Shareholder return strategy: No. 1<3562> changed its shareholder return policy along with the publication of the new mid-term management plan "Evolution 2027" and showed the direction of significantly strengthening shareholder return. So far, we have aimed for stable dividends (30% dividend payout ratio as a guide), but in the future, we plan to implement stable and continuous shareholder dividends based on a policy of aiming for a 30% dividend payout ratio, regardless of changes in annual performance. A notable feature is that we have set a minimum dividend of the previous year's annual dividend per share and will continue to increase dividends, which is a significant enhancement of shareholder return and can also be evaluated as a expression of confidence in profit growth. Moreover, we have a policy of "flexibly implementing under financial discipline" for acquiring our own shares, showing a more proactive stance.* *Considering the gap between our own perception of the stock price and the market evaluation, ROE, capital efficiency, and CF level, we have a policy of implementing it flexibly. Dividends for the fiscal year ending February 2024 will increase by 1 yen from the previous year, as expected at the beginning of the period, to 33 yen per share (mid-term dividend of 16.5 yen and year-end dividend of 16.5 yen). We also acquired 340,000 shares of our own stock (with a purchase price of 397 million yen). Despite the anticipated decline in profits for the fiscal year ending February 2025, we are expected to follow the policy of increasing dividends every period and issue a dividend of 1 yen per share (a commemorative dividend for the 35th anniversary of our founding), with an expected increase of 2 yen from the previous year to 35 yen per share (mid-term dividend of 17.5 yen and year-end dividend of 17.5 yen).

Project Holdings <9246> has not implemented dividends as a shareholder return strategy. Currently, funds are allocated to talent investment and business development investment for the promotion of growth strategy. We plan to consider dividends after securing sufficient internal reserves needed for future growth, taking into account capital efficiency, etc.

We are committed to promoting medium-term management plans to reward stakeholders such as shareholders, customers, employees, and business partners with returns resulting from the improvement of corporate value. In addition, we have already taken measures to enhance corporate governance (introduction of auditing committees, improvement of external director ratios, introduction of performance-linked compensation, etc.), redefine corporate philosophies and incorporate them into internal systems (linking employee visions with company management philosophies through personnel evaluations and feedback conducted four times a year), and appointing new personnel based on growth strategies. However, the possibility of implementing dividends, including the timing of implementation, is undecided at this point.

On the other hand, in order to enhance shareholder returns and dialogue with shareholders, and to promote DX in shareholder management, we have established a shareholder benefit system for the first quarter of the fiscal year ending December 2024. Through the shareholder benefit system, we aim to further enhance the investment attractiveness of the company's shares, realize more effective communication with shareholders, such as PR information and earnings information distribution utilizing the shareholder database, and consider efforts to improve corporate value and business expansion.

(Written by FISCO guest analyst Nozomi Kokushige).