日本管財（9728） – [Delayed] Financial Results for the Fiscal Year Ended March 31,2022

NIPPON KANZAI Co., Ltd. (Securities Code: 9728/TSE Prime)Financial Results forthe Fiscal Year Ended March 31, 2022May 25, 2022Copyright (C) 2022 NIPPON KANZAI Co., Ltd.Index3Consolidated Financial Results for FY3/2212Consolidated Financial Forecasts for FY3/2319Medium-Term Growth StrategiesCopyright (C) 2022 NIPPON KANZAI Co., Ltd.2Consolidated Financial Results for FY3/22Copyright (C) 2022 NIPPON KANZAI Co., Ltd.Consolidated Financial Results Highlights（Rounded down to the nearest ¥million）Net Sales¥103,737 million (-0.4% YoY) Sluggish orders for construction-related work, including large-scale projects Steady renewal of existing contractsOperating Profit¥7,500 million (-0.6% YoY) Decrease due to expenses incurred for COVID-19 countermeasures and strengthening the organization Improved profitability as a result of revised rates and reviewing scope of workOrdinary Profit¥8,276 million (+3.7% YoY) Increase in investment gains based on the equity method Recognition of foreign exchange gains due to the weak yenProfit Attributable to Owners of Parent ¥6,177 million (+20.0% YoY) Decrease in tax expensesCopyright (C) 2022 NIPPON KANZAI Co., Ltd.4Consolidated Financial Results SummaryConsolidated(\ million)Net SalesGross ProfitOperating ProfitOrdinary Profit(¥ million)110,000100,00090,00080,00070,00060,000SG&A Expenses14,80714.2%15,701FY3/21FY3/22YoY ChangesActualRatioActualRatioAmountRatio104,124100.0%103,737100.0%(386)-0.4%22,35421.5%23,2017,5467,9825,1497.2%7.7%4.9%7,5008,2766,17722.4%15.1%7.2%8.0%6.0%847893(45)2933.8%6.0%-0.6%3.7%1,02820.0%Profit Attributable to Owners of Parent*The accounting policies of overseas equity-method affiliate to which IFRS is applied have been changed from FY3/22, and the results for FY3/21 have been calculated after retroactively applying this change in accounting policies.Net SalesOperating Profit Margin92,49096,47897,929106,300104,124103,7377.2%7.2%6.0%6.0%6.5%6.4%Full-YearFull-YearFull-YearFull-YearFull-YearFull-YearFY3/17FY3/18FY3/19FY3/20FY3/21FY3/22Copyright (C) 2022 NIPPON KANZAI Co., Ltd.5Analysis of Increases/Decreases in Consolidated Operating Profit• Profitability improvement through price revisions and specification changes, etc.• Decrease in construction-related work• Countermeasures for COVID-19• Increase in expenses due to strengthening the organizationDecreasein net salesDecreasein cost of salesIncreasein SG&AexpensesCOGS Ratio-0.90pp*YoYSGA Ratio+0.91pp*YoY(45)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.(¥ million)*pp (percentage point)6Overview of Consolidated Balance SheetsConsolidated(\ million)Current assetsCash and deposits FY3/21 EndFY3/22 EndYoY ChangesActualRatioActualRatioAmountRatioMain Factors for Increase/DecreaseNotes and accounts receivable – trade, and contract assets14,83618.3%14,29617.4%(540)-3.6%Assets53,48333,07565.8%51,84963.1%(1,633)40.7%32,78939.9%(286)Real estate for saleNon-current assets Property, plant and equipment Intangible assets 3,5194.3%2,9073.5%27,79634.2%30,29136.9%5,4112,0246.7%2.5%5,9882,3577.3%2.9%Investments and other assets 20,36025.1%21,94626.7%Total AssetsCurrent liabilities Notes and accounts payable – trade 81,280100.0%82,141100.0%16,86820.8%13,62616.6%(3,241)-19.2%Long-term non-recourse loans payableIncome taxes payableNon-current liabilities Long-term borrowingsTotal LiabilitiesShareholders’ equity Share capitalCapital surplusRetained earningsAccumulated other comprehensive income Non-controlling interestsTotal Net Assets9,0911,8507,7177502,33624,58554,8213,0003,7855911,28111.2%2.3%9.5%0.9%2.9%3.7%4.7%0.7%1.6%6,1435616,8623751,8713,0003,7851,2801,2797.5%0.7%8.4%0.5%2.3%3.7%4.6%1.6%1.6%56,69469.8%61,65275.1%30.2%20,48924.9%(4,096)-16.7%67.4%59,09271.9%4,2717.8%-3.1%-0.9%-17.4%9.0%10.7%16.4%7.8%1.1%(612)2,4945763321,585861(2,947)-32.4%(1,289)-69.7%(854)(375)(465)-11.1%-50.0%-19.9%–688(2)4,957861–116.3%-0.2%8.7%1.1% Decrease in notes and accounts receivable -trade, and contract assets Decrease in real estate for sale Increase in investment securities due to purchase of shares of affiliates, etc.1,618 Decrease in notes and accounts payable – Decrease in income taxes payableLiabilitiestradeNet Assets Increase in foreign currency translation adjustment（￥ million）861(540)(612)(4,096)(2,947)(1,289)4,9574,27140573.5%Total Liabilities and Net Assets81,280100.0%82,141100.0%*The accounting policies of overseas equity-method affiliate to which IFRS is applied have been changed from FY3/22, and the results for FY3/21 have been calculated after retroactively applying this change in accounting policies.Equity Ratio(+5.3pp YoY)50,80962.5%55,08067.1%4,2718.4% Increase in retained earningsCopyright (C) 2022 NIPPON KANZAI Co., Ltd.7Overview of Consolidated Statement of Cash FlowsConsolidated(\ million)Profit before income taxesDepreciation Decrease (increase) in retirement benefit assetDecrease (increase) in trade receivablesIncrease (decrease) in trade payablesDecrease (increase) in inventoriesIncome taxes paidOther, netCash Flows from Operating ActivitiesPurchase of property, plant and equipment, and intangible assetsPurchase of investment securitiesProceeds from sale of investment securitiesPurchase of shares of subsidiaries resulting in change in scope of consolidationOther, netCash Flows from Investing ActivitiesIncrease (decrease) in borrowings (incl. non-recourse loans)Dividends paid (incl. dividends paid to non-controlling interests)Other, netCash Flows from Financing ActivitiesNet increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of periodCash and cash equivalents at end of periodFY3/21FY3/22YoY ChangesActualActualAmount(2,187)8,384601(325)(860)5417745517,481(616)(479)1,088-(10)(17)(997)(1,953)(102)(3,053)4,48728,34332,8308,3766207979(1,584)575(3,278)(1,241)4,456(984)(757)105(511)307(1,840)(843)(2,117)(112)(3,074)(386)32,83032,444(7)183331,839(2,125)(198)(1,091)(1,793)(3,024)(367)(278)(982)(511)318(1,822)154(164)(9)(20)(4,873)4,487(386)Free Cash Flows7,4632,616(4,847)Main Factors for Increase/Decrease（￥ million）CF from Operating Activities(3,024) Decrease in trade payables Increase in income taxes paid(2,125) (1,091) CF from Investing Activities (1,822) Decrease in proceeds from sales of investment securities(982) Increase in purchase of shares of subsidiaries resulting in change in scope of consolidation(511)CF from Financing Activities (20) Decrease in repayments of long-term non-recourse loans 154 Increase in dividends paid (164)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.8Business Segments and Main Group Companies■ Facilities Management and Operations¥71,977 mil.■ Environmental Facilities Management¥11,554 mil.Building Maintenance and Property Management (excl. Security Service)¥49,563 mil.NS Corporation Co., Ltd.Japan Environmental Solutions Co., Ltd.Okinawa Nippon Kanzai Co., Ltd.Security Services ¥22,413 mil.Three-S Co., Ltd.■ Residential Management and ¥16,980 mil.OperationsCondominium ManagementEnvironmental Facility ManagementNippon Kanzai Environment Service Co., Ltd.47.8%1.6% 1.5%11.1%FY3/22Net Sales¥103,737 mil.16.4%■ Real Estate Fund Management¥1,530 mil.Asset ManagementTokyo Capital Management Co., Ltd.Japan Housing Management Co., Ltd.Nippon Kanzai Housing Management Co., Ltd.NJK Staff Service Co., Ltd.(including Nippon Kanzai Residential Management Administrative Departmentand Public Housing Management Division)21.6%■ Other¥1,694 mil.Other BusinessesNS Corporation Co., Ltd. (Advertisement and Event Planning)Neotrust Co., Ltd. (Payroll and social insurance BPO)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.99Financial Results by Business SegmentConsolidated(\ million)Net SalesFacilities Management and Operation BusinessBuilding Maintenance and Property ManagementSecurity ServiceResidential Management and Operation BusinessEnvironmental Facility Management BusinessReal Estate Fund Management BusinessOther BusinessesSegment ProfitFacilities Management and Operation BusinessBuilding Maintenance and Property ManagementSecurity ServiceResidential Management and Operation BusinessEnvironmental Facility Management BusinessReal Estate Fund Management BusinessOther BusinessesAdjustments*particular segment.FY3/21FY3/22YoY ChangesActualRatio/MarginActualRatio/MarginAmountRatio104,124100.0%103,737100.0%73,76851,92121,84716,22711,3491,6511,1277,5469,8916,8843,0071,5661,4764523870.8%49.9%21.0%15.6%10.9%1.6%1.1%7.2%13.4%13.3%13.8%9.7%13.0%2.8%21.1%71,97749,56322,41316,98011,5541,5301,6947,5009,9126,9262,9851,6931,5804331469.4%47.8%21.6%16.4%11.1%1.5%1.6%7.2%13.8%14.0%13.3%10.0%13.7%2.9%18.6%(386)(1,790)(2,357)566753204(121)567(45)2142(21)127104(1)76-0.4%-2.4%-4.5%2.6%4.6%1.8%-7.3%50.3%-0.6%0.2%0.6%-0.7%8.1%7.1%-4.3%32.1%-*The adjusted amount of segment profit includes the elimination of intersegment transactions as well as SG&A expenses which are not attributable to any (5,670)-(6,044)-(373)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.10Performance of Main Business SegmentsFacilities Management and Operations Environmental Facilities Management Net SalesOperating Profit Margin(¥ million)Net SalesOperating Profit Margin66,98867,87375,22773,76871,97712,0009,7579,82811,34911,55413.7%13.0%10,64112.5%12.2%12.5%13.4%13.8%20,00011.1%11.6%11.9%FY3/18FY3/19FY3/20FY3/21FY3/22FY3/18FY3/19FY3/20FY3/21FY3/22Residential Management and Operations Real Estate Fund Management and OtherNet SalesOperating Profit Margin16,98716,25716,88516,22716,9808.5%9.1%8.8%9.7%10.0%(¥ million)4,0003,0002,745Operating Profit MarginNet Sales3,9703,5453,2242,77815.6%12.2%9.5%10.2%11.1%FY3/18FY3/19FY3/20FY3/21FY3/22FY3/18FY3/19FY3/20FY3/21FY3/22Copyright (C) 2022 NIPPON KANZAI Co., Ltd.11(¥ million)80,00060,00040,0000(¥ million)20,00015,00010,0005,00009,0006,0003,00002,0001,0000Consolidated Financial Forecasts for FY3/23Copyright (C) 2022 NIPPON KANZAI Co., Ltd.Consolidated Financial Forecasts SummaryMarket Background and Risks As a result of the pandemic, offices are shifting from centralization to decentralization based on the promotion of working from home and the like. Vacancy rates are also rising. Delay in construction due to soaring raw material prices and a shortage of semiconductor supply. Expectation for moves toward normalization of economic activities due to promotion of COVID-19 vaccinations. Concerns over securing staff and rising labor costs. Operating profit is expected to increase from business line expansion and cost restraints. For ordinary profit, share of profit of entities accounted for using equity method is expected to increase andnon-operating expenses are expected to be controlled.Consolidated(\ million)Net SalesGross ProfitSG&A ExpensesOperating ProfitOrdinary ProfitProfit Attributable to Owners of ParentFull-Year FY3/221H FY3/232H FY3/23Full-Year FY3/23YoY ChangesActualRatioForecastRatioForecastRatioForecastRatioAmountRatio103,737100.0%100.0%108,000100.0%4,26223,20115,7017,5008,2766,17722.4%15.1%7.2%8.0%6.0%51,80011,4007,7003,7004,1002,700100.0%22.0%14.9%7.1%7.9%5.2%56,20012,1508,0504,1004,4002,90021.6%14.3%7.3%7.8%5.2%23,55015,7507,8008,5005,60021.8%14.6%7.2%7.9%5.2%34848299223(577)-9.3%Copyright (C) 2022 NIPPON KANZAI Co., Ltd.4.1%1.5%0.3%4.0%2.7%13Increases/Decreases in Consolidated Ordinary Income Forecast(¥ million)Dividend incomeShare of profit of entities accounted for using equity methodOtherNet sales increaseCost of sales increaseSG&A expenses increaseCopyright (C) 2022 NIPPON KANZAI Co., Ltd.14Financial Forecasts by Business SegmentConsolidated(\ million)Net SalesFacilities Management and Operation BusinessBuilding Maintenance and Property ManagementSecurity ServiceResidential Management and Operation BusinessEnvironmental Facility Management BusinessReal Estate Fund Management BusinessOther BusinessesSegment ProfitFacilities Management and Operation BusinessBuilding Maintenance and Property ManagementSecurity ServiceResidential Management and Operation BusinessEnvironmental Facility Management BusinessReal Estate Fund Management BusinessOther BusinessesAdjustmentsparticular segment.Full-Year FY3/221H FY3/232H FY3/23Full-Year FY3/23YoY ChangesActualCompositionRatio/MarginForecastCompositionRatio/MarginForecastCompositionRatio/MarginForecastCompositionRatio/MarginAmountRatio103,737100.0%51,800100.0%56,200100.0%108,000100.0%71,97749,56322,41316,98011,5541,5301,6947,5009,9126,9262,9851,6931,5804331469.4%47.8%21.6%16.4%11.1%1.5%1.6%7.2%13.8%14.0%13.3%10.0%13.7%2.9%18.6%35,58024,34011,2408,2605,8001,2309303,7004,9003,4701,430850839(55)10068.7%47.0%21.7%16.0%11.2%2.4%1.8%7.1%13.8%14.3%12.7%10.3%14.5%-4.5%10.8%39,13027,42011,7108,8706,5504001,2504,1005,1503,5501,60087079111524069.6%48.8%20.8%15.8%11.7%0.7%2.2%7.3%13.2%13.0%13.7%9.8%12.1%28.8%19.2%74,71051,76022,95017,13012,3501,6302,1807,80010,0507,0203,0301,7201,63060340(6,044)-(2,934)-(3,066)-(6,000)4,2622,7322,196536149795994852991379344264916254469.2%47.9%21.3%15.9%11.4%1.5%2.0%7.2%13.5%13.6%13.2%10.0%13.2%3.7%15.6%-4.1%3.8%4.4%2.4%0.9%6.9%6.5%4.0%1.4%1.3%1.5%1.5%3.1%28.7%37.5%8.1%-*The adjusted amount of segment profit includes the elimination of intersegment transactions as well as SG&A expenses which are not attributable to any Copyright (C) 2022 NIPPON KANZAI Co., Ltd.15Topics: Shareholder Return Policy Determining dividend policy is one of NIPPON KANZAI’s most important tasks and we return profit by appropriate distribution of results according to performance. For FY3/22, year-end dividends will be set at ¥27 per share based on full-year financial results. For FY3/23, interim and year-end dividends will be set at ¥27 each, with plans for total dividends of ¥54 per share.Interim DividendsYear-End DividendsConsolidated Dividend Payout RatioDividend on Equity Ratio (DOE)FY3/19Actual25.0025.0040.0%3.8%FY3/20Actual25.0025.0042.6%3.7%FY3/21Actual25.0027.0037.8%3.6%FY3/22Actual27.0027.0032.7%3.5%FY3/23Forecast27.0027.0036.0%－(¥)60.0040.0020.000.00Interim DividendsYear-End DividendsConsolidated Dividend Payout Ratio40.0%42.6%37.8%32.7%36.0%25.0025.0027.0027.0027.0025.00ActualFY3/1925.00ActualFY3/2025.00ActualFY3/2127.00ActualFY3/2227.00ForecastFY3/23Copyright (C) 2022 NIPPON KANZAI Co., Ltd.16Corporate Governance MeasuresPromotion of Effective Asset Utilization in Accordance with the Corporate Governance Code Repositioning our portfolio of investment securities to enhance business developmentInvestmentsecuritiesFY3/22 EndSecurities held for non-business purposes ¥2,686 mil.Securities held for business purposes¥5,218 mil.¥15,653 mil.Shares of affiliates ¥7,748 mil.Reposition with business purpose securitiesOur efficient utilization of assets will contribute to better business performance and better income statementsCurrent initiatives Ongoing negotiations with multiple companies to dispose of securities held for non-business purposes.Copyright (C) 2022 NIPPON KANZAI Co., Ltd.17NIPPON KANZAI’s Thoughts on SDGsCorporate Vision: We continue to pursue “the best suited management for your building” with our advanced technology and capability.We promote work-life balance of all stakeholders including all employees and subcontractors to realize a society that allows for work-life balance.1 Safe & Secure Urban DevelopmentWe support safe, secure and sustainable urbandevelopment withbuilding managementexpertise based on our advanced technologies andvarious certifications.our2 Environmental ActivitiesWe realize a safe, secure, and pleasant societytaking global environment into consideration.3 Contributions to Local CommunitiesWe improve community well-being through ourbuilding management operations.4 Work-Life BalanceWe realize a social work-life balance.5 Enhancement of Compliance and Risk ManagementWe establish a governance structure that is soundand highly transparent.Copyright (C) 2022 NIPPON KANZAI Co., Ltd.18Medium-Term Growth StrategiesCopyright (C) 2022 NIPPON KANZAI Co., Ltd.Transition to a Holding Company StructureOverview of Transition to a Holding Company Structure Purpose of the transition• After the Group is split into management and business operating functions, a newly created holding company will be dedicated to group management, with the aim to strengthen each function of the Group. • The business operating companies themselves will be equipped with the responsibility and authority to enable to achieve swifter business operations.Such operating companies will respond more quickly to clients’ needs and execute business practices more closely rooted in the operational frontlines.• Under the holding company, such operating companies will be trained to accumulate management experience, which will lead to the nurturing of human resources. Method and summary of the transition• The holding company, which will become a wholly owning parent company, will be established through transferring shares.• The holding company will apply for listing on the “Prime Market” through procedure of technical listing, and NIPPON KANZAI Co., Ltd. will be delisted.• The date of registration and listing of the newly established holding company is scheduled for Monday, April 3, 2023.Current status After reorganizationCompany NameNIPPON KANZAI Holdings Co.,Ltd.NIPPON KANZAI Co., Ltd.NIPPON KANZAI Holdings Co.,Ltd.AddressTitle and Name of RepresentativeBusiness DescriptionsHeadquarters: 2-1-10 Nihombashi, Chuo-ku, Tokyo, JapanRegisterd office: 9-16 Rokutanji-cho, Nishinomiya City, Hyogo Pref., JapanShintaro Fukuda, President and Representative DirectorThe business management of the group companies and any other business activities associated theretoSubsidiaries, etc.NIPPON KANZAI Co., Ltd.Subsidiaries, etc.Share Capital¥3,000 millionNumber of Shares Issued41,180,306 sharesFiscal Year EndMarch 31*Subject to the approval at the annual general meeting of shareholders scheduled for June 17, 2022.Copyright (C) 2022 NIPPON KANZAI Co., Ltd.20Medium-Term Growth Strategies of Our GroupBusiness OpportunitiesGrowth Strategies1Increase in demand for private sector expertise in the public sector●Create business opportunities by strengthening PPP / PFI and designated manager systems(pp. 22-27)2Global development of know-how accumulated through domestic businesses3Approach based on IT technologies, etc.●Invest in overseas companies●Reinforce our residential management business through cooperation with overseas group companies(pp. 29-32)●Introduce IT into work management know-how and construction of facilities management database●Standardize service quality and increase work efficiency(pp. 34-37)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.21Business Opportunities (1):Overview of PPP/PFI Utilization in Japan for Public Sector Business Background of PPP/PFI promotionCurrent situation in JapanAging of public facilitiesSevere financial circumstancesPopulation decline Overview of type of Business ModelsPPP(general term for public-private partnership)PFISystems such as designated managers, etc.Comprehensive privatizationLending public land to private enterprises, etc.Cost efficiency of reconstruction, renovation, repair and operation of public facilities works, wide-area management, and facilities consolidation, etc. are necessary for maintaining proper public services. Utilizing PPP/PFI is effective as a means for realizing these.PPP︓Public Private PartnershipPFI ︓Private Finance InitiativeBusiness model in the public sector undertaken by NIPPON KANZAI●PFI●Designated Manager●Comprehensive Management●Public Facilities Management SupportSource: Compiled by NIPPON KANZAI based on “Overview of PPP/PFI” from PPP/PFI Promotion Office at the Cabinet.Copyright (C) 2022 NIPPON KANZAI Co., Ltd.22Business Opportunities (1): Track Record for Public Sector Businesses (excluding conventional general bidding)Continuous Efforts toward Expansion of Ancillary Businesses(¥ million)(No. of Projects)(¥ million)(No. of Projects)PFIDesignated ManagerNet SalesNo. of Projects4,2033,845 3,8454,1043,824407,0003,4183,2543,3273,113323028232322242424252,813 2,8132,612201817Net SalesNo. of Projects5,7825,136 5,1505,35793929792816,0015,136 5,0584,484107100976,0005,0004,0003,0002,0001,0002010004,5004,0003,5003,0002,5002,0001,5001,0005000150120906030023Copyright (C) 2022 NIPPON KANZAI Co., Ltd.Business Opportunities (1): Comprehensive Management of Public FacilitiesComprehensive Management of Public FacilitiesNIPPON KANZAI’s track record in comprehensive management of public facilities is expanding from the current 13 projectsnationwide. In the fiscal year under review, we launched operations for 6 projects (Ichihara, Imizu, Osaka, Kobe, Takasago, andKasuga) and our market share ratio is the industry-leading. Since local governments introducing comprehensive management areexpected to increase nationwide going forward, we are working on further share expansion.* Comprehensive management is a form of contract for managerial work forlocal governments such as equipmentmultiple public facilities ofinspection and cleaning. Promoting comprehensive management hassignificant advantages such as “implementation of planned capitalinvestment with prioritization,” “regional revitalization through cooperationwith local companies,” and “workload reduction of local government staff,”and we are deploying it nationwide as a measure of our public facilitiesmanagement strategy.Imizu(from Apr-2022)*105 facilitiesAkashi(from Apr-2018)*158 facilitiesAshiya(from Apr-2019)*53 facilitiesKasuga(from Apr-2022)*10 facilitiesUrasoe(from Apr-2020)*20 facilities* The number of target facilities for comprehensive management.Takasago(from Apr-2022)*50 facilitiesKobe (Eastern part)(from Apr-2022)*154 facilitiesOsaka (Eastern area)(from Apr-2022)*247 facilitiesCopyright (C) 2022 NIPPON KANZAI Co., Ltd.24Numata(from Apr-2020)*123 facilitiesChikusei(from Apr-2019)*65 facilitiesIchihara（from Apr-2022)*192 facilitiesShimada（from Apr-2021)*70 facilitiesKosai(from Apr-2019)*80 facilitiesBusiness Opportunities (1): Public Facilities Management Support BusinessPublicity Strategy in Public Facilities ManagementImplementing new initiatives using digital tools as publicity strategy under the COVID-19 pandemic.■Training, Synergy and Media Mix・Training・SynergyBy disseminating information through online salons and PPP seminars, NIPPON KANZAI will support “Public FM interested groups” to become “pioneers = practitioners.”Aiming to boost the comprehensive management market, NIPPON KANZAI will create medium to long term value, rather than ad-hoc measures.・Media mix By combining several media, NIPPON KANZAI aims to create complementary and synergistic effects between them.Operating online salonsPublic FM Online Salon was opened onFebruary 5, 2021.We have prepared various contents andfeatures and are using it as a place forthe community oflocal governmentemployees working on public facilitiesmanagement.(As of January 15, 2022, 123 peopleand 100 local governments have beenregistered.)Holding PPP seminars onlineSince being certified as an MLIT PPP Agreement Partner company inFY2018, we have held annual PPP seminars.ｆacebook screenExpertise(high)Interest(high)Online SalonOnline seminar・National PPP seminarExpertise(low)Interest(low)Magazine for government / administrative authorities”JICHITAI WORKS”For local governmentsemployeesFor a wide range of targets, including local residents and expertsRegional branding video (CM)Held in MayHeld in AugustHeld in NovemberHeld in MarchPPP seminars in FY2021 (distributed nationwide via the Website)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.25Business Opportunities (1): Acquisition of the shares of JTB Asset ManagementExpanding the Business in the Public Sector through the Cooperation with JTB Group CompaniesJTB Asset Management Co., Ltd. is a 100% owned subsidiary of JTB,and is engaged in the business offering solutions to spaces orlocations where people gather.By investing in JTB Asset Management (40%), NIPPON KANZAI willnot only share know-how and skills of the company and add them toNIPPON KANZAI’s service menu but also enhance alliances with JTBgroup companies. This will lead to the further expansion of the “AreaSolutions Business”, which is one ofthe 3 pillars in the Group’smedium-term management plan the “Pioneering Ways to bring people,places and possibilities togetherin a New Era,” also help twocompanies achieve further development though the leveraging of theirstrengths.Outline of JTB Asset Management Co., Ltd.Address10-12, Ueno 1-chome, Taito-ku, TokyoRepresentativeYasushi Takahashi, Representative DirectorEstablishmentDecember 26, 2011Share Capital¥100 million (as of March 31, 2022)Business DescriptionsFacility management, real estate consulting, planning, design and construction works, etc.Shareholding Ratio(After share acquisition) JTB Corporation (60%), NIPPON KANZAI Co., Ltd. (40%)Share Acquisition DateJuly 1, 2022 (scheduled)Strengths of JTB GroupStrengths of NIPPON KANZAI The comprehensive strength of the whole groupSolving a variety of regional Industry-leading performance (PPP field)SoftwareIssues through a fusion Hardwareof software and hardwarePFI BusinessJTBJTBAsset ManagementJTBResearchInstituteJTBCommunicationDesignetc. Networks with local governments nationwide, DMOs, etc.*DMO: Organizations promoting attractive tourism regions (Destination Management Organization) 3 business strategies outlined in the “Pioneering Ways to bring people, places and possibilities together in a New Era” Tourism, Area solutions, and Business solutions Software capabilitiesAriake Arena (Tokyo)Pacifico Yokohama North (Kanagawa Pref.)Comprehensive managementNumata City(Gunma Pref.) Hardware capabilitiesPatrol inspections in comprehensive managementCopyright (C) 2022 NIPPON KANZAI Co., Ltd.26First Arena for Concessions in JapanFacilities overviewNameAriake ArenaOwnerTokyoSite areaApprox. 36,576 ㎡Total floor spaceApprox. 47,200 ㎡StructureSteel reinforced concrete, partial steel-frame steel reinforced concrete / steel-frameHeight / no. of floors Approx. 37 meters, 5 floors above groundBusiness Opportunities (1): PFI BusinessNIPPON KANZAI participated in the consortium that was selected as acandidate for the operating rights (concessions) holder for the “AriakeArena Management Operations Project” announced by the TokyoMetropolitan Government on July 11, 2018. We are responsible formanagement and maintenance work.This is the first attempt at arena management under a concessions-type contract in Japan. The objectives are to create sports trends forTokyo residents, making the best use of private company know-how,as well as starting a new culture by holding events like concerts.Working toward improving services for Tokyo residents, we aim tomake the Ariake Arena a new sports and culture hub for Tokyo.As a member of the proposing group, NIPPON KANZAI is involved inthe entire project. We will play a role in achieving stable businessexecution during the period of the project.This facility was used as a competition venue at the 2020 TokyoOlympic and Paralympic Games.Consortium companiesRepresentative companyMembersDENTSU INC.NTT DOCOMO, INC.NIPPON KANZAI Co., Ltd.AMUSE INC.LIVE NATION JAPANDENTSU LIVE INC.ASICS Japan Corp.Partner companiesNTT FACILITIES, INC.Xross Sports Marketing Co., Ltd.Mitsubishi Research Institute, Inc.Copyright (C) 2022 NIPPON KANZAI Co., Ltd.27*Artist rendering at the time of the convention in January 2019Medium-Term Growth Strategies of Our GroupBusiness OpportunitiesGrowth Strategies1Increase in demand for private sector expertise in the public sector●Create business opportunities by strengthening PPP / PFI and designated manager systems(pp. 22-27)2Global development of know-how accumulated through domestic businesses3Approach based on IT technologies, etc.●Invest in overseas companies●Reinforce our residential management business through cooperation with overseas group companies(pp. 29-32)●Introduce IT into work management know-how and construction of facilities management database●Standardize service quality and increase work efficiency(pp. 34-37)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.28Business Opportunities (2): Overseas Development (Overview of PICA Pty Ltd.)SydneyReceptionProperties under ManagementCompany OverviewPICA is the largest “Strata Management Company” in Australia and actsas an agent for Owners Corporations. Using multiple brand names, suchas “BCS” (Body Corporate Services), PICA mainly provides services tosupport Owners Corporations which includes collecting delinquentmanagementfees. Leveraging off Nippon Kanzai’s engineeringcapabilities, PICA has introduced services related to physical aspects ofbuildings.BackgroundNippon Kanzai acquired 50% of PICA shares from Fexco, a global fintechorganization, in March 2013. Currently Nippon Kanzai and Fexco senddirectors to PICA and manage itFounded in 1981, Fexcoemploys over 2,300 people and now has operations in 29 countriesacross Europe, the Middle East, Asia-Pacific, North America and LatinAmerica.Fexco website: http://www.fexco.com/jointly.Business Environment under the PandemicDue to government restrictions on the number of persons at gatherings,postponement of general meetings and boards of directors meetings ofOwners Corporations as well as the shift to online meetings resulted in adecline in net sales, however the impact on profits was relatively limiteddue to successful cost cutting.Company NameEstablishmentCapitalMain BusinessHead OfficeMajor BranchesEmployeesNo. of Lots under ManagementPrudential Investment Company of Australia Pty Ltd.October 4, 1948AUD28 million (JPY2,300 million) *AUD1=JPY83.43 (as of December 31, 2021)Strata management, debt collectionSydneyMajor cities of East Coast, include Sydney, Melbourne, Brisbane, Cairns etc.Approx. 708 as of December 31, 2021Approx. 198,000 lots, 10,900 Plans (Owners Corporations) as of December 31, 2021Copyright (C) 2022 NIPPON KANZAI Co., Ltd.29Business Opportunities (2): Overseas Development (Overview of Keystone, LLC)Irvine, CaliforniaHead OfficeProperties under Management“Keystone”)Company OverviewKeystone Property Management, LLC (hereinafteris a gatedcommunities management company. Gated communities are developmentsconsisting of detached housing and high-end multi-unit homes in estatessurrounded by walls. Keystone provides homeowner associations with supportservices including holding annual general meeting, accounting and financialreporting and on-site management. It has a reputation for offering high-quality anddetailed services. Other than subsidiaries and affiliates of major nationwidecompanies, Keystone is ranked within the top ten companies in SouthernCalifornia. Since 2019 onward, Keystone has made progress in expanding servicearea coverage through M&A.BackgroundIn January 2017, Nippon Kanzai’s subsidiary, Nippon Kanzai USA, Inc. acquiredan interest from Keystone Pacific Property Management, LLC, the owner of theinterest and Keystone became an equity-method affiliate of Nippon Kanzai.Nippon Kanzai will work to raise efficiency of operations and expand servicesthrough renovation of the IT system, and target future growth through incorporatingthe Company’s know-how, while expanding properties under managementtoinclude high-rise condominiums etc.Business Environment under the PandemicDespite the impact of COVID-19 and variant viruses, business performance hasbeen steady due to a recovering economy and increased opportunities within thedetached housing market, one that has been robust during the pandemic.Company NameEstablishmentMain BusinessCorporate OfficeMajor BranchesEmployeesNo. of Units under ManagementKeystone Pacific Property Management, LLCSeptember 15, 2016Residential managementIrvine, CaliforniaSouthern California, with a focus on Orange CountyApprox. 255 as of December 31, 2021 (including Keystone Progressive)Approx. 86,804 units, approx. 387 associations as of December 31, 2021(including the Company’s subsidiary, Keystone Progressive)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.30Business Opportunities (2): Overseas Development (Overview of Hawaiiana)Honolulu,HawaiiProperties under ManagementCompany OverviewHawaiiana Holdings Incorporated (hereinafter “Hawaiiana”) is the largestAOAO (“Association of Apartment Owners”) management company in theState of Hawaii. Hawaiiana provides apartment owners’ associations withsupport services including holding board meetings and annual generalmeetings, as well as providing accounting and financialreporting.Hawaiiana is a highly reputable yet locally operated company with a longhistory in the industry. It operates on six islands including Oahu (home toHonolulu), Maui, Hawaii and Kauai.BackgroundNippon Kanzai acquired shares of Hawaiiana from Swell International Inc.,a locally operated real estate company, in March 2020 and through whichHawaiiana became an equity-method affiliate of Nippon Kanzai.Hawaiiana and Nippon Kanzai will work together to further improve thebusiness with global expertise cultivated and accumulated throughNippon Kanzai’s overseas expansion.Business Environment under the PandemicWhile the direct impact on earnings is limited as residential managementis classified as an essential business, Hawaiiana faces challenges in staffrecruitment and development sales due to uncertainty and instability inthe future from the COVID-19 pandemic.Company NameEstablishmentCapitalMain BusinessHead OfficeBranchesEmployeesNo. of Units under ManagementHawaiiana Holdings IncorporatedSeptember 24, 2008USD4.27 million (JPY490 million) *USD1=JPY115.01 (as of December 31, 2021)AOAO managementHonolulu, HawaiiMaui, West Maui, Kona, KauaiApprox. 240 as of December 31, 2021Approx. 107,000 units, 680 associations as of December 31, 2021Copyright (C) 2022 NIPPON KANZAI Co., Ltd.31Business Opportunities (2): Overseas Development (Overview of PPG, Inc.)Honolulu,HawaiiCompany OverviewLocated in Honolulu, Hawaii, Pacific Property Group (hereinafter “PPG”)provides property management, leasing and sales brokerage services toover 20 commercial properties including a shopping center in Waikiki thathas well-known shops and restaurants as tenants. PPG is a small-sizedyet excellent local company that provides quality services. PPG valuespersonal relationship in marketing and due to this philosophy, PPG hasmany long-time and repeat clients.BackgroundOur resident officer in Hawaii was introduced to PPG and after dueInc.,consideration, Nippon Kanzai’s subsidiary, Nippon Kanzai USA,acquired 90% of shares from founder/president in March 2022. PPG is anequity-method non-consolidated subsidiary of Nippon Kanzai.Business Environment under the PandemicAlthough there is a general unpredictability and uncertainty for future,impact is limited due to low staff turnover and active real estate marketCompany NameEstablishmentCapitalMain BusinessHead OfficeEmployeesNo. of properties under ManagementPacific Property Group, Inc.February 27, 2007USD1,000 (JPY110,000) *USD1=JPY115.01 (as of December 31, 2021)Commercial Property ManagementHonolulu, Hawaii12 as of December 31, 2021Approx. 20 as of December 31, 2021Copyright (C) 2022 NIPPON KANZAI Co., Ltd.32Medium-Term Growth Strategies of Our GroupBusiness OpportunitiesGrowth Strategies1Increase in demand for private sector expertise in the public sector●Create business opportunities by strengthening PPP / PFI and designated manager systems(pp. 22-27)2Global development of know-how accumulated through domestic businesses3Approach based on IT technologies, etc.●Invest in overseas companies●Reinforce our residential management business through cooperation with overseas group companies(pp. 29-32)●Introduce IT into work management know-how and construction of facilities management database●Standardize service quality and increase work efficiency(pp. 34-37)Copyright (C) 2022 NIPPON KANZAI Co., Ltd.33Business Opportunities (3): Approach Based on IT -Digital Transformation-With IT approaches both externally and internally, and fusion of digital and analog, we provide optimal services to customers.Utilization ofbuilding knowledge Accumulating know-how and sharing of knowledge Providing quick and optimal solutions Standardizing HR development and work quality Knowledge integration environment Accumulation in the core systemDX for clientsVisualization of equipment status Remote monitoring of equipment operation status Notification of irregular trends and irregular values Early detection and response to facilities problems IoT for facilities monitoring Operation of WAFM (Wide Area Facilities Management) centerSystem construction and provisionProviding and sharing systems Aggregation and analysis of facilities-related data Estimation of life cycle costs Providing a work management portal NK Connect Cross Point FMConversion of work records to data files Digitization of on-site forms Keeping digital data of inspection records Electronic application for work request On-site forms apps Smart devicesDX forinternal useDiversification of work styles Strengthening responsiveness to infectious diseases and disasters Effective use of travel time Online meetings Web transactionsUse of IT / ICTAutomation of office work Improving productivity Allocating staff properly Creating time with clients Automation such as RPAs Voice-to-text conversion technologyCopyright (C) 2022 NIPPON KANZAI Co., Ltd.34123456Business Opportunities (3): Remote Monitoring -Operation of Wide Area Facilities Management System-WAFM RWide Area Facilities Management SystemManage buildings 24/7 remotely• Remote management, machine security, and call center services complement each other throughout Japan.• Accumulation of data collected on a daily basis such as response history, and provision of feedbackEast JapanCustomerIoT Status MonitoringInternetBase stationMonthly reportFacility Alarm PanelAutomatic Fire Alarm PanelSecurity Monitoring PanelRegular and continuous data collection enables NIPPON KANZAI to provide detailed maintenance and equipment improvements.Facility Alarm PanelAutomatic Fire Alarm PanelSecurity Monitoring PanelRegular and continuous data collection enables NIPPON KANZAI to provide detailed maintenance and equipment improvements.West JapanCustomerIoT Status MonitoringInternetOrder/InstructionEngineering StaffBase stationOrder/InstructionEngineering StaffMaintenance historyIntegrated monitoring systemEnergymanagement Response history /ProcesshistoryCreating the next round of feedbackCopyright (C) 2022 NIPPON KANZAI Co., Ltd.35Business Opportunities (3): Shared Application -Update of Facilities Information Sharing System and Application-NK ConnectFacilities information sharing systemWork fulfillment confirmation &report application• Sharing of information with customers and partner companies on the Cloud Centralized management of various building information, work plans, and repair plans• Use of work management application with smart devicesPromoting computerization of malfunctions report and forms in the field,conversion of inspection records to data filesINTERNETReportsConversion of work records to data filesWork plan & repair plan managementConfirmation ofwork executionDetailed work reportInputat Web browserInputby SmartphoneUse of ApplicationInputby SmartphoneUse of ApplicationNote: Details will be reported by linking the application created by NIPPON KANZAI and ConMas i-Reporter of Cimtops Corporation.Copyright (C) 2022 NIPPON KANZAI Co., Ltd.36Business Opportunities (3): Shared Application -Public Facilities Management Systems: Cross Point FM1-Cross Point FM supports automatic evaluation of public facilities, optimal placement planning, operations management, the reduction of duties of staff in charge as well as maintains and improves community services.Decision-making of facility operation policy・Facilities maintenance and repairs implementation・Decision-making of facilities restructure policy・Problem solving etc. such as facilities malfunctionsPlanActionXP FMDoFormulating comprehensive management plans for public facilities・Discovery and taking inventory of public ・Formulation of operations management ・Preparation and creation of facility assetsplansrecordsPreparation and recording of stock information・Recording stock information and cost information・Inspections and management in accordance with the law・Conducting daily inspections and recording results・Implementation plan support for restructuring relocations, etc.Portfolio evaluation ofeach facility・Follow-up on each restructuringand operations case・Simulations on degree of agingand life cycle costCheckRefining and supporting the effective use of assets in the PDCA cycle1 Cross Point FM is a system developed by Cross Point Consulting Co., Ltd., in which NIPPON KANZAI has a stake, under a consigned R&D project of the Japan Science and Technology Agency (JST).Copyright (C) 2022 NIPPON KANZAI Co., Ltd.37Legal DisclaimerNo information in this material is intended to solicit the purchase or sale of shares in NIPPON KANZAI.Forward-looking statements contained in this material such as results forecasts and future prospects areforecasts and estimates made by NIPPON KANZAI based on information available at the time of the preparationof the material and are subject to potential risks and uncertainties.Please note that actual results may differ from the statements contained in this material due to various factors.NIPPON KANZAI and the information provider accept no liability whatsoever for any damage arising from anyaction taken by a user based on the information contained in this material.NIPPON KANZAI Co., Ltd. Finance Department.Phone: +81-3-5299-0863URL:https://www.nkanzai.co.jp/en/contact/ir/Copyright (C) 2022 NIPPON KANZAI Co., Ltd.38