9223.T

Core Business Transition

• After over 10 years of operation, the domestic scaffolding rental business is transitioning from an investment phase to a cash collection phase. Scaffolding equipment has a 5-year depreciation period but can be used for 20-30 years, so reduced capital expenditure on new equipment will lead to falling depreciation costs, a sharp jump in operating margin, and large increases in operating cash flow going forward. • The domestic business will remain the company's core stable high-margin revenue base to fund future M&A and expansion.

M&A and Geographic Expansion Strategy

• The company is shifting to a strategy of active M&A to achieve sustained non-linear growth. The priority is M&A of rental businesses in the ASEAN region, which has far higher projected GDP and population growth than aging, shrinking Japan. • Singapore was selected for the first ASEAN acquisition for three key reasons: it is a regional hub with excellent access to all other ASEAN markets within 2.5 hours of travel; it expects a wave of M&A activity over the next decade from aging business owners with no succession, so ASNOVA can gain regional M&A experience ahead of this wave; and it offers very favorable tax advantages relative to other markets. • The Qool acquisition (completed April 1, 2025) was selected because portable toilet rental shares the same high-margin long-lifespan rental business model as scaffolding, and ASNOVA can leverage its existing inventory management expertise to improve efficiency. Qool has a 38% pre-depreciation operating margin and 22.6% net margin, with a stable 600+ customer base. • Expected synergies from the Qool acquisition include sharing ASNOVA's proven inventory management expertise to extend equipment lifespan and improve operational efficiency, and establishing a regional hub to accelerate future ASEAN M&A.

Strategic Planning Framework Change

• The company is abandoning its prior 3-year mid-term management planning framework. Due to rapid market uncertainty (the VUCA environment) and the unpredictable impact of M&A on future results, fixed 3-year targets would confuse investors. Instead, the company will set only annual targets, working backwards from a long-term 2030 vision. • The company is discontinuing its prior monthly performance reporting, due to expected increases in overseas revenue share and the transition of the domestic business to a collection phase. • The 2030 vision is to become a high-profit, global excellent company in circular rental business, with domestic scaffolding rental as a solid profit base and new M&A-acquired businesses as growth engines. The company will not pursue growth in non-rental or non-circular business areas.

Capital Allocation Plan

• Over the next three years, the company targets approximately 6 billion yen in total M&A investment, funded by operating cash flow generated from the domestic core business.

• For the 2026 March fiscal year, ASNOVA projects full-year net sales of 5.265 billion yen, a 23.4% increase year-over-year, with pre-depreciation operating profit of 2.453 billion yen (31.5% year-over-year increase), and operating profit of 405 million yen (731.3% year-over-year increase, driven by the elimination of large one-time M&A costs from 2025). • One-time M&A related costs for the Qool acquisition are projected to total 25 million yen in the 2026 March fiscal year. • ASNOVA Vietnam remains in the investment phase, with operating profit breakeven targeted for 2030 as the company builds market share and brand recognition. • The 3-year M&A investment target is approximately 6 billion yen, focused on ASEAN-based rental companies.

For the full 2025 March fiscal year, ASNOVA's core domestic Scaffolding Rental segment generated total consolidated net sales of 4.266 billion yen, an increase of 480 million yen (12.7%) year-over-year, marking a new all-time high. Adjusted pre-depreciation operating profit for the full year (add-back of one-time Qool acquisition costs) reached 1.998 billion yen, an increase of 127 million yen year-over-year, also a new all-time high. The adjusted pre-depreciation operating margin remained at a high 46.8%, down 2.6% year-over-year due to one-time M&A related costs. For the 2026 March fiscal year forecast: ASNOVA's domestic business is projected to be a strong high-margin revenue base; acquired Qool (Singapore portable toilet rental) will contribute 9 months of results from Q2 2026 fiscal year, with a projected pre-depreciation operating margin of 38%; ASNOVA Vietnam is still in the investment phase and will not generate profit in the near term, targeting operating profit breakeven by 2030. Qool currently contributes ~80% of its revenue from long-term rental contracts, giving it highly stable cash flow.

• Market conditions in the ASEAN region are unfamiliar, and the success of future M&A and regional expansion is not guaranteed, which could lead to lower-than-expected growth or investment losses. • M&A activity carries inherent integration risks, and expected synergies may not materialize at the projected level or timeline. • Rapidly changing global market conditions (the VUCA environment) create high uncertainty for future performance, making multi-year fixed performance targets unreliable.

Q: Will the shift of the domestic scaffolding business to the collection phase immediately increase free cash flow for M&A? / A: As existing depreciation on early investments cycles off, reduced capital expenditure and falling depreciation costs will gradually increase operating cash flow over time. This incremental cash flow will be directly allocated to fund ASEAN M&A, so the ramp-up in cash will align with the company's 3-year investment plan. The core domestic business will remain stable throughout the transition.

Q: Why pursue portable toilet rental M&A, and what synergies exist with the existing scaffolding business? / A: Portable toilet rental shares the exact same high-margin rental business model as scaffolding: 5-year depreciation with 10+ years of usable equipment life, and long-term stable demand. ASNOVA's proven expertise in complex inventory management for scaffolding can be directly applied to improve Qool's operational efficiency and extend equipment lifespan, creating immediate margin synergies. The acquisition also gives ASNOVA a regional hub in Singapore for future expansion.

Q: What are the company's M&A evaluation criteria and investment return requirements? / A: The company strictly adheres to an M&A policy that prioritizes rental businesses with high long-term profitability, stable customer bases (especially with high long-term contract revenue share), and alignment with the company's circular business model. Investment returns are evaluated based on long-term free cash flow generation rather than short-term accounting profit, and targets align with the 2030 long-term vision. Only opportunities that fit the strategic focus on ASEAN expansion will be pursued.