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

Interim Period Fiscal Year March 2007
Consolidated Earnings Results Update
November 2006

Kyoritsu Maintenance Consolidated Financial Data at a Glance

Consolidated Segment Sales

InterimInterim

YY(Units: million yen)
Dormitories
HotelsContracted services
Food service
Construction
Other
Eliminations
Total% Composition
Dormitories
HotelsContracted services
Food service
Construction
Other
Eliminations
Total

FY3/06
16,655
5,042
6,581
1,967
1,963
1,542
-3,71230,038

FY3/07
17,560
6,027
5,711
1,855
5,378
1,857
-7,32431,064

Change5.4%
19.5%-13.2%-5.7%
174.0%
20.4%
97.3%
3.4%

55.4%
16.8%
21.9%
6.5%
6.5%
5.1%
-12.4%
100.0%

56.5%
19.4%
18.4%
6.0%
17.3%
6.0%
-23.6%
100.0%

Consolidated Income Statement
net sales
gross profit
operating income
ordinary income
net income
yoy change
net sales
gross profit
operating income
ordinary income
net income
margins
gross margins
operating margins
ordinary margins
net margins
Consolidated Balance Sheetcurrent assets
fixed assets
total assets
current liabilities
fixed liabilities
total liabilities
shareholders' equity
other benchmarks
ROE
ROA
equity ratio
Units: million yen

Full
Year
FY3/06
31,767
10,41013,277
3,828
9,571
3,333
-9,10363,083
50.4%
16.5%
21.0%
6.1%
15.2%
5.3%
-14.4%
100.0%

3/02
50,065
10,221
3,908
3,580
1,822

3/03
50,10910,785
4,149
3,885
2,039

3/04
54,081
10,541
4,004
4,060
2,138

3/05
58,014
10,894
4,407
4,411
2,343

3/06
63,085
11,783
4,611
4,824
2,011

32.2%
30.5%
38.2%
35.4%
58.8%

0.1%
5.5%
6.1%
8.5%
11.9%

7.9%
-2.3%
-3.5%
4.5%
4.8%

7.3%
3.3%
10.1%
8.6%
9.6%

8.7%
8.2%
4.6%
9.4%
-14.2%

20.4%
7.8%
7.2%
3.6%

21.5%
8.3%
7.8%
4.1%

19.5%
7.4%
7.5%
4.0%

18.8%
7.6%
7.6%
4.0%

100.0%
39.1%
40.9%
17.1%

18,10047,76865,86727,031
23,76150,792
15,073

22,13849,49771,64731,61023,14654,755
16,824

22,122
55,71577,86529,37429,43358,806
18,93523,25462,336
85,62031,58533,07764,663
20,78823,35074,681
98,04744,03928,31672,35525,512

12.1%
2.8%
22.9%

12.1%
2.8%
23.5%

11.3%
2.7%
24.3%

11.3%
2.7%
24.3%

7.9%
2.1%
26.0%

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

9/05
30,040
6,295
2,897
2,790
1,029

9/06
31,066
6,770
2,800
2,838
1,523

na
na
na
na
na

3.4%
7.5%
-3.3%
1.7%
48.0%

100.0%
46.0%
44.3%
16.3%

100.0%
41.4%
41.9%
22.5%

18,727
67,67286,421
33,94830,69964,647
21,61322,92978,326
101,298
33,152
41,68574,837
26,460

4.8%
1.2%
25.0%

5.8%
1.5%
26.1%

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

3/07e
69,400
na
5,340
5,310
2,790
10.0%
na
15.8%
10.1%
38.7%

2

70,000

35%

Consolidated S ales and YoY Growth

60,00030%

50,00025%

40,00020%

30,00015%

20,00010%

10,0005%

0
yen mn

0%
3/97

3/98

3/99

14,000

3/00

3/01

3/02

3/03

3/04

3/05

3/06

22%

Gross Income and Margins

22%

12,00021%

10,000

21%
20%

8,000

20%
6,000

19%
19%

4,000

18%

2,000

18%

0
yen mn

17%
3/97

3/98

5,000

3/99

3/00

3/01

3/02

3/03

3/04

3/05

3/06

9%

Operating Income and Margins

4,500

8%

4,000

7%

3,500

6%

3,000

5%

2,500

4%

2,000

3%

1,500
1,000

2%

500

1%
0%

0
yen mn 3/97

3/98

3/99

3/00

3/01

3/02

3/03

3/04

3/05

3/06

3

Interim FY3/07 Consolidated S egment S ales
5%
14%
5%

45%

15%
16%
Domitories
Food service

HotelsConstruction

Contracted services
Other

Trends in ROE, ROA
14%
12%
10%
8%

ROE
ROA

6%
4%
2%
0%

3/97 3/98 3/99 3/00
3/01

3/02

3/03

3/04

3/05

3/06

Trend in Total Assets and S hareholders' Equity
100,000
90,000

total assets

80,000shareholders' equity

70,00060,00050,00040,00030,00020,00010,00003/97 3/98 3/99 3/00 3/01 3/02 3/03 3/04 3/05 3/06

yen mn4

Interim Period of Fiscal Year March 2007 Consolidated Earnings Results
November 15, 2006

Kyoritsu Maintenance Co., Ltd.

Company Name:
Stock Exchange: Tokyo Stock Exchange
Stock Code: 9616
Homepage: http://www.kyoritugroup.co.jp
Headquarters: Advance Building 4-7-7 Sotokanda, Chiyoda-ku, Tokyo
President: Mitsutaka Sato
Contact:
Takumi Ueda
Telephone:+81-3-5295-7778
U.S. GAAP not adopted
Board of Directors Meeting: November 15, 2006
1. Interim Period of Fiscal Year March 2007 Consolidated Earnings (from April 1, 2005 to September 30, 2006)(Figures of less than a decimal point are rounded down)
Consolidated Earnings
Net Sales

Operating Income

Million Yen

Interim FY3/07
Interim FY3/06
FY3/06

31,06630,04063,084% yy

Million Yen

3.4
10.2

2,800
2,897
4,611

Net Income
Million Yen

Ordinary Income
% yy

- 3.4
15.2

2,838
2,790
4,823

EPS
% yy

Million Yen

% yy

1.7
12.6

Fully Diluted EPS
Yen

Yen

Interim FY3/07
1,523
48.0
122.98115.67
Interim FY3/06
1,029 - 26.0
92.20
78.61
FY3/062,010
161.87141.96
1)
Contributions from equity accounting method: ¥17 million in Interim FY3/07, ¥0 million in Interim FY3/06, ¥5 million in
FY3/06
2)
Average number of shares: 12,388,637 in Interim FY3/07, 11,165,312 in Interim FY3/06, and 11,453,511 in FY3/06
3)
No changes in accounting method(2) Consolidated Financial Position(Figures of less than a decimal point are rounded down)
Total Assets
Net Assets
Net Asset Ratio
Book Value per Share
Million Yen
Million Yen%
Yen
Interim FY3/07
101,298
26,46026.0
2,119.72
Interim FY3/06
86,421
21,61325.0
1,934.69
FY3/06
98,04725,51226.0
2,052.29
Shares outstanding at term end: 12,407,555 at end Interim FY3/07, 11,171,600 at end Interim FY3/06, and 12,354,813 at end
FY3/06(3) Consolidated Cash Flows

Interim FY3/07
Interim FY3/06
FY3/06(4)(5)(Figures of less than a decimal point are rounded down)
Cash Flows from
Cash and Equivalents at
Financing Activities
Year EndCash Flows fromOperating Activities

Cash Flows from
Investment Activities

Million Yen

Million Yen

Million Yen

Million Yen- 2,338
- 789
5,855

1,532
- 8,588- 15,961- 1,450
4,099
8,365

10,517
8,697
12,236

Consolidated Subsidiaries: 20 companies, Non-Consolidated Subsidiaries: 0, Companies held under equity accounting
method: 1 company
Changes in the scope of consolidation and companies held under the equity accounting method: 10 new consolidated
companies

2. Earnings Projections for Fiscal Year March 2007 (from April 1, 2006 to March 31, 2007)
Net Sales
Million Yen

Ordinary Income
Million Yen

Net Income
Million Yen

69,400
Full Year
5,310
2,790
(Note: Net income per share projection for the full year is ¥204.61)(Note) Due to the 1.2 for 1 stock split implemented on October 1, 2006, we have decided to use an average outstanding sharenumber estimate for the fiscal year March 2007 period in the calculation of our fiscal year March 2007 EPS projection.
*
All projections provided in this document are based on the most accurate information available at the time of this writing.
However our actual results may differ from our projections due to various unforeseen reasons. Also please refer to theearnings projections segment of this document for further details of our projections.
(Note) We previously adopted a policy of rounding our figures of less than a decimal point to the nearest figure, but from this interim
period we round all figures of less than a decimal point down to the lower figure.

5

1.

Corporate Structure

The Kyoritsu Maintenance Group consists of the parent company, 20 subsidiaries, and five affiliatedcompanies. Our main businesses consist of student and corporate dormitories, hotels, contracted services, foodservice, 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.
Four other companies

HotelsDormy Inn (Long-term stay business hotels)
Resort hotels

Kyoritsu Maintenance Co., Ltd.
Nine other companies

Contracted Services

Office building management businessResidential property management business

Builnet Corporation
Nikko Facility Management Co., Ltd.
Kyoritsu Maintenance Co., Ltd.
Two other companies

Food Service BusinessRestaurant businessOutsourced catering business
Hotel restaurant outsourcing business

Real Estate Development
Business

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

Other 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 Food Services Co., Ltd.

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.

6

Schematic Diagram of Our Operations

Clients

Builnet Corp.
Nikko Facility Management Corp.
Building rental,
maintenanceCorporate benefit
facilities maintenance

Office Building
Management BusinessContracted services
business

Residence, Building
Management Business
Consignment

Kyoritsu Food Service Corp.
Restaurant, cafeteria
outsourcing andrestaurant
management services

Food business

Cafeteria outsourcing
Hotel restaurant outsourcing

Construction business

Other business

Single resident lifestylesupport services, insurance
sales

Kyoritsu Livenet Co., Ltd.
Rental real estate
management andbrokerage

Other business

Rental real estate
management, brokerage

Japan Placement Center Co., Ltd.
Labor dispatch,head hunting

Other businessComprehensive personnel
services

Kyoritsu Financial Service Co., Ltd.
Loan business

Other business

Construction, planning anddesign of dormitories

Condominium business
Other related business

K
y
o
r
i
t
s
u

＜Dormitory Business＞
Student, corporate dormitories, Dormir,
outsourced dormitory management

Consignment

Construction, planning,
design, brokerage

Kyoritsu Trust Co., Ltd.
Lifestyle product sales,
insurance businessOutsourced cafeteria and hotel
restaurant management

Restaurant business

Kyoritsu Estate Co., Ltd.
Real estate
construction, sales,
brokerage

Dormy Inn resort maintenanceoutsourcing
Dormitory rennovation,
maintenance services

Consignment

Lifestyle product sales andother support services for
single residents in dormitories

M
a
i
n
t
e
n
a
n
c
e

＜Hotel Business＞
Dormy Inn business, resort business＜Contracted Services Business＞
Office building management business＜Other Business＞
Wellness Life Business(senior citizen attended care residence)other related businesses

Consignment

Dormir management, brokerage
services

Consignment
Labor dispatch,
headhunting services

C
o
.
,
L
t
d
.

Consignment
Collection andoperation services

Loan business
Consignment

Kyoritsu Creative Co., Ltd.
Advertising planning,production, and printing

Other business

Advertising planning,production, and printing

Advertising agency business
Consignment

7

2.

Management Policy(1)

Our Basic Management Policy

Our Group has exerted every effort to provide a high level of client satisfaction ever since our founding,constantly seeking to satisfy the various needs of our residents by offering them useful and high quality services
which focus on themes such as “dining,” “living,” and “comfort.”

We also offer guests at our facilities modern

versions of the “traditional Japanese boarding house” (Geshukuya) that “provide heart-warming comfort” to help
satisfy all of their lifestyle needs through the provision of high quality and helpful services.

Furthermore as a

specific part of our business strategy, we aim to “further expand and to raise the profitability of our coredormitory business,” “expand into business fields related to our dormitory business,” and “fortify the foundationof our hotel business and establish it as a driver of our future earnings.”

Finally, we seek to fortify our

corporate structure to further improve the quality of our services, and to be able to contribute to the prosperity of
our clients, our business partners, and our community.

(2)

Our Basic Policy Regarding the Distribution of Profits

We consider the capital contributed by shareholders to be invaluable, and place a high priority on the distributionof profits to our shareholders in line with our earnings performance. One of our goals is to maintain a stablelevel of dividends over the long-term and we have established a target dividend payout ratio of 20%.

Duringrecent years we have been able not only to increase our dividends, but also to offer stock splits, effectively
raising our overall dividend payout.

With regards to distribution of profits to shareholders 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. At the same time we also seek to retain a level of
earnings that will give our management the freedom to make necessary capital investments in response tochanges in the market and to develop new businesses whenever appropriate.

(3)

Our Basic Policy Regarding Reductions in the Minimum Share Investment Lot

Our Company views reductions in the minimum investment lot as an effective means of increasing market
liquidity and a way to help to invigorate the stock market.

We do not have any concrete targets in terms ofeither the timing for or the number of shares to which our minimum share investment lot could be reduced.
However we will take the trading of our shares, our shareholder structure, and stock market conditions into
consideration with regards to the timing and amount by which we could reduce our minimum share investment
lot.

(4)

Benchmarks of Our Intermediate- to Long-Term Management Strategy

The Kyoritsu Group maintains a basic goal of increasing its consolidated return on equity (ROE), and seeks tocreate a corporate structure that emphasizes profitability. In order to become a company with an even stronger
market presence in the 21st century, we seek to dramatically expand our share of the market by steadily growing
our dormitory business, to cultivate our hotel business as the second driver of our earnings growth, and toincrease the synergies within our Group.
In order to achieve these goals, our Group has established the following targets as part of our intermediate- to8

long-term management plan.
1.

We recognize the importance of strengthening our cooperation with universities to expand our share of
the student dormitory market, which has been the source of Kyoritsu’s growth since our founding.
At the same time we will accelerate the pace of our development activities and increase the resources
we allocate to this business area.

2.

In our corporate dormitory business, we note the trend by Japanese corporations to abandon theoperation of their own dormitories as part of their restructuring of corporate benefit programs, whichcomes despite growing demand for dormitories for employees working in the Tokyo metropolitan
region.

In response to this changing environment, we seek to strengthen our marketing efforts tocapture a greater share of the demand for single-employee housing and for outsourcing services tomaintain dormitories and other corporate housing.
3.

Our Dormy Inn business (business hotels) has become an established part of our overall businessmodel, and we will expand our operations to all of the major cities throughout Japan to help fortify thisbusiness’s earnings structure.

4.

With regards to our resort business, we will open facilities designed to “achieve harmony with thesurrounding natural environment” as the theme for our next generation of resorts. We expect these
efforts to help us capture the impending large growth in the leisure market, which will be driven by the“2007 Problem,” where large numbers of baby-boomer Japanese will begin retiring in 2007.

5. In our contracted services business, we will fortify and expand our nationwide network in addition toraising the level of our technical expertise and the attractiveness of our services.
6. We seek to strengthen our overall financial position by optimizing the allocation of our businessresources to restrain increases in the amount of capital employed, and by increasing the liquidity of ourreal estate holdings through a shift of assets off our balance sheet.
Additionally, we maintain the following management goals:
1.

Actively hire new staff and promote their training.

2.

Consolidate back office and other administrative functions, and streamline and speed up our overall
operations.

3.

Strengthen our IR function.

Our Group is currently reviewing our intermediate- to long-term management plan as mentioned above, and ispursuing its goal of 10% growth in both sales and ordinary income going forward.

During fiscal year March

2009, the final year of our intermediate-term management plan, we target an ordinary income margin of 8%,
ROE of 14% and ROA of 7% at the consolidated level.

(5)

Key Management Issues

In our efforts to realize the goals defined in our intermediate- to long-term management plan cited above and tofurther raise our shareholder value, the Kyoritsu Group maintains as a core principle the belief that our customers
are our primary concern and helping them is the foundation of our work ethic.
For this reason, in the development of our dormitory business we will accurately assess the demands of the9market and always place an emphasis on allocating our business resources effectively.

Specifically, we strive todifferentiate our services by raising the attractiveness of the facilities and the services we provide to students
entering colleges and schools in major metropolitan areas.

Furthermore, we seek to strengthen our standing in

the market and expand our operating territory by fortifying our cooperation with vocational schools and major
universities throughout Japan.

We will take advantage of the approaching wave of business we expect to see

for the outsourcing of corporate housing management accompanying the review of corporate benefit programs,
and strengthen our proposal-based marketing function to cultivate new customers by helping them to solve
problems in managing their employee fringe benefit facilities.
Using the know-how developed in our dormitory business as a base for our Dormy business (studio-typecondominium dormitories), we will increase the supply of our facilities to respond to the trend for students tolive alone instead of with roommates, and the growing trend for companies to provide rental housing toemployees on an individual basis.

Furthermore, we will continue to create dormitories that are cleaner andmore modern than our competitors, and aggressively target students, women, and single workers.
In our hotel business, we will speed up the nationwide development of our Dormy Inn business, which has
become an established part of our earnings structure. And in our resort business, with “The Beach Tower
Okinawa” as our flagship facility, we seek to raise the appeal of our existing facilities, and to attract retiring
Japanese baby-boomers to our facilities by providing “reasonable and high quality resort lifestyles” and“comforting accommodations.”
In our contracted services business, we are strengthening our presence in the market through the establishment ofa nationwide network of our service facilities, which is being done in part to service our own dormitory and hotel
facilities.

The market for office buildings and other commercial facilities maintenance is expanding as well, but

fierce pricing competition exists in these job applications.

Therefore we are strengthening our proposal-based

marketing capability of our contracted service business to avoid being drawn into pricing competition.
With regard to our food service business, we seek to improve both the flavor and service of our hotel restaurant
and independent restaurant management operations, and to strictly control variable and food costs to improve our
profitability.
In our other business, we will re-examine all of the roles of companies within our Group to identify and extract
further synergies.
With regard to revisions of our intermediate- to long-term management plan, and as a result of our survey andvalidation of the investment plans for our new business development, we will combine the traditional block lease
type development methods with outright purchase and other methods which use SPCs to develop new facilities.
Also we are considering the sale of some of our self-owned properties while maintaining our managementagreements on these properties.

Kyoritsu will thus be able to recover invested capital quickly while avoiding

negative impacts upon our earnings, to secure new managed properties, to restrain growth in interest-bearing
liabilities, and to improve our return on investments without damaging our financial position.
10

Each year our management identifies certain themes to pursue in our business strategy. And while we havechosen relatively conservative themes in recent years due to economic uncertainties of the times, last year
marked a turning point, and this year we chose a strategy of “pushing aggressively forward.”

In line with thistheme, our Group will concentrate its efforts to develop new businesses that can become new growth drivers of
our earnings. Also we are conscious of “the role we are obligated to fulfill in society” and we therefore seek tocreate a corporate culture and develop new business areas by working together with our customers and using ourbusiness resources without being distracted by short-lived trends.

(6)

Parent Company Relationship

We are not a subsidiary or an affiliate and therefore have no parent company.

(7)

Other Important Management Issues

We do not identify any other important management issues other than those already discussed in this document.

3.

Our Earnings and Financial Position(1)

Earnings during the Interim Period under Review

Our Consolidated Earnings during the Interim Period under Review(Units:Net Sales
Operating Income
Ordinary Income
Net Income

PreviousInterim FY3/06
30,040
2,897
2,790
1,029

Current
Interim FY3/07
31,066
2,800
2,838
1,523

million yen)

Change
(%)
3.4
- 3.4
1.7
48.0

During the term under review, the Japanese economy continued to recover on the back of improvements incorporate earnings and the employment environment, strong capital investments, and the recovery in consumer
spending.

These factors helped to offset uncertainties about the future economy due to the potential rise ininterest rates resulting from a tightening of monetary policy by the Japanese Government.
Against this backdrop, we recorded higher sales in our core dormitory business as we were able to grow thenumber of contracts through efforts to strengthen our relationships with universities and vocational schools, anddue to the high occupancy rates in our new Dormy business (studio-type condominium dormitories).
Furthermore, the high occupancy rates and contribution from various newly opened facilities (including DormyInn Sendai Annex, Dormy Inn Hakodate Goryokaku, Dormy Inn Akita, Shuzenji onsen(Hot Springs) Yukairou
Kikuya, Hakone Kowakudani onsen(Hot Springs) Mizunoto, and Yawatano onsenkyo(Hot Springs) Morinoyu
Kiranosato on a full-year basis allowed us to record growth in sales of our hotel business.

In our construction

business, we were able to increase our sales because of new orders for dormitories and hotels.

However the

opening of a number of large hotels in our resort hotel business and the subsequent increase in costs arising fromthese openings offset much of the strength in earnings we saw in our dormitory and business hotel businesses.
Consequently our sales rose by 3.4% year-over-year to ¥31,066 million, operating income declined by 3.4%
11

year-over-year to ¥2,800 million, and ordinary income grew by 1.7% year-over-year to ¥2,838 million.

Net

income increased by a large 48.0% year-over-year margin to ¥1,523 million due to the disappearance of the large
impairment accounting loss recorded during the interim period of the previous fiscal year.

Key Data by Business Segment<Dormitory Business (Student, Corporate, Dormy, Outsourced)>
Sales
Operating Income

PreviousInterim FY3/06
16,655
2,832(Units: million yen)

Current
Interim FY3/07
17,5603,278Change
(%)
5.4
15.8

(1) Dormitory BusinessIn terms of the operating environment for our student dormitories, the low birth rate trend remained inplace and the number of 18 year old Japanese declined by 2.4% year-over-year to 1.31 million.
However these negative factors were offset by an increase in the percentage of students enteringcolleges and vocational schools located in major metropolitan areas.

Against this backdrop, weconcentrated on strengthening our relationships with vocational schools and universities and we
successfully leveraged our unique services, including “food menus coordinated to healthmanagement” and “supervised dormitories providing a safe and convenient living environment,” inour marketing efforts to cultivate new clients. As evidence of our effective marketing strategy wewere able to increase the number of four year and two year colleges we served by 1.6% year-over-year
to 1,700 schools, and grow the number of resident contracts by 2.1% year-over-year to 15,206 students.
Consequently our student dormitory sales rose by 2.5% year-over-year to ¥10,557 million.
(2) Corporate Dormitory BusinessWith regards to the operating environment for our corporate dormitory business, the number of
employed Japanese workers rose by a small margin of 0.3% year-over-year or 6.427 million. While
Japanese corporations implemented structural reforms designed to reduce labor costs, a recovery incorporate earnings led to renewed hiring of younger workers.

Furthermore, as part of widespreadmeasures to restructure corporate fringe benefit programs, the trend to sell assets and outsource themanagement of dormitories and corporate housing remained firmly in place.

Furthermore the needs

and the roles of single employee dormitories continue to change, with employees desiring greater
choice and flexibility in where they choose to live. With these trends in place during the interim
period under review, we continued to implement our proposal-based solutions marketing efforts with a
new focus upon securing management of employee training facilities.

During the interim period, thenumber of companies utilizing our corporate dormitories declined by 11.2% year-over-year to 955, but
the number of residents rose by 6.0% year-over-year to 5,535 and our corporate dormitory sales roseby 8.9% from the previous term to ¥4,350 million.
(3) Dormy BusinessIn our Dormy business we increased the supply of newly developed studio-type condominiums which
can accommodate demand for housing from both students and employees.

Also we saw synergies

12

from the introduction of new student tenants in our corporate dormitories from affiliated schools andcompanies, as well as from employees moving out of dormitories with cafeterias.

Consequently

during the interim term under review, we saw a 15.6% rise from the previous interim term in residents
to 3,447 and a 14.1% year-over-year increase in our sales to ¥1,488 million.
(4) Outsourced Dormitory Business
Our outsourced dormitory business is the management of dormitories owned by corporations andschools.

During the interim period under review we promoted our proposal based marketing function

to capture demand for outsourcing of facilities accompanying the improvement in corporate earnings
and sales rose by 10.0% year-over-year to ¥1,165 million.
In our overall dormitory business we managed 367 locations (excluding outsourced dormitories) with totalboarding capacity for 26,988 residents, up 1,629 year-over-year, and housed 24,188 residents, for an increase of
1,087 from the previous interim period.

And while occupancy rates declined slightly by 1.5% points

year-over-year, it remained at a high 89.6%.

Consequently our dormitory business sales rose 5.4%

year-over-year to ¥17,560 million, and our operating income rose by 15.8% from the pervious interim to ¥3,287
million.
<Hotel Business (Dormy Inn, Resorts)>
Sales
Operating Income

PreviousInterim FY3/06
5,042
156

(Units: million yen)
Current
Interim FY3/07
6,027
- 349

Change(%)19.5―(1) Dormy Inn BusinessIn our Dormy Inn business, because most of our competitors have adopted strategies which pursue
labor-savings by specializing in accommodations functions only, we have chosen to differentiate ouroperations by offering unique hospitality services which reflect the needs of our customers.

Amongthe services sought for by our customers, we have noted strong demand for “large hot spring typebathing facilities” and “good tasting breakfasts.” And by accurately providing these features in ourfacilities and services we have been able to attain high occupancy rates of 84.4% (down 7.3%
year-over-year) at our hotels, including three newly opened hotels.

During the interim period we

opened the “Dormy Inn Sendai Annex” and “Dormy Inn Hakodate Goryokaku” in July and the“Dormy Inn Akita” in August. As a result of our efforts, we saw a 31.2% year-over-year increase insales to ¥3,177 million.
(2) Resort BusinessIn our resort business, we maintain the objective of providing hotels that offer “reasonable prices andhigh quality resort lifestyles” as well as providing “comfortable accommodations” to capture thebaby-boomer generation. Our success has been reflected in the high occupancy rate, which rose 2.8%
points from the previous year to 67.5%. And during the interim period under review we opened the
Shuzenji onsen (Hot Springs) Yukairou Kikuya, Hakone Kowakudani onsen (Hot Springs) Mizunooto13

in July and Yawatanoonsenkyo (Hot Springs) Morinoyu Kiranosato in August. As a result of these
efforts, we saw an 8.7% increase from the previous interim in sales to ¥2,849 million.

However the

opening of these three new and large facilities contributed to a front-loading of opening and other costs
and our profits was negatively impacted.
Consequently in our hotel business overall, we recorded a 19.5% year-over-year increase in our sales to ¥6,027
million, but we saw an operating loss of ¥349 million due to costs associated with the opening of our new
facilities.
<Contracted Services Business>
Sales
Operating Income(Units:PreviousInterim FY3/06
6,581
266

Current
Interim FY3/07
5,711
342

million Yen)

Change(%)- 13.228.8

The contracted services business includes maintenance services for offices and residences, rental of consigned
buildings, and parking lot management.

Despite a number of large redevelopment projects in the Tokyo region,

pricing competition in the building maintenance industry became even more severe due to consolidation ofcontracted outsourcers resulting from reviews of contracts by building owners. Furthermore, we also saw
cancellation of contracts and severe competition for new orders. With these adverse conditions in place, we
leveraged our proposal based marketing capabilities to cultivate new clients and to capture new work for related
services from our existing clients.

We also worked aggressively to strengthen our capabilities in the areas ofrenovations and property management.

Furthermore we also endeavored to raise our competitiveness in thebuilding maintenance business through strict cost management and through improvements in productivity.
Due in part to the cancellation of contracts for rental of consigned building, our office building managementbusiness sales declined by 27.8% year-over-year to ¥3,165 million.

At the same time our residence

management business sales rose by 15.8% year-over-year to ¥2,545 million.

And while our contracted services

business sales declined by 13.2% year-over-year to ¥5,711 million, our operating income actually rose by 28.8%
year-over-year to ¥342 million.
<Food Service Business (Restaurants, Outsourced Cafeterias, Hotels and Restaurants)>
Sales
Operating Income

PreviousInterim FY3/06
1,967
- 33

Current
Interim FY3/07
1,855
- 74

(Units: million yen)

Change(%)- 5.7―

Our food services business was negatively impacted by the continued high prices of meat products caused bymad cow disease and bird influenza, and the overall operating environment remained unstable.

With thesetrends in place, we continued to take steps to restructure this business, including eliminating contracts forunprofitable facilities, and cultivating management contracts for new restaurants.

In sum, our food service

business sales declined by 5.7% year-over-year to ¥1,855 million, and we recorded an operating loss of ¥74
million.

14

<Construction Business>
Sales
Operating Income(Units: million yen)PreviousInterim FY3/06
1,963
140

Current
Interim FY3/07
5,378
196

Change
(%)
173.9
40.5

In our construction business, the large influx of foreign and domestic capital into the Japanese real estate market
to take advantage of the spread between yields on financial instruments and income real estate caused a “realestate bubble” in parts of central Tokyo and other major metropolitan areas, which gradually spread to otherregions as well.

Against this backdrop, we continued to focus upon the development of studio-typecondominium dormitories and hotels to capture strong demand in the Tokyo region.

Consequently ourconstruction business sales rose 173.9% year-over-year to ¥5,378 million and our operating income grew by
40.5% year-over-year to ¥196 million.
<Other Business>
Sales
Operating Income(Units: million yen)PreviousInterim FY3/06
1,542
75

Current
Interim FY3/07
1,857
66

Change(%)
20.4- 11.8

Our other business is comprised of the wellness life service (management of senior citizen housing), rental
property brokerage service, advertising agency service, comprehensive human resources service, and financing
services.

This division’s sales rose 20.4% from the previous interim period to ¥1,857 million, but operating

income declined by 11.8% year-over-year to ¥66 million.
(2) Financial Position
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Cash and Equivalents at End of Interim(Units: million yen)PreviousInterim FY3/06- 789- 8,588
4,099
8,697

Current
Interim FY3/07- 2,338
1,532- 1,450
10,517

Change(%)- 1,549
10,121- 5,549
1,819

Review of Our Consolidated Cash Flows during the Interim Period
During the interim period under review, our consolidated cash and equivalents increased by ¥1,819 million fromthe previous interim period to ¥10,517 million.

We provide details of our cash flows below.

(Cash Flows from Operating Activities)
Advances received as deposits for our dormitory business tend to rise during the second half of the fiscal year
and therefore we saw a large decline in these advances during the interim period. In our development business
we noted an increase in payments to acquire inventories along with a reduction in our accounts payables, and our
cash flows from operating activities declined by ¥1,549 million year-over-year to a ¥2,338 million net outflow.

(Cash Flows from Investing Activities)
During the interim period under review, significant payments for new hotel and dormitory facilities and for
replacement of various items at our existing facilities were partially offset by income arising from the liquidation15

of tangible fixed assets and investment securities.

Consequently our cash flow from investing activities

increased by ¥10,121 million from the net outflow seen during the previous year’s interim period to a net inflowof ¥1,532 million.

(Cash Flows from Our Financing Activities)
During the interim term, we saw a large inflow from the issuance of a convertible bond, but we also saw an
outflow resulting from the regularly scheduled repayment of debts and the early repayment of long-term debt
accompanying the liquidation of tangible fixed assets.

Therefore our cash flow from financing activities

declined by ¥5,549 million to a net outflow of ¥1,450 million.
Trends in our cash flow indicators for our parent and group companies are listed below.
Interim FY3/05
Equity Ratio (%)
Capital Adequacy Ratio, Market
Capitalization Based (%)
Debt Recovery Period (years)
Interest Rate Coverage Ratio(note)

FY3/05Interim FY3/06

FY3/06

Interim FY3/07

25.4
32.3

24.3
29.3

25.0
37.7

26.0
61.1

26.0
33.0

－
－

5.7
13.0

－
－

7.7
10.6

－
－

1.

Each indicator is based on consolidated financial data.

2.

Each indicator is calculated as follows:(1) Equity Ratio: (Net Assets – Stock Options – Minority Interests) / Total Assets(2)

Capital Adequacy Ratio: Market Capitalization / Total Assets(Market capitalization = Term end share price X Term end shares outstanding, excluding treasury
stock)(3)

Debt Recovery Period:

Interest Bearing Debt / Operating Cash Flow

(4)

Interest Coverage Ratio: Operating Cash Flow / Interest Payments

3.

Cash flows from operating activities is based on our operating cash flows.

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.

(4) Earnings Projections(Consolidated)
Net Sales
Operating Income
Ordinary Income
Net Income(Units: million yen)Previous Term
FY3/0663,084
4,611
4,823
2,010

Full Year Projections
FY3/07
69,400
5,430
5,310
2,790

(Parent)
Net Sales
Operating Income
Ordinary Income
Net Income

Change
(%)
10.0
17.8
10.1
38.7

(Units: million yen)Previous Term
FY3/0643,249
3,591
3,962
1,610

Full Year Projections
FY3/0749,000
4,260
4,360
2,430

Change
(%)
13.3
18.6
10.0
50.8

Supported by strong Japanese corporate earnings and strong consumer spending trends, the employment situation16

in Japan for younger workers is improving dramatically on the back of strong demand to hire new graduates byJapanese companies.

But despite this favorable backdrop, uncertainties arising from the tightening of monetary

policy by the Japanese Government cloud the economic horizon.

With these trends in mind, Kyoritsu

Maintenance strives to increase its competitive advantage and to fortify its management and earnings structure.
With regard to our main dormitory business, our occupancy rate in April, which is the key to predicting ourearnings for the coming year, continued to trend strongly at 97.1%.

And on the back of our opening of facilities

in Hiroshima, we will open our first facility in Kumamoto in the coming term in addition to expanding our
network of facilities in the Kanto region.

In response to the strong demand in the market we plan to open 15

new facilities, adding a total of 1,089 rooms to our capacity and bringing the total number of facilities and rooms
under our management to 367 and 26,988 during the fiscal year March 2007. These additions reflect ourunrelenting efforts to keep pace with the needs of our customers.

With regards to our marketing function, we

will continue to fortify our relationships with both private and public universities and schools, and use ourunique services, including our cafeterias which serve healthy foods, to cultivate new customers in search ofdormitory facilities with cafeterias. And in the area of corporate dormitories, we will continue to provide
proposal based solutions to answer the needs of Japanese corporations seeking to “reduce their fixed costs by
converting them to variable costs” through the use of outsourcing, and to capture new demand for outsourcing ofcorporate training facilities as well.

We will also accelerate development activities to increase our supply of

dormitories in the major metropolitan areas to capture the strong demand there.
With regards to our hotel business, we have been successful in maintaining high occupancy rates in our Dormy Inn Hotelbusiness due to our provision of large hot spring type bath facilities and better food services. In our resort hotel business,
our hotels offer a high level of “comfort” to capture the impending wave of baby-boomer generation Japanese who are
beginning to reach retirement age. Furthermore in our Dormy Inn Hotel business we will “expand our capabilities while
maintaining our high occupancy rates,” and in our resort hotel business we seek to raise our occupancy rates bycultivating new customers.
In our contracted services business, severe market conditions remain in place due to fierce pricing competition brought onby reviews of contracts by building owners. This has been compounded by the trend for cancellation of contracts bybuilding owners seeking to consolidate the number of contractors. In response to these conditions, we sought to leverage
our proposal based marketing and raise our competitive position by increasing our technical expertise to make ourservices more attractive and to gain an even higher level of customer trust. Furthermore we will leverage our efforts toprovide our hotel business with support services, which in turn will allow us to establish a nationwide network for ourbuilding maintenance business.
With regards to our food service business, we will continue to focus our attention on improving our profit
structure through close management of variable costs.

The Kyoritsu Group seeks to raise the efficiency of ouroperations of restaurants at our nationwide network of hotels, and to strengthen our operational know-how
related to restaurants located at golf courses, as well as to develop business with restaurants outside of our Group.
In our construction business, we will increase the supply of our Dormy (studio-type condominiums) to meet the17strong demand for student and corporate dormitories in the Tokyo region, as well as increasing the supplies ofour hotel facilities.
Our other business is trending in line with our expectations.
Consequently during the current fiscal year we expect our sales to grow by 10.0% year-over-year to ¥69,400
million, ordinary income to rise by 10.1% year-over-year to ¥5,310 million, and net income to increase by a large
38.7% year-over-year to ¥2,790 million.
(4)

Business Risks

Below we note the risk factors that may be important considerations when considering an investment in our
Company.

We consider these factors to be the main risks existing during the course of our operations during theterm under review.

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.

Inaddition to our efforts to strengthen our relationships with various schools to provide their students room andboard, we provide flexible housing solutions to Japanese corporations, whose employee numbers are declining
rapidly, by supplying them with only the number of rooms they need to match the number of employees seeking
housing.

But because we maintain leases with the owners of facilities which we use as dormitories, 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 contracts by corporations due to restructuring of theirwork force.
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-stayprograms.

However we are still vulnerable to fluctuations and volatility in corporate demand caused bychanges in the economy.
In our resort hotel business, we are also subject to the volatility in occupancy rates arising from the weather
related calamities such as typhoons and from fluctuations in the economy.

Therefore our earnings may also be

severely impacted by these events.
Regarding our food services business, we are vulnerable to changes in consumer demand for our stand-alone
restaurant management operations, and may also incur loss of business resulting from cancellations of
outsourcing contracts for management of restaurants and cafeterias in hotels and other facilities.

Therefore ourearnings would be impacted by these changes.

2.

Financial Conditions

18

Our Group endeavors to maintain growth in both sales and profits as outlined in our intermediate- to long-term
management strategy (five year), but the attainment of growth is premised upon our ability to secure assets
which can be developed into dormitories and hotels.
In the development of these assets, we take our financial standing into consideration and seek to make the mostefficient use of all our resources by utilizing various financial techniques to yield the biggest returns.

However

our earnings are at risk of being negatively impacted by potential stagnation in the real estate market, volatility inasset prices, declines in cash flows resulting from our existing assets, and inability to proceed as expected with
development of assets due to volatility 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, which
perform routinely scheduled checks to ensure that we are in strict compliance with the various laws andregulations that pertain to our businesses.

But despite our best efforts to prevent accidents, we still run the 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 maybe profoundly impacted.

4.

Regarding the Implementation of “Asset Impairment Accounting”

On August 9, 2002 the Business Accounting Council announced a report entitled “White Paper on the
Accounting Standards 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 within the accounting industry, we are now required to implement asset impairment
accounting with regards to our tangible and intangible fixed assets, including investments, other assets and leases.
Therefore both our earnings and financial position may be profoundly impacted by the implementation of asset
impairment accounting when there are dramatic fluctuations in the economy and financial markets.

5.

Important Contracts

334 of the 367 dormitories we operate, and another 25 facilities we operate are leased by our company from theowners of the assets under long-term lease agreements ranging from 10 to 20 years.
Of these facilities, 13 maintain stipulations in the lease contract where we can not cancel the lease agreement
before the end of the lease. Therefore weak trends in occupancy rates of these managed assets could negatively
affect the profitability of these assets, which in turn could negatively impact our overall earnings and financial
position.

19

Moreover, the balance of rent remaining under these irrevocable lease contracts stood at ¥8,926 million as of end
September 2006.

20

4. Consolidated Financial Statements(1) Consolidated Balance Sheet
Units: million yen

ItemPrevious Interim End

Current Interim End

YY

Last FY3/06(September 30, 2005)(September 30, 2006)

Change(March 31, 2006)

Value

Share

Value

Value

Share

Share

(Assets)
Current assets

Ⅰ
1

Cash and deposits

9,394

11,12912,8982

Notes and accounts receivables

2,346

2,515

3,642

3

Inventories

2,270

3,878

1,298

4

Others

4,765

5,458

5,566

-50

-52

-55

Doubtful account reserves
Total current assets

22

22,92923

4,201

23,35024

Fixed assets

Ⅱ
1

Tangible fixed assets(1)

Buildings and structures

20,916

19,98021,049(2)

Land17,174

19,114

19,071(3)Structures in trusts

－

6,177

－

(4)

Land in trust

－

5,066

－

(5)

Others2

2,711

40,803

5,345

55,684

14,881

4,717

44,838Intangible fixed assets(1)

Consolidated account adjustment

120

－

111

(2)

Goodwill

－

102

－

(3)

Others

2,158

3

2,278

2,486

2,588

309

2,225

2,337

Investments and other assets(1)

Investment securities

9,460

4,543

12,859(2)

Deposits

6,381

6,235

6,346

(3)

Lease deposits

5,049

4,834

4,835

(4)

Others

3,805

4,537

3,557

Doubtful account reserves-106

Total fixed assets
Ⅲ

18,727

Deferred assets
Total assets

24,591-95

20,054-93

27,506

67,672

78

78,32677

10,65474,681

76

20

0

42

0

21

14

0

86,421

100

101,298

100

14,877

98,047100

21

Units: million yen

ItemPrevious Interim End

Current Interim End

YY

Last FY3/06(September 30, 2005)(September 30, 2006)

Change(March 31, 2006)

Value

Share

Value

Value

Share

Share

(Liabilities)
Current liabilities

Ⅰ1

Notes and accounts receivable

1,422

1,637

3,622

2

Short term debt

17,982

14,193

21,6683

Redeemable portion of bond within one year

1,640

1,440

1,440

4

Accrued corporate and other tax

1,029

1,770

810

5

Deposits

8,281

9,762

11,1306

Bonus reserves

728

692

991

7

Bonus reserves for directors

－

60

－

8

Compensation for completed work reserves

3

67

45

9

Others2,860

Total current liabilities

33,9483,527
39

33,152

4,330
33

-796

44,03945

Fixed liabilities

Ⅱ
1

Bonds

7,951

14,203

5,061

2

Long-term debt

14,665

18,554

15,5363

Long-term deposits

4,516

4,180

4,221

4

Retirement benefit reserves

960

1,015

980

5

Director retirement reserves

6

Others

350

377

374

2,256

3,354

2,141

Total fixed liabilities

30,69936

41,68541

10,98528,31629

Total liabilities

64,64875

74,83774

10,18972,355

74

158

0

―

―

-158

179

0

5

(Minority interests)
Minority interests(Shareholders' equity)
Ⅰ

Capital

3,515

4

―

―

-3,515

5,051

ⅡCapital reserves

4,323

5

―

―

-4,323

5,857

6

Ⅲ

Retained earnings

13,90016――-13,900

14,68015
0Ⅳ

Valuation gains on securities

172

0

―

―

-172

249

Ⅴ

Treasury stock

-298

0

―

―

298

-326

0

Total shareholder's equity

21,613

25――-21,61325,512

26

Total liabilities, minority interests, and shareholder'sequity86,421

100――-86,42198,047

100(Net assets)
Shareholders' equity

Ⅰ

Ⅱ

Ⅲ

1

Capital

―

―

5,120

5

5,120

―

―

2

Capital reserves

―

―

5,926

6

5,926

―

―
―

3

Retained earnings――

15,552

15

15,552―

4

Treasury stock

―

―

-329

0

-329

―

―

Total shareholders' equity――

26,27026

26,270――

Valuation gains on securities

―

―

27

0

27

―

―

Gains on deferred hedges

―

―

2

0

2

―

―

Total valuation and conversion gains

―

―

29

0

29

―

―

Minority interests

―

―

159

0

159

―

―

Total net assets――

26,46026

26,460――Total liabilities and net assets――

101,298100

101,298――

Valuation and conversion gains

22

(2) Consolidated Income Statement
Units: million yen

Item

FY3/06

Current InterimPrevious Interim

YY
Change(from April 1, 2005

(from April 1, 2006

to September 30, 2005)

to September 30, 2006)

Share
%

Value

to March 31, 2006)

Share
%

Value

(from April 1, 2005

Share
%

Value

Ⅰ

Net sales

30,040 100.0

31,066 100.0

ⅡCGS

23,74479.0

24,29678.2

551

51,301

81.3

6,295

21.0

6,770

21.8

474

11,783

18.7

3,398

11.3

3,969

12.8

571

7,172

11.4

2,897

9.7

2,800

9.0

△ 97

4,611

7.3

957

1.5

745

1.2

4,823

7.6

208

0.3

1,599

2.5

3,432

5.4

1,377

2.1

Gross income
SG&A

Ⅲ

Operating income

1,025

63,084 100.0

Non-operating income

Ⅳ
1

Interest received

13

11

39

2

Dividend received

49

205

188

3

Profit on marketable securities sale

122

65

341

4

Deposit returns

43

71

149

5

Minority interest profit

0

17

5

6

Others

49

278

0.9

184

556

1.8

278

233

Non-operating expense

Ⅴ
1

Interest payment

265

364

513

2

Sales discounts

39

41

―

3

Others80

Ordinary income

385

1.3

2,790

9.3

―

―

112

518

1.7

132

2,838

9.1

48

38

0.1

38

231

Extraordinary income

Ⅵ
1

Profit on marketable securities sale

―

38

208

Extraordinary loss

Ⅶ
1

Loss adjustment from previous term

―

―

215

2

Loss on fixed asset sale

―

―

36

3

Impairment accounting loss

974

―

1,012

4

Pension withdrawal loss

―

―

335

5

Payment penalties―

Net income before taxes
Corporate, resident, and enterprise taxes
Tax adjustments
Minority interest profit
Net income

974

3.3

1,815

6.0

969
△ 207

48

48

0.2

△ 926

2,828

9.1

1,012

1,729
761

2.5 △ 452

24
1,029

―

1,746
1,276

4.1

515 △ 369

0.1

27

0.1

3

44

0.1

3.4

1,523

4.9

494

2,010

3.2

23

(3) Consolidated Cash Flow Statement
Units: million yen

Items

Previous Interim(from April 1, 2005 to
September 30, 2005)

Current Interim(from April 1, 2006 to
September 30, 2006)

YY Change

FY3/06(from April 1, 2005
to March 31, 2006)

Value

Value

Value

Value

Ⅰ Cash flows from operating activities
Net income before taxes and other adjustments
Depreciation and amortization

2,828

3,432

753

940

1,634
1,012

Impairment loss

974―

Change in bonus reserves

-156

-298

―

Interest and dividends received

-63

-217

-227

Interest payments

265

364

513

Liquidation of marketable securities

-123

-103

-550

Change in receivables

1,157

992

-138

Change in accounts due

190

688

-453

Change in inventories-751-2,580221

Change in accounts payable-456-2,005

1,736-2,083-1,383

877

-879

-787

―

-8

-117

119

Bonus payments

-156

-164

-156

Others472

445

Subtotal

949-1,398Change in prepayments received
Change in deposits
Change in deposits from customers

Interest and dividends received
Interest payments
Corporate tax payments

621-2,348

8,643

60

143

202

-273

-365

-554

-1,526-717-789-2,338Marketable securities purchases-3,516-1,615Liquidation of marketable securities income

1,719

4,465

4,374

Acquisition of tangible fixed assets-4,511-8,522-9,031

Tangible fixed assets liquidation income

―

7,825

98

Intangible fixed asset acquisition

―

-376

-235

Cash flows from operating activities
Ⅱ

1,815

-2,435-1,5495,855

Cash flows from investing activities

Long term prepayments-8,910

-219

-264

-366

Loans extended-1,117207-704

Loans recovered

1,000

-220

701

Lease deposits paid

-2,387―-3,174
1,346

Lease deposits recovered

543

169

Others-99-135-8,588

1,532

Net change in short-term debt

8,405

-4,866

Net change in long-term debt

560

2,666

6,210

Repayment of long-term debt

-4,542-8,263-8,614

Income from bond issued

500

9,995

1,491

Payment for bond redemption

-570

-720

-1,590

Dividend payment

-217

-222

-418

Dividend payment to minority shareholder

-10

-18

-10

Others

-24

-21

-86

4,099

-1,450-5,549――――Ⅴ Net change in cash and equivalents-5,278-2,256

3,022-1,739Ⅵ Cash and equivalents at term start

13,976

12,236-1,73913,976

―

537

537

―

8,697

10,517

1,819

12,236

Cash flows from investing activities-58
10,121-15,961

Ⅲ Cash flows from financing activities

Cash flows from financing activities
Ⅳ Translation gains for cash and equivalents

Ⅶ Change in cash and equivalents accompanying changes in consolidation
Ⅷ Cash and equivalents at term end

11,3858,365

24

(4) Segment Informationa. Information by Business Segment
Previous Interim (from April 1, 2005 to September 30, 2005)
Dormitories

Contracted
services

HotelsFood service Construction

Other

Total

Units: million yen
Company wide
Consolidated
expense,eliminations

Sales(1) External sales to client(2)

Internal sales
Sales and transfers

16,632

5,014

4,577

1,043

1,757

1,015

30,040－30,040

22

28

2,003

923

206

527

3,712

3,712

－

Total Sales

16,655

5,042

6,581

1,967

1,963

1,542

33,753

3,712

30,040Operating expenses

13,822

4,886

6,315

2,000

1,823

1,467

30,316

3,173

27,142

Operating income

2,832

156

266

-33

140

75

3,436

539

2,897

Current Interim (from April 1, 2006 to September 30, 2006)
Dormitories

Contracted
services

HotelsFood service Construction

Other

Total

Units: million yen
Company wide
Consolidated
expense,eliminations

Sales(1) External sales to client(2)

Internal sales
Sales and transfers

17,531

5,983

4,005

990

1,324

1,170

31,00461

31,066

29

44

1,706

864

4,054

686

7,386

7,386

－

Total Sales

17,560

6,027

5,711

1,855

5,378

1,857

38,3907,324

31,066

Operating expenses

14,282

6,377

5,368

1,929

5,181

1,791

34,9306,665

28,265

Operating income

3,278

-349

342

-74

196

66

3,459

659

2,800

FY3/06 (from April 1, 2005 to March 31, 2006)
Dormitories

HotelsContracted
services

Food service Construction

Other

Total

Units: million yen
Company wide
Consolidated
expense,eliminations

Sales(1) External sales to client(2)

Internal sales
Sales and transfers

31,722

10,275

9,354

1,911

7,704

2,116

63,084－63,084

44

135

3,923

1,917

1,866

1,216

9,103

9,103

－

Total Sales

31,767

10,41013,277

3,828

9,571

3,333

72,1889,103

63,084

Operating expenses

26,962

10,11012,699

3,904

9,207

3,172

66,056

7,583

58,473Operating income

4,804

299

577

-75

364

160

6,131

1,520

4,611

25

5. Consolidated Sales Overview
Units: million yen

The table below shows sales results in each of our business segments at the end of the interim period.
Business segments

Previous Interim

Current Interim

YY Change(as of September 30, 2005) (as of September 30, 2006)

FY3/06(as of March 31, 2006)

16,655

17,5605.4%

31,767

Student

10,296

10,5572.5%

18,993

Corporate

3,995

4,350

8.9

%

7,968

Dormy

1,303

1,488

14.1

%

2,708

Outsourced

1,058

1,165

10.0

%

2,097

5,042

6,027

19.5

%

10,410

Dormy Inn

2,421

3,177

31.2

%

5,357

Resort

2,621

2,849

8.7

%

5,052

Contracted services

6,581

5,711

-13.2

%

13,277

4,383

3,165

-27.8

%

7,256

2,197

2,545

15.8

%

6,020

Food service

1,967

1,855

-5.7

%

3,828

Construction

1,963

5,378

173.9

%

9,571

Other

1,542

1,857

20.4

%

3,333

Consolidated eliminations-3,712-7,629－Total

30,04031,066

3.4

Dormitories

Hotels

Office building management
Residential property
management(Note)

1.

-9,103%63,084

The figures above do not include consumption or other taxes

6. The table below shows our capacity, resident contracts, and occupancy rates
Previous Interim
Current Interim
FY3/06
Capacity Resident Occupancy Capacity Resident Occupancy Capacity Resident Occupancy
Contracts Rates (%)
Contracts Rates (%)
Contracts Rates (%)
Student Dormitoriesna
14,898na
na
15,206na
na
15,206na
Corporate Dormitories
na
5,221
na
na
5,535
na
na
6,641
na
Dormy Inn
3,120
2,982
95.6
3,584
3,447
96.2
3,338
3,289
98.5
Total
25,35923,101
91.1
26,98824,18889.6
25,89925,136
97.1

26

Kyoritsu Maintenance Co., Ltd.
Stock Code: 9616

Advance Building 4-7-7 Sotokanda, Chiyoda-ku, Tokyo
Contact: Investor Relations Department
Phone: +81-3-5295-7875
Facsimile: +81-3-5295-2056
Email: hk@kyoritsugroup.co.jp

27