■ Initiatives of ESG

Anya <4258> is identifying important issues (materiality) that should be addressed preferentially from the perspectives of E (environment), S (society), and G (governance) in promoting ESG management. The company considers 'personnel' to be the most important in contributing to society and ensuring business continuity, and focuses on activities related to 'personnel' in ESG.

1. Consideration for 'Environment'

Actively promoting diverse work styles such as telecommuting and workations, the company is working to reduce the amount of electricity required in the office by efficiently managing office space per employee by streamlining the internal layout and promoting reducing paper use through digitization of meeting materials and reducing paper usage in operations. Furthermore, by utilizing 'Mamoru-kun', a box provided by Nippon Purple Co., Ltd. for collecting confidential information, paper collected in the collection box is transported to a confidential processing facility and recycled as recycled paper.

※ A box for collecting confidential information handled by Nippon Purple Co., Ltd. The paper collected in the collection box is transported to a confidential processing facility and recycled as recycled paper.

2. Contribution to 'Society'

The shortage of cybersecurity talent is one of the important challenges from a national defense perspective. The company is contributing to the cultivation of cybersecurity talent through collaborative research with national universities, public university corporations, school corporations, and national technical colleges. It is actively involved in the cultivation of cybersecurity talent overseas through collaboration with overseas universities, contributing to the improvement of cybersecurity in the global cyberspace. Specific initiatives include the utilization of logs through causal analysis with the University of Tokyo, joint research on service design with Kyoto University and the University of Toyama, creation of business using secret sharing methods with Sophia University, development of an app to enhance Wi-Fi experience with technical colleges, establishment of cybersecurity research departments with Hokkaido University and packet/log analysis using AI, research on mathematical modeling of next-generation machine learning with Tokyo Institute of Technology, and investigation and verification of AI to be installed in 'ALog' with Mahidol University, Thailand.

Furthermore, the company actively provides support to employees on leave due to sickness or injury, aiming to support them during their absence and facilitate their return to work to ensure equal employment opportunities for all. Additionally, actively supporting the return to work after maternity leave to promote a society where women can play an active role. Children are valuable members carrying the future of society, and active participation of men in childcare is essential. The company aims to actively support all employees who require parental leave for childcare.

3. Strengthening Governance

(1) Commitment to risk and compliance

There are various risks surrounding the company such as economic environment, natural disasters, political and geopolitical factors, reputation, labor, and misconduct. The company has established a Risk and Compliance Committee to identify these risks, prevent and control them, and has also developed a system to minimize damage in times of crisis. In addition to preventing legal violations, the company strengthens collaboration with experts to respond promptly to legal and regulatory changes.

(2) Strengthening cybersecurity measures

As a cybersecurity company, the company takes strict security measures to provide a secure cyber space to society. In addition to preventing security risks, the company consistently monitors the risk situation, establishes measures and systems to minimize damage in times of crisis. Specifically, by monitoring security risks, the company prevents their manifestation and promptly takes appropriate actions in emergencies by establishing a CSIRT. Moreover, vulnerability tests are conducted weekly on all servers and equipment. Upon discovering vulnerabilities, the company handles them appropriately based on the response criteria and the importance of each vulnerability.

(3) Continuous improvement of information security

With the goal of protecting information owned by customers and the company, the company has obtained certification for the international standard ISO/IEC 27001. The company has established an Information Security Committee, appointed security personnel in each department, and established a system to quickly address the constantly changing information security risks, striving for its maintenance and improvement.

Focus on research and development investments for the medium to long term. In March 2024, the company will implement the acquisition of its own common stock.

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).

The company recognizes returning profits to shareholders as one of the important management challenges. The company has not paid dividends since its establishment, as it believes that strengthening internal reserves as necessary working capital for hiring excellent personnel, and future new business development will lead to returning profits to shareholders. Although there are plans to consider implementing dividends as a way to return profits to shareholders in the future, taking into account the financial condition and business performance, the timing of implementation is currently undecided. In the event of distributing retained earnings, the company is following a basic policy of annual year-end dividends.

Furthermore, the company announced the introduction of a shareholder benefit program in September 2023. Shareholders who are listed on the company's shareholder register as of December 31 each year and hold 200 or more shares of the company's common stock are eligible to receive QUO cards based on the number of shares held and the holding period. In addition, in March 2024, the company acquired 48,000 shares of treasury stock as part of a flexible capital policy aimed at improving capital efficiency and responding to changes in the business environment. The company has set out its growth strategy in the medium-term management plan, and by clearly demonstrating its attitude towards returning profits to shareholders through shareholder benefits and flexible treasury stock acquisitions, our company sees a high probability of long-term stock price appreciation.

(Author: FISCO Guest Analyst Ryoji Mogi)