[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 10, 2012
Ichigo Group Holdings Co., Ltd. (JASDAQ, 2337)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Scott Callon, Chairman and Representative Statutory Executive Officer

Notice of the Twelfth Annual General Meeting of Shareholders

Dear Shareholders:
We are pleased to invite you to attend the Twelfth 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 25, 2012, 6:30 p.m.
JST.
1. Date and Time

Saturday, May 26, 2012 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 twelfth term (from March 1, 2011 to February 29, 2012)

2.

Report on the financial statements for the twelfth term (from March 1, 2011 to February 29, 2012)

Matters to be Resolved
Proposal 1

Election of 7 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 multiple votes by using both the postal voting form and the Internet voting site, only the votecasted on the Internet will be deemed as effective.
2. Handling of Concurrent Votes on the Internet
If you cast multiple votes on the Internet voting site, only the last vote will be deemed to be effective,
whether from a PC 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 or mobile phone (i-mode, EZweb or Yahoo! 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, you must be able to use i-mode, EZweb orYahoo! Keitai. To ensure security, you may not be able to vote from your mobile phone if thephone does not support encrypted transmission (SSL transmission) and mobile phone informationtransmission.
(iv) We will accept votes submitted via the Internet up until 6:30 p.m. JST on Friday, May 25, 2012,
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 password
shown on the enclosed voting form. Follow the on-screen instructions to indicate your consent or
dissent(ii)

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

(iii) We will inform you of your new login ID and temporary password for each Annual General
Meeting of Shareholders.
(3) Fees for Accessing the Voting Website
Please note that you will bear expenses such as dial-up Internet access fees and telephone charges
incurred by accessing the voting website. Please also note that you will bear expenses for the use of amobile phone to cast your vote such as packet communication fees and other charges.
4. How to Receive Notices of our 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. (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-

Enquiries 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 -------------------------------------------------------------------

P7

6.

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

P8

7.

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

P8

8.

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

P8

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 ---------------------------------------------

P14

2.

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

P15

3.

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

P18

4.

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

P23

5.

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

P23

6.

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

P27

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

P28

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

P29

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

P30

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

P31

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 ------------------------------------

P50

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

P51

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

P52

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

-4-

P54

Business Report
From March 1, 2011
To February 29, 2012I.

Current Condition of the Company

1. Business Conditions in the Current Fiscal Year
(1) Progress and Business Results
Despite the impact of the Great East Japan earthquake, economic conditions in Japan began to improve
gradually during the current fiscal year, with a recovery of production activities and individual
consumption following a rebuilt supply-chain. At the same time, economic conditions remain unstable
due to downward pressures from the Euro crisis, Iranian oil sanctions, and concerns about China’s
economic overheating.
The Japanese real estate market began to show signs of recovery, despite the slowing of real estatetransactions, supported by enhanced bank credit lines, rebuilding-oriented real estate investments after
the earthquake, and the Bank of Japan establishment of an asset purchase fund, including J-REITs, aspart of a comprehensive package of monetary easing.
Taking these positive changes as a growth opportunity, the Company has continued to strengthen its
finances and improve its profitability to drive stable financial performance as a full-service real estate
asset manager providing services in private equity real estate funds, J-REIT asset management,
property management, building management, and small-sized assets and ground leases. Specifically,
the Company has taken the following actions: Launched new funds
 Won new “Rescue AM” mandates where the Company is brought in to replace an existing asset
manager that has had a performance problem
 Established a bridge fund to support the strategic growth of Ichigo’s J-REIT (Ichigo Real Estate
Investment Corporation, “Ichigo REIT”)
 Enhanced asset values via strengthening earthquake resistance and improving building functions
 Pro-actively pursued tenant leasing Refinanced a large number of the Company’s real estate funds
 Executed strategic M&A, buying Fund Creation REIT Advisers Co., Ltd. for the strategic growthof Ichigo’s REIT business Merged two J-REIT asset managers
 Further pursued environmentally sensitive management of Ichigo assets
 Began significant Ichigo branding activities
 Promoted real estate business on small-sized assets and ground leases
 Executed strategic business tie-up for strengthening management of retail assets
 Executed strategic M&A for the Company’s prudent growth Improved long-term debt ratio Disposed assets
As a result, the Company recorded revenues of ¥18,952 million in the current fiscal year (up 48.5%
year-on-year); an operating profit of ¥1,050 million (down 22.3% year-on-year); a recurring profit of¥979 million (down 39.4% year-on-year); and a net profit of ¥1,770 million (up 185.3% year-on-year).
-5-The Company has thus been profitable for three consecutive fiscal years and fully expects that its
strong financial base and new revenue structure will support the Company’s profitability into the
future.
(2) Capital Expenditure
Some assets within Real Estate Held for Sale have been reclassified to Fixed Assets due to the change
in holding period. Thus, Fixed Assets on the consolidated balance sheet increased by ¥6,930 million
during the current fiscal year
(3) Financing
In order to further strengthen its financial base, the Company has been reducing its corporate debt, andrefinancing from short-term to long-term borrowing. The Company decreased interest-bearing
corporate debt by ¥1.43 billion in the current fiscal year, and long-term borrowings as a proportion of
total borrowing increased to 79.3% (up 21.7% year-on-year) and short-term borrowings decreased to
20.7% (down 21.7% year-on-year).
(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.
The Company acquired all shares of Fund Creation REIT Advisers Co., Ltd. (“FCRA”) on August 15,
2011, making it a 100% subsidiary. FCRA was merged with Ichigo REIT Management Co., Ltd.
(“IRM”) on November 1, 2011 with IRM as the surviving company.
The Company acquired all shares of Nichibei Building Services Co., Ltd. and Nichibei Security
Services Co., Ltd. on February 28, 2012, making them 100% subsidiaries.
2. Assets and Earnings in the Past Three Fiscal Years

Category

Ninth term

Tenth term

Eleventh term

(Year ending
February 28, 2009)(Year ending
February 28, 2010)(Year ending
February 28, 2011)

Twelfth term
(Year ending
February 29, 2012 Current fiscal year)

Revenues (million yen)
50,444
21,112
12,76018,952
Recurring Profit (Recurring(54,115)
573
1,616
979
Loss) (million yen)
Net Profit (Net loss)(48,171)
1,807
620
1,770
(million yen)
Net Profit per Share(73,934.36)
1,771.74
317.64775.14(Net loss per share) (yen)Total Assets (million yen)
140,875
100,268
98,65382,170Net Assets (million yen)
12,94523,523
27,771
28,187
Net Assets per Share (yen)11,518.77
11,711.48
10,920.79
11,613.85(Note) Net Profit per Share (Net loss per share) is calculated based on the average number of shares issued during theterm. This figure does not include treasury shares.

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

CapitalPercentage Ownershipof Voting Rights

Business Segment

Ichigo Real Estate Investment
Advisors Co., Ltd.

¥100 million

100.00%Private equity real estate
funds asset management

Ichigo REIT Management Co., Ltd.

¥400 million

100.00%J-REIT asset management

Ichigo Estate Co., Ltd.

¥30 million

100.00%Ichigo Solutions Co., Ltd.

¥500 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.
(Note 1)

¥16 million

100.00%Total building management

Nichibei Security Services Co., Ltd.
(Note 2)

¥10 million

100.00%

Security services

Real estate-related business(Small sized assets andground leases)
Dealing in financial
instruments and money
lending(Note) 1. Nichibei Building Services Co., Ltd. became a 100% subsidiary of the Company on February 28, 2012.
2. Nichibei Security Services Co., Ltd. became a 100% subsidiary of the Company on February 28, 2012.

4. Key Business Priorities
Japan’s financial and real estate markets has begun to show signs of recovery. However, future global
economic and business conditions are still uncertain.
Despite this severe business environment, the Company continues to strive for further growth as anindependent full-service real estate asset manager through maintaining its strong financial foundation as
well as expanding stable fee income. In pursuit of this, the Company expects to (1) reorganize the realestate and finance functions of the group to focus on real estate asset management business; (2) increase its
operating profits through maintaining and increasing AUM; (3) promote Ichigo REIT’s strategic growth;(4) promote small-sized property and ground lease businesses; and (5) acquire sound businesses via M&A.
The Company also intends to further reinforce corporate governance and compliance to ensure soundmanagement for our shareholders.
5. Key Business Segments (as of February 29, 2012)
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 private equity investment funds and a J-REIT, andalso engages in related real estate investment, property management, and building maintenance services.
-7-6. Principal Offices (as of February 29, 2012)
Ichigo Group Holdings Co., Ltd.
Ichigo Real Estate Investment Advisors Co., Ltd.
Ichigo REIT Management Co., Ltd.
Ichigo Estate Co., Ltd.
Ichigo Solutions 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 29, 2012)(1) Employees of the Company (Consolidated basis)
Number of employees

Increase/decrease from the end of previous fiscal year

246 (538) employees

Increased by 79 (167) employees(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 increased by 79 for full-time and 167 for non-full-time from the previous
fiscal year due to acquisitions of Nichibei Building Services Co., Ltd. and Nichibei Security Services
Co., Ltd.

(2) Employees of the Company (Parent basis)
Number of employees

Increase/decrease
from the end of previous fiscal year

Average age

Average years of
employment

39 (3) employees

Increased by 1 (-2) employees

39.3 years old

3.2 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 temp employees) is presented
in parentheses.

8. Principal Lenders (as of February 29, 2012)
Lenders

AmountKansai Urban Banking Corporation¥4,220 million

Sumitomo Mitsui Banking Corporation¥1,925 million

Mizuho Bank, Ltd.

¥1,147 million

The Bank of Yokohama, Ltd.

¥700 million

Higashi-Nippon Bank, Ltd.

¥375 million(Note) These amounts do not include non-recourse loans held by funds that the Company manages (e.g., tokumei
kumiai partnerships, etc.)-8-9. Dividend and Distribution Policy
The Company deems generating positive returns for its shareholders one of its most important priorities,
and has a basic principle of carrying out shareholder distributions in line with the Company’s financial
performance while securing retained earnings necessary for stable growth. During the fiscal year ending
February 2012, the Company considered various shareholder distribution measures based upon the
Company’s earnings outlook and possible future growth funding needs. As a consequence, the Company
twice executed share buybacks with a total acquisition cost of JPY 935 million and cancelled therepurchased shares. Given these share repurchases and cancellations, the Company has chosen not to pay
a dividend for the fiscal year ending February 2012.
Meanwhile, the Company has successfully built a strong foundation of stable fee income, and SG&A and
Non-Operating Expenses in the fiscal year ending February 2013 are expected to be fully covered by thisfee income. The Company thus expects to resume dividend payments of 200 yen per share from thefiscal year ending February 2013.
10. Other Material Matters Regarding the Company
Merger of Consolidated Subsidiaries
The Company (“IGH”) decided at its Board of Directors on April 19, 2012 to reorganize its real estateand finance functions to support further growth as an independent full-service real estate asset manager.
Furthermore, the Company will transfer its business development functions to its subsidiaries andtransform itself into a pure holding company structure.
(1) Purpose of the Mergers(i)Strengthen Real Estate Asset Management

Ichigo REIT Management Co., Ltd. (“IRM”) is the asset manager for Ichigo Real Estate Investment
Corporation (“Ichigo REIT”) and supports its strategy of being a “Comprehensive J-REIT seeking
stable profits and steady portfolio growth” in order to improve the portfolio on behalf of investors. Inturn, Ichigo Real Estate Investment Advisors Co., Ltd. (“IRE”) is a private equity real estate manager,
and has managed real estate funds cumulatively worth over JPY 1 trillion across a variety of real estate
investment products.
The IRM/IRE Merger will strengthen the Company’s asset management capabilities by bringing
together the human resources and know-how in asset management of both asset managers, while
additionally transferring IGH’s finance capabilities to IRM. The merged asset manager will seek to be
one of the leading real estate asset management companies in Japan, with strong sourcing and fundraising ability, flexible product development, high-level structured finance skills, and significant
architectural expertise to add value to IRE managed assets.
The IRM/IRE Merger will be an absorption-type merger and IRM will be the surviving corporation. The
post-merger company name will be Ichigo Real Estate Investment Advisors Co., Ltd. (“New IRE”).
Furthermore, the New IRE will be operated under the Japanese “company with committees” corporate
structure that delegates management from board-level committees to the operating level in order tosupport enhanced corporate governance and facilitate prompt decision making.
(ii) Accelerate New Business Development (Small-Sized Assets, Ground Leases, etc.)
Ichigo Estate Co., Ltd. (“IES”), which was incorporated in January 2011, focuses on small-sized assets
and ground-leases, and successfully closed multiple deals in its first year. IES will merge with Ichigo
Solutions Co., Ltd. (“ISL”), the Company’s real estate and financial solutions business, in order toenhance its product line-up by developing real estate financial product targeted at individual investors
and launching ground lease funds. The New IES will also possess warehousing function for Ichigo
REIT by combining ISL’s financial function and IES’s real estate function. Drawing upon thesestrengths, the New IES is expected to accelerate business expansion and grow to become one of thepillars of Ichigo Group’s profit base. The IES/ISL Merger will be an absorption-type merger, and ISL
will be the surviving corporation. The post-merger company name will be Ichigo Estate Co., Ltd.

-9-

(2) Mergers Overview(i)Schedule
Approval of Board of Directors ofMerger MOUs (IRM, IRE, ISL and IES):

April 19, 2012

Execution date of Merger MOUs:

April 19, 2012

Execution date of the merger agreements:

Mid-May 2012 (subject to change)

Effective date of mergers:

July 1, 2012 (subject to change)

Note: The Mergers are conditional upon regulatory authority approval.
(ii)

MethodThe Mergers will be absorption-type mergers. Between IRM and IRE, IRM will be the surviving
corporation, and IRE will be dissolved. Between ISL and IES, ISL will be the surviving corporation, andIES will be dissolved.
(3) Subsidiaries Overview(i)

Overview of IRM and IRE
Surviving Corporation

Business

J-REIT Asset Management

Paid-in Capital
Date of
Incorporation# of Shares
Outstanding
Fiscal Year-End
Shareholder
Relationshipbetween IRM and
IRE

400 million yen

Absorbed Corporation
Ichigo Real Estate Investment Advisors
Co., Ltd.
1-1-1 Uchisaiwaicho, Chiyoda-ku,
Tokyo
Takumi Naito
President & Representative Director
Private Equity Real Estate Fund AssetManagement
100 million yen

December 15, 2004

April 25, 2007

8,000 shares

2,000 shares

February
Ichigo Group Holdings Co., Ltd. 100%

February
Ichigo Group Holdings Co., Ltd. 100%Company Name
Address
Representative(ii)

Ichigo REIT Management Co., Ltd.
1-1-1 Uchisaiwaicho, Chiyoda-ku,
Tokyo
Wataru Orii
President & Representative Director

Both corporations are 100% subsidiaries of the Company.

Overview of ISL and IES
Surviving Corporation

Absorbed Corporation

Company Name

Ichigo Solutions Co., Ltd.

Ichigo Estate Co., Ltd.

Address

1-1-1 Uchisaiwaicho, Chiyoda-ku,
Tokyo

1-1-1 Uchisaiwaicho, Chiyoda-ku,
Tokyo

Representative

Takuma Hasegawa
President & Representative Director

Takuma Hasegawa
President & Representative Director

Business

Financial Instruments and Exchange
Business, Money Lending, Real EstateBusiness

Real Estate Business Mainly Focusing
on Small-Sized Assets andGround-Lease

Paid-in Capital

500 million yen

30 million yen- 10 -

Date of
Incorporation# of Shares
Outstanding

November 10, 2005

January 13, 2011

62,000 shares

1,000 sharesFiscal Year-End

February

February

Shareholder

Ichigo Group Holdings Co., Ltd. 100%

Ichigo Group Holdings Co., Ltd. 100%

Relationshipbetween ISL and
IES

Both corporations are 100% subsidiaries of the Company.

(4) Financial Overview for the Last Three Fiscal Periods(i)Financial Overview of IRM and IRE(Million yen)

Fiscal YearEnd
Revenues
Operating
ProfitRecurring
ProfitNet Profit
Net Profit per
Share (yen)Dividends per
Share (yen)Total Assets
Net Assets
Net Assets per
Share (yen)Ichigo REIT Management Co., Ltd.
(Surviving corporation)
March
February
February
2010
2011
2012
756
659
1,125

Ichigo Real Estate Investment Advisors Co.,
Ltd. (Absorbed corporation)
February
February
February
2010
2011
2012
1,538
1,038
1,083

354

330

506

-146

-180

8

363

341

522

-117

-176

12

211

177

301

-293

-203

-47

26,38022,132

37,719-146,829-101,589-23,913

-

-

-

-

-

-

1,343
1,184

1,472
1,361

1,711
1,421

781
524

571
321

461
273

148,105170,237

177,720

262,406

160,816

136,903(Note) IRM changed the fiscal-year-end from March to February in 2011. In addition, IRM merged with Fund Creation
REIT Advisers Co., Ltd. on November 1, 2011.

(ii)

Financial Overview of ISL and IES(Million yen)

Fiscal YearEndingRevenues
Operating
ProfitRecurring
ProfitNet Profit
Net Profit per
Share (yen)Dividends
per Share(yen)

Ichigo Solutions Co., Ltd.
(Surviving corporation)
February
February
February
2010
2011
2012
57
15
113

Ichigo Estate Co., Ltd.
(Absorbed corporation)
February
February
2011
2012
221

-50

-67

-117

-

-10

72

40

-22

-105

-

-10

68

35

-20

-103

-

-9

35

574

-324

-1,664--9,84635,844

-

-

-

-

-

-

- 11 -

Total Assets
Net Assets
Net Assets per
Share (yen)

2,432
2,417

988
979

1,175
876

-

51
40

1,499
75

38,99315,804

14,139-40,15375,997(5) Overview of Post-Merger Subsidiaries(i)

New IRE Overview
Surviving Corporation
Company Name

Ichigo Real Estate Investment Advisors Co., Ltd.

Address

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Representative

Wataru Orii, President & Representative Statutory Executive Officer

Business

Asset Management of J-REIT and Private Equity Real Estate Funds

Paid-in Capital

400 million yen

Fiscal Year-End

February

IRM is the surviving corporation and the post-merger company name is expected to be changed to Ichigo Real Estate
Investment Advisors Co., Ltd.

(ii) New IES Overview
Surviving Corporation
Company Name

Ichigo Estate Co., Ltd.

Address

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Representative

Takuma Hasegawa, President & Representative Director

Business

Real Estate Business Mainly Focusing on Small-Sized Assets and Ground
Leases, Investment Advisory and Agency Business, Financial Instruments andExchange Business and Moneylending Business

Paid-in Capital

500 million yen

Fiscal Year-End

February

IES is the surviving corporation and the post-merger company name is expected to be changed to Ichigo Estate Co., Ltd.

(6) Prevention of Conflicts of Interest
In order to prevent conflicts of interests, IGH will enter a “Memorandum of Understanding on Real Estate
First Refusal Rights within Ichigo Group,” with New IRE and New IES.
In addition, the New IRE will adopt a “Structure to Avoid Conflicts of Interest between Ichigo REIT and
Private Equity Funds” establishing clear rules on how to handle information related to property
acquisitions (“Information”) obtained by the New IRE.
Overview of “Memorandum of Understanding on Real Estate First Refusal Rights within Ichigo Group”(i)When IGH obtains Information:
1. When IGH obtains Information from its vendors, Ichigo Group, or any other parties who possess
Information, IGH will immediately provide this Information to the New IRE. However, if the
projected transaction price is less than JPY 500 million, IGH will provide the Information to the
New IES.
2. The New IRE, upon the receipt of Information as stipulated in the preceding clause, will
immediately consider whether it needs the Information or not, and return the Information to IGH if
the Information is considered not necessary.
- 12 -

3. IGH, upon the return of Information from the New IRE as stipulated in the preceding clause, willthen immediately provide the information to the New IES.
(ii)

When either the New IRE or the New IES obtains Information:
1. When either New IRE or New IES obtains Information, it will consider whether it needs theInformation or not. However, the New IRE will generally provide the Information to New IES if the
projected transaction price is less than JPY 500 million.
2. The New IRE and the New IES will provide Information to the other if the Information is notconsidered necessary after the receipt of Information as stipulated in the preceding clause.

Overview of “Structure to Avoid Conflicts of Interest between Ichigo REIT and Private Equity Funds”(i) When the New IRE obtains Information, at initial stage, the Acquisition & Sales group, relying uponpre-determined rules, will decide whether it should proceed to investigate the Information and any
attendant potential transaction more fully.
(ii) When the Acquisition & Sales group make a determination to proceed, it determines which one of
Ichigo REIT or Private Equity Fund has the First Refusal Right and provides Information to the relevant
Fund Manager based upon either 1) the calendar year of the building completion date (where multiple
properties, using the most recent) or 2) the address of the property in the case of land:
1. When the completion year or address is an even number:
Ichigo REIT has First Refusal Right
2. When the completion year or address is an odd number:
Private Equity Funds have First Refusal Right(iii) Should the Fund Manager of either Ichigo REIT or Private Equity Funds decide not to pursue theacquisition opportunity after gaining First Refusal Right as stipulated in the preceding clause, the otheris alternately given the opportunity to consider the acquisition.
(iv) The decision making processes which are stipulated in the proceeding clauses require approval from aCompliance Officer.
(v) The Fund Manager of Ichigo REIT will also report the results of these considerations of acquisitions
opportunities to committees of Ichigo REIT on a regular basis.

- 13 -

II. Matters Regarding the Current Status of the Company
1. Matters Regarding Shares in the Company (as of February 29, 2012)(1) Number of Authorized Shares:

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

2,256,319 shares(Including treasury stock of 20,000 shares)(3) Number of Shareholders:

18,854(4) Major Shareholders (top 10)
Investment in the Company
Name
Number of shares held (shares)
ICHIGO TRUST

Shareholding ratio (%)

1,254,521

56.10%ICHIGO TRUST PTE. LTD.

484,79421.68%J. P. MORGAN CLEARING CORP-SEC

33,996

1.52%

GOLDMAN SACHS INTERNATIONAL

26,886

1.20%

RBC DEXIA INVESTOR SERVICES
TRUST, LONDON-CLIENTS ACCOUNT

18,485

0.83%

MELLON BANK TREATY CLIENTSOMNIBUS

11,6000.52%

YOICHI AOYAMA

10,7320.48%

CBNY-NATIONALFINANCIALSERVICES LLC

6,450

0.29%

CBNY-FORUM FUNDS-ABSOLUTEOPPORTUNITIES FUND

6,004

0.27%

MONEX, INC.

5,620

0.25%

1,859,088

83.13%

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

- 14 -

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 29, 2012)
Number

9th Stock Acquisition Right Plan

Date of resolution

July 14, 2009

Number of stock acquisition rights

16,824 units (Note 1)

Type and number of shares

16,824 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:

5,400 units
5,400 shares2
300 units
300 shares2
3,350 units
3,350 shares
3(Note 1) Of the total stock acquisition rights, 9,050 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, except for retirement due toexpiration 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, the heir may exercise the rights
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.

- 15 -

Number

10th Stock Acquisition Right Plan

Date of resolution

August 8, 2011

Number of stock acquisition rights

19,845 units (Note 1)

Type and number of shares

19,845 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
550 units
550 shares
54,395 units
4,395 shares
7(Note 1) Of the total stock acquisition rights, 8,695 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, except for retirement due toexpiration 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, the heir may exercise the rights
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.

- 16 -

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

Number

10th Stock Acquisition Right Plan

Date of resolution

August 8, 2011

Number of stock acquisition rights

20,000 units (Note 1)

Type and number of shares

20,000 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¥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:

11,305 units
11,305 shares107- units- shares-(Note 1) Of the total stock acquisition rights, 11,305 units have been issued to employees.
(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, except for retirement due toexpiration 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, the heir may exercise the rights
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- 17 -

3. Officers of the Company(1) Corporate Directors (as of February 29, 2012)
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.

Director

Minoru Ishihara

Compliance Committee Member
Executive Vice President & Statutory Executive Officer of Ichigo
Group Holdings Co., Ltd.
Senior Executive Managing Director 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

Katsuhiko Hattori

Nominating Committee Member, Compensation Committee
MemberDirector of Frontier Construction & Partners Inc.

External Director

Tetsuya Fujita

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

External Director

Maki Kumagai

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

External Director

Noriko Kawate

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

External Director

Rob Crawford

Partner of Ichigo Asset Management, International Pte. Ltd.

External Director

Makoto FukuharaPartner and Executive Vice President of Ichigo Asset Management,
Ltd.

Director

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

- 18 -

(2) Statutory Executive Officers (as of February 29, 2012)
Position

Name

Responsibility and Other Business Affiliations
Overall Group Management
Partner and Chief Executive Officer of Ichigo AssetManagement, Ltd.

Chairman & Representative
Statutory Executive Officer

Scott Callon

President & Representative
Statutory Executive Officer

Kenji Iwasaki

Overall Group Management

Executive Vice President &Statutory Executive Officer

Wataru Orii

Business Development
President & Representative Director of Ichigo REITManagement Co., Ltd.

Executive Vice President &Statutory Executive Officer

Kazuya Sahashi

Strategic Investment & International

Executive Vice President &Statutory Executive Officer

Minoru Ishihara

Administration
Senior Executive Managing Director of Ichigo Real
Estate Investment Advisors Co., Ltd.
President & Representative Director of Miyako City Co.,Ltd.

Senior Statutory Executive
Officer
Statutory Executive Officer

TakashiMinamikawa
Xu Zhijun

Statutory Executive Officer

Kenji Goto

Strategic Investment

Statutory Executive Officer

Yonezo Fukuoka

Compliance

Statutory Executive Officer

Kenichi Nagao

Business Development

Finance, Accounting & Business Planning
International Business(3) Directors and Executive Officers who Retired during the Current Fiscal Year
Name

Retirement
Date

Takuma Hasegawa

May 28, 2011

Kazuya Sahashi

May 28, 2011

Samuel T. W. Chu

May 28, 2011

Hidenao Toyoshima

May 28, 2011

Akio Nakajima

May 28, 2011

Hirotomo Tasaki

May 28, 2011

Shoyo Ishimatsu

May 28, 2011

Position, Responsibility, and Other Business Affiliations
at Retirement
Director
President & Representative Director of Ichigo Estate Co., Ltd.
Director
Executive Vice President & Statutory Executive Officer(Finance, Strategic Investment & International)
External Director, Nominating Committee Member andCompensation Committee Member
Chairman of International Business Communications, Inc.,
Taipei, Taiwan
External Director, Audit Committee Member
Head of Toyoshima Law Office, Statutory Auditor of Saitama
Resona Bank, Ltd., External Director for San-Ai Co., Ltd,
External Director of Aisin Co., Ltd., Statutory Auditor of
SHUFU TO SEIKATSU SHA CO., LTD., External Director of
SC Investment Co., Ltd., External Director of Nissin Servicer
Co., Ltd., External Director of Taiko Denki Co., Ltd., External
Director of KOYO Shoji Corporation, Substitute Statutory
Auditor of Takasago Thermal Engineering Co., Ltd., External
Auditor of ZERO START COMMUNICATIONS Co., Ltd.,and External Auditor of Ginza Kimuraya.
Senior Statutory Executive Officer (Real Estate) & Head of
Osaka BranchPresident & Representative Director of Ichigo Solutions Co.,Ltd.
Statutory Executive Officer (Real Estate Solutions)
Statutory Executive Officer (Development & CRE Solutions)Executive Vice President & Director of Miyako City Co., Ltd.
- 19 -

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

Number ofrecipients

Amount paid

Directors(of whom are External Directors)

10(7)¥116 million(¥35 million)

Statutory Executive Officers

10¥40 million

Total(of whom are External Directors)

20(7)¥156 million(¥35 million)(Note) 1. As of the end of the term, there are ten Directors (including seven External Directors) and ten Statutory
Executive Officers (three of whom are also Directors), resulting in a total of seventeen officers. Since those
who are 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 number of recipients does not include one Statutory Executive Officer who is also a Director and two
external directors as they did not receive remuneration. Also, one Director who is also a President of a
subsidiary is not included as he did not receive the remuneration of director.
3. The difference between a total of twenty four officers [four officers without director remuneration (oneStatutory Executive Officer who is also a Director, two External Directors and one Director who is also a
President of a subsidiary) plus the above twenty Directors and Statutory Executive Officers] and a total ofseventeen officers as of the end of the term is because the number of officers stated above includes sevendirectors (two External Directors, one Director who is also a President of a subsidiary, one Director who isalso a Statutory Executive Officer, and three Statutory Executive Officers who are not Directors) who haveresigned.
4. The amount paid includes remuneration as stock options of ¥11 million for Directors (of which ¥1 million
is for External Directors) and stock options of ¥2 million for Statutory Executive Officers.
5. In addition, the Company paid ¥83 million as employee compensation to seven Statutory Executive Officers.
The amount includes remuneration in the form of stock options of ¥2 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.

- 20 -

(6) Outside Officer Held(i) Positions in Other Companies and the Relationship between the Company and these Other Companies- Katsuhiko Hattori, External Director, is also Director of Frontier Construction & Partners Inc. The
Company has no relationship with Frontier Construction & Partners Inc.
- 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. and Gracia Corporation.

-

Rob Crawford, External Director, is also Partner of Ichigo Asset Management International Pte.
Ltd. Ichigo Asset Management International Pte. Ltd. has a discretionary investment contract with
the Company’s controlling shareholder, Ichigo Trust (1,254,521shares, 56.1% holding)-

Makoto Fukuhara, External Director, is also Executive Vice President & Partner of Ichigo AssetManagement, Ltd. Ichigo Asset Management, Ltd. has an investment advisory agreement with
Ichigo Asset Management International Pte. Ltd. which has a discretionary investment contract
with the Company’s controlling shareholder, Ichigo Trust (1,254,521shares, 56.1% holding)(ii) Positions as External Directors in Other Companies- Katsu Fujita, External Director, is a Member of Conciliation of Civil Affairs, Tokyo District Court.
The Company has no relationship with the Tokyo District Court.
- Tetsuya Fujita, External Director, is 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 seven External Directors, to the best of the Company’s knowledge, have no spouse or relatives
in the third degree or closer who are Statutory Executive Officers of the Company or related entitiesof the Company.

- 21 -

(iv) Principal Activities in the Current Fiscal Year
Activities

Katsu Fujita

Attended 9 out of 9 meetings (attendance rate: 100%) of the Board of
Directors held in the current fiscal year. Also attended 8 out of 8
meetings (attendance rate: 100%) of the Nominating Committee held in
the current fiscal year. Also attended 17 out of 17 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.

KatsuhikoHattori

Attended 9 out of 9 meetings (attendance rate: 100%) of the Board of
Directors held in the current fiscal year. Also attended 8 out of 8
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.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

Tetsuya Fujita

Attended 9 out of 9 meetings (attendance rate: 100%) of the Board of
Directors held in the current fiscal year. Also attended 17 out of 17
meetings (attendance rate: 100%) of the Audit Committee and attended 6
out of 6 meetings (attendance rate: 100%) of the Compliance Committee
held in the current fiscal year.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

Maki
Kumagai

After becoming a Director, attended 7 out of 7 meetings (attendance rate:100%) of the Board of Directors held in the current fiscal year. Also
attended 8 out of 8 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 heldin the current fiscal year. Also, attended 6 out of 6 meetings (attendance
rate: 100%) of the Compliance Committee held in the current fiscal year.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

NorikoKawateAfter becoming a Director, attended 7 out of 7 meetings (attendance rate:100%) of the Board of Directors held in the current fiscal year. Also after
becoming a member of a member of the Audit Committee, attended 11
out of 11 meetings (attendance rate: 100%) of the Audit Committee heldin the current fiscal year.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

External
Director

Rob Crawford

After becoming a Director, attended 7 out of 7 meetings (attendance rate:100%) of the Board of Directors held in the current fiscal year.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

External
Director

MakotoFukuhara

After becoming a Director, attended 7 out of 7 meetings (attendance rate:100%) of the Board of Directors held in the current fiscal year.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.

External
Director

External
Director

External
Director

External
Director

External
Director- 22 -

(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 amountas defined in Article 425, paragraph 1 of the Company Law; provided that the liability is limited only
when the External Directors have performed their duties in good faith and without gross negligence.
4. Independent Auditor(1) Grant Thornton Taiyo ASG(2) Amount of Fees for the Independent Auditor(i)Amount of fees for the Independent Auditor for the current fiscal year

¥80 million(ii)

Total money and other financial benefits payable by the Company andsubsidiaries to the Independent Auditor¥107 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 the- 23 -

Board 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.
- The Company has appointed Chairman & Representative Statutory Executive Officer andPresident & Representative Statutory Executive Officer, Statutory Executive Officer(Compliance), and division in charge of compliance management (Compliance) to promotecompliance.
- 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 Financial Instruments and Exchange Act,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 the Internal Audit Department which reports directly to the Audit
Committee. A person separately designated by the Audit Committee or the Internal Audit Officeconducts an internal audit of business with respect to compliance with laws and regulations, theArticles of Incorporation, internal regulations, and the appropriateness 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 Internal Audit Office reports on thecorrection to and the improvement of matters indicated at the internal audit to the Audit Committee,
the Chairman & 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 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.
(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 of- 24 -

duties 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.
(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 disposition of the relevant employees
requires the consent of the Audit Committee. This ensures independence from the Statutory Executive
Officers. Other matters regarding the independence of such Directors and employees from the Statutory
Executive Officers are pursuant to the 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) The Audit Committee Member 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.
- 25 -

(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 recognizes as material(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
- 26 -

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.
(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.

- 27 -

Consolidated Balance Sheet(as of February 29, 2012)(Million yen)

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

Amount65,824
9,791
1,069

Operational investments in loans

2,527

Operational investments in securities

4,226

Real estate for sale

49,674

Others1,465

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

Total assets-2,93016,346
10,109
2,903
7,114
91
2,105
2,077
27
4,131
3,589
14
623
-96

82,170(Amounts less than one million yen have been rounded off.)- 28 -

Item
Liabilities
Current Liabilities
Trade notes and accounts payable
Short-term borrowings
Long-term loans(due within one year)
Long-term non-recourse loans(due within one year)
Income taxes payable
Accrued bonuses
Other current liabilities
Long Term Liabilities
Long-term borrowings
Long-term non-recourse loans
Long-term security deposits
received
Negative goodwill
Other long-term liabilities
Total liabilities
Net Assets
Shareholders’ Equity
CapitalCapital reserve
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

Amount13,902
57
170
1,768
8,793
115
22
2,974
40,0807,413
28,8993,362
360
4353,982
26,584
18,078
2,395
6,298
-187
-612
-604
-7
116
2,099
28,187
82,170Consolidated Income Statement
From March 1, 2011
To February 29, 2012
(Million yen)

Item

AmountRevenues
Cost of revenues
Gross profit
SG&A
Operating profit
Non-operating profit
Interest income
Dividend income
Earnings of affiliates
Amortization of negative goodwill
OthersNon-operating expenses
Interest on debt
Issuance of Corporate Bond
OthersRecurring profit
Extraordinary gain
Gain on sales of equity holdings in affiliates
OthersExtraordinary Loss
Loss on sales and retirement of fixed assets
Loss on sale of investment securities
Valuation loss on investments
Loss on business liquidation
OthersProfit before Income Taxes
Income taxes
Profit before Gain on Minority Interest
Gain on minority interests
Net Profit

18,952
15,030
3,921
2,871
1,050
5
20
141
90
33
284
48
29

1,173
75
38
62
41
26
82

(Amounts less than one million yen have been rounded off.)U- 29 -

291

361
979

1,248

251
1,976
159
1,817
47
1,770

Consolidated Statement of Changes in Shareholders' Equity
From March 1, 2011
To February 29, 2012
(Million yen)

Balance as of February 28, 2011
Changes in the fiscal year
Share Buyback
Share Cancellation
Change in consolidated subsidiaries
Net profit
Changes in items other thanshareholders’ equity
Total changes
Balance as of February 29, 2012

Commonstock
18,078

Shareholders’ Equity
CapitalRetained
Treasury
reserveearnings
stock
2,447
5,155
-36

-52

-731
104
1,770

Total shareholders’equity25,644

-935
783

-935
104
1,770
-

18,078

-52
2,395

1,142
6,298

-151
-187

Other Comprehensive Income
Stock
Foreign
Total Other
Unrealized
acquisition
currency
Comprehensive
gain on otherrightstranslation
Incomesecurities, net
adjustment
362
-492
-130
80

Balance as of February 28, 2011
Changes in the fiscal year
Share Buyback
Share Cancellation
Change in consolidated
subsidiaries
Net profit
Changes in items other than-967
485
shareholders’ equity
Total changes-967
485
Balance as of February 29, 2012
-604
-7
(Amounts less than one million yen have been rounded off.)- 30 -

939
26,584

Minority
interests

2,177

Total net
assets27,771
-935
104
1,770

-481

35

-77

-523

-481
-612

35
116

-77
2,099

416
28,187

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

48 companies- Major consolidated subsidiaries

Ichigo Real Estate Investment Advisors Co., Ltd.
Ichigo REIT Management Co., Ltd.
Ichigo Estate Co., Ltd.
Ichigo Solutions 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.

Nichibei Building Services Co., Ltd. and Nichibei Security Services Co., Ltd., all shares ofwhich the Company acquired during the fiscal year, have been included in the scope of
consolidation.
Fund Creation REIT Advisers Co., Ltd., all shares of which the Company acquired during the
fiscal year, has been included in the scope of consolidation. Later in the year, it was merged with
Ichigo REIT Management Co., Ltd. (“IRM”), with IRM as the surviving company.
Four investment associations in which the Company newly invested during the fiscal year havebeen included in the scope of consolidation.
One investment association which the Company newly established during the fiscal year has been
included in the scope of consolidation.
Five investment associations have been excluded from the scope of consolidation because theCompany sold all of its investment during the fiscal year.
One investment association has been excluded from the scope of consolidation because it wasdissolved during the fiscal year.
Three investment associations have been excluded from the scope of consolidation because theyno longer qualify as being important.
Two investment associations have been excluded from the scope of consolidation because theCompany’s control over them declined during the fiscal year.
(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- 31 -

(iv) Special Purpose Companies Subject to Disclosure
Ichigo Group loans to and holds preferred shares of two special purpose companies (pursuant toJapan’s Asset Liquidation Law) related to its real estate investment and management business.
Ichigo Group expects to earn returns on these investments via rental income and capital gains. 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 2012Management
Preferred Shares(Note 1)

Item

Amount-Operating Profit (Note 2)

64

1,517

Operating Profit (Note 3)2(Note 1) ¥1,517 million of transaction amount of Preferred Shares shows the outstanding balance of loans asof the end of February 2012.
If any loss occurs in the future, the amount of loss that Ichigo Group will bear will be limited to theabove mentioned amount.
(Note 2) Ichigo Group is entrusted asset management contract from the two special purpose companies, andits asset management fee is included in Operating Profit.
(Note 3) Ichigo Group 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

16,325871
17,196

Debts and Others
Deposits Payable
Other
Total

13,8403,508-151
17,196(2) Application of Equity Method(i) Affiliates under Equity Method
Number of affiliates accounted for under the equity method: zero
CITIC International Assets Management Limited has been excluded from the scope of equity
method because the Company sold a part of its investment during the fiscal year.
Financial CI, Corp. has been excluded from the scope of equity method because the Company
sold all of its investment in the partnership.
(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- 32 -

(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. and one other company
Reason not classified as affiliates
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

10 companies

End of February

16 companies

End of December

22 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 consolidated 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 consolidated 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 (v) 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 andequipment.
(ii) Depreciation and Amortization Methods for Material Depreciable Assets- Fixed assets:

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

Buildings and structures

10–52 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.
- 33 -

b. Allowance for Bonus

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

(iv) Material Hedge Accounting
a. Hedge accounting method
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) 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 decision-making 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.

- 34 -

(4) Amortization of Goodwill and Negative Goodwill
The Company amortizes goodwill and negative goodwill equally in appropriate timing within 10-20
years based on subsidiaries’ conditions.
2. Changes in Material Matters for Preparation of Consolidated Financial Statements(1) Changes in Scope of Consolidation and Application of Equity Method
Specified in 1. Material Matters for Preparation of Consolidated Financial Statements (1) and (2).
(2) Changes in Accounting Policy
From the current fiscal year, the Company adopted the “Accounting Standard for Asset Retirement
Obligations” (Financial Accounting Standard No. 18, March 31, 2008) and “Accounting Standard forApplication of Consolidated Financial Statement” (Financial Accounting Standard No. 21, March 31,2008). Due to the changes, Operating Profit and Recurring Profit decreased ¥0 respectively, and Net
Profit before Income Tax decreased ¥10 million.
(3) Changes in Presentation(Consolidated Balance Sheet)
From the current fiscal year, the Company presents “Profit before Gain on Minority Interest” in a
separate item based on “Accounting Standard for Consolidated Financial Statement” (Financial
Accounting Standard No. 22, December 26, 2008), applying a partial amendment on “Enforcement
Regulations of the Corporate Law”(Ministry of Justice No.7, March 27, 2009).
“Gain on Foreign Currency” (0 million yen in the current fiscal year) and “Valuation Gain on
Derivatives” (10 million yen in the current fiscal year) which were presented in separate items in theprevious fiscal are presented as “Other” in the Non-Operating Profit.
“Issuance Cost of Corporate Bond” (10 million yen in the previous fiscal year) which was presented in“Other” in the Non-Operating Expenses in the previous fiscal year is presented in a separate item, as
the amount of cost is over 10% of the Non-Operating Expenses in the current fiscal year.
“Loss on Sale of Fixed Assets” (26 million yen in the previous fiscal year) which was presented in“Other” in the Extraordinary Losses in the previous fiscal year is presented in a separate item, as theamount of loss is over 10% of the Extraordinary Losses in the current fiscal year.
(4) Additional Information(Holding Period)¥7,006 million of Real Estate Held for Sale has been reclassified to Fixed Assets: Buildings andStructures (¥1,459 million) and Land (¥5,546 million) due to the change in holding period. With thisreclassification, ¥288 million of Guarantee Deposit in Current Liabilities is reclassified to Long Term
Guarantee Deposit in Long Term Liabilities.
3. Notes to Consolidated Balance Sheet(1) Investments in SecuritiesThose related to non-consolidated subsidiaries and affiliates are as follows:
Investments in securities¥2,097 million(2) Assets Provided as Collateral- Assets Provided as Collateral- 35 -Cash and cash equivalents
Real estate assets for sale
Buildings and structures
Land
Investments in securities
Total¥1,125 million¥3,784 million¥1,214 million¥4,353 million¥237 million¥10,715 million(Note) In addition to the above, ¥3,636 million of Shares in Affiliates and ¥4,279 million of Affiliates
Securities are collateralized.

- Secured obligations
Long-term loans (due within one year)
Long-term borrowings
Total¥1,708 million¥7,246 million¥8,954 million(3) Non-Recourse Loans and Non-Recourse Bonds
Non-recourse loans are borrowings whose 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 whose 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)

9,399

-605

8,793

Long-term non-recourse loans

30,064-1,16428,89939,463-1,77037,693

Total

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 sale
Buildings and structure
Land
Total

¥4,253 million¥45,890 million¥250 million¥484 million¥50,878 million- Secured obligations
Long-term non-recourse loans (due within one year)
Long-term non-recourse loans
Total- 36 -¥9,399 million¥30,064 million¥39,463 million

(4) Breakdown of Operational Investments in Securities and Operational Investments in Loans

Shares
Bonds
Investments in tokumei kumiai partnerships
Total(Note)¥1,605 million¥287 million¥2,333 million¥4,226 million

Investments in tokumei kumiai partnerships include securities under Article 2 of the Financial
Instruments and Exchange Law or rights which are deemed to be securities.

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 end of
previous fiscal
year

Increase in shares
during the current
fiscal year

Decrease in shares
during the current
fiscal year

Number of sharesat the end of thecurrent fiscal year

Shares issued
Common stock
2,336,559―
80,240Total
2,336,559―
80,240Treasury stock
Common stock
240
100,000
80,240Total
240
100,000
80,240(Note) Details of decreased number of common shares issued
Share cancelled:
80,240 shares(Breakdown)
Shares bought back:
100,000 shares
Shares cancelled: 80,240 shares

2,256,319
2,256,319
20,00020,000(2) Stock Acquisition Rights
Balance asof the end of
the current
fiscal year

As of theend of theprevious
fiscal year

9th
stock acquisitionright plan

Commonstock

17,084－260

16,824¥99 million

10thstock acquisitionright plan

Commonstock－

20,000155

19,845¥16 million

17,08420,000415

36,669¥116 million

Category

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

Type ofsharesStock acquisitionrightsTotal－(3) Distribution of Retained Earnings(i) Amount of Dividends Paid
N/A(ii) Dividends whose Record Date is in the Current Fiscal Year but the Effective Date is in the Next
Fiscal Year
N/A

- 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 five 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(1) Cash and cash equivalents

9,791

9,791

-

(2) Notes Receivables and Accounts
Receivable (*)

1,002

1,002

-

200

200

-

1,019

1,019

-

480

480

-

4

3

0

12,49812,4980(1) Notes Payable and Accounts Payable

57

57

-

(2) Short-Term Borrowings

170

170

-

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

1,768

1,768

-

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

8,793

8,793

-

115

115

-

(6) Long-Term Corporate Debt

7,413

7,414

0

(7) Long-Term Non-Recourse Loans

28,89929,092

193

Total Debt

47,21847,411

193(3) Operating Loans (*)(4) Operating investments in securities (*)(5) Investments in securities (*)(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 for loan 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 thelast-traded exchange price or dealer-indicated price.
- 39 -

(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 estimated doubtful
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 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.
(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

2,919(2) Investments in securities

3,034(3) Long-term security deposits received

3,362(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 ofaffiliates and 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 the market value disclosure, since it is deemed highly difficult toestimate a reasonable cash flow since they are not priced in the market and it is difficult to know inadvance the security deposit period.

6. Notes on Rental Properties(1) Conditions of Rental Properties
The Company and its subsidiaries hold rental offices and retail properties. Profit and Loss on rental
properties in the current fiscal year is ¥771 million (Rental profit is presented in Revenues and Rental Costis presented in Cost of Revenues.)- 40 -

(2) Market Value of Rental Properties(Million yen)Book Value on Consolidate Balance Sheet
Balance
Balance
Increase / Decrease
as of Feb 2011
as of Feb 2012
3,011

+6,9449,955

Market Valueas of Feb 2012
10,327(Note) 1. Book Value on Consolidated Balance Sheet = Acquired Cost – (Cumulative Depreciation + Cumulative
Impairment Loss)
2. The main reason for the increase during the current fiscal year is the reclassified properties (¥7,006
million) from the item “Real Estate for Sale” due to the change in holding purpose.
3. Market Value as of February 2012 is assessed by the Company based on the Real Estate Appraisal
Standard.

7. Per Share Data
(1) Net assets per share¥11,613.85(2) Net profits per share¥775.148. Material Subsequent Events
N/A- 41 -

Parent Balance Sheet(as of February 29, 2012)(Million yen)

Item
AssetsCurrent Assets
Cash and cash equivalents
Receivables
Operating loans
Operating investment insecurities
Short-term loans to affiliates
Advance payment
Other
Allowance for doubtful
accounts
Fixed Assets
Fixed Assets
Buildings and structure
Land
Other
Intangible Assets
SoftwareInvestments and Other
AssetsInvestment in securities
Investment in securities ofsubsidiaries and affiliates
Investment in securities ofother affiliates
Corporate bonds of affiliates
Long-term investments inloans

Amount

Item

8,911
4,053
136
2,253

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

4,280
135
1,960
1,694

3,429

Accounts payable

190

1,525
40
650

Expenses payable
Income taxes payable
Advances received

62
27
115

-3,178Deposits received

15

25,083
6,340
1,490

Other
Fixed Liabilities
Long-term borrowings
Long-term borrowings
guaranteed
Other
Total Liabilities
Net Assets

78
6,687
6,412

4,839
10
15
15
18,727

Shareholders’ Equity

260
14
10,96823,5683,534

Capital18,0785,730

Additional paid-in capital

2,395

8,494

Capital reserve

2,395

370

Retained earnings

3,282

10

Other retained earnings

Carried forward retained
earnings
Other
101
Treasury stock
Allowance for doubtful
Revaluation and-85
accounts
Adjustment
Valuation adjustment in othersecurities
Acquisition Rights
Total Net Assets
Total Liabilities and Net
Total Assets
33,995
Assets(Amounts less than one million yen have been rounded off.)Long-term loans to affiliates

Amount570- 42 -

3,282
3,282
-187
-657
-657
116
23,02733,995Parent Income Statement
From March 1, 2011
To February 29, 2012
(Million yen)

Item
Revenues
Cost of revenues
Gross profit
SG&A
Operating profit
Non-operating profit
Interest income
Dividend income
Other
Non-operating expenses
Interest on debt
Interest on corporate bonds
Issuance cost of corporate bonds
Other
Recurring Loss
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
Net Profit(Amounts less than one million yen have been rounded off.)- 43 -

Amount
4,043
2,607
1,435
1,220
215
18
164
45
286
30
41
32

879
929
59
62
4
330
64

229

390
54

1,868

462
1,460
-212
1,672

Statement of Parent Changes in Shareholders' Equity
From March 1, 2011
To February 29, 2012
(Million yen)
Shareholders’ Equity
Retained earnings
Carried
Total
Total
forwardretained
capitalretainedearnings
surplusearnings

Capital surplus
Commonstock

Balance as of February 28, 2011
Changes in the fiscal year
Share buyback
Share cancellation
Net profit
Changes in items other thanshareholders’ equity (net)
Changes in the current fiscal year
Balance as of February 29, 2012

18,078

Capitalreserve

Other
capitalsurplus

2,395

52

2,447

2,341

2,341

-52

-52

-731
1,672

-731
1,672

equity-36

22,831

-935
783

-935
1,672
-

18,078

2,395

-52
-

-52
2,395

Revaluation andadjustment
Unrealized gain on Total revaluation
other securities, net and adjustment
Balance as of February 28, 2011
Changes in the fiscal year
Share buyback
Share cancellation
Net profit
Changes in items other thanshareholders’ equity (net)
Changes in the current fiscal year
Balance as of February 29, 2012

Total

Treasuryshareholders’
stock

-376

-376

941
3,282

941
3,282

Stock acquisitionrights

80

-151
-187

737
23,568

Total net assets

22,535
-935
1,672

-281

-281
-657
(Amounts less than one million yen have been rounded off.)- 44 -

-281

35

-245

-281
-657

35
116

492
23,027

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(iv) Inventory Real estate assets for sale:Individual cost method (the amount on balance sheet iswritten down to reflect declines in profitability)(2) Depreciation Method for Property and Equipment(i) Fixed Assets:

Declining-balance method

Useful lives are as follows:
Buildings and Structure
Equipments attached to Buildings
Machinery and Equipment(ii) Intangible Assets:

8-42 years
10-15 years
4-20 years
Straight-line method

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- 45 -

(iii) Hedging Policy
The Company uses derivative financial instruments in its financing activities to hedge possible
future movements in interest rates.
(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”) in proportion
to the holding percentage. Profits on dividends are recorded as revenues and an adjustment toInvestments in investment associations. Redemption of principle is recorded as a decrease of
Investments in investment associations.
(iv) Consolidated Tax Treatment
The Company qualified for consolidated tax treatment starting this fiscal year.
2. Changes in Accounting Policy
From the current fiscal year, the Company adopted the “Accounting Standard for Asset Retirement
Obligations” (Financial Accounting Standard No. 18, March 31, 2008) and “Accounting Standard forApplication of Consolidated Financial Statement” (Financial Accounting Standard No. 21, March 31,2008).
There is no impact on the Operating Profit and Recurring Profit, however ¥4 million of Extraordinary Loss
affects to ¥4 million decreases in Net Profit before Income Taxes.
3. Changes in Presentation¥1 million of Gain on Foreign Currency Exchanges and ¥10 million of Valuation Gain on Derivatives arereported as Other in Non-Operating Profit in the current fiscal year as they are no longer significant.
4. Additional Information¥6,299 million of Real Estate Held for Sale is reclassified to Fixed Assets: Buildings and Structures(¥1,459 million)and Land (¥4,839 million) due to the change in holding period. With this reclassification,¥260 million of Guarantee Deposit in Current Liabilities is reclassified to Long Term Guarantee Deposit inLong Term Liabilities.
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¥891 million¥1,214 million¥4,353 million¥237 million¥3,636 million- 46 -

Investments in other affiliated companies
Total¥4,279 million¥14,613 million

Secured obligations are as follows:
Long-term borrowings (due within one year)
Long-term borrowings
Total¥1,654 million¥5,982 million¥7,637 million(2) Accumulated Depreciation of Fixed Assets¥88 million(3) Contingent Liabilities
The Company guarantees the following companies' borrowings from financial institutions.
Amethyst LLC
Takara Building Maintenance Co., Ltd.
Ichigo Estate Co., Ltd.
Total

¥910 million¥162 million¥947 million¥2,020 million(4) Debts to Affiliates (excluding items separately indicated)
Short-term debt to affiliates¥454 million

Other short-term debt to affiliates¥200 million

6. Income Statement
Transactions with affiliates
Revenues¥1,500 million

Cost of Sales¥81 million

Non-operational transactions¥1,428 million

7. Statement of Changes in Shareholders' Equity
Number of Shares
Outstanding
as of Feb 2011

Increased Shares

Decreased Shares

Number of Shares
Outstanding
as of Feb 2012

Common Shares

240

100,000

80,24020,000Total

240

100,000

80,24020,000Treasury Shares

8. 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 inventories
Write-down of investments in real estate
Write-down of securities of affiliates
Loss carried forward
Other
Subtotal- 47 -¥1,277 million¥323 million¥1,114 million¥517 million¥3,461 million¥1,229 million¥6,490 million¥545 million¥14,958 million

Allowance for valuation
Deferred tax assets- ¥14,958 million¥ - million(2) Amendments on Deferred Assets and Deferred Liabilities due to Changes in the Effective Corporate
Income Tax Rate
“Revision of the Income Tax in Order to Construct a Tax System Addressing Changes in theSocio-Economic Structure” (Law No. 114 of 2011) and “The Special Tax Law for the Great EasternJapan Earthquake Disaster Construction” (Law No. 117 of 2011) were announced on December 2,
2011, and thus the corporate income tax will be reduced and the special tax for the disaster
construction will be newly imposed from the next fiscal year. Due to the changes, the current effective
corporate income tax rate of 40.69% for the Deferred Assets and Deferred Liabilities will be reduced
to: 38.01% during the fiscal year starting March 1, 2013 through the fiscal year starting March 1,
2015; and to 35.64% from the fiscal year starting March 1, 2016. These tax rate changes will have
limited impact on the Company’s earnings.
6. Related Party Transactions(Million yen)Type

Subsidiary

VotingConnection with
Name
RightsTransaction Typethe Related Party
Held (%)
Service
Ichigo Real Estate
contract;
Management
Investment
100 Provide
administration fee
Advisors Co., Ltd.
managerial
guidance
Loan (Provided)(Note 2)

Subsidiary

Ichigo Solutions
Co., Ltd.

Servicecontract;
100 Provide
managerial
guidance

Loan (Provided)(Note 2)
Interest received
Borrowing (Note 1)
Interest paid
Managementadministration fee

Subsidiary

Subsidiary

Ichigo REITManagement Co.,Ltd.

Ichigo Estate Co.,
Ltd.

Servicecontract;
100 Provide
managerial
guidance
Servicecontract;
100 Provide
managerial
guidance

Borrowing (Note 1)
Interest paid
Managementadministration fee
Guarantee of liabilities(Note 6)
Managementadministration fee
Loan (Provided)(Note 2)

Subsidiary

Miyako City Co.,
Ltd.

100

Financialsupport

Corporate bondpurchase (Note 2)
Interest received
Relieving accountcollectible- 48 -

Transaction
AmountAccount

Balance
Outstanding

417 Receivables

49

Short-Term
2,168 Loans to
Affiliates
Short-Term
200 Loans to
Affiliates“Others” in
10Current Assets
Short-term- Borrowings
from Affiliates
Accrued13
expenses
102 Receivables
Short-Term- Borrowings
from Affiliates
Accrued13
expenses

68

200
0
862
4
3
760
4

286 Receivables

4

947

-

-

59 Receivables
Long-term
100 borrowings
from affiliates
Affiliates’
50 Corporate
Bonds“Others” in
1
Current Assets
330

-

19

370

370
0
-

Subsidiary

Subsidiary

Asset Managers(Asia) Co., Ltd.

70

A. F. Co., Ltd.

Financial
100
supportRedemption gain on
equity holdings inaffiliates-

Loans (Note 2)
Interest received

Subsidiary

Cronos LLC

100-

Subsidiary

Alan Light LLC

0(Note 8)-

Subsidiary

Eomer LLC

0
(Note 8)-

Subsidiary

Subsidiary

Tozai Holdings
GK

Amethyst LLC

0(Note 8)0(Note 8)Collateral provision(Note 4)
Guarantee of liabilities(Note 7)
Transferred TK equity
interest (Note 9)

-

-

879

-

Short-Term- Borrowings
from Affiliates“Others” inCurrent Asset

-

1,207
63

686

-

-

370

-

-

2,560

-

-

Collateral provision(Note 4)

568

-

-

Collateral provision(Note 4)

1,498

-

-

Guarantee of liabilities(Note 7)

742

-

-

Guarantee payable

0

Fixed Assets

1

Collateral provision(Note 3)

910

-

-

Guarantee of liabilities
910(Note 3)Issuance of corporate
8,200
bonds to IT (Note 1)
Interest paid to IT
28
56.10%
Issuance fee of
Major
Ichigo Trust
Owner of41
corporate bonds to IT
shareholder (“IT”)
theCorporate bonds
Company0
guarantee payable
Collateral received
4,205
from IT (Note 5)(Note) 1. The interest rate on borrowings and corporate bonds is determined in consideration of the market interest rate.
2. The interest rate on loans is determined in consideration of the market interest rate.
3. The company has pledged real estate for sale as collateral for non-recourse loans secured from financial
institutions.
4. The Company has accepted real estate for sale as collateral for long-term borrowings from banks.
5. The Company has received securities from IT for use as collateral for the Company’s long-term borrowings frombanks.
6. The Company is jointly guaranteeing long-term borrowing from banks.
7. The Company has received a joint guarantee for long-term borrowing from banks.
8. The voting right is stated as 0%; however, 100% of controlling rights are held by a subsidiary fully owned by theCompany. Therefore, the company is treated as a subsidiary of the Company, pursuant to “Treatments of Standardsof Control and Influence of Investment Associations” (Accounting Standards No. 20, September 8, 2006).
9. The transfer price is determined in consideration of net asset price with asset valuation differences frommark-to-market prices based on the financial statements of the issuing company.
10. The above transaction amounts do not include consumption taxes. The balances at the end of term include
consumption taxes.

7. Per Share Data
(1) Net assets per share¥10,245.12(2) Net profits per share¥732.60

8. Material Subsequent Events
N/A- 49 -

Auditor's Report on the Consolidated Financial Statements
Report of Independent Auditors
April 15, 2012
To the Board of Directors of Ichigo Group Holdings Co., Ltd.

Grant Thornton Taiyo ASG
Satoru Endo, CPA, Designated and Engagement Partner(seal)

Tsutomu Nobechi, 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,
2011 to February 29, 2012 pursuant to Article 444, paragraph 4 of the Company Law. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express
an independent opinion on these consolidated financial statements.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining on a test basis and assessing theaccounting principles used and estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit provides a reasonable basis forour opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, properties and profit and loss 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
with accounting principles generally accepted in Japan.

There are no interests to be specified pursuant to the provisions of the Certified Public Accountant Law
between the Company and us or engagement partner.

- 50 -

Auditor's Report on the Financial Statements
Report of Independent Auditors
April 15, 2012
To the Board of Directors of Ichigo Group Holdings Co., Ltd.

Grant Thornton Taiyo ASG
Satoru Endo, CPA, Designated and Engagement Partner(seal)

Tsutomu Nobechi, CPA, Designated and Engagement Partner(seal)

Hiroaki Ohkane, CPA, Designated and Engagement Partner(seal)We have audited the twelfth 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, 2011 to February 29, 2012 pursuant
to Article 436, paragraph 2, item 1 of the Company Law. These financial statements and schedules are theresponsibility of the Company’s management. Our responsibility is to express an independent opinion onthese financial statements and schedules.
We conducted our audit in accordance with the auditing standards generally accepted in Japan. Thosestandards require that we obtain reasonable assurance about whether the financial statements andschedules are free of material misstatement. An audit includes examining on a test basis and assessing theaccounting principles used and estimates made by management, as well as evaluating the overall financial
statement and schedule presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and schedules referred to above present fairly, in all material
respects, properties and profit and loss for the period for the financial statements and schedules inconformity with accounting principles generally accepted in Japan.
There are no interests to be specified pursuant to the provisions of the Certified Public Accountant Law
between the Company and us or engagement partner.

- 51 -

Report of Audit Committee
Audit Report
April 19, 2012
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 twelfth fiscal year from March 1, 2011 to February 29, 2012. 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.
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 andregulations 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 of- 52 -

duties 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
At the Board of Directors meeting held on April 19, 2012, the Company approved a resolution to reorganize
its real estate and finance functions and to merge consolidated subsidiaries.
(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.

- 53 -

Reference Materials for the Annual General Meeting of Shareholders
Proposal 1

Election of 7 Directors

The terms of office of all ten Directors will expire at the conclusion of the Annual General Meeting of
Shareholders. Accordingly, the Company proposes the election of the following seven Directors.
The candidates for Directors are as follows:
No.

Name
(Date of birth)

History, Position, and Responsibility in the Company(Positions at other companies)
April 1988
September 1991

1

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

MIPS Computer Systems, Inc.
Asia-Pacific Research Center,
Stanford University
March 1994
Visiting researcher, Research Instituteof Capital Formation, Japan
Development Bank
August 1994
Tokyo Branch, Bankers Trust Asia
Securities Co., Ltd.
March 1997
Morgan Stanley Securities Co., Ltd.
June 2000
Representative of resident officers,
Representative office in Japan,
Prudential PLC
May 2001
Representative Director, PCA ASSETManagement Limited of thePrudential plc Group
April 2002
Morgan Stanley Securities Co., Ltd.
January 2003
Head of Equities, Morgan Stanley
Securities Co., Ltd.
May 2006
Partner and Chief Executive Officer,
Ichigo Asset Management, Ltd.
(current)
October 2008
Chairman & Representative Statutory
Executive Officer of the Company(current)
November 2008
Director, Chairman of Nominating
Committee, Chairman ofCompensation Committee, Vice
Chairman of Compliance Committeeof the Company (current)
November 2011
Member of Nominating Committee
and Member of Compensation
Committee (current)(Positions at other companies)
Partner and Chief Executive Officer, Ichigo AssetManagement, Ltd.

Number ofCompany's
Shares Held- 54 -

0

No.

Name
(Date of birth)

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

May 2005
May 2007

2

Kenji Iwasaki(April 10, 1968)

October 2008
November 2008
May 2009

November 2011

April 1990
October 2005
May 2007

March 2008

October 2008

3

Minoru Ishihara(October 5, 1967)

November 2008

May 2009

October 2009

November 2009

Number ofCompany's
Shares Held

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 (current)
Vice Chairman of Compliance
Committee (current)
Director (current), Member ofNominating Committee and Memberof Compensation Committee
Chairman of Nominating Committee,
and Chairman of Compensation
Committee (current)

2,865

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 theCompany
Chief Administrative Officer &Statutory Executive Officer and Headof Business Management of theCompany
Director, Asset Investment Advisors
Co., Ltd. (currently Ichigo Real Estate
Investment Advisors Co., Ltd.)
Senior Managing Director &Statutory Executive Officer(Administration) and Member ofCompliance Committee of theCompany (current)
Senior Managing Director(Administration), Asset Investment
Advisors Co., Ltd. (currently Ichigo
Real Estate Investment Advisors Co.,Ltd.)
President & Representative Director,
Asset Logistics Co., Ltd.(currently
Ichigo Marché Co., Ltd.)204- 55 -

No.

Name(Date of birth)

History, Position, and Responsibility in the Company(Positions at other companies)

Number ofCompany's
Shares Held

May 2010

Director, Senior Managing Director &Statutory Executive Officer(Administration) and Member ofCompliance Committee of the Company
January 2011
Senior Executive Managing Director &Statutory Executive Officer(Administration, Environmental &Architectural Solutions) andSenior Managing Director(Administration), Ichigo REITManagement Co., Ltd.
April 2011
President & Representative Director,
Miyako City Co., Ltd. (current)
May 2011
Senior Managing Director(Administration), Ichigo Real Estate
Investment Advisors Co., Ltd.
November 2011 Executive Vice President & Statutory
Executive Officer (Administration)(current)(Positions at other companies)
Senior Managing Director (Administration), Ichigo Real
Estate Investment Advisors Co., Ltd.
President & Representative Director, Miyako City Co.,Ltd.
April 1968

4

Katsu Fujita(June 30, 1944)

Joined The Long-Term Credit Bank ofJapan, Limited (current Shinsei Bank,
Limited)June 1995
Director, General Manager ofInformation System Group and Manager
of System Planning of The Long-Term
Credit Bank of Japan, Limited
June 1997
Senior Managing Director and Directorof Finance & Accounting Division,
Ishihara Sangyo Kaisha, Ltd.
June 2002
Executive Managing Director andDirector of Corporate Planning &Administration Division, Ishihara
Sangyo Kaisha, Ltd.
October 2007
Member of Conciliation of Civil Affairs,
Tokyo District Court (current)
May 2008
External Director, Chairman ofNominating Committee and Chairmanof Compensation Committee of theCompany
November 2008 External Director, Chairman of Audit
Committee, Member of Nominating
Committee, Member of Compensation
Committee & Member of Compliance
Committee of the Company (current)(Positions at other companies)
Member of Conciliation of Civil Affairs, Tokyo District
Court- 56 -

229

No.

Name
(Date of birth)

History, Position, and Responsibility in the Company(Positions at other companies)
April 1976

5

Tetsuya Fujita(March 26, 1954)

Joined Taisho Marine and Fire InsuranceCo., Ltd. (now Mitsui Sumitomo
Insurance Co., Ltd.)
April 2001
Executive Director, Taisho Marine & Fire
Insurance (Malaysia) Bhd. (now MSIG
Insurance (Malaysia) Bhd)
April 2002
Board Director, Skandia Life Insurance(Japan) (currently Tokyo Marine Nichido
Financial Life Insurance Co., Ltd.)
October 2006 Executive Director, AXA Life InsuranceCo., Ltd.
April 2007
Representative President & CEO, AXA
Financial Life Insurance Co., Ltd.
(currently AXA Life Insurance Co., Ltd.)
October 2009 Senior Advisor, AXA Life Insurance Co.,Ltd.
May 2010
External Director, Member of Audit
Committee, and Member of Compliance
Committee of the Company (current)
February 2011 Auditor, St. Thomas University(current)
March 2011
President, Remark Japan Co., Ltd.
(current)
May 2011
Chairman of Compliance Committee(current)(Positions at other companies)
Auditor, St. Thomas University
President, Remark Japan Co., Ltd.

Number ofCompany's
Shares Held

April 2000

6

Maki Kumagai(February 11, 1974)

Qualified as Attorney at Law, joined
Mitsui, Yasuda, Wani & Maeda
May 2003
Seconded to International Legal Affairs
Bureau, Ministry of Foreign Affairs
May 2005
Joined Mitsui Company
January 2008
Appointed Partner, Mitsui Company
May 2011
Director, Member of Nominating
Committee, Member of Compensation
Committee and Member of Compliance
Committee (current)
July 2011
Partner of Nijubashi Partners (current)(Positions at other companies)
Partner, Nijubashi Partners

41- 57 -0Name(Date of birth)No.

History, Position, and Responsibility in the Company(Positions at other companies)

Number ofCompany's
Shares Held

April 1999

7

Noriko Kawate(February 22, 1976)(Note) 1.

Joined International Dept., Deloitte
Touche Tohmatsu LLC
July 2001
Qualified as Certified Public
Accountant
August 2004
Joined Cast & Itoga (Currently Soga,
Uryu, Itoga)
November 2004 Qualified as Certified Tax Accountant
February 2008 President, CLEA Consulting Co., Ltd.
(current)
January 2009
Joined Gracia Corporation (current)
May 2011
Director, Member of Audit Committee
November 2011 Qualified as American Institute ofCertified Public Accountants (current)(Positions at other companies)
President, CLEA Consulting Co., Ltd.
Employee of Gracia Corporation

0

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

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 and Ms. Noriko Kawate are candidates
for External Director. They meet the requirements for Independent Director under therequirements of the Osaka Securities Exchange. The Company intends to register them to the
Osaka Securities Exchange as Independent Directors.

4. The Company’s reasons for proposing Mr. Katsu Fujita, Mr. Tetsuya Fujita, Ms. Maki Kumagai,
and Ms. Noriko Kawate 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 four 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 two years at the close of this
General Meeting of Shareholders.
(iii) The Company proposes Ms. Maki Kumagai as a candidate for External Director based uponher 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 one year 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 one year at the close of this General Meeting of Shareholders.
5. No candidate for External Director has been involved in inappropriate conduct while serving asa Director in other companies over the past five years- 58 -

6. 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, nor will they receive, a large amount ofmoney or other financial compensation (excluding any remuneration as a Director orAdvisor 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.
7.

In order to retain External Directors of high quality, the Company has entered into limited
liability agreements with Mr. Katsu Fujita, Mr. Katsuhiko Hattori, Mr. Tetsuya Fujita, Ms. Maki
Kumagai, Ms. Noriko Kawate, Mr. Rob Crawford, and Mr. Makoto Fukuhara. The extent ofliabilities 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 is limited
only when the External Directors have performed their duties which cause liability in good faithand without gross negligence. If the re-appointments as External Directors of Mr. Katsu Fujita,
Mr. Tetsuya Fujita, Ms. Maki Kumagai and Ms. Noriko Kawate, the Company will enter into a
new limited liability agreement with equivalent terms with each of them.

- 59 -