May 15, 2024

Financial Results for
the Fiscal Year Ended March 31, 2024
NIPPON KANZAI Holdings Co., Ltd. (Securities Code: 9347/TSE Prime)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Index 3

Overview of NIPPON KANZAI HOLDINGS

 8Consolidated Financial Results for FY3/24

 17

Consolidated Financial Forecasts for FY3/25

 21

The NIPPON KANZAI Group’s Medium-Term Growth Strategies

 41

Sustainability of the NIPPON KANZAI Group 45

Reference (1) Company Information

 68

Reference (2) Positioning in the Industry

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

2

Overview of
NIPPON KANZAI HOLDINGS

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Corporate Message“What needs to be changed with times”“What should not be changed though the time changes”
Keeping this in mind, we consider it important always to provide customers withhigh-quality services while flexibly adapting to the changes of times and environment.

The NIPPON KANZAI Group transitioned to a holding
company structure on April 3, 2023. Setting the Groupmission of“Enduring quality

without compromise,” we willfurther grow the company through exercising more of
the “collective strength” with the intra-Group synergy.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

4

Main Business Model of the NIPPON KANZAI Group This is a stock-based business model realized by accumulating single-year/multipleyear/long-term contracts with clients, including building owners.
 Taking advantage of the collective strength of the Group, we enhance client satisfaction
through the provision of value-added services suitable for various needs to tighten thegrip and further expand the profit.
Contract

ClientMajor operations included in the contract

Private building owner(corporate, individual)

•
•
•
•
•

Government offices,

Facilities management and operations
Building maintenance operations (facilities, cleaning,
etc.)
Security services
Administrative management operations (accounting)
Other operations related to facilities management

Proposal-based sales

public administration

Value-added-proposal-based sales

Homeowners’ association ofsectional ownership buildingssuch as apartments

•
•
•
•

Each NIPPON KANZAIGroup company

Building diagnosis
Preparation of long-term repair plan
Repair work, planned construction work, largescale repair work
Proposal for saving energy, etc.

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5

Strength of Stock-based Business The Group grows stably without being significantly affected by adverse global
circumstances such as past deteriorated market conditions and the COVID-19 pandemic.
(lots )

300,000

200,000

The Great
Hanshin-Awaji
Earthquake(Jan. 1995)

Lehman shock(Sep. 2008)

Great EastJapan
Earthquake(Mar. 2011)

Number of apartment lots (left axis)
Tokyo Business district vacancy
rate/average (right axis)

COVID-19
outbreak(Jan. 2020)

Officevacancy rate

100,000

0

(％)
12.0

8.0

4.0

Number ofapartment lots

0.0(¥ million)

120,000

80,00040,000NIPPON KANZAI Group Net sales
0

Source: Miki Shoji Office Market Data, Ministry of Land, Infrastructure, Transport and Tourism (MLIT) Report on Statistical Survey of Construction Starts

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

6

Strengths of the NIPPON KANZAI Group

1 Covering a wide range of business fields related to real estate We are involved in the business related to management, operation, and ownership ofreal estate in Japan and overseas. Highly professional Group companies provide
optimal solutions for various real estate types, such as office buildings, commercial
facilities, hotels, public facilities, apartments, and environmental facilities.

2 Stable management platform based on the stock-based revenue
 Most of the Group’s main businesses are stock-based businesses that can ensure

continuous revenue. We have built a stable management platform that is not greatly
affected by macroeconomic condition.

3

3

Realization of the sustainable growth of the company based on
the stable management platform Based on the stable management platform, we make proactive investments in priority
fields such as expansion of the existing business, new projects, M&A and capitalsubscription in Japan and overseas, digital transformation, and human resources
development to realize the sustainable growth of the company.
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

7

Consolidated Financial Resultsfor FY3/24

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Consolidated Financial Results Highlights（Rounded down to the nearest ¥million）

Net Sales¥122,674 million ( +8.5% YoY)

Steady consignments of new management projects and renewal of existing contracts



Orders for construction-related work also increased

Operating Profit¥8,271 million ( -0.8% YoY)

Increase of personnel expenses such as wage hike

Expenses accompanying the establishment of the Holding Company

Ordinary Profit¥8,225 million ( -5.1% YoY)

Recognition of foreign exchange gains due to the weak yenRecognition of share of loss of entities accounted for using equity method



Recognition of loss on valuation of membership

Profit Attributable to Owners of Parent

¥5,680 million(+0.4% YoY)

Recognition of gains on sale of investment securities and step acquisitions of overseas subsidiaries
Decrease in tax expenses* YoY change in the net sales and profit means the comparison with the 58th period of NIPPON KANZAI Co., Ltd.
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

9

Consolidated Financial Results Summary
NIPPON KANZAI (Reference)

NIPPON KANZAI Holdings(Reference)

FY3/23

FY3/24

YoY Changes

Consolidated(\ million)

ActualRatio

ActualRatio

AmountRatio

Net Sales

113,045100.0%

122,674

100.0%

9,628

8.5%

Gross Profit

24,77621.9%

27,134

22.1%

2,358

9.5%

16,435

14.5%

18,863

15.4%

2,427

14.8%

Operating Profit

8,341

7.4%

8,271

6.7%

(69)

-0.8%

Ordinary Profit

8,662

7.7%

8,225

6.7%

(437)

-5.1%

Profit Attributable to Owners of Parent

5,658

5.0%

5,680

4.6%

21

0.4%

SG&A Expenses(¥ million)

Net Sales

Operating Profit Margin

140,000
120,000

122,674
106,300

113,045
104,124

103,737

7.2%

7.2%

7.4%

Full-Year

Full-Year

Full-Year

Full-Year

Full-Year

FY3/20FY3/21

FY3/22

FY3/23

FY3/24

100,000
80,00060,0006.4%

NIPPON KANZAI (Reference)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

6.7%

NIPPOPN KANZAI Holdings

10Business Segments and Main Group Companies■ Environmental Facilities Management¥14,590 mil.

■ Facilities Management and Operations¥80,528 mil.

Environmental Facilities Management

Building Maintenance and Property
Management (excl. Security Service)¥56,802 mil.
Cleaning management, facility maintenanceadministrative contract tasks, and constructionrelated work of buildings, hotels, public facilities, etc.
NIPPON KANZAI Co., Ltd.
NS Corporation Co., Ltd.
Japan Environmental Solutions Co., Ltd.
Okinawa Nippon Kanzai Co., Ltd.

Security Services

Public facilities management related to theliving environment in general, such as waterand sewerage treatment facilities
Nippon Kanzai Environment Service Co., Ltd.

11.9%

65.6%

■ Real Estate Fund Management
2.1%¥4,132 mil.

3.4%

FY3/24
Net Sales¥23,726 mil.

Security on duty all the time, machine security
services

Asset Management
Asset management engaging in setting up
real estate fund and fund management, andinvestment in anonymous cooperatives¥122,674 mil.

NIPPON KANZAI Co., Ltd.
Three-S Co., Ltd.

Tokyo Capital Management Co., Ltd.
17.0%

■ Residential Management and¥20,864 mil.
Operations

46.3%

19.3%

■ Other¥2,557 mil.

Condominium Management

Other Businesses

Management of condominiums and public housing

Planning and operation of events, design
creation, payroll accounting operation

NIPPON KANZAI Co., Ltd.
Nippon Kanzai Housing Management Co., Ltd.
Japan Housing Management Co., Ltd.
NJK Staff Service Co., Ltd.
Hawaiiana Holdings Incorporated

NS Corporation Co., Ltd.
(Advertisement and event planning)
Neotrust Co., Ltd.
(Payroll and social insurance BPO)

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11

Financial Results by Business Segment
NIPPON KANZAI (Reference)

NIPPON KANZAI Holdings(Reference)

FY3/23

FY3/24

YoY Changes

Consolidated(\ million)
Net Sales

ActualRatio/Margin

ActualRatio/Margin

AmountRatio

113,045100.0%

122,674

100.0%

9,628

8.5%

77,691

68.7%

80,528

65.6%

2,837

3.7%

Building Maintenance and Property Management

54,56548.3%

56,802

46.3%

2,236

4.1%

Security Service

23,126

20.5%

23,726

19.3%

600

2.6%

Residential Management and Operation Business

18,13016.0%

20,864

17.0%

2,734

15.1%

Environmental Facility Management Business

12,936

11.4%

14,590

11.9%

1,654

12.8%

Real Estate Fund Management Business

1,950

1.7%

4,132

3.4%

2,181

111.8%

Other Businesses

2,337

2.1%

2,557

2.1%

220

9.4%

8,341

7.4%

8,271

6.7%

(69)

-0.8%

10,649

13.7%

7,550

*2

9.4%

(3,099)-29.1%

Building Maintenance and Property Management

7,597

13.9%

5,920

*2

10.4%

(1,677)-22.1%

Security Service

3,051

13.2%

1,629

*2

6.9%

(1,422)-46.6%

Residential Management and Operation Business

1,825

10.1%

1,498

*2

7.2%

(327)

-17.9%

Environmental Facility Management Business

1,697

13.1%

1,847

12.7%

150

8.8%

Real Estate Fund Management Business

60

3.1%

535

13.0%

474

778.8%

Other Businesses

369

15.8%

469

18.4%

100

27.2%

(6,261)-(3,630)

-

2,631

-

Facilities Management and Operation Business

Segment Profit
Facilities Management and Operation Business

Adjustments*1*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
particular segment.
*2 Starting from this term, with the transition to a holding company structure, the general and administrative expenses of our subsidiary, Nippon Kanzai Co., Ltd.
have been incorporated into the expenses of the Facilities Management and Operation Business and Residential Management and Operation Business.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

12

Performance of Business Segments
Facilities Management and Operations(¥ million)

Net Sales

Real Estate Fund Management

Operating Profit Margin

80,00075,22773,76871,977

13.4%

13.8%

77,69180,52812.5%

FY3/20FY3/21Net Sales(¥ million)

FY3/22

FY3/23

1,000

6.3%

16,885

16,227

16,980

9.7%

10.0%

18,1308.8%

20,864

10.1%

7.2%

FY3/21

FY3/22

FY3/23

FY3/20Net Sales

10,641

11,349

8,000
4,000
0

11,554
13.7%

12.5%

FY3/2013.0%

FY3/21

2.8%

2.9%

3.1%

FY3/22

FY3/2313.0%

FY3/24

FY3/24

Operating Profit Margin

2,500

2,337

2,012

1,694

1,500

1,127

1,000

21.1%

500
0

18.6%

12.0%

FY3/202,557

FY3/21

FY3/22NIPPON KANZAI (Reference)

15.8%

FY3/2318.4%

FY3/24NIPPONKANZAI
Holdings

Operating Profit Margin

16,00012,000

1,950

3,000

Environmental Facilities Management(¥ million)

1,530

FY3/21Net Sales(¥ million)

2,000

5,000
FY3/20

0

1,651

Other

15,0000

1,533

FY3/24

Operating Profit Margin

25,00010,000

2,000

9.4%

Residential Management and Operations

20,000

4,132

4,000
3,000

13.7%

20,0000Operating Profit Margin

5,000

60,00040,000Net Sales(¥ million)

100,000

FY3/22

12,93613.1%

FY3/23

14,59012.7%

 Starting from this term, with the transition to a holding
company structure, the general and administrative expenses ofour subsidiary, Nippon Kanzai Co., Ltd. have been
incorporated into the expenses of the Facilities Management
and Operation Business and Residential Management andOperation Business.

FY3/24

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

13

Overview of Consolidated Balance Sheets
Consolidated(\ million)

NIPPON KANZAI (Reference)

NIPPON KANZAI Holdings(Reference)

FY3/23 End

FY3/24 End

vs. FY3/22 End

ActualRatio

ActualRatio

AmountMain Factors for Increase/Decrease

Ratio

52,77960.5%

55,509

59.9%

2,730

5.2%

Cash and deposits

32,38637.2%

31,23933.7%(1,147)-3.5%

Notes and accounts receivable - trade,and contract assets

15,925

18.3%

18,664

20.1%

2,739

17.2%

Current assets

Real estate for saleNon-current assets
Property, plant and equipment

2,128

2.4%

1,455

1.6%

(672)

-31.6%

34,396

39.5%

37,136

40.1%

2,739

8.0%

6,385

7.3%

6,948

7.5%

563

8.8%

Intangible assets

2,400

2.8%

3,974

4.3%

1,574

65.6%

Investments and other assets

25,61029.4%

26,212

28.3%

601

2.4%

87,175100.0%

92,645100.0%

5,470

6.3%

16,691

19.1%

17,914

19.3%

1,223

7.3%

Notes and accounts payable - trade

7,146

8.2%

8,015

8.7%

868

12.2%

Accrued expenses

2,520

2.9%

3,565

3.8%

1,045

41.5%

Income taxes payable

Total Assets
Current liabilities

1,726

2.0%

822

0.9%

(904)

-52.4%

Non-current liabilities

5,004

5.7%

5,578

6.0%

574

11.5%

Lease liabilities

396

0.5%

981

1.1%

585

147.7%

Deferred tax liabilities

690

0.8%

1,219

1.3%

528

76.6%

Long-term guarantee deposits

2,255

2.6%

1,793

1.9%

(461)

-20.5%

21,69524.9%

23,492

25.4%

1,797

8.3%

Shareholders’ equity

62,73272.0%

66,393

71.7%

3,660

5.8%

Share capital

3,000

3.4%

3,000

3.2%

-

-

Capital surplus

3,785

4.3%

11,339

12.2%

7,554

199.6%

Retained earnings

58,72067.4%

62,382

67.3%

3,661

6.2%

1,608

1.8%

1,738

1.9%

129

8.1%

Total Liabilities

Accumulated other comprehensive income
Non-controlling interests

1,138

1.3%

1,020

1.1%

(117)

-10.3%

Total Net Assets

65,47975.1%

69,152

74.6%

3,672

5.6%

Total Liabilities and Net Assets

87,175100.0%

92,645100.0%

5,470

6.3%

(￥ million)

Assets5,470

 Increase in notes and accounts receivable - trade,and contract assets
2,739
 Increase in goodwill associated with the acquisitionof additional shares of an overseas subsidiary
1,023
 Increase in leased assets
1,077
Liabilities

1,797 Increase in notes and accounts payable - trade868
 Increase in accrued expenses
1,045 Decrease in income taxes payable(904)
Net Assets

3,672

 Increase in capital surplus
 Increase in retained earnings

7,554
3,661

Equity Ratio

73.5%(-0.3pp YoY)

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14

Overview of Consolidated Statement of Cash FlowsNIPPON KANZAI(Reference)

NIPPON KANZAI
Holdings(Reference)

Consolidated

FY3/23

FY3/24

YoY Changes(\ million)

ActualActualAmountProfit before income taxes

8,662

8,529

(133)

Depreciation

695

846

151

Decrease (increase) in retirement benefit (asset) liability

(65)

(78)

(12)

(1,686)(2,729)(1,043)

Increase (decrease) in trade payables

713

825

111

Decrease (increase) in inventories

744

601

(143)

(1,487)(3,654)(2,167)

186

1,133

947

7,763

5,473

(2,289)

(755)

(450)

305

(4,306)(1,617)

2,688

Proceeds from sales of investment securities

370

837

467

Purchase of shares of subsidiaries resulting in change inscope of consolidation

(27)

(502)

(474)

Decrease (increase) in trade receivables

Income taxes paid
Other, net
Cash Flows from Operating Activitiess

Purchase of property, plant and equipment, and intangible
assetsPurchase of investment securities

Other, net

208(1,185)(1,393)(4,511)(2,918)

1,592

Increase (decrease) in borrowings (incl. non-recourse loans)(1,293)

(831)

461

Dividends paid (incl. dividends paid to non-controllinginterests)(2,114)(2,118)

(4)

(310)

(393)

(82)

(3,717)(3,342)

374

(402)

(1,177)(775)

Cash and cash equivalents at beginning of period

32,44432,041(402)

Cash and cash equivalents at end of period

32,04130,864(1,177)

Free Cash Flows

3,251

2,554

(696)

Cash Flows from Investing Activities

Other, net
Cash Flows from Financing Activities
Net increase (decrease) in cash and cash equivalents

Main Factors for Increase/Decrease（￥ million）

CF from Operating Activities(2,289)

 Increase in trade receivables
 Decrease in income taxes paid

(1,043)(2,167)

CF from Investing Activities

1,592 Decrease in purchase of investment securities
2,688 Increase in purchase of shares of subsidiaries
resulting in change in scope of consolidation(474)

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15

Overview of Investment Securities Portfolio
Promotion of effective asset utilization in accordance with the corporate governance code

Repositioning our portfolio of investment securities to enhance business development

Investment
securities
FY3/24 End¥19,011 mil.

Securities held for non-business purposes ¥3,570 mil.

Securities held for business purposes¥5,464 mil.

Shares of affiliates¥9,977 mil.

Reposition
withbusiness
purposesecurities

Our efficientutilization of assets
will contribute tobetter businessperformance andbetter income
statements

Current initiatives
Continue to coordinate with multiple companies to eliminate non-operating holdings

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

16

Consolidated Financial Forecasts
for FY3/25

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Consolidated Financial Forecasts SummaryMarket Background and Risks
 Offices are shifting from centralization to decentralization based on promoting remote work and the like. Vacancy
rates remains high.
 Construction delays due to soaring raw material prices caused by rising prices and a supply shortage.
 Risk of exchange rate fluctuations due to soaring energy prices and the rapid depreciation of the yen as a resultof the prolonged situation in Ukraine and Middle East.
 Concerns over securing staff and rising labor costs.

Consolidated(\ million)

Full-Year FY3/24
Actual1H FY3/25

Ratio

Forecast

2H FY3/25

Ratio

Forecast

Full-Year FY3/25

Ratio

Forecast

YoY Changes

Ratio

AmountRatio

Net Sales

122,674

100.0%

64,300100.0%

72,200100.0%

136,500

100.0%

13,825

11.3%

Gross Profit

27,13422.1%

17,90027.8%

19,80027.4%

37,70027.6%

10,56538.9%

18,863

15.4%

14,40022.4%

14,80020.5%

29,20021.4%

10,336

54.8%

Operating Profit

8,271

6.7%

3,500

5.4%

5,000

6.9%

8,500

6.2%

228

2.8%

Ordinary Profit

8,225

6.7%

3,700

5.8%

5,300

7.3%

9,000

6.6%

774

9.4%

Profit Attributable to Owners of Parent

5,680

4.6%

2,400

3.7%

3,700

5.1%

6,100

4.5%

419

7.4%

SG&A Expenses

 Operating profit is expected to increase from business line expansion and cost restraints.
 Ordinary profit is expected to expand the share of profit of entities accounted for using equity method andrestrain the non-operating expenses.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

18

Financial Forecasts by Business Segment
Consolidated(\ million)
Net Sales

Full-Year FY3/24
Composition
Ratio/Margin

Actual2H FY3/25

1H FY3/25
Forecast

Composition
Ratio/Margin

Forecast

Full-Year FY3/25

Composition
Ratio/Margin

Forecast

YoY Changes

Composition
Ratio/Margin

AmountRatio

122,674

100.0%

64,300100.0%

72,200100.0%

136,500

100.0%

13,825

11.3%

80,52865.6%

39,21061.0%44,79062.0%

84,000

61.5%

3,471

4.3%

Building Maintenance and Property Management

56,802

46.3%

27,16042.2%

31,77044.0%58,930

43.2%

2,127

3.7%

Security Service

23,72619.3%

12,05018.7%

13,02018.0%

25,070

18.4%

1,343

5.7%

Residential Management and Operation Business

20,86417.0%

15,26023.7%

16,26022.5%

31,52023.1%

10,655

51.1%

Environmental Facility Management Business

14,590

11.9%

7,040

11.0%

7,960

11.0%

15,000

11.0%

409

2.8%

Real Estate Fund Management Business

4,132

3.4%

1,590

2.5%

1,590

2.2%

3,180

2.3%

(952)

-23.0%

Other Businesses

2,557

2.1%

1,200

1.9%

1,600

2.2%

2,800

2.1%

242

9.5%

8,271

6.7%

3,500

5.4%

5,000

6.9%

8,500

6.2%

228

2.8%

7,550

9.4%

3,670

9.4%

4,980

11.1%

8,650

10.3%

1,099

14.6%

Building Maintenance and Property Management

5,920

10.4%

3,000

11.1%

3,930

12.4%

6,930

11.8%

1,009

17.0%

Security Service

1,629

6.9%

670

5.6%

1,050

8.1%

1,720

6.9%

90

5.5%

Residential Management and Operation Business

1,498

7.2%

790

5.2%

780

4.8%

1,570

5.0%

71

4.8%

Environmental Facility Management Business

1,847

12.7%

980

13.9%

930

11.7%

1,910

12.7%

62

3.4%

Real Estate Fund Management Business

535

13.0%

130

8.2%

170

10.7%

300

9.4%

(235)

-44.0%

Other Businesses

469

18.4%

70

5.8%

200

12.5%

270

9.6%

(199)

-42.5%(3,630)-(2,140)-(2,060)-(4,200)

-

(569)

-

Facilities Management and Operation Business

Segment Profit
Facilities Management and Operation Business

Adjustments* The adjusted amount of segment profit includes the elimination of intersegment transactions as well as SG&A expenses which are not attributable toany particular segment.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

19

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 FY3/24, year-end dividends will be set at ¥27 per share based on full-year financial results.



For FY3/25, interim and year-end dividends will be set at ¥27 each, with plans for total dividends of¥54 per share.
NIPPON KANZAI (Reference)

NIPPON KANZAI Holdings

FY3/21

FY3/22

FY3/23

FY3/24

FY3/25

ActualActualActualActualForecast

Interim Dividends

25.00

27.00

27.00

27.00

27.00

Year-End Dividends

27.00

27.00

27.00

27.00

27.00

Consolidated Dividend Payout Ratio

37.8%

32.7%

35.7%

35.5%

33.1%

Dividend on Equity Ratio (DOE)

3.6%

3.5%

3.2%

3.0%

－

Interim Dividends

(¥)
60.00
40.00

Year-End Dividends

Consolidated Dividend Payout Ratio

37.8%

32.7%

35.7%

35.5%

33.1%

27.00

27.00

27.00

27.00

27.00

25.00

27.00

27.00

27.00

27.00

ActualActualActualActualForecast

FY3/21

FY3/22

FY3/23

FY3/24

FY3/2520.00
0.00

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

20

The NIPPON KANZAI Group’s
medium-term growth strategies

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

The NIPPON KANZAI Group’s Medium- to Long-term Management Vision
Basic Management Policy

As a partner of our customers, we continue to create and protect the value of buildings,
which are important assets.
VisionEnhancement of profitability anddiversification of businessesMedium-term Initiatives



Maintenance and strengthening ofmanagement platform







Further market share expansion in the industry
Development of new businesses and market
development
Expansion of overseas business
Improvement of profitability through review of
profit structure

Strengthening main businesses and expanding
market share in growth business fields
Creating new business opportunities and expanding
profit opportunities
Improving operational efficiency and labor productivity

Overseas
Business

Operating profit margin

Domestic Business(Stock-based business sales + new sales)
Ensuring appropriate profit margin
Maintaining profit margin

Effects of rate revisions
Effects of streamlining and indirect cost
reductions due to DX

Medium-term (3-5 years)

Long-term
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

22

Medium-term Growth Strategies Growth strategies based on the medium-term initiatives
Recognition of issues in business

Decrease in the labor inflow to the real estate-related service industry due to extension of retirement age and reemployment by companies, as well as labor shortage due to the outflow of human resources to other industriesPrices should reflect changes in economic conditions such as a shift from deflation to inflation

Diversification and sophistication of customer needs such as asset value enhancement and environmental issues
including decarbonization



Need to move away from being a labor-intensive industry, IT adoption of the entire industry, and delay in DX adoption

Growth Strategies

1

Sales promotion
to the public sector

In the PPP (Public-Private Partnership) field, demand for maintenance and renewal of
aging facilities and streamlining of operations is high. The market is expected to expand
nationwide in the future. Taking advantage of the many track records and know-how wehave built over many years, we will further strengthen the sales activities.

2

Promotion of M&A andinvestment

Taking advantage of the strength of an independent-type company which has nocomplicated relationship regarding the capital, we aim to create business opportunities
by entering into partnerships on an equal footing with companies that fit the times andproblem-solving.

3

Overseas development

By horizontally sharing the extensive facility management know-how cultivated in Japanand the strengths of our overseas companies, we aim to strengthen the foundation ofoverseas business and further expand the business scale.

4

Promotion of DX

We will strive to reduce indirect costs by improving operational efficiency and the
productivity of each employee, and to improve service quality and customer satisfaction
by increasing contact with customers.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

23

The NIPPON KANZAI Group’s Medium-Term Growth Strategies
Growth Strategies

Business Actions

1

Sales promotion to
the public sector

 Sales expansion of comprehensive management
services of public facilities Creating business opportunities by strengthening PPP /PFI and designated manager systems(P.25～P.28)

2

Promotion of M&A andinvestment

 Expansion of business line and sales channels throughaggressive M&A, investment, and business alliances inJapan and overseas(P.30～P.31)

Overseas development

 Overseas expansion into Europe and the United States
 Improvement of service quality and streamlining ofbusinesses through roll-out of the Group know-how(P.33)

Promotion of DX Improvement of operational efficiency and automationof operations (standardization of the system platform,
provision and sharing of systems, conversion of work
records to data files, utilization of robots, etc.)(P.35～P.40)

3
4

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

24

Facilities Management and Operation Business

Growth Strategies(1): NIPPON KANZAI Performance in Public Sector (excluding conventional general bidding)Sales expansion of comprehensive management services of public facilities
NIPPON KANZAI’s track record in comprehensive management of public facilities is expanding from the current 25 projects nationwide, andour market share ratio of approx. 40% is the industry-leading. In FY2024, we started operations at 6 local governments (Zama, Fukuyama,Noda, Toyooka, Marugame, and Koryo). Given the expected nationwide expansion of the comprehensive management operations market,
we will leverage our track record and accumulated know-how to strive for further market share expansion.
* Comprehensive management services of public facilities are a form of contract for managerial work for multiple public facilities of local governments
such as equipment inspection and cleaning Promoting comprehensive management has significant advantages such as “implementation of planned
capital investment with prioritization,” ,”“regional revitalization through cooperation with local companies,” and “workload reduction of local government
staff,” and we are deploying it nationwide as a measure of our public facilities management strategy

Local governments introducing
comprehensive management services
Local governments that started
the services in or before FY2022
Local governments that started
the services in FY2023
Local governments that started
the services in FY2024

Starting
periodLocal governments

No. of Starting
facilities period

Local governments

No. offacilities

Apr. 2018 Akashi-city, Hyogo*

170 Apr. 2023 Mishima-city, Shizuoka

85

Apr. 2019 Ashiya-city, Hyogo*

53

Yokkaichi-city, Mie

44

Chikusei-city, Ibaraki*

65

Kusatsu-city, Shiga

133

Kosai-city, Shizuoka*

80

Arao-city, Kumamoto

43

Apr. 2020 Numata-city, Gunma*

123

Omuta-city, Fukuoka

69

Urasoe-city, Okinawa*

20

Munakata-city, Fukuoka

181

Apr. 2021 Shimada-city, Shizuoka

70 Apr.2024 Zama-city, Kanagawa

66

Apr. 2022 Ichihara-city, Chiba

407

Fukuyama-city, Hiroshima

311

Imizu-city, Toyama

105

Noda-city, Chiba

236

247

Toyooka-city, Hyogo

131

Marugame-city, Kagawa

145

Koryo-cho, Nara

44

Osaka-city, Osaka(Eastern area)
Kobe-cory, Hyogo(Eastern part)

154

Takasago-city, Hyogo

48

Kasuga-city, Fukuoka

10“*” indicates the local governments that
introduced the services in multiple terms.

(as of March 31, 2024)
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

25

Facilities Management and Operation Business

Growth Strategies(1): Promotion of Public Facilities Management Support Business

Publicity strategy in public facilities management
We aim to increase the awareness of NIPPON KANZAI through information dissemination via commercials, social
media, and seminars.
Operating online salons■Training, Synergy and Media Mix
・Training

By disseminating information through online salons and
PPP seminars, NIPPON KANZAI will support “Public
FM interested groups” to become “practitioners.”
・Synergy
Aiming to boost the comprehensive management
market, NIPPON KANZAI will create medium to longterm value, rather than ad-hoc measures.
・Media mix By combining several media, NIPPON KANZAI aims tocreate complementary and synergistic effects between
them.
Expertise Interest(high)(high)

A public FM Online Salon was opened on February 5, 2021. The Online
Salon provides information sharing and networking opportunities among
workers of local governments who engage in Public Facilities
Management (FM) through transmitting the up-front initiatives and knowhow related to the national public FM and taking other initiatives.

132 local governments
and 170 people
participated(as of November 30, 2023)

Holding events and seminars related to public-and-private
cooperation (twice a year)

For local
governments
employees

Expertise Interest
(low)
(low)
For a wide range oftargets, including local
residents and experts

Since being certified as an MLIT PPP Agreement Partner company in
FY2018, we have held annual seminars for workers of local
governments. In FY2023, we held an in-person event (partly held online)with the aim of facilitating discussions and information exchange among
participants.

OnlineSalon

Event/Seminar*MLIT PPP Agreement Partner
TVCM (Branding video for the region)*Comprehensive management of public facilities“What is a good public facility?” edition* Broadcast in Kumamoto and Hiroshima from July to Augustin FY2023.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

26

Environmental Facility Management Business

Growth Strategies(1): NIPPON KANZAI Performance in Public Sector (excluding conventional general bidding)Sales expansion of environmental facilities management services
In the Environmental Facilities Management Business, which deals with facilities such as water and sewerage treatment facilities andindustrial waste treatment facilities, PPP-related new projects, including comprehensive privatization and DBO-method ordering, haverecently increased. Proactive sales and marketing activities are conducted nationwide to win entrusted projects. In FY2024, we started 5
new operations, including long-term comprehensive privatization.
Record of comprehensive privatization, designated
1. Promote sales of comprehensive privatization services administrators, entrustment to third parties, and DBO
Comprehensive privatization is a system in which several operations andfacilities are entrusted comprehensively so that a business operator
entrusted with the business can operate the facilities more efficiently andeffectively, making use of its knowledge and know-how. The introductionof the system is accelerated nationwide. Since the market expansion,
especially in local areas, continues to be expected, we strengthen the
promotional sales activities, development of professional humanresources, etc.

Comprehensive privatization
Designated manager
Entrustment to third parties
DBO

2. Strengthen taking DBO-method ordering in the specialuse facilities

DBO-method* has become a mainstream method for managing andoperating environmental facilities. In particular, we strengthen the sales
activities targeting the reconstruction timing of waste combustors,
recycling-related facilities, night-soil treatment plants, etc. And, there
have been an increasing number of newly established large-scalecomplex recycling facilities, which carry out all the processes, fromincineration to recycling and disposal of the waste, all at once. So, we
strengthen the sales activities for new order taking.
* DBO method is a method in which a private entity executes design,
construction work, maintenance and management, and operation
with public funding.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

27

Facilities Management and Operation Business

Growth Strategies(1): NIPPON KANZAI Performance in Public Sector (excluding conventional general bidding)

Initiatives for other public-private partnerships
PFI(¥ million)

Net Sales

Designated Manager

No. of Projects(No. of Projects)
60

6,000

Net Sales(¥ million)

No. of Projects(No. of Projects)

8,000
7,255

5,016

5,000

4,555
4,203

4,000

3,845

3,824
3,113

4,104
40

32
24

24

24

25

32

33

30

28
20

10

0

0

6,001

5,782
5,357

5,000

4,484
119

4,000
3,000

150

5,136 5,058

92

97

2,000

1,000

200

7,000
6,000

3,327

3,000

2,000

50

7,406

92

100

97

107

106

100

50

1,000
0

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

028

The NIPPON KANZAI Group’s Medium-Term Growth Strategies
Business Actions

Growth Strategies

1

Sales promotion to
the public sector

2

Promotion of M&A andinvestment

3
4

 Sales expansion of comprehensive management
services of public facilities Creating business opportunities by strengthening PPP /PFI and designated manager systems(P.25～P.28)



Expansion of business line and sales channels throughaggressive M&A, investment, and business alliances inJapan and overseas(P.30～P.31)

Overseas development

 Overseas expansion into Europe and the United States
 Improvement of service quality and streamlining ofbusinesses through roll-out of the Group know-how(P.33)

Promotion of DX Improvement of operational efficiency and automationof operations (standardization of the system platform,
provision and sharing of systems, conversion of work
records to data files, utilization of robots, etc.)(P.35～P.40)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

29

Growth Strategies(2): Promotion of M&A and Investment
Promote M&A and investment by companies related to the Groupboth domestically and abroad
The Group positions M&A and investment as important factors for expanding and growing our business. It willproactively promote M&A related business both domestically and abroad that have synergies with our group based on
the following fundamental policies.
Basic policy: M&A of and investment in blue-chip companies within strategic regions (expansion of domestic market andregional development)

Japan

Recent track record (from 2020):

・Aug. 2021
・Jul. 2022
・Dec. 2022
・Oct. 2023

Acquired 100% share of Neotrust Co., Ltd., an outsourcing company that undertakes payroll and various clerical works.
Acquired 40% share of JTB Asset Management Corp., a group company of JTB Corp.*1
Acquired 100% share of Seiryu Maintenance Inc. from SEKISUI CHEMICAL CO., LTD. *2
Nihon Kanzai Environment Service Co., Ltd. absorbed Seiryu Maintenance Inc.

<Supplementary note>*1 Business alliance with JTB Corp.
*2 NIPPON KANZAI Kankyo Service Co., Ltd., a subsidiary of NIPPON KANZAI, acquired the share.
Strengths outside the company’s sales area are expected.

Basic policy: M&A of and investment in the residential management and relevant businesses in Europe, the U.S., andOceania (expansion into the overseas market)
Recent track record (from 2020):

Overseas・Mar. 2020
・Dec. 2020・Mar. 2022
・Jul. 2023
・Aug. 2023
・Sep. 2023

Acquired 50% share of Hawaiiana Holdings Incorporated, a residential management company in Hawaii, the U.S.
Increased the ratio of investment in Keystone Pacific Property Management LCC., a gated community managementcompany on the west coast of the U.S., to 50%.
Acquired 90% share of PPG, a property management company in Hawaii, the U.S.
Established a subsidiary in Germany. (Company name: Nippon Kanzai Deutschland GmbH)
Acquired 50% share of and wholly owned Hawaiiana Holdings Incorporated, a residential management company inHawaii, the U.S.
Acquired 75% share of Ackermann Hausverwaltung GmbH, a housing management company in Munich, Germany.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

30

Facilities Management and Operation Business

Growth Strategies(2): Promotion of M&A and Investment
Concluded a business alliance agreement with JTB Corporation
On July 1, 2022, NIPPON KANZAI invested 40% in JTB Asset Management Co., Ltd (JAM), a JTB subsidiary that provides spacesolutions, and on December 28, JTB and NIPPON KANZAI concluded a business alliance agreement for collaboration. By investing in
JAM, NIPPON KANZAI will not only share know-how and skills of the company and add them to NIPPON KANZAI’s service menu but
also enhance alliances with JTB group companies. This will lead to the further expansion of the “Area Solutions Business”, which is oneof the 3 pillars in the JTB Group's medium-term management plan the “Pioneering Ways to bring people, places and possibilities
together in a New Era," also help two companies achieve further development though the leveraging of their strengths.

■Purpose of the business alliance
JTB and NIPPON KANZAI have entered into a businessalliance with the aim of expanding and developing thebusiness of JTB Asset Management and strengthening
stronger cooperation between the two companies, including
their group companies.

Promoting new business solution services
leveraging the strengths of both companies Receipt of orders by government offices and private companies
through joint sales utilizing the alliance effects (JAM)
 Consideration and sales of new services related to BPO (*) andoffice environment improvement, etc.
（*）BPO : Business Process Outsourcing

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

31

The NIPPON KANZAI Group’s Medium-Term Growth Strategies
Business Actions

Growth Strategies

1

Sales promotion to
the public sector

2

Promotion of M&A andinvestment

3
4

 Sales expansion of comprehensive management
services of public facilities Creating business opportunities by strengthening PPP /PFI and designated manager systems(P.25～P.28)



Expansion of business line and sales channels throughaggressive M&A, investment, and business alliances inJapan and overseas(P.30～P.31)

Overseas development

 Overseas expansion into Europe and the United States
 Improvement of service quality and streamlining ofbusinesses through roll-out of the Group know-how(P.33)

Promotion of DX Improvement of operational efficiency and automationof operations (standardization of the system platform,
provision and sharing of systems, conversion of work
records to data files, utilization of robots, etc.)(P.35～P.40)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

32

Facilities Management and Operation Business

Growth Strategies(3): Roll-out of the Group Know-how
Aiming to improve the business quality and the growth of the entire company, we will roll out the know-how andstrengths cultivated by each company and put them into practice. In the future, in particular, we will strengthen
information sharing in IT and digital transformation fields, raise operational efficiency, and take other measures.
Established in July 2023
Nippon Kanzai
Deutschland GmbH
Munich, Bavaria,
Germany

NIPPON KANZAI
USA, INC.
Japan
NIPPON KANZAI HD

Ackermann Ltd.

Sharing of eachcompany’s know-how
among the Group
Information sharing in
regular global meetings

Mainly in Munich, the company
engages in Rental property
Management of apartments,
Home Owners Association
management, Brokerage andFacility Management. A
synergetic effect among theGroup companies is expected
through the provision ofmanagement know-how the
Company has cultivated.

Know-how of facility
management

Honolulu,
Hawaii, USA

Strata management service forhomeowners’ associations in Australia
is provided in Japan as “NRemotE.”

Sydney, Austraria

Irvine,California, USA

Keystone, LLC

Know-how of
condominium
management

Hawaiiana
Pacific Property Group

Gated community managementcompany in California. It will
work to raise the efficiency ofoperations and expand
services through the renovationof the IT system and target
future growth throughexpanding properties undermanagement to include highrise condominiums, etc. The
company is expanding the areaby acquiring companies in thesame industry in Idaho andColorado.

PICA Pty Ltd.

The largest “strata managing agent” in Australia
who provides services to owners corporations ofsectional ownership properties. Pursuing efficient
operation while maintaining quality service andproviding peripheral services.

Pacific Property Group (hereinafter “PPG”)
provides property management, leasing, andsales brokerage services to approx. 20 officebuildings and stores in Hawaii. Strengthening
the local network and using it for the futurebusiness activities.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

The largest sectional ownership housing
management company, which is called
Association of Apartment Owners (AOAO)
management company, in Hawaii. The
accounting system introduced to Keystone
Pacific Property Management LCC. is planned to
be introduced as part of the know-how-roll-out
initiatives. Streamlining of the operations is
aimed for.

33

The NIPPON KANZAI Group’s Medium-Term Growth Strategies
Business Actions

Growth Strategies

1

Sales promotion to
the public sector

2

Promotion of M&A andinvestment

3
4

 Sales expansion of comprehensive management
services of public facilities Creating business opportunities by strengthening PPP /PFI and designated manager systems(P.25～P.28)



Expansion of business line and sales channels throughaggressive M&A, investment, and business alliances inJapan and overseas(P.30～P.31)

Overseas development

 Overseas expansion into Europe and the United States
 Improvement of service quality and streamlining ofbusinesses through roll-out of the Group know-how(P.33)

Promotion of DX Improvement of operational efficiency and automationof operations (standardization of the system platform,
provision and sharing of systems, conversion of work
records to data files, utilization of robots, etc.)(P.35～P.40)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

34

Growth Strategies(4): Promotion of DX
With IT approaches both externally and internally, and fusion of digital and analog,
we provide optimal services to customers

DX forclients

DX
DX forinternal use

1

Use of building
knowledge

2

Visualization ofequipment status

3

Providing andsharing systems

4of on-site forms
Conversion of work  Digitization
Keeping digital data of inspection records
records to data files  Electronic application for work request

5

Diversification ofwork styles

6

















Accumulating know-how and sharing of knowledge
Providing quick and optimal solutions
Standardizing HR development and work quality

Remote monitoring of equipment operation status
Notification of irregular trends and irregular values
Early detection and response to facilities problems



Aggregation and analysis of facilities-related data
Estimation of life cycle costs
Providing a work management portal

Strengthening responsiveness to infectious
diseases and disasters
Effective use of travel time
Digital-infused working styles

productivity
Automation of office  Improving
Allocating staff properlywork
 Creating time with clients

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.


















Knowledge integration
environment
Accumulation in the coresystem
IoT for facilities monitoring
Operation of WAFM (WideArea Facilities
Management) center

Systemconstruction
and provision

NK Connect
Cross Point FM

On-site forms apps
Smart devices

Online meetings
Web transactions
Use of robots, etc.

Use of IT / ICT

Automation such as RPAs
Voice-to-text conversion
technology

35

Residential Management and Operation Business

Growth Strategies(4): Provision and Sharing of Systems (DX for clients❸)
Provision of new homeowner association services using IT tools
Overview

Our staff will support the internet settings.

In the past, management of homeowners’ associations
was conducted by the association’s board members andthe property manager who met in person on site.
Each of the Group’s homeowners’ associations
management companies have launched strata
management services called NRemotE for homeowners’
associations in order to facilitate smooth operations forsituations where interpersonal contact has become
difficult due to the outbreak of the Covid 19. The
introduction of this service makes it possible to holdboard meetings and manage various tasks such as
contractual relations online.

The staff in charge supports the operation of the Association online.

Main functions
・Holding of online board meetings
・Executing management contract electronically
・Providing monthly financial reports online
・Digitalization of invoice, reports, etc.
・Online-based application service for owner/resident
information updates.
* Strata management refers to homeowners’ associations operation,and cashier works in the condominium management business inJapan. “NRemotE” was developed by the know-how rolled out by
PICA, an affiliate in Australia.
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

36

Residential Management and Operation Business

Growth Strategies(4): Provision and Sharing of Systems (DX for clients❸)
Provision of official portal app for residents of condominiums “N-Life+”
Overview“N-Life+” is a portal app that incorporates various
functions that support daily life, including online billconsultation such as that on condominium
management, online applications for facilities such as
parking lots (separate approval of the homeowners’
association is required for use), presentation ofresident services such as house cleaning, sales ofgoods related to daily life, notification of neighborhood
information, and inquiry functions in case of trouble.
Through the provision of this app, we aim to support
residents' comfortable lives and improve customer
satisfaction. We also plan that the app will serve as agateway for further promotion of DX for condominium
management.
In the Residential Management and Operation
Business, we will promote various DX features, suchas this app, to reduce costs of condominium
management based on improving work efficiency. In
this way, we will enhance our superiority over othercompanies in the same industry.

Official app for
Nippon Kanzai Housing Management
is finally here!

New release on
December 1, 2023!

To resolve residential issues, or to enjoy shopping.
* The picture is for illustrative purposes.

Presentation of resident services

Sales of goods

Emergency communications

We introduce convenient services
for your apartment such as housecleaning, renovation andhousekeeping.

We offer special deals andseasonal products at special
prices. You can enjoy shopping
online.

“I don't know who I should
consult...”. You can make a calldirectly depending on yourconcern.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

37

Residential Management and Operation Business

Growth Strategies(4): Provision and Sharing of Systems (DX for clients❸)
Completing payment from homeowner associations online “Smart Transfer Approval”
Overview

GMOあおぞらネット銀
GMO Aozora Net Bank
行 approval
Smart transfer"Smart Transfer Approval" is a unique online payment service
that uses the BaaS (Banking as a Service *) of an online bank,customized, and linked to NIPPON KANZAI's administrative
management system.
As a DX for condominium management, this service wascreated through a combination of the systems integration
function of GMO Aozora Net Bank and the condominium
management expertise of NIPPON KANZAI Group.
*BaaS（Banking as a Service）・・・A mechanism whereby banking functions and services
traditionally provided by financial institutions are divided and made available to various
companies to integrate into their own services.

Benefits of introduction
Management company had made homeowners-associationrelated payment at a bank for homeowners’ association,
which was inefficient, and, in some cases, whose settings of
payment approval route was inappropriate. Introduction ofthis service will make approvals and transfer works efficient.

(5) Transfer

Administration
Division,
日本管財㈱
NIPPONKANZAI Co., Ltd.
事務管理事業部

Bank accounts ofhomeowner associations(6) Transfer

Chairman,●●マンション管理組合
XXX Condominium
理事長様Management Association

Payees(infrastructure operators,
contractors, etc.)“Smart transfer approval,” streamlining of approvals,
and transfer works
First to introduce the service: NIPPON KANZAI GroupWe have received positive feedback from customers who
have already implemented our service for reducing laborassociated with approving documents by affixing seals anddecreasing the time until disbursement. We plan to roll out
this service to all managed properties by the end of the fiscal
year in March 2025.
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

GMO Aozora Net Bank,News release November 1, 2022 issue38

Facilities Management and Operation Business

Environmental Facility Management Business

Growth Strategies(4): Diversification of Work Styles (DX for clients❺)
Promoting the use of robots, etc., in facilities management services
NIPPON KANZAI Group has actively introduced robots and digital devices into facilities management services in orderto address labor shortages, improve operational efficiency, and improve service quality.

Benefits of introduction
・Reduction of burden on staff through reducing workload
・Reduction of human error and accident occurrence rate
・Standardization of work quality
・Appealing to our tenants through the introduction of thelatest technology

Track record■Type of building that
introduced robots
・Office building
・Public facilities
・Hospital
・School・Underground city, etc.

・Cleaning robot: 52 units in 35 buildings in operation(including outsourcing operation)

・Security robot: 2 units in 2 buildings in operation(as of April 30, 2024)

Preventive maintenance using underwater drones
Trial introduction started for the purpose of preventive
maintenance and checking damaged parts of water
channels and gates, etc. of water treatment facilities.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

39

Corporate

Growth Strategies(4): Automation of Office Work (DX for clients❻)
Improving the efficiency of operations with the use of generative AI
Since June 2023, we have developed our own conversational AI “NK-AIbot Powered by GPT-3.5” utilizing Azure
OpenAI Service and Microsoft Power Platform provided by Microsoft. In November 2023, we released the "NK-AIbotD1 Powered by GPT-4", which is capable of providing more pragmatic responses by learning from our proprietary data,such as business manuals. Following the analysis of each employee's usage patterns, we have been able to discern
trends in both users and applications. To further promote and expand usage, instead of utilizing a single AI system forvarious tasks, we have decided to develop multiple AI systems, each tailored for specific tasks, and are proactively
promoting their use in the workplace.
Concept of “NK-AIbot-D1 Powered by GPT-4” (2) Keywords taken from the question
are added to the prompt*.

(1) User asks a question to
generative AI
Can you tell me themain functions ofPOSSibility*, please?

＜Examples of main uses＞
Standardization of operations is aimed throughAI learning on manuals＜Examples of data to be learned＞

Prompt・Rules for all employees
・Operation manual of each department
・Operation manuals and response
history for each site

Input

* To ensure security, users are divided byaccess right allocation.

(3) A response will be createdbased on added keywords.
POSSbility has the following functions:managing contracts and applications
with customers; and preparing
accounting forms such as quotation andorder confirmation.

OutputCompanyspecificdata

Creating an environment where employees withlittle seniority can easily ask questions
Reducing the workload of employees
responding to inquiries*POSSibility: Core system unique to our group Prompt: Instructions and questions to AI

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Prevention of dependence on a specific person
and transmission of know-how

40

Sustainability of
the NIPPON KANZAI Group

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Sustainability Initiatives and Governance Structure Sustainability initiatives
Concerning sustainability issues, including social and environmental problems, for our group they constitute both“business opportunities” and “risks”. We recognize that they are major management issues for increasing corporate
values in the medium and long term. In order to resolve issues concerning sustainability, the entire group will
implement various measures.

 Establishment of the Sustainability Committee
The Sustainability Committee was established in January 2024 to support the Company's consideration of issues
related to sustainability and to encourage strategic and broad integration of the sustainability perspective into
management's operational decision-making and company-wide risk management initiatives.

Board of Directors
Instruction

Instruction

Reporting

ReportingManagement Meetings
Instruction

Instruction

Reporting

Reporting

Sustainability Committee
Chairperson:
Vice-chairperson:

Officer in charge of marketing and sales strategies
Senior executive officer, Human Resources Dept.
and General Affairs Dept.
Members:
Finance Division, Legal Affairs Office,Internal Control & Group Risk Management OfficeSecretariat(Regular):Public Relations, IR & Marketing Department
Secretariat(Deputy): General Planning Office,Group Companies Management Office

Task Force

Information
sharing

Risk Management Committee
Chairperson:

Officer in charge of group companies andrisk management
Vice-chairperson: Internal Control & Group Risk Management OfficeMembers:
Internal Audit Office, Secretariat of Audit Committee
and Others, Human Resources Dept.,
Finance Division, Legal Affairs Office,Public Relations, IR & Marketing Department
Secretariat:
Internal Control & Group Risk Management OfficeGroup Companies* Establishment of risk management system
Appointment of risk management promotion manager(contact point within the group)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

42

The NIPPON KANZAI Group’s Materiality
We have established ten themes deemed material for continuously meeting the everchanging demands of society. Each theme serves
three functions: a foundation that supports the creation of corporate value, capital that produces value, and the value we aim to create.
Through the resolution of each theme, we strive to provide the most optimal building management services that ensure the longevity andsafety of our customers' valued assets, continuously contributing to the further creation of value in buildings.

Values we aim tocreateContributions tolocal development

Consideration for
local environment

Leveraging
human capitalUse of accumulated
information as
intellectual property

Creation ofpartnerships

Absolute respect
for complianceReinforcement oflabor standards

Maintenance of risk
management system

Foundation supporting
corporate value creation

Maintenance ofquality and safety

Value-creating
capitalWe strive to provide optimal building management services
and continue to contribute to the creation of further value
for buildings

Sophistication of corporate governance

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

43

Definition of Each Materiality
Functional classification

Materiality
Maintenance of quality
and safety

Values we aim tocreateValue-creating
capitalContributions to local
development• By accepting orders for the operation of aging public infrastructure and facilities using the PPP method,
we contribute to the efficient management of these facilities and the creation of local employment.
Additionally, we cooperate in creating new local attractions through the management of buildings where
people gather and communicate• We contribute to a decarbonized society and beyond by assessing the environmental impact of building
facilities throughout their life cycle. This includes improving maintainability and extending service life
based on customer needs, as well as proposing replacement and reconstruction ideas.

Leveraging human capital• As a comprehensive real estate service provider, the NIPPON KANZAI Group aims to be a reliable
partner for customers and communities. We provide one-stop quality services backed by the expertiseand public certification that the Group has cultivated

Use of accumulated
information as intellectual
property

Absolute respect forcomplianceReinforcement oflabor standards
Maintenance of risk
management system
Sophistication of
corporate governance

SDGs benefiting from completion• Through building management, we provide a safe, secure, and comfortable environment for building
owners, residents, and facility users. We contribute to the construction of a sustainable social
infrastructure and also enhance asset value and profitability by optimizing building life cycle costs.

Consideration for local
environment

Creation of partnerships

Foundation
supporting
corporate value
creation

Definition• We will utilize the know-how we have accumulated through industry-leading PPP (public-private
partnership) projects and integrated management operations to optimize the life cycle costs of ourcustomers' buildings and add value to improve asset value.
• We promote digital transformation (DX) to realize high-efficiency building management in response to theera of population decline. Our focus is on the effective use of databases and the introduction of cleaning
robots and advanced technologies equipped with AI.
• We will leverage our independent and neutral perspective to create partnerships with business partners
that are optimal for our customers. These partnerships are based on an equal relationship, without beingbound by a capital relationship.
• Together with our partner companies, we will contribute to regional revitalization and revitalization
projects. Our aim is to work towards the goal of creating new businesses.
• We will strive to maintain and improve the quality of our service to customers through multiple monitoring
systems, including inspections and 'Customer Satisfaction Surveys’.
• We will also work hard to ensure thorough compliance with relevant laws and regulations, the Information
Security Policy, and the Basic Rules for the Protection of Personal Information.
• We are expanding initiatives related to diversity and inclusion, as well as work-life balance, to foster a
corporate culture that allows diverse human resources to play an active role and flourish. We aim torealize a work environment where women, the elderly, and foreigners can thrive, with mutual
consideration and respect for each other.
• The Risk Management Committee identifies, evaluates, and manages risks for the entire Group, while
the Sustainability Committee does the same for sustainability-related risks. For significant risks, bothcommittees verify the effectiveness of the countermeasures and report them to the Executive Committee
and the Board of Directors.
• We strive to build a sound, highly transparent, and stable management foundation, and we actively
disclose information in a timely manner.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

44

Initiatives for ESG

E environment

S social

Initiatives for environment and energy saving
 Carbon offset of Nishinomiya registeredoffice building

Initiatives related to worker-friendliness and employment
 Various systems related to the realization of aflexible working style
We set up various systems to support the balance between workand child raising/nursing care.

 Installation of quick EV
charger to Nishinomiya
registered office building<Major systems>•

 Promotion of replacing
corporate cars with EVs

•
•
•
•

 Enhancement of green
product lineup throughcentral purchasing system

Short-time working system (For child raising and nursing care, the system
is valid until the child becomes the third grade in elementary school)
Hour-base paid leave system
Work-from-home system
Use of satellite officeSubsidy system for hiring baby sitter

Promotion of women's career development


Development of environmental business

Assistant Manager level: 24.8％(34 out of a total of 137 men and women assistant manager) Proposal of installing photovoltaic facilities
We proactively propose installing solar carports that enable
power generation at the parking space to properties undermanagement, such as large-scale facilities, including
factories and hospitals.

100% rate of maternity leave system for women
Increase in the percentage of women in managerial
positionsManagerial position: 8.1％



(19 out of a total of 235 men and women managers)

Ensuring equality in the wage gap between men andwomen
All workers: 63.3％
Regular workers: 86.8％
Non-regular workers: 72.4％

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

(all as of March 31, 2023)* These are the figures about the main
operating company Nippon Kanzai Co., Ltd.

45

Initiatives for ESG

G governanceInitiatives for strengthening corporate governance Corporate governance systems

 Acquisition of Resilience Certification

 Form of organization design

Company with an audit andsupervisory committee

 Number of directors who are not audit

8 (0) Number of directors who are audit and4 (4) Term of directors other than audit and1 year

 Term of directors who are audit and2 years

 Operation enforcement structure

Executive officer system(3 people)

and supervisory committee members(among which, external directors)
supervisory committee members(among which, external directors)

supervisory committee members

supervisory committee members

 Establishment of Investment Committee
We set the Investment Committee as an advisory council of theBoard of Directors to promote M&A and investments as part of thegrowth strategies of the Company. The Committee examines therisk of sales projects, etc., accompanying important investmentsfrom the perspectives of profitability, business strategies, andoperation to judge the appropriateness of the investment. And,
continuous risk management is executed through monitoring after
the investment.

“Resilience Certification” is a system to certify the companies andorganizations that support the intent of “building of national
resilience” based on the “Guidelines for Certification ofOrganization Contributing to National Resilience” promoted by the
National Resilience Promotion Office, Cabinet Secretariat, and thatare committed to business continuity.
In July, 2023, NIPPON KANZAI Co., Ltd. was registered as anorganization that acquired “Resilience Certification.”
Registeredorganization

NIPPON KANZAI Co., Ltd.

Scope

Business continuity

Certified dateJuly 31, 2023

Period2 years (renewal screening after 2 years)
On July 31, the first certification organizations inAnnouncement

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

fiscal 2023 were announced on the website of
the Association for Resilience Japan.
*Integrated operation with HD

46

Reference (1)Company Information

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Basic Information

The NIPPON KANZAI Group respects each building
and keeps maintaining the value.
Business nameNIPPON KANZAI Holdings Co., Ltd.

Establishment

April 3, 2023

Share capital¥3,000 million

Representative

Shintaro Fukuda, President and Representative Director

Address ofheadquarters

2-1-10 Nihombashi, Chuo-ku, Tokyo, Japan

Address ofregistered office9-16 Rokutanji-cho, Nishinomiya City, Hyogo Pref., Japan

Business
Descriptions

The business management of the Group companies that
operate office buildings, housing complexes, environmental
facilities and real estate fund management business, andbusiness incidental or related to thisNumber of
employees

Consolidated: 10,876 (as of March 31, 2024)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

48

Business Site
Since establishment, we have offered one-stop solution forthe optimum operation management, taking advantage ofthe five-decade experience, knowledge, nationwide
network, wide business area, and the latest building
engineering.

Gated community managementcompany in California, United States
Keystone Pacific Property Management, LLC

The largest AOAO (“Association ofApartment Owners”) managementcompany in the State of Hawaii
Hawaiiana Holdings Incorporated

Property management company
in Hawaii
NIPPON KANZAI Holdings Co., Ltd.
NIPPON KANZAI Co., Ltd.
Three-S Co., Ltd.
NIPPON KANZAI Environment Service Co., Ltd.
Nippon Kanzai Housing Management Co., Ltd.

Pacific Property Group, Inc.

The largest strata managementcompany in Australia
Prudential Investment Companyof Australia Pty Ltd (PICA)

Japan Housing Management Co., Ltd.
Tokyo Capital Management Co., Ltd.
NS Corporation Co., Ltd.
Japan Environmental Solutions., Ltd.
Okinawa NIPPON KANZAI Co., Ltd.
Neotrust Co., Ltd.

Housing managementcompany in Munich, Germany

Ackermann Hausverwaltung GmbH(as of March 31, 2024)
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

49

History of NIPPON KANZAINIPPON KANZAI Holdings

FY3/24 Net sales

Oct. 1965

Current Chairman Takeshi Fukuda
founded NIPPON KANZAI Co., Ltd.
in Kobe City

Mar. 1988
Feb. 1989

67/6

Started total management business ofhigh-rise intelligent buildings¥122,674 million

Apr. 2014

Adopted a dual headquarters system, one inTokyo and the other in Kansai

Apr. 2018

Started the first comprehensive management
operations in Kansai area

Jun. 2000

Entrusted with PFI project and established a specificpurpose company

Aug. 2000

Started building diagnosis (due diligence service) business.

Mar. 2001

Listed on the 1st section of Osaka Securities Exchange(current Osaka Exchange).

Feb. 2002

Listed on the 1st section of Tokyo Stock Exchange

Apr. 2023

Established
NIPPON KANZAI
Holdingzs Co.,Ltd.

Shares were traded at the Over-The-Counter
Market of Japan Securities Dealers
Association

72/6

77/6

82/6

87/6

Aug. 1973

Started total management business forcondominiums

Apr. 1976

Started operation and maintenance businessfor public sewerage plants

92/3

97/3

02/3

07/3

May 2003

Started Asset Management BusinessJul. 2004

Started establishing funds for institutional investors

Dec. 2006

Agreed with Galileo, an investor in Australia to establish A-REIT

Jul. 1990

Entrusted with management of a land trust building
through a proposal-based competition

Nov. 1993

Listed on the 2nd section of Osaka Securities Exchange(current Osaka Exchange)

Aug. 1996

BEST System, a life-long building management system toenhance property values, was introduced to the market

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

12/3

17/3

22/3

50

Group Company Restructuring (1)Domestic
NIPPON KANZAI Co., Ltd.

Oct. 1965

Dec. 1978

Overseas

SecurityThree-S Co., Ltd.
Established jointly with SECOM CO., LTD. as part of the business
partnership on manned guarding

Aug. 1999

BM

Casa Co., Ltd.
(Current Japan Environmental Solutions, Ltd)
Acquired a condominium management company and operated
energy-saving services afterward

Jan. 2006

Environment

NIPPON KANZAI Environment Service Co., Ltd
Spun off Environmental Engineering Business

Apr. 2007

AM

Tokyo Capital Management Co., Ltd.
Spun off Real Estate Fund Management BusinessNov. 2008BM

NS Corporation Co., Ltd.
Acquired the shares of Shiseido Kaihatsu Co., Ltd.

Jun. 2013

Prudential Investment Company ofAustralia Pty Ltd.

OverseasMar. 2013
Condominium

Japan Housing Management Co.
NJK Staff Service Co., Ltd

Acquired the shares of a condominium management company
in Australia

Became a subsidiary through the merger of NKJ Holdings Co., Ltd.
in July 2021
A company that was establishedin alliance with the other company

Spun off the businessdepartment

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Other M&As

(as of March 31, 2024)

51

Group Company Restructuring (2)Domestic
Sep. 2015

BM

Overseas

Okinawa Nippon Kanzai Co., Ltd.
Spun off the business because of the company split

Jan. 2017
Jul. 2017

Keystone Pacific Property Management LLC

Overseas
Condominium

Acquired the equity of a residential management company
in the United States

Nippon Kanzai Housing Management Co., Ltd.
Spun off the residential management business

Keystone Progressive, LLC

Overseas

Apr. 2019

Acquired the equity of a residential management company
in the United States

Mar. 2020

Hawaiiana Holdings Incorporated

Overseas

Acquired the shares of a residential management company
in the United States

Aug. 2021

Other

Neotrust Co., Ltd.
Acquired the shares and made it a subsidiary

Mar. 2022

Pacific Property Group

Overseas

Acquired the shares of a PM company in the United States

Ackermann Hausverwaltung GmbH

Overseas

Sep. 2023

Acquired the equity of a housing management company inGermany

A company that was establishedin alliance with the other company

Spun off the businessdepartment

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Other M&As

(as of March 31, 2024)

52

Alliance Strategy Taking Advantage of Independent Type (1)Aug. 2002

Jan. 2006
Sep. 2006

1960

Established Japan Property Solutions Co., Ltd., a property
management company jointly funded by with Mitsubishi Trust andBanking Corporation (current Mitsubishi UFJ Trust and Banking
Corporation)
Spun off Environment Environmental Engineering Business due
to company split. Nippon Kanzai Environment Service Co., Ltd.
started operations.
Acquired Lion Building Maintenance Co., Ltd/, a group company ofLion Corporation and changed the business name to Kanzai
Facility Co., Ltd.

1970

1980

Apr. 2007

Spun off Real Estate Fund Management Business due tocompany split. Tokyo Capital Management Co., Ltd.
started operations.

Jan. 2008

Changed the business name of Casa Co., Ltd., a consolidated
subsidiary, to Japan Environmental Solutions, Ltd and started
the water filtration business.

Nov. 2008

Acquired the shares of Shiseido Kaihatsu Co., Ltd., a groupcompany of Shiseido Company, Limited, and changed thebusiness name to NS Corporation Co., Ltd.

1990

2000

Jul. 1999 Established KN Facilities Co., Ltd., a total building managementcompany jointly funded with Kumagai Gumi Co., Ltd.
Aug. 1972

Separated the equipment maintenance work business andestablished NIPPON KANZAI Service Co., Ltd.

Dec. 1978 Concluded a business partnership on manned guarding with
Nihon Keibi Hosho Co., Ltd. (current SECOM CO., LTD.) andjointly established Three-S Co., Ltd.
Oct. 1965 Current Chairman Takeshi Fukuda founded
NIPPON KANZAI Co., Ltd. in Kobe City

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

53

Alliance Strategy Taking Advantage of Independent Type (2)Jan. 2017
Jul. 2017
Apr. 2012

Kanzai Facility Co., Ltd., a consolidated
subsidiary absorbed KN Facilities Co., Ltd.

Mar. 2013

Acquired 50% share of Prudential Investment Companyof Australia Pty Ltd., a strata management company inAustralia, and formed a capital alliance.

Jun. 2013
Apr. 2014

Dec. 2017

Acquired shares of NJK Holding Co., Ltd. and made ita wholly owned subsidiary.

Absorbed NIPPON KANZAI Service Co., Ltd.
Parking lot operation business of NIPPON KANZAI Service Co., Ltd.
was split and taken over by Japan Property Solutions Co., Ltd..

Apr. 2019

NKS Co., Ltd. absorbed Kanzai Facility Co., Ltd. andchanged the business name to NIPPON KANZAI service
Co., Ltd.

Keystone Pacific Property Management LCC., an affiliatedcompany in the United States, acquired the business right of
Keystone Progressive, LLC, a residential management company.

Sep. 2019

Acquired 100% share of SANEI WORK Co., Ltd., a company
newly established by a subsidiary of Nippon Television Work 24
Corporation.

2010

Mar. 2020
Apr. 2020
Dec. 2020
Jul. 2021

Aug. 2021

Oct. 2017

Acquired 40% equity of Keystone Pacific Property
Management LCC., a gated community management company
in the United States.
Spun off the condominium management business due tocompany split. Nippon Kanzai Housing Management Co., Ltd.
started operations.
Transferred the property management business to Japan
Property Solutions Co., Ltd.

2020

Acquired 50% share of Hawaiiana Holdings Incorporated,a residential management company in Hawaii.
Absorbed SANEI WORK Co., Ltd.
Increased investment ratio to 50% after additionally acquiring
the equity of Keystone Pacific Property Management LCC.
Tokyo Capital Management Co., Ltd., a consolidated subsidiary,
merged with Japan Property Solutions Co., Ltd.
Following the merger of NKJ Holdings Co., Ltd., acquired 100%
share of Japan Housing Management Co., Ltd., Nippon Kanzai
Housing Management Co., Ltd., and NJK Staff Service Co., Ltd.
respectively to wholly own the companies.
Acquired 100% share of Neotrust Co., Ltd., and made it a wholly
subsidiary

2022

2023

Mar. 2022

Acquired 90% share of Pacific Property Group, a PM
company in Hawaii.

Jul. 2022

Acquired 40% share of JTB Asset Management Co., Ltd.,a group company of JTB Corp.

Dec. 2022

NIPPON KANZAI Environment Service Co., Ltd., a consolidated
subsidiary, acquired 100% of Seiryu Maintenance Inc. fromSekisui Chemical Co., Ltd. (made it a sub-subsidiary)Aug. 2023

NIPPON KANZAI USA, INC. a consolidated subsidiaryacquired 100% share of Hawaiiana Holdings Incorporated.

Sep. 2023

Acquired 75% of the equity of Ackermann Hausverwaltung
GmbH, a housing management company in Germany.
Nippon Kanzai Environment Service Co., Ltd., a consolidated
subsidiary absorbed Seiryu Maintenance Inc.

Oct. 2023

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

54

Mid-Term Transition of Business Performance(¥million)
150,000

Facilities Management and Operating Business
Real Estate Fund Management Business
Operating profit margin

85,41372,52273,428NIPPON KANZAI

74,22887,37990,07892,49096,47897,929113,045
104,124

5.0%

4.8%

103,737

75,06560,0004.9%

NIPPON KANZAI
Holdings

122,674
106,300

90,00071,392

Environmental Facility Management BusinessTemporary Staffing Business

Focus on consulting
businesses for local
governments

Switching of
unprofitable projects

Expansion of middle-riskand middle-return
businesses, such as PFI

120,000

Residential Management and Operation Business*
Other Businesses

5.3%

5.3%

6.0%

6.2%

6.0%

5.8%

6.5%

6.0%

6.4%

7.2%

7.2%

7.4%

6.7%

30,000

0

Lehman shock(Sep. 2008)

Strong-yen
deflation
in Japan
Sep. 2009

Mar. 2011

Democratic
Great
Party of Japan East Japan
inaugurated Earthquake

US-China
trade friction

Abenomics
Dec. 2012

Apr. 2016

LiberalDemocratic
Party back asa ruling party

Kumamoto
Earthquake

May 2019

Jan. 2020

Jul. 2021

From
COVID-19 Tokyo Olympic
Heisei to outbreak and Paralympic
Reiwa
Games

*Residential Management and Operation Business before FY3/14 is included in
Facilities Management and Operation Business.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

55

Share Price Trends(Shares)
500,000

Trading volume (LHS)

NIPPON KANZAI Holdings (RHS)

TOPIX (RHS)

(¥)
3,000

400,000

2,500

300,000

2,000

200,000

1,500

100,000

1,000

0

500

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

56

Diversity of Operation Management Facilities (Building Operation Management Business)
NIPPON KANZAI Co., Ltd.

 Portfolio of operation management building Covering a wide range of applications, such as offices, large-scale commercial facilities, and public facilities
 Recently, there is a growing trend in the number of opportunities to manage government facilities due to anincrease in the acceptance of comprehensive management for public facilities and designated administrator
projects.
Other 5.5%

Sports facilities 3.2%
+0.2p

-0.1p

Hotels/Accomodation 4.5%

Offices 24.9%

0.0p

-0.5p

Plants/Warehouse 4.5%

+0.3p
Educational/Cultural facilities 9.2%+0.2pComposition ratioof net sales(Nonconsolidated baseexcluding housing)Public facilities 15.5%+1.2p

Commercial facilities 17.6%-0.7p
Welfare medical facilities 15.0%*Figures for properties under management are based ondata in NIPPON KANZAI data base "Building charts."-0.6p

Increase and decrease compared tothe previous term (point)(as of March 31, 2024)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

57

Net Sales by Region (Building Operation Management Business)
NIPPON KANZAI Co., Ltd., Three-S Co., Ltd., Okinawa Nippon Kanzai Co., Ltd.

(Unit: ¥ billion)

Hokkaido
2.37

Kinki
22.88

Tohoku
0.96

Chubu
7.41

Kyushu, Okinawa
5.10
Chugoku
1.61

Kanto
25.75

Shikoku
0.95*Figures for properties under management are based ondata in NIPPON KANZAI data base "Building charts."

Net sales ofproperties undermanagement(\ billion)

Composition
ratio (%)

YoY
Changes (%)

Hokkaido

2.37

3.5%

-0.8%

Tohoku

0.96

1.4%

24.7%

Kanto

25.75

38.4%

6.8%

Chubu

7.41

11.1%

13.0%

Kinki

22.88

34.1%

7.9%

Chugoku

1.61

2.4%

10.3%

Shikoku

0.95

1.4%

5.6%

Kyushu

5.10

7.6%

5.2%

Total

67.03

100.0%

7.7%(as of March 31, 2024)
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

58

Number of Lots under Management by Region (Residential Management and Operation Business)
NIPPON KANZAI Co., Ltd., Nippon Kanzai Housing Management Co., Ltd., Japan Housing Management Co., Ltd.

(Unit: lots)：NIPPON KANZAI

：NKJ

：NJK

Hokkaido
4,731
Kyushu,Okinawa
3,062

Tohoku
120
Chubu
6,475

Chugoku
2,787

Number of lots
undermanagement(lots)

Shikoku400

Kinki
65,319*NJK: NIPPON KANZAI HOUSING MANAGEMENT Co., Ltd.
NJK: JAPAN HOUSING MANAGEMENT CO.
*Numerical value based on the data reported to “entrusted business records by prefecture”
investigated by Condominium Management Companies Association.

Kanto
18,759NIPPONKANZAI

YoY
Changes (%)

NJK

NKJ

Hokkaido

-

4,731

-

3.4%

Tohoku

-

120

-

0.0%

Kanto

356

14,522

3,881

-0.6%

Chubu

735

5,740

-

5.6%

Kinki

3,015

23,04739,257

0.7%

Chugoku

266

195

2,326

2.4%

Shikoku

361

-

39

0.0%

Kyushu
Total

-

3,062

-

8.9%

4,733

51,41745,5031.1%

3 companies total: 101,653 (as of March 31, 2024)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

59

Number of Facilities under Management by Region (Environmental Facilities Management Business)
Nippon Kanzai Environment Service Co., Ltd.

(Unit: cases)

Hokkaido

4

Iwate
Yamaguchi
Hyogo
Fukuoka
Nagasaki
13
11
7 Saga 3
Okayama

2

Fukui

3

Tokyo

5

1

Osaka

Ehime
5
11 Kochi
2 Tokushima
Oita

23

5

Ibaraki1

NaganoKagoshima 2

Miyagi
Gunma

5

3

3

4

Kumamoto

Okinawa4

Toyama1

Aichi Shizuoka

3

1

5

Chiba

1

Water andseweragefacilities

Generalwaste
treatment
facilities

Biomass
power
generation
facilities

1

3

-

Tohoku

-

9

Kanto

2

9

Chubu

2

10

-

12

9.4%

Kinki

10

6

-

16

12.5%

Chugoku

8

8

-

16

12.5%

Shikoku

11

3

-

14

10.9%

Kyushu

16

28

1

45

35.2%

Total

50

76

2

128

100.0%

No. of properties
undermanagement

Hokkaido

Total Composition
ratio(%)

4

3.1%

-

9

7.0%

1

12

9.4%

(as of March 31, 2024)
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

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Overseas Development (Overview of Keystone, LLC)
Company Overview
Keystone Pacific Property Management, LLC (hereinafter “Keystone”) is a residential
management company that residential communities, including gated communities.
Gated communities are developments consisting of detached housing and high-end
multi-unit homes in estates surrounded by walls. Keystone provides homeownerassociations with support services, including holding annual general meetings,
accounting and financial reporting, and on-site management. It has a reputation foroffering high-quality and detailed services. Other than subsidiaries and affiliates ofmajor nationwide companies, Keystone is ranked within the top five companies inSouthern California. Since 2019, Keystone has made progress in expanding service
area coverage through M&A.

Background
In January 2017, NIPPON KANZAI’s subsidiary, NIPPON KANZAI USA, Inc. acquired
an ownership interest in Keystone which is currently a non-consolidated equity-method
affiliate of NIPPON KANZAI.
NIPPON KANZAI will work to raise operational efficiencies and expand services
through renovation of the IT system and targeted future growth through incorporating
the Company’s know-how while expanding communities under management to include
high-rise condominiums etc. In addition, Keystone has acquired the management
rights of multiple companies within the same industry while expanding into newmarkets. The company plans continued growth in the future.

Irvine, California

Head Office

Properties under Management

Most Recent Business Environment
The current environment has elevated levels of inflation. Inflation has led to reduced
home sales, increases in costs, including employee costs, and increased employee
turnover due to increased competition for talent. This has increased customer
turnover. Businesses must use alternative means of talent acquisition/ technology toincrease efficiency and reduce staffing costs to maintain profitability.

Company Name
Establishment
Main BusinessCorporate Office
Major Branches
No. of Employees
No. of Units under Management

Keystone Pacific Property Management, LLC
September 15, 2016
Residential community management
Irvine, California
Southern California, Colorado, and Idaho
Approx. 370 (including temporary workers) as of December 31 2023
Approx. 132,000 units, approx. 645 associations as of December 31 2023
(including the Company’s subsidiary, Keystone Progressive)
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Overseas Development (Overview of Hawaiiana)
Company Overview

Honolulu,
Hawaii

Hawaiiana Holdings Incorporated (hereinafter “Hawaiiana”) is the largest AOAO(“Association of Apartment Owners”) management company in the State of
Hawaii. Hawaiiana provides apartment owners’ associations with support
services including holding board meetings and annual general meetings, as wellas providing accounting and financial reporting. Hawaiiana is a highly reputable
yet locally operated company with a long history in the industry. It operates on six
islands including Oahu (home to Honolulu), Maui, Hawaii and Kauai.

Background
Nippon Kanzai acquired a 50% share of Hawaiiana from the local real estatecompany Swell International (SI) in March 2020, making it an equity method
affiliate. In August 2023, after transferring this share to our subsidiary company,
Nippon Kanzai USA, Inc., NKUSA completed the acquisition of the remaining
shares from SI, making Hawaiiana a wholly-owned subsidiary of NKUSA.

Properties under Management

Most Recent Business Environment
The rapid increase in interest rates, inflation, a strong US $, and rising real estate
prices since last year have led to a prolonged slump in real estate transactions.
As a result, revenues related to real estate transactions have not yet returned topre-COVID levels. Labor shortages continue to persist, making talent acquisitiona significant challenge. While our property management operations remain stable,
competition in this sector remains intense.

Company Name
Establishment
CapitalMain Business
Head Office
Major Branches
No. of Employees
No. of Units under Management

Hawaiiana Holdings Incorporated
September 24, 2008
USD3.66 million (JPY519 million)*USD1=JPY141.82 (as of December 31, 2023)
AOAO management
Honolulu, Hawaii
Maui, West Maui, Kona, Kauai
Approx. 240 as of December 31, 2023
Approx. 104,000 units, 660 associations as of December 31, 2023

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Overseas Development (Overview of PPG, Inc.)
Company Overview

Honolulu,
Hawaii

Located in Honolulu, Hawaii, Pacific Property Group (hereinafter “PPG”)
provides property management, leasing and sales brokerage services to over
20 commercial properties including a shopping center in Waikiki that has
well-known shops and restaurants as tenants. PPG is a small-sized yet
excellent local company that provides quality services. PPG values personal
relationship in marketing and due to this philosophy, PPG has many longtime and repeat clients.

BackgroundOur resident officer in Hawaii was introduced to PPG and after due
consideration, NIPPON KANZAI’s subsidiary, NIPPON KANZAI USA, Inc.,
acquired 90% of shares from founder/president in March 2022. PPG is anequity-method non-consolidated subsidiary of NIPPON KANZAI.

Most Recent Business Environment
Due to the slow real estate market, the revenue from this sector has dropped
down. But the profit amount was not affected so much due to the cost system.
Management sector is stable because of the stable staff retention. But themarket is more competitive.

Company Name
Establishment
CapitalMain Business
Head Office
No. of Employees
No. of Properties under Management

Pacific Property Group, Inc.
February 27, 2007
USD1,000 (JPY141,820) *USD1=JPY141.82 (as of December 31, 2023)
Commercial Property Management
Honolulu, Hawaii
14 as of December 31, 2023
20 as of December 31, 2023

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63

Overseas Development (Ackermann HV Ltd.)
Company Overview
Residential property management company, providing HOA, brokers for
sale, rental and facilities management. While in the German market,
which often specializes only HOA management, their business model has
been established with focus on the 'stock business' of rental and HOA
management, with a wide range of 'flow business' such as 'brokerage' and'repairment' generated from stock businesses. It is counted as one of thethree largest housing management companies in Munich.

Background
In September 2023, Nippon Kanzai Deutschland GmbH, a subsidiary
newly established in July 2023, acquired a 75% equity interest from theowner and Group CEO, making Ackermann a non-consolidated subsidiary
under the equity method. From now and forward it will also work on
longer-term strategies, utilizing the knowledge developed in Japan,
Australia and the US, as well as our company's stable financial base.

Munich, BavariaState, Germany

OfficeProperties under Management

Company Name
Establishment
Main BusinessCorporate Office
Major Branch
No. Employees
No. of Units under Management

Most Recent Business Environment
After start of war in Ukraine in 2022, energy and other prices have risen
worldwide, especially in Europe and utmost in Germany, as the country
depended highly on Russia for energy. Therefore, with labor costs,
material prices and interest rates all rising, the challenge is to transfer thecost increases to sales and to cover the decline in the intermediary sector.

Ackermann Hausverwaltung GmbH (Ackermann HV)
14 May 2001 (founded in 1919)
Mainly Housing management
Munich, Bavaria, Federal Republic of Germany
City of Munich
Approx. 85FTE as of December 31, 2023)
Rental management: approx. 12,000 units;
management of condominium units: approx. 5,000 units (approx. 150 associations) as of December 31, 2023
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

64

Overseas Development (Overview of PICA Pty Ltd.)
Company Overview
PICA is the largest “Strata Management Company” in Australia and acts as anagent for Owners Corporations. Using multiple brand names, such as “BCS”(Body Corporate Services), PICA mainly provides services to support Owners
Corporations which includes collecting delinquent management fees. Leveraging
off NIPPON KANZAI’s expertise, PICA has introduced facility management
services.

Background
SydneyReception

Properties underManagement

Company Name
Establishment
CapitalMain Business
Head Office
Major Branches
No. of Employees
No. of Lots under Management

NIPPON KANZAI acquired 50% of PICA shares from Fexco, a global fintechorganization, in March 2013. Currently Board oversight is provided by directors
from NIPPON KANZAI and Fexco. Founded in 1981, Fexco employs over 2,570
people and now has operations in 29 countries across Europe, the Middle East,
Asia-Pacific, North America and Latin America.
Fexco website: http://www.fexco.com/

Most Recent Business Environment
As an industry leader, PICA Group is proactively pursuing business improvement
through “Simplification, Automation and Growth” strategies. Our initiatives
encompass streamlining operations and organization, while maintaining highquality service by implementing standardized, effective processes and procedures
as well as centralized back office services.

Prudential Investment Company of Australia Pty Ltd.
October 4, 1948
AUD28 million (JPY2,700 million)*AUD1=JPY96.90 (as of December 31, 2023)
Strata management, debt collection
SydneyMajor cities of East Coast, including Sydney, Melbourne, Brisbane, Cairns etc.
Approx. 720 as of December 31, 2023
Approx. 195,000 lots, 11,000 Plans (Owners Corporations) as of December 31, 2023

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

65

The NIPPON KANZAI Group's DX Initiatives


By visualizing the status of facilities and monitoring it in realtime, we can respond quickly to building anomalies.

2. Visualization of equipment statusStandardization of the security level and strengthening ofgovernance through the group's common core system

3. Providing and sharing systems

Operation of “WAFM (Wide-Area FM Center)”

4. Conversion of work records to data files

Standardization of the core system “POSSibility”

Overview of WAFM (Wide-Area FM Center)

Overview of the core system “POSSibility”

WAFM, with bases in the east and west, operates 24/7, conducting remotemonitoring of facility management buildings, machinery security services, and callcenter operations. By monitoring abnormal trends and values, we can quickly
detect problems in buildings and support their stable operation by responding
promptly.

This is a web-based core system unique to the Group that enables
management of contract and operation cstatus, preparation of quotation, andorder processing with partner companies, etc.
Integration is currently underway, not only with the core system, but also withvarious management systems of Group companies, such as accounting,personnel payroll and attendance management.

Base station

East Japan

Monthly report

CustomerWest Japan

Engineering
staff
技術スタッフResponse instruction

Integrated
monitoring system

Maintenancehistory

Other adopted systems
 System adapted to regulations on invoiceand Electronic Record Retention Law

 Standardization ofpurchasing system

Base station
Energymanagement

CustomerEngineering staff

Response instruction

Response history/ Process history

Please refer to P.35 for details on the “Promotion of DX”.
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

66

The NIPPON KANZAI Group's DX Initiatives
 Promoting operational efficiency and labor savings through the use of IT / ICT
3. Providing and sharing systems

4. Conversion of work records to data files

Facilities information sharing system app “NK Connect”

Utilization of building management app “Kanri-Roid”

Overwview of “NK Connect”

Context of the introduction of “Kanri-Roid”

It is an app that allows you to check the management status of facilities suchas inspection information and history of repairs in a timely manner on yourPC or smartphone.

In order to digitize and improve the efficiency of operations, we introduced“Kanri-Roid”, an AI-driven cloud-based real estate management softwaredeveloped by THIRD INC., into meter reading and inspection works ofunmanned properties under management. The reduction of analog
administrative tasks, such as transcribing hand-written inspection sheets into
data, has improved efficiency. Currently, after conducting trials, we areprogressing with expanding the range of properties to be introduced and thescope of functions to be used.

••

Sharing of information withcustomers and partnercompanies on the Cloud,Centralized management ofvarious building information,
work plans, and repair plans
Promoting the use of a work
management app on smart
devices, reporting of
malfunctions, digitization of onsite forms, and data conversionof inspection records.
Work plan & repair plan management

Confirmation ofwork fulfillment

Detailed work report▲Screen sample

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

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Reference (2)Positioning within the Industry

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

Transition of Building Maintenance (1)Transition of building management business and move of the NIPPON KANZAI Group (1965-1990)
1965

1970

1980

First oil shock

Societysituation

Second oil shock1982 Fire of Hotel New Japan

1968 Kasumigaseki Building, the first high-rise building in Japan, was completed

Laws andtechnologies
related tomaintenancesecurity

Around 1981 Multi-package unit for buildings

1970 Act on Maintenance of Sanitation in Buildings was establishedAround 1984 Decentralization control,
concentration management method
1978 Sunshine 60 was completed
1979 Act on Rationalizing Energy Use(Energy Conservation Act)
From late 1980s to 1990s Intelligent buildings

Roles andfunctions of themaintenancemanagementcompany Professional skills responding to increasing
high-rise buildings

1965 Establishment of NIPPON KANZAI

Major
moves ofNIPPONKANZAI

Building services that are becoming higher leveland more complicatedExpansion of comprehensive building maintenance From total management tointegrated management works

1980

1967 Started total building management of hospitals
1970 Started total building management ofgovernment office buildings

Established Kyushu Branch

1988
Started integrated
1981 Established Tokyo Branchmanagement business of1984 Established Nagoya Branch
intelligent buildings

1973 Started total management of condominiums
1976 Established Osaka Branch

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

1989
Established Tohoku
Branch69

Transition of Building Maintenance (2)Transition of building management business and move of the NIPPON KANZAI Group (1990present)
1990

2000

2008 Lehman shock

Bubble burst

Societysituation

1995 The Great Hanshin-Awaji
Earthquake

Laws andtechnologies
related tomaintenancesecurity

2010

2011 Great East Japan Earthquake

2001 The World Trade Center attack (9-11)

2016 Kumamoto Earthquake
2021 Tokyo Olympic and Paralympic Games
2022 Russian invasion of Ukraine

Around 1990 OA floor method

1998 Act on Securitization of Special Asset by Special Purpose Companies
1997 Implementation of FMer 1999 Act on Promotion of Development of Public Facilities, etc. by Utilizing Private Funds, etc.
qualification test
2003 Revision of the Act on Rational Use of Energy
2009 Act on Securing Financial Soundness of Local Governments

Building services that are becoming higher level and more complicatedRoles andfunctions of the SDGs, decarbonation
 Response to PFI andmaintenance Response to CRE and PRE
designatedmanagers
management
 Energy/power saving
company Response to ownership of real estate and Response to land trust andseparation of management (AM, PM)

 Digitalization of management

2000 Commercialized WAFM system. Started remotemonitoring of facilities
Entrusted with PFI business. Started building
due diligence service business2012 Joined FM expo held in Dubai, as a starting
point of entering the overseas market
2014 To double-headquarters systemredevelopment business

Major
moves ofNIPPONKANZAI

1990 Entrusted with the management
work of large-scale land trust
building
1995 Entrusted with the redevelopedbuilding management work inurban area

2002 Established OS Department

1996 Commercialized BEST,a production management system

2003 Entrusted with asset management work ofreal estate after setting up securitizationof office buildings
2007 Entrusted with the management works ofdesignated manager systems

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

2017 Entrusted with facilities management
during the construction period of Toyosu
Fish Market
2018 Started comprehensive management
operations of Akashi City
2023 Establishment of NIPPON KANZAI Holdings

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Industry Structure of Building Maintenance

Main clients are the buildings owned/developed by theirparent company. Advantage in building managementbusinesses such as sales, accounting, clerical work,
negotiations with other companies, and securing of
profitability in cooperation with their parent company, in
addition to general building management works.
Ex. Mitsubishi Jisho Property Management Co., Ltd.,MITSUI FUDOSAN BUILDING MANAGEMENT
CO.,LTD., TOKYU COMMUNITY CORP.



Organizer-like company that integrates
functions of companies of each business
type

NIPPON KANZAI is an independenttype top-level company that is able todeal with total management.







Advantage in maintenance and repair, being familiar
with products of their parent company (elevators,
escalators, electric devices, air-conditioning equipment,etc.) in addition to general building management works.
Real-estate
type

Electricity,
manufacturer
types

Independent
type
Generalconstruction,
sub-construction
types

Main clients are the buildings constructed by theirparent company. Advantage in renovation,
reconstruction, and extension works in cooperation
with their parent company, in addition to generalbuilding management works.
Ex. Kajima Tatemono Sogo Kanri Co.,Ltd., TaiseiYuraku Real Estate Co.,Ltd., OBAYASHI FACILITIESCORPORATION, etc.

Ex. Mitsubishi Electric Building Solutions Corporation,
Hitachi Building Systems Co., Ltd., etc.



Other
large-scalecompany
types

Main clients are the buildings
owned/developed by their parent company.
Many companies were management
departments spun off from their parent
company. Recently, however, there arecases in which such departments are sold as
non-core businesses.

Railway type: Ex. JR East Facility Management Co.,Ltd.,
Tobu Building Management Co., Ltd.

Insurance type: Taisay Building Management Co.,Ltd.,
Meiji Yasuda Real Estate Management Company LimitedCommerce type: AEON DELIGHT CO., LTD., etc.

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

71

Mechanism of Condominium Management Industry

NIPPON KANZAI GroupDAIKYO ASTAGE INCORPORATED

Nihon Housing Co., Ltd.

TOKYU COMMUNITY CORP.

Gojinsha Planning Research Center

Mitsui Fudosan Residential Service Co., Ltd.



Mitsubishi Jisho Community Co., Ltd.



Sumitomo Fudosan Tatemono Service Co., Ltd

DAIWA LIFENEXT CO., LTD.



Anabuki Housing Service Co., Ltd.



Global Community Co., Ltd.

Independent
type

Tradingcompany
type

ITOCHU Urban Community Ltd.



Sumisho Tatemono Co., Ltd

Sojitz LifeOne Corporation

Developer
type

Tradingcompany
type

Housingbuilder
type

Haseko Community, Inc.



Taisei-Yuraku Real Estate Co.,Ltd.



Nippon Steel Community Service Co.Ltd

Condominium management company
in Japan

Approx. 2,606 companies

Member company of Condominium
Management Companies Association

348 companies

No. of lots under management of
the member companies (per company)

Approx. 18,235 lots

(Source: Condominium Management Companies Association,
2023 Survey on condominium management commission)

NIPPON KANZAI Group
Only independent-type building management company dealing withcondominium management that is listed on the Tokyo Stock Exchange
Prime section
No. 16 in the industry (101,653 lots) total lots of 3 Group companies(Source: Mansionkanri Shimbun, calculated by NIPPON KANZAI by groupcompany)

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

72

Transition of Condominium Management Industry
Transition of laws and forms related to condominium management
Late1950s Started offering high-end condominium for high-income people
The main way of management was that a condominium company
concludes a management contract individually with a unit owner.

2000

Establishment of Act on Advancement of Proper Condominium
Management

2003

Revision to Condominium Standard Management Consignment
Contract
Condominium Standard Management Consignment Contract wasrevised associated with partial revision to Act on Advancement of
Proper Condominium Management

2009

Late 1970s Condominium took root in society
as urban-type housing

1950

1960

1970

1980

1962 Establishment of laws concerning unit
ownership of buildings, etc.

1982

Late 1960s Increase of popular-type condominium formoderate-income people
Management company affiliated with acondominium company emerged and building
maintenance companies entered the market.
Start of a management method: Unit owners
establish a homeowner association; and thehomeowner association and a managementcompany conclude the management contract.
Focus was placed on maintenance andinspections.

1990

2000

2010

2020

Formulation of the Condominium Standard Management
Consignment Contract for Mid- to High-rise condominiums(Template of the contract in the case of outsourcing abusiness to a management company)
2014

Establishment of Revised Act on Facilitation ofReconstruction of Condominiums
2021 Establishment of the regulations on explaining importantmatters via IT devices, associated with partial revision to
Act on Advancement of Proper Condominium Management
Establishment of the system in which local governments
approve condominium with a proper management plan
Revision to Condominium Standard Management
Consignment Contract
2022 Revision of the Act on Proper Condominium Management

Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

73

Legal Disclaimer

No information in this material is intended to solicit the purchase or sale of shares in NIPPON KANZAI Holdings.
Forward-looking statements contained in this material such as results forecasts and future prospects are
forecasts and estimates made by NIPPON KANZAI Holdings based on information available at the time of the
preparation of 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 Holdings and the information provider accept no liability whatsoever for any damage arisingfrom any action taken by a user based on the information contained in this material.

NIPPON KANZAI Holdings Co., Ltd.
Public Relations, IR & Marketing Department
E-mail : kouhoirm@nkanzaihd.co.jp
Copyright (C) 2024 NIPPON KANZAI Holdings Co., Ltd.

74