Ｌｉｂ　Ｗｏｒｋ（1431） – （Delayed）Explanatory materials for financial results for the second quarter of the fiscal year ending June 2022

Explanatory materials for financial results for the second quarter of the fiscal year ending June 2022February 10, 2022Fukuoka Stock Exchange Q-Board/Tokyo Stock Exchange Mothers BoardSecurities Code: 14312Financial informationHighlights3 Consolidated net sales through 2Q were 6.524 billion yen (up 43.6% YoY from the same quarter of the previous nonconsolidated fiscal year), setting a new record high. Both operating profit and net income recorded double-digit growth with an increase exceeding 10%. Ordinary profit through 2Q was 304 million yen (up 94% YoY), a dramatic gain over the figure of 157 million yen projected at the start of the fiscal year. Due to the impact of skyrocketing lumber prices and the rising cost of other residential construction parts and materials, the gross profit margin on detached houses stalled at a point below the target level. Revision of sale prices is complete already, and an improvement is expected in 3Q and beyond. Customers approached through digital marketing generated strong performance, with figures roughly doubling YoY. Strategic revisions in 1Q also made significant contributions. The Tokyo Office opened in Shibuya to promote and enhance marketing efforts. Efforts to grow the customer base resulted in numerous new visitors to the newly opened MUJI HOUSE Kumamoto showroom and Afternoon Tea HOUSE detached houses. We also joined one of Japan’s largest networks of architects. As part of efforts to expand to other regions, we chose to exhibit in two venues of Kyushu’s largest general home exhibition spaces, both in Fukuoka.Highlights of results (consolidated)42Q of FY ended June 20212Q of FY ending June 2022YoYChange% changeNet sales4,545 million yen 6,524 million yen 1,979 million yen 43.6%Operating profit251 million yen289 million yen37 million yen14.9%Ordinary profit296 million yen304 million yen8 million yen2.8%Net income163 million yen183 million yen19 million yen12.2%Trends in net sales and ordinary profitOrdinary profit in 2Q of FY ending June 2022Initial forecast: 157 million yen / Actual: 304 million yen (up 94% vs. forecast)Progress toward full-year forecasts for FY ending June 2022 Net sales: 45% Ordinary profit: 35%5Unit: millions yen14,500 1500120088090060030009,404 COVID-196,597 5736,036 6,200 582 6,524 3041951573,0002,125 1772,433 1602,752 2,766 170168Kumamoto earthquakes5,104 3,765 3713,086 3,407 2,974 203215132532010/6 2011/6 2012/62013/62014/62015/62016/62017/6 2018/6 2019/6 2020/62021/6Net salesOrdinary profitInitial forecasts2022/6Actual(2Q)2022/6Forecasts15,00012,0009,0006,00006Business reportBusiness report: Opening the Tokyo Office7Our goal is to harness unique digital marketing initiatives to establish a position as a provider of detached house platforms.To enhance marketing and promotional efforts, we have opened a new Tokyo Office in Shibuya Hikarie.This is our first office in Tokyo.We now operate a total of three offices in the Kanto area: Yokohama (Takuei Home), the Lib Work Chiba Showroom, and the Lib Work Tokyo Office.Saitama PrefectureTokyo OfficeTokyoKanagawa PrefectureChiba PrefectureLib Work Chiba ShowroomTakuei HomeBusiness report: Progress on gross profit8We’re currently implementing plans to bring major construction work in-house, thereby improving gross profit margins on detached houses.The gross profit margin on detached houses has stalled this fiscal year due to the impact of skyrocketing lumber prices and cost hikes of other residential construction parts and materials.Trend in the gross profit margin on detached houses in previous years30.1%28.1%28.0%28.0%24.9%2018/6 2019/62020/62021/62022/6 (2Q)35%FY ending June 2023 (target)Revision of sale prices is complete. An improvement is expected in 3Q and beyond.We’re currently targeting gross profit margin on detached houses of 35% through bringing major construction work in-house.Business report: A customer approach based on digital marketing9Thoroughgoing changes in our customer approach based on digital marketing in 1Q generated strong results in 2Q: up 207% YoY. The results generated by this customer approach based on digital marketing remains strong, due in part to the tailwinds of demand from consumers remaining at home in response to COVID-19.YoY changeDoubled2021/6(2Q)2022/6(2Q)Medium-term management plan “NEXT STAGE 2023”: Becoming a provider of detached house platformsBusiness report: Growth of our YouTube channel10The Lib Work Ch YouTube channel surpassed 10 million views in October 2021. The number of subscribers exceeded 34,000 in December. We’re currently moving ahead with efforts to convert viewers into fans. This channel is also generating orders.More than 10 million views(10,000 views)1000500Total views(Screen capture from February 1, 2022)June 2020December 2021Medium-term management plan “NEXT STAGE 2023”: Aiming to be the No. 1 YouTube channel on detached housesBusiness report: Exhibiting in Kyushu’s largest home exhibition spacesWe have decided to exhibit in two venues of Kyushu’s largest general home exhibition spaces (hit Marina-dori and hit Onojo), in Fukuoka. This means we will be operating four showrooms in total in the Fukuoka area.11The city of Fukuoka features one of the fastest-growing populations of any urban community in Japan.hit Marina-dori home exhibition spaceHas 37 lots in total (including the spring 2022 expansion). This home exhibition space is close to several popular retail facilities, including the city’s landmarks, Fukuoka Tower and the Fukuoka Dome.MUJI HOUSE Fukuoka Showroomsketch Fukuoka KasuyaShowroomhit Onojo home exhibition spaceHas 31 lots in total. Located in a popular bedroom community a little to the south of central Fukuoka, where the population is growing from year to year.*Map of suburban areas around the city of Fukuoka(Source: Data published by the city of Fukuoka, May 20, 2020)Medium-term management plan “NEXT STAGE 2023”: Expanding showroom areas nationwideBusiness report: Venturing into the luxury prêt-à-porter home marketWe have joined Proto Bank Station, operated by Architects Studio Japan Inc. This will allow us to secure a new customer base and further grow our businesses by creating the residential industry’s first prêt-à-porter luxury ready-built home market.12Construction costLuxury ready-built homesHomes designed by architectsHouse makersNeeds in this segment outpace products.Local contractorsPower buildersBuilding the residential industry’s first prêt-à-porter marketBrand powerArchitects Studio Japan’s luxury ready-built homes from a network of about 3,000 architects (Plan DB)Advantages of drawing on this platform for luxury ready-built homes Simplifies approaches to the architectural market, which seems hard to access for ordinary customers. Significantly reduces the labor required in meetings between sales and designers. Reduces the labor required for approval procedures, since plans already have received architectural approval. Reduces risk of misunderstandings with customers, since actual photos and videos of completed homes are available.Medium-term management plan “NEXT STAGE 2023”: Growing the customer baseBusiness report: Progress on collaborative products13Both the newly opened MUJI HOUSE Kumamoto showroom and the Afternoon Tea HOUSE (Lib Work Oita Showroom) demonstrated success in drawing customers through tour reservations during the COVID-19 pandemic. Both offer highly satisfying tour experiences.Q2 (YoY change)Q2 (YoY change)New visitorsNew visitors1.9 times1.8 timesOpened June 2021: MUJI HOUSE KumamotoOpened September 2021: Afternoon Tea HOUSE (Lib Work Oita Showroom)This showroom exhibits the three MUJI model house designs: the wood home, window home, and sunlight home. These photos show the popular single-story sunlight home. With no steps between the deck and the interior floors, and doors and windows that can be fully opened, this design blurs the boundaries between exterior and interior and creates seamless continuity between living space and surrounding land.Medium-term management plan “NEXT STAGE 2023”: Growing the customer baseAfternoon Tea HOUSEFuture expansion plansPreparations are underway to open: Chiba Showroom (January) Fukuoka Showroom (May)Business report: Named an EOY 2021 Japan finalist14President and Representative Director Seguchi was named Kyushu district representative entrepreneur and winner of the Accelerating section grand prize in the EY Entrepreneur Of The Year 2021 Japan awards.EY Entrepreneur Of The YearA global event recognizing the contributions of leading entrepreneurs who tackle the challenges posed by new business domains to generate innovations that bring growth and prosperity to societyBusiness report: Deep Alpha 3D-printed homes15We’ve launched R&D efforts on Deep Alpha 3D-printed homes as part of efforts to develop and offer distinctive and innovative homes unlike any other. We hope to offer these homes not just in Japan, but in developing countries around the world.Business report: Progress in the construction business16Takuei Home, a Group company involved in the construction business mainly in Kanagawa Prefecture, has recorded favorable business performance. Proactive purchases of new building sites and increased hiring since Takuei Home joined the Group have helped boost numbers of homes sold by 41.7% YoY.YoY growth in number of homes soldUp 41.7%(Examples of homes for sale as of February 5, 2021)2021/6 (2Q)2022/6 (2Q)Future visionBecoming a provider of detached house platformsFuture vision: SaaS service utilizing AI19We’re currently developing a software-as-a-service (SaaS) business by building a database of detached house floorplans from various providers. Based on customer questionnaires, an AI engine will automatically generate computer graphics and virtual reality experiences of the floorplans. We plan to provide this service to contractors and other businesses nationwide.Computer graphics and virtual reality experiences generated automatically after the user answers a questionnaire on a smartphoneFuture vision: Launching owned media20We offer a free magazine for detached homes that gives users access to expert answers from architects to questions about building detached homes. Our goal is to build the Lib Work brand and convert the readers to potential customers by providing accurate information to answer the questions and concerns of future homebuyers.Collecting specific informationOwned mediaCommunicating beneficial information on our ownSearching for land [e-toti.net]One-story homes [e-hiraya.net]Category siteCategory siteEarning user trust and confidence by providing accurate information from housing specialistsSocial Social mediamediaDesign [e-chumon.net]Matching consumers to architects [e-kenchikushi.net]Securing and developing prospective customersDisseminating informationVideo experienceYouTube channelForward-Looking StatementThis document contains “forward-looking statements” regarding the intent, belief or current expectations of us and our management with respect to our future financial condition and results of operations. In many cases, but not all, these statements contain words such as “forecast,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “probability,” “risk,”“project,” “should,” “seek,” “target,” “will” and similar expressions. Such forward- looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those expressed in or implied by such forward-looking statements contained or deemed to be contained herein. Given the risks and uncertainties, you should not place undue reliance on forward- looking statements, which speak only as of the date of this document. We undertake no obligation to update or revise any forward-looking statements.Contact:Administration DepartmentLib Work Co., Ltd.TEL: +81-968-44-3559https://www.libwork.co.jp/