① Current Status Assessment In analyzing the current situation toward realizing management with awareness of capital cost and stock price, the transition of each indicator over the past five years is as shown in the table below. Our Company targets ROIC of 10% or higher, exceeding WACC level, and aims to enhance corporate value through improving ROE and strengthening shareholders' equity, as well as through aggressive growth strategy investments and shareholder returns. However, for the fiscal year ending March 2025, our Group's ROIC was 6.0%, WACC was approximately 7.3%, and EVA spread (ROIC minus WACC) was -1.3%, falling short of targets. Accordingly, we recognize that improvement is necessary for our Company in both capital profitability and market valuation. FY2021 FY2022 FY2023 FY2024 FY2025 ROIC 6.3% 12.0% 9.1% 4.5% 6.0% WACC 6.5% 6.9% 7.2% 7.5% 7.3% EVA Spread -0.2% 5.1% 1.9% -3.0% -1.3% Stock Price 608¥ 499¥ 448¥ 458¥ 406¥ PER 27.8x 5.3x 7.4x ― 12.1x PBR 1.07x 0.68x 0.58x 0.60x 0.51x Market Capitalization (¥ million) 13,450 11,143 11,030 11,277 11,214 ※Stock price, PER, and PBR are figures as of the fiscal year-end date ※The calculation method for ROIC was changed in FY2025 to use the average of opening and closing shareholders' equity as the denominator, and prior year figures have also been retroactively restated. ② Policy and Targets Moving forward, while further deepening the "ROIC management" we have been focusing on, we will set the following basic policy for capital allocation based on the approach of improving capital profitability and corporate value through optimization of B/S and cash flow allocation, and will implement appropriate cash flow allocation in accordance with this policy to enhance corporate value. ●Basic Policy: Maximize medium-to-long-term corporate value through appropriate "capital allocation" (1) Prioritize allocation of funds to capital expenditure, M&A investment, research and development investment, human capital investment, and sustainability investment that contribute to enhanced corporate value (2) Implement stable and continuous dividends in accordance with our "shareholder return policy" Surplus funds remaining after necessary investments and profit allocation will be flexibly returned to shareholders through acquisition of treasury shares and other means (3) As the source of funds for (1) and (2) above, generate continuous operating cash flow through increased business value, and conduct fundraising through interest-bearing debt and other means as necessary (4) When conducting fundraising and shareholder returns, secure appropriate liquidity on hand and maintain optimal capital structure and sound financial health Target indicators are as follows: Item Indicator Target Soundness of Financial Base Shareholders' Equity Ratio 60% or higher Operational Efficiency ROE 10% or higher ROIC 10% or higher Dividends Consolidated Dividend Payout Ratio 30% or higher Dividend on Equity (DOE) 3% or higher ③Details of Initiatives Specific initiatives will improve PBR by breaking down PBR into ROE and PER, and pursuing improvement in each component. As measures to improve ROE, we will continue ROIC management initiatives we have undertaken and pursue improved capital profitability. Specifically, while strengthening earning power through cost reduction and revenue structure reform, we will enhance asset efficiency through measures such as strengthening monitoring of investment effects on capital expenditures and similar items. Additionally, by securing appropriate shareholders' equity ratios while actively pursuing shareholder returns, we will optimize financial leverage. As measures to improve PER, we will elevate market valuation by fostering shareholder and investor growth expectations regarding our Company. Specifically, we will actively promote our growth story through long-term vision and medium-term business plans, and will pursue improvements through such measures as inorganic investments including M&A. We will also work to strengthen governance through enhanced Board of Directors effectiveness and strengthen IR activities. Through these initiatives, we first aim for PBR of 1.0x or higher, and will continue to pursue sustained enhancement of corporate value. For details, please refer to our company website. (URL: https://www.punch.co.jp/ir/newsData/20250523_ir_news_2.pdf)