S e c o n d M e d i u m - Te r mManagement Plan
－ FY2022 - FY2024 －Securities code: 3299 | February 14, 2022 | https://www.mugen-estate.co.jp/

Copyright© MUGEN ESTATE Co.,Ltd. All rights reserved.

Contents

1. Review of Implementation of First Medium-Term Management Plan

2

2. Basic Policies of Second Medium-Term Management Plan

9

3. Business Strategies

19

4. Strengthening the Management Base26

@ MUGEN ESTATE Co.,Ltd.

｜

1

1

Review of Implementationo f F i r s t M e d i u m - Te r mManagement Plan

Overview of First Medium -Term Management Plan
The Group has set out three management policies: Making products that support the business base, building networks
that support the revenue base and creating human resources and systems that support the management base. Under
these management policies, the Group will advance initiatives to diversify its revenue sources.
Making products that
support the business base１

Creating human resources
and systems that support
the management base

Building networks that
support the revenue base

Providing products that respond to environmental changes, meetsocial needs and please customers

２

３

４

Refurbishing properties held
４

Mastering products and services

Mastering the selling andbuying of properties

Mastering the selling and５buying of properties

Responding to diverse work
styles６

Further strengthening Group power@ MUGEN ESTATE Co.,Ltd.

｜3

Trends in Results
Results were strong until FY2017, but results declined in the last four years due to the external environment. Results were far below thetargets for the final year of the Medium-Term Management Plan.
In FY2021, net sales fell slightly from the previous year, but profit attributable to owners of parent rose to 1,294 yen (up 116.1％ year on year).

Trend in net sales(million yen)

Net sales

80,000Net sales (target in the Medium-Term Management Plan)
57,48860,00053,93145,70640,00020,00063,568

58,10039,67730,175
7,288

11,317

11,423

12,87761,00063,00034,85833,956FY20(Consolidated)

FY21(Consolidated)

20,830

0
FY09
FY10
FY11
(Non-consolidated) (Non-consolidated) (Non-consolidated)

FY12(Consolidated)

FY13(Consolidated)

FY14(Consolidated)

FY15(Consolidated)

FY16(Consolidated)

FY17(Consolidated)

FY18(Consolidated)

FY19(Consolidated)

The period of First Medium-Term Management Plan

Trend in Ordinary Income(million yen)

Ordinary income

Ordinary income (Medium-Term Management Plan target)

8,000
5,573

6,000

6,478
5,500

5,237

4,300

3,076

4,000
2,000

5,696

2,493

1,974
161

526

109

4,500
1,785

1,770

FY20
(Consolidated)

FY21(Consolidated)

382

0
FY09
FY10
FY11
(Non-consolidated) (Non-consolidated) (Non-consolidated)

FY12(Consolidated)

FY13(Consolidated)

FY14(Consolidated)

FY15(Consolidated)

FY16(Consolidated)

FY17(Consolidated)

FY18(Consolidated)

FY19(Consolidated)

The period of First Medium-Term Management Plan
@ MUGEN ESTATE Co.,Ltd.

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4

Equity Ratio and ROE
The equity ratio remained on an improving trend.
ROE declined due to a decrease in profit.
ROE

Equity ratio
Medium-Term Management Plan

Medium-Term Management Plan

Results

Results

20%

60%

16.3%
39.3%

42.4%
12.5%

36.1%

40%

32.9%

33.2%

36.0%

13.1%
11.7%

37.4%
10%

7.6%
5.6%

20%

2.7%

0%

0%
FY2018FY2019FY2020

FY2021FY2018FY2019FY2020

FY2021@ MUGEN ESTATE Co.,Ltd.

｜

5

Purchase & Resale BusinessNet sales and unit sales of investment type properties peaked in FY2017 and they have continued to fall since thendue to the tightening of financing conditions and real estate prices remaining high (polarization of prices).
Net sales and unit sales of residential type properties rose in FY2021 compared with the previous year.

Trend in net sales(million yen)

Investment type80,00060,00055,1209,937

Residential type61,143
8,939

9,141

40,00020,00050,63245,182

52,203

FY16 (Consolidated)

FY17 (Consolidated)

41,491

36,27731,712

31,6895,291
30,986

5,810
25,901

7,051
24,638

FY19 (Consolidated)

FY20 (Consolidated)

FY21 (Consolidated)

0
FY18 (Consolidated)

The period of First Medium-Term Management Plan

Trends in unit sales(property unit)

800
600
400
200

Investment type

588
347

Residential type

676
358

593
291

409
157

332

331

148

318

302

189

241

252

184

142

FY16 (Consolidated)

FY17 (Consolidated)

FY18 (Consolidated)

FY19 (Consolidated)

FY20 (Consolidated)

FY21 (Consolidated)

0

The period of First Medium-Term Management Plan
@ MUGEN ESTATE Co.,Ltd.

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6

Achievements in the First Medium -Term Management Plan
The Group achieved certain results from its business initiatives, under the three management policies, including thelaunch of new businesses, the expansion of revenue from outside parties, that is, from interior and exterior work andleasing, and recruiting.
Initiatives

Policy category

Products
Network

Launches of new businesses

Products

Network

Expanding sales channels through real estate information websites
for real estate agencies

Products

Network

Expanding revenue from outside parties (interior and exterior workand leasing)

Products

Network− Development business, real estate specified joint business, cloud funding

Acquiring a specialized construction business license and acondominiums management business license
Enhancement of financial soundness− An equity ratio of 30% or more

Relocating to Otemachi and recruiting high-quality humanresources
Promoting work style reform− Teleworking, staggered work schedules, maternity leave and child careleave systems, employment of people with disabilities

Changing the personnel evaluation system

Human resourcesa n d s ys t e m s

Making products that support thebusiness base
Building networks that support therevenue baseCreating human resources and systems
that support the management base

Human resources
and systems

Network

Human resources
and systems
Real Estate Specified

Human resources
and systems

Joint BusinessAll units offered in theMoving the head office
to Otemachi

Shibuya Kamiyama-cho project

Human resources
and systems@ MUGEN ESTATE Co.,Ltd.

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7

Challenges and Actions
Under the Second Medium-Term Management Plan, the Group will continue totake measures to achieve targets that have not been achieved.

Products
Network
Human resources
and systems

Challenge
Sales and profit targets that are
not achieved, a decrease in ROE, adecrease in inventory turnover

Policy category

Products

Generating revenue from new
businesses

Products

Reducing cost for refurbishment

Products

Improving customer satisfaction

Improving employee engagement

Products
Human resources
and systems

Cultivating human resources,developing the education system

Human resources
and systems

Increasing business efficiency,
using IT

Human resources
and systems

Network

Making products that support the business base
Building networks that support the revenue baseCreating human resources and systems
that support the management base

ActionsOpened five sales offices in FY2021 Expand residential-type properties, which are performingwell

Develop human resources and strengthen the sales force through sales of a large number ofsmall properties

Expand residential-type properties and increase turnover

Expand customers through activities of sales offices

Development Business: Increase projects by increasing purchases and strengthening thesupervisory systemReal Estate Specified Joint Business: Use cloud funding, earn recognition, and increase repeat
customers

Reduce delivery lead time by standardizing materialsExpand residential-type properties and gain cost advantages

Stabilize quality through the standardization of refurbishment workFormulate rules that reflect voices of customers. The Customer Satisfaction Promotion Office willtake the lead.



Gather statistics on and analyze information regarding retirement and recruitment

Consider ways to instill the new corporate philosophy among employeesStrengthen employees' sense of belonging through training for new employees and rank-specifictrainingExamine the use of systems and IT according to the operation flows of individual departments

Network@ MUGEN ESTATE Co.,Ltd.

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8

2

Basic Policies ofS e c o n d M e d i u m - Te r mManagement Plan

New Corporate Philosophy
MUGEN ESTATE Group has updated its corporate philosophy to unite the Group's strengths and dramatically jump
forward toward the realization of our new dream: achieving the growth and sustainability of our businesses over the
next 50 and 100 years.

「MUGEN」
Making Dreams Come True

Motto

The corporate motto of our group is an expression of our desire to help customers make their dream of buying a home come true.
By making customers' dreams come true, we also aim to achieve development as a company and realize the aspirations of our
stakeholders'.
The company name, MUGEN ESTATE, derives from the "MUGEN" in our corporate motto.

MissionValue

Creating new value in real estate and taking onchallenges to enrich the lives of all,making their dreams come true

Pursuing speed / Taking on challenges inexhaustibly /The linking of diverse talents / Looking ahead / Fulfilling our responsibilities@ MUGEN ESTATE Co.,Ltd.

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10

Management Environment
The growth trend in the used properties market will not change during the Second Medium-Term Management Plan (2022-2024).
Residential-type properties recovered to the pre-COVID level in 2021.
Demand for investment-type properties is expected to remain high due to the continuing monetary easing, although demand will bedifferent according to asset type.
Trend in the number of contracts concluded
External environment
for used condominiums in the Tokyo area

Prolonged low interest rates due to the continuation ofmonetary easingContinuing growth in the used properties market

Increase in investment in real estate in Japan from overseasExpansion of demand for environmentally friendly real estateExtension of the period of home loan deductions



Expanding needs for spacious homes in the suburbs due tothe ubiquitization of working from home

Uncertainty regarding political situations in Asia



Rising prices of materials for renovations and delays in their
supply

Financial institutions' tighter policies on loans

Internal environmentPromoting participation and advancement for diverse humanresources

New ways of working suited to new lifestyles



Meeting the listing criteria for the Prime Market

Emphasis on sustainability and ESG issues

Number of contracts concluded for used condominiums(Contract, unit)

Number of new condominiums supplied

60,00050,00044,49939,81240,00028,871
30,00033,63620,00010,000

0
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Sources: REINS (number of contracts concluded for used condominiums)
Real Estate Economic Institute Co., Ltd. (number of new condominiums supplied)@ MUGEN ESTATE Co.,Ltd.

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11

Positioning of Second Medium -Term Management Plan
The Group backcast to formulate the Second Medium-Term Management Plan based on its vision of itself in ten years.
In the period of the plan, the Group will strive to expand its core business and strengthen growth businesses.
S e c o n d M e d i u m - Te r m M a n a g e m e n t P l a n➡ Making the trunk thicker
Strengthening growth businesses (Development
Business, Real Estate Specified Joint Business)➡ Growing branches and leaves

Preparing to expand businessNet sales
Operatingincome53.2

5.0

billion yen

billion yen

Vision of theGroup in ten
years (FY2030)

Increasing revenue in the core business (Purchase &Resale Business)

Final year targets(FY2024)

Positioning

FutureContinue to create new value in avariety of primarily residential-type
properties nationwide and provide
reliable quality and services tocustomers.

➡ Expanding trading volume, services, and trading areas

Developm ent
Bus ines sSpec if ied J oint
Bus ines s

Purchase and
Resale Business@ MUGEN ESTATE Co.,Ltd.

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12

Second Medium -Term Management Plan
Basic Policies and Priority measures
The Group considers sustainability and shareholder return as well as the expansion of business and the strengtheningof the foundation for management.
The Group will sustainably increase its corporate to stably meet the criteria for its listing on the Prime Market.
Basic Policies

4

1

Purchase and Resale Business

1 Development Business2

Leasing Business2 Specified Joint Business

Building networks toseize revenue
opportunities

Increasingorganizational
strength to drive
business growth

Advancing digitaltransformation,
which will support
business expansion
and growth(3) Expanding and cultivating
human resources(6) Improvement of capitalefficiency(4) Strengthening
governance(5) DX Strategy(7) Increasing shareholder
returns

Enhancing governancewith a view tosustainable growth (G)Strengthening theManagement Base3(2) Expanding and strengthening
growth businesses

Helping all people live better lives,
providing job satisfaction and promoting
the active participation of diverse people(S)2(1) Expanding the core business

Sustainability
Business activities
with environmental
considerations (E)Business Strategies

1

Strengthening therevenue base toexpand businesses

Priority measures

Stably meeting thelisting criteria for
the Prime Market
in the final year of
the Medium-Term
Management Plan

(increasing
tradable market
capitalization)@ MUGEN ESTATE Co.,Ltd.

｜

13

Second Medium -Term Management Plan
Consolidated Results Targets
The Group plans to achieve steady growth every year.
The Group plans to increase the operating income margin to 9.4％ in the final year.
(million yen)
FY2022

FY2021
results
Plan

FY2023

Ye a r o n ye a r
comparison

Plan

FY2024

Year on year
comparison

Plan

Year on year
comparison

33,956

38,847+14.4%

44,660+15.0%

53,224+19.2%

Real Estate Trading
Business

31,84236,648+15.1%

41,994+14.6%

49,797+18.6%

Real Estate Leasing
and Other Business

2,113

2,198

+4.0%

2,666

+21.3%

3,427+28.5%

2,342

2,624

+12.1%

3,514+33.9%

4,991+42.0%

6.9%

6.8%

-

7.9%

-

9.4%

-

1,770

2,066

+16.7%

2,919+41.3%

4,411+51.1%

5.2%

5.3%

-

6.5%

-

8.3%

-

1,276

1,314

+3.0%

1,856

+41.3%

2,805+51.1%

3.8%

3.4%

-

4.2%

-

5.3%

-

Net sales

Operating income
Ratio to net sales
Ordinary income
Ratio to net sales
ProfitRatio to net sales@ MUGEN ESTATE Co.,Ltd.

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14

Second Medium -Term Management Plan
Key Performance Indicators
The Group strives to balance growth, efficiency, soundness and shareholder returns, while considering conformance tothe Prime Market.

− CAGR (Net sales) 15.0% or more

− EPS growth rate 30.0% or more

− Dividend payout ratio 30% or more
− Purchase of treasury sales

GrowthpotentialEfficiency− ROE 11.0% or more

− Inventory turnover 1.5 times or higherKeymanagement
indicators in
the finalyear
ShareholdersReturns

Soundness− Equity ratio 30.0 - 35.0%− Net DE ratio 1.2 -1.5x

Make flexible decisions@ MUGEN ESTATE Co.,Ltd.

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15

Second Medium -Term Management Plan (by Business)
Consolidated Results Targets
The Group will expand the Purchase & Resale Business, its main business which is primarily residential-type
properties, and will strive to generate profit in its growth businesses, the Development Business and the Real EstateSpecified Joint Business.
(million yen)
FY2021
results

Purchase and
Resale BusinessLeasing
Business

Growt
h
Busin
esses
Others

Total

Development
Business
Specified Joint
BusinessPlan

FY2023

Year on year
comparison

Plan

FY2024

Year on year
comparison

Plan

Year on year
comparison

30,48731,012+1.7%

33,048+6.6%

37,830+14.5%

7,051

14,542+106.2%

18,144+24.8%

20,604+13.6%

23,436

16,470-29.7%

14,904-9.5%

17,226+15.6%Net sales

2,008

2,029

+1.0%

2,417

+19.1%

3,023+25.0%Net sales

－

2,968

－

4,368

+47.2%

6,000+37.3%Net sales

1,201*

2,409+100.5%

4,095+70.0%

5,300+29.4%Net sales

258

427

+65.5%

730+70.8%

1,071+46.6%Net sales

33,956

38,847+14.4%

44,660+15.0%

53,224+19.2%

Gross profit

5,788

6,675

+15.3%

7,841+17.5%

9,447+20.5%

Profit margin

17.0%

17.2%

-

17.6%

-

17.8%

-

Net sales
Main
stay
Busi
ness

FY2022

Residential
type properties
Investment
type properties*In segment information, net sales in the Real Estate Specified Joint Business are included in net sales in investment-type properties.

@ MUGEN ESTATE Co.,Ltd.

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16

Business Portfolio Policy
The Group will focus investment on growth businesses, the Development Business and Real Estate Specified Joint
Business, to expand them as new core revenue sources.
The Group will increase the ratio of growth businesses and build a healthy business portfolio.

Net sales
FY2021 results

Gross profit
FY2024 plan

33,956 million yen 53,224 million yen

FY2021 results

FY2024 plan

5,788 million yen

9,447 million yen

Leasing Business,
Development Business,
Specified Joint
Business and others

Leasing Business,
Development Business,
Specified Joint
Business and others

10%

Purchase and
Resale Business

90%

17%

29%
71%

38%

Purchase and
Resale Business

62%

83%

@ MUGEN ESTATE Co.,Ltd.

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17

Capital Policy
The Group will improve shareholder returns by investing in its core business and growth businesses while maintaininga high level of financial soundness.
Liquidity on hand

Investment plan
 Purchases in the core business andgrowth businesses
Actively make purchases in the Purchase & Resale
Business, Development Business, Real EstateSpecified Joint Business, and Leasing Business

Purchases

The period of First Medium-Term Management
Plan 65.8 billion yen
The period of Second Medium-Term Management
Plan 114.3 billion yen

 Investment in human resources
Actively recruit new graduates and mid-career
employees and invest in training and education forcore personnel
Number of
personnel

The period of Second MediumTerm Management Plan +71
peopleCash flows fromoperating activities

Shareholder returns

Financing (interestbearing debt)

Financial strategies

 Dividends
Change the consolidated payout ratio from around
20% to 30% or moreTotal
dividends

The period of Second Medium-Term Management
1.31 billion yen
The period of Second Medium-Term Management
Plan 1.81 billion yen*

Implement a financial strategy that increases theemphasis on capital efficiency while considering thebalance between shareholders' equity and interestbearing debt

 Purchase of treasury shares
Consider purchasing treasury shares to implement
flexible capital policies, while closely monitoring thetotal return ratio
Totalpurchaseamount

The period of Second Medium-Term Management
0.4 billion yen
Period of the Second Medium-Term Management
Plan Make flexible decisions

ROE

Final year of the First Medium-Term
Management Plan (FY2021) 5.6%
Final year of the Second MediumTerm Management Plan (FY2024)
11.0% or more**The planned figure is as of January 2022.

@ MUGEN ESTATE Co.,Ltd.

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18

3

Business Strategies

Priority Measures (1) Expansion of Core Businesses(i) Purchase and Resale Business
Increase purchases and sales of residential-type properties in Tokyo and three prefectures around Tokyo, aiming tobecome No. 1 in terms of the number of properties purchased.
Accelerate the opening of sales offices to increase sales in areas where demand is expected.

Change the sales portfolio• Aim to increase the percentage of sales from residential-type properties tomore than 50%

Breakdown of total sales in the Purchase & Resale Business
FY2021

FY2024 plan

Open sales offices focusing on specific areas• Start to profit at an early stage at five sales offices that opened in FY2021• Prepare to open new sales offices and strengthen relationships with realestate agencies
4 Opened in November

Akabane Office

3 Opened in November

Ogikubo Office30,487 million yen

Area in thenorth of
Akabane37,830 million yen

Residential type properties

23.1%

Area in the west of
Ikebukuro

Area in the westof Ogikubo

54.5%
Investment type properties

76.9%

Area in thenorth of
Kitasenju

1 Opened in September

Kitasenju Office

Head
Office45.5%

Funabashi and
Chiba area

Will expand
into the Jonanand Kanagawa
areas

5 Opened in December

Ikebukuro Office

2 Opened in October

Funabashi Office
Source: https://mapps.gsi.go.jp/maplibSearch.do#1@ MUGEN ESTATE Co.,Ltd.

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20

Priority Measures (1) Expansion of Core Businesses (ii) Leasing
Business
Accelerate the purchase of high-quality assets, enhance their value, diversify the owned properties andachieve stable revenue.
Accelerate the purchase ofhigh-quality assets

Enhancing value

Trends in assets to be held
over the medium to long term

Aim to gain and maintain stable lessees andimprove yields by enhancing the value of
properties and modifying rental prices（百万円）

30,00026,64725,000

Diversifying owned properties• Purchase assets other than rental
condominiums and office buildings and diversify
the portfolio of properties• Purchase properties that will be held for the
medium to long term to achieve stable revenue

Property whose value has been enhanced

21,25320,00014,557

15,00010,0005,000

6,824
2,175 3,010

0FY2019(result)

FY2020(result)

FY2021(result)

FY2022(plan)FY2023(plan)FY2024(plan)The period of Second Medium-Term Management Plan

@ MUGEN ESTATE Co.,Ltd.

｜

21

Priority Measures (2) Strengthening and Expanding Grow th
Businesses ( i) Development Business
Secure stable pipelines and develop exit strategies to expand revenue.

Promoting development inurban areas
Develop rental condominiums that meet local
needs. Sell them quickly and improve turnover.

Increasing purchases using
information from within theGroup
Share requirements for development sites within
the Group and increase purchases in new
businesses, such as in the condominiums for salebusiness.

Advancing development inconsideration of the SDGs
Introduce environmentally friendly materials,
products and facilities and renewable energy toprovide high-value-added properties

The Group provides the SIDEPLACE series of rental
condominiums for singles, primarily in urban areas.
(SIDEPLACE OSHIAGE completed in FY2021)@ MUGEN ESTATE Co.,Ltd.

｜

22

Priority Measures (2) Strengthening and Expanding Grow th
Businesses (ii) Real Estate Specified Joint Business
Increase revenue by expanding sales networks, increasing the scale of projects and diversifying projects.

Diversifying sales networks
As the business gains recognition, the Group will
expand its referral networks nationwide incooperation with financial institutions, accounting
firms, tax accountant firms, independent FPs, andothers.

Size of the specified joint realestate venture market（Projects）

300

200

Number of venture projects for professional investors(other than those in regional areas)
Number of venture projects for professional investors(regional)
Number of special enterprise projects (other thanthose in regional areas)
Number of special enterprise projects (regional)
Number of small specified joint real estate venture
projects (other than those in regional areas)
Number of small specified joint real estate venture
projects (regional)
Number of item (i) business projects (regional)

93

100

53

56

41

41

7
34

8
33

18
6
26

13
8
14
21

2013

2014

2015

2016

0

3

18 9
20

160
18

3

9
4
23 1

Diversifying projects

Expand the scale of projects primarily in urban
areas where asset values are high to respond toincreasing demand

Expand projects including operational assets tomeet customer needs for a more diverse portfolio

Shibuya Kamiyama-cho project

Yoyogi Project

295

220
8
24

Expanding the scale of projects

5

25
22
26 2
5
24 3

14

12 1
23
188

133
92

46
2017

2018

2019

2020

Source: Handbook on the Promotion of Use of Specified Joint Real Estate Ventures on
the website of the Ministry of Land, Infrastructure, Transport and Tourism (July 2021)@ MUGEN ESTATE Co.,Ltd.

｜

23

Purchase Plan
Actively purchase real estate to achieve sustainable growth in both core and growth businesses.
Purchases(million yen)

140,000
120,000
100,000
80,00060,00040,00020,0000

114,340
67,611

Total during the First
Medium-Term
Management Plan

Total during the Second
Medium-Term
Management PlanEmphasize the turnover period from purchase to saleAccelerate the purchase of residential-type properties
Emphasize the profitability of investment-type properties(million yen)

FY2022

FY2023

Actively purchase assets for these growth businesses
 Relaunch the fund business in FY2024

Investment type properties (rental condominiums and officeblocks; income properties)
Residential type properties (owned condominium units anddetached houses)

44,023

FY2024(million yen)

15,000Business Based on Real Estate Specified Joint Enterprise Act(Real estate for sale)
Development Business (land for development)

Leasing Business

Purchase properties that are in good locations andwhose value can be enhanced significantly(million yen)

Real estate for rent*

20,000※ Real estate for sale that has been transferred※ to non-current assets is not included.

11,40036,13360,000Purchases in each year of the Second
Medium-Term Management Plan

Purchases in each year of the Second
Medium-Term Management Plan

10,00043,782
14,956
Total during theFirst Medium-Term
Management Plan

15,000Purchases in each year of the Second
Medium-Term Management Plan

10,00048,25220,000035,976



80,00040,00034,341Development Business andSpecified Joint Business

Purchase and Resale Business

Purchases in each year of the Second Medium-Term Management Plan

Total during
the Second
Medium-Term
Management Plan

10,714

10,44012,172

14,000

FY2022

FY2023

14,9795,000
989

17,611
FY20240Total during theFirst Medium-Term
Management Plan

3,202
Total during
the Second
Medium-Term
Management Plan

3,600

4,800

3,000
723

1,240

1,240

FY2022

FY2023

FY20245,000
019,823
3,413

Total during theFirst Medium-Term
Management Plan

Total during
the Second
Medium-Term
Management Plan

7,733

6,696

FY2022

FY20235,394
FY2024@ MUGEN ESTATE Co.,Ltd.

｜24

Interior and Exterior Refurbishment Business, Property
Management Business, Brokerage BusinessRespond to the expansion of the Purchase & Resale Business.
Strive to strengthen organizational power and expand the customer base in each of the three businesses andmaximize the synergy between Group companies.
Interior and Exterior
Refurbishment Business

Property Management
Business

Brokerage Business

Maintaining and developing humanresources according to the number of orders

Maintaining personnel according to
the number of units held

Expanding the customer base

Secure human resources to respond to increasing
condominium units in the Purchase & Resale
Business and develop personnel who can handle
multiple tasks from process management to costmanagement and quality management.

Maintain the personnel that are necessary for
responding to the expansion of the Purchase &Resale Business and the Leasing Business andcultivate human resources.

Approach Chinese real estate agents and gain
potential customers via real estate investment sites

Strengthening interior andexterior work system

Maximize the number of units under management
per person and reduce the number of units whose
management is outsourced.

Promote proposal-based sales in fully custom
renovation services for individuals

Increasing the number of units undercontract management

Strengthening of digital marketing

Strengthen cooperation within the Group andincrease the number of units under contract
management

Strengthen digital marketing through thedissemination of information using social media andproduct listing ads

Find new subcontractors and control quality
thoroughly as the number of orders increases.

Strengthening materials buying power
Find new housing equipment manufacturers andwholesalers to minimize the impact of delays in the
production of housing materials due to COVID-19.

Strengthening PM and BM

Promoting proposal-based sales

Promotion of DX
Renovate the leasing management system toimprove operational efficiency per person@ MUGEN ESTATE Co.,Ltd.

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25

4

Strengthening theManagement BasePriority Measures (3) Recruitment, Expansion andDevelopment of Human Resources
Increase the organization's capabilities by promoting the recruitment and cultivation of human resources.
Aim to grow businesses under the organizational structure with more than 300 employees as the entire Group, by theend of the final year of the Medium-Term Management Plan.
The Group's personnel plan

Policy on recruitment and development(Persons)

350

314

Recruitment

Development• Promote recruitment, primarily of
new graduates• Training for new graduates andyoung employees

200• Also strive to recruit mid-career
personnel① Systematic training for new
employees

150• Increase sales staff and work site
supervision staff② Increase expertise and cultivate
professionals

300
250

243

267

287

100

• Management training for mid-level
employees

50− Enhance the management skillsof personnel

0
FY2021
results

FY2022plan

FY2023plan

FY2024plan

The period of Second Medium-Term Management Plan

• Introduce a training system forsales staff• Improving employee engagement@ MUGEN ESTATE Co.,Ltd.

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27

Priority Measures (4) Strengthening Governance
Undertake initiatives to strengthen corporate governance, including the active consideration of the balance between
members of the Board of Directors, the diversity of the members, and the size of the Board, and the analysis andevaluation of the effectiveness of the Board.
2014-2020
OutsideDirectors＜2017＞
 Two directors
assumed office＜2014＞
 One director
assumed office＜2021＞
 Nomination andCompensation
Committee
establishedNon-mandatory
a d vi s o r ycommittee

Remunerations ys t e m

S ys t e m , p o l i c y

2022-＜2022＞
 Officers' remuneration system will be changed
 Restricted stock compensation plan will be
introduced＜2015＞
 Retirement
benefits system
abolished＜2016＞
 Established Corporate Governance Guidelines
 Established standards concerning the independence ofoutside officers＜2018＞
 Establishment of Risk and Compliance
Committee

Others＜2020＞ General employer action plan(advancement of measures tosupport the raising of future
generations of children)＜2022＞
 Introduction of an executive officer system Ratio of outside directors will increase (from 28.6% to 50%)＜2022-＞
 Enhancement of risk management system
 Standardization of interior and exterior work
Enhancement of work site management structure CS Office's functions will be enhanced (to improve quality)@ MUGEN ESTATE Co.,Ltd.

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28

Priority Measures (5) DX Strategies
Implement digital transformation strategies at points of customer contact and within the Company to increase
productivity, improve operational efficiency, and reduce environmental impact.
DX at points of customer contact

Internal DX

Use DX to strengthen
competitivenessDraw attention to appraisal values anddifferentiate the Company from competitors
by introducing real estate tech, including AI
assessment and explanations of importantmatters using IT.

Introduce preliminary inspections using VR
to remove physical restrictions and savetimeBuild a database of owned properties anddevelop an exit strategy

Promote digitization

Digitalize contract documents,
transaction documents, andinternal documents and reduce
paper (reduce the environmental
impact)Analyze and use digitalized data(for rental properties
management. etc.)

Use of the cloud (fromownership to use)

Increasing operational efficiency
and cultivating human resources

Continue to switch from onpremises software (ownership) tothe cloud (rental) to quickly
respond to diverse needs

Automate operations using AIOCR and RPA and increase theefficiency of organizational
management

Centrally manage personnel data
to cultivate human resources
Centralized management

Virtual model room
Letting end customers have specific images afterrefurbishment will shorten the sales period (improveturnover).

@ MUGEN ESTATE Co.,Ltd.

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29

Priority Measures (6) Increasing Shareholder Returns
Increase the payout ratio target from around 20% to 30％ or more.
Purchase treasury stock to implement flexible capital policies, considering dividends, the total return ratio and capitalefficiency.

Trend in dividends
Dividend per share

The period of First Medium-Term
Management Plan

Dividend payout ratio

Dividend
payout ratio

20% or more

The period of Second MediumTerm Management Plan
Dividend
payout ratio

30% or more

(Yen)

50

43.2%

45

40.0%

40

37yen

35

30yen

30

25yen

25

17.3%

16yen

15yen
14.2%

9yen

10

30.8%

17yen

10yen

10.4%

9.4%

5

30.2%
24yen

28.2%

21.8%

21yen

20
15

30.2%

30yen

0
FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022(plan)

FY2023(plan)

FY2024(plan)@ MUGEN ESTATE Co.,Ltd.

｜30

Priority Measures (7) Improving Capital Efficiency
Aim to maintain profit (ROE) that exceeds the cost of equity capital, while maintaining the financial ability to respond tochanges in the environment

ROE

Cost of shareholders' equity

Medium-term target

FY2021

15.0% or more

＞

10.5％
(the Company's estimate)• Strive to improve the disclosure of financial and nonfinancial information and promote constructive dialogue,
and operate business in ways that increase investors'
trust in the Company. Through this, reduce the cost ofequity capital (10.5%) over the medium and long term.
• Balance investing, financial soundness and shareholder
returns and raise awareness of the cost of equity capitaland increase ROE (return on equity).

Medium-term targets for increasing ROE
Ratio of profit attributable toowners of parent to net sales

Asset turnover ratio

 Tighten conditions for each Expand the ratio of sales from

6.0％ or more×

residential-type properties(shorten the period frompurchase to sale)

1.0 or more

 Maintain investment capacity
 Maintain the financial ability to respond tochanges in business× 2.5

x or more

M a n a g e m e n t
I t e m sproperty Diversify the businessportfolio

Financial leverage(1) Balance between shareholders'equity and interest-bearing debt
• Interest-Bearing Debt to Total Assets• Net DE ratio(ii) Maintaining financial strength• Liquidity• Level of inventory of real estate for sale
• Percentage of loans related to theSDGs@ MUGEN ESTATE Co.,Ltd.

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Sustainability ESG ・SDGs
Implement business plans and conduct business activities, in consideration of ESG issues and the SDS, under thebasic sustainability policy below.
Meet the sustainability standards that the companies listed on the Prime Market are required to meet.

― Basic Sustainability Policy ―Under our corporate motto "Mugen" (Making Dreams Come True) which is also the origin of our company name, we at
the MUGEN ESTATE Group hope to play a useful role in making the dreams of all people, including our customers,come true.
We share the contributions that our business—creating new value in used real estate—makes
to society, and see it as our common dream to help realize the creation of a sustainable
society through our business.

We define our mission as creating new value in real estate and taking on challenges to enrich the lives of all, making
their dreams come true. By carrying out this mission, we are taking on the challenges of creating a sustainable society
and achieving sustainable growth for the MUGEN ESTATE Group.

@ MUGEN ESTATE Co.,Ltd.

｜32

Sustainability ESG ・SDGs
Operate business activities in harmony with the environment and society and contribute to the achievement of thesustainable development goals (SDGs).
Example of the Company's
ESG

Material Issues

contributions through its
business activities

Related SDGs

A large-scale renovation of a used property

Environment

E

Business activities with environmental
considerations

BeforeAfter− Revitalization of used real estate− Product development with environmental
considerations

Providing enriched lives for all people

Society− Support for enriching lives through the usedproperty business.
− Contributing to local communities andsociety− Investments in startups

S
Providing job satisfaction, promoting theparticipation and advancement of diverse
human resources− Diversity and work-life balance

GovernanceG

Enhancing governance with a view tosustainable growthThe industrial waste generated and environmental impact of the property
will be less than what would result from the demolition of used properties
and the building of new properties.

Contribute to the development of local communities by extending the life ofused properties@ MUGEN ESTATE Co.,Ltd. ｜ 33

− Basic Policy on Corporate Governance− Disclosure Policy