(English translation version)
June 18th, 2024
Daitobo Co., Ltd.
Managing Director
Head of Corporate Management Headquarters
Shogo Mieda
contact information (for inquiries)
General Manager of Finance Dpt.
Tsuyoshi Takeshita
corporate phone number 03-6262-6565
Notice of“Actions Toward Achieving Management Conscious of Cost of Capital and Stock Prices."
1.Recognition of Current Situation
We recognize the importance of management that is conscious of the cost of capital andreturn on capital in order to achieve sustainable growth and increase corporate value over themedium to long term. However, as shown in the table below, both ROE and PBR remain atlow levels. The Company resumed dividend payments in the fiscal year ending March 31,2023 and to increase dividends in the fiscal year ending March 31, 2024, taking into accountthat the Company has been profitable for nine (9) consecutive fiscal years.
(Table 1) Consolidated financial information for each fiscal year ended（Millions of yen : round down after Millions）
March31

March31

March31

March31

March31

March31

March31

2018

2019

2020

2021

2022

2023

2024

4,427

4,496

4,819

4,617

4,502

3,997

4,033

325

327

407253247214

31810329475

974269153

ＲＯＥ (%)

2.37

6.74

1.74

2.17

0.93

1.47

3.16

ＲＯＩＣ(%)

2.64

2.38

2.34

1.41

1.44

1.30

1.99

ＰＢＲ

0.71

0.55

1.09

0.72

0.59

0.53

0.58

ＰＥＲ

30.57

8.01

63.10

33.72

63.54

36.61

18.52

Net Sales
Operating profit
Profitattributable toowners of parent

2.Analysis and Evaluation of Current Status(1) Our cost of equity is generally assumed to be around 5% to 6%, and with the exception of
the end of the fiscal year ending March 31, 2019, ROE has been below the cost of equity. We
believe that the relationship between ROIC and WACC is influenced by the high ratio of debt
(mostly long-term fixed debt) in the Company's financing structure. We believe that
improving the Company's return on capital is a particularly important issue for both of theseindicators.
(2) Regarding the P/B ratio, a key management issue, the Company's P/B ratio has remained
below 1x, except at the end of the fiscal year ending March 31, 2020, due to the low stock
price level. In addition to the aforementioned issues, we believe that this indicates that theCompany's growth potential is not highly evaluated, partly due to the fact that the Company
has been in the red for a long time and has not paid dividends for a long time. Therefore, webelieve it is important to further improve and build on our track record and carefully
demonstrate our growth potential through the medium-term management plan and othermeasures.
3.Policies and Specific Efforts for Improvement(1) Basic Policy
We will make every effort to enhance the Company's profitability and demonstrate ourgrowth potential by completing our medium-term management plan "Jumping over the 130th- Toward a Future of Growth," which started in April 2024.
We intend to maintain and improve our business performance by focusing on our domestic
business, which is our mainstay commercial facilities business, and by developing ourhealthcare business to make it a pillar of our earnings. The Company intends to maintain andimprove its business performance by concentrating on our domestic business in each of theseareas. Through the implementation of these measures, we will improve the Company's returnon capital and demonstrate our growth potential.
(2) Specific Initiatives
A. Commercial Facilities Business① Increase customer and tenant satisfaction with "SUN TO MOON Kakitagawa", our largest
facility in Shizuoka Prefecture, and operate it in a more attractive manner.
② We will develop not only the commercial facility but also the surrounding area and makeit a facility that truly contributes to the local community. To this end, we will partner withlocal governments and promote SDG's.
③ We will strengthen initiatives with our business partners and consider investment in new
PM (property management) businesses and start-up companies, focusing on businesscategories within the facility.
④ In accordance with the medium- to long-term capital investment plan, we will aggressively
invest in the renewal of necessary facilities (total of about 2.5 billion yen over 10 years).
B. Healthcare Business① Responding to the needs of a healthy and long-living society, we will further accelerate ourshift to the healthcare field.
② Fully utilize domestic manufacturing bases to provide high-quality domestically produced
products.
③ To strengthen sales through non-face-to-face channels, we will promote digital businessby actively utilizing outside consultants and SNS.
④ Targeting small and medium-sized enterprises that lack successors, we will consider taking
over the healthcare business and engaging in M&A.
C. Fibers and Textiles Business① Although volume has declined due to the impact of the change in revenue recognition
standards and our withdrawal from the China business (liquidation of our Chinese subsidiary),
we will take the recovery in the domestic market and rising defense-related needs as anopportunity to expand our fibers business.
② We will focus on the uniform business for public and private sector demand where market
conditions have recovered.
③ We will contribute to the creation of a sustainable society by developing and expanding
sales of sustainable products.
④ In the apparel OEM business, we will enhance our manufacturing technology andreliability backed by our history, while expanding sales of domestically produced knitwear andmade-to-order products.
D. Priority Measures for Business Management① Promote basic sustainability policy② Promote response to SDG's issues③ Measures to realize management that is conscious of cost of capital and stock price④ Promote human capital management⑤ Strengthen financial management
E. Promotion of Proactive Dialogue with Investors① In order to carefully demonstrate the Company's growth potential, we believe that active
dialogue with investors is essential.

② While overseas investors account for approximately 30% of the Tokyo Stock Exchange's
shareholdings by investment category, and overseas investors account for a high 70% (as ofFY2023) of share trading by investment category, the shareholdings of overseas investors inthe Company are 2.3% (as of March 31, 2024). Given this low level, we believe that dialogue
with overseas investors will be a particularly important measure. For this reason, we intend to
be more proactive than ever in disclosing information in English.
③ In addition, we will actively communicate information to individual investors, taking into
consideration the importance of the fact that individual investors account for more than 77%(as of March 31, 2024) of the Company's shareholdings.
4. Numerical Targets, etc.
(1) Our ultimate target for ROE is 6% or more.
Based on the Company's cost of equity assumption of 5% to 6%, the Company will target
ROE of 6% or more. At this time, based on the ROE formula, we do not intend to accumulate
more retained earnings than necessary for the time being during the period of the mediumterm management plan, as well as to achieve the profit plan in the medium-term management
plan, because an increase in profit level and control of increase (or decrease) in net assets willlead to improvement in ROE.
(2) Regarding ROIC, we aim to achieve a level of 2% or more, which is a stable level above
WACC.
Given that our WACC assumption is around 2%, we will target ROIC of 2% or more.
To this end, we will make particular efforts to improve the level of operating income.
(3) Measures for Shareholder Returns
During the period of the current medium-term management plan, we will work to achieve
the following.
A. Dividend Payout Ratio
The Company considers the stable and appropriate return of profits to shareholders throughmaintaining and strengthening its competitiveness and increasing its corporate value to be
one of its most important managements issues and makes it a basic policy to determine profit
distribution by striving to improve business performance while also taking into considerationinternal reserves. With regard to dividends during the period of this medium-term
management plan, we aim to achieve a dividend payout ratio of approximately 50% to 80%,taking into consideration numerical targets and future business development.
B. Acquisition of Treasury Stock
The Company plans to conduct share repurchases on an irregular basis about once a year,
aiming for a total return ratio of approximately 70% to 100%.
C. Expansion of Shareholder Benefit ProgramTaking into consideration that the majority of shareholders are individual shareholders, theCompany plans to expand the shareholder special benefit program (The company has alreadyannounced the expansion starting as of March 31, 2025.).
5. Continuous Updates
We will continue to actively disseminate information on this matter more than ever by
updating it as appropriate (at least once a year).