Annual Report 2011
For the fiscal year ended March 31, 2011

Leopalace21 Corporation

Guide to this Report

To those who are new to our businessTo those who would like detailed
information about usContents

Basic
Information

Detailed
Information

Ten-Year Consolidated Financial Highlights

2

Changes in our Businesses and Business Activities

4

Services and Products Ahead of Their Time

5

Business Model Transitions and Future Directions

6

Our Characteristics and Competitiveness

8

Interview with the President

10

New Strategies

14

The New Medium-term Management Plan and Review of its First Fiscal Year

14

Actions for Fiscal 201116

A Management Structure to Support Sustainable Business Activities 20
A Management Structure Built on CSR

20Contributions to Society

22

Crisis Management and Risk Information

24

Financial Section

26

Corporate Information70Ten-Year Consolidated Financial Highlights(Millions of yen/Thousands of U.S. dollars)

For the years ended March 31

For the year:

Net sales
Apartment Construction Subcontracting
Leasing
Hotel Resort
Residential Sales
OthersCost of sales
Selling, general and administrative expenses
Operating income (loss)
EBITDANet income (loss)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2011

¥297,584
150,843
136,924
7,043
−
2,775
220,80742,20334,575
39,131
19,902¥360,369
190,217
162,766
5,928
−
1,458
268,857
46,98744,52649,233
20,464¥422,224
225,011
188,864
5,759
−
2,590
313,085
57,46851,671
56,922
20,960¥476,267
248,033
216,591
7,282
140
4,221
357,546
64,03854,68260,53833,262¥465,387
195,202249,696
8,340
1,745
10,404353,928
70,684
40,77545,340（16,582）¥631,609
316,117
277,163
7,140
14,15017,037474,71380,88876,00780,56737,358¥672,973
327,541
302,731
6,072
11,281
25,349511,054
90,517
71,40376,566342¥733,235
359,155
334,5615,611
11,46922,440589,834
93,24550,15755,9399,952¥620,376
237,062
342,316
6,734
24,644
9,620
570,749
79,355（29,728）（23,432）（79,076）¥484,391$5,825,507

107,821

1,296,705

356,606

4,288,709¥374,397
46,078
197,258¥410,340
68,309183,047¥421,164
81,420162,666¥453,434
149,798
108,786¥412,804
133,62264,513¥454,820
185,785
53,160¥493,956
170,156
49,711¥467,300
146,443
44,189¥396,512
70,97961,318¥298,274¥ 373.69
164.53−¥ 492.06
160.56
15.00¥ 585.82
150.91
15.00¥ 941.06
220.7915.00¥ 839.44（104.17）
15.00¥1,054.99
234.6850.00¥1,036.43
2.15
80.00

¥ 967.40
63.54
30.00

¥ 466.76（521.91）−¥ 195.91

12.3
62.5
5.5
−
4.3
4,228

16.7
35.8
5.2
9.3
2.7
4,385

19.3
28.0
5.0
9.9
2.0
5,702

33.0
28.8
7.6
6.8
0.7
6,457

32.4
（11.7）
（3.8）
−
0.5
6,868

37.0
24.8
8.6
21.3
0.3
7,409

33.4
0.2
0.1
3,720.9
0.3
8,678

31.3
6.4
2.1
47.2
0.3
9,926

17.9
（72.8）（18.3）
−
0.9
8,582

11.1

6,492

78,073

4,689
8,783

56,391
105,629

448,392

5,392,571

59,606

716,846（23,607）（283,910）（17,156）（206,323）（40,890）（491,755）

At year-end:

Total assets
Net assets
Interest-bearing debt

$3,587,181

33,041

397,366

43,859527,465

Amounts per share: (Yen/U.S. dollars)

Net assets
Net income (loss)
Cash dividends$（261.03）

2.36（3.14）−

Ratio:

Equity ratio (%)
Return on equity (ROE) (%)
Return on assets (ROA) (%)
Payout ratio (%)
Debt/equity ratio
Number of employees（78.7）（11.8）−
1.3
7,114

20,0003

200,00000

100,000(29,728)002/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010- 40,000

60,000(4.8) (4.9)

Operating Income (Loss)

40,000-6

146,443

185,785

20,000(23,607)

02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

133,622467,300

80,000200,000

100,000

149,798

100,000

33,041300,000

34,575120,000

70,9796

40,000140,000

81,4206.8

160,000

68,30950,157493,956

400,000

454,8209

180,000

298,274

40,77571,403
10.6

412,804

500,000

453,434

12

76,00712.0

54,682
51,6718.8
44,526(Millions of yen)
200,000

421,164

11.5(Millions of yen)
600,000

396,51260,000

12.2

（%）
15

410,340

12.4

11.6

Net Assets

374,397

620,376484,391

465,387

80,000Total Assets

46,078300,000

360,369

400,000

297,584

500,000

422,224600,000

476,267700,000

733,235(Millions of yen)
100,000

672,973

Operating Income (Loss) / Operating Margin(Millions of yen)
800,000
631,609

Net Sales

170,156(Notes)1. U.S. dollar amounts are translated from yen at the rate of ¥83.15 = US$1, the approximate rate prevailing at March 31, 2011.
2. The Residential Sales Business is classified separately from the Other Businesses in the fiscal year ended March 31, 2009. Accordingly, the numbers for the fiscal years ended March 31,
2005, 2006, 2007, and 2008 were reclassified appropriately.
3. The amounts of net assets for the fiscal years ended March 31, 2004, 2005, and 2006 represent the value of total shareholders’ equity and do not include minority interests.
4. Net loss for the fiscal year ended March 31, 2006, is the result of impairment losses posted after adoption of new accounting standards for impairment of property, plant and equipment.
5. EBITDA = Operating income + depreciation
6. Return on assets (ROA) = Net income/total assets x 100
7. Debt/equity ratio = Interest-bearing debt/(net assets – minority interests)

0

02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

002/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

Operating MarginChanges in Our Businesses and Business Activities

Services and Products Ahead of Their Time

● Providing one-stop services in all areas of real estate● Developing advanced services at Leopalace21

Leopalace21’s core business operations are apartment construction subcontracting and leasing of apartments, the two of which we have

Leopalace21 is always engaged in businesses at the forefront of the real estate industry. In leased apartments, two-year agreements are thenorm for rent. However, some tenants have short-term needs for units, such as during business travel or during periods of training. In response,from 1999 we began offering monthly agreements. These furnished units boast furniture and home appliances and are available from periodsof 30 days or more, offering a service that lets tenants move in with nothing more than a single suitcase.
In recent years we have also been consistently enhancing the added value of our apartments by installing photovoltaic power generation systems and security systems and taking measures to support the safety and security of tenants.

fused to form a unique business model. In our Apartment Construction Subcontracting Business, we construct apartments as a means ofeffectively using land and creating revenue opportunities for landowners. In our Leasing Business, we solicit tenants and perform generalmanagement and superintendence of apartments. In this manner, through our provision of one-stop services in all areas of real estate, we arebuilding a business model that creates synergies between both of our core businesses. Looking into the future, we will strengthen our Leasing
Business to build a “stock” focused business model that reinforces revenue opportunities from our stock of existing apartments.

Consolidated Net Sales by Business Segment

Consolidated Net Sales by Business for FY2010(Fiscal Year Ended March 31, 2011)
Hotel Resort Business 1％(Millions of yen)
800,000

Rental agreement

700,000

Washing machine

672,973
631,609

Others 2％

Bathroom dryer

Normal two-year agreement733,235

Residential Sales Business 1％

Microwave oven620,376

600,000
484,391476,267
465,387

500,000

Bed

422,224

Apartment Construction
Subcontracting Business

400,000

22％

300,000

Flat screen TV

360,369
297,584

200,000

Monthly agreement
Available for short-term use, starting from 30 days

100,000

Leasing Business

74％

0

03/3

04/3

05/3

06/3

07/3

08/3

09/3

10/3

11/3

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008FY2009FY2010150,843 190,217 225,011 248,033 195,202 316,117 327,541 359,155 237,062 107,821

Leasing Business

136,924 162,766 188,864 216,591 249,696 277,163 302,731 334,561 342,316 356,606
7,043

Residential Sales
Business
OthersHeater/AC unit

Furnished rooms
with home appliances
Fully equipped with daily lifestyle necessities

02/3

Apartment Construction
Subcontracting Business

Hotel Resort Business

Table and chair set

5,928

5,759

7,282

8,340

7,140

6,072

5,611

6,734

6,492

−

−

−

140

1,745

14,15011,281

11,46924,644

4,689

2,775

1,458

2,590

4,221

10,404

17,03725,34922,440

9,620

8,783

to allow residency with a single suitcase● Creating compelling products with an emphasis on functionality and prospective tenants
To promote orders in our Apartment Construction Subcontracting Business, we undertake strategic development of new products with high added
value. Moreover, to achieve merit for both tenants and landowners, we categorize products by factors such as room area, as well as by external
appearances matched to region, location, and target occupant. We also put forth products that excel in seismic resistance and other areas offunctionality. Below is a selection of our broad product lineup.

* F rom fiscal 2008 (the fiscal year ended March 31, 2009), we have split off ourResidential Sales Business from the Other Businesses categor y and recorded it
separately. Accordingly, values equating to that business from fiscal 2004 (the fiscal
year ended March 31, 2005) to fiscal 2007 (the fiscal year ended March 31, 2008)
are calculated separately as reference values.

Number of Apartment Units Under Management

Number of Owners(Units)(Persons)
30,000600,000

571,656
551,773
506,742

27,891
26,58822,568 22,627

442,025

800,000

388,500

400,000

700,000

344,045
300,000

500,000 9,128

216,463

Family-type units in maisonette styleequipped with a loft that makes
use of space under the roof.

Lavo cerna
Introduced in 2008

Lavo familia
Introduced in 2008

Leffect
Introduced in 2009

VERDURE
Introduced in 2010

Maisonette-type unit aimed at the
young family demographic.

Structure adapted to narrow urban areas that until
now were difficult to use.

The Company’s first urban-styleleased designer condominiums,
targeting exclusive metropolitan
mid- to high-rise zones and offering up to ten stories.

17,107

11,5945,000
300,000

200,000

Spacious rooms of 40m2 and up,
targeting the DINKS demographic.

400,000

100,000

02/3

Urban-style four-story structure targeting areas with high occupancy
rates.

10,000200,000 181,484

0

LEO GRANDIR
Introduced in 2007

14,21815,000600,000

259,221

VILLA SCELTE
Introduced in 2006

20,25820,000304,111

VILLA SUPERIO
Introduced in 2006

Studio-type furnished units withhome appliances for easy living,with short-term residency potential.

25,11425,000500,000

CON GRAZIAIntroduced in 2000

03/3

04/3

05/3

06/3

07/3

08/3

09/3

10/3

11/3

0

100,000 02/12
0

03/12

04/12

05/12

06/12

07/12

08/3

09/3

10/3

11/3

Partial leased residence that ensures the independence of theleased portion and the owner’s
residential portion.

Business Model Transitions and Future Directions
Leopalace21 was founded as a real estate agency. From the early 1980s we began sales of apartments, and expanded with each passing
year through a cycle of bank borrowing → land purchasing → apartment construction → apartment sales. However, that cycle collapsed in

the 1990s along with the real estate bubble, leaving our built-for-sale apartment business stranded. We thus transitioned to a business modelin which we take on apartment construction subcontracting from landowners, without purchasing land ourselves.
From here out, we will fortify our Leasing Business through measures that enhance the value of existing apartments (stock). In this way, we
will balance our business earnings, transition to a stable profit structure, and aim for the effective development of our Apartment Construction

Boosting earnings from stock

Subcontracting (Subcontracting) and Leasing Businesses.

Core business modelPursuing synergies from both our Apartment Construction
Subcontracting and Leasing Businesses
Introduced apartment security systems

2011

Newlywed tenants
desire family-typeapartment options

Overview

2010 –

Tenants desire safe,
female-friendly rooms

Launched our high valueadded brand LEONEXT

Launched Monthly Leopalace (rooms rented
monthly with furniture and home appliances)

2002
1999

Tenants desire rooms
suited for temporary stays

Started recruiting tenants formembership-based occupancy system
Established Leasing Division; launched fulloperation of real estate leasing business
Created and launched industry’s first master leasesystem (Leopalace21 leases the entire building
from the owner after apartment construction)
Full-fledged launch of Leopalace21
urban apartments

Launchedbuilt-for-saleTenants want a comfortableapartment
urban lifestylebusiness

1988
1986

2011

Owners desire eco-friendly
apartments

Full-fledged implementation of photovoltaic
power generation systems
Launched “owner-managed” buildings

1995
1996

Introduced 10-year master leases(renewable biennially)
Introduced master leases
up to 30 years
Owners desire secure,long-term apartment
management

1985 –1993

Height of ourbuilt-for-saleapartment business

1985

1983

Apartment Construction
Subcontracting
Business

2010

Developed our business model seeking
synergies between
Subcontracting andLeasing Businesses

Transitioned from realestate investment toproperty use andmanagement

Launched built-for-sale home business6

1997–2009

1994 –1996

Tenants desire lower
first-month move-in fees

Owners want to lease out
apartments but avoid theburden of management

2009

Strengthening
Leasing Business byusing assets for income

Business

Launched our full line-up
one-stop strategy for tenants

Focused on Leasing
Business

2008

Launched LEONET offering
a wide variety of TV programs

Leasing

Needs of the tenant base1973 –1984

Needs of the owner baseBusiness based on realestate brokering

1981

1973 Launched our real estate brokering business7

Our Characteristics and Competitiveness● Our business model● Market trends are in our favor
Stock of
570 thousand units

Single-person households are on the rise in Japan’s housing market. In such a market environment, the demand for studio-type housing for single
persons is expected to continue over the long term. Looking ahead, we will strive to supply high-quality housing that meets such societal needs.

571,656(As of end of FY2010)

Leasing

Master leasing

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11/3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3 /3

Property
ownersTenants
Leasing Business

Apartment Construction
Subcontracting Business

Earnings from stock

Earnings from flow

Rental income● Implementing a 30-year master lease system

Leasing of Leopalace21’s approximately 570 thousand managed
properties is available through the Company’s directly-managed
Leopalace Center offices (156 locations nationwide as of the endof March 2011) as well as the Leopalace Partners (franchise sales
offices) launched in June 2010. Moreover, our online site allows onestop handling of all procedures, from nationwide search for properties
to application and agreement, from computers and mobile phones.
These networks also cover the needs of business, allowing Leopalace21 to steadily build a record of achievement in corporate housing
and dormitories.

In its Apartment Construction Subcontracting Business, Leopalace21
implemented an industry-leading master lease system, under which
we promise up to 30600000
years of stable management that provides asolid sense of security to subleasing property owners. Against thebackground of this strength, the properties that we build as subcon500000
tractor and master lease from owners extend from Hokkaido in thenorth to Okinawa in the south, exceeding 570 thousand units as of
400000the end of March 2011.
No other single company constructs andmanages this many properties on its own.
300000200000● Our business situation

In addition to general leasing aimed at long-term
residency, Leopalace21 has opened a new market differing from conventional leasing through theintroduction of monthly leasing for short-term or
temporary residence. Our monthly agreements areused for a variety of residential purposes, including business travel, dormitories, and training.

Demand data: Estimation for future number of general households
by family category

With studio-type housing as one of our coreproducts, forecasting the future of single-personhouseholds holds important implications for us.
According to estimates by the National Instituteof Population and Social Security Research, single-person households are expected to steadily
increase through 2030, both in number and inshare of all households. As such, the market forour core studio-type housing products is expected
to continue growing in the future.

(Thousands of households)
60,00050,00040,00030,00020,00010,0000

New supply of stock● Nationwide network of 570 thousand units

Providing monthly agreements for
short-term tenants

Single-person households are on
the rise

Usage data: Breakdown of uses of month-to-monthleases (As of March 31, 2011)
100000Student dormitories 2.94％

Other 5.35％

Training 3.47％
Company
dormitories

General38.31％

14.96％

Business trips

Other (breakdown):
0 •Temporary stay between moves•Job assignment away from home
•Temporary stay during home renovation/rebuilding•Temporary use (for space) and other•Use to mitigate excessively long commute•Temporary stay to visit relation on assignment•Temporary stay to visit hospitalized relation•Study•Tourism•Other

34.97％

46,78250,28750,60050,441

49,83748,802

6,212

5,443

5,951

5,771

5,655

5,557

4,112

4,514

4,824

5,013

5,072

14,646

14,03013,256

12,394

11,524

10,703

10,045

9,762

9,391

6,539
3,578
14,919Other

49,063

14,457

12,911（27.6%）（29.5%）

2000

2005

Married couples
with child (children)
Married couples
Singles(Source: Excerpted fromthe Future Population
Projections as of March
18,237
17,922
17,334
16,5632008 from the National
15,707（37.4%）（36.0%）（34.4%）（32.7%）（31.2%）
Institute of Populationand Social Security
2010 (projected) 2015 (projected) 2020 (projected) 2025 (projected) 2030 (projected) Research.)
10,186

10,085

9,637

8,835

5,027

Single parents
with child (children)

Single-person households in rental
housing are increasing

Demand data: The number of households residing in rental housing andour share of the market (single-person and two-person households)

Along with the number and share of single-person households, the demand for rental housing by those households
is also an indicator of importance to Leopalace21. According to the Housing and Land Survey by the Ministryof Internal Affairs and Communications, the number ofhouseholds living in rental housing increased during thedecade up through 2008, with the single-person and twoperson households targeted by the Company expanding
steadily in both number and in share of all households.
Also during the decade, our share of managed units
among single-person and two-person households has
also been on the rise. The increase in these households,
in both number and in share of all households, is forecasted to continue from here out.

(Thousands of households)
20,000Studio-type housing, and the Company’s share, are on the rise
In the decade up through 2008, the total number (stock) of studio-type housing units suppliedin Japan was on an increasing trend. According to statistics published every five years by the
Ministry of Internal Affairs and Communications,as of October 1, 2008, the supply of studio-type
housing was 4,163 thousand units, an increaseof 25.8% over 10 years. Among this supply ofunits, the Company’s share increased to 11.7%
during that period.

(%)
8

60000
15,000
50000

779
2,153

40000

2,591

10,000

661
1,913

2,447

2,591

3,927

3,925

3,695

30000

569
1,672

3.7%

6

7,511

10000

9,155

8,077

0

1998/10

2003/10

2008/10

Households of two persons
Our market share(Number of managed units /single-person + two-person households)

2

1.0%

0

Households of three persons
Households of single persons

4

2.0%

5,000
20000

Households of five or more persons
Households of four persons

0(Source: Excerpted from the Housing andLand Survey for 1998, 2003, 2008 by the
Ministry of Internal Affairs and Communications; as well as Company data.)

Stock data: Number of studio-type units, number and shares of our units(Thousands of units)
5,000

(%)
15

4,000

3,000

110.3

3,309

243.0

485.4

3,498

11.7%

0

12

6

3

3.3%

1998/10

Our share

9

6.9%

2,000

1,000

Our stock
Studio-type housing stock*

4,163

2003/10

2008/100(Source: Excerpted from the Housing andLand Survey for 2008—conducted October 1, 2008—by the Ministry of Internal
Affairs and Communications, as well as
Company data.)* Studio-type housing stock: Number ofregular households in studio-type
residence(Source: Company data)
20000

Steady increase in monthly agreement tenants
Since the start of monthly agreements in fiscal
1999 (the fiscal year ended March 31, 2000),
the rising number of units leased through the service shows how it effectively fills a market need.
By accurately meeting the changing needs of themarketplace, our monthly service has maintained
a high level of agreements in excess of 100 thousand units since fiscal 2004 (the fiscal year ended
March 31, 2005).

(Thousands of units)
500
413.5

400

371.7
326.9

300

277.9
239.8

200
100

146.4
32.5
113.9

0



● The Company’s position  Usage data: Number of leased units by agreement type

01/3

167.6
57.8
109.8
02/3

194.4

89.7

03/3

150.1
04/3

106.8

461.5
104.2

05/3

Rental agreements

109.7

103.5

174.4

113.8

Monthly agreements

117.3

74.7
119.7

108.0

442.3

478.4

217.2

06/3

254.4

07/3

305.5

08/3

335.6

09/3

357.3

10/3

364.6

11/3

(Source: Company data)

Positioning in the housing complex market
15000

Within the housing complex market, the Company
specializes in leasing and has established a busi10000
ness model providing comprehensive services fromapartment construction to general management andsuperintendence. Even within an industry supporting
5000
similar business models, we have successfully differentiated ourselves by providing a large number ofshort-stay room types, as exemplified by our monthly0
agreements aimed at single tenants. Taking advantage of our characteristics and competitiveness andsolidly positioning ourselves in the marketplace, we
aim to achieve further growth in the future.

Room type

Business modelStudio units

Comprehensive service provision

Type ofprovision

Leopalace21
From construction
subcontracting
to management
services

Leopalace21
Strong in short-termstays as exemplified byour monthly agreements,
primarily in 30m2 units
targeting single-person
residency

Long-term

Length ofstay
Short-term

Leasing

Built-for-sale8
Family-type units
Specialization

6

4



Interview with the President

Launching strategies toenhance earnings from stock
to re-vitalize synergies in our business model
Eisei Miyama
President and CEO

Start of our Medium-termManagement Planin our switch to handling apartment agreements for individuals
through our newly implemented franchising program instead of

Reduction of leasing costs and improvement of services

fiscal 2011.

our directly managed sales offices, and were forced to consid-

A: In accordance with our basic policies for fiscal 2011, we will

Leopalace21 will strengthen its efforts to reduce costs and im-

Q: Please relate your impressions looking back upon the fiscal

erably revise our number of apartment units supplied. As a re-undertake (1) Full-scale measures to enhance the value of

prove services. We will review our management work to makeyear ended March 31, 2011 (fiscal 2010), the first year ofsult, consolidated net sales were ¥484.4 billion (down 21.9%

properties; (2) Reduction of leasing costs and improvementtasks such as cleaning more efficient, while also optimizing rent

the Medium-term Management Plan.

year on year). We posted an operating loss of ¥23.6 billion.

of services; and (3) Strengthened tenant placement ability.

payments to owners. In addition, based upon discussions with

A: We embarked upon business restructuring under new basic

Our construction of a foundation for growth, however, ispolicies. I believe that we are steadily building a foundation

making progress in areas not seen in the performance num-for growth.

bers. The principles behind our business restructuring are re-owners we will continue our service agreements for broadband
Full-scale measures to enhance the value of properties

operations and our comprehensive furniture and home appliance maintenance service—action plans we instituted in fiscal

flected in new action plans, and I believe that all directors andFirst, we believe that enhancing the value of our properties is

In May 2010, we launched our new Medium-term Management

employees have come together to create a structure to tackle

a direct means of enhancing our earnings from stock. Toward

Plan. The purpose behind this was to rethink our ideal busi-

our difficulties. Results are already evident in some areas, andthat end, in fiscal 2011 we will undertake full-scale upgrades

ness model and enact a shift in policies. In our core Apartment

at the end of fiscal 2010 we recorded our highest ever number

by installing photovoltaic power generation systems and secu-

Construction Subcontracting Business and Leasing Business, weof corporate apartment unit agreements. In individual agree-rity systems.

had previously placed priority on new supply of apartments asments, too, we are enjoying robust growth in our number ofrooms were in short supply in some areas. However, demand

agreements with students.

2010.
Strengthened tenant placement ability
In addition to the above, we will reinforce our franchise sales

We expect that photovoltaic power generation systems will

offices, strengthen our handling of corporate demand, andcontribute to environmental conservation. Further, the electricity

build cooperative relationships with other companies. Thesefor rental housing hit a sharp temporary decline following thegenerated can be used in common services for tenants, whilemeasures aim to increase our points of contact for acquiring

collapse of Lehman Brothers. Apartment occupancy rates fell,

revenue from the sale of surplus electric power accrues entirely

tenants, helping us grow our number of lease agreements.

and it became difficult to extract synergies from our two core

Strategies for fiscal 2011

businesses.
For that reason, we adopted new basic policies aiming at

Q: Please discuss the basic policies for the fiscal year ending

to the apartment owner.

We previously handled apartment agreements for individu-

In security systems, we are partnering with SECOM CO.,als through our directly managed sales offices. However, as

LTD., and SOHGO SECURITY SERVICES CO., LTD., to provide

this alone is insufficient for increasing our number of tenants,

a secure home living environment for tenants, whether at home

we will reinforce our Leopalace Partners franchise sales offices.

ancing of earnings in both of the businesses, and subsequently

A: In order to strengthen emphasis on our Leasing Business, weor away. We are planning to introduce this service to all units,

At the same time, we will reduce our number of directly man-began restructuring. Specifically, we transformed our thinking

made “enhancing earnings from stock” our central business

which we believe is a landmark innovation for leased apart-aged sales offices as a cost-cutting measure.

from a “Product Out” approach prioritizing apartment construc-strategy for fiscal 2011.

ments. We think this will be especially appealing to women ten-

Additionally, we will strengthen our handling of corporate

ants, and expect that it will further improve occupancy rates.

demand. The number of units for corporate use among ourtransformation to a stable earnings structure through the bal-March 31, 2012 (fiscal 2011).

tion, to a “Market Out” approach focusing on market demand.

10

Q: Please concretely describe initiatives to be implemented in

In addition, we shifted emphasis from the new supply of apart-

Last year we changed our mindset from a Product Out to a

In addition, in partnership with JS Group Corporation we

managed properties reached a record high at the end of fiscal

ments to our Leasing Business, launching one initiative afterMarket Out business model. Further, in keeping with our policy

plan to undertake room and exterior appearance renovations

2010, surpassing 200 thousand units. At the time, that figure

another to secure earnings from our existing apartments (i.e.,of shifting focus to our Leasing Business, we believe that sellingfor buildings aged 15 years or older, starting from the second

represented a 35.4% share of our total units. These numbers

stock).

tenants on the value of our stock of existing apartments is a key

half of fiscal 2011.

showcase our strength in capturing corporate demand, one of

The Company’s consolidated financial results for fiscal 2010

point. With an eye on the successful new measures we imple-

Such measures to enhance the value of properties create athe hallmarks of the Company. To enhance this strength evenhave been impacted by the protracted sluggishness in the do-mented in fiscal 2010 in order to enhance the value of ourwin-win-win relationship among owners, tenants, and the Com-further, we will increase corporate housing for families in re-mestic economy and the Great East Japan Earthquake thatstock of leased managed properties, we will move to maximizepany. Looking ahead, we will continue to expand orders forsponse to requests from corporate customers. At present, studio-

struck during the peak March season. Further, we saw a delay

the earnings gained from that stock in fiscal 2011.

both existing properties and new properties.

type rooms make up about 95% and housing for families make11

Interview with the President

Our shift toward leasing iswhat will bring out synergies between leasing and subcontracting.

In the future, the Company

envisions exporting the leasing expertise it has built up in Japan.

nursing facilities and combined facilities of leased residential

properties in which problems were found. With regard to va-

for-sale condominiums provided by corporate conglomerates.

and commercial complexes that take best advantage of proper-

cant rooms, we are recruiting tenants only after confirming that

The system calls for lump payment of a security deposit uponties’ environs and characteristics.

the rooms can be lived in without safety risks. Our structure fortaking residence, without a leasing system as in Japan; nor are

dealing with the disaster served us well due to our experience

there even leased housing insurers or rent guaranty firms togained from the Great Hanshin-Awaji Earthquake in 1995 anddeal with cases of rent non-payment. However, Leopalace21

the Niigata Chuetsu Earthquake in 2004.

has small-claims and short-term insurers and recovery specialists

Q: Will restricting the Subcontracting Business and shifting toward the Leasing Business result in an unbalance?

among its subsidiaries. In the future, rather than constructing

A: To the contrary, I believe that the result will be synergies
between these two core businesses.

Q: Please discuss the Company’s philanthropic activities related
to the earthquake.

up about 5%, but we aim to make those ratios 80% and 20%,

In fact, I believe that this shift toward the Leasing Business isrespectively.

the very thing that will reignite synergies in our business model

A: We did everything we could, working through our businessconsisting of two core businesses. The issue we faced was that

our efforts, but also our network with other real estate com-we had prioritized the supply of apartments, and occupancy

Immediately after the earthquake, we received an emergency

panies. We have formed a cooperative relationship with JS

could not keep up. As a result, we had been moving to restrict

request from the Ministry of Land, Infrastructure, Transport andGroup Corporation, and between January and March 2011

new apartment construction orders and rebalance supply in

Tourism regarding properties managed by the Company, andsaw the number of lease agreements for our properties ac-

our business to match demand. However, by capturing tenants’provided rooms within the properties we managed in the af-

quired through that company’s real estate division affiliates

needs, beginning with our measures to enhance the value offlicted areas. We also constructed 300 temporary housing units

grow to 1.5 times that of the previous year. From here out, weproperties, and by taking steps to boost our tenant placementin Miyagi and Fukushima prefectures.

will continue working to build cooperative relationships withability, our apartments will grow in popularity and create areal estate companies to increase such partnerships.

ripple effect that lifts the Subcontracting Business.

Business?

for residency, the Subcontracting Business will be restrictive in

Q: Finally, please describe the Company’s policies regarding
return to shareholders.
A: We will continue to make every effort to retain our position
as the industry leader.
For two years now we have not paid dividends to our share-

Our shift toward the Leasing Business will reactivate the busi-

saster in the form of reduced rent for our managed properties

holders, a situation which we must note with regret. Under aness model that stems from our two core businesses, and will

(halved rent for short-term tenants, waived initial fees for long-policy of boosting earnings by leveraging our stock of proper-

reignite synergies.

term residents, etc.). In addition, we collected donations andties, the Company as a whole is tackling business restructuring.

provided relief supplies.

We will continue making every effort in the future to retain
our position as the industry leader. As such, we ask all of our

Response to
the Great East Japan Earthquake

shareholders and investors to hold high expectations for ourLong-term strategies

long-term growth potential and to continue offering your generous support and understanding.

Q: Please discuss the Company’s response to the Great East
Japan Earthquake.

By continuing to accept orders only in areas with high demand

To our shareholders and investors

government, we provided support to those affected by the di-

A: The Subcontracting Business will continue, while taking a
selective stance toward orders.

want to export not things but rather our know-how.

At the same time, although there was no request from the

Q: With the Company’s shift toward the Leasing Business, what
will become of the Apartment Construction Subcontracting

expertise we have accumulated in Japan. In other words, weof providing housing.

Our success in securing tenants is dependent upon not only

Business model synergies

apartments overseas, we would like to offer the leasing business

A: Putting our past experience to work, we immediately moved
to ascertain the extent of the situation.

Q: In the long term, what sort of new developments do you wish
to pursue?

August 2011

A: We would like to take the leasing know-how we have accumulated so far and export it overseas.

the total number of new units supplied in our managed properties. However, as we have constructed many apartments fromThe Great East Japan Earthquake that occurred on March

Our strategic vision includes overseas markets. Leopalace21 al-

1985 onward, demand will grow for the renewal, renovation,

11, 2011 resulted in damage to 137 buildings (2,373 units)

ready provides intermediary services for apartments on behalf

and rebuilding of these, and thus the Subcontracting Businessamong our managed properties, but none were destroyed byof persons coming to Japan from China, Taiwan, and South

will play a role as a source of steady earnings.

the quake or washed away by the tsunami. However, some

Korea. In the future, we want to take full advantage of our local

Eisei Miyama

have become uninhabitable due to the water damage. There

office networks in China and South Korea to provide similar

President and CEO

was no major damage to our branch offices in the region.

property intermediary services for those going abroad from

Leopalace21 Corporation

Furthermore, with respect to those who manage multiple
apartments on their own, or to apartments targeting a tenant

12base different from that of our managed properties, we are

After the earthquake, we immediately formed a team of about

employing our accumulated internal expertise to perform sub-130 experts, primarily consisting of managing engineers, andWe are looking even more deeply into our international strat-

contracted construction of apartments not master leased by Leo-

conducted an investigation of our properties. Specifically, weegies. There are countries overseas that do not have the hous-

palace21 (i.e., owner-managed properties). Moreover, we are

examined exterior cracks, misalignment, and the condition of

ing culture of leased apartments or leased condominiums as

also actively working to provide construction subcontracting forfoundations and interiors. We requested that tenants leave

seen in Japan. For example, in South Korea there are only built-

Japan.

13

New Strategies
The New Medium-term Management Plan and Review of its First Fiscal Year

Responding flexibly and appropriately toa rapidly changing business environment● Background of the new strategies
Leopalace21 launched its Medium-term Management Plan in fiscal 2010 (the fiscal year ended
March 31, 2011). This Medium-term Management Plan marks a major change in direction forour business model. Precisely speaking, rather
than changing our business model itself, weare changing how we make use of it. From the● Summary of fiscal 2010

1990s, we equally held up our Apartment Construction Subcontracting Business and our Leasing
Business, practicing a business model in which
we solicited tenants for the apartments we constructed and performed complete management
and superintendence of those apartments. However, hit by the Lehman Brothers crisis in 2008,

unemployment has been increasing throughout
Japan. Our apartments, which have a high number of corporate agreements, saw many tenants
depart, leaving us with the challenge of restoring
occupancy rates. We are taking this as an opportunity to adjust our pace of new apartment supply
and to place priority on securing tenants.

Aiming for the balanced development of both of our core businesses
Previous problem areas (Product Out approach)Our basic policy for fiscal 2010, the first yearof our Medium-term Management Plan, was totransition to a stable earnings structure that balances earnings from our Subcontracting Businessand from our Leasing Business. In particular, we
implemented the following three initiatives withthe goal of a near-term return to profitability in
our Leasing Business.
First, we took measures to strengthen our tenant placement sales, with the goal of improvement in occupancy rates. Toward this end we

fortified our corporate sales, developed Leopalace Partners franchise sales offices as an adjunct to our directly managed sales offices, andbegan working to improve the competitivenessof our apartment properties.
We also undertook measures to reduce leasing costs and improve our services. We enhanced the services we offer to owners, alongwith implementing efficient apartment management and superintendence.
In addition, we enacted a strategy of limiting

our Subcontracting Business’s solicitation of orders to areas promising improvement and stability in occupancy rates.
Looking back upon all of these in fiscal 2010,
we have clearly made progress in implementing
improvements. Yet at the same time, new issues
have arisen. In light of these, in fiscal 2011 wewill enact strategies to build an even stronger
management foundation.

Review of fiscal 2010
Excesssupply(2) Decline in occupancy rates

Tenants

Master leasing

Leasing Business

Apartment Construction
Subcontracting Business

Earnings from stock

Earnings from flow(1) W ith rooms in short supply in some areas,
we actively solicited orders for apartment
construction.
(2) D emand for apartments temporarily sunkin the wake of the Lehman Brothers crisis.

Property
owners apid deterioration in occupancy rates→R(3) Rental income also deteriorated.

Transition to a stable earnings structure balancing earnings
from the Subcontracting Business and the Leasing Business
Basic policies

Action items

The result: a state of oversupply(3) Decline in rental income(1) New supply of stock

Strengthen tenant placement sales● Improve occupancy rates

Reduce leasing costs and improve● Newly establish service agreements forbroadband operations and a comprehensive furniture and home appliance maintenance service

Strategies for fiscal 2011
Strengthen the Leasing Business and implement strategies to secure a large number of tenants●Measures to enhance the value of properties: Installation of photovoltaic power generation systems and security systems in apartments●Improvement of services: Diversification of master-leasing agreements, introduction of owner-managed properties without master leasing,and limiting solicitation areas for orders●Strengthened tenant placement ability: Increase number of Leopalace Partners franchise sales offices

Enable nearterm profitability in

Goals for fiscal 2011 (Market Out approach)(1) Improve occupancy rates

Master leasing

Tenants

14

Business(1) Improve occupancy rates by enhancing
the value of properties.
(2) E nergize the Leasing Business throughstable rental income from tenants.

Apartment Construction
Subcontracting Business

Restoration of balance in earnings(2) Energize the Leasing Business● Reduce costs through review of regular
maintenance tasks● Adjust master lease rents in line with market prices

the Leasing

Reinvigoration of
the business model

Leasing Businessservices(3) R e-enable solicitation of new orders
based on demand for apartments.

Property
ownersNarrow the Subcontracting Businessto construction projects that cansecure stable earnings for the Leas-

Re-embark upon a growth pathby energizing the business model● Improve and stabilize occupancy rates
through an “area limitation” strategy

ing Business(3) Increase orders for high-income properties

15

New Strategies
Actions for Fiscal 2011

● Basic policy for fiscal 2011: Enhancing earnings from stock● The three pillars of fiscal 2011 actions

Toward management that leverages, not creates,
physical goods (stock)

The three pillars for driving business model change

Up to now, the Company has generated significant earnings through the construction of leased
apartments and condominiums by our Subcontracting Business. Our number of managed
properties has grown to exceed 570 thousand

units, enough to sufficiently meet demand. Going forward, by strengthening the Leasing Business to leverage this enormous asset of managed
units (i.e., our stock), we will secure profitability
not dependent on the Subcontracting Businessalone, and thereby set the Subcontracting Business and Leasing Business working in concert.

Basic policies for fiscal 2011
■ In fiscal 2011 (the fiscal year ending March 31, 2012), we will enhance our earnings from stock.
■ We will realize this plan by implementing three pillars of action: Full-scale measures to enhance the value of properties; Reduction of leasing costs and improvement of services; and Strengthened tenant placement ability. We havealready carried out organizational changes in May 2011, creating a stronger structure for executing this plan.
■ We will further strengthen and enhance our existing measures to address SG&A expenses.

Toward a dual headquarters structure: Marketing and Sales
Headquarters and Business Management Headquarters
ment Headquarters) and established a new
Business Management Headquarters as well asa General Planning Office directly under the
President.
Within the General Planning Office we established a Restoration Support Group to respond todisasters, and are enacting reconstruction aid for
the Great East Japan Earthquake. In addition, weestablished an Asset Management Department
to respond to the needs of tenants and owners,
and a Leopalace Partners Sales Department toexpand our franchise system.
    •Reconstruction support for
the Great East Japan Earthquake•Handling company-wide businessplanning, PR, IR, and strengthening
business collaborations

President and CEO
General Planning OfficeMarketing and Sales Headquarters
Leasing Division
Leopalace Center Sales Department
Corporate Sales Department
Leopalace Partners Sales Department

Measures to enhancethe value of properties

Reduction of leasing costs
Improvement of services

Strengthened tenant
placement ability

By offering photovoltaic power generation
systems and security systems matched tothe characteristics of properties, we aim
to increase medium- and long-term sales

We will further expand review of the regular maintenance services we provide, linking these to cost reductions.

By executing measures to increase thenumber of Leopalace Partners franchisesales offices, number of agreements per office, and number of corporate agreements,

through increased short-term earnings andimproved occupancy rates and rents.

as well as to increase the number of agreements by reducing the work load at directly
managed sales offices, we aim to increase
our overall number of agreements.

● Key strategies for the Leasing Business● New organizational structure

In May 2011, Leopalace21 carried out an organizational change to further enhance operational
efficiency.
We consolidated our three existing Headquarters (Business Structure Reform Headquarters,
Business Planning Headquarters, and Manage-

The three pillars

Start-to-finish management of the supply of
properties, from sales
to construction
Strengthened
development and guidance
for Leopalace Partners
franchise system

Business Management Headquarters
Apartment Construction
Subcontracting Division

Promoting change along the two axes of sales growthand cost reductions
Leopalace21 is committed to improving the
profitability of our Leasing Business, primarily
through the leveraging of stock. Toward that
end, we are enacting a number of initiatives
aimed at both sales growth and cost reductions.
We are making the improvement of occupancy
rates paramount and actively addressing the reduction of fixed costs and other costs, and will
strengthen our Leasing Business through a morerobust management structure.
As our strategy for growing sales, we will
increase our points of contact for acquiring tenants and improving occupancy rates, and thus

Integration of theBusiness Structure Reform
HQ, Business Planning HQ, andManagement HQ, and streamliningof the organization

Related Businesses Division

Subcontracting Sales Department

Silver (elderly care business)
Department

Construction Department

Hotel Resort Department

Measures
Increase
sales

Asset Management Department
Integration of departments
involved in dealing withtenants and owners

Improve occupancy rates
Enhance the value of properties

Reduce property management costs
Reducecosts

Design Managing Department

secure stable earnings. In addition to our conventional directly managed sales offices, we will
expand our Leopalace Partners franchise sales
offices. In addition, we will further reinforce ourexisting strength in corporate sales, to capture
the demand for corporate housing and temporary business use. Furthermore, to enhance thevalue of our properties, we will introduce security systems and photovoltaic power generation
systems, both exceptionally innovative services
in the field of leased apartments. In particular,
we intend to introduce security systems in all of
our roughly 570 thousand managed units.

Optimize master lease rents
Reduce sales costs

As cost reduction measures, we will strive for
reductions in property management costs, optimization of master lease rents for our managed
properties, and reduction of sales expenses.
At a number of the properties constructed by
Leopalace21 as a subcontractor, we perform
management and superintendence on behalf ofowners under a 30-year master leasing system.
For these, we are proposing optional approaches to the form of the agreements and the rent wepay to owners, and are considering alternatives
that take owners’ needs into account.

Details
Expand and strengthen Leopalace Partners franchise sales
offices, and strengthen corporate sales
Install security systems and photovoltaic power generation systems

Reduce costs including propane gas fees, janitorial fees, garbage collection fees, septic tank contractor expenses, etc.
Adjust master lease rents based on market prices
Drastically review the Partners system through the establishment of the
Leopalace Partners Sales Department as a controlling department(As of May 1, 2011)16

17

New Strategies

Actions for Fiscal 2011

● Strategic topics

Aiming for a stock-based business structure to ensure stableearnings
We are enacting a number of enhancement initiatives to create
an earnings structure focusing on
the Leasing Business.

and as a leasing strategy provides support for
the independence of our employees who wish toopen their own franchise sales offices.
While we hold down the number of costly
directly managed sales offices, we will link the
expansion of Leopalace Partners franchise sales
offices to the improvement and stabilization ofoccupancy rates through increased points ofcontacts for securing customers, as well as tothe conversion of fixed expenses to variable expenses and to the reduction of SG&A expenses.
Leopalace21 will gradually expand its number ofStrengthening the Leopalace Partners
franchising program
The Company began operation of its unique Leopalace Partners franchise system in June 2010as a new channel for increasing tenants. Thissystem aims to create a win-win-win relationshipamong franchisees, tenants, and the Company,

franchise sales offices from the 121 in operation
at the end of March 2011. To prevent a drop in
tenant placement ability, we intend to maintainour directly managed sales offices at 155 in fiscal 2011, only 1 less than the number at the endof March 2011. We have been steadily growing
our number of apartment agreements since theintroduction of Leopalace Partners franchise sales
offices in June 2010. In May 2011 we established a new Leopalace Partners Sales Department to further provide support for the opening of
Leopalace Partners franchise sales offices.

Leopalace Partners Structure● Increase the number of sales● Increase the number of sales

offices in cities● Increase properties available
for searching on the Internet● Provide properties suitable forcustomers ranging fromsingles to families

offices in cities● Increase properties available forTenants

searching on the Internet● Provide diverse agreement plans● Provide properties developed by

Leopalace21● Increase the number of match-ups

between customers and available units● Expand the options available for room

searches

Leopalace Partners, Nagoya Minami Office● Provide agreement types from short-term

to long-term agreements

and regional collaboration

Leopalace21● Provide the Leopalace21 brand● Provide properties managed by Leopalace as
Partner’s jurisdictional properties● Provide a profit structure and a support structurethat offer peace of mind

Leopalace Partners, Kirishima Office

Number of Directly Managed and Leopalace Partners Franchise Sales Offices,and the Number of Agreements (June 2010 – June 2011)(Agreements) 186 185 182
177
171 1686,000
165 163

157 156 156 156 155 155

111

4,000

136
5,286
130
121 124

73

2,000

42

1,000
19 2
5

6

14
152
7

22

765

54
1,002

57

1,823

2,070

9

10

Number of agreements (fiscal 2010)

150

Number of agreements (fiscal 2011)

120

2,523 2,460

2,431

2,730 901

100,000

12,47028,465

12,33250,00024,976
18,05725,28815,09337,516
09/3

29,72574,25066,435Services
Staffing and work subcontracting

13,37012,872

Manufacturing

36,16032,157

Restaurants
Retailing

28,87027,86919,63822,14039,596

43,613

48,110

10/3

11/3

12/3 (planned)

Our number of units under corporate agreement was 180 thousandat the time of the Lehman Brothers crisis, but has since reached a record highof 202 thousand units at the end of March 2011.
(1) Implement own surveys of corporate customer
demand trends(2) Strengthen collaboration with corporate
housing agency Leopalace Leasing Corporation

Industries and sectors for which future demand is anticipated: Services, retailing, restaurants, manufacturing

Provision of corporate housing agency services:
Improve convenience and capture corporate customers
Acquire customers for family-type rooms

250000 Strengthen sales approach toward industries

with anticipated demand

150000(1) Apartment security systems
With “24-hour, 365-day safety and security” as
100000our motto, we are collaborating with two major
security firms to install security systems (crime
prevention, fire monitoring, and emergency
alerts) in newly built properties and in our managed properties nationwide, thus enabling secure and comfortable living for tenants. We arealso offering optional services to protect the security of seniors living alone. We plan to install
security systems in all of the roughly 570 thousand units of our existing managed properties,
a groundbreaking approach in leased housing.

Directly Managed Sales Offices

Occurrenceofabnormality

Strengthen sales ability through collaboration
between corporate sales department andcorporate housing agency(2) Photovoltaic power generation
systems
With “safety and security of the global environment” as our motto, we are installing photovoltaic
power generation systems in newly built properties and in our managed properties nationwide.
The generated power is used for common services in apartments, and excess power can besold by owners to generate income. Apart fromour own properties, we are simultaneously introducing the systems to owners’ houses and toapartments managed by other companies. This
introduction of photovoltaic power generation
will expand our business while contributing to
the universal issue of CO2 reduction.

Transmission of abnormality alert

60
Quick response

12

59,70761,709Other industries

Leopalace Partners franchise sales offices (fiscal 2010)

2

Fiscal 2010

3

4

5

6

Instructions for quick response
Security staff rush
to investigate the scene

30

11

183,7430Initiatives to enhance the value of
properties
Acquiring tenants, possibly the greatest challenge facing the Company, requires that our
properties themselves be the choice of tenantsfrom among all properties available in a severely competitive leased housing market. Fromfiscal 2011 we have implemented several innovative measures to continue enhancing the valueof our properties.

1,337

371
8

180

Leopalace Partners franchise sales offices (fiscal 2011)

88

3,000

202,584
181,191

150,000(Offices)
162

5,000

Monitoring Center

110 or 119 (emergency numbers)
Report to police and fire departments as needed
Emergency contact0

Fiscal 2011

Security systems diagram

18

200,000

222,900

200000● Offer the advertising power of Leopalace21● Offer the networking power of sales offices

4(Units)250,000● Place customers for Leopalace properties● Conduct regional information sharing

LeopalacePartners
franchisees0

Number of Units in Corporate Use, by Industry

Strengthen corporate sales
One characteristic of the Company is its particularly strong corporate sales within the leased
housing industry. Companies that do not havedormitories or company housing, and eventhose that do, have an interest in outsourcing as
a way of reducing the costs of new construction
or renovation of aging facilities. After the collapse of Lehman Brothers, corporate use of ourproperties saw a temporary decline. However,out of 571,656 units managed by the Company
at the end of March 2011, a record high of
202,584 units (about 35.4%) were under corporate agreement.
In the development of our corporate sales
we will conduct our own surveys of demand
trends, and will strengthen our sales approach,led by Leopalace21 upper managers, towardindustries with expected future demand (services, retailing, restaurants, manufacturing, etc.).
As additional measures to capture corporate
customers by enhancing convenience, we willreinforce collaboration with our subsidiary Leopalace Leasing Corporation, a corporate housing agency, and further introduce family-styleapartments.

Photovoltaic power generation system

19

A Management Structure to Support Sustainable Business Activities
A Management Structure Built on CSR● CSR
Our business shoulders the enormous social mission of providing housing, the most basic formof infrastructure for human life. As our businessis involved with both tenants and owners overlong spans of time, it is important that we sustain
stable growth as a company. In order to do so,
we must have the trust of society. As such, we undertake a range of initiatives to carry out growthin harmony with society, acting as a good corporate citizen. These initiatives include reviewing and improving our management structure
and business activities, support for conservationof the global environment, and contributions tolocal communities.
Among our business activities in recent years,
we are working to aid single-person tenants by

preparing systems to respond promptly to unexpected trouble, and to provide a safe and secureliving environment through security systems. We
are also moving ahead with measures including
expanded product options allowing us to offer
comfortable dwellings to families, seniors, andpeople of foreign nationality, creating safe andsecure living environments for all.

CSR Declaration
We, as a corporate citizen, are determined to respond to the expectations of all stakeholders, including
customers, aiming at developing together and contributing to the realization of a sustainable society.

● A management structure built
on CSR
Corporate governance
Leopalace21 is committed to the enhancement
and strengthening of a management structure
built on CSR, incorporating elements including
corporate governance, compliance and risk
management. We have prepared and strengthened our corporate governance, with the aimof establishing an efficient, fair, and transparent management structure and realizing higher
corporate value for all stakeholders. As one
component of this, we have subjected the executive actions by the Board of Directors, theCompany’s decision-making body, to monitoring by the Board of Auditors, thereby reinforcing checks and balances within our decisionmaking processes.

Basic CSR Policy

Corporate Governance Organization (As of June 29, 2011)
General Meeting of Shareholders
Board of Auditors
Board of Directors
President and CEO

CSR Committee
Compliance Committee

Corporate Management Council

Risk Management Committee

Executive Officers Meeting

Budget Control Committee

Auditing Council

IT Committee

General Planning Office

Personnel Committee

Marketing and Sales Headquarters

As a corporate citizen determined to contribute to the realization of a sustainable society,Business Management Headquarters

we have established four basic policies.
Offering services ofsuperior quality anda lifestyle of affluence

Sound and highly
transparent businessactivities

Four basic
policies

Contributions to the
local community /Creation of favorable
work environments

Realization of asociety considerate of
the global environment

1. Offering services of superior quality and a lifestyle of affluence
By presenting new lifestyles, we offer our customers safe, secure, and comfortable living environments.
2. Contributions to the local community / Creation of favorable work environments	By participating in activities that contribute to society, we support the development of local communities
while we deepen communication with members of the community. We also create a better working environment for employees.
3. Realization of a society considerate of the global environment	We recognize the magnitude of the impact of our business activities on the global environment, and aim
to achieve a sustainable society by reducing the environmental stress from all areas of our activities.
4. Sound and highly transparent business activities	To fulfill our responsibility to be accountable to the community, we are strengthening our corporate governance and enhancing compliance as we carry out sound and highly transparent business activities.

20

CSR promotion
We position CSR activities as a key issue formanagement, and have established basic policies through which we work toward CSR. Our
CSR Committee, Compliance Committee, andRisk Management Committee cooperate to implement initiatives, keeping appropriate responses
to the demands of the community in mind.

Internal audit system
Our Auditing Department is established as
an internal auditing unit independent of each
operations unit. We originally reinforced thefunctions of the Audit Department by placing it
directly under the President and CEO. We haveCompliance
The thorough enactment of compliance is an essential component of our business activities. For
that reason, we have established a system tooversee compliance with laws and regulations
within our business activities. We have established an internal Corporate Code of Ethics
and an internal reporting system, as well as aCompliance Committee responsible for compliance practices. In addition, we have appointed
a compliance officer within each of our businessdivisions and departments as we strive to ensurecompliance at the working level.

(As of June 29, 2011)

Risk management structure
Our Risk Management Committee is responsible
for ascertaining and managing the risks that exist
in our business, and correspondingly enacts risk
management across the Company. In addition,
our Auditing Department and auditors conduct
inspections of each division’s risk management
status and make reports to corporate management and to the Risk Management Committee.
This information is used in the consideration ofcorrective actions and countermeasures.

recently established a new Auditing Council toeffect even greater strengthening of the Department, and will verify, evaluate, and improve its
effectiveness in accordance with our basic policies for internal control systems.

Organization of CSR Promotion, Compliance and Risk Management
Board of Directors

Compliance Committee

CSR Committee

Business Management Headquarters
General and Legal Affairs Department

Compliance Hotline

Risk Management Committee

Auditing Department

Each Business Division and Department
Person in Charge of CSR/Compliance

Whistleblowers/Consulters

21

A Management Structure to Support Sustainable Business Activities
Contributions to Society● Activities that contribute to the community: Acting as a good corporate citizen
As a company that provides housing, the most basic infrastructure for living, Leopalace21 aims to act as a good corporate citizen that is trusted bysociety. We will remain aware of what is best for our stakeholders, including local communities, as we conduct activities that contribute to society.

Response to disaster: Conducting CSR(housing assistance) through our business, especially in times of emergency
The Great East Japan Earthquake that occurredon March 11, 2011, resulted in extensive
damage in the Tohoku and Kanto regions. Immediately after the earthquake, we opened thelobby of our Hotel Leopalace Sendai to nearby
residents, sent aid in the form of donations, andprovided disaster supplies as a part of long-term
support activities.
As specific initiatives, we halved the rent for
short-term residence for people moving into ourmanaged properties from the afflicted region,and exempted initial expenses in the case oflong-term residence. In addition, by mid-June
we had constructed about 300 units of temporary housing, and turned these over to local
governments.
We bear high expectations placed on us bypeople evacuating the afflicted areas, and by
those entering the areas to assist in disaster recovery. As a company involved in the housingbusiness, we will continue fighting to aid in relief
and reconstruction in the disaster area by providing some measure of secure living to thesepeople.

Offering services of superior quality
and a lifestyle of affluence■ 24-hour apartment management support
From broken water pipes to a lost room key, unexpected troubles happen in the lives of single
tenants. For such occurrences, we offer a 24hour consultation hotline. We also offer on-site
rapid response services where applicable.

■ Donations, fundraising, and blood drives
All of our branches cooperate with the NPO
Ecocap Movement, collecting PET bottle caps
to donate the cost of vaccines*1 to save children in developing countries. We engage in

Ecocaps

Construction of temporary housing■ Responding to those of foreign nationality
Foreign students in Japan live with anxieties including the inability to fully communicate in an
unknown land. To support these students, we have opened support desks for foreign nationals in ten locations in Japan. Moreover, at eight branches in China and elsewhere overseas
we offer housing consultation to students before they set off for Japan.

Contributions to local communities■ City cleanup activities
All of our staff members working in local communities share a love of their cities and regions.
To build deeper exchanges with owners and their families, local residents, and partner companies, our staff take part in ongoing city cleanup activities.

City cleanup activities in fiscal 2010

used book collection (the Leopalace Recycle
Reading program) and “Volunteer Vendor”*2
fundraising, and, as a company with many
young employees, also conduct blood drives.

Leopalace Recycle Reading program donations

Realization of a society considerate of the
global environment■ Initiatives to conserve electricity
Even small savings in electricity will, when multipliedby the approximate 570 thousand units of housing
managed by the Company, add up to something significant. With that thought in mind, we continue devising steps to conserve electricity with the understanding and cooperation of tenants and owners.
Specifically, we are making a gradual switch fromincandescent lighting to fluorescent or LED lighting
in the common-use areas of our apartments. Furthermore, to promote environmental action by tenants,
we placed stickers calling for energy conservation on
power outlets in rooms. We also installed our original
devices to automatically turn off room air conditioners after three hours of use. In addition, to meet ourinternal goals for electricity demand reduction and to
make our due contribution to the alleviation of power
shortages, we are taking part in the “Cool Biz” and“Warm Biz”* programs of season-appropriate officewear at all Company branches, and are continuing
our initiative to stop unnecessary engine idling in company-owned cars.
* Cool Biz and Warm Biz: terms coined in Japan to describe
acceptable deviations from official dress code for the sakeof more season-appropriate attire.

Eastern Japan•Number of times: 1,976•Total number of people: 13,200

Central Japan*1. 400 caps generate ¥10 toward polio vaccines, which cost ¥20 per vaccination.
*2. The purchase of drinks from vending machines
utilizing this system automatically results in a
¥3 donation to the fund.

“Volunteer Vendor”■ Other initiatives
At all of our eight hotels in Japan, when a guest presents
an Eco-Green Card without having used room amenities,
we make a donation to the Organization for Industrial,
Spiritual and Cultural Advancement-International (OISCAInternational) equal to a portion of the room expenses
saved. Moreover, we conduct recycling of old analog TVs,
curtains, and microwave ovens. In addition, we conduct“green purchasing” of building materials and products, andas of March 31, 2011, have completed procurement of all
15 items identified for special procurement under the Law
on Promoting Green Purchasing.

Eco-Green CardSound and highly transparent business activities■ Education and training for employees
In order to gain the trust of all our stakeholders, Leopalace21 is striving to strengthen its
corporate governance and enhance compliance. Regarding compliance in particular,
we are working to enhance awareness and knowledge of compliance inevery one of our employees throughmeasures such as group training fromlecturers inside and outside the Company, regular on-demand training via
e-learning, and the publication of aninternal newsletter on compliance.

CSR seminar for employees•Number of times: 989•Total number of people: 6,845■ Increasing management transparency
In order to fulfill our responsibility of being accountable to society and to earn the trust of
all of our stakeholders, we at Leopalace21 work hard to reinforce our corporate governance, promote compliance, and undertake sound and transparent business activities.

Western Japan•Number of times: 527•Total number of people: 3,433
Saitama Call Center

22

Cleanup activities by the Okayama Branch
Energy conservation awareness sticker affixed to outlet

Note: For details, see “A management structure built on CSR,” p. 21.

23

A Management Structure to Support Sustainable Business Activities
Crisis Management and Risk Information● Crisis management measures: Response during time of emergency
Confirming the extent of damage fromthe Great East Japan Earthquake
Under the management structure that supports
our business activities, we enact a variety of crisis management measures. Following the Great
East Japan Earthquake that struck on March 11,
2011, we immediately confirmed the extent ofdamage to the Company. Damaged properties
totaled 2,373 units in 137 buildings (including
32 buildings within 30km of the Fukushima Daiichi Nuclear Power Station). Damages to furniture, appliances, and our own repairs to properties (30 buildings) have resulted in the recordingof an extraordinary loss of ¥1,263 million.

Damaged properties by prefecture (number ofdamaged properties/number of managed properties)(As of May 31, 2011)
Miyagi Prefecture: 63 buildings / 588 buildings
Fukushima Prefecture: 45 buildings / 623 buildings(includes 32 buildings within 30km of nuclear plant)
Ibaraki Prefecture: 12 buildings / 1,059 buildings
Chiba Prefecture: 17 buildings / 2,297 buildings

Focus Topic
Company time line after the earthquake
March 11

•Earthquake occurred•Lobby of Hotel Leopalace Sendai opened to local residents

March 12•Disaster Response Headquarters established•First report released on website

March 13

•Second report released on website

March 14

•Disaster Response Headquarters members entered disaster site
•Safety of all Company employees confirmed

March 17

•Survey team of about 130 managing engineers initiated investigation of properties
Survey targeted 2,342 buildings in cities experiencing intensity six or stronger earthquake•Request received from Ministry of Land, Infrastructure, Transport and Tourism for information on vacant rooms

March 18

•Our initiatives reported on our website

March 19

•Request for construction of temporary housing received from the Japan Prefabricated Construction Suppliers &Manufacturers Association•Survey of properties in Tochigi, Gunma, and Saitama Prefectures completed (391 buildings)

March 22

•Decision made on aid to afflicted owners and employee families

March 24

•Ongoing survey activities
Iwate Prefecture survey completed (88 buildings)
Miyagi Prefecture survey: 39% completed
Ibaraki Prefecture survey: 48% completed•Ongoing investigation to confirm safety
Owners: 94% confirmed
Tenants: 63% confirmed

March 29

•Restoration Support Group establishedMarch 31

•Restoration Support Group took over for Disaster Response Headquarters● Risk information
Listed below are the principal risks that we
believe could affect the Leopalace21 Group.
However, this list is not all-inclusive and does
not cover all the risks that could affect Groupbusinesses. This list reflects the judgment of the
Leopalace21 Group management as of thesubmission of the securities report (June 29,2011).
1. Revenues
Leopalace21 apartments are primarily utilizedby single persons, and corporate contracts

24

typically involve short-term stays by workers
travelling on company business and for use ascompany dormitories. As a result, changes in
the performance of the overall economy andcorporate business results could affect employment conditions or the demand for businesstrips, which could negatively impact occupancy
rates at the Company’s apartments.
In addition, we post all orders for apartment
construction when the contract is concluded,
however the possibility that the client may not
be able to obtain the necessary financing ora fixed rent to the owner for a period of time
stipulated in the initial contract. Therefore, fluctuations in the amount of rental income received
from tenants during the contract period could
adversely affect the Company’s profitability.

loans from a financial institution is an importantrisk factor. Changes in the willingness of financial institutions to provide credit, changes in theassessed value of real estate to be used as collateral, and fluctuations in interest rates could
affect Company revenues and thus adversely
affect the Company’s business results.
2. Cost of sales
Based on the Company’s apartment lease contract, the Company concludes a master leaseagreement with apartment owners and pays

3. Exchange rate fluctuations
The Leopalace21 Group includes overseas subsidiaries involved in the Hotel Resort Business,
and as a result its business results may be affected by exchange rate fluctuations. Our consolidated subsidiary Leopalace Guam Corporation
has borrowed funds in the form of yen-denominated loans from Leopalace21 for the purposeof acquiring facilities and equipment. Because
the value of this debt is calculated each year asof the date of account settlement, the Company
is subject to foreign exchange gain or loss inline with fluctuations in the US dollar. Therefore
it is possible that future fluctuations in exchange
rates could affect the Group’s business performance and financial position.
4. Net property, plant and equipment
and real estate held for saleImpairment losses or appraisal losses due todeclines in the current market value of marketable securities, real estate for sale, fixed assets, or other assets could adversely affect theCompany’s business performance as well as its
financial position. Moreover, with regard to theCompany’s Hotel Resort Business, there is a continuing need for regular investments in facility
replacement and renewal. As a result, changes
in depreciation expenses could have an effecton the Company’s business performance.
5. Allowance for doubtful accounts andbad debt expenses
The Company conducts financing activities, andcarries on its books a balance for operatingloans receivable comprising apartment construction loans and real estate equity loans. The Company also may guarantee the housing loans andmembership fee loans made to its customers byfinancial institutions. Apartment and other loans
where repayment has become doubtful are accounted for separately as bad debt, and a provision is separately made for bad debt in eachsuch case; however, our business results could
be affected if these debts cannot be collected,
or if we should be obliged to honor claims pertaining to these loan guarantees.
6. Reserve for apartment vacancy loss
In order to prepare for a risk of losses due to anincrease in apartment vacancies, Leopalace21
has established a “Reserve for apartment vacancy loss” fund equal to the amount of loss
that may be expected to be incurred during areasonably estimable period. The amount of
this reserve is based on the rent levels set forindividual leased units and occupancy rate forecasts calculated for the number of households
and each apartment building. Should any ofthese figures fall below the estimated values, it
could become necessary to increase the amountof the reserve, and this could adversely affectthe results of the Company’s Leasing Business.

9. Events that significantly impact theCompany’s management
The Leopalace21 Group recorded an operating loss of ¥23,607 million for fiscal 2010(¥29,728 million in the previous fiscal year),and a net loss of ¥40,890 million (¥79,076
million in the previous fiscal year).

7. Lease/guarantee deposits received
Leopalace21 has long-term deposits from property owners held as an advance for apartment
repair and renovation. These consist mainly of
deposits received from property owners as a
portion of future repair and renovation expenses, following the dissolution of Leopalace21
Owners Mutual Insurance Association. Leopalace21 makes a concerted effort as a leasing
business operator to ensure the soundness of theapartment maintenance structure, through which
properties fully leased from the owner are operated and maintained. Leopalace21 also budgets for regular repair costs based on a detailed
long-term plan. However, an unexpected largescale repair or renovation could have an impact
on Leopalace21’s financial position.
Leopalace21 also has deposits for Leopalace
Resort memberships related to the Guam resort
business, most of which date to the opening of
the resort complex in July 1993. The Leopalace21 Group works to increase member usage
by improving facilities and member services, butshould there be an unexpected number of requests for reimbursement of these deposits, this
could have an impact on Leopalace21’s financial position.

10. Information leaks
The Leopalace21 Group holds a great deal of
information, including personal information obtained through the consent of, or as a result of
non-disclosure agreements with, client companies. To control information security, the Company has drawn up the required information
security guidelines, and set up a Compliance
Committee to thoroughly educate our executive
officers and employees about information security issues. Nevertheless, in the unlikely eventthat a leak of information of some type should
occur, there is a possibility that the Group’s reputation could be damaged, and that businessperformance might be affected.
11. Other risks
The Group is aware that it incurs a variety ofrisks in the course of promoting its businesses,
and it attempts to prevent, distribute or avoid
risk whenever possible.
Nevertheless, the Group’s business performance and financial position may be affectedby changes in economic conditions, the realestate market, the financial and stock markets,
legal regulations, natural disasters, and a variety of other factors.

8. Financial covenants
Financial covenants have been set on the numerous loan agreements that Leopalace21 hasconcluded with financial institutions. Accordingly, should consolidated or non-consolidated
net assets, consolidated or non-consolidated
interest-bearing debt, or non-consolidated operating income fall below the prescribed limits ofa financial covenant, there is a possibility that
the Company, at the behest of the financial institution, could forfeit the benefit of the term forthe subject loan. Further, should the Company
violate the conditions of a financial covenant,there is a possibility that the Company could
also forfeit the benefit of the term for corporate
bonds or other borrowings.
Leopalace21 is improving its business performance through the execution of the businessplan, and continually implements to the bestof its ability measures to avoid violating thesefinancial covenants and the resulting forfeitureof the benefit of the term. However, should theCompany forfeit the benefit of the term for its
loans, this could have a major impact on the
Company’s operating performance.

25

Financial Section
Management’s Discussion and Analysis

Operating environment

Net Income (Loss) and Net MarginDuring the fiscal year ended March 31, 2011 (fiscal 2010), Ja-(Millions of yen)

pan’s economy recovered gradually against a backdrop of vari-

(%)
5.9

40,000837,358ous economic stimulus measures. However, this did not translate
into full-fledged economic recovery due to employment concernsand prolonged deflation, while the Great East Japan Earthquakethat occurred in March 2011 resulted in a difficult end to thefiscal year. In the housing industry, new housing starts in fiscal
2010 increased 5.6% from the previous fiscal year. However, thebusiness environment remained challenging, with rented housing
starts falling 6.3% year on year, for the second consecutive yearof decline.

Net sales
Under these circumstances, the Group reported consolidated net
sales of ¥484,391 million, down 21.9% from the previous fis-

20,000

342
0

1.4

4

9,952
0

0.1
(16,582)-20,000

-4

(3.6)
(8.4)

-8

-40,000(40,890)-12-60,000(12.8)-80,000(79,076)

06/3

07/3

08/3

Net Income (Loss)

09/3

10/3

11/3

-16

Net Margin

cal year, reflecting the prolonged economic downturn and theGreat East Japan Earthquake that struck during the peak business

Segment informationseason.

Leasing BusinessBy business segment, the Leasing Business accounted for 73.6%

The number of units under management at the end of fiscal 2010of total net sales, (an increase of 18.4 percentage points from thewas approximately 572 thousand (an increase of around 20 thou-previous fiscal year) and the Apartment Construction Subcontract-sand units from the previous fiscal year end), with an occupancy

ing Business 22.3% (a decrease of 16.0 percentage points), with

rate of 83.7% (an increase of 0.1 percentage points). However,both core businesses contributing a combined 95.9% of total net

due to delays in the start of various initiatives, the average oc-

sales. The Hotel Resort Business accounted for 1.3% of total net

cupancy rate during fiscal 2010 was 80.1% (a decrease of 2.2

sales (an increase of 0.3 percentage points), the Residential Sales

percentage points).

Business 1.0% (a decrease of 3.0 percentage points), and the
Others 1.8% (an increase of 0.3 percentage points).

Contents

by restricting the number of new units supplied, stepping up phone
and online sales, and expanding our sales channels, including our

Earnings

franchising program (Leopalace Partners). Our directly managed

The cost of sales was ¥448,392 million, a decrease of 21.4%

sales offices at the end of fiscal 2010 numbered 164 (down 28

27

from the previous fiscal year. As a result, gross profit was ¥35,999

from the previous fiscal year end), while our franchise sales offices

million, a decrease of 27.5% from the previous fiscal year.

numbered 121.

Consolidated Balance Sheets

30

Selling, general and administrative expenses decreased 24.9%

In terms of profits, we responded to growth in the number offrom the previous fiscal year to ¥59,606 million, due to cost re-units under management without increasing fixed costs by reinforc-

Consolidated Statements of Operations

32

duction efforts. The Group posted an operating loss of ¥23,607

ing non-office sales via phone and online and by strengthening

million. However, due to thorough cost-cutting and other mea-

the franchising program. At the same time, we improved earn-sures, the operating loss narrowed ¥6,121 million compared withings through new initiatives including revisions to our maintenancethe previous fiscal year.

service agreements for furniture and home appliances / broad-Management’s Discussion and Analysis

Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors

26

In terms of sales, we are aiming to improve the occupancy rate

33
34
35
37

Although the Group booked profits from sale of idle assets andband equipment, and also reviewed utility expenses for proper-

reversal of allowance for employees’ bonuses, net loss in fiscal

ties rented on a monthly basis. However, due to factors including

2010 was ¥40,890 million due to the recording of an impairment

delayed improvement in the occupancy rate, this business segment

loss and a disaster loss, as well as a partial reversal of deferred

reported an operating loss in the year under review.

tax assets. However, this represented an improvement of ¥38,186

As a result of the above, net sales in the Leasing Business weremillion over the previous fiscal year, when the Group incurred sub-¥356,606 million (an increase of 4.2% from the previous fiscal

stantial losses related to business structure reform expenses andyear) and the operating loss was ¥30,094 million (an improve-

other expenses.

ment of ¥17,781 million).

69

27

Financial Section

Apartment Construction Subcontracting Business

Financial position

Orders received in fiscal 2010 totaled ¥44,280 million (a de-

Total assets

crease of 73.6% from the previous fiscal year), reflecting stricter

Total assets at March 31, 2011, stood at ¥298,274 million, aloan screenings by financial institutions, sluggish and cancelleddecrease of ¥98,238 million from the previous fiscal year end.

orders accompanying the downswing in occupancy rates, and theThis primarily reflected the following decreases: cash and cash

impact of internal measures to curb supply. Orders outstanding

equivalents, ¥31,757 million; prepaid expenses, ¥4,016 million;

totaled ¥120,298 million (a decrease of 34.5% from the previous

land, ¥11,442 million; construction in progress, ¥3,300 million;

fiscal year end).

long-term prepaid expenses, ¥17,020 million; and deferred tax

In terms of products, the Group is developing product strategies

assets, ¥7,643 million.

targeting tenant segments and market areas with growth potential.
Specifically, we are developing a product lineup covering con-

Liabilities

ventional studio-type apartments through to family-type apartments

Total liabilities were ¥265,233 million, a decrease of ¥60,299

and launching products aimed at urban markets. The Group ismillion from the previous fiscal year end. Although the Groupalso introducing “owner-managed” properties that will not affectbooked ¥14,830 in long-term advances received, the decline in

the number of units supplied. The number of sales offices in the

total liabilities mainly reflected the following decreases: accounts

Apartment Construction Subcontracting Business at the end of fis-payable for completed projects, ¥30,741 million; customer ad-

cal 2010 was 75 (a decrease of 37 offices from the previous fiscalvances for projects in progress, ¥5,370 million; interest-bearing

year end).

debt, ¥17,460 million; and lease/guarantee deposits received,

In terms of profits, we are striving to reduce building material¥20,069 million.

controls and process management. In the Apartment Construction

Interest-Bearing Debt and Debt/Equity Ratio

Subcontracting Business, we are focusing on securing orders for(Millions of yen)projects that ensure stable earnings in the Leasing Business. In thisway, we aim to generate operating income despite a downward
trend in sales.
As a result, net sales in the Apartment Construction Subcontract-

lion (a decrease of 59.8%).
Hotel Resort Business

1.3

64,513and operating loss was ¥1,975 million (a deterioration of ¥650
million from the previous fiscal year).

1.4

1.2

53,16050,00049,7111.0

44,1890.9 43,859
0.8

40,000

0.6

0.5

0.4

20,00010,000

0

06/3

0.3

0.3

0.3

07/3

08/3

09/3

10/3

11/3

0.0

ing income was ¥220 million (compared to an operating loss of40

negative retained earnings in fiscal 2010.

As a result, the equity ratio was 11.1% (compared with 17.9%

Future policy on dividend payouts to shareholders will be de-at the end of the previous fiscal year) and net assets per share

cided based on the current business climate and progress of thewas ¥195.91 (compared with ¥466.76 at the end of the previous

Medium-term Management Plan throughout the term. Currently, no

fiscal year).

future policy has yet been decided.

Cash flows
Operating activities used net cash of ¥28,337 million (an increasein cash used of ¥15,346 million compared with the previous fiscal year). This mainly reflected decrease in long-term prepaid expenses of ¥20,253 million and increase in advances receivedof ¥13,441 million, outweighed by loss before income taxes of¥33,118 million and decrease in accounts payable of ¥31,706

pared with cash used of ¥8,889 million in the previous fiscal year).
This primarily reflected proceeds from sale of property, plant and
Financing activities used net cash of ¥15,891 million (comparedwith cash provided of ¥15,281 million in the previous fiscal year).
This chiefly reflected proceeds from issuance of common stock of¥1,741 million, outweighed by repayment of interest-bearing debt
As a result, cash and cash equivalents at March 31, 2011
decreased ¥31,540 million from the previous fiscal year end to¥40,492 million.

Free Cash Flow

Debt/Equity Ratio

50,000(%)

52,79545,70647,37840,000

37.0
33.4

32.4

¥3,357 million in the previous fiscal year).

30,00031.3
20,00030

11,894

Others

10,000200care) business, small-claims and short-term insurance business,

17.9-10,000

10

11.1

from the previous fiscal year) and operating loss was ¥1,442 milyear). The number of elderly care homes in the Silver business¥40,890 million for the fiscal year.

(Millions of yen)

Equity Ratio(%)

lion (an improvement of ¥1,978 million over the previous fiscal

pend payment of a year-end dividend due to losses which led to

60,000(a decrease of 81.0% from the previous fiscal year) and operat-

and financing business, were ¥8,783 million (a decrease of 8.7%

However, the Company regrets to announce its decision to sus-ance of new shares, the decrease primarily reflected a net loss of

0.2

Residential Sales BusinessNet sales in the Other Businesses, including the Silver (elderly

there was an increase in equity of ¥1,844 million due to issu-of ¥17,790 million (net after deducting proceeds from debt).
30,000Interest-Bearing Debt

Net sales in the Residential Sales Business were ¥4,689 millionof its most important issues.

equipment of ¥12,742 million.

61,31860,000Net sales from Guam resort facilities and hotels in Japan were
¥6,492 million (a decrease of 3.6% from the previous fiscal year)

The Company regards the return of profits to shareholders as one

crease of ¥37,938 million from the previous year end. Although

Investing activities provided net cash of ¥13,144 million (com(%)

ing Business were ¥107,821 million (a decrease of 54.5% fromthe previous fiscal year) and operating income was ¥11,971 mil-Basic policy on distribution of earnings

Net assets totaled ¥33,041 million at March 31, 2011, a de-million.

procurement costs and improve profitability by enhancing cost

70,000Net assets-30,000

0

06/3

07/3

08/3

09/3

10/3

11/3

(15,193)-20,000(21,880)

06/3

07/3

08/3

09/3

10/3

11/3

numbered 58 at the end of fiscal 2010 (an increase of 1 facility
from the previous fiscal year end).

28

29

Financial Section

Consolidated Balance Sheets

Leopalace21 Corporation and consolidated subsidiaries
March 31, 2011 and 20102011
ASSETS
Current assets:
Leopalace21 Corporation and consolidated subsidiaries
and cash(Notes 2-(2), 4, 5-(2))
MarchCash
31, 2011
and equivalents
2010
Trade receivables (Note 5-(2))
Accounts receivable for completed projects (Note 5-(2))
Operating loans (Note 5-(2))
ASSETS
Marketable securities (Notes 2-(4), 6)
Realassets:
estate for sale / property inventories (Note 2-(3))
Current
Leopalace21
Corporation
consolidated
subsidiaries
Realfor sale
inandprocess(Note
11-(c))
Cashestateand cashequivalents(Notes2-(2),
4, 5-(2))
MarchPayment
31, 2011forand2010
constructionin progress
Trade receivables(Note 5-(2))
Rawmaterials
and supplies
Accounts
receivablefor completed projects (Note 5-(2))
Prepaid
expenses
Operating loans (Note 5-(2))
Deferredtaxsecurities
assets (Note10)2-(4), 6)
Marketable(NotesASSETS
Other
accounts
receivable
Realassets:
estate for sale / property inventories (Note 2-(3))
Current
Other
Realfor salein process(Note
11-(c))
Cashestateand cashequivalents(Notes2-(2),
4, 5-(2))
Allowanceforforconstruction
doubtful accounts(Note 2-(10))
Payment
inprogress
Trade receivables (Note 5-(2))
Totalcurrent
assetsRawmaterials
andsupplies
Accounts
receivablefor completed projects (Note 5-(2))
Prepaid
expenses
Operating loans (Note 5-(2))
Property,plant
andequipment:(Notes 2-(6), 2-(23))
Deferredtaxsecurities
assets(Note10)2-(4),Marketable(Notes6)
Buildings
and structures(Notes 11-(c), 8)
Otheraccounts
receivable
Real estate for sale / property inventories (Note 2-(3))
Accumulated depreciation
Other
Real estate for sale in process (Note 11-(c))
Net (Note doubtful
11-(c)) accounts (Note 2-(10))
Allowance
Payment forforconstructionin progress
LandTotal(Notes11-(c),
8)
current
assetsRaw materials andsupplies
Leased assets (Note 2-(20))
Prepaid expenses
Accumulated
depreciation(Notes 2-(6), 2-(23))
Property,plant
equipment:
Deferredtaxandassets(Note 10)
Net and structures (Notes 11-(c), 8)
Buildings
Other accounts receivable
Constructionin progress
Accumulated
depreciation
Other
Other
(Note
20-(a))
Net(Note
11-(c))
Allowance for doubtful accounts (Note 2-(10))
Accumulated
depreciation
LandTotal(Notes11-(c),
8)
current
assetsNet
Leased assets (Note 2-(20))
Total property,depreciation
plant and equipment
Property,Accumulated
plant and equipment: (Notes 2-(6), 2-(23))
Net
Buildings and structures (Notes 11-(c), 8)
Investments
andinotherassets:Construction
progress
Accumulated
depreciation
Intangible
assets(Note
2-(8))
Other(Note
20-(a))
Net(Note
11-(c))
Investment
securities(Notes2-(4), 5-(2), 6, 11-(c))
depreciation
LandAccumulated(Notes 11-(c),8)
Long-term
loans
(Note
5-(2))Net assets (Note 2-(20))
LeasedBadTotal
debt property,(Notes 5-(2),plant9)and equipment
Accumulated
depreciation
Long-term prepaid expenses (Note 2-(9))
Net
Deferred tax
(Note
10)
Investments
andassets
assets:Construction
inother
progressBondissuance
cost
Intangible
assets(Note 2-(8))
Other (Note20-(a))
Other(Notesecurities
11-(c)) (Notes 2-(4), 5-(2), 6, 11-(c))
Investment
Accumulated depreciation
Allowancefor doubtful accounts (Notes 2-(10), 5-(2))
Long-term
Net loans (Note 5-(2))
Totalinvestments
and other assets
BadTotal
debt property,(Notes 5-(2),plant9)and equipment
Long-term
prepaid
expenses(Note 2-(9))
Total assets
(Note
22)
Deferredtax
assets(Note
10)
Investments
and notes
other areassets:The
accompanying
an integral part of these statements.
Bondissuance
cost
Intangible
assets(Note 2-(8))
Other(Notesecurities
11-(c)) (Notes 2-(4), 5-(2), 6, 11-(c))
Investment
AllowancefordoubtfulLong-term loans(Note accounts
5-(2)) (Notes 2-(10), 5-(2))
Totalinvestments
and
Bad debt (Notes 5-(2), 9) other assets

Thousands of U.S.
dollars (Note 1)
2011

Millions of yen
2010

LIABILITIES AND NET ASSETS

Consolidated Balance Sheets

Consolidated Balance Sheets

Long-term
prepaid
expenses(Note 2-(9))
Total assets
(Note
22)
Deferred tax assets (Note 10)
The accompanying notes are an integral part of these statements.
Bond issuance cost
Other (Note 11-(c))
Allowance for doubtful accounts (Notes 2-(10), 5-(2))
Total investments and other assets
Total assets (Note 22)30

The accompanying notes are an integral part of these statements.

40,675
6,260
Millions of yen
2,118
2011 4,311
㧙
14
105
40,675587
6,260
Millions
458 of yen
2,118
2011 23,878
4,311
3,713
㧙
1,235
14
11,870105
40,675(1,005)587
6,260
94,219458
2,118
23,878
4,311
3,713
㧙
108,9311,235
14(49,740)
11,870105
59,191(1,005)587
84,851
94,219458
6,238
23,878(2,727)
3,713
3,511
108,9311,235
67(49,740)
11,87013,89359,191(1,005)(11,228)
84,851
94,2192,665
6,238
150,285(2,727)
3,511
108,93167(49,740)
7,589
13,89359,191
6,534(11,228)
84,851
601
2,665
6,238
4,453
150,285(2,727)34,223
3,511
2,269
67
76
7,589
13,893
3,103
6,534(11,228)(5,078)601
2,665
53,7704,453
150,285
34,223
298,274
2,269
76
7,589
3,103
6,534
(5,078)601
53,7704,453
34,223
298,274
2,269
76
3,103
(5,078)53,770298,274

72,4328,180
4,737
2010 5,482
10
1,371
2,584
72,432
1,184
8,180
594
4,737
2010 27,895
5,482
6,142
10
3,207
1,371
13,4952,584
72,432
(897)
1,184
8,180
146,416594
4,737
27,895
5,482
6,142
10
112,741
3,207
1,371(49,303)
13,4952,584
63,438(897)
1,184
96,294146,416594
5,923
27,895(1,546)
6,142
4,377
112,741
3,207
3,367(49,303)
13,495
13,88263,438(897)(10,626)
96,294146,416
3,256
5,923
170,732(1,546)
4,377
112,7413,367(49,303)
6,385
13,88263,438
6,931(10,626)
96,294
1,102
3,256
5,923
5,204
170,732(1,546)
51,243
4,377
7,482
3,367
89
6,385
13,882
5,895
6,931(10,626)(4,967)1,102
3,256
79,364
5,204
170,732
51,243
396,512
7,482
89
6,385
5,895
6,931
(4,967)
1,102
79,364
5,204

489,171
Thousands of75,282
U.S.
dollars (Note25,469
1)
2011 51,850
㧙
167
1,257
489,171
7,059
Thousands of75,282
U.S.
5,506
dollars (Note25,469
1)
2011 287,174
51,85044,650㧙
14,850167
142,783
1,257
489,171(12,091)
7,059
75,282
1,133,127
5,506
25,469287,174
51,85044,650㧙
1,310,057
14,850167(598,194)
142,783
1,257
711,863(12,091)
7,059
1,020,461
1,133,127
5,506
75,016287,174(32,800)
44,65042,216
1,310,057
14,850804(598,194)
142,783
167,079
711,863(12,091)(135,029)
1,020,461
1,133,127
32,05075,016
1,807,394(32,800)

396,5123,587,181

51,243
396,512
7,482
89
5,895
(4,967)79,36442,216
1,310,057
804(598,194)
91,267167,079
711,863
78,583(135,029)
1,020,461
7,232
32,05075,01653,5501,807,394(32,800)
411,577
42,21627,293804
909
91,267167,079
37,31478,583(135,029)(61,065)
7,232
32,050646,660
53,5501,807,394
411,577
3,587,181
27,293909
91,26737,31478,583(61,065)7,232
646,660
53,550411,577
3,587,181
27,293909
37,314(61,065)646,660

Thousands of U.S.
dollars (Note 1)
2011

Millions of yen
2011

2010

Current liabilities:
Accounts payable (Note 5-(2))
Accounts payable for completed projects (Note 5-(2))
Short-term borrowings (Notes 5-(2), 11)Current portion of long-term debt (Notes 5-(2), 11)Bonds due within one year (Note 5-(2))
Lease obligations (Notes 5-(2), 11-(a))
Accounts payable-otherAccrued expenses
Accrued income taxes
Advances received (Note 3-(2))
Customer advances for projects in progress
Allowance for employees’ bonuses (Note 2-(11))
Reserve for warranty obligations on completed projects(Note 2-(14))
Reserve for fulfillment of guarantees (Note 2-(15))
Reserve for disaster losses (Note 2-(16))
Reserve for switch to terrestrial digital broadcasts (Note 2-(17))

Asset retirement obligations (Note 18)
Other
Total current liabilities

Longterm liabilities:
Bonds (Note 5-(2))
Long-term debt (Notes 5-(2), 7-(2), 11)Lease obligations (Notes 5-(2), 11-(a))
Retirement benefit reserves (Notes 2-(12), 13)
Reserve for apartment vacancy loss (Note 2-(13))
Lease/guarantee deposits received
Asset retirement obligations (Note 18)
Long-term advances received (Note 3-(2))
Long-term other payable
Other
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity:
Common stock: (Note 19)
Authorized: 250,000,000 shares
Issued: 175,443,915 shares
Capital surplus
Retained earnings
Treasury stock 6,867,850 shares (Note 19)
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on “other securities” (Note 2-(4))
Deferred gains or losses on hedges
Foreign currency translation adjustments (Note 2-(22))
Total accumulated other comprehensive income
Share subscription rights
Total net assets
Total liabilities and net assets

2,699
12,634
22,691
11,811560
1,230
11,6864427
97,154
4,055
㧙

2,705
43,3759,720
20,281560
1,196
10,4404
1,595
98,544
9,426
3,065

32,461
151,945
272,888
142,050
6,735
14,794
140,53650
5,130
1,168,421
48,771
㧙

134

326

1,609

136
1,189
1,188
30
6,092

㧙
㧙
㧙
40
7,134

1,635
14,305
14,291
364
73,250173,720

208,4112,089,235

2,600
2,228
2,739
7,874
32,60526,03548
14,830
1,210
1,344

3,160
22,762
3,640
7,307
31,728
46,104
61
㧙
1,185
1,175

31,26926,79232,937
94,691
392,126
313,115575
178,354
14,553
16,16891,513

117,122

1,100,580

265,233

325,533

3,189,815

56,56355,641

680,251

34,334(46,553)(5,501)
38,84333,894(5,663)(6,143)77,729412,920(559,863)(66,170)
467,138204(3)(6,019)(5,818)16124(5)(6,958)(6,839)
89

2,456
(39)
(72,381)(69,964)
192

33,041
298,274

70,979396,512397,366
3,587,181
31

Financial Section

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Leopalace21 Corporation and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

Leopalace21 Corporation and consolidated subsidiaries
For the year ended March 31, 2011
Thousands of U.S.
dollars (Note 1)

Millions of yen
2011

2010

2011

Net sales (Note 22)
Cost of sales
Gross profit

484,391
448,392
35,99949,627432,936

Selling, general and administrative expenses
Operating loss (Note 22)59,606(23,607)

79,355(29,728)

716,846(283,910)

114
(268)
(5,561)(1,627)
(926)
2,046
65
50
84
254
䋭
2,605
83
㧙
(15)
(101)
(2,228)
(173)

176
146
(2,468)(1,196)
(841)
130
2
105
137
1,633
92
㧙
㧙
(10,343)
(226)
(843)
(3,238)
䋭

1,372(3,229)(66,881)(19,565)(11,142)
24,609
776
597
1,009
3,060
䋭
31,330997
䋭(178)(1,217)(26,795)(2,081)

䋭

(414)

䋭

(356)
䋭
(754)
(1,263)(340)(1,188)(12)(73)(29,856)
䋭
㧙
䋭
䋭
(722)

(4,286)
䋭(9,065)(15,187)(4,086)(14,291)(123)(33,118)(77,527)(398,286)

208
(19)
㧙
7,583

330
䋭
1,359
(140)

2,500
(233)
㧙
91,202Other income (expenses):
Interest and dividend income
Equity in earnings (loss) of affiliated companies
Foreign exchange losses (Note 2-(21))
Interest expenses
Commission fee
Gain on sale of property, plant and equipment (Note 14)
Gain on sale of investment securities
Gain from cancellation of contracted work
Rent income
Reversal of allowance for doubtful receivables
Reversal of allowance for retirement benefits for directors
Reversal of allowance for employees’ bonuses (Note 2-(11))
Reversal of share subscription rights
Provision for apartment vacancy loss (Note 2-(13))
Loss on sale of property, plant and equipment (Note 15)
Loss on disposal of property, plant and equipment (Note 16)
Impairment loss (Note 8)
Loss on sale of investment securities
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Provision for bad debt
Business structure reform expenses
Loss on cancellation of structured deposits
Disaster loss (Note 2-(16))
Expenses for switch to terrestrial digital broadcasts
Provision for switch to terrestrial digital broadcasts (Note 2-(17))
Other-net
Loss before income taxes
Income taxes (Note 2-(19))
Income tax䋭current
Income tax– refund
Income taxed䋭previous period
Income taxes䋭deferred
Total income taxes
Net loss

620,376
570,749

5,825,507
5,392,571

7,772

1,549

93,469(40,890)(79,076)(491,755)

Thousands of U.S.
dollars (Note 1)

Millions of yen
Net loss
Other comprehensive income (Note 3-(1)-(b))
Net unrealized gains on “other securities”
Foreign currency translation adjustments (Note 2-(22))
Share of other comprehensive income in affiliates
Total
Comprehensive income (Note 3-1-(a))
Comprehensive income attributable to shareholders of theparent entity
The accompanying notes are an integral part of these statements.

2011(40,890)

2010

2011

䋭

(491,755)

80
939
2
1,021
(39,869)

䋭
䋭
䋭
䋭
䋭

960
11,29327
12,280(479,475)(39,869)䋭(479,475)

The accompanying notes are an integral part of these statements.

32

33

Financial Section

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Leopalace21 Corporation and consolidated subsidiaries
For the years ended March 31, 2011 and 2010
Shareholders’ equity

Commonstock
Balance as ofMarch 31, 2009

55,641

Capitalsurplus34,105Retainedearnings

Treasurystock

73,413(6,543)

Accumulated other comprehensive income
Total
Foreign
Total
Net unrealized
Deferredaccumulated
currency
othershareholders’ gains on “other losses ontranslation
comprehensive
equitysecurities”
hedgesadjustments
income156,61617(8)(10,183)(10,174)

Millions of yen
Share
subscription
rightsPurchase oftreasury stock
Disposal oftreasurystocksNet change ofitems other thanshareholders’equityTotal change
during period
Balance as ofMarch 31, 2010

(79,076)(211)

55,641

146,442(79,076)(79,076)

(0)

(0)

(0)

400

189

189

107

3

3,225

3,335

89

3,424

Depreciation

6,451

6,296

77,587

Increase (decrease) in allowance for doubtful accounts

386

(133)

4,638

Increase (decrease) in retirement benefit reserves for directors

㧙

(97)

㧙

Increase (decrease) in reserve for apartment vacancy loss

877

27,108

10,549Interest and dividend income

(114)

(176)

(1,372)

Interest expense

1,627

1,196

19,565

Foreign exchange loss (gain)

5,561

2,468

66,881Equity in losses (earnings) of affiliated companies

268

(146)

3,229

107

3

3,225

3,335

89

(75,463)

Loss (gain) on sale of property, plant and equipment(2,031)

96(24,431)

33,894(5,663)(6,143)77,729124(5)(6,958)(6,839)89

70,979

Write-offs of property, plant and equipment

101

843

1,217

Impairment loss

2,228

3,238

26,795

Disaster loss

1,263

䋭

15,187

Expense for switch to terrestrial digital broadcasts

340

䋭

4,086

Provision for switch to terrestrial digital broadcasts

1,188

䋭

14,291

Loss (gain) on sale of investment securities

109

(2)

1,305

Business structure reform expenses

䋭

29,856䋭Decrease (increase) in accounts receivable

7,821

(991)

94,059Decrease (increase) in real estate for sale

3,837

24,221

46,147

Decrease (increase) in payment for construction in progress

550

3,537

6,617

Decrease (increase) in long-term prepaid expenses

20,253

9,348

243,578

Increase (decrease) in accounts payable(31,706)(15,358)(381,314)

Increase (decrease) in customer advances for projects in progress(5,370)(5,410)(64,585)

Increase (decrease) in advances received

13,441

621

161,644

Increase (decrease) in guarantee deposits received(19,692)(4,870)(236,824)

Increase (decrease) in accrued consumption taxes

2,518(1,870)30,288Other(1,992)

177(23,967)(25,204)

2,425(303,116)

113

183

1,360

(40,890)

922

(482)

642

(40,890)

1,844

1,844

(0)

(0)

160

160

80

2

939

1,021

(73)

948

922

440

(40,890)642(38,886)

80

2

939

1,021

(73)

(37,938)

56,56334,334(46,553)(5,501)

38,843204(3)(6,019)(5,818)16

33,041Thousands of U.S. dollars (Note 1)

Capitalsurplus407,625

Retainedearnings

Treasurystock(68,108)(73,874)

Accumulated other comprehensive income
Total
Foreign
Total
Net unrealized
Deferredaccumulated
currency
othershareholders’ gains on “other losses ontranslation
comprehensive
equitysecurities”
hedgesadjustments
income934,803

1,496

(66)

(83,674)(82,244)

Share
subscription
rightsTotal net
assets

1,070

853,629

SubtotalInterest and dividends received

Cash dividend
Net loss
Issuance of
new shares
Purchase oftreasury stock
Disposal oftreasurystocksNet change ofitems other thanshareholders’equityTotal change
during period
Balance as ofMarch 31, 2011

(398,286)(78,887)(0)669,160(77,527)400

Shareholders’ equity

Balance as ofMarch 31, 2010

(33,118)

Loss before income taxes(79,076)(40,890)

Commonstock(491,755)
11,091

2010

(211)

Net loss922

2011
Cash flows from operating activities:㧙

Cash dividend

Issuance of
new shares
Purchase oftreasury stock
Disposal oftreasurystocksNet change ofitems other thanshareholders’equityTotal change
during period
Balance as ofMarch 31, 2011

Thousands of U.S.
dollars (Note 1)
2011

Millions of yen

Total net
assetsCash dividend
Net loss

Leopalace21 Corporation and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

(491,755)(491,755)

22,182

22,182

(0)

(0)

(0)

7,704

1,908

1,908

11,091(5,796)960

27

11,293

12,280(878)

11,402

11,091

5,295(491,755)

7,704(467,665)

960

27

11,293

12,280(878)(456,263)

680,251

412,920(559,863)(66,170)

467,138

2,456

(39)

(72,381)(69,964)

192

397,366

Interest paid

(1,617)(1,213)(19,446)

Income taxes paid

(1,629)(14,386)(19,592)

Net cash provided by (used in) operating activities(28,337)(12,991)(340,794)

The accompanying notes are an integral part of these statements.

The accompanying notes are an integral part of these statements.

34

35

Financial Section

Notes to Consolidated Financial Statements
Thousands of U.S.
dollars (Note 1)
2011

Millions of yen

2010

2011

Leopalace21 Corporation and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

1. Basis of Presenting Consolidated Financial Statements

Cash flows from investing activities:
Payment for purchase of property, plant and equipment(1,354)(5,735)(16,282)

Proceeds from sale of property, plant and equipment

12,742

1,536

153,244

Payment for purchase of intangible assets(1,897)(3,697)(22,818)

Payment for purchase of investment securities

(20)

(836)

(244)

Proceeds from sale of investment securities

993

126

11,947

Payment for loans

(69)

(110)

(826)

Proceeds from collection of loans

218

5

2,623

Payments for time deposits(3,713)

䋭(44,656)

Proceeds from withdrawal of time deposits

6,575

䋭

79,078

Other

(331)

(178)

(3,993)

Net cash provided by (used in) investing activities

13,144(8,889)158,073

Proceeds from short-term borrowings

16,50037,799198,436

Repayment of short-term borrowings(3,529)(28,080)(42,445)

Proceeds from long-term debt

㧙

38,000㧙

Repayment of long-term debt

(29,003)(35,348)(348,804)

Repayment of finance lease obligations(1,198)(906)(14,409)

Proceeds from issuance of bonds

㧙

3,907

㧙

Payment for redemption of bonds

(560)

(280)

(6,735)

Proceeds from issuance of common stock

1,741

䋭

20,939Proceeds from disposal of treasury stock

158

189

1,907

Payment for purchases of treasury stock

(0)

(0)

0

(15,891)

15,281(191,111)

(456)

255

(5,479)Net increase (decrease) in cash and cash equivalents(31,540)(6,344)(379,311)

Cash and cash equivalents at beginning of year

72,03278,376866,288

Cash and cash equivalents at end of year (Note 4)

40,492

72,032486,977

Cash flows from financing activities:

Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

The accompanying notes are an integral part of these statements.

The accompanying consolidated financial statements of Leopalace21 Corporation (the “Company”) have been
prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Act of Japan and its
related accounting regulations and in conformity with accounting principles generally accepted in Japan, which are
different in certain respects as to application and disclosure requirements from International Financial ReportingStandards.
The accompanying consolidated financial statements have been reformatted and translated into English (withcertain expanded disclosure) from the consolidated financial statements of the Company prepared in accordancewith accounting principles generally accepted in Japan and filed with the Financial Services Agency as required by
the Financial Instruments and Exchange Act of Japan. Some supplementary information included in the statutory
consolidated financial statements, but not required for fair presentation, is not presented in the accompanying
consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers
outside Japan, using the prevailing exchange rate at March 31, 2011, which was ¥83.15 to US$1.00. Suchtranslation should not be construed as a representation that the Japanese yen amounts have been, could have been,or could in the future be, converted into U.S. dollars at this or any other rate of exchange. Certain amounts in theprior year’s financial statements have been reclassified to conform to the current fiscal year’s presentation.

2. Summary of Significant Accounting Policies(1) Consolidation
The accompanying consolidated financial statements as of March 31, 2011 include the accounts of the Company
and its 9 (9 as of March 31, 2010) significant subsidiaries (together, the “Companies”). Affiliated companies overwhich the Company exercises significant influence in terms of their operating and financial policies have been
included in the consolidated financial statements on an equity basis. Investments in 1 affiliate have been included forthe years ended March 31, 2011 and 2010. All significant intercompany balances and transactions have been
eliminated.
Investments in subsidiaries and affiliates that are not consolidated or accounted for by the equity method are carriedat cost or less. Where there has been a permanent decline in the value of such investments, the Company has
written down the investments.
Since the fiscal year end for certain consolidated subsidiaries is December 31, their financial statements as of thatdate are used in the preparation of the Company’s consolidated financial statement. When significant transactions
occur at those subsidiaries between their fiscal year end and the Company’s fiscal year end, these transactions areincluded in consolidation as necessary.
(2) Cash and cash equivalents
For the purpose of the statements of cash flows, the Company considers all highly liquid investments withinsignificant risk of change in value that have maturities of generally three months or less when purchased to be
cash equivalents. These include cash on hand, demand deposits at banks and highly liquid short-term investmentswith negligible risk of fluctuation in value and maturities of less than three months.
(3) Inventories
Inventories of the Companies are primarily stated at cost (reflecting write down due to decline in profitability)
determined by the specific identification method.
Ending inventories are amounts after book value devaluation accompanying the decline in profitability and loss ondevaluation of real estate for sale of ¥24 million is included in the cost of sales.

36

37

Financial Section(4) Securities
Held-to-maturity securities are stated at amortized cost (straight-line method).
“Other securities” with available fair market values are stated at fair market value at the end of the fiscal year of eachconsolidated companies. “Other securities” without available fair market values are stated at cost by themoving-average method.
Unrealized gains or losses on these securities are reported, net of applicable income taxes, as a separate
component of net assets. Cost of securities sold is computed using the moving-average method.
Investments in limited investment partnerships are reported using the equity method, based on the latest financial
statements available as at the closing dates stipulated by the respective partnership contracts.
(5) Derivatives
Derivative transactions are accounted for using hedge accounting.
1. Hedge accounting method
The Company uses the deferred hedge accounting method.
The interest rate swaps that meet specific matching criteria are recognized and included in interest expense or
income.
2. Hedging method and hedge targets
Hedging method
Hedge targets
Interest rate swaps
Debt
3. Hedge policy
Interest rate swaps are utilized as a hedge against possible future interest rate increases, in amounts that fallwithin the range of the particular liability being hedged.
4. Method used to evaluate the effectiveness of the hedge
Cumulative interest rate fluctuations and changes in cash flows are compared to evaluate the effectiveness ofhedge targets and hedge methods. However, evaluation as of the date of settlement of the effectiveness ofinterest rate swaps that meet specific matching criteria is omitted.
(6) Property, plant and equipment (except for leased assets)
Rental buildings of the Company and domestic consolidated subsidiaries are stated at cost. Depreciation iscomputed generally on the straight-line basis. The range of useful lives is principally from 22 to 47 years for rentalbuildings.
Property, plant and equipment other than rental buildings of the Company and domestic consolidated subsidiaries
are stated at cost. Depreciation is computed generally by the declining-balance method. However, buildings(excluding accompanying facilities) obtained on or after April 1, 1998 are depreciated by the straight-line method.
The range of useful lives is principally from 40 to 50 years for buildings and structures and 5 years for machinery andequipment.
Property, plant and equipment of the consolidated overseas subsidiaries are depreciated by the straight-line method
based on the local GAAP. The range of useful lives is principally from 30 to 40 years for buildings and structures andfrom 3 to 5 years for machinery and equipment.
(7) Long-lived assets
The Companies review long-lived assets for impairment whenever events or changes in circumstance indicate thecarrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if thecarrying amount of an asset or asset group exceeded the sum of the undiscounted future cash flows expected toresult from the continued use and eventual disposition of the asset or asset group. The impairment loss would bemeasured as the amount by which the carrying amount of the assets exceeds their recoverable amount, which is thehigher of the discounted cash flows from the continued use and eventual disposition of the assets, or the net selling
price at disposition.

(9) Long-term prepaid expenses
Long-term prepaid expenses are amortized evenly over a period mainly from 3 to 5 years.
(10) Allowance for doubtful accounts
The Companies maintain an allowance for doubtful accounts to reserve for potentially uncollectible receivables. A
general provision for doubtful receivables is provided by applying a certain reserve percentage of the receivables
based on experience from past transactions. A specific reserve is provided for the estimated amounts to beuncollectible based on the customers’ financial condition or other pertinent factors.
(11) Allowance for employees’ bonuses
Because the bonus system was revised from the current fiscal year so that the bonus calculation period matched thefiscal period, the Company does not record an allowance for employees’ bonuses at the fiscal year end.
The Company decided to reduce the summer bonus amount to employees for the current fiscal year as an additional
cost-cutting measure for accomplishing the Medium-term Management Plan. As a result, the Company recorded¥2,605 million ($31,330 thousand) of reversal of the bonus allowance.
According to amendment of the bonus system, the bonus calculation periods have been changed as follows:
Bonus calculation period before change
Summer bonus (previous year) October 1 until March 31
Winter bonus (current year) April 1 until September 30
Bonus calculation period after change
Summer bonus (current year) April 1 until September 30
Winter bonus (current year) October 1 until March 31
As a result, operating loss in the consolidated statements of the current fiscal year and loss before income taxes
have decreased by ¥209 million ($2,516 thousand).
(12) Retirement benefit reserves
Retirement benefit reserves for employees are provided mainly at an amount calculated based on the retirement
benefit obligation as of the balance sheet date.
The retirement benefit obligation is attributed to each period by the straight-line method over the estimated years ofservice of the eligible employees.
Unrecognized actuarial gain or loss is amortized commencing the year following the year in which the gain or loss isrecognized by the straight-line method over 5 years, which is shorter than the average remaining years of service ofthe eligible employees.
Prior service cost is amortized commencing the year in which the cost is recognized by the straight-line method over
5 years, which is shorter than the average remaining years of service of the eligible employees.
Some domestic consolidated subsidiaries calculate retirement benefit reserves based on the simplified method.
(13) Reserve for apartment vacancy loss
Reserve for vacancy losses on apartment units managed under master lease agreements is calculated according to
the projected loss that could occur during a logical predictable period to prepare for the risk of increased vacancies.
It is based on estimated losses resulting from current rental income and expected future occupancy rates for eachrental property managed by the leasing division of the Company.
(14) Reserve for warranty obligations on completed projects
Reserve for warranty obligations on completed projects is provided to reserve for execution of warranty obligations
under defect liabilities in the future. It is calculated using the percentage of the past execution of warranty obligations
on the completed projects.
(15) Reserve for fulfillment of guarantees
The Company’s consolidated subsidiary Plaza Guarantee Co., Ltd., to provide for losses attributable to its leaseguarantee business, is recording the amount of loss expected based on the rate of past guarantee fulfillments.

(8) Intangible Assets
Software for internal use is amortized on a straight-line basis over the estimated useful life of 5 years.
38

39

Financial Section(16) Reserve for disaster losses
The Company, to provide for restoration costs and other losses stemming from the Great East Japan Earthquake, isrecording the anticipated amount for such losses.

(23) Interest capitalization
Leopalace Guam Corporation, a consolidated subsidiary, capitalized interest paid on borrowing for real estatedevelopment business for the development period into acquisition cost of property, plant and equipment.

Disaster loss stated in the consolidated statement of operations is restoration costs and other losses arising fromthe Great East Japan Earthquake. The breakdown of it including ¥1,189 million ($14,305 thousand) of provision fordisaster losses is as follows:

Capitalized interests included in carrying value of property, plant and equipment were ¥1,709 million ($20,559
thousand) and ¥1,983 million as of March 31, 2011 and 2010, respectively.

March 31, 2011(24) Consumption taxes
National and local consumption taxes are basically excluded from transaction amounts. However, LEOPALACE SSI,a consolidated subsidiary, includes national and local consumption taxes in operating expenses and general andadministrative expenses. The nondeductible portion of consumption taxes on the purchase of assets is recorded as
long-term prepaid expenses and amortized evenly over 5 years.

(Millions of yen)(Thousands of U.S. dollars)

Loss on damage to property equipment
under management

773

9,300

Company property repairs

125

1,502

Damage to work-in-progress property

47

565

Fixed cost for hotel business suspension
period16

192

Cost for other restoration assistance

302

3,628

1,263

15,187

Total(17) Reserve for switch to terrestrial digital broadcasts
The estimated cost of purchasing applicable equipment is provided for expenditures resulting from the switchover toterrestrial digital broadcasts.
(18) Revenues and costs of construction contracts
In recognizing construction revenues and costs of constructions in process, the percentage-of-completion method isapplied to such contracts in which the outcome of the construction activity is deemed certain by the end of the fiscal
year ended March 31, 2011, while the completed contract method is applied to other constructions. Progress ofconstruction is estimated based on the method of the ratio of actual cost incurred to total cost.

(25) Earnings per share
Basic earnings per share of common stock is computed by net income available to common shareholders divided by
the weighted-average number of common shares outstanding for the period.

3. Additional Information(1) Accounting standards for presentation of comprehensive income
Starting from the year ended March 31, 2011, “Accounting Standards for Presentation of Comprehensive Income”(Accounting Standard Board of Japan (ASBJ) Statement No. 25, June 30, 2010) have been applied. However, theamount of valuation and translation adjustments and total valuation and translation adjustments in the previous
year’s consolidated balance sheets is stated in accumulated other comprehensive income and total accumulated
other comprehensive income in the year 2010 of the current year’s consolidated balance sheets.
Consolidated statements of comprehensive income(a) Comprehensive income for the year ended March 31, 2010 was as follows:(19) Income taxes
Income taxes comprise corporate, inhabitant and enterprise taxes.

March 31, 2010
Comprehensive income attributable to shareholders of theparent entity(75,741)

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

Total(75,741)(20) Leases
Finance leases that are deemed to transfer ownership of leased property to the lessee (excluding leases thatexisted on or before March 31, 2008) are accounted for in a manner similar to sales transactions and depreciated by
the straight-line method over the lease term of respective assets as their useful lives with no residual value.
Any finance lease transactions executed before March 31, 2008, where ownership of the leased assets is nottransferred to the lessee are accounted for as operating lease transactions.
(21) Foreign currency transactions
All monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at thecurrent exchange rates as of each balance sheet date. The foreign exchange gains and losses from translation arerecognized in the consolidated statements of operations.
(22) Foreign currency financial statements
The assets and liabilities of consolidated overseas subsidiaries are translated into Japanese yen at the current
exchange rates as of each balance sheet date, and income and expenses are translated at the average exchange
rates of the fiscal year. Foreign currency translation adjustments resulting from the translation of assets, liabilities
and net assets are included in translation adjustments as a separate component of net assets.

40(Millions of yen)(b) Other comprehensive income for the year ended March 31, 2010 was as follows:
March 31, 2010

(Millions of yen)

Net unrealized gains on “other securities”

107

Foreign currency translation adjustments

3,226

Share of other comprehensive income in affiliates
Total

2
3,335

(2) Revision of system of budgeting for future expenses incurred for repair and refurbishment of furnitureand electrical appliances
During the current fiscal year, the Company revised its system of budgeting for future expenses incurred for repair
and refurbishment of furniture and electrical appliances provided in apartments managed by the Company.
According to this revision, the Company also amended the agreements for repair and refurbishment of furniture andelectrical appliances with the apartment owners. As a result, the Company received the lump-sum reserve for repair
and refurbishment of furniture and electrical appliances that the apartment owners had funded in their own accounts,
and recognized rental income (¥9,142 million, $109,946 thousand) out of lump-sum reserve in the Leasing division
for the maintenance services rendered by the Company during the year ended March 31, 2011. In addition, theCompany recorded Advances received (¥9,024 million, $108,524 thousand) for the maintenance services renderedwithin one year and Long-term advances received (¥14,830 million, $178,354 thousand) for the maintenanceservices rendered after one year.

41Financial Section

4. Cash and Cash Equivalents

A reconciliation between “Cash and cash equivalents” in the consolidated balance sheets and consolidated
statements of cash flows are as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011
Cash and cash equivalents in the consolidatedbalance sheets
Time deposits with original maturities of more than
three months
Cash and cash equivalents in the consolidated
statements of cash flows

2010

2011

40,67572,432

489,171

(183)

(400)

(2,194)40,492

72,032486,977

Trading Management Rules." The derivatives trading management situation is periodically reported to theboard of directors for comprehensive risk management. Furthermore, the contracted counterparty to derivativetrades is always a highly credit worthy Japanese financial institution, so it can be recognized that the risk ofcontract breach by the other party is close to zero.
Trade payables and debts are exposed to liquidity risk, but this risk is monitored by various means such as the
preparation of a monthly financial plan by each company in the Companies.
4) Supplementary explanations on fair value of financial instruments
Fair value of financial instruments are measured based on the quoted market price, or reasonably assessedvalue if a quoted market price is not available.
Fair value of financial instruments which quoted market price is not available is calculated based on fluctuating
factor, and the value might differ if different assumptions are used.
In addition, the contract amount of the derivative transactions described in “7. Derivative Transactions” does not
represent the market risk of the derivative transactions.

5. Financial Instruments(1) The financial instruments and related disclosures
1) Policy for financial instruments
The Companies are mainly involved in raising funds (mostly bank borrowing and corporate bond issuance)needed for capital investment to carry out Leasing Business and Apartment Construction Subcontracting
Business. Temporary excess funds are invested in highly secure financial assets, and short-term working
capital is raised by borrowing from the bank. The Companies conduct derivative transactions primarily for the
purpose of avoiding the below mentioned risk, and has a policy not to conduct speculative trading.
2) Nature and extent of risks arising from financial instruments
Operating receivables such as trade receivables and accounts receivable for completed projects are exposedto credit risk.
Foreign currencies denominated loans originated in conjunction with overseas business development are
exposed to exchange risk.
Securities are mainly held–to-maturity securities and shares of the companies with which the Company has
a business relationship, and those securities are exposed to market risk.
Almost all accounts payable and accounts payable for completed projects which are operating liabilities arescheduled to be paid within one year.
Loans payable, corporate bonds, and lease obligations related to finance lease transactions are mainly forthe purpose of raising funds necessary for investment in facilities, and the longest repayment date is sevenyears subsequent to fiscal year end.

(2) Fair value of financial instruments
The carrying amount on the consolidated balance sheet and fair value of financial instruments as of March 31, 2011
and 2010 as well as the differences between these values are described below. Financial instruments whose fairvalues appear to be extremely difficult to determine are not included in the table. (See (Note 2))(Millions of yen)March 31, 2011
Carrying value

Fair value

Difference(1) Cash and cash equivalents

40,67540,675㧙(2) Trade receivables and accounts receivable forcompleted projects

8,378

8,378

㧙

(3) Investment securities

2,702

2,713

11

(4) Operating loans

4,311
4,318

720

482

㧙

12

12

㧙

55,84756,578731
㧙Allowance for doubtful accounts (*1)

(713)

Net

3,598

(5) Long-term loans

601

Allowance for doubtful accounts (*1)

(119)

Net

482

(6) Bad debt

4,453

Allowance for doubtful accounts (*1)
Net
Total assets(4,441)

Derivative transactions are interest rate swaps whose purpose is to hedge against the risk of future interest
rate fluctuations related to loans payable. The interest rate swaps carry a risk of fluctuations in market
interest rates.

(1) Accounts payable and accounts payable forcompleted projects

15,333

15,333(2) Short-term borrowings

22,691

22,691

㧙For details of hedging method, hedge targets, hedging policy and the method for evaluating hedging
effectiveness concerning hedge accounting, please refer to aforementioned “2. Summary of Significant
Accounting Policies, (5) Derivatives”.

(3) Bonds

3,160

3,140

(20)

(4) Long-term debt

14,03914,029

(10)

3,969

3,864

(105)

59,19259,057(135)

Derivatives transaction not subject to the application ofhedge accounting

㧙

㧙

㧙

Derivatives transactions subject to the application ofhedge accounting

㧙

㧙

㧙

㧙

㧙

㧙

3) Risk management for financial instruments
Credit risk management for operating receivables and loans outstanding follows the “Receivables management
rules.” While each business division manages the extension of credit to its customers, it is also organized forearly detection and loss reduction of accounts where collection is doubtful due to worsening credit or similar
problems.

(*2)
(*2)

(5) Lease obligations
Total liabilities

Total derivative transactions

Regarding securities and investment securities, the Company periodically investigates and understands theshare price and the financial condition of the share issuing organization. In addition, for items other thanheld-to-maturity securities, the Company considers the relationship with the trading partner companies andconstantly re-evaluating its holdings.
The basic policy of derivatives trading is determined by the board of directors, and the execution andadministration of derivatives transactions are conducted in accordance with the Company’s "Derivatives
42

43

Financial Section
March 31, 2010

(Millions of yen)
Carrying value

Fair value

Difference(1) Cash and cash equivalents

72,432

72,432㧙(2) Trade receivables and accounts receivable forcompleted projects

12,917

12,917

㧙(3) Marketable securities and investment securities

3,201

3,189

(12)

(4) Operating loans

5,482

Allowance for doubtful accounts (*1)

(724)

Net

4,758

(5) Long-term loans

1,102

Allowance for doubtful accounts (*1)
Net

1,039
5,204

Allowance for doubtful accounts (*1)
Net

5,500

742

1,039

㧙

(4,228)
976

976

㧙

96,053730(1) Accounts payable and accounts payable forcompleted projects

46,08046,080㧙(2) Short-term borrowings

9,720

9,716

(4)

(3) Bonds

3,720

3,701

(19)

43,04343,016

(27)

4,836

4,696

(140)

107,399

107,209(190)

Derivatives transaction not subject to the application ofhedge accounting

㧙

㧙

㧙

Derivatives transactions subject to the application ofhedge accounting

㧙

㧙

㧙

㧙

㧙

㧙

(*2)

(4) Long-term debt(*2)(5) Lease obligations
Total liabilities

Total derivative transactions
March 31, 2011
(1) Cash and cash equivalents(2) Trade receivables and accounts receivable forcompleted projects(3) Investment securities(4) Operating loans
Allowance for doubtful accounts (*1)Net(5) Long-term loans
Allowance for doubtful accounts (*1)Net(6) Bad debt
Allowance for doubtful accounts (*1)
Net
Total assets(1) Accounts payable and accounts payable forcompleted projects(2) Short-term borrowings(3) Bonds(*2)(4) Long-term debt (*2)(5) Lease obligations
Total liabilities
Derivatives transaction not subject to the application ofhedge accounting
Derivatives transactions subject to the application ofhedge accounting
Total derivative transactions(Thousands of U.S. dollars)
Carrying value
Fair value
489,171
489,171
100,751
100,751
32,50051,850(8,580)43,2707,232(1,430)5,802
53,550(53,403)147
671,641
184,4061) Matters concerning the calculation method for the fair value of financial instruments, securities andderivatives transaction
Assets95,323

Total assets

44

Notes:(63)(6) Bad debt(*1) Operating loans, long-term loans and bad debts have deductions of their respective allowance for doubtful
accounts, which are recorded separately.
(*2) As per the consolidated balance sheet, the current portion of long-term debt (¥11,811 million, $142,050
thousand) and the bonds to be redeemed within one year (¥560 million, $6,735 thousand) are respectively
recorded as being included within long-term debts and bonds.

Cash and cash equivalents
Trade receivables and accounts receivable for completed projects
These assets are stated at carrying amount as they are settled in the short-term and their fair values
approximate their carrying amount.
Investment securities
Shares are stated at the stock exchange quoted price; bonds are stated at either the stock exchange
quoted price or the price presented by transacting financial institutions.
For notes to securities by holding purposes, please refer to “Note 6”.
Operating loans
The fair value of operating loans is stated at the net present value, which is calculated by discounting theprincipal with interest by the discount rate (i.e. the estimated interest rate for new transaction).
Long-term loans
Bad debt
The fiscal year-end outstanding balances are calculated mainly using expected future cash flows of thepotentially recoverable principal and interest.
Liabilities

Difference㧙㧙32,632

132

51,933

8,663

5,802

㧙

147
680,436
184,406

㧙
8,795
㧙

272,888
38,004
168,842
47,731
711,871㧙

272,888
37,766
168,722
46,460710,242
㧙

㧙
(238)
(120)
(1,271)(1,629)
㧙

㧙

㧙

㧙

㧙

㧙

㧙

Accounts payable and accounts payable for completed projects
These liabilities are stated at carrying amount as they are settled in the short-term and their fair values
approximate their carrying amount.
Short-term borrowings
Long-term debt
Lease obligations
These liabilities are stated at the net present value, which is calculated by discounting the principal withinterest by the discount rate (i.e. the estimated interest rate for new borrowings or lease transaction).
Bonds
Bonds issued by the Company are privately offered, and its fair value is stated at the net present value,
which is calculated by discounting the principal with interest by the discount rate (i.e. the current market
interest rate in consideration of residual value and credit risk).
Derivatives transactions
Please refer to “Note 7” below.

45

Financial Section
2) Financial instruments whose fair value appear to be extremely difficult to determine

March 31, 2010
(Thousands of
U.S. dollars)(Millions of yen)

Item
2011
Unlisted shares

2010

2011

Due within 1 year

Due after
10 years

Cash and deposits

72,432㧙㧙㧙Trade receivables andAccounts receivable forcompleted projects

12,917

㧙

㧙

㧙

1,848

2,127

22,223

Unlisted bonds (subordinate corporate bonds)

824

824

9,913

Subordinate beneficiary rights of loans andaccounts receivable in trust

907

499

10,912Marketable securities andinvestment securities

Contributions to limited investment
partnerships

253

290

3,035

Held-to-maturity bonds
700

㧙

㧙

3,740

46,083(1) Government andmunicipal bonds

㧙

3,832

(2) Corporate bonds

㧙

㧙

300

200

(1) Government andmunicipal bonds

10

709

㧙

㧙

3) The scheduled redemption amount of monetary claims and investment securities with maturity
subsequent to fiscal year end(2) Bonds(Corporate bonds)

㧙

㧙

㧙

824

March 31, 2011

(3) Others

㧙

㧙

290

999

Operating loans

941

2,303

1,404

834

Long-term loans

㧙

㧙

㧙

1,102

Total

As they have no market value, and as it is understood that it is extremely difficult to estimate their future cash flow, the above
financial instruments are not included in “Assets: Investment Securities”.

(Millions of yen)
Due within 1 year

Due after 1 year Due after 5 years
through 5 years through 10 years

Due after
10 years

Cash and deposits

40,675㧙㧙㧙Trade receivables andAccounts receivable forcompleted projects

8,378

㧙

㧙

㧙

Other investment securities
with maturities

Bad debts
Total

Held-to-maturity bonds(1) Government andmunicipal bonds

㧙

700

㧙

㧙

(2) Corporate bonds

㧙

㧙

㧙

㧙

㧙

㧙

5,204

3,712

1,994

9,163

(1) Government andmunicipal bonds

㧙

599

545

㧙

(2) Bonds(Corporate bonds)

㧙

㧙

㧙

824

(3) Others

㧙

252

㧙

(Thousands of U.S. dollars)
Due within 1 year

Due after 1 year Due after 5 years
through 5 years through 10 years

Due after
10 years

Cash and deposits

489,171㧙㧙㧙Trade receivables andAccounts receivable forcompleted projects

100,751㧙㧙㧙(1) Government andmunicipal bonds

㧙

8,419

㧙

㧙

907

(2) Corporate bonds

㧙

㧙

㧙

㧙

Other investment securities
with maturities(1) Government andmunicipal bonds

㧙

7,204

6,542

㧙

(2) Bonds(Corporate bonds)

㧙

㧙

㧙

9,912

Other investment securities
with maturities

Operating loans

513

1,693

1,466

639

Long-term loans

17

57

24

503

Bad debts

㧙

㧙

㧙

4,453

49,583

3,301

2,035

7,326

Total

㧙
86,300March 31, 2011

Investment securities

Investment securities
Held-to-maturity bonds(3) Others

㧙

3,034

㧙

10,912

Operating loans

6,173

20,361

17,634

7,682

Long-term loans

207

685

293

6,047

Bad debts

㧙㧙㧙

53,550596,30239,70324,46988,103Total

46(Millions of yen)
Due after 1 year Due after 5 years
through 5 years through 10 years

47

Financial Section

6. Securities(a) At March 31, 2011 and 2010, information with respect to “held-to-maturity securities” for which market prices
were available was summarized as follows:
March 31, 2011

March 31, 2011

Unrecognized gain
(loss)

Market value

Unrecognized gain items:

Stock

447

384

Government and municipal bonds

728

721

7

䋭

Corporate bonds

䋭

䋭

䋭

10

Others

䋭

䋭

䋭

710

10

Bonds:

Corporate bonds

䋭

䋭

䋭

Others䋭䋭710

Unrecognized loss items:
Government and municipal bonds

䋭

䋭

䋭

Corporate bonds

䋭

䋭

䋭

Others䋭䋭䋭

Subtotal

䋭

䋭

䋭

Total

700

710

10

March 31, 2010

(Millions of yen)
Carrying valueMarket value
610

11

Corporate bonds

䋭

䋭

䋭

Others

300

300

0

Subtotal

899

910

11

Government and municipal bonds

100

100

(0)

Corporate bonds

㧙

㧙

㧙

Others

200

177

(23)

Subtotal

300

277

(23)

1,199

1,187

(12)

Unrecognized loss items:(Thousands of U.S. dollars)
Unrecognized gain
(loss)

Market value

Unrecognized gain items:
Government and municipal bonds

8,413

8,544

131

Corporate bonds

䋭

䋭

䋭

Others

䋭

䋭

䋭

8,413

8,544

131

Government and municipal bonds

䋭

䋭

䋭

Corporate bonds

䋭

䋭

䋭

Others䋭䋭䋭

Subtotal

㧙

㧙

㧙

8,413

8,544

131

Subtotal
Unrecognized loss items:

Total

71

4

1,239

395

12

13

(1)

Government and municipal bonds

357

360

(3)

Corporate bonds

䋭

䋭

䋭

Others䋭䋭䋭Securities whose acquisition costexceeds their carrying value:
Stock
Bonds:

Total

599

Carrying value

75
1,634

Subtotal

OthersGovernment and municipal bonds

March 31, 2011

OthersUnrecognized gain
(loss)

Unrecognized gain items:

Total

Unrealized gain
(loss)

831

700

700

Acquisition cost

Securities whose carrying value
exceeds their acquisition cost:

Government and municipal bonds

Subtotal(Millions of yen)
Carrying value(Millions of yen)
Carrying value

48(b) Investment securities classified as “other securities” as of March 31, 2011 and 2010 were as follows:

Subtotal

䋭

䋭

䋭

369

373

(4)

2,003

1,612

391

March 31, 2010

(Millions of yen)
Carrying value

Acquisition cost

Unrealized gain
(loss)

Securities whose carrying value
exceeds their acquisition cost:
Stock

730

447

283

Government and municipal bonds

10

10

0

Corporate bonds

䋭

䋭

䋭

Others䋭䋭䋭

Others

152

106

46

892

563

329

12

13

(1)

Government and municipal bonds

639

646

(7)

Corporate bonds

䋭

䋭

䋭

Others

318

345

(27)

Others

141

166

(25)

Subtotal

1,110

1,170

(60)

Total

2,002

1,733

269

Bonds:

Subtotal
Securities whose acquisition costexceeds their carrying value:
Stock
Bonds:

49

Financial Section
March 31, 2011

March 31, 2010

(Thousands of U.S. dollars)
Carrying value

Acquisition cost

Proceeds fromsale

Securities whose carrying value
exceeds their acquisition cost:
Stock(Millions of yen)

Unrealized gain
(loss)
Stock

Gains

Losses䋭䋭䋭Government and municipal bonds

䋭

䋭

䋭

Corporate bonds

䋭

䋭

䋭

Bonds:
9,994

5,376

4,618

8,757

8,673

84

䋭

䋭

䋭

Corporate bonds

䋭

䋭

䋭

Others97

2䋭

Others

䋭

䋭

䋭

896

853

43

Total

97

2

䋭

Others

19,647

14,902

4,745

Bonds:
Government and municipal bonds

Subtotal

OthersMarch 31, 2011

(Thousands of U.S. dollars)

Securities whose acquisition costexceeds their carrying value:
Stock

Proceeds from
sale
146

156

(10)

4,295

4,333

(38)

Corporate bonds

䋭

䋭

䋭

Corporate bonds

Others䋭䋭䋭

OthersOthers䋭䋭䋭Bonds:
Government and municipal bonds

Losses

939

366

17

䋭

䋭

䋭

Bonds:

Subtotal

4,441

4,489

(48)

Total

24,08819,391

4,697(Note)March 31, 2011
¥1,848 million ($22,223 thousand) of non-listed shares, ¥824 million ($9,913 thousand) of non-listed bonds(subordinate corporate bonds), ¥907 million ($10,912 thousand) of subordinate beneficiary rights to loans andmoney in trust, and ¥252 million ($3,035 thousand) of contributions to investment business limited partnerships are
not included in the "other securities" amount given above because they have no market value and assigning themfair market prices is recognized to be extremely difficult.
March 31, 2010
¥2,127 million of non-listed shares, ¥824 million of non-listed bonds (subordinate corporate bonds), ¥499 million ofsubordinate beneficiary rights to loans and money in trust, and ¥290 million of contributions to investment businesslimited partnerships are not included in the "other securities" amount given above because they have no market
value and assigning them fair market prices is recognized to be extremely difficult.
Among the above items, the subordinate beneficiary rights to the subordinate corporate bonds and the money ontrust were acquired by the Company in conjunction with the securitization of nonexempt property type apartment
loans, the financing executed primarily as contract work fee payment loans from financial institutions to theCompany.
(c) Proceeds from sales of “other securities” and gain or loss on these sales for the years ended March 31, 2011 and2010 were summarized as follows :March 31, 2011

Government and municipal bonds

䋭

䋭

䋭

3,097

䋭

1,052

Others

2,309

410

387

Total

6,345

776

1,456

(d) Proceeds from sales of held-to-maturity debt for the year ended March 31, 2011 is as follows:
March 31, 2011

(Millions of yen)
Cost of sale

Others (Structured bonds)
Reasons for sale

Proceeds from sale
200

148

(52)

Change in management policy of surplus funds

March 31, 2011

(Thousands of U.S. dollars)
Cost of sale

Others (Structured bonds)
Reasons for sale

Gain (loss)

Proceeds from sale

2,405

Gain (loss)

1,780

(625)

Change in management policy of surplus funds(e) In addition, amount of subsidiaries and affiliate’ stocks included in investment securities of the consolidatedbalance sheet are as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011
Investment securities (stocks)

2010
744

2011
1,020

8,949

(Millions of yen)
Proceeds from
sale

Stock

Stock

Gains

Gains

Losses

78

30

1

䋭

䋭

䋭

Corporate bonds

䋭

䋭

䋭

Others258

䋭87

Others

192

35

33

Total

528

65

121

Bonds:
Government and municipal bonds

50

51

Financial Section

7. Derivative Transactions

8. Long-Lived Assets(2) Derivatives transactions subject to the application of hedge accounting
Interest rate-related derivatives
March 31, 2011

March 31, 2011

The Companies recognized impairment loss on the following asset groups for the years ended March 31, 2011 and2010:(1) Derivatives transaction not subject to the application of hedge accounting
Not applicable.

Impairment loss
PurposeCategory

Location

Rental assets(Apartmentbuildings andothers, 108 units)

Buildings andstructures

Setagaya-ku,
Tokyo, etc.

Hotel

Land

Idle assets(Training facilities
and others, 2 units)

Buildings andstructures(Millions of yen)

(Millions of yen)Hedge
accounting method
Exceptional accounting
treatments applied to interest
rate swaps

Type of derivatives

Interest-rate swaps
Pay fixed interest
and receive floatinginterest

Major hedged
itemsLong-term debt

Contract
amount1,719

Amount ofmore than 1
year-period
contracts
831

Fair value(Note)March 31, 2010
Hedge
accounting method
Exceptional accounting
treatments applied to interest
rate swaps

Type of derivatives

Interest-rate swaps
Pay fixed interest
and receive floatinginterest

Major hedged
itemsLong-term debt

Contract
amount2,607

Amount ofmore than 1
year-period
contracts
888

Fair value(Note)March 31, 2011
(Thousands of U.S. dollars)Hedge
accounting method
Exceptional accounting
treatments applied to interest
rate swaps

Type of derivatives

Interest-rate swaps
Pay fixed interest
and receive floatinginterest

Major hedged
itemsLong-term debt

Contract
amount20,673

Amount ofmore than 1
year-period
contracts
9,994

297

3,573

1,793

21,560

Sapporo city,
Hokkaido40

480

Miura city,
Kanagawa, etc.

58

700

40

482

2,228

26,795

Land

Land

Total

(Millions of yen)

Fair value(Note)

㧔Note㧕
Interest rate swap subject to the application of exceptional accounting treatments are recognized together withhedged items (i.e. long-term debt), therefore their fair value are included in the fair value of the relevant
long-term debt.

(Thousands of
U.S. dollars)

March 31, 2010
PurposeImpairment loss
(Millions of yen)

Category

Location

Rental assets(Apartmentbuildings andothers, 111 units)

Buildings andstructures

Setagaya-ku,
Tokyo, etc.

Business
properties

Software andothers

268

Land

2,935
35

Nakano-ku,
Tokyo

Total

3,238

The Companies recognized each property in domestic rental assets as a unit and grouped overseas assets bymanagerial accounting segmentation.
The Companies wrote down book value of the rental assets, hotels, and idle assets whose profitability decreased
seriously due to the slump in the rental income market and continuous decline in land prices, to recoverable
amounts and recognized the reduced values as impairment losses.
Recoverable amounts of rental assets and hotels were measured by values in current use or net sales price basedon publicly assessed values, which were calculated based on the present values of future cash flows, using a
discount rate of 3.1%.
Recoverable amounts of idle assets were measured by net sales price based on real estate appraisal values.

9. Bad Debts

Bad debts are claims as stipulated under Article 32, Paragraph 1, and Item 10 of the Regulation concerning
Financial Statements. Bad debt at March 31, 2011 and 2010 consisted of the following:(Thousands of
U.S. dollars)(Millions of yen)
2011
Claims in bankruptcy

52

2010

2011

35

㧙

426

Claims in the process of bankruptcy

2,333

2,390

28,053

Bad debts

1,609

2,644

19,355

Others

476

170

5,716

Total

4,453

5,204

53,55053

Financial Section

10. Income Taxes(a) Significant components of deferred tax assets and liabilities as of March 31, 2011 and 2010 were as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011

2010

(a) Short-term borrowings, long-term debt and lease obligations at March 31, 2011 and 2010 consisted of thefollowing:

2011

Loss carried forward for tax purposes

33,53825,691

403,348

Impairment loss

21,41429,877

257,534

Reserve for apartment vacancy loss

13,267

12,910159,556

Advances from customers for rent income

11,3292,119

136,252

Subsidiaries’ foreign exchange loss

3,849

2,792

46,288Retirement benefit reserves

3,204

2,973

38,530Loss on devaluation of property, plant and equipment

1,630

1,630

19,599Allowance for doubtful accounts

1,592

1,229

19,143

Deposits received

652

739

7,836

Loss on devaluation of securities

642

705

7,715

Sales promotion cost

581

610

6,990

Loss on devaluation of real estate for sale

560

2,067

6,736

Reserve for disaster losses

484

㧙

5,821

Reserve for switch to terrestrial digital broadcasts

484

㧙

5,815

Retirement benefit reserves for directors

482

482

5,800

Excess amortization on software

336

348

4,037

Other payables

181

361

2,178

Excess depreciation

161

153

1,932

Asset retirement obligations

157

㧙

1,888

Sales discount for construction contracts

120

148

1,442

Elimination of unrealized gain

82

95

980

Accrued enterprise tax

84

45

1,008

Reserve for fulfillment of guarantees

55

㧙

665

Reserve for warranty obligations on completed project

54

133

655

Bad debt loss

34

34

411

Low-value assets

8

23

99

Allowance for employees' bonuses

㧙

1,114

㧙

㧙

263

㧙

Others

130

699

1,576

Sub-total

95,11087,2401,143,834

Less: valuation allowance(88,981)(73,522)(1,070,127)

Total deferred tax assets

6,129

13,71873,707

(138)

(78)

(1,655)

Fixed asset retirement expenses

(9)

㧙

(109)

Others

㧙

(16)

㧙

(147)

(94)

(1,764)

5,982

13,624

71,943

Total deferred tax liabilities
Net deferred tax assets

2010

2011

Short-term borrowings,
with average interest rate of 2.75%

22,691

9,720

272,888

Current portion of long-term debt,
with average interest rate of 2.16%

11,811

20,281

142,050

Current portion of lease obligations,with average interest rate of 4.43%

1,230

1,196

14,794Long-term debt, due 2012 to 2013,
with average interest rate of 2.17%

2,228

22,762

26,792

Lease obligations, long term, due 2012 to 2018,with average interest rate of 4.53%

2,739

3,640

32,937

Total

40,69957,599489,462(Notes)
1. To calculate “Average interest rate,” weighted average rates and fiscal year-end balances are used.
2. The redemption schedule of long-term loans payable and lease obligations (excluding current portion) for 5 years
subsequent to March 31, 2011, is summarized in (b) below.
(b) Scheduled repayment amount of bonds payable, long-term debts and lease obligations subsequent to fiscal year
end are as follows:
Schedule of bonds
Millions of yen
Due within 1 year560

Due within 1 year
6,735

Due after 1 year
through 2 years
560

Due after 1 year
through 2 years
6,735

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

560

560

560

Due after 2 years
through 3 years

Thousands of U.S. dollars
Due after 3 years
Due after 4 years
through 4 years
through 5 years

6,735

6,735

6,735

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Millions of yen
Due after 4 years
through 5 years

Schedule of loans
Due after 1 year
through 2 years
Long-term debt

2,228

㧙

㧙

㧙

Lease obligation

1,233

917

384

157

Due after 1 year
through 2 years

Deferred tax liabilities:
Net unrealized gain on “other securities”(Thousands of
U.S. dollars)(Millions of yen)

2011

Deferred tax assets:

Loss on devaluation of real estate for investment

11. Short-Term Borrowings and Long-Term Debt

Due after 2 years
through 3 years

Thousands of U.S. dollars
Due after 3 years
Due after 4 years
through 4 years
through 5 years

Long-term debt

26,792㧙㧙㧙

Lease obligations

14,834

11,033

4,617

1,893

(b) Reconciliation of the differences between the normal effective statutory tax rate and the actual effective tax rate
for the years ended March 31, 2011 and 2010 was not stated since the Company posted loss before income
taxes.

54

55

Financial Section(c) Assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2011 and 2010 were as
follows:(Thousands of
U.S. dollars)(Millions of yen)
2011

2010

(a) The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the
consolidated balance sheets as of March 31, 2011 and 2010 for the Companies’ defined benefit plans:

㧙

1,157

㧙

Real estate for sale in process

20

2,289

241

Buildings and structures

58,351

32,880701,760

Land

84,334

83,9081,014,241

Investment securities

936

834

11,251Others in Investments and other assets(Membership right)

420

420

5,051

144,061

121,488

1,732,544

2011
Projected benefit obligation(7,736)(90,657)

103

951

(415)

326

(4,985)(7,874)(7,307)(94,691)

Certain consolidated subsidiaries apply simplified methods in calculating their projected benefit obligations.
(b) The following table sets forth the funded and accrued status of the entire pension plan as of March 31, 2010 and2009.

(Thousands of
U.S. dollars)
2010

2011

Short-term borrowings

20,066

6,719

241,318

Current portion of long-term debt

11,811

20,281

142,050

Long-term debt

2,228

22,762

26,792

Total

34,10549,762

410,160(e) Investment securities have been deposited with the Legal Affairs Bureau as follows:(Thousands of
U.S. dollars)(Millions of yen)
2010

2011

Deposit for operation stipulated in Building Lots andBuildings Transaction Business Act

25

35

301

Deposit for housing construction warranty

615

386

7,395

Deposit for housing defect warranty

100

89

1,198

Advanced payment certificate in accordance with
Payment and Settlement Regulations

238

㧙

2,865

2010

2009
43,851

35,983527,378

Projected benefit obligation

50,81453,153611,114

Difference(6,963)(17,170)(83,736)

The main components of the difference are unrecognized prior service costs of ¥1,871 million ($22,505
thousand) and insufficient amount carried forward of ¥5,092 million ($61,231 thousand). The Company
recognized the special annuity premium of ¥103 million ($1,237 thousand) and ¥130 million as an expense in theyears ended March 31, 2011 and 2010, respectively. The ¥5,091 million ($61,231 thousand) of insufficientamount carried forward will be settled by increasing the rate of special annuity premium based on fiscal
recalculation.
The annuity premium contributory proportion of the entire pension plan is 36% and 41% as of March 31, 2011
and 2010, respectively.
The Company has a welfare pension fund. In the welfare pension fund, it cannot reasonably calculate the portionof the pension assets attributed to the Company.
(c) The components of retirement benefit expenses for the years ended March 31, 2011 and 2010 were summarized
as follows:(Thousands of
U.S. dollars)(Millions of yen)

12. Commitment LineFor efficient procurement of working capital, the Company maintains commitment line contracts with two financial
institutions. As of the end of the current fiscal year, the unexercised portion of facilities based on the contract was asfollows:(Thousands of
U.S. dollars)(Millions of yen)
2011

56

2010

Pension assets

2011

2010

2011

Total commitment available

16,50016,500

198,437

Less amount utilized

16,500㧙

198,437

㧙

16,500㧙Balance available(Thousands of
U.S. dollars)(Millions of yen)

(Millions of yen)

2011

2011

79

Unrecognized actuarial gain or loss
Retirement benefit reserves

2010(7,538)Unrecognized prior service cost(d) Secured borrowings with pledge of collateral at March 31, 2011 and 2010 were as follows:

2011(Thousands of
U.S. dollars)(Millions of yen)

2011

Real estate for sale/property inventories

Total

13. Retirement Benefit Plans

2010

2011

Service cost

2,525

3,256

30,370Interest cost

170

156

2,040

Amortization of actuarial gain or loss

132

217

1,591

Amortization of prior service cost
Total

24

18

292

2,851

3,647

34,293(Notes) 1. In the year ended March 31, 2011, contributions to the welfare pension fund, which were recorded in service cost,were ¥1,375 million ($16,538 thousand), including ¥539 million ($6,480 thousand) of employee contribution.
2. All the retirement benefit expenses of the domestic consolidated subsidiaries adopting the simplified method wererecorded in service cost.

57

Financial Section

17. Rental Properties(d) The assumptions used in accounting for the above plans are as follows:
Assumptions used in accounting for
retirement benefits

2011

The Company possesses rental apartments in major cities and regions throughout Japan. Also, Leopalace Guam
Corporation as a subsidiary company possesses rental housing within resorts, and Plaza Guarantee Co., Ltd. as a
subsidiary company possesses rental buildings. For the year ended March 31, 2011, income arising from theserental properties was ¥4,764 million ($57,294 thousand), and impairment loss was ¥2,188 million ($26,315
thousand).

2010

Periodical allocation of estimatedretirement benefit

Same as right

Straight-line method

Discount rate

Same as right

2.2%

Amortization period of prior service cost

Same as right.

5 years(Amortized evenly over a
period not exceeding the
expected average remaining
working lives of theemployee from the time ofoccurrence.)

Amortization period of actuarial gain or
loss

Same as right

5 years from the following
fiscal year
(Amortized evenly over a
period not exceeding the
expected average remaining
working lives of theemployee from the time ofoccurrence.)

Also, the changes in book value of rental properties during the year ended March 31, 2011 and 2010, and the fairvalue as of March 31, 2011 and 2010 are as follows:
March 31, 2011

Millions of yen
Book Value

Balance as of March 31, 2010

Increase/Decrease

85,082(12,031)

Gain on sale of property, plant and equipment for the years ended March 31, 2011 and 2010 were as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011
Buildings and structures
Land
Others
Total

2010

2011

Book Value
Balance as of March 31, 2009

Increase/Decrease
4,844

537

2,000

0

24,052

1

0

20

2,046

130

24,60915. Loss on Sale of Property, Plant and Equipment

Balance as of March 31, 2010

Fair Value

85,082

March 31, 2011

82,566

Thousands of U.S. dollars
Book Value
Increase/Decrease

1,023,233

130

75,982Millions of yen

Balance as of March 31, 201045

Fair Value

73,051March 31, 2010

80,238

14. Gain on Sale of Property, Plant and Equipment

Balance as of March 31, 2011

(144,694)

Balance as of March 31, 2011

Fair Value

878,539913,794(Note)
1. Book value recorded on the consolidated balance sheets is the amount after deducting accumulated depreciation
and accumulated impairment loss from acquisition cost.
2. The main decrease is sale of property, plant, and equipment (¥8,872 million, $106,699 thousand) and impairment
loss (¥2,188 million, $26,315 thousand).
3. Fair value as of the end of the current fiscal year is calculated by the Company mainly based on “Real-estateappraisal standards”.

Loss on sale of property, plant and equipment for the years ended March 31, 2011 and 2010 were as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011

2010

18. Asset Retirement Obligations

2011

Out of asset retirement obligations, item recorded on the consolidated balance sheet are as follows:

Buildings and structures

2

10

22

Land

㧙

216

㧙

Others

13

㧙

156

Total

15

226

178

16. Loss on Disposal of Property, Plant and Equipment

Loss on disposal of property, plant and equipment for the years ended March 31, 2011 and 2010 were as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011
Buildings and structures

58

2010
89

2011
805

1,072

Leased assets

0

4

0

Others

12

34

145

Total

101

843

1,217

(1) Outline of the asset retirement obligations
Asset retirement obligations are restoration obligations under real estate rental agreement for shop and termleasehold interest agreement for rental properties and asbestos removal expenses in company-owned
apartments.
(2) Calculation method of the asset retirement obligations
For the restoration obligations under real estate rental agreement for shop, the estimated period of use at 5
years from its acquisition and the discount rate at 0.362% to 0.527% are used to calculate the amount of theasset retirement obligations.
For the restoration obligations under term leasehold interest agreement for rental properties, the estimatedperiod of use at 11–30 years depending on the period of the agreements (useful lives of buildings according to
the former Act on Land and Building Lease) and the discount rate at 1.329% to 2.301% are used to calculate theamount of the asset retirement obligations.
For asbestos removal expenses in company-owned apartments, the estimated period of removal at 3 years andthe discount rate at 0.193% are used to calculate the amount of the asset retirement obligations.

59

Financial Section(3) Changes in the total amount of the asset retirement obligations during the year are as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011

2010

2011

Balance at beginning of year

101

91

1,217

Increase due to acquisition of
tangible fixed assets

5

9

62

Adjustments due to thepassage of time

1

1

10

20. Leases

The Companies primarily lease furniture and electronic appliances, for apartments of their leasing business, andsoftware.
(a) The following pro forma amounts represent the acquisition cost, accumulated depreciation and net book value ofleased property as of March 31, 2011 and 2010, which would have been reflected in the accompanying
consolidated balance sheets if finance accounting had been applied to the finance leases that existed on or
before March 31, 2008 and are currently accounted for as operating leases:(Thousands of
U.S. dollars)(Millions of yen)

Decrease due to fulfillment ofasset retirement obligations

(29)

㧙

(348)

Others

(0)

㧙

(2)

Acquisition cost

Balance at end of year

78

101

939

Vehicles2011

Equipment

2010

2011

7

7

86

13,352

14,536

160,578

Accumulated depreciation
Vehicles19. Supplemental Information on the Statement of Changes in Equity

Equipment

Shares issued and treasury stocks for the year ended March 31, 2011 were as follows:
Type of shares

March 31, 2010

Increase

Decrease

March 31, 2011

Shares issued
Common stock

159,543,915

15,900,000㧙

175,443,915

Total

159,543,915

15,900,000㧙

175,443,915

Treasury stock
Common stock

7,667,387

63

799,600

6,867,850

Total

7,667,387

63

799,600

6,867,850(Note)
1. Breakdown of amounts of increase is as follows:
New shares issued through third-party allotment
15,900,000 shares
Purchase of shares of less than one unit
63 shares
2. Breakdown of amounts of decrease is as follows:
Sell off of shares from “Leopalace 21 Employee Stock Ownership Committee Trust Account” to the Board for Employees’
Ownership
799,600 shares
3. Number of treasury stock includes 2,298,900 shares held by the Trust Account as of the end of this fiscal year.

Shares issued and treasury stocks for the year ended March 31, 2010 were as follows:
Type of shares

March 31, 2009

Increase

Decrease

March 31, 2010

Shares issued
Common stock

159,543,915

㧙㧙

159,543,915

Total

159,543,915

㧙㧙

159,543,915

Treasury stock
Common stock

8,165,714

273

498,600

Total

8,165,714

273

498,600

1.
2.

3.

5

4

62

9,965

8,728

119,850

2

3

24

3,387

5,808

40,728Net book value
VehiclesEquipment(b) The amounts of outstanding future lease payments under finance lease subsequent to March 31, 2011 including
the interest portion thereon were summarized as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011

2010

2011

Due within one year

2,056

2,535

24,727

Due after one year

1,665

3,722

20,022

Total

3,721

6,257

44,749Annual lease expenses charged to income were ¥2,759 million ($33,183 thousand) and ¥3,188 million for the years
ended March 31, 2011 and 2010, respectively.
(c) Future minimum lease payments (including the interest portion thereon) subsequent to March 31, 2011 and 2010
for finance lease transactions accounted for as operating leases were summarized as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011

2010

2011

Lease payment

2,759

3,188

33,183

Estimated amount of depreciation by
the straight-line method over the lease period

2,418

2,768

29,074

7,667,387
7,667,387

Estimated interest cost by the interest method

230

359

2,767

Breakdown of amounts of increase is as follows:
Purchase of shares of less than one unit
273 shares
Breakdown of amounts of decrease is as follows:
Sell off of shares from “Leopalace 21 Employee Stock Ownership Committee Trust Account” to the Board for Employees’
Ownership
498,600 shares
Number of treasury stock includes 3,098,500 shares held by the Trust Account as of the end of this fiscal year.

(d) Method of estimating amount of depreciation:
Amounts corresponding to pro forma depreciation under finance leases were computed by the straight-line
method in which the lease period is used as the useful lives and it is assumed that the residual value of therelevant assets falls to nil at the end of the lease period.
(e) Method of estimating interest cost:
Estimated interest cost is calculated as the difference between the total amount of lease payments and theacquisition cost of leased properties, and allocated between each period using the interest method.

60

61

Financial Section(f) Future minimum lease payments related to non-cancelable operating leases subsequent to March 31, 2011 and2010 were as follows:
March 31, 2011
(Millions of yen)(Thousands of U.S. dollars)

Future lease
payments

Prepaid lease
payments

Differences

Future lease
payments

Prepaid lease
payments

Due within
one year

284,838(284,827)

21,959(21,959)

262,879(262,868)

3,425,590(3,425,465)

264,090(264,090)

3,161,500(3,161,375)

Due after
one year

1,035,629(1,035,629)

33,482(33,482)

1,002,147(1,002,147)

12,454,957(12,454,949)

402,676(402,676)

12,052,281(12,052,273)

Total

1,320,467(1,320,456)

55,441(55,441)

1,265,026(1,265,015)

15,880,547(15,880,414)

666,766(666,766)

15,213,781(15,213,648)

Differences(2) Calculation Method for Sales, Profits and Losses, Assets, and other Items by Reportable Segment
The accounting methods for reportable segments are basically the same as that presented in “Significant Items
Fundamental to the Preparation of the Consolidated Financial Statements.” The reportable segment profits(losses) represent operating income (loss). Inter-segment sales and transfers are based on prevailing market
prices.
(3) Information Regarding Sales, Profits and Losses, Assets, and other Items by Reportable Segment for theyears ended March 31, 2011 and 2010 were as follows:
March 31, 2011
Reportable segment
Leasing
Division

March 31, 2010
(Millions of yen)

Apartment
Construction
Subcontracting
Division

Hotel Residential
ResortSales
Division
Division

Segment
Total

Others

Total

Adjustments

Consolidated
Total

Sales

Future lease
payments

Prepaid lease
payments

Differences

Due within
one year279,727(279,685)

25,395(25,395)

254,332(254,290)

Due after
one year

1,183,488(1,183,477)

50,300(50,300)

1,133,188(1,133,177)

Total

1,463,215(1,463,162)

75,695(75,695)

1,387,520(1,387,467)

Sales to customers

356,606

107,821

6,492

4,689

475,608

8,783

484,391㧙

484,391

451

㧙

1,696

㧙

2,147

36

2,183

(2,183)

㧙

357,057

107,821

8,188

4,689

477,755

8,819

486,574(2,183)484,391

Segment profit (loss)(30,094)

11,971(1,975)

220(19,878)(1,442)(21,320)(2,287)(23,607)

Segment assets

156,272

22,06945,728119

224,188

7,591

231,779

66,495298,274

2,670

423

1,919

㧙

5,012

109

5,121

1,330

6,451

385

95

405

㧙

885

61

946

2,636

3,582

Inter-segment sales andtransfers
Total

Other items

Future operating lease payments fixed under master lease agreements in leasing business are shown inparentheses.

Contingent liabilities as of March 31, 2011 and 2010 were as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011

Depreciation
Increase in property,
plant, and equipment,
and intangible assets

Notes: 1. The “Others” classification is the business segment not included in reportable segments, and comprises
the silver (elderly care) business, small-claims and short-term insurance business, and financing business.

21. Contingent Liabilities

2010

2011

Contingent liabilities to financial institutions forcustomers who have a home mortgage

1,615

1,710

19,423

Contingent liabilities to financial institutions forcustomers who have a membership loan

22

30

264

1,637

1,740

19,687

Total(Millions of yen)

22. Segment Information(1)Overview of Reportable Segments
The Companies’ reportable segments are the components for which separate financial information is available,
and whose operating results are reviewed regularly by the board of directors in order to determine allocation of
resources and assess segment performance.

2. Breakdown of adjustments is as follows:
Segment profit (or loss)(Millions of yen)(Thousands of US dollars)Inter-segment eliminations
Corporate expenses*

46(2,333)558(28,062)

Total(2,287)(27,504)*Corporate expenses consist mainly of general administrative expenses for administrative departmentsthat are not part of reportable segments.
Adjustments in segment assets (¥66,495 million, $799,699 thousand) consist mainly of surplus operating
funds, long-term investment capital, and assets which do not belong to reportable segments.
Adjustments in the increase of property, plant, and equipment, and intangible assets (¥2,636 million,$31,701 thousand) consist of capital investments which do not belong to reportable segments.
3. Segment profit (or loss) is adjusted to operating loss on the Consolidated Statements of Operations.

The Companies have four reportable segments, the Leasing Division, Apartment Construction Subcontracting
Division, Hotel Resort Division and Residential Sales Division.
The Leasing Division operations comprise the leasing and management of apartment buildings and otherproperties, repair work, broadband internet service, rent guarantee, and the company residence agency business.
The Apartment Construction Subcontracting Division constructs apartments and other buildings on a contract
basis. The Hotel Resort Division operates hotels and resort facilities, and sells resort memberships. The
Residential Sales Division sells residential homes and other properties.

62

63

Financial Section
March 31, 2010

Related information
For the year ended March 31, 2011

(Millions of yen)
Reportable segment
Leasing
Division

Apartment
Construction
Subcontracting
Division

Hotel
ResortDivision

Residential
Sales
Division

Segment
Total

342,316

237,062

6,734

24,644

610,756

9,620

398

㧙

2,972

㧙

3,370

342,714

237,062

9,706

24,644

Segment profit (loss)(47,876)

29,745(1,324)

Segment assets

183,178

30,735

Depreciation

1,983

Increase in property,
plant, and equipment,
and intangible assets

1,580

Adjustments

Consolidated
Total

620,376㧙

620,376

36

3,406(3,406)

㧙614,126

9,656

623,782(3,406)620,376(3,357)(22,812)(3,420)(26,232)(3,496)(29,728)

55,912

3,996

273,821

10,020283,841

112,671396,512

1,034

1,968

2

4,987

105

5,092

1,204

6,296

41

3,071

3

4,695

1,495

6,190

5,182

11,372Others

Total

Sales
Sales to customers
Inter-segment sales andtransfers
Total

1. Products and services
Information concerning products and services has been omitted, since similar information is reported in Segment
Information.
2. Geographic area
(1) Sales
Information concerning sales by geographic area has been omitted, since more than 90% of sales reported in
the consolidated statement of operations are generated in Japan.
(2) Plant, property, and equipment
Millions of yen
Japan

Trust territory of U.S.A. Guam People’s Republic of China

Other items

118,084

32,191

10

Trust territory of U.S.A. Guam People’s Republic of China
1,420,131

Notes: 1. The “Others” classification is the business segment not included in reportable segments, and comprises
the silver (elderly care) business, small-claims and short-term insurance business, and financing business.

387,138

Segment profit (or loss)(Millions of yen)Inter-segment eliminations
Corporate expenses*

91(3,587)

Total(3,496)125

Adjustments in segment assets (¥112,671 million) consist mainly of surplus operating funds, long-term
investment capital, and assets which do not belong to reportable segments.
Adjustments in the increase of property, plant, and equipment, and intangible assets (¥5,183 million) consistof capital investments which do not belong to reportable segments.

Millions of yen
Leasing
Division
Impairment
loss

2,090

Apartment
Construction
Subcontracting
Division㧙

Hotel Resort Residential
Division
Sales Division
40

㧙

Other
Division

Adjustments

Consolidated
total

㧙

98

2,228

Thousands of U.S. dollars

3. Segment profit (or loss) is adjusted to operating loss on the Consolidated Statements of Operations.
Leasing
Division(Thousands of U.S. dollars)
Reportable segment
Leasing
Division

Apartment
Construction
Subcontracting
Division

Hotel
ResortDivision

Residential
Sales
Division

Segment
Total

4,288,709

1,296,705

78,07356,391

5,719,878

5,429

㧙

20,397

㧙

25,826

4,294,138

1,296,705

98,47056,391

Segment profit (loss)(361,929)

143,972(23,750)

Segment assets

1,879,395

265,405

549,948

Others

Total

Adjustments

Consolidated
Total

105,629 5,825,507

㧙5,825,507

26,253(26,253)

㧙

5,745,704

106,056 5,851,760(26,253)

5,825,507

2,643(239,064)(17,343)(256,407)(27,503)(283,910)

1,435

2,696,183

91,299 2,787,482

799,699

3,587,181

427

Other items

64

Impairment
loss
Note:

Sales

Total

1,807,394

Information concerning impairment loss on fixed assets by reportable segments
For the year ended March 31, 2011

*Corporate expenses consist mainly of general administrative expenses for administrative departments thatare not part of reportable segments.

Inter-segment sales andtransfers

Total

3. Major customers
Information concerning sales to major customers has been omitted, since sales to any particular customer does
not exceed 10% of sales reported in the consolidated statement of operations.

2. Breakdown of adjustments is as follows:

Sales to customers

150,285
Thousands of U.S. dollars

Japan

March 31, 2011

Total

Depreciation

32,1195,084

23,078

㧙

60,281

1,301

61,582

16,00577,587

Increase in property,
plant, and equipment,
and intangible assets

4,628

1,136

4,875

㧙

10,639741

11,38031,701

43,081

25,133

Apartment
Construction
Subcontracting
Division㧙

Hotel Resort Residential
Division
Sales Division
480

㧙

Other
Division

Adjustments

Consolidated
total

㧙

1,182

26,795

Amount in “Adjustments” consists of idle assets (training facilities and others, 2 units).

Information concerning goodwill amortization and unamortized balance by reportable segments
For the year ended March 31, 2011
Not applicable.
Information concerning gain on negative goodwill by reportable segments
For the year ended March 31, 2011
Not applicable.
(Additional information)
For the year ended March 31, 2011
From the current fiscal year, the Companies adopt “Accounting Standard for Disclosures about Segmentsof an Enterprise and Related Information” (ASBJ Statement No.17, March 27, 2009) and “Guidance on
Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ
Guidance No.20, March 21, 2008).
65

Financial Section

23. Amounts per Share(a) The following tables set forth the net assets and net loss per share of common stock for the years ended March
31, 2011 and 2010.
(Yen)
2011
Net assets(U.S. dollars)
2010

2011

195.91466.762.36(261.03)(521.91)(3.14)Net loss
Basic

Diluted net income per share is not stated since the Company posted net loss per share.

24. Related Party Transactions

The following tables set forth related party transactions for the years ended March 31, 2011 and 2010.
.
For the year ended March 31, 2011(a) Unconsolidated subsidiaries and affiliates
Capital stock
Attribute

Name

Address(Millionsof yen)(Thousands of
U.S. dollars)

AffiliateToyo
MiyamaKogyo
Co., Ltd.

Kisarazu
City,
Chiba

100

1,203

(b) Basis of computation of net assets per share at March 31, 2011 and 2010 was as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011
Net assets

2010

2011

33,041

70,979397,366

Amount not attributable to common stock

16

89

191

(new share subscription right)

(16)

(89)

(191)

Net assets attributable to common stock

33,02570,890397,175

Shares issued outstanding at end of year
(Thousands of shares)

168,576

151,877㧙Businessor position

Purchases of building
materials and others

Transaction amount

Balance

Attribute

Name

Transaction(Millions ofyen)(Thousands of
U.S. dollars)

Account

AffiliateToyo
MiyamaKogyo Co.,
Ltd.

Purchasesof building
materials
and others

13,254

159,394

Accounts
payable forcompletedprojects(Thousands of
U.S. dollars)(Millions of
yen)
1,232

14,821(b) Directors and major individual shareholders(c) Basis of computation of basic net loss per share for the years ended March 31, 2011 and 2010 was as follows:(Thousands of
U.S. dollars)(Millions of yen)
2011

2010

2011

(40,890)(79,076)(491,755)㧙㧙㧙Net loss attributable to common stock(40,890)(79,076)(491,755)

Weighted-average shares during the year
(Thousands of shares)

156,649

151,512㧙Dilutive securities that didn’t have dilutive
effects and therefore were not included in
the calculation of diluted net income pershare.

New share
subscription right(710)

New share
subscription right(1,712)

㧙

Amount not attributable to common stock

Relation

50.0%

Production
and salesof building
materials

Capital stock

Net loss

Percentage ofshareownership

The Company recognizes stocks held by “Leopalace 21 Employee Stock Ownership Committee Trust Account”(2,298,900 treasury stocks as of the end of this fiscal year) as the treasury stock. As a result, those numbers are
eliminated in calculating “Number of common shares used to calculate net assets per share at the end of the fiscalyear” and “Weighted average number of common shares during the fiscal year.”

Attribute

Name

Directors andclose relatives

ToshikoMiyoshiCompany where
major
shareholders(individual) andclose relatives
have majority ofvoting rights

Address

Percentage ofshareownership

Relation(Thousands of
U.S. dollars)

㧙

㧙

㧙

㧙

㧙

Leasing ofland andbuildings

Takeshi
Yoshioka

㧙

㧙

㧙

㧙

㧙

Leasing ofland andbuildings

MDI

Nakano,
Tokyo

100

1,203

Real
estatebusiness㧙Real estate
brokerage

Transaction amountAttribute

Name

Transaction

Directors andclose relatives

ToshikoMiyoshiCompany where
major
shareholders(individual) andclose relatives
have majority ofvoting rights

Businessor position(Millionsof yen)Account

Balance(Millionsof yen)(Thousands of
U.S. dollars)(Millions ofyen)(Millionsof yen)(Thousands of
U.S. dollars)

Leasing ofapartments

26

313

Long-term
prepaid
expenses

19

234

Takeshi
Yoshioka

Leasing ofapartments

12

144

㧙

㧙

㧙

MDI

Brokerageof realestate held
for sale

21

256

㧙

㧙

㧙

(Notes) 1. Consumption taxes were not included in transaction amounts but included in balance.
2. Conditions of transactions:(a) Conditions of purchases of building materials are the same as transactions with third parties.
(b) Conditions of leasing of apartments are the same as transactions with third parties.
(c) Conditions of sale of land are the same as transactions with third parties.
3. Toshiko Miyoshi is a close relative of Tadahiro Miyama, Director of the Company.

66

67

Financial Section
4. Takeshi Yoshioka is a close relative of Yoshikazu Miike, Director of the Company.
5. MDI is a company where the major shareholder (Yusuke Miyama) of the Company and his close relative(s) have 100%of the voting rights. Yusuke Miyama is no longer one of the major individual shareholders after December 21, 2010.

For the year ended March 31, 2010(a) Unconsolidated subsidiaries and affiliates
Attribute

Name

Address

AffiliateToyo
MiyamaKogyo
Co., Ltd.

Kisarazu
City,
Chiba

Attribute
Affiliate

Name

Capital stock(Millions of yen)
100

Transaction

Toyo Miyama
Kogyo Co., Ltd.

Business or
position

Percentage ofshare ownership

Production
and sales ofbuilding
materials

50.0%Transaction amount
25,511

Purchases of building materials
and others
Interlocking directors

Balance

Account(Millions of yen)

Purchases ofbuilding materials
and others

Relation(Millions of yen)
5,690

Accounts payable
for completed
projects(b) Directors and major individual shareholders
Address

Capital stockBusiness or
position

Percentage ofshare ownership

Attribute

Name

Directors
and close
relatives

Yoshiteru
Kitagawa

㧙

㧙

㧙

0.5%

Leasing of land andbuilding

ToshikoMiyoshi

㧙

㧙

㧙

㧙

Subcontracting ofbuilding construction(Millions of yen)

Relation

Leasing of land andbuilding
Takeshi
Yoshioka㧙㧙㧙Transaction amount

Leasing of land andbuildings

Account

Balance

Attribute

Name

Directors
and close
relatives

Yoshiteru Kitagawa

Leasing ofapartments

10

㧙

㧙

Toshiko Miyoshi

Apartment
construction
subcontracting

193

㧙

㧙

Leasing ofapartments

15Long-term prepaid
expenses25

Leasing ofapartments

13

㧙

㧙

Takeshi Yoshioka

Transaction㧙(Millions of yen)

(Millions of yen)

(Notes) 1. Consumption taxes were not included in transaction amounts but included in balance.
2. Conditions of transactions:(a) Conditions of purchases of building material were the same as transactions with third parties.
(b) Conditions of leasing of apartments are the same as transactions with third parties.
(c) Conditions of sale of land are the same as transactions with third parties.
3. On February 5, 2010, Yoshiteru Kitagawa resigned as a board member.
4. Toshiko Miyoshi is a close relative of Tadahiro Miyama, Executive Director of Management.
5. Takeshi Yoshioka is a close relative of Yoshikazu Miike, Director of the Company.

68

69

Corporate Information
Corporate Data (As of March 31, 2011)

Board of Directors and Auditors(As of June 30, 2011)

Company Name: Leopalace21 Corporation

Directors

Group Companies (As of March 31, 2011)
Company Name

2-54-11 Honcho, Nakano-ku,
Tokyo 164-8622, Japan
TEL: +81-3-5350-0001 (Main Line)

President and CEO

Eisei Miyama

Director

Tadahiro Miyama

Leopalace Guam Corporation

Established:

August 17, 1973

Director

Hiroyuki Miyata

Paid-in Capital:¥56,563 million

Director

Operations:

Construction, leasing and sales ofapartments, condominiums andresidential housing; development andoperation of resort facilities; hotelbusiness; broadband business; andSilver business (elderly care business),
etc.

Head Office:Number of
Employees:

7,114 (consolidated basis)
6,240 (non-consolidated basis)

Voting Rights (%)

Main Business

Consolidated Subsidiaries
100% owned

Hotel Resort Business

Leopalace Guam Distributing Corporation*

100% owned (indirectly)

Hotel Resort BusinessYoshikazu Miike

Leopalace Guam Service Corporation*

100% owned (indirectly)

Hotel Resort BusinessDirector

Kou Kimura

Leopalace Travel, Ltd.

100% owned

Hotel Resort BusinessDirector

Fumiaki Yamamoto

Leopalace Leasing Corporation

100% owned

Leasing BusinessDirector

Yuzuru Sekiya

Plaza Guarantee Co., Ltd.

100% owned

Leasing Business / Others

Director (outside)

Tetsuji Taya

Leopalace Insurance Co., Ltd.
(Small-claims and short-term insurance business)

100% owned

Others (Small-claims andshort-term insurance business)

Leopalace21 Business Consulting (Shanghai) Co., Ltd.

100% owned

Leasing Business

Leopalace Smile Co., Ltd.

100% owned

Others50% owned

Apartment Construction Subcontracting
Business

Auditors
Standing Auditor

Shinya WatanabeStanding Auditor

Masumi Iwakabe

Auditor (outside)

Koichi Fujiwara

Auditor (outside)

Masahiko Nakamura

Equity Method Affiliate
Toyo Miyama Kogyo Co., Ltd.
* Corporation having a legally certified liquor license in Guam

Major Shareholders (Top 10) (As of March 31, 2011)
Number of Shares

Percentage of
Outstanding Shares

1. Jyu-seikatsu Realty Corporation

15,900,000

9.06%

2. Yusuke Miyama

11,810,974

6.73%

3. Stockholding Association for Leopalace21’s Business Connections

5,680,300

3.24%

4. Leopalace21 Corporation

4,568,950

2.60%

Morgan Stanley & Co. International plc
5.
Standing Proxy, Morgan Stanley MUFG Securities Co., Ltd.

4,092,965

2.33%

6. Toyo Kanetsu K.K.

2,745,900

1.57%

Goldman Sachs International
7.
Standing Proxy, Goldman Sachs Japan Co., Ltd.

2,489,000

1.42%

8. Sumitomo Mitsui Banking Corporation, Trust Account2,298,900

1.31%

Hokkaido area:

Bank of New York GCM Client Account JPRDISGFEAC
9.
Standing Proxy, Bank of Tokyo-Mitsubishi UFJ

2,026,144

1.15%

14,627 units

10. Stockholding Association for Leopalace21’s Employees

1,932,290

1.10%

Shareholders

Number of apartment units under management by area (As of March 31, 2011)
Total number of units in Japan

571,656 units

Koshinetsu area:
24,895 units
Tohoku area:

Share Information (As of March 31, 2011)
Number of Shares:
Authorized: Issued andOutstanding:Number of
Shareholders:
Stock Exchange
Listing:
Transfer Agent:

34,634 units

Shareholder Composition (As of March 31, 2011)
Breakdown by Number of Shares

250,000,000
175,443,915
44,369Hokuriku area:

Foreign Corporations 11.26%

Chugoku area:

Financial Institutions 8.68%

37,877 units

Financial Instruments Business Operators (Securities Companies)
2.62%
Treasury Stocks 2.60%

16,344 units
Kanto area:
204,340 units

Government and Local Public
Organizations 0.00%

First Section of the Tokyo Stock
Exchange (Security code: 8848)
Mitsubishi UFJ Trust and Banking
Corporation

Tokai area:
Individuals and Other

60.73%

93,699 units

Kyushu/Okinawa area:

Shikoku area:

Kinki area:

49,626 units

14,549 units

81,075 units

Business Corporations and Other Legal Entities 14.09%

70

71

Leopalace21 Corporation
2-54-11 Honcho, Nakano-ku, Tokyo 164-8622, Japan
TEL: +81-3-5350-0001 (Main Line)
http://eg.leopalace21.com/© Leopalace21 Corporation 2011