Disclaimer: This is a Japanese-English translation of the summary of financial statements of the Company produced for your convenience.
Since no auditor audited this report, officially only the Japanese version is assumed to be the summary of financial statements of the Company.
This summary does not constitute any guarantee and will not compensate any losses and/or damage stemming from actions taken based on thesestatements. In the case that there is any discrepancy between the Japanese and English versions, the Japanese version is assumed to be correct.

Consolidated Financial Report
For the Second Quarter of Fiscal 2019 Ending March 31, 2019 (Japanese GAAP)
November 5, 2018
Company Name:Grandy House Corporation
Stock Exchange Listing:Tokyo Stock Exchange
Securities Code:
8999
URL:
http://www.grandy.co.jp
Representative:
Yasuro Hayashi, President
Inquiries:
Nobuyasu Takeuchi, Director & Administration Manager
TEL: +81-28-650-7777
Scheduled date of quarterly securities report filing:
November 8, 2018
Scheduled date of dividend payment commencement:―
Preparation of quarterly supplementary explanatory materials:
Yes
Quarterly results briefing held:
Yes (For institutional investors and analysts)(Figures are rounded down to the nearest million yen unless otherwise stated.)

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2019
(April 1, 2018 to September 30, 2018)(1) Consolidated Operating Results
Net Sales(Percentage figures show the year-on-year increase (decrease).)Net Income Attributableto Owners of the Parent
Operating Income
Ordinary Income
Company(¥ million)%(¥ million)%(¥ million)%(¥ million)%

21,268

(4.6)

1,464

10.1

1,532

11.2

830

(10.6)

22,289

(1.4)

1,330

(12.1)

1,378(12.2)

928(9.5)

Six months ended
September 30, 2018
Six months ended
September 30, 2017
Note: Comprehensive income

Six months ended September 30, 2018: ¥824 million (-10.8%)
Six months ended September 30, 2017: ¥924 million (-10.9%)
Net Income per ShareNet Income per Share(Diluted)(¥)(¥)

Six months ended
September 30, 2018
Six months ended
September 30, 2017

28.79

28.33

32.26

31.97

Total Assets(¥ million)
46,89347,281Net Assets(¥ million)
19,91919,556(2) Consolidated Financial Position

September 30, 2018
March 31, 2018
Reference: Shareholders' equity

Shareholders' Equity Ratio
%
42.1
41.0

Net Assets per Share(¥)
684.02671.43September 30, 2018: ¥19,725 million
March 31, 2018:¥19,362 million

2. Dividends
1Q-End2Q-End(¥)——

Fiscal 2018
Fiscal 2019
Fiscal 2019 (Forecast)

Annual Dividend per Shares
3Q-End
(¥)
(¥)
0.00
—
0.00
—

Period-End

Total

(¥)
16.00

(¥)
16.00

16.00

16.00

Note: Revisions to the most recently announced forecast of cash dividends in the current quarter: None

3. Consolidated Financial Forecasts for Fiscal 2019 (April 1, 2018 to March 31, 2019)

Net Sales

Full Fiscal Year(¥ million)
48,000%
7.3(Percentage figures show the year-on-year increase (decrease) for each corresponding period.)
Net Income
Attributable toOperating Income
Ordinary Income
Net Income per ShareOwners of the Parent
Company(¥ million)%(¥ million)%(¥ million)
%
(¥)
2,900
7.6
3,000
7.3
1,680
(8.1)
58.26

Note: Revisions to the most recently announced financial forecasts in the current quarter: None* Explanatory Notes(1) Changes of important subsidiaries during the period(changes in specified subsidiaries resulting in a change in the scope of consolidation): None
Newly included: —Excluded: —(2) Adoption of specific methods for preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting policies, accounting estimates, and restatements
1) Changes in accounting policies in connection with revision to accounting standards, etc.:
2) Changes in accounting policies other than 1):
3) Changes in accounting estimates:
4) Restatements:(4) Number of shares issued and outstanding (common stock)1) Number of shares issued and outstanding
September 30,
as of the period-end (including treasury shares) 2018
September 30,
2) Number of treasury shares
3) Average number of shares issued andoutstanding for the period

2018
Six months ended
September 30,
2018

None
None
None
None

30,823,200 shares

March 31, 201830,823,200 shares

1,985,245 shares

March 31, 2018

1,985,245 shares

28,837,955 shares

Six months ended
September 30,
201728,776,955 shares*This consolidated quarterly financial report is not subject to auditing by a certified public accountant or an audit firm.

*

Explanation concerning the appropriate use of forecasts and other special instructions
Results forecasts and other forward-looking statements contained in this report are based on assumptions, beliefs, anduncertainties in light of information available to the Company's management as of the publication date. Actual results may
differ materially from forecasts due to a variety of factors. Therefore, the Company does not guarantee the accuracy of
forecasts and other forward-looking statements and its ability to achieve stated targets.

Attachment Materials: Table of Contents
1. QUALITATIVE INFORMATION ON FINANCIAL STATEMENTS.................................................................. 2(1) Explanation regarding Operating Results ................................................................................................................ 2(2) Explanation regarding Financial Position ................................................................................................................ 3(3) Explanation regarding Future Prospects including Consolidated Financial Forecasts ............................................ 4
2. QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS AND NOTES................................................. 5(1) Quarterly Consolidated Balance Sheets................................................................................................................... 5(2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive Income .............. 7(Quarterly Consolidated Statements of Income)(Consolidated cumulative second quarter) ........................................................................................................ 7(Quarterly Consolidated Statements of Comprehensive Income)(Consolidated cumulative second quarter) ........................................................................................................ 8(3) Quarterly Consolidated Statements of Cash Flows ................................................................................................. 9(4) Notes to Quarterly Consolidated Financial Statements ......................................................................................... 10(Notes on Going Concern Assumptions) ...............................................................................................................10(Notes on Significant Changes in the Amount of Shareholders' Equity) ...............................................................10(Supplemental Information) ..................................................................................................................................10(Segment and Other Information)..........................................................................................................................10―1―

1. QUALITATIVE INFORMATION ON FINANCIAL STATEMENTS(1) Explanation regarding Operating Results
During the six months ended September 30, 2018, the Japanese economy was slowly recovering as positive
growth was recorded for the second quarter of this year.
In the housing sector, new housing starts grew steadily due to the fixed interest rate on housing loans
continuing to remain at low levels regardless of an upward trend being visible these days, as well as thecontinuation of various support measures to promote home acquisition and improvements in employment andincome conditions, but competition between businesses has intensified.
Under these circumstances, the Grandy House Group continued to strive to expand and reinforce businessunder the basic policy in its second medium-term business plan (from the fiscal year ending March 2019 to thefiscal year ending March 2021) of "continuous growth through reinforcing the core operation (new homes)" and"expansion of business through enhancing the stock business."
With regard to new home sales, one of our core operations, we endeavored to boost sales of strategic large
housing lots, reinforce our product appeal, and improve profits through cost reduction and other measures whilepurchasing housing lots for expanding into Saitama Prefecture among others. In existing home sales, we
continued the effort from the previous fiscal year to build up product inventory toward expanding home sales.
Although through initiatives such as these, orders received for both new and existing homes for the second
quarter of Fiscal 2019 increased on a year-on-year basis, the number of homes sold for the second quarter of
Fiscal 2019 fell below the figures in the same period of the previous fiscal year due to some of the homes beingscheduled to be delivered in the second half of Fiscal 2019. On the other hand, operating income improved yearon-year due to the fruits of the effort to improve profits and a year-on-year decrease in selling, general andadministrative expenses.
As a result of these initiatives, the Grandy House Group's consolidated results for the second quarter of Fiscal
2019 were as follows. Net sales were ¥21,268 million, down 4.6% year-on-year; operating income rose to ¥1,464
million, an increase of 10.1% year-on-year; ordinary income was ¥1,532 million, an increase of 11.2% year-onyear. However, net income attributable to owners of the parent company declined to ¥830 million, a decrease of
10.6% year-on-year due primarily to the booking of the payment of directors retirement benefits accompanying
the stepping down of our company founder as a director.
Results by business segment are presented as follows.
a. Real Estate Sales
In the new home sales, we started sales of the other two blocks among the total of four blocks in Yotsuba no
Mori housing lots (211 lots in Tsukuba in Ibaraki Prefecture) and opened a new model house and, at the sametime, boosted sales activities for large housing lots by holding various experience events at the new model house
at GRAND BEAT PARK Kaminokawa (141 lots, Kaminokawamachi in Tochigi Prefecture). In terms of
products, we continued to differentiate our products from those of our competitors by pursuing our "Townscapecreation" policy that gave a theme to each housing lot and harmonized the distinctive appearance of homes andthe uniform image of the housing lot, as well as to make new proposals such as building homes that were
equipped with IoT. As for expanding our sales area to include Saitama Prefecture, we made progress inpurchasing housing lots and preparing opening of new sites with the aim of contributing to the results for the next
fiscal year. Note that the cumulative number of new homes sold of the Grandy House Group reached 15,000
homes in July this year.
Through initiatives such as these, orders received for new homes for the second quarter of Fiscal 2019 were
356 homes, which is almost according to the initial plan, and those for the first half of Fiscal 2019 even reached arecord high of 685 homes (an increase of 12 homes year-on-year), but the number of homes sold during the six
months ended September 30, 2018 was 637 homes (a decrease of 29 homes year-on-year) due to some of thehomes being scheduled to be delivered in the second half of Fiscal 2019. On the other hand, profit was improved
because the initiative for cost reduction had started bearing fruit.
In existing home sales, we continued making efforts to expand existing home sales, etc. by enhancing productinventory as we did in the previous fiscal year. Amid competition intensifying due to auctions related topurchasing, orders received for the second quarter of Fiscal 2019 grew almost steadily as a result of reinforcing
procurement by setting up a goal of keeping 70 completed homes in inventory at any time, but the number ofhomes sold during the six months ended September 30, 2018 was 72 homes (a decrease of 2 homes year-onyear). On the other hand, in respect of profit, our profit increased because we were able to sell profitableproperties.
―2―

As a result of these initiatives, sales in the real estate sales segment decreased 5.8% year-on-year to ¥19,545
million. Segment profit rose to ¥1,362 million, up 12.1% from the same period of the previous fiscal year.
b. Construction Material Sales
In the construction material sales, new housing starts for wooden houses including custom-made houses havestayed below those in the same period of the previous fiscal year since July of last year. Meanwhile, domestic
wood material prices are predicted to trend lower until the end of the year as the prices of North American logs
have been displaying a downward trend since May. Under such circumstances, the Grandy House Group
expanded sales of materials to small- and medium-size builders while continuing to make efforts, such as
boosting sales of building materials/housing equipment other than pre-cut materials. As a result of these factors,
sales in the construction materials sales segment increased by 12.5% year-on-year to ¥1,595 million. Segment
profit rose to ¥100 million, up 33.9% from a year earlier.
c. Real Estate Leasing
In the real estate leasing, while more stores were opened in or relocated to the city center in the officebuilding market in and around Utsunomiya, which is our main market, vacancies of offices increased due to theresumption of offering for lease in some offices where offering for lease had been suspended for a long period oftime. In the parking lot market, competition remained intense between parking lots in the vicinity. In this context,
while we made efforts to improve the operation rate of existing assets and reduce management costs, the impactof the rise of vacancy rates, which started toward the end of last year, persisted. Consequently, sales in the realestate leasing segment were ¥127 million, a decrease of 3.9% year-on-year, and segment profit was ¥84 million,a decrease of 6.4% year-on-year.
(2) Explanation regarding Financial Position
a. Balance Sheet
As of the end of the second quarter of Fiscal 2019, total consolidated assets fell to ¥46,893 million, a decreaseof ¥387 million compared to the end of the previous consolidated fiscal year. This was due to our selective andrestrictive approach to purchasing, based on the situation of inventory following sales of large housing lots forthe current fiscal year, in terms of new home sales. Liabilities decreased to ¥26,974 million, down ¥750 million
compared to the end of the previous consolidated fiscal year due mainly to a decrease in inventories, also ending
up limiting new loans. Furthermore, we are making efforts that are continued from the previous fiscal year toswitch our fund procurement method to financing by bonds for part of our loans in order to reduce the burden ofinterest payments and to flexibly use funds.
Total net assets stood at ¥19,919 million as of September 30, 2018. This represents an increase of ¥363
million from the balance recorded as of March 31, 2018. This is largely due to the acquisition of net income
attributable to owners of the parent company despite the payment of dividends.
b. Cash Flows
Cash and cash equivalents (hereinafter, "cash flows") as of the end of the second consolidated quarterdecreased by ¥366 million compared to the end of the previous consolidated fiscal year to ¥9,447 million as aresult of increased cash flows from operating activities and decreased cash flows from investing activities andfinancial activities.
Factors contributing to movements in the Company's cash flows during the six months ended September 30,
2018, are as follows.
(Cash Flows from Operating Activities)
Net cash provided by operating activities amounted to ¥708 million (increase of ¥1,378 million for the six
months ended September 30, 2017). This was largely due to an increase in net income before income taxes and, as
mentioned above, to a decrease in inventory as a result of our selective and restrictive approach to purchasing
despite the payment of income taxes.
(Cash Flows from Investment Activities)
Net cash used in investment activities amounted to ¥252 million (a decrease of ¥65 million for the six months
ended September 30, 2017). This was mainly due to payments for the purchase of property, plant, and equipment,―3―etc., such as employee parking lots, and additional deposits made as a security deposit to warrant against housing
defects.
(Cash Flows from Financing Activities)
Net cash used in financing activities amounted to ¥822 million (decrease of ¥142 million for the six months
ended September 30, 2017). This was due to payments of dividends and a decrease in short-term loans payable
due to a reduction in inventory. As mentioned above, we switched our fund procurement method to financing bybonds for a part of our loans.
(3) Explanation regarding Future Prospects including Consolidated Financial Forecasts
There is no change to financial forecasts announced on May 7, 2018.

―4―

2. QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS AND NOTES(1) Quarterly Consolidated Balance Sheets(Thousands of Yen)FY2018(As of March 31, 2018)

Second Quarter of FY2019(As of September 30, 2018)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade
Real estate for sale
Costs on uncompleted construction contracts
Real estate for sale in process

9,813,941

9,447,642

672,527

686,433

16,588,298

17,636,205

2,414

15,1738,936,229

7,506,633

Merchandise and finished goods

211,897248,790

Raw materials and supplies

166,467

138,498

Other

413,250

602,724

Allowance for doubtful accounts(4,348)(4,198)36,800,680

36,277,904

3,256,709

3,217,316

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net

6,175

4,028

Tools, furniture and fixtures, net

62,563

66,613

5,319,659

5,454,271

69,002

76,925–23,002

8,714,109

8,842,156

66,86258,936

Investment securities

428,336

419,184

Long-term loans receivable

14,85914,284

Land
Lease assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets

Deferred tax assets

381,203

369,057

Other

846,788874,963

Allowance for doubtful accounts(4,901)(4,775)

Total investments and other assets

1,666,286

1,672,713

10,447,258

10,573,807

Bond issuance costs

33,38842,281

Total deferred assets

33,38842,28147,281,326

46,893,992

Total non-current assets
Deferred assets

Total assets―5―

(Thousands of Yen)FY2018(As of March 31, 2018)

Second Quarter of FY2019(As of September 30, 2018)

Liabilities
Current liabilities
Accounts payable for construction contracts

3,408,906

3,170,191

Short-term loans payable

19,177,700

18,596,500

Current portion of long-term loans payable

494,513562,560

Current portion of bonds

21,00021,000

Lease obligations

24,40327,316

Income taxes payable

495,419

313,888

Provision for warranties for completed construction

58,68657,247

Other755,677

747,054

24,436,306

23,495,758

Bonds payable

1,066,000

1,555,500

Long-term loans payable

Total current liabilities
Non-current liabilities

1,384,806

1,060,255

Lease obligations

50,09956,177

Provision for directors' retirement benefits

166,279

153,304

Net defined benefit liability

571,584

604,392

Asset retirement obligations

4,296

4,320

Other
Total non-current liabilities
Total liabilities

45,483

44,6673,288,549

3,478,618

27,724,855

26,974,377

2,077,500

2,077,500

Net assets
Shareholders' equity
Capital stock
Capital surplus

2,223,038

2,223,038

Retained earnings

15,407,196

15,775,904

Treasury shares
Total shareholders' equity(341,339)(341,339)

19,366,395

19,735,103

Accumulated other comprehensive income
Valuation difference on available-for-sale securities(3,824)(9,387)

Total accumulated other comprehensive income(3,824)(9,387)

193,900

193,900

19,556,471

19,919,615

47,281,326

46,893,992

Subscription rights to shares
Total net assets
Total liabilities and net assets―6―

(2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Consolidated cumulative second quarter)(Thousands of Yen)
Six months ended
September 30, 2017
(From April 1, 2017 to
September 30, 2017)

Six months ended
September 30, 2018
(From April 1, 2018 toSeptember 30, 2018)

Net sales

22,289,476

21,268,322

Cost of sales

18,440,325

17,351,210

Gross profit

3,849,151

3,917,111

Selling, general and administrative expenses

2,518,951

2,452,308

Operating income

1,330,199

1,464,803

Interest income

711

452

Dividends income

3,453

2,953

Non-operating income

Operations consignment fee

117,300

113,897

Office work fee

76,71975,838

Other

31,823

16,332

Total non-operating income

230,007

209,473

Non-operating expenses
172,383

133,404

Commission for syndicate loan

Interest expenses

4,405

3,333

Other

4,531

4,766

Total non-operating expenses
Ordinary income

181,319

141,504

1,378,887

1,532,772

Extraordinary loss
Loss on retirement of non-current assets

8,644

7,269

Loss on cancellation of lease contracts

–

2,179

Directors' retirement benefits–

300,000

Total extraordinary loss
Net income before income taxes
Income taxes – current

8,644

309,449

1,370,242

1,223,323

464,432

378,625

Income taxes – deferred(22,431)

14,583

Total income taxes

442,000

393,208

Net income

928,242

830,114

Net income attributable to non-controlling interests
Net income attributable to owners of the parent company

―7―

–

–

928,242

830,114

(Quarterly Consolidated Statements of Comprehensive Income)(Consolidated cumulative second quarter)(Thousands of Yen)
Six months ended
September 30, 2017
(From April 1, 2017
to September 30, 2017)
Net income

Six months ended
September 30, 2018
(From April 1, 2018
to September 30, 2018)928,242

830,114

Valuation difference on available-for-sale securities(3,477)(5,563)

Total other comprehensive income(3,477)(5,563)924,765824,551924,765824,551––

Other comprehensive income

Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners of the parent
company
Comprehensive income attributable to non-controllinginterests―8―

(3) Quarterly Consolidated Statements of Cash Flows(Thousands of Yen)
Six months ended
September 30, 2017
(From April 1, 2017
to September 30, 2017)

Six months ended
September 30, 2018
(From April 1, 2018
to September 30, 2018)

1,370,242

1,223,323

Depreciation and amortization
Increase (decrease) in provision for directors' retirement
benefits
Increase (decrease) in provision for warranties forcompleted construction
Increase (decrease) in allowance for doubtful accounts

142,126

119,506

16,625(12,974)(27)(1,438)(13,268)(276)

Increase (decrease) in net defined benefit liability

36,70432,808Interest and dividends income(4,164)(3,405)Interest expenses

172,383

133,404

Cash flows from operating activities
Net income before income taxes

8,644

7,269

Decrease (increase) in notes and accounts receivable-trade(67,184)(13,905)

Decrease (increase) in inventories

291,048

360,006

Increase (decrease) in notes and accounts payable-trade100,197(238,714)

Other(34,008)(137,399)

Subtotal

2,019,318

1,468,203

5,297

4,542

(151,606)(133,101)

Income taxes paid

(494,208)(631,425)

Net cash provided by (used in) operating activities

1,378,799

708,219

Purchase of property, plant and equipment(43,336)(215,117)

Purchase of intangible assets(3,418)(2,725)

Loss on retirement of non-current assets

Interest and dividends income received
Interest expenses paid

Cash flows from investment activities

Collection of loans receivable

560

574

Payments for guarantee deposits(18,000)(29,190)

Other payments(1,395)(5,873)

Other proceeds

540

94

(65,050)(252,237)

Net increase (decrease) in short-term loans payable

232,800(581,200)

Proceeds from long-term loans payable

418,300–

Repayment of long-term loans payable(356,884)(256,504)–

500,000

Net cash provided by (used in) investing activities

Cash flows from financing activities

Proceeds from issuance of bonds
Redemption of bonds(10,500)(10,500)

Cash dividends paid

(401,790)(459,942)

Repayments of lease obligations(24,475)(14,133)(142,550)(822,280)

Net increase (decrease) in cash and cash equivalents

1,171,199(366,298)

Cash and cash equivalents at beginning of the period

8,475,518

9,813,941

Cash and cash equivalents at end of the period

9,646,718

9,447,642

Net cash provided by (used in) financing activities―9―(4) Notes to Quarterly Consolidated Financial Statements(Notes on Going Concern Assumptions)Not applicable.
(Notes on Significant Changes in the Amount of Shareholders' Equity)
Not applicable.
(Supplemental Information)(Adoption of "Partial Amendments to Accounting Standard for Tax Effect Accounting," etc.)
We adopted "Partial Amendments to Accounting Standard for Tax Effect Accounting" (Corporate AccountingStandards No. 28: February 16, 2018), etc. from the beginning of the first quarter of Fiscal 2019, and deferred tax
assets are reported in Investment and other assets.
(Segment and Other Information)
Segment Information
I. The six months ended September 30, 2017 (April 1, 2017 to September 30, 2017)
1. Information relating to the amounts of net sales, profit and loss by reportable segment
Reportable Segment

Net sales
Sales to outside
customers
Inter-segment sales
and transfers
Total
Segment profit

Adjustments(Note 1)(Thousands of Yen)
AmountRecorded on
Quarterly
Consolidated
Statements ofIncome (Note 2)

Real Estate
Sales

Construction
Material Sales

Real Estate
Leasing

20,738,592

1,418,574

132,30922,289,476—

22,289,476—

1,643,079

39,7201,682,799(1,682,799)—

20,738,592
1,215,505

3,061,653
74,843172,02990,292

23,972,276
1,380,641(1,682,799)(1,754)

22,289,476
1,378,887

Total

Notes: 1 Adjustments of segment profit (−¥1,754 thousand) are eliminations of inter-segment transactions.
2 Segment profit has been adjusted to ordinary income described in quarterly consolidated statements of income.

2. Information concerning the impairment loss of non-current assets and goodwill by reportable segment
Not applicable.
II. The six months ended September 30, 2018 (April 1, 2018 to September 30, 2018)
1. Information relating to the amounts of net sales, profit and loss by reportable segment
Reportable Segment

Net sales
Sales to outside
customers
Inter-segment sales
and transfers
Total
Segment profit

Adjustments(Note 1)(Thousands of Yen)
AmountRecorded on
Quarterly
Consolidated
Statements ofIncome (Note 2)

Real Estate
Sales

Construction
Material Sales

Real Estate
Leasing

19,545,336

1,595,872

127,112

21,268,322—

21,268,322—

1,565,154

41,611

1,606,766(1,606,766)—

19,545,336
1,362,289

3,161,027
100,250

168,724
84,511

22,875,088
1,547,051(1,606,766)(14,279)

21,268,322
1,532,772

Total

Notes: 1 Adjustments of segment profit (−¥14,279 thousand) are eliminations of inter-segment transactions.
2 Segment profit has been adjusted to ordinary income described in quarterly consolidated statements of income.

2. Information concerning the impairment loss of non-current assets and goodwill by reportable segment
Not applicable.

― 10 ―