ENGLISH TRANSLATION FOR REFERENCE PURPOSE ONLYThis notice is an English translation of the original Japanese text of the timely disclosure statement dated May 15,2024 jointly issued by Daio Paper Corporation and Hokuetsu Corporation, and is for reference purposes only. In
the event of any discrepancy between the original Japanese text and this English translation, the Japanese text
shall prevail.
May 15, 2024
To whom it may concern:
Name of Company:

Daio Paper Corporation

Name of Representative:

Yorifusa Wakabayashi
President and Representative Director Chief Executive Officer

Securities Code:3880 (Prime Market of Tokyo Stock Exchange)

Contact Person:

Shuhei Shinagawa
Director, Managing Executive Officer
General Manager of Corporate Planning Division

Telephone No.:+81-3-6856-7500

Name of Company:

Hokuetsu Corporation

Name of Representative:

Sekio Kishimoto
President and Chief Executive Officer

Securities Code:3865 (Prime Market of Tokyo Stock Exchange)

Contact Person:

Makoto Yanagisawa
Director and Chief Financial Officer

Telephone No.:+81-3-3245-4500(Progress of Disclosure) Notice Concerning the Conclusion of a Basic Strategic Business Alliance Agreement
between Daio Paper Corporation and Hokuetsu Corporation

Daio Paper Corporation (hereinafter “Daio Paper”) and Hokuetsu Corporation (hereinafter “Hokuetsu”) had been
engaged in specific discussions regarding a strategic business alliance (the “Business Alliance”), as announced in the“Notice of the Commencement of Discussions for a Strategic Business Alliance between Daio Paper Corporation andHokuetsu Corporation” dated February 13, 2024.
As a result of discussions between the two companies, after Daio Paper and Hokuetsu reached an agreement on
the themes and promotion framework for the initiatives, we hereby announce that our respective Boards of Directors
resolved today to enter into a basic strategic business alliance agreement (the "Agreement").

1. Background and Significance of the Business Alliance
Daio Paper and Hokuetsu are paper manufacturers that have worked to coexist with local communities through"monozukuri" (manufacturing) respectively, and will continue to aim to be trusted by all stakeholders ranging from
customers to shareholders, business partners, local communities, and employees.
The two companies share the recognition that strengthening competitiveness through structural reforms andtransforming their business portfolios are important management issues in a severe business environment that requires-1-

solutions to social issues, such as the 2024 problem in domestic logistics and measures to reduce environmental
impact, in addition to declining domestic demand for paper such as printing and communication paper, changing
demand structures, and continuing high raw material and fuel prices, such as wood chips, coal, and heavy oil, due tothe substantial yen depreciation that has taken hold.
In order to resolve these issues, the Business Alliance will maintain the independence and healthy competitive
relationship between the two companies, while actively promoting initiatives that will contribute to the medium- tolong-term enhancement of the corporate value of both companies by leveraging their respective strengths andcomplementing each other.

2. Promotion Framework of the Business Alliance
The Business Alliance Committee, co-chaired by the presidents of both companies, will be established to regularly
monitor the progress and effectiveness of specific themes and make decisions on additions and changes to the themes,
thereby maximizing the effectiveness of the Business Alliance.

3. Details of the Business Alliance Initiatives
The initiatives of the Business Alliance, which is planned to begin in FY2024, are as follows. In each of theseinitiatives, we will respect the relationships with our business partners, while aiming to enhance the corporate valueof both companies, and will promptly realize the effects of these initiatives.
As a result of the discussions the two companies have held so far, Daio Paper and Hokuetsu currently target anincrease in operating profit of approximately two billion yen and three billion yen, respectively, in FY2026, threeyears from now, thanks to the Business Alliance.
We will hold further discussions to deepen and expand the themes to be addressed, and in the mid- to long-term,
we will consider joint research on new technologies, energy conversion, DX promotion, forest resource utilization,and other themes.
(1) Production Technology
The two companies will promote a comparative study of various processes in pulp and paper production at theirmills and share their unique and superior know-how (types of raw materials and supplies, methods of use, etc.),
thereby improving the quality and reducing the cost of their own products. Further, through sharing information onmaintenance, such as periodic inspections of mill facilities and machine repairs, and mutually utilizing machine parts,
we will reduce equipment maintenance costs and improve productivity by shortening repair periods.
In addition, thanks to meaningful information sharing on energy conservation, wastewater and waste management,
and safety and hygiene management at each mill to reduce environmental impact, we will not only enhancecompetitiveness but also contribute to the achievement of SDGs.
On top of these, the two companies will consider establishing a cooperative production system, such as mutualOEM, as an effort to improve operating efficiency at both companies' mills, reduce manufacturing costs, lower
product distribution costs, and cut CO2 emissions related to product distribution.
(2) Raw Material Purchasing
The two companies will establish a cooperative system for wood chips, the main raw material, to ensure stableprocurement, optimize inventory, and reduce costs. Specifically, the plan includes the mutual supply of wood chips
from both companies' suppliers, mutual use of wood chip vessels and landing at two ports to reduce environmental-2-impact and shipping costs, and joint BCP measures to deal with unstable marine transportation issues caused bygeopolitical risks.
Furthermore, we will work on specific measures, such as effective utilization of inventories and reduction of
procurement costs through mutual accommodation of pulp, raw materials, and consumables, and reduction of logistics
costs (joint procurement of some raw materials and fuels) by coordinating domestic transportation of raw materials
along with products logistics.
(3) Products Logistics
The two companies will work to eliminate logistics redundancy and reduce logistics costs through roundtransportation (mutual transportation) between the two companies' production bases, including group companies. We
plan to launch a pilot program initially between Hokuetsu’s Niigata Mill and Daio Paper’s Kani Mill (Gifu Prefecture)and Iwaki Daio Paper Corporation (Fukushima Prefecture), and between Daio Paper’s Mishima Mill (EhimePrefecture) and Hokuetsu’s Kishu Mill (Mie Prefecture). After establishing a smooth operation system, we will
expand our efforts to the entire group of both companies.
In addition, we will work to improve the efficiency of secondary delivery by mutually utilizing containers privatelyowned by Hokuetsu and the logistics warehouses of both companies, while verifying the effect of CO 2 reduction inproduct distribution.

4. Overview of the Companies (as of March 31, 2024)
Daio Paper Corporation(1)

Location
Representative’s
name/post
Business details
CapitalEstablished

Iidabashi Grand Bloom, 10-2, Fujimi 2 chome, Chiyoda-ku, Tokyo
Yorifusa Wakabayashi, President and Representative Director Chief Executive(2)
Officer(3)
Manufacture and sale of paper, paperboard, and household paper products(4)53,884 million yen(5)
May 5, 1943
Hokuetsu Corporation
24.8%
The Master Trust Bank of Japan, Ltd. (Trust Account)
7.8%
Daio Kaiun Co., Ltd.
5.7%
The Iyo Bank, Ltd.
4.2%
The Ehime Bank, Ltd.
4.1%
Major Shareholders and(6)Custody Bank of Japan (Trust Account)
3.8%
Shareholding Ratio
Ehime Paper Manufacturing Co., Ltd.
3.2%
Kami Shoji Co., Ltd.
2.8%
OASIS JAPAN STRATEGIC FUND LTD.
2.8%
(Standing Agent: Citibank, N.A. Tokyo Branch)
Hyogo Paper Manufacturing Co., Ltd.
1.9%
CapitalDaio Paper's shareholding ratio in Hokuetsu’s commonRelationshipstock as of March 31, 2024 is 1.4%.
Business
Not applicable
Relationship
Relationship between
Personnel
Not applicable(7)
Daio Paper andRelationshipHokuetsu
Status ofHokuetsu is Daio Paper’s Other Affiliated Company.
Relationshipwith RelatedParties(8)
Daio Paper’s consolidated operating results and consolidated financial positions for the last three years
Fiscal year ended
Fiscal year ended
Fiscal year ended
As of/Fiscal year ended
March 2022
March 2023
March 2024
Consolidated net assets
266,704 million yen
244,670 million yen
259,831 million yen
Consolidated total assets
840,441 million yen
923,531 million yen
939,490 million yen-3-Consolidated net assets pershare
Consolidated net sales
Consolidated operating profit
Consolidated ordinary profit
Profit attributable to owners ofparent
Consolidated earnings per
share
Dividend per share

1,561.52 yen

1,414.73 yen

1,487.10 yen

612,314 million yen
37,569 million yen
37,696 million yen

646,213 million yen△21,441 million yen△24,050 million yen

671,688 million yen
14,367 million yen
9,622 million yen

23,721 million yen△34,705 million yen

4,507 million yen

142.91 yen△209.01 yen

27.10 yen

22.00 yen

16.00 yen

16.00 yen

* Shareholding ratio does not include treasury stock (excluding the shares held by trust bank as Trust for Deliveryof Shares and Employee Stock Ownership Plan Trust).
Hokuetsu Corporation
(1)
(2)
(3)
(4)
(5)

Location
Representative’s
name/post
Business details
CapitalEstablished3-5-1 Nishi-Zao, Nagaoka City, Niigata
Sekio Kishimoto, President and CEO

Manufacture and sale of paper and pulp products
42,020 million yen
April 27, 1907
Misuga Kaiun Co., Ltd.
11.1%
Daio Kaiun Co., Ltd.
10.0%
The Master Trust Bank of Japan, Ltd. (Trust Account)
6.0%
Daishi Hokuetsu Bank, Ltd.
4.9%
Hokuetsu Corporation’s Agent Stockholding
4.1%
Sumitomo Realty & Development Co., Ltd.
3.6%
Major Shareholders and CGML PB CLIENT ACCOUNT/COLLATERAL(6)
3.5%
Shareholding Ratio(Standing Agent: Citibank, N.A. Tokyo Branch)
OASIS JAPAN STRATEGIC FUND LTD.
3.3%
(Standing Agent: Citibank, N.A. Tokyo Branch)
MLI FOR CLIENT GENERAL OMNI NON COLLATERALNON TREATY-PB
2.8%(Standing Agent: BofA Securities Japan Co., Ltd.)
Sompo Japan Insurance Inc.
2.7%
CapitalHokuetsu’s shareholding ratio in Daio Paper’s common
Relationshipstock as of March 31, 2024 is 24.8%.
Business
Not applicable
Relationship
Relationship between
Personnel
Not applicable(7)
Hokuetsu and Daio
Relationship
Paper
Status ofDaio Paper is Hokuetsu’s Affiliated Company accounted
Relationshipfor by the equity method.
with RelatedParties(8)
Hokuetsu’s consolidated operating results and consolidated financial positions for the last three years
Fiscal year ended
Fiscal year ended
Fiscal year ended
As of/Fiscal year ended
March 2022
March 2023
March 2024
Consolidated net assets
216,974 million yen
225,950 million yen
252,401 million yen
Consolidated total assets
376,956 million yen
388,444 million yen
415,629 million yen
Consolidated net assets per
1,286.82 yen
1,339.89 yen
1,496.55 yen
shareConsolidated net sales
261,616 million yen
301,204 million yen
297,056 million yen
Consolidated operating profit
20,455 million yen
17,288 million yen
15,267 million yen
Consolidated ordinary profit
29,514 million yen
11,471 million yen
17,766 million yen
Profit attributable to owners ofparent
21,206 million yen
8,325 million yen
8,396 million yen
Consolidated earnings per

126.22 yen-4-49.54 yen

49.94 yenshareDividend per share

24.00 yen

18.00 yen

18.00 yen

* Shareholding ratio does not include treasury stock.
5. Future Outlook
If any matters arise that should be announced in the future, we will disclose them promptly.

(END)-5-