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

Ichigo(2337)
Additional Accounting Notes
for the Twenty-Second Annual Shareholder Meeting Business Report– Employee Stock Options– Controls to Ensure Appropriate Business Conduct
 Notes to the Consolidated Financial Statements
 Notes to the Parent Financial Statements

Pursuant to Japanese law and Article 14 of Ichigo’s Articles of Incorporation, these Notes are posted
on Ichigo’s website at www.ichigo.gr.jp/en1

Employee Stock Options

1. Stock Options Issued as Compensation for Execution of Duties by Officers
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)

January 13, 2016
1,093,200 units1
1,093,200 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:

1

215,000 units
215,000 shares
3
24,000 units
24,000 shares
3
192,100 units
192,100 shares
10

Of the total stock options 431,100 units have been issued to Officers. (No units havebeen exercised in the fiscal year ending February 2022.)
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.

2

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)

January 13, 2017
1,554,500 units1
1,554,500 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:

1

260,000 units
260,000 shares
3
60,000 units
60,000 shares
4
301,200 units
301,200 shares
10

Of the total stock options 621,200 units have been issued to Officers. (No units havebeen exercised in the fiscal year ending February 2022.)
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.

3

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)

January 12, 2018
1,507,700 units1
1,507,700 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:1

218,700 units
218,700 shares
3
67,500 units
67,500 shares
5
300,400 units
300,400 shares
10

Of the total stock options 586,600 units have been issued to Officers. (No units havebeen exercised in the fiscal year ending February 2022.)
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.

4

17th 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)

January 11, 2019
1,567,000 units1
1, 567,000 common shares (1 share per unit)
N/A
JPY 432 per share
January 12, 2022 – January 11, 2027
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:1

177,300 units
177,300 shares
3
67,500 units
67,500 shares
5
302,400 units
302,400 shares
10

Of the total stock options 547,200 units have been issued to Officers. (No units havebeen exercised in the fiscal year ending February 2022.)
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.

5

18th 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

October 14, 2020
1,897,900 units1
1,897,900 common shares (1 share per unit)
N/A
JPY 340 per share
October 15, 2023 – October 14, 2028
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:

240,000 units
240,000 shares
3
75,000 units
75,000 shares
5
278,000 units
278,000 shares
10

Of the total stock options 593,000 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.

6

19th 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

April 19, 2021
1,932,500 units1
1,932,500 common shares (1 share per unit)
N/A
JPY 388 per share
April 20, 2024 – April 19, 2029
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:

236,200 units
236,200 shares
3
75,000 units
75,000 shares
5283,000 units
283,000 shares
10

Of the total stock options 594,200 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.

7

2. Stock Options Issued for Compensation for Execution of Duties by Officers andEmployees during the Current Fiscal Year
19th 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

April 19, 2021
2,000,000 units1
2,000,000 common shares (1 share per unit)
N/A
JPY 388 per share
April 20, 2024 – April 19, 2029

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

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

1,384,800 units
1,384,800 shares
208

Directors and Employees of
Subsidiaries

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

21,000 units
21,000 shares
3

1
2

Of the total stock options 1,405,800 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/A

8

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 of Directors 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 hasmade this policy available on its corporate website:www.ichigo.gr.jp/en/ir/management_policies/internal_controls.html
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, Item 1 of the Company Law, Article
112, Paragraph 2, Item 4 of the Enforcement Regulation of the Company Law)
Overview(1) The Board of Directors complies with relevant laws and regulations, the Articles
of Incorporation, 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, thatin turn supervise employees within their respective delegated areas of management.
The Board of Directors 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 of Directors sets internal rules, establishes relevant divisions andappoints Statutory Executive Officers, and engages external experts with respect toestablishing compliance, financial reporting controls, internal audit, prevention of
dealings with anti-social forces, and prevention of insider trading.
Status(1) The Board of Directors is comprised of five independent and four internal
Directors, and had a total of 11 meetings during FY22/2 with a 100% attendance
rate. Statutory Executive Officers make decisions and/or seek board approvalthrough board proposals, and report their activities to the Board of Directors at least
quarterly. The Audit Committee is comprised of three Independent Directors, andheld a total of 20 meetings during FY22/2 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 Officersof each division and subsidiary work to ensure compliance with internal controls
and the evaluation thereof.
(c) Internal Audit Department – The objective of the Internal Audit Department for
FY22/2 was to contribute to management level decision-making through a groupwide, risk-based approach along with the Audit Committee and auditors ofsubsidiaries. Specifically, the Internal Audit Department examined the execution ofmanagement duties, the status of investment securities, and the status of
information management.

9(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 Anti-Social Forceclauses 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 andensures proper disclosure thereof. Internal rules require that all officers andemployees must pre-clear any transaction in designated 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 business risks.
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.

10

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 Chairman,
President, Executive Vice President, and representatives of each subsidiary toevaluate 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 FY22/2,
Statutory Executive Officers set their business policies and targets in accordancewith the Ichigo 2030 long-term vision announced in April 2019 and successfully
achieved these 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 Regulationof the Company Law)
Overview(1) Ichigo appoints Directors and employees that assist the Audit Committee in theexecution of its duties. Such Directors and employees carry out their duties
independent from the Board of Directors, other Directors, and Statutory
Executive Officers, with any change in appointment requiring the authorizationof 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 bear associatedcosts.

11

Status(1) In accordance with internal rules pertaining to Directors and employees
assisting in the duties of the Audit Committee, Ichigo has appointed several
employees to assist the Audit Committee and has ensured their independence.
Furthermore, the prior consent from the Audit Committee has been sought for
any organizational or compensation matter with respect to these 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 have made 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 theCompany 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 Corporate
Operations 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 major
shareholder of Ichigo, Ichigo takes special care to protect the interests ofminority shareholders by having the Board of Directors evaluate the purpose,process, and price of any such transactions and ensure that they contribute toincreasing 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.

12(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 theirrespective 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 establishedby Ichigo. Audit Committee Members and internal auditors of respective
subsidiaries attend Board of Directors 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, andIchigo’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 thisinformation to Ichigo’s Board. The Chief Risk Officer provides the Board of
Directors 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.
Reference: Establishment and Status of Internal Structures to Prevent Dealings
with Anti-Social 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 AntiSocial Forces stipulated within its Code of Corporate Ethics.
(2) Ichigo has appointed the Executive Vice President and the Corporate
Operations Division as being responsible in handling requests from Anti-Social
Forces, and also receives advice on this issue from external legal counsel.
Furthermore, Ichigo augments its efforts in this area by collaborating withexternal experts such as the Organized Crime Control Division of the Tokyo
Metropolitan Police Department, the Marunouchi Police Station, and the
National Center for Removal of Criminal Organizations.
(3) Ichigo’s Statutory Executive Officer (Corporate Operations) centrally manages
group-wide information pertaining to Anti-Social Forces.

13

(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 toprevent 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.

14

Notes to the Consolidated Financial Statements
I. Material Matters for Preparation of the Consolidated Financial Statements
A. Scope of Consolidation
1. Consolidated Subsidiaries
Number of consolidated subsidiaries: 52
Major Consolidated Subsidiaries
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.
Ichigo Marché Co., Ltd.
Miyako City Co., Ltd.
Centro Co., Ltd.
Storage Plus Corporation
Ichigo Animation Co., Ltd.
Hakata Hotels Inc.
Ichigo Si Co., Ltd.
Ichigo Si Co., Ltd. and one investment partnership have been added to the scopeof consolidation, because they were established during FY22/2.
Four investment partnerships have been excluded from the scope of consolidation,
because its materiality decreased during FY22/2.
2. Major Non-Consolidated Subsidiaries
N/A
3. Reason Why Some Companies Were Not Classified as Subsidiaries Despite
the Possession of a Majority of their Voting Rights
N/A
4. Disclosure of Special Purpose Companies (SPC)
An overview of SPC, SPC transactions, and SPC transaction amounts are noted in
X. Notes on Special Purpose Companies (SPC).
B. Equity-Method Accounting
1. Equity-Method Affiliates
N/A
2. Non-Consolidated Subsidiaries Accounted for Under the Equity-Method
N/A15

3. Material Non-Consolidated Subsidiaries Not Accounted for Under the EquityMethod
N/A
4. Non-Equity-Method Affiliates
N/A
5. Reason Why Some Companies Were Not Classified as Affiliates despite Ichigo
Possessing between 20% and 50% of Their Voting Rights
N/A
C. Fiscal Year of Consolidated Subsidiaries
The fiscal year-ends of consolidated subsidiaries are as follows:
January-end
February-end
March-end
November-end
December-end

25 companies
10 companies
2 companies
1 company
14 companies

For subsidiaries whose fiscal year-ends are in December or January, financial data asof that date have been used. For subsidiaries whose fiscal year-ends are in Marchand November, provisional financial data (created at a point in time within threemonths from March-end) have been used. All necessary adjustments forconsolidation have been made with respect to significant transactions which
occurred in FY22/2.
D. Accounting Standards
1. Valuation of Material Assets
a. Other Securities
Securities with market prices

Mark-to-market on the last day of the fiscal
year (Valuation difference is reported as acomponent of shareholders’ equity; the costis calculated using the moving average cost
method.)Securities without market prices

Moving average cost method (Thevaluation method for investment
partnerships is noted in 6. (c) Investment
Partnerships.)

b. Derivatives

Mark-to-market

c. Real Estate for Sale

Cost (however, impair assets whose
profitability declines)16

2. Depreciation Methods for Material Depreciable Assets
Property, Plant, and Equipment

Primarily straight-line method

Useful life

Buildings and structures: 7~39 years
Solar power plant equipment: 20 years

3. Accounting Standards for Material Allowancesa. Allowance for Doubtful Accounts
Reserved based on the record of bad debts with respect to ordinary receivables andloans, plus an estimate of uncollectible amounts determined with reference tospecific doubtful receivables from customers experiencing financial difficulties.
b. Allowance for Employee Bonuses
Reserved based on an estimated amount for the current fiscal year.
4. Material Hedge Accounting Method
a. Hedge Accounting Method
In general, Ichigo adopts the deferral hedge accounting method. However, interest
rate swaps and interest rate caps that meet the criteria for special treatment are
accounted for under the special treatment method.
b. Hedging Instruments and Hedging Targets
Hedging instruments

Interest rate swaps and interest rate caps

Hedging targets

Loans

c. Hedging Policy
Pursuant to its internal rules, Ichigo hedges against interest rate risks that arise
from its business activities.
d. Evaluation Method of the Effectiveness of Hedges
Ichigo evaluates the effectiveness of hedging activities with reference to theaccumulated gain or loss on the hedging instruments and related hedging targets
for a period from the commencement of the hedges to the time of evaluation.
Interest-rate swaps and interest rate caps accounted for under the special treatment
method are omitted from this evaluation.
Ichigo has adopted the special treatment, pursuant to Practical Solution on theTreatment of Hedge Accounting for Financial Instruments that Reference LIBOR(ASBJ PITF No. 40, September 29, 2020), for all in-scope hedge transactions.
Details of in-scope hedge transactions are shown below:
Hedge Accounting Method

Deferral hedge accounting method

Hedging Instruments

Interest rate swaps

Hedging Targets

Loans

Hedge Transaction TypeCash-flow hedge

17

5. Goodwill Amortization Period and Method
Goodwill is amortized on a straight-line basis for a period of 10 to 20 years
depending on the specific characteristics of each subsidiary.
6. Other Material Matters Related to the Preparation of the Financial Statementsa. Consumption Tax
For most items, consumption taxes are excluded from the relevant revenue, costs,
or expenses.
Non-deductible consumption taxes are generally accounted for as costs in thecurrent fiscal year; however, certain items paid in connection with the acquisitionof assets are amortized over 5 years using the straight-line method or are includedin acquisition costs.
b. Operational Investments
Operational investments are separated from non-operational investments and areaccounted for under Operational Securities Investments and Operational Loan
Investments within Current Assets. Profits and losses arising from operational
investments are accounted for under Operating Profits and Losses.
Although Ichigo may control the decision-making body of investment vehicles orhold significant influence over them by holding shares, shares are held solely for
operational investment purposes and Ichigo has no intention of holding them assubsidiaries or affiliates. Therefore, such investment vehicles are excluded fromsubsidiaries or affiliates.
c. Investment Partnerships
Ichigo accounts for investments in investment partnerships as Operational
Securities Investments. Such investments are recorded at the time the investments
are made. Gains and losses distributed from the investment partnerships arerecorded as Revenue, and Operational Securities Investments increases ordecreases by the same amount. Refunds received from the investment partnerships
are credited to Operational Securities Investments.
d. Consolidated Tax Treatment
Ichigo qualifies for consolidated tax treatment.
e. Tax Effect Reflecting Transition to Group Aggregate Tax Treatment from
Consolidated Tax Treatment
With respect to reporting deferred tax assets and liabilities, accounting items thatwere subject to change as part of the shift to a group aggregation system andchanges in standalone tax rules under the 2020 Tax Reform, Ichigo and certain
domestic subsidiaries apply pre-revision tax rules pursuant to the ASBJ Guidance
39, “Tax Accounting With Respect to the Shift from the Tax Consolidation System
to Group Aggregation System” (issued on March 31, 2020), and do not apply therules prescribed under Clause 44 of the Implementation Guidance 28,“Accounting Standards Implementation Guidance for Tax Accounting” (issued on
February 16, 2018).

18

II. Notes on Restatement
Accounting Standard for Disclosure of Accounting Estimates
Ichigo is applying the Accounting Standard for Disclosure of Accounting Estimates(ASBJ Statement No. 31, March 31, 2020) starting from FY22/2, as described inIII. Notes on Accounting Estimates.
Restatement of Consolidated Balance Sheet Items
Starting from FY22/2, items previously stated as “Solar power plants” and “Solar
power plants under construction” under Fixed Assets are restated as “Solar andwind power plants” and “Solar and wind power plants under construction” to reflect
the start of operations of Ichigo’s first wind power plant, the Ichigo Yonezawa Itaya
ECO Power Plant.
In the FY22/2 balance sheet, “Buildings and structures under Construction” and“Solar and wind power plants under construction” under Fixed Assets are JPY 435
million and JPY 2,095 million, respectively.
III. Notes on Accounting Estimates
Valuation of Real Estate
A. Amount Recorded in FY22/2 Financial Statements
Real Estate for Sale
Fixed Assets

JPY 68,666 million
JPY 173,165 million

B. Information on Material Accounting Estimates for Specific Line Items
Ichigo and its subsidiaries invest in real estate including offices, hotels, residential
assets, and retail assets, and record real estate expected to be sold as Real Estate forSale as of FY22/2-end. Real estate expected to be held over the longer term isrecorded as Fixed Assets.
If the net sale value of Real Estate for Sale is less than the book value, the net salevalue is recorded on the balance sheet, and the difference is recorded as Valuation
Loss on Real Estate for Sale under Cost of Goods Sold. With respect to Fixed
Assets, for assets and asset groups that show indications of impairment, if the total
undiscounted future cash flow is less than the book value, Ichigo impairs the bookvalue to the asset’s recoverable amount and an equivalent impairment loss isrecorded. When recording the impairment loss, the net sale value is recorded as therecoverable amount.
Ichigo uses the lower of the internally-calculated valuation amount based on the
direct capitalization method (income approach) and the third-party real estateappraisal value as the net sale value.
Both the internal valuation amount and third-party real estate appraisal value arecalculated using the income approach based on the net income or the future cash
flows expected to be generated by the real estate assets and the cap rate.
Net income and future cash flow forecasts are impacted by rent levels in the area
where the asset is located and by the asset’s occupancy. The cap rate is impacted byinterest rate fluctuations, land prices per region and asset type, real estate market
conditions, and the age, grade, rights, and regulatory compliance of the asset.
Despite prolonged Covid impact during FY22/2, cap rates are trending downward

19

due to sustained high real estate transaction prices. As a result, the impact on thevaluation of real estate is limited with the exception of certain asset types, and theimpact has been reflected in the forecasts of cap rates, net income, and future cash
flows of hotel assets.
Ichigo makes efforts to reduce the uncertainty of its internally-calculated valuations
that are based on publicly available data via means such as obtaining third-party
verifications of the cap rates per region and asset type. However, because there
exists a large number of factors that impact the estimate of net sale value, anychange in the preconditions and assumptions of the valuation caused by a change inbusiness environment may result in the recording of a Valuation Loss on Real
Estate for Sale or an Impairment Loss.

IV. Additional Information
Reclassification of Fixed Assets to Real Estate for Sale Assets
In FY22/2 Ichigo reclassified Fixed Assets expected to be sold in the short-term to
Real Estate for Sale.
(JPY million)
FY22/2(Feb 28, 2022)
56

Buildings and structures
Depreciation-15

Buildings and structures (net)

40

Land

641

Total

681

20

V. Notes to the Consolidated Balance Sheet
A. Assets Provided as Collateral and Secured Obligations
Assets Provided as Collateral
Cash and deposits
Trade notes and accounts receivable
Operational loan investments
Real estate for sale
Current assets – other
Buildings and structures
Solar and wind power plants
Land
Buildings and structures under construction
Property, plant, and equipment – other
Leasehold rights
Total

JPY 2,099 million
JPY 137 million
JPY 1,324 million
JPY 40,633 million
JPY 3 million
JPY 37,713 million
JPY 9,901 million
JPY 73,341 million
JPY 33 million
JPY 996 million
JPY 1,167 million
JPY 167,353 million

Figures shown in Buildings and structures, Solar and wind power plants, andProperty, plant, and equipment – other are net amounts.
Secured Obligations
Long-term loans (due within one year)
Long-term loans
Total

JPY 8,038 million
JPY 119,695 million
JPY 127,734 million

B. Non-Recourse Loans
Non-recourse loans are borrowings where funds for repayment are limited only tothe value of the underlying real estate and profits from such real estate. The lenderhas no recourse to Ichigo in the event of a failure of payment.
Assets provided as collateral and the related non-recourse loans are as follows:
Assets Provided as Collateral
Cash and deposits
Trade notes and accounts receivable
Current assets – other
Buildings and structures
Solar and wind power plants
Land
Fixed Assets – other
Investment and other assets – other
Total

JPY 4,777 million
JPY 141 million
JPY 6 million
JPY 12,324 million
JPY 11,745 million
JPY 29,582 million
JPY 32 million
JPY 349 million
JPY 58,961 million

Figures shown in Buildings and structures, Solar and wind power plants, andProperty, plant, and equipment – other are net amounts.
Non-Recourse Loans
Long-term non-recourse loans (due within one year)
Long-term non-recourse loans
Total

21

JPY 1,375 million
JPY 39,489 million
JPY 40,865 million

C. Deferred Gains (Losses) on Long-Term Interest Rate Hedges
Using interest rate swaps and interest rate caps, Ichigo has significantly reduced its
interest rate risk should Japanese interest rates rise. Unrealized gains or losses onthese hedges are recorded as a deferred gains (losses) on long-term interest rate
hedges.
D. Overdraft, Loan Commitment, and Term Loan Agreements
To secure funding flexibility and stability, Ichigo has overdraft, loan commitment,
and term loan agreements with financial institutions.
Unused balance of the above agreements (as of the end of FY22/2)
Total amount of overdraft, loan commitment, andterm loan agreements
Draw-down amount
Unused balance

JPY 36,301 million
JPY 16,096 million
JPY 20,204 million

VI. Notes to the Consolidated Income Statement
Valuation Gains (Losses) on Derivatives
Using interest rate swaps and interest rate caps, Ichigo has significantly reduced its
interest rate risk should Japanese interest rates rise. Any increase (decrease) in themarket value of these instruments is recorded as valuation gains (losses) on
derivatives.
VII. Notes to the Consolidated Statement of Changes in Shareholders’ Equity
A. Type and Number of Shares Issued and Type and Number of Treasury Shares

Shares issued
Common shares
Total
Treasury shares
Common shares
Total
1
2

Number ofshares at the
beginning of
FY22/2

Increase inshares during
FY22/21

Decrease inshares during
FY22/22

Number ofshares at theend of FY22/2

505,381,018
505,381,018

–
–

–
–

505,381,018
505,381,018

33,283,200
33,283,200

4,363,500
4,363,500

180,200
180,200

37,466,500
37,466,500

Increase in treasury shares due to share buyback: 4,363,500 shares
Decrease in treasury shares due to sale of treasury shares: 180,200 shares

22

B. Employee Stock Options
Underlying Number of Shares
Stock Options
13thstock option
issuance
14th
stock option
issuance
15th
stock option
issuance
16th
stock option
issuance
17th
stock option
issuance1
18th
stock option
issuance1
19th
stock option
issuance1
Total
1

Share
Type

Value
(as of February
28, 2022)

March 1,
2021

Increase in
FY22/2

Decreasein FY22/2

February28, 2022

Commonshares1,180,700–

1,180,700––

Commonshares1,133,700–

40,5001,093,200

JPY 206 million

Commonshares1,612,600–

58,1001,554,500

JPY 252 million

Commonshares1,563,800–

56,1001,507,700

JPY 307 million

Commonshares1,644,500–

77,5001,567,000

JPY 116 million

Commonshares1,988,000–

90,1001,897,900

JPY 47 million

Commonshares–2,000,000

67,5001,932,500

JPY 31 million

9,123,300

2,000,000

1,570,500

9552,800

JPY 961 million–

The 18h and 19th stock option issuances are currently not exercisable, because their exercise dates
are in the future.

23

C. Dividends
1. Dividends Paid
Ichigo’s Board of Directors approved the following dividend on April 19, 2021:(a) Total Dividend(b) Source(c) Dividend per Share(d) Record Date(e) Payment Date

JPY 3,304 million
Retained earnings
JPY 7
February 28, 2021
May 24, 2021

2. Dividends where the Record Date is in FY22/2, but the Payment Date is in FY23/2
Ichigo’s Board of Directors approved the following dividend on April 19, 2022:
(a)
(b)
(c)
(d)
(e)

Total Dividend
SourceDividend per Share
Record Date
Payment Date

JPY 3,275 million
Retained earnings
JPY 7
February 28, 2022
May 30, 2022

24

VIII. Notes on Financial Instruments
A. Matters Concerning Status of Financial Instruments
1. Policies on Financial Instruments
Ichigo funds itself primarily via bank loans and bonds, taking into account Ichigo’s
asset acquisition and disposition activity. Short-term excess funds are managed inliquid financial instruments such as bank deposits, and short-term working capital isfinanced via bank loans. Ichigo’s policy is to use derivatives only for hedging
purposes and not for speculative transactions.
2. Details and Risks of Financial Instruments
Trade notes, accounts receivable, and operational loan investments are operatingreceivables that are exposed to customer credit risks. Foreign currency-denominatedfinancial instruments in overseas business operations are exposed to currency risks.
Operational securities investments are primarily investments in Japanese and foreign
equities, and securities investments primarily take the form of equity and are
typically investments in companies with which Ichigo has a business relationship.
All of these investments are exposed to issuer credit risk, interest rate risk, andmarket price fluctuation risk.
Bank loans, bonds, and non-recourse loans are for the purpose of financing
investments and capital expenditures, and are expected to be redeemed or repaid
within approximately thirty years after the fiscal year-end. Floating-rate loans are
exposed to interest rate risk, a part of which is hedged using derivative transactions(e.g. interest rate swaps and interest rate caps). Please refer to (I) Material Mattersfor Preparation of the Consolidated Financial Statements (D) Accounting Standards,(4) Material Hedge Accounting Method.
3. Risk Management of Financial Instruments(a) Management of Credit Risk
Operating receivables exist primarily at subsidiaries. Responsible departments
monitor the collection status pursuant to the designated procedure for mitigationof collection risk. Other operating receivables arise irregularly, e.g. at the time ofinvestment monetization, and the responsible department determines theexecution of the transaction based on the time needed for collection and the credit
worthiness of the counterparty and monitors the receivable until it is collected inaccordance with the agreement. Ichigo monitors operational securities
investments and securities investments with respect to the financial status of theissuers and reviews holding policies, as necessary and appropriate.
(b) Management of Market Risk
Ichigo uses interest rate swaps and interest rate caps for the purpose of reducing
interest rate risk on corporate and non-recourse loans. Ichigo monitors
operational securities investments and securities investments which have market
risks (e.g. real estate funds) or are denominated in foreign currencies regularly forthe impact from changes in market value and currency rates and reviews theholding policies as necessary. Derivative transactions are executed and controlled
in the Finance Department in accordance with the designated procedure.

25

(c) Management of Liquidity Risk
Ichigo establishes and updates its funding plan as necessary based on newinvestment and disposition plans set by the responsible departments, and manages
liquidity risk by maintaining short-term liquidity.
4. Supplement to Matters Concerning Market Values of Financial Instruments
Market values of financial instruments include prices based on market prices as wellas prices calculated based on rational assumptions where market prices are notavailable. Such prices may fluctuate, since their calculations include variables thatcan vary based on assumptions.

26

B. Adjustments to Market Values of Financial Instruments
Amounts recorded on the consolidated balance sheet, corresponding market values,
and their differences as of February 28, 2022 are shown below. Items for which it isdeemed highly difficult to obtain market values are not included. (See Note 2 on
page 29).
(JPY million)
Amount Recordedon Consolidated
Balance Sheet

Market Value

Difference

Assets(1) Cash and deposits

46,45846,458–(2) Trade notes and accounts receivable

1,819

1,819

–

(3) Operational loan investments

1,324

1,324

–

(4) Securities investments

1,112

1,112

–

Total Assets

50,71550,715–

Liabilities(1) Short-term loans(2) Bonds (due within one year)

2,382
274

2,382
274

–
–

(3) Long-term loans (due within one year)

9,888

9,888

–

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

1,375

1,375

–

(5) Income taxes payable

1,888

1,888

–

(6) Bonds

5,603

5,675

71

(7) Long-term loans

150,389

150,46070(8) Long-term non-recourse loans

39,48939,997507

Total Liabilities

211,293

211,942

649

-378

-378

–

1

Derivative Transactions
1

The receivables and payables related to derivative transactions are shown as a net amount.

27

(Note 1) Calculation Method of Market Value of Financial Instruments and Matters
Concerning Securities and Derivatives Transactions
Assets(1) Cash and Deposits
Carried at book value due to short settlement period.
(2) Trade Notes and Accounts Receivable
Carried at book value less allowance for doubtful accounts due to shortsettlement period and because allowance for doubtful accounts appropriately
takes into consideration credit risks.
(3) Operational Loan Investments
Carried at book value less allowance for doubtful accounts due to shortsettlement period and because allowance for doubtful accounts appropriately
takes into consideration credit risks.
(4) Securities Investments
The market values of equities are the last traded exchange price, and bonds are
the last-traded exchange price or dealer-indicated price.
Liabilities(1) Short-Term Loans, (2) Bonds due within One Year, (3) Long-Term Loans due
within One Year, (4) Long-Term Non-Recourse Loans due within One Year, and(5) Income Tax Payable
Carried at book value due to short settlement period.
(6) Bonds
The fair value of bonds issued by Ichigo is calculated based on the current value
by applying a discount rate to the total of principal and interest.
Notwithstanding the above, floating rate bonds are carried at book value because
their book values are similar to their market values.
(7) Long-Term Loans, and (8) Long-Term Non-Recourse Loans
Floating-rate borrowings for long-term loans, and long-term non-recourse loans
are carried at book value because their book values closely track their market
values. Partial floating-rate long-term loans and long-term non-recourse loans are
subject to the special accounting treatment of interest rate swaps and interest ratecaps, and their market values are calculated by taking the present value of theirprincipal and interest along with the corresponding interest rate swap, using a
discount rate for similar new loans.
The market values of fixed-rate loans are calculated based on the present value ofthe total amount of principal and interest using a discount rate for similar newloans.
Derivative Transactions
The market values of derivative transactions are the prices presented by financial
institutions. The market value of interest rate swaps and interest rate caps under
special treatment is included in long-term loans and long-term non-recourse loans
since it is accounted for with the instrument it hedges.

28

(Note 2) Financial Instruments for which it is Difficult to Obtain Market Values
Classification(1) Operational Securities Investments1(2) Securities Investments1(3) Long-term Security Deposits Received
1(JPY million)
Amount Recorded in
Consolidated Balance Sheet
1,963
2,236
6,749

Excluding allowance for doubtful accounts which are recorded separately(1) Operational Securities Investments are foreign non-listed bonds andJapanese real estate funds that don’t have market prices, and are not subject
to market value disclosures.
(2) Securities Investments are investment in Japanese non-listed bonds andequities that don’t have market prices and whose future cash flow cannot
be easily estimated, and are not subject to market value disclosures.
(3) Long-term Security Deposits Received which are security deposits
received from tenants of rental properties are not subject to market value
disclosures because they are not priced in the market and it is difficult toestimate future cash flow because the actual period of deposit is notknown.
IX. Notes on Leased Real Estate Not Currently Held for Sale
A. Income from Leased Real Estate Not Currently Held for Sale
Ichigo and some of its consolidated subsidiaries own leased real estate mainly in
the Tokyo Metropolitan area that are not currently held for sale. Income on thisleased real estate in FY22/2 was JPY 3,601 million (rental revenue is recorded in
Revenue and the cost of lease is recorded in Costs of Goods Sold). Gains on salesof real estate were JPY 3,248 million (recorded as extraordinary gains).
B. Market Value of Leased Real Estate Not Currently Held for Sale
(JPY million)
Market ValueBook Value on Consolidated Balance Sheet1
as of Feb 28,
Mar 1, 2021
Increase/Decrease2
Feb 28, 2022
20223
184,729-11,563
173,165
224,948
1

Book Value on Consolidated Balance Sheet = Acquisition Cost – (Cumulative
Depreciation + Cumulative Impairment Loss)
2
The main components of the increase for the fiscal year are JPY 1,134 million due
to the acquisition of real estate and JPY 1,108 million from Capital Expenditures.
The main components of the decrease for the fiscal year are JPY 9,421 million
resulting from asset sales, JPY 3,379 million of Depreciation, and JPY 681 million
transferred to Real Estate for Sale due to a change in the purpose of ownership.
3
Market value as of February 28, 2022 is based upon third-party real estate appraisals andcalculated by Ichigo using reasonable indices reflecting market prices.

29

X. Notes on Special Purpose Companies (SPC)
A. Overview of SPC and SPC Transactions
Ichigo Owners, an Ichigo consolidated subsidiary providing real estate investment
services to individual investors, launched a business that allows investors to makediversified, small-scale investments in a broad array of real estate assets pursuant
to the Act on Specified Joint Real Estate Ventures. This new business employs
voluntary partnerships as part of its structure.
Under this business, investors invest in a voluntary partnership pursuant to a
specified real estate venture agreement. The voluntary partnership receives
distributions of the income generated from the real estate asset it acquires using theinvested funds. dividends on the gains from the real estate purchased via theinvestments. Rental income and gains on sales associated with the real estate asset
are attributed to the investors.
Pursuant to the voluntary partnership agreement, Ichigo Owners receives a fee forserving as managing partner. Ichigo Owners also engages in real estatetransactions with the voluntary partnership.
FY22/2
Number of Voluntary Partnerships
Total Assets as of Fiscal Period-end
Total Liabilities

1
JPY 436 million‒

B. SPC Transaction Amounts(JPY million)

Real Estate Transactions1
2Managing Partner Fee

Transaction
Amount420‒

Category
Revenue
RevenueAmount420‒

1

The Real Estate Transaction amount is the sale price of the asset at the time ofsale, and recorded under Revenue in the Consolidated Income Statement.
2
The Managing Partner Fee is calculated as a percentage of the sale price andrecorded under Revenue in the Consolidated Income Statement.
XI. Per Share Data
Net Assets per ShareNet Income per ShareNet Income per Share (fully diluted)

JPY 215.46
JPY 13.81
JPY –Note: Ichigo had no dilutive common shares. Therefore, diluted net income per share
information has not been disclosed.

30

XII. Material Subsequent Events
N/A
XIII. Other Notes
Ichigo wrote down the below asset in FY22/2.
(1) Asset and Write-down Amount
Asset

Type

Location

Impairment Loss

Operating Asset

Intangible Asset

Chiyoda-ku, Tokyo

JPY 716 million(2) Write-down Rationale
Ichigo impairs the values of assets to their respective recoverable amount based on thecurrent business environment. An equivalent amount was recorded as a loss under
Extraordinary Losses.
Note that Ichigo calculates the recoverable amount based on value-in-use. For assets thatare not expected to generate future cash flows, the recoverable amount is set to zero.
Notes to the Parent Financial Statements
I. Material Accounting Policies
A. Valuation Method for Securities
1. Shares in subsidiaries and affiliates

Moving average cost method

2. Other securities
Securities with market prices

Mark-to-market on the last day of the fiscal
year (Valuation difference is reported as acomponent of shareholders’ equity; the costis calculated using the moving average cost
method.)Securities without market prices

Moving average cost method (Valuation
method for investment partnerships is notedin (F) Other Material Matters Related to the
Preparation of the Financial Statements(3) Investment Partnerships.)

3. Derivatives

Mark-to-market

4. Real estate for sale

Cost (however, impair assets whose
profitability declines)

B. Depreciation Method for Fixed Assets
1. Property, Plant, and Equipment

Primarily straight-line method

Useful life

Buildings and Structures: 8~39 years

2. Intangible Assets

Straight-line method

Useful life

Software: 5 years

31

C. Amortization of Deferred Assets
Issuance cost of shares: Full amount is recorded as cost.
D. Accounting Standards for Allowances
Allowance for doubtful accounts
Reserved based on the record of bad debts with respect to ordinary receivables andloans, plus an estimate of uncollectible amounts determined with reference tospecific doubtful receivables from customers experiencing financial difficulties.

32

E. Hedge Accounting Method
1. Hedge Accounting Method
In general, Ichigo adopts the deferral hedge accounting method. However, interest
rate swaps that meet the criteria for special treatment are accounted for under the
special treatment method.
2. Hedging Instruments and Hedging Targets
Hedging instruments
Hedging targets

Interest rate swaps
Loans

3. Hedging Policy
Pursuant to its internal rules, Ichigo hedges against interest rate risks that arise fromits business activities.
4. Evaluation of Hedge EffectivenessIchigo evaluates the effectiveness of hedging activities with reference to theaccumulated gain or loss on the hedging instruments and related hedging targets fora period from the commencement of the hedges to the time of evaluation. Interestrate swaps accounted for under the special treatment method are omitted from thisevaluation.
F. Other Material Matters Related to the Preparation of the Financial Statements
1. Consumption Tax
Consumption taxes are excluded from the relevant revenue, costs, or expenses.
Non-deductible consumption taxes are generally accounted for as costs in thecurrent fiscal year; however, certain items paid in connection with the acquisitionof assets are amortized over 5 years using the straight-line method.
2. Operational Investments
Operational investments are separated from non-operational investments and areaccounted for under Operational Securities Investments and Operational Loan
Investments within Current Assets. Profits and losses arising from operational
investments are accounted for under Operating Profits and Losses.
Although Ichigo may control the decision-making body of investment vehicles orhold significant influence over them by holding shares, shares are held solely for
operational investment purposes and Ichigo has no intention of holding them assubsidiaries or affiliates. Therefore, such investment vehicles are excluded fromsubsidiaries or affiliates.
3. Investment Partnerships
Ichigo accounts for investments in investment partnerships as Operational
Securities Investments or Investment Securities in Other Affiliates. Suchinvestments are recorded at the time the investments are made. Gains and losses
distributed from the investment partnerships are recorded as Revenue, and thecorresponding balance sheet item increases or decreases by the same amount.
Refunds received from the investment partnerships are credited to thecorresponding balance sheet item.
4. Consolidated Tax Treatment
Ichigo qualifies for consolidated tax treatment.

33

5. Tax Effect Reflecting Transition to Group Aggregate Tax Treatment from
Consolidated Tax Treatment
With respect to reporting deferred tax assets and liabilities, accounting items thatwere subject to change as part of the shift to a group aggregation system andchanges in standalone tax rules under the 2020 Tax Reform, Ichigo applies prerevision tax rules pursuant to the ASBJ Guidance 39, “Tax Accounting With
Respect to the Shift from the Tax Consolidation System to Group Aggregation
System” (issued on March 31, 2020), and do not apply the rules prescribed under
Clause 44 of the Implementation Guidance 28, “Accounting Standards
Implementation Guidance for Tax Accounting” (issued on February 16, 2018).
II. Notes on Restatement
Accounting Standard for Disclosure of Accounting Estimates
Ichigo is applying the Accounting Standard for Disclosure of Accounting Estimates (ASBJ
Statement No. 31, March 31, 2020) starting from FY22/2, as described in III. Notes on
Accounting Estimates for the Parent Financial Statements.
III. Notes to Accounting Estimates
Valuation of Real Estate
A. Amount Recorded in FY22/2 Financial Statements
Fixed Assets

JPY 6,187 million

B. Information on Material Accounting Estimates for Specific Line Items
Please see the Valuation of Real Estate section under III. Notes to Accounting
Estimates for the Consolidated Financial Statements.
IV. Notes to the Balance Sheet
7. Assets Provided as Collateral and Secured Obligations
Assets provided as collateral
Cash and deposits
Buildings and structures
Land
Property, plant, and equipment – other
Shares of affiliated companies
Long-term loans to affiliates
Total

JPY 42 million
JPY 146 million
JPY 2,099 million
JPY 10 million
JPY 1 million
JPY 1,399 million
JPY 3,700 million

Figures in Buildings and structures and Property, plant, and equipment – other are
net amounts.
Secured obligations
Long-term loans (due within one year)
Long-term loans
Total

34

JPY 100 million
JPY 825 million
JPY 925 million

B. Contingent Liabilities
Ichigo is guaranteeing the following subsidiaries’ loans from financial institutions:
Ichigo Estate Co., Ltd.
Ichigo ECO Energy Co., Ltd.
Ichigo Real Estate Services Fukuoka Co, Ltd.
Ichigo Land Shinchiku Co., Ltd.
Ichigo Owners Co., Ltd.
Centro Co., Ltd.
Storage Plus Corp.
Hakata Hotels Inc.
GK Daiba Jisho
GK Azabu Juban Jisho
GK Kawabata Holdings
GK Nakasu Holdings
GK ACZ
GK Ichigo Yubetsu Barou ECO Power Plant GK
Ichigo Toyokoro Sasadamachi ECO Power Plant GK
Ichigo Betsukai Kawakamicho ECO Power Plant GK
Ichigo Akkeshi Shirahama ECO Power Plant GK
Ichigo Yonago Izumi ECO Power Plant GK
Sera Aomizu Ushinoro ECO Power Plant GK
Ichigo Hamanaka Bokujo ECO Power Plant GK
Ichigo Toki Oroshicho ECO Power Plant GK
Ichigo Toride Shimotakai ECO Power Plant GK
Ichigo Kijo Takajo ECO Power Plant GK
Total

JPY 30,639 million
JPY 8,122 million
JPY 9,791 million
JPY 3,403 million
JPY 12,993 million
JPY 448 million
JPY 1,078 million
JPY 32 million
JPY 8,000 million
JPY 590 million
JPY 3,093 million
JPY 2,210 million
JPY 5,250 million
JPY 167 million
JPY 91 million
JPY 131 million
JPY 123 million
JPY 438 million
JPY 361 million
JPY 886 million
JPY 247 million
JPY 253 million
JPY 164 million
JPY 88,519 million

C. Affiliate Receivables and Payables (excluding items separately indicated)
Short-term receivables from affiliates
Short-term payables to affiliates
Long-term payables to affiliates

JPY 1,239 million
JPY 109 million
JPY 44 million

35

D. Deferred Gains (Losses) on Long-Term Interest Rate Hedges
Using interest rate swaps and caps, Ichigo has significantly reduced its interest raterisk should Japanese interest rates rise. Any unrealized gains (losses) on thesehedges are recorded as deferred gains (losses) on long-term interest rate hedges.
V. Income Statement
A. Transactions with affiliates
Operational Transactions
Revenue
Operating expenses
Non-Operational Transactions

JPY 7,769 million
JPY 168 million
JPY1,018 million

B. Mark-to-market gains (losses) on long-term interest rate hedges
Using interest rate swaps and interest rate caps, Ichigo has significantly reduced its
interest rate risk should Japanese interest rates rise. Any increase (decrease) in themarket value is recorded as a mark-to-market gains (losses) on long-term interest
rate hedges.
VI. Statement of Changes in Shareholders’ Equity
Type and Number of Treasury Shares
Common shares

37,466,500 sharesVII. Taxes
Breakdown of Deferred Tax Assets and Liabilities
Deferred Tax Assets
Accrued business taxes
Surplus for provision of allowance for doubtful
accounts
Valuation loss on securities investments
Valuation loss on investments in real estate
Valuation loss on securities of affiliates
Impairment loss
Deferred gains (losses) on long-term interest rate
Other
Sub-total
Allowance for valuation
Deferred Tax Assets Total

JPY 56 million
JPY 213 million
JPY 99 million
JPY 1,457 million
JPY 575 million
JPY 219 million
JPY 110 million
JPY 275 million
JPY 3,007 million-JPY 2,673 million
JPY 333 million

Deferred Tax Liabilities
Valuation gain on other securities
Deferred Tax Liabilities Total-JPY 48 million-JPY 48 million

Net Deferred Tax Assets

JPY 284 million

36

VIII. Related Party Transactions(JPY million)
Affiliation

Name

Subsidiary

Ichigo EstateCo., Ltd.

Subsidiary

Ichigo ECOEnergy Co.,Ltd.

Voting Rights Nature ofTransaction
Balance
Held
Transaction
Account
RelationshipAmountOutstanding
by Ichigo
Short-termloans to5,555
affiliates
Lending1
2,384Long-termloans to24,377
affiliates
Current
assets –49
otherInterest
314
received
Current
liabilities ––otherService Provision of
100%
30,639––contract credit
guarantee2
Receipt ofcredit1,524––
guarantee7,8Receipt ofcredit1,516––
guarantee and4,5collateral
Receipt ofcredit6,096––
guarantee andcollateral5
Short-term
Lending1
1,100 loans to
2,884
affiliates
Current
Service Interest
assets –100%
198contract received
other
Provision of
creditguarantee2

37

8,122

–

–

(JPY million)
Affiliation

Subsidiary

Subsidiary

Voting Rights
Nature ofTransaction
Balance
Held
Transaction
Account
RelationshipAmountOutstanding
by Ichigo
Short-termloans to3,800
affiliates
1
Lending–Long-termloans to
6,650
affiliates
Current
Interest
assets –102
13received
Ichigo Realother
Estate Services
Service Provision of100%
Fukuoka Co.,
contract credit
–
9,791
–
Ltd.
guarantee2
Receipt ofcredit–1,350–
guarantee andcollateral4,5Receipt ofcredit4,300––
guarantee and5collateral
Short-termloans to2,760
affiliates
1
Lending
1,056Long-termloans to956
Ichigo Land
Serviceaffiliates
Shinchiku Co.,100%
contract Provision ofLtd.
credit–3,403–
guarantee2
Current
Interest
assets –24
8received
other
Name

Lending1

Subsidiary

Ichigo Owners
Co., Ltd.

100%

Servicecontract

38

Interest
received
Provision of
creditguarantee2
Receipt ofcreditguarantee andcollateral5

Short-termloans toaffiliates
18,644Long-termloans toaffiliates
Current
208 assets –other12,3509,844
5412,993

–

–

8,604

–

–

(JPY million)
Affiliation

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Name

Hakata Hotels
Inc.

GK Daiba
Jisho

GK Kawabata
Holdings

GK Nakasu
Holdings

Voting Rights
Nature ofTransaction
Held
Transaction
Account
RelationshipAmountby Ichigo
100%(Indirectly
held)

09

09

09

Servicecontract

Underwritingof Bonds1
Interest
received

Provision of
creditguarantee2
TK Equity
Receipt ofcreditguarantee fee
Provision of
creditguarantee2
TK Equity
Receipt ofcreditguarantee fee
Provision of
creditguarantee2
TK Equity
Receipt ofcreditguarantee fee
Provision of
creditguarantee2

Subsidiary

Subsidiary

GK ACZGK
Shinsaibashi
Jisho

09

09

Balance
Outstanding

Affiliate1,500 bonds

1,960

Current
5 assets –
other

5

–

–

8,000

Advances
2 received
3,093

–

Advances
1 received
2,210

–

Advances– received
5,250

–

11
–
4
–

3

–

TK Equity

TK Equity

Receipt ofcreditguarantee fee

Advances
1 received

Payment ofcreditguarantee fee
to guarantor

Prepaid
expenses
2 Investment
and otherassets –otherReceipt ofcreditguarantee andcollateral4,5

39

1,949

–

10
2
14

–

(JPY million)
Affiliation

Subsidiary

Subsidiary

Subsidiary

Voting Rights
Nature ofTransaction
Balance
Held
Transaction
Account
RelationshipAmountOutstanding
by Ichigo
Long-term
1
Lending258
loans to10,158
Lendingaffiliates
GK LIFT2
100
Interest
Current
Received Interest
316
assets –78
received
other
Payment ofcredit1 Prepaid
1
guarantee fee
expenses
to guarantor
GK Kichijoji
09
TK Equity
Holdings
Investment
Receipt ofother2,113 and5collateral3,6
assets –other
Payment ofcredit– Prepaid–
guarantee fee
expenses
to guarantor
GK Akihabara
09
TK Equity
Jisho
Investment
Receipt of
other2,760 and4collateral3,6
assets –
other
Name

1

The interest rate on loans from Ichigo to affiliates is based upon Ichigo’s actual borrowing
costs, with due consideration to the particular circumstances of the affiliates.
2
Ichigo has provided credit guarantees to banks on loans to the subsidiary.
3
The subsidiary has received collateral from Ichigo for loans from banks.
4
Ichigo has received collateral from its subsidiaries for a loan of JPY 4,816 million from banks.
5
The subsidiary has received both guarantees and collateral from Ichigo for the loans from banks.
6
Ichigo has received collateral from its subsidiaries for a loan of JPY 4,873 million from banks.
7
Ichigo has received credit guarantees from its subsidiaries for bank loans.
8
Ichigo has received credit guarantees and collateral from its subsidiaries for a loan of JPY
1,524 million from banks.
9
Although Ichigo holds 0% of the voting rights, its wholly-owned subsidiary holds 100% ofmanagerial authority over the investment partnership (aka TK or Tokumei Kumiai). However,
the entity is considered to be Ichigo’s subsidiary, because Ichigo has adopted the accounting
standard “Practical Solutions on Application of Control Criteria and Influence Criteria to
Investment Partnerships” (Accounting Standards Board of Japan Practical Issues Task Force
No. 20, March 25, 2011).
10
The above amounts do not include consumption tax and other taxes. However, the amounts
recorded on the balance sheet do include consumption tax and other taxes.

40

IX. Per Share Data
Net Assets per ShareNet Income per ShareNet Income per Share (fully diluted)

JPY 163.20
JPY 3.89
JPY–

Note: Ichigo had no dilutive common shares. Therefore, diluted net income per share
information has not been disclosed.
X. Material Subsequent Events
N/A
XI. Other Notes
Impairment Loss
Please see XIII. Other Notes under Notes to the Consolidated Financial Statements.

41