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).

Number 1 <3562> announced its medium-term management plan 'Evolution 2027' along with a change in its shareholder return policy, indicating a significant strengthening of shareholder returns. While aiming for stable dividends (with a target dividend payout ratio of 30%) in the past, the company has now set a policy to use 'a target dividend payout ratio of 30% as a guide and to implement stable and continuous shareholder dividends regardless of annual performance volatility.' What stands out is setting a minimum dividend that equals the previous year's annual dividend per share and committing to consecutive dividend increases, demonstrating a significant enhancement in shareholder returns and confidence in profit growth. Furthermore, regarding the repurchase of treasury stocks, the company plans to carry it out 'flexibly under financial discipline,' showing a more proactive stance.

Taking into account the company's recognition and market evaluation gap on stock prices, ROE, capital efficiency, and CF levels, the company plans to implement it flexibly.

For the fiscal year ending February 2025, despite an expected decline in earnings, the company plans to follow a policy of increasing dividends every period, including a special dividend of 1.0 yen (commemorative dividend for the 35th anniversary of its establishment). It is expected to increase by 2.0 yen compared to the previous period, with an estimated dividend per share of 35.0 yen (17.5 yen interim, 17.5 yen year-end).

Furthermore, on October 25, 2024, the company announced the introduction of a shareholder benefit program. Celebrating its 35th anniversary, the purpose is to express gratitude to shareholders for their ongoing support and to promote long-term holding by enhancing understanding of the business and its investment attractiveness. Specifically, shareholders holding 300 shares (3 units) or more on the record dates (every year at the end of February and August) will receive 15,000 yen worth of QUO cards per record date (total of 30,000 yen worth of QUO cards annually), starting from the end of February 2025.

(Written by Fisco Guest Analyst Ikuo Shibata)