Make The World
More Sustainable

Ichigo Inc.
(Tokyo Stock Exchange First Section, 2337)

Materials for the Nineteenth Annual Shareholder Meeting

Our Mission

Make The World More Sustainable
Ichigo is a Japanese sustainable infrastructure company dedicated to making the world moresustainable.
Our three key businesses are: Value-Add, in which we preserve and improve real estate; AssetManagement, including managing the Tokyo Stock Exchange-listed Ichigo Office (8975),
Ichigo Hotel (3463), and Ichigo Green (9282); and Clean Energy, in which we develop solar
and wind power plants to supply clean energy and bring productive use to idle land.
We are committed to growing long-term value for our shareholders by contributing to a sustainable
society.
The word “Ichigo” comes from the ancient Japanese proverb,
Ichigo Ichie, literally meaning “One lifetime, one encounter.”
The phrase was first used by a 16th century master of the tea
ceremony, Sen no Rikyu. He called upon his disciples to give
total focus and sincerity to each act of the tea ceremony forevery guest, because that particular moment will only exist onceand must be fully lived and realized. Ichigo embraces the Ichigo
Ichie philosophy of sincerity and service, and works to build
strong long-term relationships to support the success of all of
our clients, shareholders, and stakeholders.

Make The World
More Sustainable[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.

April 26, 2019
Ichigo Inc. (Tokyo Stock Exchange First Section, 2337)
Representative: Scott Callon, Chairman

Materials for the Nineteenth Annual Shareholder Meeting
Dear Shareholders:
We are pleased to invite you to attend the Nineteenth Annual Shareholder Meeting of Ichigo
Inc. (“Ichigo”).
If you are unable to attend the meeting, you may exercise your voting rights via postal mail orthe Internet. We would appreciate it if you could please review the Reference Materials for
the Annual Shareholder Meeting attached below and cast your vote by returning the enclosed
voting form or by accessing our voting website (https://evote.tr.mufg.jp) no later than Friday,
May 24, 2019, 6:15 p.m. JST.
1. Date and Time

Sunday, May 26, 2019 at 10:00 a.m.

2. Place

La Rose, Fifth Floor, Dai-ichi Hotel Tokyo
1-2-6 Shimbashi, Minato-ku, Tokyo

3. Agenda
Matters to be Reported
a. Ichigo’s business report, consolidated financial statements, and the results of the audit of
the consolidated financial statements by the Independent Auditor and Ichigo’s Audit
Committee for the Nineteenth term (March 1, 2018 – February 28, 2019)b. Ichigo’s parent financial statements for the Nineteenth term
Matters to be Resolved
Election of Nine Directors
Additional Accounting Notes
Additional accounting notes to Ichigo’s consolidated and parent financial statements aredisclosed on our website at www.ichigo.gr.jp/en/ir/library.
Please also note that any amendments to the business report, consolidated and parent financial
statements, or shareholder meeting materials will be posted on our website atwww.ichigo.gr.jp/en.

1Voting via the Internet
1. Handling of Multiple Votes via both the Proxy Card and the Internet
If you cast multiple votes via both the proxy card and the Internet voting site, only the votecast via the Internet will be deemed effective.
2. Handling of Multiple Votes via the Internet
If you cast multiple votes via the Internet voting site, only the last vote will be deemed
effective.
3. Internet Voting Procedure
The internet voting procedure is per the below. If you choose to attend the meeting, voting via
the proxy card or the Internet is unnecessary.
a. Voting Website(i)

You can access the designated website https://evote.tr.mufg.jp from a PC or mobile
phone. Please note that the website is not available from 2 a.m. to 5 a.m. JST daily.

(ii)

If you use a firewall, have antivirus software installed, or use a proxy server, you may
encounter technical difficulties.

(iii) To exercise your voting rights from a mobile phone, please use i-mode, EZweb orYahoo! Keitai. To ensure security, you may not be able to vote from your mobile phone
if the phone does not support encrypted transmission (SSL).
(iv) We will accept votes submitted via the Internet until 6:15 p.m. JST on Friday, May 24,
2019. Please contact the help desk below if you have any questions.
b. How to Vote via the Internet(i)

Please access our voting website (https://evote.tr.mufg.jp) and use the log-in ID andtemporary password shown on the enclosed voting form. Follow the on-screen
instructions to indicate your consent or dissent.

(ii)

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

(iii) A new login ID and temporary password is issued for each shareholder meeting.
c. Fees for Accessing the Voting Website
Please note that you will be responsible for expenses such as Internet access fees andtelephone and data charges incurred in accessing the voting website.
4. How to Receive Email Notices of Future Shareholder Meetings
For those interested in receiving notices of future shareholder meetings, please apply online
via the voting website. (Please note that a mobile phone email address cannot be registered as
the receiving email address.)2

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

3

Table of Contents
Materials for the Nineteenth Annual Shareholder Meeting

1

Reference Materials for the Nineteenth Annual Shareholder Meeting
Election of Nine Directors

5

Business Report
I. Current Operations and Financials
A. Business Conditions in the Current Fiscal Year (FY19/2)
B. Earnings and Assets in the Current and Past Three Fiscal Years
C. Company and Subsidiary Information
D. Key Business Priorities
E. Key Business Segments
F. Employees
G. Principal Lenders
H. Policy on Dividends and Shareholder Distributions
I. Other Material Matters
II. Other Matters
A. Shares and Shareholder Information
B. Directors and Officers
C. Independent Auditor
D. Controls to Ensure Appropriate Business Conduct
E. Policy on Corporate Control (Takeover Defenses)

40
41
48
50
50

Consolidated Financial Statements
Consolidated Balance Sheet
Consolidated Income Statement
Consolidated Statement of Changes in Shareholders’ Equity

51
52
53

Parent Financial Statements
Parent Balance Sheet
Parent Income Statement
Parent Statement of Changes in Shareholders’ Equity

54
55
56

Auditor’s Report on the Consolidated Financial Statements
Auditor’s Report on the Parent Financial Statements
Audit Committee Report

57
58
59

4

21
31
33
34
36
36
37
38
39

Election of Nine Directors
The terms of office of all nine Directors will expire at the conclusion of this shareholder
meeting. Accordingly, Ichigo proposes the election of the following nine Directors.
The candidates for Directors are as follows:
No.

1

2

Name
Scott Callon
Reappointment

Takuma Hasegawa
Reappointment

3

4

Minoru Ishihara
Reappointment

Eri MuraiNew

Tetsuya Fujita
5

Reappointment –Independent Director

Noriko Kawate
6

Reappointment –Independent Director

Yukio Suzuki
7

Reappointment –Independent Director

Masatoshi Matsuzaki
8

Reappointment –Independent Director

Current Position and Responsibility

Board Meeting
Attendance

Chairman of the Board of Directors,
Nominating Committee Member,Compensation Committee Member,
Chairman & Representative Statutory
Executive Officer

100%(10 of 10 Total)

Chairman of Nominating Committee,
Chairman of Compensation Committee,
Chairman of Compliance Committee,
President & Representative Statutory
Executive Officer

100%(10 of 10 Total)

Compliance Committee Member,
Executive Vice President & Statutory
Executive Officer (Value-Add) & COO

90%(9 of 10 Total)

Executive Managing Director & Statutory
Executive Officer (Administration & HR)

N/A

Lead Independent Director,
Chairman of Audit Committee,
Nominating Committee Member,Compensation Committee Member,Compliance Committee Member

100%(10 of 10 Total)

Independent Director,
Nominating Committee Member,
Audit Committee Member,Compensation Committee Member

100%(10 of 10 Total)

Independent Director,
Audit Committee Member, Vice
Chairman of Compliance Committee

100%(10 of 10 Total)

Independent Director,
Nominating Committee Member,Compensation Committee Member

100%(10 of 10 Total)

Independent Director

100%(10 of 10 Total)

Nobuhide Nakaido
9

Reappointment –Independent Director

5

No.

Name
(Date of Birth)

Career History
April 1988
September 1991
March 1994
August 1994
March 1997
June 2000
May 2001
April 2002
January 2003
May 2006
October 2008
November 2008

November 2011

1

Scott Callon(December 6, 1964)

May 2012

July 2012

March 2014
May 2015
September 2015
May 2016
October 2016
July 2017

MIPS Computer Systems, Inc.
Asia-Pacific Research Center, Stanford
University
Research Institute of Capital Formation, Japan
Development Bank
Bankers Trust Asia Securities Co., Ltd.
Morgan Stanley Japan Limited
Japan Representative, Prudential plc
Representative Director, PCA Asset Management
LimitedMorgan Stanley Japan Limited
Head of Equities, Morgan Stanley Japan Limited
Partner and Chief Executive Officer, Ichigo AssetManagement, Ltd. (current)
Ichigo Chairman & Representative Statutory
Executive Officer (current)
Director (current), Chairman of Nominating
Committee, Chairman of Compensation
Committee, Vice Chairman of Compliance
Committee
Member of Nominating Committee, Member ofCompensation Committee
Associate Director, Japan Association of
Corporate Directors
Audit & Supervisory Board Member, Chiyoda
Co., Ltd.
Director, Member of Nominating Committee,
Member of Compensation Committee, Ichigo
Real Estate Investment Advisors Co., Ltd. (now
Ichigo Investment Advisors Co., Ltd.)
Independent Director, Gwynnie Bee Inc.
(current)
Independent Director, Chiyoda Co., Ltd. (current)
Chairman of Compliance Committee
Chairman of Nominating Committee, Chairmanof Compensation Committee
Member of Nominating Committee (current),
Member of Compensation Committee (current)Group Head of IT
Chairman & Statutory Executive Officer, Ichigo
Investment Advisors Co., Ltd. (current)(Other Positions)
Partner & Chief Executive Officer, Ichigo Asset Management, Ltd.
Independent Director, Chiyoda Co., Ltd.
Chairman & Statutory Executive Officer, Ichigo Investment Advisors
Co., Ltd.

6

IchigoShares
Held

N/A

No.

Name
(Date of Birth)(continued fromprevious page)

1

Career History
Message to Our Shareholders
This is your company. While we achieved the goals of our Power Up
2019 mid-term business plan, we have not reached the finish line. Allof us at Ichigo continue to be dedicated to creating value for society
and our clients. We are committed to being a world-class company
that drives sustainable growth for our shareholders.

7

IchigoShares
Held

No.

Name
(Date of Birth)

Career History
April 1994
November 2002
October 2004
September 2005
May 2006
May 2007
March 2008
May 2009
March 2010
January 2011
March 2015
May 2015

March 2016
May 2016
2

Takuma Hasegawa(January 29, 1971) October 2016
March 2018

Joined Fujita Corporation
Joined Ichigo
General Manager, Fund Business Division
General Manager, Fund Business Division
Group 1
Senior Statutory Executive Officer & General
Manager, Fund Business Division Group 1
Senior Statutory Executive Officer & CMO
Senior Statutory Executive Officer
Director & Executive Vice President & Statutory
Executive Officer (Real Estate)
Independent Director, Takara Building
Maintenance Co., Ltd.
President & Representative Director (Overall
Company Management), Ichigo Estate Co., Ltd.
Executive Vice President & Statutory Executive
Officer
Director (current), President & Representative
Statutory Executive Officer (current)
Chairman & Director, Ichigo ECO Energy Co.,
Ltd. (current)
Chairman of Compliance Committee (current)
Member of Nominating Committee, Member ofCompensation Committee
Chairman of Nominating Committee (current),
Chairman of Compensation Committee (current)Group Head of IT (current)(Other Positions)
Chairman & Director, Ichigo ECO Energy Co., Ltd.
Message to Our Shareholders
Ichigo was able to achieve the goals of our Power Up 2019 mid-termbusiness plan, just as we did in our Shift Up 2016 business plan
three years ago. Thank you to our shareholders for your guidanceand support in helping us reach these goals. With all of ouremployees, I will continue to dedicate all of my strength to working
towards a brighter future for Japan through sustainable real estatethat is safe and sensitive to the environment. Thank you for yourcontinued support.

8

IchigoSharesHeld459,230
sharesNo.

Name(Date of Birth)

Career History
April 1990
October 2005
May 2007
March 2008
October 2008
November 2008
May 2009
October 2009
November 2009
May 2010
April 2011

3

Minoru Ishihara(October 5, 1967)

May 2011
November 2011
July 2012

November 2012
March 2013

May 2015
March 2017
April 2017

Joined Hazama Corporation
Joined Creed Corporation
Joined Ichigo as Head of Human Resources andGeneral Administration Division
Executive Officer and Head of Human Resourcesand General Administration Division
Chief Administrative Officer & Statutory
Executive Officer and Head of Business
Management
Director, Asset Investment Advisors Co., Ltd.
(now Ichigo Investment Advisors Co., Ltd.)
Director (current), Managing Director & Statutory
Executive Officer (Administration), Member ofCompliance Committee (current)Managing Director (Administration), Asset
Investment Advisors Co., Ltd. (now Ichigo
Investment Advisors Co., Ltd.)
President & Representative Director, Asset
Logistics Co., Ltd. (now Ichigo Marché Co., Ltd.)
Director, Senior Managing Director & Statutory
Executive Officer (Administration)
President & Representative Director, Miyako City
Co., Ltd.
Senior Managing Director (Administration),
Ichigo Real Estate Investment Advisors Co., Ltd.
(now Ichigo Investment Advisors Co., Ltd.)
Executive Vice President (current) & Statutory
Executive Officer (Administration)
Director (current), Executive Vice President &Statutory Executive Officer (Administration),
Ichigo Real Estate Investment Advisors Co., Ltd.
(now Ichigo Investment Advisors Co., Ltd.)
Director, Ichigo ECO Energy Co., Ltd.
Head of Real Estate
Chairman, President, & Representative Director,
Miyako City, Co., Ltd. (current)
Chairman & Director, Ichigo Marché Co., Ltd.
Chairman & Director, Takara Building
Maintenance Co., Ltd.
Executive Vice President & Statutory Executive
Officer & COO (current)
President & Representative Director, Ichigo Real
Estate Services Fukuoka Co., Ltd. (current)
Chairman, President, & Representative Director,
Ichigo Marché Co., Ltd.

9

IchigoSharesHeld

183,000
sharesNo.

Name(Date of Birth)

Career History(continued from March 2018previous page) March 2019

Group Head of Value-Add (current)
Chairman & Representative Director, Ichigo
Marché Co., Ltd. (current)(Other Positions)
Chairman, President, & Representative Director, Miyako City Co.,
Ltd.
Chairman & Representative Director, Ichigo Marché Co., Ltd.
President & Representative Director, Ichigo Real Estate Services
Fukuoka Co., Ltd.

3

Message to Our Shareholders
We are re-envisioning real estate as sustainable infrastructure thatcan link together and support people's lives. As head of Ichigo's
sustainable real estate business, I am determined to seize thebusiness opportunities that this new vision can bring. I also want tocontribute to the development of sports in Japan by overseeing
Ichigo's new sponsorship of the J.League professional soccer league,and serving as manager and coach of Ichigo's weightlifting, riflery,
and track & field teams.
I will continue to work toward meeting the expectations of ourshareholders, and am dedicated to realizing Ichigo's mission. Thankyou for your guidance and support.

10

IchigoShares
Held

No.

Name
(Date of Birth)

Career History
April 1993
April 2002
January 2007
July 2012
March 2013

March 2014
March 2015

4

Eri Murai(May 16, 1970)

Joined Fujita Corporation
Joined Ichigo
Head of Finance, Ichigo
Statutory Executive Officer (Business
Management), Head of Business Planning,
IchigoDirector (Administration), Ichigo Estate,
Director, Ichigo Global Capital
Director (Business Planning), Ichigo ECOEnergySenior Statutory Executive Officer(Administration & HR), Ichigo
Executive Managing Director & Statutory
Executive Officer (Administration & HR)(current),
Group Head of Administration & HR, Ichigo(current)
President, Ichigo University (current)

Message to Our Shareholders
This is a time of change, when corporate Japan is rewriting its
rules and making a new commitment to corporate governance,
work-life balance, and respect for diversity. As society adapts tothese changes, we will create a work environment at Ichigo inwhich employees can express their individual talents and skills,
helping drive sustainable growth and higher shareholder value.
We will work every day to be a company that offers the best to
our shareholders, customers, and employees. Thank you for yourguidance and support.

11

IchigoSharesHeld

6,100
sharesNo.

Name(Date of Birth)

Career History
April 1976
April 2001
April 2002
October 2006
April 2007
October 2009
May 2010
February 2011
March 2011
May 2011
May 2012

5

Tetsuya Fujita(March 26, 1954) July 2012

May 2014

October 2015
May 2016
August 2017
March 2019

Joined Taisho Marine and Fire Insurance Co., Ltd.
(now Mitsui Sumitomo Insurance Co., Ltd.)
Executive Director, Taisho Marine & Fire
Insurance (Malaysia) Bhd. (now MSIG Insurance(Malaysia) Bhd)
Board Director, Skandia Life Insurance (Japan)(now Tokyo Marine Nichido Financial Life
Insurance Co., Ltd.)
Executive Director, AXA Life Insurance Co., Ltd.
Representative President & CEO, AXA Financial
Life Insurance Co., Ltd. (now AXA Life
Insurance Co., Ltd.)
Senior Advisor, AXA Life Insurance Co., Ltd.
Ichigo Independent Director (current), Member ofAudit Committee, Member of Compliance
Committee
Auditor, St. Thomas University
President, ReMark Japan Co., Ltd.
Chairman of Compliance Committee,
Member of Nominating Committee (current),
Member of Compensation Committee (current)
Director, Member of Audit Committee, Memberof Nominating Committee, Member ofCompensation Committee, Ichigo Real Estate
Investment Advisors Co., Ltd. (now Ichigo
Investment Advisors Co., Ltd.)
Chairman of Audit Committee (current), Memberof Compliance Committee (current),
Chairman of Audit Committee of Ichigo Real
Estate Investment Advisors Co., Ltd. (now Ichigo
Investment Advisors Co., Ltd.)
Advisor, LAUREATE INTERNATIONALUNIVERSITIES Japan
Lead Independent Director (current)
Special Advisor to CEO, ReMark Group
Advisor, Creative Solutions Co., Ltd. (current)(Other Positions)
Advisor, Creative Solutions Co., Ltd.

12

IchigoSharesHeld

62,700sharesNo.

Name(Date of Birth)(continued fromprevious page)

5

Career History
Message to Our Shareholders
As an Independent Director, I want to strengthen the objectivity andindependence of the Board, promote active discussions both within
and outside the company, and fulfill a supervisory role while
contributing to the creation of even greater corporate value forshareholders and society.
At a time when we are facing ever more change, I want to makeconstructive proposals on behalf of all shareholders to strengthen
corporate governance and risk management while enabling Ichigo toachieve growth as a sustainable company.

13

IchigoShares
Held

No.

Name
(Date of Birth)

Career History
April 1999
July 2001
August 2004
November 2004
February 2008
January 2009
May 2011
November 2011
July 2012
June 2013
May 2014

Noriko Kawate
6(February 22, 1976)
February 2015

Joined International Dept., Deloitte Touche
Tohmatsu LLC
Qualified as Certified Public Accountant
Joined Cast & Itoga (now Uryu & Itoga)
Qualified as Certified Tax Accountant
President of CLEA Consulting Co., Ltd. (current)
Joined Gracia Corporation
Ichigo Independent Director (current), Memberof Audit Committee (current)
Qualified as American Certified Public
Accountant
Director, Member of Audit Committee of Ichigo
Real Estate Investment Advisors Co., Ltd. (now
Ichigo Investment Advisors Co., Ltd.)
Audit & Supervisory Board Member, Meiji
Machine Co., Ltd.
Member of Nominating Committee (current),
Member of Compensation Committee (current),
Member of Nominating Committee, Member ofCompensation Committee of Ichigo Real Estate
Investment Advisors Co., Ltd. (now Ichigo
Investment Advisors Co., Ltd.)
Partner, Cast Group (current)(Other Positions)
President, CLEA Consulting Co., Ltd.
Partner, Cast Group
Message to Our Shareholders
Ichigo faces a changing environment in which there is enormous
uncertainty about the direction of the global economy and the realestate market. As it enters a new stage following the Power Up 2019
mid-term business plan, Ichigo must take an even harder look at risk
and return in order to achieve sustained growth and drive shareholder
value. I will use my knowledge and experience as a certified public
accountant to provide objective supervision and advice tomanagement, and thereby contribute to increasing Ichigo's corporate
value.

14

IchigoSharesHeld

48,100sharesNo.

Name(Date of Birth)

Career History
April 1975
June 1996
June 1997
June 1999
June 2000
June 2003
June 2005
June 2008
July 2010
August 2010
June 2012
May 2015

September 2015
May 2016
7

Yukio Suzuki(June 3, 1950)

March 2018
June 2018

Joined Nomura Research Institute, Ltd.
Director, Nomura Research Institute Ltd.
Director & Head of Financial Research Center,
Nomura Securities Co., Ltd.
Executive Director in charge of Research
Division, Nomura Asset Management Co., Ltd.
Executive Managing Director in charge of
Research Division, Nomura Asset Management
Co., Ltd.
Executive Managing Director, Nomura AssetManagement Co., Ltd.
Director and Audit Mission Director, Nomura
Holdings, Inc.
Advisor, Nomura Securities Co., Ltd.
CEO, Belle Investment Research ofJapan Inc. (current)
Advisor, Deloitte Touche Tohmatsu, LLC
Independent Director, Systena Corporation(current)
Ichigo Independent Director (current), Directorof Ichigo Real Estate Investment Advisors Co.,
Ltd. (now Ichigo Investment Advisors Co.,
Ltd.)
Member of Compliance Committee
Member of Audit Committee (current), Vice
Chairman of Compliance Committee (current)
Independent Auditor, WILLs Inc. (current)
Independent Auditor, XNET Corporation(current)(Other Positions)
CEO, Belle Investment Research of Japan Inc.
Independent Director, Systena Corporation
Independent Auditor, WILLs Inc.
Independent Auditor, XNET Corporation
Message to Our Shareholders
Sustainable corporate value creation requires a long-term vision,
strategizing and executing on new business development, delivering
revolutionary products and services, and solid risk management
attuned to changes in the business environment. It is especially
important that the process of corporate value creation be sharedwith shareholders. I want to fulfill my responsibility as an
Independent Director by offering management supervision based ona belief in effective corporate governance, strong human capitaldevelopment, and concern for the environment.

15

IchigoSharesHeld

13,600sharesNo.

Name(Date of Birth)

Career History
April 1976
June 1999
October 2003
April 2005

April 2006
June 2006
April 2009
April 2013
April 2014
June 2014
May 2016
8

Masatoshi Matsuzaki(July 21, 1950)
June 2016

August 2016
May 2018

Joined Konishiroku Photo Industry Co., Ltd.
(now Konica Minolta, Inc.)
General Manager, System Technology
Development Division, Office Document
Company, Konica Corporation
Director, Konica Minolta BusinessTechnologies, Inc.
Executive Officer, Konica Minolta Holdings
Inc.
Representative Director & President, Konica
Minolta Technology Center, Inc.
Senior Executive Officer, Konica Minolta
Holdings Inc.
Director & Senior Executive Officer, Konica
Minolta Holdings Inc.
Representative Director & CEO Konica
Minolta Holdings, Inc.
Representative Director & CEO Konica
Minolta, Inc.
Director & Chairman of the Board of
Directors, Konica Minolta, Inc. (current)
Chairman of the Board of Directors, Japan
Business Machine and Information System
Industries Association
Deputy Chairman, Japan Association of
Corporate Directors (current)
Ichigo Independent Director, Member ofNominating Committee (current), Member ofCompensation Committee (current)
Independent Director, Nomura ResearchInstitute, Ltd. (current)
Independent Director, Nippon Sheet Glass Co.
Ltd. (current)
Member of Public Interest Supervisory
Committee, PwC Aarata LLC (current)
Executive Director & Deputy Chairman, Japan
Association of Corporate Directors (current)(Other Positions)
Chairman of the Board of Directors, Konica Minolta Inc.
Executive Director & Deputy Chairman, Japan Association of
Corporate Directors
Independent Director, Nomura Research Institute, Ltd.
Independent Director, Nippon Sheet Glass Co. Ltd.
Member of Public Interest Supervisory Committee, PwC Aarata
LLC

16

IchigoSharesHeld

23,600sharesNo.

Name(Date of Birth)(continued fromprevious page)

8

Career History
Message to Our Shareholders
I believe sustainable corporate growth is important forshareholders and all stakeholders. In order to achieve the 2030
vision that will succeed the Power Up 2019 mid-term business planand fundamentally re-envision the company, I will continue to use
my perspective as an Independent Director to help the company's
management team keep an eye on structural changes in thebusiness environment while assessing opportunities and risks, andmeet the expectations of shareholders.

17

IchigoShares
Held

No.

Name
(Date of Birth)

Career History
April 1971
April 1998
April 2002
April 2003
April 2004
April 2005
April 2009
June 2009
October 2011
June 2013
April 2016

9

June 2016
May 2017
Nobuhide Nakaido March 2019
(November 1, 1946)

Joined Sumitomo Corporation
Director, Sumitomo Corporation
Managing Director, Sumitomo Corporation
Managing Executive Officer, Sumitomo
Corporation
Senior Managing Executive Officer,
Sumitomo Corporation
Executive Vice President, Sumitomo
Corporation
Executive Director, Assistant to President,
Sumitomo Corporation
Chairman, President, & CEO, Sumisho
Computer Systems Corporation (now SCSKCorporation)
President & CEO, SCSK Corporation
Chairman, SCSK
Director & Senior Advisor, SCSKCorporation
Senior Advisor, SCSK Corporation
Ichigo Independent Director (current)
Independent Director, eSOL Co., Ltd.
(current)(Other Positions)
Independent Director, eSOL Co., Ltd.
Message to Our Shareholders
With the successful conclusion of the Power Up 2019 mid-termbusiness plan, I want to make the utmost effort to do my best tocontribute to Ichigo's sustained growth and continued
contribution to society as Ichigo enters a new stage in its
development.

18

IchigoSharesHeld

10,000shares(Note 1) None of the candidates for Director or Independent Director has any other rolethat is in conflict of interest to Ichigo.
(Note 2) Ichigo’s Nominating Committee and Board of Directors’ reasons for nominating
Scott Callon, Takuma Hasegawa, Minoru Ishihara, and Eri Murai for Director are
as follows:(i)

Scott Callon has extensive experience leading Ichigo since October 2008 as
Director and Chairman and has knowledge and expertise derived from serving ona number of Japanese government bodies, including the Financial Services
Agency (FSA) Council of Experts that drafted Japan’s Corporate Governance
Code and the Ministry of Economy, Trade and Industry (METI) Competitivenessand Incentives Structures for Sustainable Growth Project (the “Ito Review”). He
assumed the position of Director in November 2008, and his term of office will
have been ten and a half years at the close of this shareholder meeting.
(ii)
Takuma Hasegawa has extensive knowledge and experience at Ichigo, having led
a number of Ichigo’s real estate businesses. He has been Ichigo’s President since
May 2015. He assumed the position of Director in May 2009 for two years, andhis term of office will have been six years at the close of this shareholder meeting.
(iii)
Minoru Ishihara has extensive knowledge and experience as Executive Vice
President and COO of Ichigo. He assumed the position of Director in 2009, andhis term of office will have been ten years at the close of this shareholder
meeting.
(iv)
Eri Murai has extensive knowledge and experience since joining Ichigo in 2002,
having led a number of key initiatives in finance, internal management, and HR.
She is currently the Executive Managing Director & Statutory Executive Officer(Administration & HR).
(Note 3) All five candidates for Independent Director – Tetsuya Fujita, Noriko Kawate,
Yukio Suzuki, Masatoshi Matsuzaki, and Nobuhide Nakaido – meet the Tokyo
Stock Exchange’s (TSE) requirements for Independent Directors and will be
registered with the TSE as such.
(Note 4) Ichigo’s Nominating Committee and Board of Directors’ reasons for nominating
Tetsuya Fujita, Noriko Kawate, Yukio Suzuki, Masatoshi Matsuzaki, andNobuhide Nakaido as candidates for Independent Director are as follows:
(i)

(ii)

(iii)

Tetsuya Fujita has extensive knowledge and experience working for a leading
property insurance company and a leading life insurance company. He assumed
the position of Independent Director in May 2010, and his term of office will havebeen nine years at the close of this shareholder meeting.
Noriko Kawate has extensive experience in statutory auditing at a major auditing
firm and in accounting and tax advisory as a certified public accountant and tax
accountant. She assumed the position of Independent Director in May 2011, andher term of office will have been eight years at the close of this shareholder
meeting.
Yukio Suzuki has extensive experience and knowledge of corporate and securities
research from serving important roles at a securities company, think tank, andasset management company at a major financial group, and has experience andknowledge in operational monitoring and risk control, which he can draw upon to
fully monitor Ichigo’s activities on behalf of shareholders. He assumed theposition of Independent Director in May 2015, and his term of office will havebeen four years at the close of this shareholder meeting.

19

(iv)

(v)

Masatoshi Matsuzaki has extensive experience as the CEO and Chairman leadinga major global office equipment manufacturer, driving positive structuraltransformation and business innovation, and played a leading role in developing a
best-practice board committee system to support strong corporate governance,
which he can draw upon to fully monitor Ichigo’s activities on behalf ofshareholders. He assumed the position of Independent Director in May 2016, andhis term of office will have been three years at the close of this shareholder
meeting.
Nobuhide Nakaido has extensive experience and knowledge as the Executive
Vice President of one of Japan’s largest trading companies and President &Chairman of a leading Japanese IT systems integrator, driving innovation in the
IT service industry and increasing corporate value through workstyle &workplace transformation. He has extensive knowledge and experience leading
major global companies which he can draw upon to fully monitor Ichigo’s
activities on behalf of shareholders. He assumed the position of Independent
Director in May 2017, and his term of office will have been two years at the closeof this shareholder meeting.

(Note 5) No candidate for Independent Director has been involved in inappropriate
conduct while serving as a Director in other companies over the past five years.
(Note 6) Additional information pertaining to the independence of the candidates for
Independent Director is as follows:
(i)
(ii)
(iii)

(iv)

Tetsuya Fujita and Noriko Kawate served as Independent Directors of Ichigo
subsidiary, Ichigo Investment Advisors, from July 2012 to May 2016.
Yukio Suzuki served as an Independent Director of Ichigo subsidiary, Ichigo
Investment Advisors, from May 2015 to May 2016.
No candidate for Independent Director has received in the last two years, nor will
they receive, material monetary or other financial compensation (excluding any
remuneration as Director or Advisor before assuming the position of Independent
Director) from Ichigo or related entities.
No candidate for Independent Director is the spouse of the management of Ichigo
or related entities, nor are they related within three degrees of consanguinity.

(Note 7) In order to retain Independent Directors of high quality, Ichigo has signed limited
liability agreements with Tetsuya Fujita, Noriko Kawate, Yukio Suzuki,
Masatoshi Matsuzaki, Kosuke Nishimoto, and Nobuhide Nakaido. 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 thatthe liability is limited only when the Independent Directors have performed theirduties which cause liability in good faith and without gross negligence. Upon the
re-appointment of Tetsuya Fujita, Noriko Kawate, Yukio Suzuki, Masatoshi
Matsuzaki, and Nobuhide Nakaido as Independent Directors, Ichigo will enter
into new limited liability agreements with equivalent terms with each of them.
(Note 8) Scott Callon has not received and will not receive any compensation from Ichigo.
(Note 9) Shares owned by Yukio Suzuki, a candidate for Independent Director, include
shares owned by Belle Investment Research of Japan Inc., all of whose shares are
owned by Yukio Suzuki.
(Note 10) The number of Ichigo shares owned by each of the candidates for Director is as ofFebruary 28, 2019.

20

Business Report(March 1, 2018 – February 28, 2019)I.

Current Operations and Financials

A. Business Conditions in the Current Fiscal Year (FY19/2)
1. Business Results and Progress
During FY19/2 the Japanese economy continued to expand moderately, despite a numberof natural disasters across the country, as a result of economic and fiscal policies
implemented by the Japanese government and the Bank of Japan’s monetary easing.
Capital expenditures continued to rise on the back of improved corporate earnings andbusiness sentiment, and household consumption increased moderately due to steady
improvements in employment and income.
Turning to Ichigo’s prime area of activity, the Japanese real estate market, the industry
continues to see stable investment returns on the back of ongoing rent increases driven by
low levels of vacancy. Although acquisition and sale activity has decreased, low interest
rates continue to drive strong demand for real estate investments, given their stable
returns. The J-REIT market is seeing earnings growth from capital gains and steady rent
increases, and the market is expected to see continued strong demand due to its stability
and transparency. Despite a downturn due to natural disasters in some areas, the hotel
market is seeing growing demand centered on inbound tourists from Asia, supported by
the 2020 Tokyo Olympics and the government’s efforts to promote Japan as a global
tourist destination.
With respect to clean energy, while changes in the renewable energy feed-in-tariff (FIT)
rules have caused some companies to reevaluate project viability, returns remain robust.
Ichigo’s solar power plants have also proved their resilience during recent natural
disasters. Two new solar YieldCo’s also successfully launched IPOs on the Tokyo Stock
Exchange infrastructure market during FY19/2, as the market continues to grow.
In addition, Ichigo achieved all of the goals of its three-year Power Up 2019 mid-termbusiness plan that concluded in FY19/2, and executed upon the following initiatives tobuild a foundation for sustainable growth.
Core Business Growth–

Value-Add
Given the strong real estate market, Ichigo was selective on acquisitions and sought
to be innovative in its acquisition strategy to avoid auctions and buy at the lowest
possible prices. As a result, during FY19/2 Ichigo acquired JPY 50.8 billion in
assets, while selling JPY 58.6 billion. Ichigo concurrently worked to increase thevalue of its assets through its core value-add activities, maintaining high occupancy
while driving higher rental income to grow its stock earnings.

–

Asset Management
Ichigo worked to support the growth of its TSE-listed REITs and solar YieldCo by
selling high-quality assets to Ichigo Office (8975) and Ichigo Hotel (3463) andoperating Ichigo Green’s (9282) solar power plants. The asset management businessalso contributed to growth in stock earnings through higher base asset management
fees.

21

–

Clean Energy
The expansion of Ichigo’s clean energy business continues to drive growth inIchigo’s stock earnings base.
During FY19/2, Ichigo brought five new solar power plants online. This included the
Ichigo Kasaoka Iwanoike ECO Power Plant built on floats on an idle irrigation pond,
which is Ichigo’s first floating solar plant. FY19/2 was also the first full year ofoperation for the Ichigo Showamura Ogose ECO Power Plant, which went online in
September 2017 as the largest solar plant in the Kanto region encompassing Tokyo.
In addition, Ichigo completed assessments in preparation for construction of its firstwind power plant, the Ichigo Yonezawa Itaya ECO Power Plant.

Ichigo Kasaoka Iwanoike, Ichigo’s First Floating Solar Power Plant
Ichigo Stock Earnings Growth

Stock Earnings Growing Across the Board(Gross Profit: JPY)

Value-Add

AssetManagement

Clean Energy

16.9B
14.0B

FY18/2+21%YOY

FY19/2

11.1B

12.9B
+16%
YOY

FY18/2

FY19/2

22

2.0B

+10%
YOY

FY18/2

1,9B

2.1B

FY19/2

+106%
YOY
0.9B

FY18/2

FY19/2

New Business Entry–

Ichigo Owners Real Estate Owner Services
Ichigo launched Ichigo Owners, its real estate owner services company, on March 1,
2017. Ichigo Owners caters to the needs of both experienced real estate owners andfirst-time real estate investors, leveraging Ichigo’s value-add capabilities to increase
the value of clients’ real estate. Ichigo Owners also provides ongoing asset
management services tailored to the diverse needs of clients, protecting and growing
the value of client assets while building long-term relationships of trust.
In FY19/2, Ichigo Owners acquired JPY 16.4 billion in assets and sold JPY 14.2
billion to clients. Most of the assets acquired were new, high-quality residential
assets in central Tokyo, and JPY 8.3 billion of these assets were sold to a private
equity real estate fund on behalf of a long-term domestic institutional investor.
Ichigo Investment Advisors is managing the fund in coordination with Ichigo
Owners.

–THE KNOT Lifestyle Hotels
Following on the launch of THE KNOT YOKOHAMA in December 2017, Ichigo
opened its second lifestyle hotel, THE KNOT TOKYO Shinjuku, in August 2018.
With THE KNOT TOKYO Shinjuku, Ichigo used its value-add capabilities to totallytransform a 39-year-old hotel.
THE KNOT TOKYO Shinjuku is a gathering place like Shinjuku Central Park,
which the hotel faces and opens out onto. It promotes the mixing and mingling oftravelers and local, diverse cultures and diverse interests.
Since its opening, THE KNOT TOKYO Shinjuku has operated at near-full capacity,with 80-90% of the guests coming from abroad. There are so many overseas guests
that THE KNOT TOKYO Shinjuku has been chosen as a site for the Tokyo
Metropolitan government to open a tourist information desk, offering additional
services to enhance the guests’ experience.

THE KNOT TOKYO Shinjuku–

Self-Storage, Ichigo Land, Hotel AI System Development, Smart Agriculture
Emerging businesses for Ichigo include: Self-Storage, which has large growthpotential due to Tokyo’s changing urban lifestyles; Ichigo Land, which works onlong-term urban redevelopment; AI-based IT solutions for hotels, which raisecustomer satisfaction and hotel profitability; and Smart Agriculture, which uses
technologies such as IOT (Internet of Things) to increase agricultural productivity.

23

Ichigo Smart Agriculture–

Establishment of the Ichigo Sustainable Lab (ISL)
To contribute to the creation of a sustainable society, Ichigo established the Ichigo
Sustainable Lab (ISL) in December 2018. Given its strategic importance, the ISL
reports directly to President Takuma Hasegawa, and consists of three sub-labs, eachpursuing a distinct research and development (R&D) agenda:
Community Lab
The Community Lab recognizes that a highly functional, community-oriented built
environment is critical to supporting a high quality of life. It therefore has as its
central R&D theme investigating how real estate and physical infrastructure canfoster interconnected and supportive communities as a foundation of a sustainable
society.
In collaboration with companies sharing the same goal, the Community Lab isdeveloping an open community platform that fosters social networks to link tenants
and other members of the community.
100-Year Real Estate Lab
Preserving and improving real estate is fundamental to Ichigo’s mission and social
purpose. The ISL will further deepen Ichigo’s capabilities via the 100-Year Real
Estate Lab, which will collaboratively develop long-life technologies for buildings tolast beyond 100 years.
While it is the norm in the US and Europe to renovate and retrofit major buildingssuch that they are fully functional for 50 or 100 years, the prevailing model in Japan
has been to tear buildings down within 40 years. Ichigo believes that this approach is
no longer sustainable because of growing pressure on the world’s environmental,social, and financial resources. Developing 100-year buildings will also address a
key challenge facing Japan: the deterioration of its aging public infrastructure.
Incubation Lab
Consistent with its core value of nurturing entrepreneurial spirit and diversity, Ichigo
has a culture that fosters the establishment and growth of internal startups. The
Incubation Lab supports Ichigo employees in launching new ventures that are bothsustainable and address important societal needs.

24–Improved Borrowing Terms, Share Buybacks, JPX-Nikkei 400 Index, Branding
Ichigo further strengthened its financial base by extending its loan maturities,
lowering borrowing costs, hedging against future interest rate rises, and expanding
its uncollateralized borrowing.
During FY19/2, Ichigo conducted a share buyback to grow EPS for Ichigo
shareholders.
For the third year in a row, Ichigo was selected for inclusion in the JPX-Nikkei Index
400 in August 2018. In its Power Up 2019 mid-term business plan, Ichigo is seeking
to rank within the JPX-Nikkei 400’s top 200 companies by August 2019.
To communicate its values to a broader community, Ichigo launched accounts onfour social networking services – Facebook, Twitter, LinkedIn, and Instagram.

25

FY19/2 Earnings Details
Ichigo recorded FY19/2 consolidated revenue of JPY 83.5 billion (+44.4% YOY);
operating profit of JPY 26.3 billion (+19.9% YOY), recurring profit of JPY 23.1 billion(+20.3% YOY); and net income of JPY 15.4 billion (+9.7% YOY).
Revenue
Robust asset sales, increased rental income from new acquisitions and value-add
activities, and the completion of new power plants led to a 44.4% YOY increase inconsolidated revenue to JPY 83.5 billion.
Real estate sales contributed JPY 58.7 billion, real estate rental income JPY 18.6 billion,
real estate management fee income JPY 2.4 billion, and solar power production revenue
JPY 3.6 billion.
Operating Profit
Operating profit increased on higher real estate sales, real estate rental income, andpower generation revenue, with SG&A increasing by JPY 780 million, resulting in an
operating profit of JPY 26.3 billion (+19.9% YOY).
Non-Operating Profit & Expenses
Non-operating profit totaled JPY 147 million (-8.8% YOY), with dividend income of
JPY 68 million, a foreign currency valuation gain of JPY 21 million, and a mark-tomarket gain on long-term interest rate hedges of JPY 5 million.
Non-operating expenses totaled JPY 3.4 billion (+15.7% YOY) on increased borrowing
for asset acquisitions, with interest expenses of JPY 2.3 billion, debt financing-related
fees of JPY 327 million, and a mark-to-market loss on long-term interest rate hedges of
JPY 491 million.
Extraordinary Gains
Gains on sale of shares in affiliates totaled JPY 2 million (-99.8% YOY).
Net Income
Net income grew 9.7% YOY to JPY 15.4 billion. Incomes taxes totaled JPY 7.1 billion(including a tax adjustment of JPY 241 million).
The breakdown of revenue and operating profit by segment is as follows:
Asset Management
While more volatile spot asset management fees declined, base asset management fees
showed solid growth, resulting in revenue of JPY 3.5 billion (+0.5% YOY) and segment
earnings (operating profit) of JPY 2.2 billion (+7.5% YOY).
Value-Add
Rental income from newly acquired assets contributed to an increase in stock earnings.
Asset sales were also solid, resulting in revenue of JPY 77.5 billion (+49.3% YOY) andsegment earnings (operating profit) of JPY 22.7 billion (+19.3% YOY).
Clean Energy
While flow earnings fell year-on-year because Ichigo did not sell any power plants
during the period, stock earnings rose substantially as new plants came online, including
the Ichigo Showamura Ogose ECO Power Plant, the largest solar plant in the Kanto
region encompassing Tokyo. As a result, revenue was JPY 3.6 billion (+6.5% YOY) withsegment earnings (operating profit) of JPY 1.4 billion (+51.7% YOY).

26

Operating Profit(JPY million)
26,27928,00022,90021,00021,91916,387
14,000
8,916
7,000
0
FY15/2

FY16/2

FY17/2

FY18/2

FY19/2

Due to a change in accounting treatment from FY19/2, FY15/2~FY18/2 Operating Profit
has been restated for ease of comparison. For details, please see page 19 of “Additional
Accounting Notes for the Nineteenth Annual Shareholder Meeting.”
Net Income(JPY million)

18,00014,89415,00012,925

15,37314,01812,000
9,000

6,761

6,000
3,000
0
FY15/2

FY16/227

FY17/2

FY18/2

FY19/2

Achievement of the Power Up 2019 Mid-Term Business Plan
Power Up 2019 focused on driving sustainable growth and shareholder value anddeepening Ichigo’s core capabilities over the three years from FY17/2 to FY19/2. During
the three years of Power Up 2019, Ichigo increased its operating profit by 60.4% and net
profit by 18.9%. (Ichigo’s operating profit grew more rapidly than its net income,because Ichigo’s effective tax rate normalized from 6.9% in FY16/2 to 31.8% in FY19/2.
Ichigo used tax assets in FY16/2 to reduce its effective tax rate.)
Ichigo also grew its stable earnings base, with FY19/2 Stock Earnings 240% of fixed costs.
Power Up 2019 Outcomes
KPIs(JPY million)
FY16/2 (Actual)(Shift Up 2016) (A)FY19/2 (Plan)(Power Up 2019)

FY19/2 (Actual)(Power Up 2019) (B)vs. Plan(B) - (A)Operating Profit

16,387 1

25,00026,279105.1%+60.4%

Recurring Profit

13,88921,40023,076107.8%+66.1%Net Income

12,92514,80015,373103.9%+18.9%

JPY 25.86

JPY 29.00

JPY 31.14

107.4%+20.4%

Dividend

JPY 3

JPY 7

JPY 7

100.0%+133.3%

ROE

21.0%

15.6%

16.3%

–

–

223.3%

191.4%

239.6%––EPS

Stock Earnings/
Fixed Expenses

2

1

From FY19/2, SPC-related non-recourse loan interest expenses are accounted as Fixed NonOperating Expenses rather than COGS. FY16/2 Operating Profit has therefore been restatedusing this new accounting treatment to facilitate an accurate YOY comparison.
2
Ichigo’s effective tax rate normalized from 6.9% in FY16/2 to 31.8% in FY19/2. At FY19/2’s
normalized 31.8% tax rate, FY16/2 ROE would have been 15.3%.

28

2. Capital Expenditures
During FY19/2, property, plant, and equipment (PP&E), including operating and indevelopment power plants, increased by JPY 4.0 billion.
3. Financing
In order to drive earnings growth and further strengthen its financial standing, Ichigo istaking advantage of the current low interest rate environment to improve borrowing
terms by lowering borrowing costs, staggering loan maturities, and extending loan
durations.
Ichigo has reduced loan repayments to free up cash flow by improving individual loan
terms, securing syndicate loans, and establishing an uncollateralized commitment line.
Ichigo increased uncollateralized financing to further strengthen its financial position, andinitiated an uncollateralized JPY 10 billion commitment line with Mizuho Bank in
September 2018. The commitment line is an ongoing, revolving credit line for loans with
11-year maturities that enables Ichigo to flexibly and repeatedly borrow within thecommitment line amount of JPY 10 billion in order to finance real estate acquisitions.
Uncollateralized Commitment LineUse of Proceeds
Commitment Line Amount
LenderDrawdown Period
Loan Final Repayment Date
Collateralized
Contract Date

Real estate acquisitions
JPY 10 billion
Mizuho Bank
October 1, 2018 to September 30, 2021 (3 years)
September 30, 2029
No
September 21, 2018

Ichigo’s balance of interest-bearing corporate loans as of FY19/2-end was JPY 143.4
billion (+21.0% YOY), and its balance of non-recourse loans and bonds was JPY 52.7
billion (-21.9% YOY). The average interest rate during FY19/2 for interest-bearing
corporate loans and non-recourse loans were 0.97% (-0.07% YOY) and 1.12% (-0.04%YOY), respectively.
Ichigo continues to have an extraordinarily stable and durable balance sheet, with 92.1%
of interest-bearing corporate loans as of FY19/2-end being long-term. JPY 95.6 billion ofinterest-bearing corporate loans have remaining loan terms of more than five years, withtotal interest-bearing corporate loans having an average loan term of 10.3 years.
Furthermore, 50.7% of Ichigo’s interest-bearing corporate loans as of FY19/2-end arewith the Japanese megabanks.

29

Average Interest Rate and Loan Term
Weighted Average Loan Period (RHS)
Weighted Average Remaining Loan Maturity (RHS)
Weighted Average Interest Rate (LHS)

2.5%

12
10.8 years

2.0%

1.96%

9.0 years

10.2 years

10.3 years

8.7 years

99.6 years
8.3 years
5.9 years

1.5%

8.3 years

7.8 years

1.71%

7.6 years
6

1.41%

5.5 years

1.24%

1.04%

1.0%

0.97%

0.5%

0
FY14/2

FY15/2

FY16/2

FY17/2

FY18/2

FY19/2

8% (JP Y 4.9B)

10% (JP Y 10.3B)

6% (JP Y 6.1B)

5% (JP Y 5.6B)

8% (JP Y 11.3B)

86%(JPY 26.1B)

92%(JPY 53.4B)

90%(JPY 94.4B)

94%(JPY 92.2B)

95%(JPY 112.8B)

92%(JPY 132.1B)

FY14/2

FY15/2

FY16/2

FY17/2

FY18/2

FY19/2

Term Structure of Loans
Short-Term

3

14% (JPY 4.1B)

Long-Term

4. Business Transfers, Absorption-Type Splits or Incorporation-Type Splits
N/A
5. Transferred Businesses from Other Companies
N/A
6. Succession of Rights and Obligations relating to the Business of Other Companies byAbsorption-Type Merger or Absorption-Type Split
N/A
7. Acquisition and Disposition of Shares and Other Interests in Other Companies and Stock
Options, etc.
N/A30

B. Earnings and Assets in the Current and Past Three Fiscal Years
16th Term(FY16/2)
49,69917th Term(FY17/2)
109,253

18th Term(FY18/2)
57,84619th Term(FY19/2)
83,540Operating Profit (JPY million)

16,38722,90021,91926,279Recurring Profit (JPY million)

13,88919,755

19,18523,076Net Income (JPY million)

12,925

14,89414,01815,373Net Income per Share (JPY)

25.86

29.66

28.12

31.14

Total Assets (JPY million)

251,757

273,459

296,512319,599

Net Assets (JPY million)

72,166

83,44392,725

102,859

Net Assets per Share (JPY)134.54

159.60180.20202.14

Dividend per Share (JPY)

3.0

5.0

6.0

7.0

21.0%

20.2%

16.5%

16.3%

Revenue (JPY million)

Return on Equity(Note 1) Net Income per Share is calculated based on the average number of outstanding
shares, excluding treasury shares, during the term. Net Assets per Share is
calculated based on the number of outstanding shares, excluding treasury shares,
as of the end of the fiscal year.
(Note 2) Due to a change in accounting treatment from FY19/2, prior years have been
restated. For details, please see page 19 of today’s “Additional Accounting Notes
for the Nineteenth Annual Shareholder Meeting.”

Net Income per Share (EPS)
(JPY)
33

29.66
25.86

31.14
28.12

22
13.58
11

0
FY15/2

FY16/2

FY17/231

FY18/2

FY19/2

Net Assets per Share(JPY)
202.14210
180.20159.60140134.54111.5470

0
FY15/2

FY16/2

FY17/2

FY18/2

FY19/2

Total Assets & Net Assets

360,000
300,000(JPY million)
Total Assets
Net Assets
251,757

273,459

319,599

296,512240,000
180,000

172,744

120,000
60,00058,377

83,44372,16692,725

102,8590
FY15/2

FY16/2

FY17/232

FY18/2

FY19/2

C. Controlling Parent and Subsidiary Information(1) Controlling Parent Company
N/A – Ichigo does not have a controlling parent company.
(2) Important Subsidiaries
Percentage
Ownershipof Voting Rights

Name

CapitalMain Business

Ichigo Investment Advisors Co.,Ltd.

JPY 400 million

100%

Asset manager of Ichigo Office(8975), Ichigo Hotel (3463),
and Ichigo Green (9282)

Ichigo Estate Co., Ltd.

JPY 500 million

100%Real estate value-add

Ichigo ECO Energy Co., Ltd.

JPY 150 million

100%

Clean energy business focusing
on utility-scale solar and wind
power production, making
purposeful use of idle landnationwide

Ichigo Owners Co., Ltd.

JPY 110 million

100%Real estate owner services

Ichigo Land Shinchiku Co., Ltd.

JPY 50 million

100%Real estate value-add

Ichigo Real Estate Services
Fukuoka Co., Ltd.

JPY 101 million

100%Real estate business centeredon Fukuoka in the Kyushu
regionIchigo Marché Co., Ltd.

JPY 95 million

100%

Operates Matsudo Nanbu
wholesale market in Chiba
Prefecture

Miyako City Co., Ltd.

JPY 50 million

100%

Operates Miyako City shopping
mall in Miyazaki Prefecture(Note 1) Ichigo ECO Energy increased its capital by JPY 50 million on February 1, 2019and its paid-in capital is JPY 150 million.
(Note 2) Ichigo Owners increased its capital by JPY 10 million on February 1, 2019 andits paid-in capital is JPY 110 million.
(Note 3) Ichigo Real Estate Services Fukuoka increased its capital by JPY 51 million on
February 1, 2019 and its paid-in capital is JPY 101 million.

33

D. Key Business Priorities
During the three years of Power Up 2019, Ichigo increased its operating profit by 60% (17%
CAGR), and posted record FY19/2 Operating Profit, Recurring Profit, and Net Income.
The revolution in IT and networks that has transformed industries globally has also reachedreal estate, creating opportunities for radical improvements in serving tenant needs. To
invest in the potentially enormous growth opportunities from this technological change anddrive significantly higher long-term growth for its shareholders, Ichigo has decided topursue an 11-year vision that is significantly more transformative than a traditional threeyear mid-term business plan.
Ichigo 2030: Ichigo as a Sustainable Infrastructure Company
As a sustainable infrastructure company, Ichigo is growing and expanding its core real estateand clean energy capabilities into new areas. In doing so, Ichigo will generate new earnings
streams and opportunities to serve clients while seeking to create a more sustainable society.
a. Sustainable
We have entered an era when humanity must tread more lightly on our planet and learn to do
more with less. Ichigo already has an extensive track record in sustainable real estatethrough its business model of preserving and improving existing real estate, whichchallenges the wasteful cycle of demolition and redevelopment in Japanese real estate. With
Ichigo 2030, Ichigo will continue its long-standing commitment to sustainability whiledeveloping new technologies to extend the lives of key social infrastructure beyond 100
years. Sustainability is integral to the healthy development of people, society, and theenvironment.
b. Infrastructure
Ichigo has moved beyond the traditional view of real estate as simply physical buildings andland to one in which Ichigo more broadly provides key infrastructure that is fundamental topeople’s lives. Ichigo first expanded beyond real estate in 2012, when it began developing solar
power, offering sustainable energy to support a cleaner and safer Japan and world. Ichigo 2030
takes this strategy forward by expanding the scope of Ichigo’s real estate and clean energy
businesses into other types of infrastructure that contribute to creating richer, more fulfilling
lives for the people of Japan.
Ichigo is now working to merge the physical infrastructure of daily life – offices, homes,
hotels – with the networks and data-driven possibilities of the digital world in order to offer
more enriching experiences to its clients, tenants, and other stakeholders. While continuing
to grow Ichigo’s existing businesses, Ichigo is increasing investments in new technologies
and talent and developing new partnerships with other companies who share oursustainability vision.
Time Period
FY20/2 to FY30/2 (11 years)
KPIs
1. High Capital Productivity(a) FY20/2~FY30/2 Average ROE >15%
Although Ichigo’s growth investments in IT and new businesses will initially lower ROE,
Ichigo believes these investments will increase long-term ROE by driving higher capital
productivity and earnings stability. Ichigo is focused on growing long-term EPS as a key
driver of shareholder value.

34

(b) FY20/2~FY30/2 Continuous JPX-Nikkei 400 Index Inclusion
Ichigo is targeting continuous inclusion in the JPX-Nikkei 400 Index for the entire Ichigo
2030 period (11 years). The JPX-Nikkei 400 selects companies based on ROE, operating
profit, and market capitalization, resulting in an index that is comprised of companies withhigh capital productivity and profitability.
2. High Cash Flow Generation(a) FY20/2~FY30/2 Continuous Economic Operating Cash Flow* > Net Income
Ichigo’s robust cash flows fund both growth investments and shareholder returns, so
growing these cash flows is an important business priority. Ichigo is therefore setting atarget of its annual Economic Operating Cash Flow exceeding its annual Net Income for theentire Ichigo 2030 period (11 years).
* Economic Operating Cash Flow = Cash Flows from Operations +/- any changes in Real
Estate and Power Plants for Sale
3. High Earnings Stability
FY30/2 Stock Earnings Ratio >60%
Ichigo is targeting increasing its Stock Earnings ratio from FY19/2`s 53% to 60% in
FY30/2. It is also working to increase and diversify its Flow Earnings in order to reduce theweighting of profits from Value-Add real estate sales, which can be sensitive to changes in
the real estate market. As a result, Ichigo expects to significantly increase both its earnings
and its earnings stability over the Ichigo 2030 period.
Shareholder Return Policy
Ichigo will work to drive long-term shareholder value with a shareholder return policy that
focuses on 1) dividend stability, transparency, and growth, and 2) flexible share buybacks.
1. Progressive Dividend Policy
Ichigo will continue its progressive dividend policy, originally adopted in FY17/2, in Ichigo
2030. Ichigo’s progressive dividend policy underscores its commitment to driving continued
organic earnings and dividend growth for shareholders. Under this policy, the previous
year’s dividend becomes the floor for the current year’s dividend. The dividend will beraised (or kept flat) but not cut, providing shareholders downside protection.
2. DOE >3%
In addition to its progressive dividend policy, Ichigo will continue its policy of a DOE(Dividend on Equity) payout ratio of greater than 3%. In contrast to a “dividend payout ratio
policy,” which calculates dividends based upon annual earnings which can be highly
volatile, a DOE policy pays dividends based upon far more stable shareholder equity. A
DOE policy thus results in more stable dividends for shareholders. Ichigo believes that the
combination of a progressive dividend and a DOE-based payout policy will significantly
increase the security, certainty, and visibility of its dividend to the benefit of Ichigo’s
shareholders.
3. Flexible Deployment of Share Buybacks
In addition to the above dividend policies, Ichigo is newly adopting a policy to flexibly
conduct share buybacks to optimize its capital structure and drive shareholder value.

35

E. Key Business Segments (as of February 28, 2019)
Ichigo’s biggest segment is Value-Add, in which Ichigo preserves and improves real estate.
Ichigo receives rental income during the period it is carrying out its value-add, along withprofits on sale that reflect the real estate’s higher value after the value-add is complete.
In addition to its value-add activity with respect to mid-size offices, hotels, and retail andother assets, Ichigo develops and operates solar and wind power plants to supply clean
energy and bring productive use to idle land.
Ichigo’s Value-Add Business Model
Value-Add Business Model
Green
Infrastructure

Solar Plants
Buy

Ichigo Green(9282)
OfficeIchigo Office(8975)
Hotel

Ichigo Hotel(3463)

Sell
Real
EstateValue-Add
Real
不動産
EstatePreserve &Improve

ThirdParty
Investors

Sell

Buy

F. Employees (as of February 28, 2019)
1. Employees (Consolidated)
Number of employees

Increase/decrease from previous fiscal year-end

231 (10)29 (-1)(Note 1) The number of employees is the number of full-time employees (excluding
workers dispatched from Ichigo to other companies and including workers
dispatched from other companies to Ichigo), including directors who are also
employees.
(Note 2) The average number of non-full-time employees (including part-time andtemporary staff) is presented in parentheses.

362. Employees (Parent company only)
Number of
employees

Increase/decrease
from previous fiscal
year-end

Average age

Average years of
employment

98 (2)

10 (-1)41.7 years old

4.8 years(Note 1) The number of employees is the number of full-time employees (excluding
workers dispatched from Ichigo to other companies and including workers
dispatched from other companies to Ichigo) including directors who are also
employees.
(Note 2) The average number of non-full-time employees (including part-time andtemporary staff) is presented in parentheses.
(Note 3) On a year-on-year basis the number of employees increased by ten; however,this was mainly due to employees being moved from a subsidiary pursuant toa corporate reorganization.
G. Principal Lenders (as of February 28, 2019)
Lenders

AmountSumitomo Mitsui Banking Corporation

JPY 35.0 billion

Mizuho Bank, Ltd.

JPY 33.4 billion

Kansai Urban Banking Corporation

JPY 10.8 billion

The Nishi-Nippon City Bank, Ltd.

JPY 7.0 billion

Resona Bank, Limited.

JPY 6.4 billion(Note) These amounts are for corporate loans and do not include non-recourse loans
with respect to assets that Ichigo manages (e.g., tokumei kumiai partnerships,
etc.)

37

H. Policy on Dividends and Shareholder Distributions
Ichigo views distributions to its shareholders as an important priority.
Ichigo’s Board of Directors adopted on April 19, 2016 a progressive dividend policy. This
policy underscores Ichigo’s commitment to driving continued organic earnings anddividend growth for its shareholders. Under a progressive dividend policy, the previous
year’s dividend becomes the floor for the current year’s dividend. The dividend will beraised (or kept flat) but not cut, providing shareholders downside protection.
In addition to this progressive dividend policy, Ichigo has adopted a minimum DOE(dividend on equity) payout ratio of 3%. In contrast to an “earnings payout ratio policy,”
which pays dividends based upon more volatile annual earnings, a DOE policy that pays
dividends based upon more stable shareholder equity is by its very nature more stable.
Ichigo believes that the combination of a progressive dividend and a DOE-based payout
policy will significantly increase the security, certainty, and visibility of its dividend to thebenefit of Ichigo’s shareholders.
The FY19/2 dividend per share is JPY 7, up 16.7% YOY.
Dividend per Share

7.0

7

(JPY)

6.0

6
5.0

5
4
3.0

3
2

1.3

1
0
FY14/2

FY15/2

FY16/238

FY17/2

FY19/2

I. Other Material Matters
Ichigo’s Board of Directors decided to conduct a share buyback, pursuant to the provisionsof Articles 156 and 165 of the Company Law, at the Board of Directors meeting held on
October 18, 2018. The details of the buyback are as follows:
1. Share Buyback Rationale
To grow value for Ichigo shareholders
2. Share Buyback Summary
October 2018 Share Buyback
Number of Shares
AmountAverage Share Price
Buyback Period
Buyback Method

7,869,700
JPY 2,999,975,400
JPY 381
October 19, 2018 – December 4, 2018
In-market purchases via trust bank39II. Other Matters
A. Shares and Shareholder Information (as of February 28, 2019)
1. Number of Authorized Shares:

1,500,000,000 shares

2. Total Number of Shares Issued:

505,066,430 shares (including 16,556,200 treasury shares)

3. Number of Shareholders:

23,526
Top 10 Shareholders

Name

Shares Held

ICHIGO TRUST PTE. LTD. (Standing Proxy: The Hong
Kong and Shanghai Banking Corporation Limited, Tokyo
Branch)
BNYM SA/NV FOR BNYM FOR BNY GCM CLIENT
ACCOUNTS M LSCB RD(Standing Proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)

Shareholding Ratio

237,743,200

48.67%

34,940,600

7.15%

Morgan Stanley MUFG Securities Co., Ltd.

20,107,366

4.12%

J.P. MORGAN BANK LUXEMBOURG S.A. 1300000

19,237,887

3.94%

MACQUARIE BANK LIMITED-MBL LONDON BRANCH

19,153,000

3.92%

The Master Trust Bank of Japan, Ltd. (Trust Account)

10,964,400

2.24%Japan Trustee Services Bank, Ltd. (Trust Account)

10,808,100

2.21%

STATE STREET BANK AND TRUST COMPANY 505223

6,290,392

1.29%

STATE STREET BANK AND TRUST COMPANY 505001

5,266,543

1.08%Japan Trustee Services Bank, Ltd. (Trust Account 5)

4,935,200

1.01%

369,446,688

75.63%

TOTAL(Note 1) Shareholding Ratio is calculated excluding 16,556,200 treasury shares.
(Note 2) The Shareholding Ratio of Ichigo Trust Pte. Ltd., Ichigo’s largest shareholder,decreased during the period from 49.81% to 48.67%.

40

B. Directors and Officers
1. Directors (as of February 28, 2019)
Position

Name

Scott
CallonDirector

Director

TakumaHasegawa

Director

MinoruIshihara

Independent
Director4

TetsuyaFujita1

Independent
Director4

NorikoKawate2

Independent
Director4

Yukio
Suzuki3

Responsibility and Other Business Affiliations
Chairman & Representative Statutory Executive Officer
Chairman of the Board of Directors, Nominating Committee Member,Compensation Committee Member
Partner and Chief Executive Officer, Ichigo Asset Management, Ltd.
Independent Director, Chiyoda Co., Ltd.
Chairman & Statutory Executive Officer, Ichigo Investment Advisors Co.,Ltd.
President & Representative Statutory Executive Officer
Chairman of Nominating Committee, Compensation Committee, andCompliance Committee, Head of IT
Chairman & Director, Ichigo ECO Energy Co., Ltd.
Executive Vice President & Statutory Executive Officer (Value-Add) &COO
Compliance Committee Member
Director, Ichigo Investment Advisors Co., Ltd.
Chairman, President, & Representative Director, Miyako City Co., Ltd.
Chairman, President, & Representative Director, Ichigo Marché Co., Ltd.
President & Representative Director, Ichigo Real Estate Services Fukuoka
Cd of Audit Committee, Nominating Committee Member,
ChairmanCompensation Committee Member, Compliance Committee Member
Special Advisor to CEO, ReMark Group

Nominating Committee Member, Audit Committee Member, Compensation
Committee Member
President, CLEA Consulting Co., Ltd.
Partner, Cast Group
Vice Chairman of Compliance Committee, Audit Committee Member
CEO, Belle Investment Research of Japan Inc.
Independent Director, Systena Corporation
Independent Auditor, Wills Inc.
Independent Auditor, XNET Corporation

Independent
Director4

Masatoshi
Matsuzaki

Nominating Committee Member, Compensation Committee Member
Chairman of the Board of Directors, Konica Minolta Inc.
Executive Director & Deputy Chairman, Japan Association of Corporate
Directors
Independent Director, Nomura Research Institute, Ltd.
Independent Director, Nippon Sheet Glass Co. Ltd.
Member, Public Interest Supervisory Committee of PwC Aarata LLC

Independent
Director4

KosukeNishimoto

Independent Director, Ryosan Company, Limited
Chairman, President, & Representative Director, Interworks Inc.
Independent Director, Misumi Group Inc.

Independent
Director4

Nobuhide
Nakaido－1

Tetsuya Fujita, Chairman of the Audit Committee, has served as president of a major life
insurance and a major property insurance company, in addition to having served as41

internal audit officer at a major life insurance company, and is certified as an internal
auditor. He thus has extensive knowledge of internal auditing.
2
Audit Committee Member Noriko Kawate is a Certified Public Accountant as well as a
Certified Tax Accountant and thus has extensive knowledge of the finance and accounting
fields.
3
Audit Committee Member Yukio Suzuki has served important roles at financial conpanies
and thus has extensive experience and knowledge of corporate and securities research.
4
Ichigo has registered all of the Independent Directors with the Tokyo Stock Exchange as
meeting the Tokyo Stock Exchange’s qualifications for Independent Directors.
(Note) Ichigo has assigned officers and employees to assist the Audit Committee to fulfill its
duties. Independent from other officers and employees, they proactively collectinformation and work closely with the Audit Committee members on a daily basis,and thus the effectiveness of auditing by the Audit Committee is ensured. Since suchcondition is maintained, Ichigo does not appoint a full-time Audit Committee
member.

42

2. Statutory Executive Officers (as of February 28, 2019)
Position

Responsibility and Other Business
Affiliations

Name

Chairman & Representative
Statutory Executive Officer

Scott Callon

Overall Group Management
Chairman & Statutory Executive Officer,
Ichigo Investment Advisors Co., Ltd.
Partner & Chief Executive Officer, Ichigo
Asset Management, Ltd.

Chairman & Representative
Statutory Executive Officer

Kenji Iwasaki

Overall Group Management
Chairman & Director, Ichigo Land
Shinchiku Co., Ltd.

President & Representative
Statutory Executive Officer

Takuma Hasegawa

Overall Group Management
Chairman & Director, Ichigo ECO EnergyCo., Ltd.

Executive Vice President &Statutory Executive Officer &COO

Minoru Ishihara

Chairman, President, & Representative
Director, Ichigo Investment Advisors Co.,
Ltd.
Chairman, President, & Representative
Director, Miyako City Co., Ltd.
Chairman, President, & Representative
Director, Ichigo Marché Co., Ltd.
President & Representative Director, Ichigo
Real Estate Services Fukuoka Co., Ltd.

Executive Managing Director

Eri Murai

Administration & HR

Go Watanabe

Finance
President & Representative Director,
Centro Co., Ltd.
Chairman & Director, Storage Plus Corp.
Advisor, Getter Lab

Executive Managing Director

Takeyuki Yoshimatsu

Business Management
Executive Vice President, Ichigo
Investment Advisors Co., Ltd.

Statutory Executive Officer

Katsuhiko Hattori

Engineering

Statutory Executive Officer

Haruki Nakane

Compliance

Statutory Executive Officer

Akihiko Tsukasa

Osaka Branch

Statutory Executive Officer

Kenichi Tanaka

Business Development

Statutory Executive Officer

Yasutoyo Senda

Audit

Statutory Executive Officer

Takanori Sakamatsu

Accounting & Business Planning

Executive Managing Director43

3. Directors and Statutory Executive Officers Who Stepped Down during the Current
Fiscal Year
N/A (none except for those whose terms expired).
4. Outline of Limited Liability Agreement with Independent Directors
In order to retain Independent Directors of high quality, Ichigo has signed limited liability
agreements with its Independent Directors pursuant to Article 427, Paragraph 1 of theCompany Law.
The extent of liability for compensation under the agreements is the minimum limited
liability amount as defined in Article 425, Paragraph 1 of the Company Law; provided thatthe liability is limited only when the Independent Directors have performed their duties ingood faith and without gross negligence.
5. Total Remuneration Paid to Directors and Statutory Executive Officers
Number of Recipients

Amount Paid

Directors(of whom are Independent Directors)

8(6)

JPY 256 million(JPY 63 million)

Statutory Executive Officers

11

JPY 183 million

Total(of whom are Independent Directors)

19(6)

JPY 439 million(JPY 63 million)(Note 1) As of the end of the term, there are nine Directors (including six Independent
Directors) and 13 Statutory Executive Officers (three of whom are also Directors),
resulting in a total of 19 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 andnot in the row of Statutory Executive Officers.
(Note 2) The figures above do not include the one Director that receives no remunerationfrom Ichigo.
(Note 3) The total of 20 directors and officers, which is the sum of the 19 aforementioned
directors and officers plus the one non-remunerated director differs from the totalof 19 directors and officers in the above table because one officer stepped down
during FY19/2.
(Note 4) The amount paid includes remuneration in the form of stock options of JPY 32
million for Directors (of which JPY 9 million is for Independent Directors) andstock options of JPY 19 million for Statutory Executive Officers.
(Note 5) In addition, Ichigo paid JPY 103 million as employee compensation to seven
Statutory Executive Officers who also serve as employees. This amount includes
remuneration in the form of stock options of JPY 9 million.
(Note 6) No remuneration has been paid by Ichigo subsidiaries to Ichigo’s Independent
Directors.

44

6. Policy on Determining Remuneration for Directors and Statutory Executive Officers
a. Basic Policy
Remuneration for Directors and Statutory Executive Officers of Ichigo is determinedbased on factors including the duties of each individual, contribution to Ichigo, basecompensation, and relevant work experience.
b. Specific Policies– Remuneration for Directors
Remuneration for Directors consists of a monthly base salary and a performancebased bonus. The monthly base salary is a fixed amount based on the role andresponsibilities of each Director, while the performance-based bonus is based on
Ichigo’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 therole and responsibilities of each Statutory Executive Officer, whereas theperformance-based bonus is based on the performance of Ichigo, the performance ofthe division for which the Statutory Executive Officer is responsible, and theperformance of the Statutory Executive Officer.
– Stock Options
Stock options are granted to Directors and Statutory Executive Officers to increase
their alignment to grow value for shareholders. These stock options are granted inaddition to the remuneration described above.
7. External Positions Held by Independent Directors
a. Positions in Other Companies and the Relationship between Ichigo and these Other
Companies– Independent Director Noriko Kawate is President of CLEA Consulting Co., Ltd. anda Partner of Cast Group. Ichigo has no relationship with CLEA Consulting Co., Ltd.
or Cast Group.
– Independent Director Yukio Suzuki is CEO of Belle Investment Research of Japan
Inc. Ichigo has no relationship with Belle Investment Research of Japan Inc.
– Independent Director Kosuke Nishimoto is the Chairman, President &Representative Director of Interworks Inc. Ichigo has no relationship with Interworks
Inc.
b. Positions as Independent Directors in Other Companies– Independent Director Tetsuya Fujita is a Special Advisor to CEO at the ReMark
Group. Ichigo has no relationship with the ReMark Group.
– Independent Director Yukio Suzuki is an Independent Director of Systena
Corporation, an Independent Auditor of WILLs Inc., and an Independent Auditor of
XNET Corporation. Ichigo has no relationship with Systena Corporation, WILLs
Inc., or XNET Corporation.

45

– Independent Director Masatoshi Matsuzaki is the Chairman of the Board of Directorsof Konica Minolta Inc., Executive Director and Deputy Chairman of the Japan
Association of Corporate Directors, an Independent Director of Nomura ResearchInstitute, Ltd. and Nippon Sheet Glass Co. Ltd., and a Member of the Public Interest
Supervisory Committee of PwC Aarata LLC. Ichigo has no relationship with any ofthese companies.
– Independent Director Kosuke Nishimoto is an Independent Director of Ryosan
Company, Limited and Misumi Group Inc. Ichigo has no relationship with Ryosan
Company, Limited or Misumi Group Inc.
c. Relationship with Ichigo or Related Entities of Ichigo
The six Independent Directors have no spouse or relatives in the third degree or closer
who are Statutory Executive Officers of Ichigo or related entities.

46

d. Independent Director Activities in the Current Fiscal Year
Name

Independent
Director

Tetsuya Fujita

Independent
Director

Noriko Kawate

Independent
Director

Yukio Suzuki

Independent
Director

Masatoshi Matsuzaki

Independent
Director

Kosuke Nishimoto

Independent
Director

Nobuhide Nakaido

Activities
Attended 10 out of 10 meetings (100%) of the Board of
Directors. Attended 18 out of 18 meetings (100%) of the Audit
Committee and attended 2 out of 2 meetings (100%) of theCompliance Committee. Attended 3 out of 3 meetings (100%) of
the Nominating Committee and 5 out of 5 meetings (100%) of
the Compensation Committee since becoming a member.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.
Attended 10 out of 10 meetings (100%) of the Board of
Directors. Attended 18 out of 18 meetings (100%) of the Audit
Committee. Attended 3 out of 3 meetings (100%) of theNominating Committee and 5 out of 5 meetings (100%) of theCompensation Committee since becoming a member.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.
Attended 10 out of 10 meetings (100%) of the Board of
Directors. Attended 18 out of 18 meetings (100%) of the Audit
Committee and attended 2 out of 2 meetings (100%) of theCompliance Committee. Commented and advised on resolutions
and discussions from an objective standpoint independent fromthe management team.
Attended 10 out of 10 meetings (100%) of the Board of
Directors. Attended 3 out of 3 meetings (100%) of theNominating Committee. Attended 5 out of 5 meetings (100%) of
the Compensation Committee. Commented and advised on
resolutions and discussions from an objective standpoint
independent from the management team.
Attended 10 out of 10 meetings (100%) of the Board of
Directors. Commented and advised on resolutions anddiscussions from an objective standpoint independent from the
management team.
Attended 10 out of 10 meetings (100%) of the Board of Directors
since becoming a director. Commented and advised on
resolutions and discussions from an objective standpoint
independent from the management team.

47

C. Independent Auditor
1. Grant Thornton Taiyo LLC
2. Fees Paid to the Independent Auditor(i)Fees paid to the Independent Auditor during FY19/2
Fees for the services specified in Article 2, Paragraph 1 of theCertified Public Accountants Act (Act No. 103 of 1948)

JPY 72 million

Fees for the services other than those specified in Article 2,
Paragraph 1 of the Certified Public Accountants Act–
JPY 72 million(ii) Total monetary and other financial benefits payable by Ichigo andsubsidiaries to the Independent Auditor

JPY 86 million(Note 1) Pursuant to Article 399, Paragraph 1 of the Company Law and based on the“Auditor Evaluation & Selection Standards” and “Auditor Selection &Compensation Agreement Processes” set forth by Ichigo’s Audit Committee,
Ichigo’s Audit Committee concurs with the Independent Auditor’s fees after athorough confirmation and consideration of the content of the Independent
Auditor’s audit plan, execution of work, audit fee trends, and the Independent
Auditor’s calculation of its fee estimates.
(Note 2) Pursuant to both the Company Law and the Financial Instruments and Exchange
Law, the audit agreement between Ichigo and the Independent Auditor does notcall for itemizing the audit fee breakdown, and, thus as a practical matter, Ichigo is
not able to itemize the fees. Therefore, the fees paid to the Independent Auditor
show the total amount.

48

3. Policy for the Determination of Dismissal or Non-Reappointment of the Independent
Auditor
The Audit Committee has stipulated a Policy for the dismissal or non-reappointment of
the Independent Auditor based on the “Auditor Evaluation & Selection Standards” and“Auditor Selection & Compensation Agreement Processes” set forth by Ichigo’s Audit
Committee. The Policy is as below:(a) The term of the Independent Auditor is one year, as specified in a one-year audit
contract.
(b) The reappointment of the Independent Auditor will be decided at the Audit Committee.
(c) 1. The selection, dismissal, or the non-reappointment of the Independent Auditor will
be decided at the Annual Shareholder Meeting. The Audit Committee makes thedecision to place this on the shareholding meeting agenda.
2. In the event Ichigo decides to dismiss or not reappoint an Independent Auditor at
Ichigo’s discretion or for the breach of laws and regulations such as the Company
Law or the Certified Public Accountants Law, or the breach of the contract ofengagement, the dismissal or the non-reappointment will be deliberated by the Audit
Committee with reference to the views of the Directors and Statutory Executive
Officers.
3. In the event the dismissal or the non-reappointment of the Independent Auditor is
to become the agenda of the shareholder meeting, the details of the agenda item will
be determined by the Audit Committee.
4. In the event the Independent Auditor contravenes his/her duty as an Auditor or if
proper duty as an Auditor stipulated in Article 340, Paragraph 1 of the Company Law
is deemed difficult, the Audit Committee may dismiss the Independent Auditor uponconsent of all Audit Committee members.

49

D. Controls to Ensure Appropriate Business Conduct
Pursuant to Article 416 of the Company Law and Article 112 of the Enforcement
Regulation of the Company Law, Ichigo’s Board approved and enacted a “Basic Policy
for the Establishment of Structure of Internal Controls,” with details shown below.
Pursuant to Article 14 of Ichigo’s Articles of Incorporation, Ichigo has made this policy
available on its corporate website:www.ichigo.gr.jp/ir/management_policies/internal_controls.html/en
1. Internal Controls to Ensure that Statutory Executive Officers and Employees Execute
Their Duties in Full Compliance with Japanese Law and Ichigo’s Articles ofIncorporation (Article 416, Paragraph 1 of the Company Law, Article 112, Paragraph2, Item 4 of the Enforcement Regulation of the Company Law)
2. Systems to Ensure Proper Storage and Management of Information Required for
Execution of Duty by Statutory Executive Officers (Article 112, Paragraph 2, Item 1of the Enforcement Regulation of the Company Law)
3. Risk Management Policies and Systems (Article 112, Paragraph 2, Item 2 of the
Enforcement Regulation of the Company Law)
4. Systems to Ensure Effective Execution of Duties by Statutory Executive Officers(Article 112, Paragraph 2, Item 3 of the Enforcement Regulation of the Company
Law)
5. Audit Committee and Audit Systems (Article 416, Paragraph 1, Item 1 of theCompany Law, Article 112, Paragraph 1, Items 1~7 of the Enforcement Regulation of
the Company Law)
6. Systems to Ensure Fully Appropriate Business Activities by Ichigo and its
Subsidiaries (Article 112, Paragraph 2, Item 5 of the Enforcement Regulation of theCompany Law)
Reference: Establishment and Status of Internal Structures to Prevent Dealings with
Anti-Social Forces
E. Policy on Corporate Control (Takeover Defenses)
Ichigo has not adopted any takeover defense, poison pill, or any other policy with respect
to entities or persons who would seek to control decisions with respect to Ichigo’s
financial and business policies.

50Consolidated Balance Sheet(As of February 28, 2019)
Item
AssetsAmountCurrent Assets
Cash and cash equivalents
Trade notes and accounts receivable
Operational loan investments

217,987
50,2251,344
1,324

Operational securities investments

1,218

Real estate for sale
Deferred tax assets
Other
Less: allowance for doubtful
accounts
Fixed Assets
Property, Plant, and Equipment
Buildings and structures
Depreciation
Buildings and structures (net)
Solar power plant equipment
Depreciation
Solar power plant equipment (net)Land
Buildings under construction
Solar power plants underconstruction
Other
Depreciation
Other (net)
Intangible Assets
Goodwill
Leasehold rights
Other
Investments and Other Assets

161,322397
2,156

Securities investments-2
101,611
94,976
24,577-4,23820,33821,229-2,17019,05849,924
956
1,441
-399
1,042
1,993
1,346
316
331
4,640
2,455
10

Deferred tax assets

35

Total Assets

Other current liabilities

Amount22,280
3,275
112
7,881
1,666
3,760
375
31
5,178

Long-Term Liabilities
Bonds
Long-term loans
Long-term non-recourse loans
Deferred tax liabilities
Long-term security deposits received
Other long-term liabilities

194,458
538
131,569
51,068
2,043
8,292
946

Total Liabilities
Net Assets
Shareholders’ Equity
CapitalCapital reserve
Earnings reserve
Treasury shares
Accumulated Other Comprehensive
IncomeValuation gain (loss) on othersecurities
Deferred gain (loss) on long-term
interest rate hedges
Stock Options

216,7393,656Long-term loans receivable

Other
Less: allowance for doubtful
accounts

Item
Liabilities
Current Liabilities
Short-term loans
Bonds (due within one year)
Long-term loans (due within one year)
Long-term non-recourse loans(due within one year)
Income taxes payable
Deferred tax liabilities
Accrued bonuses(JPY million)

2,231
-91
319,599

51

Minority Interests
Total Net Assets
Total Liabilities and Net Assets

98,76926,820
11,207
66,730-5,988
-21
386
-408
827
3,283
102,859
319,599

Consolidated Income Statement(March 1, 2018 – February 28, 2019)(JPY million)

Item
Revenue
Cost of Goods Sold
Gross Profit
SG&A
Operating Profit
Non-Operating Profit
Interest income
Dividend income
Valuation gain on foreign currency
Mark-to-market gain on long-term interest rate
hedgesOther
Non-Operating Expenses
Interest expense
Mark-to-market loss on long-term interest rate
hedgesDebt financing-related fees
Other
Recurring Profit
Extraordinary Gains
Gains on sale of securities investments
Pre-Tax Net Income
Income taxes – current
Income taxes – deferred
Pre-Minority Interest Net Income
Net Income Attributable to Minority Interests
Net Income

52

Amount83,54051,41332,126
5,847
26,279
3
68
21
5
49

147

2,328
491
327
203
2
7,091
241

3,350
23,076
2
23,0797,333
15,746373
15,373

Consolidated Statement of Changes in Shareholders’ Equity(March 1, 2018 – February 28, 2019)(JPY million)
Shareholders’ Equity
CapitalReserve

CapitalBalance as of March 1, 2018
Changes in the Current
Fiscal Year
Share Issuance
Dividend Payment
Net Income
Change in Consolidated
Subsidiaries
Change due to Transactions
with Non-Controlling
Shareholders
Share Buyback
Sale of Treasury Shares
Changes in Items other thanShareholders’ Equity
Total Changes
Balance as ofFebruary 28, 2019

Balance as of March 1, 2018
Changes in the Current
Fiscal Year
Share Issuance
Dividend Payment
Net Income
Change in Consolidated
Subsidiaries
Change due to Transactions
with Non-Controlling
Shareholders
Share Buyback
Sale of Treasury Shares
Changes in Items other thanShareholders’ Equity
Total Changes
Balance as ofFebruary 28, 2019

54,324

Total
Shareholders’Equity-2,99589,165-2,974
15,373

194-2,974
15,373

7

7

Retained
Earnings

26,723

11,113

97

97

Treasury
Shares11-5-2,9996-2,9991

97

93

12,406-2,993

9,604

26,820

11,207

66,730-5,98898,769Other Comprehensive Income
Deferred Gain
Stock
Valuation Gain
Total Other(Loss) on LongOptions(Loss) on Other
Comprehensive
Term Interest
Securities
IncomeRate Hedges

543

-372

171

666

Minority Total Net
Interests Assets
2,722

92,725
194-2,974
15,3737
1-2,999
1

-156

-35

-192

160

561

529

-156

-35

-192

160

561

10,133

386

-408

-21

827

3,283

102,859

53

Parent Balance Sheet(As of February 28, 2019)
Item
AssetsAmountCurrent Assets
Cash and cash equivalents
Accounts receivable
Real estate for sale
Operational securities investments
Short-term loans to affiliates
Advance payments
Accounts receivable - otherAccounts receivable due toconsolidated taxation
Deferred tax assets
Other
Less: allowance for doubtful
accounts
Fixed Assets
Property, Plant, and Equipment
Buildings and structures
Depreciation
Buildings and structures (net)
Land
Other
Depreciation
Other (net)
Intangible Assets
Software
Other
Investments and Other Assets
Securities investments
Securities investments inaffiliates
Affiliate bonds
Securities investments in affiliates other
Long-term loans receivable
Long-term loans to affiliates

53,754
21,889
277
5,978
1,216
21,417
132
560
1,682

Deposits received

120
479

Other
Long-Term Liabilities

–

Bonds
Long-term loans
Deferred tax liabilities
Long-term security deposits received
Other long-term liabilities

Amount
8,874
300
112
4,263
1,092
101
2,854
96
20
32
41,922408
40,812336
109
256

80,222
3,050
765
-319
446
2,583
71
-50
21
95
45
50
77,0762,228

Total Liabilities
Net Assets
Shareholders’ Equity
CapitalCapital reserve
Retained earnings
Capital reserve - other
Retained earnings

4,504

Earnings reserve

1,200

Earnings reserve - other50,34954,006

Retained earnings carried forward

50,34910
14,610Treasury shares
Revaluation and Adjustment
Valuation gain (loss) on othersecurities
Deferred gain (loss) on long-term
interest rate hedges
Stock Options
Total Net Assets
Total Liabilities and Net Assets-5,988
-77

Other

601

Less: allowance for doubtful
accounts-85

Total Assets

Item
Liabilities
Current Liabilities
Short-term loans
Bonds (due within one year)
Long-term loans (due within one year)
Accounts payable
Accrued expenses
Income taxes payable
Advances received(JPY million)

133,977

54

50,79682,431
26,820
11,205
11,13668
50,393
44

312
-389
827
83,181
133,977

Parent Income Statement(March 1, 2018 – February 28, 2019)(JPY million)

Item

AmountRevenue
Cost of Goods Sold
Gross Profit
SG&A
Operating Profit
Non-Operating Profit
Interest income
Dividend income
Credit guarantees income
Other
Non-Operating Expenses
Interest expense
Debt financing-related fees
Mark-to-market loss on long-term interest rate
hedgesOther
Recurring Profit
Extraordinary Gains
Gains on sale of securities investments
Pre-Tax Net Income
Income taxes – current
Income taxes – deferred
Net Income

55

15,919167
15,752
3,011
12,740
405
62
10
30

509

455
135
484
104

1,179
12,0702

2
12,073

3,221
595

3,817
8,256

Parent Statement of Changes in Shareholders’ Equity(March 1, 2018 – February 28, 2019)(JPY million)
Shareholders’ Equity
Capital Surplus

CapitalRetained Earnings

Total
Treasury Shareholders’SharesEquityOther
Retained
Earnings

Other Total Earnings
Total
Capital Capital
CapitalRetained
Reserve Surplus Surplus Reserve Carried Earnings
Forward/Retained
Earnings

Balance as of
26,723 11,039
March 1, 2018
Changes in the Current
Fiscal Year
Share Issuance
97
97
Dividend Payments
Share Buyback
Sale of Treasury
SharesNet Income
Changes in Items otherthan Shareholders’EquityTotal Changes
97
97
Balance as of
26,820 11,136
February 28, 2019

Balance as of March 1, 2018
Changes in the Current Fiscal Year
Share Issuance
Dividend Payments
Share Buyback
Sale of Treasury Shares
Net Income
Changes in Items other thanShareholders’ Equity
Total Changes
Balance as of February 28, 201974 11,113

44

97

-5

45,067

45,112-2,974-2,974

-5

-5

8,256

8,256

-2,99579,953-2,999194-2,974-2,999

6

1
8,256

91

－

5,281

5,281

-2,9932,477

68 11,205

44

50,34950,393-5,98882,431

Revaluation and Adjustment
Gain
Valuation Gain Deferred
Total
Stock
Total Net
(Loss)
on(Loss) on
Revaluation
Options
AssetsLong-Term
Other
andInterest
Rate
Securities
Adjustment
Hedges
489
-353
136
666
80,757
194-2,974-2,999
1
8,256
-177

-36

-214

160

-53

-177
312

-36
-389

-214
-77

160
827

2,424
83,18156

Auditor’s Report on the Consolidated Financial Statements
Report of Independent Auditor
April 12, 2019
To the Board of Directors of Ichigo Inc.
Grant Thornton Taiyo LLC
Hiroaki Ohkane, CPA, Designated and Engagement Partner(seal)

Kenta Nishimura, CPA, Designated and Engagement Partner (seal)
We have audited the consolidated financial statements of Ichigo Inc., namely the consolidated balance sheet, theconsolidated income statement, the consolidated statement of changes in shareholders’ equity and the notes toconsolidated financial statements, for the fiscal year from March 1, 2018 to February 28, 2019 pursuant to
Article 444, Paragraph 4 of the Company Law.
Management’s Responsibility with respect to the Financial Statements
Management is responsible for compiling and indicating the consolidated financial statements in accordance withthe generally accepted accounting principles of Japan. This includes the operation and maintenance of an internal
compliance structure which management deems necessary to ensure that the consolidated financial statements
are compiled and indicated free of material misstatement in the form of fraud or error.
Auditor’s Responsibility
The responsibility of the Auditor is to perform an independent audit and declare an opinion with respect to theconsolidated financial statements. We conducted our audit in accordance with auditing standards generally
accepted in Japan. Those standards require that we obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement.
We conducted our audit by carrying out auditing procedures on amounts in the consolidated financial statements
and information we received from the Company. These procedures included sampling and testing based on ourassessment of the potential risk of material misstatement in the form of fraud or error. Although our intent is not
to express an opinion regarding the appropriateness of the internal compliance structure, we did assess operationof the internal compliance structure to the extent it affects the accuracy of the consolidated financial statements.
This included an overall assessment of the consolidated financial statements and any assumptions made bymanagement with respect to the Company’s accounting policies or their application, and any estimates indicatedin the consolidated financial statements.
We believe we received sufficient and appropriate information to have a reasonable basis to express our opinion.
Auditing Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of the Ichigo Group consisting of Ichigo Inc. and its consolidated subsidiaries for the period forthe consolidated financial statements in conformity with accounting principles generally accepted in Japan.
Potential Conflicts of Interest
There are no interests to be specified pursuant to the provisions of the Certified Public Accountant Law between
the Company and us or the engagement partner.

57

Auditor’s Report on the Parent Financial Statements
Report of Independent Auditor
April 12, 2019
To the Board of Directors of Ichigo Inc.
Grant Thornton Taiyo LLC
Hiroaki Ohkane, CPA, Designated and Engagement Partner(seal)

Kenta Nishimura, CPA, Designated and Engagement Partner (seal)
We have audited the nineteenth term financial statements of Ichigo Inc., namely the balance sheet, the income
statement, the statement of changes in shareholders’ equity, and the notes to the financial statements andschedules, for the fiscal year from March 1, 2018 to February 28, 2019 pursuant to Article 436, Paragraph 2,
Item 1 of the Company Law.
Management’s Responsibility with respect to the Financial Statements
Management is responsible for compiling and indicating the financial statements and notes and schedules thereto
in accordance with the generally accepted accounting principles of Japan. This includes the operation andmaintenance of an internal compliance structure which management deems necessary to ensure that the financial
statements and notes and schedules are compiled and indicated free of material misstatement in the form of fraud
or error.
Auditor’s Responsibility
The responsibility of the Auditor is to perform an independent audit and declare an opinion with respect to thefinancial statements and the notes and schedules. We conducted our audit in accordance with the auditing
standards generally accepted in Japan. Those standards require that we obtain reasonable assurance about
whether the financial statements and schedules are free of material misstatement.
We conducted our audit by carrying out auditing procedures on amounts in the financial statements and notes andschedules and information we received from the Company. These procedures included sampling and testing
based on our assessment of the potential risk of material misstatement in the form of fraud or error. Although ourintent is not to express an opinion regarding the appropriateness of the internal compliance structure, we didassess operation of the internal compliance structure to the extent it affects the accuracy of the financial
statements and notes and schedules. This included an overall assessment of the consolidated financial statements
and notes and schedules and any assumptions made by management with respect to the Company’s accounting
policies or their application, and any estimates indicated in the financial statements and notes and schedules.
We believe we received sufficient and appropriate information to have a reasonable basis to express our opinion.
Auditing Opinion
In our opinion, the financial statements and schedules referred to above present fairly, in all material respects, thefinancial position of Ichigo Inc. for the period for the financial statements and schedules in conformity withaccounting principles generally accepted in Japan.
Potential Conflicts of Interest
There are no interests to be specified pursuant to the provisions of the Certified Public Accountant Law between
the Company and us or the engagement partner.

58

Audit Committee Report

April 17, 2019
Audit Committee, Ichigo Inc.
Tetsuya Fujita, Audit Committee Member (seal)
Noriko Kawate, Audit Committee Member (seal)
Yukio Suzuki, Audit Committee Member (seal)
The Audit Committee has audited the execution of the duties of the Directors and Statutory Executive Officers
during the nineteenth fiscal year from March 1, 2018 to February 28, 2019. 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 Ichigo regarding the details of resolutions by the
Board of Directors with respect to Article 416, Paragraph 1, Item 1, b and e of the Company Law and thesystem established under the resolutions (internal control system) and in accordance with audit policy andduties prescribed by the Audit Committee. In cooperation with the Internal Audit Department and otherinternal control related divisions of Ichigo, the Audit Committee has investigated the process and details ofdecision-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 andemployees and reviewed Ichigo’s business and assets. With respect to subsidiaries, we have communicatedand exchanged information with directors and auditors of subsidiaries and received business reports fromsubsidiaries as necessary.
In addition, we have supervised and verified that the Independent Auditor was independent and conducting anappropriate audit and received reports on the execution of duties from the Independent Auditor and requested
explanations as necessary. We have also received a report from the Independent Auditor that the structure toensure appropriate performance of duties (matters described in Article 131, each Item of the Company
Calculation Rules) has been established pursuant to laws and regulations including the Standards for Quality
Control of Audits (issued by Business Accounting Council on October 28, 2005) and that management
structures have been properly established within the audit firm.
By these methods, we have reviewed Ichigo’s own business report, financial statements (balance sheet,income statement, statement of changes in shareholders’ equity and notes) and their schedules, along with
Ichigo’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
A. Audit Results of Business Report(1) We note that the business report and its schedules present Ichigo’s status correctly pursuant to all laws
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 ofduties on the internal control system by Statutory Executive Officers.

59

B. 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 LLC, were reasonable.
C. Audit Results of Consolidated Financial Statements
We note that the method and results of the audit conducted by the Independent Auditor, Grant Thornton
Taiyo LLC, were reasonable.
(Note) All members of the Audit Committee are Independent Directors as provided in Article 2, Item 15 andArticle 400, Paragraph 3 of the Company Law.

60