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-Third Annual Shareholder Meeting Business Report– Employee Stock Option Details– 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 Option Details

Holding Details

1. Stock Options Issued as Compensation for Execution of Duties by Officers
15th Stock Option Plan
Date of resolution
January 13, 2017
Number of stock options
1,498,500 units1
Type and number of shares
1,498,500 common shares (1 share per unit)
Issue price
N/A
Exercise price
JPY 423 per share
Exercise period
January 14, 2020 – January 13, 2025
2
Exercise conditions
Number of stock options:
Directors
Number of shares:(excluding Independent Directors)
Number of holders:Number of stock options:
Independent Directors
Number of shares:
Number of holders:
Statutory Executive Officers
Number of stock options:(excluding those who are also
Number of shares:
Directors)
Number of holders:
1

260,000 units
260,000 shares
3
60,000 units
60,000 shares
4
231,200 units
231,200 shares
7

Of the total stock options 551,200 units have been issued to Officers. (No units havebeen exercised in the fiscal year ending February 2023.)
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

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
1,453,700 units1
1,453,700 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 shares5
228,400 units
228,400 shares
7

Of the total stock options 514,600 units have been issued to Officers. (No units havebeen exercised in the fiscal year ending February 2023.)
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

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
1,502,600 units1
1,502,600 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 shares5
230,400 units
230,400 shares
7

Of the total stock options 475,200 units have been issued to Officers. (No units havebeen exercised in the fiscal year ending February 2023.)
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

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
1,816,700 units1
1,816,700 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
203,000 units
203,000 shares
7

Of the total stock options 518,000 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.

5

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
1,855,200 units1
1,855,200 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 shares5
208,000 units
208,000 shares
7

Of the total stock options 519,200 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.

6

20th 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

August 19, 2022
1,973,900 units1
1,973,900 common shares (1 share per unit)
N/A
JPY 350 per share
August 20, 2025 – August 19, 2030
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:

232,100 units
232,100 shares
3
90,000 units
90,000 shares
6
212,000 units
212,000 shares
6

Of the total stock options 534,100 units have been issued to Officers.
Exercise Conditions(i) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(ii) Pledges and other disposition of stock options are not permitted.
(iii) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (iv).
(iv) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.

7

2. Stock Options Issued for Compensation for Execution of Duties by Officers andEmployees during the Current Fiscal Year
20th Stock Option Plan

Holding Details

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

August 19, 2022
2,000,000 units1
2,000,000 common shares (1 share per unit)
N/A
JPY 350 per share
August 20, 2025 – August 19, 2030

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

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

1,444,900 units
1,444,900 shares
200

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 1,465,900 units have been issued to employees.
Exercise Conditions(i) Any person who is allotted stock options is required to remain in the positionof Director, Statutory Executive Officer, or employee of Ichigo, or Director,
Statutory Executive Officer, Auditor or employee of Ichigo’s subsidiaries andother similar positions until the rights are exercised, except for retirement due
to expiration of term, mandatory retirement, and other cases approved by the
Board of Directors.
(ii) Pledges and other disposition of stock options are not permitted.
(iii) If a person who is allotted stock options should become deceased, the heir
may exercise the rights subject to the conditions provided for in the Stock
Options Allotment Agreement as described in (iv).
(iv) Other conditions are subject to the Stock Options Allotment Agreement
entered into between Ichigo and recipient of stock options pursuant to theresolution of Ichigo’s Board of Directors.

3. Other Material Matters regarding Stock Options
N/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,
who in turn supervise employees within their respective delegated areas ofmanagement. 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 both Statutory Executive Officers andemployees.
(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 six independent and four internal
Directors, and had a total of 9 meetings during FY23/2 with a 96.6% 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 18 meetings during FY23/2 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
FY23/2 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 FY23/2,
Statutory Executive Officers set their business policies and targets in accordancewith the Ichigo 2030 long-term vision and successfully achieved these targets. The
Head of Finance provides analytic support to the Senior Management Meeting tosupport 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: 47
Major Consolidated Subsidiaries
Ichigo Investment Advisors Co., Ltd.
Ichigo Estate Co., Ltd.
Ichigo ECO Energy Co., Ltd.
Ichigo Owners 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 Land Shinchiku Co., Ltd. and Ichigo Real Estate Services Fukuoka Co.,
Ltd., which were merged into Ichigo Estate Co., Ltd. on December 1, 2022, havebeen excluded from the scope of consolidation.
Three investment partnerships have been excluded from the scope of
consolidation because their materiality decreased during FY23/2.
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
8 companies
2 companies
1 company
11 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 FY23/2.
D. Accounting Standards
1. Valuation of Material Assets
a. Other Securities
Securities without market prices (excluding equities)

Mark-to-market(Valuationdifference isreported as acomponent ofshareholders’equity; the cost is
calculated using
the moving
average cost
method.)Equities without market prices

Moving average
cost method (Thevaluation method
for investment
partnerships isnoted in 6. (c)Investment
Partnerships.)16

b. Derivatives

Mark-to-market

c. Real Estate for Sale

Cost (however, impair assets whose
profitability declines)

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

Primarily straight-line method

Useful life

Buildings and structures: 8~39 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. Standards for Recognition of Important Revenues and Costs
a. Recognition of Revenues
Details of the performance obligations and the fulfillment of performanceobligations (i.e., time of revenue recognition) accounted for by its core businesses
that arise from contracts with Ichigo’s and Ichigo subsidiaries’ clients are as
follows:
Asset Management
Asset-Related Fee Revenue
As for the fees received from the REITs, infrastructure fund, and private funds, theperformance obligation to operate and manage an asset arises based on the client
contract. A performance obligation is satisfied over a certain period as stipulated
in the contract, and revenue is recognized during that period. However, fees linked
to asset acquisitions and sales are recognized as revenue at the time of the closingof the acquisition or sale, as the obligation is fulfilled all at once.
Sustainable Real Estate
Revenue from Asset Sales
As for the revenue from asset sales, the performance obligation to transfer
ownership of an asset arises based on the purchase and sale agreement with theclient. The performance obligation is fulfilled and revenue is recognized at thetime of the closing of the sale.
The sale price is determined in the purchase and sale agreement, and part of thesale price is received as a deposit upon the signing of the contract, and the balanceis paid when the asset is transferred.
Real Estate Rental Revenue
Real estate rental revenue is recognized in accordance with the Accounting
17

Standard for Lease Transactions (ASBJ Statement No. 13, March 30, 2007).
In addition, fees arising from the provision of ancillary services to the lease
contract are recognized as revenue when the term of service ends or throughout
the contract term depending on the details of the agreement.
Clean Energy
Power Production Revenue
Ichigo’s consolidated subsidiary bears the performance obligation to supply
electricity generated at its power plants based on its power supply contracts with
its clients. The performance obligation is satisfied and revenue is recognized at thetime electricity is supplied.
5. 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 Guidance No. 40, March 17, 2022), 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

18

6. 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.
7. 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
Ichigo and certain domestic subsidiaries will shift to a group aggregate tax
treatment from a consolidated tax treatment from FY24/2. With respect toreporting deferred tax assets and liabilities, accounting items that were subject tochange as part of the shift to a group aggregation system and changes instandalone tax rules under the 2020 Tax Reform, Ichigo and certain domestic
subsidiaries apply pre-revision tax rules pursuant to the Tax Accounting With
Respect to the Shift from the Tax Consolidation System to Group Aggregation
System (ASBJ Guidance No. 39, March 31, 2020), and do not apply the rules
prescribed under Clause 44 of the Accounting Standards Implementation
Guidance for Tax Accounting (Implementation Guidance No. 28, February 16,2018).

19

From the beginning of FY24/2, Ichigo will apply the accounting treatment anddisclosure rules prescribed under the Accounting and Disclosure Under the GroupTax Aggregation System (ASBJ Guidance No. 42, August 12, 2021) for its
reporting of corporate tax and local corporate tax, and tax accounting under its
group aggregation system.

20

II. Notes on Changes in Accounting Policies
Application of Revenue Recognition Accounting Standard
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020; hereinafter the “Revenue Recognition Accounting Standard”) has
been applied from the beginning of FY23/2. Under this accounting standard,
revenue is recognized in an amount expected to be received in exchange for goods
or services when control of promised goods or services is transferred to a customer.
Ichigo applies the transitional treatment provided in the notes to Clause 84, andthere is no impact from this change on retained earnings as of the beginning of
FY23/2.
Accordingly, the impact from the change in Revenue Recognition AccountingStandard on FY23/2 earnings is minimal.
Application of Accounting Standard for Fair Value Measurement
The “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30,
July 4, 2019; hereinafter the “Fair Value Measurement Accounting Standard”) has
been applied from the beginning of FY23/2. In accordance with the transitional
treatment provided for in Clause 19 of the Accounting Standard for Fair Value
Measurement and Clause 44-2 of the Accounting Standard for Financial
Instruments (ASBJ Statement No. 10, July 4, 2019), the Fair Value Measurement
Accounting Standard will henceforth be applied on an ongoing basis.
Financial instruments such as corporate bonds and other bonds for which it isdifficult to obtain a market value were previously recorded on the balance sheet
based on acquisition price. Under the Fair Value Measurement AccountingStandard, these financial instruments will be recorded on the balance sheet using amarket value derived from unobservable inputs based on the best available
information.
Ichigo discloses the breakdown of financial instruments by market value in VII.
Notes on Financial Instruments.
III. Notes on Accounting Estimates
Valuation of Real Estate
A. Amount Recorded in FY23/2 Financial Statements
Real Estate for Sale
Fixed Assets

JPY 79,151 million
JPY 166,227 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 FY23/2-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 is21

recorded. 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. Due
to sustained high real estate transaction prices, cap rates have been trending
downward in FY23/2. As a result, the impact on the valuation of real estate islimited. With respect to its hotel assets, Ichigo has reflected a certain level of
inbound demand in its forecasts of future cash flows on the back of the lifting ofoverseas travel restrictions last year. However, compared to pre-Covid levels, theestimates are conservative.
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.

22

IV. 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 2,395 million
JPY 181 million
JPY 1,324 million
JPY 47,551 million
JPY 12 million
JPY 32,822 million
JPY 9,919 million
JPY 67,623 million
JPY 323 million
JPY 777 million
JPY 1,200 million
JPY 164,132 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 6,653 million
JPY 118,327 million
JPY 124,981 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 4,888 million
JPY 228 million
JPY 10 million
JPY 12,350 million
JPY 13,856 million
JPY 29,582 million
JPY 44 million
JPY 344 million
JPY 61,307 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

23

JPY 4,218 million
JPY 38,012 million
JPY 42,231 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 FY23/2)
Total amount of overdraft, loan commitment, andterm loan agreements
Draw-down amount
Unused balance

JPY 46,190 million
JPY 22,456 million
JPY 23,733 million

V. 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.
VI. 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
FY23/2
Shares issued
Common shares
Total
Treasury shares
Common shares
Total
1
2

Increase inshares during
FY23/21

Decrease inshares during
FY23/22

Number ofshares at the endof FY23/2

505,381,018
505,381,018

–
–

–
–

505,381,018
505,381,018

37,466,500
37,466,500

14,552,200
14,552,200

26,50026,50051,992,200
51,992,200

Increase in treasury shares due to share buyback: 14,552,200 shares
Decrease in treasury shares due to sale of treasury shares: 26,500 shares

24

B. Employee Stock Options
Underlying Number of Shares
Stock Options
14thstock option
issuance
15th
stock option
issuance
16th
stock option
issuance
17th
stock option
issuance1
18th
stock option
issuance1
19th
stock option
issuance1
20th
stock option
issuance1
Total
1

Share TypeValue(as of February
28, 2023)

March 1,
2022

Increase in Decrease in
FY23/2
FY23/2

Commonshares

1,093,200–

1,093,200––

Commonshares1,554,500–

56,0001,498,500

JPY 243 million

Commonshares1,507,700–

54,0001,453,700

JPY 296 million

Commonshares

1,567,000–

64,4001,502,600

JPY 111 million

Commonshares1,897,900–

81,2001,816,700

JPY 78 million

Commonshares1,932,500–

77,3001,855,200

JPY 66 million

Commonshares–2,000,000

26,1001,973,900

JPY 18 million

9,552,800

2,000,000

1,452,200 10,100,600

JPY 814 million–

February28, 2023

The 18h, 19th, and 20th stock option issuances are currently not exercisable, because their exercise
dates are in the future.

25

C. Dividends
1. Dividends Paid
Ichigo’s Board of Directors approved the following dividend on April 19, 2022:(a) Total Dividend(b) Source(c) Dividend per Share(d) Record Date(e) Payment Date

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

2. Dividends where the Record Date is in FY23/2, but the Payment Date is in FY24/2
Ichigo’s Board of Directors approved the following dividend on April 19, 2023:
(a)
(b)
(c)
(d)
(e)

Total Dividend
SourceDividend per Share
Record Date
Payment Date

JPY 3,627 million
Retained earnings
JPY 8
February 28, 2023
May 29, 2023

26

VII. 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
Accounts receivable is an operating receivable that is exposed to customer credit
risks. Foreign currency-denominated financial 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
for the 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.

27

(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.

28

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, 2023 are shown below.
(JPY million)
Amount Recordedon Consolidated
Balance Sheet
Assets(1) Securities investments

Market Value

Difference

2,993

2,993

–

2,993

2,993

–

Liabilities(1) Bonds3(2) Long-term loans4

5,603
161,164

5,631
161,14527-19(3) Long-term non-recourse loans5

42,231

42,311

79

208,999

209,087

87

841

841

–

Total Assets

Total Liabilities
Derivative Transactions6
1“Cash and deposits,” “Accounts receivable,” “Short-term loans,” and “Income taxes
payable” are omitted because they are cash or items to be settled in the short term withmarket values approximately equal to book value.

2

The amounts of equities without market values and investment partnerships recorded on
the consolidated balance sheet are shown below. Such figures are not included in (1)Securities investments. Equities without market values are not subject to disclosure asprescribed in Clause 5 of the Implementation Guidance on Disclosures of Fair Value of
Financial Instruments (ASBJ Implementation Guidance No. 19, July 4, 2019). The market
value of investment partnerships are not subject to disclosure as prescribed in the
Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ
Implementation Guidance No. 31, July 4, 2019) Article 24-16.
(JPY million)
Amount Recorded on
Consolidated Balance Sheet
Operational securities investments

47

Securities investments

1,462

Total

1,509

3

“Bonds (due within one year)” are included in “(1) Bonds.”“Long-term loans (due within one year)” are included in “(2) Long-term loans.”
5“Long-term non-recourse loans (due within one year)” are included in “(3) Long-term
non-recourse loans.”
6
Claims and obligations associated with derivative transactions are shown in net amounts.
For figures whose net amounts are net obligations, the figure is shown in parenthesis.
429

C. Breakdown of Financial Instruments by Market Value
Ichigo has classified the market values of financial instruments into three levels
based on the observability and importance of the inputs used to calculate market
value.
Level 1: Market value calculated based on observable inputs that reflect market
prices for identical assets and liabilities in active markets
Level 2: Market value calculated based on observable inputs other than thoseincluded in Level 1
Level 3: Market value calculated based on unobservable inputs
If multiple significant inputs are used to calculate market value, the financial
instrument is classified under the lowest level of the multiple inputs.
1. Financial Instruments Recorded at Market Value in Consolidated Balance Sheet
Market Value (JPY million)
Level 1
Securities investments
Derivative transactions
Total Assets

Level 2

Level 3

Total

2,093
–

870
841

30
–

2,993
841

2,093

1,711

30

3,835

2. Financial Instruments Recorded at Market Value in Consolidated Balance Sheet
Market Value (JPY million)
Level 1

Level 2

Level 3

Total

Corporate Bonds
Long-Term Loans
Long-Term Non-Recourse Loans

–
–
–

5,631
161,145
42,311

–
–
–

5,631
161,145
42,311

Total Assets–

209,087–

209,087(Note) Valuation Methods Applied to Market Value Calculations and Explanation of
Inputs Used in Market Value Calculations
Securities Investments
Listed stocks are valuated using market price and classified as Level 1 because they
are traded on an active market. Meanwhile, because market prices for Ichigo’sbonds, which are not actively traded on the market, are not available, the value ofthe bonds are calculated using the present value of future cash flow discounted by adiscount rate and bonds are classified as Level 2.
Derivative Transactions
The market value of interest rate swaps and interest rate caps are calculated using
information obtained from the lender banks, and are classified as Level 2. The
market value of interest rate swaps and interest rate caps under special treatment isincluded in long-term loans and long-term non-recourse loans since it is accounted
for with the instrument it hedges.
30Bonds (Due Within One Year)
The market value of bonds issued by Ichigo is calculated based on the present valueof the total amount of principal and interest using a discount rate that accounts forthe remaining period and credit risk of the bonds, and is classified as Level 2.
Long-Term Loans and Long-Term Non-Recourse Loans
The market values of long-term loans and long-term non-recourse loans arecalculated based on the present value of the total amount of principal and interest
using a discount rate that accounts for the remaining period and credit risk of theloans.

31

VIII. 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 FY23/2 was JPY 3,677 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 4,416 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, 2022
Increase/Decrease2
Feb 28, 2023
20233
173,165-6,938166,227
218,859
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 4,699 million due
to the acquisition of real estate and JPY 1,373 million from Capital Expenditures.
The main components of the decrease for the fiscal year are JPY 9,607 million
resulting from asset sales and JPY 3,179 million of Depreciation.
3
Market value as of February 28, 2023 is based upon third-party real estate appraisals andcalculated by Ichigo using reasonable indices reflecting market prices.

32

IX. Notes to Revenue Recognition
A. Breakdown of Revenue From Contracts with Customers
Revenue From External Customers(JPY million)
InterSegment
Activities
Totalor
Reclassifi
cations
485
4,241

Revenue
From
ClientContract

Revenue
From
Other
Sources1

3,755

–

3,755

3,677

–

3,677

485

4,163

78

–

78

–

78

18,34340,294

58,637

1

58,639

Revenue From Asset Sales

13,767

27,377

41,144–

41,144

Real Estate Rental Revenue

4,246

12,82817,074

1

17,076

Other

329

88

418

–

418

Clean Energy

5,576

123

5,699

–

5,699

5,576

–

5,576

–

5,576

–

123

123

–

123

27,67540,417

68,093487

68,580Asset Management
Asset-Related Fee Revenue
Other
Sustainable Real EstatePower Production Revenue
Other
Total

Total

Adjustment
–
–
–
-487
-487
Amount Recorded in
27,67540,417
68,093–68,093Financial Statements
1
Revenue from other sources includes gains on sale of real estate based on the
Accounting Treatment for Sellers Regarding Real Estate Securitization Using
Special Purpose Companies (ASBJ Report No. 15, November 4, 2014) and rental
income based on the Accounting Standard for Lease Transactions (ASBJ
Statement No. 13, March 30, 2007).
B. Information on Understanding Revenue from Contracts with Customers
Please refer to (I) Material Matters for Preparation of the Consolidated Financial
Statements (D) Accounting Standards, (4) Recognition of Revenues and Costs for
information regarding revenue.

33

C. Information on Understanding FY23/2 and FY24/2 Revenue
1. Financial Instruments Recorded at Market Value in Consolidated Balance Sheet(JPY million)
FY23/2
Liabilities From Client Contracts (as of Mar 1, 2022)

1,865

Liabilities From Client Contracts (as of Feb 28, 2023)

3,610

Contract Assets (as of Mar 1, 2022)–

Contract Assets (as of Feb 28, 2023)–

Contract Liabilities (as of Mar 1, 2022)

994

Contract Assets (as of Feb 28, 2023)

43

Contract liabilities are advances received as deposits with respect to real estatetransactions under the Sustainable Real Estate business. Contract liabilities
decrease in line with revenue recognition. In FY23/2, the amount of revenue
recognized for the satisfaction of performance obligations from prior periods is notmaterial.
2. Financial Instruments Recorded at Market Value in Consolidated Balance Sheet
Ichigo did not have any contracts with an expected contract term over one year.

34

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.
FY23/2
Number of Voluntary Partnerships
Total Assets as of Fiscal Period-end
Total Liabilities

2
JPY 1,362 million
JPY 3 million

B. SPC Transaction Amounts(JPY million)

Real Estate Transactions1
2Managing Partner Fee

Transaction
Category
Amount868 Revenue
3 Revenue

Amount868
3

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 227.24
JPY 20.45
JPY –Note: Ichigo had no dilutive common shares. Therefore, diluted net income per share
information has not been disclosed.

35

XII. Material Subsequent Events
N/A
XIII. Other Notes
Ichigo wrote down the below asset in FY23/2.
(1) Asset and Write-down Amount
Asset

Type

Location

Impairment Loss

Other

Goodwill
Plant Under
Construction

Chiyoda-ku, Tokyo
Isumi County,
Chiba

JPY 712 million

Clean Energy Plant

JPY 91 million(2) Write-down Rationale
Ichigo impaired the goodwill and the plant under construction to their respective
recoverable amounts based on the current business environment and the cancellation ofplant construction. The equivalent amounts were recorded as losses under Extraordinary
Losses.
(3) Asset Grouping Method
When applying impairment accounting, Ichigo classifies assets into discrete groups using
the minimum asset unit that generate independent cash flow. For goodwill, the grouping
method is applied individually. For plants under construction, the grouping method uses
each plant as the minimum asset unit.
(4) Calculation of Recoverable Amount
Ichigo calculates the recoverable amount of goodwill based on value-in-use, and therecoverable amount is set to zero because there is no possibility of conversion or sale. For
the plant under construction, the recoverable amount is based on net sale price.
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 without market prices (excluding equities)

Mark-to-market(Valuation difference
is reported as acomponent ofshareholders’ equity;
the cost is calculatedusing the moving
average cost method.)

Equities without market prices

Moving average cost
method (Valuation
method forinvestment
36

partnerships is notedin (G) 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

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.
E. Accounting Standard for Recognition of Important Revenue and Costs
Details of the performance obligations and the fulfillment of performance obligation(i.e., time of revenue recognition) accounted for by its core businesses that arise
from contracts with Ichigo’s clients are as follows:
Management Advisory Fee
Ichigo receives a management advisory fee from some of its subsidiaries and its
performance obligation is to provide management advice and guidance. The
performance obligation is satisfied over a period of time, and revenue is recognizedat the time it is satisfied.
Dividend Income
Dividend income consists of dividend income from Ichigo subsidiaries and gains
and losses distributed from the investment partnerships. Dividend income from
Ichigo subsidiaries are recognized as revenue on the payment date. For details ofgains and losses distributed from the investment partnerships, please refer to I.
Material Accounting Policies (G) Other Material Matters Related to the Preparationof the Financial Statements (3) Investment Partnerships.

37

As revenue from dividend income is a financial instruments transaction within thescope of the Accounting Standard for Financial Instruments (ASBJ Statement No.
10, July 4, 2019), it is not accounted for as revenue arising from contracts withclients.
Real Estate Rental Revenue
Real estate rental revenue is recognized as revenue when the term of the provisionof ancillary services to the lease contract ends or throughout the contract term
depending on the details of the agreement.
Real estate rental revenue is recognized in accordance with the AccountingStandard for Lease Transactions (ASBJ Statement No. 13, March 30, 2007).
F. 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.
G. Other Material Matters Related to the Preparation of the Financial Statements
1. Non-deductible Consumption Tax
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.

38

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.
5. Tax Effect Reflecting Transition to Group Aggregate Tax Treatment From
Consolidated Tax Treatment
Ichigo will shift to a group aggregate tax treatment from a consolidated tax
treatment starting in FY24/2. With respect to reporting deferred tax assets andliabilities, accounting items that were subject to change as part of the shift to agroup aggregation system and changes in standalone tax rules under the 2020 Tax
Reform, Ichigo and certain domestic subsidiaries apply pre-revision tax rules
pursuant to the Tax Accounting With Respect to the Shift from the Tax
Consolidation System to Group Aggregation System (ASBJ Guidance No. 39,
March 31, 2020), and do not apply the rules prescribed under Clause 44 of the
Accounting Standards Implementation Guidance for Tax Accounting(Implementation Guidance No. 28, February 16, 2018).
From the beginning of FY24/2, Ichigo will apply the accounting treatment anddisclosure rules prescribed under the Accounting and Disclosure Under the GroupTax Aggregation System (ASBJ Guidance No. 42, August 12, 2021) for its
reporting of corporate tax and local corporate tax, and tax accounting under its
group aggregation system.
II. Notes to Restatement
A. Application of Revenue Recognition Accounting Standard
The Revenue Recognition Accounting Standard (ASBJ Statement No. 29, March 31,2020) has been applied from the beginning of FY23/2. Under this accounting standard,
revenue is recognized in an amount expected to be received in exchange for goods orservices when control of promised goods or services is transferred to a customer.
Ichigo applies the transitional treatment provided in the notes to Clause 84, and there
is no impact from this change on retained earnings as of the beginning of FY23/2.
Accordingly, the impact from the change in Revenue Recognition AccountingStandard on FY23/2 earnings is minimal.
B. Application of Accounting Standard for Fair Value Measurement
The Fair Value Measurement Accounting Standard (ASBJ Statement No. 30, July 4,2019) has been applied from the beginning of FY23/2. In accordance with thetransitional treatment provided for in Clause 19 of the Fair Value Measurement
Accounting Standard and Clause 44–2 of the Accounting Standard for Financial
Instruments (ASBJ Statement No. 10, July 4, 2019), the Fair Value Measurement
Accounting Standard will henceforth be applied on an ongoing basis.
Financial instruments such as corporate bonds and other bonds that are recognized as
being difficult to obtain a market value for were previously recorded on the balance
sheet based on acquisition price. Under the Fair Value Measurement Accounting

39

Standard, these financial instruments will be recorded on the balance sheet using amarket value derived from unobservable inputs based on best available information.
III. Notes to Accounting Estimates
Valuation of Real Estate
A. Amount Recorded in FY23/2 Financial Statements
Fixed Assets

JPY 7,928 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
A. 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 43 million
JPY 204 million
JPY 2,099 million–
JPY 1 million
JPY 1,399 million
JPY 3,747 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

JPY 100 million
JPY 725 million
JPY 825 million

B. Contingent Liabilities
Ichigo is guaranteeing the following subsidiaries’ loans from financial institutions:
Ichigo Estate Co., Ltd.
Ichigo ECO Energy Co., Ltd.
Ichigo Owners Co., Ltd.
Centro Co., Ltd.
Storage Plus Corp.
Hakata Hotels Inc.
GK Daiba Jisho
GK Kawabata Holdings
GK Nakasu Holdings

JPY 39,918
JPY 9,688
JPY 13,637
JPY 431
JPY 1,032
JPY 22
JPY 8,000
JPY 2,966
JPY 2,12340

millionmillionmillionmillionmillionmillionmillionmillionmillion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 Co., Ltd.
Ichigo Ebino Suenaga ECO Power Plant GK

JPY 5,194 million
JPY 150 million
JPY 79 million
JPY 114 million
JPY 108 million
JPY 391 million
JPY 326 million
JPY 793 million
JPY 221 million
JPY 227 million
JPY 151 million
JPY 2,823 million
JPY 88,401 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 1,664 million
JPY 227 million
JPY 52 million

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 6,767 million
JPY 171 million
JPY1,010 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

51,992,200 sharesVII. Taxes

41

Breakdown of Deferred Tax Assets and Liabilities
Deferred Tax Assets
Accrued business taxes
Surplus for provision of allowance for doubtful
accounts
Valuation loss on operating securities investments
Valuation loss on securities investments
Valuation loss on investments in real estate
Valuation loss on securities of affiliates
Other
Sub-total
Allowance for valuation
Deferred Tax Assets Total

JPY 31 million
JPY 50 million
JPY 173 million
JPY 184 million
JPY 1,505 million
JPY 840 million
JPY 248 million
JPY 3,033 million-JPY 2,835 million
JPY 198 million

Deferred Tax Liabilities
Valuation gain on other securities
Deferred gains (losses) on long-term interest rate hedges
Other liabilities
Deferred Tax Liabilities Total
Net Deferred Tax Assets-JPY 149 million-JPY 23 million-JPY 2 million-JPY 174 million
JPY 24 million

42

VIII. Related Party Transactions(JPY million)
Affiliation

Name

Subsidiary

Ichigo EstateCo., Ltd.

Voting Rights Nature ofTransaction
Balance
Held
Transaction
Account
AmountOutstanding
by Ichigo Relationship
Short-termloans to11,155affiliates
Lending1
10,491Long-termloans to31,444affiliates
Current
assets –54
otherInterest
312
received
Current
liabilities ––otherProvision of
credit39,918––2
guarantee
Service100%
contract Receipt ofcredit1,444––
guarantee7,8Receipt ofcredit1,474––
guarantee andcollateral4,5Receipt ofcredit10,058––guarantee and5collateral

Subsidiary

Ichigo ECOEnergy Co.,
Ltd.

100%

Servicecontract

Subsidiary

Ichigo Land
Shinchiku Co.,
Ltd.11100%Servicecontract

43

Managementadvisory fee10

1,235

–

–

Provision of
creditguarantee2

9,688

–

–

Interest
received

23––

(JPY million)
Affiliation

Name

Subsidiary

Ichigo Real
Estate Services
Fukuoka Co.,
Ltd.11

Voting Rights
Nature ofTransaction
Held
Transaction
Account
RelationshipAmountby Ichigo
100%Servicecontract

Interest
received

Lending1

Subsidiary

Ichigo Owners
Co., Ltd.

100%

Servicecontract

Interest
received
Provision of
creditguarantee2
Receipt ofcreditguarantee andcollateral5
Receipt ofcollateral3

44

71

–

Short-termloans toaffiliates
17,304Long-termloans toaffiliates
Current
235 assets –otherBalance
Outstanding–

11,65015,72342

13,637––

13,759

–

–

700

–

–

(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

GK ACZ

09

Subsidiary

SubsidiaryGK
Shinsaibashi
Jisho

09

09

Affiliate
400 bonds

2,248

Current
8 assets –
other

8

–

–

8,000

Advances
2 received
2,966

–

Advances
1 received
2,123

–

Advances– received
5,194

–

8
–
3
–

2

–

TK Equity
Receipt ofcreditguarantee fee

Ichigo Ebino
Suenaga ECOPower Plant
GK

Balance
Outstanding

Provision of
TK Equity credit
guarantee2

TK Equity

Payment ofcreditguarantee fee
to guarantor
Receipt ofcreditguarantee andcollateral4,545Advances
1 received

2,823

–

Prepaid
expenses
2 Investment
and otherassets –
other
1,896

–

9

–

2
11

–

(JPY million)
Affiliation

Subsidiary

Subsidiary

Subsidiary

Voting Rights
Nature ofTransaction
Balance
Held
Transaction
Account
RelationshipAmountOutstanding
by Ichigo
Long-term
Borrowing
318 loans ofBorrowing1
10,371&affiliates
GK LIFT2
100
Payment of
321 Accrued
80Interest Interest paid
expenses
Payment ofcredit1 Prepaid
1
guarantee fee
expenses
to guarantor
GK Kichijoji
09
TK Equity
Holdings
Investment
Receipt of
other2,779 and4collateral3,6
assets –other
Payment ofcredit– Prepaid–
guarantee fee
expenses
to guarantor
GK Akihabara
09
TK Equity
Jisho
Investment
Receipt ofother2,011 and3
collateral3,6
assets –
other
Name

1

The interest rate on loans from Ichigo to affiliates (and in certain cases, from affiliates toIchigo) 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 3,371 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 4,790 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
1,444 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 under the Practical Solutions on Application of Control Criteria and Influence Criteria
to Investment Partnerships (ASBJ Guidance No. 20, March 25, 2011).
10
Ichigo engages in the management of certain wholly-owned subsidiaries.
11
Ichigo Land Shinchiku Co., Ltd. and Ichigo Real Estate Services Fukuoka Co., Ltd. weremerged into Ichigo Estate Co., Ltd. on December 1, 2022. Accordingly, the above amounts
are the transaction value for the period during which they were related parties.
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.

46

IX. Notes on Revenue Recognition
Information for understanding revenue recognition is provided in I. Material
Accounting Policies, E. Accounting Standards for Important Revenue and Cost.
X. Per Share Data
Net Assets per ShareNet Income per ShareNet Income per Share (fully diluted)

JPY 157.30
JPY 4.69
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

47