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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 the Duskin Corporate Report 2020 with an understanding that Duskin intends to provide financial and non-financial information, including its long-term value creation perspective, management strategy, business results, and ESG information, in an integrated manner for institutional investors as its main readers.

This report covers several perspectives. In my third-party opinion, I would like to focus on how the management philosophy — Sowing the Seeds of Joy — is adopted in daily business practices and how well it is demonstrated to readers.

First, the perspective of long-term value creation is illustrated in Duskin's Value Creation Model, with the six capitals as inputs for the value creation process on pages 8 and 9. The six capitals at Duskin are described in detail on page 10. Duskin’s unique qualities are well structured and streamlined in a framework familiar to investors who read and evaluate many other companies' reports.

Duskin's greatest strength is its management philosophy, and franchisees can join the network only after they agree to abide by this philosophy. Another strength is that the headquarters and franchisees share common goals. This report clearly conveys these strengths.

For future improvements, the value creation model should be structured more comprehensively, with the outcome illustrating which stakeholders benefited from which fruit borne from the seeds of joy.

In particular, I expect that Duskin will consider quantifying the relationship between customer value and social value to the extent possible.

Second, corporate governance is a business foundation indispensable for Duskin to continue Sowing the Seeds of Joy. From the interview with Outside Directors on pages 68 to 69, I understand that it is well structured, which encourages open discussion. The interview also touches on the role of outside directors and discussions at the Board of Directors meetings. This helps readers to deepen their understanding of Duskin.

Third, Duskin has listed social issues–both current and those expected to arise in the near future–in Risks and Opportunities on pages 14 and 15, how Duskin is addressing these issues, and where it would plant the seeds of joy. The company is anticipating risks and at the same time foreseeing various opportunities. I expect to see Sowing the Seeds of Joy fuel growth potential in the future.

In the year 2020, the entire world has experienced the risk of an unknown and unceasing pandemic caused by COVID-19. From 2021 onward, I imagine there will also be changes in the approach to risks and opportunities, as well as CSV initiatives. Based on Duskin's management philosophy, goal sharing, and the relationship of trust it has fostered with its stakeholders, I expect that Duskin will continue to Sow the Seeds of Joy in a new environment.

I hope this report encourages in-depth discussions with stakeholders on Sowing the Seeds.

In Response to this Third-Party Opinion

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

The focus of the Duskin Report 2020 is on helping readers to better understand our efforts to create value, together with our CSV initiatives, financial strategy and capital policy.

We appreciate the favorable evaluation, particularly for our efforts to add granularity to gain a comprehensive picture of our value creation model, its process descriptions, CSV risks and opportunities, and governance structure, including the roles of Outside Directors. With this encouragement, we will continue to further enhance activities throughout our franchise network.

With regard to Ms. Murakami's recommendations on areas for future improvement, we appreciate her precisely pointing out our challenges and will work to improve those points with more specific measures and indicators in order 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 further gains in our corporate value and the realization of a sustainable society.

Hiroyuki Okubo
Director & Operating Officer
CSR Committee Chair