Growth Strategy

Interview with Our Chief Financial Officer (CFO)

Chief Financial Officer (CFO)

In the fiscal year ended January 31, 2024, growing demand inachieved an ROE of 25.3% in the fiscal year ended January 31,

the aftermath of COVID-19 contributed to record-high financial

2024, surpassing the cost of shareholders’ equity and realizing

results, posting record-high net sales of ¥10,110 million (uphigh capital efficiency.

9.4% year-on-year). Profit in FY2024 also set a new record atGoing forward, we will continue to increase profit, the numerator¥1,051 million (up 17.5% year-on-year). As a result, operatingof ROE. As for equity, the denominator, we intend to return

cash flows and free cash flows increased steadily to ¥1,126

profits as dividends while considering the balance with retained

million and ¥1,121 million, respectively. Additionally, earningsearnings.

per share (EPS) reached ¥98.99, with a compound annual

Cash Allocation and Shareholder Returns

from the fiscal year ended January 31, 2021.

For sustainable growth, we strive to ensure stable cash flows

The Medium-Term Business Plan’s
Financial and Capital Strategy

and efficient capital allocation. We aim to hold approximately
three months’ worth of monthly net sales as cash on hand andreserve any surplus funds for future growth opportunities.
including personnel expenses until newly graduated engineersof 14.0%; over 1,600 engineers; and a return on equity (ROE) ofare operational, it does not necessitate significant capitalover 20%.

investments. We believe that using surplus funds to financeIn the engineer dispatching business, our main business, thesome of the M&As will help us to adapt swiftly to various

following indicators are used. Net sales: the amount calculatedindustry restructurings and strengthen our competitiveness.

by the number of operative personnel (number of engineers ×

In terms of profit distribution, we comprehensively consider

utilization rate) × unit price of engineers × total work per-future business developments, earnings, the management

son-hours; cost of sales: labor costs for engineers assigned toenvironment, as well as the strengthening of our management

our clients; and selling, general and administrative (SG&A)

foundations, and positions the supply of stable dividends to ourexpenses: labor costs for engineers undergoing in-houseshareholders as top-priority management tasks. Accordingly, wetraining (standby status) and labor costs for other staffers. Thus,

have agreed to consider a payout ratio based on 50%. In“number of engineers,” “utilization rate,” and “unit price ofaddition, our basic approach is to continue to grow our profit

engineers” constitute our key management indicators.

this year, ensuring that the dividend remains at least at the sameTo improve the future gross margin, it is essential to increase theamount as the previous year and continues to increase.

unit price per engineer. We will aim to increase the unit price ofThe Total Shareholder Return (TSR) *has been as follows.

As a company listed on the Prime Market of the Tokyo Stockaddition of administrative staff associated with the increase inExchange, Artner is committed to managing and disclosing ourengineers and suppressing the increase in the SG&A expense

management indicators appropriately, striving for transparent

ratio.

and trustworthy financial management to earn and maintainWe will continue to work toward realizing our Medium-Termtrust from our stakeholders. To this end, we consider it critical toBusiness Plan targets of increasing the number of engineers tofocus on upgrading our management systems and improving

1,600 and maintaining a high utilization rate, unit price ofbusiness processes, as well as executing proper management

engineers, and total work person-hours. By doing so, we willof our financial figures and contributing to the Board of Direc-

endeavor to grow net sales to ¥11.6 billion, and through appro-

tors’ decision-making.

priate management of the recruitment cost ratio relative to net

We will continue to make efforts to improve our margins andsales, achieve an operating margin of 14.0%.

capital efficiency, always conscious of generating cash, allocating cash, and returning value to our shareholders. Moreover, byFor Improving Capital Efficiency

differentiating ourselves from our competitors in financialmanagement, we will aspire to achieve sustainable growth andequity ratio, we attach importance to the cost of shareholders’increase our enterprise value.

Comparison index: TOPIX total return index (%)

FY2020

FY2021

FY2022

FY2023

FY2024

91.8
110.2

98.3
121.2

102.7
129.7

123.1
138.8

262.9
183.9

Artner Co., Ltd. Annual Report 2024

Data Section

Given that the Company has no borrowings and has a high

*TSR (Total Shareholder Return) (%)

Governanceimproving administrative efficiency, thereby minimizing theSustainability

career support. We will also improve the operating margin by

Highly Transparent andTrustworthy Financial Management

Growth Strategy

While our business model requires some initial investment,

business targets: net sales of ¥11.6 billion; an operating margin

Value Creation Story

In our Medium-Term Business Plan, we have set the following

strengthening our training programs and offering extensive

Artner Co., Ltd. Annual Report 2024

Medium-Term Business Plan ROE target is of over 20%, wegrowth rate (CAGR) of 18.7% over the three-year period starting

engineers by enhancing their added value, such as through23

at approximately 8% in managing our business. Whereas ourManagement Message

HARIGAE Tomonoriequity. We are mindful to keep the cost of shareholders’ equity
Introduction

We will establish
a stable financial base andincrease our enterprisevalue continuously.

Record-high Income in the Fiscal Year EndedJanuary 31, 202424

Growth Strategy

Review of the Medium-Term Business Plan to Date
Background to the Medium-Term Business Plan

In order to secure outstanding talent in a fiercely competitive environment, it is essential to build abusiness model that will resonate with engineers and students. Better recruitment is the gateway tosuccess in all aspects of our business.

In order to meet the needs of client companies and cater to increasingly diverse business areas inmanufacturing processes, we will organize the Company into three segments so that we can supply
engineers with a high match rate to our clients. We will also expand the contracting business with the aimof actively utilizing workers of retirement age, former female engineers, and foreign workers (including
overseas students), increasing the percentage of such personnel to 10%.

〈Basic Policy〉〈Basic Policy〉

FY2016 – FY2018◎ Establish four business divisions inFebruary 2013

◎ Improve the skill level of all
engineers

1. Promote strategies by segment

To promote the assignment of our engineers to
upstream business areas where the unit priceof engineers is likely to be higher, we will
create segment-specific educational programsand training curricula for each business field toimprove the skill level of all engineers.

• Develop strategies for each segment(recruitment – education – assignment – system).
• Establish approaches to markets by segment.

2. Promote diversity and inclusion intalent management• Utilize workers of retirement age, women, andforeign workers (overseas students) as personnel.
• Utilize and organize partner companies(set up a contracting system).

Results◎ Raised the recruitment criteria to improve thequality of our engineers.
◎ Shifted the projects in which our engineers participate
at client companies to higher-level stages.

• Develop strategies for each segment(recruitment – education – assignment – system).
• Establish approaches to markets by segment.
• Explore and seek new specialist fields of technology.

2. Promote diversity and inclusion intalent management• Utilize workers of retirement age, women, andforeign workers (overseas students) as personnel.
• Utilize and organize partner companies(set up a contracting system).

Results◎ Exceeded our target operating margin as a result of
assigning more engineers to upstream business areasand increasing the unit price of engineers.
◎ The turnover rate fell as engineers felt more attracted
to the Company due to the renewal of our businessmodel (establishment of four business divisions).

Results◎ Business performance showed steady growth inboth sales and profit.

◎ Business performance showed steady growth inboth sales and profit.

◎ Because we did not reach the target number ofengineers, insufficient progress was made on ourBasic Policy, “Build a foundation for sustainable andnext-generation growth.”◎ Further improved our operating margin.
Sustainability◎ Improved the unit price of newly graduated engineers
on their first placement. Steadily revised the unit
prices of engineers across the entire company.

1. Promote strategies by segment

Growth StrategyResults

FY2021 – FY2023

Value Creation Story• Hyper Artner Business Division• Engineer Business Division• Engineer Agency Business Division• Human Resources Business Division

FY2019 – FY2021Management Message

Build a foundation for sustainable andnext-generation growth

Revamped the business model to take the company
to the next stage in anticipation of a full recovery
from the global financial crisis of 2008
FY2014 – FY2016

Introduction

Background to the Medium-Term Business Plan

◎ The gross profit per engineer recovered to levels prior
to the global financial crisis of 2008 and reached newrecord highs.
(Final year result)(Final year target)(Final year result)

Net sales¥6 billion¥4.7 billion

Operating margin

10%

Number of engineers

800(Final year target)(Final year result)

Net sales¥6 billion¥5.7 billion

9.1%

Operating margin

10%

601

Number of engineers

800

Net sales¥7.5 billion¥7.1 billion

11.8%

Operating margin

12.5%

716

Number of engineers

1,000

For the next Medium-Term Business Plan

If we can increase the scope of work handled by ourengineers at client companies from downstream to
midstream and upstream processes and raise the unit
price of engineers, the Company will be less affected byfluctuations in the economy.
To further improve business performance, we will increase
the overall number of engineers while maintaining thequality of our current engineers.

Since we did not achieve our net sales target mainly due toour failure to reach our target number of engineers, we will
incorporate strategic measures to secure engineers into
the Basic Measures section of the next Medium-TermBusiness Plan.

Artner Co., Ltd. Annual Report 2024

(Final year result)

Net sales¥10 billion¥9.2 billion

12.4%

Operating margin

12.5%

12.9%

971

Number of engineers

1,300

1,157

For the next Medium-Term Business Plan
Data Section

For the next Medium-Term Business Plan

(Final year target)

Governance25(Final year target)◎ Continue the Basic Policy and Basic Measures.
◎ Add “Explore and seek new specialist fields oftechnology” to the implementation measures.

Artner Co., Ltd. Annual Report 202426

Growth Strategy

Medium-Term Business Plan (FY2023 to FY2025)
Direction of our Carbon Neutrality Initiatives

Make Value for 2022 to 2024

Artner´s approach to sustainablegrowth and next-generation growthAs our social environment continues tochange on a global scale, dealing withsocial issues, such as initiatives based on
the recommendations from the Task Forceon Climate-related Financial Disclosures(TCFD), is an important managerial agenda

1. Promote strategies by segment

2. Promote diversity and inclusion
in talent management

Contribute to solving social issues throughour business activities, increasing our corporate
value and returning profits to stakeholders
Build a foundation for sustainable growthand next-generation growth■ Number of Engineers■ Net Sales

130 ⇒ 220

Number ofcareer hires

50 ⇒ 200

Turnover rate

Artner Co., Ltd. Annual Report 2024

1,157 ⇒ 1,600 (up 38.36%)

Utilizationrate(up 300%)

9.6% ⇒ 8.3% (down 1.3 pt)

××

Unit price ofengineers

Total work× person-hours¥ 9.2 billion ⇒ ¥ 11.6 billion (up 26.1%)

20% or more

〈Training details〉
Understanding the principles ofpower systems (inverter systems) for
EVs and FCVs

Experienced workers with skills andexperience in the fields above

Optimization of infrastructure
resources and AI/machine learning forhuman and product transactions
through the introduction of cloudcomputingIn order to recruit more talents thatmatch client needs, we are committed
to changing our recruitment policy,
which is heavily focused on new
graduates.
➡ Balance the numbers of new
graduates and career hires tosecure optimum talents
Share of carbon neutrality recruitment
targets for new graduates and career hires

FY2025(Target)

FY2024(Result)

55.0%

46.1%

Placement in carbon neutrality
projects
Contribute to solving social issues
to improve business performance

Increase the unit price of engineers
by approximately 10% compared toother projects➡ Increase net sales andprofit margins

Model design and validation of EV
battery management systems
How to analyze the results of sensor
characterization
Recycling of chemicals and materials

Share of engineers placed in carbonneutrality projects among all engineers

Meet the ever-increasing needs ofengineers in the software, electrical,
and electronic fields.
➡ Increase trainers

FY2025(Target)

FY2024(Result)

50.0%

48.3%

and Key Indicators * □⇒□… (FY2023) ⇒ (FY2025) figures■ Gross Margin(up 69.2%)

Numerical Business Targets ■ ROE
27

Number ofengineers〈Activities〉〈Recruitment targets〉
Students who have graduated fromdepartments in the fields of electricity,
electronics, materials science, energy,
and information technology■ Operating Margin

Share of engineers placed in carbon
neutrality projects among all engineers 46.1% ⇒ 50.0%

Increase the unit price of engineers by approximately
10% compared to other projects

33.3% ⇒ 37.6% (up 4.3 pt)

Recruitmentcost¥ 320 million ⇒ ¥ 660 million

Ratio of recruitment
cost to net sales

3.5% ⇒ 5.7% (up 2.2 pt)

Data Section

Number of new
graduates

Sales

GovernanceMedium-Term Business Plan Correlation Diagram of Earnings and Sales Targets

Training

Sustainability• Utilize workers of retirement age, women,and foreign workers (overseas students)
as personnel.
• Utilize and organize partner companies(set up a contracting system).

Recruitment

Growth Strategy• Develop strategies for each segment(recruitment – education – assignment– system).
• Establish approaches to markets bysegment.
• Explore and seek new specialist fieldsof technology.

Build an internal system ofrecruitment, training,and sales with carbon
neutrality as a main pillar ofour business activities

Our Recruitment, Training, and Sales Efforts with an Eye to Carbon Neutrality

Value Creation Story

BasicMeasure

Aim for furtherdevelopment
and market
penetration

Management Message

Build a foundation forsustainable andnext-generation growth

Participation by our engineers in development projects
related to electric vehicles (EVs) that do not emit CO2
when driven, fuel cell vehicles (FCVs),
infrastructure (charging infrastructure, hydrogen stations),
automated driving, semiconductors, etc.

For our major
customers in theautomotiveindustry, etc.

Introduction

BasicPolicy

12.9% ⇒ 14.0% (up 1.1 pt)■ Payout ratio 50% or more
Artner Co., Ltd. Annual Report 202428