To maintain and deepen the trust in us by all shareholders and stakeholders well into the future, the Group recognizes that ensuring the soundness and legality of business management and increasing efficiency is one of the highest priority issues of business, and to this end, we are working to enhance and strengthen our corporate governance system.
To provide shareholders, institutional investors, security analysts, and individual investors with a better understanding of the Hodogaya Chemical Group, we engage in extensive communication activities and strive to disclose information in a fair and timely manner. We have been making our Financial Statement, Annual Securities Report, and various IR materials available from the“ IR” section on our website, and we post our Summary of Quarterly Consolidated Financial Results in English starting in FY2017 and the Notice of the Annual General Meeting of Shareholders in English starting from the Annual General Meeting of Shareholders held in June 2018.
We do the following to encourage two-way communication with our shareholders.
Hodogaya Chemical introduced an electronic voting system (through which shareholders can exercise their right to vote either by scanning a QR code or online) for the General Meetings of Shareholders as of June, 2020 for increased convenience. It allows shareholders to exercise their rights in written form, with a smart device, or over the internet.
Smart devices proved particularly popular in the new electronic voting system, and they were used by many individual shareholders. This resulted in an increase in the ratio of shareholders exercising their right to vote year after year.
In addition, since the Ordinary General Meeting of Shareholders held in June 2020, we have been working to further improve the environment for exercising voting rights by introducing an electronic voting platform for institutional investors.
We are currently implementing the Mid-term Management Plan SPEED 25/30 and are approaching the end of phase 1 at the close of FY2025 (March 2026), the halfway point of the plan. Since the start of SPEED 25/30 in FY2021, we have worked to implement various measures with an eye toward achieving a high ROE in the future while balancing growth investments, interest-bearing debt controls, and shareholder return.
Over the past three years, we have generated about 15.5 billion JPY in cash flows from operating activities and have directed about 14.5 billion JPY of that into business investments, mainly the functional colorants segment, the Group’s engine of growth. At the same time, we have maintained a D/E ratio of around 0.2 times, ensuring the financial soundness and stability of the Company. In addition, during that time we increased the dividend per share from 50 JPY to 75 JPY (150%) based on our dividend policy that is conscious of improving dividend-on-equity ratio (DOE), our traditional guideline. Research and development is indispensable for the Group’s future growth, and the R&D expense ratio (compared to sales) exceeds 10%. We are making steady progress in building a new business portfolio, the most important contribution to growth in SPEED 25/30.
With an eye toward FY2025 (end of phase 1), the midway point for SPEED 25/30, we are aware that in order to achieve our management targets, generate further growth after that, and improve our PBR through these initiatives, we must not only reap the fruit of the various measures executed through FY2023 but also implement new measures. In addition to enhancing shareholder returns, we are committed to creating new value and driving future corporate value growth. To achieve this, we will implement financial and capital strategies aimed at accelerating the sustained growth of our Group. These strategies include more effectively utilizing our current resources, such as interest-bearing debt and shareholders’ equity, all while maintaining a certain level of financial stability.
Our basic policy is to maintain an appropriate balance between allocating profits earned as internal reserves for purposes such as investment to contribute to the growth of the Group, and returning profit to shareholders.
Specifically, we will effectively use our internal reserves to strengthen our mid- to long-term competitive edge through strategic investments to expand our core businesses, R&D efforts leading to the creation of new businesses and products, and to fund projects that could contribute to cost reductions, energy-saving and environmental solutions. Meanwhile, we determine fair returns to shareholders in a stable and continuous manner, taking into full consideration such factors as the business results, future expansion of business, and unforeseen risks, while paying particular attention to the ratio of dividend on equity (DOE).
Based on the above policy, the annual dividend for the fiscal year ended March 2024 has been increased to 75 JPY per share.
Moreover, in aims of increasing the dividend for four consecutive fiscal periods, the Company plans to raise the dividend to 85 JPY for the year ending March 31, 2025 (as disclosed in the financial summary for the year ended March 31, 2024).
In order to secure and enhance the corporate value of Hodogaya Chemical and common interests of our shareholders, since receiving approval at the 156th Annual General Meeting of Shareholders in 2014 for the introduction of our plan for countermeasures against large-scale acquisitions of Hodogaya Chemical shares (takeover defense measures), we have implemented a review of the details of said measures every three years when it is time for renewal. Renewal of the takeover defense measures was again approved at the 165th Annual General Meeting of Shareholders in 2023.
Corporate Planning Department
Ayumu Motegi
The role of the department responsible for IR activities is to provide appropriate information to shareholders and investors at the appropriate time in order to ensure correct understanding of the company.
In order to make it easier for shareholders to participate, we have taken actions such as holding the General Meeting of Shareholders on days that are easier to schedule and introducing an online voting system.
We hold individual meetings with institutional investors and analysts. I create materials and provide information on the company as is suitable in response to requests for IR interviews after the end of a quarter.
In the future, I want to help shareholders and investors have a better understanding of Hodogaya Chemical Group.
