マーキュリアホールディングス（7347） – [Delayed] Financial Highlights for the Fiscal Year 2021

Mercuria Holdings Co., Ltd.Financial Highlights for the Fiscal Year Ended December 31, 2021Mercuria Investment GroupStock code: 7347February 10, 2022Notes: The information in this presentation is based on the judgments of Mercuria Holdings as of the time this presentation was prepared. Mercuria Holdings does not guarantee the accuracy of this information, which may be revised at any time without prior notice. Opinions, forecasts, and other information not based on facts may differ significantly from actual results of operations and other outcomes for a variety of reasons.The provision of information is the sole purpose of this presentation. This is not a solicitation to invest in securities issued by Mercuria Holdings or in a fund operated by the group. This presentation is copyrighted material of Mercuria Holdings. The contents of this presentation cannot be disclosed or leaked to a third party without the consent of Mercuria Holdings. All figures in this presentation are on a consolidated basis.© Mercuria Holdings Co., Ltd. All rights reserved.Contents1. 2021 Financial Highlights2. The Holding Company Structure3. Profit Structure and Business Unit EarningsReference: Plan for Compliance with New Market Listing Standards (Submitted on December 6, 2021)1. 2021 Financial Highlights2021 Highlights1. Consolidated earnings2. Business plans/ New funds3. Existing fund operations4. Corporate——-2021 consolidated results: operating revenue of ¥4.2 billion andordinary profit of ¥1.8 billion Profit was ¥1.3 billion and five-year average of net income stood at ¥1.19 billionIn the aircraft leasing business, established a joint venture called Airborne Capital to specialize in the establishment and administration of aircraft leases based on the outlook for aircraft investments after the pandemicPreparations for participation in the Taiwan Mega-solar Development Project with Maiora, the strategic partner for Enex Infrastructure REIT- Management and investments of Buyout Fund I are as planned(9 cumulative investments/3 cumulative exits). To meet expected business succession needs, preparations have started to establish Buyout Fund II with contributions mainly from Buyout Fund I investors as well as from overseas investors.Established Mercuria Holdings to switch to a holding company structureUsed equity financing to procure about ¥2 billion to fund investments in the buyout business and the Taiwan mega-solar businessSelection of Prime Market for the listing with the new TSE market segments4© Mercuria Holdings Co., Ltd. All rights reserved.1. Consolidated Financial Results (1/4) SummaryNote: There is no consolidated financial information for 2020 and prior years because Mercuria Holdings was established on July 1, 2021. For reference, comparisons are provided with the consolidated financial data of the former organization where Mercuria Investment was the parent company. (Same hereafter in this presentation) Operating revenue of ¥4.2 billion and ordinary profit of ¥1.8 billion vs. the 2021 forecasts of ¥3.8 billion and ¥1.8 billion, respectively. Profit was ¥1.3 billion and five-year average of net income stood at ¥1.19 billionOperating revenueOrdinary profitFive-year average of net incomeMillion yen110% of the ¥3.8bn fct. for 2021Million yen101% of the ¥1.8bn fct. for 2021Million yenNote2017201820192020202120172018201920202021201720182019202020215© Mercuria Holdings Co., Ltd. All rights reserved.Note: 2020 operating revenue includes one-time revenue of ¥2.8 billion associated with the restructuring of Spring REIT.827 1,023 1,124 1,105 1,195 —– – 100 200 300 400 500 600 700 800 900 1,000 1,100 1,20017/12期18/12期19/12期20/12期21/12期2,208 2,083 1,800 758 1,817 – 250 500 750 1,000 1,250 1,500 1,750 2,000 2,25017/12期18/12期19/12期20/12期21/12期4,224 4,122 4,718 6,184 4,170 – 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,50017/12期18/12期19/12期20/12期21/12期1. Consolidated Financial Results (2/4)Vs. 2020, Vs. Plan Operating revenue decreased following the effect in 2020 of the change to gross revenue recognition, but the operating gross profit increased. Ordinary profit was ¥1.8 billion, up 240% YoY and 101% of revised 2021 forecast.(1)2020 Results(2) 2021 Results(3) 2021ForecastsPct. of 2021 forecast(2) / (3)Unit: Million yenOperating revenueFund management(management fees)Fund management(performance fees)Principal investments/OthersTotal1,7505633,8716,184Operating costs(3,758)Operating gross profit2,426SG&A expenses(1,654)(1,875)Operating profitOrdinary profitProfit attributable to owners of parent7727585256© Mercuria Holdings Co., Ltd. All rights reserved.YoY(2) / (1)108%130%40%67%14%150%113%228%240%248%1,8947301,5464,170(531)3,6381,7631,8171,3043,800110%1,8001,8001,20098%101%109%1. Consolidated Financial Results (3/4)Operating Gross Profit Performance fees between 2017 and 2021 are ¥6.2 billion, including ¥3.7 billion in the Growth Fund I and ¥1.7 billion in the value investment fund, which was established during the global financial crisis. Principal investments have become a major source of revenue along with fund management fees and performance fees because of consistent dividend income from Spring REIT and the strong performances of Buyout Fund I, established in 2016, and other funds.Unit: Million yenFund management (performance fees)Principal investments/OthersFund management (management fees) Fund management (performance fees) Based on distributions to investors, investment returns and other factors (upside revenue) Principal investments/Others General partner investment gain/loss: Gain/loss corresponding to ownership interests in funds (Plus) Dividends/Capital gains: Dividend income and capital gains involving direct investments Fund management (management fees) Fees are received for the provision of fund administration and management services (Stable and recurring source of revenue)7© Mercuria Holdings Co., Ltd. All rights reserved.201320142015201620172018201920202021875 1,414 1,546 1,562 1,663 1,978 1,701 1,750 1,894 69 127 294 531 325 593 764 113 1,015 346 75 38 152 2,163 1,462 1,271 563 730 – 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,50013/12期14/12期15/12期16/12期17/12期18/12期19/12期20/12期21/12期ファンド運用（成功報酬）自己投資/その他ファンド運用（管理報酬）1. Consolidated Financial Results (4/4)Five-year Average of Net Income The normal business cycle for Mercuria Holdings is five to 10 years. In addition, performance fees and other one-time revenue have a big effect on annual earnings. As a result, the five-year average of net income is used as a key performance indicator. The five-year average of net income has generally been climbing steadily and was ¥1.19 billion in 2021.Unit: Million yenFive-year average of net income8© Mercuria Holdings Co., Ltd. All rights reserved.201320142015201620172018201920202021Y-4Y-4Y-4Y-4Y-4Y-4Y-4Y-4Y-4Y-3Y-3Y-3Y-3Y-3Y-3Y-3Y-3Y-3Y-2Y-2Y-2Y-2Y-2Y-2Y-2Y-2Y-2Y-1Y-1Y-1Y-1Y-1Y-1Y-1Y-1Y-1YYYYYYYYY198 328 437 577 827 1,023 1,124 1,105 1,195 – 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,30013/12期14/12期15/12期16/12期17/12期18/12期19/12期20/12期21/12期YY-1Y-2Y-3Y-45年平均当期純利益Reference: Approximate Goal for Business Operations and Contributions to EarningsThere is a time lag between fund establishment and the receipt of performance feesFund management (performance fees)Principal investments/OthersFund management (management fees)Unit: Million yenPerformance feesPerformance feesPerformance fees¥6.5 billionAircraft leasing fundInfrastructure Warehousing FundBuyout Fund IIBuyout/Growth/Solar power/Aircraft/Real estateOthersGrowth Fund IPJ SweepBuyout Fund IBiztechKiraboshiSolar power/Aircraft/Real estate200520102016202120252030Before listing (2005-2015)After listing – Present (2016-2021)Medium term (2022-2025)Long term (2026-2030)9© Mercuria Holdings Co., Ltd. All rights reserved. – 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,00005/12期10/12期16/12期21/12期25/12期30/12期ファンド運用（成功報酬）自己投資/その他ファンド運用（管理報酬）Reference: Performance FeesCumulative Performance Fees of Prior-year Funds and Current Fund Performance FeesFund categoryMajor PartnersTotal fundsDurationInvestment strategiesTotalperformance feesGrowth Fund IGrowthDBJ, etc.¥7.0bn2005-¥3.73bnProject SweepValueOverseas investors¥9.8bn2010-2017¥1.60bnOther fundsGrowth/ValueDomestic/overseas investors-Buyout Fund IBuyoutDBJ, SMTB, etc.¥21.3bnKiraboshi FundBuyoutKiraboshi Bank, Japan Post Bank, etc.¥2.6bnBiztech FundGrowthITOCHU, SMTB, etc.¥3.1bnBuyout Fund IIBuyoutPlanning stageTarget: ¥40.0bn-¥50.0bnPlanning stageSpring REITListed in HKEXReal estateGrowth Fund IIGrowthDBJ and othersAircraft leasing fundInfrastructure Warehousing FundTaiwan Solar Power FundCFCFCFPension funds, Shinkinbanks, regional banks, etc.ITOCHU ENEX, SMTB,etc.Planning stageApprox. ¥56.0bn¥3.1bnApprox. ¥12.0bn¥7.5bnPlanning stage2012-2016-2018-2019-2013-2013-2018-2020-Planning stage¥1.20bn(Investment period)(Investment period)(Investment period)¥0.11bn(Open-end)(Investment period)(Investment period)(Investment period)–fundsPrior-year investmentsBusiness REITSpring Asset investments10© Mercuria Holdings Co., Ltd. All rights reserved.Reference: Trend of AUM as Basis for Fund Management Fees Plan to establish Buyout Fund II (business investment), the Taiwan Solar Power Fund (asset investment) and to add the assets to Spring REIT, so that we can increase the total management fees.Business investmentsSpring REITAsset investmentsBillion yen30.0Billion yen180.0Billion yen20.0予想16億円予想比113%25.020.015.010.012.65.08.1150.0120.090.060.030.026.727.025.523.3168.2151.0157.6154.8158.1146.217.515.012.510.07.55.02.517.512.79.89.88.04.911End-Dec. 2016End-Dec. 2018© Mercuria Holdings Co., Ltd. All rights reserved.End-Dec. 2020End-Dec. 2017End-Dec. 2019End-Dec. 2021End-Dec. 2016End-Dec. 2017End-Dec. 2018End-Dec. 2019End-Dec. 2020End-Jun. 2021End-Dec. 2016End-Dec. 2017End-Dec. 2018End-Dec. 2019End-Dec. 2020End-Dec. 202198 98 49 80 127 175 – 25 50 75 100 125 150 175 20016/12末17/12末18/12末19/12末20/12末21/12末81 126 233 255 267 270 – 50 100 150 200 250 30016/12末17/12末18/12末19/12末20/12末21/12末1,510 1,682 1,576 1,548 1,462 1,581 – 300 600 900 1,200 1,500 1,80016/12末17/12末18/12末19/12末20/12末21/6末Reference: Principal InvestmentsAmount of Assets, Liabilities and Principal Investments At the end of 2021, principal investments were ¥11.1 billion and loans were ¥900 million. Considering the use of loans and financial leverage too.Assets and liabilitiesPrincipal investments(Operational investment securities/Operating loans)Asset Asset investmentsinvestments ¥2.2 billion¥2.2 billionBusiness investments¥2.5 billionSpring REIT¥6.5 billion12© Mercuria Holdings Co., Ltd. All rights reserved.事業投資25 Spring REIT65 資産投資22 Billion yenEnd-Dec.2020End-Dec.2021Business investments1.72.5Spring REIT5.66.5Asset investments2.92.2Operational investmentsecurities/Operating loans10.311.1Cash and deposits2.94.7Trade accounts receivable0.40.5Other current assets0.50.4Investment securities0.30.3Other non-current assets0.80.9(1) Total assets15.118.0Business investments–Spring REIT1.00.9Asset investments0.3-Borrowings1.30.9Other current liabilities0.60.8Other non-current liabilities0.70.5(2) Total liabilities2.62.2(3) Net asests (1) – (2)12.515.81. Consolidated Financial Position (1/2) Equity capital increased because of consistent profitability and stock offerings. Cash and deposits are to be used for the establishment of Buyout Fund II and the investment in the Taiwan Solar Power Fund.Equity capitalCash and deposits/Principal investmentsUnit: Million yenUnit: Million yenEquity capitalEquity ratioOperational investment securities/Operating loansCash and depositsEnd-Dec. 2016End-Dec. 2017End-Dec. 2018End-Dec. 2019End-Dec. 2020End-Dec. 2021End-Dec. 2016End-Dec. 2017End-Dec. 2018End-Dec. 2019End-Dec. 2020End-Dec. 202113© Mercuria Holdings Co., Ltd. All rights reserved.2,080 4,164 9,282 10,815 10,270 11,143 2,871 8,259 4,052 3,551 2,880 4,675 – 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,00016/12末17/12末18/12末19/12末20/12末21/12末営業投資有価証券/営業貸付金現預金4,983 10,429 11,523 12,166 11,908 15,108 89%80%82%78%79%84%0%10%20%30%40%50%60%70%80%90%100% – 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,00016/12末17/12末18/12末19/12末20/12末21/12末自己資本自己資本比率1. Consolidated Financial Position (2/2) Equity capital increased ¥3.2 billion to ¥15.8 billion mainly because of ¥1.3 billion from earnings and ¥2.1 billion through stock offerings. Borrowings of ¥900 million for same-boat investments in Spring REIT.Unit: Million yenEnd-Dec. 2020End-Dec. 2021End-Dec. 2020End-Dec. 2021Cash and deposits2,880(19%)4,675(26%)Current assetsTrade accounts receivableOperational investment securities/Operating loansOther current assetsInvestment securitiesOther non-current assetsassetscurrent Non-374 (2%)541 (3%)10,270(68%)11,143(62%)463 (3%)441 (2%)305 (2%)281 (2%)Borrowings423 (3%)130 (1%)liabilitiesCurrent liabilitiescurrent Non-Other current liabilitiesLong-term borrowingsOther non-current liabilities574 (4%)806 (4%)874 (6%)744 (4%)713 (5%)509 (3%)Equity capital11,908(79%)15,108(84%)Net assets(Breakdown)Shareholders’ equityValuation difference on available-for-sale securitiesForeign currency translation adjustment(Breakdown)12,492(Breakdown)15,575(383)(201)(418)(48)14© Mercuria Holdings Co., Ltd. All rights reserved.760 (5%)929 (5%)Other net assets561 (4%)713 (4%)1. Consolidated Cash Flows Funds from the stock offering with the 2017 TSE First Section listing were used beginning in 2018 for same-boat investments in Mercuria-managed funds and for timing bridge investments (operating cash flows) for the establishment of funds in the future. In 2021, used a stock offering (financing cash flows) for the purpose of same-boat investments in Buyout Fund II and the Taiwan Solar Power Fund.Unit: Million yen15© Mercuria Investment Co., Ltd. All rights reserved.2016End-Dec. Operating InvestingCFCFCFCFCFCFCFCFCFCFCFCFCFCFCFFinancingexchangeEffect of rate change2017End-Dec. Operating InvestingFinancingexchangeEffect of rate change2018End-Dec. Operating InvestingFinancingexchangeEffect of rate change2019End-Dec. Operating InvestingFinancingexchangeEffect of rate change2020End-Dec. Operating InvestingFinancingexchangeEffect of rate change2021End-Dec. 2,871 8,259 4,052 3,551 2,810 4,605 765 19 4,673 30 4,205 102 131 31 454 28 6 12 176 390 150 25 179 227 1,345 44 – 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,00016/12末営業CF投資CF財務CF換算差額17/12末営業CF投資CF財務CF換算差額18/12末営業CF投資CF財務CF換算差額19/12末営業CF投資CF財務CF換算差額20/12末営業CF投資CF財務CF換算差額21/12末2. Dividends In accordance with the dividend policy, Mercuria Holdings plans to pay a dividend of ¥20 for 2021, which will result in an average payout ratio of 35.9% of net income during the past five years.Dividend policy• Dividends are the primary way to distribute earnings to shareholders and the priority is dividend stability.• The current payout ratio guideline is about 30%. As performance fees and other one-time revenue has a big effect on earnings, the guideline is to use average net income for five years as the basis. Using this average reduces the effects of earnings swings from year to year and increases the stability of dividends.• Profit attributable to owners of parent is used as earnings for the five-year average. However, years up to 2013 are not included in this average because these financial statements were not audited.• The goal is to raise the dividend along with growth of the five-year average of net income.Unit: Million yen2017 Results2018 Results2019 Results2020 Results2021 Results(1) Profit attributable to owners of parent(2) Five-year average of net income(3) Dividend per share(4) Total number of outstanding shares(5) Total dividends(3) × (4)(6) Dividend payout ratio(5) / (2)1,490926¥1729331.6%17,234,500shares17,466,100shares17,606,500shares17,644,900shares21,443,100shares1,4111,023¥1831430.7%1,2451,124¥1933529.8%5251,105¥2035331.9%1,3041,195¥2042935.9%16© Mercuria Holdings Co., Ltd. All rights reserved.3. 2022 Consolidated Earnings Forecast Due partly to the large volume of revenue from principal investments in 2020, forecast operating revenue of ¥4.0 billion and ordinary profit of ¥1.9 billion. Forecast a five-year average of net income of ¥1.16 billion and a dividend per share of ¥20.Operating revenueOrdinary profitFive-year average of net incomeMillion yenMillion yenMillion yenFund management (performance fees)Principal investments/OthersFund management (management fees)17© Mercuria Investment Co., Ltd. All rights reserved.2017201820192020202120172018201920202021201720182019202020212022Forecast2022Forecast2022Forecast1,663 1,978 1,701 1,9781,894 4,000 399 681 1,772 3,871 1,546 2,163 1,463 1,246 563 730 – 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,50017/12期18/12期19/12期20/12期21/12期22/12期予想ファンド運用（成功報酬）自己投資/その他ファンド運用（管理報酬）827 1,023 1,124 1,105 1,195 1,157 – 100 200 300 400 500 600 700 800 900 1,000 1,100 1,20017/12期18/12期19/12期20/12期21/12期22/12期予想2,208 2,083 1,800 758 1,817 1,900 – 250 500 750 1,000 1,250 1,500 1,750 2,000 2,25017/12期18/12期19/12期20/12期21/12期22/12期予想2. The Holding Company StructureOutline of the Mercuria Investment GroupCompany Profile (As of January 1, 2022) Company name:Mercuria Holdings Co., Ltd. Major Affiliates:Daibiru Bldg., 1-3-3 Uchisaiwaicho, Chiyoda-ku, TokyoJuly 1, 2021 (the former Mercuria Investment Co., Ltd. was established on October 5, 2005) Head office: Established: Capital: ¥4,057,656,380 Business: Holding company, fund management business and principal investment business Mercuria Investment Co., Ltd. (Tokyo)Management of private equity funds including buyout funds, growth funds, an infrastructure fund, an aircraft leasing fund, etc. Spring Asset Management Limited (Hong Kong)Management of Spring REIT (listed on the Hong Kong Exchanges and Clearing) MIBJ Consulting (Beijing) Co., Ltd. (China)Management of China Central Place (owned by Spring REIT) and consulting about investments in China Management personnel: Mercuria (Thailand) Co., Ltd.Toshihiro Toyoshima, CEOHideya Ishino, Director, COO, Head of Asset Investment Dept.Kiyoto Koyama, Director, CIO, Head of Business Investment Dept. Support for the business operations of Japanese companies in Thailand and consulting about investments in ThailandTokyo Stock Exchange, First Section (stock code 7347) Mercuria Airborne Capital Co., Ltd. (Tokyo) Number of employees: 83 (consolidated) Listing: Major shareholders: Development Bank of Japan Inc.ITOCHU CorporationSumitomo Mitsui Trust Bank, Limited19© Mercuria Holdings Co., Ltd. All rights reserved. Enex Asset Management Co., Ltd. (Tokyo)Asset management for Enex Infrastructure Investment Corporation (listed on the Tokyo Stock Exchange)Aircraft leasing fund and aircraft financing businesses Business Market Co., Ltd. (Tokyo)Business succession assistance using the internetOur Mission and Three Management Philosophies Mission“Change today’s Japan through Power of Funds” Three Management PhilosophiesCrossing National, Mental and Generational Boundaries —Cross BorderOur objective is to identify unique investment opportunities through our broad network of industrial and investment contacts, transcending all boundaries such as geographical, mental and generational borders and focusing on investment in growth areas and growth potential around the world based on Japan’s strengths.Becoming a World-class Investment Group —Global ReachWe aim to be a world-class investment group that seeks to earn excess returns in areas of low-liquidity investment, and that distributes those returns not only to fund investors, but also to investees, the Group’s shareholders, and other stakeholdersaround the world through the effective use and circulation of invested capital.Common Knowledge in 5 Years —Undiscovered CommonWe believe the future of our Group can be opened up by tackling and developing fields that are not currently well known but will become commonplace in the next five years, and so we are working on it every day.20© Mercuria Holdings Co., Ltd. All rights reserved.Group HistoryBefore establishmentToshihiro Toyoshima, the CEO of Mercuria Holdings, made the following statement at the World Bank that defined the Mercuria cross-border management philosophy: “The breakout power of equity will be essential for making the Japanese economy part of the dynamic growth of the global economy”200520082013201620182019202121Established Asuka DBJ Partners primarily with the backing of Development Bank of JapanEstablished Cross-border Growth Fund IInvested in Beijing’s China Central Place, later owned by Spring REIT = Beyond national boundariesInvested in Lifenet Insurance Company and Hoken No Madoguchi = Beyond mental boundariesReorganized real estate investments in China due to the global financial crisisInvested in assets of foreign investment bank that shut down Japan operations and in non-bank assetsEstablished Cross-border Growth Fund IISpring REIT was listed on the Hong Kong Exchange and ClearingEquity investments by ITOCHU and Sumitomo Mitsui Trust Bank = Strategic partnersEstablished Buyout Fund I = Beyond generational boundariesMercuria Investment was listed on the Tokyo Stock Exchange Second Section (moved to the First Section in 2017)Established an aircraft leasing fund = Full-scale start of cash flow investments, including an infrastructure fundEnex Infrastructure Investment Corporation was listed on the Tokyo Stock Exchange Infrastructure Fund MarketEstablished BizTech FundEstablished Mercuria Holdings, which is listed on the Tokyo Stock ExchangeEstablished Mercuria Airborne Capital Co., Ltd.© Mercuria Holdings Co., Ltd. All rights reserved.Main Financial IndicatorsOperating gross profitOrdinary profit(Million yen)Oct. 2016Mercuria Investment Listed on TSE 2nd SectionDec. 2017Mercuria Investment Listed on TSE 1st SectionAUM(Billion yen)Operating gross profitOrdinary profit Assets under managementDec. 2013Spring REIT listed on HKEXSep. 2010Establishment of PJ Sweep2015Sold stock to ITOCHU and Sumitomo Mitsui Trust BankOct. 2008- Toshihiro Toyoshima named CEO- Received China Central Place asset management businessOct. 2005Establishment of Mercuria Investment250.0225.0200.0175.0150.0125.0100.075.050.025.020052006200720082009201020112012201320142015201620172018201920202021Before listingAfter listing22© Mercuria Holdings Co., Ltd. All rights reserved.21 127 139 327 705 739 905 1,459 1,290 1,616 1,878 2,245 4,150 4,034 3,735 2,426 3,638 – 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 – 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,50005/12期06/12期07/12期08/12期09/12期10/12期11/12期12/12期13/12期14/12期15/12期16/12期17/12期18/12期19/12期20/12期21/12期営業総利益経常利益運用資産The Holding Company Platform (1/2)Market sectorInvestment strategiesLP investors/CustomersLP investors/CustomersLP investors/CustomersLP investors/CustomersBuyoutGrowthCash flowsReal estateソリューションBusiness units (small)Buyout No. 1Buyout No. 2KiraboshiBiztechGrowth No. 1/No. 2Aircraft leasingChina FintechMr. XuInfra-structureWare-housingEnex Infra-structure REIT (listed REIT)Investment consulting services in ThailandMr. MomotaSpring REIT(listed REIT)Mr. KoyamaMr. IshinoMr. LeungMs. YanBusiness InvestmentsAsset InvestmentsSpring REITCompaniesMercuria Investment (MIC)航空機EnexJVAMMercuriaThailandSAMLMIBJMercuria Holdings (MHD) (listed on TSE)Management PhilosophiesCrossing National, Mental and Generational BoundariesBecoming a World-class Investment GroupCommon Knowledge in 5 YearsMr. ToyoshimaMr. Takigawa© Mercuria Holdings Co., Ltd. All rights reserved.ShareholdersLeadersBusiness sectors (large)The holding company platformLeadersCapital market23The Holding Company Platform (2/2)Business Investment LeadersAsset Investment LeaderSpring REIT Business LeadersKiyoto KoyamaDirector, CIO,Head of Business Investment Dept.Fund overseen・Buyout Fund I・Buyout Fund II・Kiraboshi Fund・Biztech Fund・China Fintech FundCareer・Development Bank of JapanHideyaIshinoDirector, COO,Head of Asset Investment Dept.Leung Kwok Hoe, KevinSpring Asset Management LimitedYan JudyMIBJ Consulting (Beijing) Co., Ltd.Fund overseen・Growth Fund I・Growth Fund II・Infrastructure Xiaolin XuExecutive Officer,China Business LeaderToru ArataniManaging Director of Business Investment Dept.Warehousing Fund・Aircraft leasing fundCareer・Salomon BrothersToshiaki FukaiExecutive officer, Head of Japanese Real EstateBusiness Dept.Thai Business LeaderMinoru MomotaMercuria (Thailand) Co., Ltd.Mercuria Investment Group LeadersToshihiro ToyoshimaCEOCEO of Mercuria HoldingsCareer・Development Bank of Japan・World BankFinance & Control / Business Planning Leader Yusuke TakigawaExecutive Officer,Head of Finance & Control Dept. and Business Planning Dept.© Mercuria Holdings Co., Ltd. All rights reserved.Business teamThe holding company platform243. Profit Structure and Business Unit EarningsBusiness Summary The Mercuria Investment Group has a fund management business, which involves the management of funds received from investors, and a principal investment business, which is same-boat investments using our own funds in funds that we manage. In the fund management business, we receive management fees and performance fees based on returns generated by the management of fund assets. The performance of the principal investment business is the gains and losses of investment funds.(1)(2)Investees(5)(3)InvesteesFundFund management・Management fees・performance feesPrincipal investment・Principal investment revenue(5)(3)(5)(3)LP investors(4)GP: MICInvestorsAnalysis of need for funding based on the macro environment(1) Business planAnalysis of investment needs based on the macro environmentPipelineInvestmentsProvision of executives, business matching, etc.(2) Fund establishmentContracts for funds(3) InvestmentsCapital calls(4) Increase value/MonitoringFund performance reportsSales(5) ExitDistributions26© Mercuria Holdings Co., Ltd. All rights reserved.Composition of Earnings (1/3)Revenue Categories Operating revenue consists of fund management fees, principal investment revenue and performance fees, depending on the current stage of each fund. The following table explains these fees and their timing.DescriptionTimingRevenue categoriesFund management fees- These fees are a fixed percentage of the total fund assets (committed capital) while the fund is operating and a fixed percentage of remaining investments after the fund reaches its investment phase.Principal investment revenue- This revenue is the gain of a fund multiplied by the percentage of Mercuria Holdings’ holding of the fundPerformance fees- This fee is a fixed percentage of fund distributions (sometimes with a hurdle rate) that exceed the amount of called capital.27© Mercuria Holdings Co., Ltd. All rights reserved.- Received during the life of the fund- Revenue is recognized during the life of a fund every time the fund records a profit due to the sale of an investment or some other event- During a fund’s second half, performance fees are received based on the overall performance of the fund’s holdingsComposition of Earnings (2/3)Sources and Timing of Operating Revenue This graph shows the receipt of fund management fees, principal investment revenue and performance fees Our multi-strategy of managing many funds at once tends to keep these sources of revenue relatively even Performance fees・ Distributions that exceed the amount of funds to be invested (sometimes with a hurdle rate) x Fee ratePrincipal investment revenue・ Fund earnings x Pct. of fund ownershipduring the life of a typical fund.over time.Fund management fees・Fundraising phase: Committed capital x Fee rate(can be retroactive over a fund’s operations)・Investment phase: Committed capital x Fee rate・After end of investment phase: Remaining investments x Fee ratePerformance feesPrincipal investmentsManagement feesFundraising phaseInvestment phase (Commitment period)Duration of a fund28© Mercuria Holdings Co., Ltd. All rights reserved.X-2X-1XX+1X+2X+3X+4X+5X+6X+7X+8X+9X+10成功報酬自己投資管理報酬Composition of Earnings (3/3)Operating Revenue and Cost of Sales/SG&A Expenses In the Mercuria Holdings profit structure, fund management fees, which are received consistently, generally cover fixed expenses and performance fees and principal investment revenue provide upside potential.Fund management fees(stable revenue)Corresponding revenueCost of sales/SG&A expensesPrincipal investment revenuePersonnel expensesConsignment expensesRent expensesTravel and transportation expensesOthers(Fixed expenses)Cost of principal investmentsBonusesOperating revenuePerformance feesOperating profit- Fixed expenses involving fund management- These expenses occur when a fund records a loss- A fixed percentage of performance fees- Fund management fees, which are steady, underpin operating profit- Upside potential due to performance fees and principal investment revenue29© Mercuria Holdings Co., Ltd. All rights reserved.Revenue, Expenses and Earnings Five-year summary of revenue, expenses and earnings201620172018201920202021Unit: Million yenOperating revenue2,5214,2244,1224,7186,1844,1702,2454,1504,0343,7352,4263,6381,5621,6631,9781,7011,7501,894Performance fees1522,1631,4621,2715637305313255937641131,015Revenue, expenses and earningsOperating gross profitFund management feesPrincipal investments/OthersSG&A expenses(965)(1,920)(1,917)(1,879)(1,654)(1,875)Operating profit1,2802,2302,1171,856Ordinary profit1,2482,2082,0831,8007727581,7631,81730© Mercuria Holdings Co., Ltd. All rights reserved.Operating Gross Profit (Fund Management Fees) Operating gross profit from fund management fees during the past five yearsOperating gross profit (fund management fees)Business investmentsSpring REITAsset investmentsOperating gross profit(fund management fees)201620172018201920202021Unit: Million yen2969742934989422238211,06592675946797109291117291,0031621,5621,6631,9781,7011,7501,894 Business investments have increased mainly because of the increasing volume of assets in funds established since Mercuria Investment’s 2016 IPO. These funds are still operating and will continue to be a major source of steady revenue. (In 2018, at the final closing of Buyout Fund I management fees for prior years of the fund were recognized retroactively.) The performance of Spring REIT is generally stable; revisions to asset valuations caused by exchange rate movements are the major reason for changes in this REIT’s performance. Regarding asset investments, exits of funds in prior years are largely completed and funds procured at the IPO are being used to fund the establishment of new funds.31© Mercuria Holdings Co., Ltd. All rights reserved.Operating Gross Profit (Performance Fees) Operating gross profit from performance fees during the past five yearsOperating gross profit (Performance fees)Business investmentsSpring REITAsset investmentsOperating gross profit(performance fees)201620172018201920202021Unit: Million yen110-41-108–25-2,0551,4621,2461522,1631,4621,271–563563644-86730 For business investments, primary funds are still in the phase of making investments and have therefore not reached the stage of earning performance fees. Spring REIT purchased assets during 2017, which resulted in acquisition fees (performance fees). For asset investments, there were performance fees resulting from the exit from exiting investments of past funds, including Growth Fund I and value investment and other funds established during the global financial crisis. 32© Mercuria Holdings Co., Ltd. All rights reserved.Operating Gross Profit (Principal Investments/Others) Operating gross profit from principal investments/others during the past five yearsUnit: Million yenOperating gross profit (principal investments/others)Business investmentsSpring REIT(of which, dividends)Asset investmentsOperating gross profit(principal investments)201620172018201920202021076(77)455531-192(93)234325288308(282)-2142136(233)485-7-106(364)227398433(486)1845937641131,015 For business investments, primary funds are still in the phase of making investments. Fund income resulting from the exit from some existing investments is classified as principal investment income. Spring REIT is a source of steady income due to dividend income. There were valuation losses because of restructuring activities at this REIT in 2019 and 2020. For asset investments, fund income associated with principal investments in Growth Fund I and value investment and other funds established during the global financial crisis is classified as principal investment income. 33© Mercuria Holdings Co., Ltd. All rights reserved.Reference: Plan for Compliance with New Market Listing Standards (Submitted on December 6, 2021)1. Actions for Medium/Long-term Growth of Corporate Value (1/2)A Roadmap for Value Growth as a Publicly Owned CompanyThe Mercuria investment roadmap for medium/long-term growth of corporate value(3) Medium/long-term growth of corporate value(1) Compliance with Prime Market listing requirements 1. Free float market cap of at least ¥10 billion(2) Accomplishment of the medium-term earnings plan goal1. Five-year average of net income of at least ¥2.0 billion2. Equity capital: Up 50% (excluding capital increase through stock offerings)2022-202320251. Become a leading investment company involving reforms and innovations for the structure of industry in Japan2. Become an investment company supported by a broad investor base Goals as a publicly owned company: (1) Compliance with Prime Market listing requirements (2022-2023); (2) Use accomplishment of the medium-term earnings plan goal (in 2025) as a milestone for (3) the medium/long-term growth of corporate value. Use existing businesses (buyout fund, Spring REIT, and asset investment fund businesses) and new businesses for the maximization of performance fees, increasing management fees and the growth of principal investments. Use the holding company structure to strengthen IR and equity activities and establish a cyclical framework for businesses and corporate activities. From a medium/long-term perspective, (1) become a leading investment company involving reforms and innovations for the structure of industry in Japan and (2) become an investment company supported by a broad investor base.35© Mercuria Holdings Co., Ltd. All rights reserved.1. Actions for Medium/Long-term Growth of Corporate Value (2/2)As a Listed Company, Create a Capital/People Cycle Driven by the Fund BusinessA business/corporate cyclical framework for the growth of corporate valueBusiness income statement Corporatebaance sheetlManagement fees Commitment to managed fundsPeople cyclePerformance infoFund info信用力PR strategyFund management marketManagement emphasizing job skillsTrack recordPrincipal investments Shareholder distributionsFinancial soundnessIR strategyCapital marketPerformance fees Reinvestment of surplus incomeCapital cycleFund procurementEquity measures36© Mercuria Holdings Co., Ltd. All rights reserved.2. Plan for Compliance with Prime Market Listing Standards (1/2)Current Status of Compliance with Prime Market RequirementsCurrent status of Prime Market listing requirement compliance (as of listing change reference date, June 30, 2021) A Prime Market listing requires a free float market capitalization of at least ¥10 billion. Based on the Tokyo Stock Exchange preliminary examination as of the June 30, 2021 reference date, this figure was ¥6.5 billion, which is below the requirement.Mercuria HoldingsCompliancePrime Market requirementsNumber of shareholders3,466At least 800Free float81,767 unitsAt least 20,000 unitsFree float market cap¥6.5 billionAt least ¥10 billionFree float ratio46.3%At least 35%○○×○37© Mercuria Holdings Co., Ltd. All rights reserved.2. Plan for Compliance with Prime Market Listing Standards (2/2)Actions for Issues Regarding Listing Requirement ComplianceActions regarding issues for achieving compliance with Prime Market listing requirements There are three main reasons for the insufficient free float market cap: (1) Profit indicators, (2) Expectations of investors and (3) Number of shares of the free float. Improvements are needed for a Prime Market listing. Targets will be established and the following actions used to achieve compliance: (1) Improve sales and earnings to reach medium-term goals; (2) Earn a strong and accurate assessment by investors by strengthening IR/PR activities; and (3) Use equity measures to build a foundation for growth. Use these actions to achieve the following growth from 2022 to 2023: (1) Raise net income from ¥1.5 billion to ¥1.8 billion; (2) A PER of about 15; and (3) Raise the free float ratio to about 50%, which will raise the free float market cap to more than ¥10 billion.Achieve medium-term goals (performance)Proper recognition by investors (IR/PR)A strong foundation for growth (equity measures)1. Maximize performance 2. Increase management feesfees3. Increase principal investment revenue1. Redefine the mission and management philosophy2. Increase comprehension of corporate value by upgrading IR/PR1. Use the holding company platform for the speedy execution of every strategy2. Numerous equity measures that use loans and equity financing38© Mercuria Holdings Co., Ltd. All rights reserved.3. Accomplish Medium-term Goals (1/7)Summary1. Medium-term goalsAchieve the quantitative targets for 2025, the last year of the medium-term goals by using the buyout fund, Spring REIT and asset investment fund businesses and new businesses that use ties with external partners under the holding company structure. Five-year average of net income: At least ¥2.0 billion Equity capital: Up 50% (¥17.3 billion)2. Maximize performance fees – Maximize performance fees from funds newly established following the stock market listing.Good prospects for substantial performance fees from Buyout Fund I.Expect to receive performance fees involving the acquisition of assets for infrastructure and real estate investment funds.3. Increase management feesPlanning on establishing Buyout Fund II, which assets of ¥40-¥50 billion, as the successor to Buyout Fund I.In the asset investment sector, the goal is growth of ¥100 billion in fund assets under management during the business plan by making investments in aircraft, infrastructure, real estate and other categories.——-4. Increase principal investment revenueAll funds are performing well, resulting in the outlook for substantial income from same-boat principal investments.Activities are progressing for more growth of principal investment revenue by using retained earnings, loans and equity financing.39© Mercuria Holdings Co., Ltd. All rights reserved.3. Accomplish Medium-term Goals (2/7)Core Businesses and New BusinessesThree key business categories of the medium-term earnings plan: (1) Buyout funds, (2) Spring REIT, (3) Asset investment fundsBuyout Fund I (2016-)Buyout Fund IIMore buyout fundsSpring REIT (2013-)Asset investment fund (2018-)Use the holding company structure for utilizing alliances with external partners (The priority of each business is based on the business climate, external partners and other factors）Solutions business(Solutions business for the strategic investments of operating companies)Aircraft leasing fund business(Use knowhow from Mercuria Holdings’ first aircraft fund to continue meeting the demand for aircraft financing)Taiwan Solar Power Development Fund business (Infrastructure business)(Responding to strong demand for solar power development in Taiwan)Inbound real estate investment fund business(Use funds from Asia received through business partners along with Mercuria Holdings’ real estate fund management expertise)Other businesses(Monitoring market trends concerning loan claims funds and business revitalization)40© Mercuria Holdings Co., Ltd. All rights reserved.Internal growthInternal growthExternal partners too Corebusinesses Newbusinesses3. Accomplish Medium-term Goals (3/7)Current Status and Goals of Core BusinessesExisting businessesCurrent operations and goalsBuyout fund businessII.- Established Buyout Fund I (¥21.3 billion) in 2016 to meet demand for business succession at small and medium-sized enterprise companies as the baby boom generation ages.- Buyout Fund I has been performing well and the goal is to earn substantial performance fees.- Buyout Fund I has largely finished investments and preparations have started for Buyout Fund – Interest is high among current investors as well as foreign investors; planning on assets of ¥40-¥50 billion in Buyout Fund II.- Participated in the development of a high-quality office building in Beijing; Spring REIT has been listed in Hong Kong’s stock exchange since 2013.- Acquired store real estate (84 locations) in the UK in 2017. (About ¥160 billion in assets under management as of June 30, 2021)- Increase acquisition and management fees by purchasing properties (annual avg. of about ¥10 Spring REIT businessbillion).Asset investment fund business- Established the Enex Infrastructure REIT with IITOCHU ENEX, SMTB and Maiora; this REIT is listed on the Tokyo Stock Exchange (assets under management of about ¥56 billion on May 31, 2021).- Established an Infrastructure Warehousing Fund in 2020 with the main exit strategy of the sale of properties to Enex Infrastructure REIT.- Use the holding company structure for the use of external partners to operate an overseas infrastructure business.- The goal is increasing assets under management in asset investment funds by ¥100 billion, including other asset classes. (excluding infrastructure REIT)41© Mercuria Holdings Co., Ltd. All rights reserved.3. Accomplish Medium-term Goals (4/7)Current Status and Goals of New BusinessesNew businessesCurrent operations and goalsSolutions businessinvestments of operating companies.- Provide services such as project sourcing and outsourced management for the strategic – Biztech Fund for investments in technology companies in the real estate and logistics sectors and merger management support for the operations of Japanese companies in Thailand.- Established joint venture Mercuria Airborne Capital Co., Ltd., which specialize in aircraft leasing and management, with Airborne Capital in anticipate of a recovery in aircraft demand after the pandemic.- Established the second aircraft leasing fund to provide operating companies with an opportunity to invest in aircraft.Aircraft leasing fund businessTaiwan Solar Power Development Fund business- Preparing for the establishment of the Taiwan Solar Energy Development Fund with a business partner that operates Enex Infrastructure REIT jointly with Mercuria.- Taiwan is an attractive market because Taiwan and Japan have similar solar power systems with a stable legal framework for solar power based on the feed-in tariff (FIT) system.Inbound real estate investment fund business- Investors in China are very interested in Japanese real estate because this asset class produces higher investment yield than in many other areas of the world.- Plan to establish with a Spring REIT business partner an inbound real estate investment fund for the collection of investments from China, targeting demand created by operations of Chinese companies in Japan and foreign tourists in Japan.Other businessesinvestment funds and other activities.- Monitoring business revitalization market trends for opportunities for loan claims funds, value 42© Mercuria Holdings Co., Ltd. All rights reserved.3. Accomplish Medium-term Goals (5/7)Maximize Performance Fees Fund categoryTotal fundsDurationMaximize performance fees AccumulatedPerformance feesPrior-year fundsinvestmentsBusiness REITSpring investmentsAsset Growth Fund I¥7.0bn2005-¥3.67bnProject Sweep¥9.8bn2010-2017¥1.60bnProject CS¥2.6bn2012-2020¥0.22bnProject Sonoko¥1.5bn2013-2019¥0.33bnBuyout Fund I¥21.3bn2016-Kiraboshi Fund¥2.6bnBiztech Fund¥3.1bnChina Fintech Fund¥1.35bn2018-Spring REITGrowth Fund IIAircraft leasing fundInfrastructure Warehousing FundApprox. ¥56.0bn¥3.1bnApprox. ¥12.0bn¥7.5bn(Investment period)(Investment period)(Investment period)(Investment period)¥0.11bn(Open-end)(Investment period)(Investment period)(Investment period)2018-2019-2013-2013-2018-2020- Funds established between Mercuria Investment’s 2005 establishment and after the global financial crisis Big contributions to performance fees through 2020 Performance fees total ¥5.4 billion during the past five years Funds established since Mercuria Investment’s 2016 listing Many funds will reach the exit stage during the next five years and are expected to contribute to performance fees up to the target year of 2025. The strong performance of Buyout Fund I, which is larger than funds in prior years, is expected to make a substantial contribution to performance fees. Anticipate acquisition fees when Spring REIT acquires properties.43© Mercuria Holdings Co., Ltd. All rights reserved.3. Accomplish Medium-term Goals (6/7)Increase Management FeesAUM(Billion yen)23.325.526.727.012.68.1End-Dec. 2016End-Dec. 2017End-Dec. 2018End-Dec. 2019End-Dec. 2020End-Sep. 2021151.0168.2157.6154.8146.2158.1End-Dec. 2016End-Dec. 2017End-Dec. 2018End-Dec. 2019End-Dec. 2020End-Jun. 202130.025.020.015.010.05.0180.0150.0120.090.060.030.020.017.515.012.510.07.55.02.5Busine億円ss investmentsSpringREIT Asset investments9.89.88.04.917.412.7End-Dec. 2016End-Dec. 2017End-Dec. 2018End-Dec. 2019End-Dec. 2020End-Sep. 202144© Mercuria Holdings Co., Ltd. All rights reserved.Increase management fees Buyout Fund II, which assets of ¥40-¥50 billion, as the successor to Buyout Fund I, is expected to increase management fees. The first close is planned to be in 2022. Due to the solid performance of the previous buyout fund, current investors are expected to make investments and funds from overseas investors are expected. In 2017, assets under management increased due to additional purchases of properties by Spring REIT. (The effect of foreign exchange rate movements on asset valuations is another major cause of changes in AUM.) By using tie-ups with partners in China, Mercuria Holdings expects average annual additional investments of ¥10-¥20 billion, which will raise management fees, for the next five years. For asset investments, exits from investments of prior-year funds are largely completed. Funds procured at the IPO used to establish aircraft leasing, infrastructure warehousing and other new funds. During the next five years, use ties with external partners and plan to increase management fees by increasing fund assets under management by ¥100 billion, including aircraft, infrastructure, real estate and other asset classes.1,510 1,682 1,576 1,548 1,462 1,581 – 300 600 900 1,200 1,500 1,80016/12末17/12末18/12末19/12末20/12末21/6末81 126 233 255 267 270 – 50 100 150 200 250 30016/12末17/12末18/12末19/12末20/12末21/9末98 98 49 80 127 174 – 25 50 75 100 125 150 175 20016/12末17/12末18/12末19/12末20/12末21/9末3. Accomplish Medium-term Goals (7/7)Increase Principal Investment RevenuePrincipal investment revenue (operating revenue)Increase principal investment revenueGain/lossDec. 2016–Sep. 2021 averageBreakdownOperating gross profitFund managementfeesPerformance feesPrincipal investments/OthersProfit¥3.37bn¥1.74bn¥0.98bn¥0.63bn¥1.14bnComp.100%52%29%19%Adjusted principal investments (operating gross profit) Principal investments Principal investment revenue has become a major component of Mercuria Holdings’ revenue due to stable dividends from Spring REIT and management and performance fees resulting from the strong performance of current funds, primarily Buyout Fund I. Substantial revenue from principal investments is expected to continue. In addition to these sources of income, Buyout Fund II and a Taiwan solar power mezzanine fund are under consideration. Large same-boat investments are planned due to the expected high return (about 30%) of these funds in order to further increase principal investment revenue.[Buyout Fund II]•••To continue meeting needs involving business succession, plan to establish a fund of about ¥50 billion with primarily Buyout Fund I investors as well as overseas investors.[Taiwan Solar Power Development Fund]As the global shift to green energy continues, currently considering the establishment with Maiora, a partner for the joint management of a listed infrastructure fund in Japan, of a fund for the development of solar power projects in Taiwan.The solar power market in Taiwan is in an early stage of growth, creating the potential for earning surplus income. Also, Taiwan has a high credit rating among Asian countries and a sound legal system. As a result, there are attractive investment opportunities.End-Dec. 2016End-Dec. 2017End-Dec. 2018End-Dec. 2019End-Dec. 2020End-Sep. 202145© Mercuria Holdings Co., Ltd. All rights reserved.Note: Adjusted principal investments (operating gross profit) does not include Spring REIT valuation/sales gains and losses.532 326 567 860 583 1,305 2,080 4,164 9,282 10,815 10,270 13,194 – 2,000 4,000 6,000 8,000 10,000 12,000 14,000 – 200 400 600 800 1,000 1,200 1,40016/12期17/12期18/12期19/12期20/12期21/9期調整後自己投資（営業総利益）自己投資4. Proper Recognition by Investors (1/2)Redefine the Mission and Management Philosophy Mission“Change today’s Japan through Power of Funds” Three Management PhilosophiesCrossing National, Mental and Generational Boundaries —Cross BorderOur objective is to identify unique investment opportunities through our broad network of industrial and investment contacts, transcending all boundaries such as geographical, mental and generational borders and focusing on investment in growth areas and growth potential around the world based on Japan’s strengths.Becoming a World-class Investment Group —Global ReachWe aim to be a world-class investment group that seeks to earn excess returns in areas of low-liquidity investment, and that distributes those returns not only to fund investors, but also to investees, the Group’s shareholders, and other stakeholdersaround the world through the effective use and circulation of invested capital.Common Knowledge in 5 Years —Undiscovered CommonWe believe the future of our Group can be opened up by tackling and developing fields that are not currently well known but will become commonplace in the next five years, and so we are working on it every day.46© Mercuria Holdings Co., Ltd. All rights reserved.4. Proper Recognition by Investors (2/2)Increase Comprehension of Corporate Value by Upgrading IR/PRNo.ItemInvestor relations activitiesEstablish a frameworkEstablish the Business Planning Department, supervised directly by the holding company CEO, for IR activities.Upgrade IR skillsUpgrade skills of IR personnel by using training programs that include external instructors and resources.More English-language informationIncrease English-language financial reports and other disclosure activities to raise interest of foreign investors in Mercuria Holdings.Information about investmentsSupply information about Mercuria Holdings (fund management companies) as well as about the investments of funds to make investors aware of the use of alternative investments based on the macro environment, which is a key strength of Mercuria Holdings.More communications with institutional investorsStrengthen lines of communication with institutions by increasing opportunities for IR meetings in every quarter in addition to the current information meetings for earnings announcements.More website content for investorsMore IR content on the website to provide business, financial, investment and other information in a format that is readily accessible and easy to understand.47© Mercuria Holdings Co., Ltd. All rights reserved.1234565. A Foundation for Strong Growth (1/4)Use the Holding Company Platform for the Speedy Execution of Every StrategyHolding company structureFunctions of the holding companyMarket sectorInvestors/CustomersInvestors/CustomersInvestors/CustomersInvestors/CustomersInvestment strategiesBuyoutGrowthCash flowsReal estateBusiness unitsBuyoutFundVenture fundGrowth FundInfra-strucrurefundEnexInfra-structure REIT(listed)Aircraft leasingInvest-mentconsulting services in ThailandSpring REIT(listed)Business sectorsBusiness InvestmentsAsset InvestmentsSpring REITCompaniesMercuria Investment (MIC)EnexAMAircraft JVMercuria ThailandSAMLMIBJresources The holding company performs management oversight and corporate functions. Operating companies are responsible for conducting business operations with a proper degree of autonomy.[Management oversight functions] Determination of management policies Determination of earnings plans/consolidated budgets Ideas for significant new businesses/Major M&A and alliance activities Establishment/sale of subsidiaries/affiliated companies Allocation of capital, people and other Decisions about significant matters concerning subsidiaries with business operations (mainly about capital)[Corporate functions] Loans, stock offerings and other financial matters Accounting, human resources, IR, administration and other corporate functions The holding company is responsible for the balance sheet and operating companies are responsible for the income statement.Mercuria Holdings (MHD)Management PhilosophiesCrossing National, Mental and Generational BoundariesBecoming a World-class Investment GroupCommon Knowledge in 5 YearsThe holding company platformCapital market48© Mercuria Holdings Co., Ltd. All rights reserved.Shareholders5. A Foundation for Strong Growth (2/4)Numerous Equity Measures that Use Loans and Equity FinancingLatest balance sheet (end-Sep. 2021)Flexibility for equity measuresUnit: Billion yenCash and deposits1.44(9%)Current assetsTrade accounts receivable0.37 (2%)Operational investment securities/Operating loans13.02(81%)Other current assetsInvestment securitiesOther non-current assetsassetsNon-current 0.30 (2%)0.32 (2%)liabilitiesCurrent liabilitiesNon-current Borrowings0.13 (1%)Other current liabilitiesLong-term borrowingsOther non-current liabilities0.60 (4%)0.78 (5%)0.68 (4%)Equity capital13.14(82%)Net assets A sound balance sheet Equity ratio: 82% Net interest-bearing debt: ¥(5.3)bn The balance sheet is very strong due to the policy of holding operational investment securities/operating loans (principal investments) to no more than equity, negative net debt (cash equivalents higher than debt), and other reasons. As a result, loans and equity can be used as needed to reflect the characteristics of each need for an investment.0.56 (4%)Other net assets 0.68 (4%)49© Mercuria Holdings Co., Ltd. All rights reserved.5. A Foundation for Strong Growth (3/4)Numerous Equity Measures that Use Loans and Equity FinancingAmount of investment securities/operating loans (principal investments) (September 30, 2021)Spring REIT¥6.9bn¥13.0bn¥0.9bn¥0.9bn¥6.0bn¥12.1bn(2) Borrowings(1) ー (2)(Reference)–¥2.5bn¥3.6bnEquity capital¥13.1bnCash and deposits¥1.4bn(1) PrincipalinvestmentsBusiness investments¥2.5bnAsset Investments¥3.6bnAs of September 30, 2021 Most of the operational investment securities/operating loans (principal investments) of ¥13.0 billion are same-boat investments in funds managed by the Mercuria Investment Group: ¥2.5 billion in business investment funds, ¥6.9 billion in Spring REIT, and ¥3.6 billion in asset investment funds. Loans of ¥900 million are used entirely for a same-boat investment in Spring REIT.Upcoming activities Due to the liquidity of Spring REIT, which is listed in Hong Kong’s stock exchange, the use of loans and the financial leverage will be considered. Most business investment funds and asset investment funds operate for period of five to 10 years. Due to this time frame, investments in these funds have the characteristic of a commitment by the fund manager. As a result, we will continue to consider the use of equity to procure funds for this purpose.50© Mercuria Holdings Co., Ltd. All rights reserved.5. A Foundation for Strong Growth (4/4)Summary of the December 2021 Stock OfferingThe goal is to use stock offerings for the following purposes that contribute to the growth of corporate value１．Use principal investments to speed up the growth of business operations•Currently preparing for the launch of successor funds based on the strong performance of existing fundsAiming to use principal investments to increase AUM in funds and to target attractive opportunities•Principal investment in buyout fund (Buyout Fund II)• The buyout fund business is one part of Mercuria Holdings’ fund management business (business investments). In 2016, Buyout Fund I was established to meet the business succession needs at small and medium-sized enterprise companies as Japan’s population ages and the number of children declines.• Buyout Fund I performed very well in terms of asset management and progress with investments. To meet the expected continuation of business succession needs, preparations are under way for launching Buyout Fund II, which is to be backed mainly by Buyout Fund I investors as well as by foreign investors.Principal investment in infrastructure fund (Taiwan Solar Power Development Fund)• The infrastructure fund business is one part of Mercuria Holdings’ fund management business (asset investments). The demand for green energy is growing worldwide. In Japan, there are already infrastructure investment activities in Japan jointly with business partners and EnexInfrastructure Investment Corporation.• The climate for investments is favorable in Taiwan because of its high credit rating among Asian contries and strong legal framework. The development of the solar energy sector is at an early stage in Taiwan. Preparations have started with Maiora for the establishment of the Taiwan Solar Power Development Fund.２．A broader base of shareholders, including institutions•Activities for improving the liquidity of Mercuria Holdings stock, including measures targeting institutional investors.Use stock offerings to increase the free float and raise corporate value with the goal of achieving compliance with the free float market capitalization requirement for a Prime Market listing.•Purposes51© Mercuria Holdings Co., Ltd. All rights reserved.6. Measures to Strengthen Corporate Governance (1/3)1. Investments in human resources and intellectual property(1) Basic stance(2) ActionsTo accomplish the mission of Mercuria Holdings, we make large investments for people who can bring about change for the next generation of progress and for intellectual property, while reflecting changes in the business climate.• Enable everyone at Mercuria Holdings to fully utilize their professional skills and, to create the next generation of leaders, use self-reliant career development backed by OJT as the base for training and education programs that utilize strategic assignments for people and the use of external resources. To upgrade the skills of managers, use executive coaching, one-on-one meetings with subordinates, and other measures.• To improve efficiency, use new software and applications and establish an internal portal site. For the convenience of investors, hold online seminars and conferences, cloud platforms that investors can access as w