WARABEYA NICHIYO HOLDINGS Co., Ltd.

❶ Dialogue with the former president of WARABEYA NICHIYO HOLDINGS Co., Ltd. (Hereinafter referred to as the “Company”)

Daiwa Asset Management

We (Daiwa Asset Management) proposed to the former president of the Company a review of its pricing policies and the cost structure to improve profitability, (including suggestions for improvements up to the average level of the food sector). We expressed to the former president our expectation that the Company would establish a successful model overseas, using the resources generated by profitability improvements.

The Company

The company expressed agreement on the necessity of reviewing its pricing policies to improve profitability. However, there is a discrepancy between the Company’s understanding and that of Daiwa Asset Management regarding the appropriate level.

❷ Dialogue with the former and current presidents

Daiwa Asset Management

We proposed the Company’s need for additional restructuring of its domestic factories.We requested the Company to continue its price pass-through.

The Company

As a result of the review of the pricing policy that the Company has undertaken since last year, there has been progress in its price pass-through, leading to a change in the Company's perception of the desired level of profitability.
However, there is a discrepancy between the Company’s understanding and that of Daiwa Asset Management regarding the appropriate level.We agreed on the method to improve the Company’s cost structure.

❸ Sending of our engagement letter

The Company

The Company expressed its agreement on achieving the profit level suggested by Daiwa Asset Management.The Company announced a mid-term management plan that includes investment in the North American business. Subsequently, the Company announced additional investments in new factories.