Kyoritsu Maintenance Co., Ltd.
(Securities Code:9616)

Fiscal Year March 2010
Consolidated Earnings Results Update

May 2010

1

Kyoritsu Maintenance Consolidated Financial Data at a Glance
Consolidated Sales and YY Change
35%

100,000
90,00030%
80,00025%

70,00060,00020%

50,00015%

40,00030,00010%

20,0005%
10,00000%3/99 3/00 3/01 3/02 3/03 3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11E

m

Consolidated Operating Income and YY Change

6,000

50%
40%

5,000
30%
4,000
20%
3,000

10%
0%

2,000
-10%
1,000
-20%
0

-30%
3/99

m

3/00

3/01

3/02

3/03

3/04

3/05

3/06

3/07

3/08

3/09

3/10 3/11E

Consolidated Net Income and YY Change
3,000

80%
60%

2,500

40%
2,000
20%
1,500
0%
1,000
-20%
500

-40%
-60%

0
m

3/99

3/00

3/01

3/02

3/03

3/04

3/05

3/06

3/07

3/08

3/09

3/10 3/11E(Units:Million Yen)2

140,000
120,000
100,000
80,00060,00040,00020,00003/99 3/00 3/01 3/02 3/03 3/04 3/05 3/06 3/07 3/08 3/09 3/10
total assets

net assets (shareholders' equity)(Units:Million Yen)

14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
3/99

3/00

3/01

3/02

3/03

ROE

3/04

3/05

3/06

3/07

3/08

3/09

3/10

ROA

3

Construction,
11,938 , 12%

Other, 4,648 ,5%Food Service,
4,785 , 5%

Dormitories,
37,515 , 39%

Contracted
Services,
12,182 , 13%
Hotels, 25,148, 26%

FY3/09Other, 4,521 ,5%Construction,
9,339 , 10%
Food Service,
4,229 , 4%Dormitories,
37,564 , 40%

Contracted
Services,
11,766 , 12%

Hotels, 26,898, 29%

FY3/10(Units:Million Yen)

4

Consolidated Income Statement
net sales
gross income
operating income
ordinary income
net income

3/99 3/00 3/01 3/02 3/03 3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11E
32,458 36,788 37,884 50,065 50,109 54,081 58,014 63,085 66,287 75,606 82,303 84,513 89,600
6,578 7,173 7,834 10,221 10,785 10,541 10,894 11,783 12,242 14,183 15,507 13,957 na
2,465 2,369 2,828 3,908 4,149 4,004 4,407 4,611 3,745 4,492 5,349 4,033 4,750
2,203 2,281 2,643 3,580 3,885 4,060 4,411 4,824 3,787 4,167 4,510 3,012 3,600
850 907 1,147 1,822 2,039 2,138 2,343 2,011 2,413 2,740 2,133 1,254 1,300

Consolidated Balance Sheetcurrent assets
fixed assets
total assets
current liabilities
fixed liabilities
total liabilities
net assets (shareholders' equity)

15,336 19,900 23,793 18,100 22,138 22,122 23,254 23,350 24,901 19,967 21,852 23,104
25,695 29,867 40,478 47,768 49,497 55,715 62,336 74,681 85,562 95,728 103,891 115,980
41,144 49,880 64,327 65,867 71,647 77,865 85,620 98,047 110,507 115,738 125,793 139,209
20,921 19,731 28,513 27,031 31,610 29,374 31,585 44,039 37,342 44,119 41,615 41,499
10,946 16,977 22,064 23,761 23,146 29,433 33,077 28,316 46,068 44,079 55,266 67,956
31,866 36,707 50,577 50,792 54,755 58,806 64,663 72,355 83,411 88,199 96,882 109,455
9,278 13,169 13,747 15,073 16,824 18,935 20,788 25,512 27,096 27,538 28,911 29,753

yy change
net sales
gross income
operating income
ordinary income
net income

3.6% 13.3% 3.0% 32.2% 0.1%
6.3% 9.0% 9.2% 30.5% 5.5%
25.1% -3.9% 19.4% 38.2% 6.1%
18.2% 3.5% 15.9% 35.4% 8.5%
64.6% 6.7% 26.5% 58.8% 11.9%

margins
gross margins
operating margins
ordinary margins
net margins

20.3% 19.5% 20.7% 20.4% 21.5% 19.5% 18.8% 18.7% 18.5% 18.8%
7.6% 6.4% 7.5% 7.8% 8.3% 7.4% 7.6% 7.3% 5.6% 5.9%
6.8% 6.2% 7.0% 7.2% 7.8% 7.5% 7.6% 7.6% 5.7% 5.5%
2.6% 2.5% 3.0% 3.6% 4.1% 4.0% 4.0% 3.2% 3.6% 3.6%

other benchmarks
ROE
ROA
equity ratio
Units: million yen

7.9% 7.3% 8.7% 5.1% 14.1% 8.9% 2.7%
-2.3% 3.3% 8.2% 3.9% 15.9% 9.3% -10.0%-3.5% 10.1% 4.6% -18.8% 19.9% 19.1% -24.6%
4.5% 8.6% 9.4% -21.5% 10.0% 8.2% -33.2%
4.8% 9.6% -14.2% 20.0% 13.6% -22.2% -41.2%

18.8%
6.5%
5.5%
2.6%

na
na
na
na
na
na
na

6.0%
na
17.8%
19.5%
3.6%

16.5% na
4.8% 5.3%
3.6% 4.0%
1.5% 1.5%

9.2% 6.9% 8.3% 12.1% 12.1% 11.3% 11.3% 7.9% 8.9% 9.9% 7.4% 4.2%
2.1% 1.8% 1.8% 2.8% 2.8% 2.7% 2.7% 2.1% 2.2% 2.4% 1.7% 0.9%
22.6% 26.4% 21.4% 22.9% 23.5% 24.3% 24.3% 26.0% 24.5% 23.8% 23.0% 21.4%

na
na
na

5

Fiscal Year March 2010 Earnings Announcement
May 14, 2010
Company Name:
Kyoritsu Maintenance Co., Ltd.
Stock Code:9616
URL: http://www.kyoritsugroup.co.jp/
Director:
Mitsutaka Sato, President
Contact:
Takumi Ueda, Vice President
Tel: +81-3-5295-7778
General Shareholders Meeting (Anticipated):
June 25, 2010
Financial Accounts Filing Date (Anticipated):
June 25, 2010
Dividend Payment Date (anticipated):
June 28, 2010

Tokyo Stock Exchange(All figures of less than one million yen are rounded down to the nearest digit)

1. Fiscal Year March 2010 Consolidated Earnings (From April 1, 2009 to March 31, 2009)(1) Consolidated Earnings (Aggregated)
Net Sales
FY3/10
FY3/09Ordinary Income

Million yen% yyMillion yen% yyMillion yen

84,51382,303

2.7
8.9

4,033
5,349

-24.6
19.1

3,012
4,510

EPS

FY3/10
FY3/09Operating Income

Fully Diluted EPS

ROENet Income% yyMillion yen

-33.2
8.2

Ordinary Income to Net
Asset Ratio

1,254
2,133

OperatingMargin

Yen

Yen

%

%

%

87.33
148.4971.32
118.53

4.3
7.6

2.3
3.7

4.8
6.5

(Reference) Equity accounting method profit:

% yy

-41.2
-22.2

0 yen in FY3/10, 0 yen in FY3/09(2) Consolidated Financial Position
Total Assets
FY3/10
FY3/09

Capital:Net Assets

Net Asset Ratio

Book Value per Share

Million yen

Million yen％

Yen

139,209125,793

29,753
28,91121.2
22.8

2,054.83
1,995.59

29,518 million yen in FY3/10, 28,669 million yen in FY3/09(3) Consolidated Cash Flow Conditions
Operating Cash Flow

Investing Cash Flow

Financing Cash FlowMillion yen

Million yen

Million yen

Million yen

5,083
7,661

-16,236-13,738

11,682
8,948

11,46010,931

FY3/10
FY3/09Cash and Equivalents at Term End

2. Dividend Conditions
Registry Date

End
1Q
Yen

FY3/09FY3/10FY3/11 (Projected)

Dividends per Share
End
End
End
3Q
2Q
Year
Yen

19.00
19.00
19.00

Yen

Full
Year

Total Dividend
Payment(Annual)Dividend Payout
Ratio(Consolidated)

Dividend to Net
Asset Ratio(Consolidated)

Yen

Yen

Million Yen

%

%

19.00
19.00
19.00

38.00
38.00
38.00

545
545
―

25.6
43.5
42.0

1.9
1.9
―

6

3. Fiscal Year March 2010 Consolidated Earnings Projection (April 1, 2010 to March 31, 2011)
Operating Income

Ordinary Income

Million Yen

Net Sales%yyMillion Yen%yy

Million Yen%yy

Million Yen

%yy

Yen

43,85089,600

1.2
6.0

2,250
4,750

-28.7
17.8

1,560
3,600

-39.6
19.5

390
1,300

-67.4
3.6

27.15
90.50

First Half
Full YearNet Income

EPS

4. Others(1)

Important changes in our subsidiaries, including changes to the scope of our consolidation: Yes
Added: 0, Removed: 1, MB Mouton Property, Ltd.
(2) Changes in the accounting methods, procedures, display methods used in the creation of our consolidated
financial statements during the most recent quarter:① Changes accompanying revisions in accounting standards: Yes② Other changes: None
(3) Shares issued (Common stock)① Shares issued as of term end (including treasury stock): 15,125,582 at end FY3/10, 15,125,582 at end
FY3/09② Treasury stock as of term end: 760,215 at end FY3/10, 758,951 at end FY3/09(Reference) Parent Earnings Results
1. Fiscal Year March 2009 Parent Earnings (From April 1, 2009 to March 31, 2010)(1) Parent Earnings
Sales
FY3/10
FY3/09Ordinary Income

Net Income

Million yen％yyMillion yen％yyMillion yen％yyMillion yen％yy65,49863,704

2.8
11.5

3,181
4,069

-21.8
25.6

2,421
3,605

-32.8
9.1

1,162
1,738

-33.1
-28.4

EPS
FY3/10
FY3/09Operating Income

Fully Diluted EPS
Yen

Yen

80.93
120.99

66.09
96.58

(2) Parent Financial Position
Total Assets
FY3/10
FY3/09(Reference) Capital:

Net Assets

Net Asset Ratio

Book Value per Share

Million yen

Million yen％

Yen

121,790112,028

27,664
26,90922.7
24.0

1,925.75
1,873.06¥27,664 million in FY3/10,¥ 26,909 million in FY3/09

2. Fiscal Year March 2011 Parent Earnings Projection (April 1, 2010 to March 31, 2011)
Sales
First Half
Full Year

Operating Income

Ordinary Income

Million Yen%yy

Million Yen%yy

Million Yen%yy

Million Yen

Net Income
%yy

EPS
Yen

35, 800
70,400

4.6
7.5

2,100
3,900

-22.4
22.6

1,500
2,900

-35.7
19.7

380
1,080

-68.5
-7.1

26.45
75.18

 Notes and explanations regarding the appropriate uses of our earnings projections
All projections provided within this document are based on the most accurate information available at the timeof this writing. However our actual results may differ from our projections due to various unforeseen reasons.
71. Earnings Results(1) Analysis of Our Earnings Performance
1. Overall Earnings During Current Term

(Units:Million Yen)

FY3/09FY3/10% YY Change

Sales82,30384,513

2.7

Operating Income

5,349

4,033

-24.6

Ordinary Income

4,510

3,012

-33.2

Net Income

2,133

1,254

-41.2

During the current fiscal year, we saw a continuation of uncertainties surrounding the future of the Japanese
economy due to the trend for weak consumer prices, high levels of unemployment, and other negative factors.

Against this backdrop and despite our ability to expand our relations with new four year universities and othernew clients in our main business of dormitories, weaker than expected new residents entering our dormitories
during March and weaker demand for corporate dormitories and management of various corporate fringe benefit
facilities such as training facilities caused our earnings to suffer.

In our hotel business, our resort hotels trended strongly on the back of strong support of customers and our
successful efforts at cost management. However in our business hotels, Dormy Inns incurred a decline in its
occupancy rates due to increased competition and the spread of influenza, and subsequent reduced pricing fromour competition negatively impacted our earnings.

As a result of these developments, our sales, grew by ¥2.21 billion or 2.7% year-over-year to ¥84.513 billion.
At the same time the lower occupancy rates and openings costs from newly opened facilities caused ouroperating income to fall by 24.6% year-over-year to ¥4.033 billion.

Increased interest payments andcommissions caused ordinary and net incomes to decline by 33.2% and 41.2% year-over-year to ¥3.012 and¥1.254 billion respectively.

2. Our Earnings by Business Segment
Dormitory Business (Student, Corporate, Dormy Inn, Facilities Management Outsourcing)(Units:Million Yen)

FY3/09FY3/10% YoY Change

Contracted Residents

28,03528,646

2.2

Sales

37,51537,564

0.1

Operating Income

5,716

5,002

-12.5

8

The operating environment in our dormitory business remained difficult with a decline in the number of college age
Japanese (18 years old) declining by 2.2% year-over-year to 1.2 million. However at the same time the weakeconomy and subsequent difficulties in finding good jobs after graduation from secondary educational institutions
made the choice of universities and colleges all the more important and we noted continued popularity of major
universities and secondary educational institutions located in Tokyo and other major metropolitan areas.

Against this backdrop, we strengthened our ties with universities, vocational schools and preparatory schools, andformed new relationships with Nihon University, Toyo University, Edogawa University, Kogakuin University andother major four year universities by leveraging our unique “sanitary and healthy menus” prepared at ourcommissary facilities within our dormitories, our “highly secure and safe 24 hour supervised facilities” and ourother various dormitory services. However in March of the current fiscal year we saw the number of new
dormitory residents fall below expectations and consequently our earnings suffered. Therefore in our student
dormitory business the number of schools to which we provide services to stood at 1,583, the number of contracted
residents rose 3.7% year-over-year and sales rose by 1.2% year-over-year to ¥22.414 billion.

The operating environment for our corporate dormitory business remained difficult with a 1.6% year-over-year
decline in the total work force to 62.82 million and the number of new graduate hires rising by 1.7% year-over-year
to 948,000. Due to these difficult conditions and the subsequent worsening of corporate earnings demand for
management of various corporate facilities including training centers and others remained weak and the number ofcontracted residents in our corporate dormitory business grew by only 1.3% from the previous term to 7,511.
Consequently the number of corporate clients using our dormitory services stood at 1,210 and our sales fell by
1.9% year-over-year to ¥9.33 billion.

In our Dormier business we leveraged our expertise acquired in our student and corporate dormitory businesses tocapture demand from the diversifying needs of single students and workers by providing studio-type dormitory
facilities and facilities with commissaries. However weaker corporate earnings environment contributed to weak
demand from corporate users and the number of contracted residents and sales declined by 2.9% and 2.0% from theprevious term to 3,775 and ¥3.389 billion respectively.

Furthermore in our outsourced dormitory management business where we provide management services fordormitory facilities owned by schools and corporations we leveraged our strong reputation as “Japan’s leadingboarding house service provider” to differentiate our company from our competition and expand orders.
Consequently our sales rose by 0.9% year-over-year to ¥2.429 billion.

As a result of these efforts the number of facilities we operated in our overall dormitory business rose by 7 facilities(excluding outsourced dormitories) to 408, contracted residents grew by 683 to 30,849, and sales increased by 0.1%
year-over-year to ¥37.564 billion. With regards to costs, the deterioration in occupancy rates and taxes and other9costs arising from acquisition of new facilities offset our efforts to strictly manage costs on a per-facility basis andour operating income declined by 12.5% from the previous year to ¥5.002 billion.

Hotel Business(Units:Million Yen)

Sales
Operating Income

FY3/09FY3/10% YoY Change

25,14826,898

7.0

103

-346

－

In our Dormy Inn (business hotel) business, we sought to differentiate our Company by reflecting the needs of eachof our customers in Kyoritsu’s unique hospitality and services amidst the backdrop of reduced service levels within
the overall industry. In particular we focused upon the main themes of providing customers with “large hot spring
type bathing facilities” and “good tasting breakfast menus,” in addition to our late night check in services andreasonable pricing for extended stays as means of broadening the appeal of our business hotels to include family
travelers.

Against this backdrop, we were able to see a positive contribution to sales from six newly opened facilities
including “Haruna no Yu Dormy Inn Takasaki,” “Natural Hot Springs Mikasa no Yu Dormy Inn Hakata Gion
Hakata,” “Bandai no Yu Dormy Inn EXPRESS Koriyama,” “Natural Hot Springs To no Yu Dormy Inn PREMIUM
Otaru,” “Natural Hot Springs Keyaki no Yu Dormy Inn Tsu,” and “Natural Hot Springs Sanshu no Yu Dormy Inn
EXPRESS Mikawa Anjo.” Despite this positive contribution the lower occupancy rates arising from reduced
business travel and downward pressure upon pricing due to increased competition led to weaker than expected salesof ¥12.092 billion, or a 12.0% growth from the last term.

In our resort hotel business, we sought to satisfy our customers by providing them with “high quality resort styleaccommodations at reasonable prices” and “comforting accommodations” and opened Hidahanasato no Yu
Takayama ouan . Furthermore at our existing facilities we sought to raise the weekday occupancy rates at ourfacilities by ofeering new services and products and by leveraging the capabilities of our low-cost operations toprovide high cost performance to customers. Moreover we received a continued high level of attention by themass media which increased the awareness of our facilities. Consequently sales rose by 3.2% year-over-year to¥14.806 billion in our resort hotel business.

As a result of these efforts we were able to increase the total number of our hotel facilities by 7 to 53 and thenumber of rooms by 1,234 to 7,812, and sales rose by 7.0% year-over-year to ¥26.898 billion. During the current
term costs associated with the opening of new facilities, the widespread outbreak of influenza and weaker corporate
travel due to the stagnant economy offset our efforts to expand our sales channels and strictly manage costs and weincurred an operating loss of ¥346 million.

Contracted Services Business
10(Units:

Million Yen)

FY3/09

Sales
Operating Income

FY3/10% YoY Change

12,182

11,766

-3.4

629

211

-66.4

The contracted services business includes maintenance and management services for both offices and residences,
rental of consigned buildings, and parking lot management. In particular the building maintenance businesssuffered from severe operating conditions in particular, with conditions in the greater Tokyo metropolitan area
worsening due to demands for price cuts, reductions in service levels, and cancelation of contracts.

Against the

backdrop of this operating environment we endeavored to reduce our cost structure and acquire new clients but wealso suffered from cancellations of some larger contracts. Consequently our overall contracted services sales andoperating income declined by 3.4% and 66.4% year-over-year to ¥11.766 billion and ¥211 million respectively.

Food Service Business(Units:Million Yen)

FY3/09

Sales
Operating Income

FY3/10% YoY Change

4,785

4,229

-11.6

-80

-8

－

The operating environment for our food service business remained severe with intensifying pricing competition
from large restaurant chains and weak personal consumption trends. Against this backdrop we were able achieve
success in some of our efforts to control and reduce variable costs, and to restructure our earnings structure. But
despite these successes, store renewal costs and other negative factors caused our food service business to see a
decline in sales of 11.6% year-over-year to ¥4.229 billion, and led us to see an operating loss of ¥8 million.

Construction Business(Units:Million
FY3/09FY3/10% YoY Change

Yen)
Sales
Operating Income

11,938

9,339

-21.8

419

365

-12.9

As the operating environment in our construction business remained extremely difficult during the current term, we
promoted the strict management of costs. Moreover a decision within our Group to temporarily stop developmentof properties negatively impacted this division and contributed to 21.8% and 12.9% year-over-year declines in bothsales and operating income of ¥9.339 billion and ¥365 million.

Other Business(Units:
Sales

Million Yen)

FY3/09FY3/104,648% YoY Change
4,521

-2.7

11

Operating Income

151

209

-27.6

The other business segment is comprised of the wellness life (management of senior citizen housing), single life
style support service, insurance agency, advertising agency, rental property brokerage and management,
comprehensive human resources, and financing services. In this business we saw declines in both sales andoperating income of 2.7% and 27.6% year-over-year to ¥4.521 billion and ¥151 million respectively.

3. Earnings Projections for the Coming Term
(Consolidated Earnings)(Units:FY3/10Million Yen)

FY3/11 Estimates% YoY Change

Sales

84,51389,600

6.0

Operating Income

4,033

4,750

17.8

Ordinary Income

3,012

3,600

19.5

Net Income

1,254

1,300

3.6

FY3/11 Estimates% YoY Change(Non-Consolidated Earnings)(Units:Million Yen)

FY3/10Sales

65,49870,400

7.5

Operating Income

3,181

3,900

22.6

Ordinary Income

2,421

2,900

19.7

Net Income

1,162

1,080

-7.1

The Japanese economy is anticipated to continue to suffer from difficult conditions arising from instability in the
global financial markets.

Furthermore personal consumption trends are expected to stagnate against the backdropof weaker share prices and negligible growth in personal incomes. Given these conditions, the Kyoritsu Groupwill exert its utmost efforts to leverage synergies within its group to respond to create a solid management andearnings structure that can respond quickly and accurately to the current difficult operating environment.
With regards to our earnings estimates for the coming fiscal year, in our dormitory business we saw a relatively
strong 92.9% occupancy rates in April, which is a leading indicator for our earnings performance in the coming
year. In the coming fiscal year March 2011, we open a total of 13 new facilities nationwide, which will add 1,256
rooms, bringing the total number of facilities and rooms which we operate to 409 and 31,513 respectively.
Therefore we are continuing to respond to the diversifying needs of our residents by providing facilities for whichcosts are strictly managed and controlled. Furthermore with regard to our marketing function we have newly
established a comprehensive marketing division to effectively gather information regarding the needs of ourcustomers on a Group wide basis and to provide even more flexible and wider range of responses to these needs.

12In our hotel business, we plan to open new facilities in major metropolitan areas throughout Japan given thefavorable reception from our customers of our existing Dormy Inn hotel facilities.

While business travel

continues to be negatively impacted by weak corporate earnings, we will endeavor to capture tourist traveler
demand and expand our customer base by continuing to focus upon our offerings of “large hot spring type publicbaths” and “good tasting breakfasts.” In our resort hotel business we will continue to provide “high quality resort
style facilities at reasonable prices” and offering “comfortable accommodations” in order to capture customer
demand resulting from the growing segment of the Japanese population who are retiring and are likely to travel
more. Also we will focus upon fortifying the services and cost management at each of our facilities, while at thesame time reviewing the development and opening plans of new facilities to ensure we continue to offer“comforting accommodations” at all of our facilities that exceed the expectations of our customers. Furthermore
as part of our efforts to fortify our marketing function, we will start a special hotel division to expand ouroperations in the Hokkaido area for both business and resort hotels.

Our contracted services business encountered a further worsening of pricing competition, along with revisions inthe service contracts from our customers, demands for price reductions, and cancellation of contracts due to theconsolidation of the number of consigned service providers. Amidst these conditions, we will increase the trustof our customers by aggressively promoting our expertise and know-how as a specialist service provider and offer
our customers improved services to raise our competitive standing within the industry.

With regards to our food service business, we will continue to focus our attention upon improving our profitability
through strict management of variable costs and developing products and services that meet high levels ofcustomer satisfaction.

In our construction business, we will continue to support the Kyoritsu Group development and new facility
opening plans, in addition to developing external clients and strictly managing costs.

In our other business we will focus upon fortifying our earnings foundation in each area of this business, while atthe same time promoting a growth strategy to expand this segment.

Consequently at the consolidated level for the Kyoritsu Group, we project sales to grow by 6.0% year-over-year to¥89.6 billion, and operating, ordinary and net incomes to rise by 17.8%, 19.5% and 3.6% year-over-year to ¥4.75,¥3.6, and ¥1.3 billion respectively. And at the parent level we project sales to rise by 7.5% year-over-year to¥70.4 billion, and our operating and ordinary incomes to grow by 22.6% and 19.7% year-over-year to ¥3.9 and¥2.9 billion respectively. At the same time parent level net income is expected to decline by 7.1% year-over-yearto ¥1.08 billion. In addition we have reduced our operating and ordinary incomes by ¥50 million each, and ournet income estimate reflects the realization of an extraordinary loss of ¥800 million which contributed to a
reduction of ¥442 million due to the implementation of the “new accounting standard for liabilities resulting fromthe elimination of assets” from the coming fiscal year.
13

(2) Analysis of Financial Conditions
1. Conditions of Our Assets, Liabilities, and Net Assets
Our total assets increased by ¥13.415 billion from the end of the previous fiscal year to ¥139.209 billion. The
main reasons for this growth were the increased acquisition of tangible fixed assets, and security deposits.

Liabilities grew by ¥109.455 billion year-over-year to ¥109.455 billion during the term under review.

The mainfactor for this increase was the rise in commitment type syndicated loan form of long term debt.

Our net assets also rose by ¥841 million from the end of the last fiscal year to ¥29.753 billion. The main reason
for this increase was growth in retained earnings. Consequently our net asset ratio declined by 1.6% points fromthe end of the previous fiscal year to 21.2% at the end of the current term.

2. Cash Flow Conditions
During the term under review our consolidated cash and equivalents grew by ¥528 million to ¥11.46 billion.

(Cash Flow from Our Operating Activities)
During the current fiscal year, we saw a 4,306 million yen increase in our operating cash flow to a net inflow of
7,661 million yen, due primarily to the declines in real estate held as inventories.

(Cash Flow from Our Investing Activities)
During the period under review, we recorded a ¥2.578 billion decline in net inflow in our investing cash flow to¥5.083 billion. This inflow is attributed to a decline in net income before taxes and increases in depreciation
and accounts receivables.

(Cash Flow from Our Financing Activities)
In the current term, we saw an increase of ¥2.734 billion in the net inflow of our investing cash flow to an inflowof ¥11.682 billion. The issuance of a corporate bond and increases in long-term debt were the main factors
behind this increase in our cash inflow.

(Reference) Trends in Our Cash Flow Indicators
FY3/06

FY3/07

FY3/08

FY3/09FY3/10Net Asset Ratio (%)

26.0

24.4

23.6

22.8

21.2

Capital Adequacy Ratio, Market Capitalization Based (%)

61.1

36.9

22.1

17.6

14.2

Cash Flow to Interest Bearing Debt Ratio (%)

7.7

14.7

17.5

8.9

15.8

Interest Rate Coverage Ratio

10.6

4.9

3.6

7.7

4.5

Net Asset Ratio:

Net Assets / Total Assets

14Capital Adequacy Ratio:

Market Capitalization / Total Assets

Cash Flow to Interest Bearing Debt Ratio:
Interest Coverage Ratio:

Interest Bearing Debt / Operating Cash Flow

Operating Cash Flow / Interest Payments

1.Each indicator is based on consolidated financial data.
2.Market capitalization excludes treasury stock.
3.Cash flow is based on our operating cash flow.
4.Interest bearing debt includes all of the liabilities which bear interest payments on our consolidated balance sheet.
5.We use interest payments from our consolidated cash flow statements.

(3) Our Basic Policy Regarding the Distribution of Profits in the Current and Next Terms
We consider the capital sourced from the capital markets and contributed by shareholders to be invaluable, andplace a high priority on the distribution of profits to our shareholders in line with our earnings performance. Oneof our goals is to maintain a stable level of dividends over the long-term and we have established a target dividend
payout ratio of over 20%. During recent years we have been able not only to increase our dividends, but also tooffer stock splits, effectively raising our overall dividend payout. With regards to distribution of profits toshareholders during the current term, we expect to maintain the same full year dividend as the previous term of 38
yen per share. In the future, we will endeavor to maintain a stable level of dividends while also responding
flexibly to reflect changes in our earnings and with a view to the conversion of our convertible bond type stock
options issued in September 2006. At the same time we also seek to retain a level of earnings that will give ourmanagement the flexibility to make necessary capital investments in response to changes in the market and todevelop new businesses whenever appropriate.

(4) Business Risks
Below we note the important risk factors that maybe considerations when making an investment in our Company.
We consider these factors to be the main risks existing during the course of our operations during the term underreview.

1. Our Sales Conditions
In our core dormitory business, we operate and manage various facilities with the goal of providing a highly
relaxing environment and experience to our residents, making them feel as if they were in their own home. In
addition to our efforts to strengthen our relationships with various schools to provide their students with room andboard, we provide flexible housing solutions to Japanese corporations, whose employee numbers change
dramatically, by supplying them with only the number of rooms they need to match the number of employees
needing housing. But because our dormitories are primarily leased from the owners of the facilities, we are able
to provide flexible solutions as mentioned above. At the same time we are at risk of being negatively impacted
by the cancellation of resident contracts by schools, and by corporations due to restructuring of their work force.
15

With regards to our hotel business, we have been able to insulate ourselves from large fluctuations in occupancy
rates at our Dormy Inn Hotels by providing various unique services and amenities such as extended-stay programs
which help to differentiate our facilities from our competitors. However we remain vulnerable to fluctuations andvolatility in corporate demand caused by changes in the economy.

In our resort hotel business, we are also subject

to the volatility in occupancy rates arising from weather related calamities such as typhoons, as well as fromfluctuations in the economy.

Therefore our sales may fall below our expectations during peak seasonal periods

and our Group earnings may also be impacted by these events.

Regarding our food services business, we are vulnerable to changes in consumer demand which could result in aloss of business resulting from cancellations of outsourcing contracts for management of restaurants and cafeterias
at golf courses and corporate facilities.

Therefore our Group earnings could be negatively impacted by thesechanges.

2. Financial Conditions
The Kyoritsu Maintenance Group endeavors to maintain consistent long-term growth as outlined in ourintermediate-term management strategy, but the attainment of this growth is premised upon our ability to secure
assets which can be used dormitories and hotels. In the development of these assets, we take our financial
standing into consideration and seek to make the most efficient use of all our resources by utilizing various
financial methods to yield the biggest returns. However our earnings and financial position are at risk of being
negatively impacted by potential stagnation in the real estate market, volatility in asset prices, extreme declines incash flows from our existing assets, and inability to proceed as expected with development of assets due tovolatility in the financial markets.

3. Legal Regulations and Quality Control
Our Group provides both services and goods and we are subject to various rules and regulations relating to foodsafety and sanitation, personal information privacy security, hotel and fire laws, and a host of other safety related
regulations and laws. Therefore our Group maintains compliance structures, risk committees and internal control
structures to perform routinely scheduled checks to ensure that we are in strict compliance with the various laws
and regulations which are part of our business. But despite our best efforts to prevent accidents, we still are at riskof losing our customers’ trust in the highly unlikely event that an incident such as food poisoning and leakage of
personal information were to occur and our earnings may also be profoundly impacted.

16

4. Regarding the Implementation of “Asset Impairment Accounting”
On August 9, 2002 the Business Accounting Council announced a report entitled “White Paper on the AccountingStandards for Fixed Asset Impairment Accounting” and the policy paper entitled “Policy Statement for the
Implementation of Accounting Standards for Fixed Asset Impairment Accounting” was released on October 31,
2003.

In response to these moves by the accounting industry, we are now required to implement asset

impairment accounting with regards to our Group’s tangible and intangible fixed assets, including investments,
other assets and leases.

And we recognize the risk of an extreme contraction in our cash flow by the

implementation of asset impairment accounting at times when there are dramatic fluctuations in the economy andfinancial markets.

5. Important Contracts
The dormitories and hotels we operate are leased by our company from the owners of the assets under long-termlease agreements ranging from 10 to 20 years. Some of these facilities have stipulations in their lease contracts
that prohibit the cancellation of the lease agreement prior the end of the lease term. Therefore weak trends in
occupancy rates of these managed assets could negatively affect their profitability, which in turn could negatively
impact our overall earnings and financial position.

6. Our Dependence upon Interest Bearing Debt and the Influence of Interest Rate Trends
In our business, we use bank debt in addition to our own capital, and our interest bearing debt ratio as a percentage
of our total assets stood at 57.8% at end fiscal year March 2010. As for our Group, we are pursuing a strategy of
reducing our dependence upon interest bearing liabilities, which includes the sale of some of our self-owned
facilities to investors while retaining the management and operational contracts for these facilities. At the end of
fiscal year March 2010, 87.8% of our interest bearing debt was fixed interest rate debt and we therefore areinsulated from near term increases in interest rates. However, our earnings still remain at risk of higher funding
costs arising from increases in interest rates over the longer term.

17

2. Corporate Structure
The Kyoritsu Maintenance Group consists of the parent company, 13 subsidiaries, and four affiliated companies.
Our main businesses consist of dormitories, hotels, contracted services, food service, real estate development
business, and other business. The details of our businesses and the services provided by our various subsidiaries
and affiliates are listed below.

Business Segment

Business Description

Participating Companies

Student and corporate dormitories, and outsourced dormitory
management

Kyoritsu Maintenance Co., Ltd.
One other company

Dormy Inn (Business hotels)
Resort hotels

Kyoritsu Maintenance Co., Ltd.
Six other companies

Contracted Services

Office building management businessResidential property management business

Builnet Corporation
Kyoritsu Maintenance Co., Ltd.
One other company

Food Service BusinessRestaurant businessOutsourced catering business
Hotel restaurant outsourcing business

Kyoritsu Food Services Co., Ltd.

Construction Business

Construction, planning, design, brokerage, condominium
sales, other related real estate development businessDormitories

HotelsOther Businesses

Wellness Life Business (senior citizen residence management
and operations)
Brokerage and management of rental real estate
Single resident insurance and other lifestyle support services
Comprehensive human resources business
Financing business
Advertising business
Other related businesses

Kyoritsu Estate Co., Ltd.

Kyoritsu Maintenance Co., Ltd.
Kyoritsu Livenet Co., Ltd.
Kyoritsu Trust Co., Ltd.
Nihon Placement Center Co., Ltd.
Kyoritsu Financial Service Co., Ltd.
Kyoritsu Creative Co., Ltd.
Two other companies

18

S chematic Diagram of Our Operations

Clients

Builnet Corp.
Central BuilWork Co., Ltd.

Building rental,
maintena nce
Corporate benefit
facilities ma intena nce

Office building managementbusiness
Contracted services businessResidence, building managementbusiness

Consignment

Kyoritsu Food Service Co., Ltd.

Restaurant, cafeteria
outsourcing andrestaurant ma nagement
services

Food business

Cafeteria outsourcing
Hotel restaurant outsourcing

Construction business

Construction, planning anddesign of dormitories

Condominium business

Kyoritsu Trust Co., Ltd.

Other business

Single resident lifestyle support
services, insurance sales

Kyoritsu Livenet Co., Ltd.

Renta l real estatema na gement a nd
brokera ge

Consignment

Construction, planning, design,
brokerage

Other related business

Lifestyle product sales,
insura nce businessOutsourced ca feteria andhotel restaurant

Restaurant business

Kyoritsu Estate Co., Ltd.

Real estate construction,
sales, brokerage

Dormy Inn, resort
maintena nce outsourcing
Dormitory rennova tion,
maintena nce services

Other business

Consignment

Lifestyle product sa les andother support services for
single residents in dormitories

Consignment

Domier ma na gement,
brokera ge services＜Dormitory Business ＞
K
y
o
r
i
t
s
u
M
a
i
n
t
e
n
a
n
c
e
C
o
.
,

Student, corporate dormitories, Domier,outsourced dormitory management＜Hotel Business＞
Domy Inn (business hotels)
Resort hotels＜Contracted Services Business ＞
Office building management business＜Other Business＞
Wellness Life Business(senior citizen attended care residence)other related businesses

L
t
d
.

Rental real estate management,
brokerage

Consignment

La bor dispa tch,hea dhunting services
Japan Placement Center Co., Ltd.

La bor dispa tch,hea d hunting

Other businessComprehensive personnel services

Consignment

Kyoritsu Financial Service Co., Ltd.

Loa n business

Other businessCollection a nd
operation services

Loan business, administrative
support services

Consignment

Kyoritsu Creative Co., Ltd.

Advertising planning,production, and printing

Other business

Advertising planning,production, a nd printing

Advertising agency business

Consignment

19

3. Management Policy(1) Our Basic Management Policy(2) Benchmarks of Our Intermediate to Long-Term Management Strategy(3) Key Management Issues
With regards to the above three issues, we have chosen to eliminate any explanation of them because there havebeen no substantive changes made to them since our previous announcement of them in our fiscal year March 2009
earnings announcement released on May 15, 2009.

4. Consolidated Financial Statement(1) Consolidated Balance Sheet(Units:Previous Term FY3/09

Million Yen)

Current Term FY3/10

AssetsCurrent assets
Cash and deposits

12,065

12,594

Notes, accounts receivable

2,896

3,882

Marketable securities

32

3

Real estate for sale

424

268

Uncompleted construction payment982※5 999Deferred tax assets

665

516

4,831

4,885

-44

-44

21,852

23,104※2 38,984※2 46,485

Depreciation, aggregated-11,115-13,311

Buildings, structures (net)27,86933,174※2 25,896※2 28,626

Buildings, structures in trust※2 9,844※2 10,767

Depreciation, aggregated-816-1,361

Buildings, structures in trust (net)

9,027

9,406

※2 2,558※2 2,558

OthersDoubtful account reserves
Total current assets
Fixed assets
Tangible fixed assets
Buildings, structures

Land

Land in trust20Construction in progress

6,756※2 6,396

Others

5,220

6,520

Depreciation, aggregated-3,537-4,523

Others (net)

1,682

1,997

73,79082,159※2 2,921※2 3,848

2,921

3,848

※1, ※2 6,440※1, ※2 6,646

Long term loans

778

1,417

Security deposits

7,370

8,582

Deposits

6,986

7,512

Deferred tax assets

2,670

2,698

Others

3,086

3,315

Doubtful account reserves

-154

-198

27,17929,972

103,891

115,980

Bond issuance fees

49

124

Total deferred assets

49

124

125,793

139,209

Total tangible fixed assets
Intangible fixed assets
OthersTotal intangible fixed assets
Investments, other assets
Investment securities

Total investments, other assets
Total fixed assets
Deferred assets

Total assets

21

(Units:

Previous Term FY3/09

Million Yen)

Current Term FY3/10

Liabilities
Current liabilities
Notes, accounts payabale

3,028

3,846

※2 17,497※2, ※4 17,937

3,181

1,890

530

581

11,675

11,932

Bonus reserves

910

623

Director bonus reserves

199

147

Completed construction guarantee reserves

1211Construction work loss reserves

4

※5 4

Others

4,577

4,524

Total current liabilities

41,61541,49914,40019,385※2 33,055※2, ※4 41,264

4,509

4,155

840

848

1,168

1,199

Director retirement benefits reserves

370

339

Others922

762

Short term debt
Bond portion redeemable within 1 year
Unpaid taxes
Deposits

Fixed liabilities
Bonds
Long term debt
Long term security deposits
Deferred tax liabilities
Retirement benefit reserves22Total fixed liabilities

55,266

67,95696,882

109,455

Capital

5,136

5,136

Capital reserves

5,943

5,943

Retained earnings

19,99520,704

Treasury stock-1,468-1,470Total shareholders’ equity

29,60730,313

Other marketable security valuation gains

-937

-795

Total valuation, translation gains

-937

-795

Minority holdings

241

235

Total net assets

28,91129,753

Total liabilities, net assets

125,793

139,209

Total liabilities
Net assets
Shareholders’ equity

Valuation, translation gains

23

(2) Quarterly Consolidated Income Statement(Units:Million Yen)

Previous Term FY3/09

Current Term FY3/10(From April 1, 2008

(From April 1, 2009

to March 31, 2009)

to March 31, 2010)

Sales

82,30384,513CGS

66,79570,556Gross income

15,507

13,957

2,939

2,712

Corporate fringe benefits

488

485

Employee bonus reserve provisions

239

152

Director bonus reserve provisions

199

147

Retirement reserve provisions

102

98

Director retirement reserve provisions

13

3

Sales promotion expense

1,337

1,431

Commissions

2,059

2,162

Doubtful account reserve provisions

81

68

Outsourcing expenses

820

867

Rent

270

281

Depreciation, amortization

175

188

Goodwill amortization

17

18

1,412

1,305

Total SG&A

※1 10,157※1 9,923

Operating income

5,349

4,033

Interest income

87

73

Dividend income

35

26

Deposit redemption income

167

170

Others

128

170

419

441

SG&A
Payroll, bonuses

OthersNon-operating income

Total non-operating income
Non-operating expense

24

Interest payment

1,025

1,153

Bond issuance fee amortization

12

20

Commissions－

163

Others

220

125

1,258

1,462

4,510

3,012

Marketable securities liquidation profit－

17

Government subsidies－

84

Breach of contract penalties

128－

Insurance policy redemption refunds

76

33

Others

35

12

239

147

Total non-operating expense
Ordinary income
Extraordinary income

Total extraordinary income(Units:Million Yen)

Previous Term FY3/09

Current Term FY3/10(From April 1, 2008

(From April 1, 2009

to March 31, 2009)

to March 31, 2010)

Extraordinary loss
Impairment loss

※2 115※2 75Marketable securities evaluation loss

342

330

Marketable securities liquidation loss

101－

Others113

37

Total extraordinary loss

672

443

Net income before taxes

4,077

2,716

Corporate, residence, enterprise taxes

1,775

1,381

151

45

Corporate tax adjustment

25

Total taxes
Minority shareholding income
Net income

1,927

1,427

17

34

2,133

1,254

26

(3) Consolidated Cash Flow Statement(Units:Million Yen)

Previous Term FY3/09

Current Term FY3/10(From April 1, 2008

(From April 1, 2009

to March 31, 2009)

to March 31, 2010)

Cash flows from operating activities
Net income before taxes

4,077

2,716

Depreciation, amortization

3,695

4,068

Amortization of long term prepayments

221

243

Impairment loss

115－

Change in bonus reserves

-162

-286

Change in retirement reserves

109－Interest, dividends received

-122

-100

Interest paid

1,025

1,153

Marketable securities liquidation loss

90－

Marketable securities evaluation loss

342

330

Change in receivables

83

-986

Change in accounts due-48－

Change in inventories

1,339

158

Change in payables

-387

651

Change in prepayments

-328

241

Change in unpaid consumption, other taxes

－

-184

Change in security deposits

342

-710

Change in deposits

-145

-143

Others595

347

10,845

7,499Interest, dividends received

118

71

Interest payment-995-1,130543-2,313-1,401

7,661

5,083

Subtotal

Corporate, other tax returns
Corporate, other tax payments
Cash flow from operating activities

27

Cash flow from investing activities
Acquisition of marketable securities

-476

-428

Sales of marketable securities

250

261

-11,118-12,418

Acquisition of intangible fixed assets

－

-785

Acquisition of long term prepayments

-609

-486

Loans extended-1,197-1,648Loans recovered

1,255

732

Deposit, security deposit payments-1,933-2,277Return of deposits, security deposits

190

676

Others-98

136-13,738-16,236

Acquisition of tangible fixed assets

Cash flow from investing activities(Units:Million Yen)

Previous Term FY3/09

Current Term FY3/10(From April 1, 2008

(From April 1, 2009

to March 31, 2009)

to March 31, 2010)

Cash flow from financing activities
Short term debt

-7,3001,169

Long term debt

24,95018,810

Repayment of long term debt

-8,105-11,329

Repayment of lease liabilities-1,085－

Bond issuance

2,980

6,905

Bond redemption payment-1,910-3,306

Treasury stock acquisition-3-1

Dividend payment

-559

-544

Dividend payment to minority shareholders

-24

-19

28

Cancellation of dividend payment to minority
-16

－

21

－

Cash flow from financing activities

8,948

11,682

Translation gains for cash and equivalents－－

Net change in cash and equivalents

2,870

528

Cash and equivalents at term start

8,061

10,931

Cash and equivalents at term end※1 10,931※1 11,460

shareholders
Others(4) Assumptions Regarding Going Concern
Not applicable29

(5) Business Segment Information(Information for Our Various Business Segments)
Consolidated Figures for FY March 2009 (From April 1, 2008 to March 31, 2009)
Contracted
Dormitories

Company

Food

HotelsConstruction
Services

Service

Other

Total

Consolidated
Wide

Sales
(1)

External
37,422

24,977

8,369

2,233

6,277

3,022

82,303―82,303

93

171

3,813

2,551

5,660

1,625

13,915(13,915)―

37,51525,14812,182

4,785

11,938

4,648

96,218(13,915)

82,30331,79825,044

11,553

4,865

11,518

4,438

89,219(12,266)

76,953

5,716

103

629

-80

419

209

6,998

(1,649)5,349

40,05656,226

13,298

1,492

4,683

5,776

121,534

4,259

125,793

928

2,577

128

21

40

32

3,729

(34)

3,695

35

76

―

6

―

―

118

(2)

115

4,389

6,502

18

81

42

20

11,054(240)

10,813sales(2)Internal
sales

Total
OperatingexpenseOperatingincomeAssetsDepreciation,amortization
Impairment
Capital30

Consolidated Figures for FY March 2010 (From April 1, 2009 to March 31, 2010)
Contracted
Dormitories

Company

Food

HotelsConstruction
Services

Service

Other

Total

Consolidated
Wide

Sales
(1)External sales

37,44726,805

8,043

1,916

7,418

2,882

84,513―84,513(2)Internal sales

116

93

3,723

2,313

1,921

1,638

9,806

(9,806)―

Total

37,56426,898

11,766

4,229

9,339

4,521

94,320(9,806)

84,513Operating expense

32,561

27,245

11,555

4,238

8,974

4,369

88,944(8,464)80,479Operating income

5,002

-346

211

-8

365

151

5,376

(1,342)

4,033

Assets47,19456,74010,062

1,521

5,825

6,099

127,444

11,764

139,209

1,000

2,881

118

39

41

29

4,111

(42)

4,068

10

63

―

3

―

―

77

(1)

75

9,180

4,439

24

89

19

23

13,776(102)

13,673

Depreciation,amortization
Impairment
Capital(Reference) Changes in accounting principles(Change in accounting principle for construction projects-in-progress and cost of construction)
For construction contracts entered into from the first quarter of the current fiscal year, we have commenced
application of Accounting Standards Board of Japan’s Statement No. 15, “Accounting Standard for Construction
Contracts” and Guidance No. 18, “Guidance on Accounting Standard for Construction Contracts” issued on
December 27, 2007. These changes during led to increases of ¥809, ¥10 and ¥5 million in consolidated sales ofcontracted services, construction and building management businesses respectively.

(Regional Sales Information)
During the previous fiscal year (From April 1, 2008 to March 31, 2009) and the current fiscal year (From April 1,2009 to March 31, 2010)
We did not have any overseas subsidiaries or offices and therefore we do not report any regional sales information.

(Overseas Sales)
During the previous fiscal year (From April 1, 2008 to March 31, 2009) and the current fiscal year (From April 1,2009 to March 31, 2010)
We did not have any overseas sales.

31