Full Year 2017 Park24 Co Ltd Earnings Presentation
Tokyo Jul 20, 2020 (Thomson StreetEvents) -- Edited Transcript of Park24 Co Ltd earnings conference call or presentation Friday, December 15, 2017 at 10:59:00am GMT
TEXT version of Transcript
* Koichi Nishikawa
PARK24 Co., Ltd. - President & Representative Director
Koichi Nishikawa, PARK24 Co., Ltd. - President & Representative Director 
Good afternoon. I'm Koichi Nishikawa. Welcome to Park24's Financial Results Briefing Meeting for Fiscal Year ending in October 2017. With no further ado, I'd like to start my presentation. Please refer to the handout materials during the presentation.
First, let me go over the numbers. As announced on December 14, the group's consolidated results for the fiscal year under review posted are as follows: Net sales of JPY 232.9 billion; gross profit of JPY 60.1 billion, operating profit of JPY 20.5 billion, recurring profit of JPY 20.2 billion and comprehensive profit attributable to owners of parent stood at JPY 13.4 billion.
Our net sales was 119.8% year-on-year, but operating profit was 95.6% against the previous fiscal year, recurring profit, 95.8% and comprehensive income, 96.2%, respectively. So we ended the year with positive sales growth but declining profits. Against the revised plan announced in the fourth quarter, the actual results were slightly better. But compared to the previous year, sales were up, but profits were down for the year.
The group's business scale is summarized on Page 4. In our Parking Business, the total number of parking sites grew to 18,255, and the total number of spaces increased to 683,707. The overseas business expansion started on a full-fledged basis from fiscal year 2017, and the total number of overseas stood at 2,206 sites and 547,263 spaces, respectively. Therefore, the total number of parking sites and spaces operated by the group was 20,461 sites and 1,230,970 spaces.
The other pillar of the group is the Mobility business. Our car rental business, Times Car Rental, operated a cumulative total of 438 stores and 28,956 vehicles. Compared to the fiscal year 2016, vehicles increased by 2,256 units. Next is our car sharing business, Times Car PLUS. The true number of members on cumulative basis was 903,564. The number of vehicles increased by 3,781 to 20,033 units. And a number of what we call stations where the vehicles are distributed stood at 10,066. So rentals and car shares combined, there are a total of 10,504 sites under operation throughout Japan where people can use our vehicles, and the total number of vehicles is 48,989.
Segmental operating profits are stated on Slide 5, while the group's operating and recurring profits declined, segment-wise. Parking Business in Japan was up 103.3%. Mobility business was up 115.2%, out of which the car sharing business was 122.2% and Overseas Parking Business was 141.8%.
So at the operating profit level of business segments, it was 105%. However, costs such as overseas M&A transaction-related fees and expenses and others increased. And so the consolidated recurring profit was 95.8% against the year before. Business development cost of JPY 1.9 billion was posted. This includes JPY 1.1 billion of onetime cost such as advisory fees for overseas M&A transactions.
The following Slide 6 explains one of the reasons why the business was not able to absorb such cost increases and closed the year with declining profit. We show here the number of new parking sites and spaces. The number of new parking sites developed was 1,832. This is up by about 130 sites compared to the fiscal year 2016. So while the number of sites developed increased, the number of new spaces developed was 55,515, which was down from the previous year's level. The line chart on the right, above the bar graph represents the parking spaces per site, which was 30.3 for fiscal 2017 compared to the preceding 2 years of 36 and 37.3, respectively, the number of spaces developed per new sites were smaller.
In the footnote, the space per site for ST, Standard Times, and TPS, Times Partner Service, are shown. For ST, the average number of space per new site was 13.7, which is a decline of about 2 spaces per site from fiscal year 2016. TPS's average per new site was 1.6 spaces, which was about 27 spaces less. So the number of new sites developed was steady. But during the fiscal year under review, parking site's development skewed toward more medium to small-sized lot, especially for ST. TPS, likewise, had high proportion of its development in what we would categorize as medium to small size. So although the number of new sites developed exceeded the previous year, the number of spaces declined to make less profitability contribution. Therefore, we were not able to cover the increasing cost and our profits declined.
Next is the Mobility business. Our car rental business results are on Slide 7. We made active upfront investments on vehicles this fiscal year. Net sales per vehicle per month was up by about JPY 5,000. Operating profit per vehicle per month was down by about JPY 600. Expenses per vehicle per month was up by about JPY 5,600. Due to the upfront expenditures increase, the cost per vehicle went up and the profit margin contracted.
Next on Slide 8 is the business performance of our car sharing business, Times Car PLUS. The car sharing business achieved sales and profit increase. But against our initial plan, it missed the operating profit target. This was not necessarily due to some external environment factors, but rather owing to our operational issues.
For the fiscal year 2017, we aim to achieve the highest number of vehicles distribution, targeting 4,000 new units, so we increased the number of vehicles under operation. Meanwhile, some existing vehicles had to be relocated due to the cancellations of the Times parking sites where they were originally distributed. When our parking sites are terminated due to contract cancellations, the vehicles distributed at such sites need to be relocated somewhere else. So although such vehicles had already been distributed once, such relocations will incur the same workload as a new distribution.
Another development was that when the utilization is very high, customers may experience inconveniences if there were scarce availability of vehicles when they want to use it. When we hear about such situations from customers, we respond by, in some cases, increasing the number of units distributed. During the first quarter of fiscal year 2017, for example, we distributed an additional vehicle for a station of 2 and increased it to 3 units or, in some cases, where the utilization is extremely high, 2 or maybe even 3 more additional vehicles would have been distributed.
During such process, there have been cases where too much addition was made. We added about 400 units too much during the first quarter. These needs to be replaced eventually. So in addition to the 4,000 new units, there were pre-distributed vehicles that had to be relocated due to cancellation of parking sites as well as some excess vehicles that had to be replaced. In total, over 6,000 units required the workload of new distribution placement.
But the organization structure up until the fiscal year 2016 was not sufficient to handle such volume. So during the middle of the second quarter of the fiscal year 2017, we reorganized the business unit, changed some of the roles undertaken and amended operational flows. Such measures improved efficiency in the second half. So for the third and fourth quarters, operating profit recovered quite substantially, though still not enough to make up for the shortfall of the first half.
Slide 9 is the number of vehicles and members. As of end of October, the number of vehicles in operation was 20,033, which was slightly above the initial plan of 20,000 units. Starting from these earnings briefings, we are also identifying what is written here as not Times parking spaces. The way this business was originally intended to work was that by distributing Times car sharing vehicles at times parking sites, the parking space cost associated with such distribution is undertaken by the Parking Business instead. So the car sharing operation being free from such cost burden will be able to expedite profit generation, such was the formula when we first launched the business.
But now that we've reached the high level of Times Car parking distribution rate and as I've mentioned before, when we face cancellations of existing parking sites, if we focus solely on our profitability, then when a parking side is gone, one could argue that the car share vehicle distribution may also become no longer available. However, our car sharing business is based on members who pay monthly fee of JPY 1,000. If we just pull out of the area when a parking site is canceled, that will cause inconveniences to the existing members.
So when something like that happens, if there is another Times parking site in a close vicinity of the canceled site and if the utilization status of that one can accommodate car sharing vehicles to be distributed, then in that case, the station will be relocated to such sites. But when there are no other Times parking sites nearby, in order to maintain providing service usability to the existing members, we use non-Times operated monthly parking slots available to station the vehicles. The number of vehicles that are distributed at such non-Times parking spaces, which has increased in numbers because of such reasons, is the figures shown here, which was 4,120 units for fiscal year 2017.
So about 20% of the total stock is currently using non-Times parking spaces. Having said that, some of the regional cities' market rate for monthly parking could be very cheap, like JPY 3,000 or JPY 4,000. So for such areas, irrelevant of the availability of Times parking sites, we may seek to proactively utilize such third-party spaces to expand the overall network of the business. But in general, the majority of the increase in not Times parking spaces is coming from cancellation of the original proprietary sites.
On the right side, we show membership trends. The number of members topped the 900,000 mark. Over the last 3 years or so, one of the main theme for the car sharing business have been how to increase weekday utilization for higher profitability. One of the initiatives for that has been to increase the rate of corporate members. We continued to put effort during the fiscal year under review, and the rate achieved 39%. So almost close to 40% of the members are now corporates.
The rise in the corporate members ratio increased the amount spent per vehicle per day to 108.6% year-on-year. In addition to the increase of the number of corporate members, the number of vehicles increased, too. With more cars distributed, we now cover broader destinations, some of which we haven't been able to serve fully in the past. This offers more business opportunities for higher use that leads to increase of spending per vehicle per day.
We will continue to aggressively increase the ratio of corporate members and improve weekday utilization going forward. In our overseas business, the segment net sales stood at JPY 23.67 billion, operating profit was JPY 760 million and JPY 650 million of goodwill is recognized. So the operating profit after goodwill amortization was JPY 110 million for the fiscal year 2017.
The table on the right is the number of sites and spaces by country, Taiwan at the top row and South Korea at the very bottom. All countries, the group started rolling out since 2006, so they are in their 11th year of operation. Taiwan has 364 sites with 15,591 spaces. South Korea has 272 sites with 26,555 spaces.
Secure Parking was consolidated in January 2017. National Car Parks, second from the bottom, was consolidated to our group in August 2017 after M&A. The total number of overseas sites and spaces stand at 2,206 and 547,263, respectively. As explained in the footnote, the consolidation of Secure Parking’s results started from the second quarter of fiscal year 2017. The total value of goodwill is JPY 17.5 billion, which will be amortized over 20 years.
When I discussed the segmental operating profit, I touched briefly upon the business development cost. The costs included are mainly investments to create new mobility business models. Among such investments, the one on the left is B-Times. The B stands for booking. Members can make reservations for a parking space. Number of spaces under management is now above 10,000 mark, standing at 10,649. The development cost of this business is recognized in business development cost.
The right half of the slide shows Times Car PLUS and Ha:mo. Ha:mo is a project rolled out by Toyota Motors. Our car sharing service, Times Car PLUS, is currently conducting a joint experiment with Ha:mo in Otemachi. Using public national road, vehicle rental spaces like you see on this photo are established.
Unmanned machine terminals are also installed on the sidewalks to accept membership application. So if you go to these locations in Otemachi, you can enroll on-the-spot to use this vehicle. We are currently working on this experimental demonstration. The vehicles deployed here are all-electric vehicles, EVs. The photo shows the tricycle-like 3-wheeled car called i-Road. There are 5 of those.
In addition, 95 4-wheeled EVs called COMS are also used. 100 vehicles in total are deployed for the demonstration. And within the implementation area, there are 100 stations where these vehicles are distributed. And the user can do a drop-off return anywhere within the designated service area. We currently operate this demonstration program in the selected area, and the associated cost is recognized as business development cost.
The breakdown of the JPY 1.9 billion of business development cost is described in the footnote. Development costs related to B-Times was JPY 320 million. Strengthening of membership strategy costed JPY 230 million. Ha:mo was JPY 170 million. And this bike and cycle Times is another area of business that we are promoting with dedicated team established to expand parking site services from motorcycles and bicycles, which posted JPY 40 million cost. Another JPY 1.1 billion was recognized as a onetime expense related to M&A transactions of overseas companies, which I explained earlier in my presentation. This is the breakdown of the business development cost of JPY 1.9 billion.
Slide 12 is our payout ratio and the dividend per share track record as well as the fiscal year 2017 dividend status. We announced at the beginning of the fiscal year ending in October 2017, in December last year, that our dividend is going to be JPY 70 per share. Although the group's actual profit declined for the year, we are not going to change the dividend per share. Consequently, the payout ratio will go up by around 9% to 76.4%. And but even so, we opted to pay the dividend per share as initially stated. The dividend will be distributed pending the approval of the ordinary shareholders' meeting to be held at the end of January 2018.
By the way, the group does not uphold any specific payout ratio target. Our basic stance is that we won't retain excess cash. The additional profit generated will be distributed back to the shareholders, and that dividend is the preferred methodology of shareholder return. As such is the group's basic policy, if our profits declined, we may theoretically opt for cutting back dividends accordingly. However, the reasons why the profit declined despite sales growth during fiscal year 2017 was partially due to increase in nonrecurring costs, but not only that, it was also because the development sides has shifted too heavily to medium and small-sized lots. Or as for our car sharing business, it took too long to improve the operations.
Both factors are due to internal situations and issues. It was not that external factors such as the development environment or the competitive landscape had become more difficult or unfavorable. So as long as we make proactive changes to our businesses, we're confident that our performance can well recover back to the double-digit growth trajectory again.
Based on such confidence, we didn't revise down the announced dividend per share of JPY 70, although it will cause payout ratio to go up. And of course, going forward, when the group's earnings grow, we want to increase dividend. This is the thinking behind not revising the announced dividend per share. This concludes my explanation on the financial results of fiscal year ending October 2017.
From Page 13 onwards, I would like to briefly go over the medium to long-term vision. First of all, lately, a variety of media, such as magazines, are reporting heavily on automobile-related changes, so-called automobile society and how they are in the middle of a major transformation. Autonomous driving, shift from owning to using of vehicles, ultra small mobility, changes in power source such as shift from fossil fuels to electricity and hydrogen. These topics are reported by the media on daily basis.
When we look at the position of our business under such environment, perhaps not all, but many of our businesses are either related or linked to these topics. We are operating our business in areas very close to these changes. That is what I feel strongly. That is why -- that is one of the reasons why, currently, from many companies, we are receiving offers for joint projects, business alliances and others. We need to ensure that we are up to speed in the current trend and create new services in order to expand our business. In terms of the business environment, we currently feel strongly that tailwind has started to blow.
On Page 15, we described what we intend to do in concrete terms. The title of the slide is actions for creating new mobility services. What resources do we have? On slide -- Page 15, in the left-hand side box, we indicated the IT network as the group's major resources. The kinds of data stored in the IT network, TONIC, we believe, is our primary resource. For example, we have parking space operation data, car sharing operation data, data on members and others. We believe such data will become our major strength. And our strategy and tactics will be driven by how we will leverage and utilize the data.
Speaking of the members, we have 6.56 million Times Club members. Times business card is the corporate customers' account receivable cards and 690,000 cards have been issued. We have 900,000 car sharing members. These are our membership assets. And for the vehicles, as I have explained earlier, we have 29,000 vehicles for rent-a-car and 20,000 vehicles for car sharing. And for parking spaces, it says on the slide, 20,000 sites and 1.23 million spaces for parking facilities in Japan and overseas.
For Japan domestic business alone, we are already operating nearly 600,000 spaces and we have 10,000 spaces of B-Times, which are spaces for bookings. The common keyword from these items are network. Meaning to say that the customers are connected to the network, vehicles are also on the network and parking spaces are also on the network. On the slide, we also included communities and indicated Times Pay below that. I believe many of you are not familiar with the name. As I just explained, we have members, vehicles and parking spaces connected to the network. The only kind of data that is yet to be connected is the destination. We wanted to incorporate the destination information in the data.
From around 1 year ago -- well, this is the first time that we are commenting about this officially. From around 1 year ago, we have been working on this silently. This service that we call Times Pay, you can imagine what kind of service this is from its name. Since it says pay, in essence, it is an acquiring service. This is for all kinds of stores, such as restaurants, beauty salons, dentists that sell goods and services, and we provide terminals for settlements. The terminals are used for credit card acquiring. It looks unrelated to parking sites and mobility, but the idea is to have a variety of stores included in the Times Pay network. To put it simply, rather than focusing on charging fees for acquiring services, we focus on capturing the destination information and put it on the network.
When we achieve this, the members, the vehicles, parking spaces, where the vehicles are parked at the destination and the destination information will all be connected to the network. By providing a variety of services based on the network, where all information is connected, the rate of operation of parking sites and car sharing will be enhanced. That is the basic thinking. There are already several so-called pay services offered in the market and compared to those services, the number of stores using our service is still very small. We currently have 1,400 stores signed up. By increasing the number of stores going forward, we intend to increase the services offered through the network. In addition, the data such as actual vehicle operation status, telematics and vehicle operation data, by effective use of this data, I believe that there are opportunities for new businesses and services.
Page 16 also describes this concept that I explained in charts. By incorporating members, vehicles, parking spaces and communities on our data network, we are aiming at leveraging the big data for marketing purposes, such as obtaining introduction and acquiring new customers. These services that we envision to develop are things like parking spaces for autonomous cars on temporary standby, recharging facilities and new services utilized in big data. We can develop a variety of services.
On autonomous driving, regarding the extent of autonomous driving and the timing of introduction and the spread of use of such vehicles, it is rather difficult to foresee. But under the assumption that without doubt, this is the direction we are headed, we will proceed in the preparation to cope with the coming changes.
Turning to Page 17. This page also repeats what I have already explained. When I look back, we started the operation of 24-hour unmanned hourly charged car parking service in 1971. Since then, we have advanced into the full-fledged car parking services, and we have entered fully in 2004 the mobility service business. This is the history of our company, our DNA, the foundation of our company is Parking Business. Having said that, after a long period of operating parking sites, we came to own vehicles as tools and increased the number of members.
As I have said in the beginning, we are faced with the environmental changes surrounding automobiles. And we actually own vehicles as the tools for transportation. And when we think about the kind of services we can offer, as I have explained earlier, if we can incorporate destination as our net -- on our network, we believe that there will be a variety of new opportunities in the area of new services likely to emerge. We did have that recognition from quite some time ago.
Now finally, we are able to gradually form concrete plans supported now by our company's resources, the scale of our businesses, and we are entering such stage now. That is why I started to feel strongly lately. By expanding this area, we can add on to our Parking Businesses and Mobility businesses.
From the past, we have been calling this area of service in generic terms as member service. We are now intending to position this member service as the third pillar and grow this business to become a major driver this is the major theme in our medium- to long-term vision.
Page 18 describes our targets and objectives of our overseas business. We acquired in this January, a part of Secure Parking Business. We now operate in Australia, New Zealand, Singapore, Malaysia and the U.K. The acquisition in August of NCP is in the U.K. It may be a little difficult to see on the slide, but the areas painted in yellow on the map are the areas where we operate Parking Business. We have set targets for ourselves. Although I cannot refer to the specific figures. Internally, in 2014, we held a company-wide general meeting and we shared 10-year targets internally. Our target for the year 2024, well, aside from the sales and profit, for example, on the number of parking spaces, our target is 1 million. And 100,000 spaces for the Mobility business. We have a variety of numerical targets. Basically, the numerical targets are still to be achieved within Japan.
So regarding our target of 1 million parking spaces, if we combine the overseas business, we already achieved the target. But the target of 1 million by the year 2024 is to achieve within Japan. That is still the case. On the other hand, taking the opportunity of the financial results briefing meeting like today to the investors, at all times, we have been communicating that we basically think that we're not a company that pursue only the growth in the number of sites and spaces. We are saying that we will aim at achieving continuous profit. More specifically, we have been saying that we will aim at achieving 10% growth of recurring profit every year.
Regarding our plan towards the year 2024, basically, it is to achieve 10% growth of recurring profit every year. And when we reach 2024, the absolute amount of the recurring profit of that single year will be quite significant. Then when we reach that stage, can we really continue to grow at 10% from only our domestic business or are we going to expand our field of business to overseas in achieving the 10% growth? When we thought about it, we thought that naturally, the hurdle of achieving 10% growth will be slightly lower when we have a wider field. From that time, we already had the image in our minds that in the future, we will expand to overseas markets.
Frankly speaking, this year, we did acquire 2 companies. And when asked, were they done at the best timing, I would say that they were a little too early. However, in M&A, there are counterparties involved. And although, ideally speaking, the best timing would have been in 2022, we judge that the possibility of such good deals becoming available in that timing would not be so high. Therefore, although we thought that the timing is a little early, we looked at it as the upfront investment for future growth and we went ahead with the M&A at this timing. In a single year, we acquired 2 companies. This is for the purpose of expanding our field for the future growth. That was the assumption of the M&As.
We are still monitoring to identify the best timing. And basically, in principle, for all the services we offer domestically, we will consider expanding overseas as well. However, the car rental business will be the exception. Regarding the car rental services in all geographical areas, there are strong global players. And we believe that the conventional car rental business does not have attractive profitability nor future potential. Therefore, we think negatively about taking risks in entering into such business. In car sharing business, since we have a certain volume of parking sites overseas, in the future, we intend to leverage on our parking sites to enter into car sharing business.
Page 19 describes what I just said. When we look at the geographical areas of Secure Parking and NCP's operation in Europe, it is currently only in the U.K. In the future, in the European market, when the situation and our company is ready, we would like to consider further expansion. Also, in North America, we would also like to study the possibilities. In terms of how aggressive we will be in additional acquisitions in the future, we do not have specific plan at the moment. Basically, without considering M&A as an option, we can expand our operations in different ways. Entering these markets as network service provider can be an option. We are looking at different options to expand our business in Europe and North America. That is our current thinking.
I talked about our medium- to long-term vision and referred to the big data. And in the beginning, I referred to the changing environment surrounding the automotive industry. On telematics, actually, we have 20,000 vehicles on the road, and all the 20,000 vehicles are connected online, and the vehicle operation data are captured and stored. Out of the non-auto manufacturers, we are the largest independent company who is doing this. That is also the kind of asset that we can leverage to provide new services.
And regarding the specific ideas that are possible, they are described on Page 20. The efforts towards visualization of driving. The example on the right-hand side is the heat map of hard breaking points by generation. This is the data that plots on the map and shows where the drivers are likely to hit the brakes suddenly broken down into generations.
The left-hand side shows the combination of gravity sensors and speed data. This is the data of car sharing vehicles and shows how the accidents happened, what were the behaviors of the drivers and where they -- did they hit. The development is progressing and now we can virtualize at a certain level of precision. By installing these devices as a standard equipment on vehicles, we can contribute to reducing dangerous and risky driving. And this may be useful for insurance companies as well. We intend to proactively focus in these areas for future development.
As I have said, our foundation is parking sites, but through the range of services we provide that are connected by network, and data being accumulated, I have a feeling that a variety of new services can be developed. Some are already making progress, and I think that we are at a stage where many things are possible.
From Page 22 onwards, I would like to go over the plan for fiscal year 2018, which has already started. On consolidated basis, our planned net sales is JPY 290 billion, which is 124.5% against last year. Gross profit is JPY 71.8 billion. Operating profit is JPY 22.5 billion. Recurring profit is the same, JPY 22.5 billion, which is 110.9% of previous year's result. The comprehensive income is JPY 14 billion. In fiscal year 2018, we will return to the growth trend of 10% in recurring profit. This is our fiscal year 2018 consolidated earnings plan.
Page 23 shows the operating profit plan for each segment. In this segmental profit plan, again, we aim at achieving record-high profit for all of the segments in fiscal year 2018. The in car sharing business, we plan to generate JPY 4.5 billion in operating profit, which is 128.9% of previous year. The total profit is 110.9% of previous year.
On Page 24, the situation on the development. We will continue to focus on the profitability of the facilities that we develop. Last year, the new developments were more concentrated in the medium- to small-sized facilities. Given such situation, large-sized TPS and highly profitable ST, the sales personnel with the capabilities to develop these facilities in last year, they were shifted too much to the management side. So this year, we changed, and now the division head and everyone below will work on developments.
The people in the higher ranks are those who have certain level of experience and track records. And by shifting such resources from management role to the hands-on development role, we can expect the increase in large-sized developments. Like last year, the sales personnel who were developing small- and medium-sized facilities will continue to focus on small and medium-sized facilities. The number of development projects may be small, but if we can shift and increase the ratio of the large TPS and highly profitable ST, I believe, overall, we can achieve our target.
In the area of operation, it is the very basics that we will carry out measures carefully at individual parking facilities according to individual needs and thoroughly implement. The approximate target for the development in the fiscal year 2018 is 2,000 sites and 74,000 spaces. This is our guideline in the development in our plan.
Page 25 explains our car rental business. We will increase the number of vehicles by 2,250 and reach 31,200 at the end of the fiscal year. Basically, all the car sharing vehicles have devices mounted to connect to IT network, TONIC system. And for vehicles for car rentals, partly, 2,000 vehicles as of the end of fiscal year 2017 have the devices mounted. And our plan in the fiscal year 2018 is to increase this number to 4,000 vehicles. Our end goal is to have all the vehicles that we operate, including those for car sharing and car rentals, have the devices mounted. We aim at 100% installation rate of the devices. We will continue to devote our efforts on strengthening the networking of our vehicles.
Page 26 shows our fiscal year 2018 plan for Times Car PLUS, the car sharing business. The results are shown on the bar chart on the left, and our plan is to achieve JPY 28 billion in sales and JPY 4.5 billion in operating profit. The breakdown of the plan per vehicle is shown on the right, where it says 2018 plan, the sales is 108,500, cost is 91,100 and operating profit per vehicle per month will increase by JPY 1,400 and is JPY 17,400 annually. That is the breakdown of JPY 28 billion and JPY 4.5 billion. Towards this plan, in this fiscal year, we will devote our efforts on working on good developments and strengthen the acceleration of the facilities after development.
Page 27 shows the overseas business results and plan. The left column in the table is the Times parking in Taiwan, the column in the middle is Secure Parking and on the right is National Car Park, NCP, and there are total figures on the right. In the Overseas business, in fiscal year 2018, we plan to generate net sales of JPY 64.4 billion, JPY 600 million in operating profit after amortization and recurring profit of JPY 1.350 billion.
Page 28 shows the breakdown of business development costs. The cost concerning Times Car PLUS x Ha:mo, this is what I explained earlier. We have budgeted the same amount as last year, which is JPY 200 million. B-Times, this is Parking spaces for pre-bookings. We also budgeted the same amount as last year, JPY 300 million. The third item, strengthening of the network of destinations, the budget has increased from JPY 100 million to JPY 700 million. This is the cost related to the expansion of Times Pay that I explained earlier. We are also planning to invest JPY 100 million for the use of big data. All of these investments included, we are planning for a budget of JPY 1.3 billion for the business development.
Overseas M&A cost and related expenses will not be incurred in fiscal year 2018. So although we will either maintain or increase the budget for each item, the total cost will decrease by around JPY 600 million. I ran through my presentation, but this concludes my explanation on the fiscal year 2017 financial results, and plans for fiscal year 2018. Thank you for your kind attention.