November 24, 2023

Financial Results for the 2nd Quarter of
Fiscal Year Ending March 31, 2024
NIPPON KANZAI Holdings Co., Ltd. (Securities Code: 9347/TSE Prime)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

Index◼ 3

Overview of NIPPON KANZAI HOLDINGS◼ 8

Consolidated Financial Results for 1H FY3/24◼ 17

Consolidated Financial Forecasts for FY3/24◼ 21

The NIPPON KANZAI Group’s Medium-Term Growth Strategies◼ 41

Sustainability of the NIPPON KANZAI Group◼ 45

Reference (1) Company Information◼ 67

Reference (2) Positioning in the Industry

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

2

Overview of
NIPPON KANZAI HOLDINGS

Copyright (C) 2023 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) 2023 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)

•
•

•
•
•

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

Government offices,

Proposal-based sales

public administration

Value-added-proposal-based sales

Homeowners’ association of•••sectional 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.

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

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

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)

200,000

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) 2023 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) 2023 NIPPON KANZAI Holdings Co., Ltd.

7

Consolidated Financial Resultsfor 1H FY3/24

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

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

Net Sales¥57,003 million ( +6.1% YoY)⚫

Steady consignments of new management projects and renewal of existing contracts⚫

Orders for construction-related work also increased

Operating Profit¥3,997 million ( -4.8% YoY)⚫

Increase of personnel expenses such as wage hike⚫

Expenses accompanying the establishment of the Holding Company

Ordinary Profit¥4,482 million ( -5.6% YoY)⚫

Decrease in share of profit of entities accounted for using equity method⚫

Recognition of foreign exchange gains due to the weak yen

Profit Attributable to Owners of Parent⚫

¥3,045 million ( -0.8% YoY)

As a result of recording the extraordinary income related to the overseas subsidiary,
the results exceeded the financial forecast* YoY change in the net sales and profit means the comparison with the medium term of the 58th period of NIPPON KANZAI Co., Ltd.
Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

9

Consolidated Financial Results Summary
NIPPON KANZAI (Reference)

NIPPON KANZAI Holdings(Reference)

1H FY3/23

1H FY3/24

YoY Changes

Consolidated(\ million)

ActualRatio

ActualRatio

AmountRatio

Net Sales

53,736100.0%

57,003100.0%

3,266

6.1%

Gross Profit

12,331

22.9%

12,663

22.2%

331

2.7%

8,134

15.1%

8,665

15.2%

531

6.5%

Operating Profit

4,197

7.8%

3,997

7.0%

(199)

-4.8%

Ordinary Profit

4,747

8.8%

4,482

7.9%

(265)

-5.6%

Profit Attributable to Owners of Parent

3,068

5.7%

3,045

5.3%

(23)

-0.8%

SG&A Expenses(¥million)

Net Sales

60,00053,85452,446

Operating Profit Margin
59,30954,66449,88349,45953,8538.4%

40,000
6.4%

6.5%

1H

2H

7.3%

7.1%

1H

2H

53,73657,003

7.8%
7.0%

7.0%

2H

1H

6.0%

20,0000FY3/201H

2H

FY3/21

FY3/22NIPPON KANZAI (Reference)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

1H

FY3/23

FY3/24NIPPOPN KANZAI
Holdings

10

Business Segments and Main Group Companies■ Environmental Facilities Management¥6,964 mil.

■ Facilities Management and Operations¥37,494 mil.

Environmental Facilities Management

Building Maintenance and Property
Management (excl. Security Service)¥26,081 mil.
Cleaning management, facility maintenanceadministrative contract tasks, and constructionrelated work of buildings, hotels, public facilities, etc.

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

65.8%

12.2%

NIPPON KANZAI Co., Ltd.
NS Corporation Co., Ltd.
Japan Environmental Solutions Co., Ltd.
Okinawa Nippon Kanzai Co., Ltd.

Security Services■ Real Estate Fund Management¥1,682 mil.
2.3%

3.0%

1H FY3/24
Net Sales¥11,412 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¥57,003 mil.

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

Tokyo Capital Management Co., Ltd.
16.8%

■ Residential Management and¥9,571 mil.
Operations

45.8%
20.0%

■ Other¥1,290 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.

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

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

11

Financial Results by Business Segment
NIPPON KANZAI (Reference)

NIPPON KANZAI Holdings(Reference)

1H FY3/23

1H FY3/24

YoY Changes

Consolidated(\ million)
Net Sales

ActualRatio/Margin

ActualRatio/Margin

AmountRatio

53,736100.0%

57,003100.0%

3,266

6.1%

36,35767.7%

37,494

65.8%

1,136

3.1%

Building Maintenance and Property Management

24,984

46.5%

26,081

45.8%

1,096

4.4%

Security Service

11,372

21.2%

11,412

20.0%

40

0.4%

Residential Management and Operation Business

8,907

16.6%

9,571

16.8%

664

7.5%

Environmental Facility Management Business

5,944

11.1%

6,964

12.2%

1,019

17.1%

Real Estate Fund Management Business

1,357

2.5%

1,682

3.0%

324

23.9%

Other Businesses

1,170

2.2%

1,290

2.3%

120

10.3%

4,197

7.8%

3,997

7.0%

(199)

-4.8%

5,251

14.4%

3,333

*2

8.9%

(1,917)-36.5%

Building Maintenance and Property Management

3,733

14.9%

2,625

*2

10.1%

(1,108)-29.7%

Security Service

1,518

13.3%

708

*2

6.2%

(809)

-53.3%

Residential Management & Operation Business

984

11.1%

738

*2

7.7%

(246)

-25.0%

Environmental Facility Management Business

803

13.5%

1,016

14.6%

213

26.5%

Real Estate Fund Management Business

21

1.6%

322

19.2%

301

-

Other Businesses

265

22.7%

331

25.7%

66

25.1%

(3,128)-(1,745)

-

1,382

-

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

12

Performance of Business Segments
Facilities Management and Operations

Real Estate Fund Management(¥million)(¥million)

Net Sales

Operating Profit Margin

45,00040,00039,26438,396

36,83034,50335,00037,493
34,48337,49436,357

Net Sales

1,682
1,357

1,500

1,199

1,000
30,00025,000

14.3%

12.7%

12.3%

14.1%

13.5%

12.4%

14.4%

13.1%

20,0002H

1H

FY3/202H

1H

FY3/212H

1H

FY3/222H
FY3/23

Net Sales

FY3/24

8,291
7,791

8,000

8,770

12.7%

-0.1%

1H

2H

3.2%

△ 500

8,907

9,222

9,571

2H

8.9%

8.6%

10.3%

9.6%

1H

FY3/202H

1H

FY3/21

2H

Net Sales

1H
FY3/24

9.1%

1H

FY3/22

577

13.7%
7.7%

2H
FY3/23

1H
FY3/24

1,167

1,290

10.1%

27.8%

27.8%

2H

1H

25.7%

22.7%

469

11.1%

1,170

960

13.8%

8.9%

11.7%
1H

2H
FY3/20

Environmental Facilities Management(¥million)

2H

Operating Profit Margin

1,116

0
2H

1H
FY3/23

8,209

4,000
1H

2H

1.6%

FY3/22

658
8.8%

1H

FY3/21Net Sales

1,052

10.6%

-2.9%

2,000

1,000
6,000

6.7%

5.5%
1.7%

1H

FY3/20

593

485

0

(¥million)

Operating Profit Margin
8,435

19.2%

760

Other

10,000
8,593

1,044

452

1H

Residential Management and Operations(¥million)

772

500
8.9%

1H

Operating Profit Margin

2,000

41,3341H
FY3/212H
FY3/22NIPPON KANZAI (Reference)

1H

2H
FY3/23

1H
FY3/24NIPPONKANZAI
Holdings

Operating Profit Margin

8,000
6,991

6,000

5,196

5,444

5,495

5,853

5,568

5,986

15.0%

4,000

12.6%

12.3%

1H

2H

13.3%

12.7%

1H

2H

12.5%

6,964

5,944

14.6%

13.5%

12.8%

1H

2H

2,000
FY3/20FY3/21

1H

2H
FY3/22

FY3/23

1H⚫ 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) 2023 NIPPON KANZAI Holdings Co., Ltd.

13

Overview of Consolidated Balance Sheets
Consolidated(\ million)
Current assets

NIPPON KANZAI (Reference)

NIPPON KANZAI Holdings(Reference)

FY3/23 End

1H FY3/24 End

vs. FY3/22 End

ActualRatio

ActualRatio

AmountMain Factors for Increase/Decrease

Ratio

52,77960.5%

50,94156.9%(1,838)-3.5%

Cash and deposits

32,38637.2%

29,721

33.2%(2,665)-8.2%

Notes and accounts receivable - trade,and contract assets

15,92518.3%

15,500

17.3%

(424)

-2.7%

Real estate for sale

2,128

2.4%

2,115

2.4%

(13)

-0.6%

34,396

39.5%

38,599

43.1%

4,203

12.2%

6,385

7.3%

6,700

7.5%

314

4.9%

Non-current assets
Property, plant and equipment
Intangible assets

2,400

2.8%

4,011

4.5%

1,611

67.1%

Investments and other assets

25,61029.4%

27,887

31.1%

2,277

8.9%

87,175100.0%

89,540100.0%

2,365

2.7%

Total Assets
Current liabilities

16,691

19.1%

15,56417.4%(1,126)-6.8%

Notes and accounts payable - trade

7,146

8.2%

5,183

5.8%

(1,963)-27.5%

Income taxes payable

1,726

2.0%

931

1.0%

(795)

-46.0%

5,004

5.7%

5,794

6.5%

790

15.8%

690

0.8%

1,242

1.4%

552

80.0%

2,255

2.6%

2,106

2.4%

(149)

-6.6%

Non-current liabilities
Deferred tax liabilities
Long-term guarantee deposits
Total Liabilities

21,69524.9%

21,359

23.9%

(336)

-1.5%

Shareholders' equity

62,73272.0%

64,767

72.3%

2,035

3.2%

Share capital

3,000

3.4%

3,000

3.4%

-

-

Capital surplus

3,785

4.3%

11,339

12.7%

7,554

199.6%

Retained earnings

58,72067.4%

60,756

67.9%

2,036

3.5%

Accumulated other comprehensive income

1,608

1.8%

2,320

2.6%

711

44.2%

Non-controlling interests

1,138

1.3%

1,092

1.2%

(45)

-4.0%

Total Net Assets

65,47975.1%

68,181

76.1%

2,701

4.1%

Total Liabilities and Net Assets

87,175100.0%

89,540100.0%

2,365

2.7%

(￥ million)

Assets2,365⚫ Increase in goodwill associated with the acquisitionof additional shares of an overseas subsidiary
1,628⚫ Increase in investment securities associated withthe acquisition of shares of affiliates, etc.
772
Liabilities(336)⚫ Decrease in notes and accounts payable - trade(1,963)⚫ Increase in deposits received
963⚫ Increase in deferred tax liabilities
552

Net Assets

2,701⚫ Increase in capital surplus⚫ Increase in retained earnings

7,554
2,036

Equity Ratio

74.9%

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

14

Overview of Consolidated Statement of Cash FlowsNIPPON KANZAI (Reference) NIPPON KANZAI Holdings(Reference)

Consolidated

1H FY3/23

1H FY3/24

YoY Changes(\ million)

ActualActualAmountProfit before income taxes
Depreciation
Decrease (increase) in trade receivables

4,747

4,572

(175)

329

381

52

889

804

(85)

(1,449)(1,994)(545)

Decrease (increase) in inventories

764

(72)

(837)

Increase (decrease) in accrued consumption taxes

77

(204)

(281)

Increase (decrease) in trade payables

Income taxes paid

(693)

(2,477)(1,784)(1,132)

485

1,617

3,533

1,493

(2,039)

(363)

(223)

139

(3,089)(1,170)1,919

Proceeds from redemption of investment securities

-

100

100

Purchase of shares of subsidiaries resulting inchange in scope of consolidation

-

(517)

(517)

89

(977)

(1,067)(3,363)(2,789)

573

(195)

(191)

4

(1,104)(1,108)

(4)

(66)

(92)

(25)

Cash Flows from Financing Activities(1,365)(1,392)(26)

Net increase (decrease) in cash and cash equivalents(1,110)(2,665)(1,555)

Cash and cash equivalents at the beginning of current period

32,44432,041(402)

Cash and cash equivalents at the end of current period

31,33329,376(1,957)170(1,295)(1,466)

Other, net
Cash Flows from Operating Activities
Purchase of property, plant and equipment, andintangible assets
Purchase of investment securities

Other, net
Cash Flows from Investing Activities
Increase (decrease) in borrowings (incl. nonrecourse loans)
Dividends paid (incl. dividends paid to non-controllinginterests)
Other, net

Free Cash Flows

Main Factors for Increase/Decrease（￥ million）

CF from Operating Activities(2,039)⚫ Increase in income taxes paid
⚫ Decrease in trade payables(1,784)(545)

CF from Investing Activities

573⚫ Decrease in purchase of investment securities
1,919⚫ Purchase of shares of subsidiaries resulting inchange in scope of consolidation(517)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

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

Securities held for non-business purposes ¥3,747 mil.

Securities held for business purposes¥5,568 mil.

Shares of affiliates¥10,940 mil.

1H FY3/24 End¥20,257 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) 2023 NIPPON KANZAI Holdings Co., Ltd.

16

Consolidated Financial Forecasts
for FY3/24

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

Consolidated Financial Forecasts SummaryMarket Background and Risks◼ As a result of digital transformation, 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.

NIPPON KANZAI (Reference)

Consolidated(\ million)

Full-Year FY3/23
Actual1H FY3/24

Ratio(Reference)

NIPPON KANZAI Holdings

Actual2H FY3/24

Ratio

Forecast

Full-Year FY3/24

Ratio

Forecast

YoY Changes

Ratio

AmountRatio

Net Sales

113,045100.0%

57,003100.0%

61,596100.0%

118,600

100.0%

5,554

4.9%

Gross Profit

24,776

21.9%

12,66322.2%

12,93621.0%

25,600

21.6%

823

3.3%

16,435

14.5%

8,665

15.2%

8,334

13.5%

17,000

14.3%

564

3.4%

Operating Profit

8,341

7.4%

3,997

7.0%

4,602

7.5%

8,600

7.3%

258

3.1%

Ordinary Profit

8,662

7.7%

4,482

7.9%

4,617

7.5%

9,100

7.7%

437

5.0%

Profit Attributable to Owners of Parent

5,658

5.0%

3,045

5.3%

2,954

4.8%

6,000

5.1%

341

6.0%

SG&A Expenses⚫ In the 1H results, net sales and profits exceeded the initial forecasts.
⚫ There is no change to the outlook for consolidated financial results from initial forecasts in light of the market
environment and risk conditions.

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

18

Financial Forecasts by Business Segment
NIPPON KANZAI (Reference)

Consolidated

Full-Year FY3/23(\ million)
Net Sales

1H FY3/24

Composition
Ratio/Margin

Actual(Reference)

NIPPON KANZAI Holdings

2H FY3/24

Composition
Ratio/Margin

ActualFull-Year FY3/24

Composition
Ratio/Margin

Forecast

Forecast

YoY Changes

Composition
Ratio/Margin

AmountRatio

113,045100.0%

57,003100.0%

61,596100.0%

118,600

100.0%

5,554

4.9%

77,691

68.7%

37,49465.8%

44,81572.8%

82,310

69.4%

4,618

5.9%

Building Maintenance and Property Management

54,56548.3%

26,08145.8%

32,60852.9%

58,690

49.5%

4,124

7.6%

Security Service

23,126

20.5%

11,41220.0%

12,207

19.8%

23,620

19.9%

493

2.1%

Residential Management and Operation Business

18,130

16.0%

9,571

16.8%

9,028

14.7%

18,600

15.7%

469

2.6%

Environmental Facility Management Business

12,936

11.4%

6,964

12.2%

7,485

12.2%

14,450

12.2%

1,513

11.7%

Real Estate Fund Management Business

1,950

1.7%

1,682

3.0%

-

-

890

0.8%

(1,060)-54.4%

Other Businesses

2,337

2.1%

1,290

2.3%

1,059

1.7%

2,350

2.0%

12

0.6%

8,341

7.4%

3,997

7.0%

4,602

7.5%

8,600

7.3%

258

3.1%

10,649

13.7%

3,333

8.9%

8,286

18.5%

11,620

14.1%

970

9.1%

Building Maintenance and Property Management

7,597

13.9%

2,625

10.1%

5,844

17.9%

8,470

14.4%

872

11.5%

Security Service

3,051

13.2%

708

6.2%

2,441

20.0%

3,150

13.3%

98

3.2%

Residential Management and Operation Business

1,825

10.1%

738

7.7%

1,171

13.0%

1,910

10.3%

84

4.6%

Environmental Facility Management Business

1,697

13.1%

1,016

14.6%

763

10.2%

1,780

12.3%

82

4.9%

Real Estate Fund Management Business

60

3.1%

322

19.2%

-

-

20

2.3%

(40)

-67.2%

Other Businesses

369

15.8%

331

25.7%

48

4.5%

380

16.2%

10

2.9%

(6,261)-(1,745)-(5,364)-(7,110)

-

(848)

-

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 particularsegment.
*2 There is no change to the outlook for full-year financial forecasts by business segment from the initial forecasts in light of the market environment and risk conditions.

Copyright (C) 2023 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, the interim dividend will be set at ¥27. The year-end dividend will be set at ¥27, withplans for total dividends of ¥54 per share.
NIPPON KANZAI (Reference)

NK Holdings

FY3/20FY3/21

FY3/22

FY3/23

FY3/24

ActualActualActualActualForecast

Interim Dividends

25.00

25.00

27.00

27.00

27.00

Year-End Dividends

25.00

27.00

27.00

27.00

27.00

Consolidated Dividend Payout Ratio

42.6%

37.8%

32.7%

35.7%

33.6%

Dividend on Equity Ratio (DOE)

3.7%

3.6%

3.5%

3.2%

－

(¥)
60.00

Interim Dividends

Year-End Dividends

Consolidated Dividend Payout Ratio

42.6%

37.8%

32.7%

35.7%

33.6%

25.00

27.00

27.00

27.00

27.00

25.00

25.00

27.00

27.00

27.00

ActualActualActualActualForecast

FY3/20FY3/21

FY3/22

FY3/23

FY3/24

40.00
20.00
0.00

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

20

The NIPPON KANZAI Group’s
medium-term growth strategies

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

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

Growth Strategies

1

Sales promotion to
the public sector① ●Create business opportunities bystrengthening PPP / PFI and designatedmanager systems(P.23～P.27)

2

Promotion of M&A andinvestment② ●Promote aggressive M&A andinvestment domestically and abroad(P.29～P.31)

Overseas Development③ ●Improvement of service quality andstreamlining of businesses throughroll-out of the Group know-how(P.33)

3
4—Sharing of the Group know-how

Promotion of DX④ ●Standardization of the system platform,
provision and sharing of systems,
conversion of work records to data
files, utilization of robots(P.35～P.40)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

22

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 19 projects nationwide, andour market share ratio of approx. 50% is the industry-leading. In FY2023, we started operations at 6 local governments (Mishima, Yokkaichi,
Kusatsu, Munakata, Omuta, and Arao). We also plan to commence new operations in multiple local governments in FY2024. Given the
expected nationwide expansion of the comprehensive management services market, we will leverage our track record and accumulated
expertise to strive for further market share expansion.
* Comprehensive management is 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 withprioritization,” ,”“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

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. 2022 Ichihara-city, Chiba

407

Imizu-city, Toyama

105

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

247

Takasago-city, Hyogo

48“*” indicates the local governmentsthat introduced the services in
multiple terms.

Kasuga-city, Fukuoka

10(As of October 31, 2023)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

154

23

Facilities Management and Operation Business

Growth Strategies(1): 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.
■Training, Synergy and Media Mix

Operating online salons・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)For local
governments
employees

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.

129 local governments
and 167 people
participated(as of September 30, 2023)

Holding events and seminars related to public-and-private
cooperation
OnlineSalon

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.

Event/Seminar
Expertise Interest
(low)
(low)
For a wide range oftargets, including local
residents and experts*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) 2023 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 public housing management services
When public housing management started to shift to the designated manager systems three years after the partial revision of the Local
Autonomy Act in 2003, NIPPON KANZAI was among the first to start the sales activities. Starting with the contract for the designatedmanagement of Amagasaki City public housing in 2007, we have increased our management track record year by year. Currently, wemanage over 120,000 units across 30 local governments nationwide, making us the second largest in the industry in terms of share.
We continue to make efforts to expand the profit by introducing the designated manager systems, promoting the incorporation into thehigh-affinity comprehensive facilities management business, and scrutinizing the additional public offering projects.
* Public housing designated manager systems indicate the system in which local governments entrust a private, professional manager with the operation andmanagement of the public housing. In this system, improving the services to be provided to the public housing and streamlining costs are aimed for. Its purpose
is to enable efficient management by taking advantage of the private know-how.

Transition of the number of public housing lots
under management

Record of public housing management

No. of lots under management
140,000

128,136
121,473

120,000

Entrusted local governments
The Company’s base

113,076
108,832
106,102104,416

100,000

92,66975,00080,00080,00060,00060,00050,00040,00020,0000

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

25

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.

1. Promote sales of comprehensive privatization services
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.

Record of comprehensive privatization, designatedadministrators, entrustment to third parties, and DBO

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

26

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)

5,000

50

(¥ million)

Net Sales

No. of Projects(No. of Projects)

8,000

200

4,555
4,203
4,000

3,845

7,255
7,000

4,104

3,845

40

3,824
3,327

5,150

3,113

3,000

32

32

30

28
2,000

23

24

24

24

150

5,357

5,136

5,000

5,058

4,484

4,000

107

25
20

3,000

93

92

2,000

1,000

6,001

5,782

6,000

97

100
92

106

100

97

50

10

1,000
0

0

0

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

027

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

Growth Strategies

1

Sales promotion to
the public sector① ●Create business opportunities bystrengthening PPP / PFI and designatedmanager systems(P.23～P.27)

2

Promotion of M&A andinvestment② ●Promote aggressive M&A andinvestment domestically and abroad(P.29～P.31)

Overseas Development③ ●Improvement of service quality andstreamlining of businesses throughroll-out of the Group know-how(P.33)

3
4—Sharing of the Group know-how

Promotion of DX④ ●Standardization of the system platform,
provision and sharing of systems,
conversion of work records to data
files, utilization of robots(P.35～P.40)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

28

Corporate

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)

Recent track record (from 2020):

Japan・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) 2023 NIPPON KANZAI Holdings Co., Ltd.

29

Facilities Management and Operation Business

Growth Strategies(2): Collaborative Development by Acquiring Shares of JTB Asset Management

Concluded a business alliance agreement with JTB Corporation
On July 1, 2022, NIPPON KANZAI invested 40% in JTB Asset Management Co., Ltd, a JTB subsidiary that provides space solutions,and on December 28, JTB and NIPPON KANZAI concluded a business alliance agreement for collaboration. By investing in JTB AssetManagement (40%), 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 one of 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.

Solutions that leads to regional revitalization,
including not only tourism but also thecreation of new businesses.

■Field of the business alliance
1. Designated administrator systems and PPP businesses
2. Comprehensive management businesses aimed atregional revitalization, etc.
3. Businesses related to the development of tourist
attractions and regional exchange centers, etc.
4. Expansion of sales channels through joint businesses
5. Other initiatives considered beneficial by both companies

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

30

Facilities Management and Operation Business

Growth Strategies(2): Overseas Development (Ackermann 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.

Munich, BavariaState, Germany

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.

OfficeProperties 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.

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

Ackermann Hausverwaltung GmbH (Ackermann)
14 May 2001 (founded in 1919)
Mainly Housing management
Munich, Bavaria, Federal Republic of Germany
City of Munich
Approx. 85 as of December 31, 2022)
Rental management: approx. 12,000 units;
management of condominium units: approx. 5,000 units (approx. 150 associations) as of December 31, 2022
Copyright (C) 2023 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 sector① ●Create business opportunities bystrengthening PPP / PFI and designatedmanager systems(P.23～P.27)

2

Promotion of M&A andinvestment② ●Promote aggressive M&A andinvestment domestically and abroad(P.29～P.31)

Overseas Development③ ●Improvement of service quality andstreamlining of businesses throughroll-out of the Group know-how(P.33)

3
4—Sharing of the Group know-how

Promotion of DX④ ●Standardization of the system platform,
provision and sharing of systems,
conversion of work records to data
files, utilization of robots(P.35～P.40)

Copyright (C) 2023 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,
etc., management and leasing
and sales brokerage services ofsectional ownership properties,
and facility management. A
synergetic effect among theGroup companies is expected
through the provision ofmanagement know-how the
Company has cultivated.

Know-how of facility
management

Irvine,California, USA

Keystone, LLC

Know-how of
condominium
management

Honolulu,
Hawaii, USA

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

Sydney, Austraria

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 agency for the homeowners’
association of sectional ownership properties
called “strata management” in Australia. Taking
advantage of the know-how of NIPPON KANZAI,
we aim to develop a full lineup of integrated
services, including the provision of peripheral
operations of building management.

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) 2023 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 sector① ●Create business opportunities bystrengthening PPP / PFI and designatedmanager systems(P.23～P.27)

2

Promotion of M&A andinvestment② ●Promote aggressive M&A andinvestment domestically and abroad(P.29～P.31)

Overseas Development③ ●Improvement of service quality andstreamlining of businesses throughroll-out of the Group know-how(P.33)

3
4—Sharing of the Group know-how

Promotion of DX④ ●Standardization of the system platform,
provision and sharing of systems,
conversion of work records to data
files, utilization of robots(P.35～P.40)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

34

Corporate

Growth Strategies(3): Approach Based on IT -Digital TransformationWith IT approaches both externally and internally, and fusion of digital and analog,
we provide optimal services to customers

DX forclients

DX
DX forinternal use

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⚫

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

productivity
Automation of office ⚫⚫ Improving
Allocating staff properly
work⚫ Creating time with clients

⚫
⚫

⚫
⚫

⚫
⚫

⚫
⚫

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

Copyright (C) 2023 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 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 homeowner associations
was conducted by the association’s board members andthe property manager who met in person on site.
Each of the Group’s homeowner association
management companies have launched strata
management services called NRemotE for homeownerassociations 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.
Using NK Connect

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 homeowner 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) 2023 NIPPON KANZAI Holdings Co., Ltd.

36

Facilities Management and Operation Business

Growth Strategies(4): Conversion of Work Records to Data Files (DX for clients❹)

Promoting digitalization of operations by introduction of building
management app “Kanri-Roid”
In August 2023, NIPPON KANZAI introduced “Kanri-Roid” an AI-driven cloud-based real estate management softwaredeveloped by THIRD INC., into meter-reading and inspection works of approx. 70 unmanned properties undermanagement, with the purpose of digitalization and streamlining of the works.
BackgroundIn conventional meter-reading and inspection works, staff
filled out the numerical values and inspection results of theelectricity and water meters on site, and they input the
information again to the PC. It was very analog andgenerated operating efficiency and workload issues.

ResultThrough this trial, we were able to reduce theadministrative work time required for meter reading andinspection tasks by 116 hours per month compared tobefore the implementation. Paperless practices related toaccounting ledgers, etc., were also promoted.

OutlookBased on the validation of the effect of the trial, we will
examine the expansion of properties to which Kanri-Roid is
introduced and the scope of functions to be used to raise
operational efficiency further and save human resources.

Kanri-Roid is an AI-driven cloud-based real estate management softwaredeveloped by THIRD INC. that raises the efficiency of building management
operations and monitors the property remotely by replacing the preparation of
conventional paper-based reports on inspection, meter reading, and cleaning
with smartphone and web dashboard and linking them on a real-time basis. For
the meter-reading operations, when the user takes photos of the electricity or
water meter, AI reads the meter and automatically prepares the web meter
ledger. And, for the inspection operations, the app prepares the document
automatically only by setting in advance the format of the ledge data about thepatrol, water supply and drainage, and air-conditioning inspection and inputting
the inspection results directly to the app.

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

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Facilities Management and Operation Business

Growth Strategies(4): Diversification of Work Styles (DX for clients❺)
Promoting the use of robots, etc., in building management services
NIPPON KANZAI has introduced robots into building management services in a proactive manner because of recent
serious manpower shortage. Recently, we collaborated with SoftBank Robotics Corp. and SmartBX Co., Ltd. topromote the verification test for digitalization of building management using electronic devices such as smartphones
and sensors, in addition to robots, to increase the satisfaction of building users and operating efficiency.
Validation for introduction / monitoring

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 the latest technology

Track record
・Cleaning robot: 29 units in 21 buildings in operation(including outsourcing operation)
・Security robot: 2 units in 2 buildings in operation(as of September 30, 2023)■Type of building that
introduced robots
・Office building
・Public facilities
・Hospital
・School・Underground city, etc.

We will pick up a variety of requirements, including the use,scale, characteristic, working hours, and quality of facilities,
and test-introduce and verify robotics that meet theworking specifications of our robots. After the verification,
the robot that matches the use of the facility will be
introduced.

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

38

Corporate

Growth Strategies(4): Automation of Office Work (DX for internal use❻)

Improving the efficiency of operations with the use of generative AI
The Company developed its own conversational AI, “NK-AIbot Powered by GPT-3.5*” utilizing the Azure OpenAI
Service and Microsoft Power Platform provided by Microsoft Corporation, and, in June 2023, started the operation for
1,900 employees in Japan, including the Company and other Group companies. The introduction of the generative AI
helps new employees and employees with limited experience acquire the same level of knowledge as experienced
employees and prepare precise documents. We will try to improve the service we provide by using the time made by
the efficient operations for responding to the customers and making value-added proposals for them.
* We have released the upgraded version, “NK-AIbot-D1,” that enabled a more practical response, which was realized through teaching the AI the knowledge of ourunique data, such as operational manuals.
<Major functions, how to use>
・Response to answers, deep answers
・Preparation of documents, presentation of ideas, summarizing
・Preparation of Excel functions
・Preparation of simple program codes, etc.

[FY2023 Roadmap]
Development

Internal initiatives

May-Jun.

[Phase 1] Environmentbuilding, development

Introduction of the system to the entire
company, promotion of use, collection ofdata to be used, development of humanresources who play a role in the promotionof the company

Jul.-Sep.

[Phase 2] Use of thecompany’s data

Trial learning based on Input, frequency ofquestions, and study results

Goal
The endof 2023

Aiming for the development of AI that can provide various operational
know-how (by learning) and plays a supportive role for employees

Screen image
Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

39

Corporate

Growth Strategies(4): Standardization of the System Platform (DX for internal use)
Standardization of the system platform across the entire group
The NIPPON KANZAI Group is advancing the integration of the system platforms of each group company that had been
fragmented. By standardizing security and control levels and implementing efficient system operations, we will
strengthen the governance of the entire group.

Core system●POSSibility

Our core system POSSibility is a web system uniqueto the Group that enables management of contract
and operation status, preparation of invoice, ordering
procedures between the company andsubcontractors, etc.
We are currently integrating various IT systems
related to management of accounting, personnel
salary, attendance management, etc. as well.

Introduction of other systems●Response to invoice andElectronic Record Retention
Law

New system will be introduced in response to the Invoicing System and Electronic Record Retention Law
that is to be enforced from October 1, 2023. We will increase work efficiency through operating the systemin full scale from the second half of FY2023, in combination with digitalization of the invoice information
and unification of the management.

●Standardization ofpurchasing system

We are digitalizing the procedures for purchasing goods through applying the centralized purchasing topromote e-commerce. Although NIPPON KANZAI introduced the system in advance, we encourage theGroup companies to introduce it and aim for reducing the cost of the entire Group in the future throughincreasing work efficiency with e-commerce and collecting and analyzing the purchasing data.

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

40

Sustainability of
the NIPPON KANZAI Group

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

Initiatives for ESG
The social roles required of companies have been expanding year by year because of environmental changes in society and theeconomy. The entire Group of NIPPON KANZAI will focus on the management being aware of sustainability so as to realize asustainable society.

E environment
Initiatives for environment and energy saving⚫ Carbon offset of Nishinomiya registeredoffice building(2) Implementation of certification for real estate
environmental performance
As a certification organization for real estate environmental
performance, such as CASBEE, GRESB, and BELS,
whose needs for REIT and funds have increased recently,
we implement many certifications.

⚫ Installation of quick EV
charger to Nishinomiya
registered office building⚫ Promotion of replacing
corporate cars with EVs(No. of buildings)

Transition of the number of projects with realestate environmental performance certificate

50⚫ Enhancement of green
product lineup throughcentral purchasing system

4030Development of environmental business

20(1) Proposal of installing photovoltaic facilities
10

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.

0
FY3/15 FY3/16 FY3/17 FY3/18 FY3/19 FY3/20 FY3/21 FY3/22 FY3/23

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

42

Initiatives for ESG

S social
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.

<Major systems>
•
•
•
•
•

⚫ Workplace visits for families
As part of the initiatives related to work-life balance, we held a quizshow that deepened the understanding of the work, hadparticipants exchange their business cards, and gave a workplace
tour so that the employees’ families deepen the understanding of
the Company and communication is enhanced.

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⚫ Employment support for recruiting people withdisabilities
The Company employs people with disabilities using Social Office*,in cooperation with AOH, a general incorporated association that
operates a chocolate factory as part of the first employment-support
business in Japan.
Peoplewithdisabilities
employed by the Company
work at the authentic bean-tobar
chocolatefactory(CHOCOLABO) in Yokohama.
* A Social Office is a system in which
a company employs people and hasthem work at places other than thecompany’s facilities.
Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

43

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)and supervisory committee members(among which, external directors)◼ Number of directors who are audit and4 (4)supervisory committee members(among which, external directors)◼ Term of directors other than audit and1 yearsupervisory committee members◼ Term of directors who are audit andRegistered
2 years

supervisory committee members◼ Operation enforcement structure“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.”

Executive officer system(3 people)⚫ 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.

organization

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

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

44

Reference (1)Company Information

Copyright (C) 2023 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: 10,502 (as of September 30, 2023)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

46

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, the 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
NIPPONKANZAI Holdings Co., Ltd.
日本管財ホールディングス㈱NIPPONKANZAI Co., Ltd.
日本管財㈱Three-S
Co., Ltd.
㈱スリーエスNIPPONKANZAI Environment Service Co., Ltd.
㈱日本管財環境サービス
NipponKanzai Housing Management Co., Ltd.
日本管財住宅管理㈱Pacific Property Group, Inc.

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

日本住宅管理㈱Japan
Housing Management Co., Ltd.

東京キャピタルマネジメント㈱TokyoCapital Management Co., Ltd.
NSコーポレーション㈱NSCorporation Co., Ltd.
㈱日本環境ソリューション
Japan
Environmental Solutions., Ltd.

Okinawa
NIPPON KANZAI Co., Ltd.
㈱沖縄日本管財
NeotrustCo., Ltd.
㈱ネオトラスト

Housing managementcompany in Munich, Germany
Ackermann Hausverwaltung GmbH(as of September 30, 2023)
Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

47

History of NIPPON KANZAI
Apr. 2023

Oct. 1965

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

Mar. 1988

Started total management business ofhigh-rise intelligent buildings

Feb. 1989

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

67/6

72/6

77/6

82/6

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

87/6

Aug. 1973

Started total management business forcondominiums

Apr. 1976

Started operation and maintenance businessfor public sewerage plants

Established NIPPON KANZAI Holdings Co.,Ltd.

92/3

97/3

02/3

FY3/23
Net sales¥113,045 million

07/3

12/3

17/3

22/3

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

48

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

Other M&As

(as of October 31, 2023)

49

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

Other M&As

(as of October 31, 2023)

50

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.

Oct. 2017

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

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.

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

51

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

52

Mid-Term Transition of Business performance(¥ million)

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

Residential Management and Operation Business*
Other Businesses

Focus on consulting
businesses for local
governments

Switching of
unprofitable projects

150,000

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

Environmental Facility Management BusinessTemporary Staffing Business

118,600(fct.)
113,045
106,300

100,000

85,413

71,39273,42872,5225.0%

4.8%

87,37992,49090,07896,478104,124

103,737

97,92975,06574,22850,0004.9%

NIPPON KANZAI
Holdings

NIPPON KANZAI

5.3%

57,003
(1H)

5.3%

6.0%

6.2%

7.2%

5.8%

6.0%

6.0%

6.5%

7.2%

7.4%

6.4%

7.3%(fct.)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) 2023 NIPPON KANZAI Holdings Co., Ltd.

53

Share Price Trends(Shares)(¥)
Trading volume (LHS)

NIPPON KANZAI Holdings (RHS)

TOPIX (RHS)

500,000

3,000

400,000

2,500

NIPPON KANZAI
Holdings

300,000

2,000

TOPIX

200,000

1,500

100,000

1,000

02023/4/1

500

2023/5/1

2023/6/1

2023/7/1

2023/8/1

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

2023/9/1

54

Diversity of Operation Management Facilities (Building Operation Management Business)◼ Portfolio of operation management building⚫ Covering a wide range of applications, such as offices, large-scale commercial facilities, and public facilities⚫ Recently, showing a tendency to increase large-scale facilities such as commercial facilities and public facilities

Sports facilities 3.0%

-0.5p

Other 5.6%

+0.1p

Hotels/Accomodation 4.5%

Offices 25.4%

+0.4p

-1.2p

Plants/Warehouse 4.2%

-0.1p
Educational/Cultural facilities 9.0%

Composition ratioof net sales-0.2p(Nonconsolidated baseexcluding housing)

Commercial facilities 18.3%

Public facilities 14.3%

+1.0p

+1.1p

Welfare medical facilities 15.6%-0.7p*Figures for properties under management are based ondata in NIPPON KANZAI data base "Building charts."

Increase and decrease compared tothe previous term (point)(as of March 31, 2023)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

55

Geographical Distribution (Building Operation Management Business)
NIPPON KANZAI Co., Ltd., Three-S Co., Ltd., Okinawa Nippon Kanzai Co., Ltd.

(Unit: ¥ billion)

Hokkaido
2.39

Kinki
21.20

Tohoku
0.77

Chubu
6.56

Kyushu, Okinawa
4.85
Chugoku
1.46

Net sales ofproperties undermanagement

Kanto
24.10

Shikoku
0.90*Figures for properties under management are based ondata in NIPPON KANZAI data base "Building charts."(\ billion)

Composition
ratio (%)

YoY
Changes (%)

Hokkaido

2.39

3.8%

6.8%

Tohoku

0.77

1.2%

6.5%

Kanto

24.10

38.8%

9.3%

Chubu

6.56

10.5%

11.5%

Kinki

21.20

34.1%

6.9%

Chugoku

1.46

2.4%

6.8%

Shikoku

0.90

1.4%

-2.5%

Kyushu

4.85

7.8%

5.9%

Total

62.42

100.0%

8.0%(as of March 31, 2023)
Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

56

Geographical Distribution (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

U.S.A

：NJK

Managing approx. 100,000
lots in the south part ofCalifornia

Hokkaido
4,577
Kyushu,Okinawa
2,813

Tohoku
120
Chubu
6,130

Chugoku
2,722

HawaiiManaging approx. 110,000
Australia
lots in 6 islands including
Managing approx. 195,000 Oahu where Honolulu islots in the country, mainly
locatedin Sydney

Germany
Managing approx. 17,000
lots in the country, mainlyin Munich
Number of lots
undermanagement(lots)
Hokkaido

Shikoku400

Kinki
64,890*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
18,870NIPPONKANZAI

NKJ-

YoY
Changes (%)

NJK

4,577

-

0.0%

Tohoku

-

120

-

0.0%

Kanto

356

14,555

3,959

-1.7%

Chubu

874

5,256

-

21.3%

Kinki

2,937

23,29738,656

1.7%

Chugoku

266

195

2,261

-8.8%

Shikoku

361

-

39

0.0%

Kyushu

-

2,813

-

-0.1%

4,794

50,813

44,915

1.6%

Total

3 companies total: 100,522 (As of March 31, 2023)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

57

Geographical Distribution (Environmental Facilities Management Business)
Nippon Kanzai Environment Service Co., Ltd.
(Unit: cases)

Hokkaido

4

Iwate
Yamaguchi
Hyogo
Fukuoka
Nagasaki
14
11
7 Saga 2
Okayama2

Toyama33

Miyagi

Fukui

4

4
Gunma

4

1

Kumamoto

5
Osaka

Ehime
5
11 Kochi
1 Tokushima
Oita

Okinawa2

Kagoshima 1

Aichi

Ibaraki

5

Tokyo

Chiba

5

1
No. of properties
undermanagement

Water andseweragefacilities

Generalwaste
treatment
facilities

Biomass
power
generation
facilities

Total Composition
ratio(%)

2

1

22(as of April 1, 2023)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

58

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 NIPPON KANZAI and Fexco send
directors to PICA and manage it jointly. Founded in 1981, Fexco employs over
2,300 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
The strata management industry in Australia has been witnessing a consistentdecline in profitability over the past 15 years due to a surge in the CPI as reported
in a research by a financial institution. As an industry leader, PICA Group isproactively addressing this issue through “Simplification, Automation and Growth”
strategies. Our initiatives encompass streamlining operations and organization,
while maintaining high-quality 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 (JPY2,500 million)*AUD1=JPY89.62 (as of December 31, 2022)
Strata management, debt collection
SydneyMajor cities of East Coast, include Sydney, Melbourne, Brisbane, Cairns etc.
Approx. 750 as of December 31, 2022
Approx. 194,000 lots, 11,000 Plans (Owners Corporations) as of December 31, 2022

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Overseas Development (Overview of Keystone, LLC)
Company Overview
Keystone Pacific Property Management, LLC (hereinafter “Keystone”) is a ies
management company. Gated community is developments consisting of detachedhousing and high-end multi-unit homes in estates surrounded by walls. Keystone
provides homeowner associations with support services including holding annual
general meeting, accounting and financial reporting and on-site management. It has areputation for offering high-quality and detailed services. Other than subsidiaries andaffiliates of major nationwide companies, Keystone is ranked within the top ten
companies in Southern California. Since 2019 onward, Keystone has made progressin expanding service area coverage through M&A.

Irvine, California

Background
In January 2017, NIPPON KANZAI’s subsidiary, NIPPON KANZAI USA, Inc. acquired
an ownership interest from Keystone which is currently a non-consolidated equitymethod affiliate of NIPPON KANZAI.
NIPPON KANZAI will work to raise operational efficiencies and expand services
through renovation of the IT system, and target future growth through incorporating theCompany’s know-how, while expanding properties under management to include highrise condominiums etc. In addition, Keystone acquired the business rights of multiple
companies within the same industry while expanding into new markets. The company
plans to further grow the business in the future.

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, Denver, Colorado and Boise, Idaho
Approx. 316 as of December 31, 2022 (including Keystone Progressive)
Approx. 104,307 units, approx. 525 associations as of December 31, 2022
(including the Company’s subsidiary, Keystone Progressive)
Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

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Overseas Development (Overview of Hawaiiana)
Company Overview
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.
Honolulu,
Hawaii

Properties under Management

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.

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
USD4.27 million (JPY570 million)*USD1=JPY132.71 (as of December 31, 2022)
AOAO management
Honolulu, Hawaii
Maui, West Maui, Kona, Kauai
Approx. 240 as of December 31, 2022
Approx. 110,000 units, 670 associations as of December 31, 2022

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61

Overseas Development (Overview of PPG, Inc.)
Company Overview
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.
Honolulu,
HawaiiBackgroundOur 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 (JPY130,000) *USD1=JPY132.71 (as of December 31, 2022)
Commercial Property Management
Honolulu, Hawaii
11 as of December 31, 2022
Approx. 17 as of December 31, 2022

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62

Promotion of DX(Visualization of Facility Status -Operation of Wide-Area Facilities Management Center-）

Fully redesigned Wide-Area FM Center (WAFM Center) in April 2023
*Design and construction cooperation: JTB Asset Management, Supervision: NIPPON KANZAI

WAFMWide Area Facilities Management System
Manage buildings 24/7 remotely• Remote management, machine security, and call center services complement each otherthroughout Japan.
• Accumulation of data collected on a daily basis such as response history, and provision of
feedback

East Japan
CustomerIoT Status Monitoring

Internet

Base station

MonthlyreportFacility Alarm Panel
Automatic Fire Alarm Panel
Maintenancehistory

Security Monitoring Panel
Order/Instruction

Regular and continuous data collection enables NIPPONKANZAI to provide detailed maintenance and equipment
improvements.

Engineering Staff

Integrated
monitoring
systemWest Japan
CustomerIoT Status Monitoring

Internet

Base station

Energymanagement

Facility Alarm Panel
Automatic Fire Alarm Panel
Security Monitoring Panel
Regular and continuous data collection enables NIPPONKANZAI to provide detailed maintenance and equipment
improvements.

WAFM function enhancement
project in progress

Order/Instruction
Engineering Staff

Response
history /Process
history

Creating the next roundof feedback

NIPPON KANZAI will continue to integrate people and IT technology to further enhance its functions
and emergency response capabilities, with the aim of improving safety and streamlining building
management functions.

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

63

Promotion of DX(Provision and Sharing of Systems -Update of Facilities Information Sharing System and Application-)

We provide the app that allows you to check the facility inspection information andmaintenance/management status on PCs and smartphones.

NK Connect

Facilities information sharing system
Work fulfillment confirmation & reportapplication

INTERNET• Sharing of information with customers and partner companies on the CloudCentralized management of various building information, work plans, andrepair plans• Use of work management application with smart devices• Promoting computerization of malfunctions report and forms in the field,• conversion of inspection records to data files

Work plan & repair plan management

Input
at Web browser

Reports

Confirmation ofwork execution

Input
by Smartphone
Use of Application

Conversion of work
records to data files

Detailed work report

Input
by Smartphone
Use of Application

Note: Details will be reported by linking the application created by NIPPON KANZAI and ConMas i-Reporter of Cimtops Corporation.

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

64

Promotion of DX(Provision and Sharing of Systems -DX of Housing Management-)

Completing payment of administrative overhead, etc. of
homeowner associations online
G O Ao ora et ank
Smart transfer approval

Overview( ) Transfer"Smart Payment Approval," which combines the system
integration function of GMO Aozora Net Bank with the property
management expertise of the NIPPON KANZAI Group, is an
online payment service that enables payments from
homeowner association corporate accounts. Previously, various
expenses were paid through a bank by the property managers
on behalf of the homeowner association. This method wasinefficient and there were cases where the payment approval
process was inadequate. However, by introducing this service,
it is possible to efficiently carry out various tasks such as
approvals and payments.

Administration Division,
NIPPON KANZAI Co., td.

ank accounts ofhomeowner associations

Chairman,Condominium
Management Association( ) Transfer

ayees(infrastructure operators,
contractors, etc )“Smart transfer approval,” streamlining of approvals,
and transfer works
First to introduce the service: NIPPON KANZAI Group

Effects of introduction
・Efficient payment approval procedures between the homeownerassociations and property managers
・Thorough management of the evidence detailed setting of approvalroutes between homeowner associations and managementcompanies
・Reduction in the number of procedures, etc. at a bank

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

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

65

Promotion of DX(Digitization of Work Records – Supported by the On-Site IT Support Team)

Promotion of operational efficiency through improvement of IT skills of on-site staff
Due to the decline in the working-age population, streamlining and digitizing on-site management have become urgent topics.
To enhance the IT environment and improve productivity, we aim to improve the IT skills of on-site staff and implement support
activities such as on-site visits and remote support by the IT support team. This is to achieve efficient business operations.

Planning for on-sitelaunching supportand visitations

Patrol, check,
Interview
Accumulation ofvisiting records
Report on items to be
improved

Visiting record database

Visiting record

Improvement,
education
Remote support

ReportDigitization of visitation
records into a database

Preparation of report on
good points and areas
for improvement

Patrol of and remote support for manned
management sites throughout Japan

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

66

Reference (2)Positioning within the Industry

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

Transition of Building Maintenance (1)◼ Transition of building management business and move of NIPPON KANZAI (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
move ofNIPPONKANZAI

Building services that are becoming higher leveland more complicatedExpansion of comprehensive building maintenance1967⚫ From total management tointegrated management works

1980

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

1989
Established Tohoku
Branch68

Transition of Building Maintenance (2)◼ Transition of building management business and move of NIPPON KANZAI (1990-present)
1990

2000

2010

2008 Lehman shock2011 Great East Japan Earthquake2016 Kumamoto Earthquake

Bubble burst

Societysituation

1995 The Great Hanshin-Awaji
Earthquake

Laws andtechnologies
related tomaintenancesecurity

2001 The World Trade Center attack (9-11)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
move 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) 2023 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

69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.

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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

Developer
type

Tradingcompany
type⚫

ITOCHU Urban Community Ltd.

⚫

Sumisho Tatemono Co., Ltd⚫

Sojitz LifeOne Corporation

Housingbuilder
type
Tradingcompany
type⚫

Haseko Community, Inc.

⚫

Taisei-Yuraku Real Estate Co.,Ltd.

⚫

Nippon Steel Community Service Co.Ltd

Condominium management company
in Japan

Approx. 2,642 companies

Member company of Condominium
Management Companies Association

354 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 (100,522 lots) total lots of 3 Group companies(Source: Mansionkanri Shimbun, calculated by NIPPON KANZAI by groupcompany)

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

71

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

Copyright (C) 2023 NIPPON KANZAI Holdings Co., Ltd.

72

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) 2023 NIPPON KANZAI Holdings Co., Ltd.

73