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Message from the CEO

President & CEO
Morifumi Wada

【A Retrospective Look at EIKEN's 81th Business Year】
Please allow me to begin by extending my heartfelt gratitude to all our shareholders for your continued support of EIKEN Group (the “Group”).
In the clinical diagnostics industry, a tough business environment continues due to the revision of medical fees. Corporations are being forced to focus on even greater cost competitiveness and to actively expand overseas.
Within this business environment, based on its management framework "EIKEN ROAD MAP 2009” and medium-term management plan, the Group is striving to increase the sales of our major products in Japan, while at the same time furthering globalization of the entire Group in overseas markets by placing particular emphasis on the following four fields: fecal occult blood tests, immunological and serological tests, urine tests and genetic tests.
As a result of these efforts, the net sales for the consolidated fiscal year under review went up to 35,761 million yen (increase of 2.2% on a year-on-year basis) due to increased overseas net sales with a focus on our major product of fecal immunochemical test reagents.
Regarding profit, as the result of improving our cost to sales ratio by changing our sales composition and decreasing SG&A expenses, operating income was 4,611 million yen (increase of 32.6% on a year-on-year basis) and ordinary income was 4,681 million yen (increase of 31.9% on a year-on-year basis). Furthermore, net income attributable to shareholders of parent company amounted to 3,447 million yen (increase of 32.1% on a year-on-year basis).

【Outlook for the EIKEN's 82th Business Year】
In terms of sales, we focused on expanding sales of fecal immunochemical test reagents and devices. In particular, we were able to increase sales in overseas regions such as North America and Europe. Furthermore, in our urine test business, use of our products in various countries is increasing through a business partnership with Sysmex Corporation. In overseas markets for the pulmonary tuberculosis detection method (TB-LAMP) and malaria molecular diagnosis systems, use in Cameroon continues to increase through horizontal expansion. Additionally, in the Philippines, testing algorithm verification has been completed as a JICA project and guidelines have been issued for group tuberculosis examinations. We will promote this Philippine cases as a model for spreading our business to other countries.
In regards to research, we have applied for manufacturing and sales approval for respiratory infection items related to Simprova, a compact fully automated genetic testing device using the LAMP method, and are preparing for market launch.
Regarding our business performance, anticipated figures are as follows. Net sales: 35,900 million yen (an increase of 0.4% on a year-on-year basis), operating income: 3,600 million yen (an decrease of 21.9% on a year-on-year basis), ordinary income: 3,650 million yen (an decrease of 22.0% on a year-on-year basis), and net income attributable to parent company shareholders: 2,600 million yen (an decrease of 24.6% on a year-on-year basis). In addition, we anticipate 6,920 million yen in net sales to overseas (an increase of 14.0% on a year-on-year basis), comprising 19.3% of total sales.
We hope for the continuing support and enthusiasm of all our shareholders in the future.

EIKEN ROAD MAP 2019

Grand Vision
"Saving Your Health"
(Continuing to protect people's health as a global clinical diagnostics company)

Fundamental Policy

(1) Fundamental strategy 1: Increasing growth and profitability
1) Promoting global expansion
2) Maintaining domestic sales and increasing market share
3) Increasing profitability

(2) Fundamental strategy 2: Creating new business
1) Strategic partnership through open innovation
2) Creation and expansion of new business and new markets

(3) Fundamental strategy 3: Infrastructure development
1) Increasing productivity through IoT and AI
2) Personnel training and acquisition and structural reform
2) 3) Establishing a sales network and strengthening marketing

Policy regarding profit sharing

The Company regards distribution of profits to its shareholders as one of the most important management issues, and our dividend policy is to first ensure internal reserves required for reinforcement of our financial base and active business development, and then distribute profits by paying stable dividends twice annually, as an interim dividend and a year-end dividend. Specifically, based on the above-mentioned policy, the Company will endeavor to maintain dividends with a goal of 30% or higher for its consolidated dividend payout ratio. The Company in its Articles of Incorporation has set the decision-making body regarding dividends from surplus as follows: "Dividends from surplus, etc. can be distributed by a resolution of the Board of Directors in accordance with regulations of Article 459, Paragraph 1 of the Companies Act."
The year-end dividend for the current fiscal year has been set at 17 yen per share. This is an increase of 3 yen per share from the most recent dividend forecast of 14 yen per share. This increase is being made to respond to support from shareholders, in consideration of how the Company celebrated its 80th anniversary on February 20, 2019 and in view of business results in the fiscal year under review. As we have already paid the interim dividend of 13 yen on December 3, 2018, the dividends on an annual basis will add up to 30 yen per share.
We forecast per share dividends for the next fiscal year as an interim dividend of 13 yen and a year-end dividend of 14 yen for ordinary dividends. Internal reserves will be used effectively from a mid- to long-term perspective in investments for R&D aimed at strengthening our business structure, investments for facilities, and efforts to improve our business efficiency.

  March 31, 2015 March 31, 2016 March 31, 2017 March 31, 2018 March 31, 2019
Dividend amount per share (yen) 17.5 20 25 25 30
Dividend payout ratio (%) 30.4 30.1 31.4 35.1 32.0

* Implementation of stock split *
On of April 1, 2018, 1: 2 stock split. Accordingly, dividend amount converted into base after split before fiscal year ended Mar. 31, 2018.