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Overview of the New Medium-Term Business Plan "Activate"
(Facing new challenges) (February 2012 through January 2016)
The Tokyo Dome Group has formulated a new medium-term business plan, named "Activate" (Facing new challenges), which will run over a five-year period from the fiscal year ending January 31, 2012, to the fiscal year ending January 31, 2016.
On January 30, 2011, at Tokyo Dome City Attractions, an extremely tragic accident occurred in which a customer died. At present, the entire Tokyo Dome Group is working to rebuild its safety management system to ensure that there is no recurrence of such an accident. We recognize that the establishment of safety systems and the development of a safety-oriented corporate culture are the highest priority tasks we must tackle under the medium-term business plan.
• Overview of the New Medium-Term Business Plan "Activate" (Facing new challenges)
The Tokyo Dome Group withdrew from the financing business and the golf resort business, and subsequently worked to realize its growth strategy through the implementation of its previous medium-term business plan, "Scale Up". In addition to commencing operations at MEETS PORT, Geopolis and Splash Garden within Tokyo Dome City, the Group has carried out a range of new initiatives, including the launch of the TD Point Program and contracted operations at SPA EAS. However, owing to the impact of the global financial crisis and other factors, we have been unable to attain the growth trajectory initially envisaged. On the contrary, the operating environment has become progressively more severe year by year. While we must rigorously address such domestic and international compliance issues as CO2 emission reductions, seismic retrofitting of buildings and measures relating to IFRS, it is also essential for us to adapt our strategies to effectively meet such long-term challenges as persistent deflationary pressures and Japan's falling birth rate and aging population.
Although the current circumstances are fraught with many difficulties, the Company formulated its new medium-term business plan, backed by its resolve expressed in the following way. In December 2011, the Company will celebrate 75 years since its founding. This is an opportunity for us to make a new start as we head towards the Company's 80th anniversary. We will exercise our wisdom and rise to meet new challenges. We have named the new plan "Activate" (Facing new challenges). Although the world is undergoing rapid changes and we live in an era where predicting the future has become even more difficult, we plan to complete seismic reinforcement work at Tokyo Dome City in March 2015. We also anticipate the possibility of commencing or completing construction work for new businesses, including the redevelopment project for the Tower Land zone, within five years. These projects are covered in the plan spanning the five years from the fiscal year ending January 31, 2012, through the fiscal year ending January 31, 2016.
Under the "Activate" plan, we have set the following three management targets.
1. Operating income of ¥10,000 million in five years time (Operating income of ¥9,000 million in three years time)
2. Consolidated interest-bearing debt of ¥170,000 million in five years time (Consolidated interest-bearing debt of ¥185,000 million in three years time)
3. Payment of dividends based on a target payout ratio of 30%, and execution of stock buybacks along with retirement of treasury stock
| Fiscal year ended January 31, 2011 (actual) |
Fiscal year ending January 31, 2014 (forecast) |
Change | Fiscal year ending January 31, 2016 (forecast) |
Change | |
|---|---|---|---|---|---|
| Operating Income | 8,663 | 9,000 | 337 | 10,000 | 1,000 |
| Interest-Bearing Debt | 191,900 | 185,000 | (6,900) | 170,000 | (15,000) |
We will also pursue a range of policies to address such emerging management issues as breaking out of the trend of earnings decline; researching and developing new growth strategies; and implementing of measures to strengthen the Group's underlying business structure.
Break out of the trend of earnings decline
To break out of this trend of earnings decline at TDC—which forms the core of the Group's operations—we will implement such measures as:
1. Opening up new markets: The meetings, incentives, conferences and exhibitions (MICE) market; emerging economies; and multipurpose utilization of Tokyo Dome
2. Development investment in TDC: Redevelopment of the Parachute Land and Tower Land zones; renovation of the Yellow Building and Blue Building following the completion of seismic strengthening work
3. Group-wide measures aimed at reversing the earnings declining trend: Marketing activities for the TD Point Program; rebranding of Sapporo Korakuen Hotel (in April 1, 2011, the hotel's name was changed to "TOKYO DOME HOTEL SAPPORO"); stringent cost control focusing on cost effectiveness.
Research and development of new growth strategies
To create new business opportunities outside of TDC, we are pursuing research and development vis-à-vis the following potential growth strategies.
1. Examining entry into new markets through strategic alliances and mergers and acquisitions (M&A)
2. Researching the casino business
3. Market research related to new business models: Use of local-area Worldwide Interoperability for Microwave Access (WiMAX) provided by Tokyo Cable Network Co., Ltd.; launch of a digital signage business; and nationwide sales of popular goods and food items through Internet-based direct marketing.
Implementation of measures to strengthen the Group's underlying business structure
The period covered by the Group's "Activate" plan coincides with the Tokyo Metropolitan Government's Global Warming Prevention Measures, Phase I Period, which commenced in April 2010 pursuant to an environmental ordinance. Furthermore, by March 2016, the Group is required to comply with the Revised Act for Promotion of Renovation for Earthquake-Resistant Structures of Buildings. The Group must also prepare for the compulsory introduction in Japan of International Financial Reporting Standards (IFRS), which may occur as early as the fiscal year ending January 31, 2017. As in previous medium-term business plans, one of the Group's central challenges is the implementation of measures to improve its financial structure. At the same time, we must build a sound business structure capable of swiftly and flexibly responding to changes in the operating environment. To help achieve these goals, we are undertaking the following measures.
1. CO2 emission reduction measures; seismic retrofitting of buildings; and compliance measures relating to IFRS and other laws
2. Reduction of interest-bearing debt
3. Overhaul of the Group's organizational structure.
Disclaimer
Statements regarding future plan figures, initiatives, and other content presented in this material are subject to change due to unexpected or uncertain factors.