Our company recognizes PBR below 1.0x as a critical management issue and prioritizes improving profitability and capital efficiency. ROE and ROIC are below levels relative to capital costs; we are advancing capital efficiency improvement through ROIC management penetration and strengthened investment and financing criteria. In the Fifth Medium-Term Business Plan (fiscal 2024-2026), targeting ROE of 4.5%, we steadily proceed with overseas business restructuring while advancing the transition to management prioritizing capital efficiency. Recently, as part of overseas business restructuring, we have progressed fixed cost reduction through factory divestment in China, market introduction of SAP sheet products in baby care, and brand development of feminine care, achieving steady profitability improvement. We will continue promoting management emphasizing balance between growth investments contributing to corporate value enhancement and shareholder returns through active investor dialogue. 1. Current Situation PBR currently falls below 1.0x, which we recognize as an "urgent management transformation issue." Our company has constructed a unique portfolio in the pulp and paper industry, also operating in the chemicals sector, and steadily grew performance through fiscal 2021. At that time, expectations for growth strategy were heightened and PBR remained above 1.0x; however, since fiscal 2022, overall company performance and stock price have stagnated due to declining profitability in the Home & Personal Care overseas business. To address this issue, we recently implemented overseas business restructuring including partial divestiture of factory equipment in China and equity transfer of Turkish operations. Over the medium to long term, we will optimize capital efficiency through strategic transformation of business portfolio. 2. Capital Costs and Capital Profitability We recognize cost of equity at 5-6% (CAPM calculation) and WACC at 2-3%. Meanwhile, in fiscal 2024, ROE stands at ▲4.6% and ROIC at 0.9%, substantially below capital costs. Through dialogue with investors, we deepen understanding of capital costs while recognizing the possibility of capital cost increases. Against this backdrop, in addition to strengthening cash flow generation capacity, we are diffusing ROIC management thinking across the organization to advance capital efficiency improvements in each business division. Furthermore, we are strengthening the framework for capital-efficiency-focused decision-making by implementing clarified investment and financing criteria and strict monitoring of existing investment projects through the Investment and Financing Committee. Additionally, in Integrated Report 2025, we have expanded the 'Management Conscious of Capital Costs and Stock Prices' section to include these initiatives. ※Integrated Report 2025 【Message from Finance Officer】 https://www.daio-paper.co.jp/wp-content/uploads/pdf/2025/DAIO_2025_all.pdf#page=9 【Initiatives for Realizing Management Conscious of Capital Costs and Stock Prices】 https://www.daio-paper.co.jp/wp-content/uploads/pdf/2025/DAIO_2025_all.pdf#page=12 3. Response Approach toward PBR Recovery to Above 1.0x For PBR recovery to above 1.0x, our company prioritizes improving profitability and capital efficiency. The Fifth Medium-Term Business Plan currently under implementation (fiscal 2024-2026) is a phase focused on business foundation rebuilding in preparation for aggressive investment in the subsequent medium-term plan. The Fifth Medium-Term Plan targets ROE of 4.5%; however, we aim to recover to over 10% levels achieved at peak fiscal 2020 in subsequent medium-term plans. To achieve this target, we steadily advance overseas business restructuring while focusing on early commercialization of new growth areas including cellulose nanofiber and biorefinery new material businesses and pet business. Furthermore, we position growth investments contributing to corporate value enhancement as medium-to-long-term priority areas and formulate cash allocation policy conscious of balance with shareholder returns. Additionally, we promote sincere and active dialogue with shareholders and investors, report and share their feedback with management including directors, and aim for sustained corporate value enhancement by appropriately reflecting such input in corporate management. ※Integrated Report 2025 【Shareholder and Investor Relations】 https://www.daio-paper.co.jp/wp-content/uploads/pdf/2025/DAIO_2025_all.pdf#page=54