Quarterly Securities Report(The English translation of the “Shihanki-Houkokusho”
for the first quarter of the 70th term)from December 1, 2018
to February 28, 2019TOSEI CORPORATION
4-2-3, Toranomon, Minato-ku, Tokyo, Japan(E04021)
This is an English translation prepared for the convenience of non-resident shareholders by translating the Quarterly Securities
Report (Shihanki-Houkokusho) submitted to the Director of the Kanto Local Finance Bureau of the Ministry of Finance ofJapan on April 10, 2019. Should there be any inconsistency between the translation and the official Japanese text, the latter shallprevail.

Table of Contents
Cover
A. Company Information ..........................................................................................................1
I.

Overview of the Tosei Group ......................................................................................................... 1
1. Trends in principal management benchmarks ........................................................................................1
2. Business description ...............................................................................................................................1
II. Review of operations ...................................................................................................................... 2
1. Business and other risks .........................................................................................................................2
2. Management analysis of financial position, operating results and cash flows .......................................2
3. Important operational contracts, etc. ......................................................................................................7
III. Filing company................................................................................................................................ 8
1. Information on the Company (Tosei)’s shares, etc. ................................................................................8(1) Total number of authorized shares, etc. ...............................................................................................8(2) Status of stock acquisition rights .........................................................................................................8(3) Exercise of bond certificates with stock acquisition rights with exercise price amendment clause ....8(4) Trends in total number of issued shares, share capital, etc. .................................................................8(5) Status of major shareholders ................................................................................................................8(6) Status of voting rights ..........................................................................................................................9
2. Status of Officers ....................................................................................................................................9
IV. Accounting..................................................................................................................................... 10
1. Condensed Quarterly Consolidated Financial Statements ....................................................................11(1) Condensed Consolidated Statement of Financial Position.................................................................11(2) Condensed Consolidated Statement of Comprehensive Income........................................................12(3) Condensed Consolidated Statement of Changes in Equity ................................................................13(4) Condensed Consolidated Statement of Cash Flows ...........................................................................14(5) Notes to Condensed Quarterly Consolidated Financial Statements ...................................................15
2. Other .....................................................................................................................................................21

B. Information on Guarantee Companies, etc. of Filing Company ....................................22[Quarterly Review Report of Independent Auditors]

[Cover]Document to be filed:

Quarterly Securities Report

Provisions to base upon:

Article 24-4-7, paragraph 1 of the Financial Instruments andExchange Act

Filing to:

Director-General of the Kanto Local Finance Bureau

Date of filing:

April 10, 2019

Business year:

First quarter of the 70th term (from December 1, 2018 to February
28, 2019)

Company name (Japanese):

トーセイ株式会社 (Tosei Kabushiki-Kaisha)Company name (English):TOSEI CORPORATION

Title and name of representative:

Seiichiro Yamaguchi, President and CEO

Location of head office:4-2-3, Toranomon, Minato-ku, Tokyo, Japan

Telephone number:+81-3-3435-2865

Contact person:

Noboru Hirano, Director and CFO

Place of contact:

4-2-3, Toranomon, Minato-ku, Tokyo, Japan

Telephone number:+81-3-3435-2865

Contact person:

Noboru Hirano, Director and CFO

Places where the document to be filed isTokyo Stock Exchange, Inc.

available for public inspection:(2-1, Nihonbashi-kabutocho, Chuo-ku, Tokyo)

A.
I.

Company Information
Overview of the Tosei Group

1. Trends in principal management benchmarks
Term

69th termFirst three months

70th termFirst three months

69th term

Accounting period

From December 1, 2017
to February 28, 2018

From December 1, 2018
to February 28, 2019

From December 1, 2017
to November 30, 201818,310,040

17,059,457

61,543,319

4,150,290

2,987,175

10,171,017

2,847,530

2,035,682

6,852,237

2,875,292

2,067,162

6,856,712

47,980,486

52,466,316

52,021,782

124,675,580

143,035,531

138,768,538

58.92

41.97

141.36

58.75

41.94

141.12

38.5

36.7

37.5

4,485,532(6,395,347)

7,615,322(1,483,704)(201,471)(10,786,784)(1,852,521)

3,980,987

5,941,884

24,898,923

23,904,554

26,520,569

Revenue(¥ thousand)Profit before tax(¥ thousand)Profit attributable to owners of the parent(¥ thousand)Comprehensive income for the period
attributable to owners of the parent(¥ thousand)Total equity(¥ thousand)Total assets(¥ thousand)Basic earnings per share(¥)
Diluted earnings per share(¥)
Ratio of equity attributable to owners of theparent to total assets(%)
Net cash from (used in) operating activities(¥ thousand)Net cash from (used in) investing activities(¥ thousand)Net cash from (used in) financing activities(¥ thousand)Cash and cash equivalents at end of period(¥ thousand)Notes: 1. Filing company’s trends in principal management benchmarks are not disclosed as the Company prepares quarterly
consolidated financial statements.
2. Revenue does not include consumption taxes.
3. The above benchmarks are based on the quarterly consolidated financial statements and consolidated financial
statements that were prepared in compliance with the International Financial Reporting Standards (hereinafter“IFRS”).

2. Business description
During the three months ended February 28, 2019, there were no significant changes in business activities
operated by the Tosei Group (the Company and its subsidiaries and affiliates) from the previous fiscal year.
There were also no changes in principal subsidiaries and affiliates.
Also, Tosei Hotel Ueno Co., Ltd. has changed its trade name to Tosei Hotel Makuhari Co., Ltd. as ofDecember 13, 2018. Urban Home Corporation has changed its trade name to Tosei Urban Home Co., Ltd as ofFebruary 27, 2019.
Reportable segment classifications have been changed effective from the first quarter of the fiscal year
ending November 30, 2019. For details, please refer to “5. Segment information” in “IV. Accounting, 1.
Condensed Quarterly Consolidated Financial Statements, (5) Notes to Condensed Quarterly Consolidated
Financial Statements.”1II. Review of operations
1. Business and other risks
There were no business and other risks that newly arose during the three months ended February 28, 2019.
In addition, there were no significant changes in “Business and other risks” described in the annual securities
report for the previous fiscal year.

2. Management analysis of financial position, operating results and cash flows
Forward-looking statements included in this section are based on information available to the Group’s
management as of February 28, 2019.
(1) Operating results
During the three months ended February 28, 2019, the Japanese economy is recovering moderately,supported by personal consumption and capital investment, despite signs of weakness in exports due to aslowing Chinese economy. A moderate recovery is expected to continue going forward, backed bycontinuing improvements in the employment and income environments.
In the real estate industry where Tosei Group operates, commercial real estate transactions for the fullyear 2018 decreased 3% year on year to ¥4.0 trillion. Weakness was evident in parts of the investment
market, with limited growth in real estate prices and a decline in the number of placements of large-size
properties on the market, as well as an increasingly cautious attitude from financial institutions towards
real estate lending, in the context of fraudulent loan issues. Demand among investors remains firm
however, particularly for properties in the metropolitan area, and transactions for the full year 2019 areforecast to increase by between 0% and 5% year on year (according to a survey by a private research
institute).
In the Tokyo metropolitan area condominium market, the number of newly supplied units in the fullyear 2018 increased 3.4% year on year to 37,000 units. There continues to be firm demand for properties,
particularly in the central Tokyo area and near stations. Against a background of persistently high prices
however, the average contract rate for the first month was only 62.1%, trailing the 70% threshold fromwhich market conditions are viewed as favorable for the third consecutive year. In the build-for-saledetached house market, housing starts for the full year 2018 numbered 62,000 units, roughly unchanged
year on year. Favorable demand continues for detached houses, which remain undervalued relative to
condominiums (according to surveys by a private research institute and the Ministry of Land,
Infrastructure, Transport and Tourism).
The office leasing market of Tokyo’s five business wards has been performing favorably. The averagevacancy rate as of January 2019 was 1.8% (a decrease of 1.3% year on year), and the average rent was¥21,010 (an increase of ¥1,672 year on year). This strength in the leasing market is expected to continue,
backed by corporate office expansion requirements and increased demand for coworking space (according
to a survey by a private research institute).
In the real estate securitization market, the total value of assets under management as of January 2019
grew to ¥18.0 trillion in J-REITs (an increase of ¥1.4 trillion year on year). Despite the continuing scarcityof large-size premium properties, property acquisitions continue to progress through means such assponsored property supply, and the market scale expanded to ¥34.9 trillion, including ¥16.9 trillion ofvalue under management in private placement funds (as of June 30, 2018) (according to a survey by a
private research institute).
The Tokyo business hotel market maintained its favorable trend, with monthly guest room occupancy
rates in 2018 generally exceeding the 80% threshold from which market conditions are viewed asfavorable. The number of foreign visitors to Japan for the full year 2018 totaled 31.19 million (an increaseof 8.7% year on year), exceeding 30 million for the first time. It is anticipated that more than 35 million
foreign visitors will visit during the full year 2019, and further increases in the number of hotel guests are
expected going forward (according to surveys by the Ministry of Land, Infrastructure, Transport andTourism, the Japan National Tourism Organization, and a private research institute).
Amid this operating environment, in the Revitalization Business, the Group made steady progress inselling assets such as income-generating office buildings and apartments, while in the Development
Business, the Group pushed ahead with sales of condominiums, detached houses and commercial facilities.
In addition, the Group also proceeded with the proactive acquisition of income-generating properties andland for development as future sources of income.
2

As a result, consolidated revenue for the three months ended February 28, 2019 totaled ¥17,059 million(down 6.8% year on year), operating profit was ¥3,125 million (down 28.0%), profit before tax was ¥2,987
million (down 28.0%), and profit for the period was ¥2,035 million (down 28.5%).
Performance by business segment is shown below.
Reportable segment classifications have been changed effective from the first quarter of the fiscal year
ending November 30, 2019, and in the following quarterly comparisons figures for the same period of theprevious fiscal year have been recalculated according to the segment after such change.
Revitalization Business
During the three months ended February 28, 2019, the segment sold 15 properties it had renovated,
including Ryogoku Tosei Building Ⅰ,Ⅱ (Sumida-ku, Tokyo), T’s garden Mukogaokayuen (Kawasaki-shi,
Kanagawa), T’s Link Harajuku (Sibuya-ku, Tokyo). In addition, the segment sold four units in the
Restyling Business from Hilltop Yokohama Negishi (Yokohama-shi, Kanagawa).
During the three months ended February 28, 2019, it also acquired a total of 11 income-generating
office buildings and apartments and one land lot for renovation and sales purposes.
As a result, revenue in this segment was ¥6,623 million (down 54.1% year on year) and the segment
profit was ¥1,424 million (down 62.5%).
Development Business
During the three months ended February 28, 2019, the segment focused on the sale of condominiumand detached houses. The segment sold 121 units at THE Palms Chofu Manorgarden (Chofu-shi, Tokyo)
and sold 17 detached houses at such properties as THE Palms Court Funabashi Hoten (Funabashi-shi,
Chiba), THE Palms Court Higashi Nakano (Nakano-ku, Tokyo). In addition, the segment sold one
commercial facility and three land lots.
During the three months ended February 28, 2019, it also acquired two lots for hotel projects, one land
lot for logistics facility project, one land lot for commercial facility project and land lots for 41 detachedhouses.
As a result, revenue in this segment was ¥7,045million (up 819.5% year on year) and the segment profit
was ¥1,045 million (in comparison with segment loss of ¥145 million in the same period of the previous
fiscal year).
Rental Business
During the three months ended February 28, 2019, while the segment sold 11 buildings of its inventory
assets held for leasing purposes, it newly acquired six properties including income-generating officebuildings and apartments. In addition, the segment made efforts to lease vacancies out following
acquisitions and also focused on leasing activities for its existing non-current assets and inventory assets.
As a result, revenue in this segment was ¥1,470 million (up 8.8% year on year) and the segment profit
was ¥606 million (up 2.1%).
Fund and Consulting Business
During the three months ended February 28, 2019, while ¥11,808 million was added to the balance ofassets under management (Note), due to new asset management contracts, ¥14,433 million was subtracted
from to the balance of Assets under management ¥663,359 million for the end of the previous fiscal year,
due mainly to property dispositions by funds. The balance of assets under management as of November 30,
2019, was ¥660,733 million.
As a result, revenue in this segment was ¥603 million (down 10.5% year on year) and the segment profit
was ¥297 million (down 21.3%).
Note: The balance of assets under management includes the balance of assets that were subject to consulting contracts, etc.

Property Management Business
During the three months ended February 28, 2019, the segment made efforts to win new contracts andmaintain existing contracts. Consequently, the total number of properties under management was 626 as ofFebruary 28, 2019, a decrease of 34 from February 28, 2018, with the total comprising 392 office3

buildings, hotels, schools and other such properties, and 234 condominiums and apartments.
As a result, although the total number of properties under management decreased, revenue in thissegment was ¥1,063 million (up 9.1% year on year) and segment profit was ¥120 million (up 10.8%).
Hotel Business
During the three months ended February 28, 2019, the Group worked towards increasing the average
daily rate and occupancy rate for TOSEI HOTEL COCONE Kanda, opened in December 2017, as well as
newly opening TOSEI HOTEL COCONE Ueno in December 2018 contributed to revenue.
As a result, revenue in this segment was ¥252 million (up 113.3% year on year) and segment profit was¥48 million (up 14.6%).
(2) Analysis of financial position
As of February 28, 2019, total assets were ¥143,035 million, an increase of ¥4,266 million comparedwith November 30, 2018, while total liabilities were ¥90,569 million, an increase of ¥3,822 million.
Total assets were due to an increase in inventories. Total liabilities were due to an increase in trade andother payables and an increase in borrowing.
Total equity increased by ¥444 million to ¥52,466 million, mainly due to an increase in retained
earnings and payment of cash dividends.
(3) Analysis of cash flows
Cash and cash equivalents (hereinafter “cash”) as of February 28, 2019 totaled ¥23,904 million, down
¥2,616 million compared with November 30, 2018.
The cash flows for the three months ended February 28, 2019 and factors contributing to those amounts
are as follows:
Cash Flows from Operating Activities
Net cash used in operating activities totaled ¥6,395 million (in comparison with segment net cash
provided by operating activities of ¥4,485 million in the same period of the previous fiscal year). This ismainly due to an increase in inventories of ¥5,748 million and income taxes paid of ¥2,820 million.
Cash Flows from Investing Activities
Net cash used in investing activities totaled ¥201 million (down 86.4% year on year). This is primarily
due to payments of loans receivable of ¥126 million.
Cash Flows from Financing Activities
Net cash provided by financing activities totaled ¥3,980 million (in comparison with segment net cashused in financing activities of ¥1,852 million in the same period of the previous fiscal year). This mainlyreflects¥17,236 million in proceeds from non-current borrowings., despite ¥11,390 million in therepayments of non-current borrowings and ¥1,409 million in cash dividends paid.
(4) Operational and financial issues to be addressed
During the three months ended February 28, 2019, there was no significant change in issues to beaddressed by the Tosei Group.
The Company has set the basic policy regarding the persons who control the decision-making on thefinancial and business policies of the Company. The contents of basic policy (matters set forth in Article
118, item 3 of the Ordinance for Enforcement of the Companies Act) are as follows:a.Contents of basic policy
The Company believes that the persons who control decisions on the Company’s financial andbusiness policies need to be persons who fully understand the details of the Company’s financial andbusiness affairs and the source of the Company’s corporate value and who will make it possible tocontinually and persistently ensure and enhance the Company’s corporate value and, in turn, the4common interests of its shareholders.
The Company believes that ultimately its shareholders as a whole must make the decision on any
proposed acquisition that would involve a change of control of the Company. Also, the Company will
not reject a large-scale acquisition of the shares in the Company if it will contribute to the corporate
value of the Company and, in turn, the common interests of its shareholders.
Nonetheless, there are some forms of large-scale acquisition of shares that benefit neither the
corporate value of the target company nor the common interests of its shareholders including those witha purpose that would obviously harm the corporate value of the target company and the common
interests of its shareholders, those with the potential to substantially coerce shareholders into selling theirshares; those that do not provide sufficient time or information for the target company’s board of
directors and shareholders to consider the details of the large-scale acquisition, or for the target
company’s board of directors to make an alternative proposal and those that require the target company
to discuss or negotiate with the acquirer in order to procure more favorable terms for shareholders thanthose presented by the acquirer.
It is particularly necessary and essential for the persons who make decisions on the Company’s
financial and business policies to (i) maintain the system under which the Company group covers with
its comprehensive capability the diverse business fields and peripheral fields that allow the “integrationof real estate and finance,” which leads to maximization of the potential of the Company group, (ii)maintain employees who support those businesses with knowledge and experience specializing in realestate and finance, etc., (iii) maintain the Company’s trust in the real estate industry that has been built
up over a long period of time based on the establishment of the ability and information networks
supporting various value creation technologies, and (iv) master knowhow that enables comprehensive
business. Unless the acquirer of a proposed large-scale acquisition of the shares in the Company
understands the source of the corporate value of the Company as well as the details of financial andbusiness affairs of the Company and would ensure and enhance these elements over the medium-to-long
term, the corporate value of the Company and, in turn, the common interests of its shareholders would be
harmed.
The Company believes that persons who would make a large-scale acquisition of the shares in the
Company in a manner that does not contribute to the corporate value of the Company or the common
interests of its shareholders would be inappropriate as persons that control decisions on the Company’s
financial and business policies. The Company believes that it is necessary to ensure the corporate valueof the Company and, in turn, the common interests of its shareholders by taking necessary andreasonable countermeasures against a large-scale acquisition by such persons.
b.Overview of special measures to realize the basic policy
The Group established its three-year medium-term management plan aiming to further increase theGroup’s corporate value and is pushing ahead with business under the plan.
The Group is promoting its medium-term management plan “Seamless Growth 2020” (December
2017 to November 2020) with the fiscal year ended November 30, 2018 as its first year. The major
policy of the plan is “to continue growth as a Group to build a firm position as an originalcomprehensive real estate company.” In the fiscal year ending November 30, 2019, the Company willcontinue implementing its growth strategy based on this plan.
The Revitalization Business will revitalize and create added value for existing properties and aim to
expand operations through initiatives such as product line expansion and diversification of sales methods.
With regard to the acquisition of properties, the Company will actively increase the number of small- to
medium-size and high liquid property in the metropolitan area and acquire over ¥2.0 billion of mediumto large-size and profitable property, while paying attention to the portfolio. The Development Businesswill promote the development and sales of detached houses and condominiums that are in steadydemand, as well as active development of properties such as logistics facility and hotels after assessing
good location. On the other hand, the Stock and Fee Business, the Company’s stable source of income,aims to expand all segments. The Rental Business will strive to expand Company-held fixed assets; theFund and Consulting Business will accumulate assets under management; and the Property Management
Business will increase properties under management.
Moreover, as an initiative to establish new income-generating businesses, the Hotel Business segment
is newly established from the fiscal year ending November 30, 2019. In addition to the operation andrental of the existing properties, the Company is currently advancing the development of own brandhotel at three locations following TOSEI HOTEL COCONE Kanda, opened in December 2017, and
5

TOSEI HOTEL COCONE Ueno, opened in December 2018, and will continue to work toward thegrowth of hotel business and enhancement of Tosei brand.
c.Overview of measures to prevent decisions on the Company’s financial and business policies from being
controlled by persons deemed inappropriate according to the basic policy
This plan is a measure to prevent persons deemed as inappropriate, in view of the aforementioned
basic policy, from controlling the decisions on the Company’s financial and business policies, and its
objective is to ensure and enhance the Company’s corporate value and, in turn, the common interests of
its shareholders.
The plan stipulates procedures to be followed in an acquisition, etc. of shares, etc. of the Company((A) a purchase and/or other acquisition of the shares and the like issued by the Company that would
result in the holding ratio of share certificates, etc. (kabuken tou hoyuu wariai) of a holder (hoyuusha) of
20% or more; or (B) a tender offer (koukai kaitsuke) with respect to the shares, etc. issued by theCompany that would result in the sum of the offeror’s ownership ratio, and that of the persons having a
special relationship with the offeror, of 20% or more; or any actions similar to (A) or (B) above) bythose trying to acquire (hereinafter, the “Acquirer”).
Specifically, the Acquirer must provide the Company a statement of undertaking and an acquisition
document that includes necessary information, prior to making an acquisition.
Upon receiving these documents, an independent committee will conduct the review of the acquisition
terms, collection of information on materials such as the management plans and business plans of theAcquirer and the Company’s board of directors and comparison thereof, the review of alternative plans,
etc. presented by the Company’s board of directors, and discussions and negotiations with the Acquirer,
while obtaining advice from independent experts. In the meantime, the Company will disclose
information in a timely manner.
When the acquisition is not in compliance with the procedures stipulated in the plan, and/or there ispossibility of such offer to apparently cause harm to the corporate value of the Company and, in turn, tothe common interests of shareholders, and it is appropriate for the Company to implement the gratis
allotment of stock acquisition rights, the independent committee will recommend the implementation thegratis allotment of stock acquisition rights to the Company’s board of directors. In addition, when ameeting of shareholders is convened to confirm the intent of the Company’s shareholders, theCompany’s board of directors will comply with the shareholders’ intent. These stock acquisition rights
will be allotted with an exercise condition that does not allow, as a general rule, the Acquirer to exercise
the rights and an acquisition provision to the effect that the Company will acquire the stock acquisitionrights in exchange for shares of the Company from persons other than the Acquirer. The Company’sboard of directors will resolve, as an agency stipulated by the Companies Act, as to the implementation
or non-implementation of the gratis allotment of stock acquisition rights, fully respecting therecommendation of the Independent Committee. In addition, when a meeting of shareholders isconvened to confirm the intent of the Company’s shareholders, the Company’s board of directors will
follow the shareholders’ intent. If the procedures under this plan have commenced, the Acquirer mustrefrain from making any acquisition until the Company’s board of directors resolves not to trigger theplan. The plan will remain in effect until the conclusion of the ordinary general meeting ofshareholders for the last fiscal year ending within three years of the conclusion of the 68th Ordinary
General Meeting of Shareholders. However, if, before the expiration of the effective period, theCompany’s board of directors resolves to abolish the plan, the plan will be abolished at that time.
d. Assessment by the Company’s board of directors regarding specific measures and reasons thereofCompany’s board of directors is of the view that the various measures to enhance the corporate value,
including the new medium-term management plan and other measures to strengthen corporate
governance have been established as specific actions to continuously and sustainably enhance thecorporate value of the Company and, in turn, the common interests of its shareholders, and that these arein line with the basic policy, do not undermine the common interests of the Company’s shareholders andare not for the purpose of maintaining the positions of the Company’s corporate officers.
In addition, the Company’s board of directors is of the view that the plan is in line with the basic
policy, does not undermine the common interests of the Company’s shareholders, and is not for the
purpose of maintaining the positions of the Company’s corporate officers, based on the following
reasons: an approval at the general meeting of shareholders has been obtained for its renewal; its
6

maximum effective period is stipulated to be three years and it can be abolished at any time by the
resolution of the Company’s board of directors; an independent committee, which is comprised of themembers that are independent of the management of the Company, has been established and thecountermeasures stipulated in the plan requires the decision by the independent committee for actual
executions; and the plan fully satisfies the three principles set out in the “Guidelines Regarding Takeover
Defense for the Purposes of Protection and Enhancement of Corporate Value and Shareholders’Common Interests” released by the Ministry of Economy, Trade and Industry and the Ministry of Justiceon May 27, 2005.
(5) Research and development activities
No item to report.

3. Important operational contracts, etc.
No important operational contracts, etc. were determined or entered into during the first quarter of the fiscal
year under review.

7III. Filing company
1. Information on the Company (Tosei)’s shares, etc.
(1) Total number of authorized shares, etc.
a. Total number of authorized shares

b.

Class

Total number of authorized shares

Ordinary shares

150,000,000

Total

150,000,000

Number of shares issued
Number of issued
shares(Shares: as ofFebruary 28, 2019)

Number of issued
shares(Shares: as ofthe date of filing:
April 10, 2019)

Ordinary shares

48,544,800

48,548,800

Total

48,544,800

48,548,800

Class

Name of financial instruments
exchange where the stock of Tosei istraded or the name of authorized
Details
financial instruments firms
association where Tosei is registered
Tokyo Stock Exchange
Share unit number:(First Section),
100
Singapore Exchange (Mainboard)––

Note: Shares issued through the exercise of stock acquisition rights between April 1, 2019 and the submission date of thisQuarterly Securities Report are not included under “Number of shares issued.”(2) Status of stock acquisition rights
1) The detail of the stock option system
No item to report.
2) Details of other stock acquisition rights, etc.
No item to report.
(3) Exercise of bond certificates with stock acquisition rights with exercise price amendment clause
No item to report.
(4) Trends in total number of issued shares, share capital, etc.
Date
From December 1, 2018
to February 28, 2019

Fluctuation in
the number ofissued shares(Shares)－(¥ thousand)Fluctuation incapitalreserves(¥ thousand)

Balance ofcapitalreserves(¥ thousand)

6,554,139－

6,637,615

Balance ofissued shares

Fluctuation inshare capital

Balance ofshare capital(Shares)(¥ thousand)－

48,544,800(5) Status of major shareholders
There is no item to report due to the reporting period being a first quarter of a fiscal year.

8(6) Status of voting rights
The following status of voting rights is prepared based on the shareholder registry as of November 30,
2018, which is the latest record date, as the information as of February 28, 2019 is not yet available.
a.

Issued shares(As of February 28, 2018)
Number of shares(Shares)Number of voting rights

Details

Shares without voting rights

–

–

–

Shares with restricted voting rights(Treasury shares, etc.)
Shares with restricted voting rights(Other)

–

–

–

–

–

–

–

–

Classification(Treasury shares held)
Ordinary shares
100
Ordinary shares
48,541,000
Ordinary shares
3,700

Shares with full voting rights(Treasury shares, etc.)
Shares with full voting rights(Other)Shares less than one unit
Total number of issued shares

48,544,800

Voting rights owned by all
shareholders––

485,410
–

–

–

–
–

485,410

Note:1. The number of “Shares with full voting rights (Other)” includes 400 shares in the name of Japan Securities
Depository Center, Inc. “Number of voting rights” includes 4 units of voting rights related to shares with full voting
rights in its name.
2. At the board of directors meeting held on February 5, 2019, the Company resolved the acquisition of treasury sharesfrom February 7, 2019 to August 31, 2019, and the Company acquired 157,800 treasury shares as of February 28,
2019. As a result, the total number of treasury shares was 157,905 shares.

b.

Treasury shares, etc.

Name of shareholder

Address(Treasury shares held)TOSEICORPORATION

4-2-3,
Toranomon,
Minato-ku,
Tokyo, Japan

Total

–

Number of shares
Number of shares
held under theheld under own
name of others
name (Shares)(Shares)(As of February 28, 2018)
Percentage of number
Total number ofof shares held in theshares held
total number of issued(Shares)shares (%)

100

–

100

0.0

100

–

100

0.0

Note: At the board of directors meeting held on February 5, 2019, the Company resolved the acquisition of treasury sharesfrom February 7, 2019 to August 31, 2019, and the Company acquired 157,800 treasury shares as of February 28, 2019.
As a result, the total number of treasury shares was 157,905 shares.

2. Status of Officers
There was no change in Officers during the three months ended February 28, 2019 after the filing date ofannual securities report for the previous fiscal year.

9IV. Accounting
1. Preparation policy of the condensed quarterly consolidated financial statements
The condensed quarterly consolidated financial statements of the Company have been prepared inaccordance with International Accounting Standard (IAS) 34 “Interim Financial Reporting” under theprovision of Article 93 of the “Ordinance on Terminology, Forms and Preparation Methods of Quarterly
Consolidated Financial Statements” (Cabinet Office Ordinance No. 64 of 2007).
2. Audit attestation
The condensed quarterly consolidated financial statements for the first quarter of the fiscal year ending
November 30, 2019 (from December 1, 2018 to February 28, 2019) and for the first three months of the
fiscal year ending November 30, 2019 (from December 1, 2018 to February 28, 2019) were reviewed by
Shinsoh Audit Corporation pursuant to Article 193-2, paragraph 1 of the Financial Instruments andExchange Act.

10

1. Condensed Quarterly Consolidated Financial Statements(1) Condensed Consolidated Statement of Financial Position(¥ thousand)
Notes
AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets

8
8

Total current assets
Non-current assets
Property, plant and equipment
Investment properties
Intangible assets
Other financial assets
Trade and other receivables
Deferred tax assets
Other non-current assets

8
8

Total non-current assets
Total assets
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Current income tax liabilities
Provisions

8
8

Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Retirement benefits obligations
Provisions
Deferred tax liabilities

8
8

Total non-current liabilities
Total Liabilities
EquityShare capital
Capital reserves
Retained earnings
Treasury shares
Other components of equity
Total equity attributable to owners of parent
Total equity
Total liabilities and equity

11

As of November 30, 2018

As of February 28, 2019

26,520,569
3,090,237
62,457,864
30,49523,904,554
4,441,184
68,336,258
34,10592,099,167

96,716,101

8,785,869
33,752,847
87,9662,244,831
865,235
903,707
28,914

8,761,947
33,487,692
89,962
2,344,431
941,776
679,105
14,514

46,669,371

46,319,430

138,768,538

143,035,531

4,075,579
7,308,494
2,445,597
593,669

4,438,420
7,332,799
410,008
188,166

14,423,341

12,369,394

3,708,969
67,716,752
493,5546,817
397,320

3,844,377
73,518,921
507,8396,856
321,825

72,323,414

78,199,820

86,746,756

90,569,215

6,554,139
6,544,924
38,843,309(128)
79,537

6,554,139
6,544,808
39,422,650(166,301)
111,018

52,021,782

52,466,316

52,021,782

52,466,316

138,768,538

143,035,531

(2) Condensed Consolidated Statement of Comprehensive Income(¥ thousand)Three months ended
February 28, 2018

Three months ended
February 28, 201918,310,040

17,059,457

Cost of revenue

12,119,236

11,914,383

Gross profit

6,190,803

5,145,073

Selling, general and administrative expenses

1,877,793

2,055,136

Other income

93,98339,533

Other expenses

65,572

4,144

4,341,420

3,125,326

Finance income

40,191

40,770Finance costs

231,322

178,921

Profit before tax

4,150,290

2,987,175

Income tax expense

1,302,759

951,493

Profit for the period

2,847,530

2,035,682－

33,039－33,039(6,006)(1,713)32,864

－

903

154

Subtotal

27,762(1,558)Other comprehensive income for the period, net oftax

27,762

31,4802,875,292

2,067,162

2,847,530

2,035,682

2,875,292

2,067,162

Notes
Revenue

Operating profit

5

5

Other comprehensive income Items that will not bereclassified to profit or loss
Net change in financial assets measured at fair values
through other comprehensive income
Subtotal
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Net change in fair values of available-for-salefinancial assets
Net change in fair values of cash flow hedges

Total comprehensive income for the period

Profit attributable to:
Owners of the parent
Total comprehensive income attributable to:
Owners of the parent

Earnings per share attributable to owners of the parent
Basic earnings per share (¥)

7

58.92

41.97

Diluted earnings per share (¥)

7

58.75

41.94

12

(3) Condensed Consolidated Statement of Changes in Equity
Three months ended February 28, 2018 (December 1, 2017 – February 28, 2018)(¥ thousand)

Notes

Balance at December
1, 2017

SharecapitalCapitalreserves

Retainedearnings

Treasuryshares6,421,392

6,464,240

33,209,210－

Profit for the period

64,024－－

94,41954,132

2,847,530－

46,158,867

2,847,530

2,847,530

27,762

27,762

27,762

27,762

2,875,292

2,875,292

148,551

148,551

(61)

(61)

(61)
6

(1,207,100)

Share-based payment(1,207,100) (1,207,100)

4,935

Balance at February
28, 2018

6,515,812

6,523,308

34,849,640

Total
equity46,158,867

2,847,530

Other comprehensive
incomeTotal comprehensive
income for the period
Amount oftransactions withownersIssuance of newsharesPurchase of treasury
sharesDividends of surplus

Total
Other
equitycomponents attributableof equity
to ownersof parent(61)

91,786

4,935

4,935

47,980,486

47,980,486

Three months ended February 28, 2019 (December 1, 2018 – February 28, 2019)(¥ thousand)

Notes

Balance at December
1, 2018

SharecapitalCapitalreserves

Retainedearnings

Treasuryshares6,554,139

6,544,924

38,843,309(128)

Profit for the period

Balance at February
28, 2019

79,537－－2,035,682

(115)
6

－

52,021,782

2,035,682

2,035,682

31,48031,48031,48031,4802,067,162

2,067,162(166,287)(166,287)(166,172)(1,456,340)

6,554,139

6,544,808

39,422,650

13

Total
equity52,021,782

2,035,682

Other comprehensive
incomeTotal comprehensive
income for the period
Amount oftransactions withownersPurchase of treasury
sharesDividends of surplus

Total
Other
equitycomponents attributableof equity
to ownersof parent(1,456,340) (1,456,340)(166,301)

111,018

52,466,316

52,466,316

(4) Condensed Consolidated Statement of Cash Flows(¥ thousand)Three months ended
February 28, 2018

Three months ended
February 28, 2019

4,150,290
147,3712,987,175
216,410(358,663)(390,497)(40,191)
231,322608
10,361
1,632,647(205,424)(102,982)(40,770)
178,921－(702,625)(5,748,288)(115,288)(400)

SubtotalInterest and dividend income received
Income taxes paid

5,465,339
39,477(1,019,283)(3,615,362)
40,745(2,820,729)

Net cash from (used in) operating activities

4,485,532(6,395,347)(12,025)(134,642)(1,940)－－19(24,651)(4,840)(9,811)(48,529)(126,730)
19(1,335,115)－－

13,070

Notes
Cash flows from operating activities
Profit before tax
Depreciation expense
Increase (decrease) in provisions and retirement
benefits obligations
Interest and dividend income
Interest expenses
Loss on retirement of property, plant and equipment
Decrease (increase) in trade and other receivables
Decrease (increase) in inventories
Increase (decrease) in trade and other payables
Other, net

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment properties
Purchase of intangible assets
Purchase of other financial assets
Payments of loans receivableCollection of loans receivable
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Other, net
Net cash from (used in) investing activities(1,483,704)(201,471)

Cash flows from financing activities
Net increase (decrease) in current borrowings
Proceeds from non-current borrowings
Repayments of non-current borrowings
Proceeds from issuance of new shares
Cash dividends paid
Interest expenses paid
Purchase of treasury shares
Other, net

143,000
9,032,500(9,815,555)
148,371(1,157,717)(202,145)
(61)
(913)

(19,000)
17,236,745(11,390,358)

Net cash from (used in) financing activities(1,852,521)

3,980,987

1,149,306
23,750,239(2,615,831)
26,520,569

(622)

(184)

24,898,923

23,904,554

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate change on cash and cash
equivalents
Cash and cash equivalents at end of period

14－(1,409,822)(269,490)(166,172)
(913)

(5)
Notes to Condensed Quarterly Consolidated Financial Statements
1. Reporting entity
Tosei Corporation (hereinafter, the “Company”) is a share company located in Japan whose shares arelisted on the First Section of the Tokyo Stock Exchange and the Mainboard of Singapore Exchange. The
Company’s condensed quarterly consolidated financial statements for the three months ended February
28, 2019 have been prepared in respect of the Company and its consolidated subsidiaries (hereinaftercollectively, the “Group”). The Group engages in the following six business operations: Revitalization
Business, Development Business, Rental Business, Fund, Consulting Business and Property
Management Business and Hotel Business. The operations of each business segment are presented in “5.
Segment information” in the notes.
2. Basis of preparation(1) Compliance with IFRS
Since the Company qualifies as a “Designated International Financial Reporting Standards specified
company” as provided in Article 1-2 of the “Ordinance on Terminology, Forms and Preparation
Methods of Quarterly Consolidated Financial Statements” (Cabinet Office Ordinance No. 64 of 2007),
its condensed quarterly consolidated financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34 “Interim Financial Reporting” under the provision of
Article 93 of the “Ordinance on Terminology, Forms and Preparation Methods of Quarterly
Consolidated Financial Statements” (Cabinet Office Ordinance No. 64 of 2007).
These condensed quarterly consolidated financial statements were approved by Seiichiro Yamaguchi,
the Company’s President and CEO, and Noboru Hirano, Director and CFO, on April 5, 2019.
(2) Basis of measurement
The condensed quarterly consolidated financial statements have been prepared on the historical costbasis except for assets and liabilities measured at fair value.
(3) Presentation currency and unit amountThe condensed quarterly consolidated financial statements in this report are presented in Japaneseyen, the Company’s functional currency. All financial information presented in Japanese yen isrounded down to the nearest thousand yen.

15

3. Significant accounting policies
With the exception of the following items, significant accounting policies that the Group applies incondensed quarterly consolidated financial statements are the same as the accounting policies used in the
consolidated financial statements for the previous fiscal year.
Changes in accounting policies
The Group applied the following standards effective from the first quarter of the fiscal year ending
November 30, 2019.
Standard

Name of standard

Overview of new establishment and amendment

IFRS 9Financial Instruments

Replacement of IAS 39 with IFRS 9 regarding classification,measurement and impairment of financial assets, classificationand measurement of financial liabilities, and hedge accounting

IFRS 15

Revenue from Contracts
with Customers

Accounting for and disclosure of revenue recognition forcontracts with customers

Clarification of requirements for transfers to, or from,investment properties
The above standards have no material impact on the condensed quarterly consolidated financial statements.
IAS 40Investment properties(1) IFRS 9 “Financial Instruments”
1) Classification and measurement of financial instruments
Regarding financial instruments, the Group classified as “Financial instruments measured atamortized cost,” “Financial instruments measured at fair value through other comprehensive income”
and “Financial instruments measured at fair value through profit or loss.”
Equity instruments previously classified as “Available-for-sale financial assets” are now classified
into “Financial assets measured at fair value through other comprehensive income” and “Financial
assets measured at fair value through profit or loss.” “Available-for-sale financial assets” have been
reclassified to “Other financial assets” in the Condensed Consolidated Statement of Financial Position.
In accordance with transition provisions, the Group has not applied IFRS 9 retrospectively toconsolidated financial statements for the previous fiscal year.
2) Impairment loss of financial assets
The method of recognizing impairment on financial assets measured at amortized cost has beenchanged to recognize a loss allowance for expected credit losses on these assets.
(2) IFRS 15 “Revenue from Contracts with Customers”
With the application of IFRS 15, revenue from contracts with customers is recognized based on thefive-step approach shown below. In applying IFRS 15, the Group applies the transition provisions andrecognizes the cumulative effect of the standard at the date of initial application. For this reason, theGroup has not applied IFRS 15 retrospectively to consolidated financial statements for each priorreporting period.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract(s)Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

16

4. Significant accounting estimates and judgments requiring estimates
The preparation of the condensed quarterly consolidated financial statements in compliance with IFRS
requires the management of the Group to make judgments, estimates and assumptions that affect theapplication of accounting policies and the amounts of assets, liabilities, revenue and expenses. However,actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting
estimates are recognized in the period in which the estimates are changed and in future periods in which
the change will affect.
5. Segment information
The Group’s reportable segments are components of the Group about which separate financial
information is available that the Board of Directors regularly conducts deliberations to determine theallocation of management resources and to assess the performance. The Group draws up comprehensive
strategies for each of the following six business segments and conducts business activities accordingly;“Revitalization Business”, “Development Business”, “Rental Business”, “Fund and Consulting
Business”, “Property Management Business” and “Hotel Business”. In the Revitalization Business, theGroup acquires the properties whose asset values have declined, renovates, and resells them. In theDevelopment Business, the Group sells condominium units and detached houses to individual customers
as well as apartment and office buildings to investors. In the Rental Business, the Group rents officebuildings and apartments. The Fund and Consulting Business mainly provides asset management
services for the properties placed in real estate funds. The Property Management Business provides
comprehensive property management services. The Hotel Business provides mainly hotel operating
services.
The Tosei Group has made changes to its reportable segments, increasing the number of suchsegments from five up through the end of the previous fiscal year to six as of the first quarter of the
fiscal year ending November 30, 2019. Accordingly, the reportable segments are now: the Revitalization
Business, Development Business, Rental Business, Fund and Consulting Business, and Property
Management Business segments, Hotel Business.
As the quantitative importance of "Hotel Business", which was included in " Rental Business" and"Others", increased, it is now classified as a separate reportable segment.
Segment information for the three months ended February 28, 2018 has been prepared in accordancewith the new reportable segment classifications.
The Group’s revenue and profit/loss by reportable segment are as follows:

Three months ended February 28, 2018
(December 1, 2017 – February 28, 2018)(¥ thousand)Reportable Segments
Revitalization Development
Business
Business

RentalBusiness

Fund andConsulting
Business

Property
Management
Business

Hotel
Business

Adjustment

Revenue from externalcustomers

14,425,414

766,192

1,350,962

674,070

974,951

118,449－

18,310,040

Intersegment revenue－－

10,785

13,089255,711－(279,587)－

14,425,414

766,192

1,361,748

687,159

1,230,663

118,449(279,587)

18,310,040

3,793,912(145,430)

594,151

377,635

108,427

42,727(430,003)

4,341,420

Total

Revenue

Total
Segment profit or loss
Finance income/costs, net(191,130)

Profit before tax

4,150,290

17

Three months ended February 28, 2019
(December 1, 2018 – February 28, 2019)(¥ thousand)Reportable Segments
Revitalization Development
Business
Business

RentalBusiness

Fund andConsulting
Business

Property
Management
Business

Hotel
Business

Adjustment

Total

Revenue
Revenue from externalcustomers

6,623,933

7,045,504

1,470,217

603,283

1,063,838

252,680－

17,059,457

Intersegment revenue－－

11,414

4,207

277,524700(293,846)－

6,623,933

7,045,504

1,481,631

607,491

1,341,362

253,380(293,846)

17,059,457

1,424,157

1,045,954

606,368

297,249

120,182

48,948(417,532)

3,125,326

Total
Segment profit
Finance income/costs, net(138,151)

Profit before tax

2,987,175

6. Dividends
Dividends paid in the three months ended February 28, 2018 and February 28, 2019 are as follows:
Three months ended February 28, 2018
Resolution
Ordinary General Meetingof Shareholders held on
February 27, 2018

Dividends per share(¥)

Total dividends(¥ thousand)25

1,207,100

Record date

Effective dateNovember 30, 2017

February 28, 2018

Three months ended February 28, 2019
Resolution
Ordinary General Meetingof Shareholders held on
February 27, 2019

Dividends per share(¥)

Total dividends(¥ thousand)30

1,456,340

Record date

Effective dateNovember 30, 2018

February 28, 2019

7. Earnings per share
Three months ended
February 28, 2018
Profit attributable to owners of the parent (¥ thousand)Three months ended
February 28, 2019

2,847,530

2,035,682

2,847,530

2,035,682

48,328,491

48,505,245

138,124

31,524

48,466,615

48,536,769

Basic earnings per share (¥)

58.92

41.97

Diluted net income per share (¥)

58.75

41.94

Net income used to figure diluted net income per share(¥ thousand)
Weighted average number of outstanding ordinary shares(shares)
The number of increased ordinary shares used to figure
diluted earnings per share (shares)
The weighted-average number of ordinary shares used tofigure diluted earnings per share (shares)

Notes: Basic earnings per share is calculated by dividing profit attributable to owners of the parent, by the weighted average
number of outstanding ordinary shares during the reporting period.

18

8. Financial instrumentsi) Fair values and book values
Fair values of financial assets and liabilities and their book values presented in the condensed
consolidated statement of financial position are as follows:(¥ thousand)As of November 30, 2018

As of February 28, 2019

Book value

Fair value

Book value

Fair value

Cash and cash equivalents

26,520,569

26,520,569－－

Trade and other receivables

2,751,391

2,751,391－－

2,244,831

2,244,831－－

Cash and cash equivalents－－

23,904,554

23,904,554

Trade and other receivables－－

2,743,197

2,743,197－－

1,924,147

1,924,147－－

420,284

420,284

Trade and other payables

6,138,677

6,138,677

6,857,368

6,857,368

Borrowings

75,025,247

75,025,247

80,851,720

80,862,147

Financial assets
Loans receivables and other receivables

Available-for-sale financial assets
Available-for-sale financial assets
Financial assets measured at amortized cost

Financial assets measured at fair value
through other comprehensive income
Other financial assets
Financial assets measured at fair value
through profit or loss
Other financial assets
Financial liabilities
Financial liabilities measured at amortized cost

Method for measuring fair value of financial instruments
Cash and cash equivalents, trade and other receivables, trade and other payables, and current
borrowings
The book values of these financial instruments that are settled in a short period of time approximate
the fair values.
However, the fair values of interest rate swaps are based on market values presented by financial
institutions.
Other financial assets
The fair values of listed securities are measured based on quoted market prices. For financial assets
for which there is no active market and unlisted securities, the Group estimates fair values using
certain valuation techniques including the use of recent arm’s length transactions, reference to other
instruments that are substantially at the same price, and the discounted cash flow method.

19

Non-current borrowings
The fair values of non-current borrowings with floating interest rate approximate the book values, asinterest rates reflect market interest rates in short-term intervals. The fair values of those with fixedinterest rate are measured based on the present value of the total amount of principal and interest
discounted by the interest rate that would be charged for a new similar borrowing.
ii)

Fair value hierarchy
The following shows the analysis of financial instruments measured at fair value after the initialrecognition. Fair values of financial instruments are classified into level 1 to level 3.
Level 1:
Level 2:
Level 3:

Fair values measured at a price quoted in an active market
Fair values calculated directly or indirectly using an observable price except for level 1
Fair values calculated through valuation techniques, including inputs that are not based on
observable market data(¥ thousand)As of November 30, 2018
Level 1

Available-for-sale financial assets

Level 2

Level 3

Total

1,613,044－

631,7872,244,831

－

9,469

－

9,469

Financial liabilities measured at fairvalues through other comprehensive
income (derivative)

As of February 28, 2019
Level 1
Financial assets measured at fairvalues through other comprehensive
incomeFinancial assets measured at fairvalues through profit or loss
Financial liabilities measured at fairvalue through other comprehensive
income (derivative)

Level 2

Level 3

Total

1,709,027－

215,119

1,924,147－－

420,284

420,284

－

9,250

－

9,250

Reconciliation of financial assets classified in level 3 at the beginning of the period with those at theend of the period is as follows:(¥ thousand)Three months ended
February 28, 2019
Balance at beginning of period

631,787

Acquisition

166

Comprehensive income
Profit (loss)

3,449
－

Disposal
Balance at end of period

635,403

9. Significant subsequent events
No item to report.
20

2. Other
No item to report.

21

B.

Information on Guarantee Companies, etc. of Filing Company
No items to report.

22

(Translation)
Quarterly Review Report of Independent Auditors
April 5, 2019

To the Board of Directors of
Tosei Corporation
Shinsoh Audit Corporation
Designated and Engagement Partner,
Certified Public Accountant:
Takayuki Sakashita(Seal)

Designated and Engagement Partner,
Certified Public Accountant:
Atushi Iijima(Seal)

Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we havereviewed the condensed quarterly consolidated financial statements of Tosei Corporation included in the“Accounting” section, namely, the condensed consolidated statements of financial position, comprehensive
income, changes in equity, and cash flows, as well as their notes, for the first quarter (December 1, 2018 to
February 28, 2019) and the first three-month period (December 1, 2018 to February 28, 2019) of the fiscal year
from December 1, 2018 to November 30, 2019.
Management’s Responsibility for the Condensed Quarterly Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these condensed quarterly
consolidated financial statements in conformity with International Accounting Standard 34 “Interim
Financial Reporting” under the provision of Article 93 of the Ordinance on Terminology, Forms andPreparation Methods of Quarterly Consolidated Financial Statements of Japan; this includes the design,
implementation, and maintenance of internal control as management determines is necessary to enable thepreparation and fair presentation of condensed quarterly consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion from an independent perspective on these condensed
quarterly consolidated financial statements based on our quarterly review as independent auditor. We
conducted our review in conformity with quarterly review standards generally accepted in Japan.
A quarterly review consists principally of making inquiries, primarily of management and persons
responsible for financial and accounting matters, and applying analytical procedures and other quarterly
review procedures. Such a review is substantially less in scope than an audit conducted in conformity
with auditing standards generally accepted in Japan.
We believe that we have obtained the evidence to provide a basis for our conclusion.
Auditor’s Conclusion
In our quarterly review, we have concluded that the condensed quarterly consolidated financial
statements referred to above are in conformity with International Accounting Standard 34 “Interim
Financial Reporting”, and nothing has come to our attention that causes us to believe that they do not
fairly present, in all material respects, the financial positions of the Company and its consolidated
subsidiaries as of February 28, 2019, and the consolidated results of their operations and their cash flows
for the three-month period then ended.

Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure isrequired under the provisions of the Certified Public Accountants Act.
End

*1.The above is a digitization of the text contained in the original copy of the Quarterly Review Report, whichis in the custody of the Company (filing company of the quarterly securities report) as attachments to thefinancial statements.
2.XBRL data is excluded from the scope of the quarterly review.

Note:
The English version of the financial statements consists of an English translation of the reviewed
Japanese financial statements. The actual text of the English translation of the financial statements was
not covered by our review. Consequently, for the auditors’ review report of the English financial
statements, the Japanese original is the official text, and the English version is a translation of that text .
Should there be any inconsistency between the translation and the official Japanese text, the latter shallprevail.