Creating peace of mind through honest and committed management.

[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

May 9, 2013
Ichigo Group Holdings Co., Ltd. (JASDAQ, 2337)
Representative: Scott Callon, Chairman and Representative Statutory Executive Officer

Notice of the Thirteenth Annual General Meeting of Shareholders

Dear Shareholders:
We are pleased to invite you to attend the Thirteenth Annual General Meeting of Shareholders of Ichigo
Group Holdings Co., Ltd. (“the Company”) to be held per the below.
If you are unable to attend the meeting, you may exercise your voting rights via postal mail or theinternet. We would appreciate it if you could review the Reference Materials for the Annual General
Meeting of Shareholders attached below and cast your vote by returning the enclosed voting form or
by accessing our voting website (http://www.evote.jp) no later than Friday, May 24, 2013, 6:30 p.m.
JST.
1. Date and Time

Saturday, May 25, 2013 at 10:00 a.m.

2. Place

Dai-ichi Hotel Tokyo, Fourth Floor, Primavera
1-2-6 Shimbashi, Minato-ku, Tokyo

3. Agenda of the Meeting
Matters to be Reported
1.

Details of the business report, the consolidated financial statements, and the results of the audit ofconsolidated financial statements by the Independent Auditor and the Company’s Audit Committee
for the thirteenth term (from March 1, 2012 to February 28, 2013)

2.

Report on the financial statements for the thirteenth term (from March 1, 2012 to February 28, 2013)

Matters to be Resolved
Proposal 1

Partial Amendment to Articles of Incorporation

Proposal 2

Election of 10 Directors* If you attend the meeting in person, please submit the enclosed voting form at the venue’s reception.
* Please note that any amendments to the Reference Materials for the Annual General Meeting of Shareholders and thebusiness report, financial statements, and consolidated financial statements will be posted on our website(http://www.ichigo-holdings.co.jp/english).

-1-

Voting via the Internet
1. Handling of Concurrent Votes via Postal Mail and via the Internet
If you cast overlapping votes by using both the postal voting form and the Internet voting site, only thevotes casted on the Internet will be deemed effective.
2. Handling of Concurrent Votes on the Internet
If you cast multiple overlapping votes on the Internet voting site, only the last vote will be deemed
effective, whether from a PC, smart phone or a mobile phone.
3. Voting via the Internet
If you vote via the Internet, please review the following matters. If you attend the Meeting, voting via
postal mail (voting form) or via the Internet is unnecessary.
(1) Voting Website(i)

You can only exercise your voting rights via the Internet by accessing and using the designatedwebsite (http://www.evote.jp/) from a PC, smart phone, or mobile phone (i-mode, EZweb orYahoo! Keitai*). Please note that the website is not available from 2 a.m. to 5 a.m. JST daily.
(*i-mode, EZweb, and Yahoo! are the trademarks or registered trademarks of NTT DoCoMo, Inc.,
KDDI Corporation, and Yahoo! Inc., U.S.A., respectively.)(ii)

Please note that if you use a firewall, have antivirus software installed, or use a proxy server, etc.,
there may be technical difficulties in exercising your voting rights via the Internet.

(iii) To exercise your voting rights from a mobile phone, please use i-mode, EZweb or Yahoo! Keitai.
To ensure security, you may not be able to vote from your mobile phone if the phone does notsupport encrypted transmission (SSL transmission) and mobile phone information transmission.
(iv) We will accept votes submitted via the Internet up until 6:30 p.m. JST on Friday, May 24, 2013,
but we would appreciate your promptness in voting. Please contact the help desk below if you
have any questions.
(2) How to Vote via the Internet(i)

Please access our voting website (http://www.evote.jp), and use the log-in ID and temporary
password shown on the enclosed voting form. Follow the on-screen instructions to indicate yourconsent or dissent.

(ii)

To prevent unauthorized access (impersonation) and tampering of votes by third parties, please
note that you will be required to change the temporary password on the voting website.

(iii) We will inform you of a new login ID and temporary password for each Annual General Meetingof Shareholders.
(4) Fees for Accessing the Voting Website
Please note that you will be responsible for expenses such as dial-up Internet access fees and telephonecharges incurred by accessing the voting website. Please also note that you will be responsible for
expenses for the use of a mobile phone to cast your vote such as packet communication fees and othercharges.
4. How to Receive Notices of Future Annual General Meetings of Shareholders
You can be notified by e-mail starting from the next Annual General Meeting of Shareholders, so pleaseapply to receive such notification by accessing the voting website on your PC or smart phone. (Please
note that you may not apply for such notification by mobile phone nor can you designate your mobile
phone e-mail address as the receiving address.)-2-

Inquiries concerning the Voting Process
Mitsubishi UFJ Trust and Banking Corporation, Corporate Agency Division (Help Desk)Toll-free telephone (within Japan): 0120-173-027 (9:00 a.m. to 9:00 p.m. JST)To Institutional Investors
You may use the electronic proxy-voting platform of the Tokyo Stock Exchange for electronic voting for
the Annual General Meeting of Shareholders of the Company.

-3-

Table of Contents
Business Report
I.

II.

Current Condition of the Company
1.

Business Conditions in the Current Fiscal Year ----------------------------------------

P5

2.

Assets and Earnings in the Past Three Fiscal Years ------------------------------------

P6

3.

Important Parent Company and Subsidiary Information ------------------------------P7

4.

Key Business Priorities --------------------------------------------------------------------P7

5.

Key Business Segments -------------------------------------------------------------------

P8

6.

Principal Offices ----------------------------------------------------------------------------

P8

7.

Employees -----------------------------------------------------------------------------------

P8

8.

Principal Lenders ---------------------------------------------------------------------------

P9

9.

Dividend and Distribution Policy --------------------------------------------------------

P9

10. Other Material Matters Regarding the Company --------------------------------------

P9

Matters Regarding the Current Status of the Company
1.

Matters Regarding Shares in the Company ---------------------------------------------

P12

2.

Stock Acquisition Rights ------------------------------------------------------------------

P13

3.

Officers of the Company ------------------------------------------------------------------

P17

4.

Independent Auditor ----------------------------------------------------------------------

P21

5.

Structure to Ensure Appropriate Business Activity ------------------------------------

P22

6.

Policy on Corporate Control --------------------------------------------------------------

P26

Consolidated Financial Statements
Consolidated Balance Sheet -------------------------------------------------------------------------

P27

Consolidated Income Statement --------------------------------------------------------------------

P28

Consolidated Statement of Changes in Shareholders’ Equity -----------------------------------

P29

Notes to the Consolidated Financial Statements --------------------------------------------------

P30

Parent Financial Statements
Parent Balance Sheet ---------------------------------------------------------------------------------

P42

Parent Income Statement ----------------------------------------------------------------------------

P43

Statement of Parent Changes in Shareholders’ Equity -------------------------------------------

P44

Notes to the Parent Financial Statements ----------------------------------------------------------

P45

Auditor’s Report on the Consolidated Financial Statements ------------------------------------

P51

Auditor’s Report on the Parent Financial Statements ---------------------------------------------

P52

Report of Audit Committee -----------------------------------------------------------------------------

P53

Reference Materials for the Annual General Meeting of Shareholders
Proposal 1 --------------------------------------------------------------------------------------------

P55

Proposal 2 --------------------------------------------------------------------------------------------

P57

-4-

Business Report
From March 1, 2012
To February 28, 2013I.

Current Condition of the Company

1. Business Conditions in the Current Fiscal Year
(1) Progress and Business Results
Due to the slowdown in the world economy, impacted in part by ongoing debt issues in Europe, theJapanese economy developed at an uneven pace during the current fiscal year. Nevertheless, policies
instituted by the new Japanese government at the end of 2012 have reinvigorated expectations for an
economic recovery by changing the trend of yen appreciation, rejuvenating the Japanese stock market,
and improving the general corporate outlook for exports and earnings. For the Japanese real estatemarket, business conditions are picking up as evidenced by an upsurge since last year in the Tokyo
Stock Exchange J-REIT index and the growing number of areas in Japan with rising land values. These
positive developments stem from the continuing favorable financing environment, the possibility of theend of deflation due to bold monetary easing, and robust J-REIT participation in the Japanese realestate market via additional public offerings and new listings.
The Company intends to take advantage of this positive business environment and drive higher
earnings. Via pro-actively managing assets held in the J-REIT and private real estate funds, bringing tomarket new ground lease and small-scale real estate-related products, continuing the provision ofproperty management and building management services, and participating in new businesses such as
the ECO energy venture begun in November 2012, the Company seeks enhanced growth as anintegrated and full-service real estate group while simultaneously strengthening the Company’s stableprofitability. Specifically, in the past year the Company has carried out the following main initiatives: Acquired new stable profitability through growing the J-REIT Launched new real estate investment funds
 Sought out new core investors for real estate investments
 Expanded the small-scale real estate and ground lease-related businesses
 Improved the “green” characteristics of managed assets as well as the earthquake resistance andfunctionality of such assets
 Strengthened tenant leasing activities and set up a new website to disseminate leasing information
for managed assets
 Created a new start-up ECO energy business (megasolar, LED lighting, etc.)
 Developed and implemented various branding measures to strengthen the Ichigo brand Lengthened borrowing periods and improved profitability through refinancing existing loans
 Continued asset sales
 Strengthened the Company as a full service and integrated real estate company throughreorganization
As a result, the Company recorded revenues of ¥16,397 million in the current fiscal year (down 13.5%
year-on-year); an operating profit of ¥1,844 million (up 75.6% year-on-year); a recurring profit of¥1,734 million (up 77.1% year-on-year); and a net profit of ¥1,637 million (down 7.5% year-on-year).
The Company has thus been able to establish in the current fiscal year a stable and profitable revenue
structure that can serve as a base for strong future growth in subsequent years.

-5-(2) Capital Expenditures
There were no material capital expenditures during the current fiscal year.
(3) Financing
In order to boost profitability and the stability of its financial base, the Company made significant
efforts to reduce interest rates paid and lengthen the applicable periods of financing. As a result, for thecurrent fiscal year the balance of interest-bearing corporate debt was ¥6,907 million (down 26.1%
year-on-year), and the balance of non-recourse debt was ¥35,039 million (down 7.0% year-on-year).
With respect to the average applicable interest rates, they were reduced year-on-year 0.33% and 0.54%,
respectively. In addition, with respect to the balance of interest-bearing corporate debt as of the end of
the period, the percentage of such debt that was long-term was 79% (no change from the prior year);
however of this long-term debt, the amount that had a remaining tenor of longer than 5 years was¥1,891 million (up ¥1,395 million year-on-year), and as a consequence the Company was successful inlengthening financing periods and improving the stability of its financial base.
(4) Business Transfers, Absorption-Type Splits or Incorporation-Type Splits
N/A(5) Transferred Businesses from Other Companies
N/A(6) Succeeding to Rights and Obligations relating to the Business of Other Companies by Absorption-Type
Merger or Absorption-Type Split
N/A(7) Acquisition and Disposition of Shares and Other Interests in Other Companies and Stock Acquisition
Rights, etc.
On November 28, 2012, the Company acquired all outstanding shares of Solar Way Co., Ltd. and madeit a 100% subsidiary company.
2. Assets and Earnings in the Past Three Fiscal Years

Category

Tenth term

Eleventh term

Twelfth term

(Year ending
February 28, 2010)(Year ending
February 28, 2011)(Year ending
February 29, 2012)

Thirteenth term
(Year ending
February 28, 2013 Current fiscal year)

Revenues (million yen)
21,112
12,76018,952
16,397
Recurring Profit (Recurring
573
1,616
979
1,734
Loss) (million yen)
Net Profit (Net loss)
1,807
620
1,770
1,637
(million yen)
Net Profit per Share
1,771.74
317.64775.14731.98(Net loss per share) (yen)Total Assets (million yen)
100,268
98,65382,17080,428Net Assets (million yen)
23,523
27,771
28,18731,066
Net Assets per Share (yen)11,711.48
10,920.79
11,613.85
12,704.44(Note) Net Profit per Share (Net loss per share) is calculated based on the average number of shares issued during theterm. Net Assets per Share is calculated based on the number of outstanding shares as of the end of the fiscal
year. These figures do not include treasury shares.

-6-3. Important Parent Company and Subsidiary Information(1) Parent Company
N/A(2) Important Subsidiaries
Name

Percentage Ownershipof Voting Rights

CapitalBusiness Segment
J-REIT and private equity
real estate funds asset
management
Real estate-related business(Small sized assets andground leases)
Formation of investment
funds for overseas
investments andcross-border M&A advisory
Megasolar energy
generation business, LED
lighting, etc.

Ichigo Real Estate Investment
Advisors Co., Ltd.

¥400 million

100.00%Ichigo Estate Co., Ltd.

¥500 million

100.00%Ichigo Global Capital Co., Ltd.

¥10 million

100.00%Ichigo ECO Energy Co., Ltd.

¥50 million

100.00%Ichigo Marché Co., Ltd.

¥95 million

100.00%Wholesale market property
management

Miyako City Co., Ltd.

¥50 million

100.00%Mall property management

Takara Building Maintenance Co., Ltd.

¥10 million

100.00%

Building maintenanceNichibei Building Services Co., Ltd.

¥16 million

100.00%Total building management

Nichibei Security Services Co., Ltd.

¥10 million

100.00%

Security services(Note) 1. Ichigo REIT Management Co., Ltd. was subject to merger by absorption by Ichigo Real Estate
Investment Advisors Co., Ltd. and changed its corporate name on July 1, 2012.
2. Ichigo Solutions Co., Ltd. was subject to merger by absorption by Ichigo Estate Co., Ltd. and changed its
corporate name on July 1, 2012.
3. Ichigo Global Capital Co., Ltd. was established as a 100% subsidiary of the Company on July 2, 2012.
4. Ichigo ECO Energy Co., Ltd. was established as a 100% subsidiary of the Company on November 28,
2012.

4. Key Business Priorities
Despite the expectations that economic conditions in Japan will continue to improve due to the new
government’s policies and the expected positive spillover effects in the real estate industry in which theCompany participates, developments in the world economy continue to be affected by the European debt
problems and other uncertainties and accordingly there are downside risks to the Japanese economy.
In light of the current business environment, the Company aims to achieve significant growth as anintegrated and full-service real estate owner/operator while maintaining its strong financial foundation andstable earnings base. Driving this significant earnings growth at utmost speed is the most importantbusiness priority of the Company. In pursuit of this, the Company expects to (1) accelerate investment togrow its stable earnings base by supporting growth in the fee income of Ichigo J-REIT, adding value toacquired assets to drive long-term stable earnings, and growing the megasolar business; (2) arrange
financing for larger-scale asset acquisitions and continue developing new investor relations; (3) promote
the formation of strategic and stable banking relations and improve borrowing conditions; (4) strengthen-7-internal coordination and operating efficiency through the newly-created real estate services division.
The Company also intends to further reinforce corporate governance and compliance to ensure soundmanagement for our shareholders.
5. Key Business Segments (as of February 28, 2013)
As a long-term Japanese real estate asset manager, the Company has as its vision “Creating peace of mind
through honest and committed management” and seeks to serve the needs of society by providing
innovative asset management solutions.
The Company is principally engaged in management of a J-REIT and private equity investment funds, andalso engages in real estate investment, property management, and building maintenance services.

6. Principal Offices (as of February 28, 2013)
Ichigo Group Holdings Co., Ltd.
Ichigo Real Estate Investment Advisors Co., Ltd.
Ichigo Estate Co., Ltd.
Ichigo Global Capital Co., Ltd.
Ichigo ECO Energy Co., Ltd.

Headquarters:

Chiyoda-ku, Tokyo

Ichigo Marché Co., Ltd.

Headquarters:
Office:Chiyoda-ku, Tokyo
Matsudo City, Chiba Prefecture

Miyako City Co., Ltd.

Headquarters:

Miyazaki City, Miyazaki Prefecture

Takara Building Maintenance Co., Ltd.

Headquarters:

Ryugasaki City, Ibaraki Prefecture

Nichibei Building Services Co., Ltd.
Nichibei Security Services Co., Ltd.

Headquarters:

Matsudo City, Chiba Prefecture

7. Employees (as of February 28, 2013)(1) Employees of the Company (Consolidated basis)
Number of employees

182

Increase/decrease from the end of previous fiscal year

(549)

- 64

(+11)

(Note) 1. The number of employees is the number of full-time employees (excluding workers dispatched from
Ichigo Group to other companies and including workers dispatched from other companies to Ichigo
Group) including directors who are also employees.
2. The average number of non-full-time employees (including part-time and temporary staff) is presented
in parentheses.
3. The number of employees decreased by 64 for full-time from the previous fiscal year due toreclassification of contract employees to non-full-time.

(2) Employees of the Company (Parent basis)
Number of employees
32(0)Increase/decrease
from the end of previous fiscal year
-7

(-3)

Average age

Average years of
employment

39.5 years old

4.1 years(Note) 1. The number of employees is the number of full-time employees (excluding workers dispatched from theCompany to other companies and including workers dispatched from other companies to Ichigo Group)
including directors who are also employees.
2. The average number of non-full-time employees (including part-time and temporary staff) is presented
in parentheses.
3. On a year-on-year basis the number of employees decreased by seven employees, however this was
mainly due to such employees being moved to a subsidiary pursuant to a corporate reorganization.

-8-8. Principal Lenders (as of February 28, 2013)
Lenders

AmountKansai Urban Banking Corporation¥2,861 million

Sumitomo Mitsui Banking Corporation¥1,625 million

The Bank of Yokohama, Ltd.

¥997 million

JA Mitsui Lease Co., Ltd.

¥300 million

Resona Bank, Ltd.

¥287 million(Note) These amounts do not include non-recourse loans held by funds that the Company manages (e.g., tokumei
kumiai partnerships, etc.)

9. Dividend and Distribution Policy
The Company has set generating positive returns for its shareholders as one of its most importantpriorities, and has the basic principle of carrying out shareholder distributions in line with the Company’s
financial performance while securing a level of retained earnings necessary for stable growth. During thecurrent fiscal year, the Company considered various methods for distributing profit to shareholders based
upon the Company’s earnings outlook and possible future growth in funding needs. The Company wasable to increase stable earnings from rental income, asset management fees, and building maintenancefees and cover all fixed costs (sales and management expenses as well as interest expenses) from suchstable earnings. Accordingly, the Company was able to create a strong profit base and resume dividend
payments of 200 yen per share at the end of the fiscal period after a five-year suspension in dividends.
10. Other Material Matters Regarding the Company
Merger of Consolidated Subsidiaries
The Company decided on April 12, 2013 to merge its three facility management subsidiaries, Takara
Building Maintenance Co., Ltd. (“TBM”), Nichibei Building Services Co., Ltd. (“NBS”), and Nichibei
Security Services Co., Ltd. (“NSS”).
(1) Purpose of the Merger
The merger brings together the three firms’ distinctive know-how in building management, staffing
services, construction, and security services to form a comprehensive facility management company.
The merged firm will carry out the management of properties owned and managed by the Company
through setting up a Tokyo branch, while maintaining the existing Tokatsu area covered by NBS/NSS
by setting up a Matsudo branch.
(2) Merger Overview(i) Schedule
Approval of Board of Directors
Execution Date of the Merger Agreement
Effective Date of Merger

April 17, 2013
April 18, 2013
June 1, 2013 (subject to change)

Note: The merger is conditional upon regulatory approval.
(ii)

MethodThis will be a merger by absorption. NBS and NSS will be dissolved, and TBM will be the surviving
corporation.
(iii) Payment and Merger Consideration
There will be no payment or merger consideration because each subsidiary is 100% owned by theCompany.
-9-(3) Subsidiaries Overview(i)

Overview of the Surviving Corporation
Takara Building Maintenance (TBM)

Company Name

Takara Building Maintenance Co., Ltd.

Address

4-10-1 Nakanedai, Ryugasaki, Ibaraki

Representative

Yasutoyo Senda
President & Representative Director

Business

Building management and staffing services

Paid-in Capital

10 million yen

Date of Incorporation

April 20, 1981

# of Shares Outstanding

20,000 sharesFiscal Year-End

February

Shareholder

Ichigo Group Holdings Co., Ltd. 100%Overview of the Absorbed Corporations
Nichibei Building Services (NBS)
Company Name

Nichibei Building Services Co., Ltd.

Address

5 Nishimabashisaiwaicho, Matsudo, Chiba

Representative

Shoyo Ishimatsu
President & Representative Director

Business

Building maintenance, fire protection, building cleaning

Paid-in Capital

16 million yen

Date of Incorporation

September 3, 1970

# of Shares Outstanding

79 shares

Fiscal Year-End

February

Shareholder

Ichigo Group Holdings Co., Ltd. 100%

Nichibei Security Services (NSS)
Company Name

Nichibei Security Services Co., Ltd.

Address

5 Nishimabashisaiwaicho, Matsudo, Chiba

Representative

Shoyo Ishimatsu
President & Representative Director

Business

Security services

Paid-in Capital

10 million yen

Date of Incorporation

August 25, 1975

# of Shares Outstanding

399 sharesFiscal Year-End

February

Shareholder

Ichigo Group Holdings Co., Ltd. 100%

- 10 -

(ii) Relationship Between TBM, NBS, and NSS
Each corporation is a 100% subsidiary of the Company.

(4) Overview of the Post-Merger Subsidiary
Company Name

Takara Building Maintenance Co., Ltd.

Address

4-10-1 Nakanedai, Ryugasaki, Ibaraki

Representative

Yasutoyo Senda
President & Representative Director

Business

Comprehensive Facility Management (Building management,
Staffing services, Security services)

Paid-in Capital

10 million yen

Fiscal Year-End

February

Stock Split
Pursuant to a resolution of the meeting of the Board of Directors held on April 19, 2013, shares of theCompany shall be split at a rate of 200 shares to one effective September 1, 2013. The purpose of the share
split is to increase share liquidity and expand the potential base of Ichigo shareholders in light of the future
growth prospects of the Company. In addition, in accordance with the “Action Plan for Consolidating
Trading Units” announced by all of the Japanese stock exchanges on November 27, 2007, the Company
shall adopt a share-trading unit system with a minimum trading lot of 100 shares.

- 11 -

II. Matters Regarding the Current Status of the Company
1. Matters Regarding Shares in the Company (as of February 28, 2013)(1) Number of Authorized Shares:

2,750,000 shares(2) Total Number of Shares Issued:

2,259,934 shares(Including treasury stock of 20,000 shares)(3) Number of Shareholders:

19,666(4) Major Shareholders (top 10)
Investment in the Company
Name
Number of shares held (shares)
ICHIGO TRUST PTE. LTD.

Shareholding ratio (%)

1,785,116

79.69%OSAKA SECURITIES FINANCING CO.,LTD

14,192

0.63%

MELLON BANK TREATY CLIENTSOMNIBUS

11,686

0.52%

BANK OF NEW YORK GCM CLIENT
ACCOUNT JPRD ISG FEAC

11,0880.49%

YOICHI AOYAMA

10,732

0.47%

MONEX, INC.

6,517

0.29%

SBI SECURITIES CO., LTD.

6,339

0.28%

NOMURA SECURITIES CO., LTD.

5,476

0.24%

KUMIKO FURUI

3,830

0.17%

MATSUI SECURITIES CO., LTD.

3,808

0.17%

1,858,784

82.98%

TOTAL(Note)The shareholding ratio is calculated excluding treasury stock (20,000 shares).

- 12 -

2. Stock Acquisition Rights (aka Stock Options)(1) Stock Acquisition Rights Issued as Consideration for Execution of Duties by Officers of the Company(as of February 28, 2013)
Number

9th Stock Acquisition Right Plan

Date of resolution

July 14, 2009

Number of stock acquisition rights

13,188 units (Note 1)

Type and number of shares

13,188 common shares (1 share per unit)
No payment is required in exchange for stock acquisitionrightsIssue Price
Amount due upon exercise of each stockacquisition right
Period for exercise of rights
Exercise Conditions
Holding by Directors

Directors(excluding External Directors)
External Directors
Statutory Executive Officers(excluding those who are Directors)¥13,381 per share
August 15, 2011 – August 14, 2016
(Note 2)
Number of stock acquisition rights:
Number of shares:
Number of holders:Number of stock acquisition rights:
Number of shares:
Number of holders:Number of stock acquisition rights:
Number of shares:
Number of holders:

3,610 units
3,610 shares2
200 units
200 shares
1
910 units
910 shares
3(Note 1) Of the total stock acquisition rights, 4,720 have been issued to Directors.
(Note 2) Exercise Conditions(i)

Any person who is allotted stock acquisition rights is required to remain in the position of Director,
Statutory Executive Officer, Advisor or employee of the Company, or Director, Statutory Executive Officer,
Auditor or Employee of the Company’s subsidiaries and other similar positions until the rights are exercised,
except for retirement due to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.

(ii) Pledges and other disposition of stock acquisition rights are not permitted.
(iii) If a person who is allotted stock acquisition rights should become deceased, their heir may exercise therights subject to the conditions provided for in the Stock Acquisition Rights Allotment Agreement as
described in (iv).
(iv) Other conditions are subject to the Stock Acquisition Rights Allotment Agreement entered into between the
Company and recipient of stock acquisition rights pursuant to the resolution of the Company’s Board of
Directors.

- 13 -

Number

10th Stock Acquisition Right Plan

Date of resolution

August 8, 2011

Number of stock acquisition rights

18,890 units (Note 1)

Type and number of shares

18,890 common shares (1 share per unit)
No payment is required in exchange for stock acquisitionrightsIssue Price
Amount due upon exercise of each stockacquisition right
Period for exercise of rights
Exercise Conditions
Holding by Directors

Directors(excluding External Directors)
External Directors
Statutory Executive Officers(excluding those who are Directors)¥11,000 per share
August 9, 2013 – August 8, 2018
(Note 2)
Number of stock acquisition rights:
Number of shares:
Number of holders:Number of stock acquisition rights:
Number of shares:
Number of holders:Number of stock acquisition rights:
Number of shares:
Number of holders:

3,750 units
3,750 shares2
450 units
450 shares
4
1,000 units
1,000 shares
5(Note 1) Of the total stock acquisition rights, 5,200 units have been issued to Directors.
(Note 2) Exercise Conditions(i) The Company must fully complete its buyback of either 61,693 shares or 616,930,000 yen in the sharebuyback approved on August 8, 2011.
(ii) Any person who is allotted stock acquisition rights is required to remain in the position of Director,
Statutory Executive Officer, Advisor or employee of the Company, or Director, Statutory Executive Officer,
Auditor or employee of the Company’s subsidiaries and other similar positions until the rights are exercised,
except for retirement due to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(iii) Pledges and other disposition of stock acquisition rights are not permitted.
(iv) If a person who is allotted stock acquisition rights should become deceased, their heir may exercise therights subject to the conditions provided for in the Stock Acquisition Rights Allotment Agreement as
described in (v).
(v) Other conditions are subject to the Stock Acquisition Rights Allotment Agreement entered into between the
Company and recipient of stock acquisition rights pursuant to the resolution of the Company’s Board of
Directors.

- 14 -

Number

11th Stock Acquisition Right Plan

Date of resolution

August 24, 2012

Number of stock acquisition rights

21,870 units (Note 1)

Type and number of shares

21,870 common shares (1 share per unit)
No payment is required in exchange for stock acquisitionrightsIssue Price
Amount due upon exercise of each stockacquisition right
Period for exercise of rights
Exercise Conditions
Holding by Directors

Directors(excluding External Directors)
External Directors
Statutory Executive Officers(excluding those who are Directors)¥12,000 per share
August 25, 2014 – August 24, 2019
(Note 2)
Number of stock acquisition rights:
Number of shares:
Number of holders:Number of stock acquisition rights:
Number of shares:
Number of holders:Number of stock acquisition rights:
Number of shares:
Number of holders:

4,425 units
4,425 shares2
360 units
360 shares
4
1,300 units
1,300 shares
5(Note 1) Of the total stock acquisition rights, 6,085 units have been issued to Directors.
(Note 2) Exercise Conditions(i) The Company must distribute dividend for the thirteenth term (from March 1, 2012 to February 28, 2013).
(ii) Any person who is allotted stock acquisition rights is required to remain in the position of Director,
Statutory Executive Officer, Advisor or employee of the Company, or Director, Statutory Executive Officer,
Auditor or employee of the Company’s subsidiaries and other similar positions until the rights are exercised,
except for retirement due to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(iii) Pledges and other disposition of stock acquisition rights are not permitted.
(iv) If a person who is allotted stock acquisition rights should become deceased, their heir may exercise therights subject to the conditions provided for in the Stock Acquisition Rights Allotment Agreement as
described in (v).
(v) Other conditions are subject to the Stock Acquisition Rights Allotment Agreement entered into between the
Company and recipient of stock acquisition rights pursuant to the resolution of the Company’s Board of
Directors.

- 15 -

(2) Stock Acquisition Rights Issued for the Consideration for Execution of Duties by Employees during theCurrent Fiscal Year

Number

11th Stock Acquisition Right Plan

Date of resolution

August 24, 2012

Number of stock acquisition rights

22,000 units (Note 1)

Type and number of shares

22,000 common shares (1 share per unit)
No payment is required in exchange for stock acquisitionrightsIssue Price
Amount due upon exercise of each stockacquisition right
Period for exercise of rights

Holding by
Employees

Exercise Conditions
Employees(excluding those who are Directors
and Statutory Executive Officers)
Directors and Employees of
Subsidiaries¥12,000 per share
August 25, 2014 – August 24, 2019
(Note 2)
Number of stock acquisition rights:
Number of shares:
Number of holders:Number of stock acquisition rights:
Number of shares:
Number of holders:

15,915 units
15,915 shares112- units- shares-(Note 1) Of the total stock acquisition rights, 15,915 units have been issued to employees.
(Note 2) Exercise Conditions(i)

The Company must distribute dividend for the thirteenth term (from March 1, 2012 to February 28, 2013).

(ii) Any person who is allotted stock acquisition rights is required to remain in the position of Director,
Statutory Executive Officer, Advisor or employee of the Company, or Director, Statutory Executive Officer,
Auditor or employee of the Company’s subsidiaries and other similar positions until the rights are exercised,
except for retirement due to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(iii) Pledges and other disposition of stock acquisition rights are not permitted.
(iv) If a person who is allotted stock acquisition rights should become deceased, their heir may exercise therights subject to the conditions provided for in the Stock Acquisition Rights Allotment Agreement as
described in (v).
(v) Other conditions are subject to the Stock Acquisition Rights Allotment Agreement entered into between the
Company and recipient of stock acquisition rights pursuant to the resolution of the Company’s Board of
Directors.

(3) Other Material Matters regarding Stock Acquisition Rights
N/A- 16 -

3. Officers of the Company(1) Corporate Directors (as of February 28, 2013)
Position

Name

Responsibility and Other Business Affiliations

Scott Callon

Chairman of the Board of Directors, Nominating Committee
Member, Compensation Committee Member, Vice-Chairman ofCompliance Committee
Chairman & Representative Statutory Executive Officer of Ichigo
Group Holdings Co., Ltd.
Partner and Chief Executive Officer of Ichigo Asset Management,
Ltd.

Kenji Iwasaki

Chairman of Nominating Committee, Chairman of Compensation
Committee, Vice-Chairman of Compliance Committee
President & Representative Statutory Executive Officer of Ichigo
Group Holdings Co., Ltd.
Chairman & Statutory Executive Officer of Ichigo Real Estate
Investment Advisors Co., Ltd.
Chairman & Director of Ichigo ECO Energy Co., Ltd.

Director

Minoru Ishihara

Compliance Committee Member
Executive Vice President & Statutory Executive Officer of Ichigo
Group Holdings Co., Ltd.
Executive Vice President & Statutory Executive Officer of Ichigo
Real Estate Investment Advisors Co., Ltd.
President & Representative Director of Miyako City Co., Ltd.

External Director

Katsu Fujita

Chairman of Audit Committee, Nominating Committee Member,Compensation Committee Member
Member of Conciliation of Civil Affairs, Tokyo District Court

External Director

Tetsuya Fujita

Chairman of Compliance Committee, Audit Committee Member,
Nominating Committee Member, Compensation Committee
MemberAuditor of St. Thomas University
President of Remark Japan Co., Ltd.

External Director

Maki Kumagai

Nominating Committee Member, Compensation Committee
Compliance Committee Member
Partner of Nijubashi Partners

External Director

Noriko Kawate

Audit Committee Member
President of CLEA Consulting Co., Ltd.
Employee of Gracia Corporation

Director

Director(Note) 1. Mr. Katsu Fujita, Chairman of the Audit Committee, in his previous employment served as the head of thedivision in charge of finance and accounting for nine years and thus has extensive knowledge of the financeand accounting fields.
2. Ms. Noriko Kawate is a Certified Public Accountant as well as a Certified Tax Accountant and thus has
extensive knowledge of the finance and accounting fields.
3. The Company has registered with Osaka Securities Exchange that Mr. Katsu Fujita, Mr. Tetsuya Fujita, Ms.
Kumagai, and Ms. Kawate are independent directors.

- 17 -

(2) Statutory Executive Officers (as of February 28, 2013)
Position

Name

Responsibility and Other Business Affiliations
Overall Group Management
Partner and Chief Executive Officer of Ichigo AssetManagement, Ltd.
Overall Group Management
Chairman & Statutory Executive Officer of Ichigo Real
Estate Investment Advisors Co., Ltd.
Chairman & Director of Ichigo ECO Energy Co., Ltd.
Administration
Executive Vice President & Statutory Executive Officerof Ichigo Real Estate Investment Advisors Co., Ltd.
President & Representative Director of
Miyako City Co., Ltd.

Chairman & Representative
Statutory Executive Officer

Scott Callon

President & Representative
Statutory Executive Officer

Kenji Iwasaki

Executive Vice President &Statutory Executive Officer

Minoru Ishihara

Executive Managing Director& Statutory Executive Officer
Statutory Executive Officer

TakashiMinamikawa
Eri Murai

Statutory Executive Officer

Haruki Nakane

Compliance

Statutory Executive Officer

Hiroshi Shimazu

Audit

Statutory Executive Officer

Hisayoshi Towata

FinanceFinance
Administration(3) Directors and Executive Officers who Retired during the Current Fiscal Year
Name

Retirement
Date

Position, Responsibility, and Other Business Affiliations
at Retirement
External Director, Nominating Committee Member,Compensation Committee Member
Director of Frontier Construction & Partners Inc.
External Director, Partner of Ichigo Asset Management
International Pte. Ltd.

Katsuhiko Hattori

May 26, 2012

Rob Crawford

May 26, 2012

Makoto Fukuhara

May 26, 2012

External Director, Partner and Executive Vice President of
Ichigo Asset Management, Ltd.

Yonezo Fukuoka

May 26, 2012

Statutory Executive Officer (Compliance)

Kenichi Nagao

May 26, 2012

Statutory Executive Officer (Business Development)

Wataru Orii

July 1, 2012

Kazuya Sahashi

July 1, 2012

Xu Zhijun

July 1, 2012

Executive Vice President & Statutory Executive Officer(Business Development)
President & Representative Director of Ichigo REITManagement Co., Ltd. (now Ichigo Real Estate Investment
Advisors, Co., Ltd.)
Executive Vice President & Statutory Executive Officer,(Strategic Investment & International)
Statutory Executive Officer (International Business)

Kenji Goto

July 1, 2012

Statutory Executive Officer (Strategic Investment)- 18 -

(4) Total Remuneration Paid to Directors and Statutory Executive Officers
Category

Number of
Recipients

Amount Paid

Directors(of whom are External Directors)

7(5)¥110 million(¥30 million)

Statutory Executive Officers

11¥15 million

Total(of whom are External Directors)

18(5)¥125 million(¥30 million)(Note) 1. As of the end of the term, there are seven Directors (including four External Directors) and eight Statutory
Executive Officers (three of whom are also Directors), resulting in a total of twelve officers. Since those whoare both a Statutory Executive Officer and a Director do not receive Statutory Executive Officer's
remuneration, the total amount and number of recipients are shown in the row of Directors and not in the rowof Statutory Executive Officers.
2. The numbers above do not include one Statutory Executive Officer who is also a Director as he does notreceive remuneration.
3. The total number of Directors indicated above (not including the one Director without remuneration) includes
7 Directors who have left the Company as of the end of the current fiscal year. This accounts for thediscrepancy between the current number of Directors (12) and total number of Directors indicated above (notincluding the one Director without remuneration).
4. The amount paid includes remuneration in the form of stock options of ¥8 million for Directors (of which¥1 million is for External Directors) and stock options of ¥1 million for Statutory Executive Officers.
5. In addition, the Company paid ¥70 million as employee compensation to eight Statutory Executive Officers.
This amount includes remuneration in the form of stock options of ¥3 million.

(5) Policy on Determining Remuneration for Directors and Statutory Executive Officers(i) Basic Policy
Remuneration for Directors and Statutory Executive Officers of the Company is determined based on
the duties of each person, contribution to the Company, base compensation, prior experience, etc.
(ii) Specific Policies- Remuneration for Directors
Remuneration for Directors consists of a monthly base salary and a performance-based bonus. The
monthly base salary is a fixed amount based on the role and responsibilities of each Director, while
the performance-based bonus is based on the Company’s performance.
- Remuneration for Statutory Executive Officers
Remuneration for Statutory Executive Officers consists of a monthly base salary and aperformance-based bonus. The monthly base salary is a fixed amount based on the role andresponsibilities of each Statutory Executive Officer, whereas the performance-based bonus is basedon the performance of the Company and the department and individuals for which each Statutory
Executive Officer is responsible.
- Stock Options
Stock options are granted to Directors and Statutory Executive Officers to strengthen theirmotivation to improve performance for the benefit of shareholders. These stock options are granted
in addition to the remuneration described above.

- 19 -

(6) Outside Offices Held(i) Positions in Other Companies and the Relationship between the Company and these Other Companies- Tetsuya Fujita, External Director, is also President of Remark Japan Co., Ltd. The Company has
no relationship with Remark Japan Co., Ltd.
-

Maki Kumagai, External Director, is also Partner of Nijubashi Partners. The Company has no
relationship with Nijubashi Partners.

-

Noriko Kawate, External Director, is also President of CLEA Consulting Co., Ltd. and an
employee of Gracia Corporation. The Company has no relationship with CLEA Consulting Co.,
Ltd. or Gracia Corporation.

(ii) Positions as External Directors in Other Companies- Katsu Fujita, External Director, is a Member of the Conciliation of Civil Affairs for the Tokyo
District Court. The Company has no relationship with the Tokyo District Court.
- Tetsuya Fujita, External Director, is an Auditor of St. Thomas University. The Company has no
relationship with St. Thomas University.
(iii) Relationship with the Company or Related Entities of the Company
The four External Directors, to the best of the Company’s knowledge, have no spouse or relatives inthe third degree or closer who are Statutory Executive Officers of the Company or related entities of
the Company.

- 20 -

(iv) Principal Activities in the Current Fiscal Year
Activities

External
Director

External
Director

External
Director

External
Director

Katsu Fujita

Attended 12 out of 12 meetings (attendance rate: 100%) of the Board of
Directors held in the current fiscal year. Also attended 6 out of 6
meetings (attendance rate: 100%) of the Nominating Committee held in
the current fiscal year. Also attended 21 out of 21 meetings (attendance
rate: 100%) of the Audit Committee held in the current fiscal year andattended 8 out of 8 meetings (attendance rate: 100%) of theCompensation Committee held in the current fiscal year.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

Tetsuya Fujita

Attended 12 out of 12 meetings (attendance rate: 100%) of the Board of
Directors held in the current fiscal year. Also attended 21 out of 21
meetings (attendance rate: 100%) of the Audit Committee and attended 5
out of 5 meetings (attendance rate: 100%) of the Compliance Committee
held in the current fiscal year. Also attended 4 out of 4 meetings(attendance rate: 100%) of the Nominating Committee held while he wasa member, and 6 out of 6 meetings (attendance rate: 100%) of theCompensation Committee held while he was a member.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

Maki
Kumagai

Attended 11 out of 12 meetings (attendance rate: 92%) of the Board of
Directors held in the current fiscal year. Also attended 6 out of 6
meetings (attendance rate: 100%) of the Nominating Committee held in
the current fiscal year and attended 8 out of 8 meetings (attendance rate:100%) of the Compensation Committee held in the current fiscal year.
Also, attended 5 out of 5 meetings (attendance rate: 100%) of theCompliance Committee held in the current fiscal year.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

NorikoKawateAttended 12 out of 12 meetings (attendance rate: 100%) of the Board of
Directors held in the current fiscal year. Also attended 21 out of 21
meetings (attendance rate: 100%) of the Audit Committee held in thecurrent fiscal year.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

(v) Outline of Limited Liability Agreement with External Directors
The Company has entered into agreements to limit liability under Article 423, paragraph 1 of theCompany Law pursuant to the provisions of Article 427, paragraph 1 thereof in order to retain
talented persons as External Directors.
The extent of liability for compensation under the agreements is the minimum limited liability
amount as defined in Article 425, paragraph 1 of the Company Law; provided that the liability islimited only when the External Directors have performed their duties in good faith and without grossnegligence.
4. Independent Auditor(1) Grant Thornton Taiyo ASG- 21 -

(2) Amount of Fees for the Independent Auditor(i)Amount of fees for the Independent Auditor for the current fiscal year

¥77 million(ii)

Total money and other financial benefits payable by the Company andsubsidiaries to the Independent Auditor¥98 million(Note) Audit agreements between the Company and the Independent Auditor do not clearly itemize the amountsof audit fees for the audits under both the Company Law and the Financial Instruments and Exchange
Law, and, as a matter of practicality, the Company is not able to itemize them. Therefore, the amount offees for the Independent Auditor for the current fiscal year shows the total amount.

(3) Policy for the Determination of Removal or Non-Reappointment of the Independent Auditor
If there is any reasonable doubt about the Independent Auditor performing its duties, the Audit
Committee will consider the removal or non-reappointment of the Independent Auditor based on thefacts. If the Audit Committee determines that the removal or non-reappointment is appropriate, it willpropose the same to the Annual General Meeting of Shareholders pursuant to the Regulations of the
Audit Committee.
5. Structure to Ensure Appropriate Business Activity【1】Basic View on Internal Control System
The Company, pursuant to the Company Law, has set forth a “Basic Policy for the Establishment ofStructure of Internal Controls,” established the required internal regulations, ensured the legality andefficiency of the business of the Company, and established an appropriate risk management system.
The Company will strive to improve and reinforce these systems through continuous review.
(1) Internal Control to Ensure that Statutory Executive Officers and Employees Execute Their
Duties in Conformity with Laws and Regulations and the Articles of Incorporation(i) Corporate Governance- The Board of Directors determines material matters regarding management and supervises theexecution of duties by Statutory Executive Officers pursuant to laws and regulations, the Articles
of Incorporation, the resolutions of the Annual General Meeting of Shareholders, the Regulationsof the Board of Directors, the Ichigo Group’s Code of Corporate Ethics, the Ichigo Group’s Codeof Conduct, the Regulations of Administrative Authority and other rules. The Board of Directors
has established the Proposal and Reporting Standards to the Board of Directors and makes
decisions on the execution of business to be determined by the Board of Directors pursuant to theStandards.
- The Statutory Executive Officers make decisions on the execution of business that are delegatedby the Board of Directors, and perform their duties pursuant to these decisions, the resolution of
the Board of Directors and internal regulations.
- In order for the Board of Directors to supervise the execution of duties by Statutory Executive
Officers, the Statutory Executive Officers report on the status of the execution of business to theBoard of Directors at least once in three months. Statutory Executive Officers monitor andsupervise the execution of each other’s duties.
- The status of the execution of duties by Statutory Executive Officers will be audited by the Audit
Committee.
(ii) Compliance- The Company has established the Ichigo Group’s Code of Corporate Ethics and the Ichigo
Group’s Code of Conduct which provide rules and regulations for action to be taken by officers
and employees including Directors and Statutory Executive Officers.
- The Company has established the Compliance Committee to deliberate major issues regarding
compliance. The Compliance Committee is independent from the Statutory Executive Officers.
- 22 -

- The Company has appointed a Chairman & Representative Statutory Executive Officer and a
President & Representative Statutory Executive Officer, a Statutory Executive Officer(Compliance), and a division in charge of compliance management (Compliance) directly
reporting to the President & Representative Statutory Executive Officer to promote compliance.
- The Company maintains an internal reporting system whereby Directors, Statutory Executive
Officers, and employees may report any questionable acts in terms of compliance through internalreporting contacts or outside lawyers.
(iii) Structure to Ensure Appropriate Financial Reports- The Company has established internal systems to ensure lawful, appropriate financial reports by
establishing internal regulations and by complying with the Financial Instruments and ExchangeAct, accounting standards and other related laws and regulations.
- The President & Representative Statutory Executive Officer and Audit Department promote andestablish an internal structure which complies with J-SOX.
(iv) Internal Audit
The Company has established a Statutory Executive Officer (Compliance) and an Internal Audit
Department which reports directly to the Audit Committee. The Statutory Executive Officer(Compliance) and Internal Audit Department conduct an internal audit of business with respect tocompliance with laws and regulations, the Articles of Incorporation, internal regulations, and theappropriateness of the execution of duties, and reports the results of such audit to the Audit
Committee, the President & Representative Statutory Executive Officer, and the Board of Directors.
The Statutory Executive Officer (Compliance) and the Internal Audit Office reports on corrective
activities and the improvement of matters indicated at the internal audit to the Audit Committee, theChairman & Representative Statutory Executive Officer, the President & Representative Statutory
Executive Officer, and the Board of Directors.
(v) Rejection of Anti-Social Forces- In order to prevent anti-social forces from entering into the real estate and financial markets, theCompany has established the Ichigo Group’s Code of Corporate Ethics which prohibits interaction
with anti-social forces in cooperation and coordination with the Police Department and otherinstitutions.
- The Company has appointed a Statutory Executive Officer (Compliance) and ComplianceDepartment to eliminate interaction with anti-social forces by enhancing coordination andcooperation with the Police Department, lawyers, and other external experts; become a member ofpolice-related institutions; gather information; screen business counterparties; include provisions
against anti-social forces in agreements, etc.
- In the event an anti-social force makes a request, etc. with respect to the Company, the Statutory
Executive Officer (Compliance) shall promptly contact the police, outside legal advisors, and eachgroup company and take a forceful attitude to reject such request, etc.
(2) Systems Regarding the Retention and Control of Information in the Execution of Duties by
Statutory Executive Officers
The Company properly retains and manages documents and other information in the execution ofduties by the Statutory Executive Officers with due care and in compliance with laws and regulations
and internal regulations.
(3) Regulations and Other Systems regarding Risk Management(i) The Company controls the risk management of each department, establishes basic policies on risk
management, and determines the execution of risk management and other material mattersthrough the Business Management Department. The Business Management Department also
supports each department in establishing a risk management system and establishes acompany-wide, cross-departmental risk management system.
- 23 -

(ii) The Company, in order to enhance its risk management, has appointed Chairman &Representative Statutory Executive Officer, Statutory Executive Officer (Compliance), andCompliance Department as the risk management head.
(iii) Statutory Executive Officer (Compliance), and Compliance Department ensure risk managementof material matters that involve management decisions. These require approvals from the
President & Representative Statutory Executive Officer.
(iv) With respect to natural disasters and other risk management systems, the Company is establishingsystems with the cooperation of each department, primarily driven by the Business Management
Department. The Company has established a system which creates a task force, prevents an
expansion of damage, and allows for speedy recovery in the event of crisis.
(4) System to Ensure Effective Execution of Duties by Statutory Executive Officers(i) The Board of Directors authorizes the Statutory Executive Officers to make certain discretionary
for the appropriate and agile execution of duties. In addition, in order to comprehensively discussmaterial management matters which require approvals from the Chairman & Representative
Statutory Executive Officer, the President & Representative Statutory Executive Officer and eachdivision head & Statutory Executive Officer, the Senior Statutory Executive Officer (Finance)
convenes meetings including Statutory Executive Officers and ensures a smooth execution ofduties.
(ii) The Company creates a mid-term management plan, an annual President’s objective, annual
Group target, and annual division targets based on Ichigo Group principles. The Senior Statutory
Executive Officer (Finance) ensures effective and efficient management by charting the progressagainst these objectives.
(5) When the Audit Committee Requires Directors and Employees to Assist in the Performance of
its Duties
When required by the Audit Committee, Directors and Employees assist in the performance of its
duties.
(6) The Independence of Directors and Employees from Statutory Executive Officers
Directors and employees who assist in the performance of the duties of the Audit Committee report to
the Audit Committee. The appointment, transfer, appraisal, and compensation of the relevant
employees require the consent of the Audit Committee. This ensures independence from the Statutory
Executive Officers. Other matters regarding the independence of such Directors and employees fromthe Statutory Executive Officers are pursuant to internal regulations as separately provided.
(7) System of Reports by Statutory Executive Officers and Employees to the Audit Committee andOther Systems regarding Reports to the Audit Committee(i) Audit Committee Members may attend the meetings of the Board of Directors, the Compliance
Committee, and other important meetings and hear the status of the execution of duties by Statutory
Executive Officers, inspect related materials, and ask for explanations and reports at the meetings.
(ii) All Statutory Executive Officers, heads of departments, and other staff members must explain andreport to the Audit Committee and Audit Committee Members as required.
(iii) Statutory Executive Officers and employees immediately report to the Audit Committee Members
1. Details of decisions which may have a material impact on finance and business (including
matters regarding compliance or risk management)
2. Matters that damage the establishment of internal compliance systems
3. Matters that affect the operation of internal reporting systems
4. Other matters that the Audit Committee or any member of the Audit Committee recognizes asmaterial- 24 -

(8) Other Systems to Ensure Effective Audits by the Audit Committee(i) The Internal Audit Office works closely with the Audit Committee and the Audit Committee
Members by discussing the internal audit plan, conducting internal audits, and reporting the results
to the President & Representative Statutory Executive Officer, the Audit Committee and the Audit
Committee Members. Audit Committee Members and the Internal Audit Office also work closelywith the independent auditor and exchange opinions about matters on internal audit.
(ii) The Audit Committee or the Audit Committee Member designated by the Audit Committee may, if
it deems necessary, retain any lawyers, certified public accountants, consultants and other outsideadvisors at the Company’s cost without prior approval from the Board of Directors or the Statutory
Executive Officers.
(iii) The Audit Committee Member designated by the Audit Committee reports the status of theexecution of duties by the Audit Committee to the Board of Directors at least once every threemonths.
(9) System to Ensure Appropriate Business by the Company and its Subsidiaries(i) Ichigo Group subsidiaries share the Ichigo Group’s Management Philosophy, Code of Corporate
Ethics, and Code of Conduct.
(ii) The Company’s subsidiaries, pursuant to internal regulations, are managed and controlled by thedivisions that are in charge of managing subsidiaries, which are also responsible for providing
advice on matters of each company’s corporate governance, compliance, and risk management.
(iii) The Audit Committee works closely with Group companies by holding liaison meetings with theauditors of the Group companies to exchange opinions about material matters on internal audit.
(iv) The business activities of the Company’s subsidiaries are subject to an internal audit by the Internal
Audit Office to the extent that they do not conflict with laws and regulations.
(v) The Company undertakes, in the case of a transaction with Ichigo Trust, the controlling shareholderof the Company, it takes special care to protect minority shareholders and has in place and follows
appropriate procedures, including Board of Directors resolution or reporting.
(vi) In order to prevent conflicts of interests, the Company sets the Conflict-of –Interest Control Policy,
and takes measures to prevent damages to the Company’s clients’ interests.
【2】Policies Against Anti-Social Forces
The Company has a policy against anti-social forces included in Ichigo Group’s Code of Corporate
Ethics, as well as established an internal system against anti-social forces based on its Basic Policies on
Internal Control System.
(1) Responsible Departments and Persons
The Company has appointed the Statutory Executive Officer (Administration) as a responsible
manager and Compliance department as a responsible department which handle against claims fromanti-social forces in cooperation with relevant departments.
The Company also has former prosecutors and judges as external directors or advisors who help
supervise the Company’s anti-social forces system.
(2) Cooperation and Coordination with External Experts
The Company has established a system against anti-social forces system in cooperation andcoordination with external experts such as the Organized Crime Investigation Division of Tokyo
Metropolitan Police Department, the Marunouchi Police Department, and external lawyers, and is amember of associations to combat anti-social forces in Tokyo and Osaka to receive guidance andshare information.

- 25 -

(3) Collection and Management of Information on Anti-Social Forces
The Head of Compliance is responsible for managing information on anti-social forces gathered inand outside of the Company, and uses such information to ensure transaction counterparties are notanti-social forces.
(4) No Acceptance of Anti-Social Forces
The Company shall not accept any claims from anti-social forces but shall reject them with a firm
attitude, in cooperation and coordination with external experts.
(5) Implementation of Provisions Against Anti-Social Forces
The Company shall set forth provisions against anti-social forces in standard written agreements, andterminate contracts if the counterparty is discovered to be an anti-social force.
(6) Anti-Social Forces Training
Directors and employees of the Company check their behavior based on the Compliance Check List
submitted to Chairman and Representative Statutory Executive Officer and President andRepresentative Statutory Executive Officer on a yearly basis. This Compliance Check List
contributes to raise awareness and check behavior of directors and employees and reinforce
understanding of procedures against anti-social forces and money laundering. Guidance from external
experts is also delivered to all directors and employees promptly to raise awareness and preventanti-social forces.
6. Policy on Corporate Control (Takeover Defenses)
The Company has not adopted any takeover defense, poison pill, or any other policy with respect topersons who would seek to control decisions on the Company’s financial and business policies.

- 26 -

Consolidated Balance Sheet(as of February 28, 2013)(Million yen)

Item
AssetsCurrent Assets
Cash and cash equivalents
Trade notes and accounts receivable

Amount63,581
9,713
548

Operational investments in loans

3,636

Operational investments in securities

4,271

Real estate for sale46,176

Deferred tax assets
OthersLess: allowance for doubtful
accounts
Fixed Assets
Tangible Assets
Buildings
Land
Others369

Amount
7,304
64
484
966
2,263
65

Accrued bonuses

25

2,042

Deferred tax liabilities

15(3,177)

Other current liabilities

3,419

16,846
10,047
2,863
7,082
101

Long-Term Liabilities
Long-term borrowings
Long-term non-recourse loans
Deferred tax liabilities
Negative goodwill
Long-term security deposits
received
Other long-term liabilities
Total Liabilities
Net Assets
Shareholders’ Equity
CapitalCapital reserve

42,056
5,456
32,776277
270

Intangible Assets

2,223

Goodwill
OthersInvestments and Other Assets
Investments in securities
Long-term loans receivable
Other investments
Less: allowance for doubtful
accounts

2,203
20
4,575
4,117
13
545

Total Assets

Item
Liabilities
Current Liabilities
Trade notes and accounts payable
Short-term borrowings
Long-term borrowings (due within
one year)Long-term non-recourse loans (duewithin one
year)
Income taxes payable(101)

80,428(Amounts less than one million yen have been rounded off.)- 27 -

Retained earnings
Treasury stock
Other Comprehensive Income
Unrealized gain on other securities,
net
Foreign currency translation
adjustment
Stock Acquisition Rights
Minority Interests
Total Net Assets
Total Liabilities and Net Assets

3,230
46
49,361
28,27918,113
2,429
7,923
(187)
177
160
16
143
2,466
31,06680,428

Consolidated Income Statement
From March 1, 2012
To February 28, 2013
(Million yen)

Item
Revenues
Cost of Revenues
Gross Profit
SG&A
Operating Profit
Non-Operating Profit
Interest income
Dividend income
Amortization of negative goodwill
Others
Non-Operating Expenses
Interest on debt
OthersRecurring Profit
Extraordinary Gain
Gain on sales of fixed assets
Gain on sales of investment securities
OthersExtraordinary Loss
Loss on sale and retirement of fixed assets
Impairment loss
Loss on valuation of investment securities
Office move
OthersProfit before Income Taxes
Income taxes-current
Income taxes-deferred
Profit before Gain on Minority Interest
Gain on minority interests
Net Profit

Amount16,397
11,422
4,974
3,130
1,844
3
24
90
36

238
26

9
72
0
1
33
62
19
8
54
(106)

(Amounts less than one million yen have been rounded off.)- 28 -

155

265
1,734

83

124
1,693
(51)
1,745
108
1,637

Consolidated Statement of Changes in Shareholders' Equity
From March 1, 2012
To February 28, 2013
(Million yen)

Balance as of March 1, 2012
Changes in the current fiscal year
Share Issuance
Change in consolidated subsidiaries
Net profit
Changes in items other thanshareholders’ equity
Total changes
Balance as of February 28, 2013

Commonstock
18,078

Shareholders’ Equity
CapitalRetained
Treasury
reserveearnings
stock
2,395
6,298
-187

34

Total shareholders’equity26,584

34

69
-11
1,637

-11
1,637

34
18,113

34
2,429

1,625
7,923

-187

Other Comprehensive Income
Stock
Foreign
Total Other
Unrealized
acquisition
currency
Comprehensive
gain on otherrightstranslation
Incomesecurities, net
adjustment
-604
-7
-612
116

Balance as of March 1, 2012
Changes in the current fiscal year
Share Issuance
Change in consolidated
subsidiaries
Net profit
Changes in items other than765
24
shareholders’ equity
Total changes
765
24
Balance as of February 28, 2013
160
16
(Amounts less than one million yen have been rounded off.)- 29 -

1,695
28,279Minority
interests

2,099

Total net
assets28,187
69
-11
1,637

789

27

366

1,183

789
177

27
143

366
2,466

2,878
31,066

Notes to the Consolidated Financial Statements
1. Material Matters for Preparation of Consolidated Financial Statements(1) Scope of Consolidation(i)

Consolidated Subsidiaries- Number of consolidated subsidiaries

40 companies- Major consolidated subsidiaries

Ichigo Real Estate Investment Advisors Co., Ltd.
Ichigo Estate Co., Ltd.
Ichigo Global Capital Co., Ltd.
Ichigo ECO Energy Co., Ltd.
Ichigo Marché Co., Ltd.
Miyako City Co., Ltd.
Takara Building Maintenance Co., Ltd.
Nichibei Building Services Co., Ltd.
Nichibei Security Services Co., Ltd.

The former consolidated subsidiary Ichigo REIT Management Co., Ltd. was merged byabsorption into Ichigo Real Estate Investment Advisors Co., Ltd. in the current fiscal year, andaccordingly Ichigo REIT Management Co., Ltd. is no longer included. Ichigo REIT Management
Co., Ltd. changed its corporate name to Ichigo Real Estate Investment Advisors Co., Ltd. on July
1, 2012.
The former consolidated subsidiary Ichigo Solutions Co., Ltd. was merged by absorption into
Ichigo Estate Co., Ltd. in the current fiscal year, and accordingly Ichigo Solutions Co., Ltd. is nolonger included. Ichigo Solutions Co., Ltd. changed its corporate name to Ichigo Estate Co., Ltd.
on July 1, 2012.
Ichigo Global Capital Co., Ltd. was organized and commenced business in the current fiscal
year; it is now included as a consolidated subsidiary.
Ichigo ECO Energy Co., Ltd. was organized and commenced business in the current fiscal year;
it is now included as a consolidated subsidiary.
All outstanding shares in Solar Way Co., Ltd. were acquired in the current fiscal year; it is now
included as a consolidated subsidiary.
One investment association in which the Company newly invested during the current fiscal year
has been included in the scope of consolidation.
Two investment associations have been excluded from the scope of consolidation because theCompany sold all of its investment during the current fiscal year.
Eight investment associations have been excluded from the scope of consolidation because theyno longer qualify as being important.
(ii) Major Non-Consolidated Subsidiaries
N/A
(iii)

Reason Why Some Companies Were Not Classified as Subsidiaries in Spite of the Company
Possessing a Majority of their Voting Rights
N/A- 30 -

(iv) Special Purpose Companies Subject to Disclosure
The Company provides loans to and holds preferred shares in two special purpose companies(pursuant to Japan’s Asset Liquidation Law) related to its real estate investment and managementbusiness, and expects to earn returns on these investments via rental income and capital gains upon
disposition. The Company does not have voting rights in any of the special purpose companies.
The description of the companies and the details of transactions are per the following:(Million yen)
Profit / Loss

Transaction Amount /Outstanding Amountas of the End of
February 2013
Management
Preferred Shares(Note 1)

Item

Amount-Operating Profit (Note 2)

40

1,517

Operating Profit (Note 3)

12(Note 1) The ¥1,517 million of Preferred Shares includes the outstanding balance of loans as of the end of
February 2013. If any loss occurs in the future, the amount of loss that the Company will bear will
be limited to the above-mentioned amount.
(Note 2) The Company is entrusted with asset management contracts from the two special purpose companies,
and its asset management fee is included in Operating Profit.
(Note 3) The Company includes interest income in Operating Profit.

The below chart shows assets and liabilities of the aforementioned funds.
(Million yen)
Liabilities and Net Assets

AssetsReal Estate
Other
Total

16,137704
16,841

Debts and Others
Deposits Payable
Other
Total

13,455
3,508-121
16,841(2) Application of Equity Method(i) Affiliates under Equity Method
N/A(ii) Non-Consolidated Subsidiaries under Equity Method
N/A(iii) Major Non-Consolidated Subsidiaries not under Equity Method
N/A(iv) Affiliates not under Equity Method
N/A(v) Reason Why Some Companies Were Not Classified as Affiliates despite the Company Possessing
20% or 50% or More of Their Voting Rights
Company
Upfront Technology Co., Ltd.

- 31 -

Reason not classified as affiliate
Shares are held solely for operational investment purposes.
(3) Fiscal Year of Consolidated Subsidiaries
Fiscal year dates of consolidated subsidiaries are as follows:
End of January

6 companies

End of February

17 companies

End of December

17 companies

For subsidiaries whose fiscal year ends in December or January, financial data as of that date havebeen used. However, necessary adjustments for consolidation have been made with respect tosignificant transactions which occurred by the current fiscal year end in February.
(4) Accounting Standards(i) Valuation of Material Assets
a. Other Securities- With available market quotations

Carried at fair value on the current fiscal year date(unrealized gain or loss is included directly in net assets
and the cost of other securities sold is calculated by themoving average method).

- Without available market quotations

Moving average cost method
However, investments in investment associations aredetailed in (vi) Other Material Matters for Preparationof Consolidated Financial Statements, c. Investment
associations.

b. Derivatives

Mark-to-market

c. Inventories- Real estate for sale: Stated at cost determined by the individual cost method:
Some consolidated subsidiaries amortize real estate for sale in the same way as that of property
and equipment.
(ii) Depreciation and Amortization Methods for Material Depreciable Assets- Fixed assets:

Straight-line method (in principal)- Useful lives:

Buildings and structures 8–52 years(iii) Accounting Standards for Material Allowancesa. Allowance for Doubtful Accounts

Reserved for based on the historical experience of bad
debts with respect to ordinary receivables, plus anestimate of uncollectible amounts determined byreference to specific doubtful receivables from
customers which are experiencing financial difficulties.

b. Allowance for Bonus

Reserved for based on an estimated amount for thecurrent fiscal year.

(iv) Material Hedge Accounting
a. Hedge accounting method- 32 -

In principle, the Company adopts the deferral hedge accounting method. However, with respect
to certain foreign currency forward contracts, interest rate swaps, and interest rate caps whichmeet certain criteria, the Company may use another appropriate method.
b. Hedging instruments and hedged items
Hedging instruments

Interest rate swaps

Hedged items

Borrowingsc. Hedging policy
The Company hedges the risk from changes in foreign exchange rates and interest rates in its
operating and financing activities based on internal policies.
d. Evaluation method of effectiveness of hedging activities.
The Company evaluates the effectiveness of hedging activities by reference to the accumulated
gain or loss on the hedging instruments and related hedged items for a period from thecommencement of the hedges to the time of evaluation.
(v) Amortization periods and methods for Goodwill and/or Negative Goodwill
Goodwill and negative goodwill is amortized on a straight-line basis in periods between 10 and 20
years depending on specific factors of the individual subsidiaries.
(vi) Other Material Matters for Preparation of Consolidated Financial Statementsa. Consumption tax
Consumption taxes are excluded from the relevant revenue, costs, or expenses.
Non-deductible consumption taxes are generally accounted for as periodic costs in the current
fiscal year; however, certain items paid in connection with the acquisition of assets are amortizedbased on the straight-line method over five years.
b. Operational investments
Operational investments which are conducted by the Company as operations of the real estate
fund business and the M&A business are classified as "operational investments in securities” and“operational investments in loans” within current assets. Gains and losses arising fromoperational investments are shown under operating income and expense.
Although the Company may control the decisionmaking body of investment vehicles or holdsignificant influence over them by holding shares, shares are held solely for operational
investment purposes and the Company has no intention of holding them as subsidiaries oraffiliates. Therefore such investment vehicles are excluded from subsidiaries or affiliates.
c. Investment associations
The Company accounts for investments in investment associations as “operational investments insecurities.” Such investments are recorded at the time the investments are made. Gains and losses
distributed from the investment associations are recorded as Revenues and the investments inassociations increase or decrease by the same amount. Refunds received from the investment
associations are credited to the Investments in associations.
d. Consolidated tax treatment
The Company qualified for consolidated tax treatment.

- 33 -

(5) Changes in Accounting Policy(Changes in Accounting Policy)
Application of Accounting Standards, etc. with respect to Net Profit per Share
From the current fiscal year, the “Accounting Standards, etc. with respect to Net Profit per Share”(Financial Accounting Standard No. 2, June 30, 2010), “Guidelines for Application of AccountingStandards, etc. with respect to Net Profit per Share” (Guidelines for Application of Financial
Accounting Standards No. 4, June 30, 2010), and the “Treatment in Practice of Accounting Standards,
etc. with respect to Net Profit per Share” (Advisory on Practical Application No. 9, June 30, 2010) areused.
Due to this change, for the calculation of net profit per share after taking dilutive shares into account,the method of calculating the fair value of share options with respect to such options vesting after acertain number of years of service has been amended to take into consideration the future services to beenjoyed by the Company in addition to the amount of capital to be paid in pursuant to the exercising ofsuch options.
The effect of this change is immaterial.
(Changes in Accounting Estimates and Difficult to Distinguish Changes in Accounting Policy)
Changes in Method of Depreciation of Property, Plant, and Equipment
Pursuant to changes to the corporate tax law, for the current fiscal year the Company and all domestic
subsidiaries have amended the method for depreciation of property, plant and equipment acquired after
April 1, 2012 in accordance with the amended tax law.
The effect of this change on the Company’s profit and loss in the current fiscal period is immaterial.
(6) Changes in Presentation(Consolidated Balance Sheet)
The item “Deferred Tax Liabilities” which was included in “Others” in the Fixed Liabilities entry in thelast current fiscal year (6 million in the last year), has been indicated separately for the current fiscal
year due to an increase in significance of this item.
(Consolidated Income Statement)
The item “Valuation Loss in Investments” included in Extraordinary Loss in the prior fiscal year has
been included in “Others” for the current fiscal year due to the immaterial nature of the amount.
The item “Expense for Change of Office” which was included in “Others” in Extraordinary Loss in theprior fiscal year (14 million in the last year) has been itemized separately because it exceeds ten percentof the total of Extraordinary Loss in this current fiscal year.
(7) Additional Information(Application of Accounting Standards etc. for Accounting Changes or Corrections)
For changes or corrections of accounting standards after the beginning of the current fiscal year, thecompany has applied the “Accounting Standards etc. for Accounting Changes or Corrections”(Financial Accounting Standard No. 24, December 4, 2009) and the “Guidelines for Application of
Accounting Standards etc. for Accounting Changes or Corrections” (Guidelines for Application of
Financial Accounting Standards No. 24, December 4, 2009).

- 34 -

2. Notes to Consolidated Balance Sheet(1) Investments in SecuritiesThose related to non-consolidated subsidiaries and affiliates are as follows:
Accumulated depreciation of fixed assets¥2,266 million(2) Assets Provided as Collateral- Assets Provided as Collateral
Cash and cash equivalents
Real estate assets for sale
Buildings and structures
Land
Investments in securities
Total¥81 million¥1,496 million¥1,183 million¥4,346 million¥301 million¥7,410 million(Note) In addition to the above, ¥3,814 million of Shares in Affiliates no longer consolidated are collateralized.

- Secured obligations
Long-term loans (due within one year)
Long-term borrowings
Total¥856 million¥5,281 million¥6,138 million(3) Non-Recourse Loans and Non-Recourse Bonds
Non-recourse loans are borrowings where funds for repayment are limited only to the underlying realestate and profits from such real estate. The lender has no recourse to the Company in the event of a
failure of payment.
Debts where funds for repayment are likely to fall short are presented excluding such shortfall on the
consolidated balance sheet. Debts, valuation account, and amounts recorded in consolidated balance
sheet are as follows:

Debts(Million yen)Amounts recorded inconsolidated balance sheet

Valuation

Long-term non-recourse loans(due within one year)

4,402-2,1392,263

Long-term non-recourse loans

33,521-745

32,77637,924-2,88535,039Total

Assets provided as collateral and secured obligations with respect to the non-recourse loans andnon-recourse bonds are as follows:- Assets Provided as Collateral
Cash and cash equivalents
Real estate for saleTotal

¥3,969 million¥44,677 million¥48,646 million- Secured obligations- 35 -

Long-term non-recourse loans (due within one year)
Long-term non-recourse loans
Total¥4,402 million¥33,521 million¥37,924 million

3. Notes to Consolidated Income Statement(Impairment Loss)
During the current fiscal year, the Ichigo Group recorded the following impairment losses.
1. Details of Recorded Impairment LossType

Location

Land andFukushima City,
Fukushima Prefecture
Isumigun, Chiba
Prefecture

Use
Rental Assets

Buildings
Underutilized Land

Land

Amount of Impairment
Loss (in millions)
528

2. Background of Impairment Loss
These losses have been recorded in Extraordinary Loss deducted from book amount to amounts
reasonably realizable in the event Rental Assets are sold and the price of Underutilized Land
recovers.
3. Grouping of Impairment Assets
The assets have been grouped based on minimum cash flow criteria applicable to each type of asset.
4. Calculation Method for Amounts Reasonably Realizable
The amount reasonably realizable for Rental Assets has been calculated based on an estimate of the
net amount realizable from a sale of the assets. The amount reasonably realizable for Underutilized
Assets has been calculated based on the expected net value pursuant to an appraisal of value.
4. Notes to Consolidated Statement of Changes in Shareholders' Equity(1) Type and Number of Shares Issued and Type and Number of Treasury Stock
Number of sharesat the beginning of
the current fiscal
year

Increase in shares
during the current
fiscal year

Shares issued
Common stock
2,256,319
3,615
Total
2,256,319
3,615
Treasury stock
Common stock
20,000Total
20,000(Note) Details of increased number of common shares issued
Exercise of Stock Option: 3,615 shares- 36 -

Decrease in shares
during the current
fiscal year

Number of sharesat the end of thecurrent fiscal year-

2,259,934
2,259,934-

20,00020,000(2) Stock Acquisition Rights
Balance asof the end of
the current
fiscal year

Type ofshares9th
stock acquisitionright plan

Commonstock

16,824－

3,636

13,188¥78 million

10thstock acquisitionright plan

Commonstock

19,845－955

18,890¥46 million

11thstock acquisitionright plan

Commonstock－

22,000130

21,870¥18 million

36,66922,0004,721

53,948¥143 million

Stock acquisitionrightsCategory

The
Company

Number of shares to be issued
Increase
Decrease
As of thein thein theend of thecurrent
current
current
fiscal year fiscal year
fiscal year

As of theend of theprevious
fiscal year

Total

－

(3) Distribution of Retained Earnings(i) Amount of Dividends Paid
N/A(ii) Dividends where Record Date is in the Current Fiscal Year but the Effective Date is in the Next
Fiscal YearIn the Regular Meeting of the Board of Directors scheduled for April 19, 2013, the following is
expected to be resolved.
(1)

Total to be distributed

447 million yen(2)

Source of Distribution

Retained earnings(3)

Amount of Dividend per Share

200 yen(4)

Date of calculation

February 28, 2013

(5)

Effective Date

May 27, 2013

- 37 -

5. Notes on Financial Instruments(1) Matters Concerning Status of Financial Instruments(i) Policies on Financial Instruments
Ichigo Group finances its necessary operating capital mainly via bank loans and corporate bonds inlight of new investment and asset disposition plans. Short-term excess funds are managed in liquid
financial instruments such as bank deposits, and short-term working capital is financed via bankloans. As Company policy, derivatives transactions are used for the purpose to avert risks mentioned
below. Speculative derivatives transactions are not conducted.
(ii) Details and Risks of Financial Instruments
Notes receivable and accounts receivable are operating receivables that are exposed to customer
credit risks. Foreign currency-denominated financial instruments in overseas business operations are
exposed to currency risks.
Operational investments in securities include investments in corporate equities both inside andoutside of Japan and domestic real estate funds, and investments in securities mainly take the form ofequity and are typically investments in companies with which the Company has a business
relationship. All of these investments are exposed to issuer credit risk, interest rate risk and pricefluctuation risks. Financial instruments denominated in foreign currencies are exposed to currency
risk.
Most of notes payable and accounts payable are operating payables that are due within three months
and denominated in Japanese yen.
Borrowings and non-recourse loans are for the purpose of financing investments and capital
expenditures, and are expected to be redeemed or repaid within approximately seven years after the
fiscal year end. Floating-rate loans are exposed to interest rate risk, a part of which is hedged utilizing
derivatives transactions (e.g., interest rate swaps). Please refer to (iv) Material Hedge Accounting, (4)Accounting Standards of 1. Material Matters for Preparation of Consolidated Financial Statements formethod, objects, policies, and evaluation of effectiveness of hedging activities.
(iii) Risk Management of Financial Instrumentsa)Management of Credit Risk
Operating receivables exist mainly at subsidiaries. Responsible departments monitor thecollection status pursuant to the designated procedure for mitigation of collection risk. Other
operating receivables arise irregularly, e.g., at a time of investment monetization, the responsible
department determines the execution of the transaction based on the term needed for dispositionand credit worthiness of the counterparty, and monitors the receivable until it is collected inaccordance with the agreement. The Company monitors operational investments in securities andinvestments in securities with respect to the financial status of the issuers and reviews holding
policies, as necessary and appropriate.

b) Management of Market Risk
The Company utilizes interest rate swaps and interest rate caps for the purpose of reducing
interest rate risk on interest payables. The Company monitors operational investments insecurities and investments in securities, which have market risks (e.g., real estate funds) or are
denominated in foreign currencies regularly for the impact from the market value and currency
rate and review the holding policies as necessary. Derivative transactions are executed andcontrolled in the Finance Department in accordance with the designated procedure.
c) Management of Liquidity Risk
The Company establishes and updates its funding plan as necessary based on new investment anddisposition plans established by the responsible departments, as well as manages liquidity risk by
maintaining short-term liquidity.
- 38 -

(iv)Supplement to Matters Concerning Market Values of Financial Instruments
Market values of financial instruments include prices based on the market price as well as prices
calculated based on rational assumptions if the market price is not available. Such prices may
fluctuate, since they reflect the fluctuating variables and assumptions in the calculation process.

(2) Adjustments to Market Values of Financial Instruments
Amounts recorded on the consolidated balance sheet for market values and their differences are shown
below. (Note that there are no differences recorded for this fiscal year.) Those which were deemed
difficult to obtain the market value are not included in the table below (Refer to Note 2).
(Million yen)Amount Recordedon Consolidated
Balance Sheet

Market Value

9,713

9,713

-

542

542

-

1,300

1,300

-

(4) Operating investments in securities (*)

991

991

-

(5) Investments in securities (*)

598

598

-

3

3

0

13,14913,1490(1) Notes Payable and Accounts Payable

64

64

-

(2) Short-Term Borrowings

484

484

-

(3) Long-Term Loans (due within one year)

966

966

-

(4) Non-Recourse Loans (due within one
year)

2,263

2,263

-

65

65

-

(6) Long-Term Corporate Debt

5,456

5,539

83

(7) Long-Term Non-Recourse Loans

32,76632,958

182

Total Debt

42,07642,342

265(1) Cash and cash equivalents(2) Notes Receivables and Accounts
Receivable (*)(3) Operating Loans (*)(6) Long-Term Loans (*)
Total Assets(5) Corporate Tax Payable

Difference(*) Excluding allowance for doubtful accounts which are recorded separately.
(Note1) Calculation Method of Market Value of Financial Instruments and Matters Concerning
Securities and Derivatives Transactions
Assets(1) Cash and Cash Equivalents
Carried at book value because of the market value’s closeness to book value due to ashort settlement period.
(2) Notes Receivables and Accounts Receivable
Carried at market value which is the book value less any provision forloan losses.
(3) Operating Loans Receivable
Generally, loans are carried at book value because of the market value’s closeness tobook value due to a short settlement period. Certain debts such as loans with default
risk are carried at book value less the estimated doubtful accounts.
(4) Operational Investments in Securities and (5) Investments in Securities
The market values of equities are the last traded exchange price, and bonds are the- 39 -

last-traded exchange price or dealer-indicated price.
(6) Long-Term Loans
The market values of long-term loans are calculated based on the present value of thetotal amount of the principal using an interest rate expected for similar new loans.
Certain debts such as loans with default risk are at book value less the estimateddoubtful accounts.
Debt(1) Notes Payable and Accounts Payable, (2) Short-Term Loans, (3) Long-Term Loans withMaturity within 1 Year, and (5) Income Tax Payable within 1 Year Carried at book value
because of the market value’s closeness to book value due to a short settlement period.
(4) Non-Recourse Corporate Bonds with Maturity within 1 Year
Carried at book value because of the market value’s closeness to book value due to ashort settlement period.
Borrowings deemed to be short in repayment proceed is presented based on the
discounted current value deducted with the shortage amount due to its closeness to themarket value as of the fiscal year end.
(6) Long-Term Loans
Floating-rate borrowings among long-term borrowings are carried at book value becauseof the market value’s closeness to the book value due to the floating-rate nature of thedebt. The market values of fixed-rate borrowings are calculated based on the present
value of the total amount of the principal using an interest rate expected for similar newloans.
(7) Long-Term Non-Recourse Loans
Floating-rate borrowings among long-term non-recourse loans are carried at book value
because of the market value’s closeness to the book value due to the floating-rate natureof the debt. The market values of fixed-rate borrowings are calculated based on thepresent value of the total amount of the principal using an interest rate expected forsimilar new loans.
(Note 2) Financial Instruments for which it is Difficult to Obtain Market Values(Million yen)Amount Recorded in
Consolidated Balance SheetClassification(1) Operational investments in securities*

2,952(2) Investments in securities*

3,444(3) Long-term security deposits received

3,230*Allowance for bad debts deducted.
(1) Operational investments in securities are not subject to the market value disclosure despite being
investment securities, since they are not priced in the market and it is difficult to estimate theirmarket values.
(2) Investments in securities are not subject to the market value disclosure despite being securities of
non-listed securities, since they are not priced in the market, it is hard to estimate its future cash
flows, and it is difficult to estimate their market values.

(3) Long-term security deposits received which are security deposits received from tenants of rental
properties are not subject to market value disclosure, since it is deemed highly difficult to estimate areasonable cash flow since they are not priced in the market and it is difficult to know in advance thesecurity deposit period.

6. Notes on Rental Properties(1) Conditions with respect to Rental Properties
The Company and certain of its consolidated subsidiaries hold rental offices and retail properties in- 40 -

Tokyo and other locations. Profit and Loss on rental properties in the current fiscal year is ¥671 million(Rental profit is presented in Revenues and Rental Cost is presented in Cost of Revenues.)(2) Market Value of Rental Properties(Million yen)Book Value on Consolidate Balance Sheet
Balance
Balance
Increase / Decrease
as of Mar 2012as of Feb 2013
9,955

+7

Market Valueas of Feb 2013

9,962

11,393(Note) 1. Book Value on Consolidated Balance Sheet = Acquired Cost – (Cumulative Depreciation + Cumulative
Impairment Loss)
2. Market Value as of February 2013 is mainly assessed by the Company based on the Real EstateAppraisal Standard.

7. Per Share Data
(1) Net assets per share¥12,704.44(2) Net profits per share¥731.98(3) Net profit per share after accounting for dilutive shares¥731.32

8. Material Subsequent Events
N/A- 41 -

Parent Balance Sheet(as of February 28, 2013)(Million yen)

Item
AssetsCurrent Assets
Cash and cash equivalents
Receivables
Operating loans
Operating investment insecurities
Short-term loans to affiliates
Advance payment
Accounts receivable - other
Deferred tax assets
Other
Allowance for doubtful
accounts
Fixed Assets

Amount10,378
4,340
126
3,353

Item
Liabilities
Current Liabilities
Short-term borrowings
Short-term borrowings fromaffiliates
Long-term loans(due within one year)

3,397

Amount
3,555
484
1,554
864

Accounts payable

373

323
24
338
531
546

Expenses payable
Income taxes payable
Advances received
Deposits received
Other

77
25
123
12
39

(2,603)Long-Term Liabilities

4,507

23,026

4,235

25,13618,113
2,429

Tangible Assets

6,292

Buildings and structure
Land
Other
Intangible Assets
SoftwareInvestments and Other
AssetsInvestment in securities
Investment in securities ofsubsidiaries and affiliates
Investment in securities ofother affiliates

1,444
4,831
16
10
10

Long-term borrowings
Long-term borrowings
guaranteed
Other
Total Liabilities
Net Assets
Shareholders’ Equity
Capital16,723

Additional paid-in capital

256
14
8,062

4,035

Capital reserve

2,429

5,265

Retained earnings

4,780

5,709

Other retained earnings

4,780

Corporate bonds of affiliates

350

Carried forward retained
earnings

4,780

Long-term investments in
loans

10

Long-term loans to affiliates

1,874

Deferred Tax Assets

60

Other
Allowance for doubtful
accounts
Total Assets

93

Treasury stock
Revaluation andAdjustment
Valuation adjustment in othersecurities
Acquisition Rights

(187)
62
62
143

(676)

Total Net Assets

25,341

33,404

Total Liabilities and Net Assets

33,404(Amounts less than one million yen have been rounded off.)- 42 -

Parent Income Statement
From March 1, 2012
To February 28, 2013
(Million yen)

Item
Revenues
Cost of Revenues
Gross profit
SG&A
Operating profit
Non-Operating Profit
Interest income
Dividend income
Redeemed reserve for doubtful accounts
Other
Non-Operating Expenses
Interest on debt
Other
Recurring Profit
Extraordinary gain
Gain on sales of investment in securities
Gain on sales of equity holdings in affiliates
Other
Extraordinary Loss
Loss on sales of investment securities
Valuation loss on investments
Loss on business liquidation
Other
Profit before Income Taxes
Income taxes, etc.
Adjustment in income taxes
Net Profit(Amounts less than one million yen have been rounded off.)- 43 -

Amount
3,143
844
2,299
1,172
1,126
24
21
7
7
244
50

9
71
3
62
76
2
19
(89)
(592)

59

294
891

84

161
815
(681)
1,497

Statement of Parent Changes in Shareholders' Equity
From March 1, 2012
To February 28, 2013
(Million yen)
Shareholders’ Equity
Capital surplus

Commonstock

Balance as of March 1, 2012
Changes in the current fiscal year
New share issuanceNet profit
Changes in items other thanshareholders’ equity (net)
Changes in the current fiscal year
Balance as of February 28, 2013

Retained earnings
Carried
Total
Capital Total capital forward/
retainedreserve
surplusretainedearnings
earnings

18,078

2,395

2,395

34

34

34

3,282

3,282

1,497

1,497

Total shareholders’equity-187

23,568
69
1,497
---

34
18,113

34
2,429

34
2,429

1,497
4,780

Revaluation andadjustment
Unrealized gain on Total revaluation
other securities, net and adjustment
Balance as of March 1, 2012
Changes in the current fiscal year
New share issuanceNet profit
Changes in items other thanshareholders’ equity (net)
Changes in the current fiscal year
Balance as of February 28, 2013

Treasury
Stock

-657

-657

1,497
4,780

---187

Stock acquisitionrights116

1,567
25,136

Total net assets

23,027
69
1,497

719

719

27

747

719
62

719
62

27
143

2,314
25,341(Amounts less than one million yen have been rounded off.)- 44 -

Notes to the Parent Financial Statements
1. Material Accounting Policies(1) Valuation Standards and Method for Securities(i) Shares in subsidiaries and affiliates:

Moving average cost method(ii) Other Securities
Shares with market value:

Mark-to-market on the last date of fiscal year (valuationdifference is reported as a component of shareholders’equity and cost of revenues is calculated with moving
average cost method)

Shares without market value:

Moving average cost method. The valuation forinvestment associations is noted in (6) Material Changes
in Presentation at (iii) Investment Associations.

(iii) Derivatives:

Mark-to-market(2) Depreciation Method for Property and Equipment(i) Fixed Assets:

Mainly straight-line method

Main useful lives are as follows:
Buildings and Structures

8-39 years(ii) Intangible Assets:

Straight-line method

Main useful life is as follows:
Software5 years(3) Amortization of Deferred Assets
Issuance cost of corporate bonds:

Full amount is recorded as cost.

(4) Accounting Standards for Allowances
Allowance for doubtful accounts
The allowance is provided for doubtful accounts based on the historical experience for normal
receivables and an estimate of the collectability for receivables from companies which areexperiencing financial difficulties.
(5) Hedge Accounting Method(i) Hedge accounting method
In principle, the Company adopts the deferral hedge accounting method. However, with respect tosome interest rate swaps which meet certain criteria, the Company uses an alternative accounting
method, as reasonable and appropriate.
(ii) Hedging instruments and hedged items
Hedging instruments:

Interest rate swaps

Hedged items:

Borrowings(iii) Hedging Policy
The Company uses derivative financial instruments in its financing activities to hedge possible
future movements in interest rates.
- 45 -

(iv) Assessment of Hedge Effectiveness
The Company omits evaluating hedge effectiveness since it only applies to interest rate swaps
which meet certain criteria.
(6) Material Changes in Presentation(i) Consumption Tax
Consumption taxes are excluded from the relevant revenue, costs or expenses. Non-deductible
consumption taxes are generally accounted for as expenses depreciated equally over five years.
(ii) Operating Investments
Operating investments in securities are included in operating investments in securities andoperating loans in current assets, separate from non-operating investments. Profits and losses
incurred from operating investments are recorded as operating profits and losses. Operating
investments in which the Company has a control stake are not considered as subsidiaries oraffiliates since the Company does not have an intention to control management.
(iii) Investment Associations
Assets held by investment associations are categorized as operating investments in securities andinvestment in securities of other affiliates (“Investments in investment associations”) inproportion to the holding percentage. Profits on dividends are recorded as revenues and an
adjustment to Investments in investment associations. Redemption of principle is recorded as adecrease of Investments in investment associations.
(iv) Consolidated Tax Treatment
The Company qualifies for consolidated tax treatment.
2. Changes in Accounting Policy(Changes in Accounting Policy)
Application of Accounting Standards, etc. with respect to Net Profit per Share
From the current fiscal year, the “Accounting Standards, etc. with respect to Net Profit per Share”(Financial Accounting Standard No. 2, June 30, 2010), “Guidelines for Application of AccountingStandards, etc. with respect to Net Profit per Share” (Guidelines for Application of Financial
Accounting Standards No. 4, June 30, 2010), and the “Treatment in Practice of Accounting Standards,
etc. with respect to Net Profit per Share” (Advisory on Practical Application No. 9, June 30, 2010) areused.
Due to this change, for the calculation of net profit per share after taking dilutive shares into account,the method of calculating the fair value of share options with respect to such options vesting after acertain number of years of service has been amended to take into consideration the future services to beenjoyed by the Company in addition to the amount of capital to be paid in pursuant to the exercising ofsuch options.
The effect of this change is immaterial.(Changes in Accounting Estimates and Difficult to DistinguishChanges in Accounting Policy)
Changes in Method of Depreciation of Property, Plant, and Equipment
Pursuant to changes to the corporate tax law, for the current fiscal year the Company and all domestic
subsidiaries have amended the method for depreciation of property, plant and equipment acquired after
April 1, 2012 in accordance with the amended tax law.
The effect of this change on the Company’s profit and loss in the current fiscal period is immaterial.

- 46 -

3. Changes in Presentation(Balance Sheet)
The item “Accounts receivable – other” was included in Current Assets in the prior fiscal year (90million in the prior year), but due to a growth in its significance, it has been itemized separately in thisfiscal year.
4. Additional Information
Application of Accounting Standards etc. for Accounting Changes or Corrections)
For changes or corrections of accounting standards after the beginning of the current fiscal year, theCompany has applied the “Accounting Standards etc. for Accounting Changes or Corrections” (Financial
Accounting Standard No. 24, December 4, 2009) and the “Guidelines for Application of AccountingStandards etc. for Accounting Changes or Corrections” (Guidelines for Application of Financial
Accounting Standards No. 24, December 4, 2009).
5. Balance Sheet(1) Assets Provided as Collateral and Secured Obligations
Assets provided as collateral are as follows:
Cash and cash equivalents
Buildings and structure
Land
Investments in securities
Shares of affiliated companies
Total¥48 million¥1,183 million¥4,346 million¥301 million¥3,814 million¥9,694 million

Secured obligations are as follows:
Long-term borrowings (due within one year)
Long-term borrowings
Total¥810 million¥4,134 million¥4,944 million(2) Accumulated Depreciation of Fixed Assets¥180 million(3) Contingent Liabilities
The Company guarantees the following companies' borrowings from financial institutions.
Takara Building Maintenance Co., Ltd.
Ichigo Estate Co., Ltd.
Total

¥129 million¥1,193 million¥1,322 million(4) Debts to Affiliates (excluding items separately indicated)
Short-term receivables from affiliates¥642 million

Short-term debt to affiliates¥195 million

Long-term debt to affiliates¥17 million

6. Income Statement
Transactions with affiliates
Revenue¥2,203 million

Cost of Sales¥74 million- 47 -

Non-operational transactions¥57 million

7. Statement of Changes in Shareholders' Equity
Types and Amounts of Treasury Stock
Ordinary shares

20,0008. Tax Effect(1) Breakdown of Cause of Deferred Tax Assets and Liabilities
Deferred tax assets
Maximum amount of allowance for doubtful accounts
Write-down of operating investments in securities
Write-down of investments in securities
Write-down of investments in real estate
Write-down of securities of affiliates
Loss carried forward
Other
Subtotal
Allowance for valuation
Deferred tax assets¥1,222 million¥185 million¥825 million¥3,391 million¥1,272 million¥6,849 million¥885 million¥14,630 million- ¥14,034 million¥ 595 million

Deferred tax liabilities
Asset retirement obligation expense
Total-¥3 million-¥3 million

Net deferred tax assets¥ 592 million- 48 -

9. Related Party Transactions(Million yen)
Type

Name

VotingConnection with
Rightsthe Related Party
Held (%)

Subsidiary

Ichigo Real Estate
Investment
Advisors Co., Ltd.
(Note 5)Servicecontract;
100Managerial
guidance

Transaction Type
Borrowing (Note 1)
Interest paid
Receipt ofmanagement fee
Guarantee of liabilities(Note 4)Loans (Note 2)

Subsidiary

Ichigo Estate Co.,
Ltd. (Note 6)Servicecontract;
100Managerial
guidance

Loans (Note 2)
Interest received
Borrowing (Note 1)

Subsidiary

Subsidiary

Miyako City Co.,Ltd.

A. F. Co., Ltd.

Financialsupport;Service100
contract;
Managerial
guidance

100

FinancialsupportInterest paid
Receipt ofmanagement fee
Loans(Note 2)
Corporate bondpurchase (Note 2)
Interest received
Receipt ofmanagement fee
Loans (Note 2)
Interest received

Transaction
AmountAccount

Short-term loans
to affiliates
9 Unpaid expenses-

672 Receivables
1,193

-

Short-term loans
to affiliates
Long-term loans
to affiliates“Others” in
16
Current Assets
Short-term loans
to affiliates
11 Unpaid expenses-

151 Receivables
Long-term loans
to affiliates
Affiliates’
Corporate Bonds“Others” in
1
Current Assets

100

10 Receivables
Long-term loans
to affiliates“Others” inCurrent Asset

Balance
Outstanding
560
2
96
250
200
2
723
3
19
467
350
0
0
1,207
62

79.69%
Owner of
Major
Provision of collateral
Ichigo Trust
the
3,579
shareholder(Note 3)Company(Note 7)(Note) 1. The interest rate on borrowings and corporate bonds is determined reasonably with consideration of the market
interest rate.
2. The interest rate on loans and bonds is determined reasonably with respect to the interest rate the Company actuallypays, with special consideration of the circumstances for certain affiliates.
3. The Company has pledged securities as collateral for non-recourse loans secured from financial institutions.
4. The Company jointly guarantees long-term borrowing from banks.
5. Ichigo REIT Management Co., Ltd. was merged by absorption into Ichigo Real Estate Investment Advisors Co., Ltd.
on July 1, 2012, and Ichigo Real Estate Investment Advisors Co., Ltd. was the non-surviving company. Ichigo REITManagement Co., Ltd. changed its corporate name to Ichigo Real Estate Investment Advisors Co., Ltd. on the samedate.
6. Ichigo Solutions Co., Ltd. was merged by absorption into Ichigo Estate Co., Ltd. on July 1, 2012, and Ichigo EstateCo., Ltd. was the non-surviving company. Ichigo Solutions Co., Ltd. changed its corporate name to Ichigo Estate Co.,
Ltd. on the same date.
7. Ichigo Trust transferred all of its shares in the Company to its 100%-owned subsidiary Ichigo Trust Pte. Ltd. during
the current fiscal year.
8. The above transaction amounts do not include consumption and other taxes. The amounts recorded on the balance
sheet as of fiscal year-end do include consumption and other taxes.

- 49 -

10. Per Share Data
(1) Net assets per share¥11,249.60(2) Net profits per share¥669.42(3) Net profits per share (diluted)¥668.81

11. Material Subsequent Events
N/A- 50 -

Auditor's Report on the Consolidated Financial Statements
Report of Independent Auditors
April 14, 2013
To the Board of Directors of Ichigo Group Holdings Co., Ltd.

Grant Thornton Taiyo ASG
Tsutomu Nobechi, CPA, Designated and Engagement Partner(seal)

Satoshi Kirikawa, CPA, Designated and Engagement Partner(seal)

Hiroaki Ohkane, CPA, Designated and Engagement Partner(seal)We have audited the consolidated financial statements of Ichigo Group Holdings Co., Ltd., namely the
consolidated balance sheet, the consolidated income statement, the consolidated statement of changes inshareholders' equity and the notes to consolidated financial statements, for the fiscal year from March 1,
2012 to February 28, 2013 pursuant to Article 444, paragraph 4 of the Company Law.
Management’s Responsibility with respect to the Financial Statements
Management is responsible for compiling and indicating the consolidated financial statements inaccordance with the generally accepted accounting principles of Japan. This includes the operation andmaintenance of an internal compliance structure which management deems necessary to ensure that theconsolidated financial statements are compiled and indicated free of material misstatement in the form offraud or error.
Auditor’s Responsibility
The responsibility of the Auditor is to perform an independent audit and declare an opinion with respect
to the consolidated financial statements. We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement.
We conducted our audit by carrying out auditing procedures on amounts in the consolidated financial
statements and information we received from the Company. These procedures included sampling andtesting based on our assessment of the potential risk of material misstatement in the form of fraud or
error. Although our intent is not to express an opinion regarding the appropriateness of the internal
compliance structure, we did assess operation of the internal compliance structure to the extent it affects
the accuracy of the consolidated financial statements. This included an overall assessment of theconsolidated financial statements and any assumptions made by management with respect to theCompany’s accounting policies or their application, and any estimates indicated in the consolidated
financial statements.
We believe we received sufficient and appropriate information to have a reasonable basis to express ouropinion.
Auditing Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Ichigo Group consisting of Ichigo Group Holdings Co., Ltd. and its
consolidated subsidiaries for the period for the consolidated financial statements in conformity withaccounting principles generally accepted in Japan.
Potential Conflicts of Interest
There are no interests to be specified pursuant to the provisions of the Certified Public Accountant Law
between the Company and us or the engagement partner.

- 51 -

Auditor's Report on the Parent Financial Statements
Report of Independent Auditors
April 14, 2013
To the Board of Directors of Ichigo Group Holdings Co., Ltd.

Grant Thornton Taiyo ASG
Tsutomu Nobechi, CPA, Designated and Engagement Partner(seal)

Satoshi Kirikawa, CPA, Designated and Engagement Partner(seal)

Hiroaki Ohkane, CPA, Designated and Engagement Partner(seal)We have audited the thirteenth term financial statements of Ichigo Group Holdings Co., Ltd., namely thebalance sheet, the income statement, the statement of changes in shareholders' equity and the notes to thefinancial statements and schedules, for the fiscal year from March 1, 2012 to February 28, 2013 pursuant
to Article 436, paragraph 2, item 1 of the Company Law.
Management’s Responsibility with respect to the Financial Statements
Management is responsible for compiling and indicating the financial statements and notes and schedules
thereto in accordance with the generally accepted accounting principles of Japan. This includes theoperation and maintenance of an internal compliance structure which management deems necessary toensure that the financial statements and notes and schedules are compiled and indicated free of material
misstatement in the form of fraud or error.
Auditor’s Responsibility
The responsibility of the Auditor is to perform an independent audit and declare an opinion with respect
to the financial statements and the notes and schedules. We conducted our audit in accordance with theauditing standards generally accepted in Japan. Those standards require that we obtain reasonableassurance about whether the financial statements and schedules are free of material misstatement.
We conducted our audit by carrying out auditing procedures on amounts in the financial statements andnotes and schedules and information we received from the Company. These procedures included
sampling and testing based on our assessment of the potential risk of material misstatement in the form offraud or error. Although our intent is not to express an opinion regarding the appropriateness of theinternal compliance structure, we did assess operation of the internal compliance structure to the extent it
affects the accuracy of the financial statements and notes and schedules. This included an overall
assessment of the consolidated financial statements and notes and schedules and any assumptions madeby management with respect to the Company’s accounting policies or their application, and any estimatesindicated in the financial statements and notes and schedules.
We believe we received sufficient and appropriate information to have a reasonable basis to express ouropinion.
Auditing Opinion
In our opinion, the financial statements and schedules referred to above present fairly, in all material
respects, the financial position of Ichigo Group Holdings Co., Ltd. for the period for the financial
statements and schedules in conformity with accounting principles generally accepted in Japan.
Potential Conflicts of Interest
There are no interests to be specified pursuant to the provisions of the Certified Public Accountant Law
between the Company and us or the engagement partner.

- 52 -

Report of Audit Committee
Audit Report
April 19, 2013
Audit Committee, Ichigo Group Holdings Co., Ltd.
Katsu Fujita, Audit Committee Member(seal)

Tetsuya Fujita, Audit Committee Member(seal)

Noriko Kawate, Audit Committee Member(seal)The Audit Committee has audited the execution of the duties of the Directors and Statutory Executive Officers
during the thirteenth fiscal year from March 1, 2012 to February 28, 2013. We report the method and results ofthis audit as follows:
1. Method and Description of Audit
The Audit Committee has received regular reports and has made requests for explanations as necessary fromthe Directors, Statutory Executive Officers, and employees of the Company regarding the details of
resolutions by the Board of Directors with respect to Article 416, paragraph 1, item 1, b and e of theCompany Law and the system established under the resolutions (internal control system) and in accordancewith audit policy and duties prescribed by the Audit Committee. In cooperation with the Internal Audit
Office and other internal control related departments of the Company, the Audit Committee has investigatedthe process and details of decision-making at important meetings, the details of principal-approved
documents and other material documents relating to the execution of business, the execution of duties by
Statutory Executive Officers and employees and reviewed the Company's business and assets. With respect
to subsidiaries, we have communicated and exchanged information with directors and auditors ofsubsidiaries and received business reports from subsidiaries as necessary.
With respect to the internal control framework for financial disclosures required under the Financial
Instruments and Exchange Law, we received appraisals and auditing reports from the Statutory Executive
Officer and Grant Thornton Taiyo ASG, and as necessary we requested further clarifications.
In addition, we have supervised and verified that the Independent Auditor was independent and conducting
an appropriate audit and received reports on the execution of duties from the Independent Auditor andrequested explanations as necessary. We have also received a report from the Independent Auditor that thestructure to ensure appropriate performance of duties (matters described in Article 131, each item of theCompany Calculation Rules) has been established pursuant to laws and regulations including the Standardsfor Quality Control of Audits (issued by Business Accounting Council on October 28, 2005) and thatmanagement structures have been properly established within the audit firm.
By these methods, we have reviewed the Company’s own business report, financial statements (balance
sheet, income statement, statement of changes in shareholders’ equity and notes) and their schedules, alongwith the Company’s consolidated financial statements (including the consolidated balance sheet,consolidated income statement, consolidated statement of changes in shareholders’ equity and consolidated
notes).
2. Results of Audit(1) Audit Results of Business Report
1 We note that the business report and its schedules present the Company's status correctly pursuant to alllaws and regulations and the Articles of Incorporation.
2 We note that there has been no misconduct with respect to the execution of duties by Directors andStatutory Executive Officers, nor have we discovered any material facts which violate laws and- 53 -

regulations or the Articles of Incorporation.
3 We note that the details of the resolution by the Board of Directors with respect to the internal control
system are reasonable. Also, there is nothing material to be pointed out with respect to the execution ofduties on the internal control system by Statutory Executive Officers.
(2) Audit Results of Financial Statements and their Schedules
We note that the method and results of the audit conducted by the Independent Auditor, Grant Thornton
Taiyo ASG, were reasonable.
(3) Audit Results of Consolidated Financial Statements
We note that the method and results of the audit conducted by the Independent Auditor, Grant Thornton
Taiyo ASG, were reasonable.
3. Subsequent Events
As reported in the Business Report, the Company resolved a stock split and share-trading-unit systemeffective from September 1, 2013 at the Meeting of the Board of Directors held on April 19, 2013.
(Note) All members of the Audit Committee are External Directors as provided in Article 2, item 15 andArticle 400, paragraph 3 of the Company Law.

- 54 -

Reference Materials for the Annual General Meeting of Shareholders
Proposal 1
1.

Amendment of the Articles of Incorporation
Reason for Proposal

In accordance with the “Action Plan for Consolidating Trading Units” announced by the Japanese stock
exchanges on November 27, 2007, and in order to increase share liquidity and expand the potential base of
Ichigo shareholders in light of the future growth prospects of the Company, shares of the Company shall be
split at a rate of 200 shares to one effective September 1, 2013, and the Company shall adopt a share-trading
unit system with a minimum trading lot of 100 shares. In connection therewith, the Company would like toamend the Articles of Incorporation (proposed Article 6, Paragraph 3 “Rights for Shares less than One
Trading Lot”) on the same day to provide for rights for shareholders with less than one trading lot.
2.

Details of Proposed Changes

Current Articles of Incorporation

Proposed Change(Addition)

Shareholders of the Company which hold less than
One Trading Lot may only exercise the following
rights:(1) The rights indicated in Article 189, Paragraph 2,each Item of the Company Law;
(2) The right to make a demand in accordance with
Article 166, Paragraph 1 of the Company Law;
(3) Rights for allotment of share subscriptions andstock acquisition rights in accordance with thenumber of shares held.

Current Articles of Incorporation

Proposed Change(Date of Effectiveness)(Date of Effectiveness)

Article 44

Article 44

The changes in Article 6 and the new Article 6-2
shall be effective as of September 1, 2013. In
addition, this addendum will be deleted effective
September 1, 2013.

The changes in Article 6 and the new Article 6-2 andArticle 6-3 shall be effective as of September 1,
2013. In addition, this addendum will be deleted
effective September 1, 2013.

Note: In accordance with the “Action Plan for Consolidating Trading Units” announced by the Japanesestock exchanges on November 27, 2007, and in order to increase share liquidity and expand thepotential base of Ichigo shareholders in light of the future growth prospects of the Company, shares of
the Company shall be split at a rate of 200 shares to one effective September 1, 2013, and theCompany shall adopt a share-trading unit system with a minimum trading lot of 100 shares. In
connection therewith, at the April 19, 2013 Meeting of the Board of Directors, Article 6 (Authorized
Shares) and Article 6-2 (Share Trading Units) have been changed in accordance with the following.

- 55 -

Prior Articles of Incorporation

Current Articles of Incorporation

Article 6 (Authorized Shares)

Article 6 (Authorized Shares)

The authorized number of shares of the Company
shall be 2,750,000.

The authorized number of shares of the Company
shall be 550,000,000.

Addition

Article 6-2 (Share Trading Lots)
The minimum share trading lot shall be 100 shares.

Addition(Effective Date)
The changes in Article 6 and the new Article 6-2
shall be effective as of September 1, 2013. In
addition, this addendum will be deleted effective
September 1, 2013.

- 56 -

Proposal 2

Election of 10 Directors

The terms of office of all seven Directors will expire at the conclusion of the Annual General Meeting of
Shareholders. Accordingly, the Company proposes the election of the following ten Directors.
The candidates for Directors are as follows:- 57 -

No.

Name(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
April 1988
September 1991
March 1994

August 1994
March 1997
June 2000

May 2001

April 2002
January 2003
May 2006
October 2008

November 2008

November 2011

1
Scott Callon(Note 2)(December 6, 1964)

May 2012

July 2012

MIPS Computer Systems, Inc.
Asia-Pacific Research Center, Stanford
University
Visiting researcher, Research Institute of
Capital Formation, Japan Development
Bank
Tokyo Branch, Bankers Trust Asia
Securities Co., Ltd.
Morgan Stanley Japan Limited
Representative of resident officers,
Representative office in Japan, Prudential
PLC
Representative Director, PCA ASSETManagement Limited of the Prudential
plc Group
Morgan Stanley Japan Limited
Head of Equities, Morgan Stanley Japan
LimitedPartner and Chief Executive Officer,
Ichigo Asset Management, Ltd. (current)
Chairman & Representative Statutory
Executive Officer of the Company(current)
Director (current), Chairman ofNominating Committee, Chairman ofCompensation Committee, Vice
Chairman of Compliance Committee of
the Company (current)
Member of Nominating Committee(current) and Member of Compensation
Committee of the Company (current)
Associate Director of Japan Associationof Corporate Directors,
External Auditor of Chiyoda Co., Ltd.
(current)
Director (current), Member ofNominating Committee (current) andMember of Compensation Committee of
Ichigo Real Estate Investment Advisors
Co., Ltd. (current)
Director of Ichigo Global Capital Co.,
Ltd. (current)(Other Positions)
Partner and Chief Executive Officer of Ichigo AssetManagement, Ltd.
(Aspiration as Director)
This is your company. Our job at Ichigo is to repay thetrust of our shareholders and to contribute to society bydelivering globally top-class, value-added services.
Thanks to our shareholders’ support, we have been able tostrengthen Ichigo’s financial position greatly over the lastyear, and are investing significantly for growth. We willcontinue to focus on increasing shareholder value while
seeking to contribute to Japan and the success andprosperity of all of our stakeholders.

- 58 -

Number ofCompany's
Shares Held

0

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
April 1992
May 2001
May 2004

May 2005
May 2007

October 2008

November 2008
May 2009

November 2011

July 20122
Kenji Iwasaki(April 10, 1968)

November 2012

Joined Fujita Corporation
Joined the Company
Director, General Manager of FundBusiness Division, Merchant Banking
Group of the Company
Representative Director and Vice
President of the Company
Director, Chairman of Nominating
Committee and Chairman ofCompensation Committee of theCompany
President & Representative Statutory
Executive Officer of the Company(current)
Vice Chairman of Compliance
Committee of the Company (current)
Director (current), Member ofNominating Committee and Memberof Compensation Committee of theCompany
Chairman of Nominating Committee,(current) and Chairman ofCompensation Committee of theCompany(current)
Chairman & Statutory Executive
Officer Director (current), Chairmanof Nominating Committee (current)
and Chairman of Compensation
Committee of Ichigo Real Estate
Investment Advisors Co., Ltd.
(current)
Director of Ichigo Global Capital Co.,
Ltd.
Chairman & Director of Ichigo ECOEnergy Co., Ltd. (current)(Other Positions)
Chairman & Statutory Executive Officer Director of
Ichigo Real Estate Investment Advisors Co., Ltd.
Chairman & Director of Ichigo ECO Energy Co., Ltd.
(Aspiration as Director)
There has never been a more important time for providing
safe and reliable investment products in order to protect
and secure a bright future for the Japanese people. We
will endeavor to use the real estate management expertiseand knowhow of Ichigo to satisfy the broader societal
needs of Japan. We intend to boldly employ the growthstrategy of the Ichigo Group to satisfy the expectations of
all of our valued shareholders.

- 59 -

Number ofCompany's
Shares Held

3,130

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
April 1990
October 2005
May 2007

March 2008

October 2008

November 2008

May 2009

October 2009

November 2009

May 2010

3
Minoru Ishihara(October 5, 1967)

January 2011

April 2011
May 2011

November 2011

July 2012

November 2012

Joined Hazama Corporation
Joined Creed Corporation
Joined the Company as Head of
Human Resources and General
Administration department
Executive Officer and Head of Human
Resources and General Administration
department of the Company
Chief Administrative Officer &Statutory Executive Officer and Headof Business Management of theCompany
Director, Asset Investment Advisors
Co., Ltd. (now Ichigo Real Estate
Investment Advisors Co., Ltd.)
Senior Managing Director & Statutory
Executive Officer (Administration)and Member of Compliance
Committee of the Company (current)
Senior Managing Director(Administration), Asset Investment
Advisors Co., Ltd. (now Ichigo Real
Estate Investment Advisors Co., Ltd.)
President & Representative Director,
Asset Logistics Co., Ltd. (now Ichigo
Marché Co., Ltd.)
Director, Senior Managing Director &Statutory Executive Officer(Administration) and Member ofCompliance Committee of theCompany
Senior Executive Managing Director& Statutory Executive Officer(Administration, Environmental &Architectural Solutions) andSenior Managing Director(Administration), Ichigo REITManagement Co., Ltd.
President & Representative Director,
Miyako City Co., Ltd.
Senior Managing Director(Administration), Ichigo Real Estate
Investment Advisors Co., Ltd.
Executive Vice President & Statutory
Executive Officer (Administration)(current)
Director and Executive Vice President& Statutory Executive Officer of
Ichigo Real Estate Investment
Advisors Co., Ltd. (current)
Director, Ichigo Global Capital Co.,Ltd.
Director of Ichigo ECO Energy Co.,Ltd.

- 60 -

Number ofCompany's
Shares
Held

260

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
March 2013

Head of Real Estate Services Division(current)
Chairman & Representative Director andPresident of Miyako City Co., Ltd.
(current)
Chairman & Director of Ichigo MarchéCo., Ltd. (current)
Chairman & Director of Takara Building
Maintenance Co., Ltd. (current)
Chairman & Director of Nichibei
Building Services Co., Ltd. (current)
Chairman & Director of Nichibei
Security Services Co., Ltd. (current)(Other Positions)Executive Vice President & Statutory Executive Officer of
Ichigo Real Estate Investment Advisors Co., Ltd.
Chairman & Representative Director and President of
Miyako City Co., Ltd.
Chairman & Director of Ichigo Marché Co., Ltd.
Chairman & Director of Takara Building Maintenance Co.,
Ltd.
Chairman & Director of Nichibei Building Services Co., Ltd.
Chairman & Director of Nichibei Security Services Co., Ltd.
(Aspiration as Director)
My intention is to make Ichigo the top real estate asset
management company in Japan by vigorously performing
my duties as director and guiding the Real Estate Services
Division (including Retail PM and Fund Management),
along with providing assistance to the Chairman andPresident. I will endeavor to continue our customer-firstpolicy and further cultivate our low-cost operations,personnel development, and efficient organization for theCompany’s ongoing vitality and growth.

- 61 -

Number ofCompany's
Shares
Held

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
April 1968

June 1995

June 1997

June 2002

October 2007
May 2008

November 2008

4
Katsu Fujita(June 30, 1944)

July 2012

April 2013

Joined The Long-Term Credit Bank ofJapan, Limited (now Shinsei Bank,
Limited)Director, General Manager ofInformation System Group andManager of System Planning of The
Long-Term Credit Bank of Japan,
LimitedSenior Managing Director andDirector of Finance & Accounting
Division, Ishihara Sangyo Kaisha, Ltd.
Executive Managing Director andDirector of Corporate Planning &Administration Division, Ishihara
Sangyo Kaisha, Ltd.
Member of Conciliation of Civil
Affairs, Tokyo District Court (current)
External Director (current), Chairmanof Nominating Committee andChairman of Compensation
Committee of the Company
Chairman of Audit Committee(current), Member of Nominating
Committee (current), Member ofCompensation Committee (current) &Chairman of Compliance Committeeof the Company
Director and Chairman of Audit
Committee (current), Member ofNominating Committee (current), andMember of Compensation Committeeof Ichigo Real Estate Investment
Advisors Co., Ltd. (current)
Yokohama District Court, Labor
Arbitration Member (current)(Other Positions)
Member of Conciliation of Civil Affairs, Tokyo District
Court
Yokohama District Court, Labor Arbitration Member(Aspiration as Director)
The Ichigo Group’s management philosophy is to provide
a prosperous future for all of our stakeholders by creating
peace of mind through sincere management. I intend toutilize my many years of management experience as anindependent external director in participating in theshaping and implementation of our management strategy.
I feel special responsibility in fulfilling my duties in the
supervision of a strong corporate governance framework.
In this way, I strive to contribute to the augmentation of astable growth process for the Company.

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Number ofCompany's
Shares Held

285

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
April 1976

April 2001

April 2002

October 2006
April 2007

October 2009
May 2010

February 2011
March 2011
May 2011
5
Tetsuya Fujita(March 26, 1954)

May 2012

July 2012

Joined Taisho Marine and Fire
Insurance Co., Ltd. (now Mitsui
Sumitomo Insurance Co., Ltd.)
Executive Director, Taisho Marine &Fire Insurance (Malaysia) Bhd. (nowMSIG Insurance (Malaysia) Bhd)
Board Director, Skandia Life
Insurance (Japan) (now Tokyo
Marine Nichido Financial Life
Insurance Co., Ltd.)
Executive Director, AXA Life
Insurance Co., Ltd.
Representative President & CEO,AXA Financial Life Insurance Co.,
Ltd. (now AXA Life Insurance Co.,Ltd.)
Senior Advisor, AXA Life InsuranceCo., Ltd.
External Director (current), Memberof Audit Committee (current), andMember of Compliance Committeeof the Company
Auditor of St. Thomas University(current)
President of Remark Japan Co., Ltd.
(current)
Chairman of Compliance Committeeof the Company (current)
Member of Nominating Committee(current), and Member ofCompensation Committee of theCompany (current)
Director (current), Member ofAuditing Committee (current),
Member of Nominating Committee(current), and Member ofCompensation Committee of Ichigo
Real Estate Investment Advisors Co.,
Ltd. (current)(Other Positions)Auditor of St. Thomas University
President of Remark Japan Co., Ltd.
(Aspiration as Director)
I strongly believe that for the Ichigo Group to
implement its growth strategy in a rapid fashion, it ismore important than ever for its Directors, Auditors,
and Compliance team to be vigilant in the analysis andcontrol of risk. For external directors, it is important not
only to provide balance in supervising whether the best
and most appropriate business decisions are made, butalso to represent the shareholders of the Company inhelping steer management in the right direction.

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Number ofCompany's
Shares Held

63

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
April 2000
May 2003

May 2005
January 2008
May 2011

July 2011
July 2012
6
Maki Kumagai(February 11, 1974)

Qualified as Attorney at Law, joined
Mitsui, Yasuda, Wani & Maeda
Seconded to International Legal
Affairs Bureau, Ministry of Foreign
Affairs
Joined Mitsui Company
Appointed Partner of Mitsui
Company
Director (current), Member ofNominating Committee (current),
Member of Compensation
Committee (current) and Member ofCompliance Committee of theCompany(current)
Partner of Nijubashi Partners(current)
Director (current), Member ofNominating Committee (current) andMember of Compensation
Committee of Ichigo Real Estate
Investment Advisors Co., Ltd.
(current)(Other Positions)
Partner of Nijubashi Partners(Aspiration as Director)
Truly exceptional corporate governance comes frombalancing the interests of all stakeholders while
assisting management in striving to create the mostshareholder value and supervising such efforts. I intend
to use my legal knowledge in furthering the growth of
the Company as a full service real estate group while
continually striving to create peace of mind forshareholders through my sincere efforts as an external
director of the Company.

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Number ofCompany's
Shares Held

0

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
April 1999
July 2001
August 2004
November 2004
February 2008
January 2009
May 2011

November 2011

July 20127
Noriko Kawate(February 22, 1976)

Joined International Dept., Deloitte
Touche Tohmatsu LLC
Qualified as Certified Public
Accountant
Joined Cast & Itoga (now Soga,
Uryu, Itoga)
Qualified as Certified Tax
Accountant
President of CLEA Consulting Co.,
Ltd. (current)
Joined Gracia Corporation (current)
Director (current), Member of Audit
Committee of the Company(current)
Qualified as American Institute ofCertified Public Accountants(current)
Director (current), Member ofAuditing Committee of Ichigo Real
Estate Investment Advisors Co.,
Ltd. (current)(Other Positions)
President of CLEA Consulting Co., Ltd.
Employee of Gracia Corporation(Aspiration as Director)
For further growth of the Company as an independent
full service real estate services provider, it is vital tomaintain strong operations while developing new
ventures. Maintenance and operation of a smoothgovernance structure is a precondition to maintaining thisstable and continual increase in corporate value.
I will fulfill my duties as an external director by using
my experience and knowledge as a certified public
accountant and many years experience in auditing
companies. In this way, I intend to fully contribute myservices to satisfy the trust and expectations of theCompany’s shareholders.

- 65 -

Number ofCompany's
Shares Held

0

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
April 1975
June 1996
June 1998

July 2003
July 2005
July 2006
July 2007
February 2011
May 2011
8

May 2012
Daisuke Kotegawa(May 3, 1951)

Joined the Ministry of Finance (MOF)
Director of Securities Business
Division, Securities Bureau, MOF
Director of Coordination Division,
Supervisory Department, Financial
Services Agency (FSA)
Deputy Director-General of Minister's
Secretariat, MOF
Director-General of Kanto Regional
Finance Bureau, MOF
Deputy Director-General of Finance
Bureau, MOF
Executive Director of Japan,
International Monetary Fund (IMF)
Research Director of The Canon
Institute for Global Studies (current)
External Director of PARCO CO.,LTD. (current)
Director of SEKIDO Co., Ltd.
(current)(Other Positions)
Principal of The Canon Institute for Global Studies
External Director of PARCO Co., Ltd.
Director of SEKIDO Co., Ltd.
(Aspiration as Director)
The Asian economic zone including Japan has grown inrelative importance since the Lehman shock and theunprecedented economic challenges that are facing theWest. I will endeavor to leverage Japan’s high level ofcustomer service and quality of life with our world-classclient services to develop new demand, thereby
contributing to an increase in Company value.

- 66 -

Number ofCompany's
Shares Held

0

No.

Name
(Date of Birth)

History, Position, and Responsibility in the Company(Other Positions)
September 1998

September 2000
April 2002
June 2007

Number ofCompany's
Shares HeldEnterprise Ireland, Irish Government
Export and Trade Development
Agency, JapanXIAM
PolarLake Limited
Partner of Ichigo Asset Management
International, Pte. Ltd. (current)(Other Positions)
Partner, Ichigo Asset Management International, Pte.
Ltd.
9

0
Lee Fitzgerald(July 17, 1975)(Aspiration as Director)
I will perform my duties as a director to supervise andsupport the stable growth of the Company with the aimof promoting a long-term, sustainable increase inshareholder value. In order to maintain the competitive
position of the Ichigo Group in the Japanese real estateindustry, and continue to achieve peace of mind andimplement sincere management for our shareholders, I
will give my utmost to carry out a corporate governancepolicy which meets the expectations of all stakeholdersof the Company.

- 67 -

Name(Date of Birth)No.

History, Position, and Responsibility in the Company(Other Positions)
July 1995
March 1999
August 1999
October 2000
December 2005

June 2008
June 2010

May 2013

Number ofCompany's
Shares HeldMorgan Guaranty Trust Company of
New York, Tokyo Office
ECC Foreign Language Institute
TWI Ltd.
Morgan Stanley Japan Limited
Executive Director and COO of
Equities of Morgan Stanley Japan
Limited
Executive Director of Morgan
Stanley Asia Limited
Executive Director and COO of
Equities of Morgan Stanley MUFG
Securities
Partner and COO of Ichigo AssetManagement Co., Ltd. (expected)

100Haruhiko Sakaguchi(November 24, 1972)(Other Positions)
Partner and COO of Ichigo Asset Management Co., Ltd.
(Aspiration as Director)
Objective, fair and transparent corporate governance is ahallmark of companies focused on creating increased
value for stakeholders. Nevertheless, it is also important
to maintain flexibility and a spirit of innovation toaccomplish long-term strategic and stable growth goals.
In the performance of my duties as an external director, I
intend to dedicate my nearly twenty years of experiencein the Japanese financial industry to contribute to thecultivation of such a business environment at theCompany.

(Note) 1.

There is no special relationship between the Company and any of the candidates for Director.

2. The name of Mr. Scott Callon, candidate for Director, is written as “Callon Scott Anderberg”
under Japan’s official name registration.
3.

Mr. Katsu Fujita, Mr. Tetsuya Fujita, Ms. Maki Kumagai, Ms. Noriko Kawate, Mr. Daisuke
Kotegawa, Mr. Lee Fitzgerald, and Mr. Haruhiko Sakaguchi are candidates for External Director.
They meet the requirements for Independent Director under the requirements of the Osaka
Securities Exchange. The Company intends to register them with the Osaka Securities Exchange
as Independent Directors.

4. The Company’s reasons for proposing Mr. Katsu Fujita, Mr. Tetsuya Fujita, Ms. Maki Kumagai,
Ms. Noriko Kawate, Mr. Daisuke Kotegawa, Mr. Lee Fitzgerald, and Mr. Haruhiko Sakaguchi
as candidates for External Directors are as follows:(i) The Company proposes Mr. Katsu Fujita as a candidate for External Director based upon his
extensive knowledge and experience in the sales and management departments of a leadingbank and in corporate management. He assumed the position as an External Director of theCompany in May 2008, and his term of office will have been five years at the close of this
General Meeting of Shareholders.
(ii) The Company proposes Mr. Tetsuya Fujita as a candidate for External Director based upon
his extensive knowledge and experience working for a leading insurance company and aleading life insurance company. He assumed the position as an External Director of theCompany in May 2010, and his term of office will have been three years at the close of this
General Meeting of Shareholders.
(iii) The Company proposes Ms. Maki Kumagai as a candidate for External Director based upon
- 68 -

her expertise and experience in legal advisory for institutional clients in finance law andcorporate governance. She assumed the position as an External Director of the Company in
May 2011, and her term of office will have been two years at the close of this General
Meeting of Shareholders.
(iv) The Company proposes Ms. Noriko Kawate as a candidate for External Director based uponher experience in statutory audit at a major auditing firm and her experience in accounting
and tax advisory as a certified public accountant and tax accountant. She assumed theposition as an External Director of the Company in May 2011, and her term of office will
have been two years at the close of this General Meeting of Shareholders.
(v) The Company proposes Mr. Daisuke Kotegawa as a candidate for External Director based
upon his many years of service in importance positions as a financial officer in various
governmental and international organizations, his extensive knowledge and experience as an
executive, and his ability to supervise and guide management due to such knowledge andexperience.
(vi) The Company proposes Mr. Lee Fitzgerald as a candidate for External Director based upon
his knowledge and experience gained working in foreign government and private enterpriseand his ability to supervise and guide management while representing the best interests ofshareholders due to such knowledge and experience.
(vii) The Company proposes Mr. Haruhiko Sakaguchi as a candidate for External Director based
upon his extensive experience and knowledge of the securities business from serving insignificant positions in the financial industry and his knowledge and experience in risk
management which he can use to supervise and guide management.
5. When the Company proposes a director candidate outside of a business management
background except for having previously served in a role as an external director or auditor, theCompany provides additional rationale. The Company recommends Mr. Lee Fitzgerald as a
candidate for External Director based upon his knowledge and experience gained working inforeign government and private enterprise and his ability to supervise and guide management
while analyzing and communicating with the companies due to such knowledge andexperience.
6. No candidate for External Director has been involved in inappropriate conduct while serving asa Director in other companies over the past five years.
7.

The independence of the candidates for External Directors is as follows:(i) No candidate for External Director has managed operations (as defined in Article 2,paragraph 3, item 6 of the Enforcement Regulations of the Company Law; hereinafter thesame) of the Company or its related entities (as defined in Article 2, paragraph 3, item 19
thereof; hereinafter the same) in the past.
(ii) No candidate for External Directors has received in the last two years, nor will they receive,a large amount of money or other financial compensation (excluding any remuneration as a
Director or Advisor before assuming the position of External Director) from the Company
or related entities.
(iii) No candidate for External Directors is the spouse of, nor are they within three degrees ofconsanguinity related to the management of the Company or related entities.

8.

In order to retain External Directors of high quality, the Company has entered into limited
liability agreements with Mr. Katsu Fujita, Mr. Tetsuya Fujita, Ms. Maki Kumagai, and Ms.
Noriko Kawate. The extent of liabilities for compensation under the agreements is theminimum limited liability amount as defined in Article 425, paragraph 1 of the Company Law;provided that the liability is limited only when the External Directors have performed theirduties which cause liability in good faith and without gross negligence. Upon the
re-appointment as External Director of Mr. Katsu Fujita, Mr. Tetsuya Fujita, Ms. Maki
Kumagai and Ms. Noriko Kawate, and the appointment of Mr. Daisuke Kotegawa, Mr. Lee
Fitzgerald, and Mr. Haruhiko Sakaguchi as External Director, the Company will enter into a
new limited liability agreement with equivalent terms with each of them.

9.

Mr. Scott Callon, Mr. Lee Fitzgerald, and Mr. Haruhiko Sakaguchi receive no compensationfrom the Company.
- 69 -