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 Fiscal 2016 (The Fiscal Year Ended March 31, 2016 under Japanese GAAP)
Company Name: Grandy House Corporation
Stock Exchange Listing:
Securities Code:
8999
URL
Representative:
Hiroyuki Murata, President
Inquiries:
Atsuo Saito, Senior Managing Director
Scheduled date of the Ordinary General Meeting of Shareholders: June 29, 2016
Scheduled date of Securities Report filing:
June 29, 2016
Scheduled date of dividend payment commencement:
June 30, 2016
Preparation of annual supplementary explanatory materials:
Yes
Annual results briefing held:
Yes (For analysts)

May 9, 2016
Tokyo Stock Exchange
http://www.grandy.co.jp
TEL: +81-28-650-7777(Figures are rounded down to the nearest million yen unless otherwise stated.)

1. Consolidated Financial Results for Fiscal 2016 (April 1, 2015 to March 31, 2016)(1) Consolidated Operating Results(Percentage figures show the year-on-year increase (decrease).)Net Income Attributable to
Owners of the Parent
Net Sales
Operating Income
Ordinary Income
Company(¥ million)%(¥ million)%(¥ million)%(¥ million)%
Fiscal 2016
41,706
11.3
2,768
14.6
2,863
13.9
1,732
10.5
Fiscal 2015
37,4690.6
2,415(17.6)
2,514(17.1)
1,567(11.1)
Note: Comprehensive Income
Fiscal 2016: ¥1,669 million (5.4%)
Fiscal 2015: ¥1,583 million (-10.8%)
Net Income per
Net Income per
Ordinary Income /Operating Income /Return on Equity
Share
Share (Diluted)
Total Assets
Net Sales
(¥)
(¥)
%
%
%
Fiscal 2016
60.20
―
11.0
7.6
6.6
Fiscal 2015
54.47
―
10.9
7.2
6.4
Reference: Equity in earnings of affiliates
Fiscal 2016: ¥― million
Fiscal 2015: ¥― million(2) Consolidated Financial Position

Total Assets
Net Assets(¥ million)(¥ million)
March 31, 2016
39,545
16,623
March 31, 2015
35,84615,084
Reference: Shareholders’ equity Fiscal 2016: ¥16,448 million
Fiscal 2015: ¥15,009 million

Shareholders’ Equity Ratio
%
41.6
41.9

Net Assets per Share(¥)
571.58521.57(3) Consolidated Cash Flows

Fiscal 2016
Fiscal 2015

Cash Flows fromOperating Activities(¥ million)
101
700

Cash Flows from
Investing Activities(¥ million)
(507)
(172)

Cash Flows from
Financing Activities(¥ million)
1,575
531

Cash and Cash Equivalents
at the End of the Period(¥ million)
7,782
6,614

2. Dividends
Annual Dividend per SharesFiscal 2015
Fiscal 2016
Fiscal 2017 (Forecast)

1Q-End2Q-End3Q-EndPeriodEnd

(¥)
―
―
―

(¥)
0.00
0.00
0.00

(¥)
―
―
―

(¥)
8.00
12.00
14.00

Total
(¥)
8.00
12.00
14.00

Total
Dividends(¥ million)
230
345

Payout Ratio(Consolidated)
%
14.7
19.9
20.4

Ratio of
Dividends to
Net Assets(Consolidated)
%
1.6
2.2

3. Consolidated Financial Forecasts for Fiscal 2017 (April 1, 2016 to March 31, 2017)

Net SalesInterim Period
Full Fiscal Year(¥ million)
22,30045,000%
7.9
7.9(Percentage figures show the year-on-year increase (decrease) for each corresponding period.)
Net Income
Attributable to
Net Income per
Operating Income
Ordinary Income
Owners of the
Share
Parent Company(¥ million)%(¥ million)%(¥ million)
%
(¥)
1,560
14.1
1,600
12.8
970
8.5
33.71
3,150
13.8
3,250
13.5
1,970
13.7
68.46

* 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) 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:(3) Number of shares issued and outstanding (common stock)1) Number of shares issued and outstanding as ofMarch 31, 2016
the period-end (including treasury shares)
March 31, 2016
2) Number of treasury shares
3) Average number of shares issued and outstanding for Fiscal 2016
the period

Yes
None
None
None

30,823,200 shares

March 31, 2015

30,823,200 shares

2,046,245 shares

March 31, 2015

2,046,198 shares

28,776,955 sharesFiscal 2015

28,777,002 shares

Reference: Non-Consolidated Financial Results
1. Non-Consolidated Financial Results for Fiscal 2016 (April 1, 2015 to March 31, 2016)(1) Non-Consolidated Operating Results

Fiscal 2016
Fiscal 2015

Net Sales(¥ million)
18,60518,284

%
1.8
(6.7)

(Percentage figures show the year-on-year increase (decrease).)Ordinary Income
Net Income(¥ million)%(¥ million)%
1,556(12.1)
1,099(17.2)
1,771(13.5)
1,327
1.4

Net Income per Share(Diluted)

Net Income per Share
(¥)
38.21
46.14

Fiscal 2016
Fiscal 2015

Operating Income(¥ million)%888(18.1)
1,084(30.7)(¥)――(2) Non-Consolidated Financial Position
Total Assets
Net Assets
Shareholders’ Equity Ratio(¥ million)(¥ million)%
March 31, 2016
23,653
13,726
57.3
March 31, 2015
22,233
12,82057.3
Reference: Shareholders’ equity March 31, 2016: ¥13,551 million
March 31, 2015: ¥12,745 million

Net Assets per Share(¥)
470.92442.91

2. Non-Consolidated Financial Forecasts for Fiscal 2017 (April 1, 2016 to March 31, 2017)

Interim Period
Full Fiscal YearNet Sales(¥ million)
9,450
19,000%1.0
2.1(Percentage figures show the year-on-year increase (decrease) for each corresponding period.)
Operating Income
Ordinary Income
Net Income
Net Income per Share(¥ million)%(¥ million)%(¥ million)
%
(¥)
490
0.1
1,430
26.7
1,160
24.5
40.31
1,000
12.5
1,980
27.2
1,460
32.8
50.74

*

Disclosure concerning the implementation status of audit proceduresThis Consolidated Financial Report is not subject to the audit procedures required by the Financial Instruments and Exchange
Act of Japan. At the time of this report’s disclosure, audit procedures for consolidated financial statements under the Financial
Instruments and Exchange Act were in progress.

*

Explanation concerning the appropriate use of forecasts and other special instructions
Disclaimer:
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. Please refer to “1. ANALYSIS OFOPERATING RESULTS AND FINANCIAL POSITION (1) Analysis of Operating Results” on page 2 of the attachment
materials for information regarding the underlying assumptions for financial results forecasts and an explanation concerning
the appropriate use of forecasts and other notes.

Attachment Materials: Table of Contents
1. ANALYSIS OF OPERATING RESULTS AND FINANCIAL POSITION ............................................................ 2(1) Analysis of Operating Results ................................................................................................................................. 2(2) Analysis of Financial Position ................................................................................................................................. 4(3) Basic Policy Concerning the Allocation of Profits and Dividends for Fiscal 2016 and Fiscal 2017 ....................... 5(4) Business and Other Risks ........................................................................................................................................ 5
2. OVERVIEW OF THE CORPORATE GROUP ....................................................................................................... 9
3. MANAGEMENT POLICY ................................................................................................................................... 10(1) Basic Management Policy ..................................................................................................................................... 10(2) Target Management Benchmarks .......................................................................................................................... 10(3) Medium- and Long-Term Management Strategies ................................................................................................ 10(4) Pending Issues ....................................................................................................................................................... 11(5) Other Matters Important to the Company’s Management ..................................................................................... 11
4. BASIC APPROACH TO THE SELECTION OF ACCOUNTING STANDARDS .............................................. 11
5. CONSOLIDATED FINANCIAL STATEMENTS ................................................................................................ 12(1) Consolidated Balance Sheets ................................................................................................................................. 12(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ............................ 14(Consolidated Statements of Income) ....................................................................................................................14(Consolidated Statements of Comprehensive Income) ..........................................................................................15(3) Consolidated Statements of Changes in Net Assets............................................................................................... 16(4) Consolidated Statements of Cash Flows................................................................................................................ 18(5) Notes to Consolidated Financial Statements ......................................................................................................... 20(Notes on Going Concern Assumptions) ...............................................................................................................20(Changes in accounting policies) ...........................................................................................................................21(Segment and Other Information)..........................................................................................................................22―1―

1. ANALYSIS OF OPERATING RESULTS AND FINANCIAL POSITION(1) Analysis of Operating Results
During the consolidated fiscal year ended March 31, 2016, there were expectations for the Japanese economy
to sustain its recovery owing to improvements in corporate earnings and employment and income conditions.
However, the economic outlook remained uncertain as seen in the slowdown in China and emerging countries
and the decline in the stock market in the beginning of 2016.
In the housing sector, a favorable environment continued due to the mortgage rates remaining at a low level,
the continuation of measures to stimulate housing demand, and further improvement in the employment andincome conditions, and new housing starts remained at a steady level.
Under these circumstances, the Grandy House Group has aimed at achieving a sustainable growth with thebasic policies of “continuous growth through reinforcing the core operation (new homes)” and “expansion ofbusiness through enhancement of the stock business,” and implemented efforts by placing clear emphasis onthese policies in the medium-term business plan announced in November 2015.
In new home sales, the Group’s core operation, we made efforts to cover the entire area stretching fromsouthern Ibaraki Prefecture to Kashiwa City in Chiba Prefecture as the key undertaking in terms of growthstrategy. As a way to cultivate existing markets more extensively, we opened two “Grandy Plaza” showrooms,
which provide customers with information by allowing them to experience the features of the houses, bringing
the total to four. “Grandy Plaza” showrooms serve as the venues for disseminating information such as new
housing lots and holding various events that promote the “safety and assurance” of the Group, which
encompasses comprehensive functions from building to selling homes, can bring to our customers.
Meanwhile, in existing home sales, we worked to expand our coverage areas as a growth strategy, and madeefforts to enhance our home renovation capabilities with emphasis on functionality and design and build up
inventory in order to expand our sales.
As a result of these factors, the Grandy House Group’s consolidated results for Fiscal 2016 were as follows.
Net sales were ¥41,706 million, up 11.3% from the previous fiscal year; operating income was ¥2,768 million, up
14.6% from the previous fiscal year; ordinary income was ¥2,863 million, up 13.9% from the previous fiscal
year; and net income attributable to owners of the parent company totaled ¥1,732 million, up 10.5% from theprevious fiscal year.
Results by business segment are presented as follows.
Real Estate Sales
In the new home sales business, in the key area from southern Ibaraki Prefecture to Kashiwa City in Chiba
Prefecture, we established the Moriya Branch (Moriya City, Ibaraki Prefecture) in April 2015 in an effort to cover
the wide areas stretching along the Joban Line and Tsukuba Express Line, building up inventory and bolstering
our sales capabilities. To strengthen sales efforts in existing areas, we opened two “Grandy Plaza”
experience-oriented showrooms—one in Utsunomiya City in Tochigi Prefecture in May, and the other one in
Mito City in Ibaraki Prefecture in December. With the “Grandy Plaza” showrooms serving as the venues fordisseminating information, we put forward “Town Opening” information about new housing lots, established acomprehensive set-up from development of housing lots to building homes and after-sales maintenance, provided“assurance and safety” by offering a long-term warranty and other efforts to enable customers to experience thehigh quality of our houses. Also, we made efforts to promote sales such as holding events including an open
house event for the entire families to enjoy and “Mortgage Loan Counseling Event” by a partner bank. As a result,home sales for the quarter ended March 31, 2016 came to 350, the largest quarterly sales on record.
Home sales for the consolidate fiscal year ended March 31, 2016, despite the paltry increase in the Tochigi
area, marked a robust increase in the key area from southern Ibaraki Prefecture to Kashiwa City in Chiba
Prefecture and in the Gunma area where we boosted the sales structure to raise our share, and came to 1,290—up
120 from 1,170 for the previous consolidated fiscal year—renewing the record sales.
In existing home sales, we broadened the area subject to procuring properties and constructed an information
network, and increased the number of properties we handled thereby diversifying the sources of information andreviewing the procurement routes, and increased our inventory to around 100 homes most of which were fairly
new and worked to expand sales. In terms of homes for sale, we worked on “design renovation” which enhanced
functionality and design at the level of renovation and remodeling planning, but price competition with low-cost―2―homes continued to be intense and the number of homes sold came out to be 117, up five from the previous fiscal
year.
Accounting for each of these factors, revenues in the real estate sales segment rose 11.5% year-on-year to¥38,549 million. Segment profit was ¥2,533 million, up 12.3% from the previous fiscal year.
Construction Material Sales
In the construction material sales segment, demand for pre-cut materials remained strong thanks to thecontinued moderate improvement in the housing starts, but the prices of main materials were flat as the balance
between supply and demand did not tighten due to the increase in the imports of such materials.
Against the backdrop of such market conditions, as demand within the group expanded, we reinforced our
production structure such as by outsourcing part of the production to aim to expand external orders. In sales, we
worked to expand orders in non-housing segments and worked to boost sales of building materials other thanpre-cut materials. As a result, both sales and profits for this consolidated fiscal year grew from the year before.
As a result, revenues in the construction material sales segment increased 11.3% year-on-year to ¥2,894
million, while segment profit was ¥188 million, up 23.0% from the previous fiscal year.
Real Estate Leasing
In the real estate leasing segment, in the office leasing market in and around Utsunomiya City, Tochigi
Prefecture, which is our main market, there was not much movement with regard to larger offices but the vacancy
ratio showed a moderate improvement especially with smaller offices. In the parking market, the situation
continued to be tough owing to the increase of pay-by-the-hour parking lots run by competitors.
Under these circumstances, mainly due to the decrease in managed assets during the previous and current
fiscal years, both sales and profits for this consolidated fiscal year decreased. The decrease in assets came fromthe sale of a rental apartment building and a pay-by-the-hour parking lot in the previous year, and this year, wechanged the use of some apartments from rental to commercial during the third quarter, and sold one
pay-by-the-hour parking lot (in Mito City, Ibaraki Prefecture) during the fourth quarter.
As a result, revenues in the real estate leasing segment decreased 6.6% year-on-year to ¥262 million, while
segment profit fell to ¥165 million, a decline of 4.0%.
Outlook
For the Japanese economy, there are expectations for a recovery coming from an improvement in
employment and wage conditions, but concerns remain about the impact on corporate earnings from the reversalof the weakening of the yen and about the adverse effect of the planned consumption tax hike, while the global
economy remains fluid as seen in the slowdown in the Chinese economy; the economic outlook does nottherefore allow for optimism. For home buyers, the circumstances remain favorable as seen in low mortgage rates
and tax credits for housing loans and grants for home buyers.
Against this background, with a view to achieving the medium-term business plan which will end in the year
ending in March 2018, we continue to work on expanding our coverage area and increasing our share under thepolicy of focusing our management resources on the core operation of new home sales, and bolster ourmanagement foundation to support ongoing business expansion.
Taking into account the above factors, Grandy House is forecasting consolidated net sales of ¥45,000 million
for the fiscal year ending March 31, 2017. This represents a 7.9% increase year-on-year. Operating income isforecast to rise 13.8% to ¥3,150 million. Ordinary income is forecast to increase 13.5% to ¥3,250 million, with
net income attributable to owners of the parent company improving 13.7% to ¥1,970 million.

―3―(2) Analysis of Financial Positiona. Consolidated Balance Sheet
Total assets stood at ¥39,545 million as of March 31, 2016, up ¥3,698 million compared with the end of theprevious fiscal year. This was largely due to the increase of ¥1,168 million in the balance of cash and deposits,
and increases of ¥1,571 million and ¥458 million in real estate for sale in process with respect to new homes andexisting homes respectively.
Total liabilities grew ¥2,159 million compared with the previous fiscal year-end to ¥22,921 million. This waslargely because we funded the increase in real estate for sale for the purpose of expanding the operation withshort-term loans (project funds), and to the increase in accounts payable for construction contracts.
Net assets increased ¥1,539 million compared to the previous fiscal year-end to ¥16,623 million owing to the
net income of ¥1,732 million and the increase in subscription rights to shares, while there was a decrease individend payout and valuation difference on available-for-sale securities.
b. Cash Flows
Cash flows from operating and investing activities resulted in increases in cash and cash equivalents
respectively, and cash flows from financing activities resulted in a decrease in cash and cash equivalents in thefiscal year under review. As a result, the balance of cash and cash equivalents at the end of the period amounted
to ¥7,782 million, up ¥1,168 million year-on-year.
Factors contributing to movements in the Company’s cash flows during the fiscal year under review arepresented as follows.
(Cash Flows from Operating Activities)
Net cash provided by operating activities amounted to ¥101 million (an increase of ¥700 million for the fiscal
year ended March 31, 2015). This was largely due to the profit before income taxes and depreciation, which
added up to ¥2,933 million, increase in trade payables such as accounts payable for construction contracts, and adecrease in trade receivables, which more than offset an increase of ¥2,095 million in inventories and payment
for income taxes.
(Cash Flows from Investing Activities)
Net cash provided by investing activities amounted to a decrease of ¥507 million owing to the acquisition of
fixed assets and investment securities (compared to a decrease of ¥172 million in the previous fiscal year).
Acquired fixed assets consist mainly of two branches (Utsunomiya Interpark and Moriya City, Ibaraki
Prefecture), two “Grandy Plaza” showrooms (Utsunomiya Interpark and Mito City, Ibaraki Prefecture), and theconstruction cost (construction in progress) that represents the new business site in Oyama City, Tochigi
Prefecture.
(Cash Flows from Financing Activities)
Net cash provided by financing activities amounted to ¥1,575 million (an increase of ¥531 million for the
fiscal year ended March 31, 2015). This was largely due to the increase in short-term loans payable to support theincrease in inventory while dividends were paid.
Trends in the Group’s cash flow-related indices are presented as follows.
Fiscal 2014

Fiscal 2015

40.7
28.2

Shareholders’ equity ratio (%)
Equity ratio on market value basis (%)
Interest-bearing liabilities to cash flow ratio (years)—

Interest coverage ratio (times)—

Shareholders’ equity ratio: Shareholders’ equity/total assets
Equity ratio on a market value basis: Market capitalization/total assets
Interest-bearing liabilities to cash flow ratio: Interest-bearing liabilities/cash flows
Interest coverage ratio: Cash flows/interest payments
―4―

41.9
24.5
23.1
2.5

Fiscal 2016

41.6
26.4
177.3
0.3

Notes: 1. Each index is calculated based on consolidated financial data.
2. Market capitalization is calculated based on the number of shares issued and outstanding as of theperiod-end (after deducting treasury shares).
3. Cash flows from operating activities are used as “cash flows” in the above calculation. As operating cash
flows for the fiscal year ended March 31, 2014 were negative, interest-bearing liabilities to cash flow ratio
and interest coverage ratio data have been omitted for the year.
4. Interest-bearing liabilities include all liabilities that bear interest under the liabilities section recorded on
consolidated balance sheets.
(3) Basic Policy Concerning the Allocation of Profits and Dividends for Fiscal 2016 and Fiscal 2017
Grandy House focuses on increasing the corporate value and returning more profits to shareholders as one ofits priority management issues. For shareholders, we will follow a dividend policy that is based on businessperformance and work to enhance the policy while aiming for a consolidated dividend payout ratio of 20%.
Purchase of treasury shares will be made depending on the Company’s financial position with the aim ofincreasing the value and profit per share and enhancing the Company’s capital efficiency.
Guided by the above-mentioned dividend policies, Grandy House has declared an annual dividend of ¥12 pershare for the fiscal year under review. The annual divided forecast for the year ending March 31, 2017 is ¥14 pershare (up by ¥2 year-on-year).
Under its Articles of Incorporation, Grandy House has adopted a flexible and fluid approach toward thepayment of dividends from surplus based, which is subject to a resolution of the Company’s Board of Directors.
In accordance with standard practice, however, Grandy House plans to continue paying a single annual dividend
to shareholders of record as of March 31 each year.
(4) Business and Other Risks
The Grandy House Group recognizes that a variety of factors has the potential to impact its operating results,financial position, and share price. Details are presented briefly as follows. Readers are reminded thatforward-looking statements are based on judgments in light of information currently available to management asof the date of this publication.
 Risks relating to real estate salesi.

Housing demand
The Grandy House Group is mainly engaged in the sale of real estate and construction materials as well
as real estate leasing operations. In the fiscal year under review, sales from the real estate sales segment
accounted for 92.4% of total net sales on a consolidated basis. Real estate sales activities entail the sale ofdetached and custom-built houses, the development and sale of land for housing use, and related additional
exterior construction work. The sale of houses and land for housing use is affected by the willingness ofpurchasers to spend as well as demand trends. The willingness of purchasers to spend as well as demand
trends are in turn susceptible to such factors as movements in economic conditions, interest rates, and land
prices as well as forecasts of the future and tax systems applicable to the housing sector. Shifts in any ofthese factors have the potential to impact the Group’s performance and financial position.

ii.

Sales and marketing area
The Grandy House Group maintains its operating base largely in the North Kanto area. In Fiscal 2016,
the ratio of sales generated from activities in Tochigi Prefecture was as high as 49.2%. In recent years, theGroup has worked diligently to expand its operating base and lift the ratios of revenue generated in
prefectures outside Tochigi. In the fiscal year under review, the share of Ibaraki Prefecture (Mito City,
Ushiku City, other), Gunma Prefecture (Takasaki City, Ota City, other), and Chiba Prefecture (Kashiwa
City, other) sales as a ratio to total sales were 27.1%, 13.2%, and 10.3%, respectively. Despite theseendeavors, and for a variety of reasons including competitive relationships, the Group’s performance andfinancial position may be affected if the Company is unable to advance its strategies with respect to areas ofparticular emphasis according to plans.

iii.

Competition
In relative terms, the Grandy House Group maintains competitive advantage in Tochigi Prefecture. In
the event, however, that a new entity with the capacity to significantly impact the Group’s land supply
structure enters the market, substantial potential exists for the Group’s performance and financial position to
be affected.
―5―In major metropolitan areas, competition is heating up between the Group’s industry peers. Thankslargely to the Group’s insistence on providing high value-added products including houses built for sale thatoffer such outstanding qualities as excellent room layout, external appearance, and townscaping, GrandyHouse is essentially holding the line against home builders who are promoting a low-price strategy. Shouldcompetition continue to intensify resulting in a marked drop in prices, the potential exists for the Group’s
performance and financial position to be affected.
iv.

The procurement of sites and inventory for saleIn its real estate sales business, the Grandy House Group engages in a full range of activities. These
activities include negotiations for the purchase of land (sites), discussions with government agencies, site
development, the acquisition of permits and approvals, construction work, and maintenance. The period
from the purchase of land to construction completion generally takes about eight months. In the event ofsuch wide-ranging circumstances as the inability to purchase land or sites according to plans in advance ofsales due to difficulties in securing land that offers a favorable location and conditions, and a sharp rise inland prices, or any other unforeseen matter including a natural disaster that delays the period of construction
resulting in the failure to produce inventory for sale, the potential exists for the Group’s performance andfinancial position to be affected.

v.

Employees
The real estate industry is distinguished by the substantial mobility of its human resources and high rateof personnel turnover. The Grandy House Group is no exception and continuously confronts a high attrition
rate particularly with respect to its sales staff. The principal reason is the extremely high product unit priceand the significant amount of time and experience required for employees to achieve stable results.
Accordingly, it is not uncommon for employees to change jobs before reaching this point of stability. Under
these circumstances, the Company takes great pains to fully explain the nature of its work at the time ofrecruiting and hiring. Moreover, and in order to improve its retention rate, Grandy House provides new
employees with substantial education and on-the-job training. Every effort is made to ensure that all
employees are conversant with the Company’s sales and marketing activities that are deeply rooted in thelocal community. In the event, however, that Grandy House is unable to secure sales staff on a stable basis
and according to plans, is unable to sufficiently foster the necessary human resources required to carry out
the important role of driving the Company’s business forward, and fails to improve its retention rate, thepotential exists for the Group’s performance and financial position to be affected.

vi.

Natural and other disasters
Large-scale natural and other disasters may give rise to substantial repair expenditure due to the damage
to business assets including operating bases as well as other damage to such merchandise as detachedhouses. At the same time, any of the aforementioned disasters may force a suspension or delay of operationsat business bases and work sites owing to physical injuries, property damage, and interruptions to essential
lifelines and social infrastructure. Furthermore, disasters may result in delays in construction and delivery
reflecting such factors as the time required to complete repairs and delays in the delivery of construction
materials. In each case, the potential exists for the Group’s performance and financial position to beaffected.

 Risks relating to financial position and operating resultsi.

Dependence on debt
In the conduct of its real estate sales activities, the Grandy House Group procures all or a portion of thefunds required to purchase land earmarked for development and to meet development as well as building
construction expenses from financial and other institutions on an individual project basis. The subject land isgenerally lodged as collateral for each loan. In addition, debt finance is primarily the source of funds used topurchase and/or construct properties that underpin the Group’s real estate leasing activities as well aspurchase and/or construct properties that are used to establish business bases. As of March 31, 2016, thebalance of interest-bearing liabilities stood at ¥17,971 million.
In this context, a rise in interest rates or a prolonged period during which interest rates hover at a highlevel due to such factors as changes in economic conditions and restrictions on the access to debt and otherfunding owing to a deterioration in the Group’s credit standing can lead to difficulties in the conduct ofbusiness such as an increase in the interest expense burden, or a change in business plans. As a result, thepotential exists for the Group’s performance and financial position to be affected.

―6―

ii.

Decline in the values of non-current assets and real estate for saleWith its operating base in the North Kanto area, the Grandy House Group engages in such wide-ranging
activities as the acquisition, development, sale, and leasing of real estate. In the event of a deterioration inreal estate market conditions, the Group may incur an impairment of its non-current assets or a major
write-down of its real estate for sale and other assets. This then has the potential to affect the Group’s
performance and financial position.

iii.

Change in performance due to delays in delivery
Revenues from the sale of detached housing are recorded for accounting purposes at the time ofdelivery. While certain large-scale projects require a considerable amount of time through to delivery, theperiod required from the purchase of land to building completion is generally around eight months.
Naturally, strict management is undertaken to monitor progress. In the event, however, of a delay inconstruction due to such factors as natural disasters or other unforeseen circumstance, or a substantial delay
in delivery owing to unexpected contingencies that result in the carryover of sales into the next period, thepotential exists for the Group’s performance to be affected. In addition, in the event that a hit product that
contributes to the shortening of sales periods emerges, or orders received exceed the forecast number ofproperties sold due to a variety of factors including economic trends, and a drop-off in the supply of
products for sale arises thereafter, the potential exists for the Group’s performance and financial position to
be affected.

iv.

Sharp rise in material prices
The detached housing products handled by the Group employ timber- and petroleum-related materials.
On this basis, and in the event of difficulties in reducing costs or passing on to consumers any increase in
the prices of materials procured owing to fluctuations in market conditions and foreign currency exchange
rates, the potential exists for the Group’s performance and financial position to be affected.

 Risks relating to statutory and regulatory requirements
The Grandy House Group engages in business activities that are regulated by such wide-ranging legislation as
Building Lots and Buildings Transaction Business Act, Construction Business Act, and Act on Architects andBuilding Engineers. In addition, the Group is subject to a variety of statutory and regulatory requirements
including those stipulated under Japan’s City Planning Act, National Land Use Planning Act, Act on Regulationof Residential Land Development, Building Standards Act, Housing Quality Assurance Act, and the Act on
Assurance of Performance of Specified Housing Defect Warranty. In the event that a revision or abolition of anyof the aforementioned or other applicable statutory and regulatory requirements, or the establishment of any new
statute or regulation leads to an increase in expenditure or delays in assessment periods by governing agencies,
the potential exists for the Group’s performance to be affected.
Legislation related to such key issues as permits and approvals including Building Lots and Buildings
Transaction Business Act, Construction Business Act, and Act on Architects and Building Engineers stipulate theduration of validity and causes for cancellation. The Grandy House Group adheres strictly to all statutory andregulatory requirements and as of the date of this report has not incurred any cancellation or refusal to renew
permits and approvals. However, if for whatever reason a permit or approval is cancelled, or renewal is refused,
and the Group incurs difficulties in carrying out its mainstay business activities, the potential exists for theGroup’s performance to be seriously affected.
Details of the Grandy House Group’s principal permits and approvals as well as durations of validity andcauses of cancellation are presented in the following table.

―7―

Name of Permit,
Approval, etc.

Company NameGrandy House Corporation
IBARAKI Grandy House
Corporation
Real estate operator
licenseGUNMA Grandy House
Corporation
CHIBA Grandy House
Corporation
Chukojutaku Johokan
Corporation
Grandy House Corporation

Construction license

IBARAKI Grandy House
Corporation
Grandy Reform Corporation

Grandy House Corporation

IBARAKI Grandy House
Corporation

Architect officeregistration
GUNMA Grandy House
Corporation

CHIBA Grandy House
Corporation

General Livetech Corporation

Grandy Reform Corporation

Permits/Approval Number
Period of Validity

Regulation/
StatuteCauses ofPermit,Approval, etc.
Cancellation,
Other

Minister of Land, Infrastructure and Transportation(4) No. 5942
October 21, 2014–October 20, 2019
The Governor of Ibaraki Prefecture (2) No. 6548
Building Lots
December 1, 2012–November 30, 2017
Article 65,
and
The Governor of Gunma Prefecture (2) No. 6860
Article 66,
Buildings
December 12, 2012–December 11, 2017
Transaction Article 67
The Governor of Chiba Prefecture (1) No. 16460
Business Act
April 4, 2013–April 3, 2018
Minister of Land, Infrastructure and Transportation(2) No. 8039
September 1, 2015–August 31, 2020
The Governor of Tochigi Prefecture
Authorization (Special-24) No. 22719
February 1, 2013–January 31, 2018
The Governor of Ibaraki Prefecture
Article 28,
Construction
Article 29,
Authorization (General-24) No. 32248
Business Act
Article 29-2
March 6, 2013–March 5, 2018
The Governor of Tochigi Prefecture Authorization(General-27) No. 24829
October 16, 2015–October 15, 2020
First class architect office registration
The Governor of Tochigi Prefecture
Registration A(c) No. 2430
November 28, 2011–November 27, 2016
First class architect office registration
The Governor of Tochigi Prefecture
Registration A(c) No. 2694
January 4, 2016–January 3, 2021
First class architect office registration
The Governor of Ibaraki Prefecture
Registration No. A3316
March 6, 2013–March 5, 2018
Second class architect office registration
The Governor of Ibaraki Prefecture
Registration No. B5348
Act onMarch 29, 2013–March 28, 2018
Architects
Article 26
and Building
First class architect office registration
Engineers
The Governor of Gunma Prefecture
Registration No. 4164
November 30, 2012–November 29, 2017
First class architect office registration
The Governor of Chiba Prefecture
Registration No. 1-1304-7782
April 19, 2013–April 18, 2018
First class architect office registration
The Governor of Tochigi Prefecture
Registration No. A3461
December 9, 2014–December 8, 2019
Second class architect office registration
The Governor of Tochigi Prefecture
Registration No. B4539
June 7, 2013–June 6, 2018

 Personal information protection
The Grandy House Group handles individual, customer, and related personal information in the normal
course of its order activities. The Group takes great care to put in place a sound information management
structure and systems which are complemented by the continuous update of internal rules and regulations. In theevent, however, of the leakage of personal information to external parties that leads to a loss of credibility or the―8―

payment of compensation for damages, the potential exists for the Group’s performance and financial position to
be affected.
2. OVERVIEW OF THE CORPORATE GROUP
The Grandy House Group (Grandy House and the Company’s affiliated companies) is comprised of GrandyHouse and six subsidiary companies. The Group’s principal business activities include the sales of real estate, thesale of construction materials, and the leasing of real estate.
Details of the business activities of the Group and the activities undertaken by the Company and each subsidiarycompany are presented as follows.
(1) Real Estate Sales
The Grandy House Group engages in a wide range of real estate-related activities from the procurement ofland for sale in lots through the acquisition of related permits and approvals to the management of housing landdevelopment work, housing design and construction, sales, and after-sales maintenance and service.
In its mainstay detached housing sale, design, and construction activities, the Group has adopted an oversight
structure by individual operating area. This takes into account the Group’s focus on operations that remain deeply
rooted in the local community. Each company is active within its own basic area of operations. Grandy House
operates mainly in Tochigi Prefecture and a portion of Ibaraki Prefecture. IBARAKI Grandy House and
GUNMA Grandy House operate mainly in Ibaraki Prefecture and Gunma Prefecture, respectively. CHIBAGrandy House operates mainly in Chiba Prefecture.
Chukojutaku Johokan is primarily engaged in the sale of existing homes. Grandy Reform is active in housing
maintenance and after-sales service as well as housing renovations.
(2) Construction Material Sales
General Livetech is involved mainly in the sale of construction materials and items focusing primarily on
precut materials.
(3) Real Estate Leasing
Grandy House is engaged in such activities as the leasing of its own buildings for rent as well as
condominiums and other properties. The Company is also active in the parking business.
The following schematic provides an overview of the structure and businesses of the Grandy House Group(as of March 31, 2016).
Grandy House Corporation
Supply of pre-cut and other materials
Leasing of residential properties, shops, andbuildings; parking facility business

Sale of pre-cut andother materials

Housingrenovations

General Livetech

Maintenance and aftersales service

Sale of existing homes

Grandy Reform

Chukojutaku Johokan

Maintenance and aftersales service consignment

Sale of detached housing and related activities(Ibaraki, Gunma and Chiba Prefecture)

Sale of detached housing and related activities(Tochigi Prefecture and others)

IBARAKI Grandy HouseGUNMA Grandy HouseCHIBA Grandy House

Customers
Construction
Material Sales

Real Estate Sales―9―

Real Estate
Leasing

3. MANAGEMENT POLICY(1) Basic Management Policy
With an aim of becoming a corporate group that brings more value to society, our Group has set for itself thefollowing basic management policy.
“Basic Management Policy”
1. By providing comfortable homes that allow for living with a sense of security, we will contribute to therealization of an affluent society.
2. Abiding by laws and ethical codes, and as a good corporate citizen, we will aspire to become a corporate groupthat is trusted by all stakeholders.
3. By making products that satisfy as many customers as possible and through continuous reform, we will aim atdeveloping our business and increasing its corporate value.
(2) Target Management Benchmarks
The Grandy House Group seeks to expand its business, in particular focusing on an increase in net sales andordinary income as important benchmarks to measure its growth.
The Group’s targeted level of ROE, an indicator that demonstrates the maintenance of capital efficiency andshareholder gains, is 8% or above.
The targeted net sales and ordinary income for the year ending in March 2018, which is the final year in themedium-term business plan, are ¥48 billion and ¥3.7 billion respectively.
(3) Medium- and Long-Term Management Strategies
The Grandy House Group is working to achieve its business goals under the following basic policy andbusiness strategies in its medium-term business plan, which runs through fiscal year ending in March 2018.
“Basic policy”
1. We will strengthen our core operation (new home sales) and aim to achieve continuous growth.
2. We will aim to expand our operation by bolstering stock business (intermediating sale of existing homes,
remodeling business).
3. We will work to build a strong organization that supports business expansion and establish a stable businessfoundation.
4. We will work to bolster corporate governance and aim to increase the corporate value.
“Business strategies”
1. Real estate sales (new home sales) We will enhance our basic strategies shown below that capitalize on our strengths and aim to achieve steady
growth.
1) Provision of high-value-added properties (conveniently situated land for sale, safety and security of land,
value-added townscapes, high-quality homes clearly differentiated from low-cost ones, and safety andreassurance through long-term inspections and warranties, etc.) supported by the Group’s integrated
operations that encompass land procurement through to land development, housing design, construction
management, and after-sales service.
2) High level of self-cultivated sales capabilities under a direct sales structure (cultivation of a wide range ofcustomer needs and highlighting the advantages of the Group’s products).
3) Exploration of business opportunities in operating areas through community-based sales activities andexpansion of business to areas adjacent to existing operating bases by taking advantage of the reputation for
reliability we have established in these bases exemplified by the motto “When it comes to detached homes,
Grandy House.” During the term of the medium-term business plan, we will work to further cultivate the market and promote
our brand in the key area stretching from southern Ibaraki Prefecture to Kashiwa City in Chiba Prefecture, andaim to expand the business area with a view to covering all of Ibaraki, Chiba and Gunma prefectures.
2. Real estate sales (stock business) With respect to the existing home sales business, we will work to expand our operating base in the existinghome market that will likely grow over the long term while differentiating our products from those ofcompetitors using the concept Design Renovated Homes.
― 10 ―

 Capitalizing on the stock of 11,000 homes (cumulative number of new home sales) related to existingcustomers, we will work to strengthen renovation and other peripheral operations.
3. Other operations
 In construction materials sales, we are producing the mainline pre-cut materials at near full capacity. We will
aim to expand operations by emphasizing materials other than pre-cut materials.
 In the real estate leasing business, we will aim to raise the utilization ratio of existing assets such as by setting
rents flexibly and work to lower operating costs such as by reviewing the way we manage assets.
(4) Pending Issues
For the Japanese economy, there are expectations for a recovery coming from an improvement in
employment and wage conditions, but concerns remain about the impact on corporate earnings from the reversalof the weakening of the yen and about the adverse effects of the planned consumption tax hike, while the global
economy remains fluid as seen in the slowdown in the Chinese economy; the economic outlook does nottherefore allow for optimism.
The Group had suffered a decline in the profit in the previous fiscal year after achieving growths both in sales
and profits for six consecutive years. This fiscal year, the Group again achieved increases in sales and profits, but
to sustain the trend it will be necessary to cultivate new markets, secure a sufficient volume of high-quality
housing lots for sale, construct sales and production structures that are resistant to price competition and hire andtrain human resources that can respond to the expansion of business scale, among others. The Group will work onthese issues with a view to establishing a firm operating foundation and aim to achieve steady growth.
(5) Other Matters Important to the Company’s Management
The products and services handled by the Grandy House Group are essentially geared toward the individual
customer. In this regard, there are instances where members of the Board of Directors pursue dealings with theCompany. This includes the purchase and/or construction of homes. In each case, transactions are conducted at
the same price and profit level as those that apply to the Group’s general customer base. Again, this includes theprice for houses built for sale and ensures that transactions are conducted at an appropriate level of profit. For
other products such as custom-built homes, the terms and conditions of transactions are based on calculations
regarding fair and appropriate prices as well as formal appraisals. Moreover, transactions are subject to priorapproval by the Company’s Board of Directors.
4. BASIC APPROACH TO THE SELECTION OF ACCOUNTING STANDARDSAt present, the Grandy House Group operates its business only in Japan and most of its stakeholders areshareholders, lenders, and business partners in Japan. There is no plan to raise funds from overseas markets. Against
this background, the Group will prepare its consolidated financial statements based on Japanese GAAP for the time
being.
For the application of International Financial Reporting Standards (IFRS), we will take adequate actions while
paying attention to various situations inside and outside Japan.

― 11 ―

5. CONSOLIDATED FINANCIAL STATEMENTS(1) Consolidated Balance Sheets(Thousands of Yen)FY2015(As of March 31, 2015)

FY2016(As of March 31, 2016)

AssetsCurrent assets
Cash and deposits

6,621,018

7,789,687

734,021523,636

10,704,928

11,423,421

6,251

10,539Real estate for sale in process

6,688,779

7,996,211

Merchandise and finished goods

145,413

206,665

Raw materials and supplies

111,279

115,304

Deferred tax assets

122,613130,226

Other

401,046955,924

Allowance for doubtful accounts(5,344)(3,588)25,530,008

29,148,028

Notes and accounts receivable – trade
Real estate for sale
Costs on uncompleted construction contracts

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

4,627,088

4,823,287

Accumulated depreciation(1,543,369)(1,699,778)

Buildings and structures, net

3,083,718

3,123,508

Machinery, equipment and vehicles

23,84032,858(15,055)(21,401)

8,785

11,457

Tools, furniture and fixtures

287,254289,977

Accumulated depreciation(238,268)(233,280)

48,986

56,696

5,851,832

5,599,701

Accumulated depreciation
Machinery, equipment and vehicles, net

Tools, furniture and fixtures, net
Land
Lease assets

263,698

236,298

Accumulated depreciation(156,372)(159,738)

Lease assets, net

107,325

76,559Construction in progress

58,652

148,441

9,159,301

9,016,365

67,61666,447

Investment securities

767,434

889,407

Long-term loans receivable

19,87020,446

Deferred tax assets

108,270

160,847

Other

197,708

260,837

Allowance for doubtful accounts(3,816)(17,279)

Total property, plant and equipment
Intangible assets
Investments and other assets

Total investments and other assets
Total non-current assets
Total assets― 12 ―

1,089,467

1,314,260

10,316,385

10,397,072

35,846,393

39,545,100

(Thousands of Yen)FY2015(As of March 31, 2015)

FY2016(As of March 31, 2016)

Liabilities
Current liabilities
Accounts payable for construction contracts

2,772,752

3,054,103

Short-term loans payable

14,074,690

16,014,500

400,508

382,592

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

21,00021,000

Lease obligations

43,99941,214

Income taxes payable582,687

566,028

Provision for warranties for completed construction

51,16754,940Other

721,606

694,477

18,668,411

20,828,856

129,000

108,000

Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable

1,409,644

1,358,183

Lease obligations

69,525

39,139Provision for directors’ retirement benefits

71,204

100,979

Net defined benefit liability

358,010428,790

Asset retirement obligations

—

4,203

56,416

53,690

Other
Total non-current liabilities
Total liabilities

2,093,801

2,092,985

20,762,212

22,921,841

2,077,500

2,077,500

Net assets
Shareholders’ equity
Capital stock
Capital surplus

2,205,165

2,205,165

Retained earnings

11,049,455

12,551,499

Treasury shares(351,814)(351,831)

14,980,306

16,482,333

Valuation difference on available-for-sale securities

28,874(34,074)

Total accumulated other comprehensive income

28,874(34,074)

Total shareholders’ equity
Accumulated other comprehensive income

Subscription rights to shares
Total net assets
Total liabilities and net assets― 13 ―

75,000175,000

15,084,180

16,623,258

35,846,393

39,545,100

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Thousands of Yen)
Fiscal 2015
(From April 1, 2014
to March 31, 2015)

Fiscal 2016
(From April 1, 2015
to March 31, 2016)

Net sales

37,469,060

41,706,272

Cost of sales

30,869,711

34,470,245

Gross profit

6,599,348

7,236,026

Selling, general and administrative expenses

4,183,500

4,467,463

Operating income

2,415,848

2,768,563

Interest income

1,489

2,196

Dividends income

Non-operating income
4,391

5,205

Operations consignment fee

203,546

222,186

Office work fee

136,793

148,838

Other

36,271

29,055

Total non-operating income

382,493

407,481279,207299,810—

10,673Non-operating expenses
Interest expenses
Commission for syndicate loan
Other

4,828

2,400

284,035

312,883

2,514,306

2,863,160

Gain on sales of non-current assets

2,051

Total extraordinary income

2,051

—
—

Loss on sale of non-current assets

1,070

164,125

Loss on retirement of non-current assets

12,763

10,143

Total non-operating expenses
Ordinary income
Extraordinary income

Extraordinary loss

Loss on cancellation of lease contracts

3,089

181

Total extraordinary loss

16,924

174,449

Net income before income taxes

2,499,433

2,688,711

942,000

988,091

Income taxes – current
Income taxes – deferred(10,150)(31,639)

Total income taxes

931,849

956,451

1,567,583

1,732,260——

1,567,583

1,732,260

Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent company― 14 ―

(Consolidated Statements of Comprehensive Income)(Thousands of Yen)
Fiscal 2015
(From April 1, 2014
to March 31, 2015)
Net income

Fiscal 2016
(From April 1, 2015
to March 31, 2016)

1,567,583

1,732,260

Valuation difference on available-for-sale securities

16,273(62,949)

Total other comprehensive income

16,273(62,949)

1,583,857

1,669,310

1,583,857

1,669,310——

Other comprehensive income

Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners of theparent company
Comprehensive income attributable to non-controllinginterests― 15 ―

(3) Consolidated Statements of Changes in Net Assets
Fiscal 2015 (From April 1, 2014 to March 31, 2015)
Shareholders’ equity

Balance as of the beginning of the period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
company
Purchase of treasury shares
Net changes to items other than shareholder equity
Total changes of items during the period
Balance as of the end of the period

Capital stock

CapitalsurplusRetainedearnings

Treasuryshares2,077,500

2,205,165

9,712,087(351,814)

13,642,938(230,216)(230,216)

1,567,583

1,567,583——
2,077,500—
2,205,165

1,337,367
11,049,455—(351,814)(Thousands of Yen)
Accumulated othercomprehensive income
Valuationdifference on
availablefor-salesecurities

Balance as of the beginning of the period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
company
Purchase of treasury shares
Net changes to items other than shareholder equity
Total changes of items during the period
Balance as of the end of the period

Totalshareholders’equity12,600

Total
Subscription
accumulated rights to shares
othercomprehensive
income12,600—Total net
assets13,655,539(230,216)

1,567,583—

16,273
16,27328,874

16,273
16,27328,874― 16 ―

75,00075,00075,00091,273
1,428,641
15,084,180

1,337,367
14,980,306

Fiscal 2016 (From April 1, 2015 to March 31, 2016)
Shareholders’ equity

Balance as of the beginning of the period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
company
Purchase of treasury shares
Net changes to items other than shareholder equity
Total changes of items during the period
Balance as of the end of the period

Capital stock

CapitalsurplusRetainedearnings

Treasuryshares2,077,500

2,205,165

11,049,455(351,814)—
2,077,500—
2,205,165(230,216)

1,732,260

1,732,260

1,502,044
12,551,499

(16)

(16)

(16)
(351,831)

1,502,027
16,482,333

Accumulated othercomprehensive income

Balance as of the beginning of the period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
company
Purchase of treasury shares
Net changes to items other than shareholder equity
Total changes of items during the period
Balance as of the end of the period

Totalaccumulated
othercomprehensive
income28,87428,874

Subscription
rights to shares

Total net
assets75,00015,084,180(230,216)
1,732,260(62,949)(62,949)(34,074)(62,949)(62,949)(34,074)― 17 ―

14,980,306(230,216)(Thousands of Yen)

Valuationdifference on
availablefor-salesecurities

Total
shareholders’equity100,000
100,000
175,000(16)
37,0501,539,078
16,623,258

(4) Consolidated Statements of Cash Flows(Thousands of Yen)
Fiscal 2015
(From April 1, 2014
to March 31, 2015)

Fiscal 2016
(From April 1, 2015
to March 31, 2016)

Net cash provided by (used in) operating activities

Net income before income taxes

2,499,433

2,688,711

Depreciation and amortization

239,699

244,577

Stock compensation expense

75,000100,000

Increase (decrease) in provision for directors’
retirement benefits

26,037

29,774

Increase (decrease) in provision for warranties forcompleted construction(11,872)

3,773

Increase (decrease) in allowance for doubtful accounts(27,854)

11,707

Increase (decrease) in net defined benefit liability

71,35570,779Interest and dividends income(5,881)(7,401)

Interest expenses

279,207299,810

Loss (gain) on sales of property, plant and equipment(981)

164,125

Loss on retirement of non-current assets

12,763

10,143

Decrease (increase) in notes and accounts
receivable-trade(141,270)

196,913(1,058,425)(2,095,488)

Increase (decrease) in notes and accounts
payable-trade135,919

281,350

Other(27,707)(596,038)

Subtotal

2,065,422

1,402,738

5,881

7,897

(278,476)(303,043)(1,092,098)(1,006,234)

700,729

101,358

Decrease (increase) in inventories

Interest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment(301,704)(321,466)

Proceeds from sale of property, plant and equipment

202,147

98,694Purchase of intangible assets(24,873)(16,823)

Purchase of investment securities—(214,600)

Payments of loans receivable—(1,900)

Collection of loans receivable

4,005

1,323

Payments for guarantee deposits(54,820)(50,825)

Proceeds from collection of guarantee deposits

1354

Other payments(11,000)(14,464)

Other proceeds

13,313

12,020(172,917)(507,986)

727,610

1,939,810

Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable

464,300

345,000

Repayment of long-term loans payable(526,069)(414,377)

Proceeds from issuance of bonds

145,973—

Redemption of bonds—(21,000)

Purchase of treasury shares

—

(16)

(229,555)(229,963)

Cash dividends paid

― 18 ―

Repayments of lease obligations(50,594)(44,155)

Net cash provided by (used in) financing activities

531,664

1,575,297

Net increase (decrease) in cash and cash equivalents

1,059,476

1,168,669

Cash and cash equivalents at beginning of the period

5,554,541

6,614,018

Cash and cash equivalents at end of the period

6,614,018

7,782,687― 19 ―

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

― 20 ―

(Changes in accounting policies)(Application of accounting standards regarding business combination)
We started to apply the "Revised Accounting Standard for Business Combinations" (ASBJ Statement No. 21,
September 13, 2013), "Revised Accounting Standard for Consolidated Financial Statements" (ASBJ Statement
No. 22, September 13, 2013) and "Revised Accounting Standard for Business Divestitures" (ASBJ Statement No.
7, September 13, 2013) in the fiscal year ended March 31, 2016, which have resulted in changes in the way we
present the net income, etc. for the quarter. To better reflect such changes, we also changed the way we present
the consolidated financial statements for the fiscal year ended March 31, 2015.

― 21 ―

(Segment and Other Information)[Segment Information]
1. Overview of reportable segments
The reportable segments of the Group are components for which separate financial information is available
and whose operating results are regularly reviewed by the Company’s Board of Directors when making decisions
about the allocation of management resources and assessing performance.
The Grandy House Group is engaged in the following businesses: new home sales, existing home sales, homerenovation, construction material sales and real estate leasing (all of which are operated in Japan). A portion or
all of operations for new home sales, existing home sales and home renovation are conducted by subsidiaries.
From the perspective of similarity, relationships, and sharing of common management resources, these threebusinesses are regarded as one business segment, Real Estate Sales. The Company devises overall strategies forthis real estate sales segment and conducts business activities.
Accordingly, the Group’s three reportable segments are classified as Real Estate Sales, Construction Material
Sales, and Real Estate Leasing.
The Real Estate Sales business includes sales of new homes (including building contract and sale of land,etc.) and existing homes and home renovation. The Construction Material Sales business comprises of production
and sale of pre-cut materials for housing and sale of construction materials and home facilities and equipment. In
the Real Estate Leasing business, activities comprise the leasing of office, homes, related properties, and parking
facilities, etc.
2. Calculation method of net sales, profit and loss, assets, liabilities, and other items by reportable segment
The accounting method for reportable segments is the same as that outlined under “Important Items
Fundamental to the Preparation of Consolidated Financial Statements (This part is omitted on this translation).”Segment profit and loss are based on ordinary income. Inter-segment sales or transfers are calculated based onmarket prices.
3. Information relating to the amounts of net sales, profit and loss, assets, liabilities, and other items by reportablesegment
The fiscal year ended March 31, 2015 (April 1, 2014 to March 31, 2015)(Thousands of Yen)
Reportable Segment
Real Estate
Sales

Construction
Material Sales

Real Estate
Leasing

34,587,410

2,600,345

281,304－

2,959,748

71,77034,587,410

5,560,094

353,074

Adjustments(Note 1)

AmountRecorded on
Consolidated
Financial
Statements(Note 2)

37,469,060－

37,469,060

3,031,518(3,031,518)－

40,500,579(3,031,518)

37,469,060

Total

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

2,256,735

153,262

172,670

2,582,669(68,363)2,514,306

Segment assets

24,980,105

2,121,938

4,316,649

31,418,693

4,427,699

35,846,393

Segment liabilities

19,330,658

1,728,512

73,513

21,132,684(370,472)

20,762,212

143,435

44,20552,057

239,699－

239,699

Interest income

1,456

33

－

1,489

－

1,489

Interest expenses

267,118

11,861

227

279,207－279,207

Increase in property, plant andequipment and intangible assets

306,277

22,92713,016342,222－342,222

Other items
Depreciation and amortization― 22 ―

The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)(Thousands of Yen)

Adjustments(Note 1)

AmountRecorded on
Consolidated
Financial
Statements(Note 2)

41,706,272－

41,706,272

82,327

3,271,277(3,271,277)－

Reportable
Segment
Real Estate
Sales

Construction
Material Sales

Real Estate
Leasing

38,549,066

2,894,508

262,697－

3,188,949

Total

Net sales
Sales to outside customers
Inter-segment sales and transfers

38,549,066

6,083,457

345,025

44,977,549(3,271,277)

41,706,272

Segment profit

2,533,951

188,552

165,7432,888,247(25,086)2,863,160

Segment assets

28,709,223

2,068,682

3,974,573

34,752,479

4,792,621

39,545,100

Segment liabilities

21,634,781

1,602,456

70,70823,307,946(386,105)

22,921,841

149,759

45,57749,241

244,577－

244,577

Total

Other items
Depreciation and amortization
Interest income

2,156

40

－

2,196

－

2,196

Interest expenses

288,511

11,26631

299,810－

299,810

16,732

3,142

370,101－

370,101

Increase in property, plant and
350,225
equipment and intangible assets
Note 1: Details of adjustments are presented as follows.

Segment profit(Thousands of Yen)
Fiscal 2015

Fiscal 2016

Eliminations of inter-segment translation(68,363)(25,086)

Total(68,363)(25,086)

Segment assets(Thousands of Yen)
Fiscal 2015

Fiscal 2016

Eliminations of inter-segment receivables(368,558)(384,099)

Eliminations of inter-segment unrealized profit(35,079)(50,410)

4,831,337

5,227,131

4,427,699

4,792,621

Corporate assets
Total
Note:

Corporate assets mainly comprise cash and deposits as well as investment securities which are not attributable to reportable segments.

Segment liabilities(Thousands of Yen)
Fiscal 2015
Eliminations of inter-segment payables
Total

Fiscal 2016
(370,472)(386,105)(370,472)(386,105)

Note 2: Segment profit is adjusted with the ordinary income recorded in consolidated financial statements.

― 23 ―

[Related Information]
The fiscal year ended March 31, 2015 (April 1, 2014 to March 31, 2015)
1. Information by product and service(Thousands of Yen)
Real Estate Sales
Sales to outside customers

Construction
Material Sales

34,587,410

2,600,345

Real Estate
Leasing
281,304

Total
37,469,060

2. Information by geographic segment(1) Net sales
There are no sales to outside customer other than in Japan. Accordingly, there is no applicable information toreport.
(2) Property, plant and equipment
There are no property, plant and equipment located outside of Japan. Accordingly, there is no applicable
information to report.
3. Information by principal customer
There is no single outside customer who accounts for 10% or more of the total net sales recorded in the
consolidated statements of income. Accordingly, there is no applicable information to report.
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
1. Information by product and service(Thousands of Yen)
Real Estate Sales
Sales to outside customers

Construction
Material Sales

38,549,066

2,894,508

Real Estate
Leasing262,697

Total
41,706,272

2. Information by geographic segment(1) Net sales
There are no sales to outside customer other than in Japan. Accordingly, there is no applicable information toreport.
(2) Property, plant and equipment
There are no property, plant and equipment located outside of Japan. Accordingly, there is no applicable
information to report.
3. Information by principal customer
There is no single outside customer who accounts for 10% or more of the total net sales recorded in the
consolidated statements of income. Accordingly, there is no applicable information to report.

― 24 ―

[Information concerning Impairment Loss on Non-current Assets by Reportable Segment]
The fiscal year ended March 31, 2015 (April 1, 2014 to March 31, 2015)
Not applicable.
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
Not applicable.
[Information concerning the Amount of Goodwill Amortization and the Balance of Unamortized Goodwill by
Reportable Segment]
The fiscal year ended March 31, 2015 (April 1, 2014 to March 31, 2015)
Not applicable.
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
Not applicable.
[Information concerning Gain on Negative Goodwill by Reportable Segment]
The fiscal year ended March 31, 2015 (April 1, 2014 to March 31, 2015)
Not applicable.
The fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016)
Not applicable.

― 25 ―