Post on 12-Aug-2020
TKP Corporation
Earnings briefing materials for 1Q of the year ending
Feb. 2020
1. Financial highlights in 1Q of the year ending Feb. 2020 2
2. Future business strategy (new medium-term plan) 12
3. Appendix 28
Agenda
Financial highlights in 1Q of the year ending
Feb. 2020 (March 1–May 31, 2019)
TKP Garden City Shinsaibashi Minamisenbaopened in June 2019
Main topics
Acquired Regus Japan Holdings (“Regus Japan”), making it a subsidiary
Opened TKP Garden City PREMIUM Ikebukuro and TKP Garden City PREMIUM Hiroshima Eki Kitaguchi
Launched APA Hotel Osaka Umeda (162 rooms in total), our first hotel in the Kansai area
We project significant
increases insales and profit
for the year
Full-year earnings forecast (YoY change) announced on June 26, 2019
(Millions of yen)
FY 2019.2(actual results)
FY 2020.2(forecast) YoY
changeAmount(Percentage of
sales)
Amount(Percentage of
sales)
Net sales 35,523(100%)
54,897(100%)
154.5%
Gross profit 13,700(38.6%)
21,420(39.0%)
156.4%
SG&A 9,433(26.6%)
14,974(27.2%)
158.7%
EBITDA 5,134(14.5%)
9,745(17.8%)
189.8%
Operating profit
4,267(12.0%)
6,446(11.7%)
151.1%
Ordinary profit 4,053(11.4%)
5,397(9.8%)
133.2%
Profit 1,894(5.3%)
3,169(5.8%)
167.3%
Overview of 1Q of the fiscal year ending Feb. 2020 (consolidated)
(Millions of yen)
1Q FY2019.2
1Q FY2020.2 YoY
changeAmount(percentage of
sales)
Amount(percentage of
sales)
Net sales 9,118(100%)
10,405(100%)
114.1%
Gross profit 3,964(43.4%)
4,562(43.8%)
115.1%
SG&A 2,199(24.1%)
2,475(23.8%)
112.6%
EBITDA 1,939(21.3%)
2,383(22.9%)
122.9%
Operating profit
1,765(19.4%)
2,087(20.1%)
118.2%
Ordinary profit 1,708(18.7%)
1,053(10.1%)
61.7%
Profit 992(10.9%)
409(3.9%)
41.2%
Profit indicates profit attributable to owners of parent
Recorded one-time non-operating expense of 800 million yen associated
with the acquisition of Regus Japan
Record-highsin both sales and operating profit
Rate of progress versus full-year forecast announced on June 26, 2019
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Ordinary profit
Operating profit
1,053
2,087
801
Full-year forecast of 5,397 million yen
Full-year forecast of 6,446 million yen
(Millions of yen)
Rate of progress is in line with
full-year forecast
One-time expense
557 871 1,329
2,388 2,607
2,749
2,552
3,079
3,387 560
617
623
49
79
62
591
980
1,631
556
886
624
2018.2期1Q 2019.2期1Q 2020.2期1Q1Q FY2018.2 1Q FY2019.2 1Q FY2020.2
Consolidated sales by grade
STAR (-21%)
Others (-30%)
Accommodations/Training facilities (+66%)
BC (+1%)
CC (+10%)
GC (+5%)
GCP (+53%)
(Units: millions of yen and % of YoY change)
*GCP: Garden City PREMIUM; GC: Garden City; CC: Conference Centers; BC: Business Centers; STAR: STAR rental conference rooms
Growth driven by higher grades
andaccommodations/training facilities
Room rent4,89453.7%
Options840
9.2%
Food and beverage
1,73219.0%
Accommodations834
9.2%
Others815
8.9%
Consolidated sales9,118 million yen
Consolidated sales composition by service
1Q FY2019.2 1Q FY2020.2
Share of additional services (sales other than room rent) expanded
(Units: millions of yen and % of total sales)
Room rent5,43052.2%
Options1,0059.7%
Food and beverage
1,93718.6%
Accommodations1,25712.1%
Others773
7.4%
Consolidated sales10,405 million
yen
Primary expansion in 1Q FY2020.2
Once again focused on active expansion of higher-grade units nationwide. APA Hotel Osaka Umeda became our first hotel in the Kansai area
TKP Garden City PREMIUM Hiroshima EkiKitaguchi
(Opened in April 2019)
TKP Garden City PREMIUM Ikebukuro(Opened in April 2019)
APA Hotel Osaka Umeda(Opened in May 2019)
New annex of TKP ShinbashiConference Center
(Opened in April 2019)
TKP Garden City Sendai Ekikita Annex
(Opened in April 2019)
TKP Utsunomiya Conference Center
(Opened in March 2019)
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10
Number of meeting rooms and locations by grade
Grade FY2017.2 FY2018.2 FY2019.2 1Q FY2020.2
Garden City PREMIUM
(GCP)
Rooms 113 137 223 241Locations 11 13 20 22
Garden City(GC)
Rooms 372 417 458 461Locations 32 39 46 47
Conference Center
(CC)
Rooms 796 881 992 984Locations 67 79 87 87
Business Center
(BC)
Rooms 351 313 319 314Locations 53 49 50 50
STAR rental conference
rooms
Rooms 91 88 93 94Locations 41 38 40 41
Within trainingfacilities
LecTore, Ishinoya, etc. Rooms 29
822
75210
5811
Regus JapanRooms ‐ ‐ ‐ 337
locations - - - 143
Total
Rooms 1,752 1858 2,137 2,489Locations 212 225 253 401
Floor space (m2) 277,728 339,490 379,470 478,839
*As of May 31, 2019
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11
Summary of consolidated balance sheet
Balance sheet expanded due to acquisition of Regus Japan
(Millions of yen)End-
FY2019.21Q
FY2020.2QoQ
change
QoQchange
(%)Current assets 16,747 19,100 +2,353 +14.1%(Cash and deposits) 11,967 13,225 +1,258 +10.5%(Accounts receivable) 3,355 3,732 +377 +11.2%Non-current assets 34,318 86,451 +52,133 +151.9%(Property, plant and equipment) 24,959 30,133 +5,174 +20.7%
Total assets 51,066 105,552 +54,486 +106.7%
Current liabilities 9,299 42,835 +33,536 +360.6%
Non-current liabilities 31,003 38,687 +7,654 +24.8%
Total liabilities 40,302 81,522 +41,220 +102.3%(Interest-bearing debt) 35,911 70,252 +34,341 +95.6%
Total net assets 10,763 24,030 +13,267 +123.3%Total liabilities and net assets 51,066 105,552 +54,486 +106.7%
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12
Future business strategy
(new medium-term plan)
SPACES Shinagawa scheduled for opening in September 2019
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13
0
50,000
100,000
150,000
200,000
1994
1998
2000
2001
2002
2003
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
予
Flexible workspace market
The flexible workspace market in Japan is expanding
Flexible workspaces*1 in five wards*2 of Tokyo by total area
*1 Figures are the total of serviced offices and co-working offices. Flexible workspace, which is not leased based on a conventionaloffice lease agreement, is a new type of office that gives users more flexibility in choosing workspaces that match their needs. Source: A New Era for Flexible Workspace in TOKYO CBD from Jones Lang LaSalle K.K. (JLL; December 2018)
*2 Chiyoda, Chuo, Minato, Shinjuku and Shibuya
(m2)
E
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14
Potential market growth
Further market expansion is projected in the future
* Scale of office market in Japan: 20 trillion yen (TKP estimate based on surveys conducted by Mitsui Fudosan Co., Ltd., JLL, CBRE, etc.)
Source: TKP estimates based on data from CBRE, JLL, etc.
As of 2019200.0 billion yen
(1%)
Scale of flexible workspace market in the Tokyo Metropolitan area
2030 forecast(projection from JLL)
6.0 trillion yen(30%)
FIX
FLEX
FIX
FLEX
x
15
Market growth potential and our strategies
Expand business three-dimensionally along with market growth
Source: TKP estimates based on data from CBRE, JLL, etc.
①Share expansion
As of 2019200.0 billion yen
(1%)
2030 forecast6.0 trillion yen
(30%)
x
16
14,16217,941
21,978
28,689
35,523
54,897
68,441
76,877
2015/2期 16/2期 17/2期 18/2期 19/2期 20/2期E 21/2期E 22/2期E
Consolidated sales of approximately
77.0 billion yenin FY2022.2
(Millions of yen)
Sales targets (medium-term plan announced on June 26, 2019)
Actual results New plan
Previous plan
FY2015.2 FY2016.2 FY2017.2 FY2018.2 FY2019.2 FY2020.2target
FY2021.2target
FY2022.2target
x
17
1,224
2,4113,134
4,0845,134
9,745
14,305
16,754
2015/2期 16/2期 17/2期 18/2期 19/2期 20/2期E 21/2期E 22/2期E
Profit targets (medium-term plan announced on June 26, 2019)
8782,004
2,6943,449
4,289
6,446
9,352
11,312
2015/2期 16/2期 17/2期 18/2期 19/2期 20/2期E 21/2期E 22/2期E
6.2%
11.2%12.3% 12.0% 12.1%
14.2% 14.6%
11.7%13.7%
14.7%
Operating profit and operating profit margin
(Millions of yen)
8.6%
13.4% 14.3% 14.2% 14.5%
17.8%
20.9% 21.8%
Actual results New plan
EBITDA and EBITDA margin
Actual results New plan
Previous plan
Aiming for operating profit margin of approximately 15% and an EBITDA margin of approximately 20%
(Millions of yen)
FY2015.2 FY2016.2 FY2018.2 FY2019.2FY2017.2 FY2020.2target
FY2021.2target
FY2022.2target
FY2015.2 FY2016.2 FY2017.2 FY2018.2 FY2019.2 FY2020.2target
FY2021.2target
FY2022.2target
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18
New medium-term plan
Japan
Formulated a new medium-term plan, with the fiscal year ending in February 2022 as the final year
Acquired Regus Japan and reached a long-term exclusive partnership agreement with IWG on
April 15, 2019
Income statement to be consolidated starting in 2Q
FY2020.2
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Regus Japan
150 locations nationwide (top in Japan)
• High-end serviced offices
• 100 locations in Japan
• Co-working spaces
• 4 locations in Japan
• Budget-priced serviced offices (not staffed)
• 46 locations in Japan
*As of July 2019 (including new locations that have been announced )
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New business domains
We have established a framework that enables the utilization of all kinds of idle spaces
TKP brandsTKP brands
High grade
Long-term
Regus Japan brandsRegus Japan brands
Rental conference rooms/ Hotel banquet facilitiesRental conference rooms/ Hotel banquet facilities Serviced offices and co-working spacesServiced offices and co-working spaces
Short-term
Budget-priced
Garden City
Garden CityPREMIUM
Conference Center
Business Center
STAR Rental Conference
Rooms
x
21Naha
Kagoshima
Kumamoto
Kokura
Yamaguchi
Matsuyama
HIroshimaOkayama
Tottori
Kobe
Kyoto
Shiga
Toyohashi
Hamamatsu Atami/Izu
Hakone
YokohamaKawasaki
Omiya
ChibaTokyo
UtsunomiyaKaruizawaNagano
Matsumoto
Kanazawa
Sendai
MoriokaAkita
Hachinohe
Obihiro
Koriyama
Sapporo
OsakaNagoya
Aomori
Niigata
TsukubaMito
Toyama
Takamatsu
Miyazaki
259 locationsApprox.
388,000 m2
Approx. 150 locationsApprox.
105,000 m2
Approx. 409 locationsApprox. 493,000 m2
Oita
Nationwide network
409 locations in Japan comprising approximately 490,000m2
(top in Japan in terms of both total locations and area)
*As of July 2019 (including new locations that have been announced)
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22
Global network
TKP customers will be able to access all locations worldwide
CitiesMore than
1,100
Global networkGlobal network
LocationsMore than
3,300
Countries and regions
More than 120
Multi-brand portfolioMulti-brand portfolio
Europe, Middle East, Africa
Approx. 1,020locations
U.K.Approx. 330
locations
Asia PacificApprox. 690
locations
Americas Approx. 1,300
locations
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23
New management structure
Accelerating global business operation with a new management structure
Director
Shingo Nishioka• Joined Mitsui Construction Co., Ltd. (now Sumitomo Mitsui
Construction Co., Ltd.) in 1992. Joined Regus Japan as General Manager of the Asia Development and Management Department and moved on to become General Manager of Regus Group Limited and CEO of Regus Japan Holdings.
• Assumed role as director at TKP in May 2019
Outside Director
Mark Dixon• Established Regus (now IWG plc) in 1989 and assumed the
office of CEO. Became a non-executive director at Yellowstone Holdings S.à r.l. in 2007 and at Estorn Limited in 2010.
• Assumed role as outside director at TKP in May 2019
New!
Representative Director and CEO
Takateru Kawano New!
Director and COOKoji Nakamura
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24
Message from the new director,
Mark DixonPlease watch the accompanying video
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Merging of resources with Regus Japan, part one
Accelerating expansion through cooperative purchasing
Increase area by 270,000 tsubo
(891,000 m2) over 10 years
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Merging of resources with Regus Japan, part two
Improve operational efficiency through joint expansion
The opening of NishinipponShimbun Hall, our first joint opening, is scheduled for
September 2019
TKP Garden City PREMIUM Tenjin Sky Hall Regus Fukuoka Tenjin Sky Hall Center (tentative name)
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Triple A strategy
Anytime, Anywherefor All workers
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Appendix
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Corporate profile of Regus Japan
Name Regus GroupRegus Japan Holdings K.K.
Location of Shinjuku Park Tower, 30th floorheadquarters 3-7-1 Nishi Shinjukuin Japan Shinjuku-ku, Tokyo 163-1030
Establishment September 1998
Representative Shingo Nishioka (CEO)
Consolidated 13,249 million yenSales
No. of 250Employees (8,700 in the Regus Group)
Business Serviced offices, co-working spaces, virtual offices, rental meeting rooms
Brands Regus, Regus Express,Openoffice and SPACES
Major business Mitsubishi Estate Group, Mori Building, partners Mori Trust, Imperial Hotel, Tokyo Gas Real
Estate, Tokyu Land, NTT Urban Development, ORIX JREIT, Keihan Electric Railway, KyushuRailway, Sotetsu Building Management, and Daiei Real Estate & Development(random order)
No. of locations 3,300 in 1,100 cities in 120 countries
In Japan: More than 140 locations nationwide (in 2018)
Regus1998 Opened first location in Shinjuku Park Tower. Opened in Kamiyacho MT
Building2000 Opened in Otemachi First Square and Hibiya Imperial Hotel Tower2005 Opened in Akasaka Ark Hills and Shibuya Mark City2006 Opened five locations, including Yokohama Landmark Tower, Meieki, Osaka
Kokusai Building and Pacific Century Place Marunouchi2007 Opened in Yurakucho Itocia2008 Opened four locations, including Hankyu Grand Building in Umeda, AQUA
Hakata and Shinbashi Tokyu Building2009 Opened in Hiroshima High Building 212010 Opened six locations, including Sendai Mark One, Kobe International House,
Aoyama Place Canada and Shinagawa East One Tower2012 Opened three locations, including Sapporo Kita Building and Hankyu
Terminal Building2013 Opened four locations including Shin-Osaka Hankyu Building, Ginza Icchome
Center and one in Shin-Yokohama2014 Opened eleven facilities in Chiba, Aomori, Okayama, Ebisu, Harajuku and
elsewhere2015 Expanded into Takamatsu, Kagoshima, Naha and Hamamatsu
Opened 17 locations, including Akasaka K-Tower and units in Akihabara and Ginza San-Chome
2016 Expanded into Kanazawa. Opened ten locations, including Dai Nagoya Building, JRJP Hakata Building and Marunouchi Tekko Building. Opened Regus Express Kansai International Airport
2017 Expanded into Toyama. Simultaneously opened two locations in addition to Regus Express Hankyu Senri-Chuo
SPACES (acquired by IWG in 2014)2016 Opened a location in JP Tower Nagoya2017 Opened in Otemachi BuildingOpenoffice2012 Acquired Openoffice, a serviced office business managed by Business Bank2013 Opened four locations in Fushimi, Nagoya; Keihan Yodobashi; and elsewhere2014 Opened seven locations in Kawaramachi Oike, Kyoto; Sapporo Minami; Mito;
on Hakata Ekimae Street; and elsewhere2015 Expanded into Kokura, Kita-Kyushu and Kumamoto
Opened seven locations in Otemachi, Hiroshima; Jinnan, Shibuya; in front of Sendai Station; and elsewhere
2016 Expanded into Kumamoto, Oita and Niigata. Opened six locations, including in Tachikawa Eki Minami, Shin-Osaka Kita, Nagoya Marunouchi and elsewhere
2017 Opened in Sannomiya Minami, Kobe
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Accommodations/training facilities operated by TKP
FacilityNo. of guest rooms
Opened Building Land
APA Hotel TKP Sapporo Ekimae 203 August 2014 Leased ―APA Hotel TKP Sapporo-eki Kitaguchi EXCELLENT 108 August 2016 Leased ―APA Hotel TKP Nippori Ekimae 278 December 2016 Owned OwnedAPA Hotel TKP Tokyo Nishikasai 124 December 2017 Leased ―APA Hotel Keikyu Kawasaki Ekimae 143 June 2018 Owned LeasedAPA Hotel TKP Sendai Ekikita 306 October 2018 Owned OwnedAPA Hotel Osaka Umeda 162 May 2019 Owned LeasedAPA Hotel Hakata Higashi Hie Ekimae(tentative name) 206 Scheduled for February
2020 Owned Owned
APA Hotel Fukuoka Tenjin Nishi (tentative name) 268 Scheduled for May 2020 Owned OwnedAPA Hotel Ueno Hirokoji (tentative name) 215 Scheduled for July 2020 Owned OwnedLecTore Atami Shoarashi 20 November 2013 Leased ―LecTore Hakone Gora 23 January 2014 Leased ―LecTore Karuizawa 14 July 2014 Leased ―LecTore Atami Momoyama 31 July 2014 Leased ―LecTore Yugawara 108 May 2017 Owned OwnedLecTore Hayama Shonan‒Kokusaimura 160 April 2018 Owned OwnedLecTore Takamatsu Airport (banquet hall rental/ business alliance) 124 June 2018 ― ―
LecTore Yatsugatake (managed by a third party) 32 November 2018 ― ―LecTore Toyama Jiyukan (managed by a third party) 40 March 2018 ― ―LecTore Hakata Hisayama Onsen 44 June 2019 Owned OwnedIshinoya 22 January 2015 Leased ―First Cabin TKP Nagoya Station 199 September 2017 Owned OwnedFirst Cabin TKP Ichigaya 165 November 2018 Leased ―
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Important Notice
This English translation is only intended for reference. In cases of discrepancies, data contained within the original Japanese version shall take precedent over data contained herein.
This material has been prepared to improve the understanding of 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 and related information contained in this material are estimates which were based on information available to the TKP group at the time when the material was prepared. They will be impacted by uncertainties including market conditions and future business progress.
Please be aware that the actual results and other information may differ significantly from what is stated in this material.