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).

Veru Inc. <6183> recognizes returning profits to shareholders as one of the most important issues, and aims to stably and continuously implement dividend payments of surplus funds, taking into consideration comprehensively the dividend payout ratio and the enhancement of necessary internal reserves according to the progress of performance. In the medium term, the company's aim is to pay dividends twice a year based on the current period profit attributable to the parent company shareholders, with a target consolidated dividend payout ratio of 50% as a basic policy.

In the interim period of the fiscal year ending February 2025, despite a decline in profits, the company implemented an interim dividend of 30 yen per share, the same amount as the previous period. The planned year-end dividend is also 30 yen, the total annual dividend for the fiscal year ending February 2025 is expected to be 60 yen, with a dividend payout ratio of 55.0%. The company's dividend payout ratio significantly exceeds the average level of 39.0% for service sector companies listed on the Tokyo Stock Exchange Prime Market for the fiscal year ending March 2024, demonstrating a shareholder-oriented management approach.

In August 2024, the Tokyo Stock Exchange requested future measures for listed companies regarding 'responses aimed at achieving management conscious of capital costs and stock prices.' The company's shareholder capital cost for the fiscal year ending February 2024 is around 8%, exceeding the shareholder capital cost level, but striving to further improve capital profitability. Regarding PBR, the PBR for the fiscal year ending February 2024 is approximately 1.9 times, consistently significantly exceeding 1.0 times for the past 5 periods, continuing efforts to improve market valuation. Additionally, in cash allocation, the operating cash flow of 13.5 billion yen for the fiscal year ending February 2024 is used for shareholder returns of 4.4 billion yen, business investment and facility investment of 3.1 billion yen, and repayment of interest-bearing debt of 5.9 billion yen, aiming to balance allocation for shareholder returns, growth investments (business investment and facility investment), and repayment of interest-bearing debt. The company is expected to continue a shareholder-oriented management approach.

(Written by FISCO guest analyst Nozomi Kokushige).