Action to Implement Management that is Consciousof Cost of Capital and Stock PriceMarch, 2024

KYOKUTO SECURITIES CO., LTD.
Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail.

KYOKUTO SECURITIES CO.,LTD

Current Situation•Kyokuto Securities has been striving to attain a sustainable growth by expanding its client related businesses
while maintaining the “Face to Face business model (direct and face-to-face interaction with clients)”, and also
by making aggressive investments by its own capital, based on its sound financial base. In light of its earnings
structure, Kyokuto Securities has decided to position ROE (Return on Equity) as an important performanceindicator and has endeavored to improve its earnings power.
While its most recent cost of capital (i.e., cost of equity capital) was around 7%, the ROE for each of the last
five fiscal years has been in the range of 2% to 7% and the PBR (Price Book-value Ratio) has continued to bebelow 1x.

•【Financial Results】【Trends in Share Price and PBR】

• Kyokuto Securities posted a final loss for the fiscal year 2019 ended
March 31, 2020 due to turmoil in the securities market caused by thespread of the new coronavirus infection.
• However, its performance of the fiscal year 2023 has been recovered dueto the tailwind from the active securities market.
（ In millions of yen ）

9,000
8,000

8.0%

7.0%

7.0%

6,441

6,419

7,000

（ yen ）

8,883

8,211
6.7%

6,000

4.6%

5,000

3.6% 3,605

4,000

6.0%

5,333

1,0004,259

4.0%
3.0%

3,101

3,065
1,680

2,117

2.5%
1,168

2,727 2.0%

0-1,000
FY2017FY2018-560

FY2019Net operating revenue

KYOKUTO SECURITIES CO.,LTD

FY2020

FY2021

FY2022

Profit attributable to owners of parent

1,800
1,600

（X）

FY2023
1Q~3Q

1,457.39

1,584.43
1,449.94

1,435.55

0.80

0.0%

00.51

0.43

1,538

0.60

0.40
0.40

1,028

869

400
200

0.61

0.60

600

1.0%

1.00

0.72

1,000
800

1,482.41

1,444.99

1,339.78

1,400

582

963
733

0.20

5940.00
FY2017

ROE1.20

1.06

1,200
5.0%

3,000
2,000

• PBR continued to be below 1x for the last six years.
• Net assets have remained stable, and its financial base is sound.

FY2018FY2019Stock Price

FY2020

FY2021BPS

FY2022

FY2023.3Q

PBR

2

Implementation of management that is conscious of cost of capital and stock price• Kyokuto Securities aims to achieve ROE that exceeds its cost of shareholders' equity by further improving
profitability in the medium to long term with our cost of shareholders' equity in mind.
• Kyokuto Securities regard a proactive distribution of profits to its shareholders as one of its importantmanagement policies, and will strive to enhance shareholder returns in order to increase shareholder value.

【Countermeasures】【Specific measures】

Enhancement of
ROE

Improvement of
profitability

Solid implementation of themedium-term business plan
(FY2024-FY2026)

Increase ofshareholders value

Expansion ofshareholder returns

Raisng the consolidated
dividend payout ratio standard【Method of calculation for cost of shareholders’ equity based on CAPM】
Risk free rate
10 year Government
Bond Yield+ββ based on the daily
return for the past 5 years

×Risk premium
Difference between theoverall stock market yield*
and the risk-free rate

＝Cost ofshareholders’ equity

7.38%（as of the end of December 2023）*It is annualized based on TOPIX Total Return Index annual data for the past 25 years (excluding the year 2008 due to the Lehman Shock)
KYOKUTO SECURITIES CO.,LTD3

Summary of Medium-Term Business Plan (2024-2026)
Kyokuto Securities has now established its medium-term business plan (FY2024-FY2026) aimed at expanding itsrevenue base and enhancing its human capital, and by steadily implementing these policies, Kyokuto Securities will
make efforts to strengthen its unique business model and improve its earnings power, and ROE of 8% to beachieved as a result.

KYOKUTO SECURITIES CO.,LTD4

Enhancement of Shareholder Returns
Aiming to enhance shareholders’ returns, Kyokuto Securities has decided to raise the consolidated dividend payout
ratio standard from 50% to 70%, based on the current status of shareholders’ equity and other relevant factors. The
revised dividend policy is as follows【Revised Dividend Payout Policy】
The amount of dividend will be determined, based on the higher of a consolidated dividend payout
ratio of 70% or a consolidated dividend on equity ratio (DOE) of 2% as well as by comprehensively
evaluating such factors as its equity capital level, medium- to long-term performance trends, stock
price and others.
【Dividends】【Shareholders' Equity】• The consolidated dividend payout ratio standard will be increased from thecurrent 50% to 70%. (Effective from the fiscal year ending March 31, 2024)• Since our listing on the Tokyo Stock Exchange in April 2005, Kyokuto Securities
has continued to achieve stable growth and maintain highly sound level ofshareholders' equity.

（ yen ）

110

120

（Provisional）

100

49,00080

39,000

70

60

40

50

45

40

1530

30

30

151520FY2017FY2018FY2019FY2020402080（Provisional）

030

Interim Dividend

KYOKUTO SECURITIES CO.,LTD

20

30

20

151530

FY2021

FY2022

FY2023Year-End Dividend

63.6%（ In millions of yen ）

66.7%

70.0%

59,000
60.0%

51.8%

50.0%

36.2%
29,00027,53336,88037,37030.0%

19,00016,813

9,000

3,913
4,618

4,774
5,251

4,774
5,251

4,774
5,251

FY2004FY2012FY2017

FY2023-1,00040.0%

Share capital

Capital surplus

Treasury shares

Equity-to-asset ratio

20.0%
10.0%

Retained earnings

5