R Nippon Parking Development / 2353

COVERAGE INITIATED ON: 2010.09.06 LAST UPDATE: 2018.04.03

Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will always present opinions from company management as such. Our views are ours where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at [email protected] or find us on Bloomberg.

Research Coverage Report by Shared Research Inc. Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

INDEX

How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent earnings. First-time readers should start at the business section later in the report.

Key financial data ------3 Recent updates ------4 Highlights ------4 Trends and outlook ------5 Quarterly trends and results ------5 Full-year company forecasts ------20 Outlook ------37 Business ------38 Business description ------38 Key financial data ------51 Strengths and weaknesses ------54 Market and value chain ------55 Financial statements------57 Income statement ------57 Balance sheet ------58 Statement of cash flows ------60 Other information ------61 Corporate governance, environment, and CSR information (as of November 2016) ------61 Shareholder returns------62 History ------63 Major shareholders ------64 Top management ------64 Employees ------64 Investor relations ------64 By the way ------64 Historical earnings ------66 Historical quarterly earnings ------66 News and topics ------86 Company profile ------89

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Key financial data

Income statement FY07/04 FY07/05 FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est. Sales 3,583 4,512 5,548 6,795 7,508 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 23,500 YoY 42.6% 25.9% 23.0% 22.5% 10.5% 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% 6.9% Gross profit 1,649 1,957 2,340 2,538 2,924 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 YoY 35.0% 18.7% 19.6% 8.4% 15.2% 4.4% 17.7% 12.9% 11.7% 27.0% 14.5% 15.6% 1.3% 23.7% GPM 46.0% 43.4% 42.2% 37.3% 38.9% 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% Operating profit 706 979 1,128 920 1,181 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,500 YoY 65.2% 38.7% 15.2% -18.4% 28.4% 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% 14.1% OPM 19.7% 21.7% 20.3% 13.5% 15.7% 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 14.9% Recurring profit 711 1,019 1,824 1,329 1,827 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 3,500 YoY 68.2% 43.3% 79.0% -27.1% 37.4% -36.1% -4.4% 28.8% 32.6% 17.3% 15.9% 16.1% -25.6% 43.4% 9.0% RPM 19.8% 22.6% 32.9% 19.6% 24.3% 14.8% 12.9% 15.0% 18.0% 16.6% 17.1% 17.7% 12.4% 14.6% 14.9% Net in co me 397 612 1,069 642 489 614 765 850 518 1,378 1,582 3,531 1,255 2,243 2,350 YoY 80.2% 54.2% 74.7% -39.9% -23.9% 25.5% 24.7% 11.1% -39.0% 165.9% 14.7% 123.2% -64.5% 78.7% 4.8% Net margin 80.2% 54.2% 74.7% 9.5% 6.5% 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% 10.0% Per share data (JPY) Shares issued (year end; '000) 159 3,372 3,419 3,437 3,439 3,445 3,445 3,445 3,445 3,445 345,274 346,585 347,658 348,399 EPS 2,296.4 183.1 315.1 187.8 144.1 181.2 226.2 251.6 155.5 413.4 4.7 10.5 3.7 6.7 7.0 Dividend per share 500.0 200.0 200.0 200.0 200.0 200.0 100.0 150.0 200.0 250.0 2.7 3.3 3.5 3.8 4.0 Book value per share 9,027 592 681 569 530 490 505 635 675 917 12 20 20 23 Balance sheet (JPYmn) Cash and cash equivalents 1,242 1,572 2,590 2,105 1,852 1,701 1,201 1,777 2,885 3,899 4,765 9,902 13,121 13,888 Total current assets 1,420 1,794 3,152 2,525 2,599 2,191 1,708 2,358 3,486 4,766 5,768 11,230 15,014 15,524 T angible fixed asset s 0 0 0 805 847 904 1,261 1,588 1,204 1,703 1,993 3,164 3,852 5,015 Investment and other assets 401 2,011 2,992 4,319 3,685 3,293 2,766 2,354 1,216 2,431 2,696 2,978 2,098 3,040 Int angible fixed asset s 16 43 39 67 94 83 64 76 97 220 186 411 380 393 Total assets 1,837 3,848 6,183 7,716 7,225 6,472 5,799 6,377 6,003 9,121 10,643 17,783 21,344 23,973 Accounts payable 3 53 42 33 29 29 29 32 30 81 88 98 281 313 Short-term debt 0 67 733 3,391 2,022 1,938 1,368 1,274 1,156 624 209 102 424 1,380 Tot al current liabilit ies 413 680 1,706 4,069 3,033 2,640 2,435 2,459 2,483 2,261 2,404 2,982 2,842 4,435 Long-term debt 0 933 1,917 1,348 1,998 1,751 1,179 1,176 650 2,530 2,906 5,170 6,624 6,444 Tot al fixed liabilit ies 220 1,210 2,209 1,692 2,370 2,143 1,625 1,732 1,239 3,619 3,826 6,078 9,856 9,519 Tot al liabilit ies 633 1,889 3,915 5,761 5,403 4,783 4,060 4,191 3,722 5,880 6,230 9,061 12,698 13,954 Net assets 1,432 1,996 2,329 1,955 1,823 1,688 1,738 2,186 2,281 3,241 4,413 8,722 8,646 10,019 Interest-bearing debt 0 1,000 2,650 4,739 4,020 3,689 2,547 2,451 1,805 3,154 3,115 5,272 7,048 7,824 Statement of cash flows (JPYmn) Cash flow s from operat ing act ivit ies 462 659 347 -314 898 868 1,529 1,289 1,473 1,460 2,014 1,965 602 3,778 Cash flow s from invest ing act ivit ies -180 -1,279 -735 -1,744 728 322 -203 -73 800 -1,048 -424 1,378 2,490 -3,135 Cash flow s from financing act ivit ies 0 949 1,053 1,208 -1,495 -1,008 -1,826 -636 -1,228 612 -739 1,733 296 -551 Financial rat ios ROA (RP-based) 45.4% 35.9% 36.4% 19.1% 24.5% 17.1% 18.2% 23.6% 30.8% 29.6% 26.2% 21.2% 11.5% 14.2% ROE 32.2% 35.7% 49.5% 30.0% 25.9% 35.0% 44.9% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% Equit y rat io 77.9% 51.9% 37.7% 25.3% 25.1% 26.1% 29.7% 33.8% 37.5% 33.6% 37.8% 38.0% 31.2% 32.5% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: Starting in FY07/15, interest-bearing debt includes lease liabilities.

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Recent updates

Highlights

On April 3, 2018, Shared Research updated the report following interviews with Nippon Parking Development Co., Ltd.

On March 9, 2018, the company announced earnings results for 1H FY07/18; see the results section for details.

For corporate releases and developments more than three months old, please refer to the News and topics section.

04/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Trends and outlook

Quarterly trends and results

FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1H 1H 1H 1H 1H Est. % of 1H Sales 3,550 5,085 5,432 4,073 5,018 5,955 6,362 4,652 5,295 6,012 8,339 8,635 10,974 11,307 12,000 94.2% Parking Lot business 2,877 2,920 2,957 3,082 3,102 3,127 3,191 3,286 3,278 3,254 5,419 5,797 6,229 6,532 Domest ic 2,684 2,718 2,749 2,858 2,892 2,884 2,922 2,983 - 5,120 5,402 5,776 - Overseas 193 203 208 224 210 243 269 302 - - 299 395 453 - Ski Resort business 640 2,100 2,387 457 631 2,390 2,647 484 815 2,330 2,914 2,741 3,020 3,145 3,320 94.7% Theme Park business - - - 474 1,197 385 465 813 1,133 349 - - 1,582 1,482 Other 33 86 88 64 88 65 59 110 69 81 - 119 153 150 Eliminat ions - -22 -0 -4 -0 -11 0 -41 -1 -1 - -22 -11 -2 YoY 10.3% -0.7% 1.9% 22.0% 41.4% 17.1% 17.1% 14.2% 5.5% 1.0% 11.7% 3.5% 27.1% 3.0% 9.4% Parking Lot business 8.1% 5.9% 6.1% 7.1% 7.9% 7.1% 7.9% 6.6% 5.7% 4.1% 7.6% 7.0% 7.5% 4.9% - Domest ic 6.1% 4.9% 5.5% 6.8% 7.8% 6.1% 6.3% 4.4% - 5.5% 6.9% - - Overseas 44.8% 21.8% 14.4% 10.3% 9.1% 19.8% 29.6% 35.2% - 32.0% 14.6% - - Ski Resort business 15.5% -11.0% -5.6% 4.3% -1.5% 13.8% 10.9% 6.0% 29.2% -2.5% 20.0% -5.9% 10.2% 4.1% 9.9% Theme Park business ------71.3% -5.4% -9.3% - - - -6.3% - Gross profit 1,373 2,345 2,555 1,451 2,136 2,755 2,917 1,744 2,382 2,736 3,774 3,718 4,891 5,117 YoY 9.7% -7.0% -3.5% 20.6% 55.6% 17.5% 14.2% 20.2% 11.5% -0.7% 10.2% -1.5% 31.6% 4.6% - GPM 38.7% 46.1% 47.0% 35.6% 42.6% 46.3% 45.9% 37.5% 45.0% 45.5% 45.3% 43.1% 44.6% 45.3% - SG&A expenses 1,191 1,639 1,485 1,432 1,401 1,779 1,722 1,582 1,454 1,809 2,446 2,830 3,181 3,263 YoY 17.3% 14.5% 4.8% 20.5% 17.7% 8.6% 16.0% 10.5% 3.7% 1.7% 10.1% 15.7% 12.4% 2.6% - SG&A rat io 33.5% 32.2% 27.3% 35.1% 27.9% 29.9% 27.1% 34.0% 27.5% 30.1% 29.3% 32.8% 29.0% 28.9% - Operating profit 182 706 1,070 20 734 976 1,195 162 928 927 1,327 888 1,710 1,855 1,900 97.6% Parking Lot business 592 569 586 646 668 663 698 704 754 690 1,144 1,161 1,331 1,444 Ski Resort business -265 271 616 -515 -334 503 800 -527 -255 450 472 6 170 195 250 77.9% Theme Park business - - - 45 560 -25 -153 130 545 -69 - - 535 476 Other -5 9 1 -2 -0 2 -4 -1 7 12 -3 4 2 19 Adjustments -140 -143 -134 -153 -159 -168 -146 -145 -123 -156 -285 -283 -327 -280 Parking Lot business (incl. adj.) 452 426 453 492 508 496 552 559 631 534 859 878 1,004 1,165 Domest ic (incl. adj.) 460 446 468 500 526 504 540 531 893 907 1,030 Overseas -8 -20 -15 -7 -18 -8 12 28 -34 -29 -26 YoY -23.0% -35.3% -13.0% 27.5% 303.7% 38.2% 11.7% 718.7% 26.3% -5.0% 10.2% -33.1% 92.6% 8.4% 11.1% Parking Lot business 7.5% -4.0% 3.5% 3.8% 12.8% 16.6% 19.0% 9.1% 13.0% 4.1% - 1.5% 14.6% 8.5% - Ski Resort business - -58.1% -23.7% - - 85.8% 29.8% - - -10.6% 12.8% -98.7% 2,659.5% 14.7% 47.4% Theme Park business ------189.8% -2.7% - - - - -10.9% - Parking Lot business (incl. adj.) 9.3% -4.4% 5.9% 24.5% 12.5% 16.3% 22.0% 13.6% 24.1% 7.7% 9.3% 2.2% 14.4% 16.0% - Domest ic (incl. adj.) 6.9% -3.4% 8.4% 29.1% 14.3% 12.8% 15.5% 6.2% - 1.6% 13.6% - OPM 5.1% 13.9% 19.7% 0.5% 14.6% 16.4% 18.8% 3.5% 17.5% 15.4% 15.9% 10.3% 15.6% 16.4% 15.8% Parking Lot business 20.6% 19.5% 19.8% 20.9% 21.5% 21.2% 21.9% 21.4% 23.0% 21.2% 21.1% 20.0% 21.4% 22.1% - Ski Resort business -41.3% 12.9% 25.8% -112.8% -52.9% 21.1% 30.2% -108.7% -31.3% 19.3% 16.2% 0.2% 5.6% 6.2% 7.5% Theme Park business - 9.5% 46.8% -6.6% -32.8% 16.0% 48.1% -19.6% - - 33.8% 32.1% - Parking Lot business (incl. adj.) 15.7% 14.6% 15.3% 16.0% 16.4% 15.9% 17.3% 17.0% 19.2% 16.4% 15.9% 15.1% 16.1% 17.8% - Domest ic (incl. adj.) 17.1% 16.4% 17.0% 17.5% 18.2% 17.5% 18.5% 17.8% 17.4% 16.8% 17.8% - - Overseas -4.4% -10.0% -7.2% -3.3% -8.5% -3.3% 4.5% 9.4% -11.3% -7.3% -5.7% - - Recurring profit 319 823 1,160 -61 741 980 1,250 241 937 940 1,662 1,142 1,721 1,877 1,900 98.8% Net in co me 273 382 662 -62 689 565 538 451 758 565 1,784 655 1,253 1,323 1,300 101.8% YoY -71.9% -53.0% -53.3% - 152.3% 47.9% -18.8% - 10.1% 0.1% 105.1% -63.3% 91.4% 5.6% 3.7% Net margin 7.7% 7.5% 12.2% -1.5% 13.7% 9.5% 8.5% 9.7% 14.3% 9.4% 21.4% 7.6% 11.4% 11.7% 10.8% FY07/05 FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Est. Sales 4,512 5,548 6,795 7,508 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 23,500 Parking Lot business - 5,470 6,249 6,879 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,836 12,706 13,700 Domest ic 10,402 11,009 11,681 12,500 Overseas 684 827 1,025 1,200 Ski Resort business - - 389 502 529 1,145 1,655 1,868 4,038 4,910 5,881 5,584 6,152 6,480 Theme Park business ------474 2,860 3,000 Other - 78 210 129 ------42 272 322 320 YoY 23.0% 22.5% 10.5% 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% 6.9% Parking Lot business 14.2% 10.1% 6.7% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% 7.8% Ski Resort business 29.2% 5.4% 116.2% 44.6% 12.9% 116.2% 21.6% 19.8% -5.0% 10.2% 5.3% Theme Park business 502.8% 4.9% Gross profit 1,957 2,340 2,538 2,924 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 YoY 18.7% 19.6% 8.4% 15.2% 4.4% 17.7% 12.9% 11.7% 27.0% 14.5% 15.6% 1.3% 23.7% GPM 43.4% 42.2% 37.3% 38.9% 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% SG&A expenses 978 1,212 1,618 1,743 1,794 2,112 2,557 2,712 3,737 4,259 5,051 5,746 6,485 YoY 3.8% 23.9% 33.4% 7.8% 2.9% 17.7% 21.1% 6.1% 37.8% 14.0% 18.6% 13.8% 12.9% SG&A rat io 21.7% 21.8% 23.8% 23.2% 22.8% 24.4% 26.6% 25.6% 27.8% 28.2% 29.7% 31.7% 29.5% Operating profit 979 1,128 920 1,181 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,500 Parking Lot business - 1,410 1,780 1,870 1,993 1,985 2,244 2,169 2,359 2,332 2,393 2,733 3,030 Ski Resort business - -112 -18 -9 56 113 200 504 725 905 107 443 600 Theme Park business - 45 512 600 Other - 75 35 ------14 3 -3 -50 Adjustments - -453 -616 -603 -568 -598 -623 -652 -749 -650 -570 -618 -680 Parking Lot business (incl. adj.) - 957 1,164 1,267 1,425 1,388 1,621 1,517 1,610 1,682 1,823 2,115 2,350 Domest ic (incl. adj.) 1,711 1,874 2,100 2,300 Overseas -29 -51 15 50 YoY 38.7% 15.2% -18.4% 28.4% 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% 14.1% Parking Lot business (incl. adj.) 21.7% 8.8% 12.5% -2.6% 16.8% -6.4% 6.1% 4.5% 8.4% 16.0% 11.1% Ski Resort business 100.4% 76.9% 152.0% 43.7% 24.9% -88.2% 313.4% 35.5% OPM 21.7% 20.3% 13.5% 15.7% 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 14.9% Parking Lot business (incl. adj.) 15.3% 16.9% 17.3% 18.9% 17.5% 18.6% 16.1% 15.8% 15.2% 15.4% 16.6% 17.2% Domest ic (incl. adj.) 16.5% 17.0% 18.0% 18.4% Overseas -4.3% -6.2% 1.4% 4.2% Ski Resort business -28.9% -3.5% -1.7% 4.9% 6.8% 10.7% 12.5% 14.8% 15.4% 1.9% 7.2% 9.3% Theme Park business 9.5% 17.9% 20.0% Recurring profit 1,019 1,824 1,329 1,827 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 3,500 Net in co me 612 1,069 642 489 614 765 850 518 1,378 1,582 3,531 1,255 2,243 2,350 YoY 54.2% 74.7% -39.9% -23.9% 25.5% 24.7% 11.1% -39.0% 165.9% 14.7% 123.2% -64.5% 78.7% 4.8% Net margin 13.6% 19.3% 9.5% 6.5% 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% 10.0% Depreciat ion 25 24 83 103 104 191 247 267 316 333 493 593 667 Parking Lot business (incl. adj.) 47 60 60 83 70 94 118 124 153 179 223 Ski Resort business 36 42 44 108 177 173 198 209 340 413 421 OP+depreciat ion 1,004 1,152 1,003 1,284 1,362 1,672 1,748 2,088 2,338 2,668 3,066 2,571 3,735 Parking Lot business (incl. adj.) 1,004 1,225 1,327 1,507 1,458 1,716 1,635 1,734 1,835 2,002 2,338 Ski Resort business -76 25 35 164 290 373 703 933 1,245 520 864 % of sales 22.3% 20.8% 14.8% 17.1% 17.3% 19.3% 18.2% 19.7% 17.4% 17.6% 18.0% 14.2% 17.0% Parking Lot business (incl. adj.) 16.1% 17.8% 18.1% 20.0% 18.3% 19.7% 17.4% 17.0% 16.5% 16.9% 18.4% Ski Resort business -19.5% 4.9% 6.6% 14.4% 17.5% 20.0% 17.4% 19.0% 21.2% 9.3% 14.0% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Segment sales figures include internal sales.

05/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Parking Lot FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Domestic sales 2,528 2,591 2,607 2,675 2,683 2,718 2,749 2,859 2,892 2,884 2,921 2,984 2,998 2,957 Direct ly managed facilit ies 1,786 1,813 1,819 1,862 1,876 1,884 1,903 1,979 2,035 2,022 2,039 2,105 2,092 2,079 Outsourced management 595 611 627 645 647 666 665 677 672 673 664 681 689 686 Other 146 168 160 169 160 168 181 201 183 189 219 198 216 191 Eastern Japan 149 173 173 184 187 189 198 214 213 202 209 234 242 233 Kanto 1,254 1,248 1,267 1,294 1,305 1,302 1,329 1,387 1,363 1,343 1,356 1,396 1,380 1,357 Tokai 225 232 228 237 239 264 264 279 283 292 281 287 278 270 Kinki 689 693 693 698 692 706 699 692 738 750 772 765 792 798 Western Japan 210 244 246 262 258 258 259 286 292 297 304 302 304 299 Yo Y 5.6% 7.5% 6.9% 5.6% 6.1% 4.9% 5.4% 6.9% 7.8% 6.1% 6.3% 4.4% 3.7% 2.5% Direct ly managed facilit ies 5.0% 6.5% 6.2% 6.2% 5.0% 3.9% 4.6% 6.3% 8.5% 7.3% 7.1% 6.4% 2.8% 2.8% Outsourced management 0.5% 3.2% 8.3% 8.8% 8.7% 9.0% 6.1% 5.0% 3.9% 1.1% -0.2% 0.6% 2.5% 1.9% Other 46.0% 43.6% 10.3% -9.6% 9.6% - 13.1% 18.9% 14.4% 12.5% 21.0% -1.5% 18.0% 1.1% Eastern Japan 20.2% 44.2% 37.3% 23.5% 25.5% 9.2% 14.5% 16.3% 13.9% 6.9% 5.6% 9.3% 13.6% 15.3% Kanto 4.8% 3.3% 2.9% 0.5% 4.1% 4.3% 4.9% 7.2% 4.4% 3.1% 2.0% 0.6% 1.2% 1.0% Tokai 2.7% 6.4% 6.0% 9.2% 6.2% 13.8% 15.8% 17.7% 18.4% 10.6% 6.4% 2.9% -1.8% -7.5% Kinki 3.0% 2.4% 3.9% 4.0% 0.4% 1.9% 0.9% -0.9% 6.6% 6.2% 10.4% 10.5% 7.3% 6.4% Western Japan 14.8% 29.8% 23.6% 26.6% 22.9% 5.7% 5.3% 9.2% 13.2% 15.1% 17.4% 5.6% 4.1% 0.7% Operating profit 431 462 431 387 460 446 468 500 526 504 540 531 - - YoY - - - - 6.9% -3.4% 8.4% 29.1% 14.3% 12.8% 15.5% 6.2% - - OPM 17.0% 17.8% 16.5% 14.5% 17.1% 16.4% 17.0% 17.5% 18.2% 17.5% 18.5% 17.8% - - Number of parking facilit ies 1,130 1,135 1,155 1,150 1,155 1,171 1,195 1,218 1,209 1,208 1,206 1,204 1,201 1,198 YoY 7.9% 5.8% 4.7% 2.7% 2.2% 3.2% 3.5% 5.9% 4.7% 3.2% 0.9% -1.1% -0.7% -0.8% For rent (monthly) 897 902 919 912 916 928 950 969 961 960 966 969 972 976 For rent (monthly & hourly) 137 136 136 136 136 139 137 141 139 140 136 131 127 123 Outsourced management 96 97 100 102 103 104 108 108 109 108 104 104 102 99 Total parking spaces 38,692 38,903 39,734 39,984 40,361 41,685 42,219 43,280 43,264 43,087 43,789 44,006 43,619 43,363 YoY 5.4% 6.2% 7.5% 7.5% 4.3% 7.2% 6.3% 8.2% 7.2% 3.4% 3.7% 1.7% 0.8% 0.6% Leased spaces 22,620 22,603 23,145 23,184 23,431 24,162 24,096 25,211 25,112 24,976 25,390 25,720 25,318 25,360 Managed spaces 16,072 16,300 16,589 16,800 16,930 17,523 18,123 18,069 18,152 18,111 18,399 18,286 18,301 18,003 Contract ratio (monthly) 93.0% 93.4% 92.6% 93.4% 92.8% 92.0% 92.7% 93.0% 93.0% 93.0% 94.0% 94.0% 94.1% 92.2% Parking Lot FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Overseas sales 133 166 182 203 193 203 208 224 210 243 269 302 279 298 YoY 68.4% 8.7% 111.3% 71.8% 44.8% 21.8% 14.4% 10.3% 9.1% 19.8% 29.6% 35.2% 32.8% 22.8% Direct ly managed facilit ies 102 130 138 141 142 147 149 178 150 165 174 180 196 203 Outsourced management 26 27 28 31 31 39 36 32 32 41 54 58 62 66 Other 3 9 17 30 18 17 23 14 27 36 42 64 21 28 T hailand 98 129 143 160 139 142 155 172 161 178 184 208 169 185 YoY 66.1% 0.8% 150.9% 79.8% 41.8% 10.1% 8.4% 7.5% 15.8% 25.4% 18.7% 20.9% 5.0% 3.9% Direct ly managed facilit ies 95 120 126 130 124 126 131 162 134 141 140 144 148 155 Outsourced management ------2 - - 1 Other 3 9 17 30 14 17 23 11 27 36 42 64 21 28 China 34 37 39 43 49 57 49 44 43 49 56 58 60 63 YoY 70.0% 54.2% 34.5% 48.3% 44.1% 54.1% 25.6% 2.3% -12.2% -14.0% 14.3% 31.8% 39.5% 28.6% Direct ly managed facilit ies 7 10 11 12 16 17 13 12 10 11 15 10 10 11 Outsourced management 26 27 28 31 31 39 36 32 32 38 42 47 49 52 Other - - - - 2 1 ------South Korea and Indonesia - - - - 3 3 4 8 5 16 29 36 48 50 Operating profit -17 -17 -4 8 -8 -20 -15 -7 -18 -8 12 28 - - Number of parking facilit ies 19 20 20 21 31 31 32 35 34 45 41 43 42 44 YoY 46.2% 53.8% 25.0% 16.7% 63.2% 55.0% 60.0% 66.7% 9.7% 45.2% 28.1% 22.9% 23.5% -2.2% For rent (monthly) - - - - 15 14 15 16 16 20 15 16 16 17 For rent (monthly & hourly) 17 18 18 18 13 13 13 16 15 18 18 19 18 19 Outsourced management 2 2 2 3 3 4 4 3 3 7 8 8 8 8 T hailand 16 17 17 17 25 25 26 28 27 32 26 27 27 28 China 3 3 3 4 5 5 5 5 5 6 7 7 7 7 Korea - - - - 1 1 1 2 2 5 6 7 6 7 Indonesia ------2 2 2 2 2 Total parking spaces 6,187 6,977 6,977 6,999 8,015 8,200 8,766 9,613 9,455 11,439 11,360 12,376 12,211 12,555 YoY 37.1% 43.5% 28.4% 14.8% 29.5% 17.5% 25.6% 37.3% 18.0% 39.5% 29.6% 28.7% 29.1% 9.8% Leased spaces 4,698 5,488 5,488 5,478 5,802 5,736 6,302 7,400 7,242 7,686 7,017 7,973 7,818 8,162 Managed spaces 1,489 1,489 1,489 1,521 2,213 2,464 2,464 2,213 2,213 3,753 4,343 4,403 4,393 4,393 T hailand 4,488 5,278 5,278 5,268 5,517 5,702 6,268 7,045 6,887 7,372 6,607 7,212 7,121 7,297 China 1,699 1,699 1,699 1,731 2,455 2,455 2,455 2,455 2,455 2,985 3,575 3,635 3,625 3,625 Korea - - - - 43 43 43 113 113 405 501 852 788 956 Indonesia ------677 677 677 677 677 Contract ratio (monthly) 66.3% 60.7% 66.3% 60.2% 60.1% 72.4% 97.0% 98.4% 100.0% 96.9%

Seasonality: The busy periods for the Ski Resort business concentrate in Q2 (November–January) and Q3 (February–April), while Q1 (August– October) and Q4 (May–July) are slow and in these periods the company tends to post operating losses. Meanwhile, the busy periods for the Theme Park business are Q1, which includes summer vacation, and to a lesser extent Q4, which includes the Golden Week holiday and July, and the segment tends go book operating loss in the off periods of Q2 and Q3. Accounting for these businesses together offsets seasonality to an extent. Depending on the balance of both businesses it is likely that NPD will book an operating profit from Q1 through Q3, although Q4 may see an operating loss. The Parking Lot business exhibits no obvious seasonality.

Operating profit model by segment: The Theme Park business compensates for Ski Resort business seasonality

(JPYmn) Parking Lot Ski Resort (winter) (JPYmn) Parking Lot Ski Resort (winter) 1,200 Theme Park Total Theme Park Total 1,500 1,000

800 Raise proft 1,000 600 Raise profit Profit Profit 400 500 200

0 0 -200

-400 -500 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Q1 Q2 Q3 Q4 Source: Shared Research based on company data

06/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Contracts and properties FY07/15 FY07/16 FY07/17 FY07/18 ( Unit s ) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Parking Lot business sales Domestic 2,528 2,591 2,607 2,675 2,683 2,718 2,749 2,859 2,892 2,884 2,921 2,984 2,998 2,957 Directly Managed Facilities 1,786 1,813 1,819 1,862 1,876 1,884 1,903 1,979 2,035 2,022 2,039 2,105 2,092 2,079 Outsourced Management 595 611 627 645 647 666 665 677 672 673 664 681 689 686 Other 146 168 160 169 160 168 181 201 183 189 219 198 216 191 YoY 5.6% 7.5% 6.9% 5.6% 6.1% 4.9% 5.4% 6.9% 7.8% 6.1% 6.3% 4.4% 3.7% 2.5% Directly Managed Facilities 5.0% 6.5% 6.2% 6.2% 5.0% 3.9% 4.6% 6.3% 8.5% 7.3% 7.1% 6.4% 2.8% 2.8% Outsourced Management 0.5% 3.2% 8.3% 8.8% 8.7% 9.0% 6.1% 5.0% 3.9% 1.1% -0.2% 0.6% 2.5% 1.9% Other 46.0% 43.6% 10.3% -9.6% 9.6% - 13.1% 18.9% 14.4% 12.5% 21.0% -1.5% 18.0% 1.1% Leased and managed parking spaces 44,879 45,880 46,711 46,983 48,376 49,885 51,005 52,893 52,612 54,526 55,149 56,382 55,830 55,918 Domestic 38,692 38,903 39,734 39,984 40,361 41,685 42,219 43,280 43,264 43,087 43,789 44,006 43,619 43,363 Leased parking spaces for rent: monthly 13,703 13,795 14,188 14,226 14,374 14,598 14,704 15,114 15,026 14,920 15,293 15,730 15,647 15,706 Leased parking spaces for rent: monthly & hourly 8,917 8,808 8,957 8,958 9,057 9,564 9,392 10,097 10,086 10,056 10,097 9,990 9,671 9,654 Managed hourly parking spaces 16,072 16,300 16,589 16,800 16,930 17,523 18,123 18,069 18,152 18,111 18,399 18,286 18,301 18,003 Rented out monthly parking spaces 12,749 12,884 13,139 13,287 13,344 13,426 13,635 14,051 13,967 13,882 14,369 14,782 14,717 14,488 Contract ratio 93.0% 93.4% 92.6% 93.4% 92.8% 92.0% 92.7% 93.0% 93.0% 93.0% 94.0% 94.0% 94.1% 92.2% Sales per space (JPY'000) 65.3 66.6 65.6 66.9 66.5 65.2 65.1 66.1 66.8 66.9 66.7 67.8 68.7 68.2 YoY 0.2% 1.2% -0.6% -1.7% 1.7% -2.1% -0.8% -1.3% 0.6% 2.7% 2.4% 2.7% 2.8% 1.9% YoY 5.4% 6.2% 7.5% 7.5% 4.3% 7.2% 6.3% 8.2% 7.2% 3.4% 3.7% 1.7% 0.8% 0.6% Leased parking spaces for rent: monthly 7.7% 5.5% 7.1% 5.4% 4.9% 5.8% 3.6% 6.2% 4.5% 2.2% 4.0% 4.1% 4.1% 5.3% Leased parking spaces for rent: monthly & hourly 13.3% 10.6% 11.4% 7.6% 1.6% 8.6% 4.9% 12.7% 11.4% 5.1% 7.5% -1.1% -4.1% -4.0% Managed hourly parking spaces -0.2% 4.5% 5.9% 9.2% 5.3% 7.5% 9.2% 7.6% 7.2% 3.4% 1.5% 1.2% 0.8% -0.6% Overseas 6,187 6,977 6,977 6,999 8,015 8,200 8,786 9,613 9,455 11,439 11,360 12,376 12,211 12,555 Leased parking spaces for rent: monthly 460 394 460 533 556 685 440 439 466 518 Leased parking spaces for rent: monthly & hourly 4,698 5,488 5,488 5,478 5,342 5,342 5,862 6,867 6,686 7,001 6,577 7,534 7,352 7,644 Managed hourly parking spaces 1,489 1,489 1,489 1,521 2,213 2,464 2,464 2,213 2,213 3,753 4,343 4,403 4,393 4,393 Rented out monthly parking spaces 305 239 305 321 334 496 427 432 466 502 Contract ratio 66.3% 60.7% 66.3% 60.2% 60.1% 72.4% 97.0% 98.4% 100.0% 96.9% YoY 37.1% 43.5% 28.4% 14.8% 29.5% 17.5% 25.9% 37.3% 18.0% 39.5% 29.3% 28.7% 29.1% 9.8% Leased parking spaces for rent: monthly 20.9% 73.9% -4.3% -17.6% -16.2% -24.4% Leased parking spaces for rent: monthly & hourly 39.3% 62.8% 39.1% 18.9% 13.7% -2.7% 6.8% 25.4% 25.2% 31.1% 12.2% 9.7% 10.0% 9.2% Managed hourly parking spaces 30.6% - - 2.1% 48.6% 65.5% 65.5% 45.5% - 52.3% 76.3% 99.0% 98.5% 17.1%

Thailand 4,488 5,278 5,278 5,268 5,517 5,702 6,288 7,045 6,887 7,372 6,607 7,212 7,121 7,297 Leased parking spaces for rent: monthly 460 394 460 463 486 536 291 290 317 369 Leased parking spaces for rent: monthly & hourly 4,488 5,278 5,278 5,268 5,057 5,057 5,577 6,582 6,401 6,586 6,066 6,672 6,554 6,678 Managed hourly parking spaces 251 251 250 250 250 250 250 Rented out monthly parking spaces 305 239 305 308 299 349 278 283 317 353 Contract ratio 66.3% 60.7% 66.3% 66.5% 61.5% 65.1% 95.5% 97.6% 100.0% 95.7% China 1,699 1,699 1,699 1,731 2,455 2,455 2,455 2,455 2,455 2,985 3,575 3,635 3,625 3,625 Leased parking spaces for rent: monthly & hourly 210 210 210 210 242 242 242 242 242 242 242 242 242 242 Managed hourly parking spaces 1,489 1,489 1,489 1,521 2,213 2,213 2,213 2,213 2,213 2,743 3,333 3,393 3,383 3,383 South Korea 43 43 43 113 113 405 501 852 788 956 Leased parking spaces for rent: monthly 70 70 32 32 32 32 32 Leased parking spaces for rent: monthly & hourly 43 43 43 43 43 173 269 620 556 724 Managed hourly parking spaces 200 200 200 200 200 Rented out monthly parking spaces 13 35 30 32 32 32 32 Contract ratio 18.6% 50.0% 93.8% 100.0% 100.0% 100.0% 100.0% Indonesia 677 677 677 677 677 Leased parking spaces for rent: monthly 117 117 117 117 117 Managed hourly parking spaces 560 560 560 560 560 Rented out monthly parking spaces 117 117 117 117 117 Contract ratio 100.0% 100.0% 100.0% 100.0% 100.0% Parking lot facilities (properties) 1,149 1,155 1,175 1,171 1,186 1,202 1,227 1,253 1,244 1,253 1,247 1,247 1,243 1,242 Domestic 1,130 1,135 1,155 1,150 1,155 1,171 1,195 1,218 1,209 1,208 1,206 1,204 1,201 1,198 Leased parking facilities for rent (monthly) 897 902 919 912 916 928 950 969 961 960 966 969 972 976 Leased parking facilities for rent (monthly & hourly) 137 136 136 136 136 139 137 141 139 140 136 131 127 123 Managed hourly parking facilities 96 97 100 102 103 104 108 108 109 108 104 104 102 99 Sales per facility 2.20 2.24 2.22 2.28 2.26 2.26 2.24 2.28 2.32 2.30 2.34 2.39 2.41 2.38 YoY -2.6% 1.0% 1.8% 2.7% 2.8% 0.8% 1.0% -0.1% 2.8% 1.8% 4.6% 4.9% 3.7% 3.4% YoY 7.9% 5.8% 4.7% 2.7% 2.2% 3.2% 3.5% 5.9% 4.7% 3.2% 0.9% -1.1% -0.7% -0.8% Leased parking facilities for rent (monthly) 9.0% 6.5% 5.3% 2.5% 2.1% 2.9% 3.4% 6.3% 4.9% 3.4% 1.7% - 1.1% 1.7% Leased parking facilities for rent (monthly & hourly) 6.2% 1.5% -1.4% -2.2% -0.7% 2.2% 0.7% 3.7% 2.2% 0.7% -0.7% -7.1% -8.6% -12.1% Managed hourly parking facilities 1.1% 5.4% 8.7% 12.1% 7.3% 7.2% 8.0% 5.9% 5.8% 3.8% -3.7% -3.7% -6.4% -8.3% Overseas 19 20 20 21 31 31 32 35 34 45 41 43 42 44 Leased parking facilities for rent (monthly) 15 14 15 16 16 20 15 16 16 17 Leased parking facilities for rent (monthly & hourly) 17 18 18 18 13 13 13 16 15 18 18 19 18 19 Managed hourly parking facilities 2 2 2 3 3 4 4 3 3 7 8 8 8 8 YoY 46.2% 53.8% 25.0% 16.7% 63.2% 55.0% 60.0% 66.7% 9.7% 45.2% 28.1% 22.9% 23.5% -2.2% Thailand 16 17 17 17 25 25 26 28 27 32 26 27 27 28 Leased parking facilities for rent (monthly) 15 14 15 15 15 18 13 14 14 15 Leased parking facilities for rent (monthly & hourly) 16 17 17 17 10 10 10 13 12 13 12 12 12 12 Managed hourly parking facilities 1 1 1 1 1 1 1 China 3 3 3 4 5 5 5 5 5 6 7 7 7 7 Leased parking facilities for rent (monthly & hourly) 1 1 1 1 2 2 2 2 2 2 2 2 2 2 Managed hourly parking facilities 2 2 2 3 3 3 3 3 3 4 5 5 5 5 South Korea 1 1 1 2 2 5 6 7 6 7 Leased parking facilit ies for rent (mont hly) 1 1 1 1 1 1 1 Leased parking facilit ies for rent (mont hly & hourly) 1 1 1 1 1 3 4 5 4 5 Managed hourly parking facilities 1 1 1 1 1 Indonesia 2 2 2 2 2 Leased parking facilit ies for rent (mont hly) 1 1 1 1 1 Managed hourly parking facilities 1 1 1 1 1

Parking spaces per leased facility 39 40 40 40 41 42 42 42 42 44 44 45 45 45 Domestic 34 34 34 35 35 36 35 36 36 36 36 37 36 36 Leased parking facility for rent (monthly) 15 15 15 16 16 16 15 16 16 16 16 16 16 16 Leased parking facility for rent (monthly & hourly) 65 65 66 66 67 69 69 72 73 72 74 76 76 78 Managed hourly parking 167 168 166 165 164 168 168 167 167 168 177 176 179 182 Overseas 326 349 349 333 259 265 275 275 278 254 277 288 291 285 Leased parking facility for rent (monthly) 31 28 31 33 35 34 29 27 29 30 Leased parking facility for rent (monthly & hourly) 276 305 305 304 411 411 451 429 446 389 365 397 408 402 Managed hourly parking 745 745 745 507 738 616 616 738 738 536 543 550 549 549 Source: Shared Research based on company data

07/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

1H FY07/18 results (out March 9, 2018)

1H FY07/18: Solid JPY144mn operating profit increase. Parking Lot business saw steady profit gains and Ski Resort business saw ▷ a 3.8% increase in winter visitors, but profits missed forecasts as average customer spend plummeted Parking Lot business: In Japan, the effects of improving earnings at existing properties added up and overseas operations ▷ recorded a 1H profit for the first time. OPM absorbed the impact of active hiring and improved 0.7pp

 Existing domestic properties: Profit base grew steadily due to improved profitability at hourly parking facilities and success of measures including the transfer of monthly parking facilities to a subsidiary and making use of manned properties that offer hourly and monthly parking facilities for sales promotion and fee optimization, and redeploying personnel to properties with earnings improvement potential by converting manned properties to unmanned leased monthly parking facilities

 Overseas: Higher sales in each country. Maintained the same operating profit trend seen from Q3 FY07/17. Achieved a profit for 1H. Thailand and South Korea were strong. The company established a new base in Taiwan Theme Park business: Visitor numbers were down 3.7% and operating profit fell 11% (down JPY58mn YoY and JPY73mn below ▷ plan) due to many wet days in August and typhoons in October

 Visitor numbers, hurt by temporary park closures due to inclement weather during the busy season, caused a JPY46mn YoY drop in profit. The company will seek to enhance indoor facilities

 Maintained efforts to increase average customer spend and cut costs showed progress. Strengthened cost-effective initiatives including events and pet accommodations to raise customer satisfaction

 Renovated the cottage facilities next to amusement parks to respond to the diversifying demands of customers. The company will seek to capture demand for accommodations and improve sales by strengthening brand power

Ski Resort business: Successfully opened earlier due to investments to combat low snowfall. However, although winter visitor ▷ numbers grew nearly 4%, average customer spend plummeted. In 1H, sales and profits fell YoY and missed forecasts From Q3: The Parking Lot business will likely improve in profitability. The company will seek to achieve targets for the Ski Resort ▷ and Theme Park businesses by further increasing visitor numbers Medium-term growth: While maintaining steady profit in the Parking Lot business, the company expects to promote its health ▷ and education businesses. In the Ski Resort and Theme Park businesses, improving visitor numbers will be key

(JPYbn) Parking Lot sales Ski Resort sales Theme Park sales Other sales Sales YoY (right axis) 7 6.4 70% 6.0 6.0 6 5.3 5.4 5.3 60% 5.1 5.1 5.0 5 4.4 4.7 50% 4.2 4.4 3.9 4.1 4 3.3 3.5 40% 3.3 3.1 3.2 3.2 2.8 2.8 2.9 3.0 3 2.5 30% 2.3 2.1 2.1 2.3 2.3 1.9 2.0 1.9 2 20%

1 10%

0 0% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYbn) Parking Lot OP (including company-wide expenses; right axis) Ski Resort OP Theme Park OP Other OP OP YoY 1.5 300%

1.0 200% 0.8 0.5 0.8 0.6 0.6 0.6 0.5 0.4 0.6 0.4 0.6 0.5 0.1 0.4 0.3 0.5 0.2 0.3 0.2 100% 0.1 0.1 0.6 0.6 0.6 0.5 0.4 0.4 0.4 0.4 0.5 0.4 0.5 0.5 0.5 0.5 0.3 0.3 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.0 -0.0 -0.1 -0.1 -0.1 0% -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.3 -0.0 -0.3 -0.3 -0.4 -0.3 -0.5 -0.2 -0.5 -0.5 -100% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data.

08/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Earnings overview 1H FY07/18: Solid JPY144mn operating profit increase. Parking Lot business saw steady profit gains and Ski Resort business saw a 3.8% increase in visitors as profits missed forecasts despite rising YoY In 1H FY07/18, operating profit increased 8.4% YoY (+JPY144mn) to JPY1.86bn. 1H profits missed forecasts (JPY1.9bn). While results missed forecasts by JPY45mn, this was largely due to the Theme Park business falling short by JPY73mn and the Ski Resort business by JPY55m.

Looking at operating profit by segment, the domestic Parking Lot business made solid progress in improving profits and the overseas Parking Lot business posted a 1H profit for the first time. Operating profit was up YoY and above plan, making the business able to absorb the impact of active hiring and drive consolidated earnings. In the Ski Resort business, although early openings for the winter season and efforts to improve profitability in the off season steadily proceeded, the Kawaba and Meiho ski resorts, which have high average customer spends, lost customers to other ski resorts, causing sales and profits to fall in 1H. In the Theme Park business, lower visitor counts brought on by temporary park closures due to excessive rain during the August busy period, a series of typhoons arriving on October weekends, and heavy snowfall in January led profits to be down YoY and below plan. In the Others segment, healthcare and education both contributed to an increase in profit, but this appears to be partly because the forecasts for related expenses were conservative.

Segment performance (JPYmn)

FY07/15 FY07/16 FY07/17 FY07/18 FY07/18 1H 1H 1H 1H Change Yo Y 1H Est. Change % o f FY Sales 8,339 8,635 10,974 11,307 +333 +3.0% 12,000 -693 +94.2% Parking Lot 5,419 5,797 6,229 6,532 +303 +4.9% - +6,532 Ski Resort 2,914 2,741 3,020 3,145 +124 +4.1% 3,320 -175 +94.7% Theme Park - - 1,582 1,482 -100 -6.3% - +1,482 Other - 119 153 150 -4 -2.3% - +150 Adjustments - -22 -11 -2 +9 -82.4% - -2 Operating profit 1,327 888 1,710 1,855 +144 +8.4% 1,900 -45 +97.6% Parking (incl. adj.) 859 878 1,004 1,165 +161 +16.0% 1,160 +5 +100.4% Ski Resort 472 6 170 195 +25 +14.7% 250 -55 +77.9% Theme Park - - 535 476 -58 -10.9% 550 -74 +86.6% Other -3 4 2 19 +17 +830.5% -60 +79 Source: Shared Research based on company data Improving profitability of domestic Parking Lot business The domestic Parking Lot business continued to benefit from various measures designed to improve the profitability of existing facilities. These measures pushed up operating profit by JPY212mn in FY07/17, resulting in higher GPM for the domestic Parking Lot business (+2.6pp in Q1, +2.1pp for the Parking Lot business as a whole in Q1; +2.0pp, +1.6pp in 1H).

Parking Lot business operating profit (JPYmn)

Parking Lot business FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) FY FY FY FY FY 1H 2H 1H 2H 1H 2H 1H 2H Operating profit (previous year) 1,621 1,517 1,610 1,682 1,823 786 824 859 823 878 945 1,004 Change in profit -104 93 72 141 292 73 -1 19 122 126 166 161 Domest ic Facilit y closures -155 -110 -135 -72 -111 -38 -34 -56 -55 -77 -80 -40 Exist ing facilit ies -40 21 15 2 212 -9 11 100 112 137 New facilit ies 344 363 378 279 198 181 197 141 138 69 129 96 Other sales increases -37 68 69 67 83 88 -19 -3 70 58 25 32 SG&A expenses -116 -221 -113 -193 -105 -59 -54 -78 -115 -3 -102 -116 Overseas Overseas (Thailand and China) 33 -1 65 16 -17 8 62 40 -42 51 -24 40 Overseas (South Korea and Indonesia) -17 -20 -11 -9 -5 Company-wide expenses, other -58 -79 -158 80 -48 -33 -125 1 79 -43 -5 47 Operating profit (current year) 1,517 1,610 1,682 1,823 2,115 859 823 878 945 1,004 1,111 1,165 Source: Shared Research based on company data FY07/18 initiatives In the domestic Parking Lot business, NPD concentrated management resources and personnel on properties with significant room for improvement and worked actively to improve the profitability of hourly parking facilities by cancelling contracts or renegotiating terms of unprofitable and low efficiency parking lots (proposing changes to monthly operations or carefully adjusting prices). The company also worked to improve profitability by transferring directly managed monthly parking facilities to NCS. It transferred 230 parking lots in FY07/17 with another 357 planned for FY07/18 (transfers take place every quarter during the two-year period and their effects usually emerge after six months). The company also visited corporate customers (about 6,000 companies in Tokyo and Osaka, and about 10,000 spaces) to carefully track parking lot usage, leading to price adjustment or the adoption of monthly rental cars.

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Progress in 1H In 1H, in regard to hourly parking facilities, NPD achieved its initial plan (halving the number of properties with monthly gross profit of less than JPY500,000) six months early (107 properties at the beginning of FY07/18 down to 56 at end-1H). GPM was 37.8%, improved by 4.9pp from the FY07/16 average and 2.5pp from the 2H FY07/17 average. In regard to monthly parking facilities, the company is making steady progress toward its target (a 30% improvement in gross profit compared to pre-transfer (February 2016) by end-FY07/18) and had achieved a 23.8% improvement by January 2018. By adding monthly parking facility contracts, NCS plans to develop vehicle solutions focused on corporate users.

Improvement of existing properties (top: hourly parking facilities, bottom: monthly parking facilities transferred to NCS)

FY07/16 (FY average) FY07/18 (1H avg., ex. openings from Aug. 2016) Change Monthly gross profit No. of Sales GP % of No. of Sales GP % of No. of Sales GP GPM GPM GPM facilit ies (JPYmn) (JPYmn) total facilit ies (JPYmn) (JPYmn) total facilit ies (JPYmn) (JPYmn) Over JPY1.0mn 59 274 107 39.1% 58.5% 53 308 126 40.9% 62.4% -6 +34 +19 +1.9pp JPY0.5mn-1.0mn 74 152 51 33.6% 27.9% 83 150 58 38.7% 28.7% +9 -2 +7 +5.1pp Less than JPY0.5mn 107 131 26 19.8% 14.2% 56 77 18 23.4% 8.9% -51 -54 -8 +3.5pp Total 240 557 183 32.9% 100.0% 197 535 202 37.8% 100.0% -43 -22 +19 +4.9pp

Rate of Feb. 2016 Jan. 2018 Change change Leased spaces (units) 5,710 5,888 +178 +3.1% Rented out spaces (units) a) 5,286 5,489 +203 +3.8% Contract ratio 92.6% 93.2% +0.6pp Contract price (monthly) (JPYmn/unit) b) 28,900 31,490 +2,590 +9.0% Monthly gross profit (JPYmn) c) 54 67 +13 +23.8% Est imat ed sales a) × b) (JPYmn) d) 153 173 +20 +13.1% Estimated GPM c) ÷ d) 35.4% 38.8% +3.3pp Source: Shared Research based on company data

NPD acquired 31 new properties in 1H. Although it has seen some results from the acquisition of redevelopment properties and strategic dominance measures, because of the focus in 1H on improving the profitability of existing properties, the number of new properties was larger than in 1H FY07/17 (27 properties), but smaller than in 1H FY07/16 (50 properties) and 1H FY07/15 (44 properties).

Domestic Parking Lot business: number of new contracts, cancellations and closures

60 1,218 1,209 1,208 1,195 1,206 1,204 1,201 1,198 50 1,171 1,200 1,155 1,150 1,155 1,135 1,120 1,130 40 1,103 Focus on improving profits from exising properties 30 58 1,073 1,100 39 1,047 44 1,034 43 20 38 38 41 35 1,004 32 34 29 30 39 27 31 979 23 21 24 10 32 19 16 20 17 1,000 948 14 11 14 0 -6 -9 -6 -7 -9 -10 -13 -11 -13 -13 -13 -12 -14 -15 -11 929 -19 -19 -16 -19 -17 -20 -17 -17 -20 -10 907 -26 -22 900 835 -20 884 -30 800 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Cancellations and closures Number of new contracts Net increase QoQ Total domestic contracts (right axis) Source: Shared Research based on company data Toward 2H and FY07/19 In considering 2H, FY07/19, and beyond, NPD would like to focus on two things: further improvement in the profitability of existing properties and accelerated acquisition of new properties. It feels there is still plenty of room for improvement in the profitability of existing properties, both hourly and monthly facilities. Among the former, there are still unprofitable properties that could be improved and new properties that have been slow getting up to speed. Among the latter, there are properties in the Tokyo and Osaka areas for which it expects to complete transfer in June, but which will only produce results six months later (in FY07/19), with progress in the Tokyo area (where properties are scattered) being comparatively slower than in the Osaka area, where NPD has strategic dominance. Once transfer and profitability improvement has been completed in the Osaka area, the company plans to transfer personnel to the Tokyo area to accelerate improvements there.

In regard to new properties, NPD plans to fortify its sales team from 2H. In 1H it focused on improving the profitability of existing properties, but now that it has a schedule for achieving the improvement targets for hourly facilities in FY07/18, it plans to turn its attention more toward sales related to new properties in 2H. We will be watching the status of initiatives from Q3 onward, including redevelopment projects and strategic dominance efforts.

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In addition, NPD is strengthening cooperation with parking lot owners, parking deck equipment manufacturers, and financial institutions, and is planning a service providing alternative parking while parking lots are being overhauled. The company aims to further improve profitability through initiatives including consulting services, monthly rental cars with parking facilities for corporate users, car sharing services, and a loyalty point parking project.

Although NPD is acquiring new clients for its service providing monthly rental cars with parking facilities, there are also clients who have withdrawn from the service. There was a net QoQ increase of just one car at the end of Q2. Because of the content of client contracts, it seems that increasing their share of total sales improves gross profit per car (parking space). By further strengthening sales to corporate monthly facility users (about 6,000 companies in Tokyo and Osaka), NPD intends to replace corporate lease demand. We will be watching developments on this front as well.

New businesses NPD has several new businesses (Others segment) that are just beginning to grow and do not yet contribute significantly to the company’s earnings. The company is particularly optimistic about the healthcare and education businesses. Both businesses have already succeeded in making a profit and are viewed to have significant potential. NPD plans to expand these new businesses even as it steadily grows the mainstay Parking Lot business.

Healthcare business NPD launched Marunouchi Bike & Run in Marunouchi, Tokyo, in April 2011 for cycling commuters and runners near the Imperial Palace. In March 2015, it opened the Marunouchi Healthcare Lounge with the aim of providing businesspersons with health maintenance and promotion and prevention of diseases through cooperation with medical institutions. Then, in November 2017, it established a subsidiary named Nippon Healthy-life Development Co., Ltd. to conduct management and operation of health-related facilities and provide health management consulting and overseas services for illicit drug testing.

NPD aims to provide companies interested in health management with services to promote health and prevent disease in employees. It plans to get products ready as soon as possible and conduct sales activities to corporate clients in major urban areas with whom it already has parking contracts. It wants to have employees use NPD’s own facilities, but is also considering cooperating with major retailers to establish medical floors within their buildings, where it can serve as a tenant that improves the value of those buildings. We will be watching these developments.

Education business TCK Workshop, a subsidiary established in August 2014, provides IB (International Baccalaureate) support services, and support for returnees from abroad who are taking entrance exams to Japanese universities, for students at international schools both inside and outside Japan, and for children preparing to move overseas because of a parent’s work posting. The business is being developed by leveraging the experience of the founder (himself a so-called adult third culture kid who graduated from a Japanese university and an overseas graduate program). NPD believes the education business has significant potential, since overseas postings of Japanese businesspersons are likely to increase, and the education of their children is so important.

Toward 2H and FY07/19 Despite continued active hiring, the Parking Lot business was the driver for 1H operating profit, but the Ski Resort and Theme Park businesses saw drops in visitor numbers due to inclement weather and other factors, so operating profit still fell short of the company forecast. However, the Parking Lot business looks set to continue accumulating earnings in 2H, and NPD will work to increase visitor counts and achieve a rally in the Ski Resort and Theme Park businesses as well.

Ski Resort business The Hakuba area performed well in 1H thanks to a busy February and the Kawaba and Meiho ski resorts, which have a high average customer spend, saw visitor numbers increase YoY thanks to various initiatives. A fall in average customer spend at the Kawaba and Meiho ski resorts held down 1H earnings, but NPD believes these resorts will recover and achieve targets through the further strengthening of initiatives for the off season.

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Theme Park business We will be watching initiatives related to the Golden Week holiday (second only to the summer season in terms of visitor numbers), measures to deal with inclement weather, and initiatives related to the rental villa business. Nasu Highland Park has 5,000 villa lots, about 1,500 lots with buildings and the remaining 3,500 lots being wooded. NPD aims to make effective use of the remaining lots and the idle villas. From 1H, the rental villa business operated with 6 lots (4 owned by NPD + 2 subcontracted), and the company plans to add 10 to 20 lots per year, while also conducting sales. Eventually, it plans to build or remodel 2,500 lots for use as rental villas or, when villas are idle, as accommodations for theme park visitors. NPD does not plan to maintain all lots itself. It will conduct construction and sales with an eye on its balance sheet, targeting sales of 3x or more of depreciation expenses in order to keep fixed expenses under control as it develops the business.

In terms of attractions, NPD is enhancing its indoor facilities to counter inclement weather, with two attractions (shooting and bouldering facilities) opening in March. In addition, it is expanding its NOZARU aerial athletic facility by 1.5x to 12 courses (95 elements). It plans to further extend courses by 10–20% per year, controlling the impact on the environment through a usage cycle in wooded areas.

NPD plans to continue conducting events that have proven effective at attracting visitors and will strengthen the development of demand through participatory events. Through M&A, the company has been creating a pet-friendly amusement park, adding attractions and cafés that owners can enjoy with their pets. In 1H, it held an offline meeting of owners of the popular Bichon Frise breed of dog, which drew a large number of visitors, some of whom traveled long distances despite the impact of a typhoon on the day of the event. The company has been offering venues for concerts by brass bands from local high schools, and participatory events have also been bearing fruit.

In 2H, NPD will seek to capture new and repeat demand by increasing the number of such events and by holding them more regularly. For example, if an offline meeting of pet owners draws about 200 people each time, this could produce an increase of some 3,000–4,000 visitors from April to July if a meeting is held every week. For FY07/18, the company is targeting 461,000 visitors (+5,000 YoY), but in 1H there were just 240,000 (-10,000 YoY). However, NPD expects to get back on track in 2H as long as the weather is decent and events go as planned.

Parking Lot business

Parking Lot business performance

3.3 3.3 Domestic sales Overseas sales OPM (incl. adjustments; right axis) OPM (right axis) 3.2 3.3 (JPYbn) 3.1 3.1 3.1 2.9 2.9 2.9 3.0 3 2.8 2.8 40% 2.7 2.7 2.6 2.5 2.5 2.5 2.3 2.3 2.3 2.2 2.3 35% 2.1 2.1 2.1 1.9 2.0 2.0 2 26.6% 30% 25.6%26.0% 26.0% 24.7% 25.3% 24.4%24.1% 23.7% 23.6% 24.4% 22.7%23.1%22.8% 22.3% 23.0% 25% 22.0% 21.5% 21.6% 21.5% 21.9%21.4% 20.7% 20.6% 20.9% 21.2% 21.2% 20.3% 19.5%19.8% 1 20%

19.1%18.9%18.8% 18.6% 19.2% 17.6% 18.1% 16.7% 17.3% 16.6% 16.8% 17.3%17.0% 15% 16.3% 15.9% 15.9% 16.2% 15.7% 16.0%16.4%15.9% 16.4% 14.8% 15.4%15.1% 15.5% 15.3% 15.3% 13.7% 14.6% 0 10% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data.

Parking Lot business: In Japan, the effects of improving earnings at existing properties added up and overseas operations ▷ recorded a 1H profit for the first time. OPM absorbed the impact of active hiring and improved 0.7pp Number of domestic properties: Down 6 versus FY07/17 (31 new, 37 cancelled). The number was impacted by a review of ▷ contract terms in view of the profitability of existing properties Existing domestic properties: Profit base grew steadily due to improved profitability at hourly parking facilities and success of ▷ measures including the transfer of monthly parking facilities to a subsidiary and making use of manned properties that offer hourly and monthly parking facilities for sales promotion and fee optimization, and redeploying personnel to properties with earnings improvement potential by converting manned properties to unmanned leased monthly parking facilities

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 Hourly parking facilities: Six months earlier than planned, the company halved the number of facilities with gross profit of less than JPY500,000 per month. It then applied management resources thus freed up to improving highly profitable facilities  Monthly parking facilities: Transfer to NCS and improvement in GPM are proceeding. NPD is focusing on the development of services targeting corporate users Number of new domestic properties: 14 in Q1 and 17 in Q2. The company is steadily acquiring redevelopment projects in ▷ Harajuku and near Meguro Station. Strategic dominance is proceeding in Dojima, Osaka, and near Sendai Station

 Strategic dominance: Contributing to improvement in profitability by tracking market trends and efficiently managing expenses related to operations

 Through sales activity to parking lot owners and parking deck equipment manufacturers, NPD is developing a service providing alternative parking while parking lots are being overhauled. This service is contributing to earnings Overseas: Higher sales in each country. Maintained the same operating profit trend seen from Q3 FY07/17. Achieved a profit for ▷ 1H. Thailand and South Korea were strong. The company established a new base in Taiwan

 Thailand: The traffic solution project in Bangkok in cooperation with the Toyota Motor Corporation has entered Phase 3. NPD is in charge of operations and customer acquisition for the car sharing trial using compact electric vehicles. The company has also begun parking lot development for a commercial facility that is a joint venture between Don Quijote Holdings and a major local company

 South Korea: NPD has been steadily accumulating properties and earnings since first achieving single-month profit in February 2017. Brand recognition is improving and the company is proceeding with the hiring of quality personnel

 Taiwan: Market similar to South Korea or Japan. NPD intends to apply its expertise to monetizing idle mechanical parking facilities and helping to resolve the shortage of parking in downtown areas

Traffic solution project in Bangkok, Thailand: NPD is a central member, along with the Toyota Group, a local university, and the Thai government. Phase 1, Park & Ride: The goal was to use a park and ride system to reduce the number of vehicles entering the city from the suburbs during the morning commute. Park and ride lots were set up in 15 locations (2,794 parking spaces). Phase 2, Park & Go: The goal was to promote the efficient use of cars entering Bangkok and to control congestion. A real-time information system was set up to cover 120 major parking lots (about 30,000 parking spaces) in the city center to reduce vehicle movement in central Bangkok during the afternoon and evening. Phase 3, Ha:mo Project: The goal is to control the number of vehicles entering the city center and establish an efficient method of movement. A trial is being conducted to determine the efficiency of car sharing on a university campus, using 30 compact electric vehicles. NPD is in charge of operations and customer acquisition.

Development of commercial and parking facilities in Bangkok, Thailand: Don Quijote Holdings Co., Ltd. (TSE: 7532) announced in November 2017 that it would start developing commercial facilities in Bangkok, Thailand, and open its first store in the country under the DON DON DONKI format. NPD plans to acquire a 5% stake (Don Quijote Holdings Group 47.5%, major local paint manufacturer TOA Group 47.5%) in a company that owns the building that will house DON DON DONKI, and operate their parking facilities. Meanwhile, NPD did not disclose when the investment would take place (Don Quijote Holdings states mid-2018). However, such a move would help the company expand its earnings from FY07/19 and beyond. The building is located in the Thong Lo/Ekkamai area, where there is a concentration of Japanese residents. It has six stories above ground (commercial facilities) and three below (parking), with a total floor space of 26,770sqm. The first and second stories will house DON DON DONKI, and the building will also hold entertainment facilities and a play area featuring popular characters. NPD expects the parking lot to see brisk activity.

Effective use of real estate: The aforementioned project arose when NPD approached the TOA Group about the effective use of idle real estate. NPD plans to continue making such proposals. Incidentally, Don Quijote Holdings considers overseas business to be an important part of its growth strategy. We will be watching related developments.

Entering Taiwan market: NPD plans to increase the percentage of sales from its overseas businesses to 50% in the medium term. It has been focusing on venturing overseas for two reasons: (1) going forward, the company believes that it must begin to venture overseas at an early phase when significant investment is not required, rather than rush overseas once domestic growth ceases, (2) Overseas, competitors continue to develop businesses in English-speaking countries, but these companies have not been penetrating areas where the main language is their native language; NPD believes it can become the de facto company by penetrating such markets during the phase when the parking lot market is just being established.

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As part of this strategy, in February 2018 the company approved a proposal to establish a subsidiary in Taipei, Taiwan, making it the fifth overseas hub. The company plans to solve the lack of parking lots in the city and contribute to the improvement and development of Taiwan’s transportation society by providing parking lot services that possess high added value unique to Japanese-style parking lots, improving safety, and optimizing the parking lot supply and demand balance that the company has developed. The parking lot market in Taiwan is similar to that of Japan, with numerous mechanical parking facilities and issues of idle parking lots and inadequate parking in downtown areas. NPD aims to use its expertise to expand the scale of the market. It aims to achieve a quicker entry than it did in South Korea (established local subsidiary in July 2014, began operating first parking lot in September 2015, and first achieved single-month profit in February 2017).

Domestic Parking Lot business

Domestic Parking Lot business performance

(JPYmn) Sales Operating profit OPM (right axis) 2,983 2,998 2,957 2,858 2,892 2,884 2,922 3,000 2,749 18.5% 19% 2,676 2,684 2,718 18.2% 2,529 2,591 2,607 17.8% 17.8% 2,500 17.5% 17.5% 18% 17.0% 17.1% 17.0% 2,000 16.5% 16.4% 17%

1,500 16%

1,000 14.5% 15% 526 540 531 431 462 431 460 446 468 500 504 500 387 14%

0 13% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data

Directly managed monthly facilities and contracts (Japan)

98%

96%

94%

92%

90%

88%

86% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18

Total domestic East Japan Kanto Tokai Kinki West Japan Source: Shared Research based on company data

Monthly car rental Number of contracts QoQ (left axis) No. of monthly rental vehicles (with parking) 6,000 5,728 5,626 Number of members 25 40 200 5,513 5,372 Members per vehicle (right axis) 167 168 5,500 24.4 5,092 24 30 142 160 5,000 4,715 4,640 4,658 23 135 134 132 25 4,518 4,584 127 130 127 22.7 4,500 22 20 109 18 120 22.0 21.9 15 4,000 21.6 21.5 21 21.0 8 3,500 20.7 20.6 20 10 80 4 1 3,000 18.4 19 2,554 2,596 0 40 2,463 2,379 2,391 2,399 2,339 2,337 2,247 2,339 2,500 18 -2 -5 -5 2,000 17 -10 0 Q1 Q1 Q1 Q1 Q1 Q1 FY07/16 FY07/17 FY07/18 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data

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Overseas Parking Lot business

Parking Lot FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Overseas sales 133 166 182 203 193 203 208 224 210 243 269 302 279 298 YoY 68.4% 8.7% 111.3% 71.8% 44.8% 21.8% 14.4% 10.3% 9.1% 19.8% 29.6% 35.2% 32.8% 22.8% Direct ly managed facilit ies 102 130 138 141 142 147 149 178 150 165 174 180 196 203 Outsourced management 26 27 28 31 31 39 36 32 32 41 54 58 62 66 Other 3 9 17 30 18 17 23 14 27 36 42 64 21 28 T hailand 98 129 143 160 139 142 155 172 161 178 184 208 169 185 YoY 66.1% 0.8% 150.9% 79.8% 41.8% 10.1% 8.4% 7.5% 15.8% 25.4% 18.7% 20.9% 5.0% 3.9% Direct ly managed facilit ies 95 120 126 130 124 126 131 162 134 141 140 144 148 155 Outsourced management ------2 - - 1 Other 3 9 17 30 14 17 23 11 27 36 42 64 21 28 China 34 37 39 43 49 57 49 44 43 49 56 58 60 63 YoY 70.0% 54.2% 34.5% 48.3% 44.1% 54.1% 25.6% 2.3% -12.2% -14.0% 14.3% 31.8% 39.5% 28.6% Direct ly managed facilit ies 7 10 11 12 16 17 13 12 10 11 15 10 10 11 Outsourced management 26 27 28 31 31 39 36 32 32 38 42 47 49 52 Other - - - - 2 1 ------South Korea and Indonesia - - - - 3 3 4 8 5 16 29 36 48 50 Operating profit -17 -17 -4 8 -8 -20 -15 -7 -18 -8 12 28 - - Number of parking facilit ies 19 20 20 21 31 31 32 35 34 45 41 43 42 44 YoY 46.2% 53.8% 25.0% 16.7% 63.2% 55.0% 60.0% 66.7% 9.7% 45.2% 28.1% 22.9% 23.5% -2.2% For rent (monthly) - - - - 15 14 15 16 16 20 15 16 16 17 For rent (monthly & hourly) 17 18 18 18 13 13 13 16 15 18 18 19 18 19 Outsourced management 2 2 2 3 3 4 4 3 3 7 8 8 8 8 T hailand 16 17 17 17 25 25 26 28 27 32 26 27 27 28 China 3 3 3 4 5 5 5 5 5 6 7 7 7 7 Korea - - - - 1 1 1 2 2 5 6 7 6 7 Indonesia ------2 2 2 2 2 Total parking spaces 6,187 6,977 6,977 6,999 8,015 8,200 8,766 9,613 9,455 11,439 11,360 12,376 12,211 12,555 YoY 37.1% 43.5% 28.4% 14.8% 29.5% 17.5% 25.6% 37.3% 18.0% 39.5% 29.6% 28.7% 29.1% 9.8% Leased spaces 4,698 5,488 5,488 5,478 5,802 5,736 6,302 7,400 7,242 7,686 7,017 7,973 7,818 8,162 Managed spaces 1,489 1,489 1,489 1,521 2,213 2,464 2,464 2,213 2,213 3,753 4,343 4,403 4,393 4,393 T hailand 4,488 5,278 5,278 5,268 5,517 5,702 6,268 7,045 6,887 7,372 6,607 7,212 7,121 7,297 China 1,699 1,699 1,699 1,731 2,455 2,455 2,455 2,455 2,455 2,985 3,575 3,635 3,625 3,625 Korea - - - - 43 43 43 113 113 405 501 852 788 956 Indonesia ------677 677 677 677 677 Contract ratio (monthly) 66.3% 60.7% 66.3% 60.2% 60.1% 72.4% 97.0% 98.4% 100.0% 96.9% Source: Shared Research based on company data

15/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Reference

FY07/15 FY07/16 FY07/17 FY07/18 (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Directy operated (monthly) 897 902 919 912 916 928 950 969 961 960 966 969 972 976 - - Eastern Japan 55 57 58 56 56 55 55 53 52 51 54 55 56 59 Kanto 482 483 492 489 496 506 516 531 523 516 512 513 512 514 Tokai 73 71 74 74 73 73 76 76 78 77 76 76 78 78 Kinki 184 185 188 186 186 186 193 197 195 200 202 202 204 202 Western Japan 103 106 107 107 105 108 110 112 113 116 122 123 122 123 YoY 9.0% 6.5% 5.3% 2.5% 2.1% 2.9% 3.4% 6.3% 4.9% 3.4% 1.7% - 1.1% 1.7% Eastern Japan 34.1% 21.3% 16.0% 7.7% 1.8% -3.5% -5.2% -5.4% -7.1% -7.3% -1.8% 3.8% 7.7% 15.7% Kanto 9.3% 5.9% 4.5% 1.5% 2.9% 4.8% 4.9% 8.6% 5.4% 2.0% -0.8% -3.4% -2.1% -0.4% Tokai 2.8% - 4.2% 5.7% - 2.8% 2.7% 2.7% 6.8% 5.5% - - - 1.3% Kinki 7.0% 8.2% 4.4% 1.1% 1.1% 0.5% 2.7% 5.9% 4.8% 7.5% 4.7% 2.5% 4.6% 1.0% Western Japan 5.1% 3.9% 5.9% 4.9% 1.9% 1.9% 2.8% 4.7% 7.6% 7.4% 10.9% 9.8% 8.0% 6.0% Leased parking spaces 13,703 13,795 14,188 14,226 14,374 14,598 14,704 15,114 15,026 14,920 15,293 15,730 15,647 15,706 Eastern Japan 904 918 901 870 888 879 883 872 813 794 846 848 850 933 Kanto 7,477 7,480 7,736 7,773 7,840 8,009 8,106 8,342 8,214 8,101 8,239 8,495 8,389 8,477 Tokai 934 946 974 1,026 1,044 1,078 1,087 1,087 1,125 1,089 1,112 1,078 1,069 1,104 Kinki 2,781 2,836 2,895 2,848 2,884 2,892 3,004 3,072 3,099 3,097 3,177 3,337 3,375 3,321 Western Japan 1,607 1,615 1,682 1,709 1,718 1,740 1,624 1,741 1,775 1,839 1,919 1,972 1,964 1,871 YoY 7.7% 5.5% 7.1% 5.4% 4.9% 5.8% 3.6% 6.2% 4.5% 2.2% 4.0% 4.1% 4.1% 5.3% Eastern Japan 41.3% 22.6% 13.0% 3.6% -1.8% -4.2% -2.0% 0.2% -8.4% -9.7% -4.2% -2.8% 4.6% 17.5% Kanto 7.8% 4.7% 7.5% 4.8% 4.9% 7.1% 4.8% 7.3% 4.8% 1.1% 1.6% 1.8% 2.1% 4.6% Tokai -6.3% -4.8% 4.8% 15.0% 11.8% 14.0% 11.6% 5.9% 7.8% 1.0% 2.3% -0.8% -5.0% 1.4% Kinki 5.3% 8.1% 5.8% 2.2% 3.7% 2.0% 3.8% 7.9% 7.5% 7.1% 5.8% 8.6% 8.9% 7.2% Western Japan 6.6% 3.6% 6.1% 9.5% 6.9% 7.7% -3.4% 1.9% 3.3% 5.7% 18.2% 13.3% 10.6% 1.7% Rented out parking spaces 12,749 12,884 13,139 13,287 13,344 13,426 13,635 14,051 13,967 13,882 14,369 14,782 14,717 14,488 - - Eastern Japan 808 820 802 803 816 805 813 798 742 740 793 790 822 893 Kanto 7,003 6,988 7,122 7,250 7,196 7,302 7,490 7,715 7,582 7,458 7,726 7,966 7,819 7,746 Tokai 878 925 921 973 1,009 1,028 1,017 1,012 1,031 1,034 1,040 1,037 1,016 1,002 Kinki 2,602 2,687 2,749 2,706 2,753 2,700 2,765 2,882 2,912 2,898 3,016 3,161 3,225 3,172 Western Japan 1,458 1,464 1,545 1,555 1,570 1,591 1,550 1,644 1,700 1,752 1,794 1,828 1,835 1,675 Contract ratio 93.0% 93.4% 92.6% 93.4% 92.8% 92.0% 92.7% 93.0% 93.0% 93.0% 94.0% 94.0% 94.1% 92.2% Eastern Japan 89.4% 89.3% 89.0% 92.3% 91.9% 91.6% 92.1% 91.5% 91.3% 93.2% 93.7% 93.2% 96.7% 95.7% Kanto 93.7% 93.4% 92.1% 93.3% 91.8% 91.2% 92.4% 92.5% 92.3% 92.1% 93.8% 93.8% 93.2% 91.4% Tokai 94.0% 97.8% 94.6% 94.8% 96.6% 95.4% 93.6% 93.1% 91.6% 94.9% 93.5% 96.2% 95.0% 90.8% Kinki 93.6% 94.7% 95.0% 95.0% 95.5% 93.4% 92.0% 93.8% 94.0% 93.6% 94.9% 94.7% 95.6% 95.5% Western Japan 90.7% 90.7% 91.9% 91.0% 91.4% 91.4% 95.4% 94.4% 95.8% 95.3% 93.5% 92.7% 93.4% 89.5% YoY +1.1pp +1.2pp +0.1pp +0.6pp -0.2pp -1.4pp +0.1pp -0.4pp +0.1pp +1.1pp +1.2pp +1.0pp +1.1pp -0.8pp Eastern Japan -5.2pp +1.2pp +1.4pp +3.0pp +2.5pp +2.3pp +3.1pp -0.8pp -0.6pp +1.6pp +1.7pp +1.6pp +5.4pp +2.5pp Kanto +1.5pp +0.7pp -1.3pp -0.3pp -1.9pp -2.3pp +0.3pp -0.8pp +0.5pp +0.9pp +1.4pp +1.3pp +0.9pp -0.7pp Tokai +0.8pp +4.9pp -0.2pp +0.1pp +2.6pp -2.4pp -1.0pp -1.7pp -5.0pp -0.4pp -0.0pp +3.1pp +3.4pp -4.2pp Kinki +2.6pp +2.4pp +2.8pp +2.5pp +1.9pp -1.4pp -2.9pp -1.2pp -1.5pp +0.2pp +2.9pp +0.9pp +1.6pp +1.9pp Western Japan +0.3pp -0.8pp +1.6pp +0.7pp +0.7pp +0.8pp +3.6pp +3.4pp +4.4pp +3.8pp -2.0pp -1.7pp -2.3pp -5.7pp Spaces per facilit y 15.3 15.3 15.4 15.6 15.7 15.7 15.5 15.6 15.6 15.5 15.8 16.2 16.1 16.1 Eastern Japan 16.4 16.1 15.5 15.5 15.9 16.0 16.1 16.5 15.6 15.6 15.7 15.4 15.2 15.8 Kanto 15.5 15.5 15.7 15.9 15.8 15.8 15.7 15.7 15.7 15.7 16.1 16.6 16.4 16.5 Tokai 12.8 13.3 13.2 13.9 14.3 14.8 14.3 14.3 14.4 14.1 14.6 14.2 13.7 14.2 Kinki 15.1 15.3 15.4 15.3 15.5 15.5 15.6 15.6 15.9 15.5 15.7 16.5 16.5 16.4 Western Japan 15.6 15.2 15.7 16.0 16.4 16.1 14.8 15.5 15.7 15.9 15.7 16.0 16.1 15.2 YoY -1.2% -0.9% 1.7% 2.8% 2.7% 2.9% 0.3% -0.0% -0.4% -1.2% 2.3% 4.1% 3.0% 3.5% Eastern Japan 5.3% 1.1% -2.5% -3.8% -3.5% -0.8% 3.3% 5.9% -1.4% -2.6% -2.4% -6.3% -2.9% 1.6% Kanto -1.4% -1.2% 2.9% 3.3% 1.9% 2.2% -0.1% -1.2% -0.6% -0.8% 2.4% 5.4% 4.3% 5.0% Tokai -8.9% -4.8% 0.6% 8.8% 11.8% 10.8% 8.7% 3.2% 0.9% -4.2% 2.3% -0.8% -5.0% 0.1% Kinki -1.6% -0.1% 1.3% 1.1% 2.6% 1.4% 1.1% 1.8% 2.5% -0.4% 1.0% 5.9% 4.1% 6.2% Western Japan 1.4% -0.3% 0.1% 4.4% 4.9% 5.7% -6.1% -2.7% -4.0% -1.6% 6.5% 3.1% 2.5% -4.1% FY07/15 FY07/16 FY07/17 FY07/18 (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Monthly & hourly 137 136 136 136 136 139 137 141 139 140 136 131 127 123 Eastern Japan 14 14 15 15 16 19 18 18 18 18 18 18 19 17 Kanto 39 39 38 38 37 38 37 39 39 40 37 35 33 33 Tokai 18 18 18 18 18 18 20 21 21 21 19 17 15 15 Kinki 49 48 48 47 47 46 44 44 43 43 44 42 41 41 Western Japan 17 17 17 18 18 18 18 19 18 18 18 19 19 17 YoY 6.2% 1.5% -1.4% -2.2% -0.7% 2.2% 0.7% 3.7% 2.2% 0.7% -0.7% -7.1% -8.6% -12.1% Eastern Japan 55.6% 27.3% 15.4% 7.1% 14.3% 35.7% 20.0% 20.0% 12.5% -5.3% - - 5.6% -5.6% Kanto - - -7.3% -7.3% -5.1% -2.6% -2.6% 2.6% 5.4% 5.3% - -10.3% -15.4% -17.5% Tokai 5.9% - -5.3% -5.3% - - 11.1% 16.7% 16.7% 16.7% -5.0% -19.0% -28.6% -28.6% Kinki - -2.0% -2.0% -4.1% -4.1% -4.2% -8.3% -6.4% -8.5% -6.5% - -4.5% -4.7% -4.7% Western Japan 13.3% - 6.3% 12.5% 5.9% 5.9% 5.9% 5.6% - - - - 5.6% -5.6% Leased spaces 8,917 8,808 8,957 8,958 9,057 9,564 9,392 10,097 10,086 10,056 10,097 9,990 9,671 9,654 Eastern Japan 1,095 1,095 1,295 1,295 1,345 1,786 1,747 1,747 1,747 1,753 1,932 1,930 1,949 1,879 Kanto 2,338 2,302 2,274 2,312 2,286 2,326 2,288 2,475 2,483 2,520 2,376 2,316 2,136 2,249 Tokai 2,602 2,602 2,584 2,587 2,608 2,610 2,683 2,831 2,822 2,816 2,785 2,677 2,606 2,616 Kinki 2,154 2,081 2,076 2,023 2,077 2,099 1,912 2,008 2,042 1,975 1,991 1,890 1,803 1,819 Western Japan 728 728 728 741 741 743 762 1,036 992 992 1,013 1,177 1,177 1,091 YoY 13.3% 10.6% 11.4% 7.6% 1.6% 8.6% 4.9% 12.7% 11.4% 5.1% 7.5% -1.1% -4.1% -4.0% Eastern Japan 195.1% 186.6% 195.0% 182.1% 22.8% 63.1% 34.9% 34.9% 29.9% -1.8% 10.6% 10.5% 11.6% 7.2% Kanto 0.5% -3.2% -4.6% -12.1% -2.2% 1.0% 0.6% 7.1% 8.6% 8.3% 3.8% -6.4% -14.0% -10.8% Tokai 1.7% 0.5% -1.3% -1.9% 0.2% 0.3% 3.8% 9.4% 8.2% 7.9% 3.8% -5.4% -7.7% -7.1% Kinki 0.3% -2.1% -2.6% -5.0% -3.6% 0.9% -7.9% -0.7% -1.7% -5.9% 4.1% -5.9% -11.7% -7.9% Western Japan 56.2% 50.1% 54.2% 57.0% 1.8% 2.1% 4.7% 39.8% 33.9% 33.5% 32.9% 13.6% 18.6% 10.0% Spaces per facilit y 65.1 64.8 65.9 65.9 66.6 68.8 68.6 71.6 72.6 71.8 74.2 76.3 76.1 78.5 Eastern Japan 78.2 78.2 86.3 86.3 84.1 94.0 97.1 97.1 97.1 97.4 107.3 107.2 102.6 110.5 Kanto 59.9 59.0 59.8 60.8 61.8 61.2 61.8 63.5 63.7 63.0 64.2 66.2 64.7 68.2 Tokai 144.6 144.6 143.6 143.7 144.9 145.0 134.2 134.8 134.4 134.1 146.6 157.5 173.7 174.4 Kinki 44.0 43.4 43.3 43.0 44.2 45.6 43.5 45.6 47.5 45.9 45.3 45.0 44.0 44.4 Western Japan 42.8 42.8 42.8 41.2 41.2 41.3 42.3 54.5 55.1 55.1 56.3 61.9 61.9 64.2 YoY 6.7% 9.0% 13.0% 10.0% 2.3% 6.2% 4.1% 8.7% 9.0% 4.4% 8.3% 6.5% 4.9% 9.3% Eastern Japan 89.7% 125.2% 155.7% 163.3% 7.5% 20.2% 12.4% 12.4% 15.5% 3.6% 10.6% 10.5% 5.7% 13.5% Kanto 0.5% -3.2% 2.9% -5.2% 3.1% 3.7% 3.3% 4.3% 3.0% 2.9% 3.8% 4.3% 1.7% 8.2% Tokai -3.9% 0.5% 4.2% 3.6% 0.2% 0.3% -6.6% -6.2% -7.3% -7.5% 9.3% 16.8% 29.3% 30.1% Kinki 0.3% -0.1% -0.6% -0.9% 0.5% 5.3% 0.5% 6.0% 7.5% 0.7% 4.1% -1.4% -7.4% -3.4% Western Japan 37.8% 50.1% 45.2% 39.5% -3.9% -3.6% -1.1% 32.5% 33.9% 33.5% 32.9% 13.6% 12.4% 16.4%

16/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

FY07/15 FY07/16 FY07/17 FY07/18 (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Outsourced Management 96 97 100 102 103 104 108 108 109 108 104 104 102 99 Eastern Japan 9 11 11 13 13 13 15 15 15 15 14 14 14 13 Kanto 35 36 37 37 37 37 39 39 40 39 37 37 38 36 Tokai 12 13 13 13 14 15 15 15 15 15 13 14 14 14 Kinki 24 22 22 22 23 24 24 24 24 25 26 26 24 23 Western Japan 16 15 17 17 16 15 15 15 15 14 14 13 12 13 YoY 1.1% 5.4% 8.7% 12.1% 7.3% 7.2% 8.0% 5.9% 5.8% 3.8% -3.7% -3.7% -6.4% -8.3% Eastern Japan -18.2% 22.2% 22.2% 44.4% 44.4% 18.2% 36.4% 15.4% 15.4% 15.4% -6.7% -6.7% -6.7% -13.3% Kanto -5.4% -2.7% 2.8% 8.8% 5.7% 2.8% 5.4% 5.4% 8.1% 5.4% -5.1% -5.1% -5.0% -7.7% Tokai - 8.3% 8.3% 8.3% 16.7% 15.4% 15.4% 15.4% 7.1% - -13.3% -6.7% -6.7% -6.7% Kinki 14.3% 10.0% 10.0% 4.8% -4.2% 9.1% 9.1% 9.1% 4.3% 4.2% 8.3% 8.3% - -8.0% Western Japan 14.3% 7.1% 13.3% 13.3% - - -11.8% -11.8% -6.3% -6.7% -6.7% -13.3% -20.0% -7.1% Leased spaces 16,072 16,300 16,589 16,800 16,930 17,523 18,123 18,069 18,152 18,111 18,399 18,286 18,301 18,003 Eastern Japan 1,053 1,355 1,355 1,567 1,567 1,567 2,088 2,118 2,118 2,118 1,924 1,924 1,924 1,892 Kanto 8,820 8,864 8,934 8,934 8,934 8,934 9,089 9,049 9,113 9,043 8,888 8,894 9,045 8,934 Tokai 1,529 1,593 1,663 1,663 1,797 2,125 2,125 2,125 2,125 2,125 2,035 2,099 2,099 2,099 Kinki 3,250 3,130 3,130 3,130 3,189 3,492 3,492 3,492 3,511 3,569 4,296 4,194 4,164 4,034 Western Japan 1,420 1,358 1,507 1,506 1,443 1,405 1,329 1,285 1,285 1,256 1,256 1,175 1,069 1,044 YoY -0.2% 4.5% 5.9% 9.2% 5.3% 7.5% 9.2% 7.6% 7.2% 3.4% 1.5% 1.2% 0.8% -0.6% Eastern Japan -26.7% 28.7% 28.7% 48.8% 48.8% 15.6% 54.1% 35.2% 35.2% 35.2% -7.9% -9.2% -9.2% -10.7% Kanto -1.9% -1.4% 0.7% 4.3% 1.3% 0.8% 1.7% 1.3% 2.0% 1.2% -2.2% -1.7% -0.7% -1.2% Tokai -0.6% 3.5% 8.1% 8.1% 17.5% 33.4% 27.8% 27.8% 18.3% - -4.2% -1.2% -1.2% -1.2% Kinki 4.5% 4.6% 4.6% 3.7% -1.9% 11.6% 11.6% 11.6% 10.1% 2.2% 23.0% 20.1% 18.6% 13.0% Western Japan 38.0% 32.0% 24.9% 24.8% 1.6% 3.5% -11.8% -14.7% -10.9% -10.6% -5.5% -8.6% -16.8% -16.9% Spaces per facilit y 167.4 168.0 165.9 164.7 164.4 168.5 167.8 167.3 166.5 167.7 176.9 175.8 179.4 181.8 Eastern Japan 117.0 123.2 123.2 120.5 120.5 120.5 139.2 141.2 141.2 141.2 137.4 137.4 137.4 145.5 Kanto 252.0 246.2 241.5 241.5 241.5 241.5 233.1 232.0 227.8 231.9 240.2 240.4 238.0 248.2 Tokai 127.4 122.5 127.9 127.9 128.4 141.7 141.7 141.7 141.7 141.7 156.5 149.9 149.9 149.9 Kinki 135.4 142.3 142.3 142.3 138.7 145.5 145.5 145.5 146.3 142.8 165.2 161.3 173.5 175.4 Western Japan 88.8 90.5 88.6 88.6 90.2 93.7 88.6 85.7 85.7 89.7 89.7 90.4 89.1 80.3 YoY -1.2% -0.9% -2.6% -2.6% -1.8% 0.3% 1.2% 1.6% 1.3% -0.5% 5.4% 5.1% 7.7% 8.4% Eastern Japan -10.4% 5.3% 5.3% 3.0% 3.0% -2.1% 13.0% 17.1% 17.1% 17.1% -1.3% -2.7% -2.7% 3.1% Kanto 3.7% 1.3% -2.0% -4.1% -4.2% -1.9% -3.5% -3.9% -5.6% -4.0% 3.1% 3.6% 4.5% 7.0% Tokai -0.6% -4.5% -0.3% -0.3% 0.7% 15.6% 10.7% 10.7% 10.4% - 10.5% 5.8% 5.8% 5.8% Kinki -8.6% -4.9% -4.9% -1.0% 2.4% 2.3% 2.3% 2.3% 5.5% -1.9% 13.6% 10.9% 18.6% 22.9% Western Japan 20.7% 23.2% 10.2% 10.1% 1.6% 3.5% -0.1% -3.3% -5.0% -4.2% 1.3% 5.5% 4.0% -10.5% Source: Shared Research based on company data

Ski Resort business 8,000 20% Sales OPM (right axis) Apr. 2013 7,000 Spicy (rental) 15% 5,881 6,152 6,000 5,584 10% 4,910 5,000 5% 4,038 4,000 0% 3,000 -5% 1,868 2,000 1,655 -10% 1,145 1,000 389 502 529 -15% 0 -20% FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Sep. 2006 Nov. 2009 Oct. 2010 Nov. 2012 Hakuba Happo Iwatake Oct. 2014 Nov. 2015 (JPYmn) Kashimayari Ski Resort Kitashiga Ryuoo Ski Park Kawaba Ski Resort Tsugaike Ski Resort Meiho Ski Resort Sugadaira Kogen Snow Resort Operating profit -112 -18 -9 56 113 200 504 725 905 107 443 Cumulat ive -112 -130 -139 -82 31 231 735 1,460 2,365 2,472 2,915 M&A costs 550 144 333 511 1,021 207 Cumulat ive 550 550 550 694 1,027 1,027 1,538 1,538 2,559 2,766 2,766 Source: Shared Research based on company data

Ski Resort business: sales and earnings trends (quarterly)

3,000 60% 2,500 50% 2,000 40% 1,500 30% 808 800 1,000 619 646 616 20% 559 499 503 450 318 430 383 500 195 271 10% 52 150 155 0 0% -41 -114 -81 -149 -240 -184 -201 -193 -245 -175 -255 -500 -313 -374 -265 -334 -10% -515 -527 -1,000 -20% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Sales Operating profit OPM (right axis) Source: Shared Research based on company data

Ski Resort business: Successfully opened earlier due to investments to combat low snowfall. However, although winter visitor ▷ numbers grew nearly 4%, average customer spend plummeted. In 1H, sales and profits fell YoY and missed forecasts

 Number of visitors: Visitors increased by 28,000 (+3.8% YoY) to 751,000. All parks saw more visitors except for Ryuoo Ski Park (-9.9% YoY, or 9,000 visitors) and Kawaba (-23.4% YoY, or 17,000 visitors)

17/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

 Early openings: The strategy to open earlier than FY07/17 was successful except for Kashimayari. Ryuoo and Kawaba results were affected by nearby ski resorts also opening earlier  Inbound visitors: In the Hakuba area, the company strengthened promotions to attract visitors from Australia, Taiwan, and China, leading to high numbers of visitors

 Plummeting average customer spend: The YoY decline at the Kawaba and Meiho ski resorts, which have high average customer spends, hurt earnings

Combatting low snow: Continued to invest in added artificial snowfall equipment to secure stable snow supplies and have all ▷ areas available for skiing at an early timing in the season Measures to improve earnings: Full renovations of Ryuoo Ski Park summit restaurant and new menus for company-run ▷ restaurants in Hakuba resorts; attracted popular tenants

 Headquarters were relocated to Hakuba in November, a measure that the company expects to produce annual savings of JPY50mn Topic: NPD concluded a long-term alliance agreement with Hakuba Valley and Vail Resorts. From FY07/19, NPD will promote ▷ visits by holders of the Epic Pass, the world’s biggest season pass, and will seek to improve awareness of the company’s name. It expects to exceed JPY5,000 in sales per visitor, increasing both visitor numbers and average visitor spend Q3 and beyond: Promote campaigns to tout heavy snowfall to increase the number of visitors. Strengthen SNS efforts for ▷ locations which can be visited on a day trip (Kawaba, Meiho)

 February saw a record visitor count. The Kawaba and Meiho ski resorts, which have high average customer spends, are likely to see YoY increases in visitors

Visitor count by ski resort during off season

Summer facility (with operating ropeway) FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Q1 Q1 Q1 Q1 Yo Y Yo Y 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Hakuba Happo-one International Mountain Resort 74 77 67 70 5.0% 75 78 67 70 5.0% 96 75 78 67 -14.1% 134 112 112 98 -12.7% Nature World Tsugaike Kogen 59 64 51 52 19.1% 60 64 51 52 22.6% 74 60 64 51 -22.5% 108 92 95 78 -18.4% Hakuba Iwate Lily Garden and Mountain View 15 21 15 18 2.3% 15 21 16 20 2.3% 16 15 21 16 -20.6% 23 23 95 25 -17.6% Ryuoo Mountain Park 4 16 38 77 100.8% 5 16 41 83 103.3% 5 5 16 41 143.2% 10 9 31 60 92.1% Mt. Kongo Ropeway 16 15 -8.1% - - 23 22 -5.2% - - 4 28 - 20 46 130.0% Subtotal 154 180 190 235 23.8% 155 181 200 249 24.8% 193 155 181 204 9.8% 275 238 290 309 6.4% Summer facility (other) FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Q1 Q1 Q1 Q1 Yo Y Yo Y 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Kashimayari Sport s V illage 3 10 6 5 -7.0% 3 10 7 6 -21.8% 3 3 10 9 -7.7% 5 10 13 13 -0.7% Kawaba Resort 19 21 16 15 -5.9% 25 27 22 20 -7.7% 20 25 27 22 -19.3% 37 40 47 40 -14.6% Meiho Kogen Development 5 10 11 3.9% - 6 12 13 5.4% - - 6 13 103.8% - 3 12 22 73.5% Shinetsu Sakudo Maintenance 0 - 3.3% - - 1 1 4.6% - - - 1 - - - 1 2 99.1% Subtotal 23 37 34 33 -2.8% 28 44 44 41 -6.1% 24 28 44 47 5.0% 41 54 74 78 4.6% Total 177 217 224 268 19.6% 183 225 244 290 18.9% 217 183 225 251 11.6% 316 292 365 387 6.0% Source: Shared Research based on company data

Visitor count by ski resort during winter*

Winter facility FY07/15 FY07/16 FY07/17 FY07/18 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Yo Y 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y HAKUBA VALLEY Happo-one Winter Resort 189 163 157 186 17.9% 430 413 379 370 -2.2% 438 427 381 378 -0.6% HAKUBA VALLEY Iwatake Snow Field 52 24 31 49 56.0% 119 113 73 100 37.1% 119 113 73 100 37.1% HAKUBA VALLEY Tsugaike Kogen Ski Resort 115 127 116 121 3.6% 287 243 249 263 5.5% 289 246 250 265 6.2% HAKUBA VALLEY Kashimayari Ski Resort 68 50 43 46 5.7% 146 142 97 95 -2.2% 146 142 97 95 -2.2% Ryuoo Ski Park 105 100 91 82 -9.9% 245 254 197 200 1.8% 247 255 197 204 3.4% Kawaba Ski Resort 64 42 72 55 -23.4% 155 146 107 149 38.9% 155 146 107 149 39.5% Meiho Ski Resort 103 54 83 86 2.7% - 217 141 183 29.3% - 217 141 183 29.3% Sugadaira Kogen Snow Resort - 121 126 124 -1.2% 235 245 4.3% - - 235 245 4.3% Subtotal 700 685 723 751 3.8% 1,384 1,532 1,481 1,609 8.6% 1,394 1,550 1,484 1,623 9.4% Winter facility (other) FY07/15 FY07/16 FY07/17 FY07/18 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Yo Y 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Kawaba Resort 3 5 5 3 -45.5% 10 10 21 17 -26.1% 10 10 21 19 -6.3% Meiho Kogen Development - 1 1 1 -2.8% - 0 3 4 23.0% - 0 3 4 23.0% Mt. Kongo Ropeway - - 12 12 5.3% - - - 22 - - - - 22 - Shinetsu Sakudo Maintenance - - 0 - -10.3% ------Subtotal 3 6 20 17 -10.7% 10 10 24 45 85.2% 10 10 24 47 93.7% Total 703 691 743 768 3.4% 1,394 1,542 1,505 1,654 9.9% 1,404 1,560 1,509 1,670 10.7% *Data are from the 2016/2017 season. The numbers for Hakuba Valley and Tsugaike Koen Ski Resort includes those using seasonal tickets (20,000 and 26,000 visitors, respectively, in cumulative Q3)

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Monthly visitor count in winter season (1,000 people)

No v. Dec. Jan. Feb. Mar. Apr. May No v. Dec. Jan. Feb. Mar. Apr. May FY07/17 FY07/18 HAKUBA VALLEY Happo-one Winter Resort - 45 112 113 78 21 8 2 59 123 124 HAKUBA VALLEY Iwatake Snow Field 6 25 44 24 - 11 38 50 HAKUBA VALLEY Tsugaike Kogen Ski Resort - 34 82 82 56 7 2 - 39 80 85 HAKUBA VALLEY Kashimayari Ski Resort 10 33 30 20 1 11 34 29 Ryuoo Ski Park 35 55 62 44 3 - 29 52 68 Kawaba Ski Resort 26 45 37 30 8 - 18 36 39 Meiho Ski Resort 22 61 60 36 2 24 61 61 Sugadaira Kogen Snow Resort 33 92 77 40 1 34 90 83 Total - 215 508 507 332 45 14 3 228 518 542 HAKUBA VALLEY Happo-one Winter Resort - -13 +8 -6 -1 +4 +7 +2 +14 +11 +11 HAKUBA VALLEY Iwatake Snow Field - - +7 +12 +8 - - - +5 +13 +6 HAKUBA VALLEY Tsugaike Kogen Ski Resort - -13 +2 +13 +7 +4 +2 - +5 -2 +3 HAKUBA VALLEY Kashimayari Ski Resort - -5 -2 +1 +5 - - - +1 +1 -1 Ryuoo Ski Park - -10 +1 +5 +7 +2 - - -6 -3 +6 Kawaba Ski Resort - +15 +15 +1 +5 +5 - - -8 -9 +2 Meiho Ski Resort - +19 +10 -1 +12 +2 - - +2 - +1 Sugadaira Kogen Snow Resort - +6 -1 +2 +2 +1 - - +1 -2 +6 Total - - +39 +25 +47 +17 +12 +3 +13 +10 +35 Source: Shared Research based on company data

Theme Park business

Theme Park business: Visitor numbers were down 3.7% and operating profit fell 11% (down JPY58mn YoY and JPY73mn below ▷ plan) due to many wet days in August and typhoons in October

 Maintained efforts to increase average customer spend and cut costs showed progress. Strengthened cost-effective initiatives including events and pet accommodations to raise customer satisfaction

 Renovated the cottage facilities next to amusement parks to respond to the diversifying demands of customers. From December, the company cut costs by bringing accommodations cleaning operations in-house

Visitors: 199,000 people in Q1, 41,000 in Q2 (204,000 in Q1 FY07/17, 46,000 in Q2, 66,000 in Q3, and 129,000 in Q4). Visitor ▷ numbers, hurt by temporary park closures due to inclement weather during the busy season, caused a JPY46mn YoY drop in profit. The company will seek to enhance indoor facilities

 NOZARU, an aerial athletic facility, had 5,000 visitors in Q1 and was fully booked during busy periods. Operational period was extended and the facility had 1,000 visitors in Q2 Initiatives: Strengthened events to attract more repeat visitors. Efforts to streamline operations, reorganize organizational ▷ functions, and multitask various operations gradually began to show effects

 Reviewing shift system and reshuffling staff. Continuing to changing operating hours and reviewing products, prices

 Cottages: Aiming to build a comprehensive resort facility for enjoying features not common in everyday life, the company opened a glamping facility in Q1 and launched a new rental villa business in Q2

FY07/18: Boost content to appeal to 4.5mn (300,000 overnight) tourists to Nasu, further minimize visitor fluctuations ▷  Streamline operations: NPD believes that there is more room for improvement. Will work to hire younger workers to expand the Theme Park business and provide employee training  Theme Park: Continue to expand indoor facilities although the Nasu area already attracts 200,000 people despite inclement weather  Rental villas and cottages: Begin measures to better utilize about 5,000 units. The company plans eventually to use 2,500 lots as accommodation facilities during idle times

Q3 onward: Attract more visitors, increase repeat visitors, and improve operations ahead of a new season starting March 3 ▷  NPD is opening two indoor attractions in March. It has plans to enhance participatory events and expand NOZARU courses by 1.5x as measures to increase visitor numbers

For details on previous quarterly and annual results, please refer to the Historical financial statements section.

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Full-year company forecasts

Consolidat ed earnings FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) 1H 2H FY 1H 2H FY 1H 2H FY 1H Act. 2H Est. FY Est . Sales 8,339 8,669 17,008 8,635 9,505 18,140 10,974 11,014 21,987 11,307 12,193 23,500 YoY 11.7% 13.3% 12.5% 3.5% 9.6% 6.7% 27.1% 15.9% 21.2% 3.0% 10.7% 6.9% Operating profit 1,327 1,246 2,573 888 1,090 1,978 1,710 1,357 3,067 1,855 1,645 3,500 YoY 10.2% 10.2% 10.2% -33.1% -12.5% -23.1% 92.6% 24.5% 55.1% 8.4% 21.2% 14.1% OPM 15.9% 14.4% 15.1% 10.3% 11.5% 10.9% 15.6% 12.3% 14.0% 16.4% 13.5% 14.9% Recurring profit 1,662 1,348 3,010 1,142 1,099 2,241 1,721 1,491 3,212 1,877 1,623 3,500 YoY 23.7% 8.0% 16.1% -31.3% -18.5% -25.6% 50.7% 35.7% 43.4% 9.0% 8.9% 9.0% RPM 19.9% 15.5% 17.7% 13.2% 11.6% 12.4% 15.7% 13.5% 14.6% 16.6% 13.3% 14.9% Net in co me 1,784 1,746 3,531 655 600 1,255 1,253 989 2,243 1,323 1,027 2,350 YoY 105.1% 145.4% 123.2% -63.3% -65.6% -64.5% 91.4% 64.8% 78.7% 5.6% 3.8% 4.8% Operating profit 1,327 1,246 2,573 888 1,090 1,978 1,710 1,357 3,067 1,855 1,645 3,500 Domest ic Parking Lot 1,177 1,184 2,362 1,190 1,254 2,444 1,357 1,362 2,719 2,980 Overseas Parking Lot -34 4 -29 -29 -22 -51 -26 41 15 50 Ski Resort 472 434 905 6 101 107 170 273 443 195 405 600 Theme Park 45 535 -22 512 476 124 600 Other -3 -11 -14 4 -1 3 2 -5 -3 19 -69 -50 Adjustments -285 -366 -650 -283 -287 -570 -327 -291 -618 -280 -400 -680 Parking Lot (incl. adj.) 859 823 1,682 878 945 1,823 1,004 1,110 2,114 1,444 906 2,350 Domest ic 893 818 1,711 907 967 1,874 1,030 1,071 2,100 2,300 Overseas -34 4 -29 -29 -22 -51 -26 41 15 50

Ski Resort business FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) 1H 2H FY 1H 2H FY 1H 2H FY 1H Act. 2H Est. FY Est . Sales 2,914 2,969 5,883 2,741 2,844 5,584 3,020 3,130 6,150 3,144 3,336 6,480 YoY 20.0% 19.8% 19.9% -5.9% -4.2% -5.1% 10.2% 10.1% 10.1% 4.1% 6.6% 5.4% Operating profit 472 434 905 6 101 107 170 273 443 195 405 600 YoY 12.8% 41.4% 24.9% -98.7% -76.7% -88.2% 2,659.5% 170.6% 313.4% 14.7% 48.3% 35.5% OPM 16.2% 14.6% 15.4% 0.2% 3.6% 1.9% 5.6% 8.7% 7.2% 6.2% 12.2% 9.3% Recurring profit 3 92 95 168 272 440 193 347 540 YoY - - - 5,493.6% 195.9% 363.2% 14.9% 27.5% 22.7% RPM 0.1% 3.2% 1.7% 5.6% 8.7% 7.2% 6.1% 10.4% 8.3% Net in co me -155 38 -117 58 187 245 144 106 250 YoY - - - - 392.7% - 147.1% -43.2% 1.9% Visit ors in wint er ('000) 700 850 1,550 685 799 1,484 723 900 1,623 751 851 1,602 YoY -2.1% -6.0% -4.3% 5.5% 12.6% 9.4% 3.9% -5.4% -1.3% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

FY07/18 company forecast (Initial forecast)

FY07/20 operating profit target: JPY5.0bn The company targets an operating profit of JPY5.0bn for FY07/20, a breakdown of which is: JPY3.0bn in the Parking Lot business, JPY1.5bn in the Ski Resort business, and JPY500mn in the Theme Park business.

FY07/17 results With this target in mind, NPD in FY07/17 took the following measures: 1) the domestic Parking Lot business: improving gross profit at directly managed monthly parking lots and other measures to improve earnings at existing properties, winning renewal consulting orders for mechanical parking facilities, and accelerating growth with the launch of the loyalty point parking project, on top of self-sustaining growth; 2) the Theme Park business: methodically implementing measures to improve the ability to draw visitors and to reduce costs, and launching a rental villa business; and 3) the Ski Resort business: installing snow machines to create snow during warm winters and expediting openings for the winter season, and working on increasing visitor numbers during the off season so sales will eventually comprise 30% of the total.

This resulted in operating profit of JPY3.1bn (up JPY1.1bn YoY, JPY233mn under initial forecasts). 1) Domestic Parking Lot: operating profit of JPY2.1bn (up JPY226mn YoY, JPY110mn above initial forecasts). New contracts missed forecasts, but the company made a solid improvement in profits at existing properties and strengthened relationships with mechanical parking facility owners and equipment manufacturers. 2) Overseas Parking Lot: operating profit of JPY15mn (up JPY66mn YoY, JPY5mn above initial forecasts). All businesses moved into operating profit with the exception of Indonesia which is in the investment stage. 3) Theme Park: operating profit of JPY512mn (up JPY467mn YoY, JPY262mn above initial forecasts). Operating profit exceeded initial forecasts due to a tailwind of favorable weather and initiatives to attract more customers and cut costs. 4) Ski Resort: operating profit of JPY443mn (up JPY336mn YoY, JPY607mn below initial forecasts). The company’s measures to deal with

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the lack of snow and warm winter were effective, but the recovery in visitors to the Hakuba area was sluggish, and visitor numbers at ski fields with high average customer spend such as Kawaba, Meiho, and Ryuoo fell short of forecasts.

For consolidated results overall, profit growth in the domestic Parking Lot and Theme Park businesses did not compensate for the shortfall versus initial estimates in the Ski Resort business. However, there are several noteworthy points. 1) In the mainstay domestic Parking Lot business, which is a source of investment funds for the other growth businesses, there was solid progress in improving profits at existing properties. 2) The overseas Parking Lot business moved into operating profit, and has reached the stage where profits will accumulate. 3) The Theme Park business is offsetting seasonality in the Ski Resort business, reducing volatility in quarterly consolidated results. 4) The Theme Park business achieved its medium-term targets.

FY07/18 plan: Parking Lot to further increase GP at existing facilities, acquire new properties; Theme Park to benefit from restructuring For FY07/18, the company forecasts operating profit of JPY3.5bn (up JPY433mn YoY), with profit growth in each of its three mainstay businesses. The company plans to continue improving profits at existing properties and to acquire new properties in the Parking Lot business, implement structural reorganization in the Ski Resort business aimed at strengthening margins, and persist with initiatives to increase visitor numbers and operate more efficiently in the Theme Park business. New businesses are still in investment stage.

Parking Lot business

Parking Lot business FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Est. Sales 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,835 12,705 13,700 Domest ic Parking Lot 7,342 7,520 7,917 8,472 9,064 9,775 10,402 11,009 11,681 12,500 Directly managed 5,599 5,631 5,727 6,097 6,476 6,869 7,280 7,642 8,201 - Outsourced Management 1,350 1,514 1,763 1,894 2,064 2,356 2,478 2,655 2,690 - Other 393 376 427 480 523 549 643 710 789 - Overseas Parking Lot 37 250 335 436 684 827 1,025 1,200 Thailand 11 66 333 530 608 731 - China 36 239 268 102 153 199 206 - South Korea 14 14 65 - Indonesia 4 21 - Yo Y 4.8% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% 7.8% Domest ic Parking Lot 4.8% 2.4% 5.3% 7.0% 7.0% 7.8% 6.4% 5.8% 6.1% 7.0% Direct ly managed - 0.6% 1.7% 6.5% 6.2% 6.1% 6.0% 5.0% 7.3% - Outsourced Management - 12.1% 16.5% 7.5% 9.0% 14.1% 5.2% 7.1% 1.3% - Other - -4.3% 13.6% 12.3% 9.0% 5.0% 17.1% 10.4% 11.1% - Overseas Parking Lot - - - 584.8% 34.0% 30.1% 56.8% 20.9% 23.9% 17.1% T hailand - - - - 500.0% 404.5% 59.2% 14.7% 20.2% - China - - - 563.9% 12.1% -61.9% 50.0% 30.1% 3.5% - Gross profit 2,767 2,927 3,014 3,322 3,414 3,763 4,100 4,374 4,811 YoY 4.3% 5.8% 3.0% 10.2% 2.8% 10.2% 9.0% 6.7% 10.0% GPM 37.7% 38.9% 37.9% 38.1% 36.3% 36.8% 37.0% 37.0% 37.9% SG&A expenses (incl. adjustments) 1,500 1,502 1,626 1,701 1,897 2,153 2,418 2,551 2,697 YoY 3.2% 0.1% 8.3% 4.6% 11.5% 13.5% 12.3% 5.5% 5.7% SG&A rat io 20.4% 20.0% 20.4% 19.5% 20.2% 21.1% 21.8% 21.6% 21.2% Operat ing profit (incl. adjust ment s) 1,267 1,425 1,388 1,621 1,517 1,610 1,682 1,823 2,114 2,350 YoY 5.7% 12.5% -2.6% 16.8% -6.4% 6.1% 4.5% 8.4% 16.0% 11.2% OPM 17.3% 18.9% 17.5% 18.6% 16.1% 15.8% 15.2% 15.4% 16.6% 17.2% Domest ic Parking Lot 1,711 1,874 2,100 2,300 YoY - 9.5% 12.1% 9.5% OPM 16.5% 17.0% 18.0% 18.4% Overseas Parking Lot -29 -51 15 50 YoY - - - 239.8% OPM -4.3% -6.2% 1.4% 4.2% Operating profit (excl. adjustments) 1,870 1,993 1,985 2,244 2,169 2,359 2,332 2,393 2,733 3,030 YoY 3.0% 6.6% -0.4% 13.0% -3.4% 8.8% -1.1% 2.6% 14.2% 10.9% OPM 25.5% 26.5% 25.0% 25.7% 23.1% 23.1% 21.0% 20.2% 21.5% 22.1% Source: Shared Research based on company data Domestic Parking Lot business Existing properties could be more profitable, focus on acquiring new properties; new properties to contribute to full-year The company forecasts sales of JPY12.5bn (+7.0% YoY), operating profit of JPY3.0bn (+9.6%), and operating profit including companywide expenses of JPY2.3bn (+9.5%). NPD’s basic strategy remains unchanged from FY07/17. To accelerate its self-sustaining growth, it will concentrate its resources on the following efforts: 1) to improve gross profit in existing directly managed monthly parking lots; 2) to win renewal consulting orders for mechanical parking facilities; and 3) to accelerate growth with the launch of the loyalty point parking project. NPD will also sustain its strategy to work on acquiring new properties, improving the contract ratio for existing properties, and purchasing parking space properties in regional areas.

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For FY07/17, NPD has been focusing on improving the profitability of its existing facilities in the Parking Lot business. However, issues that still need to be addressed include a joint loyalty-point parking project with Rakuten, monthly car rental services with parking facilities, and the acquisition of new properties. The company is expecting to implement measures to deal with such issues during FY07/18. In particular, NPD is strengthening efforts to acquire more properties to achieve future growth. In addition, the company believes that there is still room to improve profitability for existing facilities. Thus, it is likely that their gross profit will continue to rise. Properties acquired in March 2017 are also expected to contribute to the company’s full-year earnings.

A certain level of vacancies for office and commercial facility parking lots is expected to continue for the current market environment. Looking toward 2020, the company expects solid demand for parking lot operations services as new commercial facilities and hotels are constructed, primarily in the Tokyo Metropolitan Area. In the housing market, the company predicts that demand will continue for value added services such as car sharing services and renting vacant parking lots to external operators.

Priority measures for FY07/18 are: 1) boosting profitability at existing properties: including boosting employee productivity, monthly contract rates, and contract prices; 2) focusing on acquiring new contracts; 3) aggressive rollout of loyalty point parking business; and 4) upgrading operations with system investments.

Improving profitability at existing facilities Existing properties accounted for the bulk of the increase (JPY212mn of JPY226mn) in domestic Parking Lot operating profit in FY07/17 (excluding a reduction of JPY111mn from the closure of properties). This was the result of the following initiatives: a) improving productivity at hourly facilities: reducing the number of low-margin facilities with few prospects of margin improvement, prioritizing employee assignments to properties with prospects for improvement and high-margin properties; b) the transfer of directly managed monthly parking facilities in Tokyo and Osaka to the company’s NCS subsidiary, which achieved the planned JPY40mn increase in gross profit. NSC: Nippon Car Service Development Co., Ltd. (wholly owned subsidiary)

In FY07/18, the company plans to carry on with similar initiatives: a) improving productivity at hourly facilities: NPD plans to work to improve profitability at low-margin and unprofitable properties, while continuing to allocate personnel to high-margin properties; and b) transferring directly managed monthly parking facilities to subsidiary: in FY07/17 the company progressively transferred 230 properties in Tokyo and Osaka to its subsidiary quarter by quarter. In FY07/18, NPD plans to transfer the remaining 357 properties, and to boost customer loyalty by expanding its monthly parking and car rental package business.

The company will strive to improve safety, service, and profitability by reviewing what service and costs are appropriate for each parking lot. This will be achieved by strengthening field capabilities, such as grasping supply and demand status for each commercial region through measures to reinforce the branch office management structure and increase personnel in the sales department with more proactive hiring policies.

Improving productivity at hourly facilities The company aims to halve the number of low-margin properties (monthly gross profit less than JPY50mn) with no prospects for improving earnings by July 2018 (versus July 2016 levels). Shared Research understands that the company wants to create a stable, ongoing source of earnings in light of external circumstances such as the labor shortage and rising personnel expenses. Starting in July 2017, the company: a) concentrated management and human resources in properties which had considerable scope for improved earnings; and b) reviewed properties that had low margins and were inefficient (reviewing hourly charging arrangements, promoting monthly contracts, and making cancellations). The result was a decline in property numbers, but fewer employees, and increased gross profit, which made a major contribution to the improvement in gross profit in FY07/17. NPD plans to further implement these initiatives in FY07/18.

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Productivity improvements at hourly facilities (number of properties, JPYmn)

Reference month Recent six months FY07/16 (FY average) FY07/17 (2H average) Monthly gross profit No. of Sales GP % of No. of No. of Sales GP % of No. of GPM GPM facilit ies (JPYmn) (JPYmn) total employees facilit ies (JPYmn) (JPYmn) total employees Over JPY1mn 60 273 107 39.3% 58.3% 207 63 300 121 40.3% 60.0% 209 JPY0.5mn-1.0mn 74 151 50 33.2% 27.3% 85 80 154 56 36.4% 27.7% 97 Less than JPY0.5mn 108 134 26 19.4% 14.2% 80 92 119 25 21.1% 12.3% 54 Total 242 558 184 33.0% 100.0% 372 235 573 202 35.3% 100.0% 360

No. of Sales GP No. of Changes GPM facilit ies (JPYmn) (JPYmn) employees New openings 14 21 7 33.3% +17 Converted to monthly -4 -1 - - -1 Ow ner-init iat ed -7 -18 -4 22.2% -11 Closures NPD-init iat ed -10 -11 -2 18.2% -5 Total -7 -9 1 - ±0 Source: Shared Research based on company data

Improving gross profit at directly managed monthly parking lots In directly managed monthly parking lots, the company has been working on strengthening its capability to acquire new properties, winning high value-added projects, and improving the contract rate at existing properties. In FY07/17, it enacted reforms, including reorganization, with an eye to maximizing the profitability of its existing properties. Specifically, it aimed to improve its earnings by: 1) progressively transferring 234 properties in the Tokyo and Osaka areas out of the 969 directly managed properties (at that time) to its wholly owned subsidiary Nippon Car Service Development Co., Ltd. (NCS); and 2) combining monthly parking lot contracts with the car sharing and monthly car rental programs under the management of NCS, as well as with the customer drawing method of the monthly parking lot search website.

Several factors are at play behind these improvements. In the first place, under its traditional push marketing steamroller strategy and contract style (requiring three-month notice for cancellation), some contracts were signed at lower levels than the going rates for the sake of higher utilization. Second, the monthly parking lot search website has successfully converted its customer-drawing capability into higher contract fees (the average contract fee of about JPY30,000 without using the website versus the website-mediated contract fee of about JPY38,000). Third, while previously it was time-consuming for NCS to attract customers online and then pass on the baton to the parent company (NPD) sales staff, the entire process is now placed under one company, which helps expedite the operational flow.

The initial target was to increase aggregate gross profit for the 234 properties (230 actually transferred) from JPY538mn in FY07/16 by 30% to JPY700mn in FY07/19. As the JPY40mn improvement in gross profit was in line with expectations, in July 2017 the company decided on the wholesale transfer of its directly managed monthly parking lots in Tokyo and Osaka to NCS. In FY07/18, the transfer of the remaining 357 properties should make a significant boost to earnings.

However, the following should be noted: 1) benefits generally flow through six months after the property transfer; 2) the properties likely to yield the most benefits were transferred first in FY07/17, in four stages, on a quarterly basis; and 3) similarly, the properties to be transferred in FY07/18 are likely to yield smaller benefits than those transferred in FY07/17.

Further improvement: Expansion of monthly car rental programs NPD is aiming for continued improvement in gross profit by expanding its monthly car rental programs. The company states that for a parking space that generates JPY10,000 per month, a monthly rental car can be expected to generate JPY28,500, an increase of JPY18,500. As of end FY07/17, the number of monthly rental cars under contract was 142 vehicles (up by eight vehicles compared to end FY07/16), and if this figure increases by 1,000 vehicles, it could yield an additional gross profit of JPY222mn per year. The company will construct a top-to-bottom comprehensive solution for vehicle management operations in order to enhance the convenience of its corporate users. The company will also aim to improve the utilization rate of its parking lot by expanding the number of searchable parking lots at web portal sites, engaging in effective advertising activities, tapping into new customer bases, and executing proactive promotions.

Nippon Car Service Development (NCS) hopes to improve utilization rates for existing monthly parking lots by re-launching its Japan Parking Lot search website (one of Japan's largest monthly parking lot search websites) in February 2015, thus adding a pull marketing approach to its traditional push marketing steamroller strategy. With the re-launch, both the number of listed properties and the search ranking improved. Further, contract fees via the website saw a rise as we saw above.

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Examples of improved gross profit after transfer to NCS

As of Feb. 2016 As of Jul. 2017 Change 50,000 Unit price Gross profit (right axis) 50,000 46,877 38,526 Spaces leased (units) 3,794 4,070 +276 +7.3% 40,000 36,548 40,000 Spaces rented out (units) 3,555 3,824 +269 +7.6% 31,546 30,000 30,000 Utilization rate 93.7% 94.0% +0.3pp +0.3%

Unit price (JPY) 31,546 36,548 +5,002 +15.9% 20,000 20,000

Sales (JPY'000) 112,146 139,760 +27,614 +24.6% 10,000 10,000 Gross profit (JPY'000) 38,526 46,877 +8,351 +21.7% 0 0 Feb. 2016 Jul. 2017 GPM 34.4% 33.5% -0.8pp (JPY'000)

Expected higher gross profit of the 234 facilities (initial, as of September 2016)

(JPYmn) Gross profit at transfer Increase in gross profit (+30.0%) (+22.4%) 699 700 Transfer 659

(+7.4%) +161 600 578 +121 +40

500 538 538 538 538

400 FY07/16 FY07/17 FY07/18 FY07/19 Est Est Est Source: Shared Research based on company data

Comparison with monthly car rental (as of September 2016)

ecoloca Monthly Regular Other companies' car rental leases car rental Fees V ehicle from JPY50,000 from JPY35,000 from JPY100,000 (monthly) Parking JPY0 from JPY25,000 (Separate arrangement) Total from JPY50,000 from JPY60,000 Contract period Six months Three years Monthly Cancellat ion penalt y A month's fee if cancelled Fees for Fees for within the first six months t he remaining period t he remaining period Parking space arrangement Packaged with car rental Customer Customer Car owner ecoloca Monthly Customer Customer Insurance policy holder ecoloca Monthly Customer Customer Parking space cert ificat e applicat ion ecoloca Monthly Customer Not required Source: Shared Research based on company data Note: Figures for regular leases and other monthly car rentals are based on company estimate Renewals for mechanical parking facilities The aforementioned transfer of the directly managed monthly parking lots to NCS will lead to a decline of JPY538mn or more in gross profit at the parent level, although it will not affect consolidated results. To offset this decrease, the company is planning to work on capturing renewal demand for mechanical parking facilities. To be specific, it aims to clinch related fees and new orders by responding to repair demand for domestic mechanical parking lots built at least 20 years ago and proposing appropriate solutions to their owners and parking garage manufacturers.

In terms of mechanical parking facilities, the number of machine units at parking garages came to 32,438 as of end-March 2015 (the circulating type: 20,603; the elevator type: 11,835), excluding two-stage, multi-stage, and plane reciprocal types commonly used in condominiums. Of those, a little over 10,000 units were built15-25 years ago and, hence, became the company’s target. As mechanical parking facilities require major repair work some 25 years after construction, it is set to work on sales activities in three ways: 1) to closely share information and data with parking garage manufacturers; 2) to propose solutions to the parking lot owners; and 3) to secure substitute parking spaces for their parking lots while under renovation. In addition, the company will convert this into the clinching of new projects.

In contrast to the traditional parking lot business with a recurring revenue business model (known in Japanese business parlance as “stock business”), this business has a non-recurring model (“flow business”) and, hence, its earnings are subject to the vicissitudes of sales results. The company is targeting 100 orders per year and a profit of about JPY100mn. Partnerships with overseas parking garage manufacturers have also been actively pursued, and the company in Q2 FY07/16 began a partnership with ASPACE (Bangkok, Thailand) for a car park with 251 spaces. We will monitor both the domestic and overseas fronts.

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Parking garage manufacturers: construction numbers

2,000 Circulating type 1,800 10,000 spaces and more 1,600 Elevator type 1,400 1,200 1,000 800 600 400 200 - FY03/60 FY03/65 FY03/70 FY03/75 FY03/80 FY03/85 FY03/90 FY03/95 FY03/00 FY03/05 FY03/10 FY03/15 Source: Shared Research based on company data

Expanding new property acquisitions New property acquisition targets: Same level as FY07/16 (FY07/16: 125 lots) New property acquisition targets for FY07/17 were around the same level as FY07/16 (125 lots). However, as the company prioritized improving earnings at existing properties, it acquired just 71 lots over the year. NPD appears to be factoring in the acquisition of a similar number of lots as in FY07/16 (125) as the earnings improvement at existing properties is on track, and it expects to see results from the information network it built in FY07/17. In FY07/18, NPD also appears to be factoring in a doubling in contribution to operating profit versus FY07/17 (which saw an increase of JPY198mn).

In FY07/17, the company strengthened its relationships with parking lot owners, manufacturers of multistory parking facilities, and financial institutions and built an information network. NPD said that it is working to win new contracts including acquiring properties by collecting information on parking lot sales. It appears that information on parking lot renovations is helping it acquire new properties.

NPD has also been increasingly hiring fresh graduates to nurture employees who can manage large-scale projects and oversee its nationwide expansion, even though an improvement in the job market has made student recruitment more difficult. The company assigns new workers to hourly facilities to focus on improving the safety and profitability of these properties. Second-year employees are assigned to monthly facilities, as well as hourly properties, to help raise profitability by improving utilization rates, etc. From their third year, employees are trained to win new contracts. In FY07/18, NPD can expect to begin seeing results from its increase in new graduates hired in 2012 onward. Developments here remain promising.

New graduate employees

1,200 New graduates Total employees (parent; year-end) Total employees (consolidated; year-end)

1,000 960

781 800 716

541 542 600 503 418 417 400 318 326 258 172 176 198 202 200 144 148158 168 169 140 92 107 108 113 101 114 88 47 64 54 78 57 75 67 79 11 11 10 13 16 14 6 9 16 23 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2,017 Source: Shared Research based on company data

Expanding regional bases: acquiring large properties and accelerating property acquisitions Competition in regional areas seemed to settle down in FY07/17 amid hiring challenges caused by the economic recovery. NPD is looking to acquire large-scale manned lots with hourly leasing, which is one of its strengths. In addition, it proactively utilized its liquid capital to acquire regional parking lot assets so as to respond to the demand to balance off fixed assets.

NPD had not been actively acquiring parking lots, with only 6 lots (742 vehicles; JPY658mn) through FY07/16. In FY07/17, the company acquired one property (a mechanical parking facility near Sendai Station in March with 194 spaces. From changes to the

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balance sheet, the purchase appears to have cost around JPY900mn.) Eying utilization of its liquid capital, however, the company is set to launch an active acquisition campaign in FY07/18, giving due consideration to return on investment.

Though small in size compared with office buildings, commercial facilities, and condominiums, parking lots tend to enjoy high profitability. NPD is poised to accelerate acquisitions by leveraging its networks of regional bases and existing parking lots. The acquisition strategy will not necessarily include land, as can be seen in the case of the Otemachi Parking Lot in Hiroshima (252 vehicles), where the company bought the leasehold.

It should be noted that, once acquired, yield from the property may improve. This is due to the fact that on-site operation becomes more efficient and also because the company has the advantage of being able to exploit its role as a buyer with machinery makers when a machine needs repairing.

Launching the loyalty point parking project The loyalty point parking project (see box below for details) launched services in August 2016 as planned. It aims to form a new group in the domestic coin parking (CP) market and also to win customer loyalty among clients in the corporate market. Initial plans for FY07/17 foresaw installation in 766 parking lots by the end of the fiscal year, but there was a significant shortfall, with only 135. Although the company was able to reach broad agreement with its partners, there were issues including: linkups with existing equipment, obtaining locations for installation, and installation costs. Nonetheless, the company targets the installation of about 800 units in FY07/18. NPD plans to do this by: a) accelerating installation of terminals for coin parking lots; b) expanding partner numbers and parking lots where the technology is usable; and c) signing up corporate members. The company is also reviewing its contract schemes and altering plans to make the equipment easier to install. Since May 2017, NPD began marketing activities to recruit corporate members, focusing on its monthly contract customers. We will be keeping a close eye on developments.

Shared Research believed that the company expected an operating profit of about JPY100mn for FY07/19 and about JPY200mn for JPY07/21 as of September 2016. While the project has been delayed by around a year, contributions to operating profit and winning customer loyalty in the corporate market look promising.

Number of planned constructions (as of September 2016)

900 6,000 5,350 800 766 716 5,000 700 666 616 4,150 600 566 4,000 516 500 433 2,950 378 3,000 400 300 244 2,000 1,610 200 140 1,000 766 100 37 4 0 0 Aug Est Nov Feb May FY07/17 FY07/18 FY07/19 FY07/20 FY07/21 FY07/2017 Est Est Est Est Est Est Est Est Source: Shared Research based on company data

Loyalty point parking project outline

Rakuten

Commissions

NPD

Point redemption Rakuten Super Point commission Corporate membership commission Device rental fee

Corporate card membership fee Point parking member companies ETC commission

Coin parking usage fee (cash) Coin parking usage fee

Individual clients Corporation clients

Source: Shared Research based on company data

Loyalty point parking project: The company is collaborating with Rakuten, Inc. (TSE1: 4755) and is participating in the “Rakuten Point Card” system (a shared point card service that lets users earn points when shopping at affiliated stores), and started a shared member service with coin parking lot operators in Japan in August 2016. As part of the project, NPD shares a system infrastructure and specific IT terminals with coin parking lot companies

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for coin parking lots, and issues points based on usage and provide cashless settlements and other services to retain mainly corporate customers. One of NPD's weaknesses has always been the small number of hourly rate parking lots it operates relative to other major parking lot operators (such as the Times parking lots operated by Park 24 and the Mitsui Repark parking lots operated by Mitsui Fudosan Reality). With the help of this new alliance with coin parking lot operators, NPD believes it may be able to compensate for its weakness in this area.

The company aims to retain customers and increase the number of parking lots it manages by expanding services for current corporate customers. This includes outsourced management services of vehicles and parking facilities for corporate clients, and cost-cutting programs that use company vehicles for car sharing, monthly car rentals and other initiatives as part of the planned member card system.

NPD’s estimates for the Japanese coin parking market indicate that there were 54,000 lots as of 2014. Of these, one of the key players has a market share of about 30% (15,500 lots), and another has about 10% (6,700 lots). NPD aims to gain market share through the remaining 60% (31,800 lots). Of the 60%, many are managed by SMEs, and although system development costs would be a large burden when done alone, participation in the point program would allow these companies to provide services on par or superior to larger competitors. Twenty companies (managing between 7,000 to 8,000 spaces in total) have already decided to participate, and service is scheduled to begin in August at about 1,000 locations. Assuming favorable results after the program begins, the program will likely expand to more of the lots operated by these companies, and it is possible that more coin parking operators will join the program.

By beginning a corporate membership service, NPD aims to achieve a business scale of 150,000 corporate vehicles (15,000 corporate vehicles are currently under monthly contract). As of September 2016, within the next three to five years, the company appears to have been targeting 100,000 corporate vehicle contracts, amounting to JPY400-500mn in sales, contributing about JPY200mn to operating profit.

Sales consist mainly of point handling fees and system usage fees, paid by those participating in the loyalty point parking project. Expenses include system development costs (including devices) and costs related to running call centers. NPD does not intend for the point parking project to be a direct source of revenue, but rather for it to bring about synergies with the Parking Lot business by improving customer retention and expanding services for current corporate customers.

In beginning the above service, it is necessary to invest in related system development and the installation of dedicated devices for each parking lot. The company plans to bear the burden of related system development costs, and devices will be leased to coin parking operators. As of September 2017, the company was reviewing its contract scheme to make it easier to adopt.

Overseas Parking Lot business Aiming for growth in operating profit from winning new contracts in FY07/18 The company forecasts JPY1.2bn in sales (+17.1%) and JPY50mn in operating profit (+JPY35mn) for the overseas Parking Lot business. In Southeast and Eastern Asia, where the company currently operates, parking lot fees are trending upward as consumer prices rise. Under these favorable market conditions, the company will accelerate efforts to win new contracts by developing operations expertise and solutions unique to overseas markets and strengthening the sales personnel structure and network with local real estate owners. In the US, the company plans to continue surveying business opportunities in the parking lot market and potential M&A transactions.

NPD had expected the overseas Parking Lot business to book an operating profit in FY07/16, building on groundwork from the previous year. However, it ended up booking a loss of JPY51mn, due to an operating loss in Thailand under the impact of a terrorist incident and by investment spending in South Korea and Indonesia. The company aimed at overall profits (OP of JPY10mn) in FY07/17 on the strength of Thailand’s turning to profitability and China’s continued profitability, although South Korea and Indonesia would accumulate investment costs. On a quarterly basis, the business posted an operating profit from Q3, which it built on in Q4 for operating profit of JPY15mn for the fiscal year as a whole. South Korea, where the business is at the investment stage, turned to a monthly operating profit in February 2017, for the fastest move into the black among the company’s overseas locations.

In FY07/18, Indonesia is still at the investment stage, but as the South Korean subsidiary is making solid progress in winning new contracts, the company said that operating profit might grow to be second only to the Thai subsidiary.

Decision to enter Taiwan market NPD plans to increase the percentage of sales from its overseas businesses to 50% in the medium term. It has been focusing on venturing overseas for two reasons: (1) going forward, the company believes that it must begin to venture overseas at an early phase when significant investment is not required, rather than rush overseas once domestic growth ceases, (2) Overseas, competitors continue to develop businesses in English-speaking countries, but these companies have not been penetrating areas

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where the main language is their native language; NPD believes it can become the de facto company by penetrating such markets during the phase when the parking lot market is just being established.

As part of this strategy, in February 2018 the company approved a proposal to establish a subsidiary in Taipei, Taiwan, making it the fifth overseas hub. The company plans to solve the lack of parking lots in the city and contribute to the improvement and development of Taiwan’s transportation society by providing parking lot services that possess high added value unique to Japanese-style parking lots, improving safety, and optimizing the parking lot supply and demand balance that the company has developed. Meanwhile, Don Quijote Holdings Co., Ltd. (TSE: 7532) announced in November 2017 that it would start developing commercial facilities in Bangkok, Thailand, and open its first store in the country under the DON DON DONKI format. NPD plans to acquire a 5% stake in a company that owns the building that will house DON DON DONKI and operate their parking facilities. NPD did not disclose when the investment would take place (Don Quijote Holdings states mid-2018). However, such a move would help the company expand its earnings from FY07/19 and beyond.

Overseas sales

(JPYmn) (JPYmn) 350 Sales Operating profit China 302 1,200 Thailand (directly managed facilities and outsourced management) 1,200 300 269 1,025 Thailand (other) 243 1,000 250 Other 224 827 202 209 203 208 210 64 42 800 684 200 182 11 36 166 30 27 17 23 27 153 17 600 133 9 436 150 118 104 144 400 335 125 161 142 142 81 70 86 11 130 134 132 134 250 100 75 70 80 79 120 126 53 60 61 95 200 85 78 37 15 50 50 26 61 58 58 57 66 68 52 0 3 8 53 59 59 57 56 58 29 29 34 37 39 43 43 49 44 43 49 26 9 13 18 17 18 20 24 -29 -51 0 1 -200 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/11 FY07/13 FY07/15 FY07/17 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Source: Shared Research based on company data Thailand NPD turned its Thailand business to profitability in FY07/14. However, business turned back to the red in FY07/16, dragged down by the impact of a terrorist incident and expenses related to launching the healthcare business. The business reverted to profitability in FY07/17. Along with the traffic solution project in Bangkok, developments on this front should continue to be watched closely.

The traffic solution project in Bangkok, Thailand: It is the brainchild of The Toyota Mobility Foundation (chaired by Mr. Akio Toyoda, CEO of Toyota Motor Corporation, Ltd.), established in August 2014 by TMC (TSE 7203) aspiring to realize a prosperous and mobile society. Combining Toyota’s know-how and the technical expertise of a local university (Chulalongkorn University) and government agencies, the project aims to tackle traffic issues such as congestion and to harmoniously coordinate diverse transport systems. It is scheduled for the period April 2015-December 2016, with a total government subsidy of about THB110mn (about JPY400mn).

Shanghai, China In China, the improved profitability of existing properties attained in FY07/15 made its contribution throughout FY07/16, turning an operating profit in Q1 and booking an operating profit for the full year. The company made an operating profit for FY07/17 as well. It plans to step up its sales activities targeting large-size foreign owned building complexes with demand for high quality services. That said, it has dropped hints that the yearly acquisition rate may be limited in view of the time it takes to recruit and train human resources.

South Korea, Indonesia, and US In South Korea, after the establishment in July 2014 of its local subsidiary, the subsidiary has won orders for its first two sublease agreements since being established. Subsequently, the company made solid progress on winning new contracts, and in FY07/17 it had seven parking lots (an increase of five YoY) with sales of JPY65mn (4.4x). In South Korea as a whole there are 51,019 mechanical parking facilities, of which 22,327 or 44% are in Seoul. There are 6,633 idle parking lots (8.7% of the total). The company said that problems with the machinery itself and breakdowns due to lack of maintenance mean there are many empty spaces. The company views sustainable growth as possible because: 1) there are many mechanical parking facilities; 2) there are many parking spaces not being used; and 3) there is generally little resistance to subleasing.

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In Jakarta, Indonesia, NPD established a local subsidiary in February 2015. The company believes that Japanese-style parking services will be in great demand in Jakarta considering the city’s traffic problem and a lack of parking spaces. In FY07/17, NPD began managing under contract the parking facility at Kuningan City, a multipurpose complex housing a Japanese auto-leasing company with 117 parking spaces, as well as a new 560-space parking lot in the Wisma Keiai skyscraper in January. In FY07/18, the company plans to focus marketing on Japanese companies and those which own multiple vehicles. It also plans to obtain parking lot information on major areas in Jakarta, in order to grow the number of new properties. In the US, the company plans to continue research into the parking lot market and business opportunities such as potential acquisitions.

Going forward The company is targeting long-term sales and operating profit equivalent to that of its domestic Parking Lot business. NPD is seeking to equate its brand with “security, safety, and efficient management” so as to set the standard for parking lot operation in Asia. It has been focusing on venturing overseas for two reasons: (1) going forward, the company believes that it must begin to venture overseas at an early phase when significant investment is not required, rather than rush overseas once domestic growth ceases, (2) Overseas, competitors continue to develop businesses in English-speaking countries, but these companies have not been penetrating areas where the main language is their native language: NPD believes it can become the de facto company by penetrating such markets during the phase when the parking lot market is just being established. NPD has the Philippines (Manila) and Taiwan (Taipei) in sight for its next business expansion.

Expansion of overseas bases

Country Cit y Populat ion No. of vehicles Monthly unit price FY07/17 sales No. of properties Managed spaces (mn) (mn) (JPY/unit) (JPYmn) (units) 2010 T hailand Bangkok 15.0 4.2 10,000 731 27 7,212 2011 China Shanghai 23.4 3.6 15,000 206 7 3,635 2014 South Korea Seoul 23.5 3.0 20,000 65 7 852 2015 Indonesia Jakarta 24.0 3.0 8,000 21 2 677 Source: Shared Research based on company data

Ski Resort business

Ski Resort segment FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Init. Est. Sales 502 529 1,145 1,655 1,868 4,038 4,910 5,881 5,584 6,152 6,480 YoY 29.2% 5.4% 116.2% 44.6% 12.9% 116.2% 21.6% 19.8% -5.0% 10.2% 5.3% Operating profit -18 -9 56 113 200 504 725 905 107 443 600 YoY - - - 100.4% 76.9% 152.0% 43.7% 24.9% -88.2% 313.4% 35.5% OPM -3.5% -1.7% 4.9% 6.8% 10.7% 12.5% 14.8% 15.4% 1.9% 7.2% 9.3% Nippon Ski Resort Development FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Sales 4,038 4,910 5,883 5,584 6,152 6,480 Gross profit 2,184 2,833 3,513 3,118 3,556 - YoY - 29.7% 24.0% -11.2% 14.0% - GPM 54.1% 57.7% 59.7% 55.8% 57.8% - SG&A (incl. adjustments) 1,679 2,109 2,608 3,011 3,113 - YoY - 25.6% 23.7% 15.5% 3.4% - SG&A rat io 41.6% 42.9% 44.3% 53.9% 50.6% - Operat ing profit (incl. adjust ment s) 504 725 905 107 443 600 YoY - 43.7% 24.9% -88.2% 313.4% 35.5% OPM 12.5% 14.8% 15.4% 1.9% 7.2% 9.3% Number of visit ors 146 147 435 517 585 1,491 1,720 1,852 1,874 2,057 W int er 1,357 1,404 1,560 1,509 1,670 Ski resorts 1,350 1,394 1,550 1,484 1,623 1,602 Other 7 10 10 24 47 Summer 134 316 292 365 387 Happo, Iwatake, Tsugaike, Ryuoo 98 275 238 270 262 320 Other 36 41 54 95 125 YoY 44.0% 0.7% 195.9% 18.9% 13.2% 154.9% 15.4% 7.7% 1.2% 9.8% W int er 3.5% 11.1% -3.3% 10.7% Ski resorts 3.3% 11.2% -4.3% 9.4% -1.3% Other 42.9% - 140.0% 95.8% Summer 135.5% -7.7% 25.0% 6.0% Happo, Iwatake, Tsugaike, Ryuoo 180.0% -13.5% 13.4% -3.0% 22.1% Other 13.9% 31.7% 75.9% 31.6% Source: Shared Research based on company data

FY07/18 is a period of business restructuring, with the following initiatives in place: 1) HQ relocation: the company plans to relocate its HQ to Hakuba, Nagano, keeping in mind the revitalization of the Hakuba area; 2) snow shortage measures: to

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continue, and considering Hakuba as well; 3) profitability improvement: lower fixed costs due to HQ relocation and higher average customer spend including restaurant replacement. The company has not factored in any earnings impact from acquisitions.

Ski Resort business: Revitalization of the Hakuba area In FY07/17 Meiho Ski Resort saw an increase in the number of visitors after the company took steps to deal with a snow shortage. However, the recovery in the number of customers was sluggish in the Hakuba area. NPD believes that more drastic measures must be taken to improve the situation because snow shortage impacted results and it did not reach initial targets for last two years in a row. As it executes structural reforms to the Ski Resort business, the company will propose a transfer of its main offices to Hakuba village at its general shareholder’s meeting in October, based on the fact that four of its eight ski resorts are located in this area and that its rental ski affiliates operate in the Hakuba area. By executing this transfer of main offices, the company can execute various future-focused initiatives with locals and those related to the ski resort industry. The company can also strengthen the connection between the management and sales departments and each ski-resort related department, as well as create a more efficient operational structure.

The company will continue to take steps to deal with the snow shortage. The company will make the necessary investments to attract visitors and improve income, even during the off season. In regard to acquiring new ski resorts and related businesses, the company maintains the same policy as its Theme Park business.

M&A driving growth Growth in the Ski Resort business is driven by acquisitions, which has increased the number of ski resorts operated, the number of visitors to existing ski resorts and the development of related businesses, as well as efforts to improve the summer season at existing ski resorts. Of these factors, M&A has had the greatest impact by expanding the number of ski resorts operated. Of the 450 ski resorts in Japan, NPD views only around 100 as viable businesses, and aims to manage around 50 of those. The company believes there is still an adequate market and intends to pursue any viable new acquisition targets that arise in FY07/18.

The company believes it will be possible to increase visitor count and improve profitability at existing ski resorts, such as the Sugadaira Kogen Snow Resort (acquired in 2015), by leveraging the group's sales force and operating experience. It also hopes to increase the average amount spent by each visitor by improving services at existing ski resorts.

NPD targets an operating profit margin of 30% in its Ski Resort business. However, as the margin has been below 10% for two years in a row, FY07/16 and FY07/17, the company said its first priority was to get it back in the double digits. There are high performers such as the Kawaba Ski Resort, and laggards such as the Kashimayari Sports Village. The company aims to improve profitability by increasing visitor count without depending on travel agencies, by catering to the needs and demands of foreign visitors, and by strengthening operations in summer

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Subsidiaries earnings (FY07/14)

FY07/2014 (Subsidiaries) Kit ashiga Kawaba Hakuba Resort Tsugaike 5 companies Nippon Ski Resort (JPYmn) Ryuoo Kashimayari Resort Development Gondola Lift Sum (a) Development (b) (a) / (b) Sales 599 567 833 2,342 567 4,908 4,910 100.0% Recurring profit 61 2 199 382 104 748 751 99.6% RPM 10.2% 0.4% 23.9% 16.3% 18.3% 15.2% 15.3% Net income 38 2 130 329 92 591 521 113.4% Net assets 321 -135 379 1,640 -280 1,925 2,780 69.3% Total assets 377 139 685 2,310 95 3,606 3,843 93.8% FY07/2015 (Subsidiaries) Kit ashiga Kawaba Hakuba Resort Tsugaike Meiho Kogen 4 companies Nippon Ski Resort (JPYmn) Ryuoo Kashimayari Resort Development Gondola Lift Development Sum (a) Development (b) (a) / (b) Sales 612 NA 837 2,308 NA 1,019 4,776 5,883 81.2% Recurring profit 86 NA 250 262 NA 304 901 846 106.5% RPM 14.0% NA 29.9% 11.3% NA 29.8% 18.9% 14.4% Net income 55 NA 242 250 NA 184 731 707 103.5% Net assets 375 -111 621 1,893 -147 75 2,964 4,883 60.7% Total assets 451 NA 847 2,130 NA 860 4,288 5,537 77.4% FY07/2016 (Subsidiaries) Kit ashiga Kawaba Kawaba Hakuba Resort Tsugaike Meiho Kogen Hare 5 companies Nippon Ski Resort (JPYmn) Ryuoo Kashimayari Resort Resort USA Development Gondola Lift Development Ski Resort Sum (a) Development (b) (a) / (b) Sales 591 NA 605 NA 2,311 581 737 NA 4,825 5,584 86.4% Recurring profit 34 NA 42 NA 200 107 -21 NA 362 95 379.0% RPM 5.7% NA 7.0% NA 8.6% 18.4% -2.8% NA 7.5% 1.7% Net income 22 NA 28 NA 195 80 -10 NA 315 -117 -268.8% Net assets 97 -315 601 -5 2,037 -31 65 NA 2,448 4,777 51.3% Total assets 455 NA 679 NA 2,266 159 963 NA 4,522 5,669 79.8% Source: Shared Research based on company data

M&A deals at ski businesses

Accounting period Year Month Det ails FY07/06 2005 Dec. Est ablished Nippon Ski Resort Development FY07/08 2006 Sep. Acquired San-Alpina Kashimayari Ski Resort for JPY 550mn FY07/10 2009 Nov. Acquired 100% of shares in Ryuoo Kanko FY07/11 2010 Oct. Acquired 99.9% of shares in Kawaba Resort FY07/13 2012 Nov. Acquired 95.46% of shares in Hakuba Kanko （Hakuba Kanko operates Hakuba Happo-one Winter Resort, Iwatake Snow Field, and Tsugaike Kogen) 2013 Apr. Acquired 100% of shares in general rental shop SPICY FY07/15 2014 Oct. Acquired 61.36% shares of Meiho Kogen Development FY07/16 2015 Nov. Acquired 83.4% shares of Hare Ski Resort, which operates Sugadaira Kogen Snow Resort Source: Shared Research based on company data 8,000 20% Sales OPM (right axis) Apr. 2013 7,000 Spicy (rental) 15% 5,881 6,152 6,000 5,584 10% 4,910 5,000 5% 4,038 4,000 0% 3,000 -5% 1,868 2,000 1,655 -10% 1,145 1,000 389 502 529 -15% 0 -20% FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Sep. 2006 Nov. 2009 Oct. 2010 Nov. 2012 Hakuba Happo Iwatake Oct. 2014 Nov. 2015 (JPYmn) Kashimayari Ski Resort Kitashiga Ryuoo Ski Park Kawaba Ski Resort Tsugaike Ski Resort Meiho Ski Resort Sugadaira Kogen Snow Resort

Operating profit -112 -18 -9 56 113 200 504 725 905 107 443 Cumulat ive -112 -130 -139 -82 31 231 735 1,460 2,365 2,472 2,915 M&A costs 550 144 333 511 1,021 207 Cumulat ive 550 550 550 694 1,027 1,027 1,538 1,538 2,559 2,766 2,766 Source: Shared Research based on company data Measures to combat warm winters and low snowfall According to the company, the Ski Resort business was negatively impacted by low snowfall resulting from the warm winter, and a drop in the number of ski tour customers, the product of a tour bus accident in Karuizawa that took place in January 2016. The warm winter played a key role in the company’s significant downward earnings forecast revision, and NPD has moved to dramatically change the way it deals with warm winters and low snowfall. Although the company had been working to strengthen projects during warmer months to stabilize performance in the Ski Resort business, it will now aim to reduce earnings risks in the winter season while targeting improved profitability.

Previously, the company sought to open early in the ski season in areas near the summit and focused on installing snow machines that supplement natural snowfall (about JPY5mn per unit). However, in the future, in order to provide a stable operational schedule for its slopes, NPD considered installing snow machines (about JPY50mn per unit) that can create snow even in conditions that are too warm for natural snowfall. These new units are to be installed in areas that can expect high amounts of customer traffic. Some gondolas are also scheduled to be upgraded to allow for use even in the absence of snow.

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The above measures are not to be implemented for the sole purpose of combatting warm winters; NPD is also seeking to improve its brand strength and profitability at its ski resorts. Specifically, by installing snow machines, the company can avoid losing customers to nearby resorts by operating gondolas even during warm winters, and strengthen branding by marketing its resorts as featuring slopes that can be used at the very beginning of the season and during periods with low snowfall. The number of days that the company can operate its ski resorts will also be increased, leading to stronger earnings.

However, although the size of the resort is a factor, the company states that between five (about JPY300mn) and ten (about JPY500mn) units are required to cover one resort. NPD installed the latest snow machines (JPY5mn each) in FY07/17. However, one slope requires 10 to 15 snow machines, an investment of around JPY100mn. That said, a lack of snow, unforeseeable four or five years earlier, is a reality. The company thus said it would put some infrastructure in place in each ski resort including in the Hakuba area in the coming few years. As the amount of investment required is high, NPD will install these units primarily in key properties where the investment is likely to have a major impact. The installation of gondolas will require even higher amounts of investment, leading the company to first focus on snow machines, then moving to building new gondolas in the future.

Improving summer season facilities For the off season for its ski resorts, the company plans to boost investment from the perspective of avoiding low snowfall risk in addition to smoothing out earnings. The segment accounts for under 20% of sales, but NPD said it would like to raise this to 30%. In FY07/17, NPD successfully increased bookings and visitor numbers at its facilities through various sales activities promoting its facilities and the surrounding environments. Kitashiga Ryuoo Mountain Park, located in Nagano Prefecture, saw a 3.2-fold increase in visitors at its new SORA terrace facility. Located on a 1,770 meter mountain summit, the facility has become especially popular for the view it offers of the seas of clouds below and of the setting sun. With the ropeway to the summit costing JPY1,800 for adults and JPY950 for children, it has also helped to improve the profitability of ski resort operations. In this manner, NPD has built up its expertise, and plans to apply its success stories elsewhere, and to invest a certain amount in the Hakuba area as well.

Theme Park business

Implementing various measures to improve operations and attract more visitors In May 2016, consolidated subsidiary Nippon Theme Park Development (established the same month) acquired shares in Towa Nasu Resort, Co. from Mitsubishi Jisho Residence Co. Ltd., making it a wholly owned subsidiary. Two months’ worth of its results was included in consolidated FY07/16 earnings. In FY07/17, it contributed to earnings throughout the year, with 455,000 visitors and operating profit of JPY512mn exceeding expectations of a visitor number of 400,000 and an operating profit of JPY250mn (+JPY205mn YoY). For FY07/18, the company forecasts 461,000 visitors (+5,000 YoY, +1.3%) and operating profit of JPY600mn (+17.1%).

Large potential to be expected from restructuring Nasu Highland The Theme Park business’ medium-term target for FY07/20 is an operating profit of JPY500mn, which it already reached in FY07/17. The restructuring potential of Nasu Highland is so promising that the company correctly thought that its OP alone could meet its target. The company focused on restructuring measures in FY07/17, working on increasing visitor counts and reducing costs. It plans to fully leverage the effects of these measures in FY07/18.

To be specific, the company plans to take five measures. First, in terms of business restructuring, it will implement an operational reform of the mainstay facility Nasu Highland Park. Second, in the area of demand creation, it will expand service contents reflecting the attractive natural environment so as to appeal to the 4.5 million annual visitors to Nasu. Third, in its effort to expand the visitor profile, the company will partner with surrounding tourist spots to upgrade the attractiveness of the entire area, working on drawing visitors from outside of neighboring prefectures (Tochigi, Ibaraki, Saitama, and Fukushima) that comprise about 60% of all the visitors as well as foreign tourists. Fourth, aiming to beef up diversity, the company will capitalize on high occupancy rates of lodging facilities during the summer vacation season to promote its rental villa business and build new cottages.

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In the Theme Park business in FY07/17, NPD implemented steps to improve its efficiency in various areas. In FY07/18, the company is entering a new phase of its operations based on the analysis, experience, and issues discovered through operating this business for more than a year. NPD believes that there is plenty of room for growth in terms of sales and profits as it attracts more visitors and improves efficiency. We will keep an eye on the measures for FY07/18. The company will continue to closely monitor the market and execute a purchase of new theme parks when such actions are appropriate.

Toward higher visitor numbers NPD believes that there is plenty of room to grow the number of visitors, in part because it has not yet fully promoted the appeal of the Nasu region. In addition, most of the customers are families, meaning that the number of visitors fluctuates widely depending on the season, day of the week, and weather. The company wants to make these fluctuations less volatile and minimize the impact on earnings. It is thinking of targeting older customers, attracting more customers on weekdays, and fostering repeat customers.

The company already started implementing effective, low-cost measures in various areas in FY07/17. These include:

Expansion of the customer base: Installation of pet-friendly amusement park rides and the establishment of a pet café ◤ equipped with a dog run in March 2017;

Attracting more customers on weekdays: The creation of Adventure Park (in April) to appeal to nearby educational ◤ institutions;

Improvement in the surrounding environment: Elimination of traffic jams at parking facilities, where long lines would form ◤ every year during the peak season (by automating the entrance and allowing nighttime parking, both to consider the effect on nearby houses and increase customer satisfaction);

Enhancement of customer satisfaction: Reduce long lines for amusement facilities prior to peak demand in the summer; ◤ Fostering repeat customers: Measures to make visitors want to return. Also, Tohoku is an ideal location for fostering repeat ◤ customers because the region does not have any similar theme parks nearby;

More publicity: Considering a better use of social networking sites, along with other measures to ensure future growth. ◤

Eye on medium-term growth The company is taking steps to strengthen its workforce with an eye on medium-term growth. NPD is aggressively recruiting young employees, primarily new graduates, and in FY07/18 its target is 120 employees, up 30 YoY (an increase of 24 YoY to 47 for those under 30). The idea is to drive internal growth in the Theme Park business by increasing its younger workforce to strengthen its capabilities in the field and organization and improve service and operations.

Business potential in cost sharing with the Ski Resort business Theme parks and amusement parks tend to produce more earnings in the summer. Riding on the steady growth of the Ski Resort business, the company is aiming to even out its earnings structure between summer and winter, moving away from the former winter-skewed business model. At Nasu Highland, about half of the annual 400,000 or so visitors come during the 10-day Golden Week period (from the end of April to the beginning of May) and the summer vacation season (from the second half of July through the end of August), while the place is closed from mid-January through February because of snow. The company thinks that it will be possible to transfer staff between its Theme Park and Ski Resort businesses. Particularly, if the approximately 70 employees of Nasu Highland can be transferred to the Ski Resort business when Nasu is closed, it will help reduce personnel costs at the Ski Resort business. Moreover, if M&As with neighboring ski resorts go unabated, such cost reductions through personnel transfer will become even more feasible, promising significant gains. Shared Research will monitor the company’s M&As going forward.

Future prospects Shared Research intends to keep a close eye on the company’s expansion into the domestic theme park and amusement park restructuring business, and its aforementioned subsequent contribution to evening out the ski resort segment’s results, which are subject to seasonal fluctuations.

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Shared Research also intends to pay attention to the following. Similar to the ski resort industry, the theme park and amusement park industry are usually managed as non-core businesses of major companies. In addition, NPD is considering restructuring and growth methods other than large-scale capital investment, as polarization occurs with major companies with substantial capital. There is also a possibility of benefiting as an industry survivor.

Monthly operating profit by segment: establishment of Theme Park business to offset seasonality of Ski Resort business (example)

(JPYmn) Parking Lot Ski Resort (summer) Ski Resort (winter) (JPYmn) Parking Lot Ski Resort (summer) Ski Resort (winter) 1,200 Theme Park Total Total excl. Theme Park Theme Park Total Total excl. Theme Park

1,000 1,500

800 Raise profit

600 1,000 Raise profit Profit Profit 400 500 200

0 0 -200

-400 -500 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Q1 Q2 Q3 Q4 Source: Shared Research based on company data M&A Patterns similar to ski resorts occurring in the theme park and amusement park industries NPD sees the market environment for theme parks and amusement parks in Japan as follows: 1) Though a large number of theme parks and amusement parks were opened in Japan since the enactment of the Act on Development of Comprehensive Resort Areas (resort law) in 1987, many of them fell into financial difficulties after the collapse of the bubble economy; 2) While the market size has been on an uptrend in recent years, gaps between popular and unpopular parks have widened, with visitors concentrating on major parks or some specific ones; 3) The environment is generally severe as investments in new amusement equipment and facilities are required to attract visitors amid declining birthrates and progress of diversified consumer needs.

Theme park and amusement park industries

Sales (JPYbn, right axis) YoY Visitors (mn, right axis) YoY 60% 180 40% 28 50% 160 30% 24 40% 140 20% 20 30% 120 20% 100 10% 16 10% 80 0% 12 0% 60 -10% 8 -10% 40 -20% 20 -20% 4 -30% 0 -30% 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 CY00 CY02 CY04 CY06 CY08 CY10 CY12 CY14 CY16 CY00 CY02 CY04 CY06 CY08 CY10 CY12 CY14 CY16 (JPYbn) Source: Shared Research based on METI data Restructuring by combining stable customer traffic areas with regional tourism resources; may benefit from being industry survivor NPD believes that there are large business opportunities for some theme parks and amusement parks in Japan which are highly attractive as resources of regional tourism and can be a key for regional development by attracting demand from foreign tourists. NPD also pays attention to the attribute that theme parks and amusement parks generate revenues in summer and expects that the business will level out its revenue structure that has a seasonal bias toward winter due to high growth of the Ski Resort business. It also sees potential benefits from being one of the remaining players in the industry.

The company to be acquired, Towa Nasu Resort, operates the Nasu Highland large-scale resort in northern Tochigi Prefecture. Nasu Highland has been developed since 1964 as Japan’s prestigious villa area and houses Nasu Highland Park, the largest amusement park in the northern Kanto region. NPD said that it will be able to establish a revenue base early on due to factors like the attractive resources of regional tourism, accessibility from central Tokyo, and rich natural environment.

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Business results and main facilities of Towa Nasu Resort

(JPYmn) FY12/13 FY12/14 FY12/15 Major facilit ies Sales 3,159 3,267 2,865 Nasu Highland Park Descript ion Amusement park YoY - 3.4% -12.3% Area 500,000sqm Operating profit 419 409 -20 V isit ors 400,000（FY12/15） OPM 13.3% 12.5% -0.7% TOWA Pure Cottages Descript ion Cottage-type hotel Recurring profit 399 395 -25 Guest rooms 72 rooms (18 cottages) Net income 497 328 -54 Nasu Highland Descript ion V illa area Total assets 8,603 8,381 8,764 Area 8mn sqm Net assets 4,230 4,547 4,492 Blocks 5,000 blocks Source: Shared Research based on company data

Prominent domestic theme parks

2016 Head office Operating company/organization Theme park Year-end revenue Yo Y locat ion (JPYbn) 1 Orient al Land Tokyo Disney Resort Chiba 3 396.3 -0.7% 2 USJ Universal St udios Japan Osaka 3 150.0 8.2% 3 Tokyo Dome Tokyo Dome City Tokyo 1 59.7 1.0% 4 Namco Namco Namja Town Tokyo 3 43.8 1.5% 5 Fuji Kyuko Fuji-Q Highland Yamanashi 2 27.4 4.7% 6 Huis Ten Bosch Huis Ten Bosch Nagasaki 9 26.6 -3.5% 7 Nagashima Resort Nagashima Resort Mie 3 25.9 2.9% 8 Mobilit yland Suzuka Circuit Mie 3 25.8 2.7% 9 Seibu Railway, Leisure Segment Seibuen Amusement Park, Toshimaen Saitama 3 21.7 0.9% 10 Y omiuri Land Y omiuriland Tokyo 3 17.7 9.6% 11 Kamori Kanko Rusutsu Resort Hokkaido 3 15.7 0.2% 12 Joban Kosan, Tourism Segment Spa Resort Hawaiians Tokyo 3 13.5 2.5% 13 Yokohama Hakkeijima Yokohama Hakkeijima Sea Paradise Kanagawa 3 11.9 53.5% 14 Okinawa Churashima Foundation Okinawa Churaumi Aquarium, other Okinaw a 3 9.8 15 Kintetsu Leisure Service Shima Spain Mura Osaka 3 9.0 -0.4% 16 Tokyo Zoological Park Society Ueno Zoological Gardens, other Tokyo 5 8.6 -2.7% 17 Osaka Aquarium Kaiyukan Osaka Aquarium Kaiyukan Osaka 3 8.4 44.0% 18 AWS Adventure World Osaka 4 7.9 8.5% 19 Sanrio Entertainment Sanrio Puroland Tokyo 3 7.5 19.4% 20 Senyo Kogyo Yokohama Cosmoworld, other Osaka 3 6.5 2.2% Source: Shared Research based on press releases issued by TEIKOKU DATABANK, LTD.

New businesses

Target: operations in 100 world cities, developing 100 CEOs, and building a company that will last for 100 years NPD expects this segment remain in its early stages. The company is working to utilize empty parking lot spaces by improving its marketing to building owners. The Marunouchi Healthcare Lounge, opened from March 25, 2015 on the 9th floor of the Shin Marunouchi Building near Tokyo Station is one example. This is part of the company’s activities to respond to an issue for the corporate world: employees cannot exploit 100% of their abilities if they are unwell, and a company cannot expect sound growth. NPD operates a runners’ station in the building which supports running in the vicinity. In September 2017 the company developed the concept and announced the establishment of a subsidiary, Nippon Healthy-life Development Co., Ltd. (planned in October 2017).

The NPD group comprises some 20 companies, but has a target of operations in 100 world cities, developing 100 CEOs, and building a company that will last for 100 years. This means there is room for 80 more CEOs. Shared Research will be watching these efforts closely for their impact on performance results.

Marunouchi Healthcare Lounge: This is a multipurpose healthcare facility targeting medical facility collaboration-based disease prevention and healthcare promotion for business people in the Marunouchi area. It is the collaboration between 12 companies, including medical institutions, Benefit One (focused on improving lifestyle and eating habits), Omron (blood pressure measurement), Dainippon Printing (measuring values), DeNA Life Science (DNA testing services), and Reebok (exercise programs), aimed at improving collaboration among cooperating companies to provide leading healthcare services.

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Historical performance compared with estimates

Results vs. Initial Est. FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est. Sales Init ial Est . 8,403 8,432 9,470 11,000 11,900 15,000 17,100 18,700 23,000 23,500 Result s 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 Result s vs. Init ial Est . -6.3% 2.8% 1.5% -3.7% 12.9% 0.8% -0.5% -3.0% -4.4% Operating profit Init ial Est . 1,364 1,400 1,715 2,000 2,160 2,400 2,900 3,100 3,300 3,500 Result s 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 Result s vs. Init ial Est . -7.8% 5.8% -12.5% -8.9% -6.4% -2.7% -11.3% -36.2% -7.1% Recurring profit Init ial Est . 1,250 1,327 1,405 1,870 2,140 2,450 2,900 3,100 3,200 3,500 Result s 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 Result s vs. Init ial Est . -6.5% -15.9% 2.4% 1.9% 4.5% 5.8% 3.8% -27.7% 0.4% Net income Init ial Est . 712 653 805 1,106 1,270 1,500 2,620 1,850 2,100 2,350 Result s 614 765 850 518 1,378 1,582 3,531 1,255 2,243 Result s vs. Init ial Est . -13.8% 17.2% 5.6% -53.1% 8.5% 5.4% 34.8% -32.2% 6.8% Source: Shared Research based on company data

The company has had a tendency to miss its sales forecasts. Shared Research attributes this to emphasizing new parking property acquisition and the resulting overly ambitious internal targets in the Parking Lot business. Further, the Ski Resorts business and the Theme Park business are impacted by poor weather (such as lack of snow). So while the company intends to forecast cautiously, heavier or lighter than expected snow and incidents (such as bus accidents) can cause results to fall short of forecasts.

In FY07/12, an impairment loss related to a ski resort prompted significantly lower net income than estimated. In FY07/13, due to the acquisition of Tokyu-Hakuba Corp, the company made upward revisions to sales and profit in September 2012. Subsequently, due to delays in the acquisition of new contracts, when the company released Q3 earnings results (end May 2013), the company made downward revisions to sales and operating profit.

Actual operating profit for FY07/13 was lower than the company’s revised forecasts, due the signing of a large parking lot consulting contract in Thailand being postponed.

NPD missed its consolidated operating profit target for FY07/14 because sales and operating profit at its Parking Lot segment fell short of forecast. According to NPD, the company missed its target for two reasons: 1) sales and profits from parking facilities that charged fees by the hour declined by at least JPY35mn due to heavy snows that swept across the Kanto region in February 2014; 2) gross profit did not rise as much as expected because the number of new contracts fell short of forecast, delaying the launch of new facilities.

Shared Research believes this was the result of NPD’s focus on improving the contract ratio for existing properties, which caused it to shift focus to emphasize highly profitable properties when acquiring new properties. Fiercer competition also impeded its acquisition campaign in FY07/15.

FY07/16 fell short of its forecasts largely due to a drop in profits at the Ski Resort business owing to a historically warm winter, and the impact of a ski bus crash in Karuizawa in January 2016.

FY07/17 fell short due to the lingering impact of the previous year’s bus crash and lower visitor numbers to ski resorts with high customer spend despite success of measures to deal with low snowfall and improve margins.

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Outlook FY07/20 operating profit target: JPY5.0bn The company has disclosed its medium-term operating profit forecast of JPY5.0bn: JPY3.0bn in the Parking Lot business, JPY1.5bn in the Ski Resort business, and JPY500mn in the Theme Park business (at the FY07/16 earnings results briefing). In order to attain these targets, it plans to 1) accelerate the growth of its existing businesses by improving its expertise to propose solutions and by pursuing M&A opportunities; and 2) utilize its cash on hand (about JPY13.0bn) for M&As, acquisition of properties, and active investment in growth fields.

Moreover, in light of the downward revision to earnings forecasts in Q2 FY07/16, the company has revised its management strategy to stabilize its consolidated earnings. Below is an overview of this strategy.

NPD’s previous business strategy consisted of achieving steady sales and profits in the Parking Lot business while expanding its winter season Ski Resort business via M&A, combatting off-season losses by strengthening initiatives during warmer months, and creating new businesses to offset seasonal fluctuations.

Business portfolio improvement targets

800 800 Ski Resort business: winter season (target in dark blue) 600 600 Parking Lot business (target in dark burgandy) 400 400

200 200

0 0

-200 -200 Theme Park business Ski Resort business: off-season (target in dark moss green) -400 -400 Aug. Sep. Oct Nov Dec Jan Feb Mar Apr May Jun Jul Source: Shared Research based on company data

This new strategy is rooted in the same fundamentals, but with several additions. First, on top of autonomous growth, profit targets in the Parking Lot business have been raised from JPY150mn to JPY200mn per month. Second, the Ski Resort business will steadily attract customers despite warm winters through the introduction of snow making equipment. The snow machines will also allow NPD to increase brand recognition and differentiate itself from competitors by opening earlier in the season when snowfall tends to be scarce. Third, in order to make up for the seasonality of the Ski Resort business, the company will work on growing its Theme Park business, which makes major contributions to earnings in the summer.

As of the end of FY07/17: 1) in the Parking Lot business, the groundwork was in place for an improvement in domestic profits, and the overseas business had moved into operating profit; 2) in the Ski Resort business, the company was implementing structural reform including moving its headquarters to Hakuba in light of the revitalization of the area; and 3) the Theme Park business had already met its target of JPY500mn in operating profit, and the company was investing with an eye on medium-term growth.

Aiming at consolidated OPM of 25% NPD wants to lift its operating profit margin to 25% (FY07/17: 14.0%) and had initiatives in the various segments as follows. 1) Parking Lot (OPM of 16.6% in FY07/17): improving profitability in existing properties. 2) Ski Resort (7.2%): do not just hope for snow but prepare to cope with low snowfall and restructure business to generate profits in the off-season. 3) Theme Park (18.0%): fixed expenses are pretty much set in concrete so margins rise if visitor numbers increase. Holding planned events and continue to make investments with high returns.

For details regarding the management strategy, see Full-year company forecasts.

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Business

Business description

In addition to parking lot management and consulting, since 2006 the company has been operating ski resorts. It has three segments: Parking Lot, Theme Park, and Ski Resort.

FY07/05 FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Est. Sales 4,512 5,548 6,795 7,508 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 23,500 Parking Lot business - 5,470 6,249 6,879 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,836 12,706 13,700 Domest ic 10,402 11,009 11,681 12,500 Overseas 684 827 1,025 1,200 Ski Resort business - - 389 502 529 1,145 1,655 1,868 4,038 4,910 5,881 5,584 6,152 6,480 Theme Park business ------474 2,860 3,000 Other - 78 210 129 ------42 272 322 320 YoY 23.0% 22.5% 10.5% 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% 6.9% Parking Lot business 14.2% 10.1% 6.7% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% 7.8% Ski Resort business 29.2% 5.4% 116.2% 44.6% 12.9% 116.2% 21.6% 19.8% -5.0% 10.2% 5.3% Theme Park business 502.8% 4.9% Gross profit 1,957 2,340 2,538 2,924 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 YoY 18.7% 19.6% 8.4% 15.2% 4.4% 17.7% 12.9% 11.7% 27.0% 14.5% 15.6% 1.3% 23.7% GPM 43.4% 42.2% 37.3% 38.9% 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% SG&A expenses 978 1,212 1,618 1,743 1,794 2,112 2,557 2,712 3,737 4,259 5,051 5,746 6,485 YoY 3.8% 23.9% 33.4% 7.8% 2.9% 17.7% 21.1% 6.1% 37.8% 14.0% 18.6% 13.8% 12.9% SG&A rat io 21.7% 21.8% 23.8% 23.2% 22.8% 24.4% 26.6% 25.6% 27.8% 28.2% 29.7% 31.7% 29.5% Operating profit 979 1,128 920 1,181 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,500 Parking Lot business - 1,410 1,780 1,870 1,993 1,985 2,244 2,169 2,359 2,332 2,393 2,733 3,030 Ski Resort business - -112 -18 -9 56 113 200 504 725 905 107 443 600 Theme Park business - 45 512 600 Other - 75 35 ------14 3 -3 -50 Adjustments - -453 -616 -603 -568 -598 -623 -652 -749 -650 -570 -618 -680 Parking Lot business (incl. adj.) - 957 1,164 1,267 1,425 1,388 1,621 1,517 1,610 1,682 1,823 2,115 2,350 Domest ic (incl. adj.) 1,711 1,874 2,100 2,300 Overseas -29 -51 15 50 YoY 38.7% 15.2% -18.4% 28.4% 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% 14.1% Parking Lot business (incl. adj.) 21.7% 8.8% 12.5% -2.6% 16.8% -6.4% 6.1% 4.5% 8.4% 16.0% 11.1% Ski Resort business 100.4% 76.9% 152.0% 43.7% 24.9% -88.2% 313.4% 35.5% OPM 21.7% 20.3% 13.5% 15.7% 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 14.9% Parking Lot business (incl. adj.) 15.3% 16.9% 17.3% 18.9% 17.5% 18.6% 16.1% 15.8% 15.2% 15.4% 16.6% 17.2% Domest ic (incl. adj.) 16.5% 17.0% 18.0% 18.4% Overseas -4.3% -6.2% 1.4% 4.2% Ski Resort business -28.9% -3.5% -1.7% 4.9% 6.8% 10.7% 12.5% 14.8% 15.4% 1.9% 7.2% 9.3% Theme Park business 9.5% 17.9% 20.0% Recurring profit 1,019 1,824 1,329 1,827 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 3,500 Net in co me 612 1,069 642 489 614 765 850 518 1,378 1,582 3,531 1,255 2,243 2,350 YoY 54.2% 74.7% -39.9% -23.9% 25.5% 24.7% 11.1% -39.0% 165.9% 14.7% 123.2% -64.5% 78.7% 4.8% Net margin 13.6% 19.3% 9.5% 6.5% 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% 10.0% Depreciat ion 25 24 83 103 104 191 247 267 316 333 493 593 667 Parking Lot business (incl. adj.) 47 60 60 83 70 94 118 124 153 179 223 Ski Resort business 36 42 44 108 177 173 198 209 340 413 421 OP+depreciat ion 1,004 1,152 1,003 1,284 1,362 1,672 1,748 2,088 2,338 2,668 3,066 2,571 3,735 Parking Lot business (incl. adj.) 1,004 1,225 1,327 1,507 1,458 1,716 1,635 1,734 1,835 2,002 2,338 Ski Resort business -76 25 35 164 290 373 703 933 1,245 520 864 % of sales 22.3% 20.8% 14.8% 17.1% 17.3% 19.3% 18.2% 19.7% 17.4% 17.6% 18.0% 14.2% 17.0% Parking Lot business (incl. adj.) 16.1% 17.8% 18.1% 20.0% 18.3% 19.7% 17.4% 17.0% 16.5% 16.9% 18.4% Ski Resort business -19.5% 4.9% 6.6% 14.4% 17.5% 20.0% 17.4% 19.0% 21.2% 9.3% 14.0% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

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Parking Lot business

The company’s business is based on boosting the efficiency of parking lots. Its main target is downtown building parking garages built as “legally mandated parking lots” (see Market and value chain for definitions). The business is subdivided into Directly Managed Facilities, Outsourced Management, and Car Sharing.

Income for the Directly Managed Facilities business is parking fees from users, and the costs are mostly fixed rental fees paid to lot owners. While there is a risk if parking fees received are less than the rent paid, few staff members are required. This makes the model particularly profitable once utilization increases.

The Outsourced Management business requires more people onsite. Generally, profitability does not change with utilization improvements, but there is no risk of losing money. The Parking Lot business as a whole is asset-light—the company does not carry parking facilities as assets while generating revenues from subleasing and consulting fees.

Parking Lot business FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Est. Sales 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,835 12,705 13,700 Domest ic Parking Lot 7,342 7,520 7,917 8,472 9,064 9,775 10,402 11,009 11,681 12,500 Directly managed 5,599 5,631 5,727 6,097 6,476 6,869 7,280 7,642 8,201 - Outsourced Management 1,350 1,514 1,763 1,894 2,064 2,356 2,478 2,655 2,690 - Other 393 376 427 480 523 549 643 710 789 - Overseas Parking Lot 37 250 335 436 684 827 1,025 1,200 Thailand 11 66 333 530 608 731 - China 36 239 268 102 153 199 206 - South Korea 14 14 65 - Indonesia 4 21 - Yo Y 4.8% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% 7.8% Domest ic Parking Lot 4.8% 2.4% 5.3% 7.0% 7.0% 7.8% 6.4% 5.8% 6.1% 7.0% Direct ly managed - 0.6% 1.7% 6.5% 6.2% 6.1% 6.0% 5.0% 7.3% - Outsourced Management - 12.1% 16.5% 7.5% 9.0% 14.1% 5.2% 7.1% 1.3% - Other - -4.3% 13.6% 12.3% 9.0% 5.0% 17.1% 10.4% 11.1% - Overseas Parking Lot - - - 584.8% 34.0% 30.1% 56.8% 20.9% 23.9% 17.1% T hailand - - - - 500.0% 404.5% 59.2% 14.7% 20.2% - China - - - 563.9% 12.1% -61.9% 50.0% 30.1% 3.5% - Gross profit 2,767 2,927 3,014 3,322 3,414 3,763 4,100 4,374 4,811 YoY 4.3% 5.8% 3.0% 10.2% 2.8% 10.2% 9.0% 6.7% 10.0% GPM 37.7% 38.9% 37.9% 38.1% 36.3% 36.8% 37.0% 37.0% 37.9% SG&A expenses (incl. adjustments) 1,500 1,502 1,626 1,701 1,897 2,153 2,418 2,551 2,697 YoY 3.2% 0.1% 8.3% 4.6% 11.5% 13.5% 12.3% 5.5% 5.7% SG&A rat io 20.4% 20.0% 20.4% 19.5% 20.2% 21.1% 21.8% 21.6% 21.2% Operat ing profit (incl. adjust ment s) 1,267 1,425 1,388 1,621 1,517 1,610 1,682 1,823 2,114 2,350 YoY 5.7% 12.5% -2.6% 16.8% -6.4% 6.1% 4.5% 8.4% 16.0% 11.2% OPM 17.3% 18.9% 17.5% 18.6% 16.1% 15.8% 15.2% 15.4% 16.6% 17.2% Domest ic Parking Lot 1,711 1,874 2,100 2,300 YoY - 9.5% 12.1% 9.5% OPM 16.5% 17.0% 18.0% 18.4% Overseas Parking Lot -29 -51 15 50 YoY - - - 239.8% OPM -4.3% -6.2% 1.4% 4.2% Operating profit (excl. adjustments) 1,870 1,993 1,985 2,244 2,169 2,359 2,332 2,393 2,733 3,030 YoY 3.0% 6.6% -0.4% 13.0% -3.4% 8.8% -1.1% 2.6% 14.2% 10.9% OPM 25.5% 26.5% 25.0% 25.7% 23.1% 23.1% 21.0% 20.2% 21.5% 22.1% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

Directly Managed Facilities As can be seen in the table above, this is the core of NPD’s Parking Lot business. The company rents unused parking spaces in legally mandated parking lots in office buildings, shopping centers and business hotels, and provides the space to outside users (subletting and subleasing).

The parking lots are built for building tenants and customers, but in recent years there has been a trend of more corporate tenants without business vehicles. The result: many unused parking spaces. The company manages such parking facilities, either renting them to long-term tenants (so called monthly contracts) or providing hourly parking for the general public. It sets the optimal prices to maximize utilization based on each market profile while reducing risks and guaranteeing stable revenues for building owners (the company pays rental fees irrespective of parking utilization rates). Benefits for users: reduced costs and improved convenience. Improved services and earnings generation: examples include lower prices compared with local competitors and value-added services, such as drop off services at certain locations.

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The company also offers monthly rentals to outside customers (i.e., customers other than the particular building tenants), with the majority of such customers located within a 300 meter radius of a parking garage. Depending on the garage location and condition, as well as building owner preferences, the service may be a combination of long-term and hourly parking. Specifically, there are many cases where the parking customers use their cars during business hours, leaving their parking spaces open. The company can rent such open spaces on a daily or short-term basis to other users. In an extreme case, the same parking space can be rented out three times: on a monthly, daily, and hourly basis (the company calls this “triple harvest”). The hourly parking business requires full-time onsite presence of the company’s employees.

Business overview For Directly Managed Facilities business that offers monthly parking, the revenue drivers are the parking lot fees (unit price) and the number of parking spaces that are rented. The number of rented parking spaces is a function of the total number of parking spaces available and the contract ratio. The costs are determined by the rent paid to the owner per parking space and the total number of spaces rented by NPD. Therefore, in determining the profitability one must look at the contract ratio and the spread between the parking fee and the sublease fee.

Securing a certain level of utilization and fee spreads is key. This requires a large amount of information and the ability to offer a solution that would be attractive to both the owner and the operator. The labor expenses in SG&A do not increase proportionally to the number of parking lots (although there is a proportionate temporary cost increase related to acquisition of parking tenants). Therefore, the business model exhibits economies of scale—the SG&A-to-sales ratio drops as the scale of operations increases.

For Directly Managed Facilities business that combines hourly parking, the drivers of sales volumes are the same as for monthly parking: the parking lot fee (unit price) and the number of occupied parking spaces. The fees and the number of spaces used fluctuate more compared with monthly parking. The base cost is made up of the sublease fee multiplied by the number of rented spaces and personnel costs. Manned operation is standard.

Considering the dependency on smaller buildings and a high initial fixed cost, the company needs to secure a large number of monthly parking spaces for profitability. This characteristic is also a barrier to entry for new competitors—they would need to aggregate a substantial number of properties under management to achieve profitability. NPD lost money in FY07/00 and FY07/01 when it began its Leased Facility Operations business.

When the company acquires parking lots, the company and lot owner enter into a rental contract which makes the company the tenant. The initial contract period for the majority of these contracts is two years, with an automatic one-year renewal at the end of the first period. The contract is cancellable during the contract period if written notification is provided three months in advance and both parties agree to end the contract. Therefore, while it is possible for the company to make preparations after receiving the cancellation notice, the possibility exists that the contract can be cancelled based on the wishes of the lot owner and income from the property disappears quickly.

There is a time gap between identifying potential customers, and customers signing the contract and starting to pay. The company uses this time to survey the surrounding area. To avoid a risk of losses in the first months of operation, contracts with building owners include free rent and discount clauses for the first few months (usually two to four months) of the contract period.

Outsourced management In contrast to the Directly Managed Facilities business, no rental contract is concluded with the parking lot owner. Revenues in the Outsourced Management business are not related to parking fees received by the lot owner contract partner. NPD receives a fixed monthly payment from the contract partner in proportion to the scale of operations (there are some contracts where a fixed amount of the owner’s parking fees are also received).

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Directly Managed Facilities (left) and Outsourced Management (right)

Leasing contract Rental contract Services Monthly Management contract users Parking fees Parking Parking Hourly lot NPD lot Management fees NPD users owners owners Hourly parking services Hourly users Leasing fees Parking fees Parking fees

Source: Shared Research based on company data

FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (units) Leased and managed parking spaces 21,215 23,365 28,874 33,611 38,627 43,305 46,983 52,893 56,382 Domest ic 21,215 23,365 26,478 28,802 34,351 37,207 39,984 43,280 44,006 Directly managed parking spaces: monthly (a) 7,969 8,465 9,712 11,386 12,529 13,499 14,226 15,114 15,730 Directly managed parking spaces: monthly & hourly 4,373 4,752 5,038 5,776 8,018 8,326 8,958 10,097 9,990 Outsourced management of hourly parking spaces 8,873 10,148 11,728 11,640 13,804 15,382 16,800 18,069 18,286 Rented out monthly parking spaces (b) 7,508 7,984 9,187 10,565 11,650 12,527 13,287 14,051 14,782 Contract ratio (b) / (a) 94.2% 94.3% 94.6% 92.8% 93.0% 92.8% 93.4% 93.0% 94.0% Sales per space (JPYmn) 0.346 0.322 0.299 0.294 0.264 0.263 0.260 0.254 0.265 YoY -10.4% -7.0% -7.1% -1.6% -10.3% -0.4% -1.0% -2.2% 4.4% YoY 16.9% 10.1% 13.3% 8.8% 19.3% 8.3% 7.5% 8.2% 1.7% Directly managed parking spaces: monthly (a) 8.0% 6.2% 14.7% 17.2% 10.0% 7.7% 5.4% 6.2% 4.1% Directly managed parking spaces: monthly & hourly 2.3% 8.7% 6.0% 14.6% 38.8% 3.8% 7.6% 12.7% -1.1% Outsourced management of hourly parking spaces 36.7% 14.4% 15.6% -0.8% 18.6% 11.4% 9.2% 7.6% 1.2% Overseas 2,396 4,809 4,276 6,098 6,999 9,613 12,376 Directly managed parking spaces: monthly - 533 439 Directly managed parking spaces: monthly & hourly 2,396 2,880 3,136 4,609 5,478 6,867 7,534 Outsourced management of hourly parking spaces 1,929 1,140 1,489 1,521 2,213 4,403 Number of parking facilities 636 687 805 938 1,045 1,138 1,171 1,253 1,247 Domest ic 636 687 803 929 1,034 1,120 1,150 1,218 1,204 Directly managed: monthly 477 515 611 727 809 890 912 969 969 Directly managed: monthly & hourly 101 107 112 122 132 139 136 141 131 Outsourced management: hourly 58 65 80 80 93 91 102 108 104 Sales per space (JPYmn) 11.54 10.95 9.86 9.12 8.77 8.73 9.05 9.04 9.70 YoY -0.7% -5.2% -9.9% -7.5% -3.9% -0.4% 3.6% -0.1% 7.3% Overseas 2 9 11 18 21 35 43 Directly managed: monthly - 16 16 Directly managed: monthly & hourly 2 5 9 16 18 16 19 Outsourced management: hourly 4 2 2 3 3 8 Spaces per facility leased or managed 33 34 36 36 37 38 40 42 45 Domest ic 33 34 33 31 33 33 35 36 37 Directly managed leased spaces: monthly 17 16 16 16 15 15 16 16 16 Directly managed leased spaces: monthly & hourly 43 44 45 47 61 60 66 72 76 Spaces under outsourced management: hourly 153 156 147 146 148 169 165 167 176 Overseas 1,198 534 389 339 333 275 288 Directly managed leased spaces: monthly & hourly 1,198 576 348 288 304 429 397 Spaces under outsourced management: hourly 482 570 745 507 738 550 No. of new parking facilit ies 163 151 141 90 125 71 Directly managed: monthly 139 119 117 74 Directly managed: monthly & hourly 14 18 17 5 Outsourced management: hourly 7 14 7 11 New spaces (units) 3,411 6,847 5,396 2,698 Direct ly managed: mont hly 1,769 1,641 1,836 1,129 Directly managed: monthly & hourly 837 2,704 746 527 Outsourced management: hourly 805 2,502 2,814 1,042 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

Development of condo block parking lot market From 2H FY07/12 onward, the company was planning to develop its parking lot management business for apartment blocks in addition to office buildings. The company has been in discussions with condo management companies (companies that deal with the maintenance of apartment blocks) over using vacant parking facilities at condo blocks. In February 2012, the National Tax Agency released taxation standards for the leasing out of empty parking lots at condos to third parties, resulting in the development of this sector.

Generally, condos that are built for sale manage their facilities through management associations composed of resident representatives. Yet in many cases resident associations then outsource these services to management companies.

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NPD believed it could develop this market and acquire new clients, and pointed out 1) the existence of a high proportion of mechanical parking facilities at condos—an area of operational expertise for the company, and 2) strong synergies with Car Sharing. For condo management and resident’s associations the benefits of this business include increased revenue from efficiently exploiting underutilized parking facilities, alleviating any shortfall from insufficient maintenance funds, such as cleaning and administration expenses.

The company targets new and old condo blocks in which parking spaces are easily leased to its long-standing corporate clients. For the time being, the company intends to focus on the Tokyo and Osaka areas. Specifically, of 99,921 condo blocks nationwide (source: Condominium Management Companies Association), the company targets 3,000-5,000 blocks.

Condominium acquisition: a renewed strategy In FY07/15, NPD had aimed to win 50 new contracts on the basis of better ability to acquire condominiums, but in part because it changed its target properties to avoid small scale properties, it fell short of targets in Q3. Nevertheless, the company did manage to win ongoing orders from around five properties in Q4, and given the potential of this market, the company intends to continue sales in this area by renewing its strategy.

Outsourced Management The company started this business in pursuit of a business model less affected by the vagaries of the real estate market, capitalizing on the earlier established success of its manned parking management operations. In this model, the company operates hourly parking facilities at large office buildings, shopping centers, luxury hotels, and retail boutiques, acting as a fee collection and contract management agent. The company offers value-added services such as valet services, a novel concept in Japan, and by doing so enhances the value not only of parking itself but also the facility where parking is located.

Outsourced Management Properties Remar ks ・Otemachi Conference Center Parking 314 parking spaces connecting Nikkei Building, JA Building, and Keidanren Kaikan in the second basement level. ・Marunouchi Building Central Parking 997 capacity parking connecting Marunouchi Building and Shin-Marunouchi Building ・Mitsubishi Corporation Headquarters Building ・Matsuya Ginza ・Westin Hotel Tokyo ・Higashi-Totsuka Aurora City Parking 1,620 capacity parking for shopping mall comprised of Seibu, Daiei, and other shops. ・Aqua Town NAYABASHI ・Osaka Securities Exchange Building Parking ・Grand Front Osaka 953 capacity parking for large scale commercial complex Source: Shared Research based on company data

Car Sharing In September 2008, the company began a car sharing program in the Shibuya/Aoyama area under the “Ecoloca” name. The company spun out its Car Sharing business into a separate company in December 2011 (establishing Nippon Car Service Development Co., Ltd.). Since then, the company has been aggressively expanding this business.

General car sharing services: Car sharing is a system in which several people share the use of a vehicle, or vehicles. Different from car rental, members can use vehicles in short time increments (minutes) and without filling in paperwork each time. It is generally a self-service arrangement where members reserve a car online, go directly to the car’s location, and then use a member card to unlock the car.

A fee system composed of membership dues, time charges, and distance charges is generally used. Since one does not maintain and manage a vehicle individually, members avoid purchase costs, insurance, inspection fees, parking, and other upkeep and maintenance charges. It is therefore an economical way for a person who does not need a car often to have one available for personal use.

Active promotion of the monthly parking and car rental package Starting in FY07/15, NPD has been actively promoting a new service that bundles monthly car rentals and parking spaces, which derives from its car sharing business. The increase in monthly car rentals has had the effect of pushing up leased parking spaces in monthly parking lots under its direct management, that is, it resulted in higher contract rate. It has the double advantage of

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being able to also offer parking spaces and being affordable versus competitors (car leasing and monthly car rentals). As the additional 256 vehicles will mean a significant increase from its current 88 (2.9 times), Shared Research will monitor the situation closely. Car sharing trends (vehicles)

Car sharing Monthly rental car 300 244 250 222 225

200 167 176 88 143 150 130 142

100 77 67 167 176 143 156 50 92 67 77 83 0 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17

Comparison with Ecoloca monthly car rental ecoloca Monthly Other companies' car rental Regular leases car rental Fees Vehicle from JPY50,000 from JPY35,000 from JPY100,000 (monthly) Parking JPY0 from JPY25,000 (Separate arrangement) Total from JPY50,000 from JPY60,000 Contract period Six months Three years Monthly Cancellation penalty A month's fee if cancelled Fees for Fees for within the first six months the remaining period the remaining period Parking space arrangement Packaged with car rental Customer Customer Car owner ecoloca Monthly Customer Customer Insurance policy holder ecoloca Monthly Customer Customer Parking space certificate application ecoloca Monthly Customer Not required Source: Shared Research based on company data Note: Figures for other car lease companies and monthly car rentals are Shared Research estimates

Others This covers the business segments outside of Leased Facility Operations, Outsourced Management, and Car Sharing, which are Leasing and Value Added Services.

Leasing Instead of renting unused lot space the company works to attract new customers on behalf of the owner. NPD also runs an internet-based parking introduction service.

Value-Added Services The company capitalizes on its location, user, and owner information as well as accumulated operational knowledge to offer such services as real estate valuation, parking garage maintenance, and other related services. These services range from simple parking property due diligence and valuation to comprehensive support of parking garage closures, including paperwork and introduction of new parking locations to tenants. NPD also offers safety advice and parking garage modernization consulting, in the latter case providing comprehensive solutions based on defined revenue targets and optimized for specific locations.

Ski Resort business

Based on its corporate philosophy of “pursuing businesses where everyone involved is happy”, the company started looking at situations where increasing utilization rates would create a win-win situation for everyone (similar to its Parking lot business). Management decided that managing ski resorts fit such a profile and entered the Ski Resort business in December 2005, establishing the Nippon Ski Resort Development subsidiary. NPD’s equity stake in Nippon Ski Resort Development declined to 93.8% in April 2014 and 84.4% in August 2014, when the unit sold newly issued shares in a third-party allotment. The company listed it on the Mothers section of the Tokyo Stock Exchange in April 2015, with an equity stake of 66.7%.

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Group companies, major facilities As of September 2014, Nippon Ski Resort Development Co., a wholly owned subsidiary, owned six companies. These are Kashimayari Ski Resort (100%; operates Kashimayari Sports Village), Kitashiga Ryuoo (100%; operates Ryuoo Ski Park), Kawaba Resort Co. (99.9%; operates Kawaba Ski Resort), Tokyu-Hakuba Corp. (95.5%; operates Hakuba Happo-one Winter Resort, Hakuba Iwatake Snow Field, and Tsugaike Kogen Ski Resort), SPICY (100%), and Meiho Kogen Development (61.4%). Tokyu-Hakuba Corp. owned three companies: Tsugaike Gondola Lift (80.0%; operates Tsugaike Highland Ski-Area), Iwatake Resort (86.7%; operates Hakuba Iwatake Snow Field), and Shinetsu Sakudo Maintenance (55.0%; installs and maintains freight-carrying cables).

Kashimayari Sports Village (Hakuba, Nagano Prefecture): NPD began operating the 78-hectare resort in 2006. Oriented ◤ toward athletes.

Ryuoo Ski Park (Shiga, Nagano Prefecture): NPD began operating the 95-hectare resort in November 2009 following the ◤ acquisition of 100% of the shares in Ryuoo Kanko from a corporate restructuring fund sponsored by Nomura Holdings. It targets university students, young skiers, snowboarders, and beginners.

Kawaba Ski Resort (Numata, Gunma Prefecture): NPD began operating the 60-hectare resort in 2010 after it acquired ◤ shares of Kawaba Resort Company (operates the Kawaba Ski Resort). Offers convenient access within a day trip from Tokyo and is located at one of the higher elevations in the area.

Happo-one Winter Resort (Hakuba, Nagano Prefecture): NPD acquired Tokyu-Hakuba shares from Tokyu Corp (TSE1: ◤ 9005) in November 2012 and consequently operates this 200-hectare resort thought to be the best ski resort in Japan. It targets both beginners and advanced skiers from the Kanto, Chubu, and Kansai regions. This resort was used for the 1998 Nagano Winter Olympics.

Iwatake Snow Field (Hakuba, Nagano Prefecture): This 125-hectare resort attracts wide-ranging visitors, mostly students ◤ in Nagano.

Hakuba Happo-one Winter Resort and Tsugaike Kogen Ski Resort have cooperating cableway operators.

Meiho Ski Resort (Okumino, Gifu Prefecture): This 96-hectare resort has five lifts to cover the 700 meters from the ◤ foothills (900m) to the peak (1,600m). It is located within two hours from central Nagoya, and snow quality is excellent. It broadly targets families from the Nagoya and Kansai regions.

Sugadaira Kogen Snow Resort: Sugadaira Kogen Snow Resort has 19 lifts, and four beginner trails ranging from 1,580m to ◤ 1,270m. There are 36 courses ranging from beginner (60%) to medium (30%) to advanced (10%).

Hare Ski Resort: On October 13, 2015, the company announced that subsidiary Nippon Ski Resort Development Co., Ltd. (TSE Mothers 6040) will acquire shares of Hare Ski Resort, which operates Sugadaira Kogen Snow Resort (Ueda City, Nagano Prefecture) as a subsidiary (making it a subsidiary of NPD’s subsidiary).The company made Hare Ski Resort a second-tier subsidiary because of the appeal and growth potential of Sugadaira Kogen Snow Resort, increased competitiveness from synergy with its existing portfolio, and further strengthening of its services and business foundation.

Ueda Kotsu (“Ueda Transport”) owned 53.4% (2,672 shares) of outstanding shares, while Ueda City held 15.9% (796 shares) of Hare Ski Resort. Following a third-party allotment to be carried out after the contract with NPD is finalized, Ueda Kotsu will receive an additional 9,000 shares, and 11,672 shares will be transferred to NPD for JPY207mn (JPY169mn when including JPY209mn in advisory fees). After the share transfer is complete, the company will hold 83.4% ownership of Sugadaira Kogen Snow Resort.

Hare Ski Resort booked operating profits for the three years until FY09/14, but since then sales and profits have fallen (see following table). As it operates in areas near where the company has previous experience—areas such as Hakuba and Kitashiga Kogen, Nagano Prefecture, and Kawaba, Gunma Prefecture—the company expects synergies. Sugadaira Kogen Snow Resort has 19 lifts, and four beginner trails ranging from 1,580m to 1,270m. There are 36 courses ranging from beginner (60%) to medium (30%) to advanced (10%).

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Business results of Hare Ski Resort

(JPYmn) FY09/12 FY09/13 FY09/14 Sales 356 360 338 YoY 1.1% -6.1% Operating profit 21 26 4 YoY 23.8% -84.6% OPM 5.9% 7.2% 1.2% Recurring profit 18 25 4 RPM 5.1% 6.9% 1.2% Net income 17 15 4 Net margin 4.8% 4.2% 1.2% Total assets 593 577 615 Net assets 287 304 309 Equit y rat io 48.4% 52.7% 50.2% ROE 2.5% 0.7% Source: Shared Research based on company data

Visitor count by ski resort (‘000)

Winter facility FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) 1H 1H 1H 1H YoY Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 YoY FY FY FY FY YoY HAKUBA VALLEY Happo-one Winter Resort 204 189 163 157 -3.2% 430 413 379 370 -2.2% 438 427 381 378 -0.6% HAKUBA VALLEY Iwatake Snow Field 56 52 24 31 26.7% 119 113 73 100 37.1% 119 113 73 100 37.1% HAKUBA VALLEY Tsugaike Kogen Ski Resort 141 115 127 116 -8.1% 287 243 249 263 5.5% 289 246 250 265 6.2% HAKUBA VALLEY Kashimayari Ski Resort 74 68 50 43 -13.5% 146 142 97 95 -2.2% 146 142 97 95 -2.2% Ryuoo Ski Park 106 105 100 91 -9.1% 245 254 197 200 1.8% 247 255 197 204 3.4% Kawaba Ski Resort 68 64 42 72 69.4% 155 146 107 149 38.9% 155 146 107 149 39.5% Meiho Ski Resort - 103 54 83 52.4% - 217 141 183 29.3% - 217 141 183 29.3% Sugadaira Kogen Snow Resort - - 121 126 4.1% 235 245 4.3% - - 235 245 4.3% Subtotal 651 700 685 723 5.6% 1,384 1,532 1,481 1,609 8.6% 1,394 1,550 1,484 1,623 9.4% Winter facility (other) FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) 1H 1H 1H 1H YoY Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 YoY FY FY FY FY YoY Kawaba Resort 3 3 5 5 5.8% 10 10 21 17 -26.1% 10 10 21 19 -6.3% Meiho Kogen Development - - 1 1 23.4% - 0 3 4 23.0% - 0 3 4 23.0% Mt. Kongo Ropeway - - - 12 - - - - 22 - - - - 22 - Shinetsu Sakudo Maintenance - - - 0 ------Subtotal 3 3 6 20 190.9% 10 10 24 45 85.2% 10 10 24 47 93.7% Total 654 703 691 743 7.5% 1,394 1,542 1,505 1,654 9.9% 1,404 1,560 1,509 1,670 10.7% Visitor count Summer facility (with operating ropeway) FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Q1 Q1 Q1 YoY 1H 1H 1H 1H YoY Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 YoY FY FY FY FY YoY Hakuba Happo-one International Mountain Resort 74 77 67 -13.6% 96 75 78 67 -14.1% 96 75 78 67 -14.1% 134 112 112 98 -12.7% Nature World Tsugaike Kogen 59 64 51 -20.4% 74 60 64 51 -22.5% 74 60 64 51 -22.5% 108 92 95 78 -18.4% Hakuba Iwate Lily Garden and Mountain View 15 21 15 -26.0% 16 15 21 16 -20.6% 16 15 21 16 -20.6% 23 23 95 25 -17.6% Ryuoo Mountain Park 4 16 38 140.5% 5 5 16 41 143.2% 5 5 16 41 143.2% 10 9 31 60 92.1% Mt. Kongo Ropeway 16 - - - 23 - - - 4 28 - 20 46 130.0% Subtotal 154 180 190 5.7% 193 155 181 200 10.0% 193 155 181 204 9.8% 275 238 290 309 6.4% Summer facility (other) FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Q1 Q1 Q1 YoY 1H 1H 1H 1H YoY Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 YoY FY FY FY FY YoY Kashimayari Sport s V illage 3 10 6 -37.5% 3 3 10 7 -22.7% 3 3 10 9 -7.7% 5 10 13 13 -0.7% Kawaba Resort 19 21 16 -22.3% 20 25 27 22 -19.3% 20 25 27 22 -19.3% 37 40 47 40 -14.6% Meiho Kogen Development 5 10 96.6% - - 6 12 86.6% - - 6 13 103.8% - 3 12 22 73.5% Shinetsu Sakudo Maintenance 0 - - - 1 - - - - 1 - - - 1 2 99.1% Subtotal 23 37 34 -6.5% 24 28 44 44 -1.5% 24 28 44 47 5.0% 41 54 74 78 4.6% Total 177 217 224 3.2% 217 183 225 244 8.4% 217 183 225 251 11.6% 316 292 365 387 6.0% Source: Shared Research based on company data

The company’s resorts are characterized by their high altitude, with the ability to draw customers, and that they all have artificial snow-making equipment installed. As for potential acquisitions, the company has said its selection criteria will focus on: regional diversification for sites, the types of skiers that each resort attracts; and attaining a more than 30% IRR.

Shared Research thinks that, with the Ski Resort business difficult to monetize, the number of candidates to sell its properties to is low and this impacts the ease with which it can exit markets. This will affect future property acquisitions. The company follows stringent investment standards in order to avoid such risk.

After Ski Resort business turned to profitability in FY07/10, it has continuously increased both visitor count and sales, with operating profit margin reaching 15.4% in FY07/15. The company has been working to increase revenues by running campaigns to boost visitor numbers (increasing PR and off-season marketing). It has also implemented cost controls by moving restaurant menus toward higher margin offerings, reviewing land lease fees and squeezing synergies out of the three ski resorts, such as joint marketing campaigns, joint purchasing and sharing of technical maintenance capabilities on lifts.

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Hakuba Village Ski Resort accumulative users (total for Hakuba Sanosaka, Hakuba Goryu, Hakuba 47, Happo-one, Iwatake, and Minekata ski resorts)

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Season No v. Dec. Jan. Feb. Mar. Apr. May Happo-one +Iwatake Share 2012-13 Number of users Monthly 6,886 142,681 284,400 298,306 204,343 41,457 18,694 Total 6,886 149,567 433,967 732,273 936,616 978,073 996,767 531,216 53.3% Sanosaka - 6,241 25,460 49,385 64,454 64,454 64,454 Goryu, Hakuba 47 4,044 65,739 170,207 280,990 363,122 384,558 394,752 Happo-one 2,842 62,281 183,546 298,330 382,128 402,149 410,649 Iwatake - 14,383 51,312 97,869 120,567 120,567 120,567 Minekat a - 923 3,442 5,699 6,345 6,345 6,345 YoY Monthly 306.3% 21.2% 2.6% 6.1% 2.5% -24.4% 9.3% Total 306.3% 25.2% 9.4% 8.1% 6.8% 5.0% 5.0% Sanosaka - 43.5% 12.5% 16.6% 16.6% 15.6% 15.6% Goryu, Hakuba 47 138.6% 15.4% 3.5% 2.9% 3.4% 1.9% 2.0% Happo-one - 34.0% 14.4% 11.9% 9.9% 7.1% 7.3% Iwatake - 34.3% 11.6% 8.4% 3.1% 2.8% 2.8% Minekat a - -0.8% 9.7% 6.1% 5.9% 5.9% 5.9% 2013-14 Number of users Monthly 8,144 174,505 299,737 245,845 234,442 48,812 19,681 Total 8,144 182,649 482,386 728,231 962,673 1,011,485 1,031,166 553,880 53.7% Sanosaka - 7,638 27,293 42,809 60,392 60,392 60,392 Goryu, Hakuba 47 4,151 81,402 189,891 281,075 372,906 398,779 410,337 Happo-one 3,993 75,730 204,535 306,119 401,208 424,147 432,270 Iwatake - 16,501 56,608 92,169 121,610 121,610 121,610 Minekat a - 1,378 4,059 6,059 6,557 6,557 6,557 YoY Monthly 18.3% 22.3% 5.4% -17.6% 14.7% 17.7% 5.3% Total 18.3% 22.1% 11.2% -0.6% 2.8% 3.4% 3.5% 4.3% Sanosaka - 22.4% 7.2% -13.3% -6.3% -6.3% -6.3% Goryu, Hakuba 47 2.6% 23.8% 11.6% 0.0% 2.7% 3.7% 3.9% Happo-one 40.5% 21.6% 11.4% 2.6% 5.0% 5.5% 5.3% Iwatake - 14.7% 10.3% -5.8% 0.9% 0.9% 0.9% Minekat a - 49.3% 17.9% 6.3% 3.3% 3.3% 3.3% 2014-15 Number of users Monthly - 156,679 279,292 274,182 203,398 39,601 26,380 Total - 156,679 435,971 710,153 913,551 953,152 979,532 546,957 55.8% Sanosaka - 7,363 25,054 44,079 57,897 57,897 57,897 Goryu, Hakuba 47 - 66,707 166,522 268,254 343,357 363,003 374,678 Happo-one - 66,471 189,837 305,160 393,243 413,198 427,903 Iwatake - 16,138 54,558 92,660 119,054 119,054 119,054 YoY Monthly -10.2% -6.8% 11.5% -13.2% -18.9% 34.0% Total -14.2% -9.6% -2.5% -5.1% -5.8% -5.0% -1.2% Sanosaka -3.6% -8.2% 3.0% -4.1% -4.1% -4.1% Goryu, Hakuba 47 -18.1% -12.3% -4.6% -7.9% -9.0% -8.7% Happo-one -12.2% -7.2% -0.3% -2.0% -2.6% -1.0% Iwatake -2.2% -3.6% 0.5% -2.1% -2.1% -2.1% Minekat a -100.0% -100.0% -100.0% -100.0% -100.0% -100.0% 2015-16 Number of users Monthly 2,211 168,953 269,353 270,565 179,310 33,808 3,050 Sanosaka 365 9,662 15,655 8,407 Goryu, Hakuba 47 1,410 103,595 136,051 100,732 74,454 16,594 1,858 Happo-one 801 58,154 104,169 119,798 79,160 17,214 1,192 Iwatake 6,839 19,471 34,380 17,289 Total 2,211 171,164 440,517 711,082 890,392 924,200 927,250 458,467 49.4% Sanosaka - 365 10,027 25,682 34,089 34,089 34,089 Goryu, Hakuba 47 1,410 105,005 241,056 341,788 416,242 432,836 434,694 Happo-one 801 58,955 163,124 282,922 362,082 379,296 380,488 Iwatake - 6,839 26,310 60,690 77,979 77,979 77,979 YoY Monthly - 7.8% -3.6% -1.3% -11.8% -14.6% -88.4% Sanosaka - -95.0% -45.4% -17.7% -39.2% - - Goryu, Hakuba 47 - 55.3% 36.3% -1.0% -0.9% -15.5% -84.1% Happo-one - -12.5% -15.6% 3.9% -10.1% -13.7% -91.9% Iwatake - -57.6% -49.3% -9.8% -34.5% - - Minekat a ------Total - 9.2% 1.0% 0.1% -2.5% -3.0% -5.3% -16.2% Sanosaka - -95.0% -60.0% -41.7% -41.1% -41.1% -41.1% Goryu, Hakuba 47 - 57.4% 44.8% 27.4% 21.2% 19.2% 16.0% Happo-one - -11.3% -14.1% -7.3% -7.9% -8.2% -11.1% Iwatake - -57.6% -51.8% -34.5% -34.5% -34.5% -34.5% Minekat a ------2015-16 Number of users Monthly - 127,658 275,988 279,475 195,508 47,793 19,365 Sanosaka - 633 12,248 16,014 14,130 - - Goryu, Hakuba 47 - 74,849 126,395 106,113 78,261 26,449 11,328 Happo-one - 45,631 112,321 113,290 78,559 21,161 8,037 Iwatake - 6,545 25,024 44,058 24,558 183 - Total - 127,658 403,646 683,121 878,629 926,422 945,787 479,367 50.7% Sanosaka - 633 12,881 28,895 43,025 43,025 43,025 Goryu, Hakuba 47 - 74,849 201,244 307,357 385,618 412,067 423,395 Happo-one - 45,631 157,952 271,242 349,801 370,962 378,999 Iwatake - 6,545 31,569 75,627 100,185 100,368 100,368 YoY Monthly -24.4% 2.5% 3.3% 9.0% 41.4% 534.9% Sanosaka 73.4% 26.8% 2.3% 68.1% - - Goryu, Hakuba 47 -27.7% -7.1% 5.3% 5.1% 59.4% 509.7% Happo-one -21.5% 7.8% -5.4% -0.8% 22.9% 574.2% Iwatake -4.3% 28.5% 28.2% 42.0% - - Minekat a ------Total -25.4% -8.4% -3.9% -1.3% 0.2% 2.0% 4.6% Sanosaka 73.4% 28.5% 12.5% 26.2% 26.2% 26.2% Goryu, Hakuba 47 -28.7% -16.5% -10.1% -7.4% -4.8% -2.6% Happo-one -22.6% -3.2% -4.1% -3.4% -2.2% -0.4% Iwatake -4.3% 20.0% 24.6% 28.5% 28.7% 28.7% Minekat a ------Source: Shared Research based on Hakuba Village data HAKUBA VALLEY brand joins TMC, operator of famous North American ski resorts Hakuba Valley, which includes four ski resorts held by NPD, became the only Japanese partner approved to join The Mountain Collective (TMC), comprised of the world's most famous ski resorts.

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TMC, which aims to promote collaborations and joint marketing among member ski resorts, is comprised of a number of large resorts, particularly in North America. TMC sells a "Mountain Collective Pass" ($389), a season pass that allows two consecutive days of skiing, including at Hakuba Valley. NPD expects this to help draw additional visitors to Hakuba Valley.

Theme Park and Amusement Park business

Conversion of Towa Resort to a wholly-owned subsidiary In May 2016, consolidated subsidiary Nippon Theme Park Development (established the same month) acquired shares in Towa Nasu Resort, Co. from Mitsubishi Jisho Residence Co. Ltd., to make it a wholly-owned subsidiary. Two months’ worth of its results were consolidated in FY07/16. Shared Research intends to keep a close eye on the company’s expansion into the domestic theme park and amusement park restructuring business through this M&A, and its subsequent contribution to leveling out the ski resort segment’s business results, which are heavily subject to seasonality.

Shared Research also intends to pay attention to these points of interest: 1) the idea that, similarly to the ski resort industry, businesses in the theme park and amusement park industry are usually managed as non-core businesses of major companies, 2) NPD’s consideration of restructuring and growth methods outside of active large-scale capital investments as these businesses become polarized from major companies, which have a strong capital position, 3) the possibility of benefiting from the position of industry survivor.

Monthly operating profit by segment: establishment of theme park business to offset seasonality of Ski Resort business

800 Ski Resort business: winter season 600

400 Parking Lot business 200

0

-200 Ski Resort business: off-season Theme Park business -400 Aug. Sep. Oct Nov Dec Jan Feb Mar Apr May Jun Jul Source: Shared Research based on company data M&A Patterns similar to ski resorts occurring in the theme park and amusement park industries NPD sees the market environment for theme parks and amusement parks in Japan as follows: 1) Though a large number of theme parks and amusement parks were opened in Japan since the enactment of the Act on Development of Comprehensive Resort Areas (resort law) in 1987, many of them fell into financial difficulties after the collapse of the bubble economy; 2) While the market size has been on an uptrend in recent years, gaps between popular and unpopular parks have widened, with visitors concentrating on major parks or some specific ones; 3) The environment is generally severe as investments in new amusement equipment and facilities are required to attract visitors amid declining birthrates and progress of diversified consumer needs.

Restructuring opportunity seen in combining areas with stable customer traffic with regional tourism resources; potential future benefit in being an industry survivor However, NPD believes that there are large business opportunities for some theme parks and amusement parks in Japan which are highly attractive as resources of regional tourism and can be a key for regional development by attracting demand from foreign tourists. NPD also pays attention to the attribute that theme parks and amusement parks generate revenues in summer and expects that the business will level out its revenue structure that has a seasonal bias toward winter due to high growth of the Ski Resort business. It also sees potential future benefits to be gained from being one of the remaining players in the industry.

The company acquired, Towa Nasu Resort, operated the Nasu Highland large-scale resort in northern Tochigi Prefecture. Nasu Highland has been developed since 1964 as Japan’s prestigious villa area and houses Nasu Highland Park, the largest amusement park in the northern Kanto region. NPD said that it will be able to establish a revenue base early on due to factors like the attractive resources of regional tourism, accessibility from central Tokyo, and rich natural environment.

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Theme park and amusement park industries

Sales (JPYbn, right axis) YoY Visitors (mn, right axis) YoY 60% 180 40% 28 50% 160 30% 24 40% 140 20% 20 30% 120 20% 100 10% 16 10% 80 0% 12 0% 60 -10% 8 -10% 40 -20% 20 -20% 4 -30% 0 -30% 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 CY00 CY02 CY04 CY06 CY08 CY10 CY12 CY14 CY16 CY00 CY02 CY04 CY06 CY08 CY10 CY12 CY14 CY16 (JPYbn) Source: Shared Research based on METI data

Business results and main facilities of Towa Nasu Resort

(JPYmn) FY12/13 FY12/14 FY12/15 Major facilit ies Sales 3,159 3,267 2,865 Nasu Highland Park Descript ion Amusement park YoY 3.4% -12.3% Area 500,000sqm Operating profit 419 409 -20 V isit ors 400,000（FY12/15） OPM 13.3% 12.5% -0.7% TOWA Pure Cottages Descript ion Cottage-type hotel Recurring profit 399 395 -25 Guest rooms 72 rooms (18 cottages) Net income 497 328 -54 Nasu Highland Descript ion V illa area Total assets 8,603 8,381 8,764 Area 8mn sqm Net assets 4,230 4,547 4,492 Blocks 5,000 blocks Source: Shared Research based on company data

Prominent domestic theme parks

2016 Head office Operating company/organization Theme park Year-end revenue Yo Y locat ion (JPYbn) 1 Orient al Land Tokyo Disney Resort Chiba 3 396.3 -0.7% 2 USJ Universal St udios Japan Osaka 3 150.0 8.2% 3 Tokyo Dome Tokyo Dome City Tokyo 1 59.7 1.0% 4 Namco Namco Namja Town Tokyo 3 43.8 1.5% 5 Fuji Kyuko Fuji-Q Highland Yamanashi 2 27.4 4.7% 6 Huis Ten Bosch Huis Ten Bosch Nagasaki 9 26.6 -3.5% 7 Nagashima Resort Nagashima Resort Mie 3 25.9 2.9% 8 Mobilit yland Suzuka Circuit Mie 3 25.8 2.7% 9 Seibu Railway, Leisure Segment Seibuen Amusement Park, Toshimaen Saitama 3 21.7 0.9% 10 Y omiuri Land Y omiuriland Tokyo 3 17.7 9.6% 11 Kamori Kanko Rusutsu Resort Hokkaido 3 15.7 0.2% 12 Joban Kosan, Tourism Segment Spa Resort Hawaiians Tokyo 3 13.5 2.5% 13 Yokohama Hakkeijima Yokohama Hakkeijima Sea Paradise Kanagawa 3 11.9 53.5% 14 Okinawa Churashima Foundation Okinawa Churaumi Aquarium, other Okinaw a 3 9.8 15 Kintetsu Leisure Service Shima Spain Mura Osaka 3 9.0 -0.4% 16 Tokyo Zoological Park Society Ueno Zoological Gardens, other Tokyo 5 8.6 -2.7% 17 Osaka Aquarium Kaiyukan Osaka Aquarium Kaiyukan Osaka 3 8.4 44.0% 18 AWS Adventure World Osaka 4 7.9 8.5% 19 Sanrio Entertainment Sanrio Puroland Tokyo 3 7.5 19.4% 20 Senyo Kogyo Yokohama Cosmoworld, other Osaka 3 6.5 2.2% Source: Shared Research based on press releases issued by TEIKOKU DATABANK, LTD.

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Main facilities

Business locations have increased with growth, and the company has branches and offices across the country. Given that the company focuses on central urban locations with numerous legally required parking garages, the majority of the managed facilities are concentrated in the Kanto and Kinki regions. Starting in FY07/17, the company progressively transferred its monthly directly managed parking lots in the Tokyo and Osaka areas to its NCS subsidiary to improve operations and profitability.

FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Parking Lot sales 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,835 12,705 Domest ic 7,342 7,520 7,917 8,472 9,064 9,775 10,402 11,009 11,681 Eastern Japan 362 384 398 478 576 519 679 788 858 Kanto 3,718 3,781 3,958 4,230 4,518 4,924 5,063 5,323 5,458 Kinki 2,060 2,101 2,192 2,282 2,398 869 922 1,046 1,143 Tokai 701 698 735 781 832 2,684 2,773 2,789 3,025 Western Japan 500 556 633 699 738 777 962 1,061 1,195 Overseas 37 250 335 436 684 827 1,025 China - 11 66 333 530 608 731 T hailand 36 239 268 102 153 199 206 South Korea - - - - 14 14 65 Indonesia - - - - - 4 21 YoY 4.8% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% Domest ic 4.8% 2.4% 5.3% 7.0% 7.0% 7.8% 6.4% 5.8% 6.1% Eastern Japan 19.0% 6.1% 3.5% 20.2% 20.5% -9.9% 30.8% 16.1% 8.9% Kanto 2.2% 1.7% 4.7% 6.9% 6.8% 9.0% 2.8% 5.1% 2.5% Kinki 3.8% 2.0% 4.3% 4.1% 5.1% -63.8% 6.1% 13.4% 9.3% Tokai 11.4% -0.4% 5.3% 6.3% 6.5% 222.6% 3.3% 0.6% 8.5% Western Japan 17.8% 11.1% 13.9% 10.5% 5.6% 5.3% 23.8% 10.3% 12.6% Overseas - - - 584.8% 34.0% 30.1% 56.8% 20.9% 23.9% China - - - - 500.0% 404.5% 59.2% 14.7% 20.2% T hailand - - - 563.9% 12.1% -61.9% 50.0% 30.1% 3.5% Number of properties 636 687 805 938 1,045 1,138 1,171 1,253 1,247 Domest ic 636 687 803 929 1,034 1,120 1,150 1,218 1,204 Eastern Japan 23 27 43 57 61 75 84 84 86 Kanto 330 351 408 468 509 557 564 564 609 Kinki 50 51 65 81 97 101 105 105 112 Tokai 169 183 198 213 235 254 255 255 265 Western Japan 64 75 89 110 132 133 142 142 146 Overseas 2 9 11 18 21 21 35 China 2 7 9 15 17 28 27 T hailand 2 2 3 4 5 7 South Korea 2 7 Indonesia - 2 Number of spaces 21,215 23,365 28,874 33,611 38,627 43,305 46,983 52,893 56,382 Domest ic 21,215 23,365 26,478 28,802 34,351 37,207 39,984 43,280 44,006 Eastern Japan 1,503 1,534 1,924 2,707 2,525 2,352 3,732 4,737 4,702 Kanto 11,117 12,260 13,650 14,852 16,391 18,614 19,019 19,866 19,705 Kinki 2,068 2,220 2,440 2,698 4,944 5,067 5,276 6,043 5,854 Tokai 4,690 5,266 5,736 5,687 7,382 7,934 8,001 8,572 9,421 Western Japan 1,837 2,085 2,728 2,858 3,109 3,240 3,956 4,062 4,324 Overseas 2,396 4,809 4,276 6,098 6,999 9,613 12,376 China 2,396 3,669 3,136 4,399 5,268 7,045 7,212 T hailand 1,140 1,140 1,699 1,731 2,455 3,635 South Korea 113 852 Indonesia 677 Contract ratio for rented monthly parking facilities Domest ic 94.2% 94.3% 94.6% 92.8% 93.0% 92.8% 93.4% 93.0% 94.0% Eastern Japan 96.4% 90.9% 95.6% 97.7% 98.2% 89.3% 92.3% 91.5% 93.2% Kanto 93.9% 94.1% 94.2% 92.4% 93.1% 93.6% 93.3% 92.5% 93.8% Kinki 96.6% 93.3% 97.2% 95.1% 92.3% 94.7% 94.8% 93.1% 96.2% Tokai 96.1% 96.6% 97.0% 93.1% 93.3% 92.5% 95.0% 93.8% 94.7% Western Japan 89.8% 91.9% 91.4% 90.8% 90.2% 90.3% 91.0% 94.4% 92.7% Source: Shared Research based on company data Figures may differ from company materials due to differences in rounding methods.

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Key financial data Cost structure Consolidated income statement FY07/9 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 Cost of sales 4,818 5,071 5,549 6,058 7,678 8,525 9,384 10,416 12,435 Gross profit 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 SG&A expenses 1,794 2,112 2,557 2,712 3,737 4,259 5,051 5,746 6,485 Operating profit 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 Parent income statement FY07/9 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Parent Parent Parent Parent Parent Parent Parent Parent Parent Sales 7,342 7,520 7,917 8,441 8,988 9,635 10,219 10,781 Cost of sales 4,574 4,592 4,909 5,162 5,629 6,086 6,422 6,782 Cost of goods purchased 2,926 2,952 3,089 3,199 3,421 3,595 3,753 3,892 Salaries in cost of sales 1,118 1,112 1,221 1,358 1,544 1,765 1,916 2,044 Subcontracted labor 298 269 295 269 295 323 278 299 Other 232 259 304 337 369 403 474 547 % of sales (cost ratio) 62.3% 61.1% 62.0% 61.2% 62.6% 63.2% 62.8% 62.9% Cost of goods purchased 39.8% 39.3% 39.0% 37.9% 38.1% 37.3% 36.7% 36.1% Salaries in cost of sales 15.2% 14.8% 15.4% 16.1% 17.2% 18.3% 18.7% 19.0% Subcontracted labor 4.1% 3.6% 3.7% 3.2% 3.3% 3.4% 2.7% 2.8% Other 3.2% 3.4% 3.8% 4.0% 4.1% 4.2% 4.6% 5.1% Gross profit 2,767 2,928 3,008 3,279 3,359 3,550 3,797 4,000 SG&A expenses 1,500 1,503 1,580 1,597 1,686 1,895 2,088 2,165 Salaries and allowances 433 465 508 565 562 583 589 623 Rent 170 170 154 173 189 198 226 234 Depreciat ion 54 48 47 53 56 53 49 51 Other 843 820 872 805 879 1,061 1,224 1,256 Yo Y 4.0% 0.2% 5.2% 1.0% 5.6% 12.4% 10.2% 3.6% Salaries and allowances 3.8% 7.3% 9.3% 11.3% -0.6% 3.8% 1.1% 5.8% Rent 1.2% 0.2% -9.5% 12.5% 9.2% 4.8% 13.8% 3.8% Depreciat ion -9.2% -10.4% -3.1% 13.5% 4.9% -5.3% -6.6% 2.7% Other 5.6% -2.8% 6.3% -7.6% 9.2% 20.7% 15.4% 2.6% Operating profit 1,267 1,425 1,428 1,682 1,673 1,654 1,709 1,835 Profit and profit margins FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Gross profit 2,538 2,924 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 GPM 37.3% 38.9% 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% Operating profit 920 1,181 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 OPM 13.5% 15.7% 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% EBITDA 1,003 1,284 1,362 1,672 1,729 2,087 2,338 2,668 3,137 2,658 3,822 EBITDA margin 14.8% 17.1% 17.3% 19.3% 18.0% 19.7% 17.4% 17.6% 18.4% 14.7% 17.4% Net margin 9.5% 6.5% 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% Financial ratios ROA (RP-based) 19.1% 24.5% 17.1% 18.2% 23.6% 30.8% 29.6% 26.2% 21.2% 11.5% 14.2% ROE 30.0% 25.9% 35.0% 44.9% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% ROIC 0.13 0.18 0.20 0.25 0.24 0.21 0.15 0.09 0.12 NOPAT 746 879 890 1,080 1,253 1,447 1,656 1,324 2,053 Net assets + interest-bearing debt 5,610 4,831 4,461 4,361 5,241 6,962 10,761 14,844 16,768 Total asset turnover 0.98 1.01 1.15 1.41 1.58 1.71 1.78 1.53 1.20 0.93 0.97 Working capital 72 122 136 134 170 160 251 327 407 537 422 Current ratio 62.1% 85.7% 83.0% 70.2% 95.9% 140.4% 210.8% 239.9% 376.5% 528.3% 350.0% Quick ratio 56.2% 67.9% 73.2% 59.0% 83.0% 127.2% 192.0% 220.6% 352.5% 486.3% 329.3% OCF / Current liabilities -10.9% 25.3% 30.6% 60.3% 52.7% 59.6% 61.6% 86.3% 73.0% 20.7% 103.8% Net debt / Equity -171.5% -137.2% -117.7% -77.5% -30.8% 47.3% 23.0% 37.4% 53.1% 70.2% 60.5% OCF / Total liabilities -5.4% 16.6% 18.1% 37.7% 30.8% 39.6% 24.8% 32.3% 21.7% 4.7% 27.1% Cash cycle (days) 1.7 3.8 5.2 5.1 5.7 5.7 5.5 6.9 7.7 9.5 7.6 Changes in working capital 37.0 50.5 14.1 -2.3 36.3 -9.7 90.5 75.7 80.8 129.1 -114.5 Source: Shared Research based on company data

Costs of sales (mainly rent to parking lot owners) and personnel costs are the largest cost components. While the rent might be a partially variable cost as it fluctuates depending on the number of parking spaces rented from the owner, it is mostly a fixed-cost high incremental margin business—rent has to be paid regardless of utilization. Salary cost is on an uptrend in comparison to sales because of a rise in the ratio of the outsourced management business, in which the ratio of personnel costs is relatively high, as well as the company’s policy to aggressively hire new employees. The company considers its market shares still being low and plans to foster core staffs who engage in obtaining new large contracts and boosting the market shares. It also hires more

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employees in expectation of increasing difficulty to secure human resources toward the 2020 Tokyo Olympics and aims to improve profitability by promoting part-time workers on parking lots and other sites to regular employees. Competitor comparison (JPYmn) TRUST Holdings Inc. FY06/09 FY06/10 FY06/11 FY06/12 FY06/13 FY06/14 FY06/15 FY06/16 FY06/17 Parking Lot sales 4,392 4,796 5,335 5,583 5,768 5,989 6,780 6,621 6,643 YoY 8.0% 9.2% 11.2% 4.7% 3.3% 3.8% 13.2% -2.4% 0.3% Parking Lot operating profit 95 283 200 310 221 91 456 536 576 YoY -40.8% 196.8% -29.4% 55.1% -28.8% -58.7% 400.2% 17.6% 7.5% OPM (%) 1.4% 3.9% 7.2% 7.0% 7.4% 5.6% -0.1% 2.1% 3.5% ROA (NI-based) -0.5% 1.7% 3.5% 3.1% 3.6% 1.5% -1.6% -0.6% 0.3% Financial leverage (t ot al asset s/shareholder equit y) 4.1 6.9 8.8 9.5 9.2 9.9 15.0 24.0 25.0 ROE -2.2% 11.8% 30.7% 29.6% 33.3% 14.6% -24.7% -15.4% 7.0% Avg. unit s (direct ly managed and member facilit ies) 45.5 46.7 37.0 39.2 36.2 36.8 38.3 39.2 41.3 Parking Management Organization, Ltd. (3251) FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 Parking Lot sales 3,227 3,642 3,876 4,595 5,228 5,686 6,691 - - YoY 5.1% 12.9% 6.4% 18.6% 13.8% 8.8% 17.7% - - GPM 12.4% 15.4% 15.2% 15.5% 16.8% 16.6% 16.8% - - Parking Lot operating profit 17 117 91 151 201 163 241 - - YoY -91.4% 603.5% -22.2% 65.0% 33.3% -19.0% 48.3% - - OPM (%) 0.5% 3.2% 2.4% 3.3% 3.8% 2.9% 3.6% - - ROA (NI-based) 0.8% 4.6% 3.1% 3.9% 5.1% 4.5% 6.6% - - Financial leverage (t ot al asset s/shareholder equit y) 2.0 2.2 2.4 2.6 2.5 2.4 2.4 - - ROE 1.5% 10.1% 7.5% 10.1% 12.8% 10.8% 15.6% - - Avg. units (contracted management) 241.5 169.1 133.4 114.6 94.0 92.2 - - - Park24 Co., Ltd. (4666) FY10/09 FY10/10 FY10/11 FY10/12 FY10/13 FY10/14 FY10/15 FY10/16 FY10/17 Est. Parking Lot sales 95,320 113,248 124,080 139,547 155,428 167,022 179,698 194,398 232,000 YoY 17.9% 18.8% 9.6% 12.5% 11.4% 7.5% 7.6% 8.2% 19.3% GPM 25.3% 27.7% 26.8% 28.2% 28.1% 26.4% 26.0% 27.3% - Parking Lot operating profit 10,584 12,839 13,292 17,809 19,509 17,554 18,730 21,453 24,200 YoY 18.4% 21.3% 3.5% 34.0% 9.5% -10.0% 6.7% 14.5% 12.8% OPM (%) 11.1% 11.3% 10.7% 12.8% 12.6% 10.5% 10.4% 11.0% 10.4% ROA (NI-based) 7.5% 7.0% 6.4% 8.5% 9.2% 7.9% 8.2% 9.4% - Financial leverage (t ot al asset s/shareholder equit y) 2.2 2.5 2.5 2.5 2.4 2.3 2.2 2.2 - ROE 16.2% 17.2% 16.3% 21.7% 22.1% 18.2% 18.5% 20.2% - Average units 29.4 32.6 33.4 33.6 33.8 33.6 33.3 33.6 Paraca Inc. (4809) FY09/09 FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 Est. Parking Lot sales 6,060 6,738 7,032 7,934 8,913 10,080 10,997 12,016 13,000 YoY 7.4% 11.2% 4.4% 12.8% 12.3% 13.1% 9.1% 9.3% 8.2% GPM 27.9% 30.3% 28.8% 30.8% 29.3% 27.2% 28.6% 30.3% - Parking Lot operating profit 1,015 1,286 1,195 1,581 1,668 1,736 2,037 2,397 2,580 YoY 18.6% 26.7% -7.0% 32.2% 5.5% 4.1% 17.3% 17.7% 7.6% OPM (%) 16.7% 19.1% 17.0% 19.9% 18.7% 17.2% 18.5% 19.9% 19.8% ROA (NI-based) 2.1% 3.2% 3.0% 3.9% 4.4% 4.4% 5.1% 5.7% - Financial leverage (t ot al asset s/shareholder equit y) 3.7 3.6 3.3 3.1 2.8 2.6 2.5 2.5 - ROE 7.5% 11.3% 10.0% 12.0% 12.3% 11.5% 12.9% 14.1% - Average units 14.9 14.7 14.6 15.0 14.1 13.8 14.2 13.9 -

Nippon Parking Development Co., Ltd. (2353) FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Parking Lot sales 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 YoY 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% GPM 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% Parking Lot operating profit 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 YoY 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% OPM (%) 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% ROA (NI-based) 9.0% 12.5% 14.0% 8.4% 18.2% 16.0% 24.8% 6.4% 9.9% Financial leverage (t ot al asset s/shareholder equit y) 3.9 3.6 3.1 2.8 2.8 2.8 2.6 2.9 3.1 ROE 35.0% 44.9% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% Average unit s (direct ly managed facilit ies) 21.4 21.2 23.6 23.5 24.9 25.3 26.9 28.5 29.7 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: Average number of car units = cars/parking spaces (Trust Holdings numbers include directly-managed parking lots and partners; Parking Management Organization, Ltd., subcontracted parking spaces; and Nippon Parking Development, directly-managed parking spaces

Compared with peers, NPD’s FY07/17 OPM of 14.0% and ROE of 31.0% were high, for the following reasons:

Focusing on a different market Competitors Park 24 (TSE1: 4666) and Paraca (TSE Mothers: 4809) operate mainly unmanned coin parking lots. Nihon Parking Corp (JASDAQ: 8997) provides pay-by-the-hour services for drive-yourself multilevel parking garages, automated parking towers, and unmanned coin parking lots. NPD’s focus on legally mandated parking lots means that its target market is the lot owners, a slightly different market compared with conventional models. The company has no listed competitors, so the company can use the prestige of its TSE listing to win large clients. Plus the company operates parking facilities located in urban areas.

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Monthly rentals It might seem that lower average car units would dent economies of scale, but because NPD uses monthly rental contracts, its cost structure differs from competitors’. Using monthly rental contracts means that labor costs are fixed (see Business model section), making the SG&A-to-sales ratio more predictable and OPM is higher.

Higher leverage NPD has a higher degree of financial leverage than its peers (see table above), which increases net profit per sales unit.

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Strengths and weaknesses Strengths Accumulated operational information and knowledge: Shared Research believes that the company’s proprietary ◤ knowledge (e.g., “triple harvest” model) based on several years of experience in managing and operating legally mandated parking garages, its wealth of market information, and its ability to offer optimal management solutions, gives parking lot owners a sense of comfort. The source of this strength appears to be the specialized sales teams which systematically perform marketing activities based on the unique characteristics of each market, not only gathering information about the parking facilities but accumulating and renewing intelligence on users (e.g., car ownership).

Non-asset business is the source of earnings: The business model does not require capital investment and the company ◤ owns no assets to speak of, so the business is not directly affected by changes in land prices (It is indirectly affected, however, by changes in the rent charged by the parking lot owners and overall parking supply.)

Room for further development of legally mandated parking lots: See Market and value chain section. ◤

Weaknesses:

High level of dependence on urban parking lot markets and Leased Facility Operations: Leased Facility Operations ◤ are a big proportion of revenues, so company-wide earnings rely almost entirely on rent compared with parking fee spreads and utilization rates of these facilities.

Low level of earnings contribution from the Ski Resort business and lack of synergies between this business and ◤ the core Parking Lot business: While the Ski Resort business became profitable in FY07/10, no synergies are expected between this and the Parking Lot business. Looking at the low level of ski business contribution to earnings, Shared Research is concerned about deteriorating asset efficiency and a dilution of management attention.

Low staff retention: Shared Research wonders whether the average duration of employment of NPD staff (3.2 years at ◤ end-July 2016) might be too short for salespeople to build their skills and accumulate professional knowledge. To grow its business the company needs to increase the number of experienced salespeople capable of independently offering solutions that match customer needs.

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Market and value chain Overview Japan had 81.6mn vehicles at end-June 2017 (source: Automobile Inspection & Registration Information Association). Every vehicle must have its own parking space, as mandated by two laws, the Parking Lot Act and the Garage Law.

Parking lots can be categorized into legally mandated parking, parking garages, and “coin parking lots”. The company mainly targets legally mandated parking in its business development. Legally mandated parking refers to parking facilities required for buildings that have a certain amount of floor space. Many legally mandated parking facilities are located in urban buildings, the majority of which are multi-story mechanical parking facilities that store cars to maximize space use. At end March 2011 there were 63,077 legally mandated facilities in Japan. The company operates 950 parking nationwide (as of FY07/13; Leased Facility Operations only), suggesting big growth potential considering the total market.

The company also focuses on the development of the parking garage market. Parking garages are multi-level parking facilities connected to department stores or large-scale shopping centers. Drivers drive up the slope themselves and park in open spaces. Advantages include the ability to fit more vehicles than flat lots in the same lot area, and there are no restrictions on the size or weight of vehicles unlike mechanized lots, and low maintenance costs.

Coin parking involves placing a gate or machine on an empty lot and parking cars in spaces on the lot. Most coin parking lots are unmanned. The company does not target the coin parking market because, according to the company, open lots are often only used temporarily for parking and get redeveloped as buildings.

Car sharing market According to the Transportation Ecology Mobility Foundation, as of March 2017, there were 1,085,922 car sharing members in Japan (+28% YoY) and 24,458 car sharing vehicles (+24% YoY). Only 0.37% of Japan’s population was a member of such services, although growth has been accelerating from 2011 onward. In contrast, car sharing service use is more widespread in the West. It is particularly popular in Switzerland, where there are 105,100 members and 2,650 vehicles (December 2012), or 1.3% of the total population. Growth in Switzerland has been static for the past three years.

Areas with high population density, developed mass transit systems, such as railroads, and short average driving distances lend themselves to car sharing. Given Japan meets these conditions, car sharing will likely go mainstream.

Domestic car sharing vehicles, members 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 No. of cars 510 563 1,265 3,915 6,477 8,831 12,373 16,418 19,717 24,458 YoY 115.2% 10.4% 124.7% 209.5% 65.4% 36.3% 40.1% 32.7% 20.1% 24.0% Memberships 3,245 6,396 15,894 73,224 167,745 289,497 465,280 681,147 846,240 1,085,922 YoY 29.2% 97.1% 148.5% 360.7% 129.1% 72.6% 60.7% 46.4% 24.2% 28.3% Source: Shared Research based on Foundation for Promoting Personal Mobility and Ecological Transportation, March 2017 Note: Based on surveys taken in January of each year through 2014; from 2015 on the surveys conducted in March

Suppliers

Leased Facility Operations, the main driver of the Parking Lot business, is based on renting parking lots from owners. There are numerous types of owners, including companies, real estate firms, financial institutions, funds, and J-REITs. The supply environment for the company has been good given the weak economy in recent years. When the economy is strong, conditions tend to deteriorate.

This means that theoretically it is possible that fewer unutilized parking spaces would be available for NPD to manage if land prices recovered or the economy showed signs of sustainable improvement. Generally the company does not own real estate, so it does not benefit from increased land prices. Instead, higher land prices can lead to an increase in parking lot rental fees and

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therefore decrease gross profits. If the unused area of parking lots in office buildings decreased, the number of potential clients (car owners) and opportunities to add new parking spaces could also shrink.

Customers

In the Leased Facility Operations business, income is derived from users of parking spaces, while in Outsourced Management, fees from lot owners are the source of income. However, the final customers in both situations are people and companies using the parking spaces. Corporate customers make up around 90% of the total clientele for monthly rental properties in the Leased Facility Operations business.

Barriers to entry

The Parking Lot business requires land and parking facilities, so barriers to entry are not necessarily high. There is a range of market participants, from large companies with a nationwide presence to individuals operating in local areas. However, to achieve profitability and gain the critical mass necessary for sustainable growth, expertise and operational knowledge are required to identify attractive locations as well as to acquire the parking spaces at optimal prices and then maintain high utilization rates.

Competition

Following the introduction of the revised Road Traffic Act in June 2006, several new companies entered the market and competition intensified. However, demand then dropped; profitability fell, and many new entrants were forced out. For legally mandated lots that the company targets, there are very few companies that operate multiple lots. Instead individual buildings oversee operations and management.

Considering other listed companies, Park 24 Co, a major industry player, operates unmanned coin parking in small lots and shopping center lots. While it may be seen as NPD’s competitor when it comes to parking lots inside commercial facilities, NPD does not target coin parking, Park 24’s core business, so the two companies’ interests do not overlap much. The same can be said of Trustpark (Fukuoka Stock Exchange: 3235), Paraca (TSE Mothers: 4809) and Nihon Parking Corp (JASDAQ: 8997), which also target mainly unmanned coin parking. Parking Management Organization (TSE Mothers: 3251) is active mainly in the operation of lots located in large facilities in metropolitan areas, and is to some extent a direct competitor.

Car Sharing In Japan, companies such as Park 24, Orix Auto Corp (subsidiary of Orix Corp; TSE1: 8591), and Car Sharing Japan (subsidiary of Mitsui & Co; TSE1: 8031) are offering such services. Park 24 had 16,252 vehicles (at end-October 2016, source: Park 24 company materials), Orix 2,600 vehicles, and Car Sharing Japan 1,761 vehicles (end of March, 2017; source: Foundation for Promoting Personal Mobility and Ecological Transportation). The company said that not many of these companies are profitable and in several years only about three will be in business.

Substitutes

Coin parking, not targeted by the company, can be a substitute. The shift from cars to public transportation (trains, buses, bicycles) reduces demand for parking services. In the short term, this phenomenon may occur due to the spike in gasoline prices. Reduced automobile use as a result may reduce demand for hourly lots. The company is working to limit these effects by maintaining monthly rental usage levels or increasing the share of monthly rental business.

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Financial statements

Income statement

Income statement FY07/02 FY07/03 FY07/04 FY07/05 FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales 1,571 2,512 3,583 4,512 5,548 6,795 7,508 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 YoY 83.1% 59.9% 42.6% 25.9% 23.0% 22.5% 10.5% 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% Cost of sales 747 1,291 1,935 2,555 3,208 4,257 4,584 4,818 5,071 5,549 6,058 7,678 8,525 9,384 10,416 12,435 Gross profit 824 1,221 1,649 1,957 2,340 2,538 2,924 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 GPM 52.5% 48.6% 46.0% 43.4% 42.2% 37.3% 38.9% 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% SG&A expenses 622 794 943 978 1,212 1,618 1,743 1,794 2,112 2,557 2,712 3,737 4,259 5,051 5,746 6,485 SG&A-to-sales ratio 39.6% 31.6% 26.3% 21.7% 21.8% 23.8% 23.2% 22.8% 24.4% 26.6% 25.6% 27.8% 28.2% 29.7% 31.7% 29.5% Operating profit 202 427 706 979 1,128 920 1,181 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 YoY -635.6% 111.6% 65.2% 38.7% 15.2% -18.4% 28.4% 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% OPM 12.9% 17.0% 19.7% 21.7% 20.3% 13.5% 15.7% 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% Non-operating income 13 9 17 60 718 483 1,230 182 123 208 379 269 308 579 713 236 Non-operating expenses (subtract) 5 14 12 20 22 73 585 272 487 270 294 55 52 142 450 91 Recurring profit 209 423 711 1,019 1,824 1,329 1,827 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 YoY -589.6% 102.0% 68.2% 43.3% 79.0% -27.1% 37.4% -36.1% -4.4% 28.8% 32.6% 17.3% 15.9% 16.1% -25.6% 43.4% RPM 13.3% 16.8% 19.8% 22.6% 32.9% 19.6% 24.3% 14.8% 12.9% 15.0% 18.0% 16.6% 17.1% 17.7% 12.4% 14.6% Extraordinary gains 0 0 0 33 0 7 9 13 227 28 34 5 4 2,244 1 85 Extraordinary losses (subtract) 3 2 10 8 18 153 988 116 212 47 585 20 87 36 280 357 Tax charges (subtract) 96 200 304 432 737 542 359 452 367 573 837 823 886 1,552 736 538 Implied tax rate 46.7% 47.6% 43.4% 41.4% 40.8% 45.8% 42.4% 42.4% 32.4% 40.4% 61.8% 37.1% 35.3% 29.7% 37.5% 18.3% Minority Interests (subtract) -4 -1 19 40 136 -28 160 Ne t in c o me 110 220 397 612 1,069 642 489 614 765 850 518 1,378 1,582 3,531 1,255 2,243 YoY -365.5% 100.3% 80.2% 54.2% 74.7% -39.9% -23.9% 25.5% 24.7% 11.1% -39.0% 165.9% 14.7% 123.2% -64.5% 78.7% Net margin 7.0% 8.8% 11.1% 13.6% 19.3% 9.5% 6.5% 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% ROE 29.7% 25.5% 32.2% 35.7% 49.5% 30.0% 25.9% 35.0% 44.8% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% Net margin 7.0% 8.8% 11.1% 13.6% 19.3% 9.5% 6.5% 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% Total asset turnover 2.43 2.18 2.29 1.59 1.11 0.98 1.01 1.15 1.41 1.58 1.71 1.78 1.53 1.20 0.93 0.97 Financial leverage 1.74 1.33 1.27 1.66 2.32 3.24 3.96 3.91 3.60 3.14 2.81 2.85 2.79 2.64 2.91 3.14 ROA (RP-based) 32.3% 36.7% 45.4% 35.9% 36.4% 19.1% 24.5% 17.1% 18.2% 23.6% 30.8% 29.6% 26.2% 21.2% 11.5% 14.2% ROIC 28.7% 28.8% 33.3% 26.2% 16.8% 9.3% 11.2% 13.3% 18.2% 20.0% 24.8% 23.9% 20.8% 15.4% 8.9% 12.2% NOPAT 118 249 411 581 669 546 701 746 879 890 1,080 1,253 1,447 1,656 1,324 2,053 Net assets + Interest-bearing debt 410 865 1,234 2,214 3,988 5,836 6,268 5,610 4,831 4,461 4,361 5,241 6,962 10,761 14,844 16,768 ROIC (pre-tax) 49.3% 49.4% 57.2% 44.2% 28.3% 15.8% 18.8% 22.4% 30.7% 33.6% 41.8% 38.6% 33.5% 23.9% 13.3% 18.3% OPM 12.9% 17.0% 19.7% 21.7% 20.3% 13.5% 15.7% 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% Sales / Invested capital 3.83 2.90 2.90 2.04 1.39 1.16 1.20 1.40 1.79 2.15 2.43 2.56 2.17 1.58 1.22 1.31 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

The company booked operating profit losses in FY07/00 and FY07/01 when it shifted to the Leased Facility Operations business. Leased Facility Operations attained sufficient scale and became NPD’s core business, allowing the company to achieve record earnings for five consecutive years through FY07/06.

Operating profit declined year-on-year in FY07/07. Recovery of the urban real estate market prompted building owners to prioritize tenant leasing, paying less attention to the profitability of parking space. As a result, the supply of parking facilities declined. This coincided with the revision of the Parking Lot Act in June 2006 that led to competitors entering the market. As a result, new contract acquisition for properties slowed, while the profitability of parking properties fell on pricing pressures.

In response to decreased profitability in FY07/07, the company focused on high value-added management (large properties and properties where the company runs complex parking lot management operations), enhancing new market development in regional areas, and changing or cancelling less profitable contracts. As a result, sales and operating profit reached historical highs in eight consecutive periods from FY07/08 to FY07/15.

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Balance sheet

Balance sheet FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Assets Cash and deposits 1,388 1,518 1,701 1,201 1,777 2,885 3,899 4,765 9,902 13,121 13,888 Marketable securities 718 334 ------Accounts receivable 103 148 162 145 163 165 257 332 418 527 480 Allowance for doubtful accounts -5 -0 -1 -0 -0 - -1 -4 -4 -61 -9 Inventories 2 3 3 19 39 25 74 82 87 291 255 Prepaid expenses 84 58 70 90 101 109 186 211 197 234 247 Other current assets 236 539 257 254 278 302 350 382 630 903 664 Total current assets 2,525 2,599 2,191 1,708 2,358 3,486 4,766 5,768 11,230 15,014 15,524 Buildings 530 574 575 681 956 513 619 722 1,410 1,466 1,809 Equipment, machinery, and vehicles 129 130 129 314 350 337 481 647 1,019 1,378 1,713 Land 142 142 200 266 281 346 596 605 690 961 1,426 Other fixed assets - - - - 1 7 7 18 46 47 68 Total tangible fixed assets 805 847 904 1,261 1,588 1,204 1,703 1,993 3,164 3,852 5,015 Tot al int angible fixed asset s 67 94 83 64 76 97 220 186 411 380 393 Investments securities 2,535 1,909 1,622 1,303 1,304 515 1,812 2,039 1,960 903 1,584 Investments in silent partnership 1,108 1,092 1,035 683 413 148 11 61 48 - - Long-term debt 81 67 55 45 37 61 29 37 77 5 - Securit y deposit s 337 293 286 306 328 332 378 396 455 499 505 Deferred tax assets 201 313 266 373 268 145 61 4 251 453 667 Other 57 11 30 56 4 15 140 160 187 238 284 Investment and other assets 4,319 3,685 3,293 2,766 2,354 1,216 2,431 2,696 2,978 2,098 3,040 Software 66 67 57 36 41 70 65 58 41 48 208 Leasehold right s - 26 26 26 26 26 26 26 26 26 26 Other 1 1 0 2 9 1 129 102 344 306 159 Total fixed assets 5,191 4,626 4,281 4,090 4,019 2,517 4,354 4,875 6,554 6,330 8,448 Total assets 7,716 7,225 6,472 5,799 6,377 6,003 9,121 10,643 17,783 21,344 23,973 ------Liabilit ies ------Accounts payable 33 29 29 29 32 30 81 88 98 281 313 Short-term debt 3,391 2,022 1,938 1,368 1,274 1,156 624 209 102 424 1,380 Ot her current liabilit ies 645 982 673 1,038 1,153 1,297 1,556 2,107 2,782 2,136 2,742 Tot al current liabilit ies 4,069 3,033 2,640 2,435 2,459 2,483 2,261 2,404 2,982 2,842 4,435 Long-term debt 1,348 1,998 1,751 1,179 1,176 650 2,530 2,906 5,170 6,624 6,444 Ot her fixed liabilit ies 344 373 393 446 556 589 1,089 920 908 3,232 3,075 Tot al fixed liabilit ies 1,692 2,370 2,143 1,625 1,732 1,239 3,619 3,826 6,078 9,856 9,519 Tot al liabilit ies 5,761 5,403 4,783 4,060 4,191 3,722 5,880 6,230 9,061 12,698 13,954 Net assets ------Capit al st ock 544 549 568 568 568 568 568 591 634 668 699 Capit al surplus 393 397 417 417 417 417 420 443 485 532 576 Retained earnings 1,517 1,325 1,259 1,345 1,856 1,872 2,582 3,328 5,955 6,100 7,162 Treasury stock -254 -354 -386 -383 -573 -602 -526 -526 -526 -526 -693 Valuation and translation adjustments -245 -101 -171 -223 -115 -6 19 189 214 -104 40 Share subscription rights - 7 0 13 27 31 39 62 115 191 280 Minorit y int erest s - - - - 6 1 138 325 1,846 1,785 1,955 Total net assets 1,955 1,823 1,688 1,738 2,186 2,281 3,241 4,413 8,722 8,646 10,019 W orking capit al 72 122 136 134 170 160 251 327 407 537 422 Total interest-bearing debt 4,739 4,020 3,689 2,547 2,451 1,805 3,154 3,115 5,272 7,048 7,824 Net cash -3,351 -2,501 -1,988 -1,346 -673 1,080 745 1,650 4,630 6,073 6,064 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Assets The Parking Lot business does not require operating capital, nor for the most part, fixed assets. However, the company has been making investments that would lead to new Outsourced Management opportunities, using cross-shareholdings in real estate companies and investments in privately placed funds as tools. As a result, investment securities and investments in Japanese LLCs form a certain share of assets alongside cash and deposits. In line with investment security sale gains and Japanese LLC investment losses booked in FY07/12, the company is now subject to less exposure.

Liabilities Since listing in 2003, the company has been debt-free. However, it borrowed JPY1bn in FY07/05 to strengthen relationships with financial institutions and get management rights to parking garages owned by financial groups. The company borrowed an additional JPY2bn in bank debt in FY07/07 to further cement the relationship with financial institutions and to finance the acquisition of ski resorts. In FY07/08 NPD started reducing its interest-bearing debt using cash from privately placed funds’ (investment partnerships it invested in) distributions and investment securities (stocks) sales. In FY07/12, the company became free of net debt (interest-bearing debt minus cash and equivalents) in connection with an increase in cash and equivalents. Interest-bearing debt increased in FY07/13 due to the execution of a JPY2.3bn loan for investment in businesses with growth potential.

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Shareholders’ equity The company’s equity (net assets) position had been growing through FY07/06 as it retained earnings from operations. It started to decline from FY07/07 to FY07/09, when the company maintained a high dividend payout ratio despite lower net profitability. From FY07/10, the company cut the payout ratio target which in turn built up internal reserves (with the posting of net income) and has increased net assets.

Per share data FY07/02 FY07/03 FY07/04 FY07/05 FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPY) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Shares issued (year end; mn) 4.5 17.6 158.6 3,371.6 3,419.1 3.4 3.4 3.4 3.4 3.4 3.4 3.4 345.3 346.6 347.7 347.7 EPS 47,510.7 12,913.3 2,296.4 183.1 315.1 187.8 144.1 181.2 226.2 251.6 155.5 413.4 4.7 10.5 3.7 3.7 EPS (fully diluted) 47,511 12,624 2,232 179 309 186 ------5 10 4 4 Dividend per share 0.0 0.0 500.0 200.0 200.0 200.0 200.0 200.0 100.0 150.0 200.0 250.0 2.7 3.3 3.5 3.5 Book value per share 0.0 58,866.0 9,027.2 592.0 681.3 568.6 530.1 490.1 504.5 634.6 675.3 916.9 12.0 20.1 19.8 19.8 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

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Statement of cash flows

Statement of cash flows FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cash flows from operating activities (1) -314 898 868 1,529 1,289 1,473 1,460 2,014 1,965 602 3,778 Cash flows from investing activities (2) -1,744 728 322 -203 -73 800 -1,048 -424 1,378 2,490 -3,135 Free cash flow (1+2) -2,057 1,626 1,190 1,326 1,216 2,273 412 1,590 3,343 3,092 643 Cash flows from financing activities 1,208 -1,495 -1,008 -1,826 -636 -1,228 612 -739 1,733 296 -551 Depreciation and amortization (A) 83 103 104 191 228 266 316 333 564 680 754 Capital expenditures (B) -869 -179 -157 -171 -219 -472 -278 -524 -1,008 -1,165 -2,186 Working capital changes (C) 37 51 14 -2 36 -10 90 76 81 129 -114 Simple FCF (NI + A + B - C) -181 362 547 787 822 323 1,326 1,315 3,006 641 926 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Cash flows from operating activities Cash flows from operating activities have been stable, but there have been exceptions. Cash flows turned negative in FY07/07. Pre-tax earnings were low due to corporate tax payments (JPY948mn) and trading securities acquisitions (JPY334mn). Cash flows from operating activities rose in FY07/10 due to higher pre-tax profit and lower corporate tax paid.

Cash flows from investing activities Cash flows from investing activities are mostly related to securities investments. Capital expenditures (net tangible fixed asset acquisition) tend to increase due to capital investment and acquisitions in the Ski Resort business. Cash flows from financing activities Cash flows from financing activities have been affected by the return of loans to financial institutions and payment of dividends.

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Other information

Corporate governance, environment, and CSR information (as of November 2016)

Corporate governance (as of November 2016)

Organization and capital structure Organizat ion form Company with Audit & Supervisory Board Cont rolling shareholders None Parent company ticker ー Directors No. of directors under Articles of Incorporation 15 Directors' terms under Articles of Incorporation (years) 1 Number of directors 12 Number of outside directors 3 Number of independent outside directors 3 Audit & Supervisory Board In place No. of Audit & Supervisory Board members under Articles of Incorporation 4 No. of Audit & Supervisory Board members 4 Number of outside members of Audit & Supervisory Board 4 No. of independent outside members of Audit & Supervisory Board 0 Other Foreign stockholding ratio (as of November 2016) Under 10% Independent officers 3 Measures regarding director incentives Stock option Inside directors, employees, Eligible for st ock opt ion subsidiary directors and employees Disclosure of individual direct ors' compensat ion None Policy on determining amount of compensation and calculation methodology In place Takeover defenses None CSR act ivit ies NPD Promotion of car sharing business at parking facilities under management NSD Revitalization of ski resorts and support of athletes

FY07/02 FY07/03 FY07/04 FY07/05 FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. ROE 29.7% 25.5% 32.2% 35.7% 49.5% 30.0% 25.9% 35.0% 44.8% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% Net margin 7.0% 8.8% 11.1% 13.6% 19.3% 9.5% 6.5% 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% Total asset turnover 2.43 2.18 2.29 1.59 1.11 0.98 1.01 1.15 1.41 1.58 1.71 1.78 1.53 1.20 0.93 0.97 Financial leverage 1.74 1.33 1.27 1.66 2.32 3.24 3.96 3.91 3.60 3.14 2.81 2.85 2.79 2.64 2.91 3.14 ROA (RP-based) 32.3% 36.7% 45.4% 35.9% 36.4% 19.1% 24.5% 17.1% 18.2% 23.6% 30.8% 29.6% 26.2% 21.2% 11.5% 14.2% ROIC 28.7% 28.8% 33.3% 26.2% 16.8% 9.3% 11.2% 13.3% 18.2% 20.0% 24.8% 23.9% 20.8% 15.4% 8.9% 12.2% NOPAT 118 249 411 581 669 546 701 746 879 890 1,080 1,253 1,447 1,656 1,324 2,053 Net assets + Interest-bearing debt 410 865 1,234 2,214 3,988 5,836 6,268 5,610 4,831 4,461 4,361 5,241 6,962 10,761 14,844 16,768 ROIC (pre-tax) 49.3% 49.4% 57.2% 44.2% 28.3% 15.8% 18.8% 22.4% 30.7% 33.6% 41.8% 38.6% 33.5% 23.9% 13.3% 18.3% OPM 12.9% 17.0% 19.7% 21.7% 20.3% 13.5% 15.7% 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% Sales / Invested capital 3.83 2.90 2.90 2.04 1.39 1.16 1.20 1.40 1.79 2.15 2.43 2.56 2.17 1.58 1.22 1.31 Source: Shared Research based on company data

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ROE, ROA, ROIC

70% ROE ROA (RP-based) ROIC 65.5%

60% 51.9% 49.5% 50% 44.8% 43.9% 44.6%

40% 35.7% 35.0% 33.3% 29.7% 30.0% 31.0% 28.8% 25.9% 30% 32.2% 23.6% 28.7% 25.5% 26.2% 18.7% 20% 24.8% 23.9% 20.8% 18.2% 20.0% 16.8% 15.4% 10% 13.3% 11.2% 12.2% 9.3% 8.9% 0% FY07/02 FY07/07 FY07/12 FY07/17

ROE ROE 70% 65.5% 5 Net margin Total asset turnover (right axis) 60% Financial leverage (right axis) 4.0 3.9 51.9% 49.5% 3.6 4 50% 3.2 3.1 44.6% 3.1 44.8% 2.9 2.8 2.8 2.8 2.6 3 40% 35.7% 35.0% 43.9% 29.7% 32.2% 2.3 25.5% 30.0% 31.0% 30% 25.9% 1.7 1.7 2 23.6% 1.3 1.3 18.7% 20% 1 10%

0% 0 FY07/02 FY07/07 FY07/12 FY07/17

ROIC

70% ROIC (pre-tax) OPM Sales / Invested capital (right axis) 5

60% 3.8 4 50% 2.9 2.9 40% 3

2.0 2.6 30% 2.4 2.2 2 1.4 1.4 2.2 1.8 1.2 1.3 20% 1.2 1.2 1.6 21.7% 19.7% 20.3% 17.0% 17.1% 17.2% 1 15.7% 16.0% 15.6% 15.0% 15.4% 15.1% 10% 12.9% 13.5% 14.0% 10.9% 0% 0 FY07/02 FY07/07 FY07/12 FY07/17

(JPYbn) (JPYbn) Net assets Interest-bearing debt Operating profit (right axis) 20 4 18 3.1 16 3 14 2.6 7.0 2.3 7.8 12 2.0 5.3 10 1.8 2 1.5 1.5 2.0 8 1.3 1.1 1.2 6 1.0 0.9 3.1 0.7 10.0 1 4.7 3.2 8.7 8.6 4 0.4 2.7 4.0 3.7 2.5 2.5 1.8 0.2 1.0 4.4 2 0.0 3.2 0.0 0.0 1.4 2.0 2.3 2.0 1.8 1.7 1.7 2.2 2.3 0 0.7 1.0 0 FY07/02 FY07/07 FY07/12 FY07/17 Source: Shared Research based on company data

Shareholder returns

The basic policy underlying NPD’s dividend policy targets sustainable revenue growth and aims to return profits to shareholders in accordance with that growth, and upon comprehensively examining internal reserves, capital efficiency and other factors necessary to strengthen its management foundation and develop its businesses over the medium-to-long term, determines its dividend policy for each period. It does not set specific targets such as payout or equity ratios.

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FY07/03 FY07/04 FY07/05 FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. T ot al dividends a) - 79 674 684 681 680 679 339 503 668 835 904 1,109 1,180 1,264 Total treasury stock acquired b) - - - - 254 100 34 - 190 30 - - - - - Total returns to shareholders c) = a) + b) - 79 674 684 935 780 712 339 693 698 835 904 1,109 1,180 1,264 Net income attributable to parent company shareholders d) 220 397 612 1,069 642 489 614 765 850 518 1,378 1,582 3,531 1,255 2,243

Dividend payout rat io a) / d) - 20.0% 110.1% 63.9% 106.0% 139.0% 110.6% 44.4% 59.1% 128.9% 60.6% 57.2% 31.4% 94.0% 56.4% Total shareholder return ratio c) / d) - 20.0% 110.1% 63.9% 145.5% 159.4% 116.1% 44.4% 81.5% 134.7% 60.6% 57.2% 31.4% 94.0% 56.4%

Net assets available to common 1,037 1,432 1,996 2,329 1,955 1,816 1,688 1,725 2,153 2,249 3,064 4,026 6,761 6,670 7,784 shareholders (year end) Average of beginning and end of f) 865 1,234 1,714 2,163 2,142 1,885 1,752 1,706 1,939 2,201 2,656 3,545 5,393 6,716 7,227 year EPS (JPY) 12,913.3 2,296.4 183.1 315.1 187.8 144.1 181.2 226.2 251.6 155.5 413.4 4.7 10.5 3.7 6.7 DPS (JPY) - 500.0 200.0 200.0 200.0 200.0 200.0 100.0 150.0 200.0 250.0 2.7 3.3 3.5 3.8 DOE a) / f) - 6.4% 39.3% 31.6% 31.8% 36.1% 38.8% 19.9% 25.9% 30.4% 31.4% 25.5% 20.6% 17.6% 17.5%

180% Payout ratio Total shareholder return ratio DOE (right axis) 45% 160% 40% 140% 35% 120% 30% 100% 25% 80% 20% 60% 15% 40% 10% 20% 5% 0% 0% FY07/02 FY07/07 FY07/12 FY07/17 Source: Shared Research based on company data

History

The company was established in December 1991. The current president Tatsumi started the business to effectively use family land. The company initially focused on management, operating parking lots for other owners and earning commissions from soliciting end users and collecting parking fees. The business then shifted to focus on brokering (intermediary services) in response to increased customer requests. Revenues had been growing for several years but Tatsumi came to the conclusion that it would be hard to sustain growth while relying solely on non-recurring revenues typical for a brokerage. Tatsumi started looking for a recurring revenue business model (known in Japanese business parlance as “stock business” as opposed to non-recurring “flow business”). The company commenced the Leased Facility Operations business, now the core business of NPD, in FY07/99. The company then acquired Nippon Ski Resort Development in 2005 with the goal of operating ski resorts. It began developing its Car Sharing business in 2008.

The company completed its IPO on the JASDAQ in 2003, after which it listed on the Second Section of the TSE. In 2005 it was transferred to the 1st Section. In the same year it was relisted on the JASDAQ.

Recent corporate timeline 2009 Nippon Ski Resort Development buys out Ryuoo Kanko Co with the goal of operating the Ryuoo Ski Park, and converts the company into a subsidiary.

2010 Established NPD Global Co in Bangkok, Thailand, for the purpose of operating, managing, and consulting for car parks in Asia.

2010 Established Nippon Parking Development (Thailand) Co in Bangkok for the purpose of operating, managing, and consulting for car parks in Thailand.

2010 Nippon Ski Resort Development acquired 99.9% of Kawaba Resort Co.’s equity for the purpose of operating the Kawaba ski resort.

2011 Siam Nippon Parking Solutions Co established with local partner that has Thai real estate management expertise.

2011 Established Bang Zhu (Shanghai) Parking Management Co for the purpose of operating, managing, and consulting for car parks in China.

2011 Began operating a parking facility at the Siam Square shopping complex in Bangkok, Thailand.

2011 Delisted from Osaka Stock Exchange’s JASDAQ Index.

2011 Made the Car Sharing business into a subsidiary.

2012 Commenced operation of Hakuba Happo-one Winter Resort, Hakuba Iwatake Snow Field, and Tsugaike Kogen Ski Resort (Nippon Ski Resort Development Co Ltd, acquired Tokyu-Hakuba Corp).

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2013 Commenced operation of ski and outdoor goods rental shop Spicy (Nippon Ski Resort Development Co Ltd, acquired Spicy Co Ltd).

2014 Established subsidiary NPD Korea Co., Ltd in South Korea, providing general consulting services regarding parking lot services in Seoul. 2014 Commenced operations at Meiho Ski Resort following the acquisition of shares in Meiho Kogen Development by Nippon Ski Resort Development.

2015 Established PT. NPD SOLUTIONS INDONESIA, offering general consulting services regarding parking lot services in Indonesia.

2015 Listed Nippon Ski Resort Development on TSE Mothers.

2015 Acquired 83.4% shares of Hare Ski Resort which operates Sugadaira Kogen Snow Resort.

2016 Nippon Theme Park Development acquired 100% of the shares in Nasu Highland Park operator Towa Nasu Resort Co. to make it a wholly owned consolidated subsidiary

Major shareholders

Toyota Motors is among the major shareholders. Capital participation by Toyota stems from the relationship developed when Toyota adopted NPD’s parking information at the time it established the information site GAZOO. Amount Top Shareholders Held Tatsumi Store Ltd. 28.30% Toyota Motor Corporation 3.42% Nippon Parking Development Co., Ltd. 3.23% NORTHERN TRUST CO．(AVFC) RE IEDU UCITS 3.05% CLIENTS NON LENDING 15 PCT TREATY ACCOUNT Kenji Okada 2.95% Kazuhisa Tatsumi 2.56% Japan Trustee Services Bank, Ltd. (Trust account) 2.19% Kenji Kawamura 2.13% Maple Capital KK 2.01% Shinichi Sugioka 1.86% Total 51.69% Source: Shared Research based on company data (As of end-July 2017)

Top management

President Kazuhisa Tatsumi (born January 4, 1968) is the company’s founder

Employees

The company had 1,053 employees (1,595 part-time workers on an annual average basis) at the consolidated level at end FY07/17. At the parent level, the company had 535 employees (844 part-time workers on an annual average basis). The average age was 26.9, and employees had been with the company for an average of 3.6 years.

Investor relations

The company maintains an IR website, and publishes information in both English and Japanese. The company holds results presentations semi-annually.

By the way Glossary Leased parking spaces, directly managed parking spaces Parking spaces that parking lot owners lease to NPD

Rented out parking spaces

Parking spaces that parking lot users rent from NPD at directly managed facilities

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Contract ratio

Rented out spaces divided by leased spaces in directly managed spaces for monthly rent

Lease fee Fee paid to parking lot owners in the Directly Managed Facilities business

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Historical earnings

Historical quarterly earnings Q1 FY07/18 results (out December 6, 2017)

Q1 FY07/18: Solid JPY193mn operating profit increase. Parking Lot business saw steady profit gains and Ski Resort business ▷ reduced losses on increase in visitors during summer season Parking Lot business: In Japan, the effects of focusing on improving earnings at existing properties added up and overseas ▷ operations recorded a Q1 profit for the first time. OPM improved 1.5pp to 23.0%

 Existing domestic properties: Profit base grew steadily due to improved profitability at hourly charge parking facilities and success of measures including the transfer of monthly parking facilities to a subsidiary and making use of manned properties that offer hourly charge and monthly parking facilities for sales promotion and fee optimization, and redeploying personnel to properties with earnings improvement potential by converting manned properties to unmanned leased monthly parking facilities

 New domestic contracts: The company acquired 14 new properties and cancelled 17 contracts after contract revisions based on profitability. Progress with strategic dominance in Sendai

 Contract revisions: Cancellation and revision of contract terms considering risk of steep rises in labor costs and renovations. Limited the effects on gross profit, leading to improved GPM

 GPM: +2.1pp for the Parking Lot business (+2.6pp in Japan). Seeking to further improve profitability in Q2 and thereafter Theme Park business: Visitor numbers were down 2.8%, sales fell 5.2%, and operating profit fell 2.7% (JPY15mn) due to many ▷ wet days in August and typhoons in October, but the negative effect was relatively small

 Maintained efforts to increase average customer spend and cut costs showed progress. Strengthened cost-effective initiatives including events and pet accommodations to raise customer satisfaction

Ski Resort business: Visitor numbers grew 20% as a result of running various events, some in collaboration with other ▷ organizers. Invested in measures to combat low snowfall to open earlier in the winter season From Q2: The Parking Lot business will likely improve in profitability. Theme Park business bolstering initiatives geared to a new ▷ season. Ski Resort business to enter high demand period

(JPYbn) Parking Lot sales Ski Resort sales Theme Park sales Other sales Sales YoY (right axis) 7 6.4 60% 6.0 6 5.3 5.4 5.3 50% 5.1 5.1 5.0 4.7 5 4.2 4.4 4.4 3.9 4.1 40% 4 3.3 3.5 3.3 3.1 3.2 3.2 2.8 2.8 2.9 3.0 30% 3 2.5 2.3 2.1 2.1 2.3 2.3 1.9 2.0 1.9 20% 2

1 10%

0 0% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYbn) Parking Lot OP (including company-wide expenses; right axis) Ski Resort OP Theme Park OP Other OP OP YoY 1.5 300%

1.0 200% 0.8 0.5 0.8 0.6 0.6 0.6 0.5 0.6 0.4 0.6 0.5 0.1 0.4 0.3 0.5 0.2 0.3 0.2 100% 0.1 0.1 0.6 0.6 0.6 0.4 0.4 0.4 0.4 0.5 0.4 0.5 0.5 0.5 0.5 0.3 0.3 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.0 -0.0 -0.1 -0.1 0% -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.3 -0.0 -0.3 -0.3 -0.4 -0.3 -0.5 -0.2 -0.5 -0.5 -100% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data.

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Earnings overview Q1 FY07/18: Operating profit up JPY193mn on steady profit gains in Parking Lot business and contribution of summer season visitors in Ski Resort business Operating profit increased 26.3% YoY to JPY928mn in Q1 FY07/18. Although the Theme Park business recorded a small profit decline due to many wet days in August and typhoons in consecutive weekends in October, the domestic Parking Lot business made solid progress in improving profits and the overseas Parking Lot business posted a Q1 profit for the first time. The Ski Resort business reduced its losses as a result of various management measures, which led to a 20% increase in visitor numbers.

The Parking Lot business continued to benefit from various measures designed to improve the profitability of existing facilities. These measures pushed up operating profit by JPY212mn in FY07/17, and in the latest quarter, GPM for the domestic Parking Lot business rose by 2.6pp (+2.1 pp for the Parking Lot business as a whole). One such measure has been the transfer of directly managed monthly parking lots to NCS. The company transferred 230 parking lots in FY07/17 with another 357 planned for FY07/18 (transfers take place every quarter during the two-year period and their effects usually emerge after six months). The company has also been converting manned properties offering both monthly and hourly parking to unmanned monthly facilities, and reassigning the freed up resources. These measures have a gradual cumulative impact on earnings, and will likely contribute to results beyond Q2. Gross profit also rose in the Ski Resort business (+JPY118mn) thanks to an increase in the number of visitors after the company implemented steps to attract more people during the summer. Ryuoo Ski Park had a twofold increase in the number of visitors from a year earlier, providing impetus for next year.

Parking Lot business

Parking Lot business performance

Domestic sales Overseas sales OPM (incl. adjustments; right axis) OPM (right axis) 3.2 3.3 3.3 (JPYbn) 3.1 3.1 3.1 2.9 2.9 2.9 3.0 2.8 2.8 3 2.7 40% 2.6 2.7 2.5 2.5 2.5 2.3 2.3 2.2 2.3 2.3 35% 2.1 2.1 2.1 1.9 2.0 2.0 2 26.6% 30% 25.6%26.0% 26.0% 24.7% 25.3% 24.4%24.1% 23.7% 23.6% 24.4% 22.7%23.1%22.8% 23.0% 22.0% 22.3% 21.5% 21.6% 21.5% 21.9% 25% 20.7% 20.6% 20.9% 21.2% 21.4% 20.3% 19.5%19.8% 1 20%

19.1%18.9%18.8% 18.6% 19.2% 17.6% 18.1% 16.7% 17.3% 16.8% 17.3%17.0% 15% 16.3% 15.9%16.6%15.9% 16.2% 15.7% 16.0%16.4%15.9% 14.8% 15.4%15.1% 15.5% 15.3% 15.3% 13.7% 14.6% 0 10% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data.

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Domestic Parking Lot business

Domestic Parking Lot business performance

(JPYmn) Sales Operating profit OPM (right axis) 2,983 2,998 2,858 2,892 2,884 2,922 3,000 2,749 18.5% 19% 2,676 2,684 2,718 18.2% 2,529 2,591 2,607 17.8% 17.8% 2,500 17.5% 17.5% 18% 17.0% 17.1% 17.0% 2,000 16.5% 16.4% 17%

1,500 16%

1,000 14.5% 15% 526 540 531 431 462 431 460 446 468 500 504 500 387 14%

0 13% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY07/15 FY07/16 FY07/17 FY07/18

Domestic Parking Lot business: number of new contracts, cancellations and closures

60 1,218 1,209 1,208 1,195 1,206 1,204 1,201 50 1,171 1,200 1,155 1,150 1,155 1,135 1,120 1,130 40 1,103 30 58 1,073 1,100 39 1,047 44 1,034 43 20 38 38 41 35 1,004 32 34 29 30 39 27 31 979 23 21 24 10 32 19 16 20 1,000 948 14 11 14 0 -6 -9 -6 -7 -9 -10 -13 -11 -13 -13 -13 -12 -14 -15 -11 929 -19 -19 -16 -19 -17 -20 -17 -17 -10 907 -26 -22 900 835 -20 884 -30 800 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Cancellations and closures Number of new contracts Net increase QoQ Total domestic contracts (right axis) Source: Shared Research based on company data

Parking Lot business: In Japan, the effects of focusing on improving earnings at existing properties added up and overseas operations recorded a profit in Q1 for the first time. OPM improved 1.5pp to 23.0% The domestic and overseas segments of the Parking Lot business were integrated from Q1 FY07/18. We assume both domestic and overseas operations recorded steady growth to post an increase in operating profit. In particular, the domestic parking-lot business saw an improvement in profitability (with GMP rising 2.6pp YoY). It appears that the company may continue to benefit from this measure in Q2 and thereafter.

FY07/17 initiatives and results In the mainstay domestic Parking Lot business, which provides investment funds for other growth businesses, in FY07/17, NPD carried out various initiatives that put highest priority on improving earnings at existing properties, and the results of those initiatives appeared to build quarter by quarter. For directly managed monthly parking lots, the company improved business efficiency by transferring businesses to subsidiary NCS, and securing better contract fees. For parking facilities that charge fees by the hour, it aggressively acquired new monthly parking lot customers, reviewed pricing structure for hourly facilities, and conducted sales promotions activities targeting surrounding facilities and building tenants, which all contributed to overall improvement. In particular, stronger earnings at parking facilities that charge fees by the hour helped boost profit margins.

FY07/18 initiatives and results The effects of these measures continued through Q1 FY07/18. The company also took the following actions to improve earnings further. For directly managed monthly parking lots, the company transferred businesses to subsidiary NCS (the remaining 357 facilities will be transferred every three months) and made proposals for improving contract ratios such as offering new services to customers, improving convenience, reducing administrative tasks, and cost savings. For parking facilities offering both monthly and hourly parking (directly managed), the company made use of manned operations in aggressive sales promotion and redeployed personnel to properties with earnings improvement potential by converting manned properties to unmanned leased monthly parking facilities. In April 2017 the company hired 88 new graduates, and the expansion in human resources further bolstered operational capacity at hourly charge parking facilities.

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The number of properties fell by three from end-July 2017 because the company focused on improving the profitability of existing facilities and reviewed the terms of its contracts based on profitability considerations. However, the success of the above measures and the overseas operation posting its first Q1 operating profit resulted in solid earnings improvement, with record sales (+5.7% YoY) and 13.0% operating profit increase (+24.1% including companywide expenses).

Hourly parking lots The company aims to halve the number of low-margin properties (monthly gross profit less than JPY50mn) with no prospects for improving earnings by July 2018 (versus July 2016 levels). Shared Research understands that the company wants to create a stable, ongoing source of earnings in light of external circumstances such as the labor shortage and rising personnel expenses. Starting in July 2017, the company: a) concentrated management and human resources in properties which had considerable scope for improved earnings; and b) reviewed properties that had low margins and were inefficient (reviewing hourly charging arrangements, promoting monthly contracts, and making cancellations). The result was a decline in property numbers, but fewer employees, and increased gross profit, which made a major contribution to the improvement in gross profit in FY07/17. NPD plans to further implement these initiatives in FY07/18.

In Q1 FY07/18, NPD benefited from ongoing efforts since FY07/17 to convert manned properties that charge hourly to unmanned monthly facilities. The plan is to aggressively convert such facilities to a monthly format if doing so would lead to more profit. Converting manned facilities to unmanned facilities will also free up workers, allowing the company to more effectively manage human resources and improve its profitability (through changes in the terms of employment contracts and other measures).

Productivity improvements at hourly facilities (number of properties, JPYmn)

Reference month Recent six months FY07/16 (FY average) FY07/17 (2H average) Monthly gross profit No. of Sales GP % of No. of No. of Sales GP % of No. of GPM GPM facilit ies (JPYmn) (JPYmn) total employees facilit ies (JPYmn) (JPYmn) total employees Over JPY1mn 60 273 107 39.3% 58.3% 207 63 300 121 40.3% 60.0% 209 JPY0.5mn-1.0mn 74 151 50 33.2% 27.3% 85 80 154 56 36.4% 27.7% 97 Less than JPY0.5mn 108 134 26 19.4% 14.2% 80 92 119 25 21.1% 12.3% 54 Total 242 558 184 33.0% 100.0% 372 235 573 202 35.3% 100.0% 360

No. of Sales GP No. of Changes GPM facilit ies (JPYmn) (JPYmn) employees New openings 14 21 7 33.3% +17 Converted to monthly -4 -1 - - -1 Ow ner-init iat ed -7 -18 -4 22.2% -11 Closures NPD-init iat ed -10 -11 -2 18.2% -5 Total -7 -9 1 - ±0 Source: Shared Research based on company data

Directly managed parking lots For directly managed parking lots, NPD worked on increasing customer convenience and cutting costs to improve the contract ratio and margins. Specifically, in FY07/17 it transferred directly managed monthly parking facilities in Tokyo and Osaka to subsidiary Nippon Car Service Development Co., Ltd. (NCS). This subsidiary runs car sharing and monthly rental car (with parking space) operations in addition to one of the largest monthly parking facility search websites in Japan. The transfer took place in four three-month stages (230 in the full year). As the gross profit improvement unfolded as planned, in July 2017, the company decided for overall transfers across the Tokyo and Osaka areas (the remaining 357 properties) and expects to see ongoing positive effects of this measure through FY07/18.

Several factors were at play behind the improvement in FY07/17. Under its traditional push marketing steamroller strategy and contract style (requiring three-month notice for cancellation), some contracts had been signed at lower levels than the going rates for the sake of higher utilization. Meanwhile, the monthly parking lot search website had successfully converted its customer-drawing capability into higher contract fees (the average contract fee of about JPY30,000 without using the website versus the website-mediated contract fee of about JPY38,000). Previously, it had been time-consuming for NCS to attract customers online and then pass on the baton to the parent company (NPD) sales staff, the entire process was now placed under one company, and this helped expedite the operational flow.

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NPD is expecting benefits from the improvement in gross profit to emerge six months after the transfers. Such benefits may have surfaced in Q1 in the form of new contracts. Even so, the effect in terms of value may be smaller than in FY07/17, because the transfers began with facilities that had more room for earnings improvement. We are also focusing on NPD aiming for higher gross profit by expanding its monthly car rental programs, although this is not in the gross profit improvement plan. As an example, the company states that for a parking space that generates JPY10,000 per month, a monthly rental car can be expected to generate JPY28,500, an increase of JPY18,500. As of the end of Q4 FY07/17, the number of monthly rental cars under contract was 142 vehicles (+12 units compared to end FY07/16). If this figure was to increase by 1,000 vehicles, it would yield an additional gross profit of JPY222mn per year. By Q3 FY07/17, the increase in the number of vehicles under contract was weak due in part to the concentration of management resources in other areas. However, the number of vehicles increased by 15 units in Q4 FY07/17 and by 25 units in Q1 FY07/18. However, the company must increase the number by more than 100 units on a quarterly basis in order to achieve its internal goal. Shared Research will monitor this situation going forward.

Directly managed monthly facilities and contracts (Japan)

98%

96%

94%

92%

90%

88%

86% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Total domestic East Japan Kanto Tokai Kinki West Japan Source: Shared Research based on company data

Monthly car rental

Number of contracts QoQ (left axis) No. of monthly rental vehicles (with parking) 6,000 5,728 5,626 25 40 200 5,513 Number of members 5,372 Members per vehicle (right axis) 167 5,500 24.4 24 30 142 160 5,000 4,715 4,640 4,658 23 135 134 132 25 4,518 4,584 127 130 127 22.7 4,500 22 20 109 18 120 22.0 21.9 15 4,000 21.6 21.5 21 21.0 8 3,500 20.7 20 10 80 4 3,000 18.4 19 2,554 0 40 2,463 2,379 2,391 2,399 2,339 2,337 2,247 2,339 2,500 18 -2 -5 -5 2,000 17 -10 0 Q1 Q1 Q1 Q1 Q1 Q1 FY07/16 FY07/17 FY07/18 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data

Contract cancellations and revisions considering risk of labor cost hikes and renovations. Limited the effects on gross profit, leading to improved GPM The company continued to review terms for contracts, which led to a YoY net decrease in the number of properties managed. Though sales may decline, by concentrating management resources on properties with capacity for improvement, NPD intends to maintain or increase GPM.

14 new contracts. Continuing to review profit margins; 17 cancellations In Q1 FY07/18, the company won 14 new contracts (11 in Q1 FY07/17, 16 in Q2, 24 in Q3, and 20 in Q4) and had 17 cancellations (20 in Q1 FY07/17, 17 in Q2, 26 in Q3, and 22 in Q4), resulting in a net decrease of three properties in the domestic Parking Lot business, bringing the total number of properties under management in Japan to 1,201 properties (-0.7% YoY) and the total number of vehicle spaces to 43,619 (+0.8% YoY). The company is expected to maintain its efforts to improve the profitability of existing facilities. However, NPD will complete the first stage of the process of transferring directly managed monthly facilities in FY07/18. For this reason, the company plans to acquire more properties in 2H and thereafter.

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Focused sales on parking lot owners and parking garage manufacturers In FY07/17, aiming to expand its business, NPD focused on acquiring new contracts. It also actively worked on large-scale parking lot maintenance targeting both parking lot owners and parking garage manufacturers and on sales to acquire alternative parking lots. In FY07/18, the company plans to continue these proactive initiatives. Shared Research will keep a close eye on future development.

Acquisition of properties to own NPD, as part of an initiative for FY07/17, is catering to other companies’ need to remove fixed assets from their balance sheet. NPD said that it would actively purchase parking facilities in regional areas using its cash-on-hand. The first such acquisition took place in March 2017, when NPD bought a property in Sendai. The company has not disclosed the details of the transaction, but the balance sheet for end-Q2 and end-Q3 show that its tangible fixed assets rose by JPY825mn (no major change in Q4). Considering that the company has depreciation expenses of about JPY100mn on a quarterly basis, it is likely that NPD purchased a properly worth as much as JPY900mn. The company sought to acquire assets with a high net operating income (NOI). Thus, we expect that this acquisition will make a certain level of profit contribution during FY07/18. The company did not acquire any properties in Q1.

Overseas Parking Lot business

Parking Lot FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Overseas sales 133 166 182 203 193 203 208 224 210 243 269 302 279 YoY 68.4% 8.7% 111.3% 71.8% 44.8% 21.8% 14.4% 10.3% 9.1% 19.8% 29.6% 35.2% 32.8% Direct ly managed facilit ies 102 130 138 141 142 147 149 178 150 165 174 180 196 Outsourced management 26 27 28 31 31 39 36 32 32 41 54 58 62 Other 3 9 17 30 18 17 23 14 27 36 42 64 21 T hailand 98 129 143 160 139 142 155 172 161 178 184 208 169 YoY 66.1% 0.8% 150.9% 79.8% 41.8% 10.1% 8.4% 7.5% 15.8% 25.4% 18.7% 20.9% 5.0% Direct ly managed facilit ies 95 120 126 130 124 126 131 162 134 141 140 144 148 Outsourced management ------2 - - Other 3 9 17 30 14 17 23 11 27 36 42 64 21 China 34 37 39 43 49 57 49 44 43 49 56 58 60 YoY 70.0% 54.2% 34.5% 48.3% 44.1% 54.1% 25.6% 2.3% -12.2% -14.0% 14.3% 31.8% 39.5% Direct ly managed facilit ies 7 10 11 12 16 17 13 12 10 11 15 10 10 Outsourced management 26 27 28 31 31 39 36 32 32 38 42 47 49 Other - - - - 2 1 ------South Korea and Indonesia - - - - 3 3 4 8 5 16 29 36 48 Operating profit -17 -17 -4 8 -8 -20 -15 -7 -18 -8 12 28 - Number of parking facilit ies 19 20 20 21 31 31 32 35 34 45 41 43 42 YoY 46.2% 53.8% 25.0% 16.7% 63.2% 55.0% 60.0% 66.7% 9.7% 45.2% 28.1% 22.9% 23.5% For rent (monthly) - - - - 15 14 15 16 16 20 15 16 16 For rent (monthly & hourly 17 18 18 18 13 13 13 16 15 18 18 19 18 Outsourced management 2 2 2 3 3 4 4 3 3 7 8 8 8 T hailand 16 17 17 17 25 25 26 28 27 32 26 27 27 China 3 3 3 4 5 5 5 5 5 6 7 7 7 Korea - - - - 1 1 1 2 2 5 6 7 6 Indonesia ------2 2 2 2 Total parking spaces 6,187 6,977 6,977 6,999 8,015 8,200 8,766 9,613 9,455 11,439 11,360 12,376 12,211 YoY 37.1% 43.5% 28.4% 14.8% 29.5% 17.5% 25.6% 37.3% 18.0% 39.5% 29.6% 28.7% 29.1% Leased spaces 4,698 5,488 5,488 5,478 5,802 5,736 6,302 7,400 7,242 7,686 7,017 7,973 7,818 Managed spaces 1,489 1,489 1,489 1,521 2,213 2,464 2,464 2,213 2,213 3,753 4,343 4,403 4,393 T hailand 4,488 5,278 5,278 5,268 5,517 5,702 6,268 7,045 6,887 7,372 6,607 7,212 7,121 China 1,699 1,699 1,699 1,731 2,455 2,455 2,455 2,455 2,455 2,985 3,575 3,635 3,625 Korea - - - - 43 43 43 113 113 405 501 852 788 Indonesia ------677 677 677 677 Contract ratio (monthly) 66.3% 60.7% 66.3% 60.2% 60.1% 72.4% 97.0% 98.4% 100.0%

350 China 302 Thailand (directly managed facilities and outsourced management) 279 300 269 Thailand (other) 243 250 224 Other 209 208 210 64 202 203 42 21 200 182 11 36 166 30 27 17 23 27 153 17 9 150 133 118 148 104 161 142 144 70 125 132 142 81 80 79 86 11 130 134 134 100 75 70 120 126 53 60 61 95 78 85 58 57 50 26 66 68 52 61 58 8 59 59 57 58 60 3 53 39 43 43 49 44 43 49 56 26 20 24 29 29 34 37 0 1 9 13 18 17 18 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 (JPYmn) FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data

Overseas: OP in Q3 maintained in Q4. Expansion continues as NPD aims to become the de facto parking operator at each location The company increased investment spending with the launch of the Parking Lot business in South Korea (July 2014) and Indonesia (February 2015), posting a quarterly operating profit in Q3 FY07/17 and maintaining profitability in Q4 FY07/17 and Q1 FY07/18. In FY07/17, investment spending in South Korea and Indonesia was absorbed by operating profit in China and

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Thailand. The Korean operation posted monthly profits in Q3 FY07/17 on acquired properties going into operation and a quarterly operating profit in Q1 FY07/18. The company remained profitable in Thailand, and posted some losses in China.

The company believes that its overseas business as a whole is becoming more profitable. It appears that NPD expects a profit increase in FY07/18, when new contracts take effect.

NPD plans to increase the percentage of sales from its overseas businesses to 50% in the medium term. It has been focusing on venturing overseas for two reasons: (1) going forward, the company believes that it must begin to venture overseas at an early phase when significant investment is not required, rather than rush overseas once domestic growth ceases, (2) Overseas, competitors continue to develop businesses in English-speaking countries, but these companies have not been penetrating areas where the main language is their native language: NPD believes it can become the de facto company by penetrating such markets during the phase when the parking lot market is just being established.

Meanwhile, Don Quijote Holdings Co., Ltd. (TSE: 7532) announced in November 2017 that it would start developing commercial facilities in Bangkok, Thailand, and open its first store in the country under the DON DON DONKI format. NPD plans to acquire a 5% stake in a company that owns the building that will house DON DON DONKI, and operate their parking facilities. NPD did not disclose when the investment would take place. However, such a move would help the company expand its earnings.

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Reference

FY07/15 FY07/16 FY07/17 FY07/18 (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Directy operated (monthly) 897 902 919 912 916 928 950 969 961 960 966 969 972 - - - Eastern Japan 55 57 58 56 56 55 55 53 52 51 54 55 56 Kanto 482 483 492 489 496 506 516 531 523 516 512 513 512 Tokai 73 71 74 74 73 73 76 76 78 77 76 76 78 Kinki 184 185 188 186 186 186 193 197 195 200 202 202 204 Western Japan 103 106 107 107 105 108 110 112 113 116 122 123 122 YoY 9.0% 6.5% 5.3% 2.5% 2.1% 2.9% 3.4% 6.3% 4.9% 3.4% 1.7% - 1.1% Eastern Japan 34.1% 21.3% 16.0% 7.7% 1.8% -3.5% -5.2% -5.4% -7.1% -7.3% -1.8% 3.8% 7.7% Kanto 9.3% 5.9% 4.5% 1.5% 2.9% 4.8% 4.9% 8.6% 5.4% 2.0% -0.8% -3.4% -2.1% Tokai 2.8% - 4.2% 5.7% - 2.8% 2.7% 2.7% 6.8% 5.5% - - - Kinki 7.0% 8.2% 4.4% 1.1% 1.1% 0.5% 2.7% 5.9% 4.8% 7.5% 4.7% 2.5% 4.6% Western Japan 5.1% 3.9% 5.9% 4.9% 1.9% 1.9% 2.8% 4.7% 7.6% 7.4% 10.9% 9.8% 8.0% Leased parking spaces 13,703 13,795 14,188 14,226 14,374 14,598 14,704 15,114 15,026 14,920 15,293 15,730 15,647 Eastern Japan 904 918 901 870 888 879 883 872 813 794 846 848 850 Kanto 7,477 7,480 7,736 7,773 7,840 8,009 8,106 8,342 8,214 8,101 8,239 8,495 8,389 Tokai 934 946 974 1,026 1,044 1,078 1,087 1,087 1,125 1,089 1,112 1,078 1,069 Kinki 2,781 2,836 2,895 2,848 2,884 2,892 3,004 3,072 3,099 3,097 3,177 3,337 3,375 Western Japan 1,607 1,615 1,682 1,709 1,718 1,740 1,624 1,741 1,775 1,839 1,919 1,972 1,964 YoY 7.7% 5.5% 7.1% 5.4% 4.9% 5.8% 3.6% 6.2% 4.5% 2.2% 4.0% 4.1% 4.1% Eastern Japan 41.3% 22.6% 13.0% 3.6% -1.8% -4.2% -2.0% 0.2% -8.4% -9.7% -4.2% -2.8% 4.6% Kanto 7.8% 4.7% 7.5% 4.8% 4.9% 7.1% 4.8% 7.3% 4.8% 1.1% 1.6% 1.8% 2.1% Tokai -6.3% -4.8% 4.8% 15.0% 11.8% 14.0% 11.6% 5.9% 7.8% 1.0% 2.3% -0.8% -5.0% Kinki 5.3% 8.1% 5.8% 2.2% 3.7% 2.0% 3.8% 7.9% 7.5% 7.1% 5.8% 8.6% 8.9% Western Japan 6.6% 3.6% 6.1% 9.5% 6.9% 7.7% -3.4% 1.9% 3.3% 5.7% 18.2% 13.3% 10.6% Rented out parking spaces 12,749 12,884 13,139 13,287 13,344 13,426 13,635 14,051 13,967 13,882 14,369 14,782 14,717 - - - Eastern Japan 808 820 802 803 816 805 813 798 742 740 793 790 822 Kanto 7,003 6,988 7,122 7,250 7,196 7,302 7,490 7,715 7,582 7,458 7,726 7,966 7,819 Tokai 878 925 921 973 1,009 1,028 1,017 1,012 1,031 1,034 1,040 1,037 1,016 Kinki 2,602 2,687 2,749 2,706 2,753 2,700 2,765 2,882 2,912 2,898 3,016 3,161 3,225 Western Japan 1,458 1,464 1,545 1,555 1,570 1,591 1,550 1,644 1,700 1,752 1,794 1,828 1,835 Contract ratio 93.0% 93.4% 92.6% 93.4% 92.8% 92.0% 92.7% 93.0% 93.0% 93.0% 94.0% 94.0% 94.1% Eastern Japan 89.4% 89.3% 89.0% 92.3% 91.9% 91.6% 92.1% 91.5% 91.3% 93.2% 93.7% 93.2% 96.7% Kanto 93.7% 93.4% 92.1% 93.3% 91.8% 91.2% 92.4% 92.5% 92.3% 92.1% 93.8% 93.8% 93.2% Tokai 94.0% 97.8% 94.6% 94.8% 96.6% 95.4% 93.6% 93.1% 91.6% 94.9% 93.5% 96.2% 95.0% Kinki 93.6% 94.7% 95.0% 95.0% 95.5% 93.4% 92.0% 93.8% 94.0% 93.6% 94.9% 94.7% 95.6% Western Japan 90.7% 90.7% 91.9% 91.0% 91.4% 91.4% 95.4% 94.4% 95.8% 95.3% 93.5% 92.7% 93.4% YoY +1.1pp +1.2pp +0.1pp +0.6pp -0.2pp -1.4pp +0.1pp -0.4pp +0.1pp +1.1pp +1.2pp +1.0pp +1.1pp Eastern Japan -5.2pp +1.2pp +1.4pp +3.0pp +2.5pp +2.3pp +3.1pp -0.8pp -0.6pp +1.6pp +1.7pp +1.6pp +5.4pp Kanto +1.5pp +0.7pp -1.3pp -0.3pp -1.9pp -2.3pp +0.3pp -0.8pp +0.5pp +0.9pp +1.4pp +1.3pp +0.9pp Tokai +0.8pp +4.9pp -0.2pp +0.1pp +2.6pp -2.4pp -1.0pp -1.7pp -5.0pp -0.4pp -0.0pp +3.1pp +3.4pp Kinki +2.6pp +2.4pp +2.8pp +2.5pp +1.9pp -1.4pp -2.9pp -1.2pp -1.5pp +0.2pp +2.9pp +0.9pp +1.6pp Western Japan +0.3pp -0.8pp +1.6pp +0.7pp +0.7pp +0.8pp +3.6pp +3.4pp +4.4pp +3.8pp -2.0pp -1.7pp -2.3pp Spaces per facilit y 15.3 15.3 15.4 15.6 15.7 15.7 15.5 15.6 15.6 15.5 15.8 16.2 16.1 Eastern Japan 16.4 16.1 15.5 15.5 15.9 16.0 16.1 16.5 15.6 15.6 15.7 15.4 15.2 Kanto 15.5 15.5 15.7 15.9 15.8 15.8 15.7 15.7 15.7 15.7 16.1 16.6 16.4 Tokai 12.8 13.3 13.2 13.9 14.3 14.8 14.3 14.3 14.4 14.1 14.6 14.2 13.7 Kinki 15.1 15.3 15.4 15.3 15.5 15.5 15.6 15.6 15.9 15.5 15.7 16.5 16.5 Western Japan 15.6 15.2 15.7 16.0 16.4 16.1 14.8 15.5 15.7 15.9 15.7 16.0 16.1 YoY -1.2% -0.9% 1.7% 2.8% 2.7% 2.9% 0.3% -0.0% -0.4% -1.2% 2.3% 4.1% 3.0% Eastern Japan 5.3% 1.1% -2.5% -3.8% -3.5% -0.8% 3.3% 5.9% -1.4% -2.6% -2.4% -6.3% -2.9% Kanto -1.4% -1.2% 2.9% 3.3% 1.9% 2.2% -0.1% -1.2% -0.6% -0.8% 2.4% 5.4% 4.3% Tokai -8.9% -4.8% 0.6% 8.8% 11.8% 10.8% 8.7% 3.2% 0.9% -4.2% 2.3% -0.8% -5.0% Kinki -1.6% -0.1% 1.3% 1.1% 2.6% 1.4% 1.1% 1.8% 2.5% -0.4% 1.0% 5.9% 4.1% Western Japan 1.4% -0.3% 0.1% 4.4% 4.9% 5.7% -6.1% -2.7% -4.0% -1.6% 6.5% 3.1% 2.5% FY07/15 FY07/16 FY07/17 FY07/18 (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Monthly & hourly 137 136 136 136 136 139 137 141 139 140 136 131 127 Eastern Japan 14 14 15 15 16 19 18 18 18 18 18 18 19 Kanto 39 39 38 38 37 38 37 39 39 40 37 35 33 Tokai 18 18 18 18 18 18 20 21 21 21 19 17 15 Kinki 49 48 48 47 47 46 44 44 43 43 44 42 41 Western Japan 17 17 17 18 18 18 18 19 18 18 18 19 19 YoY 6.2% 1.5% -1.4% -2.2% -0.7% 2.2% 0.7% 3.7% 2.2% 0.7% -0.7% -7.1% -8.6% Eastern Japan 55.6% 27.3% 15.4% 7.1% 14.3% 35.7% 20.0% 20.0% 12.5% -5.3% - - 5.6% Kanto - - -7.3% -7.3% -5.1% -2.6% -2.6% 2.6% 5.4% 5.3% - -10.3% -15.4% Tokai 5.9% - -5.3% -5.3% - - 11.1% 16.7% 16.7% 16.7% -5.0% -19.0% -28.6% Kinki - -2.0% -2.0% -4.1% -4.1% -4.2% -8.3% -6.4% -8.5% -6.5% - -4.5% -4.7% Western Japan 13.3% - 6.3% 12.5% 5.9% 5.9% 5.9% 5.6% - - - - 5.6% Leased spaces 8,917 8,808 8,957 8,958 9,057 9,564 9,392 10,097 10,086 10,056 10,097 9,990 9,671 Eastern Japan 1,095 1,095 1,295 1,295 1,345 1,786 1,747 1,747 1,747 1,753 1,932 1,930 1,949 Kanto 2,338 2,302 2,274 2,312 2,286 2,326 2,288 2,475 2,483 2,520 2,376 2,316 2,136 Tokai 2,602 2,602 2,584 2,587 2,608 2,610 2,683 2,831 2,822 2,816 2,785 2,677 2,606 Kinki 2,154 2,081 2,076 2,023 2,077 2,099 1,912 2,008 2,042 1,975 1,991 1,890 1,803 Western Japan 728 728 728 741 741 743 762 1,036 992 992 1,013 1,177 1,177 YoY 13.3% 10.6% 11.4% 7.6% 1.6% 8.6% 4.9% 12.7% 11.4% 5.1% 7.5% -1.1% -4.1% Eastern Japan 195.1% 186.6% 195.0% 182.1% 22.8% 63.1% 34.9% 34.9% 29.9% -1.8% 10.6% 10.5% 11.6% Kanto 0.5% -3.2% -4.6% -12.1% -2.2% 1.0% 0.6% 7.1% 8.6% 8.3% 3.8% -6.4% -14.0% Tokai 1.7% 0.5% -1.3% -1.9% 0.2% 0.3% 3.8% 9.4% 8.2% 7.9% 3.8% -5.4% -7.7% Kinki 0.3% -2.1% -2.6% -5.0% -3.6% 0.9% -7.9% -0.7% -1.7% -5.9% 4.1% -5.9% -11.7% Western Japan 56.2% 50.1% 54.2% 57.0% 1.8% 2.1% 4.7% 39.8% 33.9% 33.5% 32.9% 13.6% 18.6% Spaces per facilit y 65.1 64.8 65.9 65.9 66.6 68.8 68.6 71.6 72.6 71.8 74.2 76.3 76.1 Eastern Japan 78.2 78.2 86.3 86.3 84.1 94.0 97.1 97.1 97.1 97.4 107.3 107.2 102.6 Kanto 59.9 59.0 59.8 60.8 61.8 61.2 61.8 63.5 63.7 63.0 64.2 66.2 64.7 Tokai 144.6 144.6 143.6 143.7 144.9 145.0 134.2 134.8 134.4 134.1 146.6 157.5 173.7 Kinki 44.0 43.4 43.3 43.0 44.2 45.6 43.5 45.6 47.5 45.9 45.3 45.0 44.0 Western Japan 42.8 42.8 42.8 41.2 41.2 41.3 42.3 54.5 55.1 55.1 56.3 61.9 61.9 YoY 6.7% 9.0% 13.0% 10.0% 2.3% 6.2% 4.1% 8.7% 9.0% 4.4% 8.3% 6.5% 4.9% Eastern Japan 89.7% 125.2% 155.7% 163.3% 7.5% 20.2% 12.4% 12.4% 15.5% 3.6% 10.6% 10.5% 5.7% Kanto 0.5% -3.2% 2.9% -5.2% 3.1% 3.7% 3.3% 4.3% 3.0% 2.9% 3.8% 4.3% 1.7% Tokai -3.9% 0.5% 4.2% 3.6% 0.2% 0.3% -6.6% -6.2% -7.3% -7.5% 9.3% 16.8% 29.3% Kinki 0.3% -0.1% -0.6% -0.9% 0.5% 5.3% 0.5% 6.0% 7.5% 0.7% 4.1% -1.4% -7.4% Western Japan 37.8% 50.1% 45.2% 39.5% -3.9% -3.6% -1.1% 32.5% 33.9% 33.5% 32.9% 13.6% 12.4%

73/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

FY07/15 FY07/16 FY07/17 FY07/18 (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Outsourced Management 96 97 100 102 103 104 108 108 109 108 104 104 102 Eastern Japan 9 11 11 13 13 13 15 15 15 15 14 14 14 Kanto 35 36 37 37 37 37 39 39 40 39 37 37 38 Tokai 12 13 13 13 14 15 15 15 15 15 13 14 14 Kinki 24 22 22 22 23 24 24 24 24 25 26 26 24 Western Japan 16 15 17 17 16 15 15 15 15 14 14 13 12 YoY 1.1% 5.4% 8.7% 12.1% 7.3% 7.2% 8.0% 5.9% 5.8% 3.8% -3.7% -3.7% -6.4% Eastern Japan -18.2% 22.2% 22.2% 44.4% 44.4% 18.2% 36.4% 15.4% 15.4% 15.4% -6.7% -6.7% -6.7% Kanto -5.4% -2.7% 2.8% 8.8% 5.7% 2.8% 5.4% 5.4% 8.1% 5.4% -5.1% -5.1% -5.0% Tokai - 8.3% 8.3% 8.3% 16.7% 15.4% 15.4% 15.4% 7.1% - -13.3% -6.7% -6.7% Kinki 14.3% 10.0% 10.0% 4.8% -4.2% 9.1% 9.1% 9.1% 4.3% 4.2% 8.3% 8.3% - Western Japan 14.3% 7.1% 13.3% 13.3% - - -11.8% -11.8% -6.3% -6.7% -6.7% -13.3% -20.0% Leased spaces 16,072 16,300 16,589 16,800 16,930 17,523 18,123 18,069 18,152 18,111 18,399 18,286 18,301 Eastern Japan 1,053 1,355 1,355 1,567 1,567 1,567 2,088 2,118 2,118 2,118 1,924 1,924 1,924 Kanto 8,820 8,864 8,934 8,934 8,934 8,934 9,089 9,049 9,113 9,043 8,888 8,894 9,045 Tokai 1,529 1,593 1,663 1,663 1,797 2,125 2,125 2,125 2,125 2,125 2,035 2,099 2,099 Kinki 3,250 3,130 3,130 3,130 3,189 3,492 3,492 3,492 3,511 3,569 4,296 4,194 4,164 Western Japan 1,420 1,358 1,507 1,506 1,443 1,405 1,329 1,285 1,285 1,256 1,256 1,175 1,069 YoY -0.2% 4.5% 5.9% 9.2% 5.3% 7.5% 9.2% 7.6% 7.2% 3.4% 1.5% 1.2% 0.8% Eastern Japan -26.7% 28.7% 28.7% 48.8% 48.8% 15.6% 54.1% 35.2% 35.2% 35.2% -7.9% -9.2% -9.2% Kanto -1.9% -1.4% 0.7% 4.3% 1.3% 0.8% 1.7% 1.3% 2.0% 1.2% -2.2% -1.7% -0.7% Tokai -0.6% 3.5% 8.1% 8.1% 17.5% 33.4% 27.8% 27.8% 18.3% - -4.2% -1.2% -1.2% Kinki 4.5% 4.6% 4.6% 3.7% -1.9% 11.6% 11.6% 11.6% 10.1% 2.2% 23.0% 20.1% 18.6% Western Japan 38.0% 32.0% 24.9% 24.8% 1.6% 3.5% -11.8% -14.7% -10.9% -10.6% -5.5% -8.6% -16.8% Spaces per facilit y 167.4 168.0 165.9 164.7 164.4 168.5 167.8 167.3 166.5 167.7 176.9 175.8 179.4 Eastern Japan 117.0 123.2 123.2 120.5 120.5 120.5 139.2 141.2 141.2 141.2 137.4 137.4 137.4 Kanto 252.0 246.2 241.5 241.5 241.5 241.5 233.1 232.0 227.8 231.9 240.2 240.4 238.0 Tokai 127.4 122.5 127.9 127.9 128.4 141.7 141.7 141.7 141.7 141.7 156.5 149.9 149.9 Kinki 135.4 142.3 142.3 142.3 138.7 145.5 145.5 145.5 146.3 142.8 165.2 161.3 173.5 Western Japan 88.8 90.5 88.6 88.6 90.2 93.7 88.6 85.7 85.7 89.7 89.7 90.4 89.1 YoY -1.2% -0.9% -2.6% -2.6% -1.8% 0.3% 1.2% 1.6% 1.3% -0.5% 5.4% 5.1% 7.7% Eastern Japan -10.4% 5.3% 5.3% 3.0% 3.0% -2.1% 13.0% 17.1% 17.1% 17.1% -1.3% -2.7% -2.7% Kanto 3.7% 1.3% -2.0% -4.1% -4.2% -1.9% -3.5% -3.9% -5.6% -4.0% 3.1% 3.6% 4.5% Tokai -0.6% -4.5% -0.3% -0.3% 0.7% 15.6% 10.7% 10.7% 10.4% - 10.5% 5.8% 5.8% Kinki -8.6% -4.9% -4.9% -1.0% 2.4% 2.3% 2.3% 2.3% 5.5% -1.9% 13.6% 10.9% 18.6% Western Japan 20.7% 23.2% 10.2% 10.1% 1.6% 3.5% -0.1% -3.3% -5.0% -4.2% 1.3% 5.5% 4.0% Source: Shared Research based on company data

Ski Resort business 8,000 20% Sales OPM (right axis) Apr. 2013 7,000 Spicy (rental) 15% 5,881 6,152 6,000 5,584 10% 4,910 5,000 5% 4,038 4,000 0% 3,000 -5% 1,868 2,000 1,655 -10% 1,145 1,000 389 502 529 -15% 0 -20% FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Sep. 2006 Nov. 2009 Oct. 2010 Nov. 2012 Hakuba Happo Iwatake Oct. 2014 Nov. 2015 (JPYmn) Kashimayari Ski Resort Kitashiga Ryuoo Ski Park Kawaba Ski Resort Tsugaike Ski Resort Meiho Ski Resort Sugadaira Kogen Snow Resort Operating profit -112 -18 -9 56 113 200 504 725 905 107 443 Cumulat ive -112 -130 -139 -82 31 231 735 1,460 2,365 2,472 2,915 M&A costs 550 144 333 511 1,021 207 Cumulat ive 550 550 550 694 1,027 1,027 1,538 1,538 2,559 2,766 2,766 Source: Shared Research based on company data

Ski Resort business: sales and earnings trends (quarterly)

3,000 60% 2,500 50% 2,000 40% 1,500 30% 808 800 1,000 619 646 20% 559 499 616 503 318 430 383 500 195 271 10% 52 150 155 0 0% -41 -114 -81 -149 -240 -184 -201 -193 -245 -175 -500 -313 -374 -265 -334 -255 -10% -515 -527 -1,000 -20% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Sales Operating profit OPM (right axis) Source: Shared Research based on company data

Ski Resort: Visitor numbers grew 20% as a result of running various events, some in collaboration with other organizers. ▷ Invested in measures to combat low snowfall to open earlier

 Number of visitors: Visitors increased by 44,000 to 269,000, particularly in Ryuoo Ski Park, whose terrace with sea-of-clouds views attracted 39,000 more visitors; Ryuoo Ski Park renovated restaurants and included a terrace as one of the stops of bus tours

74/90 Nippon Parking Development / 2353 R LAST UPDATE: 2018.04.03 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

 Measures to improve earnings: Benefits continue to emerge from measures to boost visitor numbers in the off season such as events in collaboration with other companies and large-scale improvement and expansion of the mountain bike parks. Gross profit rose (+JPY118mn) as a result Combatting low snow: Continued to invest in added artificial snowfall equipment to secure stable snow supplies and have all ▷ areas available for skiing at an early timing in the season

 Artificial snowfall equipment: Installed new equipment in Hakuba resorts and additional equipment in Kawaba, Meiho, and Sugadaira resorts

 Happo-one (Hakuba): Opened 17 days earlier than previous year on November 21, 2017; attracted popular Karuizawa restaurant as tenant

 Tsugaike (Hakuba): Opened 15 days earlier than previous year on November 23, 2017. Added equipment such as snow kickers

 Ryuoo: Preview opening day on November 23, two days earlier than previous year. Officially opened on November 25 (also two days earlier)

 Other ski resort opening days: Sugadaira opened on December 2, 2017 (one day earlier than 2016); Kawaba also opened on December 2 (one day earlier; preview opening on November 25/26); Meiho opened on December 12 (same date as 2016)

Measures to improve earnings: Full renovations of Ryuoo Ski Park summit restaurant and new menus for company-run ▷ restaurants in Hakuba resorts; attracted popular tenants

 Headquarters were relocated to Hakuba in November, a measure that the company expects to produce annual savings of JPY50mn

Visitor count by ski resort during off season

Summer facility (with operating ropeway) FY07/15 FY07/16 FY07/17 FY07/18 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Q1 Q1 Q1 Q1 Yo Y 1H 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Hakuba Happo-one International Mountain Resort 74 77 67 70 5.0% 96 75 78 67 -14.1% 96 75 78 67 -14.1% 134 112 112 98 -12.7% Nature World Tsugaike Kogen 59 64 51 52 19.1% 74 60 64 51 -22.5% 74 60 64 51 -22.5% 108 92 95 78 -18.4% Hakuba Iwate Lily Garden and Mountain View 15 21 15 18 2.3% 16 15 21 16 -20.6% 16 15 21 16 -20.6% 23 23 95 25 -17.6% Ryuoo Mountain Park 4 16 38 77 100.8% 5 5 16 41 143.2% 5 5 16 41 143.2% 10 9 31 60 92.1% Mt. Kongo Ropeway 16 15 -8.1% - - - 23 - - - 4 28 - 20 46 130.0% Subtotal 154 180 190 235 23.8% 193 155 181 200 10.0% 193 155 181 204 9.8% 275 238 290 309 6.4% Summer facility (other) FY07/15 FY07/16 FY07/17 FY07/18 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Q1 Q1 Q1 Q1 Yo Y 1H 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Kashimayari Sport s V illage 3 10 6 5 -7.0% 3 3 10 7 -22.7% 3 3 10 9 -7.7% 5 10 13 13 -0.7% Kawaba Resort 19 21 16 15 -5.9% 20 25 27 22 -19.3% 20 25 27 22 -19.3% 37 40 47 40 -14.6% Meiho Kogen Development 5 10 11 3.9% - - 6 12 86.6% - - 6 13 103.8% - 3 12 22 73.5% Shinetsu Sakudo Maintenance 0 - 3.3% - - - 1 - - - - 1 - - - 1 2 99.1% Subtotal 23 37 34 33 -2.8% 24 28 44 44 -1.5% 24 28 44 47 5.0% 41 54 74 78 4.6% Total 177 217 224 268 19.6% 217 183 225 244 8.4% 217 183 225 251 11.6% 316 292 365 387 6.0% Source: Shared Research based on company data

Visitor count by ski resort during winter*

Winter facility FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) 1H 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y HAKUBA VALLEY Happo-one Winter Resort 204 189 163 157 -3.2% 430 413 379 370 -2.2% 438 427 381 378 -0.6% HAKUBA VALLEY Iwatake Snow Field 56 52 24 31 26.7% 119 113 73 100 37.1% 119 113 73 100 37.1% HAKUBA VALLEY Tsugaike Kogen Ski Resort 141 115 127 116 -8.1% 287 243 249 263 5.5% 289 246 250 265 6.2% HAKUBA VALLEY Kashimayari Ski Resort 74 68 50 43 -13.5% 146 142 97 95 -2.2% 146 142 97 95 -2.2% Ryuoo Ski Park 106 105 100 91 -9.1% 245 254 197 200 1.8% 247 255 197 204 3.4% Kawaba Ski Resort 68 64 42 72 69.4% 155 146 107 149 38.9% 155 146 107 149 39.5% Meiho Ski Resort - 103 54 83 52.4% - 217 141 183 29.3% - 217 141 183 29.3% Sugadaira Kogen Snow Resort - - 121 126 4.1% 235 245 4.3% - - 235 245 4.3% Subtotal 651 700 685 723 5.6% 1,384 1,532 1,481 1,609 8.6% 1,394 1,550 1,484 1,623 9.4% Winter facility (other) FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) 1H 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Kawaba Resort 3 3 5 5 5.8% 10 10 21 17 -26.1% 10 10 21 19 -6.3% Meiho Kogen Development - - 1 1 23.4% - 0 3 4 23.0% - 0 3 4 23.0% Mt. Kongo Ropeway - - - 12 - - - - 22 - - - - 22 - Shinetsu Sakudo Maintenance - - - 0 ------Subtotal 3 3 6 20 190.9% 10 10 24 45 85.2% 10 10 24 47 93.7% Total 654 703 691 743 7.5% 1,394 1,542 1,505 1,654 9.9% 1,404 1,560 1,509 1,670 10.7% *Data are from the 2016/2017 season. The numbers for Hakuba Valley and Tsugaike Koen Ski Resort includes those using seasonal tickets (20,000 and 26,000 visitors, respectively, in cumulative Q3) Theme Park business

Theme Park: Visitor numbers were down 2.8%, sales fell 5.2%, and operating profit fell 2.7% (JPY15mn) due to many wet days ▷ in August and typhoons in October, but the negative effect was relatively small

 Maintained efforts to increase average customer spend and cut costs showed progress. Strengthened cost-effective initiatives including events and pet accommodations to raise customer satisfaction

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Visitors: 199,000 people (204,000 in Q1 FY07/17, 46,000 in Q2, 66,000 in Q3, and 129,000 in Q4). Although the company ▷ faced difficulty attracting customers in Q1 due to inclement weather, it worked on improving earnings through aggressive sales promotions and an improved operating structure. Expecting to attract customers by organizing Christmas events in Q1  NOZARU, an aerial athletic facility, had 5,000 visitors in Q1 and was fully booked during busy periods Initiatives: Strengthened events to attract more repeat visitors. Efforts to streamline operations, reorganize organizational ▷ functions, and multitask various operations gradually began to show effects

 Reviewing shift system and reshuffling staff. Continuing to changing operating hours and reviewing products, prices

 Strengthening credit control for rental villas and cottages, and reviewing organizations. The company focused on operating glamping facilities in the rental cottage business

FY07/18: Boost content to appeal to 4.5mn (300,000 overnight) tourists to Nasu, further minimize visitor fluctuations ▷  Streamline operations: NPD believes that there is more room for improvement. Will work to hire younger workers to expand the Theme Park business and provide employee training  Theme Park: Continue to expand indoor facilities although the Nasu area already attracts 200,000 people despite inclement weather  Rental villas and cottages: Consider measures to better utilize 5,000 units; the project could begin in FY08/18

Q2: Attract more visitors, increase repeat visitors, and improve operations ahead of a new season. Increase advertising and ▷ promotion expenses

FY07/17 results (out September 8, 2017)

FY07/17: Record operating profit of JPY3.1bn thanks to consolidations within the Theme Park business. Parking Lot business also ▷ saw steady profit gains

 Versus FY forecasts: Reached OP targets. Ski Resort business missed target, but offset by improved earnings at the Parking Lot business and those from the conservatively estimated Theme Park business

Theme Park business: OP was JPY512mn, over 100% higher than the initial forecasts. Offset seasonal factors for the Ski Resort ▷ business and contributed to the stabilization of quarterly results

 Maintained efforts to increase average customer spend and cut costs showed progress. Strengthened cost-effective initiatives including events and pet accommodations to boost visitor numbers

Parking Lot business: In Japan, the company focused on improving earnings at existing properties and OPM saw steady ▷ improvement. Overseas operations, including those in South Korea, turned an operating profit from Q3

 Existing domestic properties: Profit base grew steadily due to improved profitability at hourly charge parking facilities and success of measures including the transfer of monthly parking facilities to a subsidiary

 Contract revisions: Cancellation and revision of contract terms considering risk of steep rises in labor costs and renovations. Limited the effects on gross profit, leading to improved GPM

 New domestic contracts: Sales efforts focusing on parking lot owners and parking garage manufacturers improved efficiency; acquired a property in Sendai, the first acquisition of the year, in March

Ski Resort business: Effects of measures to combat low snowfall and improve earnings began showing visible results; visitor ▷ numbers during the winter season increased by 9.4%. Missed targets due to lower sales in ski resorts with high average customer spend

 Number of visitors: Visitors on bus tours fell by 40,000, mainly at Ryuoo Ski Park, hurt by a tour bus accident in the previous year; inbound tourists increased to 156,000 (up 17% YoY) as initiatives saw results

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 Sharp increase in visitors at Kawaba and Meiho ski resorts, where the company responded to the snow shortage; however, results did not reach targets; steady snowfall from mid-January on at other ski resorts contributed to a rise in visitor count

FY07/18: Company forecasts profit growth in each of three mainstay businesses. To continue improving profits at existing ▷ properties and acquire new properties in Parking Lot business. Company implementing structural reorganization in Ski Resort business aimed at strengthening margins. Ongoing initiatives to increase visitor numbers and operate more efficiently in Theme Park business. New businesses are still in investment stage

(JPYbn) Parking Lot sales Ski Resort sales Theme Park sales Other sales Sales YoY (right axis) 7 6.4 60% 6.0 6 5.3 5.4 50% 5.1 5.1 5.0 4.4 4.7 5 4.2 4.4 3.9 4.1 40% 4 3.5 3.3 3.2 3.2 3.3 3.0 3.1 2.8 2.8 2.9 30% 3 2.3 2.5 2.1 2.1 2.3 2.3 1.9 2.0 1.9 20% 2

1 10%

0 0% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYbn) Parking Lot OP (right axis, including company-wide expenses) Ski Resort OP Theme Park OP Other OP OP YoY 1.5 300%

1.0 0.8 200% 0.8 0.6 0.6 0.6 0.5 0.6 0.4 0.6 0.5 0.1 0.4 0.3 0.5 0.2 0.3 0.2 100% 0.1 0.1 0.6 0.6 0.4 0.4 0.4 0.4 0.5 0.4 0.5 0.5 0.5 0.5 0.3 0.3 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.0 -0.0 -0.1 -0.1 0% -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.3 -0.0 -0.3 -0.4 -0.3 -0.5 -0.2 -0.5 -0.5 -100% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Source: Shared Research based on company data. Earnings overview FY07/17: Record operating profit thanks to consolidation within the Theme Park business. Parking Lot business also saw steady profit gains Operating profit increased significantly by 55.1% YoY to JPY3.1bn, a new record, in FY07/17. The sharp growth is largely attributable to consolidations (implemented end-May 2016) within the Theme Park business, which generally experiences peak sales in Q1. The domestic Parking Lot business also made solid progress in improving profits. Profit from the Ski Resort business also increased as the company executed measures to combat low snowfall and improve earnings. The overseas Parking Lot business also became profitable, contributing to the increase in OP.

In Q4 FY07/16, NPD intentionally consolidated companies within the Theme Park business to offset profit losses associated with seasonality in the Ski Resort business, where peak sales period normally falls in the winter and losses in the summer. Results were as planned in Q1 (losses at Ski Resort business), Q2 (losses at Theme Park business) and Q3 (losses at Theme Park business and profits at Ski Resort business) with combined operating profit in both the Ski Resort business and the Theme Park business coming in positive, despite losses in the Ski Resort business exceeding profits in the Theme Park business by JPY396mn in Q4.

Parking Lot business: In Japan, the company focused on improving earnings at existing properties and OPM saw steady improvement. Overseas operations, including those in South Korea, turned to an operating profit from Q3 In the mainstay domestic Parking Lot business, which provides investment funds for other growth businesses, in FY07/17, NPD carried out various initiatives that put highest priority on improving earnings at existing properties, and the results of those initiatives appeared to build quarter by quarter. For directly managed monthly parking lots, the company improved business efficiency by transferring businesses to subsidiary NCS, and securing better contract fees. For parking facilities that charge fees by the hour, it aggressively acquired new monthly parking lot customers, reviewed pricing structure for hourly facilities, and conducted sales promotions activities targeting surrounding facilities and building tenants, which all contributed to overall improvement. In particular, stronger earnings at parking facilities that charge fees by the hour helped boost profit margins.

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Despite a decline in the number of properties versus the end of the previous period due to a low number of new properties, owing to these initiatives, the Parking Lot business steadily generated earnings, with sales up 6.1% YoY and operating profit up 11.2% (+12.1% including adjustments). The overseas Parking Lot business moved into the black from Q3, and posted full-year operating profit of JPY15mn.

Versus FY forecasts: Ski Resort missed target by a small margin, but offset by improved earnings at the Parking Lot business and those from the conservatively estimated Theme Park business However, the Ski Resort business underperformed the revised target released in February (the revised target: JPY6.3bn in sales and JPY600mn in operating profit) as the company announced a downward revision on August 10, 2017 (JPY6.1bn in sales and JPY440 in operating profit). While the company successfully executed measures to combat low snowfall and improve earnings, the restaurant and rental businesses at ski resorts which boast high average spend for visitors (mainly Kawaba Ski Resort, Meiho Ski Resort, and Ryuoo Ski Park) did not perform according to forecasts, dragging down segment results.

On a consolidated basis, the operating profit of the Parking Lot business exceeded targets (JPY3.0bn). The weakness of the Ski Resort business was offset by the improved profitability of existing properties in the Parking Lot business, while the Theme Park business had more visitors thanks to favorable weather. NPD has also made progress in improving various aspects of its operations.

FY07/18 plan: Parking Lot to further increase GP at existing facilities, acquire new properties; Theme Park to benefit from restructuring For FY07/18, the company forecasts operating profit of JPY3.5bn (up JPY433mn YoY), with profit growth in each of its three mainstay businesses. The company plans to continue improving profits at existing properties and to acquire new properties in the Parking Lot business, implement structural reorganization in the Ski Resort business aimed at strengthening margins, and persist with initiatives to increase visitor numbers and operate more efficiently in the Theme Park business. New businesses are still in investment stage. (For details please refer to Full-year company forecasts.)

Establish new subsidiary On the same day as the results announcement (September 2017), the company established Nippon Healthy-life Development Co., Ltd. (100% NPD owned; JPY50mn in capital) with the goal of building a healthy society by improving the health of company employees. The impact on consolidated results is not significant.

Parking Lot business

Parking Lot business performance

(JPYbn) 3.3 Domestic sales Overseas sales OPM (incl. adjustments; right axis) OPM (right axis) 3.2 3.1 3.1 3.1 2.9 2.9 2.9 3.0 2.8 2.8 3 2.7 2.7 40% 2.6 2.5 2.5 2.5 2.3 2.3 2.3 2.2 2.3 35% 2.1 2.1 2.1 1.9 2.0 2.0 2 26.6% 30% 25.6% 26.0% 26.0% 24.7% 25.3% 24.4% 24.1% 23.7% 23.6% 24.4% 22.7% 23.1% 22.8% 22.3% 25% 22.0% 21.5% 21.6% 21.5% 21.9% 21.4% 20.7% 20.6% 20.9% 21.2% 20.3% 19.5% 19.8% 1 20% 19.1% 18.9% 18.8% 18.6% 17.6% 18.1% 16.7% 17.3% 16.6% 16.8% 17.3% 17.0% 15% 16.3% 15.9% 15.9% 16.2% 15.7% 16.0% 16.4% 15.9% 14.8% 15.4% 15.1% 15.5% 15.3% 15.3% 13.7% 14.6% 0 10% Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Source: Shared Research based on company data.

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Domestic Parking Lot business

Domestic Parking Lot business performance

(JPYmn) Sales Operating profit OPM (right axis) 2,983 2,858 2,892 2,884 2,922 3,000 18.5% 19% 2,684 2,718 2,749 2,591 2,607 2,676 18.2% 2,529 17.8% 17.8% 2,500 17.5% 17.5% 18% 17.0% 17.1% 17.0% 2,000 16.5% 16.4% 17%

1,500 16%

1,000 14.5% 15% 526 540 531 431 462 431 460 446 468 500 504 500 387 14%

0 13% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY07/15 FY07/16 FY07/17

Domestic Parking Lot business: number of new contracts, cancellations and closures

60 1,218 1,209 1,195 1,208 1,206 1,204 1,171 50 1,155 1,150 1,155 1,200 1,135 1,120 1,130 40 1,103 30 58 1,073 1,100 39 1,047 44 1,034 20 38 38 43 41 35 1,004 32 31 34 29 30 979 39 27 10 32 23 21 19 24 20 1,000 948 14 11 16 0 -6 -6 -7 -9 -13 -11 -9 -13 -13 -10 -13 -12 -14 -11 929 -19 -19 -16 -19 -15 -17 -20 -17 -10 907 -26 -22 900 835 -20 884 -30 800 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Cancellations and closures Number of new contracts Net increase QoQ Total domestic contracts (right axis) Source: Shared Research based on company data

Operating environment: In the domestic Parking Lot business, the ability to generate revenues from unused parking spaces remained firm, alongside that for providing better services and safety at parking lots.

Business strategy: Prioritize improving the earnings structure of existing businesses. For new orders, seek expansion while carefully assessing profitability; focus on securing major maintenance work.

Existing properties: Profit base grew steadily due to improved profitability at hourly charge parking facilities and success of measures including the transfer of monthly parking facilities to a subsidiary Full-year operating profit (includes companywide expenses) was JPY2.7bn, up JPY275mn YoY (+11.2%). The business targets an operating profit of JPY3.0bn in FY07/20 (+JPY1.2bn compared to FY07/16). As such, the company focused on improving profitability of existing properties and was able to raise profits. The company forecasts JPY3.0bn in operating profit for FY07/18 (including companywide expenses of JPY2.3bn). Profitability improvement measures are proceeding in such a manner that it is possible that OP will exceed the target.

For directly managed monthly parking lots, the company improved business efficiency by transferring businesses to subsidiaries, and securing better contract fees. For parking facilities that charge fees by the hour, it aggressively acquired new monthly parking lot customers, reviewed pricing structure for hourly facilities, and conducted sales promotions targeting surrounding facilities and building tenants, which all contributed to overall improvement. In particular, stronger earnings at hourly charge parking facilities helped boost profit margins. In April 2017 the company hired 88 new graduates, and the expansion in human resources further bolstered operational capacity at hourly charge parking facilities. In FY07/18, NPD intends to continue improving profitability in response to the ongoing personnel cost hike.

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Parking lot business: factors effecting operating profit (1H and full-year FY07/17)

Parking Lot business FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/15 FY07/16 FY07/17 (JPYmn) FY FY FY FY FY 1H 2H 1H 2H 1H 2H Operating profit (previous year) 1,621 1,517 1,610 1,682 1,823 786 824 859 823 878 945 Change in profit -104 93 72 141 292 73 -1 19 122 126 166 Domest ic Facilit y closures -155 -110 -135 -72 -111 -38 -34 -56 -55 -80 -40 Exist ing facilit ies -40 21 15 2 212 -9 11 100 112 New facilit ies 344 363 378 279 198 181 197 141 138 69 129 Other sales increases -37 68 69 67 83 88 -19 -3 70 58 25 SG&A expenses -116 -221 -113 -193 -105 -59 -54 -78 -115 -3 -102 Overseas Overseas (Thailand and China) 33 -1 65 16 -17 8 62 -42 51 -24 40 Overseas (South Korea and Indonesia) -17 -20 -11 -9 -5 Company-wide expenses -158 80 -48 1 79 -43 -5 -33 -125 Other -58 -79 Operating profit (current year) 1,517 1,610 1,682 1,823 2,115 859 823 878 945 1,004 1,111 Source: Shared Research based on company materials Directly managed parking lots For directly managed parking lots, NPD worked on increasing customer convenience and cutting costs to improve the contract ratio and margins. Specifically, it transferred directly managed monthly parking facilities in Tokyo and Osaka to subsidiary Nippon Car Service Development Co., Ltd. (NCS). This subsidiary runs car sharing and monthly rental car (with parking space) operations in addition to one of the largest monthly parking facility search websites in Japan. The transfer took place in four three-month stages, with the first stage completed in September 2016, when approximately one-fourth (51 properties) of the 234 properties were transferred as planned. The company transferred 47 properties in December and transferred more after this (230 in the full year). As the gross profit improvement unfolded as planned, in July 2017, the company decided for overall transfers across the Tokyo and Osaka areas (the remaining 357 properties).

The improvement plan implemented in FY07/17 that is due to transfers is anticipating a 30% (JPY161mn) rise in gross profit to JPY700mn from JPY538mn prior to the transfer. NPD expected a JPY40mn improvement in FY07/17. Several factors are at play behind the improvement. In the first place, under its traditional push marketing steamroller strategy and contract style (requiring three-month notice for cancellation), some contracts were signed at lower levels than the going rates for the sake of higher utilization. Second, the monthly parking lot search website has successfully converted its customer-drawing capability into higher contract fees (the average contract fee of about JPY30,000 without using the website versus the website-mediated contract fee of about JPY38,000). Third, while previously it was time-consuming for NCS to attract customers online and then pass on the baton to the parent company (NPD) sales staff, the entire process is now placed under one company, which helps expedite the operational flow.

NPD is expecting benefits from the improvement in gross profit to emerge six months after the transfers. The contribution from gross profit appeared to slow on a quarterly basis from Q1 to Q2 to Q3 and Q4, because the transfers began with facilities that had more room for earnings improvement. Meanwhile, NCS has begun to stabilize its operations meaning the unit has some room for winning more clients. Thus, there seems to have been an increase in the number of new monthly contracts. Of the 51 new contracts acquired during cumulative Q3, 13 were through NCS (8 out of 24 in the three months of Q3). NCS appears to be off to a solid start, even though it still remains smaller than the managed parking facilities business. Shared Research sees that this result led to the large-scale transfers in the Tokyo and Osaka areas.

NPD also aimed for higher gross profit by expanding its monthly car rental programs, although this is not in the gross profit improvement plan. As an example, the company states that for a parking space that generates JPY10,000 per month, a monthly rental car can be expected to generate JPY28,500, an increase of JPY18,500. As of the end of Q4 FY07/17, the number of monthly rental cars under contract was 142 vehicles (+12 units compared to end FY07/16). If this figure was to increase by 1,000 vehicles, it would yield an additional gross profit of JPY222mn per year. By Q3, the increase in the number of vehicles under contract was weak due in part to the concentration of management resources in other areas. However, the number of vehicles increased by 15 units in Q4. The company appears to have received inquiry for bulk orders from a major company. Shared Research will monitor this situation going forward.

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Transferred NCS properties Feb-16 Jul-17 Change % Leased spaces (units) 3,794 4,070 276 +7.3% Rented out spaces (units) a) 3,555 3,824 269 +7.6% Contract ratio 93.7% 94.0% +0.3pp Contract price (JPY/unit per month) b) 31,546 36,548 5,002 +15.9% Monthly gross profit (JPY'000) 38,526 46,877 8,351 +21.7% Source: Shared Research based on company materials Contract cancellations and revisions considering risk of labor cost hikes and renovations. Limited the effects on gross profit, leading to improved GPM The company continued to review terms for contracts, which led to a YoY net decrease in the number of properties managed. Though sales may decline, by concentrating management resources on properties with capacity for improvement, NPD intends to maintain or increase GPM.

New graduate employees

1,200 New graduates Total employees (parent; year-end) Total employees (consolidated; year-end)

1,000 960

781 800 716

541 542 600 503 418 417 400 318 326 258 172 176 198 202 200 144 148158 168 169 140 92 107 108 113 101 114 88 47 64 54 78 57 75 67 79 11 11 10 13 16 14 6 9 16 23 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2,017 Source: Shared Research based on company data 71 new contracts. Continuing to review profit margins; 85 cancellations In FY07/17, the company won 71 new contracts (11 in Q1, 16 in Q2, 24 in Q3, and 20 in Q4) and had 85 cancellations (20 in Q1, 17 in Q2, 26 in Q3, and 22 in Q4), resulting in a net decrease of 14 properties in the domestic Parking Lot business, bringing the total number of properties under management in Japan to 1,204 properties (+1.1% YoY) and the total number of vehicle spaces to 44,006 (+1.7% YoY). From Q3, the number of new contracts showed recovery thanks to the contribution of NCS, and the company seems to have made progress in revising contract terms to reflect a greater focus on profitability.

Focused sales on parking lot owners and parking garage manufacturers In FY07/17, aiming to expand its business, NPD focused on acquiring new contracts. It also actively worked on large-scale parking lot maintenance targeting both parking lot owners and parking garage manufacturers and on sales to acquire alternative parking lots. In FY07/18, the company plans to continue these proactive initiatives. Shared Research will keep a close eye on future development.

Acquisition of properties to own NPD, as part of an initiative for FY07/17, is catering to other companies’ need to remove fixed assets from their balance sheet. NPD said that it would actively purchase parking facilities in regional areas using its cash-on-hand. The first such acquisition took place in March 2017, when NPD bought a property in Sendai. The company has not disclosed the details of the transaction, but the balance sheet for end-Q2 and end-Q3 show that its tangible fixed assets rose by JPY825mn (no major change in Q4). Considering that the company has depreciation expenses of about JPY100mn on a quarterly basis, it is likely that NPD purchased a properly worth as much as JPY900mn. The company sought to acquire assets with a high net operating income (NOI). Thus, we expect that this acquisition will make a certain level of profit contribution during FY07/18.

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Directly managed monthly facilities and contracts (Japan)

98% 96% 94%

92%

90%

88%

86% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Total domestic East Japan Kanto Tokai Kinki West Japan Source: Shared Research based on company data

Car sharing vehicles and members

34.9 7,000 32.7 31.8 35 30.2 29.1 6,000 26.2 26.4 30 24.7 25.0 24.4 23.6 23.2 22.7 5,000 22.0 21.6 21.9 21.0 21.5 25 20.3 21.1 20.4 20.7 19.0 20.0 4,000 17.7 20 15.7 13.8 14.4 3,000 15 11.0 9.8 9.5 2,000 8.2 10 1,000 5 244 235 248 251 249 24 30 54 67 67 67 72 77 97 107 117 143 190 213 221 167 161 161 152 176 187 213 216 215 221 210 225 0 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Number of vehicles Number of members Members over vehicles (right axis) Source: Shared Research based on company data

Overseas Parking Lot business

Overseas performance

FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 79 153 86 118 133 166 182 202 209 203 208 224 210 243 269 302 YoY -2.5% 47.1% 22.9% 47.5% 68.4% 8.5% 111.6% 71.2% 57.1% 22.0% 14.3% 10.7% 0.5% 19.8% 29.6% 35.2% Direct ly Managed Facilit ies 58 58 62 83 102 130 138 141 150 147 149 178 150 165 174 180 Outsourced Management 20 23 24 23 26 27 28 31 32 39 36 32 32 41 54 58 Other 1 71 - 11 3 9 17 30 27 17 23 14 27 36 42 64 T hailand 59 128 57 89 98 129 143 160 161 142 155 172 161 178 184 208 YoY -13.2% 50.6% 7.5% 43.5% 66.1% 0.8% 150.9% 79.8% 64.3% 10.1% 8.4% 7.5% - 25.4% 18.7% 20.9% Direct ly Managed Facilit ies 58 58 57 77 95 120 126 130 134 126 131 162 134 141 140 144 Outsourced Management ------2 - Other 1 70 - 11 3 9 17 30 27 17 23 11 27 36 42 64 China 20 24 29 29 34 37 39 43 43 57 49 44 43 49 56 58 YoY 53.8% 33.3% 70.6% 61.1% 70.0% 54.2% 34.5% 48.3% 26.5% 54.1% 25.6% 2.3% - -14.0% 14.3% 31.8% Direct ly Managed Facilit ies - - 5 6 7 10 11 12 10 17 13 12 10 11 15 10 Outsourced Management 20 23 24 23 26 27 28 31 32 39 36 32 32 38 42 47 Other ------1 - - -0 - - South Korea and Indonesia 5 3 4 8 6 16 29 36 Operating profit -17 -17 -4 8 -8 -20 -15 -7 -18 -8 12 28

350 China 302 Thailand (directly managed facilities and outsourced management) 300 269 Thailand (other) 243 250 224 Other 209 208 210 64 202 203 42 200 182 11 36 166 30 27 17 23 27 153 17 133 9 150 118 104 142 144 70 125 132 161 142 81 80 86 11 130 134 134 100 75 70 79 120 126 53 60 61 95 78 85 58 57 50 26 68 52 61 58 8 66 3 53 59 59 57 49 44 49 56 58 26 24 29 29 34 37 39 43 43 43 0 1 9 13 18 17 18 20 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 (JPYmn) FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Source: Shared Research based on company data Overseas: Operating profit in Q3 maintained in Q4. Expansion continues as NPD aims to become the de facto parking operator at each location The company increased investment spending with the launch of the Parking Lot business in South Korea (July 2014) and Indonesia (February 2015), causing an operating loss at its overseas parking lot operations in cumulative Q3. However, the

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operating loss narrowed from JPY18mn in Q1 to JPY8mn in Q2, and turned to an operating profit of JPY12mn in Q3. Operating profit increased in Q4, leading to a full-year operating profit of JPY15mn, which exceeded the full-year forecast (JPY10mn). Investment spending in South Korea and Indonesia was absorbed by operating profit in China and Thailand.

We believe this is due to 1) an improved closing rate on leased monthly parking facilities and 2) the contribution of new properties starting operations in South Korea and Indonesia. The company believes that its overseas business as a whole is becoming more profitable. It appears that NPD expects a profit increase in FY07/18, when new contracts take effect. In South Korea, the company began to post a monthly operating profit in Q3 thanks to new contracts.

Status of initiatives in various countries In Bangkok, Thailand, the traffic situation remains severe, with a chronic shortage of parking facilities. NPD focused on improving earnings at comparable parking lots and on acquiring new contracts. In Shanghai, China, demand remained strong for improving parking lot services and parking lot safety. Demand also remained robust for the development of large commercial facilities. NPD focused on training personnel and acquiring new contracts by improving its Japanese-style parking lot operations management structure, one of its strengths. In Seoul, Korea, and Jakarta, Indonesia, NPD focused on acquiring new contracts and improving its organizational structure by expanding its sales staff.

As a result of these efforts: a) NPD acquired five new properties in Thailand. b) In Shanghai, from January 1, 2017, NPD began managing parking at the Himalayas Center (530 parking spaces), which is a large multipurpose facility made up of a hotel, an art museum, and other commercial facilities. In April 2017, on a continued win of new contracts at large-scale properties, the company won a contract to manage parking at the office building Shui On Land D19 (590 parking spaces). c) In Seoul, NPD started managing parking at Y’s Park in Hongdae (200 parking spaces) in November. The company won new contracts to manage a high-rise parking lot (64 parking spaces) in December 2016, a hotel parking facility (66 spaces) in January 2017, and Hongdae Toros Tower parking facility (96 spaces) in February. As a result, the company posted an operating profit for the month of February. The company expects that the five new contracts, including DONGIL TOWER (351 spaces), will fully contribute to results in FY07/18. d) In Jakarta, NPD began managing under contract the parking facility at Kuningan City, a multipurpose complex housing a Japanese auto-leasing company with 117 parking spaces, as well as a new 560-space parking lot in the Wisma Keiai skyscraper in January.

With regard to new projects in China, NPD’s existing contract management projects have been well received, and led to winning new clients. The company expects higher profits from business at the China unit. The company is seeing similar momentum in South Korea, where it has won successive contracts with the first and second Japanese hotels to enter South Korea. In FY07/17, the company acquired five new properties for a total of seven under management.

NPD plans to increase the percentage of sales from its overseas businesses to 50% in the medium term (FY07/17 result: single digit growth). It has been focusing on venturing overseas for two reasons: (1) going forward, the company believes that it must begin to venture overseas at an early phase when significant investment is not required, rather than rush overseas once domestic growth ceases, (2) Overseas, competitors continue to develop businesses in English-speaking countries, but these companies have not been penetrating areas where the main language is their native language: NPD believes it can become the de facto company by penetrating such markets during the phase when the parking lot market is just being established.

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Ski Resort business 8,000 20% Sales OPM (right axis) Apr. 2013 7,000 Spicy (rental) 15% 5,881 6,152 6,000 5,584 10% 4,910 5,000 5% 4,038 4,000 0% 3,000 -5% 1,868 2,000 1,655 -10% 1,145 1,000 389 502 529 -15% 0 -20% FY07/06 FY07/07 FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 Sep. 2006 Nov. 2009 Oct. 2010 Nov. 2012 Hakuba Happo Iwatake Oct. 2014 Nov. 2015 (JPYmn) Kashimayari Ski Resort Kitashiga Ryuoo Ski Park Kawaba Ski Resort Tsugaike Ski Resort Meiho Ski Resort Sugadaira Kogen Snow Resort Operating profit -112 -18 -9 56 113 200 504 725 905 107 443 Cumulat ive -112 -130 -139 -82 31 231 735 1,460 2,365 2,472 2,915 M&A costs 550 144 333 511 1,021 207 Cumulat ive 550 550 550 694 1,027 1,027 1,538 1,538 2,559 2,766 2,766 Source: Shared Research based on company data

Ski Resort business: sales and earnings trends (quarterly)

3,000 60% 2,500 50% 2,000 40% 1,500 30% 808 800 1,000 619 646 20% 559 499 616 503 318 430 383 500 195 271 10% 52 150 155 0 0% -41 -114 -81 -149 -240 -184 -201 -193 -245 -175 -500 -313 -374 -265 -334 -10% -515 -527 -1,000 -20% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 (JPYmn) Sales Operating profit OPM (right axis) Source: Shared Research based on company data

Ski Resort business: Effects of measures to combat low snowfall and improve earnings began showing visible results; visitor ▷ numbers during the winter season increase by 9.4%

 Number of visitors: Visitors on bus tours fell by about 40,000, particularly in Ryuoo Ski Park, impacted by a tour bus accident in the previous year; inbound tourists increased to 156,000 (up 17% YoY) as initiatives saw results

 Measures to improve earnings: Benefits continue to emerge from measures to boost visitor numbers in the off season and improve average customer spend

Combatting low snow: Added artificial snowfall equipment before the season started. Meiho Ski Resort refit lifts to open early ▷ around summits

 Sharp increase in visitors at Kawaba and Meiho ski resorts, where the company responded to the snow shortage; steady snowfall from mid-January on at other ski resorts contributed to a rise in visitor count at these locations

 However, the number of visitors to the Hakuba area was slow to recover, and the company recognizes that more drastic measures may be necessary

Improved earnings: Added convenience and value led to increase in average customer spend ▷  In the Hakuba area, launched a highly convenient gate system by collaborating with other ski resorts. This led to higher ticket prices  However, the company announced a downward revision of forecasts in August as the number of visitors to Kawaba, Meiho, and Ryuoo ski resorts, which have a high average customer spend, did not reach forecasts.

 Off season (Q1, Q4): The number of visitors increased by 6.0%. Successfully executed measures that target major tour agencies, gained attention from major media outlets, and held events.

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Visitor count by ski resort during winter*

Winter facility FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) 1H 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y HAKUBA VALLEY Happo-one Winter Resort 204 189 163 157 -3.2% 430 413 379 370 -2.2% 438 427 381 378 -0.6% HAKUBA VALLEY Iwatake Snow Field 56 52 24 31 26.7% 119 113 73 100 37.1% 119 113 73 100 37.1% HAKUBA VALLEY Tsugaike Kogen Ski Resort 141 115 127 116 -8.1% 287 243 249 263 5.5% 289 246 250 265 6.2% HAKUBA VALLEY Kashimayari Ski Resort 74 68 50 43 -13.5% 146 142 97 95 -2.2% 146 142 97 95 -2.2% Ryuoo Ski Park 106 105 100 91 -9.1% 245 254 197 200 1.8% 247 255 197 204 3.4% Kawaba Ski Resort 68 64 42 72 69.4% 155 146 107 149 38.9% 155 146 107 149 39.5% Meiho Ski Resort - 103 54 83 52.4% - 217 141 183 29.3% - 217 141 183 29.3% Sugadaira Kogen Snow Resort - - 121 126 4.1% 235 245 4.3% - - 235 245 4.3% Subtotal 651 700 685 723 5.6% 1,384 1,532 1,481 1,609 8.6% 1,394 1,550 1,484 1,623 9.4% Winter facility (other) FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) 1H 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Kawaba Resort 3 3 5 5 5.8% 10 10 21 17 -26.1% 10 10 21 19 -6.3% Meiho Kogen Development - - 1 1 23.4% - 0 3 4 23.0% - 0 3 4 23.0% Mt. Kongo Ropeway - - - 12 - - - - 22 - - - - 22 - Shinetsu Sakudo Maintenance - - - 0 ------Subtotal 3 3 6 20 190.9% 10 10 24 45 85.2% 10 10 24 47 93.7% Total 654 703 691 743 7.5% 1,394 1,542 1,505 1,654 9.9% 1,404 1,560 1,509 1,670 10.7% *Data are from the 2016/2017 season. The numbers for Hakuba Valley and Tsugaike Koen Ski Resort includes those using seasonal tickets (20,000 and 26,000 visitors, respectively, in cumulative Q3)

Visitor count by ski resort during off season

Summer facility (with operating ropeway) FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Q1 Q1 Q1 Yo Y 1H 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Hakuba Happo-one International Mountain Resort 74 77 67 -13.6% 96 75 78 67 -14.1% 96 75 78 67 -14.1% 134 112 112 98 -12.7% Nature World Tsugaike Kogen 59 64 51 -20.4% 74 60 64 51 -22.5% 74 60 64 51 -22.5% 108 92 95 78 -18.4% Hakuba Iwate Lily Garden and Mountain View 15 21 15 -26.0% 16 15 21 16 -20.6% 16 15 21 16 -20.6% 23 23 95 25 -17.6% Ryuoo Mountain Park 4 16 38 140.5% 5 5 16 41 143.2% 5 5 16 41 143.2% 10 9 31 60 92.1% Mt. Kongo Ropeway 16 - - - 23 - - - 4 28 - - - 20 46 130.0% Subtotal 154 180 190 5.7% 193 155 181 200 10.0% 193 155 181 204 9.8% 275 238 290 309 6.4% Summer facility (other) FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 FY07/14 FY07/15 FY07/16 FY07/17 ('000) Q1 Q1 Q1 Yo Y 1H 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY FY Yo Y Kashimayari Sport s V illage 3 10 6 -37.5% 3 3 10 7 -22.7% 3 3 10 9 -7.7% 5 10 13 13 -0.7% Kawaba Resort 19 21 16 -22.3% 20 25 27 22 -19.3% 20 25 27 22 -19.3% 37 40 47 40 -14.6% Meiho Kogen Development 5 10 96.6% - - 6 12 86.6% - - 6 13 103.8% - 3 12 22 73.5% Shinetsu Sakudo Maintenance 0 - - - 1 - - - - 1 - - - 1 2 99.1% Subtotal 23 37 34 -6.5% 24 28 44 44 -1.5% 24 28 44 47 5.0% 41 54 74 78 4.6% Total 177 217 224 3.2% 217 183 225 244 8.4% 217 183 225 251 11.6% 316 292 365 387 6.0% Source: Shared Research based on company data Theme Park business

Theme Park: OP was JPY512mn, over 100% higher than the initial forecasts. Offset seasonal factors for the Ski Resort business ▷ and contributed to the stabilization of quarterly results

 Measures to increase average customer spend and cut costs showed progress. Strengthened cost-effective initiatives including events and pet accommodations to boost visitor numbers

Visitors: 455,000 people (204,000 in Q1, 46,000 in Q2, 66,000 in Q3, and 129,000 in Q4). Although the company faced ▷ difficulty attracting customers in Q1 due to inclement weather, it worked on improving earnings through aggressive sales promotions and an improved operating structure. In Q2, NPD recorded growth in visitors by organizing Christmas events and

benefiting from improved weather. In Q3, focused on events and enhancing pet-related facilities. Opened one of the largest adventure theme parks in the world in Q4.

 Accommodating pets: Introduced pet-friendly amusement park rides and a pet café equipped with a dog run in March with an aim to expand the customer base and raise average customer spend

 Held Christmas events at accommodation facilities, top ranked in Rakuten Travel survey of lodging facilities with fireplaces

 In April, the company launched a cost-effective adventure park (largest of its kind in Japan) utilizing the 25,000sqm forest land located next to the cottages

 Q4: The business remained solid during the Golden Week holiday thanks in part to favorable weather; Adventure Park, featured in YouTube, gathered increased attention

Initiatives: Various initiatives to increase operational efficiency already started; working to restructure each function and increase ▷ multi-function positions

 Reviewing shift system and reshuffling staff. Changing operating hours and reviewing products, prices

 Strengthening credit control for rental villas and cottages, and reviewing organizations

FY07/18: Boost content to appeal to 4.5mn (300,000 overnight) tourists to Nasu, further minimize visitor fluctuations ▷

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News and topics

December 2017 On December 8, 2017, the company announced the establishment of a local subsidiary in Taiwan, planned for January 2018.

The company established local subsidiaries in Bangkok (2010), Shanghai (2011), Seoul (2014), and Indonesia (2015). To further accelerate its development in Asia, it decided to establish a local subsidiary in Taipei, the largest economic center of Taiwan and one of the most populous cities in the world.

The company is aiming to win 50 projects within three years following the establishment. It plans to win contracts by proposing improved safety, profitability, and service to building owners mainly in the capital city of Taipei, and by looking to cooperate with companies that own many parking lots. The new subsidiary is likely to have little impact on earnings within the first fiscal year after its establishment, but the company expects it to contribute to profits in the long term.

Subsidiary details

Name: NPD TAIWAN CO., LTD. ▷ Location: Taipei, Taiwan ▷ Business details: Parking lot management, operation, and consulting services in Taiwan ▷ Capital: TWD5mn (about JPY18mn) ▷ Major shareholder: Nippon Parking Development Co., Ltd. (owns 100.0%) ▷

August 2017 On August 10, 2017, the company announced that its consolidated subsidiary Nippon Ski resort Development Co., Ltd. (“NSD;” TSE Mothers: 6040), which manages ski resorts, has conducted a downward revision of its FY07/17 full-year forecasts.

When NSD announced revised targets on February 10, it revised the visitor count for the winter season, but there appeared to be no reason to revise the visitor count for the off season, so the initial plan was continued. However, for the winter season the target visitor count was not achieved (actual: 1.59mn visitors versus target: 1.62mn visitors, JPY49mn YoY decrease in sales) and especially at the Kawaba Ski Resort and Meiho Ski Resort, which have a comparatively high visitor spend, even the post-revision targets were not achieved. The target visitor spend was not achieved (JPY166mn YoY decrease in sales) because food and drink and rentals were below expectations at Kawaba Ski Resort, Meiho Ski Resort, and Ryuoo Ski Park. As a result, sales decreased YoY a total of JPY216mn.

In the off season, the visitor count (target: 270,000; actual visitors: 262,000) was favorable at Ryuoo Mountain Park, but lengthy rains and generally inclement weather in July in the Hakuba area kept the visitor count lower than expected, impacting the total. The visitor spend was fairly much in line with forecasts, so sales surpassed the target by JPY16mn.

NSD worked to reduce and rationalize the cost of sales, but remained unable to absorb the drop in sales, so it revised the operating profit target down by JPY160mn.

Earnings forecasts

Ski Resort business FY07/16 FY07/17 Init. Est. Revised Est. (as of Feb. 10) Revised Est. (as of Aug. 10) Difference (JPYmn) 1H 2H FY 1H Est. 2H Est. FY Est . 1H 2H Est. FY Est . 1H 2H Est. FY Est . 1H 2H FY Sales 2,741 2,844 5,584 3,530 3,470 7,000 3,020 3,280 6,300 3,020 3,080 6,100 0 -200 -200 YoY -5.9% -4.2% -5.1% 28.8% 22.0% 25.3% 10.2% 15.3% 12.8% 10.2% 8.3% 9.2% Operating profit 6 101 107 433 617 1,050 170 430 600 170 270 440 0 -160 -160 YoY -98.7% -76.7% -88.2% 6,942.9% 511.0% 880.0% 2,659.5% 326.1% 460.0% 2,659.5% 167.7% 310.7% OPM 0.2% 3.6% 1.9% 12.3% 17.8% 15.0% 5.6% 13.1% 9.5% 5.6% 8.8% 7.2% Recurring profit 3 92 95 431 564 995 168 422 590 168 267 435 0 -155 -155 YoY 14,266.7% 513.0% 947.4% 5,493.6% 358.9% 521.1% 5,493.6% 190.4% 357.9% RPM 12.2% 16.3% 14.2% 5.6% 12.9% 9.4% 5.6% 8.7% 7.1% Net in co me -155 38 -117 320 360 680 58 222 280 58 172 230 0 -50 -50 YoY - 847.4% - - 483.9% - - 352.3% - Visit ors in wint er ('000) 685 799 1,484 874 1,006 1,880 723 897 1,620 723 870 1,593 0 -27 -27 YoY -2.1% -6.0% -4.3% 27.6% 25.9% 26.7% 5.5% 12.3% 9.2% 5.5% 8.9% 7.3% Source: Shared Research based on company data

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February 2017 On February 10, 2017, the company’s subsidiary, Nippon Ski Resort Development Co., Ltd., announced revised 1H FY07/17 and full-year earnings forecasts.

Ski Resort business FY07/16 FY07/17 Init. Est. Revised Est. Difference (JPYmn) 1H 2H FY 1H Est. 2H Est. FY Est . 1H Est. 2H Est. FY Est . 1H 2H FY Sales 2,741 2,844 5,584 3,530 3,470 7,000 3,000 3,300 6,300 -530 -170 -700 YoY -5.9% -4.2% -5.1% 28.8% 22.0% 25.3% 9.5% 16.0% 12.8% Operating profit 6 101 107 433 617 1,050 160 440 600 -273 -177 -450 YoY -98.7% -76.7% -88.2% 6,942.9% 511.0% 880.0% 2,502.5% 335.7% 460.0% OPM 0.2% 3.6% 1.9% 12.3% 17.8% 15.0% 5.3% 13.3% 9.5% Recurring profit 3 92 95 431 564 995 155 435 590 -276 -129 -405 YoY 14,266.7% 513.0% 947.4% 5,066.7% 372.8% 521.1% RPM 12.2% 16.3% 14.2% 5.2% 13.2% 9.4% Net in co me -155 38 -117 320 360 680 60 220 280 -260 -140 -400 YoY - 847.4% - - 478.9% - Source: Shared Research based on company data Reasons for earnings forecast revisions The sales forecast was revised for the following reasons. 1) As in FY07/16, there was limited snowfall in Honshu (Japan’s largest island) in December 2016 and into early January 2017. Less snow than expected meant some ski resorts had to delay opening and all resorts suffered a shortage of ski runs because of lack of snow, which affected sales. 2) The company revised down its estimate of winter season visitors from the initial 1.9mn to 1.6mn.

The company also revised down its expense estimates, including costs linked to sales, such as personnel expenses and procurement costs; fuel and other energy costs; and costs for facility repairs and replacement parts. As a result, the company lowered its CoGS and SG&A expense estimate by around JPY260mn.

On the same day, the company announced revisions to its 1H and full-year FY07/17 earnings forecasts.

Consolidat ed earnings FY07/16 FY07/17 Init. Est. Revised Est. Difference (JPYmn) 1H 2H FY 1H Est. 2H Est. FY Est . 1H Est. 2H Est. FY Est . 1H 2H FY Sales 8,635 9,505 18,140 11,000 12,000 23,000 10,900 11,100 22,000 -100 -900 -1,000 YoY 3.5% 9.6% 6.7% 27.4% 26.3% 26.8% 26.2% 16.8% 21.3% Operating profit 888 1,090 1,978 1,600 1,700 3,300 1,650 1,350 3,000 50 -350 -300 YoY -33.1% -12.5% -23.1% 80.1% 56.0% 66.8% 85.8% 23.9% 51.7% OPM 10.3% 11.5% 10.9% 14.5% 14.2% 14.3% 15.1% 12.2% 13.6% Recurring profit 1,142 1,099 2,241 1,600 1,600 3,200 1,650 1,350 3,000 50 -250 -200 YoY -31.3% -18.5% -25.6% 40.1% 45.6% 42.8% 44.5% 22.9% 33.9% RPM 13.2% 11.6% 12.4% 14.5% 13.3% 13.9% 15.1% 12.2% 13.6% Net in co me 655 600 1,255 1,100 1,000 2,100 1,150 750 1,900 50 -250 -200 YoY -63.3% -65.6% -64.5% 68.0% 66.6% 67.3% 75.6% 24.9% 51.4% Source: Shared Research based on company data Reasons for earnings forecast revisions NPD commented that the reasons for revising its 1H FY07/17 earnings forecast were as follows. It expects sales of the Ski Resort business to miss the initial target due to the negative effect of reduced snowfall. However, the company expects profits to surpass targets, because aggressive efforts to acquire new monthly parking lot contracts and reviewing contract terms or cancelling contracts for unprofitable parking lots should improve profitability in the domestic Parking Lot business. In addition, in the Theme Park business, it expects increased customer draw by holding events, an uptick in visitor numbers due to a warm winter, and higher profitability resulting from an improved operational structure to also contribute to higher-than-expected profits.

However, the company expects full-year profits to fall short of the initial target, because an increase in visitors and improved profitability of the Theme Park business are unlikely to compensate for the negative effect of reduced snowfall on the Ski Resort business.

May 2016 On May 25, 2016, the company announced that consolidated subsidiary Nippon Theme Park Development (established May 20, 2016, with capital of JPY50mn and 100% held by NPD) will acquire shares in Towa Nasu Resort Co., the operator of the Nasu Highland Resort in Tochigi Prefecture, from Mitsubishi Jisho Residence Co., Ltd. to make it a wholly-owned subsidiary. The acquisition price is JPY1.0. The share delivery date is scheduled for May 31, 2016. The impact of this share acquisition on NPD’s earnings in FY07/16 will be minimal. Shared Research forecasts that the acquisition will contribute to leveling out the company’s business results, which have had a seasonal bias toward winter.

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Reasons for share acquisition NPD sees the market environment for theme parks and amusement parks in Japan as follows: 1) Though a large number of theme parks and amusement parks were opened in Japan since the enactment of the Act on Development of Comprehensive Resort Areas (resort law) in 1987, many of them fell into financial difficulties after the collapse of the bubble economy; 2) While the market size has been on an uptrend in recent years, gaps between popular and unpopular parks have widened, with visitors concentrating on major parks or some specific ones; 3) The environment is generally severe as investments in new amusement equipment and facilities are required to attract visitors amid declining birthrates and progress of diversified consumer needs.

However, NPD believes that there are large business opportunities for some theme parks and amusement parks in Japan which are highly attractive as resources of regional tourism and can be a key for regional development by attracting demand from foreign tourists. NPD also pays attention to the attribute that theme parks and amusement parks generate revenues in summer and expects that the business will level out its revenue structure that has a seasonal bias toward winter due to high growth of the Ski Resort business.

The company to be acquired, Towa Nasu Resort, operates the Nasu Highland large-scale resort in northern Tochigi Prefecture. Nasu Highland has been developed since 1964 as Japan’s prestigious villa area and houses Nasu Highland Park, the largest amusement park in the northern Kanto region. NPD said that it will be able to establish a revenue base early on due to factors like the attractive resources of regional tourism, accessibility from central Tokyo, and rich natural environment.

Business results and main facilities of Towa Nasu Resort

(JPYmn) FY12/13 FY12/14 FY12/15 Major facilit ies Sales 3,159 3,267 2,865 Nasu Highland Park Descript ion Amusement park YoY - 3.4% -12.3% Area 500,000sqm Operating profit 419 409 -20 V isit ors 400,000（FY12/15） OPM 13.3% 12.5% -0.7% TOWA Pure Cottages Descript ion Cottage-type hotel Recurring profit 399 395 -25 Guest rooms 72 rooms (18 cottages) Net income 497 328 -54 Nasu Highland Descript ion V illa area Total assets 8,603 8,381 8,764 Area 8mn sqm Net assets 4,230 4,547 4,492 Blocks 5,000 blocks Source: Shared Research based on company data

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Company profile Company Head office Osaka Fukoku Seimei Bldg, Nippon Parking Development Co., Ltd. 2-4 Komatsubara-cho, Kita-ku Osaka, Japan 530-0018 Phone Listed on +81-6-6360-2353 Tokyo Stock Exchange 1st Section Established Exchange listing December 24, 1991 February 18, 2003 Website Fiscal year-end http://www.n-p-d.co.jp/en/index.html July IR web http://www.n-p-d.co.jp/en/ir/index.html

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We offer corporate clients comprehensive report coverage, a service that allows them to better inform investors and other stakeholders by presenting a continuously updated third-party view of business fundamentals, independent of investment biases. Shared Research can be found on the web at http://www.sharedresearch.jp.

Current Client Coverage of Shared Research Inc. A ccordia G olf Trust F inancial Products Group C o., Ltd. ONO SOKKI Co., Ltd. A ccretiv e C o., Ltd. FreeBit C o., Ltd. ONWARD HOLDINGS CO.,LTD. A dastria C o., Ltd. FRONTEO, Inc. PARIS MIKI HOLDINGS Inc. ADJUVANT COSME JAPAN CO., LTD. F ujita Kanko Inc. PIGEON CORPORATION A eon Delight C o., Ltd. FURYU C O RPO RA TIO N RACCOON CO., LTD. A eon Fantasy C o., Ltd. Gamecard-Joy co Holdings, Inc. RESO RTTRUST, INC . A i Holdings C orporation GC A C orporation RO UND O NE C orporation A nGes Inc. Grandy House C orporation RV H Inc. A nicom Holdings, Inc. Hakuto C o., Ltd. RYOHIN KEIKAKU CO., LTD. A nritsu C orporation Happinet C orporation SanBio C ompany Limited A paman C o., Ltd. Harmonic Driv e Sy stems Inc. SANIX INCORPORATED A realink C o.,Ltd. Hearts United Group C o., Ltd. Sanrio C ompany , Ltd. A rtspark Holdings Inc. IDOM Inc. SATO HOLDINGS CORPORATION AS ONE CORPORATION IGNIS LTD. SBS Holdings, Inc. A team Inc. Inabata & C o., Ltd. Seria C o.,Ltd. A ucfan C o., Ltd. Infocom C orporation SHIP HEALTHCARE HOLDINGS, INC. A xell C orporation Infomart C orporation SMS C o., Ltd. A zbil C orporation Intelligent Wav e, Inc. Snow Peak, Inc. Bell-Park C o., Ltd. isty le Inc. Solasia Pharma K.K. Benefit O ne Inc. Itochu Enex C o., Ltd. SO URC ENEXT C orporation B-lot C o.,Ltd. JSB C o., Ltd. Star Mica C o., Ltd. C anon Marketing Japan Inc. J Trust C o., Ltd Strike C o., Ltd. C arna Biosciences, Inc. Japan Best Rescue Sy stem C o., Ltd. Sy mBio Pharmaceuticals Limited CERES INC. JINS Inc. TAIYO HOLDINGS CO., LTD. C hiy oda C o., Ltd. KAMEDA SEIKA CO., LTD. Takashimay a C ompany , Limited C hugoku Marine Paints, Ltd. Kenedix, Inc. Takihy o C o., Ltd. cocokara fine Inc. KF C Holdings Japan, Ltd. TAMAGAWA HOLDINGS CO., LTD. C O MSYS Holdings C orporation LAC C o., Ltd. TEA R C orporation C RE, Inc. Lasertec C orporation 3-D Matrix, Ltd. C REEK & RIV ER C o., Ltd. MATSUI SECURITIES CO., LTD. TKC C orporation Daiseki C o., Ltd. MEDINET C o., Ltd. TO KA I Holdings C orporation DIC C orporation Milbon C o., Ltd. Tri-S tage Inc. Digital A rts Inc. MIRA IT Holdings C orporation VISION INC. Digital Garage Inc. NAGASE & CO., LTD VISIONARY HOLDINGS CO., LTD. Don Q uijote Holdings C o., Ltd. NAIGAI TRANS LINE LTD. VOYAGE GROUP, INC. Dream Incubator Inc. NanoC arrier C o., Ltd. WirelessGate, Inc. EARTH CHEMICAL CO., LTD. Net O ne Sy stems C o.,Ltd. Y E LLO W H A T LT D . Elecom C o., Ltd. Nichi-Iko Pharmaceutical C o., Ltd. YUMESHIN HOLDINGS CO., LTD. Emergency A ssistance Japan C o., Ltd. NIPPON PARKING DEVELOPMENT Co., Ltd. Yume no Machi Souzou Iinkai C o., Ltd. en-Japan Inc. Nisshinbo Holdings Inc. Yushiro C hemical Industry C o., Ltd. euglena C o., Ltd. NS TOOL CO., LTD. ZAPPALLAS, INC. F errotec Holdings C orporation NTT URBAN DEVELOPMENT CORPORATION FIELDS CORPORATION O ki Electric Industry C o., Ltd Attention: If you would like to see companies you invest in on this list, ask them to become our client, or sponsor a report yourself.

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