Management Policy

Power Up 2019 Mid-Term Business Plan (MTP)

1. Power Up 2019 Overview

Power Up 2019 follows on Ichigo's Shift Up 2016 MTP, which was announced with FY14/2 Q3 earnings on January 10, 2014. Shift Up 2016 covered the period through FY16/2, and its key focus was to significantly increase Ichigo's earnings. Power Up 2019's key goals are to: 1) drive further sustainable earnings growth in Ichigo's core businesses; 2) develop new Ichigo businesses that will be forward growth engines; and 3) deepen Ichigo's core capabilities and corporate strength.
Ichigo considers Power Up 2019's KPIs to be commitments to Ichigo's shareholders, and just as with Shift Up 2016, Ichigo intends to exceed them.

2. Power Up 2019 Key Performance Indicators (KPI) (JPY M)

FY16/2
(Actual)
FY17/2
(Actual)
FY18/2
(Actual)
FY19/2
(Plan)
FY19/2
(Forecast)
vs FY 16/2
Operating Profit 15,417 21,781 20,858 25,000 25,000 +62.2%
Recurring Profit 13,889 19,755 19,185 21,400 22,000 +58.4%
Tax Rate 6.9% 26.4% 30% 30% 30% -
Net Income 12,925 14,894 14,018 14,800 15,000 +16.1%
EPS JPY 25.86 JPY 29.66 JPY 28.12 JPY 29 JPY 30.10 +16.4%
DPS JPY 3 JPY 5 JPY 6 JPY 7 JPY 7 +133%
ROE 21% 20.2% 16.5% 15.6% 15.7% -

(Note) From FY17/2, Ichigo will have consumed its tax loss carry-forwards and its tax rate will thus normalize. 3. Key Initiatives

1. Core Business Growth
List Ichigo's solar assets on the TSE's new Infrastructure Fund Market
Support the on-going growth of Ichigo Office REIT (8975) and Ichigo Hotel REIT (3463)
Expand the architecture and structural engineering team to deliver real estate that is high-function, safe, secure, and environmentally friendly
Spin out a dedicated leasing team to drive tenant acquisition and rental income
2. New Business Creation
Extend Ichigo's REIT-focused asset management business into the much larger physical real estate market
Grow Ichigo's hotel business synergistically with Ichigo Hotel REIT
Launch one or more REtech businesses, fusing Ichigo's Real Estate and IT capabilities
3. Finance as a Strategic Weapon
Grow both financial stability and earnings
De-collateralize loans, lengthen loan maturities, lower debt costs, get credit ratings, and issue bonds to diversify funding profile
4. High Capital Efficiency and Organic Growth
ROE > 15%
5. Best Place to Work
Support employee health and wellness
Goal: Japan's number one company in providing opportunities for employees
6. Global Best Practice Governance and Compliance

4. Power Up 2019 JPX-Nikkei 400 Target: Top 200 Ranking by August 2019

Ichigo entered the JPX-Nikkei 400 in its annual index constituent rebalance in August 2016. By August 2019, the final year of Power Up 2019, Ichigo will seek to rank within the JPX-Nikkei 400's top 200 companies.2

2While the JPX-Nikkei 400 does not provide an official ranking of its 400 constituents, the ranking can be objectively calculated based upon the JPX-Nikkei 400's publically-available quantitative ranking formula, which rank orders the joint set of the 1,200 highest market capitalization and 1,200 highest value-traded Japanese companies by:
(a) 3-year average ROE (40% weighting)
(b) 3-year cumulative operating profit (40% weighting)
(c) Market capitalization (20% weighting)

【Reference】Shift Up 2016 Outcomes

TSE First Section Listing on November 17, 2015
Anticipate Entering JPX-Nikkei Index 400 in August 2016