LEOPALACE21 : Consolidated Financial Statements (Japanese Accounting Standard, for the three months ended June 30, 2017)

Name of Company Listed: Leopalace21 Corporation Stock Listing: Tokyo Stock Exchange Code Number: 8848 URL: http://eg.leopalace21.com/ Location of Head Office: Tokyo Representative: Position: President and CEO Name: Eisei Miyama

Name of Contact Person: Position: Director Name: Bunya Miyao Telephone: +81-3-5350-0216 Scheduled Date of Filing of Securities Report (Japanese only): August 8, 2017

Supplemental Explanatory Material Prepared: Yes Results Briefing Held: No

1. Results for the Three Months ended June 30, 2017 (April 1, 2017 through June 30, 2017)

2. Consolidated financial results (Amounts less than one million yen are omitted) (The percentage figures indicate rate of gain or loss compared with the same period last year)

   Net sales		Operating profit		Recurring profit		Net income attributable to shareholders of the parent
   Three months ended June 30, 2017 Three months ended June 30, 2016	Million yen 128,450 125,998	% 1.9 1.0	Million yen 6,957 5,646	% 23.2 27.6	Million yen 6,917 5,203	% 32.9 26.2	Million yen 5,559 4,429	% 25.5 28.9

   (Note) Comprehensive income in the three months ended June 30, 2017: 4,167 million yen (+185.1%); three months ended June 30, 2016: 1,461 million yen (-56.1%)

   Net income per share	Diluted net income per share
   Three months ended June 30, 2017 Three months ended June 30, 2016	Yen 21.19 16.85	Yen 21.18 -

3. Consolidated financial position

4. Total assets		Net assets		Equity ratio
   As of June 30, 2017	Million	yen	Million	yen	%
   	327,095	157,795	48.2%
   As of March 31, 2017	337,828	158,870	47.0%

   (Reference) Shareholders' equity as of June 30, 2017: 157,621 million yen; as of March 31, 2017: 158,713 million yen

5. Dividend Status

   Dividend per share
   End of Q1	End of Q2	End of Q3	End of FY	Annual
   FY ended March 31, 2017	Yen	Yen	Yen	Yen	Yen
   	―	10.00	―	12.00	22.00
   FY ending March 31, 2018	―
   FY ending March 31, 2018 (Estimate)	10.00	―	12.00	22.00

   (Note) Restatement of most recent dividend forecast: None

6. Estimation of Consolidated Business Results for the Fiscal Year ending March 31, 2018 (April 1, 2017 through March 31, 2018)

   (The percentage figures for full year indicate rate of gain or loss compared with the previous FY, while those for the interim

   period indicate rate of gain or loss compared with the same term in the previous FY)

   Net sales		Operating profit		Recurring profit		Net income attributable to shareholders of the parent		Net income per share
   Six months ending September 30, 2017	Million yen	%	Million yen 9,700 23,500	%	Million yen 9,500 22,500	%	Million yen 7,500 14,200	%	Yen
   	258,000	1.1		(14.4)		(11.6)		(22.6)	28.58
   FY ending March 31, 2018	540,000	3.7		2.6		0.6		(30.4)	54.11

7. Other

9. Changes in major subsidiaries during the subject period (change in specific subsidiaries resulting in a change in the scope of consolidation): None

10. Use of accounting procedures specific to the preparation of quarterly financial statements: Yes

    (Note) Refer to P.9 Application of Accounting Methods Specific to the Preparation of Quarterly Consolidated Financial Statements" for details.

11. Changes in accounting principles, procedures or reporting methods used in preparation of financial statements

12. Changes in accounting policies accompanying revision of accounting standards, etc.: None

13. Changes in accounting policies other than (i) above: None

14. Changes in accounting estimates: None

15. Restatements: None

17. Total number of outstanding shares (common stock)

18. Total number of outstanding shares at term end (including treasury stock)

    As of June 30, 2017: 263,443,915 shares, As of March 31, 2017: 267,443,915 shares

19. Total treasury stock at term end

    As of June 30, 2017: 3,745,620 shares, As of March 31, 2017: 4,569,920 shares

20. Average number of outstanding shares during the period

21. As of June 30, 2017: 262,423,268 shares, As of June 30, 2017: 262,874,395 shares

    *Indication regarding the status of auditing:

    These financial statements are not subject to auditing under the Financial Instruments and Exchange Act. The review of these financial statements in accordance with the Financial Instruments and Exchange Act are not completed at the time of disclosure.

    *Explanation on the proper use of the business forecasts, and other special notices: (Note on the business forecasts and other forward-looking statements)

    The business forecasts and other forward-looking statements contained in this report are based on information currently available to the Company and on certain assumptions that Leopalace21 has judged to be reasonable. Readers should be aware that a variety of factors might cause actual results to differ significantly from these forecasts.

    For assumptions of business forecasts and notes on the proper use of these forecasts, please refer to P.5 "1. Business Results (3) Explanation Concerning Business Forecasts and Other Forward-looking Statements."

    (Method for the acquisition of supplemental explanatory material)

    Supplemental Explanatory Material on quarterly financial statements is scheduled to be posted on the Company's web site on August 4, 2017.

    【Table of Contents】
22. Business Results 4

23. Analysis of Business Results 4

24. Analysis of Consolidated Financial Position 5

25. Explanation Concerning Business Forecasts and Other Forward-looking Statements 5

26. Consolidated Financial Statements 6

27. Consolidated Balance Sheets 6

28. Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income 8

    Consolidated Statements of Operations 8

    Consolidated Statements of Comprehensive Income 9

29. Notes Regarding Consolidated Financial Statements 9

30. (Notes Regarding the Premise of the Company as a Going Concern) 9

    (Notes Regarding Significant Changes in Shareholders' Equity) 9

    (Application of Accounting Methods Specific to the Preparation of Quarterly Consolidated Financial Statements) 9

    (Segment Information) 10
31. Business Results

32. Analysis of Business Results

33. (Million yen)

    Net sales	Operating profit	Recurring profit	Net income attributable to shareholders of the parent
    Three months ended June 30, 2017	128,450	6,957	6,917	5,559
    Three months ended June 30, 2016	125,998	5,646	5,203	4,429
    Difference	2,452	1,310	1,713	1,129

    During the subject three months, the domestic economy showed gradual progression supported by improvements in employment and income, despite the standstill in individual consumption.

    Apartment construction remains a popular strategy to reduce inheritance tax, and new housing starts of leased units has trended strongly. On the other hand, as the number of vacant houses continues to increase and recovery in nationwide demand becomes difficult, achieving stable occupancy rates requires constructing apartments in areas with high demand, in addition to providing high-quality products and services that meet tenants' needs.

    Under these conditions, the Leopalace21 Group (the "Group") announced the Medium-term Management Plan "Creative Evolution 2020", aiming to create corporate and new social value with the basic policy of "Supporting continuous growth of core businesses in ways that further increase corporate value while constructing a base for growth areas".

    As a result, consolidated net sales for the subject first quarter came to 128,450 million yen (up 1.9% year-on-year). Operating profit was 6,957 million yen (up 23.2% year-on-year), recurring profit was 6,917 million yen (up 32.9% year-on-year), and net income attributable to shareholders of the parent was 5,559 million yen (up 25.5% year-on-year).

    Results by reportable segment are as follows.

    Effective as of the first quarter under review, the methods of reportable segment categorization was changed. The figures in the table below are presented for comparison with the same period of a year ago, after they are reclassified according to the revised methods of reportable segment categorization and common expense allocation.

    (Actual figures by segment) (Million yen)

    Net sales			Operating profit
    Three months ended June 30, 2016	Three months ended June 30, 2017	Difference	Three months ended June 30, 2016	Three months ended June 30, 2017	Difference
    Leasing Business	105,808	109,145	3,337	6,671	8,206	1,535
    Development Business	14,339	14,476	136	(130)	84	214
    Elderly Care Business	2,770	3,084	313	(483)	(471)	12
    Hotels, Resort, & Other Business	3,080	1,745	(1,335)	502	197	(305)
    Adjustments	－	－	－	(912)	(1,058)	(146)
    Total	125,998	128,450	2,452	5,646	6,957	1,310

    (i) Leasing Business

    In the Leasing Business, to establish stable occupancy, the Group providing wealth of value-added life to their tenants such as "my DIY" (formerly known as "Room Customize") which enable tenants to arrange their rooms, providing an internet services "LEONET" website for tenants, and security system installations alliance with large security companies as well as further strengthening sales for corporate customers and increase foreign tenants by refining customer support. In addition, the Group develops and manages service apartments and service offices in ASEAN countries.

    The occupancy rate at the end of the first quarter was 90.55% (up 1.95 points from the end of the same quarter last year) and the average occupancy rate for the period was 90.45% (up 1.74 points year-on-year).

    The number of units under management at the end of the first quarter was 570 thousand (increasing 2 thousand from the end of the previous fiscal year), the number of direct offices was 189 (no change), and the number of franchise offices was 117 (decreasing 2 from the end of the previous fiscal year).

    As a result, net sales amounted to 109,145 million yen (up 3.2% year-on-year), and operating profit was 8,206 million yen (up 23.0% year-on-year).