Information Disclosure on the Internet Regarding
The Notice of the 23rd Annual General Meeting of Shareholders

The 23rd Fiscal Year (from April 1, 2021 to March 31, 2022)
System for ensuring proper business operations andoverview of operation status

Page 2

Consolidated Statement of Changes in Equity

Page 7

Notes to Consolidated Financial Statements

Page 8

Non-Consolidated Statement of Changes in Equity

Page 28

Notes to Non-consolidated Financial Statements

Page 29

Sun Frontier Fudousan Co., Ltd.
This document is provided on the website (https://www.sunfrt.co.jp) of Sun Frontier Fudousan Co., Ltd. (the “Company”) on
the internet to shareholders in accordance with laws and regulations and Article 16 of the Articles of Incorporation.

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

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

(ii) System for storage and management of information related to the execution of duties by directors
Information related to the execution of duties by directors, such as records related to decision-making at important
meetings including the Board of Directors meetings and documents approved by each director in accordance withthe “Regulations on Administrative Authority,” shall be appropriately recorded, and shall be retained for a specified
period of time in accordance with laws and regulations and the “Regulations on the Handling of Documents,” andshall be kept available for inspection by directors and Audit & Supervisory Board Members as necessary. The
General Manager of the Administration Department shall be responsible for supervising the storage and managementof information.
(iii) Regulations concerning the management of risk of loss and other system
In order to respond to all risks that threaten the improvement of corporate value and the sustainable development of
the Company, the Company will strive to establish an organizational crisis management system by creating a risk

―2―management manual and establishing a task force headed by the President and Representative Director (including ateam of external experts such as corporate lawyers) in the event of an unforeseen event.
(iv) Systems to ensure efficient execution of duties by directors
As an indicator for establishing and implementing the corporate vision of the entire corporation, the Company has
formulated a medium-term management policy and a single-year management plan. In order to realize themanagement policy and the management plan, the Board of Directors has clarified the executive authority andresponsibilities of directors and has increased the efficiency of the execution of duties. In addition, with regard tomatters for which decisions on business execution have been delegated to the President and Representative Director
and directors in charge of business execution of other matters, necessary decisions shall be made based on the“Organization Regulations” or the “Regulations for Management of Affiliated Companies” including groupcompanies. These regulations shall also be appropriately reviewed based on revisions and abolition of laws andregulations and for the purpose of improving the efficiency of the execution of duties.
(v)

Systems to ensure the appropriateness of operations within the corporate group consisting of the Company and groupcompanies
In order to ensure the appropriate execution of operations by group companies, the Corporate Planning Department
shall be responsible for the management of the group companies in accordance with the “Regulations for theManagement of Affiliated Companies.” While respecting the autonomy of the group companies, the Corporate
Planning Department shall receive periodic reports on the status of the business of the group companies. In addition,
the Corporate Planning Department shall require prior consultation or prior approval with the Company for importantmanagement matters of the group companies. Group companies’ management plans are also formulated under thecontrol of the Company, and the Company provides timely and appropriate advice and guidance during the businessperiod to improve the efficiency of group companies’ operations. In addition, the Company and its group companies
have established a Risk Management Committee chaired by the President and Representative Director and assign
risk management officers to each division. In the event that any risk is discovered in management or business, it
shall be reported to the Risk Management Committee, and the risk information shall be analyzed, andcountermeasures shall be considered to prevent damage or to minimize damage to the Company and the groupcompanies if such damage occurs. We will establish a system for reporting violations of laws and regulations orillegal acts that have occurred or may occur at group companies to the internal reporting desk or outside Audit &Supervisory Board Members specified in the “Regulations on the Corporate Ethics Help Line.” We will strive forearly detection and resolution of these violations.
The Internal Audit Office shall conduct internal audits of all group companies in order to ensure the effectivenessand appropriateness of systems, organizations, and regulations covering the overall operations of group companies.
The results of these audits shall be reported to the organization designated by the Company’s President andRepresentative Director.
President and Representative Director shall prepare and report its financial statements in accordance with fair andappropriate accounting standards in order to enhance the reliability of financial reporting and increase corporate―3―

value of the Company and its group companies.
(vi) Matters relating to employees who are required to assist Audit & Supervisory Board Members in performing theirdutiesIn the event that Audit & Supervisory Board Members request that an employee be assigned to assist them in
performing their duties, such employee shall be assigned as an Audit & Supervisory Board Members’ assistant. The
auditor’s assistant shall be appointed from persons who have sufficient knowledge of accounting and law, etc., andshall perform their duties in accordance with the instructions of the Audit & Supervisory Board Members. In addition,
if an Audit & Supervisory Board has been established, it shall also serve as the secretariat of the Audit & Supervisory
Board.
(vii) Matters related to the independence of employees from directors in the preceding paragraph
In order to ensure the independence of the auditor’s assistant as set forth in the preceding paragraph, personnel
changes and evaluations of such employees shall be reported to Audit & Supervisory Board Members in advanceand their consent shall be obtained.
(viii) Matters related to ensuring the effectiveness of instructions given by Audit & Supervisory Board Members to
employees in Paragraph (vi)
The auditor’s assistant in Paragraph (vi) will have the opportunity to accompany the Audit & Supervisory Board
Members to Board of Directors meetings and other important meetings. They will also accompany the Audit &Supervisory Board Members and regularly exchange opinions with the President and Representative Director andaccounting auditors. Directors and other employees will cooperate with the Audit & Supervisory Board Members to
improve the auditing environment so that the duties of the auditor’s assistant are carried out smoothly.
(ix) System for reporting to Audit & Supervisory Board Member and other Members by Directors and employees of theCompany and group companies
All directors and department heads shall report on the status of the execution of their duties from time to time at
meetings in the Board of Directors and other meetings attended by corporate auditors. Auditors shall be permitted toattend any Company meetings they request to attend. All directors and employees of the Company and its groupcompanies shall report to the Audit & Supervisory Board Members as soon as they discover any matter that have or
may have a material impact on the Company’s credibility, business performance or any material violation of the
Corporate Vision and/or Corporate Code of Conduct, etc.
Directors and employees of the Company and group companies may report to the internal reporting office of theCompany as set forth in the “Regulations on the Corporate Ethics Help Line” at any time. In addition, they may
voluntarily report to outside Audit & Supervisory Board Members. The Compliance Department of the Company
provides education and training opportunities for directors and employees to raise awareness of the hotline andencourage active reporting.
The Company shall explicitly stipulate in the “Regulations on the Corporate Ethics Help Line” that directors and―4―employees of the Company and group companies shall not be subjected to unfavorable treatment in personnel
evaluation and shall not be subject to adverse dispositions such as disciplinary action by reporting to the internalreporting office, and shall make it known that they shall not be subject to adverse dispositions due to reporting to
Audit & Supervisory Board Members.
(x)

Matters related to the policy regarding the handling of expenses and obligations arising from the execution of duties
by Audit & Supervisory Board Members
The Company shall promptly respond to requests from Audit & Supervisory Board Members for advance paymentof expenses to be incurred in the execution of their duties, reimbursement of expenses incurred and repayment of
obligations incurred, except in cases where such expenses can be proved not to have arisen in the execution of theirduties.

(xi) Systems to ensure effective audits by Audit & Supervisory Board Members
President and Representative Director will hold regular meetings with Audit & Supervisory Board Members in orderto facilitate mutual communication. In addition, in accordance with the “Regulations for Internal Audit” and the“Internal Audit Implementation Guidelines,” the Internal Audit Office shall maintain close contact and coordinationand cooperate to ensure that audits by Audit & Supervisory Board Members and audits by the external accounting
auditors are conducted efficiently and effectively.

(2) Outline of the operating status of the system for ensuring the appropriateness of operations(i) Directors’ execution of duties
We have established internal rules to ensure that directors act in compliance with laws and regulations and the
Articles of Incorporation. During the fiscal year under review, the Company held 18 Board of Directors meetings to
discuss each proposal, supervise the status of business execution, and actively exchange opinions.
(ii) Execution of duties by Audit & Supervisory Board
During the fiscal year under review, the Audit & Supervisory Board Members held 14 Audit & Supervisory Board
Members meetings and implemented audits based on the audit plan. In addition, the Audit & Supervisory Board
Members attended Board of Directors meetings and other important meetings and regularly exchanged information
with the President and Representative Director, the accounting auditor, and the Internal Audit Office to audit theexecution of duties by the directors and to confirm the development and operational status of the internal control
system.
(iii) Ensuring the appropriateness of operations at the Company’s subsidiaries
The Company receives periodic reports on the status of businesses from its subsidiaries in accordance with the“Regulations for Management of Affiliated Companies” and monitors their business activities.

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(iv) Compliance and Risk Management
The Company has established the “Corporate Ethics Help Line” to ensure that employees who have reported
compliance violations or acts are not treated unfavorably for the reason of the report. The Company ensures that
employees who report compliance violations or questionable acts are not treated unfavorably for the reason of thereport.
In addition, we are preparing for unexpected situations such as training for countermeasures against large-scaledisasters and securing supplies for people with difficulty in returning home.

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Consolidated Statement of Changes in Equity(From April 1, 2021 to March 31, 2022)(Unit: million yen)
Shareholders’ equity
Share capital
Balance at beginning of theperiod11,965

CapitalsurplusRetainedearnings

6,445

48,573

TreasurysharesTotalshareholders’equity(67)

66,916

Changes during period
Dividends of surplus(3,071)(3,071)

Profit attributable toowners of parent
Net changes in items otherthan shareholders’ equity

7,415

7,415

Total changes during period

-

-

4,343

-

4,343

Balance at end of the period

11,965

6,445

52,917(67)

71,260

Accumulated other comprehensive income

Balance at beginning of theperiodValuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustment

Total
accumulated
othercomprehensive
incomeShare
acquisitionrights

Noncontrollinginterests

2

(292)

(289)

16

3,129

Total net
assets69,773

Changes during period
Dividends of surplus(3,071)

Profit attributable toowners of parent
Net changes in items otherthan shareholders’ equity

7,415
0

311

312

14

9

335

Total changes during period

0

311

312

14

9

4,679

Balance at end of the period

3

19

22

30

3,139

74,452―7―

Notes to Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.
(Notes Regarding Significant Accounting Policies for the Preparation of Consolidated Financial Statements)
1. Scope of Consolidation(1) Number of consolidated subsidiaries and names of principal subsidiaries
Number of consolidated subsidiaries
22 companies
Names of consolidated subsidiaries
SF Building Support Inc.
SF Building Maintenance Inc.
Sun Frontier Space Management Inc.
SF Engineering Inc.
Sun Frontier Sado Co., Ltd.
Okesa Kanko Taxi Co., Ltd.
Sun Frontier Okinawa Co., Ltd.
Sun Frontier Hotel Management Inc.
Sky Heart Hotel Inc.
Japan System Service Inc.
Communication Development Inc.
Hotel Oosado Inc.
Navd Inc.
Sun Frontier Fudousan Taiwan Co., Ltd.
SUN FRONTIER VIETNAM CO., LTD.
SUN FRONTIER DANANG CO., LTD.
PT. SUN FRONTIER INDONESIA
PT. SUN FRONTIER PROPERTY ONE
Sun Frontier NY Co. Ltd.
340 West 48 SG LLC
439 West 46 SG LLC
RIVERSIDE STUDIOS LLC
In the consolidated fiscal year under review, the newly acquired Hotel Oosado Inc. and newly established Navd Inc.
are included in the scope of consolidation.
Sun Frontier Community Arrangement Co., Ltd., which was a subsidiary of the Company, was excluded from thescope of consolidation because it ceased to exist as a result of an absorption-type merger with Sun Frontier FudousanCo., Ltd. as the surviving company.

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(2) Name of companies the Company did not make into its subsidiaries since the company held the majority voting rights
on its own account.
Not applicable.
(3) Assets, profit or loss of subsidiaries excluded from the scope of consolidation since control is deemed to be temporary
Not applicable.
(4) Special purpose company subject to disclosure
An outline of the special purpose company subject to disclosure, an outline of transactions using the special purpose
company subject to disclosure, and the transaction amount with the special purpose company subject to disclosure aredescribed in “Notes on special purpose company subject to disclosure.”
2. Application of Equity Method(1) Number of affiliated companies accounted for by the equity method and names of major companies
Number of equity-method affiliates
2 companies
Names of equity-method affiliates
Power Consulting Networks Co., Ltd.
SKY ESTATE CO., LTD.
(2) Name of the company which holds not less than 20% and not more than 50% of the voting rights on its own accountand which has not been an affiliated company
Not applicable.
(3) Special note regarding application of the equity method
Not applicable.
3. Matters concerning Accounting Policies(1) Valuation standards and methods for significant assets(i) Valuation standards and methods for securities
Other securities (available-for-sale securities)
Shares other than those with no market price Stated at market (Valuation difference is reported as a componentof net assets. The cost of sale is calculated using the movingaverage method.)
Shares with no market priceStated at cost using the moving-average method.

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

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(3) Significant provisions(i) Allowance for doubtful accounts

The allowance for doubtful accounts is provided based on thehistorical write-off rate for ordinary receivables, the estimatedamount of irrecoverable debt based on recoverability of
individual cases for specified receivables such as doubtful
accounts.
(ii) Provision for bonuses
To prepare for the payment of bonuses to employees, theCompany records the portion of the estimated bonuses to be
paid during the current consolidated fiscal year.
(iii) Provision for bonuses for directors (and other Provision for directors’ bonuses is provided based on theofficers)
estimated amount to be paid during the current consolidated
fiscal year.
(iv) Provision for fulfillment of guarantees
In order to prepare for losses related to Rent Guarantee
Business operations, costs for which the amount incurred canbe estimated individually are recorded in the amount of suchcosts, and for others, the estimated losses are recorded bytaking into account the past guarantee fulfillment rate.
(v) Provision for share-based remuneration
In order to prepare for the provision of the Company’s shares
to employees based on the Share Benefit Regulations, theprovision for the Company’s shares is recorded based on theestimated amount of the share benefit obligation at the end of
the current consolidated fiscal year.

―11―(4) Other significant matters for preparation of consolidated financial statements(i) Fiscal year of consolidated subsidiaries
Consolidated domestic subsidiaries and Sun Frontier Fudousan Taiwan Co., Ltd. close their books on March 31,
and SUN FRONTIER VIETNAM CO., LTD., PT. SUN FRONTIER INDONESIA, PT. SUN FRONTIERPROPERTY ONE, SUN FRONTIER DANANG CO., LTD., Sun Frontier NY Co., Ltd., 340 West 48 SG LLC,
439 West 46 SG LLC and RIVERSIDE STUDIOS LLC close their books on December 31.
In preparing the consolidated financial statements, the financial statements as of December 31 are used for the
consolidated subsidiaries whose closing date is December 31, and necessary adjustments are made for significant
transactions occurring between the consolidated closing date and December 31.
(ii) Standards for recording significant revenues and expenses
The major performance obligations of the Company and its consolidated subsidiaries in their principal businesses
with respect to revenue arising from contracts with clients and the normal time at which such performanceobligations are met (normal time at which revenue is recognized) are as follows.
(a) Real Estate Revitalization Business
Replanning Business
Replanning Business purchases existing office buildings and refurbishes buildings and facilities and attracts
excellent tenants to sell buildings with added value to clients in Japan and overseas. The business is obligatedto deliver these properties based on real estate sales agreements with clients.
The performance obligation is fulfilled at the time the property is delivered and revenue is recorded at thetime of delivery of the property.
(b) Real Estate Service Business(1) Property Management Business
Property Management Business enters into property management agreements with clients and is obligatedto perform various operations related to real estate properties on behalf of clients, including maintenanceand management of properties and collection of rent for tenants.
The performance obligation is fulfilled at the time service provision based on the property managementagreement, and revenue is recorded over the contract period.
(2) Building Maintenance Business
Building Maintenance Business mainly is obligated to inspect building facilities by entering into various
agreements with clients or by entering into purchase orders and order contracts.
The performance obligation is fulfilled upon completion of the work under the agreement, and revenue isrecorded at the time of issuance of the completion report for the work and construction.

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(3) Sales Brokerage Business
Sales Brokerage Business stands between the buyer and the seller at the time of purchase and sale of realestate and is responsible for executing the sales agreement. Based on the intermediary agreement with theclient, the Company is responsible for a series of operations including negotiation and adjustment oftransaction terms and conditions, delivery and explanation of important matters, preparation and deliveryof the agreement, and involvement in procedure for performance of agreements.
The performance obligation is fulfilled at the time when the property related to the real estate sales contract
established by the intermediary agreement is delivered, and revenue is recorded at the time of delivery.
(4) Leasing Brokerage BusinessLeasing Brokerage Business stands between the lessee and the lessor when leasing real estate and is
responsible for concluding lease agreements. Based on intermediary agreements with clients, the businesshas obligations related to a series of operations including negotiations and adjustments of transaction terms
and conditions, delivery and explanation of important matters, preparation and delivery of agreements, andinvolvement in procedures for performance of agreements.
The performance obligation is fulfilled at the time when the real estate lease agreement for the property
brokered by the intermediary agreement is concluded, and revenue is recorded at the time of conclusion of
the agreement.
(c) Hotel and Tourism Business(1) Hotel Operation Business
Hotel Operation Business is primarily responsible for the operation of hotels owned or leased by theCompany and is obligated to provide hotel services for clients to stay or provide meals at restaurants locatedwithin the hotel.
These performance obligations are fulfilled at the time service is provided to clients, and revenue isrecorded when clients check in.
(2) Hotel Development Business
Hotel Development Business is a business engaging in the purchase of land and the construction of hotel
buildings, which are then sold to clients, and is obligated to deliver the property based on the real estate
sales agreement with the clients.
The performance obligation is fulfilled at the time the property is delivered and revenue is recorded at thetime of delivery.
(d) Others(1) Overseas Development Business
Overseas Business is engaged in real estate development mainly for condominiums and houses in Southeast
Asia and sells these properties to clients in Japan and overseas. The business is obligated to deliver these―13―

properties based on real estate sales agreements with clients.
The performance obligation is fulfilled at the time the property is delivered, and revenue is recorded at thetime of delivery.
(2) Construction Business
Construction Business is engaged in renovation planning, repair and renovation related to renewal planning,
repair and renovation work for commercial buildings, telecommunications work, contracted interior
construction for large, medium, and small facilities, etc.
When control over goods or services is transferred to clients over a certain period, revenue is recorded overa certain period as the performance obligation to transfer goods or services to clients is fulfilled.
Contracts with a very short period between the transaction start date and the time when the performanceobligation is expected to be fulfilled, or contracts with a small order amount received per unit ofconstruction are subject to alternative treatment. Revenue is not recognized over a certain period but isrecognized when the performance obligation is fulfilled.
(iii) Accounting treatment for retirement benefits
In calculating the retirement benefit liability and retirement benefit expenses, certain of the Company’s
consolidated subsidiaries apply the simplified method where the amount of retirement benefits payable at theend of the fiscal year for voluntary resignations is the retirement benefit obligation.

(iv) Standards for translation of foreign currency-denominated assets and liabilities into Japanese currency
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the spot
exchange rates on the consolidated balance sheet date, and translation differences are charged or credited toincome. Assets, liabilities and income and expenses of foreign subsidiaries are translated into Japanese yen at
the exchange rates prevailing at the respective balance sheet dates of the foreign subsidiaries. Translationdifferences are included in foreign currency translation adjustment and non-controlling interests in net assets.
(v)

Non-deductible consumption tax accounting
Non-deductible consumption tax and local consumption tax on assets are charged to income in the year in which
they are incurred.

(vi) Amortization methods and periods for goodwill
Goodwill is amortized on a straight-line basis over mainly 10 years.
(vii) Application of consolidated taxation system
Consolidated taxation system is applied.

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(viii) Application of tax effect accounting for transition from the consolidated taxation system to the group tax sharing
systemThe Company and certain consolidated domestic subsidiaries companies will shift from the consolidated taxation
system to the group tax sharing system from the following fiscal year. However, the provisions of Paragraph 44of the “Implementation Guidance on Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ)
Statement No. 28, February 16, 2018) have not been applied to the items for which the group tax sharing system
has been adopted and the non-consolidated tax payment system has been revised in line with the transition to thegroup tax sharing system established under the Act for Partial Revision of the Income Tax Act, etc. (Act No. 8
of 2020) due to the treatment in Paragraph 3 of the “Treatment of Tax Effect Accounting for the Transition fromthe Consolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31, 2020), andthe amounts of deferred tax assets and deferred tax liabilities have been based on the provisions of the tax act
prior to the revision.
Moreover, from the beginning of the following fiscal year, the Company plans to apply the “Treatment of the
Accounting and Disclosure under the Group Tax Sharing System” (ASBJ PITF No. 42, August 12, 2021), which
provides for the handling of accounting treatment and disclosure of corporate tax, local corporate tax and tax
effect accounting with the application of the group tax sharing system.
(Changes in accounting policies due to changes in accounting standard, etc.)
1. Application of accounting standards for revenue recognition“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) was applied at the beginningof the three months ended June 30, 2021 and so revenue is recognized in the amount expected to be received in exchange
for the promised goods or services at the time when control of the goods or services is transferred to the client.
Consequently, if the event that control over goods or services related to renewal planning, repair and renovation work forcommercial buildings, telecommunications work, contracted interior construction work for large, medium, and small
facilities, etc., is transferred to clients over a certain period of time, revenue will be recorded over a certain period of time
as performance obligations to transfer goods or services to clients are fulfilled.
The application of the said accounting standard is in accordance with the transitional treatment provided in the proviso toParagraph 84 of the Revenue Recognition Accounting Standard, but there is no impact on the balance at beginning of theperiod of retained earnings. As a result of the application of the said accounting standard, net sales in current consolidated
fiscal year increased by 17 million yen and operating profit, ordinary profit and profit before income taxes each increasedby 3 million yen. Moreover, “notes and accounts receivable – trade” that was included in “current assets” in theConsolidated Balance Sheet of the previous fiscal year, has been included in “Notes, Account receivable and contract
assets” from the current consolidated fiscal year.
2. Application of accounting standards for fair value measurement“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019. Hereinafter referred to as“Fair Value Measurement Accounting Standard”) was applied at the beginning of the first quarter ended June 30, 2021
and so in accordance with the transitional treatment set forth in Paragraph 19 of the Fair Value Measurement Accounting―15―

Standard, and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4,2019), the new accounting policies set forth in the said accounting standard will be applied in the future.
Moreover, there is no impact on the Consolidated Financial Statements.
(Change of Presentation Method)
Consolidated Balance Sheet“Gain on sales of non-current assets” (1 million yen in the previous fiscal year) which was independently listed in“Extraordinary income” in the previous fiscal year has been included in “Other” in the current fiscal year due to its
decreasing financial materiality.
(Notes on Accounting Estimates)
1. Assessment of the real estate for sale(1) Amount recorded in the consolidated financial statements for the current fiscal year
Real estate for sale
14,222 million yen
Real estate for sale in process
62,934 million yen(2) Other information
For real estate for sale, etc., if the net selling price falls below the acquisition cost, the net selling price is stated as thebalance sheet amount. The net selling price is calculated by deducting the estimated future cost of construction workand the estimated selling expenses from the return value estimated based on the business plan.
The business plan that forms the basis for the value of the return to profits includes the expected tenant rent and theoccupancy rate of hotel rooms, and is based on important assumptions such as the assumed market conditions in the
future and the forecast of the convergence time of the COVID-19.
In the following fiscal year and thereafter, the net selling price may change due to changes in assumptions used informulating business plans in the events that were not anticipated at the time of formulating business plans. This may
have a significant impact on the amount of real estate for sale, etc., recognized in the consolidated financial statements
for the following fiscal year and thereafter.
2. Non-current assets impairment(1) Amount recorded in the consolidated financial statements for the current fiscal year
Non-current assets related to Hotel Development Business and Hotel Operation Business 12,080 million yen(2) Other information
Due to the impact of the spread of COVID-19, the occupancy rate of hotel rooms has decreased and profitability has
declined. As a result, signs of impairment have emerged as a significant deterioration in the business environment.
The determination of impairment losses recognition is based on a comparison of the estimated undiscounted future
cash flows over the remaining economic useful lives of the hotel’s major assets with the carrying amounts of thehotel’s asset groups.

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The business plan of the hotel, which is the basis of future cash flows, has been formulated under the policy of
conducting long-term management, based on important assumptions including the forecast of the occupancy rate of
hotel rooms, etc., as well as the assumption of future market conditions and the forecast of the convergence time of
the COVID-19.
In the following fiscal year and thereafter, the assumptions used in formulating business plans may change in theevents that were not anticipated when the business plan was formulated. This may have a material impact on the noncurrent asset amounts to be recognized in the consolidated financial statements for the following fiscal year andthereafter.
(Additional Information)
Transactions of delivering the company’s own shares to employees etc. through trusts
The Company conducts transactions to deliver its own shares through trust for the purpose of employee welfare.
(i) Overview of transaction
The Plan provides the Company’s shares to employees of the Company who meet certain requirements based on theshare benefit regulations established by the Company in advance.
The Company will grant points to employees who satisfy certain conditions at the end of the consolidated fiscal year,
and when they acquire the right to receive benefits, the Company shares corresponding to the granted points will bedelivered. The shares to be granted to employees are acquired in the future with the money set in trust in advance andmanaged separately as trust assets.
The total amount method is applied to the Employee Stock Ownership Plan (J-ESOP) in accordance with the “Practical
Solution on Transactions of Delivering the Company’s Own Shares to Employees etc. through Trusts” (ASBJ PITF
No. 30, March 26, 2015).
(ii) Own shares remaining in the trust
The book value of the Company’s shares remaining in the trust (excluding the amount of incidental expenses) is
included as treasury shares in net assets. The book value and number of shares of the treasury shares were 67 million
yen and 56,500 shares.

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(Notes to Consolidated Balance Sheet)(1) Assets pledged as collateral and obligations secured by collateral(i) Assets pledged as collateral are as follows:
Real estate for sale
Real estate for sale in process
Buildings
Land
Other
Total
(ii) Secured obligations are as follows:
Long-term borrowings

8,963 million yen
59,769 million yen
4,040 million yen
9,700 million yen
1,374 million yen
83,848 million yen
47,724 million yen(2) Accumulated depreciation of property, plant and equipment

4,540 million yen

Note. The above amounts include accumulated impairment losses.

(3) Contingent liabilities
Debt guarantee
Liability guarantee by rent guarantee
Clients pertaining to Rent Guarantee Business (amountequivalent to the guarantee limit)
Provision for fulfillment of guarantees
Total(Notes to Consolidated Statement of Income)Not applicable.

―18―

43,143 million yen(39) million yen
43,103 million yen

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

Beginning of thecurrent consolidated
fiscal year
48,755,500 shares

Increase

End of the current
consolidated fiscal year

Decrease--

48,755,500 shares(2) Matters concerning Treasury shares
Type of shares
Common shares

Beginning of thecurrent consolidated
fiscal year
56,644 shares

Increase

End of the current
consolidated fiscal year

Decrease--

56,644 sharesNote. The number of Treasury shares in common shares, includes the Company’s share of 56,500 held by the trust account of the Employee Stock
Ownership Plan (J-ESOP).
(Summary of Reasons for Change)
Not applicable.

(3) Matters concerning dividends of surplus(i) Cash dividends paid
Resolution
June 22, 2021
Annual general
meeting ofshareholders
November 9, 2021
Board of Directors

Type of shares

Total dividends Dividends per share(Millions of yen)
(yen)

Base date

Effective dateCommon shares

2,047

42.00

March 31,2021

June 23,2021

Common shares

1,023

21.00

September 30,
2021

December 7,
2021

Note. The total amount of dividends decided at the Annual General Meeting of Shareholders on June 22, 2021 includes dividends of 2 million yen
for the Company’s shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP).
The total amount of dividends decided at the Board of Directors on November 9, 2021 includes dividends of 1 million yen for theCompany’s shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP).

―19―

(ii) Dividends whose record date falls in the current consolidated fiscal year and whose effective date falls in thefollowing consolidated fiscal year
The following resolution is scheduled.
Type of shares

Source ofdividends

June 21, 2022
Annual general
Common shares
meeting ofshareholders

Retainedearnings

Resolution

Total dividends Dividends per share(Millions of yen)
(yen)
1,121

23.00

Base date

Effective date

March 31,2022

June 22,2022

Note. The total amount of dividends decided at the Annual General Meeting of Shareholders held on June 21, 2022, includes dividends of 1 million
yen for the Company’s shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP).

(4) Share acquisition rights as of the end of the current consolidated fiscal year
Number of shares to be issued (shares)

Breakdown

2018 Share acquisitionrights as Stock Option
2019 Share acquisitionrights as Stock Option
2020 Share acquisitionrights as Stock Option
2021 Share acquisitionrights as Stock Option
Total

Balance atthe end of
the current
consolidated
fiscal year
(Millions ofyen)

Beginning of
the current
consolidated
fiscal year

Increase

Decrease

End of thecurrent
consolidated
fiscal year

-

-

-

-

-

5

-

-

-

-

-

5

-

-

-

-

-

4

-

-

-

-

-

14

-

-

-

-

30

Type of shares
to be issued(Notes on Financial Instruments)(1) Items relating to financial instruments(i) Policy on financial instruments
The group limits its fund management to short-term deposits, etc. With regard to fund procurement, the Company’s
policy is to procure funds through indirect financing through bank loans and direct financing through issuance ofbonds and shares, etc., taking into comprehensive consideration the characteristics of necessary fund demand,financial market environment, long and short-term redemption periods. Derivative transactions are used to avoid
interest rate fluctuation risks on borrowings or to limit them to a certain range, and the Company’s policy is not toengage in speculative transactions.

―20―

(ii) Content as well as risks of financial instruments
Trade receivables are exposed to clients’ credit risk.
Borrowings raised funds mainly for investment in business purposes and business strategies. Variable borrowings
are exposed to interest rate fluctuation risk. Borrowings, which procures funds mainly from financial institutions, is
exposed to liquidity risks that restrict fund procurement due to changes in the stance of transactions with the group.
(iii) Risk management system for the financial instruments
A. Management of credit risks (risks pertaining to non-performance of contracts by counterparties)
Based on the Management Regulations for Trade Receivables and other rules, the Company regularly monitors
the business conditions of major business partners with regard to trade receivables, strives to identify and mitigate
early concerns about collection of trade receivables due to deterioration in financial conditions and other factors.
B. Management of market risks (risks related to market price fluctuations)
The Company will not conduct derivative transactions for speculative purposes not stipulated in the derivativetransaction management regulations.
C. Management of liquidity risk related to fund procurement (risk of inability to pay on the due date)
The Company aims to diversify its funding sources by accurately assessing the group’s funding needs andfinancial position, and by strengthening relationships with financial institutions.
(iv) Supplementary explanation of fair value of financial instruments
Since variable factors are incorporated in the calculation of the fair values of financial instruments, the value may
fluctuate by adopting different assumptions, etc.
(2) Fair value of financial instruments
At March 31, 2022, the book values of the Consolidated Balance Sheet, fair values and differences between them are as
follows.
(unit: million yen)
Consolidated Balance
Sheet amountLong-term borrowings (including
current portion)
Total liabilities

Market value

Difference

51,04350,275(768)

51,04350,275(768)

Note 1. The description “cash and time deposits” is omitted because it is cash and deposits are settled in a short period of time, and so the market
value approximates the book value.

―21―

Note 2. Shares with no market priceCategory

Consolidated Balance
Sheet value(Millions of yen)

Shares of subsidiaries andaffiliates
Unlisted shares

126
107

Note 3. Scheduled repayment amount of short-term and long-term borrowings after the consolidated balance sheet dateCategory

Over 1 year Over2 years Over 3years Over 4years
Within 1 year and within and within and within and within Over 5 years(Millions of
2 years
3 years
4 years
5 years(Millions ofyen)(Millions of (Millions of (Millions of (Millions of
yen)
yen)
yen)
yen)
yen)

Short-term borrowings

30

－

－

－

－

－

Long-term borrowings

6,874

8,320

23,071

2,826

3,106

6,844

(3) Breakdown of market value of financial instruments by appropriate category, etc.
The market values of financial instruments are classified into the following three levels according to the inputs,
observability and materiality related to the calculation of market values.
Level 1 Market Value: Market value calculated based on quoted prices of the same asset or liability in an active market(unadjusted)
Level 2 Market Value: Market value calculated using direct or indirect observable inputs other than Level 1 inputs
Level 3 Market Value: Market value calculated using significant unobservable inputs
When multiple inputs that have a significant impact on the calculation of market value are used, market value is classified
to the lowest level to which each of these inputs belongs that has the lowest priority for calculating market value.

―22―

Financial assets and liabilities not recognized in Consolidated Balance Sheet at market valueMarket value (Millions of yen)
Category
Level 1Long-term borrowings

Level 2-50,275

Level 3

Total-

50,275Note. Explanation of valuation techniques used for market value calculation and input related to market value calculation
Long-term borrowings
These market values are calculated by the discounted present value method based on the total amount of principal and interest and theinterest rate taking into account the remaining period of the debt and credit risk, and are classified as Level 2 market values.

(Notes on Lease and Real Estate)
The Company operates rental office buildings (including land) as well as hotel facilities (including land) in Tokyo and otherareas. For the fiscal year ended March 31, 2022, net rental income from such rental properties was 159 million yen (rentrevenue is recorded in net sales and rental expenses are recorded in cost of sales).
In addition, the amount recorded in the Consolidated Balance Sheet, increase/decrease for the current consolidated fiscal
year and market value at the end of the current consolidated fiscal year for the said lease and real estate are as follows.
(Unit: million yen)
Consolidated Balance Sheet amountMarket value at the end of the
Balance at the beginning of the Fiscal year under review
Balance at the end of the current consolidated fiscal year
current consolidated fiscal year
Increase/Decrease
current consolidated fiscal year
2,183
4,475
6,659
9,255
Note 1. The amount recorded in the Consolidated Balance Sheet is the acquisition cost excluding the accumulated depreciation.
Note 2. The major increase in increase/decrease during the fiscal year under review was due to new acquisition of facility (4,567 million yen) anddecrease was due to depreciation (91 million yen)
Note 3. The fair value at the end of the current consolidated fiscal year is the amount based on the real estate appraisal report by an external real estateappraiser.

―23―

(Notes on Revenue Recognition)
1. Breakdown of information regarding revenue generated from contracts with clients(Millions of yen)
Reportable segments

Revenue fromcontracts with clients
Other income(Note 1)
Net sales to externalclients

Other(Note 1)

Real Estate
Revitalization
Business

Real Estate
ServiceBusiness

51,644

5,447

6,797

63,8891,690

65,580

4,301

1,255

114

5,671

-

5,671

55,946

6,703

6,911

69,561

1,690

71,251

Hotel andTourism
Business

Total

Total

Note 1. The “Other” segment is a business segment that is not included in the reportable segment and includes Overseas Development Business andConstruction Business.
Note 2. Other income includes rental income, etc. under Accounting Standard for Lease Transactions (ASBJ Statement No. 13).

2. Basic information to understand the revenue generated from contracts with clients
Basic information for understanding revenue is as described in “(4) Other significant matters for preparation of consolidated
financial statements (ii) Standards for recording significant revenues and expenses.”―24―

3. Information to understand the amount of revenue for the current period and subsequent periods(1) Balance of contract assets and contract liabilities, etc.
The Company’s contract balance is as follows.
(Millions of yen)
Current consolidated fiscal
year(March 31, 2022)
Receivables arising from contracts with clients
1,482(at beginning of the period)
Receivables arising from contracts with clients854(at end of the period)
Contract assets (at beginning of the period)
25
Contract assets (at end of the period)

18

Contract liabilities (at beginning of the period)
Contract liabilities (at end of the period)

758
561

Note 1. Receivables arising from contracts with clients
Receivables arising from contracts with clients are mainly uncollected proceeds for the sale of condominium typehotels and room charges, etc. recognized in Hotel and Tourism Business and rights to clients arising from theperformance of contracts in Real Estate Service Business. The collection period for these receivables is mainly
within one to three months.
Note 2. Contract assets
Contract assets relates to the rights to clients arising from the receipt of payments from clients in the course of
performance recognized in connection with contract work agreements in Construction Business. Contract assets
for completed work are recognized in advance and are transferred to trade receivables upon acceptance by clientsand invoicing.
Contract assets are included in notes receivable, accounts receivable, and contract assets in Consolidated Balance
Sheet.
Note 3. Contract liabilities
Contract liabilities mainly consist of earnest money received at the time of execution of sales contracts in
Replanning Business, consideration received prior to performance under construction contracts in Construction
Business, and room charges received in advance, etc. in Hotel Operation Business. These are transferred toincome when the Company performs under contracts.

―25―

Contract liabilities are included in Other current liabilities in Consolidated Balance Sheet.
Of the contract liabilities at the beginning of current consolidated fiscal year, the amount recognized in revenue in current
consolidated fiscal year was 758 million yen.
The decrease in contract assets in current consolidated fiscal year was mainly due to a decrease in construction orders.
The decrease in contract liabilities in current consolidated fiscal year was mainly due to a decrease in deposit balance in
Replanning Business.
(Notes on Per Share Information)(1) Net assets per share(2) Earnings per share(3) Fully diluted earnings per share

1,463.74 yen
152.26 yen
152.12 yen

Note. The Company’s shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP) are included in weighted average numberof shares for the period in common shares and treasury shares deducted in the calculation of the total number of outstanding shares at the endof the fiscal year under review. The weighted average number of the Company’s shares for the period and year-end held by the trust accountis 56,500 shares.

―26―

(Notes on Special Purpose Companies subject to Disclosure)(1) Overview of the special purpose company subject to disclosure and overview of transactions using the special purpose
company subject to disclosure
The Company operates an investment product in sub-divided real estate sales business in Real Estate Revitalization
Business based on Act on Specified Joint Real Estate Ventures (voluntary partnership type) and uses voluntary
partnership as part of the business structure.
In this business, sub-divided real estate investment product purchasers (hereinafter referred to as investors) will enter
into an agreement with voluntary partnership to participate in the real estate specified business and make contributions
in kind or cash investment. Voluntary partnership is structured to receive distributions of profits and losses arising fromreal estate investments in kind or in cash by investors. Profits and losses on leasing and sales of the real estate are
attributable to investors.
As a Managing Partner (Chairman), the Company receives chairman compensation in accordance with the VoluntaryPartnership Agreement, and also receives compensation from voluntary partnership for entrusting building management
in a lump sum. In the case of cash investment type, real estate will be transferred between the Company and voluntary
partnership.
The latest financial position for the current consolidated fiscal year is as follows.
Fiscal year under review(March 31, 2022)
Number of Special Purpose Companies

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

4,062 million yen
126 million yen

The total amount of assets and liabilities of one of the above units is not included in the total amount because the closing
date has not arrived yet.
(2) Transaction amount with the special purpose company subject to disclosure
The description of transaction amount and transaction balance have been omitted due to lack of importance.
(Note on Significant Subsequent Events)
Not applicable.
(Other Note)
Not applicable.

―27―

Non-consolidated Statement of Changes in Equity(From April 1, 2021 to March 31, 2022)(Unit: million yen)
Shareholder’s equity
Retained earnings
Other retained
Total
earnings
Total Treasury shareholders’Legalsharesretained
Retained
equityreserveearnings
earnings
brought forward

Capital surplus
Share capital

Balance at
beginning of theperiodChanges during
periodDividends ofsurplusProfitNet changes in
items other thanshareholders’equityTotal changes
during period
Balance at end of
the period

11,965

Total
capitalsurplusCapitalreserve

6,449

6,449

13

49,838(67)

68,186(3,071)(3,071)(3,071)

9,284

9,284

9,284

-

-

-

-

6,213

6,213

-

6,213

11,965

6,449

6,449

13

56,03956,052(67)74,399Valuation and translationdifference
Share
Valuation
Total
Net assets
difference
valuation acquisition
total
rightson availableandfor-saletranslation
securities
difference
Balance at
beginning of theperiodChanges during
periodDividends ofsurplusProfitNet changes in
items other thanshareholders’equityTotal changes
during period
Balance at end of
the period

49,8252

2

16

68,204(3,071)
9,284
0

0

14

14

0

0

14

6,227

3

3

30

74,432―28―

Notes to Non-consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.
(Matters Concerning Significant Accounting Policies)
1. Valuation standards and methods for assets(1) Valuation standards and methods for securities(i) Shares of subsidiaries and affiliates
Stated at cost using the moving-average method.
(ii) Other securities (available-for-sale securities)
Shares other than those with no market
price, etc.
Shares with no market price, etc.

Stated at market (Valuation difference is reported as a component of
net assets. The cost of sale is calculated using the moving-averagemethod.)Stated at cost using the moving-average method.

(2) Assessment criteria and assessment methods of Inventories
Real estate for sale and Real estate for saleStated at cost determined by the specific identification method
in process(The figures shown in the balance sheet have been calculated bywriting them down based on decline in profitability.)
Leased assets are amortized in accordance with property, plant andequipment standards.
2. Depreciation of non-current assets(1) Property, plant and equipment(2) Intangible assets

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

―29―

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

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

4. Method of recording revenue and expenses
The major performance obligations in principal businesses related to revenue arising from contracts with the Company’sclients and the normal time at which such performance obligations are satisfied (normal time at which revenue is recognized)
are as follows.
(a) Real Estate Revitalization Business
Replanning Business
Replanning Business purchases existing office buildings, refurbishes buildings and facilities, and attracts excellent
tenants to sell added value to clients in Japan and overseas. The Company is obligated to deliver these properties basedon real estate sales agreements with clients.
The performance obligation is fulfilled at the time the property is delivered and revenue is recorded at the time ofdelivery of the property.
(b) Real Estate Service Business(1) Property Management Business
Property Management Business enters into property management agreements with clients and is obligated to perform
various operations related to real estate properties on behalf of clients, including maintenance and management ofproperties and collection of rent for tenants.
The performance obligation is fulfilled at the time service is provided based on the property management agreement,
and revenue is recorded over the contract period.
(2) Sales Brokerage Business
Sales Brokerage Business stands between the buyer and the seller at the time of purchase and sale of real estate andis responsible for executing the sales agreement. Based on the intermediary agreement with the client, the Company―30―

is responsible for a series of operations including negotiation and adjustment of transaction terms and conditions,delivery and explanation of important matters, preparation and delivery of the agreement, and involvement in theexecution of the agreement.
The performance obligation is fulfilled at the time when the property related to the real estate sales
agreement established by the intermediary contract is delivered, and revenue is recorded at the time of delivery.
(3) Leasing Brokerage BusinessLeasing Brokerage Business is a business that stands between the lessee and the lessor when leasing real estate andis responsible for concluding lease agreements. Based on intermediary agreements with clients, the business is
responsible for a series of operations including negotiations and adjustments of transaction terms and conditions toconclude agreements, delivery and explanation of important matters, preparation and delivery of agreements, andinvolvement in procedures for performance of agreements.
The performance obligation is fulfilled at the time when the real estate lease agreement for the property brokered by
the intermediary agreement is concluded, and revenue is recorded at the time of conclusion of the agreement.
(c) Hotel and Tourism Business
Hotel Development Business
Hotel Development Business is a business engaging in the purchase of land and the construction of hotel buildings,
which are then sold to clients, and is obligated to deliver the property based on the real estate sales agreement with theclients.
The performance obligation is fulfilled at the time the property is delivered and revenue is recorded at the time ofdelivery.
(d) Others
Construction Business
Construction Business is engaged in renovation planning, repair and renovation related to renewal planning, repair
and renovation work for commercial buildings, telecommunications work, contracted interior construction for large,
medium, and small facilities, etc.
When control over goods or services is transferred to clients over a certain period, revenue is recorded over a certain
period as the performance obligation to transfer goods or services to clients is fulfilled.
Contracts with a very short period between the transaction start date and the time when the performance obligation is
expected to be fulfilled, or contracts with a small order amount received per unit of construction are subject toalternative treatment. Revenue is not recognized over a certain period but is recognized when the performanceobligation is fulfilled.

―31―

5. Basis for preparation of other financial statements(1) Standards for translation of significant assets or liabilities denominated in foreign currencies into Japanese currency
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the spot
exchange rates prevailing at the respective balance sheet dates, and translation differences are charged or credited toincome.
(2) Non-deductible consumption tax accounting
Non-deductible consumption tax on assets is charged to income in the year in which it is incurred.
(3) Application of consolidated taxation system
Consolidated taxation system is applied.
(4) From the next fiscal year, the Company will shift from the consolidated taxation system to the group tax sharing
system. However, the provisions of Paragraph 44 of the “Implementation Guidance on Tax Effect Accounting”(Accounting Standards Board of Japan (ASBJ) Statement No. 28, February 16, 2018) have not been applied to theitems for which the group tax sharing system has been adopted and the non-consolidated tax payment system has beenrevised in line with the transition to the group tax sharing system established under the Act for Partial Revision of the
Income Tax Act, etc. (Act No. 8 of 2020) due to the treatment in Paragraph 3 of the “Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF
No. 39, March 31, 2020), and the amounts of deferred tax assets and deferred tax liabilities have been based on theprovisions of the tax act prior to the revision. Moreover, from the beginning of the following fiscal year, the Company
plans to apply the “Treatment of the Accounting and Disclosure under the Group Tax Sharing System” (ASBJ PITF
No. 42, August 12, 2021), which provides for the handling of accounting treatment and disclosure of corporate tax,
local corporate tax and tax effect accounting with the application of the group tax sharing system.
(Changes in Accounting Policies due to revisions of accounting standards, etc.)
1. Application of “Accounting Standard for Revenue Recognition,” etc.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. has been applied fromthe beginning of fiscal year ended March 31, 2022, and revenue is recognized at the amount expected to be received in
exchange for promised goods or services at the time when control over goods or services is transferred to the client.
Consequently, when control over goods or services related to renewal planning, repair and renovation work for commercial
buildings, telecommunications work, contracted interior construction work for large, medium, and small facilities, etc., istransferred to clients over a certain period, revenue will be recorded over a certain period as performance obligations totransfer goods or services to clients are fulfilled.
The application of the accounting standards is in accordance with the transitional treatment provided in the proviso toparagraph 84 of the accounting standards, but there is no impact on the beginning balance of retained earnings brought
forward. The adoption of this accounting standard has no impact on the Non-consolidated Financial Statements in fiscal
year ended March 31,2022.

―32―

2. Application of “Accounting Standard for Fair Value Measurement”, etc.
“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019. Hereinafter referred to as“Fair Value Measurement Accounting Standard”) and others have been applied since the beginning of the fiscal year underreview and in accordance with the transitional treatment in Paragraph 19 of the Fair Value Measurement AccountingStandard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4,2019), the new accounting policy prescribed by the Fair Value Measurement Accounting Standard and others will beapplied prospectively. There is no impact on financial statements for fiscal year ended March 31, 2022.
(Notes on Changes in Presentation Methods)
Income Statement related“Foreign exchange gains” (35 million yen in the previous fiscal year), which was included in “Other” in non-operating
income in the previous fiscal year, has been separately listed in fiscal year ended March 31, 2022, due to its increasedmateriality.
(Notes on Accounting Estimates)
1. Assessment of the real estate for sale(1) Amount recorded in the financial statements for the current business year
Real estate for sale
13,289 million yen
Real estate for sale in process
48,674 million yen(2) Other information
For real estate for sale, etc., if the net selling price falls below the acquisition cost, the net selling price is stated as thebalance sheet value. The net selling price is calculated by deducting the estimated future cost of construction work andthe estimated selling expenses from the return value estimated based on the business plan.
The business plan that forms the basis for the value of the return to profits includes the expected tenant rent and theoccupancy rate of hotel rooms, and is based on important assumptions such as the assumed market conditions in the
future and the forecast of the convergence time of the COVID-19.
In the following fiscal year and thereafter, the net selling price may change due to changes in assumptions used informulating business plans in the events that were not anticipated at the time of formulating business plans. This may
have a significant impact on the amount of real estate for sale, etc., recognized in the financial statements for thefollowing fiscal year and thereafter.
2. Non-current assets impairment(1) Amount recorded in the financial statements for the current business year
Non-current assets related to hotel development business 9,787 million yen―33―

(2) Other information
Due to the impact of the spread of COVID-19, the occupancy rate of hotel rooms has decreased, and profitability has
declined. As a result, signs of impairment have emerged as a significant deterioration in the business environment.
Impairment losses are losses based on a comparison of the estimated undiscounted future cash flows over the remaining
economic useful lives of the hotel’s major assets with the carrying amounts of the hotel’s asset groups.
The business plan of the hotel, which is the basis of future cash flows, has been formulated under the policy of
conducting long-term management, based on important assumptions including the forecast of the occupancy rate of
hotel rooms, etc., as well as the assumption of future market conditions and the forecast of the convergence time of
the COVID-19.
In the following fiscal year and thereafter, the assumptions used in formulating business plans may change in theevents that were not anticipated when the business plan was formulated. This may have a material impact on the noncurrent asset amounts recognized in the financial statements for the following fiscal year and thereafter.
(Additional Information)
Transactions of delivering the company’s own shares to employees etc. through trusts
The Company conducts transactions to deliver its own shares through trust for the purpose of employee welfare.
(i) Overview of transaction
The plan provides the Company’s shares to employees of the Company who meet certain requirements based on theshare benefit regulations established by the Company in advance.
The Company will grant points to employees who satisfy certain conditions at the end of the fiscal year, and when
they acquire the right to receive benefits, the Company shares corresponding to the granted points will be delivered.
The shares to be granted to employees are acquired in the future with the money set in trust in advance and managed
separately as trust assets.
The total amount method is applied to the Employee Stock Ownership Plan (J-ESOP) in accordance with the “Practical
Solution on Transactions of Delivering the Company’s Own Shares to Employees etc. through Trusts” (ASBJ PITF
No. 30, March 26, 2015).
(ii) Own shares remaining in the trust
The book value of the Company’s shares remaining in the trust (excluding the amount of incidental expenses) is
included in net assets. The book value and number of shares of the treasury shares were 67 million yen and 56,500
shares.

―34―

(Notes to Balance Sheet)(1) Assets pledged as collateral and obligations secured by collateral(i) Assets pledged as collateral are as follows:
Real estate for sale
Real estate for sale in process
Buildings
Land
Other
Total
(ii) Secured liabilities are as follows:
Long-term borrowings

8,963 million yen
46,962 million yen
3,631 million yen
9,564 million yen
1,374 million yen
70,496 million yen
40,631 million yen(2) Accumulated depreciation of property, plant and equipment

640 million yen(3) Monetary claims and monetary obligations to subsidiaries and affiliates (excluding those classified)
Short-term monetary receivables
330 million yen
Short-term monetary debt
115 million yen(4) Monetary obligations to directors

56 million yen(5) Guarantee obligations
Guarantees for borrowings loans by financial institutions ofaffiliated companies
Sun Frontier Hotel Management Inc.
Sun Frontier Sado Co., Ltd.
Communication Development Inc.

7,882 million yen
121 million yen
74 million yen(Notes to Statement of Income)Transactions with affiliated companies
Transaction volume from operating transactions
Net sales
Cost of sales and Selling, general and administrative expenses

187 million yen
339 million yen

Non-operating transactions

160 million yen―35―

(Notes to Statement of Changes in Equity)
Matters concerning the Treasury shares
Type of shares
Common shares

Beginning of thecurrent fiscal year
56,644 shares

Increase

Decrease--

End of the current
fiscal year
56,644 sharesNote. The number of Treasury shares in common shares, includes the Company’s share of 56,500 held by the trust account of the Employee Stock
Ownership Plan (J-ESOP).
(Summary of Reasons for Change)
Not applicable.

(Notes on Tax Effect Accounting)Breakdown of Deferred tax assets and deferred tax liabilities by major cause(Unit: million yen)
Deferred tax assets
Inventory assets
494
Disallowed unrealized loss on shares of affiliates
661
Accrued enterprise tax
175
Allowance for doubtful accounts
39
Taxes and duties
47
Accounts payable4
Accrued expenses
43
Provision for bonuses
77
Long-term accounts payable
17
Disallowed unrealized loss on non-current assets
9
Excess depreciation
36
Other
81
Subtotal
1,690
Valuation allowance(656)
Deferred tax assets total
1,034
Deferred tax liabilities
Valuation difference on available-for-sale securities(1)

Deferred tax liabilities total(1)

Deferred tax assets net

1,033

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

Company
name

Percentage ofvoting rights
held

Relationshipwith relatedpartiesContents of thetransaction
Receipt ofbuilding rent
(Note 1 (i))

Subsidiary

Sun Frontier Possession
Hotel
DirectManagement
100%
Inc.
Indirect -Leasetransaction
Receipt ofManagementadministrative
Concurrent service expenses
appointment(Note 1 (ii))
posts
Receipt ofLoan of funds
interest
Debt guarantee(Note 1 (iii))
Debt Guarantee(Note 1 (iv))

Transaction
amountSubject

Year-endbalance

Current liabilities
Other
111
(Advancesreceived)

10

Current assets
9 Other(Advances)0Long-term loans
31 receivable fromaffiliates

2,000

7,882 --

Note 1. Transaction Terms and Policy for Determining Transaction Terms(i) The Company receives building rent under general terms and conditions similar to those for independent third party transactions.
(ii) With regard to administrative service costs, the price is reasonably determined in consideration of costs for providing services, etc.
(iii) The interest rate for loans is determined by taking the market interest rate into account.
(iv) The Company provides guarantees for loans from banks. No debt guarantee fee has been received for this.

2. Officers and individual major shareholders, etc.
There are no significant transactions that should be noted.
(Notes on Revenue Recognition)
Basic information to understand revenue
It is the same as Notes to Consolidated Financial Statements.
(Notes on Per Share Information)(1) Net assets per share

1,527.80 yen(2) Earnings per share

190.65 yen(3) Fully diluted earnings per share

190.47 yen

Note. The Company’s shares held by the trust account of the Employee Stock Ownership Plan (J-ESOP) are included in weighted average numberof shares for the period in common shares and treasury shares deducted in the calculation of the total number of outstanding shares at the endof the fiscal year under review. The weighted average number of the Company’s shares for the period and year-end held by the trust accountis 56,500 shares.

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(Notes on Significant Subsequent Events)
Not applicable.

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