Corporate Information(As of March 31, 2004)

Corporate Data

Members of Board of Directors

Company Name: Leopalace21 Corporation
Head Office: 2-54-11 Honcho, Nakano-ku, Tokyo 164-0012
TEL: +81-3-5350-0001 (Main Line)
President and CEO: Yusuke Miyama
Established: August 17, 1973
Common Stock: ¥37,500.66 million
Number of Shares Outstanding: 139.54 million shares
Operations: Construction contracting, leasing, property management, resort development,
resort membership sales, financing, hotels, etc.
Number of Employees: 4,572(Consolidated basis) 5,702 (Non-consolidated basis)
Real Estate Transaction Certification: Minister of Land, Infrastructure andTransport Permit (8) Article 2846
Construction Permit: Minister of Land, Infrastructure and Transport Permit (Special-15)
Article 11502
Registered First-Level Builder: Tokyo Governor Registration 36122
Registered Money Lender: Kanto Finance Bureau Chief Registration (6) Article 00581
Memberships: Japan Association of Home SuppliersTokyo Lenders Association
Japan Prefabricated Construction and Manufacturers Association

Corporate Structure

President and CEO
Executive Vice President
Senior Managing Director
Senior Managing Director
Senior Managing Director
Executive Director ofManagement
Executive Director ofManagement
Director
Director
Director
Director
Director
Director
DirectorStanding Auditor
Standing Auditor
Auditor

Yusuke Miyama
Tomio Oba
Yoshiteru Kitagawa
Eisei Miyama
Kuniaki Sasahara
Jiro Nishida

Keiichiro Shinozaki
Kou Kimura
Yasuhide Sakaguchi
Yoshikazu Miike
Satoshi Abe
Yousuke Kitagawa
Tadahiro Miyama
Yoshitaka Kouda
Katsumi Furuhata
Eiichi Dobashi

Shares held by the Company
159,692 share
0.11 %( 50.0%)

Leasing Division
SPC Leopalace REIT (Real-Estate Leasing)( 37.5%)SPC Leopalace REIT II (Real-Estate Leasing)( 33.3%)

SPC Leopalace REIT III (Real-Estate Leasing)( 25.0%)Japanese Individual
and Others
62,840,859 share
45.03 %

(Hotel and Resort Management in Guam)

Miyama Travel Ltd.
(Travel Agency)

Trianon Palace Hotel De Versailles S.A. (France)(Hotel Management in France)( 100.0%)(Allotment Sales of Condominium)

Japanese Corporations
and Other Corporations
8,584,760 share
6.15 %
Foreign Corporations
41,074,244 share
29.43 %

Financial Institutions
24,400,060 share
17.49 %Name of shareholder

No. of shares% heldYusuke Miyama

28,949,774

20.75%

Japan Trustee Service Bank, Ltd. (for trust)

9,524,000

6.83%

The Bank of New York for GS International
Equity6,305,976

4.52%

The Master Trust Bank of Japan ,Ltd.
(for trust)

4,670,000

3.35%

Goldman Sachs International

3,807,024

2.73%

The Chase Manhattan Bank, NA London

3,339,900

2.39%

TOYO KANETSU K.K.

2,745,900

1.97%State Street Bank and Trust Company

2,228,244

1.60%

The Bank of New York Treaty Jastech
Account

1,696,000

1.22%

Takayuki Noguchi

1,513,300

1.08%( 100.0%)( 100.0%)

Other Business
DIA KENSETSU Co., LTD.

Securities Companies
2,484,300 share
1.78 %

Major Shareholders (Top 10)

Hotel Resort Division
MDI Guam Corporation

For the year ended March 2004

Yoshinori Uehara

Apart Construction Contracting Division
Toyo Miyama Kogyo Co., Ltd.

2004

Distribution of Shares

Leopalace21 Corporation(Manufacturing and Sales of Housing Materials)

Investors
Guide( 36.4%)

Domestic Consolidated Subsidiary
Foreign Consolidated Subsidiary
Companies Applicable Under Equity Method
Note 1: Numbers within parentheses reflect share of firm held by Leopalace21 Corporation.
Note 2: Apart from the companies listed to the left, there is one company that has currently
suspended operations (100% direct) and three approved and licensed companies(100% indirect investment).

Leopalace21 Corporation
2-54-11 Honcho, Nakano-ku, Tokyo 164-0012
TEL: +81-3-5350-0001 (Main Line) FAX: +81-3-5350-0058

Leopalace21 Corporation
Code No. 8848
http://www.leopalace21.com

Message from the President

As an industry leader, Leopalace21
constantly strives to “create new value” andto leap forward towards a new beginning.

Business Concept

Business Philosophy

Aim to “create new value” through leased residential units
Basic Principles

1. Treat the apartment business as a social operation that simultaneously achieves the two main
goals of “effectively utilizing land” and “supplying high-quality housing.”

2. Implement the basic tenet that “because there are leases there is apartment management” to theentire organization.

3. Always be willing take on new challenges and develop/provide unique, inventive products.
4. Implement a customer-first approach in sales and an aggressive management style that focuseson speed.

Medium-term Objectives

Yusuke Miyama
President and CEO

Our business environment is in the midst of an upheaval that has never been seen before.
On one hand, the lifestyles and values of people are becoming more diversified and the entire
industry is seeing rapid levels of technological innovation. On the other hand, more ways forsociety and corporations to interact in a manner that suits the next generation are being
developed.

Contracting Division: Sales ¥300 billion (orders of approximately 60,000 units annually)
Leasing Division:

Sales ¥400 billion (500,000 managed units)

Financial Strategy:

Aim to reduce interest-bearing liabilities to below ¥100 billion

Medium-term Management Strategy:1 ) Strengthen Core Businesses
Since the beginning of our existence, Leopalace21 has always broken away from stereotypes
and has strived to “create new value” by developing and proposing unique products andservices to both owners and tenants. The “Leopalace21” part of our operations is based on arevolutionary, all-encompassing system that makes possible the coexistence of owners andtenants of leased properties. This system has re-written the conventional leasing system. In
addition, we continue to promote the commercialization of new value-creating businesses
such as the “Monthly Leopalace Flat” (a leasing style that is based on systems developed in
the US and Europe to meet the broad range of market needs), real-estate securitization,broadband ISP, mail-order sales, and domestic and international hotel/resorts.
Thanks to your support, our Company was listed on the first section of the Tokyo Stock
Exchange in March 2004. In order to provide our shareholders with a greater sense ofsatisfaction, we aim to take a leap forward into future with our basic tenet of “creating newvalue” as the basis for our efforts. In addition, the new awareness that we have gained as apublicly-held Company will allow us to maximize corporate value for all stakeholders
involved including shareholders, property owners, tenants, vendors and employees.
To achieve this, we will need to thoroughly implement corporate governance strategies andpromote a management style that focuses on CSR (Corporate Social Responsibility). We lookforward to your continued support and guidance in the future.
1

The Company plans to individually strengthen the two core businesses comprising of the“Apartment Construction Contracting Business (hereafter referred to as Contracting Business”)
and the “Apartment Leasing Business”, with the aim to solidify the synergies between these twoareas. In the Contracting Business, we will focus on “selecting appropriate locations for leased
properties” and continue to improve our ability to receive orders for such work on the Leasing
Business front, we will strengthen our sales ability by increasing the number of storefronts andassociated employees, and aim to ensure profits by retaining a greater percentage of tenants.

2) Pursue New Activities
q Develop peripheral and value-added businesses to support core operations
The Company plans to actively pursue the commercialization of peripheral and value-added
businesses that support our core operations and subsequently create “new value.”
Examples of such business areas include real-estate securitization, broadband ISP, mail-ordersales, and domestic hotels.

w Develop overseas resort business (through consolidated subsidiary)
Our resort in Guam, which opened in 1993 just completed the second phase of construction
activities (October 2000 ~ December 2003) where renovation work was carried out at thesite. The Company plans to maximize the use of the improved facilities to achieve
competitive differentiation and greater customer pull. Through these efforts, we will aim to
improve operating profits so that the periodic income statement will return to profitability
in the near-term future.
2

The Company’s History（●Company timeline are all on a calendar year basis）●Begin sales of “Monthly Leopalace Flats”●Opening of Leopalace World Nagoya and Leopalace Center Seoul●Begin broadband Internet business●Begin sales of “Leopalace REIT II and III”, another real-estate securitization product●Carry out capital increase through public offering. Capital increased to¥37.2434 billion (¥37.566 billion as of 2003)●Listed on Tokyo Stock Exchange
Section I●Begin sales of “Leopalace REIT”, a real-estate securitization product●Carry out third party allocation of new shares. Capital increases to ¥30.52435 billion●Change company name to “Leopalace 21 Co., Ltd.”●Begin sales of Monthly Leopalace units

Other Divisions

6.0％●Leopalace 21 Villa Corona Series wins the 1998 Good Design Award

98

Leasing Division

11.3％
Contracting Division●Breakdown of sales by business category for period

2.1％

95

ending March 1991 (non-consolidated)

94
ess
Businition
Trans iod
Per

Real Estate Division(Condominium sales)

93
29
Post-lebubbodPeri

80.6％●Over-the-counter trading of company
shares begins

88

87

86

91

90

89

riod

e Pe
ubbl

B
riod

h Pe
rowt

97

96

99

02

01

00

03

04

d
Perio
h
t
w
ro
Re-g
Wipe out excess debt (on a consolidated basis)(for period ending March 2001)
Other Divisions

0.7％

Return to Profitability – Net Income(for period ending March 1997)

Return to Profitability–Ordinary Income

Leasing Division

Contracting
Division●Breakdown of sales by business category(for period ending March 1996)

44.9％

54.4％

for period ending March 2004
(non-consolidated)

Establishment of New Business ModelG

Condominium Apartment Sales Business●Shifts in Net Sales (non-consolidated) by Division (in 100 millions of yen)
5,000

Subdivision

Synergy model that combines “contracting”
and “renting”
full-operation

Contract Construction●Shifts in Numbers of Managed Units (non-consolidated) (units)●Shifts in Numbers of Owners (non-consolidated) (persons)

300,000

20,000

4,132
4,000
3,517
3,000

250,000

2,205
1,918

2,000

1,602

1,445
1,168
1,000

2,004

1,811

15,149

1,334

1,073

216,463

1,021
743

572

1,849

629

0

13,447200,000

86/3

87/3

88/3

89/3

90/3

91/3

92/3

93/3

94/3

95/3

96/3

97/3

98/3

99/3

00/3

01/3

02/3

03/3

04/3

219
30
2
1

497
54
19
3

1,049
54
47
17

1,265
34
109
37

1,632
45
180
61

1,777
46
250
132

536
78
316
143

183
86
354
120

42
137
364
86

18
224
373
92

0
531
428
62

0
760
519
55

12
915
618
57

27
1,040
728
54

44
1,073
841
46

37
637
1,082
55

17
1,544
1,268
67

0
1,902
1,599
16

0
2,250
1,855
27

181,484
11,404
152,351

10,000150,000
136,755

500
437
400

100,000
71,670

211

100

171

50,000
148
79

78

109

135

154

151

0

-44

-71

-58

-50

3

87/3

88/3

89/3

90/3

91/3

92/3

93/3

94/3

95/3

96/3

4,662

60,01458,73159,147 63,336
50,476

3,930
3,577
3,249
2,986
3,421
2,240

37,17932,07722,449

1,519
935

0
86/3

5,452

5,000

44

17

-100

6,578

83,176

375

300

7,816

100,035

306

158

9,041

117,273●Shifts in Ordinary Income (non-consolidated) (in 100 millions of yen)200

15,000707

252

Real Estate
Contracting
Leasing
Other17,573

259,221

2,896

97/3

98/3

99/3

00/3

01/3

02/3

03/3

88/3 89/3 90/3 91/3 92/3 93/3 94/3 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3

0

88/3 89/3 90/3 91/3 92/3 03/3 04/3 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3

04/3

4

Businesses Profile and Market Potential

Business Position

The Features of the Company’s Contracting/Leasing Synergy Model

Promote a Business Expansion Strategy with Contracting and Leasing at its Core
Domestic Operations

Overseas Operations

In the domestic market, we will aim to expand peripheral businesses while
focusing on the core fields of contracting and leasing.

(Consolidated Subsidiary)

Peripheral businesses

Hotelbusiness

Mail-ordersalesCore business

Construction
contracting
division

Resort businessHotelbusiness

Broadband
ISP

Weddingbusiness

The Core Business Model
The Company’s Fundamental Strength Lies in the Synergy Model between Contracting
and Leasing
Realize stable, long-term
management through one-time
construction contract

Development of a
new business model
for apartment leasing

The long-term “Occupancy
Membership System” and theshort-term “One-Time Use
Monthly Leopalace Flat” are thetwo main products of theCompany’s Leasing Division

The month-to-month model
continues to expand as uses forthe units become more diverse(corporate dorms, business trips,
one-time use for various
purposes by individuals, etc.)

In the world of property management,
it is important to think long-term (20~30 years) and to accurately assess
the needs of specific generations.
With its experience, Leopalace21 hasdeveloped products targeted at the“single individual,” a market segmentthat makes up the majority of leased
properties. Our main product in theContracting Division is the studio unit
which is less than 30m2 in size. Of
course, the proposals we provide toowners are for the development ofbuildings located in specific areas
where detailed marketing analysis has
shown potential for large leasedemand.

The Company’s Leasing Division
provides the market with two productsthat can be broadly categorized into“long-term” and “short-term”
occupancy periods. The former need issatisfied by our “Membership System”
which is designed for tenants who feelthat they want to live in a unit for a
substantial period of time. The latterneed is satisfied by the “Monthly
Leopalace Flat System” which isdesigned for tenants who are only
looking to occupy the units for a shortperiod of time.
As user needs become more diversified,
we have taken steps to develop
products that aim to increase theconvenience and amenity provided toshort-term users.

The month-to-month model has seena rise in popularity in recent years.
However, a more interesting trend isthat more tenants are stating that they
are using these month-to-month units
for “temporary use (40%)” rather thanfor “long-term occupancy (60%).”Areas that fall into the temporary use
category include such purposes asbusiness trips (the most prevalentreason), training, examinations/classes, temporary home during moves
or home renovations, and tourism.
The long-term occupancy category
includes such purposes as conventional
apartment leases, corporate or school
dormitories, and apartments for job
transferees who moved without theirfamilies. Our month-to-month system
has flourished as we accurately responded
to the variety of needs demanded by
the next generation of tenants.

In the overseas market, we will aim to
expand peripheral businesses while
focusing on the core field of resort
management.

Leasingdivision

Real estate
securitization

Studio Units (less than 30m2):
The Main Product of theCompany’s Contracting Division

Provision of variety ofservices that meet the broad
range of tenant needs●Breakdown of usage purposes for month-tomonth apartments (as of March 2004)

TenantOwnerContracting
Division

Leopalace21

Leasing
Division

Individual (generalpublic)Businesses (dorms,
corporate housing)Temporary use (for space)/Other

1.6％“Leopalace21 Series” Exterior view

●Achieve stable and safe

management throughone-time, long-term
Leasing contract
property requisitioning
One-time property
requisitioning contract●Proper building
maintenance throughmutual benefits society

Temporary use(for living)

38.0％

Membershipbased leases

Monthly
Leopalace flat

“Leopalace21 Series”Interior view

●Leasing format that

Provision of avariety of services
Usage fees

does not have aminimum tenancy
period and does not
require a co-signor●Provision of various
services to support
tenant lifestyles

Leopalace21 believes that apartment construction and leased property management are inseparable businessareas and for this reason we have established our operations under the fundamental concept that “because
there are leases there is apartment management.” As part of this concept, we believe that it is imperative to thinkfrom the standpoint of the owner and make key issues such as tenant subscription and retention as well asbuilding maintenance a top priority. With this in mind, the Company has developed a unique “Comprehensive
Apartment Management System” that has three major subsystems; “One-Time Leasing,” “Leopalace Membership
Tenancy,” and “Monthly Leopalace Flats (a month-to-month furnished apartment leasing system).” This systemenables our business model to exhibit the synergy effects that come along with the mutual business expansionof both the Contracting and Leasing Divisions.

Long-term
occupancy

60.4％

Market Potential
The Number of Studio Units will Continue to Expand

The Company’s main target market of “studio leases for the 35-and-under age group” is expected to follow a decreasing
trend as the population of Japan ages. However, a variety of user needs for studio units has been created and more
recently, the number of studio units and the ratio of studio units that are less than 30m2 units has simultaneously
risen. It is anticipated that there will be 4.06 million studio units and the above ratio is expected to hit 67% (company
projections) by 2008. In other words, the target market for our operations shows great potential for the future.
●Shifts in the ratio of studio units that are less than 30m2 and the number of studio units

2008

1998
1993
1988

1.72
million units
（44％）

2.45
million units
（57％）

3.21
million units
（64％）

4.06
million units（67％）

Note: Figures for 1988, 1993 and 1998 obtained from 1998 Residential/Property Statistics. Figures for 2008 are based on the Company’s estimation.

5

6

Characteristics and Competency

Features and Strengths q = “Maintenance and backup through one-time property requisition system and mutual benefits society”
With our unique supply plan, we promise 30 years of stable management

Three unique points that support the one-time property requisitioning system

Leopalace21 implements a “one-time property requisition system” that promises an industry-leading 30 years of
stable and secure property management. As always, we base our operations on the fundamental concept that“because there are leases there is apartment management.” In the aforementioned system, we segment out thecountry into 1,008 areas and perform a detailed marketing analysis on topics such as location marketability and theneeds of potential tenants in the area. From this, amanagement program (proposal) is formulated for the
Payment of requisition
owner. If the property owner agrees to its contents, werents to owners
Ownersimplement all aspects of the program from apartment
Unique tenantconstruction to operation/management (i.e. comprehensive
recruitment
systemsupport of apartment management). In addition, the “oneLeopalace21
Tenants
Corporation Payment oftime property requisition system,” which ensures rent
usage feescollection for 30 years, and the “Leopalace Benefits Society,”(rent)
which ensures long-term proper building maintenance, are
Building
Comprehensive maintenance/
the other support systems which make up the cornerstone ofmanagement by the Company
the Company’s apartment business.

A variety of tenant recruitment
systems
Unless there is a solid system that ensurestenancy, we are not providing an adequatelevel of property management to theowners that we represent. Our detailed
analysis of the marketability of any location
allows the Company to recruit tenants fromall over Japan. We use a variety of media
such as our expansive network of offices,the Internet, specialist magazines, andtelevision commercials and these marketing
efforts have ensured a high level ofapartment tenancy. Perhaps more
importantly, tenants are able to search forunits anywhere, anytime, all over Japanthrough these various outlets.

Novel renting format
Leopalace21 products are basedon a unique system that responds
to the needs of tenants that are
searching for a long-term or shortterm place to stay. In addition, we
have achieved a groundbreaking
renting method that does not
require any deposit, key-money or
co-signors. As such we are able tomeet the needs of both individuals
and corporate clients and havebeen able to acquire shares in a
broad range of market segments
and differentiate ourselves fromcompetitors.

Reliable management andoperation
Leopalace21 acts on behalf of the owneron all aspects of apartment managementfrom the maintenance of the building totenant care. Our detailed approach toafter-care ensures that the asset value ofthe building remains high and owners canfeel safe and secure in the thought that
their property is being managed with due
diligence. In addition, the long-term natureof building maintenance is supported by
the “Leopalace Benefits Society”, a backup team that solves issues related to
unforeseen circumstances and the life
design of the property owner.

Features and Strengths w = “Properties that span the country and an online network that complements it.”
A network of one-time requisitioned properties that span the entire country
Leopalace21’s one-time requisitioned properties where theCompany is both the building contractor and the apartment
manager can be found everywhere in Japan; from Hokkaido
in the north to Okinawa in the south. Nationally, we maintainapproximately 260,000 rooms all of which have beendeveloped subsequent to a detailed marketability analysis of
the location to ensure that there is great potential demand in
the area. In addition, all of the properties provide theamenities that meet the high demands of future tenants ina reliable manner. We are the only standalone company inJapan that has this many studio apartment properties.

Domestic network of 211 Leopalace Centers●No. of managed units by area

(as of March 2004)
Total number of units inJapan 259,221

Koshinetsu area:
11,940 units

Hokkaido area:
4,406 units

Hokuriku area:
7,301 units
Kinki area:
46,477 units

Tohoku area:
14,440 units

Chugoku area:
Kyushu/Okinawa area: 5,738 units
21,161 units
Shikoku area:
5,868 units

Kanto area:
102,095 units
Tokai area:
39,795 units

Visitors to the Company’s 211 Leopalace Centers locatedthroughout Japan can search real-time for property
information using our online network. For example, a person
who is in Tokyo can look up the most recent information forproperties in the Hokkaido or Kyushu regions. Once theperson finds something that is suitable, he/she canimmediately register and enter into a leasing contract. This
combined network of domestic sales offices and an online
search engine enables Leopalace21 to instantly and accurately
meet the needs of both individual and business clients.

●No. of Leopalace Centers by region(as of March 2004)

National total:
211 locations

Hokuriku area:
6 locations

Koshinetsu area:
10 locations
Hokkaido area:
3 locations

Kinki area:
54 locations

Tohoku area:
18 locations

Kyushu/Okinawa area: Chugoku area:
21 locations
6 locations

Shikoku area:
7 locations

Kanto area:
60 locations
Tokai area:
26 locations

Features and Strengths e = “Real-time web searches for properties all over Japan”
A powerful online system that is based on our expansive property network in Japan
Visitors to the Company’s website can perform real-timesearches for information on properties anywhere in Japan.
Simultaneously, they can submit an application via
Internet and sign a leasing agreement online. Leopalace21
is the only standalone company in Japan that maintains
approximately 260,000 units for lease nationwide and thislarge network of properties makes it easy for potential
tenants to find the perfect property through “real-timesearches” on the web via computer or mobile phone.
7

SearchSelection

Application

Leasing Agreement

Access even via mobile phone
Real-time searches on Leopalace properties caneven be performed on a mobile phone.
Similar to accessing the main homepage,
visitors to the mobile
phone site can obtainproperty information,
view floor plans andeven conduct creditcard transactions.

8New challenge-1 : Building of New Peripheral and Value -Added Businesses

As a result of pursuing the Company’s synergy model (contracting and leasing), Leopalace21 has been able to develop
new businesses that have the ability to create “new value.” In addition, our managerial resources including tenants,
apartment owners, nationwide network of sales offices and the online leasing network, continue to show year-onyear improvement. The goal is to maximize the effective use of these managerial resources and promote thecommercialization of peripheral/value-added businesses so that a new business model can be established.

Company’s management
resources

Tenants

OwnersNationwide
network ofsales offices

Online leasing
network

Maximize use
Development of
new business formats

Real-estate securitization

Mail-order sales

Broadband ISP

Hotel

Establishment of new business modele Mail-order Business
Leopalace21 publishes different informational magazines for three separate
target groups; apartment owners, potential tenants and current tenants.
In the future, we also plan to enhance the Company’s website to make it
more appealing for users searching for properties and applying for lease
units. These advertising channels as well as the readers and viewers they
attract are important managerial resources of the Company. As part of ourefforts to effectively utilize these resources, the Company began a
mail-order service in 1988. The products offered through this service
comprehensively support the creature comforts of specific user groups.
Examples of such products include goods that support new beginnings
and other useful items for single tenants. In the near-term future,
Leopalace21 plans to focus on developing more new, original goods thatappeal to a larger customer base.

●Company Website●Summary of goods
Useful basic items for single tenants Kitchen goods

q Real Estate Securitization Business (through consolidated subsidiary)

BicyclesCleaning and laundry goods

Miscellaneous goods

Leopalace21 is involved in real estate from a variety of angles; owner, developer and maintenance contractor. The
series of reforms to the domestic legal system in relation to real-estate securitization resulted in an opportunity forthe company to build a new business around the effective utilization of these real-estate assets. A good example
of our proactive stance in this area is the establishment of a real-estate securitization business utilizing a SPC●Leopalace REITs on the market today(Special Purpose Company) at an early stage. We now
No. of real-estate
First priority
Number of
Total
properties that are securitization
subscription
accounts (onehave three REITs (totaling 265 buildings withthe subject of(generalaccount=value
the REIT
subscription)¥50,000)
securitization values of ¥32 billion), including the first
Leopalace REIT
¥8
¥5
100,000
79“Leopalace REIT” which was put on the market in 2001.
(August 2001)
BillionBillionaccounts
Buildings
In the future, the Company plans to continue
Leopalace REIT II¥18¥8160,000114(September 2002)
BillionBillionaccounts
Buildings
accumulating know-how in this field and further advance
Leopalace REIT III¥6¥4.5
90,00072
our products to better meet the needs of marketplace.
(December 2002)
BillionBillionaccounts
Buildings＊The total securitization value for Leopalace REIT II includes a non-recourse loan of ¥6 billion

Storage goods

Bath products Clothing/fashion goods

Security and fire prevention goods
Interior furniture and tables

Ion water purifiers

Chairs, sofa beds and cushions

Futons, pillows and blankets
Curtains and separators

Food

Carpets and mats

Health, beauty and diet goods

Hobby goods●Leopalace Magazine●Leopalace Owner’s Clubr Domestic Hotel Business
Using the Company’s knowledge of apartment operations, we have started
to develop hotels in major domestic cities (currently 7 locations). Our
strategy is to pursue a hotel system that is more up-to-date to today’s needs.
With this in mind, Leopalace21’s goal is to manage community-based hotels
that are priced reasonably and play an important role in the lives of not only
business users but also long-term residents and surrounding neighbors.

Asahikawa(Opened August 2003)

Sapporow Broadband Business
The tenants in the Company’s nationwide network of managed apartments for lease form a great managerial resource.

9(Opened November 2002)

All our hotels contain sales offices for both the Company’s Contracting andLeasing Divisions. These offices act as the sales center for the region andtheir goal is to establish a partnership with area property owners and tenants.

In 2002, we began providing broadband ISP services to tenants of apartments managed by the Company. With thisservice, tenants receive a STB (LEO-NET terminal) in each room. In the standard LEO-NET service, tenants can use
the STB to view seven CS channels and pay-per-view movies as well as havebroadband Internet connection and e-mail service. The optional premium
service gives tenants access to various other features such as 11 fee-based
CS channels (CS Plus) and LEO-PHONE, an IP telephone system that makes
normal telephone subscription redundant. As of March 2004, the numberof rooms installed with STBs exceeded 100,000.
In the future, the Company plans to promote further STB installation andenhance its service menu so that the appeal of our communities improves,thus enabling us to retain more tenants and increase profitability.

●“Marutoku” Room Search Magazine

Niigata(Opened September 2002)

OkayamaSendai(Opened September 2003)(Opened April 2003)

NagoyaYokkaichi●Set Top Box (STB)●Hotel Leopalace Niigata●Hotel Leopalace Sendai(Opened May 2002)(Opened February 2003)

10

New challenge-2 : Development of Overseas Resort Business (through non-consolidated subsidiaries)

Leopalace Resort Division

Business Profile
The Company’s fully-owned subsidiary, MDI Guam, manages
a large-scale resort business comprising of the Leopalace
Resort and Westin Resort in the tropical island of Guam;
three and a half hours away from Japan. The first phase of
construction for the Leopalace Resort located in central
Guam was completed in 1993, and the beachfront Western
Resort located in the northwestern portion of the island
opened in 1996.

Main Strategies for Achieving the Medium-term Plan

Leopalace Resort is situated on approximately 5.2 million
square meters of pristine tropical land. The full-service
hotel/condominium resort has various sports facilities(e.g. baseball, soccer, tennis and swimming) and a golfcourse. In fact, no other resort in Guam compares to the
Leopalace Resort when it comes to the completeness of
its guest facilities.

1 ) Improve business infrastructure to increase customer pull
(Second phase of construction completed in December 2003)
The second phase of construction on both the Westin and Leopalace resorts was carried out to further improvethe existing hotel and condominium facilities and thus increase●Summary of second phase construction activities
customer pull. In addition to this, we built new facilities for
Leopalace Resort Division● New hotel facilities (208 rooms)
the growing “bridal market” as well as the “sports paradise”● New condominium facilities (from 109 units → 416 units)
genre. In the latter field, our top-class sports facilities● New chapel (attached to the new hotel)● Additional golf course (from 27 holes → 36 holes)
accommodate the training regimens of top Japanese athletes.
● A variety of new sporting facilities (baseball field, race pool)
The amenities of the two resorts compliment each other,Westin Resort Division
making up a great package for guests to either resort.
● 10 additional suite rooms

The Division began the second phase of construction in 2000
with the goal to eliminate capacity shortages, and this wascompleted in December 2003. The resultant improvementin amenities is expected to increase net sales of MDI Guam
to US$77.9 million by December 2006. In addition, it isbelieved that this move will help the subsidiary achieve
profitability at the operating income stage.

● New chapel (St. Leo Chapel)

2) Strengthen mechanisms for attracting more customers●Actively respond to rise in bridal and golf demands

The Company plans to aggressively develop measures to increase customer pull by using the improved infrastructure
available to guests as a result of the second phase of construction activities. First of all, the three domestic“Leopalace Bridal Salons” (in Tokyo, Osaka, and Nagoya) will focus on increasing the number of customers signingup for overseas weddings. In addition, the improved golf course amenities (with a total of 36 holes) will respondto the persistent level of demand for golf activities and will allow the Company to increase customer flow fromevents such as competitions.

Westin Resort Division

Guam●Performance and Forecast of the

Guam Resort Division(Leopalace Resort +Westin Resort)-in millions of dollars

Westin Resort
100

Leopalace Resort

50

77.9

Sales
Operating
Income

41.9
0.3

0
-15.8
-50

2003/12

2006/12(Actual)(Projected)

The Westin Resort, which ismanaged by the world-famous
Starwood Group of hotels, is
one of the best in Guam. The“Elegant Tropical Resort”
theme of the facility provides
the perfect backdrop for theimmaculate, high-quality
service and luxurious rooms
offered to guests.

●Actively engage in luring more sports groups, school trips and planned tour groups
The other goal of the second phase of construction activities was to build a “sports paradise.” As a result, we now
boast the highest quality, full-service sports facility in Guam. Our facilities have already hosted a number ofprofessional baseball, soccer and Olympic teams (swimming, synchronized swimming, softball, etc.) from Japan.
Furthermore, improved hotel amenities are expected to allow Leopalace21 to not only attract more customers via theconventional direct marketing method but also through tour agencies. With this in mind, the Company plansto set-up business to better accommodate more company get-a-ways, school trips and other pre-planned tours.

Lodging Facilities (Leopalace Resort)Sports Facilities (Leopalace Resort)
Second softball field
Third soccer field(Leopalace Resort)

Cycling and Jogging cource
Athletic field andFirst soccer field

Race pool
Diving pool

St. Leo Di Janeiro
ChapelLa Questa E

First softball field

Fitness jim
Walking pool
Swimming pool

La Questa pool

Hotel Belvedere

ReceptioncenterBaseball field

La Questa D

Baseball field

Footsal court
Multipurpose ground

Beach Volleyball court

La Questa B

Water slider
Luxury pool

Second soccer field

La Questa C
Lawn tennis court

La Questa B

La Questa C

Leopalace Resort
Hotel Belvedere

La Questa D

Athletic field and soccer field

Lawn tennis court

Club house

Race pool

Manenggon lake

ChapelLeopalace Resort
Country Club

Kids garden
Leopalace Resort
Country Club

Multipurpose ground

La Questa E

Fairway Villa Duplex
Club house

11

Sub baseball field

12

Market Trend-1 : Residential Leasehold Development
Number of new less than 30m2 residential leaseholds

Trends and projections for stock of studio leaseholds

Number of new leased apartment projects for less than
30m2 units (left hand scale)

Number of newly constructed residential leaseholds

Share of less than 30m2 residential leaseholds within
the entire new leased construction market
Percentage of leased apartments (right hand scale)(Thousands of units)
1,000(Thousands of units)
4,500

4,060
4,000

3,624
（％）

800

400 (Thousands of units)

3,500

40.0
3,000

600
452

421

400

33.4

2,000

200
0

2,451

2,500

30.1

29.2
300

3,215

30.0

79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03

1,717

1,500
1,000

269

25.5
500

23.1

21.9
19.1

200

22.1

21.9
20.0

20.8

0

20.1

19.3

18.8
17.3

104

99

100

10.0

73

0

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

1988

1993

1998

2003

2008

(Projected)(Projected)

20.0

2000

2001

2002

2003

0

(Projected)

Note 1: Source - “New Residence Statistics” are used up to 2002
Note 2: Values are on a calendar-year basis

Number of studios

Increase or decrease(in thousands of units)(in thousands of units)

Percentage increaseor decrease(%)

Number of occupied units

1988

1993

1998

1993

1998

1993

1998

Total number of units

34,701

38,457

41,744

3,756

3,288

10.8

8.5

Studios

1,717

2,451

3,215

734

764

42.7

31.1

Two-room

3,545

3,446

3,345

-100

-100

-2.8

-2.9

Three-room

5,423

5,849

6,207

426

359

7.8

6.1

Four-room

6,596

7,325

8,275

729

950

11.0

13.0

Five-room

5,211

5,800

6,430

589

630

11.3

10.9

Six-room

4,641

5,023

5,406

382

382

8.2

7.6

Seven or more room

7,137

7,875

8,170

739

295

10.4

3.7

Note 1: Source – 1998 Residential/Property Statistics
Note 2: Values are on a calendar-year basis

Steady recovery of the new construction market for less than 30m2 leased units is expected

Increase seen in stock of studio residences

According to statistics of new residential construction units developed by the Ministry of Land, Infrastructure andTransport, the number of new leased units fell from 800,000 in the bubble economy period of the late 1980s to
421,000 in the year 2000. Since 2001, the number of new leased units has increased for three consecutive years.
However, the pace of this recovery has been slow.

The stock of studio residences has also been on a rising path in recent years. According to residential and property
statistics from the Ministry of Public Management, Home Affairs, Post and Telecommunication, the number ofstudio residences in 1998 was 3,215,000, a 31.1% increase (or 764,000 units) from 1993. Compared to the overallrise in residential stock of 8.5% in the same 5-year period, growth of this market is remarkable. In contrast to this,the number of two-room residences fell by 2.9% in the same five-year period. This trend is a sign that many of thedeteriorating two-room residences in the Tokyo Metropolitan Area have been rapidly converted into new studio
properties.

Nonetheless, the less than 30m2 residential leasehold segment has seen significant growth in recent years. Sincebottoming out in 2000 at 73,000 units, the number of new construction in this segment has made a rapid recovery
hitting 99,000 in 2002 and exceeding 100,000 in 2003 (Company estimates). Moreover, the share of new less than
30m2 leased units in the entire new construction lease market has also increased. In fact, the Company estimatesthat the level of market share hit 23.1% in 2003.

Increased demand from young single tenants for compact leased units

Continued growth of the studio residential market is expected
Although new residential and property statistics have not yet been finalized, the stock of studio residences is expected
to have hit 3.6 million units in 2003. In addition, the stock of studio residences is estimated to rise to 4 million units
by 2008. This forecast is promising news because it is related to growth of the Company’s main target market.

The reason for the increased share of less than 30m2 lease units within the entire residential leasehold market canbe attributed to the increase in demand from the young singles market as they look for a new lifestyle in the city
centers. In addition, new demand arising from the outsourcing of corporate dormitories and housing services is
expected to also contribute to the growth of this market in the future.

13

14Market Trend-2 : Leasing Market
Trends and forecasts for the number of 35-and-under single households
Leopalace Memberships by Age Group

25-and-underOver 25 - 29 underOver 30 - 34 under■ Breakdown of uses on month-to-month leases(End of March 2004)

28.2%
71.8%

35-and-under(Leopalace21 Target Customers)

5,305

Note: Based on company data

5,254

5,200

5,140

5,072

5,000

4,973

4,870

4,757

Business trips 27.8％
Temporary home between moves 1.8％
Training 6.7％
Studying 0.4％
Temporary home during homerenovation/rebuilding 0.6％
Temporary place to stay to carefor ill person 0.4％
Temporary place to stay to care foraway from home employee 0.2％
Tourism (individual) 0.2％

4,000

2,445

2,378

2,325

2,276

1,740

1,748

1,732

1,704

Monthly Leopalace Flat per Month System
Membership-based system(Thousands of units)
250

239.8

194.4

200

89.7

Tourism (foreigners) 0.02％
2,234

2,188

2,138

2,090

Tourism (group) 0.02％
Temporary use (for space)and other uses 1.6％

2,034

3,000

2,000

■ Number of tenants by contract type

(March 2004)

Over 35(Thousands of units)
6,000

5,302

Use of month-to-month leases

1,672

1,653

1,605

Temporary use
1,568

1,537

38.0％

Habitational Use. Place of work
. Place for hobby,
creative activities. Common space(for friends and others). Get together location(social area). Conference room
. Other

167.6
74.7

143.9

150

129.4
3.5

57.8
32.5

113.8
100

97.4

60.4％
150.1
113.8

1,000

General living use 35.9％
1,117

1,179

1,197

1,220

1,234

1,231

1,230

1,212

1,186

50

125.9

111.4

109.8

2001/3

2002/3

97.4

119.7

Corporate dormitories 12.0％
Student dormitories 10.8％

0

Job assignment away from primary home 1.1％
2000

2001

2002

2003

2004

2005

2006

2007

2008

(Projected)(Projected)(Projected)(Projected)(Projected)(Projected)

Note 1: Source – 2000 Census and “2003 Number of Households and Future Estimates” report created by the National Institute of Population.
Note 2: Values are on a calendar-year basis

0

1998/3 1999/3

2000/3

2003/3

2004/3

Note: Source -based on company data

The 35-and-under singles market is five million strong

Develop new markets through month-to-month leases

According to a study by the Ministry of Public Management, Home Affairs, Post and Telecommunication, there are
5.25 million 35-and-under single households in Japan. When we look at our membership figures, 75% iscomprised of this segment, making the “35-and-under single tenant (workers and students)” our main target
market. More than 96% of this generation lease rather than own and therefore, the market for the Company’s leasing
division is actually five million strong.

In addition to the “Membership System” that the Company developed for prospective long-term tenants, Leopalace
has also implemented the “Monthy Leopalace” system to meet the short-term needs of prospective tenants.
Through this, we have been able to develop a new market that breaks the standard conventions of the leased industry.
The purpose for living in month-to-month leased units can generally be categorized into two areas; for living and for
temporary use. In the former category, tenants have stated that they live in these units for “general living purposes,”“dormitories (students and company employees),” “job assignment away from home,” and “for daily use because ofa long commute.” On the other hand, the latter category is dominated by tenants using the month-to-month leased
units for “business trips” but we have seen that these units are also used for a variety of purposes such as for a
temporary home between moves, a place to stay during training, a quite room to study, and for tourism purposes.

Although the target population is gradually decreasing, there still remains sufficient room for market
development.
The Japanese population is steadily aging and according to the National Institute of Population, the number of 35and-under single households will fall below five million in 2006. Despite this fact, the Company is confident of theirprospects as we only have 90,000 members from this age group currently (as of March 2004). As many single,
young-people begin college and new careers or switch careers every year, there will be a need for studio apartments.
Over the years, the Company’s highly functional and convenient studio leased units have received high praise fromthis age group and as such, we hope that we can capture more of this market in the future. Another promising signis that the uses of our studio leases are becoming more diversified, meaning that the demand for such leases will
increase in the future.

15

Daily use because of long commute 0.6％

Tenants of month-to-month leases have steadily increased as a variety of needs are being met
An analysis of tenants by contract type in recent years indicates that the sale of month-to-month leases increased
rapidly after starting the “Monthly Leopalace” system in March 2000. This shows that we were able to match market
needs appropriately at that certain juncture in time. In addition, the number of month-to-month leases has further
increased to 89,700 units as of March 2004 due to the introduction of the fully furnished (furniture, appliances, andutilities included) “Monthly Leopalace Flat” in March 2003. The shift towards more month-to-month leases is
expected to continue steadily into the future.
16

Financial Highlights

Consolidated
Net sales

Non-consolidated

Operating income

500,000 (¥ million)

50,000 (¥ million)

400,000

40,000300,000

30,000Ordinary income

Net sales

40,000 (¥ million)

30,000Operating income

Ordinary income

500,000 (¥ million)

50,000 (¥ million)

50,000 (¥ million)

400,000

40,00040,000300,000

30,00030,000200,000

20,00020,000100,000

10,00010,00020,00020,000200,000

10,000100,000
0

10,000

'00/3

'01/3

'02/3

'03/3

0

'04/3

'00/3

Net income

'01/3

'02/3

'03/3

0

'04/3

Total assets

50,000 (¥ million)

'01/3

'02/3

'03/3

'00/3

80,000 (¥ million)

400,000

'01/3

'02/3

'03/3

0

'04/3

'00/3

Net income
20,00060,000

'01/3

'02/3

'03/3

0

'04/3

Total assets

30,000 (¥ million)

30,000

'00/3

'01/3

'02/3

300,000

10,000'04/3

Shareholders’ equity

500,000 (¥ million)

100,000 (¥ million)

400,000

80,000200,000

40,0000300,000

60,00020,000-10,000

200,000

40,000100,000

20,0000-20,000
100,000-10,000
'00/3

'01/3

'02/3

'03/3

'04/3

0

0
'00/3

'01/3

'02/3

'03/3

-20,000'04/3-30,000
'00/3

'01/3

'02/3

'03/3

'04/3

-40,000

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

0

'04/3

'00/3

'01/3

'02/3

(Unit : ¥ million)

'03/3

'04/3

(Unit : ¥ million)

2000/3

2001/3

2002/3

2003/3

2004/3

2000/3

2001/3

2002/3

2003/3

2004/3

Net sales

206,155

186,991

295,683

357,496

418,873

Net sales

200,378

181,078

289,562351,775

413,239

Operating income

16,855

16,39432,672

41,65048,317

Operating income

18,661

16,91033,51442,01748,429Ordinary income

12,10813,17632,25533,44237,905

Ordinary income

15,354

15,06030,61337,51643,710Net income-10,803

32,84318,763

18,781

18,999Net income

2,412-39,644

15,831

23,73325,883

Total assets

337,283

343,039

372,954404,853

411,925

Total assets

375,478

316,556

340,183

396,220423,314

Shareholders’ equity-12,577

17,38644,75965,30776,458

Shareholders’ equity

62,73624,49644,08376,446100,607

Common stock

30,524

31,13433,27437,50037,500Common stock

30,524

31,13433,27437,50037,500Shareholders’ equity per share (¥)-119.08

158.73363.00470.44550.12

Shares outstanding (thousand shares)

105,671

109,606

123,412

139,543

139,543

Net income per share (¥)-155.51307.86155.12147.36136.80Shareholders’ equity per share (¥)

593.69223.49357.52548.34721.80Net income per share (¥)

34.70-371.40130.88185.32185.68Dividends per share (¥)

0.00

0.00

0.00

15.00

15.00

Note: In the March 2000 consolidated financial statement, the Company incurred an extraordinary loss of ¥10,851 million as a result of a loss on foreign exchange.
This is mainly as a result of a year end adjustment associated with foreign currency monetary claims and credits of overseas subsidiaries.

Note: During the period ended March 2001, the non-consolidated financials booked an extraordinary charge of ¥68.8 billion from accumulated losses at overseas entities.
The loss was not written off on a consolidated basis because it resulted from transactions between consolidated companies.

Segment information■ Sales breakdown (Consolidated)■ Operating income (Non-consolidated)(Unit : ¥ million)

Hotel Resort
Division

0.6％

2004/3

Leasing
Division

Apartment Construction
Contracting Division

44.1％

53.6％

(Unit : ¥ million)

2000/3

2001/3

2002/3

2003/3

2004/3

Apartment Construction Contracting Division

105,477

60,711150,842

190,216

225,011

Apartment Construction Contracting Division

Leasing Division

87,634

114,114135,026

159,896

185,516

Hotel Resort Division

7,444

7,611

7,582

6,688

7,056

Other Division

6,026

4,995

2,774

1,458

2,590

Other Division

271

Written-off or entire company

(426)

(441)

(542)

(764)

(1,300)

Written-off or entire company(829)

206,155

186,991

295,683

357,496

418,873

16,855

16,394

Other Division

1.7％

17

'03/3

10,00020,000-20,000

0'04/3

Shareholders’ equity

500,000 (¥ million)

40,000

'00/3

Total

2000/3

2001/3

2002/3

2003/3

2004/3

20,031

8,428

26,25041,43354,090

Leasing Division

1,115

10,786

11,047

6,579

4,136

Hotel Resort Division-3,733-2,101-3,569-2,736-3,849221

371-1,234-3,514(941)(1,427)( 2,391 )( 2,545 )

32,672

41,65048,317

Total

18

Major Management Indices

Consolidated

Non-consolidated

Profitability
Gross profit / Net sales

Operating income / Net sales

Net income / Net sales

Gross profit / Net sales

Operating income / Net sales

30.00（%）

12.00（％）

20.00（％）

30.00（％）

12.00（％）

20.00

8.00

10.00

20.00

8.00

10.00

4.00

0

10.00

4.00

Net income / Net sales
10.00（％）
0-10.00-20.00

0

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

-10.00

'04/3

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

-30.00

'04/3

'00/3

'01/3

'02/3

'03/3

'04/3

2000/3

2001/3

2002/3

2003/3

2004/3

2000/3

2001/3

2002/3

2003/3

2004/3

22.61

25.45

25.32

24.79

25.25

Gross profit / Net sales (%)

23.42

26.03

25.76

24.94

25.28

Gross profit / Net sales (%)
Operating income / Net sales (%)

8.17

8.76

11.04

11.65

11.53

Operating income / Net sales (%)

9.31

9.33

11.57

11.94

11.71

Net income / Net sales (%)

-5.24

17.56

6.34

5.25

4.53

Net income / Net sales (%)

1.20-21.89

5.46

6.74

6.26

SafetyShareholders’ equity ratio

Current ratio

20.00（％）

Fixed assets ratio

120.00（％）

1,500.00（％）

80.00

1,000.00

40.00

500.00Shareholders’ equity ratio

15.00

Current ratio

Fixed assets ratio

25.00（％）

100.00（％）

1,000.00（％）

20.00

80.00

800.00

15.00

60.00

600.00

10.00

40.00

400.00

5.00

20.00

200.00

0

0

10.00
5.00
0

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

2000/3
Shareholders’ equity ratio (%)
Current ratio (%)
Fixed assets ratio (%)

0

'04/3

2001/3

'00/3

'01/3

'02/3

'03/3

'04/3

2002/3

2003/3

2004/3

'00/3

'01/3

'02/3

'03/3

'04/3

'00/3

'01/3

'02/3

'03/3

2000/3

0

'04/3

'00/3

'01/3

'02/3

'03/3

'04/3

2001/3

2002/3

2003/3

2004/3

-

5.06

12.00

16.13

18.56

Shareholders’ equity ratio (%)

16.70

7.73

12.95

19.29

23.76

97.25

98.39

103.52

87.21

78.30

Current ratio (%)

79.84

76.54

82.99

87.59

77.96

-

1,333.70

518.85423.30367.89Fixed assets ratio (%)

446.81950.33522.66354.12294.33

Note: Since shareholders’ equity was negative for the period ended March 2003, the shareholders’ equity ratio and the fixed assets ratio are not published for the same period.

Efficiency
Total assets turnover

Fixed assets turnover

1.50 (times)

1.50 (times)

1.00

1.00

Tangible fixed assets turnover
2.00 (times)

Total assets turnover

Fixed assets turnover

1.00 (times)

Tangible fixed assets turnover

1.50 (times)

3.00 (times)

1.00

2.00

0.50

1.00

0.80

1.50

0.60
1.00
0.40

0.50

0.50

0.50
0

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

0

'04/3

0.20
'00/3

'01/3

'02/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

0

'04/3

'00/3

'01/3

'02/3

'03/3

'04/3

2000/3

2001/3

2002/3

2003/3

2004/3

2000/3

2001/3

2002/3

2003/3

2004/3

Total assets turnover (times)

0.60

0.54

0.82

0.91

1.02

Total assets turnover (times)

0.53

0.52

0.88

0.95

1.00

Fixed assets turnover (times)

0.92

0.84

1.27

1.40

1.50

Fixed assets turnover (times)

0.70

0.70

1.25

1.40

1.45

Tangible fixed assets turnover (times)

1.02

0.96

1.46

1.58

1.73

Tangible fixed assets turnover (times)

1.53

1.42

2.26

2.58

2.83

Note: The amount of total assets, fixed assets and tangible fixed assets are an average of the amount at the beginning and at the end of the year, respectively.

19

'03/3

Note) The amount of total assets, fixed assets and tangible fixed assets are an average of the amount at the beginning and at the end of the year, respectively.

20

Major Management Indices

Consolidated

Non-consolidated

Productivity
Net sales per employee

Operating income per employee

90.00 (¥ million)

60.00

Number of employees

10.00 (¥ million)

6,000 (persons)

8.00

5,000

Net sales per employee
120.00 (¥ million)

15.00 (¥ million)

80.00

10.00

40.00

5.00

Number of employees

4,000
3,000

4,000

6.00

5,000 (persons)Operating income per employee

2,000

3,000
4.00

30.00

0

'00/3

'01/3

'02/3

'03/3

'04/3

1,000

2,000

0

2.00

1,000

0

0

'00/3

'01/3

'02/3

'03/3

'04/3

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

'04/3

2000/3

2001/3

2002/3

2003/3

2004/3

70.99

56.28

74.65

83.01

83.05

Net sales per employee (¥ million)

Net sales per employee (¥ million)

0

'00/3

'01/3

'02/3

'03/3

'00/3

'01/3

'02/3

'03/3

'04/3

'04/3

2000/3

2001/3

2002/3

2003/3

2004/3

89.25

68.53

88.78

97.97

100.38Operating income per employee (¥ million)

5.80

4.93

8.24

9.67

9.58

Operating income per employee (¥ million)

8.31

6.40

10.27

11.70

11.76

Number of employees (persons)

2,951

3,693

4,228

4,385

5,702

Number of employees (persons)

2,281

3,003

3,520

3,661

4,572

Note: Net sales per employee and operating income per employee are calculated using the average number of employees during the year.

Note: Net sales per employee and operating income per employee are calculated using average number of employees during the year.

Investment indices
ROE

ROA

80.00（％）
60.00

ROE

10.00（％）

50.00（％）

8.00

40.00

6.00

30.00

4.00

20.00

2.00

10.00

ROA
12.00（％）

8.00

40.00
20.00
0

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

0

'04/3

4.00

'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

'04/3

2000/3

2001/3

2002/3

2003/3

2004/3

2000/3

2001/3

2002/3

2003/3

2004/3

ROE (%)

-

-

60.38

34.12

26.80

ROE (%)

4.59

-

46.16

39.38

29.23

ROA (%)

3.52

3.87

9.00

8.59

9.28

ROA (%)

4.12

4.35

9.32

10.18

10.66

Note 1: The amount of total assets and shareholders’ equity are an average of the amount at the beginning and at the end of the year respectively.
Note 2: Since shareholders’ equity was negative for the period ended March 2000, the ROE is not published for the period March 2000 and 2001.

Note 1: The amount of total assets and shareholders’ equity are an average of the amount at the beginning and at the end of the year respectively.
Note 2: Since a net loss was accounted for in the period ended March 2001, the ROE is not published.

Consolidated

Cash flows
Cash flows

Depreciation expense

40,000 (¥ million)

6,000 (¥ million)

30,0005,000

Shareholders’ equity per share

15,000Net income per share

Shares outstanding at the end of fiscal year

600 (¥)

400 (¥)

150,000 (thousand shares)

300

200

100,000

00

50,0004,000

20,00010,0003,000
10,000

2,000
5,000

0
-10,000

Per share data

Capital investment
20,000 (¥ million)

1,000
'00/3

'01/3

'02/3

'03/3

'04/3

0

'00/3

'01/3

'02/3

'03/3

0

'04/3

'00/3

'01/3

'02/3

'03/3

'04/3
-300

'00/3

'01/3

'02/3

'03/3

'04/3

-200

'00/3

'01/3

'02/3

'03/3

0

'04/3

'00/3

'01/3

'02/3

'03/3

'04/3

2000/3

2001/3

2002/3

2003/3

2004/3

Cash flows (¥ million)-5,98736,754

23,31823,48822,160Depreciation expense (¥ million)

4,816

3,911

4,555

4,707

5,251

Shareholders’ equity per share (¥)

Capital investment (¥ million)

7,570

5,239

10,02019,023

12,715

Net income per share (¥)-155.51307.86155.12147.36136.80Shares outstanding at the end of fiscal year (thousand shares)

105,622

109,533

123,303138,821

138,984

Note: Cash flows = Net income + Depreciation expense - Dividends - Directors’ bonuses

2000/3

2001/3

2002/3

2003/3

2004/3-119.08

158.73363.00470.44550.12

Note 1: Since shareholders’ equity for the period ended March 2000 was negative, the shareholders’ equity per share is also listed as a negative number.
Note 2: Since a net loss was booked for the period ended March 2000, net income per share is also listed as a negative number.

21

22

Balance Sheets

Consolidated

Non-consolidated

Consolidated

Non-consolidated(Unit : ¥ million)(Unit : ¥ million)

2002/3
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable for complete work
Operating loans
Marketable securities
Real estate for sale / real estate in process for sale
Payment for incomplete work
Supplies
Advance payment
Other inventories
Deferred income taxes
Accounts receivable
Other
Allowance for doubtful accounts
Fixed assets
Tangible fixed assets
Buildings and structures
Land
Construction in process
Other
Intangible fixed assets
Investments and other assets
Investments in marketable securities
Affiliate stocks
Affiliate bonds
Long-term loans receivable
Long-term loans to employees
Long-term loans to affiliates
Fixed operating receivables
Long-term advances payment
Deferred income taxes
Other
Allowance for doubtful accounts
Deferred assets
Organization cost
Bonds issuance expense

Total assets

23

2003/3

2004/3

2002/3

2003/3

2004/3

140,701
40,021

128,351
41,367130,21030,735

109,775
39,056

125,505
39,219126,804
28,16813,99829,241

31,69913,62828,89831,03823,548
11

20,137
19

16,737
164

23,548
11

20,137
19

16,737
124

33,356
4,856

-

4,005
4,856

-

3,716

133
3,747

133
3,747

-

-

-

272

295

552

487

480

746

3,606
-

7,728
-

13,518
-

3,805
-

6,064
19,8209,493
24,0173,805
17,811

6,063
19,703

9,493
24,016

3,716

22,3059,208

14,358

836

1,408

884

-1,690-1,705△1,623-1,667-1,686△1,612

232,235

276,450

281,283

230,408

270,714

296,117

206,51076,933

243,644
96,445

238,655
114,790

128,622
31,896

143,544
38,859147,492
41,314

98,184105,127

106,458

94,836

101,493102,710

29,633
1,758

39,9772,093

14,053
3,353

893
993

2,026
1,163

1,707
1,759

551
25,173619
32,186570
42,056539
101,246609
126,560

563
148,061

4,254
-

6,436
-

7,697
-

4,249
68,161

6,431
68,161

4,591
70,061

-

-

-

-

-

1,200

4,363
-

2,567
-

2,444
-

1,853
2

531
6

735
4

18,644

17,10015,821

17,924
18,64434,70017,10045,886
15,821

11,565

18,525

26,1197,277

14,322

22,532

97
3,017

246
3,246

1,330
3,560

97
2,933

246
3,272

1,330
3,508

-16,77117-15,93651△14,918-18,212-△17,612431-19,900
-

17

51

39

-

-

-

-

-

392

-

-

392

372,954404,853

411,925

340,183

396,220392

423,314

Liabilities
Current liabilities
Notes and accounts payable for completed work
Short-term debt
Long-term debt to be paid within one year
Bonds payable to be repaid within one year
Accounts payable
Accrued expenses
Accrued income taxes
Advances received
Payment received for uncompleted work
Deposits received
Allowance for employees’ bonuses
Other
Long-term liabilities
Bonds
Directors' long-term debt
Affiliates' long-term debt
Long-term debt
Reserve for retirement allowance
Deposit guarantee
Long-term accounts payable
Other
Total liabilities
Minority interests
Minority interests
Shareholders’ equity
Common stock
Additional paid-in capital
DeficitDifference from evaluation of marketable securities
Translation adjustment
Treasury stock
Common stock
Capital surplus
Earned surplus
Difference from evaluation of marketable securities
Translation adjustment
Treasury stock
Total shareholders’ equity
Total liability, minority interest and shareholders’ equity

2002/3

2003/3

2004/3

2002/3

2003/3

2004/3

135,91450,049147,164
59,771

166,278
72,921

132,266
49,829143,285
59,585

162,640
72,73248,80633,042

24,20334,221

18,568

8,459

-

-

1,435

14,311-

13,557-

14,815
1,435

8,335
890

9,677
59

10,572
52

6,524
149

7,613
45

8,557
41

60

13,323

16,75558

13,31916,7508,029
14,806

14,232
11,602

21,69910,4187,940
14,806

14,09011,602

21,657
10,418

1,311

1,423

1,689

2,759
1,311

2,688
1,423

3,832
1,689

3,625

4,030

6,531

352

787

2,249

187,380-

174,864-

151,505
14,197

163,833-

176,489-

160,066
14,197

-

-

-

3,950
8,187

25,532

22,154148,452

150,004

122,829

131,638

132,355

109,493997
18,955

1,429
17,183

1,958
12,276987
18,955

1,417
17,183

1,944
12,276

18,934
40

6,201
45

201
42

114
-

-

-

323,294

322,028

317,784

296,099

319,774

322,707

4,900

17,516

17,683---33,274--33,274--32,526--32,526--

21,254-296--

21,574
-296

-

-

552
-42

-

-

-42

-

-

-

37,50015,40737,50015,495-37,50015,37537,50015,375-

19,519-106

36,428291-

23,733-106

47,525291--6,649-12,964---

44,759-364
65,307-293
76,45844,083-56
76,466-85
100,607372,954404,853

411,925

340,183

396,220423,31424

Income Statements

Statements of Cash flows
Consolidated

Non-consolidated

Consolidated(Unit : ¥ million)

2002/3
Ordinary income and loss
Net sales
Sales from completed work
Rent and management income
Income from loan receivables
Real estate dealings
Other sales
Sales from Contracting Division
Sales from Leasing Division
Sale of Other Division
Cost of sales
Cost of completed work
Cost of leasing and management operations
Cost of loan receivables
Cost of real estate dealing
Other costs
Cost of Contracting Division
Cost of Leasing Division
Cost of Other Division
Gross profit
Selling, general and administrative expenses
Advertise expense
Operating fee
Provision from allowance for doubtful accounts
Directors’ benefits
Salaries and bonuses
Provision for accrued bonuses
Provision for retirement benefits
Welfare expenses
Fees payable
Rents
Depreciation expense
Taxes and levy
Amortization of consolidation account
Other
Operating income
Non-operating income and loss
Non-operating income
Interest income
Dividend income
Gain on sales of marketable securities
Equity method gains
Income from cancellation of resort memberships
Income from cancellation of construction contracts
Foreign exchange gain
Loss from valuation of interest swap
Other
Non-operating expenses
Interest expense
Bond’s interest
Amortization of bond expenses
Foreign exchange loss
Other
Ordinary income
Extraordinary income and losses
Extraordinary income
Gain on sales of fixed assets
Gain on sales of investment in marketable securities
Reversal of allowance for doubtful accounts
Gain from forgiveness of debt
Extraordinary losses
Loss on sales of fixed assets
Loss on disposal of fixed assets
Loss from valuation of investment in marketable securities
Provision for allowance for doubtful accounts
Transitional obligations under new accounting standard for employees’ retirement benefits
Directors’ retirement benefit
Other
Net income before taxes and adjustments
Corporate, inhabitant and enterprise taxes-current
Income taxes-correction
Income taxes-deferred
Minority interest in earnings of consolidated subsidiaries
Net income
Retained earnings brought forward
Unappropriated retained earnings (Unappropriated earnings and loss)

25

2003/3

2004/3

2002/3

2003/3

2004/3295,683
154,432
126,772
1,069
1,670
11,738220,806
109,324
100,148
621
1,311
9,399
74,87642,204
8,293
922
48
376
13,784
980
312
2,504
1,593
945
253
12,18932,672357,496
190,216
159,893
7,386
268,856
130,049
130,950
7,856
88,63946,989
7,863
1,358
210
375
15,735
1,029
375
2,520
1,910
1,133
14,476
41,650418,873
225,011
185,5138,349
313,084
147,266
154,080
11,737
105,788
57,471
8,004
1,555
118
358
19,485
1,105
487
3,031
2,407
1,999
18,91848,317

289,562
154,432
126,785
1,069
1,670
5,604
214,966
109,324
100,337
621
1,311
3,370
74,59641,082
7,446
2,439
48
365
13,207
980
302
2,727
1,979
2,489
805
806
7,482
33,514

351,775
190,216
159,925
1,633
264,037
130,049
131,934
2,053
87,73745,720
7,736
2,859
210
365
15,063
1,029
373
3,031
2,724
2,514
1,082
940
7,786
42,017413,239
225,011
185,524
2,704
308,734
147,266
156,0365,430
104,505
56,075
7,999
3,492
118
347
18,595
1,105
485
3,474
4,171
3,061
1,501
1,769
9,952
48,429

3,977
48
0
380
72
74
3,232
167
4,393
3,937
456
32,255

973
73
27
351
199
86
235
9,181
4,457
4,207
517
33,442

1,521
52
299
321
26
121
268
431
11,932
5,113
6,405
413
37,905

913
43
0
74
72
575
146
3,814
3,300
514
30,613

671
72
130
27
199
86
156
5,172
3,927
743
501
37,516

1,306
53
336
299
26
121
268
200
6,026
4,454
82
196
1,084
208
43,710

5,055
55
5,000
5,806
18
1,657
2,675
1,298
157
31,505124
190
12,426
18,763
-

215
85
35
94
3,527
84
251
1,207
1,667
157
159
30,12913,231-2,389505
18,781
-

1,479
22
1,439
17
2,733
17
762
30
1,393
157
300
72
36,651
21,491△4,713873
18,999
-

5,054
54
5,000
7,098
18
1,623
2,385
2,914
157
28,568119
190
12,426
15,83137,405-21,574

209
85
30
94
3,159
84
240
1,207
1,467
157
1
34,567
13,223-2,38923,73323,733(Unit : ¥ million)

1,461
22
1,439
2,532
16
761
30
1,193
157
300
72
42,63921,468△4,71325,88321,64247,525

2002/3

2003/3

2004/3

Cash flow from operating activities
Net income before taxes and adjustments
Depreciation expense
Amortization of consolidation account
Increase (Decrease) in allowance for doubtful accounts
Interest and dividends income
Interest expense
Gain from forgiveness of debt
Foreign exchange loss (gain)
Equity method gains
Loss on sales of tangible fixed assets
Loss on disposal of tangible fixed assets
Gain on sales of investment in marketable securities
Loss from valuation of investment in marketable securities
Loss on sales of marketable securities
Decrease (Increase) in trade accounts receivable
Decrease (Increase) in inventories
Decrease (Increase) in long-term advances payable
Increase (Decrease) in notes and accounts payable
Increase (Decrease) in advances received
Increase (Decrease) in deposit guarantee
Increase (Decrease) in accrued consumption tax
Other
SubtotalInterest and dividends received
Interest paid
Corporate taxes paid
Net cash and cash equivalents provided by operating activities

31,505
4,555
253
1,315
-76
4,559
-5,000-3,232
-380
18
1,657
2,675
-0
-4,795-1,019-8,26916,246
1,743
959
1,889
807
45,411
51-11,205-1,90932,34830,129
4,707
1,495
-78
4,971
-94
4,207
-351
84
251
1,207
-27
-12,576
1,398-14,551
11,005
2,946-1,677-257
1,372
33,909332-11,446552
23,34736,651
5,251
1,252
△68
5,579
6,405
△321
17
762
△1,43930△299△3,684△449△14,358
13,514
6,383△3,348160
2,975
55,01472△5,530△18,064
31,492

Cash flow from investing activities
Payment for purchase of tangible fixed assets
Proceeds from sales of tangible fixed assets
Commision from disposal and sales of fixed assets
Payment for acquisition of affiliate stocks
Payment for acquisition of affiliate bonds
Payment for purchase of investment in marketable securities
Proceeds from sales of investment in marketable securities
Payment for loans receivable
Repayment of loans receivable
Other
Net cash and cash equivalents used in investing activities-10,0207-6-3,441117-2,663
2,265-664-14,406-19,023204-56-3,632378-1,634
3,234-481-21,011△12,715

Cash flow from financing activities
Proceeds from short-term debt
Repayment of short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Repayment of account for long-term projects
Proceeds from issuance of stock
Proceeds from issuance of privately placed bonds
Payment for redemptions of privately placed bonds
Proceeds from minority shareholders payment
Dividends paid to minority shareholders
Payment for purchase of treasury stock
Dividend paid for shareholders
Net cash and cash equivalents provided by financing activities

2,000-2,274
3,970-11,115
-272
5,000
-100
-18
-2,809563-1,673
14,500-27,649-7,3398,452
12,500-350-13-1,010Effect exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year110
15,242
24,65939,901-9
1,316
39,901
41,21756△52△1,800△1,200△1,0994,949△1,4991,487△658△12,532

28,754△36,357

18,908△47,325△6,325

15,761
△717
△706
△29
△2,091△30,129686△10,482

41,21730,73526