Main Questions and Answers from the 78th General Meeting of Shareholders

Please explain your future business strategy for laser fusion.

We believe it will still take several decades before laser fusion becomes a reality. However, the high-power lasers we are developing for laser fusion may also be used in industrial fields. We will therefore continue working with related organizations to promote industrial applications of this technology.

Depreciation expenses appear to be affecting business performance. Please explain the background and future outlook.

To expand our manufacturing capacity for future growth, we need to make capital investments, including the construction of new factories. As a result, depreciation expenses have increased. The acquisition of NKT Photonics A/S, now renamed Hamamatsu Photonics A/S, is also a major reason for the increase. We expect depreciation expenses to reach their peak in the future. Until then, business recovery may be gradual, but sales have already bottomed out and are now on an upward trend.

In light of Japan-China relations, price competition, and the Chinese government's policy of giving priority to domestic companies, how do you view your business in China?

China is an important market for us, accounting for approximately 25 % of our total sales. Although there are currently political tensions, we have not seen any direct impact on our business with customers at this time. In response to the trend of giving preference to Chinese-made products, we have established a system under which our Chinese subsidiary can manufacture and sell the necessary products locally.

The dividend payout ratio is currently high. Please explain your outlook for improving profitability through technology development while avoiding a dividend reduction.

If we were to determine dividends based only on the dividend payout ratio, the dividend for this fiscal year could decrease significantly. For this reason, we set a minimum level for DOE and decided to maintain the dividend amount. If profits increase in the future, we believe the dividend payout ratio will decline. While maintaining an appropriate balance with shareholder returns, we will continue to allocate the necessary funds to capital investment and research and development. Our strength lies in developing technologies with a view to the next five to ten years and providing products that satisfy our customers. We will not neglect research and development.

What are the Company's current management issues, and what are the role and mission of Outside Directors?

The most important management issue is to maintain and strengthen our competitiveness by making full use of our technological capabilities. To achieve this, it is important to make the necessary investments in facilities and human resources. It is also important to build a management structure that can respond quickly and flexibly to significant changes in the social and economic environment. As outside directors, we believe our important role is to use our respective expertise, make constructive proposals from an external perspective, and engage in thorough discussions with Internal Directors.

Main Questions and Answers from the 78th General Meeting of Shareholders

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