Annual Securities Report for the 74th Term

Annual Securities Report

From January 1, 2025 to December 31, 2025 (74th Term)

Annual Securities Report

1. This Report was prepared from data submitted via EDINET (Electronic Disclosure for Investors' NETwork) for the Annual Securities Report as required by Article 24, Paragraph 1, of the Financial Instruments and Exchange Act of Japan, pursuant to Article 27-30-2 of that Act. This Report adds pagination and a table of contents.

2. The audit report attached to the Annual Securities Report submitted by the above method and the Internal Controls Report and Confirmation Letter submitted together with the above Annual Securities Report are attached at the end of this Report.

Contents

Page

Annual Securities Report for 74th Term

Part 1. Company information 5

1. Company overview 5

   1. Trends in KPIs, etc. 5

   2. History 7

   3. Lines of business 8

   4. Affiliate companies 10

   5. Employees 11

2. Business conditions 13

   1. Management policies, business environment, topics, etc. 13

   2. Sustainability concepts and initiatives 15

   3. Business and other risks 22

   4. Management's analysis of financial standing, business results, and cash flows 24

   5. Important contracts, etc. 28

   6. Research and development activities 28

3. Facilities 30

   1. Overview of capital investment 30

   2. Status of major equipment 30

   3. Plans for new facilities, removal of facilities, etc. 31

4. Status of the Company 32

   1. Stock, etc. 32

   2. Acquisition of treasury share, etc. 37

   3. Dividend policy 38

   4. Corporate governance 39

5. Accounts 68

   1. Consolidated financial statements, etc. 69

   2. Financial statements, etc. 107

6. Overview of stock administration by the Company 120

7. Reference information on the Company 121

   1. Information on the parent company of the Company 121

   2. Other reference information 121

Part 2. Information on the Company's guarantors 122

Audit Report

Internal Controls Report Confirmation Letter

Document submitted: Annual Securities Report

Underlying legal provisions: Article 24, Paragraph 1, of the Financial Instruments and Exchange Act of Japan Submitted to: Director, Kinki Local Finance Branch Bureau

Date submitted: March 25, 2026

Business year: 74th Term (January 1 - December 31, 2025)

Company name: ザ・パック株式会社

Company name in English: The Pack Corporation

Name and title of representative: Naoki Nakamura, President & CEO

Head office: 9-3 Higashiobase, Higashinari-ku, Osaka, Japan

Tel.: +81-6-4967-1221

Administrative contact: Ikuo Shimomura, Director, Corporate General Manager

Nearest contact address: 9-3 Higashiobase, Higashinari-ku, Osaka, Japan

Tel.: +81-6-4967-1221

Administrative contact: Ikuo Shimomura, Director, Corporate General Manager

Viewing locations: The Pack Corporation

9-3 Higashiobase, Higashinari-ku, Osaka, Japan Tokyo Stock Exchange, Inc.

2-1 Nihonbashi Kabutocho, Chuo-ku, Tokyo, Japan

Part 1. Company information

1. Company overview

   1. Trends in KPIs, etc.

      1. Indicators of consolidated business performance

         Fiscal year		70th	71st	72nd	73rd	74th
         Fiscal year ended		December 2021	December 2022	December 2023	December 2024	December 2025
         Net sales	(¥ million)	79,690	89,060	97,714	101,461	103,125
         Ordinary income	(¥ million)	4,422	6,353	8,063	8,285	7,532
         Profit attributable to owners of parent	(¥ million)	2,824	4,058	5,652	6,316	6,024
         Comprehensive income	(¥ million)	3,325	4,362	7,059	6,319	5,794
         Net assets	(¥ million)	62,032	65,371	71,156	74,485	76,997
         Total assets	(¥ million)	87,422	94,365	98,847	103,292	104,212
         Net assets per share	(¥)	1,087.22	1,145.49	1,245.48	1,321.50	1,384.90
         Net income per share	(¥)	49.57	71.19	99.03	111.17	107.13
         Diluted net income per share	(¥)	49.51	71.13	98.95	111.11	107.09
         Capital adequacy ratio	(%)	70.9	69.2	71.9	72.1	73.9
         Return on equity	(%)	4.6	6.4	8.3	8.7	8.0
         Price-to-earnings ratio	(times)	18.1	11.3	11.4	10.7	12.1
         Cash flows from operating activities	(¥ million)	7,217	5,380	4,443	7,101	6,862
         Cash flows from investing activities	(¥ million)	(3,460)	(3,762)	(3,962)	(5,436)	3,514
         Cash flows from financing activities	(¥ million)	(1,029)	(1,124)	(1,407)	(3,041)	(3,553)
         Ending balance of cash and cash equivalents	(¥ million)	18,067	18,653	17,812	16,656	23,551
         Employees [average number of temporary employees, not included above]	(persons)	1,198 [468]	1,183 [472]	1,183 [515]	1,196 [510]	1,223 [545]

         Notes:

         1. The Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan [ASBJ] Statement No. 29, March 31, 2020) and related guidance have been applied since the 71st term. KPIs and other data for the 70th term reflect retroactive application of these accounting standards.

         2. On July 1, 2025, the Company executed a share split at a ratio of three shares per share of common stock. Calculations of net assets per share, net income per share, and diluted net income per share are based on the assumption that this share split took place at the start of the 70th fiscal year.

      2. Indicators for the Company

         Fiscal year	70th	71st	72nd	73rd	74th
         Fiscal year ended	December 2021	December 2022	December 2023	December 2024	December 2025
         Net sales (¥ million)	69,557	77,117	85,485	88,345	88,437
         Ordinary income (¥ million)	3,748	5,214	6,713	7,194	6,572
         Net income (¥ million)	2,175	3,268	4,670	5,529	5,403
         Capital (¥ million)	2,553	2,553	2,553	2,553	2,553
         Total shares issued (thousand shares) and outstanding	19,900	19,900	19,900	19,900	59,700
         Net assets (¥ million)	57,053	59,426	63,790	65,971	67,590
         Total assets (¥ million)	79,172	85,299	87,903	90,691	90,022
         Net assets per share (¥)	1,000.08	1,041.24	1,116.47	1,170.41	1,215.67
         Dividends per share	50.00	65.00	90.00	118.00	80.00
         [interim dividend per share, (¥) included above]	[25.00]	[30.00]	[35.00]	[52.00]	[58.00]
         Net income per share (¥)	38.17	57.33	81.82	97.33	96.09
         Diluted net income per share (¥)	38.13	57.28	81.76	97.28	96.05
         Capital adequacy ratio (%)	72.0	69.6	72.5	72.7	75.1
         Return on equity (%)	3.9	5.6	7.6	8.5	8.1
         Price-to-earnings ratio (times)	23.6	14.0	13.8	12.3	13.4
         Dividend payout ratio (%)	43.7	37.8	36.7	40.4	43.0
         Employees	841	835	840	862	850
         [average number of temporary (persons) employees, not included above]	[390]	[393]	[436]	[431]	[438]
         Total returns to shareholders	71	65	92	100	153
         [Indicator for comparison: (%) TOPIX including dividends]	[121]	[118]	[151]	[182]	[213]
         Highest share price (¥)	3,270	2,817	3,450	4,145	1,315 (3,648)
         Lowest share price (¥)	2,537	2,107	2,355	3,205	1,079 (2,781)

         Notes:

         1. On July 1, 2025, the Company executed a share split at a ratio of three shares per share of common stock. Calculations of net assets per share, net income per share, diluted net income per share, and total returns to shareholders are based on the assumption that this share split took place at the start of the 70th fiscal year.

         2. Highest and lowest share prices are prices on the Prime Market of the Tokyo Stock Exchange since April 4, 2022, and on the First Section of the Tokyo Stock Exchange for earlier periods. Share prices for the 74th fiscal year refer to highest and lowest share prices following the share split; highest and lowest share prices before the share split are indicated in parentheses.

         3. Of the 80 yen in dividends per share for the 74th fiscal year, the year-end dividend of 22 yen is subject to a decision to be made at the Regular General Meeting of Shareholders scheduled for March 26, 2026.

         4. Without the share split, the year-end dividend would be 66 yen and the annual dividend 124 yen per share in the 74th fiscal year.

   2. History

      May 1952 Nippon Case Corporation established and launches sales of paper cartons and apparel boxes.

      July 1955 Hanazono Plant opens in Higashiosaka. Integrated in-house production begins for products ranging from corrugated boxes to apparel boxes.

      May 1957 Production of paper shopping bags begins. December 1957 Kobe Office (now Kobe Branch) opens. June 1958 Nagoya Office (now Nagoya Branch) opens.

      September 1959 Konoike Plant (now Osaka Plant) opens in Higashiosaka; production facilities expanded. August 1960 Fukuoka Branch and Kyoto Office (now the Kyoto Branch) open.

      March 1961 Tokyo Branch opens (now the Tokyo Head Office).

      September 1964 Expansion work completed at Konoike Plant. Hanazono Plant relocated. Full-scale multifaceted production and management structures established.

      July 1965 Sapporo Office (now the Hokkaido Branch) opens.

      May 1966 Hiroshima Office (now the Hiroshima Branch) opens.

      May 1967 Okayama Office (now the Okayama Branch) opens.

      April 1968 Sendai Office (now the Tohoku Branch) opens.

      September 1969 Nara Plant opens in Yamatokoriyama as a plant specializing in corrugated boxes. Urawa Plant opens in Urawa.

      August 1974 Production of plastic bags begins.

      September 1979 Kanto Plant (later renamed the Saitama Plant) opens in Sakado. July 1983 Company is renamed The Pack Corporation.

      January 1987 Yokohama Office (now the Yokohama Branch) opens.

      November 1987 The Pack America Corp. (now a consolidated subsidiary) established in the United States August 1991 Ibaraki Plant opens in Hitachi.

      September 1991 Stock listed on second section of Osaka Securities Exchange January 1996 The Nicols established

      January 1998 Kanto Branch opens.

      January 1999 Ibaraki Plant earns ISO 14001 (environmental management systems) certification. December 1999 Headquarters earns ISO 14001 (environmental management systems) certification. April 2000 Nara Plant earns ISO 9001 (quality management) certification.

      September 2001 Stock listed on second section of Tokyo Stock Exchange

      October 2001 Osaka, Saitama, and Ibaraki plants earn ISO 9001 (quality management) certification. April 2002 Nara Plant earns ISO 14001 (environmental management systems) certification.

      October 2002 Osaka and Saitama plants earn ISO 14001 (environmental management systems) certification. June 2003 Stock listed on first sections of Tokyo Stock Exchange and Osaka Securities Exchange October 2003 Keihin Tokushu Printing Corp. (now a consolidated subsidiary) established

      December 2003 Shanghai Office opens in China.

      March 2006 The Pack (Shanghai) Corporation (now a consolidated subsidiary) established in China November 2006 All sites earn ISO 14001 (environmental management systems) certification.

      April 2007 Additional shares acquired in Nikko Print Corporation (now a consolidated subsidiary) August 2007 The Pack (Changshu) Co., Ltd. (now a consolidated subsidiary) established in China

      Headquarters, Saitama and Osaka plants, and sales offices earn FSC® CoC certification (FSC® C020517).

      February 2009 Pack Takeyama Co., Ltd. (now a consolidated subsidiary) established April 2009 All sites earn ISO 9001 (quality management) certification.

      July 2011 Tokyo Plant opens in Hidaka, Saitama Prefecture; Saitama Plant relocated. January 2014 The Nicols merged through absorption-type merger

      June 2014 Acquired all shares of stock in Nishinihon Printing Co., Ltd. (now a consolidated subsidiary), making it a wholly owned subsidiary

      December 2016 All paper products production and sales sites in Japan earn FSC® CoC certification (FSC® C020517). April 2018 Acquired stock in Kannaru Printing Co., Ltd. (now a consolidated subsidiary), making it a subsidiary. December 2018 Tokyo and Osaka plants earn FSSC 22000 (food safety) certification.

      April 2022 Listing transferred to the Prime Market of the Tokyo Stock Exchange March 2023 New headquarter building completed in Higashinari-ku, Osaka

      February 2025 Acquired stock in Hikari Packs Ishikawa Co., Ltd. (now a consolidated subsidiary), making it a subsidiary.

   3. Lines of business

      The Pack Group consists of ten companies, the Pack Corporation and nine consolidated subsidiaries.

      The Group's business activities include the manufacture and sale of paper products, film packaging, and other products, as well as related research, logistics, services, and other activities.

      The Group's businesses are positioned as outlined below.

      Segment	Lines of business	Companies
      Paper Products	Manufacture, purchase, and sale of paper bags, printed folding paper cartons, corrugated boxes, etc.	The Pack Corporation Keihin Tokushu Printing Corp. Nikko Print Corporation Pack Takeyama Co., Ltd. Nishinihon Printing Co., Ltd. Kannaru Printing Co., Ltd. Hikari Packs Ishikawa Co., Ltd. The Pack America Corp. The Pack (Shanghai) Corporation The Pack (Changshu) Co., Ltd.
      Film Packaging	Manufacture, purchase, and sale of plastic bags, garment bags, etc.	The Pack Corporation Pack Takeyama Co., Ltd. The Pack America Corp. The Pack (Shanghai) Corporation
      Other Businesses	Purchase and sale of gifts, supplies, price tags, design production, advertising and promotional materials, etc.	The Pack Corporation Pack Takeyama Co., Ltd. Nishinihon Printing Co., Ltd. Kannaru Printing Co., Ltd. The Pack America Corp. The Pack (Shanghai) Corporation

      The Company acquired stock in Hikari Packs Ishikawa Co., Ltd. and made it a consolidated subsidiary effective February 26, 2025.

      The Company absorbed consolidated subsidiary Nikko Print Corporation through a merger by absorption effective January 1, 2026.

      The Pack America Corp. is a U.S. subsidiary selling products primarily in the U.S.

      The Pack (Shanghai) Corporation and The Pack (Changshu) Co., Ltd. are Chinese subsidiaries. The Pack (Shanghai) Corporation sells products primarily in China, while The Pack (Changshu) Co., Ltd. produces paper bags for sale in China and to the Company in Japan.

      Products

      Subcontracting of production

      Products

      Receipt of products

      Transactions

      Subcontracting of production

      Products

      Receipt of products and in-process products

      Subcontracting of production

      Transactions

      Products

      Receipt of in-process products

      Subcontracting of production

      Products

      Receipt of products and in-process products

      Products

      Products

      Subcontracting of production

      Receipt of products

      Subcontracting of

      production

      Receipt of products

      (Manufacture of paper products)

      ☆The Pack (Changshu) Co., Ltd.

Note: ☆ Consolidated subsidiary

1. 1. Affiliate companies

      Name	Address	Capital or investment (¥ million)	Main lines of business	Ownership ratio of voting rights (%)	Relationship
      (Consolidated subsidiary)					Purchase of paper products; concurrent posting of officers; secondment of employees; lending of funds; lending of equipment
      Keihin Tokushu Printing Corp.	Higashinari-ku, Osaka	10	Paper Products business	100.0
      Nikko Print Corporation	Higashinari-ku, Osaka	20	Paper Products business	100.0	Purchase of paper products; concurrent posting of officers; secondment of employees; lending of funds; lending of equipment
      Pack Takeyama Co., Ltd.	Higashinari-ku, Osaka	90	Paper Products business Film Packaging business Other Businesses	100.0	Sale of our products; purchase of paper products; concurrent posting of officers; secondment of employees; payment agency services
      Nishinihon Printing Co., Ltd.	Higashinari-ku, Osaka	45	Paper Products business Other Businesses	100.0	Purchase of paper products; concurrent posting of officers; secondment of employees
      Kannaru Printing Co., Ltd.	Yodogawa-ku, Osaka	12	Paper Products business Other Businesses	100.0	Concurrent posting of officers; secondment of employees; lending of funds
      Hikari Packs Ishikawa Co., Ltd.	Kaga, Ishikawa	1	Paper Products business	100.0	Purchase of paper products; concurrent posting of officers; secondment of employees
      The Pack America Corp.	New York, N.Y., U.S.A.	US$1,000,000	Paper Products business Film Packaging business Other Businesses	100.0	Concurrent posting of officers; secondment of employees
      The Pack (Shanghai) Corporation	Shanghai, China	US$500,000	Paper Products business Film Packaging business Other Businesses	100.0	Concurrent posting of officers; secondment of employees
      The Pack (Changshu) Co., Ltd. (See Note 2.)	Changshu, Jiangsu Province, China	US$3,900,000	Paper Products business	93.6	Purchase of paper products; concurrent posting of officers; secondment of employees; lending of funds

      Notes:

      1. Details under Important Lines of Business indicate business segment names as used under Segment Information.

      2. Qualifies as designated subsidiary.

      3. None of the above companies submits securities notices or annual securities reports.

      4. The Company acquired stock in Hikari Packs Ishikawa Co., Ltd. and made it a consolidated subsidiary effective February 26, 2025.

      5. The Company absorbed consolidated subsidiary Nikko Print Corporation through a merger by absorption effective January 1, 2026.

   2. Employees

      1. Employees of consolidated companies

         As of December 31, 2025

         Segment	Employees
         Paper Products business	912	(448)
         Film Packaging business	112	(63)
         Other Businesses	38	(5)
         Companywide	161	(29)
         Total	1,223	(545)

         Notes:

         1. Numbers of employees indicate numbers employed; annual average numbers of temporary employees are shown in parentheses.

         2. In addition to the above, the Group employs 14 executive officers.

      2. Employees of the Company

         As of December 31, 2025

         Employees	Average age (years)	Average years of continuous service (years)	Average annual salary (¥)
         850 (438)	40.4	16.3	7,091,442

         Segment	Employees
         Paper Products business	539	(341)
         Film Packaging business	112	(63)
         Other Businesses	38	(5)
         Companywide	161	(29)
         Total	850	(438)

         Notes:

         1. Numbers of employees indicate numbers employed; annual average numbers of temporary employees are shown in parentheses.

         2. In addition to the above, the Company employs 9 executive officers and 8 employees seconded to subsidiaries and other companies.

         3. Average annual salary includes bonuses and nonstandard wages.

      3. Labor unions

         The Company's employees are not unionized.

         The name, number of members, and superior organization of the labor union of consolidated subsidiaries are shown below.

         As of December 31, 2025

         Name	Union members	Superior organization
         Kannaru Printing Labor Union	49	UA ZENSEN

         There are no matters requiring reporting regarding labor-management relations.

      4. Female employees as a percentage of those in managerial positions, percentage of male employees taking childcare leave, and male-female wage disparities

         1. Submitting company

            Fiscal year under review
            Female employees as a percentage of those in managerial positions (%) (See Note 1.)	Percentage of male employees taking childcare leave (%) (See Note 2.)	Male-female wage disparities (%) (See Note 1.)
            		All workers	Permanent full-time employees (included among all workers)	Part time and fixed-term employees (included among all workers)
            8.8	139.1	59.2	74.4	56.9

            Notes:

            1. Calculated pursuant to the provisions of the Act on the Promotion of Women's Active Engagement in Professional Life (Act No. 64 of 2015)

            2. Calculated as the percentage taking childcare or other leave under Article 71-4, Paragraph 1 of the Enforcement Regulations to the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (Ministry of Labour Ordinance No. 25 of 1991) pursuant to the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (Act No. 76 of 1991)

         2. Consolidated subsidiaries

            	Fiscal year under review
            Name	Female employees as a percentage of those in managerial positions (%) (See Note 1.)	Percentage of male employees taking childcare leave (%) (See Note 2.)
            Pack Takeyama Co., Ltd.	0.0	100.0

            Notes:

            1. Calculated pursuant to the provisions of the Act on the Promotion of Women's Active Engagement in Professional Life (Act No. 64 of 2015)

            2. Calculated as the percentage taking childcare or other leave under Article 71-4, Paragraph 1 of the Enforcement Regulations to the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (Ministry of Labour Ordinance No. 25 of 1991) pursuant to the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (Act No. 76 of 1991)

            3. Omits male-female wage disparities because the information is not subject to mandatory disclosure under the provisions of the Act on the Promotion of Women's Active Engagement in Professional Life (Act No. 64 of 2015).

            4. Figures for other consolidated subsidiaries are omitted because they are not subject to mandatory disclosure under the provisions cited above.

2. Business conditions

   1. Management policies, business environment, topics, etc.

      The Group's management policies, business environment, topics, etc. are reviewed below.

      Forward-looking statements in the text express the Group's judgments as of the end of the consolidated fiscal year under review.

      1. Corporate Philosophy

         The Pack Group strives to meet shareholder expectations while aiming to achieve sustained growth in business performance and corporate value, based on the following Corporate Philosophy:

         • We value and nurture people.

         • We seek to accommodate society's every change.

         • We fulfill our social responsibilities by promoting initiatives related to the global environment and other issues.

         • As a company offering total solutions related to packaging, we seek to contribute to societal development and to thriving societies.

         As is expressed in The Pack Group's corporate motto, we are passionate and dedicated to our partnerships in all our activities. Furthermore, we pursue sustainable management in keeping with the purpose of our existence (purpose): to provide packaging solutions to contribute to a prosperous society and bring satisfaction to people. As a company offering total solutions related to packaging, we help solve the many issues facing our stakeholders through the creation of new value in packaging, thereby contributing to a prosperous and sustainable society. To this end, we strive to deliver environmental, social, and economic value that is unique to The Pack Group, based on sustained growth and the ability to adapt to social change.

      2. Targets and KPIs

         The Pack Group must maintain a solid financial standing not only to improve earnings in each of our businesses, but to remain a stable, reliable partner to all our stakeholders, from shareholders to suppliers, employees, and many others. We strive to strengthen both our capital adequacy ratio and returns on invested capital while also accounting for our obligation to provide stable dividends.

      3. Priority business and financial topics

         We operate in a mature industry in which marked growth is considered difficult to achieve based on existing customers and products alone. For this reason, we have developed sales markets and expanded our product lineup in areas such as rice bags, disposable diaper products, and packages for food products, in addition to our main product lines. We will continue to grow our businesses by focusing on developing new markets and products for which demand can be expected and undertaking aggressive capital investment where appropriate.

         In recent years, in addition to rising costs of raw materials and imports we also face rising costs in areas such as logistics and energy. We will strive to sell products at appropriate prices by raising customer satisfaction through enhanced proposal-based sales and quality control. We also plan to improve business results by achieving a more robust profit structure through further streamlining and business reforms, as well as and making steady progress on medium- and long-term business strategies.

         At the same time, based on our management principles that call for fulfilling our social responsibilities by promoting initiatives related to the global environmental and contributing to societal development and thriving societies as a company offering total solutions related to packaging, we established the Package Laboratory in 1981 as a domestic and international center for research and communication related to packages and packaging. In 1993, we began contributing to forest conservation activities. In 2000, while taking active steps in these ways to develop new eco-friendly products and technologies in our core businesses, we established The Pack Forest® Environment Fund, through which we promote forestation and forest conservation activities in cooperation with nonprofits. In 1999, the Ibaraki Plant became our first facility to earn ISO 14001 environmental management systems certification. Today, all commercial sites in Japan, including our four plants, have earned ISO 14001 environmental management systems certification and ISO 9001 quality management systems certification. In addition, all plants producing package products using paper materials and all sales sections have earned FSC® CoC certification (FSC® C020517); the manufacturing lines for folding paper containers for food products at the Tokyo and Osaka plants have earned FSSC22000 certification. In 2023, we established the Sustainable Committee to promote sustainable management in the Group. We're committed to making ongoing contributions to social progress and prosperity through our energetic efforts to address environmental issues.

      4. Medium- to long-term business strategies

         The slogan of the Group's Medium-Term Management Plan is "Evolution: Start of purpose-based management and Sustainable Management." Under this plan, we are targeting consolidated net sales of ¥107 billion and operating profit of

         ¥8.3 billion (in the period ending December 2025).

         1. Growth strategies

            1. Focusing on the food products market (including convenience stores and fast food)

               We will enhance efforts in the areas of capital investments and new product development to grow sales of primary paper containers for food product use while strengthening our multidirectional proposals by adding services to cover customer staffing shortages in areas such as paper container assembly and product packing.

            2. Focusing on the e-commerce and mail-order markets and the logistics industry

               We will focus on enhancing supply capabilities and sales of paper delivery bags, thin shipping materials to help raise transport efficiency, and other products, as well as by proposing solutions to save labor and energy in packing tasks.

            3. Strengthening our efforts in the general retail market and elsewhere

               We will promote migration to paper materials and grow our share of paper bags while increasing productivity and production capacity by enhancing manufacturing facilities. In addition, by contributing through a nonprofit revenue earned from eco-friendly products to forest conservation activities by The Pack Forest® Environment Fund, we will promote contributions to society alongside our customers, raise our brand value, and create business opportunities.

         2. Human capital strategies

            1. Securing diverse human resources

               • Enhancing midcareer hiring

               • Promoting women in the workplace (increasing the proportion of regular employees and managerial posts accounted for by women)

               • Expanding employment of people with disabilities

            2. Human resource development

               • Enhancing training structures

               • Supporting autonomous skills improvements and reskilling

            3. Normalizing human resource assignments

               • Making effective use of the talent management system

               • Expanding employment opportunities (referrals and welcoming back former employees)

            4. Improving work environments

               • Enhancing diverse workstyles and systems

               • Well-being (promoting health management)

            5. Maximizing employee engagement

               • Enhancing appropriate wage structures and benefits

               • Increasing sense of business participation via the employee stock ownership program

               • Stimulating employee exchange and communication

               • Engagement surveys

         3. Financial strategies

         We seek to support efficient and sustained growth through optimal plans for use of funds through investments in growth (i.e., capital investment, investment in new businesses, human investment, investment in computer system upgrades, and R&D) and returns to shareholders (i.e., maintaining a dividend payout ratio of 35% or above and purchase of up to ¥1 billion in treasury share in each of FY2024 and FY2025).

      5. Other important management topics

         Considerable time has passed since the construction of both the Osaka and Nara plants. We plan to rebuild both of these plants for purposes of future improvements to work environments as well as increasing productivity through labor saving by automating work in the plants. We aim to develop production structures to produce high-value-added products for the future.

   2. Sustainability concepts and initiatives

      The Group's thinking on sustainability and its sustainability initiatives are reviewed below.

      Forward-looking statements in the text express the Group's judgments as of the end of the consolidated fiscal year under review.

      1. Governance

         1. Basic policy on sustainable management

            As is expressed in The Pack Group's corporate motto, we are passionate and dedicated to our partnerships in all our activities. Furthermore, we pursue sustainable management in keeping with the purpose of our existence (purpose): to provide packaging solutions to contribute to a prosperous society and bring satisfaction to people. As a company offering total solutions related to packaging, we help solve the many issues facing our stakeholders through the creation of new value in packaging, thereby contributing to a prosperous and sustainable society. To this end, we strive to deliver environmental, social, and economic value that is unique to The Pack Group, based on sustained growth and the ability to adapt to social change.

         2. Materiality topics

            The Pack Group has identified materiality topics for each theme related to the environment, society, and governance (ESG) for use in promoting sustainable management. The priority themes based on materiality are Environmental Contributions, Cyclical Society/Climate Change, Employment and HR/Workplace Development, Community Development/Coexistence, and Corporate Governance Structural Enhancements. For each of these materiality topics, we establish key performance indicators (KPIs) as necessary, formulate action plans to realize them, and build management structures. We will contribute to a prosperous and sustainable society by promoting and enhancing these activities and delivering solutions to societal challenges through our business activities to achieve sustainable growth (value creation).

            1. Materiality topic identification process

               To identify materiality topics, we began by identifying management capital (financial capital, manufacturing capital, human capital, intellectual capital, social and relationship capital, and natural capital) in line with our value chain. We then formulated themes for maintaining and growing this management capital and defined initiatives for each topic. Materiality topics were then decided on after considering their importance to stakeholders and to the Company.

               The Sustainable Committee submitted the materiality topics to the Board of Directors for approval.

            2. List of materiality issues

               In 2022, we identified 12 materiality issues under five major themes. Specific initiatives to address these issues are reviewed below. We will contribute to an enriched, sustainable society by promoting and enhancing these activities.

               List of Materiality Issues Organized from an ESG Point of View
               
               

               Major themes Materiality (Important Issues) Initiatives

               Promoting eco-friendly product planning and technological development

               Theme 01

               Delivering solutions to environmental issues through our business activities

Reducing environmental impact throughout our business activities

Contributing to environmental conservation and preservation

• Developing, procuring, and supplying eco-friendly raw materials, including forestry-certified and mixed paper

• Proposing packaging that requires reduced volumes of raw materials

• Proposing solutions to improve work efficiency through use of our packaging

• Purifying and reusing water used in manufacturing processes

• Reducing CO2 emissions (intensity)

• Preserving and restoring forest and mountain areas

• Planting trees with consideration for ecosystems

• Proposing alternative surface processing technologies to replace plastic laminates

• Developing alternative paper packaging to replace plastic packaging

• Developing reusable packaging

• Developing eco-friendly plastic packaging

• Transitioning to renewable energy

• Appropriately managing industrial waste and reducing emissions; promoting recycling

• Establishing a new environment fund to support efforts such as the preservation and restoration of coasts and rivers

• Investing in efforts that contribute to environmental conservation and preservation

Promoting employee health and safety

Developing and cultivating the capacity to offer total solutions related to packaging

Promoting diverse work styles that encourage all employees to thrive

Co-creating brand value with our customers

Maintaining and improving quality through joint efforts with business partners

Contributing to developing future generations and fostering environmental awareness

Providing solutions to increasingly diverse social issues

Securing soundness, transparency, and efficiency in management

Promoting supply chain risk management

• Maintaining and improving the health of employees and their families as set forth in the Health and Productivity Management Declaration

• Implementing safety measures at manufacturing sites

• Using the Packaging Laboratory to foster an organization of specialists who support The Pack as a company offering total solutions related to packaging

• Developing and utilizing databases on packaging expertise

• Developing environments for work styles suited to employee lifestyles

• Promoting an action plan to empower women in the workplace

• Designing remuneration schemes to allow employees to work with peace of mind and other systems to secure post-retirement plans

• Identifying and analyzing customer issues and providing solutions

• Collecting information on packaging in Japan and overseas and communicating market developments and trends

• Implementing joint development of production technologies and establishing mass production in partnership with production subcontractors

• Improving quality by enhancing quality control structures

• Holding visiting classes for elementary school students

• Participating in educational content (including online)

• Achieving labor savings, automation, and reduced CO2 emissions by promoting a PAS system

• Developing packaging in a way that helps to address labor shortages

• Proposing total solutions that combine packaging with packing and logistics equipment

• Improving corporate governance structures

• Disclosing information on the status of initiatives related to all principles of the Corporate Governance Code

• Strengthening management soundness through the C-Line (compliance line as the internal whistleblowing system)

• Strengthening supply chains that can respond to various procurement, production, and sales risks

  • Stockpiling disaster supplies to keep employees safe in the event of natural disasters

  • Improving business efficiency and enhancing proposal capabilities through digital transformation (DX)

  • Promoting product development through training sessions in which manufacturing sites participate

  • Developing teleworking environments and adopting communication tools

  • Developing employee skills and optimizing assignments through job rotations

  • Building a more open human resource evaluation system

  • Providing multifaceted proposals on distribution and logistics solutions to achieve labor savings, automation, and mechanization

  • Proposing ways to participate in The Pack Forest® Environment Fund to preserve forests

  • Establishing eco-friendly logistics systems

  • Investing in efforts that contribute to the development of future generations

  • Participating in and supporting activities that lead to increased environmental awareness

  • Support for activities that create jobs for people with disabilities and activities that assist them in becoming self-sufficient and finding employment

  • Supporting activities of children to support environmental protection

  • Implementing fair and objective decision-making processes for management appointments

  • Improving the quality of disclosure to shareholders and other stakeholders

  • Securing diversity among the Board of Directors

  • Enhancing resilience to ensure the appropriate operation of business continuity planning

  • Countering information leaks and system failures associated with cybersecurity risks

1. 1. External environment (risks and opportunities)

      To be able to adapt to societal change, the Group anticipates the risks and opportunities indicated below. The corresponding materiality issues are also shown.

      • : Materiality issues corresponding to risks and opportunities

        Materiality (Important Issues)

        Environment

        Society

        Governance

        External factor

        No.

        Risk/opportunity

        Item

        Promoting eco-friendly product planning and technological development

        Reducing environmental impact throughout our business activities

        Contributing to environmental conservation and preservation

        Promoting employee health and safety

        Developing and cultivating the capacity to offer total solutions related to packaging

        Promoting diverse work styles that encourage all employees to thrive

        Co-creating brand value with our customers

        Maintaining and improving quality through joint efforts with business partners

        Contributing to developing future generations and fostering environmental

        Providing solutions to increasingly diverse social issues

        Securing soundness, transparency, and efficiency in management

        Promoting supply chain risk management

        Politics

        1

        Risk

        Interruption of imports of raw materials or rising import costs due to disputes or national security policies

        ○

        2

        Opportunity

        Establishment of local-production/local-consumption models leveraging our robust supply chains in Japan, the United States, and China

        ○

        ○

        ○

        3

        Opportunity

        Increase in institutional investors through enhancement of ESG initiatives in line with laws, regulations, international standards, etc.

        ○

        ○

        ○

        ○

        Economics

        4

        Opportunity

        Birth of new merchandise, services, and business models

        ○

        ○

        ○

        ○

        ○

        ○

        ○

        5

        Risk

        Increasing costs of raw materials, manufacturing, and shipping

        ○

        ○

        6

        Risk

        Rising hedge costs in raw-materials procurement

        ○

        7

        Opportunity

        Building energy-saving supply chains

        ○

        ○

        ○

        Society

        8

        Risk

        Difficulty securing diverse human resources and partners

        ○

        ○

        ○

        ○

        ○

        ○

        9

        Opportunity

        Developing diverse human resources, increasing labor productivity

        ○

        ○

        ○

        ○

        10

        Opportunity

        Growing demand for new product use

        ○

        ○

        ○

        11

        Opportunity

        Creation of products and services emphasizing safety and reliability

        ○

        ○

        ○

        ○

        Technology

        12

        Risk

        Declining purchases in brick-and-mortar stores, rising risks of information leaks, and increased response costs as new technologies spread and are widely adopted

        ○

        13

        Opportunity

        Reduced operation costs due to the arrival of new technologies and services

        ○

        ○

        ○

        ○

        Environment

        14

        Risk

        Rising tax burdens due to the adoption of carbon taxes

        ○

        ○

        ○

        ○

        ○

        ○

        15

        Risk

        Rising procurement costs due to changes in forestry resources

        ○

        ○

        ○

        ○

        ○

        ○

        16

        Risk

        Supply chain disruptions and production suspensions due to increasingly frequent natural disasters

        ○

        17

        Opportunity

        Growth in business opportunities due to move away from plastics

        ○

        ○

        ○

        ○

        ○

        ○

        ○

        Legal

        18

        Risk

        Increasing costs of adapting to legal, regulatory, and litigation risks

        ○

        ○

        19

        Opportunity

        Increasing corporate value through enhanced governance

        ○

        ○

        20

        Opportunity

        Birth of new business opportunities in response to enhanced laws or regulations

        ○

        ○

        ○

   2. Materiality and KPIs over the past five years

      In September 2023, we established KPIs for five materiality themes. We have developed management systems to achieve these KPIs, which we aim to do by FY2030.

      We will promote, check, assess, and improve related efforts by implementing the plan-do-check-act (PDCA) cycle.

      Major themes	Materiality (Important Issues)	KPI and Action plan	2021	2022	2023	2024	2025
      Theme 01 Delivering solutions to environmental issues through our business activities	Promoting eco-friendly product planning and technological development	Achieving a ratio of sales of FSC®-certified products (paper bags, paper cartons, corrugated boxes) to total sales of 50% or higher*1 based materials	13.2%	17.4%	20.2%	21.1%	21.5%
      	Reducing environmental impact throughout our business activities	Reducing CO2 emissions (Scopes 1 and 2) by 46% vs. FY2018 (from 16,662 t in FY2018 to a target of 8,997 t in FY2030)	14,894 t	15,399 t	16,756 t	16,149 t	16,319 t
      	Contributing to environmental conservation and preservation	Implementing 15 The Pack Forest® Environment Fund activities, with 500 participants per year	0 0	4 111	9 253	8 230	8 273
      Theme 02 Valuing and nurturing people	Promoting diverse work styles that encourage all employees to thrive	Increasing women's percentage of managers (managers or above) to 15% or more in which women can continue their careers over the long term	4.9%	6.7%	6.3%	7.2%	8.8%
      Theme 03 Building and enhancing relations of trust with our business partners and customers	Co-creating brand value with our customers	Earning the support of 300 firms for The Pack Forest® Environment Fund*2	67	94	123	158	177

      • Enhancing proposals to switch to paper packages

      • Expanding range of FSC®-certified suppliers

      • Accelerating the development of new materials and products using paper-

      • Switching to highly energy-efficient machinery

      • Switching electricity use to renewables (including purchases of renewable energy)

      • Expanding use of solar panels

      • Increasing the potential number of activities through new development of activity sites

      • Enhancing activities to raise awareness among local residents and seeking participants from the general public

      • Enhancing activities to which customers are invited

      • Targeting a percentage of at least 35% of new graduate hires being women

      • Developing programs and environments

      • Seeking support by enhancing tools for raising awareness of activities

      *1 Sales: The Pack (nonconsolidated) paper products business as a whole (FSC® C020517)

      *2 Number of companies with sales results

      Refer to the section titled "Sustainability" on The Pack website for more information on our sustainability initiatives, including materiality issues and KPIs.

      (URL: https://www.thepack.co.jp/en/sustainability/materiality.html)

2. Sustainability promotion structure

In January 2023, The Pack established the Sustainable Committee to promote sustainable management within the Group. In cooperation with the Conference of Business Divisions, Business Units and Group Companies, this committee and its executive arm, the Sustainable Committee Secretariat, deliberate and make decisions on matters such as formulating policies on the operation and promotion of sustainable management and other important themes, managing the progress of sustainability initiatives, and reflecting the findings in the Medium-Term Management Plans. The Sustainable Committee Secretariat handles tasks including the promotion of action plans and management of key performance indicators (KPIs), in cooperation with each section and Group member company.

In consultation with the Sustainable Committee, the Board of Directors makes decisions on policies and oversees sustainability management. The Conference of Business Divisions cooperates and shares information with the Sustainable Committee. Each business unit and Group company executes various measures and provides information on their results along with related data.

The Audit and Supervisory Board and the Audit Office conduct supplementary audits of these initiatives.

Auditing Audit and Supervisory

Board

Inquiries

Responses / reporting

Cooperation

Internal auditing

Sustainable Committee

Chair: President & CEO

Sustainable Committee Secretariat

Cooperation

Conference of

Business Divisions

Instruction

Reporting

2030

Target

Emissions [t-co2]

[CO2 emissions (Scopes 1, 2, and 3) across the supply chain]

A look at our CO2 emissions across the supply chain shows that Category 1 (purchased goods and services) of Scope 3 accounted for 82.9% of total emissions. We will continue to study ways to reduce supply chain emissions.

1. Human capital

We consider an environment in which women can succeed to be one that is more comfortable for all our employees. We have analyzed the related issues and identified the following KPIs and targets for building workplace environments in which women can work with peace of mind over the long term.

Note: These targets are for the submitting company only; consolidated subsidiaries have not set quantitative targets.

1. 1. Business and other risks

      Among the information contained in this Annual Securities Report concerning matters such as business conditions and accounting, the items described below are ones that could have major impacts on investor decision-making. This section includes forward-looking statements, which reflect the Group's judgments as of the end of the consolidated fiscal year under review.

      Recognizing the possibility of these risks, the Group will endeavor to prevent their occurrence and respond appropriately if they do arise.

      1. Decreased domestic demand and lower market prices

         The Group operates in an industry that is largely driven by domestic demand, and its net sales are impacted strongly by domestic economic trends. The Group's financial standing and business results may be impacted negatively by decreased domestic demand and falling market prices in the event of a large-scale downturn in Japan's economy.

         The Group is adding to its competitive strengths by developing products that feature high quality and high value added and by enhancing its sales capabilities. It has responded to declining domestic demand by differentiating itself from the competition via bundled sales and by venturing into niche markets not served by major players. In overseas markets, we plan to ensure stable supplies by actively expanding sales channels, cultivating appropriate business partners, and providing technical guidance.

      2. Risk of seasonal weights

         The packaging materials handled by the Group are vulnerable to fluctuations in consumer traffic due to major sales campaigns and leisure and business travel. Since major sales campaigns and other initiatives are successively held from October through the year-end/New Year period and numbers of domestic and international travelers grow during these longer vacations, both Group sales and profit tend to be weighted toward the fourth quarter. This means that changing customer demand or natural disasters, outbreaks of infectious disease, or other such events may impair the Group's financial standing and business results.

         The Group has sought to minimize seasonal fluctuations in various ways, including handling products for diverse uses and efforts to enhance relations with a wide range of business partners to avoid overdependence on specific businesses and industries. We will continue to focus on expanding sales of primary containers for food products for which we anticipate year-round demand under normal conditions and some demand even during times of recovery from disasters or pandemics.

      3. Legal, regulatory, and litigation risks

         The Group's businesses are subject to various laws and regulations concerning the environment, intellectual property, and other subjects. As a result, it faces the risk of litigation or other legal issues.

         The Group's financial standing and business results may be impacted negatively as a result of litigation.

         The Group strives to minimize this risk by calling for compliance with laws, regulations, etc. in the Code of Conduct, by promoting awareness among its officers and employees through training and education, and by fostering an organizational culture that emphasizes compliance. We ensure preparedness for changing business environments associated with revision of laws and regulations or other factors through the ceaseless gathering of information by corporate and quality control sections.

      4. Product liability

         The Group's products may be subject to demands for compensation for damages based on product liability.

         While it has not received any major demands for compensation for damages at present, it could face such demands in the future.

         While the Group is insured against product liability, there is a risk that this insurance might be insufficient to cover its potential product liability.

         The Group's quality policy calls for strengthening quality to improve customer satisfaction. A precondition for doing so is satisfying legal and regulatory requirements; we also grasp the importance of meeting customer requirements. In addition to ongoing improvements in quality management systems not just in manufacturing sections but in development, sales, and other sections, we strive to respond to any incidents swiftly and appropriately and prevent circumstances that may lead to claims for damages.

      5. Raw materials procurement and purchase of products

         The Group strives to maintain stable supplies and prices by purchasing raw materials and products from multiple domestic and international suppliers. However, a breakdown in the balance between supply and demand caused by factors such as

         soaring oil prices may damage the Group's financial standing and business results.

         The Group strives to reduce the risk of price fluctuations by closely monitoring trends in raw fuel and material costs and in exchange rates, by expanding its pool of potential suppliers, and by revising the terms of procurement as needed. We also minimize risk by reducing the sales costs through capital investments to increase productivity, and help conserve energy and other resources.

      6. Asset-impairment accounting

         There is a risk of losses resulting from factors such as usage of fixed assets or other assets held.

         The Group applies the Accounting Standard for Impairment of Fixed Assets to ensure appropriate handling in the event of lower than anticipated profitability of fixed assets due to declining business conditions or similar causes.

      7. Customer credit risk

         While the Group pays close attention to customer credit risk, its financial standing and business results may be impacted negatively in the event of manifestation of customer credit risk due to worsening of the credit standing of a major customer as a result of poor business performance or other causes.

         The Group carefully reviews financial conditions and credit information prior to the commencement of transactions to identify high-risk business partners in advance, and strives to reduce risk of nonrecovery by collecting prepayments when it deems necessary. For existing business partners, in addition to reassessing business conditions and credit limits through regular credit reviews, we maintain close communication between sections responsible for managing accounts receivable and sales sections for sharing information to quickly identify potential issues.

      8. Hostile-takeover risk

         There is a risk of third-party purchases of a large number of shares of Company stock, which could impair corporate value or joint returns to shareholders. The Group's financial standing and business results could be impacted negatively as a result.

         The Company strives to achieve transparency in its IR and SR activities. We seek to allow markets to make fair evaluations of our corporate value through the attentive communication of information to investors concerning growth strategies, business advantages, future potential, investment plans, and other matters through various opportunities, including briefings on financial results and one on one meetings. We engage in English-language disclosure on an ongoing basis as part of efforts to provide fair and good faith disclosure to a broad range of investors.

      9. Impact of disasters

         While the Group makes every effort to minimize the possible impact of disasters, there is no guarantee that it will be able to prevent or minimize every possible effect of disasters. There is a risk that the Group's financial standing and business results could be impacted negatively by causes such as reduced production capacity or higher manufacturing costs if it is unable to prevent or minimize the effects of a disaster.

         In addition to maintaining systems to ascertain employee safety in emergencies, the Group is striving to develop and maintain backup systems related to the supply of products and systems. At manufacturing facilities in particular, since we have plants both in East and West Japan, we're working to build systems to fulfill our supply responsibilities by enabling the supply of products from other facilities in the event of suspended operations at the affected facility.

   2. Management's analysis of financial standing, business results, and cash flows

      1. Overview of business results, etc.

         The financial standing, business results, and cash flows ("business results, etc." hereinafter) of The Pack Group (The Pack Corporation and its consolidated subsidiaries) in the consolidated fiscal year under review are reviewed below.

         1. Financial standing and business results

            During the consolidated fiscal year under review, Japan's economy maintained a course of gentle recovery, driven mainly by improving income conditions and government economic policies. Support from demand related to tourism from abroad had a limited impact. The recovery in consumer spending remained relatively weak compared to wage and income growth due to chronic inflation, which affected food and other consumer goods. Given these circumstances, the negative effects of rising US tariffs pose major direct and indirect downside risks to the Japanese economy.

            In the United States, despite the effects of inflation on consumer behavior, the labor market supply and demand remained largely balanced. While these conditions continued to support consumer spending, concerns persist that pressure from tariff policies on corporate earnings may dampen corporate and consumer economic activity.

            In China, while government economic policies and social welfare measures provided underlying support for domestic consumption, the unemployment rate remained flat and growth in disposable income was sluggish. The real estate market also remained in a slump, and uncertainty spurred by trade frictions with the United States dampened consumption.

            Under these circumstances, in line with the Medium-Term Management Plan slogan, "Evolution-Start of purpose-based management and Sustainable Management," the Group sought to achieve consolidated net sales of 107,000 million yen and operating profit of 8,300 million yen in the fiscal year ending December 31, 2025. Group companies worked as a team to strengthen earnings in various ways, including efforts to venture into new markets and improve quality management. Additionally, we proceeded to make aggressive capital and human resource investments. During the consolidated fiscal year under review, net sales grew by 1.6% year on year to 103,125 million yen; operating profit declined by 10.0% to 7,207 million yen; ordinary profit declined by 9.1% to 7,532 million yen; and profit attributable to owners of parent fell by 4.6% to 6,024 million yen.

            
            
            

            Given below is the business performance for each segment.

            Paper Products Segment

            During the consolidated fiscal year under review, the paper products segment accounted for 73.5% of consolidated sales. For sales of paper bags, which accounted for 31.1% of consolidated sales, despite growing sales to overseas markets, domestic market sales were slow, driving sales down 0.5% year on year to 32,044 million yen.

            Sales of paper cartons, which accounted for 26.1% of consolidated sales, grew by 4.0% year on year to 26,916 million yen. Contributing factors included strong sales to the souvenir market, chiefly in cartons for food products, as well as strong sales of cartons for takeout/delivery food products and packages for the e-commerce market.

            
            
            

            Robust sales of packages for e-commerce and corrugated boxes for shipping in the manufacturing sector drove sales of corrugated boxes, which rose 13.2% year on year to 14,743 million yen, accounting for 14.3% of consolidated sales.

            Sales in the printing business, which accounted for 2.0% of consolidated sales, grew by 3.0% year on year to 2,049 million yen, thanks to efforts to respond to new demand centered on packaging printing.

            Overall, sales in the paper products segment grew by 3.6% year on year to 75,754 million yen, while segment operating profit fell by 8.4% to 6,567 million yen.

            
            
            

            Film Packaging Segment

            The film packaging segment accounted for 12.9% of consolidated sales during the consolidated fiscal year under review. Segment sales were down 1.3% year on year to 13,322 million yen. Sales of diverse film packaging for food products grew; sales of plastic takeout bags and sanitary product packages fell.

            Operating profit in this segment was down 11.2% to 829 million yen.

            
            
            

            Other Businesses Segment

            Other businesses accounted for 13.6% of consolidated sales during the consolidated fiscal year under review. Reduced sales of supplies for the Pack Assortment Service (PAS) System (an integrated outsourcing system designed to handle tasks from manufacturing and procurement through inventory control and delivery of packaging materials) resulted in a year-on-year decline of 5.4% in segment sales, to 14,048 million yen. Operating income fell by 4.9% to 1,199 million yen.

            Turning to financial position, assets totaled ¥104,212 million at the end of the consolidated fiscal year under review, up ¥920 million from ¥103,292 million at the end of the previous consolidated fiscal year. Liabilities declined by

            ¥1,591 million, from ¥28,806 million at the end of the previous consolidated fiscal year, to ¥27,214 million. Net assets grew by ¥2,511 million to ¥76,997 million from ¥74,485 at the end of the previous consolidated fiscal year.

         2. Cash Flows

            The balance of cash and cash equivalents at the end of the consolidated fiscal year under review was up 41.4% year on year, or 6,894 million yen, to 23,551 million yen.

            Cash flows from operating activities

            Cash flows related to operating activities during the consolidated fiscal year under review resulted in net cash provided of 6,862 million yen (down 3.4% from net cash provided of 7,101 million yen in the previous consolidated fiscal year). Factors contributing to this figure include the recording of 8,859 million yen in profit before income taxes and 2,940 million yen in depreciation, along with 3,013 million yen in income taxes paid and 1,377 million yen in gain on sales of investment securities.

            Cash flows from investing activities

            Cash flows related to investment activities during the consolidated fiscal year under review resulted in net cash provided of 3,514 million yen (compared to net cash used of 5,436 million yen in the previous consolidated fiscal year). This figure reflects various factors, including 9,500 million yen in proceeds from sales of securities and 1,777 million yen in gain on sales of investment securities, despite 3,500 million yen used in the purchase of securities, 2,794 million yen used in the purchase of property, plant, and equipment, and 1,157 million yen used in the purchase of intangible assets.

            Cash flows from financing activities

            Cash flows related to financing activities during the consolidated fiscal year under review resulted in net cash used of 3,553 million yen (compared to net cash used of 3,041 million yen in the previous consolidated fiscal year). This figure reflects various factors, including cash dividends paid of 2,329 million yen and purchase of 1,001 million yen in treasury shares.

         3. Production, orders received, and sales

            1. Production

               Shown below is production by segment in the consolidated fiscal year under review.

               Segment	Production (¥ million)	YoY change (%)
               Paper Products business	30,118	103.8
               Film Packaging business	2,751	92.9
               Other Businesses	-	-
               Total	32,869	102.8

               Note: Amounts shown are calculated based on cost of manufacturing.

            2. Orders received

               Shown below are orders received in the consolidated fiscal year under review by segment.

               Segment	Orders received (¥ million)	YoY change (%)	Balance of orders (¥ million)	YoY change (%)
               Paper Products business	75,671	104.5	6,536	98.7
               Film Packaging business	12,880	94.9	754	63.1
               Other Businesses	14,019	95.7	88	75.3
               Total	102,571	101.9	7,379	93.0

               Note: Production to order is not conducted in part of the Other Businesses segment.

            3. Sales results

         Shown below are sales results in the consolidated fiscal year under review by segment.

         Segment	Sales (¥ million)	YoY change (%)
         Paper Products business	75,754	103.6
         Film Packaging business	13,322	98.7
         Other Businesses	14,048	94.6
         Total	103,125	101.6

      2. Analysis and study of business results, etc. from management's perspective

         Management's understanding of Group business results, etc. and details of their analysis and study are reviewed below. Forward-looking statements in the text represent management's judgments as of the end of the consolidated fiscal year under review.

         1. Key accounting estimates and assumptions used in such estimates

            The Group's consolidated financial statements are prepared based on generally accepted principles of corporate accounting in Japan. Major accounting policies employed in preparation of the consolidated financial statements are described under "V. Accounts: Consolidated financial statements, etc.: (1) Consolidated financial statements (Important matters serving as bases for the preparation of the consolidated financial statements)."

            In preparation of the Group's consolidated financial statements, various assumptions considered reasonable in light of past results and information currently available are taken into consideration in making estimates and judgments that could impact the states of profits, losses, or assets. However, actual results may differ from such estimates due to the inherent uncertainty of estimates. This does not include important accounting estimates and the assumptions used in them.

         2. Analysis of business results in the consolidated fiscal year under review

            1. Net sales

               Spurred by growth the Paper Products business, net sales in the consolidated fiscal year under review rose by 1.6% year on year to ¥103,125 million.

            2. Gross profit

               Cost of sales in the consolidated fiscal year under review was up 2.4% year on year to ¥77,674 million thanks to increased sales.

               Gross profit declined by ¥151 million (0.6%) year on year over the same period to ¥25,451 million as a result of efforts to improve costs through increased productivity.

            3. Operating profit

               Selling, general, and administrative expenses rose by 3.7% year on year to ¥18,243 million in the consolidated fiscal year under review, as increased personnel and logistics costs exceeded the results of continuing efforts to cut Group costs through control of expenses.

               As a result, operating profit in the consolidated fiscal year under review declined by ¥801 million (10.0%) from the previous year to ¥7,207 million.

            4. Ordinary profit

               Under non-operating income, both foreign exchange gains and commissions for purchases of treasury shares decreased.

               As a result, ordinary profit was down ¥753 million (9.1%) year on year to ¥7,532 million.

            5. Profit attributable to owners of parent

               Profit attributable to owners of parent was down ¥291 million (4.6%) year on year to ¥6,024 million.

         3. Analysis of financial standing in the consolidated fiscal year under review

            1. Assets

               Total assets at the end of the consolidated fiscal year under review stood at ¥104,212 million, up ¥920 million from the end of the previous consolidated fiscal year. Major contributing factors included increases of ¥8,893 million in cash and deposits and ¥671 million in machinery, equipment, and vehicles, net, and decreases of ¥6,499 million in securities and ¥1,944 million in investment securities.

            2. Liabilities

               Liabilities in the consolidated fiscal year under review fell by ¥1,591 million from the end of the previous consolidated fiscal year to ¥27,214 million. Major contributing factors included decreases of ¥1,134 million in electronically recorded obligations-operating and ¥373 million in notes and accounts payable-trade.

            3. Net assets

               Net assets at the end of the consolidated fiscal year under review stood at ¥76,997 million, up ¥2,511 million from the end of the previous consolidated fiscal year. Key contributing factors included increases of ¥3,695 million in retained earnings and ¥949 million in treasury shares.

         4. Strategic conditions and outlook

            The Company's strategic conditions and outlook are described under "II. Business conditions: 1. Management policies, business environment, topics, etc."

         5. Analysis of sources of capital and liquidity of funds

         The state of cash flows during the consolidated fiscal year under review is described under "II. Business conditions: 4. Management's Analysis of Financial Standing, Business Results, and Cash Flows: (1) Overview of Business Results, etc.: (ii) Cash Flows."

         Regarding sources of capital and liquidity of funds, the Company's main operating expenses include product purchasing, manufacturing expenses, and selling, general, and administrative expenses. Demand for funds for investment purposes comes mainly from capital investment.

         The Group's basic policy is to secure stable liquidity of funds and sources of funds needed in business operations. Operating capital is provided mainly by funds on hand and loans from financial institutions. The balance of debts at the end of the consolidated fiscal year under review stood at ¥462 million, while the balance of cash and cash equivalents was ¥23,551 million.

   3. Important contracts, etc.

      Not applicable.

   4. Research and development activities

      The Pack Group (The Pack Corporation and its consolidated subsidiaries) is moving forward with development of new products and processing technologies, and is also pursuing research on technologies and materials for the future under the concepts of safety and environmental protection. Based on joint efforts involving the manufacturing, engineering, and product development sections, these efforts address the entire scope of packaging materials, including corrugated boxes, folding paper cartons, paper bags, and plastic film bags.

      Since research themes are shared across business segments, we do not separate R&D activities by segment. In the consolidated fiscal year under review, R&D expenses totaled ¥457 million Groupwide and primarily targeted the following themes:

      1. Printing technologies

         1. We are pursuing research on functional and high-value-added printing technologies in gravure and offset rotary printing, including flexography.

         2. We are working to develop eco-friendly products by adopting water-based flexography in the packages field. We adopted the latest flexography printers to enable high-precision printing while improving productivity and cutting losses. The adoption established eco-friendly production processing technologies that use less energy and resources.

      2. Eco-friendly materials

         1. To contribute to the achievement of the United Nations Sustainable Development Goals (SDGs), we are proposing most suitable packages from paper, plastic, eco-friendly materials, recycled materials, or other materials to meet packaging needs and circumstances.

         2. In response to the growing practice of charging fees for shopping bags, we are developing eco-friendly bags such as convenient reusable bags that shoppers can easily carry with them; bags consisting of materials with thicknesses of 50 microns or more for repeated use; bags consisting of materials made entirely of marine biodegradable plastics and bags consisting of at least 25% biomass materials.

         3. We are continuing to develop new base papers through joint efforts with paper producers, including the development of eco-friendly base paper products with high recycled paper content. We contribute a portion of sales of these products to The Pack Forest® Environment Fund, which funds forest conservation activities.

         4. We develop and propose flexible corrugated cushioning sheets via the efficient lamination of thin paper not previously used for cardboard as a paper cushioning material to replace plastic materials.

         5. We propose printing solutions that suppress the generation of volatile organic compounds (VOCs) and CO2 emissions, by using eco-friendly plant-based inks and water flexography in printing of all packages.

         6. We are developing the Craft series of paper film packaging as functional materials for food product packages.

         7. To meet growing demand for food takeout packages and the obligation to reduce environmental impact, we have developed the Kaisonal® oil-resistance coating process using materials derived from seaweed and are proposing its application to primary paper containers. Coating paper tray interiors in this way creates eco-friendly primary paper containers that offer oil resistance equivalent to previous products incorporating oil-based coatings.

      3. Other fields

         1. Seeking to achieve universal package design, we are developing product packages and production machinery to meet emerging demand in the areas of design, function, convenience, and the environment.

         2. We are advancing R&D efforts to improve high speed production equipment suitable for systems for producing small lots with short lead times and for reducing and recycling ink sludge, a waste produced during printing.

         3. We are developing systems capable of producing products, including material paper for corrugated boxes, folding paper cartons, and paper bags, certified by the Forest Stewardship Council® reflecting high levels of environmental awareness, through verification of processing and logistics processes from forest management through delivery to consumers.

         4. We propose efficient environmental equipment and package materials for distribution and logistics solutions tailored to specific user needs. By launching a product assortment subcontracting service, we established a system capable of providing one-stop solutions for tasks ranging from the manufacture of packaging materials to assortment. In the development of packaging solutions, we're introducing systems to help save labor across packaging lines as a whole and to make them more efficient, including the deployment of robotic arms at sorting sites.

         5. We propose box coordination services to cut shipping costs by adjusting the layouts of boxes used for packing products.

         6. We design packages that incorporate thin paper, cardboard, and other easily recyclable paper materials as cushioning materials to reduce use of plastics and CO2 emissions.

         7. We are developing and proposing CC-PACK® delivery solutions based on eco-friendly materials, including flexible cardboard cushioning sheets. The flexibility of these products improves efficiency during packing and makes it possible to deliver products in packages sized to match their contents. They also help reduce environmental impact by minimizing plastic use and reducing materials to a single material (paper) as alternatives to plastic foam cushioning materials.

         8. We are proposing solutions to streamline materials management by designing packages that can be used to hold multiple products.

         9. We patented paper carton containers with a window that can be produced using automated box-making equipment to balance strong carton corners with high productivity.

         10. We patented a structure for protecting the contents inside boxes to stabilize cakes and other fragile products.

         11. The Tsutsumo wo shiru ("Learn about packaging") blog on our website provides information useful to prospective customers considering package production, including answers to inquiries about packages, packaging, and related trends available nowhere else.

2. Facilities

   1. Overview of capital investment

      During the consolidated fiscal year under review, the Group continued to make capital investments for various purposes, including enhancing production facilities.

      Capital investments (property, plant, and equipment and intangible assets) during the consolidated fiscal year under review totaled ¥3,522 million. Major capital investments in each business segment are reviewed below.

      Paper Products Paper bags

      We invested ¥959 million in paper bag production equipment at our Tokyo Plant, investment intended to enhance production capacity and production efficiency.

      Paper cartons

      We invested ¥253 million in paper carton production equipment at our Osaka Plant, investment intended to enhance production capacity and improve production efficiency.

      Common to all businesses

      We invested ¥1,191 million to change our backbone computer system. This investment is intended to improve business efficiency.

      Funding for these capital investments was allocated from funds on hand.

   2. Status of major equipment

      1. The Company

         As of December 31, 2025

         Site name (location)	Segment	Details of equipment	Book value (¥ million)					Number of employees
         			Buildings and structures	Machinery, equipment, and vehicles	Land (thousand square meters of surface area)	Other	Total
         Headquarters (Higashinari-ku, Osaka)	Paper Products Business Film Packaging Business Other Businesses Companywide	Other equipment	2,133	329	1,179 (16) [0]	107	3,749	38 (6)
         Tokyo Head Office building and 23 other sites (Shibuya-ku, Tokyo and elsewhere)	Paper Products Business Film Packaging Business Other Businesses	Sales equipment	957	11	2,578 (1)	37	3,584	407 (63)
         Osaka Plant (Higashiosaka, Osaka Prefecture)	Paper Products Business	Production equipment for paper bags, paper cartons, and other paper products	556	2,662	1,850 (30)	491	5,560	136 (142)
         	Film Packaging Business	Production equipment for plastic bags	56	351	201 (9)	10	619	36 (22)
         Nara Plant (Yamatokoriyama, Nara Prefecture)	Paper Products Business	Production equipment for corrugated boxes	106	467	394 (38)	36	1,005	77 (33)
         Tokyo Plant (Hidaka, Saitama Prefecture)	Paper Products Business	Production equipment for paper bags, paper cartons, and other paper products	2,830	4,021	2,672 (62)	149	9,673	122 (140)
         Ibaraki Plant (Hitachi, Ibaraki Prefecture)	Film Packaging Business	Production equipment for plastic bags	259	520	210 (10)	15	1,006	34 (32)
         Keihin Tokushu Printing Corp. (Seya-ku, Yokohama)	Paper Products Business	Printing equipment	4	0	663 (6)	0	667	- (-)

      2. Domestic subsidiaries

         As of December 31, 2025

         Company name	Segment	Details of equipment	Book value (¥ million)					Number of employees
         			Buildings and structures	Machinery, equipment, and vehicles	Land (thousand square meters of surface area)	Other	Total
         Keihin Tokushu Printing Corp. (Seya-ku, Yokohama)	Paper Products Business	Printing equipment	644	229	-(-)	17	891	33 (4)
         Nikko Print Corporation (Higashiosaka, Osaka Prefecture)	Paper Products Business	Printing equipment	12	368	-(-)	1	382	30 (6)
         Pack Takeyama Co., Ltd. (Tsushima, Aichi Prefecture)	Paper Products Business	Rebuilding the warehouse/office	133	617	75 (5)	28	855	95 (20)
         Nishinihon Printing Co., Ltd. (Hakata-ku, Fukuoka)	Paper Products Business	Expansion to boost the capacity of printing and production equipment	108	48	1,080 (15)	3	1,240	45 (21)
         Kannaru Printing Co., Ltd. (Yodogawa-ku, Osaka)	Paper Products Business	Production equipment for paper bags, etc.	351	64	275 (0) [1]	29	720	65 (28)
         Hikari Packs Ishikawa Co., Ltd.	Paper Products Business	Production equipment for paper bags, etc.	179	89	57 (9)	2	328	38 (27)

         Notes:

         1. "Other" under book value represents the total for tools, furniture and fixtures and construction in progress accounts.

         2. The Company and its domestic subsidiaries rent some land properties. Annual rent paid on land was ¥7 million for the Company and ¥21 million for domestic subsidiaries. The surface area of land rented is indicated separately, in brackets ([ ]).

         3. The Company owns some of the fixed assets of Keihin Tokushu Printing Corp., which are indicated above.

         4. The Company and its domestic subsidiaries rent some building properties. Annual rent paid on buildings was ¥471 million for the Company and ¥49 million for domestic subsidiaries.

         5. Numbers of employees indicated above are permanent employees. Average numbers of temporary employees are indicated separately in parentheses (( )).

   3. Plans for new facilities, removal of facilities, etc.

      1. Important new facilities, etc.

         Company/site name (location)	Segment	Details of equipment	Planned investment amount (¥ million)		Fundraising method	Start of construction	Planed completion of construction	Capacity added after completion
         			Total	Already paid
         The Pack Corporation Tokyo Plant (Hidaka, Saitama Prefecture)	Paper Products Business	Expansion of production equipment for paper bags	70	-	Funds on hand	September 2025	September 2026	See Note.
         		Expansion of platemaking equipment	198	-	Funds on hand	July 2026	May 2027	See Note.
         The Pack Corporation Western Japan Sales Division (Wakayama, Wakayama Prefecture)	Paper Products Business	Expansion of production equipment for paper bags	125	14	Funds on hand	November 2025	April 2026	See Note.
         Pack Takeyama Co., Ltd. (Tsushima, Aichi Prefecture)	Paper Products Business	Expansion of production equipment for paper bags	173	21	Funds on hand	July 2025	November 2026	See Note.
         The Pack (Changshu) Co., Ltd. (China)	Paper Products Business	Expansion of production equipment for paper bags	89	28	Funds on hand	December 2025	March 2026	See Note.

         Note: Capacity added after completion is not shown because the new facilities are intended to improve quality and streamline operations.

      2. Significant removal of facilities, etc.

         No significant removal of facilities, etc. took place aside from removal, etc. for ordinary equipment renovation.

3. Status of the Company

   1. Stock, etc.

      1. Total numbers of shares, etc.

         1. Total numbers of shares

            Class	Authorized total number of shares
            Common share	230,000,000
            Total	230,000,000

         2. Shares issued and outstanding

         Class	Shares issued and outstanding at end of business year (December 31, 2025)	Shares issued and outstanding at date of submission (March 25, 2026)	Name of listed financial instruments exchange or association of financial instruments business operators at which registration is authorized	Details
         Common share	59,700,000	59,700,000	Prime Market, Tokyo Stock Exchange	The authorized trading unit is 100 shares.
         Total	59,700,000	59,700,000	-	-

         Note: On July 1, 2025, pursuant to a May 30, 2025 Board of Directors resolution, the Company executed a share split at a ratio of three shares per share of common stock. This increases the number of shares by 39,800,000 to a total of 59,700,000 shares issued and outstanding.

      2. Status of share acquisition rights

         1. Details of stock option program

            Date of resolution	March 27, 2015	March 30, 2016	March 30, 2017	March 29, 2018	March 28, 2019
            Category and number of persons awarded options	Company Directors 9 Corporate Officers 7	Company Directors 10 Corporate Officers 7	Company Directors 10 Corporate Officers 5	Company Directors 9 Corporate Officers 7	Company Directors 7 Corporate Officers 9
            Number of share acquisition rights*	8 See Note 1.	12 See Note 1.	14 See Note 1.	15 See Note 1.	16 (14) See Note 1.
            Class, details, and number of shares subject to share acquisition rights (shares)*	Common share 2,400 See Note 2.	Common share 3,600 See Note 2.	Common share 4,200 See Note 2.	Common share 4,500 See Note 2.	Common share 4,800 (4,200) See Note 2.
            Pay-in amount on exercise of share acquisition rights (¥)*	1
            Exercise period of share acquisition rights*	May 11, 2015 - May 10, 2040	May 10, 2016 - May 9, 2041	May 10, 2017 - May 9, 2042	May 10, 2018 - May 9, 2043	May 9, 2019 - May 8, 2044
            Issue price of shares and amount allocated to capital when issuing shares on exercise of share acquisition rights (¥)*	Issue price: 750 Amount allocated to capital: 375 See Note 3.	Issue price: 779 Amount allocated to capital: 390 See Note 3.	Issue price: 990 Amount allocated to capital: 495 See Note 3.	Issue price: 1,165 Amount allocated to capital: 583 See Note 3.	Issue price: 970 Amount allocated to capital: 485 See Note 3.
            Conditions of exercise of share acquisition rights*	See Note 4.
            Provisions concerning transfer of share acquisition rights*	Prior approval by resolution of the Board of Directors is required to obtain share acquisition rights through transfer.
            Provisions concerning exchange of share acquisition rights accompanying acts of reorganization*	See Note 5.

            * The details shown are as of the end of the fiscal year under review (December 31, 2025). For specifics that have changed from the end of the fiscal year under review to the end of the month before the date of submission (February

            28, 2026), details as of the end of the month before the submission date are shown in parentheses. Specifics concerning other matters remain unchanged from those as of the end of the fiscal year under review.

            Notes:

            1. The class of share subject to share acquisition rights is Company common share. The number of shares subject to each share acquisition right ("shares allotted" hereinafter) is 300 shares.

               In the event of a stock split (hereinafter, this includes gratis allocation of shares of Company common share) or reverse stock split on Company common share after the date of allocation of share acquisition rights ("allocation date" hereinafter), the number of shares allotted will be adjusted based on the formula given below. This adjustment will be made for the number of shares of stock subject to share acquisition rights yet to be exercised as of the time of adjustment. Any remainders of less than one share resulting from the adjustment will be rounded down.

               Adjusted number of shares = Number of shares prior to adjustment x Ratio of stock split/reverse stock split

               The adjusted number of shares shall apply from the day after the basis date of the stock split (or the effective date if no basis date is specified) in the case of a stock split or on the effective date in the case of a reverse stock split.

               However, in the event of a stock split conditional on the approval by the Company General Meeting of Shareholders of a resolution on increase of capital or reserves drawing on the surplus, in which the basis date of the stock split precedes the ending date of the relevant General Meeting of Shareholders, the adjusted number of shares shall apply from the day after the ending date of the relevant General Meeting of Shareholders.

               In addition to the above cases, if the Company must adjust the number of shares allotted due to a merger, corporate spin-off, stock swap, or similar reason after the allocation date, the Company may adjust the number of subject shares allotted as judged necessary by the Company Board of Directors.

            2. The trading unit of shares shall be 100 shares.

            3. The amount of the increase in capital when issuing shares through exercise of share acquisition rights shall be the amount derived by multiplying by one-half the limit on increased capital, etc., calculated in accordance with the provisions of Article 17, Paragraph 1 of the Regulation on Corporate Accounting, with any remainder of less than one yen resulting from such calculation to be rounded up to the nearest whole yen. The amount of the increase in capital reserves when issuing shares through exercise of share acquisition rights shall be the above limit on increased capital, etc., minus the amount of the increase in capital above.

            4. Conditions of exercise of share acquisition rights

               1. A holder of share acquisition rights may exercise them only during the period of 10 days (or until the next business day if the 10th day is a holiday) from the day after his or her loss of the status of a Company (a) Director or (b) Corporate Officer (or the status after change in the event of a change during this period to the status of Company Corporate Auditor or Corporate Officer in case (a) or to the status of a Company Director, Corporate Auditor, or employee in case (b)).

               2. Only when the rate of growth in consolidated financial results (net sales and operating income) in the fiscal year in which the share acquisition rights were allotted was at least 100% vs. the previous fiscal year may an eligible person exercise all share acquisition rights allotted in that fiscal year. If the rate of growth was less than 100%, only a portion of the share acquisition rights allotted in that fiscal year, based on the rate of growth, may be exercised.

               3. Notwithstanding (i) above, if a resolution is passed by the Company General Meeting of Shareholders (or by the Board of Directors or Corporate Officer to whom such authority is delegated under Article 416, Paragraph 4 of the Companies Act if a General Meeting of Shareholders is unnecessary) approving a merger agreement whereby the Company would be the extinguished company, a corporate spin-off agreement or plan whereby the Company would be the spun-off company, or a stock swap agreement or stock transfer plan whereby the Company would become a wholly-owned subsidiary, the share acquisition rights may be exercised no later than 30 days from the day after the date of such approval. However, this does not include cases in which share acquisition rights in the reorganized company are allotted to holders of share acquisition rights in accordance with the provisions on exchange of share acquisition rights accompanying an act of reorganization, as described below.

               4. Other conditions shall be as stipulated in the Share Acquisition Right Allotment Agreement concluded between the Company and holders of share acquisition rights.

            5. Provisions concerning exchange of share acquisition rights accompanying acts of reorganization

               In the event of the merger of the Company (only those in which the Company would be extinguished by the merger), an absorption-type corporate split or corporate split involving the establishment of a new company (only those in

               which the Company would be the spun-off company), or a stock swap or stock transfer (only those in which the Company would become a wholly-owned subsidiary) (referred to collectively as "acts of reorganization" hereinafter), holders of the balance of share acquisition rights remaining ("remaining balance of share acquisition rights" hereinafter) immediately before the effective date of the act of reorganization (hereinafter, this shall refer to the effective date of the absorption-type merger in the case of an absorption-type merger, the date of establishment of the new merged company in the case of a merger involving the establishment of a new company, the effective date of the absorption-type corporate split in the case of an absorption-type corporate split, the date of establishment of the new split company in the case of a corporate split involving the establishment of a new company, the effective date of the stock swap in the case of a stock swap, or the date of establishment of the wholly owning parent company to which stock was transferred in the case of a stock transfer) shall be issued share acquisition rights in the corporation indicated in Article 236, Paragraph 1, Subparagraph 8, A-E of the Companies Act ("reorganized company" hereinafter). However, this shall be conditional on the absorption-type merger agreement, agreement on merger involving the establishment of a new company, absorption-type corporate split agreement, plan for corporate split involving the establishment of a new company, stock swap agreement, or stock transfer plan providing for issue of share acquisition rights in the reorganized company.

         2. Details of rights plan Not applicable

         3. Information on other share acquisition rights, etc.

         Not applicable

      3. Status of exercise of corporate debentures with share acquisition rights subject to revision of exercise price, etc.

         Not applicable

      4. Trends in total shares issued and outstanding, capital stock, etc.

         Date	Change in total shares issued and outstanding (thousand shares)	Balance of total shares issued and outstanding (thousand shares)	Change in capital stock (¥ million)	Balance of capital stock (¥ million)	Change in capital reserve (¥ million)	Balance of capital reserve (¥ million)
         July 1, 2025 See Note.	39,800	59,700	-	2,553	-	2,643

         Note: On July 1, 2025, pursuant to a May 30, 2025 Board of Directors resolution, the Company executed a share split at a ratio of three shares per share of common stock. This resulted in an increase of 39,800,000 shares in total shares issued and outstanding.

      5. Shareholders

         As of December 31, 2025

         Category	Status of shares (trading unit: 100 shares)								Shares in less than trading unit (shares)
         	National and local government agencies	Financial institutions	Financial instrument brokers	Other corporations	Foreign corporations, etc.		Individuals, etc.	Total
         					Non-individual	Individuals
         Shareholders	-	15	23	425	100	64	39,883	40,510	-
         Shares held (trading units)	-	92,871	9,704	163,377	127,647	101	202,924	596,624	37,600
         Percentage of shares held (%)	-	15.6	1.6	27.4	21.4	0.0	34.0	100	-

         Note: Treasury share of 4,115,930 shares is included under "Individuals, etc." (41,159 trading units) and "Shares in less than trading unit" (30 trading units).

      6. Major shareholders

         As of December 31, 2025

         Name	Address	Shares owned (thousand)	Percentage of total shares issued and outstanding (not including treasury share) (%)
         Morita Kinen Fukushizaidan	1984-40 Nakatomigaoka 2-chome, Nara, Nara Prefecture	6,243	11.24
         The Pack Trading Partners Stock Ownership Plan	9-9 Higashiobase 2-chome, Higashinari-ku, Osaka, Japan	3,837	6.90
         BBH for Fidelity Low-Priced Stock Fund (Principal All Sector Subportfolio) (Standing proxy: MUFG Bank, Ltd.)	245 Summer Street, Boston, Massachusetts 02210, USA (7-1 Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan)	3,647	6.56
         The Master Trust Bank of Japan, Ltd. (Other trust accounts) (Note 1)	Akasaka Intercity AIR, 1-8-1 Akasaka, Minato-ku, Tokyo, JAPAN	2,840	5.11
         Custody Bank of Japan, Ltd. (re-entrusted by Resona Bank; Hokuetsu Corporation retirement benefits trust account)	1-8-12 Harumi, Chuo-ku, Tokyo, Japan	2,189	3.94
         Daio Paper Corporation	2-60 Mishimakamiyacho, Shikokuchuo, Ehime Prefecture, Japan	1,720	3.09
         NIPPON ACTIVE VALUE FUND PLC (Standing proxy: HSBC Tokyo Branch)	1ST FLOOR, SENATOR HOUSE, 85 QUEEN VICTORIA STREET, LONDON, EC4V 4AB (11-1 Nihonbashi 3-chome, Chuo-ku, Tokyo, Japan)	1,597	2.87
         NAVF SELECT LLC (Standing proxy: HSBC Tokyo Branch)	251 LITTLE FALLS DR, WILMINGTON, DE, USA, 19808 (11-1 Nihonbashi 3-chome, Chuo-ku, Tokyo, Japan)	1,597	2.87
         Shichijo Paper Trading Co., Ltd.	20-10 Nihonbashi 2-chome, Chuo-ku, Tokyo, Japan	1,423	2.56
         Custody Bank of Japan, Ltd. (Other trust accounts) (Note 2)	1-8-12 Harumi, Chuo-ku, Tokyo, Japan	1,273	2.29
         Total	-	26,370	47.44

         Notes:

         1. 1. In addition to the trust account shown above, the Master Trust Bank of Japan owns 909,000 shares in an investment trust account and 67,000 shares in an annuity trust account.

         2. In addition to the trust account shown above, the Custody Bank of Japan owns 1,075 ,000 shares in an investment trust account and 26,000 shares in an annuity trust account.

      7. Voting rights

         1. Shares issued and outstanding

            As of December 31, 2025

            Category	Number of shares	Number of voting rights	Details
            Non-voting shares	-	-	-
            Shares with restricted voting rights (e.g., treasury shares)	-	-	-
            Shares with restricted voting rights (other)	-	-	-
            Shares with full voting rights (e.g., treasury shares)	(Treasury shares) Common share 4,115,900	-	-
            Shares with full voting rights (other)	Common share 55,546,500	555,465	-
            Shares in less than one trading unit	Common share 37,600	-	This shall refer to shares in lots numbering fewer than 100 shares (one trading unit).
            Total shares issued and outstanding	59,700,000	-	-
            Total shareholder voting rights	-	555,465	-

            Note: The shares of common share under "Shares in less than one trading unit" include 30 shares of treasury share owned by the Company.

         2. Treasury shares, etc.

         As of December 31, 2025

         Name or title of owner	Address of owner	Number of shares held in own name	Number of shares held in other names	Total number of shares held	Shares held as a percentage of total shares issued and outstanding (%)
         (Treasury shares owned by the Company) The Pack Corporation	9-3 Higashiobase 2-chome, Higashinari-ku, Osaka, Japan	4,115,900	-	4,115,900	6.89
         Total	-	4,115,900	-	4,115,900	6.89

   2. Acquisition of treasury share, etc.

      Stock class, etc.:

      Acquisition of common shares under Article 155, Paragraph 3 of the Companies Act, Acquisition of common shares under Article 155, Paragraph 7 of the Companies Act, and Acquisition of common shares under Article 155, Paragraph 13 of the Companies Act

      1. Acquisition by resolution of the General Meeting of Shareholders

         Not applicable

      2. Acquisition by resolution of the Board of Directors

         Category	Shares	Total price (¥)
         Status of Board of Directors (February 12, 2025) resolution (acquisition period: February 13 -December 31, 2025)	900,000	1,000,000,000
         Treasury shares acquired before this period	-	-
         Treasury shares acquired during this period	808,700	999,973,800
         Total number of shares and total price remaining under the resolution	91,300	26,200
         Percentage not yet exercised as of the end of this period (%)	10.1	0.0
         Treasury shares acquired during this period	-	-
         Percentage not yet exercised as of the submission date (%)	10.1	0.0

         Category	Shares	Total price (¥)
         Status of Board of Directors (February 13, 2025) resolution (acquisition period: February 13 -December 31, 2026)	1,800,000	2,000,000,000
         Treasury shares acquired during this period	-	-
         Percentage not yet exercised as of the submission date (%)	100.0	100.0

         Note: On July 1, 2025, the Company executed a share split at a ratio of three shares per share of common stock. The numbers of shares above have been adjusted to reflect this share split.

      3. Details of treasury share not acquired by resolution of the General Meeting of Shareholders or Board of Directors

         Category	Shares	Total price (¥)
         Treasury share acquired during the business year under review	408	35,760
         Treasury share acquired during the current period	252	-

         Notes:

         1. Treasury share acquired during the current period does not include shares acquired through purchase of remainders of stock in less than the trading unit from March 1, 2026, to the date of submission of this Annual Securities Report.

         2. On July 1, 2025, the Company executed a share split at a ratio of three shares per share of common stock. The numbers of treasury shares above have been adjusted to reflect this share split.

      4. Status of disposal and holding of treasury share acquired

         Category	Business year under review		Current period
         	Shares	Total disposal price (¥)	Shares	Total disposal price (¥)
         Treasury share acquired subject to seeking underwriters	-	-	-	-
         Treasury share acquired subject to disposal of cancellation	-	-	-	-
         Treasury share acquired subject to transfer related to merger, stock swap, issuance of shares, or corporate split	-	-	-	-
         Other (exercise of stock options)	6,600	6,956,620	300	326,928
         Other (disposal of treasury share through transfer-restricted share-based remuneration)	41,670	43,921,593	18,761	20,444,973
         Shares of treasury share held	4,115,930	-	4,097,121	-

         Notes:

         1. Treasury share disposed of and held during the current period does not include shares disposed of from March 1, 2026, to the date of submission of this Annual Securities Report.

         2. Treasury shares held during the current period exclude shares acquired through purchases of residual shares in less than the minimum trading unit from March 1, 2026 to the date of submission of this Annual Securities Report.

         3. On July 1, 2025, the Company executed a share split at a ratio of three shares per share of common stock. The numbers of shares above have been adjusted to reflect this share split.

   3. Dividend policy

      The Company determines dividends while striving both to maintain stable dividends and to enhance internal reserves. Its basic policy calls for paying dividends twice per business year as year-end dividends based on a resolution of the Regular General Meeting of Shareholders and as interim dividends based on a resolution of the Board of Directors.

      At the 74th Regular General Meeting of Shareholders scheduled for March 26, 2026, the Company will submit Resolution No. 1, Disposal of Surplus, as a resolution (decision) concerning year-end dividends per share in the fiscal year under review. We plan to pay a year-end dividend of ¥22 per share if this resolution is approved as submitted. Combined with the interim dividend of

      ¥58 per share already paid, the scheduled total annual dividend would be ¥80 per share.

      Internal reserves are intended to enhance the Company's financial structure and to meet demand for funds for R&D, acquisition of production equipment, and other purposes. This is intended to contribute to stable and growing dividends to shareholders through contributing to future growth in profits. Internal reserves are used to continue backbone computer system development and to rebuild the Osaka and Nara plants, as well as to enhance the financial foundations to allow rapid adaptation to future changes in business conditions and effective investments in business expansion to increase future corporate value.

      The Company Articles of Association state as follows: "Surplus may be distributed as interim dividends by a resolution of the Board of Directors, with a basis date of June 30 each year."

      Dividends of surplus in the business year under review are shown below.

      Date of resolution	Total amount of dividends (¥ million)	Dividends per share (¥)
      August 12, 2025, Board of Directors resolution	1,090	58
      March 26, 2026, Regular General Meeting of Shareholders resolution	1,239	66

      Note: On July 1, 2025, the Company executed a share split at a ratio of three shares per share of common stock. The year-end dividend per share in the fiscal year under review reflects this share split. Absent the share split, the planned year-end dividend would be ¥66 per share, while the annual dividend would be ¥124 per share.

   4. Corporate governance

      1. Overview of corporate governance

1. Basic policy on corporate governance

   Based on strong recognition of the importance of corporate governance, The Pack Corporation has established basic policies for maintaining improving management efficiency, ensuring compliance with corporate ethics, and maintaining a structure capable of monitoring that management activities are carried out properly while disclosing in a timely manner important information concerning shareholder interests.

2. Overview of the corporate governance system and reasons for its adoption

   The Pack Corporation is a company with corporate auditors based on the judgment that an audit structure consisting of corporate auditors, including external auditors, is an effective way to undertake management oversight functions. This is intended to enhance corporate governance.

   In addition to the board of directors required by law, the Company employs Conference of Business Divisions meetings in which executives of the level of business division general manager and above participate to allow rapid decision-making and promulgate such decisions throughout the Company, reflecting current conditions through monthly meetings. In April 2005, the Company adopted a Corporate Officer system to enable dynamic business execution.

   The Articles of Association call for up to nine directors. They also provide for the appointment of directors by a resolution passed with the support of a majority of voting rights present in a meeting attended by shareholders representing at least one-third of voting rights, without use of cumulative voting.

   As of the date this Report was submitted (March 25, 2026), the Company had eight Directors, three of whom were External Directors. The External Directors have no transactional relationships with or other interests in the Company. In addition to enhanced management oversight functions achieved by appointing External Officers, the Company secures the neutrality and objectivity of management policies and strategies involving the establishment of a Nomination Committee, Remuneration Committee, Compliance Committee, and Sustainable Committee.

   * The Company will submit a resolution concerning the Appointment of Eight Directors as a resolution (decision) to the 74th Regular General Meeting of Shareholders scheduled for March 26, 2026. If the resolution is approved as submitted, the Company will continue to have eight Directors, including three External Directors. The names of the Directors are given under "IV. Status of the Company: 4. Corporate governance: (2) Executives: (i) List of executives: b."

   Members of the Board of Directors

   The Board of Directors met 17 times during the business year under review. Shown below is the attendance of individual directors and corporate auditors.

   Title	Name	Meetings held	Meetings attended
   Director	Hideaki Yamashita	4	4
   Director	Teruo Takinoue	17	17
   Director	Naoki Nakamura	17	17
   Director	Norio Ashida	17	17
   Director	Ryuichi Watanabe	13	13
   Director	Haruyasu Ito	4	4
   Director	Ikuo Shimomura	17	17
   External Director	Hirofumi Hayashi	4	4
   External Director	Uichiro Nishio	17	17
   External Director	Kaoru Kasahara	17	17
   External Director	Reiji Domoto	13	13
   Standing Corporate Auditor	Shinji Noda	4	4
   Standing Corporate Auditor	Yasuhiro Takagi	17	17
   Standing Corporate Auditor	Haruyasu Ito	13	13
   External Corporate Auditor	Hisayoshi Tamakoshi	17	16
   External Corporate Auditor	Norimasa Iwase	17	17

   Notes:

   1. The attendance data for Hideaki Yamashita, Haruyasu Ito, Hirofumi Hayashi, and Shinji Noda is based on the number of Board meetings held through their retirement as of the end of the Regular General Meeting of Shareholders held March 26, 2025.

   2. Attendance data for Ryuichi Watanabe, Reiji Domoto, and Haruyasu Ito is based on the number of Board meetings held after they took office following their appointment in the Regular General Meeting of Shareholders held March 26, 2025.

      Specific topics considered by the Board of Directors are described below.

      • Budget, monthly settlement of accounts, quarterly settlement of accounts, annual settlement of accounts, forecasts of financial results

      • Matters related to General Meetings of Shareholders (convocation, proposed resolutions), actual and projected dividends

      • Selection of representative directors and managing executive directors, important personnel matters

      • Payment of bonuses

      • Fund investment

      • Verification of the propriety of holding cross-shareholdings

      • Sales of shares, share splits, and changes in shareholder benefit programs

      • Merger by absorption of Nikko Print Corporation

      • Changes in settlement conditions in response to an amendment of the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors

      • Tax audit report

      • Other important matters related to management

(Status of the Nomination Committee)

The Nomination Committee met four times during the business year under review. Shown below is the attendance of individual directors.

Notes:

1. The attendance data for Hideaki Yamashita and Hirofumi Hayashi is based on the number of Board meetings held through his retirement as of the end of the Regular General Meeting of Shareholders held March 26, 2025.

2. The attendance data for Naoki Nakamura and Reiji Domoto is based on the number of Board meetings held after he took office following his appointment in the Regular General Meeting of Shareholders held March 28, 2025.

   Specific topics considered by the Nomination Committee included responding to consultations from the Board of Directors consultations based on a review of policies on decisions related to the appointment and dismissal of the following persons and advice and recommendations to the Board.

   • Directors and executive officers

   • Representative directors and other corporate directors and executive officers

   • Corporate auditors

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