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. Stable and Sustainable Shareholder Returns
In accordance with the stipulations of the Articles of Incorporation, the Company’s Board of Directors returns profits 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*³), and free cash flow, as well as taking into consideration the signaling effect. Because DOE indicates the ratio of dividends to consolidated net assets, the Company 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. The Company 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.
Based on the above basic policy aiming to provide sustainable and stable dividends to its shareholders, the Company intends to set the FY2017 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).
*1Equity spread = ROE - Cost of shareholder capital