Action to Implement Management that is Conscious of Cost of Capital and Stock Price (Update on July 31, 2026)

Analysis of Current Situation

• We believe that if we can consistently achieve an ROE of 12% or higher, our profitability will exceed the cost of capital and create value, while there are various methods for calculating the cost of capital.
• Based on this recognition, by accelerating business portfolio transformation as outlined in our Medium-Term Management Plan 2026 (April 2024 - March 2027), we aim to maintain an ROE of 12% or higher and strive to achieve sustainable improvements of our corporate value. In FY2025, we exceeded our initial plan and recorded a consolidated net income of ¥600.3 billion, with ROE of 12.9%.
• Since the beginning of FY2025, our stock price has remained on an upward trend. Although it temporarily declined in March 2026 due to the situation in the Middle East, it has since outperformed the TOPIX, supported in part by the stock price increase following the announcement of our FY2025 results.
• In addition, our PBR, which was below 1x as of April 2025, has risen along with our stock price and is currently around 1.6x.
• We believe that the steady progress of the business portfolio transformation outlined in our Medium-Term Management Plan 2026 has contributed to the improvement of our stock price and PBR.

Initiatives

To further improve our stock price and PBR, we will steadily implement the following initiatives and demonstrate stable profit growth as actual results, thereby striving to further earn the trust of the market.

• The theme of Medium-Term Management Plan 2026, launched in FY2024, is “No.1 in Each Field”. To enhance our competitive advantages to achieve growth through addressing social challenges, we accelerate business portfolio transformation and generate returns that exceed the cost of capital. For that purpose, we focus on “Growth leveraged by strengths” and “Strengthening the driving force for growth.”
• Specifically, under the organizational structure based on Strategic Business Units (SBUs), we will utilize business-specific ROIC and WACC (*1), and promote business restructuring, including the replacement of low-profit assets. At the same time, by prioritizing the allocation of management resources to growth businesses with strengths and competitive advantages, we will establish earning pillars that drive profit growth, thereby further expanding our earnings base and improving the stability of our profits (*2).
• Through the business portfolio transformation, we will strive to achieve improvement of our corporate value by realizing sustainable profit growth and improving ROE.
• From FY2024 and beyond, we intend to implement shareholder returns with a total payout ratio of 40% or higher, including progressive dividends and share repurchases in a flexible and agile manner. In addition, in July 2026, we implemented a four-for-one share split, aiming to improve the liquidity of our shares and expanding our investor base by lowering the price per investment unit. We will continue to allocate management resources appropriately to shareholder returns and growth investments from the perspective of sustainable enhancement of corporate value, while maintaining financial soundness.
• Furthermore, the Board of Directors discusses these initiatives and monitors and supervises the progress. In addition, we will enhance disclosure and strive to engage in constructive dialogue with market participants so that our initiatives and their outcomes can be fully understood.

(*1) ROIC: Return on Invested Capital, WACC: Weighted Average Cost of Capital
(*2) For an overview of our initiatives and progress under the Medium-Term Management Plan 2026, please refer to the Presentation Material of Earnings Announcements.