■AD Works Group <2982>'s medium-term management plan and long-term management policy

1. The second medium-term management plan

(1) Management targets

The second medium-term management plan, which started in December 2024 and runs from the December 2024 period to the December 2026 period, aims for business growth while contributing to a sustainable society under the theme of "Sustainable Business, Sustainable Growth." While focusing on improving labor productivity and maintaining financial soundness, the plan aims for an annual growth rate of over 10% in EPS. As the final year target for the December 2026 period, the plan sets a target of 3 billion yen in net income before taxes and other adjustments and 20 billion yen in shareholder equity, with an EPS forecast of 41.76 yen. As for the first year, the December 2024 period is off to a good start, as mentioned above.

As for labor productivity, we aim to raise it from 31 million yen per employee in the December 2023 period to 35 million yen in the December 2026 period in terms of gross profit per employee. We believe that it is possible to achieve this goal by increasing the handling of high-priced large-scale properties and selling properties with high added value leveraging our product planning capabilities. As for sales and administrative expenses, while restraining fixed costs by improving the efficiency of indirect departments, if the gross profit per employee expands, the net income before taxes and other adjustments will also expand at a higher growth rate. Regarding the number of employees, the plan is to continue to slightly increase from 232 at the end of the previous period (233 as of June 2024).

As for maintaining financial soundness, we plan to maintain a level of about 30% in terms of capital adequacy ratio while being mindful of the durability against changes in business environment, given the uncertain market trends for the next three years. Therefore, we anticipate that the balance of investment properties at the end of the December 2026 period will increase by about 12% to 50 billion yen from 44.7 billion yen at the end of the December 2023 period. In addition, regarding the listing maintenance criteria for the "Prime Market," we have not yet cleared the criterion of a market capitalization of 10 billion yen (approximately 9.8 billion yen as of the end of December 2023). The final determination period will be calculated based on the average stock price from October to December 2025, so we aim to enhance corporate value and clear the listing criteria by focusing on business performance growth and improving ROIC. It is believed that clearing the criteria will be possible if the stock price exceeds 250 yen, but the company aims to raise it to a level of around 300 yen with a margin.

Please note that we have not yet cleared the listing maintenance criteria for the "Prime Market" with a market capitalization criterion of 10 billion yen (approximately 9.8 billion yen as of the end of December 2023). The final determination period will be calculated based on the average stock price from October to December 2025, so we aim to enhance corporate value and clear the listing criteria by focusing on business performance growth and improving ROIC. It is believed that clearing the criteria will be possible if the stock price exceeds 250 yen, but the company aims to raise it to a level of around 300 yen with a margin.

(Written by FISCO guest analyst, Jo Sato)