Omron 2005 Annual Report Download - page 12

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10
¥49.4 billion to ¥50.0 billion. As for details regarding tech-
nology that distinguishes the Group from its competitors for
the purpose of expanding new business domains, please
see the feature, “Technology-Driven Sustainable Growth
Begins Now” (pages 11-14).
Doubling total business value
The final goal of GD2010 2nd Stage is to double the total
business value of our various businesses through the
abovementioned strategies. We define business value as
the present value, calculated by discounting the future free
cash flow anticipated from the Group’s various business
domains. According to our internal estimates, total busi-
ness value in fiscal 2003 reached ¥600 billon. Going
forward, we will make every effort to increase this value to
¥1.2 trillion by fiscal 2007. For fiscal 2004, the business
value of existing businesses increased by ¥120 billion,
while that of new businesses and business domains went
up by ¥130 billion. In fiscal 2005, we aim to increase the
total business value by ¥110 billion.
APPROACHES TO STRENGTHEN THE MANAGEMENT
SYSTEM AND THE RETURN TO SHAREHOLDERS
Strengthening governance and
promoting active information disclosure
Even as the Omron Group firms up our defense, we are
pursuing a strategy of gradually shifting our footing toward
top line growth. I am well aware that the quicker our
growth, the more our risk will increase. In order to pursue
sustainable growth while controlling that risk, we must
continually improve management transparency and sound-
ness, and earn the unwavering support of our stakeholders
by strengthening governance and promoting more active
information disclosure. It is also important that we fulfill
our corporate social responsibility (CSR) and fully imple-
ment compliance strategies. Gaining the support of not
only our shareholders, but our broad range of stakeholders
including society at large, is a fundamental principle that
has been deeply embedded in the fabric of Omron since
its founding.
Return to shareholders based on a medium to long-term
expansion of corporate value and appropriate dividends
I am well aware that tackling the issue of return to share-
holders with a positive commitment is another managerial
mission, and one that ultimately enhances corporate value.
We intend to continue toward our goal of a dividend payout
rate of 20% of consolidated current net income. Our policy
is to maintain a minimum annual dividend of ¥10 per share
even in the event of deteriorated business results. The divi-
dend for fiscal 2004 was increased by ¥4 to ¥24 for the
year, in line with this goal. However, as the Omron Group is
shifting its management to an offensive footing, we will
give priority to the distribution of profits to retained earn-
ings for the purpose of investment in line with growth,
aiming to achieve a medium to long-term increase in corpo-
rate value. As for cash flows beyond that, we will not only
pay dividends but also actively repurchase our own shares
and return as much value as possible to our shareholders.
It is both our mission and our pleasure at the Omron Group
to use our technological edge to provide better products
and services to meet various social needs in order to earn
the further confidence of all of our stakeholders. Your con-
tinued support will be greatly appreciated.
July 2005
Hisao Sakuta, President and CEO
Definition of Business Value
New Technological Fields
Simulate 10-year FCF based on
five-year plan.
Stabilize FCF with lasting value
after 11 years.
Existing + Greater China Market
Simulate 3-year FCF
Stabilize FCF with lasting value
after 4 years.
Omron defines business value as the total of present values
of future FCF (Free Cash Flow) generated by each business unit
Lasting value
Business value 1
FY11 & after FY4 & after
Lasting value
Business value
DCF:
Present value
of FCF
DCF:
Present value
of FCF
Double the Total Business Value
2004 (FY)2005
（Plan）
2003 2007
（Tar get）
1,200
800
200
400
1,000
600
0
(Billions of yen) New Tech Fields  Existing Businesses
600
600
850
720
250
950
800
1,200
130
160
960