ORo : Medium-term Business Plan for 2022-2024

Translation

This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Medium-term Business Plan for 2022-2024

ORO Co., Ltd.

Source material (Japanese)

https://contents.xj-storage.jp/xcontents/AS01398/53ee3537/52bb/475f/b57b/316c88f3a5a5/140120220328512339.pdf

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INTRODUCTION

Purpose of Formulating the Medium-term Business Plan

The Group believes that its corporate mission is to enhance its corporate value over the medium to long term while contributing to the development of sustainable society. This mission is built on the conviction that the Group should co-prosper with its stakeholders, including society and the environment, by delivering more happiness and joy to more people, as set out in its corporate philosophy.

The Group discloses its Medium-term Business Plan this time for the purpose of presenting its earnings outlook over the next three years and its business strategies towards improving its corporate value over the medium to long term.

Over the last three years from the fiscal year ended December 31, 2019 through the fiscal year ended December 31, 2021, operating profit grew almost in line with the set targets but the growth of sales has decelerated more than expected, which has given us a sense of crisis. Accordingly, in the current Medium-term Business Plan, we have placed emphasis on presenting how we will invest in the two core business segments going forward to achieve our business growth over the medium to long term.

In addition to the disclosure of the Medium-term Business Plan this time, we will strive to achieve our management philosophy, seeing recent changes in the business environment as opportunities for growth. Specifically, we will restore the speed of our business growth over the next three years from the fiscal year ending December 31, 2022 through the fiscal year ending December 31, 2024. ----------------------------------------------------------------------------------------------------------------------P.3

1. SUSTAINABILITY

Key element 1: Pursuit of sustainability

ORO is committed in its corporate philosophy to becoming a company that delivers more happiness and joy to more people.

Under this philosophy, we believe it is important to both realize sustainable society and pursue the sustainable growth of the Company.

We will deliver new values to the world and contribute to realizing sustainable society by combining our technologies and creativity.

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2. HUMAN RESOURCES

Key element 2: Investment in human resources and the environment Our medium- to long-term growth relies heavily on human resources.

We will add higher values to our services through the discovery and creation of new ideas with sophisticated and diverse human resources.

We will also proactively invest in human resources in a bid to nurture next-generation human resources with a view to developing new businesses, adapting to new technologies, and having the new generation take over management roles in the future.

Ensuring diversity in the assignment of key personnel

We will build a work environment receptive to various career paths and work styles so that people of diverse characters are able to achieve self-fulfillment and, as a result, ensure and enhance the growth potential and organizational diversity of the Group.

Percentage of women in managerial positions 2021:5% → 2027:10%

Initiatives for developing key personnel

We will enhance our recruitment and personnel development system so we can foster superior personnel who can take up key roles in promoting our business.

Policy on human resources and the environment for ensuring diversity

Based on the Group's policy on human resources, we treat our employees fairly in all our corporate activities, including the recruitment, evaluation, assignment, pay raise, and promotion, and eliminate unreasonable elements that are irrelevant to their aptitude/capability.

Investments and initiatives for helping our employees manifest their abilities

We will promote health-oriented management to enhance the physical and mental health of our employees so that they stay healthy and motivated at work. ----------------------------------------------------------------------------------------------------------------------P.6

Notice on Voluntary Adoption of International Financial Reporting Standards (IFRS)

Beginning in the fiscal year ended December 31, 2021, the Company discloses its financial information in accordance with IFRS.

Please note that the financial information provided in the following pages is prepared under IFRS.

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Making aggressive investments to significantly accelerate growth of existing businesses

Cloud Solutions (CS) Business

Strengthen marketing activities to drive the acquisition of new customers Increase value added of products by strengthening product development

Digital Transformation (DX) Business

Upgrade services in response to ongoing shift of consumers to digitalization Strengthen sales forces at overseas business locations

Increase the variety and expand sales of tools produced overseas ----------------------------------------------------------------------------------------------------------------------P.9

Summary of Medium-term Business Plan

Consolidated Earnings Targets

Fiscal year ended Dec. 31, 2021	Fiscal year ending Dec. 31, 2022	Fiscal year ending Dec. 31, 2024
Revenue	5,530 million yen	6,180 million yen	8,757 million yen
Operating profit	2,027 million yen	2,050 million yen	2,486 million yen
Operating margin	36.7%	33.2%	28.4%
ROE	23.3%	20% or more

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Summary of Medium-term Business Plan Earnings Targets for Cloud Solutions Business

Fiscal year ended Dec. 31, 2021	Fiscal year ending Dec. 31, 2022	Fiscal year ending Dec. 31, 2024
Revenue	3,133 million yen	3,530 million yen	5,364 million yen
Operating profit	1,485 million yen	1,550 million yen	1,807 million yen
Operating margin	47.4%	43.9%	33.7%

----------------------------------------------------------------------------------------------------------------------Earnings Targets for Digital Transformation (DX) Business

Fiscal year ended Dec. 31, 2021	Fiscal year ending Dec. 31, 2022	Fiscal year ending Dec. 31, 2024
Revenue	2,397 million yen	2,650 million yen	3,393 million yen
Operating profit	519 million yen	500 million yen	679 million yen
Operating margin	21.7%	18.9%	20.0%

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Summary of Medium-term Business Plan Trend of Consolidated Earnings

Graph on left

Forecast Trend of Consolidated Revenue (millions of yen) Forecast trend of consolidated revenue:16.6%

Graph on right

Forecast Trend of Consolidated Operating Profit and Operating Margin (millions of yen) *Includes 22 million of other income (loss) not attributable to reportable segments. ----------------------------------------------------------------------------------------------------------------------P.14

Cloud Solutions Business Introduction to Cloud Solutions Business

Operating business dedicated to small- to medium-size knowledge-intensive service providers

Since 2006, we have delivered cloud-based ERP dedicated to knowledge-intensive service providers*, including IT/advertisement/consulting service providers.

ZAC, a mainstay product, has built a unique market position as Vertical SaaS** for small- and medium-size enterprises.

ERP Positioning Map by Industry/Target Customers Size

* Knowledge-intensive service industry: The type of businesses in which gold-collars (workers) provide tangible/intangible deliverables or highly professional services to customers In terms of cost structure, labor costs accounts for a significant proportion in overall costs.

** Vertical SaaS: SaaS dedicated to specific industries ----------------------------------------------------------------------------------------------------------------------Cloud Solutions Business Introduction to Cloud Solutions Business

Delivering vertically integrated solutions that instantaneously provide information useful for management decision-making

All ZAC-brand solutions are vertically integrated, and thus, are capable of timely providing the operators/managers of knowledge-intensive businesses with data necessary for knowledge-intensive services. These solutions also help improve their operational efficiency through unified systems.

Positioning Map by Industry/Business Domain

Vertically integrated system capable of outputting a management report combining the pieces of data spanning across multiple operational domains

Example: P/L by project, profit/loss by the type of service or client, sales/profit forecasts by segment (forecast analysis)

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Cloud Solutions Business Introduction to Cloud Solutions Business

Focusing on front office operations and meeting industry-specific requirements with the functions provided as standard

Since 2006, the Group has recognized about 2,000 function parameters as assets, based on its solid track record of having satisfied unique operational needs of its clients.

Most recently, more than 90%** of clients have introduced ZAC without any customization.

* Function parameters: Standard functions available for use just by turning flags ON or OFF, without the need for development of additional functions (Reforma PSA is not provided with function parameters)

**Actual results with clients that newly placed orders in 2020 and 2021 ----------------------------------------------------------------------------------------------------------------------P.17

Cloud Solutions Business Introduction to Cloud Solutions Business

Providing Periodic Version Upgrades While Maintaining Flexibility in Functionality

While ZAC is a large-scale system providing approximately 2,000* function parameters, we periodically upgrade the system within the scope of its maintenance service, continuing to improve its functionality and design and add new functions to the system.

Enhance customer satisfaction and lower Customer Churn rate through periodic version upgrades

* For ZAC Enterprise, approximately 13,000 functional parameters are available. ----------------------------------------------------------------------------------------------------------------------