Message from the President

Leopalace21 facilitates win-win solutions for tenants and property owners

We sincerely apologize to all of our stakeholders, including tenants and property owners, for causing anxiety and inconvenience due to construction defects in the properties we built and for subsequent disappointing financial results and share prices. We have placed the highest priority to deal with the construction defects in the management resources allocation for both manpower and funds. However, we determined to our regret to temporarily reduce the scale of repair works and organizational setup to tackle the construction defects from July 2020, as it is essential to recover our business performance as a prerequisite to surely deal with the problem. We will update the repair timeline when the prerequisite is satisfied, but there is no change in our policy of resolving the construction defects problem as the paramount concern.
Going forward, we will strive to restore the trust by making steady progress toward resolving the problem with curtailed scale and organizational setup.

We are promoting corporate culture reform to realize the basic policy of benefiting "for society as a whole" set forth in our mission statement. We have implemented 44 out of the 50 measures that we announced in August 2019. In addition, we determined to establish May 29 as the "Change Day 5.29" to be reminded of the construction defects problem because we made announcements of the "Notice Concerning Construction Deficiencies of Apartment Parting Walls for Six Building Series" on May 29, 2018 and of the "Notice Concerning Causes and Measures to Prevent Recurrence of Defects Related to Parting Walls etc. in Properties Constructed by the Company" on May 29, 2019. To prevent the memories of construction failures from fading away in time, we will remind on the day all Leopalace21 Group officers and employees of the past series of incidents.

We announced a new business plan on June 5, 2020 based on drastic business strategies reconstruction. The three major policies and medium-to long-term strategies are as follows.
・Reconstruct business foundation - selective concentration
・Implement structural reforms
・Restore social trust
To reconstruct business foundation through selective concentration, we will shift from a business diversification strategy to a profitability focus strategy centered on Leasing Business and increase its profitability. As to structural reforms, we will fundamentally improve the financial base for enhanced corporate value by promoting transfer or withdrawal from non-core unprofitable businesses and by offering a voluntary retirement program. We will also aim to restore the trust of stakeholders by improving business performance through structural reforms and an increase in profitability of Leasing Business, and by steadily implementing measures to deal with construction defects. At the same time, we will realize open management that heed the views of wide range of stakeholders.

Finally, we have decided to cut down our management structure to accept management responsibilities for sluggish business performance and the subsequent structural reforms. We will reduce the number of board members from 12 to 9, and executive officers from 14 to 8, as well as continue executive remuneration reduction.

We look forward to your continued understanding and support of our business in the future.

June, 2020
Bunya Miyao, President and CEO



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