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.

Ichigo(2337)
Additional Accounting Notes
for the Eighteenth Annual Shareholder Meeting 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, notes to theconsolidated and parent financial statements are posted on Ichigo’s website at www.ichigo.gr.jp/en1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: 59
Major consolidated subsidiaries
Ichigo Investment Advisors Co., Ltd.
Ichigo Estate Co., Ltd.
Ichigo ECO Energy Co., Ltd.
Ichigo Real Estate Services Fukuoka Co., Ltd.
Ichigo Owners Co., Ltd.
Ichigo Land Shinchiku Co., Ltd.
Ichigo Marché Co., Ltd.
Miyako City Co., Ltd.
Ichigo Owners Co., Ltd., Ichigo Land Shinchiku Co., Ltd., and one investment
partnership were newly created and included in the scope of consolidation during
FY18/2.
Takara Building Maintenance Co., Ltd. and one investment partnership havebeen excluded from the scope of consolidation because Ichigo sold all of its
holdings in them during FY18/2.
Centro Co., Ltd., Storage Plus Corp., and seven investment partnerships in which
Ichigo newly invested FY18/2 have been included in the scope of consolidation.
Nine investment partnerships have been excluded from the scope of
consolidation because their importance has decreased during FY18/2.
One investment partnership which has been dissolved during FY18/2 has been
excluded from the scope of consolidation.
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
B. Equity-Method Accounting
1. Equity-Method Affiliates
Number of Equity-Method Affiliate(s): 1
Major Equity-Method Affiliate(s): I Think Rent Co., Ltd.
2. Non-Consolidated Subsidiaries Accounted for Under the Equity-Method
N/A2

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
December-end

25 companies
13 companies
2 companies
19 companies

For subsidiaries whose fiscal year-ends in December or January, financial data as ofthat date have been used. For subsidiaries whose fiscal year-ends in March,
provisional financial data (created at a point in time within three-months fromMarch-end) have been used. All necessary adjustments for consolidation have been
made with respect to significant transactions which occurred by the end of FY18/2 in
February.
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; cost of
goods sold is calculated with 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)

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

Primarily straight-line method

Useful life

Buildings and structures: 7~45 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
and loans, plus an estimate of uncollectible amounts determined with reference
to specific 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, interest rate caps

Hedging targets

Loans

c. Hedging Policy
Pursuant with its internal rules, Ichigo hedges against interest rate fluctuations
that arise from its operational and financial 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.
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.

4Non-deductible consumption taxes are generally accounted for as costs in thecurrent fiscal year; however, certain items paid in connection with theacquisition of assets are amortized over 5 years using the straight-line method or
are included in 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
or hold significant influence over them by holding shares, shares are held solely
for operational investment purposes and Ichigo has no intention of holding themas subsidiaries or affiliates. Therefore, such investment vehicles are excluded
from subsidiaries or affiliates.
c. Investment Partnerships
Ichigo accounts for investments in investment partnerships as Operational
Securities Investments. Such investments are recorded at the time theinvestments are made. Gains and losses distributed from the investment
partnerships are recorded as Revenue, and Operational Securities Investments
increases or decreases by the same amount. Refunds received from theinvestment partnerships are credited to Operational Securities Investments.
d. Consolidated Tax Treatment
Ichigo qualifies for consolidated tax treatment.
E. Additional Information
Adoption of the Guidance on Recoverability of Deferred Tax Assets
Starting in FY18/2, Ichigo has adopted the “Guidance on Recoverability of Deferred
Tax Assets” (ASBJ Guidance No. 26, March 28, 2016).
Change in the Purpose of Ownership of Real Estate for Sale
As of the end of FY18/2, the purpose of ownership of some of the real estate on thebalance sheet has been changed to Buildings and Structures, and Land from Real Estatefor Sale in the amounts shown below:
Buildings and Structures
Land
Total

JPY 1,624 million
JPY 6,153 million
JPY 7,777 million

5Change in the Purpose of Ownership of Property, Plant, and Equipment
As of the end of FY18/2, the purpose of ownership of some of the real estate on thebalance sheet has been changed to Real Estate for Sale in the amounts shown below:
Buildings and Structures
Depreciation
Buildings and Structures (net)
Other
Depreciation
Other (net)
Land
Total

JPY 1,173 million-JPY 209 million
JPY 963 million
JPY 1 million
JPY 0 million
JPY 0 million
JPY 1,977 million
JPY 2,941 million

During FY18/2, the purpose of ownership of the below solar power plant equipmenton the balance sheet was changed to Solar Power Plant Equipment for Sale, and theequipment was sold, with the balance sheet value recorded as Cost of Goods Sold.
JPY 1,014 million-JPY 60 million
JPY 953 million
JPY 43 million
JPY 996 million

Solar Power Plant Equipment
Depreciation
Solar Power Plant Equipment (net)
Land
Total
Impairment Loss

Ichigo recorded an impairment loss on the below asset grouping in FY18/2.
1. Asset and Amount Recognized as Impairment Loss
Purpose
Unused Land

Type
Land

Location
Chiba Prefecture

Impairment Loss
JPY 327 million

2. Reason for Impairment
Ichigo impaired the book values of unused land to their respective recoverable
amount based on the current business environment, and an equivalent impairment
loss has been recorded under Extraordinary Losses.
3. Asset Grouping Method for Impairments
When applying impairment accounting, Ichigo classifies assets into discrete groups
using the minimum asset unit that generates independent cash flow. This asset
grouping method was used in this asset impairment.
4. Calculation Method for Recoverable Amount
Ichigo calculates the recoverable amount for unused land based on net sale values
determined using third-party real estate appraisal values.

6II. Notes to the Consolidated Balance Sheet
A. Assets Provided as Collateral and Secured Obligations
Assets Provided as Collateral
Cash and cash equivalents
JPY 2,385 million
Trade notes and accounts receivable
JPY 114 million
Operational loan investments
JPY 1,324 million
Real estate for sale
JPY 83,287 million
Current assets – other
JPY 2 million
Buildings and structures
JPY 5,574 million
Solar power plant equipment
JPY 6,573 million
Land
JPY 16,751 million
Property, plant, and equipment – other
JPY 69 million
Leasehold rights
JPY 62 million
Buildings under construction (reserved for collateral)
JPY 56 million
Total
JPY 116,203 million
Figures shown in Buildings and structures, Solar power plant equipment, andProperty, plant, and equipment – other are net amounts.
Secured Obligations
Short-term loans
Long-term loans (due within one year)
Long-term loans
Total

JPY 620 million
JPY 3,424 million
JPY 91,993 million
JPY 96,037 million

B. Non-Recourse Loans
Non-recourse loans are borrowings where funds for repayment are limited only to thevalue of the underlying real estate and profits from such real estate. The lender has
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 cash equivalents
Trade notes and accounts receivable
Real estate for sale
Current assets – other
Buildings and structures
Solar power plant equipment
Land
Investment and other assets – other
Total

JPY 10,272 million
JPY 117 million
JPY 77,604 million
JPY 2 million
JPY 516 million
JPY 10,940 million
JPY 1,268 million
JPY 367 million
JPY 101,089 million

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

7

JPY 3,921 million
JPY 63,588 million
JPY 67,509 million

C. Deferred Gain (Loss) on Long-Term Interest Rate Hedges
Using interest rate hedges, Ichigo has significantly reduced its interest rate risk
should Japanese interest rates rise. Unrealized gains or losses on these hedges arerecorded in Deferred gain (loss) 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 FY18/2)
Total amount of overdraft, loan commitment, and termloan agreements
Draw-down amount
Unused balance

JPY 26,737 million
JPY 9,377 million
JPY 17,359 million

III. Notes to the Consolidated Income Statement
Valuation Loss on Derivatives
Ichigo hedges against a future rise in long-term interest rates using interest rate
swaps and interest rate caps. A decrease in the market value of such derivative
instruments is recorded as a valuation loss on derivatives.
IV. Notes to the Consolidated Statement of Changes in Shareholders’ Equity
A. Type and Number of Shares Issued and Type and Number of Treasury Shares
Number ofshares at the
beginning of
FY18/2

Increase inshares during
FY18/21

Decrease inshares during
FY18/22

Number ofshares at theend of FY18/2

Shares issued
Common shares
503,712,300
771,900–
504,484,200
Total
503,712,300
771,900–
504,484,200
Treasury shares
Common shares329,600
8,436,500
59,6008,706,500
Total
329,600
8,436,500
59,6008,706,500
1Increase in shares issued due to employee exercise of stock options: 771,900 shares
2
Increase in treasury shares due to share buyback: 8,436,500 shares
Decrease in treasury shares due to employee exercise of stock options: 59,600 shares

8B. Stock Options
Underlying Number of Shares
Stock Options
10thstock option
issuance
11th
stock option
issuance
12th
stock option
issuance
13th
stock option
issuance
14th
stock option
issuance
15th1
stock option
issuance
16th1
stock option
issuance
Total
1

Share
Type

Value (as ofFebruary 28,
2018)

March 1,
2017

Increase in
FY18/2

Decreasein FY18/2

February28, 2018

Commonshares79,600–59,60020,000–Commonshares

838,000–

567,000

271,000

JPY 5 million

Commonshares871,100–

136,100

735,000 JPY 115 million

Commonshares1,817,300–

140,800

1,676,500 JPY 163 million

Commonshares1,460,000–

86,8001,373,200 JPY 259 million

Commonshares2,000,000–

95,5001,904,500 JPY 111 million

Commonshares–1,800,000–

7,066,000

1,800,000

1,085,800–

1,800,000

JPY 10 million

7,780,200 JPY 666 million

The 15th and 16th stock option issuances are currently not exercisable, because their
exercise dates are in the future.
C. Dividends
1. Dividends Paid
In a meeting of the Board of Directors on April 19, 2017, the following was
resolved:(a) Total Dividend(b) Source(c) Dividend per Share(d) Record Date(e) Payment Date

JPY 2,516 million
Retained earnings
JPY 5
February 28, 2017
May 29, 20179

2. Dividends where Record Date is in FY18/2, but the Payment Date is in FY19/2
In a meeting of the Board of Directors on April 18, 2018, the following was
resolved:
(a)
(b)
(c)
(d)
(e)

Total Dividend
SourceDividend per Share
Record Date
Payment Date

JPY 2,974 million
Retained earnings
JPY 6
February 28, 2018
May 28, 201810

V. Notes on Financial Instruments
A. Matters Concerning Status of Financial Instruments
1. Policies on Financial Instruments
Ichigo finances its necessary operating capital primarily via bank loans and bonds inlight of new investment and asset disposition plans. Short-term excess funds aremanaged in liquid financial instruments such as bank deposits, and short-termworking capital is financed 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 corporate
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.
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 loans 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 for the
impact from changes in market value and currency rates and reviews the holding
policies as necessary. Derivative transactions are executed and controlled in the
Finance Department in accordance with the designated procedure.

11

(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.

12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, 2018 are shown below. Items for which it
was deemed highly difficult to obtain market values are not included. (See Note 2
below).
(JPY million)

Assets(1) Cash and cash equivalents

Amount Recordedon Consolidated
Balance Sheet
45,510Market Value

Difference

45,510–(2) Trade notes and accounts receivable1

1,072

1,072

–

(3) Operational loan investments

1,324

1,324

–

(4) Securities investments

1,904

1,904

–

–

–

–

Total Assets

49,81249,812–

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

1,042

1,042

–

112

112

–

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

4,449

4,449

–

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

3,921

3,921

–

(5) Income taxes payable

1,609

1,609

–

520

514

-5

(7) Long-term loans

112,366

112,791425(8) Long-term non-recourse loans

63,58864,371

783

Total Liabilities

187,609

188,813

1,204

-466

-466

–

(5) Long-term loan investments1(6) Bonds

Derivative Transactions2
1
2

Excluding allowance for doubtful accounts which are recorded separately.
The receivables and payables related to derivative transactions are shown as a net amount.

13

(Note 1) Calculation Method of Market Value of Financial Instruments and Matters
Concerning Securities and Derivatives Transactions
Assets(1) Cash and Cash Equivalents
Carried at book value 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, andbonds are the last-traded exchange price or dealer-indicated price.
(5) Long-Term Loans
The market values of long-term loans are calculated based on thepresent value of the total amount of the principal and interest using a
discount rate for similar new loans. Certain debts such as loans withdefault risk are at book value less the estimated doubtful accounts.
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 thecurrent value by applying a discount rate to the total of principal andinterest.
(7) Long-Term Loans, and (8) Long-Term Non-Recourse Loans
Floating-rate borrowings for long-term loans, and long-term nonrecourse 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 their market values are calculated
by taking the present value of their principal and interest along withthe corresponding interest rate swap, using a discount rate for similar
new loans.
The market values of fixed-rate loans are calculated based on thepresent value of the total amount of principal and interest using a
discount rate for similar new loans.
Derivative Transactions
The market values of derivative transactions are the prices presented byfinancial institutions. The market value of interest rate swaps under
special treatment is included in long-term loans and long-term nonrecourse loans since it is accounted for with the instrument it hedges.

14

(Note 2) Financial Instruments for which it is Difficult to Obtain Market Values
Classification(1) Operational Securities Investments(2) Securities Investments1(3) Long-term Security Deposits Received
1(JPY million)
Amount Recorded in
Consolidated Balance Sheet
2
204
8,492

Excluding allowance for doubtful accounts which are recorded separately(1) Operational Securities Investments are Japanese non-listed equities that
don’t have market prices, and are not subject to market value disclosures.
(2) Securities Investments are investment in Japanese and foreign non-listed
equities as well as Japanese real estate funds 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.
VI. 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 in Tokyo andother locations that are not currently held for sale. Income on this leased real estate in
FY18/2 was JPY 1,704 million (rental revenue is recorded in Revenue and the cost oflease is recorded in Costs of Goods Sold), and impairment loss is JPY 327 million(recorded as Extraordinary Losses).
B. Market Value of Leased Real Estate Not Currently Held for SaleBook Value on Consolidated Balance Sheet1
Mar 1, 2017
25,986

Increase/Decrease2
11,0691

Feb 28, 2018
37,055(JPY million)
Market Valueas of Feb 28,
20183
48,612

Book Value on Consolidated Balance Sheet = Acquisition Cost – (Cumulative
Depreciation + Cumulative Impairment Loss)
2
The main components of the increase for the fiscal year is JPY 7,777 million
transferred from Real Estate for Sale due to a change in the purpose of ownership,
JPY 4,701 million due to the acquisition of Centro Co., Ltd., JPY 1,730 million due
to the acquisition of Storage Plus Corp., and JPY 501 million from Capital
Expenditures. The main components of the decrease for the fiscal year is JPY 2,941
million transferred to Real Estate for Sale due to a change in the purpose ofownership, JPY 378 million of Depreciation, and JPY 327 million recorded in
Impairment Loss.
3
Market value as of February 28, 2018 is primarily based upon third-party real estateappraisals.

15VII. Per Share Data
Net assets per share

JPY 180.20

Net income per share

JPY 28.12

Net income per share (fully diluted)

JPY 28.10

VIII. Material Subsequent Events
N/A

16

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; cost of
goods sold is calculated with moving
average cost method.)

Securities without market prices

Moving average cost method (Valuation
method for investment partnerships is notedin (F) Material Changes in Presentation (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

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 to specificdoubtful receivables from customers experiencing financial difficulties.

17

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 with its internal rules, Ichigo hedges against interest rate fluctuations thatarise from its operational and financial 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
for a period from the commencement of the hedges to the time of evaluation.
Interest-rate swaps accounted for under the special treatment method are omitted
from this evaluation.
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.

18

II. Additional Information
Adoption of the Guidance on Recoverability of Deferred Tax Assets
Starting in FY18/2, Ichigo has adopted the “Guidance on Recoverability of Deferred
Tax Assets” (ASBJ Guidance No. 26, March 28, 2016).
III. Notes to the Balance Sheet
A. Assets Provided as Collateral and Secured Obligations
Assets provided as collateral
Cash and cash equivalents
Real estate for sale
Buildings and structures
Land
Property, plant, and equipment – other
Shares of affiliated companies
Long-term loans to affiliates
Total

JPY 39 million
JPY 623 million
JPY 167 million
JPY 2,099 million
JPY 1 million
JPY 1 million
JPY 1,399 million
JPY 4,333 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

19

JPY 116 million
JPY 1,666 million
JPY 1,783 million

B. Contingent Liabilities
1. Ichigo is guaranteeing the following subsidiaries’ loans from financial institutions:
Ichigo Estate Co., Ltd.
Ichigo Real Estate Services Fukuoka Co, Ltd.
Ichigo Owners Co., Ltd.
Ichigo ECO Energy Co., Ltd.
GK Daiba Jisho
GK Chouan
GK Kawabata Holdings
GK Nakasu Holdings
GK Ichigaya Jisho
GK Shinsaibashi Jisho
GK SA3
GK Asakusa Jisho
GK Gyoutatsu
GK Azabu Juban Jisho
GK Nagoya Sakae Holdings
GK Ichigo Hamanaka Bokujo ECO Power Plant
GK Ichigo Minakami Aramaki ECO Power Plant
GK Ichigo Yonago Izumi ECO Power Plant
GK Sera Aomizu Ushinoro ECO Power Plant
GK Ichigo Higashi Hiroshima Saijocho Taguchi ECO Power Plant
GK Ichigo Toride Shimotakai ECO Power Plant
GK Ichigo Toki Oroshicho ECO Power Plant
GK Ichigo Yubetsu Barou ECO Power Plant
GK Ichigo Kijo Takajo ECO Power Plant
GK Ichigo Betsukai Kawakamicho ECO Power Plant
GK Ichigo Akkeshi Shirahama ECO Power Plant
GK Ichigo ECO Fuchu Jogecho Yano Power Plant
GK Ichigo Toyokoro Sasadamachi ECO Power Plant

JPY 35,088 million
JPY 6,860 million
JPY 2,700 million
JPY 1,410 million
JPY 8,000 million
JPY 6,140 million
JPY 3,604 million
JPY 2,556 million
JPY 2,346 million
JPY 2,270 million
JPY 2,218 million
JPY 1,580 million
JPY 1,445 million
JPY 670 million
JPY 300 million
JPY 1,259 million
JPY 730 million
JPY 628 million
JPY 502 million
JPY 447 million
JPY 357 million
JPY 351 million
JPY 238 million
JPY 217 million
JPY 199 million
JPY 182 million
JPY 153 million
JPY 139 million

2. Ichigo is also guaranteeing the payment of a construction assistancefund and the return of a security deposit by GK Myodani Fudosan.
JPY 194 million
JPY 82,794 million

Total

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 1,171 million
JPY 52 million
JPY 41 million

20

D. Deferred Gain (Loss) on Long-Term Interest Rate Hedges
Using interest rate hedges, Ichigo has significantly reduced its interest rate risk
should Japanese interest rates rise. Unrealized gains or losses on these hedges arerecorded in Deferred gain (loss) on long-term interest rate hedges.
IV. Income Statement
Transactions with affiliates
Operational Transactions
Revenue
Operating expenses
Non-Operational Transactions

JPY 19,446 million
JPY 36 million
JPY 819 million

V. Statement of Changes in Shareholders’ Equity
Type and Number of Treasury Shares
Common shares

8,706,500 shares

VI. Taxes
Breakdown of Deferred Tax Assets and Liabilities
Deferred Tax Assets
Accrued income 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
Deferred gain (loss) on long-term interest rate hedges
Other
Subtotal
Allowance for valuation
Deferred Tax Assets Total

JPY 165 million
JPY 33 million
JPY 25 million
JPY 1,150 million
JPY 578 million
JPY 155 million
JPY 225 million
JPY 2,335 million-JPY 1,833 million
JPY 501 million

Deferred Tax Liabilities
Unrealized gain on other securities
Asset retirement obligation expense
Deferred Tax Liabilities Total-JPY 216 million–-JPY 216 million

Net Deferred Tax Assets

JPY 285 million

21VII. Related Party Transactions(JPY million)
Affiliation

SubsidiaryName

Ichigo EstateCo., Ltd.

Voting Rights
Nature ofTransaction
Balance
Held
Transaction
Account
RelationshipAmountOutstanding
by Ichigo
Short-termloans to
6,961
affiliates
5,150
Lending1
Long-termloans to
8,050
affiliates
Current
assets –75
otherInterest
293
received
Current
liabilities –
2
other

100%

Servicecontract

Provision of
creditguarantee2

35,088––

Receipt ofcreditguarantee3,4

5,290

–

–

Receipt ofcollateral5,6

2,451

–

–

Receipt ofcreditguarantee andcollateral7

4,121

–

–

Payment ofcreditguarantee fee
to guarantor

Lending1
Subsidiary

Ichigo ECOEnergy Co.,
Ltd.

100%

Servicecontract

Interest
received
Provision of
creditguarantee2

22Prepaid
expenses– Investment
and otherassets –otherShort-termloans toaffiliates
2,914
Long-termloans toaffiliates
Current
52 assets –
other
1,410

–

–
3
1,734
2,164
18
–

(JPY million)
Affiliation

Subsidiary

Subsidiary

Voting Rights
Nature ofTransaction
Balance
Held
Transaction
Account
RelationshipAmountOutstanding
by Ichigo
Short-term
Lending1
2,152 loans to
1,900
affiliates
Ichigo Real
Current
Estate Services
Service Interest
assets 100%
34–
Fukuoka Co.,
contract received
other
Ltd.
Provision of
credit–6,860–
guarantee2
Short-termloans to3,600
affiliates
Lending1
5,850
Long-termloans to850
Ichigo Owners
Serviceaffiliates
100%
CurrentCo., Ltd.
contract Interest
assets –48
20
received
other
Name

Subsidiary

Ichigo Land
Shinchiku Co.,
Ltd.

100%

Subsidiary

GK Amethyst

011

Subsidiary

KK Kimura
Building

100%(Indirectly
held)Subsidiary

Subsidiary

YK Satsuki
Holdings

GK Minami
Ikebukuro
Jisho

Provision of
creditguarantee2
Succession
Service of businessdue tocontract company
absorption
Additional
investments
TK Equity associatedwithrefinance
Receipt ofSubsidiary credit
guarantee
TK Equity andcollateral4,7Lending1

100%

011

Financialsupport Interest
received

Receipt ofcreditTK Equity guarantee
andcollateral4,7

23

2,700

–

–

Note8

–

–

Securities of
6,300 otheraffiliates

1,840

–

Long-term– loans toaffiliates
Current
83 assets –
other
1,840

–

6,375

–

1,399
16

–

(JPY million)
Affiliation

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Voting Rights
Nature ofTransaction
Balance
Held
Transaction
Account
RelationshipAmountOutstanding
by Ichigo
Receipt ofcreditguarantee
1,232
–
–
and
collateral7
GK Gotanda
Prepaid011
TK Equity
expenses–
Payment of
Holdings
creditguarantee– Investment
fee toand other–guarantor
assets –otherProvision of
credit2,346––
2
guarantee
GK Ichigaya
Subsidiary
011
Receipt ofJisho
TK Equity credit
Advances– received
4
guarantee
fee
Provision of
credit–2,270–
guarantee2
Receipt ofGK
11
Advances
Shinsaibashi
0
TK Equity credit
1 received
4
guarantee
Jisho
fee
Receipt of
–
2,888
–
collateral5,6
Provision of
credit–8,000–
2
guarantee
GK Daiba
011
TK Equity Receipt ofJisho
creditAdvances
2 received
20
guarantee
fee
Provision of
credit–3,604–
2
guarantee
GK Kawabata
011
TK Equity Receipt ofHoldings
creditAdvances
1 received
8
guarantee
fee
Provision of
credit2,556––
2
guarantee
GK Nakasu
011
TK Equity Receipt ofHoldings
creditAdvances– received
6
guarantee
fee
Name

24

(JPY million)
Affiliation

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Voting Rights
Nature ofTransaction
Balance
Held
Transaction
Account
RelationshipAmountOutstanding
by Ichigo
Provision of
credit2,218––
guarantee2
Receipt ofAdvances
GK SA3011
TK Equity credit–
6
guarantee
received
fee
Receipt of
2,718
–
–
collateral5,6
Provision of
credit1,580––
guarantee2
Receipt of
GK Asakusa
11Advances0
TK Equity credit– received
4
Jisho
guarantee
fee
Receipt of
–
1,859
–
collateral5,6
Receipt of
5,789
–
–
collateral5,6
Provision of
GK Chouan
011
TK Equity credit
guarantee
6,140
–
–
and
collateral9
Receipt of
1,310
–
–
collateral5,6
Provision of
GK Gyoutatsu
011
TK Equity credit
1,445–
guarantee–
andcollateral9
Receipt ofcredit2,894––
guarantee3
Advance4
payment
GK Kinjo011
TK Equity Payment ofcreditguarantee
1 Investment
and otherfee to2assets –guarantor
other
GK Ichigo
Showamura
Provision of
1,374
–
011
TK Equity collateral10–
Ogose ECO
Power Plant
GK Ichigo
Provision ofHamanaka
1,259
–
011
TK Equity credit–
Bokujo ECO
guarantee2
Power Plant
Name

25

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 credit guarantees from Ichigo on loans from banks.
4
Ichigo has received credit guarantees or collateral from its subsidiaries for a loan of JPY
1,840 million from banks.
5
The subsidiary has received collateral from Ichigo for loans from banks.
6
Ichigo has received collateral from its subsidiaries for a loan of JPY 6,344 million frombanks.
7
The subsidiary has received both guarantees and collateral from Ichigo for the loans frombanks.
8
The transferred assets and liabilities due to the company absorption are JPY 1,755 million
and JPY 135 million, respectively. The company absorption does not require any share ormonetary transfer, because the successor company owns all shares of the absorbed company.
9
Ichigo has guaranteed and provided collateral for loans from banks.
10
Ichigo has provided collateral for loans from banks.
11
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 Solution 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).
12
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.
XIII. Per Share Data
A. Net assets per share

JPY 161.55

B. Net income per share

JPY 26.11

C. Net income per share (diluted)

JPY 26.10

IX. Material Subsequent Events
N/A

26