FY2020/3 2Q Relo Group Investor Presentation · Relocation Support Business 6,900 1,400 + 21.0%...

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FY2020/3 2QRelo Group

Investor Presentation

November 29, 2019

1

2012

Overview

SalesGrowth

consecutive year of th

consecutive year of th

Record-breaking First-half Profit

2

Continuous decline of working population in Japan

Strong demand for corporate fringe benefits

Sustainable Growth in both

Sales and Profits

6,648 6,404

6,149 5,880

5,587 5,268

4,942 4,640

4,382 4,157

3,946

2016 20 25 30 35 40 45 50 55 60 65

Business EnvironmentForecast of trends in the working population

(Source) Mizuho Research Institute Ltd. Report

3

FY2020/3 2Q FY2019/3 2Q YoYChange

Sales 148,568 122,642 + 21.1%

Operating profit 8,878 8,687 + 2.2%Profit before income taxes 10,167 9,320 + 9.1%

Net income 6,312 6,225 + 1.4%

EPS (Yen) 42.09 41.75 + 0.8%

Covered BGRS acquisition cost incurred in the first quarter

Consolidated Results(Millions of yen)

Rounded down to the nearest million yen

411/3期 12/3期 13/3期 14/3期 15/3期 16/3期 17/3期 18/3期 19/3期 20/3期 21/3期 22/3期 23/3期

The First Olympic Plan The Second Olympic Plan The Third Olympic Plan

Recurring profit5.2 bn

Recurring profit9.8 bn

Recurringprofit

20.1 bn

Profit before income taxes

35.5 bn

Start of the Third Olympic Plan2 Integrate large-scale companies

overseas into Relo Group

Trends in Consolidated Results

FY2011/3 FY2012/3 FY2013/3 FY2014/3 FY2016/3 FY2017/3 FY2018/3 FY2021/3FY2019/3 FY2020/3FY2015/3 FY2022/3 FY2023/3

2 Systematize each business

5

Results & Overview by SegmentDomestic Relocation Business

6

FY2016/9 FY2017/9 FY2018/9 FY2019/9

Sales

¥107.5 bnYoY Change +11.5%

Domestic Relocation BusinessSales

Operating Profit

Operating Profit


7

Corporate Housing Management

Residential Property Management

Vacant House Property Management down year on year due to many properties still being under revival

Costs borne for new Corporate Housing Management system

Reactionary decrease after huge real estate sale in FY2019/3

Domestic Relocation Business

8



Good progress in building up stock and expanding the size of the business


9

FY2016/9 FY2017/9 FY2018/9 FY2019/9

181,995 units

YoY Change+12.5%

Corporate Housing Management based on a sub-leasing system

Rental corporate housing with furniture “R+”

Forms a business foundation with

high level of stock


Units under management

10

FY2016/9 FY2017/9 FY2018/9 FY2019/9

66,169units

YoY Change+8.6％


Units under management Growth of existinggroup companies

Profit Base Expands

7 block extension throughout Japan

11

Anticipating units under management to exceed 90,000

M&A Status

FY2020/3 Acquire three big companies that aremanaging several thousand residential units

FY2019/3


HOT HOUSE Co., Ltd.

12


TokyoHanazawa

April 2019

Promote improvement of operational efficiency and governance

TokyoMyrealty

October 2019

OsakaRecrea

OsakaKENT

TokyoTokyo

Mildcity

TokyoTOHTO

TokyoTOHTO

Merge Merge

Relocation Japan

13

Sales Operating profit YoYChange

国内リロ事業 226,000 10,400Corporate Fringe Benefits 20,500 8,000 + 20.7%Relocation Support Business 6,900 1,400 + 21.0%

Global Business 17,000 900 + 1.3%

Tourism Business 9,000 2,400 - 20.8%

Domestic Relocation BusinessFY2020/3 Plan

Domestic Relocation Business 226,000 10,400 + 19.6%

Complete closings and expand stock before large-scale M&A projects enter busy season

FY2020/3 Plan

(Millions of yen)Rounded down to the nearest million yen

14

Results & Overview by Segment

Corporate Fringe Benefits

15

FY2016/9 FY2017/9 FY2018/9 FY2019/9

Sales


Corporate Fringe BenefitsSales

Operating Profit

Operating Profit


16

FY2016/9 FY2017/9 FY2018/9 FY2019/9

Strong new acquisitions

10,000co.exceeds

No. of contracted companies

FY2019/3 Industry first


Fringe benefit members

7.09 million peopleYoY change

+0.68million people

17


Sapporo Office

Fukuri Kousei Club Chubu Co., Ltd.[Nagoya]

Fukuri Kousei Club Chugoku Co., Ltd.[Okayama]

The first office in the industryKumamoto Office open

Tohoku Office

Relo ClubHeadquarters

Expanding membership bases for both large companies and SMEs

Fukuri Kousei ClubChugoku Co., Ltd.[Matsue]

The first office in the industryUtsunomiya Office open

Fukuri Kousei Club Chugoku Co., Ltd.[Hiroshima]

Fukuri kosei Club Kyushu Co., Ltd.[Okinawa]

Fukuri kosei Club Kyushu Co., Ltd.[Fukuoka]

Osaka Branch

Actively developing new business nationwide

Niigata Office

18

Fringe benefit members at large companies grew 20% year on year

Hokkaido Area

Tohoku Area

Tokyo Metropolitan AreaChubu Area

Niigata AreaChugoku Area

Kansai AreaKyushu Area

Okinawa AreaShikoku Area

Published the industry’s first Shikoku-focused members’ magazine


19

FY2016/9 FY2017/9 FY2018/9 FY2019/9 FY2016/9 FY2017/9 FY2018/9 FY2019/9


0.61million people

YoY Change +50.0%

2.64 million people

YoY Change +21.6%

Usage-related indicators show strong performance. Contributing to expand foundation going forward.

Number of App DLE-magazine subscribers

20


+32.2% YoY growth in commission revenue

Accommodation GourmetOverriding commission Commission for transportation

of customers

21

Insurance seminar for membersSupport for future life design

Added 3,000 customers in the first half. Profit doubled year on year.


22


Domestic Relocation Business 226,000 10,400 + 19.6%

福利厚生事業 20,500 8,000 +20.7%Relocation Support Business 6,900 1,400 + 21.0%



Corporate Fringe BenefitsFY2020/3 Plan

Corporate Fringe Benefits 20,500 8,000 + 20.7%

Fringe benefit members and other stock growing according to plan

FY2020/3 Plan


23


Relocation Support Business

24

FY2016/9 FY2017/9 FY2018/9 FY2019/9

Sales


Relocation Support BusinessSales

Operating Profit

Operating Profit


Changed Accounting Standards

25


Overseas Relocation Support

HR Staff Assignee

• Work visa• Physical exam• Immunization• Moving• Local housing• Flight

• Expat insurance• Language

schooling• Business training• Expense

reimbursement

Business Travel Management

HR StaffBusiness Traveler

Providesarrangements

Requestsarrangements

Confirm arrangements,

provide information on traveler and destination, and analyze costs

26


Profit for the second quarter up 23.1%, accelerating growth

Relatively no change due to major customer’s delay in completing employee relocation

Number of Global Relocation Support: YoY Change +10.4%

■ First quarter

■ Second quarter

Growth in profit related to relocation services, such as air ticket arrangement, insurance to expats, etc.

27

FY2016/9 FY2017/9 FY2018/9 FY2019/9


Number of RELO-AIRINC indices sold

+31.8%

Number of RELO-AIRINC indices sold

Continually increased share each year since starting the business 7 years ago

YoY change

28


Domestic Relocation Business 226,000 10,400 + 19.6%Corporate Fringe Benefits 20,500 8,000 + 20.7%

赴任支援事業 6,900 1,400 +21.0%



Relocation Support BusinessFY2020/3 Plan

Relocation Support Business 6,900 1,400 + 21.0%

Steadily growing number of households receiving overseas relocation support

FY2020/3 Plan


29


Global Business

30

FY2016/9 FY2017/9 FY2018/9 FY2019/9

Sales


Global BusinessSales

Operating Profit

Operating Profit


31

Global Business

No earnings contribution in FY2020/3 due to impact of acquisition cost

Implementing PMI: Aiming to create synergy with Relo Group companies as soon as possible

• Customer base made up of government agencies in North America and large companies

• Supports 60,000 relocation cases annually• Busy 2Q Slow 4Q

BGRS Limited

32

Global Business

Service packages, such as home management + 24-hour simultaneous interpreting service

Mobility Management Service

Number of users: YoY change +60%

Related auto lease/insurance to expats business doing well

Local services for relocated Japanese are performing well

Business targeting Japanese expats

33

Global Business

However, the business is impacted by delays in visa issuance under the Trump administration

Number of leasing brokerages Same level YoY

Number of sales and purchase brokerages

Asset Model Business Sluggish

Same level YoY

34

Global Business

India

Thailand

London

Established local subsidiary in Singapore

Services targeting Japanese expats

Lateral expansion of REDAC’s North America business model

35


Domestic Relocation Business 226,000 10,400 + 19.6%Corporate Fringe Benefits 20,500 8,000 + 20.7%Relocation Support Business 6,900 1,400 + 21.0%

Global Business 17,000 900 +1.3%


Global Business PlanFY2020/3 Plan


Taking into consideration PMI expenses, REDAC’s expansion into Asia, and other upfront investment

FY2020/3 Plan


36

16/9期 17/9期 18/9期 19/9期

Global Business

Greatly exceededinitial forecast

Sales

FY2016/9 FY2017/9 FY2018/9 FY2019/9

Due to gross accounting of residential housing

purchase/sale business

Sales


37


Tourism Business

38

Tourism Business

Hotel Management Business

Timeshare Business

Operation of hotels and corporate recreation facilities

Solutions for revitalizing hotels and corporate recreation facilitiesConsultant services for bringing in customers to hotels and corporate recreation facilities

Managing point system-based timeshare resorts

39

Reactionary decrease from sale of large-scale

facilities in FY2018/9

FY2016/9 FY2017/9 FY2018/9 FY2019/9

Sales

¥7.9 bnYoY Change -6.7%

Tourism BusinessSales

Operating Profit

Operating Profit

¥1.6 bnYoY Change -22.3%

40

FY2016/9 FY2017/9 FY2018/9 FY2019/9

Tourism Business

+16.2%YoY change

Profit from sale of facilities

Profit from operations

Operating Profit

41

Tourism Business

Before & After Capital Improvements Renovation of corporate recreation facilities, etc.

with professional know-how

Stable contribution to consolidated

performance

Smoothvalue-up cycle

42




観光事業 9,000 2,400 ▲ 20.8%

Tourism Business PlanFY2020/3 Plan

Plan anticipates reduced profit, incorporating reduced profit from sale of facilities

FY2020/3 Plan



43




観光事業 9,000 2,400 ▲20.8%Tourism Business（Excluding profit from sale of facilities） 9,000 2,400 + 32.8%

FY2020/3 Plan

施設売却益の減少を織り込み減益の計画Expect a 32.8% rise purely in profit from management （Excluding profit from sale of facilities）


Tourism Business PlanFY2020/3 Plan

44

Overview of FY2020/3 Plan(Millions of yen)

Rounded down to the nearest million yen

ActualFY2019/3 FY2020/3 Plan YoY

Sales 250,864 280,000 + 11.6%

Operating profit 17,867 20,200 + 13.1%Profit before income taxes 19,076 22,500 + 17.9%

Net income 13,005 14,100 + 8.4%

Annual Dividend per Share (¥) 26.00 29.00 + ¥3.00

Aiming for the 20th consecutive year of sales growth and the 11th consecutive year of record profit for FY2020/3

45

FY2003/3 FY2004/3 FY2005/3 FY2006/3 FY2007/3 FY2008/3 FY2009/3 FY2010/3 FY2011/3 FY2012/3 FY2013/3 FY2014/3 FY2015/3 FY2016/3 FY2017/3 FY2018/3 FY2019/3 FY2020/3

Dividend increases are expected

for 17 consecutive years

Dividends amount

Dividends

¥29

¥0.75

Plan

( Yen/Share )

46

FY2020/3 2QRelo Group

Investor Presentation

November 29, 2019

47

◆Be No.1 for Domestic Core Business

◆Build a footing for reaching the Global Market

- The Third Olympic Plan priority challenges -

The Third Olympic Plan

48


FY2019/3

20.0 bnRecurring

profit

Target for FY2023/3

35.5 bnProfit before income taxes

49

The Second Start-Up Period

Mission◆

Support the non-core businesses

◆Support the global expansion of Japanese companies

<Japanese Companies>Concentrating on main business due to decline in

the Japanese MarketAccelerating global expansion

50

<Japanese Companies>

growth growthgrowth

The Second Start-Up Period

Impacted by “Work style reform”Correspondence to “Equal pay for equal work”

Growing into a position to become No.1




51

Strategy

Assign managing officers who can unify core businesses

Appoint a CIO(a chief executive for information systems)

Strengthen collaboration and cross-selling between each business

Spread the “The Second Growth Curve”





This Medium-Term Management Plan representsthe final stage for Relo to become No. 1

52


System investment Improve operation efficiency

Strengthen sales capabilityIncrease ProfitsRaise customer

satisfaction

Reduce cost percentage

Spread “The Second Growth Curve”

Expand system investment for each core business

53


April 2019~

The Global “Start-Up” Stage


The FirstOlympic Plan

The SecondOlympic Plan

The Second “Start-Up” Stage （First 12 years）

The Second “Start-Up” Stage（Latter 12 years）

April 2023~ ~FY2035/3

This Medium-Term Management Plan is an important stage in gearing up for the Global “Start-Up” Stage

54


Decline in the Japanese market due to declining population

Accelerating global expansion

The business climate in Japan following the Tokyo Olympics

Increase in global M&A

Global Relocation CompanyGrouping of BGRS

Supporting mobility for people at global companies and Japanese employees relocated overseas

55

BGRS DAY 100

Take on challenges to become the No.1 Global Relocation Company

* From the Day 100 event in Toronto

56

BGRS DAY 100

BGRS VisionFor leaders at BGRS

Take on challenges targeting high level of growthParticipate in partnership management

Prior to acquisition

1.3 bnTarget for FY2023/3

4.1 bnProfit

The full-scale start of Relo Group’s global expansion

57

BGRS DAY 100

• Born from the M&A of a Canadian relocation company• Number of relocations: Third in the world• Received contracts from the governments of North

America for its high-quality service• Over 90% returning customers• High level of stock vs. flow• Targets upper echelon companies in the Fortune 500• Management policy focused on increasing efficiency

through system integration

58

BGRS DAY 100

1 High level of stock vs. flow

2 Promote digitalization

Manage to create ¥1.8 bn by focusing on efficiencyand cutting costs

Measures to increase profit by ¥2.8 bn (1)

Customer service, Office administration, Supply chainsIncrease work efficiency by introducing automation to these three segments



4.1 bnProfit

59

BGRS DAY 100

IT systems investment

Improve operationefficiency

Reduce cost percentage

Improve price flexibility

Strengthen sales capabilityIncrease profit

Create ¥1.0 bn through new business development and other aggressive sales activities

Measures to increase profit by ¥2.8 bn (2)



4.1 bnProfit

60

BGRS DAY 100

What we confirmed at BGRS

1 Improved profit margin via system integration

2 Governance structure for current management team

3 Room to expand market share/profit scale

4 Room to expand into European markets

61

BGRS DAY 100

The situation at Relo prior to the Second “Start-Up” Stage was similar to BGRS

Corporate Housing Management Corporate Fringe Benefits

There were many competitors, and internally, there was an air of stagnation and no momentum

Declared to become No.1Clarified Relo’s mission and vision

62

BGRS DAY 100

In a position to become No.1 for each core business

Clarified Policy

Strengthen sales capability and marketing

Construct strong service and follow-up frameworkImprove operation efficiency through system investment

Declared to become No.1

63

BGRS DAY 100

Reaching the stage where it can shift to an aggressive sales policy

Going forward As a member of Relo Group

Continue work on operations efficiency projects

Take up a mission that inspires staffShare a huge vision among members

64

FY2019/3 FY2020/3 FY2021/3 FY2022/3 FY2023/3

BGRS DAY 100

Impact of BGRS on the consolidated business performanceThe Third Olympic PlanFY2020/3

Acquisitioncost ｰ0.5 bn

Expect BGRS to contribute to achieving the goals of the Third Olympic Plan and create upswing

BGRS is not incorporated into the Medium-Term

Management Plan

Profit before income taxes

35.5 bn

BGRS

FY2019/3 FY2020/3 FY2021/3 FY2022/3 FY2023/3

65

FY2010/9 FY2011/9 FY2012/9 FY2013/9 FY2014/9 FY2015/9 FY2016/9 FY2017/9 FY2018/9 FY2019/9


Centralizing all residential housing-relatedoperations in one business

The First Olympic Plan The Second Olympic Plan

Units under management showed huge growth during the

Second Olympic Plan

Units under management

66


1 From FY2021/3, system enters full operation Improvement of operational efficiency/increase of ancillary revenue

2 Integrate Vacant House Property Management Support residence-related work for companies and employees

3 Strengthen rental housing service with furniture “R+” Respond to the needs of foreign workers


67


Become No.1 through overwhelming profit scale and differentiation

FY2019/3


10.5 bnOperating profit

68

FY2000/3 FY2001/3 FY2002/3 FY2003/3 FY2004/3 FY2005/3 FY2006/3 FY2007/3 FY2008/3 FY2009/3 FY2010/3 FY2011/3 FY2012/3 FY2013/3 FY2014/3 FY2015/3 FY2016/3 FY2017/3 FY2018/3 FY2019/3


Fill in the gap in fringe benefits between companies in the Tokyo metropolitan

area and local companies

“The Second Growth Curve” by system investment

- Corporate Fringe Benefits mission -

Operating profit

69


1 Become No.1 in profit scale/market share

2Strengthen “Club Off” business （CRM business）Strengthen to Japanese companies monopolizing of the customer

base

3“Club Off” + 24-hour on-site support + Call centers Strengthen monopolizing of the customer base/support declining

working population


70


FY2019/3



71


The Second Olympic Plan

• Completed integration with Relo Panasonic Excel’sexternal sales unit

• Raising businesses’ level of stock vs. flow

Entering an important stage for meeting growth curve trajectory


Over 8,000• Number of households receiving services

• Promote digitalization of work processes

72


How global companies handle mobilityHow Global Relocation Companies respond

Strategy Utilize BGRS’s infrastructure

1 Absorb BGRS’s know-how

2 Promote systemization and digitalizationof work processes

73


3 Strengthen inbound support, as a high-demand area

4 Bring in new Japan-relocating customersfrom BGRS

1 Absorb BGRS’s know-how

2 Promote systemization and digitalizationof work processes


74

Relocation Support Business+ Global Business

FY2019/3



75

Relocation Support Business+ Global Business

Existing Bases

BGRS Bases

• Provide strong support for Japanese companies’ global operations

• Support global companies’ mobility

76

Residential Property ManagementTourism Business

~FY2019/3

The Global “Start-Up” Stage

The Second “Start-Up” Stage （Latter 12 years）

The ThirdOlympic Plan

The FirstOlympic Plan

The SecondOlympic Plan

The Second “Start-Up” Stage （First 12 years）April 2011~

Related business that differs from the BtoB business in which Relo Group specializes

Residential Property Management and Tourism Business Succeeded in establishing

77


New companies joining the Group achieve high level of growth

Leased housing management companies

Small-to medium-sized hotels

Utilizing our ability to attract customers from our core businesses

Relo NetMembership

Call center

Consultant on attracting

new customers

Operations contractor

+ Activities to mitigate the successor problems facing some businesses

78


The First and Second Olympic Plans

1 Assimilated 16 leased housing management companies into the Group

2 TOHTO + Bestus : Increased profit by 6 times, doubled the margin percentage, and improved productivity

3Tourism Business: Total 47 facilities（34 owned by Relo）¥1.8 bn in profit from facility operation, and improvedproductivity

79


・ Bring in people, goods, and capital from across theworld

Will accelerate during the 4 years of the Third Olympic Plan

Business Environment

Declining population

Trends in Japan

・ Successor problem manifests at small-to mid-sizedcompanies outside of major metropolitan areas

80


Many small- to mid-sized companies are pressured to change

Adds to the successor problem

“Equal pay for equal work”

Raise minimum wageGovernment

policy

Business Environment

Declining population

81

1 Over 40 shops mainly in Northern Kyushu

1 Top Real Estate Broker in Kyushu -- # of deals

EKIMAE REAL ESTATE merged into our group

Total 4 of Real Estate Companies including that engaged in leasing & property management on 7,800 units all over Japan

during 2nd half of FY2020/3 to be merged into our group

M&A Deal Trends: Increase in deal volume & deal size


82


Restructure and consolidate operating companies joining Relo Group

Conduct a certain level of investment

Improve profit margin by streamlining operations Raise the top line

Further growth bolstered by business successand market backwind

The First and Second Olympic Plans

83


FY2019/3



84

Tourism Business

FY2019/3



* Excluding profit from sale of facilities

85


Be No. 1 for Domestic Core Business

Expand into BtoC business based on ability to attract new customers

Build a footing for reaching the Global Market

Round 2 of the Second “Start-Up” Stage:Jump to the Global “Start-Up” Stage

86


Understand the importance of mission and vision

Experience how effective shares can be in financial planning

We will prove that we still have so much potential.

Laying out a huge vision and inspiring mission

87

Planning and IR Group, Relo Group, Inc.

E-Mail: [email protected]: http://www.relo.jp/

Contact

The information contained in this presentation is provided for information purposes only and should not be construed as a solicitation to invest in our securities.This material has been prepared based on currently available information as of September 2019 and contains forward-lookingstatements that reflect Relo’s plans and expectations at the abovementioned time. Relo shall bear no responsibility or liabilityfor the accuracy of the information, or for any actions arising from the use of information in this presentation.Moreover, the contents of this material are subject to change without notice.

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FY2020/3 2Q Relo Group Investor Presentation · Relocation Support Business 6,900 1,400 + 21.0%...

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