Ichigo Inc. · TSE:2337

Ichigo — FY2015 Earnings Presentation

51 slides from Ichigo's earnings presentation, Apr 23, 2015

  1. Slide 1: Corporate Presentation, February 2015 Fiscal Year

    February 2015 Fiscal Year (March 2014 – February 2015) Corporate Presentation April April 23, 2015 20, 2015 Ichigo Group Holdings (2337) © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. www.ichigo-holdings.co.jp/english

  2. Slide 2: © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

    © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

  3. Slide 3: © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

    © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

  4. Slide 4: Creating peace of mind through honest and committed management

    Creating peace of mind through honest and committed management. management © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

  5. Slide 5: Contents

    Commitment: 100% Shift Up 2016 Achievement Clean Energy ‒ FY15/2: Operating Profit 2.1X, Net Income 1.5X YOY ‒ Solar Expansion on Track ‒ Shift Up 2016 Mid-Term Business Plan Progress ‒ Solar P&L Breakdown by Power Plant ‒ N New B Business i S Segmentt Di Disclosure l ‒ I hi S Ichigo Solar l P Power

  6. Slide 6: Commitment: 100% Shift Up 2016 Achievement

    Commitment: 100% Shift Up 2016 Achievement © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 6

  7. Slide 7: FY15/2: Operating Profit 2.1X, Net Income 1.5X YOY

    FY15/2: Operating Profit 2.1X, Net Income 1.5X YOY ■ Full -Year Consolidated Financial Results (Million yen) Feb 14 Feb 15 YoY Revenues 35,101 42,705 +21.7% Gross Profit 7,435 12,166 +63.6% Operating Profit 3,912 8,189 +109.3% Recurring Profit 3,597 7,255 +101.7% Net Income 4,526 6,761 +49.4% EPS (y

  8. Slide 8: Shift Up 2016 Mid-Term Business Plan Progress

    Shift Up 2016 Mid-Term Business Plan Progress ‒ 5X EPS in 3 years ‒ Tokyo Stock Exchange First Section Listing by February 2016 ‒ Enter JPX-Nikkei Index 400 by August 2016 Progress on Key Performance Indicators (KPI) (Million yen) Feb 13 Feb 2014 Feb 2014 Feb 2015 Feb 2015 Feb 2016 (Actual) (Plan) (

  9. Slide 9: New Business Segment Disclosure

    New Business Segment Disclosure Combined Value-Add and Real Estate into single Value-Add segment to reflect value-add activity across full spectrum of real estate assets Asset Management generates fee income via the management of the Ichigo REIT, private funds, and other fee-generating real estate A

  10. Slide 10: Segment P&L Breakdown

    Segment P&L Breakdown ‒ Rental income driving operating profit growth in Value-Add ‒ Clean Energy operating loss decreased on production ramp-up (Million yen) Revenues Segment Profit (Operating Profit) Earnings Drivers Segment Feb 15 Feb 15 Feb 15 Feb 15 (Note) YoY change is shown in Feb 14 Change (

  11. Slide 11: Corporate Loan Details

    Corporate Loan Details ■ Weighted Average Interest Rate and Average Loan Period Weighted Average Interest Rate Interest Rate Average Loan Period (Loan Period, Year) 3.0% 11 2.57% 2.56% 9.0 years 2.5% 9 2.22% 2.0% 7 1.96% 5.9 years 1.71% 1.5% 5 4.7 years 3.6 years 3.3 years 1.0% 3 Feb FY11 Feb FY12 F

  12. Slide 12: Value-Add Social Significance

    Value-Add Social Significance End Demolish and Rebuild and Embrace Value-Add ‒ Preserve and enhance high-function real estate ‒ Sustainable Real Estate serving a Sustainable Society ・Renovate, rectify, and repair Value‐Add Value Add ・Raise earthquake resistance ・Focus on tenants and their needs ・Imp

  13. Slide 13: Value-Add Business Model

    Value-Add Business Model Continuous Value-Add Drives High Asset Turnover and High ROE REIT Asset A t Incubation I b ti Value Add Business Model Value-Add R lE Real Estate t t VValue-Add l Add Assets meeting the needs of Ichigo REIT IGH R lE Real Estate t t Ichigo REIT (8975) Acquisition Acquisition

  14. Slide 14: Asset Management

    Asset Management © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 14

  15. Slide 15: Ichigo REIT Growth

    Ichigo REIT Growth Asset Management Business a Major Growth Focus – Significant Synergies with Value-Add Business ‒ IGH pprovided ppipeline p support pp to Ichigo g REIT to acquire q 11 of the 12 assets (JPY 40B) via the Ichigo REIT PO announced on April 9, 2015 – PO accretive to REIT shareholders ‒

  16. Slide 16: Value-Add

    Value-Add © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 16

  17. Slide 17: High-Return Value-Add Acquisitions Driving Growth

    High-Return Value-Add Acquisitions Driving Growth ‒ Bought 53 assets in FY15/2 (JPY 73B vs. JPY 70B plan) ‒ JPY 100B acquisition target in FY16/2 (including Ichigo REIT acquisitions) ‒ JPY 40B off acquisitions, i iti 40% off ffull-year ll t target, t in i highly-likely hi hl lik l pipeline i li as o

  18. Slide 18: Value-Add Full Asset Breakdown: Post-FY15/2 Acquisitions (1)

    Value-Add Full Asset Breakdown: Post-FY15/2 Acquisitions (1) Assets acquired from FY15/2: 49 Assets, JPY 62.3B, Forecast NOI JPY 3.9B Building Acquired Expected Forecast Equity Forecast No. Asset Class Asset Type Location Acquisition Price IGH Investment A Age D t Date NOI/Y NOI/Year M lti l 1 Multi

  19. Slide 19: Value-Add Full Asset Breakdown: Post-FY15/2 Acquisitions (2)

    Value-Add Full Asset Breakdown: Post-FY15/2 Acquisitions (2) Building Acquired Expected Forecast Equity Forecast No. Asset Class Asset Type Location Acquisition Price IGH Investment Age Date NOI/Year Multiple1 IRR2 16 Retail Fixed Asset Fukuoka City, Fukuoka 30 <JPY 1B 2014/09 JPY 48M JPY 252M - * -

  20. Slide 20: Value-Add Full Asset Breakdown: Post-FY15/2 Acquisitions (3)

    Value-Add Full Asset Breakdown: Post-FY15/2 Acquisitions (3) Building Acquired Expected Forecast Equity Forecast No. Asset Class Asset Type Location Acquisition Price IGH Investment Age Date NOI/Year Multiple1 IRR2 31 Residence Real Estate for Sale Shinjuku-ku, Tokyo 10 <JPY 1B 2014/12 JPY 27M JPY 8

  21. Slide 21: Value-Add Full Asset Breakdown: Post-FY15/2 Acquisitions (4)

    Value-Add Full Asset Breakdown: Post-FY15/2 Acquisitions (4) Building Acquired Expected Forecast Equity Forecast No. Asset Class Asset Type Location Acquisition Price IGH Investment Age Date NOI/Year Multiple1 IRR2 46 Hotel Real Estate for Sale Osaka City, Osaka 32 JPY 1B-2B 2015/02 JPY 81M JPY 173M

  22. Slide 22: Value-Add Full Asset Breakdown: FY15/2 Acquired & Sold

    Value-Add Full Asset Breakdown: FY15/2 Acquired & Sold Assets acquired and sold in FY15/2: 6 Assets, JPY 12.3B, NOI JPY 0.7B Building Acquired Expected Forecast Equity Forecast No No. Asset Class Asset Type Location Acquisition Price IGH Investment Age Date NOI/Year Multiple1 IRR2 - Office Real Esta

  23. Slide 23: Value-Add Full Asset Breakdown: Pre-FY15/2 Assets (1)

    Value-Add Full Asset Breakdown: Pre-FY15/2 Assets (1) Assets owned previous to FY15/2: 35 Assets, JPY 62.9B, NOI JPY 4.1B Building Acquired Expected No. Asset Class Asset Type Location Acquisition Price IGH Investment Age Date NOI/Year 1 Retail Real Estate for Sale Minato-ku, Tokyo 13 <JPY 1B 2004/0

  24. Slide 24: Value-Add Full Asset Breakdown: Pre-FY15/2 Assets (2)

    Value-Add Full Asset Breakdown: Pre-FY15/2 Assets (2) Building Acquired Expected No. Asset Class Asset Type Location Acquisition Price IGH Investment Age Date NOI/Year 16 Ground Lease Real Estate for Sale Atsugi City, Kanagawa - JPY 1B-2B 2011/06 JPY 171M JPY 147M 17 Retail Real Estate for Sale Mina

  25. Slide 25: Value-Add Full Asset Breakdown: Pre-FY15/2 Assets (3)

    Value-Add Full Asset Breakdown: Pre-FY15/2 Assets (3) Building Acquired Expected No. Asset Class Asset Type Location Acquisition Price IGH Investment Age Date NOI/Year 31 Retail Fixed Asset Kobe City, Hyogo 14 JPY 1B 1B-2B 2B 2013/09 JPY 144M JPY 616M 32 Retail Fixed Asset Tokorozawa City, Saitama 7

  26. Slide 26: Clean Energy

    Clean Energy © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 26

  27. Slide 27: Solar Expansion on Track

    Solar Expansion on Track As of March 2015, 29 Ichigo Solar Plants (101MW) operating or in-development ‒ 15 new plants (25 MW) came on-line after March 2014 ‒ All 29 plants have approved grid interconnections and/or signed power sale contracts with the regional electric utility. None of the projects

  28. Slide 28: Solar P&L Breakdown by Power Plant (1)

    Solar P&L Breakdown by Power Plant (1) Extraordinary returns on par or above real estate Fixed Panel Forecast Equity Tariff Operation Expected Forecast No. Area Output Depreciation IGH Investment Multiple (Held ((Pre-tax,, Start Date NOI/Year IRR2 (MW) f 20 years)) 1 for yen) 1 Ichigo Tokushima Higa

  29. Slide 29: Solar P&L Breakdown by Power Plant (2)

    Solar P&L Breakdown by Power Plant (2) Extraordinary returns on par or above real estate Fixed Panel Forecast Equity Tariff Operation Expected Forecast No. Area Output Depreciation IGH Investment Multiple (Held (Pre-tax, Start Date NOI/Year 1 IRR2 (MW) for 20 years) yen) 19 Ichigo Yamaguchi Aionishi

  30. Slide 30: Ichigo Solar Power Plant National Map

    Ichigo Solar Power Plant National Map Serving Local Communities and the Environment Ichigo Engaru Higashimachi (1.24MW) Total operating and in-development Ichigo Motomombetsu (1.40MW) Ichigo Engaru Kiyokawa Ichigo solar power plants: (1.12MW) 29 Plants (101MW) Ichigo Abira Toasa (1.17MW) Ichigo Yube

  31. Slide 31: Near-Term Solar Earnings (FY16/2 Forecast)

    Near-Term Solar Earnings (FY16/2 Forecast) ‒ Substantial revenue and gross profit growth ‒ Operating profit to turn positive this year (Million yen) Feb 14 Feb 15 Feb 15 Full-Year vs. Full-Year Feb 16 Full-Year (12M) (12M) Forecast (12M) Forecast Forecast (12M) Revenues 126 605 793 76 4% 76.4% 1 581

  32. Slide 32: Long-Term Solar Earnings

    Long-Term Solar Earnings JPY 1.97B annual NOI by FY19/2 – actual production beating P50 forecasts ■ Revenue Forecast based on 29 Plants, 101MW 19 B 1.97B 1.94B * Revenue forecast assumes that current operating and in-development power plants become fully 1.75B online 1.73B NOI = Net Operating Income

  33. Slide 33: February 2016 Earnings Forecast

    February 2016 Earnings Forecast © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 33

  34. Slide 34: FY16/2 Full-Year Earnings and Dividend Forecast

    FY16/2 Full-Year Earnings and Dividend Forecast (Million yen) Feb 16 Feb 15 vs. Feb 15 (Forecast) (Actual) (Expected） Revenues 45 000 45,000 42 705 42,705 +5 4% +5.4% Operating Profit 11,700 8,189 +42.9% Recurring Profit 10 250 10,250 7 255 7,255 +41 3% +41.3% Net Income 9,150 676 +35.3% EPS ((yen))

  35. Slide 35: FY16/2 Full-Year Segment Earnings Forecast

    FY16/2 Full-Year Segment Earnings Forecast (Million yen) Revenues Segment Profit (Operating Profit) Segment Feb 16 YoY Feb 16 YoY Feb 15 (Actual) Feb 15 (Actual) (Forecast) (Forecast) (Forecast) (Forecast) Asset Management 4,713 3,967 18.8% 2,140 779 174.7% Value-Add 38,705 38,107 1.6% 9,579 7,871 2

  36. Slide 36: Appendix: Financial & Real Estate Data

    Appendix: Financial & Real Estate Data © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 36

  37. Slide 37: Value-Add Sample Earnings Model

    Value-Add Sample Earnings Model ‒ 5.5% NOI, JPY 2B purchase, LTV 70%, 1.5% interest rate, JPY 50M capex, 20% increase in NOI, 3-year holding period ‒ Tenant leasing, aesthetic improvement, building code violation remedy, earthquake retrofit, etc. At Acquisition NOI (JPY 110M NOI/year) － (JPY 21M int

  38. Slide 38: Consolidated Balance Sheet

    Consolidated Balance Sheet (Million yen) Feb 2015 Period-End Unrealized Gain Feb 2014 YoY Unrealized of Transaction Market Value Period-End B/S Outside Increase/Decrease Gain Cost of Listed Stocks 2 Cash and Cash Equivalents 24,991 19,383 681 -5,608 19,383 0 0 Operating Loans Receivable (Value-Add)

  39. Slide 39: Consolidated Balance Sheet: Segment Breakdown

    Consolidated Balance Sheet: Segment Breakdown (Million yen) Cash and Operating Operational Real Estate Intangible g Investments Segment C h Cash L Loans I Investment t t Fi d A Fixed Assets t Oth Assets Other A t T t l Assets Total A t For Sale Assets in Securities Equivalents Receivable in Securiti

  40. Slide 40: Consolidated Risk-Based Balance Sheet

    Consolidated Risk-Based Balance Sheet Consolidated C lid t d Balance B l Sheet Sh t Total Assets JPY 172.7B Consolidated Risk-Based Balance Sheet Non-Recourse Loans Total Assets & Related Liabilities Non-Recourse Loan- JPY 49.3 B JPY 123.3B Related Assets JPY 63.7 B Non-Recourse Loan- Debt Related I

  41. Slide 41: Asset Management AUM Detail

    Asset Management AUM Detail Have shrunk low-fee private equity real estate funds to drive higher AM fees & profitability Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 (12M) (12M) (12M) (12M) (12M) Ichigo g REIT ((Public)) AUM ((Fiscal Year End)) JPY 114B JPY 106B JPY 104B JPY 121B JPY 124B AM Fee % (Average) 0

  42. Slide 42: Consolidated P&L: Gross Profit Segment Breakdown

    Consolidated P&L: Gross Profit Segment Breakdown (Million yen) Revenues Gross Profit YoY Segment Feb 2014 Feb 2015 Change Feb 2014 Feb 2015 Change (Gross Profit) Asset Management 4,118 3,967 -150 2,183 1,786 -396 - 18.1% Asset Management Fees 1,444 1,312 -131 1,334 1,224 -110 - 8.2% PM / BM Fees 2,2

  43. Slide 43: Consolidated P&L vs. Full-Year Forecast

    Consolidated P&L vs. Full-Year Forecast (Million yen) Feb 15 Full-Year Actual (12M) Feb 15 Full-Year Forecast (12M) vs. Full- vs. Full- vs. Full- Segment Operating Operating Revenues Year Gross Profit Year Year Revenues Gross Profit P fit Profit Profit Forecast Forecast Forecast Asset Management 3,9

  44. Slide 44: Consolidated Balance Sheet: Unrealized Gains

    Consolidated Balance Sheet: Unrealized Gains Real estate directly held by IGH (either on IGH balance sheet or in SPCs where IGH is sole equity holder) (Million yen) Book Value Cap Rate Appraisal Value Location NOI Unrealized Gain as of February 2015 NOI / Book Value after w rite-dow n as of February

  45. Slide 45: Consolidated Balance Sheet: Assets

    Consolidated Balance Sheet: Assets (Milli yen)) (Million vs. Feb 14 Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 (increase/decrease) Assets Current Assets Cash and cash equivalents 12,343 9,791 9,713 24,991 19,383 -5,608 Trade notes and accounts receivable 696 1,069 548 451 519 +68 Operational investments in

  46. Slide 46: Consolidated Balance Sheet: Liabilities & Net Assets

    Consolidated Balance Sheet: Liabilities & Net Assets (Million yen) vs. Feb 14 Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 (increase/decrease) Liabilities Current Liabilities Trade notes and accounts payable 47 57 64 132 124 -8 Short term borrowings Short-term 1,293 1 293 170 484 950 1,416 1 416 +466 Short-te

  47. Slide 47: Consolidated P&L

    Consolidated P&L (Million yen) Feb 15 Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 Change vs. Full-Year (12M) (12M) (12M) (12M) (12M) (YoY) Forecast Forecast Revenues 12,760 18,952 16,397 35,101 42,705 +7,604 42,000 101.7% Cost of Goods Sold 8,805 15,030 11,422 27,666 30,539 +2,873 － － Gross Profit 3,954 3,92

  48. Slide 48: Consolidated Cash Flows from Operating Activities

    Consolidated Cash Flows from Operating Activities (Million yen) Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 (12M) (12M) (12M) (12M) (12M) Cash Flows from Operating Activities: Income before income taxes 2,889 1,976 1,693 3,933 7,220 Depreciation 168 166 230 304 565 Sh Share-based b d compensationti expenses

  49. Slide 49: Consolidated Cash Flows from Investing & Financing Activities

    Consolidated Cash Flows from Investing & Financing Activities (Milli yen)) (Million Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 (12M) (12M) (12M) (12M) (12M) Cash Flows from Investing Activities: Payments into time deposits － -352 0 0 -325 Proceeds from withdrawal of time deposits 40 － 151 － 325 A Acquisitio

  50. Slide 50: IGH-Owned Real Estate Portfolio (As of February 28, 2015)

    IGH-Owned Real Estate Portfolio (As of February 28, 2015) A Assets t by b Type T A Assets t by b Location L ti Other Sendai Ground 3% 4% Lease Osaka 4% 5% (Billion yen) Hotel Office 8% Other 26% 11% Mixed 11% Tokyo Kanto 51% 14% Residence Retail 19% 29% Fukuoka 15% Sendai 48 Assets by Size Tokyo 622

  51. Slide 51: Disclaimer

    These materials were prepared to explain the Company’s businesses and are not for the purpose of soliciting investment in marketable securities issued by the Company. The Company does not guarantee the accuracy g y of the figures, g , information,, estimates or other statements included herein,, and

Ichigo Group Holdings — FY2015 Earnings Presentation on 6ix