Policy of returning profit to shareholders

Basic Policy Regarding Profit Distribution

The MEITEC Group, which hires large numbers of engineers for an indefinite period, believes it is essential to protect employment of the engineers even during times of economic hardship in order to aim for maximizing the shareholders’ return in the medium to long term and to grow sustainably. Accordingly, the Company’s policy regarding profit distribution is to place priority on the “‘qualitative and quantitative’ enhancement of shareholders’ equity” to distribute the profits of the Company based on operating results while also giving consideration to the “balance of funds.”

In addition to the level of “qualitative and quantitative” enhancement of shareholders’ equity, if the balance of funds is an amount higher than the amount of necessary funds required for business operations (consolidated three month net sales), the Company will in principle set the total return ratio by means of dividends and acquisition of treasury shares within 100%.

The Company shall in principle pay dividends twice every year: an interim dividend and a year-end dividend, setting the payout ratio to 50% or higher. The minimum level of dividends shall be a dividend on equity ratio (DOE) of 5%.

The Company shall acquire treasury shares in a timely manner, considering the level of total return ratio and payout ratio.

After the Company acquires treasury shares, it shall continue to hold treasury shares within 5 percent of the total number of shares issued. If the number of treasury shares exceeds the aforementioned limit, the excess treasury shares shall be retired by the end of the fiscal year.

 *To realize the flexible financial position, for the implementation of future growth strategies and response to the risk associated in achieving the goals of the management plan, treasury shares will be held by the company.

Total Return Ratio = Total shareholders return for the year / Consolidated net profit
Total Shareholders Return for Year = Total dividend paid (interim and year end) + Amount used to acquire the treasury shares during the fiscal year
Payout Ratio = Total dividend paid (interim and year end) / Consolidated net profit
Dividend on Equity Ratio (DOE) = Dividend / consolidated shareholder’s equity
Three Month Net Sales = Working capital : Consolidated two month net sales + Fund for strengthening the financial base (a fund to sustain the business operation in the event of a crisis equivalent to that of fiscal year ended March 2010) : consolidated one month net sales
 *Working capital is determined according to such factors as account receivables.