MIRARTH : Integrated Report 2023(view)

Integrated Report 2023

Fiscal year ended March 31, 2023

CONTENTS

Introduction

Our Purpose & Values	1
50th Anniversary of the Group's Founding	2
At a Glance	4
History of the MIRARTH HOLDINGS Group	6

MIRARTH's Vision for the Future

A Message from the CEO	8
Value Creation Process	12
Explanation of the Value Creation Process	14
Risk & Opportunity	16
Materiality	18

Strategies for Creating the Future for People and Our Planet

Review of Previous Medium-Term Management Plans	20
Progress under the Medium-Term Management Plan
(FY2021 to FY2024)	21
A Message from the CFO	22

Our Purpose

To design sustainable

Our Purpose & Values

At the launch of the new organization in October 2022, we defined the Group's raison d'etre as it moves toward the next stage of its existence, with the purpose "To design sustainable environments for a happier future for both people and our planet." This purpose includes the Group's intent to go beyond the framework of a general real estate business developer, and to evolve into a "future environment design company" that engages in co-creation with local communities and works toward the future of town planning.

To be passionate about creating vibrant

Passion & environments and to inspire and be

Financial/Non-Financial Highlights	26
Strategies by Business Segment	28

The Future as Created Together with Our Stakeholders

Sustainability in the MIRARTH HOLDINGS Group

38

environments for a happier

future for both people and

our planet.

Inspiration

inspired by people who share our vision.

Contributing to the Reduction of Environmental Impact	41
Human Resources Strategy for Supporting Sustainable Growth	44
Creating Value Together with Customers and Local Communities	48
Social Data	51

Governance Supporting Value Creation

Corporate Governance	52
Board of Directors, Auditors and Executive Officers	57
Dialogue: The Role of the Board of Directors in Realizing
a Future Environment Design Company	58
Compliance	62
Risk Management	63

Data

Eleven-YearFinancial/Non-Financial Summary	....................... 64
Corporate Data	66
Stock Information	67

Other Disclosure Information

https://mirarth.co.jp/en/ir/

Our Values

Sustainability

Value

Creation

Diversity & Co-creation

To create a sustainable world where people, nature, and society coexist in harmony.

To continue to evolve and keep up with the rapid change around us to create new value.

To value each individual's ideas and co- create a diverse and equitable environment with the local communities.

 Financial Reports	 Ordinary General Meeting
 Medium-Term Management Plan	of Shareholders
Materials	Information
 Annual Securities Reports	 Others

To generate a trusting relationship among Integrity & people and society through protection of

Editorial Policy and Cautionary Statements Regarding Forward-Looking Statements

This report, which for the most part provides details of the MIRARTH HOLDINGS Group operations in fiscal 2022, the fiscal year ended March 31, 2023, has been designed to provide stakeholders with a deeper understanding of our business activities, management strategies, performance, and other non-financial information, including interaction with society and the environment.

• This document was prepared to provide information regarding the Company's consoli- dated results in fiscal 2022 and should not be construed as a solicitation for investment in securities issued by MIRARTH HOLDINGS, Inc. The information provided in this report is fundamentally based on data available as of March 31, 2023. Any forward-looking statements including opinions and forecasts are based on the best judgments of man- agement as of the time this report was prepared. Accordingly, HIRARTH HOLDINGS does not guarantee or promise that any forward-looking statements will be realized
  or achieved or provide any assurance as to the accuracy or integrity of information. Moreover, the content of this report is subject to change without prior notice.

Trust

our safety and security.

MIRARTH HOLDINGS Integrated Report 2023

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CONTENTS

Introduction

MIRARTH's Vision for the Future

Strategies for Creating the Future for People and Our Planet

The Future as Created Together with Our Stakeholders

Governance Supporting Value Creation

Data

50th Anniversary of the Group's Founding

Evolving from a General Real Estate Business Deve loper to a Future Environment Design Company with an Eye to Further Growth

The Group celebrated its 50th anniversary on September 21, 2022, and then transitioned to a holding company structure while changing its name to MIRARTH HOLDINGS in October 2022. We have implemented a variety of initiatives to express our gratitude to all of the Group's stakeholders and to communicate our determination to evolve into a future environment design company.

Topic1 Create

50th Anniversary Logo

Expressing our 50-year History of Remaining Close to People and the City

We designed the 50th Anniversary Logo using an image of the signature Company logo and a harmonic circle image combined with a street scene impression. The circle symbolizes the Company's gentle embracement of the city like the sun, while the five lines underneath express its achievements accumulated over the past

Topic3 Build

Properties Commemorating the Takara Leben Group's 50th Anniversary

Properties Commemorating the Group's 50th Anniversary Sold in Yamate, Yokohama and Tenjin, Fukuoka

We sold two Takara Leben Group 50th anniversary properties that realize "Innovation for a New Lifestyle." The design symbolizes the main LEBEN brand, with equipment specifications that reflect new lifestyles and common facilities that meet diverse needs.

Leben Yokohama Yamate ONE	Leben Fukuoka Tenjin ONE
WARD COURT	TOWER

About Our New Name

50 years that have led to further prosperity of the city and the Group.

With Gratitude for 50 Years

Opening of HOTEL THE LEBEN OSAKA to Commemorate the Takara Leben Group's 50th Anniversary

We opened our first original brand hotel, HOTEL THE LEBEN OSAKA, in Minami-Semba, Osaka as a new concept in satisfying accommodations. We leverage the know-how we have cultivated in creating comfortable spaces for people to spend time to pursue accommodations that provide true happiness under the concept of "the happiness of relaxation is here too."

HOTEL THE LEBEN OSAKA

Mirai (Future) + Earth

This new moniker embodies our desire to evolve into a company that makes a happier future for the Earth and its people by contributing to all communities everywhere.

Topic2 Celebrate 

50th Anniversary

Celebration Events

Declaration of a New Beginning to Business Partners and All Employees

We held celebrations for employees in September 2022 and for business partners in October 2022 to commemorate the 50th anniversary of the Group's founding. These celebrations were a great success, featuring

Topic4 Communicate

50th Anniversary Promotional Campaigns

50th Anniversary Wrapped Trains & Community Buses

50th Anniversary wrapped Toden Arakawa Line (also known as Tokyo Sakura Tram) trains designed with the 50th Anniversary logo went into operation from April 1, 2021. In addition, 50th Anniversary wrapped Edo Bus community buses in Chuo Ward, Tokyo that connect Higashi-Ginza, Tsukiji, Nihonbashi, and the Yaesu North Exit of Tokyo Station were operated.

Toden Arakawa Line

Community bus in

Chuo Ward

a video conveying our utmost gratitude, the president's thoughts and initiatives, and the Group's history, followed by performances, raffles, and other events.

Collaboration with Yumi Matsutoya for Radio Sponsorship & TV Commercial Music

We are the main sponsor of Commercial Radio Station 99's WE LOVE RADIO Listen to the Radio through Speakers Campaign with Yumi Matsutoya, a singer-songwriter who serves as ambassador and celebrated her 50th anniversary in 2022. In addition, we use her song Call Me Back for 50th anniversary television commercials that aired from September 21, 2022.

Commercial Radio Station 99's campaign poster

50th anniversary event

50th anniversary event website

https://mirarth.co.jp/corporate/50th/

(Japanese only)

Topic5 SupportSDG Initiatives to Commemorate the 50th Anniversary of the Group's Founding

Main Sponsor of Ehime SDGs Koshien Supporting High School Students in Their Efforts to Achieve the SDGs

As a commemorative project for the 50th anniversary of the Group's founding, we provided special support for Ehime SDGs Koshien - High School Students' SDGs Practice Project. We sponsored this project to raise awareness of the SDGs among high school students so they can acquire a correct understanding of and implement SDGs independently.

Ehime SDGs Koshien poster

2

MIRARTH HOLDINGS Integrated Report 2023

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*3 Researched by Kensetsu Shinbun Corporation

At a Glance

Leveraging the knowledge built on its real estate business, the MIRARTH HOLDINGS Group is actively promoting business diversification and fusion. Going forward, we will work to build a well-balanced portfolio by expanding our energy and asset management businesses while maintaining our real estate business as a mainstay pillar of operations.

CONTENTS

Introduction

MIRARTH's Vision for the Future

Strategies for Creating the Future for People and Our Planet

The Future as Created Together with Our Stakeholders

Governance Supporting Value Creation

Data

MIRARTH HOLDINGS Group by the Numbers

Founded

2022: Nationwide ranking of condominium units supplied sold by developer group

Condominium Brand Recognition Ranking

Consolidated net sales
	2.7%
0.7%	5.9
	%
	153.4
	billion yen	90.6
	(FY2022)	%

Real Estate Business

With the new built-for-sale condominium business serving as our core business, we are also engaged in the liquidation business, which undertakes sales of profit-generating real estate for both residences and offices, the sale of detached houses, the renewal and resale of condominiums as well as the real estate rental and management businesses.

Sales by segment		(Millions of yen)
(FY2022)
Net sales	Gross profit
■ New built-for-sale condominium
76,110	16,724
■ Liquidation	30,631	6,707
■ New detached house	10,041	1,328
■ Renewal resale	6,159	990
■ Real estate rental	5,819	1,255
■ Real estate management	8,809	1,719
■ Real estate other	1,539	1,229

1972

Average age

37.7

(As of March 31, 2023)

6th (2022)

*1 Source: Real Estate Economic Institute Co., Ltd.

Ranking: Top 10

Ranking	2022 Ranking	(Units)
1	Open House Group	5,721
2	Nomura Real Estate Group	4,240
3	Mitsui Fudosan Group	3,420
4	Sumitomo Realty Group	3,109
5	Daiwa House Group	2,575
6	MIRARTH HOLDINGS Group	2,387
7	Mori Trust Group	2,214
8	Mitsubishi Estate Group	2,153
9	Iida Group	1,861
10	Nippon Steel Kowa Real Estate Group	1,850

3rd (2022)

*2 Research contractor: Macromill, Inc.

Ranking: Top 10

Ranking

2022 Ranking

1. Lions
2. PROUD
   3 LEBEN

1. The Parkhouse
2. GRANDE MAISON
3. Park Homes
4. GALA
5. SURPASS
6. Brillia
   10 CLIO

Consolidated gross profit

Energy Business

Focusing on solar power, the MIRARTH HOLDINGS Group's energy business utilizes renewable energy and sells the electricity generated to electric power compa- nies. The Group also works diligently to contribute to society by producing renewable energy. We are also advancing initiatives toward the building of a business

New built-for-sale condominium supply Nationwide areas expanded to 39

The MIRARTH HOLDINGS Group aims to expand its supply area. To this end, the Group will strengthen its system for purchasing land throughout Japan by proac- tively establishing bases in areas where it does not currently have a presence. We newly expanded into Shimane and Yamaguchi prefectures in fiscal 2022.

Bases

Supplied and purchased area

3.0%

2.6%

31.7
billion yen	94.5
(FY2022)	%

model that does not rely on the feed-in tariff (FIT) system.

Asset Management Business

Utilizing the Group's wealth of expertise, knowledge, and networks in real estate and renewable energy, MIRARTH HOLDINGS Group is entrusted with the management of infrastructure, J-REIT, private placement, and other funds. Through its asset management business, the Group provides excellent investment opportunities and solid asset management services.

Other Businesses

Through its other businesses, the Group engages in a wide range of activities including construction subcon- tracting, hotel management, and the provision of rehabilitation-oriented day care facility services.

Cumulative number of new built-for-sale condominium units supplied nationwide

38,807units

(As of March 31, 2023)

In terms of the number of condominium units supplied in the Tohoku area in 2022, we ranked first,*3 having supplied 501 units to a total of 20 buildings. Following 2015-2017 and 2019-2021, this was the seventh time for us to have been ranked first. We will continue to actively participate in local development projects to contribute to the revitalization of the regions and increase the number of cities in our supply area.

Percentage of	Percentage of employ-	Assets under
female managers*4	ees taking paid leave*4	management

11.0%

68.7%

¥249.4billion

(As of March 31, 2023)

(As of March 31, 2023)

(As of March 31, 2023)

Number of managed

Rental

Current power

housing units

revenues

generation capacity

Flow Businesses

The core of flow businesses is the new built-for-sale condominium business, which mainly targets families, dual-income and single -person households in metropolitan areas such as the Tokyo metropolitan area, and active seniors in regional city centers. In addition, the MIRARTH HOLDINGS Group is engaged in renovating and redeveloping buildings in partnership with government.

4 MIRARTH HOLDINGS Integrated Report 2023

Stock and Fee-Based Businesses

In the stock business, the MIRARTH HOLDINGS Group is building stable revenue from rent, and revenue generated from over 70,000 properties managed on consignment. In addition, in the fee-based business, at two listed investment corporations, investment management compensation was increased and thereby established a system that does not rely on flow businesses.

72,603 units	¥5.8 billion	320MW
(As of March 31, 2023)	(FY2022)	(As of March 31, 2023)
		*5 Including wholesale portion

*4 Scope of calculation: Takara Leben Co., Ltd.

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CONTENTS

Introduction

MIRARTH's Vision for the Future

Strategies for Creating the Future for People and Our Planet

The Future as Created Together with Our Stakeholders

Governance Supporting Value Creation

Data

History of the MIRARTH HOLDINGS Group

Established as Takara Komuten Co., Ltd., in 1972, the Group has steadily expanded net sales by spreading into a broader range of business fields. These fields include the general real estate business centering on new built-for- sale condominiums and the energy business utilizing solar and other forms of renewable energy, as well as by forming a publicly offered REIT that was also ultimately listed on the REIT market. Having celebrated its 50th anniversary in September 2022, the Group will continue its evolution in order "To design sustainable environments for a happier future for both people and our planet."

	Net Sales
	¥153.4	(Billions of yen)
	billion		180
Surpassed			150

¥100

billion mark

120

Trends in Net Sales

Surpassed

¥50

90

Net sales

billion mark

Surpassed

60

¥10

50th

billion mark

10th

20th

30th

40th

anniversary

30

anniversary

anniversary

anniversary

anniversary

0

1972 1982

1992 1993 1994 1995

1996 1997 1998 1999 2000 2001 2002 2003

2004 2005 2006

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(For the period

2021 2022 2023 ended March 31)

History

1972 Established as Takara

Komuten Co., Ltd. in

Yamato-cho,Itabashi-ku

1975 Purchased the Company's head office the Nakaitabashi Head Office Buildings (Dai-ichi Takara Building)

1982 Launched the real estate rental business

1986 Established Takara Jyuhan Co., Ltd. in an effort to expand sales and intermediary operations

1988 Established Takara Management Co., Ltd. as a real estate management company

1994 Commenced sales of the "Leben Heim" series of condominiums

1996 Changed the name of Takara Management Co., Ltd. to Leben Community Co., Ltd.

1999 Undertook the absorption-type merger of Takara Jyuhan Co., Ltd.

2000 Changed the name of Takara Komuten Co., Ltd. to Takara Leben Co., Ltd.

2001 Relocated the Company's head office to Ikebukuro following completion of the Takara Leben Head Office Building

Listed on the JASDAQ market

Established TAFUKO Co., Ltd.

(currently Leben Zestock Co.,

Ltd.)

2003 Listed on the Second Section of the Tokyo Stock Exchange

2004 Listed on the First Section of the Tokyo Stock Exchange

2006 Relocated the

Company's head office

to the Shinjuku

Sumitomo Building

2008 Launched the new Takara Leben brand

2010 Launched the detached house business with detached house built by the Company in its own right

2011 Commenced sales of custom -built houses; exhibited products at the Tachikawa Housing Exhibition Center

2012 Launched the new LEBEN

condominium brand

Made the real estate rental and management business Takara Housing Co., Ltd. (formerly Takara Property Co., Ltd.) into a subsidiary company

2013 Entered the electric power generation business

Established Takara Asset Management Co., Ltd. as an investment management business

2014 Set up the Hokuriku Office

Made Oasis Co., Ltd. (currently Takara Leben Realnet Co., Ltd.) into a subsidiary company

Made Nikko Kensetsu Co., Ltd. (currently Leben Home Build Co., Ltd.) into a subsidiary company

2015 Made Live Net Home Co., Ltd. (formerly Takara Leben Tohoku Co., Ltd.) into a subsidiary com- pany; relocated to Sendai City, Miyagi Prefecture

Made Jyutakujyouhoukan Co., Ltd. (formerly Takara Leben West Japan Co., Ltd.) into a subsidiary company

2016 Made Nikko Property Co., Ltd. (cur- rently Leben Trust Co., Ltd.) into a subsidiary company

Completed steps for Takara Leben Infrastructure Fund to be the first to list on the Tokyo Stock Exchange Infrastructure Fund Market

2017 Launched the new condominium brand "NEBEL"

Set up the Osaka Branch and the Sapporo Office

Relocated the Company's head office to the TEKKO BUILDING in Marunouchi, Chiyoda-ku

2018 Made PAG Investment Management Ltd. (currently Takara PAG Real Estate Advisory Ltd.) into a subsidiary company

Established representative office of TAKARA LEBEN CO., LTD. in Hanoi City

Takara Leben Real Estate Investment Corporation was listed on the Tokyo Stock Exchange Real Estate Investment Trust Securities Market

2019 Leben Trust Co., Ltd. merged (absorp- tion-type) with Takara Property Co., Ltd.

2021 Established Leben Funding LLC.

Made ACA Clean Energy Co., Ltd. (currently Leben Clean Energy Co., Ltd.) a subsidiary

Set up the Nagoya Office

2022 Established Takara Leben

(Thailand) Co., Ltd.

Transitioned to a holding company structure and changed its name to MIRARTH HOLDINGS, Inc.

Takara Leben West Japan Co., Ltd. changed its name to Takara Leben Co., Ltd., took over a portion of the business of the former Takara Leben, and completed the absorption -type merger of Takara Leben Tohoku Co., Ltd.

Included Takara Leben

Infrastructure Fund in the Company's scope of consolidation as a subsidiary through a takeover bid

2023 This Fund is delisted

Origin of "Takara Leben": The "Takara" that we have used in our		Harmonic Circle: The Group's symbol is the	Harmonic Circle, which is comprised of three rings,			50th Anniversary logo: As we celebrated the 50th anniversary of our
company name since the days of "Takara Komuten" refers to "treasure," as in a		representing customers, partners, and employees;	expressing how they are linked to one another;			founding in September 2022, we created a commemorative logo that incorporates
home is the treasure of a lifetime. The word "leben" added following the change		expanding organically to create harmony while support-	ing each other. The three rings convey our hope of			a Harmonic Circle and the impression of a city skyline into the design. The circle
in our company name is German for "life, lifestyle and living," which are keywords		carrying out our corporate vision to "THINK HAPPI-	NESS AND MAKE THE HAPPINESS" while reso-			symbolizes the MIRARTH HOLDINGS Group's gentle, sun-like embrace of the
essential when discussing a home. This represents the concept of hoping to offer		nating with one another. The gradation of striking	blue to deep navy expresses the intelligence and		With Gratitude for 50 Years	city, while the five lines underneath express its achievements, accumulated over
homes that are the treasure of a lifetime to as many people as possible.		sincerity pursued by everyone in the Group.				the past 50 years, which have led to the further prosperity of cities and the Group.

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A Message from the CEO

CONTENTS

Introduction

MIRARTH's Vision for the Future

Strategies for Creating the Future for People and Our Planet

The Future as Created Together with Our Stakeholders

Governance Supporting Value Creation

Data

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 anniversary on September 21, 2022. Entering a new chapter in our ongoing development, we then transitioned to a holding 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 general real estate business developer and evolve into a company 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 sustainable 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, including 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, consumer spending and economic activities gradually recovered 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 continued strong willingness of customers to purchase condominiums amid the prolonged low interest rate environment 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.

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 underpinned by strong demand for new built-for-sale condominiums.

Kazuichi Shimada

Representative Director

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

Transforming the earnings structure of the energy	TOB, the goal is to shift the earnings structure in the energy
business and making the energy and asset management	business to stable earnings model. To date, the energy
businesses the second and third pillar of our business	business has adopted a flow-type business model that pre-
As I mentioned above, TIF's TOB and inclusion in the	supposes the sale of power generation facilities with profits
Company's scope of consolidation as a subsidiary was its	concentrated in the period in which the sale is made.
most prominent initiative in fiscal 2022. In conducting this	Moving forward, we will in effect refrain from selling

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A Message from the CEO

CONTENTS

Introduction

MIRARTH's Vision for the Future

Strategies for Creating the Future for People and Our Planet

The Future as Created Together with Our Stakeholders

Governance Supporting Value Creation

Data

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

Promotion of Purpose Management

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 "company that designs the environment of the future"

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 environment 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 Climate- related Financial Disclosures (TCFD) recommendations in 2022, we set a target to reduce the greenhouse gas emis- sions 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.

• 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.

Our Purpose

To design sustainable environments for a happier future for both people and our planet.

Fu tu r e Env i r o n m e n t D e s i g n C o m p a ny

Real Estate Business			Energy Business
	 Balance of regional contributions and business			 Establishment	of a non-FIT business model
	expansion
[Core Businesses]				[Growth Businesses]  New driving force for group growth
 Overseas	expansion
			 Expansion	of stock revenue
	 Stable foundation for group growth
Asset Management Business		Other Businesses (construction, hotels, etc.)
[Stable Earnings	 Aggressive	expansion of scale of assets under		 Leveraging	our know-how to take on the challenge of new domains and to
Businesses]	management			create new value
 Strengthening	of synergies within the Group		 Aiming to establish as a next independent segment

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 addition 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 boundaries of the real estate business and is fully committed to designing the environment in a broad sense thereby contributing to society. With this as a foundation, I will work with Group companies and stakeholders to enhance corporate 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.

October 2023

Kazuichi Shimada

Representative Director, Group CEO, Group COO

and President Executive Officer

10

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11

Value Creation Process

Our Group will leverage the three types of knowledge we have cultivated in our real estate business to our energy and asset management businesses. By demonstrating synergies that transcend business fields, each Group company will go beyond the boundaries of a general real estate developer, evolving into a company that makes the future of people and the Earth happier while aiming for sustainable growth.

CONTENTS

Introduction

MIRARTH's Vision for the Future

Strategies for Creating the Future for People and Our Planet

The Future as Created Together with Our Stakeholders

Governance Supporting Value Creation

Data

Our	Purpose	P.1
Our	Values	P.1

External Environment

Awareness

Details P.16-17

Market environment

• Changes in the direction of economic policy
• Changes in lifestyles
• Segmentation of housing needs
• Political instability, economic recession
• Higher interest rates
• Low birthrate coupled with an aging and declining population
• Requests by power companies to control output

Business activities

• Surge in land prices as well as raw material and construction (labor) costs
• Difficulty in recruiting human resources, shortage of labor, and decline in employee quality

Climate change, natural disasters, etc.

• Increasingly serious global environmental issues
• Incidence of natural disasters, accidents, etc.
• Acts of terrorism, riots, and war
• Spread of infectious diseases

Governance, etc.

• Incidence of unauthorized access and cyberattacks
• Insufficient internal control functions

Materiality

P.18-19

Support for diversifying lifestyles and globalization

Responses to

changes to busi-

ness models

brought by an age-

ing society and

depopulation

Urban development and creating towns

Construction and maintenance of a corporate governance system

Promoting

compliance

Employee health

management

Encouraging

employment of diverse human resources

Providing safe, secure products and services

Improving customer

satisfaction

Improving value of

buildings

Providing buildings

and spaces that

consider the envi-

ronment and culture

Responses to

global warming

Initiatives for

renewable energy

Effective use of

resources

Responses to

disasters

Input

Financial Capital

Ability to generate stable cash flow

 Shareholders' equity	¥61.4 billion
 Interest-bearing debt	¥227.3 billion
	(As of March 31, 2023)

Human Capital

Diverse human resources that

possess expertise

 No. of employees	484
 Real estate notaries	275
 First-class registered architects	20
 Redevelopment planners	4
 Training hours per employee	28.3
* Scope of calculation: Takara Leben
 No. of employees (consolidated)	1,293

(As of March 31, 2023

Intellectual Capital

Technologies and expertise that respond to customer requests

 No. of trademark registrations

45

(As of March 31, 2023)

• Proprietarily branded condominiums LEBEN and NEBEL

Social and Relationship Capital

Trust, reliability and a

collaborative framework

 Major Group companies	10
 Business locations	9

(Including head office and overseas locations)

(As of March 31, 2023)

Natural Capital

Effective use of resources

• Land and the global environment
• Nationwide power generation facilities

Business Development    Leveraging Real Estate-related Knowledge	Output

Three Business Pillars

Consolidated

Net Sales

¥153.4

billion

(FY2022)

Real Estate

 Real Estate Business

Business

Energy

¥139.1 billion

Knowledge about real

Development

 Energy Business

Capabilities

Business

¥9.0 billion

estate that underpins

 Asset Management Business

sustainable growth

Management

¥1.0 billion

 Other Businesses

Capabilities

¥4.2 billion

Planning

Details P.28-37

Capabilities

KPI

Number of units sold

 New built-for-sale condominiums

Asset

1,861 units

(FY2022)

Management

 New built-for-sale detached houses

189 units

Business

(FY2022)

Cumulative number of

7 Elements of the Medium-Term

Management Plan

units supplied

38,807 units

1.

3.

5.

7.

* New built-for-sale condominiums

(As of March 31, 2023)

Number of managed

Further growth

Optimized

Improvement of

Personnel

housing units

of core

business

productivity and

development

businesses

2.

portfolio

4.

creation

6.

and

72,603 units

of new services

establishment of

(As of March 31, 2023)

through promotion

the rewarding

Rental revenues

Maximized group

Establishment

of DX

Proactive ESG

workplace

synergies

of a stable

considerations

environment

5.8 billion

financial ground

(FY2022)

Foundation

Human

Partners (customers and

Corporate

Compliance and

Current power generation

capacity

supporting

resources

local communities)

governance

risk management

320MW

value creation

P.44-47

P.48-50

P.52-56

P.62-63

* Including wholesale portion

(As of March 31, 2023)

Outcome

Financial Capital

A sound financial foundation that

enables further investments for growth

 TSR over the past 10 years 125.9%

 Dividend per share	¥22 annually
	(FY2022)

Human Capital

Encouraging the strong roles of

diverse employees

• Acquisitions by type of qualification

Real estate notaries	275
First-class registered architects	20
Redevelopment planners	4

• Percentage of women in management 11.0%
• Percentage of persons with disabilities

employed2.0%

• Scope of calculation: Takara Leben (As of March 31, 2023)

Intellectual Capital

Advaanced technologies and services that respond to diversifying lifestyles

• Housing performance evaluation report

acquisition rate

100%

• Energy-savingrank certification rate (Flat 35 for detached houses)
  100% of detached houses

(FY2022))

Social and Relationship Capital

Building regional revitalization and relationships of trust for the long term with all stakeholders

• No. of new built-for-sale

condominium contracts

2,242

• Increase in the number of units

under management	3,268 units
	(FY2022)

Natural Capital

Effective use of resources and

initiatives for renewable energy to

reduce environmental impact

• Increase in renewable energy

generation capacity

10MW

• Greenhouse gas emissions 3,781t-CO2
• Energy consumption 2,040.5 kL

(crude oil equivalent)

(FY2022)

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MIRARTH HOLDINGS Integrated Report 2023

MIRARTH HOLDINGS Integrated Report 2023

13

Explanation of the Value Creation Process

Over the 50 years since its founding, the Group has moved with the changing times and focused on the new built-for-sale condominium business while actively promoting business diversification and fusion, such as the energy and asset management businesses. Continuing to draw on that knowledge of real estate in the years to come, we aim to create new businesses that contribute to the solution of social issues by strengthening collaboration within and outside the Group.

Business Process Mapping

CONTENTS

Introduction

MIRARTH's Vision for the Future

Strategies for Creating the Future for People and Our Planet

The Future as Created Together with Our Stakeholders

Governance Supporting Value Creation

Data

The liquidation business operated in the real estate busi-	business as a buyer of properties. Through our consolidated
ness segment is a business in which developed rental prop-	subsidiary Takara Asset Management Co., Ltd., we also
erties are sold individually to real estate funds. A listed real	invest in office buildings, retail properties and other proper-
estate investment trust (REIT) managed by Takara PAG Real	ties in an effort to diversify our assets under management.
Estate Advisory Ltd. brings a certain level of stability to our

Real Estate-related Knowledge

										Facilities
										management
	Development of
	power generation
	facilities			Energy
						Infrastructure
				Business		Operation of	funds
Real Estate Business	Development								power	management
							facilities
										generation
Knowledge about real	Capabilities
					Rebuilding and redevelopment

estate that underpins

sustainable growth

Development Capabilities: Leveraging the real estate network built by the Group over the past 50 years, we possess "housing lot purchasing capabilities" and "development capabili- ties" that address a wide range of assets, including new built-for- sale condominiums, profit-generating real estate, and solar power generation facilities, in a way that initiates from our value chain.

Planning Capabilities: In the development of our new built-for-sale condominiums and profit-generating real estate, the Group accurately ascertains regional characteristics and demand through a consistent approach, from purchase to

product planning and sales. We possess the capability to rapidly plan products with high added-value that offer both a superior level of design characteristics and living comfort.

Management Capabilities: Having installed "SQMS®," its proprietary service quality management system based on the ISO 9001 international standard, the Group delivers a high level of management quality (See p. 49). We are increasing the number of units targeted for management by leveraging our accumulated management know-how and through the acquisition of replacement properties.

Inputs

Development

Sales

Real estate management

Repair

Brokerage

Housing lots

purchasing

Management

Capabilities

Development of rental properties

Repair

Sales

Real estate rental Rental management

Real Estate Business

Planning

Capabilities

Energy Business

Asset

Rental management

Management

Asset Management Business

Business

Liquidation

REIT and private

fund management

Financial Capital: To support sustainable growth, the MIRARTH HOLDINGS Group is putting in place a robust financial foundation. At the same time, to respond in a timely manner to the risks and opportunities that will arise from future changes in the environment, the Group is focusing on ensuring balanced, stable financial capacity. The Group is also bringing about the diversification of its financing methods, strengthening its collaborations with local financial institutions and utilizing sustainability loans.

Human Capital: The MIRARTH HOLDINGS Group positions human capital as one of its most important management resources. To address rapid changes in the industry, we are hiring and training talented human resources from within and outside the Group and, while respecting diversity, striving to unite our organization around common goals and values.

by means of its superior design capabilities and high-quality management system. At the same time, the Group is working to enhance its brand value through aggressive advertising.

Social and Relationship Capital: The major subsidiaries that operate under the MIRARTH HOLDINGS Group umbrella leverage their respective strengths while cooperating with each other and enhancing collaboration. Demonstrating the synergies that exist within the Group, they work together with partners, including customers, partner companies, and local communities, and contribute to finding solutions for society's challenges through their business activities.

Natural Capital: In addition to deploying a mega-solar power plant project by utilizing the knowledge gained through its condominiums that generate electricity from solar energy, the Group is actively developing renewable

Our Group primarily focuses on the new built-for-sale condominium business. In 2010, we leveraged our residential real estate planning and development know-how to expand into the single-family home sales business through in-house construction. Based on our planning and development

Following the introduction by the government of the feed-in

tariff (FIT) system for electricity generated from renewable

energy in July 2012, we also entered the mega-solar busi-

ness in 2013. Leveraging our knowledge from having devel-

oped condominiums in the Tokyo metropolitan area that

Intellectual Capital: The technologies and know-how accumulated throughout the Group serve as the source for creating business value. Owning multiple original condominium brands, the Group is succeeding in setting itself apart from competitors

energy businesses, such as non-FIT solar power generation that does not depend on FIT as its new business model, and promoting development of biomass and wind power plants, and thereby contributing to a carbon neutral society.

capabilities for housing-related real estate, we are gradually expanding our business areas, including the liquidation business of developing income-generating real estate and selling it to real estate funds, and the used condominium purchase and resale business. Each of the businesses in our mainstay real estate business segment functions organically by leveraging their respective areas of expertise.

generate electricity from solar energy, we are actively working

to utilize natural energy while also giving consideration to any

contributions we can make to society. While our mainstay

new built-for-sale condominium business is susceptible to the

effects of population decline, we are developing the energy

business not only by diversifying risks with the real estate

business but also by viewing energy as a new growth area.

Output/Outcome

In the fields of real estate, energy, and asset management,	Group combines its real estate, energy, asset management
our focus is on businesses that underpin the lifestyles of peo-	and other businesses to meet diversifying housing needs and
ple and local communities. In our mainstay real estate busi-	to contribute to finding solutions to social challenges. We aim
ness, we are aiming to effectively utilize management	to achieve perpetual growth by working toward the cities of
resources, and Takara Leben, which plays its part in the	the future through co-creation with our various stakeholders.
Group, continues to play a central role in management. The

14

MIRARTH HOLDINGS Integrated Report 2023

MIRARTH HOLDINGS Integrated Report 2023

15

Risk & Opportunity

In light of changes in the external environment, the Group has identified major social issues with the potential to impact value creation over the medium to long term, and derived the risks and opportunities related to these. Then, the Group has identified the materiality with which it must engage by clearly defining these risks and opportunities. By appropriately addressing risks and leveraging opportunities, the Group will enable solutions to social problems and create value.

CONTENTS

Introduction

MIRARTH's Vision for the Future

Strategies for Creating the Future for People and Our Planet

The Future as Created Together with Our Stakeholders

Governance Supporting Value Creation

Data

Creating Lifestyles with Value	Forming Communities
Providing Comfortable Spaces of High Quality	Developing Environments and Cultures

Social issues and external environment

 Changes in the direction of economic policy

(Stricter laws and regulations, changes in

legal interpretation and management policy)

Risks

 Decreased number of commercialization projects

due to subsidy system revisions

 Lost business opportunities due to changes in FIT

 Stricter regulations for energy conservation

 Strengthening of regulations on building

standards

Opportunities

 Increase in commercialization projects due to utili-

zation of subsidy system

 Ongoing low-interest housing loans, eased tax

reduction requirements

 Introduction of new systems to replace FIT

Response	Relevant materiality		Related medium-term management
	plan strategies
 Pursue new businesses such as PPA	Responses to changes to business models brought by	1.	Further growth of core businesses
 Strengthening of information-gathering activities	an ageing society and depopulation	2.	Maximized group synergies
	Urban development and creating towns

Providing buildings and spaces that consider the environment and culture

Initiatives for renewable energy

Market environment

 Changes in lifestyles

(Growth in DINKs, dual-income households,

seniors relocating to condominiums, develop-

ment of telework)

 Diversification of housing needs

 Political instability, economic recession

 Rising interest rates

 Low birthrate coupled with an aging and

declining population

 Obsolescence of products and/or services

 Deteriorating supplier operating conditions

 Decline in buyer sentiment due to increasing hous-

ing loan interest rates

 Increased funding costs due to changes in

financial institution lending attitudes and financing

market conditions

 Intensified competition including new entrants,

and rapid environmental changes

 Decreasing demand for housing

 Capture demand generation/growth opportunities

via new products and services

 Expansion in demand for compact condominiums

 Expansion of business areas

 Increase in opportunities to acquire land and

properties

 Increase in M&A opportunities

 Increased demand for condominiums among seniors

 Increase in opportunities for proposing solutions

to vacant house issues and aging buildings

 Development of compact cities

• Reflection of purchaser needs
• Diverse product offerings
• Supply compact condominiums
• Redouble efforts to diversify financing methods
• Implement ongoing performance monitoring, countermeasures
• Strengthening of financial management
• Strengthening of overseas business
• Supply condominiums in the center of regional cities
• Supply compact condominiums
• Strengthening of overseas business

Support for diversifying lifestyles and globalization

Urban development and creating towns

Improving customer satisfaction Improving value of buildings

Support for diversifying lifestyles and globalization

Providing safe, secure products and services

Improving customer satisfaction Improving value of buildings

Support for diversifying lifestyles and globalization

Responses to changes to business models brought by an ageing society and depopulation

Urban development and creating towns

1. Further growth of core businesses
2. Maximized group synergies

5. Improvement of productivity and creation of new services through promotion of DX

1. Optimized business portfolio
2. Establishment of a stable financial ground

1. Further growth of core businesses

1. Optimized business portfolio

 Requests by power companies to con-

trol output

 Decline in electricity sales revenue

 Expansion of Corporate PPA

 Implementation of area strategies in energy business	Initiatives for renewable energy	1.	Further growth of core businesses
	Effective use of resources	2.	Maximized group synergies

Business activities

• Surge in land prices as well as raw material and construction (labor) costs
• Difficulty in recruiting human resources, shortage of labor, and decline in employee quality

• Soaring procurement prices
• Decrease in profit
• Slower sales due to higher selling prices
• Lower product and service quality
• Incurring of compensation costs, brand image deterioration
• Occurrence of occupational accidents

 Stabilize procurement prices mainly by diversifying sup-	Improving customer satisfaction	1.	Further growth of core businesses
pliers, decentralizing on a regional basis, and using	Improving value of buildings	2.	Maximized group synergies
long-term contracts
 Implementation of activities designed to improve	Promoting compliance	6.	Proactive ESG considerations
employee loyalty	Employee health management	7.	Personnel development and establish-
 Personnel system reform, enhancement and upgrading	Encouraging employment of diverse human resources
	ment of the rewarding workplace
of various training systems
Providing safe, secure products and services		environment
 Implementation of branding penetration measures
Improving value of buildings
 Housing performance evaluation report acquisition

 Holding Safety Conferences, building safe implementation management systems

Climate change, natural disasters, etc.

• Increasingly serious global environmen- tal issues
• Incidence of natural disasters and accidents
• Acts of terrorism, riots, and war
• Spread of infectious diseases

• Stricter regulations for greenhouse gas usage/ emissions and energy conservation
• More stringent building standards due to stricter laws and regulations
• Raw materials/component supply shortages
• Asset damage
• Disruption to Group business facilities, supply chains, and customers
• Disruption to Group business facilities, supply chains, and customers
• Geopolitical risk
• Supply chain fragmentation
• Disruption to Group business facilities, supply chains, and customers
• Disruption to business operations
• Decline in hotel and tenant occupancy rates

• Invigoration of renewable energy market due to growing interest in environmental issues
• Increased properties needing large-scale renovation
• Increased interest in disaster-resistant buildings

• Creating demand for new products and services to meet changing lifestyles

• Development of renewable energy generation facilities
• Reduction of carbon dioxide emissions
• Formulation of climate change policy
• Building of internal system in compliance with external evaluation organization standards
• Acquisition of green certifications
• Promote earthquake-proofing of buildings and facilities, implement countermeasures for tsunamis, torrential rain, and floods
• Stockpile emergency supplies necessary for disasters
• Conduct disaster preparation drills
• Introduction of safety confirmation system
• Conducting of credit checks on business partners
• Verification of geopolitical risk
• Stabilize procurement prices mainly by use of diversify- ing suppliers, decentralizing on a regional basis, and using long-term contracts
• Promote teleworking and enhance workplace health management
• Differentiation of products and services (equipment, meeting of specifications, installation of telework spaces through renovation)

Improving value of buildings

Providing buildings and spaces that consider the environment and culture

Responses to global warming

Initiatives for renewable energy

Effective use of resources  Responses to disasters

Employee health management

Improving value of buildings

Responses to global warming

Initiatives for renewable energy 

Effective use of resources 

Responses to disasters

Urban development and creating towns

Providing safe, secure products and services Responses to disasters

Employee health management

Providing safe, secure products and services

Improving value of buildings Responses to disasters

1. Proactive ESG considerations

1. Proactive ESG considerations

5. Improvement of productivity and cre- ation of new services through promo- tion of DX

7. Personnel development and establish- ment of the rewarding workplace environment

etc.	 Incidence of unauthorized access and	 Leakage of confidential information and stop-
cyberattacks	pages of production lines and logistics systems
Governance,		 Payment of damages and fines, incurring
	countermeasures expenses
	 Insufficient internal control function	 Improper conduct, leakage of confidential
		information
		 Payment of damages and fines, incurring counter-
		measures expenses
		 Delay in response to global environmental problems

 Strengthening of insurance contracts and information	Construction and maintenance of a corporate gover-	5. Improvement of productivity and cre-
security systems	nance system	ation of new services through promo-
 Ensuring of confidentiality	Promote compliance	tion of DX

• Restrictions on external access

 Establishment of internal regulations, conducting of training	6. Proactive ESG considerations
 Identify issues and promote resolutions via Compliance
Committee and Risk Management Committee
 Enhancement of in-house checking system
 Conducting thorough compliance education

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MIRARTH HOLDINGS Integrated Report 2023

MIRARTH HOLDINGS Integrated Report 2023

17