Progress of the Medium-Term Management Plan Toward Realization ofthe Long-Term Vision
In the medium-term management plan GP25 1st Stage (fiscal 2017 to 2019) that started from fiscal 2017, we started working on thefurther enhancement of current businesses and the development of the foundations for new businesses as the key to growth in order totake the first step toward an all-embracing company for building materials. GP25 2nd Stage (fiscal 2020 to 2022) that started from fiscal
2020 was positioned as the step to accelerate the growth strategy toward an all-embracing company for building materials, and weproceeded with the execution of proactive investments with a focus on the global market, the review of the domestic business portfolio,
and the enhancement of the management foundation.

Medium-Term Management Plan GP25 1st Stage (Fiscal 2017-2019)
The first step toward an all-embracing company for building materials
Basic policy
zEndeavor to further strengthen current businesses and develop the foundations for new businesses as the key to growthzProactively develop environmental-related technologies for ecological materials, energy savings, and domestic wood utilizationzActively introduce management resources to the priority markets of public and commercial buildings and global markets
zMaximize the synergy of manufacturer and engineering to enhance profitability
zCreate a work environment where employees can work with enthusiasm and foster the human resources who will play important roles in
the futurezDefine diversity is as one of the management strategies, and the ability delivered by a variety of human resources is to be the engine ofgrowth
zStrengthen governance to enhance corporate value over the medium and long term

Results achieved against management goals(¥100 million)

BenchmarkFiscal 2016Net sales

Results
Fiscal 2018

Fiscal 2017

Goals
Fiscal 2019

Fiscal 2019

1,681

1,688

1,705

1,829

1,800

Operating profit

5585755770

Ordinary profit

5290876870

Profit attributable to owners of parent

3951

58

44

43

ROE

9.8%

11.7%

11.7%

7.8%

8%

Dividend payout ratio

30.4%

30.1%

30.3%

42.4%

30% or more

Achievements and issues
As for the management goals, we achieved the goals in terms of net sales and net profit.
As for operating profit, we increased profitability over the past three years and achieved the goal for two consecutive years; however, issues
had come to the surface in raw material procurement and the ordering and order receiving system, and we could not achieve the goal in thefinal fiscal year and issues remained in the business infrastructure.
We actively made investments, such as M&A to enhance industrial materials business, expansion of the product lineup by launching products
on a large scale, establishment of the R&D center, and the addition of the biomass boiler, and steadily executed measures to lead to the nextstage of growth.
Regarding shareholder return, we followed the policy of the dividend payout ratio at 30% or more and improved shareholder return.

3 investments toward the expansion in the priority markets

Enhancement of the MDF supply system (Purchased DSL in New Zealand)

Global markets

Distribution of the wood material business in North
America (Purchased CIPA and PWT)
Door production facility expansion and reinforcement for special order items
Launch of a new DAILITE wallmaterial productPublic andcommercial
buildings

Expansion and reinforcement of theproduction capacity

Tatami facing production facility expansion and reinforcementDistribution of the solid wood flooring business(Purchased T.O FLOORING CO., LTD.)
Distribution of the apartment renovation business (Purchased PAC SYSTEM Co., Ltd.)

Home renovation
marketEnhancement of renovation work in the Tokyo
metropolitan area (Purchased ReformQ Co., Ltd.)
2017

2018

GP25 1st Stage35

DAIKEN GROUP REPORT 2023

2019

2020

2021

GP25 2nd Stage

2022(Fiscal year)2025 Long-Term Vision

Medium-Term Management Plan GP25 3rd Stage

GP25(Fiscal 2023-2026)

Medium-Term Management Plan GP25 2nd Stage (Fiscal 2020-2022)
Accelerate growth to become an all-embracing company for building materials
Basic policy

I. Accelerating growth strategies

Daiken Group’s Value Creation

Based on firm management foundation, pursue the resolution of social issues through our business,thereby accelerating our growth strategies toward becoming an all-embracing company for building materials.
II. Enhancement of the management foundation
1 Optimize our financial foundation

Domestic: Review of the Business (Market) Portfolio
Global:	Business expansion through proactive
investments and entry into new markets

2 Restructure firm and flexible business infrastructure
3 Practice of ESG Management

Results achieved against management goals(¥100 million)

Results
Fiscal 2021

Fiscal 2022

Fiscal 2022

2,024

1,992

2,233

2,250

83

87

173

120

4.1%

4.4%

7.8%

5.3%

Net sales
I. Accelerating
growthstrategies

Operating profit
Operating profit ratio
Profit attributable to owners of parent
ROE

Efficiency
Financial
indicators
II. Enhancementof themanagementfoundation

Soundness
Shareholder
returnES
G

54

56

78

70

9.5%

9.1%

10.9%

10%

ROA

5.5%

5.8%

10.5%

7%

Shareholder equity ratio

32.7%

39.4%

41.7%

40%

Dividend payout ratio

33.4%

32.4%

33.1%

30% or more

Total domestic CO2 emissions*1

(28%)

(35%)

(36%)

(26%)

Total diversity index*2
Serious quality accidents andviolations
Degree of penetration of thegroup corporate philosophy*3

+19pt

+19pt

+30pt

+20pt

1100+4pt—+5pt+10pt

Strategy for Value Creation

Nonfinancial
indicators

Goals

Fiscal 2020

*1: Compared to fiscal 2014
*2: Our own indices in which the eight diversity items, such as the female manager ratio, were indexed as compared to fiscal 2019
*3: Our own indices in which employees’ understanding, sharing, and practice of the group corporate philosophy were indexed as compared to fiscal 2018

Achievements and issues
Toward the expansion in the global markets positioned as the growth driver, wood industrial materials business by the two North Americancompanies, which became group companies through M&As in fiscal 2020 significantly led the overall performance and we achieved all of themanagement goals excluding net sales, such as the profit goal and financial indices.
While expansion in the global markets progressed, construction demand, such as accommodation facilities and commercial facilities, rapidly
decreased because of the impact of the COVID-19 crisis in Japan, and we could not achieve the expansion goal in the public and commercialbuildings.
Toward the second half of fiscal 2022, because of the combination of a higher-than-expected increase in orders in Japan and delayed arrival of
raw materials caused by the disruption of marine transportation, a delivery delay occurred in part of the products in building materials business.
We were in the situation where we had no choice but to impose a limitation on orders received and issues remained in the BCP of the entire
supply chain.
As for the nonfinancial goals, in addition to the achievement of the total domestic CO2 reduction goal by utilizing renewable energy linked tobusiness activities, we could significantly surpass and achieve the initial goal concerning the total diversity index, which is our own index, becauseof the promotion of taking paternity leave.

Trends in performance toward the realization of theLong-Term Vision GP25

Net sales(¥100 million)
2,500

Of which net sales in thethree priority markets (Share)

Operating profit (Operating profit ratio)(¥100 million)
250

2,250

2,233

1,500

1,705

1,688

1,681

565

555

688

611

(34%)

(33%)

2,024

1,992

945

1,012

1,829
(47%)

(38%)

(36%)

200

1,208

1,271

(54%)

(57%)

150(51%)

1,000

100

173

(7.8%)
500

85

55(5.1%)

75

2016

Benchmark(4.1%)

12087(5.3%)(4.4%)

50(3.1%)(3.3%)
057(4.4%)

83

2017

2018

GP25 1st Stage

2019

2020

2021

2022

2022 Goals (Fiscal year)

0

GP25 2nd StageDAIKEN GROUP REPORT 2023

36

Data

2,000