Square Enix 2010 Annual Report Download - page 28

Management’s Discussion and Analysis of Operating Results and Financial Position (JPNGAAP)
4. Strategic Outlook, Issues Facing Management and
Future Direction
Management’s key task is to ensure growth in the Group in the
medium- and long-term, maintaining profitability through the
creation of advanced, high-quality content and services. As the
development and popularization of information technology (IT) and
network environments rapidly advance, we anticipate a major
transformation in the structure of the digital entertainment industry.
We believe that this will be driven by such factors as increased
consumer needs in the area of network-compliant entertainment and
growing access to a diverse range of content by users of devices
that provide multiple functions.
5. Basic Policy for Profit Distribution and Dividends
The Group recognizes the return of profits to shareholders as one of
its most important management tasks. The Group maintains internal
reserves to enable priority to be given to investments that will
enhance the value of the Group. Such investments may include
capital investments and M&A for the purpose of expanding existing
businesses and developing new businesses. The retention of
internal reserves is done while also taking into account return to
shareholders, operating performance and the optimal balance for
stable dividends. Accordingly, the Group strives to maintain stable
and continuous dividends. The portion of dividends linked to
operating results is determined by setting a consolidated payout
ratio target of approximately 30%.
The Company’s basic policy is to pay dividends from retained
earnings twice a year, through an interim dividend and a year-end
dividend. For the fiscal year ended March 31, 2010, the amount of
dividends from retained earnings was determined by a resolution of
the Annual General Meeting of Shareholders in the case of the year-
end dividend, and by a resolution of the Board of Directors in the
case of the interim dividend.
For the fiscal year ended March 31, 2010, to commemorate the
highest recurring income achieved by the Company since the
merger of SQUARE CO., LTD., and ENIX CORPORATION in April
2003, the year-end dividend was increased by 5 yen per share
compared with the previous year-end dividend. As a result, total
The Group will strive to respond to these changes, and has
adopted a medium- to long-term management strategy that focuses
on pioneering a new era in digital entertainment.
The Group’s operating targets for the fiscal year ending March 31,
2011, are as follows (as of June 30, 2010).
Millions of yen
Years ended/ending March 31 2004 results 2005 results 2006 results 2007 results 2008 results 2009 results 2010 results 2011 targets
Net sales ¥63,202 ¥73,864 ¥124,473 ¥163,472 ¥147,516 ¥135,693 ¥192,257 ¥160,000
Operating income 19,398 26,438 15,470 25,916 21,520 12,277 28,235 20,000
Recurring income 18,248 25,901 15,547 26,241 18,864 11,261 27,822 20,000
Net income 10,993 14,932 17,076 11,619 9,196 6,333 9,509 12,000
dividends applicable to the fiscal year were ¥35 per share. The
consolidated payout ratio for the fiscal year ended March 31, 2010
was 42.3%.
Dividends from retained earnings applicable to the fiscal year
ended March 31, 2010, were as follows.
Date of resolution Total dividends
(Millions of yen)
Dividends per share
(Yen)
November 5, 2009
Resolution of the Board of
Directors
¥1,150 ¥10
June 23, 2010
Resolution of the Annual General
Meeting of Shareholders
2,876 25
6. Risk Factors
The Group identifies the items listed below as potential risk factors
that could affect operating results. Forward-looking statements are
in accordance with management’s judgment as of June 30, 2010.
(1) Changes in the Economic Environment
In the event of a harsh downturn in the economy causing consumer
expenditure to fall, demand for the Group’s products and services in
the entertainment field may decline. Such circumstances may lead
to adverse impact on the Group’s business performance.
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