Annual Securities Report - NTT都市開発€¦ · Overview of operating results ... Issues facing...
Transcript of Annual Securities Report - NTT都市開発€¦ · Overview of operating results ... Issues facing...
English translation based on Japanese original
Annual Securities Report
(Report under Article 24, Paragraph 1 of the Financial Instruments and Exchange Act)
Fiscal year (the 28th term) From April 1, 2012 to March 31, 2013
NTT URBAN DEVELOPMENT CORPORATION
4-14-1, Sotokanda, Chiyoda-ku, Tokyo
(E04030)
Contents Page
Cover Chapter 1. Corporate Information ................................................................................................................................................ 1
Section 1. Overv iew of the Company’s Situation ................................................................................................................. 1 1. Changes in major financial data ...................................................................................................................................... 1 2. Corporate history ............................................................................................................................................................... 3 3. Businesses ........................................................................................................................................................................... 4 4. Situations of affiliates ....................................................................................................................................................... 6 5. Employees ........................................................................................................................................................................... 8
Section 2. Business Situation .................................................................................................................................................... 9 1. Overview of operating results .......................................................................................................................................... 9 2. Operating revenue ............................................................................................................................................................ 11 3. Issues facing the Group..................................................................................................................................................... 14 4. Operating risks ................................................................................................................................................................. 15 5. Sign ificant management contracts ................................................................................................................................ 18 6. Research and development activities ............................................................................................................................ 18 7. Analysis of financial position, operating results and cash flows ............................................................................. 18
Section 3. Facilities ................................................................................................................................................................... 22 1. Overview of capital investment ..................................................................................................................................... 22 2. Major facilities ................................................................................................................................................................. 24 3. Equ ipment introduction and retirement plans ............................................................................................................. 29
Section 4. Situation of Submitt ing Company ....................................................................................................................... 30 1. Shares of the Company ................................................................................................................................................... 30
(1) Total number o f shares and other informat ion ..................................................................................................... 30 (2) Stock acquisition rights ............................................................................................................................................ 30 (3) Exercise of bonds with subscription rights to shares with amendments to exercise prices .......................... 30 (4) Features of rights plan ............................................................................................................................................... 30 (5) Changes in the number of shares outstanding and capital .................................................................................. 30 (6) Ownership of shares by owner ................................................................................................................................ 30 (7) Major shareholders .................................................................................................................................................... 31 (8) Vot ing rights ............................................................................................................................................................... 32 (9) Stock option system .................................................................................................................................................. 32
2. Acquisition of t reasury shares ....................................................................................................................................... 32 3. Dividend policy ................................................................................................................................................................ 33 4. Trends in stock prices ...................................................................................................................................................... 33 5. Officers .............................................................................................................................................................................. 34 6. Corporate governance ..................................................................................................................................................... 40
(1) Corporate governance ............................................................................................................................................... 40 (2) Audit fees .................................................................................................................................................................... 51
Section 5. Financial Status ...................................................................................................................................................... 52 1. Consolidated financial statements, etc. ........................................................................................................................ 53
(1) Consolidated financial statements .......................................................................................................................... 53 (2) Other ............................................................................................................................................................................ 87
2. Non-consolidated financial statements, etc. ................................................................................................................ 88 (1) Non-consolidated financial statements .................................................................................................................. 88 (2) Details of major items in assets and liabilities .................................................................................................... 103
Section 6. Outline of Stock-Related Administration of Submitting Company ............................................................. 106 Section 7. Reference Information on Submitting Company ............................................................................................ 107
1. Informat ion on the parent company of the submitting company ........................................................................... 107 2. Other reference informat ion ......................................................................................................................................... 107
Chapter 2. Information on the Guarantee Company of the Submitting Company ........................................................... 108 Auditor’s Report Internal Control Report
[Cover]
Document submitted Annual Securities Report
Applicable law clause Article 24, Paragraph 1 of the Financial Instruments and Exchange Act
Destination Director General of the Kanto Finance Bureau
Date of submission June 19, 2013
Fiscal year The 28th term (from April 1, 2012 to March 31, 2013)
Corporate name NTT URBAN DEVELOPMENT CORPORATION
Name and title of representative Sadao Maki, President and Chief Executive Officer
Address of home office 4-14-1, Sotokanda, Chiyoda-ku, Tokyo
Telephone number +81-3-6811-6300 (key number)
Contact person Satoshi Shinoda, Executive Vice President, Corporate Strategy and Planning, Accounting and Finance
Nearest contact point 4-14-1, Sotokanda, Chiyoda-ku, Tokyo
Telephone number +81-3-6811-6424
Contact person Satoshi Shinoda, Executive Vice President, Corporate Strategy and Planning, Accounting and Finance
Place for public inspection Tokyo Stock Exchange, Inc.
(2-1, Kabutocho, Nihonbashi, Chuo-ku, Tokyo)
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Chapter 1. Corporate Information Section 1. Overview of the Company’s Situation 1. Changes in major financial data (i) Consolidated financial data
Fiscal term 24th term 25th term 26th term 27th term 28th term Closing month and year March 2009 March 2010 March 2011 March 2012 March 2013
Operating revenue (million yen) 144,277 149,224 145,693 136,842 163,168 Ordinary income (million yen) 19,504 10,215 18,554 19,229 22,016 Net income (million yen) 15,989 6,116 9,307 15,586 12,073 Comprehensive income (million yen) – – 10,658 18,209 16,487 Net assets (million yen) 183,593 185,537 190,783 203,727 213,835 Total assets (million yen) 936,650 916,725 910,492 928,537 941,050 Net assets per share (yen) 45,014.04 45,646.72 47,257.78 50,441.30 53,543.11 Net income per share (yen) 4,858.34 1,858.48 2,827.98 4,735.67 3,668.47 Net income per share (fully diluted) (yen) – – – – – Ratio of shareholders’ equity to assets (%) 15.8 16.4 17.1 17.9 18.7 Return on equity (%) 11.2 4.1 6.1 9.7 7.1 Price-earnings ratio (times) 16.2 42.5 24.6 14.2 30.3 Net cash provided by (used in) operating activities (million yen) (12,091) 35,168 40,417 3,704 48,089 Net cash provided by (used in) investing activities (million yen) (57,397) 6,695 (28,257) (23,033) (39,885) Net cash provided by (used in) financing activities (million yen) 63,079 (30,028) (14,641) 12,650 (6,660) Cash and cash equivalents at end of year (million yen) 8,691 20,508 18,015 10,960 12,809 Number of employees [Average number of temporary employees in addition to the above]
619 [225]
673 [256]
723 [256]
734 [267]
748 [311]
(Note 1) Operating revenue does not include consumption taxes.
(Note 2) Since there was no potential dilution, net income per share (fully diluted) is omitted.
(Note 3) Two consolidated subsidiaries were established, and a consolidated subsidiary was excluded from the scope of
consolidated subsidiaries because of the refund of silent partnership contributions in the 24th term.
A consolidated subsidiary was established, a company was made an equity-method affiliate, a consolidated subsidiary
was liquidated, and a consolidated subsidiary was excluded from the scope of consolidated subsidiaries because of the
refund of silent partnership contributions in the 25th term.
A consolidated subsidiary was added, and a consolidated subsidiary was excluded due to liquidation in the 26th term.
A consolidated subsidiary and an equity-method affiliate were established in the 27th term, and two companies were
liquidated and excluded from the scope of consolidated subsidiaries and equity-method affiliates, respectively.
A company was excluded from the scope of equity-method affiliates in the 28th term, following the sale of all of its
shares.
(Note 4) The number of employees is the number of people employed by the consolidated companies (excluding workers on loan
transferred out of the consolidated companies and including workers on loan transferred to the consolidated companies).
The figure in parentheses is the annual average number of temporary employees, which is not included in the number of
employees.
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(ii) Financial data of the submitting company Fiscal term 24th term 25th term 26th term 27th term 28th term
Closing month and year March 2009 March 2010 March 2011 March 2012 March 2013 Operating revenue (million yen) 122,000 128,473 125,639 120,014 140,879 Ordinary income (million yen) 16,562 5,257 15,187 15,595 15,764 Net income (million yen) 14,460 3,081 7,443 8,579 7,895 Capital stock (million yen) 48,760 48,760 48,760 48,760 48,760 Number of shares outstanding (shares) 3,291,200 3,291,200 3,291,200 3,291,200 3,291,200 Net assets (million yen) 143,951 143,020 146,614 151,101 155,110 Total assets (million yen) 725,604 709,972 708,634 727,865 733,602 Net assets per share (yen) 43,738.19 43,455.29 44,547.53 45,910.72 47,128.97 Dividends per share [Of which, interim dividends per share] (yen)
1,200 [600]
1,200 [600]
1,200 [600]
1,400 [600]
1,600 [700]
Net income per share (yen) 4,393.67 936.25 2,261.69 2,606.76 2,398.90 Net income per share (fully diluted) (yen) – – – – – Ratio of shareholders’ equity to assets (%) 19.8 20.1 20.7 20.8 21.1 Return on equity (%) 10.4 2.1 5.1 5.8 5.2 Price-earnings ratio (times) 17.9 84.4 30.8 25.9 46.4 Dividend payout ratio (%) 27.3 128.2 53.1 53.7 66.7 Number of employees [Average number of temporary employees in addition to the above]
400 [13]
434 [15]
450 [18]
446 [19]
438 [21]
(Note 1) Operating revenue does not include consumption taxes.
(Note 2) Since there was no potential dilution, net income per share (fully diluted) is omitted.
(Note 3) The number of employees is the number of people employed by the Company (excluding workers on loan transferred
from the Company and including workers on loan transferred to the Company). The figure in parentheses is the annual
average number of temporary employees, which is not included in the number of employees.
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2. Corporate history The Company was established by Nippon Telegraph and Telephone Corporation (“NTT”) in January 1986 as a real estate company
that is intended to use the unused land owned by NTT. When the Company was founded, it received land and buildings that NTT
owned as investments in kind (Note). The Company built new office buildings, commercial facilities, and residential facilities on the
land and leased the properties. NTT established real estate companies across the country for the same purpose and by the same
method. The Company has merged with the real estate companies and expanded its assets. The asset size of the Company reached the
current level when it merged with real estate companies in five cities (Sapporo, Nagoya, Osaka, Hiroshima, and Fukuoka) in April
1999.
(Note) NTT established the Company in the form of subsequent incorporation (so-called irregular investment in kind): NTT
established the Company through money contribution and then handed over properties that it had planned to contribute at
book values. When founded, the Company took over land and buildings that NTT owned at book values. Month and year Event
January 1986 NTT Urban Development Co. established as a wholly owned subsidiary of NTT for effective use of the properties owned by NTT (capital: 3,043 million yen).
June 1987 Urbannet Kojimachi Building completed as the first property for rent. September 1988 DHC Tokyo Co., Ltd. established for district heating and cooling services for Granpark Tower.
October 1988 Merger with NTT Building Co. June 1990 Urbannet Otemachi Building completed. June 1991 Otemachi First Square Inc. established for the management of Otemachi First Square.
February 1992 Stage I of Otemachi First Square completed. April 1993 Merger with NTT Actif Co. and NTT Crais Co. June 1993 NTT Makuhari Building completed.
February 1995 Merger with NTT Estate Co. February 1995 Acquires the shares of Knox Twenty-One Co., Ltd. held by NTT Estate Co. through the merger with NTT Estate
Co. October 1995 Tokyo Opera City Building Co., Ltd. established for the management of Tokyo Opera City Building.
July 1996 Tokyo Opera City Building (Office Building) completed. August 1996 Granpark Tower completed.
May 1997 Stage II of Otemachi First Square completed. April 1999 Merger with NTT Tokai Real Estate Co., NTT Kansai Building Co., NTT Cred Co., NTT Kyushu Real Estate
Co., and NTT Hokkaido Estate Co. June 2000 NTT Urban Development BuilService Co. established for building and building equipment design, construction,
supervision of construction, and management in relation to the Company’s properties. November 2001 Established UDX Tokutei Mokuteki Kaisha with Kajima Corporation as a vehicle for bidding on Akihabara lots
1 and 3 February 2002 Bid on and acquired Akihabara lots 1 and 3 in cooperation with Daibiru Corporation and Kajima Corporation
August 2003 The construction of Akihabara UDX begins (Akihabara lot 3). October 2004 Urbannet Sapporo Building completed.
November 2004 Company shares listed on the First Section of the Tokyo Stock Exchange. September 2005 Urbannet Nagoya Building completed.
January 2006 Akihabara UDX completed. December 2006 Established NTT Urban Development West BS Co.
March 2008 UDX Tokutei Mokuteki Kaisha, which develops and owns Akihabara UDX, becomes a consolidated subsidiary. April 2009 JA Building, Keidanren Kaikan completed.
October 2009 UD EUROPE LIMITED established for the investment and management of real estate in the United Kingdom. May 2010 Acquired the shares of Premier REIT Advisors Co., Ltd. (current consolidated subsidiary)
August 2011 Urbannet Tenjin Building completed. September 2011 UD AUSTRALIA PTY LIMITED established for investment and management of real estate in Australia.
July 2012 Urbannet Kanda Building completed. October 2012 Otemachi Financial City North Tower completed.
March 2013 Grand Front Osaka completed.
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3. Businesses The NTT Urban Development Group (NTT Urban Development and its affiliates) consists of 11 consolidated subsidiaries and five
equity-method affiliates. The main businesses of the Group are the Leasing Business and the Residential Property Sales Business.
The Group also engages in other businesses, including the management of office buildings, which are categorized as the Other
Business.
NTT Urban Development is a company that engages in the real estate business nationwide in a corporate group whose parent
company is NTT which primarily engages in regional, long-distance, and international communications, mobile communications, and
data communications.
The following is outlines of each business segment of the Group and the positions of NTT Urban Development and its major
affiliates in each segment: (1) Leasing Business
The Group leases properties, including office buildings, commercial facilities, rental housing and others, that it has developed and
owns. Main business fields are as follows:
a. Office buildings
Leases office buildings that it owns in metropolitan areas including Tokyo, Nagoya, Osaka, Hiroshima, Fukuoka, and Sapporo
b. Commercial facilities
Leases commercial facilities that it owns in metropolitan areas including Tokyo, Nagoya, Osaka, Hiroshima, and Fukuoka
c. Rental housing
Leases rental condominiums, company housing and other rental housing that it owns in metropolitan areas including Tokyo,
Nagoya, Osaka, Fukuoka, and Sapporo UDX Tokutei Mokuteki Kaisha leases parts of Akihabara UDX Building, which it has developed and owns. UD EUROPE LIMITED invests in and manages real estate in the United Kingdom. (2) Residential Property Sales Business
The Group sells residential properties, especially condominiums.
In the sale of condominiums, the Company sells primarily condominiums under the brand name of WELLITH. The Company also
sells building lots and other residential properties in accordance with the locational conditions of the land lots that it acquires. UD AUSTRALIA PTY LIMITED invests in and manages real estate in Australia. (3) Other
In relation to the Leasing Business, the Group manages design of building and other, construction and supervision of construction,
office building maintenance and provides air-conditioning services and operates restaurant facilities as incidental facilities of office
buildings.
NTT Urban Development Builservice Co. remodels all rental buildings at the request of tenants in the Tokyo metropolitan area. It
also carries out property management operations including the management and operation of buildings.
NTT Urban Development West BS Co. remodels rental buildings at the request of tenants in western Japan. It also engages in
property management operations including the management and operation of buildings.
NTT Urban Development Hokkaido BS Co. remodels rental buildings, manages and operates buildings, and manages parking lots
in Hokkaido.
Otemachi First Square Inc. manages the Otemachi First Square Building and its land that the Company owns.
Motomachi Parking Access Co., Ltd. maintains underground passages in Hiroshima’s Motomachi area.
Premier REIT Advisors Co., Ltd. engages in the investment management business under the Financial Instruments and Exchange
Act.
DAY・NITE Co., Ltd. and Knox Twenty-One Co., Ltd. manage food and beverage facilities.
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[Group Organization Chart] The chart below is an organization chart of the Group showing the businesses of Group companies stated above.
(Note 1) DAY・NITE Co., Ltd. was renamed from DN Food Co., Ltd. on February 1, 2013.
(Note 2) UDX Tokutei Mokuteki Kaisha is a specified subsidiary.
(Note 3) MOUNT STREET ADVISERS LIMITED, which had been an equity-method affiliate, ceased to be an equity-method
affiliate following the sale of all shares in the affiliate.
NTT Urban Development
◎ Otemachi First Square Inc. Management of Otemachi First Square
◎ Motomachi Parking Access Co., Ltd. Maintenance of underground passages in Hiroshima’s Motomachi area
Tokyo Opera City Building Co., Ltd. Management of Tokyo Opera City Building
◎ Knox Twenty-One Co., Ltd. Operation of NTT Group’s convention facilities
◎ DAY・NITE Co., Ltd. Operation of restaurants, halls and conferences, etc.
◎ UDX TokuteiMokuteki Kaisha Development and ownership of Akihabara UDX
DHC Tokyo Co., Ltd. District heating and cooling services for Granpark Tower
Tokyo Opera City District Heating & Cooling Co., Ltd. District heating and cooling services for Tokyo Opera City and other buildings
NTT Urban Development Group
◎ NTT Urban Development Hokkaido BS Co. Remodeling, property management operations including the management and operation of buildings owned by NTT Urban Development in Hokkaido area and management of parking lots
◎ NTT Urban Development Builservice Co. Design, construction, remodeling, property management operations including the management and operation of buildings owned by NTT Urban Development in the greater Tokyo metropolitan area
◎ NTT Urban Development West BS Co. Design, construction, remodeling, property management operations including the management and operation of buildings owned by NTT Urban Development in western Japan area
◎ UD EUROPE LIMITED Investment in and management of real estate in the UK
◎ UD AUSTRALIA PTY LIMITED Investment in and management of real estate in Australia
335 GRICES ROAD PTY LTD Development and sales of residential land
◎ : Consolidated subsidiaries : Equity-method affiliates
* Other Group companies One equity-method affiliate
◎ Premier REIT Advisors Co., Ltd. Investment management business under the Financial Instruments and Exchange Act
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4. Situation of affiliates
Name Address Capitalization (million yen) Main business
Voting rights ownership percentage
Relations
Parent Company
Nippon Telegraph and Telephone Corporation
Chiyoda, Tokyo 937,950
Basic research and development, the management of the Group
(Owned) 67.3
Transactions relating to the management of the Group and the leasing of properties NTT Urban Development owns Concurrent officers: –
Consolidated Subsidiaries (Owning)
NTT Urban Development Hokkaido BS Co.
Chuo, Sapporo-shi 50 Leasing Business
Other 100.0
Maintenance and management of buildings and condominiums and management of parking lots in Hokkaido area Concurrent officers: 1
Otemachi First Square Inc.
Chiyoda, Tokyo 50 Other 56.5
Management of Otemachi First Square and its land Concurrent officers: 2
NTT Urban Development Builservice Co.
Chiyoda, Tokyo 300 Other 100.0
Design, construction, remodeling, property management operations including the management and operation of buildings owned by NTT Urban Development in the greater Tokyo metropolitan area Concurrent officers: 5
Knox Twenty-One Co., Ltd.
Minato, Tokyo 24 Other 100.0
Operation of NTT Group’s convention facilities Concurrent officers: 4
DAY・NITE Co., Ltd. (Note 2)
Chiyoda, Tokyo 40 Other 100.0
Operation of restaurants, halls and conferences, etc. Concurrent officers: 4
NTT Urban Development West BS Co.
Nishi, Osaka-shi 100 Other 100.0
Design, construction, remodeling, property management operations including the management and operation of buildings owned by NTT Urban Development in Western Japan area Concurrent officers: 3
Motomachi Parking Access Co., Ltd.
Naka, Hiroshima-shi 60 Other 58.3
Maintenance of underground passages in Hiroshima’s Motomachi area Concurrent officers: 3
UDX Tokutei Mokuteki Kaisha (Note 3) Chuo, Tokyo 14,100 Leasing Business 66.0
Development and ownership of Akihabara UDX Concurrent officers: –
UD EUROPE LIMITED London, UK (Sterling pounds)
200 Leasing Business 100.0
Investment in and management of real estate in the UK Concurrent officers: 2
Premier REIT Advisors Co., Ltd.
Minato, Tokyo 300 Other 53.1
Investment management business under the Financial Instruments and Exchange Act Concurrent officers: 4
UD AUSTRALIA PTY LIMITED
Melbourne, Australia
(Australian Dollar)
17,000,000
Residential Property Sales Business
100.0 Investment in and management of real estate in Australia Concurrent officers: 3
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Name Address Capitalization (million yen) Main business
Voting rights ownership percentage
Relations
Equity-Method Affiliates (Owning)
Tokyo Opera City Building Co., Ltd.
Shinjuku, Tokyo 20 Other 23.7
Management of Tokyo Opera City Concurrent officers: 1
DHC Tokyo Co., Ltd. Minato, Tokyo 200 Other 50.0
District heating and cooling services for Granpark Tower Concurrent officers: 3
Tokyo Opera City District Heating & Cooling Co., Ltd.
Shinjuku, Tokyo 980 Other 36.2
District heating and cooling services for Tokyo Opera City Concurrent officers: 1
Harumi Yonchome City Planning Design Co. Chuo, Tokyo 50 Other 36.0
Investigation and planning relating to the development of the Harumi 4-chome area Concurrent officers: 1
335 GRICES ROAD PTY LTD
Melbourne, Australia
(Australian Dollar)
1
Residential Property Sales 50.0
Development and sales of residential land Concurrent officers: 3
(Note 1) In the main business column for the consolidated subsidiaries and equity-method affiliates, the names of business
segments are provided.
(Note 2) DAY・NITE Co., Ltd. was renamed from DN Food Co., Ltd. on February 1, 2013.
(Note 3) UDX Tokutei Mokuteki Kaisha is a specified subsidiary.
(Note 4) MOUNT STREET ADVISERS LIMITED, which had been an equity-method affiliate, ceased to be an equity-method
affiliate following the sale of all shares in the affiliate.
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5. Employees (1) Group employees
As of March 31, 2013 Business segment Number of employees
Leasing 189 ( 15) Residential property sales 73 ( 1)
Total reported segments 262 ( 16) Other 321 (292) Company-wide (common) 165 ( 3)
Total 748 (311)
(Note 1) The number of employees is the number of people employed by the consolidated companies (excluding workers on loan
transferred out of the consolidated companies and including workers on loan transferred to the consolidated companies).
The figure in parentheses is the annual average number of temporary employees, which is not included in the number of
employees.
(Note 2) The employees classified into Company-wide (common) belong to administration departments that cannot be classified into
any specific segment.
(2) Employees of the submitting company
As of March 31, 2013 Number of employees Average age Average service years Average annual salary (yen)
438 (21) 42.8 18.2 8,265,227
Business segment Number of employees
Leasing 189 ( 15) Residential property sales 73 ( 1)
Total reported segments 262 ( 16) Other 11 ( 2) Company-wide (common) 165 ( 3)
Total 438 ( 21)
(Note 1) The number of employees is the number of people employed by the Companies (excluding workers on loan transferred
from the Company and including workers on loan transferred to the Company). The figure in parentheses is the annual
average number of temporary employees, which is not included in the number of employees.
(Note 2) The average age and average annual salary are those of the employees of the submitting company.
The average annual salary includes bonuses and surplus wages.
(Note 3) In calculating the average length of service, the length of service at NTT or any other companies in the NTT Group was
added to the length of service of the employees who have been transferred from these companies. The workers on loan
transferred from other companies (25 workers) were excluded from the calculation.
(Note 4) The employees classified into Company-wide (common) belong to administration departments that cannot be classified into
any specific segment.
(3) Labor union
Almost all employees in the Group who can be union members are members of the NTT labor union. The labor-management
relations are stable.
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Section 2. Business Situation 1. Overview of operating results (1) Operating results
In the fiscal year under review, the Japanese economy showed some signs of recovery, although it remained generally weak. Looking
forward, an economic recovery is expected against the backdrop of an improving environment for exports associated with the
correction of the strong yen, the effect of monetary and fiscal policies and other factors, although there is a risk of downward
pressure being placed on the economy due to the deceleration of overseas economies and other negative factors.
In the office leasing market, the vacancy rate was improving, albeit moderately, and market rents stopped falling. In the
condominium sales market, the buying motivation of consumers was firm, supported by tax benefits and low interest rate.
According to the official announcement of land prices as of January 1, 2013, land prices continued to decline nationwide, but the rate
of decline reduced and was rebounding in some regions.
In this environment, the Company and its subsidiaries (collectively, the “Group”) operated their business steadily, aiming for
sustainable growth, while working to strengthen earnings through the completion of new office buildings and an increase in the
number of condominiums delivered. The Company also sought to promote overseas operations by acquiring 20 Finsbury Circus, an
office building in London, United Kingdom, through its local subsidiary in the United Kingdom and other means.
As a consequence, operating revenue amounted to ¥163,168 million (up ¥26,325 million, or 19.2% year on year), operating income
was ¥27,401 million (up ¥2,036 million, or 8.0%), and ordinary income was ¥22,016 million (up ¥2,787 million, or 14.5%). Net
income was ¥12,073 million (down ¥3,512 million, or 22.5%). This was primarily due to an increase in net income in the previous
fiscal year as a result of the introduction of a law relating to a revision to corporate tax rate.
The table below shows operating revenue by business segment in the fiscal year ended March 31, 2013. Operating revenue in each
segment in the text include inter-segment internal revenues and transfers.
1) Leasing Business
In the leasing business, although rent income from existing properties and other income declined, the Company did generate
earnings, especially rent income from properties completed in the previous fiscal year, including Urbannet Tenjin Building
(Fukuoka-shi, Fukuoka) and properties newly completed in the fiscal year under review. The Company also posted revenue from
sales and penalty income from office buildings in London, United Kingdom during the fiscal year under review.
In the new building development business, projects in progress include the Upper-Level Section Redevelopment Project
associated with the reconstruction of the Shibaura Water Reclamation Center (Minato-ku, Tokyo), RESOLA SOUTH TERRACE
(Fukuoka-shi, Fukuoka), Mejiro 2-Chome Project (tentative name) (Toshima-ku, Tokyo) and other properties.
During the fiscal year under review, Urbannet Kanda Building (Chiyoda-ku, Tokyo), Otemachi Financial City North Tower
(Chiyoda-ku, Tokyo) , Grand Front Osaka (Osaka-shi, Osaka), and other properties were completed.
As a result of these activities, the leasing business recorded operating revenue of ¥94,509 million (up ¥3,439 million, or 3.8% year
on year), operating expenses of ¥65,293 million (up ¥1,706 million, or 2.7%), and operating income of ¥29,216 million (up
¥1,733 million, or 6.3%).
2) Residential Property Sales Business
In the residential property sales business, the Company focused on the sale of condominiums, aiming to create high-quality
residences that complete residents’ lives and maintain asset values by working to establish the WELLITH brand.
A total of 1,052 condominiums were delivered, including WELLITH Ueno Ikenohata (Taito-ku, Tokyo), WELLITH
Miyamaedaira (Kawasaki-shi, Kanagawa), WELLITH Rokko Shinohara (Kobe-shi, Hyogo), and WELLITH Mochida Residence
(Matsuyama-shi, Ehime), with the annual number of condominiums delivered exceeding 1,000 for the first time since the
commencement of the condominium sales business. In the fiscal year under review, new sales of condominiums such as
WELLITH Arisugawa (Minato-ku, Tokyo), WELLITH Tower Atago Toranomon (Minato-ku, Tokyo) and WELLITH Inage
(Chiba-shi, Chiba) commenced. With respect to building lots and detached house sales, WELLITH Court Kitakogane
(Matsudo-shi, Chiba) and other properties were delivered.
As a result, the Company posted operating revenue of ¥54,939 million (up ¥26,454 million, or 92.9% year on year), operating
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expenses of ¥52,024 million (up ¥24,914 million, or 91.9%), and operating income of ¥2,914 million (up ¥1,539 million, or
112.0%) , reflecting an increase in the number of condominiums delivered and other factors.
3) Other Business
Operating revenue in other business in the fiscal year under review were ¥18,930 million (down ¥4,293 million, or 18.5% year on
year), operating expenses stood at ¥17,349 million (down ¥2,783 million, or 13.8%), and operating income was ¥1,580 million
(down ¥1,510 million, or 48.9%) primarily because sales posted based on progress in construction were lower than those in the
previous fiscal year, given that Otemachi Financial City North Tower, which was subject to the percentage of completion method,
was completed during the year.
(2) Consolidated cash flows
Cash and cash equivalents (hereinafter “cash”) at the end of March 2013 increased ¥1,848 million from the end of March 2012, to
¥12,809 million. Free cash flow at the end of March 2013 were up ¥27,533 million from the end of March 2012, to ¥8,203 million
plus. (Note) The calculating formula of the free cash flow is as follows:
Free cash flow = Net cash provided by (used in) operating activities + Net cash provided by (used in) investing activities The following is the situation and factors for each category of cash flow for the fiscal year ended March 31, 2013: (Net cash provided by (used in) operating activities) Net cash provided by operating activities of the Group was ¥48,089 million, with the inflow increasing ¥44,384 million year on year,
although cash was in a volatile state influenced by the purchase of land in the residential property sales business and other factors.
This is primarily attributable to an increase in cash mainly due to income before income taxes and minority interests of ¥18,969
million, depreciation and amortization of ¥23,766 million and a decline in inventories of ¥13,208 million. (Net cash provided by (used in) investing activities)
Net cash used in investing activities was ¥39,885 million, with the inflow decreasing ¥16,851 million year on year. This is primarily
attributable to an increase in cash, mainly due to proceeds from the sale of property, plant and equipment of ¥3,228 million and a
decrease in cash chiefly due to the purchase of property, plant and equipment of ¥40,689 million. (Net cash provided by (used in) financing activities)
Net cash used in financing activities was ¥6,660 million, with inflow decreasing ¥19,311 million year on year. Major factors included
an increase in cash due to proceeds from long-term loans payable of ¥29,793 million and proceeds from issuance of bonds payable of
¥10,000 million and a decrease in cash mainly due to repayments of long-term loans payable of ¥48,712 million and cash dividends
paid of ¥4,936 million.
11
2. Operating revenue The table below shows operating revenue by business segment in the fiscal year ended March 31, 2013.
Business segment Current consolidated fiscal year
(from April 1, 2012 to March 31, 2013) (million yen)
Year on year (%)
Leasing 94,509 103.8 Residential property sales 54,939 192.9
Total operating revenue in reported segments 149,448 125.0 Other 18,930 81.5 Eliminations (5,209) –
Total 163,168 119.2
(Note 1) The numbers do not include consumption tax. Operating revenue of each segment include inter-segment internal revenues
and transfers.
(Note 2) “Eliminations” refers to internal revenues and transfers duplicated in more than one segment.
The following shows breakdowns of revenue in the leasing business and residential property sales business, major businesses of the
Group:
(1) Leasing Business
The table below shows sales etc. by use of properties in the leasing business. All figures are consolidated results.
(Million yen) Classification Previous consolidated fiscal year Current consolidated fiscal year
Office/Commercial Operating revenue 84,713 88,621
Rentable floor space 1,168,526 m2 (Of the above, sub-leases: 16,326 m2)
1,199,215 m2 (Of the above, sub-leases: 23,135 m2)
Residential/Other Operating revenue 6,356 5,887 Total 91,069 94,509
(Note 1) “Rentable floor space” figures are as of the end of March.
(Note 2) The rentable area of sub-leases does not include the area of sub-leases that have been agreed upon between the Company
and its consolidated subsidiaries.
The table below shows the quarterly vacancy rate by area. Classification March 2012 June 2012 September 2012 December 2012 March 2013
Five wards of central Tokyo 2.0% 2.5% 2.7% 3.9% 4.0% Nationwide 5.4% 5.6% 5.3% 5.8% 6.5%
(Note 1) The numbers above are vacancy rates as of the end of each month.
(Note 2) Five wards of central Tokyo are Chiyoda-ku, Chuo-ku, Minato-ku, Shibuya-ku, and Shinjuku-ku.
The Group emphasizes net operating income, or NOI (see Note), as an indicator for judging the value of properties for the leasing
business. The nationwide NOI for the fiscal year ended March 31, 2013 was ¥56,397 million (up ¥2,079 million, or 3.8% year on
year). In the Tokyo metropolitan area, NOI declined to ¥33,180 million (down ¥880 million, or 2.6% year on year) mainly
attributable to reduced revenue from existing buildings. In other regions including overseas, NOI increased to ¥23,216 million (up
¥2,959 million, or 14.6%) primarily thanks to properties completed in the previous fiscal year such as Urbannet Tenjin Building
(Fukuoka-shi, Fukuoka) and the sale of the office building in London, United Kingdom.
(Note) The formula for calculating NOI (net operating income) is as follows:
(NOI = Property rental income – Property rental costs + Depreciation expenses (including prepaid long-term expenses))
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1) NOI on principal buildings (Million yen)
Building Location Primary Use Previous
consolidated fiscal year
Current consolidated fiscal year
Urbannet Otemachi Building Chiyoda, Tokyo Office 5,053 4,131 Otemachi First Square Chiyoda, Tokyo Office 3,977 3,478 NTT Makuhari Building Mihama, Chiba Office 1,799 1,815 Granpark Tower Minato, Tokyo Office 4,285 4,224 Seavans N Building Minato, Tokyo Office 2,233 2,371 Tokyo Opera City Shinjuku, Tokyo Office 1,345 1,221 Akihabara UDX Chiyoda, Tokyo Office 7,272 7,462 JA Building, Keidanren Kaikan Chiyoda, Tokyo Office 1,893 2,287 Urbannet Oroshimachi Building Wakabayashi, Sendai Office 220 199 Urbannet Itsutsubashi Building Aoba, Sendai Office 199 191 Urbannet CS Building Naka, Nagoya Office 357 343 Urbannet Shizuoka Building Aoi, Shizuoka Office 283 284 Urbannet Shizuoka Otemachi Building Aoi, Shizuoka Office 363 296 Urbannet Kaminagoya Building Nishi, Nagoya Office 85 109 Urbannet Fushimi Building Naka, Nagoya Office 424 370 Urbannet Nagoya Building Higashi, Nagoya Office 2,192 2,121 Sumitomo Corporation Nagoya Building Higashi, Nagoya Office 237 191 NTT Osaka Chuo Building Chuo, Osaka Office 373 369 Urban Ace Kitahama Building Chuo, Osaka Office 394 377 Urban Ace Higobashi Building Nishi, Osaka Office 336 331 Urban Ace Sannomiya Building Chuo, Kobe Office 409 432 Urban Ace Awaza Building Nishi, Osaka Office 330 318 Urbannet Honmachi Building Chuo, Osaka Office 349 313 Tradepia Yodoyabashi Chuo, Osaka Office 503 548 NTT Cred Motomachi Building Naka, Hiroshima Commercial 3,069 3,232 NTT Cred Hakushima Building Naka, Hiroshima Office 760 717 NTT Cred Okayama Building Kita, Okayama Office 478 466 NTT–T Building Chuo, Fukuoka Commercial 2,001 2,039 NTT–KF Building Chuo, Fukuoka Office 279 260 Urbannet Hakata Building Hakata, Fukuoka Office 165 144 Emuzu Odori Building Chuo, Sapporo Office 351 335 Emuzu Minami 22-jo Building Chuo, Sapporo Office 121 114 Urbannet Sapporo Building Chuo, Sapporo Office 780 764
Other properties, subtotal 11,384 14,528 Total 54,318 56,397
(Note) Akihabara UDX (Chiyoda, Tokyo) is a property owned by a consolidated subsidiary of the Company.
13
2) NOI by area and use (Million yen)
Area
Previous consolidated fiscal year Current consolidated fiscal year
Total
Total
Office/ Commercial
Residential/ Other
Office/ Commercial
Residential/ Other
Five wards of central Tokyo
34,061
28,745
1,938 33,180
28,007
1,779 Tokyo metropolitan area (excluding five wards of central Tokyo)
3,376 3,393
Other regions 20,257 17,579 2,677 23,216 20,858 2,358 Total 54,318 49,702 4,615 56,397 52,259 4,137
(Note) Area classifications are defined as follows:
- Five wards of central Tokyo are Chiyoda-ku, Chuo-ku, Minato-ku, Shibuya-ku, and Shinjuku-ku.
- Tokyo metropolitan area (excluding Five wards of central Tokyo) are Tokyo excluding the Five central wards, and
Kanagawa, Chiba, Saitama, Ibaraki, Gunma and Tochigi prefectures.
(2) Residential Property Sales Business
The table below shows operating revenue in the residential property sales business by operation type and area.
Classification
Previous consolidated fiscal year Current consolidated fiscal year
Units/Lots Operating revenue
(million yen) Units/Lots
Operating revenue
(million yen) Condominiums
Units delivered Tokyo metropolitan area 351 16,330 564 27,979
Other regions 107 6,062 488 19,392 Completed in inventory 99 – 207 – Building Lots, etc.
Units/Lots delivered Tokyo metropolitan area 6 281 6 4,195
Other regions 42 3,817 57 2,423 Completed in inventory 14 – 37 – Residential Subtotal (Condominiums/Building lots, etc)
Units/Lots delivered Tokyo metropolitan area 357 16,611 570 32,175
Other regions 149 9,879 545 21,815 Completed in inventory 113 – 244 – Other
Units/Lots delivered Tokyo metropolitan area – – 1 948
Other regions 1 1,993 – – Completed in inventory – – – – Grand total – 28,484 – 54,939
(Note 1) For joint projects, the number of units, corresponding to the Company’s share in the project, is rounded down to the nearest
unit.
(Note 2) “Completed in inventories” figures are as of the end of each fiscal year. The condominiums completed in inventories for
the fiscal year ended in March 2012 and the fiscal year ended in March 2013 include 12 units and 30 units, respectively, for
which a contract has been completed but ownership has not yet been transferred. The building lots completed in inventories
for the fiscal year ended in March 2012 and the fiscal year ended in March 2013 include 2 lots and 5 lots, respectively, for
which a contract has been completed but ownership has not yet been transferred.
(Note 3) 6 lots (worth ¥2,764 million) of building lots delivered for the fiscal year ended March 2012 and 2 lots (worth ¥5,276
million) of building lots delivered for the fiscal year ended March 2013 were delivered through a sale of land.
(Note 4) “Other” in the fiscal year ended March 2012 and the fiscal year ended March 2013 are the sale of a condominium
(apartment building) and others.
(Note 5) Tokyo metropolitan area includes Tokyo, Kanagawa, Chiba, Saitama, Ibaraki, Gunma and Tochigi prefectures.
14
3. Issues facing the Group (1) Basic management policy
Since it was established in January 1986, the NTT Urban Development Group, the core company in the real estate development
business of the NTT Group, has focused on urban development in cities in Japan, especially in the Otemachi area of Tokyo. This
focus has enabled consistent growth. The ultimate goal of the Group is to continue to create relaxing environments that effectively
balance people, living spaces, and the environment, under its corporate slogan, “We create harmony.” In other words, we believe that
we can create environments that offer comfortable living over the long term, through a harmony among creative people, stimulating,
energizing living environments, and comfortable, fulfilling lifestyles. We also believe that we can achieve harmony by combining the
high-quality structures and advanced technologies of the Group, and through our unshakeable commitment to functionality,
convenience, and safety as the key components of comfortable living. Consistently offering comfortable living environments creates
customer trust and, as a result, improves our corporate value.
(2) Medium- to long-term management strategies, financial targets, and issues facing the Group
The economy continues to be uncertain, given the level of exchange rate and precarious economic conditions overseas, but is
expected to benefit from positive factors such as a recovery from the difficult economic environment in Japan influenced by the
Great East Japan Earthquake and the effects of economic and monetary policies. The real estate market is showing signs of an
improvement in vacancy rate in office buildings, in addition to real estate prices and rents, which have bottomed out.
The Group has been taking steps to restructure its business base and pursue growth in consideration of financial soundness, with the
aim of achieving the financial targets it initially set, strengthening the revenue base in each business and creating stable income under
the NTT Urban Development Group Medium-Term Management Plan 2012.
On the basis of these outcomes, the Group has developed the Medium-Term Vision 2018 – For Further Growth –, a new
medium-term vision that begins in fiscal 2013. The Group will take measures for medium- and long-term growth through customer
and market-centered orientation and the pursuit of innovations.
Specific steps to be taken in the new medium-term vision are as follows:
i) Strengthening the revenue base in the leasing business
The Group will strengthen its revenue base in the leasing business by fully enforcing customer-centered orientation and promoting
development strategies that captures changes in the social environment, while further strengthening sales capabilities and cost
competitiveness and working to diversify development methods and promote asset replacement.
ii) Expanding the business scale for the future growth
In the residential property sales business, the Group will strive to expand business mainly in Tokyo metropolitan area by
deepening the WELLITH brand.
In global business, the Group will aim to achieve a stable income base through the acquisition of office buildings in Europe and
the United States, centering on London, the United Kingdom. It will also step up efforts to create business opportunities in growth
markets, mainly in Southeast Asia.
iii) Enforcing thorough financial control
The Group aims to maintain its financial balance through the careful selection of investments and implement of strategic asset
replacement, while investing in future growth. The Group will also strengthen its financial base by controlling interest-bearing
debt.
iv) Enhancing the management platform
The Group will act to enhance its management resources and will fully enforce corporate governance to establish a management
infrastructure that can be able to keep pace with business expansion.
It will also place management emphasis on shareholder value, as it has done in the past.
15
* Forward-looking statements included in this section are judgments by the Group at the end of fiscal year under review. Actual
results may be different depending of changes in the business environment and other factors.
(3) Basic policy on the control of the Stock Company
Since the parent company holds more than 50% of the voting rights, the Company has not established any basic policy relating to the
Stock Company and has not introduced any takeover defense.
4. Operating risks The following principal categories of business risks and other risks in Japan and overseas affecting the NTT Urban Development
Group’s businesses may have a material impact on investment decisions. Although the risks below are those currently recognized by
the NTT Urban Development Group, it is not necessarily an exhaustive list of risks. These risk categories are presented in the
interests of information disclosure to investors and should be given due importance in investment decisions or when construing the
Company’s business activities. The Group manages the operating risks under its risk management regulations. The forward-looking
statements included in the following reflect judgments by the Group as of the date of announcement of this document.
Risks concerning the businesses of the Group
(1) General risk
i) Leasing Business risk
In the fiscal year ended March 31, 2013, the leasing business accounted for 56.1% of consolidated operating revenue. The leasing
business tends to be susceptible to changes in the operating environment, and the Company is considering action against falls in
rents and an increase in vacancies, assuming business trends over the medium and long terms. However, a worsening
supply-demand situation in the real estate market could cause vacancies to increase and the leasing rate to decline, which could
substantially affect the operating performance of the NTT Urban Development Group. Moreover, changes in the financial status
of the Group’s major tenants, the departure of a major tenant, or changes in the conditions of property use could have repercussion
for the overall occupancy rate of Group properties and consequently could significantly affect business real estate revenues.
ii) Residential Property Sales Business risk
The deterioration of the condominium market because of intensifying competition among sellers, rising interest rates for housing
loans, and a downturn in consumer sentiment caused by elevating sales prices accompanying soaring land prices could cause
decreases in sales in relation to a prolonged selling process in the residential property sales business and increases in inventories,
which could affect the Group’s business performance. The process of work could be delayed given the shortage of construction
materials, equipment, and other materials due to the effect of large-scale disasters.
iii) Asset devaluation risk
In fiscal 2005, the Company adopted impairment loss accounting for business real estate based on the “Opinion Regarding
Accounting Standard for Impairment of Fixed Assets” issued by the Corporate Accounting Standards Committee on August 9,
2002.
In fiscal 2008, the Company applied the “Accounting Standards for Measurement of Inventories” (ASBJ Statement No. 9 on July
5, 2006). A substantial deterioration of the real estate market could necessitate the recording of impairment losses of the properties
for the leasing business and the revaluation of the inventory assets maintained for the residential property sales business, and this
in turn could impact the Group’s business performance.
The Group holds investment securities and other non-current assets and depreciation in the value of these assets from changes in
economic and financial conditions in Japan and overseas could produce a revaluation loss that might impact the Group’s business
performance.
16
iv) Effects of interest-bearing debt
The Group raises funds in Japan and overseas, and as of March 31, 2013, consolidated interest-bearing debt totaled ¥505,993
million, all of which was procured at fixed rates of interest. A significant rise in the market interest rates could, therefore, affect
the business development of the Group.
In addition, the Group’s capital procurement activities could be hampered by instability in capital markets, credit limits extended
by financial institutions, business failures (including payoffs) of such institutions, or downgrades in the Company’s debt ratings
and other factors.
Item Previous consolidated fiscal year Current consolidated fiscal year
Total assets (Million yen) 928,537 941,050 Interest-bearing debt (Million yen) 505,805 505,993 Interest-bearing debt / Total assets (%) 54.5 53.8 Operating revenue (Million yen) 136,842 163,168 Interest expenses (Million yen) 7,938 7,665 Interest expenses / Operating revenue (%) 5.8 4.7
v) Risks concerning establishment of and revisions to real estate-related and other laws, ordinances, and other regulations
The Group is subject to real estate-related laws and regulations, the Act on the Protection of Personal Information, and other laws
and regulations, and revisions to these laws and the establishment of new laws could impact the Group’s business performance.
vi) Risks concerning selection and credit of business partner
The Company makes every effort to verify the credit standing of its business partners before entering into business relations.
However, if unforeseen events lower a business partner’s credit and the Company is unable to collect debts owed to the Company,
an economic loss could result that could impact the Group’s business performance.
Depending on the selection of contractors for construction work, scandals, trouble, and financial difficulties, among other factors,
in contractors performing their operations could cause economic losses for the Group or the erosion of the Group’s credibility,
which in turn could affect the Group’s performance. To prevent and avoid the risks, the Company has set up an internal committee
to choose contractors that investigates the creditworthiness of contractors and their ability to complete construction and has
established termination criteria should contractors fail to meet standard quality or delivery periods or cause incidents or accidents.
(2) Business risk
i) Risks concerning development project investment decisions
The Company invests in quality properties for future development with the objective of further raising corporate value. Every
effort is made to ensure the decisions to invest in new development projects which do not produce an economic loss or
compromise society’s trust in the Company. Relevant laws, rights, site conditions, market studies, and other subjects are
thoroughly researched and verified. Construction plans and business revenue and expenditure plans are drawn up, and internal
meetings are held to determine business viability. The final decisions to invest are made by the Board of Directors and other
relevant groups. Despite careful preparation and consideration, fluctuations in demand arising from changes in the business
climate or in the real estate market can reduce the profitability of investments and could impact the Group’s business performance.
ii) Risks concerning sales transaction and construction contracts
Inadequate contract documents, flawed contract stipulations, or other deficiencies in sales transaction and construction contracts
could produce an economic loss or liability for damages, or compromise society’s trust in the Company in a way that could impact
the Company’s business performance. The Group seeks to prevent and avoid risks by checking contracts in advance, using
contract check sheets.
17
iii) Risks concerning damage to and deterioration of buildings in building management operations
The Group regularly inspects and maintains the buildings that it holds for leasing. However, damage to or deterioration in the
buildings, or accidents resulting from the deterioration or failures of the buildings could lead to increases in the financial burden in
association with complaints about damage to or the deterioration of the buildings and accidents caused by them, liability for
damage, the erosion of society’s trust in the Group, renovations, and rebuilding and could impact the Group’s business
performance.
iv) Risks concerning the handling of large-scale disasters in building management operations
Risks including major earthquakes, floods or other natural disasters, or infectious diseases, fires, accidents or terrorist attacks
could cause damage to, the loss of, or the deterioration of buildings the Group holds for leasing, or could interrupt the business
operations of the Group, which in turn could affect the Group’s performance. The Group has developed a business continuity plan
(BCP) designed to protect against the spread of damage from possible large-scale disasters such as the above and to minimize any
economic loss from them, identifying types of disasters and considering the effects of the disasters on tenants and the management
of buildings, emergency communication systems, and emergency action in accordance with each type of disaster.
Relationships with NTT and its group companies
(1) Position of NTT Urban Development in NTT-centered corporate group (NTT Group)
NTT Urban Development is the only comprehensive real estate company in the NTT Group and manages its businesses
independently, taking responsibility for the management. The Company consults its parent company NTT about important issues and
reports to NTT. However, NTT does not prevent the Company from making its own decisions or does not bind the Company’s
decision making.
NTT owns 67.3% of the stock of the Company as of March 31, 2013 and holds rights as the majority shareholder of the Company
under the Companies Act.
(2) Business relations with NTT Group
The Company and NTT have concluded an agreement relating to the management of the NTT Group to respect each other’s
independence and autonomy and to maximize the profits of each NTT Group company by maximizing the profits of the overall NTT
Group. Based on this agreement, the Company pays the Group operating and managing expenses. In exchange for this payment, NTT
provides the Company with comprehensive services and benefits, including advice on a range of issues, the use of the NTT brand,
and Group publicity. In particular, we believe using the NTT brand as a member of the NTT Group enhances the creditworthiness
and reliability of the Company and gives the Company advantages in the execution of operations.
The Company has concluded a building lease agreement with the NTT Group and receives rent income from the Group. The
Company determines rental prices for the NTT Group through mutual consultation, based on essentially the same conditions as those
for general customers, considering market prices and prices for neighboring properties. The Company acquires land, primarily land
for the property sales business, from the NTT Group. Both parties determine acquisition prices through consultation, taking
profitability into consideration, as in the acquisition of land from the general market.
The table below shows the status of transactions between the Company and the NTT Group in the Leasing Business.
Transactions with the NTT Group in the Leasing Business (non-consolidated) Item Previous fiscal year Current fiscal year
Operating revenue in Leasing Business (Million yen) 82,603 82,208 Operating revenue from NTT Group (Million yen) 26,600 26,341 Operating revenue from NTT Group / Operating revenue in Leasing Business (%) 32.2 32.0
18
(3) Personnel relationships with NTT Group
The Company accepts employees from other NTT Group companies not as employees on loan but as employees who have been
transferred. The Company had an outside director and an outside Corporate Auditor from NTT as of the date of the submission of
this document. They have taken up their appointments at the request of the Company, and the Company makes management
judgments independently.
Concurrent officers As of June 19, 2013 Title Name Title in parent company or its group companies Reason for appointment
Director Toyosei Sugimura Senior Manager, General Affairs Department of Nippon Telegraph and Telephone Corporation
The Company appointed Mr. Sugimura and Mr. Hiroi to gain access to broad management perspectives.
Corporate Auditor Takashi Hiroi Senior Manager, Corporate Strategy Planning Department of
Nippon Telegraph and Telephone Corporation
(Note) Of the 14 directors and four Corporate Auditors, only the two above hold a concurrent position at the parent company.
(4) Independence from NTT Group
As a company engaging in a nationwide real estate business as part of the NTT Group, the Company manages its businesses
independently, taking responsibility for management. As stated in (1), (2) and (3), we believe that the Company has a considerable
degree of independence from the parent company. 5. Significant management contracts Not applicable. 6. Research and development activities There were no special activities to describe. 7. Analysis of financial position, operating results and cash flows Forward-looking statements included in this section are judgments by the Group at the end of the fiscal year under review. (1) Significant accounting policies and estimates
The consolidated financial statements of the Group are prepared under the generally accepted accounting principles in Japan.
Estimates that affect the reported values of assets and liabilities at the closing date and the reported values of revenues and expenses
during the reporting period in the preparation of the consolidated financial statements are primarily net sale values and corporate
taxes relating to the valuation of deferred tax assets, allowance for doubtful receivables, accrued employees’ retirement benefits, a
recoverable amount relating to the impairment of fixed asset groups, and inventories. The operating revenue values and corporate
taxes are continuously valuated reasonably.
Estimates, judgments, and valuations are made based on factors considered to be reasonable in accordance with past results and
current situations. However, actual results may be different because of uncertainty inherent in estimates.
19
(2) Analysis of financial position
i) Consolidated balance sheet (Million yen) End of previous consolidated
fiscal year End of current consolidated
fiscal year Change
Assets 928,537 941,050 12,513 Liabilities 724,810 727,215 2,405 Net assets 203,727 213,835 10,108 (Restated) Minority interests 37,714 37,614 (100)
Assets, liabilities and net assets at the end of the fiscal year ended March 31, 2013 rose from the end of the previous fiscal year.
(Assets)
Total assets were ¥941,050 million (up ¥12,513 million year on year).
Current assets were ¥131,843 million (up ¥1,901 million), primarily reflecting a rise of ¥2,223 million in cash and deposits.
Non-current assets were ¥809,207 million (up ¥10,612 million). Principal factors included an increase of ¥14,980 million in
buildings and structures (net), a rise of ¥7,768 million in land and a fall of ¥10,491 million in construction in progress.
(Liabilities)
Total liabilities were ¥727,215 million (up ¥2,405 million year on year).
Current liabilities were ¥177,439 million (up ¥88,711 million). Major factors included an increase of ¥60,512 million in current
portion of bonds, a rise of ¥10,321 million in short-term loans payable, and an increase of ¥7,329 million in the current portion of
long-term loans payable.
Non-current liabilities were ¥549,775 million (down ¥86,306 million).The main factors included a fall of ¥52,119 million in
bonds payable and a decline of ¥25,856 million in long-term loans payable.
Interest-bearing debt at the end of the fiscal year under review was ¥505,993 million (up ¥187 million year on year).
(Net assets)
Net assets were ¥213,835 million (up ¥10,108 million year on year), primarily reflecting net income of ¥12,073 million and
dividend payments of ¥4,936 million. ii) Consolidated cash flows (Million yen)
Previous consolidated fiscal year
Current consolidated fiscal year Change
Net cash provided by operating activities 3,704 48,089 44,384 Net cash used in investing activities (23,033) (39,885) (16,851) Net cash provided by (used in) financing activities 12,650 (6,660) (19,311) Net increase (decrease) in cash and cash equivalents (7,054) 1,848 8,902 Cash and cash equivalents at the end of the year 10,960 12,809 1,848
Cash and cash equivalents (hereinafter “cash”) at the end of March 2013 increased ¥1,848 million from the end of March 2012, to
¥12,809 million.
For the situation of each category of cash flows at the end of the fiscal year under review, refer to 1. Overview of operating results,
(2) Consolidated cash flows.
The commercial paper (short-term bond) and bond (long-term bond) of the Company are rated by Rating and Investment
Information, Inc. as shown in the table below.
20
(As of March 31, 2013) Item Rating and Investment Information, Inc.
Commercial paper a-1 Bond A+ (3) Analysis of operating results
i) Operating revenue
Operating revenue in the fiscal year under review amounted to ¥163,168 million (up ¥26,325 million, or 19.2% year on year),
primarily reflecting an increase in the number of condominium units delivered in the residential property sales business. ii) Operating gross profit
Operating cost stood at ¥117,163 million (up ¥20,730 million, or 21.5%), attributable chiefly to a rise in the number of
condominium units delivered in the residential property sales business.
As a result, operating gross profit was ¥46,004 million (up ¥5,595 million, or 13.9%). iii) Operating income
Selling, general, and administrative expenses were ¥18,603 million (up ¥3,559 million, or 23.7%) due mainly to an increase in
selling expenses, including advertising expenses, in association with a rise in the number of condominium units delivered.
As a consequence, operating income was ¥27,401 million (up ¥2,036 million, or 8.0%). iv) Ordinary income
Ordinary income was ¥22,016 million (up ¥2,787 million, or 14.5%). The main factors were a ¥2,036 million increase in
operating income and a ¥273 million decline in interest expenses. v) Income before income taxes and minority interests
Extraordinary income was ¥389 million (up ¥329 million, or 549.4%), attributable to the posting of a gain on the sale of
non-current assets of ¥389 million.
Extraordinary losses were ¥3,436 million (up ¥572 million, or 20.0%), chiefly due to an impairment loss of ¥800 million posted in
the fiscal year under review compared with a loss on disaster of ¥323 million in the previous fiscal year.
Consequently, income before income taxes and minority interests amounted to ¥18,969 million (up ¥2,544 million, or 15.5%).
vi) Net income
Net income was ¥12,073 million (down ¥3,512 million, or 22.5%), mainly reflecting a rise in net income in the previous fiscal
year due to the introduction a law relating to a revision to corporate tax rates.
For the details of operating results by business segment in the fiscal year under review, refer to 1. Overview of operating results,
(1) Operating results.
(4) Factors significantly affecting operating results
For factors significantly affecting operating results, refer to 4. Operating Risks.
(5) Current status of and outlook for business strategy
The Group has formed Medium-Term Vision 2018 – For Further Growth –. Under the vision the Group will take steps to achieve
medium- to long-term growth by fully enforcing a customer and market-centered orientation and pursuing innovation.
The following is the specific action for each business segment in the fiscal year ending March 2014.
i) Leasing Business
The rental office market is showing signs of improvement, as falling vacancy rate of office buildings and the deteriorated rent
level after the collapse of Lehman Brothers are bottoming out.
The Company aims to strengthen its revenue base by fully enforcing customer-centered orientation and promoting development
21
strategies capturing changes in the social environment, while striving to further strengthen sales capabilities and cost
competitiveness and working on the diversification of development methods and the promotion of asset replacement.
ii) Residential Property Sales Business
In the condominium sales market, although the effect of the higher consumption tax and other factors are uncertain, the
first-month contract rate remained firm.
The Company will work to expand business mainly in the Tokyo metropolitan area by deepening the WELLITH brand.
iii) Other Business
The Group will seek to expand businesses, particularly the operations of consolidated subsidiaries, including the remodeling of
offices at the request of tenants in relation to the leasing business.
(6) Analysis of financial resources and liquidity of funds
During the fiscal year under review, the Company raised funds primarily through borrowings from financial institutions and the
issuing of bonds, among other sources, in response to such as capital needs as capital expenditures, investments, and the acquisition
of inventory assets.
For the analysis of financial resources and the liquidity of funds, refer to 1. Overview of operating results, (2) Consolidated cash
flows and 7. Analysis of financial position, operating results and cash flows, (2) Analysis of financial position.
22
Section 3. Facilities 1. Overview of capital investment The NTT Urban Development Group, consisting of the Company and its consolidated subsidiaries, invests in new construction sites
to increase the level of contribution to earnings provided by the leasing business while acquiring commercial land to expand its
overall business activities.
Capital investment was distributed as follows in the fiscal year ended March 31, 2013.
Business segment Current consolidated fiscal year (million yen) Year on year (%)
Leasing 46,136 162.9 Residential Property Sales 3 69.2 Other 160 390.5
Total 46,299 163.2 Corporate 90 21.4
Total 46,390 161.1
(Note) The figures include the amounts of property, plant and equipment, and intangible assets and others.
The main investments in the leasing business were ¥10,626 million for the Otemachi Financial City North Tower (Chiyoda-ku,
Tokyo), ¥7,876 million for the Grand Front Osaka (Osaka-shi, Osaka), ¥5,762 million (GBP 45 million) for the 20 Finsbury Circus
(London, UK), and ¥12,574 million for building renovations.
Significant changes in the Group’s major facilities during the consolidated fiscal year under review are as follows.
The following facilities have been completed during the consolidated fiscal year under review.
Name (Location)
Business segment
Primary use Structure
Area (m2) Acquisition prices (million yen) Completed
Building Land Building, etc. Land Other Total
Uchikanda 3-chome Building (tentative name) [Urbannet Kanda Building] (Chiyoda, Tokyo)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; 19 floors above ground and 1 below
14,266 1,855 4,234 17,048 197 21,480 July 2012
Otemachi 1-Chome No. 2 Urban Area Redevelopment Project Type 1 Building A [Otemachi Financial City North Tower] (Note 1, 2) (Chiyoda, Tokyo)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; Reinforced concrete structure; 31 floors above ground and 4 below
8,949 458 2,889 11,739 38 14,667 October 2012
Umekita (Osaka Station North District) Phase 1 Development Area Project [Grand Front Osaka] (Note 3) (Kita, Osaka)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; Reinforced concrete structure; 38 floors above ground and 3 below * The north and south buildings have the same structure.
481,628 33,251 [9,917] 16,669 33,874 344 50,888 March
2013
(Note 1) Four companies including the Company participated in the business as designated builders.
(Note 2) The area of building is the Company’s share of ownership in the total floor space (based on the appreciation for building
permission). The area of land is the Company’s share of ownership in the site area (based on the appreciation for building
permission).
(Note 3) The project is a joint effort by 12 developers including the Company. The area is for the entire property, and the acquisition
prices correspond to the share of ownership. Part of building is on leased land, and the figure in brackets is the area of the
leased land.
23
The following facility was sold during the consolidated fiscal year under review.
Name (Location)
Business segment Primary use Structure
Area (m2) Book value (million yen) Completed
Building Land Building, etc. Land Other Total
Alpha Place Building (Aoba, Sendai)
Leasing Business Commercial
Steel-reinforced concrete structure; 5 floors above ground
8,972 2,742 829 24 11 865 September 1991
(Note) The property was sold in March 2013. The book value is as of February 28, 2013.
Demolition work on the following facility started during the consolidated fiscal year under review.
Name (Location)
Business segment Primary use Structure
Area (m2) Book value (million yen) Completed
Building Land Building, etc. Land Other Total
Nihonbashi Asahi Seimei Building (Chuo, Tokyo)
Leasing Business Office
Steel-reinforced concrete structure; 12 floors above ground and 3 below
13,532 1,469 213 9,524 2 9,740 June 1962
(Note) The demolition work started in February 2013. The book value is as of March 31, 2013.
The following facilities changed to real estate for sale during the consolidated fiscal year under review.
Name (Location)
Business segment Primary use Structure
Area (m2) Book value (million yen) Completed
Building Land Building, etc. Land Other Total
Urbannet Kayaba-Kabuto Building (Note 2) (Chuo, Tokyo)
Leasing Business Office
Steel structure; 9 floors above ground and 1 below
9,599 – [1,380] 1,936 – 4 1,941 June 2003
Urbannet Irifune Building (Chuo, Tokyo)
Leasing Business Office
Steel-reinforced concrete structure; 8 floors above ground and 1 below
6,058 830 923 143 6 1,073 August 1990
(Note 1) The facilities above changed to real estate for sale in February 2013. The book value is as of January 31, 2013.
(Note 2) The building is on leased land. The figure in brackets is the area of leased land.
24
2. Major facilities The Group’s major facilities are summarized as follows.
(1) Submitting company As of March 31, 2013
Name (Location)
Business segment Primary use Structure
Area (m2) Book value (million yen) Completed
Building Land Building, etc. Land Lease
assets Other Total
Urbannet Otemachi Building (Chiyoda, Tokyo)
Leasing Business Office Steel structure; 22 floors
above ground and 5 below 117,618 9,361 15,276 173 – 421 15,871 June 1990
Otemachi First Square (Note 1) (Chiyoda, Tokyo)
Leasing Business Office
Steel structure; West Tower: 23 floors above ground and 5 below East Tower: 23 floors above ground and 4 below
54,284 6,236 13,494 265 – 163 13,923
First phase: February 1992; Second phase: May 1997
JA Building, Keidanren Kaikan (Chiyoda, Tokyo) (Notes 1, 2 and 3)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; 37 floors above ground and 4 below
26,517 1,506 5,225 20,647 – 59 25,932 April 2009
Urbannet Kanda Building (Chiyoda, Tokyo)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; 19 floors above ground and 1 below
14,266 1,855 4,001 17,048 – 165 21,215 July 2012
Otemachi Financial City North Tower (Note 1, 2) (Chiyoda, Tokyo)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; Reinforced concrete structure; 31 floors above ground and 4 below
8,949 458 2,807 11,739 – 33 14,579 October 2012
Seavans N Building (Note 4) (Minato, Tokyo)
Leasing Business Office Steel structure; 24 floors
above ground and 2 below 78,488 13,144 8,804 2,157 – 85 11,047 January 1991
Granpark (Note 1) (Minato, Tokyo)
Leasing Business Office
Steel structure; Partially reinforced concrete structure; 34 floors above ground and 4 below 138,423 14,227
25,254
6,091
10 364
35,072
August 1996
Granpark Heights (Note 1) (Minato, Tokyo)
Leasing Business Housing
Reinforced concrete structure; 28 floors above ground and 4 below
3,242 – 109 October 1996
Urbannet Minamiazabu Building (Minato, Tokyo)
Leasing Business Office
Reinforced concrete structure; 3 floors above ground and 1 below
742 380 140 346 – 0 487 November 1998
Garden Court Motoazabu (Note 1) (Minato, Tokyo)
Leasing Business Housing
Reinforced concrete structure; 4 floors above ground and 1 below
2,499 1,026 407 873 – 2 1,283 August 2003
Placeo Aoyama Building (Minato, Tokyo)
Leasing Business Commercial
Steel-reinforced concrete structure; 11 floors above ground and 3 below
18,674 2,952 2,222 112 – 8 2,344 April 1992
Festa Azabu (Minato, Tokyo)
Leasing Business Commercial
Steel-reinforced concrete structure; 6 floors above ground and 2 below
3,214 667 817 5 – 62 886 May 1990
Urban Court Motoazabu (Minato, Tokyo)
Leasing Business Housing
Reinforced concrete structure; 3 floors above ground and 1 partial floor below
2,805 1,675 382 22 – 3 407 September 2003 (Note 5)
Park Court Azabu-Juban The Tower (Note 1) (Minato, Tokyo)
Leasing Business Office
Reinforced concrete structure; Partially steel-reinforced concrete structure; 36 floors above ground and 1 below
989 179 109 167 – 0 277 May 2010
Tokyo Opera City (Note 1) (Shinjuku, Tokyo)
Leasing Business Office Steel structure; 54 floors
above ground and 4 below 33,086 3,831 8,763 1,094 – 89 9,947 August 1996
Urbannet Nihonbashi Building (Note 6) (Chuo, Tokyo)
Leasing Business Office Steel structure; 8 floors
above ground 3,413 – [944] 506 – – 0 507 July 2001
Urbannet Tsukiji Building (Chuo, Tokyo)
Leasing Business Office Steel structure; 8 floors
above ground 2,490 364 251 68 – 2 322 July 1990
Urbannet Tsukiji 2 (Chuo, Tokyo)
Leasing Business Office Steel structure; 7 floors
above ground 2,423 443 319 1,450 – 0 1,771 October 1998
25
Name (Location)
Business segment Primary use Structure
Area (m2) Book value (million yen) Completed
Building Land Building, etc. Land Lease
assets Other Total
Harajuku Quest (Shibuya, Tokyo)
Leasing Business Commercial
Reinforced concrete structure; 4 floors above ground and 2 below
5,367 1,872 657 38 0 27 724 March 1988
Urbannet Gotanda NN Building (Shinagawa, Tokyo)
Leasing Business Office
Steel-reinforced concrete structure; 8 floors above ground and 1 below
9,446 1,825 991 586 0 1 1,578 August 1989
Hongo Center Building (Note 1) (Bunkyo, Tokyo)
Leasing Business Office
Steel-reinforced concrete structure; 7 floors above ground and 2 below
3,233 701 489 8 – 4 502 October 1990
Urbannet Nakano Building (Nakano, Tokyo)
Leasing Business Office
Reinforced concrete structure; 6 floors above ground
9,269 3,091 1,014 575 – 11 1,600 October 1988
Ariake Center Building (Note 1) (Koto, Tokyo)
Leasing Business Office
Steel-reinforced concrete structure; 7 floors above ground and 2 below
7,322 2,348 1,675 871 – 9 2,556 April 1996
Urban Court Minami-karasuyama (Setagaya, Tokyo)
Leasing Business Housing
Reinforced concrete structure; 6 floors above ground
3,012 2,019 366 79 – 9 456 October 2000
Machida NT Building (Note 1) (Machida, Tokyo)
Leasing Business Commercial
Steel-reinforced concrete structure; 7 floors above ground and 2 below
7,592 1,360 970 58 – – 1,028 October 1992
Villa Tamagawagakuen (Machida, Tokyo)
Leasing Business Housing
Box frame type reinforced concrete structure; 3 floors above ground
3,737 6,909 361 270 – 0 632 April 1991
YRP Goban-kan (Note 1) (Yokosuka, Kanagawa)
Leasing Business Office Steel structure; 9 floors
above ground and 1 below 9,893 5,708 1,389 1,274 – 1 2,665 March 2002
Urbannet Yokohama Building (Naka, Yokohama)
Leasing Business Office Steel structure; 10 floors
above ground and 1 below 11,923 1,591 1,063 40 – 7 1,112 November 1988
NTT Makuhari Building (Mihama, Chiba)
Leasing Business Office Steel structure; 26 floors
above ground and 1 below 170,499 40,602 29,895 28 0 338 30,263 June 1993
Urbannet Oroshimachi Building (Wakabayashi, Sendai)
Leasing Business Office
S Tower: Reinforced concrete structure; 4 floors above ground N Tower: Steel-reinforced concrete structure; 8 floors above ground
28,475 10,600 2,517 1,171 – 26 3,715
S Tower: December 1993; N Tower: September 1995
Urbannet Itsutsubashi Building (Aoba, Sendai)
Leasing Business Office Steel structure; 10 floors
above ground and 1 below 12,859 3,902 2,006 309 0 7 2,323 April 1998
Urbannet Nanase Building (Nagano, Nagano)
Leasing Business Office
Steel structure; Main Tower: 7 floors above ground North Tower: 3 floors above ground
12,880 7,908 960 36 – 3 1,000
Main Tower: June 1995 North Tower: May 1996
Urbannet Niigata Sasaguchi Building (Chuo, Niigata)
Leasing Business Office Steel structure; 8 floors
above ground 5,596 3,832 729 66 0 2 799 May 2001
Urbannet Nagoya Building (Note 6) (Higashi, Nagoya)
Leasing Business Office Steel structure; 22 floors
above ground and 3 below 75,047 5,997 [950] 13,340 3,109 0 314 16,764 September
2005
Urbannet Fushimi Building (Naka, Nagoya)
Leasing Business Office Steel structure; 11 floors
above ground 14,092 1,791 1,725 2,702 0 27 4,456 June 2003
Urbannet CS Building (Note 1) (Naka, Nagoya)
Leasing Business Office
Steel-reinforced concrete structure; 7 floors above ground and 3 below
11,059 1,925 1,307 316 – 7 1,631 February 1991
Urbannet Kaminagoya Building (Nishi, Nagoya)
Leasing Business Office
Reinforced concrete structure; 3 floors above ground and 1 below
7,799 3,957 885 7 – 5 898 July 1991
Urbannet Shizuoka Otemachi Building (Aoi, Shizuoka)
Leasing Business Office
Steel-reinforced concrete structure; 10 floors above ground and 1 below
13,803 2,162 1,124 8 – 51 1,184 March 1996
Urbannet Shizuoka Building (Aoi, Shizuoka)
Leasing Business Office
Steel-reinforced concrete structure; 8 floors above ground
8,997 1,497 1,414 11 0 130 1,557 November 1991
26
Name (Location)
Business segment Primary use Structure
Area (m2) Book value (million yen) Completed
Building Land Building, etc. Land Lease
assets Other Total
Shin-Puh-Kan (Nakagyo, Kyoto)
Leasing Business Commercial Steel structure; 3 floors
above ground 6,104 6,385 1,250 212 – 27 1,491 January 2001
Urban Ace Kizugawadai Pal (Kizugawa, Kyoto)
Leasing Business Housing
Box frame type reinforced concrete structure; Tower 1: 5 floors above ground Tower 2: 4 floors above ground Tower 3: 5 floors above ground and 1 below
5,213 5,703 434 924 – 13 1,372 March 1998
Urban Ace Matsuiyamate Pal (Note 6) (Kyotanabe, Kyoto)
Leasing Business Housing
Reinforced concrete structure; 5 floors above ground
7,327 – [9,608] 655 – – 4 659 March 1998
Urbannet Shijo-Karasuma Building (Shimogyo, Kyoto)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; 7 floors above ground and 1 below
16,088 2,536 5,009 11,622 – 127 16,759 October 2010
Urban Ace Kitahama Building (Note 1) (Chuo, Osaka)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; 15 floors above ground and 2 below
14,468 2,703 2,008 690 – 12 2,712 February 1993
NTT Osaka Chuo Building (Note 1) (Chuo, Osaka)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; 14 floors above ground and 2 below
7,182 1,699 1,314 939 – 4 2,258 August 1993
Urbannet Honmachi Building (Chuo, Osaka)
Leasing Business Office
Steel-reinforced concrete structure; 6 floors above ground and 1 below
14,748 2,980 1,214 27 – 6 1,248 February 2004 (Note 5)
UD Midosuji Building (Chuo, Osaka)
Leasing Business Office
Steel-reinforced concrete structure; 8 floors above ground and 3 below
23,015 2,534 763 12,353 0 4 13,121 October 1967
Urban Ace Higobashi Building (Note 1) (Nishi, Osaka)
Leasing Business Office Steel structure; 13 floors
above ground and 2 below 11,623 1,521 1,338 37 – 32 1,407 January 1997
Urban Ace Higashitenma Building (Kita, Osaka)
Leasing Business Office Steel structure; 10 floors
above ground 10,256 1,815 1,867 28 – 17 1,914 January 1991
Grand Front Osaka (Note 7) (Kita, Osaka)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; Reinforced concrete structure; 38 floors above ground and 3 below
481,628 33,251 [9,917] 16,501 33,874 – 335 50,711 March 2013
Urban Ace Nishinakajima Pal (Yodogawa, Osaka)
Leasing Business Housing
Reinforced concrete structure; 15 floors above ground
2,632 776 337 320 – 3 662 February 2004
Urban Ace Awaza Building (Nishi, Osaka)
Leasing Business Office Steel structure; 11 floors
above ground and 1 below 12,202 1,576 1,574 106 – 1 1,682 May 1991
Urban Ace Hirakata Building (Hirakata, Osaka)
Leasing Business Office Steel structure; 6 floors
above ground 3,897 1,000 366 118 – 2 487 November 1990
Urban Ace Moriguchi Pal (Moriguchi, Osaka)
Leasing Business Housing
Steel-reinforced concrete structure; 9 floors above ground
6,307 1,970 722 459 – 3 1,185 January 2000
Urban Ace Nipponbashi Pal (Naniwa, Osaka)
Leasing Business Housing
Reinforced concrete structure; 10 floors above ground
3,486 890 503 14 – 4 523 January 1999
Urban Ace Joto Pal (Joto, Osaka)
Leasing Business Housing
Reinforced concrete structure; 8 floors above ground
4,260 1,522 356 7 – 0 364 December 1993
Urban Ace Higashishinsaibashi Pal (Chuo, Osaka)
Leasing Business Housing
Reinforced concrete structure; 11 floors above ground
5,709 1,245 774 28 – 7 809 December 2007
27
Name (Location)
Business segment Primary use Structure
Area (m2) Book value (million yen) Completed
Building Land Building, etc. Land Lease
assets Other Total
Tradepia Yodoyabashi (Chuo, Osaka)
Leasing Business Office
Steel structure; Partially steel-reinforced concrete structure; 21 floors above ground and 3 below
48,795 6,517 6,016 14,608 – 85 20,709 February 1975
Taishibashi Store 1 (Note 7) (Asahi, Osaka)
Leasing Business Commercial Steel structure; 1 floor
above ground 2,869
13,504
–
16
– 355
1,566
February 2010
Taishibashi Store 2 (Note 7) (Asahi, Osaka)
Leasing Business Commercial Steel structure; 1 floor
above ground 1,064 – – 147 February 2010
Urban Ace Taishibashi Pal (Asahi, Osaka)
Leasing Business Housing
Reinforced concrete structure; 12 floors above ground
5,816 1,034 – 14 March 2010
Urban Ace Sannomiya Building (Chuo, Kobe)
Leasing Business Office Steel structure; 14 floors
above ground and 1 below 17,272 2,438 1,766 7 – 33 1,807 January 1997
NTT Cred Okayama Building (Kita, Okayama)
Leasing Business Office Steel structure; 21 floors
above ground and 2 below 35,685 4,161 5,433 138 – 59 5,632 February 1999
NTT Cred Motomachi Building (Naka, Hiroshima)
Leasing Business Commercial
Steel structure; Partially steel-reinforced concrete structure; 35 floors above ground and 2 below
160,418 21,801 33,181 1,014 – 818 35,014 March 1994
NTT Cred Hakushima Building (Naka, Hiroshima)
Leasing Business Office Steel structure; 14 floors
above ground and 1 below 38,813 7,052 3,941 965 – 35 4,942 April 1992
Ikeda Golf Garden (Nishi, Kumamoto)
Leasing Business Commercial Steel structure; 2 floors
above ground 1,502 28,171 82 1,702 – – 1,784 April 1993
NTT-T Building (Note 6) (Chuo, Fukuoka)
Leasing Business Commercial
Steel-reinforced concrete structure; 7 floors above ground and 3 below
61,506 8,526 [249] 6,270 11,871 – 82 18,225 September
1996
NTT-KF Building (Chuo, Fukuoka)
Leasing Business Office
Steel-reinforced concrete structure; 9 floors above ground and 1 below
9,510 2,051 1,232 64 – 8 1,304 September 1991
Urbannet Hakata Building (Note 6) (Hakata, Fukuoka)
Leasing Business Office Steel structure; 8 floors
above ground 9,188 – [1,610] 1,150 – 0 32 1,183 May 2003
UD Nakasu Building (Hakata, Fukuoka)
Leasing Business Commercial
Reinforced concrete structure; 14 floors above ground
9,515 1,738 1,895 138 – 60 2,094 September 2011
Urban Citio Atago (Nishi, Fukuoka)
Leasing Business Housing
Reinforced concrete structure; 12 floors above ground
2,663 776 356 5 0 2 364 May 2006
NTT-KF Takamiya Jutaku (Minami, Fukuoka)
Leasing Business Housing
Steel-reinforced concrete structure; 11 floors above ground
8,119 4,272 508 700 0 0 1,208 February 1997
Urbannet Sapporo Building (Chuo, Sapporo)
Leasing Business Office
Steel structure; Partially reinforced concrete structure; 10 floors above ground and 1 below
31,255 5,369 4,559 310 – 114 4,983 October 2004
Emuzu Odori Building (Chuo, Sapporo)
Leasing Business Office Steel structure; 10 floors
above ground and 1 below 13,387 2,275 1,211 407 – 82 1,701 July 1996
Emuzu Minami 22-jo Building (Chuo, Sapporo)
Leasing Business Office
Reinforced concrete structure; 5 floors above ground and 1 partial floor below
8,898 5,772 814 321 – 4 1,141 June 1997
Emuzu Miyanomori Building (Note 6) (Chuo, Sapporo)
Leasing Business Office
Reinforced concrete structure; 5 floors above ground
3,650 – [1,919] 490 – – 11 502 October
1998
Emuzu Minami 6-jo Building (Chuo, Sapporo)
Leasing Business Housing
Residence: Reinforced concrete structure Shops: Steel structure; 6 floors above ground and 1 partial floor below
6,671 4,622 337 26 – 5 369 March 1997
Emuzu Nangodori Building (Note 6) (Shiroishi, Sapporo)
Leasing Business Office
Reinforced concrete structure; 4 floors above ground
3,502 – [1,610] 444 – – 1 446 August 1998
28
(Note 1) Because the building is a joint- or classification-ownership property, the area and the book value given are those
corresponding to the share of ownership. The area of the joint-ownership part of the classification-ownership property is
excluded.
(Note 2) The area of a building is floor space (appreciation for building permission) corresponding to the share of ownership, and
the area of land is the site area (appreciation for building permission) corresponding to the share of ownership.
(Note 3) The building comprises of three towers in its higher part.
(Note 4) The Company singularly owns land, and only the building is a joint- or classification-ownership property. The area and the
book value of the building given are those corresponding to the share of ownership. The area of the joint-ownership part of
the classification-ownership property is excluded.
(Note 5) The date given is the completion date of renewal work.
(Note 6) The building is sited on leased land (including a portion of leased land). The area and the book value of land given are
those corresponding to the share of ownership, and the area of leased land is given in brackets.
(Note 7) The property is jointly owned. The area is for the entire property, and the book value corresponds to the share of ownership.
Part of the building is on leased land, and the figure in brackets is the area of the leased land
(Note 8) “Other” of the book value includes lease investment assets.
(2) Domestic subsidiary As of March 31, 2013
Corporate name
Name (Location)
Business segment
Primary use Structure
Area (m2) Book value (million yen) Completed
Building Land Building, etc. Land Lease
assets Other Total
UDX Tokutei Mokuteki Kaisha
Akihabara UDX (Chiyoda, Tokyo)
Leasing Business Office
Steel structure; 22 floors above ground and 3 below
155,629 11,548 47,087 171,402 79 172 218,743 January 2006
29
3. Equipment introduction and retirement plans Plans for significant new construction, renovations, and disposals, etc. of facilities as at the end of the fiscal year ended March 31,
2013 are as follows:
(1) Significant new construction of facilities
(NTT Urban Development) As of March 31, 2013
Name (Location)
Business segment
Primary use Facilit ies
Planned investments (million yen) Financing
method
Planned start and completion date
Total Amount paid Start Completion
Upper-Level Section Redevelopment Project associated with the reconstruction of the Shibaura Water Reclamation Center (Note1) (Minato, Tokyo)
Leasing Business Office
Steel structure; Partially reinforced concrete structure; 32 floors above ground and 1 below; Floor space: Approximately 205,785 m2
40,600 5,573 Own funds and borrowings
February 2012
February 2015
Nihonbashi 2-Chome Plan (tentative name) (Note2) (Chuo, Tokyo)
Leasing Business Office
Steel structure; Partially reinforced concrete structure; 10 floors above ground and 2 below; Floor space: 13,508 m2
5,889 502 Own funds and borrowings
February 2013
September 2015
(Note 1) The project is a joint project with four development companies, including the Company.
(Note 2) The project is the reconstruction of a property owned by the Company. The planned investments do not include an
investment in the land and are investments associated with the reconstruction. The total planned investments, including an
investment in the land, are ¥19,817 million.
(2) Significant renovation As of March 31, 2013
Name (Location) Primary use Facilit ies
Planned investments (million yen) Financing method
Planned start and completion date
Total Amount paid Start Completion NTT Urban Development (Chiyoda, Tokyo and other)
Leasing business Existing buildings (Note) 12,121 – Own funds and
borrowings April 2013
March 2014
(Note) The renovation work is carried out for buildings owned by the Company, located in Chiyoda-ku, Tokyo and nationwide.
(3) Significant disposals, etc. of facilities
No significant disposals are planned.
30
Section 4. Situation of Submitting Company 1. Shares of the Company (1) Total number of shares and other information
1) Total number of shares Type Number of shares issuable
Common shares 10,500,000 Total 10,500,000
2) Shares issued
Type Number of shares issued at
the end of fiscal year (March 31, 2013)
Number of shares issued on the date of the submission
of the report (June 19, 2013)
Stock exchange or registered financial instruments dealers
association
Remarks
Common shares 3,291,200 3,291,200 The First Section of the
Tokyo Stock Exchange
The Company does not adopt a system in which a unit of shares represents
one voting right Total 3,291,200 3,291,200 – –
(Note) The number of issued and outstanding shares includes 306,300 shares of an investment in kind (with buildings, etc. of ¥927
million and land (89,492 m2) of ¥2,144 million yen).
(2) Stock acquisition rights
Not applicable.
(3) Exercise of bonds with subscription rights to shares with amendments to exercise prices
Not applicable.
(4) Features of rights plan
Not applicable.
(5) Changes in the number of shares outstanding and capital
Date
Change in number of shares
outstanding (shares)
Number of shares outstanding
(shares)
Change in capital (million yen)
Capital (million yen)
Change in capital reserve (million yen)
Capital reserve (million yen)
January 1, 2007 (Note) 2,632,960 3,291,200 – 48,760 – 34,109
(Note) The increase was attributable to a five-for-one share split completed on January 1, 2007.
(6) Ownership of shares by owner As of March 31, 2013
Classification
Ownership of shares
Fractional shares
(shares) Government
and local governments
Financial institutions
Securities companies
Other corporations
Foreign corporations and individuals
Individuals and others Total Entities
other than individuals
Individuals
Number of shareholders – 38 37 98 300 7 13,576 14,056 –
Number of shares held (unit)
– 289,440 16,176 2,227,310 653,775 15 104,484 3,291,200 –
Holdings (%) – 8.79 0.49 67.67 19.86 0.00 3.17 100.00 –
(Note) Shares in the other corporations column includes 8 shares under the name of the Japan Securities Depository Center.
31
(7) Major shareholders As of March 31, 2013
Name Address Number of shares held
Ratio of holdings to the number of shares issued (%)
Nippon Telegraph and Telephone Corporation (NTT) 2-3-1, Otemachi, Chiyoda-ku, Tokyo 2,214,815 67.30
The Master Trust Bank of Japan, Ltd. (Trust Account)
2-11-3, Hamamatsu-cho, Minato-ku, Tokyo 75,887 2.31
Japan Trustee Services Bank, Ltd. (Trust Account) 1-8-11, Harumi, Chuo-ku, Tokyo 73,387 2.23
CBNY – ORBIS SICAV (Standing agency: Citibank Japan Ltd.)
31, Z. A. Bourmicht, L-8070 Bertrangem Luxembourg (2-3-14, Higashi Shinagawa, Shinagawa-ku, Tokyo)
46,206 1.40
THE BANK OF NEW YORK – JASDEC TREATY ACCOUNT (Standing agency: Custody & Proxy Department, Mizuho Corporate Bank, Ltd.)
Avenue Des Arts, 35 Kunstlaan, 1040 Brussels, Belguim (4-16-13, Tsukishima, Chuo-ku, Tokyo)
35,792 1.09
THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT (Standing agency: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)
Avenue Des Arts, 35 Kunstlaan, 1040 Brussels, Belgium (Transaction Services Division, 2-7-1, Marunouchi, Chiyoda-ku, Tokyo)
35,315 1.07
Japan Trustee Services Bank, Ltd. (Trust Account 9) 1-8-11, Harumi, Chuo-ku, Tokyo 27,469 0.83
STATE STREET BANK AND TRUST COMPANY (Standing agency: Custody & Proxy Department, Mizuho Corporate Bank, Ltd.)
P.O.BOX 351 Boston Massachusetts 02101 U.S.A. (4-16-13, Tsukishima, Chuo-ku, Tokyo)
27,166 0.83
SSBT OD05 OMNIBUS ACCOUNT - TREATY CLIENTS (Standing agency: The Hongkong and Shanghai Banking Corporation Limited, Tokyo Branch, Custody and Clearing Division)
338 Pitt Street Sydney NSW 2000, Australia (3-11-1, Nihonbashi, Chuo-ku, Tokyo)
22,847 0.69
GOLDMAN, SACHS & CO. REG (Standing agency: Goldman Sachs Japan Co., Ltd.)
200 West Street New York, NY, USA (6-10-11, Roppongi Hills Mori Tower, Roppongi, Minato-ku, Tokyo)
21,877 0.66
Total – 2,580,761 78.41
(Note 1) All shares held by The Master Trust Bank of Japan, Ltd. (Trust account), Japan Trustee Services Bank, Ltd. (Trust account),
and Japan Trustee Services Bank, Ltd. (Trust Account 9) are those held under their trust operations (including securities
investment trusts). They include 56,375 shares under the management of investment trusts, 47,403 shares under the
management of pension trusts, and 72,965 shares under the management of other trusts.
(Note 2) The following institutions manage custody operations of shares owned by foreign institutional investors, as well as act as
owners of shares on behalf of the relevant institutional investors; they are CBNY – ORBIS SICAV, THE BANK OF NEW
YORK – JASDEC TREATY ACCOUNT, THE BANK OF NEW YORK TREATY JASDEC ACCOUNT, STATE
STREET BANK AND TRUST COMPANY, SSBT OD05 OMNIBUS ACCOUNT – TREATY CLIENTS, and
GOLDMAN, SACHS & CO. REG.
32
(8) Voting rights
1) Shares issued As of March 31, 2013
Classification Number of shares Number of voting rights Remarks
Nonvoting shares – – – Shares with limited voting rights (treasury share, etc.) – – – Shares with limited voting rights (other shares) – – – Shares with complete voting rights (treasury share, etc.) – – – Shares with complete voting rights (other shares) Common shares 3,291,200 3,291,200 – Fractional shares – – – Total number of shares issued 3,291,200 – – Number of voting rights of all shareholders – 3,291,200 –
(Note) Shares with complete voting rights (other shares) include 8 shares under the name of the Japan Securities Depository Center.
The number of voting rights includes 8 shares with complete voting rights under the name of the Japan Securities Depository
Center.
2) Treasury shares, etc. As of March 31, 2013
Owner Address of owner
Number of shares held under the
owner’s own name (shares)
Number of shares held under the
name of any other person (shares)
Total number of shares held
(shares)
Ratio of holdings to the number of shares issued (%)
– – – – – – Total – – – – –
(9) Stock option system
Not applicable.
2. Acquisition of treasury shares Type of shares
Not applicable.
(1) Acquisition based on resolutions at the shareholders meeting
Not applicable.
(2) Acquisition based on resolutions at Board of Directors meetings
Not applicable.
(3) Acquisition not based on resolutions at the shareholders meeting or Board of Directors meetings
Not applicable.
(4) Treatment of acquired treasury shares and treasury shares held
Not applicable.
33
3. Dividend policy NTT Urban Development’s basic policy on the distribution of profits is to maintain adequate internal reserves to contribute to
ongoing growth in corporate value and to strengthen its ability to provide a stable and long-term profit return to shareholders by
taking a long-term perspective on its business operations in the real estate industry. Internal reserves are primarily used to invest in
quality properties for future development, with the objective of further raising corporate value. With respect to annual dividend for the year ended March 31, 2013, the Company has decided to increase the dividend by ¥200 per
share, to ¥1,600 per share, as part of its shareholder-oriented management as expressed in the “Medium-Term Vision 2018 – For
Further Growth –” (announced on May 9, 2013), a new vision with fiscal 2013 as the first year, as well as considering the income
level in the fiscal year under review and business trends for the medium and long terms, among other factors. Since the Company
paid an interim dividend of ¥700 per share, the year-end dividend was ¥900 per share.
The Company also implements a 100-for-one stock split for its common shares with September 30, 2013 as the record date and
October 1, 2013 as the effective date and, at the same time, adopt a unit share system that will set the unit share at 100 shares.
For the fiscal year ending March 2014, the Company plans to pay an interim dividend per share of ¥800 based on the value
calculation before the stock split and a year-end dividend per share of ¥8 based on the value calculation after the stock split (¥800
based on the value calculation before the stock split), which are dividends at effectively the same level as those in the fiscal year
ended March 31, 2013 (an annual dividend of ¥1,600 per share).
These dividends are expected to be paid in two payments with year-end dividend payment and interim dividend payments.
Decision-making bodies for the above payments will be a general shareholders’ meeting for year-end dividend payment and a board
of directors for interim dividend payments.
The Articles of Incorporation specifies that the Company may pay interim dividends whose record date is September 30 of every year
by resolution of the Board of Directors.
The table below shows dividends for the fiscal year ended March 31, 2013.
Resolution Total amount of dividend (million yen) Dividend per share (yen)
Resolution of Board of Directors on November 5, 2012 2,303 700 General shareholders’ meeting on June 18, 2013 2,962 900
4. Trends in stock prices (1) Highest and lowest stock prices in each of the past five years
Fiscal term 24th term 25th term 26th term 27th term 28th term Closing month and year March 2009 March 2010 March 2011 March 2012 March 2013
Highest (yen) 176,000 105,400 92,300 73,100 115,500 Lowest (yen) 60,500 54,800 56,100 47,800 53,800
(Note) 1. The highest and lowest stock prices above are those on the First Section of the Tokyo Stock Exchange.
(2) Highest and lowest stock prices in each month of the past six months Month October 2012 November December January 2013 February March
Highest (yen) 66,500 70,800 86,200 93,400 94,700 115,500 Lowest (yen) 60,200 63,200 68,500 81,300 83,100 94,800
(Note) The highest and lowest stock prices above are those on the First Section of the Tokyo Stock Exchange.
34
5. Officers As of June 19, 2013
Title Job tit le Name Date of birth Career summary Term of
office Number of shares held
President and Chief Executive Officer
Sadao Maki
August 19, 1952
Apr. 1975 Joined Nippon Telegraph and Telephone Public Corporation Jun. 2004 Executive Manager, Corporate Planning, NTT
Communications Corporation Jun. 2005 Senior Vice President, First Sales Division, NTT
Communications Corporation Aug. 2006 Senior Vice President, First Sales Division of Enterprise
Business Division, NTT Communications Corporation Apr. 2007 Senior Vice President, Enterprise Business Division, First Sales
Division, NTT Communications Corporation Jun. 2007 Senior Vice President, Enterprise Business Division, First Sales
Division, and Global Business Division, NTT Communications Corporation
Jun. 2008 Executive Vice President, Global Business Division, NTT Communications Corporation
Jun. 2010 Senior Executive Vice President, Global Business Division, in charge of Corporate Affairs, NTT Communications Corporation
Aug. 2011 Senior Executive Vice President, in charge of Global Business Division, in charge of Corporate Affairs, NTT Communications Corporation
Jun. 2012 Senior Executive Vice President, NTT Urban Development Corporation
Jun. 2013 President and Chief Executive Officer, NTT Urban Development Corporation (present post)
(Note 3) 52
Senior Executive Vice President
Yoshiharu Nishimura
March 27, 1954
Apr. 1976 Joined Nippon Telegraph and Telephone Public Corporation Jul. 1999 Senior Manager, Department I, Nippon Telegraph and
Telephone Corporation Jul. 2000 General Manager, Real Estate Planning Office of General
Affairs, Nippon Telegraph and Telephone East Corporation Jul. 2000 Director, NTT Urban Development Corporation (until June
2004) Jul. 2004 Senior Vice President, Property Development, NTT Urban
Development Corporation Jun. 2005 Senior Vice President, Corporate Strategy and Planning, NTT
Urban Development Corporation Jun. 2008 Senior Vice President, Property Development, NTT Urban
Development Corporation Jun. 2010 Executive Vice President, Property Development, NTT Urban
Development Corporation Jun. 2012 Executive Vice President, Office Building Business
Headquarters, NTT Urban Development Corporation Jun. 2012 President and Chief Executive Officer, NTT Urban
Development Builservice Co. (present post) Jun. 2013 Senior Executive Vice President, NTT Urban Development
Corporation (present post)
(Note 3) 175
Executive Vice President
Corporate Strategy and Planning, Accounting and Finance
Satoshi Shinoda
January 13, 1954
Apr. 1977 Joined Nippon Telegraph and Telephone Public Corporation Jul. 1994 Senior Manager, Marketing Planning, Nippon Telegraph and
Telephone Corporation Jul. 1999 Senior Manager, Strategy Planning, Nippon Telegraph and
Telephone East Corporation Jul. 2002 General Manager, Nagano Branch, Nippon Telegraph and
Telephone East Corporation Jul. 2005 Executive Manager, Interconnection Promotion, Nippon
Telegraph and Telephone East Corporation Apr. 2007 Director, Business Headquarters, NTT Urban Development
Corporation Jun. 2007 Senior Vice President, Business Headquarters, Corporate
Business Department, NTT Urban Development Corporation Jul. 2007 Senior Vice President, Solution Business Headquarters,
Solution Business Department 1, NTT Urban Development Corporation
Apr. 2010 Senior Vice President, Solution Business Headquarters, Solution Business Department 1 and 2, NTT Urban Development Corporation
Jul. 2010 Senior Vice President, Accounting and Finance, NTT Urban Development Corporation
Jun. 2012 Executive Vice President, Accounting and Finance, NTT Urban Development Corporation
Jun. 2013 Executive Vice President, Corporate Strategy and Planning, Accounting and Finance, NTT Urban Development Corporation (present post)
(Note 3) 138
35
T itle Job tit le Name Date of birth Career summary Term of
office Number of shares held
Executive Vice President
Office Building Business
Kazuhiro Hasegawa
August 20, 1953
Apr. 1972 Joined Nippon Telegraph and Telephone Public Corporation Apr. 2000 Senior Manager, Planning, Nippon Telegraph and Telephone
East Corporation Jul. 2001 Senior Manager, Accounts and Finance, Nippon Telegraph and
Telephone East Corporation Jul. 2004 Senior Manager, General Affairs and Personnel, Nippon
Telegraph and Telephone East Corporation (seconded to NTT Business Associe Co., Ltd.)
Apr. 2008 Director, General Affairs, NTT Urban Development Corporation
May 2008 Director, Fund Business of Solution Business Headquarters, NTT Urban Development Corporation
Jun. 2008 Senior Vice President, Solution Business Headquarters, and Fund Business of Solution Business Headquarters, NTT Urban Development Corporation
Jul. 2009 Senior Vice President, Real Estate Investment, NTT Urban Development Corporation
Jun. 2013 Executive Vice President, Office Building Business, NTT Urban Development Corporation (present post)
(Note 3) 163
Senior Vice President
General Affairs Shiro Nakahara
October 21, 1954
Apr. 1978 Joined Nippon Telegraph and Telephone Public Corporation Apr. 1995 Senior Manager, International Procurement Office, Nippon
Telegraph and Telephone Corporation May 1996 Senior Manager, Legal Review, Nippon Telegraph and
Telephone Corporation Jul. 1999 Senior Manager, Department IV, Nippon Telegraph and
Telephone Corporation Jul. 2003 General Manager, Iwate Branch, Nippon Telegraph and
Telephone East Corporation Jun. 2006 Executive Manager, Public Solution Marketing Division,
e-Japan Promotion Division of Corporate Business Headquarters, Nippon Telegraph and Telephone East Corporation
Apr. 2008 Director, General Affairs, NTT Urban Development Corporation
Jun. 2008 Senior Vice President, General Affairs, NTT Urban Development Corporation (present post)
(Note 3) 154
Senior Vice President
Property Development
Masaru Yanagida
June 26, 1956
Apr. 1980 Joined Nippon Telegraph and Telephone Public Corporation Jul. 1999 General Manager, Real Estate Planning Office of General
Affairs of Hokkaido Branch, Nippon Telegraph and Telephone East Corporation
Apr. 2000 Senior Manager, Planning of Facility Management Division, Technical Engineering of Facility Management Division, NTT Data Corporation
Jul. 2002 Senior Manager, IT Business Development Sector, NTT Data Corporation
Apr. 2003 Senior Manager, Personnel, Nippon Telegraph and Telephone East Corporation (seconded to NTT Urban Development Corporation)
Apr. 2004 Director, Property Development, NTT Urban Development Corporation
Jun. 2010 Senior Vice President, Kansai Regional Business (General Manager of Kansai Branch)
Jun. 2012 Senior Vice President, Property Development, Kansai Regional Business
Sep. 2012 Representative Director, Harumi Yonchome City Planning Design Co. (present post)
Jun. 2013 Senior Vice President, Property Development, NTT Urban Development Corporation (present post)
(Note 3) 108
36
T itle Job tit le Name Date of birth Career summary Term of
office Number of shares held
Senior Vice President
Property Development
Takanori Ito
February 24, 1958
Apr. 1980 Joined Nippon Telegraph and Telephone Public Corporation Apr. 2004 Senior Vice President, Sales Division of Building Service
Headquarters, NTT Urban Development Corporation Apr. 2005 Senior Vice President, Sales Division of Business
Headquarters, NTT Urban Development Corporation Jul. 2007 Senior Vice President, Solution Business Department 2 of
Solution Business Headquarters, NTT Urban Development Corporation
Apr. 2009 Senior Vice President, Solution Business Department 2 of Solution Business Headquarters, Building Service Headquarters, NTT Urban Development Corporation
Apr. 2010 Senior Vice President, Building Service Headquarters, NTT Urban Development Corporation
Jun. 2010 Senior Vice President, Building Service Headquarters, NTT Urban Development Corporation
Jun. 2012 Senior Vice President, Asset Solution Promotion, NTT Urban Development Corporation
Jul. 2012 Senior Vice President, Property Development, NTT Urban Development Corporation (present post)
(Note 3) 146
Senior Vice President
Commercial Properties Development, Global Business, Regional Businesses (Chugoku and Kyushu)
Masayuki Kusumoto
August 19, 1955
Apr. 1979 Joined Nippon Telegraph and Telephone Public Corporation Apr. 2000 Senior Manager, Strategy Planning, Nippon Telegraph and
Telephone East Corporation (seconded to NTT Urban Development Corporation)
Jan. 2003 Senior Manager, Personnel, Nippon Telegraph and Telephone East Corporation (seconded to NTT Urban Development Corporation)
Apr. 2004 Director, Property Development, NTT Urban Development Corporation
Apr. 2009 Senior Vice President, Commercial Properties Development, NTT Urban Development Corporation
Jun. 2011 Senior Vice President, Commercial Properties Development, NTT Urban Development Corporation (Member of the Board)
Feb. 2013 Senior Vice President, Commercial Properties Development, Global Business, NTT Urban Development Corporation
Jun. 2013 Senior Vice President, Commercial Properties Development, Global Business, Regional Businesses (Chugoku and Kyushu) (present post)
(Note 3) 94
Senior Vice President
Residential Development
Akiyoshi Kitamura
May 26, 1957
Apr. 1981 Joined Nippon Telegraph and Telephone Public Corporation Mar. 1997 Executive Manager, Labor Department of Chugoku Regional
Communications Sector, Nippon Telegraph and Telephone Corporation
Jul. 1999 Senior Manager, Personnel, NTT Communications Corporation Jun. 2000 Senior Manager, Human Resource Management, NTT
Communications Corporation Jun. 2006 General Manager, Kanto Hospital of Medical and Health
Administration Center of General Affairs and Personnel, Nippon Telegraph and Telephone East Corporation
Jun. 2011 Senior Vice President, Solution Business Headquarters, Solution Business 1 and 2 of the Solution Business Headquarters, Regional Businesses (Tokai, Chugoku, Kyushu and Hokkaido), NTT Urban Development Corporation
Jul. 2011 Senior Vice President, Assets Solution Promotion, Regional Businesses (Tokai, Chugoku, Kyushu and Hokkaido)
Jun. 2012 Senior Vice President, Residential Development, NTT Urban Development Corporation (present post)
(Note 3) 51
Senior Vice President
Regional Businesses (Tokai and Hokkaido)
Ryuichi Tsushima
September 21, 1948
Apr. 1972 Joined Tokyo Metropolitan Government Jun. 2003 Administrator, Bureau of Chief Treasurer, Tokyo Metropolitan
Government Aug. 2004 Head, Department of Establishment of ShinGinko Tokyo,
Tokyo Metropolitan Government Jul. 2005 Head, Bureau of Port and Harbor, Tokyo Metropolitan
Government Nov. 2007 Chief Executive Officer, ShinGinko Tokyo, Limited Aug. 2009 President and Chief Executive Officer, Tokyo Heat Supply Co.,
Ltd. Sep. 2011 Consultant to the President, NTT Urban Development
Corporation Jun. 2012 Senior Vice President, Regional Businesses (Tokai, Chugoku,
Kyushu and Hokkaido), NTT Urban Development Corporation Jun. 2013 Senior Vice President, Real Estate Investment, Regional
Businesses (Tokai and Hokkaido), NTT Urban Development Corporation (present post)
(Note 3) 23
37
T itle Job tit le Name Date of birth Career summary Term of
office Number of shares held
Senior Vice President
Kansai Regional Business (General Manager of Kansai Branch)
Kanya Shiokawa
April 16, 1958
Apr. 1984 Joined Nippon Telegraph and Telephone Public Corporation Apr. 2003 Senior Manager, Real Estate Planning Office, General Affairs
Department, Nippon Telegraph and Telephone West Corporation
Apr. 2005 General Manager, Building Engineering, Kansai Regional Headquarters, NTT FACILITIES CO., LTD.
Jul. 2008 General Manager, Real Estate Planning Office, Accounts and Finance Department, Nippon Telegraph and Telephone East Corporation
Apr. 2010 Director, Property Development, NTT Urban Development Corporation
Jun. 2012 Kansai Regional Business (General Manager of Kansai Branch), NTT Urban Development Corporation
Jun. 2012 President and Chief Executive Officer, NTT Urban Development West BS Co. (present post)
Jun. 2013 Senior Vice President, Kansai Regional Business (General Manager of Kansai Branch), NTT Urban Development Corporation (present post)
(Note 4) 8
38
T itle Job tit le Name Date of birth Career summary Term of
office Number of shares held
Corporate Adviser Masaki
Mitsumura November 4, 1949
Apr. 1972 Joined Nippon Telegraph and Telephone Public Corporation Jun. 1995 Executive Manager, Advertising Department, Nippon
Telegraph and Telephone Corporation Jun. 1996 Senior Manager, President’s Office, Nippon Telegraph and
Telephone Corporation Jul. 1999 Executive Manager, Personnel Department, Nippon Telegraph
and Telephone East Corporation Jul. 2001 Senior Vice President, Personnel, Nippon Telegraph and
Telephone Corporation Jun. 2002 Senior Vice President, Department V, Nippon Telegraph and
Telephone Corporation Jun. 2002 Director, NTT Urban Development Corporation (until June
2005) Jun. 2005 Senior Executive Vice President, NTT Communications
Corporation Aug. 2006 Senior Executive Vice President, Net Business Division, NTT
Communications Corporation Jun. 2007 President and Chief Executive Officer, NTT Urban
Development Corporation Jun. 2013 Corporate Adviser, NTT Urban Development Corporation
(present post)
(Note 3) 417
Director Akira Komatsu
March 24, 1948
Apr. 1972 Research Associate, Faculty of Economics, Saitama University Jan. 1989 Professor, Faculty of Economics, Saitama University Apr. 1992 Professor, Faculty of Commerce and Management,
Hitotsubashi University Apr. 2000 Professor, Graduate School of Commerce and Management,
Hitotsubashi University Apr. 2011 Professor Emeritus, Hitotsubashi University (present post)
Professor, Department of Political Science and Economics, Faculty of Political Science and Economics, Musashino University, Professor, Graduate School of Political Science and Economics, Musashino University (present post)
Apr. 2012 Professor, Department of Business Administration, Faculty of Political Science and Economics, Musashino University (present post)
Jun. 2013 Director, NTT Urban Development Corporation (present post)
(Note 4) –
Director Toyosei Sugimura
June 13, 1964
Apr. 1987 Joined Nippon Telegraph and Telephone Corporation May 2002 Senior Manager, Marketing Strategy of Yamaguchi Branch,
Nippon Telegraph and Telephone West Corporation Apr. 2004 Senior Manager, Department V, Nippon Telegraph and
Telephone Corporation Jul. 2007 Senior Manager, General Affairs, Nippon Telegraph and
Telephone West Corporation Jul. 2011 Senior Manager, General Affairs, Nippon Telegraph and
Telephone Corporation (present post) Jun. 2012 Director, NTT Urban Development Corporation (present post)
(Note 3) –
39
T itle Job tit le Name Date of birth Career summary Term of
office Number of shares held
Corporate Auditor (full-time)
Akira Sakashita
April 5, 1949
Apr. 1972 Joined Nippon Telegraph and Telephone Public Corporation Oct. 2001 Senior Vice President, Accounting and Finance, NTT Comware
Corporation Jul. 2003 Senior Vice President, Sales and Marketing Department II, IT
Sales and Marketing Headquarters, NTT Comware Corporation Jul. 2004 Senior Vice President, Financial System Division, NTT
Comware Corporation Apr. 2006 Senior Vice President, Financial System Division, NTT
Comware Corporation Jun. 2007 Corporate Auditor, Nippon Telegraph and Telephone West
Corporation Jun. 2011 Corporate Auditor, NTT Urban Development Corporation
(present post)
(Note 5) 48
Corporate Auditor (full-time)
Akio Enomoto
June 18, 1949
Apr. 1973 Joined the Ministry of Construction Jan. 2001 Director, General Affairs Division of Policy Bureau, Ministry
of Land, Infrastructure, Transport and Tourism Aug. 2001 Assistant Vice-Minister of Minister Secretariat of the Ministry Jul. 2002 Advisor, Japan Civil Engineering Contractors Association, Inc. Oct. 2002 Executive Director, Japan Civil Engineering Contractors
Association, Inc. Jul. 2005 Deputy-President, Japan Electrical Construction Association,
Inc. Jun. 2009 Corporate Auditor, NTT Urban Development Corporation
(present post)
(Note 5) 96
Corporate Auditor (full-time)
Hiroshi Ikegawa
March 10, 1955
Apr. 1978 Joined the Ministry of Posts and Telecommunications Aug. 2005 Deputy Director-General, Postal Services Policy Planning
Bureau, Ministry of Internal Affairs and Communications Feb. 2006 Director-General, Kyushu Regional Administrative Evaluation
Bureau, Ministry of Internal Affairs and Communications Jul. 2007 Vice President, National Institute of Information and
Communications Technology Jul. 2009 Director, General for Policy Planning, Ministry of Internal
Affairs and Communications (Statistical Standards) Jan. 2012 Commissioned Expert, Yusei Fukushi Incorporated Foundation
(special officer) Jun. 2012 Corporate Auditor, NTT Urban Development Corporation
(present post)
(Note 6) 19
Corporate Auditor Takashi
Hiroi February 13, 1963
Apr. 1986 Joined Nippon Telegraph and Telephone Corporation Jul. 2002 Senior Manager, Department I, Nippon Telegraph and
Telephone Corporation May 2005 Senior Manager, Corporate Business Strategy Division,
concurrently Department I, Nippon Telegraph and Telephone Corporation
Jun. 2008 Senior Manager, Strategic Business Development Division, concurrently Corporate Strategy Planning Department, Nippon Telegraph and Telephone Corporation
Jul. 2009 Senior Manager, Corporate Strategy Planning Department, Nippon Telegraph and Telephone Corporation (present post)
Jun. 2013 Corporate Auditor, NTT Urban Development Corporation (present post)
(Note 7) –
Total 1,692
(Note 1) Of the Directors, Mr. Akira Komatsu and Mr. Toyosei Sugimura are Outside Directors.
(Note 2) Of the Corporate Auditors, Mr. Akira Sakashita, Mr. Akio Enomoto, Mr. Hiroshi Ikegawa, and Mr. Takashi Hiroi are
Outside Auditors.Of the Directors, Mr. Akira Komatsu and Mr. Toyosei Sugimura are Outside Directors.
(Note 3) Two years from the closing of the annual shareholders meeting held on June 19, 2012
(Note 4) One year from the closing of the annual shareholders meeting held on June 18, 2013
(Note 5) Four years from the closing of the annual shareholders meeting held on June 21, 2011
(Note 6) Four years from the closing of the annual shareholders meeting held on June 18, 2013
(Note 7) Two years from the closing of the annual shareholders meeting held on June 18, 2013
40
6. Corporate governance (1) Corporate governance
NTT Urban Development recognizes that strong corporate governance is a key management issue and views the introduction of
governance initiatives as one of the most important methods of maximizing corporate value. NTT Urban Development believes
that strong corporate governance deepens its trust-based relationships with stakeholders, including shareholders and other
investors, as well as customers, business partners and society as a whole. As a result, forming the key components of NTT Urban
Development’s basic corporate governance policy are efforts to ensure management transparency, to strengthen accountability, to
strictly adhere to appropriate risk management, corporate ethics, and compliance and the highest standards of corporate ethics and
compliance and to enhance management efficiency.
1) Corporate governance system
(i) Organizations of the Company
NTT Urban Development employs a system of Corporate Auditors. As stipulated in Japan's Companies Act, its internal
organizations include the General Ordinary Meeting of Shareholders, the Board of Directors, the Board of Corporate Auditors
and an independent accounting auditor. The Company has determined that audits by Corporate Auditors including Outside
Corporate Auditors is effective for monitoring management and has employed a corporate auditor system.
The Company has also established the Management Council, consisting of full-time Directors, branch managers, operating
department managers, and heads of staff departments, which advises the President on matters within his decision-making
capacity. The Management Council deliberates matters of management importance, with the goal of ensuring the speedy
execution of duties and decision making. Moreover, in an effort to further enhance transparency in the decision-making process,
full-time Corporate Auditors attend Management Council Meetings. In addition, before the Management Council, investment
risks and other matters associated with investment projects are considered by the Investment Deliberation Council, which
consists of cross-functional members, they are closely examined at investment review meetings to ensure appropriate risk
control.
The Board of Directors comprised 14 Directors (one member was Outside Director; all members were male). The Board
decides important matters, sets basic policies regarding management and business execution, and supervises the execution of
duties by Directors. In principle, the Board of Directors convenes once a month, with additional meetings as necessary for
quick decision making. During the fiscal year ended March 31, 2013, the Board of Directors convened a meeting on 27
occasions.
The Board of Corporate Auditors has four members, (all members were Outside Corporate Auditors and male). In principle, it
meets regularly once a month and holds additional meetings as necessary. During the fiscal year ended March 31, 2013, the
Board of Corporate Auditors met on 25 occasions. Corporate Auditors carry out their duties according to the audit plan
established by the Board of Corporate Auditors. Corporate Auditors attend meetings of the Board of Directors and other
important meetings, and audit the execution of duties of Directors, and examine the status of operations and assets.
As of the date when this report was submitted, the Board of Directors consisted of 14 Directors, (two members were Outside
Directors; all members were male), and the Board of Corporate Auditors consisted of four members, (all members were
Outside Corporate Auditors and male).
The Company has determined in its Articles of Incorporation that the Company may, by resolution of the Board of Directors,
release Directors and Corporate Auditors from liabilities, to the extent permitted by the Companies Act, so that they can fully
demonstrate their roles expected in executing their duties.
The Company has concluded agreements with its Outside Directors and Outside Corporate Auditors for the limitation of
liability for damages stipulated in Article 423, Paragraph 1 of the Companies Act under the provision of Article 427, Paragraph
1 of the Companies Act. The limit of liabilities for damage under the agreements is the minimum liability amount stipulated in
Article 425, Paragraph 1 of the Companies Act for both Outside Directors and Outside Corporate Auditors.
41
The chart below shows the corporate governance system of the Company.
Shareholders
Board of Auditors
Corporate Auditors Office Accounting Auditor Board of Directors Attorney
Supervision Disclosure/Explanation
Corporate Audits
Accounting Audits
Supervision Management Council Corporate Ethics
Promotion Committee
Investment Deliberation Council
Confirmation of Appropriateness
Corporate G
overnance Risk M
anagement/Internal C
ontrol
Internal Control Department
(Internal Audit Office)
Directors Management Control/ Risk Management
Control/Monitoring
Organization of Headquarter and Branch Office
Business Process Implementation and Risk Management
Administrative Divisions of Group
Companies
Control/ Monitoring
Subsidiaries
Risk Management Committee
(ii) Development of internal control system
< Basic policy >
The President is charged with business execution involving the creation and development of an internal control system, under
the supervision of the Board of Directors and the Board of Corporate Auditors. Resolution for a basic policy on the
development of an internal control system passed by the Board of Directors is as follows.
Pursuant to the Companies Act and the Enforcement Regulations of the Companies Act, NTT Urban Development shall design
internal systems to secure legal and ethical compliance in its business operations (hereinafter, the “Internal Control Systems”),
as described below.
a. A system to ensure that Directors and employees adhere to laws and regulations and the Company's Articles of Association
in the execution of their duties. This system requires that:
(a) Employees carry out their respective duties in a diligent and conscientious manner in accordance with laws, regulations
and instructions in an effort to ensure appropriate and efficient business operations as stipulated in the Company's Rules
of Employment and related documents;
(b) All Directors and employees of NTT Urban Development Group companies engage in activities that promote the highest
standards in corporate ethics and compliance in accordance with the NTT Group's Code of Corporate Ethics;
(c) The Corporate Ethics Promotion Committee is established and preventive measures initiated with regard to illegalities
and misconduct in accordance with compliance related regulations;
(d) The Company provides the necessary support infrastructure to its Directors and employees both within and outside the
Company, including a corporate ethics and compliance helpline to facilitate corporate ethics and compliance;
(e) NTT Urban Development establishes a framework to ensure information is concentrated in the relevant department and
an appropriate response is formulated in the event of potential and actual non-compliance and unethical act;
42
(f) Education and training with regard to corporate ethics and compliance is implemented on a continuous basis for
Directors and employees;
(g) The Internal Audit Office is inaugurated as a means to evaluate the efficacy and management of the Internal Control
Systems, and an audit review program is initiated for areas of particularly high risk to facilitate necessary and appropriate
improvement;
(h) A legal structure and framework, coordinated by the Legal Department, is maintained to ensure the appropriate checks
and balances are in place. In addition, the Legal Department shall centrally coordinate the Company's legal consultation
with lawyers;
(i) As an operator of financial instruments, NTT Urban Development ensures appropriate business management and human
resources structures, and develops structures to enforce the compliance with laws and ordinances, and risk management
structures, and manages appropriate customer protection and customer information control;
(j) NTT Urban Development appropriately develops and manages internal control associated with financial reports to ensure
the credibility of financial reports in accordance with the Financial Instruments and Exchange Act; and
(k) NTT Urban Development is committed to not being associated, by any means, with antisocial forces or organizations that
pose a threat to the order and safety of society, and to act decisively against these antisocial activities in cooperation with
the appropriate authorities, such as the police.
b. A structure for storing and managing information pertaining to the execution of duties by Directors. Under this structure:
(a) Minutes of meetings, associated documents and other information relating to the execution of duties by Directors are
stored and managed by the relevant department in accordance with internal rules and regulations; and
(b) Directors and Corporate Auditors regularly review the aforementioned documentation and information.
c. Provisions and other structures concerning administration of the danger of losses. In this context:
(a) By establishing the Risk Management Committee and formulating regulations relating to risk management, the Company
shall identify and assess risks regularly and shall prevent and handle the risks appropriately;
(b) Careful consideration of investment risks and other factors by the Management Council in connection with investment
projects is preceded by due diligence by the Investment Deliberation Council;
(c) NTT Urban Development conducts risk management education and training in order to raise awareness among Directors
and employees; and
(d) NTT Urban Development develops systems that enable it to take appropriate measures in the event of disaster by taking
the necessary measures, such as establishing the Disaster Risk Management Promotion Committee and the Disaster Risk
Management Promotion Office, developing a basic policy and a manual to respond to the occurrence of a major
earthquake, and holding seminars and training in disaster management.
d. A framework to ensure the efficient execution of duties by Directors. Under this framework, the Company:
(a) Clarifies department responsibilities, authority and decision-making procedures, based on internal rules and regulations
that define the structure and scope of internal organizations as well as the division of duties, responsibilities and
authority;
(b) Formulates rules and regulations for the Board of Directors. In principle, the Board of Directors meets once a month to
decide on important matters relating to the management of the Company in accordance with related legal requirements,
decision-making principles and recommendations based on due diligence. In addition, the Board of Directors periodically
reports on the status of business execution. Moreover, the Company formulates rules and regulations for the Management
Council, an organization that in principle meets once a week and reports to the Board of Directors; and
(c) Strives to enhance efficiency in the execution of business. To this end, the Board of Directors formulates medium-term
management policies and business plans and closely reviews performance on a monthly and quarterly basis.
43
e. A system for ensuring the appropriateness of operations of the Company and the entire corporate group, including its parent
company and subsidiaries. This system ensures that:
(a) Subsidiaries deliberate with and report to the Company in connection with important matters;
(b) The internal control departments periodically call on subsidiaries with the aim of monitoring and supervising subsidiary
operations;
(c) Periodic meetings are convened at which subsidiaries report to the Company on the status of operations and financial
standing. This process enables the Company to maintain a comprehensive grasp of subsidiary activities and status and to
ensure that subsidiary activities are conducted in an appropriate manner; and
(d) Transactions between the parent company and subsidiaries are conducted in an appropriate manner and contracts
executed on the same terms and conditions as those with third parties.
f. Items pertaining to employees who are appointed to assist Corporate Auditors in their duties. These items provide for:
- The establishment of a Corporate Auditors Office that reports directly to the Corporate Auditors and the appointment of
full-time, specialist employees to support Corporate Auditors in the conduct of their duties.
g. Items concerning the independence from Directors of employees who are appointed to assist Corporate Auditors in their
duties. These items ensure that:
(a) The opinions of Corporate Auditors are sought in determining personnel matters relating to employees appointed to
support Corporate Auditors; and
(b) Employees appointed to support Corporate Auditors do not engage in concurrent activities.
h. A system for Directors and employees to report to Corporate Auditors and for other reporting to Corporate Auditors. Under
this system:
(a) A comprehensive reporting system is maintained in which Corporate Auditors attend not only Board of Directors
meetings but also Management Council and other important meetings;
(b) Directors and employees are required to report to Corporate Auditors on matters relating to the execution of their duties
including the following; and
- Matters that have led to significant damage or have the potential to lead to significant damage to the Company
- Monthly business reports
- The status of internal audits
- Any risk of a breach of laws and regulations, the Company's Articles of Association and related rules and regulations
- The status of reports made under the corporate ethics and compliance helpline
- Important issues relating to corporate ethics and compliance other than those previously identified
(c) Directors are required to report to the Board of Directors on the status of the establishment and management of the
Internal Control Systems through the Internal Audit Office.
i. Other structures to ensure that audits are performed effectively by Corporate Auditors. Based on this structure:
(a) Corporate Auditors conduct meetings with representative Directors and related personnel on a quarterly basis to promote
an exchange of opinions and ensure appropriate communication channels are maintained; and
(b) The Company will provide every support to Corporate Auditors in connection with any request for the use of external
advisors including attorneys and certified public accountants.
44
< Development >
In accordance with the implementation of the Companies Act on May 1, 2006, the Board of Directors passed a resolution on
the Company's Internal Control System Basic Policy on May 11, 2006.
This basic policy was revised by the Board of Directors on March 26, 2007 with the aim of enhancing its scope and content.
The policy was further revised by the Board of Directors on March 28, 2008 to clearly state the Company's commitment in
eradicating antisocial forces, and to comply with the Financial Instruments and Exchange Act.
Moreover, the Disaster Risk Management Promotion Committee and the Disaster Risk Management Promotion Office have
been established as part of initiatives to develop and improve systems that enable the Company to take appropriate measures in
the event of disaster. In addition, as a result, the Internal Control System Basic Policy was revised at the meeting of the Board
of Directors held on March 30, 2009. As the Company stipulated in its risk management rules and regulations that risks shall be
identified and evaluated regularly, taking into account changes in the environment surrounding the Company and its initiatives
in new businesses, the Internal Control System Basic Policy was revised at the meeting of the Board of Directors held on
March 26, 2012. With the establishment of the Risk Management Committee, the basic policy was revised at the meeting of the
Board of Directors held on March 11, 2013.
The Company is appropriately preparing and implementing internal control and other systems under the Financial Instruments
and Exchange Act enacted from the fiscal year commencing on or after April 1, 2008 under the supervision of the Internal
Control Office consisting of members of the Management Council. With regard to corporate ethics and compliance, the Company has initiated a number of activities involving corporate ethics
and compliance. The Company has created the Corporate Ethics Promotion Committee consisting of heads of staff department,
service promotion department, management department and other departments to deliberate corporate ethics and compliance
policies and conduct corporate ethics and compliance training. A corporate ethics and compliance help line to respond to
employee questions concerning corporate ethics and compliance has been thoroughly disseminated within the Company and
properly managed.
(iii) Status of the development of a risk management system
Risk management is an essential part of the Internal Control Systems. NTT Urban Development's risk management initiatives
aim to promote and increase corporate value by understanding the internal and external risks borne by the Company's
operations, implementing pertinent countermeasures and ensuring appropriate and bold management decisions.
By establishing the Risk Management Committee and applying a set of the Risk Management rules and regulations
appropriately, the Company strives to address and manage a wide variety of risks and to secure continuous and stable
operations. For comprehensive risk management, when the Company makes investment decisions for development projects, it
endeavors to identify a wide range of possible risks, including the risk of declines in rent, the risk of delays in construction, risk
associated with dealing with the neighborhood, environmental risks, including soil contamination, and overseas risks, taking
into account changes in the environment surrounding the Company and its initiatives in new businesses.
The Internal Control System Basic Policy clearly describes basic policies to eradicate antisocial forces and describes the status
of the development of the policies. NTT Urban Development carries out cross-company measures to respond to unreasonable
demands from antisocial forces. The General Affairs Department is designated as the department that oversees the
implementation of the above measures.
In addition, NTT Urban Development maintains cooperation with relevant authorities, including the police, to ensure a smooth
information exchange during normal circumstances, and an urgent response in emergencies.
These basic policies and the Company's internal structure to deal with business issues are set out in the Corporate Ethics and
Compliance Regulations, Risk Management rules and regulations and the Crisis Management Manual. In this way, NTT Urban
Development ensures that the basic policies and the internal structure are enforced across the company.
(iv) Status of internal audits, audits by Corporate Auditors, and accounting audits
a. Internal audits and audits by Corporate Auditors
With respect to internal audit, NTT Urban Development has established the Internal Audit Office as the department in
45
charge of internal audits. It consists of more than one member, and carries out internal audits, reporting directly to the
President, independent of business operations. Based on internal audit plans, the Internal Audit Office verifies that the
company's operating activities conform to laws and ordinances, the Articles of Association, relevant regulations, and
management policies and plans. The office is responsible for uncovering any issues that may exist, and proposing solutions.
Such activities are designed to raise management efficiency and profitability, and to contribute to maintain the overall health
of the Group.
Audits by Corporate Auditors are conducted in accordance with the audit policies and audit plans determined by the Board
of Corporate Auditors. These audits concern the status of operations and the conditions of assets managed by the
headquarters and its major offices. If necessary, Auditors may request the submission of subsidiaries' business reports. In
addition, the Company has established a Corporate Auditors Office with assistants to the Corporate Auditors to facilitate the
execution of their duties.
Corporate Auditor Akira Sakashita once worked for the finance and accounting department of Nippon Telegraph and
Telephone Corporation and NTT Comware Corporation, and has considerable knowledge about finance and accounting.
Corporate Auditor Takashi Hiroi once worked for the finance and accounting department of Nippon Telegraph and
Telephone Corporation, and has considerable knowledge about finance and accounting.
b. Accounting audits
Because KPMG AZSA LLC has familiarity with the details of the Company’s operations, reflecting the high quality audits it
has conducted as the Company’s independent accounting auditor based on its sound audits structure and a wide range of
expertise, and taking into account audit continuity, KPMG AZSA LLC was reappointed the Company’s independent
accounting auditor for the consolidated fiscal year under review.
Certified public accountants who carried out accounting audit operations for fiscal 2012 were as follows:
Designated limited liability partners and certified public accountants: Mitsuji Maeno (2 years), Hideki Yoshida (6 years),
and Yoshitaka Kuwamoto (2 years)
* Years in the brackets show the length of years when accounting audit operations were carried out.
Breakdown of assistants associated with audit operations were as follows:
Five certified public accountants and 17 other staff
c. Co-ordination among internal audits, audits by Corporate Auditors, and accounting audits, and relations between those
audits and internal control departments
The Internal Audit Office (department in charge of internal audits), the Corporate Auditors, and the independent accounting
auditor exchange views and information quarterly and when necessary and carry out audits in collaboration with each other.
The department in charge of internal audits, the Corporate Auditors, and the independent accounting auditor audit the
Internal Control Systems and internal control departments in cooperation with the departments relevant to the systems
stipulated in the Internal Control System Basic Policy, receiving reports and explanations from the relevant departments
from time to time.
2) Matters concerning outside officers
(i) Outside Directors and Outside Corporate Auditors
As of the date of the submission of the report, the Company has two Outside Directors and four Outside Corporate Auditors, of
whom an Outside Director and an Outside Corporate Auditor are employees of NTT, which is the parent company of the
Company, holding 67.3% of the stock of the Company. NTT respect the autonomy of the Company and does not prevent or
bind decision-making by the Company.
Although the Company does not set forth specific criteria or policies for the independence of Outside Directors and Outside
Corporate Auditors, Outside Directors and Outside Corporate Auditors fulfill the functions described below. In appointing
independent officers based on the rules of Tokyo Stock Exchange, Inc., the Company makes it a frame of reference that there is
no risk that a conflict of interest will arise with general shareholders, in light of the judgment criteria for independence set by
46
Tokyo Stock Exchange, Inc., such that Outside Directors and Outside Corporate Auditors do not come from the parent
company, fellow subsidiaries, major shareholders, or major business partners.
At meetings of the Board of Directors, the Outside Director makes statements from time to time from a viewpoint independent
of the performing of operations and performs a supervisory function through deliberations at the meetings.
Outside Director Akira Komatsu has no personal, capital, or trading relationships with the Company, or other interests in the
Company. Mr. Komatsu was a national public servant (professor at Hitotsubashi University before it became an incorporated
national university) until March 2004, and there is a trading relationship for vacant room lease agreements on the Company’s
properties between the Company and the government. However, as we have judged in light of the criteria for independence set
by Tokyo Stock Exchange, Inc. that there is no risk that a conflict of interest will arise with general shareholders, given that Mr.
Komatsu does not come from the parent company, fellow subsidiaries, major shareholders, or major business partners of the
Company, we have appointed him as an independent officer pursuant to the rules of Tokyo Stock Exchange, Inc. and filed the
appointment with Tokyo Stock Exchange, Inc.
Outside Director Toyosei Sugimura is currently an employee of the parent company NTT and has worked at Nippon Telegraph
and Telephone West Corporation, a fellow subsidiary. Mr. Sugimura was an outside officer at NTT FINANCE
CORPORATION, a fellow subsidiary, and NTT ADVERTISING, Inc., a fellow subsidiary. However, Mr. Sugimura has no
other personal, capital, or trading relationships with the Company, or other interests in the Company.
Outside Corporate Auditors attend Board of Corporate Auditors meetings, which make decisions on the policies, plans, and
methods of audits and other important matters relating to audits. At the meetings, Outside Corporate Auditors report the status
of audits as needed. Outside Corporate Auditors carry out their duties according to the audit plan established by the Board of
Corporate Auditors. Corporate Auditors attend meetings of the Board of Directors and other important meetings, and audit the
execution of duties of Directors, and examine the status of operations and assets. All outside auditors carry out audits
independently from the management performing operations.
Corporate Auditor Akira Sakashita worked for the parent company NTT and fellow subsidiaries, NTT Comware Corporation
and Nippon Telegraph and Telephone West Corporation, but has no other personal, capital, or trading relationships with the
Company, or other interests in the Company.
Outside Corporate Auditor Akio Enomoto has no personal, capital, or trading relationships with the Company, or other interests
in the Company. Mr. Enomoto was a national public servant until July 2002, and there is a trading relationship for vacant room
lease agreements on the Company’s properties between the Company and the government. However, as we have judged in light
of the judgment criteria for independence set by Tokyo Stock Exchange, Inc. that there is no risk that a conflict of interest will
arise with general shareholders, given that Mr. Enomoto does not come from the parent company, fellow subsidiaries, major
shareholders, or major business partners of the Company, we have appointed him as an independent officer pursuant to the
rules of Tokyo Stock Exchange, Inc. and filed the appointment with Tokyo Stock Exchange, Inc.
Outside Corporate Auditor Hiroshi Ikegaswa has no personal, capital, or trading relationships with the Company, or other
interests in the Company. Mr. Ikegaswa was a national public servant until August 2011, and there is a trading relationship for
vacant room lease agreements on the Company’s properties between the Company and the government. However, as we have
judged in light of the judgment criteria for independence set by Tokyo Stock Exchange, Inc. that there is no risk that a conflict
of interest will arise with general shareholders, given that Mr. Ikegaswa does not come from the parent company, fellow
subsidiaries, major shareholders, or major business partners of the Company, we have appointed him as an independent officer
pursuant to the rules of Tokyo Stock Exchange, Inc. and filed the appointment with Tokyo Stock Exchange, Inc.
Outside Corporate Auditor Takashi Hiroi is an employee of NTT, the parent company, and an outside officer at Internet
Initiative Japan Inc., a company NTT is a major shareholder, and NTT Resonant Inc., a fellow subsidiary, but has no other
personal, capital, or trading relationships with the Company, or other interests in the Company.
The Outside Directors and Outside Corporate Auditors attend meetings of the Board of Directors, thereby bolstering their
function of supervising the performance of operations.
The Outside Corporate Auditors audit the Internal Control Systems and internal control departments in cooperation with the
departments relevant to the systems stipulated in the Internal Control System Basic Policy, receiving reports and explanations
from the relevant departments from time to time. The Outside Director monitors the internal control departments’ performance
47
of their duties, receiving reports on the development and management of the Internal Control Systems at meetings of the Board
of Directors that he attends.
(ii) Important concurrent positions and the relationships between the Company and the companies where the concurrent positions
are held
Title Name Concurrent post Partner Company Relationship with the Company
Senior Director Toyosei Sugimura Employee Nippon Telegraph and Telephone Corporation Parent company
Corporate Auditor Takashi Hiroi
Employee Nippon Telegraph and Telephone Corporation Parent company
Outside Director Internet Initiative Japan Inc. Parent company is a major shareholder
Outside Corporate Auditor NTT Resonant Inc. Fellow subsidiary
(Note) Corporate Auditor Takeshi Ogiwara resigned on June 18, 2013.
(iii) Main activities in the consolidated fiscal year under review
a. Attendance at meetings of the Board of Directors and the Board of Corporate Auditors
Title Name Meetings of the Board of Directors Meetings of the Board of Corporate Auditors
Meetings attended Attendance rate Meetings attended Attendance rate Director Toyosei Sugimura 20/20 100.0% – – Corporate Auditor (full-time) Akira Sakashita 27/27 100.0% 25/25 100.0%
Corporate Auditor (full-time) Akio Enomoto 27/27 100.0% 25/25 100.0%
Corporate Auditor (full-time) Hiroshi Ikegawa 20/20 100.0% 18/18 100.0%
Corporate Auditor Takeshi Ogiwara 26/27 96.3% 24/25 96.0%
(Note 1) Director Toyosei Sugimura was appointed Director on June 19, 2012. The denominators in the “Meetings attended”
columns is the numbers of meetings of the Board of Directors that were held after his appointment.
(Note 2) Corporate Auditor (full-time) Hiroshi Ikegawa was appointed Corporate Auditor (full-time) on June 19, 2012. The
denominators in the “Meetings attended” columns is the numbers of meetings of the Board of Directors and Board of
Corporate Auditors that were held after his appointment.
(Note 3) Corporate Auditor Takeshi Ogiwara resigned on June 18, 2013.
b. Utterances in the Board of Directors and the Board of Corporate Auditors meetings
(a) Director, Mr. Toyosei Sugimura made suggestions and proposals to ensure the adequacy and fairness of decisions made by
the Board of Directors, and expressed opinions about agenda items and the deliberations relating thereto from an objective
viewpoint independent of management.
(b) Corporate Auditor (full-time), Mr. Akira Sakashita stated his opinions primarily from the perspective of an experienced
business manager and made suggestions and proposals to ensure the adequacy and fairness of decisions made by the Board
of Directors. In meetings of the Board of Corporate Auditors, he also made statements as necessary regarding the
establishment and operation of a high quality corporate governance system that will enable the sound and sustainable
growth of the Company.
(c) Corporate Auditor (full-time), Mr. Akio Enomoto stated his opinions primarily from the perspective of an experienced
business manager and made suggestions and proposals to ensure the adequacy and fairness of decisions made by the Board
of Directors. In meetings of the Board of Corporate Auditors, he also made statements as necessary regarding the
establishment and operation of a high quality corporate governance system that will enable the sound and sustainable
growth of the Company.
(d) Corporate Auditor (full-time), Mr. Hiroshi Ikegawa stated his opinions primarily from the perspective of an experienced
48
business manager and made suggestions and proposals to ensure the adequacy and fairness of decisions made by the Board
of Directors. In meetings of the Board of Corporate Auditors, he also made statements as necessary regarding the
establishment and operation of a high quality corporate governance system that will enable the sound and sustainable
growth of the Company.
(e) Corporate Auditor, Mr. Takeshi Ogiwara stated his opinions based on his considerable experience at Nippon Telegraph and
Telephone Corporation and offered advice and proposals to ensure the adequacy and fairness of decisions made by the
Board of Directors. In meetings of the Board of Corporate Auditors, he also made statements as necessary regarding the
establishment and operation of a high quality corporate governance system that will enable the sound and sustainable
growth of the Company.
49
3) Remuneration for directors
(i) Policy (policy and method for determining officers’ remuneration and the method of calculating officers’ remuneration)
The matters concerning remuneration for Directors are decided at the meeting of the Board of Directors.
The remuneration for Directors consists of monthly compensation and bonuses. The monthly compensation is provided based
on the extent of roles and the scope of responsibilities for each position. The bonuses are provided by taking into account the
Company’s performance and other matters during the fiscal year under review.
In addition, from the perspective of reflecting the medium-to long-term performance of the Company, Directors purchase the
Company shares through the Directors’ stock accumulation plan by contributing over the certain amount of the monthly
compensation, and hold all of the purchased shares during the term of office.
The remuneration for Corporate Auditors is decided upon discussion by the Corporate Auditors, and from the perspective of
ensuring a high independency, only the monthly compensation is provided without gearing the amount for the Company’s
performance.
(ii) Remuneration of Directors and Corporate Auditors
Title Total amount of
remuneration (million yen)
Remuneration by type (million yen) Number of officers receiving
remuneration Basic
remuneration Bonus
Directors (excluding Outside Directors) 331 284 47 15 Corporate Auditors (excluding Outside Auditors) – – – – Outside Directors and Outside Auditors 59 59 – 4
(Note 1) The Ordinary General Meeting of Shareholders for the 22nd term held on June 21, 2007 resolved that annual
remuneration for Directors shall not exceed ¥480 million, and annual remuneration for Corporate Auditors shall not
exceed ¥80 million.
(Note 2) The number of officers includes two Directors and one Corporate Auditor who retired as at the conclusion of the Ordinary
General Meeting of Shareholders for the 27th term held on June 19, 2012.
(Note 3) Apart from the above, bonuses of ¥26 million were paid to eight employees who work as employees and Directors.
4) Number of Directors
The Articles of Incorporation stipulate that the number of directors of the Company is 25 at maximum.
5) Requirements for a resolution to elect directors
The Articles of Incorporation stipulate that a resolution of a shareholders meeting to elect directors shall be made by a majority of
the votes of the shareholders present at a meeting where shareholders holding one third or more of the votes of shareholders who
are entitled to exercise their votes are present.
The Articles of Incorporation also stipulate that cumulative votes shall not be cast for a resolution to elect directors.
6) Requirements for a special resolution in shareholders meeting
The Company has determined in its Articles of Incorporation that special resolutions of the Ordinary General Meeting of
Shareholders as stipulated in Article 309, Paragraph 2 of the Companies Act shall be made by a majority of two thirds or more of
the votes of the shareholders present at the meeting where the shareholders holding one third or more of the votes of shareholders
entitled to exercise their votes at such shareholders meetings are present. This decision was made to ensure the smooth
management of Ordinary General Meetings of Shareholders by easing the quorum for special resolutions made by Ordinary
General Meetings of Shareholders.
7) Decision-making organization for acquisition of the Company’s shares
The Company has determined in its Articles of Incorporation that the Company may acquire its own shares through market
transactions by resolution of the Board of Directors as stipulated in Article 165, Paragraph 2, of the Companies Act, so that the
Company can conduct flexible and agile capital policies.
50
8) Decision-making organization for payment of dividends from surplus
The Company has determined in its Articles of Incorporation that the Company may distribute interim dividends based on the base
date of September 30 every year by resolution of the Board of Directors as stipulated in Article 454, Paragraph 5, of the
Companies Act, so that the Company may flexibly distribute profits to shareholders.
9) Holding of shares in other companies
(i) Number of stocks held for purposes other than pure investment and the total balance sheet amount of the stocks
16 stocks, ¥1,810 million
(ii) Stocks held for purposes other than pure investment, with the number of shares, balance sheet amount, and purpose of holding
of each stock
Previous fiscal year
Specified shares invested
Stock Number of shares
Balance sheet amount
(million yen) Purpose of holding
Hibiya Engineering, Ltd. 1,371,000 1,250
Hibiya Engineering is an important company that receives orders from the Company for equipment work in buildings owned or managed by the Company. The Company holds shares in it to facilitate transactions.
Mizuho Financial Group, Inc. 104,328 14 The Company holds shares in Mizuho Financial Group to facilitate business succession associated with mergers with NTT Group companies.
(Note) Shares in Mizuho Financial Group, Inc. are allotted to the Company in compensation for shares in Mizuho Investors
Securities Co., Ltd. as a result of a share exchange conducted on September 1, 2011, with Mizuho Bank, Inc. as the wholly
owning parent company in the share exchange and Mizuho Investors Securities Co., Ltd. as the wholly owned subsidiary
company in the share exchange.
Deemed shares owned
Not applicable
Current fiscal year
Specified shares invested
Stock Number of shares
Balance sheet amount
(million yen) Purpose of holding
Hibiya Engineering, Ltd. 1,371,000 1,306
Hibiya Engineering is an important company that receives orders from the Company for equipment work in buildings owned or managed by the Company. The Company holds shares in it to facilitate transactions.
Mizuho Financial Group, Inc. 104,328 20 The Company holds shares in Mizuho Financial Group to facilitate business succession associated with mergers with NTT Group companies.
Deemed shares owned
Not applicable
(iii) The total balance sheet amount of stocks held for pure investment purposes in the previous fiscal year and the fiscal year
under review, and total dividends received, profit and loss on sale, and appraisal profit or loss associated with the stocks in
the fiscal year under review
The Company does not hold shares for pure investment purposes.
51
(iv) Stocks that have changed from stocks held for pure investment purposes to stocks held for purposes other than pure
investment or have changed from stocks held for purposes other than pure investment to stocks held for pure investment
purposes in recent fiscal years, and the number of shares held and balance sheet amount of each of the stocks
There are no stocks that have changed from stocks held for pure investment purposes to stocks held for purposes other than
pure investment or have changed from stocks held for purposes other than pure investment to stocks held for pure investment
purposes in recent fiscal years.
(2) Audit fees
1) Breakdown of compensation to auditing certified public accountants (Million yen) Classification Previous fiscal year Current fiscal year
Compensation for audit certification work
Compensation for nonaudit work
Compensation for audit certification work
Compensation for nonaudit work
Submitting company 80 35 80 24 Consolidated subsidiaries 3 – 3 –
Total 83 35 83 24
(Note) Audit certified public accountant, etc. is KPMG AZSA LLC
2) Other important compensation
Not applicable.
3) Nonaudit work of auditing certified public accountants for the submitting company
Previous fiscal year
Non-audit operations conducted by an audit certified public accountant, etc., to which the Company paid remuneration, included
the preparation of a comfort letter for the issuing of corporate bonds and advisory services related to the International Financial
Reporting Standards (IFRS).
Current fiscal year
Non-audit operations conducted by an audit certified public accountant, etc., to which the Company paid remuneration, included
the preparation of a comfort letter for the issuing of corporate bonds and advisory services related to the International Financial
Reporting Standards (IFRS).
4) Policy for determining audit fees
There are no applicable items. Remuneration for audits is determined with the agreement of the Board of Corporate Auditors in
accordance with laws and regulations, by taking into account factors including the size and specific features of the Company and
its consolidated subsidiaries, and the length of audits.
52
Section 5. Financial Status 1. Preparation of consolidated financial statements and non-consolidated financial statements (1) The Company’s consolidated financial statements are prepared under the Regulations Concerning Terminology, Forms, and
Preparation Methods of Consolidated Financial Statements (Ministry of Finance Ordinance No. 28 of 1976).
(2) The Company’s financial statements are prepared under the Regulations Concerning Terminology, Forms, and Preparation
Methods of Financial Statements (Ministry of Finance Ordinance No. 59 of 1963).
2. Audit certification Under the provision of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, the consolidated financial
statements for the consolidated fiscal year under review (from April 1, 2012 to March 31, 2013) and the financial statements for the
fiscal year under review (from April 1, 2012 to March 31, 2013) were audited by KPMG AZSA LLC.
3. Special action to ensure the adequacy of consolidated financial statements The Company has taken special action to ensure the adequacy of its consolidated financial statements. Specifically, to prepare a
system for obtaining accurate information on accounting standards and responding appropriately to changes in accounting standards,
the Company has joined the Financial Accounting Standards Foundation.
53
1. Consolidated financial statements, etc. (1) Consolidated financial statements
1) Consolidated balance sheets (Million yen)
Previous consolidated fiscal year (as of March 31, 2012)
Current consolidated fiscal year (as of March 31, 2013)
Assets
Current assets
Cash and deposits *2 9,924 *2 12,148
Notes and operating accounts receivable 15,480 13,786
Real estate for sale 14,854 21,706
Real estate for sale in progress 78,843 65,576
Costs on uncompleted construction contracts 448 346
Raw materials and supplies 60 55
Lease investment assets 3,172 3,617
Deposits paid 1,745 1,370
Deferred tax assets 427 1,141
Other *2, *4 4,983 *2, *4 12,094
Allowance for doubtful accounts (1) (0)
Total current assets 129,941 131,843
Non-current assets
Property, plant and equipment
Buildings and structures *2 692,937 *2 719,274
Accumulated depreciation (368,740) (380,097)
Buildings and structures (net) 324,196 339,176
Machinery, equipment and vehicles 13,766 14,027
Accumulated depreciation (11,727) (11,896)
Machinery, equipment and vehicles (net) 2,039 2,131
Land *2 401,361 *2 409,130
Lease assets 512 399
Accumulated depreciation (356) (265)
Lease assets (net) 156 134
Construction in progress 17,503 7,012
Other property, plant and equipment *2 15,603 *2 16,136
Accumulated depreciation (12,097) (12,815)
Other property, plant and equipment (net) 3,505 3,321
Total property, plant and equipment 748,763 760,907
Intangible assets *2 4,562 *2 5,756
Investments and other assets Investment securities *1 20,656 *1 19,056
Long-term prepaid expenses *2 17,308 *2 16,765
Deferred tax assets 397 422
Other 6,906 6,299
Total investments and other assets 45,269 42,544
Total non-current assets 798,595 809,207
Total assets 928,537 941,050
54
(Million yen) Previous consolidated fiscal year
(as of March 31, 2012) Current consolidated fiscal year
(as of March 31, 2013) Liabilit ies
Current liabilit ies
Notes and operating accounts payable-trade 13,175 10,742
Short-term loans payable – 10,321
Lease obligations 68 45
Current portion of long-term loans payable *2 48,712 *2 56,041
Current portion of bonds *2 1,611 *2 62,123 Income taxes payable 458 3,351
Deferred tax liabilities – 316
Other 24,699 34,495
Total current liabilit ies 88,727 177,439
Non-current liabilit ies Bonds payable *2 137,091 84,971
Long-term loans payable *2 318,389 *2 292,533
Lease obligations 151 133
Lease and guarantee deposits received 82,437 74,628
Negative goodwill *3 28,402 *3 26,617
Deferred tax liabilities 60,305 61,116
Provision for retirement benefits 6,026 6,388
Provision for directors’ retirement benefits 105 102
Asset retirement obligations 3,044 3,172
Other 128 110
Total non-current liabilities 636,082 549,775
Total liabilities 724,810 727,215
Net assets
Shareholders’ equity
Capital stock 48,760 48,760 Capital surplus 34,109 34,109
Retained earnings 84,265 91,402
Total shareholders’ equity 167,135 174,272
Accumulated other comprehensive income
Valuation difference on available-for-sale securities 98 1,131 Foreign currency translation adjustment (1,221) 817
Total accumulated other comprehensive income (1,122) 1,948
Minority interests 37,714 37,614
Total net assets 203,727 213,835
Total liabilities and net assets 928,537 941,050
55
2) Consolidated statements of income and consolidated statements of comprehensive income
(Consolidated statements of income) (Million yen) Previous consolidated fiscal year
(from April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
Operating revenue 136,842 163,168 Operating cost *6 96,433 *6 117,163
Operating gross profit 40,409 46,004
Selling, general and administrative expenses *1 15,043 *1 18,603
Operating income 25,365 27,401
Non-operating income Interest income 61 79
Dividends income 63 85 Contributions 123 249 Gain on donation of non-current assets 0 1 Amortization of negative goodwill 1,926 1,926
Equity in earnings of affiliates 77 82 Other 68 76
Total non-operating income 2,321 2,500
Non-operating expenses Interest expenses 7,938 7,665 Other 518 220
Total non-operating expenses 8,457 7,885
Ordinary income 19,229 22,016
Extraordinary income
Gain on sales of non-current assets – *2 389 Gain on reversal of provision for loss on warranty 60 –
Total extraordinary income 60 389
Extraordinary loss
Loss on sales of non-current assets *3 216 *3 508 Loss on retirement of non-current assets *4 2,319 *4 2,119 Impairment loss – *5 800 Loss on disaster 323 –
Other 5 8
Total extraordinary losses 2,863 3,436 Income before income taxes and minority interests 16,425 18,969
Income taxes-current 3,991 5,747
Income taxes-deferred (6,942) (202)
Total income taxes (2,951) 5,544 Income before minority interests 19,376 13,425
Minority interests in income 3,790 1,351
Net income 15,586 12,073
56
(Consolidated statements of comprehensive income) (Million yen) Previous consolidated fiscal year
(from April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
Income before minority interests 19,376 13,425 Other comprehensive income
Valuation difference on available-for-sale securities (165) 1,022
Foreign currency translation adjustment (1,000) 2,039
Total other comprehensive income * (1,166) * 3,062
Comprehensive income 18,209 16,487 Comprehensive income attributable to
Comprehensive income attributable to owners of the parent 14,427 15,145 Comprehensive income attributable to minority interests 3,782 1,341
57
3) Consolidated statements of changes in net assets (Million yen) Previous consolidated fiscal year
(from April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
Shareholders’ equity Capital stock
Balance at the beginning of the year 48,760 48,760 Changes of items during the year
Total changes of items during the year – – Balance at the end of the year 48,760 48,760
Capital surplus Balance at the beginning of the year 34,109 34,109 Changes of items during the year
Total changes of items during the year – – Balance at the end of the year 34,109 34,109
Retained earnings Balance at the beginning of the year 72,628 84,265 Changes of items during the year
Dividends from surplus (1,974) (2,632) Interim dividends (1,974) (2,303) Net income 15,586 12,073 Total changes of items during the year 11,636 7,136
Balance at the end of the year 84,265 91,402 Total shareholders’ equity
Balance at the beginning of the year 155,498 167,135 Changes of items during the year
Dividends from surplus (1,974) (2,632) Interim dividends (1,974) (2,303) Net income 15,586 12,073 Total changes of items during the year 11,636 7,136
Balance at the end of the year 167,135 174,272 Accumulated other comprehensive income
Valuation difference on available-for-sale securities Balance at the beginning of the year 257 98 Changes of items during the year
Net changes of items other than shareholders’ equity (158) 1,032 Total changes of items during the year (158) 1,032
Balance at the end of the year 98 1,131 Foreign currency translation adjustment
Balance at the beginning of the year (221) (1,221) Changes of items during the year
Net changes of items other than shareholders’ equity (1,000) 2,039 Total changes of items during the year (1,000) 2,039
Balance at the end of the year (1,221) 817 Total accumulated other comprehensive income
Balance at the beginning of the year 36 (1,122) Changes of items during the year
Net changes of items other than shareholders’ equity (1,158) 3,071 Total changes of items during the year (1,158) 3,071
Balance at the end of the year (1,122) 1,948 Minority interests
Balance at the beginning of the year 35,248 37,714 Changes of items during the year
Net changes of items other than shareholders’ equity 2,466 (100) Total changes of items during the year 2,466 (100)
Balance at the end of the year 37,714 37,614 Total net assets
Balance at the beginning of the year 190,783 203,727 Changes of items during the year
Dividends from surplus (1,974) (2,632) Interim dividends (1,974) (2,303) Net income 15,586 12,073 Net changes of items other than shareholders’ equity 1,307 2,971 Total changes of items during the year 12,944 10,108
Balance at the end of the year 203,727 213,835
58
4) Consolidated statements of cash flows (Million yen)
Previous consolidated fiscal year
(from April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
Net cash provided by (used in) operating activities Income before income taxes and minority interests 16,425 18,969 Depreciation and amortization 24,765 23,766 Loss on disaster 323 – Amortization of negative goodwill (1,926) (1,926) Impairment loss – 800 Amortization of goodwill 141 141 Increase (decrease) in allowance for doubtful accounts (2) (0) Increase (decrease) in provision for retirement benefits 136 362 Interest and dividends income (125) (164) Interest expenses 7,938 7,665 Equity in (earnings) losses of affiliates (77) (82) Gain on sales of non-current assets – (389) Loss on retirement of non-current assets 2,319 2,119 Loss on sales of non-current assets 216 508 Decrease (increase) in lease investment assets (778) (444) Decrease (increase) in notes and accounts receivable-trade (9,032) 1,702 Decrease (increase) in inventories (14,306) 13,208 Increase (decrease) in notes and accounts payable-trade 5,092 (2,433) Increase (decrease) in lease and guarantee deposits received (6,196) (3,691) Other, net (4,091) (1,629) Subtotal 20,822 58,483 Interest and dividends income received 161 189 Interest expenses paid (8,028) (7,804) Income taxes paid (9,250) (2,779) Net cash provided by (used in) operating activities 3,704 48,089
Net cash provided by (used in) investing activities Purchase of property, plant and equipment (24,305) (40,689) Proceeds from sales of property, plant and equipment 681 3,228 Purchase of investment securities (13) (465) Proceeds from repayment of investment securities 1,052 – Other, net (447) (1,958) Net cash provided by (used in) investing activities (23,033) (39,885)
Net cash provided by (used in) financing activities Net increase (decrease) in short-term loans payable – 10,321 Proceeds from long-term loans payable 72,000 29,793 Repayments of long-term loans payable (67,360) (48,712) Proceeds from issuance of bonds 14,993 10,000 Redemption of bonds (1,611) (1,611) Cash dividends paid (3,949) (4,936) Cash dividends paid to minority shareholders (1,316) (1,441) Other, net (104) (72) Net cash provided by (used in) financing activities 12,650 (6,660)
Effect of exchange rate change on cash and cash equivalents (375) 305 Net increase (decrease) in cash and cash equivalents (7,054) 1,848 Cash and cash equivalents at beginning of year 18,015 10,960 Cash and cash equivalents at end of year * 10,960 * 12,809
59
Notes
(Important items used as basic materials for preparation of consolidated financial statements)
1. Scope of consolidation
Number of consolidated subsidiaries: 11
All subsidiaries are consolidated.
Consolidated subsidiaries:
NTT Urban Development Builservice Co.
NTT Urban Development West BS Co.
NTT Urban Development Hokkaido BS Co.
Otemachi First Square Inc.
DAY・NITE Co., Ltd.
Knox Twenty–One Co., Ltd.
Motomachi Parking Access Co., Ltd.
UDX Tokutei Mokuteki Kaisha
UD EUROPE LIMITED
Premier REIT Advisors Co., Ltd.
UD AUSTRALIA PTY LIMITED
DN Food Co., Ltd. was renamed to DAY・NITE Co., Ltd. on February 1, 2013. 2. Application of equity method
Number of equity method affiliates: 5
Equity method affiliates:
Tokyo Opera City Building Co., Ltd.
DHC Tokyo Co., Ltd.
Tokyo Opera City District Heating & Cooling Co., Ltd.
Harumi Yonchome City Planning Design Co.
335 GRICES ROAD PTY LTD
MOUNT STREET ADVISERS LIMITED, which had been an equity-method affiliate, ceased to be an equity method affiliate
following the sale of all shares in the affiliate. 3. Fiscal years of consolidated subsidiaries
The end of the fiscal year of UD EUROPE LIMITED and UD AUSTRALIA PTY LIMITED is December 31. In the preparation of
the consolidated financial statements, the Company used the financial statements as of December 31 and made the adjustments
required for consolidation in relation to significant transactions occurring after the date and before the consolidated closing date.
The end of the fiscal year of other consolidated subsidiaries, etc. is the same as the consolidated closing date. 4. Accounting practices
(1) Standards and methods for the valuation of important assets
(i) Securities
Other securities
Securities having market values:
Fair value method based on the market value on the consolidated closing date is applied. (The valuation difference is recorded
as a component of net assets. The cost of products sold is calculated by the moving average method.)
Securities not having market values:
Cost method determined by the moving average method is applied.
With respect to investment in limited liability investment partnerships and associations of a similar nature (investments deemed
to be securities under Article 2, Paragraph 2 of the Financial Instruments and Exchange Act), the net amount equivalent to equity
based on the latest financial statements available is recorded.
60
(ii) Derivatives
In principle, the fair value method is applied.
(iii) Inventories
The cost method based on the specific identification method (reduction of the book value - balance sheet value - based on a
decline in profitability) is applied to real estate for sale, real estate for sale in progress.
The cost method based on the specific cost method is applied to costs on uncompleted construction contracts.
The last purchase price method is applied to raw materials and supplies.
(2) Depreciation method for important depreciable assets
(i) Property, plant and equipment (except leased assets)
The declining-balance method is primarily applied.
However, the straight-line method is applied to NTT Makuhari Building, Granpark Tower, NTT Cred Motomachi Building, and
buildings (except attached facilities) acquired on and after April 1, 1998.
Major useful lives are as follows:
Buildings and structures: 15 to 50 years
Machinery, equipment and vehicles: 5 to 17 years
(ii) Intangible assets (except leased assets)
The straight-line method is applied.
Software for internal use is amortized over its estimated useful life (five years).
(iii) Long-term prepaid expenses
The straight-line method is applied.
(iv) Lease assets
Lease assets relating to finance lease transactions without transfer of ownership
The same depreciation methods as applied to the non-current assets owned by the Company and its subsidiaries are applied.
(3) Basis for calculating important allowances
(i) Allowance for doubtful accounts
In preparation for doubtful notes and operating accounts receivable and loans receivable, the Company and its consolidated
subsidiaries post estimated uncollectible amounts, which are estimated from loan loss ratios for general reserves and from
collectability for each of specific receivables including those with low collectability.
(ii) Provision for retirement benefits
In preparation for employees retirement benefit, provision for retirement benefits is posted based on the retirement benefit
obligation and estimated pension plan assets at the end of the consolidated fiscal year.
Prior service costs are amortized using the straight-line method over the eligible employees’ average remaining period of service
at the time of occurrence.
Actuarial differences are amortized from the following fiscal year using the straight-line method over the eligible employees’
average remaining period of service at the time of occurrence in each consolidated fiscal year.
(4) Basis for posting important revenues and expenses
(i) Basis for posting revenues relating to finance lease transactions
Sales and cost of sales are posted when lease fees are received.
(ii) Basis for recording amount of construction contract revenues and costs
a. Contracts whose outcome at the end of the fiscal year under review is deemed certain
Percentage-of-completion method (construction-cost-percentage method for estimating the progress of construction)
b. Other construction contracts
Completed-contract method
(5) Significant hedge accounting method
(i) Hedge accounting method
In principle, deferred hedge accounting is applied.
A special procedure is employed for interest rate swaps that meet the criteria for the special procedure.
61
(ii) Hedging item and hedged item
Hedging item: Interest rate swap contracts
Hedged item: Borrowings
(iii) Hedging policy
Under the Company’s internal rules on derivative transactions, interest rate risks relating to the hedged item are hedged against
within a certain range.
(iv) Method of assessment of hedge effectiveness
Since the swaps are interest swaps to which special matching criteria are applied, the periodic assessment of hedge effectiveness
is not performed.
(6) Amortization method and amortization period of goodwill and negative goodwill
Goodwill and negative goodwill that was generated on or before March 31, 2010 are amortized in 20 years by the straight-line
method.
(7) Scope of cash and cash equivalents in the consolidated statements of cash flows
Cash and cash equivalents consist of cash in hand, bank deposits that can be withdrawn at any time, and short-term investments
with an original maturity of three months or less that can be readily converted into cash and that are subject to only an insignificant
risk of change in value.
(8) Other important matters that constitute the basis for preparation of consolidated financial statements
Accounting treatment of consumption taxes
Consumption taxes and local consumption taxes are accounted for by the tax exclusion method.
(Changes in accounting principles)
(Change of depreciation method)
In the fiscal year under review, the Company and its consolidated subsidiaries in Japan have changed the depreciation method for
property, plant and equipment that were acquired on or after April 1, 2012 to the method under the revised Corporate Tax Act, in
association with the amendments to the Corporate Tax Act.
As a result of this change, operating income, ordinary income and income before income taxes and minority interests each increased
by ¥173 million in the fiscal year under review, compared to those before the change.
The impact on segment information is written in relevant sections.
(Accounting standards yet to be applied, etc.)
(Accounting standard for retirement benefits, etc.)
The Accounting Standard for Retirement Benefits (ASBJ Statement No. 26 on May 17, 2012) and the Guidance on Accounting
Standard for Retirement Benefits (ASBJ Guidance No. 25 on May 17, 2012)
(1) Overview
The method of recording actuarial differences and prior service costs has been changed to a method of recording the amount that
shows the state of reserves as a liability or asset by recognizing these items after making an adjustment to the tax effect in net
assets in consolidated balance sheets. For the period attribution method of the projected amount of retirement benefits, it has
become possible to apply the fixed amount per period standard or the attribution based on benefit formula, and the method of
calculating the discount rate has been revised.
(2) Planned date of application
These accounting standards will be applied to consolidated financial statements pertaining to the end of the fiscal year ending
March 31, 2014. However, the revision of the period attribution method of the projected amount of retirement benefits will be
applied from the beginning of the fiscal year ending March 31, 2015. As the transitional treatment is set forth in the accounting
standards, they will not be applied retroactively to consolidated financial statements in prior periods.
(3) Impact of applying these accounting standards
The impact of applying these accounting standards on the consolidated financial statements when they are prepared is currently
under review.
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(Notes to consolidated balance sheets)
*1. Investment securities relating to affiliates are as follows. (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Investment securities (shares) 1,595 1,648
*2. Assets pledged as collateral and secured debt
(1) Mortgaged assets and corresponding debt
(i) Mortgaged assets (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Buildings and structures 100,326 92,612 Land 13,189 9,769
Total 113,516 102,382
(ii) Corresponding debt secured by the above collateral (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Current portion of long-term loans payable 3,909 2,988 Long-term loans payable 11,036 8,048
Total 14,945 11,036
(2) Mortgaged assets and corresponding debt regarding debt with limited recourse
(i) Mortgaged assets (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Cash and deposits (within three months) 5,608 4,771 Securities 1,099 1,099 Other current assets 267 149 Buildings and structures 49,293 47,087 Land 171,402 171,402 Other property, plant and equipment 170 172 Intangible assets 1 0 Long-term prepaid expenses 237 326
Total 228,081 225,011
(ii) Corresponding debt secured by the above collateral (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Current portion of bonds 1,611 62,123 Bonds payable 62,123 ‒
Total 63,735 62,123
*3. Goodwill and negative goodwill (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Goodwill 2,422 2,280 Negative goodwill 30,824 28,897
Net amount 28,402 26,617
*4. Breakdown of “Other current assets” (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Securities 1,099 5,024 Other 3,883 7,070
Total 4,983 12,094
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(Notes to consolidated statements of income)
*1. Major items in selling, general and administrative expenses and their amounts are as follows. (Million yen)
Previous consolidated fiscal year (From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
Advertising expenses 1,962 3,676 Salaries, allowances and bonuses 5,019 4,990 Retirement benefit expenses 333 326 Provision for directors' retirement benefits 17 14 Provision of allowance for doubtful accounts 1 0 Business consignment expenses 2,631 3,535 Taxes and dues 622 1,565 *2. Breakdown of gain on sales of non-current assets (Million yen)
Previous consolidated fiscal year (From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
Buildings and structures ‒ (187) Land ‒ 576
Total ‒ 389
On the sale of a building and structures with land, the Company recognized a loss on the building and structures component, while a
gain was recognized on the land component. A net gain resulted from this transaction and was recorded as a gain on sales of
non-current assets. *3. Breakdown of loss on sales of non-current assets (Million yen)
Previous consolidated fiscal year (From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
Buildings and structures 249 111 Land (32) 396
Total 216 508
On the sale of a building and structures with land in the previous consolidated fiscal year, the Company recognized a loss on the
building and structures component, while a gain was recognized on the land component. A net loss resulted from this transaction and
was recorded as a loss on sales of non-current assets. *4. Breakdown of loss on retirement of non-current assets (Million yen)
Previous consolidated fiscal year (From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
Buildings and structures 1,187 963 Machinery, equipment and vehicles 9 27 Removal cost 1,085 1,109 Other 36 17
Total 2,319 2,119 *5. Impairment loss
In the fiscal year under review, the Company recorded an impairment loss for the following asset group.
Primary use Type Location Impairment loss
Land for development Land Taito-ku, Tokyo 800 million yen
As a general rule, the Group examined an impairment loss for individual property.
As a result, we reduced the book value of the above assets to the recoverable value as we changed the purpose of ownership from
leasing to sale, and recorded the reduction as an impairment loss under extraordinary losses. The breakdown of the assets is land
entirely.
The recoverable value of the assets above is measured by net sales value, and an appraisal value by a real estate appraiser is used for
the net sales value.
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*6. Inventories at the end of the fiscal year are an amount after reductions in carrying values associated with declines in profitability.
The following loss on valuation of inventory is included in the operating cost. (Million yen) Previous consolidated fiscal year
(From April 1, 2011 to March 31, 2012) Current consolidated fiscal year
(From April 1, 2012 to March 31, 2013) 1,194 1,934
(Notes to consolidated statements of comprehensive income)
*Recycling and tax effect relating to other comprehensive income (Million yen)
Previous consolidated fiscal year (From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
Valuation difference on available-for-sale securities: Amount arising during fiscal year (296) 1,585 Recycling ‒ ‒
Before tax effect adjustment (296) 1,585 Tax effect 130 (563) Valuation difference on available-for-sale securities (165) 1,022
Foreign currency translation adjustment: Amount arising during fiscal year (1,000) 2,039
Total other comprehensive income (1,166) 3,062
(Notes to consolidated statements of changes in net assets)
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
1. Type and number of outstanding shares (Shares)
Type of shares Number of shares at the beginning of
fiscal year under review
Number of shares added during fiscal year under
review
Number of shares subtracted during fiscal
year under review
Number of shares at end of fiscal year under
review
Common shares 3,291,200 – – 3,291,200
Total 3,291,200 – – 3,291,200
2. Type and number of treasury stock
Not applicable.
3. Dividends
(1) Dividends
(Resolution) Type of shares Total dividends (million yen)
Dividend per share (yen) Record date Effective date
Ordinary General Meeting of Shareholders on June 21, 2011
Common shares 1,974 600 March 31, 2011 June 22, 2011
Board of Directors meeting on November 7, 2011 Common shares 1,974 600 September 30, 2011 December 5, 2011
(2) Of dividends with a record date falling in the consolidated fiscal year under review, those with an effective date falling in the
following consolidated fiscal year
(Resolution) Type of shares Total
dividends (million yen)
Source of dividends
Dividend per share
(yen) Record date Effective date
Ordinary General Meeting of Shareholders on June 19, 2012
Common shares 2,632 Retained earnings 800 March 31, 2012 June 20, 2012
65
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
1. Type and number of outstanding shares (Shares)
Type of shares Number of shares at the beginning of
fiscal year under review
Number of shares added during fiscal year under
review
Number of shares subtracted during fiscal
year under review
Number of shares at end of fiscal year under
review
Common shares 3,291,200 – – 3,291,200
Total 3,291,200 – – 3,291,200
2. Type and number of treasury stock
Not applicable.
3. Dividends
(1) Dividends
(Resolution) Type of shares Total dividends (million yen)
Dividend per share (yen) Record date Effective date
Ordinary General Meeting of Shareholders on June 19, 2012
Common shares 2,632 800 March 31, 2012 June 20, 2012
Board of Directors meeting on November 5, 2012 Common shares 2,303 700 September 30, 2012 December 3, 2012
(2) Of dividends with a record date falling in the consolidated fiscal year under review, those with an effective date falling in the
following consolidated fiscal year
(Resolution) Type of shares Total
dividends (million yen)
Source of dividends
Dividend per share
(yen) Record date Effective date
Ordinary General Meeting of Shareholders on June 18, 2013
Common shares 2,962 Retained earnings 900 March 31, 2013 June 19, 2013
(Notes to consolidated statements of cash flows)
* Relationship between cash and cash equivalents at the end period and the accounts on the consolidated balance sheets
(Million yen)
Previous consolidated fiscal year (From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
Cash and deposits 9,924 12,148 Time deposits with a deposit period of over three months (1,810) (1,810)
Short-term (less than three months) investments included in “Deposits paid” in current assets
1,745 1,370
Short-term (less than three months) investments included in other 1,099 1,099
Cash and cash equivalents 10,960 12,809
66
(Lease transactions)
1. Finance lease transactions without the transfer of ownership (lessee)
(1) Lease assets
a. Property, plant and equipment
Primarily servers and computer terminals (tools, furniture and fixtures) in the leasing business
b. Intangible assets
Software
(2) Depreciation and amortization methods for leased assets
The methods described in “Important Items Used as Basic Materials for Preparation of Consolidated Financial Statements, 4.
Accounting practices, (2) Depreciation method for important depreciable assets” apply. 2. Finance lease transactions without the transfer of ownership (Lessor)
(1) Breakdown of lease investment assets
Current assets (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Lease fees receivable 7,302 7,690 Estimated remaining value ‒ ‒ Interest income equivalent (4,129) (4,073) Lease investment assets 3,172 3,617
(2) Lease fees receivable relating to lease receivables and lease investment assets that are expected to be collected after the closin g
date
Current assets (Million yen) Previous consolidated fiscal year
(As of March 31, 2012) Due within
one year
Due after 1 year,
within 2 years
Due after 2 years,
within 3 years
Due after 3 years,
within 4 years
Due after 4 years,
within 5 years
Due after 5 years
Lease investment assets 368 368 368 368 368 5,460 (Million yen)
Current consolidated fiscal year (As of March 31, 2013)
Due within one year
Due after 1 year,
within 2 years
Due after 2 years,
within 3 years
Due after 3 years,
within 4 years
Due after 4 years,
within 5 years
Due after 5 years
Lease investment assets 406 406 406 406 406 5,659 3. Operating lease transactions
Unexpired lease fees relating to no cancellable operating lease transactions
(Lessee) (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Due within one year 1,646 1,612 Due after 1 year 21,206 19,750 Total 22,852 21,362
(Lessor) (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
Due within one year 12,847 14,543 Due after 1 year 59,769 58,159 Total 72,616 72,703
67
(Notes to financial instruments)
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
1. Financial instruments
(1) Policy on financial instruments
The Group raises fund (primarily through bank loans and bond issuance) necessary to meet financing needs mainly for investments
and working capital to carry out the leasing business and the residential property sales business. The Company and certain
consolidated subsidiaries participate in the NTT Group’s cash management system. They obtain short-term operating funds from the
system and deposit temporary idle funds to the system. The Group uses derivatives to avoid the risks described below and will not
conduct any speculative transactions.
(2) Financial instruments and their risks
Notes and operating accounts receivable are exposed to client credit risk. Short-term and long-term investment securities are
investments in Japanese government bonds, shares in companies or anonymous associations that the Group has business relations
with and are exposed to the issuers’ credit risk and the risk of market price fluctuations.
Most notes and operating accounts payable-trade are payable within a year. Loans payable and bonds payable are primarily intended
to raise the funds necessary to meet capital needs, including investments and operating funds, and their redemption dates are 11 years
and two months from the closing date at longest. Some are with variable interest rates and are exposed to the volatility risk of interest
rates. The Group hedges the risk using derivatives transactions (interest rate swap transactions).
Derivatives transactions are interest rate swap transactions to hedge the volatility risk of rates of interest paid on borrowings. For the
hedge accounting method, please refer to 4. Accounting practices, (5) Significant hedge accounting method of the Important Items
Used as Basic Materials for Preparation of Consolidated Financial Statements.
(3) Risk management structure relating to financial instruments
i) Management of credit risk (risk relating to non-performance of contracts by business partners)
The Company and certain consolidated subsidiaries manage operating receivables under their accounting regulations. They have
persons in charge of risk management at operating departments monitor the situation at business partners and manage receivables
from generation to termination by the business partner. If receivables are not collected within predetermined periods, they take
appropriate steps for credit preservation.
With regard to securities and investment securities, the Company and certain consolidated subsidiaries regularly assess the
financial situation of issuers (primarily business partners) and continuously review their holdings, except their holdings of
Japanese government bonds, considering relations with the issuers. The Group considers that Japanese government bonds have
hardly any credit risk.
The Group conducts derivatives trading only with highly rated financial institutions and considers there is little credit risk
involved.
ii) Management of market risk (exchange fluctuation risk and interest rate fluctuation risk)
Most loans payable of the Company and certain consolidated subsidiaries have fixed interest rates. To curb the volatility risk of
variable rates of interest paid, they use interest rate swap transactions.
The Company and certain consolidated subsidiaries regularly assess the fair values of the securities and investment securities
they hold, market conditions, and the financial standing of issuers.
Derivatives trading is carried out by the accounting and finance department with the approval of people having decision-making
authority under risk management guidelines relating to financial instruments that stipulate hedging instruments, trading authority,
and maximum transaction amounts.
iii) Management of liquidity risk relating to financing (risk of not being able to pay by the due date)
The Company and certain consolidated subsidiaries manage liquidity risk by having the accounting and finance department work
out and revise financing plans in a timely manner, based on reports from operating departments and by securing liquidity on hand
flexibly by participating in the NTT Group’s cash management system.
68
(4) Supplementary explanation about the current prices of financial instruments
The current prices of financial instruments are based on market prices or, if there are no market prices, prices reasonably assessed.
Assessed prices involve variation factors and vary when different assumptions are used. The amounts of contracts relating to
derivatives trading described in the notes to “derivatives trading” relations do not show the market risks of the derivatives
transactions.
2. Fair values of financial instruments
The table below shows the book value and fair value of financial instruments and the difference between them at the end of the fiscal
year.
Financial instruments whose fair value is very difficult to determine (please refer to (Note 2)) and financial instruments that are not
significant are not included in the table.
(Million yen) Book value Fair value Difference (1) Cash and deposits 9,924 9,924 – (2) Notes and operating accounts receivable 15,480 15,479 (1) (3) Short-term and long-term investment securities
Other securities 10,871 10,966 95 Total assets 36,277 36,371 94 (1) Notes and operating accounts payable-trade 13,175 13,175 – (2) Income taxes payable 458 458 – (3) Bonds payable (*1) 138,702 142,255 3,552 (4) Long-term loans payable (*2) 367,102 376,301 9,198 (5) Lease and guarantee deposits received 14,010 13,703 (306) Total liabilities 533,450 545,894 12,444
(*1) Current portion of bonds is included.
(*2) Current portion of long-term loans payable is included.
(Note 1) Methods used to calculate the fair value of financial instruments and matters relating to securities and derivatives trading
Assets
(1) Cash and deposits
As cash and deposits are short-term accounts, fair values are close to book values. Thus, they are recorded at book value.
(2) Notes and operating accounts receivable
As notes and operating accounts receivable are settled in a short term, fair values are close to book values. Thus, they are recorded at
book value. When an allowance for doubtful accounts is recognized for operating accounts receivable, however, the fair value is
determined by subtracting the estimated uncollectible amount (the amount of the allowance) from the receivable.
(3) Short-term and long-term investment securities
Fair values of stocks and bonds having market prices refer to prices set by financial market.
Liabilities
(1) Notes and operating accounts payable-trade and (2) Income taxes payable
As these accounts are settled in a short term, fair values are close to book values. Thus, they are recorded at book value.
(3) Bonds payable
Fair values of bonds payable refer to market prices if market prices are available. If market prices are not available, fair values are
determined at present values, calculated by discounting the combined total of principal and interest at a rate with the remaining
period of the bond and credit risk taken into account.
(4) Long-term loans payable
69
Fair values of long-term loans payable are determined at present values, calculated by discounting the combined total of principal and
interest at a rate with the remaining period of the long-term loans payable and credit risk taken into account.
(5) Lease and guarantee deposits received
Fair values of lease and guarantee deposits received are determined at present values, calculated by discounting deposits at a rate with
the remaining periods of the security deposits (those with confirmed refund timing) and guarantee deposits and credit risk taken into
account.
Derivatives trading
Please refer to “Derivatives trading,” below.
(Note 2) Financial instruments whose fair value is very difficult to determine
(Million yen) Classification Book value
Unlisted stocks (*1) 363 Investments in subsidiaries and affiliates (*1) 1,595 Investments in limited partnerships (*1) 9,057 Other investments (*1) 41 Deposits received (excluding those whose time of return is determined) (*2) 72,488
(*1) Unlisted stocks, investments in subsidiaries and affiliates, investments in limited partnerships, and other investments are not
included in “Assets (3) Short-term and long-term investment securities,” since they do not have market prices, and it is very
difficult to determine their fair value.
(*2) Deposits received (excluding those whose time of return is determined) are not included in “Liabilities (5) Lease and guarantee
deposits received,” because their remaining period cannot be determined, and it is very difficult to determine their fair value.
(Note 3) Scheduled amounts of redemption of pecuniary claims and securities having maturity dates after the consolidated closing
date
(Million yen)
Due within one year Due after one year within five years
Due after five years within ten years Due after ten years
Cash and deposits 9,924 – – – Notes and operating accounts receivable 15,480 – – –
Short-term and long-term investment securities
Other securities having maturity dates 1,100 3,900 – 203
Total 26,505 3,900 – 203
(Note 4) Scheduled amounts of repayment of bonds payable and long-term loans payable after the consolidated closing date
(Million yen)
Due within one year Due after one year within five years
Due after five years within ten years Due after ten years
Bonds payable 1,611 82,123 50,000 5,000 Long-term loans payable 48,712 197,093 117,296 4,000
Total 50,324 279,217 167,296 9,000
70
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
1. Financial instruments
(1) Policy on financial instruments
The Group raises fund (primarily through bank loans and bond issuance) necessary to meet financing needs mainly for investments
and working capital to carry out the leasing business and the residential property sales business. The Company and certain
consolidated subsidiaries participate in the NTT Group’s cash management system. They obtain short-term operating funds from the
system and deposit temporary idle funds to the system. The Group uses derivatives to avoid the risks described below and will not
conduct any speculative transactions.
(2) Financial instruments and their risks
Notes and operating accounts receivable are exposed to client credit risk. Short-term and long-term investment securities are
investments in Japanese government bonds, shares in companies or anonymous associations that the Group has business relations
with and are exposed to the issuers’ credit risk and the risk of market price fluctuations.
Most notes and operating accounts payable-trade are payable within a year. Loans payable and bonds payable are primarily intended
to raise the funds necessary to meet capital needs, including investments and operating funds, and their redemption dates are 19 years
and six months from the closing date at longest. Some are with variable interest rates and are exposed to the volatility risk of interest
rates. The Group hedges the risk using derivatives transactions (interest rate swap transactions).
Derivatives transactions are interest rate swap transactions to hedge the volatility risk of rates of interest paid on borrowings. For the
hedge accounting method, please refer to 4. Accounting practices, (5) Significant hedge accounting method of the Important Items
Used as Basic Materials for Preparation of Consolidated Financial Statements.
(3) Risk management structure relating to financial instruments
i) Management of credit risk (risk relating to non-performance of contracts by business partners)
The Company and certain consolidated subsidiaries manage operating receivables under their accounting regulations. They have
persons in charge of risk management at operating departments monitor the situation at business partners and manage receivables
from generation to termination by the business partner. If receivables are not collected within predetermined periods, they take
appropriate steps for credit preservation.
With regard to securities and investment securities, the Company and certain consolidated subsidiaries regularly assess the
financial situation of issuers (primarily business partners) and continuously review their holdings, except their holdings of
Japanese government bonds, considering relations with the issuers. The Group considers that Japanese government bonds have
hardly any credit risk.
The Group conducts derivatives trading only with highly rated financial institutions and considers there is little credit risk
involved.
ii) Management of market risk (exchange fluctuation risk and interest rate fluctuation risk)
Most loans payable of the Company and certain consolidated subsidiaries have fixed interest rates. To curb the volatility risk of
variable rates of interest paid, they use interest rate swap transactions.
The Company and certain consolidated subsidiaries regularly assess the fair values of the securities and investment securities
they hold, market conditions, and the financial standing of issuers.
Derivatives trading is carried out by the accounting and finance department with the approval of people having decision-making
authority under risk management guidelines relating to financial instruments that stipulate hedging instruments, trading authority,
and maximum transaction amounts.
iii) Management of liquidity risk relating to financing (risk of not being able to pay by the due date)
The Company and certain consolidated subsidiaries manage liquidity risk by having the accounting and finance department work
out and revise financing plans in a timely manner, based on reports from operating departments and by securing liquidity on hand
flexibly by participating in the NTT Group’s cash management system.
71
(4) Supplementary explanation about the current prices of financial instruments
The current prices of financial instruments are based on market prices or, if there are no market prices, prices reasonably assessed.
Assessed prices involve variation factors and vary when different assumptions are used. The amounts of contracts relating to
derivatives trading described in the notes to “derivatives trading” relations do not show the market risks of the derivatives
transactions.
2. Fair values of financial instruments
The table below shows the book value and fair value of financial instruments and the difference between them at the end of the fiscal
year.
Financial instruments whose fair value is very difficult to determine (please refer to (Note 2)) and financial instruments that are not
significant are not included in the table.
(Million yen) Book value Fair value Difference (1) Cash and deposits 12,148 12,148 – (2) Notes and operating accounts receivable 13,786 13,785 (0) (3) Short-term and long-term investment securities
Other securities 12,415 12,508 93 Total assets 38,349 38,442 92 (1) Notes and operating accounts payable-trade 10,742 10,742 – (2) Short-term loans payable 10,321 10,321 – (3) Income taxes payable 3,351 3,351 – (4) Bonds payable (*1) 147,095 152,317 5,222 (5) Long-term loans payable (*2) 348,575 359,491 10,915 (6) Lease and guarantee deposits received 17,218 16,996 (222) Total liabilities 537,305 553,220 15,915
(*1) Current portion of bonds is included.
(*2) Current portion of long-term loans payable is included.
(Note 1) Methods used to calculate the fair value of financial instruments and matters relating to securities and derivatives trading
Assets
(1) Cash and deposits
As cash and deposits are short-term accounts, fair values are close to book values. Thus, they are recorded at book value.
(2) Notes and operating accounts receivable
As notes and operating accounts receivable are settled in a short term, fair values are close to book values. Thus, they are recorded at
book value. When an allowance for doubtful accounts is recognized for operating accounts receivable, however, the fair value is
determined by subtracting the estimated uncollectible amount (the amount of the allowance) from the receivable.
(3) Short-term and long-term investment securities
Fair values of stocks and bonds having market prices refer to prices set by financial market.
Liabilities
(1) Notes and operating accounts payable-trade, (2) Short-term loans payable and (3) Income taxes payable
As these accounts are settled in a short term, fair values are close to book values. Thus, they are recorded at book value.
(4) Bonds payable
Fair values of bonds payable refer to market prices if market prices are available. If market prices are not available, fair values are
determined at present values, calculated by discounting the combined total of principal and interest at a rate with the remaining
period of the bond and credit risk taken into account.
(5) Long-term loans payable
72
Fair values of long-term loans payable are determined at present values, calculated by discounting the combined total of principal and
interest at a rate with the remaining period of the long-term loans payable and credit risk taken into account.
(6) Lease and guarantee deposits received
Fair values of lease and guarantee deposits received are determined at present values, calculated by discounting deposits at a rate with
the remaining periods of the security deposits (those with confirmed refund timing) and guarantee deposits and credit risk taken into
account.
Derivatives trading
Please refer to “Derivatives trading,” below.
(Note 2) Financial instruments whose fair value is very difficult to determine
(Million yen) Classification Book value
Unlisted stocks (*1) 500 Investments in subsidiaries and affiliates (*1) 1,648 Investments in limited partnerships (*1) 9,646 Other investments (*1) 57 Deposits received (excluding those whose time of return is determined) (*2) 65,588
(*1) Unlisted stocks, investments in subsidiaries and affiliates, investments in limited partnerships, and other investments are not
included in “Assets (3) Short-term and long-term investment securities,” since they do not have market prices, and it is very
difficult to determine their fair value.
(*2) Deposits received (excluding those whose time of return is determined) are not included in “Liabilities (6) Lease and guarantee
deposits received,” because their remaining period cannot be determined, and it is very difficult to determine their fair value.
(Note 3) Scheduled amounts of redemption of pecuniary claims and securities having maturity dates after the consolidated closing
date
(Million yen)
Due within one year Due after one year within five years
Due after five years within ten years Due after ten years
Cash and deposits 12,148 – – – Notes and operating accounts receivable 13,786 – – –
Short-term and long-term investment securities
Other securities having maturity dates 5,000 – – 203
Total 30,934 – – 203
(Note 4) Scheduled amounts of repayment of bonds payable and long-term loans payable after the consolidated closing date
(Million yen)
Due within one year Due after one year within five years
Due after five years within ten years Due after ten years
Bonds payable 62,123 40,000 40,000 5,000 Long-term loans payable 56,041 177,322 113,211 2,000
Total 118,165 217,322 153,211 7,000
73
(Notes to securities)
Previous consolidated fiscal year (as of March 31, 2012)
1. Other securities (Million yen)
Type Book value Acquisition cost Difference
Book value is more than acquisition cost or amortized cost
(1) Shares 1,264 936 328
(2) Bonds
(i) Government bonds and local bonds 5,246 5,157 88
(ii) Bonds payable – – –
(iii) Other bonds – – –
(3) Other securities – – –
Subtotal 6,510 6,093 416
Book value is equal to or less than acquisition cost or amortized cost
(1) Shares – – –
(2) Bonds
(i) Government bonds and local bonds – – –
(ii) Bonds payable – – –
(iii) Other bonds – – –
(3) Other securities 4,360 4,716 (355)
Subtotal 4,360 4,716 (355)
Total 10,871 10,809 61
(Note) Unlisted stocks (¥363 million posted on the consolidated balance sheets), shares in subsidiaries and affiliates (¥1,595 million on the consolidated balance sheets), investments in limited partnerships (¥9,057 million posted on the consolidated balance sheets), and other investments (¥41 million on the consolidated balance sheets) do not have market prices, and it is very difficult to determine their fair value. They are not therefore included in “Other securities.” No other securities were sold during the consolidated fiscal year under review.
2. No impairment losses were recorded in securities in the fiscal year under review.
74
Current consolidated fiscal year (as of March 31, 2013)
1. Other securities (Million yen)
Type Book value Acquisition cost Difference
Book value is more than acquisition cost or amortized cost
(1) Shares 1,327 936 391
(2) Bonds
(i) Government bonds and local bonds 4,112 4,066 45
(ii) Bonds payable ‒ ‒ ‒
(iii) Other bonds ‒ ‒ ‒
(3) Other securities 4,445 3,116 1,329
Subtotal 9,885 8,119 1,765
Book value is equal to or less than acquisition cost or amortized cost
(1) Shares ‒ ‒ ‒
(2) Bonds
(i) Government bonds and local bonds 1,099 1,100 (0)
(ii) Bonds payable ‒ ‒ ‒
(iii) Other bonds ‒ ‒ ‒
(3) Other securities 1,429 1,600 (170)
Subtotal 2,529 2,700 (170)
Total 12,415 10,819 1,595
(Note) Unlisted stocks (¥500 million posted on the consolidated balance sheets), shares in subsidiaries and affiliates (¥1,648 million on the consolidated balance sheets), investments in limited partnerships (¥9,646 million posted on the consolidated balance sheets), and other investments (¥57 million on the consolidated balance sheets) do not have market prices, and it is very difficult to determine their fair value. They are not therefore included in “Other securities.” No other securities were sold during the consolidated fiscal year under review.
2. No impairment losses were recorded in securities in the fiscal year under review.
75
(Derivatives trading)
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
(i) Hedge accounting is applied to all derivatives trading.
(ii) Derivatives trading to which hedge accounting is applied (Million yen)
Hedge accounting method Type of derivatives trading Hedged item Amount of contract
Fair value Over one year
Preferential procedure for interest rate swaps
Interest rate swaps Fixed payment, floating receipt
Long-term loans payable 29,000 28,000 (*)
(*) When the special procedures apply, the fair value of an interest rate swap is processed together with the long-term loans payable
hedged by the swap and is thus included in the fair value of the long-term loans payable.
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
(i) Hedge accounting is applied to all derivatives trading.
(ii) Derivatives trading to which hedge accounting is applied (Million yen)
Hedge accounting method Type of derivatives trading Hedged item Amount of contract
Fair value Over one year
Preferential procedure for interest rate swaps
Interest rate swaps Fixed payment, floating receipt
Long-term loans payable 42,185 39,185 (*)
(*) When the special procedures apply, the fair value of an interest rate swap is processed together with the long-term loans payable
hedged by the swap and is thus included in the fair value of the long-term loans payable.
76
(Notes to retirement benefits)
1. Outline of retirement benefit plans
The Company and its consolidated subsidiaries have a corporate defined benefit pension plan, contract-type corporate pension, and
lump-sum payment plans as defined benefit plans.
2. Retirement benefit obligation (Million yen)
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
(1) Retirement benefit obligation (10,789) (13,138)
(2) Pension assets 5,284 6,069
(3) Unfunded retirement benefit obligation (1) + (2) (5,505) (7,068)
(4) Unrecognized net actuarial gains (521) 680
(5) Unrecognized prior service costs (0) (0)
(6) Provision for retirement benefits (3) + (4) + (5) (6,026) (6,388)
3. Retirement benefit expenses (Million yen)
Previous consolidated fiscal year (From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
(1) Service costs 362 412
(2) Interest costs 254 264
(3) Expected return on plan assets (117) (121)
(4) Amortization of net actuarial gains (45) (62)
(5) Amortization of prior service costs (0) (0)
(6) Employees’ contribution (18) (18)
(7) Retirement benefit expenses 436 474
4. Basis of calculation of retirement benefit obligation
Previous consolidated fiscal year (As of March 31, 2012)
Current consolidated fiscal year (As of March 31, 2013)
(1) Term distribution method of expected retirement benefits Fixed amount per period standard Fixed amount per period standard
(2) Discount rates 2.5% 1.5%
(3) Expected rate of return on assets 2.0% to 2.5% 2.0% to 2.5%
(4) Amortization period of unrecognized prior service costs 11.2 to 11.5 years 11.2 to 11.5 years
(5) Amortization period of unrecognized actuarial differences 8.5 to 13.7 years 8.5 to 13.7 years
77
(Notes to deferred tax accounting)
1. Breakdown of deferred tax assets and deferred tax liabilities by major cause (Million yen) Previous consolidated fiscal year
(As of March 31, 2012) Current consolidated fiscal year
(As of March 31, 2013) Deferred tax assets (current)
Accrued bonuses in excess of the limit for income tax deduction 190 191
Accrued enterprise taxes 73 316 Accrued real estate acquisition tax 56 204 Loss on valuation of inventory 124 94 Other 213 667
Sub Total 661 1,474 Valuation reserve (0) (0)
Total 660 1,474 Deferred tax liabilities (current)
Other (232) (649) Total (232) (649)
Net deferred tax liabilities (current) 427 825 Deferred tax assets (non-current)
Evaluation loss on land 3,828 3,684 Depreciation of unused building volume 1,801 1,924 Provision for retirement benefits 2,160 2,284 Impairment loss 848 716 Compensation for loss 683 128 Other 1,676 1,747
Subtotal 10,999 10,485 Valuation reserve (6,148) (6,088)
Total 4,851 4,397 Deferred tax liabilities (non-current)
Reserve for advanced depreciation of non-current assets (11,115) (11,102)
Non-current assets valuation difference (52,907) (52,715) Reserve for special account for advanced depreciation of non-current assets (30) ‒
Other (706) (1,272) Total (64,760) (65,090)
Net deferred tax liabilities (non-current) (59,908) (60,693)
2. Breakdown of difference between the effective tax rate and the actual effective tax rate after applying tax effect accounting by
major cause if there is a significant difference between them Previous consolidated fiscal year
(As of March 31, 2012) Current consolidated fiscal year
(As of March 31, 2013) Effective tax rate 40.7% 38.0% (Adjustment) Reduction in year-end deferred tax liabilities due to tax rate change (51.6%) ‒
Amortization of negative goodwill (4.8%) (3.9%) Earnings of subsidiaries (tokutei mokuteki kaisha) attributable to minority interests (3.1%) (2.7%)
Valuation reserve 0.6% (0.3%) Other 0.2% (1.9%) Actual effective tax rate after the application of tax effect accounting (18.0%) 29.2%
78
(Notes to rental properties)
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
The Company and certain consolidated subsidiaries own rental office buildings, rental commercial facilities and residential rental
housing in Tokyo and other areas. In the fiscal year under review, the results of operation of those rental properties were ¥25,184
million (leasing revenue is accounted for in operating revenue and rental expenses in operating cost and in selling, general and
administrative expenses), with loss on the sale of non-current assets of ¥216 million (in extraordinary loss) and loss on the retirement
of non-current assets of ¥2,298 million (in extraordinary loss).
Amounts recognized in the consolidated balance sheet, the change in the fiscal year under review and the fair value as of the end of
the year for rental properties are as follows.
(Million yen) Consolidated balance sheet amount
Fair value at the end of fiscal year under review Amount at the beginning of
fiscal year under review Change during fiscal year
under review Amount at the end of fiscal
year under review 737,113 6,826 743,939 1,155,467
(Note 1) The consolidated balance sheet amount is the acquisition cost less the accumulated depreciation and the accumulated impairment loss. (Note 2) Of the change during fiscal year under review, major items included the acquisition of real estate (providing an increase of ¥6,534million)
and the sale of real estate (providing a decrease of ¥912million). (Note 3) The fair value of major properties at the end of the fiscal year under review is based on appraised values determined by outside real estate
appraisers. The fair value of other properties is calculated by the Company, which used indicators that it considered reflected market prices appropriately.
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
The Company and certain consolidated subsidiaries own rental office buildings, rental commercial facilities and residential rental
housing in Tokyo and other areas. In the fiscal year under review, the results of operation of those rental properties were ¥24,914
million (leasing revenue is accounted for in operating revenue and rental expenses in operating cost and in selling, general and
administrative expenses), with gain on the sales of non-current assets of ¥388 million (in extraordinary gain), loss on the sale of
non-current assets of ¥508 million (in extraordinary loss), loss on the retirement of non-current assets of ¥2,065 million (in
extraordinary loss) and impairment loss of ¥800 million (in extraordinary loss).
Amounts recognized in the consolidated balance sheet, the change in the fiscal year under review and the fair value as of the end of
the year for rental properties are as follows.
(Million yen) Consolidated balance sheet amount
Fair value at the end of fiscal year under review Amount at the beginning of
fiscal year under review Change during fiscal year
under review Amount at the end of fiscal
year under review 743,939 14,360 758,300 1,159,902
(Note 1) The consolidated balance sheet amount is the acquisition cost less the accumulated depreciation and the accumulated impairment loss. (Note 2) Of the change during the fiscal year under review, major items included the acquisition of real estate (providing an increase of ¥28,002
million) as well as the transfer of real estate for sale to real estate for sale in progress, the sale of real estate, and impairment losses (providing decreases of ¥5,378 million, ¥3,381 million and ¥800 million, respectively).
(Note 3) The fair value of major properties at the end of the fiscal year under review is based on appraised values determined by outside real estate appraisers. The fair value of other properties is calculated by the Company, which used indicators that it considered reflected market prices appropriately.
79
(Segment information)
Segment information by business
I. Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
1. Overview of reported segments
The reported segments of the Company are constituent units of the Company for which separate financial information is
available. The Board of Directors conducts a regular review to decide the allocation of management resources and evaluate
business performance.
The reported segments of the Company are the leasing business and the residential property sales business.
In the leasing business, the Company leases properties, including office buildings, commercial facilities and rental housing, that it has
developed and owns. In the residential property sales business, the Company sells residential properties, especially condominiums.
2. Methods used to calculate the amounts of operating revenue, profits or losses, assets, liabilities and other items in reported segments
The accounting methods of the reported business segments are generally the same as those stated in the Important Items Used as
Basic Materials for Preparation of Consolidated Financial Statements.
Profits in the reported segments are values based on operating income. Inter-segment internal revenues or transfers are based on
current fair values.
3. Information on the amounts of operating revenue, profits or losses, assets, liabilities and other items in reported segments
(Million yen)
Reported segments
Other (Note 1) Total Adjustments
(Note 2, 3)
Amount stated in
consolidated financial
statement (Note 5)
Leasing Residential property
sales Total
Operating revenue (1) Operating revenue to third
parties 90,323 28,484 118,807 18,034 136,842 – 136,842
(2) Inter-segment internal revenues and transfers 746 – 746 5,188 5,934 (5,934) –
Total 91,069 28,484 119,554 23,223 142,777 (5,934) 136,842 Segment profits 27,482 1,374 28,857 3,090 31,948 (6,583) 25,365 Segment assets 816,254 90,959 907,213 21,251 928,465 71 928,537 Other items (Note 4)
Depreciation 23,664 6 23,670 78 23,749 1,015 24,765 Increases in property, plant and equipment and intangible assets (investment amount)
28,325 5 28,330 40 28,371 421 28,793
(Note 1) Other is the business segment that is not included in the reported segments and other business activities that generate revenue. It includes design of building and other, construction and supervision of construction, office building maintenance and air-conditioning services associated with the leasing segment, and management of restaurant facilities as incidental facilities of office buildings.
(Note 2) Adjustment in segment profits of -¥6,583 million includes the elimination of inter-segment transactions of -¥139 million and company-wide expenses of -¥6,443 million that are not attributable to reported segments. Company-wide expenses are primarily selling, general and administrative expenses that are not attributable to reported segments.
(Note 3) Adjustment in segment assets of ¥71 million includes the elimination of inter-segment transactions of -¥50,151 million and company-wide assets of ¥50,222 million that are not attributable to reported segments. Company-wide assets are mainly idle funds managed by the Company (cash and deposits), investment securities and assets relating to the administrative division.
(Note 4) Depreciation and increases in property, plant and equipment and intangible assets (investment amount) include long-term prepaid expenses and the amortization thereof.
(Note 5) Segment profits are adjusted to operating income in consolidated financial statements.
80
II. Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
1. Overview of reported segments
The reported segments of the Company are constituent units of the Company for which separate financial information is
available. The Board of Directors conducts a regular review to decide the allocation of management resources and evaluate
business performance.
The reported segments of the Company are the leasing business and the residential property sales business.
In the leasing business, the Company leases properties, including office buildings, commercial facilities and rental housing, that it has
developed and owns. In the residential property sales business, the Company sells residential properties, especially condominiums.
2. Methods used to calculate the amounts of operating revenue, profits or losses, assets, liabilities and other items in reported segments
The accounting methods of the reported business segments are generally the same as those stated in the Important Items Used as
Basic Materials for Preparation of Consolidated Financial Statements.
Profits in the reported segments are values based on operating income. Inter-segment internal revenues or transfers are based on
current fair values.
(Change of depreciation method)
In the fiscal year under review, the Company and its consolidated subsidiaries in Japan have changed the depreciation method for
property, plant and equipment that were acquired on or after April 1, 2012 to the method under the revised Corporate Tax Act, in
association with the amendments to the Corporate Tax Act.
As a result of this change, segment profits in reported segments increased ¥171 million in the leasing business in the fiscal year
under review, compared to those before the change.
3. Information on the amounts of operating revenue, profits or losses, assets, liabilities and other items in reported segments
(Million yen)
Reported segments
Other (Note 1) Total Adjustments
(Note 2, 3)
Amount stated in
consolidated financial
statement (Note 5)
Leasing Residential property
sales Total
Operating revenue (1) Operating revenue to third
parties 93,745 54,939 148,684 14,483 163,168 – 163,168
(2) Inter-segment internal revenues and transfers 763 – 763 4,446 5,209 (5,209) –
Total 94,509 54,939 149,448 18,930 168,378 (5,209) 163,168 Segment profits 29,216 2,914 32,131 1,580 33,711 (6,310) 27,401 Segment assets 841,527 88,306 929,834 11,099 940,934 116 941,050 Other items (Note 4)
Depreciation 22,751 5 22,756 52 22,809 957 23,766 Increases in property, plant and equipment and intangible assets (investment amount)
46,136 3 46,139 160 46,299 90 46,390
(Note 1) Other is the business segment that is not included in the reported segments and other business activities that generate revenue. It includes design of building and other, construction and supervision of construction, office building maintenance and air-conditioning services associated with the leasing segment, and management of restaurant facilities as incidental facilities of office buildings.
(Note 2) Adjustment in segment profits of -¥6,310 million includes the elimination of inter-segment transactions of ¥48 million and company-wide expenses of -¥6,358 million that are not attributable to reported segments. Company-wide expenses are primarily selling, general and administrative expenses that are not attributable to reported segments.
(Note 3) Adjustment in segment assets of ¥116 million includes the elimination of inter-segment transactions of -¥49,493 million and company-wide assets of ¥49,610 million that are not attributable to reported segments. Company-wide assets are mainly idle funds managed by the Company (cash and deposits), investment securities and assets relating to the administrative division.
(Note 4) Depreciation and increases in property, plant and equipment and intangible assets (investment amount) include long-term prepaid expenses and the amortization thereof.
(Note 5) Segment profits are adjusted to operating income in consolidated financial statements.
81
Related information
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
1. Information by product and service
Similar information is disclosed in the Segment Information, and therefore the statement is omitted.
2. Information by region
(1) Operating revenue
Operating revenue to external customers in Japan account for more than 90% of operating revenue in consolidated statements
of income, and therefore the statement is omitted.
(2) Property, plant and equipment
The amount of property, plant and equipment located in Japan accounts for more than 90% of the amount of property, plant
and equipment in consolidated balance sheet, and therefore the statement is omitted.
3. Information by main customer
Of sales to external customers, sales to a specific customer account for less than 10% of operating revenue in consolidated
statements of income, and therefore the statement is omitted.
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
1. Information by product and service
Similar information is disclosed in the Segment Information, and therefore the statement is omitted.
2. Information by region
(1) Operating revenue
Operating revenue to external customers in Japan account for more than 90% of operating revenue in consolidated statements
of income, and therefore the statement is omitted.
(2) Property, plant and equipment
The amount of property, plant and equipment located in Japan accounts for more than 90% of the amount of property, plant
and equipment in consolidated balance sheet, and therefore the statement is omitted.
3. Information by main customer
Of sales to external customers, sales to a specific customer account for less than 10% of operating revenue in consolidated
statements of income, and therefore the statement is omitted.
Information on impairment loss of non-current assets in reported segments
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
Not applicable.
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013) (Million yen)
Leasing Residential property sales Other Corporate /
Eliminations Total
Impairment loss 800 – – – 800
82
Information on the amortized amount and unamortized balance of goodwill in reported segments
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
(Million yen)
Leasing Residential property sales Other Corporate /
Eliminations Total
Amortized amount 128 – 13 – 141
Year-end balance 2,185 – 237 – 2,422
The amortized amount and unamortized balance of negative goodwill generated on or before March 31, 2010 are as shown below.
(Million yen)
Leasing Residential property sales Other Corporate /
Eliminations Total
Amortized amount 1,926 – – – 1,926
Year-end balance 30,824 – – – 30,824
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
(Million yen)
Leasing Residential property sales Other Corporate /
Eliminations Total
Amortized amount 128 – 13 – 141
Year-end balance 2,056 – 223 – 2,280
The amortized amount and unamortized balance of negative goodwill generated on or before March 31, 2010 are as shown below.
(Million yen)
Leasing Residential property sales Other Corporate /
Eliminations Total
Amortized amount 1,926 – – – 1,926
Year-end balance 28,897 – – – 28,897
Information on gains on negative goodwill in reported segments
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012)
Not applicable.
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013)
Not applicable.
83
Related party transactions
Previous consolidated fiscal year (from April 1, 2011 to March 31, 2012) 1. Related party transactions
Companies whose parent company is the same as the parent company of the company submitting the consolidated financial
statements
Type Company name Location Capital stock
(million yen)
Business Ownership of voting rights in
percentage
Relationship Transactions Transaction
amount (million
yen)
Account Balance at end of year
(million yen)
Company having the same parent company
NTT Finance Corporation
Minato-ku, Tokyo 16,770
General leasing activities
(Owned by the
company) Direct: 1.0
Deposits Deposits paid – Deposits
paid 1,745
Borrowing Long-term loans payable
10,000
Current portion of long-term loans payable
10,000
Long-term loans payable
36,000
(Note) Deposits paid and borrowings are based on deposit agreements and loan agreements. The Company and NTT Finance Corporation determined interest rates, considering market interest rates.
2. Notes to the parent company, and important subsidiaries and affiliates
(1) Parent company
Nippon Telegraph and Telephone Corporation (listed on the Tokyo Stock Exchange and others)
(2) Important subsidiaries and affiliates
Not applicable.
Current consolidated fiscal year (from April 1, 2012 to March 31, 2013) 1. Related party transactions
Companies whose parent company is the same as the parent company of the company submitting the consolidated financial
statements
Type Company name Location
Capital stock
(million yen)
Business
Ownership of voting rights in
percentage Relationship Transactions
Transaction amount (million
yen) Account
Balance at end of year
(million yen)
Company having the same parent company
NTT Finance Corporation
Minato-ku, Tokyo 16,770
General leasing activities
(Owned by the
company) Direct: 1.0
Deposits Deposits paid – Deposits
paid 1,370
Borrowing
Short-term loans payable
– Short-term loans payable
10,321
Long-term loans payable
5,000
Current portion of long-term loans payable
3,000
Long-term loans payable
38,000
(Note) Deposits paid and borrowings are based on deposit agreements and loan agreements. The Company and NTT Finance Corporation determined interest rates, considering market interest rates.
2. Notes to the parent company, and important subsidiaries and affiliates
(1) Parent company
Nippon Telegraph and Telephone Corporation (listed on the Tokyo Stock Exchange and others)
(2) Important subsidiaries and affiliates
Not applicable.
84
(Per-share information) Previous consolidated fiscal year
(From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
Net assets per share 50,441.30 yen 53,543.11 yen Net income per share 4,735.67 yen 3,668.47 yen
(Note 1) Diluted net income per share is not disclosed because the Company does not hold any dilutive securities.
(Note 2) The basis for the calculation of net income per share is shown in the table below.
Previous consolidated fiscal year (From April 1, 2011 to March 31, 2012)
Current consolidated fiscal year (From April 1, 2012 to March 31, 2013)
Net income (million yen) 15,586 12,073 Amounts not attributable to shareholders of common stock (million yen) – –
Net income attributable to common stock (million yen) 15,586 12,073 Average number of common shares outstanding during the fiscal year 3,291,200 3,291,200
85
(Significant subsequent events)
At a meeting of the Board of Directors held on May 9, 2013, the Company resolved to conduct a stock split and adopt the unit share
system.
(1) Purpose
The Securities Listing Regulations of the Tokyo Stock Exchange were revised in April 2012 to stipulate that listed companies
whose trading units do not consist of 100 or 1,000 shares are required to consolidate their trading units into 100 shares by April 1,
2014. In response to this revision, the Company decided to conduct the stock split in which each of the Company’s common stock
shares will be split into 100 shares, and at the same time adopt the unit share system to set the number of shares constituting one
unit as 100 shares. There will be no substantial change to investment units with this stock split and adoption of the unit share
system.
(2) Details of the stock split
(i) Method of the split
Each share of common stock of the Company owned by shareholders recorded in the final shareholder register as of Monday,
September 30, 2013, will be split into 100 shares.
(ii) Number of shares to be increased by the split
Total number of issued and outstanding shares before the stock split 3,291,200 shares
Number of shares to be increased by the stock split 325,828,800 shares
Total number of issued and outstanding shares after the stock split 329,120,000 shares
Total number of authorized shares to be issued after the stock split 1,050,000,000 shares
(iii) Schedule for the split
Public announcement date for record date September 13, 2013 (Friday)
Record date September 30, 2013 (Monday)
Effective date October 1, 2013 (Tuesday)
(3) Adoption of the unit share system
(i) Number of shares constituting one unit to be newly established
The Company will adopt the unit share system and set the number of shares constituting one unit as 100 shares.
(ii) Schedule for the establishment of the unit share system
Effective date October 1, 2013 (Tuesday)
2. Acquisition of material assets
At a meeting of the Board of Directors held on March 25, 2013, the Company resolved to acquire the office building below, through
its U.K. subsidiary UD EUROPE LIMITED.
(1) Purpose
The Company acquired the office building to strengthen the real estate business in the United Kingdom.
(2) Date of acquisition
April 4, 2013
(3) Acquired property
Location: 265 Strand, London WC2R 1BH, U.K.
Use: Office
(4) Acquisition cost
GBP 77 million (equivalent to approx. ¥11.55 billion)
86
5) Consolidated supplementary schedule
Schedule of bonds
Corporate name Issue Issue date Balance at the
beginning of current year (million yen)
Balance at the end of current year (million yen)
Interest rate (%) Collateral Maturity
period
NTT Urban Development Corporation
7th unsecured bond December 4, 2006 19,996 19,997 1.9 None September
20, 2016
8th unsecured bond June 5, 2008 19,989 19,990 2.0 None March 20, 2018
9th unsecured bond September 17, 2009 9,993 9,994 1.5 None September
20, 2019
10th unsecured bond October 29, 2010 9,994 9,995 1.0 None September
18, 2020
11th unsecured bond October 28, 2011 9,996 9,996 1.1 None September
17, 2021
12th unsecured bond October 28, 2011 4,997 4,997 2.0 None September
19, 2031
13th unsecured bond October 26, 2012 – 10,000 0.9 None September
20, 2022 UDX Tokutei Mokuteki Kaisha
2nd specific general mortgage bond
September 20, 2006
63,735 (1,611)
62,123 (62,123) 2.1 Yes September
20, 2013
Total – – 138,702 (1,611)
147,095 (62,123) – – –
(Note 1) Figures in parentheses are amounts to be redeemed within a year.
(Note 2) The table below shows scheduled redemption amounts in the five years following the consolidated closing date.
(Million yen)
Due within one year Due after 1 year, within 2 years
Due after 2 years, within 3 years
Due after 3 years, within 4 years
Due after 4 years, within 5 years
62,123 – – 20,000 20,000
Schedule of borrowings
Classification Balance at the beginning
of current year (million yen)
Balance at the end of current year
(million yen)
Average interest rate
(%) Repayment term
Short-term loans payable – 10,321 0.2 – Current portion of long-term loans payable 48,712 56,041 1.4 – Current portion of lease obligations 68 45 14.3 – Long-term loans payable (excluding those to be repaid within one year) (Note 2) 318,389 (Note 2) 292,533 1.4 April 30, 2014 –
February 28, 2024 Lease obligations (excluding those to be repaid within one year) 151 133 9.5 April 20, 2014 –
January 3, 2020 Total 367,322 359,076 – –
(Note 1) The average interest rate is the weighted average interest rate for loans at the end of the term.
(Note 2) Long-term loans payable (excluding those to be repaid within one year) includes syndicated loans (¥25,300 million) for which Mizuho
Corporate Bank, Ltd., Sumitomo Mitsui Banking Corporation, and the Bank of Tokyo-Mitsubishi UFJ, Ltd. acts as the managers.
(Note 3) The table below shows the scheduled amounts of long-term loans payable and lease obligations (excluding those to be repaid within one
year) in the five years following the consolidated closing date.
(Million yen)
Due after 1 year, within 2 years
Due after 2 years, within 3 years
Due after 3 years, within 4 years
Due after 4 years, within 5 years
Long-term loans payable 58,082 53,901 33,254 32,085 Lease obligations 45 38 24 19
87
Schedule of asset retirement obligations
As the amounts of asset retirement obligations at the beginning of the fiscal year under review and at the end of the fiscal year under
review are less than one hundredth of total liabilities or net assets, the statement of the amounts of asset retirement obligations is
omitted in accordance with the provision in Article 92-2 of the Regulations for Consolidated Financial Statements.
(2) Other
1) Quarterly information, etc. for the fiscal year under review
Cumulative period Three months ended June 30, 2012
Six months ended September 30, 2012
Nine months ended December 31, 2012
Current consolidated fiscal year
Operating revenue (million yen) 41,467 78,974 108,677 163,168 Income before income taxes and minority interests (million yen) 9,035 14,914 18,470 18,969
Net income (million yen) 5,982 9,529 11,699 12,073 Net income per share (yen) 1,817.84 2,895.38 3,554.93 3,668.47
Accounting period Three months ended June 30, 2012
Three months ended September 30, 2012
Three months ended December 31, 2012
Three months ended March 31, 2013
Net income per share (yen) 1,817.84 1,077.54 659.55 113.54
2) Situation after the closing date
There are no specific events.
88
2. Non-consolidated financial statements, etc. (1) Non-consolidated financial statements
1) Non-consolidated balance sheets (Million yen) Previous fiscal year
(as of March 31, 2012) Current fiscal year
(as of March 31, 2013) Assets
Current assets Cash and deposits 95 111 Operating accounts receivable 13,002 11,951 Real estate for sale 5,302 11,923 Real estate for sale in progress 77,837 64,360 Costs on uncompleted construction contracts 347 315 Raw materials and supplies 34 28 Prepaid expenses 659 666 Lease investment assets 3,172 3,617 Deposits paid 945 – Deferred tax assets 539 1,307 Other 3,249 6,849 Allowance for doubtful accounts (1) (0) Total current assets 105,184 101,131
Non-current assets Property, plant and equipment
Buildings * 615,025 * 636,639 Accumulated depreciation (344,415) (353,290) Buildings (net) 270,609 283,349
Structures 15,330 15,440 Accumulated depreciation (10,901) (11,012) Structures (net) 4,428 4,428
Machinery and equipment 13,760 14,022 Accumulated depreciation (11,723) (11,891) Machinery and equipment (net) 2,037 2,130
Tools, furniture and fixtures 15,165 15,642 Accumulated depreciation (11,869) (12,536) Tools, furniture and fixtures (net) 3,295 3,106
Land * 230,080 * 237,848 Lease assets 286 175
Accumulated depreciation (236) (133) Lease assets (net) 50 42
Construction in progress 17,516 7,012 Total property, plant and equipment 528,018 537,917
Intangible assets Leasehold right 1,429 1,419 Software 2,975 2,191 Software in progress 13 – Lease assets 2 0 Other 96 108 Total intangible assets 4,516 3,720
Investments and other assets Investment securities 15,070 17,390 Stocks of subsidiaries and affiliates 13,903 13,903 Investments in other securities of subsidiaries and affiliates 32,274 32,274 Investments in capital 0 0 Long-term prepaid expenses 17,020 16,390 Lease and guarantee deposits paid 10,412 9,927 Other 1,464 945 Total investments and other assets 90,145 90,832
Total non-current assets 622,680 632,470 Total assets 727,865 733,602
89
(Million yen) Previous fiscal year
(as of March 31, 2012) Current fiscal year
(as of March 31, 2013) Liabilit ies
Current liabilit ies Operating accounts payable 10,892 9,510 Short-term loans payable – 10,321 Lease obligations 47 28 Current portion of long-term loans payable * 48,652 * 56,011 Accounts payable-other 9,038 13,120 Accrued expenses 1,573 1,467 Income taxes payable 177 3,042 Advances received 7,714 8,391 Deposits received 3,477 3,607 Other 4,061 8,083 Total current liabilit ies 85,636 113,584
Non-current liabilit ies Bonds payable 74,967 84,971 Long-term loans payable * 318,359 * 288,348 Lease obligations 55 48 Long-term accounts payable-other 31 5 Lease and guarantee deposits received 81,868 74,157 Deferred tax liabilities 7,452 8,533 Provision for retirement benefits 5,332 5,657 Asset retirement obligations 3,040 3,168 Other 20 17 Total non-current liabilities 491,127 464,906
Total liabilities 576,763 578,491 Net assets
Shareholders’ equity Capital stock 48,760 48,760 Capital surplus
Legal capital surplus 34,109 34,109 Total capital surplus 34,109 34,109
Retained earnings Legal retained earnings 3,437 3,437 Other retained earnings
General reserve 5,000 5,000 Reserve for advanced depreciation of non-current assets 20,031 20,017 Reserve for special account for advanced depreciation of non-current assets 49 –
Reserve for special depreciation 13 27 Retained earnings brought forward 39,629 42,636
Total retained earnings 68,160 71,119 Total shareholders’ equity 151,030 153,988
Valuation and translation adjustments Valuation difference on available-for-sale securities 70 1,121 Total valuation and translation adjustments 70 1,121
Total net assets 151,101 155,110 Total liabilities and net assets 727,865 733,602
90
2) Non-consolidated statements of income (Million yen) Previous fiscal year
(from April 1, 2011 to March 31, 2012)
Current fiscal year (from April 1, 2012 to March 31, 2013)
Operating revenue Operating revenues from leasing business 82,603 82,208 Operating revenues from residential property sales business 28,484 54,939 Operating revenues from other businesses 8,926 3,731 Total operating revenue 120,014 140,879
Operating cost Operating cost for leasing business 53,961 53,467 Operating cost for residential property sales business *6 23,392 *6 45,596 Operating cost for other businesses 6,499 2,860 Total operating cost 83,854 101,924
Operating gross profit 36,160 38,955 Selling, general and administrative expenses *1 13,799 *1 17,194 Operating income 22,360 21,760 Non-operating income
Interest income 6 2 Dividends income 145 159 Contributions 123 249 Gain on donation of non-current assets 0 1 Other 44 65 Total non-operating income 320 478
Non-operating expense Interest expenses 5,483 5,074 Interest on bonds 1,131 1,291 Other 471 107 Total non-operating expenses 7,085 6,473
Ordinary income 15,595 15,764 Extraordinary income
Gain on sales of non-current assets – *2 389 Gain on reversal of provision for loss on warranty 60 – Total extraordinary income 60 389
Extraordinary loss Loss on sales of non-current assets *3 216 *3 508 Loss on retirement of non-current assets *4 2,228 *4 2,108 Impairment loss – *5 800 Loss on disaster 318 – Other 5 8 Total extraordinary losses 2,768 3,425
Income before income taxes 12,886 12,729 Income taxes-current 3,509 5,104 Income taxes-deferred 798 (270) Total income taxes 4,307 4,834 Net income 8,579 7,895
91
Schedules of Cost Schedule of operating cost for leasing business (Million yen) Previous fiscal year
(from April 1, 2011 to March 31, 2012)
Current fiscal year (from April 1, 2012 to March 31, 2013)
Classification Note number Amount Breakdown
(%) Amount Breakdown (%)
I. Personal expenses 494 0.9 479 0.9 II. Depreciation and amortization 20,142 37.3 19,550 36.5 III. Taxes and dues 8,413 15.6 8,164 15.3 IV. Business consignment expenses 10,255 19.0 10,478 19.6 V. Other 14,656 27.2 14,795 27.7
Total 53,961 100.0 53,467 100.0
Schedule of operating cost for residential property sales business (Million yen) Previous fiscal year
(from April 1, 2011 to March 31, 2012)
Current fiscal year (from April 1, 2012 to March 31, 2013)
Classification Note number Amount Breakdown
(%) Amount Breakdown (%)
I. Land cost 10,804 46.2 20,930 45.9 II. Personal expenses 18 0.1 11 0.0 III. Sundry expenses 12,570 53.7 24,654 54.1
Total 23,392 100.0 45,596 100.0 (Note) The job order cost system is applied for calculating costs.
Schedule for operating cost for other businesses (Million yen) Previous fiscal year
(from April 1, 2011 to March 31, 2012)
Current fiscal year (from April 1, 2012 to March 31, 2013)
Classification Note number Amount Breakdown
(%) Amount Breakdown (%)
I. Personal expenses 41 0.6 133 4.7 II. Sundry expenses 6,457 99.4 2,727 95.3
Total 6,499 100.0 2,860 100.0
92
3) Non-consolidated statements of changes in net assets (Million yen) Previous fiscal year
(from April 1, 2011 to March 31, 2012)
Current fiscal year (from April 1, 2012 to March 31, 2013)
Shareholders’ equity Capital stock
Balance at the beginning of the year 48,760 48,760 Changes of items during the year
Total changes of items during the year – – Balance at the end of the year 48,760 48,760
Capital surplus Legal capital surplus
Balance at the beginning of the year 34,109 34,109 Changes of items during the year
Total changes of items during the year – – Balance at the end of the year 34,109 34,109
Total capital surplus Balance at the beginning of the year 34,109 34,109 Changes of items during the year
Total changes of items during the year – – Balance at the end of the year 34,109 34,109
Retained earnings Legal retained earnings
Balance at the beginning of the year 3,437 3,437 Changes of items during the year
Total changes of items during the year – – Balance at the end of the year 3,437 3,437
Other retained earnings General reserve
Balance at the beginning of the year 5,000 5,000 Changes of items during the year
Total changes of items during the year – – Balance at the end of the year 5,000 5,000
Reserve for advanced depreciation of non-current assets Balance at the beginning of the year 18,593 20,031 Changes of items during the year
Provision of reserve for advanced depreciation of non-current assets 1,576 221 Reversal of reserve for advanced depreciation of non-current assets (138) (236) Total changes of items during the year 1,437 (14)
Balance at the end of the year 20,031 20,017 Reserve for special account for advanced depreciation of non-current assets
Balance at the beginning of the year 18 49 Changes of items during the year
Provision of reserve for special account for advanced depreciation of non-current assets 30 –
Reversal of reserve for special account for advanced depreciation of non-current assets – (49)
Total changes of items during the year 30 (49) Balance at the end of the year 49 –
Reserve for special depreciation Balance at the beginning of the year 14 13 Changes of items during the year
Provision of reserve for special depreciation 0 17 Reversal of reserve for special depreciation (2) (2) Total changes of items during the year (1) 14
Balance at the end of the year 13 27
93
(Million yen) Previous fiscal year
(from April 1, 2011 to March 31, 2012)
Current fiscal year (from April 1, 2012 to March 31, 2013)
Retained earnings brought forward Balance at the beginning of the year 36,465 39,629 Changes of items during the year
Dividends from surplus (1,974) (2,632) Interim dividends (1,974) (2,303) Provision of reserve for advanced depreciation of non-current assets (1,576) (221) Reversal of reserve for advanced depreciation of non-current assets 138 236 Provision of reserve for special account for advanced depreciation of non-current assets (30) –
Reversal of reserve for special account for advanced depreciation of non-current assets – 49
Provision of reserve for special depreciation (0) (17) Reversal of reserve for special depreciation 2 2 Net income 8,579 7,895 Total changes of items during the year 3,163 3,007
Balance at the end of the year 39,629 42,636 Total retained earnings
Balance at the beginning of the year 63,530 68,160 Changes of items during the year
Dividends from surplus (1,974) (2,632) Interim dividends (1,974) (2,303) Net income 8,579 7,895 Total changes of items during the year 4,629 2,958
Balance at the end of the year 68,160 71,119 Total shareholders’ equity
Balance at the beginning of the year 146,400 151,030 Changes of items during the year
Dividends from surplus (1,974) (2,632) Interim dividends (1,974) (2,303) Net income 8,579 7,895 Total changes of items during the year 4,629 2,958
Balance at the end of the year 151,030 153,988 Valuation and translation adjustments
Valuation difference on available-for-sale securities Balance at the beginning of the year 214 70 Changes of items during the year
Net changes of items other than shareholders’ equity (143) 1,051 Total changes of items during the year (143) 1,051
Balance at the end of the year 70 1,121 Total valuation and translation adjustments
Balance at the beginning of the year 214 70 Changes of items during the year
Net changes of items other than shareholders’ equity (143) 1,051 Total changes of items during the year (143) 1,051
Balance at the end of the year 70 1,121 Total net assets
Balance at the beginning of the year 146,614 151,101 Changes of items during the year
Dividends from surplus (1,974) (2,632) Interim dividends (1,974) (2,303) Net income 8,579 7,895 Net changes of items other than shareholders’ equity (143) 1,051 Total changes of items during the year 4,486 4,009
Balance at the end of the year 151,101 155,110
94
Notes
(Significant accounting policies)
1. Standards and methods for the valuation of securities
(1) Shares in subsidiaries and affiliates
Cost method determined by the moving average method is applied.
(2) Other securities
(i) Securities having market values:
Fair value method based on the market value at the end of the fiscal year. (The valuation difference is recorded as a component
of net assets. The cost of products sold is calculated by the moving average method.)
(ii) Securities not having market values:
Cost method determined by the moving average method is applied.
With respect to investment in limited liability investment partnerships and associations of a similar nature (investments deemed to
be securities under Article 2, Paragraph 2 of the Financial Instruments and Exchange Act), the net amount equivalent to equity
based on the latest financial statements available is recorded.
2. Standards and methods for the valuation of derivatives
In principle, the fair value method is applied.
3. Standards and methods for the valuation of inventories
The cost method based on the specific identification method (reduction of the book value - balance sheet value - based on a decline in
profitability) is applied to real estate for sale, real estate for sale in progress.
The cost method based on the specific cost method is applied to costs on uncompleted construction contracts.
The last purchase price method is applied to raw materials and supplies.
4. Depreciation method for non-current assets
(1) Property, plant and equipment (except lease assets)
The declining-balance method is primarily applied.
However, the straight-line method is applied to NTT Makuhari Building, Granpark Tower, NTT Cred Motomachi Building, and
buildings (except attached facilities) acquired on and after April 1, 1998.
Major useful lives are as follows:
Buildings: 15 to 50 years
Structures: 15 to 50 years
Machinery and equipment: 5 to 17 years
Tools, furniture and fixtures: 2 to 20 years
(2) Intangible assets (except lease assets)
The straight-line method is applied.
Software for internal use is amortized over its estimated useful life (five years).
(3) Long-term prepaid expenses
The straight-line method is applied.
(4) Lease assets
Lease assets relating to finance lease transactions without transfer of ownership
The same depreciation methods as applied to the non-current assets owned by the Company and its subsidiaries are applied.
5. Standard for calculating allowances
(1) Allowance for doubtful accounts
In preparation for doubtful notes and operating accounts receivable and loans receivable, the Company posts estimated
uncollectible amounts, which are estimated from loan loss ratios for general reserves and from collectability for each of specific
95
receivables including those with low collectability.
(2) Provision for retirement benefits
In preparation for employees retirement benefit, provision for retirement benefits are posted based on the retirement benefit
obligation and estimated pension plan assets at the end of the fiscal year.
Prior service costs are amortized using the straight-line method over the eligible employees’ average remaining period at the time
of occurrence.
Actuarial differences are amortized from the following fiscal year using the straight-line method over the eligible employees’
average remaining period of service at the time of occurrence in each fiscal year.
6. Basis for posting revenues and expenses
(1) Basis for posting revenues and expenses
Basis for posting revenues relating to finance lease transactions
Sales and cost of sales are posted when lease fees are received.
(2) Standard for recording amount of construction contract revenues and costs
a. Contracts whose outcome at the end of the fiscal year under review is deemed certain
Percentage-of-completion method (construction-cost-percentage method for estimating the progress of construction)
b. Other construction contracts
Completed-contract method
7. Hedge accounting method
(1) Hedge accounting method
In principle, deferred hedge accounting is applied.
A special procedure is employed for interest rate swaps that meet the criteria for the special procedure.
(2) Hedging item and hedged item
Hedging item: Interest rate swap contracts
Hedged item: Borrowings
(3) Hedging policy
Under the Company’s internal rules on derivative transactions, interest rate risks relating to the hedged item are hedged against
within a certain range.
(4) Method of assessment of hedge effectiveness
Since the swaps are interest swaps to which special matching criteria are applied, the periodic assessment of hedge effectiveness is
not performed.
8. Other important matters that constitute the basis for preparation of financial statements
Accounting treatment of consumption taxes
Consumption taxes and local consumption taxes are accounted for by the tax exclusion method.
(Changes in accounting principles)
(Change of depreciation method)
In the fiscal year under review, the Company has changed the depreciation method for property, plant and equipment that were
acquired on or after April 1, 2012 to the method under the revised Corporate Tax Act, in association with the amendments to the
Corporate Tax Act.
As a result of this change, operating income, ordinary income and income before income taxes each increased by ¥172 million in the
fiscal year under review, compared to those before the change.
96
(Notes to balance sheets)
* Mortgaged assets and corresponding debt
(1) Mortgaged assets (Million yen)
Previous fiscal year (As of March 31, 2012)
Current fiscal year (As of March 31, 2013)
Buildings 100,326 92,612 Land 13,189 9,769
Total 113,516 102,382
(2) Corresponding debt secured by the above collateral (Million yen)
Previous fiscal year (As of March 31, 2012)
Current fiscal year (As of March 31, 2013)
Current portion of long-term loans payable 3,909 2,988 Long-term loans payable 11,036 8,048
Total 14,945 11,036
(Notes to statements of income)
*1. The approximate percentage of expenses that belong to selling expense is 22.0% in the previous fiscal year and 28.0% in the
fiscal year under review, and the approximate percentage of expenses that belong to general, selling and administrative expenses is
78.0% in the previous fiscal year and 72.0% in the fiscal year under review.
Major expense items and their amounts are as follows. (Million yen)
Previous fiscal year (From April 1, 2011 to March 31, 2012)
Current fiscal year (From April 1, 2012 to March 31, 2013)
Advertising expenses 1,960 3,673 Salaries, allowances and bonuses 4,015 3,999 Business consignment expenses 2,764 3,547 Taxes and dues 591 1,533 Depreciation and amortization 1,129 1,059
*2. Breakdown of gain on sales of non-current assets (Million yen)
Previous fiscal year (From April 1, 2011 to March 31, 2012)
Current fiscal year (From April 1, 2012 to March 31, 2013)
Buildings ‒ (187) Land ‒ 576
Total ‒ 389
On the sale of a building with land, the Company recognized a loss on the building component, while a gain was recognized on the
land component. A net gain resulted from this transaction and was recorded as a gain on sales of non-current assets.
*3. Breakdown of loss on sales of non-current assets (Million yen)
Previous fiscal year (From April 1, 2011 to March 31, 2012)
Current fiscal year (From April 1, 2012 to March 31, 2013)
Buildings 249 111 Land (32) 396
Total 216 508
On the sale of a building with land in the previous fiscal year, the Company recognized a loss on the building component, while a
gain was recognized on the land component. A net loss resulted from this transaction and was recorded as a loss on sales of
non-current assets.
97
*4. Breakdown of loss on retirement of non-current assets (Million yen)
Previous fiscal year (From April 1, 2011 to March 31, 2012)
Current fiscal year (From April 1, 2012 to March 31, 2013)
Buildings 1,099 939 Structures 2 14 Machinery and equipment 9 27 Removal cost 1,085 1,109 Tools, furniture and fixtures 29 16
Total 2,228 2,108
*5. Impairment loss
In the fiscal year under review, the Company recorded an impairment loss for the following asset group.
Primary use Type Location Impairment loss
Land for development Land Taito-ku, Tokyo 800 million yen
As a general rule, the Company examined an impairment loss for individual property.
As a result, we reduced the book value of the above assets to the recoverable value as we changed the purpose of ownership from
leasing to sale, and recorded the reduction as an impairment loss under extraordinary losses. The breakdown of the assets is land
entirely.
The recoverable value of the assets above is measured by net sales value, and an appraisal value by a real estate appraiser is used for
the net sales value.
*6. Inventories at the end of the fiscal year are an amount after reductions in carrying values associated with declines in profitability.
The following loss on valuation of inventory is included in the operating cost for residential property sales business.
(Million yen) Previous fiscal year
(From April 1, 2011 to March 31, 2012) Current fiscal year
(From April 1, 2012 to March 31, 2013) 1,194 1,934
(Notes to statements of changes in net assets)
Type and number of treasury stock in the previous fiscal year (from April 1, 2011 to March 31, 2012) and fiscal year under review
(from April 1, 2012 to March 31, 2013)
Not applicable.
98
(Lease transactions)
1. Finance lease transactions without the transfer of ownership (lessee)
(1) Lease assets
a. Property, plant and equipment
Primarily servers and computer terminals (tools, furniture and fixtures) in the leasing business
b. Intangible assets
Software
(2) Depreciation and amortization methods for lease assets
The methods described in “Significant accounting policies, 4. Depreciation method for non-current assets” apply.
2. Finance lease transactions without the transfer of ownership (Lessor)
(1) Breakdown of lease investment assets
Current assets (Million yen)
Previous fiscal year (as of March 31, 2012)
Current fiscal year (as of March 31, 2013)
Lease fees receivable 7,302 7,690 Estimated remaining value ‒ ‒ Interest income equivalent (4,129) (4,073) Lease investment assets 3,172 3,617
(2) Lease fees receivable relating to lease receivables and lease investment assets that are expected to be collected after the closing
date
Current assets (Million yen) Previous fiscal year
(As of March 31, 2012) Due within
one year
Due after 1 year,
within 2 years
Due after 2 years,
within 3 years
Due after 3 years,
within 4 years
Due after 4 years,
within 5 years
Due after 5 years
Lease investment assets 368 368 368 368 368 5,460 (Million yen)
Current fiscal year (As of March 31, 2013)
Due within one year
Due after 1 year,
within 2 years
Due after 2 years,
within 3 years
Due after 3 years,
within 4 years
Due after 4 years,
within 5 years
Due after 5 years
Lease investment assets 406 406 406 406 406 5,659 3. Operating lease transactions
Unexpired lease fees relating to no cancellable operating lease transactions
(Lessee) (Million yen)
Previous fiscal year (As of March 31, 2012)
Current fiscal year (As of March 31, 2013)
Due within one year 1,646 1,612 Due after 1 year 21,206 19,750 Total 22,852 21,362 (Lessor) (Million yen)
Previous fiscal year (As of March 31, 2012)
Current fiscal year (As of March 31, 2013)
Due within one year 11,897 13,036 Due after 1 year 54,592 53,233 Total 66,489 66,270
99
(Notes to securities)
The shares of subsidiaries and affiliates (¥13,424 million and ¥478 million, respectively, on the balance sheets for the fiscal year
under review and ¥13,424 million and ¥478 million, respectively, on the balance sheets for the previous fiscal year) have no market
prices, and it is very difficult to determine their fair values. Their fair values are therefore omitted.
(Notes to deferred tax accounting)
1. Breakdown of deferred tax assets and deferred tax liabilities by major cause (Million yen)
Previous fiscal year (As of March 31, 2012)
Current fiscal year (As of March 31, 2013)
Deferred tax assets (current) Accrued bonuses in excess of the limit for income tax deduction 142 142
Accrued taxes payable 54 300 Loss on valuation of inventories 124 94 Other 217 847
Subtotal 539 1,386 Valuation allowance (0) (0)
Total deferred tax assets (current) 539 1,385 Deferred tax liabilities (current) Other ‒ (78)
Total deferred tax liabilities (current) ‒ (78) Net deferred tax assets (current) 539 1,307 Deferred tax assets (non-current)
Impairment loss 848 716 Evaluation loss on land 3,828 3,684 Depreciation of unused building volume 1,801 1,924 Provision for retirement benefits 1,911 2,023 Compensation for loss 683 128 Other 1,479 1,491
Subtotal 10,553 9,967 Valuation allowance (6,182) (6,126)
Total deferred tax assets (non-current) 4,370 3,840 Deferred tax liabilities (non-current)
Reserve for advanced depreciation of non-current assets (11,115) (11,102)
Reserve for special account for advanced depreciation of non-current assets (30) ‒
Other (677) (1,271) Total deferred tax liabilities (non-current) (11,823) (12,373)
Net deferred tax liabilities (non-current) (7,452) (8,533)
2. Breakdown of difference between the effective tax rate and the actual effective tax rate after applying tax effect accounting by
major cause if there is a significant difference between them
Previous fiscal year (As of March 31, 2012)
Current fiscal year (As of March 31, 2013)
Effective tax rate 40.7% Since the difference between the effective tax rate and the actual effective tax rate after applying tax effect accounting is equal to or less than 5% of the effective tax rate, notes are omitted.
(Adjustment) Reduction in year-end deferred tax liabilities due to tax rate change (8.2%)
Other 0.9% Actual effective tax rate after the application of tax effect accounting 33.4%
100
(Per-share information) Previous fiscal year
(From April 1, 2011 to March 31, 2012)
Current fiscal year (From April 1, 2012 to March 31, 2013)
Net assets per share 45,910.72 yen 47,128.97 yen Net income per share 2,606.76 yen 2,398.90 yen
(Note 1) Net income per share fully diluted is not disclosed because the Company does not hold any dilutive shares.
(Note 2) The basis for the calculation of net income per share is shown in the table below.
Previous fiscal year (From April 1, 2011 to March 31, 2012)
Current fiscal year (From April 1, 2012 to March 31, 2013)
Net income (million yen) 8,579 7,895
Amounts not attributable to shareholders of common stock (million yen) – –
Net income attributable to common stock (million yen) 8,579 7,895
Average number of common shares outstanding during the fiscal year 3,291,200 3,291,200
(Significant subsequent events)
At a meeting of the Board of Directors held on May 9, 2013, the Company resolved to conduct a stock split and adopt the unit share system. (1) Purpose
The Securities Listing Regulations of the Tokyo Stock Exchange were revised in April 2012 to stipulate that listed companies whose trading units do not consist of 100 or 1,000 shares are required to consolidate their trading units into 100 shares by April 1, 2014. In response to this revision, the Company decided to conduct the stock split in which each of the Company’s common stock shares will be split into 100 shares, and at the same time adopt the unit share system to set the number of shares constituting one unit as 100 shares. There will be no substantial change to investment units with this stock split and adoption of the unit share system.
(2) Details of the stock split (i) Method of the split
The Company will split one share into 100 shares for the common shares owned by shareholders recorded in the final shareholder registry as of September 30, 2013 (Monday), with the same day as the record date.
(ii) Number of shares to be increased by the split Total number of issued and outstanding shares before the stock split 3,291,200 shares Number of shares to be increased by the stock split 325,828,800 shares Total number of issued and outstanding shares after the stock split 329,120,000 shares Total number of authorized shares to be issued after the stock split 1,050,000,000 shares
(iii) Schedule for the split Public announcement date for record date September 13, 2013 (Friday) Record date September 30, 2013 (Monday) Effective date October 1, 2013 (Tuesday)
(3) Adoption of the unit share system (i) Number of shares constituting one unit to be newly established
The Company will adopt the unit share system and set the number of shares constituting one unit as 100 shares. (ii) Schedule for the establishment of the unit share system
Effective date October 1, 2013 (Tuesday)
101
4) Supplementary schedules
Schedule of securities
(Shares)
Issue Number of shares Amount posted in the balance sheets (million yen)
(Investment securities) (Other securities) Hibiya Engineering, Ltd. 1,371,000 1,306 NTT Finance Corporation 500 175 Nakanoshima Rapid Railway Co., Ltd. 600 30 Central Japan International Airport Co., Ltd. 506 25 Knowledge Capital Management Corporation 3,400 170 NTT Learning Systems Corporation 480 24 Otemachi Machizukuri K.K. 400 20 Mizuho Investors Securities Co., Ltd. 104,328 20 Real Estate Guarantee Co., Ltd. 1,500 15 Internet Multifeed Co. 196 9 Akihabara Town Management Organization, Inc. 100 5 Five other stocks 7,787 8
Total 1,490,797 1,810
(Other securities)
Issue Number of investment units Amount posted in the balance sheets (million yen)
(Investment securities) (Other securities) Investments in Otemachi Development Tokumei Kumiai – 9,338 Premier Investment Corporation 8,700 4,445 Investments in NU-6 Tokumei Kumiai – 886 Investments in NU-7 Tokumei Kumiai – 543 Shibuya Honmachi 4-chome Kaihatsu Limited Liability Company – 308 Investments in NTT Green Limited Liability Partnership – 46 Knowledge Capital Association – 10 GRAND FRONT OSAKA TMO General Incorporated Association – 1
Total 8,700 15,579
102
Schedule of property, plant and equipment and other assets (Million yen)
Asset type Assets at
beginning of fiscal year
under review
Increase in fiscal year
under review
Decrease in fiscal year
under review
Assets at end of fiscal year
under review
Accumulated depreciation or amortization at
end of fiscal year under
review
Depreciation or amortization in
fiscal year under review
Assets less accumulated
depreciation at end of fiscal year under
review Property, plant and equipment
Buildings 615,025 37,003 15,389 636,639 353,290 17,754 283,349 Structures 15,330 474 364 15,440 11,012 400 4,428 Machinery and equipment 13,760 573 312 14,022 11,891 436 2,130 Tools, furniture and fixtures 15,165 901 425 15,642 12,536 1,066 3,106
Land 230,080 11,924 4,155 (800) 237,848 – – 237,848
Lease assets 286 24 135 175 133 31 42 Construction in progress 17,516 40,108 50,613 7,012 – – 7,012 Total property, plant and
equipment 907,166 91,011 71,395 (800) 926,781 388,863 19,689 537,917
Intangible assets Leasehold right – – – 1,433 13 9 1,419 Software – – – 5,069 2,877 922 2,191 Software in progress – – – – – – – Lease assets – – – 1 0 2 0 Other intangible assets – – – 628 520 14 108
Total intangible assets 7,942 335 1,145 7,132 3,411 949 3,720 Long-term prepaid expenses 26,525 9 49 26,486 10,095 591 16,390
(Note 1) Major factors behind the increase in buildings include Grand Front Osaka (16,608 million yen) and Urbannet Kanda Building (4,152
million yen).
(Note 2) The Major factor behind the increase in land includes Otemachi Financial City North Tower (11,739 million yen).
(Note 3) Major factors behind the increase in construction in progress include Otemachi Financial City North Tower (10,626 million yen) and
Grand Front Osaka (7,876 million yen).
(Note 4) The figures in parentheses in the “Decrease in fiscal year under review” column are amount of impairment losses accounted in the fiscal
year under review, which are included in the decrease.
(Note 5) Since intangible fixed assets are 1% of total assets or less, assets at beginning of fiscal year under review, increase in the fiscal year under
review, and decrease in the fiscal year under review are omitted.
Schedule of allowances (Million yen)
Classification
Assets at beginning of fiscal year
under review
Increase in fiscal year
under review
Decrease in fiscal year under review (used for
the purpose)
Decrease in fiscal year
under review (other reasons)
Assets at end of fiscal year
under review
Allowance for doubtful accounts 1 – 0 – 0
103
(2) Details of major items in assets and liabilities
1) Cash and deposits Classification Amount (million yen)
Cash 80 Deposits
Ordinary deposits 31 Total 111
2) Operating accounts receivable
(a) Breakdown by debtor Debtor Amount (million yen)
Itochu Housing Co., Ltd. 3,415 Sumitomo Real Estate Sales Co., Ltd. 3,396 Hankyu Realty Co., Ltd. 2,257 Tokyo Tatemono Real Estate Sales Co., Ltd. 819 Taisei-Yuraku Real Estate Sales Co., Ltd. 479 Other 1,582
Total 11,951
(b) Occurrence, collection, and retention of operating accounts receivable Amount at
beginning of fiscal year under review
(million yen)
Amount arising in the fiscal year
under review (million yen)
Amount collected in the fiscal year
under review (million yen)
Amount at end of fiscal year
under review (million yen)
Collection rate (%) Retaining period (day)
(A) (B) (C) (D)
100%
(A) + (D)
(C) 2
(A) + (B) (B)
365
13,002 128,310 129,361 11,951 91.5 35.49
(Note) The figures in the table above include consumption tax.
3) Real estate for sale and real estate for sale in process
(a) Breakdown by account
Account Classification Area (m2)
Amount (million yen) Major item
Real estate for sale
Land 28,455.17 4,354 Urbannet Kayaba-Kabuto Building (Chuo, Tokyo) WELLITH Yoga (Setagaya, Tokyo) Urbannet Irifune Building (Chuo, Tokyo)
Buildings 35,578.61 7,569 Total 64,033.78 11,923
Real estate for sale in process
Land 178,935.78 55,010 WELLITH Inage (Inage, Chiba) WELLITH Arisugawa (Minato, Tokyo) WELLITH Tower Atago Toranomon (Minato, Tokyo)
Buildings – 9,350 Total 178,935.78 64,360
Total Land 207,390.95 59,365
– Buildings 35,578.61 16,919 Total 242,969.56 76,284
104
(b) Breakdown by area
Area Area (m2) Amount
(million yen) Land Buildings Total Kanto 86,617.43 28,221.38 114,838.81 49,019 Tokai 3,288.67 – 3,288.67 431 Kinki 50,735.69 7,249.10 57,984.79 21,773 Chugoku 728.92 – 728.92 210 Shikoku 10,393.35 – 10,393.35 1,336 Kyushu 55,626.89 108.13 55,735.02 3,512
Total 207,390.95 35,578.61 242,969.56 76,284 4) Costs on uncompleted construction contracts
Construction work Amount (million yen) Upper-Level Section Redevelopment Project associated with the reconstruction of the Shibaura Water Reclamation Center 149
Otemachi 1-Chome Urban Area Redevelopment Project Type 1 (first-phase) 88
Umekita (Osaka Station North District) Phase 1 Development Area Project 59
Other 18 Total 315
5) Raw materials and supplies
Classification Amount (million yen) Brochures 14 Goods for tenants 14
Total 28 6) Operating accounts payable
Creditor Amount (million yen) Kyoritsu Construction Co., Ltd. 1,189 Nippon Steel City Produce, Inc. 780 Nakano Corporation 779 Kawaguchi Construction Co., Ltd. 759 Penta-Ocean Construction Co., Ltd. 699 Other 5,302
Total 9,510 7) Bonds payable 84,971 million yen
Details are stated in 1. Consolidated Financial Statements, etc., (1) Consolidated financial statements, 5) Consolidated
supplementary schedule, Schedule of bonds. 8) Current portion of long-term loans payable
Creditor Amount (million yen) Sumitomo Mitsui Banking Corporation 16,000 Shinkin Central Bank 5,000 The Nishi-Nippon City Bank, Ltd. 5,000 Mizuho Trust & Banking Co., Ltd. 5,000 Sumitomo Mitsui Trust Bank, Limited 5,000 Other 20,011
Total 56,011
105
9) Long-term loans payable Creditor Amount (million yen)
NTT Finance Corporation 38,000 Development Bank of Japan Inc. 33,048 Mizuho Corporate Bank, Ltd. 30,000 Syndicated loans (Note) 25,300 Nippon Life Insurance Company 21,000 Other 141,000
Total 288,348
(Note) Syndicated loans are co-financing with Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Banking Corporation and The Bank of
Tokyo-Mitsubishi UFJ, Ltd. as the managers.
10) Lease and guarantee deposits received Creditor Amount (million yen)
Lease deposits received 70,093 Guarantee deposits received 4,064
Total 74,157
106
Section 6. Outline of Stock-Related Administration of Submitting Company Fiscal year From April 1 to March 31 Ordinary shareholders’ meeting Within three months of the day following the closing day of each fiscal year Record date March 31
Record dates for dividends September 30 March 31
Number of shares per unit – Fractional share repurchase
Handling place – Administrator of shareholders’ list – Contact place – Repurchase fee –
Publication of announcements
Public announcements shall be made electronically. However, if accidents or other unavoidable circumstances prevent the Company from making electronic announcements, announcements shall be published on the Nihon Keizai Shimbun. URL to post public announcements: http://www.nttud.co.jp/
Benefits to shareholders Not applicable.
(Note 1) At a meeting of the Board of Directors held on May 9, 2013, the Company resolved to conduct a stock split and adopt the unit share system.
The Company will split each share of its common stock recorded as of September 30, 2013, the record date, into 100 shares and at the
same time will adopt the unit share system to set the number of shares constituting one unit as 100 shares.
(Note 2) At the ordinary general meeting of shareholders held on June 18, 2013, the Company resolved to amend the Articles of Incorporation. The
amended Articles of Incorporation stipulate that effective on October 1, 2013, shareholders may not exercise rights with respect to shares
representing less than one unit other than the following rights:
(i) Rights set forth in Article 189, Paragraph 2 of the Companies Act of Japan;
(ii) Right of request pursuant to the provisions of Article 166, Paragraph 1 of the Companies Act of Japan; and
(iii) Right to receive allocation of offered shares and offered stock acquisition rights in proportion to the number of shares owned by the
shareholder.
107
Section 7. Reference Information on Submitting Company 1. Information on the parent company of the submitting company The Company does not have any parent company stipulated in Article 24-7, Paragraph 1 of the Financial Instruments and Exchange Act.
2. Other reference information The Company has submitted the following documents from the beginning of the fiscal year under review to the date of submission of
the annual securities report:
(1) Annual securities report, its attached documents and confirmation documents
27th fiscal year (from April 1, 2011 to March 31, 2012) Submitted to the director general of the Kanto Finance Bureau on June 20,
2012
(2) Internal control report and its attached documents
Submitted to the director general of the Kanto Finance Bureau on June 20, 2012
(3) Quarterly reports and confirmation documents
1st quarter of the 28th fiscal year (from April 1, 2012 to June 30, 2012) Submitted to the director general of the Kanto Finance
Bureau on August 6, 2012
2nd quarter of the 28th fiscal year (from July 1, 2012 to September 30, 2012) Submitted to the director general of the Kanto Finance
Bureau on November 6, 2012
3rd quarter of the 28th fiscal year (from October 1, 2012 to December 31, 2012) Submitted to the director general of the Kanto
Finance Bureau on February 5, 2013
(4) Shelf registration statement (straight bond) and their attached documents
Submitted to the director general of the Kanto Finance Bureau on September 21, 2012
(5) Amended self-registration statements
Submitted to the director general of the Kanto Finance Bureau on November 6, 2012
Submitted to the director general of the Kanto Finance Bureau on February 5, 2013
(6) Supplementary documents to the self-registration statement (straight bond) and their attached documents
Submitted to the director general of the Kanto Finance Bureau on October 19, 2012
(7) Extraordinary report
Submitted to the director general of the Kanto Finance Bureau on June 20, 2012
An extraordinary report under the provisions of Article 19, Paragraph 2, Item 9-2 (Results of exercise of voting rights) of the Cabinet
Office Ordinance on Disclosure of Company Information
Submitted to the director general of the Kanto Finance Bureau on June 19, 2013
An extraordinary report under the provisions of Article 19, Paragraph 2, Item 9-2 (Results of exercise of voting rights) of the Cabinet
Office Ordinance on Disclosure of Company Information
108
Chapter 2. Information on the Guarantee Company of the Submitting Company Not applicable.
Independent Auditor’s Report on the Financial Statements and
Internal Control Over Financial Reporting
June 18, 2013
To the Board of Directors of NTT Urban Development Corporation
KPMG AZSA LLC
Atsuji Maeno (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant Hideki Yoshida (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant Yoshitaka Kuwamoto (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant
Financial Statement Audit We have audited the accompanying consolidated financial statements of NTT Urban Development Corporation and its consolidated subsidiaries provided in the “Financial Information” section in the company’s Annual Securities Report, which comprise the consolidated balance sheet as at March 31, 2013, the consolidated statement of income and consolidated statement of comprehensive income, the consolidated statement of changes in net assets and consolidated statement of cash flows for the year then ended, and important items used as basic materials for preparation of consolidated financial statements, other explanatory information and supplementary schedules, in accordance with Article 193-2(1) of the Financial Instruments and Exchange Law of Japan. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audit as
independent auditor. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NTT Urban Development Corporation and its consolidated subsidiaries as at March 31, 2013, and their financial performance and cash flows for the year then ended in accordance with accounting principles generally accepted in Japan. Internal Control Audit We also have audited the accompanying internal control report of NTT Urban Development Corporation as at March 31, 2013, in accordance with Article 193-2(2) of the Financial Instruments and Exchange Law of Japan. Management’s Responsibility for the Internal Control Report Management is responsible for the design and operation of internal control over financial reporting and the preparation and fair presentation of the internal control report in accordance with assessment standards for internal control over financial reporting generally accepted in Japan. Internal control over financial reporting may not completely prevent or detect financial statement misstatements. Auditor’s Responsibility Our responsibility is to independently express an opinion on the internal control report based on our internal control audit. We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the internal control report is free from material misstatement. An internal control audit involves performing procedures to obtain audit evidence about the assessment of
internal control over financial reporting in the internal control report. The procedures selected depend on the auditor’s judgement, including significance of effect on the reliability of financial reporting. Also, an internal control audit includes evaluating the appropriateness of the scope, procedures and result of the assessment determined and presented by management, and the overall internal control report presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the internal control report, in which NTT Urban Development Corporation states that internal control over financial reporting was effective as at March 31, 2013, presents fairly, in all material respects, the assessment of internal control over financial reporting in accordance with assessment standards for internal control over financial reporting generally accepted in Japan. Other Matter Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of the Certified Public Accountants Law of Japan. Notes to the reader of audit report: The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as required by the Financial Instruments and Exchange Law of Japan.
Independent Auditor’s Report
June 18, 2013 To the Board of Directors of NTT Urban Development Corporation
KPMG AZSA LLC Atsuji Maeno (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant Hideki Yoshida (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant Yoshitaka Kuwamoto (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant
Financial Statement Audit We have audited the accompanying non-consolidated financial statements of NTT Urban Development Corporation provided in the “Financial Information” section in the company’s Annual Securities Report, which comprise the non-consolidated balance sheet as at March 31, 2013 and the non-consolidated statement of income, non-consolidated statement of changes in net assets, significant accounting policies, other explanatory information and supplementary schedules, in accordance with Article 193-2(1) of the Financial Instruments and Exchange Law of Japan. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the non-consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of non-consolidated financial statements that are free from material misstatements, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the non-consolidated financial statements based on our audit as independent auditor. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the non-consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the non-consolidated financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the non-consolidated financial statements, whether due to
fraud or error. In making those risk assessments, we consideres internal control relevant to the entity’s preparation and fair presentation of the non-consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the non-consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of NTT Urban Development Corporation as at March 31, 2013, and their financial performance for the year then ended in accordance with accounting principles generally accepted in Japan. Other Matter Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of the Certified Public Accountants Law of Japan. Notes to the reader of audit report: The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as required by the Financial Instruments and Exchange Law of Japan.
[Cover]
Document submitted Confirmation document
Applicable law clause Article 24-4-2, Paragraph 1 of the Financial Instruments and Exchange Act
Destination Director General of the Kanto Finance Bureau
Date of submission June 19, 2013
Corporate name NTT URBAN DEVELOPMENT CORPORATION
Name and title of representative Sadao Maki, President and Chief Executive Officer
Name and title of chief financial officer Satoshi Shinoda, Executive Vice President, Corporate Strategy and Planning, Accounting and
Finance
Name and title of chief financial officer Not applicable
Address of home office 4-14-1, Sotokanda, Chiyoda-ku, Tokyo
Place for public inspection Tokyo Stock Exchange, Inc.
(2-1, Kabutocho, Nihonbashi, Chuo-ku, Tokyo)
1. Matters relating to the appropriateness of the content of the annual securities report Sadao Maki, President and Chief Executive Officer and Satoshi Shinoda, chief financial officer, Executive Vice President, Corporate
Strategy and Planning, Accounting and Finance of the Company, have confirmed that the content of the annual securities report for the
fiscal year of the 28th term (from April 1, 2012 to March 31, 2013) is appropriate in accordance with the Financial Instruments and
Exchange Act.
2. Special notes Not applicable
[Cover]
Document submitted Internal Control Report
Applicable law clause Article 24-4-4, Paragraph 1 of the Financial Instruments and Exchange Act
Destination Director General of the Kanto Finance Bureau
Date of submission June 19, 2013
Corporate name NTT URBAN DEVELOPMENT CORPORATION
Name and title of representative Sadao Maki, President and Chief Executive Officer
Name and title of chief financial officer Satoshi Shinoda, Executive Vice President, Corporate Strategy and Planning, Accounting and
Finance
Name and title of chief financial officer Not applicable
Address of home office 4-14-1, Sotokanda, Chiyoda-ku, Tokyo
Place for public inspection Tokyo Stock Exchange, Inc.
(2-1, Kabutocho, Nihonbashi, Chuo-ku, Tokyo)
1. Matters relating to the basic framework for internal control over financial reporting Sadao Maki, President and Chief Executive Officer and Satoshi Shinoda, chief financial officer, Executive Vice President, Corporate
Strategy and Planning, Accounting and Finance of the Company, are responsible for designing and operating effective internal control
over the financial reporting of the Company, and has designed and operated internal control over financial reporting in accordance
with the basic framework for internal control presented in the “On the Setting of the Standards and Practice Standards for
Management Assessment and Audit Concerning Internal Control Over Financial Reporting (Council Opinions),” published by the
Business Accounting Council.
Internal control is designed to achieve its objectives to the extent reasonable through organic links and the functioning in unison of
the basic elements of internal control. Therefore, there is a possibility that misstatements may not be completely prevented or
detected by internal control over financial reporting.
2. Matters relating to the scope of assessment, base date of assessment and assessment procedures The assessment of internal control over financial reporting was performed, with March 31, 2013, the last day of this fiscal year, as the
base date. The assessment was performed in accordance with assessment standards for internal control over financial reporting
generally accepted in Japan.
In conducting this assessment, we evaluated internal controls that may have a material effect on overall financial reporting on a
consolidation basis (“entity-level internal controls”) and based on the results of this assessment, we selected business processes to be
tested. We analyzed these selected business processes, identified key controls that may have a material impact on the reliability of the
Group’s financial reporting, and assessed the design and operation of these key controls. These procedures have allowed us to
evaluate the effectiveness of the internal controls of the Group.
We determined the scope of assessment of internal control over financial reporting from the perspective of the materiality that may
affect the reliability of their financial reporting for the Company and its consolidated subsidiaries and equity-method affiliates. The
materiality that may affect the reliability of the financial reporting is determined taking into account the materiality of quantitative
and qualitative impacts on financial reporting, and the scope of assessment of internal control over business processes is determined
taking into account the assessment results of the entity-level internal controls conducted on the Company and its two consolidated
subsidiaries. Nine consolidated subsidiaries and five equity-method affiliates are not included in the scope of the entity-level internal
control, as we determined that their materiality of quantitative and qualitative impacts on financial reporting is insignificant.
Regarding the scope of assessment of internal control over business processes, we selected only the Company as a “significant
business location,” as operating revenue of the Company accounted for roughly two thirds of total operating revenue at each business
location in the previous fiscal year (after the elimination of intercompany transactions). At the selected significant business location,
we included in the scope of assessment business processes leading to operating revenue, accounts receivable, trade, properties for
sale, and properties for sale in progress as significant accounts that may have a material impact on the business objectives of the
Company. Further, in addition to the selected significant business location, within a scope that included other business locations we
also selected business processes relating to (i) a greater likelihood of material misstatements, (ii) significant accounts involving
estimates and forecasts or (iii) a business or operation dealing with high-risk transactions, as business processes having greater
materiality for testing, taking their impact on the financial reporting into account.
3. Matters relating to the results of the assessment As a result of the assessment described above, as of the end of the fiscal year under review, we concluded that the internal control
over financial reporting of the Company was effectively maintained.
4. Additional notes Not applicable
5. Special notes Not applicable