Canon Marketing Japan Group
Medium-Term Management Plan (2022-2025) Progress Report
January 29, 2024

Canon Marketing Japan Inc.
Masachika Adachi, President© Canon Marketing Japan Inc. 2024

Hello, everyone.
I am president Masachika Adachi.
Thank you for taking the time out of your busy schedules to attend this briefing on our financial
results and management policies.
I will start by describing our progress with the Medium-Term Management Plan(2022-2025).

1

Agenda1. Medium-Term Management Plan (2022-2025) progress report
2. Strengthening Our Management Foundation© Canon Marketing Japan Inc. 2024

2

I will be talking about the two subjects shown on this slide.

2

Agenda1. Medium-Term Management Plan (2022-2025) progress report
2. Strengthening Our Management Foundation© Canon Marketing Japan Inc. 2024

3First I will report on our progress with the Medium-Term Management Plan, which we announced
on January 2022 and runs from 2022 to 2025.

3

Key Points

1 The Basic Policies and the Financial Plans are kept unchanged.
2 A focus will be continuously placed on the IT solution businessin accordance with the basic strategy.

3 Investments are going to be accelerated for further growth.

© Canon Marketing Japan Inc. 2024

4

The progress report on the Medium-Term Management Plan(2022-2025) has three key points.
- Our Basic Policies and Financial Plans as we look forward to 2025 are kept unchanged.
- We will continuously focus on the IT solution business in accordance with the basic
strategy.
- Investments are going to be accelerated for further growth.
Today, I will talk about these three points in more detail.

4Medium-Term Management Plan (2022-2025) Basic Policies
Vision2021-2025
Long-Term
Management
Objectives

Professional corporate group that solves social and customer issues
using ICT and the power of humans
Operating income

Financial
targets

Salesof which, ITS sales

ROE

Basic Policies

9.0%
Increase earnings capacity ofexisting businesses

Expand ITS businesswith profit

2022-2025
Medium-Term
Management
Plan¥58 Billion¥650 Billion
財務目標¥300 Billion

 Carry out and accelerate
strategies for different customer
groups Implement the service-typebusiness model to expand thestock business

Strengthen specialized areasand create new businesses

 Conduct strategies tailored tocustomer groups Continue growth of the industrial
equipment business Increase the profitability of thebusiness of main products

 Create new businesses

Group management aimed at continuous growth Maximize human capital value
 Establish an engagement improvement cycle
 Speed up business investments towards growth© Canon Marketing Japan Inc. 2024

5

In our Long-term Management Objectives, we defined our vision as a "professional corporategroup that solves social and customer issues using ICT and the power of humans."
We have set out the Basic Policies of the Medium-Term Management Plan in line with these Longterm Management Objectives, and are steadily implementing each strategy in accordance withthese policies.

5[Financial Plans] Updated Companywide Consolidated Financial Plan Figures(Billions of yen)

2025

2023
(Actual)2024(Projection)

2025(Projection)

Changes from thefigures announced
2023

Sales

609.5

630.0

650.0

-

of which, ITS sales

268.9

290.0

300.0

-

Op. income

52.5

54.0

58.0

-

margin

8.6%

8.6%

8.9%

-

ROE

8.7%

8.4%

9.0%

-

© Canon Marketing Japan Inc. 2024

6

As regards our Financial Plans, our 2023 results and 2024 projections are as explained earlier by
Mr. Hirukawa.
For 2025, we will keep the plan figures announced last year unchanged.
We plan to achieve sales of 650 billion yen, operating income of 58 billion yen, and a ROE of
9.0%.
In the IT Solutions Business, which is an area of focus, we plan to achieve sales of 300 billion
yen.

6[Financial Plans] Updated Consolidated Financial Plan Figures by Segment(Billions of yen)

2024
(Projection)

2025(Projection)

138.9
14.1

139.3
13.7

127.5
13.0

-

margin

10.1%

9.8%

10.2%

-

Sales

220.3
19.7

231.2
205

249.0
22.5

-

margin

8.9%

8.9%

9.0%

-

Sales

229.7
17.5

235.0
18.3

245.0
19.5

-

margin

7.6%

7.8%

8.0%

-

Sales

44.0
4.1

46.0
6.0

-

Op. Income

40.2
3.6

margin

9.0%

9.3%

13.0%

-

Sales

■Consumers■Enterprise■Area■Professional

2025

2023
(Actual)Op. Income

Op. Income

Op. Income

Changes from thefigures announced
2023
-

-

-

-

© Canon Marketing Japan Inc. 2024

7

Next I would like to describe our projections for each segment.
The projection figures for 2025 are unchanged from those announced last year.
We will steadily implement strategies in accordance with the Basic Policies and work towardachievement of this projection.

7

[Financial Plans] Trend in Gross Profit and SG&A Expenses
Gross profit grew following business expansion with profits and improvement in profitability.
We are shifting to a structure that generates profit by controlling SG&A expenses appropriately.
(Billions of yen)

Trend in SG&A Expenses

Trend in Gross Profit
Amount

40.0%

2,200

35.0%

32.4%

33.8%

34.5%

2,010
201.0
1,840
184.0

1,800
25.0%

33.9%

33.6%

1,993
199.3

2,045
204.5

1,903
190.3

Ratio

35.0%

2,000

30.0%

27.1%

28.0%

27.3%

25.4%

24.9%

1,800

25.0%

1,600
20.0%

20.0%
1,600

15.0%

1,686
168.6

15.0%

1,527
152.7

1,506
150.6

1,493
149.3

1,520
152.0

2020
2020年

2021
2021年

2022
2022年

2023
2023年

1,400

1,400

10.0%

10.0%

1,200

1,200

5.0%

5.0%

1,000

0.0%

Amount

40.0%

2,200

2,000

30.0%

Ratio

1,000

2019
2019年

2020
2020年

2021
2021年

2022
2022年

2023
2023年

0.0%

2019
2019年

© Canon Marketing Japan Inc. 2024

8This shows the trend in gross profit and SG&A expenses.
In terms of gross profit, we are steadily achieving business expansion with profits andimprovement in profitability as set out in our Basic Policies.
We have also succeeded in appropriately controlling SG&A expenses, and have made progress
shifting to a structure that will continuously generate profit.

8

【ITS Business】 Sales Targets by Business Area
We achieved growth in all domains after focusing on the ITS business, centering on the creationand expansion of the service-type business model. We are making steady achievements towards
the targets for 2025.
(Billions of yen)
268.9
209.6

221.1

241.4
82.0

98.8

290.0

300.0

108.0

SI Services

70.9

73.0

37.2

47.6

50.5

55.3

64.0

Maintenance andoperation
service/outsourcing

IT products andsystem sales

101.3

100.5

108.8

115.2

118.0

2020

2021

2022

2023

2024

75.0
(25％)

2025

Projection
Projection* FY2020 financial results have been reclassified because network camera business has been counted as an ITS business since FY2021.
** A certain product business was reclassified in FY2022, but FY2021 results were not changed.
*** FY2024 Projection was announced on January 29, 2024.
© Canon Marketing Japan Inc. 2024

9

I will now explain progress on the Basic Policy "Expand ITS business with profit."
Let me start by looking at sales targets by business area.
In the ITS Business, which is a priority business area, we have managed to achieve steady
growth.
Our 2025 projection is also unchanged from the figure announced last year.
There is also no change in our direction which is to strengthen and expand the service-typebusiness model to realize the Basic Policy "Expand ITS business with profit."
Looking to expand the "Maintenance and operation service/outsourcing" business area, which isan area of focus, we also welcomed Tokyo Nissan Computer System Co., Ltd. (now TCS), whichis strong in this area, to the Group in 2023.
We will continue implementing proactive initiatives.

9

【ITS Business】 Progress on ITS Business KPIs by Customer Segment
Steady rises in KPIs lead to enlargement of the IT solution business. We will capitalize on ourstrength in original technologies to upgrade the IT solution and to expand our areas of focus.

Quasi-major andupper-medium-sizedcompanies

SMEs

Area

Full support
for customers

Enterprise

Co-creation with
Customers

Sales related toEdge Solutions ※1
2021

2023

2025

¥23B

¥27B

¥45B

HOME※2 / IT maintenanceand operation contracts
2021

2023

2025

135,000

190,000

220,000

Sales
related toSecurity

Sales related to
※3
ITO
BPO

2021

32.5B

2021

21.5B

2023

37.1B

2023

26.0B

2025

48.5B

2025

32.0B

※1 Edge solutions : Video solution, Digital document service, Mathematical and demand forecasts, Low code development※2 HOME : IT support service※3 ITO : IT Outsourcing© Canon Marketing Japan Inc. 2024

Contribution of the service business model to value creation

Large
companies

10

This shows the ITS Business KPIs by Customer Segment, which have been set in order to realize
the financial plans explained earlier.
We have made steady progress since last year in every business area.
The 2025 projection figures are also unchanged.
Going forward, we will monitor these KPIs in each customer segment and try to expand theservice-type business model.

10

【ITS Business】 Edge Solutions
For video solutions, we will actively form capital and business alliances to expand the areas where we offer
value. For digital document services, we will enhance the Digital Work Accelerator services to solve
customers' issues.
Digital document service

Video solution
4 technological area
VSaaS

Cloud

VMS

On premiseVideo analysis software / AI

SI services

SeriesBusiness-specific Services

Protect
privacy

Analog meterreading

knowhow

Invoicereceipt

Accounting
Integration

IP Camera

Edge
Face
authentication

PeopleCounting

Maintenance andoperation
service/outsourcing

Electronic Transaction
Management Services
Long-term
retention

Centralized managementof transaction documents

Industry-specific Services
Industry A

Industry B

Industry C

Integration

Long-term retention of transaction-related documents incompliance with the Electronic Books Maintenance Act

Approval workflow

External system
integration

concluded a capital and business alliance agreementwith AWL, Inc. in 2023.

© Canon Marketing Japan Inc. 2024

11

I will now explain our strategies for achieving the individual KPIs.
Regarding Edge Solutions, we will expand the areas where we can utilize our assets andaccelerate initiatives such as the enhancement of services.
Starting with video solutions, last year, we formed a capital and business alliance with AWL, which
specializes in AI video analytics solutions and consulting for the retail sector.
We will continue strengthening solutions in the video DX area going forward.
In digital document services, we launched a bill receiving service last year as an industry-specificservice in the Digital Work Accelerator Series released in 2022.
Going forward, we will continue to solve the issues faced by customers through the further
expansion of services focusing on business-specific and sector-specific services.

11

【ITS Business】 HOME, IT maintenance and operation services
We will expand the one-stop support service for planning, selection, operation, maintenance and education
on optimal IT solutions to provide comprehensive DX support for SMEs.
 Security packNEW  Management support services

IT coordination services

Security
measures Maintenance and operation
Data protection

Response to changes inlaws and systems

PC

operational support
service

Network

operational support
service

Serveroperational support
service

Application

operational support
service

DXシリーズNEW  Educational support services
Sales strategy development support
services / SFA support services

Protection against
information leaks

Skill improvement support services /Training support services

 Services by industryNEWnursing care solution

PC

Industry A

Industry B・・・

concluded a capital and business alliance agreement withCARE CONNECT JAPAN, Inc. in 2023.
© Canon Marketing Japan Inc. 2024

12

Next, I will explain about the Makasete IT DX Series, which we are focusing on in HOME, IT
maintenance and operation services.
In the Makasete DX Series, we launched management support services and educational support
services as new services last year.
Through the expansion of these services, we are now able to provide support covering IT
investment planning and HR development in addition to the support previously provided for theselection, introduction, operation and maintenance of IT solutions.
In addition, we concluded a capital and business alliance agreement with CARE CONNECT
JAPAN, Inc. and released a nursing care solution as a business-specific service.
Moving forward, we will continue expanding new business-specific services and providing
comprehensive DX support for SMEs.

12

【ITS Business】 Security BusinessWe will help customers resolve security issues by offering comprehensive security solutions for protecting
three management assets of information, personnel and property, in two aspects of security, namely cybersecurity and physical security.
Physical security (video security)

Cyber security (information security)
フィジカルセキュリティ
Assessment

Measures fortightening
security

Operation
monitoring

Network
camerasVideo analysis
and behavior
analysis

Offering physical security solutions including crimeand intrusion prevention measures to help createa safe and secure society by combining network
cameras, recording systems, and video analysis
softwareOffering optimal cyber security solutions that
protect customers' computers, networks, cloudand other IT infrastructure and environmentsfrom cyberattacks and other threats

Information

Recorded data
management

Personnel

Property© Canon Marketing Japan Inc. 2024

13

Next is the Security Business.
We have sought to increase our market presence through the launch of comprehensive security
solutions, including airing commercials in programs we provide since mid-November last year,
targeting the continuously strong security market. We have also made progress with theenhancement of services, including the launch of Cato SASE Cloud, which delivers zero-trust
security.
We not only provide customers with cyber security solutions and physical security solutions but wealso use our resources and knowhow to help customers solve their security issues.

13

【Existing Businesses】 Printing Business / Camera Business
For the printing business, we will intensively carry out strategies for different customer groups. For the camera
business, we will step up our approaches to the intermediate customer group and carry out strategies for
specific targets to continuously improve profitability.
Strategies for different customer groups
in the printing businessEnterpriseLarge
companies

Enhance services tailoredto specific business
operations and to specificindustries to gain projects
Increase active customers
in the group of uppermedium-sized customers

Quasi-major andupper mediumsized companies

Focus on the intermediate customer groupin the camera business

Professional
Press and advertising

Still subjects

・・・
Intermediate(High amateur)

Secure andincrease thenumber ofusers of the R
SeriesHistorical sites Flowers andand culture
insects

Moving subjects

Area

SMEs

Promote solutions tocomply with laws andregulations for small- andmedium-sized companies

・・・
SportsRailways

Carry out
one-to-one
marketing

Entry(Beginners)
Recording daily life / travel© Canon Marketing Japan Inc. 2024

14

Next, I will explain about our existing businesses.
For the printing business, we will continue thoroughly implementing strategies for different
customer groups.
For large and upper-medium-sized companies, we will solve customer issues that cannot be
solved through printing devices alone through proposals that combine our digital document
solution "DigitalWork Accelerator.”
For SMEs, we will continue to strengthen profitability by maximizing value provided through theproposal of solutions to address the urgent matter of legal compliance alongside printing device
solutions.
In the camera business, we will continue to strengthen profitability by carrying out one-to-one
marketing and increasing users of the EOS R Series, targeting the intermediate customer group.

14

【Existing Businesses】 Printing Business / Camera Business
Printing Business
Inkjet PrinterLaser Beam Printer32 consecutive years

2nd
Increase ratio of
Unit Pricecomparing 2018+47%

Wide Format Inkjet PrinterIncrease ratio of
Increaseratio of
Unit Price
Increaseratio of
Unit Pricecomparing
2018
Unit Pricecomparing 2018
comparing 2018

+10%

1st
+26%

Digital Interchangeable Lens Camera
16 consecutive years

1st

Office MFP

1stIncrease ratio of
Unit Pricecomparing 2018

Camera Business+73%
Increase ratio of
Unit Pricecomparing 2018

3rd
Increase ratio of
Unit Pricecomparing 2018+14%

Data source : Company research© Canon Marketing Japan Inc. 2024

15

By implementing strategies with a clear target in each of these businesses, we have gained
recognition for the value we provide from customers, maintained a large market share andincreased the unit price, resulting in helping strengthen profitability.
We will continue implementing each strategy aiming to strengthen profitability.

15

【Specialized Area】 Initiatives in Industrial Equipment BusinessWe are working to transform into a platform holder with multi-vendor maintenance capabilities. We
will increase sales of semiconductor services in which profitability and continuity can be ensured
with a view to achieving continued growth in the industrial equipment business.
Transform into a platform holder
with multi-vendor maintenance capabilities

Trend in net sales of
the Industrial equipment business金額単位:億円(Billions of yen)

Customers

Suppliers
222
22.2

Diversified needs

Various seeds
13.9
139

126
12.6

155
15.5

142
14.2

Canon MJ Group
Discovery
Consideration of
new commercial
products

Planning/
Sales

Installation/
Maintenance

Expansion ofexisting businessSupport for
multi-vendor
maintenance

2019
2019年

2020
2020年

2021
2021年

2022
2022年

2023
2023年

2025
2025年

© Canon Marketing Japan Inc. 2024

16

Next I would like to talk about initiatives in the Industrial Equipment Business, one of our
specialized areas.
Through steady progress transforming into a platform holder with multi-vendor maintenancecapabilities, we expect to achieve growth, and, in particular, we will increase sales ofsemiconductor services in which profitability and continuity can be ensured.
We will continue implementing strategies and working on further growth in this business.

16Agenda1. Medium-Term Management Plan (2022-2025) progress report
2. Strengthening Our Management Foundation© Canon Marketing Japan Inc. 2024

17

Next, I will explain initiatives to strengthen our management foundation.

17

Basic Policy for Cash Allocation
We have been improving capacity to generate cash and will make an investment for growth and pay
dividends appropriately, utilizing operating cashflow and cash on hand.
Shareholder returns
Domains for investment
Operatingcash flow

ITS business growth
Investment
for growth200

Priority areas• Edge solutions• IT maintenance for
SMEs• Data centers• Security etc.

M&A &investment
System investment
Investment in
human resources

New business creation

Reinvestment

Billion yen
Cash onhand

Investment details

Cash and deposits needed: maintain an appropriate level of cash and deposits in handin consideration of emergency situations.

© Canon Marketing Japan Inc. 2024

18

Firstly, the basic policy for cash allocation is as shown here.
We have steadily improved our capacity to generate cash from the initial plan through the steady
implementation of each strategy I have explained.
With regard to operating cash flow and cash on hand, we will make investments for growth of morethan 200 billion yen by 2025, whilst leaving aside the cash and deposits that are needed.
We will also make appropriate allocations for shareholder returns.

18

M＆As and Investments（ITS Business）
We have been actively pursuing M&As as well as investments to expand our business in the key area of ITS.
In 2023, we acquired Tokyo Nissan Computer Systems (currently TCS) and concluded multiple strategic capitalalliance agreements.
April 2022

Investment

Edge solution

Investment

Edge solution
Concluded a capital andbusiness alliance agreementwith Capital Asset Planning,
Inc.

Businesstransfer

Healthcare

Concluded a capital andbusiness allianceagreement with Kantsu
Co., Ltd. and with THS,
Inc. respectively.

January 2022

July 2022

June 2022

Reached a basic agreement tointegrate the systems integration
business of Canon Medical
Systems Corporation’s
hospital information system

M&A

BPO
Reached an agreementon the acquisition ofshares of QB5 Inc.

September 2022

December 2022

Investment

August 2023

Investment

October 2023

M&A

Edge solution

Edge solution

DX

Concluded a capital andbusiness allianceagreement with CHIeru
Co., Ltd.

Concluded a capitaland businessalliance agreementwith AWL, Inc.

Made Tokyo Nissan
Computer System asubsidiary

Investment

Security solution
Concluded a capital andbusiness alliance agreementwith Asilla, Inc.

June 2023

Investment

nursing caresolution
Concluded a capital andbusiness alliance agreementwith CARE CONNECT JAPAN,
Inc.

August 2023

Investment

DX
Concluded a capital andbusiness alliance agreementwith Doctors Co., Ltd.

© Canon Marketing Japan Inc. 2024

19

As shown here, we have engaged in M&A and investments for expansion of the ITS Business,
which is a focus area.
Last year, we acquired Tokyo Nissan Computer Systems (now TCS) and formed capital andbusiness alliances with Care Connect Japan, AWL and Doctors, and the deals being
considered have also steadily increased.

19

Development of Highly Skilled Personnel
In addition to past initiatives to visualize skills and to raise the base level of skills, we will in the future
step up specialized training and encourage practices in order to develop highly skilled personnel.

Specialized
training for highly
skilled personnel

Business Concept

Data Science

・・・
Digital MarketingUX/UI

NextStep
Visibility
Raising of the baselevel of skills
ReskillingNumber of employees
who completed design
thinking exams
Approx. 11,100
Number of employees who
had training sessions of
Aidemy BusinessApprox. 1,100

DX certification / DX business certification
Number of employees who received standard level or higher
Approx.5,700(of which, professional level Approx. 600)
Number of employees who
had training sessions of
Data Literacy
Approx. 14,000

Number of employees who
became certified for
IT Passport
Approx. 5,000© Canon Marketing Japan Inc. 2024

20

In our investment in human resources, we are focusing on the development of highly skilled
personnel.
Since 2021, we have been working to visualize skills and raise the base level of skills, and this is
steadily reaping rewards.
In terms of basic skills, our employees have completed DX certification and DX businesscertification tests for two consecutive years as part of efforts to strengthen DX training, andaround 5,700 employees have received standard level or higher, with around 600 of thesecertified as professional level.
As a group, we completed design thinking exams to develop highly skilled employees that cancreate new value.
By stepping up and putting into practice specialized training for highly skilled personnel in areas
such as business concept, data science, digital marketing and UX/UI, we will realize thedevelopment of highly skilled personnel.

20Enhancement of Employee Engagement
We will continue our efforts to visualize and improve engagement scores on the basis of the group
employee employee engagement survey in a bid to establish a loop of improvement in engagement andthereby continuously increase corporate value.
Establishment ofEngagement Improvement Cycle

Group Employee Engagement Survey• Implemented engagement survey targeting Canon MJ Group employees• Four options available to answer survey questions: “agree,” ”somewhat
agree,” ”somewhat disagree,” and “disagree,” with points assigned toeach answer for a total possible score of 1,000

706
678

2021
2021年

686

2022
2022年

2023
2023年

2025
2025年

© Canon Marketing Japan Inc. 2024

21

Next, I will discuss enhancement of employee engagement.
Through the development of highly skilled personnel explained earlier, we will increase thevalue provided to customers and improve customer satisfaction.
Employees will gain job satisfaction by feeling that they are making a contribution.
This job satisfaction will lead to motivation for growth.
We believe that the establishment of such a loop of improvement in engagement will lead tocontinuous enhancement of corporate value.
To establish this loop of improvement in engagement, we have been conducting a group
employee engagement survey of all group employees since 2021, to visualize our engagementscore.
In 2023, we scored 706 out of a possible 1,000, increasing our score from 2021 and 2022.
By analyzing the results of the engagement survey and implementing countermeasures, we willfurther improve engagement and translate this into continuous enhancement of corporate value.

21

Investment for growth
We will proactively carry out mergers, acquisitions and financing as well as investments in systems
and personnel.
1,000

Investment for growth ¥200 billion or more

500
50.0

0
2021
2021年

2022
2022年

2023
2023年

2024
2024年

2025
2025年

© Canon Marketing Japan Inc. 2024

By proactively carrying out the mergers, acquisitions, financing and personnel investment
already explained as well as investments in systems to support this,we will work on achieving sustainable growth.

22

Shareholder Returns
Our basic policy on profit sharing is to pay dividends based on consolidated payout ratio of around 40% orabove, comprehensively taking into consideration our medium-term profit forecast, investment plans, andcash flows.

Consolidated payout
ratio of around 40%
or above

Investment for growth approx.¥90B
Payout ratio

38%

37%

43%
35%

35%

33%

33%

120
Dividend pershare: Yen© Canon Marketing Japan Inc. 2024

60

60

60

60

2017
2017年

2018
2018年

2019
2019年

2020
2020年

75

2021
2021年

90

2022
2022年

2023
2023年

2025
2025年
23

Previously, our basic policy on shareholder returns was to pay dividends based on a consolidated
payout ratio of 30%.
In the future, we will pay dividends based on the upwardly revised target of a consolidated payout
ratio of around 40% or above, comprehensively taking into consideration our medium-term profit
forecast, investment plans, and cash flows.
We also intend to strengthen returns to shareholders by enhancing our execution capabilities, withmore effective utilization of capital in mind.

Towards theContinuous Growth© Canon Marketing Japan Inc. 2024

24

Finally, we have practiced management that is based on an awareness of the cost of capitaland the share price.
We have set hurdle rates within the Group, and we believe that a ROE of 8.0%, which is a 2025
management indicator under the 2021-2025 Long-Term Management Objectives announced in
April 2021, is higher than the cost of capital.
We also believe that our current upwardly revised target of a ROE of 9.0% is also higher thanthe cost of capital.
By continuing to increase the level of ROE through investments in growth of more than 200
billion yen and by increasing TSR through dividend increases in line with profit growth, we
believe we will be more favorably evaluated by the market.
We will focus on sustainable growth, including the new measures from 2024, which will be
discussed in the next part.

24

The performance and future projections made in this document are based on information available at the present time, and include potential risks and inaccuracies.
Please be aware that due to changes in a variety of factors, actual results may differ materially from the projections and other forward-looking statements in these materials.

© Canon Marketing Japan Inc. 2023

This brings me to the end of my presentation on the progress of the Medium-Term
Management Plan(2022-2025)..