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Third-Party Opinion

Megumu Murakami
Senior Manager
Center for the Strategy of Emergence
The Japan Research Institute, Limited
Graduated from Faculty of Law, Kyoto University. Joined the Japan Research Institute in 2003 after a career in banking. Ms. Murakami became a member of the Center for the Strategy of Emergence in 2010, taking on the responsibilities of researching corporations and their use of ESG factors and SDGs.

I have reviewed Duskin Corporate Report 2019 with an understanding that Duskin intends to report its financial and non-financial information including business activities and long-term strategies in an integrated manner for institutional investors as its main readers.

When reading Duskin's corporate information, many readers will be attracted to the expression of Sowing the Seeds of Joy in its management philosophy. Then, the readers will be interested in how the management philosophy is connected in making the business profitable. Pages 19 and 20 illustrate that the three non-financial factors: sustainable franchise system, framework to ensure safety and reliability, and most trusted people in the community, are the source of Duskin's value creation. Each factor is concisely explained, which I find easy to understand. Among explanations of these pages, especially notable is the thick arrow between Duskin and franchisees indicated with "agreeing with our management philosophy" and the initiatives for human development, including the one by the Founder.

If financial and non-financial values created by these activities were highlighted, following these explanations, this could be a more integrated report.

I also find that special attention is paid to the readability of this report and making it easy to understand for the investors who are also reading various other companies' reports. The sections reporting the corporate governance included the interview with an Outside Director, information on 10 important meetings such as the Board of Directors' and Budget Meetings with the number of meetings, their members, and functions. This helps readers to deepen their understanding of Duskin.

From the perspective of an "integrated" report, there is room for improvement in the statement on Duskin's activities in Asia. I recommend that Duskin describe in greater details their efforts for environmental management and labor-related issues in their business operations in Asian countries to respond to the expectations of readers who want a more complete picture of Duskin.

From the perspective of long-term strategy, the policies in five focused CSV areas on page 23 show how Duskin is strengthening the three non-financial factors, which are the source of value creation. The policies on this page describe initiatives, looking towards the future environment and social and local changes. However, the levels of initiatives and KPIs are not consistent, which could end up giving the impression that these are only superficially organized. It is advisable to clearly state how each goal within the initiatives relates to the company-wide goals as it helps readers better understand the initiatives. It would also help Duskin to develop plans for next year and future initiatives.

I hope this substantial report will be a good source of information for Duskin's stakeholders to deepen their understanding of Duskin and build good relationships with you.

In response to this third-party opinion

We would like to express our sincere appreciation to Ms. Murakami for providing valuable opinions and comments on our report on Duskin Group's activities.

For the Duskin Corporate Report 2019, we focused our efforts on helping readers better understand the whole picture of Duskin's long-term value creation, growth strategies, ESG and SDGs initiatives. Our CSV initiatives to solve social issues through our business activities are stated in our three focused areas, sustainable development of society, eco-friendliness and human resource development.

We appreciate the favorable evaluation of our policies and initiatives. With this encouragement, we will continue to further enhance our activities in our franchise network. With regard to her recommendations for areas for future improvement, we appreciate her precisely pointing out our challenges and will work on enhancing the contents with more specific initiatives and indicators to report in a more integrated manner.

We will continue our efforts to respond to the expectations and trust of our stakeholders by implementing initiatives that will lead to the further improvement of our corporate value and the realization of a sustainable society.

Hiroyuki Okubo
Operating Officer,
CSR Committee Secretary