Note: This document has been translated from the Japanese original for reference only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail. Sun Frontier Fudosan Co., Ltd.
Assumes no responsibility for this translation, and also for the damages directly, indirectly or other forms arising fromthe translation.
(Stock Exchange Code 8934)
June 5, 2023
To Shareholders with Voting Rights:
Sun Frontier Fudousan Co., Ltd.
Seiichi Saito, President and Representative Director
2-2, Yurakucho 1-chome,Chiyoda-ku, TokyoNOTICE OF
THE 24 ANNUAL GENERAL MEETING OF SHAREHOLDERSthDear Shareholders,
We would like to express our appreciation for your continued support and patronage.
Please be informed that the 24th Annual General Meeting of Shareholders of Sun Frontier Fudosan Co., Ltd. (the“Company”) will be held for purposes as described below.
For the convocation of this General Meeting of Shareholders, electronic provision of information (materials subject toelectronic provision), which is the contents of the Reference Documents, etc., has been implemented and posted on thefollowing websites. Please access them to check the related information.
The Company's website : https://www.sunfrt.co.jp/(Please access the above website and select “Investor Relation” and “General Meeting of
Shareholders ” from the menu in this order.)The materials subject to electronic provision also posted on the following website. Please check it too.
Please access TSE website (TSE Listed Company Search)https://www2.jpx.co.jp/tseHpFront/JJK020030Action.do(Please access the above TSE website (TSE Listed Company Search), enter the name of the stock(Sun Frontier Fudousan Co., Ltd.) or securities code (8934), select “Basic information”, “Documentsfor public inspection/PR information”, then check “Notice of General Shareholders Meeting/Informational Materials for a General Shareholders Meeting” section of “Filed information available
for public inspection”.
In lieu of attending the meeting, you may exercise your voting rights in writing or via the Internet, etc. Please review theReference Documents listed in the “materials subject to electronic provision” and exercise your voting rights inaccordance with the “Guide for Exercising Voting Rights” on page 3 by 6:00 p.m. on Monday, June 26, 2023 (JST).
Information of the 24th Annual General Meeting of Shareholders
1. Date2:30 p.m. (JST) on Tuesday, June 27, 2023
(The hall is scheduled to be opened at 1:30 pm.)
2. Location
Pulp & Paper Building, 2nd Floor #Phoenix Hall 2nd Floor
3-9-11, Ginza, Chuo-ku, Tokyo
3. Agenda
Materials to be 1. Business Report, Consolidated Financial Statements, and the Results ofreported
Audits of the Consolidated Financial Statements by the Accounting Auditors
and the Audit & Supervisory Committee Board for 24th Fiscal Year (April 1,
2022 to March 31, 2023)
2. Non-consolidated Financial Statements for 24th Fiscal Year (April 1, 2022
to March 31, 2023)
Materials to be Proposal Election of Eight (8) Directors who are not Audit & Supervisory
resolved
Committee Members―1―■ Other Decisions Regarding the General Meeting of Shareholders• “Social gathering with Shareholders”, which was previously held before the pandemic of COVID-19, will resume thisyear. We look forward to your participation.
• In order to provide information promptly, the contents of this notice are disclosed on the Company's website prior to
the shipment of this notice.
• There are no souvenirs available for shareholders attending the General Meeting of Shareholders. Thank you for yourunderstanding.
• When you attend the meeting, you will be kindly requested to present the enclosed Voting Rights Exercise Form at
the reception.
• If the Shareholders is willing to exercise the voting rights by proxy, only 1 person per 1 shareholder who has voting
rights may attend the General Meeting of Shareholders as a proxy. In this case, please submit a document certifying
the authority of representation such as a power of attorney to the Company. (Poxy who is not a shareholder andaccompanying persons are not allowed to attend the General Meeting of Shareholders.)• If you exercise your voting rights both on the Voting Rights Exercise Form and via the Internet, the vote exercised via
the Internet will be deemed valid.
• If the voting rights are exercised for multiple times via the Internet, the last vote exercised will be treated as valid.
• If you do not indicate your approval or disapproval of the proposal on the Voting Rights Exercise Form, it will betreated as a manifestation of your approval.
• The Shareholders who requested for documents delivery will receive this notice with materials subject to electronic
provision. However, in accordance with laws and regulations and the provisions of Article 16 of the Company's
Articles of Incorporation, the following materials are not stated in the document. Furthermore, the materials stated in
the documents delivered to the shareholders who requested for documents delivery are a part of Business Report,
Consolidated Financial Statements, and Non-consolidated Financial Statements audited by the Audit and Supervisory
Committee in preparing the Audit Report, and a part of Consolidated Financial Statements and Non-consolidated
Financial Statements, audited by the Accounting Auditor in preparing the Accounting Audit Report.
(1) “Matters related to the Company's share acquisition rights, etc.” and “System for Ensuring Proper Business
Operations and Overview of Operation Status” in Business Report(2) “Consolidated Statement of Changes in Equity” and “Notes to Consolidated Financial Statements” in theConsolidated Financial Statements(3) “Non-Consolidated Statement of Changes in Equity” and “Notes to Non-Consolidated Financial Statements” inNon-consolidated Financial Statements■ Information for Website Posting• Any changes in the operation of the General Meeting of Shareholders will be posted on the Company's website at thefollowing URL. (https://www.sunfrt.co.jp/)• If there are any amendments made to the materials subject to electronic provision, such amendments will be postedon the respective websites listed.

■ Information for Preliminary Questions
To Shareholders who Has Questions
If the Shareholders have any opinions or questions regarding the agenda of this Annual General Meeting of Shareholders,please feel free to contact us. The Company plans to answer in advance the questions from the Shareholders which are―2―regarding the agenda of this Annual General Meeting of Shareholders, and the Company confirmed that are with highinterests from shareholders and able to be answered. For the convenience of preparation, we would appreciate yourcooperation in sending and reaching the questions by the following methods, date and time.
(Address) Corporate Planning Division of Sun Frontier Fudousan Co., Ltd.
(Address) 1-2-2 Yurakucho, Chiyoda-ku, Tokyo 100-0006(Email) soukai2023@sunfrt.co.jp

Deadline

6:00 p.m. on Wednesday, June 21, 2023

• Please note that we do not promise to answer all questions we receive.
• Please note that we will not be able to answer the questions individually.
• Questions that did not be answered at the General Meeting of Shareholders will be used for future reference.

Guide for Exercising Voting Rights
There are three ways to exercise the voting rights.
Please review the Reference Documents of the materials subject to electronic provision and exercise your voting rights.
Exercise the voting rights via
the Internet, etc.

Exercise the voting rights byattending on the day

Please indicate your approval ordisapproval of the proposals in theenclosed Voting Rights Exercise
Form and send back to us.

Please review the information on
page 5 of this notice, access thewebsite for exercising voting rightsfrom a smartphone or a computer,and indicate your approval ordisapproval of the proposals.

Please bring and submit the enclosed
Voting Rights Exercise Form to thereception desk when attending.

Expiration Date
By 6:00 p.m. on Monday,
June 26, 2023

Expiration Date
By 6:00 p.m. on Monday,
June 26, 2023

Date
2:30 p.m. on Tuesday,June 27, 2023

Exercise the voting rights in writing* Shareholders who are willing to exercise
the voting rights by proxy, may delegate
the person who is also a shareholder andwith the voting rights in accordance withthe provisions of Article 18 of theCompany's Articles of Incorporation.
However, the Shareholders shall submit adocument certifying the authority ofrepresentation.

Please indicate your approval or disapprovalof the proposals here.
Proposal

For institutional investors

Approve everyone≫

Circle the "賛"

Disapprove everyone≫

Circle the "否"Against some candidates≫

Circle the "賛".
And write down the numberof the candidate you oppose

You can exercise your voting rights by electromagnetic means from the "Electronic Voting Rights
Exercise Platform" operated by ICJ, Inc.

―3―

Guide for Exercising the Voting Rights via Internet, etc.
How to read QR code by smartphone“Smart Exercise”

How to enter the code and password to
exercise the voting rights

This is a method to log-in to the website of exercising

Website of exercising

voting right without entering the code and password.

voting rights

1 Please read the QR code at the bottom right ofhttps://soukai.mizuho-tb.co.jp/

1 Please access the website for exercising thethe Voting Rights Exercise Form.

voting rights.

Please click “次へすすむ”.

2 Please enter the code written on the Voting
Rights Exercise Form.

* ”QR code” is a registered trademark of DENSO WAVE
INCORPORATED.

Please enter the “議決権行使コード”.

2 Please follow the instructions on the screen to
indicate your approval and disapproval.

Please click “次へ”.

3 Please enter the password written on the Voting
Rights Exercise Form.
Please enter the “初期パスワード”.
Please reset the password.

Please click “登録”.

Shareholders could exercise the voting rights by“Smart Exercise” only one time.
Shareholders who is willing to change the vote,please access the website for PC, enter the codeand password written on the Voting Rights
Exercise Form to log-in, and exercise the voting
rights again.
* Reading the QR code again could bring you to
the website for PC too.
If there is any questions regarding
the exercising of voting rights,
please contact the address on the right side.

4 Please follow the instructions on the screen to
indicate your approval and disapproval.

Internet Help Dial of Mizuho Trust & Banking Co., Ltd.
(TEL) 0120-768-524(Conncted from 9 a.m. to 9 p.m. except for New Year Holidays)―4―

Proposal

Election of Eight (8) Directors who are not Audit & Supervisory Committee Member

The terms of office of all eight (8) Directors who are not Audit & Supervisory Committee Member will expire at theconclusion of this general meeting of shareholders. Accordingly, the election is proposed. This proposal was discussed
in the Audit & Supervisory Committee, and there were not particular opinions expressed.
The candidates for Directors who are not Audit & Supervisory Board Member are as follows.
Candidate
No.

Name

1

Tomoaki Horiguchi

Chairman Representative Director

Reappointment

2

Seiichi Saito

President Representative Director
President Executive Officer

Reappointment

3

Izumi Nakamura

4

Yasushi Yamada

5

Mitsuhiro Ninomiya

6Kenji Honda

Current Positions and Responsibilities

Vice President Director
Vice President Executive Officer
General Manager of Entrusted AssetManagement Division
Senior Managing Director
Senior Managing Executive Officer
General Manager of Business
Development Division
Director / Executive Officer
General Manager of Administration
Division and General Affairs Division
Director / Executive Officer
General Manager of AssetManagement Division

Candidate
Attributes

Reappointment

Reappointment

Reappointment

Reappointment

Attendance Rateof Board of
Directors
94% (16 of 17
meetings attended)

100% (17 of 17
meetings attended)

100% (17 of 17
meetings attended)

100% (17 of 17
meetings attended)

100% (17 of 17
meetings attended)

100% (17 of 17
meetings attended)

Reappointment

7

Kazutaka Okubo

Outside Director

Outside100% (17 of 17
meetings attended)

Independent
Reappointment8

Keiichi Asai

Outside Director

Outside100% (17 of 17
meetings attended)

Independent(Notes) 1. There are no special interests between each candidate and the Company.
2. Mr. Kazutaka Okubo and Mr. Keiichi Asai are candidates for Outside Directors.
3. The term of office of Mr. Kazutaka Okubo as Outside Director of the Company is 4 years at the conclusionof this general meeting of shareholders.
4. The term of office of Mr. Keiichi Asai as Outside Director of the Company is 1 year at the conclusion of theshareholders' general meeting.
5. The Company has entered into a Liability Limitation Agreement with Mr. Kazutaka Okubo and Mr. Keiichi
Asai pursuant to the provisions of Article 427 Paragraph 1 of Companies Act and the provisions of theCompany's Articles of Incorporation so that they may fully perform the expected role as an Outside Director.
The maximum amount of liability for damages under the agreement is the amount stipulated by laws andregulations. If they are elected as Directors, the Company plans to continue the agreement.
6. The Company has designated Mr. Kazutaka Okubo and Mr. Keiichi Asai as independent officers under theprovisions of the Tokyo Stock Exchange, Inc. where has notified. If they are elected as Directors, theCompany plans to continue designating them as independent officers.
7. The Company has entered into an Officers' Liability Insurance Agreement with all Director as insured
persons. Any damage that may arise from the fact that the Director as insured person is responsible for the
performance of his / her duties or from receiving a claim for pursuing such responsibility will becompensated. If each candidate is reappointed as a Director, he / she will become an insured person. The
Agreement will be renewed with the same contents when the term coming. The outline of the Agreement is
as stated in the “Outline of Officers' Liability Insurance Agreement” of the Business Report.
―5―

No.

１

reappointed

Tomoaki Horiguchi

Born on April 21, 1958
3,022,594 shares held

Biography, Positions and Responsibilities at the Company

March 1990

President and Representative Director of Sun Frontier Co., Ltd. which
is a merged company.

April 1999

Company Establishment.
President and Representative Director of the Company.

April 2020

Chairman and Representative Director of the Company (present)（Significant Concurrent Positions）

Representative Director of Sun Frontier Hotel Management Inc.
Representative Director of Sun Frontier Sado Inc.
Representative Director of Sun Frontier Okinawa Co., Ltd.
Representative Director of Okesa Kanko Taxi Co., Ltd.
■Reasons for selection as a candidate for Director
Mr. Tomoaki Horiguchi is the founder of the Company. He has strong centripetal force as President andRepresentative Director, abundant experience in corporate management and has led the growth of theCompany for many years. Ever since he changed from the President of the Company to the Chairman and
Representative Director of the Company on April 1, 2020, he has been making efforts to improve initiatives
and long-term sustainable corporate value by fostering human resources and lead the next generation andfurther strengthening the management foundation. The Company judges that his wealth of experience,achievements and high level of insight are indispensable for the management of the Company and requests
his continued election as Director.

―6―

No.

2

reappointed

Seiichi Saito

Born on June 9, 1960
73,726 shares held

Biography, Positions and Responsibilities at the Company

September 2005

Joined the Company

November 2005

General Manager of Administration Division of the Company

June 2006

Director and General Manager of Administration Division of theCompany

June 2008

Senior Managing Director and General Manager of Administration
Division of the Company

June 2012

Executive Vice President, Vice President Executive Officer andGeneral Manager of Administration Division of the Company

June 2014

Representative Executive Vice President, Vice President Executive
Officer and General Manager of Administration Division of theCompany

April 2015

Representative Executive Vice President, Vice President Executive
Officer and General Manager of Asset Management Division of theCompany

April 2020

President Representative Director and President Executive Officer(present)（Significant Concurrent Positions）

Chairman of Sun Frontier Fudousan Taiwan Co., Ltd.
Representative Director of SF Engineering Inc.
■Reasons for selection as a candidate for Director
Mr. Seiichi Saito has a wealth of experience and achievements including the management of the Company
as a President Representative Director and President Executive Officer. In addition, in the Board of Directors,
as Chairman, he has managed important management issues and enhanced the management supervisory
functions in the Board of Directors. After taking over the position of President from Mr. Tomoaki Horiguchi
in 2020, he has been striving to further develop the Company and to strengthen the management foundationthat will serve as a platform for growth for the next generation. The Company has judged that he is suitable
for realizing the Management Principle of the Company and increasing its corporate value and requests his
continued election as Director.

―7―

No.

3

reappointed

Izumi Nakamura

Born on March 16, 1952
56,079 shares held

Biography, Positions and Responsibilities at the Company

September 2006

Joined the Company
Head of Sales Administration Entrusted Asset Management
Division

June 2008

Director and General Manager of Entrusted Asset Management
Division of the Company

June 2012Managing Director, Managing Executive Officer and General
Manager of Entrusted Asset Management Division of the Company

June 2016

Senior Managing Director, Senior Managing Executive Officer andGeneral Manager of Entrusted Asset Management Division of theCompany

April 2020

Executive Vice President, Vice President Executive Officer andGeneral Manager of Entrusted Asset Management Division of theCompany (present)（Significant Concurrent Positions）

Representative Director of SF Building Support Inc.
Representative Director of SF Building Maintenance Inc.

■Reasons for selection as a candidate for Director
Mr. Izumi Nakamura has led the management of the Real Estate Service Business such as leasing, property
management and rent guarantee with strong leadership as the Executive Vice President, Vice President
Executive Officer and General Manager of Entrusted Asset Management Division. In addition, he has assisted
the President and making efforts to realize Management Principle and increase corporate value. The Company
has determined that he is suitable for realizing the Company’s business strategy for growth and supervisingbusiness divisions due to his wealth of business experience and knowledge regarding entrusted asset
management and proposes his continued election as Director.

―8―

No.

4

reappointed

Yasushi Yamada

Born on December 23, 1965
18,363 shares held

Biography, Positions and Responsibilities at the Company

August 2010

Joined the Company General Manager of Corporate Planning
Division

June 2012

Executive Officer and General Manager of Corporate Planning
Division of the Company

April 2015

Executive Officer and General Manager of Administration Divisionof the Company

June 2015

Director, Executive Officer, General Manager of Administration
Headquarters

June 2016

Managing Director, Managing Executive Officer and General
Manager of Administration Division of the Company

April 2020

Senior Managing Director, Senior Managing Executive Officer andGeneral Manager of Business Promotion Division of the Company(present)（Significant Concurrent Positions）

Chairman of Board of Directors of SUN FRONTIER DANANG CO., LTD.

■Reasons for selection as a candidate for Director
Mr. Yasushi Yamada has led new business areas in the Overseas Business and Environmental Business as
the Senior Managing Director, Senior Managing Executive Officer, and General Manager of Business
Promotion Division, and also promoting M&A. He is committed to the growth of businesses with his diverse
knowledge and leadership. The Company has judged that he is an appropriate person to realize sustainableimprovement of corporate value in response to changes in business environment and requests his continued
election as Director.

―9―

No.

5

reappointed

Mitsuhiro Ninomiya

Born on March 1, 1969
34,032 shares held

Biography, Positions and Responsibilities at the Company

September 2003

Joined the Company in Leasing Business Division

March 2006

General Manager of Property Management Business Division of theCompany

October 2010

General Manager of Human Resources General Affairs Division of
the Company

June 2014

Executive Officer of the Company (present)

April 2018

Deputy General Manager of Administration Division and General
Manager of Corporate Planning Division of the Company

April 2019

Deputy General Manager of Administration Division, General
Manager of Corporate Planning Division and General Manager ofInformation System Division of the Company

July 2019

Deputy General Manager of Administration Division, General
Manager of General Affairs Division (present) and General
Manager of Information System Division of the Company

April 2020

General Manager of Administration Division of the Company(present)

June 2020

Director of the Company (present)（Significant Concurrent Positions）

None■Reasons for selection as a candidate for Director
Mr. Mitsuhiro Ninomiya has led the Administration Division as the Director, Executive Officer, and General
Manager of Administration Division and worked to resolve management issues. Mr. Ninomiya has also
contributed to the creation of a corporate culture by leading the development of human resources through the
diffusion and retention of the Company Philosophy, which is the foundation of the Company. Based on his
wealth of knowledge and business experience, the Company has judged that he is an appropriate person who
can support the development and growth of the Company's business from the perspective of management andcontribute to the realization of sustainable enhancement of corporate value and proposes his continued
election as Director.

―10―

No.

6

reappointed

Kenji Honda

Born on March 5, 1967
6,032 shares held

Biography, Positions and Responsibilities at the Company

April 2006

Joined the Company in Entrusted Asset Management DivisionCorporate Sales Section

October 2010

General Manager of Property Management Business Division of theCompany

June 2014

Executive Officer (present) and General Manager of Property
Management Business Department of the Company

April 2018

Deputy General Manager of Entrusted Asset Management Division
and General Manager of Property Management Business 1st
Division of the Company

April 2020

General Manager of Asset Management Division of the Company(present)

June 2020

Director of the Company (present)（Significant Concurrent Positions）

Representative Director of SF Communication Inc.

■Reasons for selection as a candidate for Director
Mr. Kenji Honda has led the core businesses of the Company, such as Real Estate Revitalization Businessand specified joint real estate ventures and has contributed to the growth of the Company's business division
as Director, Executive Officer, and General Manager of Asset Management Division. Accordingly, theCompany has judged that he is an appropriate person to utilize his wealth of knowledge and operational
experience to develop and grow the Company's businesses and realize sustainable enhancement of corporate
value and requests his continued election as Director.

―11―reappointed

候補者番号

７

Kazutaka Okubo

OutsideBorn on March 22, 1973
2,900 shares held

Independent

Biography, Positions and Responsibilities at the Company

November 1995
April 1999
June 2006
July 2012
February 2016
June 2019
June 2019
June 2019
December 2019
February 2020
June 2020
June 2020
November 2020
September 2021
June 2022

Joined Century Audit Corporation (currently Ernst & Young
ShinNihon LLC)
Registered as Certified Public Accountant
Partner of ShinNihon Audit Corporation (currently Ernst &Young ShinNihon LLC)
Senior Partner of ShinNihon LLC (currently Ernst & Young
ShinNihon LLC)
Senior Managing Director and General Manager of ERM of thesame audit corporation
President and Representative Director of Okubo Associates Co.,
Ltd. (present)
Director of the Company (present)
Outside Audit & Supervisory Board Member of SEGA SAMMYHOLDINGS INC. (present)
Outside Director of LIFULL Co., Ltd. (present)
Outside Director of SALA Corp. (present)
Outside Director of The Shoko Chukin Bank, Ltd. (present)
Outside Director of Musashi Seimitsu Industry Co., Ltd.
(present)
President Representative Director of SS Dnaform Co., Ltd.
(present)
Outside Director of BrainPad Inc. (present)
Outside Audit & Supervisory Board Member of SEGA SAMMYHOLDINGS Inc. (Audit & Supervisory Commitee Member)(present)（Significant Concurrent Positions）

President Representative Director of Okubo Associates Co.
Outside Audit & Supervisory Board Member of SEGA SAMMY HOLDINGS Inc.
(Audit & Supervisory Commitee Member)
Outside Director of LIFULL Co., Ltd.
Outside Director of SALA Corp.
Outside Director of The Shoko Chukin Bank, Ltd.
Outside Director of Musashi Seimitsu Industry Co., Ltd. (Audit & Supervisory
Commitee Member)President Representative Director of SS Dnaform Co., Ltd.
Outside Director of BrainPad Inc. (Audit & Supervisory Commitee Member)■Reasons for selecting him as a candidate for Outside Director and an outline of his expected role
Mr. Kazutaka Okubo, in addition to being well versed in governance and finance based on his audit
experience at a major audit corporation, has abundant knowledge and experience in a wide range of fields
including corporate compliance and CSR. He is expected to provide management oversight and advice basedon his extensive knowledge and experience, and actively provides advice and suggestions in the Board of
Directors meetings. The Company expects that he will supervise the management of the Company toward
the sustainable improvement of its corporate value and requests his continued election as Outside Director.

―12―reappointed

候補者番号

8

Keiichi Asai

OutsideBorn on September 29, 1954
0 share held

Independent

Biography, Positions and Responsibilities at the Company

April 1978

Joined Mitsubishi Corporation

April 2009

Executive Officer, CEO of the Energy Business Group, and Office
Chief of the same company

April 2013

Vice President Director of Lithium Energy Japan Co., Ltd.

September 2014

President Representative Director of KH Neochem Co., Ltd.

April 2019

Retired from the same company

June 2021

Outside Director (Audit & Supervisory Commitee Member) of
Cosmo Energy Holdings Co., Ltd. (present)

June 2022

Director of the Company (current position)（Significant Concurrent Positions）

Outside Director of Cosmo Energy Holdings Co., Ltd. (Audit & Supervisory
Commitee Member)■Reasons for selecting him as a candidate for Outside Director and an outline of his expected role
After joining Mitsubishi Corporation, Mr. Keiichi Asai has worked in various divisions of the oil business,
including oil sales, supply and demand, and refining. He has been involved in international business in theenergy sector for the most part, with assignments in the United States and India. Appointed Vice President
Director of Lithium Energy Japan Co., Ltd. in 2013 and President Representative Director of KH Neochem
Co.,Ltd. in 2014, engaged in corporate management in general, and has abundant knowledge and experience.
From his wealth of knowledge and experience, the Company has determined that he can be expected tosupervise the Company's management and appropriately perform his duties and proposes that he is elected
as Outside Director again.

―13―

(Reference)Management System after the Proposal is approved (Planned).
Main expertise and experience we expect from Directors who are not an Audit & Supervisory Committee Member
are as follows.
Expected expertise and experience.
* Listing up to 4 main items.
Legal
HR
CSR
Corporate
Real Accounting Compliance Labor IT
ESG
M&A Overseas
management estate
Finance
Risk
HR Digital
Sustainability
Management Dev.

Name

Sex

TomoakiHoriguchi

Male

●

●

Seiichi Saito

Male

●

●

●

Male

●

●

●

Male

●

●

Izumi
Nakamura
Yasushi
YamadaMitsuhiro
Ninomiya

●
●

●

●

Male

Kenji Honda

Male

Kazutaka
Okubo

Male

Keiichi Asai

Male

●

●

●

●

●

●

●

●

●
●

●

●

●

●

Main expertise and experience we expect from Directors who are an Audit & Supervisory Committee Member are as
follows.
Expected expertise and experience.
* Listing up to 4 main items.
Legal
HR
CSR
Name
Sex
Corporate
Real Accounting Compliance Labor IT
ESG
M&A Overseas
management estate
Finance
Risk
HR Digital
Sustainability
Management Dev.
ShinichiMale●●●
Tominaga
Hidetaka
Male
●
●
●
●
TanakaTsunekoFemale●●●●Murata
The above expertise and experience are not represented to all of the knowledge and experience of each Director.

―14―

1. Status of the Corporate Group(1) Progress and Results of Operations
The Japanese economy continued to recover, mainly in personal consumption and capital investment as restrictions
on socio-economic activities further eased under coexisting with COVID-19. With regard to the global economy,
there are concerns that the Ukraine problem will be prolonged, inflation in various countries will remain high, andinterest rate hikes will lead to economic slowdown.
In the real estate market, the average rent in the Tokyo Business District (5 wards of Central Tokyo: Chiyoda, Chuo,
Minato, Shinjuku and Shibuya) in March was 19,991 yen per tsubo, down for the 32nd consecutive month (total
3,023 yen / 13.1%), and the average vacancy rate for the same month was almost unchanged at 6.41% (according
to a private research institution). Overall office market conditions remain weak. Meanwhile, in the real estate
investment market, although institutional investors’ demand remains generally strong, the outlook remains
unpredictable due to the global monetary tightening phase.
In Real Estate Revitalization Business, our core business of the Group, the number of sales increased compared tothe same period of the previous fiscal year. However, sales of relatively large-scale properties owned over the
medium to long term decreased compared to the same period of the previous fiscal year. As a result, net sales andprofits decreased. At the same time, Real Estate Service Business continued to perform well. In Hotel Development
Business, sales and profit increased significantly compared to the same period of the previous year due to thecompletion of sales of two hotels. In Hotel Operation Business, which has been greatly affected by the pandemic of
COVID-19, demand continued to increase due to the easing of restrictions on socioeconomic activities. In addition,
sales recovered sharply due to the Nationwide Travel Subsidy Program, which was launched in October to promote
domestic tourism, and the lifting of the ban on personal travel from abroad.
As a result, net sales amounted to 82,777 million yen (up 16.2% YoY), operating profit amounted to 14,905 million
yen (up 22.9% YoY), ordinary profit amounted to 14,722 million yen (up 20.5% YoY), and profit attributable toowners of parent amounted to 11,612 million yen (up 56.6% YoY).

―15―

(2) Capital Expenditures
The Company’s capital investment in the fiscal year ended March 31, 2023 was 7,844 million yen, mainly for theacquisition of rental office buildings (6,216 million yen) and hotel facilities (1,031 million yen).

(3) Financing Activities
During the fiscal year ended March 31, 2023, the Company has not made any noteworthy fund procurement.

―16―

(4) Trends in Assets and Income(i) Consolidated Assets and Income of the Corporate GroupFY2020/3
Net Sales
Ordinary Profit
Ordinary Profit Ratio
Profit Attributable to
Owners of Parent
Earnings per ShareTotal Assets
Equity Ratio
Net Assets
Net Assets per ShareFY2021/3

FY2022/3

FY2023/3(current period)(million yen)(million yen)(%)

73,21816,12722.0

59,632
7,524
12.6

71,251
12,21517.1

82,777
14,72217.8(million yen)

10,666

4,274

7,415

11,612(yen)(million yen)(%)(million yen)(yen)

219.03130,29349.6
64,8091,326.93

87.77
127,485
52.3
69,773
1,368.14

152.26
136,51252.2
74,452
1,463.74

238.98
152,51952.9
83,965
1,663.33

Note 1. The Company's shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP) are
included in weighted average number of shares for the period in common shares and treasury sharesdeducted in the calculation of the total number of outstanding shares at the end of the fiscal year underreview. Moreover, the number of the Company's shares held by the trust account at the end of the fiscal
year under review was 128,300 shares.
Note 2. “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. has been
applied from the 23rd fiscal year. The figures for assets and profit and loss from the 23rd fiscal year on areafter the application of the above accounting standards.

―17―

(ii) Non-consolidated Assets and Income of the Company

Net Sales
Ordinary Profit
ProfitEarnings per ShareTotal Assets
Net Assets
Net Assets per Share(million yen)(million yen)(million yen)
(yen)(million yen)(million yen)
(yen)

FY2020/3

FY2021/3

FY2022/3

64,472
16,822
11,122228.39
121,708
64,934
1,333.15

42,002
7,994
5,314
109.12
114,729
68,2041,400.21

59,563
14,356
9,284
190.65
124,800
74,432
1,527.80

FY2023/3(current period)
52,097
11,753
7,871
161.98137,21279,8591,645.34

Note 1. The Company's shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP) are
included in weighted average number of shares for the period in common shares and treasury sharesdeducted in the calculation of the total number of outstanding shares at the end of the fiscal year underreview. Moreover, the number of the Company's shares held by the trust account at the end of the fiscal
year under review was 128,300 shares.

(5) Material Subsidiaries
Name

Share capital

Investment
ratio

Major businesses

SF Building Support Inc.

50 million yen

100 % Rent guarantee business

SF Building Maintenance Inc.

20 million yen

100 % Building maintenance business

Sun Frontier Space Management Inc.

50 million yen

100 %SF Engineering Inc.

20 million yen

100 %Sun Frontier Hotel Management Inc.

100 million yen

100 %Sky Heart Hotel Inc.

10 million yen

100 %Sun Frontier Sado Inc.

100 million yen

100 %3 million
U.S. dollar

100 %Sun Frontier NY Co., Ltd.

Conference room rental business,rental office business
Construction and interior finishingbusiness
Hotel planning, development andmanagement business
Hotel Planning and Operation
Business
Hotel Planning and Operation,
Regional Revitalization Business
Real estate revitalization business in
the United States(6) Issues to be Addressed
The impact of the spread of COVID-19 since the beginning of 2020 has significantly changed the businessenvironment in which the Company operates. Against the backdrop of these changes in the businessenvironment and the shift to a new state (new normal), the Company reviewed the medium-term
management plan in May 2021 in order to re-establish a sustainable growth path. The quantitative target
set forth in this plan has not changed, and the final year has been extended for two years to the year ending
March 2025. Basic policy is set to provide “places where people gather and communicate with each other,and create social development and happiness for people.” We will redefine the value of the place where
people gather amid the great changes in values with the pandemic of COVID-19, and solve new social
issues through offices and hotels.
<Initiatives for Sustainability>
The Group has put into practice a philosophy management based on the spirit of altruism since ourfounding. Also, the Company has been promoting business activities that contribute to the sustainabilityof society by defining the Corporate Philosophy as “we reduce the waste of non-renewable resource onearth and contribute to the prosperity of the people, plants and animals.”
The spirit of altruism is the idea that we value others as much as we value ourselves. Our desire to make many
people smile and to contribute to the prosperity of people, plants and animals on the earth is the foundation of our―18―

business philosophy. We also place great importance on being close to clients while sharing the value that “thepleasure of others is one’s own”, with “rightness” and “consideration” based on right and wrong rather than gain
and loss.
This concept of the Group was redefined as our Sustainability Vision. We have identified three important issues(materiality), namely environmental protection, regional revitalization and human resource development, and arepromoting sustainable management that integrates with the spirit of altruism. We will continue to increase ourcorporate value over the medium to long term by realizing this vision and implementing specific measures onimportant issues to contribute to the realization of a sustainable society through our operational activities.

<Initiatives of Digital Transformation>
Digitization is another important point. The digitization of entire society has progressed rapidly and been forced
because of the pandemic of COVID-19. In addition, society as a whole is facing a labor shortage due to thedecreasing of productive age population caused by the declining birthrate. At the same time, there is a need to
improve labor productivity. In this changing social environment, digital transformation (DX) in companies has
become an urgent need. In April 2022, we reorganized the existing Digital Transformation Promotion Office into
the DX Business Division with the aim of speeding up the use of digital technology and our expertise. We will
promote the realization of data-driven management and the implementation of DX by combining our expertise withdigital.

FY ending March 31, 2025
(Quantitative target)
Net Sales

100 billion yen

Ordinary Profit

20 billion yen

Profit14 billion yen

Equity Ratio

20％ or more

Ordinary Profit
Ratio
Return on
Equity50% level
10% or more

―19―

Sustainability Vision and Important Issues (Materiality)
1. Sustainability Vision
We will contribute to the realization of a sustainable society through business activities while respecting
the heart of altruism, the Company policy.
2. Important sustainability issues
We have identified three important issues that must be addressed to realize our Sustainability Vision. We
will implement specific measures in the three areas of environmental protection, regional revitalization,and human resource development. Specific measures will be reviewed as appropriate in response to futureenvironmental and social trends and changes in the business environment.
ImportantissuesVisionIncrease environmental
sustainability bysignificantly reducing
Environmental
waste and greenhouse gas
protection
emissions, as a frontier ofReal Estate Revitalization
Business

Regional
revitalization

Create sustainable growthof regional economies
through offices, hotels, andtourism, as a frontier forsustainable regional
revitalization

Human
resource
development

Spread the concept of“altruism” that is
indispensable for realizing
a sustainable society, as afrontier of philosophy
management

Policy◼ Extend the life and health of real estate◼ Energy conservation and reduction ofenvironmental impact by Real Estate
Revitalization Business◼ Expanded use of renewable energy◼ Create buildings, offices, and spaces
with “job satisfaction” and “creativity”
that contribute to economic growth◼ Prevent and mitigate disaster throughregional cooperation◼ Solve regional issues throughcommunity activation and creation◼ Create workplaces with job satisfaction,
creativity and growth opportunities◼ Respect and utilize diversity◼ Disseminate information on philosophy
management to foster next-generation
managers―20―

Relevant SDGs

(7) Principal Business Segment of the Corporate Group (As of March31, 2023)
Business segment

Major businesses

Real Estate
Revitalization Business

Real Estate Service
Business

Hotel and Tourism
Business

Other

Replanning Business

Purchase of existing commercial buildings andrebuilding them as buildings with a new concept,
attract tenants and sell them with increased realestate value

Rental Building BusinessLeasing of own properties

Property Management Business

Property management business for management ofbuildings and tenants

Building Maintenance Business

Building maintenance business such as building
cleaning, facility management, security,
waterproofing, and exterior wall repair

Sales Brokerage Business

Brokerage of real estate for businessLeasing Brokerage BusinessLeasing of offices and stores

Rent Guarantee Business

Provide a rent guarantee for the delinquency ofrent of a tenant of real estate for building owners

Conference Room Rental Business

Plan and operate vacant office buildings in central
Tokyo as rental conference room, rental office,and coreworking space

Hotel Operation Business

Planning and management of accommodation
facilities such as hotels

Hotel Development Business

Development of new hotels, refurbishing existing
hotels, and selling them as investment products

Overseas Development Business

Real estate development business in Vietnam, etc.

Construction Business

Carry out interior finishing work,
telecommunications work, and renewal planning,
repair, and reform for business buildings―21―

(8) Principal Business Office (As of March 31, 2023)
Name
Headquarters
Ginza Branch
Nihonbashi Branch
Kodendma-cho Branch
Kanda Branch
Kojimachi Branch
Shinjuku Branch
Shibuya Branch
Gotanda Branch
Hamamatsucho Branch
Yokohama Branch
Property Management Business Department
SF Building Support Inc.
SF Building Maintenance Inc.
Sun Frontier Space Management Inc.
SF Engineering Inc.
SF Communication Inc.
Navd Inc.
Sun Frontier Hotel Management Inc.
Sky Heart Hotel Inc.
Sun Frontier Sado Inc.
Hotel Oosado Inc.
Okesa Kanko Taxi Co., Ltd.
Sun Frontier Okinawa Co., Ltd.
Sun Frontier Fudousan Taiwan Co., Ltd.
SUN FRONTIER DANANG CO., LTD.
Sun Frontier NY Co., Ltd.

Place
Chiyoda-ku, Tokyo
Chuo-ku, Tokyo
Chuo-ku, Tokyo
Chuo-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Shinjuku-ku, Tokyo
Shibuya-ku, Tokyo
Shinagawa-ku, Tokyo
Minato-ku, Tokyo
Yokohama-shi, Kanagawa
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Sumida-ku, Tokyo
Minato-ku, Tokyo
Sumida-ku, Tokyo
Chuo-ku, Tokyo
Chuo-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Sado-shi, Niigata
Sado-shi, Niigata
Sado-shi, Niigata
Naha-shi, Okinawa
TaiwanSocialist Republic of Vietnam
United States of America―22―(9) Employees (As of March 31, 2023)(i) Employees of the Corporate Group
Number of Employees
702

Increase/Decrease Compared to end of previous FY
6 increase

Note. The above number of employees does not include 601 temporary employees (part-timers and temporary
employees).
(ii) Employees of the Company
Number of Employees
329

Increase/Decrease Compared to
end of previous FY
7 increase

Average Age
36.4 years old

Average number of years ofContinuous Service
6.7 years

Note. The above number of employees does not include employees transferred from the Company to other companies.
(10) Principal Lenders (As of March 31, 2023)
LenderSumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.
Resona Bank, Limited
Mizuho Bank, Ltd.
Aozora Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited.

Loan amount (million yen)
12,087
6,189
5,751
4,864
3,575
3,319

―23―

2. Status of Shares(1) Shares (As of March 31,2023)(i) Number of Authorized Shares

91,200,000(ii) Number of Outstanding Shares

48,755,500(includes 108,869 of treasury shares)(iii) Number of Shareholders

13,971(iv) Principal Shareholders (top10)
Name
Number of shares held
Percentage of shares held (%)
Houon Co., Ltd
17,957,500
36.91
The Master Trust Bank of Japan Co., Ltd.
4,115,100
8.46(Trust Account)
Tomoaki Horiguchi
3,022,594
6.21
Custody Bank of Japan, Ltd. (Trust Account)
1,708,000
3.51
S Kawagoe Co., Ltd
1,566,400
3.22
THE BANK OF NEW YORK MELLON 140044
745,800
1.53
Morgan Stanley MUFG Securities Co., Ltd.
590,866
1.21
JP Morgan Securities Co., Ltd.
549,872
1.13
DFA INTL SMALL CAP VALUE PORTFOLIO
422,998
0.87
Keiko Horiguchi
416,500
0.86
Note 1. The percentage of shares held is calculated after exclusion of treasury shares (108,869 shares).
Note 2. The percentage of shares held is calculated including 128,300 shares of the Company held by Mizuho
Trust & Banking Co., Ltd as the trust account of the Employee Stock Ownership Plan (J-ESOP.)(2) Shares Delivered to Directors as Consideration for Execution of Duties During the Fiscal Year
Director category
Directors who are not Audit &Supervisory Committee Members(excluding Outside Directors)

Number of shares

Number of recipients (persons)
19,326(3) Other Significant Matters concerning the Shares
Not applicable.

―24―

6

3. Matters Concerning Share Acquisition Rights(1) Share acquisition rights granted as part of the compensation held by the Company’s officers
Share-based
Share-based
Share-based
Share-based
compensation typecompensation typecompensation typecompensation type
Name of sharestock option forstock option forstock option forstock option for(1)
acquisition rights
FY2018/3
FY2019/3
FY2020/3
FY2021/3(Share acquisition(Share acquisition(Share acquisition(Share acquisitionrights)rights)rights)rights)(2)

Date of issuance(3)

Number of shareacquisition rights(4)

Status of shareacquisition rights
ownership(5)

Class and numberof shares to beissued upon

(6)

(7)

June 22, 2018
June 21, 2019
June 30, 2020
June 22, 2021
(the Board of(the Board of(the Board of(the Board of
Directors Resolution) Directors Resolution) Directors Resolution) Directors Resolution)
524

740

1,112

2,155

4 Directors
4 Directors
4 Directors
6 Directors(excluding Audit & (excluding Audit & (excluding Audit & (excluding Audit &Supervisory
Supervisory
Supervisory
Supervisory
Committee Members Committee Members Committee Members Committee Members
and Outside
and Outside
and Outside
and Outside
Directors)
Directors)
Directors)
Directors)
524
740
1,112
2,155
5,240 shares incommon shares(10 stocks per 1
share acquisitionright)

7,400 shares incommon shares(10 stocks per 1
share acquisitionright)

11,120 shares incommon shares(10 stocks per 1
share acquisitionright)

21,550 shares incommon shares(10 stocks per 1
share acquisitionright)

Amount to be paidin share acquisition 1,019 yen per 1 share 789 yen per 1 share 438 yen per 1 share 657 yen per 1 sharerightsValue of property
to be contributed
upon exercise of
1 yen per 1 share to be delivered upon exercise of share acquisition rights
share acquisitionrights(8)Date of allotment:
Date of allotment:
Date of allotment:
Date of allotment
July 31, 2018
July 31, 2019
July 31, 2020of share acquisition
Exercise period:
Exercise period:
Exercise period:
rights and period
From August 1, 2018 From August 1, 2019 From August 1, 2020
for exercise
until July 31, 2048
until July 31, 2049
until July 31, 2050

(9)

Conditions forexercise of rights

Date of allotment:
July 30, 2021
Exercise period:
From July 31, 2021
until July 30, 2051

A holder of share acquisition rights may exercise their share acquisition rights in a lumpsum only when they lose their position as a Director of the Company and only on thefollowing day from losing their position until 10 days after.

Restrictions on
Any acquisition of share acquisition rights by transfer shall require approval by resolution(10) transfer of shareof the Company's Board of Directors.
acquisition rights
Note 1. At the 19th Annual General Meeting of Shareholders held on June 22, 2018, a resolution was passed to allocate
share acquisition rights to Directors (excluding Audit & Supervisory Committee Members and Outside Directors)
as share-based compensation type stock options to be exercised upon retirement, within the range of 36 million
yen per year.
Note 2. Conditions for the exercise of other rights other than those described in (9) shall be in accordance with the “Share
Acquisition Rights Application Form (Application Guidelines)” submitted to the Company.
(2) Share acquisition rights delivered to employees as consideration for execution of duties during the fiscal year underreview
Not applicable.
(3) Other significant matters concerning the share acquisition rights
Not applicable.
―25―

4. Company Officers(1) Directors (As of March 31, 2023)
Position

Name

Areas of Responsibility and Important Concurrent Positions

Chairman and Representative
Director

Representative Director of Sun Frontier Hotel Management Inc.
Tomoaki Representative Director of Sun Frontier Sado Inc.
Horiguchi Representative Director of Sun Frontier Okinawa Co., Ltd.
Representative Director of Okesa Kanko Taxi Co., Ltd.

President and Representative
Director
President and Executive Officer

Seiichi
Saito

Vice President and Director
Vice President and Executive
Officer

General Manager of Entrusted Asset Management Division
Izumi
Representative Director of SF Building Support Inc.
Nakamura Representative Director of SF Building Maintenance Inc.
Representative Director of Sun Frontier Space Management Inc.

Senior Managing Director
Senior Managing Executive Officer

Yasushi
YamadaDirector
Executive Officer

Mitsuhiro General Manager of Administration Division and General Affairs
Ninomiya Manager

Director
Executive Officer

Kenji
Honda

General Manager of Asset Management Division
Representative Director of SF Communication Inc.

Director

Kazutaka
Okubo

President and Representative Director of Okubo Associates Co.,Ltd.
Outside Director (Audit & Supervisory Committee Member) of
SEGA SAMMY HOLDINGS INC.
Outside Director (Audit & Supervisory Committee Member) of
BrainPad Inc.
Outside Director of LIFULL Co., Ltd.
Outside Director of SALA Corporation
Outside Director of The Shoko Chukin Bank, Ltd.
Outside Director (Audit & Supervisory Committee Member) of
Musashi Seimitsu Industry Co., Ltd.
President and Representative Director of SS Dnaform Co., Ltd.

Director

Keiichi
Asai

Outside Director (Audit & Supervisory Committee Member) of
Cosmo Energy Holdings Co., Ltd.

Director(Full-time Audit & Supervisory
Committee Member)
Director(Audit & Supervisory Committee
Member)Director(Audit & Supervisory Committee
Member)Chairman of Sun Frontier Fudousan Taiwan Co., Ltd.
Representative Director of SF Engineering Inc.

General Manager of Business Development Division
Chairman of the Board of SUN FRONTIER DANANG CO.LTD.

ShinichiTominaga
Hidetaka
TanakaAuditor of NPO JAPAN PLATFORM
Executive Director of Japan Credit Rating Association

Tsuneko
MurataOutside Director of Milbon Co., Ltd.
Outside Director of Kakuyasu Group Co., Ltd.
Outside Director (Audit & Supervisory Committee Member),Tokyo Seimitsu Co., Ltd.

Note 1. Directors Kazutaka Okubo, Keiichi Asai, Hidetaka Tanaka and Tsuneko Murata are Outside Directors as
stipulated in Article 2, Item 15 of the Companies Act. The Company has designated the four (4) individuals as
independent officers under the provisions of the Tokyo Stock Exchange and has notified the Tokyo Stock
Exchange of the designation.
Note 2. The Company appoints full-time Audit and Supervisory Committee Members since full-time persons who havethorough knowledge of the Company conduct effective audits through attendance at important meetings andclose cooperation with the Internal Audit Department.
Note 3. Director Kazutaka Okubo has qualifications as certified public accountants and have expertise and abundant
experience in finance and accounting.
―26―

(2) Outline of the Liability Limitation Agreement
The Company has concluded a liability limitation agreement pursuant to the provisions of Article 427, Paragraph 1of the Companies Act and Article 30, Paragraph 2 of our Company’s Articles of Incorporation with all Outside
Directors.
The maximum amount of liability for damages under the agreement is the amount stipulated by laws and regulations.

(3) Outline of Officers’ Liability Insurance Contract
The Company has entered into liability insurance contracts for officers, etc. as stipulated in Article 430 (3), Item 1of the Companies Act with the Company's and its subsidiaries' Directors, Audit & Supervisory Board Member,executive officers and other employees as insured persons.
Claims for damages arising from an act performed by an insured person in relation with the business of the Company(including inaction) are covered by compensation for damages and court costs incurred by the insured.
The Company pays all insurance premiums for all insured persons, but damage caused by criminal acts or intentional
illegal acts is excluded so as not to impair the appropriateness of the execution of duties.

(4) Remuneration for Directors for the Fiscal Year under review(i) Matters concerning the policy for determining the contents of individual compensation, etc. for Directors(a) Determination method
At the meeting held in the Board of Directors on May 12, 2023, the Company resolved a policy for
determining the details of individual compensation for Directors who are not Audit & Supervisory
Committee Members. An outline of the policy is as described in (b) to (g) below.
(b) Fixed remuneration shall be an amount considered to be at an appropriate level in comparison with theperformance of other companies in the real estate industry in Japan, etc., in consideration of the content of
duties of Directors and the Company’s situation, etc.
(c) Performance-linked remuneration shall be determined from the perspective of reflecting the results of the
improvement in performance by taking into consideration the status of achievement against the target basedon the consolidated performance (ordinary profit) of the relevant fiscal year.
(d) Directors (excluding outside directors) shall be granted restricted shares remuneration through resolution by
the Board of Directors to provide an incentive to Directors to continuously improve corporate value and tofurther share value with shareholders.
(e) As a guideline for the ratio of individual remuneration, etc. for Directors, excluding Outside Directors, if thetarget for the performance-linked remuneration indicator is 100%, fixed remuneration will be 60%,
performance-linked remuneration will be 30%, and restricted shares remuneration will be 10%. With regard
to Outside Directors, only fixed remuneration will be provided.
(Revised on May 12, 2023. Ratio before revision: fixed remuneration 65%, performance-linked
remuneration 30%, restricted shares remuneration 5%)(f) The timing of payment of remuneration, etc. shall be as follows.
a．Fixed compensation
b．Performance-linked
compensationc．Restricted shares remuneration

It is provided every month.
Payment shall be made once a year after the end of the Annual
General Meeting of Shareholders pertaining to the relevant fiscal
year.
The amount shall be determined and granted by the resolution of theBoard of Directors held once a year after the end of the Annual
General Meeting of Shareholders and the transfer restriction shall be
lifted at the time of resignation or retirement of each Director.

(g) Matters concerning delegation pertaining to determination of contents of remuneration, etc. for individual
Directors
The amount of fixed remuneration and performance-linked remuneration for each individual or thedetermination of the methods for calculating such amounts shall be determined by resolution at the Board of
Directors and delegated to the Chairman and Representative Director.
―27―

In order to improve the objectivity and transparency of the procedures for determining renumeration of
Directors, the Company has established a Nomination and Compensation Committee consisting of the
Chairman and Representative Director and President and Representative Director as well as 2 or more
Outside Directors as a voluntary advisory body. The Nomination and Compensation Committee considers
and deliberates on the amount of remuneration for Directors, the calculation method, the composition of
remuneration, the ratio, and the setting of indicators, and the Chairman and Representative Director makes
decisions with maximum respect for the deliberation contents.
(h) Status of the above decision policy for the fiscal year under review
The target for performance (consolidated ordinary profit (loss)), which is an indicator of performance-linked
compensation for the fiscal year under review, was 12,800 million yen, while the actual performance was
14,722 million yen. The determination of the amount of fixed remuneration and performance-linked
remuneration for each individual or the calculation method thereof has been delegated to the Chairman
Representative Director, who can evaluate the projects which each Director oversees, with the involvementof the Nomination and Remuneration Committee. The Board of Directors, upon receiving reports from theNomination and Remuneration Committee, has determined that the details of individual compensation for
Directors who are not Audit and Supervisory Committee Members for the fiscal year under review, including
the procedures and details of decisions made by the Chairman and Representative Director, Tomoaki
Horiguchi, are in line with the above decision policies.

(ii) Matters concerning resolutions of the Annual General Meeting of Shareholders regarding
remuneration, etc. for Directors(a) At the 23rd Annual General Meeting of Shareholders held on June 21, 2022, it was resolved that the amountof monetary remuneration (fixed remuneration and performance-linked remuneration) for Directors who are
not Audit & Supervisory Committee Members to be no more than 360 million yen per year (including no
more than 36 million yen for Outside Directors, but excluding employee salaries for Directors who
concurrently serve as employees). The number of Directors at the conclusion of the said Annual General
Meeting of Shareholders was eight (including two Outside Directors). Separately from this monetary
remuneration, at the 23rd Annual General Meeting of Shareholders held on June 21, 2022, it was resolvedthat the annual amount of restricted shares remuneration for Directors who are not Audit and Supervisory
Committee Members (excluding Outside Directors) should not exceed 36 million yen. The number of
Directors (excluding Outside Directors) at the conclusion of the said Annual General Meeting of
Shareholders was six.
(b) At the 23rd Annual General Meeting of Shareholders held on June 21, 2022, it was resolved that the amountof monetary remuneration (fixed remuneration only) for Directors who are Audit & Supervisory Committee
Members should be no more than 36 million yen per year including those for Outside Directors. The number
of Directors who are Audit & Supervisory Committee Members at the conclusion of the said Annual General
Meeting of Shareholders was three (including two Outside Directors).
(iii) Total Amount of Remuneration of Directors and Audit & Supervisory Board Members

Director category

Amount paid by type (million yen)
PerformanceAmount paid
RestrictedBasiclinked(million yen)sharescompensation compensation,
remunerationetc.

Number ofqualified
officers

Directors who are not Audit &
256
171
65
20
9
Supervisory Committee Members
(13)
(13)
(-)
(-)
(3)
(of which, Outside Directors)
Directors who are Audit &18
18
3Supervisory Committee Members
(9)
(9)
(-)
(-)
(2)
(of which, Outside Directors)
Audit & Supervisory Board
5
5
3
Members (of which, Outside Audit
(3)
(3)
(-)
(-)
(2)
& Supervisory Board Members)
Note 1. Based on the resolution made at the 23rd Annual General Meeting of Shareholders held on June 21, 2022, theCompany made the transition to a company with Audit & Supervisory Committee as of the same date.
―28―

Note 2. Bonuses are paid to Directors as performance-linked remuneration.
Note 3. Performance-linked remuneration indicates the provision for the current period in provision for bonuses for
Directors (and other officers) for the fiscal year under review.
Note 4. As non-monetary remuneration, restricted shares remuneration is provided to Directors, excluding Outside
Directors and Audit & Supervisory Committee Members. “Restricted shares remuneration” above indicates theamount recorded as expenses in the fiscal year under review.
Note 5. 70 million yen was paid to six Directors who are not Audit and Supervisory Committee Members, excluding
Outside Directors, in the current fiscal year as bonuses for the 23rd fiscal year. This compensation for Directors
is included in the 70 million yen of provision for bonuses for Directors (and other officers) for the 23rd fiscal
year and is not included in the performance-linked compensation.
Note 6. The above number of directors and remuneration amounts include one director and three Audit & Supervisory
Board Members who retired at the conclusion of the 23rd Annual General Meeting of Shareholders held on
June 21, 2022. One Outside Director took office as a Director who is not an Audit and Supervisory Committee
Member, and one outside auditor took office as a Director who is an Audit and Supervisory Committee Member.
Note 7. The amount to be paid to Audit & Supervisory Board Members relates to the period before the transition to acompany with Audit & Supervisory Committee.

(5) Matters regarding Outside Officers(i) Relationship between the Company and corporations which are significant concurrent positions• Director Kazutaka Okubo concurrently serves as the President and Representative Director of Okubo
Associates Co., Ltd., President and Representative Director of SS Dnaform Co., Ltd., Outside Director of
SEGA SAMMY HOLDINGS Inc., Outside Director of LIFULL Co., Ltd., Outside Director of SALA
Corporation, Outside Director of The Shoko Chukin Bank, Ltd., Outside Director of Musashi Seimitsu
Industry Co., Ltd., and Outside Audit & Supervisory Board Member of BrainPad Inc. There is no important
relationship to be disclosed between the Company and the said corporations.
• Director Keiichi Asai also serves as an Outside Director of Cosmo Energy Holdings Co., Ltd. However,there is no material relationship that should be disclosed between the Company and the said othercorporation.
• Director (Audit & Supervisory Committee Member) Hidetaka Tanaka concurrently serves as Auditor of
Authorized NPO Japan Platform, and Executive director of Japan Credit Rating Agency, Ltd., but there is noimportant relationship to be disclosed between the Company and the said corporation.
• Director (Audit & Supervisory Committee Member) Tsuneko Murata concurrently serves as Outside
Director of Milbon Co., Ltd., Outside Director of Kakuyasu Group Co., Ltd., and Outside Director (Audit &Supervisory Committee Member) of Tokyo Seimitsu Co., Ltd. There is no important relationship to bedisclosed between the Company and the said corporations.
(ii) Major Activities during the Fiscal Year ended March 31,2023(a) Attendance at the Board of Directors and the Audit & Supervisory Committee meetings

Director Kazutaka Okubo

Board of Directors(held 17 times)
Attendance (times) Attendance Rate(%)
17 / 17
100.0

Audit & Supervisory Committee(held 10 times)
Attendance (times) Attendance Rate(%))-

Director Keiichi Asai
14 / 14100.0
Director (Audit & Supervisory
Committee Member)
14 / 14100.0
10 / 10100.0
Hidetaka Tanaka
Director (Audit & Supervisory
Committee Member)
14 / 14100.0
10 / 10100.0
Tsuneko Murata
Note. In addition to the above-mentioned Board of Directors, there were 4 written resolutions deemed to have been
adopted by the Board of Directors Resolution pursuant to Article 370 of the Companies Act and Article 27,
Paragraph 2 of the Articles of Incorporation of the Company.
(b) Activities of Outside Directors and outline of duties performed in relation to expected roles Director Kazutaka Okubo attended all Board of Directors meetings and, as a Certified Public Accountant,provided advice to ensure the reasonableness and appropriateness of decision-making based on his
extensive knowledge in the areas of governance, compliance and CSR, as well as a wide range ofrecommendations for improving future corporate value.
 Director Keiichi Asai provided effective advice through his experience in international business. In
particular, he provided effective advice based on his insight into overall corporate management and awealth of knowledge about the energy industry. He is responsible for improving the corporate value of theCompany, deliberating important management matters in the Board of Directors, and supervising―29―

management.
 Director (Audit & Supervisory Committee Member) Hidetaka Tanaka attended all Board of Directors
meetings and appropriately expressed opinions based on his expertise in international finance, wealth ofbusiness experience as a corporate manager, and extensive knowledge in the field of sustainability. He is
responsible for enhancing the corporate value of the Company, as well as deliberating importantmanagement matters in the Board of Directors and supervising the management.
 Director (Audit & Supervisory Committee Member) Tsuneko Murata attended all Board of Directors
meetings and appropriately expressed opinions based on her experience and wealth of knowledge ofgovernance, legal affairs, compliance and CSR in corporate management. She is responsible for enhancing
corporate governance and the corporate value of the Company, as well as deliberating importantmanagement matters in the Board of Directors and supervising the management.

5. Accounting Auditor(1) Name of the Accounting Auditor:

BDO Sanyu(2) Remuneration to be Paid to the Accounting Auditor
Amount paid (million yen)Amount of remuneration, etc. as an accounting auditor for the
fiscal year under review

38

Total amount of cash and other proprietary benefits that theCompany and its subsidiaries should pay to the accounting
auditor38

Note 1. In the audit agreement between the Company and the accounting auditor, the amount of audit fees for audits
based on the Companies Act and audits based on the Financial Instruments and Exchange Act is not clearly
distinguished and cannot be substantially distinguished. Therefore, the amount of remuneration, etc. for the
fiscal year under review is the sum of these amounts.
Note 2. Reasons for the Audit & Supervisory Committee’s agreement on remuneration, etc. for the accounting auditor
Based on the “Practical Guidelines for Cooperation with Accounting Auditors” published by the Japan Audit& Supervisory Board Members Association, the Audit & Supervisory Committee has confirmed the resultsof the audit time and the amount of remuneration for each audit item and hierarchy in the audit plan for the
past fiscal year, as well as the status of the accounting auditor's performance of duties, and examined theappropriateness of the audit plan and the amount of remuneration for the fiscal year under review. As a result,the Audit & Supervisory Board has given its consent to the remuneration, etc. of the accounting auditor under
Article 399, Paragraph 1 of the Companies Act.

(3) Policy on Decision of Dismissal and Refusal of Reappointment of the Accounting Auditor
When it is considered that the accounting auditor falls under any of the items stipulated in Article 340, Paragraph 1of the Companies Act and if deemed necessary, the Audit & Supervisory Committee will dismiss the accounting
auditor subject to the unanimous consent of Audit & Supervisory Committee Members. In this case, the Audit &Supervisory Committee Member selected by the Audit & Supervisory Committee will report the dismissal of theaccounting auditor and the reason thereof at the first General Meeting of Shareholders Meeting convened after thedismissal. In addition, if it is determined that it is difficult for the accounting auditor to properly perform their duties,
the Audit & Supervisory Committee will decide on the content of a proposal concerning the dismissal of theaccounting auditor or refusal of reappointment to be submitted to the General Meeting of Shareholders.

―30―

6. System for Ensuring Proper Business Operations and Overview of Operation Status（1）Systems to ensure that the execution of duties by directors complies with laws and regulations and the
Articles of Incorporation.
The outline of the system to ensure the appropriateness of the business of other companies is as follows.
(i)

Systems to ensure that the execution of duties by directors and employees complies with laws andregulations and the Articles of Incorporation.
All directors and employees shall strive to establish a management system that is trusted by society on an
ongoing basis in the future by strengthening internal management systems and raising awareness ofcompliance, based on the recognition that it is our social responsibility as a company to always embody thespirit of legal compliance and execute business based on a fair and high level of ethics.In concrete terms,
the Internal Audit Office, which is under direct control of the President and Representative Director, will beestablished to conduct regular internal audits of all divisions and group companies without exception. In
internal audits, the Company shall ascertain the status of business operations and systems and shall fairly
investigate and verify whether all business operations are conducted appropriately in compliance with laws
and regulations, the Articles of Incorporation, and internal rules, and whether corporate systems,
organizations, and rules are proper and appropriate. The results of audits shall be reported to the President
and Representative Director. In addition, the Company will establish a “Corporate Ethics Help Line” andestablish an internal reporting system with various contact methods that thoroughly protects reporters toprevent and promptly detect violations of laws and regulations and misconduct to improve the mobility ofthe self-cleaning process, control reputational risks, and ensure public trust. Furthermore, in order to raiseawareness of compliance, the Legal Department will be established, and various training and education will
be conducted.The Company and group companies shall have no relationship with anti-social forces and shall
respond resolutely to unreasonable demands.

(ii)

System for storage and management of information related to the execution of duties by directors.
Information related to the execution of duties by directors, such as records related to decision-making atimportant meetings including the Board of Directors meetings and documents approved by each director inaccordance with the “Regulations on Administrative Authority,” shall be appropriately recorded, and shallbe retained for a specified period of time in accordance with laws and regulations and the “Regulations on
the Handling of Documents,” and shall be kept available for inspection by Directors as necessary. The
General Manager of the Administration Department shall be responsible for supervising the storage andmanagement of information.

(iii)

Regulations concerning the management of risk of loss and other systems.
In order to respond to all risks that threaten the improvement of corporate value and the sustainable
development of the Company, the Company will strive to establish an organizational crisis management
system by creating a risk management manual and establishing a task force headed by the President andRepresentative Director (including a team of external experts such as corporate lawyers) in the event of an
unforeseen event.

―31―

(iv)

Systems to ensure efficient execution of duties by directors.
As an indicator for establishing and implementing the corporate vision of the entire corporation, theCompany has formulated a medium-term management policy and a single-year management plan. In orderto realize the management policy and the management plan, the Board of Directors has clarified theexecutive authority and responsibilities of directors and has increased the efficiency of the execution ofduties. In addition, with regard to matters for which decisions on business execution have been delegated to
the President and Representative Director and directors in charge of business execution of other matters,
necessary decisions shall be made based on the “Organization Regulations” or the “Regulations forManagement of Affiliated Companies” including group companies. These regulations shall also be timely
and appropriately reviewed based on revisions and abolition of laws and regulations and for the purpose of
improving the efficiency of the execution of duties.

(v)

Systems to ensure the appropriateness of operations within the corporate group consisting of the Company
and group companies.
In order to ensure the appropriate execution of operations by group companies, the Corporate Planning
Department shall be responsible for the management of the group companies in accordance with the“Regulations for the Management of Affiliated Companies.” While respecting the autonomy of the groupcompanies, the Corporate Planning Department shall receive periodic reports on the status of the businessof the group companies. In addition, the Corporate Planning Department shall require prior consultation or
prior approval with the Company for important management matters of the group companies. Group
companies' management plans are also formulated under the control of the Company, and the Company
provides timely and appropriate advice and guidance during the business period to improve the efficiencyof group companies' operations. In addition, the Company and its group companies have established a Risk
Management Committee chaired by the President and Representative Director and assign risk management
officers to each division. In the event that any risk is discovered in management or business, it shall bereported to the Risk Management Committee, and the risk information shall be analyzed, andcountermeasures shall be considered to prevent damage or to minimize damage to the Company and thegroup companies if such damage occurs. We will establish a system for reporting violations of laws andregulations or illegal acts that have occurred or may occur at group companies to the internal reporting deskor outside Audit & Supervisory Committee Members specified in the “Regulations on the Corporate Ethics
Help Line”. We will strive for early detection and resolution of these violations.The Internal Audit Officeshall conduct internal audits of all group companies to ensure the effectiveness and appropriateness of
systems, organizations, and regulations covering the overall operations of group companies. The results ofthese audits shall be reported to the organization designated by the Company’s President and Representative
Director. President and Representative Director shall prepare and report its financial statements inaccordance with fair and appropriate accounting standards in order to enhance the reliability of financial
reporting and increase corporate value of the Company and its group companies.

(vi)

Matters relating to employees who are required to assist Audit & Supervisory Committee in performing
their duties.

―32―

In the event that Audit & Supervisory Committee request that an employee be assigned to assist them in
performing their duties, such employee shall be assigned as an Audit & Supervisory Committee’s assistant.
The assistant shall be appointed from persons who have sufficient knowledge of accounting and law andshall perform their duties in accordance with the instructions of the Audit & Supervisory Committee
Members. In addition, the assistant shall also serve as the secretariat of the Audit & Supervisory Committee.
(vii) Matters related to the independence of employees from directors in the preceding paragraph.
In order to ensure the independence of the assistant as set forth in the preceding paragraph, personnel
changes and evaluations of such employees shall be reported to Audit & Supervisory Committee in advanceand their consent shall be obtained.
(viii) Matters related to ensuring the effectiveness of instructions given by Audit & Supervisory Committee to
employees in Paragraph (vi).
The assistant in Paragraph 6 will have the opportunity to accompany the Audit & Supervisory Committee
Members to Board of Directors meetings and other important meetings. They will also accompany the Audit& Supervisory Committee Members and regularly exchange opinions with the President and Representative
Director and accounting auditors. Directors and other employees will cooperate with the Audit &Supervisory Committee Members to improve the auditing environment so that the duties of the assistant are
carried out smoothly.
(ix)

System for reporting to Audit & Supervisory Committee and other Members by Directors and employees of
the Company and group companies.
All directors and department heads shall report on the status of the execution of their duties from time totime at meetings of the Board of Directors and other meetings attended by Audit & Supervisory Committee
Members. Audit & Supervisory Committee Members shall be permitted to attend any Company meetings
they request to attend. All directors and employees of the Company and its group companies shall report to
the Audit & Supervisory Committee as soon as they discover any matter that may or may not have a material
impact on the Company’s credibility, business performance or any material violation of the Corporate Vision
and/or Corporate Code of Conduct.Directors and employees of the Company and group companies mayreport to the internal reporting office of the Company as set forth in the “Regulations on the Corporate Ethics
Help Line” at any time. In addition, they may voluntarily report to outside Audit & Supervisory Committee
Members. The Compliance Department of the Company provides education and training opportunities for
directors and employees to raise awareness of the hotline and encourage active reporting.The Company shall
explicitly stipulate in the “Regulations on the Corporate Ethics Help Line” that directors and employees of
the Company and group companies shall not be subjected to unfavorable treatment in personnel evaluationand shall not be subject to adverse dispositions such as disciplinary action by reporting to the internalreporting office and shall make it known that they shall not be subject to adverse dispositions due toreporting to Audit & Supervisory Committee Members(x)

Matters related to the policy regarding the handling of expenses and obligations arising from the executionof duties by Audit & Supervisory Committee Members.

―33―

The Company shall promptly respond to requests from Audit & Supervisory Committee Members foradvance payment of expenses incurred in the execution of their duties, reimbursement of expenses incurred,
and repayment of obligations incurred, except in cases where such expenses can be proved not to have arisenin the execution of their duties.
(xi)

Systems to ensure effective audits by Audit & Supervisory Committee
The President and Representative Director will hold regular meetings with Audit & Supervisory Committee
Members in order to facilitate mutual communication. In addition, in accordance with the “Regulations forInternal Audit” and the “Internal Audit Implementation Guidelines,” the Internal Audit Office shall maintainclose contact and coordination and cooperate to ensure that audits by Audit & Supervisory Committee andaudits by the accounting auditor are conducted efficiently and effectively.

(2) Outline of the operating status of the system for ensuring the appropriateness of operations(i) Directors’ execution of duties
We have established internal rules to ensure that directors act in compliance with laws and regulations andthe Articles of Incorporation. During the fiscal year under review, the Company held 17 Board of Directors
meetings to discuss each proposal, supervise the status of business execution, and actively exchange
opinions.
(ii) Execution of duties by Audit & Supervisory Committee Members
During the fiscal year under review, the Audit & Supervisory Committee Members held 10 Audit &Supervisory Committee meetings and implemented audits based on the audit plan stipulated by the Audit& Supervisory Committee. In addition, the Audit & Supervisory Committee Members attended Board of
Directors meetings and other important meetings and regularly exchanged information with the President
and Representative Director, the accounting auditor, and the Internal Audit Office to audit the execution ofduties by the directors and to confirm the development and operational status of the internal control system.
(iii) Ensuring the appropriateness of operations at the Company’s subsidiaries
The Company receives periodic reports on the status of its business from its subsidiaries in accordancewith the “Regulations for Management of Affiliated Companies” and monitors their business activities.
(iv) Compliance and Risk Management
The Company has established the “Corporate Ethics Help Line” to ensure that employees who havereported compliance violations or acts are not treated unfavorably for the reason of the report. The
Company ensures that employees who report compliance violations or questionable acts are not treatedunfavorably for the reason of the report.
In addition, we are preparing for unexpected situations such as training for countermeasures against largescale disasters and securing supplies for people with difficulty in returning home.

―34―

7. Policy on the Determination of Dividends of Surplus, etc.
The Group’s basic policy is to contribute to the interests of shareholders in a comprehensive manner while (i)striving to provide long-term and stable profit returns to shareholders, (ii) securing investment funds to aggressively
challenge businesses for future growth, and (iii) strengthening financial stability.
In the case of dividends of surplus, principally the Company pays dividends twice a year through interim dividends
and year-end dividends, which is stipulated in the Company’s Articles of Incorporation. The Company also provides
in its Articles of Incorporation that dividends of surplus may be determined by the Board of Directors pursuant to
the provisions of Article 459, Paragraph 1 of the Companies Act of Japan.
The year-end dividend for the fiscal year under review was 25 yen per share, 2 yen higher than the dividend forecast
announced on May 13, 2022. As the interim dividend for the fiscal year under review was 23 yen, cash dividends
per share for the year increased by 4 yen from 44 yen in the previous fiscal year to 48 yen.
The Company plans to pay an interim dividend of 26 yen per share and a year-end dividend of 26 yen per share forthe next fiscal year.

―35―Consolidated Balance Sheet(As of March 31, 2023)(Unit: million yen)
Item

AmountItem

AssetsCurrent assets

AmountLiabilities
125,886

Current liabilities

16,363

Cash and time deposits

42,016

Accounts payable - trade2,106

Notes and accounts receivableand contract assets

1,625

Short-term borrowings

50

Real estate for sale

19,781

Current portion of long-termborrowings

5,442

Real estate for sale in process

60,254

Income taxes payable

1,699

Costs of uncompleted
construction contracts

57

Provision for bonuses

237

Supplies

87

Other

2,080

Allowance for doubtful accounts

Provision for bonuses for
directors (and other officers)
Provision for fulfillment ofguarantees

-18

Other

22
6,731

Non-current assets

26,633

Property, plant and equipment

20,410Long-term borrowings

Buildings

9,528

Retirement benefit liability

5

Land

10,117

Provision for share-based
remuneration

83

Other

764

Other

1,930

Intangible assets

815

Total liabilities

68,553

Goodwill

343

Other

472

Shareholders' equity

80,430Investments and other assets

5,406

Share capital

11,965

Guarantee deposits

3,210

Capital surplus

6,445

Deferred tax assets

2,033

Retained earnings

62,289

Other

173

Treasury shares-270

Allowance for doubtful accounts-11

Total assets

Non-current liabilities

73

52,19050,170Net assets

152,519―36―

Accumulated other comprehensive
incomeValuation difference on availablefor-sale securities
Foreign currency translation
adjustment

271
2
269

Share acquisition rights

30

Non-controlling interests

3,233

Total net assets

83,965

Total liabilities and net assets

152,519

Consolidated Statement of Income(From April 1, 2022 to March 31, 2023)(Unit: million yen)
Item

AmountNet sales

82,777

Cost of sales

59,971Gross profit
Selling, general and administrative
expenses
Operating profit

22,8057,900
14,905Non-operating income
Interest and dividend income

55

Penalty income

133

Subsidy income

62

Foreign exchange gains

83

Other

72

406

Non-operating expenses
Interest expenses

477

Loss on investments based on equity method

71

Other

41

Ordinary profit

589
14,722Extraordinary income
Government subsidy

232

Gain on liquidation of subsidiaries and associates
Gain on sales of shares of subsidiaries andassociates
Other

64
101
1

400

Extraordinary loss
Loss on reduction of fixed assets

232

Loss on devaluation of investment securities

104

Impairment loss

27

Other

12

Profit before income taxes

377
14,745

Income taxes - current

3,876

Income taxes - deferred-852

Profit3,024
11,721

Profit attributable to non-controlling interests

108

Profit attributable to owners of parent

11,612―37―

Consolidated Statement of Changes in Equity(From April 1, 2022 to March 31, 2023)(Unit: million yen)
Shareholders’ equity
Capitalsurplus

Share capital
Balance at beginning of
the period
Changes during period
Dividends of surplus
Profit attributable toowners of parent
Acquisition of treasury
shares
Disposal of treasury
sharesChange in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of theperiod11,965Retainedearnings

6,445

TreasurysharesTotalshareholders’equity-67

71,26052,917-2,240-2,24011,612

11,612

-0

-239

-239

36

36

0

-

0

-

0

9,372

-202

9,169

11,965

6,445

62,289-270

80,430

Accumulated other comprehensive income
Total
Share
NonValuation
Foreignaccumulated acquisition controlling
difference on
currency
otherrightsinterests
available-fortranslation
comprehensive
sale securities
adjustment
incomeBalance at beginning of
the period
Changes during period
Dividends of surplus
Profit attributable toowners of parent
Acquisition of treasury
shares
Disposal of treasury
sharesChange in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of theperiod

3

19

22

30

3,139

Total net
assets74,452-2,24011,612
-239
36

0

-1

250

249

-

94

343

-1

250

249

-

94

9,513

2

269

271

30

3,233

83,965―38―

Notes to Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.

(Notes Regarding Significant Accounting Policies for the Preparation of Consolidated Financial Statements)
1. Scope of Consolidation
All subsidiaries are consolidated.
(1) Number of consolidated subsidiaries and names of principal subsidiaries
Number of consolidated subsidiaries
23 companies
Names of major consolidated subsidiaries
SF Building Support Inc.
SF Building Maintenance Inc.
Sun Frontier Space Management Inc.
SF Engineering Inc.
Sun Frontier Hotel Management Inc.
Sky Heart Hotel, Inc.
Sun Frontier Sado Inc.
Sun Frontier NY Co., Ltd.
Four companies newly established during the consolidated fiscal year under review are included in the scope of
consolidation. Three subsidiaries previously consolidated were excluded from the scope of consolidation due toliquidation and other factors.
(2) Name of companies the Company did not make into its subsidiaries since the company held the majority voting
rights on its own account.
Not applicable.
(3) Assets, profit or loss of subsidiaries excluded from the scope of consolidation since control is deemed to be
temporary
Not applicable.
(4) Special purpose company subject to disclosure
An outline of the special purpose company subject to disclosure, an outline of transactions using the special
purpose company subject to disclosure, and the transaction amount with the special purpose company subject todisclosure are described in “Notes on special purpose company subject to disclosure.”

2. Application of Equity Method(1) Number of affiliated companies accounted for by the equity method and names of major companies
Number of equity-method affiliates
1 company
Names of equity-method affiliates
Power Consulting Networks Co., Ltd.
In the consolidated fiscal year under review, one company, which was an affiliated company accounted
for by the equity method, was sold, so it is excluded from the scope of application of the equity method.
(2) Name of the company which holds not less than 20% and not more than 50% of the voting rights on its own
account and which has not been an affiliated company
Not applicable.
(3) Special note regarding application of the equity method
Not applicable.

3. Matters concerning Accounting Policies(1) Valuation standards and methods for significant assets(i) Valuation standards and methods for securities
Other securities (available-for-sale securities)
Stated at market (Valuation difference is reported as a
Shares other than those with no market
component of net assets. The cost of sale is calculated
priceusing the moving-average method.)
Shares with no market priceStated at cost using the moving-average method.
―39―

(ii) Inventories
1. Real estate for sale and Real estate for Stated at cost determined by the specific identification
sale in process
method(The figures shown in the balance sheet have been
calculated by writing them down based on decline inprofitability.)
Leased assets are amortized in accordance with property,
plant and equipment standards.
2. Costs of uncompleted construction Stated at cost determined by the specific identification
contracts
method(The figures shown in the balance sheet have been
calculated by writing them down based on decline inprofitability.)
3. Supplies
The most recent purchase cost method(The figures shown in the balance sheet have been
calculated by writing them down based on decline inprofitability.)(2) Depreciation or amortization method for significant depreciable assets(i) Property, plant and equipment
The declining-balance method is applied.
However, buildings (excluding facilities attached tobuildings) and facilities attached to buildings acquiredon or after April 1, 2016 are depreciated using thestraight-line method.
The estimated useful lives are as follows:
Buildings
3 to 29 years
Other
2 to 15 years
Small-amount depreciable assets with an acquisition costof 100,000 yen or more but less than 200,000 yen areamortized over three years on a straight-line basis.
(ii) Intangible assets
The straight-line method is used.
Software for internal use is amortized on a straight-line
basis over the estimated internal useful life (5 years).
(3) Significant provisions(i) Allowance for doubtful accounts

The allowance for doubtful accounts is provided basedon the historical write-off rate for ordinary receivables,
the estimated amount of irrecoverable debt based on
recoverability of individual cases for specified
receivables such as doubtful accounts.
(ii) Provision for bonuses
To prepare for the payment of bonuses to employees, theCompany records the portion of the estimated bonuses tobe paid during the current consolidated fiscal year.
(iii) Provision for bonuses for directors (and Provision for directors’ bonuses is provided based on theother officers)
estimated amount to be paid during the current
consolidated fiscal year.
(iv) Provision for fulfillment of guarantees
In order to prepare for losses related to Rent Guarantee
Business operations, costs for which the amount incurred
can be estimated individually are recorded in the amountof such costs, and for others, the estimated losses arerecorded by taking into account the past guarantee
fulfillment rate.
(v) Provision for share-based remuneration

In order to prepare for the provision of the Company’s
shares to employees based on the Share Benefit
Regulations, the provision for the Company’s shares isrecorded based on the estimated amount of the sharebenefit obligation at the end of the current consolidated
fiscal year.
―40―

(4) Other significant matters for preparation of consolidated financial statements(i) Fiscal year of consolidated subsidiaries
Consolidated domestic subsidiaries and one overseas consolidated subsidiary close their books on March 31,
and Sun Frontier NY Co., Ltd., and eight other companies close their books on December 31.
In preparing the consolidated financial statements, the financial statements as of December 31 are used forthe consolidated subsidiaries whose closing date is December 31, and necessary adjustments are made forsignificant transactions occurring between the consolidated closing date and December 31.
(ii) Standards for recording significant revenues and expenses
The major performance obligations of the Company and its consolidated subsidiaries in their principal
businesses with respect to revenue arising from contracts with clients and the normal time at which such
performance obligations are met (normal time at which revenue is recognized) are as follows.
(a) Real Estate Revitalization Business
Replanning Business
Replanning Business purchases existing office buildings and refurbishes buildings and facilities andattracts excellent tenants to sell buildings with added value to clients in Japan and overseas. The business
is obligated to deliver these properties based on real estate sales agreements with clients.
The performance obligation is fulfilled at the time the property is delivered and revenue is recorded at
the time of delivery of the property.
(b) Real Estate Service Business(1) Property Management Business
Property Management Business enters into property management agreements with clients and is
obligated to perform various operations related to real estate properties on behalf of clients, including
maintenance and management of properties and collection of rent for tenants.
The performance obligation is fulfilled at the time service provision based on the property managementagreement, and revenue is recorded over the contract period.
(2) Building Maintenance Business
Building Maintenance Business mainly is obligated to inspect building facilities by entering into various
agreements with clients or by entering into purchase orders and order contracts.
The performance obligation is fulfilled upon completion of the work under the agreement, and revenue
is recorded at the time of issuance of the completion report for the work and construction.
(3) Sales Brokerage Business
Sales Brokerage Business stands between the buyer and the seller at the time of purchase and sale ofreal estate and is responsible for executing the sales agreement. Based on the intermediary agreementwith the client, the Company is responsible for a series of operations including negotiation andadjustment of transaction terms and conditions, delivery and explanation of important matters,
preparation and delivery of the agreement, and involvement in procedure for performance ofagreements.
The performance obligation is fulfilled at the time when the property related to the real estate sales
contract established by the intermediary agreement is delivered, and revenue is recorded at the time ofdelivery.
(4) Leasing Brokerage BusinessLeasing Brokerage Business stands between the lessee and the lessor when leasing real estate and is
responsible for concluding lease agreements. Based on intermediary agreements with clients, thebusiness has obligations related to a series of operations including negotiations and adjustments oftransaction terms and conditions, delivery and explanation of important matters, preparation anddelivery of agreements, and involvement in procedures for performance of agreements.
The performance obligation is fulfilled at the time when the real estate lease agreement for the property
brokered by the intermediary agreement is concluded, and revenue is recorded at the time of conclusionof the agreement.
―41―

(c) Hotel and Tourism Business(1) Hotel Operation Business
Hotel Operation Business is primarily responsible for the operation of hotels owned or leased by theCompany and is obligated to provide hotel services for clients to stay or provide meals at restaurants
located within the hotel.
These performance obligations are fulfilled at the time service is provided to clients, and revenue isrecorded when clients check in.
(2) Hotel Development Business
Hotel Development Business is a business engaging in the purchase of land and the construction of
hotel buildings, which are then sold to clients, and is obligated to deliver the property based on the realestate sales agreement with the clients.
The performance obligation is fulfilled at the time the property is delivered and revenue is recorded at
the time of delivery.
(d) Others(1) Overseas Development Business
Overseas Business is engaged in real estate development mainly for condominiums and houses inSoutheast Asia and sells these properties to clients in Japan and overseas. The business is obligated todeliver these properties based on real estate sales agreements with clients.
The performance obligation is fulfilled at the time the property is delivered, and revenue is recorded at
the time of delivery.
(2) Construction Business
Construction Business is engaged in renovation planning, repair and renovation related to renewal
planning, repair and renovation work for commercial buildings, telecommunications work, contracted
interior construction for large, medium, and small facilities, etc.
When control over goods or services is transferred to clients over a certain period, revenue is recorded
over a certain period as the performance obligation to transfer goods or services to clients is fulfilled.
Contracts with a very short period between the transaction start date and the time when the performanceobligation is expected to be fulfilled, or contracts with a small order amount received per unit ofconstruction are subject to alternative treatment. Revenue is not recognized over a certain period but isrecognized when the performance obligation is fulfilled.
(iii) Accounting treatment for retirement benefits
In calculating the retirement benefit liability and retirement benefit expenses, certain of the Company’s
consolidated subsidiaries apply the simplified method where the amount of retirement benefits payable at theend of the fiscal year for voluntary resignations is the retirement benefit obligation.
(iv) Standards for translation of foreign currency-denominated assets and liabilities into Japanese currency
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the
spot exchange rates on the consolidated balance sheet date, and translation differences are charged or credited
to income. Assets, liabilities and income and expenses of foreign subsidiaries are translated into Japanese yenat the exchange rates prevailing at the respective balance sheet dates of the foreign subsidiaries. Translationdifferences are included in foreign currency translation adjustment and non-controlling interests in net assets.
(v) Non-deductible consumption tax accounting
Non-deductible consumption tax and local consumption tax on assets are charged to income in the year inwhich they are incurred.
(vi) Amortization methods and periods for goodwill
Goodwill is amortized on a straight-line basis over mainly 10 years.
(vii) Application of group tax sharing system
The Company and certain consolidated domestic subsidiaries apply the group tax sharing system.

―42―

(Change of Presentation Method)
Consolidated Statement of Income“Dividend income” (0 million yen in the previous fiscal year) in “Non-operating income”, which was presented
separately in the previous fiscal year, has been included in “Interest and dividend income” in the current fiscal year
because its amount has become insignificant.
“Loss on retirement of non-current assets” (20 million yen in the previous fiscal year), which was presented separately
under “Extraordinary loss” in the previous fiscal year, has been included in “Other” in the current fiscal year due toits decreasing financial materiality.

(Notes on Accounting Estimates)
1. Assessment of the real estate for sale(1) Amount recorded in the consolidated financial statements for the current fiscal year
Real estate for sale
19,781 million yen
Real estate for sale in process
60,254 million yen(2) Other information
For real estate for sale, etc., if the net selling price falls below the acquisition cost, the net selling price is statedas the balance sheet amount. The net selling price is calculated by deducting the estimated future cost of
construction work and the estimated selling expenses from the return value estimated based on the business plan.
The expected future revenue of the business plan, that forms the basis for the value of the return to profit, includes
future tenant rent, expected average unit price, occupancy rate, etc. of hotel rooms, and is formulated based on
important assumptions such as forecasts of future market conditions.
In the following fiscal years, the net selling price may change due to changes in assumptions used in formulating
business plans in the event of events that were not anticipated at the time of formulating business plans. Thismay have a significant impact on the amount of real estate for sale, etc., recognized in the consolidated financial
statements for the following fiscal year and thereafter.
2. Non-current assets impairment(1) Amount recorded in the consolidated financial statements for the current fiscal year
Non-current assets related to Hotel Development Business and Hotel Operation Business：11,648 million yen(2) Other information
If a hotel shows signs of impairment, the determination of impairment loss recognition is based on the hotel’sbusiness plan and a comparison of the estimated undiscounted future cash flows over the remaining economic
useful lives of the hotel’s major assets with the carrying amounts of the hotel’s asset groups.
The business plan of the hotel, which is the basis of future cash flows, has been formulated under the policy of
conducting long-term management, based on important assumptions including the forecast of the average unit
price and the occupancy rate of hotel rooms, etc., as well as the assumption of future market conditions.
In the following fiscal year and thereafter, the net selling price may change due to changes in assumptions usedin formulating business plans in the events that were not anticipated at the time of formulating business plans.
This may have a significant impact on the amount of real estate for sale, etc., recognized in the consolidated
financial statements for the following fiscal year and thereafter.

(Additional Information)
Change in holding purpose of assets
As a result of changing the holding purpose, property, plant and equipment (“Buildings” 1,431 million yen and “Land”
3,075 million yen) were transferred to 481 million yen in “Real estate for sale” and 4,026 million yen in “Real estate
for sale in process” in current assets.
Transactions of delivering the company’s own shares to employees etc. through trusts
The Company conducts transactions to deliver its own shares through trust for the purpose of employee welfare.
(i) Overview of transaction
The Plan provides the Company’s shares to employees of the Company who meet certain requirements based on
the share benefit regulations established by the Company in advance.
The Company will grant points to employees who satisfy certain conditions at the end of the consolidated fiscal
year, and when they acquire the right to receive benefits, the Company shares corresponding to the granted points
will be delivered. The shares to be granted to employees are acquired in the future with the money set in trust inadvance and managed separately as trust assets.
The total amount method is applied to the Employee Stock Ownership Plan (J-ESOP) in accordance with the“Practical Solution on Transactions of Delivering the Company’s Own Shares to Employees etc. through Trusts”―43―

(ASBJ PITF No. 30, March 26, 2015).
(ii) Own shares remaining in the trust
The book value of the Company's shares remaining in the trust (excluding the amount of incidental expenses) is
included in net assets. The book value and number of shares of the treasury shares were 157 million yen and
128,300 shares.

Accounting treatment and disclosure with the application of the group tax sharing system
The Company and certain domestic consolidated subsidiaries have shifted from the consolidated taxation system to thegroup tax sharing system from the current fiscal year. Accordingly, the accounting treatment and disclosure of corporatetax, local corporate tax and tax effect accounting are in accordance with the “Practical Solution on the Accounting andDisclosure Under the Group Tax Sharing System” (ASBJ PITF No. 42, August 12, 2021, hereinafter referred to as“ASBJ PITF No. 42”). In addition, based on Paragraph 32 (1) of ASBJ PITF No. 42, it is deemed that there will be no
impact due to the change in accounting policy accompanying the adoption of ASBJ PITF No. 42.

(Notes to Consolidated Balance Sheet)(1) Assets pledged as collateral and obligations secured by collateral(i) Assets pledged as collateral are as follows:
Real estate for sale
18,060 million yen
Real estate for sale in process
55,880 million yen
Buildings
7,998 million yen
Land9,772 million yen
Total
91,712 million yen(ii) Secured obligations are as follows:
Long-term borrowings

52,333 million yen(2) Accumulated depreciation of property, plant and equipment
4,890 million yen
Note. The above amounts include accumulated impairment losses.
(3) Contingent liabilities
Debt guarantee
Liability guarantee by rent guarantee
Customers pertaining to Rent Guarantee Business(amount equivalent to the guarantee limit)
Provision for fulfillment of guarantees
Total

47,416 million yen-22 million yen
47,393 million yen(4) Reduction entry amountThe reduced entry amount deducted from the acquisition cost of property, plant and equipment due to government
subsidies, etc. is as follows.
Buildings
200 million yen
Land
32 million yen(Notes to Consolidated Statement of Income)Extraordinary income
Gain on liquidation of subsidiaries and associates is associated with the liquidation of one U.S. subsidiary (RIVERSIDESTUDIOS LLC).

―44―

(Notes to Consolidated Statement of Changes in Equity)(1) Total number of issued shares
Type of shares

Beginning of the current
consolidated fiscal year

Common shares

48,755,500 shares

Increase- shares

End of the current
consolidated fiscal year

Decrease- shares48,755,500 shares(2) Matters concerning treasury shares
Type of shares

Beginning of the current
consolidated fiscal year

Increase

Decrease

End of the current
consolidated fiscal year

Common shares
56,644 shares
215,989 shares
35,464 shares
237,169 sharesNote. The number of treasury shares in common shares, includes the Company's share of 128,300 held by the trust
account of the Employee Stock Ownership Plan (J-ESOP).
(Summary of Reasons for Change)
The increase/increase in the number of treasury shares of common shares was mainly due to an increase of 143,800
shares due to the acquisition of treasury shares pursuant to the provisions of Article 156 of the Companies Act as applied
pursuant to Article 165, Paragraph 3 of the same Act, an increase of 71,800 shares due to the additional acquisition to
the employee stock ownership plan (J-ESOP), and an increase of 49 shares due to the purchase of fractional shares. Thiswas despite a decrease of 35,124 shares due to the disposal of treasury shares through the restricted shares remuneration
system.
(3) Matters concerning dividends of surplus(i) Cash dividends paid
Total dividends
Dividends per
Resolution
Type of shares
Base date
Effective date(Millions of yen)share (yen)June 21, 2022
Annual general
Common shares
1,121
23.00 March 31, 2022
June 22, 2022
meeting ofshareholders
November 10,
2022
September 30,
December 6,
Common shares
1,118
23.00
Board of2022
2022
Directors
Note. The total amount of dividends decided at the Annual General Meeting of Shareholders on June 21, 2022 includes
dividends of 1 million yen for the Company’s shares held by the trust account of the Employee Stock Ownership
Plan (J-ESOP).
The total amount of dividends decided at the Board of Directors on November 10, 2022 includes dividends of
1 million yen for the Company’s shares held by the trust account of the Employee Stock Ownership Plan (JESOP).
(ii) Dividends whose record date falls in the current consolidated fiscal year and whose effective date falls in thefollowing consolidated fiscal year
The following resolution is scheduled.
Resolution

Type ofshares

Source ofdividends

Total dividends(million yen)

Dividends per
share (yen)May 16, 2023
Board of Directors

CommonsharesRetainedearnings

1,216

25.00

Base date

Effective date

March 31, 2023

June 28, 2023

Note. The total amount of dividends decided at the Board of Directors Resolution on May 12, 2023, includes dividendsof 3 million yen for the Company's shares held by the Employee Stock Ownership Plan (J-ESOP).

―45―

(4) Share acquisition rights as of the end of the current consolidated fiscal year

Decrease

End of thecurrent
consolidated
fiscal year

Balance at theend of thecurrent
consolidated
fiscal year
(Millions of yen)

-

-

-

5

-

-

-

-

5

-

-

-

-

-

4

-

-

-

-

-

14

-

-

-

-

30

Number of shares to be issued (shares)
BreakdownType ofshares to beissuedBeginning of
the current
consolidated
fiscal year

Increase---2018 share acquisitionrights as stock option
2019 share acquisitionrights as stock option
2020 share acquisitionrights as stock option
2021 share acquisitionrights as stock option
Total(Notes on Financial Instruments)(1) Items relating to financial instruments(i) Policy on financial instruments
The group limits its fund management to short-term deposits, etc. With regard to fund procurement, the Company's
policy is to procure funds through indirect financing through bank loans and direct financing through issuance ofbonds and shares, etc., taking into comprehensive consideration the characteristics of necessary fund demand,financial market environment, long and short-term redemption periods. Derivative transactions are used to avoid
interest rate fluctuation risks borrowings or to limit them to a certain range, and the Company's policy is not toengage in speculative transactions.
(ii) Content as well as risks of financial instruments
Trade receivables are exposed to customers' credit risk.
Borrowings raised funds mainly for investment in business purposes and business strategies. Variable borrowings
are exposed to interest rate fluctuation risk. Borrowings, which procures funds mainly from financial institutions,is exposed to liquidity risks that restrict fund procurement due to changes in the stance of transactions with thegroup.
(iii) Risk management system for the financial instruments
A. Management of credit risks (risks pertaining to non-performance of contracts by counterparties)
Based on the Management Regulations for Trade Receivables and other rules, the Company regularly
monitors the business conditions of major business partners with regard to trade receivables, strives to
identify and mitigate early concerns about collection of trade receivables due to deterioration in financial
conditions and other factors.
B. Management of market risks (risks related to market price fluctuations)
The Company will not conduct derivative transactions for speculative purposes not stipulated in thederivative transaction management regulations.
C. Management of liquidity risk related to fund procurement (risk of inability to pay on the due date)
The Company aims to diversify its funding sources by accurately assessing the group’s funding needs andfinancial position, and by strengthening relationships with financial institutions.
(iv) Supplementary explanation of fair value of financial instruments
Since variable factors are incorporated in the calculation of the fair values of financial instruments, the value
may fluctuate by adopting different assumptions, etc.

―46―

(2) Fair value of financial instruments
On March 31, 2023, the book values of the consolidated balance sheet, fair values and differences between them are
as follows.
Consolidated balance
sheet amount(Millions of yen)

Market value(Millions of yen)

Difference(Millions of yen)

Long-term borrowings (including
current portion)

55,61354,240(1,373)

Total liabilities

55,61354,240(1,373)Note1. The description “cash and time deposits” is omitted because the market value approximates the book value
since it is cash and deposits are settled in a short period of time.
Note 2. Shares with no market priceConsolidated balance sheet value(Millions of yen)

Category
Shares of subsidiaries and affiliates

30

Unlisted shares
158
Note 3. Scheduled repayment amount of short-term and long-term borrowings after the consolidated balance sheet
dateOver 1 year Over 2 years Over 3 years Over 4 years
Within 1 year and within 2 and within 3 and within 4 and within 5 Over 5 years
Category(million yen)
years
years
years
years
(million yen)(million yen) (million yen) (million yen) (million yen)
Short-term
50
borrowings
Long-term
5,442
17,585
12,421
3,665
6,473
10,023borrowings(3) Breakdown of market value of financial instruments by appropriate category, etc.
The market values of financial instruments are classified into the following three levels according to the inputs,
observability and materiality related to the calculation of market values.
Level 1 Market Value:
Level 2 Market Value:
Level 3 Market Value:

Market value calculated based on quoted prices of the same asset or liability in an active
market (unadjusted)
Market value calculated using direct or indirect observable inputs other than Level 1
inputsMarket value calculated using significant unobservable inputs

When multiple inputs that have a significant impact on the calculation of market value are used, market value isclassified to the lowest level to which each of these inputs belongs that has the lowest priority for calculating market
value.
Financial assets and liabilities not recognized in consolidated balance sheet at market valueMarket value (Millions of yen)
Category
Long-term borrowings

Level 1

Level 2-

54,240Level 3

Total-

54,240Note. Explanation of valuation techniques used for market value calculation and input related to market value
calculation
Long-term borrowings
These market values are calculated by the discounted present value method based on the total amount ofprincipal and interest and the interest rate taking into account the remaining period of the debt and credit risk
and are classified as Level 2 market values.

―47―

(Notes on Lease and Real Estate)
The Company operates rental office buildings (including land) as well as hotel facilities (including land) in Tokyo andother areas. For the fiscal year ended March 31, 2023, net rental income from such rental properties was 184 million
yen (rent revenue is recorded in net sales and rental expenses are recorded in cost of sales).
In addition, the amount recorded in the consolidated balance sheet, increase/decrease for the current consolidated
fiscal year and market value at the end of the current consolidated fiscal year for the said lease and real estate are as
follows.
Consolidated balance sheet amount (Millions of yen)
Balance at the beginning of
Balance at the end of the
Fiscal year under review
the current consolidated
current consolidated fiscal
Increase/Decreasefiscal year
year
6,659
1,565
8,225

Market value at the end of
the current consolidated
fiscal year
(Millions of yen)
10,918Note 1. The amount recorded in the Consolidated balance sheet is the acquisition cost excluding the accumulated
depreciation.
Note 2. Among increases/decreases during the fiscal year under review, the major increase was due to new acquisitions(6,217 million yen) and the major decreases were due to transfers as a result of changes in the asset holding
purpose (4,507 million yen) and depreciation (143 million yen).
Note 3. The fair value at the end of the current consolidated fiscal year is the amount based on the real estate appraisal
report by an external real estate appraiser.

(Notes on Revenue Recognition)
1. Breakdown of information regarding revenue generated from contracts with clients(Unit: million yen)
Reportable segments
Real Estate Real Estate
Revitalization
ServiceBusiness
Business

Hotel andTourism
Business

Total

Other
(Note 1)

Total

Real Estate
45,63545,63545,635
Revitalization
Business net sales
Hotel13,50013,50013,500Development
Business net sales
Hotel Operation
9,282
9,282
9,282
Business net sales
Other Business net
51
6,714
25
6,792
1,774
8,566
sales
Revenue from45,687
6,714
22,80875,211
1,774
76,985
contracts withclients
Other income
4,362
1,299
129
5,792
5,792
(Note 2)
Net sales to
50,0508,014
22,93881,003
1,774
82,777
external clients
Note 1. The “Other” segment is a business segment that is not included in the reportable segment and includes Overseas
Development Business and Construction Business.
Note 2. Other income includes rental income, etc. under Accounting Standard for Lease Transactions (ASBJ Statement
No. 13).
(Changes in Presentation Methods)
In the previous fiscal year, all operating net sales other than “Real Estate Revitalization Business net sales” included
in “Revenue from contracts with customers” were included in “Revenue from contracts with customers” due to theirdecreased financial materiality. In the current fiscal year, however, “Hotel Development Business net sales” and“Hotel Operation Business net sales” have become increasingly important. Therefore, “Real Estate Revitalization
Business net sales”, “Hotel Development Business net sales”, and “Hotel Operation Business net sales” are presented
separately, and “Other Business net sales” includes operating net sales with decreased financial materiality.

―48―

2. Basic information to understand the revenue generated from contracts with clients
Basic information for understanding revenue is as described in “Notes Regarding Significant Accounting Policies for
the Preparation of Consolidated Financial Statements (4) Other significant matters for preparation of consolidated
financial statements (ii) Standards for recording significant revenues and expenses.”

3. Information to understand the amount of revenue for the current period and subsequent periods(1) Balance of contract assets and contract liabilities, etc.
The Company’s contract balance is as follows.
(Millions of yen)
Current consolidated fiscal year
(March 31, 2023)
Receivables arising from contracts with clients(at beginning of the period)
Receivables arising from contracts with clients(at end of the period)

854
1,560

Contract assets (at beginning of the period)

18

Contract assets (at end of the period)

35

Contract liabilities (at beginning of the period)

561
1,649

Contract liabilities (at end of the period)

Note 1. Receivables arising from contracts with clients
Receivables arising from contracts with clients are mainly uncollected proceeds for room charges, etc. andrights to clients arising from the performance of contracts in Real Estate Service Business. The collection
period for these receivables is mainly within one to three months.
Note 2. Contract assets
Contract assets relates to the rights to clients arising from the receipt of payments from clients in the courseof performance recognized in connection with contract work agreements in Construction Business. Contract
assets for completed work are recognized in advance and are transferred to trade receivables upon acceptanceby clients and invoicing.
Contract assets are included in notes receivable, accounts receivable, and contract assets in Consolidated
Balance Sheet.
Note 3. Contract liabilities
Contract liabilities mainly consist of earnest money received at the time of execution of sales contracts in
Replanning Business, consideration received prior to performance under construction contracts inConstruction Business, and room charges received in advance, etc. in Hotel Operation Business. These aretransferred to income when the Company performs under contracts.
Contract liabilities are included in Other current liabilities in Consolidated Balance Sheet.
Of the contract liabilities at the beginning of current consolidated fiscal year, the amount recognized in revenue incurrent consolidated fiscal year was 535 million yen.
The decrease in contract assets in current consolidated fiscal year was mainly due to a decrease in construction orders.
The decrease in contract liabilities in current consolidated fiscal year was mainly due to a decrease in deposit balance
in Replanning Business.
(Notes on Per Share Information)(1) Net assets per share(2) Earnings per share(3) Fully diluted earnings per share

1,663.33 yen
238.98 yen
238.76 yen

Note. The Company's shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP) are included
in weighted average number of shares for the period in common shares and treasury shares deducted in thecalculation of the total number of outstanding shares at the end of the fiscal year under review. The weighted
average number of the Company’s shares for the period and year-end held by the trust account is 62,921 sharesand number of shares at end of year is 128,300 shares.

―49―

(Notes on Special Purpose Companies subject to Disclosure)(1) Overview of the special purpose company subject to disclosure and overview of transactions using the special
purpose company subject to disclosure
The Company operates an investment product in sub-divided real estate sales business in Real Estate Revitalization
Business based on Act on Specified Joint Real Estate Ventures (voluntary partnership type) and uses voluntary
partnership as part of the business structure.
In this business, sub-divided real estate investment product purchasers (hereinafter referred to as investors) willenter into an agreement with voluntary partnership to participate in the specified joint real estate ventures andmake contributions in kind. Voluntary partnership is structured to receive distributions of profits and losses arisingfrom real estate investments in kind by investors. Profits and losses on leasing and sales of the real estate are
attributable to investors.
As a Managing Partner (Chairman), the Company receives chairman compensation in accordance with theVoluntary Partnership Agreement, and also receives compensation from voluntary partnership for entrustingbuilding management in a lump sum.
The latest financial position for the current consolidated fiscal year is as follows.
Fiscal year under review(March 31, 2023)
Number of Special Purpose Companies

9 unions

Total assets as of the latest balance sheet date (simple sum)
Total liabilities (simple sum)

6,140 million yen
183 million yen

For the fiscal year under review, the total amount of assets and liabilities of one of the above units is notincluded in the total amount because the closing date has not arrived yet.
(2) Transaction amount with the special purpose company subject to disclosure
Major transaction
amountTransfer amount of real estate (Note 1)

2,354 million yen

Main profit and loss
Item
AmountNet sales

2,354 million yen

Note 1. Transfer amount of real estate is stated at the transfer price at the time of transfer. The transfer amount of realestate is shown in net sales in the Consolidated Statement of Income.
Note 2. Transactions other than above have been omitted due to lack of importance.

(Note on Significant Subsequent Events)
Not applicable.

(Other Note)
Not applicable.

―50―

Non-consolidated Balance Sheet(As of March 31, 2023)(Unit: million yen)
Item

AmountItem

AssetsCurrent assets

AmountLiabilities
99,971

Cash and time deposits

27,469Accounts receivable

397

Real estate for sale
Real estate for sale in process

Current liabilities

10,643
1,097

16,301

Accounts payable - trade
Current portion of long-termborrowings
Income taxes payable

52,019Deposits payable

1,703

Short-term loans to affiliates
Long-term loans to affiliates to becollected within one year
Other

680
2,000

Allowance for doubtful accounts-7

Provision for bonuses
Provision for bonuses for
directors (and other officers)
Other

1,111

Non-current liabilities

3,531
1,441

138
65
2,665
46,709Non-current assets

37,241Long-term borrowings

44,982

Property, plant and equipment

17,683Long-term deposits received
Provision for share-based
remuneration
Other

1,591

Buildings

7,849

Land

9,711

Other

121

Intangible assets
Other
Investments and other assets
Shares of subsidiaries andaffiliates
Long-term loans to affiliates

77
56

395
395

Total liabilities

57,353

19,162

Net assets

15,268

Shareholders’ equity

79,827

1,181

Share capital

11,965

Deferred tax assets

1,032

Capital surplus

6,449

Other

1,781

Capital reserve

6,449

Allowance for doubtful accounts-101

Retained earnings

61,682

Legal reserve
Other retained earnings
Retained earnings brought
forwardTreasury shares
Valuation and translation adjustments
Valuation difference on availablefor-sale securities
Share acquisition rights

Total assets

137,212

13
61,66961,669-270
1
130

Total net assets

79,859Total liabilities and net assets

137,212―51―

Non-consolidated Statement of Income(From April 1, 2022 to March 31, 2023)(Unit: million yen)Item
Net sales
Cost of sales
Gross profit
Selling, general and administrative
expenses
Operating profit
Non-operating income
Interest and dividend income
Foreign exchange gains
Reversal of allowance for doubtful accounts
Other
Non-operating expenses
Interest expenses
Other
Ordinary profit
Extraordinary income
Gain on sales of shares of subsidiaries andassociates
Extraordinary loss
Loss on devaluation of subsidiaries’ and affiliates’
stocksLoss on valuation of investment securities
Other
Profit before income taxes
Income taxes - current
Income taxes - deferred
Profit―52―

Amount52,09733,79318,303
6,353
11,949
87
93
30
4
395
15

11

215

411
11,753
11

110
104
4
3,531
142

220
11,545
3,673
7,871

Non-consolidated Statement of Changes in Equity(From April 1, 2022 to March 31, 2023)(Unit: million yen)
Shareholder’s equity
Capital surplus
SharecapitalBalance at beginningof the period
Changes during period

Retained earnings
Other retained
earnings
Total retained
earnings
Retained earnings
brought forward

Capital Other capital Total capital Legal
reserve
surplussurplusreserve

11,9656,449-

56,03956,052

Dividends of surplus-2,240-2,240

ProfitPurchase of treasury
shares
Disposal of treasury
sharesTransfer fromretained earnings tocapital surplus
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of theperiod

7,871

7,871

-0

-0

-0

-0

0

0

13

-

-

-

-

-

5,630

5,630

11,965

6,449

-

6,449

13

61,66961,682

Shareholders’ equity
Total
Treasury shareholders’sharesequityBalance at beginningof the period
Changes during period

6,449

-67

Valuation and translation difference
Share
Valuation
Total
valuationandacquisitiondifference ontranslationrightsavailable-for-saledifference
securities

74,3993

3

30

Net assets
total
74,432

Dividends of surplus-2,240-2,240

ProfitPurchase of treasury
shares
Disposal of treasury
sharesTransfer fromretained earnings tocapital surplus
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of theperiod

7,871

7,871

-239

-239

-239

36

36

36
-1

-1

-

-1

-202

5,427

-1

-1

-

5,426

-270

79,8271

1

30

79,859―53―

Notes to Non-consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.

(Matters Concerning Significant Accounting Policies)
1. Valuation standards and methods for assets(1) Valuation standards and methods for securities(i) Shares of subsidiaries and affiliates
Stated at cost using the moving-average method.
(ii) Other securities (available-for-sale securities)
Shares other than those with no market Stated at market (Valuation difference is reported as a
price, etc.
component of net assets. The cost of sale is calculated using
the moving-average method.)
Shares with no market price, etc.
Stated at cost using the moving-average method.
(2) Assessment criteria and assessment methods of Inventories
Real estate for sale and Real estate forStated at cost determined by the specific identification
sale in process
method(The figures shown in the balance sheet have been calculated
by writing them down based on decline in profitability.)
Leased assets are amortized in accordance with property,
plant and equipment standards.
2. Depreciation of non-current assets(1) Property, plant and equipment(2) Intangible assets

3. Standards for provisions(1) Allowance for doubtful
accounts(2) Provision for bonuses(3) Provision for bonuses for
directors (and other officers)(4) Provision for share-based
remuneration

The declining-balance method is applied.
However, buildings (excluding facilities attached tobuildings) and facilities attached to buildings acquired on orafter April 1, 2016 are depreciated using the straight-line
method.
The estimated useful lives are as follows:
Buildings
3 to 29
years
Other
2 to 15
years
Small-amount depreciable assets with an acquisition cost of
100,000 yen or more but less than 200,000 yen are amortizedover three years on a straight-line basis.
The straight-line method is used.
Software for internal use is amortized on a straight-line basis
over the estimated internal useful life (5 years).

The allowance for doubtful accounts is provided based on thehistorical write-off rate for ordinary receivables, the estimatedamount of irrecoverable debt based on recoverability of individual
cases for specified receivables such as doubtful accounts.
To prepare for the payment of bonuses to employees, the Company
records the portion of the estimated bonuses to be paid during thecurrent fiscal year.
Provision for directors’ bonuses is provided based on the estimatedamount to be paid during the current fiscal year.
In order to prepare for the provision of the Company’s shares to
employees based on the Share Benefit Regulations, the provision for
the Company’s shares is recorded based on the estimated amount of
the share benefit obligation at the end of the current fiscal year.
―54―

4. Method of recording revenue and expenses
The major performance obligations in principal businesses related to revenue arising from contracts with theCompany’s clients and the normal time at which such performance obligations are satisfied (normal time at whichrevenue is recognized) are as follows.
(a) Real Estate Revitalization Business
Replanning Business
Replanning Business purchases existing office buildings, refurbishes buildings and facilities, and attracts
excellent tenants to sell added value to clients in Japan and overseas. The Company is obligated to deliver theseproperties based on real estate sales agreements with clients.
The performance obligation is fulfilled at the time the property is delivered and revenue is recorded at the time ofdelivery of the property.
(b) Real Estate Service Business(1) Property Management Business
Property Management Business enters into property management agreements with clients and is obligated toperform various operations related to real estate properties on behalf of clients, including maintenance andmanagement of properties and collection of rent for tenants.
The performance obligation is fulfilled at the time service is provided based on the property managementagreement, and revenue is recorded over the contract period.
(2) Sales Brokerage Business
Sales Brokerage Business stands between the buyer and the seller at the time of purchase and sale of real estateand is responsible for executing the sales agreement. Based on the intermediary agreement with the client, theCompany is responsible for a series of operations including negotiation and adjustment of transaction terms andconditions, delivery and explanation of important matters, preparation and delivery of the agreement, andinvolvement in the execution of the agreement.
The performance obligation is fulfilled at the time when the property related to the real estate sales
agreement established by the intermediary contract is delivered, and revenue is recorded at the time of delivery.
(3) Leasing Brokerage BusinessLeasing Brokerage Business is a business that stands between the lessee and the lessor when leasing real estateand is responsible for concluding lease agreements. Based on intermediary agreements with clients, the businessis responsible for a series of operations including negotiations and adjustments of transaction terms andconditions to conclude agreements, delivery and explanation of important matters, preparation and delivery ofagreements, and involvement in procedures for performance of agreements.
The performance obligation is fulfilled at the time when the real estate lease agreement for the property brokeredby the intermediary agreement is concluded, and revenue is recorded at the time of conclusion of the agreement.
(c) Hotel and Tourism Business
Hotel Development Business
Hotel Development Business is a business engaging in the purchase of land and the construction of hotel buildings,
which are then sold to clients, and is obligated to deliver the property based on the real estate sales agreementwith the clients.
The performance obligation is fulfilled at the time the property is delivered and revenue is recorded at the time ofdelivery.
(d) Others
Construction Business
Construction Business is engaged in renovation planning, repair and renovation related to renewal planning, repair
and renovation work for commercial buildings, telecommunications work, contracted interior construction forlarge, medium, and small facilities, etc.
When control over goods or services is transferred to clients over a certain period, revenue is recorded over acertain period as the performance obligation to transfer goods or services to clients is fulfilled.
Contracts with a very short period between the transaction start date and the time when the performance obligation
is expected to be fulfilled, or contracts with a small order amount received per unit of construction are subject to―55―

alternative treatment. Revenue is not recognized over a certain period but is recognized when the performanceobligation is fulfilled.
5. Basis for preparation of other financial statements(1) Standards for translation of significant assets or liabilities denominated in foreign currencies into Japanesecurrency
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the spot
exchange rates prevailing at the respective balance sheet dates, and translation differences are charged or credited
to income.
(2) Non-deductible consumption tax accounting
Non-deductible consumption tax on assets is charged to income in the year in which it is incurred.
(3) Application of group tax sharing system
Group tax sharing system is applied.

(Notes on Changes in Presentation Methods)
Non-consolidated Balance Sheet“Loans to subsidiaries and associates to be collected within one year” (104 million yen in the previous fiscal year),which was included in “Other in current assets” in the previous fiscal year, is presented separately in the fiscal year
under review due to its increased materiality.
Non-consolidated Statement of Income“Dividend income” (0 million yen in the previous fiscal year) in “Non-operating income”, which was presented
separately in the previous fiscal year, is included in “Interest and dividend income” from the fiscal year under review
because its amount has become insignificant.

(Notes on Accounting Estimates)
1. Assessment of the real estate for sale(1) Amount recorded in the financial statements for the current business year
Real estate for sale
16,301 million yen
Real estate for sale in process
52,019 million yen(2) Other information
For real estate for sale, etc., if the net selling price falls below the acquisition cost, the net selling price is statedas the balance sheet value. The net selling price is calculated by deducting the estimated future cost of construction
work and the estimated selling expenses from the return value estimated based on the business plan.
The business plan that forms the basis for the value of the return to profits includes the expected tenant rent andthe occupancy rate of hotel rooms and is based on important assumptions such as the assumed market conditionsin the future and the forecast of the convergence time of the COVID-19.
In the following fiscal year and thereafter, the net selling price may change due to changes in assumptions usedin formulating business plans in the events that were not anticipated at the time of formulating business plans.
This may have a significant impact on the amount of real estate for sale, etc., recognized in the financial statements
for the following fiscal year and thereafter.
2. Non-current assets impairment(1) Amount recorded in the financial statements for the current business year
Non-current assets related to hotel development business 9,577 million yen(2) Other information
The non-current assets related to Hotel Development Business are leased to consolidated subsidiaries. The rent isdetermined based on assumptions such as the average unit price and occupancy rate of hotel rooms based on
future market forecasts under the long-term management policy. If signs of impairment are shown, thedetermination of impairment loss recognition is based on the rental contracts and a comparison of the estimatedundiscounted future cash flows over the contract period with the carrying amounts of the hotels.
In the following fiscal year and thereafter, the assumptions used in calculating rents may change in the events thatwere not anticipated when the rental contracts were formulated. This may have a material impact on the non―56―

current assets amounts recognized in the financial statements for the following fiscal year and thereafter.

(Additional Information)
Change in holding purpose of assets
As a result of changing the holding purpose, property, plant and equipment (“Buildings” 1,431 million yen and “Land”
3,075 million yen) were transferred to 481 million yen in “Real estate for sale” and 4,026 million yen in “Real estate
for sale in process” in current assets.
Transactions of delivering the company’s own shares to employees etc. through trusts
The Company conducts transactions to deliver its own shares through trust for the purpose of employee welfare.
(i) Overview of transaction
The plan provides the Company’s shares to employees of the Company who meet certain requirements based on
the share benefit regulations established by the Company in advance.
The Company will grant points to employees who satisfy certain conditions at the end of the fiscal year, and when
they acquire the right to receive benefits, the Company shares corresponding to the granted points will be delivered.
The shares to be granted to employees are acquired in the future with the money set in trust in advance andmanaged separately as trust assets.
The total amount method is applied to the Employee Stock Ownership Plan (J-ESOP) in accordance with the“Practical Solution on Transactions of Delivering the Company’s Own Shares to Employees etc. through Trusts”(ASBJ PITF No. 30, March 26, 2015).
(ii) Own shares remaining in the trust
The book value of the Company’s shares remaining in the trust (excluding the amount of incidental expenses) is
included in net assets. The book value and number of shares of the treasury shares were 270 million yen and
128,300 shares.

(Notes to Balance Sheet)(1) Assets pledged as collateral and obligations secured by collateral(i) Assets pledged as collateral are as follows:
Real estate for sale
15,104
Real estate for sale in process
50,275
Buildings
7,556
Land
9,637
Total
82,573(ii) Secured liabilities are as follows:
Long-term borrowings(2) Accumulated depreciation of property, plant and equipment

million yen
million yen
million yen
million yen
million yen

47,504

million yen

910

million yen(3) Monetary claims and monetary obligations to subsidiaries and affiliates (excluding those classified)
Short-term monetary receivables
130
million yen
Short-term monetary debt
217
million yen(4) Monetary obligations to directors(5) Guarantee obligations
Guarantees for borrowings loans by financial institutionsof affiliated companies
Sun Frontier Hotel Management Inc.
Sun Frontier Sado Inc.
SF Communication Inc.
Hotel Osado Co., Ltd

―57―

56

million yen

5,355
172
85
192

million yen
million yen
million yen
million yen

(Notes to Statement of Income)Transactions with affiliated companies
Transaction volume from operating transactions
Net sales
Cost of sales and selling, general and administrative
expensesNon-operating transactions
Non-operating income
Non-operating expenses

447 million yen
746 million yen

87 million yen
6 million yen(Notes to Statement of Changes in Equity)
Matters concerning treasury shares
Beginning of the
End of the current
Increase
Decreasecurrent fiscal year
fiscal year
Common shares
56,644 shares
215,989 shares
35,464 shares
237,169 sharesNote. The number of treasury shares in common shares, includes the Company’s share of 128,300 held by the trust
account of the Employee Stock Ownership Plan (J-ESOP).
Type of shares(Summary of Reasons for Change)
The increase/decrease in the number of treasury shares of common shares was mainly due to an increase of 143,800
shares due to the acquisition of treasury shares pursuant to the provisions of Article 156 of the Companies Act as applied
pursuant to Article 165, Paragraph 3 of the same Act, an increase of 71,800 shares due to the additional acquisition to
the employee stock ownership plan (J-ESOP), and an increase of 49 shares due to the purchase of fractional shares. Thiswas despite a decrease of 35,124 shares due to the disposal of treasury shares through the restricted shares remuneration
system.

(Notes on Tax Effect Accounting)Breakdown of Deferred tax assets and deferred tax liabilities by major cause(Unit: million yen)
Deferred tax assets
Inventory assets
520
Disallowed unrealized loss on shares of affiliates
727
Accrued enterprise tax
86
Allowance for doubtful accounts
29
Taxes and duties
58
Accounts payable
53
Accrued expenses
31
Provision for bonuses
42
Long-term accounts payable
17
Excess depreciation
64
Disallowed unrealized loss on land
8
Other
113
Subtotal
1,753
Valuation allowance-714
Deferred tax assets total
1,039
Deferred tax liabilities
Valuation difference on available-for-sale securities
0
Other
6
Deferred tax liabilities total
7
Deferred tax assets net
1,032
Accounting treatment of corporate tax and local corporate tax or accounting treatment of related tax effect accounting
The Company has adopted the group tax sharing system from the fiscal year under review. Also, in accordance with the“Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System” (ASBJ PITF No. 42, August―58―12, 2021), the Company practices accounting treatment and disclosure of corporate tax and local corporate tax or related
tax effect accounting.

(Notes on Transactions with Related Parties)
1. Subsidiaries and affiliates(Unit: million yen)Type

Company
name

Percentage ofvoting rights
held

Relationshipwith relatedpartiesContents of thetransaction

Receipt of building
rent (Note 1 (i))

Sun
Frontier Possession
Subsidiary
Hotel
Direct 100%
Manageme Indirect nt Inc.

・Leasetransaction
・Management
Receipt ofadministrative
・Concurrent
service expenses
appointment(Note 1 (ii))
posts・Loan of funds Receipt of interest
Debt guarantee(Note 1 (iii))
Debt Guarantee(Note 1 (iv))

Transaction
amountSubject

Year-endbalance

Current
liabilities
358
Other
(Advancesreceived)

39

Current
7 assets Other(Advance)

040

Long-termloans toaffiliates

2,000

5,355

-

-

Note 1. Transaction terms and policy for determining transaction terms(i) The Company receives building rent under general terms and conditions similar to those for independent third
party transactions.
(ii) With regard to administrative service costs, the price is reasonably determined in consideration of costs forproviding services, etc.
(iii) The interest rate for loans is determined by taking the market interest rate into account.
(iv) The Company provides guarantees for loans from banks. No debt guarantee fee has been received for this.
2. Officers and individual major shareholders, etc.
There are no significant transactions that should be noted.

(Notes on Per Share Information)(1) Net assets per share

1,645.34 million yen(2) Earnings per share

161.98 million yen(3) Fully diluted earnings per share

161.83 million yen
Note. The Company's shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP) are included
in weighted average number of shares for the period in common shares and treasury shares deducted in thecalculation of the total number of outstanding shares at the end of the fiscal year under review. The weighted
average number of shares for the period and year-end held by the trust account is 62,921 shares and number ofshares at end of year is 128,300 shares.

(Notes on Significant Subsequent Events)
Not applicable.

―59―

Audit Report on Consolidated Financial Statements
Independent Auditor's Report
May 16, 2023
To the Board of Directors of Sun Frontier Fudousan Co., Ltd.:BDO Sanyu
Tokyo Office, Japan
Hitoshi Torii
Designated Partner
Engagement Partner
Certified Public Accountant
Satoshi Morita
Designated Partner
Engagement Partner
Certified Public Accountant
OpinionWe have audited the consolidated financial statements, which comprise the consolidated balance sheet, the consolidated
statement of income, the consolidated statement of changes in equity and the notes to consolidated financial statementsof Sun Frontier Fudousan Co., Ltd. (the “Company”) and its consolidated subsidiaries (collectively referred to as the“Group”) for the fiscal year from April 1, 2022 to March 31, 2023 in accordance with Article 444, Paragraph 4 of theCompanies Act.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position and the results of operations of the Group for the period, for which the consolidated
financial statements were prepared, in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
Other Information
Other information consists of the business report and supplementary schedules. Management is responsible for the
preparation and disclosure of the other information. The Audit & Supervisory Committee is responsible for overseeing
the Directors’ performance of duties within the maintenance and operation of the reporting process for the otherinformation.
The scope of our opinion on the financial statements does not include the other information, and we do not provide our
opinion on the other information.
―60―

Our responsibility for the audit of the financial statements is to read the other information, and, in doing so, consider
whether there is a material inconsistency between the other information and the financial statements or our knowledge
obtained during audit, and give attention to whether there are any other indications of material errors in the otherinformation aside from such material inconsistency.
If, based on the audit work performed, we determine that there is a material misstatement in the other information, we are
required to report such facts.
We have no matters to report with respect to the other information.
Responsibilities of Management and the Audit & Supervisory Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordancewith accounting principles generally accepted in Japan, including the design, implementation and maintenance of suchinternal control as management determines is necessary to enable the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it is appropriate toprepare the consolidated financial statements with the assumption of the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted inJapan.
The Audit & Supervisory Committee is responsible for overseeing the Directors’ performance of their duties including
the design, implementation and maintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion on
the consolidated financial statements based on our audit from an independent point of view. Misstatements can arise fromfraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, and design and perform audit procedures responsive to those risks. The procedures selected to be applied
depend on the auditor’s judgment. In addition, obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion.

•

Obtain, in making those risk assessments, an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the objective of the audit of the consolidated
financial statements is not to express an opinion on the effectiveness of the Group’s internal control.

•

Evaluate the appropriateness of accounting policies used by management and their method of application, as well as
the reasonableness of accounting estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis for preparing the consolidated
financial statements and based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin the consolidated financial statements or, if such disclosures are inadequate, to express a qualified opinion withexceptions on the consolidated financial statements. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as agoing concern.

•

Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance withaccounting standards generally accepted in Japan, the overall presentation, structure and content of the consolidated―61―

financial statements, including the disclosures, and whether the consolidated financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit & Supervisory Committee regarding, among other matters, the planned scope and timingof the audit, significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit & Supervisory Committee with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards in order to eliminate or reduce
obstruction factors.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and the designated engagement partners do not have any interest in the Group which is required to be disclosed
pursuant to the provisions of the Certified Public Accountants Act of Japan.

―62―

Audit Report on the Non-consolidated Financial Statements
Independent Auditor's Report
May 16, 2023
To the Board of Directors of Sun Frontier Fudousan Co., Ltd.:BDO Sanyu
Tokyo Office, Japan
Hitoshi Torii
Designated Partner
Engagement Partner
Certified Public Accountant
Satoshi Morita
Designated Partner
Engagement Partner
Certified Public Accountant
OpinionWe have audited the non-consolidated financial statements, which comprise the non-consolidated balance sheet, the nonconsolidated statement of income, the non-consolidated statement of changes in equity and the notes to non-consolidated
financial statements, and the supplementary schedules (the “financial statements and others”) of Sun Frontier FudousanCo., Ltd. (the “Company”) for the 24th fiscal year from April 1, 2022 to March 31, 2023 in accordance with Article 436,
Paragraph 2, Item 1 of the Companies Act.
In our opinion, the financial statements and others referred to above present fairly, in all material respects, the financial
position and the results of operations of the Company for the period, for which the financial statements and others wereprepared, in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements and Others
section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant
to our audit of the non-consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Other Information
Other information consists of the business report and supplementary schedules. Management is responsible for the
preparation and disclosure of the other information. The Audit & Supervisory Committee is responsible for overseeing
the Directors’ performance of duties within the maintenance and operation of the reporting process for the otherinformation.
The scope of our opinion on the financial statements does not include the other information, and we do not provide our
opinion on the other information.
―63―

Our responsibility for the audit of the financial statements is to read the other information, and, in doing so, consider
whether there is a material inconsistency between the other information and the financial statements or our knowledge
obtained during audit, and give attention to whether there are any other indications of material errors in the otherinformation aside from such material inconsistency.
If, based on the audit work performed, we determine that there is a material misstatement in the other information, we are
required to report such facts.
We have no matters to report with respect to the other information.
Responsibilities of Management and the Audit & Supervisory Committee for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of the financial statements and others in accordancewith accounting principles generally accepted in Japan, including the design, implementation and maintenance of and forsuch internal control as management determines is necessary to enable the preparation and fair presentation of financial
statements and others that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements and others, management is responsible for assessing whether it is appropriate toprepare the financial statements and others with the assumption of the Company’s ability to continue as a going concern,
disclosing matters related to going concern, as applicable in accordance with accounting principles generally accepted inJapan.
The Audit & Supervisory Committee is responsible for overseeing the Directors’ performance of their duties including
the design, implementation and maintenance of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements and Others
Our objectives are to obtain reasonable assurance about whether the financial statements and others as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion on
the financial statements and others based on our audit from an independent point of view. Misstatements can arise fromfraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements and others.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:•

Identify and assess the risks of material misstatement of the financial statements and others, whether due to fraud or
error, and design and perform audit procedures responsive to those risks. The procedures selected to be applied
depend on the auditor’s judgment. In addition, obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion.

•

Obtain, in making those risk assessments, an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the objective of the audit of the financial statements
and others is not to express an opinion on the effectiveness of the Company’s internal control.

•

Evaluate the appropriateness of accounting policies used by management and their method of application, as well as
the reasonableness of accounting estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis for preparing the financial
statements and others and based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements and others or, if such disclosures are inadequate, to express a qualified opinion
with exceptions on the financial statements and others. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.

•

Evaluate whether the presentation and disclosures in the financial statements and others are in accordance withaccounting standards generally accepted in Japan, the overall presentation, structure and content of the financial―64―statements and others, including the disclosures, and whether the financial statements and others represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with the Audit & Supervisory Committee regarding, among other matters, the planned scope and timingof the audit, significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit & Supervisory Committee with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards in order to eliminate or reduce
obstruction factors.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and the designated engagement partners do not have any interest in the Company which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

―65―

Audit Report of the Audit & Supervisory Committee
Audit Report
The Audit & Supervisory Committee have audited directors’ performance of their duties during the 24th fiscal year from
April 1, 2022 to March 31, 2023. We hereby report the method and results of the audit as follows.
1. Auditing method and its contents
The Audit and Supervisory Committee regularly received reports on the details of the resolutions of the Board of
Directors concerning the matters listed in Article 399-13, Paragraph 1, Item 1 (b) and (c) of the Companies Act ofJapan and the status of the construction and operation of the system established based on such resolutions (internal
control system) from Directors and employees, etc., requested explanations as necessary, expressed opinions, andconducted audits by the method described below.
(i) Audit & Supervisory Committee Members attended important meetings, received reports from Directors andemployees on matters related to the execution of their duties, requested explanations as necessary, inspected
important approval documents, etc., and investigated the status of business and assets at the head office and major
business offices in accordance with the standards for Audit & Supervisory Committee Audits established by the
Audit & Supervisory Committee and in accordance with auditing policies and the division of duties, in cooperation
with the internal audit department of the Company. With regard to subsidiaries, the Audit & Supervisory
Committee worked to communicate and exchange information with the Directors and Audit & Supervisory Board
Members, etc. of the subsidiaries, and received reports on the business from the subsidiaries as necessary.
(ii) We monitored and verified whether or not the accounting auditor has properly carried out audits while maintaining
its independence. We also received reports from the accounting auditor on the performance of its duties and haveasked it to provide explanations when necessary. In addition, we sought explanations as necessary, upon having
received notice from the accounting auditor that the “systems for ensuring that the performance of the duties isbeing carried out properly” (matters stipulated in each item of Article 131 of the Regulation on Corporate
Accounting) have been developed in accordance with the “Quality Control Standard for Audit” (BusinessAccounting Council, October 28, 2005), etc. With regard to key audit matters (KAMs), the Audit & Supervisory
Committee consulted with BDO Sanyu and received reports on the implementation status of the audit and requested
explanations as necessary.
Based on the methods described above, we reviewed the business report and supplementary schedules, the Nonconsolidated Financial Statements (Non-consolidated balance sheet, Non-consolidated statement of income, Nonconsolidated statement of changes in equity, and Notes to non-consolidated financial statements), supplementaryschedules attached thereto, and the Consolidated Financial Statements (Consolidated balance sheet, Consolidated
statement of income, Consolidated statement of changes in equity, and Notes to consolidated financial statements).

―66―

2. Audit Results(1) Audit results of the Business Report, etc.
(i) We deem that the Business Report and supplementary schedules attached thereto fairly represent the situationof the Company in accordance with relevant laws and regulations, and the Articles of Incorporation.
(ii) We deem there to be no misconduct or material fact constituting a violation of relevant laws and regulations,or the Articles of Incorporation, regarding the Directors in performing their duties.
(iii) We deem that resolutions of the content of the Business Report and Board of Directors regarding the internal
control systems are appropriate in content. We also deem there to be no issues to be pointed out with respect
to the Directors in performing their duties regarding the internal control systems.
(2) Audit results of the Non-consolidated Financial Statements and supplementary schedules attached thereto
We deem that the methods and results of audits performed by the accounting auditor, BDO Sanyu are appropriate.
(3) Audit results of the Consolidated Financial Statements
We deem that the methods and results of audits performed by the accounting auditor, BDO Sanyu are appropriate.
May 16, 2023
Sun Frontier Fudousan Co., Ltd. Audit & Supervisory Committee
Audit & Supervisory Committee Member (full-time) Shinichi
Tominaga
Audit & Supervisory Committee Member

Hidetaka Tanaka

Audit & Supervisory Committee Member

Tsuneko Murata

Note 1. Audit and Supervisory Committee Members Hidetaka Tanaka and Tsuneko Murata are Outside Directors as
stipulated in Article 2, Item 15 and Article 331, Paragraph 6 of the Companies Act.
Note 2. At the 23rd Annual General Meeting of Shareholders held on June 21, 2022, the Company passed a resolution to
become a company with an Audit and Supervisory Committee as of the same date. However, from April 1, 2022
to the time when the Annual General Meeting of Shareholders was held on June 21, 2022, Audit & Supervisory
Board Members performed their duties in accordance with the Companies Act of Japan. The Audit & Supervisory
Committee received a report from the Audit & Supervisory Board Members on the content and results of theaudit implemented by the Audit & Supervisory Board Members and accepted the contents.

―67―