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March 28, 2002 |
Mid-term Management Plan Announced
(FY2002-2004)
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Mitsubishi Estate Co., Ltd. has announced a new mid-term
(three-year) management plan, which is to be implemented
from the beginning of FY2002. To date, the company has
been running operations based on a management plan designed
to carry the group through FY2002, however, the business
environment has changed rapidly since the plan was initiated.
A division structure has been introduced in the company
and its affiliates, organizational reforms such as the
transfer of the Architectural Design & Engineering
Division and Hotel Business Division have been introduced
and a real estate trust fund has been created among
other activities. Furthermore, the decision has been
made to write off unrealized losses on real estate holdings
on a consolidated basis at the end of the current term
(March 31, 2002) by revaluing land holdings in fixed
assets based on the property tax base and writing-down
the fixed assets. This will make the company’s
balance sheet more transparent and sound. To enable
the company to respond to drastic changes in the business
environment in a timely manner, it was decided to adopt
a new mid-term management plan beginning from FY2002,
a period in which the Marunouchi Redevelopment Project,
including completion of the Marunouchi Building, will
be well underway.
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| •Environment Surrounding
Management |
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Following the end of land speculation and the birth of J-REITs,
the liquidity of real estate has increased. This has led to
the need to separate real estate ownership and management
roles. As a result, it has become necessary for real estate
companies to change their business models.
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As our primary mission is "Creating a truly meaningful
society through urban development," we recognize
that development will remain our core business, generating
returns parallel to the risks taken and creating added
value in the changing business environment.
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Based on this recognition, we will develop our core
business and necessary peripheral businesses and produce
synergistic effects by fusing the values of individual
projects together, thereby enhancing the overall value
of the group.
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| •Basic Management Policy
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| 1.Raising corporate value |
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We shall enhance the group's value by maintaining a
strict watch on shareholder value and cash flow.
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| 2.Commitment to “Customer is No.1”
policy |
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We shall fully embrace the principle of “customer
first” to compete in the market and build lasting
relationships with our customers.
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| 3.Collaboration-based management |
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We shall promote collaboration to create higher added
value through various cooperative activities both inside
and outside of the group.
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| •Target Indicators for FY2004
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| EBITDA (earnings before interest,
tax, depreciation and amortization) |
| 170 billion yen (compared to 140
billion yen estimated for FY2001) |
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| * EBITDA = |
Operating profit + Interest/dividend received
+ Return on investment under equity method + Cost of depreciation |
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| Conditions Necessary to Achieve
Objective under Management Plan (figures in parentheses indicate
estimates for FY2001) |
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| Revenues from Operations: |
723 billion yen |
(631 billion yen) |
| Operating Profit: |
110 billion yen |
(71 billion yen) |
| Interest-bearing Debt: |
1,160 billion yen |
(1,256 billion yen) |
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| •Management Strategies
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| We shall implement three management
strategies to achieve the EBITDA target of 170 billion yen set
for FY2004. They are: |
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| 1.Integration of asset and the non-asset
businesses |
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We shall enhance group value by integrating our asset
business, which ensures stable cash flow, and non-asset
business, which utilizes outside capital, to raise capital
efficiency as well as optimize our business and asset
portfolios.
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| 2.Strengthening of asset solution function |
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We shall strengthen the technical solutions function
offered to assist customers in resolving their problems
related to real estate and other assets. In relation
to this, Mitsubishi Estate Investment Management Co.,
Ltd. was established in September 2001. We shall further
fortify the system designed to meet the needs of corporations
wishing to make effective use of their assets by offering
them our knowledge and thereby increasing business opportunities.
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| 3.Strengthening of management system
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| 1) Introduction of personnel and organizational
systems designed to improve employee ability and
performance |
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We shall plan and implement reform in director
remunerations, the performance evaluation system,
stock options, etc., and construct a system that
gives all employees more incentive.
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Basing operations management on the divisional
structure introduced to integrate the operations
of the group's companies in April 2000, we shall
promote collaboration and information exchange
among various business sectors and bring greater
flexibility to the organization.
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| 2) Strengthening corporate governance
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In April 2002, we shall establish a new administrative
management department that will have the function
of auditing management and business operations
of the group. Further, the Operations Management
Office shall be renamed the Compliance Department
and its functions will be expanded to include
ensuring compliance with laws, ethical codes and
internal regulations.
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| 3) Promoting harmonious existence
with the environment and society |
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We shall seek to increase profits while simultaneously
making our utmost effort to live in harmony with
nature, showing proper respect toward the natural
environment as a corporate citizen and addressing
environmental problems in various ways through
the group's business activities.
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