Japanese

Dialogue with Shareholders and Investors

We endeavor to engage in dialogue with shareholders and investors with the aim of learning their views and applying them to our management. At present, the dialogue focuses on communicating our improvement in profitability over the past few years. Going forward, however, we intend to enhance the dialogue, including medium - to long-term growth stories and capital policies, which are of particular interest to shareholders and investors. The status of dialogue during FY3/25 is as follows.

Our representatives

Financial results briefing

Representative Director, PRESIDENT & COO
Director, Senior Managing Executive Officer

Meetings with investors

Representative Director, PRESIDENT & COO
Director, Senior Managing Executive Officer
Executive Officer of Corporate Planning

Breakdown of dialogue counterparties

  • Domestic / Overseas
  • Sell side / Buy side

Major themes and areas of interest in dialogue

Investors have shown considerable interest in the key topics highlighted below.
We will continue proactive and consistent information disclosure through these engagements.

Management and Growth Strategy
  • Possibility of achieving the Medium-Term Management Plan and capital efficiency targets such as ROE and ROIC
  • Growth strategy towards becoming a global top-10 player, and direction of M&A and overseas investments
  • Deployment of strategic product portfolios in each region and differentiation approaches

Business Performance and Financial Outlook
  • Progress toward financial guidance
  • Impact of FX, pricing initiatives, and timing of revenue contribution from new products
  • Trends in production costs and SG&A expenses, and changes in profitability

Products, Technology, and Global Expansion
  • Competitive advantages of proprietary technologies and CAD/CAM materials, and R&D focus areas
  • Market expansion in China, North America, and emerging markets, and reinforcement of local production and distribution capabilities
  • Strategic positioning and rationalization decisions for low-margin product lines

Capital Policy and Shareholder Returns
  • Strategic-shareholdings reduction policy and execution status
  • Potential for share buybacks and enhancements of payout ratio and DOE (Dividend on Equity)
  • Approach to cash allocation and optimization of capital structure

Governance and ESG
  • Measures to strengthen governance structure
  • ESG strategy and progress in non-financial disclosures
  • Composition and skill matrix of outside directors

External Environment and Market Dynamics
  • Evolving policy risks and competitive landscapes across regions
  • Demand fluctuations driven by reforms in dental checkup and insurance systems
  • Market trends in dental DX and 3D printing, and our strategic responses
  • This summary is based on 262 institutional investor meetings conducted in FY3/25.

Feedback to management

Investors have shown considerable interest in the key topics highlighted below.
We will continue proactive and consistent information disclosure through these engagements.

Frequency

Reporting method

Details

Meetings with investors and analysts

Quarter

Meeting bodies

Overviews of the meetings (investor summary, whether our shares are held, questions, etc.) and comments from investors and analysts are summarized and reported.

Analyst report

As appropriate

Email

Summaries of analyst reports issued by securities companies are reported.

Stock-related indices and share price information

As appropriate

Email

Analysis of our shareholders (number of shareholders, shareholder composition, etc.) and shares (share price, trading volume, etc.) are reported.

IR activity report

Semi-annual

Meeting bodies

Results of activities, issues and initiatives for the next term are reported.

Findings and results from dialogue

Requests

Findings and results

Why don't you hold a results briefing after the announcement of the results for the first and third quarters?

To enhance constructive dialogue with shareholders and investors, beginning in FY3/24, we have made efforts to disclose materials and communication information for the first and third quarters at a similar level of detail to our results presentation materials.
From FY3/26 onward, we have also begun holding results briefings for the first and third quarters.
Reference:
Financial Results Reference Materials Financial Results
Supplementary Materials Briefing Materials

We would like you to disclose the same level of information in the first and third quarters as you do for the full-year and interim results.

We would like you to proactively enhance its communication with overseas investors. In addition, we request that English materials be disclosed at the same time as the Japanese versions.

Since FY3/25, all disclosure documents required under the Tokyo Stock Exchange's timely disclosure rules have been released simultaneously in Japanese and English, enabling timely and fair dissemination of information.
In addition, we conducted our first overseas roadshows. Through face-to-face meetings, we were able to directly grasp the interests and perspectives of international investors and identify areas for further enhancement of our IR activities.
Starting in FY3/26, we also plan to provide English disclosure of our Annual Securities Report.

Some investors expressed concerns that the existence of takeover defense measures may deter certain investors from buying our shares and may prevent the Company's intrinsic corporate value from being fully reflected in the share price. Investors encouraged us to clarify our future policy, considering the effectiveness and rationale for maintaining such measures.

In March 2025, the Board of Directors resolved to discontinue the takeover defense measures that had been in place since 2007, effective upon conclusion of the Annual General Meeting of Shareholders scheduled for June 2025.
This decision reflects our recognition that it is increasingly important to enhance corporate value through diligent managerial efforts and ensure that such value is appropriately reflected in market capitalization. After carefully assessing changes in the business environment and sincerely considering the opinions received from shareholders and institutional investors, we determined that discontinuation is the most appropriate course of action.
We will continue to pursue sustainable enhancement of corporate value through constructive dialogue with shareholders.

Discontinuation (Abolition) of Response Policy to Large-Scale Purchases of the Company's Shares (Takeover Response Policies)

It appears that the proportion of cash and marketable securities to our total assets is relatively high.
Could you share your views on the Company's holdings of investment securities, including so-called Strategic-shareholdings?

Based on dialogue with shareholders and investors, and from the perspective of more effective capital utilization including allocation to growth investments, we intend to continue reducing strategic shareholdings as a general direction going forward.
In reducing the number of shares held, our basic stance is to hold dialogues with the companies in which we hold shares to gain their understanding and then proceed with the sale, while paying attention to the background of the acquisition, and the situation of the other party, etc. In addition, if the other party intends to sell our shares, we will accept the other party's intention.
Based on this stance, in FY3/25 we sold shares of five listed stocks, four of which were completely sold.
During the period of the Fifth Medium-Term Management Plan, which commenced in April 2024, we plan to reduce the ratio of strategic shareholdings to net assets from approximately 20% as of the end of FY3/24 to around 10%.
Reference:

SHOFU Group Fifth Medium-Term Management Plan

Measures to achieve cost of capital and share price conscious management (UPDATE)

Regarding your dividend policy, considering the situation where net cash (cash and deposits + investment securities - interest-bearing debt) and the equity ratio have been at a fairly high level, isn't it necessary to further enhance shareholder returns?

Our basic policy is to maintain stable and sustainable dividends while aiming to enhance long-term corporate value (shareholder value) and provide appropriate returns to shareholders. At the same time, we remain committed to securing sufficient internal reserves to support proactive growth investments and future business expansion.
Reference:

Dividend Information
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