Disclosed at June 25, 2025

In our medium-term management plan "Sustainability V (Value)" (FY2024 to FY2026), we have set a basic policy of achieving profit growth and improved capital productivity to improve our corporate value. In addition to the consolidated KPIs of 110 billion yen in sales, 2.6 billion yen in operating profit, and 1.9 billion yen in net profit attributable to owners of the parent for the fiscal year ending March 2026, we have set ROE of 8% or more and ROIC of 6% or more as capital return indicators.

We also set shareholder's equity cost and WACC (weighted average cost of capital) as capital costs to evaluate and verify the achievement of capital return. Regarding our stock price, we strive to ensure that our growth potential is properly and sufficiently evaluated by the market by actively engaging in dialogue with shareholders and investors, communicating our medium- to long-term growth strategy, and further enhancing disclosure information.

Planning & Disclosure

The Company has set a capital efficiency target for the fiscal year ending March 31, 2026 (FY2025), and has also indicated its policy to increase capital efficiency and growth-oriented investments and shareholder returns based on its capital allocation policy, and is committed to management with a strong awareness of the cost of capital and stock price.

Basic policy of the medium-term management plan Sustain V (Value)

Achieving profit growth and improving capital efficiency to increase corporate value

Profit Growth

Improvement of Profitability

◼ Pursuing a strategy of providing multiple values by seizing growth opportunities in the market and gradually improving profit margins over the medium- to long-term span.

◼ Improve the profit foundation by concentrating management resources on areas that will earn high profits over the medium-term span

Growth in Net Sales

◼ Accelerate investment in strategic domains and grow sales

Investment in Human Assets

◼ Formulate and implement medium- to long-term human assets management strategies

-Visualization of the Group's human assets

-Recruitment and human assets development initiatives for management human assets (career-type human assets), global human assets, sales human assets, and highly specialized human assets

-Measures to improve employee engagement

Capital Productivity Improvement

Business Investment and Capital Investment

◼ Allocation of capital to growth investments: Investment limit set to over ¥10 billion.

◼ Aggressive investment with an awareness of capital efficiency, including total asset turnover and financial leverage (utilization of interest-bearing debt)

Shareholder Return

◼ Shareholder return policy taking capital efficiency into account (total return ratio: 50%)

◼ Focus on building relationships with institutional investors and strengthening information disclosure through various IR tools

Important target index for the medium-term management plan, SustainaV (Value)

FY2023

FY2024

FY2025

Important target index*1

Net sales

¥90.1 Bn

¥94.5 Bn

¥110.0 Bn

Construction Supply

¥58.1 Bn

¥61.0 Bn

¥70.0 Bn

Industrial Materials

¥17.1 Bn

¥17.9 Bn

¥20.0 Bn

Electronic Devices

¥14.7 Bn

¥15.5 Bn

¥20.0 Bn

Operating profit

¥1.74 Bn

¥2.12 Bn

¥2.6 Bn

Profit attributable to owners of parent

¥4.83 Bn

¥1.56 Bn

¥1.9 Bn

ROE

22.4%

6.6%

Over 8%

ROIC

4.2%

4.4%

Over 6%

Total return ratio

40.4%

100.2%

100%*2

Investment quota

¥9.8 Bn*3

¥13.7 Bn*4

¥15.0 Bn*5

*1 Updated Medium-term Management Plan Sustainability V (Value) FY2023 to FY2025 (announced on December 14, 2023)

*2 Changes to shareholder return policy in the Medium-term Management Plan Sustainability V (Value) (announced on August 8, 2024)

*3 Cumulative total from FY2021 to FY2023

*4 Cumulative total from FY2021 to FY2024

*5 Cumulative total from FY2021 to FY2025

Current Assessment

Capital Efficiency Status

FY2023

FY2024

◇Profit

In view of capital efficiency, real estate for rent, investment securities, etc. were sold.

Profit attributable to owners of parent 204.8 % YoY.

Decrease due to gains from sales of real estate for rent, etc., in the previous fiscal year.

Profit attributable to owners of parent decreased 67.6% YoY.

◇ ROE

ROE increased 14.1% points YoY due to higher profit attributable to owners of parent and increased financial leverage.

ROE significantly exceeded cost of equity. (Equity Spread 16.7%)

ROE decreased 15.8% points compared to the previous fiscal year due to the impact of gains on sales of real estate for rent, etc., which occurred in the previous fiscal year.

ROE exceeded the cost of shareholders' equity. (Equity Spread 1.6%)

◇ ROIC

ROIC declined by 0.8% YoY as a result of the expansion of invested capital due to the significant increase in net profit attributable to owners of parent from the previous year.

ROIC is below WACC.(EVA spread -0.3%)

WACC increased due to an increase in the Company's market capitalization and a higher ratio of shareholders' equity to interest-bearing debt.

ROIC increased by 0.2% points compared to the previous period due to the increase in invested capital, but due to the increase in operating profit.

ROIC exceeded WACC. (EVA spread 0.9%)

*In FY2023, profit attributable to owners of parent, shareholders' equity, and ROE all increased significantly due to a gain on sales of fixed assets of 4,773 million yen, which was the result of executing a review of asset allocation through the sale of real estate.

Profit: Profit attributable to owners of parent (Millions of yen)

Net assets: average during the period  (Millions of yen)

FY2020

FY2021

FY2022

FY2023

FY2024

ROE (%)

5.9

7.2

8.3

22.4

6.6

Profit (Millions of yen)

1,000

1,296

1,585

4,832

1,566

Net assets (Millions of yen)

16,930

17,965

19,008

21,559

23,751

ROIC (%)

5.1

5.2

5.0

4.2

4.4

Cost of equity (%)

5.9

6.2

5.6

5.7

5.0

WACC (%)

4.4

4.0

3.9

4.5

3.5

Profit: Profit attributable to owners of parent

Net assets: average during the period

Current Assessment P/B Ratio

  • As a result of steadily implementing initiatives based on the basic policy of the medium-term management plan, P/B Ratio has risen to almost 1.0x.

  • We recognize that there is still a gap between our current and market expected returns, so we will work on measures to grow profits and improve capital productivity.

FY2023

FY2024

◇ Market capitalization

In the FY2023, our stock price has remained firm, and its market capitalization is on an upward trend as a result of a large upward revision of full-year final profits, an increase in dividends due to higher profits, and a large-scale stock buyback.

  • Established joint ventures and implemented M&A
  • Enhanced shareholder return policy with consolidated dividend payout ratio of 80% or more and total return ratio of 100%.
  • Increased dividends and share buybacks to improve shareholder return
  • Rising stock price leads to rising market capitalization

◇ PBR

P/B ratio is below the 1.0x level, recognizing that the situation has not reached the market's return expectations.

  • PBR is almost 1.0x level with rising stock price
  • Recognized that there is still a gap between market expected return

FY2020

FY2021

FY2022

FY2023

FY2024

P/B ratio (times)

0.46

0.55

0.67

0.94

0.93

ROE (%)

5.9

7.2

8.3

22.4

6.6

P/E Ratio (times)

8.0

7.8

8.2

4.6

14.0

Market capitalization (Millions of yen)

8,011

10,122

12,998

22,078

22,283

Net assets (Millions of yen)

17,454

18,477

19,539

23,578

23,924

(1) Policies and goals for improvement (2) Specific measures for improvement

(1) Policies and goals for improvement

  • Achieve ROE target of 8.0% or more and ROIC target of 6.0% or more in the final year of the medium-term management plan (fiscal year ending March 31, 2026 (FY2025))
  • Steadily implement initiatives based on the basic policies of the medium-term management plan to improve P/B ratio, and strive to increase corporate value through profit growth and capital productivity improvement

(2) Specific measures for improvement

・PMI execution and monitoring 
Accelerate the return on investment and raise Group profits through implementation and appropriate monitoring of PMI measures for the four main M&As implemented.

・New investment in strategic areas (M&A, new businesses, plant and equipment investment, etc.) 
Expand investment limits and make new investments emphasizing capital efficiency and growth potential based on capital allocation policy
・Restructuring of Industrial Materials Segment 
Improve the growth potential and capital profitability of the Industrial Materials business through consolidation of the Industrial Materials business as a subsidiary and reorganization of group companies.
・Achieving both growth and shareholder returns
Shareholder returns based on a consolidated dividend payout ratio of at least 80% and a policy of 100% total return ratio (including share buybacks and cancellations)
・Enhancement of various IR tools /Strengthen information disclosure to foreign investors and individual investors, and dialogue with shareholders
Expand opportunities for investor communication through participation in investor events and efforts to increase awareness through the use of mass media for investors 
・Reduction of policy shareholdings
Reduction toward a net asset ratio of less than 10.0%.

Results of major initiatives based on the policies of the medium-term management plan

Strategic Investment Execution -1-

Actual results during the period of the Strategic Investment Limit (FY2021-FY2025)

◇M&A

(Including M&A in group companies)

M&A

  • Sanwa Holdings Co., Ltd.(February 2025)
  • Gansui Corporation (June 2023)
  • Gansui Corporation becomes a consolidated subsidiary.(December 2022)
  • Sinbou Edix Co., Ltd.(December 2022)

◇Capital and business partnership

  • Investment in DG Capital Group Co., Ltd. Established DG Takashima Co., Ltd.

               Advanced penetration of renewable energy through digital grid technology

◇Human assets investment

  • Actively recruiting mid-career personnel and increasing their capabilities
  • Conduct engagement survey, develop and implement improvement measures

Strengthening Capabilities in the Solar Power Market through M&A

Our Group's Capabilities in the Photovoltaic Power Generation System Market

Residential

Distribution

Takashima & Co., Ltd.

Installation

New Energy Distribution System Inc.

Industrial

Distribution

Takashima & Co., Ltd.

Installation

Sanwa System Co., Ltd.

Comprehensive Collaborative Agreement on Zero Carbon Island Okinoerabu Project
Kagoshima Prefecture, China Town  - Erabuyuri Electric Power Co., Ltd - Takashima Co.

Strategic Investment Execution -2-

  • Of the investment budget expanded to 15 billion yen, a cumulative total of 13.7 billion yen has been invested between fiscal 2021 and fiscal 2024.
  • Continue to invest aggressively by actively utilizing external funds (interest-bearing debt, etc.) and cash from asset allocation.

FY2021 - FY2023

FY2024

Total

M&A

(Included M&A Consideration Costs)

¥7.45 Bn

¥3.13 Bn

¥10.58 Bn

  • New Energy Distribution System Inc.(December 2022)
  • Sinbou Edix Co., Ltd.(December 2022)
  • Gansui Corporation(June 2023)
  • DG Takashima Co.,Ltd.(August 2024)
  • Sanwa Holdings Co., Ltd.(February 2025)

Plant & equipment

(Investment in maintenance, renewal and enhancement of own plants and facilities)

¥1.44 Bn

¥0.43 Bn

¥1.87 Bn

Human assets, IT & others

(Recruit/Engagement Survey Core system renewal Enhancement of IR)

¥0.95 Bn

¥0.32 Bn

¥1.26 Bn

Invested ammount

¥9.84 Bn

¥3.87 Bn

¥13.71 Bn

Proactive shareholder returns

basic policy on shareholder return 

  • Our basic policy on shareholder return is to increase investment in growth, aiming to become a company of sustainable growth with strategic investment, while at the same time, we will return profits to shareholders with an awareness of capital efficiency.

 

Medium-term Management Plan “Sustainability V(Value)

  • Shareholder returns based on a consolidated dividend payout ratio of at least 80% and a 100% total return policy (including share repurchases and cancellations)
  • based on the recognition that further improvement of capital efficiency is necessary to achieve ROE of 8% or higher, we have decided to change the shareholder return policy of a dividend payout ratio of 40% or higher and a total return ratio of 50%, which were previously set under Sustainability V (Value).

4-for-1 stock split of common stock effective October 1, 2023.

Dividend per share before the stock split is based on the assumption that the stock split was conducted in the fiscal year ended March 31, 2020 (FY2019).

Strengthen information dissemination to foreign investors and individual investors, and dialogue with shareholders

  • Expand opportunities for investor communication by exhibiting at investor events and using mass media for investors to raise awareness

Breakdown of the number of shares by investor type

(End of March 2025)

IR strategy

Reduction of cross-shareholdings

  • FY2023: Sell all financial institution stocks (4 stocks)
  • FY2024: Sell trading partner stocks (3 stocks). Cross-shareholdings to net assets ratio is 9.9%

Policy stock

FY2020

FY2021

FY2022

FY2023

FY2024

Shares other than unlisted shares

Number of Company

18

18

18

14

11

Balance sheet amount

(Millions of yen)

2,936

2,697

2,462

2,629

1,883

Shares of unlisted shares

Number of Company

22

22

20

21

22

Balance sheet amount

(Millions of yen)

147

147

137

187

487

Disclosed at December 14, 2023