TKP Corporation
Transcript of TKP Corporation
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TKP Corporation
Earnings briefing materials for
Q1 of the year ending
February 2021
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Executive summary
Topics
Business overview
Management policy in FY02/21
Appendix
Contents
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36
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Due to the spread of COVID-19, the Japanese government declared a
state of emergency on April 7. This move greatly changed our
business environment, prompting many of our customers to cancel
or postpone the use of rental conference rooms.
However, on May 25, the state of emergency was lifted across Japan
and demand for conference rooms has been recovering since June.
Owing to uncertainty over when the COVID-19 pandemic will end
and how it will affect our performance, we have refrained from
making full-year forecasts at this time.
Q1 FY02/21 (March–May)
Executive summary
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FY02/21 Q1 Highlights
‣Announced downward revision to full-year earnings forecast for FY02/20 and revisions to the medium-
term business plan
‣Announced a new management structure with executive appointments
Publicized “BCP support office” and other measures to address COVID-19
Signed a syndicated loan agreement with Sumitomo Mitsui Banking Corporation (¥2.5 billion)
Signed a commitment line agreement with Mizuho Bank (¥5.0 billion)
Entered into a special overdraft agreement with Sumitomo Mitsui Banking Corporation (¥10.0 billion)
‣Announced differences between actual and forecast results for FY02/20 and the decision to suspend the
medium-term business plan
‣Announced voluntary reductions in executive compensation (for May–July 2020, a 50% reduction in
representative director compensation and a 40% reduction for full-time directors)
‣Announced the issuance of preferred shares in a subsidiary to APA Holdings (¥1.8 billion increase in net
assets)
On April 24, in response to investee First Cabin Co., Ltd. filing for bankruptcy with the Tokyo District
Court, we announced details on the handling of and outlook for two facilities under franchise contracts
(Extraordinary loss of ¥180 million in Q1)
‣Launched live broadcasting support packages for shareholders’ meetings
‣Opened APA Hotel Fukuoka Tenjin Nishi
Held our general shareholders meeting with live broadcasting. Shinichi Saijo appointed as new outside
director
Opened APA Hotel Ueno Hirokoji
Announced Q1 earnings
Concluded a capital and business alliance with bridal business operator Escrit Inc. (TSE1: 2196) for joint
development of banquet halls for corporate clients in the COVID-19 era (shareholding ratio: 12.59%)
Mar. 6
Mar. 11, 12, 13
Mar. 31
Apr. 6
Apr. 10
Apr. 21
Apr. 27
May 5
May 29
Reference: Q2 FY02/21 Highlights
July 14
July 15
July 16
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Date Details
Mar. 11 The WHO declared a pandemic.
Mar. 20 A government expert panel opined that organizers should judge and response seriously to the risk of holding events.
Mar. 25The Tokyo metropolitan government asked residents to refrain from non-essential, non-urgent outings and
recommends working at home on weekdays.
Apr. 6The Tokyo metropolitan government asked people to refrain from outings, where possible, as the national
government prepares to declare a state of emergency.
Apr. 7The Japanese government declared a one-month state of emergency, through May 6, for seven prefectures (Tokyo,
Kanagawa, Saitama, Chiba, Osaka, Hyogo, and Fukuoka).
Apr. 10 Following the state of emergency declaration, the Tokyo metropolitan government asked some facilities to close.
Apr. 16 The Japanese government extended the state of emergency declaration nationwide.
May 4 The Japanese government extended the state of emergency through May 31.
May 14 The state of emergency is lifted in 39 prefectures.
May 21 The state of emergency is lifted in all except five prefectures.
May 25 The state of emergency is lifted in all of Japan
June 2 “Tokyo Alert” is issued in Tokyo.
June 11 “Tokyo Alert” is lifted.
June 19 Event restrictions are reduced to Step 2 (indoor and outdoor events limited to 1,000 attendees)
July 10 Event restrictions are reduced to Step 3 (indoor and outdoor events limited to 5,000 attendees)
COVID-19-related developments in Japan since March 2020Measures to deal with COVID-19 gained steam in Japan in March.
The April 7 declaration of a state of emergency prompted cancellation/postponement of conference room usage,
but demand has been recovering since the state of emergency was lifted on May 25.
Q2
Q1
Recovery in conference room demand
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Financial highlights in Q1
of the year ending
February 2021(March 1–May 31, 2020)
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Q1 FY02/21 Consolidated Results (March–May)
(Factors affecting non-operating
income/expenses)
■Non-operating expenses
Syndicated loan arrangement fees: ¥120mn
Forex losses: ¥182mn
(Factors affecting extraordinary
income/losses)
■Extraordinary income
Gain on sale of real estate: ¥128mn
Employment adjustment subsidy: ¥218mn
■Extraordinary losses
Impairment loss: ¥100mn
Loss on valuation of investment securities:
¥180mn (First Cabin)
Loss on liquidation of subsidiaries: ¥70mn
Main TKP Group sales fell substantially due to precipitous decline in demand following the state of
emergency declaration. Despite reducing various costs, goodwill amortization caused losses at profit
lines from operating profit on down. However, EBITDA (our most emphasized metric) was in the black
thanks to the consolidation of Regus Japan.
*EBITDA is calculated as operating profit/loss plus depreciation, goodwill amortization, amortization of long-term prepaid
expenses, and amortization of intangible assets such as customer-related assets.
**Quarterly profit/loss attributable to owners of the parent
(Million yen)
Q1 Q1 YoY
Change(FY02/20) (FY02/21)
Sales 10,405 10,447 +0.4%
Gross profit4,562 2,744
-39.8%(43.8%) (26.3%)
SG&A2,475 3,712
+50.0%(23.8%) (35.5%)
EBITDA*2,383 367
-84.6%(22.9%) (3.5%)
Operating profit2,087 -968
-(20.1%) (-9.3%)
Ordinary profit1,053 -1,291
-(10.1%) (-12.4%)
Profit attributable to
owners of the
parent**
409 -1,471-
(3.9%) (-14.1%)
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Consolidated results for Q1 FY02/21 (Regus results shown separately)
Main TKP Group performance was severely affected by COVID-19, but the pandemic’s impact on Regus was
limited. Regus Taiwan was in the red at the operating profit level due to the recording of goodwill amortization
associated with the acquisition, but Regus Japan was in the black (as in the previous quarter) with solid results
absorbing goodwill amortization.
Notes: The main TKP Group refers to consolidated results minus figures for Regus Japan and Regus Taiwan.
EBITDA is calculated as operating profit/loss plus depreciation, goodwill amortization, amortization of long-term prepaid expenses, and amortization of
intangible assets such as customer-related assets.
Regus Japan operating profit factors in deduction of goodwill amortization and amortization of customer-related assets
Regus Taiwan operating loss factors in deduction of goodwill amortization (forex rate: TWD1 = JPY3.62)
(Million yen)
Q1 Q1 YoY change Q1 Q1
(FY02/20) (FY02/21) (FY02/21) (FY02/21)
Main TKP Group Main TKP Group Regus Japan Regus Taiwan
Net sales 10,405 5,693 -45.3% 4,456 297
Gross profit 4,562 1,149 -74.8% 1,547 47(43.8%) (20.2%) (34.7%) (16.1%)
SG&A2,475 2,321
-6.2%1,275 116
(23.8%) (40.8%) (28.6%) (39.1%)
EBITDA2,383 -828
-1,034 161
(22.9%) (-14.6%) (23.2%) (54.2%)
Operating profit or
loss
2,087 -1,171-
271 -68(20.1%) (-20.6%) (6.1%) (-23.0%)
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2,418 2,467 2,493 2,522 2,683
4,796 5,392 5,232 5,080
1,999 2,268 2,191 2,541 2,252
2,987
3,021 3,119 2,463
327 405 361
383 373
521
579 479
364
79
72 82 81 80
165
157 153
111
174 198 240
280 285
978
1,003 1,460
1,318
2,355 2,265 2,774 2,260 2,645
2,942
3,853 2,860
2,080
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1
Change in main expenses (consolidated)
Other
Consolidated Q1 FY02/21 (March–May): Main expenses
Rent and personnel expenses account for the greater part of expenses across the company, while advertising
expenses are extremely low due to the high ratio of repeat customers. Amortization (mainly goodwill) has
increased since the consolidation of Regus Japan. During Q1, personnel expenses decreased due to the temporary
closure of some facilities.
(Million yen)
Consolidation of
Regus Japan
Consolidation of
Regus Taiwanadvertising expense to
sales ratio
1.1%
Q1
FY02/19
Q2
FY02/19Q3
FY02/19Q4
FY02/19
Q1
FY02/20
Q2
FY02/20Q3
FY02/20
Q4
FY02/20Q1
FY02/21
Amortization
Advertising and
depreciation
Utilities
Personnel
Rent
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Location openings and closures in Q1 FY02/21
Opened six TKP facilities, two Regus facilities, and two joint facilities.
Closed nine TKP facilities as lease agreements came to an end.
(Six new facilities) (Two new facilities)
TKP Garden City PREMIUM
Yokohama Shin Takashima
(from April 2020)
TKP Garden City PREMIUM
Shinagawa
(from April 2020)
TKP Shinagawa Conference
Center New building
(from April 2020)
TKP Miyako City Osaka Tennoji
(from March 2020)
TKP Sapporo Ekimae Conference Room
(from March 2020)
*Regus opened in June 2020 (Q2)
TKP STAR Rental Meeting
Room Iidabashi 4-chome
(from April 2020)
TKP STAR Rental Meeting
Room Higashi Ginza
(from April 2020)
Regus Kyoto Shijo Karasuma
Business Center
(from March 2020)
Regus Takasaki
Business Center
(from April 2020)
SPACES Sendai
(from May 2020)
*TKP opened April 2018
(One new TKP facility,
one new Regus facility)
Joint openings
TKP Garden City: One facility
TKP Conference center: Five facilities
TKP Business center: One facility
TKP STAR rental meeting rooms: Two facilities
(Closed nine facilities)
GCP GCP
CC CC
STAR STAR
CC
SPACES
Regus
Regus
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Grade FY02/18 FY02/19 FY02/20 Q1 FY02/21
Garden City
PREMIUM
(GCP)
Locations 13 20 25 27
Rooms
Seats
137
12,650
223
21,184
300
26,227
315
27,581
Garden City
(GC)
Locations 45 55 56 55
Rooms
Seats
480
43,461
557
50,433
561
49,348
551
48,246
Conference
center
(CC)
Locations 74 83 82 80
Rooms
Seats
806
60,653
920
65,451
918
67,846
882
64,212
Business
center (BC)
Locations 48 49 45 43
Rooms
Seats
310
15,749
316
16,068
286
14,045
278
13,226
STAR rental
meeting rooms
Locations 38 36 36 37
Rooms
Seats
88
4,148
76
3,345
70
3,542
81
4,389
(Inside training
facilities)
LecTore, Ishinoya,
etc.
Locations 722
1,199
1052
2,358
1372
3,679
1372
3,679Rooms
Seats
TKP total
Locations 225 253 257 255
Rooms 1,843 2,144 2,207 2,179
Seats 137,860 158,839 164,687 161,333
m2 339,493 363,247 407,365 406,193
Number of meeting rooms, locations, and seats by grade (TKP)*We offer 400,000 m2 of office space in 255 facilities with five grades to meet different purposes, scales, and budgets.
*As of May 31, 2020. Figures have been retroactively adjusted following review of the grade of some locations. 122,873 tsubo
Temporary offices
in large, new
buildings
Banquet facilities in
large, older hotels
Temporary offices
in large, older
buildings
Temporary offices
in medium-sized,
older buildings
Temporary offices
in small, older
buildings
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2,605
993
3,003
803
2,541
420
31
1,144
62
1,041
92
383
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Impact of COVID-19 on the rental conference room business
Since March, and especially after the state of emergency declaration, many customers cancelled and postponed
their rental conference room bookings. Despite receiving a certain amount in cancellation fees, YoY rental
conference room sales fell significantly. On May 25, the state of emergency was lifted across the country.
Accordingly, demand for conference rooms has been recovering since June.
*Sales figures include room fees, options fees, and catering fees.
キャンセル料
会議室売上
Cancellation fees
Monthly Rental Conference Room Sales*(Million yen)
Cancellation fees
Cancellation fees
March
2019
March
2020April
2020
May
2020
April
2019
May
2019
Sales from
actual useSales from
actual useSales from
actual use
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KPI for the Rental Conference Room Business
Sales per square meter, the KPI for the rental conference rooms business,
fell substantially YoY on the impact of the state of emergency declaration.
*Sales figures include room fees, options fees, and catering fees
12,654
11,118
12,025 11,686
7,404
100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
Q1 average Q2 average Q3 average Q4 average
Sales per square meter and conference room floor space
FY02/20 sales FY02/21 sales
FY02/20 floor space FY02/21 floor space
Monthly
sales/m2 (Yen)
Conference room
floor space (m2)会議室面積(坪)
12,235
14,080
11,647
9,758
8,713
3,741
100,000
120,000
140,000
160,000
180,000
200,000
220,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
March April May
Sales per square meter and conference room floor space
(Q1 only)
FY02/20 sales FY02/21 sales
FY02/20 floor space FY02/21 floor space
Monthly
sales/m2(Yen)Conference room
floor space (m2)
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14.7%
20.9%
39.3%
7.4%
0.9%11.8%
4.9%
GCP
GC
CC
BC
STAR
Accommodations / trainingfacilitiesOthers
Main TKP Group sales, by grade and service
(% of total)
Sales by grade
“Others” mainly represents restaurant sales and sales for transactions at facilities
other than those of the company.
GCP: Garden City PREMIUM, GC: Garden City, CC: Conference center, BC:
Business center, STAR: STAR rental conference rooms
Sales by service
“Options” mainly represents sales for the use of conference room equipment.
“Others” represents accommodations sales at facilities other than those of the company,
service fees, and cancellation fees.
Sales by grade
Sales by service
By grade, the ratio of conference center (CC) sales (mostly for training and exams) increased.
By service, “Others” sales rose due to cancellation fees.
33.4%
4.3%
2.6%7.0%
52.7%
Room rent
Options
F&B
Accommodations
Others
Q1 FY02/21
JPY5.7bn52.2%
9.7%
18.6%
12.1%
7.4%
Q1 FY02/20
JPY10.4bn
Q1 FY02/21
JPY5.7bn
Q1 FY02/20
JPY10.4bn
(% of total)
12.8%
26.4%
32.6%
6.0%0.6%
15.7%
6.0%
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TKP conference room usage breakdown
In COVID-stricken Q1, the use of conference rooms as venues for in-house training and
exams was high. Meanwhile, usage involving food and beverage such as parties fell
significantly.
Q1 FY02/21Q1 FY02/20
Meeting
(20.7%)
Training
(17.8%)
Seminar
(12.2%)
Recruiting
(18.4%)
Exam
(2.9%)
Party
(4.9%)
Conference
(3.0%)
Other
(20.1%)
Meeting
(17.3%)
Training
(26.4%)
Seminar
(9.6%)
Recruiting
(19.7%)
Exam
(4.2%)
Party
(0.5%)
Conference
(0.7%)
Other
(21.6%)
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*As of May 2020 *Workstations (WS): Number of seats at Regus facilities
Brand FY02/18 FY02/19 FY02/20 Q1 FY02/21
facilities 2 2 4 5
WS 1,144 1,144 2,483 2,784
facilities 75 81 100 102
WS 12,212 13,203 15,672 16,263
facilities 5 5 5 5
WS 165 165 165 161
facilities 36 44 47 47
WS 3,048 3,941 4,363 4,336
facilities ‐ 2 2 2
WS ‐ 667 667 667
facilities 9 11 11 11
WS 1,462 1,652 1,652 1,652
Regus(Japan)
facilities 118 132 156 159
WS 16,569 18,453 22,683 23,544
㎡ 87,860 98,052 120,035 124,343
Regus(Taiwan)
facilities 9 13 13 13
WS 1,462 2,319 2,319 2,319
㎡ 11,809 20,368 20,368 20,368
Large community-
type rental offices
High-grade
rental offices
Rental offices
adjacent to public
transportation
Reasonably priced
unmanned rental
offices
Large community-
type rental offices
High-grade
rental offices
Total: 144,711 m2
(43,775 tsubo)
Regus: number of facilities and workstations by brandWe offer over 140,000 m2 of office space in 172 facilities with four brands in Japan and two in Taiwan to serve specific needs
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Reach cruising speed at
around 18 months
Reach the breakeven point at
around 8 to 12 months
Occupancy
rate of 45%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
-80,000,000
-30,000,000
20,000,000
70,000,000
120,000,000
Typical occupancy rates and profit margins after opening
Regus’ business model
On average, Regus facilities break even 8–12 months after opening and reach cruising speed after around 18
months. While it takes longer for these facilities to turn a profit compared to rental conference room facilities,
they employ a sublease-based recurring revenue model. We can expect them to achieve stability in the long term
(after 10+ years) and maintain high profitability that is relatively unaffected by business conditions.
By comparison, TKP has lower initial costs than Regus and reaches the breakeven
point more quickly. Through joint launches, we can achieve profitability faster for
facilities as a whole.
Rent incurred
Takes an average of
three to four months
to open a location
after concluding a
contract
Location opens
High occupancy rates maintained over the long term
Occupancy
rate of 65%
Time elapsed after opening
CBIT margin (operating profit margin of location) Occupancy rate
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Impact of COVID-19’s spread on Regus
Regus’ customer contracts, compared to those for rental conference rooms, tend to be long-term
(12–18 months), with facilities serving as satellite offices in cases. Since March, sales have been
essentially unaffected by the spread of COVID-19.
1,351 1,386 1,398 1,416 1,458 1,459 1,457 1,454 1,460 1,511 1,491 1,453
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May.
Regus’ monthly sales (FY02/21)
Regus Japan Regus TaiwanFY02/20 FY02/21
106
(Million Yen)
Start of consolidation for
Regus Taiwan
Start of consolidation for
Regus Japan
100 9898 102
96
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Regus (Japan) performance indicators
Occupancy rate is a KPI for Regus. The occupancy rate dipped in May due to: (1) a decrease in
preliminary visits and contracts due to the government’s stay-at-home request, and (2) natural
decline as contract periods for existing customers came to an end. Since June, preliminary visits
have been on a recovery trend.
82.3% 82.9% 83.6%85.2% 86.2% 86.3%
83.6% 82.8% 82.9% 83.2% 83.1%81.5%
44.7%46.7%
48.9%46.3%
48.7% 49.3%
60.6%
66.9%68.6%
71.7%72.4%
72.2%
0.0% 0.7%
6.8%5.2%
10.3%8.7%
14.7%
19.2%
23.2%
27.8%
31.9% 31.4%
75.8%76.2%77.1%77.4%77.2%
74.4%74.2%74.3%74.5%75.6%76.0%74.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May.
May. 2018 and earlier Jun. 2018 to May. 2019
Jun. 2019 and later Overall average
0
5,000
10,000
15,000
20,000
25,000
Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May.
May. 2018 and earlier Jun. 2018 to May. 2019 Jun. 2019 and later
(Seats)
損益分岐稼働率
(FY02/21) (FY02/21)
Occupancy rate by year openedWorkstations by year opened
Note: As Regus Taiwan is small in scale, the figures above are
calculated using Regus Japan only.
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Sales by Regus (Japan) brand and service
(Sales Composition) (Sales Composition)
Sales by brand Sales by service
By brand, Regus accounts for about 75% of Regus Japan sales. SPACES locations, which are about four
times as large as those of Regus, devote roughly 75% of floor space to rental offices and the remaining
25% to coworking space. By service, revenue from subleasing rental offices accounts for the majority of
sales.
Q1
FY02/21
JPY4.5bn
Q1
FY02/21
JPY4.5bn
*Non-office represents meeting room usage fees and options fees.
SPACES
(11.6%)
Regus
(74.6%)
Regus Express
(0.6%)
OpenOffice
(13.2%)
Office
(76.6%)
Non-office
(23.4%)
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(Million yen)FY02/20 Q1 FY02/21 YoY change
Current assets 16,854 17,374 520
(Cash and deposits) 9,131 12,745 3,613
(Accounts receivable) 4,114 1,793 -2,320
Non-current assets 100,618 100,007 -611
(Property, plant and equipment) 39,049 39,154 105
(Intangible fixed assets) 44,875 44,196 -678
Total assets 117,473 117,381 -91
Current liabilities 20,221 20,480 259
Non-current liabilities 61,448 61,467 18
Total liabilities 81,670 81,948 277
(Interest-bearing debt) 65,747 66,541 793
Total net assets 35,802 35,433 -369
Total liabilities and net assets 117,473 117,381 -91
Equity ratio 30.4% 29.3% -1.1pp
Summary of consolidated balance sheet
As of the end of Q1, the TKP Group had ¥12.7 billion in cash and deposits. At present, our cash and
deposits and fundraising capacity exceeds ¥35 billion, well over our annual working capital needs.
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21
Outlook
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Pursue business selection and concentration
Maintain sufficient working capital and reduce fixed costs
Respond to future changes in demand
Management policies until the COVID-19 pandemic subsides
In line with the spread of COVID-19, we determined our general approach toward the three policies
we outlined for FY02/21 and are already implementing measures accordingly.
Secured a total of ¥35 billion in cash and deposits, and fundraising capacity
Suppressed personnel expenses, including through voluntary reductions in executive compensation
(May–July 2020)
Under the state of emergency declaration, we aimed to differentiate peripheral businesses through selection and
concentration, and decided to suspend or reduce operations at non-core businesses as appropriate. Operations have
resumed for the most part with the lifting of the state of emergency, yet some facilities were closed permanently.
We will continue to focus on our core flexible workspace business moving forward.
The COVID-19 pandemic has created new demand such as for spaces to hold examinations, host
shareholders’ meetings, and deliver webinars. We will continue to enhance new services around
the keywords “remote” and “decentralized.”
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Both TKP and Regus employ various types of contracts to minimize risk. Almost all conventional office contracts
are fixed-term lease agreements, but for many of our facilities, we conclude standard lease agreements that can be
canceled with six months’ notice. Variable rent, which accounts for about 40% of our facilities, also helps to
suppress rent risk.
Analyzing the Group’s real estate risk
Contract type Main characteristics Rent risk
Outsourcing
agreementNo fixed rent
94 facilities
(36.9%)
11 facilities
(6.9%)
Standard lease
agreement
Contract can be cancelled with
six months’ notice
56 facilities
(22.0%)
84 facilities
(52.8%)
Fixed-term lease
agreement
Many restrictions on cancelling
the contract prematurely
97 facilities
(38.0%)
64 facilities
(40.3%)
Ownership No fixed rent8 facilities
(3.1%)- -
(Japan)
Fixed rent
56.6%
Variable rent
43.4%Fixed rent
60.7%
Variable rent
39.3%
(Japan)
Very low
Low
Medium
(1) Rent risk based on early cancellation conditions
(2) Rent risk based on rent payment structure
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Core businesses
Faced with the state of emergency declaration, we promptly implemented business selection and
concentration. We have mostly resumed operations at non-core businesses that had been suspended and
are working toward changing their business formats based on the shape of the post-COVID economy.
Office space
(rented by the month)
Office space
(rented by the hour)
Non-core
businesses
Non-core
businesses
Pod hotels1
APA Hotel1
New city
(business)
hotels
Hot spring inn
City
hotel
Accommodation
and training
facilitiesEvent production
Medical
academic
conferencesCall centers
Prepared
lunchboxes
Staffing
service
1. Operated as a franchise business
Pursue business selection and concentration
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Overview of trends in peripheral businesses
Business/company name Under state of emergency Current status
APA Hotel
*operating as a franchise
Continued regular operation.
Maintained high occupancy rates
although at low pricing
Continuing regular operation.
Average daily rate is gradually rising
TokiwakenScale greatly reduced and
operations suspended.
Adjusted orders
Resumed limited operations providing bento
lunches for conference room users
LecTore; Ishinoya Partial closures
Operations resumed.
Some locations closed (Hakata Hisayama
Onsen)
Shinagawa Haizennin
Shokaijo
Dispatching to hotel banquet
facilities declined.
Dispatching to hotels accepting
COVID-19 patients with light
symptoms increased
Demand for hotel banquet dispatching
recovering.
Also dispatching to Escrit Inc.
Azur Takeshiba Operated at a reduced scale Resumed regular operation
TKP CommunicationsContinued regular operation.
Increased call center demand from
food delivery clients
Continuing regular operation.
Robust call center demand from food
delivery clients continues
First Cabin SuspendedNagoya location closed.
Resumed operations at Ichigaya
Majors Operated at a reduced scaleTransferred head office to TKP.
Operating on a limited scale
TKP Medicalink Regular operation Regular operation
x
26
3. Measures in the hotel and accommodations business• Check-in/check-out: Measures to prevent infection from droplet
transmission, measures to limit crowding
• Meals: Prohibit buffet-style dining in principle, develop menus based
around individual servings, ensure social distancing
• Bathing facilities: Measures to limit crowding
• Clean with EPA detergent and disinfectants, provide disinfecting alcohol
solutions, ensure proper air circulation
We have established company guidelines to combat COVID-19
and give utmost priority to safety and security in the COVID era.
Company guidelines to combat COVID-19
1. Measures at all businesses• Manage employee health, regularly disinfect facility interiors,
have employees engaged in customer service wear masks
2. Measures in the flexible workspace business• Use air purifiers and control humidity inside rooms
• Recommend layouts informed by social distancing principles
• Manage air circulation to avoid creating closed spaces
• Disinfect conference halls, thoroughly circulate air,
avoid concentrated gatherings
• Prohibit buffet-style dining in principle, propose solitary dining
and (bento-style) individual servings.
“School” layout (120 people) Dispersed layout (60 people)
x
27
As COVID-19 spreads, in addition to our traditional optional services, we have launched services
that add value through infection prevention measures to provide safe environments.
New products at core businesses
Training facilitiesRental meeting
rooms
Banquet halls Seminars
Main conference room equipment up to the present
Wireless
routers
Microphones Projectors
Whiteboards
Screens
Various uses of company conference rooms
Plastic screens to prevent
droplet transmissionPlastic sheets at reception desks
Disinfectant spray
for microphones
Thermometer guns
Ziaino air purifiers
Face shieldsThermography
Partitions
A strong lineup of equipment to counter COVID-19
AI Thermography
x
28
Changes in demand at core businesses
Sales of live webcast packages for
general meetings of shareholders
One-stop support from specialized staff that includes rehearsal, day-before
and day-of preparation, and provision of the necessary equipment for live
streaming and on-demand broadcasting.
Live/on demand broadcasting (image)
Increase in exam hall demand
Since June, we have enjoyed significant demand for use of our facilities as exam halls (for the Eiken exam, etc.)
due to the difficulty of holding exams on university campuses. There has also been an increase in use as venues
for general meetings of shareholders compared to a typical year, and sales of live webcast packages have also
been robust. The shift to decentralized workspace is accelerating, evidenced in part by increasing use of
conference rooms as studios (packaging web seminars with streaming service).
In June 2020, the ratio of usage of TKP rental
conference rooms as exam halls was up 2.2x YoY.
Increasing use as studios
0
50
100
150
200
250
300
350
3月 4月 5月 6月
FY02/21 webcast/teleconference orders
月別問い合わせ件数 月別予約数Monthly inquiries Monthly reservationsMonthly reservationsMonthly inquiries
March April May June
x
29
Changes in demand at core businesses
We secured an agreement to provide support centers for rent relief benefits application at around 60
of our directly managed facilities across Japan for a period of approximately two months starting
July 15.
We have leased rooms at roughly 60 of our directly managed facilities across Japan
as support centers for those applying for rent relief benefits
Rent relief benefits processing businessRecruit Holdings Co., Ltd. was awarded a contract and formed a consortium of five companies:
Deloitte Tohmatsu Consulting LLC, Toppan Printing Co., Ltd., BELLSYSTEM24, Inc., TMJ, and newsbase, inc.
newsbase, inc. is responsible for setting up and operating support centers for offline applications.
The TKP Group entered an agreement with the company for the provision of application support venues for
those applying for rent relief benefits (with a start date of July 15). We have leased rooms in around 60
directly managed facilities (approximately 16,500 m2) for roughly two months.
Secured orders at locations across Japan
through a single agreement
subcontracted
x
30
To date, office space has been leased under long-term (essentially permanent) arrangements
requiring the payment of fixed rent, large deposits, and funds for interior work. The future will see
an increase in flexible agreements that focus on office use, when and in the quantity needed.
Note: Figures assume the market for office space in the Tokyo metropolitan area has a value of
¥20 trillion (estimates based on research by Mitsui Fudosan, JLL, and CBRE)
¥200 billion (1%) as of 2019 JLL forecast: ¥6 trillion (30%) by 2030
FIXFLEX
FIXFLEX
Scale of the flexible workspace
market in the Tokyo metro area
Office building
Lease agreements
(long-term, fixed)
Temporary use
(flexible)
Affected by the coronavirus
A major business
opportunity for TKP
Future
Increasing office
vacancies in central Tokyo
The office redefined for
flexibility
Office building
Cancel
Cancel
Cancel
Sourcing Operation
Workspace redefined as a result of COVID-19
x
31
Increase in demand for satellite offices
Vacancy rates in city centers are increasing.
At the same time, the trend toward renting less office floor space is accelerating.
Cases of companies utilizing satellite offices are on the rise.
The average vacancy rate of the Tokyo business area (five central wards: Chiyoda, Chuo, Minato, Shinjuku,
Shibuya) in June was 1.97 %, an increase of 0.33pp from May. In June, a new building was completed with
some space left unfilled, and existing buildings were affected by contract cancellations as companies reduced
floor space. The number of new contracts also fell sharply during the month such that unused floor space
increased by roughly 86,000 m2.
The average vacancy rate of the Tokyo business area has risen for the fourth consecutive month
Source: Miki Shoji Co, Ltd., Latest Office Building Market Report (July 2020)
On June 6, Fujitsu officially announced that it will halve its office space by March 31, 2023, including for group
companies in Japan. It owns about 60 offices nationwide and leases about 380 offices. It plans to halve its total
floor space of 1.2 million m2 over three years. The company will shift to telework for most of its employees and
offer a new telework subsidy of ¥5,000 per month.
In response to the COVID-19 pandemic, Fujitsu began recommending working from home for its roughly 80,000
employees in Japan. Excluding factories, the company is still working to reduce the ratio of employees commuting to
work to a maximum of 25%. It plans to revise its former work style system, which was premised on commuting.
In an online press conference on the 6th, Fujitsu’s Hiroki Hiramatsu (Corporate Executive Officer) emphasized the
company would “promote work styles that are not bound by time or place,” indicating the company intends to give
employees the flexibility to choose where and when they work.
The company will gradually reduce its fixed offices throughout Japan so that employees can work flexibly from home.
Specifically, it plans to set up core offices and satellite offices in each region of the country, and make all
workstations freely available to employees. It will also expand the scope of the “super flex system,” which eliminates
core hours, to all group employees in Japan.a
Fujitsu announces it will reduce office space by halfJuly 6, 2020 (The Nikkei Morning Edition)
x
32
Location opening plans
Workspace will transition toward a “hub and spoke” model in which companies maintain a head office and
multiple satellite offices. In addition to areas with many head offices, our group targets the areas around
“hub” stations— which connect residential areas to the city center—as candidates for new openings.
Areas we have focused on up to
the present
Areas in which we will
increase openings
赤坂・六本木
市ヶ谷・四谷
Areas for particular focus:
◇Tokyo/Shimbashi area
◇Shinagawa area
◇Shibuya area
◇Shinjuku area
◇Akasaka/Roppongi area
Ichigaya/Yotsuya
Akasaka/Roppongi
x
33
Formed capital and business alliance with Escrit Inc.
On July 15, 2020, we signed a capital and business alliance with Escrit Inc. (TSE1: 2196), which operates a bridal
business. We plan to acquire 1.7 million shares from Escrit founder Hiroshi Iwamoto (Blocks Co., Ltd.) for a price
of ¥334.4 per share (total value of ¥568 million), which will yield a shareholding ratio of 12.59%.
We will provide details at a joint
press conference to follow
Joint development of banquet halls targeting
corporate customers in the COVID era
Outline of the business alliance
(1) TKP will help acquire corporate customers for use of Escrit’s
banquet services during the weekdays.
(2) TKP will outsource new openings, renovations, maintenance
and repair work, and property management of our group’s
facilities to Shibutani & Co. (Escrit’s consolidated subsidiary),
which provides comprehensive real estate solutions.
(3) The companies will jointly develop the infection prevention-
based business including satellite offices employing the anti-
bacterial and anti-viral interior construction technologies held
by Container Bank and Shibutani & Co.
x
34
A model of fully optimized office building use
Moving forward, we will develop large compound locations incorporating our group’s
many services and brands. We also plan to form busines tie-ups with bridal companies
such as Escrit to leverage unused space at their facilities on weekdays.
Break buildings into zones (upper, middle, lower) and optimize
usage by zone to limit close-quarters contact (i.e., in elevators)
Large compound location
レンタルオフィス(リージャス)
ウェディングバンケット
Up
pe
rM
iddle
Low
er
APAホテル
ウェディングバンケット
Up
pe
rM
iddle
Low
er
Weekends
and holidaysWeekdays
x
35
Our mission for FY02/21 and the AAA strategy
Anytime, Anywhere
for All workers
Become Japan’s leading corporate group in the flexible workspace
market and an infrastructure company that supports corporate
work style reform
x
36
Appendix
x
37
Corporate profile (as of May 31, 2020)
Name
Businesses
Executives
Headquarters
Established
Representative
director
Capital
Listed
Employees
TKP Corporation
Flexible workspaces
Food and beverage/banquets
Hotels and resorts
Event production
BPO
Takateru Kawano Representative director/CEO
Shingo Nishioka Director/COO
Koji Nakamura Director/CFO
Haruo Tsuji Director
Kohei Watanabe Director
Shinichi Saijo Director
Mark Dixon Director
Yoshinori Sogabe Standing auditor
Takanori Shige Auditor
Takayuki Hayakawa Auditor
TKP Ichigaya Building 2F
8 Ichigaya-Hachimancho, Shinjuku-ku, Tokyo
August 15, 2005
Takateru Kawano
¥12 billion (as of May 31, 2020)
March 27, 2017: TSE Mothers (3479)
1,680* (as of May 31, 2020)*Excluding part-time employees
Convenistation Co., Ltd.
TKP Properties Corporation
TKP Communications Corporation
Tokiwaken Corporation
TKP Medicalink Corporation
Regus Taiwan(Collective name for the 13 entities operating the
Regus business in Taiwan)
Regus Japan(Collective name for the 55 entities operating the
Regus business in Japan)
TKP Corporation
Majors Inc.
Shinagawa Haizennin Shokaijo Y.K.
TKPSPV 1–4 / 6–10
x
38
2017
Listed on the TSE Mothers exchange
Opened Azur Takeshiba in Minato-ku, Tokyo
Began providing Cloudspace, a space matching service
Majors Inc. became a subsidiary
2018
Opened CIRQ Shinjuku, a large multipurpose event hall
Opened LecTore Hayama Shonan Kokusaimura, a large resort training hotel
Opened APA Hotel TKP Sendai Ekikita
Number of directly managed meeting rooms exceeded 2,000
2005Opening of first facility, TKP Roppongi Kaigishitsu
TKP Corporation established in Hamamatsu-cho, Minato-ku, Tokyo
2006Expanded into the Hokkaido, Kansai, and Kyushu regions
Monthly sales exceeded ¥100 million
2007 Expanded into the Tohoku and Tokai regions
2008Registered as a Class 2 travel operator
Established Convenistation Co., Ltd. (consolidated subsidiary)
2009 Established TKP Properties Corporation (consolidated subsidiary)
2010
Established current TKP Communications Corporation (consolidated subsidiary)
Established TKP New York, Inc. (consolidated subsidiary)
Expanded into the Chugoku region
2011 Opened TKP Garden City Shinagawa (banquet hall facility inside a hotel)
2012 Number of directly managed meeting rooms exceeded 1,000
2013
Established Tokiwaken Corporation (consolidated subsidiary)
Joined Keidanren (Japan Business Federation)
Expanded into the United States (New York)
2014Registered as Class 1 travel operator
Opened APA Hotel TKP Sapporo Ekimae
2015 Opened TKP Izu Nagaoka Onsen Villa Garden Inshinoya
History
2019
Regus Japan became a subsidiary
Opened APA Hotel Osaka Umeda (Osaka)
Shinagawa Haizennin Shokaijo Y.K. became a subsidiary
Increased capital through public offering
Regus Taiwan became a subsidiary
A company that revitalizes and redistributes space
2005TKP Corporation
established
2017Listed on the TSE
Mothers exchange
2019
Regus Japan
became a subsidiary
2005 20212006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0.180.75
2.032.65 3.39
3,025.99
8.29
11.65
14.16
17.94
21.97
28.68
35.52
54.34
(Billions of yen)
2020
Opened APA Hotel Fukuoka Tenjin Nishi in Fukuoka
Established guidelines to fight COVID-19
Opened APA Hotel Ueno Hirokoji in Tokyo
Entered a capital and business alliance with Escrit Inc.
x
39
Shareholder composition
70.1%
4.0%
12.4%
8.0%
3.4%0.7%
1.5%
Shareholder distribution
Takateru Kawano (including asset management company)
Individuals and others
Financial institutions
Japanese corporations
Foreign investors
Brokerage firms
Treasury stock
59.8%
10.9%
10.2%
7.9%
7.9%
2.0% 1.3%
Shareholder distribution
Takateru Kawano (including asset management company)
Individuals and others
Financial institutions
Japanese corporations
Foreign investors
Brokerage firms
Treasury stock
Issued shares: 33,171,600Shareholders: 2,909
As of February 29, 2020As of February 28, 2019
Issued shares: 38,056,985Shareholders: 10,837
x
40
Flexible Workspace(Rental meeting rooms, hotel banquet facilities,
serviced offices, co-working spaces)
Event
ProductionBPO
Hotel/
Accommodation
and Training
Food &
Beverage/
Banquet
Business areas
In the mainstay flexible workspace business, TKP provides temporary office space to companies.
x
41
Business model and sourcing strategy
Real estate owners Corporate users
Revita
lize
sp
ac
e
Secure rental income
Utilize vacant properties
Reduce rent burden
Reduce CAPEX
One-stop booking of office
space across Japan
Flexible workstyles
TKP and Regus’ sourcing strategy is to complement each other’s strengths and
pursue joint location openings. By doing so, we can advance into areas not covered by TKP
while opening locations of a size Regus could not achieve on its own.
Se
ll in s
ma
ll lots
(sp
ac
e s
ha
ring
)
Open large facilities concentrated
around major stations in major
cities
Spread locations all over Japan
including in regional areas and
around airports
Regus’s sourcing strategy
TKP’s sourcing strategy
Joint openings
Share costs of operating facilities
Possible to operate as a TKP facility
until Regus occupancy rate rises
x
42
Currently, the Regus brand is essentially unaffected by the novel coronavirus pandemic. Except for large banquet
facilities, TKP’s existing conference room spaces can also be repurposed into distributed offices, earning revenue
even amid the corona crisis. Large hotel banquet facilities, which are most affected, account for only around 6% of
total sales.
Repurpose space to create offices in high demand even amid the Corona pandemic
TKP brands
High-grade
Long-term
Rental meeting rooms, hotel banquet facilities Serviced offices and co-working spaces
Short-term
Budget-priced
Garden City
Large hotel banquet facilities and
banquet facilities in office
buildings
Garden City PREMIUMMainly in new and relatively new
buildings. Highest grade banquet
facilities in office buildings
Conference Center
Large office building facilities
suitable for conferences and
training
Business Center
Mid-sized office building facilities
suitable for meetings and training
STAR rental meeting
rooms
Small office building facilities for
meetings and training
Entrepreneurial communities
Large serviced offices
High-grade serviced offices
available when needed
Unmanned rental spaces in good
locations provided economically
Regus brands (in Japan)
5 locations 107 locations
47 locations
27 locations
55 locations
80 locations
43 locations
37 locations
No negative
impact
Small negative
impact
Major negative
impact
Negative
impact
Note: Numbers of locations are in Japan as of May 31, 2020.
x
43
Sapporo
Obihiro
Aomori
Sendai
Morioka
Niigata
Koriyama
Mito
Nagano
Karuizawa
Hachinohe
Akita
Tokyo
ChibaHayama
Utsunomiya
Kawasaki
Yokohama
Hamamatsu
Hakone, Yugawara
Atami
Izu
Matsumoto
Kobuchizawa
ToyamaKanazawa
NagoyaKyoto
Shiga
Osaka
KobeHimeji
OkayamaHiroshima
Yamaguchi
Takamatsu
MatsuyamaKokura
Hakata,
Tenjin
Oita
Kumamoto
Miyazaki
Kagoshima
Naha
Nagasaki
TKP facilities Regus Japan facilities
Omiya
TKP Group network
Facilities Seats (seats in TKP conference rooms +
workstations at Regus facilities)
Contracted floorspace
427 187,196
550,720
facilitiesseats
m2
As of May 31, 2020
The TKP Group has an extensive network of temporary office space in Japan. We are expanding
our amount of flexible workspace, centering on urban areas.
Domestic target for 2030:
approx. 1.4 million m2
(approx. 1,500 locations)
As of May 31, 2020
As of May 31, 2020
x
44
Usage of TKP rental conference rooms
FY02/20 usage breakdown (by sales)
円グラフ予定
Meeting
(23.2%)
Training
(15.3%)
Seminar
(14.2%)Recruiting
(10.4%)
Exam
(5.8%)
Party
(5.3%)
Conference
(3.8%)
Others
(22.0%)
x
45
Global collaboration with IWG (CEO: Mark Dixon1; listed on the London Stock Exchange)
IWG provides workspaces globally under the Regus brand and is the overwhelming global leader in the flexible
workspace market. Regus members are free to use the business lounges at all locations, which number more
than 3,300.
1. Mark Dixon, IWG’s CEO, is also an outside director at TKP.
2. Figures are for FY12/19.
1,100+
cities
Global network
3,388+
locations
110+countries/
regions
Diverse brands
2.5mnmembers
Robust Group performance
Sales2:
£2,653mn(Approx. ¥380.7bn)
EBITDA2:
£428mn(Approx. ¥61.4bn)
Operating
profit2:
£176mn(Approx. ¥25.3bn)
Europe, Middle East,
Africa
Approx. 1,100locations
UK
Approx. 320locations
Asia Pacific
Approx. 690locations
Americas
Approx. 1,300locations
x
46
Accommodation/training facilities operated by TKP ( As of May 31, 2020)
Facility 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 Owned
APA Hotel TKP Tokyo Nishikasai 124 December 2017 Leased ―
APA Hotel TKP Keikyu Kawasaki Ekimae 143 June 2018 Owned Leased
APA Hotel TKP Sendai Ekikita 306 October 2018 Owned Owned
APA Hotel Osaka Umeda 162 May 2019 Owned Leased
APA Hotel Hakata Higashi Hie Ekimae 206 February 2020 Owned Owned
APA Hotel Fukuoka Tenjin Nishi 268 May 2020 Owned Owned
APA Hotel Ueno Hirokoji 215 July 2020 Owned Owned
LecTore Atami Koarashi 20 November 2013 Leased ―
LecTore Hakone Gora 23 January 2014 Leased ―
LecTore Karuizawa 14 July 2014 Leased ―
LecTore Atami Momoyama 31 July 2014 Leased ―
Azur Takeshiba (managed on contract) 122 April 2017 Leased ―
LecTore Yugawara 108 May 2017 Owned Owned
LecTore Hayama Shonan Kokusaimura 160 April 2018 Owned Owned
LecTore 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 (Closed) 44 June 2019 Owned Owned
Izunagaoka Villa Garden Ishinoya 22 January 2015 Leased ―
First Cabin TKP Nagoya Station (Closed) 199 September 2017 Owned Owned
First Cabin TKP Ichigaya (Reopened on July 1st) 165 November 2018 Leased ―
x
47
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.
Important Notice