Outline of Consolidated Financial Statements - IR...

This document has been translated from a portion of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation, nor for direct, indirect, or any other form of damages that may arise from use of this translation. This English version includes some explanatory notes.

February 14, 2011

Outline of Consolidated Financial Statements for the Fiscal Year Ended December 2010 Name of Company Listed: Tokyo Tatemono Co., Ltd. Exchange: First Section of Tokyo Stock Exchange Code Number: 8804 URL: http://www.tatemono.com Representative: Makoto Hatanaka, President & Representative Director Contact: Yoshitoshi Kagami, General Manager,

Corporate Communications and Investor Relations Department, TEL: +81-(0)3-3274-1984 Scheduled date of ordinary shareholders’ meeting: March 30, 2011 Scheduled day for commencement of dividend payment: March 31, 2011 Planned date for submission of securities report: March 30, 2011

(Amounts are rounded down to the nearest one million yen.) 1. Consolidated Results of Operations for the Fiscal 2010 (January 1, 2010 to December 31, 2010) (1) Consolidated business results

Revenue from operations Operating income Recurring income Net income Million yen % Million yen % Million yen % Million yen %

FY2010 198,274 (24.5) 24,055 (17.5) 13,687 (29.2) 6,316 (0.5)FY2009 262,609 31.4 29,162 5.2 19,331 (5.7) 6,345 (37.2)

Note: The percentage figures indicate the percentage increase/decrease compared with the corresponding for the previous fiscal year.

Net income per share Net income per share after adjusting for dilution Return on equity Recurring margin on

gross capital

Operating margin on revenue from

operations Yen Yen % % %

FY2010 14.67 – 2.5 1.4 12.1FY2009 19.51 – 2.7 2.0 11.1

(Reference) Investment income/loss due to equity method: Year ended December 31, 2010: 304 million yen Year ended December 31, 2009: 357 million yen

(2) Consolidated financial status Total assets Total net assets Owners’ equity ratio Owners’ equity per share Million yen Million yen % Yen

FY2010 927,925 262,597 27.6 594.74 FY2009 969,492 259,292 26.2 590.82

(Reference) Owners’ equity: As of December 31, 2010: 256,121 million yen As of December 31, 2009: 254,481 million yen

(3) Consolidated cash flows

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Cash and cash equivalents at end of period

Million yen Million yen Million yen Million yenFY2010 59,730 (1,464) (53,122) 20,906 FY2009 66,293 (48,915) (18,487) 16,078

2. Dividend Status

Dividend per share

End of first quarter

End of interim period

End of third quarter Year-end Annual

Total dividendamount

(Annual)

Payout ratio (Consolidated)

Ratio of dividends to

net assets (Consolidated)

Yen Yen Yen Yen Yen Million yen % %FY2009 – 5.00 – 5.00 10.00 3,753 51.3 1.5FY2010 – 4.00 – 4.00 8.00 3,461 54.5 1.3FY2011

(Projection) – 4.00 – 4.00 8.00 57.4

3. Projection of Consolidated Results of Operations for Fiscal 2011 Ending December 2011(January 1, 2011 to December31, 2011)

Revenue from operations Operating income Recurring income Net income Net income per

share Million yen % Million yen % Million yen % Million yen % Yen

Interim period 95,000 16.7 7,000 (21.5) 2,000 (48.7) 1,000 (37.7) 2.32 Full year 190,000 (4.2) 25,000 3.9 15,000 9.6 6,000 (5.0) 13.93

Note: The percentage figures indicate the percentage increase/decrease compared with the full year and the interim period of the previous fiscal year.

4. Other (1) Significant changes in subsidiaries during the term (any changes in specific subsidiaries accompanied by a change in the scope of

consolidation): None

(2) Changes in the accounting principles, procedures and presentation related to the preparation of the consolidated financial statements (thosethat are described in changes in significant items regarding preparation of consolidated financial statements)

(i) Changes due to amendments to accounting standards: Yes (ii) Changes due to other reasons than item (i): None Note: For more details, please see “Changes in Significant Items Regarding Preparation of Consolidated Financial Statements” on page 23.

(3) Number of outstanding shares (common shares) (i) Number of outstanding shares (including treasury stock) at the end of the period

As of December 2010: 433,059,168 shares As of December 2009: 433,059,168 shares (ii) Number of shares of treasury stock at the end of the period

As of December 2010: 2,415,400 shares As of December 2009: 2,333,172 shares Note: For the number of shares as the basis for the calculation of net income (consolidated) per share, please see “Per Share Information” on

page 38. (Reference) Summary of Non-Consolidated Financial Statements 1. Non-Consolidated Results of Operations for the Fiscal 2010 (January 1, 2010 to December 31, 2010) (1) Non-consolidated business results

Revenue from operations Operating income Recurring income Net income Million yen % Million yen % Million yen % Million yen %

FY2010 134,479 (35.6) 17,586 (38.9) 9,005 (54.9) 10,822 36.8FY2009 208,925 40.8 28,783 19.5 19,973 10.3 7,908 (15.1)

Note: The percentage figures indicate the percentage increase/decrease compared with the corresponding for the previous fiscal year.

Net income per share Net income per share after adjusting for dilution

Yen YenFY2010 25.01 – FY2009 24.16 –

(2) Non-consolidated financial status

Total assets Total net assets Owners’ equity ratio Owners’ equity per share Million yen Million yen % Yen

FY2010 856,957 252,910 29.5 584.48 FY2009 887,520 245,650 27.7 567.59

(Reference) Owners’ equity: As of December 31, 2010: 252,910 million yen As of December 31, 2009: 245,650 million yen

Explanation Regarding the Appropriate Use of Business Performance Projections, and Other Items Warranting Special Mention The performance projections and other statements regarding the future presented in these materials are based on information presently obtained by the Company and on certain assumptions deemed to be rational, and the actual performance may differ materially depending on various factors. See "1. Operating Results (1) Analysis of Operating Results" on page 1 of the accompanying materials for details about business performance projections.

1. Operating Results (1) Analysis of Operating Results

a. Current Operating Results

In fiscal 2010, the Japanese economy steadily recovered, reflecting improvement overseas led by emerging economies.

However, in the second half of the year, the domestic economy came to a standstill, as exports decreased gradually in face of

the historically high yen, and consumer spending showed signs of weakening largely due to the waning impact of government

fiscal stimulus.

In the real estate industry, the business environment remained challenging in the rental office market. Signs of letup in the

decline of occupancy rates were tempered by continued downward pressure on rent levels, mainly from corporate cost-

cutting efforts. The residential housing market continued to show a trend towards improvement. The number of houses

supplied and housing starts rose, reflecting a healthier balance between supply and demand and the impact of government

policies. Meanwhile, inventories were reduced and the contract ratio held steady. The real estate investment market stayed on

a recovery path. The trading volume in the J-REIT market increased, as J-REITs merged and raised capital via public

offerings.

In this type of business environment, the Group has focused on building a stable management foundation to achieve

enhanced and stable future profitability centered on its office building and other leasing businesses, and condominiums,

detached houses and other real estate sales businesses while actively pursuing urban development projects.

Total revenue from operations for the term fell from ¥262,609 million for the preceding fiscal year to ¥198,274 million, down

24.5%. Operating income decreased from ¥29,162 million, a fall of 17.5%, to ¥24,055 million. Ordinary income declined

from ¥19,331 million, to ¥13,687 million, a decline of 29.2%.

With respect to extraordinary income and losses, the Group recorded a gain on the sale of stock in affiliates of ¥3,713 million

as extraordinary income and loss on devaluation of investment securities of ¥8,639 million and loss on revaluation of

inventories of ¥5,459 million as extraordinary losses in the preceding fiscal year, while the Group posted gain on sale of

property and equipment of ¥1,553 million as extraordinary income in the fiscal year under review.

As a result, net income for the year totaled ¥6,316 million (falling 0.5% from ¥6,345 million the previous year).

See below for an outline of business results by business segment.

<Leasing of Office and Commercial Buildings>

The Company focused on tenant services, with the aim of “providing a safe and comfortable space,” thereby improving

occupancy rates and profitability.

In the building leasing business, revenue edged down slightly from the preceding fiscal year, largely due to the sale of

existing buildings such as Tokyo Tatemono Osaka Building (Chuo Ward, Osaka), which offset the Company’s operation of

offices buildings completed in the preceding fiscal year, such as “JA Building,” “Keidanren Kaikan” (Chiyoda Ward, Tokyo),

and Osaki Center Building (Shinagawa Ward, Tokyo), for the entire fiscal year. In the management services, revenue also

decreased, mainly due to the fact that the Company earned profits for SPC (special purpose company) dividends by selling

the buildings of “Olinas Tower” (Sumida Ward, Tokyo) in the preceding fiscal year.

As a result, revenue from the leasing business decreased from ¥68,008 million for the preceding fiscal year to ¥57,126

million, a decline of 16.0%. Operating income sank from ¥28,659 million to ¥17,257 million, down 39.8%.

− 1 −

FY2009 FY2010 Item Rentable area (m2)

(Sublease area) Amount (million yen) Rentable area (m2) (Sublease area) Amount (million yen)

Land 31,723(10,704) 786 31,513

(10,704) 926

Buildings 692,772(198,634) 46,147 667,923

(198,823) 45,049

Management services (Note) – 21,074 – 11,151Total – 68,008 – 57,126

Note: Management services include dividend income pertaining to investments of SPCs, ¥4,332 million for the year ended December 31, 2010 and ¥11,724 million for the year ended December 31, 2009.

<Real Estate Sales>

To practice the concepts represented by the slogans “sophisticated residences” and “safety and security,” which express the

identity of Brillia’s brand, the Company sought to acquire carefully selected sites and to plan customer-oriented products. The

Company also placed emphasis on quality control, after-sales services and maintenance.

During the fiscal year under review, the Company recorded sales for condominiums including “Brillia Sugamo” (Toshima

Ward, Tokyo), “Brillia Koshigaya Lake Town” (Koshigaya, Saitama Prefecture), “Brillia e-SQUARE” (Saiwai Ward,

Kawasaki), “Brillia Aoba Eda” (Aoba Ward, Yokohama) and “Brillia Tower Kobe Motomachi” (Chuo Ward, Kobe), and

residential sites such as “Tokyo Tatemono Yokohama Building” (Nishi Ward, Yokohama), “Tokyo Tatemono Kyobashi

Building” (Chuo Ward, Tokyo), and “Tokyo Tatemono Shinmuromachi Building” (Chuo Ward, Tokyo).

Sales for condominiums declined from the preceding fiscal year, reflecting the fact that no large city center condominiums

were completed and the number of apartments sold fell.

Consequently, revenue from the real estate sales business decreased from ¥158,054 million to ¥109,217 million, a fall of

30.9%, and operating income dropped from ¥8,555 million to ¥6,273 million, down 26.7%.

In the fiscal year under review, we recorded ¥514 million in inventory valuation losses on condominiums currently on sale as

operating costs.

FY2009 FY2010 Item

Quantity sold Amount (million yen) Quantity sold Amount

(million yen) Condominiums 2,914 120,769 1,614 62,832 Detached houses (including land zoned for detached houses) 49 2,250 50 3,093

Housing lots, etc. 37 30,305 29 38,496 Management services 34,522 4,728 36,434 4,796

Total – 158,054 – 109,217

<Other businesses>

Revenue from the related services business fell, reflecting the sale of certain golf courses in the resort, leisure and hotel

business in the preceding fiscal year, and the sale of Informa Co., Ltd., engaged in the media complex business. However,

income rose year on year, primarily because brokerage fees increased given the continued upswing in real estate transactions

in the brokerage business, and because the Company recorded profits for dividends through the sale of assets held by SPC in

the other account.

As a consequence, revenue from the related services business declined from ¥36,546 million to ¥31,929 million, falling

12.6%, and the operating income stood at ¥7,376 million (operating loss of 964 million for the previous fiscal year).

− 2 −

FY2009 FY2010 Item

Quantity Amount (million yen) Quantity Amount

(million yen) Brokerage 3,170 3,137 2,286 3,987 Resort/leisure/hotel – 11,316 – 8,269 Renovation – 5,536 – 4,194 Restaurants – 1,050 – 964 Retail of packaged media – 4,701 – –Spa – 3,286 – 3,302 Other (Note) – 7,517 – 11,212

Total – 36,546 – 31,929

Note: “Other” includes dividend income pertaining to investments in SPC commercial facilities and in real estate investment

funds: ¥4,873 million for the year ended December 31, 2010 and ¥1,468 million for the year ended December 31, 2009.

b. Outlook for the Next Term

Outlook for the next term:

Full-year projection(billion yen)

Compared with the fiscal year under

review Revenue from operations 190.0 (-4.2%)Operating income 25.0 (+3.9%)Recurring income 15.0 (+9.6%)Net income 6.0 (-5.0%)

With the application of the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information

(Accounting Standards Board of Japan (ASBJ) Statement No. 17 issued on March 27, 2009) and the Guidance on Accounting

Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ Guidance No. 20 issued on March

21, 2008) from the next fiscal year, the segment classification will be changed from “Leasing,” “Real Estate Sales” and

“Other” in the past to “Buildings, etc.,” “Housing” and “Other.”

In the next fiscal year, we anticipate the completion of Yaesu Kyodo Building (tentative name) (Chuo Ward, Tokyo) and the

sale of SPC-related assets in the Buildings, etc. business.

In the Housing business, we plan to complete the construction of Brillia Ariake Sky Tower (Koto Ward, Tokyo) and Brillia

WELLITH Bunkyo Sendagi (Bunkyo Ward, Tokyo), etc. and deliver them.

As a result, we expect revenue from operations to be ¥190 billion (down 4.2% from the fiscal year under review), operating

income to reach ¥25 billion (up 3.9%), recurring income to increase to ¥15 billion (up 9.6%) and net income to be ¥6 billion

(down 5.0%).

In the fiscal year under review, the Company conducted a tender offer for NIHON PARKING CORPORATION (listed on

JASDAQ), which operates a pay-by-the-hour parking business. The tender offer was concluded on February 7, 2011.

Following this, the Company has decided to make NIHON PARKING CORPORATION a consolidated subsidiary from the

next fiscal year.

(2) Analysis of Financial Situation a. Analysis of Assets, Liabilities and Net Assets

(Assets)

Total assets at the end of the term fell ¥41,567 million from the end of the preceding fiscal year, to ¥927,925 million. This

result principally reflects a decrease of ¥35,494 million in current assets mainly due to the sale of real estate for sale, and a

− 3 −

fall of ¥6,072 million in fixed assets, reflecting a decline in tangible fixed assets chiefly owing to the sale of “Tokyo

Tatemono Osaka Building” (Chuo Ward, Osaka) and an increase in investment securities primarily due to a capital

contribution to SPC.

(Liabilities)

Total liabilities decreased ¥44,873 million, to ¥665,327 million. Interest-bearing liabilities (excluding lease obligations)

decreased ¥50,098 million from the end of the preceding year, to ¥460,835 million. This decrease reflects the repayment of

debt, which offset the Company’s issuance of ¥20 billion bonds.

(Net assets)

Net assets rose ¥3,305 million, to ¥262,597 million, reflecting an increase due to net income, which offset a decrease due to

dividends paid.

b. Analysis of Cash Flow Situation

Consolidated cash and cash equivalents (hereinafter “cash”) at the end of fiscal 2010 increased ¥4,828 million from the end

of fiscal 2009, to ¥20,906 million. Cash from operating activities increased ¥59,730 million, cash from investing activities

declined ¥1,464 million, and cash from financing activities decreased ¥53, 122 million.

Cash flows for each category are as follows.

(Cash flow from operating activities)

The increase in cash from operating activities amounted to ¥59,730 million (a fall of ¥6,562 million from the previous fiscal

year), mainly reflecting an increase in cash thanks to income before income taxes and minority interests of ¥12,530 million,

depreciation expenses (a non-cash item) of ¥8,198 million, and a decrease of 40,767 million in inventories.

(Cash flow from investing activities)

The decline in cash from investing activities amounted to ¥1,464 million (a rise of ¥47,450 from the previous year),

reflecting a decrease in cash due mainly to expenditure of ¥17,714 million for purchase of investment securities, ¥12,587

million for purchase of noncurrent assets, and an increase in cash attributable to income of ¥17,796 million from the sale of

noncurrent assets, ¥6,769 million from the redemption of investment securities and an increase of ¥6,529 million in deposits

received under the Real Estate Specified Joint Enterprise Law.

(Cash from financing activities)

The decrease in cash from financing activities amounted to ¥53,122 million (a decline of ¥34,634 million from the previous

fiscal year), mainly reflecting funds raised through the issuance of ¥20 billion bonds, and the repayment of debt.

c. Cash Flow Index Estimation

FY2008 FY2009 FY2010 Equity capital ratio 23.2% 26.2% 27.6%Market value based equity capital ratio 13.2% 15.7% 17.4%Period of debt redemption – 7.7 years 7.7 yearsInterest coverage ratio – 8.0 6.9Notes: 1) Each index is calculated by the following formulae using consolidated financial figures:

Equity capital ratio: shareholder equity/total gross assets Market value based equity capital ratio: total market value of shares/total gross assets Period of debt redemption: interest-bearing liabilities/operating cash flow Interest coverage ratio: operating cash flow/interest payment

2) Total market value of shares is calculated as follows: end-term closing stock price x number of outstanding stocks at end term (not including treasury stocks).

3) For operating cash flows and interest payment, the “cash flow from operating activities” and “amount of interest” in the consolidated cash flow statement are used. Interest-bearing liabilities refer to all interest-bearing liabilities listed on the consolidated balance sheet.

4) As the cash flow from operating activities was negative for fiscal year 2008, the period of debt redemption and interest coverage ratio are not listed for the year.

− 4 −

− 5 −

(3) Basic Policy regarding Dividend Distribution of Revenue for the Current and Successive Term For dividends, it is the Company’s policy to steadily return its profit to each stockholder by comprehensively accounting for

future operations, business expansion and business outlook.

The dividend for the current term is to be ¥4 per share, while the interim dividend is ¥4. This makes the estimated annual

dividend ¥8 per share (-¥2 compared to the preceding term), and a dividend payout ratio of 54.5% for the current term.

For the following term, the Company plans to set the annual dividend at ¥8 per share, the same as the dividend in the current term,

with an interim dividend of ¥4 per share and a year-end dividend of ¥4 per share, in light of results forecasts for the next term.

Dividend payout ratio for the succeeding term is estimated to be 57.4%.

2. Corporate Group The Group, comprising the Company and its 53 affiliates (of which, 37 consolidated subsidiaries and seven equity-method

affiliates), engages in the leasing of office and commercial buildings, real estate sales, brokerage, resort/leisure/hotel, real estate

securitization, renovation, international operations, and other business activities. The main businesses of the Group and the

positioning of each company pertaining to these businesses are as follows:

(1) Leasing of Office and Commercial Buildings The Company and its consolidated subsidiaries Tokyo Tatemono Real Estate Sales Co., Ltd., Tokyo Tatemono Resort Co., Ltd.,

Totate Building Co., Ltd., Shinjyuku Square Tower Management Co., Ltd., and one other subsidiary lease out and manage office

buildings and condominiums.

Kachidoki GROWTH TOWN Co., Ltd., a consolidated subsidiary, develops rental condominiums.

Nihonbashi 1-Chome Development Special Purpose Corporation, a consolidated subsidiary, develops office buildings.

In the leasing of office and commercial buildings business, consolidated subsidiaries Tokyo Tatemono Amenity Support Co., Ltd.

and Shinjuku Center Building Management Co., Ltd., and equity-method affiliates Tokyo Real Estate Management Co., Ltd. and

Tokyo Building Service Co., Ltd. engage in the building management and cleaning business.

The leasing of office and commercial buildings business is classified as the “Leasing” segment.

(2) Real Estate Sales The Company develops and sells condominiums and detached houses, etc., and a consolidated subsidiary Tokyo Tatemono Real

Estate Sales Co., Ltd. is a primary sales agent. Another consolidated subsidiary Tokyo Tatemono Amenity Support Co., Ltd.

operates the management business for condominiums sold by the Company.

The real estate sales business is classified as the “Real estate sales” segment.

(3) Brokerage The Company sells and buys real estate, provides brokerage and agent services for leasing and the real estate appraisal and

consulting businesses.

Tokyo Tatemono Real Estate Sales Co., Ltd., a consolidated subsidiary, sells and buys real estate and provides sales agent

services for condominiums, etc. and agent services for the leasing, selling, and buying of real estate.

The brokerage business is classified as the “Other” segment.

(4) Resort/Leisure/Hotel The Company sells resort villas and develops leisure faculties around the Hatori Lake in Fukushima, and a consolidated

subsidiary Hatoriko Highland Regina Forest Co., Ltd. operates and manages these facilitates.

Tokyo Tatemono Resort Co., Ltd., a consolidated subsidiary, engages in the hotel business and operates and manages resort

facilities.

J-Golf Co., Ltd., Tsurugashima Country Club Co., Ltd., Kawaguchiko Country Club Co., Ltd. and Tojo Golf Club Co., Ltd.,

consolidated subsidiaries, and other nine companies manage and operate golf courses.

The resort/leisure/hotel business is classified as the “Other” segment.

(5) Real Estate Securitization The Company gives advice on real estate investments and asset liquidation of general business corporations, using securitization

methods.

The Company and its consolidated subsidiary Tokyo Tatemono Fund Management Co., Ltd. operate businesses under the Real

Estate Specified Joint Enterprise Act.

− 6 −

Tokyo Tatemono Investment Advisors Co., Ltd., a consolidated subsidiary, provides consulting services on real estate

investments.

Tokyo Realty Investment Management, Inc., an equity-method affiliate, operates an asset management business for investment

corporations as an asset management company under the Act on Securities Investment Trust and Securities Investment

Corporations.

The real estate securitization business is classified as the “Other” segment.

(6) Renovation Tokyo Tatemono Techno-build Co., Ltd., a consolidated subsidiary, operates a renovation business for buildings and

condominiums, etc.

The renovation business is classified as the “Other” segment.

(7) International Operations Tokyo Tatemono (U.S.A.), Inc., a consolidated subsidiary, and one other company operate a real estate leasing business in the

United States. These companies are classified as the leasing segment.

Amenity Garden Shanghai Ltd. and Shanghai Dong Ying Real Estate Consulting Co., Ltd. operate a real estate leasing business

in China and are classified as the leasing segment.

Tokyo Tatemono (Shanghai) Real Estate Consulting Co., Ltd. and Tokyo Tatemono (China) Investment Co., Ltd. operate a real

estate consulting business in China and are classified as the other segment.

Shanghai Xiang Tai Real Estate Development Co., Ltd., an equity-method affiliate, and two other companies develop

condominiums for sale in China.

(8) Other Businesses Tokyo Tatemono Resort Co., Ltd., a consolidated subsidiary, operates a restaurant business.

Tokyo Tatemono Finance Co., Ltd., a consolidated subsidiary, operates a finance business.

Hotness Co., Ltd., a consolidated subsidiary, operates a spa (premium bathhouse) business.

E-state Online Co., Ltd., a consolidated subsidiary, provides an information provision service using the Internet.

Qualityworks Co., Ltd., a consolidated subsidiary, provides a labor dispatch service.

Prime Place Co., Ltd., a consolidated subsidiary, engages in the operation and management business of commercial facilities.

Tsunagu Network Communications, Inc., an equity-method affiliate, operates an Internet connection business for housing

complexes.

Other businesses are classified as the “Other” segment.

The business structure diagram that shows the above companies and businesses is as follows:

− 7 −

− 8 −

(Business Structure Diagram)

Leasing of Office and Commercial Buildings

0 Tokyo Tatemono Real Estate Sales Co., Ltd.0 Tokyo Tatemono Resort Co., Ltd. 0 Totate Building Co., Ltd. 0 Shinjyuku Square Tower Management Co.,

Ltd. 0 Nihonbashi 1-Chome Development Special

Purpose Corporation 0 Kachidoki GROWTH TOWN Co., Ltd.

Others

Leasing / operation Building management / cleaning 0 Tokyo Tatemono Amenity Support Co., Ltd. 0 Shinjuku Center Building Management Co.,

Ltd. Tokyo Real Estate Management Co., Ltd. Tokyo Building Service Co., Ltd.

Others

Brokerage Renovation

0 Tokyo Tatemono Real Estate Sales Co., Ltd. Others

0 Tokyo Tatemono Techno-build Co., Ltd.

0 Tokyo Tatemono Real Estate Sales Co., Ltd. 0 Tokyo Tatemono Amenity Support Co., Ltd.

Real Estate Sales

0Tokyo Tatemono (U.S.A.), Inc. 0 Tokyo Tatemono (Shanghai) Real Estate

Consulting Co., Ltd. 0 Tokyo Tatemono (China) Investment Co., Ltd. 0 Amenity Garden Shanghai Ltd. 0 Shanghai Dong Ying Real Estate Consulting

Co., Ltd. Shanghai Xiang Tai Real Estate Development Co., Ltd. Others

International Operations

Resort / Leisure / Hotel Tokyo Tatemono Co., Ltd. Other Businesses 0 Tokyo Tatemono Resort Co., Ltd. 0 Hatoriko Highland Regina Forest Co., Ltd. 0 J-Golf Co., Ltd. 0 Tsurugashima Country Club Co., Ltd. 0 Kawaguchiko Country Club Co., Ltd. 0 Tojo Golf Club Co., Ltd.

Others

0Tokyo Tatemono Resort Co., Ltd. Restaurant business

0Tokyo Tatemono Finance Co., Ltd.Finance business

0Hotness Co., Ltd. Spabusiness

Internet-related business 0E-state Online Co., Ltd.

Tsunagu Network Communications, Inc.

Real Estate Securitization 0Qualityworks Co., Ltd.

Labor dispatch service

0 Tokyo Tatemono Fund Management Co., Ltd. 0 Tokyo Tatemono Investment Advisors Co., Ltd.

Tokyo Realty Investment Management, Inc. 0Prime Place Co., Ltd.

Operation and management businessof commercial facilities

0 indicates consolidated subsidiaries. indicated equity-method affiliates.

3. Management Policy (1) Basic Management Policy, Medium- and Long-Term Management Strategies and Target Management Indicators As there is no significant change from the disclosed details (on February 12, 2009) in the outline of consolidated financial

statements for the fiscal year ended December 2009, the disclosure is omitted.

The outline of consolidated financial statements for the fiscal year ended December 2010 is posted in the following sites.

(Homepage of the Company)

http://www.tatemono.com/ir/kessan.html

(Homepage of the Tokyo Stock Exchange (Listed Company Search))

http://www.tse.or.jp/listing/compsearch/index.html

(2) Issues to Address The Japanese economy is expected to gradually recover in the future, with modest growth in exports and production, fuelled by

improvement overseas, offsetting the effect of persistent deflation and other downward pressures on the economy.

In the real estate industry, the rental office market is expected to see an upward swing in occupancy rates, but rent levels look set

to remain low. The residential housing market is expected to hold firm, with a predicted increase in the number of houses

supplied and continued low interest rates and gift tax exemptions. The real estate investment market will experience increased

activity, mainly due to the purchase of J-REITS by the Bank of Japan’s new asset-buying fund, and this is expected to lead to an

increase in trading of real estate.

Given these circumstances, the Group will further strengthen its earning power and financial business based on the Group

medium-term business plan (2009 – 2014), and steadily build a solid footing. We will consider a change in the business

environment as an opportunity to create new value, and we will develop business in China where growth is expected, as well as

implementing measures for the aging society, to make repaid progress to a new level. We will also contribute to the development

of a sustainable society through environmentally friendly business activities, in accordance with the Tokyo Tatemono Group

Environmental Policy formulated in the fiscal year under review.

− 9 −

4. Consolidated Financial Statement

(1) Consolidated Balance Sheet (Million yen)

End of FY2009 (December 31, 2009)


Assets Current assets

Cash *1 16,090 *1 20,941 Accounts receivable, trade 4,546 6,056 Marketable securities *1, *6 1,154 *6 2,409 TK investments *6 5,343 *6 5,339 Real estate for sale *1, *4, *5 74,114 *1, *4, *5 35,361 Real estate for sale in progress 40,820 47,371 Real estate for development 35,795 30,794 Deferred income taxes 2,534 2,321 Other current assets *6 16,519 *6 10,819 Allowance for doubtful accounts (187) (176)Total current assets 196,733 161,238

Fixed assets Property and equipment

Buildings and structures *1, *2 202,732 *1, *2 198,368 Accumulated depreciation (76,669) (78,446)Buildings and structures (net amount) 126,062 119,922

Land *1, *2, *3 326,006 *1, *2, *3 310,423 Construction in progress 4,995 8,591 Other fixed assets *2 19,147 *2 18,717

Accumulated depreciation (9,747) (10,232)Other fixed assets (net amount) 9,399 8,484

Total property and equipment *4, *5 466,464 *4, *5 447,422 Intangible and other assets

Lease rights *2, *5 24,573 *2 24,513 Goodwill 3,329 3,212 Other intangible and other assets *2 354 *2 413 Total intangible and other assets 28,257 28,139

Investments Investment securities *1, *6 184,839 *1, *6 198,177 TK investments *6 58,461 *6 59,075 Long-term loans 303 578 Deferred income taxes 5,872 1,298 Guarantee deposits paid *2 10,541 *2 10,148 Other investments *2, *6 19,148 *2, *4, *6 22,908 Allowance for doubtful accounts (516) (463)Investment loss reserve (613) (598)Total investments 278,037 291,124

Total fixed assets 772,759 766,686 Total assets 969,492 927,925

− 10 −

− 11 −

(Million yen)



Liabilities Current liabilities

Short-term borrowings *1 134,767 *1 119,281 Commercial paper 26,400 – Accounts payable, trade *1 11,960 *1 9,796 Accrued income taxes 1,357 1,798 Reserve for compensation for completed work 5 4 Provision for bonuses 255 264 Reserve for bonuses to directors and corporate auditors 173 220 Investments received for real estate specific joint enterprises – *2 10,790

Other current liabilities *1 30,023 *1 32,279 Total current liabilities 204,943 174,436

Long-term liabilities Bonds payable *1 74,500 *1 94,500 Long-term debt *1 268,266 *1 240,754 Deferred income taxes 8,545 8,633 Deferred income taxes on land revaluation *3 23,011 *3 23,721 Accrued severance indemnities 5,674 6,335 Allowance for retirement benefits for directors 874 984 Reserve for scrapping of buildings 489 582 Provision for environmental measures – 278 Guarantee deposits received *1 44,574 *1 41,238 Investments received for real estate specific joint enterprises

*2 65,467 *2 61,206

Other long-term liabilities *1 13,851 *1 12,655 Total long-term liabilities 505,256 490,890

Total liabilities 710,200 665,327 Net assets

Shareholders’ equity Capital 92,451 92,451 Capital surplus 90,705 90,696 Retained earnings 46,032 50,692 Treasury stock (521) (543)Total shareholders’ equity 228,667 233,297

Valuation and translation adjustments Valuation difference on available-for-sale securities 8,690 11,323 Revaluation difference on land *3 18,121 *3 13,637 Translation adjustments (997) (2,136)Total valuation and translation adjustments 25,814 22,823

Minority interests 4,810 6,476 Total net assets 259,292 262,597

Total liabilities, minority interests and net assets 969,492 927,925

(2) Consolidated Statement of Income (Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Revenue from operations 262,609 198,274 Cost of revenue *1 201,781 *1 151,112 Gross profit 60,828 47,161 Selling, general and administrative expenses 31,665 23,106 Operating income 29,162 24,055 Non-operating income

Interest income 27 44 Dividend income 633 632 Equity in income of affiliated companies 357 304 Other 784 377 Total non-operating income 1,803 1,358

Non-operating expenses Interest expense 8,529 8,723 New share issue expenses 164 9 Bond issuance expenses 53 101 Distribution from real estate specific joint enterprises 1,550 1,686 Other 1,336 1,205 Total non-operating expenses 11,634 11,726

Recurring income 19,331 13,687 Extraordinary income

Gain on sale of property and equipment 137 1,553 Gain on sale of investment securities 29 99 Gain on sale of stock in affiliates 3,713 – Gain on change in shareholding in subsidiaries 349 – Reversal of provision for loss on guarantee 2 – Reversal of provision for directors' retirement benefits – 17 Total extraordinary income 4,232 1,670

Extraordinary loss Loss on revaluation of inventories 5,459 – Loss on sale of fixed assets 19 511 Loss on retirement of property and equipment 91 179 Loss on devaluation of investment securities 8,639 297 Loss on valuation of stock in affiliates – 24 Loss on investment in consortia 568 494 Loss on transfer of business 112 – Provision for investment loss reserve 15 – Provision for environmental measures – 278 Impairment loss *2 1,224 *2 1,039 Total extraordinary loss 16,131 2,826

Income before income taxes and minority interests 7,433 12,530 Current income taxes 4,041 4,422 Deferred income taxes (818) 1,520 Total income taxes 3,222 5,942 Gain (loss) on minority interests (2,135) 271 Net income 6,345 6,316

− 12 −

(3) Consolidated Statements of Changes in Owners’ Equity (Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Shareholders’ equity Capital

Balance at the end of previous period 77,181 92,451 Changes in items during the period

Issuance of new shares 15,269 – Total changes in items during the period 15,269 –

Balance at the end of current period 92,451 92,451 Capital surplus


Issuance of new shares 15,269 – Disposal of treasury stock (18) (8)Total changes in items during the period 15,251 (8)

Balance at the end of current period 90,705 90,696 Retained earnings


Dividends from surplus (4,131) (3,894)Net income 6,345 6,316 Reversal of revaluation reserve for land (1,978) 2,238 Total changes in items during the period 235 4,659

Balance at the end of current period 46,032 50,692 Treasury stock

Balance at the end of previous period (529) (521)Changes in items during the period

Acquisition of treasury stock (21) (35)Disposal of treasury stock 28 13 Change in equity in affiliates accounted for by equity method-treasury stock 1 –

Total changes in items during the period 7 (21)Balance at the end of current period (521) (543)

Total shareholders’ equity Balance at the end of previous period 197,902 228,667 Changes in items during the period

Issuance of new shares 30,539 – Dividends from surplus (4,131) (3,894)Net income 6,345 6,316 Reversal of revaluation reserve for land (1,978) 2,238 Acquisition of treasury stock (21) (35)Disposal of treasury stock 9 5 Change in equity in affiliates accounted for by equity method-treasury stock 1 –

Total changes in items during the period 30,764 4,630 Balance at the end of current period 228,667 233,297

− 13 −

(Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Valuation and translation adjustments Valuation difference on available-for-sale securities


Net changes in items other than shareholders’ equity 852 2,632 Total changes in items during the period 852 2,632

Balance at the end of current period 8,690 11,323 Revaluation difference on land


Net changes in items other than shareholders’ equity (1,388) (4,483)Total changes in items during the period (1,388) (4,483)

Balance at the end of current period 18,121 13,637 Translation adjustments

Balance at the end of previous period (1,192) (997)Changes in items during the period

Net changes in items other than shareholders’ equity 195 (1,139)Total changes in items during the period 195 (1,139)

Balance at the end of current period (997) (2,136)Total valuation and translation adjustments


Net changes in items other than shareholders’ equity (340) (2,990)Total changes in items during the period (340) (2,990)

Balance at the end of current period 25,814 22,823 Minority interests


Net changes in items other than shareholders’ equity (2,485) 1,665 Total changes in items during the period (2,485) 1,665

Balance at the end of current period 4,810 6,476 Total net assets


Issuance of new shares 30,539 – Dividends from surplus (4,131) (3,894)Net income 6,345 6,316 Reversal of revaluation reserve for land (1,978) 2,238 Acquisition of treasury stock (21) (35)Disposal of treasury stock 9 5 Change in equity in affiliates accounted for by equity method-treasury stock 1 –

Net changes in items other than shareholders’ equity (2,826) (1,325)Total changes in items during the period 27,938 3,305

Balance at the end of current period 259,292 262,597

− 14 −

(4) Consolidated Statements of Cash Flows (Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Cash flows from operating activities Income before income taxes and minority interests 7,433 12,530 Depreciation 8,504 8,198 Impairment loss 1,224 1,039 Goodwill amortization 165 190 Equity in income of affiliated companies (357) (304)Increase (decrease) in allowance for doubtful accounts (14) (63)Increase (decrease) in investment loss reserve 15 (15)Increase (decrease) in provision for bonuses (76) 9 (Reversal of) reserve for bonuses to directors and corporate auditors (53) 47

Increase (decrease) in provision for retirement benefits 417 661 Increase (decrease) in provision for retirement benefits for directors 62 109

Increase (decrease) in provision for loss on guarantees (20) – Increase (decrease) in provision for environmental measures – 278

Interest and dividend income (661) (676)Interest expense 8,529 8,723 Loss on revaluation of inventories 5,459 – Write-down of marketable securities 8,639 297 Loss on valuation of stocks of subsidiaries and affiliates – 24 Loss (gain) on sales of investment securities (29) (99)Loss (gain) on sales of stocks of subsidiaries and affiliates (3,713) – Loss (gain) on investments in consortia 568 494 Gain on change in shareholding in subsidiaries (349) – Loss (gain) on sales and retirement of fixed assets (25) (862)Loss (gain) on transfer of business 112 – (Increase) decrease in accounts receivable, trade 10,632 (1,512)(Increase) decrease in marketable securities (203) (1,330)(Increase) decrease investments in TKs 2 – (Increase) decrease in inventories *2 26,412 *2 40,767 Increase (decrease) in guarantee deposits received (1,753) (3,463)Increase (decrease) in accounts payable, trade 1,360 (157)(Increase) decrease in guarantee deposits paid (14) 392 Increase (decrease) in deposits 6,395 1,588 Other 2,570 1,075 Subtotal 81,234 67,943 Interest and dividends received 743 798 Interest paid (8,288) (8,639)Income taxes paid (7,395) (372)Net cash provided by operating activities 66,293 59,730

− 15 −

− 16 −

(Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Cash flows from investing activities Proceeds from maturity of marketable securities 17 20 Proceeds from sale of marketable and investment securities 8,609 6,769

Payment for purchase of marketable and investment securities (24,589) (17,714)

Proceeds from sale of investments in subsidiaries involving change in the scope of consolidation

*3 8,897 –

Purchase of stocks of subsidiaries and affiliates (161) (355)Proceeds from sales of stocks of subsidiaries and affiliates 195 0 Investments in TKs (a form of silent partnership) (14,798) (2,985)Proceeds from sale of investments in consortia 235 1,752 Proceeds from sale of fixed assets 561 17,796 Payment for purchase of fixed assets (35,578) (12,587)Payments of loans receivable (4,318) (341)Collection of loans 1,226 4,405 Increase (decrease) in receipt from investment in specific joint real estate ventures 10,244 6,529

Other *4 543 (4,752)Net cash used in investing activities (48,915) (1,464)

Cash flows from financing activities Increase (decrease) in short-term borrowings (78,000) (13,792)Increase (decrease) in commercial paper 5,100 (26,400)Increase in long-term debt 108,800 97,300 Repayment of long-term debt (98,467) (126,506)Increase in long-term accounts payable, other 7,000 – Payments for long-term accounts payable, other – (700)Proceeds from issue of bonds 12,000 20,000 Proceeds from issue of shares 30,539 – Proceeds from sales of treasury stock 9 5 Acquisition of treasury stock (21) (35)Dividends paid (4,124) (3,886)Payments of dividends to minority shareholders (119) (49)Proceeds from issue of shares to minority shareholders – 1,720 Other (1,203) (777)Net cash used in financing activities (18,487) (53,122)

Effect of exchange rate changes on cash and cash equivalents 29 (315)

Net increase (decrease) in cash and cash equivalents (1,080) 4,828 Cash and cash equivalents at beginning of year 17,159 16,078 Cash and cash equivalents at end of year *1 16,078 *1 20,906

(5) Notes on the Going Concern Premise Not applicable.

(6) Significant Items Regarding Preparation of Consolidated Financial Statements

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

1. Matters relating to the scope of consolidation (1) Number of consolidated subsidiaries: 36

Principal consolidated subsidiaries: Tokyo Tatemono Real Estate Sales Co., Ltd., Tokyo Tatemono Techno-build Co., Ltd., Tokyo Tatemono Amenity Support Co., Ltd., Tokyo Tatemono Resort Co., Ltd., and Totate Building Co., Ltd. Nihonbashi 1-Chome Development Special Purpose Corporation is included in consolidated subsidiaries as its controlling power has increased. J-Golf Co., Ltd. (a new company established through the company split of the former J-Golf Inc.) is included in consolidated subsidiaries following its establishment. Former J-Golf Inc., Nikko Izumi Kanko K.K. and five other companies are excluded from consolidated subsidiaries due to the sale of shares. Informa Co., Ltd. is excluded from consolidated subsidiaries due to the sale of shares. Amenity Staff Co., Ltd. is excluded from consolidated subsidiaries due to the merger with Tokyo Tatemono Amenity Support Co., Ltd.

1. Matters relating to the scope of consolidation (1) Number of consolidated subsidiaries: 37

Principal consolidated subsidiaries: Tokyo Tatemono Real Estate Sales Co., Ltd., Tokyo Tatemono Techno-build Co., Ltd., Tokyo Tatemono Amenity Support Co., Ltd., Tokyo Tatemono Resort Co., Ltd., and Totate Building Co., Ltd. Tokyo Tatemono (China) Investment Co., Ltd. is included in consolidated subsidiaries as it has paid its registered capital.

(2) Name of principal non-consolidated subsidiaries, etc. Principal non-consolidated subsidiary: Hatoriko Highland Development Co., Ltd. (Reason for excluding it from the scope of consolidation)

As the non-consolidated subsidiary does not have a significant impact on consolidated financial statement because it is small in scale in terms of total assets, net sales, net income and loss and retained earnings (the amount corresponding to equity), etc., it is excluded from the scope of consolidation.

(2) Name of principal non-consolidated subsidiaries, etc. Principal non-consolidated subsidiary: East 3 Special Purpose Corporation (Reason for excluding it from the scope of consolidation)

Same at the left

(3) Special purpose companies subject to disclosure The overview of special purpose companies subject to disclosure, the overview of transactions using special purpose companies subject to disclosure, and the amount of transactions with special purpose companies subject to disclosure are described in the “matters relating to special purpose companies subject to disclosure.”

(3) Special purpose companies subject to disclosure Same at the left

− 17 −

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

2. Matters relating to the application of an equity method (1) Number of equity-method affiliates

Affiliates: 5 Name of principal affiliates: Tokyo Real Estate Management Co., Ltd. Tokyo Building Service Co., Ltd. Hanto Real Estate Management Co., Ltd. is excluded from equity-method affiliates as the Company sold shares.

2. Matters relating to the application of an equity method (1) Number of equity-method affiliates

Affiliates: 7 Name of principal affiliates: Tokyo Real Estate Management Co., Ltd. Tokyo Building Service Co., Ltd. Tianjin Wanbin Real Estate Development Co., Ltd. is included in equity-method affiliates as the Company acquired shares. Yangzhou Wanwei Property Co., Ltd. is included in equity-method affiliates due to its establishment.

(2) As both of the total of amounts corresponding to equity in the net income and loss of a non-consolidated subsidiary (Hatoriko Highland Development Co., Ltd.) and an affiliate (Reliance Co., Ltd.) and the total of amounts corresponding to equity in retained earnings of these companies do not have a significant impact on consolidated financial statements, an equity method is not applied to investments in these companies.

(2) As both of the total of amounts corresponding to equity in the net income and loss of a non-consolidated subsidiary (East 3 Special Purpose Corporation) and an affiliate (Nissei Building Management Co., Ltd.) and the total of amounts corresponding to equity in retained earnings of these companies do not have a significant impact on consolidated financial statements, an equity method is not applied to investments in these companies.

(3) For those equity-method affiliates whose closing date is different from the consolidated closing date, financial statements for business year of each company are used.

(3) Same at the left

3. Matters relating to business years of consolidated subsidiaries Of consolidated subsidiaries, the closing date of Nihonbashi 1-Chome Development Special Purpose Corporation is October 31. When preparing consolidated financial statements, financial statements of the consolidated subsidiary as of October 31 are used, and adjustments necessary for consolidation are made for significant transactions arising between October 31 and the consolidated closing date. The closing dates of other consolidated subsidiaries are the same as the consolidated closing date.

3. Matters relating to business years of consolidated subsidiaries Same at the left

4. Matters relating to accounting policies (1) Valuation standards and methods of important assets

Securities Held-to-maturity bonds

Amortized cost method (straight line method) Available-for-sale securities

With market value The mark-to-market method based on the market value on the last day of the consolidated fiscal year. (Valuation profit and loss are reported directly

to net assets, with the cost of sale being calculated by the moving average method)

Without market value Cost method based on the moving average method

4. Matters relating to accounting policies (1) Valuation standards and methods of important assets

Securities Held-to-maturity bonds

Same at the left Available-for-sale securities

With market value Same at the left

Without market value Same at the left

− 18 −

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Inventories Real estate for sale

Cost method based on the specific identification method (a method of writing down the book value based on a fall in profitability)

Real estate for sale in progress Same as the above

Real estate for development Same as the above

Inventories Real estate for sale

Same at the left

Real estate for sale in progress Same at the left

Real estate for development Same at the left

(2) Depreciation methods of important depreciable assets (i) The Company and its domestic consolidated subsidiaries

Property and equipment (excluding lease assets) Buildings and structures Straight line

method Others

Machinery and equipment Straight line method

Vehicles Declining balance method

Tools, furniture and fixtures Same as the above

However, some domestic consolidated subsidiaries use the straight line method only for buildings (excluding annexed structures) acquired on and after April 1, 1998 and the declining balance method for other depreciable assets. The useful life and residual value are accounted for with the same methods as those stipulated in the Corporate Tax Act.

(2) Depreciation methods of important depreciable assets (i) The Company and its domestic consolidated subsidiaries

Property and equipment (excluding lease assets) Same at the left

Intangible and other assets (excluding lease assets) Straight line method Software for in-house use is accounted for with the straight line method over the usable life (five years).

Intangible and other assets (excluding lease assets) Same at the left

Lease assets Lease assets relating to finance leases other than those in which ownership rights of lease assets are deemed to transfer to the lessee The straight line method is used, taking the lease period to be the useful life and the scrap value to be zero. For leases commencing on or before December 31, 2008, an accounting method similar to that used for ordinary rental transactions is used.

Lease assets Lease assets relating to finance leases in which the ownership rights of lease assets is transferred to the lessee The same method as the depreciation method used for fixed assets owned by the Company is used. Lease assets relating to finance leases other than those in which ownership rights of lease assets are deemed to transfer to the lessee The straight line method is used, taking the lease period to be the useful life and the scrap value to be zero. For leases commencing on or before December 31, 2008, an accounting method similar to that used for ordinary rental transactions is used.

(ii) Foreign consolidated subsidiaries Straight line method

(ii) Foreign consolidated subsidiaries Same at the left

− 19 −

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

(3) Accounting methods of important deferred assets New share issue expenses

A full amount is processed at the time expenses are incurred.

Bond issuance expenses A full amount is processed at the time expenses are incurred.

(3) Accounting methods of important deferred assets New share issue expenses

Same at the left Bond issuance expenses

Same at the left

(4) Recording standards for important allowances Allowance for doubtful accounts

To prepare for irrecoverable receivables, the Company records the estimated irrecoverable amount for standard receivables on the basis of the actual loss ratio. Doubtful accounts are recorded for on an individual basis, based on estimates of the irrecoverable amount in question. When an allowance for doubtful accounts is provided for the entire amount of bankruptcy claims, rehabilitation claims and claims equivalent to these claims, the allowance for doubtful accounts is directly reduced from the claims. Claims that fall into this category amount to ¥2,698 million.

(4) Recording standards for important allowances Allowance for doubtful accounts

Same at the left

Investment loss reserve In preparation for losses on investments in affiliates, the amount deemed required is recorded, taking the financial situation and estimates of the irrecoverable amount in the future into account.

Investment loss reserve Same at the left

Reserve for compensation for completed work Some consolidated subsidiaries record the amount based on actual compensation in prior years to prepare for the disbursement of repair costs for completed work.

Reserve for compensation for completed work Same at the left

Provision for bonuses To provide for bonuses to employees, the estimated amount of bonuses to be incurred in the current year is recorded.

Provision for bonuses Same at the left

Reserve for bonuses to directors and corporate auditors

To prepare for the payment of bonuses to directors and corporate auditors, the estimated amount is recorded.

Reserve for bonuses to directors and corporate auditors

Same at the left

− 20 −

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Accrued severance indemnities In preparation for the disbursement of retirement benefits for employees, the Company records an amount deemed to have been incurred during the period under review, based on projected retirement benefit liabilities and pension assets at the end of the period in question. Actuarial gains and losses are amortized in the year following the year in which the gain or loss is recognized by the straight line method over periods (10 years) within the average remaining years of service of the employees.

Accrued severance indemnities Same at the left

Allowance for retirement benefits for directors To prepare for the provision of retirement benefits for directors, the Company and certain consolidated subsidiaries record estimated amounts required at the end of the period in question in accordance with internal regulations.

Allowance for retirement benefits for directors Same at the left

Reserve for scrapping of buildings Certain consolidated subsidiaries that operate their principal business using buildings on fixed-term leased land are required to record a reasonably estimated amount evenly over the contract period to prepare for retirement losses and building demolition costs, etc. that arise at the time of expiration of the term under the fixed-term leasehold contract. Accordingly, these companies record the amount for the elapsed periods at the end of this fiscal year.

Reserve for scrapping of buildings Same at the left

───────── Provision for environmental measures To prepare for expenditures for the disposal of waste such as PCB (polychlorinated biphenyl), a reasonably estimated amount is recorded.

(5) Hedge accounting (i) Hedge accounting method

The Company applies special hedge accounting to interest rate swaps.

(5) Hedge accounting (i) Hedge accounting method

Same at the left

(ii) Hedging instruments and hedged items Hedging instruments: interest rate swaps Hedged items: borrowings

(ii) Hedging instruments and hedged items Hedging instruments: interest rate swaps Hedged items: borrowings and corporate bonds

(iii) Hedging policy The Company engages in interest rate swaps to hedge the impact of interest rate fluctuations on income and does not engage in speculative transactions.

(iii) Hedging policy Same at the left

(iv) Valuation methods of effectiveness of hedging activities

The valuation of effectiveness is omitted as interest rate swaps fulfill the conditions for special hedge accounting.

(iv) Valuation methods of effectiveness of hedging activities

Same at the left

(6) Consumption taxes The tax-exclusion method is used.

(6) Consumption taxes Same at the left

− 21 −

− 22 −

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

5. Valuation of assets and liabilities of consolidated subsidiaries

The Company adopts the fair value method for all valuations of assets and liabilities of consolidated subsidiaries.

5. Valuation of assets and liabilities of consolidated subsidiaries

Same at the left

6. Amortization of goodwill and negative goodwill Goodwill is amortized evenly over the estimated amortization period from five to 20 years.

6. Amortization of goodwill and negative goodwill Same at the left

7. Cash and cash equivalents Cash and cash equivalents in consolidated statements of cash flows include cash on hand, demand deposits, and highly liquid investments with original maturities of three months or less, which are readily convertible to cash and that present insignificant risk of changes in value.

7. Cash and cash equivalents Same at the left

(7) Changes in Significant Items Regarding Preparation of Consolidated Financial Statements (Changes in accounting policies)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

(Accounting standards for the valuation of inventories) Staring from this fiscal year, the Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9 issued on July 5, 2006) is applied, and the valuation standard is changed from the cost method to the method of writing down the book value based on a fall in profitability. As a result, gross profit, operating income, and recurring income declined ¥2,970 million, and income before income taxes and minority interests decreased ¥8,430 million, compared to the amounts when the past method was used. The impact on segment information is stated in the applicable section.

─────────

(Accounting treatment of foreign subsidiaries in consolidated financial statements for the time being)

Staring from this fiscal year, the Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements (ASBJ Practical Issues Task Force No. 18 issued on May 17, 2006) is applied. This application does not have an impact on income and loss.

─────────

(Accounting standards for lease transactions) Although finance leases other than those in which ownership rights of the leased property are deemed to transfer to the lessee were accounted for using a method similar to that used for ordinary rental transactions, the Accounting Standard for Lease Transactions (ASBJ Statement No. 13 revised on March 30, 2007) and the Guidance on Accounting Standard for Lease Transactions (ASBJ Guidance No. 16 revised on March 30, 2007) are applied from this fiscal year. As a result, the accounting method is changed to a method similar to that used in ordinary sales transactions, and finance leases other than those in which ownership rights of the leased property are deemed to transfer to the lessee are recorded as lease assets. For finance leases other than those in which the ownership rights of the leased property are deemed to transfer to the lessee, whose date of commencing the lease transaction is before the first fiscal year of application, an accounting method similar to that used for ordinary rental transactions is continued to be used. The impact of this change on total assets is minor and does not have an impact on income and loss.

─────────

− 23 −

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

(Recording Classification) Consolidated subsidiaries that engage in the management and operation of golf courses previously recognized personnel costs directly related to the management of golf courses and depreciation expenses related to facilities of golf courses, etc. in general and administrative expenses, but starting from this consolidated fiscal year this was changed to a method in which the costs are recognized as the cost of revenue. After reviewing the method to account for expenses in accordance with an increase in revenue from operations, this change was made to more appropriately present the correspondence between revenue from operations and the cost of revenue. Because of this change, gross profit for this fiscal year declined ¥4,747 million, compared with the case in which the past method is used. This change does not have an impact on operating income, recurring income, or income before income taxes and minority interest. The change does not affect segment information.

─────────

───────── (Changes in accounting standards for recognition of construction revenues and cost of completed work)

With respect to accounting standards employed for the recognition of revenues resulting from construction work undertaken for customers, we previously applied the completed contract method. However, the Company applied the Accounting Standard for Construction Contracts (ASBJ Statement No. 15 issued on December 27, 2007) and the Guidance on Accounting Standard for Construction Contracts (ASBJ Guidance No. 18 issued on December 27, 2007) from this consolidated financial year. Beginning with construction contracts that started from this consolidated financial year, the percentage-of-completion method is applied to construction projects recognized as having certainty of outcomes for the portion completed by the end of this consolidated financial year, and the completed-contract method is applied to other construction contracts. This change does not have an impact on income and loss.

───────── (Application of accounting standards for retirement benefits) Starting from this consolidated fiscal year, the Partial Amendments to Accounting Standard for Retirement Benefits (Part 3) (ASBJ Statement No. 19 issued on July 31, 2008) is applied. This change does not have an impact on income and loss.

− 24 −

− 25 −

(Changes in Presentation Methods) FY2009

(Jan. 1, 2009 to Dec. 31, 2009) FY2010

(Jan. 1, 2010 to Dec. 31, 2010)

(Consolidated balance sheets) Associated with the application of the Cabinet Office Ordinance Regarding Partial Amendment to the Regulation for Terminology, Forms and Preparation of Financial Statements (Cabinet Office Ordinance No. 50 issued on August 7, 2008), an item that was presented as “inventories” in the previous fiscal year is presented as the following separate items from this consolidated fiscal year: “real estate for sale” (¥73,115 million in the previous fiscal year), “real estate for sale in progress” (¥57,591 million in the previous fiscal year), “real estate for development” (¥51,497 million in the previous fiscal year) and “Other” of current assets (¥322 million for this consolidated fiscal year and ¥1,208 million for the previous fiscal year).

─────────

(8) Notes on Consolidated Financial Statements (Relating to Consolidated Balance Sheets)

(Million yen)End of FY2009

(December 31, 2009) End of FY2010

(December 31, 2010)

*1. Assets pledged as collateral and liabilities for which collateral are provided as follows: (1) Assets pledged as collateral

Real estate for sale 12,457 Buildings and structures 9,471 Land 30,174 Total 52,102

*1. Assets pledged as collateral and liabilities for which collateral are provided as follows: (1) Assets pledged as collateral

Real estate for sale 9,885 Buildings and structures 9,059 Land 30,174 Total 49,118

(2) Liabilities for which collateral are provided

Short-term borrowings 4,331 Accounts payable, trade 700 Other current liabilities 16 Long-term debt 19,414 Guarantee deposits received 340 Other long-term liabilities 6,300 Total 31,103

Other than the above, cash and deposits (time deposits) of ¥1 million, marketable securities of ¥20 million, and investment securities of ¥875 million are provided as assets in trust to safeguard in-house savings and business security deposits, etc. under the Building Lots and Buildings Transaction Business Act and other laws. Of the assets above, Nihonbashi 1-Chome Development Special Purpose Corporation pledges buildings and structures of ¥1,114 million and land of ¥18,785 million as collateral for interest rate swaps and provides assets owned as general security for corporate bonds (specified bonds) of ¥2,500 million in accordance with the provisions of Article 128 of the Act on Securitization of Assets (Act No. 105 of 1998).

(2) Liabilities for which collateral are provided Short-term borrowings 3,944 Accounts payable, trade 700 Other current liabilities 16 Long-term debt 14,134 Guarantee deposits received 324 Other long-term liabilities 5,600 Total 24,719

Other than the above, cash and deposits (time deposits) of ¥1 million, and investment securities of ¥883 million are provided as assets in trust to safeguard in-house savings and business security deposits, etc. under the Building Lots and Buildings Transaction Business Act and other laws. Of the assets above, Nihonbashi 1-Chome Development Special Purpose Corporation pledges buildings and structures of ¥1,019 million and land of ¥18,785 million as collateral for interest rate swaps and provides assets owned as general security for corporate bonds (specified bonds) of ¥2,500 million in accordance with the provisions of Article 128 of the Act on Securitization of Assets (Act No. 105 of 1998).

*2. Real estate for the real estate specific joint enterprise (in the anonymous association (tokumei kumiai) system) are as follows:

Buildings and structures and others 38,413 Land 29,996 Lease rights 4,439 Other intangible and other assets 0 Guarantee deposits paid 774 Other investments 315 Total 73,939

Investments received corresponding to the above are recorded in “investments received for real estate specific joint enterprises” under long-term liabilities.

*2. Real estate for the real estate specific joint enterprise (in the anonymous association (tokumei kumiai) system) are as follows:

Buildings and structures and others 36,236 Land 29,996 Lease rights 4,439 Other intangible and other assets 0 Guarantee deposits paid 774 Other investments 280 Total 71,727

Investments received corresponding to the above are recorded in “investments received for real estate specific joint enterprises” under long-term liabilities.

− 26 −

− 27 −



(December 31, 2010)

*3. The Company revaluates land for business in accordance with the Act on Revaluation of Land (Act No. 34 enacted on March 31, 1998) and records valuation difference in long-term liabilities and net assets. ・Revaluation method Land for business is revaluated based on the appraisal as stipulated in Article 2, Item 5 of the Order for Enforcement of Act on Revaluation of Land (Cabinet Order No. 119 of March 31, 1998). ・Date of revaluation: December 31, 2000

*3. Same at the left

*4. Real estate for sale of ¥26,435 million was transferred to property and equipment in this consolidated fiscal year due to the change in purpose of holding the assets.

*4. Real estate for sale of ¥738 million was transferred to property and equipment of ¥736 million and investments of ¥1 million in this consolidated fiscal year due to the change in purpose of holding the assets.

*5. Property and equipment of ¥28,426 million and intangible and other assets of ¥709 million were transferred to real estate for sale in this consolidated fiscal year due to the change in purpose of holding the assets.

*5. Property and equipment of ¥2,992 million were transferred to real estate for sale in this consolidated fiscal year due to the change in purpose of holding the assets.

*6. Preferred securities in special purpose companies (SPC) and TK investments for the purpose of real estate investment are included as follows:

Marketable securities 1,134 TK investments 5,343 Other 15 Subtotal of current assets 6,493 Investment securities 144,483 TK investments 58,446 Other investments 232 Subtotal of fixed assets 203,162 Total 209,656

In current assets, preferred securities and TK investments held for sale are recorded. TK investments are the deemed securities as provided for in Article 2, Paragraph 2, Item 5 of the Financial Instruments and Exchange Act.

*6. Preferred securities in special purpose companies (SPC) and TK investments for the purpose of real estate investment are included as follows:

Marketable securities 2,409 TK investments 5,339 Other 15 Subtotal of current assets 7,765 Investment securities 153,281 TK investments 59,062 Other investments 232 Subtotal of fixed assets 212,575 Total 220,341

In current assets, preferred securities and TK investments held for sale are recorded. TK investments are the deemed securities as provided for in Article 2, Paragraph 2, Item 5 of the Financial Instruments and Exchange Act.

7. Contingent liabilities Guaranteed obligations 4,393

7. Contingent liabilities Guaranteed obligations 9,585

(Relating to Consolidated Statements of Income) (Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

*1. Write-down of the book value of inventories held for ordinary sale due to a fall in profitability

Cost of revenue 4,795

*1. Write-down of the book value of inventories held for ordinary sale due to a fall in profitability

Cost of revenue 514

*2. Impairment loss The Group makes the grouping of individual properties and recorded impairment losses for the following asset groups in this consolidate fiscal year.

Main use Type Location Resort facilities and other

Land, buildings and structures and other

Iwase-gun, Fukushima and other

For asset groups in which income arising from business operations has been negative on an ongoing basis, the book value is reduced to the recoverable value, and the reduction is recorded in extraordinary losses as an impairment loss. The breakdown of impairment loss is as follows:

Land 381 Buildings and structures and other 842 Total 1,224

The recoverable value of the asset groups is measured by net sale value or use value. Chiefly, the appraisal value of the licensed real-estate appraiser is used for the net sale value, and the use value is calculated by discounting the future cash flows by 2%.

*2. Impairment loss The Group makes the grouping of individual properties and recorded impairment losses for the following asset groups in this consolidate fiscal year.

Main use Type Location Condominiums for rent and other

Land, buildings and structures and other

Toshima Ward, Tokyo and other

For asset groups to be sold in this consolidated fiscal year and those asset groups in which income arising from business operations has been negative on an ongoing basis, the book value is reduced to the recoverable value, and the reduction is recorded in extraordinary losses as an impairment loss. The breakdown of impairment loss is as follows:

Land 615 Buildings and structures and other 423 Total 1,039

The recoverable value of the asset groups is measured by net sale value, etc. and valued by planned sale value, etc.

− 28 −

(Relating to Consolidated Statements of Changes in Owners’ Equity)

FY2009 (January 1, 2009 to December 31, 2009) 1. Number of shares issued

Type of stock End of FY2008 Increase Decrease End of FY2009

Common stock (shares) 318,059,168 115,000,000 – 433,059,168

(Summary of change) A breakdown of the increase is as follows:

Increase due to the issue of new shares through public placement 103,750,000 Increase due to the issue of new shares through private placement 11,250,000

2. Treasury stock


Common stock (shares) 2,317,410 52,855 37,093 2,333,172


Increase due to the purchase of shares constituting less than one unit 52,855 A breakdown of the decrease is as follows:

Decrease due to requests for sale of shares to constitute one unit 28,373 Decrease due to changes in equity in equity-method affiliates 8,720

3. Dividends (1) Dividend payment

Resolution Type of stock Total dividend (million yen)

Dividend per share (yen) Record date Effective date

Annual shareholders’ meeting on March 27, 2009

Common stock 2,542 8 December 31, 2008 March 30, 2009

Board of Directors meeting on July 31, 2009

Common stock 1,589 5 June 30, 2009 August 28, 2009

(2) Dividends the record date for which belongs to the fiscal year under review and the effective date of which is in the next fiscal year

Scheduled date of resolution Type of stock Source of

dividends Total dividend(million yen)



Common stock

Retained earnings 2,163 5 December 31, 2009 March 31, 2010

− 29 −

− 30 −

FY2010 (January 1, 2010 to December 31, 2010) 1. Number of shares issued


Common stock (shares) 433,059,168 – – 433,059,168

2. Treasury stock


Common stock (shares) 2,333,172 98,627 16,399 2,415,400


Increase due to the purchase of shares constituting less than one unit 98,627 A breakdown of the decrease is as follows:

Decrease due to requests for sale of shares to constitute one unit 16,399 3. Dividends (1) Dividend payment

Resolution Type of stock Total dividend (million yen)



Common stock 2,163 5 December 31, 2009 March 31, 2010

Board of Directors meeting on July 30, 2010

Common stock 1,730 4 June 30, 2010 August 30, 2010

(2) Dividends the record date for which belongs to the fiscal year under review and the effective date of which is in the next fiscal year

Scheduled date of resolution Type of stock Source of

dividends Total dividend(million yen)



Common stock

Retained earnings 1,730 4 December 31, 2010 March 31, 2011

(Relating to Consolidated Statements of Cash Flows) (Million yen) FY2009

(Jan. 1, 2009 to Dec. 31, 2009) FY2010

(Jan. 1, 2010 to Dec. 31, 2010)

*1. Relationship between cash and cash equivalents at the end of the year and the amount of items stated in consolidated balance sheets

(As of December 31, 2009)Cash 16,090Time deposits with the term of more than three months (11)

Cash and cash equivalents 16,078

*1. Relationship between cash and cash equivalents at the end of the year and the amount of items stated in consolidated balance sheets

(As of December 31, 2010)Cash 20,941Time deposits with the term of more than three months (34)

Cash and cash equivalents 20,906

*2. Increase and decrease in inventories include increases and decreases in accounts payable, trade and advances pertaining to inventories.

*2. Same at the left

*3. Major items composing assets and liabilities of the companies that are excluded from consolidated subsidiaries due to the sale of shares Items composing assets and liabilities of Informa Co., Ltd. and seven other companies that are excluded from consolidated subsidiaries due to the sale of their shares at the time of exclusion, and the relationship between the sales value of the shares and “proceeds from the sale of investments in subsidiaries involving a change in the scope of consolidation” are as follows:

Current assets 3,199Fixed assets 5,627Goodwill 13Current liabilities (7,596)Long-term liabilities (93)Gain on sale of stock in affiliates 3,675Sale value of shares 4,826Collection of loans receivable 4,512Cash and cash equivalents (441)Balance: Proceeds from sale of investments in subsidiaries involving change in the scope of consolidation

8,897

*4. “Other” in cash flows from investing activities includes proceeds of ¥515 million from newly making Nihonbashi 1-Chome Development Special Purpose Corporation a consolidated subsidiary. The relationship with the items composing assets and liabilities at the time of commencing consolidation is as follows:

Current assets 534 Fixed assets 20,177 Goodwill 582 Current liabilitie (14)Long-term liabilities (15,527)Minority interests (0)Amount recorded in consolidated balance sheet until the time of acquiring control

(5,752)

Total –Cash and cash equivalents at consolidated subsidiaries

515

Total 515

− 31 −

(Segment Information) [Industry Segments by Business Type] FY2009 (January 1, 2009 to December 31, 2009) (Million yen)

Leasing Real estate sales Other Total Eliminations/

Corporate Consolidated

I. Revenue from operations and operating income

Revenue from operations

(1) External customers 68,008 158,054 36,546 262,609 – 262,609

(2) Inter-segment or transfer 693 262 2,784 3,741 (3,741) –

Total 68,702 158,316 39,331 266,350 (3,741) 262,609

Cost and operating expenses 40,043 149,761 40,296 230,101 3,345 233,446

Oprating income (loss) 28,659 8,555 (964) 36,249 (7,086) 29,162

II. Assets, depreciation, impairment loss and capital expenditures

Assets 621,195 181,229 111,071 913,496 55,996 969,492

Depreciation 6,883 24 1,519 8,427 77 8,504

Impairment loss 0 0 1,223 1,224 – 1,224

Capital expenditures 55,546 46 862 56,455 7 56,463 Notes: 1) Method of classifying industry segments:

Business segments are classified in accordance with the business activities of the corporate group. 2) Principal description of each industry segment:

Leasing: Leasing and management of land, buildings, and housing Real estate sales: Sales of residential land lots, detached houses, and high-rise condominiums Other: Real estate brokerage, appraisal, and consulting, contract civil engineering and construction;

resort, leisure and hotel businesses, etc. 3) Operating expenses for the year ended December 31, 2009 include ¥7,280 million in operating expenses that cannot

be allocated and these are recorded in “Eliminations/Corporate.” This also primarily consists of expenses related to general administration of the Company.

4) Assets for the year ended December 31, 2009 include ¥108,087 million in company-wide assets recorded in “Eliminations/Corporate.” These primarily consist of cash and cash equivalents, investment securities and assets related to general administration.

5) For the year ended December 31, 2009, ¥26,435 million of real estate for sale was transferred to property and equipment due to a change in the holding purpose of that real estate. As a result, assets under “Leasing” increased by this amount while assets under “Real estate sales” decreased by the same amount. Asset increases under “Leasing” due to this allocation are not included in capital expenditures. In addition, ¥29,135 million of property and equipment, and intangible assets was transferred to real estate for sale due to a change in the holding purpose of those properties and equipment, and intangible assets. As a result, assets under “Real estate sales” increased by this amount while assets under “Leasing” decreased by the same amount.

6) Change of accounting methods (Accounting standard for measurement of inventories) As described in “Change of accounting”, the Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9) that was issued on July 5, 2006 was applied from the year ended December 31, 2009. As a result, in the real estate sales segment, operating income declined ¥2,970 million for the year ended December 31, 2009 in comparison with the case in which the old method is used.

− 32 −

FY2010 (January 1, 2010 to December 31, 2010) (Million yen)

Leasing Real estate sales Other Total Eliminations/

Corporate Consolidated

I. Revenue from operations and operating income

Revenue from operations

(1) External customers 57,126 109,217 31,929 198,274 － 198,274

(2) Inter-segment or transfer 656 308 4,255 5,220 (5,220) －

Total 57,783 109,526 36,185 203,494 (5,220) 198,274

Cost and operating expenses 40,525 103,253 28,808 172,586 1,632 174,218

Oprating income (loss) 17,257 6,273 7,376 30,907 (6,852) 24,055

II. Assets, depreciation, impairment loss and capital expenditures

Assets 609,509 156,724 110,470 876,704 51,221 927,925

Depreciation 6,910 35 1,166 8,111 86 8,198

Impairment loss 1,002 － 37 1,039 － 1,039

Capital expenditures 9,755 96 583 10,435 114 10,550 Notes: 1) Method of classifying industry segments:

Business segments are classified in accordance with the business activities of the corporate group. 2) Principal description of each industry segment:

Leasing: Leasing and management of land, buildings, and housing Real estate sales: Sales of residential land lots, detached houses, and high-rise condominiums Other: Real estate brokerage, appraisal, and consulting, contract civil engineering and construction;

resort, leisure and hotel businesses, etc. 3) Operating expenses for the year ended December 31, 2010 include ¥6,864 million in operating expenses that cannot

be allocated and these are recorded in “Eliminations/Corporate.” This also primarily consists of expenses related to general administration of the Company.

4) Assets for the year ended December 31, 2010 include ¥82,606 million in company-wide assets recorded in “Eliminations/Corporate.” These primarily consist of cash and cash equivalents, investment securities and assets related to general administration.

5) For the year ended December 31, 2010, ¥738 million of real estate for sale was transferred to property and equipment and investments due to a change in the holding purpose of that real estate. As a result, assets under “Leasing” increased by this amount while assets under “Real estate sales” decreased by the same amount. Asset increases under “Leasing” due to this allocation are not included in capital expenditures. In addition, ¥2,992 million of property and equipment was transferred to real estate for sale due to a change in the holding purpose of those properties and equipment, and intangible assets. As a result, assets under “Real estate sales” increased by this amount while assets under “Leasing” decreased by the same amount.

− 33 −

− 34 −

[Geographical Segments] Fiscal Year 2009 (January 1, 2009 through December 31, 2009) and Fiscal Year 2010 (January 1, 2010 through December 31,

2010)

Geographical segment information is not presented, as more than 90% of total operating revenues and assets from all segments

are from Japan.

[Overseas Operating Revenues] Fiscal Year 2009 (January 1, 2009 through December 31, 2009) and Fiscal Year 2010 (January 1, 2010 through December 31,

2010)

Overseas operating revenues are not presented, as less than 10% of consolidated operating revenues are from overseas.

(Relating to Rental Properties) FY2010 (January 1, 2010 to December 31, 2010) The Company and certain of its consolidated subsidiaries own office buildings for rent, condominiums for rent, and commercial

facilities for rent in Tokyo and other regions.

As some of office buildings for rent are used by the Company and some of its consolidated subsidiaries, they are posted as real

estate, including portions used as rental property.

The amount recorded in consolidated balance sheet and the market value of these rental prosperities and real estate including

portions used as rental property are as follows:

(Million yen)

Amount recorded in

consolidated balance sheet Market value at the end of FY2010

End of FY2010

Rental prosperities 330,316 359,978

Real estate including portions used as rental property 107,628 139,413

Notes: i) The amount recorded in consolidated balance sheet is the amount obtained by subtracting accumulated depreciation from acquisition costs.

ii) The market value at the end of FY2010 is the value based on the valuation of properties by an outside licensed real-estate appraiser for principal properties and the value calculated by the Company based on the Real Estate Appraisal Standards (including values adjusted using indicators) for other properties.

(Additional Information) Starting from the fiscal year under review, the Accounting Standard for Disclosures about Fair Value of Investment and Rental

Property (ASBJ Statement No.20 issued on November 28, 2008) and the Guidance on Accounting Standard for Disclosures about

Fair Value of Investment and Rental Property (ASBJ Guidance No.23 issued on November 28, 2008) are applied.

− 35 −

(Relating to Special Purpose Companies Subject to Disclosure) FY2009 (January 1, 2009 to December 31, 2009) The Company and its consolidated subsidiary Tokyo Tatemono Real Estate Sales Co., Ltd. make investments in special purpose

companies (in the form of specific purpose companies (tokutei mokuteki gaisha) under the Act on Securitization of Assets, special

limited liability companies (tokurei yugen gaisha), and limited liability companies (godo gaisha)) to diversify financing and

clarify project management, and special purpose companies (49) in which the ratio of investment is 40% or more are subject to

disclosure.

Relevant businesses are conducted with investments by the Company, Tokyo Tatemono Real Estate Sales Co., Ltd., and business

partners and borrowings, etc. from financial institutions (nonrecourse loans and specified bonds).

The Company and Tokyo Tatemono Real Estate Sales Co., Ltd. plan to collect investments extended in an appropriate manner

after the business is completed, and losses, if arise in the future, to be incurred by the Company and Tokyo Tatemono Real Estate

Sales Co., Ltd. will be limited to the amount of their investments.

The Company and Tokyo Tatemono Real Estate Sales Co., Ltd. do not have investments with voting rights in these special

purpose companies and do not send off officers or employees.

The amounts of transactions, etc. with special purpose companies in the fiscal year under review are as follows:

Major income and loss End balance (Million yen) Item Amount (Million yen)

Investments, etc. (Note 1) Management business Brokerage services and sales agent services

170,809

― ―

Revenue from operations (Note 2) Cost of revenue (Note 3) Cost of revenue (Note 4) Cost of revenue (Note 5)

11,978

607

4,505 330

Notes: 1) The items that compose investments, etc. are marketable securities of ¥1,019 million, investment securities of ¥118,734 million, TK investments (current assets) of ¥5,000 million, TK investments (fixed assets) of ¥46,055 million, which are preferred securities and TK investments in specific purpose companies.

2) Dividends and distributed profits from investments are recorded as revenue from operations, and the breakdown by segment is as follows: ¥11,223 million of the leasing segment and ¥754 million for the other segment.

3) Distributed losses from investments are recorded in the other segment as cost of revenue. 4) Fees for the asset management business entrusted with by special purpose companies are recorded as revenue from

operations, and the breakdown by segment is as follows: ¥3,421 million of the leasing segment and ¥1,084 million for the other segment.

5) Fees for real estate asset sales brokerage services and sales agent services entrusted with by special purpose companies are recorded in the other segment as revenue from operations.

Major assets, liabilities and net assets (simple aggregation) of special purpose companies on the latest closing date are as follows

(Note 6):

Major liabilities and net assets (Million yen) Major assets (Million yen) Real estate Other

756,605 65,487

Borrowings, etc. (Note 7) Investment deposits received, etc. (Note 8) Other

549,138 253,109

19,845

Total 822,093 Total 822,093 Notes: 6) Of special purpose companies in which there is a balance of investments at the end of the consolidated fiscal year, one

special purpose company the amount of whose assets is insignificant because of the sale of all real estate held is not aggregated.

7) Borrowings, etc. represent nonrecourse loans and specified bonds of specific purpose companies. 8) Investment deposits received, etc. represent preferred capital and TK investments of specific purpose companies.

− 36 −

− 37 −

FY2010 (January 1, 2010 to December 31, 2010)

The Company and its consolidated subsidiary Tokyo Tatemono Real Estate Sales Co., Ltd. make investments in special purpose

companies (in the form of specific purpose companies (tokutei mokuteki gaisha) under the Act on Securitization of Assets, special

limited liability companies (tokurei yugen gaisha), and limited liability companies (godo gaisha)) to diversify financing and

clarify project management, and special purpose companies (38) in which the ratio of investment is 40% or more are subject to

disclosure.

Relevant businesses are conducted with investments by the Company, Tokyo Tatemono Real Estate Sales Co., Ltd., and business

partners and borrowings, etc. from financial institutions (nonrecourse loans and specified bonds).

The Company and Tokyo Tatemono Real Estate Sales Co., Ltd. plan to collect investments extended in an appropriate manner

after the business is completed, and losses, if arise in the future, to be incurred by the Company and Tokyo Tatemono Real Estate

Sales Co., Ltd. will be limited to the amount of their investments.

The Company and Tokyo Tatemono Real Estate Sales Co., Ltd. do not have investments with voting rights in these special

purpose companies and do not send off officers or employees.

The amounts of transactions, etc. with special purpose companies in the fiscal year under review are as follows:

Major income and loss Balance at the end of FY2010 (Million yen) Item Amount (Million yen)

Investments, etc. (Note 1) Management business Brokerage services and sales agent services

175,239

― ―

Revenue from operations (Note 2) Cost of revenue (Note 3) Cost of revenue (Note 4) Cost of revenue (Note 5)

5,194

0

2,832 222

Notes: 1) The items that compose investments, etc. are marketable securities of ¥2,349 million, investment securities of ¥120,525 million, TK investments (current assets) of ¥5,000 million, TK investments (fixed assets) of ¥47,364 million, which are preferred securities and TK investments in specific purpose companies.

2) Dividends and distributed profits from investments are recorded as revenue from operations, and the breakdown by segment is as follows: ¥1,900 million of the leasing segment and ¥3,293 million for the other segment.

3) Distributed losses from investments are recorded in the other segment as cost of revenue. 4) Fees for the asset management business entrusted with by special purpose companies are recorded as revenue from

operations, and the breakdown by segment is as follows: ¥1,348 million of the leasing segment and ¥1,483 million for the other segment.

5) Fees for real estate asset sales brokerage services and sales agent services entrusted with by special purpose companies are recorded in the other segment as revenue from operations.

Major assets, liabilities and net assets (simple aggregation) of special purpose companies on the latest closing date are as follows

(Note 6):

Major assets (Million yen) Major liabilities and net assets (Million yen) Real estate Other

743,326 53,529

Borrowings, etc. (Note 7) Investment deposits received, etc. (Note 8) Other

541,964 247,559

7,332

Total 796,856 Total 796,856 Notes: 6) Of special purpose companies in which there is a balance of investments at the end of the consolidated fiscal year, one

special purpose company the amount of whose assets is insignificant because of the sale of all real estate held is not aggregated.

7) Borrowings, etc. represent nonrecourse loans and specified bonds of specific purpose companies. 8) Investment deposits received, etc. represent preferred capital and TK investments of specific purpose companies.

(Per Share Information) FY2009

(Jan. 1, 2009 to Dec. 31, 2009) FY2010

(Jan. 1, 2010 to Dec. 31, 2010) Net assets per share 590.82 yen

Net income per share 19.51 yen Diluted net income per share is not written as there is no potential share.

Net assets per share 594.74 yen

Net income per share 14.67 yen Same at the left

Note: Calculation Basis 1. Net assets per share


End of FY2010 (December 31, 2010) Item

Total net assets on the consolidated balance sheet (million yen) 259,292 262,597

Net assets pertaining to common stock (million yen) 254,481 256,121Difference (million yen) Minority interests 4,810 6,476

Number of shares issued of common stock (thousand shares) 433,059 433,059Number of treasury shares of common stock (thousand shares) 2,333 2,415

Number of common shares used for the calculation of net assets per share (thousand shares) 430,725 430,643

2. Net income per share

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)Item

Net income in consolidated statement of income (million yen) 6,345 6,316

Net income pertaining to common stock (million yen) 6,345 6,316Average number of shares of common stock during the year (thousand shares) 325,313 430,678

Summary of potential shares not included in the calculation of diluted net income per share due to the lack of dilution effect

－－

− 38 −

(Major Subsequent Events) FY2009

(Jan. 1, 2009 to Dec. 31, 2009) FY2010

(Jan. 1, 2010 to Dec. 31, 2010) The Company resolved to issue an unsecured straight corporate bond at the Board of Directors meeting held on February 26, 2010 and issued the bond on March 19, 2010. An outline is as follows: The 11th unsecured corporate bond 1. Issue size: ¥10,000 million 2. Issue price: ¥100 per face value of ¥100 3. Interest rate: 1.58% per annum 4. Maturity: March 19, 2015 (bullet maturity) 5. Payment date and issue date: March 19, 2010 6. Use of proceeds: To be used for repayment of borrowings. The 12th unsecured corporate bond 1. Issue size: ¥10,000 million 2. Issue price: ¥100 per face value of ¥100 3. Interest rate: 1.80% per annum 4. Maturity: March 18, 2016 (bullet maturity) 5. Payment date and issue date: March 19, 2010 6. Use of proceeds: To be used for repayment of borrowings.

The Company resolved to acquire shares in NIHON PARKING CORPORATION (listed on JASDAQ, hereinafter “the target company”) by tender offer, etc. at the Board of Directors meeting held on December 17, 2010 and has determined to make the target company its consolidated subsidiary, following the conclusion of the tender offer on February 7, 2011. 1. Purpose of acquiring shares The Company and the target company made a judgment that both companies will be able to maximize their ability to increase earnings by integrating the real estate and customer networks owned and managed by the Company and the parking management expertise and customer network owned by the target company, so that this move will bolster the earnings power of the Company and realize the potential earnings power of the target company. We also believe that these effects will be further enhanced and will lead to an increase in the corporate value of the both companies, as the Company and the target company operate businesses in an integrated manner as a single group. 2. Name and business, etc. of the target company (1) Name: NIHON PARKING CORPORATION (2) Business: Operation of the pay-by-the-hour parking

business (3) Size: Net sales ¥10,503 million (FY2010/02) Total assets ¥12,951 million (FY2010/02)

3. Time to acquire shares (planned settlement date) February 15, 2011 and February 24, 2011

4. Number of shares to acquire, acquisition price, and the percentage of voting rights after acquisition

(1) Number of shares to acquire: 50,697 shares (Including 10,000 shares to acquire through the acquisition of shares owned by persons in special relationship)

(2) Acquisition price: ¥3,040 million (Including ¥598 million to require for the acquisition of shares owned by persons in special relationship)

(3) Percentage of voting rights after acquisition: 93.69%

(Omission of Disclosure) The disclosure of notes to lease transactions, information on related parties, tax effect accounting, financial instruments,

marketable securities, derivatives transactions, retirement benefits, and business combinations is omitted as the necessity of

disclosing this information in the outline of consolidated financial statements is deemed insignificant.

− 39 −

5. Non-Consolidated Financial Statement (1) Non-Consolidated Balance Sheet



(December 31, 2010)

Assets Current assets

Cash 10,262 15,071 Accounts receivable, trade 3,075 4,345 Marketable securities 1,134 2,409 TK investments 5,343 5,339 Real estate for sale 37,464 19,544 Real estate for sale in progress 41,016 47,497 Real estate for development 36,294 31,330 Advance payments-trade 30 76 Prepaid expenses 1,151 1,349 Deferred income taxes 1,244 1,134 Short-term loans receivable 25,873 12,158 Other current assets 11,115 7,018 Allowance for doubtful accounts (1,137) (1,178)Total current assets 172,869 146,097

Fixed assets Property and equipment

Buildings 155,272 150,727 Accumulated depreciation (52,688) (52,708)Buildings (net amount) 102,583 98,018

Structures 4,560 4,557 Accumulated depreciation (1,641) (1,851)Structures (net amount) 2,919 2,705

Machinery and equipment 1,338 1,362 Accumulated depreciation (415) (535)Machinery and equipment (net amount) 922 826

Vehicles 32 29 Accumulated depreciation (27) (27)Vehicles (net amount) 4 1

Tools, furniture and fixtures 3,989 3,936 Accumulated depreciation (2,535) (2,963)Tools, furniture and fixtures (net amount) 1,453 973

Land 281,167 265,763 Lease assets – 5

Accumulated depreciation – (0)Lease assets (net amount) – 5

Construction in progress 2,764 3,108 Total property and equipment 391,816 371,403

Intangible and other assets Lease rights 14,358 14,562 Other 50 47

14,408 14,610 Total intangible and other assets

− 40 −



(December 31, 2010)

Investments Investment securities 170,353 179,250 Stocks of subsidiaries and affiliates 28,056 29,451 Investments in other securities of subsidiaries and affiliates 5,752 10,702

TK investments 54,141 55,448 Investments in capital of subsidiaries and affiliates 15,057 22,753 Long-term loans 13 335 Long-term loans receivable from subsidiaries and affiliates 25,195 16,300

Deferred income taxes 4,603 – Guarantee deposits paid 9,752 8,005 Other investments 3,869 3,482 Allowance for doubtful accounts (7,706) (235)Investment loss reserve (663) (648)Total investments 308,425 324,846

Total fixed assets 714,651 710,860 887,520 856,957 Total assets

− 41 −

− 42 −



(December 31, 2010)

Liabilities Current liabilities

Short-term borrowings 5,941 5,281 Current portion of long-term loans payable 114,079 111,773 Commercial paper 26,400 – Accounts payable, trade 10,405 7,102 Accrued expenses 6,576 6,171 Accrued income taxes 922 1,286 Advances received 6,461 8,135 Deposits received 9,272 10,695 Provision for bonuses 134 124 Reserve for bonuses to directors and corporate auditors 150 150 Deposits received from employees 651 625 Investments received for real estate specific joint enterprises – 11,200

Other current liabilities 300 101 Total current liabilities 181,296 162,648

Long-term liabilities Bonds payable 72,000 92,000 Long-term debt 242,903 217,280 Deferred income taxes – 127 Deferred income taxes on land revaluation 23,011 23,721 Accrued severance indemnities 4,240 4,749 Allowance for retirement benefits for directors 648 730 Provision for environmental measures – 278 Guarantee deposits received 38,515 35,180 Investments received for real estate specific joint enterprises 72,564 61,346

Other long-term liabilities 6,691 5,982 Total long-term liabilities 460,574 441,397

Total liabilities 641,870 604,046 Net assets

Shareholders’ equity Capital 92,451 92,451 Capital surplus

Legal capital surplus 77,108 77,108 Other capital surplus 13,285 13,277 Total capital surplus 90,394 90,386

Retained earnings Other retained earnings

Reserve for reduction entry of replaced property 669 4,552 Retained earnings brought forward 36,490 41,771

Total retained earnings 37,159 46,324 Treasury stock (244) (265)Total shareholders’ equity 219,791 228,896

Valuation and translation adjustments Valuation difference on available-for-sale securities 7,768 10,376 Revaluation difference on land 18,121 13,637 Total valuation and translation adjustments 25,889 24,013

Total net assets 245,650 252,910 Total liabilities, minority interests and net assets 887,520 856,957

(2) Non-Consolidated Statement of Income (Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Revenue from operations 57,927 47,302 Revenue from leasing of office and commercial buildings

146,959 78,953 Revenue from real estate sales 4,038 8,223 Revenue from other operations

208,925 134,479 Total revenue from operations Cost of revenue

Cost of revenue in leasing of office and commercial buildings 33,234 33,220

119,478 65,092 Cost of revenue in real estate sales 4,591 2,810 Cost of revenue in other operations

157,305 101,122 Total cost of revenue 51,620 33,356 Gross profit 22,837 15,770 Selling, general and administrative expenses 28,783 17,586 Operating income

Non-operating income 896 764 Interest income 856 861 Dividend income 524 294 Other

2,277 1,920 Total non-operating income Non-operating expenses

6,464 6,105 Interest expense 1,142 1,617 Interest on bonds

411 38 Interest on commercial papers 164 – New share issue expenses 53 101 Bond issuance expenses

1,762 1,785 Distribution from real estate specific joint enterprises 1,088 853 Other

11,087 10,501 Total non-operating expenses 19,973 9,005 Recurring income

− 43 −

(Million yen)FY2009

(Jan. 1, 2009 to Dec. 31, 2009)FY2010

(Jan. 1, 2010 to Dec. 31, 2010)

Extraordinary income 120 1,527 Gain on sale of property and equipment

– 99 Gain on sale of investment securities 3,699 – Gain on sale of stock in affiliates

111 7,358 Reversal of allowance for doubtful accounts 2 – Reversal of provision for loss on guarantee

3,934 8,985 Total extraordinary income Extraordinary loss

4,856 – Loss on revaluation of inventories – 508 Loss on sale of fixed assets

47 88 Loss on retirement of property and equipment 7,563 297 Loss on devaluation of investment securities

– 24 Loss on valuation of stock in affiliates 15 – Provision for investment loss reserve – 278 Provision for environmental measures

1,196 975 Impairment loss 13,679 2,174 Total extraordinary loss 10,228 15,816 Income before income taxes 3,279 3,531 Current income taxes (958) 1,462 Deferred income taxes

2,320 4,994 Total income taxes 7,908 10,822 Net income

− 44 −

(3) Non-Consolidated Statements of Changes in Owners’ Equity (Million yen)

(Jan. 1, 2009 to Dec. 31, 2009) (Jan. 1, 2010 to Dec. 31, 2010)FY2009 FY2010

Shareholders’ equity Capital



Balance at the end of current period 92,451 92,451 Capital surplus

Legal capital surplus Balance at the end of previous period 61,839 77,108 Changes in items during the period


Balance at the end of current period 77,108 77,108 Other capital surplus


Disposal of treasury stock (18) (8)Total changes in items during the period (18) (8)

Balance at the end of current period 13,285 13,277 Total capital surplus


Issuance of new shares 15,269 – Disposal of treasury stock (18) (8)Total changes in items during the period 15,251 (8)

Balance at the end of current period 90,394 90,386 Retained earnings

Other retained earnings Reserve for reduction entry of replaced property

Balance at the end of previous period 669 669 Changes in items during the period

Provision of reserve for reduction entry of replaced property – 3,883

Total changes in items during the period – 3,883 Balance at the end of current period 669 4,552

Retained earnings brought forward Balance at the end of previous period 34,692 36,490 Changes in items during the period

Dividends from surplus (4,131) (3,894)Net income 7,908 10,822 Reversal of revaluation reserve for land (1,978) 2,238 Provision of reserve for reduction entry of replaced property – (3,883)

Total changes in items during the period 1,798 5,281 36,490 41,771 Balance at the end of current period

− 45 −

(Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Total retained earnings Balance at the end of previous period 35,361 37,159 Changes in items during the period

Dividends from surplus (4,131) (3,894)Net income 7,908 10,822 Reversal of revaluation reserve for land (1,978) 2,238 Total changes in items during the period 1,798 9,165

Balance at the end of current period 37,519 46,324 Treasury stock

Balance at the end of previous period (250) (244)Changes in items during the period

Acquisition of treasury stock (21) (35)Disposal of treasury stock 28 13 Total changes in items during the period 6 (21)

Balance at the end of current period (244) (265)Total shareholders’ equity


Issuance of new shares 30,539 – Dividends from surplus (4,131) (3,894)Net income 7,908 10,822 Reversal of revaluation reserve for land (1,978) 2,238 Acquisition of treasury stock (21) (35)Disposal of treasury stock 9 5 Total changes in items during the period 32,326 9,135

Balance at the end of current period 219,761 228,896 Valuation and translation adjustments

Valuation difference on available-for-sale securities Balance at the end of previous period 6,949 7,768 Changes in items during the period

Net changes in items other than shareholders’ equity 818 2,608 Total changes in items during the period 818 2,608

Balance at the end of current period 7,768 10,376 Revaluation difference on land


Net changes in items other than shareholders’ equity (1,388) (4,483)Total changes in items during the period (1,388) (4,483)

Balance at the end of current period 18,121 13,637 Total valuation and translation adjustments


Net changes in items other than shareholders’ equity (570) (1,875)Total changes in items during the period (570) (1,875)

25,889 24,013 Balance at the end of current period

− 46 −

− 47 −

(Million yen)

FY2009 (Jan. 1, 2009 to Dec. 31, 2009)

FY2010 (Jan. 1, 2010 to Dec. 31, 2010)

Total net assets Balance at the end of previous period 213,894 245,650 Changes in items during the period

Issuance of new shares 30,539 – Dividends from surplus (4,131) (3,894)Net income 7,908 10,822 Reversal of revaluation reserve for land (1,978) 2,238 Acquisition of treasury stock (21) (35)Disposal of treasury stock 9 5 Net changes in items other than shareholders’ equity (570) (1,875)Total changes in items during the period 31,756 7,260

Balance at the end of current period 245,650 252,910

(4) Notes on the Going Concern Premise Not applicable.

− 48 −

− 49 −

Scheduled Changes in Directors and Auditors (As of March 30, 2011)

1. Changes in Representative Directors None 2. Changes in other directors and auditors (1) Candidates for new directors

Director Tsutomu Hanada (current General Manager, Kansai Branch) Director Kengo Fukui (current General Manager, Corporate Planning

Department) (2) Candidate for new auditor

Auditor (part-time) Tetsuya Kawagishi (Managing Director, Mizuho Corporate Bank, Ltd.) (Note) Tetsuya Kawagishi is a candidate for an outside auditor.

(3) Directors to retire

Managing Director Seiken Saito (To become the President and Representative Director of Tokyo Building Service Co., Ltd.)

Managing Director Shinji Ayaki (To become the President and Representative Director of Tokyo Tatemono Resort Co., Ltd.)

(4) Auditor to retire

Auditor (part-time) Fumihito Ishizaka (5) Other changes

Senior Managing Director Akisato Saruta (current Managing Director) Senior Managing Director Kazumasa Kato (current Managing Director) Managing Director Shuichiro Koshimizu (current Director and General Manager,

Urban Planning Department) Managing Director Hitoshi Nomura (current Director and General Manager, Building

Planning Department)

Date post:	07-Sep-2019
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

Outline of Consolidated Financial Statements - IR...

Documents