Treasure Factory Co., Ltd.TSE: 3093

Plan Toward Being Eligible for Continued Listing Criteria for New Market Segment

· Issued by Treasure Factory Co., Ltd.

TSE 1st Section Code: 3093

Plan Toward Being Eligible

for Continued Listing

Criteria for New Market

Segment

Treasure Factory Co., Ltd.

December 15, 2021

Status of Eligibility for Continued Listing Criteria

  • Status of Eligibility for Continued Listing Criteria

As of the standard date of transition (June 30, 2021), the Company does not meet the following continued listing criteria for the Prime Market.

Criteria for eligibility for

The Company

continued listing on the

(as of the standard

Prime Market

date of transition)

Market

10 billion yen

5.6 billion yen

capitalization of

tradable shares

  • Period of the Plan

The period to execute the Plan Toward Being Eligible for Continued Listing Criteria for New Market Segment ("the Plan") shall be three fiscal years from the end of the current fiscal year ending February 2022 (FY2022) to the end of the fiscal year ending February 2025 (FY2025). The Company will carry out the initiatives described in the Plan and in the Medium-Term Management Plan already announced on April 14, 2021.

  • Reason for selecting the Prime Market

The Company aims to increase its market capitalization and improve its corporate value in the uptrending reuse market by achieving continuous growth in sales and profits in accordance with its Medium-Term Management Plan. The Prime Market requires listing companies to have a high level of liquidity and appropriate level of market capitalization, to keep a higher quality of corporate governance, and to commit to sustainable growth and improvement of medium- to long-term corporate value, and the Company has prospects of achieving the levels of the Prime Market on a medium-term basis. Going forward, in order to achieve sustainable growth in the stock markets, the Company determines that it is in the best interest of the Company to select and apply for listing on the Prime Market. Based on the results of future forecasts of the Company's market capitalization of tradable shares in view of the Medium-Term Management Plan, the Company expects to meet the eligibility criteria for the Prime Market as of the end of FY2025. (*For business forecasts and prospects for market capitalization of tradable shares, please refer to page 3 onward of this document.)

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Medium-Term Management Plan for FY2022-FY2025 [Newly Announced Plan for FY2025]

The Company has updated its Medium-Term Management Plan previously announced in April 2021 (FY2022-FY2024) to extend the period

through FY2025.

With the promotion of SDGs and efforts to create a more sustainable society, people are taking greater steps towards the concept of

reuse. In the reuse market that is expected to grow further, the Group as a whole will strive to continue achieving an average annual

growth rate of 10% to maintain stable profit growth around its core reuse business.

Four-year average

FY2022

FY2023

FY2024

FY2025

of annual growth

rates (CAGR)

Net sales

22,600 million

25,000 million

27,800 million

31,000 million

11.1%

yen

yen

yen

yen

Ordinary profit

820 million

1,040 million

1,320 million

1,580 million

24.6%

yen

yen

yen

yen

Ordinary profit ratio

3.6%

4.2%

4.7%

5.1%

－

Profit attributable to

540 million

680 million

870 million

1,050 million

24.9%

yen

yen

yen

yen

owners of parent

Stores opened per year

15-20 stores

20-25 stores

25-30 stores

25-30 stores

－

*Plans for FY2022-FY2024 have not been changed from the figures initially announced on April 14, 2021.

Assumptions and notes on the Plan

  • Growth of existing stores are assumed to be as usual when incorporating in the Plan.
  • As there are many uncertain elements related to M&A, increase in profit and expenses for M&A including intermediary fees are not included in the Plan.
  • The Plan may be impacted in the event the Company fails to secure the number of new store properties as originally assumed.

• The Plan may be significantly impacted in the event of unexpected situations such as the spread of COVID-19.

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• The Medium-Term Plan may be revised as necessary.

Management Policies to Achieve the Medium-Term Management Plan

Policy

1

Policy

2

Policy

3

Policy

4

Policy

5

Development of reuse business

  1. Open 20-30 new stores per year mainly in the Kanto, Kansai, Chubu, and Kyushu regions to expand the reuse network. These stores will serve as physical purchase and sales locations and also as hubs for online sales.
  2. Through recovery of earnings of the Group's reuse companies, achieve continuous contribution to consolidated profit.

Investment in new businesses

  1. Expand the distribution bases in Kanto and Kansai regions for full-scale deployment of the B2B auction business.
  2. Accelerate growth by offering our original moving & removal plus purchasing services at the same time. In addition to partnering with moving companies, the Company will have its own moving & removal division to provide moving services.
  3. Continue investing in the rapidly growing rental business to create a new pillar of business.

Growth in overseas markets

  1. The Thailand business turned a single-year profit in the fiscal period ended November 2021 and will establish a stable profit structure and promote the opening of new stores going forward.
  2. In Taiwan, which the Company newly entered, aim for early opening of the first store to establish a reuse business model and achieve a single-year profit.

Growth through M&A

Actively conduct M&A of companies that can supplement the Company's business, including other reuse companies and moving companies, which will enable us to leverage synergies within the Group.

Growth through investments in digital transformation

Utilize the development capabilities of the Company's systems division and the system developer subsidiary to

streamline operation using AI, improve the efficiency of appraisals, and create opportunities for new purchases and

sales through digital investments to increase the Group's revenue.

4

Competitive Advantages of the Company

The Company has established competitive advantages by creating a unique business model. Based on its system development capabilities, the Company will constantly improve its business model and services to maintain its competitive advantages in a sustainable manner.

Purchasing in multiple categories

through multiple channels

  • Purchasing of approximately 1.2 million purchases of approximately 10 million items through in-store,home-visit,home-delivery purchases, purchases from companies, purchases in moving & removal, and purchases through auctions (for each, 20% increase year on year).
  • Capable of purchasing in all genres by utilizing the system for general reuse

Reduction of inventory turnover period

with the use of in-house auction

capabilities

  • Cash out early items that are difficult to sell in general retail and slow moving inventory through the use of in-house auction
  • Having the auction channel enables the
    Company to purchase a broader range of items, leading to increased purchasing

Multiple-store operation in diverse

business categories

  • By possessing diverse business categories, the
    Group has established a multiple-store operation system which allows opening of new stores in various locations
  • By handling different categories, different types of Group stores can be located close to each other

System development and data analysis

capabilities

  • With its in-house systems development division and subsidiary for system development, the Group will develop its own systems, apps, and online sales systems to make improvements quickly
  • Established a system in which data is updated on a real time basis, data of all bases are shared, and the PDCA cycle based on data analysis is rapidly reflected

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