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TKP Corporation Earnings briefing materials Q2 FY2021 October 14th, 2021 TKP Garden City PREMIUM Kyobashi

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Page 1: Earnings briefing materials Q2 FY2021

0

TKP Corporation

Earnings briefing materials Q2 FY2021

October 14th, 2021 TKP Garden City PREMIUM Kyobashi

Page 2: Earnings briefing materials Q2 FY2021

1

Executive Summary Q2 FY2021

Performance Review & Business Review

Business Development

Appendix

Contents

FY2020:up to Feb. 21 Q1:Mar. - MayFY2021:up to Feb. 22 Q2:Jun. – Aug.

Q3:Sep. – Nov.Q4:Dec. – Feb.

Definition on periods

Page 3: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Executive Summary Q2 FY2021

Business Performance

Management Topic

• Quarterly operating profit and ordinary profit turned around as rental meeting rooms were utilized as vaccination venues, and some of hotels were block-leased for COVID-19 mild case patients.

• Promoting new style leasing structures, where profitability risks are hedged, ahead of social & economic normalization, alongside with countermeasures to COVID-19.

• Revied full year guidance on October 6th as pandemic impacts to the rental meeting room business are getting to be longer than original anticipation.

• Announced business tie-up with Nikkei Inc.

Page 4: Earnings briefing materials Q2 FY2021

3

Performance ReviewQ2 FY2021

Page 5: Earnings briefing materials Q2 FY2021

4

(C) TKP Corporation 2021

Profit forecast revision for FY2021 announced on October 6thAlthough our measures to COVID-19 were effective, pandemic derived impacts became longer than our assumption. Therefore, we revised full year guidance. In addition, as we finished estimating tax amount for this year, resulting from internal reorganization, net profit guidance is newly introduced.

(million yen)Feb. 2021

actualFeb. 2022

initial forecastFeb. 2022

new forecastnew vs. initial

Net sales 43,138 48,000 43,800 (4,200)

EBITDA※1

(% to sales)3,073

7.1%5,800

12.1%3,600

8.2%(2,200)

Operating profit(% to sales)

(2,497)(5.8%)

7001.5%

(1,900)(4.3%)

(2,600)

Ordinary profit(% to sales)

(2,321)(5.4%)

1000.2%

(2,500)(5.7%)

(2,600)

Net profit attributable to

owners of parent(% to sales)

(3,503)(8.1%)

― (3,900)(8.9%)

※1 EBITDA is calculated by adding depreciation, goodwill amortization, amortization of long-term prepaid expenses, and amortization of intangible assets such as customer-related assets to theoperating profit/loss.

※2 Tax amount was not properly estimated as internal reorganization was not yet finished. Therefore, net profit was to be determined at the beginning of the fiscal year.

(TBD※2)

Page 6: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

(million yen) Feb. 2021 Feb. 2022 Y-Y change Feb. 2022

Q1 Q2 1H Q1 Q2 1H (%) Forecast

Net Sales 10,447 10,097 20,544 10,272 11,683 21,955 +6.9% 43,800

Gross profit 2,744 2,317 5,062 2,588 3,689 6,277 +24.0% -

(% to sales) 26.3% 23.0% 24.6% 25.2% 31.6% 28.6% +4.0pt -

SG&A 3,709 3,367 7,076 3,418 3,357 6,775 (4.2%) -

EBITDA 367 362 729 574 1,709 2,283 +212.9% 3,600

(% to sales) 3.5% 3.6% 3.6% 5.6% 14.6% 10.4% +6.8pt 8.2%

Operating profit (loss) (964) (1,049) (2,013) (829) 331 (498) - (1,900)

(% to sales) (9.2%) (10.4%) (9.8%) (8.1%) 2.8% (2.3%) +7.5pt (4.3%)Ordinary profit (loss) (1,288) (831) (2,119) (979) 233 (746) - (2,500)Profit (loss) attributable to owners of the parent

(1,464) (938) (2,403) (1,878) (255) (2,133) - (3,900)

Consolidated results Q2 FY2021• Net sales for Q2 significantly recovered from last year as well as from Q1, thanks

to vaccination center operation. • Quarterly operating profit turned around as some of our hotels were block-

leased out as accommodation facilities for COVID-19 mild case patients.

Page 7: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY2019 FY2020 FY2021

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY2019 FY2020 FY2021

OthersRegus JapanTKP

Quarterly trend in net sales/EBITDA

TKP Q2 sales recovered to JPY6.8 billion, recording post-pandemic new highEBITDA jumped by 4.7 times from last year and 3.0 times from Q1.

(million yen) (million yen)EBITDANet sales

Page 8: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Consolidated balance sheet Shareholders’ equity rose to 34.6%, as share subscription rights were exercised, and certain non-current assets were divested. Operating cash flow was negative as we paid two-year equivalent tax, as tax payment last year was deferred.

End of Aug. 2020 End of Aug. 2021 Change from last yearCash flow from operation 3,112 (3,028) (6,141)Cash flow from investment 438 2,007 +1,568Free Cash Flow 3,551 (1,021) (4,572)Cash flow from finance 1,234 (1,887) (3,122)

(million yen) End of Feb. 2021 End of Aug. 2021 ChangeCurrent assets 21,373 19,337 (2,035)(Cash & deposits) 15,195 12,312 (2,882)(Accounts receivable) 3,318 2,846 (472)

Non-current assets 95,573 89,696 (5,877)(Property, plant and equipment) 38,735 35,757 (2,977)(Intangible fixed assets) 42,196 39,159 (3,036)

Total assets 116,946 109,033 (7,912)Current liabilities 26,955 19,008 (7,946)Non-current liabilities 54,849 50,457 (4,392)Total liabilities 81,804 69,465 (12,338)

(Interest-bearing debt) 62,676 54,677 (7,998)Total net assets 35,142 39,567 +4,425Total assets & liabilities 116,946 109,033 (7,912)

Shareholders’ equity ratio 28.4% 34.6% +6.2pt

Page 9: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Progress on new share subscription rights

In January, we allocated moving strike new share subscription rights to a third party in order to finance additional flexible office related capital investment (exercise started in February). 7th tranche was completed on September 27th.The 8th tranche commencement is currently under deliberation.

7th new share subscription right(allocated on Feb. 4th, 2021)

New capital:c. 8.3 bn.8th new share subscription right

Expected new capital:c. 10 bn※2

※1:We have options to decide the commencement day, numbers of the rights to be exercised, as well as termination day. ※2:Calculated based upon the closing price of ¥2,672 as of January 13th as the base price for the strike price. Expected capital amount

could change in accordance with the strike price, which is moving strike structure.

Option to commence※1

Period (M or Q) Exercised share Fresh capital (¥ million)FY20 Q4 (February) 294,600 728FY21 Q1 (Mar. to May) 1,637,900 3,709FY21 Q2 (Jun. to Aug.) 1,339,400 2,711FY21 Q3 (September) 702,400 1,146

Total 3,974,300 8,296

finished

Page 10: Earnings briefing materials Q2 FY2021

9

Business ReviewQ2 FY2021

Page 11: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

FY Feb. 2021first half

FY Feb. 2021second half

FY Feb. 2021full year

FY Feb. 2022Q1

FY Feb. 2022Q2

Opened 10(4,453 tsubo) 2(373 tsubo) 12(4,826 tsubo) 1(653 tsubo) 2(266 tsubo)

Closed 21(6,349 tsubo) 25(5,448 tsubo) 46(11,797 tsubo) 11(5,275 tsubo) 2(333 tsubo)

Opened 8(2,319 tsubo) 1(764 tsubo) 9(3,083 tsubo) 2(833 tsubo) 3(558 tsubo)

Closed - 3(706 tsubo) 3(706 tsubo) - -

Opened - 1(1,000 tsubo) 1(1,000 tsubo) - -

Closed - - - - -

TKP closed 2 facilities due to contract expiry and termination request. TKP opened two accommodation facilities through revenue sharing agreements. Regus Japan opened in two new cities and started its 17th location in Osaka.

(Japan)

(Taiwan)

TKP Conference CenterTKP Business Center

(Breakdown of 2 closures)1 facility1 facility

TKP onsen hotel omoto (Asama)

LecTore LecTore

TKP Resort Hotel Tateshina

(Japan)

Openoffice

OpenofficeMidosuji

(Opened in August 2021)

Regus Shizuoka Aoi TowerBusiness Center

(Opened in June 2021)

Regus

Regus Koriyama EkimaeBusiness Center

(Opened in June 2021)

Regus

Facility openings and closures in core operations

Page 12: Earnings briefing materials Q2 FY2021

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TKP(C) TKP Corporation 2021

Temporary offices in large, new buildings

Banquet facilities in large, older hotels

Temporary offices in large, older buildings

Temporary offices in medium-sized, older buildings

Temporary offices in small, older buildings

Brand with Escrit Inc.

Grade Feb. 2019 Feb. 2020 Aug. 2021

CIRQLocations 24 24

RoomsTsubo - 51

-51

19,776Garden City

PREMIUM(GCP)

Locations 25 27 26RoomsTsubo

300-

296-

30615,896

Garden City(GC)

Locations 58 54 50RoomsTsubo

563-

522-

46937,059

ConferenceCenter(CC)

Locations 82 66 66RoomsTsubo

918-

780-

76929,654

BusinessCenter(BC)

Locations 45 34 31RoomsTsubo

286-

223-

2125,524

STAR rentalMeeting rooms

Locations 36 32 28RoomsTsubo

70-

71-

551,641

LecTore and Ishinoya(accommodations & training venue)

Locations 15 14 16RoomsTsubo

101-

90-

9923,430

TKP TotalLocations 261 251 241

Rooms 2,238 2,033 1,961Tsubo 133,193 142,002 132,980

Number of meeting rooms, locations by grade (TKP)We provide rental meeting rooms in grades according to the purpose of use, scale, budget, and other factors. These comprise 241 facilities and over 130,000 tsubo of floor space.

Page 13: Earnings briefing materials Q2 FY2021

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TKP(C) TKP Corporation 2021

(million yen) Feb. 2021 Feb. 2022 Y-Y change

Q1 Q2 1H Q1 Q2 1H (%)

Net sales 5,410 5,261 10,672 5,466 6,859 12,325 +15.5%

Gross profit 1,266 891 2,158 1,368 2,449 3,817 +76.9%

(% to sales) 23.4% 16.9% 20.2% 25.0% 35.7% 31.0% +10.8pt

SG&A 2,150 1,884 4,035 1,860 1,893 3,753 (7.0%)

EBITDA (674) (744) (1,418) (275) 797 521 -

(% to sales) (12.5%) (14.1%) (13.3%) (5.0%) 11.6% 4.2% +17.5pt

Operating profit (loss) (884) (993) (1,877) (491) 555 64 -

(% to sales) (16.3%) (18.9%) (17.6%) (9.0%) 8.1% 0.5% +18.1pt

Business performance in 1H FY2021 for TKP (non-consolidated) Hotel business, a major loss-making reason last year, turned around in Q2EBITDA and OP both achieved quarterly profit as vaccination center operation, to some extent, positively contributed to the profit during the quarter.

Page 14: Earnings briefing materials Q2 FY2021

13

TKP(C) TKP Corporation 2021

5,391 4,687 5,078

4,549

1,881 3,157

4,166 3,628

2,871 2,763

1,001

953 1,105

831

243

580

1,133 965

890 841

1,510

1,813

1,734 1,878

1,717

114

187

328

224

227

153

1,258

1,396

1,344

1,141

391

590

833

701

867

1,095

398

299

328

218

213

72

137

157 282

269

92

76

105

739

2,569

676

291

603

329

229

0

2,000

4,000

6,000

8,000

10,000

12,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY2019 FY2020 FY2021

Room rent Option Vaccination center F&B Accomodations Others Cancellation fee※“Option” mainly represents sales for the use of meeting room equipment.

Sales by serviceAlthough the mainstay rental room business continued to struggle during Q2, the saviors were vaccination centers and hotel block-lease deals for COVID-19 mild case patients.

(Million yen)

Page 15: Earnings briefing materials Q2 FY2021

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TKP(C) TKP Corporation 2021

41,831

36,755

39,776 38,358

24,476

20,255

26,654 25,032

22,825

29,687

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY2019 FY2020 FY2021

Sales per tsubo and meeting room gross leasable area※

面積

坪あたり売上高

■GLA(tsubo)sales / tsubo

※ Sales include room charge, options and catering revenues※ GLA indicates gross leasable area as meeting room function

Meeting room GLA (tsubo)

Trend in KPI of the rental meeting room businessSales per tsubo recorded post pandemic highest number partly thanks to vaccination center operation related top line.We will continue to provide one stop solution, combining venues and services.

Monthly Sales / tsubo Quarterly average (yen)

Page 16: Earnings briefing materials Q2 FY2021

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TKP(C) TKP Corporation 2021

Sales ratio by usage: TKP meeting roomsDuring Q2, utilization as vaccinations either as simple vaccination venues or by our own vaccination centers increased, which is included into “Others.”

Others include temporary offices, workshops, AGMs, press conferences and vaccination centers

20.7% 23.2% 24.7% 24.1%17.2% 18.3% 20.4%

14.9% 14.4% 12.8%

18.4% 11.7% 4.9% 6.0% 19.5%7.9% 3.9%

2.3%8.3%

4.4%

17.8%16.0%

15.5% 11.7%

27.1%

9.2%7.9%

4.6%

21.7%

7.3%

15.2%18.0%

21.0%18.0%

10.2%

10.9% 19.4%

17.5%

17.9%

13.9%

4.9%4.3%

3.9%8.4%

0.6%

1.0%0.5%

0.3%

0.2%

0.4%

2.9%3.5% 5.9% 11.3%

4.2%

13.6%

18.9%34.0%

11.8%

10.7%

20.1% 23.4% 24.1% 20.5% 21.3%

39.2%29.1% 26.3% 25.6%

50.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY2019 FY2020 FY2021

Meeting Recruiting Training Seminar Party Exam Others

Page 17: Earnings briefing materials Q2 FY2021

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Regus(C) TKP Corporation 2021

Brand Feb.2020 Feb.2021 Aug. 2022

Location 4 6 7Tsubo - - 5,752

Location 100 105 108Tsubo - - 28,406

Location 5 4 4Tsubo - - 288

Location 47 47 48Tsubo - - 7,360

Location 2 3 3Tsubo - - 3,027

Location 11 11 11Tsubo - - 4,134

Regus (Japan)Location 156 162 167Tsubo 36,311 39,885 41,806

Regus (Taiwan)Location 13 14 14Tsubo 6,161 7,161 7,161

JapanTaiw

an

Large community-type rental offices

High-grade rental offices

Rental offices adjacent to public transportation

Reasonably priced unmanned rental offices

Large community-type rental offices

High-grade rental offices

Regus Japan and TaiwanTotal:48,967tsubo

Regus: number of Locations by brand

We operate four brands in Japan and two brands in Taiwan suited to different needs. We provide a total of 181 facilities with 50,000 tsubo of workspace.

Page 18: Earnings briefing materials Q2 FY2021

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Regus(C) TKP Corporation 2021

New nine-story building1-9F SPACES

SPACES Roppongi

October 1, 2020

2-9F SPACES10F TKP

SPACES Shinjuku

Total:764.3 tsubo

March 22, 2021

SPACES Akasaka

Total:991.5 tsubo Total:921.5 tsubo

We decided to open one-building format under SPACES brand, as flexible offices are so much in demand. By having symbolic large-scale buildings, we can expect top line synergy effects to the smaller Regus facilities through traffic funneling.

Opening on Nov. 1, 2021

Regus Shibuya KoendoriBusiness Center

1-6F Regus7-8F TKP

Total:415.1 tsubo

September 1, 2021

New development of one-building facilities

3-6F SPACES7-8F TKP

Page 19: Earnings briefing materials Q2 FY2021

18

Regus(C) TKP Corporation 2021

※SG&A, and operating profit (loss) are calculated after deducting amortization of goodwill & customer related assets

Business performance in 1H FY2021 for Regus JapanNet sales finally started to rise, after bottoming out from declining trend last year, which was because of large scale tenant departures. Recent cost hike is related to our active investment for flexible office expansion in the future.

(million yen) Feb. 2021 Feb. 2022 Y-Y change

Q1 Q2 1H Q1 Q2 1H (%)

Net sales 4,456 4,375 8,831 4,208 4,376 8,585 (2.8%)

Gross profit 1,547 1,439 2,987 1,111 1,177 2,289 (23.3%)

(% to sales) 34.7% 32.9% 33.8% 26.4% 26.9% 26.7% (7.2pt)

SG&A 1,275 1,274 2,549 1,397 1,329 2,727 +7.0%

EBITDA 1,034 941 1,975 492 578 1,071 (45.8%)

(% to sales) 23.2% 21.5% 22.4% 11.7% 13.2% 12.5% (9.9pt)

Operating profit (loss) 271 165 437 (286) (151) (437) -

(% to sales) 6.1% 3.8% 5.0% (6.8%) (3.5%) (5.1%) (10.1pt)

Page 20: Earnings briefing materials Q2 FY2021

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Regus(C) TKP Corporation 2021

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY2019 FY2020 FY2021

Office Others Membership Meeting room

Sales by serviceOffice, which is mainstay business of Regus Japan, is now rising, after being in a declining trend from Q1 last year.

(Millions of yen)

※Membership: Monthly subscription service where the members are entitled to use all the Regus lounges & co-working spaces located in Japan

Page 21: Earnings briefing materials Q2 FY2021

20

Regus(C) TKP Corporation 2021

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY2019 FY2020 FY2021

Regus SPACES Open Office Others

Sales by brandsSales at SPACES grew a lot, thanks to new large-scale facility openings. SPACES Roppongi that newly opened in September is now attracting many non-Japanese companies.

(million yen)

※Others: Sales unrelated to the brands such as membership sales

Page 22: Earnings briefing materials Q2 FY2021

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Regus(C) TKP Corporation 2021

80.1% 81.5%79.0%

76.2%74.2% 73.4% 74.4%

75.1% 75.8%

71.5%68.5% 67.5% 67.4% 69.8%

36.2%

42.1%

37.3% 37.6%

42.2%

46.7%

54.4%

15,000

16,000

17,000

18,000

19,000

20,000

21,000

22,000

23,000

24,000

25,000

30%

40%

50%

60%

70%

80%

90%

Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY2020 FY2021

Occupancy and GLA (gross leasable area) of Regus JapanAverage occupancy rate of facilities longer than two year track recordAverage occupancy rate of all the facilitiesAverage occupancy rate of facilities below two year track record

KPI trends for Regus Japan

Despite active new facility openings, occupancy rates are improving in both new and existing facilities. We expect continuous occupancy improvement, although we may experience temporary drop because of large-scale new facility openings.

FY2019

GLA (tsubo)Occupancy(%)

Page 23: Earnings briefing materials Q2 FY2021

22

Business Development

Page 24: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Key developments in major segments for FY2021

• After hitting the bottom in Q1, the occupancy rate has been steadily recovering and is now moving up to 70%

• Started business tie-up with Nikkei Office Pass, which utilizes our nation-wide office space network. Together, we will lead Japan’s working style reform

• More than half of APA Hotel rooms (four hotels) are block-leased out for mild cases of COVID-19 patients

• Also serving as antibody cocktail treatment centers

• Implemented COVID-19 vaccination projects and achieved 900,000 vaccinations

• Continue promoting service developments which appropriately reacting to the social & economic needs

Page 25: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Plan to accelerate new leasing style, avoiding occupancy risk

Raising utilization rate by providing unique contents

Promoting alliances to propel Japan’s new working style

Progress of TKP Group business development

①Leasing

②Sales

③Alliance

Page 26: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Advantageous leasing contracts under the pandemic

Renovation Rent

CancellationsRent free Deposit

Leasing strategy at TKP GroupSharing with property owners

Sales link, profit link or fixed

Basic strategy is to share risk & initial cost with property owners, also to move monthly rent into variable cost by striking all the measures above

At the pandemic

1 Rent has been renegotiated

achieving more than JPY600 million cost reduction mostly next year

2 New favorable leasing conditions

New contracts are with longer free rent & initial cost sharing

①Leasing

Page 27: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

New leasing styles – TKP

A banquet hall at Kyoto Tower Hotel was changed to “TKP Garden City Kyoto Tower” from October • In addition to existing space already in operation, we

started to manage two new floors.• Since this leasing is under revenue sharing scheme,

we can manage with reduced fixed cost, eyeing for post pandemic economic recovery.

4 new TKP accommodations opened to cope with rising demand for work-cation and accommodation training• Realizing network expansion with limited

additional cost by rebranding existing facilities• Under revenue sharing agreement, eyeing for rising

demand for face-to-face off-site meetings and accommodation trainings

①Leasing

TKP Resort Hotel Tateshina TKP onsen hotel omoto

AOTS Kansai Training Center(KKC) TKP Workshop Resort

Page 28: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

New style leasing – Hybrid, Regus Japan

14th hybrid style entire-building type TKP & Regus will start in Nov. 2021• Extremely convenience location, two-minute

walking distance to Shibuya station surrounded by many commercial facilities

• Large scale flexible working office with serviced offices, co-working spaces and rental meeting rooms, all in one building from 1F to 8F

Consistently branching out to local cities with risk shared leasing style

• Decided to branch out to regional area quickly but with limited risk as flexible working style is getting popular even in regional cities

• Clients can easily setup branch offices with cozy working setup for their workers. This will help revitalizing regional economy of Japan Shizuoka Aoi

Busines CenterDai Nagoya Building

Busines CenterKoriyama EkimaeBusiness Center

①Leasing

Page 29: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Providing venues with proper solutions & contents

Based upon unrivaled locations, network of clients &operating capacity as TKP Platform, we continue proposing appropriate contents to our clients

ContentsServices

②Sales

OperationService

Humanmore than

300,000

Clients

Unrivaledchoices of locations

Venue

Page 30: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Helped office-wide vaccinations at TKP vaccination center

Vaccinated 900,000 people,

working for 1,500 companies

at c. 20 facilities nation-wide

By keeping in touch with them after vaccinations, we are enjoying growth of business inquiries for next year and beyond

②Sales

Page 31: Earnings briefing materials Q2 FY2021

30

(C) TKP Corporation 2021

Utilization of APA Hotel for COVID-19 patients

APA Hotel TKP Nippori Ekimae

APA Hotel TKPSendai Ekikita

APA Hotel HakataHigashi Hie Ekimae

APA Hotel FukuokaTenjin Nishi

Four hotels are block-leased for mild cases of COVID-19 patients:Representing c. 53% (1,058 out of 2,013 rooms) of APA Hotel we manage

At “APA Hotel TKP Sendai Ekikita,” beds & facilities for antibody cocktail treatments have been installed. Capacity is max. 16 patients / day

②Sales

block-lease for mild case patients

anti-body cocktail treatment

Page 32: Earnings briefing materials Q2 FY2021

31

(C) TKP Corporation 2021

Converting meeting rooms to rental office:Work X Office

TKP rental office

Meeting Rooms

Quickly convertible

1 2

3 4

Hub & Spoke Temporary projects

Satellite offices Satellite CampusStudy Hall

②Sales

Examples of usage : ・Office for year-end tax adjustment

40 officers / 3 months(service)・Call Centers

4months / multiple locations(travel)・Election campaign office

50 officers / 1 month

Page 33: Earnings briefing materials Q2 FY2021

32

(C) TKP Corporation 2021

New contents: Examination management system “AOT”

Complete solution for entities to conduct examinations. TKP provides entire management solution from applications, examinations, to the result notifications. Upgraded from previous version, CBT Test Centers

Examination management systemdeveloped uniquely by TKP Group

• Completely paperless• Adopted in national exams• Can be used for major hiring

events, trainings and workshops

受験票発行

採点

②Sales

Managementoffice

Computersystem

Venue setup / staffing

Bookingexamination

venue

Navigation applicants

Arranging proctors

Inquiries from

applicants

Office utensils

Scoring

Office control Certificate proctors

Examination fee reception

Scoring

Posting admission

slips

Applications

Page 34: Earnings briefing materials Q2 FY2021

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(C) TKP Corporation 2021

Announced our tie-up with Nikkei Inc.③Alliance

Tie-up between TKP Group and Nikkei Inc.Working together to promote working style reform efforts bythe companies and to improve the conveniences for all thebusinesspersons.

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Details of Joint operation

We promote & sell membership, where holders are entitled to use c. 100 Regus facilities 300 Nikkei OFFICE PASS locations

more than

300 locations

Co-working space

c.100 facilities

New OFFICE PASS as joint operation

Largest network of more than 400 facilitiesSubscription with unlimited usage or pay-per-use

Vacancy info. available online, no booking required

③Alliance

※2021年10月時点

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Business strategy: toward post-pandemic economic normalization

Optimizing Costs

Securing stable profit

actively promote development of contents & services, uniquely derived from platform of TKP Group,

comprised of Venue, Clients, & Operation

Back to Growth by improving profitability per area space

Forming alliances

• F&B outsourcing• Renegotiating rent• Fixed cost reduction

• Flexible office growth• Hotel demand recovery

• Unique locations• Unrivaled contents

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Our rental meeting rooms can be quickly converted into serviced officesand vice versa and this enables us to flexibly accommodate to the demandchanges. We will also solidify Regus and APA Hotel (FC) business tofurther enlarge TKP Group profit base

Conversion canbe quickly done

Regus

Serviced office

Hourly rental meeting room

Contentssolution

February 2020 With COVID-19 After COVID-19

APA Hotel (FC)

Scenario for demand expansion

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Anytime, Anywhere, for All workers

Anytime, Anywhere, for All workers

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Appendix

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Real estate owner Users

Lease

TKP handles contracts and all other tiresome procedures

Divide space into smaller units with value added services

etc.

Training

temporary office

Conferences

Banquets

Sub-lease

Business model: flexible office business

Asset light - we do not own the assets, rather we lease them. Then, we sub-lease in hourly manner with value-added services. This is our value creation.

×

Real estate

Equipment rentals

Lunch boxes and catering

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Source of our profit are leasing contracts we conclude advantageously at the time of recession. We typically reduce rent payment risk by combining Japanese traditional lease agreements, fixed-term contracts with cancellation options, as well as revenue sharing agreements.

Main feature of the business model

Contract Main features ofthe contracts Rent risk

Revenue sharingagreement

Flexibly negotiated with asset owners

87 facilities(40.1%)

8 facilities(4.8%)

Traditional leaseagreement

Contract can becancelled with sixmonths’ notice

42 facilities(19.4%)

88 facilities(52.7%)

Fixed-term leaseagreement

Many restrictions oncancelling the contract before expiry date

80 facilities(36.9%)

71 facilities(42.5%)

Ownership No fixed rent 8 facilities(3.7%) ー ー

(Japan)

Ichigaya Conference center :4,058 tsubo

Shimbashi Conference center :2,813 tsubo

Garden City Osaka Umeda :2,152 tsubo

cost

Very low

Low

Medium

※As of August 31, 2021

(Japan)

Fixed rent

58.7%

Variable41.3%

Fixed rent

59.9%

Variable40.1%

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Leasing in accordance with the market changes – breakeven pointsBetween TKP and Regus, the timings of breakeven are different. By conducting hybrid operation and mutual conversion, we control profit & loss at one location.

Improving P/L balance by joint openings

Initial cost(average of 3–4 months from the

start of a contract to opening)

Contract start;construction

begins

Facility opening

Break-even occupancy rate(approx. 45%)

Regus occupancy rate

Time

Reach break-even point after approx. 8–12 months

*Stable demand

Larger initial costLonger time to break evenLittle influenced by market conditions

Initial cost

TKPoccupancy rate

Time

Facilityopening

Reach break-even point soon after opening

(within 2–3 months)

Break-even occupancy rate (approx. 20%)

*Fluctuating demand based on market conditions

Smaller initial costShorter time to break evenGreatly influenced by market conditions

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Facility Guest rooms Opened Building LandAPA Hotel TKP Sapporo Ekimae 203 August 2014 Leased ―APA Hotel TKP Sapporo-Eki Kitaguchi EXCELLENT 108 August 2016 Leased ―APA Hotel TKP Nippori Ekimae 278 December 2016 Owned OwnedAPA Hotel TKP Tokyo Nishikasai 124 December 2017 Leased ―APA Hotel TKP Keikyu Kawasaki Ekimae 143 June 2018 Owned LeasedAPA Hotel TKP Sendai Ekikita 306 October 2018 Owned OwnedAPA Hotel Osaka Umeda 162 May 2019 Owned LeasedAPA Hotel Hakata Higashi Hie Ekimae 206 February 2020 Owned OwnedAPA Hotel Fukuoka Tenjin Nishi 268 May 2020 Owned OwnedAPA Hotel Ueno Hirokoji 215 July 2020 Owned OwnedLecTore Atami Koarashi 20 November 2013 Leased ―LecTore Hakone Gora 23 January 2014 Leased ―LecTore Karuizawa 14 July 2014 Leased ―LecTore Atami Momoyama 31 July 2014 Leased ―AZUR Takeshiba (managed on contract) 122 April 2017 Leased ―LecTore Yugawara 108 May 2017 Owned OwnedLecTore Hayama Shonan Kokusaimura 160 April 2018 Owned OwnedLecTore Takamatsu Airport(banquet hall rental/ business alliance) 124 June 2018 ― ―

LecTore Yatsugatake (managed by a third party) 32 November 2018 ― ―LecTore Toyama Jiyukan (managed by a third party) 40 March 2018 ― ―ISHINOYA Izu Nagaoka 22 January 2015 Leased ―ISHINOYA Atami 34 September 2020 Leased ―First Cabin TKP Ichigaya 165 November 2018 Leased ―

Tohan seminar house Iidabashi(managed by a third party) 15 March 2016 ― ―

FUKUICHI(Ikaho Onsen) (managed by a third party) 64 April 2019 ― ―TKP Onsen hotel OMOTO (Asama Onsen) (managed by a third party) 29 Jun 2021 ― ―TKP Resort hotel Tateshina (managed by a third party) 58 July 2021 ― ―

Accommodation/training facilities operated by TKP ※As of August 31, 2021

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This English translation is only intended for reference. In cases of discrepancies, datacontained within the original Japanese version shall take precedent over datacontained herein.

This material has been prepared to improve the understanding of our Group, and noinformation contained herein shall be construed as solicitation for purchase or sale ofour shares. This material has not been prepared for investment advisory purposes.

Forecasts and related information contained in this material are estimates which werebased on information available to the TKP group at the time when the material wasprepared. They will be impacted by uncertainties including market conditions and futurebusiness progress.

Please be aware that the actual results and other information may differ significantlyfrom what is stated in this material.

Important Notice