This is an English translation of the official announcement in Japanese that was released on January 14, 2014. The translation
is prepared for the readers’ convenience only. All readers are strongly recommended to refer to the original Japanese version
for complete and accurate information. Should there be any inconsistency between the translation and the official Japanesetext, the latter shall prevail.

Consolidated Financial Results
for the Year Ended November 30, 2013
<IFRS>
January 14, 2014
Company name: Tosei Corporation
Stock listing: TSE / SGX
Securities code number: 8923/S2D
URL: http://www.toseicorp.co.jp/english/
Representative: Seiichiro Yamaguchi, President and CEO
Contact: Noboru Hirano, Director and CFO
Phone: +81-3-3435-2864
Ordinary general shareholders’ meeting: February 27, 2014 (scheduled)
Commencement of dividend payments: February 28, 2014 (scheduled)
Submission of Securities Report (Yuka Shoken Hokokusho): February 28, 2014 (scheduled)
Preparation of supplementary materials for financial results: Yes
Holding of financial results meeting: Yes (for institutional investors and analysts)
Note: All amounts are rounded down to the nearest million yen.
1.

Consolidated Financial Results for the Year Ended November 30, 2013
(December 1, 2012 – November 30, 2013)(1) Consolidated Operating Results
RevenueYear ended Nov. 30, 2013
Year ended Nov. 30, 2012

(Percentages indicate year-on-year changes.)
Profit before tax
Profit for the year

Operating profit(¥ million)(%)(¥ million)(%)(¥ million)(%)(¥ million)(%)

35,07024,195

44.9
－

3,909
2,856

36.9
－

3,217
2,218

45.0
－

2,003
1,465

36.7
－

Profit for the year
attributable toowners of the parent

Total comprehensive
income for the year

Basic earnings
per share

Diluted earnings
per share(¥ million)(%)(¥ million)

(%)

(¥)

(¥)

2,003
1,465

36.7
－

2,008
1,464

37.1
－

42.99
32.07

－
－

Year ended Nov. 30, 2013
Year ended Nov. 30, 2012

Ratio of profit to equity
Ratio of profit before tax Ratio of operating profit
attributable to owners of
to total assets
to revenue
the parent(¥ million)

Year ended Nov. 30, 2013
Year ended Nov. 30, 2012
(Reference) Equity in earnings of affiliates(¥ million)

7.1
4.7
5.7
3.5
Year ended Nov. 30, 2013: ¥－million(¥ million)

11.1
11.8
Year ended Nov.30, 2012: ¥－million

Note: The Company split its shares by 100 for 1, effective July 1, 2013. Therefore, the basic earnings per share and diluted earnings per share
were calculated on the assumption that the stock had been split at the beginning of the previous fiscal year.

(2) Consolidated Financial Position
Total assets

As of Nov. 30, 2013
As of Nov. 30, 2012

Total equity

Ratio of equity
Equity per share
Equity attributable to attributable to owners
attributable toowners of the parent of the parent to total owners of the parent
assets(¥ million)(¥ million)(¥ million)

(%)

(¥)

71,27665,36330,102
26,54330,102
26,54342.2
40.6

623.45581.03

Note: The Company split its shares by 100 for 1, effective July 1, 2013. Therefore, the equity per share attributable to owners of the parent wascalculated on the assumption that the stock had been split at the beginning of the previous fiscal year.

1(3) Consolidated Cash Flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities(¥ million)(¥ million)(¥ million)

Year ended Nov. 30, 2013
Year ended Nov. 30, 2012

2,772
(325)

(940)
56

3,456
1,316

Cash and cash
equivalents at end ofyear(¥ million)
14,7119,410

2. Dividends
Annual dividends per share

1Q-end(¥)
Year ended Nov. 30,
2012Year ended Nov. 30,
2013
Year ending Nov. 30,
2014(projected)

2Q-end 3Q-end Year-end

Total

Ratio of dividend
to equity
Total dividends
Payout ratio
attributable toper share(Consolidated) owners of the(Total)parent(Consolidated)(¥ million)
(%)
(%)

(¥)

(¥)

(¥)

(¥)

－

0.00

－

600.00600.00

274

18.7

1.0

－

0.00

－

8.00

8.00

386

18.6

1.3

－

0.00

－

10.00

10.00

20.9

Note: The Company split its shares by 100 for 1, effective July 1, 2013. Therefore, the payout ratio (Consolidated) and ratio of dividend toequity attributable to owners of the parent (Consolidated) were calculated on the assumption that the stock had been split at the beginning of
the previous fiscal year. The dividend per share for the year ended November 30. 2012 was however, presented using the pre-stock split
figures.

3. Projected Consolidated Results for the Year Ending November 30, 2014
(Percentages indicate year-on-year changes.)(December 1, 2013 – November 30, 2014)
Profit for the year
Basic earnings
attributable to
Revenue
Operating profit Profit before tax Profit for the year
per shareowners of theparent(¥ million) (%) (¥ million) (%) (¥ million) (%) (¥ million) (%) (¥ million) (%)(¥)
Year ending Nov.
30, 2014

41,81719.2

4,618 18.1

3,800 18.1

2

2,309

15.3

2,309 15.3

47.82

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting inchanges in the scope of consolidation): No
Newly added: –Excluded: –(2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period
financial statements after error corrections(a) Changes in accounting policies required by IFRS: No(b) Changes in accounting policies due to other reasons: No(c) Changes in accounting estimates: No(3) Number of issued shares (common stock)(a) Number of issued shares at the end of the year (including treasury stock)48,284,000 shares
As of Nov. 30, 2013
45,684,000 shares
As of Nov. 30, 2012(b) Number of shares of treasury stock at the end of the year
As of Nov. 30, 2013–
As of Nov. 30, 2012–(c) Average number of outstanding shares during the year:
46,602,904 sharesYear ended Nov. 30, 2013
45,684,000 sharesYear ended Nov. 30, 2012
Note: The Company split its shares by 100 for 1, effective July 1, 2013. Therefore, the aforementioned numbers of shares were
calculated on the assumption that the stock had been split at the beginning of the previous fiscal year.

(Reference) Summary of Non-consolidated Results
1. Non-consolidated Financial Results for the Year Ended November 30, 2013
(December 1, 2012 – November 30, 2013)(Percentages indicate year-on-year changes.)(1) Non-consolidated Operating Results

Year ended Nov. 30, 2013
Year ended Nov. 30, 2012

Net sales(¥ million)(%)
30,044
54.6
19,431(6.2)

Operating income(¥ million)
(%)
3,388
31.8
2,571
9.6

Ordinary income(¥ million)
(%)
2,654
31.7
2,016
25.9

Net income(¥ million)
(%)
1,656
38.2
1,198
20.6

Net income per share(diluted)
(¥)
35.54
－
26.23
－

Net income per share(¥)
Year ended Nov. 30, 2013
Year ended Nov. 30, 2012

Note: The Company split its shares by 100 for 1, effective July 1, 2013. Therefore, the net income per share and the net income per share(diluted) were calculated on the assumption that the stock had been split at the beginning of the previous fiscal year.

(2) Non-consolidated Financial Position
Total assets
Net assets
Equity ratio
Net assets per share(¥ million)(¥ million)(%)(¥)
As of Nov. 30, 2013
67,20729,01543.2
600.94As of Nov. 30, 2012
61,59325,69941.7
562.54(Reference) Equity As of November 30, 2013: ¥29,015 million
As of November 30, 2012: ¥25,699 million
Note: The Company split its shares by 100 for 1, effective July 1, 2013. Therefore, the net income per share and the net assets per shares were
calculated on the assumption that the stock had been split at the beginning of the previous fiscal year.

32. Projected Non-consolidated Results for the Year Ending November 30, 2014
(Percentages indicate year-on-year changes.)(December 1, 2013 – November 30, 2014)

Year ending Nov. 30, 2014

Net sales(¥ million)(%)
36,484
21.4

Ordinary income(¥ million)
(%)
3,421
28.9

Net income(¥ million)
(%)
2,087
26.0

Net income per share
(¥)
43.23

* Information regarding execution of audit proceduresThis financial results report is exempt from the audit procedures pursuant to the Financial Instruments and Exchange Act. At thetime of disclosure of this financial results report, the audit procedures for the consolidated financial statements pursuant to the
Financial Instruments and Exchange Act have not been completed.
* Proper use of earnings forecasts and other notes(1) The forward-looking statements, including earnings forecasts, contained in these materials are based on information
currently available to the Company and on certain assumptions deemed to be reasonable by the Company. Actual
performance and other results may differ substantially from these statements due to various factors. For theassumptions for earnings forecasts and cautions concerning the use thereof, please see “1. Analysis of BusinessResults and Financial Positions, (1) Analysis of Business Results, 2) Outlook for the Year Ending November 30,
2014” on page 8.
(2) The Company split its shares by 100 for 1, effective July 1, 2013.
(3) As from the first quarter of the current fiscal year, the Company has been preparing its financial statements inaccordance with the International Financial Reporting Standard (IFRS). The consolidated financial statements forthe previous year also comply with IFRS.
(4) A financial results meeting will be held on January 14, 2014 for institutional investors and analysts. The presentationmaterials distributed at the meeting will be available on our website immediately after the disclosure of accountsettlement.

4

Contents of Attached Materials

1. Analysis of Business Results and Financial Positions …………………………………………. 6(1) Analysis of Business Results ……………………………………..……………………………. 6(2) Analysis of Financial Position …..…………………………………………………………..…. 8(3) Fundamental Earnings Distribution Policy and Dividends for Fiscal 2013 and Fiscal 2014 ……. 10
2. Conditions of Corporate Group ………………………………………………………….………. 11
3. Management Policies ………………………………………………………….……………………. 14(1) Fundamental Management Policy ……………………………………………………………… 14(2) Performance Targets and Medium-to-Long-term Management Strategies ………………….. 14(3) Issues to Be Addressed ………………………………………………………………………… 14
4. Consolidated Financial Statements ………………………………………………………….……. 15(1) Consolidated Statement of Financial Position ………………………………………………...
(2) Consolidated Statement of Comprehensive Income …………………………………………..
(3) Consolidated Statement of Changes in Equity ……………………………………………….
(4) Consolidated Statement of Cash Flows …………………………………………………….…
(5) Notes on Going Concern Assumption ………………………………………………………...
(6) Notes on Consolidated Financial Statements …………………………………………………
(Segment information) ………………………………………………………………………….
(Profit per Share) ………………………………………………………………………………
(Significant Subsequent Events) ………………………………………………………………

5

15
16
17
18
19
19
26
27
27

1. Analysis of Business Results and Financial Positions(1) Analysis of Business Results
1) Consolidated Results for the Year Ended November 30, 2013
During the year ended November 30, 2013 (December 1, 2012 to November 30, 2013–“fiscal year underreview”), the Japanese economy has shown signs of overcoming deflation such as the depreciating yen andrising stock prices, supported by the bold monetary easing as well as the government’s economic measures.
There has also been a recovery trend in business sentiment, as mostly seen as the large corporations
recording earnings growth.
In the real estate industry where Tosei Group operates, there were active transactions by J-REITs, and thetotal number of real estate transactions conducted by all listed companies during the first-half of the fiscal
year 2013 reached the pre-Lehman Crisis level. The recovery trend of the real estate market has been further
pushed by the foreign investors became increasingly proactive in investing in Japanese properties.
(According to a survey by a private research institution) As for the condominium market in the greater Tokyo
area, the strong demand continued on the back of the mortgage tax break, anticipation of a rise in property
price, as well as last-minute demands of home buyers spurred by the scheduled consumption tax hike. Since
2010, the closing rate of sales contracts has mostly remained above 70%, which is viewed as a favorable
condition, and recorded 79.6% in October 2013. (According to a survey by a private research institution)
In the office leasing market of Tokyo’s five business wards, the upward trend of occupancy ratecontinued, and the rate of vacancy as of October 2013 became 7.56%, down 1.18 percentage point from thesame month last year. The average asking rent had decreased at a slow pace until October 2013 but thenpicked up for the first time in 16 months, recording ¥16,237/tsubo in the same month: There is a mounting
expectation for the market recovery. (According to a survey by a private research institution)
In the real estate securitization market, the J-REIT’s acquisitions have largely increased, and the total
amount of property acquired during the period from January to October 2013 amounted to ¥1.8 trillion, up
2.8 times in value from the same period last year. (According to a survey by a private research institution) As
at the end of June 2013, the combined balance of assets managed by real estate funds hit the record ¥27.1
trillion, of which ¥10.4 trillion was accounted for by J-REITs and ¥16.7 trillion was by private placement
funds. (According to a survey by a private research institution)
In such operating environment, Tosei Group has sold a total 8 of income-generating office buildings andapartments as well as 11 buildings of the Restyling properties in the Revitalization Business. Also in theDevelopment Business, the Group has sold 1 office building and 114 units in 5 condominiums, and of theGroup’s primary focus, the detached house projects, it has sold 78 units in 10 sites. The revenues of both
Revitalization and Development Businesses have largely exceeded that of the previous year. As a result ofproactive efforts on acquisitions, the Group successfully acquired a larger number of assets, the source of its
future income, than it did a year earlier. With respect to the Group’s global operations, it has worked to serve
as a bridge between Tokyo and overseas by taking some measures to enhance the relationship with offshore
investors, such as listing on the Singapore Exchange and conducting public stock offering in Singapore.
As a result, consolidated revenue for the fiscal year under review totaled ¥35,070 million (an increase of
44.9% from the previous year), operating profit was ¥3,909 million (an increase of 36.9%), profit before tax
was ¥3,217 million (an increase of 45.0%), and profit for the period was ¥2,003 million (an increase of
36.7%).
As from the first quarter of the current fiscal year, the Company has been preparing its financial
statements in accordance with the International Financial Reporting Standard (IFRS). The year-on-year
figures presented in the above business results as well as in the segment results are based on the comparisonswith the consolidated financial statements of the previous fiscal year prepared according to IFRS.

Revitalization Business
During the fiscal year under review, the Company sold 12 properties it had renovated, including
Meguro Ekimae Tosei Building (Shinagawa-ku, Tokyo), Harajuku Mansion (Shibuya-ku, Tokyo), Kanda
Urban Building (Chiyoda-ku, Tokyo), Nissei Building (Chiyoda-ku, Tokyo), Excel TY Building (Shibuyaku, Tokyo). In addition, the Company sold 89 units under its Restyling Business such as Hilltop
Yokohama Negishi (Yokohama-shi, Kanagawa), Hilltop Yokohama Higashi Terao (Yokohama-shi,
Kanagawa), and Estage Kaminoge (Setagaya-ku, Tokyo). Also, it acquired a total 26 properties of income-6

generating office buildings and apartments as well as 3 land lots for renovation and sales purposes.
As a result, revenue in this segment reached ¥11,098 million (up 85.6% year-on-year), and the segment
profit was ¥1,398 million (up 411.6% year-on-year).
Development Business
During the fiscal year under review, the segment focused on the sale of condominiums and detachedhouses in demand. It sold 114 newly-built condominium units in THE Palms Shibuya Tokiwamatsu(Shibuya-ku, Tokyo), THE Palms Sendagaya (Shibuya-ku, Tokyo), THE Palms Tsukishima Luna Garden(Chuo-ku, Tokyo) , THE Palms Takadanobaba (Shinjuku-ku, Tokyo), and THE Palms Nishigahara (Kitaku, Tokyo), as well as a total of 78 detached houses such as properties at Palms Court Hatsudai (Shibuyaku, Tokyo), Palms Court Koishikawa 3-Chome (Bunkyo-ku, Tokyo) and Palms Court Setagaya Okamoto(Setagaya-ku, Tokyo). It also sold Kamata Tosei Building (Ota-ku, Tokyo) and the land lot in Motoazabu
3-Chome (Minato-ku, Tokyo). The segment acquired 2 properties for office and shop projects, 1 property
for apartment project, and 13 land lots for detached house projects during the current fiscal year.
As a result, revenue in this segment came to ¥16,347 million (up 48.8% year-on-year), and segment
profit reached ¥1,447 million (down 34.1% year-on-year).
Rental Business
During the fiscal year under review, the segment sold 8 buildings of its inventory assets it holds forleasing purposes and also acquired a total 22 of income-generating office buildings and apartments. Also,
it focused on leasing its non-current assets, inventories, as well as vacant units of the properties it had
acquired.
As a result, revenue in this segment were ¥2,647 million (up 7.8% year-on-year), and segment profit
reached ¥1,590 million (up 18.7% year-on-year).
Fund and Consulting Business
During the fiscal year under review, while the segment obtained a new asset management contract in
the amount of ¥63,649 million, the balance of assets under management decreased by ¥126,956 million,
due mainly to the property dispositions by funds. Consequently, the fee income relating to acquisitions anddispositions of properties for funds largely contributed to the revenue.
As a result, the segment revenue was ¥1,398 million (up 80.0% year-on-year), and segment profit was¥669 million (up 268.7% year-on-year).
As of November 30, 2013, the balance of assets under management (Note) totaled ¥248,028 million.
Note: The balance of assets under management includes the balance of assets which were subject to consulting contracts, etc.

Property Management Business
During the fiscal year under review, the number of properties managed by the Company including
office buildings, parking lots and schools was 343, an increase of 37 from the previous year, while thenumber of condominiums and apartments decreased by 13 to 203 properties. The total number ofproperties under management came to 546, an increase of 24 from a year earlier. Further, the Company has
started to also manage hotel buildings under its Property Management Business from the current fiscal
year.
As a result, revenue in this segment was ¥3,160 million (up 0.1% year-on-year), and the segment profit
was ¥122 million (segment loss of the previous year totaled ¥11 million).
Alternative Investment Business
During the fiscal year under review, the segment focused on the sale of properties acquired through
M&A, collection of debt, and leasing of the properties which it had acquired by accepting a substituteperformance. The segment recognized gain on the sale of properties and loans receivable, interest income,as well as rental income from the properties it acquired by accepting a substitute performance.
As a result, revenue in this segment came to ¥418 million (down 50.2% year-on-year), and the segment
profit was ¥73 million (down11.3 % year-on-year).

72) Outlook for the Year Ending November 30, 2014
The operating environment in the coming fiscal year ending November 30, 2014 is expected tocontinuously be favorable, with the outlook that the trading of income-generating properties will be further
vitalized on expectations of the effect of so-called Abemnomics policies, that the demand for condominiums
and detached houses will remain strong despite of a temporary drop following the consumption tax hike, andthat the offshore investment money will reflow into the Japanese markets. Against this backdrop, the Tosei
Group will concentrate on the renovation and sale of the income-generating properties it had alreadyacquired in the Revitalization Business as well as the sale of Restyling properties (the sale of renovated unitsof pre-owned condominiums). Further, it will focus on selling newly-built condominiums and detachedhouses in the Development Business. With respect to the Group’s fee-earning business, seen as a stable
income source, it will work toward the revenue growth of all segments, aiming to increase the numbers ofproperties it holds in the Rental Business for the leasing purposes and the volume of assets it manages in theFund and Consulting Business, as well as to increase the number of properties it manages in the Property
Management Business.
In addition, the Group will further accelerate its acquisitions of properties which will become a revenue
source for its coming fiscal years and will strive for planning and development of new buildings. At the sametime, it will endeavor to set up a real estate fund by attracting both domestic and offshore investment money,
with the concentrated and complete support of the Group.
As a result of the aforementioned measures, in the year ending November 30, 2014, the Tosei Groupprojects that consolidated revenue will be ¥41,817 million (an increase of 19.2% from the previous year),
operating profit will be ¥4,618 million (an increase of 18.1%), profit before tax will be ¥3,800 million (anincrease of 18.1%), and profit for the year will be ¥2,309 million (an increase of 15.3%).

(2) Analysis of Financial Position
1) Assets, Liabilities and Equity as of November 30, 2013
Total assets increased by ¥5,913 million to ¥71,276 million from the previous year. Primary factors
included an increase of ¥5,301 million in cash and cash equivalents resulted from a progress in the sale ofproperties in the Revitalization and Development Businesses as well the issuance of new shares byinternational placement on the Singapore Exchange.
Total liabilities increased by ¥2,355 million to ¥41,174 million from the previous year. Primary factors
included an increase of ¥2,634 million in borrowings, attributed to the progress in property acquisitions.
Total equity increased by ¥3,558 million to ¥30,102 million from the previous year. Primary factors
included the issuance of new shares by international placement on the Singapore Exchange and an increase
in retained earnings.
The use of the net proceeds from issuance of new shares on the Singapore Exchange and its details asof November 30, 2013 are as follows:
1. Use of Placement Proceeds(¥ thousand)Total amount raised in July 2013

1,933,438

Total amount utilized from the proceeds (As of Nov. 30, 2013)

1,177,770

Balance proceeds

755,667

2. Details of Use of Proceeds(¥ thousand)

Revitalization Business
Acquisition cost of residential property in Sendagi(partial)
Acquisition cost of residential property in Shonan(partial)
Acquisition cost of residential property in Kokubunji(partial)

Bunkyo-ku,
TokyoFujisawa-shi,
Kanagawa
Kokubunji-shi,Tokyo

Apartment

95,500Apartment

29,864

Apartment

234,785

Subtotal
8

360,149

Development Business
Construction cost of THE Palms Nishigahara(partial)
Construction cost of Palms Court Minamiasagaya(partial)

Kita-ku,
Tokyo
Suginami-ku,
Tokyo

Condominium

384,250

Detached house

22,684

Subtotal

406,934

Fund and Consulting BusinessCo-equity investment in preferred equity of Tokumei Kumiai (silent partnership) of a private
fundCo-equity investment in a private fund (partial)

50,000360,687

Subtotal

410,687

Total amount utilized for the period up until November 30, 2013

1,177,770

2) Cash Flows for the Year ended November 30, 2013
Cash and cash equivalents (hereinafter “cash”) as of November 30, 2013 totaled ¥14,711 million, an
increase of ¥5,301 million from the end of the previous year, as a result of recording ¥3,217 million in
profit before tax and the progress in the property acquisitions and sale in the Revitalization andDevelopment Businesses.
The cash flows for the fiscal year under review and their factors are as follows:
Cash Flows from Operating Activities
Net cash provided in operating activities totaled ¥2,772 million (net cash used in the previous year
totaled ¥325 million). This is mainly due to ¥3,217 million yen of profit before tax as well as an increase
in inventories by ¥1,118 million. The increase in inventories was because the acquisitions in the
Revitalization and Development businesses progressed at a steady pace and exceeded the decrease ininventories accompanied by property sale.
Cash Flows from Investing Activities
Net cash used by investing activities totaled ¥940 million (net cash provided in the previous year
totaled ¥56 million). This is primarily due to purchase of available-for-sale financial assets totaling ¥667
million and purchase of investment properties totaling ¥525 million.
Cash Flows from Financing Activities
Net cash provided in financing activities totaled ¥3,456 million (an increase of 162.6% from theprevious year). This mainly reflected the fact that in the Revitalization and Development Businesses, theproceeds from non-current borrowings associated with property acquisitions exceeded the repayment of
non-current borrowings associated with property sale, and that there was ¥1,825 million of proceeds fromissuance of new shares.

9

(Reference) Trends in cash flow indicators for the Tosei Group

Ratio of equity attributable to owners of theparent to total assets (%)
Market value ratio of equity attributable toowners of the parent to total assets (%)

Year ended
Nov. 30, 2012

Year ended
Nov. 30, 2013

40.6

42.2

25.1

52.6

–

12.6

Interest-bearing debt to cash flows ratio (years)–
Interest coverage ratio (times)
Ratio of equity attributable to owners of the parent to total assets:
Market value ratio of equity attributable to owners of the parent tototal assets:
Interest-bearing debt to cash flows ratio:
Interest coverage ratio:

3.8
Equity attributable to owners of the parent to total
assets/Total assets
Market capitalization/Total assets
Interest-bearing debt/Cash flows
Cash flows/Interest expenses

Notes:(1) All indicators are calculated using consolidated financial figures.
(2) Market capitalization is calculated based on the number of issued shares, excluding treasury stock.
(3) The figure for cash flows employs cash flows from operating activities.
(4) Interest-bearing debt includes all liabilities recorded on the Consolidated Statement of Financial Position on which interest is
paid.
(5) Interest-bearing debt to cash flows ratio and interest coverage ratio are not presented for the year ended November 30, 2012
because cash flows from operating activities on the consolidated statements of cash flows were negative.

(3) Fundamental Earnings Distribution Policy and Dividends for Fiscal 2013 and Fiscal 2014
Tosei’s fundamental earnings distribution policy is to strive to continuously provide stable dividends while
comprehensively considering operating results, the future operating environment and progress in its businessplan to balance dividends with the need for internal capital resources to generate long-term growth in corporate
value by taking advantage of highly profitable business opportunities.
For the year ended November 30, 2013 and the year ending November 30, 2014, Tosei plans to pay cash
dividends per share of ¥8 and ¥10 respectively.

10

2. Conditions of Corporate GroupThe Tosei Group is composed of Tosei Corporation (“Tosei” or the “Company”) and 7 subsidiaries(including 6 consolidated subsidiaries). Its main businesses are the Revitalization Business, the Development
Business, the Rental Business, the Fund and Consulting Business, the Property Management Business, and theAlternative Investment Business. The operations of each business segment and the main subsidiaries and/or
affiliates conducting those operations are as follows.
Main
Companies

Segment

Operations

Revitalization
Business

The Tosei Group acquires office buildings, commercial facilities, apartments and otherproperties whose asset value has declined, boosts their value though “value-up plans”(*) judged to best match the characteristics of the properties’ areas and tenantrequirements, and sells them as revitalized real estate to buyers including investors, realestate funds and individual end users. In the “Restyling Business,” the Group acquires
income-generating condominiums and sells their units to end-users after boosting thevalue of common and private areas by renovation (the Group continues to hold andmanage the occupied units as rental properties).
The Tosei Group’s “value-up” activities go beyond just renewing properties and involve
realizing comprehensive regenerations of their values. This entails not only improving
the convenience and functionality of properties but also focusing on providing
satisfaction to owners and giving end users a sense of pride.
(*) Plans primarily look 10 or 20 years ahead and consist of improved designs torefurbish/renovate internal and external elements that have deteriorated or become
obsolete, functional improvement of facilities including renovation, adding new
functions to premises and equipment and conversions, and boosting lease income
by such means as renting out vacant space, collecting overdue rent and raising rent.

Tosei
Corporation

Development
Business

In the main districts of Tokyo, which form the Tosei Group’s core operating area, there
is a mixture of needs for office, commercial and residential space and other uses, andthese different uses create significant differences between land values. Tosei verifies thecharacteristics of land it acquires including area, shape, intended purpose, relevant
needs, rent, and selling price. Based on this, Tosei carries out development and new
construction to maximize the value of the land, and then sells whole buildings orindividual units.
The Group is able to respond to diverse needs by developing office buildings,
commercial buildings (T’s BRIGHTIA series) and mixed-use buildings, condominiums(the Palms series), as well as detached houses (Palms Court series). Once development
is complete or tenants have been found, the properties are sold to buyers including
investors, real estate funds, and end-users.

Tosei
Corporation

RentalBusiness

The Tosei Group has expanded the scope of its business primarily in the main districtsof Tokyo by acquiring office buildings, condominiums, stores and parking lots, andrenting them out to end-users and others.
As a landlord, the Tosei Group is capable of swiftly gathering accurate information on
tenant needs to further enhance “value-up plans” by reflecting these needs.

Tosei
Corporation

Fund andConsulting
Business

The Tosei Group conducts business as a type II financial instruments business as well as
an investment advisory and agency business and an investment management business asprovided for in the Financial Instruments and Exchange Act. Specifically, in addition tosuch work as purchasing, selling and brokering trust beneficiary rights in accordancewith a wide variety of investor needs, the Group provides advice regarding theacquisition, holding and disposition of properties, and asset management services forreal estate funds that carry out discretionary investment.
The Tosei Group’s management approach is to provide high distributions to investors bytaking full advantage of its “value-up,” leasing and maintenance capabilities with theaim of maximizing rental income and reducing its own rent costs. Revenues areprimarily derived from acquisition fees upon the purchase of properties and asset
management fees for properties held.

Tosei
Corporation

11

Tosei Asset
Advisors, IncMain
Companies

Segment

Operations

Property
Management
Business

This business carries out comprehensive property management that meets a wide varietyof real estate needs including administration, facility management, cleaning and security
for condominiums, office buildings and their facilities, repair work for the private
portions of condominiums and office buildings, as well as contract work of officeinterior renovation.
In the management of condominiums, this business makes full use of the expertise it has
accumulated over a number of years to provide consultancy and advisory services tounit owners and condominium management associations, and provides a total support tothe associations from their launch to smooth operation.
With respect to managing office buildings, in order to streamline the operations ofbuilding owners, the business provides meticulous management services including
building maintenance and the management of equipment, water supply and drainage,
sanitation and cleaning. The business also maintains the asset values of buildings byimplementing precise maintenance plans regarding the age-related deterioration ofbuildings.

Tosei
CommunityCo., Ltd.

Alternative
Investment
Business

This business invests in real estate collateralized loans and acquires collateral throughcollecting receivables and accepting substitute performances by negotiating withmortgaged property owners/debtors, and acquires businesses including companies withreal estate holdings and real estate business operators. The business also utilizes theexpertise of the Tosei Group to boost the value of the real estate it acquires before
selling it.

Tosei
RevivalInvestment
Co., Ltd.

12

A schematic diagram of the businesses of the Tosei Group is as follows:

End-users

Revitalization
BusinessLand
Buildings
Beneficiaryrights to trusts

Purchase
Bidding

Tosei
Corporation

Revitalized realestate“Value-up”

Sale
Investors

Developed realestateDevelopment
Business

Leasing
REITs

RentalBusiness
Fund andConsulting
Business

Funds
Investment advisor andagencyType II financial
instruments business

Real estatefunds* Wholly owned subsidiary
Tosei Asset Advisors,
Inc.
.
Fund and Consulting
Business

Investment
Investors
Dividends

Investment managementbusiness
Investment advisor andagencyType II financial
instruments business

Property management* Wholly owned subsidiary
Tosei Community Co.,Ltd.
Property
Management
Business

Property management

Funds
Managed properties

Management

Building maintenance

Building owners
Tenants* Wholly owned subsidiary
Real estatecollateralizedloans
Companies withreal estateholdings

Purchase
M&A

Tosei Revival
Investment Co., Ltd.
Alternative
Investment BusinessCollection“Value-up”
Coordinate title
Revitalize

Real estatecollateralized loans
Real estate acquired byaccepting substituteperformance

Debtors

Sale
Investors
End-users

Stock of companies withreal estate holdings* Wholly owned subsidiary

NAI Tosei Japan, Inc* Wholly owned subsidiary

Tosei Singapore Pte. Ltd.

13

Property sale

3. Management Policies(1) Fundamental Management Policy
The Tosei Group’s corporate philosophy is to create new value and inspiration in all aspects of real estate asa group of global-minded and experienced professionals. With constant commitment to quality construction,
the Group is striving to integrate real estate and finance in its six business segments: Revitalization,
Development, Rental, Fund and Consulting, Property Management and Alternative Investment. The Group isalso aiming to contribute to society and increase its corporate value by restoring the value of real estate with aview to a timeframe of 10 to 20 years.
(2) Performance Targets and Medium- to Long-term Management Strategies
Under the aforementioned corporate philosophy, the Tosei Group has established its current three-year
medium-term management plan whose first year was the last fiscal year ended November 30, 2012.
Under this management plan named “Next Stage 2014”, the Group aims to become a real estate firm withworld-class business quality by setting three key policies: expand and grow the existing six business segments,
move into global markets, and innovate the management infrastructure.
(3) Issues to Be Addressed
The transactions of income-generating real estate has rebounded from the downturn caused by the Lehman
Crisis, and the housing market targeting end-users residing in the greater Tokyo area currently remains strong.
While there are upward trends in property trading price and construction cost supported by the improvement inmarket confidence, there also are some economic factors such as the scheduled consumption tax hike and thatthe actual rise in pay rate is expected to require a certain time until it is put into effect.
Under such circumstances, the Group sees its most important task is to carefully monitor the supply-anddemand balance of the market and optimize the allocation of its investments. It will endeavor to create thevalue necessary to ensure the appropriate profits from acquisitions of pre-owned properties for renovation andland lots for home/office development, and also from sale of such renovated/developed properties.
Further, in order to respond to the increase in the numbers of transactions and rental properties associatedwith the Group’s business expansion, the Group has reorganized its Business Division (Asset Solution
Departments) effective December 1, 2013. It recognizes the other important task for the Group is to more
efficiently conduct the each process of acquisition, renovation, development, leasing, and sale, with its
restructured organization. At the same time, the Group as a listed company will continue to reinforce its
governance, by emphasizing its three main focuses: compliance, risk management, and timely and appropriate
information disclosure.

14

4. Consolidated Financial Statements(1) Consolidated Statement of Financial Position(¥ thousand)As of Nov. 30, 2012
AssetsCurrent assets
Cash and cash equivalents
Available-for-sale financial assets
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Investment properties
Intangible assets
Available-for-sale financial assets
Trade and other receivables
Deferred tax assets
Other assets
Total non-current assets
Total assets

As of Nov. 30, 2013

9,410,622
10,0001,884,308
37,417,375
22,426

14,711,997－
902,131
38,040,625
24,781

48,744,733

53,679,536

3,331,447
11,695,720
43,091410,061
160,170
973,8444,014

3,304,792
12,703,600
31,598810,105
188,884554,362
4,014

16,618,350

17,597,357

65,363,083

71,276,894

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Current income tax liabilities
Provisions

3,314,472
7,742,443
72,921
154,143

2,323,705
7,587,433
865,256
209,124

Total current liabilities

11,283,980

10,985,520

2,136,256
24,659,337
541,647
24,842
173,126

2,107,809
27,449,160
607,932
24,003

Non-current liabilities
Trade and other payables
Borrowings
Retirement benefits obligations
Provisions
Deferred tax liabilities
Total non-current liabilities
Total Liabilities
EquityShare capital
Capital reserves
Retained earnings
Other components of equity
Total equity
Total liabilities and equity

15－

27,535,211

30,188,904

38,819,191

41,174,425

5,454,673
5,516,499
15,576,014(3,295)

6,421,392
6,375,317
17,304,409
1,348

26,543,892

30,102,468

65,363,083

71,276,894

(2) Consolidated Statement of Comprehensive Income(¥ thousand)Year ended Nov. 30, 2012
(Dec. 1, 2011 – Nov. 2012)

Year ended Nov. 30, 2013
(Dec. 1, 2012 – Nov. 30, 2013)

Revenue
Cost of revenue

24,195,800
18,081,979

35,070,345
27,759,099

Gross profit
Selling, general and administrative expenses
Other income
Other expenses

6,113,821
3,245,692
17,90429,377

7,311,245
3,414,950
33,004
19,695

Operating profit
Finance income
Finance costs

2,856,655
4,540
642,5633,909,604
3,467
695,799

Profit before tax
Income tax expense

2,218,631
753,346

3,217,272
1,213,792

Profit for the year
Other comprehensive income
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
Other comprehensive income for the period, net oftax
Total comprehensive income for the year

1,465,284

2,003,480

1,382

3,776

1,442

1,299

(3,751)

(431)

(926)

4,644

1,464,358

2,008,124Profit attributable to:
Owners of the parent

1,465,284

2,003,480

Total comprehensive income attributable to:
Owners of the parent

1,464,358

2,008,124

32.07

42.99

－

－

Earnings per share attributable to owners of the parent
Basic earnings per share (yen)Diluted earnings per share (yen)16(3) Consolidated Statement of Changes in Equity
Year ended November 30, 2012 (Dec. 1, 2011 – Nov. 30, 2012)(¥ thousand)Other
components ofequityTotal equity

14,339,150(2,369)25,307,953－

1,465,284－

1,465,284

－

－

－

(926)

(926)

Total comprehensive income
for the year－－

1,465,284(926)

1,464,358

Dividends from surplus－－(228,420)－(228,420)

Balance at Nov. 30, 2012

5,454,673

5,516,499

15,576,014(3,295)26,543,892

Share capital

Capital reserves

5,454,673

5,516,499

Profit for the year－

Other comprehensive income

Balance at Dec. 1, 2011

Retainedearnings

Year ended November 30, 2013 (Dec. 1, 2012 – Nov. 30, 2013)(¥ thousand)Other
components ofequityTotal equity

15,576,014(3,295)26,543,892－

2,003,480－

2,003,480

－

－

－

4,644

4,644

－

－

2,003,480

4,644

2,008,124

Issuance of new shares

966,719

858,818－－

1,825,537

Dividends from surplus－－(274,104)－(274,104)

Retained earnings from newly
consolidated subsidiaries

－

－

(981)

－

(981)

6,421,392

6,375,317

17,304,409

1,348

30,102,468

Share capital

Capital reserves

5,454,673

5,516,499

Profit for the period－

Other comprehensive income
Total comprehensive income
for the period

Balance at Dec. 1, 2012

Balance at Nov. 30, 201317

Retainedearnings

(4) Consolidated Statement of Cash Flows(¥ thousand)Cash flows from operating activities
Profit before tax
Depreciation expense
Increase (decrease) in provisions and retirement
benefits obligations
Interest and dividends income
Interest expenses
Gain on available-for-sale financial assets
Loss on sales of investment properties
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

Year ended Nov. 30, 2012
(Dec. 1, 2011 – Nov. 2012)

Year ended Nov. 30, 2013
(Dec. 1, 2012 – Nov. 30, 2013)

2,218,631
180,327

3,217,272
173,480

81,520112,844(4,540)642,563(3,467)695,799－
18,874
2,377(7,323)－
183
908,464(1,118,535)(793,107)(3,862,618)
1,301,557
7,555(1,021,652)(682)

SubtotalInterest and dividends income received
Income taxes paid

(206,859)
4,530(122,725)

2,956,384
3,566(187,336)

Net cash from (used in) operating activities(325,054)

2,772,614(25,346)(114,956)
216,965(4,560)(22,000)(525,736)－(4,490)－50,782－
7,466(1,340)216,700
83

56,228(940,724)

384,400
15,777,100(13,838,051)(378,400)
20,869,988(17,855,004)
1,825,537(273,717)

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment properties
Proceeds from sales of investment properties
Purchase of intangible assets
Purchase of available-for-sale financial assets
Proceeds from sales of available-for-sale financial
assetsCollection of available-for-sale financial assets
Collection of loans receivable
Other, net
Net cash from (used in) investing activities
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
Other, net－(227,857)(778,011)

Net cash from (used in) financing activities
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
Increase in cash and cash equivalents from newly
consolidated subsidiaries
Cash and cash equivalents at end of year18

(11,064)(667,000)－(1,219)(729,954)(1,771)

1,316,359

3,456,677

1,047,533
8,361,689

5,288,567
9,410,622

1,399

3,770

－

9,036

9,410,622

14,711,997

(5) Notes on Going Concern Assumption
No item to report.
(6) Notes on Consolidated Financial Statements
a. Reporting entity
TOSEI CORPORATION (Hereinafter, the “Company”) is a stock company located in Japan whose
stock is listed on the First Section of Tokyo Stock Exchange and the Mainboard of Singapore Exchange.
The Company and its subsidiaries (hereinafter collectively, the “Group”) engage in the following six
business operations: Revitalization Business, Development Business, Rental Business, Fund andConsulting Business, Property Management Business and Alternative Investment Business. The
operations of each business segment are presented in (6) Notes on Consolidated Financial Statements,“(Segment information)”.
b. Basis of preparation(1) Compliance with IFRS
Since the Company qualifies as a “specified company” as provided in Article 1-2 of the “Ordinanceon Terminology, Forms and Preparation Methods of Consolidated Financial Statements” (Ordinance ofthe Ministry of Finance No. 28 of 1976), its consolidated financial statements have been prepared inaccordance with International Accounting Standard (IAS) under the provision of Article 93 of the said
ordinance.
(2) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for assets
and liabilities measured at fair value.
(3) Presentation currency and unit
The consolidated financial statements in this report are presented in Japanese yen, the Company’sfunctional currency. All financial information presented in Japanese yen is rounded down to the nearest
thousand yen.
c. Significant accounting policies
The accounting policies applied to this consolidated financial statements are consistent throughout all
the periods presented therein.
(1) Basis of consolidation
1) Subsidiaries
Subsidiaries are entities of which the Company governs the financial and operating policies
directly or indirectly so that the Group will obtain benefits from their activities. The financial
statements of subsidiaries are included in the consolidated financial statements from the date whencontrol is obtained until the date when it is lost.
Intra-Group balances of payables and receivables, intra-Group transactions, as well as unrealized
gains or losses arising from intra-Group transactions are eliminated in preparing the consolidated
financial statements.
2) Business combinations
The Group has applied the acquisition method to account for business combinations. The
considerations transferred for the acquisition of a subsidiary comprises the fair value of the assets
transferred, liabilities incurred, and the equity interests issued by the Group. The considerationstransferred also include the fair value of assets or liabilities arising from contingent consideration
arrangements. Acquisition-related costs are recognized as expenses when incurred. The identifiable
assets acquired, the liabilities and contingent liabilities assumed in a business combination are
initially measured at their fair values at the acquisition date.
19

(2) Foreign currency translation
1) Foreign currency transactions
Foreign currency transactions are translated into the functional currencies of each entity in theGroup using the exchange rates at the date of the transactions. Assets and liabilities denominated inforeign currencies to be re-measured at the end of each reporting period are retranslated into thefunctional currencies using the exchange rates at that date. Non-monetary assets and liabilities
measured at fair value in foreign currencies are retranslated into the functional currencies using theexchange rates at the date when the fair value was determined.
Foreign exchange differences arising on the settlement of such transactions, and exchange
differences arising on translating foreign currency-denominated monetary assets and liabilities using
the exchange rates at the end of the reporting period, are recognized in profit or loss. However, whena gain or loss on a non-monetary item is recognized in other comprehensive income, the foregoingexchange differences are also recognized in other comprehensive income.
2) Foreign operations
Assets and liabilities of foreign operations are translated into Japanese yen using the exchange rate
at the reporting date. Income and expenses are translated into Japanese yen using the averageexchange rate for the period. However, if such an average exchange rate is not considered as areasonable approximation of the cumulative effect of the exchange rates at the transaction dates, theexchange rates at the transaction dates are used.
Exchange differences arising on translating financial statements of foreign operations arerecognized in other comprehensive income. On the disposal of the interest in a foreign operation
involving loss of control or significant influence, the cumulative amount of the exchange differencesin connection with the foreign operation is recognized in profit or loss in the period during which theinterest is disposed of.
(3) Cash and cash equivalents
Cash and cash equivalents are cash on hand, demand deposits, and short-term investments withmaturities of three months or less from the date of acquisition that are readily convertible to cash andsubject to an insignificant risk of changes in value.
(4) Financial instruments
The Group classifies investments in financial assets in two categories: loans and receivables, andavailable-for-sale financial assets. This classification is made according to the nature of assets and forwhat purpose the assets were acquired. The classification of investments is determined on initialrecognition, and whether the classification is appropriate is reassessed at each reporting date.
1) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market. Financial assets classified in this category are recorded as current
assets, except for those with maturities of greater than 12 months after the reporting date or
exceeding the normal operating cycle. Loans and receivables are included in “Trade and otherreceivables” in the consolidated statement of financial position.
2) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are not classified inother categories. Available-for-sale financial assets are recorded as non-current assets unless the
management has an intention to dispose of the investment within 12 months from the reporting date.
Available-for-sale financial assets are initially recognized at the fair value plus directly attributabletransaction costs, and subsequently measured at the fair value.
Purchase and sale of financial assets are recognized at the transaction date, or the date on which
the Group commits itself to purchase or sell the asset. Financial assets are derecognized when therights to receive cash flows from the assets are extinguished or transferred, and the Group has
substantially transferred all the risks and rewards incidental to ownership of the assets. After initialrecognition, available-for-sale financial assets are recognized at fair value. Loans and receivables arerecognized at amortized cost using the effective interest method. Financial assets or financial asset
groups are assessed on a quarterly basis whether there is any objective evidence that the asset or20asset group is impaired. When there is objective evidence, impairment losses are recognized.
Unrealized gains or losses attributable to changes in the fair value of available-for-sale financial
assets are recognized in changes in the fair value of available-for-sale financial assets. Whenavailable-for-sale financial assets are sold or disposed of, cumulative changes in the fair value ofavailable-for-sale financial assets are recognized in profit or loss.
The fair value of listed securities is measured at quoted market prices. For financial assets forwhich there is no active market and unlisted securities, the Group calculates fair value using certain
valuation techniques, in particular, which include recent cases of arm’s length transactions,references to prices of other financial instruments that are substantially equivalent, the discounted
cash flow method, and others.
The Group assesses financial assets or financial asset groups at each reporting date whether there
is any objective evidence that the asset or asset group is impaired. When there is objective evidence,
impairment losses are recognized.
For equity instruments classified as available-for-sale financial assets, the possibility that the costof investment is not recoverable and whether there is a significant or long-term decrease of fair value,
which are included in information on significant changes that have adverse effects arising in thebusiness environment where an issuer runs its business, are also taken into account in assessing
whether there is any objective evidence for impairment. When there is objective evidence foravailable-for-sale financial assets, losses, which are measured as the difference between theacquisition cost and the fair value at the reporting date less impairment losses of the financial assetsthat were previously recognized in profit or loss, are transferred to profit or loss.
(5) Inventories
Inventories are assessed at cost or, if lower, at net realizable value. Net realizable value is calculated
by deducting costs to sell from the estimated selling price.
The cost of inventories is comprised of purchase prices, development expenses, borrowing costs andseparately identified expenditure including other related expenditure.
Borrowing costs for borrowings for developed real estate are capitalized as part of cost of thedeveloped real estate over the period up to the end of the development, based on the specificidentification method.
(6) Property, plant and equipment
The Group applies the cost model in measurement of property, plant and equipment. Property, plantand equipment are measured at the carrying amount, which is calculated as cost less any accumulated
depreciation and accumulated impairment losses. The cost of property, plant and equipment includes
cost directly incidental to the acquisition of assets, and costs of dismantling and removing the assets andrestoring the site on which they are located, and borrowing costs directly attributable to acquisition,
construction or production of qualifying assets.
Subsequent expenditures on property, plant and equipment that have already been recognized areincluded in the carrying amount of the assets only if it is highly probable to generate future economic
benefits related to the items for the Group and the expenditures can be measured reliably. Costs of the
day-to-day servicing of property, plant and expenditure are recognized in profit or loss when incurred.
Depreciation of assets except for land and construction in progress is principally computed under thestraight-line method over the following estimated useful lives. The diminishing balance method isapplied, if depreciation based on the diminishing balance method better reflects the pattern in which the
future economic benefits embodied in the asset are expected to be consumed by the entity.
Buildings and structures 3 to 50 years
Tools, furniture and fixtures 3 to 20 years
The estimated useful lives, residual values, and depreciation methods are reviewed at the end of eachyear, and changed if necessary.
(7) Intangible assets
The Group applies the cost model in measurement of intangible assets. An intangible asset is carriedat cost less any accumulated amortization and any accumulated impairment losses.
Subsequent expenditures on intangible assets that have already been recognized are included in the
carrying amount of the assets only if it is highly probable to generate future economic benefits related to21the items for the Group and the expenditures can be measured reliably. Other expenditures arerecognized in profit or loss when incurred.
1) Software
Acquired software is initially recognized at cost including purchase consideration (net of
discounts and rebates) and expenditures directly attributable to the preparation for the asset for theintended use.
After the acquisition, the software is amortized under the straight-line method over its estimateduseful life. The estimated useful life and amortization method are reviewed in each fiscal year, andchanged if necessary.
(8) Leases
1) Lessee
Leases are classified as finance leases when all the risks and rewards incidental to ownership of anasset in a lease arrangement are substantially transferred to the lessee. All leases other than financeleases are classified as operating leases.
The Group’s assets under finance leases are tools, furniture and fixtures and are capitalized at
amounts equal to the fair value of leased property at the inception of the lease or, if lower, at thepresent value of the minimum lease payments. Leased assets are depreciated on a straight-line basis
over the estimated useful lives or, if shorter, the lease terms. Lease obligations are recognized asliability in the consolidated statement of financial position.
Operating lease payments are recognized in profit or loss on a straight-line basis over the leaseterm.
Contingent rent expense is recognized in profit or loss for the period during which it is incurred.
2) Lessor
Leases of investment properties are classified as operating leases when all the risks and rewards
incidental to ownership of an asset in a lease arrangement are substantially held by the Group. Lease
income from operating leases (net of incentives provided to the lessee) is recognized in profit or loss
on a straight-line basis.
Initial direct costs incurred to the Group at the inception of operating leases are added to thecarrying amount of the leased assets, and are recognized in profit or loss on the same basis as lease
income over the lease term.
Contingent rent income is recognized in profit or loss for the period during which it is incurred.
(9) Investment properties
Investment properties are properties held to earn rentals or for capital gain or both, and do not include
properties for sale in the ordinary course of business or used for administrative purposes.
The Group applies the cost model in measurement of investment properties.
Investment properties are initially recognized at cost, and subsequently presented at the carrying
amount, which is calculated as cost less any accumulated depreciation and accumulated impairment
losses. Depreciation of investment properties is principally computed under the straight-line method overthe following estimated useful lives. The diminishing balance method is applied, if depreciation based on
the diminishing balance method better reflects the pattern in which the future economic benefits
embodied in the asset are expected to be consumed by the entity.
Buildings and structures 3 to 50 years
Tools, fixtures and fittings 3 to 20 years
The estimated useful lives, residual values, and depreciation methods are reviewed at the end of eachquarter, and changed if necessary.
(10) Impairment of non-financial assets
The Group assesses whether there is any indication of impairment on a quarterly basis for the
carrying amounts of non-financial assets except inventories and deferred tax assets. If any such
indication exists, the recoverable amount of the asset or each cash-generating unit (CGU) to which theasset belongs is estimated.
The recoverable amount is the higher of its fair value less costs to sell and its value in use. When the22

recoverable amount of the asset (or CGU) falls below the carrying amount, the carrying amount of theasset (or CGU) is reduced to the recoverable amount.
Difference between the carrying amount and the recoverable amount is recognized as impairment
losses in profit or loss.
When impairment losses are reversed after recognition, the carrying amount of the asset (or CGU) is
increased to the revised estimated recoverable amount. However, the reversal of the impairment loss
does not exceed the carrying amount that would have been determined had no impairment loss beenrecognized for the asset (or CGU).
The reversal of impairment losses is immediately recognized through profit or loss.
(11) Trade and other payables
Trade and other payables are obligations to pay for goods or services provided to the Group in theordinary course of business and others. Trade and other payables are classified as current liabilities whensuch payables are due within one year or within the normal operating cycle, and otherwise, presented as
non-current liabilities.
Trade and other payables are initially recognized at fair value and subsequently at amortized costcalculated using the effective interest method.
(12) Borrowings
Borrowings consist of borrowings and lease obligations. Borrowings are initially recognized at fairvalue and subsequently recognized at amortized cost. Difference between net proceeds net of transaction
costs and the repayment amount is recognized in profit or loss over the borrowing period using theeffective interest method.
Borrowings are recorded as current liabilities unless the Group has unconditional rights to reschedulethe repayment for at least 12 months after the reporting date.
(13) Provisions
Provisions are recognized when there are present legal or constructive obligations as a result of past
events; it is probable that outflows of economic benefits will be required to settle the obligations; andreliable estimates can be made of the amount of obligations.
(14) Employment benefits
1) Defined benefit pension plans
Liabilities associated with defined benefit pension plans are calculated by discounting theestimated amount of future benefits obtained in return for services that employees rendered in prioryears or the current year to the present value. Unrecognized past service costs are deducted from thiscalculation.
The yield of gilt-edged corporate bonds of which the maturity largely matches that of the Group’s
debts is used as the discount rate.
These liabilities are calculated by actuaries using the projected unit credit method.
When pension plans are revised, increases or decreases in benefits related to past services
rendered by employees are recognized in profit or loss on a straight-line basis over the average
period until the amount of the benefits is determined. For benefits that are immediately determined,
the costs are immediately recognized in profit or loss.
All the actuarial differences arising from defined benefit pension plans are recognized in profit orloss on a straight-line basis in the average remaining service period.
2) Defined-contribution pension plans
Defined-contribution pension plans are post-employment benefit plans in which an employer pays
fixed contributions to a separate entity and will have no obligation to pay further contributions.
Contributions associated with defined-contribution pension plans are recognized in profit or loss inthe period during which employees render services.
3) Short-term employee benefits
Short-term employee benefits are measured on an undiscounted basis and are recognized as profit
or loss when the related service is rendered.
23

Bonus accrual and paid absences are recognized as liabilities, when the Group has present legal orconstructive obligations to pay, and when a reliable estimate of the amount of obligations can be
made.
(15) Revenue
Revenue is recorded at the fair value of the consideration received for the sale of properties andservices or receivables net of discounts, rebates and consumption taxes, etc., less internal sales. Revenue
is recognized as follows:
1) Sale of properties
Revenue from the sale of properties is recognized when the significant risks and rewards
incidental to ownership of the assets for sale have been transferred to the buyer; the Group retains
neither continuing involvement nor effective control over the assets; it is probable that the economic
benefits associated with the transaction will flow to the Group; and the amounts of the cost andrevenue incurred in respect of the transaction can be measured reliably.
2) Operating lease of rental properties
Revenue associated with operating lease is recognized on a straight-line basis over the lease
period.
3) Rendering of services
Revenue from the rendering of services is recognized by reference to the stage of provision ofservices or when provision of services is finished.
4) Interest income
Interest income is recognized using the effective interest method.
5) Dividend income
Dividend income is recognized when the right to receive dividend payment is vested.
(16) Borrowing costs
The Group adds borrowing costs directly attributable to acquisition, construction or production ofassets that require a reasonable period of time before intended use or sale becomes possible, or
qualifying assets, to the cost of these assets until the intended use or sale of the assets effectively
becomes possible.
Borrowing costs other than those described above are recognized in profit or loss in the period during
which these costs are incurred using the effective interest method.
(17) Derivatives and hedges
Derivatives are initially recognized at fair value on the day when the derivative contract is enteredinto, and subsequently re-measured at fair value at each reporting date.
The Group has concluded interest rate swap contracts in order to hedge changes in future cash flows
associated with floating-rate borrowings. At the inception of the hedge, concluded derivatives aredesignated as cash flow hedge and documented.
The Group also assesses whether a derivative used in the hedge transaction is highly effective inoffsetting fair value of the hedged item or changes in cash flows, at the inception of the hedge and on an
ongoing basis.
Changes in fair value of derivative transactions that are designated as cash flow hedge and qualify forcash flow hedge are recognized in equity through other comprehensive income. Of changes in fair valueof derivative transactions, ineffective portion is immediately recognized in profit or loss.
(18) Income tax expense
Income tax expense are comprised of current taxes and deferred taxes and recognized in profit or loss,
except for the taxes which arise from business combinations or are recognized either directly in equity orin other comprehensive income.
Current taxes are computed by adding adjustments of the amount of expected tax payment or
expected refund up to the previous year to the estimated amount of expected tax payment or expected
refund on taxable profits or losses in the current year which are multiplied by tax rates that are enacted or24substantially enacted at the reporting date.
Deferred tax assets and liabilities are recognized for temporary differences between accounting
carrying amounts of assets and liabilities and amounts of them for tax purpose. For differences
associated with initial recognition of assets or liabilities in transactions that have no effect on any profit
and loss for both accounting and tax purposes, except for business combinations, deferred tax assets andliabilities are not recognized. Deferred tax assets and liabilities are measured using the tax rate that is
expected to be applied when the temporary differences will reverse under the law which is in effect or
substantially in effect at the reporting date. Deferred tax assets and liabilities are offset if the Group has alegally enforceable right to offset current tax assets against current tax liabilities, and they are related toincome taxes levied by the same taxation authority on the same taxable entity.
Deferred tax assets are recognized only for the carry-forward of unused tax losses, unused tax credits
and deductible temporary differences, to the extent that it is highly probable that taxable profit will beavailable against which they can be utilized in the future. Deferred tax assets are reviewed at eachreporting date, and reduced by the amount that is highly unlikely to be utilized.
(19) Earnings per share
The Group discloses basic and diluted earnings per share (attributable to owners of the parent) related
to ordinary shares. Basic earnings per share is calculated by dividing profit for the year attributable toowners of the parent, by the weighted average number of ordinary shares issued during the reporting
period that is adjusted by the number of treasury shares.
(20) Segment information
Operating segments are components of the Group that engage in business activities from which theGroup may earn revenues and incur expenses. These are components for which discrete financial
information is available, and whose operating results are regularly reviewed by the Board of Directors of
the Company to make decisions about resources to be allocated to the segments and assess theirperformances.
Reportable segments are determined on the basis of the operating segments.
Segment information includes items that are directly attributable to the segments and items that areallocated to the segments on a reasonable basis.
d. Significant accounting estimates and judgments requiring estimates
The preparation of the consolidated financial statements in compliance with IFRS requires the
management of the Group to make judgments, estimates and assumptions that affect the application of
accounting policies and the amounts of assets, liabilities, income and expenses. However, actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Changes to accounting
estimates are recognized in the period in which the estimates are changed and in future periods in which
the change affects.

25

(Segment information)(1) Summary of reportable segments
The Group’s reportable segments constitute the Company for which separate financial information isavailable. The Board of Directors regularly conducts deliberations to determine the allocation ofmanagement resources and to assess the financial results of each segment. The Group draws up
comprehensive strategies for each of the following business segments and conducts business activities
accordingly; “Revitalization Business”, “Development Business”, “Rental Business”, “Fund andConsulting Business”, “Property Management Business”, and “Alternative Investment Business”. In the
Revitalization Business, the Group acquires the properties whose asset values have declined, renovates,
and resells them. In the Development Business, the Group sells condominium units and detached houses
to individual customers as well as apartments and office buildings to investors. In the Rental Business,
the Group rents office buildings and condominiums. 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. In the Alternative Investment Business,
the Group acquires real estate collateralized loans and sells the properties acquired through collection ofdebt and acceptance of substitute performance.
As from the first quarter of the current fiscal year, the name of “Fund Business” has been changed to
the “Fund and Consulting Business.” This amendment was made only to the name of the businesssegment, and there was no change in the segmentation.
(2) Method for calculating revenue, profit or loss and other items by reportable segment
The methods of accounting applied in the reported operating segments are consistent with theaccounting policies adopted by the Group, provided in “(6) Notes on Consolidated Financial Statements,c. Significant accounting policies”.
The reported segment profit is calculated on an operating profit basis. Intersegment revenue ortransfers are based on actual market prices.

26

The Group’s revenue and profit by reportable segment are as follows:Year ended November 30, 2012
(Dec.1, 2011 – Nov 30, 2012)(¥ thousand)
Revitalization Development
Business
Business

Fund andConsulting
Business

RentalBusiness

Property
Alternative
Management Investment
Business
Business

Adjustment

Total

Revenue
Outside customers

5,980,183

10,985,270

2,455,286

776,723

3,156,589

841,747－

24,195,800－

274,003

55,04423,065

343,859

2,269(698,243)－

5,980,183

11,259,274

2,510,331

799,788

3,500,448

844,017(698,243)

24,195,800

273,405

2,197,549

1,340,024

181,737(11,365)

82,365(1,207,061)

2,856,655

Intersegment revenue
Total
Segment profit/loss
Finance income/costs, net(638,023)

Profit before tax

2,218,631

Year ended November 30, 2013
(Dec.1, 2012 – Nov 30, 2013)(¥ thousand)
Revitalization Development
Business
Business

Fund andConsulting
Business

RentalBusiness

Property
Alternative
Management Investment
Business
Business

Adjustment

Total

Revenue
Outside customers
Intersegment revenue
Total
Segment profit/loss

11,098,020

16,347,700

2,647,153

1,398,239

3,160,312

418,918－

35,070,345－－

56,55921,654

381,595

21,195(481,004)－

11,098,020

16,347,700

2,703,713

1,419,893

3,541,908

440,113(481,004)

35,070,345

1,398,665

1,447,316

1,590,390

669,997

122,257

73,024(1,392,047)

3,909,604

Finance income/costs, net(692,332)

Profit before tax

3,217,272(Profit per Share)
Year ended
November 30, 2012
(Dec. 1, 2011 – Nov. 30, 2012)

Year ended
November 30, 2013
(Dec. 1, 2012 – Nov. 30, 2013)

1,465,284

2,003,480

45,684,000

46,602,904

32.07

42.99

Profit for the year attributable to owners of the parent(¥ thousand)
Weighted average number of common stock outstanding(shares)
Basic earnings per share (¥)

Notes: 1.Basic earnings per share is calculated by dividing profit for the year attributable to owners of the parent, by theweighted average number of common stock outstanding during the reporting year.
2. Information on diluted earnings per share is omitted due to an absence of potential shares.
3. The Company split its shares by 100 for 1, effective July 1, 2013. Therefore, the basic earnings per share were
calculated on the assumption that the stock split was implemented at the beginning of the previous fiscal year ended
November 30, 2013.

(Significant Subsequent Events)
No item to report.
27