Tosei Corporation · TSE:8923
Tosei — FY2005 Earnings Presentation
45 slides from Tosei's earnings presentation, April 2006
Slide 1: Financial Results for the Fiscal Year Ended Nov. 2005
Financial Results for the Fiscal Year Ended Nov. 2005 Tokyo Value-up Partner
Slide 2: Index
INDEX Business Business Str Strategies ategies of of the the Tosei Tosei Gr Group oup ((Seiichir Seiichir oo Yamaguchi, Yamaguchi, Pr President esident and and CEO) CEO) I.I. Tosei Tosei Gr Group oup Over Overview view and and Advantages Advantages p. p. 22 II. II. Summar Summaryy of of Results Resu
Slide 3: Business Strategies of the Tosei Group
Business Str ategies of the Tosei Gr oup 2
Slide 4: Group Overview
Gr oup Over view Name Name TOSEI TOSEI CORPORATION CORPORATION Addr Address ess 2-3 2-3 Kanda-awajicho, Kanda-awajicho, Chiyoda-ku,Tokyo Chiyoda-ku,Tokyo Date Dateestablished Febr established February uary 2, 2, 1950 1950 Capital Capital ¥1,999,096,500 ¥1,999,096,500 Repr Representative esentative S
Slide 5: History
Histor y Net sales TRI1 1established TRI established TC2 2becomes consolidated TC becomes consolidated subsidiary subsidiary (¥ Million) 1950 1950 Established EstablishedYukari YukariKogyo KogyoCo., Co.,Ltd. Ltd. TRA3 3established TRA established 1983 1983 Company Companyname namechanged changedtoto
Slide 6: Tosei Group Vision
Tosei Gr oup Vision Mission To Tocr create eate new new value valueinin all allrreal ealestate estatear areas easin in or order der to toenhance enhance the the wellbeing wellbeing of ofthe thecommunity community Cor por ate Slogan ““Tokyo Tokyo Value -up Par Value-up tner”” Partner Real Real estate
Slide 7: Tosei Group Advantages (1) Business Scope
Tosei Gr oup Advantages (1) Business Scope With unifor m capabilities over a br oader r ange of business ar eas, Tosei has a fir m lead over other companies in the r eal estate industr y. “ Only One” Business Model = offer s Comprehensive management of all businesses by one division: the Asset Solut
Slide 8: Tosei Group Advantages (2) Portfolio Management
Tosei Gr oup Advantages (2) Por tfolio Management Managing r eal estate por tfolios within the Asset Solution Depar t ment eliminates compar tmentalization and maximizes value. Asset Solution Depar tment Land Sell to Pur Local area attributes investor s Incr Implement Purchase Increase Lease and Lan
Slide 9: Tosei Group Advantages (3) Competitive Advantage in Purchasing
Tosei Gr oup Advantages (3) Competitive Advantage in Pur chasing High pr opor tion of negotiated transactions (86% *) thr ough original original pur chasing r outes Competitive advantage due to business offerings that other companies can’t pr ovide, speedy compa nies can’ decision- decision-making a
Slide 10: Tosei Group Advantages (4) Focus on Quality I
Tosei Gr oup Advantages (4) Focus on Quality I Tosei enfor ces str ict double-checks of quality with its or iginal, ISO9001-cer tified Palms Quality Check (PQC) system PQC System Tosei’s or iginal quality standar ds based on ISO -compliant quality manual PQC System Flowchar t Design Constr uction PP
Slide 11: Tosei Group Advantages (4) Focus on Quality II
Tosei Gr oup Advantages (4) Focus on Quality II Established to str engthen Tosei’s pr oduct -planning capabilities, the Value-Up Labor ator y helps cr eate enhanced r esidential mater ials and inter ior s. Value-Up Labor ator y Established in J une 2005 as an in- in-house pr oduct -planning labor at
Slide 12: Business Awareness – Market Conditions I
Business Awar eness – Mar ket Conditions I Acceler Acceleration ation of of rrevitalization evitalization will will Potential Potentialof ofTokyo ’s 23 Tokyo’s 23war wards dswill will continue continue for another 2-3 yearss for another 2 - 3 year rremain high emain high Real estate financial produc
Slide 13: Business Awareness – Market Conditions II
Business Awar eness – Mar ket Conditions II Lar Large gepr proper operties tiesand and vacant vacant lots lots Small Smalland and medium -size pr medium-size proper operties ties for for condominiums condominiums Intensely competitive (vacant lots) Fewer competitor s Competition among 60 developer s
Slide 14: Business Awareness – Market Conditions by Sales Target
Business Awar eness –Mar ket Conditions by Sales Tar get Tosei sells to Asset size (¥ (¥ million) Over 2,000 REIT Pr ivate funds Gr oup 1 View r eal estate as cur r ent assets for investment 1,000-2,000 Pr ivate funds Cor por ations (incl. r eal estate cos.) purposes Wealthy Gr oup 2 500-1,000 Pr iv
Slide 15: II. Summary of Results and Outlook for FY Ending Nov. 2006
II. Summar y of Results and Outlook for the Fiscal Year Ending Nov. 2006 14
Slide 16: Overview of Results for the Fiscal Year Ended Nov. 2005
Over view of Results for the Fiscal Year Ended Nov. 2005 (Non-consolidated and Consolidated) (¥ million) FY FY ended ended Nov. Nov. FY FY ended ended Nov. Nov. Incr 2004 2004 2005 2005 Increase ease FY FY ended ended Nov. Nov. (Non- (Non- 2005 2005 (Non- (Non- consolidated) consolidated) consolidat
Slide 17: Upward Revision of Forecasts
Upwar d Revision of For ecasts (Non-consolidated and Consolidated) Tosei has focused on business that yields higher mar gins and value. As a r esult, or dinar y income has incr eased significantly despite a slight decr ease in net sales compar ed to initial for ecasts. Net Net sales sales Or Ordinar
Slide 18: Outlook for the Fiscal Year Ending Nov. 2006
Outlook for the Fiscal Year Ending Nov. 2006 (Non-consolidated and Consolidated) (¥ million) FY FY ending ending Nov. Nov. 2006 2006 FY FY ending ending Nov. Nov. 2006 2006 (Non-consolidated) (Non-consolidated) (Consolidated) (Consolidated) YoY YoY incr increase ease YoY YoY incr increase ease Forec
Slide 19: Forecasts by Business Segment
For ecasts by Business Segment (¥ million, %) FY ended Nov. 2005 FY ending Nov. 2006 YoY change % of net sales % of net sales Amount % Net sales (¥ million) 17,644 100.0 28,484 100.0 10,840 61.4 Real Estate Revitalization Business 10,400 58.9 14,739 51.7 4,339 41.7 Real Estate Fund Business 349 2.0
Slide 20: Overview of Initiatives for the Current Fiscal Year (1)
Over view of Initiatives for the Cur r ent Fiscal Year (1) Wor k to achieve gr owth thr ough lar ge pr oper ties while steadily expanding business in small and medium- medium-size pr oper ties, wher e Tosei has an advantage Real Estate Revitalization Fur ther expand “ value- up” and tr ading busines
Slide 21: Overview of Initiatives for the Current Fiscal Year (2)
Over view of Initiatives for the Cur r ent Fiscal Year (2) Wor k to achieve gr owth thr ough lar ge pr oper ties while steadily expanding business in small and medium- medium-size pr oper ties, wher e Tosei has an advantage Real Estate Development Build customer por tfolios that meet mar ket needs •
Slide 22: Overview of Initiatives for the Current Fiscal Year (3)
Over view of Initiatives for the Cur r ent Fiscal Year (3) Diver sify entr y points in real estate pur chasing Alter native investment Enhance Real Estate Fund Business Proper ty management Alter native Investment Tosei Revival Investment Real estate- estate-backed NPL funds: Or pheus Capital (for m
Slide 23: III. Medium-term Management Plan
III. Medium-ter m Management Plan 22
Slide 24: Medium-term Management Plan – Overview
Medium-ter m Management Plan – Over view Pr omoting gr owth & expansion, br and establishment G ROW ING UP 2008 GROW Raising cor por ate value “Tokyo Value-up Par tner ” Real estate por tfolio r evitalization manager s Double scale of business Establish cor por ate br and 23
Slide 25: Medium-term Management Plan – Objectives
Medium-ter m Management Plan – Objectives Tar gets for FY Ending Nov. 2008 Net Netsales sales ¥40,500 ¥40,500million million Or Ordinar dinaryyincome income ¥6,000 ¥6,000million million Aiming to double scale of business in ter ms of net sales and or dinar y income Shar Shareholder eholders’s’ equit
Slide 26: Medium-term Management Plan – Strategic Targets 1 (1)
Medium-ter m Management Plan – Str ategic Tar gets 1 (1) 1. 1.Business Businessgr growth owth and and finances finances (¥ million, %) (¥ million) (¥ million) FY FY ¥50,000 ¥8,000 Consolidated ended ending % Consolidated ¥40,500 ¥40,000 ordinary ¥6,000 Nov. Nov. Change net sales ¥6,000 income 2005 2
Slide 27: Medium-term Management Plan – Strategic Targets 1 (2)
Medium-ter m Management Plan – Str ategic Tar gets 1 (2) (¥ million, %) Expand Existing Businesses FY ended Nov. 2005 Gross Gross Expand r eal estate r evitalization business by Segment targets Net sales profit profit making effective use of “value-up” capabilities (Consolidated) ratio Real Estate R
Slide 28: Medium-term Management Plan – Strategic Targets 1 (3)
Medium-ter m Management Plan – Str ategic Tar gets 1 (3) Fund Operating Asset Balance Targets (¥ billion) (¥ billion) ¥150 FY FY FY FY 130+ ended ending ending ending Nov. 05 Nov. 06 Nov. 07 Nov. 08 ¥130 R EITs Real estate 20.2 41.3 55 100 R eal estate funds funds ¥30 ¥110 REITs - - 30 30 ¥90 85 Tot
Slide 29: Medium-term Management Plan – Strategic Targets 1 (4)
Medium-ter m Management Plan – Str ategic Tar gets 1 (4) Business por tfolio map (Expand and enhance High growth new businesses) (Incr ease size of properties) Expand Expand (Incr ease no. of Alter native (Incr ease no. of properties) properties) Investment Expand Expand Real Estate Funds (Expand ra
Slide 30: Medium-term Management Plan – Strategic Targets 2
Medium-ter m Management Plan – Str ategic Tar gets 2 2. 2. Customer Customerssand and trtransactions ansactions Str engthen pur chasing that builds gr owth capacity Achieve an accurate gr asp of cor por ate needs Str engthen data management and use Enlarge and cultivate pur chasing infor mation netw
Slide 31: Medium-term Management Plan – Strategic Targets 3
Medium-ter m Management Plan – Str ategic Tar gets 3 3. 3. Business Businesspr processes ocessesand and or organizational ganizationaloper operations ations Tosei Group str uctur e Raise awareness of compliance Reinforce activities of Compliance Committee (Distribute compliance book to employees 4 t
Slide 32: Medium-term Management Plan – Strategic Targets 4
Medium-ter m Management Plan – Str ategic Tar gets 4 4. 4.Quality Quality and and quantity quantity of ofhuman human rresour esources ces (Number of employees) 200 Subsidiairies Incr ease number of per sonnel 170 Efficiently hir e and appropriately allocate personnel Tosei Corp. 157 who can meet the
Slide 33: Medium-term Management Plan – Summary
Medium-ter m Management Plan – Summar y “Grow “Gr owing ing Up 2008” –– the Up 2008” thesecond second step step towar towardd aa gr great eat leap leap for forwar wardd (2003~05: (2003~05:fir firstststep step(get (getrready), eady),2006~08: 2006~08: second secondstep step(get (getset), set),2009~: 2
Slide 34: Overview of Results for the Year Ended Nov. 2005
Over view of Results for the Year Ended Nov. 2005 33
Slide 35: Year Ended Nov. 2005 – Highlights
Year Ended Nov. 2005 – Highlights Achievements for the Year Ended Nov. 2005 J anuar y Began commer cial facility development (Constr uction of Shinjuku Building star ted) Febr uar y Acquir ed r eal estate investment advisor license Mar ch Established Tosei Revival Investment (TRI) (Enter ed alter na
Slide 36: Overview of Results
Over view of Results (¥ million, %) FY ended Nov. 04 FY ended Nov. 05 YoY Change FY ended Nov. 05 (Non- (Non- % of net sales % of net sales Amount % (Consolidated) % of net sales consolidated) consolidated) Net sales 14,514 100.0 16,828 100.0 2,314 15.9 17,644 100.0 Cost of sales 11,596 79.9 12,382
Slide 37: Main Performance Indicators
Main Per for mance Indicator s (¥ million, %) 5-Year Perfor mance Indicator s Non-consolidated Consolidated FY ended FY ended FY ended FY ended FY ended FY ended Nov. 2001 Nov. 2002 Nov. 2003 Nov. 2004 Nov. 2005 Nov. 2005 Operating income ratio 8.10% 10.59% 12.76% 14.42% 19.75 % 20.04 % Ordinary inc
Slide 38: Reclassification of Tosei Group Business Segments
Reclassification of Tosei Gr oup Business Segments Old Segments New Segments Real Estate Revitalization “Value-up” Real Estate Revitalization Business Revitalization Revitalization “Value-up” and tr ading business Tosei Cor por ation Real Estate Funds Real Estate Fund Business Funds Fund str uctur i
Slide 39: Tosei Group's Business Flow
Tosei Gr oup’s Business Flow Entr y “Value-up” (Incr ease value) Exit Adjustments for sale “Value-up” (approx. 6 months) (approx. 6 months) Real estate r evitalization Rental income Sell to Cur r ent assets investor s Real estate Development Pur chase development (12~20 months) Sell to end users Fix
Slide 40: Overview of Segment Results (1) Net Sales/Cost of Sales
Over view of Segment Results (1) Net Sales/Cost of Sales (¥ million, %) FY ended Nov. 2004 FY ended Nov. 2005 YoY change FY ended Nov. 2005 Net sales Non- Non- Amount Consolidated consolidated % of total consolidated % of total % % of total Total 14,514 100.0 16,828 100.0 2,314 15.9 17,644 100.0 Rea
Slide 41: Overview of Segment Results (2) Gross Profit/Operating Income
Over view of Segment Results (2) Gr oss Pr ofit/Oper ating Income (¥ million, %) FY ended Nov. 2004 FY ended Nov. 2005 YoY change FY ended Nov. 2005 Gr oss pr ofit Non- Non- consolidated % of total consolidated % of total Amount % Consolidated % of total Total 2,918 100.0 4,445 100.0 1,527 52.3 4,85
Slide 42: Comparison of Sales by Segment
Compar ison of Sales by Segment Building a business por tfolio focused pr imar ily on r evitalization, a business which stems fr om r ising liquidity in the r eal estate mar ket Segment Sales (Non- (Non-consolidated) 20,000 16,828 Achieved ear nings fr om the gr owth of the r eal estate r evitalizat
Slide 43: Revitalization Business
Revitalization Business A Favor able Mar ket for Revitalization Due to Gr eater -than -expected Activity in Real Estate Mar ket Revitalization Business Net Sales/Gr oss Profit (Non- (Non-consolidated) Major Sales Ne t s ale s Gros s profit Pr oper ties lar gely located in inner Tokyo 10,000 2,500 11
Slide 44: Fund Business
Fund Business Incr easing Fee Income thr ough Rapid Gr owth of Fund Oper ating Asset Balance Fund Business Net Sales/Gross Profit Fund Operating Asset Balance (Non- (Non-consolidated) Ne t s ale s Gr os s profit 400 400 25,000 24,186 350 350 (¥ million) 3,942 20,000 300 300 250 250 15,000 Net sales
Slide 45: Fund Business Asset Scale by Fund
Fund Business Asset Scale by Fund Br oadening Investor Base and Diver sifying Pr oduct Lineup Existing Fund Lineup Equity Investor s Asset Balance FY ended Nov. 05 Individuals and domestic Ar go Fund II institutional investor/Tosei ¥862 million Poseidon Fund Overseas financial institution/Tosei ¥8,5