Our Corporate Governance Philosophy
6. Issues to be Addressed by the Company (1) Acquisition of individual clients and the
promotion of long-term occupancy
With respect to the tenants in the Company’s properties under management, corporate clients constitute a rising trend while individual clients constitute a declining trend.
The Company’s policy is to continue to enhance strong corporate sales, however, taking into consideration the fact that corporate clients are easily impacted by economic cycles, from the perspective of assuring stable sales and earnings, the Company will also strengthen its efforts to take in individual clients and promote long-term occupancy through measures such as implementing advertising and sales campaigns for individual clients, expanding its sales network through new store openings, and providing a variety of services for tenants.
(2) Improving earnings power and developing new businesses
For the Group to grow sustainably, improving its earnings power in the Leasing Business and developing new business domains will be necessary. Although the
Company has already made efforts to increase its earnings power by enhancing tenant services and implementing measures to increase the value of properties, in addition to establishing a rental housing management company in South Korea and operating a “leased roof solar power generation business” through a special purpose company, the Company will continue to work on developing new products and services, as well as its revenue base.
Leopalace21 Corporation / Annual Report 2014
Millions of yen Thousands of U.S. dollars (Note 1)
2014 2013 2014
ASSETS Current assets:
Cash and cash equivalents (Notes 2-(2), 4, 5-(2)) Trade receivables (Note 5-(2))
Accounts receivable for completed projects (Note 5-(2)) Operating loans (Note 5-(2))
Securities (Notes 2-(4), 5-(2), 6)
Payment for construction in progress (Note 2-(14)) Raw materials and supplies
Prepaid expenses
Deferred tax assets (Notes 2-(16), 10) Other accounts receivable
Other
Allowance for doubtful accounts (Notes 2-(9), 5-(2)) Total current assets
Property, plant and equipment: (Notes 2-(5), 2-(20)) Buildings and structures (Notes 8, 11-(2), 17) Accumulated depreciation
Net
Machinery, equipment, and vehicles Accumulated depreciation
Net
Land (Notes 11-(2), 8, 17) Leased assets (Note 2-(17)) Accumulated depreciation Net
Construction in progress Other (Note 20-(1)-(a)) Accumulated depreciation Net
Total property, plant and equipment
Investments and other assets:
Intangible assets (Note 2-(7))
Investment securities (Notes 2-(4), 5-(2), 6, 11-(2)) Long-term loans (Note 5-(2))
Bad debt (Notes 5-(2), 9)
Long-term prepaid expenses (Note 2-(8)) Deferred tax assets (Notes 2-(16), 10) Bond issuance cost
Other (Note 11-(2))
Allowance for doubtful accounts (Notes 2-(9), 5-(2)) Total investments and other assets
Total assets (Note 22)
The accompanying notes are an integral part of these statements.
56,682 4,360 2,232 1,880 505 340 457 12,772 4,274 1,017 6,723 (346) 90,896
111,350 (56,609) 54,741 3,274 (2,652)
622 80,781 6,833 (5,034) 1,799 176 10,074 (9,195)
879 138,998
6,613 7,177 571 1,900 8,128 6,586 48 3,339 (2,606) 31,756 261,650
726,459 53,344 16,044 13,892 3,404 4,868 4,513 64,901 40,300 15,397 53,244 (2,154) 994,212
1,176,400 (621,854) 554,546 71,190 (32,803) 38,387 794,798 111,451 (61,239) 50,212 36,073 105,366 (97,617) 7,749 1,481,765
64,141 70,519 5,468 13,799 36,143 118,074 334 29,510 (20,928) 317,060 2,793,037 74,767
5,490 1,651 1,430 350 501 464 6,680 4,148 1,585 5,480 (222) 102,324
121,075 (64,001) 57,074 7,327 (3,376) 3,951 81,801 11,471 (6,303) 5,168 3,713 10,843 (10,047) 796 152,503
6,601 7,258 563 1,420 3,720 12,152 34 3,038 (2,154) 32,632 287,459
Leopalace21 Corporation and consolidated subsidiaries March 31, 2014 and 2013
Millions of yen Thousands of U.S. dollars (Note 1)
2014 2013 2014
LIABILITIES AND NET ASSETS Current liabilities:
Accounts payable (Note 5-(2))
Accounts payable for completed projects (Note 5-(2)) Short-term borrowings (Notes 5-(2), 5-(3), 11, 12) Current portion of long-term debt (Notes 5-(2), 5-(3), 11) Bonds due within one year (Notes 5-(2), 5-(3))
Lease obligations (Notes 5-(2), 5-(3), 11-(1)) Accounts payable—other
Accrued expenses Accrued income taxes
Advances received (Note 2-(15))
Customer advances for projects in progress
Reserve for warranty obligations on completed projects (Note 2-(12)) Reserve for fulfillment of guarantees (Note 2-(13))
Asset retirement obligations (Note 18) Other
Total current liabilities Non-current liabilities:
Bonds (Notes 5-(2), 5-(3))
Long-term debt (Notes 5-(2), 5-(3), 11) Lease obligations (Notes 5-(2), 5-(3), 11-(1)) Long-term advances received (Note 2-(15)) Lease/guarantee deposits received Deferred tax liabilities
Retirement benefit reserves (Notes 2-(10), 13) Reserve for apartment vacancy loss (Note 2-(11)) Liability for retirement benefit
Asset retirement obligations (Note 18) Other
Total non-current liabilities Total liabilities
Net assets
Shareholders’ equity:
Common stock: (Note 19)
Authorized: 500,000,000 shares in 2014 and 250,000,000 shares in 2013 Issued: 267,443,915 shares in 2014 and 217,443,915 shares in 2013 Capital surplus
Retained earnings
Treasury stock: 4,569,210 shares in 2014 and 5,900,320 shares in 2013 (Note 19) Total shareholders’ equity
Accumulated other comprehensive income:
Net unrealized gains on “other securities” (Note 2-(4)) Foreign currency translation adjustments (Note 2-(19)) Remeasurements of defined benefit plans (Notes 3, 13) Total accumulated other comprehensive income Share subscription rights
Minority interests Total net assets
Total liabilities and net assets
2,670 14,307 11,875 2,940 560 1,098 13,252 13 394 49,037 3,807 72 457 37 4,626 105,145
1,480 30,020 1,054 32,358 8,984
— 8,634 13,951
—
49 1,824 98,354 203,499
62,867 39,425 (31,019) (4,727) 66,546
648 (9,061)
— (8,413)
18
— 58,151 261,650
26,097 117,846 — 28,566 5,441 15,308 155,472 20 9,706 437,732 50,934 2,253 5,662 414 43,896 899,347 8,939 263,090 40,365 268,447 82,513 1,320 — 90,876 97,653 424 21,207 874,834 1,774,181
731,465 500,403 (153,409) (35,566) 1,042,893 4,153 (20,567) (7,925) (24,339)
175 127 1,018,856 2,793,037 2,686
12,129
— 2,940 560 1,576 16,001 2 999 45,051 5,242 232 583 43 4,517 92,561 920 27,077 4,154 27,629 8,492 136
— 9,353 10,050 44 2,183 90,038 182,599
75,282 51,501 (15,789) (3,660) 107,334 427 (2,116) (816) (2,505)
18 13 104,860 287,459
Leopalace21 Corporation / Annual Report 2014
Millions of yen Thousands of U.S. dollars (Note 1)
2014 2013 2014
Net sales (Note 22) Cost of sales Gross profit
Selling, general and administrative expenses Operating profit (Note 22)
Other income (expenses):
Interest and dividend income
Equity in gains of affiliated companies Equity in losses of affiliated companies
Foreign exchange gains (losses), net (Note 2-(18)) Interest expenses
Commission fee
Gain on sale of property, plant and equipment (Note 14) Gain on sale of investment securities (Note 6)
Gain from cancellation of contracted work Gain on liquidation of subsidiaries
Reversal of allowance for disaster losses
Reversal of allowance for switch to terrestrial digital broadcasts Loss on sale of property, plant and equipment (Note 15) Loss on disposal of property, plant and equipment (Note 16) Impairment loss (Notes 2-(6), 8)
Consumption tax refund Other—net
Income before income taxes Income taxes (Note 2-(16)) Current
Refund Deferred
Income before minority interests Minority interests
Net income (Note 23)
The accompanying notes are an integral part of these statements.
454,222 396,509 57,713 50,299 7,414
94
—
0 5,592 (1,423) (549)
—
6 38 70 3 65
— (85) (2,173)
109 (190)
8,971
313 (7)
(4,670) (4,364) 13,335
— 13,335
4,577,241 3,901,189 676,052 543,199 132,853
1,073 26
—
97 (15,300)
(5,352)
3
—
178
—
—
— (12) (132) (7,568)
—
(1,109) 104,757 7,464 (306) (50,346) (43,188) 147,945 (32) 147,977 471,090
401,511 69,579 55,906 13,673
110 3
—
10 (1,575)
(551)
0
—
18
—
—
— (1) (14) (779)
— (112) 10,782 768 (31) (5,182) (4,445) 15,227 (3) 15,230
Leopalace21 Corporation and consolidated subsidiaries For the years ended March 31, 2014 and 2013
Millions of yen Thousands of U.S. dollars (Note 1)
2014 2013 2014
Income before minority interests Other comprehensive income
Net unrealized gains on “other securities”
Foreign currency translation adjustments (Note 2-(19)) Share of other comprehensive income in affiliates Total
Comprehensive income
Comprehensive income attributable to shareholders of the parent entity Comprehensive income attributable to minority interests
The accompanying notes are an integral part of these statements.
13,335
399 (2,093)
0 (1,694)
11,641 11,641
—
147,945 (2,144) 67,464 11 65,331 213,276 213,310 (34) 15,227
(221) 6,943 1 6,723 21,950 21,954 (4)
Leopalace21 Corporation and consolidated subsidiaries For the years ended March 31, 2014 and 2013
Leopalace21 Corporation / Annual Report 2014
Millions of yen
Shareholders’ equity Accumulated other comprehensive income Share subscription
rights
Minority interests
Total net assets Common
stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’
equity
Net unrealized gains on “other securities”
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive
income Balance as of April 1, 2012
Net income Issuance of new shares Sales of treasury stock Decrease from decrease in affiliated companies Increase from decrease in affiliated companies Net change of items other than shareholders’ equity Total change during period Balance as of March 31, 2013 Net income
Issuance of new shares Acquisition of treasury stock Sales of treasury stock Net change of items other than shareholders’ equity Total change during period Balance as of March 31, 2014
Thousands of U.S. dollars (Note 1)
Shareholders’ equity Accumulated other comprehensive income Share subscription
rights
Minority interests
Total net assets Common
stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’
equity
Net unrealized gains on “other securities”
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive
income Balance as of March 31, 2013
Net income Issuance of new shares Acquisition of treasury stock Sales of treasury stock Net change of items other than shareholders’ equity Total change during period Balance as of March 31, 2014
The accompanying notes are an integral part of these statements.
56,563 6,304
6,304 62,867 12,415
12,415 75,282
610,837 120,628
120,628 731,465
33,884 6,304 (153) (610)
5,541 39,425 12,415 (339)
12,076 51,501
383,061 120,628 (3,286)
117,342 500,403
(44,964) 13,335
610
13,945 (31,019) 15,230
15,230 (15,789)
(301,386) 147,977
147,977 (153,409)
(4,959)
232
232 (4,727)
(0) 1,067
1,067 (3,660)
(45,927)
(0) 10,361
10,361 (35,566)
40,524 13,335 12,608 79 (610) 610
26,022 66,546 15,230 24,830 (0) 728
40,788 107,334
646,585 147,977 241,256 (0) 7,075
396,308 1,042,893
249
399 399 648
(221) (221) 427
6,297
(2,144) (2,144) 4,153
(6,969)
(2,092) (2,092) (9,061)
6,945 6,945 (2,116)
(88,044)
67,477 67,477 (20,567)
—
—
—
—
(816) (816) (816)
—
(7,925) (7,925) (7,925)
(6,720)
(1,693) (1,693) (8,413)
5,908 5,908 (2,505)
(81,747)
57,408 57,408 (24,339)
27
(9) (9) 18
—
— 18
175
—
— 175
—
—
—
—
13 13 13
—
127 127 127
33,831 13,335 12,608 79 (610) 610 (1,702) 24,320 58,151 15,230 24,830 (0) 728
5,921 46,709 104,860
565,013 147,977 241,256 (0) 7,075
57,535 453,843 1,018,856 Leopalace21 Corporation and consolidated subsidiaries
For the years ended March 31, 2014 and 2013
Millions of yen Thousands of U.S. dollars (Note 1)
2014 2013 2014
Cash flows from operating activities:
Income before income taxes Depreciation
Increase (decrease) in allowance for doubtful accounts Increase (decrease) in reserve for apartment vacancy loss Increase (decrease) in allowance for disaster losses
Increase (decrease) in allowance for switch to terrestrial digital broadcasts Interest and dividend income
Interest expense
Foreign exchange loss (gain)
Equity in losses (earnings) of affiliated companies Loss (gain) on sale of property, plant and equipment Loss on disposal of property, plant and equipment Impairment loss
Reversal of allowance for disaster losses
Reversal of allowance for switch to terrestrial digital broadcasts Loss (gain) on sale of investment securities
Decrease (increase) in accounts receivable Decrease (increase) in real estate for sale
Decrease (increase) in payment for construction in progress Decrease (increase) in long-term prepaid expenses
Increase (decrease) in accounts payable
Increase (decrease) in customer advances for projects in progress Increase (decrease) in advances received
Increase (decrease) in guarantee deposits received Increase (decrease) in accrued consumption taxes Other
Subtotal
Interest and dividends received Interest paid
Income taxes paid
Net cash used in operating activities
The accompanying notes are an integral part of these statements.
8,971 5,684 (97) (5,256) (20) (58) (94) 1,423 (5,592)
0
85 2,173 (3) (65) (6) (102)
14 280 16,300 (503) 850 (19,587) (1,033)
75 4,302 7,741 80 (1,297)
(455) 6,069
104,757 58,235 (2,615) (44,674)
—
— (1,073) 15,300 (97) (26)
9 132 7,568
—
—
— (1,878)
— (1,565) 97,818 (24,418) 13,083 (84,708) (5,183) (5,045) 44,969 170,589 954 (15,399) (4,724) 151,420 10,782
5,994 (269) (4,598)
—
— (110) 1,575 (10) (3)
1 14 779
—
—
— (193)
— (161) 10,067 (2,513) 1,346 (8,718) (533) (519) 4,626 17,557 98 (1,585)
(486) 15,584
Leopalace21 Corporation and consolidated subsidiaries For the years ended March 31, 2014 and 2013
Leopalace21 Corporation / Annual Report 2014
Millions of yen Thousands of U.S. dollars (Note 1)
2014 2013 2014
Cash flows from investing activities:
Payment for purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Payment for purchase of intangible assets
Payment for purchase of investment securities Proceeds from sale of investment securities Payment for loans
Proceeds from collection of loans
Payments for purchase of time deposits Proceeds from withdrawal of time deposits Other
Net cash provided by (used in) investing activities Cash flows from financing activities:
Proceeds from short-term borrowings Repayment of short-term borrowings Proceeds from long-term debt Repayment of long-term debt
Repayment of finance lease obligations Payment for redemption of bonds
Proceeds from issuance of common stock Proceeds from sales of treasury stock Payment for purchases of treasury stock
Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (Note 4)
The accompanying notes are an integral part of these statements.
(707)
— (184)
— 85 (21)
39 (300)
600 482 (6)
2,609 (29,638) 32,268 (6,801) (1,359) (560) 12,552 78
— 9,149 292 15,504 40,878 56,382
(53,252)
32 (9,365)
(2,101) 195 (148) 353 (6,801) 3,887 (131) (67,331)
— (115,382)
— (28,593) (11,760) (5,441) 240,072 7,076 (0) 85,972 2,581 172,642 547,822 720,464 (5,481)
3 (964)
(216)
20 (15)
36 (700)
400 (13) (6,930)
— (11,875)
— (2,943) (1,210) (560) 24,708 728 (0) 8,848 266 17,768 56,382 74,150
1. Basis of Presenting Consolidated Financial