Annual Securities Report(Excerpt Version)

The 25th Fiscal Year

From April 1, 2023 to March 31, 2024

Sun Frontier Fudousan Co., Ltd.

Contents

Full version will be disclosed later.
The 25th Annual Securities Report
Cover ........................................................................................................................................................................... 1
Part I Corporate Information .........................................................................................................................................
Item 1. Overview of the Company and Its Consolidated Subsidiaries ..........................................................................
1. Summary of Business Results ...........................................................................................................................
2. History...............................................................................................................................................................
3. Description of Business.....................................................................................................................................
4. Overview of Subsidiaries and Affiliates .......................................................................................................... 8
5. Employees ....................................................................................................................................................... 9
Item 2: Business Overview .......................................................................................................................................... 2
1. Management Policy, Business Environment and Tasks Ahead, etc................................................................. 2
2. Sustainability Policy and Initiatives .............................................................................................................. 13
3. Risk Factors................................................................................................................................................... 14
4. Analyses of Consolidated Financial Position, Operating Results and Cash Flows from the management’s
perspective.............................................................................................................................................................. 20
5. Material Agreements, etc............................................................................................................................... 31
6. Research and Development Activities........................................................................................................... 31
Item. 3 Property, Plants and Equipment..................................................................................................................... 32
1. Overview of Capital Investment ................................................................................................................... 32
2. Major Facilities ............................................................................................................................................. 32
3. Plans for Capital Investment, Disposal of Property, Plants and Equipment, etc. .......................................... 33
Item. 4 Information on the Company......................................................................................................................... 34
1. Information on the Company’s Shares, etc. .................................................................................................. 34
2. Acquisitions, etc. of Treasury Shares ............................................................................................................ 42
3. Dividend Policy............................................................................................................................................. 43
4. Corporate Governance, etc. ........................................................................................................................... 43
Item. 5 Financial Information .................................................................................................................................... 60
1. Consolidated Financial Statements, etc. ........................................................................................................ 61
2. Non-Consolidated Financial Statements, etc............................................................................................... 109
Item. 6 Outline of the stock operations of the Company ...............................................................................................
Item. 7 Reference Information on the Company ...........................................................................................................
1. Information on the Parent Company .................................................................................................................
2. Other Reference Information ............................................................................................................................
Part II Information on Guarantors, etc., for the Company .............................................................................................
Audit Report
Internal Control Report
Confirmation

CoverDocument title

Annual Securities Report

Clause of stipulation
Place of filing

Article 24, Paragraph 1 of the Financial Instruments and Exchange
Act of Japan
Director-General of the Kanto Local Finance Bureau

Filing dateJune 26, 2024

Fiscal year

The 25th Fiscal Year (from April 1, 2023 to March 31, 2024)

Company name

Sun Frontier Fudousan Kabushiki Kaisha

Company name in English

Sun Frontier Fudousan Co., Ltd.

Title and name of representative

Seiichi Saito, President Representative Director

Address of registered head office

1-2-2 Yurakucho, Chiyoda-ku, Tokyo, Japan

Telephone number+81 (0)3 5521-1301

Name of contact person
Nearest place of contact

Takeshi Hirahara, Senior Executive Officer, General Manager ofCorporate Planning Division
1-2-2 Yurakucho, Chiyoda-ku, Tokyo, Japan

Telephone number+81 (0)3 5521-1301

Name of contact person

Takeshi Hirahara, Senior Executive Officer, General Manager ofCorporate Planning DivisionTokyo Stock Exchange, Inc.
(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo, Japan)

Place for public inspection

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Item 2: Business Overview
1. Management Policy, Business Environment and Tasks Ahead, etc.
The forward-looking statements in herein are based on the judgment of the Group as of the end of the current
consolidated fiscal year.
(1) Management policies and strategies(i) Basic policy of corporate management
The Group practices philosophy management and attaches importance to being a group that shares the value of
altruism. “Not for profit, but for trust. Change yourself, solve problems from clients' point of view and exceed
expectations.” Based on this principle, we are committed to solving social issues through our corporate activities
while proactively changing and taking on new challenges in management. We also aim to achieve harmony with
our shareholders and contribute to the realization of a sustainable and prosperous society.
Credo
Altruism ～ We believe in helping others, as many as we can, throughout our lives. ～MissionOur mission is to look after every employee and pursue the happiness of both mind and matter.
At the same time, to co-create a rich and sustainable society by contributing to the evolution
and the development of the human society.
VisionOur vision is to become the most appreciated visionary company that fully utilizes limited
resources and continues the challenges to create new values.
(ii) Target management indicator
Aiming for stable growth over the medium to long term, the Group places importance on maintaining at least
20% Ordinary profit margin from the perspective of profitability and productivity, at least 50% Equity Ratio
from the perspective of financial security, and at least 10% ROE, which indicates how effectively the Groupmanaged Shareholders’ equity.
(iii) Management environment
One year has passed since COVID-19 was classified as Category 5, and the Japanese economy has continued
to recover moderately as social and economic activities have been normalized, the employment and income
environments have improved, and inbound demand has surged. On the financial front, although the zero interest
rate policy has been lifted, the accommodative financial environment is expected to be maintained. However,
the yen has recently depreciated mainly due to the difference in interest rates between Japan and the UnitedStates. As a company in the real estate business, which is said to be relatively susceptible to interest rates, it isnecessary for the Company to pay close attention to trends in the U.S. economy.
(2) Priority business and financial issues to be addressed
Since its foundation, our Group has been practicing philosophy-based management centered on the spirit of"altruism." We have defined our corporate philosophy as "reducing the waste of non-reproducible resources andcontributing to the perpetual prosperity of the people, plants and animals, and we have been developing businessactivities that contribute to the sustainability of society. The spirit of "altruism" is the idea of valuing others asmuch as oneself. The core of our business philosophy is the desire to bring smiles to many people and contributeto the prosperity of humanity, flora, and fauna on Earth. Instead of focusing on profit and loss, we base ourjudgments on right and wrong, with a sense of "rightness" and "compassion," sharing the value that "the joy ofothers is our own joy," and we place great importance on being close to our customers.
To redefine this philosophy of our Group and to ensure our Group's sustainable growth, we have established a
Sustainability Vision. Furthermore, we have identified three important issues (materiality): "environmental
protection," "regional revitalization," and "human resource development," and we are promoting sustainability
management integrated with the spirit of "altruism." By continuing to implement concrete measures for realizing
this vision and addressing important issues, we aim to contribute to the realization of a sustainable society throughour business activities and enhance our corporate value over the medium to long term.
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Sustainability Vision and important issues (materiality)
1. Sustainability Vision
We will contribute to the realization of a sustainable society through our business activities while respecting
the heart of altruism, the Group policy.
2. Important issues (materiality)
We have identified three important issues (materiality) that should be addressed to achieve our Sustainability
Vision. In these three items of “Environmental Protection”, “Regional Revitalization”, and “Human Resource
Development, we will implement specific measures. Furthermore, the specific measures will be reviewed asneeded in response to future environmental and social trends, as well as changes in the business environment.
Important issues
Environmental
protection

Regional
Revitalization

Human resource
development

VisionIncrease environmental sustainability bysignificantly reducing waste andgreenhouse gas emissions, as afrontier of Real Estate Revitalization
Business.
Create sustainable growth of regional
economies through offices, hotels, andtourism, as a frontier forsustainable regional revitalization.

Spread the concept of “altruism” that is
indispensable for realizing a sustainable
society, as a frontier ofphilosophy management.

Specific measures◼ Extending the life and health of realestate◼ Energy conservation and reduction ofenvironmental impact by Real Estate
Revitalization Business◼ Create buildings, offices, and spaces
with
“job
satisfaction”
and“creativity”that contribute to economic
growth◼ Prevent and mitigate disaster throughregional cooperation
workplaces
withjob◼ Createsatisfaction, creativity, and growth
opportunities.
workplaces
withjob◼ Createsatisfaction, creativity, and growth
opportunities(3) Medium-Term Management Strategy
The Group celebrated its 25th anniversary in April this year, marking the final year of the current medium-term
management plan (the review was announced on May 12, 2021). Even during the current medium-term
management plan period, under the Company policy “altruism” that the Group has been advocating since its
foundation, we have made efforts to realize the Company Philosophy “Look after every employee and pursue
the happiness of both mind and matter. At the same time, co-create a rich and sustainable society by contributing
to the evolution and the development of the human society.” Although we encountered the unprecedented
headwind of the pandemic of COVID-19 during this period, we overcame it and set a new record in our financial
results for the fiscal year ended March 2024. In addition, we are now in sight of achieving our targets for thecurrent medium-term management plan. In order to realize the Company Philosophy and achieve sustainablegrowth over a longer period of time starting this year, which is a milestone year, we decided that we should
quickly clarify our long-term targets and measures. Accordingly, we have formulated the Long-Term Vision 2035
as the Group's vision for ideal image over the next 10 years, and the next medium-term management plan as anaction plan to realize this vision.
<Overview of Long-Term Vision 2035>
Based on the values of the Company policy “altruism,” the Group's Company Philosophy is to “Look after
every employee and pursue the happiness of both mind and matter. At the same time, co-create a rich andsustainable society by contributing to the evolution and the development of the human society.” Through therealization of this vision, we aim to achieve the following Long-Term Vision 2035 and its quantitative target
we have formulated.
・ Long-Term Vision 2035
Utilize limited resources to fill the world with smiles and excitement!
Becoming a corporate group that continues to challenge the creation of future value.
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・ Quantitative target
Aim for 300 billion yen in net sales and 60 billion yen in ordinary profit in fiscal 2035.
<Outline of the next medium-term management plan>
The following is an overview of the next medium-term management plan for the three-year period (from fiscal
year ending March 31, 2026 to fiscal year ending March 31, 2028) following the achievement of the current
medium-term management plan based on the Long-Term Vision 2035, the ideal image in 10 years.
・ Basic policy
Work to resolve social issues by promoting cooperation and diversification within our core business throughproduct making and heartwarming services from clients' point of view.
・ Quantitative target

Profit plan

Management
indicator

Year ending March
31, 2025(Forecast)Year ending March
31, 2028(Target)Growth rate

Net sales

100 billion yen

135 billion yen

35%

Ordinary profit

20 billion yen

27 billion yen

35%

Ordinary profit
margin

20%

20%

-

ROE

10% or more

10% or more-

Equity ratio

50% level

45% level-

2 Sustainability Policy and Initiatives■Sustainability Vision
We will contribute to the realization of a sustainable society through our business activities while respecting theheart of altruism, the Company policy.
■Three important sustainability issues (Materiality)
Important Issue

VisionEnvironmental
protection

Increase environmental sustainability by significantly reducing waste and greenhouse gas
emissions, as a frontier of Real Estate Revitalization Business.

Regional
revitalization
Human
resource
development

Create sustainable growth of regional economies through offices, hotels, and tourism, as afrontier for sustainable regional revitalization.
Spread the concept of “altruism” that is indispensable for realizing a sustainable society, as afrontier of philosophy management.

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■Specific measures and KPIs

Important issues

Social issues
to be solved

Key measures

Extension of economic
lives of buildings throughreal estate revitalization
constructions

1

Environmental
protectionThe
demolition ofsmall andmedium-sizedbuildings thatcan still be
used if theirvalue isincreased =Waste ofresources

2
Revitalizationof regional
economies

Regional
revitalization
Responding toincreasingly
severe natural
disasters

3

Specific measures

Decrease in
the workingage
population
due to thedecliningbirthrate andExtending thelife and healthof real estate

Energyconservation
andreduction ofenvironmental
impact by
Real Estate
Revitalization
Business
Creattebuildings,
offices, andspaces withjob satisfaction
and creativity
that contributeto economic
growthMaintain the “health” ofbuildings
by improving theoccupancy rateof old buildings throughcomprehensive real estate
supportReduction of CO2
emissionsthrough promotion of realestate revitalization
Offset real estate
revitalization
constructions’ CO2emissions with credits

Promotion of real estate
revitalization
with consideration forwell-being

Providing setup offices
with emergency supplies
and installation space
Disasterprevention
Providing informationand mitigation that contributes to theby regional
improvement
coordinationof tenants’ disasterprevention
awareness
Creating a work
environment
Respect andsuited to each employee’s
utilizelife
diversity
stage and provide flexible
training
opportunities
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Objectives (KPIs)

Extend economic
useful lives by
30% or more
Occupancy rate of
90% or more forbuildings over 30
years old
90% or more ofcontinued
management
after replanning
properties sales
Reduce CO2
emissions by 12% ormore on averagecompared withbuilding
reconstruction

Fiscal 2023
(Fiscal year
ended March
31, 2024)
results

54.1%

93.8%

98.0%

12.7%

Carbon offset 100%

100.0%

30% or more of new
replanning properties
supplied exceed
company standards

68.8%

Annual tenantsatisfaction surveys

Satisfaction:
96.7%

At least 5 lots byfiscal 2023

9 lotsDisaster prevention
information posting
on dedicated website
Fiscal 2023: 100%

100%

Ratio of women in
managerial
positions:
12% or more by
April 2025 (Sun
Frontier FudousanCo., Ltd.)

10.3%(April 1,
2024)

Important issues

Humanresource
development

Social issues
to be solved

aging
population(decrease inactual labor
force)
andelimination of
the gendergap

Key measures

Specific measures

Establishment of nextgeneration
leader development
program,Create aworkplace with support system forexternal
job
trainings, etc.
satisfaction,
creativity, andUtilization of DX,
growthimprovement ofopportunities
business processes andimprovement of
individual abilities

Objectives (KPIs)

Fiscal 2023
(Fiscal year
ended March
31, 2024)
results

Ratio of training
hours to designatedworking hours: 12%
or more (Sun
Frontier FudousanCo., Ltd.)

12.1%

Year-on-yearincrease in ordinary
profit per hour (perSun Frontier
Fudousan Co., Ltd.
regular employee)Notachieved(92%)■Information Disclosure Based on the TCFD Recommendations
ⅰ．Governance
The Company recognizes addressing climate change and environmental issues as a critical management
priority at our company. In coordination with Risk Verification Committee, Sustainability Committee compiles
information of risks and opportunities associated with climate change, examines response measures, and makes
periodic report to the Board of Directors. The Board of Directors oversees the progress of initiatives related toclimate change issues discussed and reported by executive departments, and discussed issues related to these
initiatives at least once a year.
The President Representative Director receives reports on the status of initiatives related climate change
from the advisory bodies, the Sustainability Committee, and the Risk Verification Committee, and assumes thehighest responsibility for risk assessment and management including risks of climate change.
System of Sustainability Promotion

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Meetings and Roles in the System of Sustainability Promotion
Organizations andcommittees

Roles

Board of Directors

Receiving reports from the Sustainability Committee on the status of the risk management
related to climate change and overseeing the progress of measures.

President Representative
Director

Receiving reports on the status of overall sustainability activities, including the one related
to climate change, from the Sustainability Committee as an advisory body. Assuming thehighest responsibility for risk assessment and management including risks of climatechange.

Risk Verification
Committee

As an advisory body to the President Representative Director, discussing assessment ofcomprehensive risk, including climate change. Examining the risks reported by Risk
Management Committee and instructing the business divisions to take measures through the
Risk Management Committee.

Risk Management
Committee

Discusses comprehensive management and measures against risks in operations, including
climate change. Meetings held once a month.

Sustainability Committee

As an advisory body to the President Representative Director, promoting sustainability
activities including climate change countermeasures. In coordination with the Risk
Verification Committee and the Risk Management Committee, summarizing risks andopportunities related to climate change, etc. from each division and group company,
considering measures shall be taken, and making periodic reports to the Board of Directors.
Meetings held four times a year.

ⅱ．Strategy
Based on the TCFD recommendations, we analyzed scenario of risks and opportunities related to climatechange. Through the scenario analysis, we defined 1.5°C and 4°C scenarios based on scientific evidence fromIEA (International Energy Agency) and assessed the importance of risks and opportunities related to climate thatmight affect operations as of 2030.
Definition of Scenarios
Scenario
1.5℃ scenario
configuration
World view
The Japanese government will promotesevere measures against climate change,
including the introduction of a carbon tax,
which will lead to drastic social changes,
and regulations on plastic and climatechange-related information disclosure will
be required.
Damage from natural disasters such as
flooding is limited.
Reference
IEA The Net-Zero Emissions by 2050
scenario
Scenario (NZE) / IEA World Energy
Outlook 2021/ IEA World Energy
Outlook 2018/ IPCC AR6 SSP1-1.9
Characteristics
Transition risks related to policies, etc. arelikely to become apparent.

4℃ scenario
There will be no climate action by thegovernment beyond current measures and noclimate change action is required.
Abnormal weather such as droughts andfloods due to rising temperatures will become
apparent, sites will be damaged, and response
costs and recovery costs at the time of thedisaster are expected.
IEA World Energy Outlook 2021/ IEA World
Energy Outlook 2018/ IPCC AR6 SSP5-8.5

Physical risks associated with abnormal
weather, etc. are likely to become apparent.

Identification and assessment of risks and opportunities
We assessed the impact of transition and physical risks related to climate change on our Real Estate
Revitalization Business and Real Estate Service Business. Regarding the transition risks, we considered a variety of
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items from policy and legal regulations to market changes such as acute risks and chronic risks for physical risks. We
will respond to these risks and opportunities that judged as particularly significant impact on our company.
Scope
Impact: Real Estate Revitalization Business and Real Estate Service Business: High : Very significant impact (> 19% of net sales): Medium : Significant (10-19% of net sales): Small : Limited impact (<10% of net sales)
Term of risk occurrence: Short term
: Within one year
Term of risk occurrence: Medium term
: Within 1 to 5 years
Term of risk occurrence: Medium to long term : Within 5 to 10 years
Term of risk occurrence: Long term
: Over 10 years
List of risks and opportunities
The list includes the risks and opportunities recognized by the Company whose impact on the business is“medium” or above.
Impact on business andTiming ofMain
Subfinancial
results
Details of risks and opportunities
risk
category
category
occurrence
1.5℃
4℃
Company-wide
Transition
risk

Reputation

Stakeholder Concerns about Passive ESG
Responses

Medium－Medium tolong term

Medium－Short term

Small

MediumMediumterm

MediumMediumShort term

Medium－Mediumterm

MediumMediumMediumterm

Real Estate Revitalization BusinessTransition
risk

Policyregulation

Physicalrisk

Chronic

Opportunity

Products
andServices

Additional capital investment costs due toincreased energy efficiency standards to be
met in repairs
Increase in cost of air conditioning
equipment and increase in energy cost atowned properties
Increase in selling price to property owners
and building owners by improving theenvironmental performance of properties inredevelopment

Hotel and Tourism BusinessTransition
risk

Policyregulation

Opportunity

Products
andServices

Increased trend toward trial construction ofbuildings with high environmental
performance, shortages of materials withhigh environmental performance and risinglabor costs due to the concentration of
construction work
Contribute to the local community byconserving and coexisting with nature in thearea where the hotel is located, thereby
improving the image of the hotel andincreasing the number of guests

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Financial impact
The list includes the results of calculating the financial impact of the risks and opportunities recognized by theCompany.
Calculation method
Financial impact*Base year is fiscal 2022.
Degree2030(billion yen)
Risk /*The impact in 2030 is calculated byBusiness impactofOpportunity
reflecting the CAGR (Compound Annual
influence
1.5 ° C
4°C
Growth Rate)

Carbon tax

Increased tax burden
due to large increase incarbon tax[Company-wide]
Company's CO2 emissions x carbon
price per unit of emissions

3.23

－

Small

1.93

－

Small

－

－

[Real Estate Revitalization]

Carbon tax

Large increase incarbon tax leading tohigher costs for raw
materials with large
unit emissions

Sales losses
due tonaturaldisasters

Sales loss due tointerruption of businessactivities because ofdamage to a businesssite caused by a natural
disasterFlooddamage due
to sea levelrise

Occurrence of flood
damage to owned realestate due to high tides
and heavy rains causedby rising sea levels

Improving the selling
price to the wealthy and
Improvementbuilding owners byof selling
improving theprices ofenvironmental
properties
performance of theproperty

Input cost of raw materials* x emission
intensity of raw materials x carbon
price per emission*For cement and ready-mixed
concrete with high emission
intensity, the amount of input iscalculated from the total floorarea of properties sold in thebase year using an LCA tool.
[Real Estate Revitalization](*Not calculated as the impact
on rent income is difficult to
calculate)[Hotel Management]－

Daily sales loss x maximum days of
downtime* x damage ratio**Determined by investigating
the flood depth level at the timeof the occurrence of a storm
surge at the hotel[Real Estate Revitalization](*Not calculated because theproperties owned are located inTokyo and the impact of storm
surge is minimal.)[Hotel Management]
Repair cost by flood depth level due tosea level rise x amount of real estate
owned**Determined by investigating
the flood depth level at the timeof the occurrence of a storm
surge at the hotel (owned
property).
[Real Estate Revitalization]
Total floor area of BELS certified
properties (*1) x difference in rent
between BELS certified and ordinary
properties (*2)(*1) Total floor area of BELS
certified properties in the base
year
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1.97

1.97

Probability ofProbability ofoccurrence:1.4%

occurrence:2.8%

－

－

Small

－

0.62

0.62

Probability ofProbability ofoccurrence:1.4%

occurrence:2.8%

0.81

0.81

Small

Small

(*2) Difference in unit price per tsubo between the
BELS certified property in the base year and theCompany's RP property in the vicinity as of March
31, 2024

ⅲ．Risk management
In order to establish a sustainability system, the Company has established the “Sustainability Committee”
to respond to overall sustainability issues, including climate change issues, as well as regulations on companywide risk management. For risks related to climate change, the Risk Verification Committee evaluates the risks
reported by the Risk Management Committee. The identified and assessed risks are examined by the
Sustainability Committee, and the business divisions and Group companies then respond to those risks. In
addition, the Board of Directors receives a report from the Risk Management Committee on the status of andresponses to comprehensive risk management, including climate change risks.

ⅳ．Metrics and Targets
The Company calculates greenhouse gas emissions as an indicator for evaluating climate change-relatedrisks and opportunities. Scope1 “Fuel use (CO2)”, Scope2 “Use of electricity supplied by others (CO2)”, andScope3 “Other indirect emissions (CO2)” were included in the calculation. We will continue to monitor ourgreenhouse gas emissions in the future and will establish a system and set targets so that we can expand the scopeof monitoring and reduce CO2 emissions in our activities.
Greenhouse Gas Emissions(Consolidated)
Fiscal 2021 annual
emissions (t-CO2)

Fiscal 2022 annual
emissions (t-CO2)

Fiscal 2023 annual
emissions (t-CO2)

Scope1 *1

4,088.5

3,237.9

3,391.9

Scope2 *2

6,692.5

7,633.7

7,281.2

Scope3 *3

194,929.0

152,744.0

148,333.7(Non-consolidated)
Fiscal 2021 annual
emissions (t-CO2)

Fiscal 2022 annual
emissions (t-CO2)

Fiscal 2023 annual
emissions (t-CO2)

Scope1 *1

0.0

0.0

0.0

Scope2 *2

196.3

195.1

88.0

Scope3 *3

194,929.0

152,744.0

148,333.7*1 Emissions from gas and gasoline use *2 Emissions from electricity use *3 Other indirect emissions
Calculation period: FY 2021 (April 2021 to March 2022), FY 2022 (April 2022 to March 2023), FY 2023 (April
2023 to March 2024)
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To be disclosed: domestic and international consolidated subsidiaries (Scope1 and 2), Real Estate Revitalization
Business (Scope3)
Calculation method: market-based*Calculation methods are based on location (calculated using the average emission intensity for Japan as a whole)and market (calculated using the emission intensity of each electric power company). We adopted the latter marketbased method.,
Emission factors used in Scope2: 2020 and 2021 emissions factor result for each electric utility
Greenhouse gas emissions reduction target (compared to fiscal 2022)
Total of Scope 1
and Scope 2

2030

2050

Fiscal 2023 Results

22% reduction(annual reduction of 2.7%)

Carbon neutral

1.8% reduction

Please refer to “Sustainability” https://www.sunfrt.co.jp/en/sustainability/ on the Company's website for the status of
the Group's sustainability management initiatives and information on ESG-related data.
■Initiatives to human capital management
The Sun Frontier Group has promoted the permeation of the Sun Frontier Philosophy and Amoeba Management, inwhich each and every employee participates in management, toward the Company Philosophy of “Look after every
employee and pursue the happiness of both mind and matter. At the same time, co-create a rich and sustainable society
by contributing to the evolution and the development of the human society.” While fostering a sense of unity
throughout the Sun Frontier Group, each and every one of our employees works voluntarily and independently, andwe create a corporate culture and work environment where each and every one of us can make the most of his or her
abilities. In this way, we have valued the motivation and job satisfaction of each and every one of our employees. Inline with our core principle of “Not for profit, but for trust” we are developing businesses based on a relationship oftrust with clients rather than with profit.
At the Sun Frontier Group, the core of all employees' decisions and actions is a philosophy based on “rightness as aperson.” The “Philosophy” states that “the results of life and work = way of thinking × enthusiasm × ability.” Sun
Frontier places importance not only on abilities and enthusiasm, but also on the judgment axis of “rightness as aperson.” We encourage the growth of each and every person in order to contribute to the advancement anddevelopment of the city and society. Even as the Group's businesses diversify and a variety of employees work, thiscommon approach transcends the boundaries of businesses and creates a culture in which each and every employee
is connected across the organization and co-creates high goals. Also, by promoting Amoeba Management, we arecontributing to the expansion of our organization and business by developing human resources with a managerial
mindset and producing new leaders.
The Sun Frontier Group aims to realize a workplace environment that provides “job satisfaction,” “creativity,” and“growth opportunities,” where each and every employee can make the most of his or her capabilities by providing
educational opportunities to enhance the abilities, skills, and expertise of each employee, as well as to polish the “wayof thinking” based on the Group's philosophy.
Approach to human capital
Creating a good corporate culture and realizing Company Philosophy through Philosophy and Amoeba
Management.

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*“Amoeba Management” is a registered trademark of Kyocera Corporation
Ideal human resource“Sun” in the company name “Sun Frontier” is a symbol of the power to continue to shine in the highest and largest
way, and a symbol of the love that falls on everyone. “Frontier” refers to our attitude of developing businesses witha venture spirit, always being forward-looking, believing in unlimited potential, and continuing to challenge thecreation of new value.
Employees who gather in Sun Frontier are expected to have both the “heart of altruism” and “frontier spirit.”
Human resource development policies
Together with our colleagues who share our values of altruism, we will cultivate human resources who can develop
new fields with a frontier spirit toward the realization of a sustainable society.
We aim to create a society that can be inherited by future generations. We foster human resources who have thekindness to care for the people around them and the strength to do the right thing, and who boldly take onchallenges in areas where they have no experience.
Please refer to our website https://www.sunfrt.co.jp/company/bring_comp.html for initiatives related to humanresource development in the Group.
Internal environment development policy
Creating a workplace environment with job satisfaction, creativity, and growth opportunities. We aim to create a “cocreation” organization in which all employees set their own goals, work actively toward those goals, and continue tocreate new value based on mutual trust.
<Job satisfaction>
A climate that encourages challenge and growth and rewards peers who have taken on challenges.
We respect the voluntary initiatives of our employees to contribute to people and society. We place importance on aculture of trust and respect for each other's challenges. We believe that we can achieve even higher goals as a company
by providing an environment that matches the life stages of each employee.
<Creativity>
A corporate culture that envisions the future and aims to create new value.
New ideas are born by constantly improving the current situation and refining sensitivity while envisioning the future.
We believe that the existence of an environment in which people respect each other will lead to the creation of newvalue by leveraging diverse ideas.

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<Growth opportunities>
A culture that stimulates the desire to learn and works toward high goals.
We respect our employees' desire to learn and grow and provide opportunities for them to do so.
We believe that the foundation of a company that continues to grow is a company that boldly predicts future changes
and continuously strives to achieve its goals.
Health management initiatives<Health declaration>
Sun Frontier Fudousan will protect all employees, aim for material and spiritual happiness, and maintain andimprove the health of employees.
<Health management promotion system>

The chief executive officer for the promotion of health management is the President Representative Director, and
the General Affairs Department plays a central role in cooperation with the sanitation committee, industrial
physicians, and health insurance unions. The sanitation committee, chaired by General Manager of the General
Affairs Department, is held once a month by personnel in charge of labor affairs, employees with experience insanitation, and industrial physicians. The committee discusses ways to maintain and improve the health of
employees and discusses issues related to the creation of a comfortable working environment. In addition, theGeneral Affairs Department and the Health Insurance Union will work together to regularly exchange informationand discuss measures.
<Management issues to be solved through health management> Maintaining and promoting the mental and physical health of employees Help employees feel more of job satisfaction and be more productive by maintaining their physical and mental
healthTo maintain and improve the mental and physical health of employees, we are working on epidemic prevention,
increased engagement, and reduction of risk of mental health problems. In addition, we believe that being mentallyand physically healthy gives a sense of job satisfaction and encourages to pursue further career advancement.

13/122

Healthinvestment

Health investment effectIndicators on the status ofhealth investment policy
initiatives

Indicators related tochanges in employee
attitudes and behavior

Epidemic
prevention

Medicalexamination

Healthcheckup rate

Influenzavaccination

Vaccination
utilization rate

Smoking rate

M easures related
to lifestyle habits

Seminarparticipation rate

Food
consciousness

Lifestylequestionnaire
response rate

Good quality
sleep

Paid vacation

Rate of paid
leave taken

Clarificationof duties

Stress checkexamination rate

Indicators on final
health-related target s

Increased
engagement
Reduction ofhigh stress rate

Management issues
to be solved
through healthmanagement

Mentalandphysicalhealth ofemployeesJobsatisfaction ,improved
productivity

For information on the Group's health management initiatives, please refer to the Company’s website
https://www.sunfrt.co.jp/company/health_management_declaration/

3. Risk Factors
Among the matters related to the business overview and financial information described in the Annual Securities
Report, the following are matters that may have a significant impact on investors’ decisions.
The forward-looking statements in this document are those determined by the Group as of the end of theconsolidated fiscal year under review.
1. Business environment surrounding the Group and characteristics of the Group’s business(1) Business environment
The Group is working on “real estate revitalization and utilization” mainly in central Tokyo and developing
one stop real-estate services that include brokerage, management, guarantee, construction, leasing, and trading,centered on office buildings and commercial buildings in central Tokyo, which is influential in enhancing
market competitiveness as a company. However, the Group’s operating results and financial position may beaffected by a downturn in the real estate market, such as a rise in vacancy rate or a decline in rent, due toworsening economic conditions.
(2) Status of competition
The Group’s businesses are comprised of Replanning Business, Rental Building Business, brokerage andleasing, Property Management Business, Building Maintenance Business, Rent Guarantee Business,
Conference Room Rental Business, Hotel Development Business, Hotel Operation Business, Overseas
Development Business, and Construction Business. These businesses are characterized by the organic
combination of these businesses to provide consistent services related to commercial real estate. In addition,
the Company aims to maintain and strengthen its competitiveness and differentiate itself from competitors
by conducting business operations in a coordinated manner, such as by linking the functions of each business
unit for comprehensive strengths and purchasing potentially superior properties from a broad network ofcustomers. However, if this advantage is not maintained, the Group’s operating results and financial position
may be affected.
(3) Characteristics of Replanning Business(i) Replanning Business is a revitalization business that mainly targets commercial real estate. It is a businessthat improves profits by regenerating commercial real estate that is inactive or has high vacancy rate andlow profits. The buyer is an individual or corporation that invests mainly in real estate for rent income.
14/122

In the event of turmoil in the financial markets due to worsening economic conditions or a credit crunch,etc., the distribution market for real estate may be sluggish, and the inventories value of properties handled
in Replanning Business may decline. In addition, sales activities may not progress as planned, which may
have an impact on the Group’s operating results and financial position.
(ii) Replanning Business procures funds mainly by borrowing from financial institutions and purchases
properties, so the interest-bearing debt balance changes depending on the status of property purchases andsales. In raising funds, the Company does not rely on borrowings from specific financial institutions andstrives to raise funds on stable and appropriate terms while always balancing with multiple financial
institutions. However, if turmoil in the financial markets arises due to a credit crunch or other factors, theGroup’s operating results and financial position may be adversely affected due to a failure to procure thenecessary funds for business development.
(iii) Replanning Business will purchase the property and sell it after the completion of replanning. Cost of
sales and net sales of the business will be recorded when the property is sold. In addition, the amount pertransaction is high compared to revenues from other Real Estate Service Business, etc. Consequently, theGroup’s operating results and financial position may be affected by factors such as the timing of the saleand changes in amount.
(4) Hotel development
The Group is responsible for everything from planning, development, revitalization and management of hotels.
Some of the properties owned by the Group may be sold to investors after stable operations. However, thebasic business model is to continue leasing and operating the property even after it is sold. Unlike theReplanning Business, in the Hotel Development Business, there are cases in which the Company starts
development from scratch by purchasing land on its own. In such cases, the Group’s operating results andfinancial position may be affected by the fact that it takes a considerable period of time to complete the project,which may result in a longer period of time during which it is unable to record revenue, such as hotel room
revenue, or by the fact that the Group’s business period may be relatively longer making it more susceptible
to economic fluctuations.
(5) Hotel operations
Hotel Operation Business generally tends to be affected by economic trends and consumer spending.
Accordingly, the Group’s operating results and financial position may be affected by a decline in demand forbusiness trips by companies and a decline in demand for leisure activities by individuals due to the sluggish
economy, oversupply of rooms due to the opening of new hotels, or a decline in room rates and occupancy
rate due to the spread of infectious diseases. In addition, fluctuations in foreign currency exchange rates,
territorial disputes with neighboring countries, growing anti-Japanese sentiment, and other changes in thesituation may lead to a decrease in the number of foreign tourists, a reduction in travel forecast, or a decline
in consumer confidence. These changes may have an impact on the Group’s operating results and financial
position.
(6) Country risk
The Group’s strategy is to expand its Overseas Business. However, the Group may be exposed to risks suchas exchange rate trends, differences in religions, cultures and business practices, uncertainty in economic
conditions, political instability such as conflicts, civil commotions, terrorism and riots, and problems in local
labor-management relations. There are also risks associated with political, economic, legal or other obstacles,
such as investment regulations, restrictions on remittances and tax system reforms including tax rate changes.
The expansion of Overseas Business operations may require a long period of time before the realization of
investment profits, and may affect the Group’s operating results and financial position.
(7) Disasters, etc.
In the event of a natural disaster such as an earthquake, storm or flood, or a man-made disaster such as a war,
terrorism or fire, the value of real estate held, managed or invested by the Group may be significantly impaired,
which may have an impact on the Group’s operating results and financial position.
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(8) Risks of lawsuits
There is a possibility that a lawsuit or other claim may be filed by a business partner or client in connection
with a property for which the Group conducts trading, leasing, trading or leasing brokerage or management.
The contents and results of these lawsuits may affect the Group’s operating results and financial position.
(9) Risks related to climate change and the environment
As a corporate citizen, we are aware of the inevitableness and importance of addressing global environmental
issues. Any delay in the use of products with low environmental impact or in the initiatives toward a carbonneutral society could lead to a decline in the social reputation of the Group, which in turn could affect its
performance.
(10) Risks related to the supply chain
The Group relies on external suppliers for materials and fixtures. In the event of a supply shortage, delivery
delay or price hike in materials and fixtures that are used in the Group’s products in a cross-sectional manner,
the Group’s business period may be prolonged, or business costs may rise, adversely affecting the Group’s
operating results.
(11) Risks related to the market interest rates
Our group secures short-term and long-term interest-bearing debts from financial institutions and othersources to operate and expand our business. When new financing is necessary, the cost of capital may
increase during periods of rising market interest rates. Furthermore, an increase in market interest rates maylead to a decline in the purchasing intent of real estate buyers and an increase in the expected return on realestate demanded by investors. This could result in a decrease in our group's real estate sales revenue and a
decline in the value of our owned assets. Consequently, our group's business, financial condition, andoperating results may be adversely affected.
(12) Risks Related to Foreign Exchange Fluctuations
Our group operates businesses overseas, and fluctuations in foreign exchange rates can affect the costs offinancing overseas operations, the amount of profit or loss from overseas operations included in ourconsolidated financial statements, and the amounts recorded for assets and liabilities. Significant
fluctuations in exchange rates can also influence import prices, impacting construction and energy costs,
and may become a factor in cost variations in our group's individual businesses. Additionally, changes inexchange rates can affect the performance of tenant companies, potentially impacting our group's rental
income. These factors may influence our group's business, financial condition, and operating results.
2. Asset valuation(1) Risks related to the evaluation of real estate for sale (including real estate for sale in process)
The Group holds a large amount of inventories in real estate for sale and real estate for sale in process (officebuildings, hotel assets, etc.). The valuation of these inventories is based on the net selling price. The net selling
price is the estimated amount of sales less the estimated amount of future construction costs and the estimatedamount of sales expenses, etc., and the estimated amount of sales is mainly the return on profits estimatedbased on the business plan formulated by the Group. In addition, these inventories are exposed to risks suchas lengthening of the ownership period due to delays in commercialization, tenant leasing status, profitability
due to the management status such as hotel occupancy rates, fluctuations in the investment yield of real estate,
and rising market interest rates. As a result, there is a possibility that the net selling price will decline and avaluation loss will be recognized. As a result, the Group’s operating results and financial position may beaffected.
(2) Risks related to the non-current assets impairment loss related to Hotel Business
The Group owns non-current assets (buildings, facilities attached to buildings, land, software, etc.) in the
Hotel Development Business and Hotel Operation Business of the Hotel and Tourism Business segment.
These non-current assets are exposed to risks such as changes in the real estate market in the future and a
decline in the occupancy rate of hotel rooms. In the future, as the above-mentioned risks increase, and if thetotal estimated undiscounted future cash flows over the remaining economic useful lives of the hotel's major
assets, which are calculated based on the hotel's business plan, decrease, there is a possibility that a non16/122

current assets impairment loss will occur. As a result, the Group’s operating results and financial position may
be affected.
3. Legal regulations
The Group’s business is subject to legal restrictions under the Real Estate Brokerage Act, the Construction
Business Act, the Act on Real Estate Appraisal, the Real Estate Investment Advisory Business Registration
Regulation, the Financial Instruments and Exchange Act, the Act on Architects and Building Engineers, theSecurity Services Act, the Act on Advancement of Proper Condominium Management, the Rental Residential
Management Business Registration Regulation, and the Act on Maintenance of Sanitation in Buildings, andrelated approvals have been obtained.
The expiration dates of licenses, permissions, etc. pertaining to the Group’s major operations are as follows.
Currently, there are no grounds for cancellation of such licenses, permissions, etc., but if such grounds occur inthe future, the Group’s business activities may be significantly affected.
The business of the Group may also be affected in the future if these laws and regulations are revised or abolishedor if new laws and regulations are established.
(1) The validity period and other expiration dates are stipulated by laws, regulation, contracts, etc. as follows.
License, permission,
registration, etc.

Residential landbuildings business
operator license

Company name

Validity period,
registration date

Sun Frontier
Fudousan Co., Ltd

December 29,
2019 December 28,
2024

Sun Frontier
Hotel Management
Inc.
SF
Building
Maintenance Inc.
Sun Frontier
Okinawa Co., Ltd.

Specific
construction
business license

Sun Frontier
Fudousan Co., Ltd

Generalconstruction
licenseSF Engineering Inc.

January 8, 2022
January 7, 2027
February 25,
2022 February 24,
2027

Type

Relevant laws-

Real Estate
Brokerage Act

17/122Governor ofTokyo
Governor ofTokyo
Governor of
Okinawa
Prefecture

January 9, 2024 January 8, 2029
Building
construction,roof
construction,
steel structure
construction,
July 20, 2022 - carpenter
July 19, 2027
construction,
tile, brick andblock
construction,interior finishing
work, electrical
work
January 17, 2023 Building
construction,
January 16,interior finishing
2028
work

Issuer ofregistration,
etc.
Minister ofLand
Infrastructure, Transport
and Tourism

Governor ofTokyo
Construction
Business Act

Governor ofTokyoLicense, permission,
registration, etc.

Company name

SF Building
Maintenance Inc.

SF Communication
Inc.
Real estateappraiser
registration
General real estate
investment
advisory businessregistration
Type II Financial
instruments
business operator
registration

Specified joint realestate ventures
permitSun Frontier
Fudousan Co., Ltd.

Validity period,
registration date

Type

Waterproofing
work, interior
finishing work,building
construction,
carpenter
construction,
plastering work,stone work, roof
December 25,
construction,
2023 tile, brick andDecember 24,
block
2028
construction,
sheet metal
work, glass
work, painting
work, heatinsulation work,
fittings work,
fire fighting
facilities work
Electrical work,
March 10, 2022 telecommunicati
March 9, 2027
ons work
February 7, 2023
February 6,
2028

Relevant laws

Governor ofTokyo

Act on Real
EstateAppraisal

Governor ofTokyo
Minister ofLand,
Infrastructure, Transport
and Tourism
DirectorGeneral of
Kanto

Sun Frontier
Fudousan Co., Ltd.

November 3,
2019 November 2,
2024-

Real Estate
Investment
Advisory
Business
Registration
Regulation

Sun Frontier
Fudousan Co., Ltd.

Registered on
September 30,
2007-

Financial
Instruments andExchange Act

Sun Frontier
Fudousan Co., Ltd.

First class architect Sun Frontier
office registration
Fudousan Co., Ltd.

Approved on
October 29,
2018-

Act onSpecified Joint
Real Estate
VenturesFebruary 1, 2020--

Act onArchitects and18/122

Issuer ofregistration,
etc.

Minister ofLand,
Infrastructure, TransportandTourism,
Commission
er of theFinancial
Services
AgencyGovernor ofTokyoLicense, permission,
registration, etc.

Company name

Validity period,
registration dateType

January 31, 2025

Security businesscertification

Antique dealer

Condominium
managementbusinessregistration

Rentalresidential
managementbusinessregistration
Building
environment
sanitation
comprehensive
managementbusinessregistration
Building
drinking water
storage tankcleaning
businessregistration
Fire defense
equipment
businessregistration

SF Building
Maintenance Inc.
Sun Frontier
Fudousan Co., Ltd.

December 26,
2021 December 25,
2026
April 5, 2024 April 4, 2029
Registered on
October 2, 2019

SF Communication
Inc.

Registered onJune 23, 2010

SF Building
Maintenance Inc.

January 8, 2022
January 7, 2027

Sun Frontier
Fudousan Co., Ltd.

Sun Frontier
Fudousan Co., Ltd.

SF Building
Maintenance Inc.

October 20,
2021 October 19,
2026
February 1,
2022 January 31,
2027

Relevant laws

Issuer ofregistration,
etc.

Building
Engineers-

Security
Services Act-

Secondhand
Goods BusinessAct-

Act onAdvancementof Proper
Condominium
Management

-

Tokyo
Metropolitan Public
SafetyCommission
Tokyo
Metropolitan Public
SafetyCommission
Minister ofLand,
Infrastructure, Transport
and Tourism

Act on Proper
Management ofRental Housing

Director of
Kanto
Regional
Developme
nt Bureau-

Act onMaintenance ofSanitation in
Buildings

Governor ofTokyo

Governor of
Tokyo

-

SF Building
Maintenance Inc.

September 18,
2021 September 17,
2027

SF Building
Maintenance Inc.

June 29, 2018 June 28, 2024-

Act onMaintenance ofSanitation in
Buildings

SF Building
Maintenance Inc.

Registered on
July 3, 2018-

Fire Service
Act

Chief of
Honjo Fire
StationOutdooradvertisingbusiness license

SF Building
Maintenance Inc.

December 6,2023 December 5,
2028-

OutdoorAdvertisement
Act

Governor ofTokyo

Money lending
businessregistration

SF Building
Support Inc.

July 1, 2023 June 30, 2026

-

Money
Lending
Business Act

Governor ofTokyo

19/122

License, permission,
registration, etc.
Generalcharteredpassenger
automobiletransport
business
Generalpassenger
automobiletransport
business
Registeredelectric
construction
business
operator license

Company name

Validity period,
registration dateOkesa Kanko TaxiCo., Ltd.

Registered on
January 19,
1999

Type

-

Relevant laws

Issuer ofregistration,
etc.

Road Transport
Act

Director,
Hokuriku
Shinetsu
Transport
BureauOkesa Kanko TaxiCo., Ltd.

Registered on
May 6, 1955-

Road Transport
Act

Director,
Hokuriku
Shinetsu
Transport
BureauSF Communication
Inc.

October 3, 2020
October 2, 2025-

Electrical
Construction
Business Law

Governor ofTokyo(2) In conducting real estate securitization business, the Group will use special purpose companies (SPC)
established by either special purpose companies based on the Asset Securitization Act or stock companies
and limited liability companies based on the Companies Act. If a special purpose company based on the Asset
Securitization Act conducts securitization business, it will be subject to the regulations of the Asset
Securitization Act.
4. Changes in accounting standards and the real estate tax system
Changes in accounting standards and the real estate tax system may have an impact on the Group’s operating
results and financial position due to increased costs of property acquisitions and sales.
5. Protection of personal information
The Group is a “business entity handling personal information” that holds personal information on building
owners, tenants, hotel guests, etc. in the course of business, and it is forecasted that related information will
increase as the Group expands its business in the future. Although we are strengthening our information
management system to ensure thorough internal information management, if personal information such as
customer information is leaked outside due to unforeseen circumstances, it may damage the credibility of theGroup and affect its operating results and financial position.
4. Analyses of Consolidated Financial Position, Operating Results and Cash Flows from the management’s
perspective
A summary of the Company’s financial position, operating results and cash flows for the consolidated fiscal year
under review, as well as the content of recognition, analysis and discussion regarding the Company’s operating
results and other aspects from the perspective of management, are as follows. The forward-looking statements
contained herein are based on judgments made as of the end of the consolidated fiscal year under review.
(1) Operating Results
The Japanese economy continued to recover as the employment and income environments persisted to improveamid rising expectations for higher interest rates. In the global economy, while there are concerns about theoutlook, such as persistently high policy interest rates in various countries, a slowdown in the Chinese economy,
and high crude oil prices due to the impact of geopolitical risks, there is growing attention to the timing of policy
interest rate cuts before the U.S. presidential election and a soft landing of the U.S. economy.
In the real estate market, average rents in the Tokyo Business District (5 wards of Central Tokyo: Chiyoda, Chuo,
Minato, Shinjuku and Shibuya) bottomed out in November 2023 (unit price per tsubo: 19,726 yen) after 40
consecutive months of decline, and are currently on a slight upward trend at 19,820 yen (March 2024). After
20/122

peaking at 6.48% in June 2023, the average vacancy rate has generally continued to improve, reaching 5.47%
in March 2024 (according to a survey by a private survey organization). Until now, the market has been generally
weak due to the promotion of remote work in the pandemic of COVID-19 and the increase in vacant floor spacecaused by the rush of completion of large-scale new office buildings. However, after the transition of COVID19 to Category 5 (May 2023), demand has recovered as the significance of offices has been reconfirmed, andexpectations for further declines in vacancy rate and increases in rents are increasing. In the real estate
investment market, although the Bank of Japan's negative interest rate policy has been lifted, the accommodative
financial environment is expected to be maintained, and low interest rates and the depreciation of the yen are
expected to continue. Against this backdrop, overseas investors are expected to return to investing in officebuildings. At the same time, strong investment demand for hotels continues due to a recovery in tourism demand.
In this environment, in the Real Estate Revitalization Business, our core business in the Group, the number ofsales increased from the previous fiscal year. In addition, profit margin remained at a high level. As a result,both net sales and profit increased, continuing to drive the overall performance of the Company. Moreover, theReal Estate Service Business operations continued to perform well. In Hotel Development Business, net sales
decreased in reaction to the sale of two hotels in the previous fiscal year, while profit increased due to the saleof one hotel in the fiscal year under review. In Hotel Operation Business, due to the “Nationwide Travel Subsidy
Program” and the transition of COVID-19 to a Category 5 disease, as well as the impact of the depreciation of
the yen, tourism demands further increased due to the recovery of both domestic and foreign tourists, and both
net sales and profit saw significant year-on-year increases.
As a result, in the current consolidated fiscal year, net sales amounted to 79,868 million yen (down 3.5% YoY),
operating profit amounted to 17,600 million yen (up 18.1% YoY), ordinary profit amounted to 17,374 million
yen (up 18.0% YoY) and profit attributable to owners of parent amounted to 11,917 million yen (up 2.6% YoY).
The results by segment are as follows.
(Real Estate Revitalization Business)(1) In Replanning Business, we provide a one stop, integrated real estate service that includes everythingfrom the purchase of buildings, renovation and utilization planning, construction work, leasing, rent
guarantee services, management, and building management. During the fiscal year under review,purchase operations progressed at a faster pace than planned, thanks to cooperation among various
departments of the Office Division and the strengthening of the procurement system. We will continue tostrengthen our purchase operations in preparation for commercialization and sales in the coming fiscal
year. In commercialization, we worked to reflect the real needs of clients in our products and increase thevalue of our properties with a high added value. In property sales, we sold 25 properties (including two
properties in New York and one small-lot property) during the fiscal year under review, and maintained
a high level of 30% in segment profit margin. We will continue to utilize our community-based leasing
capabilities to sell properties with high occupancy rates and high added value to investors in Japan andoverseas. We also continued to focus on purchase and sales in our Replanning Business of apartments in
New York, with one purchase and two sales in the fiscal year under review. Additionally, in specified joint
real estate ventures, Compass Nerima, the Company's eighth small-lot project, was sold out, and Compass
Sakurashinmachi, the Company's ninth small-lot project, was launched. In the fiscal period under review,
both net sales and profit posted year-on-year increases due to steady property sales and the maintenanceof a high level of gross profit margin.
(2) In Rental Building Business, with the aim of building a stable revenue base as a stock business, we are
expanding the number of rental buildings properties in Replanning Business and utilizing the operational
capabilities we have accumulated in Real Estate Service division to increase rent income over the medium
to long term. As a result of an increase in the number of properties held as inventories, both net sales andprofit increased year on year.
As a result, net sales amounted to 51,027 million yen (up 1.9% YoY) and segment profit amounted to 15,602
million yen (up 1.7% YoY) in total for the Real Estate Revitalization Business.

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(Real Estate Service Business)
In the Real Estate Service Business, we are engaged in (1) Property Management Business, (2) Building
Maintenance Business, (3) Sales Brokerage Business, (4) Leasing Brokerage Business, (5) Rental Conference
Room Business, and (6) Rent Guarantee Business.
(1) In Property Management Business, we aim to raise tenant satisfaction through property management thatmeets the needs of the clients. At the same time, we are working with the leasing brokerage division to
attract tenants and revise conditions to appropriate rents, thereby supporting the high-occupancy andhigh-profitability building management that meets building owners' requests. In the fiscal year underreview, both net sales and profit recorded year-on-year growth, with number of entrusted buildings adding
36 buildings and occupancy rate improving 4.31% pt.
End of March 2022

End of March 2023

End of March 2024

Number of
Entrusted
Buildings

421 buildings

457 buildings

493 buildings

Occupancy Rate

91.5%

89.6%

93.9%

(2) Under the slogan of “making Tokyo the most beautiful city in the world,” Building Maintenance Businessis engaged in projects such as inspections, cleaning, renovation and surveys to maintain and manage
buildings. With strengths in glass cleaning and exterior wall cleaning and repair work, we are collaboratingwith each department of the Office Division. Results for the fiscal year under review decreased from theprevious fiscal year in both net sales and profit due to a decrease in facility disinfection work related to
the COVID-19 pandemic and cancellations at unprofitable sites.
(3) In Sales Brokerage Business, as part of our real estate consulting, we are working to quickly respond toinquiries from clients in other divisions, including Property Management Business and Leasing Brokerage
Business. The Office Divisions are working together to expand our customer base by supporting building
owners' building management, and based on the trust we have built up, we have been able to win brokeragecontracts. Results for the year under review declined in both net sales and profit due to the conclusion oflarge-scale projects in the previous fiscal year.
(4) In Leasing Brokerage Business, we opened two sites in the fiscal year under review, the Shimbashi officeand the Ikebukuro office, creating a service network of 12 sites in the main central Tokyo area. By utilizing
tenant needs and changes that we have quickly learned from leasing sites in our research and proposals
for optimal use of office space, we are leading to the creation of a new sense of value from our clients'
perspective in Replanning Business product planning. Also, in our sub-lease operations, where we areworking to resolve building owners' concerns, we added two new entrustment contracts during the fiscal
year under review, bringing the total number of properties to 10. We will continue to stay close to clientsand contribute to the local community by providing services as a familiar information center. Results forthe fiscal year under review increased year on year in both net sales and profit due to strong performancein leasing.
(5) In Rental Conference Room Business, the number of companies that have resumed group training
programs has increased, and demand for rental conference room services has increased. Through services
that respond to clients’ requests, both new and repeat customers have increased. During the fiscal year
under review, we opened new Vision Centers in the following five areas: Nihombashi, Ichigaya, Yaesu,
Shinjuku, and Shimbashi. The scale of operations was 15 sites, 6,481 tsubo. We will continue to accelerate
site expansion mainly in central Tokyo. In the fiscal year under review, orders increased due to the new
conference room opening and the floor space expansion in 10 facilities, resulting in significant year-onyear growth in both net sales and profit.

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(6) In Rent Guarantee Business, through our brand “TRI-WINS”, we provide services tailored to building
owners for all processes from tenant screening at offices and stores, rent guarantee, building surrenderlawsuits, and eviction. Compared to general guarantee services, this brand expands the range of services.
It is a win-win-win service that solves the risks and issues faced by both building owners and tenants andcontributes to economic growth and social stability. As a result of continued stable progress in our corecredit guarantee business, our performance in both net sales and profit remained strong.
As a result, net sales amounted to 10,497 million yen (up 18.7% YoY) and segment profit amounted to 5,612
million yen (up 14.8% YoY) in total for the Real Estate Service Business.
(Hotel and Tourism Business)
In the Hotel and Tourism Business, we are engaged in (1) Hotel Development Business and (2) Hotel
Operation Business.
(1) In Hotel Development Business, net sales decreased year on year due to the sale of two hotels in theprevious fiscal year, but profit increased significantly due to the sale of one subdivision of a condominium
hotel lot and one hotel. In addition to the capital return from the sale of those hotels, we will utilize thefunds raised through convertible bonds that were completed on October 6, 2023 to reinvest in development,
including M&A, centered on the Tabino Hotel brand, and expand our operations. At present (May, 2024),
there are 10 hotels with 1,347 rooms under planning in parts of the country, and together with hotels in in
operation, there will be 39 hotels with 4,456 rooms.
(2) In Hotel Operation Business, five hotels (612 rooms) have been added to the Group, including Seifutei(11 rooms) in Inawashiro-machi, Fukushima, and Joytel Hotel Namba Doutonbori in the Kansai area. As
a result, a total of 29 hotels (3,109 rooms) are currently (May, 2024) in operation. We will continue tofocus on creating enthusiastic fans through the heart-warming services of our staff under the theme of “aheartwarming and fun hotel.” During the fiscal year under review, due to the continued expansion ofdomestic tourism demand and the effects of recovery in inbound tourism, occupancy rate and average
daily rate continued to rise based on the Group's high added value strategies. As a result, net sales andprofit increased significantly from the previous fiscal year.
As a result, net sales amounted to 16,977 million yen (down 26.1% YoY) and segment profit amounted to
4,369 million yen (up 153.9% YoY) in total for the Hotel and Tourism Business.
(Other Business)
In Other Business, we are engaged in (1) Overseas Development Business and (2) Construction Business.
(1) As for Overseas Development Business operations, the Group entered the Vietnamese market, where
growth is expected, and is developing condominiums and other businesses. In October 2023, we acquired
land for the development of a condominium in Danang, the largest city in central Vietnam, and theconstruction is scheduled to begin in the first half of the next fiscal year. We will continue to contribute to
the development of local communities by providing high-quality housing using Japan's advanced
construction technology. Results for the fiscal year under review declined in both net sales and profit due
to a rebound from property sales in the previous fiscal year.
(2) In Construction Business, we are engaged in renewal planning, repair and renovation of commercial
buildings, interior finishing work and telecommunications construction, etc. Both net sales and profit
increased year on year due to the booking of sales from large-scale construction projects by Group
companies.
As a result of the above, net sales amounted to 2,409 million yen (up 34.8% YoY) and segment profit
amounted to 301 million yen (up 6.4% YoY) in total for Other Business.
The main initiatives for the fiscal year under review are as follows.
“Sun Frontier Fudousan is committed to protecting all employees, achieving material and spiritual happiness,
23/122and initiatives to maintain and improve the health of its employees.” Based on this declaration, the Company
aims to maintain and improve the mental and physical health of its employees and increase their job
satisfaction which shall lead to increased productivity. We were recently certified as one of the “2024
Excellent Health and Productivity Management Corporations (Large-scale Corporations Category)” by the
Ministry of Economy, Trade and Industry and the Japan Health Council. Encouraged by this certification, we
will further strengthen our initiatives to maintain and improve the mental and physical health of our employees.
The Group sets a sustainability vision of “We will contribute to the realization of a sustainable society throughour business activities while respecting the heart of altruism, the Company policy.” Based on this vision, we
have identified “Environmental protection,” “Regional revitalization” and “Human resource development” aspriority issues (materiality) and are working to resolve social issues through our businesses. In February, 2024
we concluded an agreement for “Mizuho Positive Impact Finance” with Mizuho Bank Ltd. We will continue
to contribute to the realization of a sustainable society by continuing to take on the challenge of creating newvalue while controlling the waste of limited resources, and by advancing our business activities through thecreation of customer delights.
Production, orders received and sales results are as follows.
(i) Production performance
As it is difficult to define production operations of the Group (the Company and its consolidated subsidiaries;
the same shall apply hereinafter), the actual production results are omitted.
(ii) Orders received
As the Group does not manufacture to order, the record of orders received is omitted.
(iii)Sales performance
The sales results by segment for the current consolidated fiscal year are as follows.
Segment Name

Amount (million yen)

YoY Change (%)

Real Estate Revitalization Business

51,027

1.9

Real Estate Service Business

10,497

18.7

Hotel and Tourism Business

16,977

-26.1

Other

2,409

34.8

Adjustment-1,043-79,868

-3.5

Total

Notes: 1. Adjustment is intersegment eliminations.
2. Sales results by major clients and the ratio of such sales results to total sales results
Consolidated fiscal year underPrevious fiscal year
review(*1)
ClientAmountAmountRatio (%)
Ratio (%)
(million yen)(million yen)
Neptune Special Purpose
17,50021.1
Company
Nagomi Special Purpose
13,50016.3
Company(*1) The current consolidated fiscal year is not listed because, among the net sales to external clients,
there is no client that accounts for 10% or more of net sales in the consolidated statement of income.

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(2) Consolidated Financial Position
Total assets at the end of the current consolidated fiscal year amounted to 188,661 million yen (up 23.7%
compared with the end of the previous fiscal year), liabilities amounted to 94,244 million yen (up 37.5%
compared with the end of the previous fiscal year), and net assets amounted to 94,416 million yen (up 12.4%
compared with the end of the previous fiscal year).
The increase in total assets was mainly due to an increase of 5,851 million yen in cash and deposits, an increaseof 34,826 million yen in real estate for sale in process and an increase of 912 million yen in land of non-current
assets, which were partially offset by a decrease of 8,149 million yen in real estate for sale and a decrease of
388 million yen in deferred tax assets.
The increase in liabilities was mainly due to an increase of 6,764 million yen in current portion of long-termborrowings, an increase of 9,999 million yen in bonds payable and an increase of 7,101 million yen in longterm borrowings, which were partially offset by a decrease in 789 million yen in advances received of other in
non-current liabilities.
The increase in net assets was mainly due to the recording of 11,917 million yen in profit attributable to ownersof parent, which was partially offset by the year-end dividend payment of 1,216 million yen and the interim
dividend payment of 1,265 million yen. Equity ratio increased 4.9 percentage points to 48.0%.
(3) Consolidated Cash Flows
Cash and cash equivalents (hereinafter called, “funds”) at the end of the current period increased by 5,951
million yen from the beginning of the fiscal year to 47,866 million yen as a result of a decrease of 11,003 million
yen of funds provided by operating activities, a decrease of 4,254 million yen of funds provided by investing
activities, and an increase of 21,040 million yen of funds provided by financing activities.
Cash flows for the current consolidated fiscal year and their factors are as follows.
(Cash flows from operating activities)
Net cash outflow used in operating activities was 11,003 million yen compared with net cash provided byoperating activities of 16,544 million yen in the previous fiscal year. This was mainly due a decrease of 26,770
million yen from an increase in inventories, corporate income tax payments of 3,505 million yen and a decreaseof 1,187 million yen from an increase in accounts receivable, despite profit before income taxes of 17,295
million yen and depreciation of 2,124 million yen.
(Cash flows from investing activities)
Net cash outflow used in investing activities was 4,254 million yen compared with net cash outflow used ininvesting activities of 6,681 million yen in the previous fiscal year. This was mainly due to outflow of 2,457
million yen in purchase of property, plant and equipment and 954 million yen in purchase of shares ofsubsidiaries and associates, despite 205 million yen in proceeds from collection of guaranteed deposits.
(Cash flows from financing activities)
Net cash provided by financing activities was 21,040 million yen compared with net cash provided by financing
activities of 2,039 million yen in the previous fiscal year. This was mainly due to 32,558 million yen in proceedsfrom long-term borrowings and 9,999 million yen in proceeds from bond issuance, despite 18,991 million yen
in repayments of long-term borrowings and 2,481million yen in dividends paid.
(Sources of capital and liquidity of funds)
The main demand for funds in our business activities is purchase in inventory assets, which is related to the Real
Estate Revitalization Business. Purchase of inventory assets is provided by long-term borrowings from financial
institutions secured by individual inventory assets and funds acquired through operating activities. As a basic
policy, the inventory asset is to be sold within one year, and a lump-sum repayment of borrowings is made at
the time of sale of the inventory asset, while taking into account the monthly scheduled repayment and thisensures sufficient liquidity of funds.
25/122(Financial measures)
The Group’s fiscal policy is to create a debt structure that extends the weighted average borrowing period byreducing the ratio of short-term borrowings to interest-bearing debt and increasing the ratio of long-termborrowings. In addition, we are working to build a solid financial base by securing a substantial amount of cash
and deposits as a basic policy.
(4) Significant accounting estimates and assumptions used in such estimates
The Group’s consolidated financial statements are prepared in accordance with accounting standards generally
accepted in Japan. The accompanying consolidated financial statements include estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses. However, actual results may differ fromthese estimates and assumptions.
Among the accounting estimates and assumptions used in the preparation of the consolidated financial statements,
significant ones are described in “Item 5. Financial Information, 1. Consolidated Financial Statements, etc. (1)Notes to Consolidated Financial Statements (Significant Accounting Estimates).”
5. Material Agreements, etc.
Not applicable
6. Research and Development Activities
Not applicable.

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Item. 4 Information on the Company
1. Information on the Company’s Shares, etc.
(1) Total number of shares, etc.
(i) Total number of shares
Type

Total number of shares authorized to be issued (shares)

Common shares

91,200,000

Total

91,200,000(ii) Issued shares

Type

Number of sharesissuedas of the end of the
fiscal year
(March 31, 2024)

Number of sharesissuedas of filing date(June 26, 2024)

Name of Listed Financial
Instruments Exchange orregistered Authorized Financial
Instruments Firms Association

Contents

Commonshares48,755,500

Tokyo Stock ExchangeFirst Section (as of the end of the Share unit :48,755,500
fiscal year)
100 shares
Prime Market (as of filing date)

Total

48,755,500

48,755,500--(2) Share acquisition rights, etc.
(i) Stock option plans
A. Status of Share Acquisition Rights grants
Date of resolution
Category and number ofindividuals covered by
the plan
Number of Share
Acquisition Rights*
Type, description andnumber of shares to beissued upon the Share
Acquisition Rights*
Amount paid upon
exercise of Share
Acquisition Rights *Period for exercising
Share Acquisition
Rights*Issue price of shares andamount to beincorporated into capitalwhen shares are issued
upon exercise of Share
Acquisition Rights*

June 22, 2018

June 21, 2019

June 30, 2020

Directors of the Company (excluding outside directors): 4

June 22, 2021
Director of theCompany(excluding outside
directors)
6 persons524 units

740 units

1,112 units

2,155 units

Common shares
5,240 shares (Note1)

Common shares
7,400 shares (Note1)

Common shares
11,120 shares(Note 1)

Common shares
21,550 shares (Note
1)

1 yen
From August 1,
From July 31, 2021 to2020 to July 31,
July 30, 2051
2050
Issue price:
Issue price:
Issue price:
Issue price:
439 yen658 yen
1,020 yen
790 yenAmount included in Amount included in
Amount included in Amount included inshare capital:
share capital:
share capital:
share capital:
220 yen (Note329 yen (Note 2)
510 yen (Note 2)
395 yen (Note 2)
2)
From August 1, 2018 From August 1, 2019
to July 31, 2048
to July 31, 2049

27/122

Conditions for exercising Share Acquisition Rights holders may exercise their Share Acquisition Rights in a lump
Share Acquisition
sum during the period from the day following the day on which they lose their position
Rights*as Director of the Company to the day on which ten days have elapsed. (Note 3)
Matters related to transfer
Acquisition of a Share Acquisition Rights by transfer requires approval of the Board ofof Share Acquisition
Directors.
Rights*Matters concerning theissuance of Share
Acquisition Rights in(Note 4)connection with an act ofreorganization** These items indicate the status as of the end of the fiscal year (March 31, 2024). There are no changes between
the end of the fiscal year and the end of month previous to the filing month (May 31, 2024).
Notes: 1. The number of shares subject per Share Acquisition Right shall be 10 shares.
However, after the allotment date of Share Acquisition Rights, if the Company effects a share split(including allotment of its common stock to shareholders without consideration; the same applies
hereinafter) or reverse stock split, the number of shares to be granted shall be adjusted according to thefollowing formula for a Share Acquisition Rights that has not been exercised at the time of the share
split or reverse stock split, and any fraction of less than one share resulting from the adjustment shallbe discarded.
Number of granted shares after adjustment = Number of granted shares before adjustment × Split orconsolidation ratio
In addition, in the event that the Company conducts a merger or corporate split after the Allotment Date,or in the event that an adjustment of the number of granted shares is required in the same manner as inthese cases, the number of shares shall be adjusted within a reasonable scope taking into consideration
the conditions of the merger or corporate split.
2. Increase in Share Acquisition Rights and share capital due to issuance of shares upon exercise of capitalreserve(i) The amount of increase in share capital upon issuance of shares upon exercise of Share Acquisition
Rights shall be one half of the maximum amount of increase in share capital, etc. calculated pursuant
to Article 17, Paragraph 1 of the Regulations on Corporate Accounting, and any fraction less than one
yen resulting from such calculation shall be rounded up.
(ii) The amount of increase in Share Acquisition Rights upon issuance of shares upon exercise of capitalreserve shall be amount obtained by subtracting the amount of increase in share capital set forth in (i)above from the maximum amount of increase in share capital, etc. set forth in (i) above.
3. Matters concerning acquisition of Share Acquisition Rights(i) In the event that Share Acquisition Rights cannot be exercised due to the aforementioned “Conditions
for Exercise of Share Acquisition Rights” or the provisions of the Share Acquisition Rights Allocation
Application Form prior to exercising his/her right, the Company may acquire such Share Acquisition
Rights without consideration on a date separately determined by the Company's Board of Directors.
(ii) In the event that a proposal for approval of a merger agreement under which the Company will bedissolved, an absorption-type company split agreement or an incorporation-type company split planunder which the Company will be split, or a share exchange agreement or share transfer plan underwhich the Company will become a wholly-owned subsidiary is approved at the General Meeting of
Shareholders of the Company (or at the meeting of Board of Directors if a General Meeting of
Shareholders is not required), the Share Acquisition Rights whose rights have not been exercised asof that date may be acquired without consideration on a date separately determined by the Board of
Directors of the Company.
4. In the event where the Company engages in any merger (limited to a case where the Company ceases toexist as a result of the merger), a corporate split in which a division of the Company is merged into an
existing company, a corporate split in which a division of the Company is spun off to establish a new
28/122

company (for both, limited to cases where the Company is split up), or an exchange or transfer of shares(for both, limited to cases where the Company becomes a wholly-owned subsidiary) (collectively“Organizational restructuring”), each person holding the remaining Share Acquisition Rights at the time
the Organizational restructuring takes effect (hereinafter “Remaining Share Acquisition Rights”) shallrespectively be granted the Share Acquisition Rights of the relevant stock companies set forth in Article
236, Paragraph 1, Item 8 (a) through (e) inclusive of the Companies Act of Japan (hereinafter“Reorganized Company”). In this event, the Remaining Share Acquisition Rights shall become null andvoid and the Reorganized Company shall issue new Share Acquisition Rights.
However, the new Share Acquisition Rights shall be granted, only if provisions for granting them inaccordance with the following items are included as conditions in a merger agreement (in which theCompany is merged into a Reorganized Company or a Reorganized Company is established as the resultof the merger), a corporate split agreement (in which a division of the Company is merged into a
Reorganized Company), a plan for a corporate split (in which a division of the Company is spun off toestablish a Reorganized Company), a share exchange agreement, or a plan for transfer of shares (in bothof which the Company becomes a fully-owned subsidiary of a Reorganized Company).
(i)

Number of Share Acquisition Rights of reorganized companies to be delivered
The same number of remaining Share Acquisition Rights held by the Share Acquisition Rights shallbe issued.
(ii) Type and number of shares of the restructured company to be issued upon Share Acquisition Rights
The type of shares to be issued by Share Acquisition Rights shall be common shares, the ReorganizedCompany, and the number of common shares, the Reorganized Company to be delivered upon
exercise of Share Acquisition Rights shall be determined in accordance with (Note 1) above, taking
into consideration the conditions of the Organizational Restructuring.
(iii) Value of assets to be contributed upon exercise of Share Acquisition Rights
The value of the property to be contributed upon the exercise of the Share Acquisition Rights shallbe the amount obtained by multiplying the post-reorganization exercise price specified below by the
number of shares to be issued for each such Share Acquisition Right. The post-reorganization
exercise price shall be 1 yen per Share Acquisition Right of the Reorganized Company.
(iv) Period during which the Share Acquisition Rights may be exercised
From the effective date of the reorganization to the expiration date of the exercise period of the Share
Acquisition Rights set forth in the aforementioned “exercise period of the Share Acquisition Rights.”(v) Acquisition of Share Acquisition Rights
Determined in accordance with (Note 3) above.
(vi) Share Acquisition Rights transfer restrictions
Acquisition of Share Acquisition Rights by transfer shall require the approval of Board of Directorsof the Reorganized Company.
(vii) Increase in Share Acquisition Rights and Share capital due to issuance of shares upon exercise of
Capital reserve Determined in accordance with (Note 2) above.

(ii) Rights plan
Not applicable.
(iii) Other Share Acquisition Rights, etc.
The Company has issued third-party allotment unsecured convertible bonds with Share Acquisition Rights
under the Companies Act of Japan.
1st Series Unsecured Convertible Bonds with Share Acquisition Rights (hereinafter the relevant bonds with
Share Acquisition Rights will be referred to as “Bonds with Share Acquisition Rights”, the bond portion will
be referred to as “bonds” and the Share Acquisition Rights portion will be referred to as the “Share
Acquisition Rights” ).

29/122

Date of resolution

September 20, 2023

Number of Share
Acquisition Rights
49(units)*Number of own Share
Acquisition Rights outof Share Acquisition
Rights (units)*
Common shares 6,434,900
The number of common shares of the Company to be newly issued by the Company or
to be disposed of by the Company in lieu of such shares (the issuance or disposal of theCompany's common shares shall hereinafter be referred to as the “delivery” of theCompany's common shares) upon exercise of the Share Acquisition Rights shall be theType, description and number obtained by dividing the total amount of the bonds pertaining to the Sharenumber of shares to
Acquisition Rights exercised at the same time by the conversion price in effect at thebe issued upon thetime of such exercise. However, if a fraction of less than one (1) share arises, such
Share Acquisition
fraction shall be settled in cash in accordance with the provisions of the Companies Act
Rightsof Japan (in cases where the Company has adopted the Share Unit System, if shares less(shares) *than one (1) unit arise as a result of the exercise of the Share Acquisition Rights, such
fraction shall be settled in cash as if the right to demand purchase of shares less than one(1) unit prescribed in the Companies Act of Japan has been exercised, and any fractionof less than one (1) share shall be discarded.)
Any fraction of less than one (1) yen arising from such cash settlement shall be rounded
down.
1. Details and value of assets to be contributed (calculation method)(1) Upon the exercise of one (1) Share Acquisition Right, each bond to which such Share
Acquisition Rights are attached shall be contributed.
(2) The value of the property to be contributed upon the exercise of one (1) Share
Amount paid upon
Acquisition Right shall be 204,080,000 yen, the amount of each bond.
exercise of Share
2. Conversion price
Acquisition Rights*
The conversion price used to calculate the number of the Company's common shares tobe delivered upon the exercise of each Share Acquisition Right shall be 1,554 yen.
The conversion price may be adjusted as provided in the Terms and Conditions of theIssuance of Bonds with Share Acquisition Rights. (Note) 1
The Share Acquisition Rights may be exercised at any time between October 10, 2023
and October 4, 2028 (if the bonds are redeemed prior to the maturity date pursuant to
the provisions of Paragraph 13, Item (2) (a) (i) through (iii) and (b) (i) through (v) of theIssuance Terms of the Bonds with Share Acquisition Rights, two (2) banking days prior
to the redemption date) (Note) 2
However, the exercise of voting rights may not be requested during the following
Period for exercising
periods.
Share Acquisition(1) The stockholder record date for the Company's common shares (the record date
Rights*prescribed in Article 124, Paragraph 1 of the Companies Act of Japan) and the precedingbusiness day (a day that is not a holiday for the transfer institution.)(2) the day on which the transfer institution deems it necessary.
(3) If the Company reasonably determines that it is necessary to suspend the exercise of
the Share Acquisition Rights in order to carry out organizational restructuring, during
the period designated by the Company within 30 days prior to the day within 14 days
from the day following the effective date of such organizational restructuring.
Issue price of shares
1. Issue priceand amount to be
The conversion price of Share Acquisition Rights stated in “Amount paid upon exercise
incorporated intoof Share Acquisition Rights” above (if the conversion price is adjusted, the conversion
capital when shares
price after adjustment)
are issued upon
2. Increased share capital and capital reserve30/122

exercise of Share
Acquisition Rights

Conditions forexercising Share
Acquisition Rights*
Matters related totransfer of Share
Acquisition Rights*(1) The amount of increase in share capital upon issuance of shares upon exercise of
Share Acquisition Rights shall be one half of the maximum amount of increase in sharecapital, etc. calculated pursuant to Article 17, Paragraph 1 of the Regulations on
Corporate Accounting, and any fraction less than one (1) yen resulting from suchcalculation shall be rounded up.
(2) The amount of increase in capital reserve upon issuance of shares upon exercise of
Share Acquisition Rights shall be amount obtained by subtracting the amount of increasein share capital set forth in (1) above from the maximum amount of increase in sharecapital, etc. set forth in (1) above.
A part of each Share Acquisition Rights cannot be exercised. (Note) 2

Not applicable. (Note) 2

In the event that the Company carries out organizational restructuring, except in the caseof early redemption of the bonds with Share Acquisition Rights, the Successor Company,
etc. shall grant Share Acquisition Rights of the Successor Company, etc. to holders of
the remaining bonds with Share Acquisition Rights attached immediately prior to theeffective date of the organizational restructuring as set forth in items (1) through (10)(hereinafter “Successor Share Acquisition Rights”) below in lieu of the Share
Acquisition Rights held by the holders of the Share Acquisition Rights. In this case, on
the effective date of the organizational restructuring, the Share Acquisition Rights shallbe extinguished, the obligations pertaining to the bonds shall be succeeded to theSuccessor Company, etc., the holder of the Share Acquisition Rights shall become theholder of the Successor Share Acquisition Rights, and the provisions concerning theShare Acquisition Rights in the Issuance Terms of the Bonds with Share Acquisition
Rights shall apply mutatis mutandis to the Successor Share Acquisition Rights.
1. The number of Share Acquisition Rights of the Successor Company, etc. to bedelivered
The same number as the Share Acquisition Rights held by the holders of the remaining
bonds with Share Acquisition Rights immediately prior to the effective date of such
Matters concerningorganizational restructuring.
the issuance of Share
2. The type of shares to be the subject of the Share Acquisition Rights of the Successor
Acquisition Rights in Company, etc. are common shares of the Successor Company, etc.
connection with an act 3. The number of shares to be the subject of the Share Acquisition Rights of theof organizational
Successor Company, etc.
restructuring*
The number of common shares of the Successor Company, etc. to be delivered upon theexercise of Share Acquisition Rights of the Successor Company, etc. shall be determinedwith reference to the Issuance Terms of the Bonds with Share Acquisition Rights, taking
into consideration the conditions of such organizational restructuring, and shall be inaccordance with the following: the conversion price shall be subject to the same
adjustment as (Note) with respect to the above-mentioned “Amount paid upon exerciseof Share Acquisition Rights.”(i) In the event of a merger, share exchange, share transfer or share delivery, theconversion price shall be determined so that, when the Share Acquisition Rights of the
Successor Company, etc. are exercised immediately after the effective date of theorganizational restructuring, the holders of the Company's Share Acquisition Rights will
receive the number of common shares of the Successor Company, etc. in the same
number that would be obtained if the Share Acquisition Rights were exercised
immediately prior to the effective date of the organizational restructuring. Whensecurities or other assets of the Successor Company, etc. other than common shares aredelivered at the time of the organizational restructuring, the number of common sharesof the Successor Company, etc. equal to the number obtained by dividing the fair market
value of the securities or assets by the market value of the common shares of the
31/122

Successor Company, etc. shall also be received.
(ii) In the case of any other organizational restructuring, the conversion prices shall be
determined so that, when the Share Acquisition Rights of the Successor Company, etc.
are exercised immediately after the effective date of such organizational restructuring,
the holder of the bonds with Share Acquisition Rights may receive an economic profit
equivalent to the economic profit that the holder of the bonds with Share Acquisition
Rights would have received if the Share Acquisition Rights had been exercised
immediately before the effective date of the organizational restructuring.
4. The details and value of the property to be contributed upon the exercise of Share
Acquisition Rights of the Successor Company, etc., or the method of calculating such
value
Upon the exercise of one (1) Share Acquisition Right of the Successor Company, etc.,
each bond shall be contributed, and the value of the property contributed upon theexercise of one (1) Share Acquisition Right of the Successor Company, etc. shall be thesame as the amount of each bond.
5. The period during which the Share Acquisition Rights of the Successor Company, etc.
may be exercised
The exercise period shall be from the effective date of the organizational restructuringor the date of delivery of the Share Acquisition Rights of the Successor Company, etc.,
whichever is later, to the expiration date of the exercise period of the Share Acquisition
Rights set forth in “Period for exercising Share Acquisition Rights” above, and shall be
subject to the same restrictions as in “Period for exercising Share Acquisition Rights”
above.
6. Conditions for the exercise of Share Acquisition Rights of the Successor Company,etc.
To be determined in accordance with “Conditions for exercising Share Acquisition
Rights” above.
7. There are no provisions on the Share Acquisition Rights of the Successor Company,
etc.
8. Matters concerning the capital and capital reserves to be increased in cases where
shares are issued as a result of the exercise of Share Acquisition Rights of the Successor
Company, etc.
The amount of share capital to be increased by the issuance of shares upon the exerciseof Share Acquisition Rights of the Successor Company, etc. shall be one half of the
maximum amount of increase in share capital, etc. calculated pursuant to Article 17,
Paragraph 1 of the Regulations on Corporate Accounting, and any fraction of less thanone (1) yen resulting from such calculation shall be rounded up to the nearest one (1)yen.
The amount of increase in the capital reserve by the issuance of shares upon the exerciseof Share Acquisition Rights shall be the amount obtained by subtracting the amount of
increase in share capital from the maximum amount of increase in share capital, etc.
9. If organizational restructuring occurs, it shall be determined in accordance with thiscolumn.
10. Other
If any fraction of less than one (1) share arises with respect to the number of commonshares of the Successor Company, etc. to be delivered by the Successor Company, etc.
as a result of the exercise of Share Acquisition Rights of the Successor Company, etc.,
such fraction shall be rounded down and no adjustment shall be made in cash. (In cases
where the Successor Company, etc. has adopted the Share Unit System, if shares lessthan one (1) unit arise as a result of the exercise of Share Acquisition Rights of the
Successor Company, etc., such fraction shall be settled in cash as if the right to demandpurchase of shares less than one (1) unit prescribed in the Companies Act of Japan has
been exercised, and any fraction of less than one (1) share shall be discarded). In
addition, holders of the bonds with Share Acquisition Rights as of the effective date oforganizational restructuring may not transfer the bonds separately from the Share
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Acquisition Rights of the Successor Company, etc. In the event that such restriction on
the transfer of the bonds becomes legally invalid, the Share Acquisition Rights of the
Successor Company, etc. attached to a bond similar to the bonds issued by the Successor
Company, etc. may be delivered to holders of the bonds with Share Acquisition Rights
immediately prior to the effective date of such organizational restructuring in lieu of the
Share Acquisition Rights and the bonds.
The content and valueof the property to becontributed upon the
See “Amount paid upon exercise of Share Acquisition Rights” above
exercise of Share
Acquisition Rights*
Outstanding amountof bonds with Share
9,999
Acquisition Rights(Millions of yen)** These items indicate the status as of the end of the fiscal year (March 31, 2024). There are no changes as of theend of month previous to the filing month (May 31, 2024).
(Note) 1 Adjustment of conversion priceIf, after the issuance of the bonds with Share Acquisition Rights, the number of issued common sharesof the Company changes or is likely to change due to the issuance of new shares with an amount to be
paid in that is less than the market price, split of shares, etc., the Company shall adjust the conversion
price using the formula set forth below.
After the issuance of the bonds with Share Acquisition Rights, the conversion price shall be adjusted
as appropriate in the event of the payment of a special cash dividend or as otherwise provided in theIssuance Terms of the Bonds with Share Acquisition Rights.
Number of
Number ofIssue or disposal priceshares issued or X
commonper share+
Adjusted
Conversion
disposed ofsharesconversion = price before X
issuedCurrent priceadjustment
price
Number of common shares issued + Number of shares issued or
disposed
2. Matters agreed upon in the Underwriting Agreement concluded between the Company and the Underwriter(AAGS S5, L. P.)(1) The Underwriters may not, in principle, exercise this Share Acquisition Rights within one (1) year from
October 6, 2023.
(2) As a general rule, the Underwriters may exercise the Share Acquisition Rights only if the closing priceof the regular transactions of the Company's common shares on the business day immediately preceding
the day on which the exercise of the Share Acquisition Rights becomes effective is not less than theamount obtained by multiplying the conversion price by 1.20.
(3) The transfer of the bonds with Share Acquisition Rights by the Underwriters shall require the approvalof the resolution of the Company's Board of Directors.
(4) The Underwriters shall not transfer the shares acquired through the conversion of the bonds with Share
Acquisition Rights to certain competitors and activists designated by the Company outside the market
without the prior written consent of the Company (excluding transactions for which the purchaser cannot
be specified, such as PTS transactions and off-auction transactions).
(5) During the period from October 6, 2023 until either (i) the expiration date of the exercise period of the
Share Acquisition Rights or (ii) the date on which the Holding Ratio of Share Certificates, etc. of theUnderwriter ceases to be 5% or more, whichever comes first, if the Company intends to decide, executeor agree with a third party to issue or dispose of the shares, etc. (excluding those resulting from the
remuneration of shares based on the remuneration plan for officers and employees of the Company andits subsidiaries that has already been introduced and the exercise of Share Acquisition Rights for stock
33/122

options that have already been issued as of the date of the Underwriting Agreement), the Company shallnotify the Underwriter of the details of such decision, execution or agreement with a third party at least
20 business days prior to the earlier of such decision, execution or agreement with a third party, andshall confirm the intention of the Underwriter, and shall obtain the written consent of the Underwriter
prior to such decision, execution or agreement with a third party, whichever comes earlier. If theUnderwriter receives such notice and desires to issue or dispose of the shares, etc. to the Underwriter onbehalf of or in addition to such third party under the same conditions, the Company shall issue or disposeof the shares, etc. to the Underwriter under the same conditions.
(3) Exercises, etc., of moving strike convertible bonds, etc.
Not applicable.
(4) Changes in the number of issued shares, share capital, etc.
Not applicable(5) Shareholdings by shareholder category
As of March 31, 2024
Number of shares (100 shares per unit)
Foreign shareholders
National
Financial
Financial
Other
Other
and local
instrument
Individuals
institution
corporation than Individual
governmens businessand othersssindividuasts
operatorslsCategory

Total

Shares lessthan one unit
(shares)Number ofshareholders

-

21

26

161

181

51

12,327

12,767-

Number ofshares held
(Units)-65,27013,089190,213

95,039498

123,218 487,327

22,800Shareholding
ratio (%)-

13.3932.685

39.03119.5020.102

25.284 100.000-

Notes: 1. “Financial institutions” includes 1,280 units of the Company’s shares accounted in trust by theemployee stock ownership plan (J-ESOP).
2. 74,908 shares of treasury shares held by the Company are included in “Individuals and others” and“Share less than one unit” in the table. These amounts are 749 units and 8 shares, respectively(6) Major shareholders

Name

HOUON Co., Ltd

Address

2-41-8 Maihama, Urayasu-shi, Chiba

As of March 31, 2024
Ratio of thenumber of shares
Number ofheld to the total
sharesnumber of issued
heldshares(shares)(excluding
treasuryshare) (%)
18,507,500

38.02

The Master Trust Bank of Japan, AKASAKA INTERCITY AIR, 1-8-1Ltd. (Accounted in trust)
Akasaka, Minato-ku, Tokyo

3,524,500

7.24

Tomoaki Horiguchi

2,478,396

5.09

Urayasu-shi, Chiba

34/122Name

Custody Bank of Japan, Ltd.
(Accounted in trust)
THE BANK OF NEW YORKMELLON 140044(Standing proxy: Mizuho Bank,
Ltd., Settlement & Clearing)
DFA INTL SMALL CAP
VALUE PORTFOLIO(Standing proxy: Citibank, NATokyo Branch)
Keiko Horiguchi

Address

1-8-12 Harumi, Chuo-ku, Tokyo
240 GREENWICH STREET, NEW
YORK, NY 10286, U.S.A(Shinagawa Intercity Building A, 2-15-1
Konan, Minato-ku, Tokyo)
PALISADES WEST 6300, BEE CAVE
ROAD BUILDING ONE AUSTIN TX
78746 US
(6-27-30 Shinjuku, Shinjuku-ku, Tokyo)
Urayasu-shi, Chiba

Sun Frontier Employee Stock
Ownership Association
JP Morgan Securities Co., Ltd.

2-7-3 Marunouchi, Chiyoda-ku, Tokyo

SSBTC CLIENT OMNIBUS
ACCOUNT
Total-

Number ofsharesheld(shares)

Ratio of thenumber of shares
held to the total
number of issued
shares(excluding
treasuryshare) (%)

2,037,100

4.18

892,400

1.83

477,700

0.98

416,500

0.86

416,000

0.85

374,8510.77

354,057

0.73

29,479,004

60.56

Note: 1. Of the number of shares held above, the number of shares held through trusts is as follows.
The Master Trust Bank of Japan, Ltd.
1,295,400 shares
Custody Bank of Japan, Ltd.
1,465,000 shares

35/122

(7) Voting rights(i) Outstanding shares
As of March 31, 2024
Classification

Number of shares (shares)

Number of voting rights(units)Description

-

-

-

-

-

-

-

-

-

-

-

Shares without voting
rightsShares with restricted
voting rights (treasury
share, etc.)
Shares with restricted
voting rights (others)
Shares with full voting
rights (treasury share, etc.)
Shares with full voting
rights (others)
Shares less than one unit

(Treasury share)
Common shares
74,900Common shares
48,657,800
Common shares
22,800

Number of issued shares

486,578

48,755,500

-

-

-

-

-

Total number of voting
486,578rights
Notes: 1. Shares less than one unit include 8 shares in treasury shares.
2. Common shares in the “Shares with full voting rights (others)” includes 128,300 Company's treasury
shares (1,283 voting rights) held by the employee stock ownership plan (J-ESOP).
(ii) Treasury share, etc.
As of March 31, 2024
Number of
Ownership
Number ofshares held
percentage to
Total sharesshares held
under thethe total
Name of shareholders
Address
heldunder own
names ofnumber of(shares)name (shares)
othersissued shares(shares)(%)(Treasury shares)
1-2-2 Yurakucho,
Sun Frontier Fudousan
74,90074,9000.1
Chiyoda-ku, Tokyo
Co., Ltd.
Total-

74,900-74,9000.1

Notes: 1. In addition to the above, there are 8 shares less than one unit.
2. The Company's 128,300 treasury shares owned by the employee stock ownership plan (J-ESOP) are notincluded in the above treasury shares, etc., but are accounted for as treasury shares in the consolidated
financial statements and non-consolidated financial statements.
(8) Details of officers and employee stock ownership plan
The Company implemented an incentive plan, the “employee stock ownership plan (J-ESOP)” (hereinafterreferred to as the “Plan” and the trust established under the trust agreement concluded with Mizuho Trust &Banking Co., Ltd. concerning the Plan is referred to as the “Trust”) in which the Company’s stock price andperformance are linked to employee (including employees of the Company and some employees of theCompany's subsidiaries. The same applies hereinafter) compensation and shared with shareholders to motivate
employees to improve their stock price and performance.
(i) Outline of the Plan
Based on the Share Benefit Regulations established by the Company in advance, the Plan provides theCompany's employees who meet certain requirements with the cash equivalent to Company's shares and36/122Company's shares converted at market value (hereinafter referred to as “Company's shares”).
The Company grants points to employees according to their length of service and other factors, and provides
them with Company's shares and other benefits equivalent to the points granted when they acquire the rightto receive benefits under certain conditions. Shares to be granted to employees shall be acquired by cash
established in advance as a trust, including future shares, and separately managed as trust assets.
The introduction of this system will increase the interest of the Company's employees in improving theirstock prices and business performance, and will contribute to the Company's more ambitious work.
Structure of the System

A. Upon the introduction of the Plan, the Company shall establish “Share Benefit Regulations.”
B. The Company entrusts cash (third party benefit trust) to Mizuho Trust & Banking Co., Ltd. (re-trustee:
Custody Bank of Japan, Ltd.) in order to acquire in advance shares to be provided to employees in the
future based on the “Share Benefit Regulations.”
C. The Trust will acquire the Company's shares using cash entrusted in (ii) above through the stock exchange
market or by accepting the Company’s treasury shares disposition.
D. The Company will grant points to employees based on the “Share Benefit Regulations.”
E. The Trust will exercise its voting rights based on instructions from the trust administrator.
F. The Trust shall be deemed to be a beneficial interest of the employee who satisfies the beneficiary
requirements set forth in the “Share Benefit Regulations” (hereinafter referred to as the “Beneficiary”)
and will provide the said Beneficiary with Company’s shares depending on the number of points they areprovided. However, if the employee meets the requirements in the Share Benefit Regulations, they will
be provided with cash equivalent to the market value of Company's shares.
(ii) Total number of shares to be delivered to employees, etc.
128,300 shares(iii) Scope of persons who can receive beneficial interests and other rights under the Plan
A person who satisfies the beneficiary requirements specified in the Company's Share Benefit Regulations
2. Acquisitions, etc. of Treasury ShareClasses of shares Companies Act of Japan Acquisition of common shares pursuant to Article 155, Item 3, 7, and
13(1) Acquisitions by a resolution of the General Meeting of Shareholders
Not applicable.
(2) Acquisition by a resolution of the Board of Directors
Not applicable
37/122

(3) Content not based on the resolution of the General Meeting of Shareholders or the resolution of the Board of
Directors
Category

Number of shares (shares)

Total value (thousand yen)

Treasury shares acquired during the
1,9850
fiscal year under review
Treasury shares acquired during the0－
periodNote: Treasury shares acquired during the period under review do not include the number of shares acquired
through the purchase of shares less than one unit from June 1, 2024 to the date of submission of the Annual
Securities Report.
(4) Status of disposal and possession of the acquired treasury shares
During the fiscal year under review
Category

Acquired treasury shares thatwere offered to subscribers forsubscription
Acquired treasury shares thatwere canceled
Acquired treasury shares thatwere transferred due to merger,
exchange of shares, issue ofshares, or corporate split
Other (Granting of the
Restricted Stock)
Number of treasury shares held

Number of shares(shares)During the period

Total disposal
amount(million yen)

Number of shares(shares)

Total disposal
amount(million yen)

-

-

-

-

-

-

-

-

-

-

-

-

35,94651--

74,908-74,908-Notes: 1. The number of treasury shares held during the current period does not include the number of sharesacquired through the purchase of shares less than one unit during the period from June 1, 2024 to thefiling date of this Annual Securities Report.
2. The number of treasury shares held by the employee stock ownership plan (J-ESOP) is not included in
the number of shares held during the fiscal year under review and during the period.

3. Dividend Policy
The Company’s basic policy is to contribute to the interests of shareholders in a comprehensive manner by striving
to return profits to shareholders in a stable manner over the long term while securing investment funds that will
aggressively challenge businesses for future growth, and by taking into consideration the stability and enhancementof financial position.
The Company stipulated in the Articles of Incorporation that interim dividends can be implemented, and its policy
is to continue to distribute dividends twice a year, with the record date set on March 31 and September 30 eachyear. The distribution of dividends is resolved by either the General Meeting of Shareholders or the Board of
Directors.

38/122

The dividends of surplus whose record date belongs to this fiscal year is as follows.
Total dividend amount
Dividends per share
Date of resolution(million yen)
(yen)
November 9, 2023
1,265
26.00
Board of Directors Resolution
May 21, 2024
1,553
32.00
Board of Directors Resolution
Note:
The total amount of dividends includes the Company’s shares’ dividends accounted in trust by theemployee stock ownership plan (J-ESOP).
4. Corporate Governance, etc.
(1) Overview of corporate governance(i) Basic stance on corporate governance
The Company's basic stance on corporate governance is that all officers and employees should set “theright thing to do as a human being” based on high ethical standards as a criterion for business execution
and practice it. Based on this, we recognize that it is an important mission of management to contribute tosociety through business activities and to pursue profit fairly, and to build firm trust from stakeholders suchas shareholders, customers and employees by continuously increasing corporate value over the long term.
Based on this recognition, the Company is working to strengthen its corporate governance with the below
basic policies:
1. improving transparency and ensuring fairness,
2. swift decision-making and business execution,
3. thorough accountability,
4. timely and appropriate information disclosure, and
5. enhancement of compliance awareness.
(ii) Outline and reason for adoption of the current corporate governance system
A. Overview of current corporate governance system and its activities
By adopting a system of a Company with Audit & Supervisory Committee as corporate governance system,
the Audit & Supervisory Committee members, who audit and supervise the execution of duties of thedirectors, will become members of the Board of Directors, thereby strengthening the supervisory functionof the Board of Directors and further enhancing corporate governance. In addition, by enabling the Boardof Directors to broadly delegate decisions on business execution to the directors, we aim for a swift
decision-making on business execution. At the same time, we aim to achieve sustainable growth andincrease corporate value in the medium to long term by having the Board of Directors focus on importantmanagement decisions such as management plans.
(a) Board of Directors
The Company’s Board of Directors consists of eleven members from directors (including four outside
directors) and is responsible for passing resolutions on matters stipulated in laws and regulations and the
Articles of Incorporation, as well as making management decisions and supervising the execution of duties.
Board of Directors meetings are held once a month, and extraordinary Board of Directors meetings areheld as necessary to decide on matters stipulated by laws and regulations, important matters related tocompany management, and other matters stipulated by the Board of Directors Regulations. In addition,
the Company supervises the execution of duties by directors and executive officers by receiving
information on the status of execution of duties from directors and executive officers on a regular basis.
In fiscal 2023, the Company held 18 Board of Directors meetings, and the attendance of each Director is
as follows

39/122Name

Number ofmeetings held

Attendance

Tomoaki Horiguchi

18 times

18 times

Seiichi Saito

18 times

18 times

Izumi Nakamura

18 times

18 times

Yasushi Yamada

18 times

18 times

Director

Mitsuhiro Ninomiya

18 times

18 times

Director

Kenji Honda

18 times

18 times

Kazutaka Okubo

18 times

18 times

Keiichi Asai

18 times

18 times

Shinichi Tominaga

18 times

18 times

Hidetaka Tanaka

18 times

18 times

Tsuneko Murata

18 times

18 times

Title
Chairman Representative
Director
President Representative
Director
Vice President Director
Senior Managing Director

Outside Director
Outside Director
Audit & Supervisory
Committee Member
Director
Audit & Supervisory
Committee Member
Outside Director
Audit & Supervisory
Committee Member
Outside Director(b) Audit & Supervisory Committee
The Audit & Supervisory Committee consists of three Audit & Supervisory Committee members(including two outside directors), and each Audit & Supervisory Committee member shall conduct
audit as described in “(3) Conditions of audit (i) Audit & Supervisory Committee’s Audit” inaccordance with the audit policy, audit plan, etc. established by the Audit & Supervisory Committee.
(c) Nomination and Compensation Committee (optional)
In order to improve the objectivity and transparency of procedures relating to the officer’s election,
dismissal, and remuneration, the Company has established the Nomination and Compensation
Committee, which consists of Chairman Representative Director, President Representative Director
and two or more Outside Directors, as the voluntary advisory body of Board of Directors. In
Nomination and Compensation Committee, standards and processes related to the officer’s election,
dismissal, and remuneration as well as the evaluation basic policy are examined and deliberated, andthe Board of Directors will make decisions regarding officer’s election, dismissal, and remuneration
with maximum respect for the deliberation contents.
In fiscal 2023, Nomination and Compensation Committee meetings were held three times, and theattendance of individual directors is as follows.
Title
Chairman Representative
Director
President Representative
Director
Outside Director
Audit & Supervisory
Committee
MemberOutside Director

Name

Number ofmeetings held

Attendance

Tomoaki Horiguchi

3 times

3 times

Seiichi Saito

3 times

3 timesKazutaka Okubo

3 times

3 times

Hidetaka Tanaka

3 times

3 times

40/122

The members of each organization are as follows. (◎Represents the chairman.)
Audit &
Supervisory
Committee

Nomination
andCompensation
Committee(voluntary)

Name

Board ofDirectors

Tomoaki Horiguchi○◎

Seiichi Saito◎○

Izumi Nakamura○

Yasushi Yamada○

Director

Mitsuhiro Ninomiya○

Director

Kenji Honda○

Kazutaka Okubo○

Keiichi Asai○

Shinichi Tominaga○◎

Hidetaka Tanaka○○

Tsuneko Murata

○

○

Title

Chairman Representative
Director
President Representative
Director
Vice President Director
Senior Managing Director

Outside Director
Outside Director
Audit & Supervisory
Committee Member
Director
Audit & Supervisory
Committee Member
Outside Director
Audit & Supervisory
Committee Member
Outside Director○○

A diagram of the Company's corporate governance system is as follows.

Election and dismissal

Election and dismissal

ReportDirection

41/122

Risk Management Committee

Response

A. Reason for adoption of the said system
The Company operates an Audit & Supervisory Committee system. Four of the 11 Board of Directors
members are independent outside directors, and they supervise directors’ execution of duties. The
Company has adopted the current governance system as we have determined that the above corporate
governance system is appropriate considering the scale and business of the Company based on our basic
stance of corporate governance.
(ⅲ) Other items on corporate governanceA. the Progress of the Internal Control System Development
In accordance with the Ordinance for Enforcement of Companies Act of Japan and Companies Act ofJapan, the Company resolved “Internal Control System Construction basic policy” in Board of Directors
as described below and has established and is operating its system.
B. Basic policy for building an internal control system(a) 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 raisingawareness of compliance, based on the recognition that it is our social responsibility as a company toalways embody the spirit 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
Representative Director, will be established to conduct regular internal audits of all divisions andgroup companies without exception. In internal audits, the Company shall ascertain the status ofbusiness 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 Representative Director and Audit &Supervisory Committee on a regular basis. Also the Company shall report to Board of Directors asneeded. In addition, the Company will establish a “Corporate Ethics Help Line” and establish aninternal reporting system with various contact methods that thoroughly protects reporters in order toprevent and promptly detect violations of laws and regulations and misconduct to improve themobility of the self-cleaning process, control reputational risks, and ensure public trust. Furthermore,in order to raise awareness 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.
(b) 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
at important meetings including the Board of Directors meetings and documents approved by eachdirector in accordance with the “Regulations on Administrative Authority,” shall be appropriately
recorded, and shall be 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 bydirectors as necessary. The General Manager of the Administration Department shall be responsible
for supervising the storage and management of information.
(c) Regulations concerning the management of risk of loss and other system
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 Representative Director (including a team of external experts such as corporate lawyers)
in the event of an unforeseen event.
(d) 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
order to realize the management policy and the management plan, the Board of Directors has clarified
42/122the executive authority and responsibilities of directors and has increased the efficiency of theexecution of duties. In addition, with regard to matters for which decisions on business execution
have been delegated to the President Representative Director and directors in charge of businessexecution of other matters, necessary decisions shall be made based on the “Organization Regulations”
or the “Regulations for Management of Affiliated Companies” including group companies. These
regulations shall also be appropriately reviewed based on revisions and abolition of laws andregulations and for the purpose of improving the efficiency of the execution of duties.
(e) Systems to ensure the appropriateness of operations within the corporate group consisting of theCompany 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 accordancewith the “Regulations for the Management of Affiliated Companies.” While respecting the autonomyof the group companies, the Corporate Planning Department shall receive periodic reports on thestatus of the business of the group companies. In addition, the Corporate Planning Department shallrequire 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 thebusiness period to improve the efficiency of group companies' operations. In addition, the Company
and its group companies have established a Risk Management Committee chaired by the President
Representative Director and assign risk management officers to each division. In the event that any
risk is discovered in management or business, it shall be reported to the Risk Management Committee,
and the risk information shall be analyzed and countermeasures shall be considered to prevent damage
or to minimize damage to the Company and the group companies if such damage occurs. We will
establish a system for reporting violations of laws and regulations or illegal acts that have occurredor may occur at group companies to the internal reporting desk or 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 Office shall conduct internal
audits of all group companies in order 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
Representative Director and Audit & Supervisory Committee, etc. President Representative Director
shall prepare and report its financial statements in accordance with fair and appropriate accounting
standards in order to enhance the reliability of financial reporting and increase corporate value of theCompany and its group companies.
(f) Matters relating to employees who are required to assist Audit & Supervisory Committee Members
in performing their duties
In the event that Audit & Supervisory Committee Members request that an employee be assigned toassist them in performing their duties, such employee shall be assigned as an Audit & Supervisory
Committee Members’ assistant. The auditor’s assistant shall be appointed from persons who havesufficient knowledge of accounting and law and shall perform their duties in accordance with the
instructions of the Audit & Supervisory Committee Members.
(g) Matters related to the independence of employees from directors in the preceding paragraph
In order to ensure the independence of the auditor’s assistant as set forth in the preceding paragraph,
personnel changes and evaluations of such employees shall be reported to Audit & Supervisory
Committee Members in advance and their consent shall be obtained.
(h) Matters related to ensuring the effectiveness of instructions given by Audit & Supervisory Committee
Members to employees in Paragraph (f)The auditor’s assistant in Paragraph (f) 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 opinionswith the President Representative Director and accounting auditors. Directors and other employees
43/122

will cooperate with the Audit & Supervisory Committee Members to improve the auditing
environment so that the duties of the auditor’s assistant are carried out smoothly.
(i) System for reporting to Audit & Supervisory Committee Member and other Members by Directors
and employees of the Company and group companies
All directors who are not Audit & Supervisory Committee Members and department heads shall reporton the status of the execution of their duties from time to time at the Board of Directors meetings inand other meetings attended by corporate auditors. Auditors shall be permitted to attend any Company
meetings they request to attend. All directors who are not Audit & Supervisory Committee Members
and employees of the Company and its group companies shall report to the Audit & Supervisory
Committee Members 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
may report 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 educationand 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 evaluation and shall not be subject to adverse dispositions suchas disciplinary action by reporting to the internal reporting office and shall make it known that theyshall not be subject to adverse dispositions due to reporting to Audit & Supervisory Committee
Members.
(j) Matters related to the policy regarding the handling of expenses and obligations arising from theexecution of duties by Audit & Supervisory Committee Members
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 arisen in the execution of their duties.
(k) Systems to ensure effective audits by Audit & Supervisory Committee Members
President Representative Director will hold regular meetings with Audit & Supervisory Committee
Members in order to facilitate mutual communication. In addition, in accordance with the“Regulations for Internal Audit” and the “Internal Audit Implementation Guidelines,” the Internal
Audit Office shall maintain close contact and coordination and cooperate to ensure that audits by
Audit & Supervisory Committee Members and audits by the accounting auditor are conductedefficiently and effectively.

C. Outline of the operating status(a) Directors' execution of duties
We have established internal rules to ensure that directors act in compliance with laws and regulations
and the 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.
(b) Execution of duties by Audit & Supervisory Committee Members
During the fiscal year under review, the Audit & Supervisory Committee Members held 13 Audit &Supervisory Committee Members’ meetings and implemented audits based on the audit plan. In
addition, the Audit & Supervisory Committee Members attended Board of Directors meetings andother important meetings and regularly exchanged information with the President Representative
Director, the accounting auditor, and the Internal Audit Office to audit the execution of duties by the
directors and to confirm the development and operational status of the internal control system.
44/122(c) 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 businessactivities.
(d) Compliance and Risk Management
The Company has established the “Corporate Ethics Help Line” to ensure that employees who havereported compliance violations or questionable acts are not treated unfavorably for the reason of thereport. The Company ensures that reporters are not treated unfavorably in personnel change,
personnel evaluation and disciplinary action. In addition, we are preparing for unexpected situations
such as training for countermeasures against large-scale disasters and securing supplies for people
with difficulty in returning home.
D. Status of the development of the risk management system
The Company's risk management system includes risk management in each division. At the same time,the director who is not Audit & Supervisory Committee Member, division head, and chief grasp the statusof important management matters (contracts, quality, intellectual property, etc.) in a cross-sectionalmanner. If necessary, the director who is not Audit & Supervisory Committee Member, division head,and chief hold weekly meetings for report and review. The Company has established a system to promptly
hold a temporary Board of Directors’ meeting to respond to an emergency.
In addition, in order to strengthen risk management, the Company strives to implement internal audit andenhance education and training regarding various laws and regulations for officers and employees andcarries out educational activities to ensure awareness. Moreover, the Company has entered into anadvisory contract with a law firm in order to deal with cases that require guidance and has received advice
and guidance appropriately.
E. Outline of the liability limitation agreement
The Company has concluded a liability limitation agreement pursuant to the provisions of Article 427,
Paragraph 1 of the Companies Act with the Outside Directors under Article 423, Paragraph 1 of the said
Law. The maximum amount of liability for damages under the agreement is the amount stipulated bylaws and regulations.
Such limitation of liability is permitted only when the Outside Director has acted in good faith andwithout gross negligence in performing the duties that caused the liability.
F. Outline of officers' liability insurance contract
The Company has entered into liability insurance contracts for officers, etc. as stipulated in Article 430(3), Item 1 of the Companies Act with the Company's and its subsidiaries' Directors, Audit & Supervisory
Committee Members, 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.
(iv) Matters related to director
A. Maximum number of directors
The Company's Articles of Incorporation stipulate that the number of directors of the Company shall not
exceed 10 and the number of Audit & Supervisory Committee Members shall not exceed 4.
B. Requirements for a resolution on the appointment of a director
The Company's Articles of Incorporation stipulate that a resolution for the election of a director shall be
adopted by a majority of the voting rights of the shareholders who are eligible to exercise the voting
rights and who are present at the meeting, where the shareholders holding one-third or more of the voting
rights of all shareholders eligible to exercise the voting rights must be present and cumulative voting
shall not be used in a resolution for the election of a director.
45/122

(v) Matters concerning General Meeting of Shareholders
A. General Meeting of Shareholders special resolution requirements
When a special resolution is required, resolutions made pursuant to Article 309, Paragraph 2 of theCompanies Act of Japan shall be adopted by two-thirds or more of the voting rights of the shareholders
who are eligible to exercise the voting rights and who are present at the meeting, where the shareholders
holding one-third or more of the voting rights of all shareholders eligible to exercise the voting rights
must be present. The purpose of this agreement is to facilitate the smooth operation of General Meetingof Shareholders by securing a quorum for special resolutions in General Meeting of Shareholders.
B. Matters to be resolved in the General Meeting of Shareholders Resolution Matters that may be resolved
at the meeting of Board of Directors(a) Acquisition of own shares
To enable the execution of flexible capital policy to respond to changes in the business environment,
pursuant to the provisions of Article 165, Paragraph 2 of the Companies Act of Japan, the Company
may acquire its own shares through transactions on the market, etc., by a resolution of the Board of
Directors.
(b) Exemption from liability of Director
To ensure directors can fully perform the role expected of them, in accordance with the provisions ofArticle 426, Paragraph 1 of the Companies Act of Japan, the Company may, by a resolution of theBoard of Directors, exempt a Director (including those who were a Director) from his/her liability fordamages caused by his/her dereliction of duty, within the limits stipulated by laws or regulations.
(c) Dividends of surplus, etc.
In order for the Company to flexibly implement its capital and dividend policies, we provide in our
Articles of Incorporation that matters stipulated in each item of Article 459, Paragraph 1 of theCompanies Act of Japan, such as dividends of surplus, may be determined by resolution of the Boardof Directors, except as otherwise provided by laws and regulations.
(2) Board of Directors and Audit & Supervisory Committee Members(i) List of Board of Directors and Audit & Supervisory Committee Members
Male: 10 persons, Female: 1 person (percentage of the female: 9%)
Title & Position

Name

Date of birth

Career summary

March
1990

Chairman
Representative
Director

TomoakiHoriguchi

Term Shareof ownershi
office p (shares)

Sun Frontier Co., Ltd. (merged
company)
President Representative Director
April 1999 Establishment of the Company
President Representative Director
August Representative Director of Sun
2015
Frontier Hotel Management Inc.
(current position)
November Representative Director of Sun(Note2,478,396
April 21, 1958
2017
Frontier Sado Co., Ltd. (current
2)
position)
June 2018 Representative Director of Sun
Frontier Okinawa Co., Ltd.
(current position)
August Representative Director of Okesa
2018
Kanko Taxi Co., Ltd. (current
position)
April 2020 Chairman Representative Directorof the Company (current position)
46/122

Title & Position

Name

Date of birth

Career summary

Term Shareof ownershi
office p (shares)

May 2021 President Representative Directorof Hotel Osado Co., Ltd. (current
position)

President
Representative
Director

Seiichi Saito

June 9, 1960

September Joined the Company
2005
November General Manager of2005
Administration Division
June 2006 Director, General Manager ofManagement Division
June 2008 Senior Managing Director, General
Manager of Management Division
June 2012 Executive Vice President, Vice
President Executive Officer,
General Manager of
Administration Division
June 2014 Representative Executive Vice
President, Vice President Executive
Officer, General Manager of(Note
Administration Division2)
April 2015 Representative Executive Vice
President, Vice President Executive
Officer, General Manager of AssetManagement Division
June 2017 Chairman of Sun Frontier
Fudousan Taiwan Co., Ltd.
(current position)
January Representative Director of Kouwa
2019
Corporation (currently SF
Engineering Inc.) (current position)
April 2020 President Representative Directorof the Company, President
Executive Officer (current
position)

47/122

81,829Title & Position

Vice President
Director, General
Manager of
Entrusted AssetManagement
Division

Senior Managing
Director, General
Manager ofBusiness
Promotion
Division

Name

Date of birth

Career summary

Term Shareof ownershi
office p (shares)

September Joined the Company Head of Sales
2006
Administration Entrusted AssetManagement Division
June 2008 Director, General Manager of
Entrusted AssetManagement
Division of the Company
June 2012 Representative
Director
SF
Building Support Inc. (current
position)
June 2012 Managing Director, Managing
Executive
Officer,
GeneralManager of Entrusted AssetManagement Division of theCompany
Izumi(Note
March 16, 1952 November Representative Director of Yubi
Nakamura2)
2013
Co., Ltd. (currently SF Building
MaintenanceInc.)(current
position)
June 2016 Senior Managing Director, Senior
Managing
Executive
Officer,
General Manager of Entrusted
Asset Management Division
April 2019 Representative Director of Sun
Frontier Space Management Inc.
(current position)
April 2020 Executive Vice President, Vice
President Executive Officer,
General Manager of Entrusted
Asset Management Division(current position)

Yasushi
YamadaAugust Joined the Company, Manager of2010
Corporate Planning Division
June 2012 Executive Officer, Manager ofCorporate Planning Division
April 2015 Executive Officer, General
Manager of Administration
Division
June 2015 Director, Executive Officer,
General Manager ofDecember 23,(Note
Administration Division
1965
2)
June 2016 Managing Director, Managing
Executive Officer, General
Manager of Administration
Division
November Representative Director of PT.SUN
2017
FRONTIER PROTERTY ONE(current position)
December Representative Director of PT.SUN
2017
FRONTIER INDONESIA (current
position)
48/12260,781

22,765Title & Position

Name

Date of birth

Career summary

Term Shareof ownershi
office p (shares)

April 2020 Senior Managing Director, Senior
Managing Executive Officer,
General Manager of Business
Promotion Division (current
position)
June 2020 Chairman Representative Directorof SUN FRONTIER VIETNAM
CO., LTD. (current position)
June 2020 Chairman Representative Directorof SUN FRONTIER DANANG
CO., LTD. (current position)

Managing
Director, General
Manager of
Administration
Division

Mitsuhiro
Ninomiya

September Joined the Leasing Business
2003
Division of the Company
March Manager of Property Management
2006
Business Division
October Manager of Human Resources
2010
General Affairs Division
June 2014 Executive Officer (current
position)
April 2018 Deputy General Manager of
Administration Division, Manager
of Corporate Planning Division
April 2019 Deputy General Manager of
Administration Division, Manager (NoteMarch 1, 1969of Corporate Planning Division,
2)
Manager of Information System
Division
July 2019 Deputy General Manager of
Administration Division, Manager
of General Affairs Division,
Manager of Information System
Division
April 2020 General Manager of
Administration Division of theCompany (current position)
June 2020 Director
April 2024 Managing Director (current
position)

April 2006 Joined the Company in Entrusted
Asset Management DivisionCorporate Sales Section
Director, General
October
Chief of Property Management
Manager of Asset(Note
Kenji Honda March 5, 1967
2010
Business Division
Management
2)
June 2014 Executive Officer (current
Division
position),Manager of Property Management
Business Division
49/122

36,133

7,833

Title & Position

Name

Date of birth

Career summary

Term Shareof ownershi
office p (shares)

April 2018 Deputy General Manager of
Entrusted Asset Management
Division, the 1st Manager of
Property Management Business
Division
April 2020 General Manager of AssetManagement Division (current
position)
June 2020 Director (current position)
February Representative Executive Vice
2021
President of Communication
Development Inc. (currently SF
Communication Inc.) (current
position)
April 2024 Senior Executive Officer (current
position)

Director

April 1978 Joined Mitsubishi Corporation
April 2009 Executive Officer and Head of theEnergy Business Group CEO
Office of the same company
April 2013 Vice President Director of Lithium
Energy Japan
September 29, September President Representative Director (Note
Keiichi Asai
1954
2014
of KH Neochem Co., Ltd.
2)April 2019 Retired from the same company
June 2021 Outside Director, Audit &Supervisory Committee Memberof Cosmo Energy Holdings Co.,
Ltd. (current position)
June 2022 Outside Director of the Company(current position)
April 1984 Joined Shimizu Corporation
February Director of Tokyo Branch
1997 Construction Department of thesame company
July 2007

Director

KoichiIshimizu

October 16,
1958

General Manager of Tokyo
Building Construction Department
No. 3, Building, Construction
Division of the same company
July 2008 General Manager of New Head
Office Construction Division of thesame company
April 2015 Executive Officer, Director of
Hiroshima Branch of the same
company
April 2017 Managing Officer in charge of theTokyo Metropolitan Area, Directorof Tokyo Branch of the same
company

0-50/1220Title & Position

Name

Date of birth

Career summary

Term Shareof ownershi
office p (shares)

April 2020 Senior Managing Officer in chargeof the Tokyo Metropolitan Area,
Director of Tokyo Branch,
Manager in charge of Nuclear
Business of the same company
April 2021 Senior Managing Officer in chargeof the Kansai Region, Director of
the Yumeshima Project of the same
company
April 2023 Standing Advisor of the same
company
March Resigned from the same company
2024
June 2024 Outside Director of the Company(current position)

Director,
Audit &
Supervisory
Committee
MemberShinichiTominaga

April 1981 Joined The Sumitomo Bank, Ltd.
(currently Sumitomo Mitsui
Banking Corporation)
September Compliance Manager of Kenedix
2007
Advisors, Inc.
March Manager of Finance & Accounting
2009
Department of Kenedix, Inc.
September Manager of Business Management
2010
Department of Kenedix, Inc.
July 2017 Joined the Company, Deputy
General Manager of(Note
June 13, 1957
Administration Division
3)
April 2018 Manager for Governance andOther Special Missions of theCompany
April 2019 Accounting Manager of theCompany
July 2020 Manager of Corporate Planning
Division of the Company
June 2022 Director, Audit & Supervisory
Committee Member of theCompany (current position)

51/122700

Title & Position

Name

Date of birth

Career summary

Term Shareof ownershi
office p (shares)

November Joined Century Audit Corporation
1995 (currently Ernst & Young
ShinNihon LLC)
April 1999 Registered as Certified Public
Accountant
June 2006 Partner of ShinNihon Audit
Corporation (currently Ernst &Young ShinNihon LLC)
July 2012 Senior Partner of ShinNihon LLC(currently Ernst & Young
ShinNihon LLC)
February Senior Managing Director and2016 General Manager of ERM of thesame audit corporation

Director,
Audit &
Supervisory
Committee
MemberDirector,
Audit &
Supervisory
Committee
MemberKazutaka
Okubo

YukikoEdairoJune 2019 President Representative Director of
Okubo Associates Co., Ltd. (current
position)
June 2019 Director of the Company (current
position)
March 22, 1973
December Outside Director of LIFULL Co.,2019 Ltd. (current position)
February Outside Director of SALA
2020 Corporation (current position)
June 2020 Outside Director of The Shoko
Chukin Bank, Ltd. (current position)
June 2020 Outside Director, Audit &Supervisory Committee Member ofMusashi Seimitsu Industry Co., Ltd.
(current position)
November Representative Director of SS
2020 DNAFORM (current position)
September Outside Director, Audit &2021 Supervisory Committee Member ofBrainPad Inc. (current position)
June 2024 Director, Audit & Supervisory
Committee Member of theCompany (current position)
December Registered as an attorney at law
2009(Tokyo Bar Association)
December Joined Makinouchi & Kamiishi Law
2009 Office (currently Makinouchi Law
Office)(Note
June 14, 1980 July 2016 Joined Ginza Broad Law Offic
3)
January Established Toranomon Daiichi Law
2020 Office (present)
June 2024 Director, Audit & Supervisory
Committee Member of theCompany (current position)
52/1223,500-

0-Title & Position

Name

Date of birth

Career summary

Total

Term Shareof ownershi
office p (shares)

2,691,937

Notes: 1. Director Mr. Keiichi Asai, Mr. Kazutaka Okubo, Mr. Hidetaka Tanaka and Ms. Tsuneko Murata are“Outside Directors.”
2. For one year from the conclusion of Annual General Meeting of Shareholders on June 27, 2023
3. For two years from the conclusion of Annual General Meeting of Shareholders on June 21, 2022
4. The Company has appointed 1 substitute Audit & Supervisory Committee Member who is a director as
stipulated in Article 329, Paragraph 3 of the Companies Act of Japan in preparation for the event that the
number of Audit & Supervisory Committee Member who is a director falls short of the number stipulated
by laws and regulations.
The career summary of alternate Audit & Supervisory Committee Member who is a director is as follows.
Share
Name
Date of birth
Career summary
ownership(shares)
April 1985 Registered as an attorney (Daini
Tokyo Bar Association)
Fumio
July 26, 1952
April 1989 Established and is the General
Tsuchiya
Manager of Tsuchiya Law Office(current position)
5. The Company has introduced an executive officer system in order to improve efficiency by separating
management decision-making and supervisory functions from business execution functions and tostrengthen business execution functions. The 14 executive officers is as follows.
Name
Title
Position
President Executive* Seiichi Saito
Officer
Izumi
Vice President
General Manager of Entrusted Asset Management*
Nakamura
Executive Officer
Division
YasushiSenior Managing*
General Manager of Business Promotion Division
YamadaExecutive Officer
Mitsuhiro
Managing Executive*
Division Director, Administration Division
Ninomiya
Officer
Senior Executive
Division Director, Asset Management* Kenji Honda
Officer
Division
Senior Executive
Asset Management Division, Head of Building
Shuhei Oda
OfficerBusiness Department Manager
KentaroSenior Executive
Entrusted Asset Management Division, Head of
Kawanishi
Officer
Property Management Business
TakeshiSenior Executive
Administration Division, General Manager ofHirahara
Officer
Corporate Planning Department
Asset Management Division,
Kenji Wakao
Executive Officer
Head of Construction Department
MidoriAdministration Division
Executive Officer
KanekoGeneral Manager, Marketing Department
HiroyukiExecutive Officer
Head of DX Business
Takekawa
Keiichiro
Entrusted Asset Management Division, Head of Leasing
Executive Officer
NishimotoManagement Business

53/122Asset Management Division, General Manager ofConsulting Department
Asset Management Division,
HiroyukiExecutive Officer
Building Business Department, General Manager of
Kobayashi
Replanning Department* Indicates Executive Officer concurrently serving as Director.
Tetsuya Arai

Executive Officer(ii) Outside Officers
Annual Securities Report as of the submission date, the relationship with the four Outside Director members
is as follows.
Outside Director Mr. Keiichi Asai joined Mitsubishi Corporation and worked in various divisions of thepetroleum business including sales, supply and marketing and refining of petroleum products. He was also
stationed in the United States and India and has engaged in international business of the energy businessgroup almost consistently. He has a wealth of knowledge and experience as he assumed the positions of Vice
President Director of Lithium Energy Japan in 2013 and President Representative Director of KH Neochem
Co., Ltd. in 2014 and has been involved in overall corporate management. The Company has appointed him
as Outside Director because the Company has judged that he can be expected to supervise the managementof the Company based on his wealth of knowledge and experience, and appropriately perform his duties.
The Company has designated him as an independent officer under the provisions of the Tokyo Stock
Exchange, Inc. and has notified the Tokyo Stock Exchange of the designation. There are no other personal
relationships, capital relationships, significant business relationships, or any other interests between the
Company and Mr. Asai.
Mr. Koichi Ishimizu, an Outside Director at Sun Frontier Fudousan Co., Ltd., joined Shimizu Corporation,
where he had consistently been involved in construction site operations, overseeing building construction
management. He had supervised construction projects from inception to completion, and had held senior
management positions, including Executive Officer and Senior Executive Officer, gaining extensive
experience in corporate management. Based on his vast knowledge and experience in both field operations
and management, the Company has appointed him as an Outside Director, expecting him to provide effective
supervision of the Company's management and perform his duties appropriately. The Company has also
designated him as an independent officer under the provisions of the Tokyo Stock Exchange, Inc., and has
notified the Tokyo Stock Exchange of this designation. There are no other personal relationships, capital
relationships, significant business relationships, or any other interests between the Company and Mr.
Ishimizu.
Outside Director Mr. Kazutaka Okubo, who is an Audit & Supervisory Committee Member, is well versedin corporate audit as a Certified Public Accountant. He has served as a manager of audit corporations, various
expert committee members of government agencies and executive officers of business associations. He hasa wealth of insight and experience in areas such as crisis management, compliance and CSR. The Company
has appointed him as Outside Director who is an Audit & Supervisory Committee Member because theCompany has judged that it is possible for him to provide appropriate advice and proposals at an independent
standpoint to the managers involved in business execution in the decision-making of the Board of Directors.
The Company has designated him as an independent officer under the provisions of the Tokyo Stock
Exchange, Inc. and has notified the Tokyo Stock Exchange of the designation. Although he holds Company's
shares (3,500 shares) as of the filing date, there are no other personal relationships, capital relationships,
significant business relationships, or any other interests between the Company and Mr. Okubo.
Ms. Kyoko Edahiro, an Outside Director and Audit and Supervisory Committee Member at Sun Frontier
Fudousan Co., Ltd., is a lawyer with specialized knowledge and extensive experience in corporate legal
affairs, focusing on real estate and inheritance-related fields. The Company has appointed her as an Outside
Director and Audit and Supervisory Committee Member, believing that her professional expertise willcontribute to strengthening the governance of the Company Group and enhancing the audit and supervisionof business execution. The Company has also designated her as an independent officer under the provisionsof the Tokyo Stock Exchange, Inc., and has notified the Tokyo Stock Exchange of this designation. There
54/122

are no other personal relationships, capital relationships, significant business relationships, or any otherinterests between the Company and Ms. Edahiro.
As described above, Outside Directors and Outside Audit & Supervisory Committee Members are expected
to fulfill their functions and roles to contribute to the sustainable growth of the Company and theenhancement of corporate value over the medium- to long-term, and the Company believes that the Outside
Directors and Outside Audit & Supervisory Committee Members are sufficiently selected.
The Company has established criteria for determining the independence of Outside Directors and Outside
Audit & Supervisory Board Members to be appointed. Individuals who fall under any of the following
criteria for the independence of Outside Directors will not be appointed.
Criteria for Determining the Independence of Outside Directors
An Outside Director of the Company is deemed to have independence if none of the following conditions
apply:
1.

An executive (*1) of the Company or its consolidated subsidiaries (hereinafter collectively referred toas the "Company Group"), or someone who has been an executive of the Company Group in the past
10 years.
2. A person or an executive of a person for whom the Company Group is a major business partner (*2).
3. A major business partner (*2) of the Company Group or an executive thereof.
4. A major lender (*3) to the Company Group or an executive thereof.
5. A major shareholder (*4) of the Company or an executive thereof.
6. A lawyer, certified public accountant, consultant, or other professional who receives significant
monetary or other property benefits (*5) from the Company Group, aside from director compensation(if the recipient of such benefits is an organization, such as a corporation or partnership, this applies toindividuals belonging to the organization).
7. A person belonging to an audit firm that is the accounting auditor of the Company.
8. A person who receives significant donations (*6) from the Company Group (if the recipient of such
donations is an organization, such as a corporation or partnership, this applies to executives of theorganization).
9. A close relative (*7) of an executive of the Company Group.
10. A close relative of a person who falls under any of the conditions 2 to 8 above.
11. A person who, in the past three years, has fallen under any of conditions 2 to 9 above.
12. In addition to the above, any person who has any other specific reason that could create a conflict ofinterest with the Company, making it difficult to fulfill the duties of an independent Outside Director.
Even if an individual falls under any of the conditions 1 to 11 above, if the Company determines that theindividual is substantially independent, the Company may judge the individual to be independent by
explaining and disclosing the reasons at the time of the appointment of the Outside Director.
(*1) "Executive" refers to an executive as defined in Article 2, Item 6 of the Ordinance for Enforcement of
the Companies Act, including executive directors, executive officers, and employees, but excluding nonexecutive directors and Audit & Supervisory Board members.
(*2) "A person for whom the Company Group is a major business partner" refers to a business partner whose
payment amount from the Company Group in the most recent fiscal year exceeds 2% of their consolidated
net sales.
"A major business partner of the Company Group" refers to a business partner whose payment amount to theCompany Group in the most recent fiscal year exceeds 2% of the Company Group’s consolidated net sales.
(*3) "Major lender" refers to a financial institution where the balance of the Company Group’s borrowings
exceeds 2% of the Company’s consolidated total assets at the end of the most recent fiscal year. However,financial institutions listed as lenders in statutory documents such as securities reports or business reports,
even if the percentage is 2% or less, are included as major business partners.
(*4) "Major shareholder" refers to a shareholder who holds 10% or more of the voting rights in their own
name or another’s name at the end of the most recent fiscal year.
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(*5) "Significant monetary or other property benefits" refers to benefits exceeding 10 million yen per year on
average over the past three fiscal years from the Company Group.
(*6) "Significant donations" refers to donations exceeding 10 million yen per year on average over the past
three fiscal years from the Company Group.
(*7) "Close relative" refers to a spouse or a relative within the second degree of kinship.

(iii) Coordination among supervisions or audits by Outside Directors internal audits, audits by Audit &Supervisory Committee Members and accounting audits, and relations with the Internal Control Division
With regard to the supervision or audit by Outside Director or the relationship between audit and internal
audit, Audit & Supervisory Committee Member audit and accounting audit, the Internal Audit Office
implements internal audits based on the internal audit plan on business activities, effectiveness and accuracyof business implementation, compliance status, etc. The results are regularly reported to the President
Representative Director, Audit & Supervisory Committee Members including outside Audit & Supervisory
Committee Members, and Directors including Outside Directors, and at the same time, the Internal Audit
Office explains the purpose of internal control and evaluation of control, etc., and provides specific advice
and recommendations for business improvement and appropriate management. In addition, the Internal
Audit Office, Audit & Supervisory Committee, and accounting auditor work closely with each other, and
the Audit & Supervisory Committee and accounting auditor have a system that allows them to grasp thesituation of internal audits in a timely manner. Audit & Supervisory Committee Members and the accounting
auditor also share information on Audit & Supervisory Committee Member audits and accounting audits
and coordinate with each other.
Based on the audit plan formulated in the Audit & Supervisory Committee, Outside Directors who are Audit& Supervisory Committee Members, mainly the full-time Audit & Supervisory Committee Members,
conduct a planned and comprehensive audit of the overall business of the Company and its subsidiaries. In
addition to attending important Board of Directors meetings, other important meetings, and expressing
opinions, audits are conducted through interviews with directors and access to important approval
documents. From the standpoint of an independent organization, the 3 Outside Directors who are Audit &Supervisory Committee Members regularly hold Audit & Supervisory Committee meetings to ensure
appropriate monitoring, and actively exchange information, including the accounting auditor, to secure
coordination. Moreover, the Internal Audit Office, Audit & Supervisory Committee and accounting auditor
hold regular meetings to exchange information and communicate with each other.

(3) Conditions of Audit(i) Audit & Supervisory Committee’s Audit
We are a Company with Audit & Supervisory Committee. The Audit & Supervisory Committee consists ofthree Audit & Supervisory Committee Members (including two Independent Outside Directors).
The rules of the Audit & Supervisory Committee stipulate that, generally, Audit & Supervisory Committee
meetings shall be held once a month and additional meetings may be held as needed. In addition todetermining audit policies, plans and allocation, the members will exchange opinions based on business
operation audit reports developed by full-time (by selection) Audit & Supervisory Committee Members,deliberate on the legality of regular Board of Directors meeting proposals, and share information on riskcases, etc. In addition, the Audit & Supervisory Committee will regularly communicate with the accounting
auditor and the Internal Audit Office, receive reports and explanations on the audit conditions and results,
and exchange opinions.
Each Audit & Supervisory Committee Member will perform one’s duties based on the plan throughout theperiod in accordance with the audit policies, allocation, etc. determined by the Audit & Supervisory
Committee. In order to audit the execution of duties by the Board of Directors, each Audit & Supervisory
Committee Member will ask questions and express opinions as appropriate in Board of Directors meetings.
Throughout the year, the full-time (by selection) Audit & Supervisory Committee Member (1 person) willconduct on-site inspections at each division and subsidiary, attend major meetings such as the Management
Committee, inspect various important documents, including significant meeting minutes and approval
56/122requests, and receive explanations on questions as appropriate from directors and employees, request reports,and state opinions. In addition, he will attend accounting auditor inspections, conduct joint audits with theInternal Audit Office, and exchange opinions as appropriate to work closely with each other, making efforts
to enhance the effectiveness of the audit.
During the fiscal year under review, Audit & Supervisory Committee meetings were held 13 times, and themain activities in each Audit & Supervisory Committee meeting are as follows.
A. Accounting audit
Audit & Supervisory Committee Members monitor whether the accounting auditor maintains an
independent position, receive an explanation of the audit plan from accounting auditor, and verify
whether an appropriate audit is being implemented. In addition, regarding the execution of duties, theCompany receives non-consolidated and consolidated reviews and reviews report for each quarter,
receives an audit results report at the end of the fiscal year, and requests explanations as necessary.
B. Business operation audit and internal control audit
Audit & Supervisory Committee Members coordinate with the Internal Audit Office and check the audit
situation. If necessary, Audit & Supervisory Committee Members implement an audit, where important
documents are inspected and visits to each department are conducted. Moreover, Audit & Supervisory
Committee Members attend the Board of Directors meetings, audit the execution of duties of directors,
the management of the meeting, the content of the resolution, etc., and express opinions as necessary.
C. Exchanging of views with President Representative Director
The Audit & Supervisory Committee holds regular meetings with the President Representative Director
to exchange opinions on management issues, business plans, and other matters and communicate witheach other.
D. Activities in the Audit & Supervisory Committee
Audit & Supervisory Committee Meetings are held once a month, where matters are reported such as
deliberations on the Audit & Supervisory Committee Meeting’s audit policy and audit plan, evaluationsof the accounting auditor, etc., and the results of the Audit & Supervisory Committee Member audits andinternal audits, and additional meetings are held as needed. A total of 13 meetings were held in this fiscal
year and the attendance of each Audit & Supervisory Committee Member at the Audit & Supervisory
Committee Meeting is as follows.
The full-time Audit & Supervisory Committee Members attend important meetings such as theManagement Committee and the Risk Management Committee, as well as Board of Director meetings ofsubsidiaries, and express opinions as necessary. In addition, they will share information on the content ofimportant meetings with independent Outside Audit & Supervisory Committee Members andcommunicate through exchanging opinions.
Attendance at Audit & Supervisory Board meetings
Category
Full-time Audit & Supervisory
Committee Member
Outside Audit & Supervisory
Committee Member
Outside Audit & Supervisory
Committee Member

Name

AttendanceShinichi Tominaga

13 times/13 times

Hidetaka Tanaka

13 times/13 times

Tsuneko Murata

13 times/13 times(ii) Internal audit
The internal audit of the Company has established the Internal Audit Office (three persons) as a department
under direct control of the President Representative Director. For the purpose of verifying theappropriateness and effectiveness of the internal control system for overall business operations, regular audit
is conducted in accordance with the internal audit plan based on the status of risk management in eachdepartment. In implementing the internal audit, we have asked each department to improve and correct thematters pointed out by the audit. For the audit results, we have prepared the internal audit report manual and
57/122

report to the President Representative Director. In addition, the Company holds regular meetings with the
Audit & Supervisory Committee and accounting auditor to exchange information and communicate witheach other to coordinate and to ensure that internal checks and balances function adequately.
A. Internal audit policy･ The business audit shall objectively evaluate the rational and effective business activities of eachdepartment based on the management policy and laws and regulations, etc. In addition, with regard to
the new system that will be implemented into operation, the status of the review of business processes
shall be checked, and appropriate business activities shall be maintained and improved.
･ Coordinate with the head of each department to solve problems and issues of the internal control systemof each department.
B. Internal audit priority items･ Understanding the company policy and monthly schedule, and grasping the progress of specific actionplans･ Correlation between approval documents such as request for approval and business execution/results･ Compliance with laws and regulations such as the Housing Construction Business Act, the Construction
Business Act, the Financial Instruments and Exchange Act, the Crime Proceeds Transfer Prevention Act,and the Personal Information Protection Act･ Contents of training and education in each department and status of effectiveness confirmation(iii) Accounting audit
A. Name of the Audit Corporation
BDO Sanyu
As for accounting audit, we have asked BDO Sanyu to provide audit throughout the period without being
biased towards the final audit. In addition to accounting audit, we receive advice on accounting issues andinternal control issues as needed.
B. The number of consecutive years they have conducted audits
24 years from the year ended March 2001
C. Certified public accountants who performed the work
Hitoshi Torii, Engagement Partner, Designated Partner
Tomoharu Takashima, Engagement Partner, Designated Partner
The Engagement Partner rotation is appropriately implemented, and in principle, have not been involvedin audit operations for more than seven consecutive accounting periods.
D. Composition of assistants who supported the audit work
5 Certified Public Accountants, Other 3 persons
Note: Other is those in charge of system audit.
E. Selection policy and reasons for the Audit Corporation
The Company has received an explanation from BDO Sanyu regarding the audit system, audit plan, etc.
of the Audit Corporation. The Company has determined that it is appropriate to select the Corporation as
the accounting auditor based on the “Accounting Auditor Selection and Evaluation Criteria” establishedby the Audit & Supervisory Committee as follows, comprehensively considering the independence of the
Corporation, its quality control system, its presence or absence of expertise, its level of understanding of
the Company’s business fields, audit remuneration, etc.
･ Accounting Auditor selection and assessment criteria(1) Audit system(2) Audit project(3) Quality of audit operations(4) Results of audit operations(5) Audit remuneration

58/122

F. Evaluations of Audit Corporations by Audit & Supervisory Committee
As a result of evaluating each item in accordance with the “Selection policy and reasons for the Audit
Corporation” established by the Audit & Supervisory Committee as described in “E” above, Audit &Supervisory Committee Members and the Audit & Supervisory Committee have determined that none of
the evaluation items poses any problem in terms of the accounting audit eligibility, independency,
reliability, etc.
(iv) Details of audit remuneration, etc.
A. Details of remuneration to auditors
Fiscal year ended March 31, 2023
Category

Fiscal year ended March 31, 2024

Remunerations for Remunerations for Remunerations for Remunerations foraudit services
non-audit services
audit services
non-audit services(million yen)(million yen)(million yen)(million yen)

The Company

38

-

41

-

Consolidated
subsidiaries

-

-

-

-

Total

38

-

41

-

For the previous fiscal year and current consolidated fiscal year, there are no applicable matters regarding
the content of non-business audit of the Certified Public Accountant to reporting companies.
B. Details of remuneration to individual member firms affiliated with the same network, to which auditors
belong (excluding “(A)”)
Not applicable.
C. Other material remunerations for audit services
Not applicable.
D. Policy on determining audit remuneration
The Company's audit remuneration for the audit by the Certified Public Accountant, etc. has been
determined by the Board of Directors with the consent of the Audit & Supervisory Committee as a resultof confirming the transition of audit time and audit remuneration under the audit plan, as well as the statusof the audit plan and actual results of this fiscal year, and examining the validity of the estimate of
remuneration amount.
E. Reason for the Audit & Supervisory Committee giving consent to remuneration for the accounting
auditors
The Audit & Supervisory Committee, based upon the “Practical Guidelines for Cooperation with Financial
Auditors,” released by the Japan Audit & Supervisory Board Members Association, confirmed the actual
number of audit hours and the amount of remuneration by audit category and hierarchy in the audit planfor the past years, as well as the status of the performance of duties by accounting auditor. As a result of
examining the appropriateness of this fiscal year’s audit plan and the amount of remuneration, the Audit& Supervisory Committee gives consent in accordance with Article 399, Paragraph 1 of the Companies
Act of Japan.
(4) Compensation(i) Matters pertaining to the policy for determining the amount of officers’ remuneration, etc. or the methods forcalculating such amountThe Company has established the following policies for determining the amount of remuneration, etc. forofficers and the method of calculating such amount (policies for determining the details of individual
remuneration, etc. for directors were resolved at Board of Directors on May 10, 2024).
The remuneration, etc., of the Company's directors (excluding outside directors) consists of fixed
remuneration, performance-linked remuneration and stock-based compensation (compensation for restricted
59/122

stock), with a target of 60% fixed remuneration, 30% performance-linked remuneration and 10% stockbased compensation (compensation for restricted stock).The fixed remuneration is an amount that is deemed
to be an appropriate level in comparison with the performance of other companies in the real estate industry,taking into consideration the duties of directors and the status of the Company. With a viewpoint of reflecting
the results of performance improvement, performance-linked remuneration is determined based on the
consolidated performance (Ordinary profit (loss)) for the fiscal year concerned, taking into consideration theachievement status for the consolidated performance forecast.
At the 23rd Annual General Meeting of Shareholders held on June 21, 2022, the Company resolved that the
maximum amount of remuneration, etc. for directors of the Company to be no more than 360 million yen
per year (including 36 million yen for outside directors, but excluding salaries for directors who concurrently
serve as employees). (The number of directors at the conclusion of the said General Meeting of Shareholders
was eight (including two outside directors)).
In consideration of the neutrality and independency of the functions of the audit, remuneration, etc. for
Directors who are Audit & Supervisory Committee Members, are integrated into fixed remuneration. At the23rd Annual General Meeting of Shareholders held on June 21, 2022, the limit of the remuneration, etc. for
Directors who are Audit & Supervisory Committee Members was set at 36 million yen per year. (At theconclusion of the General Meeting of Shareholders, the number of Directors who are Audit & Supervisory
Committee Members was three (including two outside directors)).
As for stock remuneration for directors other than Audit & Supervisory Committee Members (excluding
outside directors, hereinafter “Eligible Directors”), the Company has introduced the Restricted Stock (“RS”)
remuneration system for the purpose of providing an incentive for sustainable enhancement of our corporate
value and advancing a further sharing of value with the shareholders. The specific timing of payment andallocation to the Eligible Directors will be determined in the Board of Directors meetings after the
Nomination and Compensation Committee’s deliberation respecting the contents discussed by them. At the23rd Annual General Meeting of Shareholders held on June 21, 2022, it was resolved that the total numberof the Company's common shares to be issued to the Eligible Directors or disposed of shall be no more than
50,000 shares per year and the total amount of such remuneration shall be no more than 36 million yen peryear (the number of Eligible Directors at the conclusion of the said General Meeting of Shareholders was 6).
With regard to the amount of remuneration, etc., for directors of the Company or the method of calculatingsuch amount, the Company has established a voluntary Nomination and Compensation Committee consistingof the Chairman Representative Director and President Representative Director as well as two or more
Outside Directors in order to ensure the objectivity and transparency of the procedures for determining
remuneration for directors. The President Representative Director Seiichi Saito has the authority to preparea draft of the calculation method and the basic policy for the amount of remuneration, etc., of the Company's
directors. Based on the draft, the Nomination and Compensation Committee deliberates on the compositionof remuneration, etc., the ratio thereof, the method for calculating the setting of indicators, etc. The Board of
Directors has the authority to determine the policy regarding the determination of the amount of remuneration,etc., of the Company's directors or the method of calculating such amount. However, The Board of Directors
allows the President Representative Director to determine the amount of remuneration, etc., of the Company's
directors or the method of calculating such amount, while respecting the contents of discussions by the
Nomination and Compensation Committee to the maximum extent possible.
The Company has held 14 Nomination and Compensation Committee meetings in total since its
establishment on December 18, 2018. The Committee is attended by all members and deliberates mattersrelated to the election and dismissal of the Company's director and matters related to the amount of
remuneration, etc. Based on the deliberations of the Nomination and Compensation Committee, theCompany's Board of Directors has made a resolution regarding the amount of remuneration, etc. for director
or the method for calculating such amount.
In order to ensure the independency of the authority to make decisions regarding the amount of remuneration,etc. of the Company's Audit & Supervisory Committee Members or the method of calculating such amount,
Audit & Supervisory Committee Members have the authority to make decisions on policies regarding theamount of remuneration, etc. of each Audit & Supervisory Committee Member.
Moreover, the consolidated ordinary profit, the target indicator for performance-linked remuneration thisfiscal year, was 16,000 million yen with a total of 17,374 million yen. The decisions on the amount of
individual fixed remuneration and performance-linked remuneration or the method of calculating suchamount have been delegated to Chairman Representative Director, who can evaluate operations by each60/122director, through the participation of the Nomination and Compensation Committee. The Board of Directors
received a report from the Nomination and Compensation Committee and determined that the contents ofdirector's individual remuneration pertaining to this fiscal year, including the procedure and contents of thedecision by the Chairman Representative Director Tomoaki Horiguchi, are in line with the above decision
policy.
(ii) The total amount of remuneration, etc. by officer category, the total amount of remuneration, etc. by type,
and the number of eligible officers
Total Amountof
Total Amount by Type of Remuneration, etc.
Number ofClassification
Remuneration,(million yen)
Persons Paid
etc. Paid(million yen)
PerformanceFixed
StocklinkedRemuneration
Optionremuneration
Directors(excluding Audit &Supervisory Committee
257.2
160.2
70.0
27.0
6
Members and Outside
Directors)
Audit & Supervisory
Committee Members
12.0
12.0
1
(excluding Outside
Directors)
Outside Officers

26.0

26.0

-

-

4

(iii) Total amount of consolidated remuneration by officers
Not listed because there is no consolidated remuneration whose total amount is 100 million yen or more.
(iv) Important employee salaries for officers who also serve as employees
Not listed because there are no officers who concurrently serve as employees.
(5) Status of shareholdings(i) Classification of investment shares
The Company classifies investment shares into those held for pure investment purposes and those held for
purposes other than pure investment. Shares held solely for the purpose of gaining profits throughfluctuations in share value or dividends associated with the shares are classified as held for pure investment
purposes. Shares held for any other purposes are classified as held for purposes other than pure investment.
All investment shares held by the Company are classified as held for purposes other than pure investment.
(ii) Investment shares held for purposes other than pure investment
a. Method for Verifying the Holding Policy and Rationality of Holdings, and the Content of Verificationby the Board of Directors Regarding the Appropriateness of Holding Individual Stocks
The Company engages in strategic shareholding from a mid- to long-term perspective to enhance theCompany’s corporate value by maintaining and strengthening stable business relationships and close
cooperative relationships. Holding shares of business partners, assuming continuous transactions, isconsidered an effective means of building stable relationships and contributing to the enhancementof corporate value in the long term.
The rationality of holding these shares is periodically verified by comprehensively considering the
purpose and effects of the holdings. The appropriateness of holding individual stocks is examinedannually by the Board of Directors, taking into account the purpose and effects of the holdings, aswell as the recent status of the business relationship with the target company.

61/122b.

The number of stocks and the balance sheet amountThe number
Unlisted share
Shares other than unlisted
share

c.

3
1

The balance sheet amount(JPY million)
154
7

Information on the Number of Shares, Balance Sheet Amounts, etc. for Each Issue of Specified
Investment Stocks and Deemed Held Stocks
Not-applicable.

(iii)

Investment shares for the pure investment investment
Not-applicable(iv)

Changes Made During the Fiscal Year to the Purpose of Holding Investment Stocks from Pure
Investment Purposes to Non-Pure Investment Purposes
Not-applicable(v)

Changes Made During the Fiscal Year to the Purpose of Holding Investment Stocks from Non-Pure
Investment Purposes to Pure Investment Purposes
Not-applicable

62/122

Item. 5 Financial Information
1. Basis of preparation of the consolidated financial statements and the non-consolidated financial statements(1) The Company's consolidated financial statements are based on the “Ordinance on Terminology, Forms, andPreparation Methods of Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28 of1976).
(2) The Company’s non-consolidated financial statements are based on the “Ordinance on Terminology, Forms,
and Preparation Methods of Financial Statements, etc.” (Ordinance of the Ministry of Finance No. 59 of 1963.
Hereinafter referred to as the “Ordinance on Financial Statements, etc.”).
Also, the Company is qualified as a company submitting financial statements prepared in accordance withspecial provision and prepares financial statements in accordance with the provision of Article 127 of theOrdinance on Financial Statements, etc.
2. Audit certification
Pursuant to Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act of Japan, the consolidated
financial statements for the fiscal year from April 1, 2023 to March 31, 2024 and the non-consolidated financial
statements for the business year from April 1, 2023 to March 31, 2024 were audited by BDO Sanyu.
3. Particular efforts to secure the appropriateness of the consolidated financial statements, etc.
The Company carries out particular efforts to secure the appropriateness of consolidated financial statements, etc.
Specifically, for the purpose of both ensuring that the Company has an appropriate grasp of the contents of
Accounting Standards and related regulations, and properly preparing consolidated financial statements, etc., theCompany joined to the Financial Accounting Standards Foundation, and participating in seminars and other events
hosted by the foundation.

63/122

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements(i) Consolidated Balance Sheet(Unit: million yen)
As of March 31, 2023 As of March 31, 2024
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade and contract assets
Real estate for sale
Real estate for sale in process
Costs of uncompleted construction contracts
Supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Accumulated impairment
Buildings (net amount)
Land
Other
Accumulated depreciation
Accumulated impairment
Other (net amount)
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

64/12242,016*1) 1,625*2) 19,781*2) 60,254
57
87
2,080
-18
125,886

47,867*1) 2,138*2) 11,632*2) 95,081
50
104
2,680
-38
159,518*5) 13,416-3,878-8*2) 9,528*2,*5) 10,117
1,767
-995
-6
764
20,410*5) 14,486-4,438-8*2) 10,038*2,*5) 11,029
2,587-1,325-7
1,254
22,323

343
472
815

579
614
1,193

3,210
2,033
*3) 173-11
5,406
26,633
152,519

3,523
1,644
*3) 470-13
5,626
29,143
188,661

(Unit: million yen)
As of March 31, 2023 As of March 31, 2024
Liabilities
Current liabilities
Accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Provision for bonuses for directors
Provision for fulfillment of guarantees
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term borrowings
Retirement benefit liability
Provision for share-based remuneration
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

65/1222,10650*2) 5,442
1,699
237
73
*4) 22
6,731
16,3632,810
62*2) 12,207
2,967
279
80
*4) 44
6,314
24,767*2) 50,170
5
83
1,930
52,19068,5539,999*2) 57,272
1
97
2,105
69,477
94,244

11,965
6,445
62,289-270
80,43011,965
6,433
71,725-233
89,889

2
269
271
30
3,233
83,965
152,519

2
626
629
30
3,867
94,416
188,661(ii) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income(Unit: million yen)
For the year ended
March 31, 2023
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest and dividend income
Eviction fee received
Subsidy income
Foreign exchange gains
Income on investments based on equity method
Penalty income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on liquidation of subsidiaries and associates
Loss on investments based on equity method
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Government subsidy
Gain on liquidation of subsidiaries and associates
Gain on sale of shares of subsidiaries and associates
Other
Total extraordinary income
Extraordinary loss
Impairment loss
Loss on reduction of fixed assets
Loss on retirement of non-current assets
Loss on devaluation of investment securities
Other
Total extraordinary loss
Profit before income taxes
Corporate tax, resident tax and business tax
Corporate tax adjustments
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

66/122For the year ended
March 31, 2024

*1) 82,777*2) 59,971
22,805*3) 7,900
14,905*1) 79,868
53,462
26,405*3) 8,804
17,600

55
62
83
133
72
406

71
97
40
125
12
52
399

477
71
41
589
14,722

539
68
17
625
17,374232*4) 64
101
1
400

41
41

*5) 27
232
12
104
0
377
14,745
3,876
-852
3,024
11,721
108
11,612*5) 4841
30
120
17,295
4,808
464
5,272
12,023
106
11,917

Consolidated Statement of Comprehensive Income(Unit: million yen)
For the year ended
March 31, 2023
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income()
Owners of parent
Non-controlling interests

67/122For the year ended
March 31, 2024

11,721

12,023-1259*) 258
11,9800351*) 351
12,375

11,861
118

12,27995

(iii) Consolidated Statement of Changes in Equity
For the fiscal year ended March 31, 2023
(Unit: million yen)
Shareholders' equity
Share capital Capital surplus
Balance at beginning of the period
Changes during period
Dividends of surplus
Profit attributable to owners ofparentAcquisition of treasury shares
Disposal of treasury shares
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other thanshareholders' equity
Total changes during period
Balance at end of the period

11,965

6,445

Retainedearnings
52,917

Treasuryshares-67

Total
shareholders'equity71,260-2,240-2,24011,612

11,612
-239
36

-0
0

11,965

0
6,445

0

9,372
62,289-202-270

Accumulated other comprehensive
incomeShare
NonValuation
Total
Foreigndifference
accumulated Acquisitio controllingcurrency
n Rights interests
on availableothertranslation
for-salecomprehensive
adjustment
securities
incomeBalance at beginning of the period
3
19
22
30
3,139
Changes during period
Dividends of surplus
Profit attributable to owners ofparentAcquisition of treasury shares
Disposal of treasury shares
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other than
-1
250
249
94
shareholders' equity
Total changes during period
-1
250
249
94
Balance at end of the period
2
269
271
30
3,233

68/122

-239
36

9,169
80,430Total net
assets74,452-2,24011,612
-239
36
0
343
9,513
83,965

For the fiscal year ended March 31, 2024
(Unit: million yen)
Shareholders' equity
Share capital Capital surplus
Balance at beginning of the period
Changes during period
Dividends of surplus
Profit attributable to owners ofparentAcquisition of treasury shares
Disposal of treasury shares
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other thanshareholders' equity, net
Total changes during period
Balance at end of the period

11,965

6,445

62,289Total
shareholders'equity-270
80,430-2,481-2,481

11,917

11,917Retainedearnings

Treasuryshares-0
37

14

11,965

-27

0

-12
6,433

9,435
71,725

-27

37
-233

Accumulated other comprehensive
incomeShare
NonValuation
Total
Foreigndifference
accumulated Acquisition controllingcurrency
Rightsinterests
on availableothertranslation
for-salecomprehensi
adjustment
securities
ve incomeBalance at beginning of the period
2
269
271
30
3,233
Changes during period
Dividends of surplus
Profit attributable to owners ofparentAcquisition of treasury shares
Disposal of treasury shares
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other than
0
357
357
633
shareholders' equity, net
Total changes during period
0
357
357
633
Balance at end of the period
2
626
629
30
3,867

69/122

-0
51

9,459
89,889Total net
assets

83,965-2,481
11,917
-0
51
-27
991
10,45094,416

(iv) Consolidated Statements of Cash Flows(Unit: million yen)
For the year ended
March 31, 2023
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Loss (gain) on liquidation of subsidiaries and associates
Loss on reduction of fixed assets
Government subsidy
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses for directors
Increase (decrease) in provision for fulfillment ofguarantees
Increase (decrease) in provision for share-based
remuneration
Interest and dividend income
Subsidy income
Interest expenses
Loss (gain) on investments based on equity method
Loss on retirement of non-current assets
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Other
SubtotalInterest and dividends received
Interest paid
Income taxes refund (paid)
Proceeds from subsidy income
Proceeds from government subsidy
Proceeds from settlement
Other
Net cash provided by (used in) operating activities
Cash flows from investing activities
Proceed from sales of shares of subsidiaries and associates
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Payments of guaranteed deposits
Proceeds from collection of lease and guarantee deposits
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Other
Net cash provided by (used in) investing activities

70/122For the year ended
March 31, 2024

14,745*2) 1,968
27
64
-64
232
-232
6
-87
-0

17,295*2) 2,124
48
75
68
41
-41
20
27
6

-17

21

15

13

-55
-62
477
71
12
409
1,854
1,155
1,751
22,27455-490-5,729
62
232
150
-10
16,544

-71
-40
539
-12
30
-1,187-26,770114
580-7,11571-536-3,50540
41-11,003

125
-100
100
-7,531
27
-312
-692
2,337

-0
100
-2,457
0
-275
-581
205

-478

-954

-155
-6,681-291-4,254

(Unit: million yen)
For the year ended
March 31, 2023
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Dividends paid
Proceeds from issuance of bonds
Purchase of treasury shares
Proceeds from share issuance to non-controllingshareholders
Payments for refunds to non-controlling shareholders
Proceeds from sales of shares in subsidiaries not resulting
in change in scope of consolidation
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

71/122For the year ended
March 31, 2024

20
23,261-18,691-2,239-239

832,558-18,991-2,481
9,999
-0

1

46

-69

-94

4

-

-5
2,039
59
11,962
29,951*1) 41,914-5
21,040169
5,951
41,914*1) 47,866

Notes(Notes on Going Concern Assumption)
Not applicable.
(Significant Accounting Policies for the Preparation of Consolidated Financial Statements)
1. Scope of Consolidation
All subsidiaries are consolidated.
(1) Number of consolidated subsidiaries
26 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.
Nihon Toshi Hotel Kaihatsu Co. Ltd.
Sun Frontier NY Co., Ltd.
The scope of consolidation included 3 companies acquired through stock acquisition and 2 companies newly
established in the consolidated fiscal year under review. One of these companies was excluded from thescope of consolidation because it was dissolved by merger. In addition, one company was excluded from thescope of consolidation due to liquidation.
Nihon Toshi Hotel Kaihatsu Co. Ltd., whose shares were acquired in the current consolidated fiscal year, isonly included in the consolidated balance sheet for the current consolidated fiscal year because the deemed
date of acquisition is the end of the current consolidated fiscal year.
(2) Special purpose company subject to disclosure
An outline of the special purpose company subject to disclosure, an outline of transactions using thespecial purpose company subject to disclosure, and the transaction amount with the special purpose
company subject to disclosure are described in “Notes on special purpose company subject to disclosure.”
2. Application of Equity Method(1) Number of affiliates accounted for by the equity method
1 company
Name of equity-method affiliate
Power Consulting Networks Co., Ltd.
(2) Names of major affiliates not accounted for by the equity method
Not applicable.
3. Fiscal year of consolidated subsidiaries
Domestic consolidated subsidiaries and 1 foreign consolidated subsidiary close their books on March 31,
and Sun Frontier NY Co., Ltd. and 9 other subsidiaries 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.

4. Matters concerning accounting policies(1) Valuation standards and methods for significant assets(i) Securities
Other securities (available-for-sale securities)
A. Other than shares without a market price72/122

Mark-to-market accouting is adopted (Valuation differences are processed using the full net asset
direct method, and the cost of sales is calculated using the moving average method)
B. Shares without a market price, etc.
Stated at cost determined by moving-average method.
(ii) Inventories
A. Real estate for sale and real estate for sale in process
Stated at cost determined by specific identification method (Balance Sheet values are calculated by
the book value devaluation method based on decline in profitability).
Property under lease is amortized in accordance with property, plant and equipment.
B. Costs of uncompleted construction contracts
Stated at cost determined by specific identification method (Balance Sheet values are calculated by
the book value devaluation method based on decline in profitability).
C. Supplies
Stated at most recent purchase cost method (Balance Sheet values are calculated by the book value
devaluation method based on decline in profitability).
(2) Depreciation or amortization method for significant depreciable assets(i) Property, plant and equipment
Using the declining-balance method. However, buildings (excluding facilities attached to buildings)
and facilities attached to buildings acquired on or after April 1, 2016 are depreciated using the straightline method.
The main estimated useful lives are as follows:
Buildings 3 to 29 years
Others2 to 15 years
Small-amount depreciable assets with an acquisition cost of 100,000 yen or more than 100,000 yen
but less than 200,000 yen are depreciated over 3 years on a straight-line basis.
(ii) Intangible assets
Using the straight-line method.
Software for internal use is amortized on a straight-line basis over the estimated internal useful life (5years).
(3) Standards for significant provisions(i)Allowance for doubtful accounts
The allowance for doubtful accounts is provided based on the historical write-off rate for ordinary
receivables and the estimated amount of irrecoverable debt based on recoverability of individual cases
for specified receivables such as doubtful accounts.
(ii) Provision for bonuses
In order to prepare for the payment of bonuses to employees, the Company records the portion of theestimated bonuses incurred at the end of the consolidated fiscal year under review.
(iii) Provision for bonuses for directors
In order to prepare for directors' bonuses is provided based on the estimated amount incurred at theend of the consolidated fiscal year under review.
(iv) Provision for fulfillment of guarantees
In order to prepare for losses related to Rent Guarantee Business operations, expenses for which theamount incurred can be estimated individually are recorded in the amount of such expenses, and forothers are recorded in the estimated losses by taking into the historical loss rate.
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(v) Provision for share-based remuneration
In order to prepare for the Company's shares to employees based on the Share Benefit Regulations,the provision is recorded based on the estimated amount of the share benefit obligation at the end of
the consolidated fiscal year under review.
(4) Accounting treatment for retirement benefits
In calculating the retirement benefit liability and retirement benefit expenses, certain consolidated
subsidiaries apply the simplified method where the amount of retirement benefits payable at the end of
the fiscal year for voluntary resignations is the retirement benefit obligation.
(5) Standards for recording significant revenues and expenses
The details of major performance obligations in major businesses related to revenue arising from contracts
with customers of the Company and its consolidated subsidiaries and the normal point in time when such
performance obligations are satisfied (the time when revenue is recognized) are as follows.
(i) Real Estate Revitalization Business
Replanning Business
Replanning Business is a business of purchasing existing office buildings, renovating the buildings
and facilities, and selling them to customers in Japan and overseas with added value by attracting
high-quality tenants. The Company is obligated to handover the properties based on real estate sales
contracts with customers.
The performance obligation is satisfied at one point in time when the property is delivered, andrevenue is recorded at the time of delivery of the property.
(ii) Real Estate Service Business
A. Property Management Business
Property Management Business enters into property management agreements with customers andis obligated to perform various services related to real estate properties on behalf of customers,such as maintenance and management of properties and rents collection from tenants.
The performance obligations are satisfied when services are provided based on the property
management contract, and revenue is recorded over the term of the contract.
B. Building Maintenance Business
Building Maintenance Business is mainly responsible for the inspection of building facilities byentering into various contracts with customers or exchanging purchase orders with contract
documents.
The performance obligation is satisfied when the work based on the contract is completed, andrevenue is recorded when the completion report for the work and construction is issued.
C. Sales Brokerage Business
Sales Brokerage Business stands between the buyer and the seller at the time of sale and purchaseof real estate and is engaged in concluding sales and purchase agreements. Based on brokerage
agreements with customers, the Company is responsible for a series of services, including
concluding agreements such as negotiation and adjustment of transaction terms, delivery andexplanation of important points, preparation and delivery of agreements, and participation inprocedures for performance of agreements.
The performance obligation is satisfied at one point in time when the property related to the realestate sales contract concluded by the intermediary contract is hand overed, and revenue is recordedat the time of the delivery.
D. Leasing Brokerage Business
When leasing real estate, Leasing Brokerage Business stands between the lessee and the lessor toconclude a lease agreement. Based on brokerage agreements with the customers, the Company is
responsible for a series of services, including concluding agreements such as negotiation andadjustment of transaction terms, delivery and explanation of important points, preparation anddelivery of agreements, and participation in procedures for performance of agreements.
The performance obligation is satisfied at one point in time when the real estate lease agreement
for the property mediated by the mediation agreement is concluded, and revenue is recorded at thetime when the agreement is concluded.
(iii) Hotel and Tourism Business
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A. Hotel Operation Business
Hotel Operation Business is mainly engaged in the operation of hotels owned by the Company or
which lease agreements have been entered into. It is obligated to provide hotel services toaccommodate customers and meals at restaurants established within the hotel.
Such performance obligations are satisfied at a point in time by providing services to customers,
and revenue is recorded at the time of customer check-in.
B. Hotel Development Business
Hotel Development Business is engaged in the business of selling hotels that have been completed
from the purchase of land to the construction and is obligated to deliver such properties based onreal estate sales contracts with customers.
The performance obligation is satisfied at one point in time when the property is delivered, andrevenue is recorded at the time of delivery.
(iv) Others
A. Overseas Development Business
Overseas Business is engaged in real estate development centered on condominiums and residents
in Southeast Asian countries and sells them to customers in Japan and overseas. It is obligated tohandover such properties based on real estate sales contracts with customers.
The performance obligation is satisfied at one point in time when the property is delivered, andrevenue is recorded at the time of delivery.
B. Construction Business
The Company carries out renewal planning, repair and renovation work of commercial buildings,
telecommunications work, and contracted interior construction work for large, medium and small
sized facilities.
When control over a good or service is transferred to a customer over a period of time, revenue isrecognized over a period of time as the obligation to transfer the good or service to the customer issatisfied.
The Company applies an alternative treatment to contracts in which the period from the transaction
start date in the contract to the point in time when the performance obligations are expected to be
fully satisfied is very short, or construction in which the amount of order received per construction
unit is insignificant. Revenue is not recognized over a certain period but is recognized when theperformance obligations are fully satisfied.
(6) 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 and liabilities of foreign subsidiaries are translated into Japanese yen at theexchange rates prevailing at the respective balance sheet dates of the foreign subsidiaries, and income
and expenses are translated at the average exchange rate of the year. Translation differences are included
in foreign currency translation adjustment and non-controlling interests in net assets.
(7) Amortization methods and periods for goodwill
Goodwill is amortized on a straight-line basis over mainly 10 years.
(8) Scope of funds in the consolidated statements of cash flows
Cash on hand, deposits that can be withdrawn at any time, and short-term investments that are readily
convertible into cash and that are subject to insignificant risk of changes in value and that mature or
become due within 3 months of the date of acquisition.
(9) Significant matters for the preparation of other consolidated financial statements(i) Non-deductible consumption tax accounting for assets
Non-deductible consumption tax and local consumption tax are treated as current consolidated fiscal
year expenses.
(ii) Application of Group Tax Sharing System
The Company and certain consolidated domestic subsidiaries apply the Group Tax Sharing System.
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(Significant Accounting Estimates)
1. Assessment of real estate for sale, etc.
(1) Amount included in consolidated financial statements of the current consolidated fiscal year
Current consolidated
Previous fiscal year
fiscal year
Real estate for sale

19,781 million yen

11,632 million yen

Real estate for sale in process

60,254 million yen

95,081 million yen(2) Information on significant accounting estimates related to the identified items
For real estate for sale, etc., if the net selling price falls below the acquisition cost, the net selling price isstated as 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 in the business plan that forms the basis for the value of the return to profits
includes the expected future tenant rent and average unit price and occupancy rate of hotel rooms and isbased on important assumptions such as the assumed market conditions in the future.
In the following fiscal year, the net selling price may change due to changes in assumptions used informulating business plans in the event of 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., recognizedin 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
Current consolidated
Previous fiscal year
fiscal year
Non-current assets related to Hotel Development
11,648 million yen
12,354 million yen
Business and Hotel Operation Business(2) Information on significant accounting estimates related to the identified items
If a hotel shows an indication of impairment, the determination of impairment loss recognition is basedon the hotel’s business plan and a comparison of the estimated undiscounted future cash flows over theremaining 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 thepolicy 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
used in 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., recognizedin the consolidated financial statements for the following fiscal year and thereafter.
(Changes in Accounting Policies)(Change in translation method for income and expenses of overseas subsidiaries)
Income and expenses of overseas subsidiaries were previously translated into Japanese yen at the spot exchange
rates on the closing date of such subsidiary. From the beginning of the current fiscal year, the translation method
was changed to use the average exchange rate of the fiscal year. This change was made in order to mitigate theeffect of temporary fluctuations in foreign exchange rates on the profits and losses and more appropriately reflect
the performance of overseas subsidiaries in the consolidated financial statements, as the impact on the profits
and losses of overseas subsidiaries is expected to become more important due to the expansion of the Group’s
overseas operations amid the increasing range of exchange rate fluctuations caused by the increasingly complex
international situation in recent years.
As the effect of this change is insignificant, it has not been applied retroactively.
(Accounting standards not yet applied)
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(“Accounting Standard for Current Income Taxes” etc.)
・“Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27, October 28, 2022)
・“Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25,
October 28, 2022)
・“Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, October28, 2022)(1) Overview
The purpose of these accounting standards is to determine the classification of corporate income taxes
where tax is imposed on other comprehensive income and the treatment of tax effects related to thesale of shares of subsidiaries when the group tax sharing system is applied.
(2) Scheduled date of application
Application is scheduled from the beginning of the fiscal year ending March 31, 2025.
(3) Impact of the application of the accounting standards, etc.
The amount of impact on the consolidated financial statements from the application of the“Accounting Standard for Current Income Taxes” and other standards has not been determined at thistime.
(Change of Presentation Method)(Consolidated Statement of Income)“Loss on retirement of non-current assets,” which was included in “Other” under “Extraordinary loss” in theprevious fiscal year, is presented separately from the current consolidated fiscal year because it exceeded
10/100 of the total amount of extraordinary loss. To reflect this change, consolidated financial statements forthe previous fiscal year have been reclassified.
As a result, 12 million yen, which was included in “Other” under “Extraordinary loss” in the previous fiscal
year's Consolidated Statement of Income, has been reclassified as 12 million yen in “Loss on retirement of
non-current assets” and 0 million yen in “Other.”(Consolidated Statement of Cash Flows)“Purchase of shares of subsidiaries resulting in change in scope of consolidation,” which was included in“Other” of “Cash flows from investing activities” in the previous fiscal year, is presented separately from thecurrent consolidated fiscal year due to an increase in its financial significance. To reflect this change inpresentation method, Consolidated Financial Statements has been reclassified for the previous fiscal year.
As a result, “Other” of -634 million yen in “Cash flows from investing activities” in the consolidated statementof cash flows for the previous fiscal year, have been reclassified as “Purchase of shares of subsidiaries resulting
in change in scope of consolidation” of -478 million yen and “Other” of -155 million yen.
(Additional Information)
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 and managed separately as trust assets.
The total amount method is applied to the Employee Stock Ownership Plan (J-ESOP) in accordance withthe “Practical Solution on Transactions of Delivering the Company’s Own Stock 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 at the endof the previous fiscal year were 157 million yen and 128,300 shares and at the end of the current fiscal
year were 157 million yen and 128,300 shares.
(Related to Consolidated Balance Sheet)
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* 1 Within notes, accounts receivable and contract assets, the amounts of claims and contracted assets arisingfrom contracts with customers are shown in “Notes (Revenue Recognition) 3. (1) Balance of contract
assets and contract liabilities” of the Consolidated Financial Statements.
* 2 Collateralized assets and liabilities(1) Assets pledged as collateral are as follows.

Real estate for sale

For the year ended
March 31, 2023
18,060 million yen

For the year ended
March 31, 2024
9,109 million yen

Real estate for sale in process

55,88087,692

Buildings

7,998

7,777

Land

9,772

10,236

91,712 million yen

114,815 million yen

Total(2) Collateralized obligations are as follows.

For the year ended
March 31, 2023
Long-term borrowings(including current portion of long-termborrowings)
Total

For the year ended
March 31, 2024

52,333 million yen

66,349 million yen

52,333 million yen

66,349 million yen* 3 Items relating to affiliated companies are as follows.
For the year ended
March 31, 2023
Other (shares of subsidiaries and
30 million yen
affiliates)

For the year ended
March 31, 2024
43 million yen* 4 Contingent liabilities
Liability guarantee by rent guarantee
For the year ended
March 31, 2023

For the year ended
March 31, 2024

(Guarantee)
Customers pertaining to Rent
Guarantee Business(amount equivalent to the guaranteed
limit)

47,416 million yen

Provision for fulfillment of guarantees
Total

-22
47,393 million yen

50,535 million yen-44
50,490 million yen* 5 Reduction entry amountThe reduced entry amount deducted from the acquisition cost of property, plant and equipment throughgovernment subsidies, etc. is as follows.
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Buildings
200 million yen
41 million yen
Land
Total

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232 million yen

41 million yen

(Related to Consolidated Statement of Income)* 1 Revenue arising from contracts with customers
Revenue arising from contracts with customers and other revenue are not presented separately for net sales.
The amount of revenue arising from contracts with customers is shown in Consolidated Financial
Statements “Notes (Segment Information, etc.) 3. Information on net sales, profit or loss, assets, liabilities
and other items and disaggregation of revenue for each reportable segment.”* 2 Ending inventory is the amount after write-down of book value by decline in profitability. The
following loss on revaluation of inventories is included in cost of sales.
For the year ended
March 31, 2023

For the year ended
March 31, 2024
14 million yen- million yen* 3 Major expense items and amount in selling, general and administrative expenses are as follows.
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Sales commission
451 million yen
568 million yen
Salaries and allowances
2,560
2,817
Retirement benefit costs
74
85
Provision for bonuses provision
186
216
Provision for bonuses for directors
73
79(and other officers) provision
Provision for share-based
14
12
remuneration provision
Allowance for doubtful accounts
13
3
provisionCommission paid
1,076
1,371
* 4 The breakdown of gain on sales of non-current assets is as follows.
For the year ended
March 31, 2023
Other (vehicles)
Total

64 million yen
64 million yen

For the year ended
March 31, 2024
- million yen- million yen

The gain on liquidation of subsidiaries and associates is due to the liquidation of one U.S. subsidiary(RIVERSIDE STUDIOS LLC).
* 5 Impairment loss
The Company recorded impairment loss for the following asset groups.
For the year ended March 31, 2023
Location

Use

Type

Impairment loss
(million yen)Matsudo, Chiba

Common assets

Land, buildings, etc.

22

Narita, Chiba

Business assets

Buildings

5

In calculating impairment loss, the Company identifies the smallest unit that generates independent cash
flows based on the business segment and groups assets. Assets that do not generate cash flows independently,
such as the head office, are common assets.
As a result of a review of the present value of common assets held by some consolidated subsidiaries in
conjunction with the sale, the recoverable amount fell below the book value. Therefore, the book value was
79/122

reduced to the recoverable amount, and the decrease was recorded in extraordinary loss. The sale of thecommon assets was completed during the fiscal year under review.
In addition, as a result of a review of the company's future revenue outlook for business assets, etc. held bysome consolidated subsidiaries, the recoverable amount of the cash-generating unit (asset group) fell below
the book value. Therefore, the book value was reduced to the recoverable amount and the decrease wasrecorded in extraordinary loss.
The recoverable amount of the asset or asset group is measured by the net selling price or the value in use.
The net selling price is calculated based on the non-current assets tax valuation, and the value in use is zero
because future cash flows are not expected.
For the year ended March 31, 2024
Location
Sumida-ku, Tokyo

Use

Impairment loss
(million yen)

Type

Business assets

Goodwill48

In calculating impairment loss, the Company identifies the smallest unit that generates independent cash
flows based on the business segment and groups assets. Assets that do not generate cash flows independently,
such as the head office, are common assets.
Regarding goodwill related to Japan System Service Inc. which was merged into SF Building MaintenanceInc., one of the Company's consolidated subsidiaries, in the fiscal year ended March 31, 2023, due tochanges in the business environment and other factors, there was a discrepancy between the business planat the time of the merger, which was the basis for the calculation of goodwill, and the actual results.
Therefore, the book value of the goodwill was reduced to the recoverable amount and impairment loss wasrecorded under extraordinary loss.
The recoverable amount is measured based on the value in use, and the value in use is zero because no
future cash flows are expected.
(Consolidated statements of Comprehensive Income)* Reclassification adjustment and tax effect related to other comprehensive income
For the year ended
March 31, 2023
Valuation difference on availablefor-sale securities
Current amount incurred
Reclassification adjustment
Before tax effect adjustment
Tax effect
Valuation difference on availablefor-sale securities
Foreign currency translation
adjustment
Current amount incurred
Reclassification adjustment
Foreign currency translation
adjustment
Total other comprehensive income

For the year ended
March 31, 2024

-1 million yen-

0 million yen
-

-1
0

0
-0

-1

0

366
-106

284
66

259

351

258

351

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(Notes to Consolidated Statement of Changes in Equity)
For the year ended March 31, 2023
1. Total number of issued shares
Beginning of theType of shares
current consolidated
Increase
fiscal year
Common shares

48,755,500 shares

End of the current
consolidated fiscal
year

Decrease--

48,755,500 shares(Summary of Reasons for Change)
Not applicable.
2. Matters concerning Treasury shares
Beginning of theType of shares
current consolidated
fiscal year
Common shares

56,644 shares

Increase

Decrease

215,989 shares

35,464 shares

End of the current
consolidated fiscal
year
237,169 shares

Note: 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 main changes of treasury shares of common shares was due to an increase of 143,800 shares due to theacquisition 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 thepurchase of fractional shares. This was despite a decrease of 35,124 shares due to the disposal of treasury
shares through the restricted shares remuneration system.
3. Matters related to share acquisition rights
Number of shares to be issued (shares)
Company
Name

BreakdownType of Beginning ofEnd of theshares tothe current
current
be issued consolidated Increase Decrease consolidated
fiscal year
fiscal year

Balance at theend of thecurrent
consolidated
fiscal year
(million yen)2018 Share
Submitting Acquisition
company Rights as
Stock Option

-

-

-

-

-

5

2019 Share
Submitting Acquisition
company Rights as
Stock Option

-

-

-

-

-

5

2020 Share
Submitting Acquisition
company Rights as
Stock Option

-

-

-

-

-

4

2021 Share
Submitting Acquisition
company Rights as
Stock Option

-

-

-

-

-

14

-

-

-

-

30

Total

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4. Matters concerning dividends(1) Cash dividends paid
Resolution
AnnualGeneralMeeting of
Shareholders,June 21, 2022

Total amount of
Dividends perType of shares
dividends
share (yen)(million yen)

Common shares

1,121

Record date

23.00 March 31, 2022

Effective dateJune 22, 2022

Board ofDirectors,
September 30,
December 6,
Common shares
1,118
23.00
November 10,
2022
2022
2022
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 by 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 (J-ESOP).
(2) Dividends whose record date is in current consolidated fiscal year and whose effective date is in thefollowing fiscal year
Total amount Dividends per
Source of
Resolution Type of sharesof dividends
share
Record date Effective datedividends(million yen)
(yen)
Board ofDirectors,
CommonRetained
March 31,
1,216
25.00
June 28, 2023
May 16,
sharesearnings
2023
2023
Note: The total amount of dividends decided by the Board of Directors on May 16, 2023 includes dividendsof 3 million yen for the Company's shares held by the trust account of the Employee Stock Ownership
Plan (J-ESOP).

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For the year ended March 31, 2024
1. Total number of issued shares
Beginning of theType of shares
current consolidated
fiscal year
Common shares

Increase

48,755,500 shares

End of the current
consolidated fiscal
year

Decrease--

48,755,500 shares(Summary of Reasons for Change)
Not applicable.
2. Matters concerning Treasury shares
Beginning of theType of shares
current consolidated
fiscal year
Common shares

237,169 shares

Increase

Decrease

1,985 shares

35,946 shares

End of the current
consolidated fiscalyear
203,208 shares

Note: 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 main reason for the change in the number of treasury shares in common shares is that there was anincrease of 1,934 shares due to the purchase of treasury shares as eligible employees who were granted
remuneration of restricted stock lost their rights and an increase of 51 shares due to the purchase of
fractional shares, while there was a decrease of 35,946 shares due to the disposition of treasury shares forthe issuance for remuneration of restricted stock.
3. Matters related to Share Acquisition Rights
Balance at theend of the
End of thecurrent
current
consolidated
Increase Decrease
consolidated
fiscal year
fiscal year
(million yen)

Number of shares to be issued (shares) Note 2
Company
Name

BreakdownType of Beginning ofshares to the current
be issued consolidated
fiscal year2018 Share
Submitting Acquisition
company Rights as
Stock Option

-

-

-

-

-

5

2019 Share
Submitting Acquisition
company Rights as
Stock Option

-

-

-

-

-

5

2020 Share
Submitting Acquisition
company Rights as
Stock Option

-

-

-

-

-

4

2021 Share
Submitting Acquisition
company Rights as
Stock Option

-

-

-

-

-

14

Share
acquisition
Submitting rights in 1st
company Series
Unsecured
Convertible

Commonshares6,434,900-

6,434,900

Note 1

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Bonds with
Share
Acquisition
RightsTotal- 6,434,900-

6,434,900

30

Notes: 1. Convertible bonds with share acquisition rights are accounted for by the lump-sum method.
2. Number of shares to be issued is the number of shares assuming that the share acquisition rights havebeen exercised.
(Summary of Reasons for Change)
Increase due to issuance of share acquisition rights relating to 1st
Series Unsecured Convertible Bonds with Share Acquisition Rights

6,434,900 shares

4. Matters concerning dividends(1) Cash dividends paid
Resolution

Type of shares

Board ofDirectors,
May 16, 2023

Common shares

Total amount of
Dividends per
dividends
share (yen)(million yen)
1,216

Record date

25.00 March 31, 2023

Effective dateJune 28, 2023

Board ofDirectors,
September 30,
December 5,
Common shares
1,265
26.00
November 9,
2023
2023
2023
Notes:1. The total amount of dividends decided by the Board of Directors on May 16, 2023 includes
dividends of 3 million yen for the Company's shares held by the trust account of the Employee
Stock Ownership Plan (J-ESOP).
2. The total amount of dividends decided by the Board of Directors on November 9, 2023 includes
dividends of 3 million yen for the Company's shares held by the trust account of the Employee
Stock Ownership Plan (J-ESOP).
(2) Dividends whose record date is in current consolidated fiscal year and whose effective date is in thefollowing fiscal year
Total amount Dividends per
Source of
Resolution Type of sharesof dividends
share
Record date Effective datedividends(million yen)
(yen)
Board ofDirectors,
CommonRetained
March 31,
1,553
32.00
June 26, 2024
May 21,sharesearnings
2024
2024
Notes:1. The total amount of dividends decided by the Board of Directors on May 21, 2024 includes
dividends of 4 million yen for the Company's shares held by the trust account of the Employee
Stock Ownership Plan (J-ESOP).
2. Dividends per share include the 25th anniversary commemorative dividend of 2 yen per share.

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(Consolidated Statements of Cash Flows)* 1 The relationship between cash and cash equivalents at end of period and amount in item listed in
Consolidated Balance Sheet is as follows.
For the year ended
March 31, 2023
Cash and deposits accountTime deposits with a deposit
period of more than 3 months
Cash and cash equivalents

42,016 million yen

For the year ended
March 31, 2024
47,867 million yen-101
41,914 million yen-147,866 million yen* 2 Depreciation for Inventories under lease included in Depreciation is as follows.
For the year ended
March 31, 2023
1,107 million yen

For the year ended
March 31, 2024
1,070 million yen(Lease Transactions)Operating lease transactions(Lessee)
Future minimum lease payments for non-cancelable operating lease transactions
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Within one year
1,479 million yen
2,149 million yen
Over one year
10,564
15,945
Total
12,043 million yen
18,095 million yen(Financial Instruments)
1. Items relating to financial instruments(1) Policy on financial instruments
The Company 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 of bonds and shares, etc., taking into comprehensive consideration thecharacteristics 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 to engage in speculative transactions.
(2) Content and risks of financial instruments
Trade receivables are exposed to customers’ credit risk.
Borrowings raised funds mainly for investment in business purposes and business strategies. Variableborrowings are exposed to interest rate fluctuation risk. Borrowings, which procures funds mainly fromfinancial institutions, is exposed to liquidity risks that restrict fund procurement due to changes in the
stance of transactions with the Group.
Corporate bonds are procured mainly for capital investment and do not bear interest.
(3) Risk management system for financial instruments(i) 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.

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(ii) Management of market risks (risks related to market price fluctuations)
Derivative transactions are not conducted for speculative purposes not stipulated in the derivativetransactions management regulations.
(iii) 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
and financial position, and by strengthening relationships with financial institutions.
(4) Supplementary explanation of fair value of financial instruments
Since variable factors are incorporated in the calculation of the value, the value may fluctuate by adopting
different assumptions, etc.
2. Fair value of financial instruments
The Consolidated Balance Sheet amount, market value and the difference between the two are as follows.
For the year fiscal year March 31, 2023
Consolidated Balance
Sheet amount(million yen)

Market value(million yen)

Difference(million yen)

Long-term borrowings(including current portion)

55,61354,240-1,373

Total liabilities

55,61354,240-1,373For the year fiscal year March 31, 2024
Consolidated Balance
Sheet amount(million yen)

Market value(million yen)

Difference(million yen)

Corporate bonds

9,999

9,156

-843

Long-term borrowings(including current portion)

69,47967,288-2,191

Total liabilities

79,47976,444-3,035

Notes: 1. Methods for calculating the market values of financial instruments and derivative transactions
AssetsCash and deposits
Information is omitted because it is cash, and the market value approximates the book value
because the deposits are settled in a short period of time.
Liabilities
Corporate bonds and long-term borrowings
The market value of corporate bonds and long-term borrowings is calculated by discounting
by the rate assumed in the case where the same financing is conducted for the bonds and longterm borrowings classified by a certain period.
Notes: 2. The Consolidated Balance Sheet amounts of financial instruments, such as stocks without market
price are as follows:(million yen)
For the year ended
For the year ended
Category
March 31, 2023
March 31, 2024
Shares of subsidiaries and30
43affiliates
Shares of unlisted companies

158
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155

The above items are not included in “2. Fair value of financial instruments” because there is nomarket price, and it is extremely difficult to grasp the fair value.
Notes: 3. Redemption schedule of cash receivables after consolidated close date
For the year ended March 31, 2023
Over 1 year and Over 5 years andWithin 1 year
within 5 years
within 10 years(million yen)(million yen)(million yen)
Cash and
42,016
deposits
Total

42,016

Over 10 years(million yen)
-

-

-

-

Over 1 year andwithin 5 years(million yen)Over 5 years andwithin 10 years(million yen)

47,867---47,867---For the year ended March 31, 2024
Within 1 year
(million yen)
Cash anddeposits
Total

Over 10 years(million yen)

Notes: 4. Scheduled repayment amount of short-term borrowings and long-term borrowings after
consolidated close date
For the year ended March 31, 2023
Over 2 years Over 3 years Over 4 years
Over 1 year andWithin 1 year
and within 3
and within 4
and within 5Over 5 years
within 2 years(million yen)
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
Total

5,492

17,585

12,421

3,665

6,473

10,023

Over 2 years
Over 1 year andWithin 1 year
and within 3
within 2 years(million yen)
years
(million yen)(million yen)Over 3 years
and within 4
years(million yen)Over 4 years
and within 5
years(million yen)Over 5 years(million yen)

For the year ended March 31, 2024

Short-termborrowings
Corporatebonds
Long-term
borrowings
Total

62

-

-

-

-

-

-

-

-

-

9,999

-

12,207

12,762

18,100

5,149

9,465

11,794

12,26912,762

18,1005,149

19,465

11,794

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3. Matters concerning the breakdown of the market value of financial instruments by level
The market value of financial instruments is classified into the following three levels according to the input,
observability and importance of Calculation of Market Value.
Level 1 market value: market value of the same asset or liability based on the quoted (unadjusted) price inan active market
Level 2 market value: market value calculated using directly or indirectly observable inputs other than Level
1 inputs
Level 3 market value: market value calculated using significant unobservable inputs
If multiple inputs that significantly affect the calculation of market value are used, the market value isclassified at the lowest priority level in the calculation of market value among the levels to which each of
those inputs belongs.
(1) Financial instruments recorded Consolidated Balance Sheet at market value
Previous consolidated fiscal year (March 31, 2023)
There are no applicable matters.
Current consolidated fiscal year (March 31, 2024)
There are no applicable matters.
(2) Financial instruments other than those recorded Consolidated Balance Sheet at market value
Previous consolidated fiscal year (March 31, 2023)
Category

Market value (million yen)
Level 1Long-term borrowings

Level 2-

Level 354,240

Total-

54,240Current consolidated fiscal year (March 31, 2024)
Category

Market value (million yen)
Level 1

Level 2

Level 3

Total

Corporate bonds

-

9,156

-

9,156

Long-term borrowings-

67,288-67,288

Note: Explanation of valuation techniques used to calculate market value and inputs to calculate market
value
1. Corporate bonds
The market value of the corporate bonds issued by Company are calculated using the discounted
present value method based on the total amount of principal and interest, the interest rate taking
into account the remaining period and the credit risk of the corporate bond. They are classified as
Level 2 market value.
2. Long-term borrowings
These market values are calculated using the discounted present value method based on the total
amount of principal and interest, the interest rate taking into account the remaining period and thecredit risk of the liability. They are classified as Level 2 market value.
(Securities)
Other securities (available-for-sale securities)
For the year ended March 31, 2023
Omitted due to lack of importance.
For the year ended March 31, 2024
Omitted due to lack of importance.

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(Derivative Transactions)
1. Derivative transactions for which hedge accounting is not applied
Not applicable.
2. Derivative transactions for which hedge accounting is applied
Interest rate related
For the year ended March 31, 2023
Not applicable.
For the year ended March 31, 2024
Not applicable.
(Retirement Benefits)
1. Overview of stated retirement benefit plans
The Company and certain of its consolidated subsidiaries implement the defined contribution pension plans.
Certain consolidated subsidiaries implement the lump-sum retirement allowance plans and apply thesimplified method for calculating retirement benefit liability and retirement benefit expenses.
2. Defined benefit plan applying simplified method(1) Reconciliation of beginning and ending balances of retirement benefit liability under the system to which
the simplified method is applied
For the year ended
March 31, 2023

For the year ended
March 31, 2024

Retirement benefit liability at beginning of year

6 million yen

5 million yen

Payments for retirement benefits

1

3Retirement benefit liability balance at end of year51(2) Reconciliation between the balance of retirement benefit obligations at the end of the fiscal year andretirement benefit liability recorded in the Consolidated Balance Sheet
For the year ended
March 31, 2023

For the year ended
March 31, 2024

Unfunded retirement benefit obligation

5 million yen

1 million yen

Net liabilities and assets recorded in
Consolidated Balance Sheet

5

1Retirement benefit liability

51

Net liabilities and assets recorded in
Consolidated Balance Sheet

51

3. Defined Contribution Plan
The amount required to be contributed by the Company and its consolidated subsidiaries to the defined
contribution plan was 74 million yen for the year ended March 31, 2023 and 84 million yen for the year
ended March 31, 2024.

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(Stock Options, etc.)
1. Amount recorded as expenses for stock options and name of item
For the year ended March 31,
For the year ended March 31,
2023
2024
Stock remuneration expenses ofselling, general and administrative- million yen- million yen
expenses
2. Details and size of stock options and changes in stock options(1) Details of stock options
Company Name

Submitting company

Submitting company

Date of resolution

June 22, 2018

June 21, 2019

Category and number of grantees

4 Directors (excluding Outside
Director) of the Company

4 Directors (excluding Outside
Director) of the Company

Type and number of shares granted Common shares 5,240 shares

Common shares 7,400 shares

Grant dateJuly 31, 2018

July 31, 2019

Share acquisition rights may be
exercised only when theposition as Director of theCompany is lost. In this case,share acquisition right holders
may exercise their shareacquisition rights in a lump sum
only during the period from the
day following the day on which
they lose their position as
Director of the Company to the
day on which ten days haveelapsed.
There is no rule on applicable
service periods.

Share acquisition rights may be
exercised only when theposition as Director of theCompany is lost. In this case,share acquisition right holders
may exercise their shareacquisition rights in a lump sum
only during the period from the
day following the day on which
they lose their position as
Director of the Company to the
day on which ten days haveelapsed.
There is no rule on applicable
service periods.

Exercise period

August 1, 2018 to July 31, 2048

August 1, 2019 to July 31, 2049

Company Name

Submitting company

Submitting company

Date of resolution

June 30, 2020
4 Directors (excluding Outside
Director) of the Company

June 22, 2021
6 Directors (excluding Outside
Director) of the Company

Type and number of shares granted Common shares 11,120 shares

Common shares 21,550 shares

Grant dateJuly 31, 2020

July 30, 2021

Vesting conditions

Share acquisition rights may be
exercised only when theposition as Director of theCompany is lost. In this case,share acquisition right holders
may exercise their shareacquisition rights in a lump sum
only during the period from the
day following the day on which
they lose their position as
Director of the Company to the

Share acquisition rights may be
exercised only when theposition as Director of theCompany is lost. In this case,share acquisition right holders
may exercise their shareacquisition rights in a lump sum
only during the period from the
day following the day on which
they lose their position as
Director of the Company to the

Vesting conditions

Applicable service period

Category and number of grantees

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Applicable service period
Exercise period

day on which ten days haveelapsed.
There is no rule on applicable
service periods.
August 1, 2020 to July 31, 2050

day on which ten days haveelapsed.
There is no rule on applicable
service periods.
From July 31, 2021 to July 30,
2051(2) Size and changes in stock options
As for stock options existing in current consolidated fiscal year (for the year ended March 31, 2024), thenumber of stock options is converted into the number of shares.
(i) Number of stock options
Company Name

Submitting company

Submitting company

Date of resolution

June 22, 2018

June 21, 2019

Before vesting (shares)
End of previous fiscal year--

Granted--Forfeited--

Vested--Unvested balance

-

-

5,240

7,400

Vested--Exercised--

Forfeited

-

-

5,240

7,400

After the vesting of rights (shares)
End of previous fiscal year

Unexercised balance

Company Name

Submitting company

Submitting company

Date of resolution

June 30, 2020

June 22, 2021

Before vesting (shares)
End of previous fiscal year--

Granted--Forfeited--

Vested--Unvested balance--

11,12021,550

Vested--Exercised--

Forfeited--

11,12021,550After the vesting of rights (shares)
End of previous fiscal year

Unexercised balance

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(ii) Unit price information
Company Name

Submitting company

Submitting company

Date of resolution

June 22, 2018

June 21, 2019

Exercise price (yen)11Average stock price at exercise (yen)

-

-

1,019

789

Fair value at grant date (yen)Company Name

Submitting company

Submitting company

Date of resolution

June 30, 2020

June 22, 2021

Exercise price (yen)11Average stock price at exercise (yen)

-

-

438

657

Fair value at grant date (yen)

3. Method of estimating the fair value of stock options granted to current consolidated fiscal year
There are no applicable matters because the rights have been determined at the time of granting.

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(Tax Effect Accounting)
1. Breakdown of deferred tax assets and deferred tax liabilities by major cause
For the year ended
March 31, 2023
Deferred tax assets
Inventories
Excess depreciation
Taxes and duties
Accounts payable
Accrued enterprise tax
Accrued expenses
Provision for bonuses
Long-term accounts payable
Loss carryforwards (Note 2)
Other
Subtotal deferred tax assets
Valuation allowance for loss carryforwards
for tax purposes (Note 2)
Valuation allowance for future deductible
temporary differences, etc.
Valuation allowance subtotal (Note 1)
Deferred tax assets total
Deferred tax liabilities
Land valuation difference
Uncompleted construction expense
Other
Deferred tax liabilities total
Deferred tax assets net

For the year ended
March 31, 2024

1,102 million yen
326
62
59
104
77
75
17
1,244
415
3,484 million yen

1,034 million yen
423
68
76
167
90
88
17
439
553
2,961 million yen

-496

-334

-940

-968

-1,4372,047 million yen-1,302
1,659 million yen

19 million yen
98
37 million yen

18 million yen
88
34 million yen

2,010 million yen

1,624 million yen

Deferred tax liabilities are included in “Other” under non-current liabilities on the Consolidated Balance
Sheet.
(Change in presentation method)“Excess depreciation,” which was included in “Other” of deferred tax assets in the previous fiscal year, ispresented separately from current consolidated fiscal year due to its increased materiality. In order to reflect
this change in presentation method, the notes related to Tax Effect Accounting in the previous consolidated
fiscal year have been reclassified.
As a result, 742 million yen, which was included in “Other” in deferred tax assets, has been reclassified as“Excess depreciation” of 326 million yen and “Other” of 415 million yen.
Notes: 1. The valuation allowance decreased by 134 million yen. This decrease was mainly due to adecrease of 309 million yen in the valuation allowance for loss carryforwards for tax purposesin consolidated subsidiary Sun Frontier Hotel Management Inc. and an increase of 155 million
yen in the valuation allowance at consolidated subsidiary Hotel Osado Co., Ltd. as a result ofa change in the company classification for determining the recoverability of deferred tax assets.

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2. Tax loss carryforwards and the deferred tax assets by carryforward period
For the year ended March 31, 2023

(Unit: million yen)Over 1 Over 2 Over 3 Over 4
Within 1 year and years and years and years and Over 5
Total
year within 2 within 3 within 4 within 5 years
years
years
years
years

Tax loss carryforwards (a)

5

-

-

1

-

1,236

1,244

Valuation allowance

-

-

-

-1

-

-495

-496

Deferred tax assets (b)

5

-

-

-

-

741

747

(a) Tax loss carryforwards are calculated by multiplying the effective statutory tax rate.
(b) The deferred tax assets for the tax loss carryforwards is determined to be recoverable basedon future taxable income.
For the year ended March 31, 2024

(Unit: million yen)Over 1 Over 2 Over 3 Over 4
Within 1 year and years and years and years and Over 5
year within 2 within 3 within 4 within 5 years
years
years
years
years

Total

Tax loss carryforwards (a)

-

-

1

-

9

428

439

Valuation allowance

-

-

-1

-

-7

-324

-334

Deferred tax assets (b)

-

-

0

-

1

103

105

(a) Tax loss carryforwards are calculated by multiplying the effective statutory tax rate.
(b) The deferred tax assets for the tax loss carryforwards is determined to be recoverable basedon future taxable income.
2. Reconciliation between the statutory effective tax rate and the corporate income tax rate after applying tax
effect accounting

Statutory effective tax rate
(Adjustments)
Entertainment expenses, etc. permanently
excluded from deductible expenses
Per capita inhabitant tax
Change in valuation allowance
Difference in applicable tax rate fromconsolidated subsidiaries
Tax credit
Effect of liquidation of overseas subsidiaries
Effect of group tax sharing system adoption
Other
Corporate income tax rate after applying tax
effect accounting

For the year ended
March 31, 2023
30.6 %For the year ended
March 31, 2024
- %

0.2 %

- %

0.2 %
-9.7 %

- %
- %

0.2 %

- %

-0.4 %-1.7 %
1.0 %
0.1 %

- %
- %
- %
- %

20.5 %- %(Note) For this consolidated fiscal year, the difference between the statutory effective tax rate and the burden
rate of corporate taxes after applying tax effect accounting is less than 5% of the effective tax rate, andtherefore, the note is omitted.

94/122

3. Accounting treatment of corporate income taxes and local corporate taxes, or accounting treatment of related
tax effect accounting
The Company and certain consolidated domestic subsidiaries have adopted the group tax sharing system. In
addition, the Company and its consolidated subsidiaries have adopted the accounting treatment of corporate
income taxes and local corporate taxes or the accounting treatment of related tax effect accounting inaccordance with the “Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing
System” (ASBJ PITF No. 42, August 12, 2021).
(Asset retirement obligations)
The Company recognizes asset retirement obligations mainly related to recovery to the original state at thetime of removal based on real estate lease agreements. In lieu of recording asset retirement obligations asliabilities, lease deposits and security deposits related to real estate lease agreements are recorded as expenses
by reasonably estimating the amount for which collection is not expected in the end (expenses for restorationof leased buildings) and recording the amount that is borne by the current consolidated fiscal year as expenses.
In addition, the amount which belongs to the burden of current consolidated fiscal year is calculated based on
the expected occupancy period.
(Rental and other real estate)
The Company owns rental office buildings (including land) and hotel facilities (including land) in Tokyo andother areas.
For the year ended March 31, 2023, net rental income from such rental properties was 184 million yen (rentrevenue is recorded in net sales and rental expenses are recorded in cost of sales).
For the year ended March 31, 2024, net rental income from such rental properties was 157 million yen (rentrevenue is recorded in net sales and rental expenses are recorded in cost of sales).
The Consolidated Balance Sheet book value, increase/decrease during the period and market value of the rental
properties are as follows.
(Unit: million yen)
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Beginning balance
6,659
8,225
Consolidated Balance
Increase/decrease during the period
1,565
435
Sheet value
Year-end balance
8,225
8,660
Year-end market value
10,918
11,528Notes: 1. The amount recorded in Consolidated Balance Sheet is acquisition cost less accumulated
depreciation.
2. In increase/decrease during the period, the increase in the previous fiscal year is mainly due to new
acquisitions (6,217 million yen), and the decrease is mainly due to transfer due to a change in the
purpose of holding assets (4,507 million yen) and depreciation (143 million yen).
In the current consolidated fiscal year, the increase is mainly due to new acquisitions (665 millionyen), while the decrease is due to retirements (31 million yen) and depreciation (199 million yen).
3. Fair values at the end of the fiscal period are amount based on real estate appraisal reports by external
real estate appraisers or amount adjusted using certain appraisal values or indicators.
(Revenue Recognition)
1. Breakdown of revenue from contracts with customers
Breakdown of revenue from contracts with customers is described in “(Segment Information, etc.) Segment
information 3. Information on net sales, profit or loss, assets, liabilities, and other items and disaggregationof revenue for each reportable segment.”
2. Information that serves as the basis for understanding the revenue arising from contracts with customers
Information that serves as the basis for understanding revenue is described in “(Significant Accounting
Policies for the Preparation of Consolidated Financial Statements) 4. Matters concerning Accounting Policies(5) Standards for recording significant revenues and expenses.”

95/122

3. Information on the relationship between the fulfillment of performance obligations based on contracts withcustomers and cash flows arising from those contracts as well as the amount and timing of revenues expected
to be recognized in and after the following fiscal year from contracts with customers that exist at the end of
the current fiscal year
For the fiscal year ended March 31, 2023
(1) Balance of contract assets and contract liabilities
The contract balances of the Group are as follows.
(million yen)
Current consolidated fiscal year
(March 31, 2023)
Claims arising from contracts with customers(beginning of the fiscal year)
Claims arising from contracts with customers (endof the fiscal year)

854
1,560

Contract assets (beginning of the fiscal year)

18

Contract assets (end of the fiscal year)

35

Contract liabilities (beginning of the fiscal year)

561

Contract liabilities (end of the fiscal year)

1,649

Notes: 1. Claims arising from contracts with customers
Claims arising from contracts with customers mainly consist of uncollected payments ofcondominium hotel sales and hotel charges recognized in Hotel and Tourism Business andrights to customers arising from the contract performance in Real Estate Service Business.
The collection of these claims is generally within one to three months.
2. Contract assets
Contract assets consist of rights to customers arising from the payments received from
customers in line with a series of obligations recognized in connection with the contract work
agreement in Construction Business. The contract assets for the completed work are recognizedin advance and transferred to operating claims upon customer acceptance and billing.
The contract assets are included in notes, accounts receivable and contract assets in theConsolidated Balance Sheet.
3. Contract liabilities
Contract liabilities mainly consist of earnest money received at the conclusion of sales contracts
in Replanning Business, the payment received prior to performance based on the contract work
agreements in Construction Business, and accommodation charges received as advancepayment in Hotel Operation Business. Based on the agreement, they are transferred to revenue
when the Group performs them.
Contract liabilities are included in Other current liabilities in the Consolidated Balance Sheet.
In the contract liabilities at the beginning of the current consolidated fiscal year, 535 million yen wasrecognized as the revenue for the current consolidated fiscal year. The increase in contract assets for thecurrent consolidated fiscal year was mainly due to an increase in construction orders received inConstruction Business, and the increase in contract liabilities was mainly due to an increase in the balanceof the earnest money in Replanning Business.
(2) Transaction price allocated to remaining performance obligations
As the Group does not have any important contracts with an initial expected contract period of more than
one year, information on the remaining performance obligations is omitted by using practical expedientmeasures.
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Also, there are no significant amounts that are not included in the transaction prices in the consideration
arising from contracts with customers.
For the fiscal year ended March 31, 2024
(1) Balance of contract assets and contract liabilities
The contract balances of the Group are as follows.
(million yen)
Current consolidated fiscal year
(March 31, 2024)
Claims arising from contracts with customers(beginning of the fiscal year)
Claims arising from contracts with customers (endof the fiscal year)

1,560
1,938

Contract assets (beginning of the fiscal year)

35

Contract assets (end of the fiscal year)

134

Contract liabilities (beginning of the fiscal year)
Contract liabilities (end of the fiscal year)

1,649
674

Notes: 1. Claims arising from contracts with customers
Claims arising from contracts with customers mainly consist of uncollected payments ofcondominium hotel sales and hotel charges recognized in Hotel and Tourism Business andrights to customers arising from the contract performance in Real Estate Service Business.
The collection of these claims is generally within one to three months.
2. Contract assets
Contract assets consist of rights to customers arising from the payments received from
customers in line with a series of obligations recognized in connection with the contract work
agreement in Construction Business. The contract assets for the completed work are recognizedin advance and transferred to operating claims upon customer acceptance and billing.
The contract assets are included in notes, accounts receivable and contract assets in theConsolidated Balance Sheet.
3. Contract liabilities
Contract liabilities mainly consist of earnest money received at the conclusion of sales contracts
in Replanning Business, the payment received prior to performance based on the contract work
agreements in Construction Business, and accommodation charges received as advancepayment in Hotel Operation Business. Based on the agreement, they are transferred to revenue
when the Group performs them.
Contract liabilities are included in Other current liabilities in the Consolidated Balance Sheet.
In the contract liabilities at the beginning of the current consolidated fiscal year, 1,612 million yen wasrecognized as the revenue for the current consolidated fiscal year. The increase in contract assets for thecurrent consolidated fiscal year was mainly due to an increase in construction orders received inConstruction Business while the decrease in contract liabilities was mainly due to a decrease in thebalance of the earnest money for properties sold in Replanning Business.
(2) Transaction price allocated to remaining performance obligations
As the Group does not have any important contracts with an initial expected contract period of more than
one year, information on the remaining performance obligations is omitted by using practical expedientmeasures.
Also, there are no significant amounts that are not included in the transaction prices in the consideration
arising from contracts with customers.
97/122

(Segment Information, etc.)
Segment information
1. Overview of Reportable Segments
The reportable segments of the Company are the constituent units of the company group for which separate
financial information is available and which are subject to periodic review by the Board of Directors inorder to determine the allocation of management resources and evaluate performance.
The head office formulates comprehensive strategies for each type of product and service and conducts
business activities.
Accordingly, the Company consists of three reportable segments: “Real Estate Revitalization Business”,“Real Estate Service Business”, and “Hotel and Tourism Business”, which are defined by the product andservice segments established by the head office.
“Real Estate Revitalization Business” is engaged in Replanning Business and Rental Building Business.
“Real Estate Service Business” is engaged in Property Management Business, Building MaintenanceBusiness, Sales Brokerage Business, Leasing Brokerage Business, Conference Room Rental Business, andRent Guarantee Business. “Hotel and Tourism Business” is engaged in Hotel Development Business andHotel Operation Business.
2. Method of Calculating the Net Sales, Profit (loss), Assets, Liabilities and other items for Each Reportable
Segment
The method of accounting for the reportable segments is the same as that described in “Significant basis
for preparation of consolidated financial statements” in the Annual Securities Report. Reportable segment
profits are based on ordinary profit.

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3. Breakdown of the revenue and information on Net Sales, Profit (loss), Assets, Liabilities, and Others foreach reportable segment
For the year ended March 31, 2023
Reportable segments
RealReal Estate
Hotel andEstateRevitalization
Tourism
ServiceBusiness
Business
Business

Total

Other
(Note 1)

Total

(Unit: million yen)Amount on
consolidated
Adjustment
financial(Note 2)statement(Note 3)

Net sales
Revenue fromcontracts withcustomers

45,687

6,714

22,80875,211

1,774

76,985-76,985

Other income

4,362

1,299

129

5,792

-

5,792

-

5,792

50,0508,014

22,93881,003

1,774

82,777-

82,777

16

828

28

874

13

887

-887

-

Subtotal

50,066

8,843

22,967

81,877

1,788

83,665-887

82,777

Segment profit

15,343

4,890

1,720

21,954283

22,237-7,514

14,722

Segment assets

78,4402,950

24,442

105,832676

106,50946,010152,519

Segment liabilities

46,5603,709

11,467

61,737

194

61,932

6,621

68,553

Depreciation

872

45

889

1,807

4

1,811

151

1,963

Amortization of
goodwill

-

4

-

4

47

51

12

64

Interest expenses

332

3

113

450

-

450

26

477

Net sales toexternalcustomers
Internal sales ortransfers

OthersIncome(loss) on
investments based-71-71
on equity method
Increase inproperty, plantand equipment
6,216
163
1,031
7,411
1
7,412
431
7,844
and intangible
assets
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. Details of the “Adjustment” are as follows:(1) Adjustment in segment profit of negative 7,514 million yen includes elimination of intersegment
transactions of 3 million yen and company-wide expenses of negative 7,517 million yen not allocated toeach reportable segment. Company-wide expenses are mainly selling, general and administrative expenses
that are not attributable to reportable segments.
(2) Adjustment in segment assets of 46,010 million yen include eliminations of intersegment transactions ofnegative 17,749 million yen and company-wide assets of 63,759 million yen that are not allocated to each
99/122

reportable segment. Company-wide assets consist mainly of surplus operating funds (cash and time
deposits and available-for-sale securities) and administration department’s assets that do not belong to any
reportable segment.
(3) Adjustment in segment liabilities of 6,621 million yen include elimination of intersegment transactionsof negative 264 million yen and company-wide liabilities of 6,885 million yen that are not allocated to eachreportable segment.
(4) Adjustment of depreciation under “Other” of 151 million yen includes depreciation of company-wide
assets not allocated to each reportable segment of 151 million yen.
(5) Adjustment of income(loss) on investments based on equity method under “Other” of negative 71 million
yen includes income(loss) on investments based on equity method of negative 71 million yen related tocompany-wide assets not allocated to each reportable segment.
(6) Adjustment of increase in property, plant and equipment and intangible assets under “Other” of 431
million yen includes the 431 million yen increase in property, plant and equipment and intangible assets
related to company-wide assets not allocated to each reportable segment.
Note 3. Segment profit is reconciled to ordinary profit in the Consolidated Statement of Income.

100/122

For the year ended March 31, 2024
Reportable segments
RealReal Estate
Hotel andEstateRevitalization
Tourism
ServiceBusiness
Business
Business

Total

Other
(Note 1)

Total

(Unit: million yen)Amount on
consolidated
Adjustment
financial(Note 2)statement(Note 3)

Net sales
Revenue fromcontracts withcustomers

46,662

8,171

16,814

71,6472,363

74,010-74,010

Other income

4,358

1,377

121

5,857

-

5,857

-

5,857

51,020

9,548

16,93677,504

2,363

79,868-79,868

6

948

41

997

46

1,043

-1,043-51,02710,49
716,97778,502

2,409

80,912-1,04379,86815,602

5,612

4,369

25,583301

25,885-8,51017,374

Segment assets

105,206

3,688

26,259135,153

1,845

136,999

51,662

188,661

Segment liabilities

62,499

4,391

9,776

76,667299

76,967

17,277

94,244

1,327

80

508

1,916

4

1,920

204

2,124

Amortization of
goodwill

-

17

6

23

51

75

-

75

Interest expenses

426

7

60

493

-

493

45

539

Net sales toexternalcustomers
Internal sales ortransfers
Subtotal
Segment(loss)

profitOthersDepreciation

Income(loss) on
investments based
1212
on equity method
Increase inproperty, plantand equipment
614
302
1,716
2,633
1
2,635
394
3,029
and intangible
assets
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. Details of the “Adjustment” are as follows:(1) Adjustment in segment profit of negative 8,510 million yen includes elimination of intersegment
transactions of negative 25 million yen and company-wide expenses of negative 8,485 million yen notallocated to each reportable segment. Company-wide expenses are mainly selling, general andadministrative expenses that are not attributable to reportable segments.
(2) Adjustment in segment assets of 51,662 million yen include eliminations of intersegment transactionsof negative 19,913 million yen and company-wide assets of 71,575 million yen that are not allocated toeach reportable segment. Company-wide assets consist mainly of surplus operating funds (cash and time
deposits and available-for-sale securities) and administration department’s assets that do not belong to
any reportable segment.
101/122

(3) Adjustment in segment liabilities of 17,277 million yen include elimination of intersegment transactionsof negative 561 million yen and company-wide liabilities of 17,839 million yen that are not allocated toeach reportable segment.
(4) Adjustment of depreciation under “Other” of 204 million yen includes depreciation of company-wide
assets not allocated to each reportable segment of 204 million yen.
(5) Adjustment of income(loss) on investments based on equity method under “Other” of 12 million yen
includes income(loss) on investments based on equity method of 12 million yen related to company-wide
assets not allocated to each reportable segment.
(6) Adjustment of increase in property, plant and equipment and intangible assets under “Other” of 394
million yen includes the 394 million yen increase in property, plant and equipment and intangible assets
related to company-wide assets not allocated to each reportable segment.
Note 3. Segment profit is reconciled to ordinary profit in the consolidated statement income.
Related Information
For the fiscal year ended March 31, 2023
1. Information by product and service
Information by product and service is omitted because similar information is provided in “Segment
information.”
2. Regional information(1) Net sales
Net sales to external customers in Japan accounts for more than 90% of net sales in the Consolidated
Statement of Income, so the description is omitted.
(2) Property, plant and equipment
Property, plant and equipment which is located in Japan, accounts for more than 90% of amount inproperty, plant and equipment in the Consolidated Balance Sheet, so the description is omitted.
3. Information by major customers(Unit: million yen)
Name of the customer

Net sales

Associated segment name

Neptune Special Purpose Company

17,500 Real Estate Revitalization Business

Nagomi Special Purpose Company

13,500 Hotel and Tourism Business

For the fiscal year ended March 31, 2024
1. Information by product and service
Information by product and service is omitted because similar information is provided in “Segment
information.”
2. Regional information(1) Net sales
Net sales to external customers in Japan accounts for more than 90% of net sales in Consolidated
Statement of Income, so the description is omitted.
(2) Property, plant and equipment
Property, plant and equipment which is located in Japan, accounts for more than 90% of amount inproperty, plant and equipment in the Consolidated Balance Sheet, so the description is omitted.
3. Information by major customers
Sales to external customers are not disclosed because there is no customer that accounts for 10% ormore of net sales in the Consolidated Statement of Income.
102/122

Information on non-current assets impairment loss by reportable segment
For the fiscal year ended March 31, 2023
(Unit: million yen)
Reportable segments
Real Estate Real Estate
Revitalization Service
Business
Business

Corporateandelimination

Other

Hotel andTourism
Business

Total

Impairment
55loss(Note) The amount in “Other” is related to the Construction Business.

22

Total

-

27

For the fiscal year ended March 31, 2024
(Unit: million yen)
Reportable segments
Real Estate Real Estate
Revitalization Service
Business
Business
Impairment
loss

-

48

Corporateandelimination

Other

Hotel andTourism
Business

Total
-

48

-

Total

-

48

Information on goodwill amortization and unamortized balance by reportable segment
For the fiscal year ended March 31, 2023
(Unit: million yen)
Reportable segments
Real Estate Real Estate
Revitalization Service
Business
Business

Hotel andTourism
Business

Other
Total

Corporate andelimination

Total

Balance at
end of the
65
65
277
343
periodNote: Information regarding amortization of goodwill is omitted because similar information is disclosed in thesegment information.
For the fiscal year ended March 31, 2024
(Unit: million yen)
Reportable segments
Real Estate Real Estate
Revitalization Service
Business
Business

Hotel andTourism
Business

Other
Total

Corporate andelimination

Total

Balance at
end of the
308
308
270
579
periodNote: Information regarding amortization of goodwill is omitted because similar information is disclosed in thesegment information.
Information on negative goodwill gain by report segment
For the fiscal year ended March 31, 2023
Not applicable.
For the fiscal year ended March 31, 2024
Not applicable.
103/122(Related Party Information)
1. Transactions with related parties(1) Transactions between the company submitting consolidated financial statements and related parties(i) Non-consolidated subsidiaries and affiliates of the company submitting consolidated financial
statements
For the fiscal year ended March 31, 2023
There are no important matters to be stated.
For the fiscal year ended March 31, 2024
There are no important matters to be stated.
(ii) Officers and major shareholders of the company submitting consolidated financial statements(limited to individuals), etc.
For the fiscal year ended March 31, 2023
There are no important matters to be stated.
For the fiscal year ended March 31, 2024
There are no important matters to be stated.
(2) Transactions between consolidated subsidiaries of the company submitting consolidated financial
statements and related parties
For the fiscal year ended March 31, 2023
There are no important matters to be stated.

Type

For the fiscal year ended March 31, 2024
Share
Contents
Name of
Percentage
Contents Transaction
capital orof
Relationshiptheof votingof theamountLocation investment businesswith relatedcompany,
rightstransacti (million(millionorpartiesetc.
owned (%)
on
yen)
yen)
occupation

Year-endbalanceItem(millionyen)Companiesin which the
majority of
Asset
Lease ofvoting rights TH Kosan Urayasu,
Cost of1 manageme None
None
real
12
are held by Co., Ltd. Chiba
salesnt
estatethe officers
and his/ herrelatives
Note: Leasing of real estate are conducted under general terms and conditions similar to those forindependent third party transactions.
2. Notes on parent company and significant affiliated companies
Not applicable.

104/122-

(Special Purpose Companies Subject to Disclosure)(1) Overview of the special purpose company subject to disclosure and overview of transactions using thespecial 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 the Act on Specified Joint Real Estate Ventures (voluntary partnershiptype) 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)
will enter into an agreement with voluntary partnership to participate in the real estate specified businessand make cash contribution or contribution in kind. Voluntary partnership is structured to receive
distributions of profits and losses arising from the real estate purchased by investors in kind or cash. 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 the voluntary partnership for
entrusting building management in a lump sum. In the case of cash investment type, real estate transfer
occurs between the Company and voluntary partnership.
The latest financial position for the previous and current consolidated fiscal year is as follows.
For the fiscal year ended
March 31, 2023
Number of Special Purpose
Companies
Total assets as of the latest
balance sheet date (simple sum)
Total liabilities (simple sum)

For the fiscal year ended
March 31, 2024

9 partnerships

13 partnerships

6,140 million yen

7,725 million yen

183 million yen

203 million yen

The total assets and total liabilities of one partnership for the previous fiscal year and of three partnerships
for the fiscal year under review, are not included in the total amount above because the closing date has not
yet arrived.
(2) Transaction amount with the special purpose company subject to disclosure
For the fiscal year ended March 31, 2023
Amounts of majortransactions

Major profit and loss
Item

AmountTransfer of real estate
2,354 million yen
Net sales
2,354 million yen(Note 1)
Notes: 1. The transfer of real estate is stated at the transfer price at the time of transfer. The transfer of realestate is recorded in the net sales of the Consolidated Statement of Income.
2. Information on transactions other than the above is omitted as the transaction amount is immaterial.
For the fiscal year ended March 31, 2024
Amounts of majortransactions

Major profit and loss
Item

AmountTransfer of real estate
1,758 million yen
Net sales
1,758 million yen(Note 1)
Notes: 1. The transfer of real estate is stated at the transfer price at the time of transfer. The transfer of realestate is recorded in the net sales of the Consolidated Statement of Income.
2. Information on transactions other than the above is omitted as the transaction amount is immaterial.

105/122(Per share information)
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Net assets per share
1,663.33 yen
1,864.36 yen
Earnings per share
238.98 yen
245.50 yen
Fully diluted earnings per share
238.76 yen
230.74 yen
Notes: 1.The basis for calculation of earnings per share and fully diluted earnings per share is as follows.
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Earnings per share
Profit attributable to owners of parent company
11,612
11,917(million yen)Amount not attributable to common shareholders(million yen)
Profit attributable to owners of parent company for
11,612
11,917common shares (million yen)
Average number of common shares (shares)
48,592,065
48,541,810
Fully diluted earnings per share
Adjustment of profit attributable to owners ofparent company (million yen)
Common shares increase (shares)
45,2703,104,495(including Convertible bonds with Share(-)(3,059,215)
Acquisition Rights (shares))(including Share Acquisition Rights (shares)(45,270)(45,280)
Outline of dilutive shares not included in the calculationof fully diluted earnings per share because they have no
dilutive effect
2. The basis for calculation of net assets per share is as follows.
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Total net assets (million yen)
83,965
94,416
Amount of deduction from total net assets (million yen)
3,263
3,897
(including Share Acquisition Rights (million yen))
30
30(including non-controlling interests (million yen))
3,233
3,867
Net assets at year-end available to common shares
80,70290,519(million yen)
Number of common shares at year-end used for the
48,518,331
48,552,292
calculation of net assets per share (shares)
3. 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. The weighted average number of shares for the period of the Company’s shares held by the trust
account is 62,921 shares for the previous fiscal year and 128,300 shares for the current fiscal year. The
number of shares at the end of the fiscal year is 128,300 shares for the previous fiscal year and 128,300
shares for the current fiscal year.
(Significant Subsequent Events)
Not applicable.

106/122(v) Consolidated supplementary schedule
Schedule of corporate bonds

Company
Name

Balance at
beginning of
the period(million yen)

Date of
issue

Brand

Balance at
end of theperiod(million yen)Interest
rate(%)

Security

Maturity

9,999

Noninterest bearing

Unsecured
corporatebond

October
6, 2028

Total issue price ofshares issued upon
exercise of Share
Acquisition Rights(million yen)

Rate of
Share
Acquisition
Rightsgranted(%)

1st Series
UnsecuredSun
Convertible
Frontier
October 6,
Bonds with
Fudousan2023
ShareCo., Ltd.
Acquisition
RightsNote:1 Convertible bonds with Share Acquisition Rights

Details of shares tobe issued

Issue priceof ShareAcquisition Rights

Issue
price ofshares
(yen)

Total
issue
price
(million yen)

Period for
Matters
exercising
relating toShare
substituteAcquisition
payment
RightsFrom
Sun Frontier
October 10,
Free of
1,554
Fudousan Co., Ltd.
9,999
100 2023 to(*2)
charge(*1)
Common shares
October 4,2028(*1) Subject to adjustment as provided in the terms and conditions of issuance of the bonds with Share Acquisition
Rights.
(*2) Upon the exercise of Share Acquisition Rights, the bonds pertaining to the Share Acquisition Rights shall be
invested.
2. Total amount of redemption per year within five (5) years after closing bookMore than one
More than 2
More than 3
More than 4
Within one year year but less than years but lessyears but lessyears but less(million yen)
2 years
than 3 years
than 4 years
than 5 years(million yen)(million yen)(million yen)(million yen)
-

-

-

-

9,999

Borrowings and other details
Classification

Balance atBalance at end of
beginning of the
Average interest
the period
periodrate (%)(million yen)(million yen)Due date

Short-term borrowings

50

62

1.00

-

Long-term borrowings
due within one year

5,442

12,207

0.94-

Long-term borrowings

50,17057,2720.95

2025-2046

Total

55,66369,541--

Notes: 1. The average interest rate is the weighted average interest rate on the year-end borrowings
balance.
2. The repayment schedule for Long-term borrowings for five (5) years after the Consolidated
107/122

Balance Sheet date is as follows:
Over 1 year andwithin 2 years(million yen)
Long-term borrowings

Over 2 years and Over 3 years and Over 4 years andwithin 3 years
within 4 years
within 5 years(million yen)(million yen)(million yen)

12,762

18,100

5,149

9,465

Asset retirement obligations
There are no applicable items regarding asset retirement obligations because, in lieu of recording asset
retirement obligations as liabilities, the amount of security deposits and guarantee deposits related to realestate lease agreement that is unlikely to be recovered (restoration costs for the leased buildings) isreasonably estimated and the amount that is borne by the current consolidated fiscal year is recorded as an
expense.
(2) Other
Quarterly information of current consolidated fiscal year

(Cumulative period)

1st Quarter

2nd Quarter

3rd Quarter

Current
consolidated
fiscal year

(millionyen)

18,452

48,99862,25879,868

Quarterly profit(million
before income taxes yen)

4,161

11,91913,876

17,295

Quarterly profit(million
attributable to owners
yen)of parent company

3,134

8,463

9,744

11,917

Quarterly earnings
per share

64.60

174.39200.76245.50Net sales(yen)(Accounting Period)
Quarterly earnings per share (yen)

1st Quarter

2nd Quarter

64.60

108/122109.77

3rd Quarter
26.38

4th Quarter
44.74

2. Non-Consolidated Financial Statements, etc.
(1) Non-Consolidated Financial Statements(i) Non-Consolidated Balance Sheet(Unit: million yen)
As of March 31, 2023
AssetsCurrent assets
Cash and deposits
Account receivable - trade
Real estate for sale
Real estate for sale in process
Short-term loans to affiliates
Current portion of long-term loans
receivable from subsidiaries and associates
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Land
Other
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Shares of subsidiaries and affiliates
Long-term loans to affiliates
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

109/122

As of March 31, 2024

27,469*2) 397*1) 16,301*1) 52,019
680

32,979*2) 448*1) 11,612*1) 83,087
1,003

2,000

908

*2)

1,111
-7
99,971

*2)

1,797
-54
131,782

*1)
*1)

7,849
9,711
121
17,683*1) 7,659*1) 10,175
146
17,981

395
395

541
541

15,268
1,181
1,032
1,781
-101
19,162
37,241
137,212

15,278
380
1,203
1,897
-93
18,66637,189168,972

(Unit: million yen)
As of March 31, 2023
Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Income taxes payable
Deposits payable
Provision for bonuses
Provision for bonuses for directors (andother officers)
Other
Total current liabilities
Non-current liabilities
Corporate bonds
Long-term borrowings
Long-term deposits received
Provision for share-based remuneration
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Capital reserve
Other capital surplus
Total capital surplus
Retained earnings
Legal reserve
Other retained earnings
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Share acquisition rights
Total net assets
Total liabilities and net assets

110/122

As of March 31, 2024

*2) 1,097*1) 3,531
1,441*2) 1,703
138*2) 1,526*1) 11,377
2,104*2) 2,169
151

65

70

*2) 2,665
10,643*2) 1,683
19,083*1) 44,982
1,591
77
56
46,70957,3539,999*1) 52,599
1,755
90
60
64,50583,589

11,965

11,965

6,449
6,449

6,449
14
6,464

13

13

61,66961,682-270
79,827

67,141
67,154-233
85,35012

1
30
79,859137,2122
30
85,382
168,972

(ii) Non-consolidated Statement of Income(Unit: million yen)
For the year ended
March 31, 2023
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
Total non-operating income
Non-operating expenses
Interest expenses
Allowance for doubtful accounts provision
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of shares of subsidiaries andassociates
Total extraordinary income
Extraordinary loss
Loss on retirement of non-current assets
Loss on valuation of investments in
subsidiaries
Loss on devaluation of shares of subsidiaries
and affiliates
Loss on valuation of investment securities
Other
Total extraordinary loss
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit111/122

For the year ended
March 31, 2024

*1) 52,097*1) 33,793
18,303*1, *2) 6,353
11,949*1) 52,929*1) 34,076
18,853*1, *2) 6,909
11,944*1) 879330
4215*1) 54131
9*1) 10206

395*1) 15411
11,753

481
46
8
536
11,614

11

-

11

-

4

25

-

23

110

-

104
0
220
11,545
3,531
142
3,673
7,871

48
11,565
3,783
-171
3,611
7,953

Cost of sales specification
For the year ended
March 31, 2023
Classification

Note
AmountNumber (million yen)

For the year ended March 31,
2024

Composition
Composition
Amountratio
ratio(million yen)(%)(%)

Real Estate Revitalization Business cost
Buildings and Land30,89491.4

30,61089.8

Outsourcing costs

184

0.5

285

0.8

1,316

3.9

1,527

4.5

Expenses(including taxes and duties)

(273)

(323)

(including depreciation)

(826)

(995)

Real Estate Revitalization Business cost total

32,39595.9

32,423

95.1

Outsourcing costs

583

1.7

549

1.6

Expenses

321

1.0

540

1.6

Real Estate Service Business cost(including rent)(275)

Real Estate Service Business cost total

(306)

904

2.7

1,089

3.2

337

0.9

409

1.2

Hotel and Tourism Business cost
Expenses(including rent)

(110)

(110)

(including depreciation)

(220)

(266)

Hotel and Tourism Business cost total

337

0.9

409

1.2

106

0.3

88

0.3

Labor costs

8

0.0

5

0.0

Expenses

40

0.1

59

0.2

155

0.5

153

0.5

33,793100.0

34,076

100.0

Other Business cost
Outsourcing costs

Other Business cost total
Cost of sales
Note: Cost calculation is based on individual cost accounting.

112/122

(iii) Non-Consolidated Statement of Changes in Equity
For the year ended March 31, 2023
(Unit: million yen)
Shareholders’ equity
Capital surplus
Retained earnings
Otherretainedearnings
Other
Total
Total
CapitalLegalcapitalcapitalRetained retained
reserve
reserve
surplussurplusearnings earnings
brought
forwardSharecapitalBalance at beginningof the period
Changes during
periodDividends ofsurplusProfitPurchase oftreasury shares
Disposal oftreasury shares
Transfer fromretained earnings
to capital surplus
Net changes in
items other thanshareholders’equityTotal changes during
periodBalance at end of theperiod11,965

6,449

-

13

56,03956,052-2,240-2,240

7,871

7,871

-67

-239
-0

-0

0

0

36
-0

-0

-

-

-

-

-

5,630

5,630

-202

11,965

6,449

-

6,449

13

61,66961,682-270

Valuation and translation difference
Share
Valuation
Total valuationacquisitiondifference onand translationrightsavailable-for-saledifference
securities

Total net
assetsShareholders’ equity
Total shareholders’equityBalance at beginning of
the period
Changes during period
Dividends of surplus
ProfitPurchase of treasury
shares
Disposal of treasury
sharesTransfer from retained
earnings to capitalsurplus

6,449

Treasuryshares74,3993

3

30

74,432-2,2407,871-2,240
7,871

-239

-239

36

36

-

-

113/122

Shareholders’ equity
Total shareholders’equityNet changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of theperiodValuation and translation difference
Share
Valuation
Total valuationacquisitiondifference onand translationrightsavailable-for-saledifference
securities

Total net
assets

-1

-1

-

-1

5,427

-1

-1

-

5,426

79,8271

1

30

79,859For the year ended March 31, 2024
(Unit: million yen)
Shareholders’ equity
Capital surplus
Retained earnings
Otherretainedearnings
Other
Total
Total
CapitalLegalcapitalcapitalRetained retained
reserve
reserve
surplussurplusearnings earnings
brought
forwardSharecapitalBalance at beginningof the period
Changes during
periodDividends ofsurplusProfitPurchase oftreasury shares
Disposal oftreasury shares
Transfer fromretained earnings
to capital surplus
Net changes in
items other thanshareholders’equityTotal changes during
periodBalance at end of theperiod11,965

6,449

-

6,449

13

61,66961,682-2,481-2,481

7,953

7,953

Treasuryshares

-270

-0
14

14

37

-

-

14

14

-

5,471

5,471

37

11,965

6,449

14

6,464

13

67,141

67,154-233

114/122

Shareholders’ equity
Total shareholders’equityBalance at beginning of
the period
Changes during period
Dividends of surplus
ProfitPurchase of treasury
shares
Disposal of treasury
sharesTransfer from retained
earnings to capitalsurplus
Net changes in items
other than shareholders'equityTotal changes during
periodBalance at end of theperiodValuation and translation difference
Share
Valuation
Total net
Total valuation andacquisitiondifference on
assetstranslationrightsavailable-for-saledifference
securities

79,8271

1

30

79,859-2,481
7,953-2,481
7,953

-0

-0

51

51

-

-

0

0

-

0

5,522

0

0

-

5,523

85,3502230

85,382

Notes(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)
Securities other than securities without market priceStated at market based on the market price, etc. (Valuation difference is reported as a component of
net assets. The cost of sale is calculated using the moving-average method.)
Securities without market priceStated at cost using the moving-average method.
(2) Valuation standards and methods for inventories
Real estate for sale and real estate for sale in process
Stated at cost determined by the specific identification method (The figures shown in the balance sheet
have been calculated by writing them down based on decline in profitability.)
Leased assets are depreciated in accordance with property, plant and equipment standards.
2. Depreciation of non-current assets(1) Property, plant and equipment
The declining-balance method is applied. However, buildings (excluding facilities attached to buildings)
and facilities attached to buildings acquired on or after April 1, 2016 are depreciated using the straightline 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
115/122

yen are depreciated over three years on a straight-line basis.
(2) 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 (5years).
3. Standards for provisions(1) Allowance for doubtful accounts
The allowance for doubtful accounts is provided based on 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.
(2) Provision for bonuses
To prepare for the payment of bonuses to employees, the Company records the portion of the estimatedbonuses to be paid during the fiscal year under review.
(3) Provision for bonuses for directors (and other officers)
Provision for directors' bonuses is provided based on the estimated amount incurred at the end of the
fiscal year under review.
(4) 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, provision for share-based remuneration is recorded based on the estimated amount of theshare benefit obligation at the end of the fiscal year under review.
4. Method of recording revenue and expenses
The details of the main performance obligations in major businesses related to the revenue arising fromcontracts with customers of the Company and the normal time at which such performance obligations are
satisfied (normal time to recognize revenue) are as follows.
(a) Real Estate Revitalization Business
Replanning BusinessIn the Replanning Business, the Company buys existing office buildings, renovates the buildings andfacilities, and sells them to customers in Japan and overseas with added value by attracting high-quality
tenants. The Company is obligated to deliver the properties based on real estate sales contracts withcustomers.
The performance obligation is satisfied at the point the Company delivers the property. The Company
records the revenue at the time of this delivery.
(b) Real Estate Service Business(1) Property Management BusinessIn the Property Management Business, the Company concludes the property management agreementwith customers and is obligated to perform various services related to real estate properties on behalfof customers, such as maintenance and management of properties and collection of rents from tenants.
The performance obligation is satisfied when the Company provides services based on the property
management contract. The Company records the revenue over the contract period.
(2) Sales Brokerage Business
In Sales Brokerage Business, the Company stands between the buyer and the seller at the time of saleand purchase of real estate property and engages in the conclusion of sales contracts. Based on thebrokerage agreement with the customer, the Company has obligations related to a series of services,such as negotiation and adjustment of transaction terms to conclude the contract, delivery andexplanation of important facts, preparation and delivery of contracts, and involvement in proceduresfor performance of agreements.
The performance obligation is satisfied at a point when the Company delivers the property related to116/122

the real estate sales contract that has been concluded based on the brokerage agreement. The Company
records the revenue at the time of this delivery.
(3) Leasing Brokerage BusinessIn the Leasing Brokerage Business, the Company stands between the lessee and lessor at the time oflease of real estate and engages in the conclusion of lease contracts. Based on the brokerage agreementwith the customer, the Company has obligations related to a series of services, such as negotiation andadjustment of transaction terms to conclude the contract, delivery and explanation of important facts,
preparation and delivery of contracts, and involvement in procedures for performance of agreements.
The performance obligation is satisfied at a point the customer agrees to the real estate lease contract
for the property rented per the brokerage agreement. The Company records the revenue at the time of
the conclusion of this agreement.
(c) Hotel and Tourism Business
Hotel Development BusinessIn the Hotel Development Business, the Company engages in the development of new hotels startingfrom the purchase of land to the construction of buildings, and sells the developed hotels to customers.
The Company is obligated to deliver the properties based on real estate sales contracts with customers.
The performance obligation is satisfied at a point the Company delivers the property. The Company
records the revenue at the time of this delivery.
(d) Other
Construction Business
The Company engages in renewal planning, repair and reform, telecommunications work ofcommercial buildings, and contracted interior construction work for large, medium, and small-sizedfacilities.
If control of goods or services is transferred to the customer over a certain period, the performanceobligation is satisfied at a point the Company transfers the goods or services to the customer. Also, theCompany records the revenue during this period.
In addition, the Company applies an alternative treatment to contracts with a very short period from thetransaction start date to the point when the performance obligations are expected to be fully satisfied,or for construction work with a small amount of order per construction unit. The revenue is notrecognized over the period of this alternative treatment, and the Company will record the revenue when
the performance obligations are fully satisfied.
5. Other basis for preparation of financial statements(1) Standards for translation of significant assets or liabilities denominated in foreign currencies into
Japanese currency
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yenat the spot exchange rates prevailing at the respective balance sheet dates, and translation differences arecharged or credited to income.
(2) Accounting for non-deductible consumption taxes
Non-deductible consumption taxes related to assets are accounted for as expenses for the fiscal year
they are incurred.
(3) Application of group tax sharing system
Group tax sharing system is applied.
(Notes on Accounting Estimates)
1. Assessment of the real estate for sale(1) Amount recorded in the financial statements for the current business year
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Real estate for sale

16,301 million yen

11,612 million yen

Real estate for sale in process

52,019 million yen

83,087 million yen

117/122

(2) Information on significant accounting estimates related to the identified items
For real estate for sale, etc., if the net selling price falls below the acquisition cost, the net selling price isstated as the balance sheet value. The net selling price is calculated by deducting the estimated future costof construction work and the estimated selling expenses from the return value estimated based on thebusiness plan.
The business plan that forms the basis for the return value includes the expected tenant rent etc. and isformulated based on important assumptions such as the assumed market conditions in the future.
In the following fiscal years, the net selling price may change due to changes in assumptions used informulating business plans if events that were not anticipated at the time of formulating business plansoccur. This may have a significant impact on the amount of real estate for sale, etc., recognized in thefinancial 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
For the year ended
For the year ended
March 31, 2023
March 31, 2024
Non-current assets related to9,577 million yen
9,332 million yen
Hotel Development Business(2) Information on significant accounting estimates related to the identified items
The non-current assets related to Hotel Development Business are leased to consolidated subsidiaries,
and the rent is determined based on assumptions of the average unit price and occupancy rate of hotel
rooms based on future market forecasts under the policy of long-term management. A determination ofwhether an impairment loss has been recognized in the event of an indication of impairment is made bycomparing the carrying amount of the hotel with the estimated total amount of undiscounted future cash
flows expected to result over the lease term based on the lease agreement.
In the following fiscal year and thereafter, the assumptions used in the calculation of rent may change if
events that were not anticipated at the time of concluding the lease agreement occur.
This may have a material impact on the non-current asset amounts recognized in the financial statements
for the following fiscal year and thereafter.
(Change of Presentation Method)(Related to Non-consolidated Statement of Income)“Loss on retirement of non-current assets,” which was included in “Other” under “Extraordinary loss” in theprevious fiscal year, is presented separately from the fiscal year under review because it exceeded 10/100 of thetotal amount of extraordinary loss. To reflect this change, the Non-consolidated Financial Statements of theprevious fiscal year has been reclassified.
As a result, 4 million yen, which was included in “Other” under “Extraordinary loss” in Non-consolidated
Statement of Income in the previous fiscal year, has been reclassified as 4 million yen in “Loss on retirement of
non-current assets” and 0 million yen in “Other.”(Additional Information)
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, including those for the future,with the money set in trust in advance and managed separately as trust assets.
The total amount method is applied to the Employee Stock Ownership Plan (J-ESOP) in accordance withthe “Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees etc.
118/122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 as treasury shares. The book value and number of shares of the treasury
shares at the end of the previous fiscal year were 157 million yen and 128,300 shares and at the end of
the current fiscal year were 157 million yen and 128,300 shares.

(Related to Non-consolidated Balance Sheet)*1 Assets pledged as collateral and corresponding liabilities are as follows.
(1) Assets pledged as collateral
As of March 31, 2023

As of March 31, 2024

15,104 million yen
50,275
7,556
9,637
82,573 million yen

9,109 million yen
82,229
7,298
10,100108,737 million yen

As of March 31, 2023

As of March 31, 2024

47,504 million yen

63,362 million yen

47,504 million yen

63,362 million yen

Real estate for sale
Real estate for sale in process
Buildings
Land
Total
(2) Liabilities for the above

Long-term borrowings (including
current portion of long-termborrowings)
Total*2 Assets and liabilities related to affiliated companies (excluding those presented separately)
As of March 31, 2023

As of March 31, 2024

130 million yen
217

208 million yen
238

Short-term monetary claim
Short-term monetary obligations

3. Debt Guarantees
Guarantees for affiliated companies’ borrowings from financial institutions
As of March 31, 2023

As of March 31, 2024

5,355 million yen
172
85
192

3,250 million yen
342
26
316

Sun Frontier Hotel Management Inc.
Sun Frontier Sado Inc.
SF Communication Inc.
Hotel Osado Co., Ltd.

(Related to Non-consolidated Statement of Income)*1 Total amount of operating transactions and non-operating transactions with affiliated companies
For the year ended
March 31, 2023
Operating transactions (revenue)
Operating transactions (expenses)
Non-operating transactions (revenue)
Non-operating transactions (expenses)

447 million yen
746
87
6

119/122

For the year ended
March 31, 2024
514 million yen
1,003
55
-

*2 Major expense items and amount in selling, general and administrative expenses are as follows.
For the year ended
March 31, 2023
Sales commission
Commission paid
Salaries and allowances
Transfer to provision for bonuses
Transfer to provision for bonuses for
directors (and other officers)
Transfer to provision for share-based
remuneration
Allowance for doubtful accounts
provision
Depreciation

368 million yen
1,161
1,887
138

Approximate percentage
Selling costs
General and administrative expenses

For the year ended
March 31, 2024
488 million yen
1,248
2,020
151

65

70

13

12

13

3

119

164

5.8%
94.2%

7.1%
92.9%

(Securities)
For the year ended March 31, 2023
Since the shares of subsidiaries and affiliates are securities without market price, the market value of sharesof subsidiaries and affiliates is not stated.
The non-consolidated balance sheet amounts of shares of subsidiaries and affiliates which are securities
without market price are as follows.

Shares of subsidiaries

As of March 31, 2023
(million yen)
15,268

Shares of affiliates

0Classification

Total

15,268For the year ended March 31, 2024
Since the shares of subsidiaries and affiliates are securities without market price, the market value of sharesof subsidiaries and affiliates is not stated.
The non-consolidated balance sheet amounts of shares of subsidiaries and affiliates which are securities
without market price are as follows.

Shares of subsidiaries

As of March 31, 2024
(million yen)
15,278

Shares of affiliates

0Classification

Total

15,278120/122

(Tax Effect Accounting)
1. Breakdown of deferred tax assets and deferred tax liabilities by major cause
As of March 31, 2023

As of March 31, 2024

Inventories
Denial of loss on devaluation of shares ofsubsidiaries and affiliates
Accrued enterprise tax

520 million yen

636 million yen

727

735

86

114

Allowance for doubtful accounts

29

33

Taxes and duties

58

65

Accounts payable

5375

Accrued expenses

31

38

Provision for bonuses

42

46

Long-term accounts payable
Denial of loss on devaluation of non-current
assetsExcess depreciation

17

17

8

8

64

55

Other

113

101

Deferred tax assets

Subtotal deferred tax assets

1,753 million yen

1,928 million yen

-714

-716

1,039 million yen

1,211 million yen

Deferred tax liabilities
Valuation difference on available-for-salesecurities
Other

0 million yen

1 million yen

66

Total deferred tax liabilities

7 million yen

7 million yen

1,032 million yen

1,203 million yen

Valuation allowance
Total deferred tax assets

Net deferred tax assets

2. Reconciliation between the statutory effective tax rate and the corporate income taxes' effective tax rate after
the adoption of tax effect accounting
For both the previous fiscal year and fiscal year under review, the difference between the statutory effective
tax rate and the corporate income tax rate after the adoption of tax effect accounting is 5/100 or less of thestatutory effective tax rate, so the description is omitted.
3. Accounting treatment of corporate income taxes and local corporate taxes, or accounting treatment of related
tax effect accounting
The Company has adopted the group tax sharing system. In addition, the Company has adopted theaccounting treatment of corporate income taxes and local corporate taxes or the accounting treatment ofrelated tax effect accounting in accordance with the “Practical Solution on the Accounting and Disclosure
Under the Group Tax Sharing System” (ASBJ PITF No. 42, August 12, 2021).

121/122

(Revenue Recognition)
Information that serves as the basis for understanding the revenue arising from contracts with customers isomitted because the same contents are stated in “Notes (Revenue Recognition)” of the consolidated financial
statements.
(Significant Subsequent Events)
Not applicable.
(iv) Non-Consolidated Supplementary Schedule
Detailed statement of property, plant and equipment, etc.

Category

Property,plant andequipment

Intangible
assets(Unit: million yen)
Increase
Decrease Depreciation
Balance atduring the during the /amortization Balance at Accumulated
beginning ofType of asset
fiscal year fiscal year during theend of the depreciation/
the fiscal
ended March ended March current fiscal fiscal year amortizationyear
31, 2024
31, 2024
year
Buildings

7,849

300

22

468

7,659

1,238

Land

9,711

463

-

-

10,175

-

Other

121

92

4

62

146

169

Total

17,683

856

26

531

17,981

1,407

Other

395

233

1

85

541

-

Total

395

233

1

85

541

-

Note: Of the increase during the current period, the main items are as follows.
Real estate
Increase due to acquisition of Rental Building Business
Buildings
revitalization assets (office buildings)
Real estate
Increase due to acquisition of Rental Building BusinessLand
revitalization assets (office buildings)

150 million yen
463 million yen

Schedule of allowances(Unit: million yen)
Item

Balance at beginningof the fiscal year

Increase during the Decrease during theBalance at end of the
fiscal year ended
fiscal year ended
fiscal year
March 31, 2024
March 31, 2024

Allowance for doubtful
accounts

108

48

9

147

Provision for bonuses

138

151

138

151

65

70

65

70

77

12

-

90

Provision for bonuses
for directors (and otherofficers)
Provision for sharebased remuneration(2) Major assets and liabilities
This information is omitted because consolidated financial statements are prepared.
(3) Other
Not applicable.

122/122