Financial Results
for the Fiscal Year Ended March 2023
KPP GROUP HOLDINGS CO., LTD.
Tokyo Stock Exchange Prime Market : 9274

June 7, 2023

1

Summary of Financial Results
for the Fiscal Year Ended March 2023

2

Forecast for the Fiscal YearEnding March 2024 and Other Information
Progress in the Third Medium-Term Business Plan

3

(from the Fiscal Year Ended March 2023 to the Fiscal Year Ending
March 2025)

4

Reference Materials

1

1

Summary of Financial Results
for the Fiscal Year Ended March 2023

2

Forecast for the Fiscal YearEnding March 2024 and Other Information

3

Progress in the Third Medium-Term Business Plan

4

Reference Materials(from the Fiscal Year Ended March 2023 to the Fiscal Year Ending March 2025)

2

Summary of Financial Results for
the Fiscal Year Ended March 2023

Consolidated Financial Summary

Continuing from the previous fiscal year, we achieved record sales and profit mainly due to rising sales
prices in overseas markets.
Net sales

Operating profit
Ordinary profit• Sales increased significantly in Northeast Asia, Europe/South America and Asia-Pacific, as sales prices rose due to a series of price revisions.
• Gross profit rose particularly in Europe and Oceania, which experienced a wide range of price revisions, and absorbed an increase in SG&A
expenses, resulting in strong profit growth.
• Sales and gross profit of recovered paper and pulp increased in Japan, also making a contribution.
• Non-operating expenses grew year-on-year due to a loss on sale of trade receivables and other factors, but ordinary profit doubled year-on-year
due to a large increase in operating profit.

FYE March 2023

FYE March 2022
(JPY million)

Full-year results

Full-year results

Variance in amount

Variance in %Net sales

563,414659,656+96,241+17.1%

Gross profit

92,951

120,584+27,633+29.7%

SG&A

83,571

100,182+16,610+19.9%

Operating profit

9,379

20,401+11,022+117.5%

Ordinary profit

8,844

18,404+9,560+108.1%

Profit attributable to owners ofparent7,497

15,722+8,224+109.7%FYE March 2023
(JPY million)

Full-year results

Quarterly results for FYE March 2023
1Q

2Q

3Q

4Q

Net sales

659,656

154,845

165,853

172,369

166,587

Operating profit

20,401

5,339

6,960

5,095

3,006

Ordinary profit

18,404

4,818

6,248

5,181

2,155

Profit attributable to owners of parent

15,722

3,848

5,338

4,010

2,525

3

Summary of Financial Results for
the Fiscal Year Ended March 2023

Results by Segment

Segment profit in Europe/South America, which is the region led by Antalis, jumped +176.0%
Northeast Asia
Europe/South America
Asia-PacificReal estate leasing• Revised sales prices for paper and paperboard in Japan. Net sales increased despite lower sales volumes. Sales volume and net sales of recovered paper grewsignificantly as we diversified the collection methods. Pulp sales rose due to an increase in unit sales prices, despite a drop in sales volume from the previous year.
Profit in Northeast Asia as a whole declined slightly due to deteriorating market conditions in China and other factors.
• In the paper business, market prices rose due to a series of price revisions, and the profit margin temporarily increased due to the sale of inventories that werepurchased at old prices in the stock business (inventory sales business). In the packaging business and the visual communication business, both sales and profits
increased due to a recovery in demand and expansion of business scale through mergers and acquisitions (M&A).
• In Australia and New Zealand, both sales and profits increased due to price revisions resulting from higher raw material and fuel prices, the effects of businessexpansion through M&A, and other factors.
• In the ASEAN region, profit/loss has been improving due to the effect of business restructuring. In Singapore, investment in the visual communication business
contributed to the results.
• Sales and profits fell due to a decrease in rental income resulting from redevelopment of rental parking lots and tenant replacement at the KPP Yaesu Building,which led to the occurrence of vacancy periods.

FYE March 2023

FYE March 2022

Europe/South America

Asia-PacificReal estate leasing

Total

Variance in amount

Variance in %287,390

305,461+18,070+6.3%

Segment profit

3,479

3,432

(46)

(1.3%)

Profit ratio

1.2%

1.1%

-

(0.1pt)Net sales

236,383

303,709+67,326+28.5%

Segment profit

5,961

16,453+10,491+176.0%

Profit ratio

2.5%

5.4%

-

+2.9ptNet sales

38,40949,269+10,859+28.3%

Segment profit

1,234

2,186

+952

+77.2%

Profit ratio

3.2%

4.4%

-

+1.2ptNet sales

1,230

1,216

(14)

(1.2%)

176

115

(60)

(34.3%)

Profit ratio

14.3%

9.5%

-

(4.8pt)Net sales

563,414659,656+96,241+17.1%

9,379

20,401+11,022+117.5%

1.7%

3.1%

-

+1.4ptNet sales

Northeast Asia

Full-year results

Full-year results(JPY million)

Segment profit

Operating profit*(after adjustment for corporate
expenses, etc.)

Profit ratio*

Corporate expenses, etc.: general administrative expenses in the administrative divisions of the head office that do not belong to the above segments.

4

Summary of Financial Results for
the Fiscal Year Ended March 2023

Increase/Decrease Factors in Operating Profits (Year-on-Year)(JPY million)

37,012
26,972

20,401(Of which, the effect of thedepreciation of the yen: 993)

9,379

Operating profit for
FYE March 2022

(1) Gross profit Up(increase in sales)

profit Up(2) Gross(profit margin(3)

SG&A Up

improvement)

Operating profit for
FYE March 2023

Achieved a significant growth in profit driven by higher profits in inventory trading due to rising sales prices,which absorbed the increase in SG&A expenses.
(1) Gross profit (effect of sales increase) +17,592‐ Sales prices rose mainly in the paper business in Northeast Asia, which is the region led by Kokusai Pulp and Paper; Europe and South America, led by
Antalis; and Asia-Pacific, led by Spicers.
(2) Gross profit (effect of improved gross margin) +10,040- The profit margin temporarily increased due to the sale of inventories that were purchased at old prices in the stock business (inventory sales business) ⇒Consolidated gross margin 16.5% → 18.3%(+1.8%)(3) SG&A +16,610(Main factors)• Selling expenses: Up mainly due to higher freight costs as the prices of raw materials and fuels rose worldwide.
• Labor costs: Up mainly in Europe as a result of higher incentives due to strong sales, etc.
• Rent: Up in Europe and Oceania mainly due to an increase in the number of offices through M&A.
• Amortization of goodwill: Up due to the implementation of M&A in Europe and Asia-Pacific in FYE March 2023.

5

Summary of Financial Results for
the Fiscal Year Ended March 2023

Change in Balance Sheet (Compared with March 31, 2022)

March 31, 2022

March 31, 2023

Variance inamountCurrent assets

210,523

243,596+33,073

Cash and cash
equivalents

22,63430,731+8,097

126,965

132,873+5,908

Short-term borrowings

Merchandise andmanufactured goods

51,27072,237+20,966

Tangible fixed assets

34,19637,063+2,867

Intangible fixed assets

9,248

13,896+4,648Goodwill

4,508

5,330

+821

36,73836,104(634)

290,707

330,662+39,955(JPY million)

Accounts receivable(Notes and accounts receivable,
electronically recorded monetaryclaims)Investments and otherassetsTotal assets┃ Main factors of change

March 31, 2022

March 31, 2023

Variance inamount170,164

207,947+37,782

94,503

97,418+2,914

37,61562,884+25,269

Fixed liabilities

64,16754,905(9,261)Long-term debt

42,622

31,425(11,196)234,332

262,853+28,521

38,22552,629+14,403

Total net assets

56,37467,808+11,433

Total liabilities andnet assets

290,707

330,662+39,955(JPY million)

Current liabilities
Accounts payable(Notes and accounts payable trade, electronically recorded
obligations - operating)(including commercial paper)(Including bonds)

Total liabilities
Retained earnings┃ Financial strength and profitability indicators• Merchandise and manufactured goods: In Japan, Europe and Oceania,
inventory value increased due to rising market prices.

• Net D/E ratio improved from 1.0 → to 0.9• Intangible fixed assets: Increased in goodwill and customer-related assets ofcompanies acquired in FYE March 2023, and software.

• Equity ratio increased from 19.4% → to 20.5%• Interest-bearing debt: Increased together with an increase in merchandise andmanufactured goods.

• ROE (FYE March 2023)

25.4% (*FYE March 2022: 15.0%)• ROA (FYE March 2023)

5.1% (*FYE March 2022: 2.7%)• ROIC (FYE March 2023)

8.6% (*FYE March 2022: 4.4%)┃ About ratings• Domestic CP rating : J1, up from J2• Long-term issuer rating: newly acquired A-

In March 2023,
the Company issued its first bonds(total amount: JPY 10 billion)* Net DE ratio: (Interest-bearing debt − cash and deposits) / Net assets

6Summary of Financial Results for
the Fiscal Year Ended March 2023

(JPY million)

Change in Cash FlowsFYE March 2022

Main breakdowns

FYE March 2023

Cash flows from operating activities

4,821

10,308• Income before income taxes +19,309• Depreciation +7,706• Amortization of goodwill +1,227• Increase in inventories (16,374)• Income taxes paid (1,728)

Cash flows from investing activities(2,678)(8,530)• Acquisition of tangible and intangible fixed assets (5,957)• Acquisition of shares of subsidiaries (4,682)• Sale of tangible and intangible fixed assets +2,617

Cash flows from financing activities(11,803)

4,205• Issuing of bonds +10,000• Net increase in short-term debt and commercial paper +475
• Net increase in long-term debt +484
• Repayments of lease obligations (5,427)• Dividends paid (1,326)

Translation difference for cash andcash equivalents

1,748

2,085

• Foreign currency translation adjustments of cash and loans receivable fromforeign subsidiaries, etc.

Increase (decrease) in cash and cash
equivalents(7,912)

8,068-

Cash and cash equivalents at the
beginning of the period

30,543

22,631-

Cash and cash equivalents at the endof the period

22,631

30,699-Basic policy on cash management• Based on the basic policy of the Third Medium-Term Business Plan, cash flows from operating activities are used for M&A and otherinvestment activities. We will maintain this policy.
• Going forward, we will also utilize cash inflows from financing activities for investment depending on the size of the project.
7

1

Summary of Financial Results
for the Fiscal Year Ended March 2023

2

Forecast for the Fiscal YearEnding March 2024 and Other Information

3

Progress in the Third Medium-Term Business Plan

4

Reference Materials(from the Fiscal Year Ended March 2023 to the Fiscal Year Ending March 2025)8

Forecast for the Fiscal Year Ending
March 2024 and Other Information

Consolidated Earnings Forecast

Net sales of JPY 650 billion and operating profit of JPY 17 billion are expected to be achieved through strengthening the
packaging business, visual communication business and environment-related business, which are our profitablebusinesses with high potential for growth.
Net sales• In the paper business, a decline in demand is factored into the forecast. The packaging and visual communication
businesses will expand.Market conditions in Northeast and Southeast Asia will recover.

Operating profit• Portfolio reform through M&A will continue to contribute to operating profit. The sale of inventories that were purchased
at old prices in the previous fiscal year will be completed, and profit margin is expected to become a normal rate.

Ordinary profit• Rise in interest rates as factor of decrease in profit.

FYE March 2024

FYE March 2023
(JPY million)

Full-year results

Full-year earnings
forecast

Variance in amount

Variance in %Net sales

659,656

650,000(9,656)(1.5%)

Gross profit

120,584

112,000(8,584)(7.1%)

SG&A

100,182

95,000(5,182)(5.2%)

Operating profit

20,401

17,000(3,401)(16.7%)

Ordinary profit

18,404

13,500(4,904)(26.6%)

Profit attributable toowners of parent

15,722

10,500(5,222)(33.2%)* Assumed exchange rates: JPY 130/EUR, JPY 80/AUD, JPY 125/USD, JPY 17/RMB

9Forecast for the Fiscal Year Ending
March 2024 and Other Information

Forecast by Segment

In Northeast Asia, sales and profits will increase due to the recovery of operations in Japan and market conditions in China. Europe/SouthAmerica and Asia-Pacific will develop the fourth business after the packaging business and visual communication business.
Northeast Asia
Europe/SouthAmerica
Asia-PacificReal estate leasing• In Japan, price revisions will contribute to higher sales and profits.
• In the China business, provision of allowance for doubtful accounts will be completed. The market is picking up due to the recovery of
the Chinese economy from the pandemic, and this is expected to lead to a recovery in business performance.
• A recession is expected in the European economy, but we will reform our business portfolio through our ongoing M&A strategy.
Continue to reduce inventory.
• The Oceania business will grow at a normal rate. In the Southeast Asia & India business, business restructuring is to be promoted
through M&A to improve profitability.
• Full contribution from revenue generated from the logistics center and office for YAMATO TRANSPORT CO., LTD., which wascompleted in the previous fiscal year.

FYE March 2024

FYE March 2023

Europe/South America

Asia-PacificReal estate leasing

Total

Variance in amount

Variance in %305,461

318,000+12,538+4.1%

Segment profit

3,432

4,900

+1,467+42.8%

Profit ratio

1.1%

1.5%

-

+0.4ptNet sales

303,709

287,000(16,709)(5.5%)

Segment profit

16,453

10,800(5,653)(34.4%)

Profit ratio

5.4%

3.8%

-

(1.7pt)Net sales

49,26942,000(7,269)(14.8%)

Segment profit

2,186

1,900

(286)

(13.1%)

Profit ratio

4.4%

4.5%

-

+0.1ptNet sales

1,216

1,300

+83

+6.9%

115

500

+384

+332.6%

Profit ratio

9.5%

38.5%

-

+29.0pt

Net sales

659,656

650,000(9,656)(1.5%)

20,401

17,000(3,401)(16.7%)

3.1%

2.6%

-

(0.5pt)Net sales

Northeast Asia

Full-year earnings
forecast

Full-year results(JPY million)

Segment profit

Operating profit*(after adjustment for corporate
expenses, etc.)

Profit ratio* Corporate expenses, etc.: general administrative expenses in the administrative divisions of the head office that do not belong to the above segments.

10Forecast for the Fiscal Year Ending
March 2024 and Other Information

Recognition Related to Capital Costs and Various Spreads

Current cost of capital recognized by the Company:
cost of shareholders’ equity 7.8% , Cost of capital (weighted average cost of capital, WACC) 3.2%
Cost of shareholders’ equity

7.8%

ROE

Equity spread+17.6%

25.4%(FYE March 2023 results)(FYE March 2023 results)

Cost of shareholders’ equity ... Calculated using capital asset pricing model (CAPM)
Return on equity (ROE) ... Profit / Equity (shareholders’ equity) × 100

15.0%(FYE March 2022 results)

Cost of capital (WACC)ROIC

EVA spread

3.2%

8.6%

+5.4%

(FYE March 2023 results)(FYE March 2023 results)

Cost of capital (WACC) ... Weighted average cost of capital
ROIC ... NOPAT (operating profit × (1 − effective tax rate)) / (interestbearing debt + shareholders’ equity)

4.4%(FYE March 2022 results)➢ ROIC has been introduced as an indicator of performance-linked share-based compensation for directors, etc. with the aim of increasing

their willingness to contribute to the KPP Group’s medium- to long-term performance and enhancement of corporate value.

Policies and measures to improve ROE and ROIC and to reduce capital costs
Expanding high-margin businesses, investing in businesses that exceed the cost of capital, restructuring our business portfolio,
lowering the cost of capital through optimal capital structure, etc.

We will continue to outperform the cost of capital in the Company (at least 12.0% in ROE*).
Strive to create sustainable shareholder value and aim to exceed 1x PBR.
* ROE target for the final year of the Third Medium-Term Business Plan: 12.0% or more11

Forecast for the Fiscal Year Ending
March 2024 and Other Information

Policy on Shareholder Returns
Change in cash dividends per share
Expected annual

24
(JPY)

(Dividend to commemorate
the conversion to a holding
company: JPY 2)

22

dividend: JPY 22

20
18
16
14

22

(Dividend to commemorate
the listing: JPY 2)

12
10

18

8

14

6

4

8

8

FYE March
2018

FYE March
2019

10

10

FYE March
2020

FYE March
2021

2
0
FYE March
2022

FYE March
2023

FYE March2024

Basic policy on dividends
Recognizing the return of profits to shareholders as one of the most important management issues, we will pay dividends on a stable andcontinuous basis and improve corporate competitiveness and shareholder value by enhancing and effectively utilizing retained earnings.
‐ The Group will pay progressive dividends (maintain or increase the dividend amount) while securing financial resources to promote“In-Organic Growth through Strategic M&A” and “Improvement of Financial Position(improvement of D/E ratio and equity ratio)”
set forth in the Third Medium-Term Business Plan.
‐ After reviewing the status of cash flow acquisition, the Company will consider repurchasing its own shares in the second quarter of the
fiscal year ending March 2024 or later.
Current status• FYE March 2022 As acquisitions of Spicers and Antalis contributed significantly to the Group’s earnings and solidified the earnings base for the full year,
we paid an interim dividend for the first time.
• FYE March 2023 In addition to the commemorative dividend of JPY 2 for the transition to a holding company structure, we announced a dividend
increase of JPY 4 reflecting our strong performance. The annual dividend forecast was raised to JPY 20 from the initial forecast of JPY 15.

12

1

Summary of Financial Results
for the Fiscal Year Ended March 2023

2

Forecast for the Fiscal YearEnding March 2024 and Other Information

Progress in the Third Medium-Term Business Plan
3

(from the Fiscal Year Ended March 2023 to the Fiscal Year Ending
March 2025)

4

Reference Materials

13

Progress in the Third MediumTerm Business Plan

Operating Results (Net Sales and Operating Profit)

Net sales (JPY million)
Spicers
Made into a
consolidated
subsidiary(July 2019)* Consolidated from Q3

AntalisMade into a
consolidated
subsidiary(July 2020)* Consolidated from Q3

659,656

650,000

650,000

563,414590,000

430,404• Led the restructuring of domestic distribution through thefiscal year ended March 2019.
Sales remained in the range of JPY 370 billion to 380
billion (2013 to 2019)• In the Second Medium-Term Business Plan, we promoted
an In-Organic strategy through overseas M&A. Achieved asignificant growth in sales volume and gross margin ratio
and improved portfolio.

381,397• Leveraging our global network of 151 offices in 43
countries around the world, we will continue to expand thescope and scale of our business.
FYE March 2020

FYE March 2021

FYE March 2022

FYE March 2023

FYE March 2024

FYE March 2025... Forecast initiallydisclosed* Forecast
disclosed* The Third Medium-TermBusiness Plan Targets

Operating profit (JPY million)
20,403•

Profit ratio improved as the packaging and visual communication
businesses were added to the portfolio following the acquisitionof overseas companies. In FYE March 2023, there was a paper
shortage due to supply chain fragmentation, which boosted
operating profit.

•

The operating deficit recorded in FYE March 2021 was due to a
provision of allowance for doubtful accounts following thecollapse of the largest clients in Hong Kong and China. FromFYE March 2022 to FYE March 2023, we achieved the highest
profit as Spicers and Antalis fully contributed to the results.

•

The profit is expected to decline in FYE March 2024 due to thedisappearance of one-time profits generated in FYE March
2023, but it is expected to be well above the Third Medium-TermBusiness Plan target of JPY 14.5 billion.

17,00014,50012,0009,379
1,850
FYE March 2020

FYE March 2021

FYE March 2022

FYE March 2023... Forecast initiallydisclosed

FYE March 2024
* Forecast
disclosed

FYE March 2025

* The Third Medium-TermBusiness Plan Targets(9,035)The Second Medium-Term Business Plan Period

The Third Medium-Term Business Plan Period

14

Progress in the Third MediumTerm Business Plan
AntalisMade into a
consolidated
subsidiary(July 2020)* Consolidated from Q3

Spicers
Made into a
consolidated
subsidiary

Operating Results (Gross Profit Margin and Operating Margin)

Gross profit margin
18.3%
16.5%

17.2%

16.6%

12.1%

(July 2019)* Consolidated from Q3• For FYE March 2024, we take into account risk factors
such as a pullback from the bubble experienced in theprevious year and recession in both Europe andAustralia.

6.2%

FYE March 2020

• In FYE March 2023, there was a bubble in paper
products in the Australian and European businesses,
resulting in a rise in the gross profit margin to 18.3%.

FYE March 2021

FYE March 2022

FYE March 2023

FYE March 2024
* Forecast
disclosed

FYE March 2025

• Expand high-margin businesses (such as packaging
and visual communication businesses) through M&A
and continue to increase the consolidated gross margin
ratio.

* The Third Medium-TermBusiness Plan Targets

Operating margin
3.1%
2.6%

2.2%

1.7%
0.5%
FYE March 2020

FYE March 2021

FYE March 2022

FYE March 2023

FYE March 2024

* Forecast
disclosed

FYE March 2025

• The operating margin, which was previously below 1%,
has now risen to the 2% to 3% level reflecting theacquisitions of overseas businesses.
• Further improvement of operating cash flow by
expanding high-margin products and reducing SG&A
expenses.

* The Third Medium-TermBusiness Plan Targets(2.1%)The Second Medium-Term Business Plan Period

The Third Medium-Term Business Plan Period

15

Progress in the Third MediumTerm Business Plan

Inorganic Growth/Progress of Antalis and Spicers' M&A Strategies

Antalis’ M&A strategy
Enhance Antalis’ presence in the market by acquiring companies that provide customized solutions in growth areas such as
packaging and visual communication to strengthen Antalis’ products and services.

Spicers’ M&A strategy
Build a strong Spicers brand by acquiring companies in the fields that have an affinity with its existing businesses such as
packaging and visual communications. At the same time, aim for further growth by acquiring experienced personnel.

M&A activities conducted by Antalis and Spicers
2019
Spicers
Business: Sales of
paper-related products
Location: Australia,
New Zealand

2020

2021

2023

2022

Company A

Company B

Company D

Business: Sales of
paper-related products
Location: Australia

Business: Visualcommunication
Location: Australia

Business: Packaging(industrial packaging)
Location: New ZealandCompany G
Business: Packaging
Location: Germanyz

AntalisCompany C

Company E

Company H

Business: Sales of
paper-related products
Location France (Paris)

Business: Visualcommunication
Location: New ZealandBusiness: Visualcommunication
Location: Switzerland

Business: Packaging(food packaging)
Location: Australia

Company F
Business: Visualcommunication
Location: Singapore

Company J
Business: Sales of
paper-related products
Location: Australia

Company K
Business: Packaging
Location: Spain※ Company L

Company I
Business: Packaging
Location: Spain

Business: Visualcommunication
Location: Poland,
Czech Republic※ The acquisition of shares in L and the transfer of its business are subject to obtaining a permit
from the Polish Competition and Consumer Protection Agency. (as of June 7, 2023)... M&As by Antalis: 5 companies in total (visual communication business: 2, packaging business: 3)... M&As by Spicers: 7 companies in total (paper business: 2, packaging business: 2, visual communication business: 3)
16

Progress in the Third MediumTerm Business PlanKPP RISANET Network and Recovered Paper Collection (Japan)

KPP RISANET

An association founded in 2013 to promote mutual friendship among its members,
is … conduct the recovered paper collection business based on sound management,
and contribute to the development of the industry.

2013

2023

(At the time of establishment)(At present)

Number ofmembers

17 companies

31 companies

Recoveredpapercollection

approx. 3 million tons

approx. 7 million tons

(Annual)Paper and paperboard
consumption in Japan

23.15 million tons* (2021)

Equivalent to about 40% ofrecovered paper collected in Japan
Recovered paper collectionin Japan

18.39 million tons* (2021)
Utilize the KPP RISANET Network and contribute to
the realization of a comprehensive recycling-oriented society*

Source: Fastmarkets RISI Annual review of global pulp & paper statistics, 2021

17

Progress in the Third MediumTerm Business Plan

Completion of a Logistics Center and Office

A logistics center and office for YAMATO TRANSPORT CO., LTD. was completed in February 2023.
It began operating as a leased property.
‐ The logistics center and office were constructedon the site, which is adjacent to the head officebuilding of the Company and used to be a parking
lot, with the aim of effectively utilizing the realestate owned.

‐ We entered into a fixed-term building leaseagreement to secure long-term and stable realestate income.
[Features of the property]
Conveniently accessible, located a 5-minute walkaway from Shintomicho Station on the Yurakucho
Subway Line and a 7-minute walk away from Tsukiji
Station on the Hibiya Subway Line
Close to the Tokyo Bay area, allowing collection
and delivery to central and nearby Tokyo(1) Address:613-2 Akashi-cho, Chuo-ku, Tokyo(2) Overview:

Logistics center and Office(3) Site area:

1,038.41 m2 (314.12 tsubo)(4) Total floor area:

4,131.44 m2 (1,249.76 tsubo)(5) Structure and scale:

Steel-framed and six stories above ground18

Progress in the Third MediumTerm Business PlanKPP Open Innovation

Aiming to build a second pillar of business in place of the KPP Group’s core business, we are actively promoting R&D, business alliances and* Oji Fiber and BMecomo are consolidated subsidiaries of the Company
investments in new products and services handled by “Oji Fiber”,“AmicaTerra” and “BMecomo.”
Products and Services

R&D, business alliances and investments

Oji Fiber➢ Strengthening product lineup for “Kami no ito (paper yarn) OJO+”➢ Enhancing competitiveness by expanding procurement sources➢ Holding the “Project OJO+ Meeting,” a production and sales meeting
involving partner companies, at regular intervals to accelerate thepace of business development

Lightweight and excellent in moisture absorption and release,
toughness, deodorization, dyeability and biodegradability
Wide range of applications including artificial grass, apparel, socks
and daily necessities

AmicaTerra➢ Execution of additional investment to further promote businesscollaboration and relationship enhancement

Modo-cell®, a plastic substitute material

Examples of products using modo-cell®

Because the main raw material comes from plants, it is completely
biodegraded in soil and water including the ocean
No special mold is required for molding, and products can be manufactured
using general plastic molding machines➢ Improving the development and product capabilities for products
using modo-cell® through a business alliance with a molding
manufacturer, and accelerating the initiatives for developing newmarkets and customers➢ Conducted sales skill improvement seminars regularly incollaboration with AmicaTerra to strengthen sales capabilities andcross-selling to expand nationwide

BMecomo➢ Participation in the project to develop a fully non-feed-in-tariff(NON-FIT) decarbonized power supply with hybrid fuel of woodand manufacturing by-products* Fuel for power supply to be developed in this project: waste bacterial beds and recycledwood chips discharged from the Mie Mushroom Center of HOKUTO Corporation andplastic-based resources(2023/3/31 : https://www.kpp-gr.com/ja/news/irnews/auto_20230331539593/pdfFile.pdf )BMecomo supports daily operations and business management bygathering and analyzing all data obtained from biomass power plants,
utilizing the latest technology and providing visualization, thereby helping
maximize the profits of biomass power plants➢ Business alliance with Kett Electric Laboratory Co., Ltd. Launcheda solution that uses data of in-line NIR moisture analyzer(2023/5/31 : https://www.kpp-gr.com/ja/news/irnews/auto_20230531589777/pdfFile.pdf )19

Progress in the Third MediumTerm Business Plan

Support for “The C.W. Nicol Afan Woodland Trust”

Respecting Mr. C.W. Nicol’s wish to restore Japan’s beautiful natural environment and the Disaster Recovery Project
organized by the C.W. Nicol Afan Woodland Trust, a general incorporated foundation, we have been supporting the trust
as an official sponsor since 2015.

Keynote address by Mr. C.W. Nicol
Mr. C.W. Nicol was invited to KPPGROUP HOLDINGS to give a keynote
speech at the 7th KPP Exhibition heldfrom Monday, November 11 to
Wednesday, November 13, 2019.
We have released a video that excerpts
and summarizes part of the speech.
Follow the link below to access thevideo.
https://www.youtube.com/watch?v=z9MKE8_zwVc

From “Memorial ceremony for C.W. Nicol” (April 26, 2023)

Support for the forest maintenance activities in South Area of the Afan Woodland has been newly started. For a forest rich in biodiversity.

(1) Examining the current state of
the forest - Biological survey(2) Maintaining the forest –Creating a maintenance policy(3) Monitoring - Adaptive management

20Progress in the Third MediumTerm Business Plan

Long-Term Management Vision “GIFT+1 2030”

Initiated the formulation of the next long-term management vision, “GIFT+1 2030,”
which will follow the current “GIFT+1 2024”

FYE March 2020

FYE March 2021

FYE March 2022

FYE March 2023

FY2030“GIFT+1 2030”

FYE March 2024
(Forecast)

The Second

The Third

The Fourth

The Fifth

Medium-Term Business Plan

Medium-Term Business Plan

Medium-Term Business Plan

Medium-Term Business Plan

✔ By the year 2030, there is a need to achieve the targets set to create a sustainable society,including “the target of the 30by30 Alliance for Biodiversity,” in which the company is a member,“medium-term targets for reducing GHG emissions,” and “achieving Sustainable Development Goals (SDGs)”✔ With a view to hitting the sales mark21

1

Summary of Financial Results
for the Fiscal Year Ended March 2023

2

Forecast for the Fiscal YearEnding March 2024 and Other Information

3

Progress in the Third Medium-Term Business Plan

4

Reference Materials(from the Fiscal Year Ended March 2023 to the Fiscal Year Ending March 2025)

22

Summary of the Third
Medium-Term Business Plan

Long-Term Vision “GIFT + 1 2024”

The Third Medium-Term Plan is the final stage of the long-term vision “GIFT + 1 2024”- Toward “GIFT + 1 2030” and “NEXT 100” years
The Third Medium-Term Plan Period

Focusing on Overseas Markets

Expansion of raw material
business

NEXT 100

Global Management
Establishing a Comprehensive
Recycling-Oriented Company
Completion toward “NEXT 100”

Investment in growth engines
and overseas expansion
Strengthening profitability

Reorganization of businessportfolio

Antalis became aconsolidated
Spicers became asubsidiaryconsolidated(July 2020)
Newly listed on thesubsidiaryTokyo Stock(July 2019)
Exchange

Current

Transition to a holding company structure
Company name changed to
KPP GROUP HOLDINGS(October 2022)(June 2018)

Business structure reformperiodFYE March
2017

FYE March
2018

FYE March
2019

The First Medium-Term Plan

Business development
periodFYE March
2020

FYE March
2021

FYE March
2022

The Second Medium-Term Plan

Long-Term Vision “GIFT + 1 2024”

Business
completion period

FYE March
2023

FYE March
2024

FYE March
2025

The Third Medium-Term Plan

GIFT + 1 2030
23

Summary of the Third
Medium-Term Business Plan

Themes of the Third Medium-Term Plan

Theme
Achieving the Long-Term Vision “GIFT + 1 2024” andfor the 100th Anniversary of the Company

Messages
Contributing to a sustainable society through recycling-enhancing business andincreasing corporate value through business portfolio reform

Strengthen global group management

Establish and deepen profit base

• Maximize profits of each operatingcompany• Promote strategic alliances and M&A• Pursue global synergies• Promote DX (Digital Transformation)✕• Realization of ESG management• Establish a global operations system• Strengthen group communication• Appropriate allocation of management
resources24

Summary of the Third
Medium-Term Business Plan

Reform of KPP GROUP WAY

The KPP Group’s management philosophy “KPP GROUP WAY” has been reformed along with our startwith the holding company structure- Introduced the concept of “Purpose Management.” Aim to be a company that contributes to the creation of a sustainable society based on the new KPP GROUP WAY.

Corporate Message

A Paper Trail for Creating The Future
MISSION

G lobalization
Leveraging our global network to become a leading pulp and paper company.

Contributing
to the realization
ペーパーイノベーションでof a recycling-oriented society
循環型社会の実現に貢献する

I nnovation
Developing the potential of paper through a creative mind anda recycling-oriented business model.

F unction
VISION

GIFT+1
Globalization Innovation Function Trust +1 (ESG)
VALUES

Promote e-commerce and take on the challenges of new business domains.

T rustContinue being a sincere company trusted by stakeholders.

+1 ( plus one )Contribute to the realization of a sustainable society by adding environmental,social, governance, and other initiatives to all elements of our vision as "plus one".

・ Pioneering The Future with “Paper Innovation”
・ Cultivate Autonomous Human Resources
・ Open-minded Organization

KPP Group Charter
Paper Innovation
DNA Supporting The Organization

25

Summary of the Third
Medium-Term Business Plan

Sustainability and ESG Management

KPP Group’s Basic Sustainability Policy
We, the KPP Group, will contribute to the realization of a sustainable society through the development of comprehensive recycling-oriented
management based on the basic principles of the “KPP GROUP WAY.”
We also consider the environment, society and governance as important management issues, identify material issues related to our businessactivities, and work to resolve these issues.

Material Issues of the KPP Group
Global Expansion

Response to DX

Implementation of Green Business• Expansion of • Development of
e-commerce
new systems• Solving the marine plastic
pollution problem

Climate Change Countermeasures

Diversity & Inclusion

Enhancement of Governance• Development of solutions toprevent global warming• Ensuring diversity• Creation of groupsynergies• Inner communication• Reduction of
CO2 Emissions• Utilization of diverse • Compliance
personnel• Recycling and waste reduction• Information security • Risk management

ESG Management Initiatives (For details, please refer to “Integrated Report 2022” https://www.kpp-gr.com/en/ir/report.html)[Issues]• Creation of a recyclingoriented society[Measures]• Establishment of a paper
recovery network andselling raw materials forrecovered paper• Endorsement of TCFD anddisclosure of information
related to climate change
countermeasures• Development anddistribution of products
and services with reduced
environmental impact• Response to climatechange• Spread of renewableenergy[Issues]• Human resource
development[Measures][Issues][Measures]• Introduction of fair personnel
system and implementation ofevaluation• Education (e-learning andtraining by rank)• Enhancement ofcorporate governance• Strengthening the global
governance structure• Diverse work systems• Development of an
employee-friendly work
environment• Diversity & Inclusion• Promotion of Green Biz
Project• Prevention of harassment• Response to long working
hours• Improvement of work-lifebalance• Promotion of women’s careeradvancement• Diversification of hiring practices• Forest conservation andreforestation• Raise awareness of paper
culture and book culture• Dissemination of information on
paper culture and book culture• Utilization of managed
forest resources• Reduction of poverty
and hunger• Various types of support• Disaster and incident
response• BCP• Evacuation drills
Safety confirmation drills• Diversity & Inclusion• Reinforcement of Groupwide security

26

Summary of the Third
Medium-Term Business Plan

Transition to a Holding Company Structure

Transition to a holding company structure was completed on October 1, 2022
Three core operating companies (Kokusai Pulp & Paper Co., Ltd., Antalis and Spicers) come under theholding company’s umbrella

KPP GROUP HOLDINGSBusiness area

Business area

Northeast Asia

Business area

Europe / North andSouth America

Asia-Pacific(Oceania / Southeast Asia and India)

Kokusai Pulp & Paper

AntalisSpicers(Japan)(France)(Australia)• Consolidated subsidiaries: 18• Number of employees:
Around 1,000• Head office: Japan (Tokyo)*• Consolidated subsidiaries: 57• Number of employees:
Around 4,000• Head office: France (Paris)• Consolidated subsidiaries: 16• Number of employees:
Around 450• Head office: Australia (near Melbourne)

Both the number of consolidated subsidiaries and the number of employees are as of March 31, 2023. Spicers includes KPP-AP.

[Consolidated Net Sales Ratio] * FYE March 2023
Asia-Pacific

15.5%

EuropeNorth America

Europe/SouthAmerica

Northeast
Asia

46.1%

46.4%

Northeast
Asia* Approximation,
excluding real estate(Kokusai Pulp &Paper)(Antalis)[Consolidated Operating Profit Ratio]

Southeast Asia
and India* FYE March 2023
Asia-PacificNortheast
Asia

9.9%

15.6%

South America
Oceania(Spicers)* Northeast Asia: Japan, China, Taiwan, Hong Kong and South Korea

Europe/South America

74.5%* Approximation,
excluding realestate27

Summary of the Third
Medium-Term Business Plan

Benefits of Becoming a Holding Company (Creating Synergies)✓ Strategy: Share strategies, tactics, and management
methods across regions✓ Human Resources: Optimizing global staffing✓ Functions: Eliminating duplicated functions throughshared services, etc.

✓ Sales: Business matching within the group.
Sharing know-how, skill information and salesorganizations/channels✓ SCM: Global sharing of distribution networks
and product inventories✓ Funding: Utilization of surplus funds✓ Credit: Utilization of credit✓ Taxation: Development of Global
Governance System

Management
Synergies

Financial
Synergies✓ Procurement: Achieving economies of scale
through joint procurement of products✓ Brand: Brand awareness and brand strength

Business
Synergies28

Summary of the Third
Medium-Term Business Plan

Promoting Inorganic Growth (M&A/Alliance)

Aim for medium- to long-term growth by promoting inorganic growth (growth through acquisition of
external resources) as well as organic growth (growth through internal resources)

Organic Growth

Inorganic Growth

Expansion of recycling-based
business models

Expanding business domains
by acquiring external management resources
Total amount: JPY• Further expansion of recycling-oriented
businesses by balancing used paper businesswith product sales• Strengthen pulp business, including raw
materials for sanitary paper• Maximize profits by expanding the share of thepaper and paperboard wholesale business,and promoting e-commerce, while reducing
expenses• Expansion of solution businesses

20 billion (in three years)• Target business for M&A
Visualcommunication
business

Packagingbusiness

Other processing
businesses• Management resources to be acquired
Portfolio

Human
resources

Management
know-how

Offices andfacilities

29

Summary of the Third
Medium-Term Business Plan

Net Sales and Gross Profit
by Business Segment* From the Third Medium-Term Management Planannounced on June 13, 2022

Continue to promote business portfolio reforms under the Third Medium-Term Plan
Final year of the Second
Medium-Term Plan

Final year of the Third MediumTerm Plan (targets)FYE March 2022

FYE March 2025
JPY 650 billion
455

JPY 563.4 billion
Chemical products &Machinery, etc.
Visual communication

309

Packaging

776

Paper raw material

439

Board

605

650

500

+79.7%
1,300

JPY 92.9 billion

93

29

520
975

244
Paper

JPY 108 billion
25
183+67.6%
382

47
30

3,006

52
45

2,600
486
393

Net sales

Gross profit

Net sales

Gross profit

Ratio of visual communications and packaging businesses with higher gross margins to rise30

Summary of the Third
Medium-Term Business Plan

Regional Strategy Summary* From the Third Medium-Term Management Planannounced on June 13, 2022

Overseeing the global operations with the three pillars: KPP, Antalis and Spicers “North and South America”
and “Southeast Asia and India” start to fully expand businesses from the Third Medium-Term Plan.
Company inchargeKokusai Pulp &Paper

Area in charge

Final year of the Third
Medium-Term Plan

Sales Target

Strategy Overview

JPY 320 billion

・ Expand sales of paper and board by reviewing marketing methods focusing
on e-commerce while ensuring sales share and profits.
・ Promote comprehensive recycling-oriented business.
・ In China, increase both sales and profit by expanding sales volume in linewith market expansion.

EuropeJPY 250 billion

・ For paper & board, maintain the number 1 position in the region,and secure revenue and profit growth.
・ Packaging and visual communication businesses will make good useof the inorganic strategy to expand while capturing market expansion.
・ Promote e-commerce in all three businesses for further improvementof profit margin ratio.

North and SouthAmerica

JPY 20 billion

・ Consider full-scale entry into North America and implement inorganic strategy.

JPY 35 billion

・ Increase profitability by maintaining the market share in paper and board
in the region and promoting e-commerce.
・ Utilize inorganic strategy for packaging and visual communicationand pursue M&A actively.
・ Further promote adhesive labels as a product segment.

JPY 25 billion

・ Complete organizational restructuring. Promote business by utilizing know-how
under the control of Spicers.
・ Aim for growth by capturing market expansion in the area of paper and board,packaging and visual communication.

Northeast Asia

(KPP)

AntalisOceania
Spicers
Southeast Asia
and India

31

Summary of the Third
Medium-Term Business Plan

Targets for the Final Year 2025 of
the Third Medium-Term Plan

* From the Third Medium-Term Management Planannounced on June 13, 2022

Aiming to increase both sales and profits with more profitability(JPY million)FYE March 2022

FYE March 2025

Growth rate

Net sales

563,414650,000+15.4%

Operating profit

9,379

14,500+54.6%

Operating margin

1.7%

2.2%

+0.5ptNet profit

7,497

9,000

+20.0%

ROE

15.0%

12.0% or more

-

ROA

2.7%

2.5% or more-

Measures to achieve targets
・ Improvement in profitability: Increase in sales
and operating profit ratio, etc.

・ Improvement of asset efficiency: Group business
management through ROIC, etc.

Targets for improving financial position

DE ratio*1

Capital adequacy ratio

FYE March 2022

FYE March 2025

1.4 times

1.0 time or less

19.4%

25.0% or more

*1. DE ratio: Interest-bearing debt / net assets

32Summary of the Third
Medium-Term Business Plan

* From the Third Medium-Term Management Plan

Cash Flow Allocation

announced on June 13, 2022

Increasing corporate value by growth investment within operating cash flow
Improving our financial position by accumulating retained earnings
Maintaining a net debt-to-equity ratio of less than 1× and increase equity ratio to 25% or more

Shareholder returns are based on an appropriate amount of retained earnings

Cash inflow

Cash outflow

Sale of fixed assets andcross-shareholdings
Cash and +Return of fund management
deposits
Collection of doubtful debt

Repayment of interest-bearing debt

Operating cash flow
Three-year cumulative amountJPY

36.0billion

Growth Investments
Investment amount used forinorganic strategy (M&A, etc.)
approximately JPY

20.0billion(free cash flow)

JPY

23.0billion

Retained earnings

Shareholder returns (dividends)
Use of external funds
33Reference
Materials

Company Profile

A group of paper merchants with a 98-year history
Company Name
Established

November 1924

Representative
Head Office
AddressKPP GROUP HOLDINGS CO., LTD.

■ Number of Countries

Madoka Tanabe, Chairman & Chief Executive Officer
Tadashi Kurihara, President
6-24 Akashi-cho, Chuo-ku, Tokyo

CapitalJPY 4,723 million

Employees

5,457 (consolidated)

43■ Number of Cities

134■ Number of Bases

151* As of March 31, 2023*

As of March 31, 2023

Status of shareholders
March 31, 2022

Principal
shareholders(as of March 31, 2023)

Oji Holdings Corporation

17.3%

The Master Trust Bank of Japan, Ltd.
(trust account)

7.7%

Nippon Paper Industries Co., Ltd.

7.1%

Custody Bank of Japan, Ltd.

3.1%

KPP Group Holdings(Employee Stock Ownership Association)

3.1%

Mizuho Bank, Ltd.

2.5%

Mitsui Sumitomo Insurance Company, Limited

2.4%

MUFG Bank, Ltd.

2.3%

Sumitomo Mitsui Banking Corporation

2.3%

The Norinchukin Bank

2.3%

March 31, 2023

Foreigncorporations, etc.

Foreigncorporations, etc.

3.68%

6.63%
Trust
banks

13.35%
Financial
institutions

Shareownership ratio
by owner

17.95%

Other
corporations

Trust
banks

Other
corporations

17.15%
Shareownership ratio
by owner

39.57%

32.37%

Financial
institutions

17.44%
Individuals
and others

Individuals
and others

25.46%

26.41%

34

Reference
Materials

Paper and Paperboard Business (Domestic)

Paper
Deals in newsprint, printing paper, and information-related paper.
There is a wide range of paper types, and we make proposals that match the properties
and characteristics of each type of paper depending on the application.

Paperboard
Paperboard is mainly classified into “container board” and “folding box board” and is widely used
for packaging.
“Container board” is the base paper used to make corrugated boxes, and accounts for about
80% of all paperboard.
“Folding box board” is the base paper for paper boxes such as candy, tissues, cards, etc.

Paper manufacturers

Users

Paper
Merchant（Secondary trading）

Printing companies,
newspaper companies,
publishers,
stationery manufacturers,
wrapping paper manufacturers,
packaging paper manufacturers,
etc.

Consumers
Product

Kokusai Pulp &Paper• Independent common distributors- Primary paper distribution is mainly classified into paper manufacturer affiliates, general trading company affiliates,
and independent common distributors
35

Reference
Materials

Domestic and Overseas Business Models in the Paper BusinessHybrid and global deployment of three business models in different regions

Paper Trading type

Paper Distribution type

Paper Merchant type

Overseas business model

Domestic business modelBusiness models in Europe and America

MissionMissionMissionTrading business utilizing global
network in paper, paperboard
and paper materials

Paper-related wholesale businesscombining indent business(consignment sales) with stockbusiness (inventory sales)

High-value-added business through cutting
and processing and sales of own-brandproducts with large-scale logistics
and delivery functions

Gross margin* ratio

Gross margin* ratio

Gross margin* ratio

approx. 3%

approx. 6%

approx. 25%*Gross margin ratio in normal times

Maximizing profitability and efficiency by developing various businessmodels appropriate for each region36Reference
Materials

Adhesive Label Business**Adhesive Labels Business ... Paper Business

Adhesive Label Business in Oceania
Providing services in all fields, including daily necessities, food and beverage, medical andpharmaceutical, logistics and distribution, and industrial-related fields.
- Propose to customers the best combination of surface materials, adhesives,
release paper and release film for various applications.
- Wide range of supply sources, especially in Asia and Europe- A large selection of approx. 100 different products.
- In-house slitting process provides added value, responding flexibly to customer specifications.
Daily Necessities

Logistics

Food & Beverage

OthersMedical Care

37

Reference
Materials

Packaging Business (Customized Solutions)Customized solutions (Antalis)
Experts who provide customized solutions that meet customer needs for a wide range of packaging material Providing services
in a wide range of industrial fields, including automobiles, electronics, high-tech, machinery, metals, food, chemicals and so on.
ExpertInquiries from Customers✓ What protection does the product need?
✓ What are the transportation modes androutes, and the situation of on-site
inventory?
✓ What do your internal logistics look like?
✓ What about the disposal after use?

We have products that need
protection, but we can’t find astandard packaging solution to meet
our needs.

・Carefully consider customers unique cases and develop a solution that meets their requirements
・Procurement of the highest quality packaging materials at competitive prices through a broad network of suppliers and manufacturers
Packaging Design Center

Providing a variety of packaging materials (examples)

Corrugatedcardboard

FoamcushionAir
cushionPaper
cushionHoneycomb panel

Gap filling buffermaterial

Firm
packagingmaterial

Bag-type air
cushioning
material

Corrugated
foam

38

Reference
Materials

Visual Communication BusinessWe provide solutions and products ranging from large-format inkjet printers to inks and other consumables,and materials for indoor and outdoor signage, displays, and car wrapping- Experienced marketing teams provide high-level user support
Examples of indoor and outdoor signage, display, wrapping, etc.

* Examples of projects in which products of Antalis’ visual communication series were delivered in collaboration with architects, interior designers, printers
and advertising agencies.

Coala Air Board

1

COALA STICKY
WALL S

2

COALA ROLL-UP
ECO

3

COALA
ROLL-UP
PET S

4

COALA
ORGANZA

5COALA
INTERIOR FILM

6

STADUR SIGNEASYPRINTBLACK7COALA FLOOR& WALL R

8

DIBOND

39

Reference
Materials

Paper Raw Materials Business (domestic)

Paper raw material (pulp and used paper)
Currently, approximately 40% of the raw material consumed by the entire paper industry is pulp,
and the remaining 60% is used paper.
We use our domestic and international network to procure pulp and used paper,and to sell them to paper manufacturers.

Artery Business

Secondary wholesaler/user

users（ Product Sales ）Annual sales results
approx.

Products
Paper・
Paperboard

1.8million tons

Paper and
paperboard
business

Final users（Companies, homes, etc.）

製紙メーカー

Used Paper

Annual collection
results
approx.

Used Paper

Wholesaler of used paper

1.1million tons

Collection

Paper rawmaterials
business

Vein Business（ Collecting used paper ）• Recycling industry through recycling of used paper- Japan’s paper industry is characterized by the recycling of used paper.
- Kokusai Pulp & Paper plays an important function in this process and has been working for many
years toward the realization of a sustainable society.
40Reference
Materials

Comprehensive Recycling-Oriented Business Model in Japan

Building a comprehensive recycling-oriented business model contributing to the realization of a sustainable society
Material recycling

Reduction of GHG Emissions

Contributing to the realization of a circular economy
through recycling-oriented business⚫

Town ecomo

Office ecomo

Utilizing the collection network of used paper wholesalersthroughout Japan.
Collected used paper is delivered to paper manufacturers
as raw materials for paper (recycling material)⚫

*see “Paper Raw Materials Business” on page 36 of this material.
⚫

⚫

⚫

Used paper collection solution business using
our originally developed Town ecomo and Office ecomo.
Provision of the ecomo Closed Recycling Service,
which visualizes resource emissions, recycling routes,
and recycling volumes

Forests

Pulp
manufacturers

Contributing to reducing greenhouse gas emissions
through projects to support biomass power generation

Collection bins for usedpaper are installed at
supermarkets and other retailstores. Old newspapers andmagazines are brought fromhome for recycling. Points
are given according to theweight.

Development of BMecomo, an operation support
system for biomass power plants using AI and IoTtechnologies
Purchase unused wood, waste wood, and scrap wood,and supply them to biomass power plants

Confidential documents
generated in corporate offices
are collected to convert theminto recycled paper.
Significantly reducing the timeand effort required forshredding and contributing to
the environment

Sawmills/
Construction sites

BM ecomo
Forests
Distribution

Distribution

Collection

Offices/Households

Paper
manufacturers

Material
recycling

Distribution
Printing/
Processing
companies

Reductionof GHG
Emissions

https://bmecomo.com/
Consumers

BM ecomo supports daily operations and business
management by gathering and analyzing all data obtained
from biomass power plants, utilizing the latest technology
and providing visualization, thereby helping maximize theprofits of biomass power plants.
Purchase waste wood from construction material
manufacturers and supply it to biomass power plants.

Power
Stations
Supporting
operation

41

Reference
Materials

Example of ESG Management Investments for Realizationof a Recycling-Oriented Society in Japan

Capital and business alliance with Amica Terra Co., Ltd.,
engaged in the sale and manufacturing of non-plastic products.

Oji Fiber Co., Ltd., which manufactures and processes paper yarn
and other textile products made from paper, became a subsidiary.

In February 2022, formed a capital and business alliance with Amica Terra
Co., Ltd., which is engaged in plastic substitute materials (modo-cell®)made mainly from plant fibers (cellulose).

In March 2022, Oji Fiber Co., Ltd. became a subsidiary, and it manufactures
paper yarn “Kami no Ito OJO+” made from Manila hemp.

Characteristics of modo-cell®

modo-cell®

Plants are the main raw material, and plant residues
that were previously discarded of can be used as
raw materials.
The main raw material is plants, and so it completely
biodegrades on the ground and in the soil.
No special mold is required for molding, andproducts can be manufactured using general plastic
molding machines.
Effective for disposing of abandoned bamboo forests
and agricultural waste
Possible to reflect the characteristics of plants usedas raw materials in products.

Features of Kami no Ito OJO+Lightweight and excellent in water absorption,quick drying property, toughness, deodorization,
dyeability and biodegradability.
Wide range of applications including artificial grass,apparel, night wear and daily necessities

Examples of products using Kami no Ito OJO+

Examples of products using modo-cell®

42Reference
Materials

Conclusion of a Sales Distributor Agreement with Ranpak

In September 2022, a sales distributor agreement was concluded between Ranpak B.V. (“Ranpak”),
the largest provider of product protection solutions with paper cushioning material, and Kokusai Pulp & Paper
Details of Ranpak’s business
A leading company in the field of paper cushioning material, providing packaging solutionsin 50 countries around the world by selling paper packaging materials including protective
material and leasing packaging equipment.
Reason for and purpose of the agreement
Switching from plastic to paper protective packaging makes it possible to decrease
environmental impact, significantly reduce time required for packaging, standardize
packaging operations, and cope with busy seasons.
This agreement was concluded in anticipation of growing demand for paper cushioning
materials in Japan, particularly in the EC industry.
→ Antalis was originally a Ranpak distributor in Europe.

We will continue to actively pursue the creation of business synergies
among KPP Group companies and the promotionof environmentally friendly products through information exchange.

Paper cushioning

Gap filling

Packaging

Cold chain

Packing equipment(example)

Exhibiting at the Next-Generation EC & Store Expo (October 26–28, 2022 at Makuhari Messe)• Demonstration of high-speed generation of paper
cushioning material• Exhibited environmentally friendly products andservices for the industry, such as water-soluble ducttape, all-paper cushioned envelopes as packaging for
posting items, and packaging materials coated with
self-adhesive glue

43

Reference
Materials“Green Products & Solutions” Catalog and Sample Kits

We created a catalog introducing products and solutions that help reduce environmental impact. Six samplesof paper solutions and reduction of plastic use are enclosed.
Products and solutions are presented in three categories: Retail/Restaurant/Office, Manufacturers, and Logistics Warehouse
Six samples of environmentally friendly products, such as paper solutions and reduction of plastic use, are enclosed.

Sample Kit request form https://shifton.kpp-gr.com/catalogue_form.html[Kami no ito (paper yarn) OJO+][modo-cell®]• Made from 100% “OJO +,” paper threads derived from Japanesewashi paper made from natural materials (Manila hemp)• Main raw materials are plant fiber, starch and plantbased resin• The texture is smooth, and it is hard to believe that it was madeof paper• Various molding methods can be applied[Paper face cover]• Paper face cover made mainly from pulp
Used in fitting rooms in a clothes shop
• Reduces plastic use by about 70% compared with petroleumbased nonwoven fabrics[Coala Air Board]• Antalis’ brand, Koala Air Board, is a sustainable material madeof 100% recyclable paper• Used for panels and fixtures in exhibitions[Paper packaging materials]• Consists of “pure white paper, polyethylene (PE),aluminum vacuum metallizing PET (VMPET), PE, andlinear low-density (LL) polyethylene film”• Paper packaging materials that can have “Paper Mark,”
an identification mark requested by laws and regulations,applied to them

[Paper clear file]• Paper clear file bound with eco-press binder• Very eco-friendly stationery that is manufactured without
the use of glue, heat or staples

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Materials

Example of ESG Management Green Products / Green Solutions

KPP Group’s Green Products

Promotion of
paper solutions

Due to the marine plastic pollution problem, moves to restrict disposable plastic are acceleratingin countries around the globe, and demand for paper as an alternative material is rising.
In recent years, research and development has been progressed mainly by paper manufacturers,
and there has been an increase in examples of food packaging and daily necessities.
Examples: Cutlery, clear folders, face covers, hangers, paper packaging, cushioning, packaging, etc.

Green
Products

Reduction ofplastic use

These products reduce the use of petroleum-derived plastic by innovating manufacturing technologies
and mixing in biomass-derived pulp and paper to an extent that does not detract from plastic’s
characteristics such as barrier properties and processing suitability.
Examples: Paper-made cold insulation box, paper + film packaging materials, waterproof & oilproof paper, etc.

Biomass
materials

As it is often difficult to switch plastic to other materials due to its various characteristics,
research is being conducted with the aim of reducing the environmental impact. Biomass plastic
manufactured using biomass materials and biodegradable plastic that is broken down
by microorganisms are some examples.
Examples: In-store point of purchase (POP) advertising, fishing equipment, cutlery, etc.

Paper-based clear folders

Try-on face cover for clothes shop

Reduced plastic cutlery

Artificial grass made of paper yarn

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Materials

Digital Marketing Initiatives

Service site “SHIFT ON”- Part of our digital marketing initiatives. The goal is to create customer contacts and prospects.
At the same time, we will introduce marketing automation (MA) tools to sophisticate marketing.

https://shifton.kpp-gr.com/

Environmental and newfunctional materials solutions
Comprehensive support for the planning and implementation ofenvironmental projects, including SDGs and carbon neutrality.
Packaging solution
Helping customers solve their management issues through thedevelopment of packaging materials and original packaging.
Total solution for sales promotion
Comprehensive support for the policies of sales promotion tools
installed inside and outside stores, from material selection to supply.

Analyze the potential needs of customers from the three perspectives of “environment/functional materials,” “packaging,” and “sales promotion,”
thereby providing solutions that can be realized with materials and systems- Solve important management issues such as improving operational efficiency, reducing costs, reforming work styles, and improving corporate value

Customer concerns and issues
Sales are slow because of limited daily shipments
Improving
operational
efficiency

Packing is a bottleneck and shipping is not progressing smoothly
Too much cushioning

Standardiz
ing ofoperation

Different workers put in different amounts of cushioning material.
Quality of service is not standardized.
The speed of the packing work is different from line to line,
complicating management
Want to improve the packing skills of temporary workers
hired during the busy season
Do not know what to start with in terms of environmental initiatives

Greenefforts

Packing is a bottleneck and shipping is not progressing smoothly
Looking for alternative packaging that can contribute to SDGs

Operational improvement proposal
Improving operational
efficiency and leveling
operations through theintroduction of automatedmachines for packaging

Green material proposal
Achieve plastic-free
operations by changing someof the packaging materials
from petroleum-derived
materials to paper

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Materials

PAPER MALL (EC Site for Paper-Related Products)

https://www.kpps.jp/papermall/Our website “Paper Mall” offers approx. 1,000 types of general paper, specialty paper
and paper products, which can be purchased from a single sheet of paper.
Samples and sample books can be ordered free of charge, and we also offer a processing
service to cut general paper into desired sizes to meet a wide range of customer needs.
We have strengthened the lineup of our “Green Products” series of environmentally friendly
products (see below) to help all stakeholders who are working on SDGs.
This is a comprehensive paper-related website that makes the most of the strengths ofour company, a paper specialist, such as the ability to make prompt deliveries through the
network of KOKUSAI PULP & PAPER CO., LTD., the ability to check the latest paper-related
information such as paper industry news, and the ability to receive questions and consultations
about paper.

■ Green Products: Environmentally friendly products

・ Promotion of paper solutions
Microplastics are a cause of marine pollution. There is a need to develop materials
that can replace plastic.
We are working to change to paper, i.e., switching to products made from paper.

・ Plastic Reduction
We will reduce the amount of plastic used by mixing in other materials while maintaining
the properties of the plastic.
We are developing materials and products to reduce the amount of plastic used.

・ Bioplastics
https://www.kpps.jp/papermall/greenproducts/

Plastics that return to the soil as compost and do not remain after being decomposed by
microorganisms and other natural elements.
We are developing materials and products in search of the possibilities of biodegradable plastics
and biomass plastics.

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Materials

Integrated Report / TSUNAGU (Public Relations Magazine)
Integrated Report (FY2022)

TSUNAGU (Vol.54)

A report including KPP’s financial and non-financial information.
It provides details of our ESG and sustainability strategies.

In addition to KPP news, the magazine introduces paper-based artists,traditional paper crafts, and various paper-related topics to readers
to rediscover a fascination with paper.

https://www.kpp-gr.com/ja/ir/library/integrated.html

https://www.kpp-gr.com/ja/tsunagu.html

Contact
Corporate Communications Office
TEL:03-3542-4169
https://www.kpp-gr.com/en/contact/contact3.html

48Disclaimer

This document contains forward-looking statements, future plans, and management targets related to
the Company.These forward-looking statements are based on current assumptions regarding future
events and trends and are not guaranteed to be accurate.
Actual results may differ materially from those presented herein due to various factors.

Unless otherwise stated, the financial data presented herein are presented in accordance withaccounting principles generally accepted in Japan.
The Company does not necessarily make any revisions to the forward-looking statements it has made,regardless of the occurrence of future events, etc., except when required by the Disclosure Rules.
Information relating to other companies is based on publicly known information.
This document does not constitute solicitation of offers to acquire, offer to sell, or offer to buy any
securities (hereinafter referred to as “solicitation”). It is not intended for solicitation activities, nor can it
be the basis for any contract or obligation.
This English document is just a translation of the Japanese document. Therefore, please use thisEnglish document only for convenience and refer to the original Japanese document as appropriate.

Contact
KPP GROUP HOLDINGS CO., LTD. Investor Relations Contact
https://www.kpp-gr.com/en/contact/contact3.html

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