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

Materials for the Eighteenth Annual Shareholder Meeting

Our Mission

Ichigo Preserves and Improves Real Estate
Ichigo is a Japanese real estate owner-operator and clean energy producer.
Our three key businesses are: Value-Add, in which Ichigo preserves and improves real estate;
Asset Management, including managing the Tokyo Stock Exchange-listed Ichigo Office (8975),
Ichigo Hotel (3463), and Ichigo Green (9282); and Clean Energy, in which Ichigo builds andoperates solar and wind power plants on unused land nationwide.
We are committed to serving the needs of society and creating long-term value for our shareholders.

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.

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

May 11, 2018
Ichigo Inc. (Tokyo Stock Exchange First Section, 2337)
Representative: Scott Callon, Chairman

Materials for the Eighteenth Annual Shareholder Meeting
Dear Shareholders:
We are pleased to invite you to attend the Eighteenth Annual Shareholder Meeting of
Ichigo Inc. (“Ichigo”).
If you are unable to attend the meeting, you may exercise your voting rights via postal
mail or the 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 25, 2018, 6:30 p.m. JST.
1. Date and Time

Sunday, May 27, 2018 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. Business Report, Consolidated Financial Statements, and the results of the audit of theConsolidated Financial Statements by the Independent Auditor and Audit Committee
for the Eighteenth Term (March 1, 2017 – February 28, 2018)b. Parent Financial Statements for the Eighteenth Term (March 1, 2017 – February 28,
2018)
Matters to be Resolved
Proposal 1 Amendment to Articles of Incorporation
Proposal 2 Election of 9 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/en1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 thevote cast 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 6:30 p.m. JST on Friday, May
25, 2018. 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 notethat you 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 beregistered 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 Eighteenth Annual Shareholder Meeting

1

Reference Materials for the Seventeenth Annual Shareholder Meeting
Proposal 1 Amendment to Articles of Incorporation
Proposal 2 Election of 9 Directors

5
6

Business Report
I. Current Operations and Financials
A. Business Conditions in the Current Fiscal Year (FY18/2)
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. Principal Offices
G. Employees
H. Principal Lenders
I. Dividend and Distribution Policy
J. Other Material Matters
II. Other Matters
A. Shares and Shareholder Information
B. Employee Stock Options
C. Directors and Officers
D. Independent Auditor
E. Controls to Ensure Appropriate Business Conduct
F. Policy on Corporate Control (Takeover Defenses)

37
38
46
53
55
60

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

61
62
63

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

64
65
66

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

67
68
69

4

23
29
31
32
33
33
34
34
35
36

Proposal 1

Amendment to Articles of Incorporation

1. Purpose of the Proposed Amendment
Ichigo’s corporate governance is a Company with Committees (Nominating, Audit,
Compensation) structure with Independent Directors always comprising a majority of theBoard of Directors. Pursuant to Article 460, Paragraph 1 of Japan’s Company Law,
Ichigo’s current Articles of Incorporation limit decision-making on dividends to thisindependent Board. However, as a means of broadening shareholder rights, Ichigo is
proposing an amendment to the Articles of Incorporation that would also allow dividends
to be decided by Ichigo shareholders at shareholder meetings.
2. Amendment Details(Amended areas underlined)

Current

After Amendment

Article 39 Decision-Making Body for
Dividends

Article 39 Decision-Making Body for
Dividends

Decisions relating to dividends and othermatters specified in Article 459,
Paragraph 1 of the Company Law shallbe made by the Board of Directors,
without resolution at the Annual
Shareholder Meeting, unless otherwise
stipulated by law and regulation.

Decisions relating to dividends and othermatters specified in Article 459,
Paragraph 1 of the Company Law can bemade by the Board of Directors, unlessotherwise stipulated by law andregulation.

5

Proposal 2

Election of 9 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

Minoru Ishihara
Reappointment

4

5

6

7

8

Tetsuya Fujita
Reappointment –Independent Director

Noriko Kawate
Reappointment –Independent Director

Yukio Suzuki
Reappointment –Independent Director

Masatoshi Matsuzaki
Reappointment –Independent Director

Kosuke Nishimoto
Reappointment –Independent Director

Current Position and Responsibility
Chairman of the Board of Directors,
Nominating Committee Member,Compensation Committee Member,
Chairman & Representative Statutory
Executive Officer
Chairman of Nominating Committee,
Chairman of Compensation Committee,
Chairman of Compliance Committee,
President & Representative Statutory
Executive Officer
Compliance Committee Member,
Executive Vice President & Statutory
Executive Officer (Value-Add) & COO
Lead Independent Director,
Chairman of Audit Committee,
Nominating Committee Member,Compensation Committee Member,Compliance Committee Member

Reappointment –Independent Director

100%(9 of 9 Total)

100%(9 of 9 Total)

100%(9 of 9 Total)

100%(9 of 9 Total)

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

100%(9 of 9 Total)

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

100%(9 of 9 Total)

Independent Director,
Nominating Committee Member,Compensation Committee Member

100%(9 of 9 Total)

Independent Director

100%(9 of 9 Total)

Independent Director

100%(8 of 8 Total)

Nobuhide Nakaido
9

Board Meeting
Attendance

6

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.
7

IchigoShares
Held

N/A

No.

Name
(Date of Birth)(continued fromprevious page)

Career History
Message to Our Shareholders
This is your company. Ichigo’s mission is to repay the trust of ourshareholders by driving sustainable growth in shareholder value.

1

As the final year of our Power Up 2019 mid-term business plan, thisis an important year for us to fully achieve the goals set forth inPower Up 2019 and establish a strong foundation for the next stageof our growth. We will continue to work to build Ichigo’s capabilities
and grow value for all shareholders and stakeholders.

8

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

2

March 2016
May 2016
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’s goal is to serve Japan’s prosperity and contribute to Japan’s
future through Ichigo’s real estate activities.
This is the final year of our Power Up 2019 mid-term business plan,
which is an incredibly important year both to achieve our Power Up
2019 goals and set out our future growth strategy. Together with all
Ichigo employees, I will dedicate all of my strength to work towards
this end. Thank you for your continued guidance and support.

9

IchigoSharesHeld354,400
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 20093

May 2010
Minoru Ishihara(October 5, 1967) April 2011
May 2011
November 2011
July 2012

November 2012
March 2013

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.

10

IchigoSharesHeld

207,400
sharesNo.

Name(Date of Birth)

Career History(continued from May 2015previous page)
March 2017
April 2017
March 2018

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. (current)Group Head of Value-Add (current)(Other Positions)
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.
3
Message to Our Shareholders
Ichigo seeks to be a company that truly puts our clients first. Our
direct interaction with tenants helps us to understand their needs andserve them through our real estate expertise and advanced IT
capabilities, property management services, and local knowledge.
We are working together with our tenants to create a bright future.
As the manager of Ichigo’s weightlifting, rifle shooting, and track &field teams, I will do my best with all of our athletes in working
towards the 2020 Tokyo Olympics. Thank you so much to our fansfor your wonderful support.
I will continue to work towards growing value for our shareholders
and delivering on Ichigo’s mission. Thank for your continued
guidance and support.

11

IchigoShares
Held

No.

Name
(Date of Birth)

Career History
April 1976
April 2001
April 2002
October 2006
April 2007
October 2009
May 2010

4

February 2011
March 2011
May 2011
May 2012
Tetsuya Fujita(March 26, 1954) July 2012

May 2014

October 2015
May 2016
August 2017

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 (current)
Lead Independent Director (current)
Special Advisor to CEO, ReMark Group (current)(Other Positions)
Special Advisor to CEO, ReMark Group
Advisor, LAUREATE INTERNATIONAL UNIVERSITIES Japan

12

IchigoSharesHeld61,300sharesNo.

Name(Date of Birth)(continued fromprevious page)

4

Career History

Message to Our Shareholders
I believe the role of an Independent Director is to supervise company
management from an independent perspective and contribute to thegrowth of both corporate and social value. By offering advice andguidance from a broad range of expertise, we can promote healthyboard-level discussions. I hope to leverage my own management
experience to drive Ichigo’s growth and support our shareholders andall stakeholders in achieving their goals and aspirations.
As an Independent Director, I will work to promote transparency inmanagement and strengthen corporate governance.

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

5

Noriko Kawate(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
Although the real estate market remains strong on the back of themonetary easing by the Bank of Japan, in order for Ichigo to continue
to grow shareholder value, we must flexibly and nimbly execute on
strategies that takes into account the rapidly changing environment ofJapan’s real estate market. Drawing upon my expertise andexperience in the fields of financial auditing and consulting, I will
work to contribute towards a corporate governance structure thatstrikes the right balance between the pursuit of growth andappropriate oversight and controls.

14

IchigoSharesHeld

41,600shares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

6
Yukio Suzuki(June 3, 1950)

September 2015
May 2016
March 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)
Auditor, WILLs Inc. (current)(Other Positions)
CEO, Belle Investment Research of Japan Inc.
Independent Director, Systena Corporation
Auditor, WILLs Inc.
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 shared withshareholders. As an Independent Director, I will supervise Ichigo inpursuit of effective corporate governance, strong human capitaldevelopment, and global environmental consciousness.

15

IchigoSharesHeld

13,300shares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

7

Masatoshi Matsuzaki(July 21, 1950)

May 2016

June 2016

August 2016

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)(Other Positions)
Chairman of the Board of Directors, Konica Minolta Inc.
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

15,300sharesNo.

Name(Date of Birth)(continued fromprevious page)

7

Career History

Message to Our Shareholders
I believe sustainable corporate growth is important forshareholders and all stakeholders. While short-term earnings
performance cannot be ignored, of even greater importance is acompany’s ability to identify structural changes in the businessenvironment and to proactively establish and execute on a futureoriented business strategy. I will continue to leverage myperspective as an Independent Director to support management’s
focus on important business issues.

17

IchigoShares
Held

No.

Name
(Date of Birth)

Career History
April 1981
September 1984
June 1995
July 1996
November 1999
April 2006
June 2014
June 2015
May 2016
April 2017
June 20178

Kosuke Nishimoto(March 1, 1958)

Joined Kanebo Ltd. (Now Kanebo Cosmetics
Inc.)
Joined Meitec Corporation
Director, Meitec Corporation
Senior Managing Director, Meitec
Corporation
President, Meitec Corporation
President and CEO, Meitec Corporation
Chairman, Meitec Corporation
Independent Director, Ryosan Company,
Limited (current)
Independent Director, Interworks Inc.
Ichigo Independent Director (current)
Chairman, President, & Representative
Director, Interworks Inc. (current)
Independent Director, Misumi Group Inc.
(current)(Other Positions)
Independent Director, Ryosan Company, Limited
Chairman, President, & Representative Director, Interworks Inc.
Independent Director, Misumi Group Inc.
Message to Our Shareholders
I believe that a long-term perspective towards growth along withdecision-making aimed at growing corporate value are especiallycritical during times of significant changes in businessenvironment. Leveraging the independent and neutral perspectiveof an Independent Director, I will support Ichigo in striking the
optimal balance between risk, return, and cost in its business
management and execution.

18

IchigoSharesHeld

15,500sharesNo.

Name(Date of Birth)

Career History
April 1971
April 1998
April 2002
April 2003
April 2004
April 2005
April 2009
June 20099

October 2011
June 2013
April 2016
Nobuhide Nakaido(November 1, 1946) June 2016
May 2017

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)

Message to Our Shareholders
I will draw upon my management experience to contributetowards the further development of Ichigo’s distinctive businessmodels (such as Value-Add), growing shareholder value, andstrengthening Ichigo’s brand.

19

IchigoSharesHeld

N/A

(Note 1) None of the candidates for Director has any relationship of note with Ichigo.
(Note 2) Ichigo’s Nominating Committee and Board of Directors’ reasons fornominating Scott Callon, Takuma Hasegawa, and Minoru Ishihara 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
on a number of Japanese government bodies, including the Financial Services
Agency (FSA) Council of Experts that drafted Japan’s first Corporate
Governance Code and the Ministry of Economy, Trade and Industry (METI)
Competitiveness and Incentives Structures for Sustainable Growth Project (the“Ito Review”). He assumed the position of Ichigo Director in November 2008,
and his term of office will have been nine and a half years at the close of thisshareholder 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 Ichigo Director in May 2009 for
two years, and his term of office will have been five years at the close of thisshareholder meeting.
(iii)
Minoru Ishihara has extensive knowledge and experience as Executive Vice
President and COO of Ichigo. He assumed the position of Ichigo Director in
2009, and his term of office will have been nine years at the close of thisshareholder meeting.
(Note 3) All six candidates for Independent Director – Tetsuya Fujita, Noriko Kawate,
Yukio Suzuki, Masatoshi Matsuzaki, Kosuke Nishimoto, and Nobuhide
Nakaido – meet the Tokyo Stock Exchange’s (TSE) requirements for
Independent Director and will be registered with the TSE as such.
(Note 4) Ichigo’s Nominating Committee and Board of Directors’ reasons fornominating Tetsuya Fujita, Noriko Kawate, Yukio Suzuki, Masatoshi
Matsuzaki, Kosuke Nishimoto, and Nobuhide Nakaido as candidates for
Independent Director are as follows:
(i)

(ii)

(iii)

(iv)

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 ofoffice will have been eight 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, and her term of office will have been seven years at theclose of this shareholder meeting.
Yukio Suzuki has extensive experience and knowledge of corporate andsecurities research from serving important roles at a securities company, thinktank, and asset management company at a major financial group, and has
experience and knowledge in operational monitoring and risk control, which
he can draw upon to fully monitor the Company’s activities. He assumed theposition of Independent Director in May 2015, and his term of office will havebeen three years at the close of this shareholder meeting.
Masatoshi Matsuzaki has extensive experience as the CEO and Chairman
leading a major global office equipment manufacturer, driving a positive
structural transformation and business innovation, and played a leading role indeveloping a best-practice board committee system to support strong corporate
20

(v)

(vi)

governance, which he can draw upon to fully monitor the Company’s activities
on behalf of shareholders. He assumed the position of Independent Director in
May 2016, and his term of office will have been two years at the close of thisshareholder meeting.
Kosuke Nishimoto has extensive experience and knowledge as the CEO andChairman leading Japan’s largest engineering outsourcing services company,
growing the company and deepening its capabilities on behalf of all
stakeholders while driving significant growth in shareholder value. He has
deep understanding of human resources and talent development, which he candraw upon to fully monitor Ichigo’s activities on behalf of shareholders. He
assumed the position of Independent Director in May 2016, and his term ofoffice will have been two 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 one
year at the close of 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 an Independent Director 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, norwill they receive, material monetary or other financial compensation(excluding any remuneration as Director or Advisor before assuming theposition 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 ofconsanguinity.

(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 of liabilities for compensation under the agreements is the minimum
limited liability amount as defined in Article 425, Paragraph 1 of the Company
Law; provided that the liability is limited only when the Independent Directors
have performed their duties which cause liability in good faith and withoutgross negligence. Upon the re-appointment of Tetsuya Fujita, Noriko Kawate,
Yukio Suzuki, Masatoshi Matsuzaki, Kosuke Nishimoto, and Nobuhide
Nakaido as Independent Directors, Ichigo will enter into new limited liability
agreements with equivalent terms with each of them.

21

(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 isas of February 28, 2018.

22

Business Report(March 1, 2017 – February 28, 2018)
I.

Current Operations and Financials

A. Business Conditions in the Current Fiscal Year (FY18/2)
1. Business Results and Progress
During FY18/2 the Japanese economy continued to expand moderately, as a result of
economic and fiscal policies implemented by the Japanese government, monetaryeasing policies implemented by the Bank of Japan, and growth of the global economy.
Capital expenditures continued to increase on the back of improved corporate
earnings and business sentiment, and household consumption gradually increased due
to steady improvements in employment and income.
Turning to Ichigo’s prime area of activity, the Japanese real estate industry has seen
relatively stable investment returns on the back of ongoing rent increases and low
interest rates, in turn driving strong demand for real estate investments. As can beseen in five consecutive years of land price increases in Tokyo, land prices continue tobe on the rise, especially for the three major metropolitan areas. Despite a shift offunds from J-REIT mutual funds into J-REIT ETFs, the J-REIT market is expected tosee continued strong demand given its stability and product transparency. The officemarket continues to see rent increases in the five central wards of Tokyo, with further
growth of office demand expected from strong corporate earnings, headcountexpansion, and efforts to improve work environments in order to attract talent.
Although the hotel market continues to see large new supply, demand is growing
strongly, centered on inbound tourists from Asian countries, 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, it has also
spurred creation of a secondary market for existing solar power plants anddevelopment rights. A new solar YieldCo also IPOed on the Tokyo Stock Exchange
infrastructure market during FY18/2, as the market continues to grow.
Within this business environment, Ichigo executed on the following initiatives toachieve the goals it set out in its Power Up 2019 mid-term business plan and establish
a foundation for sustainable growth.
Core Business Growth–

Value-Add
Given the strong real estate market, Ichigo worked to grow through new
initiatives and innovative approaches to asset acquisition. Specifically, Ichigo
acquired via M&A a Tokyo-based real estate operator, Centro Co., Ltd., and also
made acquisitions in new asset types in logistics and self-storage facilities.
FY18/2 asset acquisitions totaled JPY 54.3 billion, which will drive future
earnings growth via rental income. FY18/2 asset sales were JPY 23.6 billion.
Because Ichigo’s FY18/2 Value-Add profit margins were significantly above
forecast, Ichigo was able to be more selective in its Value-Add asset sales andretained more Value-Add assets that will contribute to stable earnings going
forward.

23

Through its strengthened leasing activities and high-quality tenant services,
Ichigo has also successfully increased both occupancy and rents at Tradepia
Odaiba, Ichigo’s first large-scale Value-Add asset, in the first year postacquisition.

Tradepia Odaiba–

Asset Management
Ichigo worked to support the growth of its two TSE-listed REITs and solar
YieldCo by supporting Ichigo Office’s (8975) portfolio restructuring and Ichigo
Hotel’s (3463) hotel acquisitions and selling two solar power plants to Ichigo
Green (9282).

–

Clean Energy
Ichigo launched the operation of the Ichigo Showamura Ogose ECO Power Plant
in September 2017, four months ahead of its initial launch schedule. Ichigo
Showamura is the largest solar power plant in Kanto, the region that encompasses
Tokyo and the world’s largest electricity market. With a 20-year fixed power sale
contract (FIT) in place, Ichigo Showamura will be a stable earnings driver fortwenty years. Ichigo continues to expand its solar and wind power plant pipeline.

Ichigo Showamura, Tokyo’s Largest Solar Power Plant

24

New Business Entry–

Real Estate Owner Services
Ichigo launched Ichigo Owners, a real estate owner services company, on March
1, 2017, as its fourth pillar of business. Ichigo Owners caters to the needs of bothexperienced real estate owners as well as first-time real estate investors,
leveraging Ichigo’s value-add capabilities to increase the value of clients’ realestate. Ichigo Owners also provides ongoing asset management services tailoredto the diverse needs of Ichigo clients, building long-term relationships of trust,and protecting and growing the value of client real estate holdings.

–

Boutique Hotels
Ichigo launched its first boutique hotel brand and opened THE KNOTYOKOHAMA on December 1, 2017, having transformed and upgraded the old
Yokohama Kokusai Hotel. THE KNOT brand is positioned between luxury hotels
and budget hotels, which is common in Europe and the US, but new for Japan.
Ichigo’s second boutique hotel, THE KNOT TOKYO (provisional name), iscurrently being developed in Shinjuku.

THE KNOT YOKOHAMA–

Self-Storage
Ichigo entered the self-storage market through its acquisition of Centro, which
offers indoor storage equipped with the industry’s leading security and air
conditioning management systems. The self-storage market has significant
growth potential in Japan, and Ichigo will accelerate new openings, leveraging its
extensive network and solid financial standing.

–

Ichigo Land
Ichigo established a new subsidiary, Ichigo Land Shinchiku (“Ichigo Land”), on
October 17, 2017 to further contribute to a sustainable society via Ichigo’s ValueAdd capabilities.

–

Hotel AI System
Ichigo has allied with Fujitsu Kyushu Systems Limited, a major hotel systems
developer and member of the Fujitsu Group with deep expertise in AI (artificial
intelligence) and IoT (Internet of Things), to develop an AI-based revenue
management system. Ichigo’s goal in this alliance is to develop technology
solutions that increase guest satisfaction, increase hotel values, and drive higher
earnings.

25

Improved Borrowing Terms, Share Buybacks, JPX-Nikkei 400 Index, Branding–

Ichigo further strengthened its financial standing by extending its loan maturities,
lowering borrowing costs, hedging against future rises in interest rates, andexpanding its uncollateralized borrowings.

–

Ichigo conducted two share buybacks during FY18/2 to grow EPS for Ichigo
shareholders.

–

For the second year in a row, Ichigo was selected for inclusion in the JPX-Nikkei
Index 400 in August 2017. 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.

–

Ichigo implemented a number of measures to strengthen the Ichigo brand.

Ichigo thus recorded FY18/2 revenue of JPY 57.8 billion (-47.1% year-on-year);
operating profit of JPY 20.9 billion (-4.2% year-on-year); recurring profit of JPY 19.2
billion (-2.9% year-on-year); and net income of JPY 14.0 billion (-5.9% year-onyear).
Operating Profit(JPY million)
24,00018,00021,781

20,858

FY17/2

FY18/2

15,417

12,000
8,189
6,000

3,912

0
FY14/2

FY15/2

FY16/2Net Income(JPY million)

18,00014,89415,00012,92514,01812,000
9,000
6,000

6,761
4,526

3,000
0
FY14/2

FY15/2

FY16/226

FY17/2

FY18/2

2. Capital Expenditures
During FY18/2, solar power plant equipment and solar power plants underconstruction (fixed assets) increased by JPY 3.4 billion.
3. Financing
In order to drive earnings growth and further strengthen its financial standing, Ichigo
took 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 significantly reduced its interest rate risk should Japanese interest rates
rise, hedging 60.2% of interest-bearing corporate loans as of the end of FY18/2 via
interest rate swaps and interest rate caps. If asset acquisition and sales and loan
repayments proceed as forecast, then 79.6% of FY21/2-end interest-bearing corporateloans will be hedged against interest rate movements.
Ichigo has also been increasing its uncollateralized borrowings, which total JPY 29
billion as of March 2017.
LenderTerm

Use of Funds

Uncollateralized
Loans

SMBC-led
syndicated loan1

JPY 8 billion 7 years

Uncollateralized
Commitment
Lines

SMBC

JPY 10 billion

2 years fromdrawdown date

Acquisition of
new hotels

Mizuho Bank

JPY 4 billion

2 years fromdrawdown date

Acquisition of
new hotels

Mizuho Bank

JPY 5 billion

3 years fromdrawdown dateMizuho Bank

JPY 2 billion

Until March 31,
2018

Uncollateralized
Credit Facilities

Total
1

AmountRefinancing

Solar power plantdevelopment andacquisition
Capex in theevent of a natural
disaster

JPY 29 billion

SMBC, Shinsei Bank, Hokuriku Bank, Yamaguchi Bank, Tokushima Bank, ShinGinko Tokyo
As a result, Ichigo’s outstanding balance of interest-bearing corporate loans as of theend of FY18/2 was JPY 118.5 billion (+20.5% year-on-year), and its outstandingbalance of non-recourse loans and bonds was JPY 67.5 billion (-11.0% year-on-year).
Average interest rates during FY18/2 for interest-bearing corporate loans and nonrecourse loans were 1.0% (-0.2% year-on-year) and 1.2% (-0.1% year-on-year),respectively.
Ichigo continues to have an extraordinarily stable and durable balance sheet, with
95.3% of interest-bearing corporate loans as of the end of FY18/2 being long-term.
Specifically, JPY 82.0 billion of interest-bearing corporate loans have remaining
terms of more than 5 years, with total interest-bearing corporate loans having an
average loan term of 10.2 years. Furthermore, 47.8% of Ichigo’s interest-bearing
corporate loans as of the end of FY18/2 are with Japanese megabanks.

27

Average Interest Rate and Loan Term
(Loan Term, Years)
12(Interest Rate)
2.5%
Weighted
Weighted Average
AverageInterest
InterestRate
Rate

10.8 years

WeightedLoan
AverageLoan Term
Average
Period

2.0%

1.96%

10.2 years

9 years9
8.7 years

1.71%
1.5%

6
5.9 years

1.41%
1.24%
1.04%

1.0%
FY14/2

FY15/2

FY16/2

FY17/2

FY18/2

14% (JPY 4.1B)

8% (JPY 4.9B)

10%(JPY 10.3B)

6% (JPY 6.1B)

5% (JPY 5.6B)

86%(JPY 26.1B)

92%(JPY 53.4B)

90%(JPY 94.4B)

94%(JPY 92.2B)

95%(JPY 112.8B)

FY14/2

FY15/2

FY16/2

FY17/2

FY18/2

Term Structure of Loans
Short-Term
Long-Term

28

3

4. Business Transfers, Absorption-Type Splits or Incorporation-Type Splits
Ichigo transferred a mid-size Value-Add retail asset to Ichigo Land via a corporate
divestiture on February 20, 2018.
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 andStock Options, etc.
Ichigo completed the sale of its 100% subsidiary Takara Building Maintenance toSinanen Holdings on March 1, 2017.
Ichigo established a real estate owner services company, Ichigo Owners Co., Ltd., on
March 1, 2017 as a wholly-owned subsidiary with a paid-in capital of JPY 100
million.
On July 3, 2017, Ichigo acquired 100% of the outstanding shares of Centro Co., Ltd.
via Carpe Diem GK Tokumei Kumiai, a special purpose company. Through thisacquisition, Centro’s subsidiary that operates a self-storage business, Storage Plus
Corp., became Ichigo’s consolidated subsidiary.
B. Earnings and Assets in the Current and Past Three Fiscal Years
FifteenthTerm(FY15/2)
42,705SixteenthTerm(FY16/2)
49,699SeventeenthTerm(FY17/2)
109,253

EighteenthTerm(FY18/2)
57,846

Operating Profit (JPY million)

8,189

15,417

21,781

20,858Recurring Profit (JPY million)

7,255

13,88919,755

19,185Net Income (JPY million)

6,761

12,925

14,89414,018Net Income per Share (JPY)

13.58

25.86

29.66

28.12

Total Assets (JPY million)

172,744251,757

273,459

296,512Net Assets (JPY million)

58,377

72,166

83,44392,725Net Assets per Share (JPY)111.54134.54

159.60180.20

Dividend per Share (JPY)

1.3

3.0

5.0

6.0

13.0%

21.0%

20.2%

16.5%

Revenue (JPY million)

Return on Equity(Note) 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.
29

Net Income per Share (EPS)
(JPY)
29.66

30

28.12

25.86
20
13.58
9.83

10

0
FY14/2

FY15/2

FY16/2

FY17/2

FY18/2

Net Assets per Share
(JPY)
200

180.20159.60150

134.54111.54

97.42

100
50
0

FY14/2

FY15/2

FY16/2

FY17/2

FY18/2

Total Assets & Net Assets(JPY million)
296,512300,000
250,000

Total Assets
Net Assets

200,000

251,757

273,459

172,744150,000
114,944
100,000
50,00050,842

72,16658,377

83,44392,7250
FY14/2

FY15/2

FY16/230

FY17/2

FY18/2

C. Company 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 100 million

100%

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

Ichigo Real Estate Services
Fukuoka Co., Ltd.

JPY 50 million

100%Real estate business centeredon Fukuoka in Kyushu region

Ichigo Owners Co., Ltd.

JPY 100 million

100%Real estate owner services

Ichigo Land Shinchiku Co., Ltd.

JPY 50 million

100%Real estate value-add

Ichigo 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 established Ichigo Owners Co., Ltd., a real estate owner services
company, as a wholly-owned subsidiary with paid-in capital of JPY 100
million on March 1, 2017.
(Note 2) Ichigo sold Takara Building Maintenance Co., Ltd. to Sinanen Holdings
Co., Ltd. on March 1, 2017.
(Note 3) Ichigo acquired 100% of the outstanding shares of Centro Co., Ltd. via
Carpe Diem GK Tokumei Kumiai, a special purpose company, on July 3,
2017. Via this acquisition, Storage Plus Corp., Centro’s subsidiary that
operates a self-storage business, became Ichigo’s consolidated subsidiary.
(Note 4) Ichigo established Ichigo Land Shinchiku Co., Ltd., a real estate value-add
company, as a wholly-owned subsidiary with paid-in capital of JPY 50
million on October 17, 2017.

31

D. Key Business Priorities
Ichigo’s Power Up 2019 mid-term business plan sets out as its key goals to drive further
sustainable earnings growth in Ichigo’s core businesses and develop new Ichigo
businesses that will be forward growth engines. Consistent with this strategy and in
response to potential changes in market conditions in Japan’s currently strong real estatemarket, Ichigo has been building a foundation for sustainable growth for its shareholders.
Ichigo has been successfully generating steady earnings growth in its three corebusinesses: Value-Add, Asset Management, and Clean Energy.
In Asset Management, there is a significant gap between the share prices of J-REITs andYieldCos versus the realizable value of the underlying real estate and renewable energy
assets, which underscores the current undervaluation of Ichigo Office, Ichigo Hotel, andIchigo Green. To close this valuation gap, Ichigo is working to increase earnings by
generating profits on asset sales that can fund growth investments and value-add capex,
strategically restructuring asset portfolios, and acquiring new assets taking advantage of
the Ichigo Office, Ichigo Hotel, and Ichigo Green’s strong financial standing.
In Value-Add, Ichigo has expanded into new asset types, including logistics and selfstorage. In Clean Energy, Ichigo has been adding wind power plant projects to its
existing portfolio of solar power plants. Ichigo is working across all of its businesses todrive sustainable growth by accelerating the development of new earnings drivers, suchas real estate owner services and self-storage.

Sustainability

Profitability

Power Up 2019 Key Initiatives

Core Business
Growth• List Ichigo’s solar assets on the TSE’s new
Infrastructure Market• Support the ongoing growth of Ichigo Office(8975) and Ichigo Hotel (3463)•Expand the architecture and structural
engineering team to deliver real estate that is
high-function, safe, secure, andenvironmentally friendly• Spin out a dedicated leasing team to drive
tenant acquisitions and rental income

New Business
Creation• Extend Ichigo’s REIT-focused asset
management business into the much larger
physical real estate market• Grow Ichigo’s hotel business synergisticallywith Ichigo Hotel• Launch one or more REtech businesses,
fusing Ichigo’s Real Estate and IT capabilities• Launched Ichigo Owners: JPY 21.4B acquisitions,
JPY 2.3B sales in first year
• Launched Ichigo’s first boutique hotel, THE KNOTYOKOHAMA, on Dec 1, 2017
• Allying with Fujitsu Kyushu Systems to develop AI hotelrevenue management system

Finance as aStrategic Measure• Grow both financial stability and earnings• De-collateralize loans, lengthen loan
maturities, lower debt costs, get credit ratings,
and issue bonds to diversify funding profile• Average Loan Maturity: 10.2 years• Average Interest Rate: 1.04%• Long-Term Loan Ratio: 95%

High Capital
Efficiency andOrganic Growth• ROE >15%

• FY17/2 20.2%• FY18/2 16.5%

Best Place to
Work• Support employee health and wellness• Goal: Japan’s number one company inproviding opportunities for employees• 100% return rate for employees who take child leave• Annual stock option grants (fully expensed) to all employees
to align their interests with Ichigo shareholders

•
•
•
•

Listing of Ichigo Green (9282) on Dec 1, 2016
Asset sales to Ichigo Office (8975) and Ichigo Hotel (3463)
Expanded the architecture and structural engineering teamSpun out a dedicated leasing team to drive tenant acquisitionsand value-add• 6 of 9 Board Members are Independent Directors• 3 former CEOs of TSE 1st Section companies serve as
Independent Directors

Global Best Practice Governance and Compliance32

E. Key Business Segments (as of February 28, 2018)
Ichigo’s core activity is preserving and improving real estate focused on Value-Add.
Ichigo receives rental income during the period it is carrying out its value-add, alongwith profits on sale that reflect the real estate’s higher value after the value-add iscomplete. In addition to its value-add activity with respect to mid-size offices, hotels,
and retail and other assets, Ichigo develops and operates solar and wind power plants to
supply clean energy and bring productive use to unused land.
Ichigo’s Value-Add Business Model
Value-Add Business Model
Green
Infrastructure

Solar Plants
Buy

Ichigo Green(9282)

Sell

OfficeIchigo Office(8975)
Hotel

Value-Add
Real
不動産
EstateIchigo Hotel(3463)

Preserve &ImproveReal
EstateThirdParty
Investors

Sell

Buy

F. Principal Offices (as of February 28, 2018)
Headquarters
Ichigo Inc.
Ichigo Investment Advisors Co., Ltd.
Ichigo Estate Co., Ltd.
Ichigo ECO Energy Co., Ltd.
Ichigo Owners Co., Ltd.
Ichigo Land Shinchiku Co., Ltd.
Ichigo Real Estate Services Fukuoka Co., Ltd.

Chiyoda-ku, Tokyo

Fukuoka City, Fukuoka Prefecture

Ichigo Marché Co., Ltd.

Matsudo City, Chiba Prefecture

Miyako City Co., Ltd.

Miyazaki City, Miyazaki Prefecture33

G. Employees (as of February 28, 2018)
1. Employees (Consolidated basis)
Number of employees

Increase/decrease from previous fiscal year-end

202 (11)-38 (-614)(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 arealso employees.
(Note 2) The average number of non-full-time employees (including part-time andtemporary staff) is presented in parentheses.
(Note 3) The number of full-time employees decreased by 38 and non-full-time
employees by 614 as a result of the deconsolidation of a subsidiary.
2. Employees (Parent basis)
Number of
employees

Increase/decrease
from previous fiscal
year-end

Average age

Average years of
employment

88 (3)+4 (–)

42.4 years old

5.1 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 arealso 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 four;
however, this was mainly due to employees being moved from a
subsidiary pursuant to a corporate reorganization.
H. Principal Lenders (as of February 28, 2018)
Lenders

AmountSumitomo Mitsui Banking Corporation

JPY 34.7 billion

Mizuho Bank, Ltd.

JPY 17.7 billion

Kansai Urban Banking Corporation

JPY 11.3 billion

The Nishi-Nippon City Bank, Ltd.

JPY 7.8 billion

Resona Bank, Limited.

JPY 6.8 billion(Note) These amounts do not include non-recourse loans held by funds that Ichigo
manages (e.g., tokumei kumiai partnerships, etc.)34

I. Dividend and Distribution Policy
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 dividend protection.
In addition to this progressive dividend policy, Ichigo has adopted a minimum DOE(dividend on equity) payout ratio of 3%. In contrast to a “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 tothe benefit of Ichigo’s shareholders.
The FY18/2 dividend per share is JPY 6, up 20% year-on-year.
Dividend per Share
(JPY)

7

6.0

6
5.0

5
4
3.0

3
2
1

1.1

1.3

FY14/2

FY15/20
FY16/235

FY17/2

FY18/2

J. Other Material Matters
Ichigo’s Board of Directors decided to conduct share buybacks, pursuant to theprovisions of Articles 156 and 165 of the Company Law, at the Board of Directors
meetings held on April 19, 2017 and October 12, 2017. The details of these buybacks
are as follows:
1. Share Buyback Rationale
To grow value for Ichigo shareholders
2. Share Buyback Summary
April 2017 Share Buyback
Number of Shares
AmountAverage Share Price
Buyback Period
Buyback Method

4,627,400
JPY 1,499,979,200
JPY 324
April 24, 2017 – April 28, 2017
In-market purchases via trust bank

October 2017 Share Buyback
Number of Shares
AmountAverage Share Price
Buyback Period
Buyback Method

3,809,100
JPY 1,499,969,100
JPY 394
October 13, 2017 – November 1, 2017
In-market purchases via trust bank36II. Other Matters
A. Shares and Shareholder Information (as of February 28, 2018)
1. Number of Authorized Shares:

1,500,000,000 shares

2. Total Number of Shares Issued:504,484,200 shares (including 8,706,500 treasury shares)

3. Number of Shareholders:

25,578Top 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

246,943,200

49.81%

24,417,500

4.93%

MACQUARIE BANK LIMITED–MBL LONDON BRANCH(Standing Proxy: Citibank, N.A., Tokyo Branch)

15,785,000

3.18%

BNYMSANV RE GCLB RE JP RD LMGC
(Standing Proxy: Citibank, N.A., Tokyo Branch)

11,078,186

2.23%

Japan Trustee Services Bank, Ltd.
(Trust Account)

11,061,600

2.23%

STATE STREET BANK AND TRUST COMPANY(Standing Proxy: The Hong Kong and Shanghai Banking
Corporation Limited, Tokyo Branch)

10,759,100

2.17%

Ueda Yagi Tanshi Co., Ltd.

7,462,200

1.51%

THE MASTER TRUST BANK OF JAPAN (Trust Account)

7,429,000

1.50%

Morgan Stanley MUFG Securities Co., Ltd.

5,497,260

1.11%Japan Trustee Services Bank, Ltd.
(Trust Account 5)

5,379,600

1.09%

TOTAL

345,812,646

69.75%(Note 1) Shareholding Ratio is calculated excluding 8,706,500 treasury shares.
(Note 2) Ichigo’s share buybacks increased the Shareholding Ratio of Ichigo Trust Pte.
Ltd., Ichigo’s largest shareholder, from 49.55% to 49.81% as of February 28,
2018.
(Note 3) The Bank of Tokyo-Mitsubishi UFJ, Ltd., the standing Proxy for BNYM SA/NV
FOR BNYM FOR BNY GCM CLIENT ACCOUNTS M LSCB RD, haschanged its name to MUFG Bank, Ltd., effective April 1, 2018.
37

B. Employee Stock Options
1. Stock Options Issued as Compensation for Execution of Duties by Officers
10th Stock Option Plan

Holding Details

Date of resolution
Number of stock options
Type and number of shares
Issue price
Exercise price
Exercise period
Exercise conditions2

August 8, 2011100 units1
20,000 common shares (200 shares per unit)
N/A
JPY 11,000 per unit (JPY 55 per share)
August 9, 2013 – August 8, 2018

Number of stock options:
Directors
Number of shares:(excluding Independent Directors)
Number of holders:
Independent Directors
Statutory Executive Officers(excluding those who are
Directors)

Number of stock options:
Number of shares:
Number of holders:Number of stock options:
Number of shares:
Number of holders:

1

－
－
－
－
－
－
100 units
20,000 shares
1

Of the total stock options 100 units have been issued to Officers. (100 units have been
exercised in the fiscal year ending February 2018.)
2
Exercise Conditions(i) Ichigo must fully complete its buyback of either 61,693 shares or JPY
616,930,000 as approved by Ichigo’s Board of Directors on August 8, 2011.
(ii) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(iii) Pledges and other disposition of stock options are not permitted.
(iv) If a person who is allotted stock options should become deceased, the heirmay, within one year from the decease, exercise the rights subject to theconditions provided for in the Stock Options Allotment Agreement as
described in (v).
(v) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.
(Note) Shares of Ichigo were split 200 shares to one effective September 1, 2013.

38

11th Stock Option Plan

Holding Details

Date of resolution
Number of stock options
Type and number of shares
Issue price
Exercise price
Exercise period
Exercise conditions2

August 24, 2012
1,355 units1
271,000 common shares (200 shares per unit)
N/A
JPY 12,000 per unit (JPY 60 per share)
August 25, 2014 – August 24, 2019

Number of stock options:
Directors
Number of shares:(excluding Independent Directors)
Number of holders:Number of stock options:
Independent Directors
Number of shares:
Number of holders:
Statutory Executive Officers
Number of stock options:(excluding those who are
Number of shares:
Directors)
Number of holders:
1

679 units
135,800 shares2－－－
81 units
16,200 shares2

Of the total stock options 760 units have been issued to Officers. (2,100 units havebeen exercised in the fiscal year ending February 2018.)
2
Exercise Conditions(i) Ichigo must pay an interim or full-year dividend in the 13th fiscal year (March
1, 2012 – February 28, 2013).
(ii) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor, or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(iii) Pledges and other disposition of stock options are not permitted.
(iv) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (v).
(v) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.
(Note) Shares of Ichigo were split 200 shares to one effective September 1, 2013.

39

12th Stock Option Plan

Holding Details

Date of resolution
Number of stock options
Type and number of shares
Issue price
Exercise price
Exercise period
Exercise conditions2

January 10, 2014
735,000 units1
735,000 common shares (1 share per unit)
N/A
JPY 337 per share
January 12, 2016 – January 10, 2021

Number of stock options:
Directors
Number of shares:(excluding Independent Directors)
Number of holders:Number of stock options:
Independent Directors
Number of shares:
Number of holders:
Statutory Executive Officers
Number of stock options:(excluding those who are
Number of shares:
Directors)
Number of holders:1

153,700 units
153,700 shares2－－－
142,800 units
142,800 shares
9

Of the total stock options 296,500 units have been issued to Directors. (5,300 units
have been exercised in the fiscal year ending February 2018.)
2
Exercise Conditions(i) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(ii) Pledges and other disposition of stock options are not permitted.
(iii) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (iv).
(iv) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.

40

13th Stock Option Plan

Holding Details

Date of resolution
Number of stock options
Type and number of shares
Issue price
Exercise price
Exercise period
Exercise conditions2

January 13, 2015
1,676,500 units1
1,676,500 common shares (1 share per unit)
N/A
JPY 382 per share
January 14, 2017 – January 13, 2022

Number of stock options:
Directors
Number of shares:(excluding Independent Directors)
Number of holders:Number of stock options:
Independent Directors
Number of shares:
Number of holders:
Statutory Executive Officers
Number of stock options:(excluding those who are
Number of shares:
Directors)
Number of holders:1
2

270,000 units
270,000 shares2
18,000 units
18,000 shares
2
271,000 units
271,000 shares
10

Of the total stock options 559,000 units have been issued to Officers.
Exercise Conditions(i) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(ii) Pledges and other disposition of stock options are not permitted.
(iii) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (iv).
(iv) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.

41

14th Stock Option Plan

Holding Details

Date of resolution
Number of stock options
Type and number of shares
Issue price
Exercise price
Exercise period
Exercise conditions2
Directors(excluding Independent Directors)
Independent Directors
Statutory Executive Officers(excluding those who are also
Directors)
1
2

January 13, 2016
1,373,200 units1
1,373,200 common shares (1 share per unit)
N/A
JPY 474 per share
January 14, 2018 – January 13, 2023
Number of stock options:
Number of shares:
Number of holders:Number of stock options:
Number of shares:
Number of holders:Number of stock options:
Number of shares:
Number of holders:

175,000 units
175,000 shares2
24,000 units
24,000 shares
3
196,000 units
196,000 shares
10

Of the total stock options 395,000 units have been issued to Officers.
Exercise Conditions(i) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(ii) Pledges and other disposition of stock options are not permitted.
(iii) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (iv).
(iv) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.

42

15th Stock Option Plan

Holding Details

Date of resolution
Number of stock options
Type and number of shares
Issue price
Exercise price
Exercise period
Exercise conditions2
Directors(excluding Independent Directors)
Independent Directors
Statutory Executive Officers(excluding those who are also
Directors)
1
2

January 13, 2017
1,904,500 units1
1,904,500 common shares (1 share per unit)
N/A
JPY 423 per share
January 14, 2020 – January 13, 2025
Number of stock options:
Number of shares:
Number of holders:Number of stock options:
Number of shares:
Number of holders:Number of stock options:
Number of shares:
Number of holders:

210,000 units
210,000 shares
2
75,000 units
75,000 shares
5
268,000 units
268,000 shares
10

Of the total stock options 553,000 units have been issued to Officers.
Exercise Conditions(i) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(ii) Pledges and other disposition of stock options are not permitted.
(iii) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (iv).
(iv) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.

43

16th Stock Option Plan

Holding Details

Date of resolution
Number of stock options
Type and number of shares
Issue price
Exercise price
Exercise period
Exercise conditions2
Directors(excluding Independent Directors)
Independent Directors
Statutory Executive Officers(excluding those who are also
Directors)
1
2

January 12, 2018
1,800,000 units1
1,800,000 common shares (1 share per unit)
N/A
JPY 519 per share
January 13, 2021 – January 12, 2026
Number of stock options:
Number of shares:
Number of holders:Number of stock options:
Number of shares:
Number of holders:Number of stock options:
Number of shares:
Number of holders:

173,700 units
173,700 shares2
81,000 units
81,000 shares
6
225,400 units
225,400 shares
8

Of the total stock options 480,100 units have been issued to Officers.
Exercise Conditions(i) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(ii) Pledges and other disposition of stock options are not permitted.
(iii) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (iv).
(iv) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.

44

2. Stock Options Issued for Compensation for Execution of Duties by
Officers and Employees during the Current Fiscal Year
16th Stock Option Plan

Holding Details

Date of resolution
Number of stock options
Type and number of shares
Issue price
Exercise price
Exercise period
Exercise conditions2

January 12, 2018
1,800,000 units1
1,800,000 common shares (1 share per unit)
N/A
JPY 519 per share
January 13, 2021 – January 12, 2026

Employees(excluding those who are Directors
and Statutory Executive Officers)

Number of stock options:
Number of shares:
Number of holders:

1,299,800 units
1,299,800 shares
187

Directors and Employees of
Subsidiaries

Number of stock options:
Number of shares:
Number of holders:

20,100 units
20,100 shares
3

1
2

Of the total stock options 1,319,900 units have been issued to employees.
Exercise Conditions(i) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(ii) Pledges and other disposition of stock options are not permitted.
(iii) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (iv).
(iv) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.

3. Other Material Matters regarding Stock Options
N/A45

C. Directors and Officers
1. Directors (as of February 28, 2018)
Position

Name

Scott
CallonDirector

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,
Chairman & Director, Ichigo ECO Energy Co., Ltd.
Executive Vice President & Statutory Executive Officer (Value-Add) &COO
Compliance Committee Member
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.
Chairman of Audit Committee, Nominating Committee Member,Compensation Committee Member, Compliance Committee Member
Advisor, Laureate International Universities Japan
Special Advisor to CEO, ReMark Group

Director

TakumaHasegawa

Director

MinoruIshihara

Independent
Director3

TetsuyaFujita1

Independent
Director3

NorikoKawate2

Independent
Director3

Yukio
SuzukiIndependent
Director3

Masatoshi
Matsuzaki

Independent
Director3

KosukeNishimoto

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

Independent
Director3

Nobuhide
Nakaido－1

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
Nominating Committee Member, Compensation Committee Member
Chairman of the Board of Directors, Konica Minolta Inc.
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

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 asinternal audit officer at a major life insurance company, and is certified as an internal
auditor. He thus has extensive knowledge of internal auditing.
46

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 andaccounting fields.
3
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 such condition is maintained, Ichigo does not appoint a full-time Audit
Committee member.

47

2. Statutory Executive Officers (as of February 28, 2018)
Position

Responsibility and Other Business
Affiliations

Name

Chairman & Representative
Statutory Executive Officer

Scott Callon

Overall Group Management
Chairman & Statutory Executive Officer(Overall Company Management), 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, 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

Executive Managing Director

Go Watanabe

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

Executive Managing Director

Takeyuki Yoshimatsu

Business Management

Statutory Executive Officer

Katsuhiko Hattori

Engineering

Statutory Executive Officer

Haruki Nakane

Compliance

Statutory Executive Officer

Hiroshi Shimazu

Audit

Statutory Executive Officer

Hisayoshi Towata

Statutory Executive Officer

Masaaki Yajima

Statutory Executive Officer

Akihiko Tsukasa

Finance
Office, Residential
Executive Managing Director, Ichigo
Marché Co., Ltd.
Osaka Branch

Statutory Executive Officer

Kenichi Tanaka

Business Development48

3. Directors and Statutory Executive Officers Who Stepped Down during the Current
Fiscal Year
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 1of the Company 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
that the liability is limited only when the Independent Directors have performed theirduties in good 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)

9(7)

JPY 232 million(JPY 60 million)

Statutory Executive Officers

11

JPY 149 million

Total(of whom are Independent Directors)

20(7)

JPY 381 million(JPY 60 million)(Note 1) As of the end of the term, there are nine Directors (including six Independent
Directors) and fourteen Statutory Executive Officers (three of whom are also
Directors), resulting in a total of twenty officers. Since those who are both a
Statutory Executive Officer and a Director do not receive Statutory Executive
Officer’s remuneration, the total amount and number of recipients are shown in
the row of Directors and not in the row of Statutory Executive Officers.
(Note 2) The figures above do not include the one Director that receives noremuneration from Ichigo.
(Note 3) The total of 21 directors and officers, which is the sum of the 20
aforementioned directors and officers plus the one non-remunerated director,
differs from the total of 20 directors and officers in the above table because one
officer stepped down during FY18/2.
(Note 4) The amount paid includes remuneration in the form of stock options of JPY 31
million for Directors (of which JPY 6 million is for Independent Directors) andstock options of JPY 30 million for Statutory Executive Officers.
(Note 5) In addition, Ichigo paid JPY 109 million as employee compensation to seven
Statutory Executive Officers who also serve as employees. This amountincludes remuneration in the form of stock options of JPY 8 million.
(Note 6) No remuneration has been paid by Ichigo subsidiaries to Ichigo’s Independent
Directors.

49

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 a performance-based bonus. The monthly base salary is a fixed amount basedon the role and responsibilities of each Statutory Executive Officer, whereas theperformance-based bonus is based on the performance of Ichigo, the performanceof the 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.
and a 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 an Advisor to Laureate International
Universities Japan and a Special Advisor to CEO at the ReMark Group. Ichigo
has no relationship with Laureate International Universities Japan or ReMark
Group.
– Independent Director Yukio Suzuki is an Independent Director of Systena
Corporation. Ichigo has no relationship with Systena Corporation.

50

– Independent Director Masatoshi Matsuzaki is the Chairman of the Board of
Directors of Konica Minolta Inc., Deputy Chairman of the Japan Association of
Corporate Directors, an Independent Director of Nomura Research Institute, 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 anyof these 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 orcloser who are Statutory Executive Officers of Ichigo or related entities.

51

d. Principal Director Activities in the Current Fiscal Year
Name

Independent
Director

Tetsuya Fujita

Independent
Director

Noriko Kawate

Independent
Director

Yukio Suzuki

Independent
Director

Takashi Kawamura

Independent
Director

Masatoshi Matsuzaki

Independent
Director

Kosuke Nishimoto

Independent
Director

Nobuhide Nakaido

Activities
Attended 9 out of 9 meetings (100%) of the Board of Directors.
Attended 17 out of 17 meetings (100%) of the Audit Committee
and attended 2 out of 2 meetings (100%) of the Compliance
Committee. Attended 5 out of 5 meetings (100%) of theNominating Committee and 7 out of 7 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 9 out of 9 meetings (100%) of the Board of Directors.
Attended 17 out of 17 meetings (100%) of the Audit Committee.
Attended 5 out of 5 meetings (100%) of the Nominating
Committee and 7 out of 7 meetings (100%) of the Compensation
Committee since becoming a member. Commented and advisedon resolutions and discussions from an objective standpoint
independent from the management team.
Attended 9 out of 9 meetings (100%) of the Board of Directors.
Attended 17 out of 17 meetings (100%) of the Audit Committee
and attended 2 out of 2 meetings (100%) of the Compliance
Committee. Commented and advised on resolutions anddiscussions from an objective standpoint independent from the
management team.
Attended 1 out of 1 meetings (100%) of the Board of Directors
during his term as a director. Commented and advised on
resolutions and discussions from an objective standpoint
independent from the management team.
Attended 9 out of 9 meetings (100%) of the Board of Directors.
Attended 5 out of 5 meetings (100%) of the Nominating
Committee. Attended 7 out of 7 meetings (100%) of theCompensation Committee. Commented and advised on
resolutions and discussions from an objective standpoint
independent from the management team.
Attended 9 out of 9 meetings (100%) of the Board of Directors.
Commented and advised on resolutions and discussions from an
objective standpoint independent from the management team.
Attended 8 out of 8 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.

52

D. Independent Auditor
1. Grant Thornton Taiyo LLC
2. Fees Paid to the Independent Auditor(i)Fees paid to the Independent Auditor during FY18/2
Fees for the services specified in Article 2, Paragraph 1 of theCertified Public Accountants Act (Act No. 103 of 1948)

JPY 74 million

Fees for the services other than those specified in Article 2,
Paragraph 1 of the Certified Public Accountants Act–
JPY 74 million(ii) Total monetary and other financial benefits payable by Ichigo andsubsidiaries to the Independent Auditor

JPY 91 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 andExchange Law, the audit agreement between Ichigo and the Independent
Auditor does not call for itemizing the audit fee breakdown, and, thus as apractical matter, Ichigo is not able to itemize the fees. Therefore, the fees paid
to the Independent Auditor show the total amount.

53

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-reappointmentof 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
the decision 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 theCompany Law or the Certified Public Accountants Law, or the breach of thecontract of engagement, the dismissal or the non-reappointment will bedeliberated 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 orif 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 upon consent of all Audit Committee members.

54

E. 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 madethis 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
of Incorporation (Article 416, Paragraph 1 of the Company Law, Article 112,
Paragraph 2, Item 4 of the Enforcement Regulation of the Company Law)
Overview(1) The Board complies with relevant laws and regulations, the Articles ofIncorporation, resolutions adopted at shareholders’ meetings, Ichigo’s mission,
Ichigo’s Code of Corporate Ethics, and Ichigo’s Code of Conduct in making its
decisions and delegating daily management to the Statutory Executive
Officers, that in turn supervise employees within their respective delegatedareas of management. The Board supervises the Statutory Executive Officers
by receiving periodic reports on the status of business execution. The Audit
Committee audits the performance of duties for both Statutory Executive
Officers and employees.
(2) The Board sets internal rules, establishes relevant divisions and appoints
Statutory Executive Officers, and engages external experts with respect toestablishing compliance, financial reporting controls, internal audit, preventionof dealings with anti-social forces, and prevention of insider trading.
Status(1) The Board is comprised of six independent and three internal directors, andhad a total of 9 meetings during FY18/2 with a 100% attendance rate. Statutory
Executive Officers make decisions and/or seek board approval through board
proposals, and report their activities to the Board at least quarterly. The Audit
Committee is comprised of three Independent Directors, and held a total of 17
meetings during FY18/2 with a 100% attendance rate.
(2) (a) Compliance – The Compliance Committee held two meetings to deliberatematerial compliance matters and conducted training sessions based on thecompany’s Code of Corporate Ethics and Code of Conduct. A whistle-blowing
system exists, including the ability to directly notify an external lawyer.
(b) Financial Reporting Controls – The President and Statutory Executive
Officers of each division and subsidiary work to ensure compliance withinternal controls and the evaluation thereof.
(c) Internal Audit Department – The objective of the Internal Audit Department
for FY18/2 was to contribute to management level decision-making through agroup-wide, risk-based approach focusing on recommendations to prevent
problems and improve operations. Specifically, the Internal Audit Department
examined the execution of management duties, IT system security, and thestatus of investment securities.
55

(d) Prevention of Dealings with Anti-Social Forces – Ichigo has written
manuals on how to handle Anti-Social Forces as well as rules that require AntiSocial Force clauses to be included in contracts. Furthermore, Ichigo works
with the Tokyo Metropolitan Police Department and other external experts in
conducting due diligence of business counterparties. (See “System Against
Anti-Social Forces.”)(e) Prevention of Insider Trading – Through its internal rules on the
management of insider information, Ichigo strictly manages all critical
corporate information and ensures proper disclosure thereof. Internal rules
require that all officers and employees must pre-clear any transaction indesignated securities with the Statutory Executive Officer of their respective
divisions.
2. Systems to Ensure Proper Storage and Management of Information Required for
Execution of Duty by Statutory Executive Officers (Article 112, Paragraph 2, Item
1 of the Enforcement Regulation of the Company Law)
Overview
Ichigo has internal rules with respect to the creation, management, and storage of
information and documents pertaining to the execution of duties by Statutory
Executive Officers. Ichigo remains fully compliant with all relevant laws andregulations.
StatusHandling of information is stipulated in the Information Management Policy andhandling of documents is stipulated in the Document Management Policy, and all
officers and employees conduct business in full compliance with both policies.
3. Risk Management Policies and Systems (Article 112, Paragraph 2, Item 2 of the
Enforcement Regulation of the Company Law)
Overview
Ichigo’s policy is that the Statutory Executive Officer of each division is responsible
for the compliance of respective business operations and for managing businessrisks. In addition, a Chief Risk Officer has been appointed and a Risk Management
Division established in order to ensure a proper risk management framework exists
across the entire group and to deal with any significant risks that arise. Ichigo's risk
management framework also prescribes how to respond to any loss of basic business
functions as a result of natural disasters or accidents.
StatusIchigo continually monitors business execution and the risk thereof, and the Chief
Risk Officer reports monitoring results to the Board. Ichigo has business
continuity plans that specify how to recover from natural disasters and accidents,
and all officers and employees are fully aware of these plans.

56

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)
Overview
Ichigo provides for efficient and agile execution of duties by establishing clarity
with respect to scope of responsibilities and associated authority. Ichigo setsbusiness plans and monitors progress based on the group’s management
philosophy and mission, annual group policies, and annual business targets.
Furthermore, Ichigo holds a regular Senior Management Meeting comprised of
the Chairmen, President, Executive Vice President, and representatives of eachsubsidiary to evaluate and make decisions on material business matters.
StatusStatutory Executive Officers execute their duties within their respective delegatedscopes of responsibilities without any undue overlap or negligence. For FY18/2
Statutory Executive Officers set their business policies and targets in accordancewith Ichigo’s Power Up 2019 mid-term business plan announced in FY17/2, andsuccessfully achieved these FY18/2 targets. The Head of Finance provides
analytic support to the Senior Management Meeting to support its effectiveness as
a forum for vigorous discussion and review of key business issues.
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)
Overview(1) Ichigo appoints directors and employees that assist the Audit Committee in theexecution of its duties. Such directors and employees are set to be independent
from the Board, Directors, and Statutory Executive Officers, with any change
in appointment requiring the authorization of the Audit Committee.
(2) Audit Committee Members attend important meetings, and can request
explanations from officers and employees as well as view all related materials.
(3) Officers and employees must report to the Audit Committee or Audit
Committee Members matters that have material impact on the business andfinancial situation of Ichigo. Any person making such report shall not receive
disadvantageous treatment for making such report.
(4) The Audit Committee maintains a close relationship with the Internal Audit
Department by discussing audit plans and receiving reports on audit results.
The Audit Committee also receives periodic reports from the Independent
Auditor as well as exchanges views on any material audit matters.
(5) The Audit Committee holds meetings with Audit Committee Members andauditors of subsidiaries, attends important meetings at subsidiaries, andreceives explanations and reports from subsidiaries in order to assess theappropriate execution of duties by directors and Statutory Executive Officersof subsidiaries.
(6) The Audit Committee, at its sole discretion, can appoint external specialists
necessary for the execution of audits and can request that Ichigo bearassociated costs.
57

Status(1) In accordance with internal rules pertaining to directors and employees
assisting in the duties of the Audit Committee, Ichigo has appointed one
Statutory Executive Officer and two employees, and has ensured their
independence. Furthermore, the prior consent from the Audit Committee has
been sought for any organizational or compensation matter with respect tothese appointed individuals.
(2) In accordance with Audit Committee Rules, the Audit Committee attended
important management meetings and received explanations as well as
reviewed any relevant materials. In addition, officers and employees havemade all required reporting to the Audit Committee, and no disadvantageous
treatment has resulted from such reporting.
(3) The Audit Committee approved internal audit plans and received reports on the
results of audits. Furthermore, the Audit Committee has received periodic
reports from the external auditor and has engaged in discussion of material
audit matters.
(4) The Audit Committee holds two liaison meetings a year with Audit Committee
Members and auditors of subsidiaries, and receives explanations and reports
from the officers and employees of subsidiaries.
(5) The Audit Committee has requested that Ichigo bear the costs associated withauditing of subsidiaries.
6. Systems to Ensure Fully Appropriate Business Activities by Ichigo and its
Subsidiaries (Article 112, Paragraph 2, Item 5 of the Enforcement Regulation of
the Company Law)
Overview(1) Ichigo and all subsidiaries share Ichigo’s Management Philosophy, Code ofCorporate Ethics, and Code of Conduct, and have executed a managementagreement requiring that they work collaboratively in dealing with corporate
governance, compliance, risk management, and prevention of dealings with
Anti-Social Forces.
(2) Ichigo has appointed a Statutory Executive Officer and established a Business
Management Division responsible for monitoring business activities ofsubsidiaries, and requires each subsidiary to provide business reports.
(3) With respect to any transaction with Ichigo Trust Pte. Ltd., the controllingshareholder of Ichigo, Ichigo takes special care to protect the interests ofminority shareholders by having the Board evaluate the purpose, process, andprice of any such transactions and ensure that they contribute to increasing
Ichigo’s corporate value and protect all Ichigo shareholders.
(4) Ichigo supports, advises, and manages its subsidiaries to ensure their businessactivities are fully compliant with the Company Law. Ichigo oversees
appropriate business conduct of subsidiaries by receiving periodic reports withrespect to their business operations as well as execution of duties by directors
and officers.

58(5) Through its internal rules on the management of insider information, Ichigo
strictly manages all critical corporate information and ensures proper
disclosure thereof. Internal rules require that all officers and employees must
pre-clear any transaction in designated securities with the Statutory Executive
Officer of their respective divisions.
Status(1) Structure to Ensure that Ichigo Subsidiaries Execute Their Duties inCompliance with Laws and Regulations and Ichigo’s Articles of Incorporation
The Boards of each subsidiary have approved a “Basic Policy for the
Establishment of Structure of Internal Controls,” pursuant to the one
established by Ichigo. Audit Committee Members and internal auditors ofrespective subsidiaries attend Board meetings as well as any other importantmanagement meetings and examine related materials to ensure directors andofficers are executing their duties in compliance with laws and regulations,and Ichigo's Articles of Incorporation.
(2) Structure for Ichigo Subsidiaries to Report to Ichigo on the Execution of Their
DutiesThe President receives a report every three months from the presidents of eachsubsidiary with respect to business operations and the execution of duties bydirectors and officers.
(3) Structure of Risk Management at Ichigo Subsidiaries
Each subsidiary monitors business risks pursuant to their respective risk
management policies, and reports results to Ichigo's Risk Management
Division. The Head of Ichigo’s Risk Management Division, in turn, reports
this information to Ichigo’s Board. The Chief Risk Officer provides the Board
with a comprehensive update on the status of group-wide risk management.
(4) Structure to Ensure Efficient Execution of Duties at Ichigo Subsidiaries
Each subsidiary has policies in place to ensure clarity of scope of
responsibilities, with management decisions being made in line with suchpolicies, therefore resulting in the efficient execution of duties.
Establishment and Status of Internal Structures to Prevent Dealings with AntiSocial Forces
As part of its internal control systems, Ichigo has established an internal structure
to prevent dealings with Anti-Social Forces:(1) Ichigo and its subsidiaries have clear policies on preventing dealings with
Anti-Social Forces stipulated within its Code of Corporate Ethics.
(2) Ichigo has appointed the Executive Vice President and the Business
Management Division as being responsible in handling requests from AntiSocial Forces, and also receives advice on this issue from external legal
counsel. Furthermore, Ichigo augments its efforts in this area by collaboratingwith external experts such as the Organized Crime Control Division of theTokyo Metropolitan Police Department, the Marunouchi Police Station, andthe National Center for Removal of Criminal Organizations.
(3) Ichigo’s Compliance Officer centrally manages group-wide information
pertaining to Anti-Social Forces.
59

(4) Under no circumstance will Ichigo heed to the request from an Anti-Social
Force, and working together with external experts Ichigo shall firmly reject
any request. All contracts with external parties will include language that aims
to prevent dealings with Anti-Social Forces. Ichigo will terminate business
relationships with any existing counterparty that is identified as being an AntiSocial Force.
(5) All officers and employees of Ichigo and subsidiaries receive compliancetraining, and are made fully aware of their obligation to prevent dealings with
Anti-Social Forces and escalate any concerns on this matter.
F. Policy on Corporate Control (Takeover Defenses)
Ichigo has not adopted any takeover defense, poison pill, or any other policy withrespect to entities or persons who would seek to control decisions with respect toIchigo’s financial and business policies.

60

Consolidated Balance Sheet(As of February 28, 2018)
Item
AssetsAmountCurrent Assets
Cash and cash equivalents
Trade notes and accounts receivable
Operational loan investments

231,681
45,5101,097
1,324Operational securities investments

2

Real estate for sale
Deferred tax assets
Other
Less: allowance for doubtful
accounts
Fixed Assets
Property, Plant, and Equipment
Buildings and structures
Depreciation
Building 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

180,789342
2,643

Securities investments-28

Amount16,316
1,042
112
4,449
3,921
1,609
494
34
4,652

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

187,470520
112,366
63,588
1,744
8,492
758

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

203,787

969
483
-359
124
1,968
1,600
135
233
4,303
2,184
10

Deferred tax assets

68

Total Assets

Other current liabilities

64,831
58,558
14,273-3,673
10,60020,895-1,122
19,773
26,99397

Long-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)

2,132
-91

Minority Interests
Total Net Assets
Total Liabilities and Net Assets

296,512

61

89,16526,723
11,11354,324-2,995
171
543
-372
666
2,722
92,725296,512

Consolidated Income Statement(March 1, 2017 – February 28, 2018)(JPY million)

Item
Revenue
Cost of Goods Sold
Gross Profit
SG&A
Operating Profit
Non-Operating Profit
Interest income
Dividend income
Other
Non-Operating Expenses
Interest expense
Mark-to-market loss on long-term interest rate
hedgesDebt financing-related fees
Other
Recurring Profit
Extraordinary Gains
Gain on sales of shares in affiliates
Other
Extraordinary Losses
Loss on disposal of fixed assets
Impairment loss
Pre-Tax Net Income
Income taxes – current
Income taxes – deferred
Pre-Minority Interest Net Income
Net Income Attributable to Minority Interests
Net Income

62

Amount57,84631,92025,925
5,067
20,858
3
57
100

161

1,266
244
159
165
1,221
41
11
327
5,665
258

1,835
19,185
1,263
339
20,1095,923
14,185167
14,018

Consolidated Statement of Changes in Shareholders’ Equity(March 1, 2017 – February 28, 2018)(JPY million)
Shareholders’ Equity
CapitalReserve

CapitalBalance as of March 1, 2017
Changes in the Current
Fiscal Year
Share Issuance
Dividend Payment
Net Income
Change in Consolidated
Subsidiaries
Share Buyback
Sale of Treasury Shares
Changes in Items other thanShareholders’ Equity
Total Changes
Balance as of February 28,
201842,840

Total
Shareholders’Equity-15
80,532-2,516
14,018145-2,516
14,018-17-17

Retained
Earnings

26,65011,056

72

72

Treasury
Shares-15-2,99919-2,9994

72

57

11,483-2,9808,633

26,723

11,11354,324-2,99589,165

Other Comprehensive Income
Deferred Gain
(Loss) on
Valuation Gain
(Loss) on Other Long-Term
Interest Rate
Securities
HedgesBalance as of March 1, 2017
Changes in the Current
Fiscal Year
Share Issuance
Dividend Payment
Net Income
Change in Consolidated
Subsidiaries
Share Buyback
Sale of Treasury Shares
Changes in Items other thanShareholders’ Equity
Total Changes
Balance as of February 28,
2018

117

-365

Foreign
Currency
Translation
Adjustment

Total Other
Comprehensive
Income55-192

Stock Minority Total Net
Options Interests Assets
491

2,612

83,443145-2,516
14,018-17-2,999
4

426

-7

-55

363

175

110

649

426

-7

-55

363

175

110

9,282

543

-372

－

171

666

2,722

92,72563

Parent Balance Sheet(As of February 28, 2018)
Item
AssetsAmountCurrent Assets
Cash and cash equivalents
Accounts receivables
Real estate for sale
Operational securities investments
Short-term loans to affiliates
Advance payments
Accounts receivables - other
Consolidated tax receivables
Deferred tax assets
Other
Less: allowance for doubtful
accounts
Fixed Assets
Property, Plant, and Equipment
Buildings and structures
Depreciation
Building and structures (net)
Land
Other
Depreciation
Other (net)
Intangible Assets
SoftwareInvestments and Other Assets
Securities investments
Securities investments in
subsidiaries and affiliates
Securities investments of otheraffiliates
Long-term loans receivable
Long-term loans to affiliates
Deferred tax assets
Other
Less: allowance for doubtful
accounts

39,98523,179485
651
2
14,195
65
539
549
177
163

Total Assets

-25

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
Deposits received
Other
Long-Term Liabilities
Bonds
Long-term loans
Long-term security deposits received
Other long-term liabilities

74,411
3,030
700
-272
428
2,583
63
-44
19
14
14
71,3652,060(JPY million)

Total Liabilities
Net Assets
Shareholders’ Equity
CapitalAdditional paid-in capital
Capital reserve
Other additional paid-in capital

Amount
4,642
422
112
1,411
1,050
38
1,426
72
20
88
28,996520
28,235128
113

33,63979,953
26,723
11,113
11,03974

4,340

Retained earnings

45,11252,096

Earnings reserve44

10
12,464
108
371

Other retained earnings
Retained earnings carried forward
Treasury 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-85

114,39664

45,06745,067-2,995
136
489
-353
666
80,757
114,396

Parent Income Statement(March 1, 2017 – February 28, 2018)(JPY million)

Item

AmountRevenue
Cost of Goods Sold
Gross Profit
SG&A
Operating Profit
Non-Operating Profit
Interest income
Dividend income
Income from provision of credit guarantees
Other
Non-Operating Expenses
Interest expense
Debt financing-related fees
OthersRecurring Profit
Extraordinary Gains
Gain on sales of shares in affiliates
Extraordinary Losses
Loss on doubtful accounts
Office move expenses
Pre-Tax Net Income
Income taxes – current
Income taxes – deferred
Net Income

65

20,609977
19,631
2,852
16,779
432
93
7
36
354
157
346
1,205
327
5
4,410
-63

570

858
16,492
1,205
333
17,364
4,346
13,017

Parent Statement of Changes in Shareholders’ Equity(March 1, 2017 – February 28, 2018)(JPY million)
Shareholders’ Equity
Capital surplus

CapitalRetained earnings

Total
Treasury Shareholder
SharesEquityOther
Retained
Earnings

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

Balance as of March 1, 26,650 10,966
2017
Changes in the Current
Fiscal Year
Share Issuance72
72
Dividend Payments
Share Buyback
Sale of Treasury
SharesDecrease due toCorporate Divestiture
Net Income
Changes in Items otherthan Shareholders’Equity72
72
Total Changes
Balance as of February 26,723 11,039
28, 2018

Balance as of March 1, 2017
Changes in the Current Fiscal Year
Share Issuance
Dividend Payments
Share Buyback
Sale of Treasury Shares
Decrease due to Corporate
Divestiture
Net Income
Changes in Items other thanShareholders’ Equity
Total Changes
Balance as of February 28, 201889 11,056

44

72

-15

36,187-2,51636,232-2,516

-15

-15

-15

73,924-2,999145-2,516-2,99919

4-1,620-1,620-1,62013,01713,01713,017

57

－

8,879

8,879

-2,9806,029

74 11,113

44

45,067

45,112-2,99579,953

Valuation Adjustment
Gain
Valuation Deferred(Loss)
on
Total
Stock Options
Gain (Loss) on Long-Term
Valuation
Other
Interest Rate Adjustment
Securities
Hedges
66
-341
-275
491

Total Net
Assets74,140145-2,516-2,9994-1,62013,017

423

-11

411

175

587

423
489

-11
-353

411
136

175
666

6,617
80,75766

Auditor’s Report on the Consolidated Financial Statements
Report of Independent Auditor
April 12, 2018
To the Board of Directors of Ichigo Inc.
Grant Thornton Taiyo LLC
Satoshi Kirikawa, 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, 2017 to February 28, 2018 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.

67

Auditor’s Report on the Parent Financial Statements
Report of Independent Auditor
April 12, 2018
To the Board of Directors of Ichigo Inc.
Grant Thornton Taiyo LLC
Satoshi Kirikawa, CPA, Designated and Engagement Partner (seal)
Kenta Nishimura, CPA, Designated and Engagement Partner (seal)
We have audited the eighteenth 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, 2017 to February 28, 2018 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.

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Audit Committee Report

April 18, 2018
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 eighteenth fiscal year from March 1, 2017 to February 28, 2018. 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.

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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.

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