Nippon Parking Development / 2353

R Nippon Parking Development / 2353

COVERAGE INITIATED ON: 2010.09.06 LAST UPDATE: 2019.06.28

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.

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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 ------15 Outlook ------34 Business ------35 Business description ------35 Key financial data ------45 Strengths and weaknesses ------46 Market and value chain ------47 Financial statements------51 Income statement ------51 Balance sheet ------52 Statement of cash flows ------53 Other information ------54 Corporate governance, environment, and CSR information ------54 Shareholder returns------55 History ------56 Major shareholders ------57 Top management ------57 Employees ------57 By the way ------57 Historical earnings ------58 Historical quarterly earnings ------58 News and topics ------88 Company profile ------88

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Key financial data

Income statement FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est. Sales 7,508 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 22,771 24,700 YoY 10.5% 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% 3.6% 8.5% Gross profit 2,924 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 10,129 YoY 15.2% 4.4% 17.7% 12.9% 11.7% 27.0% 14.5% 15.6% 1.3% 23.7% 6.0% GPM 38.9% 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% 44.5% Operating profit 1,181 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,533 4,200 YoY 28.4% 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% 15.2% 18.9% OPM 15.7% 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 15.5% 17.0% Recurring profit 1,827 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 3,610 4,100 YoY 37.4% -36.1% -4.4% 28.8% 32.6% 17.3% 15.9% 16.1% -25.6% 43.4% 12.4% 13.6% RPM 24.3% 14.8% 12.9% 15.0% 18.0% 16.6% 17.1% 17.7% 12.4% 14.6% 15.9% 16.6% Net in co me 489 614 765 850 518 1,378 1,582 3,531 1,255 2,243 2,211 2,600 YoY -23.9% 25.5% 24.7% 11.1% -39.0% 165.9% 14.7% 123.2% -64.5% 78.7% -1.4% 17.6% Net margin 6.5% 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% 9.7% 10.5% Per share data (JPY) Shares issued (year-end; '000) 3,439 3,445 3,445 3,445 3,445 3,445 345,274 346,585 347,658 348,399 348,399 EPS 144.1 181.2 226.2 251.6 155.5 413.4 4.7 10.5 3.7 6.7 6.6 7.8 Dividend per share 200.0 200.0 100.0 150.0 200.0 250.0 2.7 3.3 3.5 3.8 4.0 4.3 Book value per share 530 490 505 635 675 917 12 20 20 23 25 Balance sheet (JPYmn) Cash and cash equivalents 1,852 1,701 1,201 1,777 2,885 3,899 4,765 9,902 13,121 13,888 11,709 Total current assets 2,599 2,191 1,708 2,358 3,486 4,766 5,768 11,230 15,014 15,524 13,574 T angible fixed asset s 847 904 1,261 1,588 1,204 1,703 1,993 3,164 3,852 5,015 6,583 Investments and other assets 3,685 3,293 2,766 2,354 1,216 2,431 2,696 2,978 2,098 3,040 3,009 Int angible fixed asset s 94 83 64 76 97 220 186 411 380 393 206 Total assets 7,225 6,472 5,799 6,377 6,003 9,121 10,643 17,783 21,344 23,973 23,372 Accounts payable 29 29 29 32 30 81 88 98 281 313 290 Short-term debt 2,022 1,938 1,368 1,274 1,156 624 209 102 424 1,380 293 Tot al current liabilit ies 3,033 2,640 2,435 2,459 2,483 2,261 2,404 2,982 2,842 4,435 3,002 Long-term debt 1,998 1,751 1,179 1,176 650 2,530 2,906 5,170 6,624 6,444 6,306 Tot al fixed liabilit ies 2,370 2,143 1,625 1,732 1,239 3,619 3,826 6,078 9,856 9,519 9,377 Tot al liabilit ies 5,403 4,783 4,060 4,191 3,722 5,880 6,230 9,061 12,698 13,954 12,380 Net assets 1,823 1,688 1,738 2,186 2,281 3,241 4,413 8,722 8,646 10,019 10,992 Interest-bearing debt 4,020 3,689 2,547 2,451 1,805 3,154 3,115 5,272 7,048 7,824 6,599 Statement of cash flows (JPYmn) Cash flow s from operat ing act ivit ies 898 868 1,529 1,289 1,473 1,460 2,014 1,965 602 3,778 2,947 Cash flow s from invest ing act ivit ies 728 322 -203 -73 800 -1,048 -424 1,378 2,490 -3,135 -2,851 Cash flow s from financing act ivit ies -1,495 -1,008 -1,826 -636 -1,228 612 -739 1,733 296 -551 -2,787 Financial rat ios ROA (RP-based) 24.5% 17.1% 18.2% 23.6% 30.8% 29.6% 26.2% 21.2% 11.5% 14.2% 15.3% ROE 25.9% 35.0% 44.9% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% 27.2% Equit y rat io 25.1% 26.1% 29.7% 33.8% 37.5% 33.6% 37.8% 38.0% 31.2% 32.5% 36.3% 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 June 28, 2019, Shared Research updated the report following interviews with Nippon Parking Development Co., Ltd.

On June 7, 2019, the company announced earnings results for Q3 FY07/19; see the results section for details.

For previous releases and developments, please refer to the News and topics section.

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Trends and outlook

Quarterly trends and results

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 to 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

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Performance by segment

Cumulative FY07/17 FY07/18 FY07/19 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % of FY FY Es t . Sales 5,018 10,974 17,336 21,987 5,295 11,307 17,902 22,771 5,694 11,972 19,036 77.1% 24,700 YoY 41.4% 27.1% 23.2% 21.2% 5.5% 3.0% 3.3% 3.6% 7.5% 5.9% 6.3% 8.5% Parking Lot business 3,102 6,229 9,420 12,709 3,278 6,532 9,827 13,236 3,370 6,772 10,280 73.4% 14,000 YoY 7.9% 7.5% 7.6% 7.4% 5.7% 4.9% 4.3% 4.1% 2.8% 3.7% 4.6% 5.8% Domestic 2,892 5,776 8,698 11,681 2,998 5,955 8,937 12,006 3,038 6,079 9,205 YoY 7.8% 6.9% 6.7% 6.1% 3.7% 3.1% 2.7% 2.8% 1.3% 2.1% 3.0% Overseas 210 453 722 1,025 279 577 889 1,229 331 692 1,074 YoY 9.1% 14.6% 19.8% 23.9% 32.8% 27.4% 23.1% 19.9% 18.6% 19.9% 20.8% Ski Resort business 631 3,020 5,667 6,152 815 3,145 5,876 6,420 868 3,187 6,031 87.5% 6,890 YoY -1.5% 10.2% 10.5% 10.2% 29.2% 4.1% 3.7% 4.4% 6.5% 1.4% 2.6% 7.3% Theme Park business 1,197 1,582 2,047 2,860 1,133 1,482 1,987 2,832 1,353 1,788 2,378 72.1% 3,300 YoY - - - 502.8% -5.4% -6.3% -2.9% -1.0% 19.4% 20.6% 19.7% 16.5% Other 88 153 212 322 69 150 226 384 109 235 364 Eliminations -0 -11 -11 -52 -1 -2 -13 -101 -6 -10 -17 Operating profit 734 1,710 2,906 3,067 928 1,855 3,213 3,533 1,106 2,114 3,570 85.0% 4,200 YoY 303.7% 92.6% 48.4% 55.1% 26.3% 8.4% 10.6% 15.2% 19.2% 14.0% 11.1% 8.5% OPM 14.6% 15.6% 16.8% 14.0% 17.5% 16.4% 17.9% 15.5% 19.4% 17.7% 18.8% 17.0% Parking Lot business 668 1,331 2,029 2,733 754 1,444 2,143 2,912 777 1,564 2,425 71.3% 3,400 YoY 12.8% 14.6% 16.1% 14.2% 13.0% 8.5% 5.6% 6.5% 3.1% 8.3% 13.2% 16.8% OPM 21.5% 21.4% 21.5% 21.5% 23.0% 22.1% 21.8% 22.0% 23.1% 23.1% 23.6% 24.3% Ski Resort business -334 170 970 443 -255 195 1,107 625 -240 158 1,089 136.2% 800 YoY - - 55.8% 313.4% - 14.7% 14.2% 41.1% - -18.9% -1.6% 28.0% OPM - 5.6% 17.1% 7.2% - 6.2% 18.8% 9.7% - 5.0% 18.1% 11.6% Theme Park business 560 535 382 512 545 476 361 548 679 636 407 67.8% 600 YoY - - - - -2.7% -10.9% -5.4% 6.9% 24.6% 33.5% 12.5% 9.5% OPM 46.8% 33.8% 18.7% 17.9% 48.1% 32.1% 18.2% 19.3% 50.2% 35.6% 17.1% 18.2% Other -0 2 -2 -3 7 19 23 34 10 23 30 50 Eliminations -159 -327 -473 -618 -123 -280 -422 -585 -120 -267 -381 -650 Quarterly FY07/17 FY07/18 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales 5,018 5,955 6,362 4,652 5,295 6,012 6,595 4,869 5,694 6,278 7,064 YoY 41.4% 17.1% 17.1% 14.2% 5.5% 1.0% 3.7% 4.7% 7.5% 4.4% 7.1% Parking Lot business 3,102 3,127 3,191 3,289 3,278 3,254 3,294 3,409 3,370 3,403 3,508 YoY 7.9% 7.1% 7.9% 6.7% 5.7% 4.1% 3.2% 3.7% 2.8% 4.6% 6.5% Domestic 2,892 2,884 2,922 2,983 2,998 2,957 2,982 3,069 3,038 3,041 3,126 YoY 7.8% 6.1% 6.3% 4.4% 3.7% 2.5% 2.1% 2.9% 1.3% 2.8% 4.8% Overseas 210 243 269 302 279 298 312 340 331 361 382 YoY 9.1% 19.8% 29.6% 35.2% 32.8% 22.8% 15.8% 12.5% 18.6% 21.1% 22.4% Ski Resort business 631 2,390 2,647 484 815 2,330 2,731 544 868 2,319 2,844 YoY -1.5% 13.8% 10.9% 6.0% 29.2% -2.5% 3.2% 12.3% 6.5% -0.5% 4.1% Theme Park business 1,197 385 465 813 1,133 349 505 845 1,353 435 590 YoY - - - 71.3% -5.4% -9.3% 8.6% 3.9% 19.4% 24.5% 16.9% Other 88 65 59 110 69 81 76 158 109 125 129 Eliminations -0 -11 0 -41 -1 -1 -12 -87 -6 -4 -7 Operating profit 734 976 1,195 162 928 927 1,358 320 1,106 1,009 1,455 YoY 303.7% 38.2% 11.7% 718.7% 26.3% -5.0% 13.6% 98.3% 19.2% 8.8% 7.1% OPM 14.6% 16.4% 18.8% 3.5% 17.5% 15.4% 20.6% 6.6% 19.4% 16.1% 20.6% Parking Lot business 668 663 698 704 754 690 698 769 777 787 860 YoY 12.8% 16.6% 19.0% 9.1% 13.0% 4.1% 0.0% 9.2% 3.1% 14.0% 23.2% OPM 21.5% 21.2% 21.9% 21.4% 23.0% 21.2% 21.2% 22.6% 23.1% 23.1% 24.5% Ski Resort business -334 503 800 -527 -255 450 913 -483 -240 398 932 YoY - 85.8% 29.8% - - -10.6% 14.1% - - -11.5% 2.1% OPM - 21.1% 30.2% - - 19.3% 33.4% - - 17.2% 32.8% Theme Park business 560 -25 -153 130 545 -69 -115 186 679 -43 -229 YoY - - - 189.8% -2.7% - - 43.1% 24.6% - - OPM 46.8% - - 16.0% 48.1% - - 22.1% 50.2% - - Other -0 2 -4 -1 7 12 4 11 10 13 7 Eliminations -159 -168 -146 -145 -123 -156 -142 -163 -120 -147 -114 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: Segment sales figures include internal sales.

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Key indicators for the domestic Parking Lot business

Parking Lot business FY07/17 FY07/18 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Number of parking facilities 1,209 1,208 1,206 1,204 1,201 1,198 1,183 1,181 1,192 1,195 1,196 YoY 4.7% 3.2% 0.9% -1.1% -0.7% -0.8% -1.9% -1.9% -0.7% -0.3% 1.1% QoQ change -9 -1 -2 -2 -3 -3 -15 -2 11 3 1 New contracts 11 16 24 20 14 17 18 18 22 14 25 Cancellations -20 -17 -26 -22 -17 -20 -33 -20 -11 -11 -24 For rent (monthly) 961 960 966 969 972 976 968 972 985 987 982 For rent (monthly and hourly) 139 140 136 131 127 123 121 115 112 114 118 Outsourced management 109 108 104 104 102 99 94 94 95 94 96 Total parking spaces (units) 43,264 43,087 43,789 44,006 43,619 43,363 43,524 43,563 43,617 43,518 43,697 YoY 7.2% 3.4% 3.7% 1.7% 0.8% 0.6% -0.6% -1.0% 0.0% 0.4% 0.4% Leased spaces 25,112 24,976 25,390 25,720 25,318 25,360 25,668 25,712 25,747 25,711 25,796 YoY 7.2% 3.4% 5.4% 2.0% 0.8% 1.5% 1.1% 0.0% 1.7% 1.4% 0.5% Monthly 15,026 14,920 15,293 15,730 15,647 15,706 15,933 16,144 16,253 16,125 15,957 YoY 4.5% 2.2% 4.0% 4.1% 4.1% 5.3% 4.2% 2.6% 3.9% 2.7% 0.2% Monthly and hourly 10,086 10,056 10,097 9,990 9,671 9,654 9,735 9,568 9,494 9,586 9,839 YoY 11.4% 5.1% 7.5% -1.1% -4.1% -4.0% -3.6% -4.2% -1.8% -0.7% 1.1% Managed spaces 18,152 18,111 18,399 18,286 18,301 18,003 17,856 17,851 17,870 17,807 17,901 YoY 7.2% 3.4% 1.5% 1.2% 0.8% -0.6% -3.0% -2.4% -2.4% -1.1% 0.3% Rented out spaces 13,967 13,882 14,369 14,782 14,717 14,488 14,770 15,085 15,099 15,220 15,305 YoY 4.7% 3.4% 5.4% 5.2% 5.4% 4.4% 2.8% 2.0% 2.6% 5.1% 3.6% Contract ratio (monthly parking) 93.0% 93.0% 94.0% 94.0% 94.1% 92.2% 92.7% 93.4% 92.9% 94.4% 95.9% Domestic sales 2,892 2,884 2,921 2,984 2,998 2,957 2,982 3,069 3,038 3,041 3,126 YoY 7.8% 6.1% 6.3% 4.4% 3.7% 2.5% 2.1% 2.8% 1.3% 2.8% 4.8% Directly managed facilities 2,035 2,022 2,039 2,105 2,092 2,079 2,075 2,122 2,108 2,097 2,130 YoY 8.5% 7.3% 7.1% 6.4% 2.8% 2.8% 1.8% 0.8% 0.8% 0.9% 2.7% Sales per leased space 81 81 81 82 82 82 81 83 82 82 83 YoY 0.5% 2.0% 2.7% 2.6% 1.4% 1.6% 0.4% 0.3% -0.1% -0.7% 1.7% Outsourced management 672 673 664 681 689 686 681 700 696 700 715 YoY 3.9% 1.1% -0.2% 0.6% 2.5% 1.9% 2.6% 2.8% 1.0% 2.0% 5.0% Sales per managed space 37 37 36 37 38 38 38 39 39 39 40 YoY -3.1% -2.2% -1.6% -0.6% 1.7% 2.5% 5.7% 5.3% 3.5% 3.2% 4.7% Other 183 189 219 198 216 191 227 247 233 245 281 YoY 14.4% 12.5% 21.0% -1.5% 18.0% 1.1% 3.7% 24.7% 7.9% 28.3% 23.8% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: Sales per leased space for directly managed facilities is determined by dividing directly managed facilities sales by the number of leased spaces in those facilities; sales per managed space for outsourced management facilities is calculated by dividing outsourced management facilities sales by the number of parking spaces in those facilities.

Domestic Parking Lot business: Number of parking spaces (units), number of contracts

FY07/17 FY07/18 FY07/19 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Monthly rental vehicles with parking 134 132 127 142 167 168 180 201 222 256 242 space (units) YoY 22.9% 3.9% -5.9% 9.2% 24.6% 27.3% 41.7% 41.5% 32.9% 52.4% 34.4%

Car sharing (units) 81 89 83 83 82 79 72 72 67 64 62

YoY -35.7% -23.3% -22.4% -9.8% 1.2% -11.2% -13.3% -13.3% -18.3% -19.0% -13.9%

Car sharing (no. of contracts) 2,339 2,337 2,247 2,399 2,339 2,596 2,103 2,357 2,102 2,055 2,053

YoY -6.7% -2.6% -2.9% 3.2% 0.0% 11.1% -6.4% -1.8% -10.1% -20.8% -2.4% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

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Key indicators for the overseas Parking Lot business

Parking Lot FY07/17 FY07/18 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Number of parking facilities 34 45 41 43 42 44 48 48 50 50 57 YoY 9.7% 45.2% 28.1% 22.9% 23.5% -2.2% 17.1% 11.6% 19.0% 13.6% 18.8% For rent (monthly) 16 20 15 16 16 17 19 18 20 20 21 For rent (monthly and hourly) 15 18 18 19 18 19 21 22 23 19 29 Outsourced management 3 7 8 8 8 8 8 8 7 7 7 Total parking spaces (units) 9,455 11,439 11,360 12,376 12,211 12,555 12,130 12,824 12,702 12,600 15,761 YoY 18.0% 39.5% 29.6% 28.7% 29.1% 9.8% 6.8% 3.6% 4.0% 0.4% 29.9% Leased spaces 7,242 7,686 7,017 7,973 7,818 8,162 8,313 9,007 9,085 8,983 10,977 YoY 24.8% 34.0% 11.3% 7.7% 8.0% 6.2% 18.5% 13.0% 16.2% 10.1% 32.0% For rent (monthly) 556 685 440 439 466 518 534 554 592 490 665 YoY 20.9% 73.9% -4.3% -17.6% -16.2% -24.4% 21.4% 26.2% 27.0% -5.4% 24.5% For rent (monthly and hourly) 6,686 7,001 6,577 7,534 7,352 7,644 7,779 8,453 8,493 8,493 10,312 YoY 25.2% 31.1% 12.6% 9.7% 10.0% 9.2% 18.3% 12.2% 15.5% 11.1% 32.6% Managed spaces 2,213 3,753 4,343 4,403 4,393 4,393 3,817 3,817 3,617 3,617 4,784 YoY 0.0% 52.3% 76.3% 99.0% 98.5% 17.1% -12.1% -13.3% -17.7% -17.7% 25.3% Rented out spaces 334 496 427 432 466 502 503 533 577 478 589 YoY 9.5% 107.5% 40.0% 34.6% 39.5% 1.2% 17.8% 23.4% 23.8% -4.8% 17.1% Contract ratio (monthly parking) 60.1% 72.4% 97.0% 98.4% 100.0% 96.9% 94.2% 96.2% 97.5% 97.6% 88.6% Overseas sales 210 243 269 302 279 298 312 340 331 361 382 YoY 9.1% 19.8% 29.6% 35.2% 32.8% 22.8% 15.8% 12.5% 18.6% 21.1% 22.4% Directly managed facilities 150 165 174 180 196 203 218 242 252 269 297 YoY 5.6% 12.2% 16.8% 1.1% 30.7% 23.0% 25.3% 34.4% 28.6% 32.5% 36.2% Sales per leased space 20.7 21.5 24.8 22.6 25.1 24.9 26.2 26.9 27.7 29.9 27.1 YoY - - - - 21.0% 15.9% 5.8% 19.0% 10.6% 20.4% 3.2% Outsourced management 32 41 54 58 62 66 70 69 54 55 62 YoY 3.2% 5.1% 50.0% 81.3% 93.8% 61.0% 29.6% 19.0% -12.9% -16.7% -11.4% Sales per managed space 14.5 10.9 12.4 13.2 14.1 15.0 18.3 18.1 14.9 15.2 13.0 YoY - - - - -2.4% 37.5% 47.5% 37.2% 5.8% 1.2% -29.3% Other 27 36 42 64 21 28 24 28 24 37 22 YoY 50.0% 111.8% 82.6% 357.1% -22.2% -22.2% -42.9% -56.3% 14.3% 32.1% -8.3% Parking Lot FY07/17 FY07/18 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Number of parking facilities 34 45 41 43 42 44 48 48 50 50 57 YoY 9.7% 45.2% 28.1% 22.9% 23.5% -2.2% 17.1% 11.6% 19.0% 13.6% 18.8% Thailand 27 32 26 27 27 28 29 28 30 30 32 China 5 6 7 7 7 7 7 7 7 7 6 South Korea 2 5 6 7 6 7 10 10 10 10 13 Indonesia - 2 2 2 2 2 2 2 2 2 4 Total parking spaces (units) 9,455 11,439 11,360 12,376 12,211 12,555 12,130 12,824 12,702 12,600 15,761 YoY 18.0% 39.5% 29.6% 28.7% 29.1% 9.8% 6.8% 3.6% 4.0% 0.4% 29.9% Thailand 6,887 7,372 6,607 7,212 7,121 7,297 7,298 7,933 7,971 7,869 9,831 YoY 24.8% 29.3% 5.4% 2.4% 3.4% -1.0% 10.5% 10.0% 11.9% 7.8% 34.7% Leased spaces 6,887 7,122 6,357 6,962 6,871 7,047 7,048 7,683 7,721 7,619 8,025 For rent (monthly) 486 536 291 290 317 369 370 390 428 326 421 For rent (monthly and hourly) 6,401 6,586 6,066 6,672 6,554 6,678 6,678 7,293 7,293 7,293 7,604 Managed spaces 0 250 250 250 250 250 250 250 250 250 1,806 China 2,455 2,985 3,575 3,635 3,625 3,625 2,966 2,966 2,966 2,966 2,577 YoY - 21.6% 45.6% 48.1% 47.7% 21.4% -17.0% -18.4% -18.2% -18.2% -13.1% Leased spaces 242 242 242 242 242 242 257 257 257 257 257 For rent (monthly) ------15 15 15 15 15 For rent (monthly and hourly) 242 242 242 242 242 242 242 242 242 242 242 Managed spaces 2,213 2,743 3,333 3,393 3,383 3,383 2,709 2,709 2,709 2,709 2,320 South Korea 113 405 501 852 788 956 1,189 1,189 1,029 1,029 1,630 YoY 162.8% 841.9% 1,065.1% 654.0% 597.3% 136.0% 137.3% 39.6% 30.6% 7.6% 37.1% Leased spaces 113 205 301 652 588 756 891 891 931 931 1,532 For rent (monthly) 70 32 32 32 32 32 32 32 32 32 32 For rent (monthly and hourly) 43 173 269 620 556 724 859 859 899 899 1,500 Managed spaces 0 200 200 200 200 200 298 298 98 98 98 Indonesia - 677 677 677 677 677 677 677 677 677 1,582 YoY ------133.7% Overseas sales 210 243 269 302 279 298 312 340 331 361 382 YoY 9.1% 19.8% 29.6% 35.2% 32.8% 22.8% 15.8% 12.5% 18.6% 21.1% 22.4% Thailand 161 178 184 208 169 185 184 189 194 214 229 YoY 15.8% 25.4% 18.7% 20.9% 5.0% 3.9% 0.0% -9.1% 14.8% 15.7% 24.5% Directly managed facilities 134 141 140 144 148 155 159 165 172 175 196 YoY 8.1% 11.9% 6.9% -11.1% 10.4% 9.9% 13.6% 14.6% 16.2% 12.9% 23.3% Sales per leased space 19.2 20.1 20.8 21.6 21.4 22.3 22.6 22.4 22.3 22.8 25.1 YoY -14.4% -12.4% -9.1% -12.8% 11.2% 10.6% 8.6% 3.6% 4.4% 2.4% 11.1% Other 27 36 42 64 21 28 24 21 20 37 22 YoY 92.9% 111.8% 82.6% 481.8% -22.2% -22.2% -42.9% -67.2% -4.8% 32.1% -8.3% China 43 49 56 58 60 63 56 62 58 54 54 YoY -12.2% -14.0% 14.3% 31.8% 39.5% 28.6% 0.0% 6.9% -3.3% -14.3% -3.6% Directly managed facilities 10 11 15 10 10 11 11 10 10 11 11 Managed spaces 32 38 42 47 49 52 46 45 43 44 43 YoY 3.2% -2.6% 16.7% 46.9% 53.1% 36.8% 9.5% -4.3% -12.2% -15.4% -6.5% Sales per managed space 14.5 15.3 13.8 14.0 14.5 15.4 15.1 16.6 15.9 16.2 17.1 YoY 3.2% -13.0% -15.0% -3.3% 0.0% 0.2% 9.2% 18.9% 9.8% 5.7% 13.2% South Korea 5 11 21 28 41 42 63 80 67 78 84 YoY 150.0% 266.7% 425.0% 460.0% 720.0% 281.8% 200.0% 185.7% 63.4% 85.7% 33.3% Directly managed facilities 5 8 14 22 32 31 45 59 60 72 79 YoY 150.0% 166.7% 250.0% 340.0% 540.0% 287.5% 221.4% 168.2% 87.5% 132.3% 75.6% Sales per leased space 44.2 50.3 55.3 46.2 51.6 46.1 54.6 66.2 65.9 77.3 64.1 YoY -4.9% -27.9% -40.5% -28.0% 16.6% -8.3% -1.2% 43.4% 27.6% 67.6% 17.4% Indonesia - 5 8 8 7 8 9 8 8 11 10 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: Sales per leased space for directly managed facilities is determined by dividing directly managed facilities sales by the number of leased spaces in those facilities; sales per managed space for outsourced management facilities is calculated by dividing outsourced management facilities sales by the number of parking spaces in those facilities

08/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Number of visitors and performance in the Ski Resort business

FY07/17 FY07/18 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 No. of visitors ('000) 224 987 1,905 2,057 268 1,059 1,997 2,149 291 1,073 2,035 YoY 3.2% 7.8% 9.8% 9.9% 19.6% 7.3% 4.8% 4.5% 8.6% 1.3% 1.9% Winter facility ('000) - 743 1,654 1,670 - 769 1,696 1,702 - 756 1,709 YoY - 7.5% 9.9% 10.7% - 3.5% 2.5% 1.9% - -1.7% 0.8% Summer facility ('000) 224 244 251 387 268 290 301 447 291 317 326 YoY 3.2% 8.4% 9.1% 6.3% 19.6% 18.9% 19.9% 15.5% 8.6% 9.3% 8.3% Sales 631 3,020 5,667 6,152 815 3,145 5,876 6,420 868 3,187 6,031 YoY -1.5% 10.2% 10.5% 10.2% 29.2% 4.1% 3.7% 4.4% 6.5% 1.4% 2.6% Gross profit 267 1,751 3,419 3,556 385 1,790 3,593 3,741 409 1,821 3,684 YoY -13.9% 13.3% 13.9% 14.0% 44.2% 2.2% 5.1% 5.2% 6.5% 1.7% 2.5% GPM 42.3% 58.0% 60.3% 57.8% 47.2% 56.9% 61.1% 58.3% 47.2% 57.1% 61.1% SG&A expenses 600 1,582 2,450 3,113 640 1,596 2,486 3,117 650 1,663 2,594 YoY 4.5% 2.8% 2.9% 3.4% 6.6% 0.9% 1.5% 0.1% 1.6% 4.2% 4.4% SG&A rat io 95.2% 52.4% 43.2% 50.6% 78.5% 50.7% 42.3% 48.5% 74.8% 52.2% 43.0% Operating profit -334 170 970 443 -255 195 1,107 625 -240 158 1,089 YoY - - 55.8% 313.4% - 14.7% 14.2% 41.1% - -18.9% -1.6% OPM - 5.6% 17.1% 7.2% - 6.2% 18.8% 9.7% - 5.0% 18.1% FY07/17 FY07/18 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 No. of visitors ('000) 224 763 918 152 268 791 938 152 291 782 962 YoY 3.2% 9.2% 12.1% 10.9% 19.6% 3.7% 2.2% - 8.6% -1.1% 2.6% Winter facility ('000) - 743 911 16 - 769 927 6 - 756 953 YoY - 7.5% 11.9% 433.3% - 3.5% 1.8% -62.5% - -1.7% 2.8% Summer facility ('000) 224 20 7 136 268 22 11 146 291 26 9 YoY 3.2% 150.0% 40.0% 1.5% 19.6% 10.0% 57.1% 7.4% 8.6% 18.2% -18.2% Sales 631 2,390 2,647 484 815 2,330 2,731 544 868 2,319 2,844 YoY -1.5% 13.8% 10.9% 6.0% 29.2% -2.5% 3.2% 12.3% 6.5% -0.5% 4.1% Gross profit 267 1,485 1,668 136 385 1,406 1,803 148 409 1,411 1,863 YoY -13.9% 20.2% 14.5% 17.9% 44.2% -5.3% 8.1% 8.8% 6.5% 0.4% 3.3% GPM 42.3% 62.1% 63.0% 28.2% 47.2% 60.3% 66.0% 27.3% 47.2% 60.9% 65.5% SG&A expenses 600 981 868 663 640 956 890 631 650 1,013 931 YoY 4.5% 1.7% 3.2% 5.1% 6.6% -2.6% 2.6% -4.8% 1.6% 6.0% 4.6% SG&A rat io 95.2% 41.1% 32.8% 136.9% 78.5% 41.0% 32.6% 116.0% 74.8% 43.7% 32.7% Operating profit -334 503 800 -527 -255 450 913 -483 -240 398 932 YoY - - 29.8% - - -10.6% 14.1% - - -11.5% 2.1% OPM - 21.1% 30.2% - - 19.3% 33.4% - - 17.2% 32.8% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

Visitor count by ski resort during summer

Summer facility (with operating ropeway) Cumulative FY07/17 FY07/18 FY07/19 ('000) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total summer facilities 224 244 251 387 268 290 301 447 291 316 326 YoY 3.2% 8.4% 11.6% 6.0% 19.6% 18.9% 19.9% 15.5% 8.6% 9.0% 8.3% Total facilities with operating ropeway 190 200 204 309 235 249 255 375 254 270 274 YoY 5.6% 10.5% 12.7% 6.6% 23.7% 24.5% 25.0% 21.4% 8.1% 8.4% 7.5% Hakuba Happo-one International Mountain Resort 67 67 67 98 70 70 70 105 69 69 69 Hakuba Iwatake Mountain Resort 15 16 16 25 18 20 21 34 37 45 49 Tsugaike Kogen 51 51 51 78 52 52 52 81 57 57 58 Ryuoo Mountain Park 38 41 41 60 77 83 83 112 74 74 74 Mt. Kongo Ropeway 16 23 28 48 15 22 27 43 14 22 22 Other 34 44 47 78 33 41 46 72 37 46 52 YoY -8.1% 0.0% 6.8% 5.4% -2.9% -6.8% -2.1% -7.7% 12.1% 12.2% 13.0% Kashimayari Sports Village 6 7 9 13 5 6 7 12 6 6 7 Kawaba Resort 16 22 22 40 15 20 21 36 17 24 25 Meiho Kogen Development 10 12 13 22 11 13 15 24 12 15 17 Shinetsu Sakudo Maintenance 0 1 1 2 0 1 1 1 0 1 1 Quarterly FY07/17 FY07/18 FY07/19 ('000) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total summer facilities 224 20 7 136 268 22 11 146 291 25 10 YoY 3.2% 150.0% - -2.9% 19.6% 10.0% 57.1% 7.4% 8.6% 13.6% -9.1% Total facilities with operating ropeway 190 10 4 105 235 14 6 120 254 16 4 YoY 5.6% 900.0% - -3.7% 23.7% 40.0% 50.0% 14.3% 8.1% 14.3% -33.3% Hakuba Happo-one International Mountain Resort 67 - - 31 70 - - 35 69 - - Hakuba Iwatake Mountain Resort 15 1 - 9 18 2 1 13 37 8 4 Tsugaike Kogen 51 - - 27 52 - - 29 57 - 1 Ryuoo Mountain Park 38 3 - 19 77 6 - 29 74 - - Mt. Kongo Ropeway 16 7 5 20 15 7 5 16 14 8 - Other 34 10 3 31 33 8 5 26 37 9 6 YoY -8.1% 42.9% - 3.3% -2.9% -20.0% 66.7% -16.1% 12.1% 12.5% 20.0% Kashimayari Sports Village 6 1 2 4 5 1 1 5 6 - 1 Kawaba Resort 16 6 - 18 15 5 1 15 17 7 1 Meiho Kogen Development 10 2 1 9 11 2 2 9 12 3 2 Shinetsu Sakudo Maintenance 0 1 - 1 0 1 - - 0 1 - Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

09/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Visitor count by ski resort during winter

Cumulative FY07/17 FY07/18 FY07/19 ('000) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total winter facilities - 743 1,654 1,670 - 768 1,696 1,702 - 755 1,709 YoY - 7.5% 9.9% 10.7% - 3.4% 2.5% 1.9% - -1.7% 0.8% Ski resorts - 723 1,609 1,623 - 751 1,658 1,664 - 738 1,676 YoY - 5.5% 8.6% 9.4% - 3.9% 3.0% 2.5% - -1.7% 1.1% HAKUBA VALLEY Happo-one Winter Resort - 157 370 378 - 186 404 409 - 174 390 HAKUBA VALLEY Iwatake Snow Field - 31 100 100 - 49 121 121 - 48 119 HAKUBA VALLEY Tsugaike Kogen Ski Resort - 116 263 265 - 121 269 271 - 126 283 HAKUBA VALLEY Kashimayari Ski Resort - 43 95 95 - 46 93 93 - 45 93 Ryuoo Ski Park - 91 200 204 - 82 202 202 - 86 214 Kawaba Ski Resort - 72 149 149 - 55 134 134 - 56 146 Meiho Ski Resort - 83 183 183 - 86 186 186 - 79 188 Sugadaira Kogen Snow Resort - 126 245 245 - 124 247 247 - 121 239 Other - 20 45 47 - 17 38 38 - 17 33 YoY - 233.3% 87.5% 95.8% - -15.0% -15.6% -19.1% - 0.0% -13.2% Kawaba Resort - 5 17 19 - 3 9 9 - 4 10 Meiho Kogen Development - 1 4 4 - 1 3 3 - 1 3 Mt. Kongo Ropeway - 12 22 22 - 12 24 24 - 11 19 Shinetsu Sakudo Maintenance - 0 ------Quarterly FY07/17 FY07/18 FY07/19 ('000) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total winter facilities - 743 911 16 - 768 928 6 - 755 954 YoY - 7.5% 11.9% 300.0% - 3.4% 1.9% -62.5% - -1.7% 2.8% Ski resorts - 723 886 14 - 751 907 6 - 738 938 YoY - 5.5% 11.3% 366.7% - 3.9% 2.4% -57.1% - -1.7% 3.4% HAKUBA VALLEY Happo-one Winter Resort - 157 213 8 - 186 218 5 - 174 216 HAKUBA VALLEY Iwatake Snow Field - 31 69 - - 49 72 - - 48 71 HAKUBA VALLEY Tsugaike Kogen Ski Resort - 116 147 2 - 121 148 2 - 126 157 HAKUBA VALLEY Kashimayari Ski Resort - 43 52 - - 46 47 - - 45 48 Ryuoo Ski Park - 91 109 4 - 82 120 - - 86 128 Kawaba Ski Resort - 72 77 - - 55 79 - - 56 90 Meiho Ski Resort - 83 100 - - 86 100 - - 79 109 Sugadaira Kogen Snow Resort - 126 119 - - 124 123 - - 121 118 Other - 20 25 2 - 17 21 - - 17 16 YoY - 233.3% 38.9% - - -15.0% -16.0% - - 0.0% -23.8% Kawaba Resort - 5 12 2 - 3 6 - - 4 6 Meiho Kogen Development - 1 3 - - 1 2 - - 1 2 Mt. Kongo Ropeway - 12 10 - - 12 12 - - 11 8 Shinetsu Sakudo Maintenance - 0 -0 ------Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: From the winter season 2016/2017, visitor counts at HAKUBA VALLEY Iwatake and Tsugaike include visitors with season passes (20,000 and 26,000 respectively, in cumulative Q3)

Monthly visitor count during winter

FY07/18 FY07/19 ('000 visitors) No v . Dec. Jan. Fe b. Mar. Apr. May No v . Dec. Jan. Fe b. Mar. Apr. May Total 3 228 518 542 324 40 5 - 190 548 570 317 48 14 HAKUBA VALLEY Happo-one Winter Resort 2 59 123 124 74 19 4 - 43 130 125 68 22 5 HAKUBA VALLEY Iwatake Snow Field 11 38 50 21 0 - 7 41 52 18 HAKUBA VALLEY Tsugaike Kogen Ski Resort - 39 80 85 54 8 1 - 33 93 92 56 7 1 HAKUBA VALLEY Kashimayari Ski Resort 11 34 29 17 0 - 10 35 31 15 Ryuoo Ski Park - 29 52 68 48 3 - 30 55 73 50 3 8 Kawaba Ski Resort - 18 36 39 33 6 - 14 41 44 35 10 Meiho Ski Resort 24 61 61 37 1 - 18 61 67 37 3 Sugadaira Kogen Snow Resort 34 90 83 37 0 - 32 89 82 35 Total +3 +13 +10 +35 -8 -5 -9 -3 -38 +30 +28 -7 +8 +9 HAKUBA VALLEY Happo-one Winter Resort +2 +14 +11 +11 -4 -2 -4 -2 -16 +7 +1 -6 +3 +1 HAKUBA VALLEY Iwatake Snow Field - +5 +13 +6 -3 +0 - - -4 +3 +2 -3 - - HAKUBA VALLEY Tsugaike Kogen Ski Resort - +5 -2 +3 -2 +1 -1 - -6 +13 +7 +2 -1 - HAKUBA VALLEY Kashimayari Ski Resort - +1 +1 -1 -3 -1 - - -1 +1 +2 -2 - - Ryuoo Ski Park - -6 -3 +6 +4 - - - +1 +3 +5 +2 - - Kawaba Ski Resort - -8 -9 +2 +3 -2 - - -4 +5 +5 +2 +4 - Meiho Ski Resort - +2 - +1 +1 -1 - - -6 - +6 - +2 - Sugadaira Kogen Snow Resort - +1 -2 +6 -3 -1 - - -2 -1 -1 -2 - - Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

10/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Number of visitors, customer spend, and performance in the Theme Park business

FY07/17 FY07/18 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 No. of visitors ('000) 204 250 316 455 199 240 327 461 246 306 405 YoY - - - - -2.5% -4.0% 3.5% 1.3% 23.6% 27.5% 23.9% Average spend (JPY) - - - 3,953 - 3,988 - 4,073 - 3,767 - YoY ------3.0% - -5.5% - Sales 1,197 1,582 2,047 2,860 1,133 1,482 1,987 2,832 1,353 1,788 2,378 YoY - - - - -5.4% -6.3% -2.9% -1.0% 19.4% 20.6% 19.7% Gross profit - 787 - 1,095 - 708 - 1,102 - 942 - YoY ------10.0% - 0.6% - 33.1% - GPM - 49.7% - 38.3% - 47.8% - 38.9% - 52.7% - SG&A expenses - 252 - 583 - 232 - 554 - 306 - YoY ------8.2% - -4.9% - 32.2% - SG&A rat io - 15.9% - 20.4% - 15.6% - 19.6% - 17.1% - Operating profit 560 535 382 512 545 476 361 548 679 636 407 YoY - - - - -2.7% -10.9% -5.4% 6.9% 24.6% 33.5% 12.5% OPM 46.8% 33.8% 18.7% 17.9% 48.1% 32.1% 18.2% 19.3% 50.2% 35.6% 17.1% FY07/17 FY07/18 FY07/19 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 No. of visitors ('000) 204 46 66 139 199 41 87 134 246 60 99 YoY - - - - -2.5% -10.9% 31.8% -3.6% 23.6% 46.3% 13.8% Sales 1,197 385 465 813 1,133 349 505 845 1,353 435 590 YoY - - - - -5.4% -9.3% 8.6% 3.9% 19.4% 24.5% 16.9% Operating profit 560 -25 -153 130 545 -69 -115 186 679 -43 -229 YoY - - - - -2.7% - - 43.1% 24.6% - - OPM 46.8% - - 16.0% 48.1% - - 22.1% 50.2% - - Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

Q3 FY07/19 results (out June 7, 2019)

Q3 FY07/19: Operating profit up JPY357mn YoY on rising earnings at Parking Lot and Theme Park businesses. At the Parking Lot ▷ business, earnings growth was underpinned by solid gains at domestic operations and the rising profitability of overseas

operations. Hurt by warm winter temperatures, earnings at the Ski Resort business were down Parking Lot business: Aided by organizational restructuring and enhancements to facilitate new acquisitions both in Japan and ▷ overseas, the Parking Lot business saw solid gains at the bottom line and increased its operating profit margin by 2.4pp

 Domestic: As the pace of profitability improvement at existing facilities slowed from that seen until FY07/18, the company moved to restructure its organization to better facilitate new acquisitions and was able to realize a net increase in the number of domestic parking lots under contract for the first time since Q4 FY07/16  Overseas: Overseas parking lot operations reported higher sales and higher earnings. In Thailand, which accounts for the bulk of overseas parking lot operations, quarterly sales and operating profit both set new record highs on the back of rising revenues from existing facilities and new acquisitions. South Korean operations also grew on a steady stream of new acquisitions

Theme Park business: Sales and profit were up on strong visitor numbers ▷  Visitor numbers: At 405,000, theme park attendance for Q3 was up 24.1% YoY. The growth in visitor numbers reflects the company’s concerted effort to bring in new types of visitors, strengthen marketing, and open new attractions.

Ski Resort business: Despite a positive start in Q1 (August–October 2018) owing to additional measure to attract visitors during ▷ the summer season, during Q2 (November 2018–January 2019) natural snowfall came later than usual and temperatures were not low enough to put down man-made snow. Q3 quarter (February–May 2019) saw a solid number of visitors, but cumulative Q3 profit finished down YoY despite higher sales. The company has not changed its forecast for the full year. Shared Research’s view is that the Theme Park business has performed ▷ slightly strong while the Ski Resort business has performed slightly weak, but the company says the progress as a whole has been in line with plan.

Earnings overview

Sales: JPY19.0bn (+6.3% YoY) ▷

11/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Operating profit: JPY3.6bn (+11.1% YoY), operating profit margin of 18.8% (+1.0pp YoY) ▷ Recurring profit: JPY3.6bn (+9.5% YoY) ▷ Net income attributable to parent company shareholders: JPY2.3bn (+4.7% YoY) ▷

Sales rose in all segments. Performance in the Parking Lot business was strong in Japan and overseas, where earnings improved. The Theme Park business found success through the highly cost-effective addition of new attractions and special events. Sales in the Ski Resort business were down significantly YoY as a result of little snowfall, but the number of visitors increased at a greater rate between January and April compared with the same period last year.

Operating profit slipped in the Ski Resort business but rose on a consolidated basis, thanks to increases in the Parking Lot and Theme Park businesses.

Versus full-year FY07/19 company forecasts, Q3 sales reached 77.1% while operating profit reached 85.0%, recurring profit reached 87.3%, and net income attributable to parent company shareholders reached 87.7%. Operating profit in the Parking Lot business achieved 71.3% of its target figure in the same forecast and operating profit in the Ski Resort and Theme Park businesses finished at 136.2% and 67.8%, respectively. The Ski Resort business tends to incur an operating loss during Q4 (May to July) as it is summer season. On the other hand, the Theme Park business generated operating profit in Q4 FY07/18 which included the Golden Week Holidays and summer vacation.

Parking Lot business

Sales: JPY10.3bn (+4.6% YoY) ▷  Domestic Parking Lot business sales: JPY9.2bn (+3.0% YoY)  Overseas Parking Lot business: JPY1.1bn (+20.8% YoY)

Operating profit: JPY2.4bn (+13.2% YoY); operating profit margin of 23.6% (+1.8pp YoY) ▷

Domestic Parking Lot business

Sales: JPY9.2bn (+3.0% YoY) ▷  Directly managed facilities: JPY6.3bn (+1.4% YoY)  Outsourced management: JPY2.1bn (+2.7% YoY)  Other: JPY759mn (+19.7% YoY)

Number of parking lots (facilities), rented spaces, and spaces under management in the domestic Parking Lot business The company attributed the gains at its domestic Parking Lot operations to previous efforts (undertaken through FY07/18) to improve the profitability of existing facilities, organizational restructuring (in FY07/19) to facilitate new parking lot acquisitions, and increased activity by sales personnel to secure new facilities. As a result, the company broke the downtrend in the number of domestic parking lots under contract between Q4 FY07/16 and Q4 FY07/18 (from 1,218 to 1,181), with the number of domestic parking lots in Q1 FY07/19 reaching 1,192, marking an upturn from the previous quarter. However, the net increase in parking lot facilities for cumulative Q3 remained moderate at 15 (+1 in Q3 [February to April 2019]). With a labor shortage, the company prioritized operations, and was unable to allocate adequate resources toward sales activities to acquire new businesses. The company aims to visit more facilities going forward.

The number of directly managed parking lots (total for monthly and hourly parking) stood at 1,100 (+1.0% YoY), the number of leased parking spaces at 25,796 (+0.5% YoY), the number of rented spaces for monthly parking at 15,305 (+3.6% YoY), and the contract ratio at 95.9% (+3.2pp YoY).

Turning to outsourced management parking lots for hourly parking, the number of parking lots stood at 96 (+2.1% YoY) and the number of parking spaces at 17,901 (-0.3% YoY).

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For the monthly parking and car rental package business, the company had 242 cars at the end of April 2019, a 34.4% YoY increase. As the car sharing business is positioned to supplement the monthly parking and car rental package business, the number of contracts remained relatively flat at 2,053 contracts at the end of April 2019, a 2.4% YoY decrease.

Overseas Parking Lot business

Sales: JPY1.1bn (+20.8% YoY) ▷  Thailand: JPY637mn (+18.2% YoY)  China: JPY166mn (-7.1% YoY)  South Korea: JPY229mn (+56.3% YoY)

Number of parking lots under management in the overseas Parking Lot business The number of parking lots under operation overseas rose to 57 (+18.8% YoY), and the total number of parking spaces to 15,761 (+29.9% YoY), contributing to an increase in sales. By country, the number of parking lots stood at 32 in Thailand (+10.3% YoY) with 9,831 parking spaces (+34.7% YoY), six in China (-14.3% YoY) with 2,577 parking spaces (-13.1% YoY), and 13 in South Korea (+30.0% YoY) with 1,630 parking spaces (+37.1% YoY).

The Thailand business is a joint venture (5% NPD investment) with Pan Pacific International Holdings Corp (TSE1: 7532), the ▷ operator of Don Quijote discount stores. The second Don Quijote store in Southeast Asia, DONKI MALL THONGLOR opened in February 2019. NPD manages DONKI MALL THONGLOR’s parking lot (311 parking spaces). In Q3 FY07/19, the parking lot utilization rate was higher than expected. While NPD has established its business models in Thailand and South Korea, challenges remain in establishing a working business ▷ model tailored to the Chinese market.

The overseas Parking Lot business had operated at a loss, but it has turned profitable and continues to improve, which has helped improve operating margins for its overall Parking Lot business.

Ski Resort business

Sales: JPY6.0bn (+2.6% YoY) ▷ Operating profit: JPY1.1bn (-1.6% YoY); operating profit margin of 18.1% (-0.7pp YoY) ▷

During the summer season in Q1 (August–October 2018), the number of visitors increased thanks to the opening of new facilities. While the number of visitors fell due to delayed ski resort openings during the Q2 winter season (November 2018–January 2019), it increased at a greater rate during Q3 (February–April 2019) than that in the period previous year. As a result, sales were up but profit fell. A consolidated subsidiary Nippon Ski Resort Development Co., Ltd. revised H1 FY07/19 guidance downward in February 2019, but kept full-year guidance unchanged.

Number of summer season visitors in the Ski Resort business The number of visitors during the summer season totaled 326,000 (+8.3% YoY) while visitors to lift facilities (gondolas, ropeway, lifts) totaled 274,000 (+7.5% YoY). The increase reflected successful openings of new facilities at the Hakuba Iwatake Mountain Resort and Tsugaike Kogen, both located in Hakuba Valley. The mountain-top terrace Hakuba Mountain Harbor opened at Hakuba Iwatake in October 2018, and attracted over 20,000 visitors in that month alone. There were 49,000 visitors during summer season up to the end of April 2019 at Hakuba Iwatake Mountain Resort, a 130.5% increase compared to visitors during summer season up to the end of April 2018. The outdoor adventure park Xtrem Aventures Hakuba Tsugaike Wow! was opened at Tsugaike Kogen in August 2018. At the same time, the company recorded favorable visitor numbers at Sora terrace, which offers

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views of the seas of clouds below, despite fewer business days than the previous year due to scheduled large-scale ropeway maintenance. Ancillary revenues from sales of beverages and goods grew at all facilities.

In May 2018, prior to the opening of Hakuba Mountain Harbor, Hakuba Iwatake Mountain Resort had 2,000 visitors. In May 2019, after the opening of Hakuba Mountain Harbor, it had 19,000 visitors, performing well even in Q4. Hakuba Mountain Harbor will contribute to the company’s earnings from the summer season of FY07/19.

Number of winter season visitors in the Ski Resort business Visitors during the winter season totaled 1,709,000 (+0.8% YoY). Ski resort openings were delayed due to the winter cold and late snowfall, resulting in a YoY drop in ski resort visitors in December 2018 to 190,000 (-16.7% YoY). According to observations from the Nagano Local Meteorological Office, the first snowfall of 2018, which fell on December 8, occurred 17 days later than is typical, and 20 days later than the first snowfall in 2017. However, the company was able to begin sales early in areas of higher elevation at all ski resorts thanks to its efforts to replace and augment its artificial snow machines. A large natural snowfall in January 2019 allowed for expanded areas for skiing, and visitors for the same month reached 548,000 (+5.8% YoY) and 570,000 in February (+5.2% YoY). Inbound visitors from overseas during this winter season totaled 228,000 (+8.8% YoY), an all-time high.

Theme Park business

Sales: JPY2.4bn (+19.7% YoY) ▷ Operating profit: JPY407mn (+12.5% YoY); operating profit margin of 17.1% (-1.1pp YoY) ▷

Sales and profit rose on an increase in the number of visitors driven by new attractions and events.

The number of visitors totaled 405,000 (+23.9% YoY), breaking down as 392,000 visitors (+23.7% YoY) at Nasu Highland Park and 13,000 visitors (+44.4% YoY) at the NOZARU aerial athletic facility. In an effort to attract visitors, the company focused on hosting various events, including Dino-A-Live show featuring mechanical suit robots of the world’s first two-legged dinosaurs, which was held for the second year in a row; new character shows featuring popular anime or TV show characters such as Kamen Rider; circus visiting Japan for the first time from the US; and Harajuku Colorful Street produced in collaboration with Asobisystem Co., Ltd. Further, to enhance the appeal of its theme parks, the company introduced five new attractions including the popular Gururi Mori, a maze filled with various activities for children. In commemoration of the 40th anniversary of Nasu Highland Park, the company sought to attract visitors in collaboration with the regional community by running a campaign offering free entrance to guests staying at nearby hotels to attract visitors from the entire Nasu area. It also opened the park at night, with illuminations serving as the main attraction, during the 10-day Golden Week holiday to attract visitors.

Operating profit increased, primarily due to sales growth at Nasu Highland Park. However, operating margins declined as sales growth exceeded operating profit growth. This is largely because the company performed repair work during Q3 (February–April 2019). As a result, sales increased to JPY590mn (+16.9% YoY) while an operating loss widened to JPY229mn (from operating loss of JPY115mn in Q3 FY07/18). In FY07/18, the company performed repair work during Q4 (May–July 2018).

In Q4 2019 (May–July), the longer-than-normal 10-day Golden Week Holiday as well as good weather seem to have had an positive impact on visitor count.

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

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Full-year company forecasts

Consolidat ed earnings FY07/17 FY07/18 FY07/19 Init. Est. (JPYmn) 1H 2H FY 1H 2H FY 1H 2H FY Sales 10,974 11,014 21,987 11,307 11,464 22,771 11,972 12,728 24,700 YoY 27.1% 15.9% 21.2% 3.0% 4.1% 3.6% 5.9% 11.0% 8.5% Operating profit 1,710 1,357 3,067 1,855 1,679 3,533 2,114 2,086 4,200 YoY 92.6% 24.5% 55.1% 8.4% 23.7% 15.2% 14.0% 24.2% 18.9% OPM 15.6% 12.3% 14.0% 16.4% 14.6% 15.5% 17.7% 16.4% 17.0% Recurring profit 1,721 1,491 3,212 1,877 1,734 3,610 2,139 1,961 4,100 YoY 50.7% 35.7% 43.4% 9.0% 16.3% 12.4% 14.0% 13.1% 13.6% RPM 15.7% 13.5% 14.6% 16.6% 15.1% 15.9% 17.9% 15.4% 16.6% Net in co me 1,253 989 2,243 1,323 888 2,211 1,558 1,042 2,600 YoY 91.4% 64.8% 78.7% 5.6% -10.3% -1.4% 17.7% 17.4% 17.6% Operating profit 1,710 1,357 3,067 1,855 1,679 3,533 2,114 2,086 4,200 Parking Lot 1,331 1,402 2,733 1,444 1,467 2,912 1,564 3,400 Domest ic Parking Lot 1,357 1,362 2,719 1,430 1,424 2,854 Overseas Parking Lot -26 41 15 14 44 58 Ski Resort 170 273 443 195 430 625 158 800 Theme Park 535 -22 512 476 71 548 636 600 Other 2 -5 -3 19 15 34 23 Adjustments -327 -291 -618 -280 -305 -585 -267 Parking Lot (incl. adj.) 1,004 1,111 2,115 1,165 1,162 2,327 1,298 2,750 Domest ic 1,030 1,071 2,100 1,151 1,119 2,269 Overseas -26 41 15 14 44 58

Ski Resort business FY07/17 FY07/18 FY07/19 Init. Est. (JPYmn) 1H 2H FY 1H 2H FY 1H 2H FY Sales 3,020 3,130 6,150 3,144 3,276 6,420 3,187 3,703 6,890 YoY 10.2% 10.1% 10.1% 4.1% 4.6% 4.4% 1.4% 13.0% 7.3% Operating profit 170 273 443 195 430 625 158 642 800 YoY 2,659.5% 170.6% 313.4% 14.7% 57.4% 41.1% -18.9% 49.3% 28.0% OPM 5.6% 8.7% 7.2% 6.2% 13.1% 9.7% 5.0% 17.3% 11.6% Recurring profit 168 272 440 193 421 614 158 582 740 YoY 5,493.6% 195.9% 363.2% 14.9% 54.6% 39.5% -18.0% 38.3% 20.6% RPM 5.6% 8.7% 7.2% 6.1% 12.8% 9.6% 5.0% 15.7% 10.7% Net in co me 58 187 245 144 235 379 115 335 450 YoY - 392.7% - 147.1% 25.8% 54.5% -20.2% 42.4% 18.7% Visit ors in wint er ('000) 723 900 1,623 751 913 1,664 738 1,694 YoY 5.5% 12.6% 9.4% 3.9% 1.4% 2.5% -1.7% 1.8% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

FY07/19 company forecast (Initial forecast) Medium-term target: FY07/20 operating profit of JPY5.0bn NPD announced medium-term targets at the FY07/16 earnings results briefing held in September 2016. It targets an operating profit of JPY5.0bn by 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. At the FY07/18 earnings results briefing held in September 2018, the company said it was maintaining the JPY5.0bn target for operating profit, but adjusted the breakdown as follows: JPY3.0bn in the Parking Lot business and JPY2.0bn in the Theme Park, Ski Resort, and Other businesses. The reason for this change is that as of August 2018, no progress had been made on M&A in the Ski Resort business. Meanwhile, FY07/18 operating profit for the Theme Park business reached JPY548mn, already exceeding the medium-term target. The following is a look back at past initiatives and an overview of initiatives planned for FY07/19, including those related to new businesses.

Overview of past initiatives FY07/17: GPM improved for existing domestic properties in Parking Lot; overseas business moved into black. Effect of improvements in Theme Park beginning to appear With the medium-term targets in mind, NPD in FY07/17 implemented 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 overseas Parking Lot business: absorbing upfront spending in South Korea and Indonesia and moving overseas business as a whole into the black; 3) 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 4)

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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 summer 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, and overseas Parking Lot as a whole secured a position in the black. 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 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: Parking Lot failed to acquire planned number of new properties but further increased GP at existing facilities; Ski Resort saw success with measures to combat poor snowfalls For FY07/18, the company forecast operating profit of JPY3.5bn (+JPY433mn YoY), with profit growth in each of its three mainstay businesses. The company’s forecasts by business were 1) domestic Parking Lot (JPY2.3bn, +JPY200mn YoY): Continue improving profits at existing properties and acquire new properties; 2) overseas Parking Lot (JPY50mn, +JPY35mn YoY); 3) Theme Park (JPY600mn, +JPY88mn YoY): Persist with initiatives to increase visitor numbers and operate more efficiently; 4) Ski Resort (JPY600mn, +JPY157mn YoY): Implement structural reorganization aimed at strengthening margins; and 5) new businesses (JPY50mn loss, widening by JPY47mn YoY): Still in investment stage.

Actual operating profit was JPY3.5bn, up JPY466mn YoY and JPY33mn above the initial plan. By business, 1) domestic Parking Lot (JPY2.3bn, +JPY169mn YoY, -JPY31mn versus initial plan): NPD acquired only 67 new properties (versus initial target of 125 in line with FY07/16), causing it to fall short of the targeted profit increase, but earnings improvement at existing properties made steady progress, helping to secure a profit increase; 2) overseas Parking Lot (estimated at JPY58mn, +JPY43mn YoY, +JPY8mn versus initial plan): Achieved operating profit except Indonesia and Taiwan, which are in an investment stage; profit up for overseas business overall; 3) Theme Park (JPY548mn, +JPY35mn YoY, -JPY52mn versus initial plan): Visitor count fell on inclement weather in 1H (including peak period of Q1), but events, facilities expansion, and other initiatives to draw new customers made steady progress; 4) Ski Resort (JPY625mn, +JPY182mn YoY, +JPY25mn versus initial plan): Performance at Kawaba Ski Resort, which has a high average customer spend, has been deteriorating on competition with neighboring facilities, but this was absorbed by the contribution of measures to combat poor snowfalls at other ski resorts. Summer season initiatives also helped to push profit up for the year.

FY07/19 company forecasts For FY07/19, NPD forecasts operating profit of JPY4.2bn (+JPY667mn YoY), with profit growth in all segments. By business, 1) domestic Parking Lot (+JPY450mn YoY in gross profit of +JPY550mn for Parking Lot as a whole [+JPY423mn in operating profit]): Even as the effect of improvements to existing parking lots accumulates, NPD will focus on raising commission revenue, acquiring new properties, and proposing solutions for existing properties; 2) overseas Parking Lot (+JPY100mn YoY of +JPY550mn segment total): NPD aims to move above the breakeven point, where higher sales will lead to higher profit, and to accumulate profit in South Korea and Thailand, which both have momentum, while getting Indonesia and Taiwan into the black; 3) Theme Park (OP

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of JPY600mn, +JPY52mn YoY): NPD plans to use regional resources effectively in the Theme Park business and create new appeal, holding events with a strong customer draw and PR effect and promoting the adoption of facilities with a strong investment effect; also plans to advance initiatives related to the rental villa business in earnest; 4) Ski Resort (OP of JPY800mn, +JPY175mn YoY): NPD will continue measures to combat poor snowfalls and work to further increase average customer spend, capture inbound tourists, and make resorts popular year round (enhance efforts for summer season).

Segment earnings (left: sales, right: operating profit)

(JPYmn) (JPYmn) Parking Lot Ski Resort Theme Park Other Parking Lot Ski Resort Theme Park Other 30,000 6,000

25,000 5,000 600 3,300 2,832 4,000 20,000 2,860 548 800 474 512 625 6,890 3,000 45 443 6,152 6,420 725 905 15,000 107 5,881 5,584 200 504 4,910 2,000 56 113 4,038 3,400 2,912 10,000 1,868 2,733 1,655 2,244 2,169 2,359 2,332 2,393 1,145 1,000 1,780 1,870 1,993 1,985 502 529 1,410 389 12,709 13,236 14,000 11,086 11,836 5,000 9,400 10,212 7,953 8,724 0 6,249 6,879 7,342 7,520 -112 -18 -9 0 -1,000 FY07/07 FY07/09 FY07/11 FY07/13 FY07/15 FY07/17 FY07/19 FY07/07 FY07/09 FY07/11 FY07/13 FY07/15 FY07/17 FY07/19 Est. Est. Source: Shared Research based on company data

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 FY07/19 (JPYmn) Init. Est. Sales 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,835 12,709 13,236 14,000 Domest ic Parking Lot 7,342 7,520 7,917 8,472 9,064 9,775 10,402 11,009 11,681 12,006 12,281 Directly managed 5,599 5,631 5,727 6,097 6,476 6,869 7,280 7,642 8,201 8,368 - Outsourced management 1,350 1,514 1,763 1,894 2,064 2,356 2,478 2,655 2,690 2,756 - Other 393 376 427 480 523 549 643 710 789 881 - Overseas Parking Lot 37 250 335 436 684 827 1,025 1,229 1,719 Thailand 11 66 333 530 608 731 727 - China 36 239 268 102 153 199 206 241 - South Korea 14 14 65 226 - Indonesia 4 21 32 - Yo Y 4.8% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% 4.1% 5.8% Domest ic Parking Lot 4.8% 2.4% 5.3% 7.0% 7.0% 7.8% 6.4% 5.8% 6.1% 2.8% 2.3% Direct ly managed - 0.6% 1.7% 6.5% 6.2% 6.1% 6.0% 5.0% 7.3% 2.0% - Outsourced management - 12.1% 16.5% 7.5% 9.0% 14.1% 5.2% 7.1% 1.3% 2.5% - Other - -4.3% 13.6% 12.3% 9.0% 5.0% 17.1% 10.4% 11.1% 11.7% - Overseas Parking Lot - - - 584.8% 34.0% 30.1% 56.8% 20.9% 23.9% 19.9% 39.9% T hailand - - - - 500.0% 404.5% 59.2% 14.7% 20.2% -0.5% - China - - - 563.9% 12.1% -61.9% 50.0% 30.1% 3.5% 17.0% - South Korea 247.7% - Indonesia ------425.0% 52.4% - Gross profit 2,767 2,927 3,014 3,322 3,414 3,763 4,100 4,374 4,811 5,106 YoY 4.3% 5.8% 3.0% 10.2% 2.8% 10.2% 9.0% 6.7% 10.0% 6.1% GPM 37.7% 38.9% 37.9% 38.1% 36.3% 36.8% 37.0% 37.0% 37.9% 38.6% SG&A expenses (incl. adjustments) 1,500 1,502 1,626 1,701 1,897 2,153 2,418 2,551 2,696 2,779 YoY 3.2% 0.1% 8.3% 4.6% 11.5% 13.5% 12.3% 5.5% 5.7% 3.1% SG&A rat io 20.4% 20.0% 20.4% 19.5% 20.2% 21.1% 21.8% 21.6% 21.2% 21.0% Operat ing profit (incl. adjust ment s) 1,267 1,425 1,388 1,621 1,517 1,610 1,682 1,823 2,115 2,327 2,750 YoY 5.7% 12.5% -2.6% 16.8% -6.4% 6.1% 4.5% 8.4% 16.0% 10.0% 18.2% OPM 17.3% 18.9% 17.5% 18.6% 16.1% 15.8% 15.2% 15.4% 16.6% 17.6% 19.6% Domest ic Parking Lot 1,711 1,874 2,100 2,269 YoY - 9.5% 12.1% 8.0% OPM 16.5% 17.0% 18.0% 18.9% Overseas Parking Lot -29 -51 15 58 YoY - - - 292.2% OPM -4.3% -6.2% 1.4% 4.7% Operating profit (excl. adjustments) 1,870 1,993 1,985 2,244 2,169 2,359 2,332 2,393 2,733 2,912 3,400 YoY 3.0% 6.6% -0.4% 13.0% -3.4% 8.8% -1.1% 2.6% 14.2% 6.5% 16.8% OPM 25.5% 26.5% 25.0% 25.7% 23.1% 23.1% 21.0% 20.2% 21.5% 22.0% 24.3% Source: Shared Research based on company data

NPD forecasts Parking Lot business sales of JPY14.0bn (+5.8%, +JPY764mn YoY) and operating profit of JPY2.8bn (+18.2%, +JPY423mn YoY; including companywide expenses of JPY650mn). Starting with FY07/18, the company discloses information on the Parking Lot business as a whole, rather than splitting the segment into domestic and overseas businesses. For this reason, it does not disclose operating profit by region, but has said it is targeting a JPY550mn YoY increase in gross profit. This breaks down as a) domestic Parking Lot: about +JPY450mn, including commission revenue (about +JPY150mn), existing properties (about +JPY170mn), and new properties (profit increase) and closing properties (profit decline) together coming to about +JPY130mn; and b) overseas Parking Lot: about +JPY100mn.

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There are no particular changes in plan for either domestic or overseas, but Shared Research will particularly be watching the following: a) domestic: now that sales structure reform was completed in FY07/18, whether or not the company under the new structure will be able to acquire new properties and expand services targeting existing customers; and b) overseas: whether or not the company will be able to push profit above plan on increased properties and sales in Thailand and South Korea, which supply the bulk of overseas profit.

Domestic Parking Lot business Focus on acquiring new properties; growth strategy includes further improving gross profit for existing properties and increasing commission revenue NPD forecasts sales of JPY12.3bn (+2.3% YoY) and an increase in gross profit of about JPY450mn. Now that sales structure reform was completed for the time being in FY07/18, the company in FY07/19 will strengthen efforts to acquire new properties and work to achieve self-sustaining growth in its mainstay business. In terms of the direction of its domestic growth strategy, the company aims to accumulate profit by further improving gross profit for existing properties and enhancing its system for acquiring new properties. In anticipation of the achievement of gross profit improvements for existing properties, it plans also to do the following: 1) increase commission revenue: Achieve a JPY400mn business by enhancing its online strategy; and 2) enhance user solutions: Proceed with initiatives to improved gross profit on properties by 20%. In addition, to accelerate its self-sustaining growth, it seems the company will concentrate its resources on the following efforts: a) winning renewal consulting orders for mechanical parking facilities; and b) purchasing parking space properties in regional areas.

For FY07/18, NPD focused on improving the profitability of its existing facilities in the Parking Lot business, an effort continued from FY07/17. 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. For the loyalty-point parking project, in FY07/19 NPD has changed the original plan of nationwide deployment to a plan of achieving dominance in certain regions, but the effects of this move will likely not surface immediately. Nevertheless, NPD is strengthening efforts to acquire more properties to achieve future growth.

NPD expects a certain level of vacancies for office and commercial facility parking lots, which the company targets, to continue in 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, as issues such as aging residents and inadequate reserve funds for repairs worsen, the company predicts that demand will continue for value added services such as car sharing services and renting vacant parking lots to external operators.

The following is an overview of the domestic growth strategy.

Diagram of domestic Parking Lot business

Measures to increase average customer spend at exist ing facilit ies w inding dow n; Accelerated transfer of monthly Provide new solutions and parking facilit ies t o a subsidiary; Switching focus to contract rate improvement s for exist ing facilit ies and improve gross margin 20–30% w orked t o halve low profit abilit y facilit ies successfully acquiring new facilit ies

T ransferred facilit ies in T okyo and Osaka to a subsidiary, w it h t he aim of increasing gross margin of monthly parking facilit ies by 30% in three years

FY07/17 FY07/18 FY07/19 FY07/20 Source: Shared Research based on company data Increasing commission revenue: enhancing online strategy

In the domestic Parking Lot business, one aspect of the company’s growth strategy is increasing commission revenue to JPY400mn. It hopes to achieve this by enhancing its online strategy. First, it aims to enhance its Japan Parking Lot search website (for monthly parking). Specifically, it will a) update the website (already implemented in September) to improve searchability and guidance by individual needs in order to improve user-friendliness; b) increase the number of listed properties and enhance

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information by gathering data from bases nationwide, aiming to increase listings by 60%; and c) in customer relationship management, since operators are the contact point for monthly users, enhance operator response capability and services.

With the Japan Parking Lot search website, the company introduces monthly parking lots and collects commissions. Although expenses related to operators occur, increases in commission revenue translate fairly directly to increases in profit. For FY07/19, NPD is targeting an increase in commission revenue of JPY100 200mn, which would account for about a third of the increase in – gross profit for the domestic Parking Lot business. Following a website update in 2014, the user count more than quadrupled. The company hopes to see a similar boost in user count this time.

Commission revenue: This includes not just commissions from the search website, but also commissions from the consulting business, which helps customers secure substitute parking while their mechanical parking facilities are being renovated.

Aiming to improve utilization rates for existing monthly parking lots, Nippon Car Service Development (NCS) re-launched its Japan Parking Lot search website (one of Japan's largest monthly parking lot search websites) in February 2015, 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.

Enhancing user solutions: Improving profitability at existing facilities Of the JPY169mn net OP increase in the domestic Parking Lot business during FY07/18, existing properties accounted for a significant portion with gross profit up JPY245mn when excluding a JPY199mn reduction from the closure of properties. This was the result of the following initiatives: a) improving productivity at hourly facilities (+JPY204mn) by 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) improving profitability (+JPY40mn) through the transfer of directly managed monthly parking facilities in Tokyo and Osaka to the company’s subsidiary NCS, establishing an environment in which sales efforts can be concentrated on existing customers to improve prices, and revise conditions. NCS: Nippon Car Service Development Co., Ltd. (wholly owned subsidiary)

NPD forecasts a gross profit increase of about JPY170mn for existing properties in FY07/19. It believes there is still room to increase profitability and in FY07/19 plans to further increase gross profit by enhancing user solutions and strengthening its area-based strategy. In addition, it is worth noting that the effects of profitability improvements conducted in FY07/18 should contribute to higher profits throughout the fiscal year.

Enhancing user solutions Enhancing user solutions means increasing gross profit per parking space by proposing auto-related solutions beyond mere parking to parking lot users. The company already offers 201 monthly rental cars with parking (as of end FY07/18) and also has other services available, as shown in the following image. It aims to add new solutions to 20–30% of the around 10,000 parking spaces it oversees in Tokyo and Osaka. The aforementioned 201 cars the company already offers produce at least twice the gross profit per space as it ordinarily receives. If it can indeed add solutions to 20 30% of spaces, this would contribute a gross profit – increase of around 20 30%. –

For the monthly rental cars with parking, NPD is strengthening company-oriented sales efforts, and for the aforementioned 201 cars, the average number of parking spaces per user company is about 1.5. However, NPD is already able to capture large contracts for 10 20 cars per company, so it should not prove difficult to capture contracts for some 3,000 spaces. When sales – personnel visit companies, discussions are not just about cost reductions, but have been turning toward the need for solutions related to accident reduction and management of business hours. These are difficult issues to address if the company only provides parking spaces, so it plans to provide a range of solutions that will also help it improve gross profit per space.

From the beginning of the financial year, NPD has had a sales structure in place and is making progress on enhancing solutions, but it only expects serious contribution to earnings from 2H due to the timing of the expiration of users’ current auto lease contracts and the fact that it can take from two to three months from the conclusion of business discussions to the start of a new contract.

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Examples of solutions

Situation Operations necessary for car users NPD's solutions (products)

Advise on best choice (car-sharing, monthly) At vehicle Select type (ownership, leasing, rental, car-sharing, monthly) delivery Arrange the best parking lot Find parking lot (location, costs, specification, utilities, access) (intermediary websites models [2], [3]) Visualize records; optimize operation At Manage operation (mileage, hours, route, dangerous driving) (dashboard camera, smart drive, remote control) introduction Visualize records; optimize management Parking lot management (monthly parking, coin parking) (intermediary website models [2],[3], pp)

Consider use of vehicle (renewal of leasing, car rental, Visualize records; advise on best choice At renewal car-sharing, switch to monthly car rental) (car-sharing, monthly car rental) Improve gross margin per space by proposing solutions in addition to parking space Source: Shared Research based on company data

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.

Renewals for mechanical parking facilities: The aforementioned transfer of the directly managed monthly parking lots to NCS begun by NPD in FY07/17 will lead to a decline in gross profit at the parent level. To offset this, 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, NPD 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.

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

Acquisition of new properties The number of new properties being acquired has stagnated. After 125 acquired in FY07/16, there were just 71 in FY07/17 and 67 in FY07/18. The company worked at the same time to improve the profitability of existing properties, so the number of contract cancelations exceeded the number of new contracts, and the total number of properties trended downward slightly. In addition, the decrease in gross profit brought by property closures surpassed the increase in gross profit brought by newly acquired properties in FY07/18. Profit improvements absorbed the negative impact of property closures for existing properties overall. This seems to be largely due to the focus on improving profitability at existing properties since FY07/17, on an organization level as well.

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Property acquisitions and closures

(JPYbn) (JPYbn) Number of new contracts Cancellations and closures Net increase QoQ Closures New facilities Gross profit improvements at existing facilities 60 50 58 400

40 44 43 212 41 300 38 38 39 39 30 35 245 32 32 34 29 30 31 27 200 378 20 23 24 344 363 21 20 19 17 18 18 279 10 14 16 14 11 100 198 132 0 -6 -6 -7 -9 -11 -9 -10 -11 -13 -13 -13 -13 -12 -14 -10 -16 -15 -17 -17 -17 0 -19 -19 -19 -20 -20 -20 -72 -22 -110 -111 -20 -26 -155 -135 -100 -199 -30 -33 -40 -40 -200 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data Current phase of profitability improvement for existing properties completed Since FY07/17, NPD has been conducting reforms including structural changes with a view to achieving maximum profit on existing properties. These efforts include the following: a) improving productivity at hourly facilities: NPD has worked 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 worked to transfer the remaining 357 properties, and to boost customer loyalty by expanding its monthly parking and car rental package business. The results of these efforts have driven profit for the past two fiscal years, as shown by the following analysis of factors impacting operating profit.

Improved productivity at hourly facilities: The company aimed 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). Property numbers declined as a result, but fewer employees and increased gross profit made a contribution to the improvement in gross profit in FY07/17 and FY07/18.

Productivity improvements at hourly facilities (number of properties)

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

Background to improved gross profit at directly managed monthly parking lots: a) some contracts under NPD’s traditional push marketing steamroller strategy and contract style (requiring three-month notice for cancellation) had been signed at lower levels than the going rates for the sake of higher utilization; b) 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); and c) 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 was now placed under one company, which helped expedite the operational flow.

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Analysis of factors impacting Parking Lot business operating profit

Parking Lot business FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) FY 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 2,115 786 824 859 823 878 945 1,004 1,111 Change in profit -104 93 72 141 292 212 73 -1 19 122 126 166 161 51 Domest ic Facilit y closures -155 -110 -135 -72 -111 -199 -38 -34 -56 -55 -77 -122 -80 -40 Exist ing facilit ies -40 21 15 2 212 245 -9 11 100 112 137 108 New facilit ies 344 363 378 279 198 132 181 197 141 138 69 129 96 36 Other sales increases -37 68 69 67 83 75 88 -19 -3 70 58 25 32 43 SG&A expenses -116 -221 -113 -193 -105 -119 -59 -54 -78 -115 -3 -102 -116 -3 Overseas Overseas (Thailand and China) 33 -1 16 -17 8 -42 51 65 43 -24 40 62 40 3 Overseas (South Korea and Indonesia) -17 -20 -11 -9 -5 Company-wide expenses, other -58 -79 -158 80 -48 33 -33 -125 1 79 -43 -5 47 -14 Operating profit (current year) 1,517 1,610 1,682 1,823 2,115 2,327 859 823 878 945 1,004 1,111 1,165 1,162 Source: Shared Research based on company data Initiatives for acquiring new properties NPD aims to return new property acquisitions to their former level through reform of its sales organization and changes to its area-based strategy. The company acquired 67 properties in FY07/18, but seems to be targeting 80–120 in FY07/19.

We will be watching the effects of reform of the company’s sales organization. After completing one phase of profitability improvements for existing properties in FY07/18, NPD began reorganizing and from the beginning of FY07/19 has been promoting the abovementioned initiatives and development of new properties. The number of visits by the sales force to existing and potential customers has already increased.

This does not mean the number of visits is being increased haphazardly. Even as the company was closing unprofitable properties in FY07/17 and FY07/18, it was focusing on areas with large numbers of companies where it would be possible to achieve dominance. In these areas where NPD is strong, it plans to make effective use of the parking database it has built up via its Japan Parking Lot search website not only to achieve efficient acquisitions, but also to improve profitability.

Expanding regional bases: acquiring large properties and accelerating property acquisitions From FY07/17 onward, NPD has been looking to acquire large-scale manned lots with hourly leasing, which is one of its strengths. In addition, it is utilizing its cash on hand 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 balance sheet, the purchase appears to have cost around JPY900mn.) The company made no further acquisitions in FY07/18. Eying utilization of its cash on hand, however, the company is set to launch an acquisition campaign in FY07/19, 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.

Overseas Parking Lot business Overseas business rose above the breakeven point overall; next stage aims for growth in operating profit from winning new contracts in FY07/19 The company forecasts JPY1.7bn in sales (+39.9%, +JPY490mn YoY) and an increase of JPY100mn in gross profit for the overseas Parking Lot business (OP target not disclosed; FY07/18 OP was JPY58mn). It aims to get all regions into the black, including Indonesia and Taiwan, where losses remained in FY07/18.

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In the overseas business, the biggest profit contributions were from Thailand (Bangkok) and South Korea (Seoul). In Thailand, the number of properties is not growing significantly, but as in Japan improvements to existing properties (cost reductions through mechaniz ation, improved utilization rates, rent shifts, etc.) are improving profit. In addition, Don Quijote Holdings Co., Ltd. (TSE: 7532) is planning to open its first store in Thailand at the end of 2018, so during FY07/19 NPD will begin operating that store’s parking lot, which is likely to have a significant impact on earnings, so this development will be worth watching. In South Korea, the company is increasing the number of properties it holds, a trend that is likely to continue throughout FY07/19.

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 apparently intends to 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.

Overseas Parking Lot business In FY07/16, NPD booked 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. In FY07/17, the company recorded operating profit of JPY15mn on the strength of Thailand’s turning to profitability and China’s continued profitability, although South Korea and Indonesia would accumulate investment costs. 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 progress in winning new contracts, the company said that operating profit has grown to be second only to the Thai subsidiary.

Taiwan 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.

Overseas sales

(JPYmn) (JPYmn) 400 Sales Operating profit 1,229 China 340 350 Thailand (directly managed facilities and outsourced management) 1,200 312 1,025 Thailand (other) 302 298 300 269 279 1,000 Other 827 243 224 800 250 21 684 203 203 208 210 64 28 193 42 21 24 200 182 11 36 600 166 30 17 23 27 153 17 14 436 133 9 335 150 118 157 168 400 104 142 144 148 160 250 70 125 161 142 81 80 79 86 11 130 125 132 134 100 75 70 120 126 200 53 60 61 95 58 78 37 85 57 15 50 26 68 61 58 58 8 66 52 0 3 53 59 59 49 57 49 44 49 56 58 60 63 56 62 26 24 29 29 34 37 39 43 43 1 9 13 18 17 18 20 -29 -51 0 -200 Q1 Q3 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 FY07/18 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. The increase in sales in FY07/18 was minor, but earnings structure improvements are proceeding, and Thailand was the driver for overseas operating profit. Cooperating with Toyota Motor Corporation (TSE1: 7203) on the traffic solution project for Bangkok, Thailand, appears to be having a beneficial impact on new development efforts.

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 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).

Don Quijote Holdings 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.

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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.

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.

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 obtained parking lot information on major areas in Jakarta, in order to grow the number of new properties.

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.

Expansion of overseas bases

Country Cit y Populat ion No. of vehicles Monthly unit price FY07/18 sales No. of properties Managed spaces (mn) (mn) (JPY/unit) (JPYmn) (units) 2010 T hailand Bangkok 15.0 4.2 10,000 727 28 7,933 2011 China Shanghai 23.4 3.6 15,000 241 7 2,966 2014 South Korea Seoul 23.5 3.0 20,000 226 10 1,189 2015 Indonesia Jakarta 24.0 3.0 8,000 32 2 677 2017 Taiwan T aipei (incl. New Taipei) 6.7 - 15,000–25,000 0 1 59 Source: Shared Research based on company data

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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 FY07/19 (JPYmn) Init. Est. Sales 502 529 1,145 1,655 1,868 4,038 4,910 5,881 5,584 6,152 6,420 6,890 YoY 29.2% 5.4% 116.2% 44.6% 12.9% 116.2% 21.6% 19.8% -5.0% 10.2% 4.4% 7.3% Operating profit -18 -9 56 113 200 504 725 905 107 443 625 800 YoY - - - 100.4% 76.9% 152.0% 43.7% 24.9% -88.2% 313.4% 41.1% 28.0% OPM -3.5% -1.7% 4.9% 6.8% 10.7% 12.5% 14.8% 15.4% 1.9% 7.2% 9.7% 11.6% Nippon Ski Resort Develop FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 (JPYmn) Init. Est. Sales 4,038 4,910 5,883 5,584 6,152 6,420 6,890 Gross profit 2,184 2,833 3,513 3,118 3,556 3,741 - YoY - 29.7% 24.0% -11.2% 14.0% 5.2% - GPM 54.1% 57.7% 59.7% 55.8% 57.8% 58.3% - SG&A (incl. adjustments) 1,679 2,109 2,608 3,011 3,113 3,117 - YoY - 25.6% 23.7% 15.5% 3.4% 0.1% - SG&A rat io 41.6% 42.9% 44.3% 53.9% 50.6% 48.5% - Operat ing profit (incl. adjust ment s) 504 725 905 107 443 625 800 YoY - 43.7% 24.9% -88.2% 313.4% 41.1% 28.0% OPM 12.5% 14.8% 15.4% 1.9% 7.2% 9.7% 11.6% Number of visit ors 146 147 435 517 585 1,491 1,720 1,852 1,874 2,057 2,149 W int er 1,357 1,404 1,560 1,509 1,670 1,702 Ski resorts 1,350 1,394 1,550 1,484 1,623 1,664 1,694 Other 7 10 10 24 47 38 - Summer 134 316 292 365 387 447 - Happo, Iwatake, Tsugaike, Ryuoo 98 275 238 270 261 333 369 Other 36 41 54 95 126 114 YoY 44.0% 0.7% 195.9% 18.9% 13.2% 154.9% 15.4% 7.7% 1.2% 9.8% 4.5% - W int er 3.5% 11.1% -3.3% 10.7% 1.9% - Ski resorts 3.3% 11.2% -4.3% 9.4% 2.5% 1.8% Other 42.9% - 140.0% 95.8% -19.1% - Summer 135.5% -7.7% 25.0% 6.0% 15.5% - Happo, Iwatake, Tsugaike, Ryuoo 180.0% -13.5% 13.4% -3.3% 27.6% 10.8% Other 13.9% 31.7% 75.9% 32.6% -9.5% - Source: Shared Research based on company data

FY07/18 was a period of business restructuring to streamline operations, with the company working on increasing earnings as much as possible during the main winter season and quickly making the summer season profitable as well. Specifically, it implemented these initiatives: 1) HQ relocation: the company relocated its HQ to Hakuba, Nagano, keeping in mind the revitalization of the Hakuba area; 2) snow shortage measures: continued, and considering Hakuba as well; 3) profitability improvement: lower fixed costs due to HQ relocation, higher average customer spend including restaurant replacement, and withdrawal from two overseas stores; and 4) summer season: worked to bolster earnings.

Although these initiatives have been producing genuine results, some issues remain. In particular, in regard to increasing average customer spend for the winter season, although lift ticket prices at each ski resort essentially rose by 1.4%, the overall average customer spend fell by 4.3%. This is primarily because the customer count declined at Kawaba Ski Resort, which has a comparatively high average customer spend.

The company’s basic plans remain unchanged in FY07/19 as it continues working to both increase earnings in the winter season and make the summer season profitable. Its growth strategy includes the following: 1) increasing average customer spend (winter season); 2) attracting more inbound tourists (winter season); 3) turning resorts into year-round facilities (winter season and summer season); and 4) making use of the natural environment of individual regions, such as installing outdoor terraces (summer season).

HQ relocation: 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 proposed a transfer of its main offices to Hakuba village at its general shareholder’s meeting in October 2017, 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 has also strengthened the connection between the management and sales departments and each ski-resort related department, and created a more efficient operational structure.

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Increase winter season earnings After the Ski Resort business moved into the black in FY07/10, NPD conducted M&A even as it improved the operating profit margin to 15.4% in FY07/15. However, after a major bus crash in the Karuizawa area in January 2016, demand for bus tours declined. This and the impact of warm winters have made things difficult since FY07/16, so the company strengthened measures to combat poor snowfalls and attract inbound tourists. These measures helped visitor counts recover somewhat during the FY07/17 and FY07/18 winter seasons, helping profitability to begin improving. The current operating profit margin (9.7% in FY07/18) remains low, and fixed costs weigh heavily, but the business structure is such that an increase in sales has a significant impact on earnings, so there is still plenty of room for improvement.

Measures to increase average customer spend The company’s growth strategy for FY07/19 calls for increasing the average customer spend, continuing measures to combat poor snowfalls, and attracting inbound tourists. In terms of customer spend, NPD aims to raise the unit price of lift tickets at the various ski resorts, raise average customer spend for the Ski Resort business as a whole by raising visitor counts at ski resorts with a higher average customer spend (Kawaba and Meiho), and expand incidental revenue such as from restaurants. It aims to achieve an increase in the unit price of lift tickets via a price review and by attracting inbound tourists, and will focus on recovery at the Kawaba Ski Resort (which was impacted by competing ski resorts in FY07/18) to improve the average customer spend. Although the Kawaba area as a whole has seen visitor count drop by 15% (10.4% drop for NPD), the company plans to follow the successful example of other ski resorts and conduct thorough online marketing. It has already reorganized and is preparing to achieve this. In addition, both the Kawaba and Meiho ski resorts are approaching their 30th anniversaries (they opened in 1989) and they have a lot of customers from major urban areas, so the company will aim to enhance measures to induce repeat visits.

Lift ticket prices in Q4 FY07/18 at seven ski resorts (left), average customer spend at seven ski resorts (right)

2,500 Lift ticket price at 7 ski resorts (Q4) 3,500 Average visitor spend at 7 ski resorts (Q4)

3,000 2,000 2,500

1,500 2,000

1,500 3,015 3,081 2,950 1,000 1,861 1,916 1,943 2,695 1,639 1,000 500 500

0 0 FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data Measures to combat poor snowfalls NPD began measures to combat poor snowfalls. In FY07/17, the company installed snow machines at ski resorts (Kawaba, Meiho, and Ryuoo) where it anticipated the greatest impact, adding machines at Hakuba Happo-one and Iwatake in FY07/18. The machines allow resorts to be opened earlier than when relying on natural snowfall alone and also allow pistes to be expanded. Increased awareness of the machines also leads to peace of mind for visitors, so the company plans to continue their use at all ski resorts from FY07/19 onward.

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 downward earnings forecast revision, and NPD has moved to 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. Through FY07/16, 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, from FY07/17, 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 being upgraded to allow for use even in the absence of snow.

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.

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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.

Early openings

Ski resorts managed by NPD FY07/16 FY07/17 FY07/18 Yo Y difference Yo Y difference HAKUBA VALLEY Kashimayari Ski Resort Dec 12 Dec 10 -2 Dec 10 - HAKUBA VALLEY Happo-one Winter Resort Nov 28 Dec 08 +10 Nov 21 -17 HAKUBA VALLEY Iwatake Snow Field Dec 18 Dec 16 -2 Dec 09 -7 HAKUBA VALLEY Tsugaike Kogen Ski Resort Nov 28 Dec 08 +10 Nov 25 -13 Ryuoo Ski Park Dec 04 Nov 26 -8 Nov 23 -3 Kawaba Ski Resort Dec 08 Dec 03 -5 Nov 25 -8 Meiho Ski Resort Dec 29 Dec 12 -17 Dec 09 -3 Sugadaira Kogen Snow Resort Dec 05 Dec 03 -2 Dec 02 -1 Source: Shared Research based on company data Inbound tourism The number of inbound visitors (overseas tourists) in FY07/18 (based on number of English-language tickets sold) was 154,000 (9.2% of total visitors), and NPD is targeting a ratio of 10% in the medium term. Of the 154,000 visitors from overseas, 149,000 went to the Hakuba area, but this area does not have enough medium and large luxury lodging facilities to handle the demand from inbound visitors. NPD plans to secure lodging facilities through cooperation with partners in the Hakuba area, begin full operation in other areas (Meiho), and enhance efforts to provide English-language ski schools and snowmobile experiences. In regard to the issue of lodging facilities in the Hakuba area, the company said at a results briefing that it is considering the possibility of renovating old Japanese-style houses and obtaining land on which it can have partners build hotels (which might have an impact from FY07/21 onward).

Starting with the 2018 season, the Hakuba Valley ski resorts concluded a long-term alliance agreement with Vail Resorts, which operates the world’s biggest seasonal lift pass, the Epic Pass. Holders of the Epic Pass (of which there are 740,000) are allowed to ski five consecutive days for free at 10 locations in Hakuba Valley, and holders of the Hakuba Valley season pass (JPY130,000 or JPY70,000 for children aged 6–12 years) are able to purchase Vail Resorts lift tickets at a 50% discount. The impact of the alliance has not been woven into the company’s plan, but it should encourage visits by Epic Pass holders and improve Hakuba’s name recognition around the world. NPD projects a possible boost in visitor count in the tens of thousands.

Inbound tourists (left: number of English-language tickets sold by NPD; center: of which, Happo-one; right: visitors to Hakuba Valley by region of origin)

(000) (000) Happo inbound tourists Happo-one Iwatake Tsugaike Kogen HAKUBA VALLEY: Winter 2017-2018 180 600 Happo general visitors 30% Other (Hakuba area) Other Happo inbound tourist ratio 157 154 Total visitors: 330,000 160 29.1% 133 500 25% North 140 24 25.1% 25.1% 29 America Other 120 16 400 63 20% 27 85 16 19.9% 103 100 5 96 110 300 15% Europe 80 14.4%

60 200 375 10% 110 102 342 Asia 95 306 40 285 268 Oceania 100 5% 20 0 0 0% FY07/16 FY07/17 FY07/18 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data Summer season Ever since entering the Ski Resort business, NPD has worked to enhance earnings in the summer season. In the winter season, there is a burden of fixed costs arising from the need to compact snow from early morning after a fresh snowfall, the need for patrols during business hours, and so on. In the summer season, expenses are comparatively light, since lift facilities can be operated at a minimum (the company says August 2018 profit for the Ryuoo SORA terrace facility actually exceeded the winter season’s peak month, despite sales being lower). For this reason, investment can be recovered more quickly and it is easier to turn a profit from summer season initiatives. In FY07/19 too, the company plans to host events and establish new facilities

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leveraging the natural environment of the region. It says it wants to create a tourism market by providing local residents with a place to play and increasing the number of tourist spots in the area. New facilities opened in FY07/19: Hakuba Mountain Harbor (opened in October 2018 in Iwatake), Xtrem Aventures Hakuba Tsugaike Wow! (opened in August 2018 in Tsugaike, with Amidasu, Kogidasu, and Kabedasu attractions opened in October)

season: 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.

Q4–Q1 Ski Resort business performance (left), visitor count (right)

(JPYmn) (000) Sales Operating profit Happo-one Iwatake Tsugaiko Kogen 1,000 500 Ryuoo Mt. Kongo Ropeway Kashimayari 815 Meiho Kawaba 447 800 640 631 388 34 590 556554 544 400 365 600 491 484 438 457 317 40 41 47 400 292 300 37 46 90 40 20 112 200 31 0 8 16 17 24 28 25 38 9 60 200 107 0 92 95 81 78 -41 -81 23 -200 -149-114 23 31 34 -184 -201-193 -175 100 25 -240 -245 -265 -255 -400 -313 -334 134 -374 112 112 98 105 -483 -600 -515 -527 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 Source: Shared Research based on company data M&A driving growth Growth in the Ski Resort business is driven by acquisitions, which have 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 performance 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.

However, the company has made no progress with M&A since acquiring the Sugadaira Kogen Snow Resort in 2015. This is because of changes in the M&A environment with an increase in the price of ski resorts in Hokkaido and Chinese investors gradually acquiring resorts even in Honshu. Nevertheless, foreign capital typically targets lodging-based resorts, while NPD specializes in resorts for day trips, and the two formats do not seem to be in direct competition. The company says that, although it will still keep in mind the goal of recovering investment on an EBITDA basis over three to five years, it believes it can achieve growth by enhancing summer-season profitability and capturing new winter season customers, even without M&A. It does, however, intend to pursue any viable new acquisition targets that arise in FY07/19.

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M&A and performance 8,000 20% Apr. 2013 Sales OPM (right axis) Spicy (rental) 7,000 6,420 15% 6,152 5,881 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 FY07/18 Sep. 2006 Nov. 2009: Kitashiga Oct. 2010: Kawaba Nov. 2012 Hakuba Happo Oct. 2014 Nov. 2015: Sugadaira (JPYmn) Kashimayari Ski Resort Ryuoo Ski Park Ski Resort Iwatake Tsugaike Ski Resort Meiho Ski Resort Kogen Snow Resort

Operating profit -112 -18 -9 56 113 200 504 725 905 107 443 625 Cumulat ive -112 -130 -139 -82 31 231 735 1,460 2,365 2,472 2,915 3,540 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 2,766

Subsidiaries earnings

FY07/16 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% FY07/17 Kit ashiga Kawaba Kawaba Hakuba Resort Tsugaike Meiho Kogen Hare 4 companies Nippon Ski Resort (JPYmn) Ryuoo Kashimayari Resort Resort USA Development Gondola Lift Development Ski Resort Sum (a) Development (b) (a) / (b) Sales 705 NA 816 NA 2,293 NA 957 NA 4,772 6,152 77.6% Recurring profit 111 NA 207 NA 138 NA 146 NA 602 440 136.8% RPM 15.7% NA 25.3% NA 6.0% NA 15.3% NA 12.6% 7.2% Net income 72 NA 134 NA 83 NA 130 NA 419 245 170.7% Net assets 170 -340 735 -41 1,898 NA 195 NA 2,618 5,120 51.1% Total assets 529 NA 867 NA 2,090 NA 1,100 NA 4,586 6,037 76.0% FY07/17 Kit ashiga Kawaba Kawaba Hakuba Resort Tsugaike Meiho Kogen Hare 4 companies Nippon Ski Resort (JPYmn) Ryuoo Kashimayari Resort Resort USA Development Gondola Lift Development Ski Resort Sum (a) Development (b) (a) / (b) Sales 830 NA 720 NA 2,392 NA 953 NA 4,895 6,420 76.2% Recurring profit 187 NA 126 NA 250 NA 142 NA 705 614 114.9% RPM 22.6% NA 17.5% NA 10.5% NA 14.9% NA 14.4% 9.6% Net income 116 NA 23 NA 353 NA 103 NA 595 379 156.9% Net assets 286 -356 653 -1 2,158 NA 427 NA 3,167 5,427 58.4% Total assets 590 NA 686 NA 2,347 NA 980 NA 4,602 6,152 74.8% 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

Theme Park business

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. Full-year contribution from FY07/17 onward.

The company forecasts Theme Park business sales of JPY3.3bn (+16.5%, +JPY468mn YoY) and operating profit of JPY600mn (+9.5%, +JPY52mn YoY). These forecasts assume a visitor count of 550,000 (+19.0%, +88,000 YoY) and average customer spend of JPY3,901 (-4.2%, -JPY172 YoY).

FY07/18: Inclement weather caused struggle to attract customers in 1H; recovery achieved in 2H as events and other measures to draw customers proved successful In Q1 FY07/18, where profit is concentrated, inclement weather in peak month August (26% of total visitor count for the year) and a direct hit from a typhoon in October (7% of total visitor count) put pressure on the visitor count, but the situation was helped by a variety of countermeasures, including events. The visitor count finished the year up 6,000 YoY (+1.5%) at 461,000,

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which even exceeded the forecast by 0.1%. In terms of profit too, the dropping out of a temporary factor in FY07/17 (increase of JPY46mn in the amount of villa service fees collected) was covered by various measures to improve profitability, and profit finished up YoY. Countermeasures: Events with good ability to attract customers (events making use of popular characters and digital technology), participatory events (joint concerts by local junior high and high school brass bands, cosplay events, and so on), pet-friendly amusement park (attractions and cafés that owners can enjoy with their pets, a dog run, and offline meetings for owners of various dog breeds), events in cooperation with companies providing welfare services, active sales of season passes, etc.

Measures to improve profitability: Results are surfacing for various measures the company pushed forward since the time it took over the business. These include increased efficiency of human resources, improved GPM for restaurants and the sale of goods, improved advertising efficiency, improved profitability of villas and lodging facilities at Nasu Highland, earnings contribution from new attractions, etc.

FY07/19: No change to strategy. NPD will continue aiming to improve customer draw and operational capabilities The FY07/19 strategy remains unchanged from 2H FY07/18. This growth strategy includes: 1) effective use of regional resources; 2) creation of new appeal; and 3) pursuit of improved operational capability. With these measures, NPD aims to increase visitor count by 19.0% YoY (+88,000 for a total of 550,000). However, it expects average customer spend to fall by JPY172 (-4.2%) to JPY3,901 due to active sales of season passes and cooperation with welfare services companies.

Nasu Highland visitor count and average customer spend (left: full year, right: quarterly)

('000) (JPY) ('000) No. of visitors Average spend (JPY; right axis) Number of visitors 600 550 4,100 250 4,073 204 500 462 4,050 199 455 200

400 4,000 150 139 135 300 3,953 3,950 100 87 200 3,901 3,900 65 66 46 50 41 100 65 3,850

0 3,800 0 FY07/16 FY07/17 FY07/18 FY07/19 Q1 Q3 Q1 Q3 Q1 Q3 Est. FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data

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 and FY07/18. The company was correct in its thinking that the restructuring of Nasu Highland alone would be enough to let it achieve the OP target. The company focused on restructuring measures so far, working on increasing visitor counts and reducing costs.

In FY07/19, it plans to fully leverage the effect of the following measures.

Business restructuring: it will implement an operational reform of the mainstay facility Nasu Highland Park ▷ Demand creation: it will expand service contents reflecting and effectively utilizing the attractive natural environment and other ▷ regional resources so as to appeal to the 4.5 million annual visitors to Nasu Expanding visitor profile: it will work to bring in new customers through locally based events and 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 Diversification: it will capitalize on high occupancy rates of lodging facilities during the summer vacation season to promote its ▷ rental villa business in earnest

NPD implemented steps to improve its efficiency in various areas during FY07/17. In FY07/18, the company entered 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 there continues to be plenty of room for growth in terms of sales and profits as it attracts more visitors and

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improves efficiency. We will keep an eye on the measures for FY07/19. 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 (+19.0% YoY) 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 improve customer draw during peak seasons, while working to stabilize visitor counts throughout the year to minimize the impact of downfalls on earnings. Specifically, it plans to hold events that proved popular in FY07/18 on a regular basis and hold 1.5x 2x the number of events it did in FY07/18. –

NPD aims to contain costs by holding locally based events that make effective use of regional resources (for example, joint concerts by local junior high and high school brass bands). Twenty bands have already applied to participate, and the company aims to hold one or two concerts a month from June to December 2018. It expects brass band fans, along with family and friends of band members, to attend. Another of the company’s plans is to hold several offline meetings of pet owners per year, and it has already planned 10 meetings for owners of specific breeds and one meeting for owners of any breed, for a total of 11 meetings from August 2018 to January 2019. A single meeting in FY07/18 drew some 300 visitors, so 11 meetings should mean an increase of around 3,000 visitors in FY07/19. NPD believes it can increase its ability to attract customers by reducing the number of business days in the off season and concentrating events and attractions in the peak season. It also has high hopes for cooperative efforts with welfare services companies.

The company started implementing effective, low-cost measures in various areas. 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; installation of additional pet-friendly infrastructure, including a walking path and water facilities; offline meetings for owners of different dog breeds in FY07/18

Effective use of regional resources: Expansion of the NOZARU aerial athletic course to take advantage of Nasu’s abundant ◤ nature (first opened in March 2017; course expanded 1.5x in March 2018), joint concert by local junior high and high school brass bands (FY07/18)

Indoor facilities to counter weather issues: Enhancement of facilities and events such as Laser Mission (March 2017), ◤ Noborungma (March 2018), and Dinoworld (July 2018)

Ongoing initiatives: i) 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 (FY07/17); ii) Enhancement of customer satisfaction: Reduce long lines for amusement facilities prior to peak demand in the summer; iii) Fostering repeat customers: Measures to make visitors want to return; iv) Fostering repeat customers: Tohoku is an ideal location for fostering repeat customers because the region does not have any similar theme parks nearby; v) More publicity: Considering better use of social networking sites. It is likely that these and other measures will be conducted in an ongoing manner.

Rental villa business

NPD launched the vacation rental (rental villa) business in earnest in FY07/18 and aims to actively expand on the 10 company-owned properties (about JPY3mn per year in gross profit per building) and two properties operated under contract (about JPY1.3mn). (Data is as of July 2018.)

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 FY07/19 its target is 135 employees, up 31 YoY (an increase of 20 YoY to 50 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

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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.

Employee count by age bracket

–20s 30s 40s 50s– –20s 30s 40s 50s– 160 60 135 140 50 20 120 104 40 100 90 20 39 80 70 21 30 38 60 22 26 30 20 40 16 29 16 10 20 50 13 23 30 0 6 0 FY07/16 FY07/17 FY07/18 FY07/19 FY07/16 FY07/17 FY07/18 FY07/19 Est. Est. Source: Shared Research based on company data

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.

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

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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 FY07/19 (JPYmn) Cons. 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 24,700 Result s 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 22,771 - Result s vs. Init ial Est . -6.3% 2.8% 1.5% -3.7% 12.9% 0.8% -0.5% -3.0% -4.4% -3.1% - 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 4,200 Result s 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,533 - Result s vs. Init ial Est . -7.8% 5.8% -12.5% -8.9% -6.4% -2.7% -11.3% -36.2% -7.1% 1.0% - 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 4,100 Result s 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 3,610 - Result s vs. Init ial Est . -6.5% -15.9% 2.4% 1.9% 4.5% 5.8% 3.8% -27.7% 0.4% 3.2% - Net income Init ial Est . 712 653 805 1,106 1,270 1,500 2,620 1,850 2,100 2,350 2,600 Result s 614 765 850 518 1,378 1,582 3,531 1,255 2,243 2,211 - Result s vs. Init ial Est . -13.8% 17.2% 5.6% -53.1% 8.5% 5.4% 34.8% -32.2% 6.8% -5.9% - 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, JPY500mn in the Theme Park business, and JPY0.0mn in Other businesses (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.

After the end of FY07/18, NPD changed its forecast for the Ski Resort business, Theme Park business, and Other businesses to a total of JPY2.0bn. This is because as of September 2018, there had been no progress with M&A and the operating profit margin was falling. This makes it appear unlikely that the Ski Resort business will be able to achieve the initially targeted JPY1.5bn in operating profit. That said, the company has already achieved its target for the Theme Park business, and Other businesses are also accumulating profit. The company says it expects the Parking Lot and other businesses to make up for any shortfall in the Ski Resort business.

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.

FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 (JPYmn) Est. Sales 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 22,771 24,700 Parking Lot business 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,836 12,706 13,236 14,000 Domest ic 10,402 11,009 11,681 12,006 12,281 Overseas 684 827 1,025 1,229 1,719 Ski Resort business 529 1,145 1,655 1,868 4,038 4,910 5,881 5,584 6,152 6,420 6,890 Theme Park business ------474 2,860 2,832 3,300 Other ------42 272 322 384 - YoY 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% 3.6% 8.5% Parking Lot business 6.7% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% 4.2% 5.8% Ski Resort business 5.4% 116.2% 44.6% 12.9% 116.2% 21.6% 19.8% -5.0% 10.2% 4.4% 7.3% Theme Park business 502.8% -1.0% 16.5% Gross profit 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 10,129 YoY 4.4% 17.7% 12.9% 11.7% 27.0% 14.5% 15.6% 1.3% 23.7% 6.0% GPM 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% 44.5% SG&A expenses 1,794 2,112 2,557 2,712 3,737 4,259 5,051 5,746 6,485 6,595 YoY 2.9% 17.7% 21.1% 6.1% 37.8% 14.0% 18.6% 13.8% 12.9% 1.7% SG&A rat io 22.8% 24.4% 26.6% 25.6% 27.8% 28.2% 29.7% 31.7% 29.5% 29.0% Operating profit 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,533 4,200 Parking Lot business 1,870 1,993 1,985 2,244 2,169 2,359 2,332 2,393 2,733 2,912 3,400 Ski Resort business -9 56 113 200 504 725 905 107 443 625 800 Theme Park business - 45 512 548 600 Other ------14 3 -3 34 50 Adjustments -603 -568 -598 -623 -652 -749 -650 -570 -618 -585 -650 Parking Lot business (incl. adj.) 1,267 1,425 1,388 1,621 1,517 1,610 1,682 1,823 2,115 2,327 2,750 Domest ic (incl. adj.) 1,711 1,874 2,100 2,269 -650 Overseas -29 -51 15 58 - YoY 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% 15.2% 18.9% Parking Lot business (incl. adj.) 8.8% 12.5% -2.6% 16.8% -6.4% 6.1% 4.5% 8.4% 16.0% 10.0% 18.2% Ski Resort business 100.4% 76.9% 152.0% 43.7% 24.9% -88.2% 313.4% 41.1% 28.0% OPM 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 15.5% 17.0% Parking Lot business (incl. adj.) 17.3% 18.9% 17.5% 18.6% 16.1% 15.8% 15.2% 15.4% 16.6% 17.6% 19.6% Ski Resort business -1.7% 4.9% 6.8% 10.7% 12.5% 14.8% 15.4% 1.9% 7.2% 9.7% 11.6% Theme Park business 9.5% 17.9% 19.3% 18.2% Recurring profit 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 3,610 4,100 Net in co me 614 765 850 518 1,378 1,582 3,531 1,255 2,243 2,211 2,600 YoY 25.5% 24.7% 11.1% -39.0% 165.9% 14.7% 123.2% -64.5% 78.7% -1.4% 17.6% Net margin 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% 9.7% 10.5% Depreciat ion 104 191 247 267 316 333 493 593 667 782 Parking Lot business (incl. adj.) 60 83 70 94 118 124 153 179 223 263 Ski Resort business 44 108 177 173 198 209 340 413 421 432 OP+depreciat ion 1,362 1,672 1,748 2,088 2,338 2,668 3,066 2,571 3,735 4,316 Parking Lot business (incl. adj.) 1,327 1,507 1,458 1,716 1,635 1,734 1,835 2,002 2,338 2,590 Ski Resort business 35 164 290 373 703 933 1,245 520 864 1,057 % of sales 17.3% 19.3% 18.2% 19.7% 17.4% 17.6% 18.0% 14.2% 17.0% 19.0% Parking Lot business (incl. adj.) 18.1% 20.0% 18.3% 19.7% 17.4% 17.0% 16.5% 16.9% 18.4% 19.6% Ski Resort business 6.6% 14.4% 17.5% 20.0% 17.4% 19.0% 21.2% 9.3% 14.0% 16.5% 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

Parking Lot business FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 (JPYmn) Init. Est. Sales 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,835 12,709 13,236 14,000 Domest ic Parking Lot 7,342 7,520 7,917 8,472 9,064 9,775 10,402 11,009 11,681 12,006 12,281 Directly managed 5,599 5,631 5,727 6,097 6,476 6,869 7,280 7,642 8,201 8,368 - Outsourced Management 1,350 1,514 1,763 1,894 2,064 2,356 2,478 2,655 2,690 2,756 - Other 393 376 427 480 523 549 643 710 789 881 - Overseas Parking Lot 37 250 335 436 684 827 1,025 1,229 1,719 Thailand 11 66 333 530 608 731 727 - China 36 239 268 102 153 199 206 241 - South Korea 14 14 65 226 - Indonesia 4 21 32 - Yo Y 4.8% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% 4.1% 5.8% Domest ic Parking Lot 4.8% 2.4% 5.3% 7.0% 7.0% 7.8% 6.4% 5.8% 6.1% 2.8% 2.3% Direct ly managed - 0.6% 1.7% 6.5% 6.2% 6.1% 6.0% 5.0% 7.3% 2.0% - Outsourced Management - 12.1% 16.5% 7.5% 9.0% 14.1% 5.2% 7.1% 1.3% 2.5% - Other - -4.3% 13.6% 12.3% 9.0% 5.0% 17.1% 10.4% 11.1% 11.7% - Overseas Parking Lot - - - 584.8% 34.0% 30.1% 56.8% 20.9% 23.9% 19.9% 39.9% T hailand - - - - 500.0% 404.5% 59.2% 14.7% 20.2% -0.5% - China - - - 563.9% 12.1% -61.9% 50.0% 30.1% 3.5% 17.0% - South Korea 247.7% - Indonesia ------425.0% 52.4% - Gross profit 2,767 2,927 3,014 3,322 3,414 3,763 4,100 4,374 4,811 5,106 YoY 4.3% 5.8% 3.0% 10.2% 2.8% 10.2% 9.0% 6.7% 10.0% 6.1% GPM 37.7% 38.9% 37.9% 38.1% 36.3% 36.8% 37.0% 37.0% 37.9% 38.6% SG&A expenses (incl. adjustments) 1,500 1,502 1,626 1,701 1,897 2,153 2,418 2,551 2,696 2,779 YoY 3.2% 0.1% 8.3% 4.6% 11.5% 13.5% 12.3% 5.5% 5.7% 3.1% SG&A rat io 20.4% 20.0% 20.4% 19.5% 20.2% 21.1% 21.8% 21.6% 21.2% 21.0% Operat ing profit (incl. adjust ment s) 1,267 1,425 1,388 1,621 1,517 1,610 1,682 1,823 2,115 2,327 2,750 YoY 5.7% 12.5% -2.6% 16.8% -6.4% 6.1% 4.5% 8.4% 16.0% 10.0% 18.2% OPM 17.3% 18.9% 17.5% 18.6% 16.1% 15.8% 15.2% 15.4% 16.6% 17.6% 19.6% Domest ic Parking Lot 1,711 1,874 2,100 2,269 YoY - 9.5% 12.1% 8.0% OPM 16.5% 17.0% 18.0% 18.9% Overseas Parking Lot -29 -51 15 58 YoY - - - 292.2% OPM -4.3% -6.2% 1.4% 4.7% Operating profit (excl. adjustments) 1,870 1,993 1,985 2,244 2,169 2,359 2,332 2,393 2,733 2,912 3,400 YoY 3.0% 6.6% -0.4% 13.0% -3.4% 8.8% -1.1% 2.6% 14.2% 6.5% 16.8% OPM 25.5% 26.5% 25.0% 25.7% 23.1% 23.1% 21.0% 20.2% 21.5% 22.0% 24.3% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (units) Leased and managed parking spaces 21,215 23,365 28,874 33,611 38,627 43,305 46,983 52,893 56,382 56,387 Domest ic 21,215 23,365 26,478 28,802 34,351 37,207 39,984 43,280 44,006 43,563 Directly managed parking spaces: monthly (a) 7,969 8,465 9,712 11,386 12,529 13,499 14,226 15,114 15,730 16,144 Directly managed parking spaces: monthly & hourly 4,373 4,752 5,038 5,776 8,018 8,326 8,958 10,097 9,990 9,568 Outsourced management of hourly parking spaces 8,873 10,148 11,728 11,640 13,804 15,382 16,800 18,069 18,286 17,851 Rented out monthly parking spaces (b) 7,508 7,984 9,187 10,565 11,650 12,527 13,287 14,051 14,782 15,085 Contract ratio (b) / (a) 94.2% 94.3% 94.6% 92.8% 93.0% 92.8% 93.4% 93.0% 94.0% 93.4% Sales per space (JPYmn) 0.346 0.322 0.299 0.294 0.264 0.263 0.260 0.254 0.265 0.276 YoY -10.4% -7.0% -7.1% -1.6% -10.3% -0.4% -1.0% -2.2% 4.4% 3.8% YoY 16.9% 10.1% 13.3% 8.8% 19.3% 8.3% 7.5% 8.2% 1.7% -1.0% Directly managed parking spaces: monthly (a) 8.0% 6.2% 14.7% 17.2% 10.0% 7.7% 5.4% 6.2% 4.1% 2.6% Directly managed parking spaces: monthly & hourly 2.3% 8.7% 6.0% 14.6% 38.8% 3.8% 7.6% 12.7% -1.1% -4.2% Outsourced management of hourly parking spaces 36.7% 14.4% 15.6% -0.8% 18.6% 11.4% 9.2% 7.6% 1.2% -2.4% Overseas 2,396 4,809 4,276 6,098 6,999 9,613 12,376 12,824 Directly managed parking spaces: monthly - 533 439 554 Directly managed parking spaces: monthly & hourly 2,396 2,880 3,136 4,609 5,478 6,867 7,534 8,453 Outsourced management of hourly parking spaces 1,929 1,140 1,489 1,521 2,213 4,403 3,817 Number of parking facilities 636 687 805 938 1,045 1,138 1,171 1,253 1,247 1,229 Domest ic 636 687 803 929 1,034 1,120 1,150 1,218 1,204 1,181 Directly managed: monthly 477 515 611 727 809 890 912 969 969 972 Directly managed: monthly & hourly 101 107 112 122 132 139 136 141 131 115 Outsourced management: hourly 58 65 80 80 93 91 102 108 104 94 Sales per space (JPYmn) 11.54 10.95 9.86 9.12 8.77 8.73 9.05 9.04 9.70 10.17 YoY -0.7% -5.2% -9.9% -7.5% -3.9% -0.4% 3.6% -0.1% 7.3% 4.8% Overseas 2 9 11 18 21 35 43 48 Directly managed: monthly - 16 16 18 Directly managed: monthly & hourly 2 5 9 16 18 16 19 22 Outsourced management: hourly 4 2 2 3 3 8 8 Spaces per facility leased or managed 33 34 36 36 37 38 40 42 45 46 Domest ic 33 34 33 31 33 33 35 36 37 37 Directly managed leased spaces: monthly 17 16 16 16 15 15 16 16 16 17 Directly managed leased spaces: monthly & hourly 43 44 45 47 61 60 66 72 76 83 Spaces under outsourced management: hourly 153 156 147 146 148 169 165 167 176 190 Overseas 1,198 534 389 339 333 275 288 267 Directly managed leased spaces: monthly & hourly 1,198 576 348 288 304 429 397 384 Spaces under outsourced management: hourly 482 570 745 507 738 550 477 Source: Shared Research based on company data

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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.

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

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.

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 Directly Managed Facilities business that offers monthly parking: sales drivers and costs 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

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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.

Directly Managed Facilities business that combines hourly parking: sales drivers and costs 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.

Contracts with parking lot owners 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 is also received).

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.

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:

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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 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

300 273 244 250 222 225

200 88 167 176 143 201 150 130 142

100 77 67 167 176 143 156 50 92 67 77 83 72 0 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18

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.

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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%. For information on performance trends and strategy, please refer to the Full-year company forecasts section.

Group companies, major facilities As of July 2018, 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%).

40/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Visitor count by ski resort (‘000)

Winter facility FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 ('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 189 163 157 186 17.9% 413 379 370 404 9.2% 427 381 378 409 7.9% HAKUBA VALLEY Iwatake Snow Field 52 24 31 49 56.0% 113 73 100 121 20.6% 113 73 100 121 20.6% HAKUBA VALLEY Tsugaike Kogen Ski Resort 115 127 116 121 3.6% 243 249 263 269 2.5% 246 250 265 271 2.2% HAKUBA VALLEY Kashimayari Ski Resort 68 50 43 46 5.7% 142 97 95 93 -2.9% 142 97 95 93 -2.9% Ryuoo Ski Park 105 100 91 82 -9.9% 254 197 200 202 0.6% 255 197 204 202 -1.0% Kawaba Ski Resort 64 42 72 55 -23.4% 146 107 149 134 -10.0% 146 107 149 134 -10.4% Meiho Ski Resort 103 54 83 86 2.7% 217 141 183 186 1.6% 217 141 183 186 1.6% Sugadaira Kogen Snow Resort - 121 126 124 -1.2% 235 245 247 0.8% - 235 245 247 0.8% Subtotal 700 685 723 751 3.8% 1,532 1,481 1,609 1,658 3.1% 1,550 1,484 1,623 1,664 2.5% Winter facility (other) FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 ('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 5 5 3 -45.5% 10 21 17 9 -46.7% 10 21 19 9 -52.3% Meiho Kogen Development - 1 1 1 -2.8% 0 3 4 3 -11.6% 0 3 4 3 -11.6% Mt. Kongo Ropeway - - 12 12 5.3% - - 22 24 10.0% - - 22 24 10.0% Shinetsu Sakudo Maintenance - - 0 - -10.3% - - - - -18.4% - - - - -18.4% Subtotal 3 6 20 17 -10.7% 10 24 45 38 -14.6% 10 24 47 38 -18.4% Total 703 691 743 768 3.4% 1,542 1,505 1,654 1,696 2.5% 1,560 1,509 1,670 1,702 1.9% Source: Shared Research based on company data

Summer facility (with operating ropeway) FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 ('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% 75 78 67 70 5.0% 75 78 67 70 5.0% 112 112 98 105 7.1% Nature World Tsugaike Kogen 59 64 51 52 19.1% 60 64 51 52 22.6% 60 64 51 52 26.2% 92 95 78 81 36.9% Hakuba Iwate Lily Garden and Mountain View 15 21 15 18 2.3% 15 21 16 20 2.3% 15 21 16 21 2.3% 23 31 25 34 3.7% Ryuoo Mountain Park 4 16 38 77 100.8% 5 16 41 83 103.3% 5 16 41 83 103.3% 9 31 60 112 85.4% Mt. Kongo Ropeway 16 15 -8.1% - - 23 22 -5.2% - 4 28 27 -1.8% 20 46 41 -11.0% Subtotal 154 180 190 235 23.8% 155 181 200 249 24.8% 155 181 204 255 24.8% 238 290 309 375 21.2% Summer facility (other) FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 FY07/15 FY07/16 FY07/17 FY07/18 ('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 10 7 6 -21.8% 3 10 9 7 -19.0% 10 13 13 12 -9.9% Kawaba Resort 19 21 16 15 -5.9% 25 27 22 20 -7.7% 25 27 22 21 -3.2% 40 47 40 34 -15.1% Meiho Kogen Development 5 10 11 3.9% - 6 12 13 5.4% - 6 13 15 14.5% 3 12 22 24 8.0% Shinetsu Sakudo Maintenance 0 - 3.3% - - 1 1 4.6% - - 1 1 3.1% - 1 2 1 -5.8% Subtotal 23 37 34 33 -2.8% 28 44 44 41 -6.1% 28 44 47 46 -0.9% 54 74 78 72 -7.8% Total 177 217 224 268 19.6% 183 225 244 290 18.9% 183 225 251 301 19.9% 292 365 387 447 15.5% 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.

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

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 YoY (2017-18; right axis) 1,200 20% 1,011 1,031 987 963 926 997 946 879 978 953 974 949 980 1,000 17.3% 937 914 925 932 927 15% 877 890 924 8.4% 732 800 728710711 740 10% 678 683 600 8.4% 5% 482 441 434 436 438 5.3% 5.1% 397 404 4.3% 400 0% 183 150 171 150 200 119 157 128 -5% 2 7 8 0 2 0 0 0 -10% ('000) Nov. Dec. Jan. Feb. Mar. Apr. May Source: Shared Research based on Hakuba Village data

Inbound visitors While inbound tourists accounted for a little over 10% of total visitors during winter season in 2019, they contributed to a larger proportion of profits as per customer spend of inbound tourists tend to be higher than other visitors.

Hakuba Valley, which has good snow quality, is popular among inbound tourists. Unlike the Hokkaido area, however, the Hakuba area does not have a good food selection. The company sees a need to combine Tokyo area food offerings as a part of the tour package.

Participation in Epic Pass, world’s biggest seasonal lift pass Starting with the 2018 season, the Hakuba Valley ski resorts concluded a long-term alliance agreement with Vail Resorts, which operates the world’s biggest seasonal lift pass, the Epic Pass. Holders of the Epic Pass (of which there are 740,000) are allowed to ski five consecutive days for free at 10 locations in Hakuba Valley, and holders of the Hakuba Valley season pass (JPY130,000 or JPY70,000 for children aged 6–12 years) are able to purchase Vail Resorts lift tickets at a 50% discount.

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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

-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.

42/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

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 Q1 Q1 CY00 CY02 CY04 CY06 CY08 CY10 CY12 CY14 CY16 CY18 (JPYbn) CY00 CY02 CY04 CY06 CY08 CY10 CY12 CY14 CY16 CY18 Source: Shared Research based on METI data

Business results and main facilities of Towa Nasu Resort at time of acquisition

(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

Nasu Highland Park Revenue Structure The break-even point in terms of annual visitor count is at about 380,000 visitors. Although its business involves high fixed costs of about JPY200mn/month, profit margins increase as visitor count increases. Visitor count tends to increase during the Golden Week Holidays (between late April and early May) and summer vacation season (July and August), which translates to higher profits in Q1 (August–October) and Q4 (May–July). NPD thinks that it is more effective to further increase visitor count during busy months rather than figuring out how to attract visitors during slow months.

Prominent domestic theme parks

2017 Head office Operator Theme park Year-end revenue Yo Y locat ion (JPYbn) 1 Orient al Land Tokyo Disney Resort Chiba March 406.5 2.6% 2 USJ Universal St udios Japan Osaka March 165.8 - 3 Tokyo Dome Tokyo Dome City Tokyo January 61.9 3.6% 4 Namco Namco Namja Town Tokyo March 47.2 8.0% 5 Fuji Kyuko Fuji-Q Highland Yamanashi February 27.6 0.4% 6 Huis Ten Bosch Huis Ten Bosch Nagasaki September 27.1 1.7% 7 Nagashima Resort Nagashima Resort Mie March 26.0 0.8% 8 Mobilit yland Suzuka Circuit Mie March 24.9 -3.2% 9 Seibu Railway, Leisure Segment Seibuen Amusement Park, Toshimaen Saitama March 20.8 -4.3% 10 Y omiuri Land Y omiuriland Tokyo March 20.2 13.7% 11 Joban Kosan, Tourism Segment Spa Resort Hawaiians Tokyo March 12.7 -5.9% 12 Yokohama Hakkeijima Yokohama Hakkeijima Sea Paradise Kanagawa March 11.8 -0.3% 13 Okinawa Churashima Foundation Okinawa Churaumi Aquarium, other Okinaw a March 9.9 0.6% 14 Osaka Aquarium Kaiyukan Osaka Aquarium Kaiyukan Osaka March 9.4 11.3% 15 Tokyo Zoological Park Society Ueno Zoological Gardens, other Tokyo March 8.3 -4.6% 16 Sanrio Entertainment Sanrio Puroland Tokyo May 8.0 5.7% 17 Senyo Kogyo Yokohama Cosmoworld, other Osaka March 7.5 3.1% 18 AWS Adventure World Osaka April 7.3 -7.2% 19 Yokohama Green Association Yokohama Zoo Zoorasia Kanagawa March 6.0 -4.7% 20 Reoma Unit y New Reoma World Kagawa March 5.5 4.4% 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 FY07/18 (JPYmn) Parking Lot sales 7,342 7,520 7,953 8,724 9,400 10,212 11,086 11,835 12,709 13,236 Domest ic 7,342 7,520 7,917 8,472 9,064 9,775 10,402 11,009 11,681 12,006 East Japan 362 384 398 478 576 519 679 788 858 965 Kanto 3,718 3,781 3,958 4,230 4,518 4,924 5,063 5,323 5,458 5,531 Kinki 2,060 2,101 2,192 2,282 2,398 869 922 1,046 1,143 1,094 Tokai 701 698 735 781 832 2,684 2,773 2,789 3,025 3,212 West Japan 500 556 633 699 738 777 962 1,061 1,195 1,203 Overseas 37 250 335 436 684 827 1,025 1,229 China - 11 66 333 530 608 731 727 T hailand 36 239 268 102 153 199 206 241 South Korea - - - - 14 14 65 226 Indonesia - - - - - 4 21 32 YoY 4.8% 2.4% 5.8% 9.7% 7.8% 8.6% 8.6% 6.8% 7.4% 4.1% Domest ic 4.8% 2.4% 5.3% 7.0% 7.0% 7.8% 6.4% 5.8% 6.1% 2.8% East Japan 19.0% 6.1% 3.5% 20.2% 20.5% -9.9% 30.8% 16.1% 8.9% 12.5% Kanto 2.2% 1.7% 4.7% 6.9% 6.8% 9.0% 2.8% 5.1% 2.5% 1.3% Kinki 3.8% 2.0% 4.3% 4.1% 5.1% -63.8% 6.1% 13.4% 9.3% -4.3% Tokai 11.4% -0.4% 5.3% 6.3% 6.5% 222.6% 3.3% 0.6% 8.5% 6.2% West Japan 17.8% 11.1% 13.9% 10.5% 5.6% 5.3% 23.8% 10.3% 12.6% 0.7% Overseas - - - 584.8% 34.0% 30.1% 56.8% 20.9% 23.9% 19.9% China - - - - 500.0% 404.5% 59.2% 14.7% 20.2% -0.5% T hailand - - - 563.9% 12.1% -61.9% 50.0% 30.1% 3.5% 17.0% Number of parking facilit ies 636 687 805 938 1,045 1,138 1,171 1,253 1,247 1,229 Domest ic 636 687 803 929 1,034 1,120 1,150 1,218 1,204 1,181 East Japan 23 27 43 57 61 75 84 84 86 87 Kanto 330 351 408 468 509 557 564 564 609 585 Kinki 50 51 65 81 97 101 105 105 112 107 Tokai 169 183 198 213 235 254 255 255 265 270 West Japan 64 75 89 110 132 133 142 142 146 155 Overseas 2 9 11 18 21 21 35 43 China 2 7 9 15 17 28 27 28 T hailand 2 2 3 4 5 7 7 South Korea 2 7 10 Indonesia - 2 2 Number of spaces 21,215 23,365 28,874 33,611 38,627 43,305 46,983 52,893 56,382 56,387 Domest ic 21,215 23,365 26,478 28,802 34,351 37,207 39,984 43,280 44,006 43,563 East Japan 1,503 1,534 1,924 2,707 2,525 2,352 3,732 4,737 4,702 4,702 Kanto 11,117 12,260 13,650 14,852 16,391 18,614 19,019 19,866 19,705 20,056 Kinki 2,068 2,220 2,440 2,698 4,944 5,067 5,276 6,043 5,854 5,776 Tokai 4,690 5,266 5,736 5,687 7,382 7,934 8,001 8,572 9,421 9,096 West Japan 1,837 2,085 2,728 2,858 3,109 3,240 3,956 4,062 4,324 3,933 Overseas 2,396 4,809 4,276 6,098 6,999 9,613 12,376 12,824 China 2,396 3,669 3,136 4,399 5,268 7,045 7,212 7,933 T hailand 1,140 1,140 1,699 1,731 2,455 3,635 2,966 South Korea 113 852 1,189 Indonesia 677 677 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% 93.4% East Japan 96.4% 90.9% 95.6% 97.7% 98.2% 89.3% 92.3% 91.5% 93.2% 96.0% Kanto 93.9% 94.1% 94.2% 92.4% 93.1% 93.6% 93.3% 92.5% 93.8% 91.5% Kinki 96.6% 93.3% 97.2% 95.1% 92.3% 94.7% 94.8% 93.1% 96.2% 95.6% Tokai 96.1% 96.6% 97.0% 93.1% 93.3% 92.5% 95.0% 93.8% 94.7% 97.1% West Japan 89.8% 91.9% 91.4% 90.8% 90.2% 90.3% 91.0% 94.4% 92.7% 92.9% 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 FY07/09 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. Sales 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 22,771 Cost of sales 4,818 5,071 5,549 6,058 7,678 8,525 9,384 10,416 12,435 12,643 Gross profit 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 10,129 SG&A expenses 1,794 2,112 2,557 2,712 3,737 4,259 5,051 5,746 6,485 6,595 Operating profit 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,533 Parent income statement FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (JPYmn) Parent 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 10,231 9,022 Cost of sales 4,574 4,592 4,909 5,162 5,629 6,086 6,422 6,782 6,380 5,521 Cost of goods purchased 2,926 2,952 3,089 3,199 3,421 3,595 3,753 3,892 3,583 2,788 Salaries in cost of sales 1,118 1,112 1,221 1,358 1,544 1,765 1,916 2,044 1,943 1,814 Subcontracted labor 298 269 295 269 295 323 278 299 318 378 Other 232 259 304 337 369 403 474 547 536 541 % of sales (cost ratio) 62.3% 61.1% 62.0% 61.2% 62.6% 63.2% 62.8% 62.9% 62.4% 61.2% Cost of goods purchased 39.8% 39.3% 39.0% 37.9% 38.1% 37.3% 36.7% 36.1% 35.0% 30.9% Salaries in cost of sales 15.2% 14.8% 15.4% 16.1% 17.2% 18.3% 18.7% 19.0% 19.0% 20.1% Subcontracted labor 4.1% 3.6% 3.7% 3.2% 3.3% 3.4% 2.7% 2.8% 3.1% 4.2% Other 3.2% 3.4% 3.8% 4.0% 4.1% 4.2% 4.6% 5.1% 5.2% 6.0% Gross profit 2,767 2,928 3,008 3,279 3,359 3,550 3,797 4,000 3,850 3,501 SG&A expenses 1,500 1,503 1,580 1,597 1,686 1,895 2,088 2,165 2,195 2,137 Salaries and allowances 433 465 508 565 562 583 589 623 611 568 Rent 170 170 154 173 189 198 226 234 224 201 Depreciat ion 54 48 47 53 56 53 49 51 67 78 Other 843 820 872 805 879 1,061 1,224 1,256 1,292 1,291 Yo Y 4.0% 0.2% 5.2% 1.0% 5.6% 12.4% 10.2% 3.6% 1.4% -2.6% Salaries and allowances 3.8% 7.3% 9.3% 11.3% -0.6% 3.8% 1.1% 5.8% -2.0% -7.0% Rent 1.2% 0.2% -9.5% 12.5% 9.2% 4.8% 13.8% 3.8% -4.5% -10.3% Depreciat ion -9.2% -10.4% -3.1% 13.5% 4.9% -5.3% -6.6% 2.7% 33.4% 15.6% Other 5.6% -2.8% 6.3% -7.6% 9.2% 20.7% 15.4% 2.6% 2.9% -0.1% Operating profit 1,267 1,425 1,428 1,682 1,673 1,654 1,709 1,835 1,836 1,364 Profit and profit margins 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. Gross profit 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 10,129 GPM 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% 44.5% Operating profit 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,533 OPM 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 15.5% EBITDA 1,362 1,672 1,729 2,087 2,338 2,668 3,137 2,658 3,822 4,396 EBITDA margin 17.3% 19.3% 18.0% 19.7% 17.4% 17.6% 18.4% 14.7% 17.4% 19.3% Net margin 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% 9.7% Financial ratios ROA (RP-based) 17.1% 18.2% 23.6% 30.8% 29.6% 26.2% 21.2% 11.5% 14.2% 15.3% ROE 35.0% 44.9% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% 27.2% ROIC 13.3% 18.2% 20.0% 24.8% 23.9% 20.8% 15.4% 8.9% 12.2% 13.8% NOPAT 746 879 890 1,080 1,253 1,447 1,656 1,324 2,053 2,436 Net assets + interest-bearing debt 5,610 4,831 4,461 4,361 5,241 6,962 10,761 14,844 16,768 17,717 Total asset turnover 1.15 1.41 1.58 1.71 1.78 1.53 1.20 0.93 0.97 0.96 Working capital 136 134 170 160 251 327 407 537 422 560 Current ratio 83.0% 70.2% 95.9% 140.4% 210.8% 239.9% 376.5% 528.3% 350.0% 452.1% Quick ratio 73.2% 59.0% 83.0% 127.2% 192.0% 220.6% 352.5% 486.3% 329.3% 416.8% OCF / Current liabilities 30.6% 60.3% 52.7% 59.6% 61.6% 86.3% 73.0% 20.7% 103.8% 79.2% Net debt / Equity -117.7% -77.5% -30.8% 47.3% 23.0% 37.4% 53.1% 70.2% 60.5% 46.5% OCF / Total liabilities 18.1% 37.7% 30.8% 39.6% 24.8% 32.3% 21.7% 4.7% 27.1% 23.8% Cash cycle (days) 5.2 5.1 5.7 5.7 5.5 6.9 7.7 9.5 7.6 7.4 Changes in working capital 14.1 -2.3 36.3 -9.7 90.5 75.7 80.8 129.1 -114.5 137.5 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 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.

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Strengths and weaknesses Strengths Favorable rent terms due to first mover advantage for legally mandated parking lots: Unused parking spaces in ◤ legally mandated parking lots do not create value for the parking lot owner. Hence, NPD is able to rent these spaces at prices lower than nearby market rates. Moreover, it’s easier to negotiate a free-rent period. Because of this arrangement, the company is able to rent out parking spaces to end-users on favorable terms compared to nearby market rates. Even when competitors approach parking lot owners already contracted with NPD, the owners tend to resist setting up another free-rent period. With NPD being the first mover, this serves as a form of barrier to entry.

Improving profitability by monitoring corporate vehicle usage: The main target customer for NPD-managed parking ◤ lots are the companies with corporate vehicles and offices nearby. Generally, it is easier to convince companies to switch contracts as there is an underlying need for more affordable and convenient parking spaces. Moreover, corporate vehicles tend to be out of parting lots for longer periods for sales activities for example. NPD parking lot operators increase parking space utilization by monitoring the general usage of corporate vehicles, and operating the parking space as hourly spaces while the corporate vehicles are not parked in the parking lots. As a result, NPD is able to increase profitability.

Ability to match up an excess and shortage of parking lot s: While legally mandated parking lots are intended to fulfill ◤ regional parking needs, facility-specific needs vary. Hence, it is easy for parking lots to have an excess or shortage in capacity. However, the information needed to match up shortage with an excess is not publicly available. NPD maintains a database that tracks parking space demand and supply, enabling it to match up supply with demand more effectively than its competitors.

Weaknesses:

Overseas challenges in applying successful domestic business model: NPD aims to increase sales and operating ◤ profit in the overseas Parking Lot business to match the scale of its domestic Parking Lot business over the long term (domestic Parking Lot business accounted for 90.7% of sales and overseas Parking Lot business accounted for 9.3% of sales in FY07/18). Shared Research understands that NPD’s strength in domestic Parking Lot business is based on domestic regulations (legally mandated parking lots) and needs (for parking lot owners and renters). In developing business overseas, the company needs to build up a business model and sales structure tailored to each country’s culture and needs, which takes time.

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 (3.9 years at end ◤ July 2018) 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 82.4mn vehicles at end September 2018 (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.

According to the Annual Report for Car Parking Lots, there were 70,127 legally mandated parking facilities nationwide, offering 3,171,713 parking spaces. The company operates 1,100 parking lots around Japan with 25,720 spaces (as of end July 2018.; 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 2018, there were 1,320,794 car sharing members in Japan (+22% YoY) and 29,208 car sharing vehicles (+19% YoY). Growth in such services has been accelerating from 2011 onward.

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

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 No. of cars 21 42 68 86 118 237 510 563 1,265 3,915 6,477 8,831 12,373 16,418 19,717 24,458 29,208 YoY 100.0% 61.9% 26.5% 37.2% 100.8% 115.2% 10.4% 124.7% 209.5% 65.4% 36.3% 40.1% 32.7% 20.1% 24.0% 19.4% Memberships 50 515 924 1,483 1,712 2,512 3,245 6,396 15,894 73,224 167,745 289,497 465,280 681,147 846,240 1,085,922 1,320,794 YoY 930.0% 79.4% 60.5% 15.4% 46.7% 29.2% 97.1% 148.5% 360.7% 129.1% 72.6% 60.7% 46.4% 24.2% 28.3% 21.6% Source: Shared Research based on Foundation for Promoting Personal Mobility and Ecological Transportation, March 2018 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.

Competitors

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.

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Competitor comparison (JPYmn)

TRUST Holdings Inc. FY06/09 FY06/10 FY06/11 FY06/12 FY06/13 FY06/14 FY06/15 FY06/16 FY06/17 FY06/18 Parking Lot sales 4,392 4,796 5,335 5,583 5,768 5,989 6,780 6,621 6,643 6,890 YoY 8.0% 9.2% 11.2% 4.7% 3.3% 3.8% 13.2% -2.4% 0.3% 3.7% Parking Lot operating profit 95 283 200 310 221 91 456 536 576 320 YoY -40.8% 196.8% -29.4% 55.1% -28.8% -58.7% 400.2% 17.6% 7.5% -44.4% OPM (%) 1.4% 3.9% 7.2% 7.0% 7.4% 5.6% -0.1% 2.1% 3.5% 4.7% ROA (NI-based) -0.5% 1.7% 3.5% 3.1% 3.6% 1.5% -1.6% -0.6% 0.3% 0.9% 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 19.6 ROE -2.2% 11.8% 30.7% 29.6% 33.3% 14.6% -24.7% -15.4% 7.0% 18.0% 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 39.8 Parking Management Organization, Ltd. (3251) FY03/09 FY03/10 FY03/11 FY03/12 FY03/13 FY03/14 FY03/15 FY03/16 FY03/17 FY03/18 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 FY10/18 Est. Parking Lot sales 95,320 113,248 124,080 139,547 155,428 167,022 179,698 194,398 232,956 290,000 YoY 17.9% 18.8% 9.6% 12.5% 11.4% 7.5% 7.6% 8.2% 19.8% 24.5% GPM 25.3% 27.7% 26.8% 28.2% 28.1% 26.4% 26.0% 27.3% 25.8% - Parking Lot operating profit 10,584 12,839 13,292 17,809 19,509 17,554 18,730 21,453 20,505 22,500 YoY 18.4% 21.3% 3.5% 34.0% 9.5% -10.0% 6.7% 14.5% -4.4% 9.7% OPM (%) 11.1% 11.3% 10.7% 12.8% 12.6% 10.5% 10.4% 11.0% 8.8% 7.8% ROA (NI-based) 7.5% 7.0% 6.4% 8.5% 9.2% 7.9% 8.2% 9.4% 6.6% 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 2.7 ROE 16.2% 17.2% 16.3% 21.7% 22.1% 18.2% 18.5% 20.2% 17.8% Average units 29.4 32.6 33.4 33.6 33.8 33.6 33.3 33.6 32.7 Paraca Inc. (4809) FY09/09 FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 Est. Parking Lot sales 6,060 6,738 7,032 7,934 8,913 10,080 10,997 12,016 12,689 14,000 YoY 7.4% 11.2% 4.4% 12.8% 12.3% 13.1% 9.1% 9.3% 5.6% 10.3% GPM 27.9% 30.3% 28.8% 30.8% 29.3% 27.2% 28.6% 30.3% 29.4% - Parking Lot operating profit 1,015 1,286 1,195 1,581 1,668 1,736 2,037 2,397 2,403 2,500 YoY 18.6% 26.7% -7.0% 32.2% 5.5% 4.1% 17.3% 17.7% 0.3% 4.0% OPM (%) 16.7% 19.1% 17.0% 19.9% 18.7% 17.2% 18.5% 19.9% 18.9% 17.9% ROA (NI-based) 2.1% 3.2% 3.0% 3.9% 4.4% 4.4% 5.1% 5.7% 5.5% 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 2.4 ROE 7.5% 11.3% 10.0% 12.0% 12.3% 11.5% 12.9% 14.1% 13.3% Average units 14.9 14.7 14.6 15.0 14.1 13.8 14.2 13.9 13.3 Nippon Parking Development Co., Ltd. (2353) FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Parking Lot sales 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 22,771 YoY 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% 3.6% GPM 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% 44.5% Parking Lot operating profit 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,533 YoY 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% 15.2% OPM (%) 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 15.5% ROA (NI-based) 9.0% 12.5% 14.0% 8.4% 18.2% 16.0% 24.8% 6.4% 9.9% 9.3% 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 2.9 ROE 35.0% 44.9% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% 27.2% 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 30.8 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 FY07/18 OPM of 15.5% and ROE of 27.2% 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.

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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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 FY07/09 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. Sales 7,870 8,664 9,607 10,591 13,437 15,118 17,008 18,140 21,987 22,771 YoY 4.8% 10.1% 10.9% 10.2% 26.9% 12.5% 12.5% 6.7% 21.2% 3.6% Cost of sales 4,818 5,071 5,549 6,058 7,678 8,525 9,384 10,416 12,435 12,643 Gross profit 3,052 3,593 4,058 4,533 5,759 6,594 7,624 7,724 9,552 10,129 GPM 38.8% 41.5% 42.2% 42.8% 42.9% 43.6% 44.8% 42.6% 43.4% 44.5% SG&A expenses 1,794 2,112 2,557 2,712 3,737 4,259 5,051 5,746 6,485 6,595 SG&A ratio 22.8% 24.4% 26.6% 25.6% 27.8% 28.2% 29.7% 31.7% 29.5% 29.0% Operating profit 1,258 1,481 1,501 1,821 2,021 2,335 2,573 1,978 3,067 3,533 YoY 6.5% 17.7% 1.3% 21.3% 11.0% 15.5% 10.2% -23.1% 55.1% 15.2% OPM 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 15.5% Non-operating income 182 123 208 379 269 308 579 713 236 199 Non-operating expenses (subtract) 272 487 270 294 55 52 142 450 91 122 Recurring profit 1,168 1,117 1,438 1,906 2,236 2,592 3,010 2,241 3,212 3,610 YoY -36.1% -4.4% 28.8% 32.6% 17.3% 15.9% 16.1% -25.6% 43.4% 12.4% RPM 14.8% 12.9% 15.0% 18.0% 16.6% 17.1% 17.7% 12.4% 14.6% 15.9% Extraordinary gains 13 227 28 34 5 4 2,244 1 85 7 Extraordinary losses (subtract) 116 212 47 585 20 87 36 280 357 316 Tax charges (subtract) 452 367 573 837 823 886 1,552 736 538 942 Implied tax rate 42.4% 32.4% 40.4% 61.8% 37.1% 35.3% 29.7% 37.5% 18.3% 28.5% Minority Interests (subtract) -4 -1 19 40 136 -28 160 149 Ne t in c o m e 614 765 850 518 1,378 1,582 3,531 1,255 2,243 2,211 YoY 25.5% 24.7% 11.1% -39.0% 165.9% 14.7% 123.2% -64.5% 78.7% -1.4% Ne t ma rgin 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% 9.7% ROE 35.0% 44.8% 43.9% 23.6% 51.9% 44.6% 65.5% 18.7% 31.0% 27.2% Ne t ma rgin 7.8% 8.8% 8.8% 4.9% 10.3% 10.5% 20.8% 6.9% 10.2% 9.7% Total asset turnover 1.15 1.41 1.58 1.71 1.78 1.53 1.20 0.93 0.97 0.96 Financial leverage 3.91 3.60 3.14 2.81 2.85 2.79 2.64 2.91 3.14 2.91 ROA (RP-based) 17.1% 18.2% 23.6% 30.8% 29.6% 26.2% 21.2% 11.5% 14.2% 15.3% ROIC 13.3% 18.2% 20.0% 24.8% 23.9% 20.8% 15.4% 8.9% 12.2% 13.8% NOPAT 746 879 890 1,080 1,253 1,447 1,656 1,324 2,053 2,436 Net assets + Interest-bearing debt 5,610 4,831 4,461 4,361 5,241 6,962 10,761 14,844 16,768 17,717 ROIC (pre-tax) 22.4% 30.7% 33.6% 41.8% 38.6% 33.5% 23.9% 13.3% 18.3% 19.9% OPM 16.0% 17.1% 15.6% 17.2% 15.0% 15.4% 15.1% 10.9% 14.0% 15.5% Sales / Invested capital 1.40 1.79 2.15 2.43 2.56 2.17 1.58 1.22 1.31 1.29 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.

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.

Profit declined temporarily in FY07/16, when the Ski Resort business was hurt by a warm winter and reduced snowfall, but has trended up since FY07/17 on growth in the Parking Lot business, improved earnings in the Ski Resort business, and profit contributions from the Theme Park business that was consolidated in FY07/16.

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Balance sheet

Balance sheet FY07/08 FY07/09 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 (J PYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Assets Cash and deposits 1,518 1,701 1,201 1,777 2,885 3,899 4,765 9,902 13,121 13,888 11,709 Marketable securities 334 ------Accounts receivable 148 162 145 163 165 257 332 418 527 480 575 Allowance for doubtful accounts -0 -1 -0 -0 - -1 -4 -4 -61 -9 -6 Inventories 3 3 19 39 25 74 82 87 291 255 275 Prepaid expenses 58 70 90 101 109 186 211 197 234 247 235 Other current assets 539 257 254 278 302 350 382 630 903 664 786 Total current assets 2,599 2,191 1,708 2,358 3,486 4,766 5,768 11,230 15,014 15,524 13,574 Buildings 574 575 681 956 513 619 722 1,410 1,466 1,809 2,448 Equipment, machinery, and vehicles 130 129 314 350 337 481 647 1,019 1,378 1,713 1,854 Land 142 200 266 281 346 596 605 690 961 1,426 2,128 Other fixed assets - - - 1 7 7 18 46 47 68 153 Total tangible fixed assets 847 904 1,261 1,588 1,204 1,703 1,993 3,164 3,852 5,015 6,583 Total intangible fixed assets 94 83 64 76 97 220 186 411 380 393 206 Investments securities 1,909 1,622 1,303 1,304 515 1,812 2,039 1,960 903 1,584 1,465 Investments in silent partnership 1,092 1,035 683 413 148 11 61 48 - - - Long-term debt 67 55 45 37 61 29 37 77 5 - - Security deposits 293 286 306 328 332 378 396 455 499 505 495 Deferred tax assets 313 266 373 268 145 61 4 251 453 667 667 Other 11 30 56 4 15 140 160 187 238 284 381 Investment and other assets 3,685 3,293 2,766 2,354 1,216 2,431 2,696 2,978 2,098 3,040 3,009 Software 67 57 36 41 70 65 58 41 48 208 96 Leasehold rights 26 26 26 26 26 26 26 26 26 26 26 Other 1 0 2 9 1 129 102 344 306 159 77 Total fixed assets 4,626 4,281 4,090 4,019 2,517 4,354 4,875 6,554 6,330 8,448 9,798 Total assets 7,225 6,472 5,799 6,377 6,003 9,121 10,643 17,783 21,344 23,973 23,372 - - - Liabilities - - - Accounts payable 29 29 29 32 30 81 88 98 281 313 290 Short-term debt 2,022 1,938 1,368 1,274 1,156 624 209 102 424 1,380 293 Other current liabilities 982 673 1,038 1,153 1,297 1,556 2,107 2,782 2,136 2,742 2,419 Total current liabilities 3,033 2,640 2,435 2,459 2,483 2,261 2,404 2,982 2,842 4,435 3,002 Long-term debt 1,998 1,751 1,179 1,176 650 2,530 2,906 5,170 6,624 6,444 6,306 Other fixed liabilities 373 393 446 556 589 1,089 920 908 3,232 3,075 3,072 Total fixed liabilities 2,370 2,143 1,625 1,732 1,239 3,619 3,826 6,078 9,856 9,519 9,377 Total liabilities 5,403 4,783 4,060 4,191 3,722 5,880 6,230 9,061 12,698 13,954 12,380 Net assets ------Capital stock 549 568 568 568 568 568 591 634 668 699 699 Capital surplus 397 417 417 417 417 420 443 485 532 576 560 Retained earnings 1,325 1,259 1,345 1,856 1,872 2,582 3,328 5,955 6,100 7,162 8,109 Treasury stock -354 -386 -383 -573 -602 -526 -526 -526 -526 -693 -792 Valuation and translation adjustments -101 -171 -223 -115 -6 19 189 214 -104 40 -82 Share subscription rights 7 0 13 27 31 39 62 115 191 280 410 Minority interests - - - 6 1 138 325 1,846 1,785 1,955 2,088 Total net assets 1,823 1,688 1,738 2,186 2,281 3,241 4,413 8,722 8,646 10,019 10,992 Working capital 122 136 134 170 160 251 327 407 537 422 560 Total interest-bearing debt 4,020 3,689 2,547 2,451 1,805 3,154 3,115 5,272 7,048 7,824 6,599 Net cash -2,501 -1,988 -1,346 -673 1,080 745 1,650 4,630 6,073 6,064 5,110 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. However, starting in FY07/17, NPD is actively working to acquire large parking lot properties while keeping ROI under consideration.

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. 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 cash equivalents.

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Statement of cash flows

Statement of cash flows 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. Cash flow s from operat ing act ivit ies (1) 898 868 1,529 1,289 1,473 1,460 2,014 1,965 602 3,778 2,947 Cash flow s from invest ing act ivit ies (2) 728 322 -203 -73 800 -1,048 -424 1,378 2,490 -3,135 -2,851 Free cash flow (1+2) 1,626 1,190 1,326 1,216 2,273 412 1,590 3,343 3,092 643 96 Cash flow s from financing act ivit ies -1,495 -1,008 -1,826 -636 -1,228 612 -739 1,733 296 -551 -2,787 Depreciat ion and amort izat ion (A) 103 104 191 228 266 316 333 564 680 754 863 Capit al expendit ures (B) -179 -157 -171 -219 -472 -278 -524 -1,008 -1,165 -2,186 -2,413 W orking capit al changes (C) 51 14 -2 36 -10 90 76 81 129 -114 138 Simple FCF (NI + A + B - C) 362 547 787 822 323 1,326 1,315 3,006 641 926 523 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.

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 mainly by the return of loans to financial institutions and payment of dividends.

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Other information

Corporate governance, environment, and CSR information

Corporate governance (as of October 2018)

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 13 Number of outside directors 5 Number of independent outside directors 5 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 st ockholding rat io 10% or higher, and under 20% Independent officers 5 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 Revit alizat ion of ski resort s and support of at hlet es

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 FY07/18 (JPYmn) Cons. 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% 27.2% 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% 9.7% 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 0.96 Financial leverage (equit y mult iplier) 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 2.91 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% 15.3% 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% 13.3% NOPAT 118 249 411 581 669 546 701 746 879 890 1,080 1,253 1,447 1,656 1,324 2,053 2,365 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 17,717 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% 19.9% 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% 15.5% 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 1.29 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% 27.2% 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% 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 2.9 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% 27.2% 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 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% 15.5% 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 3.5 18 3.1 16 3 14 2.6 7.0 6.6 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 1.0 6 0.9 3.1 11.0 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 FY07/18 (JPYmn) Cons. 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 1,349 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 1,349 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 2,211

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% 61.0% 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% 61.0%

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 8,494 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 8,139 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 6.6 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 4.0 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% 16.6%

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 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).

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

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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.

Shareholding Top shareholders Shared held ('000) ratio Tatsumi Store Ltd. 98,600 29.2% Toyota Motor Corporation 11,907 3.5% Northern Trust Co. (AVFC) Re IEDU UCITS Clients Non Lending 15 Pct Treaty Account 11,164 3.3% Japan Trustee Services Bank, Ltd. (Trust account) 10,639 3.2% Kenji Okada 10,295 3.1% Kazuhisa Tatsumi 9,106 2.7% The Master Trust Bank of Japan, Ltd. (Trust account) 8,350 2.5% Kenji Kawamura 7,426 2.2% Maple Capital KK 7,000 2.1% Shinichi Sugioka 6,603 2.0% SUM 181,090 53.7% Source: Shared Research based on company data (As of end-July 2018)

Top management

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

Employees

The company had 1,000 employees (1,645 part-time workers on an annual average basis) at the consolidated level at end FY07/18. At the parent level, the company had 427 employees (748 part-time workers on an annual average basis). The average age was 27.2, and employees had been with the company for an average of 3.9 years.

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

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 1H FY07/19 results (out March 8, 2019)

1H FY07/18: Operating profit up JPY260mn YoY on rising earnings at Parking Lot and Theme Park businesses. At the Parking Lot ▷ business, earnings growth was underpinned by solid gains at domestic operations and the rising profitability of overseas operations. Hurt by warm winter temperatures, earnings at the Ski Resort business were down Parking Lot business: Aided by organizational restructuring and enhancements to facilitate new acquisitions both in Japan and ▷ overseas, the Parking Lot business saw solid gains at the bottom line and increased its operating profit margin by 1.0pp

Theme Park business: Sales and profit were up on strong visitor numbers ▷  Visitor numbers: At 306,000, theme park attendance for 1H was up 28% YoY. The growth in visitor numbers reflects the company’s concerted effort to bring in new types of visitors, strengthen marketing, and open new attractions. It opened new shows based on popular characters such as Kamen Rider and PreCure  Lodging business: The company moved into the lodging business with the opening of a glamping facility and the startup of a vacation home rental business that acquires and renovates existing properties to rent to vacationers

Ski Resort business: Despite a positive start in Q1 (August–October 2018) thanks to additional measure to attract visitors during ▷ the summer season, 1H operating profit finished down YoY despite higher YoY sales as natural snowfall came later than usual during Q2 (November 2018–January 2019) and temperatures were not low enough to put down man-made snow FY07/19: The company plans to continue aggressive hiring, including large number of new grads. At the domestic Parking Lot ▷ business, the company is looking to improve the profitability of individual parking spaces by bringing in new customers and developing and marketing more services aimed at corporate customers and, overseas, sees growth being driven by regions that

are experiencing strong growth. At the Theme Park business, the company is looking to sustain growth by adding new events and attractions and by moving into the rental villa business Ski Resort business: The downward revision to its 1H result forecast notwithstanding, the company has not changed its forecast ▷ for the full year. As before, the company is forecasting a 7% increase in sales and 28% increase in operating profit based on the inclusion of its ski resorts in those covered by Epic Pass, the most extensive global season pass for winter ski resorts, and increases in the number of summertime visitors attracted by its mountain-top terraces and other facilities Topics: Established joint venture Roku-yon (60% owned by NPD) on June 14, 2018 to focus on sharing businesses such as private ▷ lodging services, and subsequently decided to make Roku-yon a wholly-owned subsidiary at the end of November Share buybacks: In March 2019, the company announced a share buyback program, authorizing the acquisition of up to 2.8mn ▷ shares (equal to 0.84% of shares outstanding, excluding treasury stock) at a maximum cost of JPY500mn

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Sales and operating profit

(JPYbn) Parking Lot sales Ski Resort sales Theme Park sales Other sales Sales YoY (right axis) 6.6 7 6.4 6.3 70% 6.0 6.0 5.7 6 5.3 5.4 5.3 60% 5.1 5.1 5.0 4.9 4.7 5 4.2 4.4 4.4 50% 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 2.3 2.3 1.9 2.0 1.9 2.1 2 20% 1 10% 0 0% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19

(JPYbn) Parking Lot OP (including company-wide expenses; right axis) Ski Resort OP Theme Park OP Other OP OP YoY

1.5 200%

1.0 0.9 0.7 0.8 0.5 0.8 0.4 0.6 0.6 0.6 0.5 0.4 100% 0.6 0.5 0.6 0.2 0.4 0.3 0.1 0.5 0.3 0.2 0.4 0.2 0.1 0.1 0.6 0.6 0.7 0.6 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.5 0.6 0.3 0.3 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0% 0.0 -0.0 -0.1 -0.1 -0.1 -0.1 -0.0 -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.3 -0.0 -0.2 -0.3 -0.4 -0.3 -0.3 -0.5 -0.2 -0.5 -0.5 -0.5 -100% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 Source: Shared Research based on company data.

Earnings overview

Sales: JPY12.0bn (+5.9% YoY) ▷ Operating profit: JPY2.1bn (+14.0% YoY), operating profit margin of 17.7% (+1.3pp YoY) ▷ Recurring profit: JPY2.1bn (+14.0% YoY) ▷ Net income attributable to parent company shareholders: JPY1.6bn (+17.7% YoY) ▷

Sales rose in both the Parking Lot and Theme Park businesses. Performance in the Parking Lot business was strong in Japan and overseas, where earnings improved. The Theme Park business found success through the highly cost-effective addition of new attractions and special events. However, Q2 (November 2018–January 2019) sales in the Ski Resort business fell YoY due to warm winter weather.

Operating profit slipped in the Ski Resort business but rose on a consolidated basis, thanks to increases in the Parking Lot and Theme Park businesses.

1H sales reached 98.1% of their target figure in the 1H FY07/19 company forecast, while operating profit reached 96.1%, recurring profit reached 99.5%, and net income attributable to parent company shareholders reached 107.5%. Operating profit in the Parking Lot business achieved 97.4% of its target figure in the same forecast and operating profit in the Ski Resort and Theme Park businesses finished at 52.6% and 113.5%, respectively. Although performance fell short of 1H forecasts in the Ski Resort business, the company has made no changes to its full-year forecast for the business, as customer numbers are increasing YoY after ski resorts were opened in January 2019, and the company expects improved performance during the summer season.

Parking Lot business

Sales: JPY6.8bn (+3.7% YoY) ▷  Domestic Parking Lot business sales: JPY6.1bn (+2.1% YoY)  Overseas Parking Lot business: JPY692mn (+19.9% YoY)

Operating profit: JPY1.6bn (+8.3% YoY); operating profit margin of 23.1% (+1.0pp YoY) ▷

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Primary factors affecting change in profit in the Parking Lot business

Parking Lot business operating profit

Parking Lot business FY07/16 FY07/17 FY07/18 FY07/16 FY07/17 FY07/18 FY07/19 (JPYmn) FY FY FY 1H 2H 1H 2H 1H 2H 1H Operating profit (previous year) 1,682 1,823 2,115 859 823 878 945 1,004 1,111 1,165 Change in profit 141 292 212 19 122 126 166 161 51 132 Domest ic Facilit y closures -72 -111 -199 -38 -34 -56 -55 -77 -122 -80 Exist ing facilit ies 2 212 245 -9 11 100 112 137 108 2 New facilit ies 279 198 132 141 138 69 129 96 36 85 Other sales increases 67 83 75 -3 70 58 25 32 43 23 SG&A expenses -193 -105 -119 -78 -115 -3 -102 -116 -3 43 Overseas Overseas (Thailand and China) -1 16 -17 8 65 43 62 40 3 45 Overseas (South Korea and Indonesia) -20 -11 -9 -5 Company-wide expenses, other 80 -48 33 1 79 -43 -5 47 -14 13 Operating profit (current year) 1,823 2,115 2,327 878 945 1,004 1,111 1,165 1,162 1,297 Source: Shared Research based on company data

Operating profit rose by JPY73mn in the domestic Parking Lot business and JPY45mn in the overseas Parking Lot business.

New parking lot acquisitions were a primary factor affecting change in profit in the domestic Parking Lot business, and ▷ contributed JPY85mn. However, this was mostly offset by a negative impact of JPY80mn from closure of properties. SG&A curtailment and streamlining were also major factors boosting profit, contributing JPY43mn, as well as JPY23mn in intermediary and consultant fees. Thanks to restructuring efforts that resulted in a more efficient sales organization, the company made strong progress in terms of acquisition of new parking lots and monthly contracts. In the overseas Parking Lot business, the company strengthened its organizational structure by expanding its sales staff, which ▷ contributed to new parking lot acquisitions and improvement of existing facilities.

Domestic Parking Lot business

Sales: JPY6.1bn (+2.1% YoY) ▷  Directly managed facilities: JPY4.2bn (+0.8% YoY)  Outsourced management: JPY1.4bn (+1.5% YoY)  Other: JPY478mn (+17.3% YoY)

The number of directly managed parking lots (total for monthly and hourly parking) stood at 1,101 (+0.2% YoY), the number of leased parking spaces at 25,711 (+1.4% YoY), the number of rented spaces for monthly parking at 15,220 (+5.1% YoY), and the contract ratio at 94.4% (+2.2pp YoY). Sales per leased space rose in FY07/17 and FY07/18 due to parking fee adjustments, but the company committed to bringing up its contract rate in 1H FY07/19, and the rise in sales per leased space has settled down for the time being.

Turning to outsourced management parking lots for hourly parking, the number of parking lots stood at 94 (-5.1% YoY) and the number of parking spaces at 17,807 (-1.1% YoY). Focusing on profitability, the company requested fee revisions and other changes, which led to some contract cancellations. However, outsourced management sales rose YoY thanks to a rise in sales per managed space.

FY07/18 initiatives

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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 adjustments or the adoption of monthly rental cars.

Other sales increased driven by commission revenue and other factors. The company established parking lot intermediary call centers in Tokyo and Osaka, and a focus on acquiring new parking lots led to an increase in the number of brokered facilities.

2H initiatives in the domestic Parking Lot business In terms of new parking lot acquisition initiatives in 2H FY07/19, the company plans to strengthen sales to REIT office properties and increase its sales personnel. The company will strengthen sales to REIT office properties by establishing a team of sales specialists and targeting 753 office buildings held by 22 REITs that are located within the company’s target area (22 REITs hold 875 office buildings in total).

Overseas Parking Lot business

Sales: JPY692mn (+20.0% YoY) ▷  Thailand: JPY408mn (+15.4% YoY)  China: JPY112mn (-8.6% YoY)  South Korea: JPY145mn (+73.5% YoY)

Number of parking lots under management in the overseas Parking Lot business The number of parking lots under operation overseas rose to 50 (+13.6% YoY), and the total number of parking spaces to 12,600 (+0.4% YoY), contributing to an increase in sales. By country, the number of parking lots stood at 30 in Thailand (+7.1% YoY) with 7,869 parking spaces (+7.8% YoY), seven in China (unchanged YoY) with 2,966 parking spaces (-18.2% YoY), and 10 in South Korea (+42.9% YoY) with 1,029 parking spaces (+7.6% YoY).

Major factors affecting profit in the overseas Parking Lot business Profit increased supported by sales growth and effects from measures implemented in FY07/18 to improve profitability. Thailand and South Korea deliver the largest profit contributions to the overseas Parking Lot business. In Thailand, the business posted record high sales and operating profit thanks to progress in profitability improvement for existing facilities supported by reductions in operating costs and fee adjustments. Also contributing to these record highs were newly acquired contracts for monthly parking spaces and the offering of real estate consulting services to owners of existing facilities. Sales growth outpaced the expansion in the number of parking spaces, which confirms profit growth was underpinned by fee hikes. In South Korea, the number of parking spaces increased in tandem with the opening of the Best Western Hotel (total number of parking spaces: 40, number of parking spaces under management: 40).

2H initiatives in the overseas Parking Lot business In 2H, the company began managing a parking lot with 311 spaces at Donki Mall Thonglor in Thailand in February 2019. This facility is the second Don Quijote store to open in Southeast Asia. The company also began managing a parking lot with 1,556 spaces at The Market, a large commercial complex also located in Thailand.

Ski Resort business

Sales: JPY3.2bn (+1.4% YoY) ▷ Operating profit: JPY158mn (-18.9% YoY); operating profit margin of 5.0% (-1.2pp YoY) ▷

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Sales and profit increased during the summer season in Q1 (August–October 2018), thanks to increased number of visitors attributed to the opening of new facilities. However, these values all decreased during the Q2 winter season (November–January 2018) due to delayed ski resort openings.

Number of summer season visitors in the Ski Resort business The number of visitors during the summer season totaled 316,000 (+9.0% YoY) while visitors to lift facilities (gondolas, ropeway, lifts) totaled 270,000 (+8.4% YoY). The increase reflected successful openings of new facilities at the Hakuba Iwatake Mountain Resort and Tsugaike Kogen, both located in Hakuba Valley. The mountain-top terrace Hakuba Mountain Harbor opened at Hakuba Iwatake in October 2018, and attracted over 20,000 visitors in that month alone. The outdoor adventure park Xtrem Aventures Hakuba Tsugaike Wow! was opened at Tsugaike Kogen in August 2018. At the same time, the company recorded favorable visitor numbers at Sora terrace, which offers views of the seas of clouds below, despite fewer business days than the previous year due to scheduled large-scale ropeway maintenance. Ancillary revenues from sales of beverages and goods grew at all facilities.

Number of winter season visitors in the Ski Resort business Visitors during the winter season totaled 755,000 (-1.7% YoY). Ski resort openings were delayed due to the winter cold and late snowfall, resulting in a YoY drop in ski resort visitors in December 2018 to 190,000 (-16.7% YoY). According to observations from the Nagano Local Meteorological Office, the first snowfall of 2018, which fell on December 8, occurred 17 days later than is typical, and 20 days later than the first snowfall in 2017. However, the company was able to begin sales early in areas of higher elevation at all ski resorts thanks to its efforts to replace and augment its artificial snow machines. A large natural snowfall in January 2019 allowed for expanded pistes, and visitors for the same month reached 548,000 (+5.8% YoY) and 570,000 in February (+5.2% YoY). Inbound visitors from overseas during 1H totaled 122,000 (+14.0% YoY).

Major factors affecting profit in the Ski Resort business Sales and sales prices per unit both rose during the summer season and were major factors driving profit, along with a decrease in amortization of goodwill. However, major factors hindering profit, including a slide in sales due to a drop in visitors during the winter season and increases in advertising and sales promotion expenses, had a larger impact.

Company forecast and 2H initiatives for the Ski Resort business 1H operating profit fell JPY143mn short of the initial company forecast. The company projects that profit increases during the Q3 winter season (February–April 2019) and the Q4 summer season (May–July 2019) will exceed the previous company forecast and has accordingly left its full-year forecast for operating profit unchanged at JPY800mn.

In 2H, the company forecasts an increase in inbound visitors as it promotes snowfall-related measures and strengthens initiatives such as its efforts to encourage the holding of special events during the Q3 winter season. The company will aim to increase profit in the Q4 summer season by strengthening its Terrace business (the mountain-top terrace at Hakuba Iwatake and SORA terrace at Ryuoo Mountain Park) and through initiatives related to Golden Week, which will comprise ten consecutive holidays in 2019.

Sales and profit in the business tend to be weighted toward the winter season of Q2 and Q3. In addition, the company expects an increase in visits by holders of the Epic Pass based on the alliance agreement concluded with Vail Resorts from FY07/19.

NPD has concluded a long-term alliance agreement with Vail Resorts, which operates the world’s biggest seasonal lift pass, the Epic Pass. Holders of the Epic Pass (more than 925,000) are allowed to ski five consecutive days for free at nine locations in Hakuba Valley.

Theme Park business

Sales: JPY1.8bn (+20.6% YoY) ▷ Operating profit: JPY636mn (+33.5% YoY); operating profit margin of 35.6% (+3.5pp YoY) ▷

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Sales and profit rose on an increase in the number of visitors driven by new attractions and events. The number of visitors totaled 306,000 (+27.4% YoY), breaking down as 296,000 visitors (+26.3% YoY) at Nasu Highland Park and 10,000 visitors (+67.3% YoY) at the NOZARU aerial athletic facility. The company simultaneously launched three new attractions during the busy period of summer vacation season. Additionally, the company hosted various events which were highly effective at attracting customers, relative to their costs. A specific example would be the “Dino-A-Live” show, which featured the world’s first two-legged animatronic dinosaur show operated by ON-ART Corp. In October, it held a “Spooky Halloween” event in Nasu Highland Park in collaboration with Obaken Haunted Mansion (in Honan-cho, Tokyo). The company also continued its focus on developing repeat customers (started in FY07/18) by hosting events such as offline meetings of dog owners at amusement parks and concerts by local brass bands in Tochigi Prefecture. On the other hand, customer spend fell to JPY3,767 (-5.5% YoY). The company raised the number of theme park visitors while maintaining established prices by securing repeat visitors through strengthening year-long passport sales and offering discounts to local residents.

The Towa Pure Cottages located next to an amusement park, expanded its range of offerings (previously centered on cottage-type facilities) by adding glamping facilities and launching Resorthouse, a vacation home rental business that acquires and renovates existing properties in the Nasu Highland villa area, which is managed by the company.

Operating profit increased, primarily thanks to sales growth at Nasu Highland Park. Also contributing to the climb in profit were growth in the number of guests in the hotel business, an increase in both sales and profit at NOZARU, and the launch of the vacation home rental business.

Q1 FY07/19 results (out December 7, 2018)

Q1 FY07/19: Operating profit up JPY178mn YoY with all segments reporting higher earnings. At the Parking Lot business, ▷ earnings growth was underpinned by solid gains at domestic operations and the rising profitability of overseas operations. The

Ski Resort business enjoyed success with the help of additional "Green Season (summer season)" initiatives while the Theme Park business brought in more visitors with help of new, cost-effective attractions and special events Parking Lot business: Aided by organizational restructuring and enhancements to facilitate new acquisitions both in Japan and ▷ overseas, the Parking Lot business saw solid gains at the bottom line and increased its operating profit margin by 0.1pp

 Overseas: Overseas parking lot operations reported higher sales and higher earnings. In Thailand, which accounts for the bulk of overseas parking lot operations, quarterly sales and operating profit both set new record highs on the back of rising revenues from existing facilities and new acquisitions. South Korean operations also grew on a steady stream of new acquisitions

Theme Park business: Coinciding with the busy season, during Q1 the Theme Park business opened new attractions and ran ▷ more special events, which brought in more visitors and added to both the top- and bottom-line growth

 Visitor numbers: At 246,000, theme park attendance for the quarter was up 24% YoY. Attendance figures evinced the success of the company's efforts to bring in new types of visitors, strengthen marketing, and open new attractions. Also contributing to the success were initiatives such as concerts by local brass bands (from Ibaragi Prefecture), aggressive sales of season passes, business alliance with a fringe benefit company, offline meetings of pet owners, and expansion of the NOZARU aerial athletic facility

 Lodging business: The company moved into the lodging business with the opening of a glamping facility and the startup of a vacation home rental business that acquires and renovates existing properties to rent to vacationers

Ski Resort business: The additional initiatives launched by the company to increase visitors to its ski resort properties during the ▷ so-called “Green Season (summer season)” met with success, leading to higher revenues and smaller losses during the summer

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season. During the quarter the company also began making preparations for the busy season and the special 60th anniversary celebration of Hakuba resort area  The company attributed the gains to the overall success of various new initiatives, including the renovation of facilities, the addition of a mountain-top terrace at Hakuba-Iwatake, and its experiments with different activities, such as night-sky viewing at Hakuba-Happo

Topics: Established joint venture Roku-yon (60% owned by NPD) on June 14, 2018 to focus on sharing businesses such as ▷ private lodging services, and subsequently decided to make Roku-yon a wholly-owned subsidiary at the end of November Share buybacks: Bought back 3.0mn shares at a total cost of JPY532mn between September 10 and September 27, 2018. In ▷ conjunction with this, the company also authorized the issuance of stock options representing up to 3.0mn shares under a stock option award program

Sales and operating profit

(JPYbn) Parking Lot sales Ski Resort sales Theme Park sales Other sales Sales YoY (right axis) 7 6.4 6.6 70% 6.0 6.0 5.7 6 5.3 5.4 5.3 60% 5.1 5.1 5.0 4.7 4.9 5 4.2 4.4 4.4 50% 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 2.3 2.3 1.9 2.0 1.9 2.1 2 20% 1 10% 0 0% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 (JPYbn) Parking Lot OP (including company-wide expenses; right axis) Ski Resort OP Theme Park OP Other OP OP YoY

1.5 200%

1.0 0.9 0.7 0.8 0.5 0.8 0.6 0.6 0.6 0.5 0.4 100% 0.6 0.5 0.6 0.2 0.4 0.3 0.1 0.5 0.3 0.2 0.4 0.2 0.1 0.1 0.6 0.6 0.7 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.5 0.6 0.3 0.3 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0% 0.0 -0.0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.3 -0.0 -0.2 -0.3 -0.4 -0.3 -0.3 -0.5 -0.2 -0.5 -0.5 -0.5 -100% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 Source: Shared Research based on company data. Earnings overview Operating profit up JPY178mn YoY with all segments reporting higher earnings. At Parking Lot business, earnings growth was underpinned by solid gains at domestic operations and the rising profitability of overseas operations. Ski Resort business enjoyed success with help of additional "Green Season (summer season)" initiatives; Theme Park business brought in more visitors with help of new, cost-effective attractions and special events In Q1 FY07/19, the company reported sales of JPY5.7bn (+7.5% YoY), operating profit of JPY1.1bn (+19.2% YoY), recurring profit of JPY1.1bn (+19.9% YoY), and net income attributable to parent company shareholders of JPY946mn (+24.8% YoY).

The solid performance reflected steady growth in earnings thanks to improved profitability at the Parking Lot business, new summer-season initiatives at the Ski Resort business that led to lower losses during the summer season, and successful efforts at its Theme Park business to attract new types of visitors with strengthened marketing and the addition of new attractions and special events. All segments reported higher earnings, including the Other business.

Looking at operating profit by segment, at the Parking Lot business we find earnings moving up from depressed levels, underpinned by the steady improvement in profitability of domestic parking lot operations and further gains overseas, where its mainstay operations in Thailand set new record highs for both quarterly sales and operating profit at existing facilities on improved profitability. At the Ski resort business, overall results were good even during summer season thanks to the renovation of existing facilities and the addition of new facilities and events. The Theme Park business logged higher sales and earnings, opening three new cost-effective attractions just in time for the busy season and, after experiencing good results last year, adding

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more special events to increase the number of new visitors and attract more repeat visitors. Reflecting the success of these initiatives, the number of visitors rose 23.9% YoY (one may think that the YoY increase in visitors is attributable to a long stretch of rainy days in August and typhoons in October that depressed park attendance in Q1 FY07/18, but the company noted that visitor numbers were also up 20%–21% versus Q1 FY07/17). The Other business segment logged higher sales and stayed in the black. (In FY07/18, the healthcare and education businesses both added to earnings, but this was partly because the forecasts for related expenses were overly cautious. Its illegal drug testing service in Thailand contributed to solid growth in sales and earnings.)

Progress rates in Q1 results versus 1H FY07/19 forecasts were in line with plans. Sales reached 46.7% of the company’s 1H FY07/19 forecasts (Q1 FY07/18 sales reached 46.8% of the 1H FY07/18 results), operating profit 50.3% (50.0%), recurring profit 52.3% (49.9%), and net income attributable to parent company shareholders 65.3% (57.3%).

Parking Lot business

Parking Lot business performance

3.4 (JPYbn) Domestic sales Overseas sales OPM (incl. adjustments; right axis) OPM (right axis) 3.3 3.4 3.2 3.3 3.3 3.3 3.1 3.1 3.1 2.9 2.9 2.9 3.0 2.8 2.8 3 2.7 2.7 40% 2.5 2.5 2.6 2.5 2.3 2.2 2.3 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%25.3%26.0% 24.7%24.4%24.1% 23.7% 24.4% 22.7%23.1%22.8% 23.6% 23.0% 23.1% 22.0% 22.3% 21.6% 21.9% 22.6% 25% 20.7%21.5% 20.6% 20.9%21.5%21.2% 21.4% 21.2%21.2% 20.3% 19.5%19.8% 1 20% 19.1%18.9%18.8% 19.2% 19.5% 18.1%18.6% 17.8% 17.6%16.7% 17.3% 16.8% 17.3%17.0% 16.9% 15% 16.3% 15.9%16.6%15.9% 16.2% 15.7% 16.0%16.4%15.9% 16.4% 14.8% 15.4%15.1% 15.5% 15.3% 14.6%15.3% 0 13.7% 10% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 Source: Shared Research based on company data.

The business reported sales of JPY3.4bn (+2.8% YoY) and operating profit of JPY777mn (+3.1% YoY). Sales rose only modestly in the domestic Parking Lot business, but expanded in the overseas Parking Lot business. Profit rose in tandem with sales growth.

In Japan, the number of parking lots under operation reached 1,192 (+11 from end-FY07/18) and the number of parking spaces was for 43,617 vehicles, marking the first expansion since Q4 FY07/16. This was attributable to restructuring efforts to facilitate new acquisitions as the pace of profitability improvement at existing facilities slowed from that seen until FY07/18. Overseas, the company further strengthened its organizational structure by adding sales personnel in each country, and focused on winning new contracts. In Thailand, a key overseas market for parking lot operations, sales and operating profit both reached record highs on the back of rising revenues from existing facilities and new acquisitions.

Domestic Parking Lot business Sales came to JPY3.0bn (+1.3% YoY), breaking down as JPY2.1bn for Directly Managed Facilities (+0.8% YoY), JPY696mn for Outsourced Management (+1.0% YoY), and JPY233mn for Other (+7.9% YoY).

The company attributed the gains at its domestic parking lot operations to previous efforts (undertaken through FY07/18) to improve the profitability of existing facilities, organizational restructuring (in FY07/19) to facilitate new parking lot acquisitions, and increased activity by sales personnel to secure new facilities. As a result, it was able to acquire 22 new parking lot facilities during Q1 FY07/19. This was not only the first time since Q4 FY07/17 that the company's domestic parking lot business has acquired more than 20 new facilities in a single quarter, it also broke the downtrend in the number of domestic parking lots under contract between Q4 FY07/16 and Q4 FY07/18 (from 1,218 to 1,181). In Q1 FY07/19, the number of domestic parking lots reached 1,192, marking an upturn from the previous quarter. The number of directly managed parking lots (total for monthly and hourly parking) stood at 1,097 (-0.2% YoY), the number of leased parking spaces at 25,745 (+1.7% YoY), the number of rented spaces for monthly parking at 15,009 (+2.6% YoY), and the contract ratio at 92.9% (-1.2pp YoY). Turning to outsourced management parking lots for hourly parking, the number of parking lots stood at 95 (-6.9% YoY) and the number of parking spaces at 17,870 (-2.4% YoY).

FY07/18 initiatives

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In Other businesses, sales increased driven by commission revenue and other factors. The company established parking lot intermediary call centers in Tokyo and Osaka, and a focus on acquiring new parking lots led to an increase in the number of brokered facilities.

Domestic Parking Lot business performance

(JPYmn) Sales Operating profit OPM (right axis) 3,069 2,983 2,998 2,957 2,982 3,038 2,858 2,892 2,884 2,922 3,000 2,684 2,718 2,749 18.5% 19% 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 Q3 Q1 5,513 Q1 Q3 Q1 Q3 Q1 Q3 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19

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

60 1,218 1,209 1,208 1,206 1,195 1,204 1,201 1,198 1,192 1,171 1,183 1,181 50 1,155 1,150 1,155 1,200 1,135 1,120 1,130 40 1,103 Focus on improving profits from 1,073 30 58 existing properties 1,100 1,047 1,03439 44 43 41 20 38 35 38 1,004 34 29 30 39 32 31 979 27 23 24 10 32 21 19 20 17 18 18 22 1,000 948 14 11 16 14 0 -6 -6 -7 -9 -13 -11 -9 -13 -13 -10 -13 -12 -14 -11 -11 929 -19 -19 -16 -19 -15 -17 -20 -17 -17 -20 -20 -10 907 -26 -22 900 835 -33 -20 884 -30 800 Q1 Q3 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 FY07/19 Cancellations and closures Number of new contracts Net increase QoQ Total domestic contracts (right axis)

Directly managed monthly facilities and contracts

Total Japan East Japan Kanto Tokai Kinki West Japan 98%

96%

94%

92%

90%

88%

86% Q1 Q3 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 FY07/19

Monthly car rental Number of contracts QoQ (left axis) No. of monthly rental vehicles (with parking) 6,000 5,728 Number of members 25 40 400 5,6265,513 5,372 Members per vehicle (right axis) 5,500 5,092 24 24.4 4,993 30 300 4,715 25 5,000 4,640 4,6584,584 23 222 4,518 4,454 21 21 4,500 22.7 22 18 167 168 180 20 14215 201 200 127 135 130 134 132 127 22.0 21.9 12 4,000 21.6 21.5 21 109 21.0 10 8 100 3,500 20.7 20.6 20 4 18.4 1 3,000 2,596 19 2,5542,463 18.3 0 0 2,3792,3912,3392,337 2,3992,339 17.7 2,500 2,247 18 2,102 -2 2,357 -5 -5 2,000 2,103 17 -10 -100 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/16 FY07/17 FY07/18 FY07/19 FY07/16 FY07/17 FY07/18 FY07/19

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Overseas Parking Lot business Sales came to JPY331mn (+18.6% YoY), breaking down as JPY194mn for Thailand (+14.5% YoY), JPY58mn for China (-3.3% YoY), and JPY67mn for South Korea (+60.2% YoY). The number of parking lots under operation overseas rose to 50 (+19.0% YoY), and the total number of parking spaces to 12,702 (+4.0% YoY), contributing to an increase in sales. By country, the number of parking lots stood at 30 in Thailand (+11.1% YoY) with 7,971 parking spaces (+11.9% YoY), seven in China (unchanged YoY) with 2,966 parking spaces (-18.2% YoY), and 10 in South Korea (+66.7% YoY) with 1,029 parking spaces (+30.6% YoY). Profit increased supported by sales growth and effects from year-earlier measures to improve profitability.

Thailand and South Korea deliver the largest profit contributions to the overseas Parking Lot business. In Thailand, the business posted record high sales and operating profit thanks to progress in profitability improvement for existing facilities supported by reductions in operating costs and fee increases, and the acquisition of three new monthly parking facilities. Sales growth outpaced the expansion in the number of parking spaces, which confirms profit growth was underpinned by fee hikes. In South Korea, the number of parking spaces increased in tandem with the opening of the Best Western Hotel (total number of parking spaces: 40, number of parking spaces under management: 40).

Overseas Parking Lot business performance

400 China 340 331 350 Thailand (directly managed facilities and outsourced management) 312 302 298 300 Thailand (other) 269 279 Other 243 224 250 208 210 21 20 203 193 203 64 28 24 182 11 36 42 21 200 166 30 17 23 27 153 17 14 133 9 150 118 157 160 168 174 104 161 142 144 148 81 80 79 70 86 11 125 125 132 134 142 100 75 70 120 126 130 53 60 61 95 78 26 85 58 57 50 8 66 68 52 61 58 3 53 59 59 49 57 49 49 56 58 60 63 56 62 58 26 24 29 29 34 37 39 43 44 43 0 1 9 13 18 17 18 20 Q1 Q3 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 FY07/19 Source: Shared Research based on company data

Parking Lot FY07/16 FY07/17 FY07/18 FY07/19 Yo Y chg (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Overseas sales 193 203 208 224 210 243 269 302 279 298 312 340 331 +52 YoY 44.8% 21.8% 14.4% 10.3% 9.1% 19.8% 29.6% 35.2% 32.8% 22.8% 15.8% 12.5% 18.6% Direct ly managed facilit ies 142 147 149 178 150 165 174 180 196 203 218 242 252 +56 Outsourced management 31 39 36 32 32 41 54 58 62 66 70 69 54 -8 Other 18 17 23 14 27 36 42 64 21 28 24 28 24 +3 T hailand 139 142 155 172 161 178 184 208 169 185 184 189 194 +25 YoY 41.8% 10.1% 8.4% 7.5% 15.8% 25.4% 18.7% 20.9% 5.0% 3.9% - -9.1% 14.8% Direct ly managed facilit ies 124 126 131 162 134 141 140 144 148 155 159 165 172 +24 Outsourced management ------2 - - 1 2 2 1 +1 Other 14 17 23 11 27 36 42 64 21 28 24 21 20 -1 China 49 57 49 44 43 49 56 58 60 63 56 62 58 -2 YoY 44.1% 54.1% 25.6% 2.3% -12.2% -14.0% 14.3% 31.8% 39.5% 28.6% - 6.9% -3.3% Direct ly managed facilit ies 16 17 13 12 10 11 15 10 10 11 11 10 10 - Outsourced management 31 39 36 32 32 38 42 47 49 52 46 45 43 -6 Other 2 1 ------7 3 +3 South Korea and Indonesia 3 3 4 8 5 16 29 36 48 50 72 88 75 +27 Operating profit -8 -20 -15 -7 -18 -8 12 28 - - - - - Number of parking facilit ies 31 31 32 35 34 45 41 43 42 44 48 48 50 +8 YoY 63.2% 55.0% 60.0% 66.7% 9.7% 45.2% 28.1% 22.9% 23.5% -2.2% 17.1% 11.6% 19.0% For rent (monthly) 15 14 15 16 16 20 15 16 16 17 19 18 20 +4 For rent (monthly & hourly) 13 13 13 16 15 18 18 19 18 19 21 22 23 +5 Outsourced management 3 4 4 3 3 7 8 8 8 8 8 8 7 -1 T hailand 25 25 26 28 27 32 26 27 27 28 29 28 30 +3 China 5 5 5 5 5 6 7 7 7 7 7 7 7 - South Korea 1 1 1 2 2 5 6 7 6 7 10 10 10 +4 Indonesia - - - - - 2 2 2 2 2 2 2 2 - Total parking spaces 8,015 8,200 8,766 9,613 9,455 11,439 11,360 12,376 12,211 12,555 12,130 12,824 12,702 +491 YoY 29.5% 17.5% 25.6% 37.3% 18.0% 39.5% 29.6% 28.7% 29.1% 9.8% 6.8% 3.6% 4.0% Leased spaces 5,802 5,736 6,302 7,400 7,242 7,686 7,017 7,973 7,818 8,162 8,313 9,007 9,085 +1,267 Managed spaces 2,213 2,464 2,464 2,213 2,213 3,753 4,343 4,403 4,393 4,393 3,817 3,817 3,617 -776 T hailand 5,517 5,702 6,268 7,045 6,887 7,372 6,607 7,212 7,121 7,297 7,298 7,933 7,971 +850 China 2,455 2,455 2,455 2,455 2,455 2,985 3,575 3,635 3,625 3,625 2,966 2,966 2,966 -659 South Korea 43 43 43 113 113 405 501 852 788 956 1,189 1,189 1,029 +241 Indonesia - - - - - 677 677 677 677 677 677 677 677 - Contract ratio (monthly) 66.3% 60.7% 66.3% 60.2% 60.1% 72.4% 97.0% 98.4% 100.0% 96.9% 94.2% 96.2% 97.5% -2.5pp Source: Shared Research based on company data

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Reference

Parking Lot FY07/16 FY07/17 FY07/18 FY07/19 Yo Y chg (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Domestic sales 2,683 2,718 2,749 2,859 2,892 2,884 2,921 2,984 2,998 2,957 2,982 3,069 3,038 +40 Direct ly managed facilit ies 1,876 1,884 1,903 1,979 2,035 2,022 2,039 2,105 2,092 2,079 2,075 2,122 2,108 +16 Outsourced management 647 666 665 677 672 673 664 681 689 686 681 700 696 +7 Other 160 168 181 201 183 189 219 198 216 191 227 247 233 +17 East Japan 187 189 198 214 213 202 209 234 242 233 240 250 245 +3 Kanto 1,305 1,302 1,329 1,387 1,363 1,343 1,356 1,396 1,380 1,357 1,365 1,429 1,407 +27 Tokai 239 264 264 279 283 292 281 287 278 270 267 279 272 -6 Kinki 692 706 699 692 738 750 772 765 792 798 805 817 821 +29 West Japan 258 258 259 286 292 297 304 302 304 299 305 295 291 -13 Yo Y 6.1% 4.9% 5.4% 6.9% 7.8% 6.1% 6.3% 4.4% 3.7% 2.5% 2.1% 2.8% 1.3% Direct ly managed facilit ies 5.0% 3.9% 4.6% 6.3% 8.5% 7.3% 7.1% 6.4% 2.8% 2.8% 1.8% 0.8% 0.8% Outsourced management 8.7% 9.0% 6.1% 5.0% 3.9% 1.1% -0.2% 0.6% 2.5% 1.9% 2.6% 2.8% 1.0% Other 9.6% - 13.1% 18.9% 14.4% 12.5% 21.0% -1.5% 18.0% 1.1% 3.7% 24.7% 7.9% East Japan 25.5% 9.2% 14.5% 16.3% 13.9% 6.9% 5.6% 9.3% 13.6% 15.3% 14.8% 6.8% 1.2% Kanto 4.1% 4.3% 4.9% 7.2% 4.4% 3.1% 2.0% 0.6% 1.2% 1.0% 0.7% 2.4% 2.0% Tokai 6.2% 13.8% 15.8% 17.7% 18.4% 10.6% 6.4% 2.9% -1.8% -7.5% -5.0% -2.8% -2.2% Kinki 0.4% 1.9% 0.9% -0.9% 6.6% 6.2% 10.4% 10.5% 7.3% 6.4% 4.3% 6.8% 3.7% West Japan 22.9% 5.7% 5.3% 9.2% 13.2% 15.1% 17.4% 5.6% 4.1% 0.7% 0.3% -2.3% -4.3% Operating profit 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 17.1% 16.4% 17.0% 17.5% 18.2% 17.5% 18.5% 17.8% - - - - - Number of parking facilit ies 1,155 1,171 1,195 1,218 1,209 1,208 1,206 1,204 1,201 1,198 1,183 1,181 1,192 -9 YoY 2.2% 3.2% 3.5% 5.9% 4.7% 3.2% 0.9% -1.1% -0.7% -0.8% -1.9% -1.9% -0.7% For rent (monthly) 916 928 950 969 961 960 966 969 972 976 968 972 985 +13 For rent (monthly & hourly) 136 139 137 141 139 140 136 131 127 123 121 115 112 -15 Outsourced management 103 104 108 108 109 108 104 104 102 99 94 94 95 -7 Total parking spaces 40,361 41,685 42,219 43,280 43,264 43,087 43,789 44,006 43,619 43,363 43,524 43,563 43,617 -2 YoY 4.3% 7.2% 6.3% 8.2% 7.2% 3.4% 3.7% 1.7% 0.8% 0.6% -0.6% -1.0% -0.0% Leased spaces 23,431 24,162 24,096 25,211 25,112 24,976 25,390 25,720 25,318 25,360 25,668 25,712 25,747 +429 Managed spaces 16,930 17,523 18,123 18,069 18,152 18,111 18,399 18,286 18,301 18,003 17,856 17,851 17,870 -431 Contract ratio (monthly) 92.8% 92.0% 92.7% 93.0% 93.0% 93.0% 94.0% 94.0% 94.1% 92.2% 92.7% 93.4% 92.9% -1.2pp FY07/16 FY07/17 FY07/18 FY07/19 Yo Y chg (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Directy operated (monthly) 916 928 950 969 961 960 966 969 972 976 968 972 985 +13 East Japan 56 55 55 53 52 51 54 55 56 59 59 63 64 +8 Kanto 496 506 516 531 523 516 512 513 512 514 510 503 504 -8 Tokai 73 73 76 76 78 77 76 76 78 78 77 80 79 +1 Kinki 186 186 193 197 195 200 202 202 204 202 201 204 215 +11 West Japan 105 108 110 112 113 116 122 123 122 123 121 122 123 +1 YoY 2.1% 2.9% 3.4% 6.3% 4.9% 3.4% 1.7% - 1.1% 1.7% 0.2% 0.3% 1.3% East Japan 1.8% -3.5% -5.2% -5.4% -7.1% -7.3% -1.8% 3.8% 7.7% 15.7% 9.3% 14.5% 14.3% Kanto 2.9% 4.8% 4.9% 8.6% 5.4% 2.0% -0.8% -3.4% -2.1% -0.4% -0.4% -1.9% -1.6% Tokai - 2.8% 2.7% 2.7% 6.8% 5.5% - - - 1.3% 1.3% 5.3% 1.3% Kinki 1.1% 0.5% 2.7% 5.9% 4.8% 7.5% 4.7% 2.5% 4.6% 1.0% -0.5% 1.0% 5.4% West Japan 1.9% 1.9% 2.8% 4.7% 7.6% 7.4% 10.9% 9.8% 8.0% 6.0% -0.8% -0.8% 0.8% Leased parking spaces 14,374 14,598 14,704 15,114 15,026 14,920 15,293 15,730 15,647 15,706 15,933 16,144 16,253 +606 East Japan 888 879 883 872 813 794 846 848 850 933 942 1,004 1,001 +151 Kanto 7,840 8,009 8,106 8,342 8,214 8,101 8,239 8,495 8,389 8,477 8,535 8,559 8,541 +152 Tokai 1,044 1,078 1,087 1,087 1,125 1,089 1,112 1,078 1,069 1,104 1,095 1,170 1,117 +48 Kinki 2,884 2,892 3,004 3,072 3,099 3,097 3,177 3,337 3,375 3,321 3,485 3,499 3,673 +298 West Japan 1,718 1,740 1,624 1,741 1,775 1,839 1,919 1,972 1,964 1,871 1,876 1,912 1,921 -43 YoY 4.9% 5.8% 3.6% 6.2% 4.5% 2.2% 4.0% 4.1% 4.1% 5.3% 4.2% 2.6% 3.9% East Japan -1.8% -4.2% -2.0% 0.2% -8.4% -9.7% -4.2% -2.8% 4.6% 17.5% 11.3% 18.4% 17.8% Kanto 4.9% 7.1% 4.8% 7.3% 4.8% 1.1% 1.6% 1.8% 2.1% 4.6% 3.6% 0.8% 1.8% Tokai 11.8% 14.0% 11.6% 5.9% 7.8% 1.0% 2.3% -0.8% -5.0% 1.4% -1.5% 8.5% 4.5% Kinki 3.7% 2.0% 3.8% 7.9% 7.5% 7.1% 5.8% 8.6% 8.9% 7.2% 9.7% 4.9% 8.8% West Japan 6.9% 7.7% -3.4% 1.9% 3.3% 5.7% 18.2% 13.3% 10.6% 1.7% -2.2% -3.0% -2.2% Rented out parking spaces 13,344 13,426 13,635 14,051 13,967 13,882 14,369 14,782 14,717 14,488 14,770 15,085 15,099 +382 East Japan 816 805 813 798 742 740 793 790 822 893 920 964 957 +135 Kanto 7,196 7,302 7,490 7,715 7,582 7,458 7,726 7,966 7,819 7,746 7,719 7,828 7,835 +16 Tokai 1,009 1,028 1,017 1,012 1,031 1,034 1,040 1,037 1,016 1,002 1,037 1,119 1,049 +33 Kinki 2,753 2,700 2,765 2,882 2,912 2,898 3,016 3,161 3,225 3,172 3,349 3,397 3,498 +273 West Japan 1,570 1,591 1,550 1,644 1,700 1,752 1,794 1,828 1,835 1,675 1,745 1,777 1,760 -75 Contract ratio 92.8% 92.0% 92.7% 93.0% 93.0% 93.0% 94.0% 94.0% 94.1% 92.2% 92.7% 93.4% 92.9% -1.2pp East Japan 91.9% 91.6% 92.1% 91.5% 91.3% 93.2% 93.7% 93.2% 96.7% 95.7% 97.7% 96.0% 95.6% -1.1pp Kanto 91.8% 91.2% 92.4% 92.5% 92.3% 92.1% 93.8% 93.8% 93.2% 91.4% 90.4% 91.5% 91.7% -1.5pp Tokai 96.6% 95.4% 93.6% 93.1% 91.6% 94.9% 93.5% 96.2% 95.0% 90.8% 94.7% 95.6% 93.9% -1.1pp Kinki 95.5% 93.4% 92.0% 93.8% 94.0% 93.6% 94.9% 94.7% 95.6% 95.5% 96.1% 97.1% 95.2% -0.3pp West Japan 91.4% 91.4% 95.4% 94.4% 95.8% 95.3% 93.5% 92.7% 93.4% 89.5% 93.0% 92.9% 91.6% -1.8pp YoY -0.2pp -1.4pp +0.1pp -0.4pp +0.1pp +1.1pp +1.2pp +1.0pp +1.1pp -0.8pp -1.3pp -0.5pp -1.2pp East Japan +2.5pp +2.3pp +3.1pp -0.8pp -0.6pp +1.6pp +1.7pp +1.6pp +5.4pp +2.5pp +3.9pp +2.9pp -1.1pp Kanto -1.9pp -2.3pp +0.3pp -0.8pp +0.5pp +0.9pp +1.4pp +1.3pp +0.9pp -0.7pp -3.3pp -2.3pp -1.5pp Tokai +2.6pp -2.4pp -1.0pp -1.7pp -5.0pp -0.4pp -0.0pp +3.1pp +3.4pp -4.2pp +1.2pp -0.6pp -1.1pp Kinki +1.9pp -1.4pp -2.9pp -1.2pp -1.5pp +0.2pp +2.9pp +0.9pp +1.6pp +1.9pp +1.2pp +2.4pp -0.3pp West Japan +0.7pp +0.8pp +3.6pp +3.4pp +4.4pp +3.8pp -2.0pp -1.7pp -2.3pp -5.7pp -0.5pp +0.2pp -1.8pp Spaces per facilit y 15.7 15.7 15.5 15.6 15.6 15.5 15.8 16.2 16.1 16.1 16.5 16.6 16.5 +0.4 East Japan 15.9 16.0 16.1 16.5 15.6 15.6 15.7 15.4 15.2 15.8 16.0 15.9 15.6 +0.5 Kanto 15.8 15.8 15.7 15.7 15.7 15.7 16.1 16.6 16.4 16.5 16.7 17.0 16.9 +0.6 Tokai 14.3 14.8 14.3 14.3 14.4 14.1 14.6 14.2 13.7 14.2 14.2 14.6 14.1 +0.4 Kinki 15.5 15.5 15.6 15.6 15.9 15.5 15.7 16.5 16.5 16.4 17.3 17.2 17.1 +0.5 West Japan 16.4 16.1 14.8 15.5 15.7 15.9 15.7 16.0 16.1 15.2 15.5 15.7 15.6 -0.5 YoY 2.7% 2.9% 0.3% -0.0% -0.4% -1.2% 2.3% 4.1% 3.0% 3.5% 4.0% 2.3% 2.5% East Japan -3.5% -0.8% 3.3% 5.9% -1.4% -2.6% -2.4% -6.3% -2.9% 1.6% 1.9% 3.4% 3.0% Kanto 1.9% 2.2% -0.1% -1.2% -0.6% -0.8% 2.4% 5.4% 4.3% 5.0% 4.0% 2.8% 3.4% Tokai 11.8% 10.8% 8.7% 3.2% 0.9% -4.2% 2.3% -0.8% -5.0% 0.1% -2.8% 3.1% 3.2% Kinki 2.6% 1.4% 1.1% 1.8% 2.5% -0.4% 1.0% 5.9% 4.1% 6.2% 10.2% 3.8% 3.3% West Japan 4.9% 5.7% -6.1% -2.7% -4.0% -1.6% 6.5% 3.1% 2.5% -4.1% -1.4% -2.2% -3.0% Source: Shared Research based on company data

68/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

FY07/16 FY07/17 FY07/18 FY07/19 Yo Y chg (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Monthly & hourly 136 139 137 141 139 140 136 131 127 123 121 115 112 -15 East Japan 16 19 18 18 18 18 18 18 19 17 16 14 14 -5 Kanto 37 38 37 39 39 40 37 35 33 33 32 31 31 -2 Tokai 18 18 20 21 21 21 19 17 15 15 14 14 14 -1 Kinki 47 46 44 44 43 43 44 42 41 41 39 40 37 -4 West Japan 18 18 18 19 18 18 18 19 19 17 20 16 16 -3 YoY -0.7% 2.2% 0.7% 3.7% 2.2% 0.7% -0.7% -7.1% -8.6% -12.1% -11.0% -12.2% -11.8% East Japan 14.3% 35.7% 20.0% 20.0% 12.5% -5.3% - - 5.6% -5.6% -11.1% -22.2% -26.3% Kanto -5.1% -2.6% -2.6% 2.6% 5.4% 5.3% - -10.3% -15.4% -17.5% -13.5% -11.4% -6.1% Tokai - - 11.1% 16.7% 16.7% 16.7% -5.0% -19.0% -28.6% -28.6% -26.3% -17.6% -6.7% Kinki -4.1% -4.2% -8.3% -6.4% -8.5% -6.5% - -4.5% -4.7% -4.7% -11.4% -4.8% -9.8% West Japan 5.9% 5.9% 5.9% 5.6% - - - - 5.6% -5.6% 11.1% -15.8% -15.8% Leased spaces 9,057 9,564 9,392 10,097 10,086 10,056 10,097 9,990 9,671 9,654 9,735 9,568 9,494 -177 East Japan 1,345 1,786 1,747 1,747 1,747 1,753 1,932 1,930 1,949 1,879 1,864 1,806 1,806 -143 Kanto 2,286 2,326 2,288 2,475 2,483 2,520 2,376 2,316 2,136 2,249 2,217 2,190 2,190 +54 Tokai 2,608 2,610 2,683 2,831 2,822 2,816 2,785 2,677 2,606 2,616 2,587 2,598 2,618 +12 Kinki 2,077 2,099 1,912 2,008 2,042 1,975 1,991 1,890 1,803 1,819 1,805 1,914 1,815 +12 West Japan 741 743 762 1,036 992 992 1,013 1,177 1,177 1,091 1,262 1,060 1,065 -112 YoY 1.6% 8.6% 4.9% 12.7% 11.4% 5.1% 7.5% -1.1% -4.1% -4.0% -3.6% -4.2% -1.8% East Japan 22.8% 63.1% 34.9% 34.9% 29.9% -1.8% 10.6% 10.5% 11.6% 7.2% -3.5% -6.4% -7.3% Kanto -2.2% 1.0% 0.6% 7.1% 8.6% 8.3% 3.8% -6.4% -14.0% -10.8% -6.7% -5.4% 2.5% Tokai 0.2% 0.3% 3.8% 9.4% 8.2% 7.9% 3.8% -5.4% -7.7% -7.1% -7.1% -3.0% 0.5% Kinki -3.6% 0.9% -7.9% -0.7% -1.7% -5.9% 4.1% -5.9% -11.7% -7.9% -9.3% 1.3% 0.7% West Japan 1.8% 2.1% 4.7% 39.8% 33.9% 33.5% 32.9% 13.6% 18.6% 10.0% 24.6% -9.9% -9.5% Spaces per facilit y 66.6 68.8 68.6 71.6 72.6 71.8 74.2 76.3 76.1 78.5 80.5 83.2 84.8 +8.6 East Japan 84.1 94.0 97.1 97.1 97.1 97.4 107.3 107.2 102.6 110.5 116.5 129.0 129.0 +26.4 Kanto 61.8 61.2 61.8 63.5 63.7 63.0 64.2 66.2 64.7 68.2 69.3 70.6 70.6 +5.9 Tokai 144.9 145.0 134.2 134.8 134.4 134.1 146.6 157.5 173.7 174.4 184.8 185.6 187.0 +13.3 Kinki 44.2 45.6 43.5 45.6 47.5 45.9 45.3 45.0 44.0 44.4 46.3 47.9 49.1 +5.1 West Japan 41.2 41.3 42.3 54.5 55.1 55.1 56.3 61.9 61.9 64.2 63.1 66.3 66.6 +4.6 YoY 2.3% 6.2% 4.1% 8.7% 9.0% 4.4% 8.3% 6.5% 4.9% 9.3% 8.4% 9.1% 11.3% East Japan 7.5% 20.2% 12.4% 12.4% 15.5% 3.6% 10.6% 10.5% 5.7% 13.5% 8.5% 20.3% 25.8% Kanto 3.1% 3.7% 3.3% 4.3% 3.0% 2.9% 3.8% 4.3% 1.7% 8.2% 7.9% 6.8% 9.1% Tokai 0.2% 0.3% -6.6% -6.2% -7.3% -7.5% 9.3% 16.8% 29.3% 30.1% 26.1% 17.8% 7.6% Kinki 0.5% 5.3% 0.5% 6.0% 7.5% 0.7% 4.1% -1.4% -7.4% -3.4% 2.3% 6.3% 11.5% West Japan -3.9% -3.6% -1.1% 32.5% 33.9% 33.5% 32.9% 13.6% 12.4% 16.4% 12.1% 6.9% 7.5% FY07/16 FY07/17 FY07/18 FY07/19 Yo Y chg (Units, spaces) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Outsourced management 103 104 108 108 109 108 104 104 102 99 94 94 95 -7 East Japan 13 13 15 15 15 15 14 14 14 13 13 13 13 -1 Kanto 37 37 39 39 40 39 37 37 38 36 37 38 39 +1 Tokai 14 15 15 15 15 15 13 14 14 14 13 13 13 -1 Kinki 23 24 24 24 24 25 26 26 24 23 22 21 21 -3 West Japan 16 15 15 15 15 14 14 13 12 13 9 9 9 -3 YoY 7.3% 7.2% 8.0% 5.9% 5.8% 3.8% -3.7% -3.7% -6.4% -8.3% -9.6% -9.6% -6.9% East Japan 44.4% 18.2% 36.4% 15.4% 15.4% 15.4% -6.7% -6.7% -6.7% -13.3% -7.1% -7.1% -7.1% Kanto 5.7% 2.8% 5.4% 5.4% 8.1% 5.4% -5.1% -5.1% -5.0% -7.7% - 2.7% 2.6% Tokai 16.7% 15.4% 15.4% 15.4% 7.1% - -13.3% -6.7% -6.7% -6.7% - -7.1% -7.1% Kinki -4.2% 9.1% 9.1% 9.1% 4.3% 4.2% 8.3% 8.3% - -8.0% -15.4% -19.2% -12.5% West Japan - - -11.8% -11.8% -6.3% -6.7% -6.7% -13.3% -20.0% -7.1% -35.7% -30.8% -25.0% Leased spaces 16,930 17,523 18,123 18,069 18,152 18,111 18,399 18,286 18,301 18,003 17,856 17,851 17,870 -431 East Japan 1,567 1,567 2,088 2,118 2,118 2,118 1,924 1,924 1,924 1,892 1,892 1,892 1,892 -32 Kanto 8,934 8,934 9,089 9,049 9,113 9,043 8,888 8,894 9,045 8,934 9,192 9,307 9,326 +281 Tokai 1,797 2,125 2,125 2,125 2,125 2,125 2,035 2,099 2,099 2,099 2,008 2,008 2,008 -91 Kinki 3,189 3,492 3,492 3,492 3,511 3,569 4,296 4,194 4,164 4,034 3,803 3,683 3,683 -481 West Japan 1,443 1,405 1,329 1,285 1,285 1,256 1,256 1,175 1,069 1,044 961 961 961 -108 YoY 5.3% 7.5% 9.2% 7.6% 7.2% 3.4% 1.5% 1.2% 0.8% -0.6% -3.0% -2.4% -2.4% East Japan 48.8% 15.6% 54.1% 35.2% 35.2% 35.2% -7.9% -9.2% -9.2% -10.7% -1.7% -1.7% -1.7% Kanto 1.3% 0.8% 1.7% 1.3% 2.0% 1.2% -2.2% -1.7% -0.7% -1.2% 3.4% 4.6% 3.1% Tokai 17.5% 33.4% 27.8% 27.8% 18.3% - -4.2% -1.2% -1.2% -1.2% -1.3% -4.3% -4.3% Kinki -1.9% 11.6% 11.6% 11.6% 10.1% 2.2% 23.0% 20.1% 18.6% 13.0% -11.5% -12.2% -11.6% West Japan 1.6% 3.5% -11.8% -14.7% -10.9% -10.6% -5.5% -8.6% -16.8% -16.9% -23.5% -18.2% -10.1% Spaces per facilit y 164.4 168.5 167.8 167.3 166.5 167.7 176.9 175.8 179.4 181.8 190.0 189.9 188.1 +8.7 East Japan 120.5 120.5 139.2 141.2 141.2 141.2 137.4 137.4 137.4 145.5 145.5 145.5 145.5 +8.1 Kanto 241.5 241.5 233.1 232.0 227.8 231.9 240.2 240.4 238.0 248.2 248.4 244.9 239.1 +1.1 Tokai 128.4 141.7 141.7 141.7 141.7 141.7 156.5 149.9 149.9 149.9 154.5 154.5 154.5 +4.5 Kinki 138.7 145.5 145.5 145.5 146.3 142.8 165.2 161.3 173.5 175.4 172.9 175.4 175.4 +1.9 West Japan 90.2 93.7 88.6 85.7 85.7 89.7 89.7 90.4 89.1 80.3 106.8 106.8 106.8 +17.7 YoY -1.8% 0.3% 1.2% 1.6% 1.3% -0.5% 5.4% 5.1% 7.7% 8.4% 7.4% 8.0% 4.8% East Japan 3.0% -2.1% 13.0% 17.1% 17.1% 17.1% -1.3% -2.7% -2.7% 3.1% 5.9% 5.9% 5.9% Kanto -4.2% -1.9% -3.5% -3.9% -5.6% -4.0% 3.1% 3.6% 4.5% 7.0% 3.4% 1.9% 0.5% Tokai 0.7% 15.6% 10.7% 10.7% 10.4% - 10.5% 5.8% 5.8% 5.8% -1.3% 3.0% 3.0% Kinki 2.4% 2.3% 2.3% 2.3% 5.5% -1.9% 13.6% 10.9% 18.6% 22.9% 4.6% 8.7% 1.1% West Japan 1.6% 3.5% -0.1% -3.3% -5.0% -4.2% 1.3% 5.5% 4.0% -10.5% 19.0% 18.1% 19.9% Source: Shared Research based on company data

69/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Contracts and properties FY07/16 FY07/17 FY07/18 FY07/19 Yo Y chg ( Unit s ) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Leased and managed parking spaces 48,376 49,885 51,005 52,893 52,612 54,526 55,149 56,382 55,830 55,918 55,654 56,387 56,319 +489 Domestic 40,361 41,685 42,219 43,280 43,264 43,087 43,789 44,006 43,619 43,363 43,524 43,563 43,617 -2 Leased parking spaces for rent: monthly 14,374 14,598 14,704 15,114 15,026 14,920 15,293 15,730 15,647 15,706 15,933 16,144 16,253 +606 Leased parking spaces for rent: monthly & hourly 9,057 9,564 9,392 10,097 10,086 10,056 10,097 9,990 9,671 9,654 9,735 9,568 9,494 -177 Managed hourly parking spaces 16,930 17,523 18,123 18,069 18,152 18,111 18,399 18,286 18,301 18,003 17,856 17,851 17,870 -431 Rented out monthly parking spaces 13,344 13,426 13,635 14,051 13,967 13,882 14,369 14,782 14,717 14,488 14,770 15,085 15,099 +382 Contract ratio 92.8% 92.0% 92.7% 93.0% 93.0% 93.0% 94.0% 94.0% 94.1% 92.2% 92.7% 93.4% 92.9% -1.2pp Sales per space (JPY'000) 66.5 65.2 65.1 66.1 66.8 66.9 66.7 67.8 68.7 68.2 68.5 70.4 69.7 +0.9 YoY 1.7% -2.1% -0.8% -1.3% 0.6% 2.7% 2.4% 2.7% 2.8% 1.9% 2.7% 3.9% 1.3% YoY 4.3% 7.2% 6.3% 8.2% 7.2% 3.4% 3.7% 1.7% 0.8% 0.6% -0.6% -1.0% -0.0% Leased parking spaces for rent: monthly 4.9% 5.8% 3.6% 6.2% 4.5% 2.2% 4.0% 4.1% 4.1% 5.3% 4.2% 2.6% 3.9% Leased parking spaces for rent: monthly & hourly 1.6% 8.6% 4.9% 12.7% 11.4% 5.1% 7.5% -1.1% -4.1% -4.0% -3.6% -4.2% -1.8% Managed hourly parking spaces 5.3% 7.5% 9.2% 7.6% 7.2% 3.4% 1.5% 1.2% 0.8% -0.6% -3.0% -2.4% -2.4% Overseas 8,015 8,200 8,786 9,613 9,455 11,439 11,360 12,376 12,211 12,555 12,130 12,824 12,702 +491 Leased parking spaces for rent: monthly 460 394 460 533 556 685 440 439 466 518 534 554 592 +126 Leased parking spaces for rent: monthly & hourly 5,342 5,342 5,862 6,867 6,686 7,001 6,577 7,534 7,352 7,644 7,779 8,453 8,493 +1,141 Managed hourly parking spaces 2,213 2,464 2,464 2,213 2,213 3,753 4,343 4,403 4,393 4,393 3,817 3,817 3,617 -776 Rented out monthly parking spaces 305 239 305 321 334 496 427 432 466 502 503 533 577 +111 Contract ratio 66.3% 60.7% 66.3% 60.2% 60.1% 72.4% 97.0% 98.4% 100.0% 96.9% 94.2% 96.2% 97.5% -2.5pp YoY 29.5% 17.5% 25.9% 37.3% 18.0% 39.5% 29.3% 28.7% 29.1% 9.8% 6.8% 3.6% 4.0% Leased parking spaces for rent: monthly 20.9% 73.9% -4.3% -17.6% -16.2% -24.4% 21.4% 26.2% 27.0% Leased parking spaces for rent: monthly & hourly 13.7% -2.7% 6.8% 25.4% 25.2% 31.1% 12.2% 9.7% 10.0% 9.2% 18.3% 12.2% 15.5% Managed hourly parking spaces 48.6% 65.5% 65.5% 45.5% - 52.3% 76.3% 99.0% 98.5% 17.1% -12.1% -13.3% -17.7% Thailand 5,517 5,702 6,288 7,045 6,887 7,372 6,607 7,212 7,121 7,297 7,298 7,933 7,971 +850 Leased parking spaces for rent: monthly 460 394 460 463 486 536 291 290 317 369 370 390 428 +111 Leased parking spaces for rent: monthly & hourly 5,057 5,057 5,577 6,582 6,401 6,586 6,066 6,672 6,554 6,678 6,678 7,293 7,293 +739 Managed hourly parking spaces 251 251 250 250 250 250 250 250 250 250 - Rented out monthly parking spaces 305 239 305 308 299 349 278 283 317 353 354 381 425 +108 Contract ratio 66.3% 60.7% 66.3% 66.5% 61.5% 65.1% 95.5% 97.6% 100.0% 95.7% 95.7% 97.7% 99.3% -0.7pp China 2,455 2,455 2,455 2,455 2,455 2,985 3,575 3,635 3,625 3,625 2,951 2,951 2,951 -674 Leased parking spaces for rent: monthly & hourly 242 242 242 242 242 242 242 242 242 242 242 242 242 - Managed hourly parking spaces 2,213 2,213 2,213 2,213 2,213 2,743 3,333 3,393 3,383 3,383 2,709 2,709 2,709 -674 South Korea 43 43 43 113 113 405 501 852 788 956 1,189 1,189 1,029 +241 Leased parking spaces for rent: monthly 70 70 32 32 32 32 32 32 32 32 - Leased parking spaces for rent: monthly & hourly 43 43 43 43 43 173 269 620 556 724 859 859 899 +343 Managed hourly parking spaces 200 200 200 200 200 298 298 98 -102 Rented out monthly parking spaces 13 35 30 32 32 32 32 32 32 32 - Contract ratio 18.6% 50.0% 93.8% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% - Indonesia 677 677 677 677 677 677 677 677 - Leased parking spaces for rent: monthly 117 117 117 117 117 117 117 117 - Managed hourly parking spaces 560 560 560 560 560 560 560 560 - Rented out monthly parking spaces 117 117 117 117 117 117 117 117 - Contract ratio 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% - Taiwan 59 Rented out monthly parking spaces 59 Parking lot facilities (properties) 1,186 1,202 1,227 1,253 1,244 1,253 1,247 1,247 1,243 1,242 1,231 1,229 1,242 -1 Domestic 1,155 1,171 1,195 1,218 1,209 1,208 1,206 1,204 1,201 1,198 1,183 1,181 1,192 -9 Leased parking facilities for rent (monthly) 916 928 950 969 961 960 966 969 972 976 968 972 985 +13 Leased parking facilities for rent (monthly & hourly) 136 139 137 141 139 140 136 131 127 123 121 115 112 -15 Managed hourly parking facilities 103 104 108 108 109 108 104 104 102 99 94 94 95 -7 Sales per facility 2.26 2.26 2.24 2.28 2.32 2.30 2.34 2.39 2.41 2.38 2.42 2.50 2.45 +0.03 YoY 2.8% 0.8% 1.0% -0.1% 2.8% 1.8% 4.6% 4.9% 3.7% 3.4% 3.4% 4.4% 1.4% YoY 2.2% 3.2% 3.5% 5.9% 4.7% 3.2% 0.9% -1.1% -0.7% -0.8% -1.9% -1.9% -0.7% Leased parking facilities for rent (monthly) 2.1% 2.9% 3.4% 6.3% 4.9% 3.4% 1.7% - 1.1% 1.7% 0.2% 0.3% 1.3% Leased parking facilities for rent (monthly & hourly) -0.7% 2.2% 0.7% 3.7% 2.2% 0.7% -0.7% -7.1% -8.6% -12.1% -11.0% -12.2% -11.8% Managed hourly parking facilities 7.3% 7.2% 8.0% 5.9% 5.8% 3.8% -3.7% -3.7% -6.4% -8.3% -9.6% -9.6% -6.9% Overseas 31 31 32 35 34 45 41 43 42 44 48 48 50 +8 Leased parking facilities for rent (monthly) 15 14 15 16 16 20 15 16 16 17 19 18 20 +4 Leased parking facilities for rent (monthly & hourly) 13 13 13 16 15 18 18 19 18 19 21 22 23 +5 Managed hourly parking facilities 3 4 4 3 3 7 8 8 8 8 8 8 7 -1 YoY 63.2% 55.0% 60.0% 66.7% 9.7% 45.2% 28.1% 22.9% 23.5% -2.2% 17.1% 11.6% 19.0% Thailand 25 25 26 28 27 32 26 27 27 28 29 28 30 +3 Leased parking facilities for rent (monthly) 15 14 15 15 15 18 13 14 14 15 16 15 17 +3 Leased parking facilities for rent (monthly & hourly) 10 10 10 13 12 13 12 12 12 12 12 12 12 - Managed hourly parking facilities 1 1 1 1 1 1 1 1 1 1 - China 5 5 5 5 5 6 7 7 7 7 6 6 6 -1 Leased parking facilities for rent (monthly & hourly) 2 2 2 2 2 2 2 2 2 2 2 2 2 - Managed hourly parking facilities 3 3 3 3 3 4 5 5 5 5 4 4 4 -1 South Korea 1 1 1 2 2 5 6 7 6 7 10 10 10 +4 Leased parking facilit ies for rent (mont hly) 1 1 1 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 7 7 8 +4 Managed hourly parking facilities 1 1 1 1 1 2 2 1 - Indonesia 2 2 2 2 2 2 2 2 - Leased parking facilit ies for rent (mont hly) 1 1 1 1 1 1 1 1 - Managed hourly parking facilities 1 1 1 1 1 1 1 1 - Taiwan 1 1 +1 Leased parking facilit ies for rent (mont hly & hourly) 1 1 +1 Parking spaces per leased facility 40.8 41.5 41.6 42.2 42.3 43.5 44.2 45.2 44.9 45.0 45.2 45.9 45.3 +0.4 Domestic 34.9 35.6 35.3 35.5 35.8 35.7 36.3 36.5 36.3 36.2 36.8 36.9 36.6 +0.3 Leased parking facility for rent (monthly) 15.7 15.7 15.5 15.6 15.6 15.5 15.8 16.2 16.1 16.1 16.5 16.6 16.5 +0.4 Leased parking facility for rent (monthly & hourly) 66.6 68.8 68.6 71.6 72.6 71.8 74.2 76.3 76.1 78.5 80.5 83.2 84.8 +8.6 Managed hourly parking 164.4 168.5 167.8 167.3 166.5 167.7 176.9 175.8 179.4 181.8 190.0 189.9 188.1 +8.7 Overseas 258.5 264.5 274.6 274.7 278.1 254.2 277.1 287.8 290.7 285.3 252.7 267.2 254.0 -36.7 Leased parking facility for rent (monthly) 30.7 28.1 30.7 33.3 34.8 34.3 29.3 27.4 29.1 30.5 28.1 30.8 29.6 +0.5 Leased parking facility for rent (monthly & hourly) 410.9 410.9 450.9 429.2 445.7 388.9 365.4 396.5 408.4 402.3 370.4 384.2 369.3 -39.2 Managed hourly parking 737.7 616.0 616.0 737.7 737.7 536.1 542.9 550.4 549.1 549.1 477.1 477.1 516.7 -32.4 Source: Shared Research based on company data

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Ski Resort business

Ski Resort business: sales and earnings trends (quarterly)

Sales Operating profit OPM (right axis) 3,000 60% 2,500 50% 2,000 40% 1,500 30% 913 1,000 808 800 20% 559 619 646 616 430 383 499 503 450 500 195 318 271 10% 52 150 155 0 0% -41 -114 -81 -149 -240-184 -201-193 -245 -175 -240 -500 -313 -374-265 -334 -255 -10% -515 -527 -483 -1,000 -20% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 (JPYmn) FY07/10 FY07/11 FY07/12 FY07/13 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/19 Source: Shared Research based on company data

The business reported sales of JPY868mn (+6.5% YoY) and an operating loss of JPY240mn (versus operating loss of JPY255mn in FY07/18). The operating loss narrowed as a result of higher sales driven by stronger summer-season initiatives and an increase in the number of visitors.

The number of visitors on lift facilities (gondolas, ropeway, lifts) totaled 254,000 (+7.9% YoY). The increase reflected successful openings of new facilities at the Hakuba Iwatake Mountain Resort and Tsugaike Highland Ski-Area, both located in Hakuba Valley. The mountain-top terrace Hakuba Mountain Harbor opened at Hakuba Iwatake in October, and attracted over 20,000 visitors in that month alone. The outdoor adventure park Xtrem Aventures Hakuba Tsugaike Wow! was opened at Tsugaike Highland in August. At the same time, the number of visitors at Sora Terrace, which offers views of the seas of clouds below, declined only 3.6% YoY despite less business days than the previous year accompanying a scheduled large-scale ropeway maintenance.

On the profit front, the operating loss narrowed as sales growth offset an increase in cost of sales and SG&A expenses.

Sales and profit in the business tend to be weighted toward Q2 and Q3 during winter season. In addition, the company expects an increase in visits by holders of the Epic Pass based on the alliance agreement concluded with Vail Resorts from FY07/19.

NPD has concluded a long-term alliance agreement with Vail Resorts, which operates the world’s biggest seasonal lift pass, the Epic Pass. Holders of the Epic Pass (740,000) are allowed to ski five consecutive days for free at 10 locations in Hakuba Valley.

Visitor count by ski resort during summer season

Summer facility (with operating ropeway) FY07/16 FY07/17 FY07/18 FY07/19 FY07/16 FY07/17 FY07/18 FY07/16 FY07/17 FY07/18 FY07/16 FY07/17 FY07/18 ('000) Q1 Q1 Q1 Q1 Yo Y 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY Yo Y Hakuba Happo-one International Mountain Resort 77 67 70 69 -2.0% 78 67 70 5.0% 78 67 70 5.0% 112 98 105 7.1% Hakuba Iwatake Mountain Resort 21 15 18 37 96.4% 21 16 20 22.6% 21 16 21 22.6% 31 25 34 36.9% Tsugaike Kogen 64 51 52 57 10.1% 64 51 52 2.3% 64 51 52 2.3% 95 78 81 3.7% Ryuoo Mountain Park 16 38 77 74 -3.6% 16 41 83 103.3% 16 41 83 103.3% 31 60 112 85.4% Mt. Kongo Ropeway 16 15 14 -3.9% - 23 22 -5.2% 4 28 27 -1.8% 20 48 43 -10.8% Subtotal 180 190 235 254 7.9% 181 200 249 24.8% 181 204 255 24.8% 290 309 375 21.4% Summer facility (other) FY07/16 FY07/17 FY07/18 FY07/19 FY07/16 FY07/17 FY07/18 FY07/16 FY07/17 FY07/18 FY07/16 FY07/17 FY07/18 ('000) Q1 Q1 Q1 Q1 Yo Y 1H 1H 1H Yo Y Cml. Q3 Cml. Q3 Cml. Q3 Yo Y FY FY FY Yo Y Kashimayari Sport s V illage 10 6 5 6 4.2% 10 7 6 -21.8% 10 9 7 -19.0% 13 13 12 -9.9% Kawaba Resort 21 16 15 17 11.4% 27 22 20 -7.7% 27 22 21 -3.2% 47 40 36 -15.1% Meiho Kogen Development 5 10 11 12 12.8% 6 12 13 5.4% 6 13 15 14.5% 12 22 24 8.1% Shinetsu Sakudo Maintenance 0 0 0 -12.8% - 1 1 4.6% - 1 1 3.1% 1 2 1 -5.8% Subtotal 37 34 33 37 9.9% 44 44 41 -6.1% 44 47 46 -0.9% 74 78 72 -7.8% Total 217 224 268 291 8.6% 225 244 290 18.9% 225 251 301 19.9% 365 387 447 15.5% Source: Shared Research based on company data

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Visitor count by ski resort during winter*

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 74 19 4 HAKUBA VALLEY Iwatake Snow Field 6 25 44 24 - 11 38 50 21 0 HAKUBA VALLEY Tsugaike Kogen Ski Resort - 34 82 82 56 7 2 - 39 80 85 54 8 1 HAKUBA VALLEY Kashimayari Ski Resort 10 33 30 20 1 11 34 29 17 0 Ryuoo Ski Park 35 55 62 44 3 - 29 52 68 48 3 Kawaba Ski Resort 26 45 37 30 8 - 18 36 39 33 6 Meiho Ski Resort 22 61 60 36 2 24 61 61 37 1 Sugadaira Kogen Snow Resort 33 92 77 40 1 34 90 83 37 0 Total - 215 508 507 332 45 14 3 228 518 542 324 40 HAKUBA VALLEY Happo-one Winter Resort - -13 +8 -6 -1 +4 +7 +2 +14 +11 +11 -4 -2 -4 HAKUBA VALLEY Iwatake Snow Field - - +7 +12 +8 - - - +5 +13 +6 -3 +0 - HAKUBA VALLEY Tsugaike Kogen Ski Resort - -13 +2 +13 +7 +4 +2 - +5 -2 +3 -2 +1 -1 HAKUBA VALLEY Kashimayari Ski Resort - -5 -2 +1 +5 - - - +1 +1 -1 -3 -1 - Ryuoo Ski Park - -10 +1 +5 +7 +2 - - -6 -3 +6 +4 - - Kawaba Ski Resort - +15 +15 +1 +5 +5 - - -8 -9 +2 +3 -2 - Meiho Ski Resort - +19 +10 -1 +12 +2 - - +2 - +1 +1 -1 - Sugadaira Kogen Snow Resort - +6 -1 +2 +2 +1 - - +1 -2 +6 -3 -1 - Total - - +39 +25 +47 +17 +12 +3 +13 +10 +35 -8 -5 - Source: Shared Research based on company data

Theme Park business The business reported sales of JPY1.4bn (+19.4% YoY) and operating profit of JPY679mn (+24.6% YoY). Sales and profit rose on an increase in the number of visitors driven by new attractions and events.

Th number of visitors totaled 246,000 (+23.9% YoY), breaking down as 237,000 visitors (+22.7% YoY) at Nasu Highland Park and 8,000 visitors (+67.1% YoY) at the NOZARU aerial athletic facility. The company simultaneously launched three new attractions in this business during summer vacation season, which is its busy season. It also hosted a “Dino-A-Live” show (world’s first 2-legged animatronic dinosaur show operated by ON-ART Corp.). In October, it held a “Spooky Halloween” event in Nasu Highland Park in collaboration with Obaken Haunted Mansion (in Honan-cho, Tokyo). The company also continued its focus on developing repeat customers (started in FY07/18) by hosting events such as offline meetings of dog owners at amusement parks and concerts by local brass bands in Tochigi Prefecture.

Operating profit in the business increased thanks to sales growth.

FY07/18 results (out September 7, 2018)

FY07/18: Operating profit up JPY466mn YoY with all segments reporting higher earnings. Sales were below plan but earnings ▷ still finished in line with plan thanks to gains at the domestic Parking Lot business, good weather and the success of measures to combat poor snowfalls at the Ski Resort business, and the opening of new cost-efficient attractions and more events at the Theme

Park business

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Parking Lot business: The company saw profitability improve again in FY07/18 at existing parking lots in Japan and this ▷ together with positive growth in sales and earnings at overseas operations absorbed the cost of aggressive new hiring and drove a 0.5pp improvement in the segment operating profit margin  Domestic: The company steadily improved the revenue base of domestic operations thanks to the success of measures aimed at improving the profitability of hourly parking facilities, the transfer of monthly parking facilities to a subsidiary, and the redeployment of personnel made redundant (due to the conversion of parking facilities that offer both hourly and monthly rentals to unmanned operations) to properties where there was still room to improve earnings. The company also changed its structure with the aim of shifting excess employees to newly acquired properties

 Overseas: Overseas parking lot operations reported higher sales and higher earnings, with earnings in all countries finishing up YoY with the exception of Taiwan, where the company only began operations in February this year. In China, the company acquired its first facility to provide parking on a monthly rental basis

Theme Park business: After bad weather depressed theme park attendance in 1H, park attendance bounced back in 2H. ▷ Operating profit turned up from Q3 onward as various initiatives produced results

 Visitor numbers: At 461,000, theme park attendance for the full year was up 1.5% YoY. Attendance figures evinced the success of the company's efforts to overcome the rough start to the year (from the bad weather that depressed visitors in August and October 2017) by bringing in new types of visitors, additional marketing, and new attractions. Contributions from successful initiatives such as aggressive sales of season passes, business alliance with a fringe benefit company, offline meetings of pet owners, and expansion of the NOZARU aerial athletic facility

Ski Resort business: Successfully opened earlier due to investments to combat low snowfall. Visitor numbers grew owing to ▷ favorable weather during the busy season in Q3 and successful measures to combat less snow

 The company attributed the gains to the overall success of its renovation of facilities for summer-time visitors, the expansion of the MTB course at Hakuba-Iwatake, and its experiments with different activities, such as night-sky viewing at Hakuba-Happo

Medium- to long-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 FY07/19: The company plans to continue aggressive hiring, including large number of new grads. At the domestic Parking Lot ▷ business, the company is looking to improve the profitability of individual parking spaces by bringing in new customers and

developing and marketing more services aimed at corporate customers and, overseas, sees growth being driven by regions that are experiencing strong growth. At the Theme Park business, the company is looking to sustain growth by adding new events and attractions and by moving into the rental villa business

 Ski Resort business: The company is forecasting a 7% increase in sales and 28% increase in operating profit based on the inclusion of its ski resorts in those covered by Epic Pass, the most extensive global season pass for winter ski resorts, and increases in the number of summertime visitors attracted by its mountain-top terraces and other facilities

Topics: Established joint venture Roku-yon (60% owned by NPD) with Actcall Inc. on June 14, 2018 to focus on sharing ▷ businesses such as private lodging services Share buyback: The company planned to spend up to JPY600mn to buy back up to JPY3.0mn of its shares by September 30, ▷ 2018 (purchase completed). The company is also scheduled to issue stock options for up to 3.0mn shares

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(JPYbn) Parking Lot sales Ski Resort sales Theme Park sales Other sales Sales YoY (right axis) 6.6 7 6.4 70% 6.0 6.0 6 5.4 60% 5.1 5.3 5.3 5.1 5.0 4.9 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

1.5 200%

1.0 0.9 0.8 0.5 0.8 0.6 0.6 0.6 0.4 100% 0.6 0.5 0.2 0.4 0.6 0.5 0.1 0.4 0.3 0.5 0.2 0.3 0.2 0.1 0.1 0.6 0.6 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.5 0.6 0.3 0.3 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0% 0.0 -0.0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.3 -0.0 -0.3 -0.4 -0.3 -0.3 -0.5 -0.2 -0.5 -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.

Earnings overview Operating profit up across all segments thanks to gains at the domestic Parking Lot business, good weather and successful measures to combat poor snowfalls at Ski Resort business, and opening of new cost-efficient attractions at the Theme Park business For FY07/18, the company reported operating profit of JPY3.5bn; up 15.2% or JPY466mn YoY, in line with its forecast of JPY3.5bn. The results reflect ongoing efforts to improve the profitability of the Parking Lot business, the expected jump in earnings during the peak season (Q3) at the Ski Resort business and, at the Theme Park business, the success of measures aimed at attracting new types of visitors, an expanded marketing program, and the addition of new facilities and attractions. With all segments reporting higher earnings, including the Other business segment, operating profit finished 1.0% above plan even though sales came in slightly below plan.

Looking at operating profit by segment, the domestic Parking Lot business made solid progress in improving profits; earnings were also higher overseas, with the exception of the newly opened operations in Taiwan. At the Ski Resort business, the number of visitors exceeded the previous year level owing to plenty of natural snowfall during the busy season in Q3 and successful measures to combat less snow; overall results at the Ski Resort business were good even during the summer season in Q4 thanks to the renovation of existing facilities and the addition of new facilities and events. At the Theme Park business, despite lower visitor counts brought on by temporary park closures due to excessive rain during the peak season in August last year, a series of typhoons arriving on weekends in October of last year, and heavy snowfall in January, in Q3 at the beginning of the 2018 season, the number of visitors rebounded due to several initiatives and the business saw narrower YoY decrease in operating profit. (The YoY decrease in sales was mainly because the company received a construction order for vacation housing in FY07/17. Over the full year, the number of theme park visitors increased 1.5% YoY.)

The Other business segment was in the black all four quarters; the healthcare and education businesses both contributed to an increase in segment profit, but this was partly because the forecasts for related expenses were conservative. An illicit drug testing service in Thailand is steadily increasing its earnings.

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 in 1H (+2.6pp in Q1, +2.1pp for the Parking Lot business as a whole in Q1; +2.0pp, +1.6pp in 1H). Q3 operating profit maintained the same level as the previous year, indicating steady performance. Over the course of the full year the

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company worked steady to improve profitability by undertaking sales promotions at its facilities with human operators and adjusting parking rates to better match demand.

Parking Lot business operating profit (to be updated following interviews with the company)

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 adjustments or the adoption of monthly rental cars.

Occupancy (left) and contract spaces (right)

('000) Total domestic Kanto Kinki Other Kanto Kinki Other Total domestic (right axis) 98% 9 18

97% 8 16 96% 7 14 95% 6 12 94% 5 10 93% 4 8 92%

91% 3 6

90% 2 4 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 FY07/14 FY07/15 FY07/16 FY07/17 FY07/18 Source: Shared Research based on company data

New parking facilities Over the course of the full year NPD contracted for 67 new properties, down slightly from 71 the previous year. Although the company has seen some results from the acquisition of redevelopment properties and strategic dominance measures, its primary focus was directed to improving the profitability of existing properties, and the impact of this move was felt. The number of contract cancellations increased to 90 from 85 the previous year mainly because of a review of contract terms to secure profitability of existing properties. The total number of properties in operation at the end of July 2018 was 1,181, down 18 versus the end of July 2017.

The number of new contracts has been running at low levels since Q1 FY07/17, with facility closures and cancellations surpassing the number of newly contracted properties. The company plans on bringing the net decrease to an end in FY07/18, and flip the number to a net increase in FY07/19. Toward this end, the company aims to increase the amount of time the salesforce spends on winning new contracts and has implemented organizational changes to shift more people out of administration and into sales and step up hiring of new employees. Shared Research will keep a close eye on developments.

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

60 1,218 1,209 1,208 1,206 1,204 1,201 1,198 1,195 1,183 50 1,171 1,181 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 18 18 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 -20 -10 907 -26 -22 900 835 -33 -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 Q4 and FY07/19 (As of Q3 FY07/18, for reference) Parking Lot business (domestic): In considering Q4, 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. For monthly facilities, there is significant room for improving contract ratio in the Kanto area since the majority of these facilities are located in Tokyo. 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. Notable results have yet to surface in Q3, but the company is pressing forward with action plans and organizational improvements. We will be watching the status, including redevelopment projects and strategic dominance efforts.

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 12 cars at the end of Q3 for a total of 180. 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.

Parking Lot business (overseas): Overseas, NPD expects the steady Parking Lot business in South Korea (accounted for 16% of overseas sales in cumulative Q3) to contribute to full-year earnings; it also expects Thailand to finish strong (61%). NPD is in the process of winning its first contract in Taiwan where it opened a base in February 2018, and is looking to further expand business leveraging this track record. On the profit front, in China (20% of overseas sales in cumulative Q3), while the company is having difficulties increasing the number of properties (seven as of Q3), profits are improving thanks to effective cost controls. The company is also working to revamp its relatively low profitability in Thailand; Shared Research will keep an eye on the outcome.

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

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wants to have employees use NPD’s own facilities, but is also cooperating with major retailers such as department stores* 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. *Shizuoka Isetan department store opened Wellness Park Shizuoka (about 800sqm) on May 30, 2018, renovating the seventh floor children’s wear section into an area for health-related goods. The floor design includes a healthcare lounge in the center.

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.

Ski Resort business: In a busy month of February, visitor numbers increased YoY not only in the Hakuba area that saw a strong Q2 but also in the Kawaba and Meiho ski resorts, which have a high average customer spend, thanks to various initiatives. Subsidiary Nippon Ski Resort Development Co., Ltd. (TSE 1: 6040) announced a revision to its earnings forecasts on June 6, 2018 (recurring profit and net income revised upward) but forecasts for sales and operating profit were left unchanged. The company thinks recovery at the Kawaba and Meiho ski resorts (which held down Q2 earnings) and further strengthening of initiatives for the summer season will help it reach the plan.

Toward FY07/19, Shared Research will keep a close eye on: Winter season: At Hakuba Valley, increase in customer count owing to a long-term alliance agreement with Epic Pass, the most extensive global season pass that can be used at 64 resorts in eight countries, capturing inbound tourists through various initiatives, and provision of high value-added services such as attractive dining facilities Summer season: Launch of facilities like the successful SORA terrace, which are low in cost but can attract many customers High ROI acquisitions

In August 2018, NPD will launch a French-origin, outdoor adventure park Xtrem Aventures Hakuba Tsugaike Wow! in Hakuba Tsugaike. The effects are unknown but it will be worth attention.

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 facility XD Dark Ride and bouldering facility Noborungma) opening in March. In particular, Noborungma has benefited from TV and other media coverage as well as social network including You Tube, there is a long waiting line of customers during weekends and holidays. 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 Q4 and FY07/19, 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. In FY07/18, there were 461,000 visitors (+5,000 YoY), and cumulative Q3 finished at 327,000 (+11,000 YoY). However, NPD expects to get back on track in 2H as long as the weather is decent and events go as planned.

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Parking Lot business

Parking Lot business performance

3.3 3.3 3.3 3.4 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% 22.6% 25% 22.0% 21.5% 21.6% 21.5% 21.9%21.4% 20.7% 20.6% 20.9% 21.2% 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% 17.8% 16.7% 17.3% 16.6% 16.8% 17.3%17.0% 16.9% 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 again in FY07/18 and overseas ▷ operations stayed in the black. OPM absorbed the impact of active hiring and improved 0.5pp Number of domestic properties: Down 18 versus FY07/17 (67 new, 90 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

 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; low contract ratio in the Kanto region recognized as an issue Number of new domestic properties: At 67 over the course of the full year, new property contracts were fewer than expected ▷ but the company steadily acquired sites at 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: Revenues and earnings were up YoY in all countries except for Taiwan, where a subsidiary was only established in ▷ February 2018

 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

 Acquired first property (with 160 parking spaces) in June. We will be watching to see how the company leverages the track record of this property to secure contracts for additional properties

Traffic solution project in Bangkok, Thailand: NPD is a central member, along with the Toyota Group, a local university, and the Thai government.

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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.

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).

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Domestic Parking Lot business

Domestic Parking Lot business performance

(JPYmn) Sales Operating profit OPM (right axis) 3,069 2,983 2,998 2,957 2,982 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

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

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 5,513 180 201 200 5,372 Members per vehicle (right axis) 167 168 5,500 24.4 5,092 24 4,993 30 142 160 5,000 4,715 4,658 23 25 4,640 4,584 135 130 134 132 4,518 4,454 127 127 21 4,500 22.7 22 18 20 109 120 22.0 21.9 15 4,000 21.6 21.5 21 12 21.0 8 3,500 20.7 20.6 20 10 80 4 1 18.4 3,000 2,596 19 2,554 2,463 0 40 2,379 2,391 2,339 2,399 2,339 2,357 2,500 2,337 2,247 18 2,103 18.3 -2 -5 -5 2,000 17.7 17 -10 0 Q1 Q1 Q1 Q1 Q1 Q1 FY07/16 FY07/17 FY07/18 FY07/16 FY07/17 FY07/18

Overseas Parking Lot business

400 China 340 Thailand (directly managed facilities and outsourced management) 350 312 302 298 Thailand (other) 300 269 279 Other 243 224 250 21 203 203 208 210 64 28 193 42 24 182 11 36 21 200 166 30 17 23 27 153 17 14 133 9 150 118 157 168 104 144 148 160 125 161 142 142 81 80 70 86 11 130 125 132 134 100 75 70 79 120 126 53 60 61 95 78 85 57 50 26 68 61 58 58 8 66 52 3 53 59 59 49 57 49 44 49 56 58 60 63 56 62 26 24 29 29 34 37 39 43 43 0 1 9 13 18 17 18 20 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

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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 133 166 182 203 193 203 208 224 210 243 269 302 279 298 312 340 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% 15.8% 12.5% Direct ly managed facilit ies 102 130 138 141 142 147 149 178 150 165 174 180 196 203 218 242 Outsourced management 26 27 28 31 31 39 36 32 32 41 54 58 62 66 70 69 Other 3 9 17 30 18 17 23 14 27 36 42 64 21 28 24 28 T hailand 98 129 143 160 139 142 155 172 161 178 184 208 169 185 184 189 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% - -9.1% Direct ly managed facilit ies 95 120 126 130 124 126 131 162 134 141 140 144 148 155 159 165 Outsourced management ------2 - - 1 2 2 Other 3 9 17 30 14 17 23 11 27 36 42 64 21 28 24 21 China 34 37 39 43 49 57 49 44 43 49 56 58 60 63 56 62 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% - 6.9% Direct ly managed facilit ies 7 10 11 12 16 17 13 12 10 11 15 10 10 11 11 10 Outsourced management 26 27 28 31 31 39 36 32 32 38 42 47 49 52 46 45 Other - - - - 2 1 ------7 South Korea and Indonesia - - - - 3 3 4 8 5 16 29 36 48 50 72 88 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 48 48 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% 17.1% 11.6% For rent (monthly) - - - - 15 14 15 16 16 20 15 16 16 17 19 18 For rent (monthly & hourly) 17 18 18 18 13 13 13 16 15 18 18 19 18 19 21 22 Outsourced management 2 2 2 3 3 4 4 3 3 7 8 8 8 8 8 8 T hailand 16 17 17 17 25 25 26 28 27 32 26 27 27 28 29 28 China 3 3 3 4 5 5 5 5 5 6 7 7 7 7 7 7 South Korea - - - - 1 1 1 2 2 5 6 7 6 7 10 10 Indonesia ------2 2 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 12,130 12,824 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% 6.8% 3.6% 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 8,313 9,007 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 3,817 3,817 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 7,298 7,933 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 2,966 2,966 South Korea - - - - 43 43 43 113 113 405 501 852 788 956 1,189 1,189 Indonesia ------677 677 677 677 677 677 677 Contract ratio (monthly) 66.3% 60.7% 66.3% 60.2% 60.1% 72.4% 97.0% 98.4% 100.0% 96.9% 94.2% 96.2% Source: Shared Research based on company data

Reference

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 2,982 3,069 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 2,075 2,122 Outsourced management 595 611 627 645 647 666 665 677 672 673 664 681 689 686 681 700 Other 146 168 160 169 160 168 181 201 183 189 219 198 216 191 227 247 East Japan 149 173 173 184 187 189 198 214 213 202 209 234 242 233 240 250 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 1,365 1,429 Tokai 225 232 228 237 239 264 264 279 283 292 281 287 278 270 267 279 Kinki 689 693 693 698 692 706 699 692 738 750 772 765 792 798 805 817 West Japan 210 244 246 262 258 258 259 286 292 297 304 302 304 299 305 295 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% 2.1% 2.8% 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% 1.8% 0.8% 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% 2.6% 2.8% 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% 3.7% 24.7% East 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% 14.8% 6.8% 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% 0.7% 2.4% 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% -5.0% -2.8% 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% 4.3% 6.8% West 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% 0.3% -2.3% 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 1,183 1,181 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% -1.9% -1.9% For rent (monthly) 897 902 919 912 916 928 950 969 961 960 966 969 972 976 968 972 For rent (monthly & hourly) 137 136 136 136 136 139 137 141 139 140 136 131 127 123 121 115 Outsourced management 96 97 100 102 103 104 108 108 109 108 104 104 102 99 94 94 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 43,524 43,563 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% -0.6% -1.0% 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 25,668 25,712 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 17,856 17,851 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% 92.7% 93.4%

81/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 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 Directy operated (monthly) 897 902 919 912 916 928 950 969 961 960 966 969 972 976 968 972 East Japan 55 57 58 56 56 55 55 53 52 51 54 55 56 59 59 63 Kanto 482 483 492 489 496 506 516 531 523 516 512 513 512 514 510 503 Tokai 73 71 74 74 73 73 76 76 78 77 76 76 78 78 77 80 Kinki 184 185 188 186 186 186 193 197 195 200 202 202 204 202 201 204 West Japan 103 106 107 107 105 108 110 112 113 116 122 123 122 123 121 122 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% 1.7% 0.2% 0.3% East 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% 9.3% 14.5% 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% -0.4% -1.9% Tokai 2.8% - 4.2% 5.7% - 2.8% 2.7% 2.7% 6.8% 5.5% - - - 1.3% 1.3% 5.3% 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% -0.5% 1.0% West 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% -0.8% -0.8% 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 15,933 16,144 East Japan 904 918 901 870 888 879 883 872 813 794 846 848 850 933 942 1,004 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 8,535 8,559 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 1,095 1,170 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 3,485 3,499 West 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 1,876 1,912 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% 4.2% 2.6% East 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% 11.3% 18.4% 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% 3.6% 0.8% 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% -1.5% 8.5% 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% 9.7% 4.9% West 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% -2.2% -3.0% 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 14,770 15,085 East Japan 808 820 802 803 816 805 813 798 742 740 793 790 822 893 920 964 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 7,719 7,828 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 1,037 1,119 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 3,349 3,397 West 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 1,745 1,777 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% 92.7% 93.4% East 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% 97.7% 96.0% 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% 90.4% 91.5% 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% 94.7% 95.6% 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% 96.1% 97.1% West 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% 93.0% 92.9% 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 -1.3pp -0.5pp East 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 +3.9pp +2.9pp 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 -3.3pp -2.3pp 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 +1.2pp -0.6pp 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 +1.2pp +2.4pp West 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 -0.5pp +0.2pp 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 16.5 16.6 East 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 16.0 15.9 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 16.7 17.0 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 14.2 14.6 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 17.3 17.2 West 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 15.5 15.7 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% 4.0% 2.3% East 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% 1.9% 3.4% 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% 4.0% 2.8% 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% -2.8% 3.1% 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% 10.2% 3.8% West 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% -1.4% -2.2% Source: Shared Research based on company data

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 137 136 136 136 136 139 137 141 139 140 136 131 127 123 121 115 East Japan 14 14 15 15 16 19 18 18 18 18 18 18 19 17 16 14 Kanto 39 39 38 38 37 38 37 39 39 40 37 35 33 33 32 31 Tokai 18 18 18 18 18 18 20 21 21 21 19 17 15 15 14 14 Kinki 49 48 48 47 47 46 44 44 43 43 44 42 41 41 39 40 West Japan 17 17 17 18 18 18 18 19 18 18 18 19 19 17 20 16 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% -11.0% -12.2% East 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% -11.1% -22.2% Kanto - - -7.3% -7.3% -5.1% -2.6% -2.6% 2.6% 5.4% 5.3% - -10.3% -15.4% -17.5% -13.5% -11.4% Tokai 5.9% - -5.3% -5.3% - - 11.1% 16.7% 16.7% 16.7% -5.0% -19.0% -28.6% -28.6% -26.3% -17.6% 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% -11.4% -4.8% West Japan 13.3% - 6.3% 12.5% 5.9% 5.9% 5.9% 5.6% - - - - 5.6% -5.6% 11.1% -15.8% 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 9,735 9,568 East 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 1,864 1,806 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 2,217 2,190 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 2,587 2,598 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 1,805 1,914 West Japan 728 728 728 741 741 743 762 1,036 992 992 1,013 1,177 1,177 1,091 1,262 1,060 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% -3.6% -4.2% East 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% -3.5% -6.4% 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% -6.7% -5.4% 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% -7.1% -3.0% 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% -9.3% 1.3% West 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% 24.6% -9.9% 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 80.5 83.2 East Japan 78.2 78.2 86.3 86.3 84.1 94.0 97.1 97.1 97.1 97.4 107.3 107.2 102.6 110.5 116.5 129.0 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 69.3 70.6 Tokai 144.6 144.6 143.6 143.7 144.9 145.0 134.2 134.8 134.4 134.1 146.6 157.5 173.7 174.4 184.8 185.6 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 46.3 47.9 West 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 63.1 66.3 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% 8.4% 9.1% East 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% 8.5% 20.3% 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% 7.9% 6.8% 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% 26.1% 17.8% 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% 2.3% 6.3% West 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% 12.1% 6.9%

82/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 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 94 94 East Japan 9 11 11 13 13 13 15 15 15 15 14 14 14 13 13 13 Kanto 35 36 37 37 37 37 39 39 40 39 37 37 38 36 37 38 Tokai 12 13 13 13 14 15 15 15 15 15 13 14 14 14 13 13 Kinki 24 22 22 22 23 24 24 24 24 25 26 26 24 23 22 21 West Japan 16 15 17 17 16 15 15 15 15 14 14 13 12 13 9 9 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% -9.6% -9.6% East 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% -7.1% -7.1% 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% - 2.7% 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% - -7.1% 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% -15.4% -19.2% West 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% -35.7% -30.8% 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 17,856 17,851 East 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 1,892 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 9,192 9,307 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 2,008 2,008 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 3,803 3,683 West 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 1,044 961 961 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% -3.0% -2.4% East 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% -1.7% -1.7% 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% 3.4% 4.6% 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% -1.3% -4.3% 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% -11.5% -12.2% West 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% -23.5% -18.2% Spaces per facilit y 167.4 168.0 165.9 164.7 164.4 168.5 167.8 167.3 166.5 167.7 176.9 175.8 179.4 181.8 190.0 189.9 East Japan 117.0 123.2 123.2 120.5 120.5 120.5 139.2 141.2 141.2 141.2 137.4 137.4 137.4 145.5 145.5 145.5 Kanto 252.0 246.2 241.5 241.5 241.5 241.5 233.1 232.0 227.8 231.9 240.2 240.4 238.0 248.2 248.4 244.9 Tokai 127.4 122.5 127.9 127.9 128.4 141.7 141.7 141.7 141.7 141.7 156.5 149.9 149.9 149.9 154.5 154.5 Kinki 135.4 142.3 142.3 142.3 138.7 145.5 145.5 145.5 146.3 142.8 165.2 161.3 173.5 175.4 172.9 175.4 West 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 80.3 106.8 106.8 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% 7.4% 8.0% East 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% 5.9% 5.9% 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% 3.4% 1.9% 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% -1.3% 3.0% 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% 4.6% 8.7% West 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% 19.0% 18.1% Source: Shared Research based on company data

83/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 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 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 55,654 56,387 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 43,524 43,563 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 15,933 16,144 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 9,735 9,568 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 17,856 17,851 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 14,770 15,085 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% 92.7% 93.4% 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 68.5 70.4 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% 2.7% 3.9% 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% -0.6% -1.0% 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% 4.2% 2.6% 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% -3.6% -4.2% 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% -3.0% -2.4% 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 12,130 12,824 Leased parking spaces for rent: monthly 460 394 460 533 556 685 440 439 466 518 534 554 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 7,779 8,453 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 3,817 3,817 Rented out monthly parking spaces 305 239 305 321 334 496 427 432 466 502 503 533 Contract ratio 66.3% 60.7% 66.3% 60.2% 60.1% 72.4% 97.0% 98.4% 100.0% 96.9% 94.2% 96.2% 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% 6.8% 3.6% Leased parking spaces for rent: monthly 20.9% 73.9% -4.3% -17.6% -16.2% -24.4% 21.4% 26.2% 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% 18.3% 12.2% 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% -12.1% -13.3%

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 7,298 7,933 Leased parking spaces for rent: monthly 460 394 460 463 486 536 291 290 317 369 370 390 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 6,678 7,293 Managed hourly parking spaces 251 251 250 250 250 250 250 250 250 Rented out monthly parking spaces 305 239 305 308 299 349 278 283 317 353 354 381 Contract ratio 66.3% 60.7% 66.3% 66.5% 61.5% 65.1% 95.5% 97.6% 100.0% 95.7% 95.7% 97.7% 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 2,951 2,951 Leased parking spaces for rent: monthly & hourly 210 210 210 210 242 242 242 242 242 242 242 242 242 242 242 242 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 2,709 2,709 South Korea 43 43 43 113 113 405 501 852 788 956 1,189 1,189 Leased parking spaces for rent: monthly 70 70 32 32 32 32 32 32 32 Leased parking spaces for rent: monthly & hourly 43 43 43 43 43 173 269 620 556 724 859 859 Managed hourly parking spaces 200 200 200 200 200 298 298 Rented out monthly parking spaces 13 35 30 32 32 32 32 32 32 Contract ratio 18.6% 50.0% 93.8% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Indonesia 677 677 677 677 677 677 677 Leased parking spaces for rent: monthly 117 117 117 117 117 117 117 Managed hourly parking spaces 560 560 560 560 560 560 560 Rented out monthly parking spaces 117 117 117 117 117 117 117 Contract ratio 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Taiwan 59 Rented out monthly parking spaces 59 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 1,231 1,229 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 1,183 1,181 Leased parking facilities for rent (monthly) 897 902 919 912 916 928 950 969 961 960 966 969 972 976 968 972 Leased parking facilities for rent (monthly & hourly) 137 136 136 136 136 139 137 141 139 140 136 131 127 123 121 115 Managed hourly parking facilities 96 97 100 102 103 104 108 108 109 108 104 104 102 99 94 94 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 2.42 2.50 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% 3.4% 4.4% 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% -1.9% -1.9% 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% 0.2% 0.3% 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% -11.0% -12.2% 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% -9.6% -9.6% Overseas 19 20 20 21 31 31 32 35 34 45 41 43 42 44 48 48 Leased parking facilities for rent (monthly) 15 14 15 16 16 20 15 16 16 17 19 18 Leased parking facilities for rent (monthly & hourly) 17 18 18 18 13 13 13 16 15 18 18 19 18 19 21 22 Managed hourly parking facilities 2 2 2 3 3 4 4 3 3 7 8 8 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% 17.1% 11.6% Thailand 16 17 17 17 25 25 26 28 27 32 26 27 27 28 29 28 Leased parking facilities for rent (monthly) 15 14 15 15 15 18 13 14 14 15 16 15 Leased parking facilities for rent (monthly & hourly) 16 17 17 17 10 10 10 13 12 13 12 12 12 12 12 12 Managed hourly parking facilities 1 1 1 1 1 1 1 1 1 China 3 3 3 4 5 5 5 5 5 6 7 7 7 7 6 6 Leased parking facilities for rent (monthly & hourly) 1 1 1 1 2 2 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 4 4 South Korea 1 1 1 2 2 5 6 7 6 7 10 10 Leased parking facilit ies for rent (mont hly) 1 1 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 7 7 Managed hourly parking facilities 1 1 1 1 1 2 2 Indonesia 2 2 2 2 2 2 2 Leased parking facilit ies for rent (mont hly) 1 1 1 1 1 1 1 Managed hourly parking facilities 1 1 1 1 1 1 1 Taiwan 1 Leased parking facilit ies for rent (mont hly & hourly) 1

Parking spaces per leased facility 39 40 40 40 41 42 42 42 42 44 44 45 45 45 45 46 Domestic 34 34 34 35 35 36 35 36 36 36 36 37 36 36 37 37 Leased parking facility for rent (monthly) 15 15 15 16 16 16 15 16 16 16 16 16 16 16 16 17 Leased parking facility for rent (monthly & hourly) 65 65 66 66 67 69 69 72 73 72 74 76 76 78 80 83 Managed hourly parking 167 168 166 165 164 168 168 167 167 168 177 176 179 182 190 190 Overseas 326 349 349 333 259 265 275 275 278 254 277 288 291 285 253 267 Leased parking facility for rent (monthly) 31 28 31 33 35 34 29 27 29 30 28 31 Leased parking facility for rent (monthly & hourly) 276 305 305 304 411 411 451 429 446 389 365 397 408 402 370 384 Managed hourly parking 745 745 745 507 738 616 616 738 738 536 543 550 549 549 477 477 Source: Shared Research based on company data

84/89 Nippon Parking Development / 2353 R LAST UPDATE: 2019.06.28 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp Coverage

Ski Resort business 8,000 20% Apr. 2013 Sales OPM (right axis) Spicy (rental) 7,000 6,420 15% 6,152 5,881 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 FY07/18 Sep. 2006 Nov. 2009: Kitashiga Oct. 2010: Kawaba Nov. 2012 Hakuba Happo Oct. 2014 Nov. 2015: Sugadaira (JPYmn) Kashimayari Ski Resort Ryuoo Ski Park Ski Resort Iwatake Tsugaike Ski Resort Meiho Ski Resort Kogen Snow Resort Operating profit -112 -18 -9 56 113 200 504 725 905 107 443 625 Cumulat ive -112 -130 -139 -82 31 231 735 1,460 2,365 2,472 2,915 3,540 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 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% 808 800 913 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 -483 -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 less snowfall. Visitor numbers grew owing to ▷ favorable weather during the busy season in Q3 and successful measures to combat less snow

 Number of visitors: Visitors increased by 41,000 (+2.5% YoY) to 1.66mn. Growth was driven by Hakuba area resorts with the exception of Kashimayari Ski Park (-2.9% YoY, or 2,000 visitors)

 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

 Busy season: There was plenty of natural snowfall and investment to combat less snow proved to be successful. However in March, the number of visitors fell YoY due to warm air and rainfall. The Kawaba ski resort, accessible for a day trip from the greater Tokyo area, had struggled to attract visitors due to fierce competition. NPD aims to achieve a rally in FY07/19 with the help of enhanced online marketing

 Inbound visitors: In the Hakuba area, the company increased promotions to attract visitors from Australia, Taiwan, and China, but the number of numbers of visitors still declined by 1.3%

 Decreasing average customer spend: The YoY decline at the Kawaba and Meiho ski resorts, which have high average customer spends, hurt earnings in 1H. Meanwhile, Q3 benefited from the recovery of these two resorts in February and March

 Combatting low snow: NPD 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 Topic: The Hakuba Valley ski resorts concluded a long-term alliance agreement with 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

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Visitor count by ski resort during summer season

Visitor count by ski resort during winter*

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

Theme Park business

Theme Park business: After bad weather depressed theme park attendance in 1H, park attendance bounced back in 2H. ▷ Operating profit turned up from Q3 onward as various initiatives produced results The drop in sales reported by the Theme Park business reflected the dropout of the construction order for rental villa received ▷ last year. The Nasu Highland park reported 447,000 visitors, down only 0.6% versus the previous year

 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

Visitor numbers: Including NOZARU, visitor count rises 1.5% to 461,000 as rebound in Q3 overcomes slow start due to bad ▷ weather in 1H

 Contributions from successful initiatives such as aggressive sales of season pass, business alliance with a fringe benefit company, offline meetings of pet owners, and expansion of the NOZARU aerial athletic facility

 Strong NOZARU, an aerial athletic facility, expanded NOZARU courses by 1.5x during the 2018 season and also managed to open one month earlier than usual

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 Outdoor facilities: Noborungma opened in March 2018 got off to a strong start. Various media coverage including TV as well as improved recognition through social media and You Tube contributed to results 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

2018 season: Attracted more visitors in cumulative Q3, as the company made efforts to increase repeat visitors, and improve ▷ operations ahead of a new season starting March 3

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News and topics

On March 8, 2019, the company announced that its Board of Directors had approved a share buyback program.

Details of share buyback program

Class of shares to be acquired: Nippon Parking Development common stock ▷ Total number of shares to be acquired: Maximum 2,800,000 shares (0.84% of shares outstanding, excluding treasury stock) ▷ Total cost of shares to be acquired: Maximum JPY500mn ▷ Timeframe for buybacks: March 11 through March 29, 2019 ▷ Acquisition method: At market price on Tokyo Stock Exchange ▷

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 Financial 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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