Conference Call regarding Decision of Share Repurchases Summary of Q&A

Described below is the summary of Q&A session with institutional investors and securities analysts at Conference Call regarding Decision of Share Repurchases held on June 28, 2021.

Q1Regarding the timing of the share repurchases, please explain what discussions were held by the Board of Directors, including the share price movement since the business result announcement in May.

We cannot disclose the details of the discussions held at the Board meeting, but we wished to make the capital level adjustment under the new approach as soon as possible, and also believed that communicating the management’s view on the share price was important, including the signaling effect.

Q2Are you likely to increase the capital level adjustment budget for fiscal 2021 depending on the share price?

We are not considering making changes to the total budget for fiscal 2021 at the moment.

Q3Will capital level adjustment decisions which were previously made only in May and November be made flexibly throughout the year based on the bolt-on M&A pipeline and share price?

Yes. The most significant element for deciding the timing under the new approach will be the pipeline of bolt-on M&A deals. We made the capital level adjustment at this time as there are no M&A deals due to be announced. Status of the pipeline will change with time, so we may not necessarily make half of the adjustment during the first half of the fiscal year. The pipeline information will become more accurate with progress of the deals, so we would like to spread the timing of the capital level adjustment to a certain degree. As we explained in May, we never intended the capital level adjustments previously announced together with business results to correspond to the second half of the previous fiscal year. However, if we apply such assumption, the adjustment to be made in 1H21 will be for 2H20.

Q4You stated that the timing of capital level adjustments will be spread across the year. Are two or more adjustments highly likely for this fiscal period?

It will depend on the status of the bolt-on M&A pipeline, but unless we have a pipeline of 70 billion yen or more, that will be the case.

Q5Are there set criteria for proportion of one-time dividends and share buybacks?

No. We will make the optimal decision considering the share price and investor opinions among other things, within the total budget of 100 billion yen.

Q6With respect to the share price signaling effect, what market reaction would you consider as successful result of the share price signaling?

We cannot disclose our target share price, but we will determine by observing the impact of the announcement and of the share buyback on the share price for a certain period.

Q7Why did you set the share buyback period to expire at the end of August?

Previous capital level adjustments were made once every six months. We shortened the period to enable more flexible decision making.

Q8About a month has passed since the announcement of the new capital level adjustment scheme on May 20, 2021. Could you explain the investor feedback to the extent possible?

The investors I frequently communicate with have generally been supportive of the new scheme, and I have not encountered much negative opinions.

Q9With the total budget of 100 billion yen, were some investors disappointed that there will be no adjustments exceeding that amount?

Our approach to capital level adjustment has not changed, and we believe 100 billion yen calculated by deducting dividends and budget for large-scale M&A from adjusted net income is appropriate for fiscal 2021.

Q10As we enter the second half of 2021, what is the management’s view on the fact that there are no visible bolt-on M&A deals in the pipeline?

M&A deals are not our objective per se, so we do not believe the lack of good investment opportunity is a significant problem considering the current state of economy. M&A is an effective tool for enhancing growth and diversification, so our policy remains that we will make active investments if there are good opportunities.

Q11What was the reason for choosing 30 billion yen as the amount of capital level adjustment?

The decision was made based on comprehensive consideration of the bolt-on M&A pipeline and current share price among other things.

These information materials are prepared based on the currently available information for us and described subject to our predictions and forecasts carried out at the time of preparation.
It must be noted that what is described therein does not guarantee our future business performance and carries certain risk of misjudgment or uncertainty.
Accordingly, you are kindly requested to bear in mind that there may be a possibility of sizable divergence between the actual business performance in the future and that of our predictions or forecasts described therein.