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Basic Policy for Capital Strategy

Eisai's capital policy is to improve shareholder value based on “medium- to long-term Return on Equity (ROE) management”, “sustainable and stable shareholder returns” and “value-creative investment criteria for growth”, while maintaining the integrity of its finances.

1. Medium- to Long-term ROE Management

Eisai believes that ROE is an important indicator of the sustainable creation of value for shareholders. In terms of medium- to long-term ROE management, we aim for an ROE that exceeds the cost of capital (creation of a positive equity spread*1) by improving profit margins, financial leverage and asset turnover in the medium- to long-term.

2. Sustainable and Stable Shareholder Returns

In terms of shareholder returns, profits are returned to all shareholders in a stable and sustainable way based on factors such as a healthy balance sheet and comprehensive consideration of the consolidated financial results, Dividends on Equity (DOE) and free cash flow, as well as taking into consideration the signaling effect. Because DOE indicates the ratio of dividends to consolidated net assets, Eisai has positioned it as an indicator that reflects balance sheet management, and, consequently, capital policy. Acquisition of treasury stock will be carried out appropriately after factors such as the market environment and capital efficiency are taken into account. Eisai uses the ratio of equity attributable to owners of the parent and net debt ratio as indicators to measure a healthy balance sheet.

3. Value-Creative Investment Criteria for Growth

To ensure that strategic investments create shareholder value, Eisai invests selectively using its Value-Creative Investment Criteria based on Net Present Value and the Internal Rate of Return spread using a risk-adjusted hurdle rate.

4. Dividends

Based on the above basic policy aiming to provide sustainable and stable dividends to its shareholders, Eisai intends to set the FY2016 year-end dividend at ¥80 per share. Combined with the interim dividend of ¥70 per share, this results in an annual dividend of ¥150 per share (same as the previous year).


Equity spread = ROE - Cost of shareholder capital