Financial Summary

Recent Updates

Highlights

On February 29, 2012, Nippon Parking Development announced 1H FY07/12 results: click here to go directly to the 1H FY07/12 results section.

(For original Japanese-only release in PDF format, please click here.)

For corporate releases and developments more than three months old please refer to the News & Topics section.

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Trends & Outlook

Note on Seasonality

The sales and profits for the Ski Resort Business are seasonal, and are mainly posted in Q2 (November-January) and Q3 (February-April). Conversely, Q1 (August-October) and Q4 (May-July) sales are minimal and these periods post losses. Consequently, sales and operating profit are higher for the entire company in Q2 and Q3, and lower in Q1 and Q4.

1H FY07/12 Results (Announced on February 29, 2012; please refer to the preceding tables)

The company maintained its FY07/12 forecast.

Sales were up 6.6% YoY at 5.0 billion yen – an all-time high for a six-month period. Operating profit meanwhile rose 9.6% YoY to 770 million yen, likewise, recurring profit also came in at 770 million yen, a 19.0% YoY increase. The large increase in recurring profit was due to a 48 million yen YoY decline in investment losses in an investment partnership; the investment loss for the period came in at 7 million yen. Net income for the Q2 period increased only very marginally due to write-downs of deferred income tax assets resulting from revisions to the corporate tax rate.

Sales came in slightly below plan, whereas operating profit was effectively in line with its forecast. At the segment-level, the company noted performance for both the Parking Lot and Ski Resort businesses proceeded in line with plans.

Parking Lot Business

Sales were 8.9% higher YoY at 4.2 billion yen and operating profit rose 19.8% YoY to 799 million yen.

Higher sales were driven domestically by an improvement in profitability at existing properties and a net increase of 81 properties in Japan (96 newly-acquired properties and 15 terminated) since end-July 2011; resulting in all time-high for properties run by the company. The persistently high office vacancy rate has meant that new contract acquisitions for the company have progressed smoothly as demand from owners to monetize their car parks remained strong. Existing properties also witnessed improved profitability on the back of improved human resources and the expansion of services, such as the establishment of an online portal site for monthly and hourly parking. Regarding improved staffing at existing properties, the company had previously relied mainly on temporary staff. However, given turnover of temporary staff was high (the average employment period was just over one year), it was difficult to retain expertise, and consequently they implemented a new policy of making some temporary employees into fulltime staff in order to accumulate operational expertise and raise levels of service satisfaction.

As for the overseas parking facility business, as of end-January 2012, it operated five facilities in Thailand (with a total of 3,101 parking spaces) and one in China (with a total of 40 parking spaces). New property acquisitions though seemed to have fallen slightly behind schedule. However, given the limited operating losses and the potential market size the company believed long-term potential remained for the business.

Domestic sales came in at 4.1 billion yen (+6.1% YoY), of which 3.0 billion yen (+3.8% YoY) was Leased Facility Operations, and 944 million yen (11.0% YoY growth) was from Outsourced Management. The overseas business meanwhile contributed 114 million yen in sales (no YoY comparison as sales began for this unit from 1H FY07/11).

Despite higher labor expenses related to the opening of new properties, cost controls elsewhere, newly acquired sites and operational improvement at existing sites resulted in higher operating profit.

Ski Resort Business

Sales were down 4.7% at 784 million yen and the segment posted an operating loss of 29 million yen (vs. an operating loss of 36 million yen a year earlier).

The company attempted to improve operating efficiency at Kashimayari Sports Village and Kawaba Ski Resort by deliberately opening them later than normal, and visitor numbers for both were around the same as the previous year. Sales however were down 4.7% YoY due to a portion of sales being affected by the changing of the opening date for these resorts as it fed into sales calculations for season tickets, lower operating days for the first month of the season, and some tenant contracts (which were based on sales numbers for the ski resorts). Adjusting for these factors, sales were actually up YoY.

The company acquired the Kawaba Ski Resort in October 2010 and the operating loss increased YoY as the segment felt the impact of increased operational and preparation costs from running three resorts compared to the previous year.

Other Topics

Car Sharing Business

The company spun out their car sharing business into a separate company in December 2011 (establishing Japan Automobile Service Co.) and had plans to aggressively expand this business. As of end-January 2012, the company had 107 cars; 1,120 accounts; and 2,167 members. The company noted a stand-alone car sharing business would struggle to be profitable, however, a company operating parking facilities, such as NPD, could generate efficiency synergies that would lead to increased revenue. They gave the following example showing the revenue changes for an area covering part of Tokyo (source: 1H FY07/12 results presentation).

• Assumption: 5 parking facilities, 8 car sharing vehicles
• Revenue from Parking Lots: Sales of 2.5 million yen, COGS of 1.8 million yen, GPM of 0.7 million yen
• Combined Revenue of Parking Lots and Car Sharing: sales of 3.3 million yen (2.5 million yen + 0.8 million yen), COGS of 2.1 million yen, GPM of 1.2 million yen (0.7 million yen + 0.5 million yen)

Going forwards, the company was looking to establish new locations primarily at directly managed Tokyo properties, and aimed to have 150 vehicles by end-July 2012; 300 vehicles by end-July 2013; 600 vehicles by end-July 2014; and 1000 vehicles by end-July 2015.

Development of Condo Block Parking Lot Market

From 1H FY07/12 onwards, the company was planning to develop its parking lot management business for apartment blocks in addition to office buildings. The company has been in discussions with condo management companies (companies that deal with the maintenance of apartment blocks) over utilizing vacant parking facilities at condo blocks. (Generally, condos that are built for sale manage their facilities through management associations composed of resident representatives, however, in many cases resident associations then outsource these services to management companies.) In February 2012, the National Tax Agency released taxation standards for the leasing out of empty parking lots at condos to third parties, resulting in the development of this sector. NPD believed it could not only develop this market and acquire new clients but pointed out:

• The existence of a high proportion of mechanical parking facilities at condos - an area of operational expertise for the company
• Strong synergies with its car sharing business

For condo management and resident’s associations the benefits of this business include increased revenue from efficiently exploiting underutilized parking facilities, alleviating any shortfall from insufficient maintenance funds such as cleaning and administration expenses.

Balance Sheet

As for the company’s balance sheet, interest-bearing debt had been decreasing and as of end-July 2012 the company was expected to be net debt free (net interest-bearing debt for FY07/12 was 783 million yen). The company had 1.4 billion yen in investment securities as of end-January 2012, of which the largest position was in IHI Transport Machinery Co. (TSE 6321). On February 3, 2012, IHI Corp. (TSE 7013) announced a TOB for IHI Transport Machinery. The company plans to tender their IHI Transport Machinery shares and the 1.3 billion yen transaction was slated to occur on March 23, 2012, resulting in a pre-tax gain of 310 million yen. This would also suggest that the company will become net cash by end-July 2012.

Q1 FY07/12 Results (Announced on November 30, 2011; please refer to the table above)

The company maintained its FY07/12 forecast and Q1 figures came in roughly as expected. Sales were up 9.3% YoY at 2.1 billion yen – an all-time quarterly high. Operating profit though was down 5.6% YoY at 212 million yen due to the impact from lower profitability at the Ski Resort Business as the company added a new resort to the segment despite increased profitability at the Parking Lot Business. Recurring profit increased 14.8% to 202 million yen on the back of lower investment losses in a silent partnership and net income came in at 95 million yen (+46.0% YoY).

Parking Lot Business

Sales were up 8.8% YoY to 2.1 billion yen and operating profit rose 16.9% YoY to 396 million yen. Higher sales were driven by a net increase of 32 properties domestically (38 newly-acquired properties and 6 terminated), and two new parking lots in Bangkok at its overseas business. Domestic sales came in at 2.0 billion yen (+6.0% YoY), of which 1.5 billion yen (+3.3% YoY growth) was Leased Facility Operations, and 470 million yen (14.4% YoY growth) was from Outsourced Management. The overseas business contributed 53 million yen (no YoY comparison as sales began for this unit from 1H FY07/11).

Despite higher labor expenses related to the opening of new properties, cost controls elsewhere, newly acquired sites and operational improvement at existing sites resulted in higher operating profit.

The company also remarked that as of November 30, 2011 it was not directly affected by the flooding in Bangkok.

Ski Resort Business

Sales were up 62.9% at 28 million yen and the segment posted an operating loss of 183 million yen (vs. an operating loss of 114 million yen a year earlier) The company acquired the Kawaba Ski Resort in October 2010 and the operating loss increased YoY as the segment felt the impact of increased operational and preparation costs from running three resorts compared to the previous year.

Topics

Establishment of a Car-Sharing Subsidiary

On November 28, 2011, the company announced that it had converted its car sharing operations into a fully owned subsidiary that would manage the business. As of end-October 2011, the company had established 8 locations with 97 vehicles nationwide for car sharing, and had 1,844 members. It plans to introduce more vehicles at new facilities and roll-out new services, such as placing cars at environmentally friendly organizations and facilities; and at universities as it introduces services aimed at students.

Having established the subsidiary NPD was aiming to expand its coverage area, centered on the Tokyo Metropolitan and Osaka areas, with a target of 1000 vehicles within three years in metro areas, and 5000 vehicles nationwide over the medium term.

NPD noted its decision to establish a separate subsidiary for its car-sharing business, set the above performance targets, and bolster the business was driven by a realization by the company that customer needs have been growing and car-sharing was likely to be a business with significant future growth potential.

An overview of the car sharing business follows:

• Car sharing is a system in which several people share use of a vehicle, or vehicles. Different from car rental, members can use vehicles in short time increments (of minutes) and without filling in paperwork each time. It is generally a self-service arrangement where members reserve a car online, go directly to the car’s location, and then use a member card to unlock the car.
• A fee system composed of membership dues, time charges, and distance charges is generally used. Since one does not maintain and manage a vehicle individually, members avoid purchase costs, insurance, inspection fees, parking, and other upkeep and maintenance charges. It is therefore a very economical way for a person who does not need a car often to have one available for personal use.
• As of January 2011, only 0.06% of Japan’s population were members of such services; there were 3,911 car sharing vehicles available among 73,244 members/users in Japan. In contrast, car sharing service use is more widespread in the West. It is particularly popular in Switzerland, where there are 94,000 members and 2,350 vehicles (as of June 2010), or 1.22% of the total population. (Source: Transportation Ecology Mobility Foundation “Trends in car sharing membership and vehicle numbers in Japan” (February, 2011).)
• In Japan, companies such as Park 24 Co. (TSE 4666), and Orix Auto Corp. (subsidiary of Orix Corp. (TSE 8591)) are offering such services. Park 24 has 71,850 members and 2,727 vehicles (as of end-October 2011) and Orix had 40,000 members and 1,274 vehicles (as of end-March 2011).

Areas with high population density, developed mass transit systems, such as railroads, and short average driving distances lend themselves to car sharing. Given Japan meets all of these conditions, it is likely car sharing will move into the mainstream and thus SR Inc. believes it is worth paying attention to the progress of this business.

FY07/11 Results

On September 2, 2011, the company released FY07/11 results (see the table above).

Sales grew by 10.9% YoY to 9.6 billion yen for FY07/11; operating profit was up 1.3% YoY at 1.5 billion yen; recurring profit increased 28.8% to 1.4 billion yen and net income came in at 850 million yen (+11.1% YoY).

As it has done every year since the company’s establishment, sales continued to increase in FY07/11 as the group added new parking properties in the Parking Lot Business and acquired Kawaba Ski Resort in the Ski Resort Business. Operating profit reached a record high as decreased profitability in the Parking Lot Business was offset by higher profits in the Ski Resort Business.

Recurring profit increased by a sizable 28.8% YoY. Specifically, non-operating profit increased to 208 million yen (vs. 123 million yen in FY07/10) due to gains on sale of investment securities, and non-operating expenses were down to 270 million yen (vs. 487 million yen in FY07/10) due to a decrease in losses from privately placed funds related to investments in sleeping partnerships.

Net income was up 11.1% YoY. Extraordinary losses fell to 47 million yen (vs. 212 million yen in FY07/10) due to a reduction in valuation losses on investment securities. However, extraordinary profits also fell to 28 million yen (vs. 227 million yen in FY07/10) due to declines in negative goodwill gains.

Parking Lot Business

Sales were up 5.8% YoY to 8.0 billion yen and operating profit decreased 2.6% YoY (inclusive of group wide costs) to 1.4 billion yen.

The breakdown of sales was as follows:

• Leased Facility Operations sales were 5.8 billion yen (+2.4% YoY)
• Outsourced Management sales were 1.7 billion yen (+16.4% YoY)

The domestic vs. overseas breakdown was as follows:

• Domestic Parking Lot sales were 7.9 billion yen (+5.3% YoY)
• Overseas Parking Lot sales were 37 million yen (no YoY comparison as this was the first year of business).

As of end-July 2011 the company had increased its net domestic property count by 116 properties, with 146 newly-acquired properties and 30 terminated. Compared to the company's planned FY net increase of around 80 properties (new contracts: 100 to 120; canceled contracts: 20 to 40), the actual pace of new contract acquisitions exceeded the forecast. The company commented that despite real estate conditions bottoming out, office vacancy rates remain high. As such, building owners had a strong incentive to generate earnings from parking, and demand from them was particularly strong. In addition, there was a net increase of two parking lots in Thailand (for a net increase of 2,396 operated/managed parking spaces).

Although new parking lot acquisitions proceeded smoothly, the company believes operating profit decreased YoY for the following four reasons:

1. Due to March 2011’s earthquake, drivers held back from using cars in some areas of Tokyo and Yokohama and utilization rates at hourly parking lots dropped (resulting in a negative impact of approximately 30 million yen on operating profit).
2. Gross profit from existing parking lot properties decreased (resulting in a negative impact of approximately 65 million yen on operating profit).
3. Increased personnel costs due to aggressive hiring of new graduates, initial costs associated with it "MARUNOUCHI Bike & Run" scheme (resulting in a negative impact of approximately 93 million yen on operating profit).
4. Expenses related to its entry into the Thai and Chinese markets (resulting in a negative impact of approximately 39 million yen on operating profit).

Regarding the effects of the March 2011 disaster (point one above), utilization rates at hourly parking lots in the Tokyo and Yokohama areas had returned to pre-quake levels since May. In the Tokyo area, profitability at monthly Leased Facility Operations decreased due to a fall in parking fees and users switching over to different parking lots. The company commented that parking fees in the Osaka area were recovering since they bottomed out in March 2011. As for the Tokyo area, the company said parking fees had bottomed out and profitability was recovering after it sent additional staff to existing properties to bolster operations there.

Ski Resort Business

Sales were up 44.6% at 1.7 billion yen and operating profit increased 100.4% YoY to 113 million yen. Kashimayari Sports Village visitors fell to 142,000 (-13.4% YoY) and at Ryuoo Ski Park visitors decreased to 245,000 (-9.6% YoY), in part because operations were shuttered for 14 days following March's 2011 earthquake. However, the acquisition of the Kawaba Ski Resort increased FY07/11 visitors to 517,000 from FY07/10’s 435,000 visitors. Visitor numbers were also positively affected by good snowfall, which allowed the last day of the ski season to be pushed out till early May from early April. Consequently, revenues were significantly higher. Moreover, increased operational efficiency (shared marketing of the three ski resorts, shared lift maintenance techniques, etc.) and variable costs being kept in check resulted in operating profit posting a significant increase.

For details on previous quarterly and annual results please refer to the Historical Financial Statements section.

Full Year (FY07/12) Outlook

The company's FY07/12 forecast called for a 14.5% YoY increase in sales to 11.0 billion yen and operating profit to rise 33.2% YoY to 2.0 billion yen.

In the Parking Lot Business, sales were forecast to grow 14.4% YoY to 9.1 billion yen, and operating profit was expected to increase 29.7% YoY to 1.8 billion yen. The majority of the increase in sales is slated to come from the domestic Parking Lot Business with the company forecast targeting a net increase of 4,700 operated/managed parking spaces. That net increase represents targeted growth of 51.0% YoY vs. the net increase of 3,113 spaces in FY07/11. According to the company, it will increase staff numbers in the Domestic Parking Lot Business (143 employees in FY07/10, 170 in FY07/11, and 200 in FY07/12) and further divide its geographic management areas. The goal is to improve the handling of regional operations, and to cultivate new business areas outside of the company’s existing focus on the Tokyo metropolitan area. In addition, existing property revenues are expected to bottom out and rebound as business recovers from the effects of the earthquake in FY07/11 and contribute to improved profitability.

In the Ski Resort Business, SR Inc. understands recovering visitor numbers vs. FY07/11 (during which the March 2011 earthquake resulted in temporarily suspended operations) will be a major factor in driving increased revenues. On top of a significant increase in revenues, high profit margins were forecast due to continued efforts to increase operational efficiency as well as an expected decrease in depreciation and amortization costs.

Operating profit was expected to grow 30.0% YoY to 1.9 billion yen. Non-operating losses of 130 million yen were forecast due to losses on investments in partnerships, etc. No notable extraordinary losses were expected, and net income was forecast to increase 30.1% YoY to 1.1 billion yen.

Future Outlook

The company has not disclosed a specific medium term earnings forecast. However, it stated OPM of 25% (vs. 15.6% FY07/11), and a RPM of 25% (vs. 15.0% FY07/11) as its medium terms goals.

The improvements in operating profit margin are expected to come from a lower SG&A to sales ratio driven by lower non-personnel overhead and higher employee productivity (bringing the number of managed facilities to 20-25 per employee).

The company plans to increase the equity ratio by selling investment securities and withdrawing from partnership investments (privately placed funds); having started redeeming 100-200 million yen per annum from FY07/09. The company expected to reach an equity ratio of 30% as early as FY07/10 and accomplished this objective.

As for operating profit, 3 billion yen appears to be a level that the company would like to achieve in the near future. Assuming the target operating profit margin of 25%, this would mean 12 billion yen of sales. The company has also said it wants to grow operating profit profit between 20 to 30% annually. SR Inc. notes the target appears realistic judging from the potential market size (driven by the regulatory requirements for all large buildings to have a certain number of parking spaces). However, SR Inc. believes that the key to achieving these goals is to ensure training and retaining of talented sales personnel.

In terms of monthly Leased Facility Operations, which accounted for over half of the overall parking business revenues, the SG&A to sales ratio declines as the number of managed properties increases. SR Inc. therefore believes that bringing the operating profit margin closer to the gross profit margin levels should not be difficult as long as NPD manages to grow the number of parking facilities it operates.

Two possibilities of longer-term business development include the further development of its Car Sharing business, and overseas expansion.

Expansion into car sharing business: SR Inc. thinks that the car sharing market is promising in the mid- to long-term due to declining rates of vehicle ownership by both individuals and corporations. The company’s car sharing business is relatively new and its contribution to earnings is still limited, but the segment could be more meaningful in the future. As of end-FY07/11 the unit had 77 vehicles, it was targeting 150 units by end-FY07/12, and by FY07/13 was aiming for 300 vehicles.

Overseas expansion:

As of end-FY07/11 the company had established overseas subsidiaries in Thailand and China, and as of September 2011 the company wanted its overseas Parking Business to contribute half of operating profits within roughly five years.

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Business

Business Description

In addition to the Parking Business and Parking consulting, the company has been operating ski resorts since 2006. Of the two businesses, the Parking Business contributes the bulk of earnings.

Main Business Divisions

Parking Business (82.8% of sales in FY07/12)

The company’s business is based on increasing the efficient use of parking lots. Its main target is downtown building parking garages built as “legally mandated parking lots” (see Market and Value Chain for definitions). The business is subdivided into Leased Facility Operations, Outsourced Management, Leasing, and Value Added Services.

Leased Facility Operations

This is the main business for NPD; around 60.0% of overall consolidated sales and 73.0% of parking-related sales (FY07/11). The company rents unused parking spaces in legally mandated parking lots in office buildings, shopping centers and hotels, and provides the space to outside users (subleasing). The parking lots are built for building tenants and customers, but in recent years, there has been a trend of more corporate tenants without business vehicles resulting in many unused parking spaces. The company manages such parking facilities, either renting them to long-term tenants (so-called monthly contracts) or providing hourly parking for the general public. It sets the optimal prices to maximize utilization based on each market profile while reducing risks and guaranteeing stable revenues for building owners (the company pays rental fees irrespective of parking utilization rates). At the same time, the company also offers reduced costs and improved convenience for users. Examples include lower prices compared to local competitors and value added services such as drop off services at some locations.

The company also offers monthly rentals to outside customers (i.e. customers other than the particular building tenants), with the majority of such customers located within a 300 meter radius of a parking garage. Depending on the garage location and condition, as well as preferences of building owners, the service may be a combination of long-term and hourly parking. Specifically, there are many cases where the parking customers use their cars during business hours, leaving their parking spaces open. The company can rent such open spaces on a daily or short time basis to other users. In an extreme case, the same parking space can be rented out three times: on a monthly basis, daily basis, and hourly basis (the company appropriately calls this renting style a “triple harvest”). The hourly parking business requires full-time onsite presence of the company’s employees.

Outsourced Management

The company started this business in pursuit of a business model less affected by the vagaries of the real estate market, capitalizing on the earlier established success of its manned parking management operations. In this model, the company operates hourly parking facilities at large office buildings, shopping centers, luxury hotels, and retail boutiques, acting as a fee collection and contract management agent. The company offers value added services such as valet services, a novel concept in Japan, and by doing so enhances the value not only of parking itself but also the facility where parking is located. The Outsourced Management business is a growth driver for the company, with its share of sales in the Parking Business rising from 7.8% in the FY07/06 to 22.2% in FY07/11 (18.3% of consolidated sales).

Others

This covers the business segments outside of Leased Facility Operations and Outsourced Management, which are Leasing; Value Added Services; and Car-Sharing

Leasing: Instead of renting unused lot space the company works to attract new customers on behalf of the owner. NPD also runs an internet-based parking introduction service.

Value Added Services: The company capitalizes on its location, user, and owner information as well as accumulated operational know-how to offer such services as real estate valuation, parking garage maintenance, and other related services. These services range from simple parking property due diligence and valuation to comprehensive support of parking garage closures, including paperwork and introduction of new parking locations to the tenants. NPD also offers safety advice and parking garage modernization consulting, in the latter case providing comprehensive solutions based on clearly defined revenue targets and optimized for specific locations.

Car-Sharing: In September 2008, the company began a car sharing program in the Shibuya/Aoyama area under the “Ecoloca” name. There are a number of advantages NPD enjoys thanks to its existing core business. The company has parking spaces to keep shared vehicles and the expertise to acquire new lots. It also tends to manage parking garages in central metropolitan locations where parking rents are high and relatively few people can afford to own a car. The car sharing can serve to fill the latent demand in such areas.As of July 2011, there were 77 car sharing vehicles and 1,364 members, and the company stated its aim for 1,000 vehicles and 20,000 users over the medium to long term, increasing revenues to around 1 billion yen per annum.

Ski Resort Business (17.2% of sales in FY07/11)

Based on its proclaimed corporate philosophy of “pursuing businesses where everyone involved is happy,” the company started looking at situations where increasing utilization rates would create a win-win situation for everyone (similar to its Parking Business). Management decided that managing ski resorts fit such a profile and entered the ski resort business in December 2005, establishing the Nippon Ski Resort Development subsidiary.

As of December 2011, Nippon Ski Resort Development Co., a wholly owned subsidiary, fully owned both the Kashimayari Ski Resort (operates the Kashimayari Sports Village) and Kitashiga Ryuoo Co., Ltd. (operates the Ryuoo Ski Park) and 99% of the Kawaba Resort Company (operates the Kawaba Ski Resort).

The three ski resorts operated by the company (as of December 2011) included:

• Kashimayari Sports Village (Nagano): NPD began operating the resort in 2006. 142,000 season visitors in FY07/11. Oriented towards athletes.
• Ryuoo Ski Park (Nagano): NPD began operating the resort in November 2009 following the acquisition of 100% of the shares in Ryuuo Kanko Co., Ltd. from a corporate restructuring fund sponsored by Nomura Holdings. 245,000 season visitors in FY07/11. It targets university students, young skiers, snowboarders, and beginners.
• Kawaba Ski Resort (Gunma): NPD began operating the resort in 2010 after it acquired shares of Kawaba Resort Company (which operates the Kawaba Ski Resort). The resort attracted 124,000 season visitors in FY07/11. Offers convenient access within a day trip from Tokyo and is located at one of the higher elevations in the area.

The company’s resorts are characterized by their high altitude, with the ability to draw customers, and that they all have artificial snow making equipment installed. As for potential acquisitions, going forwards, the company has said its selection criteria will focus on regional diversification for sites, the types of skiers that each resort attracts and an IRR above 30%.

As SR Inc. understands it, with the ski resort business difficult to monetize the number of candidates to sell its properties to are low and this impacts the ease with which they can exit markets and will affect future acquisition of properties. The company is attempting to tighten their investment standards in order to avoid such risk.

Operating profit in the Ski Resort Business shifted into positive territory in FY07/10. The company has been working to increase revenues by running campaigns to boost visitor numbers (increasing PR and off-season marketing). It has also implemented cost controls by focusing restaurant menus on higher margin offerings, reviewing land lease fees and squeezing synergies out of the three ski resorts, such as joint marketing campaigns, joint purchasing and sharing of technical maintenance capabilities on lifts etc.

Main Facilities

Business locations have increased with growth, and as of December 2011, in addition to Osaka, the company had branch offices in Tokyo, Sapporo, Sendai, Yokohama, Nagoya, Kyoto, Kobe, Hiroshima and Fukuoka. Because the company’s business focuses on central urban locations with numerous legally required parking garages, the majority of the managed facilities are concentrated in the Kanto and Kinki regions.The Kanto region made up 49.8% of sales in the parking lot business as of end-FY07/11, while Kinki contributed 27.6%.

Business Model

The main Parking Business is classified into Leased Facility Operations and Outsourced Management. Income for the Leased Facility Operations business is parking fees from users, and the costs are mostly fixed rental fees paid to lot owners. While there is a risk if parking fees received are less than the rent paid, very few staff are required, which makes the model very profitable once utilization increases.

The Outsourced Management business on the other hand requires more people onsite. In this model, generally speaking profitability does not change with utilization improvements, but there is no risk of losing money. The parking lot business as a whole is an asset-light one - the company does not carry parking facilities as assets while generating revenues from subleasing and consulting fees.

Parking Business

(Leased Facility Operations)

For Leased Facility Operations that offer monthly parking, the revenue drivers are the parking lot fees (unit price) and the number of parking spaces that are rented. The number of rented parking spaces is a function of the total number of parking spaces available and the contract ratio. The costs are determined by the rent paid to the owner per parking space and the total number of spaces rented by NPD. Therefore, in determining the profitability one must look at the contract ratio and the spread between the parking fee and the sublease fee. Securing a certain level of utilization and fee spreads is the key. This requires a large amount of information as well as an ability to offer a solution that would be attractive to both the owner and the operator. The labor expenses in SG&A do not increase proportionally to the number of parking lots (although there is a proportionate temporary cost increase related to acquisition of parking tenants). Therefore, the business model exhibits economies of scale where the SGA-to-sales ratio drops as the scale of operations increases.

For Leased Facility Operations that combine hourly parking, the drivers of sales volumes are the same as for monthly parking: the parking lot fee (unit price) and the number of occupied parking spaces. The fees and the number of spaces used fluctuate more vs. monthly parking. The base cost is made up of the sublease fee times the number of rented spaces and personnel costs (manned operation is standard).

Considering the dependency on relatively small buildings and a relatively high initial fixed cost, the company needs to secure a large number of monthly parking spaces to achieve stable profitability. Looking at this issue in a different light, it becomes obvious that this characteristic is also a barrier to entry for new competitors – they would need to aggregate a substantial number of properties under management to achieve profitability. Illustrating this fact, NPD lost money in FY07/00 and FY07/01 when it began its Leased Facility Operations business.

When the company acquires parking lots, the company and lot owner enter into a rental contract which makes the company the tenant. The initial contract period for the majority of these contracts is two years, with an automatic one-year renewal at the end of the first period. The contract is cancellable during the contract period if written notification is provided three months in advance and both parties agree to end the contract. Therefore, while it is possible for the company to make some amount of preparations from receiving the cancellation notice, the possibility exists that the contract can be cancelled based on the wishes of the lot owner and income from the property disappears in a relatively short period of time.

There is a time gap between identifying potential customers and those customers actually signing the contract and starting to pay, and the company uses this time to conduct a thorough survey of the surrounding area. To avoid a risk of losses in the first months of operation, contracts with building owners include free rent and discount clauses for the first few months (usually 2-4 months) of the contract period.

(Outsourced Management)

In contrast to the Leased Facility Operations business, no rental contract is concluded with the parking lot owner. Revenues in the Outsourced Management business are not related to parking fees received by the lot owner contract partner. NPD receives a fixed monthly payment from the contract partner in proportion to the scale of operations (there are some contracts where a fixed amount of the owner’s parking fees are also received).

Ski Resort Management

Earnings in this segment are driven by the revenues and costs related to the management of ski resort properties. The company has been working to achieve stable profitability – running campaigns to boost visitor numbers, keeping facilities open during summers to generate additional sales, increasing average ticket revenue by selling ski lift tickets combined with food and beverages, revamping restaurant menus, reviewing land lease fees, and thoroughly controlling costs (e.g. by optimizing use of electricity).

Cost Structure

Costs of sales (COGS; mainly rent to parking lot owners) and personnel costs (SG&A) are the largest cost components. While the rent might be called a partially variable cost as it fluctuates depending on the number of parking spaces rented from the owner, the business is mostly a fixed-cost high incremental margin business –rent has to be paid regardless of the utilization rates.

Profitability Ratios

The company’s gross profit margin during FY07/02-FY07/06 averaged 46.5% and operating profit margin averaged 18.3%. However, in FY07/07 several facilities with low profitability and increased personnel expenses pushed the gross profit margin to 37.3% and operating profit margin to 13.5%. Gross and operating profit margins improved in FY07/11 (to 42.2% and 15.6%, respectively); a recovery, but still lower than earlier levels.

Return on assets (ROA) fell to single digits in FY07/07 despite an increase in assets, caused by a drop in total asset turnover and net profit margin. However, because the company financed asset growth through debt, returns on equity (ROE) did not drop as much as returns on total assets (ROA). ROA, however, returned to double digit levels in FY07/10 and FY07/11.

Return on assets (ROA) fell to single digits in FY07/07 despite an increase in assets, caused by a drop in total asset turnover and net profit margin. However, because the company financed asset growth through debt, returns on equity (ROE) did not drop as much as returns on total assets (ROA).

Note: ROA (net profits for the year/total assets) = total asset turnover (sales/total assets) X net profit margin (net income/sales)

ROE (net profits for the year/equity capital) = ROA (net profit for the year/total assets) X financial leverage (total assets/equity capital)

Compared to its peers, NPD’s FY07/11 operating profit margin of 15.6% and ROE of 43.8% was more profitable. SR Inc. thinks that the reasons for this are below:

• Focusing on a different market

Competitors Park 24 and Paraca operate mainly unmanned coin parking lots. NPD’s focus on legally mandated parking lots means that its target market is the lot owners, which is a slightly different market when compared to conventional models. Furthermore, the company has no listed competitors, so the company can use the prestige of its TSE listing to win large clients. Additionally, the company operates parking facilities located in urban areas.

• Monthly Rentals

It might seem that lower average car units would lead to losses of economies of scale, but because NPD uses monthly rental contracts, its cost structure differs from competitors. Using monthly rental contracts means that labor costs are fixed (see Business Model), making the SG&A-to-sales ratio more predictable and OPM is higher.

• Higher Leverage

NPD has a higher degree of financial leverage than its peers (see table above), which increases net profit per unit of sales.

Strengths, Weaknesses

Strengths:

• Accumulated operational information and know-how. SR Inc. believes that the company’s proprietary know-how (exemplified by the “triple harvest” model etc.) based on several years of experience in managing and operating legally mandated parking garages, its wealth of market information, and its ability to offer optimal management solutions, gives parking lot owners a sense of comfort. The source of this strength appears to be the specialized sales teams which systematically perform marketing activities based on unique characteristics of each market, not only gathering information about the parking facilities but also accumulating and renewing intelligence on users (e.g. car ownership).
• Non-asset business is the source of earnings. The business model does not require capital investment and the company owns no assets, so the business is not directly affected by changes in land prices (it is indirectly affected however by changes in the rent by the parking lot owners and overall parking supply in the market).
• Room for further development of legally mandated parking lots: See “Market and Value Chain”.

Weaknesses:

• High level of dependence on urban parking lot markets and Leased Facility Operations. Leased Facility Operations make up a large percentage of revenues, so company-wide earnings rely almost entirely on rent vs. parking fee spreads and utilization rates of these facilities.
• Low level of earnings contribution from the Ski Resort Management business and lack of synergies between this business and the core parking management business. While the Ski Resort Management business became profitable in FY07/10, no synergies are expected between this and the parking lot business. Looking at the low level of ski business contribution to earnings, SR Inc. is somewhat concerned about deteriorating asset efficiency and a dilution of management attention.
• Low staff retention. SR Inc. wonders if the average duration of employment of NPD staff (4.1 years as of FY07/11) might be too short for salespeople to build their skills and accumulate professional know-how. To grow its business the company needs to increase the number of experienced salespeople capable of independently offering solutions that match customer needs.

Group Companies

• Nippon Ski Resort Development Co.: established in December 2005 to conduct ski resort operations and consulting. The company is a 100% subsidiary of NPD. It fully owns both the Kashimayari Ski Resort (operates the Kashimayari Sports Village) and Kitashiga Ryuoo Co., Ltd. (operates the Ryuoo Ski Park), and owns 99% of the Kawaba Resort Company (operates the Kawaba Ski Resort).

• NPD GLOBAL CO., LTD.: established in September 2010 (NPD owns a 49% stake) to provide parking lot consulting solutions in Asia. It consists of a Thailand-based affiliate NIPPON PARKING DEVELOPMENT (THAILAND) CO., LTD.

• Bang Zhu (Shanghai) Parking Management Co.: a 100% owned Chinese subsidiary in Shanghai in July 2011 to provide car park management consulting.

• Japan Auto Service Inc.: A wholly owned subsidiary, established in December 2011 that operates NPD’s car sharing business.

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Market & Value Chain

Market Overview

Domestic

There were 78.66 million vehicles in Japan as of March 2011 and every vehicle must have its own parking space, as mandated by two laws, the Parking Lot Act and the Garage Law.

Parking lots can be broadly categorized into “legally mandated parking,” “parking garages,” and “coin parking lots.” The company mainly targets legally mandated parking in its business development. Legally mandated parking refers to parking facilities required for buildings that have a certain amount of floor space. Many legally mandated parking facilities are located in urban buildings, the majority of which are multistory mechanical parking facilities that store cars to maximize the use of building space. At the end of March 2009 there were around 60,000 legally mandated facilities throughout Japan, with more than 50,000 in the metropolitan areas of central Tokyo, Osaka, and Nagoya. The company operates 622 parking nationwide (as of FY07/10; Leased Facility Operations only), which suggests that the potential for growth is large considering the total market.

The company also focuses on the development of the parking garage market. Parking garages are multi-level parking facilities connected to department stores or large-scale shopping centers. Drivers drive up the slope themselves and park in open spaces. Advantages include the ability to fit more vehicles than flat lots in the same lot area, and there are no restrictions on the size or weight of vehicles unlike mechanized lots, and low maintenance costs.

Coin parking involves placing a gate or machine on an empty lot and parking cars in spaces on the lot; the majority of coin parking lots are unmanned. The company doesn’t target the coin parking market because, according to the company, open lots are often only used temporarily for parking and get redeveloped as buildings.

Overseas

The company established Chinese and Thai subsidiaries in FY07/11 in a bid to expand its parking lot business overseas.

Thailand:

• Legally mandated parking lots (Bangkok): buildings with floor space of 300 square meters or more are required to have one parking space every 60 square meters (buildings in Tokyo over 1,500 square meters must have one space for every 200 square meters)
• Number of passenger vehicles (Thailand): 27.5 million (as of end-2010)
• Parking fees (Bangkok): approximately 6,000 yen a month (as of September 2011)

China

• Legally mandated parking lots (Shanghai): one space per 200 square meter of floor space
• Number of parking lots (Shanghai): 19,183
• Number of passenger vehicles (China): 85 million (as of October 2010)
• Parking fees (Shanghai): from approximately 12,000 yen to 18,000 yen a month, daily rates capped at maximum of 1,000 yen (as of September 2011)

Suppliers

Leased Facility Operations, the main driver of the Parking Business, is based on renting parking lots from owners. There are numerous types of owners, including companies, real estate firms, financial institutions, funds, and J-REITs. The supply environment for the company has been good given the weak economy in recent years. When the economy is strong, conditions tend to deteriorate.

This means that theoretically, it’s possible that fewer unutilized parking spaces would be available for NPD to manage if land prices recovered or the economy showed signs of sustainable improvement. Generally speaking, the company does not own real estate, so it does not benefit from increased land prices. Instead, higher land prices can lead to an increase in parking lot rental fees and therefore decrease gross profits. Additionally, if the unused area of parking lots in office buildings decreased, the number of potential clients (car owners) and opportunities to add new parking spaces could also shrink.

Customers

In the Leased Facility Operations business, income is derived from users of parking spaces, while in Outsourced Management, fees from lot owners are the source of income. However, the final customers in both situations are people and companies using the parking spaces. Corporate customers make up around 90% of the total clientele for monthly rental properties in the Leased Facility Operations business.

Barriers to Entry

The parking lot business requires land and parking facilities, so barriers to entry are not necessarily high. There is a range of market participants, from large companies with nationwide presence to individuals operating in local areas. However, to achieve profitability and gain the critical mass necessary for sustainable growth, a certain level of expertise and operational know-how are required to identify attractive locations as well as to acquire the parking spaces at optimal prices and then maintain high utilization rates.

Competition

Following the introduction of the revised Road Traffic Act in June 2006, several new companies entered the market and competition intensified. However, demand then dropped; profitability fell, and many new entrants were forced to exit. Additionally, for legally mandated lots that the company targets, there are very few companies that operate multiple lots; instead, individual buildings oversee operations and management.

Considering other listed companies, Park 24 (TSE 4666), a major industry player, operates unmanned coin parking in small lots and shopping center lots. While it may be seen as NPD’s competitor when it comes to parking lots inside commercial facilities, NPD does not target coin parking, Park 24’s core business, so the two companies’ interests do not seem to overlap much. The same can be said of Trust Park (Fukuoka Stock Exchange 3235), Paraca (TSE Mothers 4809) and Nihon Parking Corporation (Jasdaq 8997), which also target mainly unmanned coin parking. On the other hand, Parking Management Organization Ltd. (TSE Mothers 3251) is active mainly in the operation of lots located in large facilities in metropolitan areas, and is to some extent a direct competitor.

Substitutes

Coin parking not targeted by the company can be a substitute in many cases. More broadly speaking, the shift from cars to public transportation (trains, buses, bicycles, etc.) reduces demand for the services provided by the company. In the short term, this phenomenon may occur due to the spike in gasoline prices. Reduced automobile use from the spike in gasoline prices may easily lead to a reduction in the rate of operation of hourly lots, and the company is working to limit these effects by maintaining monthly rental usage levels or increasing the share of the monthly rental business.

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Strategy

The company strategy is to continue growing its existing business. It has also started working on developing the Car Sharing business as a new solution for optimal use of parking space. Furthermore, the company has been looking for opportunities to expand its Parking Business overseas.

In terms of growing the existing business, the company targets small and medium size building owners with proposals to sublease their parking space, or introduce a mix of subleasing and hourly parking. For large building owners, NPD is working to come up with high value added management ideas while at the same time working with corporations and individuals to attract them as car sharing customers. The overseas expansion is a much longer term theme but the company has already set up a global consulting division to take the expertise gained in Japan to foreign markets.

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Historical Financial Statements

Earnings Results Discussion for the Year Preceding Current Fiscal Year (For Reference Purposes)

Q3 FY07/11 Results

On May 31, 2011, the company released Q3 FY07/11 results (see the table above).

Cumulative 3Q FY07/11 sales were 7.5 billion yen (+12.0% YoY), operating profit was 1.3 billion yen (+9.5% YoY), recurring profit was 1.3 billion yen (+39.0% YoY), and net income was 793 million yen (+7.7% YoY).

Parking Lot Business

Cumulative sales increased 5.4% YoY to 5.9 billion yen and operating profit decreased 3.0% YoY to 990 million yen. The company commented that since end-FY07/10 there had been a net increase of 94 properties: 120 new parking lots acquired, 26 closed.

Compared to the company's projected full year net increase of around 80 properties (new contracts: 100 to 120; cancelled contracts: 20 to 40), the actual pace of net expansion exceeded forecasts, mainly due to new contract acquisitions. The company commented that because office vacancy rates remain high, building owners are strongly incentivized to generate earnings from parking and thus demand from building owners who also own parking lots was particularly strong. On the other hand, improvements in the profitability of existing properties in the Tokyo and Osaka areas seemed to be lagging.

Ski Resort Business

Cumulative sales increased 44.5% YoY to 1.6 billion yen and operating profit increased 71.6% YoY to 353 million yen. Post-Tohoku earthquake, visitor numbers were subdued partly owing to a temporary suspension of operations. However, the acquisition of the Kawaba Ski Resort increased FY07/11 visitors to 510,000 from FY07/10’s 431,000 visitors.

FY07/11 Forecast Revision

The company also downwardly revised parts of its full-year FY07/11 forecast as follows:

• Sales: 9.6 billion yen (vs. previous forecast of 10.2 billion yen)
• Operating profit: 1.5 billion yen (vs. previous forecast of 1.8 billion yen)
• Recurring profit: 1.4 billion yen (unchanged)
• Net income: 822 million yen (unchanged)

The company cited the following reasons behind its downwardly revised forecasts, it expected:

• Lower-than-projected sales from both its parking lot and ski resort businesses due to the Tohoku earthquake

• Increased costs related to its parking business due to the construction of an employee dormitory for new graduates and start-up related costs for its new “MARUNOUCHI Bike & Run” service targeting joggers training around Tokyo’s Imperial Palace and bicycle commuters.

• Lower than forecast revenues at some of its existing car park properties in the Osaka and Tokyo areas were expected to further weigh on the Parking Lot Business’ top-line

Of the above reasons for the downward revision the first two are temporary factors. SR Inc. believes the real challenge going forward will be in improving profitability at existing properties in the Osaka and Tokyo areas.

By segment, sales from the Ski Resort Business were expected to fall short of initial projections although operating profit was expected to hit the initial forecast mainly due to the extension of ski resort operations into spring. On the other hand, both sales and operating profit at the Parking Lot Business were expected to miss their initial targets.

No revisions were made to recurring profit and net income forecasts, however. This was due mainly to smaller-than-estimated losses from privately placed funds related to investments in sleeping partnerships, and to profits from sales of investment securities.

Thailand

The company’s Thai subsidiary (Siam Nippon Parking Solutions Co.) won a contract from Chulalongkorn University to operate from July 1, 2011, a parking lot in Siam Square.A prestigious, large-scale commercial development located in Bangkok's central business and commercial district Siam Square is a commercial facility started by Chulalongkorn University in 1965. The parking lot has a capacity of 1,917 vehicles and is used by 15,000 vehicles daily.

China

The company announced plans to establish a Chinese subsidiary in Shanghai in July 2011, tentatively named “Bang Zhu (Shanghai) Parking Management Co.”. The company will target properties that can accommodate around 100 vehicles, and aims to be operating and managing 50 building-based parking lots within the next three years. Parking fees are to be the equivalent of 12,000 to 18,000 yen per month or 130 yen per hour, which seems higher than those in Thailand.

Q2 (1H) FY07/11 Results

On February 28, 2011, the company released FY07/11 Q2 (1H) results (see the table above).

In 1H FY07/11, sales were 4.7 billion yen (+12.9%, YoY), operating profit was 703 million yen (+5.6%, YoY), recurring profit was 648 million yen (+10.3%, YoY), and net income was 411 million yen (+3.0%, YoY).

Sales and operating profit reached record semiannual highs, mainly due to the combination of a net increase of parking facilities and the October 2010 acquisition of the Kawaba Resort Company (operator of the Kawaba Ski Resort in Gunma). Recurring profit growth was higher than operating profit growth due to the decreased losses from investments in Japanese LLCs (48 million yen vs. 98 million yen of 1H FY07/10).

Compared to forecasts, sales were 4.5% and operating profit 9.1% lower than anticipated. The company explained that this was due to factors including lower earnings from existing properties in the Parking Lot Business (monthly Leased Facility Operations in Tokyo and monthly and hourly Leased Facility Operations in Osaka). It also commented that it believed it was still possible to achieve full year forecasts. The company provided the following reasons for its optimism: the number of new contracts in the Parking Lot business could exceed forecasts and add to profits in 2H FY07/11, the Car Sharing Business has grown to the extent that it can make a minor impact on Leased Facility Operations, and the Ski Resort Business is performing better than expected.

Parking Lot Business

Sales increased 5.4% YoY to 3.9 billion yen, gross profit increased 3.3% YoY to 1.4 billion yen and operating profit increased 1.8% YoY to 667 million yen. The company commented that since the end of FY07/10, the net increase in properties was 58 (74 new parking lots were acquired and 16 were closed). This represents growth exceeding the pace anticipated in the forecast (a net increase of 80 based on adding 100 -120 new and closing 20-40). The main reason for the quickened pace was the acquisition of new properties. The company explained that this resulted from high office vacancy rates, something which increases the need for clients with parking facilities to earn profits from these facilities. Further, within the above-mentioned 58 net increase in properties, 7 were within the Outsourced Management business; so not only Leased Facilities but also the Outsourced Management business were performing strongly. This may have something to do with a recent employer change for security guards (who would often also manage parking areas). As builders have been increasing the quality of buildings, more parking facilities management specialists are managing parking areas, instead of the traditional choice between maintenance and security companies.

Conversely, conditions were challenging for existing properties in Tokyo and Osaka, which reduced gross profit in the Parking Lot Business by about 77 million yen (about 5.5%). The company’s initiatives to improve the profitability of its existing properties included adding staff and expanding sales channels. The company plans to make use of additional staff from its increased employment of new graduates in recent years (14 in April 2010, 22 planned in April 2011). It plans to send them to existing properties to capture information about customer usage and to ensure quick “refill” of empty spaces. In order to expand its sales channels, it is adding to its “carpet bombing sales” business model with a plan to strengthen customer acquisition via the Internet (using Google and other search engines).

Ski Resort Business

Sales increased 70.4% YoY to 822 million yen and operating profit increased 239.3% YoY to 36 million yen. Sales were about 6.3% below forecasts, but operating profit was 10 million yen higher than anticipated. Sales were less than expected because December’s snow came later than the company anticipated. However, it was able to exceed its forecast for operating profit by controlling costs and SG&A expenses.

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Overseas Business Development

The company began Leased Facility Operations at the Ramaland Building (in the center of Bangkok; 553 parking spaces) in January 2011. The company said that it entered a bid in March 2011 for a property that could become its second building (this building will have over 500 spaces). The company hopes to grow its Leased Facility Operations Business to 50 properties in Thailand over the next 3 years. The company thinks that each property could contribute about 12 million yen of gross profit annually, so 50 properties would mean increasing gross profit by about 600 million yen. In yen terms, parking charges in Bangkok are about 6,000 yen per month. However, the city’s regulations are more strict than Tokyo; buildings with floor space of 300 square meters or more are required to have one parking space every 60 square meters (buildings in Tokyo over 1,500 square meters must have one space for every 200 square meters). Additionally, considering the traffic congestion problems in Bangkok and that demand for parking outstrips supply, the company thinks that parking charges will increase in the future.

A summary of the company’s other comments from its results meeting on March 1, 2011, are below:

• Interest bearing debt was forecasted to be 2.5 billion yen by the end FY07/11 (1.3 billion yen for the Parking Lot Business, 1.2 billion yen for the Ski Resort business).
• The company hopes to repay 200 million yen a year over the next three years reduce its interest bearing debt by 600 million yen for the Ski Resort business.
• The company had 683 million yen of privately placed funds (investments in partnerships) on the balance sheet in FY07/10, but by the end of FY07/11 the company plans to make impairment reserves 300 million yen, with a further 300 million yen by the end of FY07/12.
• The company had 1.3 billion yen of securities on the balance sheet in FY07/10, but the company plans to reduce this amount.
• As of FY07/11, depreciation and amortization were about 200 million yen per year in the Ski Resort Business, while EBITDA was approximately 300 million yen. The company expects depreciation and amortization to trend downwards after FY07/12, so the FY07/11 operating profit margin will likely meet the forecast. Additionally, the company has some excellent ski resort prospects and, if the pace of resort sales continues, it thinks that it will be able to buy properties at the same current annual pace.

Q1 FY07/11 Results

On November 30, 2010, the company released FY07/11 Q1 results (see the table above). As a percentage of the 1H company estimates, the results were as follows:

• Sales: 39.3% (vs. 1H estimate of 4.9 billion yen)
• Operating profit: 29.1% (vs. 1H estimate of 773 million yen)
• Recurring profit: 24.9% (vs. 1H estimate of 707 million yen)
• Net income: 16.3% (vs. 1H estimate of 398 million yen)

Sales reached a quarterly high for the company, mainly due to the combination of a net increase of parking facilities and starting summer operations at the Kashimayari Ski Resort. Operating profit decreased 24.9% YoY due to higher labor costs in the Parking Lot business and an operating loss in the Ski Resort Business. Net income increased 13.7% YoY; securities valuation losses were smaller compared to last year (18 million vs. 145 million yen last year).

The company commented that increased labor expenses in the Parking Lot business were the result of prior investments aimed at strengthening the domestic and foreign businesses. The operating loss in the Ski Resort Business was the result of 2 factors: it was off-season for skiing, and the consolidation of Kitashiga Ryuoo Co., Ltd. (which operates Ryuoo Ski Park) in November 2009 made the operating loss larger than FY07/10 Q1.

Parking Lot Business

The company expected a slight increase YoY in operating profit but results were just below estimates, down 0.7% YoY. The company explained that this was due to lower earnings from existing properties (monthly Leased Facility Operations in Tokyo and monthly and hourly Leased Facility Operations in Osaka) which were somewhat offset by a moderate rise in gross profit margin (+2.3% YoY).

Lower earnings from existing properties in Tokyo were a result of declines in contract rates. While contract rates in the Kanto area (Tokyo and Yokohama) were 94.1% in Q1 FY07/10, they fell to 92.2% for Q1 FY07/11. The company blamed insufficient efforts of its staff to capture information about customer usage and to ensure quick “refill” of the vacated parking spaces. It said that to it take corrective steps such as adding more staff to existing properties, better collection and utilization of information (e.g. analyzing why clients terminate contracts, etc.).

The company mentioned that tougher competition in Osaka drove average prices lower for monthly and hourly Leased Facility Operations, which resulted in lower than expected earnings. To counter the effects of increased competition, the company said that it would deemphasize the monthly and hourly Leased Facility Operations and focus more on the Outsourced Management Business.

The company commented that since the end of FY07/10, the net increase in properties was 24 (35 new parking lots were acquired and 11 were closed) adding that the new acquisitions were strong.

Ski Resort Business

The purchase of Kitashiga Ryuoo Co., Ltd. in November 2009 and sales and marketing activities during the summer combined to increase segment revenues. The company is trying to add services to attract customers throughout the year, with the hopes of minimizing off-season operating losses for ski resorts. Specifically, it began full-scale summer operations at Kashimayari Sports Village, positioning the facility as a center for outdoor sports. Activities offered during the summer included bicycle events, a sports training camp for university students and triathletes, and nature tours for primary school students. The company also conducted sales and marketing activities for a mountain-top “Sanyasouen” (wildflower botanical garden) at Ryuoo Ski Park. Given that these initiatives were very recent they could not help the Q1 FY07/11 results – the company recorded an operating loss of 114 million yen for the segment in that quarter.

Topics

Overseas Business Development

The company set up two Thailand-based affiliates (NPD GLOBAL CO., LTD. and NIPPON PARKING DEVELOPMENT (THAILAND) CO., LTD.) on September 30, 2010. The company said it would hold 49% share of NPD GLOBAL and NPD GLOBAL would hold 99% of NIPPON PARKING DEVELOPMENT (THAILAND).

The company aims to grow its Leased Facility Operations business to 50 properties in Thailand over the next 3 years. The company concluded an advisory agreement with Jones Lang LaSalle (Thailand) and plans to build local monthly and hourly Leased Facility Operations using introductions to Jones Lang LaSalle’s existing clients.

Kawaba Ski Resort

Nippon Ski Resort Development Co., a wholly owned subsidiary, acquired 99% of Kawaba Resort Company’s stock on October 20, 2010. The Kawaba Resort Company operates the Kawaba Ski Resort, located in Gunma.

SR understands the acquisition price was about 329 million yen, based on the Q1 FY07/11 company filings(“Expenses for Acquisition of Subsidiaries” on the Cash Flow Statement).

When announcing the acquisition, the company revised its full year forecast upward (increasing its sales forecast by 700 million yen and its operating profit forecast by 35 million yen) by nearly the same amount as Kawaba Resort Company’s forecasted results. The company expects a higher average unit price from Kawaba Ski Resort than its two other ski resorts (Kashimayari Sports Village and Ryuoo Ski Park) because of the resort’s prime location - a day trip from Tokyo. Consequently, despite having only 140,000 visitors (less than the other two ski resorts), the company expects sales of about 700 million yen from Kawaba. The company set an investment hurdle of 30% cash on cash return, taking into account cost of repairs.

Full Year FY07/10 Results

The company announced FY07/10 full year results on September 3, 2010. Results were as follows:

• Sales: 8.7 billion yen (+10.1 YoY%, vs. the full year forecast of 9.0 billion yen)
• Operating profit: 1.5 billion yen (+10.1% YoY, vs. the full year forecast of 1.4 billion yen)
• Recurring profit: 1.1 billion yen (-10.1% YoY, vs. the full year forecast of 1.4 billion yen)
• Net income: 765 million yen (+24.7% YoY, vs. the full year forecast of 670 million yen)

• Parking Business:

Sales were 7.5 billion yen (+2.4% YoY). Sales from Leased Facility Operations rose 0.6% YoY to 5.6 billion yen. Sales from the Outsourced Management business were up 12.1% YoY to 1.5 billion yen. Sales increased due to the net increase of 44 leased facilities (875 parking spaces), and the net increase of 7 pay-buy-the-hour facilities (1,275 parking spaces). OP rose 12.5% to 1.4 billion yen due to the following factors: 1) higher sales due to more parking lots, 2) higher GPM from improved contract ratios in monthly leased facilities, 3) lower SG&A-to-sales ratio due to cost reduction.

• Ski Resort Business:

Revenue increased 116.2% as a result of strong marketing activity at Kashimayari Ski Resort and the acquisition of Ryuoo Ski Park. Operating profit increased to 56 million yen vs. an operating loss of 9 million yen the same period last year.

Recurring profit decreased 4.4% YoY due to the loss of 379 million yen related to an investment in real estate.

Net income rose 24.7% to 765 million yen. A 145 million yen securities valuation loss (shares of Anabuki Construction Inc.) was offset by a gain of 227 million yen from a one-time write-off of negative goodwill from the Ryuoo Kanko acquisition.

Q4 operating profit decreased by 28.3% YoY. Q4 is off-season for the Ski Resort business, which usually means losses. The company began operating the Ryuoo Ski Park in FY07/10, so the park’s results increased total losses in Q4, which impacted the YoY comparison.

Marketable securities decreased 318 million yen to 1.3 billion yen (vs. 1.6 billion yen as of July 31, 2009), investments in partnerships decreased 353 million yen to 683 million yen (vs. 1.0 billion yen as of July 31, 2009). The decrease in the marketable securities was due to losses on Anabuki Construction Inc. stock. Tangible fixed assets increased 356 million yen to 1.3 billion yen as of July 31, 2010.

The company did not achieve its sales and recurring profit forecasts for the period. The company commented that sales were beneath expectations due to the following factors:

1. The net increase of parking facilities was 51 vs. the company’s estimate of 75.
2. Lower sales in monthly and hourly rentals.

The company typically targets facilities in Tokyo, but the sales force focused its attention on existing properties and was unable to handle sourcing new properties as well. The contract ratio for the Tokyo area recovered during the year to approximately 95%, almost full operation. So at the beginning of Q4, the sales force was able to focus on sourcing new properties which meant that the net increase in properties was high for the quarter, at 25. The company’s contract ratio in the Tokyo started to decline in January 2009, due to staff shortages related to employee turnover. SR Inc. thinks that HR management can probably be highlighted as an ongoing challenge for the company.

Sales for monthly and hourly rentals decreased 172 million yen, mainly due to lower hourly parking fees in the Osaka area. The company made an effort to minimize the impact on gross profit by reviewing labor expenses and facility rental fees. The result of these efforts was a gross profit decline of only 33 million yen for existing monthly and hourly rental properties.

Recurring profit fell short of the company forecast due to losses from off balance sheet investments in Japanese LLCs.

To sum up FY07/10, sales did not meet the company forecast, but SR Inc. thinks that there were some bright spots in addressing outstanding issues. Such issues include improving the contract ratio for existing properties (particularly in the Tokyo area) and achieving profitability in the Ski Resort Business segment.

Q3 FY07/10 Results

The company released Q3 FY07/10 results on May 28, 2010 (see the table above). As a percentage of the full year company forecast, the cumulative Q3 numbers were as follows:

• Sales: 74.2% (6.7 billion yen vs. full year forecast of 9.0 billion yen)
• Operating profit: 85.8% (1.2 billion yen vs. full year forecast of 1.4 billion yen)
• Recurring profit: 69.5% (941 million yen vs. full year forecast of 1.4 billion yen)
• Net income: 109.9% (736 million yen vs. full year forecast of 670 million yen)

Sales for the period were 6.7 billion yen (+12.8% YoY); operating profit was 1.2 billion yen (+35.8% YoY). Results by segment were as follows.

Parking Business:

Cumulative sales were 5.6 billion yen (+2.8% YoY). Sales from Leased Facility Operations rose 0.8% YoY to 4.2 billion yen. While the number off such facilities rose to 19 (a net increase of 598 spaces YoY), the contract ratio (the number of subleased parking spaces/ the number spaces in the company’s inventory) for monthly Leased Facility Operations improved 3.7% from 91.2% to 94.9% YoY. Sales from the Outsourced Management business were up 13.0% YoY to 1.1 billion yen. Sales increased due to the acquisition of 6 parking facilities (1,083 parking spaces). OP rose 14.5% to 1.0 billion yen due to the following factors: 1) higher sales due to more parking lots, 2) higher GPM from improved contract ratios in monthly Leased Facility Operations business 3) lower SG&A-to-sales ratio due to cost reduction.

Ski Resort Business:

Revenue increased 117.8% as a result of strong marketing activity at Kashimayari Ski Resort and the acquisition of Ryuoo Ski Park. Operating profit increased to 205 million yen vs. 12 million yen the same period last year.

Recurring profit (Q3 cumulative) increased 15.1% YoY despite the loss of 260 million yen related to an investment in real estate. The YoY comparison of RP was helped by a loss in investment securities (102 million yen) in FY07/09.

Net income (Q3 cumulative) rose 102.8% to 736 million yen. A 145 million yen securities valuation loss (shares of Anabuki Construction Inc.) was offset by a gain of 224 million yen from a one-time write-off of negative goodwill from the Ryuoo Kanko acquisition.

There was no change to either the full year or dividend forecast. As a percentage of the operating profit, the cumulative Q3 numbers are 85.5% of the full year forecast. This is within the expected range as the Ski Report Business normally loses money in Q4 due to seasonality.

The net increase of parking facilities through Q3 was 25 vs. the initial full year estimate of 75. The company explains that the reason for such low numbers is a strategic shift to focus on improving the contract ratio for the monthly parking business.

Q2 (1H) FY07/10 Results

Nippon Parking Development released Q2 FY07/10 results on February 26, 2010 (see the table above). As a percentage of the 1H company forecast, the cumulative Q2 numbers were as follows:

• Sales: 46.3% (4.2 billion yen vs. full year forecast of 9.0 billion yen)
• Operating profit: 46.5% (665 million yen vs. full year forecast of 1.4 billion yen)
• Recurring profit: 43.4% (587 million yen vs. full year forecast of 1.4 billion yen)
• Net income: 59.5% (399 million yen vs. full year forecast of 670 million yen)

Parking Business:

Q2 cumulative sales were 3.7 billion yen (+2.9% YoY). Sales from Leased Facility Operations rose 0.8% YoY to 2.8 billion yen. The number of such facilities rose to 31 YoY (a net increase of 704 parking spaces). The contract ratio for monthly Leased Facility Operations improved 1.7% from 92.8% to 94.5% YoY. Sales in Outsourced Management business were up 15.7% YoY to 735 million yen thanks to the acquisition of 4 parking facilities (638 parking spaces). Operating profit was up 5.7% to 941 million yen due to: 1) higher sales thanks to more parking lots, 2) higher GPM from improved contract ratios in monthly Leased Facility Operations, and 3) lower SG&A-to-sales ratio from cost cuts.

Ski Resort Business:

Revenue increased 91.8%, a result of strong marketing activity at Kashimayari Ski Resort and the acquisition of Ryuoo Ski Park. Operating profit turned to a net increase of 11 million yen vs. an operating loss the same period last year.

Recurring profit (Q2 cumulative) increased 17.1% YoY despite the loss of 80 million yen from investments in Japanese LLCs affected by the sluggish real estate market. There was no loss in investment securities, unlike a year earlier (a loss of 102 million yen), which helped the YoY comparison.

Net income (Q2 cumulative) rose 92.8% to 399 million yen due to an extraordinary gain of 144 million yen from the one-time write-off of negative goodwill of Ryuoo Kanko Ski Park offsetting 145 million yen securities valuation loss related to Anabuki Construction Inc. share holding.

There was no change to either the full year or dividend forecast.

Q1 FY07/10 Results

Nippon Parking Development released Q1 FY07/10 results on November 27, 2010 (see the table above). As a percentage of the 1H company forecast, Q1 numbers were as follows:

• Sales: 42.6% (1.9 billion yen vs. 1H forecast of 4.4 billion yen)
• Operating profit: 46.0% (300 million yen vs. 1H forecast of 651 million yen)
• Recurring profit: 44.8% (277 million yen vs. 1H forecast of 618 million yen)
• Net income: 16.0% (57 million yen vs. 1H forecast of 356 million yen)

Parking Business:

Sales were 1.9 billion yen (+4.1% YoY). Sales from Leased Facility Operations rose 0.5% YoY to 1.4 billion yen. The number of such facilities rose to 23 YoY (a net increase of 662 parking spaces) and the contract ratio for monthly Leased Facility Operations improved 2.2% from 92.6% to 94.8% YoY. Sales from the Outsourced Management business were up 24.2% YoY to 370 million yen. Sales increased due to the acquisition of 8 parking facilities (2,548 parking spaces). The large pay-by-the-hour management property opened during the last quarter also positively affected sales from the beginning of the period. Operating profit was up 17.4% to 341 million yen due to the following factors as: 1) higher sales due to more parking lots, 2) higher GPM from improved contract ratios in the Leased Facility Operations business, and 3) lower SG&A to sales ratio due to cost reduction.

Ski Resort Business:

Revenue increased 129.8% to 8 million yen as a result of sales and marketing activities during the summer. However, Q1 operating expenses of 41 million yen were incurred for maintenance of lifts and slopes and marketing materials such as brochures.

Recurring profit increased 20.5% YoY despite investment partnership losses brought about by the weak real estate market. There were no losses in investment securities, unlike a year earlier (-102 million yen), which helped the YoY comparison. The company booked a 145 million yen valuation loss on its investment in Anabuki Construction Inc.

There was no change to either the full year or dividend forecast.

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Income Statement

The company booked operating profit losses in FY07/00 and FY07/01 when it shifted to the Leased Facility Operations business. Leased Facility Operations proceeded to achieved a sufficient scale and became NPD’s core business, allowing the company to achieve record earnings for five consecutive years through FY07/06.

Operating profit declined YoY in FY07/07. The company identified the following reasons for deterioration in earnings: with the recovery of the urban real estate market, building owners placed a higher priority on tenant leasing paying less attention to profitability of their parking space. As a result, the supply of parking facilities declined. This coincided with the revision of the Parking Lot Act in June 2006 that led to multiple competitors entering the market. As a result, new contract acquisition for properties slowed while the profitability of parking properties declined due to pricing pressures.

In response to decreased profitability in FY07/07, the company focused on high value added management (large properties and properties where the company runs complex parking lot management operations), enhancing new market development in regional areas, and changing or cancelling less profitable contracts. As a result, sales and operating profit reached historical highs in three consecutive periods from FY07/08 to FY07/10.

The company has recorded large non-operating and extraordinary gains and losses, mostly from equity and Japanese LLC investments. The gains were visible in FY07/06 when non-operating earnings got a boost from sales of investment securities (603 million yen) and distributions of profits from privately placed fund investments (84 million yen). Also, in FY07/08 non-operating gains from privately placed fund investments (1.1 billion yen) were offset by non-operating losses due to sales of investment securities (402 million yen) and extraordinary losses resulting from valuation losses on short-term and investment securities (419 million yen and 565 million yen respectively).

Historical Performance vs. Estimates

The company has historically had a tendency to miss its sales forecasts. SR Inc. believes this to be due to emphasis on new parking property acquisition and the resulting aggressive internal targets. The net profits tend to exceed initial company forecasts when growth is expected YoY (periods through FY07/06), but under deliver when the company forecasts YoY declines (FY07/07 & FY07/08).

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Balance Sheet

Assets

The Parking Business does not require operating capital, nor for the most part, fixed assets. However, the company has been making investments that would lead to new Outsourced Management opportunities, using cross shareholdings in real estate companies and investments in privately placed funds as tools. As a result, investment securities and investments in Japanese LLCs form a large share of assets alongside cash and deposits. The breakdown of investment securities and Japanese LLC investments as of FY07/11 is shown below.

The company mentioned that the cumulative amount invested in Japanese LLCs was 1.6 billion yen, with a return of 1.1 billion yen (as of FY07/10).

Liabilities

Since listing in 2003, the company has been debt free. However, it borrowed 1 billion yen in FY07/05 to strengthen relationships with financial institutions and get management rights to parking garages owned by financial groups. The company borrowed an additional 2 billion yen in bank debt in FY07/07 to further cement the relationship with financial institutions and to finance the acquisition of ski resorts. In FY07/08 NPD started reducing its interest bearing debt using cash from privately placed funds’ (investment partnerships it invested in) distributions and investment securities (stocks) sales.

Shareholders' Equity

The company equity (net assets) position had been growing through FY07/06 as it retained earnings from operations; it started to decline from FY07/07 when the company maintained a high dividend payout ratio despite lower net profitability.

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Cash Flow Statement

Operating Cash Flow

Operating cash flow has been relatively stable, but turned negative in FY07/07. Pre-tax earnings were low due to corporate tax payments (948 million yen) and trading securities acquisitions (334 million yen).Operating cash flow in FY07/10 due to higher pre-tax profit and lower corporate tax paid.

Investment Cash Flow

Investment cash flow for the company is mostly related to securities investments. Capital expenditures (net tangible fixed asset acquisition) expanded in FY07/07 from the purchase of Sun Alpina Kashimayari ski resort, with capex in other periods covered mostly by operating cash flow.

Financial Cash Flow

Financial cash flow has been affected by the return of loans to financial institutions and payment of dividends.

A certain amount of simple free cash flow was generated. However, in FY07/07 the negative operating cash flow mentioned above and increased capital expenditures resulted in negative free cash flow.

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Other Information

History

The company was established in December 1991. The current president Tatsumi started the business to effectively utilize family land. The company initially focused on management, operating parking lots for other owners and earning commissions from soliciting end users and collecting parking fees. The business then shifted to focus on brokering (intermediary services) in response to increased customer requests. Revenues had been growing for several years but Tatsumi came to the conclusion that it would be hard to sustain growth while relying solely on non-recurring revenues typical for a brokerage. Tatsumi started looking for a recurring revenue business model (known in the Japanese business parlance as “stock business” as opposed to non-recurring “flow business”). The company commenced the Leased Facility Operations business, now the core business of NPD, in FY07/99. The company then acquired Nippon Ski Resort Development in 2005 with the goal of operating ski resorts. It began developing its car sharing business in 2008.

The company completed its IPO on the Jasdaq in 2003, after which it listed on the 2nd Section of the TSE. In 2005 it was transferred to the 1st Section. In the same year it was relisted on the Jasdaq.

Recent Corporate Timeline:

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News & Topics

November 2011

On November 30, 2011, Nippon Parking Development announced Q1 FY07/12 results: click here to go directly to the Q1 FY07/12 results section.

(For original Japanese-only release in PDF format, [ http://www.n-p-d.co.jp/ir/pdf/20111130_1qtanshin.pdf please click here.])

On November 28, 2011, the company announced it was to set up a new car sharing subsidiary.

(For original Japanese-only release in PDF format please click here.)

• Name: Japan Automobile Service Co.
• Business: management of car sharing services
• Date of establishment: December 13, 2011
• Major shareholders (and stake in parentheses): Nippon Parking Development Co. (100.0%)

As of end-October 2011, the company had 97 vehicles across eight car-sharing sites nationwide, with 1,844 members. Going forwards, the company was planning to continue to develop new sites and roll out new services, such as the introduction of services for students and establishing sites at universities, and environmentally friendly sites. After the establishment of the new subsidiary NPD intends to expand its service area around the Tokyo and Osaka areas aiming to have 1,000 vehicles in these metropolitan areas over the next three years, with a mid to long term goal of 5,000 vehicles nationwide under the service.

September 2011

On September 2, 2011, the company released FY07/11 results: click here to go direct to the FY07/11 results section.

(For original Japanese-only release in PDF format please click here).

The company also announced it had applied to the Osaka Stock Exchange’s JASDAQ (Standard) market to delist its shares due to trading of its shares being concentrated on the Tokyo Stock Exchange’s first section, the company said.

May 2011

On May 31, 2011, the company released Q3 FY07/11 results.

At the same time, the company announced it downwardly revised parts of its full-year FY07/11 forecast (for original Japanese-only release in PDF format please click here) and that it had decided to set up a new affiliate in China (for original Japanese-only release in PDF format please click here).

March 2011

On March 12, 2011, the company made an announcement regarding the March 11 Tohoku earthquake.

Parking Lot Business:

• The company has a branch office and manages parking lots in Sendai, Miyagi prefecture (an area in northeastern Japan that was heavily affected). No injuries were reported in company-managed parking lots in Sendai or at the Sendai branch office.
• However, the city of Sendai was without power, so multistory mechanical parking facilities were inoperable. The company planned to perform safety inspections at its facilities before reopening them (pending restoration of electricity).
• Additionally, safety inspections of all parking lots in Tokyo and Yokohama were proceeding. The company planned to reopen each parking lot after confirming the lot was safe.

Ski Resort Business:

• There were no reports of injuries to customers or employees. Furthermore, there were no reports of damage to ski resort equipment.

Future Outlook:

The company expected a minimal impact on earnings from the earthquake. It said it would make future announcements as needed.

February 2011

On February 28, 2011, the company released Q2 FY07/11 results.

January 2011

On January 14, 2011, the company announced that it decided to set up a new affiliate in Thailand, SIAM NIPPON PARKING SOLUTION CO., LTD., with January 17, 2011 as the creation date. The company provided the following details:

Ownership: The company said NPD GLOBAL (affiliate of NPD) would hold 50.1% of SIAM NIPPON PARKING SOLUTION and local business partners involved in real estate would hold the remainder. The local partners and ownership percentages are: Kitisak Jampathipphong (49%) and Chalotorn Marut (0.9%).

Impact: The impact on FY07/11 performance is minor, but the company expects some contribution in the mid to longer-term.

November 2010

On November 30, 2010, the company released Q1 FY07/11 results.

October 2010

On October 8, 2010, the company announced that Nippon Ski Resort Development Co., a wholly owned subsidiary, would buy 99% of Kawaba Resort Company’s stock on October 20, 2010. The Kawaba Resort Company operates the Kawaba Ski Resort, located in Gunma. The company announced an upward revision to 1H and full year FY07/11 forecasts in the same announcement, reflecting the acquisition. The revised figures were as follows:

1H FY07/11 Forecasts

• Sales: 4.9 billion yen (previous forecast: 4.6 billion yen)
• Operating profit: 773 million yen (previous forecast: 707 million yen)
• Recurring profit: 707 million yen (previous forecast: 659 million yen)
• Net income: 398 million yen (previous forecast: 370 million yen)

Full Year FY07/11 Forecasts

• Sales: 10.2 billion yen (previous forecast: 9.5 billion yen)
• Operating profit: 1.8 billion yen (previous forecast: 1.7 billion yen)
• Recurring profit: 1.4 billion yen (previous forecast: 1.4 billion yen)
• Net income: 822 million yen (previous forecast: 805 million yen)

September

On September 29, 2010, the company announced that it decided to set up affiliates in Thailand. The company provided the following details:

Ownership details: The company set up two Thailand-based affiliates (NPD GLOBAL CO., LTD. and NIPPON PARKING DEVELOPMENT (THAILAND) CO., LTD.) on September 30, 2010. The company said it would hold 49% share of NPD GLOBAL and NPD GLOBAL would hold 99% of NIPPON PARKING DEVELOPMENT.

Business opportunities: After setting up the affiliates, the company plans to conclude an advisory agreement with Jones Lang LaSalle (Thailand). The two affiliates will then offer parking solutions to Jones Lang LaSalle’s clients, like improving profitability, upgrading security, and expanding services. The target number of parking lots is 50.

Impact: The impact on FY07/11 performance is minor. But the company expects those affiliates to contribute in the mid to longer-term.

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Top Management

President Kazuhisa Tatsumi (born January 4, 1968) is the company’s founder.

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Employees

The company employed 196 employees at the consolidated level as of FY07/10. Employees’ average age was 34.8, and has been working with the company for 4.7 years.

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Major Shareholders

Major shareholders as reported by the company at the end of FY07/10 are as follows.

While Toyota Motors is a shareholder, it agreed to capital participation after using NPD’s parking information when it established its information site GAZOO.

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Dividends and Shareholder Benefits

The company tends to aggressively distribute profits as dividends thanks to the asset-light nature of its core business. The company sets the dividends each period based on its view of longer term capital needs and capital efficiency. It does not have specific targets such as payout or equity ratios.

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Investor Relations

The company maintains an IR website, and publishes information in both English and Japanese. The company holds results presentations semi-annually.

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By the Way

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Latest Q&A

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