Hibiki Path Advisors Submits Shareholder Proposals for Tomoe Corporation’s 93rd Annual General Meeting Scheduled for 27th June 2025

TOKYO--(BUSINESS WIRE)--Hibiki Path Aoba Fund (hereinafter referred to as “HPAF”), which has a discretionary investment contract with Hibiki Path Advisors (hereinafter referred to as “we”, “our” or “Hibiki”), have submitted two shareholder proposals to be voted on at Tomoe Corporation (hereinafter referred to as “Tomoe”)’s upcoming 93^rd Annual General Meeting of Shareholders scheduled for 27^th June 2025. The proposals are as follows:

1. Granting restricted stock compensation—up to 300 million yen per year (maximum of 251,000 shares)—to Directors (excluding Directors who are Audit & Supervisory Committee members and Outside Directors)
2. Adopting a shareholder return policy that ensures a dividend on equity (DOE) of 10% or more and a progressive dividend policy

Tomoe is a highly respected construction company specializing in complex three-dimensional structures. Developed in 1932, the company’s signature “Diamond Truss” technology enables the creation of large, open architectural spaces without interior pillars and continue to be well-recognized across the industry for its superior engineering capabilities.

While the Company has an excellent business model, it faces the following issues:

• Compensation structure for Directors:
  The combined shareholding of the Company’s four Directors (excluding Audit & Supervisory Committee members and Outside Directors) amounts to approximately 200 million yen in market value, only 0.4% of the Company’s market capitalization, which is extremely low. Furthermore, their compensation consists solely of fixed amount remuneration.
• Financials:
  The Company holds approximately 35.4 billion yen in investment securities (primarily cross-shareholdings), accounting for around 30% of total assets and 50% of net assets. While “Mid-Term Management Plan (Japanese Only)” dated May 15, 2023, sets an ROE target of 10%, the ROE for FY3/25 based on NOPAT, which includes only profits derived purely from business operations, is just 3.8%.

* Stock price is based on the closing price of 1,324 yen on 19^th May 2025. The number of shares held by directors is based on FY3/24 Annual Securities Report. The numbers for the investment securities and ROE are based on the FY3/25 Q4 Earnings Report. NOPAT is computed based on tax rate of 30%.

Above mentioned issues led (i) The Company's management team lacks a structure that would enable it to stand on the same footing as shareholders and focus on enhancing corporate value, As a result, (ii) the company's capital policy has not been properly addressed, and the P/B ratio has remained below 1x for many years and currently only 0.8x. In addition, the company owns real estate unrelated to its core business (with an unrealized pre-tax profit of approximately 40 billion yen), and the P/B ratio after adjustment for unrealized gains is 0.5x, which is extremely undervalued.

* Stock price is based on the closing price of 1,324 yen on 19th May 2025. Unrealized pre-tax profit on real estate is based on FY3/24 Annual Securities Report.

In “Measures to achieve management focused on cost of capital and stock price (Japanese Only)” dated 14^th November 2024, Tomoe acknowledged that its net assets have been growing faster than its share price and recognized the need to address its overcapitalized balance sheet. However, despite the Company’s recognition, no concrete actions have been taken. In consideration of this situation and to secure the common interests of all shareholders, we have decided to submit these proposals.

Please find the full shareholder proposal document at the following link:
[Shareholder Proposal]

We respectfully ask our fellow shareholders to support our proposal from the perspective of enhancing and maximizing the common interests of all shareholders, and to exercise your voting rights proactively.

26^th May 2025

Note: This post does not constitute a solicitation for an offer to acquire or recommend the purchase or sale of specific securities, or advice on investment, legal, tax, accounting, or any other matters. In the event of any discrepancy or conflict between the English and Japanese versions, unless otherwise noted, the meaning of the Japanese language version shall prevail unless otherwise expressly indicated.