Financial Results for Fiscal 2013, the Year Ending December 31, February 21, 2014

Financial Results for Fiscal 2013, the Year Ending December 31, 2013 February 21, 2014 Contents ・・・・・・・・・・・・・・・・・・・・・・ P2 ・・・・・・・・・・・・・・・ ・・・・・・・...
Author: Cori Gregory
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Financial Results for Fiscal 2013, the Year Ending December 31, 2013

February 21, 2014

Contents ・・・・・・・・・・・・・・・・・・・・・・

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KNT-CT Holdings’ Scope of Consolidation ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

P5

Organizational Structure of the Management Integration Integrating Operations to Realize Synergies Business Structure

Overview of FY2013 ・・・・・・・・・・・・・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

P6–8

Results for FY2013 ・・・・・・・・・・・・・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

P9

Sales by Segment for FY2013 ・・・・・・・・・・・・・・・・・・・ ・・・・・・・・・・ ・・・・・・・・・・・・・・・・・

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P11

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P12

Full-Year Forecasts of Consolidated Financial Results for FY2014

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P13

Medium-Term Management Plan (2013 – 2015) Priority Initiatives

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P14

Review of KNT-CT Holdings Organizational Structure ・・・・・・・・・・・・・・・・・・・・・・・・・

P15

Consolidated Balance Sheets at the End of the FY2013 Consolidated Cash Flow Statement for the FY2013

IR Inquiries

—1—

Organizational Structure of the Management Integration

KNT-CT Holdings Co., Ltd.

Absorption-type split (Group Tour Business)

Absorption-type split (Individual Travel Business)

Transfer of shares (Media-based Travel Business)

Kinki Nippon Tourist Co., Ltd.

Kinki Nippon Tourist Individual Tour Co., Ltd.

Club Tourism International Inc.

—2—

Integrating Operations to Realize Synergies

Reorganization to a holding company framework under KNT-CT Holdings Co., Ltd., on January 1, 2013

On January 1, 2013, the KNT Group shifted to a holding company framework, and in February 2013, established a medium-term management plan spanning through the fiscal year ending December 31, 2015. Based on this plan, KNT-CT Holdings Co., Ltd., is promoting independent management of group companies and stronger links between them, while working to maximize synergies by leveraging the strengths of the Kinki Nippon Tourist and Club Tourism International brands.

—3—

Business Structure Club Tourism International Inc.

Two subsidiaries

Kinki Nippon Tourist Individual Tour Co., Ltd.

Kinki Nippon Tourist Individual Tour Sales Co., Ltd.

Kinki Nippon Tourist Co., Ltd. Kinki Nippon Tourist Hokkaido Co., Ltd.

KNT-CT Holdings Co., Ltd.

Kinki Nippon Tourist Tohoku Co., Ltd. Kinki Nippon Tourist Chugoku-Shikoku Co., Ltd. Kinki Nippon Tourist Kyushu Co., Ltd. Twelve domestic consolidated subsidiaries of KNT-CT Holdings Co., Ltd. Fifteen overseas consolidated subsidiaries of KNT-CT Holdings Co., Ltd.

—4—

KNT-CT Holdings’ Scope of Consolidation 37 consolidated subsidiaries 14 travel companies in Japan

Kinki Nippon Tourist Co., Ltd., Kinki Nippon Tourist Individual Tour Co., Ltd., Club Tourism International Inc., Kinki Nippon Tourist Individual Tour Sales Co., Ltd., Kinki Nippon Tourist Hokkaido Co., Ltd., Kinki Nippon Tourist Tohoku Co., Ltd., Kinki Nippon Tourist Kanagawa Co., Ltd., Kinki Nippon Tourist Chugoku-Shikoku Co., Ltd., Kinki Nippon Tourist Kyushu Co., Ltd., Kinki Nippon Tourist Okinawa Co., Ltd., United Tours Co., Ltd., T-Gate, Inc., Showa Travelers Club Co., Ltd., Sanki Travel Service Co., Ltd.

13 travel companies outside Japan

KIE (USA), KIE (CND), KIE (EUR), KIE (OCE), PDI, KNT KOREA, others

10 other affiliated companies

Temporary staff services

Tourist Experts Co., Ltd

Merchandising and insurance

Kinki Nippon Tourist Shoji Co., Ltd.

Business consignment and others

Tourist Service Hokkaido Co., Ltd., KNT Business Create Co., Ltd., Club Tourism Marketing Co., Ltd.

Travel assistance services

Tourist International Assistance Service, Inc.

Event and convention planning

Event & Convention House, Inc.

Care-giving services

Club Tourism Life Care Service., Ltd.

2 reinsurance underwriting businesses

H&M INSURANCE HAWAII, GRIFFIN INSURANCE

Three companies affiliated by the equity method Japan Outside Japan

NTT Data Teranos Corporation KNT Travel (Thailand) Co., Ltd., KNT Taiwan Co., Ltd.

—5—

KNT-CT Holdings building

Overview of FY2013—Part 1 Principal companies operating under KNT-CT Holdings Co., Ltd. ■Individual Travel Business Kinki Nippon Tourist Individual Tour offers dedicated website packages while Club Tourism International promotes bus tour packages. Through cross-selling of each company’s respective products, joint marketing of charter flights, and other strategies, KNT-CT Holdings is working to generate greater synergies.

Kinki Nippon Tourist Individual Tour Co., Ltd., and Kinki Nippon Tourist Individual Tour Sales Co., Ltd. Improving quality and adding higher value to tour packages including theme-style travel while boosting sales through faceto-face consulting ■Created travel products that address specific tastes and objectives including trips to secluded areas and Word Heritage Sites, cruises, and overseas weddings ■Kinki Nippon Tourist Individual Tour Sales opened the Yurakucho Theme Travel Salon as a flagship outlet in Tokyo on March 30 ■Kinki Nippon Tourist Individual Tour Sales opened the Grand Front Osaka Sales Agent in Osaka’s Umeda district as its flagship outlet in the Kansai region on April 26 ■Kinki Nippon Tourist Individual Tour Sales opened the Shibuya Koen-Dori Overseas Travel Salon as a second flagship outlet on November 1

A theme travel brochure

The Grand Front Osaka Sales Agent —6—

The Shibuya KoenDori Overseas Travel Salon

Overview of FY2013—Part 2 Principal companies operating under KNT-CT Holdings Co., Ltd. Club Tourism International Inc. Taking successful steps to enhance customer satisfaction while further distinguishing itself from competitors by drawing on its creative planning capabilities, an area of particular strength, to deliver packages with a high theme-based flavor and considerable added value ■ Conducted a special charter cruise of the Voyager of the Seas, one of the largest cruise ships in Asia ・ Planned and created a travel package completely different from those offered by competitors ■Put forward a lineup of such theme-based packages as a walking tour that covers 23 sites of inscribed property around the outskirts of Mt. Fuji, a site registered on the World Heritage List, group package tours made up of solo passengers, and tours with grandchildren ■Upgraded and expanded packages to the Ise-Shima area that use the Shimakaze Premium Express operated by Kintetsu Railways and the special Kagirohi club tourism train to coincide with Shikinen Sengu, a religious festival at the Ise Grand Shrine ■Opened the Kintetsu Abeno Harukas Outlet in the Kintetsu Department Store Abeno Harukas Wing Building on October 10 → Tour packages to the Ise-Shima area that use the Kagihiro train



Pamphlet cover for a walking tour around the outskirts of Mt. Fuji

← Overseas travel pamphlet cover for tour packages made up of solo passengers

—7—

Overview of FY2013—Part 3 Principal companies operating under KNT-CT Holdings Co., Ltd. ■ Group Tour Business Kinki Nippon Tourist Co., Ltd Expanding proposal-based marketing of individual and group tours in major cities „ Proactively stepped up sales activities for the meetings, incentives, conferences and exhibitions (MICE) market in growing industries ・Organized travel related to corporate conventions and incentives

Shikinen Sengu at the Ise Grand Shrine: Naiku, or the inner sanctuary, and Shinku, or the new sanctuary

„ Attended to the needs of numerous groups visiting the Ise Grand Shrine to worship during the Oshiraishi-mochi-gyoji, a ceremony that forms part of Shikinen Sengu

„ Aggressively expanded sales activities to meet demand related to major sporting events ・Handled travel related to the Tokyo Marathon 2013 ・Supported bidding activities as an official partner of the Tokyo 2020 Olympics and Paralympics Bid Committee ・Used sports as a means to attract tourists to various region and promote the consulting business „ Cultivated demand for travel in the education market ・Improved the handling of school trips ・Stimulated demand for travel related to sports and cultural events besides school trips

—8—

Tokyo Marathon 2013 Friendship Run

Japan Festival in Vietnam 2013

Results for FY2013 (Millions of yen)

FY2013

Increase/decrease

FY2012

% change

Sales

448,273

310,982

137,291

44.1

Gross income

77,163

59,031

18,132

30.7

Operating income

3,885

2,344

1,541

65.7

Ordinary income

3,539

2,644

895

33.9

Extraordinary income

284

306

(22)

(7.2)

Extraordinary loss

678

1,690

(1,012)

(59.9)

1,863

1,788

75

4.2

Net income

[Disclosing sales as gross sales] Given the nature of sales transactions for travel packages such as memberorganized tours and special order tours, KNT-CT Holdings has changed its method for calculating sales from the previously used net sales method, in which sales figures are minus the cost of sales, to a gross sales method, in which sales figures includes cost of sales ■Sales increased 137,291 million yen compared to the previous year owing to the inclusion of Club Tourism International Inc. in the scope of consolidation ■Operating income increased 1,541 million yen ■ Ordinary income increased 895 million yen (Non-operating expenses such as foreign exchange losses amounted to 854 million yen)

—9—

Sales by Segment for FY2013 (Millions of yen)

Individual Travel Business Sales to external customers Inter-segment sales and transfers

Total sales

Income and loss by segment

Group Tour Business

Other

Total

Amount recorded in consolidated Adjustment financial statements

268,979

100,418

78,874

448,273



448,273

100

2,198

11,901

14,200

(14,200)



269,080

102,616

90,776

462,473

(14,200)

448,273

2,091

2,002

533

4,627

(741)

3,885

—10—

Consolidated Balance Sheets at the End of FY2013 (Millions of yen)

December 31, 2013

December 31, 2012

Current assets

103,092

67,142

35,950

Cash and deposits Fixed assets

57,369

28,541

28,828

26,216

20,617

5,599

Total assets

129,308

87,760

41,548

Current liabilities Trade accounts payable and unsettled travel tickets

98,797

77,162

21,635

43,666

41,540

2,125

Fixed liabilities

6,556

4,879

1,677

Total liabilities

105,354

82,041

23,312

Total net assets

23,954

5,718

18,236

Retained earnings

7,131

(7,203)

14,334

129,308

87,760

41,548

Total liabilities and net assets

Increase/decrease

—11—

December December 31, 2013 31, 2012

Capital adequacy ratio

18.5%

6.4%

December December 31, 2013 31, 2012

Net assets per share 88.85円

59.45円

Consolidated Cash Flow Statement for FY2013 (Millions of yen)

FY2013

FY2012

Cash flows used in operating activities

7,105

(1,776)

Cash flows from investment activities

2,545

(198)

Cash flows from financing activities

440

(3,032)

Cash and cash equivalents at the end of the interim period

54,698

26,509

■ Cash flows used in operating activities Cash flows used in operating activities amounted to 7,105 million yen, mainly owing to income before income taxes of 3,145 million yen and to the increase in advanced order for group tours amounting to 3,984 million yen. ■ Cash flows from investing activities Cash flows from investing activities was 2,545 million yen, mainly owing to proceeds from the redemption of deposited money totaling 2,577 million yen ■ Cash flows from financing activities Cash flows from financing activities totaled 440 million yen, mainly owing to proceeds from the issuance of shares of 492 million yen

—12—

Full-Year Forecasts of Consolidated Financial Results for FY2014

Full-Year Forecasts for FY2014

Sales

464,000 million yen

Operating income

4,300 million yen

Ordinary income

4,500 million yen

Net Income

1,900 million yen

Net income per share

7.17 yen

—13—

Medium-Term Management Plan (2013 – 2015) Priority Initiatives

1. Maximize synergies in operations 2. Cut down on costs by making the management of divisions more efficient 3. Develop and motivate human resources 4. Improve management’s ability to carry out strategies 5. Develop global business focusing on Asia

—14—

Review of KNT-CT Holdings Organizational Structure As of January 1, 2014

KNT-CT Holdings Organizational Structure

Chairman of the Board Chief Executive Officer Reorganized

As of October 1, 2013

Corporate Strategy Headquarters General Affairs & Public Relations Department

Chairman of the Board

Personnel Department

Chief Executive Officer Corporate Planning Department

Accounting Department Business Strategy Headquarters

General Affairs Department

Domestic Travel Department

Accounting Department

Overseas Travel Department

Management Supervising Department

Inbound Travel Department Travel Related Product Department Sports Marketing Department Regional Promotion Department Management Supervising Department —15—

IR Inquiries

Higashi-Kanda Fukoku Seimei Building 1-7-8 Higashi Kanda, Chiyoda-ku, Tokyo, Japan 101-8641 Public Relations, General Affairs Department, TEL:03-6891-6839 FAX:03-6891-6890 URL:http://www.kntcthd.co.jp/

These materials are not intended to solicit investment, but are provided for reference only. Please refer to the company’s financial statements and securities reports for accurate earnings figures. The financial targets provided in this material are based on information available at the time of writing, however, actual results may differ from the forecasts as a result of changes in a range of factors.

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