2 nd Business Plan (Year

Transcription

1 2 nd nd Medium-Term Business Plan (Year ending March 31, 2008 year ending March 31, 2010) March 08, 2007 Prestige International Inc. Osaka Securities Exchange Hercules Growth Growth: 4290

2 This presentation may provide projections or forward- looking statements regarding future conditions, events or performance. The Company wishes to caution you that such statements are just predictions and the actual events or results may differ materially due to changes in business conditions. Page 2

3 Overview of 1st Medium-Term Business Plan (From the year ended March 31, 2004 to the year ending March 31, 2007) Page 3

4 1st Medium-Term Business Plan Summary of 1st Medium-Term Business Plan (Year ended March 31, 2004 to year ending March 31, 2007) In its first medium-term business plan, the Company has aimed to quickly achieve the stable operation of the Akita BPO Center, to bolster the revenue base of existing businesses and to expand operations. To acquire the No.1 market share in the small, high value-added added service market and to realize stable growth, the Company has endeavored to organically link each of its businesses and to develop its operations horizontally. At the same time, the Company has planned and begun to build the 2nd BPO Center as part of its growth infrastructure, aiming to put p in place a system for the next medium-term business plan. Page 4

5 Overview of 1st Medium-Term Business Plan Sales Sales (unit : million Yen) Sales have risen 69.8% in 3 years The Automotive Assistance segment has grown significantly Sales in the Financial Services segment have risen twofold from FY2004 The Insurance Assistance segment has grown steadily 12,500 10, % 12,054 12,500 10,000 7,500 5,000 Automotive Assistance Insurance Assistance CRM Financial Services IT& Other Business 694 1, ,050 1,146 1, ,333 1,057 1, ,701 1,096 2, ,500 7,101 8,306 10,040 2,500 1,327 3,319 4,325 5,703 6,345 5,000 Page 5 FY 2004 FY 2005 FY 2006 FY 2007 (Forecast) 0 FY 2004 FY 2005 FY 2006 FY 2007 (Forecost)

6 Overview of 1st Medium-Term Business Plan Income Operating Income (unit : million Yen) Operating income has risen 272.2% in 3 years The operating income of the Automotive Assistance segment has increased in proportion to sales Profitability has improved in the Insurance Assistance and Financial Services segments The CRM segment has continuously kept profit 1,800 1,700 Automotive Assistance Insurance Assistance CRM Financial Services IT& Other Business ,500 1, % 1,705 1, Page ,052 1,298 FY 2004 FY 2005 FY 2006 FY 2007 (Forecost) FY 2004 FY 2005 FY 2006 FY 2007 (Forecost)

7 Review of 1st Mid-term Business Plan 1 Results Sales The BPO business, mainly in the Automotive Assistance segment, has h grown significantly. The target has been achieved. Cost of Sales By transferring operations to the Akita BPO Center, the Company has improved its overall profitability. The gross margin increased from 24.5% in FY2004, to 26.2% in FY2006. (The forecast for FY2007 is 27.1%.) SG&A Expense Although the total amount increased, the ratio of the expense to sales fell from 18.0% in FY2004 to 12.9% in FY2006. (The forecast for FY2007 is 12.8%.) Operating Income Operating income rose 272.2% from FY2004 (the ratio of the forecast for FY2007). The target has been almost achieved. Page 7

8 Review of 1st Mid-term Business Plan 2 Review While the Company increased market share and achieved growth by developing existing businesses horizontally, it did not create new n businesses. (New business creation is not included in the original plan.) Since the Company put priority on expanding scale for the stabilization ization of businesses, it was slow to start improving business efficiency and a could not reach the target operating margin of 15%. In China, the Company was slow to set up a local subsidiary, and negotiations with the affiliated bank went on longer than expected. The local company was therefore unable to contribute to sales and profits in the period d of the first medium-term business plan. Page 8

9 Background to Development of 2nd Medium-Term Business Plan (From the year ended March 31, 2008 to the year ending March 31, 2010) Page 9

10 Changes in the Business Environment Rising market share in business domain The Company needs to maintain and improve its competitive advantage. age. Certain fast-growing businesses, where the Company is growing market share, are moving to the stable growth stage. Development of services that meet corporate needs The Company needs the ability and driving force to develop new businesses. b The Company is committed to the quality and efficiency of the services of the whole Group. To improve the value of services, the Company needs to develop the next growth strategy. Page 10

11 Position of 2nd Medium-Term Business Plan 1 2 The 2nd medium-term business plan is a sequel to the 1st medium-term business plan, based on which the Company has operated since The period of the 2nd is 3 years from 2007 to During the period the Company will improve the results of the 1st plan and re-create businesses. The Company will establish a new growth structure for the whole Group by addressing the remaining issues and dealing with new business challenges in the medium term, and will thereby strive to create a corporate group that will be able to grow quickly in a rapidly changing business environment. Sep. 11, 2001 Negative growth following the terrorist attacks 2nd Mid-term Business Plan Growth Returned to the original point 1st Mid-term Business Plan Established of business basement Business re-creation Time Page Established 2001 Hercules market listed

12 2nd Medium-Term Business Plan (From the year ended March 31, 2008 to the year ending March 31, 2010) Page 12

13 Vision and Policy - 2nd Mid-term Business Plan Vision of 1st Medium-Term Business Plan (Year ended March 31, 2008 to year ending March 31, 2010) The Company will continue to provide for client companies mainly in Japan, the United States, and Europe services that make the inconvenient convenient, including mainly OEM (Original equipment manufacture) supplies of intangible goods and services and BPO (Business Process Outsource) business. In doing so, it will aim to become the NO. 1 company in each of the different fields in which it operates as a company creating services. Page 13

14 Vision and Policy - 2nd Mid-term Business Plan Policy In the Automotive Assistance segment, the Company aims to increase sales and profits by bolstering its competitive advantage with the expansion of services, improvements in business efficiency using economies of scale, and approaches to new targets. The Company will develop markets for Japanese who are long-term overseas residents and will refine its services. As part of the process, the Company will strive to develop the credit card issue business in multiple areas and increase the customer base in the healthcare program business. The Company will make bold proposals of initiatives including cost reduction proposals for potential clients, for which the second BPO Center will be used. The Company then aims to improve unproductive parts early. The Company is committed to maintaining and managing quality and improving efficiency for each service line. To create business that drives growth, the Company will offer packages of new services and efficient business management to a large number of clients. To that end, the Company will actively seek business alliances and perform other activities. Page 14

15 Illustration of Growth in 2nd Medium-Term Business Plan FY2010 FY2008 Establishing foundations for achieving targets FY2009 Expanding the foundations for growth Completing the foundations for growth Completing the plan Achieving economies of scale through expansion New businesses to drive growth Increasing revenue by expanding existing businesses Stabilizing existing businesses and executing strategies for high revenue Increasing the ability to accept new business processes Focusing on select businesses Establishing differentiation Speeding up growth Page 15

16 Group Japan Prestige International Inc. Akita BPO Center Makuhari BPO Center Prestige Humansolution Inc. Temporary staffing / external capital 32%: ed1. Co., Ltd. Power Technology Inc. Marketing support / external capital 80.7% PI Capital Inc. Investment business / subsidiary Time Commerce Co., Ltd. IT & Other Business / wholly owned subsidiary evolution Co., Ltd. Job offer and application website management / external capital 41% Premier Insurance Planning Inc. Insurance assistance / wholly owned subsidiary Premier RS Inc. Automotive assistance / wholly owned subsidiary All Assist Inc. Insurance assistance / external capital 33.3%: Takken Brains K.K. Premier Lotus Network Inc. Automotive assistance / external capital 64%: Lotus K.K., etc. Overseas Prestige International USA Inc. (Irvine) Honolulu Prestige International UK Ltd. (London) Paris Prestige International (S) Pte Ltd. (Singapore) Hong Kong Kuala Lumpur Jakarta Taipei Ho Chi Minh Sydney Bangkok (Establishment plan of Apr. 2007) Prestige International CHINA Co., Ltd. (Shanghai) Corporation Branch Office Page 16

17 BPO business Financial Services Insurance Assistance Automotive Assistance CRM PREMIO Financial Contact Center (Domestic) Claim (Assessment) Healthcare Program Mutual Aid Roadside Assistance Extended Warranty Automobile Contact Center Domestic CRM Overseas CRM Overseas Expanding the area in which credit cards are issued Enhancing the contents of the PRMIO business Bolstering services for Japanese living overseas Developing luxurious consumer goods (brand goods etc.) Domestic Establishing the superiority of the Akita BPO Center Enhancing the Group s field network Creating new business, as in small amount and short term insurance products Enhancing comprehensive packages Page 17

18 Medium-Term Targets (unit : million Yen) FY2006 (Performance) FY2007 (Forecast) FY2008 FY2009 FY2010 FY07 VS FY10 Sales 10,040 12,054 13,200 15,800 19, % Operating Income 1,298 1,705 1,800 2,600 3, % % Net Income ,015 1,490 2, % % EPS (Yen) 8, , ,835 20,309 27,397 ROE (%) *ROE is calculated based on the performance for the year ended March M 2006, and the forecast for the year ending March Page 18

19 Medium-Term Targets (by Segment) (unit : million Yen) Segment FY2007 (Forecast) FY2008 FY2009 FY2010 Automotive Assistance Sales 6,345 5,800 6,150 6,600 Operating Income Insurance Assistance Sales 2,401 2,500 3,300 4,000 Operating Income ,242 CRM Sales 1,096 1,580 1,800 2,200 Operating Income Financial Services Sales 1,701 2,150 2,550 3,200 Operating Income Real Estate Assistance Sales ,100 2,000 Operating Income IT & Other Business Sales ,000 Operating Income Page 19

20 Operations by Segment Page 20

21 Automotive Assistance Segment Market size Share Roadside assistance business for non-life insurance About 10bn About 45% Roadside assistance business for manufacturers About 14bn About 5% Of the above, for imported car manufacturers Road services for members About 1bn About 35bn About 50% - * The figures are estimates by Prestige. The figures for the roadside assistance business for manufacturers represent the potential market including domestic manufacturers. Business Environment Roadside assistance In the roadside assistance business for non-life insurance, the Company s s market share increased, and the pace of expansion has stabilized. Meanwhile, the Company can expand its market share in the roadside de assistance business for manufacturers if the potential market including domestic manufacturers is taken into consideration. Road services for members (by JAF etc.), which are B2C services, are standardized. The Company, which provides services in accordance with the value of the vehicle model, can increase its market share if it fully commits to this market. Peripheral Business Companies intent on developing programs that value customer satisfaction sfaction have a strong interest in high value-added added road services. Page 21

22 Automotive Assistance Segment FY2007 (Forecast) FY2008 FY2009 FY2010 FY2007 VS FY2010 Amount % Sales 6,345 5,800 6,150 6, % Operating Income % % (unit : million Yen) Business Policy * With the conclusion of large outsourced projects, sales and operating income should fall. Sales will also decline with a change in the accounting procedure. (There is no influence on operating income.) Page 22 Roadside assistance Will develop new profitable clients, maintain and increase the number n of clients by diversifying services, and shift from B2B to B2B2C. Will bolster competitiveness by improving quality and cutting costs through field subsidiaries (PRS, PLN). Will shift from services for vehicles involved in accidents and disabled vehicles to services for drivers. Will speed up processing and upgrade data analysis by radically changing the system. Will enter the B2C roadside assistance business for luxury cars in earnest (differentiating the Company from JAF) Peripheral Business Will realize high value-added added services by bundling the extended warranty business and roadside assistance business for manufacturers.

23 Overseas Japanese Citizens Market The credit card issuing business for credit support and the healthcare program business for medical support for Japanese living overseas, including long-stay residents (such as company representatives and students) and permanent residents, are a designed to alleviate the inconvenience of living abroad, bridging the gap to the level of services expected by Japanese living in Japan. The Company aims to expand its operations, and will look at integrating them. The potential market is large. In addition, the Company is the sole s operator in the market for overseas Japanese. This enables further business development. Breakdown of Japanese living overseas by area US Chine 350, ,000 Page 23 North America 39% * Source: Foreign Ministry Asia 26% Europe 16% Oceania 7% Other 12% Shingapore Thailand Philipine UK 0% 20% 40% 60% 80% 100% Breakdown of Japanese by countries Long stay 25,000 36,000 13,000 54,000 Permanent

24 Insurance Assistance Segment Market size Our share Claim (Assessment) business Healthcare Program business About 3bn About 8bn About 45% About 5% * Prestige has estimated the figures based on the number of companies operating overseas and the number of their employees living overseas Business Environment Claim (Assessment) Business Although the Company expects an increase in turnover in China, overall o performance has stalled. Since the targets are Japanese companies operating overseas, the potential market size is large. (There are 800 companies operating overseas.) The business is being recognized by an increasing number of companies. The number of companies using the service has increased from one in 2002, to seven now. The Company expects further growth. Outsourcing of operations such as household staff mutual aid assigned by large mutual benefit societies is increasing. The Company also expects to accept comprehensive services including systems for small amount and short term insurance products.. Hence, there is potential for further growth in this field. Page 24 Healthcare Program Business Other Business

25 Insurance Assistance Segment FY2007 (Forecast) FY2008 FY2009 FY2010 FY2007 VS FY2010 Amount % Sales 2,401 2,500 3,300 4,000 +1, % Operating Income , % % (unit : million Yen) Business Policy * A change in accounting procedure alters annual sales by 300m but does not affect operating income. Healthcare Program Business Will allocate management resources to developing new client companies, enhancing sales power and expanding the scale of the business. Will invest in systems and bolster business efficiency. Will pursue a marketing strategy to improve awareness of the healthcare program. Other Business Will accept new medical checkup reservations for employees and other o services and expand the new services as pillars of the Company s s businesses. Page 25

26 Financial Services Segment No. of Japanese (Long-stay + permanent residents) PREMIO Cardholder Business Environment US 350,000 27,000 PREMIO Business China Thailand Hong Kong Singapore Philippines Indonesia Malaysia UK Australia Canada 90,000 36,000 25,000 25,000 13,000 11,000 10,000 54,000 52,000 42, N.A. 1,300 N.A. N.A. N.A. N.A. N.A. N.A. N.A. * The number of Japanese residents are based on Foreign Ministry statistics. Membership in the United States has doubled in 3 years. Since the business is still in its infancy in China and Hong Kong, membership is expected to rise there. Japanese people are living in many countries. The potential market is large. Peripheral Business (Domestic) Credit card companies face the need to cut costs in a rapidly changing environment following the raising of gray zone interest rates. They need to relocate their call centers to local cities soon. Page 26

27 Financial Services Segment FY2007 (Forecast) FY2008 FY2009 FY2010 FY2007 VS FY2010 Amount % Sales 1,701 2,150 2,550 3,200 +1, % Operating Income % % (unit : million Yen) Business Policy PREMIO Business Will step up the pace of development of the business into Thailand, Singapore and other Asian countries (during the 2nd medium-term business plan). Will set up a portal site for providing information and pursuing convenience for long-stay Japanese residents in the United States and enhance content such as shopping and auctions. Will promote the sale of PREMIO Regular Cards, which are sold in the United States (you cannot get airline mileage points with the card), to permanent Japanese residents through new business partners (community-based retailers, etc.). Peripheral Business (Domestic) Will make proposals for the effective use of the 2nd BPO Center to credit card companies and focus on concluding large contracts. Page 27

28 CRM Segment FY2005 FY2006 FY2007 (Estimate) FY2007 (Estimate) CRM market 557.6bn 651.1bn 741.4bn 841.0bn Of the above, customer service- related market 346.3bnbn 419.2bn 486.0bn 558.0bn * Source: 2006 Call Center White Paper Business Environment Call center Business The market for call center business emphasizing CS (customer satisfaction) will grow. Although the market is expected to grow, there is fierce competition tion for customers. In addition, there are few elements of differentiation. Price competition is thus likely to occur in the market. With the Akita BPO Center, the Company employs mainly full-time and long-term employees. This leads to stable operation, for which the Company has earned high marks. Page 28

29 CRM Segment FY2007 (Forecast) FY2008 FY2009 FY2010 FY2007 VS FY2010 Amount % Sales 1,096 1,580 1,800 2,200 +1, % Operating Income % % (unit : million Yen) Business Policy Call center Business R&D in this field has the potential to develop businesses that will w become mainstays of the Company. (The Company will strive to identify customer needs and acquire business-specific specific expertise.) Will avoid competition with major call center companies (will not t participate in competition) and select companies with which the Company can partner. Is increasing proposals for comprehensive customer services, including customer consultation, support for the introduction of e-commerce, e and the management of e-commerce e for the luxury consumer goods industry, which is increasingly outsourcing g operations to the Company. Will strive to expand customer service contracts with Internet companies. c Page 29

30 Real Estate Assistance Segment The Company is launching a new real estate-related business as part of the expansion of its operating base. It will establish a joint venture that will deliver synergy and a network for providing day-to-day assistance services, including the handling of water leaks, renovations, and repairs. Operations will get fully underway in April Client Company End-user Service information sells Outsources Prestige Group calls Dispatches personnel New company (JV) = AKITA BPO Center Requests arrange = Premier RS Alliance companies, specialty companies Network Page 30

31 Real Estate Assistance Segment FY2007 (Forecast) FY2008 FY2009 FY2010 FY2007 VS FY2010 Amount % Sales ,100 2, Operating Income % (unit : million Yen) Business Policy Will narrow targets by industry and by product and make proposals Will expand sales channels through a new company to be established ed in April 2007 Target business area Mortgages (new contracts per year) Fire insurance Credit cards Condominiums No. of targets About 500,000 About 11m About 270m About 4.85m [Housing supply] Real estate management firms, housing construction companies, trading companies, etc. [Mortgage agreements] New targets [Insurance, guarantees] Life insurance companies, non-life insurance companies, etc. [Housing services] Financial institutions, Home security companies, *Sources credit card companies, etc. Number of mortgages: Ministry of Land, Infrastructure and Transport renovation companies, etc. Number of fire insurance policies: General Insurance Association of Japan Number of credit cards issued: Japan Consumer Credit Industry Association sociation Number of condominiums: Real Estate Companies Association of Japan an Page 31 (accumulated number of condominiums supplied)

32 Investment for growth 1 In the 2nd medium-term business plan, the Company will recoup the substantial investments that were made in the 1st medium-term business plan for the 2nd BPO Center, etc. At the same time, it will use capital increases and loans to fund actively investment to accelerate growth. Expansion of business bases Will establish a company in Thailand during the business plan to expand the local currency-denominated credit card business. Will expand the network of satellite bases in China, Hong Kong, and Singapore. (Will consider entering Vietnam and India.) Will commit to the launch of the 3rd BPO Center during the business plan. Will consider building employee housing and additional day-care facilities in the area adjacent to the Akita BPO Center to secure human resources. Will develop good, community-based working conditions. Page 32

33 Investment for growth ➁ Improving efficiency Will invest in training field subsidiaries to bolster quality and d invest in improving their operating efficiency. Will refine systems for the overseas accident insurance assessment business and healthcare programs. Will upgrade the system to improve the efficiency of the Akita BPO B Center as a whole and to reduce expenses. M&A, alliances Will not perform mergers and acquisitions for scale expansion (basic policy). Will promote alliances to create a growth engine and synergy for business. Will search for alliances to bolster the system division. Will establish a joint venture (real estate assistance business) in April 2007 as the first step for creating new businesses. Page 33

34 Akita BPO Center A large space enables the development of peripheral facilities. Total investment: 1,250 million yen Number of seats (2nd BPO Center seats 550 people) Facilities to improve the working environment Two cafeterias, each having about 100 seats On-site day-care facilities Refreshing room Parking facilities for employees (for 800 vehicles) Theater-like training room that seats 100 people Two centers are built on a large site of 36,300 square meters. The Company aims to win high marks by differentiating itself and maintaining quality based on long-term employment. The facilities will be operating at full capacity in 3 years. Page 34

35 Thank You March 08, 2007 Prestige International Inc. Osaka Securities Exchange Hercules Growth Growth: 4290