TKP Corporation

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0

TKP Corporation

Earnings briefing materials for

Q1 of the year ending

February 2021

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1

Executive summary

Topics

Business overview

Management policy in FY02/21

Appendix

Contents

2

3

5

21

36

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2

Due to the spread of COVID-19, the Japanese government declared a

state of emergency on April 7. This move greatly changed our

business environment, prompting many of our customers to cancel

or postpone the use of rental conference rooms.

However, on May 25, the state of emergency was lifted across Japan

and demand for conference rooms has been recovering since June.

Owing to uncertainty over when the COVID-19 pandemic will end

and how it will affect our performance, we have refrained from

making full-year forecasts at this time.

Q1 FY02/21 (March–May)

Executive summary

ｘ

3

FY02/21 Q1 Highlights

‣Announced downward revision to full-year earnings forecast for FY02/20 and revisions to the medium-

term business plan

‣Announced a new management structure with executive appointments

Publicized “BCP support office” and other measures to address COVID-19

Signed a syndicated loan agreement with Sumitomo Mitsui Banking Corporation (¥2.5 billion)

Signed a commitment line agreement with Mizuho Bank (¥5.0 billion)

Entered into a special overdraft agreement with Sumitomo Mitsui Banking Corporation (¥10.0 billion)

‣Announced differences between actual and forecast results for FY02/20 and the decision to suspend the

medium-term business plan

‣Announced voluntary reductions in executive compensation (for May–July 2020, a 50% reduction in

representative director compensation and a 40% reduction for full-time directors)

‣Announced the issuance of preferred shares in a subsidiary to APA Holdings (¥1.8 billion increase in net

assets)

On April 24, in response to investee First Cabin Co., Ltd. filing for bankruptcy with the Tokyo District

Court, we announced details on the handling of and outlook for two facilities under franchise contracts

(Extraordinary loss of ¥180 million in Q1)

‣Launched live broadcasting support packages for shareholders’ meetings

‣Opened APA Hotel Fukuoka Tenjin Nishi

Held our general shareholders meeting with live broadcasting. Shinichi Saijo appointed as new outside

director

Opened APA Hotel Ueno Hirokoji

Announced Q1 earnings

Concluded a capital and business alliance with bridal business operator Escrit Inc. (TSE1: 2196) for joint

development of banquet halls for corporate clients in the COVID-19 era (shareholding ratio: 12.59%)

Mar. 6

Mar. 11, 12, 13

Mar. 31

Apr. 6

Apr. 10

Apr. 21

Apr. 27

May 5

May 29

Reference: Q2 FY02/21 Highlights

July 14

July 15

July 16

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4

Date Details

Mar. 11 The WHO declared a pandemic.

Mar. 20 A government expert panel opined that organizers should judge and response seriously to the risk of holding events.

Mar. 25The Tokyo metropolitan government asked residents to refrain from non-essential, non-urgent outings and

recommends working at home on weekdays.

Apr. 6The Tokyo metropolitan government asked people to refrain from outings, where possible, as the national

government prepares to declare a state of emergency.

Apr. 7The Japanese government declared a one-month state of emergency, through May 6, for seven prefectures (Tokyo,

Kanagawa, Saitama, Chiba, Osaka, Hyogo, and Fukuoka).

Apr. 10 Following the state of emergency declaration, the Tokyo metropolitan government asked some facilities to close.

Apr. 16 The Japanese government extended the state of emergency declaration nationwide.

May 4 The Japanese government extended the state of emergency through May 31.

May 14 The state of emergency is lifted in 39 prefectures.

May 21 The state of emergency is lifted in all except five prefectures.

May 25 The state of emergency is lifted in all of Japan

June 2 “Tokyo Alert” is issued in Tokyo.

June 11 “Tokyo Alert” is lifted.

June 19 Event restrictions are reduced to Step 2 (indoor and outdoor events limited to 1,000 attendees)

July 10 Event restrictions are reduced to Step 3 (indoor and outdoor events limited to 5,000 attendees)

COVID-19-related developments in Japan since March 2020Measures to deal with COVID-19 gained steam in Japan in March.

The April 7 declaration of a state of emergency prompted cancellation/postponement of conference room usage,

but demand has been recovering since the state of emergency was lifted on May 25.

Q2

Q1

Recovery in conference room demand

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5

Financial highlights in Q1

of the year ending

February 2021(March 1–May 31, 2020)

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6

Q1 FY02/21 Consolidated Results (March–May)

(Factors affecting non-operating

income/expenses)

■Non-operating expenses

Syndicated loan arrangement fees: ¥120mn

Forex losses: ¥182mn

(Factors affecting extraordinary

income/losses)

■Extraordinary income

Gain on sale of real estate: ¥128mn

Employment adjustment subsidy: ¥218mn

■Extraordinary losses

Impairment loss: ¥100mn

Loss on valuation of investment securities:

¥180mn (First Cabin)

Loss on liquidation of subsidiaries: ¥70mn

Main TKP Group sales fell substantially due to precipitous decline in demand following the state of

emergency declaration. Despite reducing various costs, goodwill amortization caused losses at profit

lines from operating profit on down. However, EBITDA (our most emphasized metric) was in the black

thanks to the consolidation of Regus Japan.

*EBITDA is calculated as operating profit/loss plus depreciation, goodwill amortization, amortization of long-term prepaid

expenses, and amortization of intangible assets such as customer-related assets.

**Quarterly profit/loss attributable to owners of the parent

(Million yen）

Q1 Q1 YoY

Change(FY02/20) (FY02/21)

Sales 10,405 10,447 +0.4%

Gross profit4,562 2,744

-39.8%(43.8%) (26.3%)

SG&A2,475 3,712

+50.0%(23.8%) (35.5%)

EBITDA*2,383 367

-84.6%(22.9%) (3.5%)

Operating profit2,087 -968

-(20.1%) (-9.3%)

Ordinary profit1,053 -1,291

-(10.1%) (-12.4%)

Profit attributable to

owners of the

parent**

409 -1,471-

(3.9%) (-14.1%)

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7

Consolidated results for Q1 FY02/21 (Regus results shown separately)

Main TKP Group performance was severely affected by COVID-19, but the pandemic’s impact on Regus was

limited. Regus Taiwan was in the red at the operating profit level due to the recording of goodwill amortization

associated with the acquisition, but Regus Japan was in the black (as in the previous quarter) with solid results

absorbing goodwill amortization.

Notes: The main TKP Group refers to consolidated results minus figures for Regus Japan and Regus Taiwan.

EBITDA is calculated as operating profit/loss plus depreciation, goodwill amortization, amortization of long-term prepaid expenses, and amortization of

intangible assets such as customer-related assets.

Regus Japan operating profit factors in deduction of goodwill amortization and amortization of customer-related assets

Regus Taiwan operating loss factors in deduction of goodwill amortization (forex rate: TWD1 = JPY3.62)

(Million yen）

Q1 Q1 YoY change Q1 Q1

(FY02/20） (FY02/21） (FY02/21) (FY02/21)

Main TKP Group Main TKP Group Regus Japan Regus Taiwan

Net sales 10,405 5,693 -45.3% 4,456 297

Gross profit 4,562 1,149 -74.8% 1,547 47(43.8%) (20.2%) (34.7%) (16.1%)

SG&A2,475 2,321

-6.2%1,275 116

(23.8%) (40.8%) (28.6%) (39.1%)

EBITDA2,383 -828

-1,034 161

(22.9%) (-14.6%) (23.2%) (54.2%)

Operating profit or

loss

2,087 -1,171-

271 -68(20.1%) (-20.6%) (6.1%) (-23.0%)

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8

2,418 2,467 2,493 2,522 2,683

4,796 5,392 5,232 5,080

1,999 2,268 2,191 2,541 2,252

2,987

3,021 3,119 2,463

327 405 361

383 373

521

579 479

364

79

72 82 81 80

165

157 153

111

174 198 240

280 285

978

1,003 1,460

1,318

2,355 2,265 2,774 2,260 2,645

2,942

3,853 2,860

2,080

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1

Change in main expenses (consolidated）

Other

Consolidated Q1 FY02/21 (March–May): Main expenses

Rent and personnel expenses account for the greater part of expenses across the company, while advertising

expenses are extremely low due to the high ratio of repeat customers. Amortization (mainly goodwill) has

increased since the consolidation of Regus Japan. During Q1, personnel expenses decreased due to the temporary

closure of some facilities.

(Million yen）

Consolidation of

Regus Japan

Consolidation of

Regus Taiwanadvertising expense to

sales ratio

1.1%

Q1

FY02/19

Q2

FY02/19Q3

FY02/19Q4

FY02/19

Q1

FY02/20

Q2

FY02/20Q3

FY02/20

Q4

FY02/20Q1

FY02/21

Amortization

Advertising and

depreciation

Utilities

Personnel

Rent

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9

Location openings and closures in Q1 FY02/21

Opened six TKP facilities, two Regus facilities, and two joint facilities.

Closed nine TKP facilities as lease agreements came to an end.

(Six new facilities) (Two new facilities)

TKP Garden City PREMIUM

Yokohama Shin Takashima

(from April 2020)

TKP Garden City PREMIUM

Shinagawa

(from April 2020)

TKP Shinagawa Conference

Center New building

(from April 2020)

TKP Miyako City Osaka Tennoji

(from March 2020)

TKP Sapporo Ekimae Conference Room

(from March 2020)

*Regus opened in June 2020 (Q2)

TKP STAR Rental Meeting

Room Iidabashi 4-chome

(from April 2020)

TKP STAR Rental Meeting

Room Higashi Ginza

(from April 2020)

Regus Kyoto Shijo Karasuma

Business Center

(from March 2020)

Regus Takasaki

Business Center

(from April 2020)

SPACES Sendai

(from May 2020)

*TKP opened April 2018

(One new TKP facility,

one new Regus facility)

Joint openings

TKP Garden City: One facility

TKP Conference center: Five facilities

TKP Business center: One facility

TKP STAR rental meeting rooms: Two facilities

(Closed nine facilities)

GCP GCP

CC CC

STAR STAR

CC

SPACES

Regus

Regus

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10

Grade FY02/18 FY02/19 FY02/20 Q1 FY02/21

Garden City

PREMIUM

(GCP)

Locations 13 20 25 27

Rooms

Seats

137

12,650

223

21,184

300

26,227

315

27,581

Garden City

(GC)


Rooms

Seats

480

43,461

557

50,433

561

49,348

551

48,246

Conference

center

(CC)


Rooms

Seats

806

60,653

920

65,451

918

67,846

882

64,212

Business

center (BC)


Rooms

Seats

310

15,749

316

16,068

286

14,045

278

13,226

STAR rental

meeting rooms


Rooms

Seats

88

4,148

76

3,345

70

3,542

81

4,389

(Inside training

facilities）

LecTore, Ishinoya,

etc.

Locations 722

1,199

1052

2,358

1372

3,679

1372

3,679Rooms

Seats

TKP total

Locations 225 253 257 255

Rooms 1,843 2,144 2,207 2,179

Seats 137,860 158,839 164,687 161,333

m2 339,493 363,247 407,365 406,193

Number of meeting rooms, locations, and seats by grade (TKP)*We offer 400,000 m2 of office space in 255 facilities with five grades to meet different purposes, scales, and budgets.

*As of May 31, 2020. Figures have been retroactively adjusted following review of the grade of some locations. 122,873 tsubo

Temporary offices

in large, new

buildings

Banquet facilities in

large, older hotels

Temporary offices

in large, older

buildings

Temporary offices

in medium-sized,

older buildings

Temporary offices

in small, older

buildings

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11

2,605

993

3,003

803

2,541

420

31

1,144

62

1,041

92

383

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Impact of COVID-19 on the rental conference room business

Since March, and especially after the state of emergency declaration, many customers cancelled and postponed

their rental conference room bookings. Despite receiving a certain amount in cancellation fees, YoY rental

conference room sales fell significantly. On May 25, the state of emergency was lifted across the country.

Accordingly, demand for conference rooms has been recovering since June.

*Sales figures include room fees, options fees, and catering fees.

キャンセル料

会議室売上

Cancellation fees

Monthly Rental Conference Room Sales*(Million yen）

Cancellation fees

Cancellation fees

March

2019

March

2020April

2020

May

2020

April

2019

May

2019

Sales from

actual useSales from

actual useSales from

actual use

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12

KPI for the Rental Conference Room Business

Sales per square meter, the KPI for the rental conference rooms business,

fell substantially YoY on the impact of the state of emergency declaration.

*Sales figures include room fees, options fees, and catering fees

12,654

11,118

12,025 11,686

7,404

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

Q1 average Q2 average Q3 average Q4 average

Sales per square meter and conference room floor space

FY02/20 sales FY02/21 sales

FY02/20 floor space FY02/21 floor space

Monthly

sales/m2 (Yen)

Conference room

floor space (m2)会議室面積(坪）

12,235

14,080

11,647

9,758

8,713

3,741

100,000

120,000

140,000

160,000

180,000

200,000

220,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

March April May

Sales per square meter and conference room floor space

(Q1 only)

FY02/20 sales FY02/21 sales

FY02/20 floor space FY02/21 floor space

Monthly

sales/m2(Yen)Conference room

floor space (m2)

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13

14.7%

20.9%

39.3%

7.4%

0.9%11.8%

4.9%

GCP

GC

CC

BC

STAR

Accommodations / trainingfacilitiesOthers

Main TKP Group sales, by grade and service

(% of total）

Sales by grade

“Others” mainly represents restaurant sales and sales for transactions at facilities

other than those of the company.

GCP: Garden City PREMIUM, GC: Garden City, CC: Conference center, BC:

Business center, STAR: STAR rental conference rooms

Sales by service

“Options” mainly represents sales for the use of conference room equipment.

“Others” represents accommodations sales at facilities other than those of the company,

service fees, and cancellation fees.

Sales by grade

Sales by service

By grade, the ratio of conference center (CC) sales (mostly for training and exams) increased.

By service, “Others” sales rose due to cancellation fees.

33.4%

4.3%

2.6%7.0%

52.7%

Room rent

Options

F&B

Accommodations

Others

Q1 FY02/21

JPY5.7bn52.2%

9.7%

18.6%

12.1%

7.4%

Q1 FY02/20

JPY10.4bn

Q1 FY02/21

JPY5.7bn

Q1 FY02/20

JPY10.4bn

(% of total）

12.8%

26.4%

32.6%

6.0%0.6%

15.7%

6.0%

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14

TKP conference room usage breakdown

In COVID-stricken Q1, the use of conference rooms as venues for in-house training and

exams was high. Meanwhile, usage involving food and beverage such as parties fell

significantly.

Q1 FY02/21Q1 FY02/20

Meeting

(20.7%）

Training

(17.8%）

Seminar

(12.2%）

Recruiting

(18.4%）

Exam

(2.9%）

Party

(4.9%）

Conference

(3.0%）

Other

(20.1%）

Meeting

(17.3%）

Training

(26.4%）

Seminar

(9.6%）

Recruiting

(19.7%）

Exam

(4.2%）

Party

(0.5%）

Conference

(0.7%）

Other

(21.6%）

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15

*As of May 2020 *Workstations (WS): Number of seats at Regus facilities

Brand FY02/18 FY02/19 FY02/20 Q1 FY02/21

facilities 2 2 4 5

WS 1,144 1,144 2,483 2,784

facilities 75 81 100 102

WS 12,212 13,203 15,672 16,263

facilities 5 5 5 5

WS 165 165 165 161


WS 3,048 3,941 4,363 4,336

facilities ‐ 2 2 2

WS ‐ 667 667 667


WS 1,462 1,652 1,652 1,652

Regus(Japan）

facilities 118 132 156 159

WS 16,569 18,453 22,683 23,544

㎡ 87,860 98,052 120,035 124,343

Regus(Taiwan）


WS 1,462 2,319 2,319 2,319

㎡ 11,809 20,368 20,368 20,368

Large community-

type rental offices

High-grade

rental offices

Rental offices

adjacent to public

transportation

Reasonably priced

unmanned rental

offices

Large community-

type rental offices

High-grade

rental offices

Total： 144,711 m2

(43,775 tsubo)

Regus: number of facilities and workstations by brandWe offer over 140,000 m2 of office space in 172 facilities with four brands in Japan and two in Taiwan to serve specific needs

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16

Reach cruising speed at

around 18 months

Reach the breakeven point at

around 8 to 12 months

Occupancy

rate of 45%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

-80,000,000

-30,000,000

20,000,000

70,000,000

120,000,000

Typical occupancy rates and profit margins after opening

Regus’ business model

On average, Regus facilities break even 8–12 months after opening and reach cruising speed after around 18

months. While it takes longer for these facilities to turn a profit compared to rental conference room facilities,

they employ a sublease-based recurring revenue model. We can expect them to achieve stability in the long term

(after 10+ years) and maintain high profitability that is relatively unaffected by business conditions.

By comparison, TKP has lower initial costs than Regus and reaches the breakeven

point more quickly. Through joint launches, we can achieve profitability faster for

facilities as a whole.

Rent incurred

Takes an average of

three to four months

to open a location

after concluding a

contract

Location opens

High occupancy rates maintained over the long term

Occupancy

rate of 65%

Time elapsed after opening

CBIT margin (operating profit margin of location) Occupancy rate

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17

Impact of COVID-19’s spread on Regus

Regus’ customer contracts, compared to those for rental conference rooms, tend to be long-term

(12–18 months), with facilities serving as satellite offices in cases. Since March, sales have been

essentially unaffected by the spread of COVID-19.

1,351 1,386 1,398 1,416 1,458 1,459 1,457 1,454 1,460 1,511 1,491 1,453

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May.

Regus’ monthly sales (FY02/21)

Regus Japan Regus TaiwanFY02/20 FY02/21

106

(Million Yen）

Start of consolidation for

Regus Taiwan

Start of consolidation for

Regus Japan

100 9898 102

96

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18

Regus (Japan) performance indicators

Occupancy rate is a KPI for Regus. The occupancy rate dipped in May due to: (1) a decrease in

preliminary visits and contracts due to the government’s stay-at-home request, and (2) natural

decline as contract periods for existing customers came to an end. Since June, preliminary visits

have been on a recovery trend.

82.3% 82.9% 83.6%85.2% 86.2% 86.3%

83.6% 82.8% 82.9% 83.2% 83.1%81.5%

44.7%46.7%

48.9%46.3%

48.7% 49.3%

60.6%

66.9%68.6%

71.7%72.4%

72.2%

0.0% 0.7%

6.8%5.2%

10.3%8.7%

14.7%

19.2%

23.2%

27.8%

31.9% 31.4%

75.8%76.2%77.1%77.4%77.2%

74.4%74.2%74.3%74.5%75.6%76.0%74.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%


May. 2018 and earlier Jun. 2018 to May. 2019

Jun. 2019 and later Overall average

0

5,000

10,000

15,000

20,000

25,000


May. 2018 and earlier Jun. 2018 to May. 2019 Jun. 2019 and later

(Seats)

損益分岐稼働率

(FY02/21) (FY02/21)

Occupancy rate by year openedWorkstations by year opened

Note: As Regus Taiwan is small in scale, the figures above are

calculated using Regus Japan only.

ｘ

19

Sales by Regus (Japan) brand and service

(Sales Composition） (Sales Composition）

Sales by brand Sales by service

By brand, Regus accounts for about 75% of Regus Japan sales. SPACES locations, which are about four

times as large as those of Regus, devote roughly 75% of floor space to rental offices and the remaining

25% to coworking space. By service, revenue from subleasing rental offices accounts for the majority of

sales.

Q1

FY02/21

JPY4.5bn

Q1

FY02/21

JPY4.5bn

*Non-office represents meeting room usage fees and options fees.

SPACES

(11.6%)

Regus

(74.6%)

Regus Express

(0.6%)

OpenOffice

(13.2%)

Office

(76.6%)

Non-office

(23.4%)

ｘ

20

(Million yen）FY02/20 Q1 FY02/21 YoY change

Current assets 16,854 17,374 520

(Cash and deposits） 9,131 12,745 3,613

(Accounts receivable） 4,114 1,793 -2,320

Non-current assets 100,618 100,007 -611

(Property, plant and equipment） 39,049 39,154 105

(Intangible fixed assets） 44,875 44,196 -678

Total assets 117,473 117,381 -91

Current liabilities 20,221 20,480 259

Non-current liabilities 61,448 61,467 18

Total liabilities 81,670 81,948 277

(Interest-bearing debt） 65,747 66,541 793

Total net assets 35,802 35,433 -369

Total liabilities and net assets 117,473 117,381 -91

Equity ratio 30.4% 29.3% -1.1pp

Summary of consolidated balance sheet

As of the end of Q1, the TKP Group had ¥12.7 billion in cash and deposits. At present, our cash and

deposits and fundraising capacity exceeds ¥35 billion, well over our annual working capital needs.

ｘ

21

Outlook

ｘ

22

Pursue business selection and concentration

Maintain sufficient working capital and reduce fixed costs

Respond to future changes in demand

Management policies until the COVID-19 pandemic subsides

In line with the spread of COVID-19, we determined our general approach toward the three policies

we outlined for FY02/21 and are already implementing measures accordingly.

Secured a total of ¥35 billion in cash and deposits, and fundraising capacity

Suppressed personnel expenses, including through voluntary reductions in executive compensation

(May–July 2020)

Under the state of emergency declaration, we aimed to differentiate peripheral businesses through selection and

concentration, and decided to suspend or reduce operations at non-core businesses as appropriate. Operations have

resumed for the most part with the lifting of the state of emergency, yet some facilities were closed permanently.

We will continue to focus on our core flexible workspace business moving forward.

The COVID-19 pandemic has created new demand such as for spaces to hold examinations, host

shareholders’ meetings, and deliver webinars. We will continue to enhance new services around

the keywords “remote” and “decentralized.”

ｘ

23

Both TKP and Regus employ various types of contracts to minimize risk. Almost all conventional office contracts

are fixed-term lease agreements, but for many of our facilities, we conclude standard lease agreements that can be

canceled with six months’ notice. Variable rent, which accounts for about 40% of our facilities, also helps to

suppress rent risk.

Analyzing the Group’s real estate risk

Contract type Main characteristics Rent risk

Outsourcing

agreementNo fixed rent

94 facilities

(36.9%）

11 facilities

(6.9%）

Standard lease

agreement

Contract can be cancelled with

six months’ notice

56 facilities

(22.0%）

84 facilities

(52.8%）

Fixed-term lease

agreement

Many restrictions on cancelling

the contract prematurely

97 facilities

(38.0%）

64 facilities

(40.3%）

Ownership No fixed rent８ facilities

(3.1%）- -

(Japan）

Fixed rent

56.6%

Variable rent

43.4%Fixed rent

60.7%

Variable rent

39.3%

(Japan）

Very low

Low

Medium

(1) Rent risk based on early cancellation conditions

(2) Rent risk based on rent payment structure

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24

Core businesses

Faced with the state of emergency declaration, we promptly implemented business selection and

concentration. We have mostly resumed operations at non-core businesses that had been suspended and

are working toward changing their business formats based on the shape of the post-COVID economy.

Office space

(rented by the month)

Office space

(rented by the hour)

Non-core

businesses

Non-core

businesses

Pod hotels1

APA Hotel1

New city

(business)

hotels

Hot spring inn

City

hotel

Accommodation

and training

facilitiesEvent production

Medical

academic

conferencesCall centers

Prepared

lunchboxes

Staffing

service

1. Operated as a franchise business

Pursue business selection and concentration

ｘ

25

Overview of trends in peripheral businesses

Business/company name Under state of emergency Current status

APA Hotel

*operating as a franchise

Continued regular operation.

Maintained high occupancy rates

although at low pricing

Continuing regular operation.

Average daily rate is gradually rising

TokiwakenScale greatly reduced and

operations suspended.

Adjusted orders

Resumed limited operations providing bento

lunches for conference room users

LecTore; Ishinoya Partial closures

Operations resumed.

Some locations closed (Hakata Hisayama

Onsen）

Shinagawa Haizennin

Shokaijo

Dispatching to hotel banquet

facilities declined.

Dispatching to hotels accepting

COVID-19 patients with light

symptoms increased

Demand for hotel banquet dispatching

recovering.

Also dispatching to Escrit Inc.

Azur Takeshiba Operated at a reduced scale Resumed regular operation

TKP CommunicationsContinued regular operation.

Increased call center demand from

food delivery clients

Continuing regular operation.

Robust call center demand from food

delivery clients continues

First Cabin SuspendedNagoya location closed.

Resumed operations at Ichigaya

Majors Operated at a reduced scaleTransferred head office to TKP.

Operating on a limited scale

TKP Medicalink Regular operation Regular operation

ｘ

26

3. Measures in the hotel and accommodations business• Check-in/check-out: Measures to prevent infection from droplet

transmission, measures to limit crowding

• Meals: Prohibit buffet-style dining in principle, develop menus based

around individual servings, ensure social distancing

• Bathing facilities: Measures to limit crowding

• Clean with EPA detergent and disinfectants, provide disinfecting alcohol

solutions, ensure proper air circulation

We have established company guidelines to combat COVID-19

and give utmost priority to safety and security in the COVID era.

Company guidelines to combat COVID-19

1. Measures at all businesses• Manage employee health, regularly disinfect facility interiors,

have employees engaged in customer service wear masks

2. Measures in the flexible workspace business• Use air purifiers and control humidity inside rooms

• Recommend layouts informed by social distancing principles

• Manage air circulation to avoid creating closed spaces

• Disinfect conference halls, thoroughly circulate air,

avoid concentrated gatherings

• Prohibit buffet-style dining in principle, propose solitary dining

and (bento-style) individual servings.

“School” layout (120 people) Dispersed layout (60 people)

ｘ

27

As COVID-19 spreads, in addition to our traditional optional services, we have launched services

that add value through infection prevention measures to provide safe environments.

New products at core businesses

Training facilitiesRental meeting

rooms

Banquet halls Seminars

Main conference room equipment up to the present

Wireless

routers

Microphones Projectors

Whiteboards

Screens

Various uses of company conference rooms

Plastic screens to prevent

droplet transmissionPlastic sheets at reception desks

Disinfectant spray

for microphones

Thermometer guns

Ziaino air purifiers

Face shieldsThermography

Partitions

A strong lineup of equipment to counter COVID-19

AI Thermography

ｘ

28

Changes in demand at core businesses

Sales of live webcast packages for

general meetings of shareholders

One-stop support from specialized staff that includes rehearsal, day-before

and day-of preparation, and provision of the necessary equipment for live

streaming and on-demand broadcasting.

Live/on demand broadcasting (image)

Increase in exam hall demand

Since June, we have enjoyed significant demand for use of our facilities as exam halls (for the Eiken exam, etc.)

due to the difficulty of holding exams on university campuses. There has also been an increase in use as venues

for general meetings of shareholders compared to a typical year, and sales of live webcast packages have also

been robust. The shift to decentralized workspace is accelerating, evidenced in part by increasing use of

conference rooms as studios (packaging web seminars with streaming service).

In June 2020, the ratio of usage of TKP rental

conference rooms as exam halls was up 2.2x YoY.

Increasing use as studios

0

50

100

150

200

250

300

350

3月 4月 5月 6月

FY02/21 webcast/teleconference orders

月別問い合わせ件数月別予約数Monthly inquiries Monthly reservationsMonthly reservationsMonthly inquiries

March April May June

ｘ

29

Changes in demand at core businesses

We secured an agreement to provide support centers for rent relief benefits application at around 60

of our directly managed facilities across Japan for a period of approximately two months starting

July 15.

We have leased rooms at roughly 60 of our directly managed facilities across Japan

as support centers for those applying for rent relief benefits

Rent relief benefits processing businessRecruit Holdings Co., Ltd. was awarded a contract and formed a consortium of five companies:

Deloitte Tohmatsu Consulting LLC, Toppan Printing Co., Ltd., BELLSYSTEM24, Inc., TMJ, and newsbase, inc.

newsbase, inc. is responsible for setting up and operating support centers for offline applications.

The TKP Group entered an agreement with the company for the provision of application support venues for

those applying for rent relief benefits (with a start date of July 15). We have leased rooms in around 60

directly managed facilities (approximately 16,500 m2) for roughly two months.

Secured orders at locations across Japan

through a single agreement

subcontracted

ｘ

30

To date, office space has been leased under long-term (essentially permanent) arrangements

requiring the payment of fixed rent, large deposits, and funds for interior work. The future will see

an increase in flexible agreements that focus on office use, when and in the quantity needed.

Note: Figures assume the market for office space in the Tokyo metropolitan area has a value of

¥20 trillion (estimates based on research by Mitsui Fudosan, JLL, and CBRE)

¥200 billion (1%) as of 2019 JLL forecast: ¥6 trillion (30%) by 2030

FIXFLEX

FIXFLEX

Scale of the flexible workspace

market in the Tokyo metro area

Office building

Lease agreements

(long-term, fixed)

Temporary use

(flexible)

Affected by the coronavirus

A major business

opportunity for TKP

Future

Increasing office

vacancies in central Tokyo

The office redefined for

flexibility

Office building

Cancel

Cancel

Cancel

Sourcing Operation

Workspace redefined as a result of COVID-19

ｘ

31

Increase in demand for satellite offices

Vacancy rates in city centers are increasing.

At the same time, the trend toward renting less office floor space is accelerating.

Cases of companies utilizing satellite offices are on the rise.

The average vacancy rate of the Tokyo business area (five central wards: Chiyoda, Chuo, Minato, Shinjuku,

Shibuya) in June was 1.97 %, an increase of 0.33pp from May. In June, a new building was completed with

some space left unfilled, and existing buildings were affected by contract cancellations as companies reduced

floor space. The number of new contracts also fell sharply during the month such that unused floor space

increased by roughly 86,000 m2.

The average vacancy rate of the Tokyo business area has risen for the fourth consecutive month

Source: Miki Shoji Co, Ltd., Latest Office Building Market Report (July 2020)

On June 6, Fujitsu officially announced that it will halve its office space by March 31, 2023, including for group

companies in Japan. It owns about 60 offices nationwide and leases about 380 offices. It plans to halve its total

floor space of 1.2 million m2 over three years. The company will shift to telework for most of its employees and

offer a new telework subsidy of ¥5,000 per month.

In response to the COVID-19 pandemic, Fujitsu began recommending working from home for its roughly 80,000

employees in Japan. Excluding factories, the company is still working to reduce the ratio of employees commuting to

work to a maximum of 25%. It plans to revise its former work style system, which was premised on commuting.

In an online press conference on the 6th, Fujitsu’s Hiroki Hiramatsu (Corporate Executive Officer) emphasized the

company would “promote work styles that are not bound by time or place,” indicating the company intends to give

employees the flexibility to choose where and when they work.

The company will gradually reduce its fixed offices throughout Japan so that employees can work flexibly from home.

Specifically, it plans to set up core offices and satellite offices in each region of the country, and make all

workstations freely available to employees. It will also expand the scope of the “super flex system,” which eliminates

core hours, to all group employees in Japan.a

Fujitsu announces it will reduce office space by halfJuly 6, 2020 (The Nikkei Morning Edition)

ｘ

32

Location opening plans

Workspace will transition toward a “hub and spoke” model in which companies maintain a head office and

multiple satellite offices. In addition to areas with many head offices, our group targets the areas around

“hub” stations— which connect residential areas to the city center—as candidates for new openings.

Areas we have focused on up to

the present

Areas in which we will

increase openings

赤坂・六本木

市ヶ谷・四谷

Areas for particular focus:

◇Tokyo/Shimbashi area

◇Shinagawa area

◇Shibuya area

◇Shinjuku area

◇Akasaka/Roppongi area

Ichigaya/Yotsuya

Akasaka/Roppongi

ｘ

33

Formed capital and business alliance with Escrit Inc.

On July 15, 2020, we signed a capital and business alliance with Escrit Inc. (TSE1: 2196), which operates a bridal

business. We plan to acquire 1.7 million shares from Escrit founder Hiroshi Iwamoto (Blocks Co., Ltd.) for a price

of ¥334.4 per share (total value of ¥568 million), which will yield a shareholding ratio of 12.59%.

We will provide details at a joint

press conference to follow

Joint development of banquet halls targeting

corporate customers in the COVID era

Outline of the business alliance

(1) TKP will help acquire corporate customers for use of Escrit’s

banquet services during the weekdays.

(2) TKP will outsource new openings, renovations, maintenance

and repair work, and property management of our group’s

facilities to Shibutani & Co. (Escrit’s consolidated subsidiary),

which provides comprehensive real estate solutions.

(3) The companies will jointly develop the infection prevention-

based business including satellite offices employing the anti-

bacterial and anti-viral interior construction technologies held

by Container Bank and Shibutani & Co.

ｘ

34

A model of fully optimized office building use

Moving forward, we will develop large compound locations incorporating our group’s

many services and brands. We also plan to form busines tie-ups with bridal companies

such as Escrit to leverage unused space at their facilities on weekdays.

Break buildings into zones (upper, middle, lower) and optimize

usage by zone to limit close-quarters contact (i.e., in elevators)

Large compound location

レンタルオフィス(リージャス）

ウェディングバンケット

Up

pe

rM

iddle

Low

er

APAホテル

ウェディングバンケット

Up

pe

rM

iddle

Low

er

Weekends

and holidaysWeekdays

ｘ

35

Our mission for FY02/21 and the AAA strategy

Anytime, Anywhere

for All workers

Become Japan’s leading corporate group in the flexible workspace

market and an infrastructure company that supports corporate

work style reform

ｘ

36

Appendix

ｘ

37

Corporate profile (as of May 31, 2020)

Name

Businesses

Executives

Headquarters

Established

Representative

director

Capital

Listed

Employees

TKP Corporation

Flexible workspaces

Food and beverage/banquets

Hotels and resorts

Event production

BPO

Takateru Kawano Representative director/CEO

Shingo Nishioka Director/COO

Koji Nakamura Director/CFO

Haruo Tsuji Director

Kohei Watanabe Director

Shinichi Saijo Director

Mark Dixon Director

Yoshinori Sogabe Standing auditor

Takanori Shige Auditor

Takayuki Hayakawa Auditor

TKP Ichigaya Building 2F

8 Ichigaya-Hachimancho, Shinjuku-ku, Tokyo

August 15, 2005

Takateru Kawano

¥12 billion (as of May 31, 2020)

March 27, 2017: TSE Mothers (3479)

1,680* (as of May 31, 2020)*Excluding part-time employees

Convenistation Co., Ltd.

TKP Properties Corporation

TKP Communications Corporation

Tokiwaken Corporation

TKP Medicalink Corporation

Regus Taiwan(Collective name for the 13 entities operating the

Regus business in Taiwan)

Regus Japan(Collective name for the 55 entities operating the

Regus business in Japan)

TKP Corporation

Majors Inc.

Shinagawa Haizennin Shokaijo Y.K.

TKPSPV 1–4 / 6–10

ｘ

38

2017

Listed on the TSE Mothers exchange

Opened Azur Takeshiba in Minato-ku, Tokyo

Began providing Cloudspace, a space matching service

Majors Inc. became a subsidiary

2018

Opened CIRQ Shinjuku, a large multipurpose event hall

Opened LecTore Hayama Shonan Kokusaimura, a large resort training hotel

Opened APA Hotel TKP Sendai Ekikita

Number of directly managed meeting rooms exceeded 2,000

2005Opening of first facility, TKP Roppongi Kaigishitsu

TKP Corporation established in Hamamatsu-cho, Minato-ku, Tokyo

2006Expanded into the Hokkaido, Kansai, and Kyushu regions

Monthly sales exceeded ¥100 million

2007 Expanded into the Tohoku and Tokai regions

2008Registered as a Class 2 travel operator

Established Convenistation Co., Ltd. (consolidated subsidiary)

2009 Established TKP Properties Corporation (consolidated subsidiary)

2010

Established current TKP Communications Corporation (consolidated subsidiary)

Established TKP New York, Inc. (consolidated subsidiary)

Expanded into the Chugoku region

2011 Opened TKP Garden City Shinagawa (banquet hall facility inside a hotel)

2012 Number of directly managed meeting rooms exceeded 1,000

2013

Established Tokiwaken Corporation (consolidated subsidiary)

Joined Keidanren (Japan Business Federation)

Expanded into the United States (New York)

2014Registered as Class 1 travel operator

Opened APA Hotel TKP Sapporo Ekimae

2015 Opened TKP Izu Nagaoka Onsen Villa Garden Inshinoya

History

2019

Regus Japan became a subsidiary

Opened APA Hotel Osaka Umeda (Osaka)

Shinagawa Haizennin Shokaijo Y.K. became a subsidiary

Increased capital through public offering

Regus Taiwan became a subsidiary

A company that revitalizes and redistributes space

2005TKP Corporation

established

2017Listed on the TSE

Mothers exchange

2019

Regus Japan

became a subsidiary

2005 20212006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0.180.75

2.032.65 3.39

3,025.99

8.29

11.65

14.16

17.94

21.97

28.68

35.52

54.34

(Billions of yen)

2020

Opened APA Hotel Fukuoka Tenjin Nishi in Fukuoka

Established guidelines to fight COVID-19

Opened APA Hotel Ueno Hirokoji in Tokyo

Entered a capital and business alliance with Escrit Inc.

ｘ

39

Shareholder composition

70.1%

4.0%

12.4%

8.0%

3.4%0.7%

1.5%

Shareholder distribution

Takateru Kawano (including asset management company)

Individuals and others

Financial institutions

Japanese corporations

Foreign investors

Brokerage firms

Treasury stock

59.8%

10.9%

10.2%

7.9%

7.9%

2.0% 1.3%

Shareholder distribution

Takateru Kawano (including asset management company)

Individuals and others

Financial institutions

Japanese corporations

Foreign investors

Brokerage firms

Treasury stock

Issued shares: 33,171,600Shareholders: 2,909

As of February 29, 2020As of February 28, 2019

Issued shares: 38,056,985Shareholders: 10,837

ｘ

40

Flexible Workspace(Rental meeting rooms, hotel banquet facilities,

serviced offices, co-working spaces)

Event

ProductionBPO

Hotel/

Accommodation

and Training

Food &

Beverage/

Banquet

Business areas

In the mainstay flexible workspace business, TKP provides temporary office space to companies.

ｘ

41

Business model and sourcing strategy

Real estate owners Corporate users

Revita

lize

sp

ac

e

Secure rental income

Utilize vacant properties

Reduce rent burden

Reduce CAPEX

One-stop booking of office

space across Japan

Flexible workstyles

TKP and Regus’ sourcing strategy is to complement each other’s strengths and

pursue joint location openings. By doing so, we can advance into areas not covered by TKP

while opening locations of a size Regus could not achieve on its own.

Se

ll in s

ma

ll lots

(sp

ac

e s

ha

ring

)

Open large facilities concentrated

around major stations in major

cities

Spread locations all over Japan

including in regional areas and

around airports

Regus’s sourcing strategy

TKP’s sourcing strategy

Joint openings

Share costs of operating facilities

Possible to operate as a TKP facility

until Regus occupancy rate rises

ｘ

42

Currently, the Regus brand is essentially unaffected by the novel coronavirus pandemic. Except for large banquet

facilities, TKP’s existing conference room spaces can also be repurposed into distributed offices, earning revenue

even amid the corona crisis. Large hotel banquet facilities, which are most affected, account for only around 6% of

total sales.

Repurpose space to create offices in high demand even amid the Corona pandemic

TKP brands

High-grade

Long-term

Rental meeting rooms, hotel banquet facilities Serviced offices and co-working spaces

Short-term

Budget-priced

Garden City

Large hotel banquet facilities and

banquet facilities in office

buildings

Garden City PREMIUMMainly in new and relatively new

buildings. Highest grade banquet

facilities in office buildings

Conference Center

Large office building facilities

suitable for conferences and

training

Business Center

Mid-sized office building facilities

suitable for meetings and training

STAR rental meeting

rooms

Small office building facilities for

meetings and training

Entrepreneurial communities

Large serviced offices

High-grade serviced offices

available when needed

Unmanned rental spaces in good

locations provided economically

Regus brands (in Japan)

5 locations 107 locations

47 locations

27 locations

55 locations

80 locations

43 locations

37 locations

No negative

impact

Small negative

impact

Major negative

impact

Negative

impact

Note: Numbers of locations are in Japan as of May 31, 2020.

ｘ

43

Sapporo

Obihiro

Aomori

Sendai

Morioka

Niigata

Koriyama

Mito

Nagano

Karuizawa

Hachinohe

Akita

Tokyo

ChibaHayama

Utsunomiya

Kawasaki

Yokohama

Hamamatsu

Hakone, Yugawara

Atami

Izu

Matsumoto

Kobuchizawa

ToyamaKanazawa

NagoyaKyoto

Shiga

Osaka

KobeHimeji

OkayamaHiroshima

Yamaguchi

Takamatsu

MatsuyamaKokura

Hakata,

Tenjin

Oita

Kumamoto

Miyazaki

Kagoshima

Naha

Nagasaki

TKP facilities Regus Japan facilities

Omiya

TKP Group network

Facilities Seats (seats in TKP conference rooms +

workstations at Regus facilities)

Contracted floorspace

427 187,196

550,720

facilitiesseats

m2

As of May 31, 2020

The TKP Group has an extensive network of temporary office space in Japan. We are expanding

our amount of flexible workspace, centering on urban areas.

Domestic target for 2030:

approx. 1.4 million m2

(approx. 1,500 locations)

As of May 31, 2020

As of May 31, 2020

ｘ

44

Usage of TKP rental conference rooms

FY02/20 usage breakdown (by sales)

円グラフ予定

Meeting

(23.2%）

Training

(15.3%）

Seminar

(14.2%）Recruiting

(10.4%）

Exam

(5.8%）

Party

(5.3%）

Conference

(3.8%）

Others

(22.0%）

ｘ

45

Global collaboration with IWG (CEO: Mark Dixon1; listed on the London Stock Exchange)

IWG provides workspaces globally under the Regus brand and is the overwhelming global leader in the flexible

workspace market. Regus members are free to use the business lounges at all locations, which number more

than 3,300.

1. Mark Dixon, IWG’s CEO, is also an outside director at TKP.

2. Figures are for FY12/19.

1,100+

cities

Global network

3,388+

locations

110+countries/

regions

Diverse brands

2.5mnmembers

Robust Group performance

Sales2:

￡2,653mn(Approx. ¥380.7bn)

EBITDA2:

￡428mn(Approx. ¥61.4bn)

Operating

profit2:

￡176mn(Approx. ¥25.3bn)

Europe, Middle East,

Africa

Approx. 1,100locations

UK

Approx. 320locations

Asia Pacific

Approx. 690locations

Americas

Approx. 1,300locations

ｘ

46

Accommodation/training facilities operated by TKP ( As of May 31, 2020)

Facility Guest rooms Opened Building Land

APA Hotel TKP Sapporo Ekimae 203 August 2014 Leased ―

APA Hotel TKP Sapporo-Eki Kitaguchi EXCELLENT 108 August 2016 Leased ―

APA Hotel TKP Nippori Ekimae 278 December 2016 Owned Owned

APA Hotel TKP Tokyo Nishikasai 124 December 2017 Leased ―

APA Hotel TKP Keikyu Kawasaki Ekimae 143 June 2018 Owned Leased

APA Hotel TKP Sendai Ekikita 306 October 2018 Owned Owned

APA Hotel Osaka Umeda 162 May 2019 Owned Leased

APA Hotel Hakata Higashi Hie Ekimae 206 February 2020 Owned Owned

APA Hotel Fukuoka Tenjin Nishi 268 May 2020 Owned Owned

APA Hotel Ueno Hirokoji 215 July 2020 Owned Owned

LecTore Atami Koarashi 20 November 2013 Leased ―

LecTore Hakone Gora 23 January 2014 Leased ―

LecTore Karuizawa 14 July 2014 Leased ―

LecTore Atami Momoyama 31 July 2014 Leased ―

Azur Takeshiba (managed on contract) 122 April 2017 Leased ―

LecTore Yugawara 108 May 2017 Owned Owned

LecTore Hayama Shonan Kokusaimura 160 April 2018 Owned Owned

LecTore Takamatsu Airport

(banquet hall rental/ business alliance)124 June 2018 ― ―

LecTore Yatsugatake (managed by a third party) 32 November 2018 ― ―

LecTore Toyama Jiyukan (managed by a third party) 40 March 2018 ― ―

LecTore Hakata Hisayama Onsen (Closed) 44 June 2019 Owned Owned

Izunagaoka Villa Garden Ishinoya 22 January 2015 Leased ―

First Cabin TKP Nagoya Station (Closed) 199 September 2017 Owned Owned

First Cabin TKP Ichigaya (Reopened on July 1st) 165 November 2018 Leased ―

ｘ

47

This English translation is only intended for reference. In cases of discrepancies, data

contained within the original Japanese version shall take precedent over data

contained herein.

This material has been prepared to improve the understanding of our Group, and no

information contained herein shall be construed as solicitation for purchase or sale of

our shares. This material has not been prepared for investment advisory purposes.

Forecasts and related information contained in this material are estimates which were

based on information available to the TKP group at the time when the material was

prepared. They will be impacted by uncertainties including market conditions and future

business progress.

Please be aware that the actual results and other information may differ significantly

from what is stated in this material.

Important Notice

Documents

TKP Corporation