ARDEPRO : Notice Concerning the Disclaimer of Conclusions in the Quarterly Review Report for the July 2024 Fiscal Year 1st Quarter Report 158KB

「再活」×２

不動産を「再活」し、日本を「再活」する。

News Release: ARDEPRO Co., Ltd.

(8925 TSE Standard)

December 15, 2023

Notice Concerning the Disclaimer of Conclusions in the Quarterly Review

Report for the July 2024 Fiscal Year 1st Quarter Report

ARDEPRO Co., Ltd. ("the Company") received a quarterly review report with a disclaimer of conclusions regarding the consolidated financial statements for the July 2024 fiscal year 1st quarter. The details are as follows.

1. Name of the audit corporation conducting the review Frontier Audit Corporation
2. Quarterly review report content

The content of the quarterly review report received by the Company regarding the 1st quarter of the July 2024 fiscal year is as follows.

Disclaimer of Conclusions

Frontier Audit Corporation carried out a quarterly review of the financial statements (quarterly consolidated balance sheets, quarterly consolidated profit and loss statements, quarterly statements of consolidated comprehensive income, and notes) related to the "accounting conditions" listed by ARDEPRO Co., Ltd. for the first quarter of the fiscal year from August 1, 2023 to July 31, 2024 (August 1 to October 31, 2023) and the consolidated first quarter period (August 1 to October 31, 2023) in accordance with paragraph 2 clause 1 of article 193 of the Financial Instruments and Exchange Act.

Considering the seriousness of the impacts which the items listed in the "Basis for Disclaimer of Conclusions" section could have on the consolidated quarterly financial statements listed above, the Audit Corporation will not issue a conclusion on the financial status of the Company and its consolidated subsidiaries as of October 31, 2023 and whether or not there were any matters identified at all of the important points causing belief that the business performance figures for the consolidated quarter ended on this date are not correctly displayed.

Basis for Disclaimer of Conclusions

The Auditing Corporation was unable to acquire sufficient and appropriate audit evidence regarding whether fraudulent disclosure which could have serious impact on consolidated financial statements for the fiscal year were included in the real estate for sale, goodwill, and start-of-term balance estimate pursuant to the measurement of bad debt reserve and deferred tax asset amounts for the first fiscal year audit of Nihon Jutaku Kaihatsu TMK.

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Regarding the applicable start-of-term balance, following consultation with the company and the previous auditor, the company decided to carry out repeat consideration of the estimate methods used along with the selection and application of critical assumptions and data.

Sufficient and appropriate audit evidence could not be acquired regarding the start-of-term balance for the first consolidated quarter of the applicable consolidated fiscal year, and the Auditing Corporation determined that if there are undetected fraudulent disclosures, they could have major and wide-ranging impacts on both the current financial status as of October 31, 2023 and the business results for the consolidated first quarter ended this date, therefore a disclaimer of conclusions for the consolidated financial statements was issued.

Emphasized Points

As explained in the notes regarding important subsequent events (special alert market stock designation and listing contract penalty requirements), the Company was designated as Security on Alert by TSE on November 30, 2023 and will be required to pay listing contract penalties.

These matters have no impact on the opinion of the Auditing Corporation.

Other Matters

Quarterly review and auditing for the quarterly consolidated financial statements for the first quarter consolidated accounting period and first quarter consolidated cumulative period of the Company's previous consolidated fiscal year ended July 31, 2023 and the previous consolidated fiscal year were carried out by previous supervising auditor. The previous supervising auditor issued an unqualified opinion for the applicable quarterly consolidated financial statements on December 15, 2022, and also issued an unqualified opinion for the applicable consolidated fiscal year financial statements on October 27, 2023.

Responsibility of Management and the Audit and Supervisory Committee for Quarterly Consolidated Financial Statements

In Japan, management staff are considered responsible for drafting and appropriately issuing quarterly consolidated financial statements in accordance with drafting standards generally considered to be fair and appropriate. These responsibilities include the establishment and operation of internal control systems as determined necessary by these management staff for ensuring quarterly consolidated financial statements free of fraudulent disclosures related to important matters, either through error or fraud, can be drafted and appropriately issued.

In the course of drafting quarterly consolidated financial statements, managers evaluate whether drafting financial statements on the assumption that the Company will continue to

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do business is appropriate, and if disclosure of matters related to this standard of continuing business on which the drafting of quarterly consolidated financial statements which are generally considered fair and appropriate in Japan is necessary, managers are responsible for disclosing the applicable matters.

The responsibility of the Audit and Supervisory Committee is to monitor the executive of duties by executives related to the maintenance and operation of financial reporting processes.

Responsibilities of Auditors in the Quarterly Review of Quarterly Consolidated Financial Statements

In Japan, auditors are considered responsible for implementing quarterly reviews in accordance with standards generally considered fair and appropriate, as well as issuing opinions on quarterly consolidated financial statements based on the results of these reviews from an independent viewpoint. However, as noted in the "Basis for Disclaimer of Conclusions" section of this report, the Auditing Corporation was unable to acquire the evidence needed to form a foundation for declaring conclusions regarding the quarterly consolidated financial statements. In accordance with Japan's regulations regarding professional ethics, the Auditing Corporation is independent from the Company and its consolidated subsidiaries, and its auditors also meet their other ethics responsibilities.

Conflicts of interest

There are no noteworthy conflicts of interest to disclose between the Company, its consolidated subsidiaries, the auditing corporation, and its executive employees as defined by the provisions of the Certified Public Accountants Act.

1. Date quarterly review report was received December 15, 2023
2. Future handling

The Company accepts the reasoning for the disclaimer of conclusions at this time and will carry out repeat considerations.

The Company is deeply sorry for the worry and inconvenience caused to its shareholders, investors and all other parties concerned.

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