Nippon Active Value Fund Plc · LSE:NAVF
Nippon Active Value Fund — Yakult Honsha — Proxy Contest (April 2026)
26 slides from Nippon Active Value Fund's proxy contest presentation, April 2026
Slide 1: Unlock Yakult
Explanatory Materials on the Shareholder Proposals for Yakult Honsha Co., Ltd. “Unlock Yakult” April 2026 Los Angeles | Las Vegas | New York | Tokyo | Hong Kong | Seoul | Mumbai | Sydney www.daltoninvestments.com
Slide 2: Disclaimer
Disclaimer This document has been prepared for qualified investors, is provided for informational purposes only, and does not constitute a solicitation of any shares in any investment vehicle managed by Dalton Investments. Such solicitations can only be made to qualified investors by means of the pr
Slide 3: Table of Contents
Table of Contents 1. Executive Summary Page 4 2. Overview of the Three Proposals Page 6 3. Current Status of Yakult Page 8 4. Key Issues Facing Yakult Page 13 5. Details of the Proposals Page 21 6. Conclusion Page 24 3
Slide 4: Executive Summary
Executive Summary
Slide 5: Executive Summary
Executive Summary Despite being a pioneer in the globally growing probiotics sector with a strong business foundation, including a brand underpinned by technology and know-how and sales channels, Yakult has not been able to fully realize its potential due to insufficient governance and lack of capit
Slide 6: Overview of the Three Proposals
Overview of the Three Proposals
Slide 7: Overview of the Three Proposals
Overview of the Three Proposals Approval of Compensation Amendment of Articles of Election of Two Directors Amount for Restricted Incorporation Regarding Stock Compensation Plan Record Date for AGM ✓ Investors are not provided with sufficient and timely information necessary for ✓ Governance malfunc
Slide 8: Current Status of Yakult
Current Status of Yakult
Slide 9: Global Interest in Yakult's Core Business Area Has Rapidly Increased in Recent Years
Global Interest in Yakult’s Core Business Area Has Rapidly Increased in Recent Years Trend in Google Search Volume (by keyword) July 2010 – May 2024 Gut health Immunity Brain health Source: Danone investor presentation materials 9
Slide 10: The Company Is a Global Enterprise Generating More Than Half of Its Profits Overseas
The Company Is a Global Enterprise Generating More Than Half of Its Profits Overseas, with Operating Margins Steadily Improving Along with Global Expansion (JPY mn) Sales (Japan) Sales (Overseas) Operating Profit Margin (rhs) (%) 600,000 16.0 14.0 500,000 12.0 400,000 10.0 300,000 8.0 6.0 200,000 4.
Slide 11: Long-Term Growth Is Expected to Continue, Particularly Overseas
Long-Term Growth Is Expected to Continue, Particularly Overseas Where Price Pass-Through Is Relatively Easier Breakdown of Consolidated Operating Profit* (25/3) Americas In particular, market coverage** in the U.S., a key market, remains at approximately 35%. As manufacturing capacity expands, which
Slide 12: Over the Past 10 Years, While the TOPIX Has Increased Approximately Threefold, the Company's Share Price Has Declined
On the Other Hand, Over the Past 10 Years, While the TOPIX Has Increased Approximately Threefold, the Company’s Share Price Has Declined Share Price Trend Over the Past 10 Years (As of End-Feb 2026) 350 (Indexed with starting point = 100 ) 300 Topix ( + 202.8% ) 250 200 Topix Food ( + 56.9% ) 150 10
Slide 13: Key Issues Facing Yakult
Key Issues Facing Yakult
Slide 14: Issue 1: Cash Not Deployed with Awareness of Cost of Capital ― Domestic Investment
Issue１: Cash Generated Is Not Being Deployed with Sufficient Awareness of the Cost of Capital ― Domestic Investment According to management, the payback period for an approximately JPY 52 bn investment in a new domestic plant is 20 years (which, in other words, corresponds to an expected return of 3
Slide 15: Issue 1: Cost of Capital ― Overseas Investment
Issue１: Cash Generated Is Not Being Deployed with Sufficient Awareness of the Cost of Capital ― Overseas Investment In China, structural sales declines have reduced factory utilization to ~50–60%. Despite persistently low utilization, capacity rationalization was implemented at a later stage than wo
Slide 16: Issue 1: Cost of Capital ― Real Estate
Issue１: Cash Generated Is Not Being Deployed with Sufficient Awareness of the Cost of Capital ― Real Estate Even after the 2020 HQ relocation, the Company retains real estate around its former Shinbashi headquarters, which, given the implied costs, does not appear to meet the cost of capital Former
Slide 17: Issue 1: Cost of Capital ― Cross-shareholdings
Issue１: Cash Generated Is Not Being Deployed with Sufficient Awareness of the Cost of Capital ― Cross-shareholdings The Company holds JPY 80.2 bn in cross-shareholdings (approx. 14% of net assets); however, the planned reduction under the current mid-term plan is too slow, and full early divestment
Slide 18: Issue 2: Room for Improvement in Board Governance ― Management Structure
Issue 2: Room for Improvement in Board Governance ― Management Structure The company’s management structure is structurally prone to governance deficiencies Number of ➢ Board size of 14–15 members may hinder swift decision-making Directors Composition ➢ Majority of directors are internal, raising in
Slide 19: Issue 2: Board Governance ― Director Incentives (1/2)
Issue 2: Room for Improvement in Board Governance ― Director Incentives (1/2) Previously, 70% of director compensation consisted of fixed pay. Performance-based compensation (15%) was determined solely by sales, operating profit, and dairy product bottles sold, with no capital efficiency metrics inc
Slide 20: Issue 2: Board Governance ― Director Incentives (2/2)
Issue 2: Room for Improvement in Board Governance ― Director Incentives (2/2) Disclosure indicates an increase in stock-based compensation from 15% to 25%; however, the breakdown between performance- and non-performance-linked components is undisclosed, and the level remains relatively low vs. globa
Slide 21: Details of the Proposals
Details of the Proposals
Slide 22: Details of the Proposals: Election of Two Directors
Details of the Proposals: Election of Two Directors To enhance board independence and oversight and instill a cost-of-capital focus, we propose the following two outside directors Mr. James B. Rosenwald III Mr. Kota Isogai 1981 Oliver R. Grace & Family, Senior Investment Advisor, Portfolio Manager 2
Slide 23: Details of the Proposals: Approval of Restricted Stock Compensation Amount
Details of the Proposals: Approval of Restricted Stock Compensation Amount We propose expanding the stock compensation framework so that restricted stock equivalent to up to three times the fixed compensation can be granted over the next three years* Current Proposed ➢ Annual director compensation c
Slide 24: Conclusion
Conclusion
Slide 25: Conclusion
Conclusion Whether the Company’s future earnings growth translates into increased corporate value depends on disciplined capital allocation by management. We expect management to place as much, if not greater, emphasis on capital efficiency in decision-making, alongside day-to-day operations. 25
Slide 26: For further information, please contact
For further information, please contact: Dalton Investments 360 N Pacific Coast Highway Suite 1060 El Segundo California 90245 United States of America Phone: +1 424 231 9100 Email: info@daltoninvestments.com info@daltoninvestments.com Los Angeles | Las Vegas | New York | Tokyo | Hong Kong | Seoul |