Avi Japan Oppo. Regulatory News (AJOT)

AVI Japan Opportunity Trust PLC ("AJOT" or the "Company")

LEI: 894500IJ5QQD7FPT3J73

18 May 2023

London

Asset Value Investors (AVI) submits shareholder proposals toNC Holdings

London, 18 May 2023 - Asset Value Investors ("AVI") today launched a public campaign regarding the submission of shareholder proposals to NC Holdings (TSE: 6236, "NCHD"). AVI's campaign can be found here:

www.enhancingNCHD.com

The conveyor belt market, in which NCHD's main business operates, is expected to shrink due to decarbonisation efforts and reduced reliance on coal-fired power generation plants. In NCHD's multi-storey parking business, competition is expected to intensify, and the business environment surrounding NCHD is extremely uncertain.

Under these circumstances, for shareholders and investors to understand the future potential of NCHD, it is essential to provide a clear explanation of the medium- to long-term management vision and how the company intends to increase its corporate value and protect the common interests of all shareholders. However, NCHD refuses to publish a mid-term plan.

In addition, NCHD's performance has been sluggish, with operating profits guidance for FY2024/3 expected to fall by almost 30% from three years ago. NCHD's management has only blamed changes in the external environment for the poor performance and has not provided a clear explanation to investors.

NCHD has significant net cash equivalents amounting to almost 70% of its market cap, and the need to raise funds on the stock market appears to be limited. The directors of the company are expected to weigh up various strategic alternatives, including a review of the business portfolio and capital structure, in the best interests of all shareholders. However, we do not believe that NCHD is proactively exploring all strategic alternatives, and we are concerned that the common interests of shareholders are being undermined.

NCHD's difficult outlook, poor performance, lack of mid-term plan and long-term vision, inefficient balance sheet, and unwillingness to explore all strategic alternatives, have led NCHD's share price to trade significantly below its intrinsic corporate value.

Since becoming a shareholder of NCHD in 2021, AVI, as a responsible institutional investor committed to the aims of the Stewardship Code, has privately conducted meaningful dialogue to try and enhance NCHD's medium- to long-term corporate value and, in turn, the interests of all shareholders. However, as stated above, we are unsure whether the current management and directors of the company are fully acting in the best interests of shareholders. Therefore, AVI, as a shareholder holding more than 20% of the voting rights of NCHD, has decided that it has a responsibility to act on improving the situation.

Considering this, AVI has submitted shareholder proposals for the best interests of all NCHD's shareholders, which are summarised as follows:

1. Election of Mr. Jiro Yasu and Mr. Philip Partnow, who have knowledge and experience of the capital market, as external independent directors

2. Establishment of a 'Strategic Review Committee' to evaluate the company's strategic alternatives in the best interests of all shareholders

3. Increase the annual remuneration limit of the stock compensation plan for directors to JPY 150 million with TSR and ROIC targets

4. Payment of a year-end dividend equivalent to a dividend payout ratio of 70%

AVI's shareholder proposals are submitted with the best interests of shareholders in mind by strengthening NCHD's supervisory function and increasing discipline over management, where the interests of shareholders have not adequately been taken into account. AVI had hoped that NCHD would have considered our proposals sincerely and engaged in proactive discussions with us. However, the Board of Directors, which has been operating without sufficient discipline, has been so averse to strengthening supervision and discipline that it has attempted to prevent our proposals from being approved. This is highlighted by the Board's opposition to AVI's shareholder proposals where they make claims that the proposals "will damage the corporate value" and "will harm the interests of shareholders," without any evidence.

It is regrettable that the Board of Directors has prioritised the status quo over the best interests of shareholders. As a result, NCHD's corporate governance has proven itself to be dysfunctional and in need of change. We urge all NCHD's shareholders to review the content of our shareholder proposals and the presentation material, to make an objective decision.

Joe Bauernfreund, CEO of AVI, stated:

"AVI is committed to a purposeful dialogue to benefit all shareholders of its investee companies. We have been seeking ways to bring NC Holdings' value closer to its intrinsic value through friendly and constructive dialogue in private with NC Holdings' management for two years since 2021. It is regrettable that, despite these efforts, management has not proactively listened to our recommendations, and we feel the situation is unlikely to improve. Having exhausted our attempts to keep our suggestions private, we have now, unfortunately, had to exercise our right to make shareholder proposals."

"We hope shareholders will see the benefit of our proposals, and if approved, that the Board of Directors will work with the Strategic Review Committee and utilise the capital markets expertise of our two proposed directors to realise the best interest of all shareholders."

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AVI at a glance

AVI is an investment management company established in London, United Kingdom, in 1985, and AVI has invested in Japanese equities for more than 20 years. AVI manages AVI Global Trust (Total Gross Assets: approximately JPY190bn (£1.2bn)), AVI Japan Opportunities Trust (Total Gross Assets: approximately JPY31bn (£0.19bn)), etc., as of 31 March 2023. AGT and AJOT are public companies whose shares are listed and traded on the main market of the London Stock Exchange.

AVI has signified its commitment to the "Principles for Responsible Institutional Investors: Japan's Stewardship Code" and, in accordance with its aim, engages in constructive "purposeful dialogue" (engagement) with management and board members in order to contribute to the enhancement of the corporate value and sustainable growth of the portfolio companies.

Contact:

Asset Value Investors Limited

Kaz Sakai

kaz.sakai@assetvalueinvestors.com

Disclaimer:

In respect of content and information set out in the English language version and the Japanese language version of this press release, in the event of any inconsistency between them, the Japanese language version shall prevail unless otherwise expressly indicated.