Square Enix 2012 Annual Report Download - page 28

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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. The bodies authorized to determine dividends paid from
retained earnings for the fiscal year ended March 31, 2012 were
the Annual General Meeting of Shareholders or the Board of
Directors in the case of the year-end dividend, and the Board of
Directors in the case of the interim dividend.
Total dividends applicable to the fiscal year were ¥30 per share,
comprising an interim dividend of ¥10 and a year-end dividend of
¥20. In accordance with Article 459 of the Companies Act, the
Company’s Articles of Incorporation stipulate that dividends paid
from retained earnings and other related matters may be determined
by a resolution of the Board of Directors.
Dividends from retained earnings applicable to the fiscal year
ended March 31, 2012 were as follows.
Date of resolution Total dividends
(Millions of yen)
Dividends per share
(Yen)
November 4, 2011
Resolution of the Board of
Directors
¥1,150 ¥10
May 18, 2012
Resolution of the Board of
Directors
2,301 20
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 the submission
date of the securities filing.
(1) Changes in the Economic Environment
In the event of a harsh downturn in the economy causing consumer
expenditures 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.
(2) The Group’s Ability to Respond to Changes in Consumer
Preferences in the Digital Content Market and the Rapid
Progress of Innovative Technology
It is possible that the Group’s substantial transformation stated in
the “Medium- to Long-term Management Strategies and Challenges”
may adversely affect the Group’s business performance if the Group
is unable to respond adequately and promptly to such transformation.
(3) Changes in Game Platforms and the Group’s Response
The Group’s digital entertainment business could be affected by
diversification, the trend toward increasingly advanced functions
and the general transition of platforms for home-use video game
consoles, smartphones and everyday digital devices, which would
impact the way the Group supplies content, its business model and
profitability.
(4) Securing Human Resources to Execute the Group’s Growth
Strategies Concentrating on the Creation of New Content
and the Promotion of Global Businesses
The Group has been making rapid progress in expanding its
business operations. Delays in securing ideally suited human
resources may adversely affect the Group’s business performance.
(5) Expansion in the Group’s International Business
Operations
As the Group pursues expansion of its international business
operations, a variety of factors present in the countries and regions
in which the Group operates may affect its business performance.
Such factors include market trends, the political situation, economic
climate, laws and regulations, social conditions, cultural factors,
religious factors and customs.
Management Discussion and Analysis of Operating Results and Financial Position (JPNGAAP)