,371.94
51,704.06

Earnings per
share (diluted)(¥)－－(2) Financial Position

As of Nov. 30, 2011
As of Nov. 30, 2010

Total assets(¥ million)
56,31358,871

Net assets(¥ million)
24,382
23,620(Reference) Equity: As of November 30, 2011: ¥24,382 million

Equity ratio(%)

As of November 30, 2010: ¥23,620 million

2. Projected Nonconsolidated Results for the Fiscal Year Ending November 30, 2012 (December 1, 2011 –November 30, 2012）（Percentages represent change compared with the same period of the previous fiscal year）

Revenues(¥ million)(%)

Ordinary income(¥ million)(%)

Net income(¥ million)(%)

Earnings
per share(¥)

Six months ending
7,567(14.0)
286(48.4)
104(65.9)
228.72
May 31, 2012
Year ending
23,350
12.7
1,999
24.8
1,165
17.3
2,550.73
November 30, 2012
* Information regarding implementation of auditing procedures
The current consolidated financial statements are exempted from auditing procedures based on the Financial
Instruments and Exchange Act. At the time of disclosure, we have not completed the auditing process for these
consolidated statements.
* Proper use of the earnings forecasts and other notes(Cautionary Remark Regarding Forward-Looking Statements)
The projections are forward-looking statements based on currently available information, and therefore containelements of uncertainty. Actual performance may differ from projections due to changes in operating conditions. See“2) Outlook for the Year Ending November 30, 2012” in “1. Business Results, (1) Analysis of Business Results” onpage 5 for matters concerning the above projections.

2(Access to the financial statements and supplementary materials)
Presentation Meeting on the Financial Results for the year ended November 30, 2011 will be held on January 10,2012 for institutional investors and analysts. The presentation materials will be available on our homepage
immediately after the disclosure.

3

○ Contents of attached documents
1. Business Results(1) Analysis of Business Results ...................................................................................................................... 5(2) Analysis of Financial Position... ................................................................................................................... 7(3) Fundamental Earnings and Distribution Policy... ......................................................................................... 8(4) Business and Other Risks. ............................................................................................................................ 8
2. Conditions of Corporate Group.................................................................................................................... 16
3. Management Policies ................................................................................................................................... 18(1) Fundamental Management Policy .............................................................................................................. 18(2) Tasks to Be Addressed ................................................................................................................................ 18(3) Other Important Management Matters ....................................................................................................... 18
4. Consolidated Financial Statements............................................................................................................... 19(1) Consolidated Balance Sheets...................................................................................................................... 19(2) Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income ............ 22
Consolidated Statements of Comprehensive Income ................................................................................. 23(3) Consolidated Statements of Changes in Net Assets.................................................................................... 24(4) Consolidated Statements of Cash Flows..................................................................................................... 26(Segment Information) ............................................................................................................................... 28(Real Estate-related Business, Including Rental Business) ........................................................................ 31

4

1. Business Results(1) Analysis of Business Results
1) Consolidated Results for the Year Ended November 30, 2011
During the year ended November 30, 2011 (December 1, 2010 to November 30, 2011), the Japanese economy showedsome signs of recovery from the severe situations caused by the Great East Japan Earthquake on March 11, 2011 as a resultof recovery of supply chain and the effect of political measures. However, it still remains uncertain due to the European
sovereign debt crisis and further appreciation of the yen.
In the real estate industry where Tosei Group operates, the number of condo offering in the greater Tokyo area continues
to be low since April 2011 affected by the earthquake, but the closing rate during the months from January 2010 to October
2011 has been above 70%, which is considered favorable.
In the market for leased office building in the five business wards of Tokyo, the average asking rent subsequently remains
at low levels. The vacancy rate shows a downward trend after April 2011, yet it is still at high level.
In the market for securitized real estate as of the end of June 2011, the balance of assets for private placement funds undermanagement increased by ¥0.2 trillion from the end of December 2010 to ¥15.9 trillion.
In this operating environment, Tosei Group continued to promote purchase and sale of residential properties that are ingood demand, as well as small and medium sized office buildings that are highly liquid. The Group concentrated on thesale of entire buildings in stock such as new condominiums, office buildings, and refurbished properties in the Restylingbusiness. With a focus on lands for condominium and detached house development, it also concentrated on purchasing awide range of properties such as assets for the Restyling business and office buildings. Furthermore, our consistentinitiatives to strengthen the relationship with overseas investors allowed us to achieve origination of “Restyling fund”.
Consequently, the Group expanded the balance of assets under management.
As a result, for the year ended November 30, 2011, consolidated revenue totaled ¥24,759 million (a decrease of 6.4%
from the previous fiscal year), operating income was ¥2,389 million (an increase of 38.4%), ordinary income was ¥1,574
million (an increase of 96.0%), and net income was ¥751 million (an increase of 78.4%).
Segment results were as follows:
Revitalization Business
During the year ended November 30, 2011, the Company sold a total of 204 units through the Restyling business. The
properties sold include Hilltop Yokohama Negishi (Yokohama City, Kanagawa Prefecture), Clover Roppongi (Minato
Ward, Tokyo), Renai Higashi Terao (Yokohama City, Kanagawa Prefecture), Estage Kaminoge (Setagaya Ward, Tokyo).
In addition, the Company sold 11 buildings it had revitalized including Meguro Tosei Building (Shinagawa Ward, Tokyo),
Ueno Park Building, (Taito Ward, Tokyo), and Sea Place Shin-Yokohama (Yokohama City, Kanagawa Prefecture). As aresult, segment revenues totaled ¥12,040 million, an increase of 47.8% compared with the same period last year.
Meanwhile, due to the declines in office building rent caused by economic stagnation, the Company adopted the
Accounting Standard for Measurement of Inventories (the LCM method) for some properties and lowered their bookvalues by ¥43 million, charged to the cost of revenues. As a result, the segment operating income was ¥1,891 million an
increase of 363.5% compared with the same period last year.
Development Business
During the year ended November 30, 2011, the Company concentrated on the sale of new condominiums and detachedhouses that are in firm demand as well as office buildings. The development business sold a total of 65 newly-built
condominiums including THE Palms Mitaka Vivace and THE Palms Mitaka Leggero (Mitaka City, Tokyo), 12 detachedhouses in Palms Court Mitaka Adagio (Mitaka City, Tokyo). As for office buildings, the Company sold Shinjuku Tosei
Building (Shinjuku Ward, Tokyo). As a result, segment revenues came to ¥ 5,256 million, a decrease of 55.0% comparedwith the same period last year.
Meanwhile, for the same reasons that applied to the revitalization business, the development business recognized a ¥ 600
million valuation loss, charged to the cost of revenues, due to the adoption of the LCM method. Consequently, segment
operating loss came to ¥22 million. (The segment operating income of the same period last year was ¥ 599 million.)
Rental Business5During the year ended November 30, 2011, a challenging situation continued due to office downsizing and relocations
prompted by the prolonged recession. Also in our revitalization business and the development business, the decrease inrental income resulting from inventory sale exceeded the increase in rental income resulting from newly acquired inventory.
As a result, segment revenues were ¥2,459 million, a decrease of 4.9% compared with the same period last year andoperating income was ¥1,182 million, a decrease of 8.7%.
Fund Business
During the year ended November 30, 2011, due to customers replacing their asset management companies with Tosei,
and origination of new “Restyling fund”, the balance of assets under management showed an overall increase. As a result,
the Company earned asset management fees steadily as well as brokerage fees related to large-sized funds. Consequently,
segment revenues were ¥1,396 million, an increase of 24.2% compared with the same period last year while operating
income was ¥652 million, an increase of 30.6%. As of Nov. 30, 2011, the balance of assets under management* totaled¥285,904 million.
*Note: The balance of assets under management includes the balance of assets which were subject to consulting contracts and etc.

Property Management Business
During the year ended November 30, 2011, regarding the sector for office buildings, parking lots and schools, the numberof properties the Company managed decreased by 4 to 308 properties as of Oct. 31, 2011, while the number ofcondominiums and rental apartments, increased by 4 to 203 properties.
Due to an increase in operating cost, the segment revenues were ¥3,425 million, an increase of 25.2 % compared with thesame period last year and segment operating income was down 13.1% to ¥104 million.
Alternative Investment Business
During the year ended November 30, 2011, this segment focused on the collection of debt and the leasing of properties
which the Company acquired through like-kind exchanges. As a result, the segment earned interest income and revenues
from the sale of receivables, as well as rental income from real estate acquired through like-kind exchangs. Consequently,
segment revenues came to ¥180 million, an increase of 6.1% compared with the same period last year.
Also, the segment recognized a ¥250 million valuation loss, charged to cost of revenues, following the adoption of the
LCM method to reflect the revision of land unit prices. As a result, the segment operating loss was ¥190 million, an
increase of 233.4% compared with the same period last year.
2) Outlook for the Year Ending November 30, 2012
In the business environment where Tosei Group operates, there are signs of a gradual recovery from the severe situations
caused by the Great East Japan Earthquake on March 11, 2011, yet it still remains uncertain due to the European sovereign
debt crisis and further appreciation of the yen. The real estate trading market experienced a sharp downturn, because thenumber of transaction decreased in the immediate aftermath of the earthquake. However, there has been a sign of recovery,reflecting the Bank of Japan’s decision of raising the ceiling of J-REIT purchases.
In this environment, Tosei will work to enhance its competitiveness in the sales of office and condominium buildings in
the revitalization business by improving earning capacity of the properties through renovations and leasing efforts to attract
potential investors. As for the residential properties in firm demand, the Company will focus on the purchase and sale of theproperties for the Restyling business in which it purchases occupied rental condominiums and sells units on an individual
basis after renovaing the entire building including its common areas.
In the development business, the Company will accelerate the purchase of optimum lands for residential property
development, centering on condominiums and detached houses, along with the development and the sale of high value
properties which will meet end-users’ needs. The Company will especially work to expand its product line and operatingarea where it develops detached houses, in an effort to satisfy various needs of customers.
Tosei’s properties are diversified in their use and size, and therefore have a broad customer base. Having seen the sluggish
demand for office buildings after the financial crisis, the Company will concentrate on purchase, development, and sale ofresidential properties for end-users in which it has a full range of pruducts such as newly-built condominiums and exisiting
6

condominiums for both sale and for lease, as well as detached houses.
Tosei will also continue to focus on its fee business, which generates stable income without relying on our asset growth. In
the fund business, where the shakeout in the market is likely to become more apparent because of the credit crunch, theCompany considers this an opportunity for operators offering high quality services to achieve further expansion, and will
focus on acquiring the custody business for fund assets under management. It will also promote its consulting business thathelps to improve the profitability of real estate owned by business corporations. In addition, it will deepen ties with overseas
investors primarily in Asia, in a bid to seek an influx of capital into properties in Japan, and work to increase the balance offund assets under management.
In the property management business, the Company will increase stable fee income by increasing the number ofproperties under management, based on the trust it has developed through its wholly owned subsidiary Tosei Community
Co., Ltd.
As a result of the above, in the year ending November 30, 2012, the Tosei Group projects that consolidated revenues willbe ¥29,063 million, a year-on-year increase of 17.4%, operating income will be ¥3,079 million, an increase of 28.9%,
ordinary income will be ¥2,226 million, an increase of 41.4%, and net income will be ¥1,278 million, an increase of 70.1%.

(2) Analysis of Financial Position
1) Assets, Liabilities and Net Assets as of November 30, 2011
Total assets decreased by ¥2,715 million to ¥59,967 million compared with the previous year. Primary factors included anincrease in cash and deposits which totaled ¥1,198 million and a decrease in real estate for sale in progress totaling ¥3,905
million.
Total liabilities decreased by ¥3,235 million to ¥34,991 compared with the previous year. Primary factors included a
decrease in debt due to progress in property sales.
Net assets increased by ¥520 million to ¥24,976 million compared with the previous year. Primary factors included
increases in retained earnings.
2) Cash Flow for the Year ended November 30, 2011
Cash and cash equivalents as of November 30, 2011 comprised of ¥ 1,537 million in income before income taxes in
addition to progress in the sales and purchase of properties in the revitalization and development businesses, resulting in a
total of ¥8,306 million, showing a increase of ¥1,485 million compared with the end of the previous fiscal year.
Cash Flows from Operating Activities
Net cash provided in operating activities totaled ¥6,017 million. This total is comprised of ¥1,537 million in income
before income taxes and a ¥3,305 million decrease in inventories as the sales of properties in the revitalization anddevelopment businesses progressed and the sales amount exceeded that of purchase. (Net cash used by operating activities
totaled ¥1,625 million in the same period of the previous fiscal year).
Cash Flows from Investing Activities
Net cash used in investing activities totaled ¥116 million, primarily due to an increase in investment in securities totaling¥353 million and a decrease in time deposits totaling ¥286 million. (Net cash used in investing activities decreased by
35.0% from the same period of the previous fiscal year.)
Cash Flows from Financing Activities
Net cash used by financing activities totaled ¥4,416 million, mainly because the amount of debt payment exceeded theincome generated from borrowing as a result of smooth progress of property sale in the revitalization and the development
business. (Net cash provided in financing activities in the same period of the previous fiscal year was ¥735 million)

7

(Reference) Trends in cash flow indicators for the Tosei Group are as follows.
Year ended
Nov. 30, 2008

Year ended

Year ended

Year ended

Nov. 30, 2009

Nov. 30, 2010

Nov. 30, 2011

Equity ratio (%)

27.9

35.7

39.0

41.6

Equity ratio on a market value basis (%)

7.6

13.6

23.7

14.2

Redemption period (years)

3.4

2.9

－

5.0

Interest coverage ratio (times)

11.6

12.5

－

6.8

Equity ratio:
Equity ratio on market value basis:
Debt repayment term:
Interest coverage ratio:

Net assets/Total assets
Market capitalization/Total assets
Interest-bearing debt/Cash flows
Cash flows /Interest expenses

Notes:(1) All indicators are calculated using consolidated financial figures.
(2) Market capitalization is calculated based on the number of shares issued and outstanding, excluding treasury stock.
(3) The debt redemption period employs cash flows from operating activities.
(4) Interest-bearing debt includes all debt listed in the consolidated balance sheets on which interest is paid.
(5) Debt redemption period and interest coverage ratio are not presented for the fiscal year ended November 30,
2010 because cash flows from operating activities were negative.

(3) Fundamental Earnings Distribution Policy
Tosei’s fundamental earnings distribution policy is to strive to continuously provide stable dividends while
comprehensively considering operating results, the future operating environment and progress in its business plan tobalance dividends with the need for internal capital resources to generate long-term growth in corporate value by taking
advantage of highly profitable business opportunities.
For the year ended November 30, 2011 (the 62nd period), Tosei plans to pay cash dividends per share of ¥500.
For the year ending November 30, 2012 (the 63rd period), Tosei plans to pay cash dividends per share of ¥500.
(4) Business and Other Risks
Risks that have the potential to affect the performance, stock price and financial position of the Tosei Group include, but
are not limited to, the issues discussed below.
Forward-looking statements represent Tosei Group judgments as of November 30, 2011. The Tosei Group maintains a
policy of recognizing the potential for risks to occur and working to preclude them or manage them if they arise.
1. Business Environment1) Revitalization Business and Development Business(i) Effects of Real Estate Market Conditions
The Tosei Group’s core revitalization and development businesses purchase properties on their own account, andtypically take several months to two years until they sell the properties after increasing their value or developing them.
During that time, changes in the general economy, such as trends in land prices, interest rates and fiscal policy, may occur,
and any resulting deterioration of conditions in the real estate market could have an impact on the Tosei Group’s operating
results and financial position.
(ii) Changes in Business Results due to Timing of Property Transfer
These two businesses book property sales amounts as revenues, and therefore the amount per transaction is large. In
addition, because the two businesses book revenues upon transfer of the property, any delay in transferring the property
could affect the Tosei Group’s operating results and financial position. In particular, the presence or absence of transfers oflarge-scale properties in the fourth quarter could cause a considerable change in revenues and income.
8

(iii) Construction Delays and Increased Construction Costs due to Natural Disasters, Etc.
Tosei Group makes efforts to draw up a rational yearly budget using the buildup method based on concrete purchasing
and sales plans. However, construction delays and the accompanying increase in construction/renovation costs due tonatural disasters or other unforeseen events have the potential to affect the Tosei Group’s operating results and financial
position.
(iv) Application of Accounting Standard for Measurement of Inventories
The Company adopted “Accounting Standard for Measurement of Inventories” (ASBJ Statement No.9, July 5, 2006) for
inventories held for sale. As a result, inventories held at year-end are written down if fair value (net realizable value) islower than acquisition cost, and the loss on the write-down of the difference is then charged as the cost of revenues. In the
future, the Company will lower the book values of inventories if fair value (net realizable value) is lower than acquisition
cost due to deterioration in financial or real estate market conditions or other cause, and the resulting loss could have an
impact on the Tosei Group’s operating results and financial position.
2) Rental BusinessIn the rental business, a source of stable revenue for the Tosei Group, changes in general economic conditions or interest
rates, the emergence of competing properties, or the occurrence of declines in rental fees or large numbers of vacancies due
to natural disasters or other events have the potential to affect the Tosei Group’s operating results and financial position.
3) Fund Business(i) Management Performance of Funds
The fund business, which plays a significant role in the growth and positioning of the Tosei Group, earns fees incompensation for asset management including locating real estate properties that match the needs of investors, raising theirvalue, conducting lease-up activities and then selling them. Therefore, asset management advisory and other capabilities
play a role in the performance of the real estate funds, and the Tosei Group has accumulated expertise in both real estateand finance.
Tosei’s reputation as an asset management company may decline, which could have an impact on the Tosei Group’s
operating results and financial position in the event that rental conditions or other aspects of the real estate properties which
Tosei provides discretionary investment, management and advises on do not achieve the performance expected byinvestors.
(ii) Changes in Investor Trends due to Fiscal Policy, Etc.
Real estate funds are one means of investment, and the Tosei Group’s operating results and financial position could be
affected if investors withdraw from or refrain from investing in real estate funds due to changes in fiscal policies or the
global economy, or if funds can no longer continue due to funding problems.
(iii) Compensation in Connection with Non-recourse Loans
A special purpose company operated by a real estate fund that is managed by the Tosei Group may borrow funds via a
non-recourse loan (debt can only be collected from income and sale proceeds of underlying real estate collateral. Also
known as a limited recourse loan) when acquiring real estate. In this case, the Tosei Group, in its capacity as asset manager,
may be held liable to compensate for damages, etc. incurred by the lender on the grounds of fraud or unlawful acts,
environmental pollution or other incident resulting from willful intent or gross negligence by interested parties on the
borrower side such as the borrower or the asset manager, in connection with the non-recourse loan. This liability is
generally no guarantee of performance of the loan obligation but if such damage did occur as a result of gross negligenceon the part of the Tosei Group, the Company or the Tosei Group may assume liability for compensation.
4) Property Management Business(i) Decline of Management Commission Costs
Currently, management commission costs for condominiums and office buildings are continuing their downward trend9due to increasing competition with other companies and cost-reduction pressure from customers. The Tosei Group ismaking efforts to raise efficiency and cut management contracting costs, but further reductions in management
commission costs or a surge in contract cancellations have the potential to affect the Tosei Group’s operating results andfinancial position.
(ii) Workplace Accidents, Etc.
The Tosei Group has obtained ISO 9001 certification for its business execution and provision of services. Although theGroup is striving to enhance its business quality and services, unpredictable workplace accidents, defects in construction or
facilities, problems with services, or other incidents of a scale that could impact society have the potential to affect the Tosei
Group’s operating results and financial position.
5) Alternative Investment Business
The alternative investment business, primarily purchases real estate collateralized loans and invests in M&As of realestate-owning companies. However, the inability to acquire real estate-collateralized loans in a shrinking market for nonperforming loans, the failure of M&As of real estate-owning companies to take place, or the inability to recover capital
invested in acquired loans or companies as planned have the potential to affect the operating results and financial positionof the Tosei Group
2. Reliance on Interest-Bearing Debt and Interest Rates
The Tosei Group procures debt financing, primarily from financial institutions, on a project-by-project basis, to fundexpenses associated with business activities including acquisition of land and buildings and construction. Consequently, theratio of interest-bearing debt to total assets is consistently at a certain level. Increases in interest rates typically increase fundprocurement costs, and therefore have the potential to affect the Tosei Group’s operating results and financial position.
In addition, lump-sum repayments due to conflicts with financial covenants on partial loans, delays of project sales, andlower-than-expected sales revenues also have the potential to affect the operating results and financial position of the Tosei
Group.
In procuring funds, the Tosei Group negotiates with multiple financial institutions to obtain the best financing terms.
Unexpected changes in the operating environment and other factors that might impede access to funding could delay
projects or render them untenable, which could affect the operating results and financial position of the Tosei Group.
<Balance of Interest-Bearing Debt>
Year ended

Year ended

Year ended

Year ended

Year ended

Nov. 30, 2007

Nov. 30, 2008

Nov. 30, 2009

Nov. 30, 2010

Nov. 30, 2011

Balance of Interest-Bearing Debt (¥million)

59,69047,63135,29634,26430,075

Total Assets (¥million)

86,92278,30962,23562,682

59,967

68.7

60.8

56.7

54.7

50.2

LTV (%)

3. Business Areas
1) Competitive Conditions
The Tosei Group’s primary market is the 23 wards of Tokyo, and the Group purchases and sells primarily small andmedium-sized properties. The Group has flexibly mobilized the information and know-how of its six businesses to conductsynergistic business operations. However, declines in selling prices of properties due to price competition caused by the
recent decline in real estate transactions and deterioration of foreign investment have the potential to affect the operating
results and financial position of the Group.
2) Occurrence of Disasters
The occurrence of a natural disaster such as a major earthquake in Tokyo, which is believed likely to happen in the future,
destructive storm or flood, or a human disaster such as war, terrorism or fire, could cause substantial losses in the value ofthe real estate the Group invests in, manages, develops and controls, and therefore has the potential to affect the Tosei
10Group’s results and financial position.
4. Legal Regulations
1) Legal Regulations
In addition to the Company Law and regulations in the Financial Instruments and Exchange Law that apply to listedcompanies, the main legal regulations pertaining to the businesses of the Tosei Group are as follows.
If these legal regulations are strengthened in the future, the cost of legal compliance measures could increase.
Main Legal Regulations
・Real Estate Transaction Business Law
・National Land Use Plan Law
・City Planning Law
・Building Standards Law
・Construction Business Law
・Architect Law
・Housing Quality Assurance Law
・Financial Instruments and Exchange Law
・Financial Products Solicitation Law
・Real Estate Specific Joint Enterprise Law

・Trust Business Law
・Act on Investment Trust and Investment Corporations
・Act on Securitization of Assets
・Real Estate Investment Advisory Business Registration Rules
・Law for Execution of Warranty against Housing Defects
・Law for Prevention of Transfer of Proceeds from Crime
・Law Concerning Proper Condominium Management
・Law Concerning Assurance of Sanitary Environments in Buildings
・Security Service Law
・Fire Service Law
・Law Regarding the Rationalization of Energy Use
・Money Lending Business Act.

2) Licenses and Permits, Etc.
The Tosei Group’s businesses have obtained the following related permits in accordance with the laws listed above. As
Tosei Group works to observe the current requirements imposed by administrative laws and local ordinances, there has notbeen any issue that could result in the revocation of licenses or permits. However, the business activities of the Group could
profoundly be affected in the event that revocation of licenses or permits occurred due to virolation of law.
Moreover, an adverse change in any of the above laws may lead to a negative impact on the operating results or financial
position of the Group.
Tosei Corporation
Name of License or Permit

Real Estate Business License

Authority

Governor ofTokyo

Content of License or Permit

Tokyo Governor’s License (11)
No. 24043

11

Expiration

March 23, 2012

Rescission, Cancellation or
Other Reasons
When the license has been obtained
through wrongful means, or theprovisionsofcausesfordisqualification of officers, etc.
become applicable, the license shallbe rescinded. (Article 66 of the
Building Lots and Buildings
Transaction Business Act)

Real Estate Investment
Advisory Business
Registration

Minister of Land,
Infrastructure,
General－000127
Transport andTourism

Specified Construction
Business License

Governor of
Tokyo

Tokyo Governor’s License(Special－19) No. 107905

December 9, 2012

First Class Architect’s OfficeLicenseGovernor of
Tokyo

Tokyo Governor’s Registration(No. 46219)

April 10, 2016

Real Estate Specific Joint

Governor of
Tokyo

Tokyo Governor, No. 58－

Kanto Financial Bureau Chief(Financial Instruments) No. 898－

Enterprise Permit

Registered Financial
Instrument Business (Type 2
Kanto Financial
Financial
Instrument Business, Advisor Bureau
and Agency)

February 28, 2016

When the registration has been
made through wrongful means, orthe provisions of causes fordisqualification of officers, etc.
become applicable, the registration
shall be rescinded. (Article 30 of theRules on Registration of Real Estate
Investment Advisory Business)
When a situation arises so that there
is no fulltime officer or employee inthe company who has experience ofbeing engaged for five (5) years ormore in specialized construction
business, the permission shall be
rescinded. (Article 29 of theConstruction Business Act)
When the registration has been
made through wrongful means, orthe provisions of causes fordisqualification of the first-classregistered architect, etc. become
applicable, the registration shall be
rescinded. (Article 26 of theArchitect Act)
When license of the building lots
and buildings transaction businesshas been rescinded, or theprovisionsofcausesfordisqualification of officers, etc.
become applicable, the authorization
shall be rescinded. (Article 36 of theReal Estate Specified Joint
Enterprise Act)
When the registration has been
made through wrongful means, orthere is a risk of insolvency in thelight of capital or operation or the
status of property, the registration
shall be rescinded. (Article 52 of the
Financial Instruments and ExchangeAct)

Tosei Asset Advisors, Inc.
Name of License or Permit

Real Estate Business License

Authority

Governor ofTokyo

Registered Financial Instrument
Business (Type 2 Financial
Instrument Business, Investment
Kanto Financial
Management)

BureauContent of License or Permit

Tokyo Governor’s License (2)No. 85736

Expiration

April 7, 2016

When the registration has been madethrough wrongful means, or there is arisk of insolvency in the light of capitalor operation or the status of property,
the registration shall be rescinded.
(Article 52 of the Financial Instruments
and Exchange Act)－

When the authorization has beenobtained through wrongful means, or
damages have been caused to anotherparty in the course of business, theauthorization shall be rescinded.
(Article 67-2 of the Building Lots andBuildings Transaction Business Act)

Kanto Financial Bureau Chief(Financial Instruments) No. 363

Minister of Land,
Minister of Land, Infrastructure,
Infrastructure,
Transport andTransport and Tourism No. 52
Tourism

12

When the license has been obtained
through wrongful means, or theprovisionsofcausesfordisqualification of officers, etc. become
applicable, the license shall be
rescinded. (Article 66 of the Building
Lots and Buildings Transaction
Business Act)－

Registered Financial Instrument
Business (Advisor and Agency)

License for discretionary
proxy in realty trading

Rescission, Cancellation or
Other Reasons

Tosei Community Co., Ltd.
Name of License or Permit

Real Estate Business License

Authority

Governor ofTokyo

General Construction Building Governor ofLicenseTokyo

Content of License or Permit

Expiration

Tokyo Governor’s License (3) No.
80048

September 28, 2016

Tokyo Governor’s License(General－19) No. 119534

March 10, 2013

Specified Construction
Business License

Governor of
Tokyo

Tokyo Governor’s License(Special－19) No. 119534

March 10, 2013

First Class Architect’s OfficeLicenseGovernor of
Tokyo

Tokyo Governor’s Registration(No. 49526)

January 15, 2014

Condominium Management
Business

Minister of Land, Minister of Land, Infrastructure,
Infrastructure,
Transport and Tourism (2)Transport and
No. 030488
Tourism

May 21, 2012

Building Environmental
Health Comprehensive
Management Company

Governor ofTokyo

October 3, 2013

Security Service License

Tokyo Public
SafetyCommissioner

Tokyo Governor’s License(Comprehensive 19) No. 273

Security Service Law Authorization
October 4, 2016
No.30002591

Rescission, Cancellation or
Other Reasons
When the license has been obtained
through wrongful means, or theprovisionsofcausesfordisqualification of officers, etc. become
applicable, the license shall be
rescinded. (Article 66 of the Building
Lots and Buildings Transaction
Business Act)
When license of the building lots andbuildings transaction business has been
rescinded, or the provisions of causes
for disqualification of officers, etc.
become applicable, the authorization
shall be rescinded. (Article 36 of theReal Estate Specified Joint EnterpriseAct)
When a situation arises so that there isno fulltime officer or employee in thecompany who has experience of being
engaged for five (5) years or more in
specialized construction business, thepermission shall be rescinded. (Article
29 of the Construction Business Act)
When the registration has been madethrough wrongful means, or theprovisionsofcausesfordisqualification of the first-classregistered architect, etc. become
applicable, the registration shall be
rescinded. (Article 26 of the Architect
Act)
When the registration has been madethrough wrongful means, or theprovisionsofcausesfordisqualification of officers, etc. become
applicable, the registration shall be
rescinded. (Article 83 of the Act on
AdvancementofProper
Condominium Management)
When the registration has been madethrough wrongful means, or theprovisionsofcausesfordisqualification of officers, etc. become
applicable, the registration shall be
rescinded. (Article 12-4 of the Act on
Maintenance of Sanitation in
Buildings)
When the recognition has beenobtained through wrongful means, orthe provisions of causes fordisqualification are applicable, therecognition shall be rescinded. (Article
8 of the Security Services Act)

Tosei Revival Investment Co., Ltd.
Name of License or Permit

Real Estate Business License

Authority

Governor ofTokyo

Content of License or Permit

Tokyo Governor’s License (1)No. 88903

13

Expiration

February 22, 2013

Rescission, Cancellation or
Other Reasons
When the license has been obtained
through wrongful means, or theprovisionsofcausesfordisqualification of officers, etc. become
applicable, the license shall be
rescinded. (Article 66 of the Building
Lots and Buildings Transaction
Business Act)

Money Lending Business
Registration

Governor of
Tokyo

Tokyo Governor, (1), No.31311

March 16, 2013

When the registration has been madethrough wrongful means, or theprovisionsofcausesfordisqualification are applicable, theregistration shall be rescinded. (Article
24-6-5 of the Money Lending BusinessAct)3) Accounting Standards and Tax System(i) Changes in Accounting Standards and the Real Estate Tax System
Changes regarding accounting standards and the real estate tax system could cause increases in the cost of holding,acquiring and selling assets, and therefore have the potential to affect the operating results and financial position of theTosei Group.
(ii) Scope of Consolidation of Real Estate Funds
Consolidation or non-consolidation of real estate funds in which Tosei conducts asset management is determined
individually on the basis of the extent of Tosei’s control over and influence on the investment partnership. Changes ininterpretation of consolidation that affect accounting auditors’ opinions and cause a change in the scope of consolidation of
the Tosei Group have the potential to affect the operating results and financial position of the Tosei Group.
5. Defect Liability and After-Sale Service
Under the Real Estate Transaction Business Law, real estate businesses assume liability for defects when they sell aproperty to parties other than real estate businesses, regardless of whether the property is new or second-hand. Under the
Housing Quality Assurance Law, real estate businesses are obligated to provide a 10-year warranty on the main structuralcomponents of the building for new properties. In addition, the Tosei Group provides customers with an after-sale service
warranty (valid for 1-10 years, depending on the item) according to the Group’s “After-Sale Service Standards.”
The Tosei Group conducts quality checks through its Architectural Design and Planning Department, and also works tomitigate business risks by taking measures such as requiring vendors and construction companies to provide an after-saleservice warranty equivalent to that of the Tosei Group. However, if for some reason a defect arises in a property suppliedby the Tosei Group, and the Group is unable to impose the defect liability on the vendor, or the vendor or contractor isincapable of fulfilling the warranty, the Tosei Group would incur additional expenses, which have the potential to affect theoperating results and financial position of the Tosei Group.
6. Human Resources
Because of the characteristics of the Tosei Group’s businesses, people are an extremely important management resource,
and further securing high-caliber personnel, educating them to master Tosei’s unique competencies and developing
management candidates are essential to accomplishing the medium-term management plan. The inability of the Tosei
Group to secure or train the personnel that it requires, or the departure of management currently in office, has the potential
to affect the operating results and financial position of the Tosei Group.
7. Personal Information Protection
In its revitalization business, development business, rental business, fund business, property management business andalternative investment business, the Tosei Group holds the personal information of many customers, including persons
involved in these businesses. The volume of personal information the Group holds is expected to increase along with futurebusiness expansion. In line with the Personal Information Protection Law, the Group has established regulations for
managing information assets, trained its employees, strengthened its information management system and taken thoroughmeasures to manage personal information. However, the release or leak of personal information or material corporate
information held by the Tosei Group to outside parties due to unforeseen circumstances could cause a loss of trust in the
Tosei Group, and thus have the potential to affect the Group’s operating results and financial position.

148. Other
When purchasing a second-hand property, the Tosei Group surveys the building’s structure, use of asbestos, soil pollution
and other elements. However, business execution may be temporarily suspended or prolonged if, for example, a building’s
structural design data has not been saved, a building that contains asbestos is demolished, or the results of the soil pollution
survey show that soil improvement is necessary. Such suspension of business has the potential to affect the operating
results and financial position of the Tosei Group.

15

2. Conditions of Corporate GroupThe Tosei Group is composed of Tosei Corporation (“Tosei” or the “Company”) and 6 consolidated subsidiaries. Its main
businesses are the revitalization business, the development business, the rental business, the fund business, the property
management business, and the alternative investment business. The operations of each business segment and the main
affiliates and other companies conducting those operations are as follows.
Main
Segment
Operations
Companies
Revitalization The Tosei Group acquires office buildings, commercial facilities, rental condominiums and other
Tosei
Business
properties whose asset value has declined, increases their value through “value-up plans” that best
Corporation
match local characteristics and tenant needs, and resells them to investors, real estate funds, andindividual end-users as revitalized real estate.
As “the Restyling Business”, the Tosei Group acquires income-producing condo complexes andsells them as condominiums for sale to end-users after increasing the value of common andexclusive areas. (the Group continues to hold and manage pre-occupied units for rental properties)
The Tosei Group’s “value-up” activities do not end with renewal. Tosei works tocomprehensively restore property value by focusing on providing property owners with satisfactionand end-users with pride in addition to improving convenience and functionality*Plans primarily look 10-20 years into the future, and cover improved design through the renewalof deteriorated or obsolete interior fixtures; functional reform including building renovation,
addition of functions and conversion; and lease up including leasing vacant space, collecting
overdue rent and raising rent.
Development
In the 23 wards of Tokyo, the Tosei Group’s primary operating area, needs for office, commercial Tosei
Businessand residential space and other uses are mixed, and how land is used can create significant
Corporationdifferences in its value. In acquiring land, Tosei studies factors relating to properties it purchases
including local area and site characteristics, use, demand, rent levels and selling prices to maximize
their value through development and new construction before selling them as single properties or
subdividing them for individual sales to end-users. Tosei responds to diverse needs by developing
office buildings, mixed-use buildings that include commercial facilities (T’S BRIGHTIA Series),
residential condominiums (THE Palms Series), and detached housing (THE Palms Court Series),and sells them to investors, real estate funds, end-users and other customers when construction iscomplete or after tenants have been secured.
RentalThe Tosei Group has expanded the scope of its business, It owns office buildings, condominiums
Tosei
Businessand commercial properties, and parking lots primarily in the 23 wards of Tokyo, which it mainly
Corporation
rents to end-users. As a landlord, the Tosei Group can quickly gather accurate information on tenantneeds, which contributes to further enhancing “value-up plans” to reflect those needs.
Fund
The Tosei Group conducts business as a Type 2 financial instrument business operator, as well as
Tosei
Businessan advisor and agency, as defined by the Financial Instruments and Exchange Law. SpecificCorporation
operations include buying, selling and brokering trust beneficiary rights that match diverse needs ofinvestors and providing advice and services on acquisition, management and disposal of properties. Tosei Asset
The Group also provides asset management service which assumes discretionary investment
Advisors, Incmanagement activity.
To offer high dividends to investors, the Tosei Group manages funds by making full use of its“value-up,” leasing and maintenance capabilities to maximize rental income and cut costs. Core
revenues include acquisition fees when new properties are purchased and asset management feesfor properties held
Property
Tosei Community Co., Ltd. conducts comprehensive property management to meet a variety of
Tosei
Management real estate needs, including administration, facility management, cleaning and security for
Community
Business
condominium complexes and office buildings and facilities, specialized building and utilities repair Co., Ltd.
work for units in condominiums complexes and office buildings, and office interior renovation
contracting.
Based on many years of experience in managing condominiums, Tosei Community offers
consulting and advice to holders of comparted-ownership and condominium associations, andprovides total support from the startup to the smooth operation of condominium associations.
Tosei Community maintains the asset value of aging office buildings with accurate maintenanceplans offering meticulous services that rationalize building owner management, such as
maintenance engineering and management of utilities, water supply and drainage sanitation andcleaning.
Alternative
Tosei Revival Investment Co., Ltd. invests in real estate-collateralized loans and collects debt or
Tosei Revival
Investment
acquires mortgaged properties as payment in kind, by negotiating with mortgaged property
Investment
Businessowners/debtors. It also acquires properties through M&As of companies with real estate holdings
Co., Ltd.
and other companies associated with real estate and applies the Group’s know-how to increase thevalue of acquired properties before selling them.
16

A schematic diagram of the businesses of the Tosei Group is shown below.

End-users“Value-up”

Land
Buildings
Beneficiaryrights to trusts

Revitalization
Business
Purchase・
Bidding

Value-restored
real estate

Tosei
Development
Corporation Business

Developed
Real estate

Sale
Investors
Rental
REITs
・
Funds

Rental Business
Fund Business

Investment Advisor andAgency/ Type2 Financial
Instrument Business

Real estate
funds

Investment
Dividends

Investors*Wholly owned subsidiary
Investment Management
Business

Tosei Asset
Advisors, Inc.

Investment Advisor and Agency
Type2 Financial Instrument
Business

Property Management*Wholly owned subsidiary
Tosei Community
Property Management
Co., Ltd.
Property M anagement Building MaintenanceBusiness*Wholly owned subsidiary
Real estate
Collateralized
Loans・
Companies
withReal estateholdings

Purchase
M&A

Tosei Revival
Investment Co.,Ltd.
Alternative Investment
Business“Va lue-up” ・Managed
Properties

Management

Funds
Building Owners
Tenants

Real estate
Collateralized
LoansCollection

Debtors

Real estate
Acquired in
Like-kind exchanges

Research title

Sa leTurn around

Investors
Stock of companies
with real estate holdings

17

Property Sale

End-users

3. Management Policies(1) Fundamental Management Policy
The Tosei Group’s mission is to create new value and inspiration in all aspects of real estate as a globalminded group of seasoned professionals. With constant commitment to quality construction, the Group works
to contribute to society and increase its corporate value by restoring the value of real estate from a view 10 to
20 years in the future by integrating real estate and finance in its six businesses: revitalization, development,
rental, funds, property management and alternative investment.
(2) Performance Targets, Medium-to-Long-Term Management Strategies, and Tasks to Be Addressed
The real estate market where Tosei Group operates appears to show signs of a gradual recovery after getting
through the worst time caused by the financial crisis, yet it still remains challenging due to the European
sovereign debt crisis, further appreciation of the yen, and uncertainty of Japan’s economic outlook.
In this operating environment, the Tosei Group developed “Next Stage 2014”, its medium-term management
plan for the next three years starting from December 1, 2011.
In the management plan, the Group aims at becoming a world-class real estate firm under the policies of“Expansion and growth of existing six business segments”, “Foray into a global market”, and “Renovation ofbusiness management infrastructure”.
In order to achieve “Expansion and growth of existing six business segments”, our tasks are to keep an eye
on the market trends amid the global economic downturn and the shrinking domestic real estate market, andcontinuously respond to constantly changing customer needs. To do so, we have to strengthen ourrevitalization and development businesses, especially focusing on the expansion of the end user targetedbusiness. Also, in our fund business, the challenges are not only to increase assets under management and fee
income but also to originate a new fund.
The achievements of “Foray into a global market” will include establishing an overseas subsidiary andmonetizing the operation by strengthening the relationship with foreign investors and diversifying themanagement portfolio of the Group.
For “Renovation of management infrastructure”, the Group needs to build a solid business foundation
suitable for cultivating human resources and implementing the strategies, to sustain its sound financial
structure and to construct an optimum disclosure system which enables us to respond to the globalization.
While pursuing these new tasks that are essential to carry out the policies, the Group will continue to placeemphasis on three centerpieces of compliance, risk management, and timely disclosure. At the same time, wewill improve the group-wide corporate governance in order for our management quality to live up to theglobal standards.
(3) Other Important Management Matters
None

―18―

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(Thousands of yen, rounded down to the nearest thousand)As of Nov. 30, 2011

As of Nov. 30, 2010ASSETS
Current assets
8,326,305

7,127,425

Notes and accounts receivable

399,856

415,791

Marketable securities

10,00010,000Real estate for sale

27,360,973

27,197,076

Real estate for sale in progress

6,374,335

10,279,685

Purchased receivables

81,361

86,467

Supplies

3,254

2,565

Deferred tax assets

966,545664,629

Other391,300

292,357

Allowance for doubtful accounts(5,697)(16,434)

43,908,234

46,059,565

Buildings and structures

5,337,567

5,140,797

Accumulated depreciation(947,482)(827,060)

Buildings and structures (net)4,390,084

4,313,737

Tools and furniture

120,979

112,437

Accumulated depreciation(88,678)(81,216)

Tools and furniture (net)32,301

31,220Land

10,175,285

10,051,371

Other

6,777

5,191

Accumulated depreciation(4,895)(2,652)Other (net)

1,882

2,538

14,599,553

14,398,868

Software65,81662,720

Telephone rights

1,889

1,889

Total intangible fixed assets

67,70564,609Investment in securities

380,61249,405Long-term loans receivable

10,325

13,031

Deferred tax assets

870,404

1,965,859

Cash and deposits

Total current assets
Fixed assets
Tangible fixed assets

Total tangible fixed assets
Intangible fixed assets

Investments and other assets―19―

As of Nov. 30, 2011

As of Nov. 30, 2010

Other

145,100

193,185

Allowance for doubtful accounts(14,332)(61,908)

Total investments and other assets

1,392,110

2,159,573

16,059,369

16,623,050

59,967,603

62,682,616

Total fixed assets
Total assets―20―

As of Nov. 30, 2011

As of Nov. 30, 2010

LIABILITIESCurrent liabilities
Notes and accounts payable
Long-term debt due within one year

806,396
6,170,937

368,162
10,823,561

Income taxes payable

79,27139,092

Advance received

545,967

285,505

Accrued bonuses to employees

150,520

110,113

Other

1,038,122

847,748

Total current liabilities

8,791,215

12,474,183

23,904,245

23,438,898

Deferred tax liabilities

15,20014,922

Accrued severance costs

133,154

108,927

Accrued retirement benefits to officers

312,586

301,253

1,810,439
24,7101,886,524

Negative goodwill

－

1,490

Other

－

783

26,200,336

25,752,800

34,991,552

38,226,983

Capital stock

5,454,673

5,454,673

Additional paid-in capital

5,538,149

5,538,149

Retained earnings

13,985,597

13,462,034

Total shareholders' equity

24,978,420

24,454,857

Valuation difference on available-for-sale securities(2,369)774

Total of accumulated other comprehensive income(2,369)774

24,976,051

24,455,632

59,967,603

62,682,616

Long-term liabilities
Long-term debt

Guarantee deposits received
Asset retirement obiligations

Total long-term liabilities
Total liabilities－

NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income

Total net assets
Total liabilities and net assets―21―

(2) Consolidated Statements of Operations(Thousands of yen, rounded down to the nearest thousand)Year ended November 30, 2011

Year ended November 30, 2010

(Dec.1, 2010-Nov. 30, 2011)(Dec.1, 2009-Nov. 30, 2010)

Revenues

24,759,291

26,449,540

Cost of revenues

19,290,132

22,056,551

Gross profit

5,469,158

4,392,989

Selling, general and administrative expenses

3,080,121

2,666,444

Operating income

2,389,037

1,726,544

Interest income

2,797

9,611

Dividend income

2,861

2,814

Amortization of negative goodwill

1,490

2,104

Penalty income

34,035－

Miscellaneous income

30,724

16,481

Total non-operating income

71,90831,011

885,646

939,643

Stock issuance expenses－

11,261

Miscellaneous losses

799

3,516

886,445954,421

1,574,500

803,134

Gain on sale on investment securities

－

1,184

Total extraordinary gains

－

1,184

－

4,688

16,976－

19,932－－55,032

Total extraordinary losses

36,90959,720

Income before income taxes

1,537,591

744,598

Current income taxes

65,89934,625

Deferred income taxes

719,708

288,366

Total income taxes

785,608

322,992

Income before minority interests

751,982－

Net income

751,982421,606

Non-operating income

Non-operating expenses
Interest expense

Total non-operating expense
Ordinary income
Extraordinary gains

Extraordinary losses
Loss on retirement of fixed assets
Loss on valuation of membership
Loss on adjustment for changes of accounting standard for asset retirement obligations
Special contribution at the time of withdrawal from EPF―22―

Consolidated Statements of Comprehensive Income(Thousands of yen, rounded down to the nearest thousand)Year ended November 30, 2011 Year ended November 30, 2010
(Dec.1, 2010-Nov. 30, 2011)(Dec.1, 2009-Nov. 30, 2010)

Income before minority interests
Other comprehensive income
Valuation difference on available-for-salesecurities
Total of other comprehensive income

751,982－(3,143)－(3,143)－Comprehensive income

748,839－

748,839－(Comprehensive income attributable to)Comprehensive income attributable to ownersof the parent―23―

(3) Consolidated Statements of Changes in Net Assets(Thousands of yen, rounded down to the nearest thousand)Year ended November 30, 2011

Year ended November 30, 2010

(Dec.1, 2010-Nov. 30, 2011)(Dec.1, 2009-Nov. 30, 2010)

Shareholders’ equity
Common stock
5,454,673

4,452,807

Issuance of new shares－

1,001,866

Total changes during the fiscal year－

1,001,866

5,454,673

5,454,673

5,538,149

4,536,283

Issuance of new shares－

1,001,866

Total changes during the fiscal year－

1,001,866

5,538,149

5,538,149

13,462,034

13,238,348

Dividends from retained earnings(228,420)(197,920)

Net income

751,982421,606

Total changes during the fiscal year

523,562

223,686

13,985,597

13,462,034

24,454,857

22,227,438－

2,003,732

Dividends from retained earning(228,420)(197,920)

Net income

751,982421,606

Total changes during the fiscal year

523,562

2,227,418

24,978,420

24,454,857

774

(388)

(3,143)

1,162(3,143)

1,162(2,369)774

Balance at end of previous fiscal year
Changes during the fiscal year

Balance at end of the fiscal year
Additional paid-in capital
Balance at end of previous fiscal year
Changes during the fiscal year

Balance at end of the fiscal year
Retained earnings
Balance at end of previous fiscal year
Changes during the fiscal year

Balance at end of the fiscal year
Total shareholders’ equity
Balance at end of previous fiscal year
Changes during the fiscal year
Issuance of new shares

Balance at end of the fiscal year
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at end of previous fiscal year
Changes during the fiscal year
Change in items other than shareholders’ equity
during the fiscal year (net)Total changes of items during the period
Balance at end of the fiscal year―24―Year ended November 30, 2011

Year ended November 30, 2010

(Dec.1, 2010-Nov. 30, 2011)(Dec.1, 2009-Nov. 30, 2010)

Total of accumulated other comprehensive income
Balance at end of the fiscal year

774

(388)

(3,143)

1,162(3,143)

1,162(2,369)774－

26,657－(26,657)

Total changes during the fiscal year－

(26,657)

Balance at end of the fiscal year－－

24,455,632

22,253,707－

2,003,732

Dividends from retained earnings(228,420)(197,920)

Net income

751,982421,606(3,143)(25,494)

520,4192,201,924

24,976,051

24,455,632

Changes during the fiscal year
Change in items other than shareholders’ equity
during the year (net)Total changes during the fiscal year
Balance at end of the fiscal year
Stock acquisition rights
Balance at end of previous fiscal year
Changes during the fiscal year
Change in items other than shareholders’ equity
during the year (net)Total net assets
Balance at end of previous fiscal year
Changes during the fiscal year
Issuance of new shares

Change in items other than shareholders’ equity during
the fiscal year (net)Total changes during the fiscal year
Balance at end of the fiscal year―25―

(4) Consolidated Statements of Cash Flows(Thousands of yen, rounded down to the nearest thousand)Year ended November 30, 2011

Year ended November 30, 2010

(Dec.1, 2010-Nov. 30, 2011)(Dec.1, 2009-Nov. 30, 2010)

1,537,591
336,398(1,490)17,654(5,658)885,646－744,598
363,533(2,104)142,272(12,425)
939,643
4,688

19,932－

16,976－64,280(109,754)

5,106
3,305,302(220,082)
438,233
260,461(76,084)
333,139

34,824(2,012,877)
65,013(350,373)
12,952(249,708)(203,907)

Subtotal

6,917,407(633,625)

Receipts of interest and dividends
Payments of interest
Payment of income taxes

4,923(881,503)(23,098)

13,147(933,555)(71,661)

Net cash provided by (used in) operating activities

6,017,729(1,625,695)

Decrease (increase) in time deposits

286,136(306,136)

Purchases of tangible fixed assets(61,532)(22,807)

Purchases of intangible fixed assets
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from collection of investment securities
Decrease (increase) in guarantee deposits
Payment of loan receivable
Proceeds from collection of loan receivables
Other(36,717)(353,350)
015,347(17,740)(3,580)－－59,454(48,000)
139,821(566)

Net cash provided by (used in) investing activities(116,149)(178,765)－
11,474,100(15,661,377)－(70,000)
17,099,900(18,059,821)
1,965,813(227,718)(198,884)(1,567)(1,567)(4,416,563)

735,439

Cash from operating activities
Income before income taxes
Depreciation
Amortization of negative goodwill
Increase (decrease) in allowancesInterest and dividend income
Interest expenses
Loss on retirement of tangible assets
Loss on adjustment for changes of accounting stan
dard for asset retirement obligations
Loss on valuation of membership
Decrease (increase) in notes and accounts
receivable
Decrease (increase) in purchased receivables
Decrease (increase) in inventories
Decrease (increase) in advance payment
Increase (decrease)in notes and accounts payable
Increase (decrease) in advance received
Increase (decrease) in deposits received
Other

Cash flows from investing activities－
51,705

Cash flows from financing activities
Increase (decrease) in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from new stock issue
Cash dividends paid
Other
Net cash provided by (used in) financing activities

―26―

－
3,050

Year ended November 30, 2011

Year ended November 30, 2010

(Dec.1, 2010-Nov. 30, 2011)(Dec.1, 2009-Nov. 30, 2010)

Net increase (decrease) in cash and cash equivalents

1,485,016(1,069,021)

Cash and cash equivalents at beginning of year

6,821,288

7,890,310

Cash and cash equivalents at end of year

8,306,305

6,821,288―27―

(Segment Information)
a. Business Segment Information(December 1, 2010 to November 30, 2011)
Reportable segments
Revitalization Development
Business
Business

RentalBusiness

Fund
Business

Property
Management
Business

Alternative
Investment
Business

Total

Adjustment(Note 1)

IncomeAccording toConsolidated
Statement of
Operations(Note 2)

Revenues
Outside customers

12,040,886

5,256,145

2,459,614

1,396,347

3,425,416

180,880

24,759,291－

24,759,291

Intersegment andtransfers－－

48,11918,017

485,731－551,869(551,869)－

12,040,886

5,256,145

2,507,733

1,414,365

3,911,147

180,880

25,311,160(551,869)

24,759,291

Segment operating
income (Loss)

1,891,898(22,238)

1,182,925

652,879

104,845(190,258)

3,620,051(1,231,014)

2,389,037

Segment assets

19,048,273

13,562,936

13,258,186

856,286

1,669,912

2,433,173

51,098,768

8,868,835

59,967,603

Depreciation－－

254,418

2,281

24,50916,657

297,866

38,532

336,398

Increase in tangible andintangible assets－－

44,049

3,605

5,376

2,661

55,69349,204

104,897

Total

Others

Notes: 1. (1) The downward adjustment of segment operating income (loss) by ¥1,231,014 thousand includes the elimination of intersegment
transactions of ¥20,063 thousand and general expenses that cannot be allocated to any particular reportable segment of ¥1,210,951
thousand. General expenses mainly consist of SG&A expenses of the parent company that are not attributable to any particular reportablesegment.
(2) The upward adjustment of segment assets by ¥8,868,835 thousand includes assets of ¥9,783,874 thousand. Assets mainly consist of
surplus funds (Cash and deposits and Marketable securities) and assets related to the administrative division of the Company.
(3) The upward adjustment of depreciation by ¥38,532 thousand consists of general expenses that are not attributable to any particular
reportable segment.
(4) The upward adjustment of increase in tangible and intangible assets by ¥49,204 thousand consists of increase in assets that are not
attributable to any particular reportable segment.
2. Segment operating income (loss) is adjusted with income according to the Consolidated Statements of Operations.

―28―

(December 1, 2009 to November 30, 2010)
Revitalization Development
Business
Business

RentalBusiness

Fund
Business

Property
Management
Business

Alternative
Investment
Business

Total

Elimination or
Consolidated
Corporate

I. Revenues and operating
income(loss)
Revenues(1) Outside customers

8,149,422

11,682,418

2,587,041

1,124,585

2,735,528

170,544

26,449,540－

26,449,540(2) Intersegment
sales and transfers－－

47,08050,966322,237－

420,285(420,285)

－

Total

8,149,422

11,682,418

2,634,122

1,175,552

3,057,765

170,544

26,869,825(420,285)

26,449,540

Operating expenses

7,741,222

11,083,323

1,338,960

675,5032,937,060

227,606

24,003,678

719,317

24,722,996

Operating income (loss)

408,200

599,094

1,295,161

500,048

120,705(57,061)2,866,147(1,139,603)

1,726,544

22,657,203

12,737,840

14,458,918

399,536

942,0432,802,045

53,997,587

8,685,029

62,682,616

Depreciation－－

285,547

2,040

16,24016,902

320,73142,802363,533

Capital expenditure

－

－

8,895

1,555

5,187

－

15,638

10,74926,387

II. Assets, depreciation andcapital expenditures:
Assets

Notes: 1. Method of Business Classification
Businesses are based on the classifications used by internal management.
2. Principal Businesses of Each Segment
Segment
Principal Business
The Tosei Group acquires office buildings, commercial facilities, rental condominiums and otherproperties whose asset value has declined, increases their value through “value-up plans” that best match
local characteristics and tenant needs, and resells them to investors, real estate funds, and individual endRevitalization Business
users as revitalized real estate. As “the Restyling Business”, the Tosei Group acquires income-producing
condo complexes and sells them as condominiums for sale to end-users after increasing the value ofcommon and exclusive areas. (the Group continues to hold and manage pre-occupied units for rental
properties)
Focusing on the 23 wards of Tokyo, the Group studies factors relating to properties it purchases including
the local area, site characteristics, use, demand, rent levels and selling prices to maximize their value
Development Businessthrough development and new construction before selling them to investors, real estate funds, end-users
and other customers.
The Tosei Group owns office buildings, residential and commercial properties, and parking lots primarily
in the 23 wards of Tokyo, which it rents to end-users. By gathering information on tenants’ needs, it
Rental Businessenhances “value-up plans” in the revitalization business and improves asset management capabilities in
the fund business.
The Tosei Group conducts business as a Type 2 financial instrument business operator, as well as anadvisor and agency, as defined by the Financial Instruments and Exchange Law. In accordance with theFund Businessaforementioned law, the Group buys, sells and brokers entrusted properties that match diverse needs ofinvestors and provides advice and services on acquisition, management and disposal of properties. The
Group also provides asset management and discretionary investment management services.
The Tosei Group does comprehensive property management to meet a variety of real estate needs,
including administration, facility management, cleaning and security for condominium complexes andProperty Management Businessoffice buildings and facilities, as well as utilities repair work for exclusive areas in condominiums
complexes and office buildings, and office interior renovation contracting.
The Tosei Group invests in the real-estate collateralized loans and collects debt or acquires mortgaged
properties as payment in kind. It also acquires properties through M&As of companies with real estate
Alternative Investment Businessholdings and other companies associated with real estate and applies the Group’s know-how to increase
the value of acquired properties before selling them.
3. Unallocatable operating expenses included in Eliminations or Corporate were ¥1,142,389 thousand, and mainly consisted of expenses related to thegeneral and administrative divisions of the reporting companies.
4. Unallocatable assets included in Eliminations or Corporate were ¥9,542,626 thousand, and mainly consisted of surplus funds (cash and deposits)
and assets related to the administrative division of the Company.

b.

Geographic segment information(December 1, 2009 to November 30, 2010).

Geographical segment information is omitted, as the Company had no consolidated subsidiaries or branch offices outside Japan in the year ended
November 30, 2010 (December 1, 2009 to November 30, 2010).

c.

Overseas sales(December 1, 2009 to November 30, 2010).

―29―

Overseas sales information is omitted because the Company had no overseas sales in the year ended November 30, 2011 (December 1, 2010 toNovember 30, 2011).

d.

Segment information
1.

(December 1, 2010 to November 30, 2011).

Summary of reporting segments (December 1, 2010 to November 30, 2011)
The Group’s reportable segments are components of the Company about which separate financial information is available that is evaluatedregularly by the Board of Directors to determine distribution of management resources and assess performance. The Group’s head office draws
up comprehensive domestic strategies for each segment and the Group conducts business activities accordingly. Consequently, the Group ismade up of different segments, as determined by head office, and has six reportable segments: the revitalization business, the development
business, the rental business, the fund business, the property management business and the alternative investment business. In the revitalization
business, the Group increases the value of properties whose asset value has declined and resells them. In the development business, the Groupsells condominium units and detached houses in lots to private customers and sells rental apartments and office buildings to investors. In therental business, the Group rents office buildings and condominiums. The fund business mainly provides REIT fund asset management
services. The property management business provides comprehensive property management services. In the alternative investment business,
the Group acquires real estate collateralized loans, collects debt, and sells properties acquired as payment in kind.

2.

Method for calculating segment sales and income or loss, assets, and liability
The segment income is calculated on an operating income basis. Intersegment sales and transfers are based on the market price.

3.

Information on segment sales and income, or loss, assets, and liability (December 1, 2009 to November 30, 2010).
Information on segment sales and income, or loss, assets, and liability is omitted, as the Company disclosed the same information which is tobe disclosed when adopting “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (No.17, issued
by the Accounting Standards Board of Japan (ASBJ) on March 27, 2009) and “Guidance on Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (No.20, issued by the Accounting Standards Board of Japan (ASBJ) on March 21, 2008.).

e.

Relevant Information
1.

(December 1, 2010 to November 30, 2011).

Product and Service Information
Information on each product and service is omitted, as the Company disclosed the same information on “Segment Information”.

2.

Regional Information(1) Revenues
Information on revenues is omitted, as revenues from external customers in Japan exceeded 90% of the revenues on the consolidated
statement of operations.
(2) Tangible Fixed Assets
Information on tangible fixed assets is omitted, as the amount of tangible fixed assets located in Japan exceeded 90% of the tangible fixed
assets on the condolidated balance sheet.

3.

Major Customer Information
Information on major customer is omitted, as the Company has no external customer accouting for more than 10% of the revenues on the
consolidated statement of operations.

f.

Impairment loss on Fixed Assets(December 1, 2010 to November 30, 2011).

None

g.

Amortization of goodwill and Balance of Unamortized Goodwill (December 1, 2010 to November 30, 2011).
Information on Amortization of goodwill and Balance of Unamortized Goodwill is omitted as their amounts are very small.

h.

Gain on Negative Goodwill (December 1, 2010 to November 30, 2011).
None

―30―

(Additional Information)
Effective from the current consolidated fiscal year, the Company applied “Accounting Standard for Disclosures about Segments of an Enterpriseand Related Information” (No.17, issued by the Accounting Standards Board of Japan (ASBJ) on March 27, 2009) and “Guidance on AccountingStandard for Disclosures about Segments of an Enterprise and Related Information” (No.20, issued by the Accounting Standards Board of Japan(ASBJ) on March 21, 2008.

(Real Estate-related Business, Including Rental Business)
Current Consolidated Fiscal Year (December 1, 2010 to November 30, 2011)
The Tosei Corporation and some of its consolidated subsidiaries own office buildings for lease, condominiums for rent, etc. mainly in Tokyo withthe aim of earning rental profits. Income relating to said real estate-related business, including the rental business, in the fiscal year ended November
2011 was ¥585,522 thousand. (rental profits are charged to revenues, and rent expenses are charged to cost of revenues.)
Amounts recorded on the consolidated balance sheet regarding said real estate-related business, including the rental business, and the market values
are as follows:
Amounts recorded on the consolidated balance sheet (¥ thousand)
Balance at end of previous
consolidated fiscal year

Balance at end of previous
consolidated fiscal year

11,949,112

Balance at end of current
consolidated fiscal year

(122,587)

Market value at end of current
consolidated fiscal year (¥thousand)

11,826,524

12,582,805

Notes: 1. Amounts recorded on the consolidated balance sheet are obtained by subtracting accumulated depreciation and accumulated impairment loss
from the cost of acquisition.
2. Of the increase (decrease) in the current consolidated fiscal year, the major increase was a transfer (¥506,978 thousand) from “real estate forsale” as a result of change in the purpose of holding the real estate, while the major decrease was a transfer (¥235,581 thousand) to “realestate for sale” as a result of change in the purpose of holding the real estate.
3. The market value at the end of current consolidated fiscal year is calculated by the Tosei Corporation using the methord which complies
with the Real Estate Appraisal Standard.
4. With respect to the Toranomon Tosei Building, a part of which is used as the headquarters of the Tosei Corporation and its consolidated
subsidiaries, the amount for the portion not used as headquarters is included in the amounts in the above table.

Previous consolidated fiscal year (December 1, 2009 to November 30, 2010)
Tosei Corporation and some of its consolidated subsidiaries own office buildings for lease, condominiums for rent, etc. mainly in Tokyo with theaim of earning rental income. Income relating to said real estate-related business, including the rental business, in the fiscal year ended November
2010 was ¥771,009 thousand (rental profits are booked as revenues and rent expenses are charged to cost of revenues.)
Amounts recorded on the consolidated balance sheet regarding said real estate-related business, including the rental business, and the market values
are as follows:
Amounts recorded on the consolidated balance sheet (¥ thousand)
Balance at end of previous
consolidated fiscal year

Increase (decrease) in current
consolidated fiscal year

10,327,181

Balance at end of current
consolidated fiscal year

1,621,931

Market value at end of current
consolidated fiscal year (¥ thousand)

11,949,112

13,994,083

Notes: 1. Amounts recorded on the consolidated balance sheet are obtained by subtracting accumulated depreciation and accumulated impairment
loss from the cost of acquisition.
2. Of the increase (decrease) in the current consolidated fiscal year, the major increase was a transfer (¥4,687,540 thousand) from properties forsale as a result of change in the purpose of retention, while the major decrease was a transfer (¥2,953,387 thousand) to properties for sale as aresult of change in the purpose of retention.
3. The market value at the end of current consolidated fiscal year is calculated by the Tosei Corporation using the methord which complies
with the Real Estate Appraisal Standard.
4. With respect to the Toranomon Tosei Building, a part of which is used as the headquarters of the Tosei Corporation and its consolidated
subsidiaries, the amount for the portion not used as headquarters is included in the amounts in the above table.

―31―

(Additional Information)
Effective from the current consolidated fiscal year, the Company applied “Accounting Standard for Disclosures about Fair Value of Investment andRental Property” (No.20, issued by the Accounting Standards Board of Japan (ASBJ) on November 28, 2008) and “Guidance on AccountingStandard for Disclosures about Fair Value of Investment and Rental Property” (No.23, issued by the Accounting Standards Board of Japan (ASBJ)
November 28, 2008).

―32―