FY2018/3 2Q Relo Group Investor Presentation November 21, 2017 0
Overview 18 consecutive year of th Sales Growth 9 consecutive year of th Record Profit 1
Business Environment Trends in recruiting, job seeking and job-offers-seekers ratio (Jul, 2017) Effective job opening-to application ratio High level for the first time in 43 years Strong demand for corporate fringe benefits fueled by labor market condition (Source) Ministry of Health General job placements (Jul, 2017) Sustainable Growth in both Sales and Profits 2
Consolidated Results FY2018/3 2Q (Millions of yen) Rounded down to the nearest million yen FY2017/3 2Q YoY Change Sales 110,218 98,499 + 11.9% Operating profit 7,188 5,891 + 22.0% Recurring profit 7,711 6,182 + 24.7% Net income 5,070 4,238 + 19.6% EPS (Yen) 33.81 28.67 + 17.9% (Note) The company conducted a 1-for-10 stock split of common shares with an effective date of 1st April, 2017. EPS is calculated based on the assumption that such stock split was implemented at the beginning of the previous fiscal year. 3
Trends in Consolidated Results Sales 110.2bn YoY Change +11.9% Recurring profit 7.7bn YoY Change +24.7% The First Olympic Plan The Second Olympic Plan FY2010/9 FY2013/9 FY2014/9 FY2015/9 FY2016/9 FY2017/9 4
Results & Overview by Segment Domestic Business
Domestic Business Overall Operating profit Sales 89,830 mil YoY Change +12.5 % Operating profit 5,958 mil YoY Change +18.2 % FY2014/9 FY2015/9 FY2016/9 FY2017/9 6
Domestic Business Domestic Relocation Corporate Housing Management Residential Property Management Fringe Benefits Corporate Fringe Benefits 7
Domestic Relocation Overall Operating profit Sales 79,554 mil YoY Change +11.5 % Operating profit 2,700 mil YoY Change +3.9 % FY2014/9 FY2015/9 FY2016/9 FY2017/9 8
Corporate Housing Management Units under management Strong demands of sub-leasing system to reduce clients workload 146,622 units YoY Change +14.0% Steady business activities targeting to medium and large sized companies To be top in the market Focus on 2 Strategies FY2014/9 FY2015/9 FY2016/9 FY2017/9 9
Corporate Housing Management 1 New Acquisition New acquisition by switching from competitors who provide agency services Lower the profit margin due to increased workloads by different services Improve the Profit Margin to Reasonable Level by Reconstructing the IT System Convert to Sub-leasing 10
Corporate Housing Management 2 IT System Investment Improve usability of Relo-Net Improve operation efficiency Accelerating the Schedule for Reconstruction of the IT System Expenses expected to increase due to upfront investment 11
Corporate Housing Management Horizontal Expansion of Best Practices of Fringe Benefit IT system investment Improve usability of Relo-Net Improve operation efficiency Increase commission income Improve profit margin Expand the Profit
Residential Property Management Units under management Organic growth of existing companies + 7 Block development 52,134 units YoY Change +10.1% Profit Base Expansion FY2014/9 FY2015/9 FY2016/9 FY2017/9 13
Residential Property Management 2 Companies joined group in first half Companies acquired until FY2017/3 Companies acquired during FY2018/3 Life Fudosan (Fukuoka) Osaka Recrea Life Agent Artha (Tokyo) Saitama Daiko Kanagawa Bestus Miyagi Nakamichi Shinwa Shoji Housing Mate Tokyo Tohto Chofu Housing Chiba Yoshida Fudosan Hukuoka Room Mainly Acquiring SMEs 14
Residential Property Management Common Brand Tokyo Tokyo Tokyo Kanagawa Saitama Chiba Fukuoka Fukuoka Miyagi Miyagi Miyagi Housing Mate Shinwa Shoji Nakamichi Group Life Fudosan Room Group Yoshida Fudosan Daiko Group Bestus Group Artha Chofu Housing TOHTO Group Sharing the Best Practices to Expand Profit 15
Residential Property Management TOHTO Bestus Room Daiko 16
Domestic Business Domestic Relocation Corporate Housing Management Residential Property Management Fringe Benefits Corporate Fringe Benefits 17
Corporate Fringe Benefits Operating profit Sales 10,275 mil YoY Change +20.7 % Operating profit 3,257 mil YoY Change +33.4 % FY2014/9 FY2015/9 FY2016/9 FY2017/9 18
Corporate Fringe Benefits Fringe benefit members Strong growth in new acquisitions Fringe benefit program Membership 5.82 mil YoY Change +0.67 mil FY2014/9 FY2015/9 FY2016/9 FY2017/9 19
Corporate Fringe Benefits Industry-first Okinawa office opened Strength in Local Region Hokkaido Area Scrupulous Service Tohoku Area Kyushu / Okinawa Area Chugoku / Shikoku Area Chubu Area Kansai Area Koshinetsu Area Kanto Area Promoting Sales on Large Companies, SMEs and Local Companies 20
Corporate Fringe Benefits E-magazine subscribers Number of App DL 1.85 mil YoY Change +18.0% 20,000+/ month FY2014/9 FY2015/9 FY2016/9 FY2017/9 16/4 17/9 Solid Growth in Users of Our Digital Channels 21
Hotel Management Before & After Capital Improvements Hotel management with professional know-how Stable Contribution on Consolidated Performance
Domestic Business Overall FY2018/3 Projection Operating profit Sales 184.7 bn YoY Change +10.3 % Operating profit 13.9 bn YoY Change +16.1 % FY2015/3 FY2016/3 FY2017/3 FY2018/3 23
Results & Overview by Segment Global Business
Global Business Operating profit Sales 17,745 mil YoY Change +6.3 % Operating profit 1,508 mil YoY Change +8.5 % FY2014/9 FY2015/9 FY2016/9 FY2017/9 25
Business Environment The Trump administration BREXIT Only a temporary impact Domestic market to shrink Trend of Globalization Continues 26
Global Relocation Support Completed global relocation support cases FY2017/9 FY2016/9 3,598 households 3,754 households YoY Change +4.3% 27
Global Destination Support Growth mainly in North America by Housing brokerage Service apartment operation San Francisco San Jose Los Angeles Irvine Chicago Dallas Detroit Boston Westchester New York New Jersey Leasing Broker Business in Dallas Doubles by YoY 28
Global Destination Support Locations of expatriate spread from mega cities to the Midwest / Southern area San Francisco San Jose Los Angeles Irvine Chicago Dallas Detroit Boston Westchester New York New Jersey Higher Possibility to Choose Relo, Which Has the Highest Number of Bases 29
Global Destination Support From the fiscal year ending in March 2018 Start mobility management service Enhance sales for insurance to expats (Residential / Automobile related) Further Monopolize the Customer Base of Expats
Global Destination Support Number of housing brokerages 1,112 units Operation of Occupancy serviced apartments rate 85.7% 31
Global Business FY2018/3 Projection Operating profit Sales 37.0 bn YoY Change +9.9 % 営業利益 Operating profit 2.9 bn 29 億円 YoY 前期比 Change +15.3 % 増 % FY2015/3 FY2016/3 FY2017/3 FY2018/3 32
Projection for FY2018/3
Consolidated Financial Projection for FY2018/3 (Millions of yen) Rounded down to the nearest million yen FY2017/3 FY2018/3(P) YoY Change Operating revenue 205,117 226,000 +10.2% Operating profit 13,264 15,500 +16.9% Recurring profit 14,239 16,500 +15.9% Net profit 9,151 10,500 +14.7% EPS (yen) 61.62 70.50 +14.4% Dividend per share (yen) 18.4 21 +2.6 34
Dividends Projection Dividend amount (Yen/Share) 15 th consecutive year of dividend increase 21 (P) 0.75 FY2003/3 FY2005/3 FY2007/3 FY2009/3 FY2011/3 FY2013/3 FY2015/3 FY2017/3 35
Stock Split 10-for-1 stock split on March 31, 2017 Number of Shareholders Mar 31, 2017 4,579 1.5 times Sep 30, 2017 6,442 We will continue operations while taking care to ensure a reasonable level of price and liquidity of our stock 36
Consolidated B/S Consolidated Balance Sheets (Millions of yen) 37 (Millions of yen) Assets Rounded down to nearest million yen Total liabilities and net assets Rounded down to nearest million yen FY2017/9 FY2017/3 Change FY2017/9 FY2017/3 Change Current assets 54,075 56,580 ( 2,505) Current liabilities 44,307 45,720 ( 1,413) Cash and deposits 12,886 13,309 ( 423) Accounts payable-trade 2,709 3,425 ( 716) Notes and accounts receivable-trade 9,791 12,094 ( 2,303) Short-term loans payable 10,145 12,663 ( 2,518) Real estate for sale 7,978 6,729 +1,249 Current portion of long-term loans payable 1,729 1,695 +34 Supplies 533 501 +32 Income taxes payable 2,272 2,490 ( 218) Advance payments 13,450 13,291 +159 Advances received 16,892 16,067 +825 Other 9,476 10,693 ( 1,217) Allowance for bonuses 534 761 ( 227) Allowance for doubtful accounts (42) (40) ( 2) Other 10,024 8,616 +1,408 Noncurrent assets 47,062 42,754 +4,308 Noncurrent liabilities 14,524 13,883 +641 Property, buildings and equipment 8,522 7,486 +1,036 Corporate bond 1,500 1,800 ( 300) Buildings and structures 7,557 6,749 +808 Long-term loans payable 6,240 5,440 +800 Accumulated depreciation (2,652) (2,503) ( 149) Long-term lease deposits 5,944 5,867 +77 Buildings and structures, net 4,904 4,246 +658 Allowance for loss on guarantees 0 60 ( 60) Tools, furniture and fixtures 1,843 1,794 +49 Liabilities for retirement benefits 332 326 +6 Accumulated depreciation (1,395) (1,312) ( 83) Negative goodwill 1 2 ( 1) Tools, furniture and fixtures, net 448 482 ( 34) Other 506 386 +120 Land 2,475 2,340 +135 Total liabilities 58,831 59,604 ( 773) Other 1,082 783 +299 Net assets 42,319 39,742 +2,577 Accumulated depreciation (388) (365) ( 23) Shareholders equity 40,966 38,634 +2,332 Other, net 693 417 +276 Capital stock 2,667 2,667 +0 Intangible assets 11,111 10,524 +587 Capital surplus 2,871 2,871 +0 Software 1,920 1,485 +435 Retained earnings 38,626 36,342 +2,284 Goodwill 9,002 8,862 +140 Treasury stock (3,199) (3,246) +47 Other 188 176 +12 Total accumulated other comprehensive income 894 677 +217 Investments and other assets 27,427 24,744 +2,683 Valuation difference on available-for-sale securities 702 459 +243 Investment securities 13,144 10,585 +2,559 Foreign currency translation adjustment 193 222 ( 29) Lease and guarantee deposits 11,534 11,627 ( 93) Adjustment for retirement benefits (1) (4) +3 Other 2,821 2,603 +218 Subscription rights to shares 39 39 +0 Allowance for doubtful accounts (72) (72) +0 Non controlling interests 419 390 +29 Deferred assets 13 12 +1 Total liabilities and net assets 101,151 99,347 +1,804 Bond issuance expenses 10 12 ( 2) Other 2 0 +2 Total assets 101,151 99,347 +1,804
FY2018/3 2Q Relo Group Investor Presentation November 38 21, 2017
The Second Start-Up The Second Start-up Stage A year and a half remaining The First Olympic Plan The Second Olympic Plan The Second Start-up Stage The Third Olympic Plan The Global Start-up Stage FY2012/3 ~FY2015/3 ~FY2019/3 ~FY2023/3
The Second Start-Up The Second Olympic Plan Top Profit Scale or Top Share in the Market Strengthen Domestic Management Base Increase of Market Capitalization
The Second Start-Up Effect of Acquisition AIRINC Collecting Information of Global Relocation Companies Starting Research for Global Fringe Benefit Market
The Second Start-Up The Third Olympic Plan Build the Foundation to Reach the Global Market Start to Challenge to Be the Top Global Relocation Company
Progress of the Second Start-Up Initial Plan FY2019/3 Recurring profit Negative Factors 20bn Delay in M&A closing on property management companies Lower performance than plan in global business On Track Positive Factors Strong growth of corporate fringe benefit business Expansion of hotel management
Business Environment < Issues of Companies > > Trends in conversion from full-time to part-time due to shrinking working-age population Need to improve the system to secure the employees Review the Current Systems of Corporate Housing & Benefits Expand applicable scope range Upgrade current services Introduce new system
Business Environment Review the Current Systems of Corporate Housing & Benefits Expand applicable scope range Upgrade current services Introduce new system SMEs Local companies Established a New Corporate Housing System Introduction of Fringe Benefit Services
Business Environment < Issues of Companies > Trends in conversion from full-time to part-time due to shrinking working-age population Needs to Improve the system to secure the employees Needs of high productivity due to manpower shortage Increase in Outsourcing Non-core Functions Market Expansion of Corporate Housing Management & Fringe Benefits
Corporate Housing Management Start to Prepare for Market Domination In-house Management Company A The Third Olympic Plan Total Market 1,200,000 units Others Company B Company C The Final Stage of Market Domination
Corporate Housing Management Start to Prepare for Market Domination The Second Olympic Plan The Third Olympic Plan Focus to large-scale IT system development Exert IT system development effect Withdraw of competitors due to manpower shortage Profit Scale Market Share No. 1 Temporary decline in profit margin Improve Usability Improve Profit Margin
Residential Property Management Initial Plan FY2019/3 Recurring profit 4.7bn Delay in M&A Closing Competition intensification of large scale M & A deals Change the Target to SMEs
Residential Property Management Negative Factor Initial Plan FY2019/3 M & A investment amount 40bn Now Approx. 5.0bn Positive Factor Annual average growth rate of existing companies Increase Higher than Forecast
Residential Property Management Initial plan for recurring profit 4.7bn Companies acquired during FY2018-FY2019/3 Companies acquired during FY2016-FY2017/3 Companies acquired during FY2015/3 1.2bn 0.4bn FY2011/3 期 FY2013/3 期 FY2015/3 期 FY2017/3 期 FY2019/3 期
Corporate Fringe Benefits Initial Plan FY2019/3 Recurring profit 6.8bn Surpass the Plan More serious worker shortage in local companies and SMEs Increase Membership by Finely-tuned Service
Corporate Fringe Benefits Contribution to Contract with Large Companies with Local Bases Hokkaido Area Sapporo Sales Office Tohoku Area Chubu Area Tohoku Sales Unit Fukuri Kousei Club Chubu Co., Ltd. Koshinetsu Area Kyushu/Okinaw Area Fukurikosei Club Kyushu Co., Ltd. Kanto Area Relo Club Headquarters Chugoku/ Shikoku Area Fukuri Kousei Club Chugoku Co., Ltd. 53 Kansai Area Osaka Branch
Corporate Fringe Benefits Continuous investments in IT system Improve usability Increase in accommodation users Commission growth from facilities
Hotel Management Units under management Management contract Ownership 15 13 2 FY2012/3 FY2014/3 FY2016/3 12/3 期 14/3 期 16/3 期
Hotel Management Companies 赤字の保養所を Benefit 売却 Service Introduction of Fringe Relo Group Acquisition of corporate recreation facilities Renovation as accommodation Utilization as training centers Utilization for timeshare business
Resort Business (Timeshare business) Initial Plan FY2019/3 Recurring profit 0.5bn Positive Contribution Good performance in new sales Collaboration with hotel management business Increase of number of facilities
Global Business Initial Plan FY2019/3 Recurring profit 4.0bn A Bit Behind the Initial Plan
Global Relocation Support New Company Relocation International Global relocation support Relo Excel International Relo Panasonic Excel International External sales division Share mission / vision Participate in the stock holding system Enhance People-to-People exchange Organize and consolidate services High potential for cross-selling
Global Relocation Support Relo Group Front-end products Collaborate with AIRINC Start marketing Major Companies Operation in-house Increase in Number of Approaches to Major Companies *Image of joint seminar
Global Destination Support Horizontal Spreading of REDAC Model
Global Destination Support JAC Strattons Limited. No. 2 as Number of housing brokerages for Japanese residents in the UK Number of new / renewal contracts-1,000/year
Global Destination Support Human Resources / General Affairs Officer Outsourcing Business report Progress management database of expats Housing support 24 hours interpreting service Furniture rental Tenant insurance Car insurance Car lease Purchase Mobile phone
Global Business Initial Plan FY2019/3 Recurring profit 4.0bn Promote recovery Integration of global relocation support division Expansion of the geographic coverage Expansion of the business by new service menu
Our Mission Our Vision & Mission To help corporations and their employees be free from care and anxiety, and enable them to perform to their full potential though our products and services Our Vision
The Third Olympic Plan Theme Be No.1 for Domestic Core Business Build a Foundation for Global Expansion
Contact Planning and IR Group, Relo Group, Inc. TEL: 03-5312-8704 E-Mail: ir@relo.jp URL : http://www.relo.jp/ The information contained in this presentation is provided for informational purposes and should not be construed as a solicitation of an investment in our securities. This material was made based on currently available information as of Sep, 2017, and contains forward-looking statements that reflect Relo s plans and expectations at the above-mentioned time. Relo shall bear no responsibility or liability for the accuracy of the information, or any actions arising from the use of information in this presentation. Moreover, the contents of this material are subject to change without any notice. 67