Number of Weddings
Total Page:16
File Type:pdf, Size:1020Kb
BUILDING THE FUTURE Prologue In October 1998 three enthusiastic young people created TAKE AND GIVE. NEEDS Co., Ltd. (“T&G”). The name T&G came from the concept of understanding (taking) customer needs and providing (giving) services corresponding to them. T&G identified opportunities and created a niche in a wedding market that had been decreasing in size. In a short period of time T&G estab- lished the house wedding market and achieved unprecedented growth, gaining a comprehensive understanding of its customer base. T&G entered into the wedding market with a focus on the following three possibilities: 1. The potential to become the No. 1 company in the industry 2. The potential to develop wedding-related businesses 3. The potential to develop post-wedding businesses In the eight years since its launch, T&G has moved from the wedding venue development business to the lifestyle business, beginning a new stage of growth. This document has been translated from the original Japanese as a guide for non-Japanese investors. It contains forward-looking statements based on a number of assumptions and beliefs made by management in light of information currently available. Actual financial results may differ materially depending on a number of factors, including changing economic conditions, delay in the opening of new venues, and pricing and product initiatives of new and existing competitors. ONE MEMORY AT A TIME SECTION 1 UNDERSTANDING T&G Message from the President: Yoshitaka Nojiri 6 House wedding business model 16 Development and financial strategy 22 “T&G-isms” culture and history 24 SECTION 2 FINANCIAL SECTION Financial highlights 34 Management analysis 35 Non-consolidated financial statements 38 SECTION 3 INVESTORS’ GUIDE Corporate data 50 List of venues and affiliated restaurants 51 The Japanese wedding market 52 The T&G house wedding business 60 FY2005 KEY NUMBERS 41 62 In the year to March 2006, VENUES T&G established 21 new house wedding halls across Japan, bringing the total to 62 and making T&G the largest house weddings company in Japan. In the year to March 2006, T&G achieved its FCF first positive free cash flow since establishment 850 and paid its first dividend of ¥300 plus a commemorative dividend of ¥200. -169 2 5.9 27.9 ROE has been improving due to strong growth in profit and a large ROE decrease in capital expenditure. Target ROE is over 30%. 2 TAKE AND GIVE. NEEDS CO., LTD. ANNUAL REPORT 2006 3.5 5.1 ORDINARY INCOME Ordinary profit increased steadily as a result of an increase 4.8 in the number of highly profitable directly managed venues. T&G’s net sales to ordinary income ratio was over 15%, despite the cost of having established 21 new halls during the year. 33.9 21.8 2.5 Net sales in the Since 2005, T&G has opened NET SALES year ended March CAPEX new venues off the balance sheet, 2006 increased by over ¥1.0 billion, with growth at both mainly using SPCs. Compared to the year to March 2005, new and existing venues. T&G is No. 1 in sales among in which T&G opened 19 new halls, capital expenditure has domestic weddings companies. been greatly reduced. 3 1 UNDERSTANDING T&G 2 Section 1 explains T&G’s corporate culture and the sources of its strength, as well as T&G’s basic business model, financial strategy and future growth strategy. 3 4 TAKE AND GIVE. NEEDS CO., LTD. ANNUAL REPORT 2006 6 14 1 20 22 6 Message from the President: Yoshitaka Nojiri President & CEO Yoshitaka Nojiri discusses T&G strategies. Topics range from the reasons why T&G entered the wedding venue development business to future strategies, including new businesses that T&G is currently moving towards. 2 16 Business model of house weddings Explains ‘house weddings’ as the source of eight years of growth, and provides an overview of T&G services, revenue models and key differentiators. 21 Coffee break: T&G house wedding schedule 22 Development and financial strategy Discusses T&G’s policy of balancing profit growth with maintaining a sound financial base, and provides an explanation of strategies to improve ROE and ROA while rapidly increasing net sales and profits. 24 “T&G-isms” culture and history Introduces “T&G-isms”. Describes T&G’s ability to create markets, key to the development of future businesses, and T&G’s current businesses. This section also discusses T&G’s unique culture, which distinguishes the company from 3 the rest of the market, and provides an historical look at T&G’s business development to date. 26 Case study: Creating the house wedding market 32 Coffee break: T&G and the media 5 Basic Strategy of T&G Message from Yoshitaka Nojiri Why the wedding business? I established T&G in October 1998. I was 26 years old and had just spent three Wedding- years as a businessman with a large insurance group. Born the second son of 10 related market (10 trillion yen) self-employed parents, I was determined to some day run my own business. My school was attended by the children of business owners, entertainers, athletes and several wealthy families. I became aware of what a great thing it was to be Wedding the owner of a listed company, and recall embedding the term listed company in 2 ceremony & reception market my consciousness from a very early age. (2 trillion yen) At junior high school I mixed study with lots of fun and games, planning huge Japanese wedding market events, working for a second-hand clothing store, and gaining experience of how In 2005, 710,000 couples were married business works. At high school and university I played with what was at the time in Japan. The average price of a wedding ceremony was ¥3,030 thousand (see page 56) Japan’s strongest rugby club, becoming No. 1 in the country. I think that through DATA: Health, Labour and Welfare Ministry: this I developed the fighting instinct to make more of my future than I might have, Population Dynamics 2005 RECRUIT CO., LTD. ‘Zexy Marriage and developed the habit of winning. Trend Survey 2006’ Looking back, I realize that the experiences I had during my education are helping me to this day. In deciding which industry to establish my own business in I had three key points in mind. The industry I chose had to enable my business to: 1. Rapidly become No. 1 2. Continue long term, and 3. Diversify into related areas. After graduating, I found a working environment where I could meet with many different business leaders, and for three years researched a wide range of busi- ness sectors. At the end of this process I had narrowed my focus down to three areas: human resources, nursing services, and special ceremonies. In the ceremonies sector, the wedding business seemed particularly attractive. Yoshitaka Nojiri The prevailing wedding ceremony business in Japan had existed for a number Born in Tokyo, 1972. From an early of decades, but for a long time there had been little change in the services offered, age developed an interested in running his own business, influenced and nothing had happened to shake up the industry structure. Of further interest by his self-employed parents. Twice was the fact that in this large, ¥2 trillion industry there were very few listed or oth- won national university championship as a member of the Meiji University erwise well-financed businesses. (Note 1) rugby team. Joined Sumitomo Fire & Another feature of the industry was the lack of real competition between busi- Marine Insurance Co. after graduation, working in venture business support. nesses to secure customers. This stemmed from the fact that, in contrast to the Resigned in 1998 to pursue opportu- restaurant trade or other such businesses, most customers only make use of a nities in the wedding industry, found- ing T&G in October of that year. wedding service once in their lives. Note 1: Japan has very few specialized wedding businesses. Most operations are supplementary to the 6 management of hotels or inns. See page 59 for details. TAKE AND GIVE. NEEDS CO., LTD. ANNUAL REPORT 2006 10 2 Dedicated Because of these circumstances, Japan’s so-called second baby boomers were Co-op or wedding venues similar reaching the marrying age to find a wedding industry that was far behind the times. Others facilities 18% 1 At that time I happened to attend my first wedding, invited by a friend. The 5% 28% impact that wedding had on me is a key driver of T&G today. Weddings in Japan at that time were far too formal for the new generation, to the extent that people Hotels, Japanese-style inns wondered why on earth they should pay all that money. The more I looked into the 49% industry, the more I became convinced of the customer support we could gain by providing wedding services that people really wanted. Number and type of wedding venues in Japan I also became aware of how attractive the whole wedding period was from a DATA: METI 2005 Survey of Specialized Service Industries business point of view. For most people, getting married marks a transition from being an individual to being part of a household. A business able to capture cus- tomers at this entry point would have the potential to develop a range of other operations. I felt that if I could create a way to become very close to customers during this transition period, there was every chance of being able to quickly grow a company into a lifestyle-related business.