Sun Frontier Fudousan Co., Ltd.TSE: 8934

The 25th Business Year PDF From April 1, 2023 to March 31, 2024

Jul 19, 2024 at 9:52 AM UTC · Issued by Sun Frontier Fudousan Co., Ltd.

Annual Securities Report

(Excerpt Version)

The 25th Fiscal Year

From April 1, 2023 to March 31, 2024

Sun Frontier Fudousan Co., Ltd.

Contents
	Full version will be disclosed later.
The 25th Annual Securities Report
Cover	1
Part I Corporate Information
Item 1. Overview of the Company and Its Consolidated Subsidiaries

Summary of Business Results
History...............................................................................................................................................................
Description of Business................................................................................................................................................................................................................................................................

4.	Overview of Subsidiaries and Affiliates	8
5.	Employees	9
Item 2: Business Overview	2
1.	Management Policy, Business Environment and Tasks Ahead, etc	2
2.	Sustainability Policy and Initiatives	13
3.	Risk Factors	14
4. Analyses of Consolidated Financial Position, Operating Results and Cash Flows from the management's
perspective	20
5.	Material Agreements, etc	31
6.	Research and Development Activities	31
Item. 3 Property, Plants and Equipment	32
1.	Overview of Capital Investment	32
2.	Major Facilities	32
3.	Plans for Capital Investment, Disposal of Property, Plants and Equipment, etc	33
Item. 4 Information on the Company	34
1.	Information on the Company's Shares, etc	34
2. Acquisitions, etc. of Treasury Shares	42
3.	Dividend Policy	43
4.	Corporate Governance, etc	43
Item. 5 Financial Information	60
1.	Consolidated Financial Statements, etc	61
2.	Non-Consolidated Financial Statements, etc	109
Item. 6 Outline of the stock operations of the Company
Item. 7 Reference Information on the Company

Information on the Parent Company
Other Reference Information .............................................................................................................................................................................................................................................

Part II Information on Guarantors, etc., for the Company.............................................................................................

Audit Report

Internal Control Report

Confirmation

Cover
Document title	Annual Securities Report
Clause of stipulation	Article 24, Paragraph 1 of the Financial Instruments and Exchange
	Act of Japan
Place of filing	Director-General of the Kanto Local Finance Bureau
Filing date	June 26, 2024
Fiscal year	The 25th Fiscal Year (from April 1, 2023 to March 31, 2024)
Company name	Sun Frontier Fudousan Kabushiki Kaisha
Company name in English	Sun Frontier Fudousan Co., Ltd.
Title and name of representative	Seiichi Saito, President Representative Director
Address of registered head office	1-2-2 Yurakucho, Chiyoda-ku, Tokyo, Japan
Telephone number	+81 (0)3 5521-1301
Name of contact person	Takeshi Hirahara, Senior Executive Officer, General Manager of
	Corporate Planning Division
Nearest place of contact	1-2-2 Yurakucho, Chiyoda-ku, Tokyo, Japan
Telephone number	+81 (0)3 5521-1301
Name of contact person	Takeshi Hirahara, Senior Executive Officer, General Manager of
	Corporate Planning Division
Place for public inspection	Tokyo Stock Exchange, Inc.
	(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo, Japan)

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Item 2: Business Overview

1. Management Policy, Business Environment and Tasks Ahead, etc.

The forward-looking statements in herein are based on the judgment of the Group as of the end of the current consolidated fiscal year.

(1) Management policies and strategies

Basic policy of corporate management

The Group practices philosophy management and attaches importance to being a group that shares the value of altruism. "Not for profit, but for trust. Change yourself, solve problems from clients' point of view and exceed expectations." Based on this principle, we are committed to solving social issues through our corporate activities while proactively changing and taking on new challenges in management. We also aim to achieve harmony with our shareholders and contribute to the realization of a sustainable and prosperous society.

Credo

Altruism ～ We believe in helping others, as many as we can, throughout our lives. ～

Mission

Our mission is to look after every employee and pursue the happiness of both mind and matter. At the same time, to co-create a rich and sustainable society by contributing to the evolution and the development of the human society.

Vision

Our vision is to become the most appreciated visionary company that fully utilizes limited resources and continues the challenges to create new values.

Target management indicator

Aiming for stable growth over the medium to long term, the Group places importance on maintaining at least 20% Ordinary profit margin from the perspective of profitability and productivity, at least 50% Equity Ratio from the perspective of financial security, and at least 10% ROE, which indicates how effectively the Group managed Shareholders' equity.

Management environment

One year has passed since COVID-19 was classified as Category 5, and the Japanese economy has continued to recover moderately as social and economic activities have been normalized, the employment and income environments have improved, and inbound demand has surged. On the financial front, although the zero interest rate policy has been lifted, the accommodative financial environment is expected to be maintained. However, the yen has recently depreciated mainly due to the difference in interest rates between Japan and the United States. As a company in the real estate business, which is said to be relatively susceptible to interest rates, it is necessary for the Company to pay close attention to trends in the U.S. economy.

(2) Priority business and financial issues to be addressed

Since its foundation, our Group has been practicing philosophy-based management centered on the spirit of "altruism." We have defined our corporate philosophy as "reducing the waste of non-reproducible resources and contributing to the perpetual prosperity of the people, plants and animals, and we have been developing business activities that contribute to the sustainability of society. The spirit of "altruism" is the idea of valuing others as much as oneself. The core of our business philosophy is the desire to bring smiles to many people and contribute to the prosperity of humanity, flora, and fauna on Earth. Instead of focusing on profit and loss, we base our judgments on right and wrong, with a sense of "rightness" and "compassion," sharing the value that "the joy of others is our own joy," and we place great importance on being close to our customers.

To redefine this philosophy of our Group and to ensure our Group's sustainable growth, we have established a Sustainability Vision. Furthermore, we have identified three important issues (materiality): "environmental protection," "regional revitalization," and "human resource development," and we are promoting sustainability management integrated with the spirit of "altruism." By continuing to implement concrete measures for realizing this vision and addressing important issues, we aim to contribute to the realization of a sustainable society through our business activities and enhance our corporate value over the medium to long term.

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Sustainability Vision and important issues (materiality)

Sustainability Vision
We will contribute to the realization of a sustainable society through our business activities while respecting the heart of altruism, the Group policy.
Important issues (materiality)
We have identified three important issues (materiality) that should be addressed to achieve our Sustainability Vision. In these three items of "Environmental Protection", "Regional Revitalization", and "Human Resource Development, we will implement specific measures. Furthermore, the specific measures will be reviewed as needed in response to future environmental and social trends, as well as changes in the business environment.

Important issues	Vision		Specific measures
Environmental	Increase environmental sustainability by	◼Extending the life and health of real
protection	significantly reducing waste and	estate
	greenhouse gas emissions, as a	◼Energy conservation and reduction of
	frontier of Real Estate Revitalization	environmental impact by Real Estate
	Business.	Revitalization Business
Regional	Create sustainable growth of regional	◼Create	buildings, offices, and	spaces
Revitalization	economies through offices, hotels, and	with	"job	satisfaction"	and
	tourism, as a frontier for	"creativity"that contribute to economic
	sustainable regional revitalization.	growth
		◼Prevent and mitigate disaster through
		regional cooperation
Human resource	Spread the concept of "altruism" that is	◼Create	workplaces	with	job
development	indispensable for realizing a sustainable	satisfaction,	creativity,	and	growth
	society, as a frontier of	opportunities.
	philosophy management.	◼Create	workplaces	with	job
		satisfaction,	creativity,	and	growth
		opportunities

(3) Medium-Term Management Strategy

The Group celebrated its 25th anniversary in April this year, marking the final year of the current medium-term management plan (the review was announced on May 12, 2021). Even during the current medium-term management plan period, under the Company policy "altruism" that the Group has been advocating since its foundation, we have made efforts to realize the Company Philosophy "Look after every employee and pursue the happiness of both mind and matter. At the same time, co-create a rich and sustainable society by contributing to the evolution and the development of the human society." Although we encountered the unprecedented headwind of the pandemic of COVID-19 during this period, we overcame it and set a new record in our financial results for the fiscal year ended March 2024. In addition, we are now in sight of achieving our targets for the current medium-term management plan. In order to realize the Company Philosophy and achieve sustainable growth over a longer period of time starting this year, which is a milestone year, we decided that we should quickly clarify our long-term targets and measures. Accordingly, we have formulated the Long-Term Vision 2035 as the Group's vision for ideal image over the next 10 years, and the next medium-term management plan as an action plan to realize this vision.

Long-Term Vision 2035>

Based on the values of the Company policy "altruism," the Group's Company Philosophy is to "Look after every employee and pursue the happiness of both mind and matter. At the same time, co-create a rich and sustainable society by contributing to the evolution and the development of the human society." Through the realization of this vision, we aim to achieve the following Long-Term Vision 2035 and its quantitative target we have formulated.

Long-TermVision 2035

Utilize limited resources to fill the world with smiles and excitement!

Becoming a corporate group that continues to challenge the creation of future value.

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Quantitative target

Aim for 300 billion yen in net sales and 60 billion yen in ordinary profit in fiscal 2035.

medium-term management plan>

The following is an overview of the next medium-term management plan for the three-year period (from fiscal year ending March 31, 2026 to fiscal year ending March 31, 2028) following the achievement of the current medium-term management plan based on the Long-Term Vision 2035, the ideal image in 10 years.

Basic policy

Work to resolve social issues by promoting cooperation and diversification within our core business through product making and heartwarming services from clients' point of view.

Quantitative target

		Year ending March	Year ending March
		31, 2025	31, 2028	Growth rate
		(Forecast)	(Target)
Profit plan	Net sales	100 billion yen	135 billion yen	35%

Ordinary profit	20 billion yen	27 billion yen	35%


	Ordinary profit	20%	20%	-
	margin
Management
ROE	10% or more	10% or more	-
indicator
	Equity ratio	50% level	45% level	-

2 Sustainability Policy and Initiatives ■Sustainability Vision

We will contribute to the realization of a sustainable society through our business activities while respecting the heart of altruism, the Company policy.

■Three important sustainability issues (Materiality)

Important Issue	Vision

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

Regional	Create sustainable growth of regional economies through offices, hotels, and tourism, as a
revitalization	frontier for sustainable regional revitalization.

Human	Spread the concept of "altruism" that is indispensable for realizing a sustainable society, as a
resource
frontier of philosophy management.
development

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■Specific measures and KPIs

					Fiscal 2023
	Social issues				(Fiscal year
Important issues	Key measures	Specific measures	Objectives (KPIs)	ended March
to be solved
				31, 2024)

					results
			Extension of economic	Extend economic
			lives of buildings through
1			useful lives by	54.1%
		real estate revitalization
			30% or more
			constructions

				Occupancy rate of
		Extending the	Maintain the "health" of	90% or more for	93.8%
	The	life and health	buildings	buildings over 30

	demolition of	of real estate	by improving the	years old
	small and		occupancy rate	90% or more of
	medium-sized		of old buildings through	continued
	buildings that		comprehensive real estate	management	98.0%
	can still be		support	after replanning
Environmental	used if their			properties sales
value is			Reduce CO2
protection	Energy
increased =	Reduction of CO2	emissions by 12% or
	conservation
	Waste of	emissions	more on average
	and	12.7%
	resources	through promotion of real	compared with
	reduction of
		estate revitalization	building
		environmental
			reconstruction
		impact by
		Offset real estate
		Real Estate
		revitalization
		Revitalization	Carbon offset 100%	100.0%
		constructions' CO2
		Business
		emissions with credits

2		Creatte		30% or more of new
		buildings,		replanning properties	68.8%
		offices, and		supplied exceed
		Promotion of real estate
	Revitalization	spaces with	company standards
	revitalization
	of regional	job satisfaction
	with consideration for
	economies	and creativity
	well-being	Annual tenant	Satisfaction:
		that contribute
			satisfaction surveys	96.7%
		to economic

		growth

Regional			Providing setup offices	At least 5 lots by
revitalization			with emergency supplies	9 lots
		fiscal 2023
		Disaster	and installation space
	Responding to
	prevention	Providing information
	increasingly
	and mitigation	that contributes to the	Disaster prevention
	severe natural
	by regional	improvement	information posting
	disasters	100%
	coordination	of tenants' disaster	on dedicated website

			prevention	Fiscal 2023: 100%
			awareness
	Decrease in		Creating a work	Ratio of women in
	the working-		environment	managerial
	age	Respect and	suited to each employee's	positions:	10.3%
3	population	utilize	life	12% or more by	(April 1,
	due to the	diversity	stage and provide flexible	April 2025 (Sun	2024)
	declining		training	Frontier Fudousan
	birthrate and		opportunities	Co., Ltd.)
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					Fiscal 2023
	Social issues				(Fiscal year
Important issues	Key measures	Specific measures	Objectives (KPIs)	ended March
to be solved
				31, 2024)

					results
	aging		Establishment of next-	Ratio of training
	population		generation
		hours to designated
	(decrease in		leader development
		working hours: 12%
	actual labor	Create a	program,	12.1%
	or more (Sun
	force)	workplace with	support system for
	Frontier Fudousan
Human	and	job	external
Co., Ltd.)
resource	elimination of	satisfaction,	trainings, etc.

development	the gender	creativity, and	Utilization of DX,	Year-on-year
	gap	growth	increase in ordinary
	improvement of	Not
		opportunities	profit per hour (per
		business processes and	achieved
			Sun Frontier
			improvement of	(92%)
			Fudousan Co., Ltd.
			individual abilities
			regular employee)

■Information Disclosure Based on the TCFD Recommendations

ⅰ．Governance

The Company recognizes addressing climate change and environmental issues as a critical management priority at our company. In coordination with Risk Verification Committee, Sustainability Committee compiles information of risks and opportunities associated with climate change, examines response measures, and makes periodic report to the Board of Directors. The Board of Directors oversees the progress of initiatives related to climate change issues discussed and reported by executive departments, and discussed issues related to these initiatives at least once a year.

The President Representative Director receives reports on the status of initiatives related climate change from the advisory bodies, the Sustainability Committee, and the Risk Verification Committee, and assumes the highest responsibility for risk assessment and management including risks of climate change.

System of Sustainability Promotion

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Meetings and Roles in the System of Sustainability Promotion

	Organizations and		Roles

	committees


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


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

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

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

			As an advisory body to the President Representative Director, promoting sustainability
			activities including climate change countermeasures. In coordination with the Risk
Sustainability Committee		Verification Committee and the Risk Management Committee, summarizing risks and
	opportunities related to climate change, etc. from each division and group company,

			considering measures shall be taken, and making periodic reports to the Board of Directors.
			Meetings held four times a year.

ⅱ．Strategy

Based on the TCFD recommendations, we analyzed scenario of risks and opportunities related to climate change. Through the scenario analysis, we defined 1.5°C and 4°C scenarios based on scientific evidence from IEA (International Energy Agency) and assessed the importance of risks and opportunities related to climate that might affect operations as of 2030.

Definition of Scenarios

	Scenario		1.5℃ scenario		4℃ scenario
	configuration

World view		The Japanese government will promote	There will be no climate action by the
			severe measures against climate change,	government beyond current measures and no
			including the introduction of a carbon tax,	climate change action is required.
			which will lead to drastic social changes,	Abnormal weather such as droughts and
			and regulations on plastic and climate	floods due to rising temperatures will become
			change-related information disclosure will	apparent, sites will be damaged, and response
			be required.	costs and recovery costs at the time of the
			Damage from natural disasters such as	disaster are expected.
			flooding is limited.
Reference		IEA The Net-Zero Emissions by 2050	IEA World Energy Outlook 2021/ IEA World
scenario		Scenario (NZE) / IEA World Energy	Energy Outlook 2018/ IPCC AR6 SSP5-8.5
			Outlook 2021/ IEA World Energy
			Outlook 2018/ IPCC AR6 SSP1-1.9
Characteristics		Transition risks related to policies, etc. are	Physical risks associated with abnormal
			likely to become apparent.	weather, etc. are likely to become apparent.

Identification and assessment of risks and opportunities

We assessed the impact of transition and physical risks related to climate change on our Real Estate Revitalization Business and Real Estate Service Business. Regarding the transition risks, we considered a variety of

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items from policy and legal regulations to market changes such as acute risks and chronic risks for physical risks. We will respond to these risks and opportunities that judged as particularly significant impact on our company.


Scope	: Real Estate Revitalization Business and Real Estate Service Business
Impact	: High	: Very significant impact (> 19% of net sales)
	: Medium : Significant (10-19% of net sales)
	: Small	: Limited impact (<10% of net sales)
Term of risk occurrence: Short term	: Within one year
Term of risk occurrence: Medium term	: Within 1 to 5 years
Term of risk occurrence: Medium to long term	: Within 5 to 10 years
Term of risk occurrence: Long term	: Over 10 years

List of risks and opportunities

The list includes the risks and opportunities recognized by the Company whose impact on the business is "medium" or above.

Main

Sub-

Impact on business and

Timing of

financial results

Details of risks and opportunities

risk

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