ELAN | 6099 (TSE Prime)
Company Report

Strategy Advisors, Inc.

Yutaro Nishi

June 12, 2024

Highly Profitable Hospital Services
Company that has Increased Sales& Profits for 17 Consecutive Years
Elan Corporation is a pioneer in the hospitalization set business, which rents
clothing, towels, daily necessities and diapers necessary for hospitalization andin long-term care insurance facilities, etc. It is the industry leader with a market
development rate of 15.0%, double that of the second-placed company. In
FY12/2023, the company posted sales of \41.4bn (+14.2% YoY), operating
profit of \3.7bn (+8.1% YoY), net income of \2.5bn (+20.9% YoY) and ROE of
25.4%, representing 17 consecutive years of growth in sales and profit.
The founder, Hideharu Sakurai, CEO, started out in the bedding door-to-doorsales business and over the past 10 years has aggressively changed his businessmodel to seize larger business opportunities, shifting to the bedding renovation
business and then to the hospitalization set business. Behind this speed ofbusiness development, is Sakurai's conviction, gained through his racing
experience, that “speed is the key to decision making.”
The hospitalization set business created by Elan is an excellent business modelthat benefits all parties involved: it reduces the burden on family members andnurses by providing hospitalized patients with rental contracts for personal linen,
etc., and provides an opportunity for linen suppliers, who already have business
relationships with hospitals through the lease of bedding, etc., to expand theirbusiness by outsourcing the supply of personal linens to them. The equity story
of Elan is to protect this superior business model by fending off price competition
from latecomers by introducing new products that include insurance andguarantees; while continuing to challenge new business areas such as hospitalrelated linen companies and e-commerce platforms for hospitals in India andVietnam, which are experiencing rapid growth.
Elan's PER, which was in the 40x range before the COVID-19 pandemic, reachedover 60x due to the increase in demand caused by the pandemic and since thenhas continued to decline as the pandemic subsided. The company's profits haveincreased since prior to the COVID-19 pandemic and given its high ROE anddividend payout ratio, it appears to be undervalued.

Share Price & Volumes (Past Year)

Source: Strategy Advisors

Key Indicators
Stock Price (2024/6/12)

857

YTD High (1/3)

1,105

YTD Low (5/28)

827

52-Week High (23/12/17)

1,120

52-Week Low (23/10/25)

729

Shares Issued (mn)60.6Market Capitalization (\ bn)

52.7

EV (\ bn)

61.9

Equity Ratio (Actual, %)56.9

ROE (23/12, %)25.4

PER (24/12 Forecast, Times)

20.0

PBR (23/12 Actual, Times)

6.2

Yield (24/12 CoE, %)1.4

Source: Strategy Advisors

There are virtually no domestic companies involved in hospital-related linen
services that are expanding internationally, including Tokai Corporation (TSE9729) (most recent PER 13.3). Overseas companies such as Cintas Corp
(NASDAQ CTAS) (PER 35.8) & UniFirst Corp (NYSE UNF) (PER 31.8) are
operating internationally.
Japanese GAAP - Consolidated
FY

Sales

YoY

OP

YoY

RP

YoY

NP

YoY

EPS

DPS

(\ mn)(%)(\ mn)(%)(\ mn)(%)(\ mn)

(%)

(\)

(\)

FY12/2020

26,056

21.1

2,068

38.6

2,148

43.1

1,446

46.1

23.9

14.0

FY12/2021

31,636

21.4

2,799

35.3

2,819

31.2

1,906

31.8

31.5

9.0

FY12/2022

36,265

14.6

3,391

21.2

3,412

21.0

2,083

9.3

34.5

11.0

FY12/2023

41,426

14.2

3,665

8.1

3,682

7.9

2,519

20.9

41.7

13.0

FY12/2024 CoE

50,000

20.7

4,200

14.6

4,230

14.9

2,850

13.1

47.1

14.0

Source: Strategy Advisors, Based on Company Data.

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ELAN | 6099 (TSE Prime)
Table of Contents
1.

Company Profile ............................................................................................................................. 4
１）

Elan has Developed into a Provider of “CS Set’s” as a Result of Pursuing Solutions to the World's Greater

Problems & Has

Achieved 17 Consecutive Years of Increased Sales and Profits ........................................... 4

２）“CS Set” Business Model Benefits All 3 Parties Involved in Commercial Distribution ............................. 5

３）

Active Business Development in India and Southeast Asia Where Economic Growth is Remarkable .... 7

４）

Shareholder Composition With > 52% Held by Insiders ................................................................... 82.

History .........................................................................................................................................10

3.

Hideharu Sakurai CEO's “My Resume” ..............................................................................................11

4.

Management Philosophy .................................................................................................................13

5.

Equity Story ..................................................................................................................................14

6.

Comparison with Competitors in the Industry and Market Trends ......................................................16
１）

Comparing Elan's Global Business Portfolio with Domestic and International Peers .............................16

２）

Comparison Across Countries of Operation ....................................................................................19３）

Comparison of Key Financial Indicators & PER ................................................................................20

４）

Domestic Hospitalization Set Market .............................................................................................22

５）

Global Hospital Linen Leasing Market ............................................................................................24

６）

Linen Leasing Market for Hospitals in India ....................................................................................25

７）

India's Human Resources-Related IT Services Market .....................................................................25

7.

Competitive Strategy Analysis .........................................................................................................26

8.

ROE Analysis and Management with the Cost of Capital and Stock Price in Mind ....................................29

9.

Current Performance Trends ...........................................................................................................31
１）

FY12/2024 1Q Results ................................................................................................................31

２）

Forecast for FY12/2024 ..............................................................................................................33

10.

Valuation ......................................................................................................................................34

１）

Undervalued Compared to Past Performance .................................................................................34

２）

Undervalued Compared to Domestic Companies ............................................................................34

３）

Undervalued Compared to Foreign Companies ...............................................................................35

11.

Sustainability ................................................................................................................................37

12.

Risk Factors ..................................................................................................................................402

ELAN | 6099 (TSE Prime)
Executive Summary
Pioneer in Hospitalization
Set Services, 17 Consecutive
Years of Sales and Profit
GrowthElan Corporation is a pioneer in hospitalization set services, renting clothing,towels, daily necessities and diapers necessary for hospitalization (admission)in hospitals and long-term care insurance facilities. The company's name forthis service is “CS Set” (*derived from “care and support set” and reads ““CSSet””). The service has 428,000 users and 2,320 contracted facilities, for amarket development rate of 15.0%, the highest in the industry (as of
FY12/2023). The company's FY12/2023 results include sales of \41.4bn(+14.2% YoY), operating profit of \3.7bn (+8.1% YoY), net income of \2.5bn(+20.9% YoY), operating profit margin of 8.8%, ROE of 25.4% and PER of 26.8
for the latest fiscal year, marking 17 consecutive years of sales and profit
growth.

Management to Seize Larger
Business Opportunities with
Speedy Decision Making
Cultivated Through Racing
Experience

The founder, Hideharu Sakurai, CEO, started out in the bedding door-to-doorsales business, which allowed him to have more flexible hours to become amotorcycle racer and over the past 10 years has become more independent;
establishing Elan (1995), shifting to the bedding renovation business (1998)
and then into the hospitalization set business (2003). This speed of businessdevelopment is unique in the bedding and linen industry, where mostcompanies have been in the same business for decades and is based on
Sakurai's conviction, gained through his experience at Racing, that speed is the
key to success.”

Invests in India's Largest
Hospital E-Commerce
Platform as Well as in LinenAfter going public in 2014, the company differentiated itself from similarlatecomer services in Japan by offering a hospitalization set combined with joint
guarantees and indemnification to avoid price competition, while overseas, itfocused on the fast-growing Southeast Asia. In India and Vietnam, it has
invested in hospital-related linen companies and also made a joint investmentswith Toppan Printing and MSI in the largest e-commerce platform for hospitals
in India.

Some Overseas Peers with
International Operations
have PER >30x

Including Tokai Corporation (TSE 9729) (PER 13.3 in the latest period), there
are no domestic companies in the hospital linen industry with international
operations. Overseas companies include Cintas Corp (NASDAQ CTAS) (35.8),
Elis SA (Paris ELIS) (16.8), UniFirst Corp (NYSE UNF) (31.8), Healthcare
Services Group Inc (NASDAQ HCSG) (20.0), Sescoi Inc (NASDAQ HCSG) (20.0),
Servizi Italia SpA (Italia SRI) (9.0) as well as others are operating internationallylike Elan.

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ELAN | 6099 (TSE Prime)
1. Company Profile
１）Elan has Developed into a Provider of “CS Set’s” as a Result of
Pursuing Solutions to the World's Greater Problems & Has
Achieved 17 Consecutive Years of Increased Sales and Profits
Continuously Solving theWorld's Problems andMoving into the
Hospitalization Set Service

Since its establishment in 1995, the company has been striving to solve the“world's problems” under the theme of “realization of a spiritually enrichingliving environment”. The company has converted from the bedding sales
business (door-to-door sales of bedding) in its early years to the current ““CSSet”” business.

Provide Patient Set Services
Not Only to Hospitals but
Also to Geriatric Healthcare
Facilities

The ““CS Set”” business combines rental of clothes and towels with laundry
service and provision of daily necessities for people hospitalized in hospitals orin long-term care facilities such as geriatric health care facilities, special nursing
homes for the elderly, fee-based nursing homes, group homes and care houses.
The company operates in a single segment of the nursing-care and healthcarerelated business.

Elan, Hospitals/Nursing
Homes and Linen SuppliersWork Together to Provide
Services

Patients, residents and their families can use the ““CS Set”” to realize “emptyhanded hospitalization/admission,” “empty-handed visitation” and “emptyhanded discharge/release”. The user or his/her family concludes a contract with
Elan when using the “CS Set”. The contract is executed by Elan, hospitals,
nursing care facilities, etc., linen suppliers (businesses that supply linen
products such as clothes, towels, sheets, pillowcases, etc.) and daily
commodities dealers (hereinafter referred to as “linen suppliers, etc.”).

17 Consecutive Years ofSales and Profit Growth &ROE >25%

The company operates from 28 head offices and sales branches nationwide,with 428,000 users and 2,320 contracted facilities, The company has achieved
17 consecutive years of sales and profit growth in FY12/2023. On a consolidated
basis, the company employs 378 people (as of December 31, 2023). Elan has
291 employees, including 185 in sales and 106 in administration.

4

ELAN | 6099 (TSE Prime)２）“CS Set” Business Model Benefits All 3 Parties Involved inCommercial Distribution
Build Win-Win-Win
Relationships

This business model not only reduces anxiety, stress and family burden uponadmission and hospitalization, but also improves the work of ward staff andstabilizes the management of nursing care facilities and hospitals, benefiting
not only “CS Set” users and their families, but also the hospitals, geriatrichealthcare facilities and linen suppliers. This establishes a win-win-win
relationship.
The commercial distribution of ““CS Set’s” can be broadly classified into two
types of transactions based on differences in contractual arrangements withhospitals, geriatric healthcare facilities and linen suppliers.
① Form of direct contract between hospitals, geriatric healthcare facilities,
etc., and the Elan Group (Elan prime contractor)

There are 2 Types ofTransactions, But There is
No Real Difference Between
Them

Users and Their Families
Can Reduce Hassle andWorry During
Hospitalization and
Admission② The Elan Group does not have a direct contractual relationships withhospitals and geriatric healthcare facilities.
The difference between the two types of transactions is due to the history ofcontact with hospitals and geriatric healthcare facilities, etc., and there is nodifference in the roles of the parties involved in the management of the ““CSSet””.
The benefit for users and their families is that the ““CS Set”” reduces hassles
and concerns during hospitalization and admission. The ““CS Set”” can be used
to wash and change necessary clothing and towels and to replenish daily
necessities, making it possible for patients to enter and leave the hospital“empty-handed” and for family members to visit without leaving the hospital“empty-handed”. Since the usage fee includes a fixed daily fee based on thenumber of days of hospitalization/admission, it is easy to calculate expenses
related to hospitalization/admission living. This allows patients to remain at this
hospital without worrying about the frequency of changing clothes and towels
or the amount of daily necessities used.

5

ELAN | 6099 (TSE Prime)
Chart1. Standard Plans for “CS Set’s”

ExpensesPlan A

Plan B

Plan C

700 yen per day

500 yen per day

300 yen per day

TowelsBath towel, face towel, hand towel

Daily

Cups, tissues, shampoo, slippers, etc.

Necessities
Clothing

Complete set of oral care products
Hospital gown or top and bottom sweatshirt
Underwear & Socks
Nursing carenightgowns and meal
aprons

Source: Prepared by Strategy Advisors based on GMO FG Data.

Hospitals and Nursing
Homes Can Concentrate on
Their Primary Nursing andCare Duties

The advantage for hospitals and nursing care facilities is that they canconcentrate on their primary nursing and care duties by introducing Elan'sservices. The workload related to on-site laundry and replenishment of daily
necessities by nurses and caregivers will be reduced. Furthermore, since Elanconsigns the work of explaining services to users, accepting applications andstoring goods to hospitals and nursing care facilities and pays outsourcing
commissions in return, which contributes to increased revenues for hospitals
and nursing care facilities. In addition, when hospitals and nursing care facilities
themselves charge fees for services that are not covered by insurance, they are
required to take strict measures in accordance with administrative guidancefrom the Ministry of Health, Labor and Welfare. However, by using Elan'sservices, this hassle can be eliminated.

New Revenue Opportunities
for Linen Suppliers

The advantage for linen suppliers, etc., is that they can gain new revenue
opportunities by contracting with Elan. Linen suppliers’ contract with hospitals
and nursing care facilities to deliver bedding (futons, wrapping cloths, sheets,
pillows and pillowcases) covered by medical insurance and nursing careinsurance and to perform laundry services. However, the existing hospitalrelated business is saturated and the company needs to find new opportunities
for meaningful cost reductions and new revenue opportunities. Through Elan'sservices, linen suppliers and others will have the opportunity to expand theirsales through leasing and laundry services for daily clothing and towels included
in ““CS Set’s” and sales of daily commodities, which they had not previously
implemented.

6

ELAN | 6099 (TSE Prime)
Chart 2 . Elan's Business Model

Source: Elan website３）Active Business Development in India and Southeast Asia
Where Economic Growth is Remarkable
Aiming to Expand in India
and Southeast Asia, Where
Economic Growth isRemarkable

In order to expand its successful business Japanese business overseas which
has the world's highest aging population rate, Elan is also aggressively
developing its business in India, Southeast Asia and other emerging countries
that are experiencing remarkable economic growth. The company has been
expanding overseas through investments in a laundry service company for
hospitals in India, among others.

First Investment in India is
in a Medical B-to-B
E-Commerce Company

The first investment in India was in Boston Ivy Healthcare Solution Pvt. Ltd.
(“BIHS”) (India unlisted), a healthcare-related B-to-B e-commerce company(2018). It operates one of India's largest hospital e-commerce services,
Medikabazaar. The service offers about 300,000 products on the service,
allowing hospitals to search and compare products in real time BIHS has 17
fulfillment centers in India that even handle deliveries, helping healthcare
providers manage inventory and stocking efficiency. Following BIHS, Elan
invested in Quick Smart Wash Pvt. Ltd. (QSW, 2021), an in-hospital laundrycompany and Akal Information Systems Ltd. (unlisted in India) (2023), an IT
staffing company.

7

ELAN | 6099 (TSE Prime)
Several Hospital Laundry
Service Companies are
Being Made Subsidiaries inVietnamVietnam's population and economy are expected to continue to grow, and the
population is expected to age in the future. In addition, the number of medical
institutions and hospital beds in Vietnam is expected to increase and demand
for medical-related services is expected to rise further. In March 2024, theCompany made GREEN LAUNDRY JOINT STOCK COMPANY (GREEN) (unlistedin Vietnam) a wholly owned subsidiary, the company provides laundry services
to major hospitals mainly in Ho Chi Minh City, Vietnam. Furthermore, TMC VIETNAM TRADING AND SERVICE JOINT STOCK COMPANY (TMC) (unlisted in
Vietnam), which is headquartered in Hanoi, Vietnam and engages in businessincluding laundry services for major hospitals, is scheduled to become asubsidiary (in June 2024).

Expansion into Other
Southeast Asian Countries
to be Considered

In 2024, the company aims to dispatch personnel to India and Vietnam to begin
operations. Expansion to other countries planned include Indonesia, Malaysia,
Vietnam, Thailand, Singapore and Taiwan.

Chart3 . Elan's Overseas Expansion

CompanyCountry

Boston Ivy Healthcare Solution Pvt. Ltd.
（BIHS）

Business Type

Investment

Consolidated

Companies Accounted for

Ratio

Balance Sheet

Using the Equity Method

Sales of medical
Indiamaterials, etc.

5% or lessNo

No

Laundry service for
Quick Smart Wash Pvt. Ltd.（QSW)

Indiahospitals

42.18%

No

No

AKAL

India

Temporary staffing

5% or less

No

No

100%

Yes

-

51%

Yes

-

GREEN LAUNDRY JOINT STOCK COMPANY（GREEN)

Laundry service forVietnam

TMC VIET NAM TRADING AND SERVICEJOINT STOCK COMPANY（TMC）

hospitals
Laundry service forVietnamhospitals

Note: QSW is materiality criteria; TMC is planned acquisition. Source: Elan４）Shareholder Composition With > 52% Held by Insiders
CEO Sakurai Effectively
Owns Approximately 27%

Major shareholders include CEO Hideharu Sakurai, 19.8% (26.53% including his
spouse and SAKURA Corporation) and Nobuhiro Nakajima, one of the foundersof the company, 15.25% (21.25% including his spouse and N-Style), so at least
52% of the shares are held by insiders. By ownership, individuals and othersaccount for 50.2%, financial institutions 19.7%, other corporations 15.0%,
foreign corporations 14.5% and financial instruments firms 0.5% (as ofDecember 31, 2023).

8

ELAN | 6099 (TSE Prime)
Chart4 . Elan Ownership Overview by Category (December 31, 2023)
Category% of Shares Held

Individuals and Others

50.2

Financial Institutions

19.7

Other Corporations

15.0

Foreign Corporations, etc.

14.5

Financial Instruments Firms

0.5

Source: Elan

Chart5. List of Major Shareholders (as of December 31, 2023)
Ranking

Major Shareholders# of Shares Held

Shareholding(‘000)

Ratio (%)

1

Hideharu Sakurai

12,00019.80

2Nobuhiro Nakajima

9,240

15.25

3

The Custody Bank of Japan, Ltd.

5,578

9.20

4

The Master Trust Bank of Japan, Ltd.

4,897

8.08

5

SAKURA Corporation

3,760

6.20

6

N-Style Corporation

3,160

5.21

7

ES Corporation

1,960

3.23

8

NORTHERN TRUST CO.(AVFC) RE FIDELITY FUNDS

1,673

2.76

858

1.42

774

1.28

43,90072.44

9NORTHERN TRUST CO.(AVFC) RE THE HIGHCLERE INTERNATIONALINVESTORS SMALLER COMPANIES FUND

10

RE FUND 107-CLIENT AC
Total Amount

Source: Company Data

9

ELAN | 6099 (TSE Prime)
2. History
Shifted Business Format
from Bedding Sales to
Bedding Remodeling &Then to Hospitalization Set
Services

In February 1995, the company was established in Sagamihara City, Kanagawa
Prefecture, as Elan Limited Liability Company for the purpose of selling bedding;in June 2001, the head office was moved to Matsumoto City, Nagano Prefecture,
to expand the bedding renovation business. In May 2003, the company
launched the ““CS Set”” service, a nursing care medical-related business.

Since 2006, the Company
has Concentrated its
Resources on the
Hospitalization Set Service
Business and was Listed on
the Stock Exchange in 2014

In December 2006, the company quit the bedding remodeling business andconcentrated its resources on expanding its business into the nursing andmedical care-related business. In November 2014, the company was listed on
the Mothers market of the Tokyo Stock Exchange and the following November,it was promoted to the First Section of the Tokyo Stock Exchange (TSE Prime
Market).

Investment in Several
Indian Companies Since
2018

In September 2018, Elan Services Inc. was established to strengthen customer
support, specializing in personal billing and customer support. In November ofthe same year, the company signed a stock subscription agreement with Boston
Ivy Healthcare Solutions (unlisted in India), the largest hospital e-commerce
platform in India; in March 2019, the number of facilities using “CS Set”
surpassed 1,000 facilities; in February 2021, the company invested in Quick
Smart Wash which operates a hospital-related linen business.

Achieved Introduction of“CS Set’s” in All 47
Prefectures in Japan in 2021

In April 2021, Ryukyu Elan Co., Ltd. was established to develop ““CS Set”” andother healthcare-related businesses in Okinawa Prefecture, and in November
2021, ““CS Set”” were introduced in all 47 prefectures nationwide.

Investment in an Indian
Human Resources-Related
IT Services Company in
2023

In September 2022, the number of facilities using ““CS Set”” exceeded 2,000
facilities; in October 2023, Elan Logistics Co. was established to strengthen
logistics functions; in November 2023, Elan invested in AKAL (unlisted in India),
which develops IT services such as human resource management applications.
and also acquired additional shares of Classico, a developer of white coats, withwhich it had a capital and business alliance in 2020 (41.3% shareholding and14.9% of voting rights as of June 2024).

10

ELAN | 6099 (TSE Prime)
3. Hideharu Sakurai CEO's “My Resume”
A Passion for Vehicles Led
Him to Become a Motorcycle
Racer

Chairman Hideharu Sakurai was born in Miyazaki Prefecture, where his motheris from and is now 54 years old (born March 28, 1970). Immediately after hisbirth, he moved to Kawasaki City, Kanagawa Prefecture and later grew up in
Sagamihara City. Since elementary school, he has loved bicycles and othervehicles, and his interest eventually shifted to motorcycles, where he aspired
to become an auto racer. After graduating from high school, he joined Honda
Clio Sagamihara (Honda Cars Kanagawa Kawanishi) in April 1988. While
working as a car dealer, he spent his time racing to become a motorcycle racer.
He also attended a racing school in Australia.

After His Father PassedAay, He Gave Up Racing and
Became a Passionate Doorto-Door Bedding Salesman

After joining Nippon Columbia DCS Sales in January 1990, he joined a bedding
door-to-door sales company in February 1991. This was the result of choosing
a position that allowed him to have more freedom of time to pursue his goal of
becoming a motorcycle racer. However, after his father passed away from illness
in the same year, his family began to oppose his pursuit of a career that risked
the loss of his life and he gave up the idea of becoming a racer. In order to
distract himself from his feelings, he became passionate about sales as a doorto-door bedding salesman. As a result, his sales performance improved
significantly and his income, which was based on a full commission system,
increased greatly and he even took on a directorial position at the age of 23.

Fired After Discussing
Future Independence andFounded a Company by
ChoiceEventually, running a company became a new goal and when he and Nobuhiro
Nakajima and Yukio Sato, who had worked together, discussed their future
independence with the president of the company they worked for, the president
became angry and fired them. As a result, they were forced to become
independent, and in February 1995, Mr. Nakajima, Mr. Sato and Mr. Sakurai
founded Elan, with Mr. Sakurai as the representative director. The company was
founded in Sagamihara City, Kanagawa Prefecture, where Sakurai grew up andthe business was a door-to-door bedding sales business.

Finding a Need in theBedding RemodelingBusiness, the Company
Steadily Expanded its
Business

Elan was a limited liability company when it was founded, but two years later it
became a joint-stock corporation. While listening to customers through doorto-door bedding sales, the company discovered that there was a need toremake old futons into futons and cushions of different sizes to meet theirneeds. Seeing a commercial opportunity in this situation, the company openeda branch in Matsumoto City, Nagano Prefecture, in 1998 and began a full-scale
bedding remodeling business. The city of Matsumoto in Nagano Prefecture waschosen not only because it was close to the hometown of Chairman Sakurai'swife, but also because more futons were owned in the countryside than in thecity center (since most people live in one house) and because it is in the centerof the map of Japan. Because of the large number of hotels and inns in thearea, the bedding remodeling business expanded steadily and in 2001, the head
office was relocated to Matsumoto City, Nagano Prefecture.

11

ELAN | 6099 (TSE Prime)

Finding a Greater Need in
the Hospitalization Set
Service Business, theCompany Shifted its Focus
and Went Public

While the bedding remodeling business was doing well with general households,
hotels, and inns as customers, one day Elan received a single inquiry from a
hospital asking if it handled hospital bedding, which prompted Elan to startresearching the hospital industry. As a result, Elan found that hospitalized
patients, their families and hospital staff were very troubled over “personal
effects“. With the desire to “solve the problems of many people in the hospitalindustry,” it created the ““CS Set”” hospitalization set service and launched the“CS Set” business in 2003 at a branch in Sagamihara City, Kanagawa Prefecture.
The company grew steadily as it shifted its focus from the successful bedding
remodeling business to the much-needed “CS Set” business and finally went
public in 2014. Mr. Sakurai was appointed Chairman and CEO in March 2022
(his current position).

His Motto is, “ChallengeYourself to Do What No-One
Else is Doing”

Chairman Sakurai's motto is “to challenge what no one else is doing”. He aims
to please people by creating a system that generates profit, not by volunteering
to help people in need. Elan's mission is to “bring smiles to the faces of thosein need in the healthcare field”. The idea of doing such best work with the best
people is part of Elan's DNA.

If his Father Had Not Died,
He Could Have Been a
World-Class Racer

He says that being a racer helps a lot in management. There are many
similarities between the two. A racer makes a mistake and it is literally fatal.
Speed is also important in making decisions. He sometimes thinks to this day,“If my father had not died, I could have been a world-class racer”.

12ELAN | 6099 (TSE Prime)
4. Management Philosophy
Elan Means “Leap/Flight”
in French and“Passion/Enthusiasm” inEnglish“Elan” means “leap and flight” in French and “passion and enthusiasm” inEnglish. The company was named Elan to express their desire to be a company
that contributes to society through the passionate actions of each and every
one of our employees and plays a significant role in the wider world.

Elan's Mission is to Increase
Smiles by Solving
Healthcare-Related
Problems

Elan's management philosophy is “We pursue the best products and services tosatisfy our customers and realize a heart-enriching living environment throughpassionate actions”. Elan's mission is to “bring smiles to the faces of those inneed in the healthcare field”. As each person's life stage changes from day today, they may face various problems and anxieties related to healthcare. Elan's
mission is to resolve such problems and concerns and bring smiles to the facesof as many people as possible.

Three Guiding Principles
That Support our Activities
to Raise Smiles

The society and vision that Elan wants to realize is “to increase the total amountof smiles”. By continuing to think of businesses and methods that makeeveryone happy, without sacrificing anyone or anything and without giving up,
Elan aims to realize a society in which all people around the world can live
healthy, enriched lives with smiles on their faces. The action guidelines (credo)that support Elan's activities to realize its vision are “A-T-G,” “Win-Win-Win,”and “Exciting Work”. In addition to these three, there are many other credos,
which are compiled into a book, which is distributed to employees when theyjoin the company.

“A.T.G.”“A.T.G.” is the most important spirit of ELAN, which is to do any work cheerfully(Akaruku in Japanese), happily (Tanoshiku) and energetically (Genkini)! This is
the most important spirit of Elan. Even in difficult times, if you have the ATG
mindset, you will not look for reasons why you can't do the job, but will instead
think, “If I'm going to do it anyway, let's enjoy it!” or “Let's find a way to makeit fun!” and “Let's think of a way to make it fun!”; always instead of looking forreasons why we can't do it, turning the situation into a positive one and takethe first step forward without giving up.

“WIN-WIN-WIN”

At Elan, we place great importance on thinking about mutually beneficial
situations that benefit both ourselves and the other party. Also, at that time thefirm values thinking about the “three WINs,” not “Win-Win,” but “Win-Win-Win.
This is because it believes that it is difficult to maintain a balanced relationshipif they only think about ourselves and the other party and do not pay attention
to someone else who is always around them. Elan values such a way of working
that everyone balances each other out and everyone WINs.

“Exciting Work”

At Elan, they value not just doing what we are told, but transforming it into
exciting work that they themselves want to do. As a result, work becomes morepositive and enjoyable. At Elan, they value the attitude of changing one's usual
work into “exciting work” by oneself.

13

ELAN | 6099 (TSE Prime)
5. Equity Story
Elan - A Highly Profitable &High-Growth Company, is
Also Expanding into Other
Asian Countries

Elan is a highly profitable, high-growth company. Elan's core business ishealthcare services, a growth area. The company is expanding into Asian
countries where the population is growing and health care services are lagging
significantly.

Sales, Profits & Profit
Margins Have All Achieved
GrowthElan's Return on Equity (ROE, last quarter) at 25% is quite high compared to
9% for all Japanese companies. Over the past five years (Nikkei forecast for thecurrent term), the company has achieved very high growth, with sales and net
income increasing 2.1 and 2.9 times respectively, despite the economic crisis
caused by the new coronavirus. They have also steadily increased their profit
margin on sales.

Strategy is THE “Story” that
Makes You Want to Tell
SomeoneAn equity story is a long-term scenario that will grow the company's stock priceand profits. From the perspective of long-term stock price growth, an equity
story is considered to consist primarily of (1) a feasible and precise
management strategy and (2) an “exciting dream”. In “Competitive Strategy asa Story: Conditions for Excellent Strategy,” Ken Kusunoki, a leading Japanesemanagement scholar and professor at Hitotsubashi University's Graduate
School of Business Administration, wrote, “Companies that have achieved andsustained great success have in common that their strategies are constructed
as a 'story' with flow and movement. Strategy is a necessary and difficult
process. Strategy is not something that is forced upon you by necessity and is
not something that you have no choice but to trudge along with a difficult lookon your face, but it is about creating an interesting “story” that you can't wait
to tell someone”. An equity story is a concept similar to this.

Difficult to Imitate Elan
Which Has Established
Win-Win-Win Relationships

Elan has steadily implemented a “feasible and precise business strategy”. Elan
has been trying to coexist and prosper with linen suppliers and other businesses
by ensuring that their businesses do not compete with Elan's. Since Elan is notin the linen supply business and is not affiliated with any particular company, it
is not hostile to linen suppliers, etc., and can partner with any company, giving
it a competitive edge in its nationwide expansion. Thus, by establishing a winwin-win relationship, the business partner itself becomes a barrier to entry,
forming a barrier that makes it difficult for others to imitate Elan.

Also Working on ValueAdded Enhancement
Through “CS Set” R &“CS Set” LC

In order to further differentiate itself from its competitors, the company has
been adding value to its “CS Set’s” by developing “CS Set” R (a service thateliminates the need for a joint guarantor upon hospitalization or admission),“CS Set” LC (a service that compensates “CS Set” users for accidents involving
damage) and original patient garments.

14

ELAN | 6099 (TSE Prime)“Exciting Dreams” of
Expansion into
Emerging Countries

The “exciting dream” for Elan is to expand into emerging markets. Japan is
rapidly aging and demand for healthcare services is growing. The market
development rate in Japan is estimated to be 15% as of the end of 2011,
suggesting that there is still much room for development. However, with theaverage age of the so-called baby boomers now in their late 70s, the elderly
population is expected to peak out over the next 10 to 20 years. Thus, it is clearthat there is a limit to long-term growth if the population remains only in Japan,
where the population is declining.

Already in India andVietnamTherefore, Elan is expanding into India and Vietnam. Both have growing
populations and low levels of healthcare services. Elan has invested in threeventure companies in India that are involved in the wholesale of medical
supplies, linen supply, and temporary staffing services. It also acquired ahospital laundry company in Vietnam. It is also considering expansion into
Indonesia, Malaysia, Thailand and Singapore. By entering countries and regionswith aggregate populations more than 10 times that of Japan, the company
aims to sustain growth over the medium to long term.

15

ELAN | 6099 (TSE Prime)
6. Comparison with Competitors in the Industry
and Market Trends１）Comparing Elan's Global Business Portfolio with Domestic
and International Peers
Comparison of Elan Group
with 15 Domestic andInternational Peer
Companies

While Elan's domestic business is limited to the “CS Set” business, it is involvedin a wide range of overseas businesses, including linen and garment leasing tohospitals in India and Vietnam and related goods sales and human resourcerelated businesses in India. With this in mind, in addition to the nine domestic
companies that provide hospitalization set services, six major listed companies
involved in linen leasing to hospitals overseas were included in Elan's
comparison.

The Top 4 Companies in
Terms of Sales are Europeanand U.S. Companies with
Customers in Diverse
Industries

The top four companies in terms of sales are from Europe and the U.S. These
companies rent a wide variety of items, including uniforms, workplaceequipment, toiletries and linen. Therefore, their customers include not only
hospitals, but also accommodations, restaurants, various retailers, factories andbeyond. Cintas, the largest company in terms of revenue, is the leading providerof uniforms, towels, and mats for employees; Elis, in second place, provides
uniforms, linens and beverage rental and maintenance services for the
workplace; and Vestis, in third place, rents uniforms, mats, towels, linens andother workplace supplies. UniFirst, in fourth place, provides workplace uniforms
and protective clothing. In Europe and the United States, hospitals offer theirown inpatient set-up services.

The Largest in Japan is
Watakyu Seimoa, an EquityMethod Affiliate of ITOCHU
Corporation

Other than Elan, none of the other Japanese companies have overseas
operations, almost all of which are focused solely on Japan. The largest is
Watakyu Seimoa Corporation (unlisted), an equity method affiliate of ITOCHU
Corporation (TSE 8001), which has expanded its scale through multiple
acquisitions in the same industry. The company has a large presence in anindustry where many companies are community-based, with offices throughout
Japan.

Second in Japan is Tokai, aPublicly Listed Company
That Also Operates a
Dispensing Pharmacy

Second to Watakyu Seimoa in terms of sales is Tokai Corp. (TSE 9729). Tokai
started its business in 1955 in Gifu Prefecture, Japan, renting bedding toconstruction workers. Today, the company is involved in linen supply for
hospitals, “hospitalization and move-in sets”, linen and bedding supply for hotels
and inns, nursing care equipment rental and finally dispensing pharmacies.

Amenity, a Latecomer to the
Hospitalization Set
Business, Reached Half of
Elan's Sales Through a LowPriced Offensive

While most of the domestic linen washing companies, including Watakyu
Seimoa and Tokai, have their own linen washing factories, Amenity Co.
(unlisted), a latecomer to Elan, entered the hospitalization set business and has
grown to about half Elan's sales off the back of its low pricing strategy.

16

ELAN | 6099 (TSE Prime)

In Vietnam, Where theOverall Market is Growing,
Elan has Laundry Factories

In Japan, Elan specializes in the hospitalization set business, does not operate
a linen leasing business for hospitals and nursing care facilities and does not
own a laundry. This is a decision made to avoid excessive competition in amature market where the company is a latecomer. On the other hand, unlike inJapan, the markets in India and Vietnam are still growing, and linen leasing
services are not widely available in those countries. The company plans to
introduce the hospitalization set business after the linen leasing service has
been established to a certain extent.

Entering the Medical
Supplies Sales Business in a
Way that has Potential for
Business Growth

In addition, some companies in the same industry are taking advantage of theirstrong ties to hospitals and nursing care facilities to wholesale medical-related
equipment and supplies to these facilities. However, these businesses are
localized, lack price transparency and lack business expansion capability.
Against this backdrop, Elan invested in Boston Ivy Healthcare Solutions, which
operates India's largest healthcare B2B e-commerce platform. The platform
allows many industry players to participate without geographical restrictions
and ensures price transparency, making it a business with high growthpotential.

Aiming to Expand Provisionof IT-Based Human
Resource-Related Solutions

Furthermore, similarly with regard to healthcare-related staffing andplacement, while there are other companies in the same industry that utilize
their usual connections to conduct business within a geographically limited
scope for medical institutions and nursing care facilities, Elan does not conductbusiness that lacks such a broad business focus. Elan has realized an investment
in Akal Information Systems, a human resource-related IT services company inIndia and is looking for an opportunity to provide human resource-related
solutions utilizing IT.

17

ELAN | 6099 (TSE Prime)
Chart6 . Major Business Portfolios of Leading Companies Involved in Linen Leasing to Hospitals
Major Business Portfolio
Linen And Garment Leasing

RecentCompanyCountry

Sales

Hospital

Hospital(\ mn)

Set&

LodgingNursing

Facility

Facility
Cintas Corp.

Related Goods
Sales

Eating &Drinking

Wholesale

Facility

Human Resources

Plat

DispatchIT

FormIntroduction

ServiceUS1,322,365

-

Yes

Yes

Yes

Yes

-

-

-

France732,598

-

Yes

Yes

Yes

-

-

-

-

Vestis Corp.

US423,793

-

Yes

-

Yes

-

-

-

-

UniFirst Corp.

US334,957

-

Yes

Yes

Yes

-

-

-

-

Japan

174,869

Yes

Yes

Yes

-

Yes

-

-

-

Tokai Corp.

Japan

138,222

Yes

Yes

Yes

Yes

Yes

-

-

-

Servizi Italia

Italy

48,946

-

Yes

Yes

Yes

-

-

-

-

Japan

41,426

Yes

-

-

-

-

-

-

-

Vietnam

910

-

Yes

-

-

Yes

-

-

-

Vietnam

433

-

Yes

-

-

-

-

-

-

India

246

-

Yes

-

-

-

-

-

-

India

-

-

-

-

-

-

Yes

-

-

India

-

-

-

-

-

-

-

-

Yes

K-Bro Linen

Canada35,297

-

Yes

Yes

Yes

-

-

-

-

Koyama Corp.

Japan

30,800

Yes

Yes

Yes

-

Yes

-

-

-

Japan

26,900

Yes

Yes

Yes

-

-

-

Yes

-

YamashitaJapan

26,800

Yes

Yes

Yes

-

-

-

-

-

AmenityJapan

23,600

Yes

-

-

-

-

-

Yes

-

Japan

23,200

Yes

Yes

Yes

-

-

-

-

-

NIC

Japan

8,362

Yes

Yes

-

-

-

-

-

-

Benex

Japan

6,600

Yes

Yes

Yes

Yes

-

-

-

-

Elis SA

Watakyu
Seimoa Corp.

ELAN Group
ELAN
TMC
VietNam
Green
Laundry
Quick
Smart
Wash
Boston Ivy
Akal
Information

Shibahashi
ShokaiKoyamaShokai*Calculated at 150 Yen to the US Dollar, 170 Yen to the Euro, 110 Yen to the Canadian Dollar, 0.006 Yen to the Vietnamese Dong,and 1.8 Yen to the Indian Rupee.
Source: Prepared by Strategy Advisors. Based on Company Data.

18

ELAN | 6099 (TSE Prime)２）Comparison Across Countries of Operation
U.S. Companies have a
Limited Number ofCountries of Operation.
While European Companies
Operate in a Larger
Number of Countries

Comparing the countries in which each company operates, three U.S.
companies; Cintas, Vestis and UniFirst, have operations only in the U.S. andCanada; both countries are large enough to cover a large geographic area, but
the number of countries themselves is small. Elis is present in about 20
European countries, including France and the UK and four South Americancountries (Mexico, Brazil, Chile, and Colombia), but not in Asia. Servizi Italia
operates in Albania, Morocco, Turkey, India and Brazil, in addition to Italy.

In Addition to Elan,
Yamashita is the Only OtherJapanese Company to
Expand Overseas

In addition to Elan's operations in Vietnam and India, Japanese firm Yamashita
Corporation (unlisted) operates a welfare equipment rental and sales businessand a nursing care renovation business in China.

19

ELAN | 6099 (TSE Prime)
Chart7 . Major Business Expansion Countries - Representative Companies Involved in Linen
Leasing to Hospitals
RecentCompanyCountry

Main Business Development Countries

Sales(\ mn)

Japan

China

VietnamIndia

TurkeyItaly

FranceUK

USA

CanadaCintas Corp.

America

1,322,365

-

-

-

-

-

-

-

-

〇

〇

Elis SAFrance732,598

-

-

-

-

-

〇

〇

〇

-

-

Vestis Corp.

America

423,793

-

-

-

-

-

-

-

-

〇

〇

America

334,957

-

-

-

-

-

-

-

-

〇

〇

Japan

174,869

〇

-

-

-

-

-

-

-

-

-

Tokai

Japan

138,222

〇

-

-

-

-

-

-

-

-

-

Servizi Italia

Italy

48,946

-

-

-

〇

〇

〇

-

-

-

-

ELAN

Japan

41,426

〇

-

〇

〇

-

-

-

-

-

-

K-Bro Linen

Canada35,297

-

-

-

-

-

-

-

〇

-

〇

Japan

30,800

〇

-

-

-

-

-

-

-

-

-

Japan

26,900

〇

-

-

-

-

-

-

-

-

-

YamashitaJapan

26,800

〇

〇

-

-

-

-

-

-

-

-

AmenityJapan

23,600

〇

-

-

-

-

-

-

-

-

-

Japan

23,200

〇

-

-

-

-

-

-

-

-

-

NIC

Japan

8,362

〇

-

-

-

-

-

-

-

-

-

Benex

Japan

6,600

〇

-

-

-

-

-

-

-

-

-

UniFirst
Corp.
Watakyu
Seimoa Corp.

KoyamaCorp.
Shibahashi
ShokaiKoyamaShokai*Calculated at 150 Yen to the USD, 170 Yen to the Euro and 110 Yen to the Canadian Dollar.
Source: Prepared by Strategy Advisors. Based on Company Data.

３）Comparison of Key Financial Indicators & PER
Cintas Has the Highest
ROE & PER

Comparing key financial indicators and PER (listed companies only) for the mostrecent fiscal year, Cintas has the highest 3-year average ROE and PER, mainly
due to its high net income margin, making it the only company in thecomparison group with a double-digit net income margin.

20

ELAN | 6099 (TSE Prime)
Elan is Less Expensive Than
UniFirst & K-Bro Linen

Elan has the second highest ROE, mainly due to its high total asset turnover.
However, UniFirst Corp, which has a much lower ROE, has a PER of 31.8, higher
than Elan's 26.8. K-Bro Linen, which also has a much lower ROE than Elan, has
a PER of 20.0, which is close to Elan's. Compared to these companies, Elan's
share price is undervalued.

Chart 8 . Key Indicators for the Most Recent Fiscal Year for Representative Companies Involvedin Linen Leasing to Hospitals
Key Indicators for the Most Recent Fiscal Year
CompanyCountry

RecentSales(\ mn)

3 Years
CAGR

Net

Total

ProfitAsset

MarginTurnoverFinancial
Leverage

3-YearROE

Average

PER

ROE

Cintas Corp.

America

1,322,365

7.6%

15.2%

1.1

2.3

37.4%

34.9%

35.8

Elis SAFrance732,598

15.4%

6.1%

0.5

2.7

7.8%

6.2%

16.8

Vestis Corp.

America

423,793

3.3%

7.5%

0.9

2.0

13.3%

8.4%

11.9

UniFirst Corp.

America

334,957

7.4%

4.6%

0.9

1.3

5.3%

6.3%

31.8

WatakyuJapan

174,869

4.6%

3.1%

1.9

2.0

12.1%

9.2%

-

Seimoa Corp.
Tokai

Japan

138,222

5.4%

4.2%

1.2

1.3

6.9%

7.4%

13.3

Servizi Italia

Italy

48,946

6.2%

1.9%

0.7

2.9

4.0%

4.4%

9.0

Elan

Japan

41,426

16.7%

6.1%

5.4

0.8

25.4%

26.1%

26.8

K-Bro Linen

Canada35,297

17.7

5.5%

0.9

2.0

10.0%

5.5%

20.0

Koyama Corp.

Japan

30,800

-

7.9%

1.0

1.3

10.1%

11.0%

-

Japan

26,900

-

1.1%

1.5

2.5

4.0%

9.1%

-

YamashitaJapan

26,800

-

-

-

-

-

-

-

AmenityJapan

23,600

-

-

-

-

-

-

-

Japan

23,200

-

-

-

-

-

-

-

NIC

Japan

8,362

3.2%

-

-

-

-

-

-

Benex

Japan

6,600

0.5%

-

-

-

-

-

-

Shibahashi
ShokaiKoyamaShokai*Calculated at 150 Yen to the USD, 170 Yen to the Euro and 110 Yen to the Canadian Dollar.
Source: Prepared by Strategy Advisors Based on Company Data.

21

ELAN | 6099 (TSE Prime)４）Domestic Hospitalization Set Market
The Aging Population Rate
Will Not Stop Rising Soon

As of March 1, 2024, the population aged 65 and over in Japan was 36.23mn,
accounting for 29.2% of the total population (estimated population by theStatistics Bureau of the Ministry of Internal Affairs and Communications).
38.7% of the population is expected to be aged 65 and over by 2070, with one
out of every 2.6 persons aged 65 and over and one out of every four aged 75
and over. Hence, the market size for Elan's services is expected to grow further
due to the aging of the population.

Chart9 . Aging Population Trends and Future Projections

Note: Figures for 2024 are March 1 estimates; figures before that are based on the Ministry of Internal
Affairs and Communications population estimates as of October 1 of each year; figures for 2025 andthereafter are 2023 mid-year estimates from the National Institute of Population and Social Security
Research. The aging rate is the percentage of the population aged 65 and over. Source: Ministry ofInternal Affairs and Communications, National Institute of Population and Social Security ResearchMarket Size Expanded
10-Fold in 10 years

The domestic hospitalization set market (CS market) is worth \122bn in
FY2022, growing 10-fold from \12.2bn in FY2012. The average annual growthrate is 25.9%.

22

ELAN | 6099 (TSE Prime)
Industry Leader Elan's
Strategy is to Add Value to
Avoid Price Competition

Elan leads the industry with a 15.0% share of the “CS Set” market (as of
FY12/2023), targeting 11,404 facilities (7,241 hospitals with 50 or more beds
and 4,163 geriatric healthcare facilities and long-term care hospitals with 50 ormore beds). The number of hospital contracts (50 beds or more) was 1,368,
for a development rate of 18.9%. The number of contracts for geriatrichealthcare facilities and long-term care medical care hospitals (50 beds ormore) was 343, for a development rate of 8.2%. Elan is the leader in the CS
market, but in order to avoid homogenization of services and price competition,
the company is working to add value through the development of peripheralservices.

Second Place is Amenity,with About Half of Elan's
Sales

The next largest company in terms of market size after Elan is Amenity, whichis involved in hospitalization sets. Amenity is about half the size of Elan. Other
major competitors in the industry include Watakyu Seimoa and Tokai, althoughsales figures are not available.

Tokai is Also IncreasingSales

One of Tokai's main products is the “hospitalization and occupancy set,” a setof clothing, towels and daily necessities for hospitalization and occupancy withrental services provided on a per day basis (daily billing). The number ofcontracts for linen supply services is approximately 1,000 for hospitals and2,700 for nursing care facilities. Sales figures for “hospitalization and occupancysets” were not disclosed, although sales for FY2022 grew by 11.2% YOY.

Medium to Long-Term
Market Growth is Expected
to Continue

According to Elan, the CS market is expected to continue growing over the
medium to long term for the following reasons. First, new introductions are
increasing due to increased attention to infection prevention, such as the 2021
revision of nursing care fees that will make infection control mandatory underoperating standards (with a three-year transitional measure). Second, facilities
that experienced the convenience of high utilization rates in response to the
new coronavirus (ban on visits) are continuing to actively promote its use.
Third, the new coronavirus was moved to category 5 illness and the utilization
rate of hospital beds is expected to increase in the future.

23

ELAN | 6099 (TSE Prime)
Chart 10 . CS Market Size Trends

Source: Elan５）Global Hospital Linen Leasing Market
Projected to Grow at an
Annual Rate of Nearly 10%

According to Market.US, the global hospital linen leasing market is expected to
grow at a CAGR of 9.8% over the 10-year period from 2022 to 2032 on theback of rising hygiene awareness due to the COVID-19 pandemic and increasingawareness that it is ultimately cheaper to outsource to specialized hospitalvendors. Currently, the largest market is North America, but the future growth
driver is expected to be the Asia-Pacific region.

Chart11 . Global Hospital Linen Leasing Market(bn $)
GlobalMarket
(YoY)

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

CAGR

11.5

12.7

13.9

15.3

16.8

18.4

20.2

22.2

24.4

26.7

29.4

-

-

10.4%

9.4%

10.1%

9.8%

9.5%

9.8%

9.9%

9.9%

9.4%

10.1%

9.8%

Source: Prepared by Strategy Advisors. Based on Company Data.

24

ELAN | 6099 (TSE Prime)６）Linen Leasing Market for Hospitals in India
QSW Plans to Aggressively
Increase Facility Capacity in
Anticipation of Growth in
the Indian Market

According to QSW, the company currently handles 35 tons per day and aims toincrease its capacity to 200 tons per day to capture 10% of the industry market
share. Therefore, the total daily throughput for the Indian market isapproximately 2,000 tons, which means that QSW's current market share isapproximately 2, and since QSW's sales for the most recent fiscal year were246mn yen, the total market size is approximately \14,000mn. As mentioned
above, the average growth rate of the global market as a whole is about 10%,with the Asia-Pacific region leading the growth, so the Indian market is expected
to grow at a pace exceeding 10%.

７）India's Human Resources-Related IT Services Market
The Human ResourcesRelated IT Services Market
is Expected to Grow at an
Annual Rate ofApproximately 26%

According to TechSci Research, a U.S. research firm, the Indian market forhuman resources-related IT services was worth $344mn in 2023 and is
expected to grow at a CAGR of 26.2% until 2029. This is largely due to the factthat Indian companies are recognizing the importance of IT for humanresource-related administrative tasks and are working on IT for more and moreadministrative tasks. Another factor supporting the promotion of IT is the factthat the regulations set by states in India differ greatly from state to state,making reporting to state governments extremely complex.

Akal Information's Peers
are Also Experiencing
Rapid Sales Growth

Akal Information Systems, a subsidiary of Elan, does not disclose its results
publicly, but its peers Allsec Technologies Ltd (Bombay 532633) and Greytip
Software Pvt Ltd (unlisted) have had sales growth rates in the neighborhood ofor exceeding 20% for the last three years.

25

ELAN | 6099 (TSE Prime)
7. Competitive Strategy Analysis
Strategy to Concentrate on“CS Set” BusinessMichael Porter's “Strategy of Competition” is classified as positioning theory. Itemphasizes “how to position your company to gain an advantage within yourindustry”. Porter classifies competitive strategies into differentiation,
concentration and cost leadership. Elan's strategy is to concentrate on the “CSSet” business, for example, with limited participation in peripheral areas. It does
not participate in price-cutting competition but responds by upgrading its
products and services.

Avoid Price Competition
with Value-Added Strategies“CS Sets” are composed of items necessary for hospitalization and residentialcare, such as clothing and towels. The products included in the set are notunique and are a combination of existing products, making them easy for othercompanies in the same industry to imitate. In fact, one or two companies enter
the market each year and there are about 30 competitors in the “CS Set”
market. While some competitors offer services at reduced prices, Elan respondsby increasing the added value of its services. In addition, Elan has establisheda win-win-win relationship, benefiting not only users and their families, but also
hospitals and geriatric healthcare facilities, as well as linen suppliers and others.
Pioneer in the
Hospitalization Set
Business, Overwhelmingly
Leading Other Latecomers

Elan was the first to systematically develop the hospitalization set as a business,
and as a pioneer, it leads its latecomers by far. The following factors are the key
to its competitive advantage: (1) Know-How, (2) Business Model and (3)Positioning. The company has particularly built an even higher barrier to entry
through its stock of Know-How and its Positioning in the industry.
① Know-How
Determination of profitability line, explanation and operation of the nursing andlong-term care field, operation of services in conformity with administrative
guidance and billing and collection operations.
② Business Model
Coexistence and co-prosperity model that leverages existing business
relationships as is.
③ Positioning
Open positioning or not belonging to a specific family.

26

ELAN | 6099 (TSE Prime)
Chart12 . Strategy Group Map in the Hospitalization Support Set Industry

Source: ELAN Integrated Report “ELAN REPORT 2023” (November 24, 2023)

Expansion of “CS Set” with
Creation of New Pillars inJapan & Overseas are THE
3 Pillars for the Future

Under the “Medium-Term Management Vision (2023-2025)” started in FY2023,
the company aims for net sales of \68bn, operating income of \7bn and amarket development rate of 26%. In the mid to long-term, we expect a market
development rate of 30% and an operating profit margin of 10%. The threepillars of the vision are “expansion of “CS Set’s”, “Creation of new pillars inJapan” and the “Creation of pillars overseas”.

Focus on “CS Set” Sales toLarge Hospitals with Large
Potential for Development

In particular, the company is aggressively marketing to hospitals with more than
50 beds, where there is great room for development. The facility's contract
retention rate is high with a customer satisfaction rate of over 96% for fiveconsecutive years.

Also Promote Sales of “CSSet” R and “CS Set” LC

The company is switching from paper-based to the use of tablets for theoperation of “CS Set’s” from application for use to issuance of invoices and is
working on digitalization. In addition, the company has proposed “CS Set” R (aservice that provides a d va n c e p a y m e n t f o r h o s p i t a l i z a t i o n a n d
n u r s i n g c a r e e x p e n s e s ) and “CS Set’s” LC (a s e r v i c e t h a tcompensates for damage accidents during hospitalization andr e s i d e n t i a l c a r e ) . I n FY12/2023, “CS Set” R was introduced to 22 of 81
facilities (27.2%), and “CS Set” LC to 15 of 69 facilities (21.7%), a net increase.
(21.7%).

27

ELAN | 6099 (TSE Prime)
Plans to Commercialize
Home Set’s & Promote theIntroduction of Original
Patient Garments

As a new business, the company aims to commercialize the home set. Utilizing
customer contacts with more than 420,000 monthly “CS Set” users and theirfamilies, the company is developing a business that solves problems in all
directions from post-discharge to re-hospitalization. Since the medical
treatment environment changes drastically for about four weeks immediately
after discharge from the hospital, placing a heavy burden on users and theirfamilies, the company will provide comprehensive support services for problems
that occur sequentially during the period until the patients become accustomed
to life at home. In addition, the company has developed an original patient
gown called “lifte” and aims to introduce it to more than 200 facilities by 2024.

Overseas Investment
Destination Industries are
Not Limited to Linen
Leasing-Related Industries

Overseas, in addition to two hospital linen leasing companies in Vietnam and alinen leasing company in India, the company has invested in a hospital-related
product e-commerce platform operator and a human resource-related IT
services company. The company is also investing in a hospital-related products
e-commerce platform operator and a human resources-related IT services
company.

28

ELAN | 6099 (TSE Prime)
8. ROE Analysis and Management with the Costof Capital and Stock Price in Mind
Elan is a Highly Profitable
Company

Elan's ROE level is high, which is well above its cost of equity. Therefore, Elan's
management can be considered highly profitable.

ROE Can be Broken Down
into 3 Factors

ROE is net income divided by equity capital (average of beginning and end of
period). It indicates how much profit is generated by the company's equity
attributable to shareholders. According to the DuPont analysis, ROE can be
broken down into the following three factors. The following, equity capital andtotal assets are all averages at the beginning and end of the period.
ROE = Net income to sales (net income/sales) x Total asset turnover(sales/total assets) x Financial leverage (total assets/equity capital)
Net profit margin is an indicator of profitability, total asset turnover is anindicator of efficiency and financial leverage is an indicator of safety. It is useful
to increase ROE, where companies can (1) increase profit margin, (2) increase
sales or (3) increase financial leverage.

Elan's ROE Increase is Due
to Higher Net Profit Margin

Elan's ROE for the year ending December 31, 2023 is high at 25.4%. The
company has a net profit margin of 6.1%, an asset turnover of 2.4 times, anda financial leverage of 1.8 times. TSE Prime (excluding financials) has anaverage ROE of 9.6%, return on sales of 4.8%, asset turnover of 0.5 times andfinancial leverage of 3.1 times in FY2022. Relatively speaking, Elan's total asset
turnover is high. Thus, the main reason for the long-term increase in Elan's ROE
is the increase in the net profit margin on sales.

Chart 13. Elan's ROE Dupont Analysis
ROE

Profit to Net Sales

Total Asset Turnover

Financial Leverage

（FY)

(%)

(%)

(Times)(Times)

2013

35.9

4.1

3.0

2.9

2014

17.7

3.5

2.5

2.0

2015

15.9

4.0

2.2

1.8

2016

18.6

4.4

2.4

1.8

2017

20.5

4.3

2.6

1.8

2018

22.3

4.7

2.6

1.8

2019

21.3

4.6

2.5

1.8

2020

25.8

5.6

2.5

1.9

2021

27.9

6.0

2.5

1.9

2022

25.3

5.7

2.4

1.8

2023

25.4

6.1

2.4

1.8

Source: QUICK FactSet

29

ELAN | 6099 (TSE Prime)
Elan Estimates Cost of
Equity at 7.7%

The cost of equity is the expected return demanded by shareholders andinvestors. Elan estimates the cost of equity at 7.7%. This is based on the
Capital Asset Pricing Model (CAPM), proposed by Sharpe and Lintner, inwhich the cost of equity is the “risk-free interest rate + β × market risk
premium”.

Beta is the Sensitivity of the
Subject Company's Stock
Price to the Overall Market

Beta (beta) is the sensitivity of the stock price of the target company to theoverall market; a beta of 1 means that the market and the stock price ofthe target company move similarly; a beta greater than 1 means that thevolatility of the stock price of the target company is greater. The ma rket risk
premium is the additional return sought for the amount of risk in the stock.

Equity Spreads are Above
Shareholder Return
Expectations but Trending
Lower

Since the company's ROE is 25.4%, the equity spread, the difference between
ROE and cost of shareholders' equity, is 17.8%, generating a profit that exceeds
shareholders' return expectations. On the other hand, over the past five years,
the equity spread, which had been on the rise, has been on the decline since
FY12/2022 due to lower profitability (lower ROE) and higher beta (higher costof shareholders' equity) caused by delays in passing on higher purchase prices.

Three Measures are Set
Forth

The company's future actions include (1) making growth investments to achievesustainable growth and increase profitability and ROE, (2) reducing the cost ofcapital through enhanced information disclosure, proactive investor relations
activities, sustainability management and strengthened governance and finally,(3) increasing the equity spread through each of these measures to increase
corporate value. The company's goals are as follows.

Aiming for 26% ROE in theMedium Term

The medium-term vision calls for ROE of 26% in FY12/2025 (25.4% in
FY12/2023) and payout ratio of 30% (31.2% in FY12/2023). Dividends havebeen increasing for 10 consecutive years, from \0.3 per share (DPS) in
FY12/2014 to \14 per share (DPS) in FY12/2024.

Chart 14. Elan's Cost of Capital and ROE Based on CAPM
EquityCost ofRisk-Free

Year

ROE

SpreadEquityRate

ΒPremium

Risk

FY 2019

21.4%

17.5%

3.9%

-0.03%

0.62

6.27%

FY 2020

25.8%

20.2%

5.6%

0.02%

1.02

5.45%

FY 2021

27.9%

22.2%

5.7%

0.07%

1.03

5.49%

FY 2022

25.3%

18.7%

6.6%

0.41%

1.11

5.62%

FY 2023

25.4%

17.8%

7.7%

0.62%

1.29

5.45%

Source: Elan30

ELAN | 6099 (TSE Prime)
9. Current Performance Trends
１）FY12/2024 1Q Results
Increase in Sales andIncome Due to Acquisitionof New Facilities andIncrease in Number ofUsers of “CS Set’s” etc.

Elan's performance in the first quarter of FY12/2024 was as follows: net salesof \11,487mn (+16.5% YoY), operating income of \1,059mn (+6.8% YoY) andhigher sales and profits. The increase in both sales and income was due to theacquisition of new “CS Set” facilities, an increase in the number of users and a
price pass-through of higher procurement costs.

Operating Margin Declined
Due to M&A-RelatedExpenses in Vietnam andHigher Employee Salaries
Number of Facilities with“CS Set’s” reached 2,360

Although gross profit margin increased due to progress in price pass-through,SG&A expenses increased due to M&A-related costs in Vietnam and salary
increases for employees, resulting in a decline in operating profit margin.
The number of facilities with new contracts and the number of facilities withcancelled contracts during the first quarter totaled 71 and 31, respectively,
bringing the total number of “CS Set” installations to 2,360 facilities at the endof the first quarter, up 40 facilities from the end of the previous consolidated
fiscal year.

31

ELAN | 6099 (TSE Prime)
Chart 15. Quarterly Business Performance Trends (\ mn)
FY End

12/22

12/23

12/24

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Net Sales

8,793

8,811

9,162

9,499

9,857

9,924

10,645

11,000

11,487

(YoY)

16.9%

14.5%

13.6%

13.7%

12.1%

12.6%

16.2%

15.8%

16.5%

Cost Of Sales

6,523

6,626

6,962

7,127

7,467

7,603

8,187

8,417

8,666

Gross Profit

2,270

2,185

2,200

2,372

2,390

2,322

2,458

2,581

2,821

(Gross Profit Margin)

25.8%

24.8%

24.0%

25.0%

24.2%

23.4%

23.1%

23.5%

24.6%

SG&A Expenses

1,356

1,385

1,352

1,543

1,397

1,513

1,533

1,643

1,762

Operating Profit

914

800

848

829

992

809

925

939

1,059

(Operating Profit Margin)

10.4%

9.1%

9.3%

8.7%

10.1%

8.2%

8.7%

8.5%

9.2%

Non-Operating Income

4

7

7

2

5

7

4

1

Recurring Profit

918

808

855

831

997

816

929

940

1,066

(Recurring Profit Margin)

10.4%

9.2%

9.3%

8.7%

10.1%

8.2%

8.7%

8.5%

9.3%

0

0

0

-377

0

0

0

0

918

808

855

454

997

816

929

940

Total Income Taxes

291

257

269

136

302

258

293

310

339

(Corporate Tax Rate)

31.7%

31.8%

31.5%

30.0%

30.3%

31.6%

31.5%

33.0%

31.8%

Net Profit

627

551

585

320

696

557

636

630

727

Net Profit Margin

7.1%

6.3%

6.4%

3.4%

7.1%

5.6%

6.0%

5.7%

6.3%

(Loss)

Extraordinary
Income/Loss
Income Before Income
Taxes

7

0

1,066

Source: Company Data.

32

ELAN | 6099 (TSE Prime)２）Forecast for FY12/2024
Forecasting Increased Sales& Profit for FY12/24 Also

For FY12/2024, the company forecasts sales of \50.0bn (+20.7% YoY),
operating profit of \4.2bn (+14.6% YoY), recurring profit of \4.2bn (+14.9%
YoY) and net income of \2.8bn (+13.1% YoY). The company plans to further
develop the number of facilities that use “CS Set’s” from its 28 sales offices
nationwide, and by enhancing the added value of its services, secure acompetitive advantage over competitors and promote an increase in the numberof new facilities and the number of users. In addition, the company plans toincrease the profitability of the entire group by improving operational efficiency
and productivity through further promotion of various types of systemization.

Sales Growth Pace is
Expected to Accelerate in
the Second Half of the YearFor 1H FY12/2024, the company expects sales to increase 14.3% YoY, butearnings are expected to decline. In 2H FY12/2024, sales are expected toincrease at an accelerated pace to +20.7% YoY, due to an improved operating
environment for “CS Set’s”, an increase in the utilization rate of hospital beds,
and progress in price shifting. This is due to the expected improvement in the“CS Set” operating environment, increase in bed utilization and progress in priceshifting in the second half of the year.

33

ELAN | 6099 (TSE Prime)
10.

Valuation１）Undervalued Compared to Past Performance
PER Down Despite Higher
ROE & Dividend Payout
Ratio

Elan's share price rose from 2017 to 2019, along with its PER, on the back ofbusiness growth and increased shareholder returns. In 2020, PER rose to over
60x on expectations of increased demand for hospitalization sets due to the
COVID-19 pandemic, reaching a high of \1,736 in January 2021. Since then,the share price has declined as the COVID-19 pandemic subsided and PER is
currently below 20x. PER is lower now than it was in 2017-2019, before the
COVID-19 pandemic, despite higher ROE and dividend payout ratios and thecompany is now undervalued compared to past performance.

Chart13. Elan's Share Price and Key Indicators
12/17

12/18

12/19

12/20

12/21

12/22

12/23

LTM

Share Price (\)

355

674

805

1,499

1,110

938

1,116

827

Net Profit (\ mn)

658

865

990

1,446

1,906

2,083

2,519

2,550

PER (Times)

32.2

47.2

49.3

62.8

35.2

27.2

19.6

17.5

ROE

20.5%

22.3%

21.3%

25.8%

27.9%

25.3%

25.4%

25.8%

18.2%

24.5%

27.6%

29.3%

28.5%

31.9%

31.2%

-

Dividend Payout
Ratio

Source: Prepared by Strategy Advisors. Based on Company Data.

２）Undervalued Compared to Domestic Companies
Elan is a Highly Profitable
Company

As Tokai Corp. is the only listed peer in Japan, Elan ranks fifth in terms of market
capitalization when compared to other medical and welfare-related companies
in the category. Hogy Medical (TSE 3593) is a leading manufacturer of medical
non-woven fabrics, sterile packaging materials and various medical kit products.
Compared to these companies, Elan's ROE is high (3-8x), but its PER is below
or about the same level, making it undervalued. Only Elan's share price has
declined over the past year, making it even more undervalued.

34

ELAN | 6099 (TSE Prime)
Chart14. Valuations of the Top 10 Medical and Welfare Supplies Companies
MarketDescription

Capitalization(\ bn)

Stock Price
Net Profit(\ bn)

ROE

PER

PBR

Percentage(Times)(Times)change(Past Year)

1

Paramount Bed HD

160.9

10.6

8.0%

13.8

1.1

11.7%

2

Hogy Medical

99.2

2.8

3.3%

28.8

1.1

20.7%

3

Nagaileben

81.2

3.2

7.6%

23.3

1.7

8.9%

4

Tokai

73.3

5.8

6.9%

12.2

0.8

8.0%

5

ELAN

50.1

2.5

25.4%

16.7

6.2

-4.9%

6

France Bed HD

44.1

3.1

8.2%

13.2

1.2

6.2%

7

Nippon Care Supply

30.6

1.6

9.7%

16.2

1.8

19.0%

8

KOWA

6.2

0.7

29.3%

9.3

2.6

41.6%

9

Kawamoto

4.7

0.6

5.9%

9.9

0.6

-17.2%

10

PLATZ

3.0

0.2

7.2%

24.1

0.8

20.4%

Note: As of May 31, 2024; PER is the FactSet forecast for the current term. PER’s for companies below France Bed Holdings arecompany estimates.
Source: Prepared by Strategy Advisors from QUICK FactSet data.

３）Undervalued Compared to Foreign Companies
Elan is Less Expensive Than
UniFirst & K-Bro Linen

As mentioned earlier, Elan has the second highest ROE, mainly due to its hightotal asset turnover. However, UniFirst Corp, which has a much lower ROE, has
a PER of 31.8, higher than Elan's 26.8. K-Bro Linen, which also has a much
lower ROE than Elan, has a PER of 20.0, which is close to Elan's. Compared tothese companies, Elan's share price is undervalued.

35

ELAN | 6099 (TSE Prime)
Chart15. Key Indicators for the Most Recent Fiscal Year for Representative Firms Involved in Linen
Leasing to Hospitals (Restated)
Key Indicators for the Most Recent Fiscal Year
CompanyCountry

Net Sales

3 Year(\ mn)

CAGR

Net

Total

Income

Asset

Ratio

TurnoverFinancial
Leverage

3-YearROE

Average

PER

ROE

Cintas Corp.

US

1,322,365

7.6%

15.2%

1.1

2.3

37.4%

34.9%

35.8

Elis SAFrance732,598

15.4%

6.1%

0.5

2.7

7.8%

6.2%

16.8

Vestis Corp.

US423,793

3.3%

7.5%

0.9

2.0

13.3%

8.4%

11.9

UniFirst Corp.

US334,957

7.4%

4.6%

0.9

1.3

5.3%

6.3%

31.8

Japan

174,869

4.6%

3.1%

1.9

2.0

12.1%

9.2%

-

Tokai

Japan

138,222

5.4%

4.2%

1.2

1.3

6.9%

7.4%

13.3

Servizi Italia

Italy

48,946

6.2%

1.9%

0.7

2.9

4.0%

4.4%

9.0

ELAN

Japan

41,426

16.7%

6.1%

5.4

0.8

25.4%

26.1%

26.8

K-Bro Linen

Canada35,297

17.7%

5.5%

0.9

2.0

10.0%

5.5%

20.0

Koyama Corp.

Japan

30,800

-

7.9%

1.0

1.3

10.1%

11.0%

-

Japan

26,900

-

1.1%

1.5

2.5

4.0%

9.1%

-

YamashitaJapan

26,800

-

-

-

-

-

-

-

AmenityJapan

23,600

-

-

-

-

-

-

-

Japan

23,200

-

-

-

-

-

-

-

NIC

Japan

8,362

3.2%

-

-

-

-

-

-

Benex

Japan

6,600

0.5%

-

-

-

-

-

-

Watakyu Seimoa
Corp.

Shibahashi
ShokaiKoyamaShokai*Calculated at 150 Yen to the US Dollar, 170 Yyen to the Euro and 110 Yen to the Canadian Dollar.
Source: Prepared by Strategy Advisors. Based on Company Data.

36

ELAN | 6099 (TSE Prime)
11.

Sustainability

Women on Board of
Directors in 2020

Elan has an audit committee system. In February 2020, the company initiatedan executive officer system and in March 2020, the company introduced an audit
committee system. In the same year, a female director was appointed to theboard. Three of the eight directors are independent outside directors and all
three are audit committee members (including two outside directors).

Outside Director Ratio
is 37.5%

According to Principle 4-8 of the Corporate Governance Code, companies listedon the prime market are required to appoint at least one-third and half of their
independent outside directors, which in the case of Elan, is met with an outside
director ratio of 37.5%. In addition, the company has established a Nomination
and Compensation Committee as a voluntary advisory body, the main membersof which are independent outside directors.

Goal is to Have 5 Female
Board Members by 2025

There is one female director, and the goal is to have five female directors by
2025. This target exceeds the standard required by the TSE. The TSE has set atarget of appointing at least one female director by 2025 and at least 30% by
2030 for companies listed on the prime market. In addition to directors,
corporate auditors and executive officers, female officers may include executive
officers or equivalent positions.

Chart 19. Elan's Sustainability Roadmap

Source: Elan, “Financial Results for the Year Ended December 31, 2023,” February 26, 2024.

37

ELAN | 6099 (TSE Prime)
Sustainability Committee(Elan Mirai Committee)
Established

Elan has established the Sustainability Committee (Elan Mirai Committee) inorder to achieve both “resolution of social issues” and “corporate and human
growth” through business by promoting sustainability management. In order tocontribute to the “realization of an enriched living environment,” the following
four materialities have been identified as important issues that should beprioritized, and the initiatives, indicators and targets for the materialities aredisclosed in the December 2023 Integrated Report “ELAN REPORT 2023”.
1.

Support the promotion of health and the well-being of all

2.

Stable service provision and reduced environmental impact

3.

Bringing smiles to our own faces and to those of others we come incontact with.

4.

Build and maintain a sound and sustainable business foundation

Climate Change-Related
Disclosures In-Line with
TCFD

With regard to climate change, the company discloses information in line withthe framework recommended by the Climate-related Financial Disclosure Task
Force (TCFD). The Climate Change (TCFD) Subcommittee has been established
as a subordinate body of the Sustainability Committee (Elan Mirai Committee),which is chaired by the President and COO.

Calculated GHG Emissions
in 2022

GHG emissions were calculated for the first time in FY12/2022. Scope 1 refers
to direct emissions from the company's own fuel use and industrial processes.
Scope 2 refers to indirect emissions from the use of energy purchased by thecompany, such as electricity and heat. Specifically, the sources of emissions areelectricity, heat, cold water and steam purchased and used by the company.

Aim for Virtually Zero
Emissions by 2050 for
Scope 1 and 2

Scope 3 refers to the emissions of other companies, other than Scope 1 and 2;
related to Elan's business activities such as raw material procurement, logistics,
and sales, etc. Scope 3 accounts for about 99% of Elan's GHG emissions, andthey will strive to reduce GHG emissions through continuous efforts toencourage suppliers to reduce their GHG emissions. For Scope 1 and 2, Elan
aims to achieve virtually zero emissions by 2050.

Continuing to Increase theAmount of Human
Investment to Improve
Corporate Value

In order to enhance corporate value, the key themes of human capitalmanagement are “maximizing the value of human resources,” “increasing
diversity,” “reforming work styles and promoting women's activities,” “promoting
health management,” “compliance and ethics” and “reflection in management
strategies”. And the amount of human capital investment will be \86.91mn in
FY12/2010 and \156.62mn in FY12/2011, with a target of \115.68bn in
FY12/2012.

50% of Male Employees
Take Childcare Leave

Elan's female management ratio is 9.9% (consolidated company), with targetsof 20% in FY12/2024 and 25% in FY12/2025. The male childcare leave
utilization rate is 50% (Elan unconsolidated), with targets of 55% in FY12/2024
and 60% in FY12/2025. The wage gap between men and women is 56.4%(71.6% for full-time workers and 35.6% for part-time/fixed-term workers).

38

ELAN | 6099 (TSE Prime)
Ratio of Female Managers
is on Par with the Averageof Listed Companies

According to a survey by Tokyo Shoko Research, of the 2,456 companies withfiscal year ending March 31, 2023, the average ratio of female managers is 9.4%
(1,706 of the companies listed). The average gender wage gap is 71.7% (1,677
companies listed), with women earning approximately 30% less than men.
Elan's ratio of female managers is on par with the average for listed companies,
but the gender wage gap is 15.3 percentage points larger.

39

ELAN | 6099 (TSE Prime)
12.

Risk Factors

Although there are no major risks to watch at this point, the following two risks
can be identified as possibly prevent the company's performance from growing
as much as planned.
① Further increases in the number of new entrants into the hospitalization set
business and intensified price competition may become obstacles toexpanding Elan's customer base. However, the hospitalization set business
requires the accumulation of know-how, such as the need for careful
explanations to on-site personnel at hospitals and nursing care facilities, andthe barriers to entry are higher than they appear on the surface.
② In markets such as India and Vietnam, which are new challenges for Elan,
there is a possibility that a situation that cannot be assumed from thecommon sense of the Japanese market will arise and have a negative impact
on Elan.

40

ELAN | 6099 (TSE Prime)
Chart 20. Consolidated Statements of Income(\ mn)

12/17

12/18

12/19

12/20

12/21

12/22

12/23

12/24
CoE

Net Sales

15,467

18,58521,51926,056

31,63636,26541,426

Cost of Sales

11,46913,75816,045

19,49323,75927,23831,674Gross Profit

3,998

4,827

5,473

6,564

7,877

9,027

9,751

Gross Profit Margin

25.8%

26.0%

25.4%

25.2%

24.9%

24.9%

23.5%

SG&A Expenses

3,085

3,548

3,981

4,495

5,078

5,636

6,086

Operating Profit

913

1,279

1,492

2,068

2,799

3,391

3,665

4,200

Operating Profit Margin

5.9%

6.9%

6.9%

7.9%

8.8%

9.4%

8.8%

8.4%

Non-Operating Income

12

4

14

82

26

28

33

2

0

1

0

2

1

0

Late Charges Income

-

-

7

17

16

14

11

Consulting Fee Income

3

-

-

-

-

4

4

Subsidy Income

1

1

3

0

3

1

6

Non-Operating Expenses

1

1

5

2

6

7

16

1

0

4

0

1

2

4

-

-

-

-

3

5

5

Ordinary Profit

924

1,282

1,501

2,148

2,819

3,412

3,682

4,230

Ordinary Profit Margin

6.0%

6.9%

7.0%

8.2%

8.9%

9.4%

8.9%

8.5%

27

0

0

0

0

-377

0

27

0

0

0

0

0

0

0

0

0

0

0

-377

0

Profit Before Income Taxes

951

1,282

1,501

2,148

2,819

3,035

3,682

Profit Before Tax Ratio

6.1%

6.9%

7.0%

8.2%

8.9%

8.4%

8.9%

Income Taxes

293

417

512

702

913

953

1,163

Income Taxes - Current

328

469

547

778

973

1,066

1,219

Deferred Income Taxes

-35

-51

-35

-76

-60

-114

-56

Profit

658

865

990

1,446

1,906

2,083

2,519

4.3%

4.7%

4.6%

5.5%

6.0%

5.7%

6.1%

Gain on Sale of Non-Current
AssetsLoss on Retirement of Noncurrent Assets
Loss on Investments in
Investment Partnerships

Extraordinary Income/Loss
Marginal Gain on Step
Acquisitions
Loss on Valuation of
Investment Securities

Net Profit Margin

50,000

5.7%

Source: Company Data.

41

ELAN | 6099 (TSE Prime)
Chart 16. Consolidated Balance Sheet(\ mn)

12/17

12/18

12/19

12/20

12/21

12/22

12/23

Cash and Deposits

2,147

3,057

3,472

4,498

5,632

6,036

5,489

Accounts receivable

3,409

3,658

4,476

5,044

5,848

7,105

8,622

Inventories

499

595

767

995

1,080

1,332

1,899

Deferred Tax Asset

110

157

0

0

0

0

0

Other

-239

-317

-388

-357

-430

-397

-503

5,926

7,150

8,327

10,18012,13014,076

15,507

Land

114

114

114

114

114

269

269

Other

180

188

198

203

227

292

271

Property, Plant and Equipment

294

302

312

317

341

561

540

Goodwill

166

127

88

49

10

0

0

Other

61

112

108

113

95

92

109

Intangible Assets

227

239

196

162

105

92

109

Investments and Other Assets

79

133

402

1,030

1,371

1,342

2,838

Total Non-Current Assets

601

674

909

1,509

1,818

1,996

3,486

Total Assets

6,527

7,824

9,236

11,68913,94816,072

18,993

Accounts payable - trade

2,340

2,746

3,340

4,158

4,868

5,568

6,427

Accounts payable - other

335

369

397

564

617

622

700

Income Taxes Payable

250

390

425

712

847

730

859

Other

105

57

49

68

85

92

103

3,030

3,562

4,211

5,502

6,417

7,012

8,089

Provision for share awards

-

-

-

-

14

20

28

Provision for share awards for directors

-

-

-

-

31

50

63

Other

0

0

4

3

2

1

0

Non-current liabilities

0

0

4

3

47

71

90

Total Liabilities

3,030

3,562

4,215

5,505

6,464

7,083

8,179

Capital & Surplus

1,102

1,116

1,116

1,116

1,116

1,116

1,116

Retained Earnings

2,396

3,142

3,919

5,093

6,575

8,112

9,964

0

0

0

0

-197

-194

-194

Shareholders' Equity

3,497

4,258

5,036

6,210

7,494

9,035

10,887

Total Net Assets

3,497

4,263

5,021

6,184

7,484

8,990

10,814

Total Liabilities and Net Assets

6,527

7,824

9,236

11,68913,94816,072

18,993Current Assets

Current Liabilities

Treasury shares

Source: Company Data.

42

ELAN | 6099 (TSE Prime)
Chart 2217.

Consolidated Operating Cash Flows(\ mn)

12/17

12/18

12/19

12/20

12/21

12/22

12/23

Profit Before Income Taxes

951

1,282

1,501

2,148

2,819

3,035

3,682

Depreciation

79

99

110

117

120

144

188

0

0

0

0

0

377

8

60

87

120

24

75

-44

102

Working Capital

-394

60

-445

13

-162

-728

-1,069

Income Taxes Paid

-346

-376

-560

-563

-916

-1,082-1,098Other Operating Cash Flows

-32

39

53

209

170

-121

-32

Cash Flows from Operating Activities

318

1,191

779

1,948

2,106

1,581

1,781

0

-68

-71

-550

-268

-211

-1,475

-74

-102

-71

-87

-78

-347

-195

-161

-

-

-

-

-

-

(Security) Deposit

-8

-8

-12

-14

-11

-68

-9

Other

5

2

2

3

-1

1

18

-238

-176

-152

-648

-358

-625

-1,661

Issuance of Shares

7

16

0

0

0

3

0

Redemption and Cancellation of Shares

0

0

0

0

-197

0

0

-89

-119

-212

-272

-416

-555

-666

0

-1

-1

-2

-1

-1

-1

Cash Flows from Financing Activities

-82

-104

-213

-274

-614

-553

-667

Free Cash Flow

80

1,015

627

1,300

1,748

956

120

Loss (Gain) on Valuation of Investment
Securities
Increase (Decrease) in Allowance for
Doubtful Accounts

Purchase of Investment Securities
Acquisition of Tangible and Intangible Fixed
AssetsAcquisition of Subsidiary Shares

Cash Flows from Investing Activities

Dividends Paid
Other Financing Cash Flows

Source: Company Data.

43

ELAN | 6099 (TSE Prime)
Chart 23. Stock Indicators, ROE and KPIs
12/17

12/18

12/19

12/20

12/21

12/22

12/23

12/24
CoE

EPS (Yen)

44.2

28.8

32.7

23.9

31.5

34.5

41.7

BPS (Yen)

233.9

140.1

165.7

102.1

123.8

148.7

178.9

Dividend Per Share (Yen)

8.0

14.0

9.0

14.0

9.0

11.0

13.0

Dividend Payout Ratio

18.2

24.5

27.6

29.3

28.5

31.9

31.2

Closing Price (Yen)

1,418

1,347

1,610

1,499

1,110

938

1,116

PER (Times)

32.2

47.2

49.3

62.8

35.2

27.2

26.8

PBR (Times)

6.1

9.6

9.7

14.7

9.0

6.3

6.2

14,95015,15030,30030,30060,60060,60060,600

162

220

440

469

140,969

138,769

138,795

14,95015,15030,30030,30060,45960,46160,461Market Capitalization (\ mn)

21,19940,814

48,782

90,83967,11056,71367,475

Shareholders' Equity Ratio

53.6

54.5

54.4

52.9

53.7

55.9

56.9

Interest-Bearing Debt

0.0

0.0

0.0

0.0

0.0

0.0

0.0

D/E Ratio

-0.6

-0.7

-0.7

-0.7

-0.8

-0.7

-0.5

19,05237,75745,31086,341

61,47850,677

61,986

EBITDA (\ mn)

992

1,378

1,602

2,185

2,919

3,535

3,853

4,388

EV/EBITDA Multiple

19.2

27.4

28.3

39.5

21.1

14.3

16.1

10.9

ROE

20.5

22.3

21.3

25.8

27.9

25.3

25.4

ROIC (Capital Invested)

-

22.2

21.1

24.4

27.6

29.6

25.3

ROIC (Business Assets)

-

103.7

124.0

208.7

329.7

402.0

288.7

Number Of Employees

232

242

276

290

320

349

378

Shares Issue & Outstanding (tn)Number Of Treasury Stock(Shares)

47.1

14.0

18.7

Number Of Shares of Treasury
Stock Excluded (Thousand
Shares)EV (Enterprise Value)

Note: Share price indices for FY3/24 are based on the closing price on March 22; balance sheet items are as of December 31,
2023.
Source: Company Data.

44

ELAN | 6099 (TSE Prime)
Disclaimer

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