Hirogin : Establishing Our Purpose / Mid-Term Plan 2024

Announcement Regarding the Establishment of Purpose

and Formulation of Mid-Term Plan 2024

Hirogin Holdings, Inc. (President: Toshio Heya) hereby announces that the Hirogin Holdings Group has established, at the Board of Directors meeting held today, its purpose and formulated the Mid-Term Plan 2024 covering a five-year period from April 2024.

1. Purpose

Expanding the horizons of the future alongside the regional community

through wide-ranging services

• As a Regional Comprehensive Services Group, the Group is pushing forward with initiatives to resolve every issue affecting the regional community and its customers. However, to clarify the basis and objective of the Group's businesses and starting point to which the Group and its employees should return, we have

newly established our purpose based on the outlook below.

"through wide-ranging	We will bring value to each stakeholder by leveraging the Group's
services":	financial and nonfinancial functions as a Regional Comprehensive
	Services Group, as well as the service functions available within the
	region including the governments.
"alongside the regional	Based on the fact that the Group cannot grow without the growth of
community":	the region, we will achieve growth with the region such as by
	revitalizing the regional community to generate business
	opportunities for the Group.
"Expanding the	We will expand a range of possibilities for the future of the region,
horizons of the future":	our customers and shareholders, and the organization (the Group).

2. Mid-Term Plan 2024

1. Formulation process
2. • In October 2022, 16 young employees of the Group formed the Future Creation Task Force and began examining, from the perspective of young employees, what we might seek to achieve 10 years from now. Following six months of deliberations, they summarized their vision for the future for the region as well as the Group and its employees, and made recommendations to our directors, including external directors.
   • From April 2023, based on these recommendations, discussions have been conducted primarily by the Board of Directors, considering the Mid-Term Plan by backcasting from the vision for the future 10 years from now. The Mid-Term Plan formulated is based on proposals made as appropriate by the newly established Future Creativity Working Group (established in July 2023 and comprising 12 younger employees as well as middle-ranking and core-generation employees).
3. Concepts for plan formulation
4. • We are approaching a period of transformation in which the environment surrounding regional economies and financial institutions will change still further. As a Regional Comprehensive Services Group, we recognize the need to strengthen our initiatives, more than ever before, to revitalize the region.
   • We considered the state of the region desired 10 years from now in which the Group's management foundations are rooted. We also defined the ideal state of the Group 10 years from now. To realize these visions, we formulated the Mid-Term Plan covering the first five years based on the backcasting concept.

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State of the region desired 10	• A vibrant region
years from now	= A region in which prefectural GDP is maintained and grows
	(Cities in which people gather, a tourism-based prefecture,
	smart cities, a leading sustainability region)
Ideal state of the Group 10 years	• Helping to create a vibrant region and demonstrating
from now	overwhelming presence in the region
	→ Increasing corporate value (continuous improvement in
	ROE and PBR)

1. Plan period FY2024-2028 (five years)
2. Approach to strategies
3. • Before selecting the matters that must be addressed to realize the state of the region desired 10 years from now (a vibrant region), the Group clarified materialities (i.e., priorities for the region).
   • We will provide solutions to social issues (generation of impact) and achieve the sustainable growth of the Group (increase in corporate value) by executing the following strategies to address the materialities.
   • Specifically, we will work in various ways to revitalize the region as we take on new risks, including reviewing our structures and actively investing in new businesses (expanding business axes) to address the needs of our customers and the region while improving the quality of our existing businesses (deepening business axes). Through these efforts, we will build real strength in the Group and strive to increase corporate value while striking a balancing among investments in growth, soundness, and shareholder returns.
   • In addition, we have established regional revitalization metrics for materialities with special focus and will work on these in collaboration with governments and the regional community.
   • 1. Strategies in the Mid-Term Plan

Value creation	•	Creating a virtuous circle in which the region, our customers, and the Group
strategies		grow and develop together
	• Working on regional revitalization by resolving regional issues in
		collaboration with local public agencies and local companies
	• Uncovering the latent needs of customers according to business stages and
		life events and providing solutions by the Group to resolve every issue
	•	Growing and developing the Group by expanding businesses of Group
		companies, creating new businesses, etc.
Management	•	Strengthening the management of portfolio of specialized human resources;
foundation		enhancing human capital investments; reviewing business operations using
reinforcement		IT and DX to strengthen our structures in priority areas (strategic allocation
strategies		of human resources and review of structures).
	•	Expanding investments in growth centered on DX to realize our value
		creation strategies

1. Strategy drivers
   • Realizing the value creation strategies and the management foundation reinforcement strategies by

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positioning SX, DX, and AX (alliance transformation) as drivers

1. Management targets
2. 1. Regional revitalization metrics

	Target for FY2028
Net migration in population in	Reduction of
Hiroshima Prefecture	decrease
Tourism consumption in	Continuous
Hiroshima Prefecture	increase
Greenhouse gas emissions in	Continuous
Hiroshima Prefecture	reduction

1. Management metrics Target for FY2028

Consolidated ROE	7% or higher
Consolidated capital adequacy	Approx. 11%
ratio
Consolidated BPS	2,000 yen or higher

Group initiatives

• Support for startups and venture companies
• Staff introductions
• Involvement in urban and regional development
• Investments and loans to the tourism industry
• Environmental financing

End

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Establishing Our Purpose / Mid-Term Plan 2024

March 2024

Expanding the horizons of the future

Hirogin Holdings, Inc.

Establishment of our purpose

Purpose: The Group's raison d'etre

Expanding the horizons of the future alongside the regional community through wide-ranging services

Backdrop and reasons for requiring a purpose

• Era of high uncertainty
• Increased diversity in organizations and human resources
• Trend toward emphasizing social significance
• Transition from shareholder capitalism to stakeholder capitalism in corporate management

Significant changes from the past both within corporate organizations and in how society views companies

Clarification of the basis and objective of the Group's businesses and starting point to which the Group and its employees should return

• Foster a sense of unity within the corporate organization
• Strengthen employee motivation
  (Clarify the social significance of the work of each employee)
• Clearly indicate that the objective of our business activities is to contribute to resolving social issues

HIROGIN HOLDINGS | Establishing Our Purpose / Mid-Term Plan 2024 1

Purpose / management philosophy / brand slogan

Purpose: The Group's raison d'etre		Brand slogan
Expanding the horizons of the future alongside the		Expanding the horizons of the future
regional community through wide-ranging services

Management Policy: Management Vision & Code of Conduct

Management Vision: The ideal state of the Group

Contribute to the creation of a prosperous future for the regional community as a trusted Regional Comprehensive Services Group by closely offering thorough support to customers.

Basic concept for deploying the

Code of Conduct: management vision in concrete ways and our promise to stakeholders

Hirogin Holdings will endeavor to create shared value with the regional community and realize a sustainable society, based on the five items of the Code of Conduct.

1. Work in step with regional communities to actively contribute to their development
2. Think and act from the customers' points of view to contribute to their prosperous life and business development
3. Continuously enhance the Company's corporate value
4. Create a cheerful, rewarding corporate group where everyone works healthfully
5. Exercise a high level of compliance

The Group

(Employees)

	Hirogin Holdings
Region	As a Regional Comprehensive	Shareholders
Services Group, we will expand
	future possibilities for each
	stakeholder by linking them in a
		virtuous circle.

Customers

HIROGIN HOLDINGS | Establishing Our Purpose / Mid-Term Plan 2024 2

Philosophy underpinning the Mid-Term Plan 2024

Based on the shared ideal state of the region and the Group 10 years from now, we formulated Mid-Term Plan 2024, which covers the first five-year period by backcasting from the ideal state 10 years from now.

Backcasting

Mid-Term

Plan 2024

(initiatives in the

first five years)

Now

Details on

pages 7-13

Ideal state

10 years from now

(vision)

Region	The
Group

VibrantOverwhelming

regionpresence in the region

Details on pages 4-6

Emphasis on	Shift in way of
earnings level of	Expand investments in growth and human capital investments with
the Group	thinking

			regional revitalization as the main objective
Cost containment

HIROGIN HOLDINGS | Establishing Our Purpose / Mid-Term Plan 2024 3

Vision of the ideal state 10 years from now: Materialities in the region

Ideal state 10 years from now

Mid-Term Plan 2024

Materialities in the region

State of the region

desired 10 years

from now

Vibrant region

=

A sustainably

developing region

Slowing the trend

of shrinking populations

Restraining decreases in permanent population

Increasing visitors to the prefecture

Curbing population decline

A region where young people will stay as permanent residents (A region that facilitates both work and childrearing)

Urban development

Making the region more attractive; realizing a good life

Growth as tourism-based prefecture

Transitioning from tourism based on travelers passing through to tourism based on touring and staying in the region

Maintaining and

growing

prefectural GDP

Increasing productivity

Developing high value-added

industries that drive the future growth of the regional economy

Increasing corporate productivity

Strengthening corporate sustainability

(a precondition for corporate survival)

Growth/regeneration of manufacturing businesses serving as core industries

Industrial innovation

Transformation of industrial structure; Growing startups and venture companies

Investment in human capital

Promoting DX

Facilitating carbon neutrality

Regional revitalization metrics set for materialities marked with

HIROGIN HOLDINGS | Establishing Our Purpose / Mid-Term Plan 2024 4

Ideal state of the region 10 years from now

Cities in which people gather

Development of companies and

jobs attractive to youngVibrant region generations, securing regional

Ideal state 10 years from now

Mid-Term Plan 2024

Tourism-based prefecture

Numerous visitors from in and outside the prefecture (Establishment of tourism

employment and income

Smart cities*

Maintenance and

expansion of prefectural GDP

Popula- Produc-

tion tivity

based on touring and staying)

Leading sustainability region

Access to high-quality services that leverage digital technologies (e.g., AI), data, etc.

Realization of a sustainable society where region's social and environmental issues are resolved

* Smart cities: Sustainable cities and regions that continue to create new value by solving the issues faced by cities and regions by leveraging new	HIROGIN HOLDINGS | Establishing Our Purpose / Mid-Term Plan 2024	5
information, communication, and other technologies and enhancing the level of management (planning, maintenance, administration, operation, etc.)

Ideal state of the Group 10 years from now Hirogin Holdings

Ideal state 10 years from now

Mid-Term Plan 2024

Demonstrating overwhelming presence in the region

Deepening and expanding Function	(human
	Structure
the business axes	resources)
Providing advanced financial and
nonfinancial solutions
Providing wide-ranging services
that leverage alliances

Strengthening of Groupwide joint efforts

Increasing

corporate value

Maximizing human capital

Human resources sought by the Group:

Generalists with both expertise and

management capabilities

Specialists capable of generating solutions

Providing organizational support for the

autonomous career development of every employee

(Enhancing human capital investments, including reskilling)

Ensuring the active engagement of

every employee

Reviewing compensation levels, including base

salary hikes, on a continual basis

Continuous improvement in ROE	Increase in capital adequacy;	Continuous improvement in	Continuous improvement
(8-10%, which exceeds	enhancement of returns to	contribution of nonbank Group	in PBR
the cost of equity)	shareholders and BPS	companies to consolidated	(to ensure more than 1x)
				performance

Developing real strength in the Group in the first five years

with eyes firmly on the state 10 years from now

HIROGIN HOLDINGS | Establishing Our Purpose / Mid-Term Plan 2024 6