Action to Implement Management that is
Conscious of Cost of Capital and Stock Pricehttps://www.star-m.jp
Code 7718

February 9, 2024
* The projections in this document are based on information available at the time of release of this report and certain assumptions the Company considers reasonable.
* The Company does not promise that these projections will be achieved. Actual results may differ materially from projections due to a variety of factors.

Action Policies

Improving the Price-to-Book Ratio (PBR) is a key management issue⚫ PBR (period-end basis) consistently below 1x from FY12/2021 (average for the past five fiscal years: 0.98x).

Current
State ofAffairs⚫ In light of the cyclical nature of the Group’s business results, set the ROE target for the three fiscal years of the First
Medium-Term Management Plan at an average of 10% or more.
⚫ Reducing the cost of capital in a bid to generate equity spreads recognized as the paramount issue.

In addition to further improving ROE over the medium to long term, critical needto improve the Group’s PER and cost of capital by clearly explaining growthstrategies, business risks, and the status of strategy execution, etc.

(1) Steadily carry out (execute) the Medium-Term Management Plan (execute growth strategies)
ActionPolicies(2) Promote disciplined capital policies, including changes in the structure of capital(3) Strengthen IR activities, including efforts to upgrade and expand information disclosure１

Action Policy(1) Execute growth strategies
Focus on the Machine Tools Segment where the market is expected to expand with working to cultivate
demand in the Special Products Segment and create new businesses that will serve as a third pillar.
Machine Tools Segment⚫ In light of the trend toward miniaturization and increasingly intricate products the strength of the Group’s Swiss-Type CNC Automatic Lathes liesin their high-precision machining technology.
⚫ Despite the favorable and unfavorable nature of operating conditions, a supply system that can address these shifts in the market is essential given
the expected growth in demand for Swiss-Type CNC Automatic Lathes over the medium to long term.
⚫ The Star Micronics Group has secured a high market share mainly in the U.S. and European markets through a well-developed service system.
⚫ Demand in the mainstay medical-related industry is expected to grow on an ongoing and steady basis in both developed and emerging countries.
⚫ Increase in emerging market demand and especially India over the medium to long term owing to such factors as the growth in domestic demandand policies to strengthen exports.

Work to establish the Group’s position as a leading manufacturer of automatic lathes by further
strengthening service functions and thereby cultivating emerging markets while maintaining a strong
customer base in Europe and the U.S.
Sales of Star Micronics’ Automatic Lathes

Global Medical Component Market Scale*1

Sales of Star Micronics’ Automatic Lathes(Amount-Based)(Star Micronics’ Product-Related Components)(India Market Volume-Based)

Estimated CAGR + 10%

Estimated CAGR + 6%

(Of which medical-related + 12%)Estimated CAGR + 50%(India Market + 9%*2)…

…
*1 Estimate of the market scale of components that can be processed by the Company’s
products based on multiple research reports.
*2 Source: The International Market Analysis Research and Consulting Group (IMARC)…

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Action Policy(1) Execute growth strategies
Special Products Segment⚫ Growing need for complex Software solutions that include Hardware and cloud services in stores.
⚫ Upgrade and expand the product lineup to meet changing store needs, including the timely introduction of new products (labelprinters, etc.).
⚫ Put in place a support system that enables system vendors to engage in one-stop development, including peripheral equipment
through proprietary SDKs.
⚫ Well in advance of its competitors, the Star Micronics Group helped cultivate mPOS and food delivery markets by drawing on its
strong marketing capabilities.

Work to become a total solution provider in store operations by pursuing user and vendorconvenience without overlooking market opportunities and changes in demand.
■Business Domain Matrix
New Business(Specific Initiatives)⚫ Production DX: Develop services, etc. that help increase operating efficiency atmanufacturing sites

Logistics DX

Markets/Customers

Promote business development that helps increase customers’
operating efficiency in areas adjacent to existing businesses +enclave strategies.

NewChallenge

Special Products
Segment
Expansion
Production DX⚫ Store DX: Develop services to solve operating issues at restaurants and retail stores, etc.
⚫ Logistics DX: Develop services, etc. for retail and other stores that address issues
related to distribution management

Store DX

ExistingLowCurrent
businesses

Machine Tools
Segment

Adjacent/Core

Business Model Uncertainty

High３Action Policy(2) Promote disciplined capital policies
Work to reform the structure of capital by redefining and promoting the Company’s returns toshareholders policy based on actual conditions in a disciplined fashion and advancing the use ofliabilities in line with growth investments.
Redefining the Returns to Shareholders Policy
Trends in DPS (Past 10 Years)

Target a total payout ratio of 50% or more including the repurchase of own shares,based on a stable annual dividend of ¥60 or more per share

604020Commit to achieve a total payout ratio of 50% or more including the repurchase ofown shares, based on a progressive annual dividend of ¥60 or more per share

Reform the Structure of Capital

0* Included a special dividend in FY12/2022

With the premise of ensuring financial soundness, flexibly provide returns to shareholders in linewith the established policy, and reform the structure of capital over the medium to long term byproactively utilizing liabilities for growth investments.
(Specific Initiatives)⚫ Review the adequacy and structure of capital taking into consideration such factors as the cyclical nature of the Group’sbusiness results and future growth investments.
⚫ Consider the use of sustainable finance as a source of funds for investments in domestic factories in the Machine Tools Segment.

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Action Policy(3) Strengthen IR activities
Further deepen dialogue with investors and reflect in the decision-making process.
Interviews conducted in 2023
* Principal targets: Institutional investors and analysts145
Financial results briefings: 2 (Participants: 74)

Specific Initiatives

1 on 1 meetings:

Principal Company representatives
Representative director, president and CEO(1 on 1 meetings, financial results briefings))

Senior Executive Officer and General Manager Corporate
Headquarters(1 on 1 meetings)
Executive Officer and General Manager Corporate
Headquarters Accounting(1 on 1 meetings)
Major dialogue themes and points of interest● Business environment trends● Progress under the Medium-Term Management Plan
● Future direction of existing businesses● Thoughts on the Company’s PBR falling below 1 times● Approach toward returns to shareholders● Upgrade and expand meetings and explanations with investors
In addition to proactively conducting interviews to help
investors better understand the Group’s growth strategies, etc.,
create opportunities to actively disseminate information toindividual investors and to meet with overseas investors.
● Upgrade, expand, and enhance information disclosure
Upgrade and expand IR tools including the Factbook, whichhelps investors better evaluate the Company’s financial results,
as well as the disclosure of sustainability-related informationand eliminate information asymmetry as a part of efforts toenhance the quality of dialogue.
● Garner regular feedback and investor opinions
Ensure that investors’ opinions are fed back to all relevant
parties, including the Board of Directors, by the department
responsible for IR and reflected in the management decisionmaking process in a timely manner.

Actively promote IR activities and enhance the quality ofdialogue５