VISION 30～ Go To The Next Stage ～Plan to Meet the Continued Listing Criteria for theNew Market Segments

November 12, 2021

OKADA AIYON CORPORATIONVISION 30～ Go To The Next Stage ～１Contents
1. Status of Conformity to the Continued Listing Criteria for the New Market Segments ... P 2
2. Basic Policy toward Increase in Market Capitalization of Tradable Shares ………………. P 3 – 4
3. Review of Planned Figures of the Medium-Term Management Plan ……………………….. P 5

4. Increase in Actual Amount of Net Income ………………………………………………………. P 6
5. Productivity Improvement of Invested Capital ………………………………………………… P 7 - 8

6. Progressive and Flexible Shareholder Returns ………………………………………………… P 9
7. Enhancement of Investor Relations and Information Disclosure …………………………… P 10(Reference 1) Growth Investment and Cash Flows ………………………………………..............P 11(Reference 2) Framework of the Medium-to Long-Term Management Plan …………………... P 12 – 13(Reference 3) Reference Information ………………………………………………………………… P 14

1. Status of Conformity to the Continued ListingCriteria for the New Market Segments(1) Status of conformity to the Prime Market (as of July 9, 2021 TSE primary determination) ２
Continued listing

Our Company’s figures

20,000 units

60,807 units

10.0 billion yen

7.59 billion yen

35.0 %

72.5 %

20.0 million yen

28.1 million yen

No. of tradable shares
Market capitalization of tradable
sharesTradable share ratio
Trading value (avg. per day)

Items mentioned in ourplan〇(2) Number of tradable shares, tradable share ratio and market capitalization of tradable
shares following revisions
In the plan, the number of tradable shares, tradable share ratio and market capitalization of tradable shares will be based onrevised figures in view of the following situations. (As for the stock price, 1248.9 yen will be applied which is the stock priceat the time of the TSE primary determination.)(1) Recalculate based on the share statistics as of September 30, 2021.
(2) Consider equities of special stakeholders, etc. other than executives.
Before revision

No. of tradable shares
Market capitalization of tradableshares

Tradable share ratio

After revision

60,807 units

57,168 units

7.59 billion yen

7.13 billion yen

72.5 %

68.2 %

Items mentioned in ourplan〇2. Basic Policy toward Increase in Market Capitalizationof Tradable Shares(1) Basic policy
We are planning to meet the continued listing criteria for the Prime Market at the ‘end of March2024’ which is the final year of the ‘Medium-Term Management Plan Rolling Plan FY2021 FY2023’ and we will improve corporate value by realizing 4 priority issues toward increasing
market capitalization of tradable shares.

(2) 4 priority issues① Increase in actual amount of net income (P 6)
We will ‘increase the actual amount of net income’ by achieving the medium-termmanagement plan.

② Productivity improvement of invested capital (P 7 – 8)

We will ‘improve productivity of invested capital’ by achieving the medium-term managementplan.

③ Progressive and flexible shareholder returns (P 9)
We will ‘return profit to shareholders flexibly’ considering the changes in stock price and theprogress of profit and investment plans as well as adopting a ‘progressive dividend policy’
based on stable growth as a basic return policy.

④ Enhancement of investor relations and information disclosure (P 10)

We will ‘enhance investor relations and information disclosure’ that can contribute to theinvestment decisions of shareholders and investors.

３2. Basic Policy toward Increase in Market Capitalizationof Tradable Shares

４(3) Basic idea of increasing market capitalization of tradable shares
Market capitalizationof tradable shares＝Net income⇒

Increase actual amount of net income.

⇒Raise PER (=expected value) by improving productivity of invested
capital, implementing shareholder returns and enhancing investor
relations and information disclosure, etc.

⇒Tradable share ratio is above the standard value and although we will nottake aggressive measures, we will consider reviewing our policy
investment stocks and effective use of treasury stock, etc.

PER

(price-earnings ratio)

Tradableshare ratio

Net income×

PER(price-earnings ratio)×

Tradableshare ratio

3. Review of Planned Figures of the Medium-Term
Management Plan

◆ Revised the planned figures of the ‘Medium-Term Management Plan Rolling Plan FY2021 – FY2023’ in the plan as ５follows according to the revised business forecasts for FY3/22 (November 12). (The figures in red in the table below
are the changes. The figures in brackets represent initial comparisons.)◆ As we are planning to review the medium-term management plan every year and disclose the new rolling plan (3-yearplan) following the FY3/22 financial results, when revising the FY3/22 business forecasts, we left the sales plan for
FY3/23 and FY3/24 unchanged and only revised the profit plan for FY3/23 considering the actual profit margin in the plan.

Medium-Term Management Plan Rolling Plan FY2021 – FY2023(Million yen)

Current period

Initial plan

Revised plan

FY3/22

FY3/23FY3/24

FY3/22

FY3/23

FY3/24

Net sales

18,50020,00022,00019,65620,00022,000Operating income

1,600

1,800

2,100

1,852

1,900

2,100

8.6

9.0

9.5

9.4

(+0.8)

9.5(+0.5)

9.5

Ordinary income

1,600

1,800

2,100

1,856

1,900

2,100

Net income attributable toowners of parent

1,060

1,200

1,400

1,200

1,250

1,400

Operating margin (%)(+1,156)(+252)(+256)(+140)(+100)(+100)(+50)

4. Increase in Actual Amount of Net Income
６(1) Net income plan of the medium-term management plan (after revision)
Current termNet income

1,200919(attributable to owners of parent)

FY3/21 (actual) FY3/22 (forecast)(Million yen)

1,250

1,400

FY3/23 (plan)

FY3/24 (plan)(2) Expected value of market capitalization of tradable shares from PER (price-earnings ratio)◆Calculate the expected value of market capitalization of tradable shares from PER based on net income plan of the mediumterm management plan (after revision)
Market capitalization of tradable shares= net income× PER (times)× tradable share ratio (estimated value 68.2%)(*) Projected PER

FY3/22 forecast-based expectedvalue of market capitalization of
tradable shares

FY3/23 plan-based expected value ofmarket capitalization of tradable
sharesFY3/24 plan-based expectedvalue of market capitalization of
tradable shares

3-month average

11.2

9.1 billion yen×

9.5 billion yen

×

10.6 billion yen〇

Recent 1-year average

11.9

9.7 billion yen

×

10.1 billion yen〇

11.3 billion yen〇

Recent 5-year average

13.0

10.6 billion yen〇

11 billion yen〇

12.4 billion yen〇

Necessary PER=12.3

Necessary PER=11.8

Necessary PER=10.5(*) Expected PER3-month average: daily average from April to June 2021, recent 1-year average: monthly average from October 2020 to September 2021, recent 5-year average: monthlyaverage from October 2016 to September 2021

5. Productivity Improvement of Invested Capital７(1) Invested capital productivity improvement Actual and Plan- ROIC-WACC, economic value added from the bottom to recovery FY3/17(actual)

117

Invested capitalInterest-bearing debt
Shareholders’ equity

4374

FY3/18(actual)

FY3/19(actual)

FY3/20(actual)

FY3/21(actual)

14215016448
9447102Medium-Term Management Plan Rolling Plan

Current period

FY3/22(forecast)

FY3/24(plan)

174

185

FY3/23(plan)

57

61

62

62

62

107

114

123

133

143

195

205(100 million yen)(100 million yen)

NOPAT

7.2

(net operating profit after tax)

6.32

ROIC

(rate of return on invested capital)

WACC(weighted average cost of capital)

3.83

ROIC－WACC
Economic value added(invested capital ×[ROIC – WACC]

2.49
2.8

7.8
6.01

4.30
1.71
2.2

9.9

8.9

9.0

6.79
5.68
5.25

5.02

1.55
2.3

12.0

12.4

13.7

6.706.50

6.82（％）

5.25

5.42

5.54

5.30
4.68

0.66

0.61

1.0

1.0

1.45
2.6

*Based on our Company’s calculation（(For the assumptions of calculation of each figure, please refer to (Reference 3) Reference Information.)

（％）

（％）

1.08

1.28

2.1

2.6

(100 million yen)

5. Productivity Improvement of Invested Capital(2) Correlation between PER andcapital productivity
Projected PER (times)

30.0- Expected to raise PER through improvement in capital productivity-８

Our Company
10 construction machinery-related company avg.

5715 Furukawa Co., Ltd., 6289 Giken Ltd., 6297 Koken Boring Machine Co., Ltd.,
6301 Komatsu Ltd., 6302 Sumitomo Heavy Industries, Ltd., 6305 Hitachi
Construction Machinery Japan Co., Ltd., 6358 Sakai Heavy Industries, Ltd., 6390
KATO WORKS CO., LTD., 6395 Tadano Ltd., 6432 Takeuchi MFG Co., Ltd.

10 construction machinery-related company avg. projected PER

Projected PER represent figures at the end of eachmonth (our Company’s research)

10 construction machinery-relatedcompanies’ 5-year avg. 19.2

25.0

Target position

20.0

Rise in PER due toimproved ROIC – WACC

15.0
10.0
5.0Our Company’s

projected PER

Our Company’s 5-year
avg. 13.0
Decrease in ROIC – WACC
Decrease in PER

Not indicated between May and Sep. 2020 because many forecasts
were to be determined among our Company and 10 construction
machinery-related companies due to the impact of COVID-190.0(100 million yen, %)FY3/17
actual

FY3/18actual

FY3/19actual

FY3/20actual

FY3/21
actual

FY3/22
forecast

FY3/23plan

FY3/24plan

Net sales

131

153

178

179

175

196200220

Ordinary income

10.9

12.7

15.6

13.4

14.3

18.5

19.0

21.0

Net income

6.9

6.6

10.0

8.8

9.1

12.0

12.5

14.0

Investedcapital

117

142

150

164

174

185

195

205

ROIC-WACC

2.49

1.71

1.55

0.66

0.61

1.45

1.08

1.28

6. Progressive and Flexible Shareholder Returns
９

Shareholder return policy① Progressive dividend policy continuing with dividend increase while considering a dividend payout
ratio of 30% and growth investment allocation based on medium-to long-term stable growth.
⇒ Expected to increase dividend for 12 consecutive years in FY3/22② Also, we will implement a flexible shareholder return considering the changes in stock price andprogress of profit and investment plans.
③ Regard shareholder special benefit plan as a necessary measure to raise our company recognition
and to expand medium-to long-term investor base.

Dividend

Dividend payout ratio

(Yen)

3530

1510（％）

return22.8

20＋

Current term Flexible shareholder

34.6

25

Progressive dividend<FY3/20>
Stock repurchase
158 thousand shares=200 million yen

25.3

222324

FY3/16

FY3/17

FY3/18

25.6

25.2

2728

29

31

FY3/19FY3/20FY3/21

FY3/2221.920.750Forecast(after revision)

FY3/23

FY3/244035302520151050

(Reference 1) Growth Investment and Cash Flows(1) Growth investment
2,000(Million yen)

１１

1,500

5005092670<Major investments>

1,750

1,158

887

1,000

Current term

■Capital investment ■Depreciation

627332765
374429636

1,000433439

470

520

550

FY3/22
forecast

FY3/23plan

FY3/24plan

FY3/16
actual

FY3/17
actual

FY3/18actual

FY3/19actual

FY3/20actual

FY3/21
actualAiyon Techplant

Hokuriku
sales officeAiyon Tech plant
M&A goodwill

Shonan sales
officeShikoku sales
officeHead officemaintenancefactory
Shikoku sales
officeShonan sales office
Hiroshima sales
officeUS head office(2) Cash flows(100 million yen)

60

Cash and deposits balance

Operating CF+35

40

Operating CF

800

Investing CF

Investing CF△36 Financing CF +24

Chubu sales office Sapporo sales
Hiroshima sales
officeofficeUS head officeSendai sales
officeFinancing CF

Increase in cash

Aiyon Techplant

FCF

Operating CF+40 Investing CF△37 Financing CF△9Current term

200-20FY3/16
actual

FY3/17
actual

FY3/18actual

FY3/19actual

FY3/20actual

FY3/21
actual

FY3/22
forecast

FY3/23plan

FY3/24plan

(Reference 2) Framework of the Medium-to
Long-Term Management Plan

１２

Long-term vision VISION30 & medium-term management plan rolling plan FY2021 – FY2023

VISION30 statement
SloganValues

VISION30 key performance indicator (KPI)

People create environment[Corporate culture] Corporate culture which respects individuals,
with freewheeling and sense of unity[Business] Provision of products & services for users[Sociality] Business expansion which leads to solving social
agendas including environmental problems

Develop human resources capable of creating environment
unaffected by the environment and contribute to the realization ofeco-friendly society through business.

Practice of ESG management
Goal to reach forBest in Japan

Global Tier

TripleNet sales: 30 billion yen or more
Operating income: 3 billion yen or more
Market cap: 30 billion yen or more

TripleSales growth: 10% or more
Operating income margin: 10% or more
ROE: 10% or more

Achievement of VISION30

(Reference 2) Framework of the Medium-toLong-Term Management Plan１３Long-term vision VISION30 & medium-term management plan rolling plan FY2021 – FY2023
VISION30 3 strategies
Human resourcestrategy① Humandevelopment② Personnel system③ Work-style reform

Recruitment, development and utilization of human resources
Fair assessment and reward systems reflecting performance andcontributions
Create a workplace which is pleasant and meaningfulMarket strategy① Domestic strategy② Overseas strategy③ New business

Strengthening of one-stop value chain corresponding to expanding demandMarket cultivation through investment of merchandise and workforce to 3 locations
which are US, Europe and Asia
Application of new technology (new dismantling method, DX, etc.) and promotion ofstrategic M&As

① CG system② Hardware③ Software

Building of a governance system to support sustainable growth
Improvement of domestic & overseas plants and sales offices (expansion& new construction)
Development of work restructuring and ability to respond to customers
due to system infrastructure improvement and DX

Reinforcement ofbusiness
infrastructure● Medium-term management plan Rolling plan FY2021 – FY2023
Business plan (FY3/24)

FY2023managerial
goal

Investment plan (FY3/22 – FY3/24 total)

Net sales

22,000 million yen

Capital investment

Operating income

2,100 million yen

R&D expenses

Sales growth (YoY)
Operating income margin

3,550 million yen
660 million yen<Major capital investments (scheduled)>
Hiroshima sales office, Chubu sales office, Sendai
sales office, Sapporo sales office, Morioka sales
office, Okada America, Aiyon Tech plant

(Reference 3) Reference Information
１４(1) Invested capital productivity performance and assumption offormulation of the plan
① Shareholders’ equity cost

Shareholders’ equity cost = risk-free rate + risk premium×β(beta) [collection period = risk premium: after 1960, β: 2 years]
End-FY3/17

End-FY3/18

End-FY3/19

End-FY3/20

End-FY3/21

After FY3/22 (*)

Shareholders’ equity cost

5.9%

6.1%

7.3%

7.7%

7.5%

7.7%

Risk-free rate

0.23%

0.09％

0.07％

0.04％

0.04％

－Risk premium

5.97%

6.25%

5.87%

6.08%

6.10%

－β(beta)

0.95

0.97

1.24

1.26

1.22

－

② NOPAT (net operating profit after tax)(*) Apply the highest capital cost in the past 5 years after FY3/22NOPAT = operating income × (1- effective tax rate) [effective tax rate = fixed at 35%]

③ ROIC (rate of return on invested capital)
ROIC = NOPAT/invested capital (debt + equity) [debt = book value basis, equity = book value basis]④ WACC (weighted average cost of capital)

WACC = debt cost × (1- effective tax rate) ×debt/ (debt + equity) + shareholders’ equity cost × equity/ (debt + equity)[debt = book value basis, equity =market cap basis, stock prices after FY3/22 are estimated base on 3-month average projected
PER =11.2](2) Medium-to long-term management plan See materials
Long-term vision VISION30 & Medium-term management plan Rolling plan FY2021 – FY2023
Japanesehttps://www.aiyon.co.jp/assets/pdf/medium-and-long-term-management-plan.pdf

Englishhttps://www.aiyon.co.jp/wp-content/uploads/2021/08/cbbf03897f1ae17f1e37062281fb7c12.pdf

VISION 30～ Go To The Next Stage ～１５The plans and forecasts in these materials have been preparedbased on the information currently available to the Company andcertain assumptions that the Company deems to be reasonable, andembody risks and uncertainties.
Therefore, the Company gives no assurances or guarantees
regarding future planned figures and realization of measures.

(Contact)
Corporate Planning Office/Administrative Headquarter
OKADA AIYON CORPORATIONTEL 06-6576-1271

FAX 06-6576-1270

URL http://www.aiyon.co.jp/