July 12, 2024
To Whom It May Concern
Company Name: Toyo Denki Seizo K.K.
Representative: Akira Watanabe, President, Representative
Director(Stock Code: 6505 TSE Standard)Inquiries:
Jun Nukina, Executive Officer, General
Manager, Corporate Planning Division
Tel.: +81-3-5202-8122

Action to Implement Management that is Conscious of Cost of Capital and Stock Price

Toyo Denki Seizo K.K. (hereinafter “Toyo Denki”) hereby announces that, at a meeting of the Board of Directors
held on July 12, 2024, we again analyzed and evaluated our current status regarding measures to realize managementwith an awareness of capital cost and stock price, and discussed future action policies for improvement.
For further details, please refer to the attached document, “Measures to Realize Management with Awareness ofCapital Cost and Stock Price.”

Action to Implement Management thatis Conscious of Cost of Capital andStock Price

1

Action to Implement Management that is Consciousof Cost of Capital and Stock Price◼ Current recognition and issues
Improvement of PBR through improvement of ROE is recognized as
an important management issue
PBR has been hovering around 0.4
times at present and has remainedbelow 1 time

ROE remained below the 8% target ofthe Medium-Term Management Plan2026

Low PBR is attributable to low ROE◼ PBR◼ Return on equity (ROE)

8.0%

1.05

8%

0.95
0.85
0.75
0.65

0.47

0.44

0.55

0.37

0.36

0.38

0.45

4.4%

6%

4.1%
3.5%

3.7%
4%

0.35
0.25
0.15

2%

0.05
-0.05

FYE May FYE May FYE May FYE May FYE May FYE May FYE May
2020
2021
2022
2023
2024
2025
2026

FYE May FYE May FYE May FYE May FYE May FYE May FYE May
2020
2021
2022
2023
202420252026

Medium-Term Management
Plan 2026

Medium-Term Management
Plan 2026

Analysis and evaluation of current situation -- Our cost ofequity is approx. 7–8%-1%

2

Action to Implement Management that is Consciousof Cost of Capital and Stock Price◼ Policies for enhancing corporate value

PBR

ROE

PER

Work to improve ROE and PER

ROE

Our goal is to achieve the ROE target of 8% for the fiscal year
ending May 2026 set in the Medium-Term Management Plan
2026, exceeding the cost of equity
Aim to further improve ROE thereafter

PER

To improve the Group’s long-term corporate value, we willcommunicate how we aim to achieve growth by deepening oursustainability management and strengthening our IR activities,
and raise our growth expectations
3Action to Implement Management that is Consciousof Cost of Capital and Stock Price◼ Specific initiatives to increase corporate value
Medium-Term Management Plan 2026
◼ Expansion of new businesses andproducts

ROE

Strengthening
profitability

FYE May 2026
TargetPBR• Expand R&D investment to promotetechnology development◼ Thorough improvement in earnings
structure of existing businesses

8%• Review of appropriate selling prices• Order-receiving activities by integrating
manufacturing and sales

Aim to further
improve◼ Improvement in asset efficiency withawareness of capital cost

PER

Improvement inasset efficiency• Continued curtailment of cross-shareholdings• Review of assets with low operating efficiency(recreation facilities, etc.)

Improvement of
expected growthrate• Steady implementation of the Medium-Term
Management Plan
• Promotion of sustainability management• Determination of materiality

Enhancingshareholder
returns• Dividend policy and payout ratio: 30% or more
• Continued purchase of treasury shares4

Action to Implement Management that is Consciousof Cost of Capital and Stock PriceStrengthening
profitability

Improvement in asset
efficiency

Sustainable growth

Medium-Term
Management Plan 2026
Medium-Term Management Plan 2026

◼ Consolidated financial targets for FYE
May 2026

Net sales

40 billion yen

Order backlog at endof period

450 00Operatingmargin5%

41,375

ROE

8%

13%

37,000350 0030,158250 00

Improve operating profit and ROE
significantly by “thorough improvementin earnings structure of existing
businesses” and “improvement in asset
efficiency with awareness of capital cost”

Net sales40,000

31,025

11%

32,140ROE

8.0%

29,496Return net sales to the pre-COVID level of
40 billion yen through “expansion of newbusinesses and products”

15%

9%

27,2757%

3.5%

150 00

3.7%

5%

5.0%
Operatingmargin

2.9%
500 0-50 00

0.6%
FYE May2022

1.7%
FYE May2023

Net sales (millions of yen)
Operating margin

3%

1%

FYE May2024

FYE May2025

FYE May2026-2%

Order backlog at end of period (millions of yen)

ROE

5Action to Implement Management that is Consciousof Cost of Capital and Stock Price
Improvement of expected growth rate
Determination of five material issues to be addressed as priorities forsustainable growth and enhancement of corporate value
Materiality
1

Promotion of activities
of diverse humanresources2

Creation of innovation
using technology

3

Stable procurement andhigh-quality
manufacturing

What we aim to be
Aim to be a corporate group in which diverse humanresources continue to achieve self-fulfillment by
creating an organization and culture in which
individuals can maximize their abilities and grow daily
while taking on new challenges
Aim to be a corporate group that continues tocontribute to the creation of an affluent society by
constantly striving for technological improvements andcreating new innovations based on the spirit (heart) ofcraftsmanship that has been passed down fromgeneration to generation
Aim to be a corporate group that continues to provide
high-quality products and services by building a strong
supply chain that can coexist and prosper with
suppliers and by sincerely manufacturing while
thoroughly listening to customers’ opinions.

4

Contributing to a
decarbonized society

Aim to be a corporate group that continues tocontribute to the realization of a sustainable society
through the development and sale of products andservices that respond to climate change based on
outstanding motor drive technology

5Conducting corporate
activities responsible tosociety andstakeholders

Aim to continue to be an indispensable corporategroup for society and stakeholders while maintaining
ethical and transparent management and increasing
corporate value

Main KPIs• Employee engagement metrics• Education and training costs peremployee• Ratio of female managers in
administrative divisions• New sales based on new development• Number of new product and businessproposals• Number of automation and labor-saving
improvements• Number of new suppliers developed• Reduction of losses in manufacturing
processes• Strengthen delivery management• Reduction of CO2 emissions in Scope 1&2• Reduction of CO2 emissions during
shipping and transportation• Orders received for products andservices contributing to decarbonization• Rate of participation in human rights
training• Rate of participation in compliancetraining• Improvement rate of information security
training results

6

Action to Implement Management that is Consciousof Cost of Capital and Stock Price
Enhancing shareholder returns◼ Dividend policy
Under Medium-Term Management Plan 2026, we aim to increase dividends
and enhance corporate value by expanding profits, while maintaining asustainable, stable dividend payout ratio of at least 30% as our basic policy.
(Dividend forecast for the fiscal year ending May 2025: 40 yen)

◼ Continued purchase of treasury
shares

5045

Dividend per share

Continued implementation based oncomprehensive consideration of funding,business performance, stock prices, etc.

403530254020153030303030(Forecast)

1050FYE May FYE May FYE May FYE May FYE May FYE May FYE May
2020
2021
2022
2023
2024
2025
2026

Medium-Term Management
Plan 2026

Current ongoing purchase of treasury
sharesDisclosed on January 11, 2024
Acquisition period: January 12, 2024, toJanuary 10, 2025
: Up to 300,000 shares

Number of sharesacquired
Total acquisition price : Up to 300 million yen

7