Financial Result Summary For FY Nov 2016 · FY Nov 2014 FY Nov 2015 FY Nov 2016 YoY Change (JPY million) (JPY million) (JPY million) Sales 13,901 19,333 20,973 +8.5% Gross profit

Financial Result Summary For FY Nov 2016

January 13, 2017

Star Mica Co., Ltd.

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Contents

１．Executive Summary

３．Corporate Strategy

４．Market Analysis and Reference

２． Business Outline

５．Company Profile

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-PL- Profit reached new record high. Recurring Profit up by over 40%.

■ Sale of properties by investment business also contributed to profit.

■ Record earning was led by extensive marketing and sales of renovated pre-owned condominium.

FY Nov 2014 FY Nov 2015 FY Nov 2016 YoYChange

(JPY million) (JPY million) (JPY million)

Sales 13,901 19,333 20,973 +8.5%

Gross profit 3,531 4,600 5,519 +20.0%

Operating income 1,903 2,465 3,258 +32.2%

Recurring profit 1,286 1,797 2,581 +43.6%

Net income 772 1,114 1,678 +50.6%

Depreciation/Amortization 451 332 286 -14.0%

EBITDA 2,354 2,798 3,544 +26.7%※ EBITDA = Operating profit + Depreciation/Amortization

（※）

FY Nov 2014 FY Nov 2015 FY Nov 2016 YoYChange Explanation of business units


Sales 13,901 19,333 20,973 +8.5%　Pre-owned　Condominium 12,253 15,497 16,982 +9.6% Revenue from pre-owned condominium rent/sales

　　Rent 2,120 2,363 2,530 +7.1%

　　Sales 10,132 13,134 14,452 +10.0%

Investment business 1,199 3,419 3,547 +3.7%Revenue excluding pre-owned condominium rent/sales※including sale of properties FY Nov 2015 : 2,433 JPY million FY Nov 2016 : 2,512 JPY million

Advisory business 448 416 443 +6.7% Revenue from real estate brokerage, management fee, etc

FY Nov 2014 ProfitMargin FY Nov 2015 Profit

Margin FY Nov 2016 ProfitMargin

YoYChange Explanation of business units


Gross profit 3,531 25.4% 4,600 23.8% 5,519 26.3% +20.0%　Pre-owned　Condominium 2,932 23.9% 3,627 23.4% 3,857 22.7% +6.4% Profit from pre-owned condominium rent/sales

　　Rent 1,558 73.5% 1,719 72.8% 1,797 71.0% +4.5%

　　Sales 1,385 13.7% 1,947 14.8% 2,204 15.3% +13.2%

　　Mark-to-market loss -11 - -40 - -143 - -

Investment business 242 20.2% 668 19.5% 1,334 37.6% +99.7%Profit from pre-owned condominium rent/sales※ including revenue of properties FY Nov 2015 : 276 JPY million FY Nov 2016 : 896 JPY million

　　Mark-to-market loss - - - - -0 - -

Advisory business 356 79.6% 305 73.4% 328 73.9% +7.5% Profit from real estate brokerage, management fee, etc

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Growth of Pre-owned Condominium Business contributed as our main domain.

■ Rent revenue and profit increased from acquisition of properties. ■ Sales of properties increased by refined marketing strategies to meet various demand.

FY Nov 2015 FY Nov 2016 YoYChange

(JPY million) (JPY million)

Current assets 39,315 43,093 +9.6%　Cash and deposits 1,933 3,260 +68.6% Inventories 36,890 39,221 +6.3%Fixed assets 9,477 8,550 -9.8%　Tangible fixed assets 9,067 8,004 -11.7%Total assets 48,802 51,651 +5.8%Short-term liabilities 6,094 4,941 -18.9%Long-term liabilities 30,154 32,804 +8.8%Shareholder's equity 12,486 13,846 +10.9%Capital-to-asset ratio 25.6% 26.8%

Total real estate holdings 45,957 47,225 +2.8%（inventories＋Tangible fixed assets）

＋1,267

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-BS- Total real estate holdings are at JPY47.2 billion, will become future profit source. ■ We strived to acquire quality assets to add to our real estate holdings.

※ Most of the inventories are condos from pre-owned condominium business ※ Most of the fixed assets are properties from investment business

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■ 2016.1 Started sales of “Stella Garden Musashikoganei” after renovation of the whole building. ■ 2016.3 Hosted 2nd Design Contest by College students. ■ 2016.6 Initiated investment in Minpaku related company, dispatched corporate director. ■ 2016.6 Revised up FY result forecast (1st revision). Revised up dividend per share forecast (34 yen to 41 yen). ■ 2016.12 Renewed corporate logo and web site. ■ 2016.12 Revised up FY result forecast (2nd revision). Revised up dividend per share forecast (41 yen to 46 yen).

Highlights

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２．Business Outline


We strive to realize society from "build" to "utilize“.

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Corporate Philosophy

We offer better lifestyle through renovation.

before after

■ We consider unique characteristics and renew each condominium functionally as a new residence.

■ We have recorded sales of more than 5,000 units to date, or 600 units per year, mainly in Tokyo Metropolitan area.

■ We provide total lifestyle service through our group companies in purchase/sale, reform, and property management.

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http://www.shiawase.starmica-r.co.jp/

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Example of product concept: Renovation that supports women.

■ Pursue comfortable living from women‘s perspective. ■ Product planning focused in storage, line of human flow, and ease of maintenance.

✔ Pantry （storage space in kitchen） ✔ Easy-care sink

✔ Straight route from entrance to kitchen

✔ Storage cabinet for big-size stuff “Shiawase (Happy life) Renovation”

After

Before

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Renovation of the entire building. ■ Renovate condominium unit and also the entire building by large scale.

■ Successful sales as “Stella” brand, 9 buildings in Tokyo and Kanagawa.

■ Consider not only building exterior or facility but also softwares such as security service and living environment.

Stella Residence Hikawadai Stella Residence Koenji Stella Garden Mizonokuchi

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Working with external vendors to revitalize renovation market. ■ Lifestyle proposal with house facility providers, interior designers, renovation service providers. ■ Diverse offering in renovation plan to meet wide variety of lifestyles.

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0

10

20

30

40

ＡＢＣ Star Mica

■ Our pre-owned condominium holdings is over 1,800 units. We will continue to offer variety of condominiums from our stock.

We own largest number of pre-owned condominiums in the industry.

※Summarized by Star Mica from corporate fiscal reports

Comparison of pre-owed condominium holdings

(as of Nov. 30, 2016. in book value)

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（ Unit : JPY bn ）

10.0%

20.0%

30.0%

ＡＢＣ Star Mica

■ We aim to expand profit margin by optimizing marketing strategy and making improvements in product quality.

Our profit margin remains strong.

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※Listed comparable companies, gross profit margin of consolidated financial results for last 3 years.

Comparison of gross profit margin (last 3 years )

・・・last year

・・・2 years ago

・・・3 years ago

（ Unit : % ）

1998～33.2%

1989～199734.1%

1981～1988 22.0%

～1980 10.8%

A well diversified condominium portfolio.

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Composition by region Composition by year built

Average unit data

※ Above figures are as of November 2016. ※ Average property figures are based on number of properties. (all unit based) ※ Regional and Age segregation are based on acquisition amount. (all unit based)

Avg size 64.02 ㎡Avg age 25.0 yearAvg acquisition 20,049 K（JPY）

Tokyo （central

5 wards）12.6%

Tokyo（23 wards, ex-above）

39.7%Tokyo

（ex-23 wards）

9.7%

Kanagawa 17.6%

Saitama 4.3%

Chiba 3.5%

Areas under Osaka branch

9.2%

Others 3.4%

1 2

Unrealized gain in pre-owned condominiums are estimated to be approximately 11 billion yen.

56.2

39.2

Estimated sales revenue

5.7

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■ Appraisal from third party appraiser indicates inventory market value (Estimated sales value) of JPY56.2bn. ■ Estimated profit from sales will be JPY11.3bn, increase by JPY1.5bn YoY.

Unrealized gain from recent FY end book value （Unit: JPY billion）

Estimated sales value Book value

Estimated cost before sale

※ Estimated cost before sale is calculated based on past record of transaction fee and renovation cost. ※ Above figures are based on projection under certain accounting method, this does not guarantee future capital gain revenue.

Unique strategy

Awarded companies

Marui Group YKK “Fastener Business” Kakaku.com, Inc. Komatsu

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Kirin Brewery Gourmet Navigator Fast Retailing Co., Ltd. Oisix Inc. etc.

■ We invest in less liquid pre-owned condominiums that are occupied, rather than more liquid vacant condominiums. ■ Our unique strategy was recognized by Porter Prize in 2011.

Award named after Professor Michael E. Porter (Harvard Business School) in Corporate Strategy. This award is given to companies that have innovative product, process and management, with unique strategy and solid earning results.

Porter Prize

We are reaching the goal of 3-year medium term business plan (2015-2017) in 2 years.

Sales

20.0bn 20.9bn

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＜ Recurring Profit

2.2bn ＜ 2.5bn

EBITDA

3.3bn ＜ 3.5bn

ROE

10.0％＜ 12.7％

FY2016 Results ( 2nd year )

FY2017 Goals ( 3rd year )

We have achieved strong results to meet Strategic Emphasis in FY2015 and FY2016.

Opened Saitama branch（2016/6） Expanded product offerings

Invested 1.6billion yen. Realized sales of 1.0 billion yen.

Increase corporate publicity through change in listed market, recruiting efforts.

Reinforce real estate brokerage, property management.

Invest in real estate restoration projects.

Expand area of acquisition. Enhance product quality.

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Strategic Emphasis

Strengthened renovation proposal ability. Enhanced services to tenants.

Changed listing to Tokyo Stock Exchange 2nd Section. Total number of management and employees over 100.

Pre-owned condominium

Investment

Advisory

Finance/Corporate management

2-year results

We are planning medium term, 3-year business plan (2017-2019).

Business Environment

■ Changes are uncertain in Japanese economy (fragile outlook of the world economy, aging population etc) ■ Rising price in newly built condominiums, potential over supply of them, higher activities in pre-owned condominium market. ■ Evolution of Sharing economy, Integration of IT and existing businesses (Development in Fin-tech etc)

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★ Focus our resources to pre-owned condominium business

★ Challenge for Innovation

Establish leading position in pre-owned condominium industry in both volume and quality.

Challenge ourselves to further integrate IT and real estate to pursue new business opportunities.

Our Direction

We renewed our corporate logo to meet new challenges.

✔ Strong logo type to express trust, innovation and challenging spirit.

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■ We hope to share our value through brand communication.

✔ Golden ratio to provide beauty, stability and universality.

Points of new logo

Challenges toward integration of real estate business and IT.

✔ Virtual property visits utilizing VR technologies.

✔ Home key system by smartphones.

✔ Paperless contracts/agreements by tablets. ✔ Match making of demand and supply through cloud servers.

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Examples of business

0

5

10

15

20

25

30

35

40

2011 2012 2013 2014 2015 2020

Preparing to enter Minpaku service. Seek to meet inbound short stay demand.

■ Government is considering launch or Minpaku service, related legislation is to be discussed in 2017 ordinary diet session.

Number of international visitors to Japan

（Unit：million）

Recent developments

Our positioning

✔ Negotiation and adjustments to prepare a bill

✔ Announcement of companies to provide Minpaku services.

Year 2020 goal 40 million

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✔ We own large number of condominiums in Tokyo and suburbs.

✔ We have alliance with Squeeze, a minpaku marketing/operation company.

✔ We have experience in furnished condominium, short-term rent arrangements.

We aim to establish leading role in the industry in 3 years (end of FY2019）.

FY 2019/11(E)

FY 2016/11

Inventory

Operating Profit

Sales

20.9bn 23.5bn

37.7bn 45.0bn

3.2bn 3.5bn

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Others ・ Achieve ROE of 10% for all 3 years. ・ Listing change from Tokyo Stock Exchange 2nd section to 1st section.

0.0

10.0

20.0

30.0

40.0

50.0

2010/11 2011/11 2012/11 2013/11 2014/11 2015/11 2016/11 2019/11

■ From increased inventory of pre-owned condominiums, we anticipate improvement in rent revenue and sales revenue.

We plan to make aggressive acquisition in pre-owned condominiums.

・・・・・・・ (Planned)

26.9 23.9 24.1

21.2

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（Unit : JPY bn）

Transition of Inventories (at end of each year)

35.3 37.7

45.0

31.1

1.6 1.81.5

1.8 1.92.4

3.2 3.3 3.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2010/11 2011/11 2012/11 2013/11 2014/11 2015/11 2016/11 2017/11 2019/11

■ Growth of Pre-owned condominium holdings lead us to future stable gains.

Operating profit is growing along with business expansion.

(Forecast)

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History of Operating Profit

（Unit : JPY bn）

(Planned)

We are looking forward to breaking record high earnings again in FY 2017. ■ We believe demand of renovated pre-owned condominiums remains high due to expensiveness in newly built condominiums.

（※1）

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■ We will strive to increase supply of quality pre-owned condominiums for higher sales and profit.

FY Nov 2016Result

FY Nov 2017Forecast

YoYChange

(JPY million) (JPY million)

Sales 20,973 21,800 +3.9%

　Pre-owned　Condominium business 16,982 17,430 +2.6%

Gross profit 5,519 5,669 +2.7%

　Pre-owned　Condominium business 3,857 4,032 +4.5%

Operating income 3,258 3,356 +3.0%

Recurring profit 2,581 2,727 +5.7%

Net income 1,678 1,750 +4.3%

10.0 11.0 11.5 12.0 15.0 18.0

29.0

46.050.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2009/11 2010/11 2011/11 2012/11 2013/11 2014/11 2015/11 2016/11 2017/11

We plan to increase dividend, eight consecutive years in a row.

（Unit ： Yen ）

■ Goal of dividend payout ratio is 30%, long-term. We continue to plan on increase in dividends.

Consolidated dividend

payout ratio 22.8％ 14.0％ 14.4％ 20.2％ 17.9％ 21.0％

※ Due to stock split of 1-100 in December 2012, past per share dividends are adjusted.

23.5％ 24.8％

■ FY 2016 annual dividend was 46 yen, increase of 17 yen YoY. FY 2017 annual dividend forecast is 50 yen.

（Forecast ）

25.9％

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History of dividend per share （※）

Semi-annual shareholder benefit plan.

Sample

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Sample

Benefit Record date Stock Holding

Benefit Record date Stock Holding

: Lifestyle Goods （2,000 yen） : Nov end : over 100shares

: Quo Card （1,000 yen） : May end : over 100shares

※ Sample photo subject to change without notice

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0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

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Japanese pre-owned condominium stock now over 6 million units.

■ Supply of newly built condominiums is rising steadily. ⇒ We expect growth and development in Japanese condominium market.

Number of new condominiums construction in units

Over 6million units

Source: Star Mica, based on the statistical data from Ministry of Land, Infrastructure, and Transport data

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

（Unit：One contract））

33

※ 12 months total in each year except for the year 2016. 11 out of 12 months total as for the year 2016.

Condominium market is shifting towards pre-owned. ■ Number of pre-owned condominiums for purchase/sale is in increasing trend.

Number of pre-owned condominium purchase and sale in Tokyo metropolitan area

Source: Star Mica, based on the statistical data from REINS Market Trend

14.7%

Japan

83.1% 88.0%

68.4%

US UK France（2014）（2012）（2013）（2013）

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Potential upside in market growth, in a global perspective.

■ 70-90% of housing market in developed countries are used(pre-owned) properties, whereas 10% in Japan. ■ Along with maturing social infrastructure, we think this as a growth market.

Ratio of used(pre-owned) properties among all housing market

Source: Star Mica based on the data from and Ministry of Land, Infrastructure and Transport data

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Future outlook of renovation business. ■ Households can own higher grade “for-sale condominiums” compared to lower grade “for-rent condominiums”, with better economics. ■ Planning, renovating and providing warranty by experienced company like us can offer reliable housing to households. Standard monthly rent Monthly mortgage repayment （※１）（※２）

143 thousand yen

85 thousand yen

※1 Based on our corporate results at November 2016, Average sales price of 31.8million yen, average space of 67.53 square meters ※2 Assumed mortgage of 30 million yen, at 1%, for 35 years

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37

Company profile（as of 30 Nov. 2016）

Company name Star Mica Co., Ltd.

Representative Chairman and CEO Masashi Mizunaga

Date of incorporation May 1, 2001

Listing date October 2, 2006

Listed market Tokyo Stock Exchange 2nd Section （stock code: 3230）

Capital 3,573 million yen

Offices Tokyo head office （Minato Ward）, Yokohama branch（Yokohama City）,Osaka branch （Osaka City）, Saitama branch ( Saitama City )

Main Bank Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation,Aozora Bank, Mizuho bank, Ltd, Resona Bank, Ltd.

Auditor KPMG AZSA LLC

Employees 101

Businesses Pre-owned Comdominium business, Investment business, Advisorybusiness

2,347

5,016

8,047 7,058

2013/11 2014/11 2015/11 2016/11

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Major shareholders (as of 30 Nov. 2016) Major Shareholders （Unit : Shares ）

Distribution of share ownership Transition in number of shareholders

‥‥Non-individual investors

‥‥Individual investors Office Ohgi,

Masashi Mizunaga 28.5%

Financial Institutions

19.2%

Individual investors,

others 25.1%

Foreign entities 17.6%

Other corporations

0.2%

Treasury Stock 9.5%

Shareholder May 2016 Nov 2016 %Holdings

% VotingRights Notes

Office Ohgi 1,497,000 1,497,000 15.0% 16.5% Private Company of Masashi MizunagaMasashi Mizunaga 1,343,900 1,351,200 13.5% 14.9% Chairman / Representative DirectorStar Mica Co., Ltd 957,799 945,599 9.5% － Treasury stockHiroshi Taguchi 900,000 900,000 9.0% 9.9%The Master Trust Bank of Japan, Ltd. (Account in trust） 527,000 730,200 7.3% 8.1%Japan Trustee Services Bank, Ltd. (Account in trust） 897,400 708,600 7.1% 7.8%Royal Bank of Canada Trust Company (Cayman) Ltd. 466,000 466,000 4.7% 5.1%Citibank London KIA FUND 136 140,300 213,480 2.1% 2.4%The Nomura Trust and Banking Co., Ltd.(Account in investment trust） 240,300 189,600 1.9% 2.1%

　　Others 3,030,301 2,998,321 30.0% 33.1%Total 10,000,000 10,000,000 100.0% 100.0%

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Cautionary Statement / Contact Information

■ This presentation contains forward-looking statements, including forecasts of business performance and operation

plans and targets. These statements are based on information available to the company’s management when this

material was prepared and on current assumptions for uncertain factors affecting future earnings. Actual results may

differ from the information presented in this report due to a host of factors that are unforeseeable and/or beyond the

control of the company.

■ The information in this presentation includes data believed by the company to be reliable and has been obtained from

public sources believed to be reliable. However, the company makes no representation as to the accuracy or

completeness of such information.

■ This presentation is not to be construed as a solicitation to invest in the company. Investors must make their own

investment decisions.

For further information please contact: Star Mica Co., Ltd., Corporate Planning Department E-mail： [email protected]

Documents

Financial Result Summary For FY Nov 2016 · FY Nov 2014 FY Nov 2015 FY Nov 2016 YoY Change (JPY million) (JPY million) (JPY million) Sales 13,901 19,333 20,973 +8.5% Gross profit