Financial Results Presentation of Fiscal Year Ended …...Source: Fuji Economic Research Institute...

TKP Corporation All rights reserved.

TSE Mothers: Ticker code 3479

Financial Results Presentation ofFiscal Year Ended Feb. 2017

April 25 2017


AGENDA

1 Business overview

2 Management strategy

3 Highlights of the year ended February 2017

4 Forecast for the year ending February 2018

1

5 Mid-term management plan


Business overview

2

TKP Corporation All rights reserved. 3

Corporate philosophy

roduceotalT K Pukanー

Our logo symbolizes the flag waved by Liberty, in the famous painting “Liberty

Leading the People” by Eugene Delacroix, and expresses our revolution to lead

customers, society and employees in a better direction.

TKP aspires to be a

”Space Regeneration & Distribution Company”through the rental conference room business for companies, and create

quality “places”, “spaces” and “time”, by making use of and adding value to underutilized properties and land and regenerating space


Repeated innovation and growth since our founding

4

Sales (units: JPY MM)

14,162

17,941

21,978

06.5期 07.5期 08.5期 09.5期 10.5期 11.2期 12.2期 13.2期 14.2期 15.2期 16.2期 17.2期*Changed fiscal period

Multi-use of banquet halls and conference rooms

Regeneration of hotel banquet halls

Focus on niche and sharing businesses

FY May 2006 FY May 2007 FY May 2008 FY May 2009 FY May 2010 FY Feb 2011 FY Feb 2012 FY Feb 2013 FY Feb 2014 FY Feb 2015 FY Feb 2016 FY Feb 2017


Business model

5

Source underutilized assets & underperforming properties from real estate owners at

attractive prices, and “regenerate” the “space” into conference rooms and banquet halls,

and provide high value-add as a sharing economy.

Secure rental income

Underutilized assets

Underperforming properties

Loss-making assets

Real estate owners

Space Regeneration（Utilization of assets）

Conferences

Tests

Events

Presentations

Seminars

Exhibitions

Training

Hiring

Banquets/parties

Hourly rentalSmall-lot sales Optional services

Source in bulk, and sell (distribute) in small lots（Create premium value）

TKP

Improved convenience

Cost reduction

Consolidation of operations

Multi-purpose usage

Conference room users

Bulk

sourc

ing (a

t attra

ctiv

e p

rices)

Sm

all-lo

t distrib

utio

n (sh

arin

g)


Business domains

Unlike traditional sharing economies, TKP focuses on bulk sourcing (which have high

barriers to entry), and distributes the space in small lots (high value-add) through

hourly rentals.

Major categories of sharing economies

For individuals

Relatively low barriers to entry

Small-lot sourcing

Short to mid-term usage

Small-lot distribution

For individuals

Small-lot sourcing

Relatively low barriers to entry

Short term usage

Small-lot distribution

For companies

Bulk sourcing

Relatively high barriers to entry

Mid to long term usage

Small-lot and bulk distribution

For companies

Bulk and small-lot sourcing

Relatively high barriers to entry

Short, mid and long term usage

Small-lot and bulk distribution

Accommodation（Airbnb）

Taxis（Uber）

Office（WeWork）

Office（TKP）


Hokuriku / Koshinetsu

45rooms

Kanto

851rooms

Chugoku/Shikoku

50rooms

Kansai

298rooms

Tokai

137rooms

Hokkaido

85rooms

Kyushu/Okinawa

139rooms

那覇

鹿児島

熊本大分

小倉

山口

松山

広島

岡山

鳥取

神戸

京都

滋賀

大阪名古屋

豊橋

浜松熱海・伊豆

箱根

横浜川崎大宮

千葉東京

宇都宮軽井沢長野

松本

金沢

仙台

盛岡秋田

八戸

帯広

Tohoku

105rooms

郡山

札幌

Japan 1,710 rooms

TKP operates 1,752 conference rooms in and out of Japan. Thanks to our nationwide

network of conference rooms, can handle large-scale projects such as university

entrance exams and nationwide hiring by large companies.

Nationwide network of rental conference rooms

Overseas 42 rooms

Taiwan

Hong Kong

Singapore

Myanmar

New York / New Jersey

Overseas

42rooms

7

*As of June 2017

Malaysia


Number of users per year has reached 22,500 companies,

and more than half of listed companies in Japan are TKP users.

The high repeat user ratio of over 80% will ensure our client base.

Number of corporate users per

year 22,500

Gross number of corporate

users 60,000

Number of users of listed

companies per year

2,000Repeat

80%

New

20%

High repeat user ratio

New and repeat user ratio

Repeat client means the client used our facilities FY 2016/2 and FY 2017/2.

Stable client base


5 different grades, suitable for different purposes

Garden CityHotel banquets, and office banquets with large multi-purpose hallsRental conference rooms in large hotels, with a strong focus on quality and suitable for various types of events

No. of locations: 32No. of rooms: 372Mainly renovated

facilities

Garden City PREMIUMState-of-the-art luxury office banquet / conference roomsSuitable for diverse purposes, from conferences to banquets, with high-endinteriors and unique atmosphere

No. of locations: 11No. of rooms: 113

Brand new / relatively new facilities

Conference Center

Suitable for office banquets (banquets that mainly consist of conferences)Covers a diverse range of business purposes, mainly conferences and seminars


facilities

Business Center

Conference facilities with a focus on conferences (rather than banquets)Suitable for internal meetings, large and small


facilities

Star Rental Conference Rooms

Local community-based conference roomsSuitable for small-scale meetings/assemblies, by companies as well as individuals


facilities

*Figures are as of Feb 2017


“Want to use

accommodation facilities

when traveling…”

Take in large-scale

opportunities that

include accommodation

“Want one-stop

services, from one

service provider, for

both the conference and

banquet…”

Monetize the ancillary

needs of conference

room use

“Want to make

reservations for

accommodation and

travel, as well as for the

conference room…”

Capture outsourcing

needs among companies

that place orders for

conference rooms

10

Raising average spend by customer through one-stop services

Optional

services

Accommodation

services

Other services

Dining services

TKP offers one-stop services through its range of ancillary services that cater to the

users’ needs, which leads to higher average customer spending.

Rental conference

room services


Ancillary services

Bento boxesCatering

RestaurantsCafe

Dining servicesSimultaneous

interpreting systemVideo conferencing

system Training coordination Video, audio, lighting

Rental services for recruiting

Office furniture/equipment Setting up partitions High-spec projectors

Optional services

Employee trip packages Affiliated hotelsTraining trip packages

Resort-type accommodation &

training facility

Izu Nagaoka Onsen hot spring

spa

Hybrid facility consisting of hotel and

conference rooms

Urban resort-type accommodation facility

Hybrid facility consisting of a compact hotel and conference rooms

Accommodation

Travel arrangements

Accommodation arrangements

Others

TKP offers dining services including catering and providing bento boxes, optional

services such as simultaneous interpreting services, accommodation services, travel

arrangements and other services.

http://www.kashikaigishitsu.net/facilitys/gc-ap-sapporo/kizuna/

http://www.kashikaigishitsu.net/facilitys/gc-ap-sapporo/kizuna/

http://gc-nagoya.net/ise/

http://gc-nagoya.net/ise/

http://www.hotel-azur.com/



Management strategy

12


Market environment ① “Sourcing”: Age of office buildings

With the aging of offices (61% of office buildings in Tokyo are over 20 years old), there

will be more relocations leading to TKP being able to “source” more conference rooms.

～19594%

1960～21%

1970～14%

1980～15%1990～

7%

1995～3%

2000～17%

2005～13%

2010～20137%

Aged 20

years or

above

61%

Less than

20 years

39%

61% of office buildings in central Tokyo are aged 20 years or older

Source: “Land in Tokyo” by Mitsui Fudosan

13


Market environment ① “Sourcing”: New construction start statistics

Companies are moving into newly-build offices which have higher rents. In order to

control their costs, more companies are expected to reduce their in-house conference

room space.

Construction starts of new office buildings are continuing steadily

Source: METI’s “Annual Construction Statistics”, compiled by Mitsui Fudosan

756 783 726563 635 669

191 182 197

209 242 215

732799 929

1,074995 1,022

1,6791,764

1,852 1,846 1,872 1,906

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

10年 11年 12年 13年 14年 15年

（1,000 tsubo）

その他

大阪圏

東京圏

2010 2011 2012 2013 2014 2015

14

Other areas

Greater Osaka

Greater Tokyo


Market environment ② “Distribution” market

4,520

4,670

4,790 4,860

4,970

4,200

4,400

4,600

4,800

5,000

2011 2012 2013 2014 2015

（JPY 100 MM）

1,892 2,337 2,427

2,590

1,070 1,472 1,429

1,995

0

1,000

2,000

3,000

0

500

1,000

1,500

2,000

2,500

3,000

2011 2012 2013 2014

（1,000 people）MICE開催件数参加者数（右軸）

The training service market is expanding, while the number of MICE events is also

steadily increasing. The market for corporate banquets in hotels is large. Strong

potential for ancillary services such as dining & restaurants.

Market size of corporate training services No. of MICE events and no. of participants

Accommo

dation

37%

Weddings/Banquets

502.3 billion yen 31%

Dining

21%

Others

11%

Size of hotel market（2014）

Source: Yano Research Institute “Corporate Training Service Market 2016” Source: Government Travel Bureau “International Conference Statistics”

Source: Yano Research Institute “2015 Hotel Industry”

Size of dining/restaurant market（2015）

Dining

industry

76%

Ready-made food industry

21%

Catering

900 billion yen

3%

1.62 trillion yen

Source: Fuji Economic Research Institute “Restaurant Marketing Data 2016 No.3”

* MICE: acronym of “M”（Meeting）, “I” for Incentive Travel, referring to welfare & training trips by companies, “C” for “Convention”, referring to international conferences by organizations and academic conferences, and “E” for “Exhibition/Event”. Term used to refer to business events that attract a large number of visitors.

15

32.9 trillion yen

MICE events Participants(right-hand scale)


Efficient strategy for facility openings, mixing “Real” and “Virtual”

Garden City

Garden City PREMIUM

Conference Center

Business Center

Secure revenues from our main target through “Real” facility openings, while expanding

the base of our business and brand penetration through “Virtual” facility openings using

“Cloudspace”

STAR Rental Conference Rooms

Main targetSecuring revenues

Expand base of businessPenetrate brand

High value-add

Deepen service offering

Secure volume

Focus on efficiency

“Real”“Hotel quality”

“Virtual”


64 137

291

511 497 559

743

1,092

1,287 1,382

1,451

1,752

17

Plan for “Real” facility openings

Both sourcing and distribution of space is robust. TKP will continue to secure space at

reasonable prices, using our healthy pipeline, and increase openings of conference rooms

and banquet halls that are “Real” and “Hotel quality”

No. of conference rooms “Real” facility openings already decided

Timing in 2017

LocationNo. of tsubo

Grade

March Takebashi 530 Garden City

AprilHamama-

tsucho 360 Garden City

April Kyobashi 547Garden CityPREMIUM

April Sapporo 900 Garden City

May Yokohama 170 Garden City

July Osaka 271 Conference Center

August Ueno 200 Conference Center

September Nagoya 540 Garden City

*As of April 25, 2017


“Virtual” strategy using Cloudspace

Easily monetize vacant space.

Simple operation flow, secure

guarantee service

Use vacant space easily and at

reasonable prices.

Comfortable usability

Space provider User

Efficiently approach and care for low-profitability customers.

Utilize as infrastructure to attract new users.

Containment of competitors providing “vacant space matching services”

Increase contact with real estate owners. Secure future sources of space.

Effect

/ aim

Cloudspace provides the ultimate in convenience for both the “space provider” and

“user”. The strategy is to get space providers to register, and source space from them in

the future.


Different approaches for different user classes

Choosing the best approach depending on the type of user (heavy, potential heavy, one-

off/light users)

Active proposals

and care by VIP

sales staff

Heavy users

“Digging up” of user needs by designated

sales staff, leading to higher revenues,

building a relationship of trust, and turning

users into repeat customers

Potential heavy users

Efficient operations using call center and Cloudspace

(no assigning of sales staff)

One-off users, light users

Sale

s

User classification

Up to 500 companies

Up to 2,500 companies More than 2,501 companies

Event concierge


Improving occupancy and average spend per customer

By combining the “Event Concierge” with our client database, we will further improve

occupancy and average spend per customer.

Establishment of “Event Concierge”

Reinforce and utilize client DB

Promote repeat use

Flatten seasonal volatility

Diversification

Cross-selling

Longer usage hours

Improve occupancy Raise average spend per customer


Strategies to improve occupancy

38%

98%

84%

80%

44%40%

30%28%

32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb.

（Example）Shinagawa Conference Center occupancy

*Calculated the hourly occupancy of each facility, and applied the room capacity (when used in the “school” layout on a weighted average basis

*Hourly occupancy＝total hours of usage ÷ hours of operation（no. of rooms × 8 hours）

Accumulate know-how to fill in the quiet periods. → Barrier to entry for competitors

23%

28% 30%

Still a lot of room upside for occupancy

Respond to peak demand

By making use of our nationwide network of more than 1,750 conference rooms, as

well as our client base exceeding 22,500 companies, we will further improve occupancy.


Offer accommodation services to maximize demand for rental conference rooms

In order to cater to demand for accommodation from conference room users, we operate rental

conference rooms that have accommodation facilities nationwide. We achieve high occupancy for the

underutilized suburban facilities we take on by capturing corporate demand.

Lectore Ishino-ya APA Hotels First CabinAzur Takeshiba

Resort-type seminar hotels, within 1 hour

from CBD

High grade resort-type seminar ryokan

(Japanese style inn)Hybrid business hotel with conference rooms

Compact hotel with conference rooms

Resort-style training city hotel in central Tokyo

Suburban Major cities

Relatively old DevelopmentRelatively new

Acquisition at attractive prices. Trial for seminar hotels Selective investments within our FC

Regeneration and utilization of underutilized properties

Tool for sending customers to our rental conference rooms.Catering to accommodation needs that accompany conferences

No. offacilities

0→2

No. offacilities

1

No. offacilities

1

No. offacilities

5

No. offacilities

3→9

* Only includes facilities that are already in operation, or facilities for which TKP has already reached an official decision to open.




Services using conference rooms as an “OS”

Seminars

Conferences Training

Hiring-relatedTests/exams Banquets / parties

PresentationsInternational conferences Anniversary events

PurposeExhibitions

Accom

modatio

n

Din

ing / c

ate

ring

Optio

nal se

rvic

es

Tele

mark

etin

g

New

serv

ices

External resources (alliance partners)Conference rooms / banquet halls as an “OS”

By applying various resources to our strength of being able to offer spaces (where

consumption takes place), we will continue to build in new services to our conference

rooms, which serve as the “Operating System”.

Client base

General Affairs Dept.

PR Dept. HR Dept.Participants of conferences,

seminars, etc.

Person placing the order Users


Highlights of FY Feb 2017

24


Results for FY Feb 2017

25

Outperformed the previous year in all major profit benchmarks. Average growth rate of

34%

1 Increase in directly operated rental conference rooms, due to the opening of new facilities

Expansion of the high value-add Garden City PREMIUM category2

Development of new purposes (exam venues, etc.)for the non-busy season

3 Robust performance of the newly-opened hotels4

【Reasons for strong performance】

Feb 2016 Feb 2017 Year-on-year

Sales 17,941 21,978 +22.5%

Operating income 2,004 2,694 +34.4%

Ordinary income 1,848 2,552 +38.1%

Net income 935 1,352 +44.5%

（JPY MM）


Trends of sales and operating income

Steady growth in sales and operating income

14,162

17,941

21,978

2015.2期 2016.2期 2017.2期

878

2,004

2,694

6.2%

11.2%

12.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0

500

1,000

1,500

2,000

2,500

3,000

2015.2期 2016.2期 2017.2期

営業利益営業利益率

Sales (JPY MM) Operating income (JPY MM)

26

Operating income

Operating profit margin

FY Feb 2015 FY Feb 2015FY Feb 2016 FY Feb 2016 FY Feb 2017FY Feb 2017


Garden City

PREMIUM

1,355 6%

Garden City

7,523 34%

Conference Center

8,034 37%

Business Center

1,782 8%

STAR rental

conference room

179 1%

Accommodation

1284 6%Others

1819 8%

Garden City

PREMIUM

317 2%

Garden City

6,341 35%

Conference Center

6,846 38%

Business Center

1,657 9%

STAR rental

conference room

250 2%

Accommodation

711 4%

Others

1,816 10%

Sales breakdown by facility grade

The top 3 grades enjoyed steady growth and drove top line sales.

FY Feb 2016（JPY MM） FY Feb 2017（JPY MM）

27

（Consolidated sales for FY Feb 2016）（Consolidated sales for FY Feb 2017）


Sales breakdown by service

Robust growth in conference room services, as well as ancillary

services

Rental Conference

room revenue

12,659 58%

Fees for

optional

services

2,135 10%

Dining revenue

4,657 21%

Accommodation

revenue

1,093 5%

Others

1,433 6%

FY Feb 2016（JPY MM）

（consolidated sales for FY Feb 2016）

FY Feb 2017（JPY MM）

（Consolidated sales for FY Feb 2017）

28

Rental Conference

room revenue

10,304 58%

Fees for

optional

services

1,682 9%

Dining revenue

4,004 22%

Accommodation

revenue

594 3%

Others

1,356 8%


Forecast for FY Feb 2018


Forecast

30

Feb 2017（Actual）

Feb 2018（Forecast） Year-on-year

Sales 21,978 26,839 +22%

Operating income 2,694 3,271 +21%

Ordinary income 2,552 3,021 +18%

Net income 1,352 1,705 +26%

（JPY MM）

We are forecasting an average growth rate of 22% during the fiscal year ending

February 2018

1 Continue active openings of facilities. Focus on high-grade facilities that with high added-value.

2

Strengthen sales capabilities by introducing event concierges and sales support system.3

Start operation of Azur Takeshiba, a comprehensive city hotel.4

【Strategies that will be implemented in order for TKP to achieve the forecast】


Mid-term Management Plan

31


Continue active openings of facilities.

Basic policy

Expand into ancillary businesses (accommodation

etc.) and bring these businesses in-house.

Enter new business areas (including through M&A).

Further utilization of existing space

High value-add, high efficiency

Asset light management


Mid-term management plan

Targeting sales of JPY 38.5 billion and operating income of JPY 5.8 billion in the period

ending February 2020Hotels currently under construction to begin

contributing by FY Feb 2020（百万円）

Area OpeningNo. of rooms

Category

Nishi-kasai

2017.12 124 Conversion

Kawasaki 2018.4 143 New

Umeda 2018.8 161 New

Soto-kanda

2018.12 87 New

Hamamatsucho

2019.2 100 Expansion

Sonezaki 2019.2 270 New

Sendai 2019.3 305 New

*As of April 25, 2017

14,162

17,941

21,978

26,839

31,602

38,543

878

2,004

2,694

3,271

3,934

5,813

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2015.2期 2016.2期 2017.2期 2018.2期 2019.2期 2020.2期

売上高営業利益

FY Feb 2020FY Feb 2019FY Feb 2018FY Feb 2017FY Feb 2016FY Feb 2015

(JPY MM)

Sales Operating income


Feb 2017（Actual）

Feb 2018（Forecast）

Feb 2019（Plan）

Feb 2020（Plan）

Sales 21,978 26,839 31,602 38,543

Operating income

2,694 3,271 3,934 5,813

Ordinary income

2,552 3,021 3,589 5,459

Net income 1,352 1,705 2,044 3,221

（JPY MM）

Mid-term management plan (major targets)

We will target “sales growth rate” of 20%, and consolidated operating profit margin of

14 – 15％.


[Disclaimer]

This is English translation only for the purpose of reference. Please be sure to refer to

the original version.

This material has been prepared to improve understanding towards our group, and no

information contained herein shall be construed as solicitation for purchase or sale of

our shares. This material has not been prepared for investment advisory purposes.

Forecasts etc. contained in this material are estimates, based on information available

to the TKP group at the time of preparing the material, and will be impacted by

uncertainties including market conditions and future business progress.

Please be informed that the actual results etc. could differ significantly from what is

stated in this material.

Financial Results Presentation of Fiscal Year Ended …...Source: Fuji Economic Research Institute...

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Transcript of Financial Results Presentation of Fiscal Year Ended …...Source: Fuji Economic Research Institute...