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Consolidated business performance in the 43rd fiscal term: Despite declines in revenue and profit due to external factors, our term-end occupancy rate registered a record high level, and we also increased the dividend by 40-yen year on year

Our consolidated business performance for the 43rd fiscal term (the fiscal year ended April 30, 2019) saw net sales of ¥328,524 million (a 0.0% decrease from the previous term). Operating income was ¥15,606 million (a 20.7% decrease from the previous term), ordinary income was ¥16,057 million (a 21.1% decrease from the previous term), and profit attributable to owners of parent was ¥10,832 million (a 13.9% decrease from the previous term), marking declines in revenue and profit.

In the construction business, demand from landowners wishing to utilize land through construction of apartment buildings and rental condominiums remained firm as owning land by itself does not produce earnings but does give rise to a tax burden. However, the number of orders on the books and the volume of completed construction was flat, impacted by external factors such as a stricter stance on lending at financial institutions, and increases in the price of construction materials also affected profit, leading to declines in revenue and profit.

Meanwhile, the real estate leasing business saw revenue and profit growth due to an increase in the number of managed properties. Construction orders were considered carefully based on demand, enhancement of Facilities Search Home Mate Research functions, and other tenant promotion measures were successful, and our occupancy rate at the end of the term reached a record high level.

Despite the decline in revenue and profit in our consolidated business performance, we decided to pay an annual dividend of ¥220 per share, ¥40 more than in the 42nd fiscal term, in response to the support of our shareholders.

Management strategy for the 44th fiscal term:
Combining both offense and defense

In this 44th fiscal term (the fiscal year ending April 30, 2020), Capture the Urban Market will be our offensive strategy and Strengthen Management Quality will be our defensive strategy. With this as our management slogan, we will focus on rebuilding our base for long-term stable growth by combining these two strategies.

Offensive strategy: More focus on capturing the urban market

Branch and personnel strategy: Opening new branches and relocating existing branches

As our offensive strategy, we will focus more on capturing the urban market in construction orders. We have established the Tokyo and the Kansai metropolitan areas as our key strategic areas. In the Tokyo metropolitan area, which is the most important, since the opening of new sales branches for handling construction orders has progressed steadily so far, we will increase the number of sales personnel going forward and spur on strategic sales. We are implementing a plan for opening new branches in the Kansai metropolitan area as well.

At the same time, we are also resolutely relocating existing branches. We need to withdraw existing branches from regions with low population density and relocate them in regions with high population density, but we have not made enough progress in this regard.

Consequently, we will promote the opening of new branches and the relocation of existing branches in tandem as a set.

Product strategy: One-room apartments and high value-added rental condominiums

RC・Univaly・RROCEED
RC・Univaly・RROCEED

To succeed in the urban market, we are aware that in addition to our branch strategy, we also need products that meet urban needs. Therefore, we will work to expand strategic urban products, expand high valueadded products, and improve the specifications of existing products.

In terms of strategic urban products, we are working on the development of products with enhanced quality and variation in design and interior specifications and products with more variation in floor plans. In particular, as a metropolitan area-only floor plan, we will also focus on so-called one-room apartments, in which Token Corporation has not previously been involved to any significant degree. We will aim to differentiate our one-room apartments from those of other companies with the development of a more up-market one-room apartment.

We will also focus efforts on enhancing high valueadded products. We will increase value added through support for IoT and renovation of furnished properties, which will translate into an increase in profit and stable, long-term tenancies. We aim to win orders for high value-added products not only in Tokyo, Osaka, and Nagoya, but also in the main cities, such as ordinancedesignated cities.

We will leverage product features to increase orders by developing products that cater to the diverse needs of owners and tenants, such as one-room and high value-added products, and using the right product for the right area.

Defensive strategy: Strengthening management quality

Rigorous construction cost management

As our defensive strategy, we will promote measures to strengthen management quality. In the current environment, it is not easy to build up sales. Therefore, we will strive for rigorous cost management, particularly construction costs, as an area where we are able to make a start.

Our buildings boast high earthquake-resistance, and we are proud to be top-class within the industry. This high performance is backed by the strength of the framework, and we have patents for this technology. We have continued working to increase earthquake-resistance with our advanced technical capabilities, including our proprietary seismic frame (patent acquired) and the use of our proprietary foundation construction using steel underground beams. We plan to rigorously manage the supply chain by integrating products and improving logistics to reduce waste without compromising building quality.

Ensuring appropriateness of operations: Internal inspections

Internal inspections

We are also making every effort to ensure the appropriateness of our operations.

Firstly, in our external sales activities, we already implement rigorous screening, taking into account factors such as location. Specifically, before accepting construction orders, we determine demand for housing and other factors and establish sales prohibited areas, sales promotion areas, and case-by-case sales appraisal areas, carry out fair rent appraisals, and confirm financing in advance. Going forward, we will continue to ensure rigorous preliminary screening.

In addition, internally, the Business Supervision Department at our headquarters already has a checking function in the consistent appraisal of business plans for rental housing. Before the establishment of the Business Supervision Department, the appraisal of business plans was entrusted to the sales division involved. However, the current system functions appropriately without major errors occurring thanks to the appraisals by an internal but independent department. In the 43rd fiscal term, internal inspections of a large number of branches were conducted in collaboration with the Business Supervision Department’s branch offices. Furthermore, surprise inspections were conducted with the goal of correcting and preventing misconduct and improper operations and ensuring compliance and internal rules. We will also conduct inspections of branches in the 44th fiscal term.

Further use of IT in operations

While we have made progress in the automation of our plants, there is still room for promoting the use of IT in operations at support divisions. By using IT, we will reduce routine work, improve operational efficiency, shift our employees to high value-added work, and create a leaner organization. In addition, we will use IT more widely in the drafting of management strategies to execute highly reliable strategies.

In the 44th fiscal term, we will roll out strategies that combine both offense and defense in the ways outlined above.

Nagoya Touken World, the Nagoya Sword Museum, under preparation as new business: Conservation and passing on of cultural heritage unique to a company that conserves and passes on Japan’s land

Nagoya Touken World
Nagoya Touken World

In the 44th fiscal term, we will also focus our efforts on new business. In June 2020, we plan to open Nagoya Touken World, the Nagoya Sword Museum, which will exhibit many swords, suits of armor, and weapons, on a site next door to the recently opened Sakae Tower Hills. Nagoya Touken World will be one of the largest sword museums in the world. Ahead of its opening, we established a virtual sword museum website called Touken World in November 2018, to foster a sense of anticipation for our museum business.

Japanese swords are valuable cultural heritage and even among our National Treasures, have a significant presence in terms of their large number. Export of National Treasures, Important Cultural Properties, and Important Art Objects is prohibited by law. By rigorously managing Japan’s important cultural heritage, this museum will not only prevent its dispersal but can also help to pass it on to future generations.

Token Corporation can be described as a company that conserves Japan’s land and passes it on to future generations by building, managing, and operating rental housing as an effective use of land. It is precisely because of this that we think it is meaningful to contribute to society by playing the same role for Japan’s cultural heritage. Through this new cultural business, we will raise the presence of our company as well as contribute to the development of the regional economy and the spread of Japanese culture.

Prioritizing long-term rather than short-term profit
and aiming for long-term stable growth

The strict preliminary screening in our core business and the inspections of branches in each area by the Business Supervision Department at our headquarters described earlier will lead to the loss of short-term profit. However, from a long-term perspective, we will avoid losses, which will conversely translate into profit. We also expect that it will firmly bolster our future management.

In the 44th fiscal term, we will combine both offense and defense in a well-balanced manner, leading to long-term stable growth. We ask all of our shareholders for their continued support in the future.