lease management trust system - 大東建託株式会社€¦ · system, through which we assume...

Annual Report 2009Year ended March 31, 2009

LeaseManagementTrustSystem

Daito Trust Construction Co., Ltd.

Daito Trust Construction is committed to “contributing to society by ensuring the most efficient use of all available land and resources.” In the field of residential leasing, the Company demonstrates this commitment by fully satisfying the needs of landowners and tenants alike. In doing so, we work to supply high-quality leased housing and expand our involvement in peripheral businesses.

Daito is implementing to the following five policies, which serve to provide definitive guidelines for its business activities. 1. Place customers first: Emphasize customer service（CS）2. Focus on priority issues: Carefully allocate business resources3. Emphasize cash-driven transactions4. Pursue high wages backed by high productivity5. Create and evolve according to needs of customers and society

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Corporate Principles

Daito Trust Construction Co., Ltd. (“Daito”) and the Daito Trust Group (“the Group”) have adopted the Daito Trust Construction Code of Conduct to demonstrate their corporate philosophy and earn the confidence of customers and society in general. Comprising guidelines and standards for daily business activities, the Code applies to the behavior of all individuals in the Group.

1. Legal Compliance and Corporate Ethicss（1）As decent and responsible members of society, we shall comply with laws and regulations at all times while maintaining the highest ethical

standards. （2）We shall respect the character and individuality of each person and not permit social discrimination or the infringement of human rights.（3）We shall resolutely oppose any antisocial influence or group that threatens public order and safety.

2. Management Transparency and Confidentiality（1）We shall strive to disclose information to customers and investors accurately and in a timely manner in order to facilitate a correct understanding of

management and business activities.（2）To maintain fair and open business relationships, we shall refuse all gifts and entertainment offered by business partners and others.（3）We shall strictly manage information on customers and business clients obtained in the course of performing work duties and not use such

information for another purpose without proper reason.

3. Placing Customers First（1）We shall act in the interests of our customers and constantly strive to provide a high level of satisfaction and earn their trust.（2）We shall act courteously toward all customers and strive to provide correct information and engage in fair business dealings.

4. Social Responsibility（1）We shall maintain a sound financial position and debt-free business in order to perpetually provide products and services demanded by society.（2） We shall listen to the opinions of our various stakeholders while being mindful of our relationship with society at all times.（3） We shall each consider the contribution we can make to society and strive to make contributions, no matter how small, starting in our any

environment.

5. Environmental Issues and Health and Safety（1）We shall actively strive to preserve the global environment by endeavoring to conserve energy and resources and through recycling efforts.（2）As a corporation that is innovative in its approach to land use, we shall endeavor to maintain comfortable living environments that emphasize

harmony between the community and nature.（3）We shall strive to create a comfortable workplace environment that ensures the safety and health of all employees and other persons engaged in the

Group’s activities.

6. Overseas Activities（1）We shall comply with international laws and regulations and those of individual countries and respect local culture and customs. （2）We shall maintain cordial relations with local communities and contribute to the development and prosperity of culture and society.

Daito Trust Construction Code of Conduct

01Lease Management Trust System

02 Daito Trust Construction Co., Ltd.

Net Sales

Net Sales

1,200

1,000

800

600

400

200

0 '05 '06 '07 '08 '09

491.7538.6

564.3

641.0

954.8

（¥ billions）

Operating Income &Operating IncomeMargin

Operating Income

Operating Income Margin

30

25

20

15

10

5

00

10

20

30

40

50

60

70

80

55.7

11.3

63.7

11.8

72.6

12.9

66.2

10.3

70.3

7.4

'09'08'07'06'05

Notes : U.S. dollar amounts are translated from yen at the rate of ¥98.23=U.S.$1, the approximate exchange rate at March 31, 2009.

OPERATING RESULTS For the years ended March 31

Net sales ConstructionReal estateOther

Gross profit Construction(Gross profit margin %)Real estate(Gross profit margin %)Other(Gross profit margin %)

Operating income (Operating income margin %)Ordinary income (Ordinary income margin %)Net income (Net income margin %)

FINANCIAL POSITION As of March 31

Total assets Current assets Noncurrent assets Current liabilities Noncurrent liabilities Net assets

CASH FLOWS

Cash flows provided by operating activities Cash flows (used in) provided by investing activities Cash flows (used in) provided by financing activities Cash and cash equivalents at end of year

PER COMMON SHARE

Net income Net assets Cash dividends applicable to the year

RATIOS

ROEEquity ratioPayout ratio

¥376,070293,50366,51616,050

120,80494,415(32.2)

13,968(21.0)

12,421(77.4)

44,036(11.7)

45,801(12.2)

24,423(6.5)

345,144217,751127,392123,86515,535

205,743

31,905 (519)

(25,829)124,369

183.13 1,618.51

60.00

11.8 59.6 32.8

¥332,223252,295

59,50020,426

106,86983,309

(33.0)12,651

(21.3)10,907

(53.4)

41,788(12.6)

42,429(12.8)

23,495(7.1)

325,833214,094111,738105,555

11,989208,287

31,389 (33,505)

(7,849)118,929

174.32 1,545.55

50.00

11.6 63.9 29.7

¥306,284236,251

50,98019,051

100,83378,876

(33.4)10,388

(20.4)11,569

(60.7)

39,427(12.9)

40,750(13.3)

23,200(7.6)

304,168210,470

93,69796,01510,084

198,068

45,516 11,992 (6,773)

128,356

172.58 1,467.24

45.00

12.3 65.1 29.4

¥255,778191,470

44,69319,614

85,54563,431

(33.1)8,822(19.7)

13,291(67.8)

26,920(10.5)

27,586(10.8)

15,703(6.1)

266,428153,971109,474

78,2787,791

180,357

19,036 (5,567)(2,722)77,101

117.18 1,346.26

30.00

9.2 67.7 29.3

2003200220012000

Consolidated Financial Highlights

（¥ billions）（%）


Net Income & NetIncome Per Share

0

50

100

150

200

250

300

350

400

251.07

31.5

299.29

36.8

345.59

41.8

367.29

44.4

349.25

42.1

60

50

40

30

20

10

0

（¥）（¥ billions）

'05 '06 '07 '08 '09

ROE & ROA30

25

20

15

10

5

0

14.2

7.7

15.6

8.4

16.2

8.8

15.5

8.4

14.1

7.8

ROE

ROA

（％）

'05 '06 '07 '08 '09

¥438,627344,77275,74318,111

141,129112,416

(32.6)14,545(19.2)

14,167(78.2)

49,077(11.2)

50,348(11.5)

27,976(6.4)

364,754229,671135,083133,03517,261

214,458

22,735 (20,567)(18,610)107,568

218.40 1,723.72

63.00

13.3 58.8 30.3

¥491,761384,27683,15424,330

159,299121,436

(31.6)19,444(23.4)

18,418(75.7)

55,715(11.3)

56,672(11.5)

31,505(6.4)

409,276275,215134,061162,45917,727

229,089

37,388 506

(15,846)129,494

251.07 1,854.20

71.00

14.2 56.0 30.2

¥538,692419,86889,87428,949

172,957130,103

(31.0)23,322(25.9)

19,531(67.5)

63,767(11.8)

65,400(12.1)

36,858(6.8)

440,406298,487141,918177,70420,477

242,406

66,116 (20,000)(29,789)

146,100

299.29 2,013.65

87.00

15.6 55.0 30.1

¥564,316441,286

93,87229,156

181,061135,457

(30.7)25,069

(26.7)20,534

(70.4)

72,648(12.9)

73,656(13.1)

41,823(7.4)

473,386320,631152,754174,291

23,979275,115

60,305 (13,131)(12,131)181,234

345.59 2,275.75

94.00

16.2 58.0 30.4

¥641,045439,955171,343

29,746

187,121141,889

(32.3)28,054

(16.4)17,177

(57.7)

66,295(10.3)

69,609(10.9)

44,478(6.9)

532,155395,038137,116177,952

52,772301,429

25,489 12,426 (10,746)208,247

367.29 2,482.56

232.00

15.556.575.0

2004 2005 2006 2007 2008 2009 2009

Millions of yenThousands

of U.S. dollars

Thousands of U.S. dollars

Thousands of U.S. dollars

U.S. dollars

Millions of yen

Millions of yen

Yen

%

¥954,881469,603464,779

20,497

181,896150,304

(32.0)25,351

(5.5)6,240(30.4)

70,389(7.4)

73,976(7.7)

42,129(4.4)

540,477383,594156,883178,459

65,676296,341

30,209 (13,480) (39,606)181,569

349.25 2,496.99

104.00

14.154.731.5

＄9,720,8694,780,6474,731,538

208,663

1,851,7351,530,123

(32.0)258,077

(5.5)63,524(30.4)

716,573(7.4)

753,089(7.7)

428,881(4.4)

5,502,1583,905,0591,597,0981,816,746

668,5943,016,807

307,533（137,228）（403,196）1,848,406

3.5625.421.06

14.154.731.5

Net Income Per Share

Net Income


President

Isao Minabe

To Our Shareholders

We look forward to your ongoing supportIn our quest to match the needs of landowners and tenants, we at Daito developed our unique Lease Management Trust System, through which we assume responsibility for lease property management on behalf of landowners. Under the system, we undertake lease property management as thirty-year whole-building lease, from initial proposals to building design and construction, tenant recruiting and property management－while taking on all the risks involved in the process. The Daito has earned high praise from customers and holds the top position in the industry, with order received apartments has reached over100,000 residential units and also approximately 550,000 residential units under management (as of March 31, 2009).

Going forward, we will target more efficient deployment of assets entrusted to us by landowners, while upgrading our products and services to satisfy the needs of tenants. In these ways, we will continue seeking to be the “company of choice” among both landowners and tenants.

We look forward to your ongoing support.

Operating environment and operating results in the fiscal year ended March 2009 In the fiscal year ended March 2009, the worldwide credit shrinkage in financial markets that originated in the United States began to affect the real economy in Japan. Among the consequences were a falling stockmarket and a rising yen, pressure on capital investment due to large reductions in corporate earnings, and adjustments in the employment market, all of which contributed to a strengthening of the recessionary developments in the Japanese economy.

The rental housing market which is the Daito Group’s business field was temporarily weakened by influences such as the changed attitude of financial institutions to providing loans and reduced interest in rental property investment among landowners. However, the reasons motivating landowners to utilize their land assets, whether to alleviate an inheritance tax burden, serve as a source of pension income, or satisfy some other need, are resistant to the influence of the particular economic climate, so that underlying demand stayed firm, while the demand among tenants for high-quality rental housing also remains unchanged.

Under these conditions, Daito posted net sales of ¥954,881 million, a 49.0% increase from the previous fiscal year, operating income of ¥70,389 million, a 6.2% increase, ordinary income of ¥73,976 million, up 6.3%, and net income of ¥42,129 million, a 5.3% decrease. Daito thus achieved an increase in both sales and (operating and ordinary) income. Ordinary income, in particular, reached a record level.


Can you outline Daito’s business performance by segment in the fiscal year ended March 2009 and the factors influencing it?Q

600

400

200

0

469

09/3

439

08/3

441

07/3

32.032.330.7

60

40

20

0

（%）（¥ billions）

（%） 600

400

200

0

464

09/3

171

08/3

93

07/3

5.5

16.4

6.0

26.7

5.8

50

30

10

-10

-30

（¥ billions）

40

30

20

10

0

20

09/3

29

08/3

29

07/3

30.4

57.770.4

25.737.4

150

120

90

60

30

0

（%）（¥ billions）

Gross profit margin if under whole-building leaseNet sales

Net sales

Gross profit margin Net salesGross profit margin excluding sales and profits of Daito Kyosaikai Co., Ltd.

Gross profit margin

Gross profit margin

Construction

Real estate

Other business

1. ConstructionIn our core construction business, sales grew by 6.7% year-on-year to ¥469,603 million on the strength of a healthy level of orders received in the first half-year and a substantial outstanding order balance. The gross profit margin for completed projects declined 0.3 percentage points from the previous fiscal year to 32.0%. Daito nevertheless managed to substantially exceed the original target of 30.9% thanks to measures to limit cost inflation in the first-half year, a fall in material costs in the second half-year, and other cost reduction efforts.

2. Real estateIn the real estate business, an increase in whole-building lease agreements under our Lease Management Trust System allowed our leasing company, Daito Building Management Co., Ltd., to increase its rental income. This was one of the main factors in the growth in real estate business net sales, which increased by 171.3% year-on-year to ¥464,779 million.

3. Other businessOther business revenue amounted to ¥20,497 million, a 31.1% decline from the previous f iscal year. The main reason for the decrease in other business revenue was that the rental income guarantee business operated by Daito Kyosaikai Co., Ltd., which provides guaranteed rental income even during vacant periods, was subsumed in February 2008 into the whole-building lease business operated by Daito Building Management Co., Ltd. The rental income guarantee business was thus transferred from the other operations category to become part of the whole-building lease operations of the real estate business. Meanwhile, the nationwide LP gas supply company Gaspal Co., Ltd., added sales thanks to a growth in the number of households supplied, while Care Partner Co., Ltd., which provides daytime care to the elderly, benefited from sales growth due to an increase in the number of facilities operated.


What was the effect on Daito’s business of the downturn in theJapanese economy since September 2008?

Q1. Orders receivedFollowing the sharp downturn in the economy from October 2008, delayed adjustment to changed attitude by financial institutions to the loan for apartments. Reduce interest in rental property investments (use of land) among landowners, and other factors led to a 12.3% year-on-year reduction in orders received to ¥437,157 million.

On the other hand, customers with whom we have existing relationships understand the need to utilize land assets, so that repeat business commissions and recommendations from these customers remained stable regardless of the economic downturn.

*When landowners undertake a property rental project, it is usual for the construction of the rental property to be 　funded with a loan from a financial institution.

2. Occupancy rateRegarding the occupancy rate of residential rental properties, although there was no major change in tenant demand for rental housing, one effect of the sharp economic downturn was a reduction in corporate demand, which led to a worsening trend in occupancy rates in some regions. As a result, while the number of tenants placed did show a 7.8% year-on-year rise to 171,846, the occupancy rate for residential units registered a 0.8 percentage point decline from the previous fiscal year to 95.6%.

（¥ billions） 300

200

100

0

246

08/4～08/9

190

08/10～09/3

264

07/10～08/3

234

07/4～07/9

Value of orders received

（number） 2,000

1,500

1,000

500

0

1,783

08/4～08/9

1,518

08/10～09/3

1,810

07/10～08/3

1,778

07/4～07/9

Number of new contracts

（number） 2,000

1,500

1,000

500

0

1,668

08/4～08/9

1,632

08/10～09/3

1,705

07/10～08/3

1,372

07/4～07/9

Number of new contracts from repeat orders or recommendation

（number）（%）（%） 30,000

20,000

10,000

0

25.0

0

15.015,918

09/3

17,785

08/3

16,756

17.120.421.3

07/3

100

0 09/3

96.4

08/3

96.6

07/3

95.6

Rent basis occupancy rate（Residential use）

Number of corporate contracts and percentage of total


What is the outlook for Daito’s business performance and key performance indicators in the fiscal year ending March 2010?Q

2. Orders receivedWe forecast a 10.9% increase from the previous fiscal year to ¥485,000 million. We will be expanding our sales force, enhancing their training, and taking steps to match our product lineup more closely to the needs of different markets, at the same time working to strengthen information exchange and maintain good relations with the various financial institutions that provide loans to our customers (i.e. landowners) for the construction of rental housing. Additionally, to expand orders received through repeat business commissions and recommendations, we will be further cultivating our relationships of trust with existing customers.

1. Profit performanceWe forecast increases in both sales and income.The forecast for consolidated business performance in the fiscal year ending March 2010 calls for a 3.4% growth in net sales to ¥987,100 million, a 0.4% increase in operating income to ¥70,700 million, a 0.7% rise in ordinary income to ¥74,500 million, and a 3.3% expansion in net income to ¥43,500 million.

3. Occupancy rateWe forecast a 0.7 percentage point improvement to an occupancy rate of 95.6% for residential properties and 94.8% for commercial-use properties.We will be renewing our television commercials and taking other measures to raise the degree of recognition of our e-Heya Net brand, improving the functions of the rental unit search website, and strengthening alliances with real estate businesses as part of tenant recruitment activities tailored to the characteristics of the different regional markets. We will also be working to maintain a high occupancy rate through measures to expand our customer base, for instance by providing properties that accept pets, offering tenancy agreement options that require no guarantor or no deposit money, and promoting agreements with tenants in senior age groups.

250,000

200,000

150,000

100,000

50,000

0

200,000

10/3（forecast）

171,846

09/3

159,435

08/3

Number of tenancy agreements（number）

600

500

400

300

200

100

0 10/3（forecast）

437

09/3

498

08/3

Target for orders received

485

（¥ billions）

94.1

09/3

94.8

10/3（forecast）

96.3

10/3（forecast）

95.6

09/3

100

0

Rent basis occupancy rate（%）

100

80

60

40

20


73.9

09/3

69.6

08/3

Ordinary income

74.5


50

40

30

20

10


42.1

09/3

44.4

08/3

Net income

43.5

（¥ billions） 1,200

1,000

800

600

400

200


954.8

09/3

641.0

08/3

Net sales

987.1


80

60

40

20


70.3

09/3

66.2

08/3

Operating income

70.7

（¥ billions）

Residential properties

Commercial-use properties


What are Daito’s medium-term targets and the relevant strategies?Q

Lease housing starts

15%

0

（Thousands units）（%）

'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08

582

687

652

574 564

616

515

443426 418

442 454 458 467

517537

430

'130

400

800

10

20

Acquire a 15% marketshare by

March 31, 2013

1.6

3.13.4 3.4 3.1 3.3

5.14.4

5.46.0

6.97.2

8.6

9.6 9.69.0

11.4

Lease housing start

'09

444

11.6

Daito's Share

― Our target is to capture a 15% share of lease housing starts and achieve orders received worth ¥600,000 million by the fiscal year ending March 2013.― The tax burden imposed by land ownership and land inheritance continues to be heavy and the underlying demand for effective use of land assets remains correspondingly firm. Moreover, the total number of households in Japan is set to continue rising until around 2015, decreasing gradually thereafter. Some 30 to 40% of all households occupy rental housing, and as this figure has remained constant in the past regardless of the particular economic climate, demand for rental housing is expected to remain stable in the future. In addition to the increase in the number of households, the progressive aging and deterioration of the older rental housing stock leads to the expectation that the supply of new rental housing will show firm development in the future.

Within this scenario, the Daito Group will be focused on expanding its share of the rental housing market. Our medium- to long-term business target is to capture a 15% share of lease housing starts by 2013, up from 11.6% in the fiscal year ended March 2009. Through the Daito Group’s unique Lease Management Trust System, whereby we undertake to look after all aspects of rental housing management for the customer, we will continue to work for the effective utilization of the assets（rental properties）entrusted to us by landowners, offering customers a valuable asset management service. Amid intensifying competition in the rental market, we will also be actively implementing a range of initiatives to ensure that Daito is the company of choice for tenants as well as landlords. These will include offering products tailored to local markets and providing services sensitive to tenant needs.

July 2009

President

Isao Minabe


What is your basic policy on profit return to shareholders?Q

Dividend per share Payout ratio

（¥）（%） 300

250

200

150

100

50

0

80

60

40

20

007/3 08/3 09/3 10/306/305/3

Dividend per share & payout ratio

9487

232Special dividend

Regular dividend

128

108 104

184

71

75.0

31.5

50

30.130.130.2

― From the fiscal year ending March 2010, we are implementing changes to make our stock more attractive to investors ― Payout ratio: 50% Purchase of treasury stock: 30% of net income*（Based on consolidated figures）

*Where the conditions in 2.below are met.

1. Dividend policyDaito’s dividend policy has consistently reflected the recognition of shareholder return as an important issue. Our basic commitment is to provide a stable dividend by ensuring a strong business base; specifically we have set a target payout ratio of 50%, to consist of a standard dividend of ¥20 and a profit return component reflecting overall consolidated business performance.

Before change （until March 2009） Target payout ratio of 30% to consist of a standard dividend of ¥20 and a profit return component reflecting the combined business performance of Daito and its consolidated subsidiary Daito Building Management Co., Ltd.

2.Purchase and retirement of treasury stockThe policy will be changed to specify ongoing purchase and retirement of treasury stock in the interest of increasing shareholder value when certain conditions are met, including consolidated net income exceeding ¥10,000 million and the absence of large-scale funding requirements. Additionally, the upper limit for purchase of treasury stock is to be set at a target figure of 30% of consolidated net income.

Before change （until March 2009）Where certain conditions are met, including non-consolidated net income exceeding ¥10,000 million and absence of large-scale funding requirements, Daito applies a policy of ongoing purchase and retirement of treasury stock in the interest of increasing shareholder value. The upper limit for purchase of treasury stock is to be set at a target f igure of 50% of non-consolidated net income.


Lease Business

Planning

Design and Construction

We will achieve stable growth and sound business operations by taking full advantage of the Lease Management Trust System’s exceptional features.

Product Development CapabilitiesDaito offers a wide range of high-performance building designs to meet diverse needs ranging from the business objectives of landowners to the lifestyle requirements of tenants.

Sales and Planning CapabilitiesWe have won the conf idence and support of landowners throughout Japan thanks to staff with specialist consulting expertise and our unique and comprehensive support service.


n

Thirty-Year W

hole-Building Leas

e

Lease Management Trust System

Our integrated support service in the rental housing business, outlined above, is known as the Lease Management Trust System.

Benef iting from the expertise built up in the 30 years since our establishment, our capabilities in management responsiveness and tenant recruitment have made possible 30 years of whole-building lease operations.

Risk Responsiveness, Management Responsiveness, and Tenant Recruitment Capabilities

Quality Control CapabilitiesOur highly skilled engineers and the DK Network—our independently developed mobile project management system—are enabling us to improve process control and increase the efficiency of construction operations, ensuring uniformly high construction quality standards.


Orders won from the competition

(20-30%)

Special orders not subject to competition (70-80%)

Directsales

Landowners

Daito Competitors

Lease Business Planning:Maximizing Benefits for Customers

Sales Capabilities

High ratio of special orders, thanks to direct sales system Trends in repeat orders

Repeat ratio(Number of repeat orders to total number of orders received)

Repeat amount

250（¥ billions）（%）

200

150

100

50

0'09

199.0

41.4

'08'05 '06 '07

161.5

193.5 192.0 199.6

38.743.0 42.4

38.2

Personal visits to unlock potential demand among landownersDaito’s sales force of more than 3,000 associates builds uniquely close relationships with landowners throughout Japan by establishing direct personal contact. Through these visits, we present the landowner with a tailor-made business plan covering taxation, finance, construction, and other aspects of the project in a way that takes full account of the topography, the surrounding environment, and the landowner’s individual circumstances. This direct sales system is Daito’s key to unlocking potential demand among landowners.

Stable level of orders thanks to high proportion of special orders and repeat orders Sales activities based on the direct approach make it possible to identify potential customers and build customer networks. The result is that the majority of the orders we receive arise from a direct approach, not subject to competition.

Daito also receives around 40% of its orders each year through repeat business. This demonstrates customers’ satisfaction and understanding to our business.

The stable level of our orders received is based on high proportion of special orders and repeat orders.

Agriculturalcooperatives

Local real estate agents

Banks

0

20

40

60

80

100


Specialist staff set appropriate rent based on market research

Impartial stance

Optimal business plan implemented

Landowner (sales staff)Seeks to set high rents

Project Planning Capabilities

Lease Management Trust System

Seeks to set reasonable rents Tenants (tenant assistance recruiting staff)

Optimal plans created by market research and specialist staffDaito offers an internal qualif ication called “Trust Construction Specialist” for employees who possess expertise required for land utilization. Trust Construction Specialists possess specialist knowledge in taxation, finance, construction planning, and other areas enabling them to devise and present the optimal business plan for the individual landowner.

We also have a dedicated team of 291 staff nationwide (As of March 31, 2009) who conduct market research in order to set appropriate rents. With this dedicated team to set rents and decide room arrangements on an impartial basis appropriate to the site where the landowner plans to build, we are able to present business plans adapted to different markets with a high rate of success.

Drafting of business plan

Mapping system—comprehensive information management system covering rental market rates, including properties managed by other companies, and other data

Market analysis—identifying latest trends in rental market rates and local rental property supply

Presentation ofbusiness plan

Feasibility assessment of rental housing business

Assessment of rent levels

Setting of appropriate rent and

project conditions


Developing high-performance standard products for versatile adaptability to different market needs and locational factors(56 different products with 680 room arrangements)In order to ensure uniformly high levels of business efficiency and residential amenity across a range of locational factors nationwide, Daito has developed a range of standard rental property products designed according to uniform criteria independently devised in house.

Our standard products cover a wide range of variations including different structural types (two-by-four method, steel frame, reinforced concrete construction), and different floor areas and floor plans (from single to family occupancy). We also offer earthquake protection through seismic isolation and seismic damping, pet-friendly options, security options, and other features.

By offering this diverse range of products to meet their requirements, we guide landowners steadily to success in the rental housing business.

Design and Construction: Create Something Worthwhile and Lasting

Product Development Capabilities

Low-rise apartments Medium-rise Condominiums

MERIDIO24

Vasa

Defi24

Modessa24

SEFIO24

Modessa NK

Sunremy

SHAROL

BRIA・S

DEAMER

MODEST

ESTRENO Landule

・Standard products・System standard products

・Business responsiveness・Residential amenity・Construction performance ・Low maintenance features

Market needs

Tenant needs

Entrance to 2nd floor units

Entrance to 1st floor units

・Identification of social trends and market trends・Continuous analysis of tenant

preferences, etc.

・Ensuring and improving uniform basic performance company-wide・Introduction of new

technology and materials

Standard rental property products

Ensuring building performance

Response to market needs

Structure Type of dwelling Room arrangement & size

Special requirements

・Two-by-four method・Steel frame structure・Rahmen structure・System brace

structure・Reinforced concrete

structure・Rahmen structure・Box frame

construction

・Flat-style・Maisonette style・Flat-maisonette style・Reverse flat style・Single shared

corridor style・Central staircase

style

・1 room to 3-bedroom units・2 to 8 stories

・Seismic isolation construction method・Seismic damping

construction method・Pet-friendly options・Security options, etc.

Flat-style Wide variety of options Side door for petsDaito original steel frame system brace construction method


Quality Control Capabilities

Design and Construction

Independently developed project management system DK Network

Construction report

Number of engineers (As of March 31, 2009) 2,467

Receive latest on-site information

On-site supervision

Daito VFO database Business partners

DK NETWORK

Rece

ive in

struc

tion a

nd ap

prov

als vi

a e-m

ailSe

nd p

hoto

s tak

en o

n th

e sp

otRecording of visual images during construction process

Percentage holding 1st class license of architecture*1st Class Architect or 1st Class Construction Management Engineer 90%

Ensuring high-quality construction through highly skilled engineering teams and an independently developed project management systemLong-term stability in the rental housing business demands that high quality is achieved in construction. At Daito, highly skilled and highly qualif ied engineers exercise seamless quality control through our independently developed DK Network.

The DK Network is a project management network that links construction sites with the construction management unit to ensure construction accuracy and a uniformly high level of quality. At each stage of the project, the system allows us to carry out our own detailed inspections in addition to the regulation inspections.

Inspection data and visual images covering all stages from the start of construction through to completion are incorporated in a construction report that is presented to the owner, ensuring that the high quality of construction is transparently documented. After handing over the completed building, the unique quality assurance standards of our after-sales service continue to provide the customer with comprehensive support.


Thirty-Year Whole Building Lease: Leave It to the Experts

Risk Responsiveness

Daito not only provides support in rental housing management, but also covers owners for every conceivable risk arising from market fluctuationsDaito’s Lease Management Trust System covers landowners against risks of all kinds arising from market fluctuations. First, as a means of ensuring stable rental income, we pay a predetermined monthly rental to the owner, even in times of vacancy or default of payment. Thanks to the tenant recruitment capabilities of our staff, we have achieved a high occupancy rate.

Next, even if there are fluctuations in market rates, our rents stay fixed for a ten-year period, the longest in the industry. Rent revisions are then made every five years. This offers stability to owners and protects them from fluctuations in the market in the surrounding area.

Moreover, Daito bears the cost of restoring a property to its original state when a tenant moves out and the cost of maintaining and repairing buildings that have deteriorated over time—both costs traditionally borne by owners.

These services are made possible by pursuing long-term efficiencies in our lease business, including exhaustive market research and the development and adoption of low-maintenance materials and f ittings. They are also the result of Daito’s wealth of knowledge accumulated through its management of 550,000 residential units nationwide.

Landowner

Whole-building lease contractRental contract

Daito Group

*Wholly owned subsidiary of Daito Trust Construction Co., Ltd.

Tenants

Regular reports

Lease payments

Tenant recruiting

Building contractor contract

Daito Building Management*

Daito Trust Construction

Collection of rental payments


Management Responsiveness

Thirty-Year Whole-Building Lease

Our specialist staff review the complicated and laborious procedures involved in rental housing managementTo offer landowners in the rental housing business an improved quality of service in property management, our wholly-owned subsidiary specializing in proper ty management, Daito Building Management Co., Ltd., provides a comprehensive agency service covering all aspects of the complicated and laborious procedures involved in rental housing management, from rent collection to building maintenance and tenant negotiations.

Regardless of whether rent has been collected from tenants, at the end of every month, Daito pays the next month’s rent to the landowner. Meanwhile, dedicated staff collect rent directly from late-paying tenants, ensuring reliable rent payment to landowners and reliable rent collection.

Moreover, to ensure the peace of mind of both landowners and tenants, landowners receive a Building Report once every two months allowing them to check up on the state of their property, while tenants with problems or inquiries have access 24 hours a day, including public holidays, to the services of the Daito Customer Center.

Targeting operational efficiency in the rental housing business with planned repairs and independent development of high-durability materials and low-maintenance materials and fittings We take advantage of economies of scale in the execution of planned building refurbishments and in our independent development and deployment of a series of high-durability materials and low-maintenance materials and fittings to reduce overall business costs and increase the eff iciency of rental housing operations.

・Use of the EB Sheet special cosmetic sheet makes waxing unnecessary and improves resistance to wear and tear from furniture, etc.・Also allows relaying of floor to be limited to the smallest unit.

Neo flooring

Oil-based marker pen stains can also be removed with an eraser.

EB Cloth with enhanced resistance to soiling and wear

Materials that reduce maintenance costs

Kitchen unit allowing replacement of surface panels only

Interior fixtures, hallway storage units, etc., with enhanced soiling resistance

・Detail of roofing material

(1) Acrylic surface membrane(2) Natural stone particles(3) Acrylic resin base coating(4) Acrylic protective membrane coating(5) Aluminum and zinc plating(6) Base steel sheet(7) Aluminum and zinc plating(8) Acrylic resin base coating

Stains can be removed easily by wiping with a dry or damp cloth, a neutral detergent, or similar

Special surface treatment improves resistance to wear and soilingPlus high-grade printing ink reduces risk of discoloration and fading

Daito Customer CenterBuilding Report

EB Cloth allows easy removal of smoke and grease deposits, electrical scorch marks from TVs and refrigerators, and other stains.

Superior durability and weather-resistance with roofing material made of natural stone chip deposited on aluminum and zinc-plated steel sheet

Cross-section of roofing material showing 8-layered structure


Thirty-Year Whole Building Lease: Leave It to the Experts

Tenant Recruitment Capabilities

Competitors Number of units under residentialmanagement and occupancy rate

Tenants

800

600

400

200

0

100

90

80

70

97.0 97.0 96.6 96.495.6

Occupancy rateNumber of units under management

6% 42% 52%

Housecom(Group company)

Affiliated real estate agents(Around 43,000 agencies)

Managementsubsidiary

Local real estate agencies

In-housetenant-finding

service

Daito

（thousand units）（%）

354

05/3

404

06/3

454

07/3

502

08/3

552

09/3

Tenant recruitment through a network of dedicated staff and local real estate companies placing tenants in Daito propertiesMost other companies in the industry outsource the tenant recruitment function to outside real estate companies. However, this produces a tendency for real estate agents to prioritize properties that are easy to rent, sometimes preventing owners from receiving a stable tenant recruitment service.

In the rental housing business, the tenant recruitment process is vital to maintaining a stable rental income. Daito employs specialist teams of in-house staff (1,038 as of March 31, 2009) to carry out tenant recruitment and this stable supply of tenants covers almost 60% of the properties managed by Daito and the subsidiary Housecom. This is complemented by a network of around 40,000 affiliated real estate agents, giving Daito strong capabilities in tenant recruitment.

360 branch offices nationwide with 1,038 specialist staff

(including 180 branch offices specializing in rental housing agency services)

Housing construction companies

Other competitors


Thirty-Year Whole-Building Lease

Tenant recruitment activities through a wide range of channelsDaito carries on tenant recruitment activities through the 479 branch off ices of the Daito Group nationwide (Daito Trust Construction 360 branches, Housecom 119 branches).

Using the Internet to find rental units is also becoming more popular year by year. Daito has responded by enhancing our e-Heya Net rental unit search website, renewing television commercials, issuing rental unit listings, and engaging in other activities to boost the number of website visitors.

We also make use of the property listing magazine Ju-SEE and a wide range of other channels in our tenant recruitment activities.

Rolling out a range of tenant services to expand our tenant customer base To attract tenant demand from all sectors, Daito is targeting tenancy agreements with people of middle age and older as well as overseas nationals and others who may have difficulty providing a guarantor. To do this, Daito offers a tenancy agreement option with no requirement for a guarantor as well as one that lightens the initial financial burden on the tenant by not requiring the payment of deposit money.

Meanwhile, to respond to the increasingly diverse needs of tenants, we provide pet-owners with properties to live in worry-free comfort with their pets.

Daito rental housing agency Group company: rental housing agency (Housecom)

Online rental unit search website

e-Heya Net rental housing agency brand

Rental property listing magazine


Date of construction of rental housing stock (17,160,000 units)*As of 2003

Source: Ministry of Internal Affairs and Communications; Survey of Housing Land

Customers’ reasons for land utilization

Source: Results of customer survey (March 2009)

Uncertainty about future of farming11%

Other5%

Haveunder-utilized land

19%

Securestable income

24%

Reduceproperty taxes

17%

Reduce inheritance tax

24%

Sales activity is undertaken in urban

areas in each city

1981～199028.8%

1991～200030.7%

2001～ 6.1%

1971～198017.7%

～197018.8%

Daito holds information on over 4 million lots of land*

*Lots suitable for construction of rental housing (100m2 or more)

36% of rental housing is superannuated stock built in 1980 or earlier*Lifespan of housing: 30 to 40 years

1. Firm underlying demand among landowners for land asset utilization (rental housing construction)

Landowners in Japan continue to face diff icult choices. Continuing with farming operations offers poor returns, but the aging of the population means a shortage of younger farmers to hand over to. In the meantime they are confronted with a mounting burden of property and inheritance taxes, which is particularly heavy in areas on the outskirts of cities.

Rental housing has attracted interest as a solution to these difficulties and underlying demand from landowners remains correspondingly firm.

2. Many unused agricultural sites and other lots available nationwide for rental housing construction

Daito holds information on more than 4 million lots suitable for the construction of rental housing (area of at least 100m2) and is engaged in related sales activities in urbanization areas.

3.Construction demand expanding as 1/3 of rental housing becomes superannuated

In Japan, existing houses are demolished and rebuilt when they deteriorate, creating a rebuilding cycle of 30 to 35 years. Given that rental housing built in 1980 or before represents around 36% of the total, potential demand from rebuilding of properties can be expected to continue growing.

Business Background and Future Rental Housing Demand (Market Environment)

Rental housing market (supply side)


Number of rental housing starts

Required supply of new rental housing units (figures from 2010 based on Daito forecasts)

Number of households in rental housing

Required supply of new rental housing units

2003

18,301

2010

13,614

17,167

18,424

2015

11,719

18,349

2020

9,824

18,116

2025

7,267

17,584

4,5876,705 8,525

10,83012,835

2030

4,750

20,000

15,000

10,000

5,000

0

(thousand)

Source: Total Number of Households, National Institute of Population and Social Security Research

17,167

（thousand units） 1,000

800

600

400

200

0'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08

540

670

880840 820

760

580

680 650570 560

610

510440 420 410 440 450 450 460

510 530

430 440

Enactment of revised Building Standards Law

Bubble period Supply running at 400,000 to 450,000 units per year

High-volume supply due to Production

Green Land Law amended

1. Number of households to continue increasing until 2015 with no major decrease thereafter

The number of households is forecasted to continue rising until 2015 due to the spread of the nuclear family, the tendency to marry at a later age, and other factors. It is furthermore predicted that there will be no substantial fall in numbers in subsequent years.

As historic data suggest that the proportion of households living in rental housing will remain constant, with little effect from fluctuations in the economic climate and land prices, underlying demand for rental housing can be expected to remain firm.

2. Loss and shakeout of superannuated rental housing creates corresponding demand for supply of new high-quality housing

Japan is said to have a housing rebuilding cycle of 30-35 years. It is estimated that rental housing units, which are currently occupied by 17,167,000 households, will shrink in number to 4,750,000 units by 2030 due to aging of the housing stock and other causes.

In 2030, the number of households occupying rental housing is projected to be 17,584,000, so that 12,835,000 rental housing units will need to be supplied by then.

3. Rental housing demand forecast to continue running at 400,000-450,000 units/yearThe number of rental housing starts in Japan, even given the effect of the economic climate, legislative amendments, and other factors, remains at 400,000-450,000 a year.

Going forward, rental housing demand is expected to run at 400,000 to 450,000 units a year. This projection is based on an increase in the number of households living in rental housing, an increase in company housing for single people and other short-term housing needs, loss of existing housing stock, and an increase in the number of housing units that are 30 years old or above and therefore tend to have a high rate of vacancy.

Rental housing market (demand side)Percentage and total number of households in rental housing(figures from 2010 based on Daito forecasts)

47,080

2003

50,140

2010

50,480

2015

50,270

2020

49,630

2025

48,180

2030

（%） 60,000

40,000

20,000

0

100

80

60

40

20

0

(thousand )

36.5 36.5 36.5 36.5 36.5 36.5

Percentage of households in rental housing

Number of households in rental housing

Total number of households

Source: Total Number of Households, National Institute of Population and Social Security Research

18,301 18,424 18,349 18,116 17,58417,167

CSR Initiatives


Basic Environmental PolicyWe at the Daito Group will work actively to protect the global environment by conserving energy and resources and promoting recycling. As an innovative leader in land utilization, we will continue to offer comfortable living environments while focusing on harmony with local communities and the natural environment.

Environmental Guidelines1. Legal SystemWe will conduct our business activities in compliance with laws and regulations related to the environment.2. EducationThrough ongoing educational activities, all employees shall initiate activities that are environmentally friendly.

3. Conservation of resourcesWe will strive to reduce environmental impact by extending the life of buildings and by conserving resources.4. RecyclingWe will strive to reduce environmental impact through the re-use of materials.5. Reuse of resourcesWe will strive to reduce environmental impact by promoting the recycling of resources. 6. CreativityWe will provide services that lead to a reduction in environmental impact by proposing people-friendly living environments

Environmental management project

President

Workplace Environment Group[Main activities]● Reduce waste generated at offices● Reduce carbon dioxide generated at offices● Promote purchase of green office supplies● Promote save energy at offices ● Promote save resources at offices

SHINAGAWA EAST ONE TOWER (Daito Building Management Co., Ltd.)[Main activities]● Formulation and implementation of carbon-dioxide reduction plan and submission of

report to Bureau of Economy, Trade and Industry ● Introduction of water-saving devices and automatic electricity-saving sensors

Project Committee Chairman (Director in Charge of the Environment)

��

Through its Environmental Management Project, launched in 2004, Daito works to 3Rs “reduce, reuse, and recycle” across the range of its corporate activities, thus making an active contribution to global environmental protection.

As a medium-term target, until the year 2010, Daito has set itself the goal of achieving a 7% reduction compared to the fiscal year ended March 2005 in the emission of the greenhouse gases by offices and newly-built rental properties (including distribution operations). To meet this target, we have introduced Eco Challenge “D,” a format for environmental action unique to Daito. Based on the environmental management approach that lays down a common set of company-wide assessment criteria, it will allow us to implement effective environmental management going forward.

Targeting Environmental Protection and Social Harmony

Technical Development Group

● Develop environmentally friendly products● Management for emission of toxic substances ● Develop highly durable products● Introduce environmentally friendly materials and specifications● Promote purchase of green construction materials

[Main activities]

On-Site Construction Group

● Minimize on-site construction waste●Implement regulations for emission of toxic substances● Promote purchase of green construction materials● Reduce carbon-dioxide emissions from transportation of construction materials

[Main activities]


Day services for the elderly

Employees working at Daito Corporate Services Co., Ltd.

The day service centers at the first floor

Providing day service for the elderlyThe day service centers operated by the Daito subsidiary Care Partner Co., Ltd., represent a solution intermediate between institutional care and home-based care. Numbering 61 centers nationwide as of May 2009, these centers help the elderly to lead independent lives in familiar surroundings of their local community. By providing such services, we are able to offer living spaces suited to the elderly as care recipients and families as their care providers. Through such activities, Daito hopes to make a contribution to the broader society.

Promoting Employment of the DisabledDaito’s special subsidiary Daito Corporate Service Co., Ltd. was established to promote employment of the disabled. Daito Corporate Service currently employs 51 staff. These employees are engaged in miscellaneous clerical work previously handled by outsourcing companies and temporary staff, centering on the parent company’s head office. Daito attaches great importance to harmony among individuals, society, and corporations. Our quest is to provide workplace environments that enable individuals to overcome their disabilities and be independent, and thus work with a sense of responsibility and independence. In the process, we hope to be a company that helps people enjoy their work and achieve their dreams. In 2008, Daito Corporate Service won the highest award in a program operated by the Ministry of Health, Labour and Welfare to recognize companies setting a good example in improving employment opportunities and workplace environments for people with disabilities. Moreover, Daito Corporate Service was designated as the operator of a general employment support facility in a project operated by the municipality of Urayasu in Chiba Prefecture aimed at recruiting facilities to support the employment of people with disabilities. The operation of the facility is due to begin in October 2011.

Contributing to Communities and Society

Highest award in a program operated by the Ministry of Health,Labour and Welfare

Corporate Governance

Market Interaction Built on Sound Practices and Legal Compliance


Corporate Governance Structure

Select and dismiss Select and dismiss

Audit

Audit

Report

Report

Report

ReportDirect, monitor

Report Report

Direct

Direct

Direct

Direct

Report

Collaborate

Collaborate

Report

Submit and reportEstablish managementpolicy, direct and resolvecritical issues

Submit and report

Submit and report

Select, dismiss andsupervise

Submit and report

Select and dismiss

Internal Audit Division

President andRepresentative Director

Shareholders’Meeting

Divisions, Departments and Subsidiaries

Board of Corporate Auditors＊1

Board of Corporate Directors＊2

Department Managers’ Meeting＊3

Independent Auditors

Compliance Promotion Division

J-SOX Promotion Division

Environmental Management Project

IR website

Information DisclosureDaito regards the disclosure of information as one of its most important corporate responsibilities. By complying with relevant laws and regulations, we endeavor to disclose new information promptly, whether it is positive or negative. To ensure management transparency and objectivity, we are committed to appropriate and timely disclosure of information through a full range of channels. These include news releases, f inancial results briefing sessions, and publication on the investor relations website of various materials, such as monthly performance data, a range of financial results data from the quarterly and annual accounts, and the annual securities report. As the proportion of Daito stock held by overseas investors is high, we also engage in overseas investor relations activity and take other action to encourage the use of voting rights; for instance, we provide the invitation to the annual shareholders’ meeting and the information on the voting resolutions in English.

Corporate Governance and ComplianceDaito’s corporate governance policy focuses on maximizing corporate value and enhancing management eff iciency and transparency for all its shareholders. To this end, our major tasks are to assure strict adherence to corporate ethics and legal regulations, establish and strengthen internal control systems, and ensure objectivity and timely decision-making by management.

Executive Management Meeting＊4

＊1 Four Corporate Auditors （All of whom are outside auditors）　＊2 Eleven Corporate Directors （Including one outside director）　＊3 Core Business Department Managers and General Managers＊4 Operating Officers or Department Managers　＊5 Sales Headquarters Manager and Sales Managers

Sales Headquarters Meeting＊5


Board of DirectorsThe Board of Directors consists of eleven directors, including one outside director. Every month, the Board meets to make decisions on matters stipulated in laws and the Company’s Articles of Incorporation, as well as important matters affecting the Company and its affiliates. The outside director has no business interests in the Company.

Board of Corporate AuditorsDaito has adopted an auditor system. In April 2000, an executive officer system was introduced; at the same time, the number of corporate directors was reduced in order to facilitate speedy business decision-making. The number of auditors is four, all of whom are external auditors. One of the auditors is employed full-time as a standing corporate auditor. This auditor regularly attends Board of Directors’ Meetings and checks the execution of duties as necessary in collaboration with the Internal Audit Division. The system also allows the auditor to monitor the work of the corporate directors and the implementation of decisions made by the Board of Directors and Department Managers’ Meetings. All auditors and a financial auditor attend meetings of the Board of Corporate Auditors, at which the financial auditor explains the auditing system, auditing plans, and the implementation of auditing to the four corporate auditors. With the exception of the disposal of treasury stock associated with the exercising of new share subscription rights (offered following approval at the Ordinary General Meeting of Shareholders), the external corporate auditor has no business interests in the Company.

Department Managers’ MeetingDepartment Managers’ Meetings are attended by the President and Representative Director, as well as by the department managers and general managers (directors or executive officers) in charge of the departments that control the Company’s core businesses. In accordance with basic policy decided by the Board of Directors, this body formulates specific operational policies and plans and discusses and makes decisions on other important operational matters.

Executive Management Meeting The Executive Management Meeting is made up of the senior staff (executive officers or department managers) responsible for the major corporate departments. Meetings are held three times a month to discuss action in response to specific operational issues and problems. The meetings are presided over by a corporate director selected by the Board of Directors, who reports back to the Board of Directors on the items discussed. This arrangement ensures that management is kept promptly informed of concrete issues and problems at the front line of corporate operations.

Compliance Promotion Division and J-SOX Promotion DivisionDaito has set up two offices under the direct control of the company President, the Compliance Promotion Division and the J-SOX Promotion Division, which are engaged in the prevention and management of the risk. The Compliance Promotion Division manages risk related to the legal compliance of business activities in collaboration with the Internal Audit Division, which is responsible for checking compatibility with in-house standards. The Compliance Promotion Division is also responsible for formulating the Daito Group Code of Behavior and ensuring that all employees are familiar with it.

Through its section in charge of disclosing information in the public interest, the Division endeavors to identify improper behavior as early as possible and take corrective measures.

The J-SOX Promotion Division, which began full operation on May 5, 2009, was established to meet the requirements of the Financial Instruments and Exchange Law, in accordance with the provisions of which it takes action to enhance and strengthen internal control.


Board of Directors, Corporate Auditors

and Executive Officers

Representative Director and President

Isao MinabeManaging Director

Naomi KumakiriManaging Director

Akio InadaRepresentative Director and Chairman

Katsumi Tada

Managing Director

Hideki AsanoManaging Director

Takashi IgawaDirector

Hisaharu JinDirector

Hideyuki Nakaita

Director

Tetsuzo NakasatoDirector

Hitoshi Kadouchi

Standing Corporate Auditor

Masayasu Uno

Corporate Auditor

Hideo HachiyaSakumichi Yamada Koji Murata

Executive Officers

Sinichi HiraiMasami FujiyoshiShuji Nakada Hitoshi MurayamaNorio MizunoMinoru OsawaKoichi EbiharaHiroshi KawaguchiAkinori MurakawaTomoyuki NishimuraKazuhiko Saito

Director

Tetsuo Takeda


Organization

Shareholders’ Meeting

Board of Directors

Chairman

President Chief of Sales Department 17 Local Sales Departments (200 branches in Japan)

Engineering Promotion Department

Sales Management Department Sales Control DepartmentLoan Management DepartmentSales Planning DepartmentPersonnnel Development Department

Tenant Recruiting Management Department Tenant Recruiting Management DepartmentRental Marketing Department

Design Management Department Product Development DepartmentDesign DepartmentEngineering DepartmentNew CAD Development Project

Administration Headquarters Administration DepartmentGeneral Administration DepartmentPersonnel DepartmentGeneral Accounting DepartmentInformation System DepartmentPurchasing Department

Corporate Planning DivisionTotal Quality Management DivisionLegal Affairs DivisionInternal Audit DivisionCompliance Promotion DivisionJ-SOX Promotion Division *Environmental Management ProjectBrand Strategy ProjectManagement Strategy Committee

[Subsidiaries]Daito Finance Co., Ltd. Housecom Co., Ltd. Ju-See Information Center Co., Ltd. Ju-See Publishing Co., Ltd. Daito Steel Co., Ltd. Care Partner Co., Ltd. Daito Building Management Co., Ltd. House Leave Co., Ltd.Gaspal Co., Ltd. Daito Construction Co., Ltd. Daito Corporate Service Co., Ltd. Daito Asia Development PTE LTDDaito Asia Investment PTE LTDDaito Asia Development (Malaysia) Sdn. Bhd. D・T・C Reinsurance Limited.

Construction Management Department Construciton Process Management DepartmentConstruciton Quality Management Department

Building Management Department Customer Service Division

* “J-SOX” is an acronym for the Japanese Version of the Sarbanes-Oxley Act in the United Sates.

Board of Corporate Auditors


Daito Trust Construction Corporate Capabilities

Daito has the largest number of leased units under management in the whole of Japan. To gain an accurate understanding of Daito’s competencies, we provide some business results below.

Sound financial position

< Consolidated data for year ended March 31, 2009 >

0YenInterest-bearing debt

54.7%

7.4%

14.1%

Equity ratio

Operating margin

Return on equity

Number of customers

56,528peoplesNote: As of March 31, 2009

Note: Share of repeat orders in new contracts (year ended March 2009

41.3%

Design, construction,

product, and technological

capabilities

11.6%Note: Results for year ended March 2009

Note: Results for year ended March 2009

numberof houses51,645

Proprietary thirty-year

whole-building lease

98.1%thirty-year whole-building lease contract ratio

(Share of contracts signed in year ended March 2009)

thirty-year whole-building leases(30 years; renewed every two years thereafter)

Fixed long-term rents(Fixed for first 10 years; renewed every five years thereafter)

Owners bear no costs for restoration of units to original state

(30 years)

Owners bear no maintenance or repair costs(30 years: Full package plan)

Brokerage and management capabilities

95.6%Residential occupancy ratioNote: Results for year ended March 2009

39,551Leased commercial-use properties undermanagement

Note: As of March 31, 2009

94.1%Commercial occupancy ratioNote: Results for year ended March 2009

Leased residentialunits under management

Note: As of March 31, 2009

552,369numberof houses

numberof houses

Largest numberof leased units

under management in Japan

No.1Ranking for leased units under management

(Released by Zenkoku Chintai Jutaku Shimbunsha)

July 28 , 2008

2008 1st place

2007 1st place2006 1st place2005 1st place2004 1st place2003 1st place

Number ofcustomers Number of lease housing starts

Repeat ratioNumber of Daito housing starts


For more information

Visit our Websitehttp://www.kentaku.co.jp/e/index.html

http://www.kentaku.co.jp/e/products/index.html

http://www.kentaku.co.jp/e/ir/index.html

http://www.kentaku.co.jp/e/corporate/index.html

Products & Services information IR information Corporate information

Net Sales/Net Income and Nikkei Average Stock Price, and Social and Economic Developments

Established Daito Sangyo Co., Ltd.

Established Daito Kyosaikai Co., Ltd.Established the Daito Cooperative Association

Name changed to Daito Trust Construction Co., Ltd.

Listed shares on Second Section of Nagoya Stock Exchange

Name changed to Daito Construction Co., Ltd.


Chronology

・Daito Sangyo Co., Ltd. is established in Nagoya, Japan, to construct lease buildings for effective land utilization.

74

・The name of Daito Sangyo Co., Ltd. is changed to Daito Construction Co., Ltd.

78

・Daito Kyosaikai Co., Ltd. is established and commences business.

80

・Daito Construction is merged with Daito Kosan Co., Ltd. （Nagoya, Osaka）, Daito Sekkei Co., Ltd. （Nagoya, Osaka）, and Daito Construction Co., Ltd. （Osaka）.

85

・The name of Daito Construction is changed to Daito Trust Construction Co., Ltd. （“Daito”）.

88

・Daito is listed on the Second Section of the Nagoya Stock Exchange.

89

Vietnam

conflict concluded

Social andEconom

ic Developm

ents

Iranian Revolution

Second oil shock

US

SR

conflict with A

fghanistan

Agricultural land taxes equalized

with residential land taxes

Iran-Iraq War

Nikkei A

verage reached ￥10,000

Plaza A

ccord signed

Louvre A

ccord signed

Black M

onday

Consum

ption tax introduced

Nikkei A

verage peaks at ￥38,915

History

1000

900

800

700

600

500

400

300

200

100

01974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Head office relocated to Tokyo

Listed shares on First Section of Tokyo Stock Exchange

Established Daito Finance Co., Ltd. Established Housecom Co., Ltd.

Established Shanghai Daito Trust Construction Co., Ltd.

Established Daito Building Management Co., Ltd

Shinagawa East One Tower completed

Launched the Lease Management Trust System

Daito Corporate Service Co., Ltd.

Opening of Le Meridien Kuala Lumpur

Established Gaspal Kanto Co., Ltd. and Gaspal Chubu Co., Ltd.

Net sales (left scale: ¥ billions) Net income (left scale: ¥100 millions) Nikkei Stock Average (right scale: ¥ thousands)


・Head Office is relocated to Shiba-Koen Minato-ku, Tokyo.

96

・Daito Steel Co., Ltd. is established.・Daito Construction Co., Ltd. is

established.

97

・Care Partner Co., Ltd. is established.・Daito Building Management Co., Ltd. is established.

99

・Gaspal Kanto Co., Ltd. and Gaspal Chubu Co., Ltd. are established.

01

・Shin-Nihon Denken Co., Ltd. （now Daito Construction Co., Ltd.） is established.

02

・Head Office is relocated to Konan, Minato-ku, Tokyo（Shinagawa East One Tower）.

03

・Katumi Tada appointed Chairman; Moritaka Asada appointed President・Le Meridien Kuala Lumpur is opened for business.

04

・Daito Corporate Service Co., Ltd. is established.05

・Lease Manegement Trust System launched・Chairman Tada appointed concurently as President

06

・Isao Minabe appointed as President House Leave Co., Ltd. established・Shanghai Garden Plaza go on sale.

07

・Daito Kyosaikai Co., Ltd. merges with Daito Building Management Co., Ltd.・Branch office network expands to 200 outlets.

08

・Head Office is relocated to Shinagawa-ku, Tokyo.

90

・Daito is listed on the First Section of the Nagoya Stock Exchange.

91

・Daito is listed on the First Section of the Tokyo Stock Exchange.

92

・Daito Finance Co., Ltd. is established.93

・Housecom Co., Ltd. is established.94

・Shanghai Daito Trust Construction Co., Ltd. is established in Shanghai.

95

100

90

80

70

60

50

40

30

20

10

0

Governm

ent appraisal of land valuedeclines for the first tim

e in 17 years

Official discount rate reachesall-tim

elow

of 0.5%

Septem

ber 11 terrorist attacksin the U

nited States

Gulf W

ar

Production G

reen Land L

aw am

ended

Yen reaches peak of U

S$1 =

￥79.5

Consum

ption tax raised to 5%

Y2K

problem

Air cam

paign against Afghanistan

The euro is circulated

Falsified reports on the structuralstrength of apartm

ent complexes and

hotels in Japan uncovered

Iraq War

Bank of Japan ends quantitative easing

Revised B

uilding Standards L

aw enacted

Subprim

e loan crisis

Lehm

an Brothers collapses, w

orldwide

business crisis.

Dollar falls below

100 yen for first time

in 12 years.

Enactm

ent of revised insurance business law

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2005 2006 20072004 2008

Investor Information and Corporate Data


（Thousands of shares）

Share Price Trends

Trading Volume

34,234,272

5,092,500

4,176,529

3,261,600

2,999,111

2,844,600

2,739,281

2,166,012

2,104,774

1,606,700

28.38

4.22

3.46

2.70

2.48

2.35

2.27

1.79

1.74

1.33

Name Number of shares owned Ratio of shareholding （%）

Daisho Co., Ltd.

Japan Trustee Services Bank, Ltd. （held in trust 4G）

State Street Bank and Trust Company

Japan Trustee Services Bank, Ltd. （held in trust）

State Street Bank Trust Company 505225

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

Mellon Bank NA as Agent for Its Client Mellon Omnibus US Pension

Daito Trust Construction Co., Ltd.

Katsumi Tada

Sumitomo Realty & Development Co., Ltd.

Principal Shareholders

09/0108/1108/0908/0708/0508/0308/0107/1107/0907/0707/0507/0307/0106/09 06/1106/0706/05 09/0306/03

18,000

20,000

14,000

16,000

12,000

10,000

8,000

6,000

4,000

2,000

009/0108/1108/0908/0708/0508/0308/0107/1107/0907/0707/0507/0307/0106/09 06/1106/0706/05 09/0306/03

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Daito's share price

Daito's share price

（¥

） Nik

kei S

tock

Ave

rage

（¥

）

Nikkei Stock Average

22,000

26,000

30,000

34,000

18,000

14,000

10,000

6,000

0


Corporate Name:Head Office:Established:Capital:Employees:

Daito Trust Construction Co., Ltd. 2-16-1, Konan, Minato-ku, Tokyo 108-8211, JapanJune 20, 197429,060 million yen（Common Stock） 9,109 （at the end of March 2009）

Corporate Data

Number of shares authorized:Number of shares issued:Number of shareholders:Trading unit:Fiscal year-end:Annual meeting of shareholders:Ex-rights date:

Independent Auditors:Transfer agent:

Stock exchange listing:

Code:

329,541,100120,604,33218,538 （as of March 31, 2009） 100 shares March 31 JuneMarch 31 For Interim dividend: September 30 Deloitte Touche TohmatsuMitsubishi UFJ Trust Bank LimitedCorporate Agency Department7-10-11, Higashisuna, Koto-ku,Tokyo 137-8081, Japan

Tokyo stock exchange （1st section） Nagoya stock exchange （1st section） 1878

Investor Information

Printed in Japan

2-16-1 Konan, Minato-ku, Tokyo 108-8211, JapanT E LU R LE-mail

: +81-3-6718-9111: http://www.kentaku.co.jp: [email protected]

Contents

Consolidated financial review P. 1

Consolidated balance sheets P. 5

Consolidated statements of income P. 7

Consolidated statements of changes in net assets P. 9

Consolidated statements of cash flows P. 11

Financial summaries of subsidiaries P. 13

Consolidated Financial Section 2009

Financial statements in this report are translated the ones

audited in Japanese GAAP into English and are not subject

to auditing.

Notes�

Consolidated Financial Review

Analysis of operating results

In the year ended March 31, 2009, the worldwide credit shrinkage in financial markets that originated in

the United States began to affect the real economy in Japan. Among the consequences were a falling stock

market and a rising yen, pressure on capital investment due to large reductions in corporate earnings, and

adjustments in the employment market, all of which contributed to a strengthening of the recessionary

developments in the Japanese economy.

The housing market also continued to operate in a difficult environment, with the turbulence in the

financial market and the uncertain future of the economy dampening residential investment sentiment.

Within this scenario, the Daito Group saw the rental housing market, which is the core element of its

business, temporarily weakened by influences such as the changed attitude of financial institutions to

provide loans and reduced interest in rental property investment among landowners. However, the reasons

motivating landowners to utilize their land assets, whether to alleviate an inheritance tax burden, serve as

a source of pension income, or satisfy some other need, are resistant to the influence of the particular

economic climate, so that underlying demand stayed firm, while the demand among tenants for high-quality

rental housing also remains unchanged.

In its consolidated business performance under these conditions, the Daito Group recorded net sales of

¥954,881 million, a 49.0% increase on the previous fiscal year. On the profits front, meanwhile, operating

income increased by 6.2% to ¥70,389 million and ordinary income by 6.3% to ¥73,976 million, while net

income declined by 5.3% to ¥42,129 million.

The forecast for consolidated business performance in the fiscal year ending March 2010 is shown below.

� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � (¥millions)

Results for

year ended

March 2009

Forecast for

year ending

March 2010

Change

Net sales 954,881 987,100 3.4%

Net sales of completed construction contracts 469,603 461,000 -1.8%

Sales on real estate business 464,779 502,200 8.1%

Other business revenue 20,497 23,900 16.6%

Gross profit 181,896 189,200 4.0%

Gross profit on completed construction contracts 150,304 154,000 2.5%

Gross profit real estate business 25,351 27,600 8.9%

Gross profit other business 6,240 7,600 21.8%

Operating income 70,389 70,700 0.4%

Ordinary income 73,976 74,500 0.7%

Net income 42,129 43,500 3.3%

Performance by segment

(1) Construction

In our core construction business, sales grew by 6.7% year-on-year to ¥469,603 million on the strength of a

healthy level of orders received in the first half-year and a substantial order backlog. The gross profit

margin for completed projects declined 0.3 percentage points from the previous fiscal year to 32.0%.

Nevertheless, the placing of advance orders for steel frame materials in the first half-year and the fall in

material prices in the second half-year, combined with other efforts to reduce costs, allowed the original plan

of 30.9% to be substantially exceeded.

On a non-consolidated basis, however, orders received fell by 12.3% year-on-year to ¥437,277 million. The

main factor in this was a delayed adjustment to the changed financial conditions created by the sharp

downturn in the economy from September 2008.

Going forward, we will be expanding our sales force, enhancing their training, and taking steps to match our

product lineup more closely to the needs of different markets, at the same time working to strengthen

information exchange and maintain good relations with the various financial institutions that provide loans

to our customers (i.e. landowners) for the construction of rental housing. Our forecast for orders received for

the fiscal year ending March 2010 is ¥485,000 million, an increase of 10.9% over the previous fiscal year.

1

(2) Real estate

In the real estate business, an increase in whole-building lease agreements under our Lease Management

Trust System allowed our leasing company, Daito Building Management Co., Ltd., to increase its rental

income. This was one of the main factors in the growth in the sales of the real estate business, which

increased by 171.3% year-on-year to ¥464,779 million. Regarding the occupancy rate of rental properties,

although there was no major change in tenant demand for rental housing, one effect of the sharp economic

downturn was a drop in corporate demand, which led to a worsening trend in occupancy rates in some

regions. As a result, the number of tenancy agreements concluded on a non-consolidated basis, at 171,846,

did increase by 7.8% year-on-year, but the occupancy rate for residential units registered a 0.8 percentage

point decline from the previous fiscal year to 95.6%, while the occupancy rate for commercial property fell by

1.4 percentage points to 94.1%. Moving forward, we will be renewing our television commercials and taking

other measures to further raise the degree of recognition of our e-Heya Net brand, improving the functions

of the rental unit search website, and strengthening alliances with real estate businesses as part of tenant

recruitment activities tailored to the characteristics of the different regional markets. We will also be

working to maintain a high occupancy rate through measures to expand our customer base, for instance by

providing properties that accept pets, offering tenancy agreement options that require no guarantor or no

deposit money, and promoting agreements with tenants in older age groups.

(3) Other business

Sales from other operations amounted to ¥20,497 million, a decrease of 31.1% from the previous fiscal year.

The main reason for the decreased sales total for other operations was that the rental income guarantee

business operated by Daito Kyosaikai Co., Ltd., which provides guaranteed rental income even during

vacant periods, was subsumed in February 2008 into the whole-building lease business operated by Daito

Building Management Co., Ltd. The rental income guarantee business was thus transferred from the other

operations category to become part of the whole-building lease operations of the real estate business.

Meanwhile, Gaspal Co., Ltd., which operates a nationwide LP gas supply business, added sales thanks to a

growth in the number of households supplied, while Care Partner Co., Ltd., which provides daytime care to

the elderly, benefited from sales growth due to an increase in the number of facilities operated. The number

of households supplied with LP gas by Gaspal Co., Ltd., was over 50,000 at the end of March 2009. The

target is to reach 80,000 households by the end of March 2010. The number of facilities operated by Care

Partner Co., Ltd., as of March 31, 2009, was 58. In the period to March 2010, the opening of four further

facilities is planned to bring the total to 62 facilities nationwide.

Assets and Liabilities

Current assets on a consolidated basis as of March 31, 2009, showed a decline of ¥11,444 million from the

previous fiscal year-end to ¥383,594 million. This was the result of a fall of ¥54,417 million in short-term

investment securities, including a decline in negotiable certificate of deposit, which was balanced by

increases of ¥17,302 million in cash and cash deposits, ¥7,220 million in notes and accounts receivable, and

¥11,600 million in operating loans. Noncurrent assets in the same period increased by ¥19,766 million to

¥156,883 million, a rise due chiefly to increases of ¥9,000 million in long-term deposits, ¥3,081 million in

guarantee deposits, and ¥4,424 million in subordinated bonds. Liabilities meanwhile grew by ¥13,409

million to ¥244,135 million. The main factors in this were increases of ¥8,501 million in long-term

guarantee deposits and ¥3,303 million in the provision for repairs on whole building lease. The net result of

these movements was an increase of ¥8,321 million in total assets from the previous fiscal year-end to

¥540,477 million. Shareholders’ equity ratio declined by 1.8 percentage points from the previous fiscal

year-end to 54.7%, while net assets totaled ¥296,341 million.

Cash flows

Cash and cash deposits at fiscal year-end stood at ¥181,569 million, down ¥26,677 million from a year

earlier.

(1) Cash flows from operating activities

Net cash provided by operating activities amounted to ¥30,209 million. The main element in this was

income before income taxes and minority interests, which amounted to ¥72,902 million, a 5.0% decrease

over the previous fiscal year, set against with a ¥7,234 million increase in notes and accounts receivable and

income taxes paid of ¥34,209 million.

2

(2) Cash flows from investing activities

Net cash used in investing activities totaled ¥13,480 million. The main elements in this were a net figure of

¥8,058 million used in the purchase and sale of short-time investment securities and investment securities

and ¥7,497 million in additions to guarantee deposits.

(3) Cash flows from financing activities

Net cash used in financing activities was ¥39,606 million. This consisted principally of ¥28,118 million in

dividends paid and ¥11, 446 million in acquisition costs, mainly for purchase of treasury stock to be retired.

Cash flow indicators for the Daito Group are shown below.

Year

ended

March

2005

Year

ended

March

2006

Year

ended

March

2007

Year

ended

March

2008

Year

ended

March

2009

Shareholders’ equity ratio (%) 56.0 55.0 58.0 56.5 54.7

Shareholders’ equity ratio on a market value basis (%) 135.6 167.2 141.5 117.1 72.3

Ratio of interest-bearing debt to cash flow (years) 0.0 0.0 0.0 0.0 0.0

Interest coverage ratio (times) 4,051.6 14,418.3 11,681.0 7,678.9 4,969.0

Notes: shareholders’ equity ratio: shareholders’ equity divided by total assets

The equity ratio on a market value basis is the total market value of shares issued and outstanding divided by total assets.

Ratio of interest-bearing debt: to cash flow: interest-bearing debt divided by cash flow

Interest coverage ratio: cash flow divided by interest payments

*1. All figures are calculated on a consolidated basis.

*2. The total market value of shares is calculated by multiplying the closing share prices at the end of the fiscal year by the total number of

shares issued and outstanding at the fiscal year-end (exclusive of treasury stock).

*3. Cash flow is based on cash flow from operating activities in the consolidated statements of cash flows. Interest-bearing debt covers all of

those liabilities recorded in the consolidated balance sheets for which interest is paid. Interest payment is based on interest paid as shown in

the consolidated statements of cash flows.

Basic policy on appropriation of earnings and dividends for the fiscal years for

March 2009 and March 2010

(1) Dividend policy

Daito’s dividend policy has consistently reflected the recognition of shareholder return as an important issue.

Our basic commitment is to provide a stable dividend by ensuring a strong business base; specifically, we

have set a target payout ratio of 30%, to consist of a standard dividend of ¥20 and a profit return component

reflecting the combined business performance of Daito and its subsidiary Daito Building Management Co.,

Ltd. On this basis, we intend to apply to an annual dividend per share of ¥104 (¥52 of which was paid as an

interim dividend). From the fiscal year ending March 2010, the target payout ratio will change to 50%, to

consist of a standard dividend of ¥20 and a profit return component reflecting consolidated business

performance.

(2) Purchase and retirement of treasury stock

When certain conditions are met, including non-consolidated net income exceeding ¥10,000 million and the

absence of large-scale funding requirements, Daito applies a policy of ongoing purchase and retirement of

treasury stock in the interest of increasing shareholder value. The upper limit for purchase of treasury stock

is set at a target figure of 50% of non-consolidated net income. In the fiscal year ended March 2009,

2,760,000 shares (acquisition cost ¥11,446 million) were purchased. Together with the 479,600 shares

acquired in the previous fiscal year, this formed a total of 3,239,600 shares, which were retired on March 31,

2009. Starting in the fiscal year ending March 2010, Daito will change to a policy of ongoing purchase and

retirement of treasury stock in the interest of increasing shareholder value when consolidated net income

exceeds ¥10,000 million, there are no large-scale funding requirements, and certain other conditions are

met. The upper limit for purchase of treasury stock will be altered to a target figure of 30% of consolidated

net income.

(3) Application of internal reserve funds

The future deployment of internal reserve funds will be explored with the focus on effective investment

strategies for business expansion and increase of corporate value.

3

Business risks

The rental housing sector which is the core business of the Daito Group is subject to the risks described

below. In connection with the operating results, financial position, cash flow, and other aspects of the

business performance of the Daito Group, items which may have a significant influence on the decisions

made by investors are listed below. References to the future in the text are based on assessments made by

the Daito Group as of the fiscal year-end.

(1) Increase in cost of sales and decline in profitability due to sharp rise in material costs

Daito assumes the role of principal contractor in all its lease building construction projects, while its on-site

construction supervisors (construction engineers) place separate orders for each stage of construction

directly with subcontractors, with the aim of curtailing costs for completed work. In the event that an

increase in various material prices leads to an upward revision of subcontractor invoices payable by the

Company, gross profit margins may be negatively impacted.

(2) Performance decline due to changes in inheritance and property taxes

Daito obtains building construction orders based on its consulting sales activities, which include making

proposals to landowners for the effective utilization of land for residential lease buildings. Within Japan’s

current tax system, building lease operations are deemed to be effective means of land utilization.

Furthermore, the most common reason for landowners to begin residential lease operations is as a strategy

to alleviate the burden of inheritance and property taxes. Accordingly, in the case that changes to the law or

liberalization measures are applied to land inheritance and property taxes, the Company’s procurement of

orders may be affected, and its performance may decline.

(3) Order cancellations due to sudden interest rate hikes

When first engaging in building lease operations, landowners generally borrow money from banks and other

financial institutions to cover the cost of building construction. Overall long-term interest rates have

remained low, providing stable yield from property leasing activities, even if the market weakens. This is a

key factor for landowners commencing real estate leasing. In the event that interest rates rise sharply,

landowners may cancel their orders for projects in the planning stage or review plans for work in progress

due to the deterioration in profitability. Under these circumstances, the Company may not meet its targets

for total orders received or for total projects completed.

(4) Increase in overheads due to legislative changes

Daito requires a number of approvals and licenses in order to conduct its business. These include building

industry approvals, registration as architects, a real estate agency license, and a license to participate in the

money lending business. The Company’s corporate activities are also subject to related laws and various

other legal regulations. To ensure that such regulations are properly observed, the Company is reinforcing

its corporate governance and compliance systems. However, the Company’s business performance may be

impacted in the event of failure to observe laws and other regulations, or the enactment of new laws that

restrict its business activities.

(5) Risk of personal information leaks

Daito assumes custody of various personal information about landowners and tenants. While the Company

is particularly careful about protecting personal information, any leakage of such information to outside

parties could lead to a significant loss of trust, which could affect its business performance.

4

Consolidated balance sheets

2008 2009 2009

Assets

Current assets

Cash and deposits ¥122,266 ¥139,569 $1,420,838

26,303 33,523 341,270

Short-term investment securities 116,590 62,172 632,922

Costs on uncompleted construction contracts 16,629 17,816 181,370

Other inventories 4,766 6,126 62,363

Prepaid expenses 33,030 35,401 360,388

Deferred tax assets 9,421 12,056 122,732

Operating loans 59,036 70,637 719,098

Other 7,335 6,789 69,113

Allowance for doubtful accounts (342) (498) (5,069)

Total current assets 395,038 383,594 3,905,059

Noncurrent assets

Property, plant and equipment

Buildings and structures, net 31,178 28,334 288,445

Tools, furniture and fixtures, net 1,166 901 9,172

Land 42,490 41,984 427,405

Lease assets, net � 299 3,043

Other, net 289 242 2,463

Total property, plant and equipment 75,124 71,763 730,560

Intangible assets 523 501 5,100

Investments and other assets

Investment securities 25,231 26,783 272,656

Subordinated bonds 6,503 10,928 111,249

Deferred tax assets 7,488 9,929 101,079

Deferred tax assets for land revaluation 4,923 3,164 32,210

Insurance fund 413 368 3,746

Other 19,076 35,901 365,478

Allowance for doubtful accounts (2,168) (2,456) (25,002)

Total investments and other assets 61,468 84,618 861,427

Total noncurrent assets 137,116 156,883 1,597,098

Total assets 532,155 540,477 5,502,158

$=98.23yen

(March 31,09)

Notes receivable, accounts receivable from completed

construction contracts and other

Millions of yen

Thousands of

U.S. Dollar

5

2008 2009 2009

Liabilities

Current liabilities

Accounts payable for construction contracts ¥27,303 ¥30,442 $309,905

Lease obligations � 65 661

Income taxes payable 26,940 25,376 258,332

Advances received on uncompleted construction contracts 42,365 39,794 405,110

Advances received 36,671 37,579 382,561

Provision for bonuses 12,431 8,349 84,994

Provision for warranties for completed construction 595 1,153 11,737

Deposits received 5,669 5,764 58,678

Other 25,974 29,932 304,713

Total current liabilities 177,952 178,459 1,816,746

Noncurrent liabilities

Lease obligations � 251 2,555

Provision for retirement benefits 6,989 7,663 78,010

Provision for directors' retirement benefits 2,050 2,074 21,113

Provision for repairs on whole building lease � 4,603 46,859

Long-term guarantee deposits 39,745 48,247 491,163

Other 3,987 2,837 28,881

Total noncurrent liabilities 52,772 65,676 668,594

Total liabilities 230,725 244,135 2,485,340

Net assets

Shareholders' equity

Capital stock 29,060 29,060 295,836

Capital surplus 36,070 34,540 351,623

Retained earnings 249,273 250,495 2,550,086

Treasury stock (8,172) (7,870) (80,118)

Total shareholders' equity 306,232 306,226 3,117,438

Valuation and translation adjustments

Valuation difference on available-for-sale securities 1,814 (318) (3,237)

Deferred gains or losses on hedges (425) (236) (2,402)

Revaluation reserve for land (7,173) (4,610) (46,930)

Foreign currency translation adjustment 438 (5,322) (54,178)

Total valuation and translation adjustments (5,346) (10,487) (106,759)

Minority interest 544 603 6,138

Total net assets 301,429 296,341 3,016,807

Total liabilities and net assets 532,155 540,477 5,502,158

$=98.23yen

(March 31,09)

Thousands of

U.S. DollarMillions of yen

6

Consolidated statements of income

2008 2009 2009

Net sales

Net sales of completed construction contracts ¥439,955 ¥469,603 $4,780,647

Sales on real estate business 171,343 464,779 4,731,538

Other business revenue 29,746 20,497 208,663

Total net sales 641,045 954,881 9,720,869

Cost of sales

Cost of sales of completed construction contracts 298,065 319,298 3,250,514

Cost of sales on real estate business 143,288 439,428 4,473,460

Cost of sales on other business 12,569 14,257 145,138

Total cost of sales 453,924 772,984 7,869,123

Gross profit

Gross profit on completed construction contracts 141,889 150,304 1,530,123

Gross profit-real estate business 28,054 25,351 258,077

Gross profit-other business 17,177 6,240 63,524

Total gross profit 187,121 181,896 1,851,735

Selling, general and administrative expenses

Directors' compensations 1,199 731 7,441

Employees' salaries and allowances 54,220 57,948 589,921

Provision for bonuses 7,125 3,913 39,835

Retirement benefit expenses 1,541 1,843 18,762

Provision for directors' retirement benefits 99 102 1,038

Legal welfare expenses 4,609 5,143 52,356

Advertising expenses 5,889 4,514 45,953

Provision of allowance for doubtful accounts 440 463 4,713

Warranty cost for vacant rooms 12,659 � �

Rents 6,358 6,838 69,612

Software development expenses 487 � �

Other 26,194 30,006 305,466

Total selling, general and administrative expenses 120,825 111,506 1,135,152

Operating income 66,295 70,389 716,573

$=98.23yen

(March 31,09)

Thousands of


7

2008 2009 2009

Non-operating income

Interest income ¥1,716 ¥1,782 $18,141

Dividends income 149 163 1,659

Commission fee 129 1,719 17,499

Foreign exchange gains 693 � �

Miscellaneous income 1,104 1,124 11,442

Total non-operating income 3,793 4,789 48,752

Non-operating expenses

Loss on valuation of securities � 150 1,527

Miscellaneous expenses 480 1,052 10,709

Total non-operating expenses 480 1,203 12,246

Ordinary income 69,609 73,976 753,089

Extraordinary income

Reversal of allowance for doubtful accounts � 115 1,170

Gain on sales of noncurrent assets 8,038 0 0

Gain on sales of investment securities � 1,757 17,886

Reversal of provision for warranty cost for vacant rooms 982 � �

Total extraordinary income 9,020 1,872 19,057

Extraordinary loss

Loss on sales of noncurrent assets 0 213 2,168

Loss on retirement of noncurrent assets 92 75 763

Loss on valuation of investment securities 1,798 2,620 26,672

Impairment loss 18 38 386

Total extraordinary loss 1,908 2,947 30,001

Income before income taxes and minority interests 76,721 72,902 742,156

Income taxes-current 35,266 32,696 332,851

Income taxes-deferred (3,146) (1,983) (20,187)

Total income taxes 32,120 30,713 312,664

Minority interests in income 122 59 600

Net income 44,478 42,129 428,881

$=98.23yen

(March 31,09)

Thousands of


8

Consolidated statements of changes in net assets

Shareholders' equity 2008 2009 2009

Capital stock

Balance at the end of previous period ¥29,060 ¥29,060 $295,836

Balance at the end of current period 29,060 29,060 295,836

Capital surplus

Balance at the end of previous period 34,540 36,070 367,199

Changes of items during the period

Disposal of treasury stock 1,529 15 152

Retirement of treasury stock � (1,545) (15,728)

Total changes of items during the period 1,529 (1,529) (15,565)

Balance at the end of current period 36,070 34,540 351,623

Retained earnings

Balance at the end of previous period 216,762 249,273 2,537,646


Dividends from surplus (11,967) (28,118) (286,246)

Net income 44,478 42,129 428,881

Retirement of treasury stock � (10,225) (104,092)

Reversal of revaluation reserve for land � (2,563) (26,091)

Total changes of items during the period 32,510 1,221 12,430

Balance at the end of current period 249,273 250,495 2,550,086

Treasury stock

Balance at the end of previous period (7,863) (8,172) (83,192)


Purchase of treasury stock (2,909) (11,504) (117,112)


Retirement of treasury stock � 11,771 119,831

Total changes of items during the period (308) 302 3,074

Balance at the end of current period (8,172) (7,870) (80,118)

Total shareholders' equity




Net income 44,478 42,129 428,881



Retirement of treasury stock � � �


Total changes of items during the period 33,731 (5) (50)


$=98.23yen

(March 31,09)

Thousands of


9

Valuation and translation adjustments 2008 2009 2009

Valuation difference on available-for-sale securities

Balance at the end of previous period ¥8,884 ¥1,814 $18,466


Net changes of items other than shareholders' equity (7,069) (2,132) (21,704)

Total changes of items during the period (7,069) (2,132) (21,704)

Balance at the end of current period 1,814 (318) (3,237)

Deferred gains or losses on hedges

Balance at the end of previous period � (425) (4,326)


Net changes of items other than shareholders' equity (425) 189 1,924

Total changes of items during the period (425) 189 1,924

Balance at the end of current period (425) (236) (2,402)

Revaluation reserve for land

Balance at the end of previous period (7,173) (7,173) (73,022)


Net changes of items other than shareholders' equity � 2,563 26,091

Total changes of items during the period � 2,563 26,091


Foreign currency translation adjustment

Balance at the end of previous period 482 438 4,458


Net changes of items other than shareholders' equity (44) (5,760) (58,637)

Total changes of items during the period (44) (5,760) (58,637)

Balance at the end of current period 438 (5,322) (54,178)

Total valuation and translation adjustments

Balance at the end of previous period 2,193 (5,346) (54,423)



Total changes of items during the period (7,540) (5,141) (52,336)


Minority interests

Balance at the end of previous period 421 544 5,538


Net changes of items other than shareholders' equity 122 59 600

Total changes of items during the period 122 59 600

Balance at the end of current period 544 603 6,138

Total net assets




Net income 44,478 42,129 428,881





Total changes of items during the period 26,314 (5,087) (51,786)


$=98.23yen

(March 31,09)

Thousands of


10

Consolidated statements of cash flows

2008 2009 2009

Net cash provided by (used in) operating activities

Income before income taxes and minority interests ¥76,721 ¥72,902 $742,156

Depreciation and amortization 3,454 2,527 25,725

Impairment loss 18 38 386

Increase (decrease) in allowance for doubtful accounts 67 445 4,530

Increase (decrease) in provision for bonuses 4,700 (4,081) (41,545)

Increase (decrease) in provision for directors' bonuses (78) � �

(1,174) � �

Increase (decrease) in provision for retirement benefits 1,055 673 6,851

� 3,303 33,625

Interest and dividends income (1,866) (1,945) (19,800)

Interest expenses 4 5 50

Loss (gain) on valuation of investment securities 1,798 2,620 26,672

Decrease (increase) in notes and account receivable-trade (8,957) (7,234) (73,643)

4,507 (1,179) (12,002)

Decrease (increase) in other inventories (576) (1,371) (13,957)

Decrease (increase) in prepaid expenses (28,615) (5,552) (56,520)

Decrease (increase) in operating loans (12,765) (11,600) (118,090)

Increase (decrease) in notes and accounts payable-trade (2,560) 3,155 32,118

Increase (decrease) in accounts payable-other (274) 1,950 19,851

Increase (decrease) in advances received 29,038 907 9,233

(10,125) (2,571) (26,173)

Increase (decrease) in accrued consumption taxes 333 � �

Increase (decrease) in long-term guarantee deposits � 8,501 86,541

Other, net (619) 739 7,523

Subtotal 54,086 62,234 633,553

Interest and dividends income received 1,592 2,191 22,304

Interest expenses paid (3) (6) (61)

Income taxes paid (30,186) (34,209) (348,254)

Net cash provided by (used in) operating activities 25,489 30,209 307,533

$=98.23yen

(March 31,09)

Increase (decrease) in advances received on uncompleted

construction contract

Decrease (increase) in costs on uncompleted construction contracts

Increase (decrease) in provision for repairs on whole building lease

Increase (decrease) in provision for warranty cost for vacant rooms

Thousands of


11

2008 2009 2009

Net cash provided by (used in) investing activities

Payments into time deposits (¥13,319) (¥27,506) ($280,016)

Proceeds from withdrawal of time deposits 8,102 26,914 273,989

Purchase of property, plant and equipment (860) (468) (4,764)

20,643 � �

Purchase of short-term investment securities (106,813) (17,262) (175,730)

Proceeds from redemption of short-term investment securities 113,995 25,600 260,612

Purchase of investment securities (6,676) (20,563) (209,335)

Proceeds from sales of investment securities 49 4,167 42,420

Proceeds from cancellation of insurance funds 36 159 1,618

Payments for guarantee deposits (2,797) (7,497) (76,320)

Other, net 66 2,976 30,296

Net cash provided by (used in) investing activities 12,426 (13,480) (137,228)

Net cash provided by (used in) financing activities

Repayments of lease obligations � (34) (346)

Proceeds from disposal of treasury stock 4,130 50 509


Cash dividends paid (11,967) (28,118) (286,246)

Net cash provided by (used in) financing activities (10,746) (39,606) (403,196)

Effect of exchange rate change on cash and cash equivalents (156) (3,801) (38,694)

Net increase (decrease) in cash and cash equivalents 27,012 (26,677) (271,576)

Cash and cash equivalents at beginning of period 181,234 208,247 2,119,993

Cash and cash equivalents at end of period 208,247 181,569 1,848,406

$=98.23yen

(March 31,09)

Proceeds from sales of property and ownership of land and

building of the Shanghai Garden Plaza

Thousands of


12

Financial Summaries of Subsidaries

Construction business

$=98.23yen

(March 31,09)Net Sales Gross Profit

SG&A

Expenses

2008 Millions of yen 13,228 294 76

2009 Millions of yen 3,891 11 184

2009 Thousands of US dollar 39,611 111 1,873

2008 Millions of yen 2,281 178 76

2009 Millions of yen 3,532 220 83

2009 Thousands of US dollar 35,956 2,239 844

Real estate business

$=98.23yen


SG&A

Expenses

2008 Millions of yen 114,366 24,758 12,789

2009 Millions of yen 432,093 16,296 9,293

2009 Thousands of US dollar 4,398,788 165,896 94,604

2008 Millions of yen 6,766 6,766 6,226

2009 Millions of yen 7,107 7,107 6,820

2009 Thousands of US dollar 72,350 72,350 69,428

2008 Millions of yen 2,303 870 246

2009 Millions of yen 0 0 0

2009 Thousands of US dollar 0 0 0

Other business

$=98.23yen


SG&A

Expenses

2008 Millions of yen 13,694 183 126

2009 Millions of yen � � �

2009 Thousands of US dollar � � �

2008 Millions of yen 1,547 1,006 200

2009 Millions of yen 1,847 1,210 173


2008 Millions of yen 3,253 (367) 1,279

2009 Millions of yen 4,519 99 999


2008 Millions of yen 10,692 1,081 1,710

2009 Millions of yen 14,233 2,039 2,016


2008 Millions of yen 3,543 113 182

2009 Millions of yen 3,769 190 453





2008 Millions of yen 1 (4) 12









2008 Millions of yen 2,430 922 966

2009 Millions of yen 2,356 1,017 824


2008 Millions of yen 2,034 747 15

2009 Millions of yen 1,857 621 10


Care Partner Co., Ltd.

Gaspal Co., Ltd.

Daito Corporate Service Co., Ltd.

House Leave Co., Ltd.

Ju-See Publishing Co., Ltd.

Shanghai Daito Trust Construction Co., Ltd.

Daito Asia Development (Malaysia) Sdn. Bhd.

DTC�REINSURANCE LIMITED

Daito Asia Development PTE. LTD.

Daito Asia Investment PTE. LTD.

Daito Building Management Co., Ltd.

Daito Construction Co., Ltd.

Daito Steel Co., Ltd.

Daito Finance Co., Ltd.

Daito Kyosaikai Co., Ltd.

Housecom Co., Ltd.

13

Operating

Income

Net Income Total Assets Net Assets Business Activities

217 156 3,823 3,025

(173) (326) 3,086 2,699

(1,761) (3,318) 31,416 27,476

102 65 652 (129)

137 80 876 (48)

1,394 814 8,917 (488)

Operating

Income


11,969 7,190 86,663 10,502

7,002 4,461 115,509 25,442

71,281 45,413 1,175,903 259,004

539 358 3,748 1,541

287 166 3,710 1,708

2,921 1,689 37,768 17,387

623 5,990 18,386 14,034

0 169 � �

0 1,720 � �

Operating

Income


56 46 10,058 10,058

� � � �

� � � �

805 480 64,284 3,303

1,037 614 74,468 3,918

10,556 6,250 758,098 39,885

(1,647) (950) 1,291 (663)

(899) (900) 1,417 (1,564)

(9,151) (9,162) 14,425 (15,921)

(629) (558) 3,288 (2,439)

22 1,074 3,760 (1,365)

223 10,933 38,277 (13,895)

(68) (81) 938 (257)

(263) 116 1,247 (141)

(2,677) 1,180 12,694 (1,435)

12 14 96 68

9 11 311 240

91 111 3,166 2,443

(16) (10) 51 39

65 37 251 77

661 376 2,555 783

(3) 38 9,771 6,738

(1) 6,841 12,321 12,295

(10) 69,642 125,430 125,165

146 960 15,298 15,276

77 265 12,456 12,447

783 2,697 126,804 126,712

(44) 514 9,404 (661)

192 (259) 7,498 (703)

1,954 (2,636) 76,331 (7,156)

732 822 2,885 1,762

611 658 2,473 1,349

6,220 6,698 25,175 13,733

Reinsurance company for fire insurance

Financing to overseas subsidiaries

Loans to overseas subsidiaries

Printing of documents, administrative support, etc.

Operation of tenant guarantor services for rental housing

Operation of day service centers

Sales of fuel (LP gas)

Operation of e-Heya Net website, production of listing

magazines

Overseas hotel operations

Management of rental property

Design and construction of rental property

Supply of construction parts and materials, etc.

Financing operations (construction financing loans)

Rent guarantees to property owners

�Merged with Daito Building Management Co., Ltd.

on April 1, 2008 �

Rental housing agency

Operation of serviced apartments in Shanghai

�Closed in September, 2008�

14

lease management trust system - 大東建託株式会社€¦ · system, through which we assume...

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