Natural hot spring Ryoun no Yu Onyado Nono Aasakusa

Akinomiya hot spring resort - Yukemuri no Yado Inazumi hot spring

Consolidated Financial Results for FY3/20 H1
November, 2019
Takumi Ueda
President

9616

Agenda01

Consolidated Financial Results for six month
period ended September 30, 2019

P. 3

02

Forecast for Consolidated Financial Resultsfor FY3/20

P.25

03

Progress in Mid-term Management Plan
(FY3/18-FY3/22)

P.29

1

Natural hot spring Sansa no Yu
Dormy Inn Morioka

Consolidated
Financial Results
for six month
period ended
September 30, 2019

Meiji Global Village

Executive Summary１

The 9th straight year of the increased H1 ordinary profit andthe 7th straight year of hitting a highest-ever H1 ordinary profit

2

Newly opened facilities in FY3/20 H1 :３

Stable growth in dormitory business︓FY3/20 H1 operating profit +3.1% vs. PY•

Dormitory 13 facilities (1,451 rooms), Dormy Inn business 3 facilities (551 rooms)、
Resort business 2 facilities (186 rooms)

 Occupancy rate at the beginning of FY3/20 was 98.7%, an increase of 1.0pp vs.PY

Robust growth in Dormy Inn business︓FY3/20 H1 operating profit +19.1% vs. PY

4

 Decrease in the number of travelers from South Korea was fully offset by the growth in thenumber of the guests from other countries
 Decrease in RevPAR in the Osaka region was fully offset by our nationwide expansion

5

Raised FY3/20 interim dividend per share to 22 yen with +2 yen vs. PY
The 7th straight year of the increased interim dividend per share3

FY3/20 H1 Consolidated Financial Results and KPIs
(Unit: oku yen=100 MM yen)

FY3/19H1 ActFY3/20H1 Actvs. PY

Reveue

792.0

938.1

+146.1+18.4%

Operating Profit

80.4

90.6

+10.2

+12.7%

Ordinary Profit

78.3

89.7

+11.3

+14.5%Net Profit

53.1

61.1

+7.9

+14.9%EPS(Yen)

136.4

156.8

+20.3

+14.9%

Capital Investments

93.0

110.4

+17.3

+18.7%

Depreciation Expense

22.6

25.0

+2.4

+10.6%Cash Flow*

75.8

86.2

+10.3

+13.6%Net D/E Ratio

0.9x

0.8x

-0.0x

-

* Net profit + Depreciation expense
4

Historical data of H1 Revenue and Operating Profit over the past five years(Unit: oku yen=100 MM yen)

Revenue

Othe rs183.0

Othe rs158.5

Othe rs
128.3
Hote l347.6

Othe rs
158.8

Others260.1

Hote l
390.4

Hotel
426.3

Hote l267.0

Hote l
300.7

Dormi tory
218.6

Dormi tory
225.5

Dormi tory
233.4

Dormi tory
242.8

Dormitory
251.8

FY3/16 H1

FY3/17 H1

FY3/18 H1

FY3/19 H1

FY3/20 H1

Operating Profit
Othe rs-8.4

Othe rs-9.9

Othe rs-11.7

Othe rs-4.6
Hote l
47.8

Others
-0.4
Hotel
52.7

Hote l46.2

Hote l
46.9

Dormi tory
29.7

Dormi tory
35.4

Dormi tory
36.9

Dormi tory
37.2

Dormitory
38.4

FY3/16 H1

FY3/17 H1

FY3/18 H1

FY3/19 H1

FY3/20 H1Hote l40.2

5FY3/20 H1 Revenue and Operating Profit by business segment(Unit: oku yen=100 MM yen)

Revenue

242 251

232

Hotel Business total- FY3/19 H1 390- FY3/20 H1 426

256
157 169

FY3/19 H1

74

97

80

FY3/20 H1

Dormy Inn

Operating Profit

Resorts

Comprehensive Foods Service
Building
Business
Management
Business

Development
Business

68

OthersHotel Business total- FY3/19 H1 47.8
- FY3/20 H1 52.7

45.7

37.2 38.4

62

36

34
Dormitory

117

38.3

+0.1 (incl. sales and lease back of real estate -0.9)
FY3/19 H1
FY3/20 H1

9.4

10.4 10.6
7.0
0.3

2.3

0.2

3.9

0.8
-0.4

Dormitory

Dormy Inn

Resorts

Comprehensive
Building
Management
Business

Foods Service
Business

Development
Business

Others6

Dormitory Business: FY3/20 H1 Revenue and Operating Profit(Unit: oku yen=100 MM yen)

Operating Profit

Revenue+1.1 oku yen/ +3.1％ vs. PY+8.9 oku yen/ +3.7％ vs. PY

-1.5

-0.6

+0.2

-0.3

+1.6

+9.8

+0.4

+0.4
251
242

242

FY3/19 H1

FY3/19open

FY3/20open

Close

OthersFY3/20 H1

38
37

37

FY3/19 H1

FY3/19open

FY3/20open

Close

OthersFY3/20 H1
7

Dormitory Business: Number of contracted rooms and occupancy rate at the beginning of FY (Historical data)

Number of contracted rooms at the beginning of FY – by category(Rooms)38,380(+1,285)

40,000

4,372

30,000

8,050

4,586

4,810

5,097

5,263

8,682

9,387

10,068

11,31240,089(+1,709)

5,293

5,531

12,085

13,266(+773)

20,000

Domeal(+1,181)*

21,292
20,20010,00020,212

20,685

20,534*

20,520*21,002Mainly coming from anincrease in companies tointroduce a system of
dormitories for employees(+290)(+482)

Dormitories for
employees
Dormitories forstudents0
FY3/14

FY3/15

FY3/16

FY3/17

FY3/18* Incl. Foreign 2,460(12.0%)
Students

FY3/19FY3/202,660(12.7%)

3,079(14.5%)

Occupancy rate at the beginning of FY
(%)

97.0

97.2

97.3

FY3/14

FY3/15

FY3/16

98.3

98.3

97.7

FY3/17

FY3/18

FY3/1998.7

Mainly driven byincrease incontracted rooms for
4 year university andcollege students incl.
foreign ones

FY3/208

Dormy Inn Business: FY3/20 H1 Revenue and Operating Profit(Unit: oku yen=100 MM yen)

Operating Profit

Revenue+23.9 oku yen/ +10.3％ vs. PY

+6.8

-0.2

+7.3 oku yen/ +19.1％ vs. PY

+0.8

-2.4

+2.4

-0.4

+0.5

-2.0

+6.2

+15.9
+4.4

Marginal profit from

-0.6

38
232

232

FY3/19 H1 Existing Temporarily FY3/19
facilities* closed
open
facilities
due to hugerenewal45

increase in RevPAR

256

38

+2.9

Cost-Saving etc.

+3.3

FY3/20open* Facilities opened by the end of March, 2018

KOR
(Seoul)OthersFY3/20 H1

FY3/19 H1

Existing Temporarily FY3/19
facilities* closed
open
facilities due
to hugerenewalFY3/20open

KOR(Seoul)OthersFY3/20 H1

9

Dormy Inn Business: Occupancy rate and ADR by month(Unit: ｔhousand yen)

FY3/19:OCC
FY3/20:OCC

95.0%

FY3/19:ADR

96.2%

FY3/20:ADR

93.8%

13.5

92.8%
91.2%

91.6%
90.3%

90.0%

12.0

85.0%

10.5

80.0%

9.0
Apr

May

Jun

Jul

Aug

Sep

OCC

Oct

Nov

Dec

Jan

Feb

Q2

H1

Q3

Mar

ADR(thousand yen)
Q1

Q2

H1

Q3

Q4

FY3/19 Act

89.1%

92.1%

90.6%

92.7%

89.7%

FY3/20 Act

91.0%

94.3%

vs. PY

+1.9pp+2.2pp

Full
year
90.9%

Q1
FY3/19 Act

10.9

11.7

11.3

92.7%

FY3/20 Act

11.3

11.4

11.3

+2.1ppvs. PY

＋0.3

-0.3

＋0.0

11.0

Q4

Full
year

10.3

(Note) Above figures are excl. the impact of facilities that have been opened on and after April 1, 2018 to compare 2 periods of occupancy rate and ADR on a common basis

11.0

10

Dormy Inn Business: RevPAR by month(Unit: ｔhousand yen)

13.0
FY3/19:RevPAR

11.9
12.0

FY3/20 H1
vs.PY

11.0

10.6

10.5

by area

10.3

FY3/20:RevPAR

Osaka

Hokkaido Koushinetsu Tohoku Chushikoku Kyushu

Total

-9.2%

+9.0%

+2.3%

+7.0%

+6.4%

+3.9%

+2.6%

2月

3月

10.1

9.6

10.0
9.0
8.0
4月

5月

6月

7月

8月

9月

10月

11月

12月

1月

RevPAR(thousand yen)
Q1

Q2

H1

FY3/19 Act

9.7

10.8

10.3

FY3/20 Act

10.3

10.8

10.5

vs. PY

＋0.5

0.0

＋0.2

Q3
10.2

Full
year

Q4
9.3

10.0

(Note) Above figures are excl. the impact of facilities that have been opened on and after April 1, 2018 to compare 2 periods of RevPAR on a common basis

11

Dormy Inn Business: Related data of inbound tourism
The number of inbound hotel guests

Share by country in inbound tourism – FY9/19

Source︓Japan tourism agency Unit: Thousand People

Source︓JINTO

53,39048,883

Others22%

40,81534,72635,438

China
32%

USA
6%
Hong Kong
7%
FY9/15

FY9/16

FY9/17

FY9/18

South
Korea
17%

Taiwan16%

FY9/19The number of inbound guests - Dormy Inn

Share by country in inbound tourism on a revenue basis

Unit: Thousand People

OthersEurope/in Asia
USA 3.8%

1,002

5.7%

850

South
Korea

28.1%
1.4%
12.1%
3.7% FY3/19
H1 Act15.7%
42.0%
FY3/2014.5%
China
Taiwan

633
323

368

H1 Act17.2%

FY9/15

FY9/16

FY9/17

FY9/18FY9/1922.6%
Hong Kong

33.2%

12

Dormy Inn Business: The number of Inbound guests/ Inbound ratio by month
The number of Dormy Inn guests(cumulative)
FY3/20:宿泊者数累計
Inbound ratio
FY3/19:インバウンド比率(Unit: thousand people)

The number of Inbound guests(cumulative)
FY3/20:インバウンド宿泊者数累計
Inbound ratio
FY3/20:インバウンド比率

35.0%
35.0%

32.0%
29.5%

28.8%

4,000

28.6%

30.0%
30.0%
25.3%

24.8%

25.0%
25.0%
3,055

3,000

20.0%
20.0%

2,558
1,984

2,000

15.0%

1,472
10.0%
992

1,000

853
681

513

494

1,002
5.0%

343

178

0

0.0%

4月

5月

6月

7月

8月

9月

10月

11月

12月

1月

2月

ADR

% of Inbound
Q1

Q2

H1

Q3

Q4

FY3/19 Act

29.7%

27.1%

28.3%

30.9%

32.0%

FY3/20 Act

30.1%

26.2%

28.1%

vs. PY＋0.3pp-0.9pp-0.2pp

Full
year
29.9%

3月
(thousand yen)

FY3/19 H1

FY3/20 H1

vs. PY

Excl. inbound

10.8

11.0

+0.3

+2.6%

Inbound

13.2

12.3

-0.9

-6.6%

+2.4

+1.3

-1.1

13

Third-party evaluation on Dormy Inn
Dormy Inn attained first place for the business hotel department at JCSI in 2019

Score of Customer Satisfaction in the Business Hotel Category
Ranking12
3
45

FY2019FY2018FY2017

Dormy Inn

Richmond Hotels

Richmond Hotels

81.7

81.8

81.2

Richmond Hotels

Dormy Inn

Super Hotels

81.0

80.0

80.7

Comfort Hotels

Comfort Hotels

Daiwa Roynet Hotels

79.1

79.0

79.4

Super Hotels

Super Hotels

Dormy Inn

78.5

78.3

79.2

Daiwa Roynet Hotels

Daiwa Roynet Hotels

Comfort Hotels

77.4

77.3

76.6

“JCSI(Japanese Customer Satisfaction Index)” is a survey of the customer satisfaction index in the service industries.
Japan Productivity Center is conducting a survey at six times per year, approximately 30 industries, about 400
companies are targeted.
14

Resort Business: FY3/20 H1 Revenue and Operating Profit(Unit: oku yen=100 MM yen)

Operating Profit

Revenue+11.9 oku yen/ +7.6％ vs. PY-2.3 oku yen/ -25.2％ vs. PY

-2.0

-0.3
+3.3

+7.7

-2.3
-4.6

+8.1
+4.0

Marginal profit from

169

+3.1

9.4
157

157

FY3/19 H1 Existing Temporarily FY3/19
facilities* closed
open
facilities
due to hugerenewalFY3/20open* Facilities opened by the end of March, 2018

OthersFY3/20 H1-1.2

increase in RevPAR

FY3/19 H1

Cost-Saving etc.

2.0

7.0

+5.7

Existing Temporarily FY3/19
facilities* closed
open
facilities due
to hugerenewalFY3/20open

OthersFY3/20 H1

15

Resort Business: Occupancy rate and ADR by month(Unit: ｔhousand yen)

FY3/19:OCC
100.0%

FY3/19:ADR

95.6%

FY3/20:OCC

55.0

FY3/20:ADR
50.0

90.0%

84.1%
79.3%
79.1% 79.0%
77.9%

80.0%

45.0
40.0

70.0%
60.0%

35.0

50.0%

30.0
Apr

May

Jun

Jul

Aug

Sep

OCC

Oct

Nov

Dec

Jan

Feb

Mar

Q1

Q2

H1

Q3

Q4

FY3/19

40.0

44.4

42.3

42.0

41.0

ADR(thousand yen)
Full
year

Q1

Q2

H1

Q3

Q4

FY3/19

79.2%

87.6%

83.4%

84.6%

83.0%

FY3/20 Act

78.7%

86.4%

82.7%

FY3/20 Act

42.7

45.0

43.9

vs. PY

-0.5pp-1.2pp-0.8ppvs. PY

＋2.7

＋0.6

＋1.6

83.6%

Full
year

(Note) Above figures are excl. the impact of facilities that have been opened on and after April 1, 2018 to compare 2 periods of occupancy rate and ADR on a common basis

41.9

16

Resort Business: RevPAR by month(Unit: ｔhousand yen)

48.3

50.0

FY3/19:RevPAR
40.0

35.4

34.8

33.3

34.8

FY3/20:RevPAR

30.2
30.0

20.0
4月

5月

6月

7月

8月

9月

10月

11月

12月

1月

2月

3月

RevPAR(thousand yen)
Q1

Q2

H1

FY3/19

31.7

38.9

35.3

FY3/20 Act

33.6

38.9

36.3

vs. PY

＋1.9

0.0

＋1.0

Q3
35.5

Q4
34.0

Full year
35.1(Note) Above figures are excl. the impact of facilities that have been opened on and after April 1, 2018 to compare 2 periods of RevPAR on a common basis

17Other Businesses: FY3/20 H1 Revenue and Operating profit(Unit: oku yen=100 MM yen)

Revenue︓+13.0% vs. PY

Operating profit︓ +67.6% vs. PY

18

Balance Sheet
As of Sep 30, 2018

As of Mar 31, 2019

As of Sep 30, 2019
AssetsLiabilities

208.9 bn yen

124.5 bn yen

AssetsLiabilities(+6.4 bn yen)(+1.6 bn yen)

202.5 bn yen

122.9 bn yen

Cash andInterest-bearing

AssetsLiabilities(+2.1 bn yen)(-1.1 bn yen)deposits

liabilities

200.4 bn yen

124.0 bn yen

Cash andInterest-bearing

20.4 bn yen

89.7 bn yen

Cash andInterest-bearing

deposits

liabilities(+3.8 bn yen)(+6.8 bn yen)deposits

liabilities

16.6 bn yen

82.9 bn yen

20.3 bn yen

86.9 bn yen(-3.7 bn yen)(-4.0 bn yen)

*Including 19.9
bn yen in*Including 19.9

convertible bond*Including 19.9

bn yen in

Non-current

bn yen inconvertible bondassetsconvertible bondNon-current

Non-current

160.5 bn yen

assetsNet Assets(-0.2 bn yen)

Net Assets

assetsNet Assets

160.7 bn yen

79.5 bn yen

84.3 bn yen

156.3 bn yen

76.4 bn yen(+4.4 bn yen)(+3.1 bn yen)(+4.8 bn yen)

Treasury shares

Treasury shares

Treasury shares-0.3 bn yen-0.3 bn yen-0.3 bn yen

19Interest-bearing debt and Net D/E ratio(oku yen=100 MM yen)

800
700

(*.*x)

Interest-bearring debt（Net）

1.6

Net D/E ratio

1.3

1.4

600

1.2

500

0.7

400
300
200

1.0
0.9
668

503

412

0.9
665

522

0.8
692

1.0
0.8
0.6

100

0.4

0

0.2
FY9/14

FY9/15

FY9/16

FY9/17

FY9/18FY9/1920

Our efforts against ESG• Enhancing Corporate Governance System Appointment of outside directors
Outside director (not Audit and Supervisory Board Member, 1 director) : New position created in June, 2019. Former commissioner of
the Japan tourism agency. Personnel with seasoned knowledge of Japan transport/ tourism administration
Outside director (Audit and Supervisory Board Member, 2 directors) : Personnel with seasoned knowledge of finance, accounting,corporate management and economics－ Above 3 members have been already listed in TSE as “independent executive”. They attend our BOD meeting regularly andmonitor our management health carefully with some constructive opinions.
 Setting aside enough time for our shareholders to give a lot of thought to the bills of our shareholders meeting through early
electronic disclosure of notice of shareholders’ meeting• Gender Equality
 Appointment of the first female director for us in the shareholders meeting to be held in June, 2019 Underlying upward trend in the ratio of female full-time employees(47.5% at the end of Mar, 2019, +4.9pp compared to the end of Mar, 2016)
 Moderately upward trend in both the ratio of female management positions to all management positions and that of female
management positions to female full- employees• Affordable and Clean Energy
 Investment in renewables－ Actively participating in “local production of electricity for local consumption” by Nakanojo, Gunma (local government)
 Activities for Environmental Conservation－ Environmental practice of “WECO*” as a Dormy Inn original effort－ The Introduction of business card made from limestone•

An effort to seek an environmental conservation by limiting a scope of our cleaning task under customers’ request

21

Awareness of our company■ Distributed corporate TV commercials to live broadcasting of the Hakone Ekiden– undoubtedly one of the well-known Ekiden races held in Japan■ Distributed corporate commercials through the terrestrial/ internet/ radio program we sponsored■ Distributed TV commercials of Kyoritsu Resort “La Vista”in Hokkaido and Kyushu region■ Broadcasting the PR video of Kyoritsu Resort■ Acting as an official sponsor of the Japan Women’s Football League in 2019,
We have signed an official sponsorship agreement withthe“Nadeshiko League”, where strong and healthy womenshine brightly.
We will eagerly support popularization activities meant
to convey dreams of achievement and feelings ofinspiration from the hard-playing athletes inthe“Nadeshiko League”to as many people as possible.

■ Enhancement of IR activities - participating in various IR events- IR activities for domestic investors: Some briefing sessions for individual and institutional investors, participating in IR fairs
and one-on-one meeting with investors, etc.
- IR activities for overseas investors: IR Road Show, participating in some IR conferences - 5 times in FY3/19
22

Further improvement in customer satisfaction■ Setting up and enhancement of comprehensive customer network-

Utilization of comprehensive customer database that leads to very kind hospitality
 Customer data makes it possible to provide each customer with higher-quality service
 Use historical information on usage by customer as an effective way of marketing and take thorough countermeasures to secure
customer information-

Designing a membership program so that customers can use our company over an extended period of time
 Make most valued customers understand our business and service better/ Grant some privileges/services to them-Starting point program so that our customers can enjoy the benefits by using of our site to reserve our hotels.
The number of members of our site at the end of Sep, 2019 was 750 thousand people, increasing +37.2%
compared to the end of March, 2018.
 Arranged a tie-up with “d point” program produced by NTT DOCOMO – very easy to earn and use “points”※ Made “earning” and “using” d point service available in “November 2018” and “April 2019”, respectively■ Developed the application of “Domico” for residents of our dormitories- Gradually expanded this operation from FY3/20-

Made it possible to apply for and cancel the board service at our dormitories on the day with simple
method “by mobile phone”-

In addition, made it possible to file the notification of sleepover with dormitory “by mobile phone”
23Forecast for
Consolidated
Financial Resultsfor FY3/20

Scene of dormitory for students

Kotohira hot spring
Onyado Shikishimakan

FY3/20 Consolidated Financial Forecast and KPIs
(Unit: oku yen=100 MM yen)

FY3/19FY3/20Act

Forecast

Reveue1,628.1

1,830.0

Operating Profit

145.6

157.0

Ordinary Profit

143.2

Net Profit

Key assumptions in FY3/20 Forecast

vs. PY

Dormitory Business+201.8+12.4%

+11.3

+7.8%

154.0

+10.7

+7.5%

95.6

102.0

+6.3

+6.6%

EPS(Yen)

245.4

261.6

+16.1

+6.6%

Dormy Inn Business

Capital Investments

174.8

153.4

-21.4

-12.3%-

Depreciation Expense

47.5

50.0

+2.4

+5.0%

Cash Flow*

143.2

152.0

+8.7

+6.1%

DPS (Yen)

45

47

+2.0

+4.4%

18.3%

18.0%

-0.4pp

-

DPR

*

-

-

Occupancy rate at the beginning of FY3/20:
98.7%, +1.0pp vs. PY
Number of contracted rooms at the
beginning of FY3/20: 40,089, +4.5% vs. PY

Number of hotels/rooms planned to open
in FY3/20:
・7 hotels/ 1,535 rooms (+11.6%)
RevPAR (thousand yen): 10.3, +3.0% vs. PY

Resort Business--

Number of hotels/rooms planned to open
in FY3/20:
・3 hotels/ 241 rooms (+9.1%)
RevPAR (thousand yen): 36.7, +4.8% vs. PY* Net profit + Depreciation expense* Incl. negative impact of 14.5 oku yen vs. PY – opening expense +4.5 oku yen, huge renewal expense, etc. +8.0 oku yen and systemmodification fee +2.0 oku yen for customer satisfaction improvement25

FY3/20 Forecast - Revenue and Operating profit by business segment(Unit: oku yen=100 MM yen)

Revenue489 508

467

525
315

361

FY3/19 Act

Hotel Business total- FY3/19 Act 783- FY3/20 Forecast 886

158

155 151

FY3/20 Forecast

69
Dormitory

Dormy Inn

Resorts

Operating Profit
78.0 81.6
65.4

72.9

76

Comprehensive Foods Service
Building
Business
Management
Business

2.9 2.4
Dormy Inn

Others19.0 18.5

16.7 17.4

Dormitory

Development
Business

124 140

Hotel Business total- FY3/19 Act 82.1
- FY3/20 Forecast 90.3

FY3/19 Act
FY3/20 Forecast

201

Resorts-1.2 1.2

0.9 0.6

Comprehensive Foods Service
Building
Business
Management
Business

Development
Business

Others26

FY3/20 Development Plan
FY3/18

FY3/19FY3/20

実績

実績

計画+10 facilities

Dormitory+963 rooms+14 facilities+1,780 rooms+15 facilities+1,575 rooms

Noda ANNEX, Senjunakamachi,

Waseda, Hikifune, Keiotsunashima,

Sendaihigashiguchi Ⅴ,

Tsunashimaekimae, Higashiosaka,

Tsurugashima, Omoromachi,

Motoyama, Osakatenma, Kagoshima,

Maihama, Minamikoshigaya,

Kaihinmakuhari, Tokorozawa,

Tenjinminami, Kobe, Ichigaya,

IrinakaⅡ, Koroen, KotoniⅡ,

Hakataekiminami Ⅱ, Kokuraekimae,

Komagome, Meidai global village,

Pedal Hanakoganei

Hokudaimae2,

Setagayatodoroki, Kamishakujii,

Hanazonomarutamachi,

Minamiurawa, Dokkyodaigakumae,

Ryuokuchikouen3, Ookurayama,

Kyotogoshominami, Kanazawaekinishi

ShounanfujisawaⅡ+9 facilities

Dormy Inn

+9 facilities+1,530 rooms+7 facilities+1,535 rooms

PREMIUM Kanda,Miyazaki,

Honhachinohe, Osakatanimachi,

MaebashiApr

global cabinGL Suidobashi,

Korakuen, Oita,

Fukui

Jun

Kofumarunouchi, Izumo,

global cabin Hamamatsu,

MoriokaJul

EXPRESS Sendai-Seaside,

global cabin Yokohamachukagai,

Nono Asakusa

Oct

Nono Nara, Kochi, Matsuyama

Takamatsuchuokoenmae,

KawasakiJan

PREMIUM Namba ANNEX,

FuranoFeb

PREMIUM Osakakitahama

Mito

Mar

+4 facilities

Resorts+1,571 rooms+253 rooms+2 facilities+171 rooms+3 facilities

Keiun (Izumo),

La Vista Kirishima (Kagoshima),

Echigoyuzawa

Tsukiyo no Usagi (Izumo),

Shirakawago (Gifu)(Niigata)+241 rooms

Apr

Le Chien Kyu-Karuizawa,

Kotohira (Kagawa)Sep

Suiun (Gora)

Inazumi (Akita)Nov
27

Echigo Yuzawa hot spring
Yukemuri no Yado Yuki no Hana

Progress in Mid-termManagement Plan
(FY3/18 - FY3/22)

Nankishirahama
Hamachidori no Yu Kaishu

Key quantitative targets of mid-term management plan and progress report
Name of MMP
Outline

Kyoritsu Jump Up Plan
1. Customer satisfaction improvement- Produce products and services that lead to better customer satisfaction, raise customers’ assessment of the Company
and get greater trust

2. Advanced development- Expand business bases and build a solid business foundation

Key Quantitative Targets/ Development Plan
Key Quantitative Targets

Starting FY for Mid-term Management Plan
(FY3/17)

Progress at the end of FY3/19

Final FY of Mid-term Management Plan
(FY3/22)

Revenue

1,358 oku yen

1,628 oku yen(CAGR: +10%)

2,200 oku yen(CAGR: +10%)

Operating Profit

118 oku yen

146 oku yen(CAGR: +11%)

190 oku yen(CAGR: +10%)

Net D/E Ratio

0.9x

0.8x

DPR

16.8%

18.3% - projection

Advance gradually to more than 20%

ROE

11.7%

12.6%

More than 10%

Progress at the end of FY3/20 H1

Final FY of Mid-term Management Plan

(FY3/18 - FY3/20 H1 end / cummulative)(At the end of Mar, 2022)

Development Plan

Starting point for Mid-term Management Plan
(At the end of Mar, 2017)

Maintain lower than 1.0x
for securing financial health- Opened: 4,194 rooms
Dormitory

37,000 rooms- Already decided: Around 5,700 rooms

7,000 rooms(Progression rate: 81%)- Opened: 3,652 rooms
Dormy Inn

10,200 rooms- Already decided: Around 9,000 rooms

9,000 rooms(Progression rate: 100%)- Opened: 610 rooms
Resort2,200 rooms- Already decided: Around 1,500 rooms

1,400 rooms(Progression rate: 107%)29

Development plan of dormitories and hotels leading to sustainable growth
FY3/18

FY3/19FY3/20FY3/21Results

Results

Plan

Plan

FY3/22
Plan

Dormitory+10 facilities*+963 rooms*+14 facilities*+1,780 rooms*+15 facilities*+1,575 rooms*+13 facilities*+1,027 rooms*+4 facilities*+401 rooms*

FY3/17 :Available facilities

473 facilities

Available facilities

485 facilities

Available facilities

493 facilities

Available facilities

505 facilities

Available facilities

507 facilities

Lease ratio

88.5%

Lease ratio

88.5%

Lease ratio

87.4%

Lease ratio

87.7%

Lease ratio

87.4%

Available rooms

38,166 rooms

Available rooms

39,450 rooms

Available rooms

40,632 rooms

Available rooms

41,561 rooms

Available rooms

41,721 rooms

463 facilities/37,000 rooms

MTMP**7,000 rooms Noda ANNEX,[L]Senjunakamachi,→Already decided
Around 5,700 rooms

Progression rate

81%
Dormy Inn
FY3/17 :64 facilities/10,200 rooms
MTMP**９,000 rooms[L]Tsunashimaekimae,
Higashiosaka, [L]Maihama,[L]Minamikoshigaya,[L]IrinakaⅡ, [L]Koroen etc.

Around 9,000 rooms

Progression rate

100%
Resorts
FY3/17 :24 facilities/2,200 rooms

Progression rate

[L]Motoyama, [L]Osakatenma,[L]Tsurugashima, Omoromachi,[L]Kagoshima, [L]Kobe, [L]Ichigaya,[L]Kaihinmakuhari, [L]Tokorozawa,[L]Komagome, Meidai global village,[L]Hakataekiminami Ⅱ,[L]Setagayatodoroki etc.

[L]SakadoⅡ, NiigataⅡ,[L]Sendaihigashiguchi,[L]Kyoto Kuinabashi,[L]Nagoyanisshin,[L]Hiraoekimae[L]Hamadayama,[L]Komazawakoen,[L]Kokuraekimae etc.

[L]Esakakoen etc.

+9 facilities*+1,530 rooms*+7 facilities+1,535 rooms+9 facilities+2,151 rooms+11 facilities+2,242 rooms

Available facilities

72 facilities

Available facilities

80 facilities

Available facilities

87 facilities

Available facilities

96 facilities

Available facilities

107 facilities

Lease ratio

98.8%

Lease ratio

98.9%

Lease ratio

99.0%

Lease ratio

99.2%

Lease ratio

99.3%

Available rooms

11,811 rooms

Available rooms

13,248 rooms

Available rooms

14,783 rooms

Available rooms

16,934 rooms

Available rooms

19,176 rooms[L]PREMIUM Kanda,[L]Honhachinohe, [L]Osakatanimachi,[L]Korakuen, [L]Oita,[L]global cabin Suidobashi,[L]Kofumarunouchi, [L]Izumo,[L]EXPRESS Sendai-Seaside,[L]Nono Nara, [L]Kochi,[L]Matsuyama[L]global cabin Hamamatsu,[L]global cabin Yokohamachukagai,[L]Takamatsuchuokoenmae,[L]Maebashi, [L]Fukui,[L]Nono Kyotoshichijo, [L]Kobe,[L]Morioka, [L]Nono Asakusa,[L]PREMIUM Ginza,[L]Kawasaki, [L]Furano,[L]Ikebukuro, [L]Nagasakiekimae,[L]Mito[L]Toyohashi, [L]Gotenba,[L]Fukuyama, [L]Nono Kanazawa[L]PREMIUM Namba ANNEX,[L]Nono Matsumoto,[L]Nono Sendai, [L]Tokyo bay(Toyosu),[L]Hiroshima ANNEX, [L]Enoshima,[L]Nono Yodoyabashi,[L]Okayama, [L]Nono Matsue,[L]Nono Kumamoto,[L]Nono Asakusabettei, [L]Yokohama,[L]PREMIUM Osakakitahama+4 facilities+253 rooms+2 facilities+171 rooms+3 facilities+241 rooms+6 facilities+486 rooms+5 facilities+359 rooms

Available facilities

29 facilities

Available facilities

31 facilities

Available facilities

34 facilities

Available facilities

40 facilities

Available facilities

45 facilities

Lease ratio

58.7%

Lease ratio

60.2%

Lease ratio

61.7%

Lease ratio

60.4%

Lease ratio

66.9%

Available rooms

2,478 rooms

Available rooms

2,649 rooms

Available rooms

2,890 rooms

Available rooms

3,376 rooms

Available rooms

3,735 rooms

Tsukiyo no Usagi (Izumo),
Around 1,500 rooms[L]Keiotsunashima,[L]Sapporokita, [L]Nippori,+1,571 rooms

MTMP**1,400 rooms Keiun (Izumo),→Already decided[L]Sendaihigashiguchi Ⅴ,+9 facilities[L]Miyazaki,→Already decided[L]Waseda, [L]Hikifune,[L]La Vista Kirishima (Kagoshima),[L]Echigoyuzawa (Niigata),[L]La Vista Kusatsu (Gunma),[L]Shirakawago (Gifu)[L]Kotohira (Kagawa),[L]Nasushiobara Rengetsu(Tochigi),[L]Ninnaji (Kyoto),[L]Wakuraonsen (Ishikawa),[L]La Vista Hakodate bay ANNEX,[L]Le Chien Kyu-Karuizawa,

Inazumi (Akita)[L]Suiun (Gora)[L]Kawazu Onsen (Shidsuoka),

Kikuyabettei Suigetsu (Shizuoka) etc. [L]Jozankei etc.

107%
Lease ratio（Total）

89.4%

89.7%

89.1%

89.3%

89.8%

* The number of increase in development facilities/rooms (not available facilities/rooms at the end of FY) ** Mid-term Management Plan
(Note) Red-highlighted parts mean the development facility with higher inbound ratio than our average. Underlined parts mean the developing facilities for sales and lease back of realestate not only complied with but also planned. ［L］parts mean the facilities for lease.

30

Acceleration of Sales and Lease Back of Real Estate
Development
profit(estimated)

The effect of profit leveling by
development profit

The amount of sales and lease back of realestate which has already decided
significantly exceeds ¥30 bn of the
expectation in mid-term management plan

¥3.2 bn

Expanding how to use the funds
by increasing resources¥1.0 bn

Sumitomo Mitsui
Finance and leasing
14 properties ¥65 bn
Development margin 5%
CAP 4.5～5.5%(Initial plan)¥30 bnDevelopment
margin 3%【Mid-term Management Plan】
Investmentsindevelopment

Raising
Funds

Others8 properties¥35 bnThe amount of sales
and lease back ofreal estate (estimated)

Generating profit from further
strengthening of business fundation\140 bn
Additional investments in development↑↑

Operating CF / Financing

Sales and leaseback of real estate\110 bn\30 bnExceeding the amount of sales andlease back of real estate expectedin mid-term management plan
\20～30 bn

31Stable hiring of personnel
Hiring of new
graduates

April 2019

April 2020

April 2021

2019年4月
296(Act)

300(Plan)

2021年4月
300～320(Plan)

Comprehensive work: 31
Hotel: 260
Senior Life Business: 5Comprehensive work: 22
Hotel: 270
Senior Life Business: 8Comprehensive work: 20
Hotel: 270～290
Senior Life Business: 10

Incl. foreign students: 57(Nepal, Vietnam, China, Republic of Korea)

Hiring route

We can get universities and colleges to introduce
many graduates to us with good relationship that wehave been building through our dormitory businesswith them

No restriction in the number of foreigners hired
Hiring talented foreigners actively

Share of new employees from theuniversities and colleges that used ourdormitories to total in April, 2019 :
49.7% (147 employees)

Dormy Inn
Staff forforeigners

 Supported by our own call-talkers
 Always positioning our counter clerk (available for English, Chinese and Korean guidance) at Dormy Inn in the Tokyoand Kansai region where the inbound ratio is higher than the others

Staff for cleaning  For 18 hotels of Dormy Inn : In house (taking advantage of our high recruitment ability/ hiring without making/ linen exchange
any distinction according to people’s nationality/ providing the highest quality education from us directly)
For the other hotels of Dormy Inn : Outsourcing (more than one outsourcing companies per 1 facility) Promoting the efficiency of cleaning/ linen exchange without diminishing the quality through work restructuring32

Important Notice

For the purposes of this notice, “presentation” means this document, any oral presentation, any question and answer session and any written or oral material discussed or
distributed by Kyoritsu Maintenance Co., Ltd. (“Kyoritsu”) during the presentation. This presentation (including any oral briefing and any question-and-answer in connection
with it) is not intended to, and does not constitute, represent or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for,exchange, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction. No shares or other securities are being offered to the publicby means of this presentation.
The companies in which Kyoritsu directly and indirectly owns investments are separate entities. In this presentation, “Kyoritsu” is sometimes used for convenience wherereferences are made to Kyoritsu and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who workfor them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.

Forward-Looking Statements
This presentation and any materials distributed in connection with this presentation may contain forward-looking statements, beliefs or opinions regarding Kyoritsu’s futurebusiness, future position and results of operations, including estimates, forecasts, targets and plans for Kyoritsu. Without limitation, forward looking statements often include
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including general economic conditions in Japan and worldwide; competitive pressures and developments; applicable laws and regulations; decisions of regulatory authorities
and the timing thereof; natural disasters, any of which may cause Kyoritsu’s actual results, performance or financial position to be materially different from any future results,
performance, achievements or financial position expressed or implied by such forward-looking statements. Neither Kyoritsu nor its management gives any assurances that the
expectations expressed in these forward-looking statements will turn out to be correct, and actual results or performance could materially differ from expectations. Persons
receiving this presentation should not place undue reliance on forward looking statements. Kyoritsu undertakes no obligation to update any of the forward-looking statements
contained in this presentation or any other forward-looking statements it may make. Past performance is not an indicator of future results and the results of Kyoritsu in thispresentation may not be indicative of, and are not an estimate, forecast or projection of Kyoritsu’s future results.

33

Further accelerating priority measures of FY3/18-FY3/22 Mid-term Management
Plan and delivering stellar results

Thank you!

9616