Medium-Term Business Strategy

The Brother Group has formulated the medium-term business strategy "CS B2024" for the period from FY2022 to FY2024 as a road map to achieve the Brother Group Vision "At your side 2030."

Based on "Take off towards our new future" in CS B2024, the Brother Group will undertake business portfolio transformation—including expansions in the industrial area and transformation in the printing area—as well as management foundation transformation for a sustainable future.

Four priority themes

1. Towards expansion in the Industrial area
   • Achieve significant growth in Industrial Equipment business
     We will achieve significant growth in the Industrial Equipment business by contributing to enhancing customers' competitiveness of manufacturing and reducing CO₂ emissions, through improving productivity and environmental performance.
   • Accelerate growth in Domino business
     We will accelerate growth by enhancing product strength in the digital printing area and strengthening relationships with customers in the coding and marking area, and at the same time, enhance industrial inkjet technology foundation to secure long-term competitiveness.
2. Towards transformation in the Printing area
   • Accelerate P&S business model transformation
     We will strive to further strengthen the profitability of existing business even amid the harsh market environment, and at the same time, promote transformation for the future, including accelerating the shift to a business model that connects with customers, such as a contract-based business model, and expanding commercial & industrial labeling business.
3. Towards the business portfolio of the future
   • Create new businesses that help to address materialities
     We will search widely for business opportunities that enable working people's productivity and creativity and help protect the earth by further evolving Brother's strengths.
   • Evolving printing technology with inkjet at its core and expanding its range of applications
     We will advance the evolution of printing technology with inkjet at its core and expand its range of applications in both the industrial and consumer areas.
4. Management foundation transformation for a sustainable future
   • Undertake environmental efforts towards carbon neutrality
     We will promote efforts towards achieving targets in reduction of CO₂ emissions, resource circulation, and biodiversity conservation stated in the Brother Group Environmental Vision 2050. In particular, we will undertake reduction of CO₂ emissions through various activities to achieve carbon neutrality in the Brother Group's business activities by 2050.
   • Enhance and expand connections with customers
     We will connect with even more customers and continuously provide more value than ever before in each of our businesses. Furthermore, we will use data obtained through connections with customers to create even more customer value and seek business model transformation. In addition, we will achieve stable product supply by building resilient supply chains.
   • Foundation for all transformations - Evolve Brother's unique management system "Brother Value Chain Management" (BVCM)^*, encourage employees to take on challenges, and improve employee engagement
     As a cornerstone of transformation, we will continuously evolve BVCM, encourage employees to take on challenges, and improve employee engagement to continue to improve the productivity and creativity of the Brother Group.

• Brother Value Chain Management (BVCM)
  Brother's unique customer-oriented management system defining the flow of value provision to customers

The Brother Group has identified five materialities (priority social issues) in order to "contribute to society and help protect the earth" as we set as "Our Purpose" in the Brother Group Vision "At your side 2030." We have set sustainability targets to address these materialities and will promote company-wide efforts to address them as a management issue.

Materiality		Targets for FY2024	Relevant SDGs
Contribute to society	Supporting people's value creation	In the Industrial Equipment business, secure performance advantage of products that contribute towards improving customer productivity and reducing CO2 emissions In P&S business, build platform to connect directly with customers towards improving LTV*1 of customers
	Realizing a diverse and active society	Visualize employee engagement at the global level and improve engagement survey scores Enhance talent development and governance for encouraging the assignment of local employees to top management positions of facilities outside Japan Strengthen talent pipeline for healthy gender balance in management positions and establish environment for achieving diverse ways of working*2
	Pursuing a responsible value chain	Expand the human rights risk assessment on suppliers Attain RBA*3 Gold certification for three Group manufacturing facilities
Protect the earth	Reducing CO2 emissions	[Scope 1 and 2*4] Achieve 47% reduction from the FY2015 level (9% reduction during the three-year period from FY2022 to FY2024) Ref.) FY2030 Targets: 65% reduction from the FY2015 level [Scope 3*4] Take measures to reduce 150,000 tons through own effort Ref.) FY2030 Targets: 30% reduction from the FY2015 level
	Circulating resources	Achieve ratio of virgin materials used in products of 81% or less Ref.) FY2030 Targets: below 65%

1. Lifetime Value (LTV)
   Customer lifetime value, which is the value to customers and profits generated for companies over the entire usage period of products and services
2. Implemented at Brother Industries, Ltd.
3. Responsible Business Alliance (RBA)
   International organization to promote CSR, which establishes standards to ensure that working conditions are safe, that workers are treated with respect and dignity, and that business operations are conducted environmentally responsibly and ethically in the supply chains of the manufacturing industry
4. Scope 1, 2, 3
   Categories of greenhouse gas emission sources; Scope 1 refers to direct greenhouse gas emissions by business operators, Scope 2 refers to indirect greenhouse gas emissions resulting from use of electricity, heat, and steam supplied by other entities, and Scope 3 refers to indirect greenhouse gas emissions other than Scope 1 and 2 (emissions by other entities related to the activities of business operators)

The Brother Group will continuously improve shareholder value by achieving both business growth and sustainability goals. While strengthening shareholder returns based on a stable and continuous dividend policy, we will aggressively invest for the future, utilizing operating cash flow generated from our business as well as interest-bearing debt.

Prior investments for the future

Stable and continuous shareholder returns

Based on our policy of stable and continuous shareholder returns, we will pay out a minimum annual dividend of 68 yen per share during the period of CS B2024 (with a consolidated payout ratio set at 35% based on the earnings forecast for FY2022), and also consider additional shareholder returns, including an increase in the dividend level, depending on factors such as business performance. We will also flexibly carry out repurchase of our own shares.

1. Exchange rate:1USD=108.00JPY,1EUR=125.00JPY
2. Reference values for comparison with FY2024 targets and exchange rate assumptions