This is an English translation of the official announcement in Japanese that was released on January 11, 2017. 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 Fiscal Year Ended November 30, 2016
<IFRS>
January 11, 2017
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: +81-3-3435-2865
Ordinary general shareholders’ meeting: February 24, 2017 (scheduled)
Commencement of dividend payments: February 27, 2017 (scheduled)
Submission of Securities Report (Yuka Shoken Hokokusho): February 27, 2017 (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 Fiscal Year Ended November 30, 2016
(December 1, 2015 – November 30, 2016)(1) Consolidated Operating Results
RevenueYear ended Nov. 30, 2016
Year ended Nov. 30, 2015(¥ million)(%)(¥ million)(%)(¥ million)(%)(¥ million)(%)

49,81843,00615.8(14.0)

9,279
6,891

34.6
23.9

8,450
6,040

39.9
29.5

5,547
4,135

34.1
43.9

Total comprehensive
income for the year

Profit attributable toowners of the parent
Year ended Nov. 30, 2016
Year ended Nov. 30, 2015

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

Operating profit

Basic earnings
per share

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

(%)

(¥)

(¥)

5,547
4,135

34.1
43.9

5,509
4,081

35.0
35.1

114.8985.66－－

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
(%)

(%)

Year ended Nov. 30, 2016
14.4
7.9
Year ended Nov. 30, 2015
12.0
6.9
(Reference) Equity in earnings of affiliates
Year ended Nov. 30, 2016: ¥－million

(%)

18.6
16.0
Year ended Nov.30, 2015: ¥－million(2) Consolidated Financial Position
Total assets

As of Nov. 30, 2016
As of Nov. 30, 2015

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)

(%)

(¥)

121,276
93,19641,01036,22841,01036,22833.8
38.9

849.35750.32

1

(3) Consolidated Cash Flows
Cash flows fromoperating activities
Year ended Nov. 30, 2016
Year ended Nov. 30, 2015

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at end ofyear(¥ million)(¥ million)(¥ million)(¥ million)(7,472)(4,443)(8,193)481

18,522
6,661

21,64018,791

2. Dividends
Annual dividends per share

1Q-endYear ended Nov. 30,
2015Year ended Nov. 30,
2016Year ending Nov. 30,
2017(Forecast)

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

－

16.00

16.00

772

18.7

2.2

－

0.00

－

22.00

22.00

1,062

19.1

2.8

－

0.00

－

25.00

25.00

20.4

3. Consolidated Earnings Forecasts for the Fiscal Year Ending November 30, 2017
(Percentages indicate year-on-year changes.)(December 1, 2016 – November 30, 2017)
Revenue(¥ million)

Year ending Nov.
30, 2017

69,268

Profit attributable
Basic earnings
Operating profit Profit before tax Profit for the year to owners of theper share
parent(%) (¥ million)(%) (¥ million)(%) (¥ million)(%) (¥ million)
(%)
(¥)

39.0

10,008

7.8

9,001

6.5

5,926

6.8

5,926

6.8

122.75* Notes(1) Changes in significant subsidiaries during the year (changes in specified subsidiaries resulting in changes
in the scope of consolidation): No
Newly added: －Excluded: －(2) Changes in accounting policies and changes in accounting estimates(a) Changes in accounting policies required by IFRS:No(b) Changes in accounting policies other than (a) above: No(c) Changes in accounting estimates:No(3) Number of issued shares (ordinary shares)(a) Number of issued shares at the end of the year (including treasury shares)
48,284,000 shares
As of Nov. 30, 2016
48,284,000 shares
As of Nov. 30, 2015(b) Number of treasury shares at the end of the year
As of Nov. 30, 2016–
As of Nov. 30, 2015–(c) Average number of outstanding shares during the year
48,284,000 sharesYear ended Nov. 30, 2016
48,284,000 sharesYear ended Nov. 30, 2015

2

(Reference) Summary of Non-consolidated Results
1. Non-consolidated Financial Results for the Fiscal Year Ended November 30, 2016
(December 1, 2015 – November 30, 2016)(Percentages indicate year-on-year changes.)(1) Non-consolidated Operating Results
Net salesYear ended Nov. 30, 2016
Year ended Nov. 30, 2015

Operating income

Ordinary income(¥ million)(%)(¥ million)(%)(¥ million)(%)(¥ million)(%)

41,96537,242

12.7(17.9)

7,836
5,948

31.7
18.6

7,123
5,553

28.3
34.4

4,734
3,906

21.2
60.2

Net income per share
Year ended Nov. 30, 2016
Year ended Nov. 30, 2015

Net income

Net income per share(diluted)

(¥)

(¥)

98.06
80.91

－
－

(2) Non-consolidated Financial Position
Total assets

Net assets(¥ million)

Equity ratio(¥ million)

As of Nov. 30, 2016
114,085
As of Nov. 30, 2015
88,071(Reference) Equity As of November 30, 2016: ¥38,409 million

Net assets per share
(%)

(¥)

38,45533.7
34,47839.1
As of November 30, 2015: ¥34,477million

795.50714.06

2. Non-consolidated Earnings Forecasts for the Fiscal Year Ending November 30, 2017
(Percentages indicate year-on-year changes.)(December 1, 2016 – November 30, 2017)
Net salesYear ending Nov. 30, 2017

Ordinary income

Net income

Net income per share(¥ million)(%)(¥ million)(%)(¥ million)

(%)

(¥)

56,623

34.9

6,228

(12.5)

4,235(10.6)

87.71* Information on implementation 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 outlook of future performance, contained in these materials are based on
information currently available to the Company and on certain assumptions deemed to be reasonable by theCompany. Actual performance and other results may differ substantially from these statements due to various
factors. For the assumptions on which the earnings forecasts are based and cautions concerning the use thereof,
please refer to “1. Analysis of Business Results and Financial Positions, (1) Analysis of Business Results, 2)
Outlook for the Fiscal Year Ending November 30, 2017” on page 8 of the attached materials.
(2) A financial results meeting will be held on January 11, 2017 for institutional investors and analysts. The presentationmaterials distributed at the meeting will be available on our website immediately after the disclosure of accountsettlement.

3

Contents of Attached Materials
1. Analysis of Business Results and Financial Positions …………………………………………. 5(1) Analysis of Business Results ……………………………………..……………………………. 5(2) Analysis of Financial Position …..…………………………………………………………..…. 7(3) Fundamental Earnings Distribution Policy and Dividends for Fiscal 2016 and Fiscal 2017 ……. 8
2. Conditions of Corporate Group ………………………………………………………….………. 9
3. Management Policies ………………………………………………………….……………………. 12(1) Fundamental Management Policy ……………………………………………………………… 12(2) Performance Targets and Medium-to-Long-term Management Strategies ………………….. 12(3) Issues to Be Addressed ………………………………………………………………………… 12
4. Basic Concept Regarding Selection of Accounting Standards ………………………….……. 12
5. Consolidated Financial Statements ………………………………………………………….……. 13(1) Consolidated Statement of Financial Position ………………………………………………... 13(2) Consolidated Statement of Comprehensive Income ………………………………………….. 14(3) Consolidated Statement of Changes in Equity ………………………………………………. 15(4) Consolidated Statement of Cash Flows …………………………………………………….… 16(5) Notes on Going Concern Assumption ………………………………………………………... 17(6) Notes on Consolidated Financial Statements ……………………………………………….… 17(Segment information) …………………………………………………………………………. 18(Earnings per share) …………………………………………………………………………… 19(Significant subsequent events) ………………………………………………………..……… 19

4

1. Analysis of Business Results and Financial Positions(1) Analysis of Business Results
1) Consolidated Results for the Fiscal Year Ended November 30, 2016
During the fiscal year ended November 30, 2016, the Japanese economy remained on a moderate recovery track
despite apparent weaknesses in exports and production. There is increasing uncertainty about the future of the global
economy due primarily to the impact from concern of slowdown in emerging-market economies, the issue ofBritain’s withdrawal from the EU, and the direction that economic measures will take in the U.S., which will soon
inaugurate a new president. However, a moderate recovery is expected backed by robust personal consumption amid
steady improvement of the employment and income environment going forward.
In the real estate industry where Tosei Group operates, domestic real estate transactions by listed companies andother such entities from January 2016 to August 2016 decreased 20% year on year to ¥2.6665 trillion. Transactions
decreased due to a fall in property supply available to the market in addition to investors, particularly overseas
investors, refraining from making real estate transactions involving relatively expensive properties despite very highinvestment motivation for investors, both in Japan and overseas, against a backdrop of a favorable financing
environment (according to a survey by a private research institution).
In the Tokyo metropolitan area condominium market, consumer buying motivation did not increase amid a surge
in condominium prices and another postponement of the consumption tax hike, and sales companies have been
reducing property supply. The number of newly-built condominium units sold from January 2016 to October 2016
decreased 15.3% year on year, and contract rates for each month were, in general, at levels below the 70% thresholdfrom which market conditions are viewed as favorable. In projections by a private research institution, the numberof units sold in 2016 is forecast to be around 37,000, marking the first time in seven years that the number of units
sold has fallen below 40,000 since 2009, when supply fell after the Lehman Crisis.
In the Tokyo Metropolitan area build-for-sale detached house market, housing starts from January 2016 to
October 2016 rose 8.7% year on year. There continues to be strong demand for detached housing, which is relatively
inexpensive compared to new condominiums, and robust demand is expected to continue going forward (according
to the Ministry of Land, Infrastructure, Transport and Tourism data).
In the office leasing market of Tokyo’s five business wards, demand from corporate businesses for relocation andexpansion continued to be strong and the vacancy rate was low in the mid-3% range. The average asking rent
continued to increase gradually and the price per tsubo (1 tsubo = 3.3m2) as of October 2016 was in the ¥18,400
range, rising 4.7% year on year (according to a survey by a private research institution).
In the real estate securitization market, expansion of the market is continuing against a backdrop of a favorable
financing environment. The total value of assets under management in the J-REIT market as of October 31, 2016,(acquisition cost base) increased around ¥1.4 trillion year on year to around ¥15.2 trillion. As of June 30, 2016, thetotal value of assets under management in the J-REIT market amounted to approx. ¥14.8 trillion and private
placement funds amounted to approx. ¥13.9 trillion for a total market size of approx. ¥28.7 trillion (according to asurvey by a private research institution).
Amid this operating environment, in the Revitalization Business, the Tosei Group made steady progress in selling
assets such as income-generating office buildings and apartments, while in the Development Business, the Grouppushed ahead with sales and development of commercial facilities and detached houses. In addition, we proactively
acquired income-generating properties and land for development as future sources of income.
As a result, consolidated revenue for the fiscal year under review, totaled ¥49,818 million (up 15.8% year on year),
operating profit was ¥9,279 million (up 34.6%), profit before tax was ¥8,450 million (up 39.9%), and profit for theyear was ¥5,547 million (up 34.1%).

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, 2016, and in the following yearly comparisons figures for the previous fiscal year havebeen recalculated according to the segment after such change.
Revitalization Business
During the fiscal year under review, the segment sold 32 properties it had renovated, including
Kinshicho Tosei Building (Sumida-ku, Tokyo), STABLE NAKANO (Nakano-ku, Tokyo), City Forum
Kamihongo (Matudo-shi, Chiba), Château Espoir Kokubunji (Kokubunji-shi, Tokyo), JPT Motomachi
Building (Yokohama-shi, Kanagawa) and Hakusan Asanomi Building (Bunkyo-ku, Tokyo). In addition,
the segment sold 57 units in the Restyling Business, including Hilltop Yokohama Negishi (Yokohama-shi,
Kanagawa), Hilltop Yokohama Higashi Terao (Yokohama-shi,Kanagawa) and Renai Kamakura Ueki
(Kamakura-shi, Kanagawa). During the fiscal year under review, it also acquired a total of 54 income-5generating office buildings and apartments and eight land lots for renovation and sales purposes.
As part of the acquisition, our company acquired Kishino Coporation and Kishino Real Estate
Corporation, companies hold income properties mainly in Toshima-ku, Tokyo, in the second quarter andacquired Four Big Corporation, company hold income properties mainly in Nakano-ku, Tokyo, in third
quarter, through M&A transaction and converted it into consolidated subsidiaries.
As a result, revenue in this segment was ¥25,809 million (down 0.7% year on year) and the segment
profit was ¥4,001 million (down 4.1%).
Development Business
During the fiscal year under review, the segment sold new commercial facilities T’s BRIGHTIA
Minami Aoyama (Minato-ku, Tokyo) and T’s BRIGHTIA Tsunashima (Yokohama-shi, Kanagawa).In
addition, the segment focused on the sale of detached houses, for which there was firm demand. The
segment sold 119 detached houses at such properties as THE Palms Court Kashiwa Hatsuishi (Kashiwashi, Chiba), THE Palms Court Koshigaya Lake Town (Koshigaya-shi, Saitama), THE Palms Court Mitaka
Osawa (Mitaka-shi, Tokyo), THE Palms Court Hashimoto (Sagamihara-shi, Kanagawa) and THE Palms
Court Kitakoiwa (Edogawa-ku, Tokyo). During the fiscal year under review, it also acquired five land lots
for detached housing projects, one land lot for condominium and three land lots for commercial facility
projects.
From the three months ended February 29, 2016, the segment embarked on efforts to enhanceacquisition and sales networks in the outskirts of Tokyo and the Kanagawa area, facilitated by theCompany making Urban Home Corporation, detached house sales and custom home construction company
based in Machida-shi, Tokyo a consolidated subsidiary.
As a result, revenue in this segment was ¥13,138 million (up 98.9% year on year) and the segment
profit was ¥3,674 million (up 586.8%).
Rental Business
During the fiscal year under review, while the segment sold 21 buildings of its inventory assets held forleasing purposes, it newly acquired 51 properties including income-generating office buildings andapartments. 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 ¥5,282 million (up 25.4% year on year) and the segment profit
was ¥2,389 million (up 33.0%).
Fund and Consulting Business
During the fiscal year under review, while ¥74,462 million was subtracted from the balance of assets
under management (Note), due mainly to property dispositions by funds, ¥100,856 million was added tothe balance of Assets under management ¥421,792 for the end of the previous fiscal year, due mainly to
new asset management contracts of large projects the segment obtained. The balance of assets undermanagement as of November 30, 2016, was ¥448,186 million. The acquisition of such large projectcontracts increased asset management fees and contributed to revenue.
As a result, revenue in this segment was ¥2,302 million (down 5.6% year on year) and the segment
profit was ¥951 million (down 35.0%).
Note: The balance of assets under management includes the balance of assets that were subject toconsulting contracts, etc.
Property Management Business
During the fiscal year under review, the segment worked to win new contracts and maintain existing
contracts. Consequently, the total number of properties under management was 594 as of November 30,
2016, an increase of 47 properties from November 30, 2015, with that total comprising 375 officebuildings, hotel, schools and other such properties, and 219 condominiums and apartments.
As a result, revenue in this segment was ¥2,944 million (down 4.1% year on year) and segment profit
was ¥141 million (down 3.8%).
OthersDuring the fiscal year under review, revenue in this segment was ¥340 million (down 51.0% year on
6

year) and the segment loss was ¥17 million (in comparison with segment profit of ¥178 million in theprevious fiscal year).
2) Outlook for the Fiscal Year Ending November 30, 2017
In the real estate investment market, which is the Company’s primary target market, the financing environment isfavorable after financing for real estate investment expanded due to the low interest rate environment backed bylarge-scale monetary easing by the Bank of Japan such as the introduction of a negative interest rates policy. There
are signs of some investors, particularly foreign investors, taking a cautious stance toward property acquisition
following a lack in supply of large properties in addition to an increase in low-yield properties due to a rise in realestate prices. Despite this, the Tosei Group deems that the operating environment will continue to be stable, giventhat the demand for real estate investment is likely to continue against a backdrop of continued monetary easing
under “Abenomics” (the economic policies taken by Prime Minister Shinzo Abe).
In the Revitalization Business, we intend to focus on renovating and selling income-generating properties geared
toward investors ranging from private investors to general business entities, REITs and private placement funds,
leveraging our strengths with respect to wide-ranging exit strategies. Also, in regard to acquisition that will become
future sources of income, we will work to acquire superior real estate with high recovery potential while carefully
monitoring market trends. Specifically, while keeping our portfolio in mind, we are aiming to increase our handlingof small- and medium-scale properties that cost less than ¥1.0 billion and for which high liquidity and stable demandcan be expected, and we are aiming to acquire highly profitable large-scale properties that cost ¥2.0 billion or more.
In the Development Business, we will expand the supply of detached houses, for which there is robust demand,and develop condominiums for families in hand-picked areas. Also, we are proactively developing commercial
facilities, office buildings, hotels and other such properties.
Moreover, in our stock and fee businesses that we position as sources of consistent revenues, we will work toincrease revenues in each of the respective segments. To that end, we will pursue the aims of increasing the numberof properties we hold for leasing purposes and improving occupancy rates in the Rental Business, amassing more
assets under management in the Fund and Consulting Business, and further increasing the number of properties that
we manage in the Property Management Business.
As a result of the aforementioned measures, in the fiscal year ending November 30, 2017, we forecast that
consolidated revenue will be ¥69,268 million (up 39.0% year on year), operating profit will be ¥10,008 million (up7.8%), profit before tax will be ¥9,001 million (up 6.5%), and profit for the year will be ¥5,926 million (up 6.8%).

(2) Analysis of Financial Position
1) Assets, Liabilities and Equity
As of November 30, 2016, total assets were ¥121,276 million, an increase of ¥28,080 million comparedwith November 30, 2015. This was primarily due to an increase in inventories resulting from purchase ofproperties exceeding sales of properties in the Revitalization Business and Development Business.
Total liabilities increased by ¥23,298 million to ¥80,266 million compared with November 30,
2015.This mainly reflected an increase in borrowings, whereby loan proceeds associated with property
acquisitions exceeded loan repayments associated with property sales.
Total equity increased by ¥4,781 million to ¥41,010 million compared with November 30, 2015, mainly
due to an increase in retained earnings.
2) Cash Flows
Cash and cash equivalents (hereinafter “cash”) as of November 30, 2016 totaled ¥21,640 million, an
increase of ¥2,849 million compared with November 30, 2015.
The cash flows for the fiscal year under review and factors contributing to those amounts are as
follows:
Cash Flows from Operating Activities
Net cash used in operating activities totaled ¥7,472 million (up 68.2% year on year). This is mainly due
to profit before tax of ¥8,450 million, as well as an increase in inventories of ¥15,971 million, which was a
result of property acquisitions in the Revitalization Business and Development Business, and income taxes
paid of ¥2,297 million.
Cash Flows from Investing Activities
Net cash used in investing activities totaled ¥8,193 million (net cash provided by investing activities
totaled ¥481 million in the previous fiscal year). This is primarily due to purchases of investment
7

properties ¥1,743 million, payments of loans receivable ¥2,935 million and purchase of investments in
subsidiaries resulting in change in scope of consolidation totaling ¥3,297 million.
Cash Flows from Financing Activities
Net cash provided by financing activities totaled ¥18,522 million (up 178.1% year on year).
This mainly reflects ¥23,866 million in the repayments of non-current borrowings, ¥ 926 million ininterest expenses paid and ¥771 million in cash dividends paid, despite ¥42,442 million in proceeds from
non-current borrowings.
(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 (%)
Interest-bearing debt to cash flows ratio (years)

Year ended
Nov. 30, 2014

Year ended
Nov. 30, 2015

Year ended
Nov. 30, 2016

40.5

38.9

33.8

43.0

39.2

33.1

117.3

－

－

0.3
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:－－
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 shares.
(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, 2015
and the consolidated fiscal year ended November 30, 2016 because cash flows from operating activities on the consolidated
statements of cash flows were negative.

(3) Fundamental Earnings Distribution Policy and Dividends for Fiscal 2016 and Fiscal 2017
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 fiscal year ended November 30, 2016 and the fiscal year ending November 30, 2017, Tosei plans to
pay cash dividends per share of ¥22 and ¥25 respectively.

82. Conditions of Corporate GroupThe Tosei Group is composed of Tosei Corporation (“Tosei” or the “Company”) and 12 subsidiaries(including 11 consolidated subsidiaries). Its main businesses are the Revitalization Business, the Development
Business, the Rental Business, the Fund and Consulting Business, and the Property Management Business. The
operations of each business segment and the main subsidiaries and/or affiliates conducting those operations are
as follows.
Segment

Operations

Revitalization
Business

The Tosei Group acquires, through diverse means (*1), office buildings, commercial
facilities, apartments and other properties whose asset value has declined, boosts theirvalue though “value-up plans” (*2) judged to best match the characteristics of theproperties’ areas and tenant requirements, and sells them as revitalized real estate tobuyers including investors, real estate funds and individual business entities that acquire
real estate for private use. In the “Restyling Business,” the Group acquires incomegenerating condominiums and sells their units to end-users after boosting the value ofcommon and private areas by renovation.
The Tosei Group’s “value-up” activities go beyond just renewing properties andinvolve realizing comprehensive regenerations of their values. This put a focus on not
only improving the convenience and functionality of properties but also providing
satisfaction to owners and giving end users a sense of pride.
(*1) The Company carries out the acquisition of superior real estate through a broad
range of means that include not only buying and selling actual real estate, butalso acquisitions through the means of “real estate M&A” where real estate heldby companies with real estate holdings and by real estate business operators is
acquired through M&A, and through real estate collateralized loans and rights
adjustment for substitute performance real estate.
(*2) The Company’s “value-up plans” consist of the three primary components ofimproved designs to refurbish/renovate internal and external elements that havedeteriorated or become obsolete, enhanced security functions, etc., to increase
the security and functionality of facilities, and incorporating eco-friendly designs
and equipment that take the environment into consideration, in addition to
improved profitability through conversion projects, vacancy countermeasures,
rent increases, etc.
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,
and these different uses create significant differences between land values. Tosei
verifies the characteristics of land it acquires including area, shape, intended purpose,
relevant needs, rent, and selling price. Based on this, Tosei carries out development andnew 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, hotels,
condominiums (the Palms series), as well as detached houses (Palms Court series andComodo Casa series). Once development is complete or tenants have been found, theproperties are sold to buyers including investors, real estate funds, and end-users.
The Tosei Group has expanded the scope of its business primarily in the main
districts of Tokyo by acquiring office buildings, condominiums, stores and parking lots,
and renting them out to end-users and others.
As a landlord, the Tosei Group is capable of swiftly gathering accurate informationon tenant needs to further enhance “value-up plans” by reflecting these needs.

Development
Business

RentalBusiness

9

Main
Companies
Tosei
Corporation
Tosei
RevivalInvestment
Co., Ltd.

Tosei
Corporation
Urban Home
Corporation

Tosei
Corporation

Fund andConsulting
Business

Property
Management
Business

The Tosei Group conducts business as a type II financial instruments business as wellas an investment advisory and agency business and an investment management businessas provided for in the Financial Instruments and Exchange Act.
Specifically, in addition to providing Tosei Reit Investment Corporation’s asset
management services, the Tosei Group also provides services such as selling andbrokering trust beneficiary rights, and management of income-generating properties asasset management services for real estate funds. Also, the Tosei Group provides
consulting services and real estate brokerage related to corporate real estate held bybusiness entities.
This business carries out building and equipment management, and security (building
maintenance) for office buildings, apartments, hotels, commercial facilities, andeducational facilities; owner proxy services, tenant management, tenant solicitation, andbuilding management (property management); and management services forcondominiums.
With respect to building maintenance, in order to streamline building owners’
operations through building maintenance, the management of equipment, etc., thebusiness maintains the asset values of buildings by implementing precise maintenanceplans regarding the age-related deterioration of buildings.
With respect to property management, the business provides comprehensive property
management such as finding the most suitable tenants and proposing medium- to longterm property renewals, with the aim of realizing maximized owner profit.
In the management of condominium, this business makes full use of the knowhow it
has accumulated over a number of years to provide total support to management
associations from their launch to helping them operate smoothly once they are started
up.

10

Tosei
Corporation
Tosei Asset
Advisors, Inc

Tosei
CommunityCo., Ltd.

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

11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 five business segments: Revitalization,
Development, Rental, Fund and Consulting and Property Management. The Group is also aiming to contributeto society and increase its corporate value through these five businesses.
(2) Performance Targets and Medium- to Long-term Management Strategies
Under the aforementioned corporate philosophy, the Tosei Group established its current three-year mediumterm management plan, whose first year is the fiscal year ending November 30, 2015.
Under this management plan named “Advancing Together 2017”, the Group aims to become a group of realestate businesses with a sustainable competitive advantage and high quality manegement by setting four key
policies: (1)further expand the existing business segments/consider and advance into peripheral businesses,(2)establish optimal governance and an efficient operating structure, (3)develop human resources while
increasing Group employee satisfaction, and (4)enhance customer satisfaction while building Tosei’s brandrecognition.
(3) Issues to Be Addressed
The Group is aiming to establish a firm management structure that is able to withstand any changes in themarket environment, and set the “vision of revenue ¥100 billion” as its six year medium- to long-term vision
for the 2020 fiscal year. The fiscal year ending November 30, 2017, is the final year of the current mediumterm management plan and we are working toward realizing the 2020 concept that is the Company’s aim.
Based on future forecasts for the real estate investment market going forward and the housing market targetingend users, we recognize that formulating a more practical new medium-term management plan is an issue to beaddressed.

4. Basic Concept Regarding Selection of Accounting Standards
Tosei Group has adopted IFRS.
The Group expects that adoption of IFRS will bring numerous benefits in facilitating its overseas expansion
going forward, such that include improving its creditworthiness abroad enhancing flexibility in fund raising by
global offering, etc., and improved convenience of financial information for overseas investors and others.
Meanwhile, another benefit is that the adoption of IFRS enables Tosei Corporation to submit IFRS-based
financial statements, as is, for matters involving both the Tokyo Stock Exchange and the Singapore Exchange
where the Company maintains multiple listings.

12

5. Consolidated Financial Statements(1) Consolidated Statement of Financial Position(¥ thousand)As of Nov. 30, 2015
AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current 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 non-current assets
Total non-current assets

As of Nov. 30, 2016

18,791,081
2,914,639
46,156,041
27,01021,640,866
3,531,880
67,298,309
121,444

67,888,773

92,592,501

3,315,747
18,785,986
96,6481,225,047
1,098,687
781,146
4,014

3,595,898
21,728,740
96,612
1,441,167
1,235,065
557,392
28,91425,307,278

28,683,790

93,196,052

121,276,292

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

2,734,006
9,492,795
1,150,089
442,3032,955,289
9,387,249
1,859,183
450,030

Total current liabilities

Total assets

13,819,195

14,651,752

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

3,510,413
39,175,846
383,31278,905

4,349,965
60,772,064
413,376
79,049Total non-current liabilities

43,148,478

65,614,455

56,967,673

80,266,208

6,421,392
6,373,881
23,327,875
105,228

6,421,392
6,418,823
28,120,304
49,562

Total Liabilities
EquityShare capital
Capital reserves
Retained earnings
Other components of equity
Total equity
Total liabilities and equity

13

36,228,378

41,010,083

93,196,052

121,276,292

(2) Consolidated Statement of Comprehensive Income(¥ thousand)Year ended Nov. 30, 2015
Year ended Nov. 30, 2016
(Dec. 1, 2014 – Nov. 30, 2015) (Dec. 1, 2015 – Nov. 30, 2016)
Revenue
Cost of revenue

43,006,964
31,091,794

49,818,113
33,468,138

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

11,915,169
5,099,064
126,357
50,49916,349,974
7,021,724
222,197
270,540

Operating profit
Finance income
Finance costs

6,891,963
22,840874,4939,279,906
63,062892,920

Profit before tax
Income tax expense

6,040,311
1,904,494

8,450,048
2,902,579

Profit for the year
Other comprehensive income
Items that will not be reclassified to net profit or loss
Remeasurements of defined benefit pension plans
Total items that will not be reclassified to net profit orloss
Items that may be reclassified to net 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 items that may be reclassified to net profit orloss
Other comprehensive income for the year, net of tax

4,135,816

5,547,469(5,006)

17,503(5,006)

17,503(14,420)(24,512)(28,020)(31,465)(6,982)

312(49,423)(55,665)(54,430)(38,162)

Total comprehensive income for the year

4,081,386

5,509,307

Profit attributable to:
Owners of the parent

4,135,816

5,547,469

Total comprehensive income attributable to:
Owners of the parent

4,081,386

5,509,30785.66

114.89－－Earnings per share attributable to owners of the parent
Basic earnings per share (yen)Diluted earnings per share (yen)14(3) Consolidated Statement of Changes in Equity
Year ended November 30, 2015 (Dec. 1, 2014 – Nov. 30, 2015)(¥ thousand)Other
components ofequityTotal equity

19,776,474

154,652

32,727,836－

4,135,816－

4,135,816－－－(54,430)(54,430)

Total comprehensive income
for the year－－

4,135,816(54,430)

4,081,386

Dividends from surplus－－(579,408)－(579,408)

Share-based payment－(1,435)－－(1,435)

Transfer from othercomponents of equity toretained earnings－－(5,006)

5,006－

Balance at Nov. 30, 2015

6,421,392

6,373,881

23,327,875

105,228

36,228,378

Share capital

Capital reserves

6,421,392

6,375,317

Profit for the year－

Other comprehensive income

Balance at Dec. 1, 2014

Retainedearnings

Year ended November 30, 2016 (Dec. 1, 2015 – Nov. 30, 2016)(¥ thousand)Other
components ofequityTotal equity

23,327,875

105,228

36,228,378－

5,547,469－

5,547,469－－－(38,162)(38,162)－－5,547,469(38,162)5,509,307

Dividends from surplus－－(772,544)－(772,544)

Share-based payment－

44,941－－

44,941

Transfer from othercomponents of equity toretained earnings－－

17,503(17,503)－

Balance at Nov. 30, 2016

6,421,392

6,418,823

28,120,304

49,56241,010,083

Share capital

Capital reserves

6,421,392

6,373,881

Profit for the year－

Other comprehensive income
Total comprehensive income
for the year

Balance at Dec. 1, 201515

Retainedearnings

(4) Consolidated Statement of Cash Flows(¥ thousand)Year ended Nov. 30, 2015
Year ended Nov. 30, 2016
(Dec. 1, 2014 – Nov. 30, 2015) (Dec. 1, 2015 – Nov. 30, 2016)
Cash flows from operating activities
Profit before tax
Depreciation expense
Increase (decrease) in provisions and retirement
benefits obligations
Interest and dividends 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

6,040,311
222,440

8,450,048
333,415(164,709)

43,168(22,840)
874,493
2,372(1,097,514)(8,845,226)
930,567(28,424)(63,062)
892,920
7,711
944,245(15,971,161)
235,008(110,587)

SubtotalInterest and dividends income received
Income taxes paid

(2,088,530)
22,832(2,377,395)(5,238,293)
63,063(2,297,257)

Net cash from (used in) operating activities(4,443,093)(7,472,487)(100,000)
240,000(71,303)(750,033)(37,610)(5,020)757,951(45,000)
30,000(54,277)(1,743,387)(27,711)(321,636)
124,918444,960

34,680－64(2,935,000)
72－(3,297,173)－

40,563

2,596

132

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of investment properties
Purchase of intangible assets
Purchase of available-for-sale financial assets
Collection of available-for-sale financial assets
Proceeds from sales of available-for-sale financial
assetsPayments of loans receivableCollection of loans receivable
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Proceeds from purchase of investments in
subsidiaries resulting in change in scope of
consolidation
Other, net

481,605(8,193,818)

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

Net cash from (used in) investing activities(95,000)
31,627,000(23,273,064)(578,436)(1,015,655)(3,745)

1,652,800
42,442,800(23,866,891)(771,761)(926,467)(7,983)

Net cash from (used in) financing activities

6,661,097

18,522,496

2,699,610
16,100,795

2,856,190
18,791,081(9,323)(6,404)

18,791,081

21,640,866

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate change on cash and cash
equivalents
Cash and cash equivalents at end of year16

(5) Notes on Going Concern Assumption
No item to report.
(6) Notes on Consolidated Financial Statements
No item to report.

17

(Segment information)(1) Summary of reportable segments
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 five business segments and conducts business activities accordingly;“Revitalization Business”, “Development Business”, “Rental Business”, “Fund and Consulting
Business”, and “Property Management Business”. In the Revitalization Business, the Group acquires theproperties 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 apartment
and office buildings to investors. In the Rental Business, the Group rents office buildings 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 Tosei Group has made changes to its reportable segments, reducing the number of such segmentsfrom six up through the end of the previous fiscal year to five as of the first quarter of the fiscal year
ending November 30, 2016. Accordingly, the reportable segments are now: the Revitalization Business,
Development Business, Rental Business, Fund and Consulting Business, and Property Management
Business segments.
With this change, transactions formerly classified as being associated with the Alternative Investment
Business segment, based on the point of view that they involved acquisition of real estate arising frompurchases of real estate collateralized loans, M&As of real estate-owning companies and otheralternative means of investment, are now classified as being associated with either the Revitalization
Business, Rental Business, Fund and Consulting Business, or Other, depending on the nature of therevenue derived from the respective transaction. The “Other” category includes business involving
sports club facilities.
(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.
The reported segment profit is calculated on an operating profit basis. Intersegment revenue ortransfers are based on actual market prices.
The Group’s revenue and profit by reportable segment are as follows:
Segment information for the fiscal year ended November 30, 2015 has been prepared in accordancewith the new reportable segment classifications.
Year ended November 30, 2015
(Dec.1, 2014 – Nov 30, 2015)(¥ thousand)Reportable Segments
Revitalization Development
Business
Business

RentalBusiness

Fund andConsulting
Business

Property
Management
Business

Other

Revenue from externalcustomers

25,986,125

6,605,956

4,211,591

2,439,354

3,069,740

694,195－

43,006,964

Intersegment revenue－－

50,5084,726

504,491－(559,726)－

25,986,125

6,605,956

4,262,100

2,444,081

3,574,232

694,195(559,726)

43,006,964

4,174,428

534,965

1,797,180

1,464,587

146,925

178,153(1,404,277)

6,891,963

Adjustment

Total

Revenue

Total
Segment profit
Finance income/costs, net(851,652)

Profit before tax

6,040,311

18

Year ended November 30, 2016
(Dec.1, 2015 – Nov 30, 2016)(¥ thousand)Reportable Segments
Revitalization Development
Business
Business

RentalBusiness

Fund andConsulting
Business

Property
Management
Business

Other

Revenue from externalcustomers

25,809,872

13,138,715

5,282,131

2,302,732

2,944,458

340,203－49,818,113

Intersegment revenue－－

42,057

27,242

1,061,175

1,376(1,131,851)－

25,809,872

13,138,715

5,324,188

2,329,975

4,005,633

341,579(1,131,851)

49,818,113

4,001,446

3,674,377

2,389,804

951,468

141,274(17,904)(1,860,559)

9,279,906

Adjustment

Total

Revenue

Total
Segment profit or loss
Finance income/costs, net(829,858)

Profit before tax

8,450,048(Earnings per share)
Year ended
November 30, 2015
(Dec. 1, 2014 – Nov. 30, 2015)

Year ended
November 30, 2016
(Dec. 1, 2015 – Nov. 30, 2016)

Profit attributable to owners of the parent (¥ thousand)

4,135,816

5,547,469

Weighted average number of outstanding ordinary shares(shares)

48,284,000

48,284,000

85.66

114.89Basic earnings per share (¥)

Notes: 1. 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.
2. Diluted earnings per share is not presented because there were no potential shares that have dilutive effects.

(Significant subsequent events)
No item to report.

19