Medium-Term Management Plan Financial Strategy

ValuesFinancial Strategy

Business Model

The third medium-term management plan assumes cumulative operating cash flow of ¥120 billion over the threeyear period plan. In principle, DCM’s policy is to use cash flow generated by our business activities for investments ingrowth. The Company also intends to use debt as needed to achieve both investment in growth and shareholder
returns.

DCM Holdings’ policy is to determine the annual dividend with a target payout ratio of 35%. At the same time, wewould like to aim for a dividend payout ratio of 40% in the future, with a view to continuously increasing dividends inline with profit growth.
The Company’s policy is to consider flexible implementation of share buybacks with a view to maintaining andimproving capital efficiency while sustaining financial soundness (measured by the equity ratio and other indicators)
for sustainable growth.
The acquired treasury shares will be held at approximately 5% of the total number of shares issued andoutstanding to prepare for future strengthening of the business base including M&A and utilization through stock
options, and similar measures. As general rule, any surplus shares will be cancelled.

Growth investments and shareholder returns

With regard to capital investment during the third mediumterm management plan, in addition to plans to open 52 newstores, including those in the Pro Shop Hodaka and DCM
Nicot formats, we plan to renovate 223 existing stores toclarify and optimize the role of each store size. We forecast
investing ¥39 billion to execute this store strategy.
Additionally, DCM Holdings has budgeted investment of¥15 billion in systems and logistics. This investment includes
reducing tasks at stores, streamlining logistics and head
office operations to pursue even lower cost operations aswell as that for expanding EC shipping locations and app
development to build and strengthen DCM’s unique BOPIS
business model.

In the third medium-term management plan, we intend toproactively consider and implement expansion of the home
improvement center business or M&A in business fields
where growth is projected in the future, to promote theenhancement of corporate value. Meanwhile, we have set theminimum dividends at ¥6.0 billion for a single year and ¥18.0
billion cumulatively, assuming the dividend level ismaintained at that of final year of the second medium-term
management plan. We intend to consider share buybacks ina dynamic manner, taking into account the potential forinvestment in growth, such as M&A, while balancing
medium- to long-term improvement of corporate value andthe improvement of capital efficiency.

(%)
Billions of yen

New store and remodelinginvestment
System and logistics-related
investment

1554

Total(13)Dividend payout ratio
100

7.9
7.5

7.47.1

6.9
6.6(5)

Figures in parentheses represent single-year capital investment projections.

6.8
6.2

5.8

80(18)

Growthinvestment

71.7

Item
Growth investment (M&A, etc.)

39.7

50~100Share buybacks

Shareholder
returns

Dividends

DCM Holdings Co., Ltd. Integrated Report 2023

45.4

47.4
23.6

38.1

18.0

11.0

28.8
20
27.3

30.4

49.4

41.7

20.7

40

25.4

27.5

28.8

16/2

17/2

39.0

3.0

23.3

30.0
4.9

32.4
30.0

27.1

25.1

26.1

19/2

20/2

21/2

22/2

32.0

18(6)

Figures in parentheses indicate projected dividends for a single fiscal year.
* Dividends shown are the minimum amount that would be paid if the level of dividends
in the final year of the second third medium-term management plan is maintained.

32

56.0
51.1

Medium-term management
plan period

71.0

65.1

Growth investment and shareholder returns
Billions of yen

6.6
6.0

75.060Debt usedas needed

9.0

8.6

Share buyback ratio

Medium-term management
plan period

39(%)

ROE (right axis)

120

Financial Highlights

Operatingcash flow
(3-yearcumulative total)¥120 billion

Item• Continue to consider flexible share buybacks with a view to improving capital efficiency• Hold approximately 5% of total shares issued and outstanding, and cancel any surplus (consider
using for M&A, etc.)

Risk Management and Compliance

Capitalinvestment¥54 billion

Share buyback
policyCorporate GovernanceCapital investment• Decided to aim for an annual dividend payout ratio of 35%• Continue to increase dividends in line with profit growth, aiming for a payout ratio of 40% in the future

Dividends

Sustainability

Capital investment

Medium-Term Management Plan

Shareholder Return Policy

Message from the President

Cash Allocation

0

13/2

14/2

15/2

18/2

23/2

0.033