Consolidated Financial Results
For the Fiscal Year Ended March 31, 2016
(Based on Japanese GAAP)(Translation of Japanese Financial Flash Report, Released on May 10, 2016)
Company name: Sun Frontier Fudousan Co., Ltd.
Stock listing: Tokyo Stock Exchange 1st Section
Code number: 8934
URL: http://www.sunfrt.co.jp
Address: 14F, Toho Hibiya Building, 2-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006
Representative: Tomoaki Horiguchi, President, Representative Director
Inquiry: Yasushi Yamada, Executive Officer and Managing Director(Phone: +81-3-5521-1301)*Amounts under one million yen have been rounded down.

1. Consolidated Performance in the Fiscal Year Ended March 31, 2016
(1) Operating results*Percentage figures shown under net sales, operating income, ordinary income, and net income columns indicate year-on-year changes for
those items.
(Millions of yen, except for per share figures)

Net Sales

Operating Income

Ordinary Income

FY ended March 31, 2016

¥30,625 (10.4%)¥7,387 (26.3%)¥7,024 (25.6%)

FY ended March 31, 2015

¥27,741 (56.1%)¥5,850 (29.1%)¥5,593 (28.8%)Note) Comprehensive Income: FY Ended March, 2016: ¥8,140 million (58.2%) FY Ended March, 2015: ¥5,147 million (28.0%)

Net Income

Net Income per Share(Yen)

Fully Diluted
Net Income per Share(Yen)

FY ended March 31, 2016

¥8,157 (61.4%)¥190.78¥ －FY ended March 31, 2015

¥5,053 (25.7%)¥118.18¥ －Reference) Income on investments based on equity method: FY Ended March, 2016: ¥8 million
FY Ended March, 2015: ¥- million(2) Financial Position (at end of the term)(Millions of yen, except for per share figures)

Total Assets

Net Assets

Equity Ratio(%)

Net Assets per Share(Yen)

FY ended March 31, 2016

¥54,084¥30,14455.7%¥704.92

FY ended March 31, 2015

¥40,424¥22,701

56.2%¥530.95

Reference) Equity at term-end: FY ended March 31, 2016: ¥30,139 million

FY ended March 31, 2015: ¥22,701 million(3) Cash Flows(Millions of yen)

Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

FY ended March 31, 2016¥(1,580)¥123¥3,633

Cash and Cash
Equivalents at
Year-End¥13,375

FY ended March 31, 2015

¥1,382¥(276)¥701¥11,2121

Cash Flows from
Financing Activities

2. Cash Dividends
Cash Dividends per Share

(Yen)

Total
Dividends

Net asset
Payout ratio
dividend rate
(Consolidated)(Consolidated)

1st quarter
period2nd quarter
period3rd quarter
periodYear end

Annualtotal

FY Ended March 31, 2015

-

¥0.00

-

16.50

16.50

705

14.0

3.4

FY Ended March 31, 2016

-

¥0.00

-

25.00

25.00

1,068

13.1

4.0

FY Ended March 31, 2017
(Projections)

-

¥0.00

-

28.00

28.00

(Millions of yen)

21.4

3. Projections for Consolidated Performance in the Fiscal Year Ending March 31, 2017
(From April 1, 2016 to March 31, 2017) *Percentage figures are indicated year-on year changes for those items.

FY Ending March 31, 2017

Net Sales

Operating Income(Millions of yen, except for per share figures)
Net Income per
Ordinary Income
Net Income
Share¥41,000 (+33.9%)¥8,500 (+15.1%)¥8,200(+16.7%)¥5,600 (-31.3%)¥130.97

Note) The main reason for the decrease in net income is that the next FY (ended March 31, 2017) income before tax adjustments is expected to
put a complete end to tax loss carryforward from previous terms. As a result, a ¥1,325 million reversal of loss included in the deferred tax asset
calculated at the end of FY ended March 31, 2016 would be added up to the corporate tax adjustment amount, which leads to a heavier tax
burden than the previous term.

4. Others(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of
consolidation): None
Newly companies: —Excluded companies: —(2) Changes in accounting principles, procedures and presentation methods
1) Changes caused by revision of accounting standards: Yes
2) Changes other than those included in 1): None
3) Changes in accounting estimates: None
4) Restatement of corrections: None
(3) Number of shares issued and outstanding (common shares)
1) Number of shares issued and outstanding at the end of the period (including treasury stock):
FY ended March 31, 2016: 42,755,500 shares
FY ended March 31, 2015: 42,755,500 shares
2) Number of treasury stock at the end of period:
FY ended March 31, 2016: 143 shares
FY ended March 31, 2015: 143 shares3) Weighted average number of shares for the period:
FY ended March 31, 2016: 42,755,357 shares
FY ended March 31, 2015: 42,755,368 shares

2Reference: Overview of Non-consolidated Performance
1. Non-consolidated Performance in FY ended March 31, 2016 (from April 1, 2015 to March 31, 2016)(1) Operating Results*Percentage figures shown in the net sales, operating income, ordinary income, and net income columns indicate year-on year changes for
those items.
(Millions of yen, except for per share figures)

Net Sales

Operating Income

Ordinary Income

Net Income

FY Ended March, 2016

¥29,631 (18.5%)¥7,334 (31.1%)¥6,965 (30.0%)¥8,131 (64.6%)

FY Ended March, 2015

¥25,012 (45.8%)¥5,594 (19.8%)¥5,359 (19.1%)¥4,940 (21.6%)

Net Income per Share (Yen)

Fully Diluted Net Income per Share (Yen)FY Ended March, 2016¥190.19-

FY Ended March, 2015

¥115.56-(2) Financial Position

FY Ended March, 2016

Total Assets

Net Assets¥53,300¥29,955(Millions of yen, except for per share figures)
Equity Ratio (%) Net Assets per Share (Yen)FY Ended March, 2015
¥39,801¥22,528
Reference: Equity at term-end: FY Ended March, 2016: ¥29,955 million
FY Ended March, 2015: ¥22,528 million

56.2%¥700.6356.6%¥526.91※Indication of audit procedure implementation status
This financial results report is exempt from audit procedure based upon the Financial Instruments and Exchange Act. It is under
the audit procedure process at the time of disclosure of this report.
※Appropriate use of projections for performance, other notes
The projections for performance in this report contain forward-looking statements based on information available to theCompany at the date of publication, and on certain set assumptions that have been deemed reasonable. Actual earnings mayvary greatly in accordance with a wide range of factors. Please refer to section 1. Analysis of Operation Results and Financial
Position (1) Analysis of Operation Results on page 7 for assumptions used for projections and the notes on the use of the
projections.

3

○Table of Contents of Appendix
1. Analysis of Operation Results and Financial Position......................................................................................................... 5(1) Analysis of Operation Results........................................................................................................................................ 5(2) Analysis of Financial Position ....................................................................................................................................... 7(3) Basic Policy for Profit Allocation and Dividends for Current and Next Terms ............................................................ 8
2. Management Policy ............................................................................................................................................................. 8(1) The Company’s Fundamental Management Policy ....................................................................................................... 8(2) Target Managerial Indexes ............................................................................................................................................. 8(3) Corporate Management Strategy in the Mid to Long Terms ......................................................................................... 8(4) Challenges the Company Must Address ........................................................................................................................ 9
3. Our Fundamental Approach to the Selection of Accounting Standards .............................................................................. 9
4. Consolidated Financial Statements.................................................................................................................................... 10(1) Consolidated Balance Sheets ....................................................................................................................................... 10(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income .................................. 12(3) Consolidated Statements of Changes in Net Assets ..................................................................................................... 14(4) Consolidated Statements of Cash Flows ...................................................................................................................... 16

4

1. Analysis of Operation Results and Financial Position(1) Analysis of Operation Results

With regard to the Japanese economy during this consolidated fiscal year, thanks to the government’s economic stimulus
measures and monetary easing by the Bank of Japan, corporation earnings and employment situation have been showing
improvement. Moreover, in the meantime, significant increase of foreign visitors to Japan is also contributable to moderate
economic recovery. On the other hand, as the economic downside risk of China including the emerging countries has
increased, the economic outlook is still uncertain.
In the real estate industry to which our company and our consolidated subsidiaries (hereinafter, “our corporate group”) belong,
there has been a long-term improvement in the vacancy rate in the office market in city-center, and the average rent is also
showing moderate improvement in the same period. In the real estate investment market, investors’ purchase demand remains
as high as ever, which leads to continuous decrease in expected yield, particularly in terms of prime city-center real estate.
In such an environment, our corporate group focuses on the utilization and distribution of small to medium-sized commercial
properties in the urban center of Tokyo, and has helped building owners solve various troubles regarding real estate. We create
multifaceted earning opportunities by providing each customer with one-stop services with philosophy-based business model,
including proposal and order receipt for the rental, brokerage, sale, management, maintenance, remodeling, and renovation ofbuildings; consultation regarding inheritance, tax affairs, etc. in collaboration with specialists and rent guarantee service, etc.
By linking up unrivalled knowhow and experience gained through the process of providing the above mentioned various
services, we have been proactively developing real estate revitalization projects that deliver substantial value added to
stakeholders and society. Focusing mainly on commercial properties in 5 central wards (Chiyoda, Chuo, Minato, Shinjuku, andShibuya), we change the layout of rental rooms, creating green lush terraces on building roofs, preparing setup offices,
redesigning the interior to make sure everything fit to every customer’s deepest needs. Hence, not only do buildings sold by ourcompany possess great attractiveness but also deliver high quality. Moreover, our leasing management team with high expertiseand deep understanding of local needs are always there to help property owners fulfill any vacancies.
As for procurement of real estate, we obtain information on good real estate from leading real-estate companies and trustbanks, and an increasing number of pieces of information from “Kyoeikai (Co-prosperity Association)”, which is our original
network of affiliates. In addition, we have worked to establish competitive procurement routes through activities, for example,
solving building owners’ worries, which contribute to the direct procurement of real estate.
FY 2015 was also a year full of new and exciting challenges for Sun Frontier group with the establishment of “Sun Frontier
Hotel Management Co., Ltd.” operating in hotel planning and management and the investment in “Power Consulting Networks
K.K.” – expert in asset consulting and building management, turning it into our affiliated company. As a Tokyo-based real estatecompany, we cooperate with Shanghai Spring Group engaging in travel and aviation services to open in Tokoname City, Aichi
Prefecture the first hotel under the joint brand “Spring Sunny”. This bold but brilliant inbound-market oriented, urban tourist
hotel development proves our effort in introducing Japan’ beautiful nature and hospitality to more travelers, especially thosecoming from overseas. Furthermore, we have also launched other real estate development projects on a global scale, such ascity hotel and high rise condominium in Danang, the largest city in the central of Vietnam and urban residential houses in Jakarta,
the capital of Indonesia.
As a result of the above dynamic business activities, our operating results for the fiscal year ended March 2016 were as
follows:
Sales: ¥30,625 million (up by 10.4% from the previous fiscal year), operating income: ¥7,387 million (up by 26.3%), ordinary
income: ¥7,024 million (up by 25.6%) and net income: ¥8,157 million (up by 61.4%).
The performance of each segment is as follows:
Real Estate Revitalization (referred as Replanning ™ by Sun Frontier)From the procurement stage, our corporate group starts a “production” process through which we aim to put the property to
the best use possible. By carefully researching real estate leasing market on a daily basis to collect knowledge and linking eachsection’s experience in technologies, planning, building management and construction, we draw up feasibly creative businessplans. In addition, we emphasize the fact that the more satisfied the tenants, the more satisfied the owner. Through frequentinteractions with tenants, we look for all possible ways to make the property more comfortable and convenient for them to use,
and address any challenges quickly, and thereby achieve high rates of tenant retention and utilization.
We have been successful in maximizing the profitability of real estate by renovating real estate, especially those with low rateof utilization. Concretely, we renew properties so that they can meet the needs of society and owners, and therefore, turningthem into profitable real estate investment before selling them to individuals and corporation customers.
By continuing to provide reliable aftersales service (including property management, pro-active response to faults, solving
owner difficulties and responding to new demands), we deliver the property as a composite package of added value that evenextends to post-sale follow-up service.
As for the replanning business, we determine target buyers at the stages of procurement and commercialization, pursuing not
only the rate of return, but also “true values” suited for target clients such as location, rarity, yield stability and taxation merits.
Through these efforts, both sales and profits increase from the previous year.
As for the property leasing business, we purchase and retain properties according to our well-selected criteria. With a
combination of valuable knowledge and skills in rental brokerage, property management, construction solutions and rent
guarantee services, we have been succeeding in maintaining a high rate of utilization and securing stable rental income.
In the real estate securitization business, though we did enjoy income distributed from real estate funds we invested in, bothrevenue and profits decreased compared to the previous year.
As a result of the above activities, sales were ¥26,835 million (up by 10.5% from the previous fiscal year) and segment income
was ¥8,072 million (up by 28.7%).
5

Real Estate Brokerage
Our sales intermediation business has been focusing on customer referrals from other departments such as property
management and leasing brokerage. By providing high value added and satisfaction to customers, the business flourishes througha good circulation of referrals and repeaters. Besides that, with our ability in solving customers’ problems, real estate consulting
and foreign language corresponding service for overseas investors (mainly those from Taiwan), our customer base has expanded
significantly. This together with the recovery of real estate investment market has contributed to a remarkably positive change
in both revenue and profit compared with those of the previous term.
In the leasing brokerage business, while occupancy rate continuously improves, not only are we active in finding tenants, butalso in solving property owners’ various problems. Furthermore, the leasing management team is also contributing to the wholegroup’s profit by engaging in recruiting tenants for properties of replanning business, and bringing in new customers entrusting
their buildings to property management department.
As a result of the above activities, sales were ¥1,536 million (up by 24.0% from the previous fiscal year) and segment income
was ¥1,312 million (up by 25.2%).
Property Management
In the property management business, we strove to boost resident satisfaction by providing meticulous service in accordancewith customers’ needs, even if those needs are latent, and therefore managed to maintain a high tenancy rate in the buildings
under our management. Thanks to a consecutive increase in loyal customer number, at the end of this fiscal year we weremanaging 57 more buildings compared to the end of the previous year (a 20.7% increase), as can be seen in the table below. We
offer inclusive services linked with other businesses, as the clients who purchase real estate through our replanning or sales
brokerage business continue to entrust us with the management of buildings after purchase. As a result, sales and profits
increased from the previous year.
End of Mar. 2014

End of Mar. 2015

End of Mar. 2016

No. of entrusted buildings

227

276

333

Operation rate

97.1％

92.9％

95.5％

As for the building maintenance business, by demonstration of our strength in property maintenance, especially in cleaning
and repairing walls of high-rise buildings, we have been able to increase the number of orders received and consequently
generate more revenue for the fiscal year ended Mar 2016. The expertise also helps us to streamline synergy with othercompanies under Sun Frontier group. However, due to cost incurred from new management system, profit is almost unchanged
from previous term.
As a result of the above activities, sales were ¥1,483 million (up by 11.9% from the previous fiscal year) and segment income
was ¥675 million (up by 13.5%).
Other Businesses
As for the construction solution business, due the lack of large-scale project orders compared to the previous term, this term
witnessed a considerable plunge in both revenue and profit.
In the rent guarantee business, concentration on new client acquisition and enhancement of cooperation with affiliatedcompanies has helped improve the bottom line.
“Space Rental”, our new business established this term has started to achieve positive monthly financial result since the 3rdquarter. From the 4th quarter, we continued to expand this business by taking over new rental conference rooms as well as offices.
As a result of the above activities, sales were ¥770 million (down by 14.1% from the previous fiscal year) and segment income
was ¥329 million (down by 5.6%).
Outlook for the Next Fiscal Year
Macroeconomic factors such as continuation of economic growth strategy and financial relaxation policies by the government
and Bank of Japan, improvement trend of corporate earnings and growth of inbound market as a result of the promotion of
tourism (the number of foreign tourists visiting Japan in March 2016 is 2,010,000, leaping by 31.7% compared with the previousyear) have contributed to the positive growth rate of Japanese economy this term. On the other hand, growth slowdown ofemerging economies and worldwide anxieties caused by global oil price plummet still give national economy an uncertain
outlook.
Under such circumstances, besides core business in commercial properties, as aforementioned, we seek new challenges inpromoting hotel business and overseas business. Focusing on “high value added creation” and “human resource development”,
we continue contributing to stakeholders as professional in real estate utilization and therefore keep growing firmly as a highly
profitable corporation.
Through these efforts, as for the consolidated earnings forecast for the term ending March 2016, we estimate sales of ¥41,000
million (33.9% increase), operating income of ¥8,500 million (15.1% increase), ordinary income of ¥8,200 million (16.7%
increase), and net income of ¥5,600 million (31.3% decrease).
The main reason for the decrease in net income is that the next FY (ended March 2017) income before tax adjustments is
expected to put a complete end to tax loss carryforward from previous terms. As a result, a ¥1,325 million reversal of loss
included in the deferred tax asset calculated at the end of FY ended March 2015 would be added up to the corporate tax

6adjustment amount, which leads to a heavier tax burden than the previous term.
It should be noted that the above earnings forecast was drafted based on information that was available to us on the date of
publication. Actual earnings may turn out to be different from those forecasted due to various reasons.
(2) Analysis of Financial Positioni) Assets, Liabilities, and Net Assets
The current assets at the end of this consolidated fiscal year were ¥51,365 million, increasing ¥13,912 million from the endof the previous consolidated fiscal year, as inventory assets increased.
There were expenditure of ¥1,580 million in the cash flow from operating activities, income of ¥123 million from the cash
flow from investing activities, and income of ¥3,633 million from the cash flow from financial activities, and the fixed term
deposit with deposit term over 3 months increasing by ¥564 million. As a result, cash and deposits were ¥15,413 million,
increasing ¥2,727 million from the end of the previous consolidated fiscal year
Inventory assets were ¥32,714 million, increasing ¥9,233 million from the end of the previous consolidated fiscal year, as
mainly real estate for sale and sale in process in the replanning business due to the strategy to promote property acquisition.
Noncurrent assets were ¥2,718 million, decreasing ¥252 million from the end of the previous consolidated fiscal year, due tobuildings retained as hotels for rent and land are switched to inventory assets.
Together with the increase in inventory assets, total liabilities at the end of this consolidated fiscal year were ¥23,939 million,
increasing ¥6,216 million from the end of the previous consolidated fiscal year, as interest-bearing debt amount (long-term debts,
short-term debts, bonds) went up. Even though dividends were paid at the end of FY ended March 2014, Total net assets were¥30,144 million, increasing ¥7,443 million from the end of the previous consolidated fiscal year, as retained earnings increased
due to a leap in net income this term.
Consequently, net assets per share were ¥704.92.
Total assets as of the end of this consolidated fiscal year were ¥54,084 million, increasing ¥13,659 million from the end of
the previous consolidated fiscal year.
ii) Cash Flow
Cash and cash equivalents (hereinafter called “cash”) as of the end of this consolidated fiscal year were ¥13,375 million,
increasing ¥2,163 million from the beginning of this consolidated fiscal year. This is mainly the result of expenditure on longterm debt repayment of ¥9,326 million, inventory assets increasing in value by ¥9,213 million, ¥11,360 million of proceedsfrom long-term loans payable, ¥8,269 million of income before income taxes and minority interests.
Each cash flow for this consolidated fiscal year and related factors are as follows:
Cash flow from operating activities
Cash obtained from operating activity were ¥1,580 million (previous term: cash inflow of ¥1,382 million). This was mainly
stemmed from increase in inventory assets by ¥9,213 million, depreciation and amortization of ¥645 million and income before
incomes taxes and minority interests of ¥8,269 million.
Cash flow from investing activities
The cash flow from investing activities was ¥123 million (previous term: cash outflow of ¥276 million). This was mainly the
result of an inflow from ¥7,193 million sale of tangible fixed assets and ¥3,182 million refund of fixed term deposit despite the
cash outflow for tangible fixed asset acquisition of ¥6,040 million, fixed-term deposit of ¥3,746 million.
Cash flow from financing activities
Cash obtained from financing activities was ¥3,633 million (previous term: income of ¥701 million). This was mainly due to¥11,360 million of proceeds from long-term loans and ¥5,113 million income from corporate bond issuance while the outflow
was ¥9,326 million of repayment of long-term loans payable and ¥4,065 million of redemption of bonds.
(Reference) Changes in Cash Flow Related Indicators
FY Ended March FY Ended March FY Ended March
31, 2012
31, 2013
31, 2014
Equity ratio (%)
57.5
68.5
53.7
Equity ratio on market
57.8
246.9
179.5
price basis (%)
Debt repayment period
4.4――(years)Interest coverage ratio
7.9――(times)Equity ratio:
equity capital/total assets
Market value basis equity ratio:
total market value of stock/total assets
Debt repayment period:
interest-bearing debt/operating cash flow
Interest coverage ratio:
operating cash flow/interest payments

FY Ended March
31, 2015
56.2

FY Ended March
31, 2016
55.7

117.0

89.8

1,012.0―

5.9―(Note 1) Stock Market Capitalization is calculated as Term End Stock Closing Price x Number of Issued Shares at Term End.
(Note 2) Operating Cash Flow uses the cash flow from operating activities of the Consolidated Cash Flow Statement of Accounts.
(Note 3) Interest Bearing Liabilities include all liabilities requiring interest payment among the liabilities included on the7Consolidated Balance Sheet. Furthermore, regarding interest payments, the payment amount of interest from the Consolidated
Cash Flow Statement of Accounts is used.
(Note 4) Cash Flow to Interest Bearing Liabilities Ratio and Interest Coverage Ratio for Fiscal Years ended March 31, 2013,
March 31, 2014 and March 31, 2016 are not recorded because the operating cash flow is negative.
(3) Fundamental Policy for Profit Allocation and the Dividends for the Current and Next Terms
Our company has a fundamental policy of returning profits to shareholders on a long-term, stable basis while retaining enoughprofits to be able to respond to business environment changes flexibly. We utilize undistributed profits for financial standing
enhancement as well as future business expansion, and therefore boost up the company’s value.
The term-end dividend for the term ended March 2016 is ¥25 per share under the above mentioned policy.
This matter is to be discussed at the annual meeting of shareholders scheduled in June 2016.
The dividend for the next term ended March 2017 is planned to be ¥28 per share.

2. Management Policy(1) The Company’s Fundamental Management Policy
Our corporate group conducts business guided by a fundamental management policy that is comprised of the following
management principal and corporate philosophy.
Management Principal“While protecting all our employees and pursuing physical and psychological essence of things, we work in a spirit of harmony tocontribute to the prosperity of society and humankind.”Corporate Philosophy“Through our work, we employees shall put abundant enthusiasm into developing our knowledge, skills and characters, and weshall dedicate ourselves to the utilization and distribution of real estate stock to prevent waste of non-reproducible resources andto contribute to the lasting prosperity of humankind and all living things.”(2) Target Management Indicators
Our corporate group aims to produce lasting growth in the long term, financial stability by retaining own capital ratio over 50%,
ordinary profit margin, and high profitability and productivity with ordinary income to net sales ratio over 20%.
(3) Corporate Management Strategy in the Mid to Long Terms
Our corporate group has defined its client base as being made up of building owners, asset holders and wealthy individuals, andby staying by their side resolving any real estate-related difficulties that they might have, we aim, as professionals in real estateutilization, to be a real estate company that is loved and chosen by every customers. Working mainly with small to medium sizedbuildings in the Tokyo metropolitan area, we define our policy not only to focus on the property itself, but also to bring happinessto property owners, resolving any difficulties that they may have. As a foundation for this work, based on a philosophy that issummed up in the word “altruism”, we train human resources who are able to prioritize the happiness of others first and do what
is beneficial to the society. Consequently, we strive to earn our customers’ trust (we believe that our people are our fortune, and so
we write “human resources” with the character meaning “fortune” in Japanese).
As for the environment in which our corporate group operates, given remarkable improvement in vacancy rates of downtown
commercial properties, moderate and sustained rise in rental standards, favorable financing conditions and the weak yen trend, thedrive to purchase Japanese real estate, primarily among foreign investors, remains high. Furthermore, as described below, we havedeveloped a three-pronged strategy for future growth in response to the increasing number of foreign tourists visiting Japan andsignificant growth of inbound market and mid-term changes in business conditions including the progress of urban re-modeling.
This three-pronged strategy is concretely defined as “1. Current Business Expansion,” “2. M&A” and “3. Overseas Expansion”.
We exert our strength in real estate operation business model by developing hotel business, and through that, we are able to keep
contributing to realize the dream of making Japan a world class travel destination.
1. Current Business Expansion
We will strive to enhance our market penetration into our main battlefield, office market in the center of Tokyo, the world’s
largest metropolitan area.
In addition to expanding our network of branches and continuing improving our service quality, we will also ascertain ourcustomers’ apparent and latent needs, and work to expand our service lineup. Furthermore, in order to improve customer
satisfaction, we will train our personnel to build close relationships with each individual client, devising proposals optimally
tailored to them, working on structural improvements including improvements to our customer service.
Moreover, we will work on projects to utilize and operate urban spaces in order to make effective use of our clients’ assets, andin order to invigorate cities by responding to changes in urban structure and making effective use of social infrastructure stock.
Already, in September 2014, we started a 33-small office project in Okachimachi, and in April 2015, we opened a for-rent by hour
event space and rental meeting rooms in front of Tokyo Station as a rental space project. Considering our buildings as more thanjust rental space, we put a lot of thought into their potential, keep generating and combining different sources of value added todevelop plans for new building projects.
Finally yet importantly, the government has defined the development of tourism into a core industry as an important pillar innational growth strategy, aiming to increase the consumption amount of foreign tourists from the current ¥3.5 trillion to ¥8 trillion
in 2025, and ¥15 trillion in 2035. In such a context where inbound market consumption plays the role of driving domestic
consumption, the problem of insufficiency in lodging facilities for overseas tourists is getting more severe. Accordingly, Sun
Frontier group have determined to answer this newly generated inbound market needs and therefore contribute to realize the dream8

of making Japan a world class travel destination by exerting our strength in commercial property operation business model into
the development, operation and revitalization business of hotels.
2. M&AWe see the utilization of M&A as an effective choice in helping us make further progress, providing better client-oriented services.
As the scope of our business expands, fields in the circumference of our current business such as underdeveloped building
construction, facilitation, housing management and hotel business are positioned as important to enhance along with our corebusiness development. We will rapidly acquire the platforms, personnel and technology for our projects, and strive for growth anddevelopment by moving ahead with capital tie-ups and business alliances in order to provide our clients with optimal services thatare responsive to changes in the environment.
3. Overseas Business Expansion
It has been three years since we started our overseas businesses, with an increasing number of foreign asset holders and affluent
individuals accounting for a large share in our client portfolio. We pursue the following two policies with the aim of making further
progress overseas, particularly focusing on Asia.
1. Further promote inbound investment by providing Asia’s burgeoning affluent classes with real estate investment opportunities
in Tokyo, the city with the largest economy in the world.
2. Pursue outbound investment by aiming, firstly, to provide Japan’s affluent classes with real estate investment opportunities infast-growing Asian metropolises, and secondly, to develop projects targeting high-earners, helping support regional economies andcontributing to the wellbeing of the local. Specifically, we have launched new real estate development projects, such as city hotel
and high-rise condominium in Danang, the largest city in the central of Vietnam and urban residential houses in Jakarta, the capitalof Indonesia.
Strongly treasuring our employees’ development, we aim to become an organization where each employee can experience thesatisfaction that comes through taking on challenges. Our policy is clearly defined to unlock the utmost potential of our personnel,
increasing the number of external collaborators, improving our capability to solve property owners’ problems, and working tobecome a hub for affluent Asian investors together with Asian growth.
We aim to maintain our ordinary profit margin at 20% or higher, keeping renewing ourselves while managing risk, pro-actively
entering niche markets, and continue moving forward with greater emphasis on profit than on sales.
By staying close to our clients and working to solve any real estate-related problems, we aim to become a company of “realestate utilization professionals”, the most reliable partner than any in the world. Also, by uniting as a team, understanding ourclients’ needs, providing maximal added value, and creating greater client satisfaction, we will strive to deliver greater sustainablecorporate value.
(4) Challenges the Company Must Address
Although the outlook of the economy remains uncertain, under minus interest rate policy of Bank of Japan, consumption andinvestment condition seems getting improved. Moreover, with large-scale urban regeneration project execution in the central ofTokyo, real estate efficient utilization trend becomes more active while the promotion of tourism industry by the government keeps
driving the swelling demand of inbound market.
In this context, we are aware of the importance of clearly defining our business policy and strategy, and setting ourselves apartfrom other companies in the industry, in order to become a company that customers love and happily choose.
Our corporate group have defined our client base as being made up of property owners and wealthy individuals, and our focus
is to provide them with service tailored to each individual need and to solve their problems. We will use the information we gain
through repeated interactions with clients to identify their needs and challenges, which we will then solve by working
collaboratively across divisions, thereby providing clients with the optimum service and products. We believe that the superiorityof our corporate group lies in the fact that we are always able to satisfy our clients, providing them with high value added, andgaining their confidence.
Finally, as previously mentioned we have determined to answer the newly generated inbound market needs and therefore
contribute to realize the dream of making Japan an excellent travel destination by demonstrating our strength in commercial
property operation business model into the development, operation and revitalization business of hotels.

3. Our Fundamental Approach to Selecting Accounting Standards
Taking into account the capacity to compare consolidated financial statements from different periods and to compare different
corporations, for the time being, our corporate group has established the policy of using Japanese standards for drafting
consolidated financial statements.
Furthermore, with regard to the application of IFRS, after considering the conditions both in Japan and overseas, our policy is
to handle them in an appropriate manner.

94. Consolidated Financial Statements(1) Consolidated Balance Sheets(Thousands of yen)
FY ended March 31, 2015
(As of March 31, 2015)
ASSETS
Current assets
Cash and deposits
Accounts receivable-trade
Real estate for sale
Real estate for sale in process
Supplies
Deferred tax assets
Other
Allowance for doubtful accounts

FY ended March 31, 2016
(As of March 31, 2016)

12,686,800
233,535

15,413,978344,832※1 1,599,420※1 21,880,382
730
774,725
297,082※1 6,047,465※1 26,664,726
2,096
1,736,749
1,174,601△19,882△18,977

37,452,794

51,365,472

1,399,882

906,851

Total current assets
Noncurrent assets
Property, plant and equipment
Buildings
Accumulated depreciation△173,745

Buildings, net
Land
Other
Accumulated depreciation※1

1,226,136※1

1,232,143
95,603△204,553※1△70,433

Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets

702,298
1,172,832
131,980※1△87,256

25,16944,7232,483,449

1,919,854

1,875
74,388278,208

76,263278.208

Investments and other assets
Deferred tax assets
Other
Allowance for doubtful accounts

2,083
414,572△4,587△4,381

Total investments and other assets

412,069

520,784

Total noncurrent assets
Total assets

10※2

525,166

2,971,783

2,718,847

40,424,577

54,084,319

(Thousands of yen)
FY ended March 31, 2015
(As of March 31, 2015)
LIABILITIESCurrent liabilities
Accounts payable-trade
Short-term loans payable
Current portion of bonds
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Provision for directors' bonuses
Construction warranty reserve
Provision for loss on guarantees for rent
Other

FY ended March 31, 2016
(As of March 31, 2016)

606,061-

Total current liabilities
Noncurrent liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for loss on litigation
Other
Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity

599,139※1 40,000※1 964,484
221,154
109,208
30,00022,10022,361
1,535,214※1 1,248,500※1 101,200※1 2,004,184
973,017
134,643
41,1506,800
41,7392,491,110

3,550,585

7,641,484※1 340,000※1 12,648,786
31,0001,152,905※1 1,413,300※1 13,642,252
578
1,242,048

14,172,691

16,298,179

17,723,276

23,939,663

8,387,211
2,871,767
11,434,300

8,387,211
2,871,767
18,885,910

△174

△174

22,693,105

30,144,715

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment

2,253
5,941

△8,331

Total accumulated other comprehensive income

2,951

8,195

△5,379Minority interest

-

5,320

Total net assets

22,701,300

30,144,656

40,424,577

54,084,319

Total liabilities and net assets

11(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Thousands of yen)
FY ended March 31, 2015
FY ended March 31, 2016
(April 1, 2014- March 31, 2015) (April 1, 2015- March 31, 2016)
Net sales
Cost of sales

27,741,197
18,757,583

30,625,958
19,666,198

Gross profit

8,983,613

10,959,759

Selling, general and administrative expenses※1

Operating income

3,133,004※1

3,572,377

5,850,609

7,387,382

Non-operating income
Interest income
Dividends income
Equity in earnings of affiliates
Interest on refund
Subsidy income
Other

8,219
477
508
5,040
1,105

10,919
372
8,142
41
5,520
935

Total non-operating income

15,35025,930235,614
20,98910,232
5,781

235,178
25,51986,36442,015

272,618

389,078

5,593,341

7,024,235

Non-operating expenses
Interest expenses
Finance costs
Stock issuance cost
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of noncurrent assets

14,017※2

Total extraordinary income

14,017Extraordinary loss
Loss on retirement of noncurrent assets
Provision for loss on litigation
Amortization of goodwill
Other※3 64731,0001,220

Total extraordinary losses※2

1,257,517
1,257,517※3

1,019
10,850-32,867

11,869

Income before income taxes and minority interests

5,574,492

8,269,883

Income taxes-current
Income taxes-deferred

452,566

1,075,077△19,292△959,586

Total income taxes

433,274

115,490

Income before minority interests

5,141,217

8,154,393

Minority interests in income (loss)

88,145△2,6795,053,072

8,157,072

Net income

12Consolidated Statements of comprehensive income(Thousands of yen)
FY ended March 31, 2015
FY ended March 31, 2016
(April 1, 2014 - March 31, 2015) (April 1, 2015 - March 31, 2016)
Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total other comprehensive income

5,141,217

8,154,393

503
5,448

698

※

5,952

△14,273※△13,574

Comprehensive income

5,147,170

8,140,818

Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

5,059,025
88,145

8,143,497

13△2,679(3) Consolidated Statements of Changes in Net Assets
Previous Fiscal Year (From April 1, 2014 to March 31, 2015)(Thousands of yen)
Shareholders' equity
Capital stock
Balance at the beginningof current period
Changes of items during
the period

Capital surplus

8,387,211

Retained earnings

2,871,767

6,958,425

Total shareholders'equityTreasury shares△121

18,217,283

Dividends from surplus△577,197△577,197

Net income

5,053,072

5,053,072

Purchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period

△52

△52

―

―

4,475,875△52

4,475,822

8,387,211

2,871,767

11,434,300

174

22,693,105

Accumulated other comprehensive income
Valuation difference on
available-for-salesecurities
Balance at the beginningof current period
Changes of items during
the period

1,749

Foreign currency
Total accumulated othertranslation adjustment comprehensive income
493

2,242

Minority interests

250,000

Total net assets

18,469,526

Dividends from surplus△577,197

Net income

5,053,072

Purchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period

△52
503

5,448

5,952

△250,000△244,047

503

5,448

5,952

△250,000

4,231,774

2,253

5,941

8,195

―

22,701,300

14Current Fiscal Year (From April 1, 2015 to March 31, 2016)(Thousands of yen)
Shareholders' equity
Capital stock
Balance at the beginningof current period
Changes of items during
the period

Capital surplus

8,387,211

Retained earnings

2,871,767

11,434,300

Total shareholders'equityTreasury shares△174

22,693,105

Dividends from surplus△705,463△705,463

Net income

8,157,072

8,157,072

Purchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period――

7,451,609―

7,451,609

8,387,211

2,871,767

18,885,910△174

30,144,715

Accumulated other comprehensive income
Valuation difference on
available-for-salesecurities
Balance at the beginningof current period
Changes of items during
the period

2,253

Foreign currency
Total accumulated othertranslation adjustment comprehensive income
5,941

8,195

Minority interests―

Total net assets

22,701,300

Dividends from surplus△705,463

Net income

8,157,072

Purchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period

698△14,273△13,574

5,320△8,254698△14,273△13,574

5,320

7,443,355

2,951△8,331△5,3795,320

30,144,656

15

(4) Consolidated Statements of Cash Flows(Thousands of yen)
FY ended March 31, 2015
FY ended March 31, 2016
(April 1, 2014 - March 31, 2015) (April 1, 2015 - March 31, 2016)
Net cash provided by (used in) operating activities
Income before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors' bonuses
Increase (decrease) in construction warranty reserve
Increase (decrease) in provision for loss on guarantees for rent
Increase (decrease) in provision for loss on litigation
Interest and dividends income

5,574,492
509,235
7,500
6,641
21,70810,000※2

Interest expenses
Equity in earnings of affiliates ( means earnings)
Stock issuance cost
Loss (gain) on sales of noncurrent assets
Loss on retirement of noncurrent assets
Loss on litigation
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) in advances paid
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in deposits received
Increase (decrease) in guarantee deposits received
Other, net
Subtotal

8,269,883
645,579
1,875※2△1,11025,495
11,150△12,700
15,80031,000△15,300
19,378-△8,696
235,614
10,232△11,291
235,178△14,017647
191,578△1,257,517
1,019
10,850424,592△5,200,257
7,370
308,373
181,048
95,400142,461△9,213,959△387,420△483,365
375,333
89,143
231,965

2,113,435△950,296△8,14286,364

Interest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Payment for loss on litigation

5,671

4,893

△234,472△501,965-△232,420△361,135△41,850

Net cash provided by (used in) operating activities

1,382,668△1,580,809

16

(Thousands of yen)
FY ended March 31, 2015
FY ended March 31, 2016
(April 1, 2014 - March 31, 2015) (April 1, 2015 - March 31, 2016)
Net cash provided by (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Payments for guarantee deposits
Net decrease (increase) in derivative deposit
Other, net
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from stock issuance to minority shareholders
Repayments to minority shareholders
Cash dividends paid to minority shareholders
Cash dividends paid
Other, net△3,482,882
3,546,825△3,746,904
3,182,868△375,036
17,198△6,040,700
7,193,448△71,231240,235△210,815△110,836-△151,480△143,544△276,372

123,516△347,500
11,155,000

1,248,500
11,360,000△8,385,750
389,767△9,326,834
5,113,635△1,195,000-△4,065,500
8,000-△250,000△88,145△576,358△52

Net cash provided by (used in) financing activities△704,308-

701,961

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

3,633,493

2,254△12,964

1,810,511

2,163,234

9,401,600

Cash and cash equivalents at end of period※117

11,212,112

11,212,112※1

13,375,347