Disclaimer: This is a Japanese-English translation of the summary of financial statements of the Company produced for your convenience. Since
no auditor audited this report, officially only the Japanese version is assumed to be the summary of financial statements of the Company. Thissummary does not constitute any guarantee and will not compensate any losses and/or damage stemming from actions taken based on thesestatements. In the case that there is any discrepancy between the Japanese and English versions, the Japanese version is assumed to be correct.

Consolidated Financial Report
For Fiscal 2017 (The Fiscal Year Ended March 31, 2017 under Japanese GAAP)
Company Name: Grandy House Corporation
Stock Exchange Listing:
Securities Code:
8999
URL
Representative:
Hiroyuki Murata, President
Inquiries:
Atsuo Saito, Vice President/Management Division Director
Scheduled date of the Ordinary General Meeting of Shareholders: June 29, 2017
Scheduled date of securities report filing:
June 29, 2017
Scheduled date of dividend payment commencement:
June 30, 2017
Preparation of annual supplementary explanatory materials:
Yes
Annual results briefing held:
Yes (For analysts)

May 8, 2017
Tokyo Stock Exchange
http://www.grandy.co.jp
TEL: +81-28-650-7777(Figures are rounded down to the nearest million yen unless otherwise stated.)

1. Consolidated Financial Results for Fiscal 2017 (April 1, 2016 to March 31, 2017)(1) Consolidated Operating Results(Percentage figures show the year-on-year increase (decrease).)Net Income Attributable to
Owners of the Parent
Net Sales
Operating Income
Ordinary Income
Company(¥ million)%(¥ million)%(¥ million)%(¥ million)%
Fiscal 2017
43,962
5.4
2,715
(1.9)
2,805
(2.0)
1,744
0.7
Fiscal 2016
41,706
11.3
2,768
14.6
2,863
13.9
1,732
10.5
Note: Comprehensive Income
Fiscal 2017: ¥1,786 million (7.0%)
Fiscal 2016: ¥1,669 million (5.4%)
Net Income per
Net Income per
Ordinary Income /Operating Income /Return on Equity
Share
Share (Diluted)
Total Assets
Net Sales
(¥)
(¥)
%
%
%
Fiscal 2017
60.61
60.59
10.1
6.6
6.2
Fiscal 2016
60.20
―
11.0
7.6
6.6
Reference: Equity in earnings of affiliates
Fiscal 2017: ¥― million
Fiscal 2016: ¥― million(2) Consolidated Financial Position

Total Assets
Net Assets(¥ million)(¥ million)
March 31, 2017
45,682
18,121March 31, 2016
39,545
16,623
Reference: Shareholders’ equity Fiscal 2017: ¥17,921 million
Fiscal 2016: ¥16,448 million

Shareholders’ Equity Ratio
%
39.2
41.6

Net Assets per Share(¥)
622.78571.58(3) Consolidated Cash Flows

Fiscal 2017
Fiscal 2016

Cash Flows fromOperating Activities(¥ million)(2,885)
101

Cash Flows from
Investing Activities(¥ million)
(562)
(507)

Cash Flows from
Financing Activities(¥ million)
4,140
1,575

Cash and Cash Equivalents
at the End of the Period(¥ million)
8,475
7,782

2. Dividends
Annual Dividend per SharesFiscal 2016
Fiscal 2017
Fiscal 2018 (Forecast)

1Q-End2Q-End3Q-EndPeriodEnd

(¥)
―
―
―

(¥)
0.00
0.00
0.00

(¥)
―
―
―

(¥)
12.00
14.00
16.00

Total
(¥)
12.00
14.00
16.00

Total
Dividends(¥ million)
345
402

Payout Ratio(Consolidated)
%
19.9
23.1
21.9

Ratio of
Dividends to
Net Assets(Consolidated)
%
2.2
2.3

3. Consolidated Financial Forecasts for Fiscal 2018 (April 1, 2017 to March 31, 2018)

Net SalesInterim Period
Full Fiscal Year(¥ million)
23,90048,000%
5.7
9.2(Percentage figures show the year-on-year increase (decrease) for each corresponding period.)
Net Income
Attributable to
Net Income per
Operating Income
Ordinary Income
Owners of the
Share
Parent Company(¥ million)%(¥ million)%(¥ million)
%
(¥)
1,540
1.7
1,580
0.6
1,070
4.4
37.18
3,200
17.9
3,300
17.6
2,100
20.4
72.98

* Explanatory Notes(1) Changes of important subsidiaries during the period(changes in specified subsidiaries resulting in a change in the scope of consolidation): None
Newly included: ―Excluded: ―(2) Changes in accounting policies, accounting estimates, and restatements
1) Changes in accounting policies in connection with revision to accounting standards, etc.:
2) Changes in accounting policies other than 1):
3) Changes in accounting estimates:
4) Restatements:(3) Number of shares issued and outstanding (common stock)1) Number of shares issued and outstanding as ofMarch 31, 2017
the period-end (including treasury shares)
March 31, 20172) Number of treasury shares
3) Average number of shares issued and outstanding for Fiscal 2017
the period

Yes
None
None
None

30,823,200 shares

March 31, 2016

30,823,200 shares

2,046,245 shares

March 31, 2016

2,046,245 shares

28,776,955 sharesFiscal 2016

28,776,955 shares

Reference: Non-Consolidated Financial Results
1. Non-Consolidated Financial Results for Fiscal 2017 (April 1, 2016 to March 31, 2017)(1) Non-Consolidated Operating Results

Fiscal 2017
Fiscal 2016

Net Sales(¥ million)
19,462
18,605%4.6
1.8(Percentage figures show the year-on-year increase (decrease).)Ordinary Income
Net Income(¥ million)%(¥ million)
%
1,979
27.1
1,451
32.1
1,556
(12.1)
1,099(17.2)Net Income per Share(Diluted)

Net Income per Share
(¥)
50.46
38.21

Fiscal 2017
Fiscal 2016

Operating Income(¥ million)
%
1,004
13.0
888
(18.1)

(¥)
50.44
―

(2) Non-Consolidated Financial Position
Total Assets
Net Assets
Shareholders’ Equity Ratio(¥ million)(¥ million)%
March 31, 201724,452
14,922
60.2
March 31, 2016
23,653
13,726
57.3
Reference: Shareholders’ equity March 31, 2017: ¥14,722 million
March 31, 2016: ¥13,551 million

Net Assets per Share(¥)
511.62470.92

2. Non-Consolidated Financial Forecasts for Fiscal 2018 (April 1, 2017 to March 31, 2018)

Interim Period
Full Fiscal Year**Net Sales(¥ million)
10,20020,400%
4.4
4.8(Percentage figures show the year-on-year increase (decrease) for each corresponding period.)
Operating Income
Ordinary Income
Net Income
Net Income per Share(¥ million)%(¥ million)%(¥ million)
%
(¥)
550
9.1
1,500
4.1
1,290
2.6
44.83
1,100
9.6
2,100
6.1
1,600
10.2
55.60

The consolidated financial report is not subject to auditing.
Explanation concerning the appropriate use of forecasts and other special instructions
Disclaimer:
Results forecasts and other forward-looking statements contained in this report are based on assumptions, beliefs, anduncertainties in light of information available to the Company’s management as of the publication date. Actual results may
differ materially from forecasts due to a variety of factors. Therefore, the Company does not guarantee the accuracy of
forecasts and other forward-looking statements and its ability to achieve stated targets. Please refer to “1. OVERVIEW OFOPERATING RESULTS (1) Overview of Operating Results for Fiscal 2017” on page 2 of the attachment materials for
information regarding the underlying assumptions for financial results forecasts and an explanation concerning the appropriate
use of forecasts and other notes.

Attachment Materials: Table of Contents
1. OVERVIEW OF OPERATING RESULTS ............................................................................................................. 2(1) Overview of Operating Results for Fiscal 2017 ...................................................................................................... 2(2) Overview of Financial Position for Fiscal 2017 ...................................................................................................... 5(3) Overview of Cash Flows for Fiscal 2017 ................................................................................................................ 5(4) Basic Policy Concerning the Allocation of Profits and Dividends for Fiscal 2017 and Fiscal 2018 ....................... 6
2. OVERVIEW OF THE CORPORATE GROUP ....................................................................................................... 7
3. BASIC APPROACH TO THE SELECTION OF ACCOUNTING STANDARDS ................................................ 8
4. CONSOLIDATED FINANCIAL STATEMENTS AND IMPORTANT NOTES .................................................... 9(1) Consolidated Balance Sheets ................................................................................................................................... 9(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ............................ 11(Consolidated Statements of Income) .................................................................................................................... 11(Consolidated Statements of Comprehensive Income) ..........................................................................................12(3) Consolidated Statements of Changes in Net Assets............................................................................................... 13(4) Consolidated Statements of Cash Flows................................................................................................................ 15(5) Notes to Consolidated Financial Statements ......................................................................................................... 16(Notes on Going Concern Assumptions) ...............................................................................................................16(Segment and Other Information)..........................................................................................................................17―1―

1. OVERVIEW OF OPERATING RESULTS(1) Overview of Operating Results for Fiscal 2017
While the economy of Japan under the consolidated fiscal year under review is faced with overseas risks suchas an economic recession in China and developing countries in Asia, problems associated with Brexit, and theinauguration of the new US administration, the Japanese economy has continued to show signs of a gradual
recovery, with sustained improvement in the employment and income situation, and positive growth for four
consecutive quarters until the end of last year.
In the housing sector, the repeated postponement of the consumption tax hike to 10% that was planned forApril this year made it possible to avoid the large changes in demand associated with a tax increase. With thesechanges, the number of new housing starts (mainly for rental) increased. Moreover, as the government continues
to offer various support measures to promote house buying, the environment for house buying remains favorable,with the interest rate on housing loans remaining at record low levels. As moves are being seen to use up land
inventory that was acquired in expectation of the increased demand ahead of the (originally planned) second
consumption tax hike, the number of new construction starts remains strong. Meanwhile, as the number of
construction starts has remained steady despite the decreased impact of long-term low interest rates and the
postponement of the consumption tax hike resulting in customers being less willing to buy, the market inventoryof detached houses has been increasing, resulting in greater competition between businesses.
Under these circumstances, the Grandy House Group positioned the consolidated fiscal year under review,which is the second year of the three-year medium-term business plan (drawn up in 2015), as an important year toachieve management targets in the final year, and continued to strive to expand and reinforce business under thebasic policy of “continuous growth through reinforcing the core operation (new homes)” and “expansion ofbusiness through enhancement of the stock business.”
With regard to new home sales, one of our core operations, we built and enhanced a new branch in ourdesignated focus area for increasing sales, which extends from southern Ibaraki Prefecture to the Kashiwa area in
Chiba Prefecture, and launched sales of “Yotsuba no Mori” (literally, “Four-leaf Clover Hill”) housing lots (211lots, Tsukuba City, Ibaraki Prefecture), the largest housing lot development ever implemented by our group, from
December 2016. In terms of efforts to improve our market share, while holding various hands-on events to attract
customers, we have also made preparations to thoroughly develop the area through further enhancement of oursales structure by moving our Kennan branch (Oyama City, Tochigi Prefecture) to our new company building. We
have made efforts to facilitate brand penetration for our products by differentiating them based on high level ofcreativity, energy conservation and security. In existing home sales, we have continued to build up our productinventory to stabilize and increase sales while working to expand our business in metropolitan areas at our branch
in Setagaya Ward, Tokyo, which opened at the end of the last financial period.
Through initiatives such as these, the Group’s consolidated results for this fiscal year increased, at 1,346 newhome sales (up 56 from the same period of the previous year) and 136 existing home sales (up 19 from the same
period of the previous year). However, as competition increased with rush orders ahead of the end of the period,
sales profits had to be reduced.
As a result of these initiatives, the Grandy House Group’s consolidated results for Fiscal 2017 were as
follows. Net sales were ¥43,962 million, up 5.4% from the previous fiscal year; operating income was ¥2,715
million, down 1.9% from the previous fiscal year; ordinary income was ¥2,805 million, down 2.0% from theprevious fiscal year; and net income attributable to owners of the parent company totaled ¥1,744 million, up
0.7% from the previous fiscal year.
Results by business segment are presented as follows.
 Real Estate Sales
In the new home sales business, we worked to fully cover our designated focus area for increasing sales,
which extends from southern Ibaraki Prefecture to the Kashiwa area in Chiba Prefecture while also expanding ourhouse products in terms of both quantity and quality through initiatives such as strategically developing large landlots. In addition to the Chiba Grandy House Branch successively launching dozens of medium-scale housing lots
to enhance our product inventory, we opened the Tsukuba Branch (Ibaraki Grandy House branch) in Tsukuba City,
Ibaraki Prefecture in November 2016, which started sales of “Yotsuba no Mori” housing lots (211 lots, Tsukuba
City, Ibaraki Prefecture), the Group’s largest scale housing lot development ever, from December 2016. In terms―2―

of initiatives to increase our market share, we have worked to attract families as customers, through efforts suchas communicating information from our “Grandy Plaza” hands-on showroom as well as a diverse range ofhands-on events such as our “KIDS Bike Festival” held by a local professional bicycle team and the “Future
Living Experience Event” involving all-electric housing fitted with a solar power generation system together with
an electric vehicle. In March 2017, we also moved our Kennan branch (Oyama City, Tochigi Prefecture) , which
covered southern Tochigi Prefecture, to our new company office established with the “Grandy Plaza” showroom
newly constructed in a dense commercial area of Oyama City and prepared the area for thorough development byfurther increasing staff numbers and enhancing existing systems. In terms of products, we engaged in productplanning with different concepts for each housing lot. For example, “Happiness Forest Tokami” (35 lots,
Utsunomiya City, Tochigi Prefecture), offers increased nighttime security throughout all lots, “Solaris Vita
Minamikashiwa Stage 8” (26 lots, Kashiwa City, Chiba Prefecture) is a proposal-based planned product thatcombines lifestyles with electric vehicles, and the aforementioned “Yotsuba no Mori,” in which all lots have beenequipped with seismic-resistant features. In addition, we have promoted sales by differentiating our products fromthose of our competitors with our strength in building comfortable urban environments.
Through these initiatives, although we were able to expand the number of lot sales in our previously
mentioned designated focus area, the uneven distribution of product inventory in other areas, etc. resulted in a
temporary stagnation in orders from December 2016 through January 2017. In light of this, we made every effort
to achieve a sales recovery by the end of this financial period. However, although we were able to secure 1,346
new home sales (up 56 from the same period of the previous year), we faced a tough battle in terms of profits
with increased price support.
For existing home sales, we increased our product inventories in all sales areas to expand the number of sales(a sufficient inventory of over 100 homes at any time, of which over 60 are completed) under our policy of stockbusiness enhancement and worked to develop our business in metropolitan areas (Tokyo, Saitama, Chiba andKanagawa Prefectures) as designated focus areas under a policy of expanding our sales areas. This made it
possible to contribute to the operating results of this period for the said area, with 24 sales (up 18 from the same
period of the previous year) and 34 purchases (up 7 from the same period of the previous year). As a result, thenumber of existing home sales during this cumulative period increased 19 over the same period of the previous
year to reach 136, and the product inventory at the end of the period was 112 lots (up 16 from the same period of
the previous year).
As a result of these initiatives, sales in the real estate sales segment increased 5.5% year-on-year to ¥40,673
million. Segment profit was ¥2,497 million, down 1.4% from the previous fiscal year.
 Construction Material Sales
In the construction material sales segment, new housing starts for wooden houses increased year-on-year for a
15th consecutive month up to March, with demand continuing to grow steadily. Meanwhile, the prices for pre-cut
materials such as chipboard for floors began rising as the demand for wood used in housing grew steadily. Under
these circumstances, while efforts made to expand sales of our core product, pre-cut materials, to our best
customers with a focus on small and medium-sized builders’ offices and the enhancement of sales of construction
materials and housing equipment other than pre-cut materials resulted in increased revenue being maintainedwith sales of ¥3,030 million (up 4.7% compared to same period of previous year), segment profit decreased to¥148 million (down 21.4% compared to the same period of previous year) as a result of intensified competition
and increased costs.
 Real Estate Leasing
In the real estate leasing segment, the office market around Utsunomiya City, Tochigi Prefecture, our main
sales area, continued to exhibit demand for small-scale properties and prime properties with new facilities. In theparking lot market, we continued to see competition between neighboring parking lots and new investment in
pay-by-the-hour parking lots. In this context, while we made efforts to improve the operation rate of existingworking assets as we had sold one pay-by-the-hour parking lot (Mito City, Ibaraki Prefecture) in the previous
financial period and not made any new investments this period, our sales decreased to ¥258 million (down 1.6%
compared to same period of previous year) as a result of decreased working assets. Decreased profits andincreased management costs resulting from large-scale tenant building repair costs, etc. resulted in segment profit
decreasing to ¥155 million (down 6.2% compared to same period of previous year).
―3―Outlook
As the Japanese economy is expected to continue to recover with improved employment and income
conditions, the future remains unclear, with fears that it will be affected by greater labor shortages, the unstable
political situations overseas and emerging protectionism. In terms of housing sales, although low loan interest
rates, the housing loan tax system and housing grants, etc. have resulted in the buying environment remaining
favorable, these measures are becoming less effective at promoting purchasing while new housing starts remain
steady. As a result, competition between businesses is increasing, with a trend for greater market inventories
becoming apparent.
In this context, we are continuing to expand our sales area and market share with various initiatives including
a reorganization of our sales structure based on a policy of overcoming factors that resulted in decreased
operating profits this period and concentrating management resources on selling new housing, which is our corebusiness.
However, we have generally revised our profit target from the operating targets of the medium-term businessplan, which enters its final year in the next period (fiscal year ending March 2018), taking market conditions andour sales structure for this term into account. Our financial forecast for the period ending March 31, 2018 is now
sales of ¥48,000 million (up 9.2% compared to the same period of the previous year), operating income of ¥3,200
million (up 17.9% compared to the same period of the previous year), ordinary income of ¥3,300 million (up17.6% compared to the same period of the previous year) and net income attributable to owners of the parent
company of ¥2,100 million (up 20.4% compared to the same period of the previous year).

―4―(2) Overview of Financial Position for Fiscal 2017
Total consolidated assets as of March 31, 2017 were ¥45,682 million, up ¥6,137 million with increases inmainly liquid assets compared to the previous consolidated fiscal year. This was mainly due to inventory assets
increasing by ¥5,694 million as a result of proactive purchasing of large areas of land for lots such as theaforementioned “Yotsuba no Mori” (211 lots) ahead of business expansion from the next period onward as wellas the increase in cash deposits.
Total liabilities grew ¥4,639 million compared with the previous consolidated fiscal year to ¥27,561 million.
This was mainly due to adjustments resulting from the increased inventory assets that led to greater short-term
debt, in addition to long-term debt used to procure investment in new office buildings at our sales base (Kennan
Branch, Oyama City, Tochigi Prefecture).
Net assets increased by ¥1,498 million compared to the previous consolidated fiscal year to reach ¥18,121
million. The main reason for this was that while shareholder dividends were paid, net income attributable toowners of the parent company was ¥1,744 million yen.
(3) Overview of Cash Flows for Fiscal 2017
Cash and cash equivalents (hereinafter, “cash flows”) as of March 31, 2017 increased by ¥692 million
compared to at the end of the previous consolidated fiscal year as a result of decreased cash flows from operating
and investing activities and increased cash flows from financial activities, to reach ¥8,475 million yen.
Factors contributing to movements in the Company’s cash flows during the consolidated fiscal year underreview are presented as follows.
(Cash Flows from Operating Activities)
The decreased cash flow from operating activities was ¥2,885 million (an increase of ¥101 million in theprevious fiscal year). This was mainly because, although while net income before income taxes and depreciation
and amortization increased, the increased amount for inventories was ¥5,694 million and payment for income
taxes needed to be paid.
(Cash Flows from Investing Activities)
The decreased cash flow from investing activities was ¥562 million (a decrease of ¥507 million in theprevious fiscal year). This was mainly due to the acquisition of fixed assets such as the newly constructed sales
base (Kennan branch, Oyama City, Tochigi Prefecture).
(Cash Flows from Financing Activities)
Net cash provided by financing activities amounted to ¥4,140 million (an increase of ¥1,575 million for the
fiscal year ended March 31, 2016). This was largely due to the increase in short-term loans payable to support theincrease in inventory while dividends were paid.
Trends in the Group’s cash flow-related indices are presented as follows.
Fiscal 2015

Fiscal 2016

41.9
24.5
23.1
2.5

Shareholders’ equity ratio (%)
Equity ratio on market value basis (%)
Interest-bearing liabilities to cash flow ratio (years)
Interest coverage ratio (times)

Fiscal 2017

41.6
26.4
177.3
0.3

Shareholders’ equity ratio: Shareholders’ equity/total assets
Equity ratio on a market value basis: Market capitalization/total assets
Interest-bearing liabilities to cash flow ratio: Interest-bearing liabilities/cash flows
Interest coverage ratio: Cash flows/interest payments
Notes: 1. Each index is calculated based on consolidated financial data.
2. Market capitalization is calculated based on the number of shares issued and outstanding as of theperiod-end (after deducting treasury shares).

―5―

39.2
25.9
—
—

3. Cash flows from operating activities are used as “cash flows” in the above calculation. As operating cash
flows for the fiscal year ended March 31, 2017 were negative, interest-bearing liabilities to cash flow ratio
and interest coverage ratio data have been omitted for the year.
4. Interest-bearing liabilities include all liabilities that bear interest under the liabilities section recorded on
consolidated balance sheets.
(4) Basic Policy Concerning the Allocation of Profits and Dividends for Fiscal 2017 and Fiscal 2018
Grandy House focuses on increasing the corporate value and returning more profits to shareholders as one ofits priority management issues. For shareholders, we will follow a dividend policy that is based on businessperformance and work to enhance the policy while aiming for a consolidated dividend payout ratio of 20%.
Purchase of treasury shares will be made depending on the Company’s financial position with the aim ofincreasing the value and profit per share and enhancing the Company’s capital efficiency.
Grandy House has declared an annual dividend of ¥14 per share for the fiscal year under review, despite thefact that we were unable to secure the net income forecast for this period based on the above policy. The annual
divided forecast for the year ending March 31, 2018 is ¥16 per share (up by ¥2 year-on-year).
Under its Articles of Incorporation, Grandy House has adopted a flexible and fluid approach toward thepayment of dividends from surplus based, which is subject to a resolution of the Company’s Board of Directors.
In accordance with standard practice, however, Grandy House plans to continue paying a single annual dividend
to shareholders of record as of March 31 each year.

―6―2. OVERVIEW OF THE CORPORATE GROUP
The Grandy House Group (Grandy House and the Company’s affiliated companies) is comprised of GrandyHouse and six subsidiary companies. The Group’s principal business activities include the sales of real estate, thesale of construction materials, and the leasing of real estate.
Details of the business activities of the Group and the activities undertaken by the Company and each subsidiarycompany are presented as follows.
(1) Real Estate Sales
The Grandy House Group engages in a wide range of real estate-related activities from the procurement ofland for sale in lots through the acquisition of related permits and approvals to the management of housing landdevelopment work, housing design and construction, sales, and after-sales maintenance and service.
In its mainstay detached housing sale, design, and construction activities, the Group has adopted an oversight
structure by individual operating area. This takes into account the Group’s focus on operations that remain deeply
rooted in the local community. Each company is active within its own basic area of operations. Grandy House
operates mainly in Tochigi Prefecture and a portion of Ibaraki Prefecture. IBARAKI Grandy House and
GUNMA Grandy House operate mainly in Ibaraki Prefecture and Gunma Prefecture, respectively. CHIBAGrandy House operates mainly in Chiba Prefecture.
Chukojutaku Johokan is primarily engaged in the sale of existing homes. Grandy Reform is active in housing
maintenance and after-sales service as well as housing renovations.
(2) Construction Material Sales
General Livetech is involved mainly in the sale of construction materials and items focusing primarily on
precut materials.
(3) Real Estate Leasing
Grandy House is engaged in such activities as the leasing of its own buildings for rent as well as
condominiums and other properties. The Company is also active in the parking business.
The following schematic provides an overview of the structure and businesses of the Grandy House Group(as of March 31, 2017).
Grandy House Corporation
Supply of pre-cut and other materials
Leasing of residential properties, shops, andbuildings; parking facility business

Sale of pre-cut andother materials

Housingrenovations

General Livetech

Maintenance and aftersales service

Sale of existing homes

Grandy Reform

Chukojutaku Johokan

Maintenance and aftersales service consignment

Sale of detached housing and related activities(Ibaraki, Gunma and Chiba Prefecture)

Sale of detached housing and related activities(Tochigi Prefecture and others)

IBARAKI Grandy HouseGUNMA Grandy HouseCHIBA Grandy House

Customers
Construction
Material Sales

Real Estate Sales―7―

Real Estate
Leasing

3. BASIC APPROACH TO THE SELECTION OF ACCOUNTING STANDARDSAt present, the Grandy House Group operates its business only in Japan and most of its stakeholders areshareholders, lenders, and business partners in Japan. There is no plan to raise funds from overseas markets. Against
this background, the Group will prepare its consolidated financial statements based on Japanese GAAP for the time
being.
For the application of International Financial Reporting Standards (IFRS), we will take adequate actions while
paying attention to various situations inside and outside Japan.

―8―

4. CONSOLIDATED FINANCIAL STATEMENTS AND IMPORTANT NOTES(1) Consolidated Balance Sheets(Thousands of Yen)FY2016(As of March 31, 2016)

FY2017(As of March 31, 2017)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade
Securities
Real estate for sale
Costs on uncompleted construction contracts

7,789,687

8,475,518

523,636

589,066–

499,982

11,423,421

14,054,910

10,5392,368

Real estate for sale in process

7,996,211

11,021,975

Merchandise and finished goods

206,665

220,154

Raw materials and supplies

115,304

147,599

Deferred tax assets

130,226

117,152

Other

955,924

456,190

Allowance for doubtful accounts(3,588)(4,316)29,148,028

35,580,603

4,823,287

5,215,916

Accumulated depreciation(1,699,778)(1,780,981)

Buildings and structures, net

3,123,508

3,434,934

Machinery, equipment and vehicles

32,85847,067(21,401)(33,465)

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

Accumulated depreciation
Machinery, equipment and vehicles, net

11,457

13,602Tools, furniture and fixtures

289,977

316,050

Accumulated depreciation(233,280)(249,726)

56,696

66,324

5,599,701

5,376,457

236,298

286,290

Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation(159,738)(183,628)

Lease assets, net

76,559102,661

Construction in progress

148,441–

9,016,365

8,993,981

66,44764,140889,407448,642

Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable

20,446

16,614

Deferred tax assets

160,847

240,664

Other

260,837

357,141

Allowance for doubtful accounts(17,279)(18,843)

Total investments and other assets

1,314,260

1,044,218

10,397,072

10,102,340

39,545,100

45,682,944

Total non-current assets
Total assets―9―

(Thousands of Yen)FY2016(As of March 31, 2016)

FY2017(As of March 31, 2017)

Liabilities
Current liabilities
Accounts payable for construction contracts

3,054,103

3,231,631

Short-term loans payable

16,014,500

20,225,700

Current portion of long-term loans payable

382,592

495,152

Current portion of bonds

21,00021,000

Lease obligations

41,214

38,632

Income taxes payable

566,028

410,406

Provision for warranties for completed construction

54,94057,223

Other694,477

635,983

20,828,856

25,115,729

108,000

87,000Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable

1,358,183

1,587,719

Lease obligations

39,13970,305

Provision for directors’ retirement benefits

100,979

132,954

Net defined benefit liability

428,790508,917

Asset retirement obligations

4,203

4,249

Other

53,69054,280Total non-current liabilities
Total liabilities

2,092,985

2,445,425

22,921,841

27,561,155

2,077,500

2,077,500

Net assets
Shareholders’ equity
Capital stock
Capital surplus

2,205,165

2,205,165

Retained earnings

12,551,499

13,982,262

Treasury shares(351,831)(351,831)

16,482,333

17,913,096

Valuation difference on available-for-sale securities(34,074)

8,692

Total accumulated other comprehensive income(34,074)

8,692

Total shareholders’ equity
Accumulated other comprehensive income

Subscription rights to shares
Total net assets
Total liabilities and net assets― 10 ―

175,000

200,000

16,623,258

18,121,788

39,545,100

45,682,944

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Thousands of Yen)
Fiscal 2016
(From April 1, 2015
to March 31, 2016)

Fiscal 2017
(From April 1, 2016
to March 31, 2017)

Net sales

41,706,272

43,962,733

Cost of sales

34,470,245

36,420,793

Gross profit

7,236,026

7,541,939

Selling, general and administrative expenses

4,467,463

4,826,889

Operating income

2,768,563

2,715,050

2,196

1,424

Non-operating income
Interest income
Dividends income

5,205

5,204

Operations consignment fee

222,186

237,660

Office work fee

148,838

158,479

Other

29,05525,834

Total non-operating income

407,481428,603

Non-operating expenses
Interest expenses

299,810

328,937

Commission for syndicate loan

10,673

5,609

Other

2,400

3,800

Total non-operating expenses

312,883

338,346

2,863,160

2,805,306

Gain on sales of non-current assets

–

5,829

Total extraordinary income

–

5,829

Loss on sale of non-current assets

164,125–

Loss on retirement of non-current assets

10,14330,396–

232,659

Ordinary income
Extraordinary income

Extraordinary loss

Impairment loss
Loss on cancellation of lease contracts

181

45

Total extraordinary loss

174,449

263,101

Net income before income taxes

2,688,711

2,548,034

988,091

857,424

Income taxes – current
Income taxes – deferred(31,639)(53,592)

Total income taxes

956,451

803,832

1,732,260

1,744,202––

1,732,260

1,744,202

Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent company― 11 ―

(Consolidated Statements of Comprehensive Income)(Thousands of Yen)
Fiscal 2016
(From April 1, 2015
to March 31, 2016)
Net income

Fiscal 2017
(From April 1, 2016
to March 31, 2017)

1,732,260

1,744,202

Valuation difference on available-for-sale securities(62,949)

42,767

Total other comprehensive income(62,949)

42,767

1,669,310

1,786,969

1,669,310

1,786,969––

Other comprehensive income

Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners of theparent company
Comprehensive income attributable to non-controllinginterests― 12 ―

(3) Consolidated Statements of Changes in Net Assets
Fiscal 2016 (From April 1, 2015 to March 31, 2016)
Shareholders’ equity

Balance as of the beginning of the period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
company
Purchase of treasury shares
Net changes to items other than shareholder equity
Total changes of items during the period
Balance as of the end of the period

Capital stock

CapitalsurplusRetainedearnings

2,077,500

2,205,165

11,049,455

Total
shareholders’equity(351,814) 14,980,306(230,216)(230,216)

1,732,260

1,732,260—
2,077,500—
2,205,165

1,502,044
12,551,499

Treasuryshares

(16)

(16)

(16)
(351,831)

1,502,027
16,482,333(Thousands of Yen)
Accumulated othercomprehensive income
Subscription
Total
Valuationrights todifference on accumulatedsharesotheravailablecomprehensive
for-saleincomesecurities
Balance as of the beginning of the period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
company
Purchase of treasury shares
Net changes to items other than shareholder equity
Total changes of items during the period
Balance as of the end of the period

28,87428,87475,000Total net
assets15,084,180(230,216)
1,732,260(62,949)(62,949)(34,074)(62,949)(62,949)(34,074)― 13 ―

100,000
100,000
175,000(16)
37,0501,539,078
16,623,258

Fiscal 2017 (From April 1, 2016 to March 31, 2017)
Shareholders’ equity

Balance as of the beginning of the period
Cumulative effects of changes in accounting policies
Restated balance
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
company
Net changes to items other than shareholder equity
Total changes of items during the period
Balance as of the end of the period

Capital stock

CapitalsurplusRetainedearnings

2,077,500

2,205,165

2,077,500

2,205,165

12,551,499
31,883
12,583,383

Total
shareholders’equity(351,831) 16,482,333
31,883(351,831) 16,514,217(345,323)(345,323)

1,744,202

1,744,202—
2,077,500—
2,205,165

1,398,879
13,982,262

Treasuryshares—(351,831)(Thousands of Yen)
Accumulated othercomprehensive income

Balance as of the beginning of the period
Cumulative effects of changes in accounting policies
Restated balance
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
company
Net changes to items other than shareholder equity
Total changes of items during the period
Balance as of the end of the period

Valuation
Total
difference on accumulated
availableotherfor-salecomprehensive
securities
income(34,074)(34,074)(34,074)(34,074)

Subscription
rights toshares175,000
175,000

Total net
assets

16,623,258
31,883
16,655,142(345,323)
1,744,202

42,76742,767
8,692

42,76742,767
8,692― 14 ―

24,99924,999200,000

67,767
1,466,646
18,121,788—
1,398,879
17,913,096

(4) Consolidated Statements of Cash Flows(Thousands of Yen)
Fiscal 2016
(From April 1, 2015
to March 31, 2016)

Fiscal 2017
(From April 1, 2016
to March 31, 2017)

Net cash provided by (used in) operating activities

Net income before income taxes
Depreciation and amortization
Stock compensation expense
Impairment loss
Increase (decrease) in provision for directors’
retirement benefits
Increase (decrease) in provision for warranties forcompleted construction
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in net defined benefit liability
Interest and dividends income
Interest expenses
Loss (gain) on sales of property, plant and equipment
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable-trade
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Payments of loans receivableCollection of loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other payments
Other proceeds
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Purchase of treasury shares
Cash dividends paid
Repayments of lease obligations
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period

2,688,711
244,577
100,000–

2,548,034
272,503
24,999232,659

29,774

31,974

3,773

2,282

11,707
70,779(7,401)
299,810164,125
10,143

2,293
80,126(6,628)
328,937(5,829)30,396

196,913(2,095,488)(5,694,866)

281,350

177,527(596,038)
1,402,738
7,897(303,043)(1,006,234)
101,358

578,810(1,462,206)
8,919(331,251)(1,100,740)(2,885,279)(321,466)
98,694(16,823)(214,600)(1,900)1,323(50,825)54(14,464)
12,020(507,986)(487,541)
6,750(20,652)––
1,099(56,488)18(17,666)
12,000(562,480)

1,939,810
345,000(414,377)(21,000)(16)(229,963)(44,155)
1,575,297
1,168,669
6,614,018
7,782,687― 15 ―(65,429)

4,211,200
805,000(462,904)(21,000)–(344,900)(46,804)
4,140,591
692,830
7,782,687
8,475,518

(5) Notes to Consolidated Financial Statements(Notes on Going Concern Assumptions)Not applicable.

― 16 ―

(Segment and Other Information)[Segment Information]
1. Overview of reportable segments
The reportable segments of the Group are components for which separate financial information is available
and whose operating results are regularly reviewed by the Company’s Board of Directors when making decisions
about the allocation of management resources and assessing performance.
The Grandy House Group is engaged in the following businesses: new home sales, existing home sales, homerenovation, construction material sales and real estate leasing (all of which are operated in Japan). A portion or
all of operations for new home sales, existing home sales and home renovation are conducted by subsidiaries.
From the perspective of similarity, relationships, and sharing of common management resources, these threebusinesses are regarded as one business segment, Real Estate Sales. The Company devises overall strategies forthis real estate sales segment and conducts business activities.
Accordingly, the Group’s three reportable segments are classified as Real Estate Sales, Construction Material
Sales, and Real Estate Leasing.
The Real Estate Sales business includes sales of new homes (including building contract and sale of land,etc.) and existing homes and home renovation. The Construction Material Sales business comprises of production
and sale of pre-cut materials for housing and sale of construction materials and home facilities and equipment. In
the Real Estate Leasing business, activities comprise the leasing of office, homes, related properties, and parking
facilities, etc.
2. Calculation method of net sales, profit and loss, assets, liabilities, and other items by reportable segment
The accounting method for reportable segments is the same as that outlined under “Important Items
Fundamental to the Preparation of Consolidated Financial Statements (This part is omitted on this translation).”Segment profit and loss are based on ordinary income. Inter-segment sales or transfers are calculated based onmarket prices.
3. Information relating to the amounts of net sales, profit and loss, assets, liabilities, and other items byreportable segment
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)(Thousands of Yen)
Reportable Segment
Real Estate
Sales

Construction
Material Sales

Real Estate
Leasing

38,549,066

2,894,508

262,697–

3,188,949

82,32738,549,066

6,083,457

345,025

Adjustments(Note 1)

AmountRecorded on
Consolidated
Financial
Statements(Note 2)

41,706,272–

41,706,272

3,271,277(3,271,277)–

44,977,549(3,271,277)

41,706,272

Total

Net sales
Sales to outside customers
Inter-segment sales and transfers
Total
Segment profit

2,533,951

188,552

165,7432,888,247(25,086)2,863,160

Segment assets

28,709,223

2,068,682

3,974,573

34,752,479

4,792,621

39,545,100

Segment liabilities

21,634,781

1,602,456

70,70823,307,946(386,105)

22,921,841
244,577

Other items
Depreciation and amortization

149,759

45,57749,241

244,577–

Interest income

2,156

40

–

2,196

–

2,196

Interest expenses

288,511

11,26631

299,810–

299,810

Increase in property, plant andequipment and intangible assets

350,225

16,732

3,142

370,101–

370,101― 17 ―

The fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)(Thousands of Yen)
Reportable Segment
Real Estate
Sales

Construction
Material Sales

Real Estate
Leasing

40,673,836

3,030,458

258,437

Total

Adjustments(Note 1)

AmountRecorded on
Consolidated
Financial
Statements(Note 2)–

43,962,733

Net sales
Sales to outside customers–

3,263,997

82,5703,346,567(3,346,567)–

40,673,836

6,294,456

341,00747,309,300(3,346,567)

43,962,733

Inter-segment sales and transfers
Total

43,962,733

Segment profit

2,497,353

148,167

155,461

2,800,982

4,323

2,805,306

Segment assets

34,271,665

2,128,917

3,801,304

40,201,887

5,481,056

45,682,944

Segment liabilities

26,204,510

1,665,758

72,64827,942,917(381,762)

27,561,155

172,046

51,251

49,204

272,503–

272,503

Other items
Depreciation and amortization
Interest income

1,412

12

–

1,424

–

1,424

Interest expenses

319,252

9,685–

328,937–

328,937

28,771

1,582

549,397–549,397

Increase in property, plant and
519,043
equipment and intangible assets
Note 1: Details of adjustments are presented as follows.

Segment profit(Thousands of Yen)
Fiscal 2016

Fiscal 2017

Eliminations of inter-segment translation

4,323(25,086)

Total

4,323

(25,086)

Segment assets(Thousands of Yen)
Fiscal 2016

Fiscal 2017

Eliminations of inter-segment receivables(384,099)

Eliminations of inter-segment unrealized profit
Corporate assets
Total
Note:

(379,695)(50,410)(47,095)

5,227,131

5,907,847

4,792,621

5,481,056

Corporate assets mainly comprise cash and deposits as well as investment securities which are not attributable to reportable segments.

Segment liabilities(Thousands of Yen)
Fiscal 2016
Eliminations of inter-segment payables

Fiscal 2017
(386,105)

Total(386,105)

Note 2: Segment profit is adjusted with the ordinary income recorded in consolidated financial statements.

― 18 ―(381,762)(381,762)

[Related Information]
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
1. Information by product and service(Thousands of Yen)
Real Estate Sales
Sales to outside customers

Construction
Material Sales

38,549,066

2,894,508

Real Estate
Leasing262,697

Total
41,706,272

2. Information by geographic segment(1) Net sales
There are no sales to outside customer other than in Japan. Accordingly, there is no applicable information toreport.
(2) Property, plant and equipment
There are no property, plant and equipment located outside of Japan. Accordingly, there is no applicable
information to report.
3. Information by principal customer
There is no single outside customer who accounts for 10% or more of the total net sales recorded in the
consolidated statements of income. Accordingly, there is no applicable information to report.
The fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)
1. Information by product and service(Thousands of Yen)
Real Estate Sales
Sales to outside customers

Construction
Material Sales

40,673,836

3,030,458

Real Estate
Leasing258,437

Total
43,962,733

2. Information by geographic segment(1) Net sales
There are no sales to outside customer other than in Japan. Accordingly, there is no applicable information toreport.
(2) Property, plant and equipment
There are no property, plant and equipment located outside of Japan. Accordingly, there is no applicable
information to report.
3. Information by principal customer
There is no single outside customer who accounts for 10% or more of the total net sales recorded in the
consolidated statements of income. Accordingly, there is no applicable information to report.

― 19 ―

[Information concerning Impairment Loss on Non-current Assets by Reportable Segment]
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
Not applicable.
The fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)(Thousands of Yen)
Real Estate
Sales
Impairment loss

Construction
Material Sales

143,090

Real Estate
Leasing–

89,568

Corporate/
OffsetTotal–

232,659[Information concerning the Amount of Goodwill Amortization and the Balance of Unamortized Goodwill by
Reportable Segment]
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
Not applicable.
The fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)
Not applicable.
[Information concerning Gain on Negative Goodwill by Reportable Segment]
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
Not applicable.
The fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017)
Not applicable.

― 20 ―