Consolidated Financial Results for the Second Quarter of
the Fiscal Year Ending March 31, 2017
(Based on Japanese GAAP)(Translation of Japanese Financial Summary, Released on November 8, 2016)
Company name: Sun Frontier Fudousan Co., Ltd.
Stock listing: Tokyo Stock Exchange 1st Section
Code number: 8934
URL: http://www.sunfrt.co.jp
Address: 14F, Toho Hibiya Building, 2-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006
Representative: Tomoaki Horiguchi, President
Inquiries: Yasushi Yamada, Managing Director(Phone: +81-3-5521-1301)*Amounts under one million yen have been rounded down.

1. Consolidated Performance in the Second Quarter of the Fiscal Year Ending March 31, 2017
(1) Operating results*Percentage figures shown under net sales, operating income, ordinary income, and net income columns indicate year-on-year changes for
those items.
(Millions of yen, except for per share figures. The number in parentheses are increase rate)

2nd Quarter of FY ending March 31, 2017
2nd Quarter of FY ended March 31, 2016

Net Sales¥18,906 (47.1%)¥12,857 (8.3%)

Operating Income¥5,174 (45.4%)¥3,559 (18.2%)

Ordinary Income¥4,840 (45.0%)¥3,337 (15.9%)(Note) Comprehensive Income: 2nd quarter of FY ending March 31 2017: ¥3,379 million (24.6%)
2nd quarter of FY ended March 31 2016: ¥2,712 million (1.9%)

Fully Diluted Net Income
per Share (Yen)¥3,420 (25.9%)¥2,717 (2.2%)

Net Income per Share(Yen)¥80.00¥63.55

Total Assets¥58,979¥54,084

Net Assets¥32,463¥30,144

Equity Ratio (%)
55.0%
55.7%

Net Income
2nd Quarter of FY ending March 31, 2017
2nd Quarter of FY ended March 31, 2016

¥ －
¥ －

(2) Financial Position (at end of the term)(Millions of yen)

2nd Quarter of FY ending March 31, 2017
FY ended March 31, 2016

(Reference) Shareholders’ Equity at term-end
2nd Quarter of FY ending March 31, 2017 (as of September 30, 2016): ¥32,450 million
FY ended March 31, 2016 (as of March 31, 2016): ¥30,139 million

2. Cash Dividends
Cash Dividends per Share
2nd Quarter
3rd Quarter
FY Ended March 31, 2016
0.00
FY Ending March 31, 2017
0.00
FY Ending March, 2017 (Projections)
0.00(Note) Changes from the latest released dividend forecasts: None
1st Quarter
-

(Yen)

Year-end
25.00

Annual total
25.00

28.00

28.00

3. Forecast for Consolidated Financial Results for the Fiscal Year Ending March 31, 2017
(From April 1, 2016 to March 31, 2017) *Percentage figures are indicated year-on year changes for those items.
(Millions of yen, except for per share figures. The number in parentheses are increase rate)
Net Income per
Net Sales
Operating Income
Ordinary Income
Net Income
Share (Yen)¥8,500 (15.1%)¥8,200(16.7%)¥130.97¥5,600 (△31.3%)
FY Ending March, 2017 ¥41,000 (33.9%)(Note) Changes from the latest released performance: None
The main reason for the decrease in net income is that income of FY ending March 31, 2017 before tax adjustments is expected to put acomplete end to tax loss carryforward from previous terms. As a result, ¥1,325 million reversal of loss included in the deferred tax asset
calculated at the end of FY ended March 31, 2016 would be added up to the corporate tax adjustment amount, which leads to a heavier
tax burden than the previous term.

1

4. Others(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of
consolidation): None
New companies: —Excluded companies: —(2) Adoption of special accounting practices in the preparation of quarterly consolidated financial statements: None
(3) Changes in accounting principles, procedures and presentation methods
1) Changes caused by revision of accounting standards: Yes
2) Changes of accompanying revisions other than 1) above: None
3) Changes in accounting estimates: None
4) Restatement of corrections: None
(4) Number of outstanding shares (common stocks)
1) Number of outstanding shares at the end of the period (including treasury stock):
2nd Quarter of FY ending March 31, 2017: 42,755,500 shares
FY ended March 31, 2016: 42,755,500 shares
2) Number of treasury stock at the end of period:
2nd Quarter of FY ending March 31, 2017: 143 shares
FY ended March 31, 2016: 143 shares
3) Average number of shares for the period:
2nd Quarter of FY ending March 31, 2017: 42,755,357 shares
2nd Quarter of FY ended March 31, 2016: 42,755,357shares※Implementation status of quarterly review processes
This Summary of Consolidated Financial Results is not subject to quarterly review processes under the Financial Products
and Exchange Law. At the time of this document’s release, review of the quarterly financial statements under the Financial
Products and Exchange Law had not been completed.
※Appropriate use of business forecasts; other special items
Business forecasts contained in this report are based on information available to the Company on the date of this report’s
announcement and assumptions deemed reasonable. The company provides no assurance that the forecasts will beachieved. Actual results may differ significantly from such forecasts due to unforeseen circumstances.

2

Table of Contents of Appendix
1. Qualitative Information Concerning Consolidated Business Performance for the Quarter Under Review ............... 4(1) Qualitative information on consolidated operating results ..................................................................................... 4(2) Qualitative information on consolidated financial position .................................................................................... 6
2. Consolidated Financial Statements............................................................................................................................. 7(1) Quarterly consolidated balance sheets .................................................................................................................... 7(2) Consolidated Quarterly Statements of Income and Consolidated Quarterly Statements ofcomprehensive income ......................................................................................................................................... 9(3) Notes to quarterly financial statements ................................................................................................................. 11(Notes regarding the conditions of going business) ............................................................................................. 11(Notes in the case of major changes in shareholders’ equity)............................................................................... 11(Segment information, etc.) .................................................................................................................................. 113

1. Qualitative Information Concerning Consolidated Business Performance for the Quarter under Review(1) Qualitative information on consolidated operating results
In the situation of yen appreciation and sluggish growth of consumption, corporate profits recovery
remains at a standstill. However, employment and income environment is improving due to various
economic policy and monetary policy of the government and the BOJ. As increase of tourists to Japan also
effects significantly on economy, a recovery basic tone continued in economic conditions. On the other hand,
economy of emerging nations including China is slightly decelerating and showing downside risk, while
impacts of Brexit on economy is also a concern. The sense of uncertainty about the future global economy isgetting highIn the real estate industry to which our company and our consolidated subsidiaries (hereinafter, “ourcorporate group”) belong, the vacancy rate of central Tokyo office building market has been hovering beneath
4% and average rent is also growing modestly. On the other hand, in real estate invest market, J-REIT is
trading actively in real estate investment market, although many investors are in a wait-and-see moodbecause the uncertain prospects of the world economy. In such situation, trade volume of commercial realestate in market is gradually declining.
Under such circumstances, we specialize in small and medium-sized office buildings in central Tokyo,
and dig deep in local market to develop high professional business with intense concentration. Throughrevitalization and utilization of real estate which is environmentally friendly, we solve any real estate
related difficulties based on the viewpoint of customers sincerely. We provide services like rental and sales
brokerage, management and maintenance, small repair and large scale renovation of buildings, specialists
consultation regarding inheritance and tax affairs, rent guarantee service, etc. We eliminate customers’
anxiety and complaints through all these services and create multifaceted earning opportunities.
By utilizing unrivalled knowhow and experience gained through various service above to the usedbuildings of revitalization business, we have been proactively developing real estate revitalization projects
to which all experience is linked up and utilized. We conducts various renovations, such as transition forbest use which could bring vigor to street community, setup offices with furnished interior before tenants
are being recruited, garden terrace installation on rooftop, etc. By these renovations which reach hearts oftenant, used buildings are revitalized to attractive and high quality ones. In addition, with the strength ofrental brokerage based on community sales, we sell properties to asset holders and wealthy people byutilizing the strength and features of circumference area as well as local history. This effort make us able
to optimize the financial returns of buildings. Through grasp of tenants’ needs and constant improvement,
we are making achievements in revitalization business by mainly focusing on 5 central wards in Tokyo(Chiyoda, Chuo, Minato, Shinjuku and Shibuya).
Our business model strength is the operation capability gained from office building business. Byutilizing the model in development, management and revitalization, we are actively developing hotelbusiness as the second main pillar following our office business.
Considering meeting the demands of accommodations from tourists to Japan could benefits the creationof society interests, we are developing the “Inbound City-tourism Hotel” which is targeted at tourists toJapan. In April 2016, “SPRINGSUNNY”, the first hotel of our collaborative brand with the Spring Group
which is developing travel and air transport business in China, fully opened in Tokoname city, Aichi
prefecture. As the result of our efforts on operation aiming at “heart-warming” hotel, the occupancy rate
remains at a high level over 96% and average daily rate is improving remarkably as well. In addition, weare moving on with the plan of upper grade hotel in Kyoto. In order to serve purposes of hotel guests, weare making efforts on different categories for development and operation of “Inbound City-tourism Hotel”.
Furthermore, in Da Nang, the largest city in central Vietnam, our first project in Vietnam, “The Blossom
City” hotel, opened in August 2016. At the same time, we are developing high-rise condominiums over there
as well. On the other hand, in Jakarta, the capital of Indonesia, we are proceeding with the construction ofurban condominiums as well as service apartment business. Through these projects, we are aggressively
pursuing our overseas development in fast-growing Southeast Asia.
As a result, our consolidated results for the second quarter ending September 2016 were as follows:
Sales ¥18,906 million (up by 47.1% year on year), operating income ¥ 5,174 million (up by 45.4% year
on year), ordinary income ¥4,840 million (up by 45.0% year on year), and net income ¥3,420 million (up by
25.9% year on year).
The performance of each segment is as follows.
Real Estate Revitalization
From the procurement stage, our corporate group starts a “production” process through which we aim
to put the property to the best use possible. By carefully researching real estate leasing market on a daily
basis to collect knowledge and linking each section’s experience in technologies, planning, building4management and construction, we draw up feasibly creative business plans. In addition, we emphasize thefact that the more satisfied the tenants are, the more satisfied the owners are. Through frequentinteractions with tenants, we look for all possible ways to make the property more comfortable andconvenient for them to use, and address any challenges quickly, and thereby achieve high rates of tenant
retention and utilization.
As for replanning business, we acquire used buildings with problems such as aging facilities and low
occupancy rate. Cherishing the location characteristics and local history, we renovate the buildings from thetenant's perspective or present-day needs at the time. By making efforts in office renovation for regional
needs, we succeeded in revitalizing the buildings to high occupancy rate and high value-added products.
Then we sell these products to asset holders and wealthy people. Such product making which appeal tovalue from perspective of customers led to high profit margin. Both sales and profits increased from theprevious year. Profit margin rose as well.
In addition, we also take our responsibility to our customers seriously and quickly, providing an
integrated set of support services after purchase such as hard and soft management of real estate, active
actions toward problems, resolution for building owners’ issues and response to the customer's new request,etc.
As for building rental business, we utilize the comprehensive operation capability to building
revitalization. This make us be able to stabilize rent income from high occupancy rate. Building numbers
and balance inventory increased. Because medium-sized projects operated over multiple years were sold asscheduled, rent income decreased. Thus, both sales and profits decreased from previous year.
As a result of activities above, sales were ¥16,514 million (up by 51.0% year on year) and segment
income was ¥5,601 million (up by 54.6% year on year).
Real Estate Brokerage
Our sales brokerage business has been focusing on taking quick actions for customer referrals fromother departments such as property management and rental brokerage. This lead to business chances suchas purchase and sales from repeaters, referrals from a satisfied customer, etc. In addition, we are making
efforts to improve our problem-solving skills through assets consulting and expand target customers
through multiple language actions toward overseas customers including Taiwanese. On the other hand,market is showing partial overheat while some financial institutions become cautious about lending to realestate investment. In such environment, we should work harder but we didn’t make enough effort to meetthe needs of customers. Thus, compared to previous year, both sales and profits decreased.
As for rental brokerage, we are expanding branch offices across Tokyo area by focusing mainly on 5
central wards. In respective area of each branch office, we dig deep and work hard for customers with thestrength of rental brokerage based on community sales. Thus, both sales and profits increased from previous
year. Furthermore, in the process of improving occupancy rate, we don’t only take vacancies as the only
problems of building owners. We also pay attention to related problems such as decrepitude and inheritanceissues with multifaceted and long-term perspective. Actual needs drawn out through conversation withcustomers are connected to business chances such as renewal and sales brokerage.
As a result of activities above, sales were ¥698 million (down by 24.0% year on year) and segment
income was ¥553 million (down by 32.1% year on year).
Property Management
As for property management business, we are conducting building management which make us be able
to stabilize rent income from high occupancy rate. The management consists of system establishment ofdetailed building operation and management, tenant recruitment based on knowledge of business conditions
and property values in local neighborhoods, precise accounting, etc. About system establishment above, we
make efforts such as monthly tenant visit to improve customer satisfaction. Also, we make document
preparations exquisitely according to building owners’ needs including language translation for foreign
customers.
Through activities above, we succeeded in gaining building customer trust. For example, building
owners who already became our customer would entrust new buildings to our management. Customers whobought buildings from our revitalization and sales brokerage department will entrust the building
management to us after purchase. By making effort in increasing the entrusted buildings through service
improvement, we were newly managing 44 buildings (14.4% increase year on year), as can be seen in thetable below.
In addition, we make proposals for latent needs from perspectives of customers by learning deeply
through grasp of their assets background and understanding of their building management policies. By
doing this, we succeeded in creating business chances for sales brokerage and construction orders. This lead
to issue resolution for customers by using our comprehensive group capability. Furthermore, by efforts such5

as profitability improvement through appropriate rent modification and contract change to Fixed Term
Building Lease Agreement with the grasp of rebuilding in future, we are providing high value-added service.
As a result of activities above, both sales and profits increased.

No. of entrusted buildings
Occupancy rate

End of September 2014
243
96.8%

End of September 2015
306
96.6%

End of September 2016
350
95.8%

As for the building maintenance business, by demonstration of our strength in property maintenance,
especially in cleaning and repairing walls of high-rise buildings, we have been able to increase the numberof orders received through cooperation with property management business. However, as personnel
expenses are also increasing, sales got increased but profits have hit a plateau compared to previous year.
As a result of activities above, sales were ¥854 million (up by 17.1% year on year) and segment income
was ¥397 million (up by 15.9%).
Other Businesses
In the rent guarantee business, concentration on new client acquisition and enhancement of cooperation
with affiliated companies has helped to increase caseloads stably. Both sales and profits increased fromprevious year.
As for the construction solution business, due to commercialization specialized in revitalization
business, sales decreased and profits increased.
In space rental business (rental meeting room business), users are increasing steadily based on
repeaters and referrals. Compared to previous year, sales increased sharply, profits with large surplus werealso achieved. Furthermore, in order to expand business, we are actively developing and operating new
branch of rental office and rental meeting room through cooperation with rental brokerage department.
As for the hotel business, “SPRINGSUNNY Hotel Nagoya Tokoname” opened in April as the first hotelof collaborative brand with Shanghai Spring Group. As the result of our efforts on operation aiming at“heart-warming” hotel, the occupancy rate remains at a high level over 96% and average daily rate isimproving remarkably as well. In addition, we are moving on with the plan of upper grade hotel in Kyoto.
In order to serve purposes of hotel guests, we are making efforts on different categories for development andoperation of our own brand as “Inbound City-tourism Hotel”.
As a result of activities above, sales were ¥839 million (up by 210.2% year on year) and segment income
was ¥417 million (up by 187.8% year on year).
(2) Qualitative information on consolidated financial position
As of the end of the second quarter of this consolidated fiscal year, total assets were 58,979 million yen (up by 9.1% fromthe end of the previous consolidated fiscal year) and liabilities were 26,516 million yen (up by 10.8%). The main reasonsfor the increase in total assets were that deferred tax assets decreased 827 million yen and acquired land increased 5,154
million yen. The main reasons for increase in liabilities was that advances received decreased 414 million yen and long-term
debt increased 3,167 million yen.
In addition, net assets were 32,463 million yen (up by 7.7 %). The main reason for the increase in net assets was thatthough 1,068 million yen was paid out for year-end dividends, 3,420 million was posted as quarterly net income.

6

2. Consolidated Financial Statements(1) Consolidated Quarterly Balance Sheets
FY ended March 31, 2016
(As of March 31,2016)(Thousands of yen)
End of 2Q of FY ending
March 31, 2017(as of September 30, 2016)

ASSETS
Current assets
Cash and deposits

15,413,97815,464,519

Accounts receivable-trade344,832

391,971

Real estate for sale
Real estate for sale in process

6,047,465
26,664,726

960,499
32,646,062

2,096

5,308

1,736,749
1,174,601

909,342
750,901

Supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets△18,977△15,345

51,365,472

51,113,210

702,298

694,669

1,172,832

6,327,088

44,72344,2201,919,854

7,065,979

278,208

271,831525,166

532,983△4,381△4,419Noncurrent assets
Property, plant and equipment
Buildings, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

7

520,784

528,564

2,718,847

7,866,375

54,084,319

58,979,585

FY ended March 31, 2016
(As of March 31,2016)(Thousands of yen)
End of 2Q of FY ending
March 31, 2017(as of September 30, 2016)

LIABILITIESCurrent liabilities
Accounts payable-trade
Short-term loans payable

599,139
1,248,500

929,852
1,088,300

Current portion of bonds
Current portion of long-term loans payable

101,200
2,004,184

1,183,900
2,199,384

Income taxes payable

973,017

688,437

Provision for bonuses
Provision for directors' bonuses

134,643
41,150140,648
24,000Construction warranty reserve

6,800

10,400

Provision for loss on guarantees for rent
Other

41,7392,491,110

49,204
2,028,612

Total current liabilities

7,641,484

8,342,739

1,413,300

280,000

13,642,252
578

16,614,460
341

Noncurrent liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Other

1,242,048

1,278,570

Total noncurrent liabilities

16,298,179

18,173,372

23,939,663

26,516,111

8,387,211
2,871,767
18,885,910

8,387,211
2,871,767
21,237,799

Total liabilities
NET ASSETS
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock

△174

△174

30,144,715

32,496,604

2,951

2,734

Foreign currency translation adjustment△8,331△48,895

Total accumulated other comprehensive income△5,379△46,160

Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities

Minority interests
Total net assets
Total liabilities and net assets

8

5,320

13,02930,144,656

32,463,473

54,084,319

58,979,585

(2) Consolidated Quarterly Statements of Income and Consolidated Quarterly Statements ofcomprehensive income
Consolidated Quarterly Statements of Income

Net sales
Cost of sales(Thousands of yen)
Second Quarter of FY ended
Second Quarter of FY ending
March 31, 2016
March 31, 2017
(April 1,2015- September 30, 2015) (April 1,2016- September 30, 2016)
12,857,352
18,906,804
7,657,650
11,670,201

Gross profit

5,199,702

7,236,603

Selling, general and administrative expenses

1,639,982

2,062,306

Operating income

3,559,719

5,174,297

Non-operating income
Interest income

5,647

7,462

Dividends income
Subsidy income

275
4,470

282
1,770

412

1,288

Other

10,805

10,802Non-operating expenses
Interest expenses

Total non-operating income

107,558

106,071

Bond Issuance Cost

84,128-Foreign currency transaction loss
Financing Cost
Other

17,9138,651
14,46661,429154,105
22,780Total non-operating expenses

232,719344,387

3,337,806

4,840,712

Gains from sale of noncurrent assets

-

1,601

Total extraordinary profit

-

1,601

827
10,850-Ordinary income
Extraordinary income

Extraordinary loss
Loss on retirement of noncurrent assets
Loss from lawsuits
Loss on valuation of membership
Total extraordinary losses
Income before income taxes and minority interests

-

1,250

11,6771,250

3,326,129

4,841,063

626,106

Income taxes-current
Income taxes-deferred△16,751

593,582
827,265

Total income taxes

609,355

1,420,848

Income before minority interests

2,716,773

3,420,214

Minority interests in income (loss)

△560

△558

2,717,334

3,420,773

Net income

9Consolidated Quarterly Statements of comprehensive income

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income

Second Quarter of FY ended
March 31, 2016
(April 1,2015September 30, 2015)
2,716,773(Thousands of yen)
Second Quarter of FY ending
March 31, 2017
(April 1,2016September 30, 2016)
3,420,214△86△4,014△216△40,564△4,100△40,780

2,712,672

3,379,434

2,713,233

3,379,992

△560

△558

Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests10(3) Notes to quarterly financial statements(Notes regarding the conditions of going business)
Not applicable.
(Notes in the case of major changes in shareholders’ equity)
Not applicable.
(Segment information, etc.)
Second Quarter of Fiscal Year Ended March 31, 2016 (April 1, 2015 -September 30, 2015)
1. Information concerning sales and income or loss amount by reporting segment

I(Thousands of yen)
Quarterly
consolidated
Adjustment
income/loss
amountsstatement(Note 2)amount(Note 3)

Reporting segment
Total

Total

Other
business(Note 1)

Real Estate
Revitalization

Real Estate
Brokerage

Property
Management

Sales

10,937,695

919,349

729,729

12,586,774

270,577

12,857,352―

12,857,352

Segment
income(loss)

3,623,181

815,353

342,599

4,781,134

144,959

4,926,094△1,366,374

3,559,719

Notes: 1. The classification “other business” refers to business segments that are not included in reporting segments, and includes
construction solution business and delinquent rent guarantee business and space rental business, etc.
2. The segment income adjustments amount, △1,366,374 thousand yen, includes △1,473,932 thousand yen in companywide expenses that are not allocated to reporting segments and 107,558 thousand yen in adjustment amounts for interest
expense. The company-wide expenses are mainly selling, general and administrative expenses that are not allocated toreporting segments.
3. Segment income (loss) is adjusted with operating incomes calculated in consolidated quarterly statements of income.

2. Information on impairment of non-current assets and goodwill etc. for each reporting segment
Not applicable.
II

Second Quarter of Fiscal Year Ending March 31, 2017 (April 1, 2016 - September 30, 2016)
1. Information concerning sales and income or loss amount by reporting segment
Reporting segment
Property
Management

Other
business(Note 1)

Total

Real Estate
Revitalization

Real Estate
Brokerage

Sales

16,514,542

698,494

854,551 18,067,588

839,216 18,906,804

Segment
income(loss)

5,601,092

397,193

397,193

417,126

Total

6,551,702

6,968,828(Thousands of yen)
Quarterly
Adjustment
consolidated
amounts
income/loss statement(Note 2)amount(Note 3)―18,906,804△1,794,531

5,174,297

Notes: 1. The classification “other business” refers to business segments that are not included in reporting segments, andincludes construction solution business and delinquent rent guarantee business and space rental business and hotel
operation business, etc.
2. The segment income adjustments amount, △ 1,794,531 thousand yen, includes △ 1,900,215 thousand yen incompany-wide expenses that are not allocated to reporting segments and 105,684 thousand yen in adjustment amounts
for interest expense. The company-wide expenses are mainly selling, general and administrative expenses that are notallocated to reporting segments.
3. Segment income (loss) is adjusted with operating incomes calculated in consolidated quarterly statements of income.

2. Information on impairment of non-current assets and goodwill etc. for each reporting segment
Not applicable.

11