Message from the CEO Message from the CEO

Promote the transformation of the business model based on Our Purpose, to evolve into a “company that designs the environment of the future.”

Fulfilling a Greater Social Mission as We Celebrate Our 50th Anniversary

The MIRARTH HOLDINGS Group celebrated its 50th anni- versary on September 21, 2022. Entering a new chapter in our ongoing development, we then transitioned to a hold- ing company structure and changed the Company’s name to MIRARTH HOLDINGS, Inc. on October 1, 2022. MIRARTH is a combination of the words Mirai (future in Japanese) and Earth. The new company name embodies our determination to look beyond the boundaries of a gen- eral real estate business developer and evolve into a com- pany that makes a happier future for the Earth and its people by contributing to all communities everywhere.
We have defined the purpose of the Group as it moves toward the next stage of its existence, as “To design sus- tainable environments for a happier future for both people and our planet.” Drawing on the traditional “THINK HAPPINESS AND MAKE THE HAPPINESS” vision and “Creating Together” mission of Takara Leben Co., Ltd., this purpose takes into consideration the future expansion of the Group’s overall business. In fulfilling our purpose, we have initiated various steps toward transformation, includ- ing business segment reorganization with a view to creating a new business model.

FY2022 Business Environment and Performance Review

With the easing of restrictions on people’s movements geared toward preventing the spread of COVID-19, con- sumer spending and economic activities gradually recov- ered in fiscal 2022. However, uncertainty surrounding the future increased owing to the sharp rise in commodity prices on the back of fluctuations in raw material and energy costs as well as foreign currency exchange rate. In the real estate industry, the Group’s mainstay new built-for- sale condominium business was supported by the contin- ued strong willingness of customers to purchase condominiums amid the prolonged low interest rate envi- ronment and other factors. While this sustained increase in demand and nationwide decrease in the number of units supplied have resulted in a favorable supply and demand balance, soaring labor and construction costs have caused the sales price of new condominiums to continuously rise each year. In the energy industry, many companies and public authorities are strengthening their efforts toward decarbonization in a bid to achieve carbon neutrality by 2050. As a result, the market is expected to expand. the sales price of new condominiums to continuously rise each year. In the energy industry, many companies and public authorities are strengthening their efforts toward decarbonization in a bid to achieve carbon neutrality by 2050. As a result, the market is expected to expand.
In light of these changes in business conditions, the tender offer (TOB) for Takara Leben Infrastructure Fund, Inc. (TIF), announced and implemented in September 2022, was executed as a necessary measure for the Group to achieve further sustainable growth. Although this TOB was a major factor in pushing down the Group’s consolidated net sales and earnings in fiscal 2022, results in the core real estate business exceeded plans owing to robust sales under- pinned by strong demand for new built-for-sale condominiums.

Promotion of Purpose Management

• After restructuring into 4 business segments, shift to a holding structure in October 2022.
• Promotion of sustainability management centered on new growth and Our Purpose through business structure innovation, and increase of the earning power of each business to become a future environmental design company.

Establishing a New Business Model to Enhance Long-Term Corporate Value

Transforming the earnings structure of the energy business and making the energy and asset management businesses the second and third pillar of our business

As I mentioned above, TIF’s TOB and inclusion in the Company’s scope of consolidation as a subsidiary was its most prominent initiative in fiscal 2022. In conducting this TOB, the goal is to shift the earnings structure in the energy business to stable earnings model. To date, the energy business has adopted a flow-type business model that pre- supposes the sale of power generation facilities with profits concentrated in the period in which the sale is made. 
Moving forward, we will in effect refrain from selling developed facilities, and shift to a stock-type business that generates stable earnings from revenue gained through the sale of electric power. We will nurture this business into a second pillar after the real estate business while expanding EBITDA by integrating facility ownership and power genera- tion. In fiscal 2029, we are targeting a real estate business and energy business EBITDA ratio of 1:1.
As far as the scale of development facilities is concerned, we will shift from the development of mega solar power plants using the FIT system to the development of small- and medium-scale power plants based mainly on Power Purchase Agreements (PPAs), which are direct purchases by electric power users. At the same time, we have estab- lished an off-taker model linked to long-term power sales contracts with several partners, including Osaka Gas Co., Ltd. to stabilize PPA earnings and will work to put in place a de-FIT business model.
Moreover, we will expand assets handled by the asset management business by incorporating solar power gener- ation facilities into the Group’s assets. In the future, we will expand the scale of assets under management by leverag- ing the high level of asset management capabilities devel- oped as the first listed infrastructure fund in Japan, and grow this business into the third pillar of our portfolio. 
Due to these changes in the earnings structure, we have revised the management indicators and performance goals in our Medium-Term Management Plan (see page 22 for details). 
Our net income forecast for fiscal 2023 is in line with initial plans. Performance forecasts at each level of profit for fiscal 2024 are expected to exceed initial plans as the energy business enters a period of stable earnings. As far as net income is concerned, we are projecting stable income of more than 10 billion yen from fiscal 2024.

Toward becoming a “future environment design company”

As I mentioned at the beginning of this message, our newly formulated purpose cannot be achieved with a business model that for the most part revolves mainly around real estate. Real estate property development is merely a single point, so to speak. Starting from a developed property, we must create a line that connects that property to electric power (power generation facilities), map out an environ- ment through the supply of renewable energy, and build a scheme to design a city that can revitalize the community. PPA and other models help give shape to the designs required to create these aspects.
We will help realize a sustainable society through the organic combination of each business as a future environ- ment design company. While growing our energy business by leveraging the strengths we have developed in our core real estate business, we will create new value in other businesses while securing stable earnings in the asset management business and enhancing our corporate value.
To build a long-term business foundation, we will further promote sustainability management within the Group. After expressing our support for the Task Force on Climaterelated Financial Disclosures (TCFD) recommendations in 2022, we set a target to reduce the greenhouse gas emissions associated with the Group’s business activities by 50% by fiscal 2030 compared with the levels recorded in fiscal 2020 and to achieve net zero emissions by fiscal 2050 in March 2023. In addition to conducting an employee happiness survey in October 2022, we are working to enhance our corporate culture and human resources system to enable a diverse array of employees to play an active role. Among a host of initiatives, we will implement an average 2.5% salary base increase in fiscal 2023.

To Our Stakeholders

For the MIRARTH HOLDINGS Group, 2023 marks a new phase of sustainable growth over the next 50 to 100 years. As a holdings company, our role is to clarify the direction in which the Group should steer to fulfill its purpose. In addi- tion to promoting transformation through the execution of business strategies, our goal is to ensure the overall growth of the Group as a whole.
From an operating perspective, further growth of the real estate business and establishment of a new energy busi- ness model are major themes going forward. As far as the energy business is concerned, we have already outlined a roadmap to 2030 and are promoting measures to achieve established goals. However, these ideas and images are yet to be fully shared throughout the Group. Serving as both Group CEO and COO, I am responsible for further instilling our purpose throughout the Group at this time of business model transformation. I am therefore committed to ensuring that the entire Group looks beyond the bound- aries of the real estate business and is fully committed to designing the environment in a broad sense thereby con- tributing to society. With this as a foundation, I will work with Group companies and stakeholders to enhance cor- porate value by clarifying responsibilities and authority, while maintaining the speed and agility of management decision-making that is one of the Group’s inherent strengths.
As we work toward achieving our goals, we ask for the continued support and understanding of all stakeholders.