FAQ (Search categories)
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Financial Strategy
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Do SHIFT’s guidelines include M&A?
Given the high degree of uncertainties involved, M&A plans are generally not included in our guidelines.
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When SHIFT passed the resolution (in February 2019) on raising new capital, why did it choose to do so with moving strike warrants, rather than equity financing or debt financing?
We selected that method based on comprehensive consideration for capital policy flexibility and the impact on our share price.
Specifically, unlike standard moving strike warrants, we are able to fix the maximum number of new shares issued upon exercise of the warrants, regardless of subsequent share price fluctuation. In addition, by maintaining conscientious communications with institutional investors, sales are limited exclusively to parties who understand and support SHIFT Group’s business particularly well. Thus, we obtained a good balance between share price stability and liquidity.
We ended up raising ¥5.2 billion. We also succeeded in limiting the dilution of our stock to 6.79%. Not to mention, typically, when this method is employed to raise capital, share prices tend to fall around 10% over the three months following the resolution date, but in SHIFT’s case, we were able to raise our share price by around 30%, thus dramatically minimizing any negative impact on existing shareholders.
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Is SHIFT Group’s business recurring-revenue business or one-time revenue business?
One-time revenue business. However, when formulating budgets and earnings targets, our customers share their annual development plans with us and in many cases, we form our annual operational strategies together with our customers, and in that sense we see our business having recurring-revenue elements to some extent as well.
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What kind of analyst coverage does SHIFT have?
We refer you to the linked information.
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Will SHIFT conduct capital raising in the future?
We are giving the topic proper consideration based on SHIFT Group’s financial condition and future growth strategies.
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What is SHIFT’s dividend policy?
Since SHIFT is currently in the growth phase, we have designated the development of a supply system that meets service demand as an area of urgent focus. We are therefore proactively implementing strategic investments in recruiting activities. We continue to undertake studies to enable us to implement dividend payments at the appropriate time.
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What are SHIFT’s capital policies going forward?
We are studying capital policies from a variety of angles for further growth. In terms of measures we have already implemented, from February to around July 2019, we raised capital by issuing moving strike warrants, thereby improving our previous undercapitalized balance sheet. We also expanded our balance sheet with loans attained through commitment lines and other contracts while maintaining our debt-to-equity ratio. While monitoring our debt-to-equity ratio and cost of capital, and emphasizing dialog with capital markets, we will continue to consider various means of raising capital.
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What is SHIFT’s assessment of its recent earnings results?
We referyou to our latest transcript of business results webcast.