Shareholder Proposal to SHIMAMURA Co.,Ltd. (8227)
TOKYO, April 17, 2024 – Japan Catalyst, Inc. (hereinafter referred to as "JCI") implements anengagement investment strategy with regards to Japanese listed companies through the Monex Activist
Mother Fund ("MAMF", a Japan-registered mutual fund) and the Japan Catalyst Fund ("JCF", a Caymanregistered corporate-type investment fund), to which JCI provides investment advice.
We have been engaged with SHIMAMURA Co., Ltd. ("SHIMAMURA"), a key investment for MAMF andJCF, from a long-term perspective. SHIMAMURA has built its steady growth on a unique and superiorbusiness model, establishing processes in both product appeal and sales power that we believe areunmatched by competitors. At present, SHIMAMURA stands as an excellent company that has secured asolid position with a major infrastructure supporting apparel sales nationwide.
With the aim of further increasing corporate value and improving capital efficiency, we have made ashareholder proposal* for SHIMAMURA’s 71st Annual General Meeting of Shareholders to be held in May
2024, requesting the introduction of a Dividend on Equity ratio (DOE) of 5% into the Articles ofIncorporation, effective from the dividend for the fiscal year ending February 2025. We hope that thisshareholder proposal will serve as a catalyst for introducing appropriate capital discipline at SHIMAMURA
and transforming it into a company that excels not only in operational efficiency but also in capital efficiency.
SHIMAMURA’s business has shown remarkable resilience, with a steady increase in its levels of cash anddeposits, even amid the rapid deterioration of the business environment due to the unprecedented COVID19 pandemic. As of April 12, 2024, SHIMAMURA’s market capitalization was approximately 550 billion
yen, and the total of cash, deposits, securities, and investment securities amounted to approximately 300
billion yen as of February 20, 2024 (see Chart 1), indicating a sufficient level of retained earnings comparedto the recent expenditures on tangible fixed assets in the last three fiscal years: 8.2 billion yen (fiscal yearended February 2022), 4.4 billion yen (fiscal year ended February 2023), and 7.6 billion yen (fiscal yearended February 2024). We believe that even if SHIMAMURA implements the proposed 5% DOE dividend
policy and proceeds with aggressive new store openings according to its corporate plan, it will be possible
to maintain its current and expected level of retained earnings and a conservative financial approach,without any negative impact on its business operations.
We understand that the psychological hurdle for SHIMAMURA's board of directors, which has maintained
a conservative shareholder return policy for many years, to significantly raise shareholder returns is high.
However, if the current capital discipline is maintained, capital efficiency is expected to decline.
SHIMAMURA itself has commented, following our shareholder proposal, at the financial results briefing

for the fiscal year ended February 2024 and during its medium-term management plan presentation for2027, that the current return policy may lead to further accumulation of retained earnings and deteriorationin its return on capital.
We hope that this shareholder proposal will serve as a catalyst for SHIMAMURA to conduct managementwith a heightened awareness of capital efficiency, significantly increase its corporate value, and achieve
value creation for all stakeholders as stated in its management philosophy.
Through dialogue with various stakeholders, JCI is committed to promoting genuine corporate governancereform, aiming to advance Japan's capital markets, enhance corporate and stock values, and ultimately
improve the productivity of Japan as a whole.
(Chart 1)
SHIMAMURA's Market Capitalizationand the amount of Cash, Deposits, Securities, and Investment Securities(Billion yen)

600

550 billion yen
More than half of the market capitalization

500

is cash and cash equivalents etc.

400
300 billion yen3002001000Market Capitalization

Cash, Deposits,（As of April 12, 2024）

Securities, and Investment Securities（As of April 20, 2024）（Prepared by JCI based on publicly available information.）*JCI has been delegated the authority to act as a sub-agent in this shareholder proposal by Monex AssetManagement, Inc., the proxy agent for the Monex Activist Mother Fund.

This material is an English translation of a Japanese announcement made on the date above. Although the Company intended to faithfullytranslate the Japanese document into English, the accuracy and correctness of this English translation is not guaranteed and thus you areencouraged to refer to the original Japanese document.