DyDo DRINCO, INC. - ダイドーグループホールディン … to desserts, energy drinks, health foods, and other ﬁelds. Based on our slogan, "Offering delicious products for

2-2-7 Nakanoshima, Kita-ku, Osaka, Japan 530-0005Tel: +81-6-6222-2611

DyDo DRINCO head office obtained ISO 14001 certification.DyDo DRINCO is committed to the environment.

DyDo DRINCO, INC.

Offering delicious productsfor the sound mind and body

2-2-7 Nakanoshima, Kita-ku, Osaka, Japan 530-0005Tel: +81-6-6222-2611

DyDo DRINCO head office obtained ISO 14001 certification.DyDo DRINCO is committed to the environment.

DyDo DRINCO, INC.


DyDo Group Corporate Philosophy

DyDo Group Slogan

DyDo Group Corporate VisionEnhancing brand strength and product lineups as the group's core business

through marketing strategies tailored to individual channels

DAIDOPHARMACEUTICAL

CORPORATION

DyDo DRINCO, INC.

Beverage SalesDivision

OEM BeverageProduction Division

Tarami CorporationShunnotoki Inc.

Food Productionand Sales Division

21

DyDo Group has three segments: DyDo DRINCO for

beverage sales, DAIDO PHARMACEUTICAL for OEM

beverage production, and Tarami for food production

and sales. Our business activities extend from soft

drinks to desserts, energy drinks, health foods, and

other fields. Based on our slogan, "Offering delicious

products for the sound mind and body," we pursue

an autonomous business model in each segment

while working to overcome challenges and achieve

sustained growth.

Our Philosophy

Together with customers

Together with future generations

Together with society

Together with people

Offering high quality products, adding a surprise to deliver "distinctive DyDo" taste and wellness to customers.

Creating "DyDo standards" for the upcoming next generations. To go beyond current framework and values.

"All DyDo" product development and corporate activities involved in the group is committed to build rich and vibrant society.

Endless "DyDo challenging sprit" to bring happiness to all people through our group activities.

Efforts to invest in research, development and manufacturing of energy drinks, and ensuring stable sales

centering on OEM (Original Equipment Manufacturer)

The group's third pillar, boasting thelargest share in the fruit dessert jelly market

DyDo BUSINESS SERVICE, INC.

SHANGHAI DyDo DRINCO, INC.

DyDo BEVERAGE SERVICE, INC. DyDo BEVERAGE SHIZUOKA, INC.

DyDo DRINCO SERVICE KANTO, INC.

DyDo DRINCO RUS, LLC


DyDo Group strives to achieve happiness and prosperity together with people and

society as a whole.To realize this, we will continue our

dynamic efforts to take on new challenges.

DyDo Group wants people to choose and appreciate our soft drinks, desserts, energy drinks, and health foods.

3 4

DyDo DRINCO, INC.

Beverage sales are the group's core business. We manufacture

products designed from the customer's perspective. Coffee is our

main beverage, and in addition to producing the tastiest beverage

products we also supply added value. Approximately 280,000 vending

machines carry our products across Japan, through which we strive to

enhance locality-based sales. We also sell through retail outlets and

online, aiming to expand to new sales channels. Our goal is to deliver

delicious "distinctively DyDo" beverages for people's everyday lives.

Goingstrong for 40years About

Vending machines

drinkitems50

About

280,000(as of March 2015)

DyDo DRINCO, INC.

DyDo BEVERAGE SERVICE, INC.DyDo BUSINESS SERVICE, INC.

DyDo BEVERAGE SHIZUOKA, INC.DyDo DRINCO SERVICE KANTO, INC.

SHANGHAI DyDo DRINCO, INC.DyDo DRINCO RUS, LLC

We care about

making truly

delicious coffee. We are closing the

gap to find out what

customers truly want.

Beverage Sales Division

65

DAIDOPHARMACEUTICAL

CORPORATIONTarami Corporation

This division engages in energy drink research, development, and produc-tion, along with OEM (contract) manu-facturing. Based on decades of know-how, the division manufactures products ranging from pharmaceuti-cals and quasi-drugs to soft drinks, and holds the top share in the industry, developing about 50 items every year.

Food Production andSales Division


We have created a brand that

people trust and choose,

earning the top market share in

the industry. Our fruit dessert

jelly products bring smiles to

both children and adults,

which is what we aim for and

what spurs our growth.

%40

DAIDO PHARMACEUTICAL CORPORATION Tarami Corporation

Meeting needs

artfully by making

one-of-a-kind products.Putting smiles on faces

by making products

that simply taste great.

Fruit dessert jelly market

Top share of over

(As of January 2015; DyDo survey)

OEM (OriginalEquipment Manufacturer)

developeditems

About50annually

7 8

�e DyDo Group aims to

raise its corporate value

through sustained growth.

President & Representative Director

Tomiya Takamatsu

Based on the DyDo Group's philosophy of "striving to achieve happiness and prosperity together with people and society as a whole," we aim to raise corporate value and build prosperity with all of our stakeholders—customers, shareholders, local communities, business partners, and employees.

We will need all of our stakeholders to put forth effort if the group is to achieve sustainable growth and raise our corporate value in the medium term. Society also expects us to take positive action on ESG concerns, i.e. environmental, social, and governance.

To build an abundant, vibrant society it is important to lead the way by achieving sustainable growth and reaching our corporate value targets in the medium and long term.

Against this backdrop, we were in need of new challenges, so business objectives have been set in our "Challenge the Next Stage" mid-term business plan, which extends from March 2014 to the end of the 2018 fiscal year.

The group is comprised of three companies working together to produce synergies—DyDo DRINCO as the Beverage Sales Division, DAIDO PHARMACEUTICAL CORPORATION as the OEM Beverage Production Division, and Tarami Corporation as the Food Production and Sales Division. At every stage in our business activities, management makes use of feedback from our stakeholders. We will continue to pursue challenges together as a group to achieve sustained and sustainable growth.

We humbly request that you extend to us your continued support and guidance.

Tomiya Takamatsu, President

Message from the President

Mid-term Business Plan

"Challenge the Next Stage"FY2014 – FY2018

�e Next Stage

New fields

Domesticexpansion

9 10


Food Production andSales Division

Achievement ofinnovative product

development

Market expansionthrough overseas

business development

Optimized businessresults, improved

productivity

Development ofnew food and health

related business


The DyDo Group has put forward the "Challenge the Next Stage"

mid-term business plan, which will continue until FY2018.

Our mid-term operating margin target is 4.0% on consolidated sales of

200 billion yen in FY2018. Based on the group's corporate

philosophy of striving to achieve happiness and prosperity

together with people and society as a whole, we are

engaging in four challenges to realize sustained

growth.

Challenge to enhance product strength

(Generate stable cash flow)

Overseasexpansion

Challengeto establish

new businessfoundations

Challenge togrow existing

businesses

Moving on tothe Next Stage

as a Group

To this point we have worked to optimize results by concentrating management resources on the domestic beverage and food businesses. Moving forward, we aim to generate a stable cash flow to fund further growth by improving productivity and performance in our existing businesses that already provide a solid revenue base.

We are taking new measures to enhance product strength and are also reevaluat-

ing the development process. Our challenge is to take these and

other new steps so that we can deliver products to consum-

ers that are distinctive to the DyDo Group.

DyDo DRINCO RUS, LLC was established in Moscow, Russia, in December 2013. We are now applying the vending machine business model that is a major strength for DyDo DRINCO to business development in Russia. Accelerating ahead with business development outside of Japan is part of our attempt to open up new markets.

With a strong financial base built from our existing businesses, and in line with our corporate philosophy, we will explore further possibilities for entering new fields of business aimed at reaching new customer demographics. We will also strive to establish new business foundations to roll out new businesses related to food and health.


Netsales 200 billion yen

Group companies 28 billion yen

4.0%Operatingmargin

FY2018 Mid-term Management Objectives

Sales breakdown

DyDo DRINCO 144.7 billion yen

New businesses 27.3 billion yen

Challenge to expand

overseasbusinesses

Existing fields

Moscow



Mid-term Business Plan "Challenge the Next Stage"Four Challenges in Pursuit of Growth Mid-term Business Plan

Capital Policy and Returns to Shareholders

1

Our basic stance on capital policy rests on the importance of keeping a balance between three factors: the effective use of capital, maintaining fiscal soundness, and returns to shareholders. Efforts aimed at the effective use of capital include placing priority on allocating internal reserves to strategic business investments—establishing new business foundations—which will improve capital efficiency.Efforts to maintain fiscal soundness are based on improving stable cash creation capacity via existing businesses to maintain a financial foundation that will enable ongoing strategic business investment.In the context of returns to shareholders, our basic policy is to maintain stable dividends, and by making efforts to improve profitability and increase income on an ongoing basis, we aim to increase dividends in the medium term.

The target figures for our mid-term business plan by FY2018 are a way station towards further growth.In the future, based on our new corporate philosophy and vision, we will continue to make endless challenges to achieve sustained growth.

Pursuit of Sustained Growth

11 12

OEM Beverage Production Division

Food Production and Sales Division


DAIDO PHARMACEUTICAL CORPORATION / OEM Beverage Production Division

Tarami Corporation / Food Production and Sales Division

DyDo DRINCO / Beverage Sales DivisionOur competitive edge is having control over the manufacturing side of all products sold in vending machines. We are now trying to use this advantage to boost sales per machine. In the convenience store and other markets as well, we are planning effective and efficient promotions to generate strong ongoing sales.

As the industry's top OEM producer, we are working to maintain and enhance our system that provides steady, safe production while also working to cut costs to increase efficiency. We are also expanding our capabilities in development and proposing solutions to secure further orders and build a stable revenue base for the DyDo Group.

In building the Tarami brand we have established a strong position in the fruit dessert jelly market. We are continuing to develop a wide range of products that we hope customers will love, as we adapt to changing times and work to achieve further growth.

At DyDo DRINCO, by carefully selecting coffee beans and using coffee blending techniques that we developed, we came out with a revamped "DyDo Blend" in 2012 to expand the share of our flagship coffee brand.We plan to reevaluate our product development processes and expand our soft drink lines while engaging in R&D related to new initiatives. These efforts are aimed at creating innovative, new products for customers as only the DyDo Group can develop.

DyDo DRINCO established the wholly owned subsidiary DyDo DRINCO RUS, LLC in Moscow in December 2013 to make a full-scale entry into the Russian market. DAIDO PHARMACEUTICAL has partnered with TCI Co., Ltd. of Taiwan; and Tarami has established a joint venture in Indonesia. Through such initiatives we are actively working to expand business outside of Japan.

Utilizing the foothold provided by stable cash flow from existing businesses, we are looking into possibilities for expanding our range of business.We will use strategic business investments to establish a new business portfolio centered on "food and health" and secure a business foundation with high profitability and growth potential aimed at improving capital efficiency.

New

fields

Group

comp

anies

130.4

3.15.2

6.0

10.2

17.8

27.327.3

28.0

144.7

Improvingproductivityin existingbusinesses

Enhancingproduct

strengths

Overseasexpansion

DAIDOPHARMACEUTICAL

CORPORATION

TaramiCorporation

Health, food products,etc.

FY2013 FY2018(billion yen)

FY2018 Mid-term Management Objectives

billion yen

Net sales

200 %

Operating margin

4.0

Effective use of capital

Maintaining fiscal soundness

Returns to shareholders

Basic approach

Realizing sustainable,profitable growth

Returns to shareholders

Establishing a new businessfoundation via strategic investment

Effective use of capitalImproving cash creation

capacity in existing businesses

Maintaining fiscal soundness

Beverag

eS

ales Divisio

n

BeverageSales

Division

200 billion yen

• Establishing a new business foundation (Expansion centering on health and food products)

• Expanding our business range by M&As and partnerships

Challenge to grow existing businesses

2 Challenge to enhance product strength

3 Challenge to expand overseas businesses

4 Challenge to establish new business foundations

By engaging in these four challenges, our mid-term business objectives are set at achieving consolidated sales of 200 billion yen and an operating margin of 4.0% by FY2018.Every single member of the DyDo Group is fully engaged with these challenges.

• Priority is given to appropriating internal reserves for strategic business investment for sustained income/growth and improving capital efficiency

• Improve stable cash creation capacity via existing businesses• Maintain financial foundation enabling ongoing strategic

business investment

• Continue to maintain stable dividends despite the severe earnings environment

• Aim to realize ongoing income/growth for mid-term increased dividends

Strengthening/building core products(realizing innovative product development)

Market expansion through overseas business develop-ment

Greater performance/ improved productivity via group management

DyDo DRINCO, INC.

DyDo DRINCO's Strengths and Key Features

We efficiently develop and supply products that customers want using a unique business model.

DyDo DRINCO does not have its own production sites; instead we

outsource all production in a "fabless management" system. We also

outsource logistics to cooperating companies all across Japan. This

business strategy eliminates investment risks and reduces logistics costs.

Also, with our business model, most of these efficiently made products

are sold in vending machines, which furnish steady sales. We aim to

consistently operate vending machines that offer progressive designs,

features, and performance to become well accepted wherever they stand,

and supply products that customers choose first and appreciate.

Affiliate production plant

Distribution center

Securing steady profit with coffee sold through vending machinesVending machine sales, which have comparatively good price stability and steady sales, account for 85% of our sales. By cate-gory, sales from canned coffee, our core product, account for more than 50%. Our business strategy is to focus on selling highly prof-itable coffee via vending machines with high price and sales stability to secure a steady stream of profits.

Characteristics and Strengths of Our Business Model 1

Effective use of management resources via fabless managementDyDo DRINCO does not have its own production sites; instead we have a strong relationship with our partner production sites. Product logistics are also outsourced to cooperating companies all across Japan. This business strategy enables us to reduce investment risks. This approach realizes efficient utilization of operating resources as well as allowing us to concentrate our investment in product development and high-performance vending machine operations. We strive to develop products with high value that are distinctive from those of our competitors, and operate our vending machines more in line with customer needs.

Characteristics and Strengths of Our Business Model 2

Approx.

85%

Vendingmachines

More than

50%

Coffeebeverages

Ensures stable sales and profit

Overall industry figure

Approx. 30%Vending machines

Overall industry figure

Approx. 20%Coffee beverages

We plan and develop coffee products in terms of content and design based on extensive consumer research. As developers, we do not rely solely on our own views, but are constantly seeking out the opinions of customers and we place high value on them during product development. Furthermore, after coming out with a new product we conduct regular surveys to determine how well the product's contents and design are being received by customers. The honest opinions of customers that result from such research go into improving our level of development.We will try as always to take on new challenges and create wonderful surprises for customers by making products that are unique in the industry.

Commentfrom

Employee

We want to create wonderful surprises by developing one-of-a-kind products from the consumer's perspective.

Scheme of Business Operations

Affiliated beverageproduction plants

Affiliated packageproduction plants

Affiliated vendingmachine

production plants

CVS, merchandisers and retailers

DyDoOnline Shop

Outsourcing

Distributioncenter

Vending machines

Outsourcing

Approximately

85% of oursales come

from vendingmachines

Coffeemakes upmore than

50% ofour sales

Reduced logistics costsDevelop productswith high value

Develop remarkablevending machines

Planning and development Production Logistics Business operations Sales

Reducedinvestment

risks

High-qualityvending machine

operations

Katsuhiko Konishi, Coffee Development Group, Marketing Department

13 14

A portion of vending machine sales is do-nated to help sustain and create wood-lands.

Green Fundraising Vending Machines

Energy-Saving Features

We first introduced efficient "heat-pump vending machines" in 2007 and have expanded numbers of installed units each year. Heat pumps reuse heat generated by refrigeration to keep hot products warm rather than simply releasing the heat into the outside air. This enables reduced power consumption during the winter in particular, leading to decreased CO2 emissions.

Efficient Vending Machines

As a measure to further reduce energy consumption, we introduce heat-pump vending machines that use LED lights, which are durable and use minimal energy. Furthermore, the adoption of LED lights enables reduced usage of mercury and other harmful substances found in fluorescent lights.

LED Lighting

If a disaster occurs, products inside the vending machine can be dispensed for free.

Emergency Aid Vendor

"Green Power" stickers on vending machines raise awareness of the Green Power Certification System.

Green Power Certification System

Our "D Design" theme based on the letter D from DyDo features yellow-orange coloring and thick lines, letting everyone recognize our vending machines even from far away. The buttons are large, making them easy for the customer to push and see. We colored the coin return lever, return slot, and other elements the same yellow-orange coloring, visible to the eye.

"D Design"

This expresses our appreciation to customers for their patronage. The numbers on the roulette start spinning after a product is purchased, and if they match the customer may select an additional drink free of charge. In the case of a win, there is a time limit and so customers must choose a drink within 30 seconds.

Roulette Feature

Our point card feature makes purchasing DyDo DRINCO products through a vending machine more enjoyable. Collect the required amount of points and apply to receive a premium gift—everyone wins! Many people enjoy this campaign.

Point Cards

DyDo DRINCO vending machines thank customers for purchases and deliver other spoken messages according to the time of day, current season, and so forth. Our machines speak in standard Japanese and Kansai dialect as well as other regional dialects—some machines even speak foreign languages such as English. These vending machines were built from the concept of providing enjoyment to customers.

Talking Features for Enjoyment

Annual electricity consumption (per machine)

Trends in heat-pump vending machine installation

• Share of DyDo DRINCO-introduced vending machines in one year

DyDo DRINCO Vending Machines

See p. 31 for details

DyDo DRINCO, INC.

Year 2007 2009 2014

Rate of introduction of heat-pump vending machines

2% 53% 99%

2000 2005 2014 (model)

3,000

2,500

2,000

1,500

1,000

500

0

(kWh)

2,963

1,726

594

reduction80%



15 16

�e vending machine is a vitalretail outlet and a close part ofconsumers' lives.

DyDo Blend

DyDo Blend Demitasse

Rich flavor and aroma only made possible by using strictly selected top-quality coffee beans and a carefully refined brewing process. Brings satisfaction and makes break times more enjoyable. This product has been one of our top sellers because savvy coffee drinkers love its deep aroma and taste.

A small special treat for yourself

DyDo DRINCO Brand Introduction

This phrase represents DyDo DRINCO's experience cultivated over 40 years of product development as well as the devoted care of our affiliate manufactures. We offer "distinctive DyDo" delicious taste that meets customer needs and surpasses customer expectations.

Yuzu Lemon is one of several fruit-flavored soft drinks that offer a luxurious feeling of relaxation through a citrus aroma.

Relax and enjoy a fruity taste

DyDo DRINCO, INC.

Our lineup of "miu" soft water products, which contain elements from deep-sea water off the coast of the Muroto Cape in the southern part of Kochi Prefecture are just a few of our products tailored toward a range of drinking contexts in customers' everyday lives. We provide modern people today with the minerals they need.

miu

Wakagokochi

Our optimum roasting technology and blending technology create our “distinctive DyDo” taste. Our coffee product brings out the natural taste of coffee beans, made possible by our confidence in product development.

Rich and complex taste achieved through blending

17 18

Making special, select products that continue to appeal to consumers.

Only the best: delicious taste and minerals in deep-sea water

• Minerals contained are sodium and potassium.• miu Lemon & Orange and miu Active Charge contain elements in the

sodium and potassium from sources other than deep sea minerals.

DAIDOPHARMACEUTICAL

CORPORATION

DAIDO PHARMACEUTICAL CORPORATION's Strengths and Key Features

DAIDO PHARMACEUTICAL CORPORATION is expanding its OEM (original equipment manufacturer) business of health drinks, focusing on medicinal products. In recent years, as the beauty and health markets continue to grow, we have been taking early steps to establish a production system that can handle new material blends and various container formats that are in line with market needs while making use of our specialized knowledge and expertise in conventional energy drinks. These efforts have helped us secure orders from various companies. We will continue in the future to create products that will contribute to healthier lifestyles, based on partnerships with collaborative development manufacturers.

Flow of Product Development

DAIDO PHARMACEUTICAL CORPORATION, the group's OEM Beverage Production Division, pursues energy drink research, development, and manufacturing, specializing in OEM. The company holds a top share in the industry, manufacturing a wide range of products from pharmaceuticals and quasi-drug drinks to beauty tonics for women, and develops around 50 products a year. It has a flexible production system that can meet a wide range of market needs with speed, quality, and high-mix, low-volume production capabilities.

DAIDO PHARMACEUTICAL CORPORATION's Strengths and Key Features 1

Our GMP-certified factories have gained ISO 9001 and FSSC 22000 certification and are fully qualified for the manufacture of pharmaceuticals. They use quality control and assurance systems that offer reliable safety, and have an excellent reputation among our customers who are major manufacturers of pharmaceuticals, cosmetics, and health foods.


DAIDO PHARMACEUTICAL CORPORATION's contract manufacturing is a highly profitable business segment within the DyDo Group. The segment is building a strong foundation for maintaining consistent business results by striving above all to maintain and improve upon the safety of its production system while also promoting cost cutting through increased efficiency.


The international standard for quality management systems that we use to meet the needs of corporate customers and the market by assuring the quality of our products and services.

A food safety system certification that is a benchmark standard approved by the Global Food Safety Initiative (GFSI), which combines the ISO 22000 international standard for Food Safety Management Systems with PAS 220, the advanced British standard.

An abbreviation for "Good Manufacturing Practice," constituting manufacturing process control criteria for maintaining safety in manufacturing and consistent quality in all processes from the acceptance of raw materials to production and shipment.

ISO 9001

FSSC 22000

GMP

Planning & Development Production Quality Control & Quality Assurance

We constantly collect the latest information on raw materials and active pharmaceutical ingredients to offer our customers products that are in line with current trends. We carry out repeated prototyping to reach the final product, to ensure that we offer products with a high level of satisfaction to customers.

Introducing the latest equipment, we have created a production system in line with diversifying market needs. DAIDO PHARMACEUTICAL CORPO-RATION operates on the ideal of achieving both high quality and high efficiency.

We undertake quality control to ensure overall product quality, and quality assurance to ensure product quality before production and during the production phase. This includes strict and detailed inspections of everything related to quality in pursuit of safety.

Productplanning

I try to figure out what kind of products customers need and then meet their expectations.

9,603 million yen(6.4%)

1,135 million yen(21.9%)

My job involves acquiring new customers and securing orders for new products. The thing I concentrate on most in carrying out my regular duties is to figure out as best I can what kind of products customers need right now. I also try to make proposals that will meet customers' expectations. What gives me the greatest satisfaction is when I put in the time and effort to visit a customer any number of times and adjust the proposed solutions, and this leads to their signing a contract with us. I plan to continue using my skills and experience to get orders for new container shapes and dosage forms, and concentrate on approaching new customers.

Hideaki MizunoManager,Sales Section, Sales Department, Sales and Development Business Unit

19 20

Consolidatedoperating income

5,174 million yen(FY2014)

Consolidatednet sales

149,526 million yen(FY2014)

Collaborating through first-rate manufacturing to help people lead healthy lives.

Maintaining and improving upon the safety of the production system and aiming to push forward as the industry's No. 1 contract manufacturer.

A high profitability segment that assures stability in group revenue.

We hold the top share in the industry in contract manufacturing (OEM) through initiatives in researching, developing, and manufacturing drinkable preparations.

Commer-cialization

Commentfrom

Employee




As plant manager I am responsible for supplying the products that customers need when they need them, in the volumes required, safely, and with high quality. My specific duties cover supervising production process management and measures to make production steadier and more efficient through QC activities, and so on. Before becoming plant manager I was involved in quality control and quality assurance. It was a very good experience for me to participate in the structural reforms that split off the Quality Control Division, which was previously under the jurisdiction of the plant. This led to the FSSC 22000 certification at the plant for food sanitation. I will continue working to improve food safety by utilizing my experience in the Quality Assurance Division, and will promote improvements to the production system by introducing new equipment to achieve even steadier operations.

Tarami Corporation

Tarami's Strengths and Key Features

Tarami Corporation is a well-known company with brand strength, which is why we have a top share in the fruit dessert jelly market. We are striving to bolster brand strength to achieve further growth. When one eats delicious food, a smile comes to one's face. Seeing the smile of someone dear to you is also a pleasure. We want everyday life to be filled with smiles, and we want those smiles to continue into the future. Our goal is to create delicious products that bring happiness to as many people as possible and brighten their everyday lives. With these ideas close to heart, Tarami Corporation continues to take on new challenges.

Flow of Product Development

Maintaining a top share in the fruit dessert jelly market through our powerful recognition level and brand strength.Tarami represents the group's Food Production and Sales Division. Its name recognition and brand strength have allowed the company to maintain the top share in the fruit dessert jelly market. After becoming a group company in June 2012, Tarami has become the third main contributor to the DyDo Group's consolidated performance. With an approach to making products based on the desire to supply items that generate surprise and wonder and meet the needs of the times, Tarami aims to maintain its share of over 40% of the growing fruit dessert jelly market.

Tarami's Strengths and Key Features 1Creating more delicious products with a focus on consumers and an eye on their lifestyles.The fruit dessert jelly market is likely to experience stable growth in the future following a consumer trend toward more healthy desserts. As we build an unassailable position in the fruit dessert jelly market, Tarami aims to develop higher value-added products and open new dessert markets and sales channels to achieve further growth.

Tarami's Strengths and Key Features 2

PlanningTarami Corporation's jelly production begins with the search for delicious tastes that are in demand on the market. We repeatedly con-duct consumer interviews and monitor target demo-graphics, selling only prod-ucts deemed to be of a quali-ty that will satisfy customer expectations. In addition, we strictly pursue an appropriate balance between fruit quality and costs while carefully se-lecting optimal ingredients from around the world.

DevelopmentThrough complex marketing research and hands-on devel-opment, the product develop-ment department continues to offer innovative flavors and new taste sensations to consumers. We continue to propose new flavors, textures and more, by repeatedly analyzing constitu-ents including functional ingre-dients and components related to flavor, considering various types of textures and so forth for the jelly portions, and con-ducting analytical sensory eval-uations of products.

ProductionTarami produces fruit dessert jelly products under hygienic condi-tions using cutting-edge manufacturing equip-ment. Our plant boasts the largest production line in the world for fruit dessert jelly, which em-ploys the latest in mech-anization to ensure high-quality Tarami prod-ucts.

Quality ControlNo matter how delicious the fruit may be, it cannot be called a good quality product if special care is not seriously taken for safety. Tarami Corporation has established its own unique hygiene and quality control system in line with international standards, in order to con-duct strict quality checks during every phase of the production process. Tarami Corporation takes every step to ensure quality control as it does for the flavor of its products. We will pursue measures to achieve higher product quality.

Main Products

Kudamonoyasanseries

Gorotto Kajitsuseries

WITHHAPPINESS

series

TaramiCorporation

CompetitorA

CompetitorB

Othercompanies

(Source: DyDo survey as of January 2015)

ISO 9001 registeredJQA-QM5315

FSSC 22000 registeredJQA-FC0064Konagai Plantcup desserts

(excluding products indecorative boxes)

Ayako HirayamaPlant Manager,Konagai Plant, Tarami Corporation

21 22

DyDo DRINCO +Tarami Corporationjointly developed

products

Developing products and strengthening the brand to generate smiles and wonder.

I am utilizing my experience in quality assurance to improve manufacturing and the production environment.

Commentfrom

Employee

Productplanning

Commer-cialization

Challenge to expand overseas businesses

Overseas Development

23 24

DyDo DRINCO RUS, LLC was established in Moscow, Russia in December 2013 as a wholly owned subsidiary to make a full-scale entry into the Russian market. Japanese products have a good reputation in the Russian market for safeness and high quality. We are creating a new business opportunity by applying the vending machine business model that is a major strength for DyDo DRINCO to business devel-opment in Russia.

Starting to install vending machines in Moscow, Russia

TCI is engaged in R&D, manufacturing and sales based on the three core businesses of functional drinks, dietary supplements, and skincare products. TCI has the top share of the market in Taiwan for contract manufacturing of health foods and skincare products. It also has strengths in new materials and advanced production technologies, supplying a wide variety of products to over 35 countries around the world. The DyDo Group has a 15% share in TCI, making it an equity-method affiliate. This collaborative arrangement will be extended to take advantage of growth opportunities in the Chinese and ASEAN markets.

Tie-up with TCI Co., Ltd. of Taiwan

Subway

Gasstation

Busterminal

CinemaTrainstation

Tarami established PT Tarami Aeternit Food through a joint venture with PT Aeternit Prima Mandiri in Indonesia. The company will carry out production and sales of fruit jellies, such as the Tarami brand. The initiative is aimed at creating new markets in Indonesia and other ASEAN countries.

Joint venture company in Indonesia–establishment of PT Tarami Aeternit Food

PT Tarami Aeternit Food (TAF)

AternitInternational

(AI)

KANEMATSUCORPORATION

TaramiCorporation

PT AeternitPrima Mandiri

(APM)

PT KeongNusantara Abadi

(Keong)

Company with the aim of selling products inIndonesia and neighboring countries (ASEAN, etc.)

Holding companyof Keong

Special purpose company aiming at investment in TAF

20%80%100%

51% 49%

April 2014DAIDO PHARMACEUTICAL CORPORATION and TCI agree to cooperate on technical support contracts and contract manufacturing for the health foods and drinks sector, as well as the manufacture and sales of health foods and drinks to subsidiaries of Japanese companies, and in so doing, achieve the joint development of new markets.

December 2014The DyDo Group stakes a 15% investment in TCI, making it an equity-method affiliate.DyDo DRINCO's president, Tomiya Takamatsu, is appointed as a director.

We will take our cooperative relationship to the next stage to build growth opportunities in China and the ASEAN via Taiwan-based growing company, TCI.

Image ofSales Flow of

DAIDO PHARMACEUTICALCORPORATION

Japanesemanufacturers

Orders

DAIDO PHARMACEUTICALCORPORATION

TCITaiwan Plant

TCIShanghai Plant

Taiwanesemarket

Chinesemarket

DyDo DRINCO RUS, LLC established in December 2013

Trading company providing diverse products and services in a wide range of segments

• Manufacture and sale of nata de coco, aloe, jellies and drinks, and canned escargot

• Biggest manufacturer of nata de coco in Indonesia

CSR Policy

Customers

Employees

Society

BusinessPartners

Shareholders

The DyDo Group listens to all stakeholders—our customers, shareholders, business

partners, employees, and society—reflecting a variety of opinions in our products and

services. We also take active measures aimed at building a robust and prosperous

society that practices environmental conservation.

CSR Activities

"For ongoing increases in corporate value!"Realizing stable returns through a sound governance system.

Toour

shareholders

"Emphasizing the importance of the bonds between people and society!"Contributing to the vitality of members of local society through our business operations and community activities.

Tosociety

"Challenging the next growth stage together!"Sharing management vision / strategies and deepening relations of trust with our business partners.

Toour business

partners

"Giving the joy of working dynamically and gaining achievements!"Ensuring communication inside the company and developing human resources able to take challenges.

Toour

employees

"Always giving amazement with our high quality!"Bringing joy and amazement as well as safety and reliability.

Toour

customers

25 26

Working harmoniously with our stakeholders to help build a robust and prosperous society.

Based on our group philosophy of

"striving to achieve happiness and

prosperity together with people and

society as a whole," we are

incorporating the voices of our

stakeholders into our management

and contributing to the realization of

an active and enriched society.

Salespoints

Inspectionspassed

Retailshops

Vendingmachines

Sumio Komatsu, General Manager,Quality Assurance DepartmentNIHON CANPACK CO., LTD.

NIHON CANPACK CO., LTD. pursues quality activities on a daily basis with the goal of producing the highest quality in Japan. We aim to produce high-quality products to satisfy customers while working diligently to meet expectations. We carry out annual quality assurance audits to reconfirm and share our quality control data, raising mutual awareness toward quality, which leads to making better products. We are grateful for the long partnership and are confident in the relationship of trust that we have built.

CSR Activities

We check for compliance with standards and other conditions in raw materials starting from the product planning phase.We also implement thorough quality checks in the pre-production phase. Occasionally, we actually go to the production site if necessary to implement onsite evaluation of production and processing plants.

Check implemented at the raw material phase Production phase check Distribution and sales phase check

Compliance and quality check before production Quality control through DyDo's double-tiered evaluation method

At DyDo, we implement a double-tiered evaluation method in line with our fabless business approach, which entails outsourcing of production to affiliate production plants. Each affiliate production plant carries out inspections during production, which are followed by inspections by our Production Control Department. We utilize this strict, double-tiered evaluation check method in an effort to ensure product safety.

Marketing Headquarters

Product planning anddevelopment

Raw material selection

Selection of affiliateproduction plant

Products evaluation based on our raw material standards

Only legally compliant, safe raw materials are used

Products evaluation based on our quality standards

Evaluating on-site observation

•Raw material manufacturer•Country of origin•Blending ratio•Presence of allergens•Presence of genetic modification•Presence of bovine and porcine material, etc.

•Quality specifications•Production process•Handling conditions•Safety in terms of Food Sanitation Act*1

•Residual pesticides

•On-site origin inspections and plant evaluations.

*1 Food materials meet the standards outlined by the Food Sanitation Act,established to provide safety with regard to harmful or toxic substances ormicroorganisms and prevent health risks attributable to food or drinkconsumption, such as the use of additives.

*2 Products are subjected to aconstant temperature and theliquid content is checked for itscondition and taste.

We would like to deliver not only distinctive products but also we want each and every customer to feel secure about our products. We publish a list of the raw materials and nutritional ingredients on our website.In addition, we post information regarding phosphorous, potassium and caffeine content, as well as allergenic substances, which customers often inquire about.

DyDo DRINCO has a customer service center that is always available to receive a wide range of customer inquiries, opinions, impressions, requests and so on. We consider our customers' opinions to be vital assets. We utilize them to develop our products and vending machines, and improve our services.

Strict quality checks, both in-house and at affiliate plants

Product planning and development at DyDo DRINCO begins with repeated hypotheses and verifications while considering what types of beverages customers really want to drink. Based on our investigation, we seek potential needs that exist in consumers which they may not be aware of.With this approach, we determine through comprehensive trial-and-error experimentation, going through raw materials, blend ratios and production methods that will help us achieve optimal flavors. This is how we provide fully developed, complete products to customers. In addition, we focus on package design as an important way to appeal to target customers. Optimal materials, sizes and shapes are selected from among numerous packaging options to create a design that expresses the quality of the product as well as brand image. This is all in an effort to create something the customer would like to choose and hold on to.

* Closed on Saturdays, Sundays and national holidays; during the New Year holiday period; and on special summer holidays.

* Calls from customers are recorded to improve our products and services.

0120-559-552 (Open Monday–Friday, 9:00–17:00, domestic calls only)

* Although we read all e-mails that we receive, please understand we are unable to reply to all of them.

http://www.dydo.co.jp/faq/ (Available 24 hours a day)

Telephone inquiries

E-mail inquiries

Selected AffiliateProduction Plants

Production andinspection processes

Production ControlDepartment

Raw material inspection

Production control

Product inspection (visual / physical properties)

Temperature consistency check*2

Microbes (bacteria, etc.) check

Raw material inspectionProduct inspection (visual / physical properties)Product inspection table checkTemperature consistency check*2

Radioactive substance inspection

Inspectionprocesses

Freshnessmonitoring

Affiliateproduction

plant

Affiliateproduction

plant

Affiliateproduction

plant

Inspectionspassed

Custom

ers

Production plant auditing

"Always giving amazement with our high quality!"

Affiliate production plant selection

Commentfrom Affiliate Plant

ProductProduct Product

More detailed information is available on our website http://www.dydo.co.jp/csr/product.html

27 28

Providing information that customers want through our website

Forming flavors that customers consider ideal and delicious taste that they expect

Pay attention carefully to customer opinions to improve our products and services

Toour

customers

1

2

3

4

5

1

2

3

4

5

Yamada SxL Home Co., Ltd.

Internal job posting system

Masaya Morimoto, Marketing Department The DyDo Compliance Hotline is a service that leads to compliance by providing an outlet for reporting or consulting about illegal acts or behavior of concern. Employees of business partners of the DyDo Group may also use the hotline. We are building a system that enables prompt investigation and appropriate action/countermeasures to be taken.

CSR Activities

"Giving the joy of working dynamically and gaining achievements!"

"Challenging the next growth stage together!"

Regular and reliable visits by DyDo's salespeople created a good impression, and when it came time to change our office layout, we decided to put DyDo's vending machines in the open space. DyDo is good about changing products periodically and meeting our needs, treating us with care.Also, in the summertime, they held a sampling event for the employees working at our head office to try drinks that can help prevent heat exhaustion. We all enjoyed the tasting. Our employees liked the sincere approach of DyDo's salespeople, so we are recommending DyDo to all of our company's branches and sales offices.

Commentfrom

BusinessPartner

Communication on a daily basis is essential for building better partnerships of mutual trust with our suppliers and other partners. At DyDo DRINCO we also hold regular seminars to explain policies with the goal of making progress together by sharing DyDo's management vision and business strategy.

Personnel Training

At DyDo DRINCO we try to develop in our personnel the confidence to act autonomously, set high goals, and take on challenges without being afraid to fail. We want them to develop into capable individuals who can carry out business globally. At the same time we want them to pursue personal growth and help draw out the strengths of their teams, keeping in mind what it takes to live and work harmoniously with others.

A Respect for Autonomy

DyDo DRINCO works to build healthy partnerships with our suppliers and other partners through fair dealings that comply with laws and regulations.

DyDo DRINCO employs an internal job posting system that aims to improve employee motivation and invigorate the organization. The system makes it possible for individual employees to develop their own careers and take on new challenges in the section of their choice within the group.

CaseExample

DyDo DRINCO has about 280,000 vending machines across Japan. We talk with vending machine location owners not only when negotiating vending machine placement, but also after installation, communicating closely to build good relationships.

Motoji Kunitsu, President, Kunitsu Syouji Co., Ltd.

Our company first started doing business with DyDo DRINCO in the spring of 1992 when we began selling DyDo soft drinks in our vending machines. We had been thinking at the time that our ice cream business alone would not sustain the company, as it was subject to major seasonal fluctuations. So we began selling soft drinks to diversify; now soft drinks have become our main business.Based on DyDo DRINCO's corporate philosophy of striving to achieve happiness and prosperity together with people and society as a whole, our company aims to contribute to local communities through the soft drink vending machine business, bringing satisfaction to customers and enjoyment to our employees and their families.

I wanted to try my hand at product manufacturing, using my experience as a DyDo Group route merchandiser. Then I found out that the section I was interested in was looking for someone, so I eagerly took advantage of the system. Now that I am working in the new post I feel a lot of hope and also a sense of purpose—that I must apply my 11 years of experience to produce good results. The system was the catalyst that enabled me to reconsider how I wanted to develop my career. It has also increased my motivation toward work. I have become more conscious of how I want to continue growing on the personal level.

Commentfrom

Employee

Dalia Potapova, International Business Department, DyDo DRINCO RUS, LLC.

A Respect for Diversity At DyDo DRINCO we believe that the corporation will grow when a diverse group ofpeople of different ages and nationalities, and both genders, demonstrate their individual strengths.

Creating the chance to talk with executives

A Dialogue with Employees

DyDo DRINCO executives visit business locations across Japan to talk with employees. This chance for employees to engage in a dialogue with top executives helps to create an open work environment in which opinions can be shared freely.

I work at DyDo DRINCO RUS, LLC. My job covers a wide range of business tasks that include registering products when they are imported to Russia from Japan, creating accounting documents, creating labels in Russian based on the product information listed in Japanese, and many other duties. I feel that the work environment is a warm one in which the staff all help one another as much as they can, regardless of gender or nationality, so that everyone is able to work to the best of her or his own ability. In the future I would like to improve workflows for the tasks I handle and become more of a specialist, rather than a generalist.

Commentfrom

Employee

The DyDo Vending Partner Association is an organization for DyDo DRINCO special operators (vending machine operators that handle our products) with whom we have, since DyDo's founding, built a strong relationship based on a close understanding of the company's objectives.

Information Sessions for Business Partners

A Dialogue with DyDo Vending Partners

A Dialogue with Location Owners

Healthy Partnerships

More detailed information is available on our website http://www.dydo.co.jp/csr/employee.html

More detailed information is available on our websitehttp://www.dydo.co.jp/csr/business_partner.html

29 30

Toour business

partners

Toour

employees

Commentfrom

BusinessPartner

20 million yen10 million yen 10 million yen

The Hatachi Fund(Account set up by The Nippon Foundation) Great East Japan Earthquake

Recovery Initiatives Foundation

Public interest incorporated foundation

Normally, when there is a power outage caused by a natural disaster, conventional vending machines are switched to emergency power by administrators. We are able to deliver to a maximum of 500 products free of charge within 48 hours without power.

Makiko Sakaue, Teacher, Oshimi Elementary School, Katsuragi, Nara

I requested a factory tour for my students so that they could go out into the real world around where they live and learn from working people about their struggles and dreams. I anticipated that the tour might also lead to community pride in having such a factory in their local area. I am grateful for the video and children's pamphlet that the factory prepared, and for their kind treatment. The pamphlet was useful later for a write up in the school newspaper. We also received drinks that the factory produces which seemed to help the children become more familiar with the factory.

Commentfrom

ParticipatingTeacher

Disaster relief support agreements set up with local governmentsDyDo DRINCO has set up agreements with many local governments promising to provide products (free of charge) we have in stock in our distribution centers and disaster aid vending machines (emergency aid vendors) in the event of a major disaster. With these agreements, we are helping to lighten the load on local governments when it comes to drinking water storage preparation in the event of a major disaster.

* The "Cooperative Agreement to Supply Beverages in Times of Emergency" applies only to responses outlined in agreements set up between DyDo and local governments.

Community Support Activities

Community Support FundThe DyDo Group considers the enrichment of the local community our obligation as we engage positively with people and the environment. We therefore established the Community Support Fund for the purpose of carrying out ongoing activities to support local communities. The fund is not an interim assistance measure, but is designed to assist with medium- to long-term support activities by appropriating monies irrespective of the company's performance in a single fiscal year.

Fundraising via vending machinesWorking together with the owners of our vending machines, we set up what we call "community action vending machines" and contribute a portion of profits taken by vending machines to raise funds. Our "Green Fundraising Vending Machines" that help in creating woodlands nationwide are one type among several fundraising vending machines. Funds collected are utilized in various activities through each association and organization. DyDo

DRINCO Japanese Festivals

Based on our original goal of helping to create bonds between people and revitalize regions through support for festivals that embody Japan’s traditional culture, our support efforts have reached their 13th year (as of 2015). From Hokkaido in the north to Okinawa in the south, we offer assistance at 34 festivals throughout the country. By helping to invigorate these festivals, we are also helping to invigorate Japan. Moving forward, we will work together with local people, governments and others in order to cultivate vitality in regions throughout the country.

To build ties with the local community, DAIDO PHARMACEUTICAL CORPORATION actively accepts factory tours for local elementary schools and others. We want the local community to understand our business and feel closer to the factory. Toward this end we will continue communicating with the local community, and will work to build and maintain a relationship of trust.

DyDo Group Efforts

DAIDO PHARMACEUTICAL CORPORATION Factory Tour (elementary school)

Community Action through Vending Machines

Tarami Corporation activities for support of child care institutionsTo contribute first to the local society in our home prefecture of Nagasaki, Tarami Corporation has been delivering jelly products to children at 11 child care institutions throughout the prefecture. We have been providing products on a monthly basis since we started in December 2008, and children have sent us thank you letters in response. We plan to continue such activities as long as we keep putting smiles on children's faces.

Emergency Aid Vendors

Supplying beverages from vending machines and distribution centers in times of disaster

Support activities

Economic assistance is being provided to foundations that are taking care of children affected by the disaster. Starting in 2012 and including this year, the company has given 10 million yen annually to each of the organizations below.

Approximately 10% (about 10 yen per drink) of monthly sales from the designated vending machines is donated to fishery industry associations in Iwate, Miyagi, and Fukushima Prefectures.

Cultural assistance through dance class support in the Tohoku region

Ongoing assistance for recovery from the Great East Japan Earthquake

Assistance through "Kizuna" Tohoku Revitalization Fundraising Vending Machines

Support to alleviate lack of exercise among children in Fukushima Prefecture

Starting in 2012, a Tohoku Dance Project was begun, offering dance classes to children to provide support on the theme of kizuna (ties) to the Tohoku region.

To alleviate stress and a lack of exercise among children in Fukushima Prefecture, a Parent-Child Hip-Hop Class project is being carried out.

Guide Dog Fundraising Vending Machines

Galaxy Fundraising Vending Machines

CSR Activities

Green Fundraising Vending Machines

Giving to guide dog training initiatives

Support for children fighting intractable diseases

Assisting afforestation projects around the country

Evacuationcenter

Evacuationcenter

Evacuationcenter

EvacuationcenterBeverages

Beverages

Beverages

Beverages

Fundraising vending machines(through cooperation with the owner)

A portion ofprofits

Installation/contract

Salescommission

Fundraising

Fundraising

More detailed information is available on our website http://www.dydo.co.jp/csr/jihanki/

31 32

"Emphasizing the importance of the bonds between

people and society!"

Tosociety

0111099

長方形

We have introduced an electronic conferencing system in the board room at the head office for company executives to lead the way in paperless efforts.Also, mobile devices are distributed to employees to reduce the volume of printouts and make business talks more timely and efficient.

Commentfrom Local

Government

Established: June 7, 2001Revised: April 16, 2014

PresidentDyDo DRINCO, Inc.

Environmental Policy

Green Power Certification SystemIn 2002, DyDo DRINCO became the first company in the beverage industry to participate in the Green Power Certification System. Through this system, natural energy generation is outsourced for a cost, and in return a certificate is issued and the customer is recognized as having used green energy.DyDo DRINCO-commissioned windmills (Akita Prefecture) have continued operat-ing since the Company's initial participa-tion in the system, and their annual power generation of approximately 1 million kWh of clean energy contributes toward conservation of fossil fuels and reduction of CO2 emissions.

Based on the idea of achieving happiness and prosperity together, the DyDo Group recognizes the role of nature in allowing us to produce the beverages and food products that we deliver to people throughout society. We consider it an important responsibility to pass on to the next generation a clean earth and a society full of vitality, so we strive to carry out operations with full consideration for the environment.

Basic Philosophy

•Comply with all environment-related laws and regulations applicable to our businessactivities.

•Save resources and save energy in our business activities at all times.

•Reduce environmental impact in our products and services.

•Work at both environment and business activities for better communication withpeople and society as a whole.

Action Guidelines

Environmental Activities by Employees/At the Office

Planting trees and maintenance efforts

Rainwater is converted into delicious drinking water through a cleansing mechanism in forest soil. We actively participate in local forest volunteer activities, such as entering into forest fostering agreements with autonomous groups to protect the precious forests that create fresh water crucial to our beverages.

Every single one of our vending machines has a sticker to make more people aware of clean energy which is so vital for the next generation (green power).

Environmental Activities through Our Products

Steel cans are the high-flyers of recyclingDyDo DRINCO's mainstay product is canned coffee, and steel cans are used to reduce environmental impact in manufacturing. The recycle rate for steel cans in FY2013 was 92.9%.

Going paperless

Mayor Takeo Nakamura, Asahi Village, Higashichikuma District, Nagano Prefecture

These activities began in 2003 in Nagano Prefecture with the first adopt-a-forest project, when DyDo DRINCO and Asahi Village entered into an adoptive relationship. A forest-building volunteer group from the Chubu No. 1 Sales Division comes to help thin trees and cut branches near the Asahi Prime Ski Grounds. The group also takes the thinned wood to a local elementary school, or uses it to lay walking paths around village facilities. We are very grateful for these volunteer actions. Last year they made a new signboard, "DyDo DRINCO Prime Forest," helping to deepen our mutual ties. We look forward to protecting the land and working to avert global warming while raising a valuable forest together that will produce tasty, pure drinking water.

Paperless system using tablet PCs

CSR Activities

"Working for a clean earth through our beverages

and food products!"

Issue a green power certification

Conventional power supply

Japan NaturalEnergy Company

Limited

Wind powergenerationcompaniesRegional

electricpower

companies

Regionalelectricpower

companies

Green Power Certification System

Wind power contracts

1Reconsignment2

Power generation performance report

4

Electric power sales

3

Third-party performance report attestation

5

6

Steel can recycling rate by year

Source: Japan Steel Can Recycling Association

87.1% 88.7% 88.1% 85.1% 88.5% 89.1% 89.4% 90.4% 90.8%100

90

80

10

0

(%)

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

92.9%

More detailed information is available on our website http://www.dydo.co.jp/csr/eco/

33 34

Tomiya Takamatsu

An electronic conferencing system in the board room at the head office allows directors to set an example for paperless operations.

Forthe

Environment

Environmental Activities through Vending Machines

DyDo Challenge Tsushin is a Japanese-language newsletter for shareholders that helps the company to establish two-way communication, an important pursuit in investor relations.

Newsletter for shareholders

Financial content is explained through a Q&A format

Shareholder questionnaire results are provided each issue as feedback

Shareholder questions are answered in this section

Engaging with Shareholders and Investors

DyDo DRINCO holds explanatory meetings for private investors and semiannual financial briefings for institutional investors. Beginning in FY2014, the group has been actively expanding the opportunities to engage with investors by setting up small meetings and separate meetings. We also make public videos of semiannual financial briefings for institutional investors via our website in order to engage more people.

Every year on January 20 and July 20 we send a gift package of DyDo products worth 3,000 yen to shareholders owning 100 or more of our shares as a small expression of our appreciation and for them to enjoy the special taste that only DyDo can provide.

DyDo DRINCO considers returning profits to shareholders an important management issue. Our basic stance on profit sharing is to distribute dividends on a stable, ongoing basis with consideration for the balance between shareholder return and the internal reserves needed for sustained growth.With regard to internal reserves, we consider the prioritization of allocating funds to strategic business investment aimed at sustaining profit growth and improving capital efficiency to be in the interests of both the company and shareholders alike as it will contribute to further profits.Looking ahead, we can anticipate the earnings environment to remain tough, but by improving profitability and achieving sustained profit growth we aim to increase dividend payments in the medium term.

General Meeting of Shareholders

To allow more shareholders to attend the DyDo DRINCO ordinary general meeting of shareholders, starting in April 2014 the venue was changed to a hotel in downtown Osaka that provides good transportation access and a high-capacity hall. An effort was also made to send out the invitations earlier. For the 39th Ordinary General Meeting held on April 16, 2014, the invitations were sent out on March 25. As an additional measure for shareholders living far away or unable to attend for other reasons, the video of the business report has been made public on the company website.

Twicea year

Allocation base date:January 20, July 20

Sample image of set sent to our current shareholders, as of January 20, 2015

CSR Activities

"For ongoing increases in corporate value!"

Information Disclosure Policy

DyDo DRINCO strives to provide information rapidly, on the basis of transparency, fairness, and continuity, to all our stakeholders, including our shareholders and investors. In addition to information disclosure in accordance with the Companies Act, the Financial Instruments and Exchange Act and other laws, plus the Timely Disclosure Rules of the Tokyo Stock Exchange (TSE), we also strive to disclose information proactively and candidly as far as possible as we believe this will be effective for generating a deeper understanding of DyDo DRINCO.

Our Stance on Shareholder Return

Special shareholder benefits

http://www.dydo.co.jp/corporate/ir/event/general_meeting.htmlSee website for videos

http://www.dydo.co.jp/corporate/ir/event/results_briefing.htmlSee website for videos

Trends in cash dividends per share

FY2009

50 50 50

60 60 6060(yen)

50

40

30

20

10

0FY2010 FY2011 FY2012 FY2013 FY2014

Stable and continuous profit allocation

35 36

The name DyDo Challenge Tsushin was chosen from a call put out to shareholders for a name for the newsletter

Toour

shareholdersMore detailed information is available on our website

http://www.dydo.co.jp/csr/stock_holder.html

The following are the types of risks that could have a serious impact on the business performance and financial soundness of the DyDo Group. The items listed below were assessed by the group as of January 20, 2015, and do not constitute all of the possible business risks.

The DyDo Group holds to a group philosophy of striving to achieve happiness and prosperity together with people and society as a whole; we promise to work dynamically to break new ground and help build a rich and vibrant society, balanced by feedback from stakeholders.These are the specific measures based on our group philosophy through which we aim to take social responsibility as a corporation: 1. Regulatory compliance, 2. Financial reporting reliability, 3. Asset protection, and 4. Business effectiveness/efficiency. We have determined that establishing an internal control system shall form our basis for achieving these measures.

1. Basic Approach DyDo DRINCO takes as its basic approach to corporate governance to undertake sound corporate activities and thorough compliance, to improve the transparency and efficiency of our management, to build smooth relations with all the stakeholders involved with us, including customers, employees, business partners, members of local society and shareholders, and to strive to maximize our corporate value.

2. Outline of Our Current Corporate Governance System

Corporate Governance

Internal Control

In addition to the regular board of directors meeting held each month, extraordinary meetings are also held as necessary; in the board of directors meetings important issues on the execution of our operations are discussed and decided upon, and the execution of duties by the various group companies overseen. Two out of the seven members of the board of directors are outside directors (as of April 17, 2014), functioning to give advice and supervision on our management from independent viewpoints. Four corporate auditors, including three outside auditors, attend the board of directors meetings; one of these auditors is a woman.Management councils made up of full-time executive directors and executive officers are also regularly held, to review important issues and to give support to rapid decision making by the president and the board of directors.The board of corporate auditors consists of one full-time corporate auditor and three outside auditors (as of April 17, 2014). It attends important meetings inside the company, including the board of directors meetings, ascertaining the situation from persons of responsibility inside the group organization and overseeing the execution of duties by the directors.KPMG AZSA LLC is appointed as the accounting auditor, and gives advice and guidance from a third party's viewpoint of the legality and correctness of accounts and internal controls.

3. Reasons for Selecting the Current Corporate Governance System

4. Corporate Governance System (Organizational Chart)

DyDo DRINCO's products are beverages, an intimate part of consumers' everyday lives, and hence the trust of consumers is of the most vital importance in the management of our company. Accordingly, we have introduced an executive officer system to bring about faster decision making and efficiency in the functioning of each organization, to realize a company configuration enabling us to keep a closer ear to the voices of consumers and to reflect them in our management.We have also appointed two outside directors and three outside auditors to oversee our execution of operations from an independent viewpoint and to act as checks. We deem this enables us to improve our transparency and thus are utilizing our current system.

Basic Approach on Internal Control

An internal auditing department that reports directly to the president and is independent from the business divisions so as to maintain impartiality has been established to audit each internal division, report the results to the president, assess the results, and provide guidance. Also, we have set up a board of corporate auditors and the position of accounting auditor for the department to work with to conduct effective and efficient audits.In addition to the above auditing system, a director has been put in charge of internal control to oversee all aspects of internal control and compliance (both regulatory and within the realm of social ethics), to ensure full compliance and the smooth running of the internal control system.We have distributed Compliance Action Guidelines indicating specific standards of conduct for all directors and employees and will continue to raise awareness toward compliance. Each business division in the company is to autonomously check its own risk management status in accordance with our Basic Rules on Risk Management that cover many basic matters related to compliance. Each division is to then present the results to the Risk Management Committee, headed by the president, which is to discuss and review measures based on those results.Also, to help strengthen deterrence against legal violations, a DyDo Compliance Hotline is being set up for internal reporting based on our Internal Report System Rules. Another system that has been put in place is the strict handling of personal information based on Privacy Protection Rules.Our company's basic policy regarding the building of an internal control system has been established at our board of directors meeting.

Outline of Our Internal Control System

CSR Activities

Business Risks

For more details http://www.dydo.co.jp/csr/internal_control.html

For more details http://www.dydo.co.jp/csr/risk.html

General Meeting of Shareholders

Execution ofOperations

Management Council

Risk ManagementCommittee

Internal Control Officer

Personnel / General Affairs(Legal Affairs Group)

Operating Division

President andRepresentative Director

Audit

InternalAudit

Accounting Audit

Coordination

Coordination

Appointment / Stepping Down

Audit

Appointment / Stepping Down

Appointment /Stepping Down

Accounting A

udito

r

Legal Consultant, etc.

Ad

vice / Guid

ance

Co

ord

ination

Rep

orts

Rep

orts

Appointment /Stepping Down

Board ofCorporate Auditors

AuditingDepartment

Board of Directors

37 38

For more details http://www.dydo.co.jp/csr/governance.html

1.2.3.

4.5.6.7.

8.9.

10.11.12.13.

Management of customer informationFood safety and quality controlChanges in the market value of securitiesSecuring and developing personnelOverseas business developmentCorporate takeovers and business/capital alliances

Domestic economic situationMarket competition in the beverage industryFocus on sales in the vending machine channel and reliance on coffee beveragesProcurement of ingredients and raw materialsProduction systemWeather and natural disastersLegal regulations, etc.

Liabilities

Current liabilities

Notes payable and accounts payable

Short term loans

Short term lease obligations

Accounts payable

Accrued income taxes

Accrued expenses

Accrued bonuses

Other

Fixed liabilities

Long term loans

Long term lease obligations

Other

Liabilities total

Net assets

Shareholders' equity

Capital stock

Capital surplus

Retained earnings

Treasury stock

Total other comprehensive income

Minority interests

Net assets total

Liabilities / net assets total

42,623

16,514

4,693

4,124

11,298

1,826

2,012

1,032

1,120

21,302

12,820

3,115

5,365

63,925

79,856

1,924

1,464

76,472

(4)

866

1,831

82,554

146,479

41,240

16,286

6,434

2,438

11,052

1,237

1,901

1,013

877

21,919

14,076

2,550

5,292

63,160

81,184

1,924

1,464

77,800

(4)

1,647

1,901

84,734

147,894

Net sales

Cost of sales

Gross profit

Sales expenses and ordinary management costs

Operating income

Non-operating income

Non-operating expenses

Ordinary income

Income before taxes

Income taxes, etc.

Minority interests

Net income

154,828

70,553

84,275

78,270

6,004

964

1,006

5,962

5,962

2,096

154

3,712

149,526

67,553

81,972

76,798

5,174

710

1,414

4,470

4,470

2,027

120

2,322

FY2014(Jan. 21, 2014 to

Jan. 20, 2015)

FY2013Item

Item

(Jan. 21, 2013 toJan. 20, 2014)

14,764

(16,580)

(469)

108

(2,176)

29,051

26,874

13,959

3,734

(2,561)

11

15,145

26,874

42,020

FY2014(Jan. 21, 2014 to

Jan. 20, 2015)

FY2013(Jan. 21, 2013 to

Jan. 20, 2014)

FY2013(As of January 20, 2014)


Assets

Current assets

Cash and cash equivalent

Notes receivable and accounts receivable

Securities

Inventories

Other

Fixed assets

Tangible fixed assets

Tools, equipment and machinery (net amount)

Lease assets

Other (net amount)

Intangible fixed assets

Investments and other assets

Investment securities

Other

Assets total

81,503

33,498

14,474

24,425

6,270

2,835

64,976

34,461

17,426

7,368

9,667

11,709

18,805

12,563

6,241

146,479

81,907

47,800

13,707

10,316

7,323

2,758

65,986

34,655

20,171

5,044

9,440

11,072

20,257

14,589

5,668

147,894



Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalent at beginning of year

Cash and cash equivalent at end of year

Item

Item

Consolidated Balance Sheets

Consolidated Income Statements (Unit: million yen)

(Unit: million yen)

(Unit: million yen)Consolidated Statements of Cash Flows

Consolidated Financial Statements

40

�e Group Actively Pursued Measures Aimed at Sustained Growth

The Japanese economy in fiscal 2014 began a mild recovery as the employment situation improved due to changes in economic and financial policy implemented by the government. However, following the consumption tax hike in April, electricity rates and other costs remained high, and with the ensuing rise in costs of daily necessities, consumers became more budget-conscious. Unseasonable weather has also played a part, and in the end, it has taken time for personal consumption to recover. Additionally, there was concern that a further drop in the value of the yen would make the import of raw materials more expensive. Exports were sluggish due to economic uncertainties overseas caused by a number of factors such as the situation in the Ukraine, increasing conflict in the Middle East and other rising geopolitical risks, stagnation in the Eurozone economy, and a slowing of growth in emerging economies. We now anticipate that a full recovery in the economic climate will take further time.In such circumstances, the DyDo Group is doing what it needs to do in response to such major changes in the economic environment. Aiming to further increase corporate value, we are establishing a new group philosophy and group vision, and have set in motion our "Challenge the Next Stage" mid-term business plan; we have been actively pursuing measures aimed at sustaining growth into the future.

Current Fiscal Year Forecast

After the consumption tax increase in April 2014, the market environment in the beverage industry went through a major change, with increasingly fierce competition in sales and price among players in the industry just to maintain share as sales volumes remained stagnant.Under such conditions the DyDo Group is pursuing four challenges stated in our "Challenge the Next Stage" mid-term business plan to raise the corporate value by achieving sustained growth. To achieve growth in existing lines of business, we are taking steps to provide added value rather than succumbing to price wars. At the same time we are working to cut costs across the entire supply chain, but the recent devaluation of the yen, which has led to higher costs in raw materials, is forecast to have a significant effect on income.

Regarding Dividends

In line with the same basic approach we have always taken, which is to continually maintain stable dividends, we set the year-end dividend at 30 yen per share. Added to the interim dividend of 30 yen per share, the annual dividend for this fiscal year is 60 yen.In the coming fiscal year, although we foresee rising costs of raw materials due to the yen devaluation and a consumer trend toward low-priced purchases making the earnings environment in the beverage industry even tougher, we will continue to maintain stable dividends and therefore anticipate the same 30-yen-per-share interim and year-end dividends for another annual dividend of 60 yen per share.Although we foresee this difficult earnings environment continuing, we will strive to further boost profitability and achieve sustained growth to try to increase the dividend in the medium term.

303030

151,000

1.0%

FY2015Year on year difference (%) change from previous year

4,500

(13.0%)

4,400

(1.6%)

2,700

16.3%

FY2013FY2014FY2015 (forecast)

303030

606060

994994

−

26.8%42.8%36.8%

1.3%1.2%

−

Annual dividend

2nd quarter Year end Total

Total amountof dividends

(consolidated)(million yen)

Dividendpayout ratio

(consolidated)

Dividend rateon net assets(consolidated)

Netsales

Operatingincome

Ordinaryincome

Netincome

Earningsper share

(yen)

124,5973,839

11,50011,287

Net salesSegment profitCapital expenditureDepreciation expenses



Food Productionand Sales Division Total Adjustment Consolidated

statement

10,2201,135

291483

15,360198470572

150,1785,173

12,26112,343

(651)0−−

149,5265,174

12,26112,343

(Unit: million yen)

(Unit: million yen)

(Unit: yen)

FY2014 Business Performance

Consolidated results for FY2014 are as follows:

Net sales 149,526 million yen (down 3.4% from FY2013)

Operating income 5,174 million yen (down 13.8% from FY2013)

Ordinary income 4,470 million yen (down 25.0% from FY2013)

Net income 2,322 million yen (down 37.5% from FY2013)

39

162.98

−

Financial Report

Corporate Data

DyDo DRINCO, INC.

2178, Nakazato-machi, Nagasaki 851-0198Tel: +81-95-839-1111

Tarami Corporation

1051-15, Kaizumachi, Isahaya, Nagasaki 854-0063

Shunnotoki Inc.

Sales Bases

Consolidated Subsidiaries

DyDo BEVERAGE SERVICE, INC.


DAIDO PHARMACEUTICAL CORPORATION

Tarami Corporation

Shunnotoki Inc.

DyDo BEVERAGE SHIZUOKA, INC.




Head Office Tokyo Office Sumitomo Fudosan Mita Twin Bldg. East 4F,

4-2-8, Shibaura, Minato-ku, Tokyo 108-0023

Nakanoshima Central Tower Bldg. 18F, 2-2-7,

Nakanoshima, Kita-ku, Osaka 530-0005

Tel: +81-6-6222-2611

Tohoku Daiichi Sales Department

Tohoku Daini Sales Department

Shutoken Daiichi Sales Department

Shutoken Daini Sales Department

Tokyo Sales Department

Chubu Daiichi Sales Department

802, Roimento Sendai, 5-1-35, Tsutsujigaoka, Miyagino-ku, Sendai, Miyagi 983-0852 Tel: +81-22-292-3271

Chubu Daini Sales Department

Chukyo Daiichi Sales Department

Chukyo Daini Sales Department

Nishi Nihon Daiichi Sales Department

Nishi Nihon Daini Sales Department

Chokkatsu Sales Department

2-7-19, Dainitonya-machi, Aomori 030-0113Tel: +81-17-729-2307

3-40-1, Maruyamadai, Kounan-ku, Yokohama,Kanagawa 233-0013 Tel: +81-45-846-2100

1-311-2, Miyahara-cho, Kita-ku, Saitama 331-0812Tel: +81-48-665-7100

10, Ichigaya Building, 1-1, Honmura-cho, Ichigaya, Shinjuku-ku, Tokyo 162-0845 Tel: +81-3-6361-9171

198-1, Hirose, Isawa-cho, Fuefuki, Yamanashi 406-0035Tel: +81-55-261-5220

DyDo DRINCO, INC.

January 27, 1975

2-2-7 Nakanoshima, Kita-ku, Osaka, Japan 530-0005

Tomiya Takamatsu, President

1,924,325,000 yen

16,568,500

23,511 (as of January 20, 2015)

The First Section of Tokyo Stock Exchange Market

Consolidated: 2,767; Non-consolidated: 673 (as of January 20, 2015)

From every January 21st to next year January 20th

Resona Bank, Bank of Tokyo-Mitsubishi UFJ, Mizuho Corporate Bank

KPMG AZUSA LLC

Sumitomo Mitsui Trust Bank, Limited

Company Name

Established

Head Office

Representative Director

Paid-in Capital

Number of Shares Outstanding

Number of Shareholders

Stock Exchange Listing

Number of Employees

Fiscal Year

Major Corresponding Banks

Auditors

Transfer Agent & Register

1283, Kando, Yoshida-cho, Haibara-gun, Shizuoka 421-0304Tel: +81-548-32-8845

2-6, Higashi-Ozone-cho, Higashi-ku, Nagoya, Aichi 461-0022Tel: +81-52-935-0871

705, Ueno, Kawage-cho, Tsu, Mie 510-0304Tel: +81-59-245-5031

3-1-55, Nagayoshinagahara-higashi, Hirano-ku, Osaka 547-0013 Tel: +81-6-6709-6101

1-14-30, Doi, Higashi-ku, Fukuoka 813-0032Tel: +81-92-663-2171

2-2-7, Nakanoshima, Kita-ku, Osaka 530-0005Tel: +81-6-6222-2633

Tel: +81-120-559-552

Tel: +81-120-606-909

Customer Service Center

DyDo DRINCO Online and Mail Order SalesShopping Customer Service Center

Contact Us

DyDo BEVERAGE SERVICE, INC.

2-2-7, Nakanoshima, Kita-ku, Osaka 530-0005


2-2-7, Nakanoshima, Kita-ku, Osaka 530-0005

DAIDO PHARMACEUTICAL CORPORATION

214-1, Shimura, Katsuragi, Nara 639-2121Tel: +81-745-62-5031

DyDo BEVERAGE SHIZUOKA, INC.

2276, Yamashina, Fukuroi, Shizuoka 437-0066Tel: +81-538-43-1066


3-4-25, Omochanomachi, Mibu-machi, Shimotsuga-gun,Tochigi 321-0202Tel: +81-282-86-3424


No. 2002, Green Commerce Spirit, 1258, Yuyuan Road, Changning, Shanghai, ChinaTel: +86-21-6237-5650


5 Building, 1 Nijny Kidlovsky Sidestreet, Moscow, 125009Tel: +7-499-940-92-21

41 42

Net sales

Cost of sales

Cost of sales ratio (%)

Gross profit margin (%)

SG&A expenses to net sales (%)

Operating income

Operating margin (%)

Ordinary income

Ordinary margin (%)

Net income

Profit margin on net sales (%)

Earnings per share (yen)

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

Cash and cash equivalent at end of year

Total assets

Net assets

Capital adequacy ratio (%)

Net assets per share (yen)

Numbers of shares outstanding (thousands)

Number of employees

Net sales per employee

Depreciation expenses

Capital expenditure

151,369

68,927

45.5

54.5

50.2

6,539

4.3

5,809

3.8

2,691

1.8

162.45

14,911

(3,252)

(11,964)

21,174

125,497

73,049

57.0

4,321.26

16,568

3,149

48.06

12,747

1,481

147,404

67,284

45.6

54.4

49.5

7,295

4.9

6,687

4.5

2,351

1.6

141.91

17,540

(8,274)

(11,016)

19,424

128,550

74,788

56.9

4,416.66

16,568

2,936

50.20

12,350

6,839

148,902

67,976

45.7

54.3

49.0

7,934

5.3

7,725

5.2

4,410

3.0

266.22

16,491

(6,704)

(219)

29,051

140,487

79,097

55.1

4,670.18

16,568

2,916

51.06

11,202

16,833

154,828

70,553

45.6

54.4

50.6

6,004

3.9

5,962

3.9

3,712

2.4

224.08

14,764

(16,580)

(469)

26,874

146,479

82,554

55.1

4,872.53

16,568

2,770

55.89

12,080

14,376

149,526

67,553

45.2

54.8

51.4

5,174

3.5

4,470

3.0

2,322

1.6

140.16

13,959

3,734

(2,561)

42,020

147,894

84,734

56.0

4,999.88

16,568

2,767

54.04

12,343

12,261

FY2014FY2013FY2012FY2011FY2010Fiscal year

Consolidated Highlights

(Unit: million yen)

Net sales

200,000(million yen)

150,000

100,000

50,000

0FY2010 FY2011 FY2012 FY2013 FY2014

Net assets / Capital adequacy ratioNet assets Capital adequacy ratio

100,000(million yen)

75,000

50,000

25,000

0

60(%)

45

30

15

0FY2010 FY2011 FY2012 FY2013 FY2014

Operating income

10,000(million yen)

7,500

5,000

2,500

0FY2010 FY2011 FY2012 FY2013 FY2014

Net income

5,000(million yen)

4,000

3,000

2,000

1,000

0FY2010 FY2011 FY2012 FY2013 FY2014




Consolidatednet sales

149,526 million yen

Food Production and Sales Division15,325 million yen(10.3%)OEM Beverage

Production Division9,603 million yen(6.4%)

Beverage Sales Division124,597 million yen(83.3%)

* Net sales by segment are external sales figures

Financial Report

Documents

DyDo DRINCO, INC. - ダイドーグループホールディン … to desserts, energy drinks, health foods, and other ﬁelds. Based on our slogan, "Offering delicious products for