IKYU Corporation Tokyo Stock Exchange First Section (Securities Code No. 2450) Non-Consolidated Financial Results for Fiscal 2011 (April 2011 to March 2012) Presentation Materials May 10, 2012 This is an English translation of the Japanese presentation materials prepared for IR. If there are any discrepancies between the English and Japanese, the Japanese is always controlling.
I. Results of FY2011 II. Earnings Forecast for FY2012 Ⅲ. Reference Materials -1-
Summary of FY2011 8.2% increase in Ikyu.com booking turnover and significant revenue increases in other services Revenue 3,676 million (+ 726 million or +24.6% year-on-year) Operating income 1,024 million (+ 400 million or +64.2% year-on-year) Net income 484 million (+ 217 million or +81.7% year-on-year) Booking turnover increased 8.2% and the booking rooms also increased steadily (+11.2% year-on-year) Ikyu Market and Ikyu.com Restaurant/EC contributed to revenue increase. Ratio to site management fees of 14.7% (previous fiscal year was 9.9%). Cost increase for enhancement of royalty program was covered with increase in revenue; Operating income and net income increased significantly. Ikyu.com (including Ikyu.com Business) FY2010 FY2011 Year-on-year Year-on-year April 2010 to March 2011 April 2011 to March 2012 Change amount Change rate Booking Turnover (million yen) 30,647 33,168 + 2,520 + 8.2% Booking rooms (thousand) 1,335 1,484 + 149 + 11.2% Average room rate per night (yen) 22,949 22,337-612 - 2.7% * *The average room rate per night with the exclusion of Ikyu.com Business has increased by 418. -2-
Statement of Income for FY2011 (April 2011 to March 2012) Strong performance of all services with increases in revenue and income (Unit: million yen) Revenue FY2010 FY2011 Year-on-year change amount Year-on-year change rate 2,950 3,676 + 726 + 24.6% Site management fees 2,824 3,574 + 750 + 26.6% (Ikyu.com) 2,543 3,047 + 504 + 19.8% (Ikyu.com Restaurant/EC) 247 362 + 115 + 46.5% Other (Ikyu Market, etc.) 33 164 + 131 + 394.9% Advertising revenue, etc. 126 102-24 - 19.1% Operating costs 2,326 2,652 + 325 + 14.0% Personnel costs 845 973 + 128 + 15.2% Advertising costs 638 382-255 - 40.0% System-related fees* 321 245-75 - 23.6% Point/stamp costs 50 526 + 476 + 936.0% Other 471 523 + 52 + 11.2% Operating income Operating income margin Ordinary income Extraordinary gain or loss Income before income tax Net Income 623 1,024 + 400 + 64.2% 21.1% 27.9% - - 654 1,084 + 429 + 65.7% -189 (150) + 38-467 933 + 466 + 99.8% 266 484** + 217 + 81.7% *Includes depreciation cost. **Net income decreased by 47 million due to impact of deferred tax accounting with the change of corporate tax rate starting from the next fiscal year. -3-
FY2011 Balance Sheet (Unit: million yen) (Assets) End of March 2011 End of March 2012 Change amount Change rate Liquid assets 3,862 65.0% 5,417 71.9% + 1,555 + 40.3% Cash and deposit 3,331 3,859 + 528 + 15.9% Accounts receivable 319 476 + 157 + 49.4% Other 212 1,081 + 869 + 410.1% Fixed assets 2,080 35.0% 2,117 28.1% + 36 + 1.8% Tangible fixed assets 72 58-13 - 18.9% Intangible fixed assets 483 353-130 - 26.9% Investments and other assets 1,524 1,705 + 180 + 11.8% assets 5,942 100.0% 7,535 100.0% + 1,592 + 26.8% (Liabilities) Current liabilities 912 15.3% 2,331 30.9% + 1,418 + 155.5% Accounts payable 531 949 + 418 + 78.8% Income tax payable 48 490 + 442 + 920.8% Point/stamp reserves 84 440 + 355 + 421.2% Other 248 451 + 203 + 81.6% Fixed liabilities 49 0.8% 52 0.7% + 2 + 4.6% liabilities 962 16.2% 2,383 31.6% + 1,421 + 147.7% (Net assets) net assets 4,980 83.8% 5,151 68.4% + 171 + 3.4% liabilities and net assets 5,942 100.0% 7,535 100.0% + 1,592 + 26.8% Of which, 496 is managed with corporate bonds. Of which, 501 is managed with corporate bonds. -4-
FY2011 Statement of Cash Flows Maintained positive operating cash flow (Unit: million yen) April 2010 to March 2011 April 2011 to March 2012 Cash flows from operating activities 708 1,718 Cash flows from investing activities -519-835 Cash flows from financing activities -326-326 Balance of cash and cash equivalents at beginning of period 2,968 2,831 Balance of cash and cash equivalents at end of period 2,831 3,388 Capital expenditure -161-20 Depreciation costs 161 163 * Main factor for cash flows from investing activities Main factor for cash flows from financing activities (-) Approx. 800 million investment in Chinese joint venture (-) Approx. 320 million payment for dividends *An essential cash balance of 4,885 million, where 500 million of term deposit over three months and 997 million of corporate bonds is added to 3,388 of cash, is recognized. -5-
Increase in Site Visitors; Significant Increase of Members Number of site visitors and members increased through contribution of new services FY2009 FY2010 FY2011 Increase in members 250,000 240,000 300,000 members 2,080,000 2,320,000 2,630,000 Improvement of awareness of new services Members significantly increased with initiation of the royalty program Site visitors* increased by 38.9% year-on-year * of unique visitors to Ikyu.com Business and Ikyu.com Restaurant for Q4) Strengthened royalty program to capture newly increased site visitors -6-
Industry Leader in Customer Satisfaction In FY2011, Ikyu was ranked 1st in customer satisfaction survey (travel industry) by JCSI 78 ) 10 0 Customer satisfaction index (out of 76 74 72 70 68 66 64 62 60 Customerexpectation(anticipationbeforeuse) 71.7 70.1 68.8 Perceivedquality(evaluationofqualityafteruse) 73.2 73.6 72.1 70.6 73.3 71.8 Fiscal 2010 Fiscal 2011 Industry Perceivedvalue(satisfactionwithvalue) median Customersatisfaction 76.5 75.2 73.6 Reviews(recommendationtoothers) 62.6 61.1 60.9 Royalty(intentionforcontinueduse) 71.5 68.9 68 Significantly improved in terms of royalty (intention for continued use) from previous fiscal year. Managing the site while maintaining the trust of users In JCSI s Japan customer satisfaction index, Ikyu was ranked 1st in the travel industry in terms of customer satisfaction. (This survey is the largest customer satisfaction survey in Japan with responses from over 100,000 users.) -7-
I. Results of FY2011 II. Forecast for FY2012 Ⅲ. Reference Materials -8-
Earnings Forecast for FY2012 Outlook for FY2012 and comparison with previous fiscal year (Unit: million yen) FY2011 FY2012 Results (April 2011 to March 2012) Forecast (April 2012 to March 2013) Year-on-year change amount Year-on-year change rate Revenue 3,676 4,242 + 565 + 15.4% Operating costs 2,652 2,965 + 312 + 11.8% Operating income 1,024 1,276 + 252 + 24.7% Ordinary income 1,084 1,330 + 246 + 22.8% Net income 484 811 + 327 + 67.5% Note: Figures on this page are of items estimated by Ikyu Corporation s plans and strategies as of May 10, 2012. Please note that the actual results may vary significantly due to various factors and that Ikyu Corporation may revise future outlooks or modify factors that were the basis for future outlooks without prior notice, except for when required by law. -9-
FY2012 Period Earnings Forecast and Sales and Costs Breakdown Sales Breakdown (Unit: million yen) Comparison with previous fiscal year (Booking turnover) FY2011 Results (April 2011 to March 2012) Forecast (April 2012 to March 2013) FY2012 Year-on-year change amount Year-on-year change rate (Ikyu.com) 3,047 3,450 + 402 + 13.2% (Ikyu.com Restaurant/EC) 362 493 + 130 + 36.1% Others (Ikyu Market, etc.) 164 193 + 28 + 17.5% Site commission revenues 3,574 4,136 + 562 + 15.7% Advertising revenues, etc. 102 105 + 3 + 3.1% revenue 3,676 4,242 + 565 + 15.4% Comparison with previous fiscal year (Operating costs) Cost Breakdown Ikyu.com booking *Including Ikyu.com Business Booking turnover: 34.8 billion Booking rooms: 1,480,000 34.8 billion (+5.0%) 1,610,000 (+8.1%) Average room rate per night: 22,337 21,705 (-2.8%) Estimations (Unit: million yen) Personnel costs (+ 121 million) Due to increase in personnel Advertising costs (+ 55 million) Due to increase in sales (Affiliate advertising, etc.) Point/stamp costs (+ 96 million) Due to increase in sales FY2011 Results (April 2011 to March 2012) Forecast (April 2012 to March 2013) FY2012 Year-on-y ear change amount Year-on-y ear change rate Personnel costs 973 1,095 + 121 + 12.5% Advertising costs 382 438 + 55 + 14.6% System-related fees 245 272 + 26 + 10.9% Point/stamp costs 526 623 + 96 + 18.3% Others 523 536 + 12 + 2.4% operating costs 2,652 2,965 + 312 + 11.8% Note: Figures on this page are of items estimated by Ikyu Corporation s plans and strategies as of May 10, 2012. Please note that the actual results may vary significantly due to various factors and that Ikyu Corporation may revise future outlooks or modify factors that were the basis for future outlooks without prior notice, except for when required by law. -10-
Recovered Several Years Prior Investment; Income on Upward Trend Aiming for new record income for FY2013 onwards through utilization of investment of past few years 4,500 Revenue continually increasing 4,242 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2,468 2,652 1,477 1,418 Record income 2,790 1,317 2,950 654 3,676 Decreased income due to investment in mass system improvement, TV commercials, opening of new site, etc. 1,084 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 Revenue Ordinary income Aiming for new record income for FY2013 onwards 1,330 Income on an upward trend due to contribution of profits from new services and strengthening of system functions Forecast -11-
Dividends Maintained FY2011 dividend level in FY2012 End of FY2011 End of FY2012 Forecast dividend per share 1,100 1,100 Forecast total dividend for FY2012: 327,489,800 Policy of returning profits to shareholders We consider dividends to be the central means by which profits are returned to shareholders. As for the payout ratio, our basic policy is to aim for a payout of 40% of net income in the mid to long term. In the meantime we do not intend to implement other incentives of shareholders as Ikyu Corporation does not directly manage hotels or ryokans and faces many challenges with regard to costs and procedures. -12-
I. Results of FY2011 II. Earnings Forecast for FY2012 Ⅲ. Reference Materials -13-
Company name: Ikyu Corporation Corporate Profile Location: Sumitomo Seimei Akasaka Bldg. 8F 3-3-3, Akasaka, Minato-ku, Tokyo 107-0052 Established: July 30, 1998 Representative Director: Masabumi Mori Paid-in capital: 888 million (as of May 10, 2012) number of employees: 112 (as of March 31, 2012) Main business: Number of shares outstanding: 297,718 (as of May 10, 2012) Number of shareholders: 12,088 (as of March 31, 2012) Management of Dedicated luxury hotel and ryokan reservation site Ikyu.com Japan s largest selection restaurant instant reservation site Ikyu.com Restaurant Specialty shopping site Okuru Ikyu Premium lodging-type hotel reservation site Ikyu.com Business Coupon sale site for luxury hotels, ryokans, restaurants and spas Ikyu Market Top shareholders (as of March 31, 2012) Name of shareholder Shares held Shareholding ratio Masabumi Mori 134,064 45.03% Mori Trust Co., Ltd. 26,493 8.90% Japan Trustee Services Bank, Ltd. (trust account) 9,813 3.30% The Nomura Trust and Banking Co., Ltd. (trust account) 5,123 1.72% Yuji Takano 4,020 1.35% Eiko Ito 3,660 1.23% Toshiki Kurihara 3,540 1.19% Yasuo Mori 2,700 0.91% Takao Fujiwara 2,440 0.82% Keizo Asai 2,360 0.79% -14-
Ikyu.com Booking Turnover (by Quarter) (Unit: million yen) *Includes tax 6,266 6,579 9,772 7,842 6,452 6,843 10,155 8,482 7,687 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,108 1,092 5,157 5,487 1,830 7,942 1,479 6,362 1,247 1,371 5,205 5,471 2,205 7,950 1,778 6,703 1,705 5,982 Ryokan Hotel 1,000 0 FY2009 4Q FY2010 1Q 2Q 3Q 4Q FY2011 1Q 2Q 3Q FY2011 4Q Booking turnover for ryokans in the fourth quarter of FY2011 was favorable a year-on-year increase of 36.7% Hotels increased by 14.9% and the overall booking turnover increased by 19.1% year-on-year -15-
Ikyu.com Booking Rooms and Average Room Rate per Night (by Quarter) Booking rooms (thousand) Average room rate per night 450 400 350 300 250 200 22,228 281 22,381 293 24,123 405 23,193 21,637 20,915 338 298 327 Breakdown of booking rooms in 4Q 23,629 429 22,776 21,624 372 355 30,000 25,000 20,000 15,000 150 100 50 Hotel: 92.3% Ryokan: 7.7% Average room rate per night for hotels (per room) 18,227 (- 471 or -2.5% year-on-year) Average room rate per night for ryokans (per room) 62,469 (- 454 or -0.7% year-on-year) 10,000 5,000 0 FY009 4Q FY2010 FY2011 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2011 4Q - -16-
Ikyu.com Accommodation Facilities (by Quarter) Number of facilities 2,200 1,225 1,757 1,825 1,910 1,946 1,991 2,055 2,08 0 2,115 2,000 1,800 1,600 1,400 520 554 630 657 684 726 752 774 Number of Ikyu.com Business hotels* 1,200 1,000 800 564 569 586 596 607 624 639 638 642 Number of ryokans 600 400 200 661 668 685 684 682 683 690 690 699 Number of Ikyu.com hotels 0 FY2009 4Q end FY2010 4Q end 2Q end 3Q end 4Q end FY2011 1Q end 2Q end 3Q end FY2011 4Q end Ikyu.com Business launched in 2010 is steadily increasing its number of lodging facilities *Ikyu.com Business was launched on April 14, 2010. -17-
0 Members (by Quarter) Number of members (thousand) 2,800 Net increase of members in the fourth quarter of FY2011 was approx. 71,000; Year-on-year increase of 54% +71,000 2,630 2,600 2,559 2,400 2,200 2,080 2,127 2,214 +46,000 2,280 2,326 2,389 2,475 2,000 0 FY2009 4Q end FY2010 4Q end 2Q end 3Q end 4Q end FY2011 1Q end 2Q end 3Q end FY2011 4Q Note: Members are able to use the same ID and password on Ikyu.com, Ikyu.com Restaurant, Okuru Ikyu, Ikyu.com Business and Ikyu Market. -18-
Member Distribution Ratio of male to female: 56:44 Average age: Male: 45 Female: 41 70s or older 60s 70s or older 20s or younger 60s 20s or younger 70s or older 60s 20s or younger 20s 20s 20s 50s 50s 50s 30s 40s 40s 30s 40s 30s Approx. 1,460,000 Approx. 1,170,000 Approx. 2,630000 Male Female As of March 31, 2012-19-
Members (by Fiscal Year) Number of members (thousand) membership has exceeded 2.6 million 3,000 2,630 2,500 2,326 2,000 1,597 1,824 2,080 1,500 1,000 500 0 FY2007 end FY2008 end FY2009 end FY2010 end FY2011 end -20-
Corporate Earnings (by Fiscal Year) (Unit: million yen) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 FY2007 FY2008 FY2009 FY2010 FY2011 Revenue 2,468 2,652 2,790 2,950 3,676 Ordinary income 1,477 1,418 1,317 654 1,084 Net income 863 773 820 266 484-21-
Ikyu.com Booking Turnover (by Fiscal Year) (Unit: million yen) *includes tax 34,000 FY2011 Hotel: 78.7% Ryokan: 21.3% (comparison of booking turnover) 33,168 32,000 30,674 30,900 30,458 30,647 30,000 28,000 26,000 24,000 0 FY2007 FY2008 FY2009 FY2010 FY2011-22-
Ikyu.com Booking Rooms and Average Room Rate per Night (by Fiscal Year) Booking rooms (thousand) Average room rate per night (yen) 1,600 1,400 1,200 1,000 800 600 400 200 0 25,808 25,104 23,060 22,949 22,337 1,320 1,230 1,335 1,484 1,188 Breakdown of booking rooms in FY2011 Hotel: 92.4%Ryokan: 7.6% Average room rate per night for hotels (per room) 19,037 (- 1,050 or -5.2% year-on-year) Average room rate per night for ryokans (per room) 62,215 (+ 145 or +0.2% year-on-year) 30,000 25,000 20,000 15,000 10,000 5,000 - FY2007 FY2008 FY2009 FY2010 FY2011-23-
Ikyu.com http://www.ikyu.com/ Ikyu.com is a booking site for luxury hotels and ryokans. Reservations can be made 24 hours a day for approx. 1,300 lodging facilities nationwide. Reservations are accepted until 5 a.m. Various extensive plans are offered for high-quality hotels and ryokans which have cleared the strict criteria for entry at reasonable prices. The site s content has proven satisfactory for our customers and users by whom the site is deeply trusted. Implementing rigorous screening with regard to lodging facilities (1,341 facilities as of the end of March 2012) Ample information for each facility Ikyu Plus+ Ikyu Plus+ is a lineup of hotels and ryokans that can only be booked via Ikyu.com among all dedicated internet booking sites. Enjoy this Ikyu services that is one level above others. -24-
Ikyu.com Business http://www.ikyu.com/biz/ What is Ikyu.com Business? Ikyu.com Business is a dedicated hotel reservation site for premium lodgingtype hotels whose numbers are rapidly increasing. Attending to the needs of customers seeking comfortable stays at hotels, this site introduces hotels for men and women alike traveling alone, placing priority on safety and cleanliness. The site Ikyu.com Business School which considers business trips with the slogan Enjoyable and energizing business trips! has been launched. Opinions are solicited on Twitter and information is disseminated across Japan. Ikyu.com Business School http://ikyubiz.blogspot.com/ twitter (twinavi approved) http://twitter.com/ikyubiz/ More premium lodging-type hotels are scheduled to open one after another. -25-
Mechanism of Booking System Payments are made at the facilities or beforehand using credit cards Ikyu receives commissions according to booking results from the lodging facilities 24 hour online reservation 24 hour online reservation Customers 2. Real time booking Reservations can be made any time of the day Automatic notification system 3. Notification of reservation completion 1. Real time registration of rooms and prices Inputs as well as changes are possible any time of the day Automatic notification system 3. Notification of reservation completion Luxury hotels Luxury ryokans 4. Lodging and payment Payment at checkout or beforehand with credit card Premium lodging-type hotels 5. Commissions from facilities according to lodging results -26-
Ikyu.com Restaurant and Ikyu Market http://restaurant.ikyu.com/ Ikyu.com/ restaurant Ikyu.com Restaurant is an instant reservation site for selected restaurants where reservations can be made 24 hours a day. The real time rankings (sales ranking and review ranking) are very helpful when it comes to choosing restaurants. Ikyu.com Market Coupon group buy site where everybody can benefit http://market.ikyu.com/ This site introduces coupons for luxury hotels, restaurants, spas, etc. on a day-to-day basis. Resembling a market that is packed with fresh products, a line of colorful and seasonal coupons are offered here. Experience the luxury also offered by the new service for spa coupons that can be purchased any time of the day. -27-
Okuru Ikyu and Ikyu.com Gift Send a heartfelt luxury to your dearest http://shop.ikyu.com/ Okuru Ikyu A wide selection of items that can be used as gifts for various occasions such as special dates or even just casual gifts can be found here such as gift tickets for hotels, ryokans, restaurants and spas listed on Ikyu as well as Ikyu original goods through tie-ups and catalog gifts where the receivers are able to choose themselves. http://shop.ikyu.com/shikyugift/start.htm/ Ikyu.com Gift offers gift tickets for which the receivers are able to choose the facilities themselves. The selection can be made from among hotels, ryokans, restaurants and such from all over Japan carefully selected by Ikyu.com according to the course shown on the ticket. The site can be used to send events, not objects. Products are sold in Okuru Ikyu. -28- Ikyu.com Gift
Thank you for your time. IKYU Corporation Heartfelt luxury Ikyu.com Of the plans, strategies and forecasts or outlooks of business results included in this document, those that do not include historical facts are based on assumptions and convictions of Ikyu Corporation from information available as of the preparation of this document. Please note that the actual results may vary significantly due to various factors. For details of items that may impact Ikyu Corporation s business results, please refer to the section Risks to Business, etc. in the 12th Fiscal Period Securities Report. However, keep in mind that factors that may impact business results are not limited to the items in Risks to Business, etc. Also, please note that Ikyu Corporation may revise future outlooks or modify factors that were the basis for future outlooks without prior notice, except for when required by law.