To play its proper role as a responsible corporate citizen in this newly unfolding age, the Daiwa House group takes its corporate mission very seriously. We believe that our mission is threefold: to earn the trust of the public through sincerity and truthfulness; to provide a long-term and reliable supply of products and services with high added value; and to secure the growth of our corporate group through close cooperation with our customers. By pursuing these goals, we are confident of achieving continued long-term growth.

To this end, we have openly declared our intention to pursue the strengthening of our financial position and the improvement of corporate transparency through improved management disclosure, with the goal of building stronger bonds of trust with our stakeholders. Thus, the repayment of interest-bearing debt and reduction of expenses, as well as the lump-sum amortization of liabilities on retirement benefits and elimination of unrealized losses during the term, were all means to strengthen our financial position. As a result, despite the repayment of interest-bearing debt and elimination of unrealized losses, we still managed to keep our equity ratio at the high level of 44.2%, and have built a firm management base from which we can face the future with confidence.

In addition to a strong financial position, we continue to place emphasis on cash flow and on realizing a constantly high shareholders' value through investment from the long-term perspective. To this end, amid the current continuing downward trend in land prices, we are making efforts to improve our turnover of land assets still further from the viewpoint both of lightening landholding risk and reducing inventories. Our policy is to maintain the annual inventory turnover rate for land for the construction of single-family houses to 2, and the rate for condominiums to 1. We are also registering valuation losses on land held for sale, which frees us to engage in more aggressive land selling operations.

Compared with the majority of companies in the construction industry, which is heavily dependent on bank loans, the Daiwa House group has succeeded in building a relatively strong financial base. With this as the cornerstone of our future growth strategy, we are working to improve our earning power and realize a stable level of corporate value on a long-term basis.