Prospect Japan Fund Ltd: Closing Announcement of Second Quarter of the Fiscal Year Ending March 31, 2018

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14 Nov, 2017, 08:21 GMT

[Japanese Standards] (Consolidated)

ST PETER PORT, Guernsey, Nov. 13, 2017 /PRNewswire/ --

Prospect Co., Ltd. (Tokyo: 3528) http://www.prospectjapan.co.jp

1. Consolidated Results for Second Quarter of Fiscal Year Ending March 31, 2018 (From April 1, 2017 to September 30, 2017)

(1) Consolidated Operating Results (cumulative) (% indicates the rate of increase or decrease from the same quarter of the previous year.)

Sales

Operating profit

Ordinary profit

Net profit attributable to
owners of the parent

(million yen)

Second Quarter of the Fiscal Year
Ending March 31, 2018

3,486

Up 12.6

Up 1,006

Up 295

1,903

Second Quarter of the Fiscal Year
Ended March 31, 2017

3,989

Up 21.4

Up 367

Up 550

Up 568

(Note)

Comprehensive income:

Second Quarter
of Fiscal Year
Ending
March 31, 2018:

1,867

(million yen)

(-%)

Second Quarter
of Fiscal Year
Ended
March 31, 2017:

Up 725

(million yen)

(-%)

		Net profit per share			Fully diluted net profit per share
		(yen, sen)			(yen, sen)
Second Quarter of the Fiscal Year Ending March 31, 2018		7.52			6.90
Second Quarter of the Fiscal Year Ended March 31, 2017		Up 3.35			-
(2) Consolidated Financial Condition
	Total assets		Net asset	Net worth ratio		Net asset per share
	(million yen)		(million yen)	%		(yen, sen)
Second Quarter of the Fiscal Year Ending March 31, 2018	39,162		23,845	63.5		62.08
Fiscal Year Ended March 31, 2017	27,368		12,489	42.0		67.77

(Reference) Net worth:	Second Quarter of Fiscal Year Ending March 31, 2018:		24,874	(million yen)		Fiscal Year Ended March 31, 2017:	11,505	(million yen)
2. Status of Dividend
		Annual dividend
		End of 1^stquarter			End of 2^nd quarter	End of 3^rd quarter	End of period	Total
		(yen, sen)			(yen, sen)	(yen, sen)	(yen, sen)	(yen, sen)

Fiscal Year Ended March 31, 2017		-			-	-	3.00	3.00
Fiscal Year Ending March 31, 2018		-			-
Fiscal Year Ending March 31, 2018 (Forecast)						-	4.00	4.00

(Note) Existence of adjustment of the dividend forecast most recently announced: None

3. Expected Consolidated Results for Fiscal Year Ending March 31, 2018 (From April 1, 2017 to March 31, 2018)

The Company Group has proactively adopted M&A as a diversification strategy and has also expanded its asset management business as one of its important segments. As these businesses tend to be significantly affected by changes in economic conditions and market environment, it is extremely difficult to properly forecast and disclose ordinary business results. As there is a risk of misleading investors, etc., in disclosing business results forecast under such circumstances, the Company has adopted a policy to make timely disclosure of closing business results and a summary of the business to be conducted on a quarterly basis, and not to disclose a forecast of consolidated business results.

* Precautions

(1) Changes in material subsidiaries in the current consolidated cumulative quarter (changes in the special subsidiaries accompanying changes in the scope of consolidation): Yes

New: 1 (Company Name: The Prospect Japan Fund Limited), Exclusion: --- (Company Name: )(Note) For details, refer to "2. Quarterly Consolidated Financial Statements and Major Notes (4) Notes to Quarterly Consolidated Financial Statements (Changes in Material Subsidiaries in the Current Consolidated Cumulative Quarter)" on p. 10 of the attached materials.

(2) Application of accounting particular to preparation of Consolidated Quarterly Financial Statements: None

(3) Changes in accounting policy, changes in accounting estimate and restatement
[1] Changes in accounting policy in connection with the amendment of accounting standards, etc.: None
[2] Changes in accounting policy other than [1] above: None
[3] Changes in accounting estimate: None
[4] Restatement: None

(4) Number of outstanding shares (common stocks)

[1] Number of outstanding shares at the end of term (including treasury stocks):	2Q of the Fiscal Year Ending March 31, 2018:	403,448,312	shares	Fiscal Year Ended March 31, 2017:	172,556,807	shares
[2] Number of treasury stocks at the end of term:	2Q of the Fiscal Year Ending March 31, 2018:	2,775,408	shares	Fiscal Year Ended March 31, 2017:	2,773,334	shares
[3] Average number of shares during the term (cumulative quarter):	2Q of the Fiscal Year Ending March 31, 2018:	253,055,384	shares	2Q of the Fiscal Year Ended March 31, 2017:	169,808,104	shares

* The quarterly closing announcement is not subject to quarterly review.

* Explanation about Appropriate Use of the Forecast of Business Results and other Matters to be Noted

(Matters to be Noted for Statement about the Future, etc.)

Description regarding the future such as the forecast of business results stated in this material is based on information which the Company has currently obtained and certain assumptions that the Company determines to be reasonable, and does not make assurances of the achievement thereof by the Company. Also, actual results, etc., may significantly differ from the forecast depending on various factors. For the conditions constituting the precondition of the forecast of business results and the matters to be noted in using the forecast of business results, etc., refer to "1. Qualitative Information of the Current Quarterly Closing (3) Explanation about Future Forecast Information, including Forecast of Consolidated Business Results" on p. 3 of the attached materials.

Table of Contents of Attached Materials
1. Qualitative Information of the Current Quarterly Closing	2
(1) Explanation about Business Results	2
(2) Explanation about Financial Conditions	3
(3) Explanation about Future Forecast Information,including Forecast of Consolidated Business Results	3
2. Quarterly Consolidated Financial Statements and Major Notes	4
(1) Consolidated Quarterly Financial Statements	4
(2) Quarterly Consolidated Profit and Loss Statement and Consolidated Statement of Comprehensive Income	6
Quarterly Consolidated Profit and Loss Statement
Consolidated Cumulative Second Quarter	6
Consolidated Statement of Comprehensive Income
Consolidated Cumulative Second Quarter	7
(3) Quarterly Consolidated Cash Flow Statement	8
(4) Notes to Quarterly Consolidated Financial Statements	10
(Notes to Assumptions on Going Concern)	10
(Explanatory Note in Case of Significant Changes in the Amount of Shareholders' Equity)	10
(Changes in Material Subsidiaries in the Current Consolidated Cumulative Quarter)	10
(Application of Accounting Particular to Preparation of Consolidated Quarterly Financial Statements)	10
(Changes in Accounting Policy)	10
(Changes in Accounting Estimate)	10

1. Qualitative Information of the Current Quarterly Closing

(1) Explanation about Business Results

The Japanese economy in the Current Consolidated Cumulative 2nd Quarter continued along a moderate recovery track, partly due to the effects from various policies implemented by the central government. On the other hand, a sense of uncertainty remains about the future outlook due to uncertain overseas economic conditions and the impact from fluctuations in financial and capital markets.

Under such a business environment, sales of the Company Group for the Consolidated Cumulative 2nd Quarter for the year ending March 31, 2018 were 3,486 million yen (3,989 million yen in the same quarter in the previous year), operating loss was 1,006 million yen (367 million yen in the same quarter in the previous year), ordinary loss was 295 million yen (550 million yen in the same quarter in the previous year), quarterly net profit attributable to owners of the parent was 1,903 million yen (quarterly net loss attributable to owners of the parent of 568 million yen in the same quarter in the previous year).

In this regard, in the Current Consolidated Cumulative 2nd Quarter, in connection with The Prospect Japan Fund Limited (hereinafter referred to as "TPJF") becoming a subsidiary, we recorded profit on negative goodwill of 2,420 million yen in extraordinary profit.

Business performance by segment is as follows.

In addition, the name of the reported segment has been changed since the Consolidated 1st Quarter. The previously named "Solar Business" has been renamed the "Renewable Energy Business" due to the start of the biomass related business. There is no other impact on the segment information other than the name change.

[1] Real Estate Sales Business, Condominium Sales Business

We mainly sell condominiums for general customers in the metropolitan area.

In the Current Consolidated Cumulative 2nd Quarter, we executed new contracts for 77 housing units at 3,015 million yen (91 housing units at 2,974 million yen in the same quarter in the previous year) and delivered 24 housing units and recorded sales of 766 million yen and segment loss of 40 million yen (6 housing units for sales of 230 million yen and segment loss of 152 million yen in the same quarter in the previous year).

[2] Real Estate Sales Business, Land and Buildings

We focus our sales on residential land and detached homes as well as individual buildings, etc.

In the Current Consolidated Cumulative 2nd Quarter, no contracts or sales results were recorded (contracts of 173 million yen, sales of 299 million yen and segment profit of 30 million yen in the same quarter in the previous year).

[3] Real Estate Sales Business, Custom-Made Homes

We undertake contract construction and reform construction for detached homes, etc., mainly in Yamagata Prefecture as a business area.

In the Current Consolidated Cumulative 2nd Quarter, we executed new contracts for 21 buildings of 590 million yen (13 buildings of 417 million yen in the same quarter in the previous year) and delivered 11 buildings and recorded sales of 476 million yen and a segment loss of 55 million yen (9 buildings, sales of 419 million yen and segment loss of 66 million yen in the same quarter in the previous year) (including reforms, etc.).

[4] Asset Management Business

We conduct management business of real estate and securities, comprised of Japanese stocks.

In the Current Consolidated Cumulative 2nd Quarter, we recorded sales of 132 million yen and segment profit of 19 million yen (sales of 174 million yen and segment profit of 62 million yen in the same quarter in the previous year).

[5] Construction Business

We conduct propulsion construction and pre-stressed concrete (PC) construction, etc.

In the Current Consolidated Cumulative 2nd Quarter, we recorded sales of 1,798 million yen and segment loss of 5 million yen (sales of 2,699 million yen and segment profit of 70 million yen in the same quarter in the previous year).

[6] Renewable Energy Business

We conduct renewable energy business, the main revenue source of which is the sale of electricity generated by PV, etc.

In the Current Consolidated Cumulative 2nd Quarter, we recorded sales of 293 million yen and segment profit of 116 million yen (sales of 132 million yen and segment profit of 63 million yen in the same quarter in the previous year).

[7] Other

For others, mainly as real estate lease business, we lease condominiums, etc., owned by the Company to general customers.

In the Current Consolidated Cumulative 2nd Quarter, we recorded sales of 18 million yen and segment profit of 5 million yen (sales of 33 million yen and segment profit of 21 million yen in the same quarter in the previous year).

(2) Explanation about Financial Conditions

Total assets at the end of the Current Consolidated 2nd Quarter were 39,162 million yen, an increase of 11,794 million yen as compared with the end of the previous consolidated fiscal year. This was due to an increase in cash and deposits and securities in connection with TPJF becoming a consolidated subsidiary, an increase in inventory assets in connection with the new purchase of land for the condominium sales business and the progress of projects, and an increase in tangible fixed assets related to capital investment in the renewable energy business, etc.

Liabilities at the end of the Current Consolidated 2nd Quarter were 15,316 million yen, an increase of 437 million yen as compared with the end of the previous consolidated fiscal year. This was due to an increase in borrowings as a result of new financing of project funds in the condominium sales business and capital investment funds, etc., in the renewable energy business, etc.

Net assets at the end of the Current Consolidated 2nd Quarter were 23,845 million yen, an increase of 11,356 million yen as compared with the end of the previous consolidated fiscal year. This was due to an increase in capital and capital surplus as a result of the issuance of new shares in connection with consolidation of TPJF, etc.

(3) Explanation about Future Forecast Information, including Forecast of Consolidated Business Results

With regard to the outlook for the future, improvement in the economic environment is expected due to the success of various economic policies. However, we must continue to keep a close eye on the uncertainty in overseas economic conditions and the impact from fluctuations in financial and capital markets.

Under such circumstances, the Company Group has proactively adopted M&A as a diversification strategy and has also expanded its asset management business as one of its important segments. As these businesses tend to be significantly affected by changes in economic conditions and market environment, it is extremely difficult to properly forecast and disclose ordinary business results. As there is a risk of misleading investors, etc., in disclosing business results forecast under such circumstances, the Company has adopted a policy to make timely disclosure of closing business results and a summary of the business to be conducted on a quarterly basis, and not to disclose a forecast of sales and a forecast of profits for the Fiscal Year ended March 31, 2018.

2. Quarterly Consolidated Financial Statements and Major Notes
(1) Consolidated Quarterly Financial Statements
		(Unit: thousand yen)
	Previous Consolidated Fiscal Year (March 31, 2017)	Current Consolidated 2nd Quarter (September 30, 2017)
Assets
Current Assets
Cash and deposits	5,409,806	5,992,545
Notes and accounts receivable	295,664	542,210
Accounts receivable for completed construction projects	1,071,410	514,922
Accounts receivable for investment advisory fees	16,397	11
Securities	790,188	10,341,517
Real estate for sale	925,573	381,073
Real estate for sale in process	2,451,405	3,562,902
Real estate for development	476,221	311,847
Expenses for uncompleted construction projects	27,631	251,164
Raw materials and stores	21,088	13,048
Deferred tax assets	376,038	259,212
Other	1,137,521	2,629,865
Allowance for doubtful accounts	Up 49,358	Up 46,932
Total Current Assets	12,949,590	24,753,390
Fixed Assets
Tangible fixed assets
Buildings (net)	710,726	689,036
Machinery, equipment and delivery equipment (net)	3,372,631	3,262,124
Tools, furniture and fixtures (net)	53,093	45,645
Land	2,558,513	2,558,519
Construction in progress	891,705	2,000,378
Total tangible fixed assets	7,586,671	8,555,703
Intangible fixed assets
Goodwill	1,015,260	916,415
Software	17,602	18,152
Other	30,255	31,983
Total intangible fixed assets	1,063,118	966,550
Investments and other assets
Investment securities	114,546	114,546
Investments in capital	2,761,293	3,449,286
Long-term loans	2,445,624	1,003,423
Deferred tax assets	11,567	7,484
Other	1,076,068	964,485
Allowance for doubtful accounts	Up 640,442	Up 652,540
Total investments and other assets	5,768,658	4,886,685
Total Fixed Assets	14,418,447	14,408,940
Total Assets	27,368,038	39,162,330

(Unit: thousand yen)
	Previous Consolidated Fiscal Year (March 31, 2017)	Current Consolidated 2nd Quarter (September 30, 2017)
Liabilities
Current Liabilities
Notes and accounts payable	833,260	613,920
Accrued construction payment	1,759,135	762,091
Short-term borrowings	181,400	406,880
Bonds to be redeemed within a year	51,900	53,800
Current portion of long-term borrowings	1,798,503	4,025,406
Corporate income tax, etc., payable	244,108	154,611
Amount received for uncompleted construction projects	179,947	347,640
Reserve for bonuses	135,026	91,828
Reserve for officers' bonuses	12,420	-
Allowance for compensation for completed construction projects	11,375	11,872
Allowance for construction projects losses	16,700	6,300
Provision for loss on litigation	20,000	20,000
Other	655,190	1,241,893
Total Current Liabilities	5,898,968	7,736,244
Fixed Liabilities
Bonds	146,700	164,800
Long-term borrowings	7,854,349	6,503,577
Deferred tax liabilities	1,890	1,267
Net defined benefit liabilities	136,674	134,998
Reserve for retirement benefits for officers	114,822	141,157
Allowance for compensation for completed construction projects	201,995	201,995
Provision for loss on compensation expenses	23,000	23,000
Asset retirement obligations	11,179	11,183
Other	489,024	398,310
Total Fixed Liabilities	8,979,636	7,580,290
Total Liabilities	14,878,604	15,316,535
Net Assets
Shareholders' equity
Capital	4,257,256	10,940,558
Capital surplus	5,480,641	10,804,097
Retained earnings	1,838,718	3,232,662
Treasury stock	Up 140,002	Up 140,141
Total shareholders' equity	11,436,596	24,837,177
Accumulated other comprehensive income
Foreign currency translation adjustments	69,318	37,429
Total accumulated other comprehensive income	69,318	37,429
New share subscription rights	778,640	Up 1,227,189
Non-controlling interest	204,878	198,378
Total Net Assets	12,489,433	23,845,795
Total Liabilities and Net Assets	27,368,038	39,162,330

(2) Quarterly Consolidated Profit and Loss Statement and Consolidated Statement of Comprehensive Income
(Quarterly Consolidated Profit and Loss Statement)
(Consolidated Cumulative Second Quarter)
(Unit: thousand yen)
	Previous Consolidated Cumulative 2nd Quarter (From April 1, 2016 To September 30, 2016)	Current Consolidated Cumulative 2nd Quarter (From April 1, 2017 To September 30, 2017)
Sales	3,989,352	3,486,452
Cost of Goods Sold	3,386,920	2,824,516
Gross Profit on Sales	602,431	661,936
Selling, General and Administrative Expenses	969,683	1,668,555
Operating loss (Up )	Up 367,252	Up 1,006,619
Non-operating Income
Interest income and dividend	216,831	171,417
Gain on investments in capital	-	711,557
Valuation gain on securities	-	5,760
Clerical affairs fee received	150	1,200
Penalties income	3,180	-
Foreign currency exchange profit	-	11,634
Reversal of allowance for doubtful accounts	16,135	-
Other	16,741	24,009
Total Non-operating Income	253,038	925,578
Non-operating Expenses
Interest expenses	152,610	166,724
Borrowing fees	9,827	8,414
Foreign currency exchange loss	245,457	-
Bond issuance cost	-	1,225
Transfer to allowance for doubtful accounts	-	3,301
Other	27,944	34,839
Total Non-operating Expenses	435,840	214,505
Ordinary Loss (Up )	Up 550,054	Up 295,546
Extraordinary Profits
Profit on sale of fixed assets	1,226	642
Profit on reversal of stock acquisition rights	7,593	8,320
Profit on negative goodwill	-	2,420,250
Total Extraordinary Profits	8,820	2,429,212
Extraordinary Losses
Retirement loss on fixed assets	0	0
Total Extraordinary Losses	0	0
Quarterly net profit or net loss before dividends distribution from silent partnership, income taxes (Up )	Up 541,234	2,133,666
Dividends distribution from silent partnership	9,710	14,939
Quarterly net profit before taxes, etc. or quarterly net loss before taxes, etc. (Up )	Up 550,944	2,118,726
Corporate income tax, resident tax and business tax payable	12,533	93,586
Adjustment of corporate income tax, etc.	4,743	120,020
Total corporate income tax, etc.	17,277	213,606
Quarterly net profit or quarterly net loss (Up )	Up 568,222	1,905,119
Quarterly net profit attributable to non-controlling interests	46	1,825
Quarterly net profit attributable to owners of the parent or quarterly net loss attributable to owners of the parent (Up )	Up 568,269	1,903,294

(Consolidated Statement of Comprehensive Income)
(Consolidated Cumulative Second Quarter)
		(Unit: thousand yen)
	Previous Consolidated Cumulative 2nd Quarter (From April 1, 2016 To September 30, 2016)	Current Consolidated Cumulative 2nd Quarter (From April 1, 2017 To September 30, 2017)
Quarterly net profit or quarterly net loss (Up )	Up 568,222	1,905,119
Other comprehensive income
Foreign currency translation adjustments	Up 157,391	Up 37,553
Total other comprehensive income	Up 157,391	Up 37,553
Quarterly comprehensive income	Up 725,613	1,867,565
(Breakdown)
Quarterly comprehensive income attributable to owners of the parent	Up 702,445	1,871,404
Quarterly comprehensive income attributable to non-controlling interests	Up 23,167	Up 3,838

(3) Quarterly Consolidated Cash Flow Statement
(Unit: thousand yen)
	Previous Consolidated Cumulative 2nd Quarter (From April 1, 2016 To September 30, 2016)	Current Consolidated Cumulative 2nd Quarter (From April 1, 2017 To September 30, 2017)
Cash flow from operating activities
Quarterly net profit before taxes, etc. or quarterly net loss before taxes, etc. (Up )	Up 550,944	2,118,726
Depreciation	95,050	151,335
Stock compensation expense	45,585	43,715
Depreciation of goodwill	98,845	98,845
Bond issuance cost	-	1,225
Profit on negative goodwill	-	Up 2,420,250
Increase/decrease in allowance for doubtful accounts (Up : decrease)	Up 16,135	9,671
Increase/decrease in allowance for bonuses (Up : decrease)	43,871	Up 43,198
Increase/decrease in reserve for officers' bonuses (Up : decrease)	Up 10,256	Up 12,420
Increase/decrease in allowance for compensation for completed construction projects (Up : decrease)	Up 6,646	497
Increase/decrease in allowance for construction projects losses (Up : decrease)	Up 2,200	Up 10,400
Increase/decrease in net defined benefit liabilities (Up : decrease)	15,055	Up 1,675
Increase/decrease in officers' retirement allowance (Up : decrease)	7,846	26,335
Interest income and dividend income	Up 216,831	Up 171,417
Profit on reversal of stock acquisition rights	Up 7,593	Up 8,320
Profit/loss on investment in silent partnership (Up : profit)	19,587	22,351
Interest expenses	152,610	166,724
Valuation profit/loss on investment securities (Up : profit)	-	Up 5,760
Profit/loss on operation of investments in capital (Up : profit)	-	Up 711,557
Profit/loss on foreign currency exchange difference (Up : profit)	245,457	Up 11,634
Profit/loss on sale of fixed assets (Up : profit)	Up 1,226	Up 642
Dividends distribution from silent partnership	-	6,446
Increase/decrease in accounts receivable (Up : increase)	1,472,943	328,550
Increase/decrease in advance received (Up : decrease)	275,391	294,507
Increase/decrease in inventory assets (Up : increase)	Up 1,257,462	Up 651,867
Increase/decrease in trades payable (Up : decrease)	Up 934,916	Up 384,434
Increase/decrease in operating investment securities (Up : increase)	Up 678,511	103,087
Increase/decrease in advance payment (Up : increase)	Up 118,543	Up 201,082
Increase/decrease in receivables (Up : increase)	Up 74,467	271,662
Other	Up 99,365	Up 73,344
Subtotal	Up 1,502,857	Up 1,064,321
Interest and dividends received	64,815	89,682
Interest paid	Up 154,573	Up 62,715
Corporate income tax, etc., refunded	1,524	-
Corporate income tax, etc., paid	Up 22,680	Up 173,314
Cash flow from operating activities	Up 1,613,771	Up 1,210,669


		(Unit: thousand yen)
	Previous Consolidated Cumulative 2nd Quarter (From April 1, 2016 To September 30, 2016)	Current Consolidated Cumulative 2nd Quarter (From April 1, 2017 To September 30, 2017)
Cash flow from investing activities
Expenditure for acquisition of tangible fixed assets	Up 1,909,275	Up 1,948,762
Revenue from sale of tangible fixed assets	-	Up 6,128
Expenditure for acquisition of securities	-	Up 11,972
Revenue from redemption of investment securities	47	-
Revenue from sale of investment real estate	5,269	1,431
Expenditure for payment of investments in capital	Up 515,528	-
Revenue from acquisition of shares of a subsidiary accompanying the change in scope of consolidation	-	2,935,110
Expenditure for loans	Up 201,117	-
Revenue from collection of loans	117	214
Cash flow from investing activities	Up 2,620,485	969,893
Cash flow from financing activities
Revenue from short-term borrowings	280,000	637,300
Expenditure for repayment of short-term borrowings	Up 130,100	Up 411,820
Expenditure for repayment of installment liabilities	Up 5,305	Up 3,521
Revenue from long-term borrowings	3,170,500	1,317,000
Expenditure for repayment of long-term borrowings	Up 918,018	Up 384,745
Revenue from issuance of bonds	-	48,775
Expenditure for redemption of bonds	Up 28,200	Up 30,000
Revenue from issuance of shares due to exercise of stock acquisition rights	-	Up 320
Expenditure for acquisition of treasury stock	Up 68,652	Up 120
Dividends paid	Up 167,980	Up 503,756
Dividends paid to non-controlling interests	Up 2,660	Up 2,660
Revenue from payment by the contributors of silent partnership	17,600	160,000
Cash flow from financing activities	2,147,182	826,130
Translation differences in cash and cash equivalents	Up 11,759	Up 2,615
Increase/decrease in cash and cash equivalents (Up : decrease)	Up 2,098,833	582,739
Cash and cash equivalents at the beginning of period	5,924,530	5,379,806
Cash and cash equivalents at the end of period	3,825,697	5,962,545

(4) Notes to Quarterly Consolidated Financial Statements

(Notes to Assumptions on Going Concern)

No applicable matter.

(Explanatory Note in Case of Significant Changes in the Amount of Shareholders' Equity)

During the second quarter, new shares were issued to acquire TPJF. New shares were also issued due to the exercise of 10,000 units of the stock acquisition rights No.2. As a result, there was an increase in "Capital" of 6,683,302 thousand yen and an increase in "Capital Surplus" of 5,323,456 thousand yen. At the end of the second quarter, "Capital" was 10,940,558 thousand yen and "Capital Surplus" was 10,804,097 thousand yen.

(Changes in Material Subsidiaries in the Current Consolidated Cumulative Quarter)

During the second quarter, we made TPJF a fully-owned subsidiary and included it in the scope of consolidation.

TPJF is a specified subsidiary.

(Application of Accounting Particular to Preparation of Consolidated Quarterly Financial Statements)

No applicable matter.

(Changes in Accounting Policy)

No applicable matter.

(Changes in Accounting Estimate)

No applicable matter.

Closing of Second Quarter of the Fiscal Year Ending March 21, 2018: Supplementary Explanation Material

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Prospect Japan Fund Ltd: Closing Announcement of Second Quarter of the Fiscal Year Ending March 31, 2018