Regarding the 63rd Annual General Meeting of Shareholders held on Wednesday, May 31, 2023, we will respond to the questions and opinions received from our shareholders.
Thank you very much for your valuable feedback.
We will take your feedback into consideration for the future and kindly ask for your continued support.
Q. Please tell us about specific improvement measures implemented by external directors up to now.
A. Regarding the achievements of the current external directors, each has the following.
Director Asami Ito
Not only do they leverage their personal networks for our company, but they also regularly provide flexible and innovative proposals from an objective perspective. Furthermore, when visiting the company managed by this director (in the manufacturing industry), they openly share initiatives aimed at fostering empathy with employees, offering valuable insights to our company.
Director Tsuneo Negoro
Drawing on their own experience, during shipping troubles caused by the COVID-19 pandemic, we were able to minimize losses by negotiating under the precise guidance of this director.
Q. There are reports that performance was affected by lockdowns in China, while there are also reports that SKI (Shenyang Kimoto Industrial Co., Ltd.) sales increased, which feels contradictory.
A. The business that was significantly affected by lockdowns in China is our core film business. On the other hand, SKI engages in 3D data processing and other activities, and its sales increased.
Regarding the film business, China itself is a significant market as a consumer base for smartphones and home appliances, while also being known as the world's factory due to its numerous manufacturing industries. Our films are supplied as part of these products, and were affected by production halts at customers due to lockdowns and subsequent inventory adjustments.
Furthermore, SKI’s performance has been on the rise over the past three years. SKI’s core operations include data processing for maps and three-dimensional data processing for digital twin technologies※1. A key factor in its success is its collaboration on data creation and infrastructure initiatives for the national resiliency plan※2 led by the Ministry of Land, Infrastructure, Transport and Tourism. Although certain data processing tasks—which cannot be performed in China for national security reasons—are conducted within Japan, SKI fundamentally leverages its technical expertise to deliver high-quality data.
*1: Technology that digitally replicates the real world and conducts various simulations using digital data.
*2: A disaster prevention plan promoted by the Ministry of Land, Infrastructure, Transport and Tourism aimed at preventing major disasters and ensuring rapid recovery.
Q. Regarding the disposition of retained earnings, dividends are to be paid despite the 63rd fiscal year being in deficit. Since dividends during deficits could weaken the company, could not paying dividends be considered as one option for future deficits?
A. Since our listing on the over-the-counter market in 1994, we have continued to pay dividends to shareholders and bonuses to employees regardless of performance. We will consider your proposal as material for future deliberation.
Please note that with regard to decisions on the appropriation of surplus, Kazunobu Kimoto, our President and Chairman and also a major shareholder, does not participate in the deliberations at all. Instead, the deliberations are conducted with our Vice Chairman, Yoshinori Sasaoka, serving as chairperson, in order to ensure the fairness of the Board of Directors’ proceedings.
Q. Is the approximately 10% lower approval rate for candidate number 1, Kazunobu Kimoto, compared to other director candidates due to movements by funds or similar? Also, has any analysis been conducted?
A. There are no movements by funds or similar, and we have not analyzed the reason for the lower approval rate. Historically, there is a tendency for voting results to be lower in years with poor performance. We sincerely accept your votes of opposition as responsibility for performance and encouragement. Furthermore, considering the length of tenure up to now, we intend to thoroughly consider succession to the next generation.
Q. We would like each director candidate, excluding newly appointed ones, to express their aspirations before the resolution.
A. We will consider this as an issue for deliberation from the next time onward. Additionally, each director will present business strategies at the shareholder meeting.
Q. Please tell us about the current status and future of the liquid sales business.
A. Regarding liquid sales, we have been focusing on this area since last year and are promoting liquid sales globally. We are now seeing some sales results, albeit modest. In response to customer requests, we are advancing proposals that include not only the sale of the liquid but also application methods and equipment.
Q. Please tell us about the current status and future of IR activities.
A. Since last fiscal year, we have begun publishing videos of shareholder meetings on our website. Furthermore, starting this year, we have changed the financial results briefings, which were previously held for analysts, to open briefings where business partners and others can also participate. Regarding company PR, we sincerely accept the results of surveys conducted by organizations such as Nikkei Inc. and Toyo Keizai Inc. and are striving for improvement.
Thanks to you, we have been awarded three stars in the 2022 " NIKKEI Smart Work " survey. We will continue to promote our IR activities so that we can fully promote our activities.