Resolving
Social Issues
with IT Solutions
Integrated Report2019
For the year ended December 31, 2019

PROFILE
Strengths of the Canon Marketing Japan (Canon MJ) Group
Customer Base and Sales
Capabilities

IT Solutions Capabilities

Canon Brand

We have built solid relationships withWe have amassed technologies by acquiring

Since our inception as part of Canon’s sales

numerous customers over our more than 50

companies with top capabilities anddivision, we have been the exclusive seller inyears of selling Canon brand products.

developing state-of-the-art technologies.

Japan of Canon brand cameras, inkjet printers,

Customer needs have diversified with our

We leverage advanced development expertise

office multifunction printers (MFPs), laser

businesses. We will draw on customer trust

based on our deep business and industry

beam printers (LBPs), and other Canon brand*

and our track record to deliver optimal

insight to offer a range of IT solutions,offerings, and have maintained high market

products and solutions that match the needs

including systems development, cloudshares. We also offer maintenance servicesof large corporations through small-to-

services, and data center services.

and support.

medium-sized enterprises.

* Excluding semiconductor exposure equipment, LCD substrate
exposure equipment, and medical devices

Third-Party Assessments
The FTSE4Good Index Series has included Canon MJ for the past 16 years. In addition, we became part of FTSE Blossom Japan and the SNAM Sustainability Index for the third
consecutive time in the year under review. We were also part of the MSCI Japan ESG Select Leaders Index in 2018.

2020

Sompo Sustainability Index

THE INCLUSION OF Canon Marketing Japan Inc. IN ANY MSCIINDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICEMARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE ASPONSORSHIP, ENDORSEMENT OR PROMOTION OF Canon
Marketing Japan Inc. BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI.
M S C I A N D T H E M S C I I N D E X N A M E S A N D LO G O S A R E
TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

Group Mission

Help resolve social issues with advanced imaging and IT solutions

Group Vision

The Canon Marketing Japan Group understands and grows with its customers.

Establishment

1968

Position within the Canon Group

Market and provide solutions, primarily in Japan

Canon Marketing JapanWe market Canon’s products and services inJapan and provide our unique IT solutions.

Canon
EuropeCanon
Asia
Marketing

Canon
Inc.

Canon
U.S.A.

Research and development,
and manufacturing ofCanon’s products

Canon
Australia

Canon Marketing Japan Inc. I Integrated Report 20191

CONTENTS
Overview of the Canon MJ Group
4 An Interview with the President
10 Financial and Nonfinancial Highlights
12 Review by Segment

Value Creation of the Canon MJ Group
14 Milestones
16 Canon MJ Group’s Value Creation Process
18 Growth Scenario under the Medium-Term Management Plan
20 Special Feature: Case Study—Resolving Social Issues with IT Solutions

Segment Strategies
24 Consumers Segment
26 Enterprise Segment
28 Area Segment
30 Professional Segment

Sustainable Management—ESG Initiatives
34 Sustainable Management
36 Initiatives Underpinning Sustainable Growth
40 Corporate Governance
47 Board of Directors and Audit & Supervisory Board Members

Financial, ESG, and Corporate Data
48 Ten-Year Consolidated Financial Summary
50 Financial Review
52 Consolidated Financial Statements
80 ESG Data
82 Canon MJ Group Companies
83 Corporate Data

2

Canon Marketing Japan Inc. I Integrated Report 2019

Editorial Policy
The Canon MJ Group began publishing an integrated report from fiscal 2019, replacing the annual report.
Integrated Report 2019 aims to provide information that various stakeholders need to understand how the Group generates corporate value. The reportpresents more nonfinancial information that showcases the Group’s ability to create value over the medium through long terms and contribute to social
sustainability. Detailed financial information is available through such channels as the Group’s website and the securities report. Detailed CSR-related
information remains available through the Group’s website, the CSR report, and other vehicles.

Categories and Positioning of Disclosed Information

Summarized

Financial Information

Nonfinancial Information

Information on website
https://cweb.canon.jp/eng/ir/

Information on website
https://cweb.canon.jp/csr/(in Japanese only)

Integrated Report

Securities Report

Corporate
Governance Report

CSR Report
Digest

CSR
ReportInformation
Security
ReportDetailed

Reference Guidelines
International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC), and Ministry of Economy, Trade and Industry (METI) Guidance forIntegrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation

Reporting Period
This report covers fiscal 2019, ended December 31, 2019, and also includes activities and information before and after that term.

Scope of Coverage
Canon Marketing Japan Inc. and domestic and overseas Group companies

Disclaimer Regarding Forward-Looking Statements
This integrated report contains forward-looking statements about the future performance and management plans of the Canon MJ Group. All forward-looking statements
are based on management’s assumptions in light of information available to the Company at the time of publication. The following factors may therefore influence actual
results. These factors include consumer trends in Japan as well as other major global markets, private capital expenditures, currency fluctuations, notably against the U.S.
dollar, materials prices, and political turmoil in certain countries and regions.

Canon Marketing Japan Inc. I Integrated Report 20193

Overview of the Canon MJ GroupAN INTERVIEW WITH
THE PRESIDENT

Masahiro Sakata
President

4

Overview of the Canon MJ GroupQ
A We are working to improve profitability by focusing on more value-added products and services.

In fiscal 2019, net sales slipped 0.1% while operating income rose 12.1%, resulting in an operating margin of 5.2%, a record high for theCompany. In last year’s annual report, you stated that your priority was to boost profitability. Has that goal been achieved?

attributable to owners of parent grew 6.8%, to a record ¥22,250 million.

year, which could undermine our operational underpinnings. Also, theReturn on equity (ROE) advanced 0.2 percentage point, to 7.1%.

pace of digitization in connecting people and things picked up in all

These results demonstrated that we can no longer expect toaspects of business and daily life. Operating more nimbly has become

generate corporate growth simply by boosting unit shipments ofa must for corporate growth.

hardware or market share. We enhanced earnings principally by

Net sales for fiscal 2019 were down 0.1% from a year earlier, tooffering value-added products and services, thereby raising unit

¥621,134 million. Operating income increased 12.1%, to ¥32,440 million,

selling prices and margins. As such, we performed generally as weand our operating margin was up 0.5 percentage point, to 5.2%. Profit

expected in terms of our profitability focus.

Value Creation of the Canon MJ Group

Markets for existing businesses contracted faster than ever during theQ
A We created a structure to provide value-added IT solutions Groupwide.

Segment Strategies

The Canon MJ Group continued to perform solidly in IT solutions in fiscal 2019. Revenues in that area jumped 12%, to more than ¥200 billion,
accounting for 36% of net sales. Was growth in core Group companies the main driver?

The main driver of the Group’s IT solutions business has been

Market analysis shows that the needs of large enterprises differ

Canon IT Solutions Inc., which focuses on services for large companies.

somewhat from those of small-to-medium-sized enterprises. As

In the year under review, Canon System & Support Inc. drew on its sales

specialization progresses and business units need more advanced

sites throughout Japan to deliver and greatly increase sales of IT

expertise, big companies are striving to boost productivity by leveraging

solutions for small-to-medium-sized enterprises. Business units that

IT while outsourcing non-core operations. The situation with small-to-previously supplied document solutions to large companies, primarily

medium-sized enterprises is that their people have to handle manywith MFPs, have also bolstered sales by providing IT solutions todifferent roles, and they are adopting IT to enhance operational

enhance the operational efficiency of those customers. So, by

efficiency. In many cases, particularly at small-to-medium-sized

expanding IT solutions Groupwide, we have put ourselves on the pathenterprises, businesses do not have IT specialists, so there is a growing

to grow net sales from approximately ¥200 billion to ¥300 billion or soneed to entrust post-deployment support to us.

by fiscal 2025.

Sustainable Management—ESG Initiatives

The first thing to note is that markets are expanding for IT solutions.

Financial, ESG, and Corporate Data

Canon Marketing Japan Inc. I Integrated Report 20195

Overview of the Canon MJ GroupAN INTERVIEW WITH THE PRESIDENTQ
A The digital interchangeable lens camera market is shrinking faster than expected.

Consumer sales continue to decline. The market for Canon’s mainline digital cameras seems to be shrinking rapidly. How do you view thatsituation, and what are you doing to stem the tide?

Our key consumer products are digital cameras and inkjet printers, but

cameras affordable for ordinary consumers. Now, although smartphones

markets have shrunk faster than envisioned, particularly for digitaloffer convenient picture taking for many people, there is still a certain

cameras. We are the camera market leader, especially in the digital

number of camera and photography enthusiasts. I therefore expect theinterchangeable lens camera market, in which our market share is almost

camera market to stop shrinking once the enthusiast base becomes

60%. As such, the impact of market shrinkage has been significant.

central to it. We will naturally need to work on maintaining a certain

As the camera market continues to decline, we suspect that it ismarket scale by highlighting the enjoyment of cameras andreturning back to a scale more in line with what it used to be, whenphotography to young people and women. It will be vital to keep

photography enthusiasts were willing to purchase cameras that wereintroducing attractive offerings, a good example being the Canonquite expensive. The customer base grew as a result of the expansionary

mirrorless cameras for which market demand is expanding. We will

efforts of camera manufacturers and sales companies, which madecontinue introducing new mirrorless cameras in 2020.

Q
A Inkjet printers are contributing to profitability.

Still, the operating margin on consumer products has increased to beyond 5%. Does that signal a shift to high-margin products, lower costs,
and stronger profitability?

Q

As I mentioned earlier, we have focused on selling value-added digitalsales of mid-range offerings instead of low-priced products whilecameras and inkjet printers. That said, digital cameras have notmaintaining our top market share. We were additionally able to cut

contributed to better profitability, as markets have shrunk faster thancosts by trimming our organization and taking other steps. This

our sales strategies have envisaged. For inkjet printers, average unit

resulted in earnings declining less than sales, thereby enhancing our

prices have increased, with profitability improving from prioritizing

operating margin.

Two years have passed since you transitioned from a product-based organizational framework to a market- and customer-centric one
comprising business units. How has this been beneficial in terms of these units mutually drawing on customer bases and engaging in IT
solutions-based sales for small-to-medium-sized enterprises?

A Fine-tuning in line with sales activity realities.

6

Since the transition, we have fine-tuned all of our business units,

While we are only halfway through that process, I think that theheadquarters planning functions, and other elements of operations to

new framework is heading in the right direction. Still, just because

more swiftly identify customer needs and deliver added value in a

operations are all in business units it is not sufficient just to unify

more timely manner.

business models. The Enterprise segment has a sales-driven andCanon Marketing Japan Inc. I Integrated Report 2019

each business can demonstrate its own strength. As such, we willcomprises indirect and direct seller-driven organizations. We haveensure organizational flexibility by reviewing sales and service processes,

found that there are areas in which people in business units can allwith the top priority being to generate added value for customers.

Overview of the Canon MJ Groupsystems engineering-centric organization, while the Area segment

collaborate to generate synergies by serving the same customers, andQ
A We seek to grow by becoming a business that meets intangible needs.

are unfortunately fewer products that we can differentiate solely based

think that products that it becomes hard to deliver added value willon tangible features. Demand for intangible benefits will likely expand

rapidly shrink in the marketplace. Our offerings include such productsin the years ahead. I think that we will find it hard to grow if we fail toas well as those that still deliver added value but could experiencetransform our businesses to match such a change. We formulated ourfast-shrinking markets in view of value being lower than before. There

new medium-term management plan based on that assumption.
Segment Strategies

Q

While we have not altered our general stance since fiscal 2018, weValue Creation of the Canon MJ Group

What current and future market climate assumptions have you used in formulating your management plan for fiscal 2020 through 2022?

Under your new medium-term management plan, your basic strategy is to become a highly profitable enterprise by pursuing a growth strategy
and reinforcing profitability. Your approach is simpler than under the previous plan. Is the biggest difference from last year the scale of theoperating income growth you are targeting?

A We prioritize earnings.
value to customers and become more profitable. Our basic strategy ismust do to materialize our earnings plans and that will determine thesimpler because we have based it on such thinking.

Sustainable Management—ESG Initiatives

The pursuit of profit will guide management. We will consider what we
resulting sales. In other words, we will focus on delivering high added

Q
A We are largely on track to reach our IT solutions sales target of ¥300 billion.

Your growth strategy focuses on the IT solutions business. You have a clear sales structure and time frame for your medium-term goals. Does
that make reaching ¥300 billion in sales more likely?

Sales of business PCs relating to the end of support for Windows 7 andto be clear about where we stand by that final year.
From this year, we disclosed three new categories for our ITin fiscal 2019, so not all of our performance was internally driven. Still,

solutions sales structure. We decided to disclose new categories to

we have a better picture to an extent of our sales composition, themake clear our commitment to putting IT solutions center stage bysteps we need to take, and the structure we should put in place topresenting solid figures. Another goal is to make comparisons easierreach ¥300 billion in sales. We are working on Long-Term Managementwith the sales and compositions of other companies.

Financial, ESG, and Corporate Data

other external special demand factors contributed to IT solutions sales

Objectives Phase IV, which covers fiscal 2021 through 2025, and we aim

Canon Marketing Japan Inc. I Integrated Report 20197

Overview of the Canon MJ GroupAN INTERVIEW WITH THE PRESIDENTQ
A We urgently need to develop and recruit talented people.
What growth strategy issues and risks do you see?

People are pivotal. We know that it will be challenging to swiftly deploy

We are planning a range of measures on the development front,

people with the right knowledge and skillsets in the areas in which we

examples being to exchange people within and outside our organization

want to grow. We don’t have enough such people yet. Our growth could

and step up training. We are pushing ahead with executive-level hiring,slow if we find it hard to develop or recruit talented people.

and have already been active in that respect in several departments.

Q
A We aim to fuel growth in the IT field by swiftly filling capacity at the Nishi-Tokyo Data Center Phase II facility.
Tell us about the focus of strategic investments, progress in constructing the Nishi-Tokyo Data Center Phase II facility, and your revamping ofenterprise systems.

Our strategic investments cover IT solutions and business process

whose Tier Standard is the globally recognized benchmark for the

optimization, including in the medical field. If a deal is possible in a suitablereliability of data centers. Inquiries about the Phase II facility have thus

area, we would consider acquisitions or investments at the right time.

risen significantly. Quickly filling capacity at that facility should

The Nishi-Tokyo Data Center Phase II facility is an ongoing

contribute to our growth in the IT field.

investment project in the IT solutions area. This facility will be more

Our goal in revamping enterprise systems is to drive operational

advanced than the Phase I facility because of the accelerated and highly

efficiency to adapt quickly to change. Our previous setup incorporated

integrated CPUs, with much more memory. We launched services withsystems for complex operations, which made systems themselves more

the Phase I building in 2012, and it was running almost at full capacity

complex and inefficient for handling new operations and developing

in around seven years. I think that the Phase II facility can reach fullbusinesses. To build our new system, we started by evaluating the needs

capacity even earlier. The operational stability of the Phase I facilityof individual operations, simplifying and systematizing business flows.

positioned us to obtain M&O (management & operations) certification

Simplicity will also contribute to further systems development.

from the Uptime Institute, a leading American private-sector entity,

Q
A We are helping resolve social issues through our IT solutions business.
What progress are you making in the ESG area?

We recommend MFPs, printers, and other offerings that can saveinventory and streamline logistics. The system also helps reform work

considerable energy, and are providing carbon offset products while

practices for logistics staff and overcome shortages of truck drivers

reusing and recycling hardware.

while lowering environmental impact. We will continue to sort out theIn the IT solutions business, we provide a product demand andsupply planning system for manufacturers. This helps them optimize

8

Canon Marketing Japan Inc. I Integrated Report 2019

operational issues of customer issues through our IT solutions business,and in doing so help to resolve social issues.

Overview of the Canon MJ Group
Value Creation of the Canon MJ GroupQ
A We eliminated share dilution by retiring treasury stock.

You retired treasury stock in March 2020. What is your stance on shareholder returns?

stock on March 11, 2020. We did so because as we have secured

under a shareholder returns policy that comprehensively considers

investment funds for now, we have less need for using our stock insuch factors as our medium-term earnings outlook, investment plans,acquisition or other transactions, and we also wanted to eliminate theand cash flows. Cash dividends for fiscal 2019 were ¥60 per share,risk of diluting the shares held by our investors.

Segment Strategies

Based on a consolidated payout ratio of 30%, we aim to pay dividends

unchanged from a year earlier. We retired 20 million shares of treasury

Q
A We seek to deliver solid results in an adverse business climate.

What is your outlook for the business environment in fiscal 2020? What are your management goals?

Fiscal 2021 will see us start the five-year Long-Term Management

we announced our results for the first quarter, we shelved the annual

Objectives Phase IV, which we are formulating from customer

earnings forecast that we announced at the start of fiscal 2020. As I

perspectives. I believe that it will be vital to create benchmarks andmentioned earlier, we face market shrinkage not just in the digitalsystems that we can execute reliably from year one. We have madecamera field but also in the document business, where the market

improving corporate value central to formulating a long-term

could diminish faster amid teleworking and other new work practices.

management plan that is extremely effective and can deliver steadyAs such, I think that the business climate will be adverse in fiscal 2020.

results. It is the antithesis of plans in which numbers are simply left toThat said, the Group is generating solid results in initiatives to enhancetake on a life of their own.

that backdrop that our prime focus will be on what customers want andI look forward to the ongoing support and encouragement of ourFinancial, ESG, and Corporate Data

added value for customers, centered around IT solutions. It is against

Sustainable Management—ESG Initiatives

The COVID-19 pandemic has made the future even more unclear. Whenshareholders for our endeavors in fiscal 2020 and beyond.

on working out how to become a highly profitable corporate group.

Canon Marketing Japan Inc. I Integrated Report 20199

Overview of the Canon MJ GroupFINANCIAL AND NONFINANCIAL HIGHLIGHTS
Financial Highlights
Net sales

Operating income(Millions of yen)

(Millions of yen)(FY)646,003629,314632,190

621,591

621,134

2015

2016

2017

2018

2019

(FY)

26,647

27,6762015

2016

30,4072017

32,44028,941

2018

2019

The Company posted a 0.1% decline in net sales, to ¥621,134 million,

Operating income was up 12.1%, to ¥32,440 million, as a higher grossreflecting lower digital interchangeable camera revenues, which offset

profit from increased IT solutions revenues and lower expenses boosted

further demand increases for IT solutions.

profitability.

Profit attributable to owners of parent

Profit attributable to owners of parent per share(Millions of yen)

(Yen)

20,68015,670(FY)

2015

20,82622,25018,162

2016

159.48160.61

20172018

171.60140.06120.84

2017

2018

2019

Profit attributable to owners of parent increased 6.8%, to ¥22,250 million.

(FY)

2015

2016

2019

Profit attributable to owners of parent per share rose ¥10.99 from a year
earlier, to ¥171.60.

Return on equity (ROE)

Cash dividends per share

(%)

(Yen)

7.2
6.5

6.9

7.1
45.00

5.7

(FY)

2015

2016

2017

2018

2019

ROE was up 0.2 percentage point, to 7.1%, on earnings growth and greater
capital efficiency.

10

Canon Marketing Japan Inc. I Integrated Report 2019

(FY)

2015

60.00

60.00

60.00

2017

2018

2019

50.00

2016

Cash dividends per share were unchanged, at ¥60.00 for the year.

Overview of the Canon MJ Group

Nonfinancial Highlights
Greenhouse gas (GHG) emissions (Scope 1 and 2)

Contributions to reductions in customer carbon dioxide (CO2) emissions(t-CO2)(t-CO2)

42,31340,513

41,8742016

2017

48,78650,77520182019

155,843
121,572

123,075

128,071

135,515

2016

2017

2018

2019

Data center
Value Creation of the Canon MJ Group

Excluding data
center
(FY)

2015

(FY)

2015

GHG emissions (excluding data center) for the year under review trended

This figure presents energy and resources savings in terms of CO2

downward owing to business site consolidations, a reduction in the

reductions for environmentally friendly products and IT solutions that we

number of vehicles, and more economical driving. In contrast, data center

provide to customers. These reductions more than doubled our GHG

emissions increased with the number of servers.

emissions (Scope 1 and 2).

Patent applications published and number of patents published(Cases)99.97%

99.93%

99.99%

99.99%

Patent applications
published

360

2016

324
228

165

2017

2018

2019

(FY)

2015

2016

191

2017

160

148

2018

2019

This shows the percentage of industrial waste from collection centers

The Intellectual Property Department and Group companies collaborate

nationwide that we recycle instead of incinerating or putting into landfill.

closely on ongoing efforts to invent and to apply for and obtain patents,

Our recycling rate has remained high for the past three years.

focusing on unique Group products and solutions.

Number of female managers and women as percentage of managers

Sustainable Management—ESG Initiatives

2015

397

379

Number ofpatents
published

99.79%(FY)

381

Segment Strategies

Industrial waste recycling rate(%)

Percentage of Group employees taking paid leave(%)

Number of female managers(Number of people)

75

2.2%

(FY)

2015

92

97
60.7%

2.4%

2016

2.6%

2017

2.9%

2018

68.3%

74.5%
Financial, ESG, and Corporate Data

Women aspercentage ofmanagers

80

85

3.1%

2019

(FY)

2017

2018

2019

The Group has 97 female managers, representing 3.1% of all managers.

The percentage of Group employees taking paid leave rose 6.2 percentage

Both figures show an upward trend.

points, to 74.5%.

Canon Marketing Japan Inc. I Integrated Report 201911

Overview of the Canon MJ GroupREVIEW BY SEGMENTCONSUMERS SEGMENT
Segment sales declined 11.6%, to ¥132,790 million. Segment income was down 6.5%, to ¥6,865 million.
Lower sales of digital interchangeable lens cameras

Lower sales of ink cartridges[Factors][Factor]• Although we focused on expanding sales of mirrorless cameras,• Lower print volumes

centered on the full-sized EOS RP, unit sales of such offerings as theEOS Kiss M plunged.

Lower sales of IT products[Factor]• Impact of shrinking digital SLR camera market• Sales dropped for SD cards and other peripherals, offsetting steadydemand for gaming PCs.

Lower sales of compact digital cameras[Factor]Market position• Contracting market

Maintained top market shares in digital SLR, mirrorless, and compact
digital cameras and in inkjet printers

Higher inkjet printer sales[Factor]• Although sales declined amid a sluggish market for consumer models,
we did well with high-capacity Giga Tank offerings.

(Millions of yen)

2018

2019

YoY growth rate

Segment sales

150,245

132,790-11.6%

Segment income

7,340

6,865

-6.5%

ENTERPRISE SEGMENT
Segment sales increased 4.1%, to ¥195,828 million. Segment income was up 15.4%, to ¥10,070 million.
Higher sales to financial services industry

Higher sales by Canon IT Solutions Inc.

[Factors][Factors]• Solid demand for security brokerage systems integration (SI) projects• Although SI demand was down in the absence of the previous year’s large

and investment product sales support system projects for credit unions

projects for the financial services industry, we secured several projects,• Secured large laser printer order from a life insurer

primarily for manufacturers.

Higher sales for manufacturing customers[Factor]• Enjoyed solid demand, which included an order for demand forecast
systems for a beverage company and a large order for operational datacollection terminals for a food company• Secured several large infrastructure systems projects• Obtained orders for embedded systems projects
Sales of office MFPs in this segment were down in the absence of theprevious term’s major projects and as a result of efforts to minimize orders

Higher sales for retailers

for low-profitability projects. Sales of laser printers were up on big orders[Factor]from a life insurer.

• Demand was steady, including for a point-of-purchase production
systems project for a retailer, a large office MFP project for an informationand communications company, and large orders from a security firm anda trading house for network cameras

12• Data center services demand remained favorable.

Canon Marketing Japan Inc. I Integrated Report 2019

Overview of the Canon MJ Group(Millions of yen)

2018

2019

YoY growth rate

Segment sales

188,168

195,828

4.1%

Segment income

8,724

10,07015.4%

AREA SEGMENT
Lower office MFP sales

Higher sales of Canon System & Support Inc.

[Factor][Factors]•
Unit shipments to small-to-medium-sized enterprises dwindled,• The termination of support for Windows 7 drove replacement demand

offsetting the impact of higher sales to mid-sized enterprises.

for business PCs among small-to-medium-sized enterprises leading

Value Creation of the Canon MJ Group

Segment sales increased 4.2%, to ¥268,310 million. Segment income climbed 19.2%, to ¥14,398 million.

to a surge in unit shipments.

Higher laser printer sales• For customers replacing business PCs, we did well with proposals for[Factor]•
Notwithstanding progress toward office MFP consolidation, we
expanded sales to certain industries and did well with proposals for

deploying such offerings as the HOME IT support cloud service forsmall-to-medium-sized enterprises and ESET antivirus software.

replacing business PCs.
Segment Strategies(Millions of yen)

2018

2019

YoY growth rate

Segment sales

257,569

268,310

4.2%

Segment income

12,07814,39819.2%

PROFESSIONAL SEGMENT
Lower production printing sales

utilization rates, sales agent agreements were terminated with foreign[Factor]manufacturers with which we did major transactions outside the• Demand was sluggish for businesses related to continuous feed andsemiconductor field.

wide-format printers.

Sustainable Management—ESG Initiatives

Segment sales decreased 5.9%, to ¥43,676 million. Segment income soared 89.9%, to ¥1,617 million.

Higher healthcare sales

Lower industrial equipment sales[Factor][Factor]• Hospital information systems and digital radiography demand was solid.

• Offsetting favorable demand for maintenance services to enhance plant(Millions of yen)

2019

YoY growth rate

Segment sales

46,42543,676-5.9%

Segment income

851

1,617

89.9%

Canon Marketing Japan Inc. I Integrated Report 2019

Financial, ESG, and Corporate Data

2018

13

Value Creation of the Canon MJ GroupMILESTONESThe Canon Marketing Japan Group was established in 1968 to sell Canon’s business machines, and later expanded
beyond selling Canon cameras and business machines to offer PCs from other companies and SI services. Today, theGroup combines its IT capabilities, diverse products, and fine-tuned services to supply solutions that support allareas of society.

1983
1981
1971
1968

Canon Business Machines Sales Inc.,
Canon Business Machine Services Inc.,and Canon Camera Sales Inc. merge toform Canon Sales Co., Inc.

The Company lists on
the Second Section of
the Tokyo Stock
Exchange.

The Company lists
on the First Sectionof the Tokyo Stock
Exchange.

Canon Business Machines Sales Inc.
and Canon Business Machine Services
Inc. established1969

Canon Camera Sales
Inc. establisheds machineses
ras and busin
e
m
a
c
g
in
ll
e
S

s of other companies
Selling PCs and server
SI business

14

Canon Marketing Japan Inc. I Integrated Report 2019

The Canon MJ Group launches Long-Term
Management Objectives Phase II (covering fiscal
2011 through 2015).
The key strategies were to expand the market sharesof Canon products, diversify businesses, create
services businesses, and reform Group operations.

The Canon MJ Group launches Long-Term
Management Objectives Phase III (covering fiscal
2016 through 2020).
The Company formulated its Group Mission and Group
Vision under this phase (see page 1). The goals are to
combine Canon’s robust imaging technologies and the
IT technologies that the Canon MJ Group has
accumulated over the years to expand the Company’sbusiness domains while collaborating with customers
to help resolve social issues.

Overview of the Canon MJ GroupThe Canon Sales Group launchesLong-Term Management
Objectives Phase I (covering
fiscal 2006 through 2010).
The key strategies were todominate the domestic market andestablish new businesses.

2006
Value Creation of the Canon MJ Group

Canon Sales Co., Inc. was renamed
Canon Marketing Japan Inc.

2018
The Company’s 50th anniversary

2019
Net sales

621,134
millionOperating income

32,440
Segment Strategies

millionOperating margin

5.2%

Sustainable Management—ESG Initiatives

2003

Acquires SUMITOMO METAL System Solutions Co., Ltd., renaming it CANON SYSTEMSOLUTIONS INC., thus fully entering the IT solutions field

2007

Acquires Argo 21 Corporation

2008

Integrates CANON SYSTEM SOLUTIONS INC. and Argo 21 Corporation to create Canon IT Solutions Inc.

2012

Nishi-Tokyo Data Center begins services

Canon Marketing Japan Inc. I Integrated Report 2019

Financial, ESG, and Corporate Data

Expanded IT solutions
business15

Value Creation of the Canon MJ GroupCANON MJ GROUP’S VALUE CREATION PROCESSThe Canon MJ Group will endeavor to maintain and enhance its business model by taking advantage of its strengths
in terms of contributing to social sustainability over the long term while helping resolve social issues throughadvanced imaging and IT solutions.
Social changes

Opportunities andrisks

Capital that helps create value

Extensively analyze current
situation to materialize mission

Financial capital

Robust financial position

Globalwarming

Canon MJ Group Strengths

Equity ratio of 64.4%

Customer base and sales clout
Manufacturing
capitalNishi-Tokyo Data Center
Maintenance and operations
certification

Decliningbirthrate

Human capital

Digitaltransformation

Technology sources

IT solutions technology
Group Mission
The source andmotivation for value
creation efforts

Intellectual
capital

We are the sole seller in Japan of such Canon brandproducts* as cameras, inkjet printers, office MFPs, andlaser printers in which we have consistently maintained
high market shares.
*Excluding semiconductors and medical equipment

Fruits of in-house product andservices development

Number of patents held
1,269 (as of December 31, 2019)Social capitalWork practicereforms

Natural capital

Performance
Newly added financial value

Corporate citizenship

Medium-Term Management Plan for 2020 through 2022

Domestic partner network
Nationwide

Long-Term Management Objectives Phase III(Covering fiscal 2016 through 2020)
Group Mission:

Group Vision:

Help resolve social issues

The Canon Marketing Japan Group

Environmental footprint reduction

with advanced imaging andunderstands and grows with its

GHG emissions (excluding data centers)
Down for the fifth straight year

IT solutions

customers.

ESG
Reinvestment

16

Canon Marketing Japan Inc. I Integrated Report 2019

From 2003, began fully entering IT solutions field
through extensive acquisitions.
Financial institution systems a particular strength

Exclusively sell Canon products in Japan

Systems engineers
Around 4,000

Respect for
Diversity

More natural
disasters andepidemics

We maintain a customer base for large companies andsmall-to-medium-sized enterprises throughout Japan,
and we are a trusted provider of corporate solutions.

World-class data center operating quality

Corporate governance, human resources, environment, and societyOverview of the Canon MJ Group

Value creation area

Value created

Optimally allocate businessresources based on thesituational analysis: MediumTerm Management Plan

Kyosei materialization

Safety and security

Profit before income
taxes¥33.3 billion
Imaging

Growthstrategies

We will endeavor through all of thebusinesses of the Canon Group and Canon
MJ Group to help create a society in which
everyone works together and lives inharmony.

Payout ratio
Offices

35.0%

Segment Strategies

Focus on IT Solutions
business

Value Creation of the Canon MJ GroupResource allocation

Value provided to society

Addressing climate change• Providing eco-friendly products

Enhance
profitability

Return on equity
Manufacturing

7.1%• Collecting and recycling• Support for reducing environmental
impact through IT solutions

Solutions provision
Products and services
Generate value by developing
and delivering products andservices¥221.5 billion

Sustainable Management—ESG Initiatives(Group IT solutions sales)

Finance

Tackling population decline
Help enhance productivity through Canon
products and IT solutions

Medical care

P18–

Contributions to
reductions in customer
CO2 emissions

135,515t-CO2
Education

P34–

Logistics andservices¥10.9 billion

Financial, ESG, and Corporate Data

Corporate taxes

Helping realize social safety andsecurity
Contribute to safety and security throughcybersecurity and network camera
systems

Canon Marketing Japan Inc. I Integrated Report 201917

Value Creation of the Canon MJ GroupGROWTH SCENARIO UNDER THE MEDIUM-TERM MANAGEMENT PLAN
The Canon MJ Group has formulated two strategies to become highly profitable over the medium term. The first is to
grow the IT solutions business. The second is to improve overall profitability by maintaining earnings from key Canon
products while using IT to bolster productivity.

Basic Strategy
We will draw on our IT solutions capabilities, Canon brand, and customer base strengths to transform into a highly profitable corporate group by endeavoring
to solidify our growth strategy and profitability. Our growth strategy is to help resolve customer management issues and myriad social issues by focusing on
the IT solutions business.

Transform into a highly profitable corporate group
Maximize profitability by providing solutions ahead of changes in society and customers

Growth strategy

Reinforcement of profitability

Focus on the IT solutions business

Maintain profitability ofCanon’s core businesses• Help resolve myriad social issues

Enhance internal productivity
through IT• Help resolve management issues

IT solutions capabilities

Canon brand

Customer base

Background to Formulating the Medium-Term Management Plan
Japan’s workforce is continuing to shrink, so the Canon MJ Group needs to become more productive by overhauling business processes, using IT more, andreforming work practices. We thereby aim to transform into a highly profitable corporate group by offering our accumulated expertise to customers.

18

Canon Marketing Japan Inc. I Integrated Report 2019

Growth Strategy: Focusing on the IT Solutions Business
The nation’s declining workforce has made it imperative to tackle labor shortages at large corporations and small-to-medium-sized enterprises. Improving
Overview of the Canon MJ Group

productivity through work practice reforms is another pressing challenge.
Large corporations accordingly seek to further use IT, enhance operating efficiency, and concentrate resources on core businesses, and are reforming
work practices.
Small-to-medium-sized enterprises need to tackle labor shortages and maintain IT systems after deployment by introducing and employing IT.
Corporate activities are impossible without IT, for which demand is growing.
The Canon MJ Group will cater to robust IT demand by expanding its SI services, data centers, cloud services, and IT maintenance and operations services.

Value Creation of the Canon MJ Group

Priority Areas and Medium-Term Targets for the IT Solutions Business
Expand IT maintenance and operations services and outsourcing, with SI services as our core
CAGR
+4%

Main products / services• Data centers / Cloud services• Operations / Support

System sales / IT products• Infrastructure construction system• Product system security• IT products including PCs¥95.0 billion¥83.0 billion¥33.6 billion¥55.0 billion¥104.2 billion¥100.0 billion

2019

2022

(FY)

Segment Strategies

IT maintenance and operations
services and outsourcing¥250.0 billion¥220.8 billion*• SI development• Embedded development• Engineering

SI services¥300.0 billion +2025(Results)* In disclosing actual results for fiscal 2019, under new classifications, net sales included in IT solutions mainly regarding Canon product-related services are excluded.

Enhancing Profitability: Maintaining Earnings from Major Canon Products while Improving Productivity by Accelerating IT
We will bolster profitability by maintaining earnings from major Canon products while accelerating in-house IT deployments. We will also improve productivity

Digital interchangeable lens cameras

Sustainable Management—ESG Initiatives

by revamping core systems, introducing robotic process automation (RPA), and further leveraging the Internet of Things (IoT) to enhance service capabilities.
Office MFPs

• Top ranking in the mirrorless camera market• Improve profitability by increasing sales to priority customers> Aim for top ranking in the market for full-frame models by increasing the• Strengthen the capability of proposal-making on the use of MFPs in the businessselection of the EOS R SYSTEM

operation process• Construct efficient sales and support systems• Improve efficiency in maintenance services through the use of IoT

Inkjet printers

Laser printers• Improve profitability through sales expansion of home-use printers whose unit

• Increase the number of machines in field (MIF) by continuing sales expansion to
specific industries• Promote the NETEYE service*business-use printers and those with large-capacity ink tanks• Improve profitability by raising the ratio of genuine Canon ink cartridges and by

Financial, ESG, and Corporate Data

price is high and whose printing volume is large• F urther sales expansion of the business field by increasing the selection of

expanding automatic deliveries

Maintain earnings (as shown below)

Optimize operational processes

Maintain highly efficient organizational management* Online support service that provides a comfortable use environment. By using the internet, the support continues monitoring the state of multifunctional products.

Canon Marketing Japan Inc. I Integrated Report 201919

Value Creation of the Canon MJ Group

Case Study—Resolving Social Issues with IT Solutions
The Canon MJ Group centers its growth strategy on the IT solutions business and helps resolve a range of socialand management issues.
Digital technologies have swiftly transformed all aspects of society in

As explained in the interview with the president, large enterprises andrecent years. In version 1 of its Guidelines for Promotion of Digital

small-to-medium-sized enterprises have somewhat different IT requirements.

Transformations, published in January 2018, the Ministry of Economy, Trade

Large customers primarily need to better harness IT to boost productivity soand Industry (METI) presents its definition of Digital Transformation (DX),they can focus on highly specialized tasks in their departments. Small-to-“Corporations responding to dramatic changes in the business climate,medium-sized enterprises need to employ IT to engage in more efficientleveraging data and digital technologies to transform products, services,

sales, internal communications, and other activities. This case study

and business models in keeping with customer and social needs while also

spotlights AvantStage, a total enterprise solution for manufacturers that wetransforming businesses, organizations, processes, and corporate culturesoffer to large enterprises. It also presents HOME, an IT support cloud service

to gain competitive advantages.” Building IT systems is vital to driving DX.

for small-to-medium-sized enterprises.

IT Solutions for Large Enterprises
AvantStage helps to optimize supply chain management among food manufacturers needing to overcome suchchallenges as their manual labor dependence and food losses.
In Japan, companies must urgently boost productivity, as the working

out of stock, with companies missing out on opportunities or losing

population is dropping amid a declining birthrate. Food manufacturing

customers to rivals. As such, to strike a balance it is vital to produce moreposes innumerable management challenges, as players often frequently

accurate demand forecasts and formulate production plans that reflectrevamp product lines and must carefully deal with expiration dates andshipment and inventory conditions. Stock replenishment plans should also

shipping deadlines. High-mix, low-volume production is another common

factor in shipment frequency and capacity from plants to distribution

feature in that industry, and many processes are labor intensive. Anothercenters and warehouses around the nation.

consideration is lags in IT implementations across production processes.
IT throughout manufacturing processes is not progressing, so production,

20

The Canon MJ Group helps food manufacturers to resolve issues throughthe IT tools that they so urgently need.

purchasing, manufacturing management, and other systems run separately.

Canon IT Solutions’ AvantStage concept offers customized mission-

It thus takes considerable time to identify lots and shipment destinations in

critical solutions, and comprises four products. One is FOREMAST, forthe event of contamination or other issues.

projecting demand and for demand and supply planning. Another is mcframe,

Food losses are an urgent concern. The Japanese government estimatedwhose capabilities include production planning, cost management, and sales

that the nation threw away 27.59 million metric tons of food in fiscal 2016,

logistics. A key benefit of AvantStage is that it is a best-of-breed offering.

of which about 6.43 million metric tons, or more than 20%, were edible.

Some customers might want a complete package of tools. Others might

Cutting production to prevent disposals increases the risk that items will go

wish to deploy just some tools to resolve specific issues. Combining

Canon Marketing Japan Inc. I Integrated Report 2019solution. FOREMAST comprises functional SI core groups such as for projecting

systems for customers.

demand and planning inventory replenishment, and offers consulting, systems

Deploying mcframe can help resolve productivity improvement issues

Overview of the Canon MJ Groupmission-critical tools in this business package enables us to build optimal

development, and other services. The chart below presents FOREMAST-based

mentioned earlier. This core systems package manages production, costs,

demand and supply planning and adjustment flows.
Augmenting Demand Planner (DP) is Replenishment Planner (RP), which

other AvantStage tools. We developed mcframe specifically for manufacturing,

computes production requirements and inventory transfers to accommodate

so it incorporates a plethora of business and production expertise. Process

demand. We also use Plan Browser (PB), which monitors and calibrates

management approaches often differ among plants, and many processes

monthly, weekly, and daily demand and supply, to drive a plan–do–check–depend on the skills of experienced personnel. Deploying mcframe digitizes

act (PDCA) business cycle.

such processes to visualize, automate, and streamline operations andValue Creation of the Canon MJ Groupand sales management, and lets customers integrate information with

A food manufacturer deploying FOREMAST used to suffer fromstandardize plant tasks.

frequently finding items out of stock. On a particular day, that customer

Each plant can thus run in line with the system without having towould often experience stock nearing expiration dates and that it did not havedepend on talent, boosting per-capita productivity. The feedback has been

sufficient stock for orders, forcing it to ship items from distant warehouses to

excellent, with some customers finding far faster lot tracing and others

cover such situations. Having adopted FOREMAST, the customer can now use

noting a 75% reduction in site reports and shorter inspections.

the optional delivery deadline alert feature to address potential problems.
Segment Strategies

FOREMAST uses scientific techniques to produce demand and supply

That customer has also told us that the number of irregular tasks hasplans to help resolve food losses. The R&D Division of Canon IT Solutions

decreased, greatly reducing on-site workloads.

incorporated years of research into mathematical techniques to realize this

FOREMAST Target Operations (Manufacturing)Excluded

Demand and supply chain management

Sales
Organization and business flow planning

BudgetCompanywide planning•Identifying demand
and trends•Collecting sales information•Assessing prediction
accuracy

Demand planning
FOREMAST/PB
Monthly and weekly demand

Daily demand

Sales projection information (monthly or weekly)

Selection, aggregation,and distribution

Sales promotion and deal negotiations information

Production requirement calculations
FOREMAST/RP•Optimizing inventory levels•Balancing supply•Factoring in production
efficiencies

Sustainable Management—ESG Initiatives

Demand and supply forecasts
FOREMAST/DPMonthly or weekly planning

Demand and supply adjustments
FOREMAST/PB

Order information
Production plans

Orders and reserves

Production requirements

Production and material
requirements planningmcframeProcess planning
ASPROVA
Product orders(production outsourcing)

Suppliers

Raw materials andparts procurement

Firm
plans

Site plans

Inventory replenishment amount calculations
and inventory alerts
FOREMAST/RP
Replenishment amounts

Inventory monitoring and adjustments
FOREMAST/PB

Shipment plans*2

Supply plans*1
Shipment plans*2
Plant inventories
Transfers (PULL
Inventories
replenishment)
Merchandise procurement (ordering)Raw materials procurement

Production

Production and procurement

Swiftly detecting
and responding
to demand andsupply changes
and defects

Financial, ESG, and Corporate Data

Daily planning

Delivery plans
Inventories

Shipments

Customers

Logistics and supply chain management*1 Supply plans: Primary transport plans from plants to warehouses (plans for allocating plant inventories)*2 Shipment plans: Truck loading plans for replenishment orders
Canon Marketing Japan Inc. I Integrated Report 201921

Value Creation of the Canon MJ Group
SPECIAL FEATURE: CASE STUDY—RESOLVING SOCIAL ISSUES WITH IT SOLUTIONS

The latest version of FOREMAST, which we rolled out in 2020,and logistics planners and also helps resolve social issues. For example, it

incorporates features that employ the R&D Division’s proprietary artificial

optimizes work–life balance by reducing workload mismatches that lead tointelligence (AI) technology, such as a deep learning-based demand forecast

overwork and cuts CO2 emissions by boosting transportation efficiency.

model. A feature that automatically adjusts the demand and supply plan fortasks at production and logistics sites reduces workloads for manufacturing

We will continue to improve the capabilities of AvantStage and cultivate
services that meet customer needs.

IT Solutions for Small-to-Medium-Sized Enterprises
HOME, an IT support cloud service for small-to-medium-sized enterprises offers inexpensive, solidly supported
IT cloud solutions that are simple to deploy to streamline operations.

22

Japan’s shrinking workforce has made it extremely challenging for small-such as by improving operational efficiency and reinforcing marketing andto-medium-sized enterprises to boost productivity by reviewing businesscapabilities. Still, some claim that it is impossible for them to invest in IT

processes. Managers and employees of these enterprises often handle

because of the great costs and work entailed in implementing anddiverse tasks. Sales representatives may undertake everything frommaintaining systems.

management strategies to accounting, human resources, and public

Cloud services can help small-to-medium-sized enterprises employ

relations. Workloads may prevent them from performing their core sales

IT easily and at low cost. Cloud storage enables them to share and use dataroles or from engaging in new areas. It is vital to enhance the operational

anywhere or centrally manage information through secure storage. Anotherefficiency of such individuals in view of their broad roles. There are also

benefit of cloud services is that systems always remain up to date withoutbusiness information management issues to consider. For example, storingcustomers having to buy new hardware or software. The usage rates ofcontracts, purchase orders, and other important paper-based documents iscloud services have surged in recent years.

a complex process that can also result in information leaks. IT helps resolve

HOME, the Group’s IT support cloud service for small-to-medium-a range of management issues for small-to-medium-sized office managers,

sized offices, offers cloud services that are quick and simple to deploy. They

Canon Marketing Japan Inc. I Integrated Report 2019

Overview of the Canon MJ Group

Software Investment Ratios by Company Size
(Last quarter moving averages)

15

12.0%
Large corporations

10

0

Value Creation of the Canon MJ Group

4.3%

5

Small-to-medium-sizedenterprises
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Sources: Small and Medium Enterprise Agency’s 2020 White Paper on Small and Medium Enterprises in Japan and Ministry of Finance’s surveys for Financial Statements Statistics of Corporations by Industry
Notes: 1. Covering large corporations capitalized at more than ¥1 billion and small-to-medium-sized enterprises capitalized at between ¥10 million and ¥100 million.
2. Software investment ratio = Software investments divided by capital expenditures and multiplied by 100.

understood contract terms. Having deployed the HOME service, the customer

expertise to use.

now enjoys additional mailbox capacity, does not need to make extra

HOME carefully selects cloud services that are important for small-to-

settings changes or delete mails, and does not need to maintain a server, as

medium-sized enterprises. These include groupware for managing

there is none on the premises. It is also easier to view individual schedules,

schedules, storage for sharing documents and data, and capabilities forand the customer finds it easier than anticipated to add users.

hosting within their own domains.
We also offer security services that prevent unauthorized access to

Segment Strategies

begin with the beneficial essentials for enterprises, and require no in-house

HOME enables small-to-medium-sized enterprises to boost theirprofitability by helping them tap IT tools.

networks. Customers can deploy our cloud and security services without
Sustainable Management—ESG Initiatives

requiring specialized knowledge. HOME is easy to use, affordable, extremely
reliable, and offers complete support.
One customer had issues sharing information in-house, and was
unable to secure real-time response through emailing. Mailboxes were

We join hands with small-to-medium-sized enterprises seeking

small and capacity was frequently limited. Its salespeople were thus unable

greater operational efficiencies through IT. We help them tackle IT issues,

to externally check emails and schedules, making it difficult to secure theboost productivity, and grow their businesses by leveraging systems

internal information needed when negotiating deals. A key to deploying

construction, deployment support, and IT maintenance services as part oftype-O (Microsoft 365) of Canon System & Support’s HOME was that it was

total solutions to their diverse challenges.
Financial, ESG, and Corporate Dataeasy to change user numbers on a monthly basis. Other benefits were
support desk aggregation and the ability to access support that fully

Canon Marketing Japan Inc. I Integrated Report 201923

Segment Strategies

CONSUMERS SEGMENT
Business Overview

Market Outlook and Strategies for Fiscal 2020

In the Consumers segment, we aim to broaden engagement with customers

Note: The COVID-19 pandemic made it exceedingly difficult when the Company issued this report toin BtoC markets and maintain ongoing ties with them. We supply cameras,present reasonable market and performance forecasts for fiscal 2020. Management may accordingly
revise the strategies below during the term.

printers, and diverse other products and services that help build deep ties
with customers by providing photo and video enjoyment. We benefit from

Digital Interchangeable Lens Cameras

the support of numerous customers in Japan. In 2019, we held No. 1 shares

Demand for digital interchangeable lens cameras has trended downward

in the domestic markets for digital SLR, mirrorless, and compact digital

since peaking in 2013, declining particularly for digital SLR cameras. In

cameras, as well as inkjet and laser beam printers.

contrast, demand for mirrorless models outstripped that for SLRs for the

In 2019, we concentrated on delivering unparalleled photo and video

first time in 2018, and the gap will likely expand. We will endeavor to

enjoyment in mature markets for cameras and printers. We bolstered thesatisfy a wide range of consumers, not just in SLRs but also in entry-level

lineup for the iNSPiC, a mini photo printer that we rolled out in 2018 forthrough professional mirrorless offerings, primarily for the EOS R series

smartphone users. We also announced and brought out the iNSPiC REC, aand the EOS Kiss M.

carryaround model without a display and with a carabiner mechanism that

Compact Digital Cameras

users can clip onto their bags or belts.
We have built a strong following among young and female consumers

The compact digital camera market is trending down overall, and wefor such offerings, which we believe can deliver unique new experiences.

expect demand to continue declining in 2020. Canon will accordingly focus

We look to boost sales of gaming PCs and other merchandise andon high-value-added market drivers, including high magnification zoom

services carrying other brands in keeping with trends as part of efforts tolens cameras and high-resolution, high-definition cameras. We will also

make living more enjoyable for customers as a leading photo imaging

offer new ways for consumers to enjoy photography, such as through thecompany. With the tastes and purchasing patterns of consumers

iNSPiC REC.

diversifying, we aim to optimize and expand engagement with customers
through such existing channels as mass retail and camera stores andwholesalers while also stepping up efforts in the e-commerce space.

Business Management Policies
The Consumers segment mission is to keep delivering new value to society and customers through photoand video imaging, including through Canon’s original camera business. In a climate in which changes aredramatic and hard to predict, we will strive to make our existing businesses more robust while flexibly andswiftly offering new products and services.

Koichi Mikami
Senior Executive Officer
Director of Consumers Segment

24

Overview of the Canon MJ GroupStrengths and Strategies
Dominant shares of the cameraand printer markets

Technical and support capabilities forassisting professionals

Diverse channels

We will leverage ties with a wide range of customers

We help professional photographers in the fieldWe will broaden our engagement with customers

and develop new products and services tothrough our products and services while delighting

through various channels, including throughfurther increase customer satisfaction.

customers through photography and videography.

mass retail, camera, and other stores, as well
Value Creation of the Canon MJ Groupas through e-commerce and our showrooms.

Printers

through photos and videos, we will draw on our existing channels,

Aggregate printer market demand, including for inkjet and laser beam

e-commerce, showrooms, and other vehicles to invest extensively inmodels, was down around 5% in fiscal 2019. Demand for consumer inkjet

externally sourced merchandise while bolstering service operations.

printers is dropping, while that for offerings with large ink tanks andRisk Management Approach

expanding sales of high-value-added offerings and boosting unit prices.

Markets in core businesses are shrinking, and the COVID-19 pandemic

We will leverage digital marketing to expand our presence in inkjet printers

could accelerate that trend. We seek to make existing businesses morewith large tanks and business models. As with the iNSPiC, we will continue

robust while investing in new businesses and e-commerce channels thatto offer consumers new ways to enjoy prints. We will pursue overall growth

can become new expansion engines.

Segment Strategies

business printers is rising. For consumer machines, we will focus onby compensating for lower consumer machine and consumables demand.

New Businesses
Sustainable Management—ESG Initiatives

Markets in core businesses are maturing, so we must urgently build new
businesses. In keeping with our mission of bringing people together

Strengthening Our Relationship with Society

We will contribute to society by delivering camera and printer products and services thatbring people closer together and provide new value. Last year, we responded to requests
from numerous customers by launching an inkjet printer trade-in service. We will endeavor
Financial, ESG, and Corporate Data

to lower environmental impact from production through support by dismantling andrecycling resources from collected printers.
We donate ¥10 to the Furusato Project for each printer traded in to help nonprofit
organizations (NPOs) throughout Japan that engage in conserving forests and rice terraces,
restoring arable land, and protecting flora and fauna.

Canon Marketing Japan Inc. I Integrated Report 201925

Segment Strategies

ENTERPRISE SEGMENT
Business Overview

contribute to such endeavors by drawing on the trust of a customer baseIn the Enterprise segment, we serve large customers in the finance,

we have built over the years to help with DX efforts by offering design

manufacturing, retailing, public, and education sectors by offering Canon’scapabilities that resolve customers’ management and business issues andline of diverse products and solutions while leveraging the technologicalby pushing ahead with digital businesses that deliver swift results by

and development capabilities of Group company Canon IT Solutions to

combining advanced devices, solutions, and technologies.

deliver solutions and SI services that help resolve industry-specificMarket Outlook and Strategies for Fiscal 2020

management issues.
We also maintain an IT infrastructure business that encompasses

Note: The COVID-19 pandemic made it exceedingly difficult when the Company issued this report tobuilding systems infrastructure, running data centers and providing

present reasonable market and performance forecasts for fiscal 2020. Management may accordingly

security, as well as an engineering business that draws on our state-of-revise the strategies below during the term.

All industries

the-art technologies.
Our mission is to create value with customers and to become a true

They will draw on corporate efficiencies, labor savings, and digitization topartner by delivering that value. We want customers to rely on our

speed up efforts to improve productivity, with many of them adoptingorganization and people and, where they require, make us their first port ofpaperless processes. At the same time, the IT services market shouldcall. Our vision is to increase existing value in markets and sectors andcontinue to grow, with DX efforts leveraging AI, the IoT, and other platforms

contribute to society. We seek to become recognized in markets andsteadily ramping up. Efforts will accelerate to reform work practices ahead

sectors for our ability to resolve issues and for the value of our solutionsof the Tokyo Olympic and Paralympic Games in 2021.

supply capabilities, which are highly trusted among customers.

Financial services

Large corporations that are key customers for the Enterprise segment

Investments to lift employee productivity, efforts to reinforce customer

are speeding up efforts to boost productivity in view of a declining worker

contacts, and initiatives to materialize fintech and other new products andpopulation and work practice reforms. Many customers have embarked onservices should support growth. We will augment fiduciary operations andDX initiatives leveraging AI, the IoT, big data, and other tools. We will

damage insurance areas by cultivating business-specific solutions, one

Business Management Policies
Human resources
Swiftly identify changes in the business environment and become individuals and teams that can conceive,
create, and execute ideas to resolve customer growth issues.
Customer baseWe will retain, deepen, broaden, and extend positive relationships with customers to grow and evolve with them.
Value provision
We will identify customers and market trends, understand ourselves, and provide and refine value that
customers and markets find attractive.
Masachika Adachi
Director, Senior Managing Director
Director of Enterprise Segment

26

Overview of the Canon MJ GroupStrengths and Strategies
Robust customer base

Advanced expertise

Total support

We have drawn on our customer base to build

We have amassed a solid project track record on

This coverage for system life cycles extends

trust from extensive transactions leveraging

the strength of Canon IT Solutions’ outstanding

from planning and consulting to design,

relationships with top managements andSI and systems development capabilities anddevelopment, construction, operations, andoutstanding marketing capabilities.

advanced technologies.

maintenance.
Value Creation of the Canon MJ Group

By combining these capabilities, we aim to create a business model that generates new value by balancing high added value and productivity
and strengthen the profitability of our IT solutions business while expanding sales.
Japan has embarked on its greatest postwar education reforms. Using

industry changes.

information and communications technology (ICT) environments has

Manufacturing

become essential for reforms extending from elementary through highExpanding demand among manufacturers overall to upgrade enterpriseschools to universities and working adult education courses. We will broaden

systems should surpass average overall market growth through further

our presence in educational markets by drawing on our infrastructure in key

increases in the IoT and AI deployments. This trend should encompass notcompetency areas and by accelerating SI development, centered on the injust assembly operations, principally in the automotive sector, but also

Campus Series.

Segment Strategies

example being new corporate cloud services that capitalize on a wave ofchemicals, foods, consumer products, pharmaceuticals, and other process

Risk Management Approach

solutions, building new maintenance solutions, and differentiation

The risk of shortages of talented professionals in the IT industry is becoming

solutions that harness video technology.

increasingly acute. We will step up recruiting and strategically cultivate

Retailing

existing engineers, such as by shifting them upstream, while reinforcing ties

We expect demand for SI associated with M&As and for businesswith external systems partners to beef up human resources. The COVID-19

streamlining and automation amid labor shortages to underpin growth,

pandemic has led more customers to have employees work from home,which should be faster than the market average. We will promote labor-

reducing office print volumes. We thereby expect maintenance services

saving IT solutions that overcome personnel shortages, particularly among

revenues to decline. We are assessing the extent of such a downturn.

Sustainable Management—ESG Initiatives

setups. We will focus on such areas as developing engineering businessretailers and trading firms, and cultivate trading business, point-ofpurchase, and other solutions.

Educational markets
Strengthening Our Relationship with Society
Financial, ESG, and Corporate Data

Canon IT Solutions’ Nishi-Tokyo Data Center has donated credits equivalent to 20,000 metric tonsof CO2 to a Tokyo 2020 carbon offset program that aims to make the Tokyo Olympic and Paralympic
Games carbon neutral in 2020. The center has reduced its emissions significantly through arange of energy conservation initiatives, and will keep contributing to social sustainability
through such endeavors.

Artist’s rendition of the Nishi-Tokyo Data Center Phase II facility

Canon Marketing Japan Inc. I Integrated Report 201927

Segment Strategies

AREA SEGMENT
Business Overview

Market Outlook and Strategies for Fiscal 2020

In the Area segment, we maintain sales and services sites around Japan,
focusing on offering management and business solutions for small-tomedium-sized customers with fewer than 1,000 employees.

Note: The COVID-19 pandemic made it exceedingly difficult when the Company issued this report topresent reasonable market and performance forecasts for fiscal 2020. Management may accordingly
revise the strategies below during the term.

Targeting businesses by employee size enables us to customize

We expect that replacement demand for business PCs, which has driven

solutions. Information security measures, for example, entail risks thatsales to date, will come to a halt through the first quarter of fiscal 2020. At

vary according to employee numbers and business categories. We deliver

the same time, we anticipate that IT investments will remain brisk to help

optimal solutions to customers by leveraging the expertise we havestreamline operations in keeping with work practice reforms and enhanceamassed to date and our successes.

productivity. We will continue to uphold and build ties with customers that

Our customer channels are Canon System & Support Inc., a subsidiaryof Canon MJ, business partners in Japan, and dealers and systems

have arisen through PC demand while providing new products and services
to new customers.

partners, which are primarily systems integrators.

In particular, small-to-medium-sized customers are extensively

We will combine the capabilities of these channels and the Canon MJ

using IT, and Canon System & Support provides a key role in that area.

Group’s strengths to undertake area marketing to build an optimal

Although such customers are increasingly keen to deploy IT, they do notcustomer response structure that is both market- and customer-centric.

have enough personnel to maintain and manage systems. Canon System &This segment aims to build robust relationships with customers andSupport offers total support in everything from deployment to operations

expand further by not only supplying Canon products but also deliveringand maintenance to help customers streamline, develop, and transform

solutions for customer management and business challenges.

their businesses.
With working populations declining, we anticipate a growing need for
IT operations and management and security measures among small-tomedium-sized enterprises, providing more opportunities for our earnings
growth.

Business Management Policies• Grow with partners by helping resolve the diverse business challenges of small-to-medium-sizedenterprises.
• Deliver outstanding customer satisfaction in service and support areas.
• Employ information and data to establish uniform management processes and management styles toenhance efficiency and productivity for our partners and our organization.
• Better incentivize and reward partners and employees and improve their satisfaction levels.

Kunihiko Kubo
Senior Executive Officer
Director of Area Segment

28

Overview of the Canon MJ GroupStrengths and Strategies
Diverse channels
These offer various customer operational solutions and include business partners whose customers are leading local enterprises, systems partners
that deploy enterprise systems for companies throughout Japan, and Canon System & Support, which maintains broad, nationwide customer supportand sells directly to small-to-medium-sized enterprises.

Value Creation of the Canon MJ Group

Customer support infrastructure through approximately 200 sites nationwide
We provide products and maintain an IT solutions support structure for customers around Japan and engage in direct sales to resolve businesschallenges for small-to-medium-sized enterprises.
Capabilities in offering industry and business systems with system integrators
We provide products and IT solutions by collaborating with systems partners that have deployed systems at companies around Japan.

At the same time, we do not anticipate significant growth in the• Labor shortages owing to declining working population
Countermeasuresthe consolidation of such systems and the increasing digitization of

We will transform our business approach by leveraging digital and remotedocuments. To expand product sales under such circumstances, we willinteraction tools in the drive to boost productivity and expand earnings

have to propose products that work with customers’ internal systems andeven in a declining working population.

Segment Strategies

markets for MFPs, LBPs, and other document output equipment because of

propose production equipment and other industry goods for customers. We
will accordingly need to deploy resources strategically in such fields, andwill reinforce our structure and cultivate our human resources.

• Risk that maintenance services could decline because they accountfor a high proportion of sales• Risk that our proposal and support capabilities could experience a
relative decline amid intensifying competition in the IT space

Japan’s working population continues to fall, and small-to-mediumsized customers in particular are experiencing such issues as
Sustainable Management—ESG Initiatives

Risk Management Approach

Strengthening Our Relationship with Society

shortages of IT professionals. We will help customers boost
productivity and transform work practices by providing support andafter-sales services that leverage our IT while contributing to theresolution of labor shortages and other social issues.

Countermeasures
We will transform ourselves into a customized solutions proposer forsmall-to-medium-sized enterprises.
Financial, ESG, and Corporate Data

Canon Marketing Japan Inc. I Integrated Report 201929

Segment Strategies

PROFESSIONAL SEGMENT: PRODUCTION PRINTING
Business Management Policies• We require all employees in this organization to explore ways to grow with our highly specialized customer base, swiftly delivering top-quality products
and services and attentive support.
• We are cultivating a cadre of professionals that can help customers tackle changes in the printing market.

Strengths and Strategies
Ample experience and expertise

Expansion in commercial and industrial printing

We will draw on our capabilities, amassed over many years in data

We will take advantage of our robust customer base and our technologicalprinting services, to provide printers and solutions that cater to theand development capabilities to become trusted partners in commercial

diverse needs of customers.

and industrial printing.

Business Overview• Acquire new customers by providing high-quality inkjet printers andWe offer business reform support for customers, primarily in the printing

solutions offerings catering to diverse needs in the commercial

industry. We sell high-speed digital printers, wide-format printers, andprinting market.

point-of-purchase systems and consumables. We provide print prepress• Acquire new customers by targeting signs, displays, labels, and otherand post-processing equipment, inspection devices, and printing-related

media for industrial printing.

software and maintenance services. We also develop and supply workflow• Help enhance customer productivity by offering new large-format

systems and print services.

printers and drawing management solutions.
• Differentiate with inspection and workflow systems and supply total

Market Outlook and Strategies for Fiscal 2020
Note: The COVID-19 pandemic made it exceedingly difficult when the Company issued this report tosolutions.
• Endeavor to reinforce customer ties by helping resolve issues, notably bypresent reasonable market and performance forecasts for fiscal 2020. Management may accordingly

cutting costs and focusing on core businesses by supplying andrevise the strategies below during the term.

outsourcing business services at and from outside customer sites,

The printing market is gradually trending down, and this situation isnotably for print on demand services, contents production, and office

expected to remain unchanged in fiscal 2020. The digital printing market is

equipment management.

expanding in Japan, however, albeit more slowly than in Europe or theUnited States. This is because of a shift away from offset printing toward

Risk Management Approachon-demand printing, which makes possible multi-type, small-quantity

Digitization might not progress as expected because of lower-priced offset

production in applications such as direct mails, insurance notices, teaching

printing in the commercial printing sector. We will accordingly go beyond

materials, and other mass documentation.

printing to offer an array of IT technology and other Canon MJ Group• Provide data print service forms that employ color inkjet printers andsolutions to address various customer issues in the printing market.

solutions for printing them with variable data to help streamline
customer print factory operations and maintain and expand ourcustomer base.

30

Canon Marketing Japan Inc. I Integrated Report 2019

PROFESSIONAL SEGMENT: INDUSTRIAL EQUIPMENT
Overview of the Canon MJ Group

Business Management Policies
Our growth strategies underpin everything we do.
• We accordingly pursue a mission of cultivating the technological progress of industrial infrastructure and providing valuable solutions to realize a safe,
secure, and affluent lifestyle, workplace, and society.
• Our vision is to become a profitable organization by fostering our Beyond CANON and Beyond JAPAN businesses from customer-centric and global
perspectives while cultivating our services businesses.

Value Creation of the Canon MJ GroupStrengths and Strategies
Become unique

Draw on our seasoned support

Maintain an ample product lineup

Maintain a unit that specializes in developing

Leverage our support capabilities so we canProvide total solutions, including for process

products internally and identify world-classoffer field support that can cover diverse productreforms.

equipment based on market needs, packaging

offerings in Japan and overseas that need

it with technology.

advanced technologies.

Segment Strategies

Business Overview

In non-semiconductor markets, we will boost sales of individual
products. We will broaden our product lineup in the IoT vision area,

manufacturing and inspection equipment, IoT-related vision products, metal

centered on Canon CMOS image sensors, and become more adept at

3D printers, optical measuring instruments, and other laser processing

proposing solutions to develop new markets. In the laser processing field,

equipment. We currently handle the offerings of 19 companies from seven

we will solidify sales of large metal 3D printers in the energy andcountries. We will accelerate product group expansion and broaden our

automotive arenas, in which this equipment is increasingly used to mass

activities to continue meeting customer needs.

produce parts. We will accelerate our market penetration for measuring
Sustainable Management—ESG Initiatives

This organization sells, supports, and maintains semiconductor

devices from Äpre Instruments, LLC and Gesellschaft für Bild- undMarket Outlook and Strategies for Fiscal 2020
Note: The COVID-19 pandemic made it exceedingly difficult when the Company issued this report topresent reasonable market and performance forecasts for fiscal 2020. Management may accordingly
revise the strategies below during the term.

Signalverarbeitung mbH that we now offer.

Risk Management Approach
Our risks in the year ahead are that markets will experience dramatic

Capital investments in the memory segment of the semiconductor market

changes and that distributor agreements with overseas business partners

have long stagnated. We expect a recovery to begin in the second half ofwill dissipate. We will accordingly cultivate new products and businessfiscal 2020. The proliferation of electric vehicles (EVs), progress inpartners and broaden our lineup.
Financial, ESG, and Corporate Data

autonomous car technologies, the commercialization of 5G broadband
networks, and other developments should see demand remaining solid for
power semiconductors and communications equipment-related parts.
We will continue to strengthen customer and product diversity forthis market, reinforce our structure to adapt to market environmentchanges, and deploy our strategies for expanding services sales.

Canon Marketing Japan Inc. I Integrated Report 201931

Segment Strategies

PROFESSIONAL SEGMENT: HEALTHCARE
Business Management Policies
With the medical and healthcare industry landscape transforming, our mission has been to support the evolution of IT to address customer challenges
and needs and provide valuable medical information systems. We seek to become a truly trusted partner by providing top-quality products and services
that deliver value.
Strengths and Strategies
Achievements and trust over

Medical IT solutions specialization

Medical information and quality control

more than 40 years

We offer market strategies, specialists, and a

We have ensured safe handling of medical

solutions lineup.

information by retaining ISMS Conformity

We have built a solid track record in the medical
IT business by focusing relentlessly on customer

Assessment Scheme and PrivacyMark

needs and being able to provide total support

certifications.

that extends from proposing to developing,
deploying, and maintaining medical IT setups.

Business Overview

Growth fields include transitions to cloud services such as for

We provide total solutions, specializing in the medical market, and offer

electronic medical records and image management systems. Also

one-stop proposals, development, installation, and maintenance. We

important are comprehensive community-based care and related

cater to diverse customer needs, providing an array of solutions andfacilities collaboration. We anticipate systems and services that harness

services from constructing large medical information systems throughcloud technology, good examples being remote image diagnoses andsmall systems with short lead-time such as receipt computers,

online medical appointments and interviews. It is against this market

electronic medical records, medical examination, and dispensing

backdrop that we will draw on our position as a total solutions provider

systems. We cultivate medical image cloud services that leverage ourin medical IT and identify increasingly sophisticated customer needs

strengths in imaging and IT to cater to diverse customer needs.

and the value they demand in bringing together our experience andcloud infrastructure to create and deploy new services that match theMarket Outlook and Strategies for Fiscal 2020
Note: The COVID-19 pandemic made it exceedingly difficult when the Company issued this report topresent reasonable market and performance forecasts for fiscal 2020. Management may accordingly
revise the strategies below during the term.

Risk Management Approach
The COVID-19 pandemic’s impact on medical facility operations could

The digitization of medical information at hospitals, clinics, and other

undermine IT investments, changing the direction of medical ICT

institutions in Japan should contribute to the collection of data that ispolicies. We will tackle these risks by maintaining our business

important for AI uses. The government is accordingly continuing to

infrastructure so we can provide outstanding services to existingpromote healthcare ICT, driving market expansion. We expect that

customers, increasing customer numbers by deploying medical cloud

electronic medical records will become cheaper and more diverse bysolutions that cater to diversifying needs. We will thereby stabilize our

gaining a foothold in small and mid-sized hospitals, 60% of which haveoperating infrastructure.

yet to adopt them.

32

needs of tomorrow’s markets.

Canon Marketing Japan Inc. I Integrated Report 2019

SUSTAINABLE MANAGEMENT—ESG INITIATIVES• Sustainable Management• Initiatives Underpinning Sustainable Growth• Corporate Governance• Board of Directors and Audit & Supervisory Board Members

Canon Marketing Japan Inc. I Integrated Report 201933

Sustainable Management—ESG Initiatives

SUSTAINABLE MANAGEMENTThe Canon MJ Group views tackling climate change, bolstering information security, respecting human rights and diversity, and maintaining corporate
governance as vital for supporting sustainable growth, and accordingly engages in a range of related initiatives.
We seek to offer products, services, and solutions that embrace social issues (aspects of sustainability*) in keeping with contemporary social demands
and expectations. We believe that helping resolve social issues and delivering social value through our operations will contribute to sustainable corporate
and social progress. The Canon MJ Group will undertake CSR activities that generate new value that matches current needs in keeping with its “Business with
CSR” slogan.
* Encompassing such areas as safety and security, health, environmental conservation, effective resources usage, biodiversity, information security, occupational safety and health, measures for the elderly, and community support

Group Mission
Help resolve social issues with advanced imaging and IT solutions

Group Mission
Group Vision

Group Vision
The Canon Marketing Japan Group understands and grows with its customers.

Business with CSR
The Canon MJ Group aims to identify rapidly changing social needs and customer businessBusiness with CSR

management issues, helping overcome social issues by providing IT and other solutions.
We will leverage Business with CSR activities to help achieve the Sustainable
Development Goals (SDGs).

Basic CSR
These CSR activities are essential to address the demands of stakeholders

Basic CSR

in terms of human rights, labor, the environment, and information
security, which are crucial for business health. These activities factor in
adherence to ISO 26000, the Keidanren (Japan Business Federation)’s
Charter of Corporate Behavior, and other elements.

Corporate Governance and Compliance
Our commitment in these respects underpins all business activities andensures transparent management decisions.

The“Three Selfs”
Spirit34

Canon Marketing Japan Inc. I Integrated Report 2019

Our “Three Selfs” spirit is a central guiding principle that dates back to the foundingof Canon and is part of our corporate DNA. The principle states that employees should
proactively take the initiative (self-motivation), conduct oneself responsibly and withaccountability (self-management), and know one’s position, roles, and circumstances(self-awareness). The Three Selfs spirit is the foundation of our CSR activities.

Overview of the Canon MJ Group

Helping Resolve Social Issues
FOREMAST, a demand projection and demand and supply planning solution for manufacturing
Reducing inventories without causing shortages through management systems leveraging mathematical technology
mcframe, which provides production and cost control and sales management solutions for manufacturers
More than 600 companies have installed our system, which caters to the diverse needs of manufacturers

Value Creation of the Canon MJ Group

Environmental Protection
Contributions to reductions in customer CO2 emissions (t-CO2)
Improved energy savings of products and carbon offset deployment
Efficiencies from IT solutions
Used products and consumables recycling
Total

2017
19,93950,43352,703123,075

2018
19,546
57,77350,752
128,071

2019
19,70468,78647,024
135,515

Trusted Quality
Segment Strategies

Certifications acquiredStandards
ISO 9001
ISO 20000
Business Continuity Management System Conformity
Assessment Scheme

Diversity
Percentage of female managers

Sustainable Management—ESG Initiatives

ISMS Conformity Assessment Scheme
PrivacyMark
ISO14001:2015

Acquiring companies and business units
Canon System & Support Inc. (companywide)
Canon IT Solutions Inc. (department)
Canon Production Printing Systems Inc. (department)
Canon IT Solutions Inc. (department)
Canon IT Solutions Inc.
IT Services Division, IT Services Technology Division, and DC Operations Department(Nishi-Tokyo Data Center)
Canon Marketing Japan Inc. and 13 other companies
Canon Marketing Japan Inc. and 8 other companies
Canon Marketing Japan Inc. and 12 other companies

Worker-Friendliness

3.1%

Number and percentage of outside directors(as of December 31, 2019)

2 (33%)

2.74%

Financial, ESG, and Corporate Data

Ensuring Management Transparency

Turnover rate (Canon MJ Group, as of December 31, 2019)

Ensuring Independence from the Parent
Company
Number of directors from the parent company(as of December 31, 2019)

None

Canon Marketing Japan Inc. I Integrated Report 201935

Sustainable Management—ESG Initiatives

INITIATIVES UNDERPINNING SUSTAINABLE GROWTH
Environmental Management

Product Collection and Recycling Activities

The Canon MJ Group seeks to contribute to social progress by enhancing

We set up a program to efficiently collect used Canon MFPs, LBPs, andlifestyles and safeguarding the environment by deploying in-housethose cartridges from customers and dealers and to recycle valuable

measures to prevent global warming and reduce waste while pursuingresources within the Group, thereby contributing to the creation of a

distinctive initiatives as a marketing enterprise.

recycling-driven economy.
Group member Canon Ecology Industry Inc. recycles used cartridges,
disassembling and cleaning reusable parts and crushing and pelletizing

Future Forest 2020 Environmental Vision
The Canon MJ Group formulated Future Forest 2020 as its medium-termother parts for use in new cartridges.

vision for environmental management. This vision draws on the Canon
Group’s Kyosei corporate philosophy in the drive to enhance lifestyles

Information Security

while minimizing environmental footprints to preserve forest diversity and

The Canon MJ Group helps realize a secure society by managing

people’s hometowns for future generations.

information security based on its governance oversight. Products andsolutions for customer information security issues draw on our expertisein this field.

Deploying Green Ratios (FY2016–2020)
The Canon MJ Group formulated the following three Green Ratios as

We have taken various steps to bolster information security

medium-term environmental benchmarks for monitoring annual progress.

governance, moving forward with objective assessments and ongoing

Annual improvement in
CO2 emissions intensity
Contributions to
reductions in customer
CO2 emissions
Ratio of customer CO2
emissions reductions
divided by the Canon MJ
Group’s own reductions

improvements. We formulated the Basic Policy on Information Security for

Targets for 2016
through 20202019 results

1.2%(year on year)

5.3%(year on year)

the Canon MJ Group and rolled out the Information Security Management
System (ISMS) and Personal Information Protection Management System(PMS) for the Group to standardize and streamline management. We are
optimizing our information security countermeasures, training information

More than 150,000
metric tons

135,515 metric tons

security personnel, and have secured and maintained certification underthe ISMS Conformity Assessment Scheme and PrivacyMark. We deployed
the Canon MJ Computer Security Incident Response Team to reinforce

More than triple

2.3-foldcybersecurity. We also issue the Information Security Report.

Intellectual Property Strategy
Lowering Environmental Impacts with Key IT Solutions

In an increasingly digital world, we seek to innovate IT and other tools

The Canon MJ Group offers a range of document and other IT solutions.

that deliver added value. We accordingly engage in intellectual property

These offerings improve operational efficiency and reduce costs while

initiatives to make such added value a key strength.

lowering environmental impact by reducing the need for movements of

The Canon MJ Group held 1,269 patents at the end of December

people and objects and conserving resources and energy. We can help

2019 that are the fruit of the efforts of its R&D organization. These

customers cut energy consumption, for example, by enabling them to use

patents center on natural language processing, video recognition,

data centers and reduce storage space by digitizing paper documents.

mathematical technology, and other tools that help deliver valuable
customer solutions.

36

Canon Marketing Japan Inc. I Integrated Report 2019

Overview of the Canon MJ GroupWe distinguish ourselves with outstanding solutions that leverage

Approachsolid customer solution techniques and robustly protected patents

Business continuity planning must not only encompass a structure andunderlying them.

procedures but also be effective, particularly in the event of a major
earthquake in Tokyo or a powerful new flu epidemic. We are accordingly

Business Continuity

endeavoring to make our PDCA cycles more agile.

The Canon MJ Group formulates business continuity measures to prepare
Key initiatives

Value Creation of the Canon MJ Groupfor major earthquakes, influenza outbreaks, and other crises.

• Building a contact system
Business Continuity Planning

We set up this system so relevant parties can properly communicate andThis planning entails formulating preparatory measures to keep

services and can can be used outside working hours. By efficiently

operations running without interruption or to aid swift recoveries

sharing disaster situation, business damage, and other information, we

following disasters and therefore help the Group fulfill its social

seek to streamline decision-making, prevent secondary damage, andresponsibilities.

maintain and swiftly restore business continuity.

Key initiatives• Drills• Preparing for a major earthquake in Tokyo

To prepare for disasters, we regularly conduct drills to ensure that people

We produced a plan to restore services to customers as fast as possible,

can properly use social networking services in emergencies, notably bynotably by transferring headquarters functions to alternative locations

sending messages about safety and disaster situations. Departments

and undertaking recovery initiatives based on the assumption that such aformulating business continuity plans conduct desk-based simulations

disaster would disrupt electricity supplies and other key socialand drills based on scenarios in keeping with themes that match theirinfrastructure elements.

circumstances. We explore countermeasures for issues that arise in drills.

• Readying for a flu pandemic• Assessments

We formulated a plan to keep assisting customers that offer vital social

Each year, a secretariat overseeing Groupwide business continuity

services based on the assumption that human resources would be limited

management activities confirms the effectiveness of business continuity

in the event of such a disaster while also ensuring the safety of ourplanning by assessing departmental management activities from third-

employees and their families.

party perspectives. We evaluate the effectiveness of these efforts from

Sustainable Management—ESG Initiatives

respond following disasters. The system leverages social networking

Segment Strategies

Approachthose perspectives, identify issues, clarify improvements, and provide
Business Continuity Management

feedback on activities for subsequent fiscal years.
Financial, ESG, and Corporate Data

We run business continuity plans based on regular drills and otherbusiness continuity management plans and endeavor to enhance theireffectiveness.

Canon Marketing Japan Inc. I Integrated Report 201937

Sustainable Management—ESG Initiatives
INITIATIVES UNDERPINNING SUSTAINABLE GROWTH

Customer Engagement
The Canon MJ Group is committed to meeting customer expectations.

Engaging in Green Procurement
The Canon MJ Group endeavors to eliminate hazardous chemical
substances by complying with the Global Canon Green Procurement

Quality Management System
In keeping with its Basic Policy on Product Safety, the Canon MJ Groupestablished a quality management system and a quality assurance risk
management system to provide top-quality products and services that

Standards*.
* These mandatory standards for Canon Group companies stipulate the parent’s green procurement
requirements as part of its environmental protection initiatives.

Rigorous Procurement Compliancethat are safe and reliable for customers. For the quality management

The Canon MJ Group educates about its action guidelines and procurement

system, we established policies and targets for the relevant products,

laws and regulations initiative to ensure optimal and fair businessservices, and support. We pursue ongoing improvements through PDCA

transactions. We established the Group Procurement Regulations,

cycles and clarify responsibilities and authority for achieving goals.

maintaining requirements for fair and equitable transactions, environmental

We manage product quality in the marketplace by collaborating withprotection, and compliance with procurement-related laws and regulations.

Canon Inc., which oversees manufacturing through IT systems, andAs well as stating our requirements of business partners, we

respond swiftly to customer issues.

conclude basic agreements before engaging in transactions with them,committing to complying strictly with laws and ordinances and to

Relationships with Business Partners

engaging in fair and honest transactions that do not violate corporate

The Canon MJ Group contributes to customer value by helping businessethics or erode social trust. After we start doing business with thesepartners improve their skills. We foster fair procurement in keeping withpartners, we conduct regular surveys to check progress in an array oflaws and ordinances and engage in green procurement practices to shrink

areas, including from environmental and social perspectives, providing

our environmental footprint.

them with feedback on assessments.

Procurement Activities
The Canon MJ Group established the following basic procurement policy.

Respecting Human Rights and Diversity
The Canon MJ Group endeavors to prevent employee discrimination andharassment and fosters a corporate culture that values diversity.

Basic Procurement Policy
1. Foster efficient and competitive business activities by pursuing safety
and quality and endeavoring to stably procure reasonably priced

The Canon Group aims to ensure that all executives and employees

products and services that meet customer needs.

alike understand and adhere to the Canon Group Code of Conduct, which

2. Prioritize green procurement of products and services that help shrink
our environmental footprint as part of conservation initiatives.
3. Offer fair trading opportunities and procure fairly in keeping with laws
and social norms.
4. Engage in procurement activities that foster mutually beneficial longterm relationships with business partners to realize a sustainableeconomy.

38

Preventing Discrimination and Promoting Diversity

Canon Marketing Japan Inc. I Integrated Report 2019encourages respect for individuals and individuality and prohibits
discrimination, including in terms of race, religion, nationality, gender,
and age.
Within the Canon MJ Group, we utilize email magazines sent to all
employees and compliance meetings for all work units to raise awarenessamong executives and employees about discrimination issues.

Federation), Canon Marketing Japan and Canon IT Solutions Inc. submitted
voluntary plans to appoint female officers and managers.
Also, Canon System & Support Inc., Canon Production Printing
Systems Inc., Canon BizAttenda Inc., and Canon Customer Support Inc.
formulated action plans based on their specific challenges to foster the
managers. By 2020, Canon MJ looks to have women accounting for 2.0%

Employees with Disabilities (Non-Consolidated Basis)(Number of people)

(%)

2.4

200

161

157

2.17%

2.16%

150

100

150

151

150
2.19%

2.15%

2.2
Value Creation of the Canon MJ Groupparticipation of women in workplaces and appoint and recruit female

Overview of the Canon MJ GroupIn support of the Women’s Action Plan of Keidanren (Japan Business

2.10%
50

of managerial positions and 11.0% of deputy manager roles.
0

Combating Harassment
The Canon MJ Group engages in various awareness-building initiatives toprevent sexual and power harassment.

(FY)

2015

2016

2017

Number of employees with disabilities

2018

2019

0

Percentage of employees with disabilities* Calculated according to prescribed working hours, disability degrees, and other factors in keeping with
the Ministry of Health, Labour and Welfare standards.

Harassment issues are part of the agenda for training new
employees and managers. Compliance meetings also position harassment
Segment Strategies

as an issue for discussion within work units.

Reforming Work Practices

We make it easier for employees to seek advice about harassment

The basic policy of the Canon MJ Group’s Long-Term Management

by offering consultations and by enabling the sharing of concerns by

Objectives Phase III is to become a corporate group in which its people

email or telephone.

can shine, and we are undertaking work practice reforms as part of thatapproach. We are helping our people to work more efficiently so they can

Initiatives to Employ People with Disabilities

complete their tasks during regular work hours, notably by institutingdays without overtime, using satellite offices and teleworking,and accordingly endeavors to create a barrier-free work environment.

encouraging the use of IT tools, and leveraging AI and RPA.

Sustainable Management—ESG Initiatives

The Canon MJ Group is committed to employing people with disabilities,
As of June 2019, 2.19%* of Canon MJ’s employees were people withdisabilities, exceeding the Japanese government’s mandatory rate ofBalancing Professional and Private Commitments

2.0%. The Group will continue pushing ahead with new graduate andCanon MJ has rolled out a range of programs to foster career plans andmidcareer hiring of individuals with disabilities.

create more attractive employment environments by empowering its
people to balance work with childcare and nursing care commitments.
In January 2008, we received Kurumin Mark certification from thedirector of the Tokyo Labor Bureau in recognition of our commitment toFinancial, ESG, and Corporate Data

providing childcare-friendly workplaces.

Canon Marketing Japan Inc. I Integrated Report 201939

Sustainable Management—ESG Initiatives

CORPORATE GOVERNANCE
Overview of Corporate Governance at the Canon MJ Groupand fairly implemented without compromising the Company’s interests.

• O rganizational format: Company with Audit & Supervisory Board

The Company acts appropriately and fairly in all transactions, not justmembers

those with its controlling shareholder, to avoid compromising its• Number of directors: 6

independence and interests and to safeguard the interests of all• Number of outside directors: 2

shareholders.

• Number of outside directors designated as independent: 2• Term of directors: 1 year

Independence from the Parent Company• Number of Audit & Supervisory Board members: 5

The Company’s parent company is Canon Inc., which held 58.5% of the• Number of outside Audit & Supervisory Board members: 3

Company’s voting rights as of December 31, 2019. Within Canon Inc.’s• Number of outside Audit & Supervisory Board members designated ascorporate group, the Company oversees sales, service, and marketing forindependent: 2

Canon products in the Japanese market. The Company also supplies IT• Term of Audit & Supervisory Board members: 4 years

solutions and other services, clearly compartmentalizing its operations.

• Independent auditor: Deloitte Touche Tohmatsu LLC

With regard to transactions with the parent company, the Company• Use of executive officer system: Yes

has the exclusive right to sell all Canon brand products in Japan, the• Number of executive officers: 23

exceptions being semiconductor and LCD lithography systems andmedical equipment. Transaction terms are determined by presenting the

Basic Stance on Corporate Governance

Company’s asking prices and engaging in conventional negotiations. None

We recognize that sustainable growth in corporate value requires ongoingof the Company’s directors concurrently serves the parent company.

improvement in such areas as management transparency and the

It is because of this situation that the Company faces no restrictions

monitoring of progress toward management targets. This is reflected infrom the parent company in terms of operational activities and maintains

our wide-ranging initiatives to strengthen corporate governance. We havea certain level of independence from the parent company by making its

implemented all principles of Japan’s Corporate Governance Code.

own management decisions on business activities and operations.
The Company ensures the effectiveness of its corporate governanceInitiatives to Enhance Corporate Governanceas a listed enterprise by bolstering the Internal Auditors Office while

2011 Adopts executive officer system

independently building diverse internal controls systems through2014 Appoints outside director

collaboration with its Audit & Supervisory Board members and the2016 Increases number of outside directors to two

independent auditor and setting up committees.

2016 Establishes standards for independent outside directors
2016 Complies with Corporate Governance Code

Policy on Constructive Dialogue with Shareholders

2018 Sets up Nomination and Remuneration Committee

The Company helps to drive sustainable growth and improve corporate
value over the medium and long terms by engaging in constructive

Protection of Minority Shareholders in Transactions with
the Controlling Shareholder

dialogue with shareholders, including through general meetings of

The Company’s controlling shareholder is Canon Inc. The Company

terms, results briefings, and meetings with major institutional investors.

concludes important basic agreements with Canon Inc. based on
resolutions of the Board of Directors. Such agreements are appropriately

40

Canon Marketing Japan Inc. I Integrated Report 2019

shareholders, briefings on management plans for the medium and long

Overview of the Canon MJ Group

Corporate Governance Organization(As of March 31, 2020)

General Meeting of Shareholders
Appointment / Dismissal

Appointment / Dismissal

Appointment / Dismissal

Monitoring

6 Directors
Board of Directors

Inquiry
ReportNomination and Remuneration Committee

5 Audit & Supervisory Board Members
Audit & Supervisory Board

Cooperation
Audit of financial
statements

Independent
AuditorCooperation

Management Committee

Disclosure Committee

Cooperation
Value Creation of the Canon MJ GroupInternal Auditors Office

CSR Committee

Internal audits

Internal Controls Evaluation Committee
AdviceBusiness Segments / Group Companies

Lawyers /Licensed Tax Accountants

Staff Managers

expertise. At least one outside Audit & Supervisory Board member is an

We maintain a structure in which the representative director oversees

outside auditor who fulfills the independence criteria that the Board ofCompanywide business strategies and execution, while supervision of

Directors separately determines.

business domains and headquarters functions is primarily through

The Audit & Supervisory Board cooperates with the independent

executive directors, and add at least two independent outside directors toauditor and the Internal Auditors Office to assess performance andensure sound management. In accordance with laws and ordinances, thecorporate assets and ensure sound management.

Board of Directors monitors important decisions and implementation.

Segment Strategies

Board of Directors

There are five Audit & Supervisory Board members, of whom three
are outside auditors. Their duties include attending Board of Directors’

the representative director’s direction and supervision through executive

meetings, speaking with directors and other parties, and perusing

officers whom the Board of Directors appoints through its resolutions toimportant accounts’ documents in line with the auditing policies and work

assume responsibility for making and implementing decisions forallocations that the Audit & Supervisory Board stipulates, and conducting

business domains and headquarters functions.

rigorous audits by examining operations and property.

Sustainable Management—ESG Initiatives

Other decisions are handled by the representative director or under

As well as engaging in regular deliberations about results, executive

Internal Auditors Officemakes decisions on important matters relating to legal affairs and Board

The Internal Auditors Office produces internal audit policies for Canon MJ

regulations at gatherings that are normally held once monthly and at

and its subsidiaries as an independent specialist that reports directly toManagement Committee meetings attended by the directors of Canon MJ

the president. It also conducts audits, assesses, and advises on all

and the presidents of major subsidiaries.

business activities from the perspectives of credibility of financial reports,

Financial, ESG, and Corporate Dataappointments, and other matters, the Board of Directors discusses andthe validity and efficiency of operations, legal compliance, and the

Audit & Supervisory Board

conservation of assets. The auditors of Canon IT Solutions Inc. and Canon

The Audit & Supervisory Board functions independently of the Board of

System & Support Inc. conduct assessments based on the same policies.

Directors, and comprises individuals who are familiar with the Company’s

The Canon MJ Group had 50 audit staff members.

business or corporate management and who have accounting or other

Canon Marketing Japan Inc. I Integrated Report 201941

Sustainable Management—ESG Initiatives
CORPORATE GOVERNANCE

Outside Directors and Outside Audit & Supervisory Board
Members

Outside Directors’ and Outside Audit & Supervisory Board Members’(as Defined under the Companies Act)

Board Meetings

Attendance at Board of Directors’ Meetings and Audit & Supervisory

Canon MJ has two outside directors and three outside Audit & Supervisory

Name

Board members. Pursuant to the consent of all Audit & Supervisory Board
members and the Board of Directors, we implemented our independence
criteria for outside directors and outside Audit & Supervisory Board
outside Audit & Supervisory Board members in keeping with the Corporate
Governance Code and standards of independence. Our outside directors
and outside Audit & Supervisory Board members satisfy the independenceof the Board of Directors.

Akio
Dobashi

14/16 times (88%) of Board of Directors’ meetings

YoshioOsawa

16/16 times (100%) of Board of Directors’ meetings

KunihikoTedo

16/16 times (100%) of Board of Directors’ meetings
18/20 times (90%) of Audit & Supervisory Board meetings

Outside directors

members to clarify the standards for ensuring outside directors andcriteria and help maintain and improve the transparency and accountability

Attendance at meetings of the Board of Directors andAudit & Supervisory Board during fiscal 2019

Outside Audit &Supervisory
Board members

The Company does not maintain a specialist organization or provide

Nobuyasu 16/16 times (100%) of Board of Directors’ meetings
Kusumi20/20 times (100%) of Audit & Supervisory Board meetings
Shigeo15/16 times (94%) of Board of Directors’ meetings
Hasegawa 20/20 times (100%) of Audit & Supervisory Board meetings

full-time staff to assist outside directors or outside Audit & Supervisory
Board members. Directors in charge of operations and other officials
meeting agendas as needed. Internal auditors, directors in charge ofAnalysis and Evaluation of Effectiveness of the Board of
Directors

operations, and other officials provide outside Audit & Supervisory Board

The Company consulted with directors and Audit & Supervisory Board

members with prior explanations of Board of Directors’ meeting agendas

members about the effectiveness of the Board of Directors, and the Board

as needed. Outside Audit & Supervisory Board members attend Audit &of Directors analyzed and evaluated the findings. These talks confirmed

Supervisory Board meetings, which are held at least once monthly, as well

the overall effectiveness of the Board of Directors. We will draw on theas liaison meetings and other gatherings conducted as required toviews of directors and auditors (in matters relating to the roles of

exchange information on important items and audit details.

directors) in running the Board of Directors to further improve its

provide outside directors with prior explanations of Board of Directors’

effectiveness in the course of discussions.

Policies and Procedures for Determining Remunerationfor Senior Executives and Directors
Remuneration for the representative director and directors consists ofbasic remuneration, which is a fixed basic monthly fee for executing theirroles and duties, a bonus linked to performance during the fiscal year,
and stock incentives also linked to performance to promote improvements
in medium- to long-term business performances and corporate value. The
same applies to remuneration for executive officers, who are senior
executive officers or above. Outside directors only receive basic
remuneration.

42

Canon Marketing Japan Inc. I Integrated Report 2019

whether the dismissal of a representative director, executive director, orRemuneration Committee comprising the president, one director, and two

executive officer who is a senior executive officer or above (collectively,

independent outside directors. The committee verifies the appropriateness“management team executives”) is necessary in the event of illegal,of the remuneration system for directors and executive officers who are

unfair, or treasonous behavior among such individuals, if they have failed

senior executive officers or above, including ideas on calculating basic

to fulfill their roles, or for other reasons that make such people unsuited

remunerations and bonuses and the criteria for granting performance-

to retain their posts as management team executives.
All results of Nomination and Remuneration Committee deliberations

structure, whose basic calculation approaches were resolved at meetings

shall be submitted to the Board of Directors, regardless of the outcome ofof the Board of Directors and are verified by the Nomination and Remuneration

Board of Directors’ deliberations on the necessity of dismissal. The

Committee.

management team executives subject to deliberations cannot join in

The total of basic remuneration and performance-linked stock

Value Creation of the Canon MJ Grouplinked remuneration. Remunerations are all in line with the remuneration

Overview of the Canon MJ GroupThe Company maintains a voluntary four-person Nomination anddiscussions.

incentives for directors must be less than the maximum total remuneration
approved at general meetings of shareholders. Bonuses, however, are

IR Activities

determined when proposals for them are approved at ordinary general

We formulated the Canon MJ IR Policy in 2008 to clarify our stance, which

meetings of shareholders.

is disclosed on the official investor relations (IR) website below. For retail
Segment Strategies

investors, the president, the managing executive officer overseeing IR, or
Nomination and Remuneration Committee

other executives conduct Company briefings. In 2019, the Company

Masahiro Sakata: Chairperson, President & Representative Director

conducted Company briefings for a large number of retail investors in

Masachika Adachi: Director, Senior Managing Director

February, May, August, and December. For analysts and institutional

Akio Dobashi: Outside Director

investors, the Company augments medium- to long-term management plan

Yoshio Osawa: Outside Director

briefings by the president at the beginning of the year with quarterly
results briefings at which the managing executive officer in charge of IR
outlines performances. The Company also embraces individual interview

To nominate director or Audit & Supervisory Board member candidates

requests, meeting requests from analysts and institutional investors, andand appoint senior executive officers (including successors and president

teleconferences with foreign institutional investors. The Company

and representative director candidates), the president and representative

participated in a domestic securities firm-sponsored conference and held

director first nominates candidates from among those fulfillinga meeting between the president and overseas institutional investors.

Sustainable Management—ESG Initiatives

Appointment and Nomination Procedures

requirements. The nomination is submitted at a meeting of the Board of
Directors after the Nomination and Remuneration Committee confirms

Canon MJ IR websitethat it is fair and appropriate.

canon.jp/8060e-ir

before deliberations by the Board of Directors.

Financial, ESG, and Corporate Data

The Audit & Supervisory Board discusses and consents to nominees

Internal Controls
Based on the Companies Act, the Board of Directors resolved the basic

Dismissal Procedures for Management Team Executives

policy for an internal controls system to ensure appropriate businessDirectors and Audit & Supervisory Board members can ask the Nomination

practices, and is deploying that system in line with the policy.

and Remuneration Committee for deliberations at any time to decide

Chaired by the president, the Internal Controls Evaluation Committee

Canon Marketing Japan Inc. I Integrated Report 201943

Sustainable Management—ESG Initiatives
CORPORATE GOVERNANCE

Messages from Outside Directors
Corporate governance can be both proactive and defensive. Proactive governance fosters transparent andresponsive management that lifts corporate value over the medium through long terms. Defensive
governance is about thoroughly monitoring systems that prevent corporate scandals and complianceviolations and thereby safeguard corporate value.
I have been an outside director of Canon MJ for five years. During that time, the Company has
expanded IT solutions, which it has positioned as a growth business, while remaining free of scandals.
As such, in my view the Company has had no issues in terms of either proactive or defensive governance.
Akio Dobashi
Outside Director

Canon MJ set up its Nomination and Remuneration Committee in December 2018 to ensure that
executive selections and remuneration decisions are more objective. In that respect, I think that theCompany has driven further governance progress.
Participants in Board of Directors’ meetings always engage in a spirited debate, so I consider the

Board of Directors as effective as those of other companies with which I have been involved.
The COVID-19 pandemic has accelerated the use of IT to transform work practices. I think that now is the right time for Canon MJ tocontribute to society with its technologies. It is to that end that the Company needs to focus its business resources on IT solutions, undertaking
bold human resources strategies and pursuing M&As.

The launch of the Nomination and Remuneration Committee by Canon MJ in December 2018 was a stepin the right direction for its corporate governance. The committee deliberates executive appointments,
remuneration, and successor planning. I believe that such deliberations have resulted in a fairer andmore rational governance structure regarding human resources and remuneration today and for future
efforts in those areas.
In an increasingly challenging climate, the Board of Directors has engaged in lively debate on a
range of matters. These have included future management strategies, medium-term planning, andinvestments. As Chairman of the Board, Masahiro Sakata champions open discussion. This has
Yoshio Osawa
Outside Director

empowered directors to be more vocal, revitalizing the Board of Directors.
The Group has continued to steadily expand IT solutions, which it has positioned as a growthbusiness. I think that such progress is the fruit of our strengths. These include a customer base andsales network across Japan and a subsidiary with a total of approximately 4,000 systems engineers. Still, to grow further I believe that we should
do more to assess and execute M&As and other expansionary investments that draw on our ample cash position.
I have found the Group extremely systematic and disciplined in addressing such crises as typhoon damage in 2019 and the COVID-19
pandemic in 2020 by ensuring that its human resources, organizational, governance, and other underpinnings are rock solid. I think that thesequalities are tremendous strengths for Canon MJ.

44Canon Marketing Japan Inc. I Integrated Report 2019

The digital interchangeable lens camera market could continue tosubsidiaries. Its task is to develop internal controls systems for theshrink as the overall market shifts from SLR to mirrorless models. Sales

entire Canon MJ Group.

declines of inkjet printers and inkjet cartridges may accelerate amid theCanon Inc., which is listed on the New York Stock Exchange, has
adopted systems that comply with the Sarbanes-Oxley Act, a U.S. law

Overview of the Canon MJ Groupconsists of officials representing corporate departments anddecrease in the print volume associated with the declining demand forprinting New Year’s greeting cards.
In the industrial equipment business, capital spending among

Canon Group, Canon MJ has also applied global perspectives bysemiconductor and device manufacturers greatly affects orders forestablishing systems based on the same standards.

semiconductor fabrication and measuring equipment. Results could

Value Creation of the Canon MJ Group

designed to improve corporate governance. As a member of the global

stagnate if these manufacturers reduced such expenditure.

Corporate Ethics and ComplianceIn the medical equipment business, the Pharmaceutical and Medical
Device Act (formerly, the Pharmaceutical Affairs Act) makes it mandatory

laws and regulations. We also commit to complying with laws and social

to appoint sales administrators, set up post-marketing traceability

rules, maintaining social justice, and continuing to meet the expectations

information systems, and reinforce safety management structures. Whileof society. We engage in compliance from the perspectives of initiatives to

the Group does its utmost to maintain systems to comply with suchraise awareness, educating, and undertaking organizational activities torequirements, transactions with medical institutions and medical

ensure that all of our people act ethically and obey the law.

equipment dealers could decline if its safety management structure or

We distribute the Canon Group Code of Conduct and other handbooks

Segment Strategies

For the Canon MJ Group, compliance is not simply a matter of obeying

information systems do not perform as envisaged.

and Compliance Cards to all Group employees and enhance awarenessAs we purchase products and services from many partners,

through education and training. We convene the semiannual Complianceincluding parent Canon Inc., we may face the risk of insufficient supplies

Meeting to confirm compliance risks and countermeasures at each workof goods owing to certain partner circumstances, including naturalsite. We also maintain an ongoing internal reporting system.

disasters and major accidents. Results could be affected if such situations
hamper sales activities.
Sustainable Management—ESG Initiatives

Business Risks
Credit Risks

In office MFPs and maintenance services, price competition continues.

The Canon MJ Group could experience unforeseen credit losses, as it

The unit price for maintenance services continues to fall, and profitability

engages in numerous transactions in which it collects payments after

could deteriorate if price competition intensifies. A decline in printproviding goods and services. The Company therefore draws on credit

volumes driven by the trend toward paperless offices could affect the

information from external credit bureaus and other sources as part ofCanon MJ Group’s results. An increase in unit sales of third-party laser

thorough credit management efforts while hedging risks throughprinter toner cartridges could constrain revenues from genuine Canonfactoring and other means. The Company provides allowances forcounterparts.

doubtful receivables to cover the risks of losses on collection. Large

In IT solutions, the Company carefully manages work hours invarious SI projects to prevent losses. Nonetheless, such factors as

Financial, ESG, and Corporate Data

Impacts of Market Competition and Fluctuations

unforeseen uncollectible amounts could detract from the Group’s
results and financial position.

additional customer specifications, altered requirements, or mismatches
in the Company’s and customers’ interpretations of specifications orprogress could hamper results.

Canon Marketing Japan Inc. I Integrated Report 201945

Sustainable Management—ESG Initiatives
CORPORATE GOVERNANCE

Relationship with the Parent Company

Canon Inc. and other partners, the Group may not be sufficiently able to

Canon MJ is a subsidiary of Canon Inc., which owned 58.5% of its stock asprovide products and services. The pandemic could hamper sales owingof December 31, 2019. The Company has the exclusive right to sell all

to its impact on the domestic economy and market. It is hard to predict

Canon brand products in Japan, the exceptions being semiconductor andthe performance impact at this juncture because the scale of the

LCD lithography systems and medical equipment. In fiscal 2019, Canonpandemic and an idea of when it might abate are unclear.

MJ’s purchases from Canon Inc. amounted to ¥182,019 million, or 54.8%
of its total purchases.

IT Governance: Investing in IT to Boost Corporate Value

Because of this relationship, a major shift in the management

The Group endeavors in various ways to enhance corporate governancepolicies or business activities of Canon Inc. could have a significant

and keep improving corporate value. IT is important to corporate

impact on the business activities, performance, and financial position ofmanagement and the Group is deploying IT governance. We are

the Canon MJ Group. If it becomes impossible to maintain the superiority

institutionalizing IT investment management and have set up IT investmentof Canon products in relevant industries for whatever reason, the Group’s

assessment committees under the auspices of the Management Committee.

results could be adversely affected.

These assessment committees approve and evaluate investment projects
from the perspectives of business growth and productivity improvement

Information Management
The Canon MJ Group holds important information about various Group
operations as well as a considerable amount of sensitive information
about companies and individuals. As such, we formulate information
management policies and rules, educate and train employees toincrease awareness of the importance of information management,
implement and check the status of system security measures, andcreate and deploy an ISMS. Notwithstanding these measures, informationthat leaks externally as a result of cyberattacks could greatly inconveniencebusiness partners and other stakeholders or lower the credit standingof the Canon MJ Group, thus possibly hampering its operations, results,
and financial position.
Natural Disasters
Earthquakes, typhoons, and other natural disasters and outbreaks ofserious infectious diseases in areas in which the Group does businesscould affect its operations. While we maintain redundant equipment andinformation systems as backup, the Group cannot guarantee that wewould sufficiently avert damage from such disasters, which could
adversely affect its performance and financial position.
The COVID-19 pandemic has caused supply chain and production
turmoil, particularly in Asia. Depending on how this situation affects

46

Canon Marketing Japan Inc. I Integrated Report 2019

to optimize the effectiveness of IT investment and reduce risks.

BOARD OF DIRECTORS AND AUDIT & SUPERVISORY BOARD MEMBERS
Overview of the Canon MJ GroupAS OF MARCH 26, 2020

Value Creation of the Canon MJ Group
Segment Strategies

Iwao Hashimoto

Akio Dobashi

Yoshio Osawa

Nobutoshi Matsumoto

Audit & Supervisory
Board Member(Outside)

Audit & Supervisory
Board Member(Outside)

Director(Outside)

Director(Outside)

Audit & Supervisory
Board Member(Outside)

Shiro Hamada

Masahiro Sakata

Masachika Adachi

Hatsumi Hirukawa

Masatoshi Tanise

Audit & Supervisory
Board Member(Standing)

Director, Senior
Executive Officer

President &Representative
Director

Director, Senior
Managing Director

Director, Senior
Executive Officer

Audit & Supervisory
Board Member(Standing)Canon Marketing Japan Inc. I Integrated Report 2019

Financial, ESG, and Corporate Data

Shinichi Inoue

Sustainable Management—ESG Initiatives

Shigeo Hasegawa

47

Financial, ESG, and Corporate Data

TEN-YEAR CONSOLIDATED FINANCIAL SUMMARYCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31

2019

2018

2017

2016

Net sales (Note 5)¥ 621,134¥ 621,591¥ 632,190¥ 629,314

Operating income

32,44028,94130,407

27,676

Profit before income taxes

33,30330,70830,91928,903

Profit attributable to owners of parent

22,25020,826

20,68018,162

Total assets

503,699

498,791

510,833

497,728

Total stockholders’ equity (Note 4)

324,476

303,028

297,032

280,473

Cash flows from operating activities

22,053

16,99028,88533,306

Cash flows from investing activities(94,585)(10,526)

7,964(19,461)

Cash flows from financing activities(8,557)(7,839)(7,145)(6,086)

Cash and cash equivalents at end of year

54,494

135,572

136,980

107,286¥  171.60¥  160.61¥  159.48¥  140.06

60.00

60.00

60.00

50.00

2,502.39

2,336.97

2,290.70

2,162.96

For the year:

At year-end:

Cash flows:

Per share of common stock:
Profit attributable to owners of parent (Note 2)
Cash dividends (Note 3)
Stockholders’ equity (Note 4)

Notes 1. ‌The figures have been presented in U.S. dollars by translating all Japanese yen amounts at ¥110 to U.S.$1, the prevailing exchange rate as of December 31, 2019.
2. ‌Profit attributable to owners of parent per share is based on the weighted average number of shares of common stock outstanding during the respective fiscal years.
3. C‌ ash dividends per share are the amounts applicable to the respective fiscal years, including dividends to be paid after the end of the year.

Net Sales and Return on Sales (ROS)(Billions of yen / %)Operating Income and Operating Margin

ROS

Net Sales

Operating
Income(Billions of yen / %)OperatingMarginWorking Capital
Total
Current
Assets(Billions of yen / Times)

32.4
674

632

659 657 659 646

30.4
629 632 622 621

3.3 3.4

25.1

26.6

3.6

27.7

4.4
16.8 17.0 3.8

2.9

1.6 1.5

302 302

383
3.0

4.1
1.9

2.5
7.7 8.4

317 325

340 348 362

377
3.1

4.8 4.7

2.4 2.4

1.1

Current
Ratio

398

28.9
5.2

Total
Current
Liabilities

2.6

2.0

1.9

2.0

2.1

2.2

2.3

2.5

157 151 163 165 165 160 157 157

130 1200.6
1.1
FY ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

48

Canon Marketing Japan Inc. I Integrated Report 2019

1.3

FY ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

FY ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

Thousands of U.S. dollars(Note 1)

2013

2012

2011

2010

2019

¥ 646,003¥ 659,432¥ 657,216¥ 659,218¥ 632,419¥ 674,159$ 5,646,673

26,64725,08817,013

16,802

8,442

7,736

294,909

27,49825,85817,055

17,52910,972

8,584

302,755

15,67016,03010,168

10,579

6,764

3,724

202,273486,502479,747

467,076

462,574

447,765448,592

4,579,082

277,008

270,061

256,795

253,862

250,671

246,680

2,949,782

29,73038,191

28,781

33,767

8,716

35,186200,482(44,536)(15,221)(25,757)(16,067)(12,108)(13,012)(859,864)(6,225)(4,545)(9,105)(11,813)(3,811)(8,171)(77,791)

99,574

120,607

102,183108,260

102,373

109,575

495,400

Yen

U.S. dollars(Note 1)¥  120.84¥  123.62¥   76.67¥   77.45¥   49.30¥   26.70$     1.56

45.00

40.00

24.00

24.00

20.00

20.00

0.55

2,136.22

2,082.60

1,980.22

1,907.50

1,827.25

1,798.16

22.75

Segment Strategies

2014

Value Creation of the Canon MJ Group2015

Overview of the Canon MJ Group

Millions of yen

Total Stockholders’ Equity and ROE(Billions of yen / %)Total Stockholders’Equity270 277
6.1 5.7280
6.5297 303

Total Assets and Total Stockholders’ Equity Ratio

Profit Attributable to Owners of Parent(Billions of yen / %)(Billions of yen)324

7.2 6.9 7.1

449 448

Total Assets

480
463 467

55.0 56.0 54.9 55.0

487 498

Total Stockholders’Equity Ratio

511 499 504

56.3 56.9 56.4 58.1

20.7 20.8
60.8

18.2

64.4

16.0 15.7

10.6 10.2

4.2
2.7

22.3

Financial, ESG, and Corporate Data

257
247 251 254

ROE

Sustainable Management—ESG Initiatives

4. ‌Total stockholders’ equity in the above table represents the total of stockholders’ equity and accumulated other comprehensive income (loss) in the consolidatedbalance sheets.
5. ‌Effective fiscal 2013, we have changed to an accounting method that deducts a portion of sales incentives (which had previously been accounted for under selling,
general and administrative expenses) from net sales; therefore, the amount of net sales for fiscal 2012 and relevant key management indicators have been adjusted
retroactively.

4.0

6.8

1.5

FY ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

3.7

FY ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

FY ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

Canon Marketing Japan Inc. I Integrated Report 201949

Financial, ESG, and Corporate Data

FINANCIAL REVIEWBusiness Performance
Net Sales

an information and communications company. There were also significant

Consolidated net sales for the year ended December 31, 2019, decreased

network camera projects for a security company and a trading firm.

0.1%, to ¥621,134 million, from the previous year. This reflected

Canon IT Solutions Inc. experienced a drop in demand for SI services

downturns in demand for digital interchangeable lens cameras andafter large projects for financial institutions in the previous year, but sales

industrial equipment, which offset higher revenues from IT solutions forwere up slightly on the strength of several projects, primarily forlarge and small-to-medium-sized enterprises.

manufacturers. Another driver with the subsidiary was that data center
services performed well, also securing several large infrastructure

Segment Information• Consumers Segment

systems projects and some embedded systems projects.

Sales of mirrorless cameras were down, as while we focused onafter large projects in the previous year and efforts to constrain orders for

expanding demand, particularly for the full-sized EOS RP, unit sales of theminimally profitable projects. Sales of laser printers increased, a key

EOS Kiss M camera were lower than in the previous year, when demand

factor being large orders from a life insurer.

Sales of office MFPs were down in this segment, reflecting a drop

for this model soared. Sales of digital interchangeable lens cameras

Segment sales accordingly increased 4.1%, to ¥195,828 million.

declined as markets shrank and overall sales of interchangeable lensSegment income rose 15.4%, to ¥10,070 million, principally because

cameras declined. Market shrinkage was also behind lower sales ofgross profit increased with sales, while Canon IT Solutions benefited fromcompact digital cameras. We maintained top shares in the markets forhighly profitable businesses.

digital interchangeable lens cameras, mirrorless cameras, and compact
digital cameras.
Sales of inkjet printers increased on favorable demand for refillable• Area Segment
Sales of business equipment declined. This reflected sluggish demand

GIGA TANK models, which outweighed sluggish markets for consumer

among small-to-medium-sized enterprises, which offset expanded sales

offerings. Ink cartridge sales decreased amid dwindling print volumes. Weof office MFPs, particularly to mid-sized enterprises. Laser printer sales

remained the inkjet printer market leader for the sixth straight year.

increased despite an ongoing shift toward replacing them with office

Sales of IT products fell, as demand for SD cards and peripherals
dropped, overshadowing favorable gaming PC revenues.
As a result of these factors, segment sales were down 11.6%, to¥132,790 million. Segment income decreased 6.5%, to ¥6,865 million.

MFPs. The prime drivers here were expanded sales to certain industries
and enhanced sales when replacing older business PCs.
Canon System & Support Inc. spearheads IT solutions in the Area
segment. The period under review saw progress in business PC
replacements among small-to-medium-sized enterprises in line with the• Enterprise Segment

end of extended support for Windows 7, driving a surge in unit shipments.

Sales to financial institutions rose due to solid sales of systems

Sales rose on cloud service and software proposals to customers

integration (SI) projects for a security brokerage and investment productreplacing PCs, including for the HOME IT support cloud service, which issales system projects for credit unions, as well as large new laser printercompatible with Office 365, for ESET antivirus software, and various

projects for a life insurer.

efficiency enhancement software.

Sales for manufacturing customers rose on favorable demand,
including for a demand forecast systems project for a beverage company

income jumped 19.2%, to ¥14,398 million, as gross profit improved in line

and a large business data collection device project for a food company.

with higher sales of highly profitable IT solutions.

Sales to retailers increased on point-of-purchase production systems
projects for a retailer and large office multifunction printer (MFP) projects for

50

Segment sales therefore climbed 4.2%, to ¥268,310 million. Segment

Canon Marketing Japan Inc. I Integrated Report 2019

Overview of the Canon MJ Group• Professional Segment

the semiconductor area.

Production Printing

Healthcare

Demand was sluggish for continuous feed and wide-format printers,

Sales were up on solid demand for hospital information systems andleading to a sales decline.

digital radiography.

Industrial Equipment

As a result of these factors, segment sales dropped 5.9%, to ¥43,676
million. Segment income was up 89.9%, to ¥1,617 million, due to suchrising plant utilization rates, sales agent agreements ended with foreign

measures as cost reduction.

Value Creation of the Canon MJ Group

Sales were down, as while we fared well in maintenance services amid
manufacturers with which we had engaged in large transactions outside

Income Analysis
Consolidated net sales were down 0.1%, to ¥621,134 million.
Cost of sales rose 4.1%, to ¥420,108 million. Gross profit fell 7.9%, to¥201,026 million.
Selling, general and administrative expenses were down 10.9%, to¥168,586 million.

Operating income therefore advanced 12.1%, to ¥32,440 million.
Total other income dropped 51.1%, to ¥863 million.
As a result of these factors, profit attributable to owners of parent
increased 6.8%, to ¥22,250 million, and rose ¥10.99 on a per-share basis,to ¥171.60.

Total current assets decreased ¥5,945 million from the end of the previous

million. This reflected a ¥5,931 million decrease in net defined benefit

term, to ¥377,404 million. This reflected an aggregate decline of ¥1,080 million

liabilities.

in cash and cash equivalents, securities, and short-term loans receivable, as
well as a ¥4,375 million drop in notes and accounts receivable.
Total non-current assets increased ¥10,853 million, to ¥126,295
million. This was due largely to a ¥13,761 million increase in construction
Nishi-Tokyo Data Center.
Total current liabilities decreased ¥9,879 million, to ¥120,024 million.
This reflected a ¥24,288 million decline in notes and accounts payable.
Total long-term liabilities were down ¥6,735 million, to ¥58,582

Total net assets rose ¥21,522 million, to ¥325,093 million. The prime
drivers were ¥22,250 million in profit attributable to owners of parent,¥8,428 million in dividends paid, and ¥7,229 million in remeasurementsof defined benefit plans.
As a result of these factors, total liabilities and net assets increased

Sustainable Management—ESG Initiatives

in progress associated with the construction of the second phase of theSegment Strategies

Financial Position¥4,908 million, to ¥503,699 million.
The total stockholders’ equity ratio was 64.4%, up 3.6 percentage
points from a year earlier. Stockholders’ equity per share advanced¥165.42, to ¥2,502.39.

Cash FlowsNet cash provided by operating activities totaled ¥22,053 million, up

in net short-term loans receivable of ¥79,998 million, payments forfrom ¥16,990 million a year earlier. The principal factors in this change

purchases of property, plant and equipment of ¥11,651 million, andwere ¥33,303 million in profit before income taxes, ¥12,257 million in

payments for purchases of intangible fixed assets of ¥1,451 million.
Net cash used in financing activities was ¥8,557 million, an increase

trade notes and accounts receivable, offset by a decrease in tradefrom ¥7,839 million a year earlier, principally because of ¥8,442 million innotes and accounts payable of ¥24,301 million and ¥10,965 million in

dividends paid.

income taxes paid.
Net cash used in investing activities amounted to ¥94,585 million, an

Financial, ESG, and Corporate Data

depreciation and amortization, and ¥4,858 million in a decrease in

As a result of these factors, cash and cash equivalents at the end of
the year were ¥54,494 million, down ¥81,078 million from a year earlier.

increase from ¥10,526 million a year earlier. Key factors were an increase

Canon Marketing Japan Inc. I Integrated Report 201951

Financial, ESG, and Corporate DataCONSOLIDATED BALANCE SHEETSCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESDECEMBER 31, 2019 AND 2018ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Notes 10 and 11)
Notes and accounts receivable (Note 10)
Inventories (Note 4)
Short-term loans receivable (Note 10)
Other current assets
Allowance for doubtful receivables
Total current assets
PROPERTY, PLANT AND EQUIPMENT:Land
Buildings and structures
Machinery and vehicles
Furniture and fixtures
Rental assets
Lease assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
INTANGIBLE ASSETS:
SoftwareLease assets
Utilization rights
Other intangible assets
Total intangible assets
INVESTMENTS AND OTHER ASSETS:
Investments in securities (Notes 10 and 11)Long-term loans receivable
Net defined benefit assets (Note 12)
Lease deposits (Note 16)
Deferred tax assets (Notes 2 and 13)
Other investments
Allowance for doubtful receivables
Total investments and other assets
Total non-current assets
Total assets

52

Canon Marketing Japan Inc. I Integrated Report 2019

Millions of yen

2019

2018

¥  54,494
112,667
34,110170,0126,197(76)377,404¥ 135,572
117,042
33,02190,0147,792(92)383,349

28,91851,692
167
16,88739,656147
14,095
151,562(68,748)
82,81428,91851,755167
16,861
39,610388
334
138,033(66,046)
71,987

4,148
2
316
3
4,469

4,941
6
316
3
5,266

11,03836393
4,359
20,7932,775(382)
39,012
126,295¥ 503,699

7,986
36
304
4,424
23,0402,831(432)
38,189115,442¥ 498,791

Overview of the Canon MJ Group

Millions of yen

LONG-TERM LIABILITIES:
Lease obligations (Notes 10 and 17)
Deferred tax liabilities (Note 13)
Allowance for long-term continuous service rewards (Note 2)
Net defined benefit liabilities (Notes 2 and 12)
Other long-term liabilities (Note 17)
Total long-term liabilities2018¥  51,543
72
8,236
5,902
17,856
4,314
32,101
120,024¥  75,831
101
6,967
4,064
16,676
4,113
22,151
129,903

103
—
1,043
53,956
3,480
58,582

117
30
1,019
59,887
4,264
65,31773,30382,820202,783(31,926)
326,980

73,30382,820189,958(31,924)
314,157

3,930
11
52
(6,497)(2,504)617
325,093¥ 503,699

2,519
2
76
(13,726)(11,129)543
303,571¥  498,791

Segment Strategies

2019

Value Creation of the Canon MJ Group

LIABILITIES AND NET ASSETSCURRENT LIABILITIES:
Notes and accounts payable (Note 10)
Lease obligations (Notes 10 and 17)
Accrued income taxes (Note 13)
Consumption taxes payable
Accrued expenses
Reserves
Other current liabilities
Total current liabilities

COMMITMENTS AND CONTINGENT LIABILITIES (Notes 3 and 9)

Sustainable Management—ESG Initiatives
Financial, ESG, and Corporate Data

NET ASSETS (Note 2):
STOCKHOLDERS’ EQUITY (Notes 8 and 19):
Common stock
Authorized 299,500,000 shares; Issued 151,079,972 shares in 2019 and 2018
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)Net unrealized gains on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income (loss)
NON-CONTROLLING INTERESTS
Total net assets
Total liabilities and net assets• See accompanying notes to consolidated financial statements.

Canon Marketing Japan Inc. I Integrated Report 201953

Financial, ESG, and Corporate DataCONSOLIDATED STATEMENTS OF INCOMECANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31, 2019 AND 2018

Millions of yen

2019¥ 621,134
420,108
201,026
168,586
32,4402018¥ 621,591
403,418
218,173
189,232
28,941

350
(13)
768
248
13
(83)
2
—
(207)
—
(329)
114
863
33,303

352
(13)
547
495
126
(16)
490
214
(311)
(65)
(158)
106
1,767
30,708

INCOME TAXES (Note 13):
Current
Deferred
Total income taxes
Profit12,626(1,663)
10,963¥  22,340

9,893
(78)
9,815
¥  20,893

PROFIT ATTRIBUTABLE TO:
Non-controlling interests
Owners of parent
Profit¥      9022,250¥  22,340¥      6720,826¥  20,893

NET SALES (Note 2):
COST OF SALES (Note 4):Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Notes 2 and 5):
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Insurance income
Gain on investments in partnership
Gain on sales of fixed assets (Note 6)
Loss on impairment of fixed assets
Gain on sales of investments in securities
Gain on sales of shares of subsidiaries and associates
Loss on sales and disposal of fixed assets (Note 6)
Loss on disaster
Loss on devaluation of investments in securities
Other, net
Total other income
Profit before income taxes

Yen

PER SHARE OF COMMON STOCK (Note 2):
Profit attributable to owners of parent
Cash dividends applicable to the year
• See accompanying notes to consolidated financial statements.

54

Canon Marketing Japan Inc. I Integrated Report 2019¥  171.60¥   60.00¥   160.61¥    60.00

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions of yen

2019¥ 22,3402018¥ 20,893

1,412
9
(25)
7,229
8,625
¥ 30,965

(641)
(4)
(26)
(6,380)(7,051)¥ 13,842¥ 30,87590¥ 30,965¥ 13,779
63¥ 13,842

Value Creation of the Canon MJ GroupPROFIT
OTHER COMPREHENSIVE INCOME (LOSS) (Note 7)
Net unrealized gains or losses on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income (loss)
Comprehensive income
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of parent
Non-controlling interests
Comprehensive income

Overview of the Canon MJ GroupCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31, 2019 AND 2018

• See accompanying notes to consolidated financial statements.

Segment Strategies
Sustainable Management—ESG Initiatives
Financial, ESG, and Corporate Data

Canon Marketing Japan Inc. I Integrated Report 201955

Financial, ESG, and Corporate DataCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31, 2019 AND 2018

Millions of yen

Number of sharesof common stock
151,079,972

BALANCE AT JANUARY 1, 2018
Profit attributable to owners of parent
Cash dividends
Purchase of treasury stock
Disposition of treasury stock
Profit attributable to non-controllinginterests
Cash dividends paid to non-controllinginterests
Other, net
BALANCE AT JANUARY 1, 2019
Cumulative effect of changes in accounting
policies (Note 2)
Restated balance at beginning of year
Profit attributable to owners of parent
Cash dividends
Purchase of treasury stock
Profit attributable to non-controllinginterests
Cash dividends paid to non-controllinginterests
Other, net
BALANCE AT DECEMBER 31, 2019

Commonstock¥ 73,303

Stockholders’ equity
CapitalRetained
surplusearnings¥ 82,820¥ 176,912
20,826(7,780)Treasurystock¥ (31,921)
(3)
0

0

151,079,972¥ 73,303¥ 82,820¥ 189,958¥ (31,924)(997)
151,079,972

73,30382,820188,961
22,250(8,428)(31,924)(2)

151,079,972¥ 73,303¥ 82,820¥ 202,783¥ (31,926)

Millions of yen

BALANCE AT JANUARY 1, 2018
Profit attributable to owners of parent
Cash dividends
Purchase of treasury stock
Disposition of treasury stock
Profit attributable to non-controllinginterests
Cash dividends paid to non-controllinginterests
Other, net
BALANCE AT JANUARY 1, 2019
Cumulative effect of changes in accounting
policies (Note 2)
Restated balance at beginning of year
Profit attributable to owners of parent
Cash dividends
Purchase of treasury stock
Profit attributable to non-controllinginterests
Cash dividends paid to non-controllinginterests
Other, net
BALANCE AT DECEMBER 31, 2019

Accumulated other comprehensive income (loss)
Net unrealized
Deferred gains Foreign currency Remeasurements Non-controlling
gains onor losses ontranslation of defined benefit interests
available-for-salehedgesadjustments
plans
securities¥ 3,159¥  6¥ 99¥  (7,346)¥ 491• See accompanying notes to consolidated financial statements.

56

Canon Marketing Japan Inc. I Integrated Report 2019(640)
¥ 2,519

(4)
¥  2

(23)
¥ 76

(6,380)¥ (13,726)

Total net
assets¥ 297,523
20,826(7,780)
(3)
0

67

67

(11)

(11)

(4)
¥ 543

(7,051)¥ 303,571
(997)

2,519

1,411
¥ 3,930

2

9
¥ 11

76

(24)
¥ 52

(13,726)

7,229¥ (6,497)

543

302,574
22,250(8,428)
(2)

90

90

(16)

(16)

0
¥ 617

8,625
¥ 325,093

CONSOLIDATED STATEMENTS OF CASH FLOWSMillions of yen

12,257
83
(67)
4,469
(19)
(65)
(350)
13
190
(2)
329
(248)
4,858
(1,805)(24,301)
4,039
32,684347(13)(10,965)
22,053

13,282
16
100
1,228
(67)
3
(352)
13
183
(488)
158
(495)
8,355
859
(25,106)(3,032)25,365351(13)(8,713)
16,990CASH FLOWS FROM INVESTING ACTIVITIES:Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of intangible assets
Payments for purchases of investments in securities
Proceeds from sales of investments in securities
Proceeds from sales of shares of subsidiaries resulting in change in scope of consolidation
Decrease (increase) in short-term loans receivable, net
OtherNet cash provided by (used in) investing activities(11,651)
17(1,451)(1,384)
328—(79,998)(446)(94,585)(9,905)263(2,238)
(677)
1,535
527
(0)
(31)
(10,526)

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term loans payable, net
Repayments of finance lease obligations
Payments for purchases of treasury stock
Dividends paid
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

—
(110)
(2)
(8,442)(3)(8,557)
11(81,078)
135,572¥ 54,494

91
(136)
(4)
(7,790)0(7,839)(33)(1,408)
136,980¥ 135,572

Financial, ESG, and Corporate Data

¥ 30,708

Sustainable Management—ESG Initiatives¥ 33,303

Segment Strategies

2018

Value Creation of the Canon MJ Group2019
CASH FLOWS FROM OPERATING ACTIVITIES:Profit before income taxes
Adjustments for:
Depreciation and amortization
Loss on impairment of fixed assets
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in net defined benefit liabilities
Decrease (increase) in net defined benefit assets
Increase (decrease) in allowance for bonuses
Interest and dividend income
Interest expense
Loss (gain) on sales and disposal of property, plant and equipment, net
Loss (gain) on sales of investments in securities
Loss (gain) on valuation of investments in securities
Loss (gain) on investments in partnership
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other, net
Sub-totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

Overview of the Canon MJ GroupCANON MARKETING JAPAN INC. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED DECEMBER 31, 2019 AND 2018

• See accompanying notes to consolidated financial statements.

Canon Marketing Japan Inc. I Integrated Report 201957

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1

Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Canon
Marketing Japan Inc. (the “Company”) and its consolidated
subsidiaries (the “Group”) are prepared on the basis of accounting
principles generally accepted in Japan, which are different in certain
respects as to application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from2

Summary of Significant Accounting Policies(a) Principles of Consolidation
The accompanying consolidated financial statements for the year
ended December 31, 2019 include the accounts of the Company andall of its 19 (20 in 2018) subsidiaries.
All intercompany accounts and transactions are eliminated inconsolidation.
(b) Cash Equivalents
For purposes of the consolidated statements of cash flows, theCompany and its consolidated subsidiaries consider all highly liquid
investments, including securities, time deposits and certificates ofdeposit, all of which mature or become due within three months ofthe date of acquisition, to be cash equivalents.
(c) Securities
The held-to-maturity debt securities are stated at amortized cost.
Available-for-sale marketable securities are stated at fair market
value, with unrealized gain or loss, net of the applicable taxes,
reported as a separate component of net assets. Available-for-salesecurities whose fair value is not readily determinable are stated atcost determined by the moving-average method.
(d) Inventories
Merchandise and service parts are valued at cost determined by themonthly moving-average method. The carrying amount in the balance
sheet represents the amount after write-downs due to decreased
profitability.
Work in process is valued at cost determined by the specificidentification method.
Supplies are valued at cost determined by the last-purchaseprice method. The carrying amount in the balance sheet represents
the amount after write-downs due to decreased profitability.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation iscomputed by the declining-balance method for property andequipment, with the exception of items that are depreciated by thestraight-line method at rates based on the estimated useful lives of
the respective assets.

58

the consolidated financial statements prepared by the Company as
required by the Financial Instruments and Exchange Law of Japan.
Certain accounts and items presented in the original consolidated
financial statements in Japanese have been reclassified for theconvenience of readers outside Japan.

Canon Marketing Japan Inc. I Integrated Report 2019

Such items are leased assets, certain assets of consolidated
subsidiaries, buildings purchased on or after April 1, 1998 (exclusiveof furniture and fixtures) and furniture and fixtures and structurespurchased on or after April 1, 2016.
The useful lives are as follows:
Buildings, from 5 to 75 years; furniture and fixtures, from 2 to 20
years; and rental assets, 3 years.
Normal repairs and maintenance, including minor renewals andimprovements, are charged to income as incurred.
(f) Intangible Assets
Software for sale is depreciated by a larger amount of the depreciation
based on the estimated sales quantity or the estimated sales revenueor the straight-line depreciation based on the estimated effective
duration of sales (up to three years). Internal-use software isdepreciated by the straight-line method based on the length of inhouse durability (five years).
(g) Leases
Leased assets under finance lease contracts are depreciated by thestraight-line method over their respective lease contract term withzero residual value.
(h) Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided in the amountrequired to cover possible losses on collection. It is determined byadding individually estimated uncollectible amounts for specific items
to an amount based on the actual rate of uncollected receivables of
the Group in prior years.
(i) Allowance for Bonuses
Allowance for bonuses is provided at the estimated amount ofbonuses to be paid to employees subsequent to the balance sheet
date for services rendered in the current fiscal year.
(j) Bonuses to Directors
The estimated amount payable for the next round of directors’
bonuses, which are classed as expenses for the current year, has been
included in the accounts for the current fiscal year.

(3) ‌Application of simplified method at smaller-sized companies, etc.
Certain consolidated subsidiaries apply the simplified method for
calculating net defined benefit liabilities and net periodic benefit
costs. Under this method, the payments for voluntary early retirementof all eligible employees at the end of the fiscal year are recognized
as retirement benefit obligations.

(o) Foreign Currency Financial Statements
The balance sheet accounts of the foreign subsidiaries are translated
into Japanese yen at the current exchange rates in effect at thebalance sheet date, except for the components of net assets excluding
non-controlling interests which are translated at their historical

Consumers segment
Sales are measured at discounted prices pledged in agreements withcustomers, net of rebates and other factors in line with sales.
Estimates are based on past trends and other known factors at timesof sale. Sales are recognized to the extent that important reversals areunlikely.

Financial, ESG, and Corporate Data(n) Translation of Foreign Currency Accounts
All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at
the current exchange rates in effect at the balance sheet date. The
foreign exchange gains and losses on translation are recognized in
the accompanying consolidated statements of income.

(q) Standards for Recognizing Significant Revenues and Expenses
The Company and its consolidated subsidiaries adopted the
Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 30, 2018) and Implementation Guidance on AccountingStandard for Revenue Recognition (ASBJ Guidance No. 30, March 30,2018). The normal timing for recognizing key performance obligations
and revenues in core businesses is as follows.
The Group sells and provides services for Canon products. It also
provides products and services in the IT solutions and industrial
equipment and healthcare fields. For sales of offerings that do not
require customer acceptance inspections, customers normally obtain
control of products upon delivery. The Group’s performanceobligations are thereby deemed fulfilled, so revenue is recognized
upon product delivery. Services mainly entail maintenanceagreements, so revenue is recognized evenly over the lengths of these
agreements or, in accordance with the extent of product usage, basedon amounts determined in those agreements.
Revenues are recognized in keeping with the specific situationsof each reporting segment, as below. The Enterprise and Area
segments provide similar products and services, so their revenues arestated collectively.

Sustainable Management—ESG Initiatives(m) Income Taxes
Deferred tax assets and liabilities are recorded to reflect the impact of
temporary differences between assets and liabilities recognized forfinancial reporting purposes and such amounts recognized for tax
purposes. These deferred taxes are measured by applying thestatutory income tax rate to the temporary differences.

(p) Per Share Amounts of Common Stock
Profit attributable to owners of parent per share is calculated using
profit available to holders of common stock, and the weighted average
number of shares of common stock outstanding for the period.
Cash dividends per share presented in the accompanying
consolidated statements of income are dividends applicable to therespective fiscal years, including dividends to be paid after the end of
the respective fiscal years.

Segment Strategies(2) ‌Amortization of unrecognized actuarial gains and losses and priorservice cost
Unrecognized prior service cost is amortized by the straight-line
method over the average remaining service period of the eligible
employees at the time when it arose. Unrecognized actuarial gains
and losses are amortized from the fiscal year following the year inwhich they arose by the straight-line method over the averageremaining service period of the eligible employees.

exchange rates.
Revenue and expense accounts are translated at the averageexchange rates prevailing during the year.

Value Creation of the Canon MJ Group(I) Accounting Method for Retirement Benefits(1) ‌Method of attributing estimated amounts of retirement benefits toperiods
In calculating retirement benefit obligations, the estimated amount of
retirement benefits attributed to a period up to the current fiscal year
is primarily determined using the benefit formula basis.

Overview of the Canon MJ Group(k) Allowance for Long-Term Continuous Service Rewards
In order to set aside money for payment of rewards to employees who
have given long-term continuous service determined in accordancewith the Company’s internal regulations, an allowance for long-term
continuous service rewards is recorded based on the amount theCompany and certain consolidated subsidiaries expect to pay in the
future.

Enterprise and Area segments
For product repairs and installations and other services, sales arerecognized when it is deemed that services have been completed in
keeping with performance obligations. Contract development softwaresales are recognized based on input methods for software for which
reasonable progress can be estimated. If it is impossible to estimate
reasonable progress, sales are recognized based on cost recovery
methods for recoverable expenses.

Canon Marketing Japan Inc. I Integrated Report 201959

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Professional segment
Where equipment performance is subject to customer acceptanceinspections, sales are recognized upon such acceptance inspections.
(r) Application of Consolidated Taxation System
The Company and certain consolidated subsidiaries have adopted theconsolidated taxation system.
(s) Changes in Accounting Policies
The Accounting Standard for Revenue Recognition (ASBJ Statement
No. 29, March 30, 2018) and Implementation Guidance on AccountingStandard for Revenue Recognition (ASBJ Guidance No. 30, March 30,2018) became applicable from fiscal years beginning on or after April
1, 2018. The Group accordingly applied the Accounting Standard for
Revenue Recognition from the start of the fiscal year ended December
31, 2019, recognizing projected revenues in exchange for goods andservices upon transferring control to customers.
The Company applies the Accounting Standard for Revenue
Recognition in keeping with the transitional treatment provisions ofParagraph 84 of those standards. The Company has retroactively
adjusted the beginning balance of retained earnings as of January 1,
2019 to reflect the cumulative impact of applying the new accounting
policy. The Company has not, however, applied its new accounting
policy retroactively for application under Paragraph 86 of the
Accounting Standard for Revenue Recognition with regard toagreements under which most revenue has been recognized under the
method used prior to the start of the year ended December 31, 2019.
To apply the method stipulated under Paragraph 86-1 of the
Accounting Standard for Revenue Recognition and change contracts
made before the start of the year ended December 31, 2019, theCompany undertook steps (1) through (3) below based on contract
terms after reflecting all contractual changes, cumulatively adjustingretained earnings at the start of the year under review.

3(1) Classify fulfilled and unfulfilled performance obligations(2) Calculate transaction prices(3) Allocate transaction prices to fulfilled and unfulfilled performanceobligations
This led to declines of ¥1,953 million in net sales, ¥1,922 million
in cost of sales, and ¥31 million in operating income, ordinary income,and profit before income taxes. Retained earnings at the start of theyear under review decreased by ¥997 million.
From the year ended December 31, 2019, the Group posted tocost of sales some personnel and other expenses previously recorded
as selling, general and administrative expenses. This was because inview of the early adoption of the Accounting Standard for Revenue
Recognition from the year ended December 31, 2019, the Group
reviewed the scope of cost aggregation as a result of assessing thepositioning of performance obligation-related costs with regard toservices that have become increasingly important in recent years. Thischange increased cost of sales in the year ended December 31, 2019,by ¥20,072 million compared with the amount under the previous
method and lowered gross profit by the same amount. There was no
impact on operating income, ordinary income, or profit before income
taxes.
(t) Change in Presentation Method
Change in line with application of Partial Amendments to AccountingStandard for Tax Effect Accounting
Partial Amendments to Accounting Standard for Tax EffectAccounting (ASBJ Statement No. 28, February 16, 2018) applied fromthe start of the year ended December 31, 2019. Deferred tax assets
are thus included in investments and other assets, while deferred tax
liabilities are now presented as part of long-term liabilities.
As a result of this change, ¥3,896 million in deferred tax assets
included in total current assets at December 31, 2018, is now includedin ¥23,040 million in deferred tax assets as part of investments andother assets.

Contingent Liabilities
Contingent liabilities as of December 31, 2019 and 2018 were as follows:
Millions of yen

Guarantees for employees’ housing loans
Total

60

Canon Marketing Japan Inc. I Integrated Report 2019

2019
¥7
¥7

2018
¥9
¥9

Overview of the Canon MJ Group

4

Inventories
Inventories as of December 31, 2019 and 2018 were composed of the following:
Millions of yen

2018¥ 28,716
2,466
1,191
648
¥ 33,021

Value Creation of the Canon MJ Group

Merchandise
Service parts
Work in process
Supplies
Total

2019
¥ 29,512
3,769
206
623
¥ 34,110

Note: ‌For the software development contracts from which contract losses are expected, the inventory relating to such contracts and relevant reserves for contract losses do not offset each other and havebeen recorded in gross amounts in current assets and current liabilities, respectively.

Write-downs of inventories for the years ended December 31, 2019 and 2018, net of the amount of the reversal, were included in the following account:
Millions of yen

Cost of sales

2018¥ 1,449

Selling, General and Administrative Expenses

Segment Strategies5

2019¥ 1,381

The primary components of “Selling, General and Administrative Expenses” for the years ended December 31, 2019 and 2018 were as follows:
Millions of yen

2018¥ 92,756
2,809
80
406
6,399
444
123

Sustainable Management—ESG Initiatives

Salaries and allowances
Provision for bonuses
Provision for directors' bonuses
Provision of allowance for long-term continuous service rewards
Retirement benefit costs
Provision for product warranties
Provision of allowance for doubtful receivables

2019¥ 76,235
2,795
100
397
9,203
534
1

Research and development costs included in “Selling, general and administrative expenses” and “Cost of sales” for the years ended December 31, 2019 and 2018 amounted to ¥495 million and ¥522
million, respectively.

6

Other Income (Expenses)
1. The components of “Gain on sales of fixed assets” for the years ended December 31, 2019 and 2018 were as follows:
Millions of yen

2019
¥8
3
2
—
—

2018
¥ 103
—
6
0
17

0

—

0
¥ 13

0
¥ 126

Canon Marketing Japan Inc. I Integrated Report 2019

Financial, ESG, and Corporate Data

Buildings and structures
Machinery and vehicles
Furniture and fixtures
Rental assets
Land
Software
Other
Total

61

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. The components of “Loss on sales and disposal of fixed assets” for the years ended December 31, 2019 and 2018 were as follows:
Millions of yen

Buildings and structures
Furniture and fixtures
Rental assets
Land
Software
Other
Total

7

2019
¥  91
40
73
—
3
0
¥ 207

2018
¥ 153
65
82
8
1
2
¥ 311

Other Comprehensive Income (Loss)
The following table shows amount arising during the year, reclassification adjustments, pre-tax amount, tax effect and net-of-tax amount foreach component of other comprehensive income (loss) for the years ended December 31, 2019 and 2018.

Net unrealized gains or losses on available-for-sale securities
Amount arising during the year
Reclassification adjustments
Pre-tax amountTax effectNet-of-tax amountDeferred gains or losses on hedges
Amount arising during the year
Pre-tax amountTax effectNet-of-tax amountForeign currency translation adjustments
Amount arising during the year
Pre-tax amountTax effectNet-of-tax amountRemeasurements of defined benefit plans
Amount arising during the year
Reclassification adjustments
Pre-tax amountTax effectNet-of-tax amount
Total other comprehensive income (loss)

62

Canon Marketing Japan Inc. I Integrated Report 2019

2019

2018

¥ 2,207
(160)
2,047
(635)
1,412

¥    (335)
(593)
(928)
287
(641)

14
14
(5)
9

(6)
(6)
2
(4)

(25)
(25)
—
(25)

(26)
(26)
—
(26)

5,731
4,739
10,470(3,241)
7,229¥ 8,625(10,692)
1,471(9,221)
2,841(6,380)¥ (7,051)

Overview of the Canon MJ Group

8

Common Stock and Dividends
1. The following table shows the movement of number of common stock for the years ended December 31, 2019 and 2018.
Increase orpurchase(Thousands ofshares)151,080
21,412—
1

Issued stock
Treasury stock

Decrease or sale
As of December 31,(Thousands of2018shares)—0

Increase orpurchase(Thousands ofshares)151,080
21,413

Decrease or sale
As of December 31,(Thousands of2019shares)———1

151,080
21,414

Value Creation of the Canon MJ GroupAs of January 1,
2018

Notes: 1. The increase of treasury stock was due to the purchase of fractional stock.
2. The decrease of treasury stock was due to the sale of fractional stock.

2. Matters regarding dividends
The Company distributes a semiannual interim dividend by resolution of Board of Directors and annual dividend by resolution of Generalstockholders’ meeting.
Semiannual interim dividends is paid to the common stock holders of the Company as of semiannual period end and annual dividend is paid
to the common stock holders of the Company as of year end.
Resolution date, total dividends, dividend per share for the years ended December 31, 2019 and 2018 were as follows:
2019
Resolution date

Annual dividendInterim dividend

March 27, 2019
July 23, 2019

Total dividends Dividend per share(Millions of yen)
(Yen)
¥ 4,538¥ 35¥ 3,890¥ 30

Resolution date
March 28, 2018
July 25, 2018

Total dividends Dividend per share(Millions of yen)
(Yen)
¥ 4,538¥ 35¥ 3,242¥ 25

Segment Strategies

Dividends

2018

Annual dividend of ¥3,890 million (¥30 dividend per share) was resolved by General stockholders’ meeting held on March 26, 2020.
Total dividend per share was ¥60 for fiscal 2019 and fiscal 2018, respectively.

9

Lease Transactions
Sustainable Management—ESG Initiatives

1. Lessees’ accounting
The following table shows future minimum lease payments subsequent to December 31, 2019 and 2018 for noncancelable operating leases.
Millions of yen

Due within one year
Due after one year
Total

2019
¥  2,486
9,203¥ 11,6892018¥  2,596
11,307¥ 13,903

2. Lessors’ accounting
The following table shows future minimum lease income subsequent to December 31, 2019 and 2018 for noncancelable operating leases.

Due within one year
Due after one year
Total

2019
¥ 2,148
2,406¥ 4,554

Financial, ESG, and Corporate Data

Millions of yen

2018¥ 1,890
2,543¥ 4,433

Canon Marketing Japan Inc. I Integrated Report 201963

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10

Financial Instruments
1. Information on financial instruments(1) Policies for financial instruments
The Group limits its asset management to financial instrumentscharacterized as very safe and believes that financing should mainly
be conducted through the use of Group finances whenever necessary.
The Company enters into derivative transactions to hedge against
foreign exchange fluctuation risks and not for speculative purposes.
(2) Types and risks of financial instruments and systems to control
those risks
Operating receivables, consisting of notes and accounts receivable,
are exposed to credit risks of customers. The Group strives to mitigate
these risks by strict credit control utilizing credit information provided
by external credit agencies, as well as by credit insurance and otherrisk-hedging means.
Short-term loans receivable are mainly the loans to the parent
company by the Company, rendered in compliance with the internal
regulations for investment and management of funds.
Short-term investments in securities and investments insecurities consist primarily of held-to-maturity debt securities andequity securities issued by business counterparties of the Group, andare exposed to market price fluctuation risk. Regarding this risk, theGroup periodically monitors the fair values of the securities and thefinancial condition of their issuers, i.e., business counterparties. In

addition, for securities other than held-to-maturity debt securities,
the Group continuously reviews the status of security holdings, taking
market conditions and relationships with business counterparties into
consideration.
Trade payables, consisting of notes and accounts payable, aremainly those due within six months.
Derivative transactions consist of forward exchange contracts tohedge against the risks of fluctuations in foreign currency denominatedtrade payables.
(3) Supplementary explanation on fair values of financial instruments
The fair values of financial instruments include not only values basedon market quotations, but also values calculated on a theoreticalbasis in cases where market quotations are not available. Such values
may vary depending on different assumptions, as variables arefactored into the calculation of such values.
2. Fair values of financial instruments
The book values of financial instruments in the consolidated balance
sheets as of December 31, 2019 and 2018, their fair values, and thedifferences between the two are as follows. The table below, however,excludes the financial instruments whose fair values are not readily
determinable (see Note 2).
Millions of yen

2019(1) Cash and deposits(2) Notes and accounts receivable(3) Short-term investments in securities and investments in securities(4) Short-term loans receivable
Total assets(5) Notes and accounts payable
Total liabilities

Book value¥  53,994
112,667
9,059
170,012¥ 345,732¥  51,543¥  51,543

Fair value¥  53,994
112,667
9,059
170,012¥ 345,732¥  51,543¥  51,543

Difference
—
—
—
—
—
—
—
Millions of yen

2018(1) Cash and deposits(2) Notes and accounts receivable(3) Short-term investments in securities and investments in securities(4) Short-term loans receivable
Total assets(5) Notes and accounts payable
Total liabilities

64

Canon Marketing Japan Inc. I Integrated Report 2019

Book value¥  65,072
117,042
76,89990,014¥ 349,027¥  75,831¥  75,831

Fair value¥  65,072
117,042
76,89990,014¥ 349,027¥  75,831¥  75,831

Difference
—
—
—
—
—
—
—

Overview of the Canon MJ Group

Notes: 1. Calculation methods of fair values of financial instruments and other matters relating to securities are as below:
Assets(1) Cash and deposits, (2) Notes and accounts receivable, and (4) Short- (3) Short-term investments in securities and investments in securities
term loans receivable
The fair values of equity securities are based on the prices at theThe book values of these assets are used as their fair values, sincesecurity exchanges, and those of debt securities are based on the prices
they are to be settled in the short term and accordingly their fair values at the security exchanges or quotations obtained from counterparty
approximate their book values.
financial institutions. Details of securities by holding objectives aredescribed in Note 11 Securities.

Value Creation of the Canon MJ Group

Liabilities(5) Notes and accounts payable
The book values of these liabilities are used as their fair values, since they are to be settled in the short term and accordingly their fair values
approximate their book values.
2. The book values of financial instruments whose fair values are not readily determinable as of December 31, 2019 and 2018 were as follows:
Millions of yen

2019¥ 1,564¥   915

Equity securities
Investments in investment partnerships

2018
¥ 713
¥ 873
Segment Strategies

These financial instruments are not included in (3) Short-term investments in securities and investments in securities in the preceding table offair values, since they do not have market prices and therefore their fair values are not readily determinable.
3. The redemption schedule of monetary claims and securities with maturities as of December 31, 2019 and 2018 were summarized as follows:
Millions of yen

2019
Due after
1 year——Due within
1 year¥  65,072
117,0422018
Due after
1 year———500
170,012¥ 337,173

—
—
—
—

—
70,50090,014¥ 342,628————

Sustainable Management—ESG Initiatives

Cash and deposits
Notes and accounts receivable
Short-term investments in securities and investments in securities
Held-to-maturity debt securities(1) Corporate bonds(2) Other
Short-term loans receivable
Total

Due within
1 year¥  53,994
112,667

4. The repayment schedule of lease obligations as of December 31, 2019 and 2018 was as follows:
Millions of yen¥ 72

1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
¥ 49

¥ 33

¥ 17

¥4

2018
Due within
1 year¥ 101

Financial, ESG, and Corporate Data2019
Due within
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
¥ 58

¥ 35

¥ 19

¥4

Canon Marketing Japan Inc. I Integrated Report 201965

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11

Securities
Securities as of December 31, 2019 and 2018 were classified and included in the following accounts:
Millions of yen

Securities classified as:
Available-for-sale:
Investments in securities
Held-to-maturity:
Cash and cash equivalents
Total

2019

2018

¥ 11,038¥  7,986500¥ 11,538

70,500¥ 78,486

The carrying amounts and aggregate fair values of investments in securities at December 31, 2019 and 2018 were as follows:
Millions of yen

2019
Cost
Securities classified as:
Available-for-sale:
Equity securities
Other
Total

Unrealized gains¥ 3,014—¥ 3,014¥ 5,594—¥ 5,594

Unrealized losses

Fair value¥ (49)—¥ (49)¥ 8,559—¥ 8,559

Millions of yen

2018
Cost
Securities classified as:
Available-for-sale:
Equity securities
Other
Total

Unrealized gains¥ 2,94711¥ 2,958

Unrealized losses¥ 3,4491¥ 3,450

Fair value

¥ (8)
—
¥ (8)

¥ 6,38812¥ 6,400

Available-for-sale securities whose fair value is not readily determinable as of December 31, 2019 and 2018 were as follows:
Millions of yen

Available-for-sale:
Equity securities
Investments in investment partnerships
Total

2019

2018

¥ 1,564915¥ 2,479¥   713873¥ 1,586

Impairment loss of ¥321 million and ¥158 million was recorded on unlisted equity securities in the years ended December 31, 2019 and2018, respectively.

66

Canon Marketing Japan Inc. I Integrated Report 2019

Overview of the Canon MJ Group12

Employees’ Retirement and Severance Benefits
1. Overview
The Company has a defined contribution pension plan, a pension planwith a market-based variable accumulation rate (quasi-cash balanceplan), and a lump-sum severance payment plan, and its domestic
consolidated subsidiaries have defined benefit corporate pension

plans, and lump-sum severance payment plans. The Company
sometimes provides retiring employees with extra retirement
payments not included in the retirement benefit obligations actuariallycalculated in line with its retirement benefit accounting.
Value Creation of the Canon MJ Group2. Defined benefit plans(1) Reconciliation of retirement benefit obligations at beginning and end of year
Millions of yen

2019¥ 218,637
6,360
1,187
2,149
(8,011)(669)—¥ 219,653

2018¥ 217,952
6,513
1,218
115
(7,161)—(0)¥ 218,637

Segment Strategies

Retirement benefit obligations at beginning of year
Service costs
Interest costs
Actuarial gains and losses
Benefit paid
Prior service costs
Other
Retirement benefit obligations at end of year
(2) Reconciliation of plan assets at beginning and end of year

Millions of yen

2018¥ 169,452
4,221(10,577)
3,051(6,381)¥ 159,766

Sustainable Management—ESG Initiatives

Plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses
Contributions from the employer
Benefit paid
Plan assets at end of year2019
¥ 159,766
3,980
7,211
3,001
(7,088)¥ 166,870(3) Reconciliation of retirement benefit obligations at beginning and end of year for which the simplified method was applied
Millions of yen

Net defined benefit liabilities at beginning of year
Net periodic benefit costs
Benefit paid
Contributions to plans
Net defined benefit liabilities at end of year

2019
¥ 712
125
(24)
(33)
¥ 780

2018
¥ 700
98
(52)
(34)
¥ 712

Financial, ESG, and Corporate Data

Canon Marketing Japan Inc. I Integrated Report 201967

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(4) Reconciliation of retirement benefit obligations and plan assets at year-end and net defined benefit liabilities and assets in consolidatedbalance sheets
Millions of yen

2019¥ 200,318
167,214
33,104
20,459¥  53,563¥  53,956(393)¥  53,563

Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Net liabilities and assets in consolidated balance sheets
Net defined benefit liabilities
Net defined benefit assets
Net liabilities and assets in consolidated balance sheets2018¥ 197,969
160,052
37,917
21,666¥  59,583¥  59,887(304)¥  59,583

Note: Plan assets include plan assets for which the simplified method was applied.

(5) Retirement benefit costs
Millions of yen

2019¥ 6,360
1,187(3,980)
5,012
(273)
125
¥ 8,431

Service costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of prior service costs
Net periodic benefit costs using the simplified method
Retirement benefit costs of defined benefit plans

2018¥ 6,513
1,218(4,221)
4,815(3,345)98¥ 5,078

Note: In addition to the above retirement benefit costs, the Group recorded ¥584 million and ¥395 million for extra retirement payments for the years ended December 31, 2019 and 2018, respectively.

(6) Remeasurements of defined benefit plans before income tax effect adjustment
Changes in unrecognized prior service costs and unrecognized actuarial gains and losses for the years ended December 31, 2019 and 2018 wereas follows:
Millions of yen

2019
Unrecognized priorservice costs
At beginning of year
Net change
At end of year

68

Canon Marketing Japan Inc. I Integrated Report 2019

¥ (1,407)(396)¥ (1,803)

Unrecognizedactuarial gains
and losses¥ 21,308(10,074)¥ 11,234

Total¥ 19,901(10,470)¥  9,431

2018
Unrecognized priorservice costs¥ (4,751)
3,344¥ (1,407)

Unrecognizedactuarial gains
and losses¥ 15,431
5,877¥ 21,308

Total¥ 10,680
9,221¥ 19,901

Overview of the Canon MJ Group(7) Plan assets
1. Main components of plan assets
Ratios for main components of plan assets were as follows:
2018
23%
2
49
20
6
100%

Value Creation of the Canon MJ Group

Bonds
StocksPooled funds
Life insurance company general accounts
Other
Total

2019
21%
3
52
18
6
100%

Note: ‌The composition of pooled funds was 47% in bonds and 53% in stocks for the year ended December 31, 2019, and 50% in bonds and 50% in stocks for the year ended December 31, 2018.

2. Methodology for setting long-term expected rates of return
The long-term expected rate of return on plan assets are determined by considering current and projected plan asset allocations and current andanticipated long-term rates of return from diverse plan assets.
(8) Actuarial assumptions
The principal actuarial assumptions as of December 31, 2019 and 2018 were as follows:
Segment Strategies

Discount rates
Long-term expected rates of return on plan assets
Estimated rates of salary increases

2019
0.21 - 0.48%
2.0 - 2.5%
1.9 - 2.6%

2018
0.05 - 0.62%
2.0 - 2.5%
1.9 - 2.7%

3. Defined contribution plan
The required contributions of the Company and consolidated subsidiaries to defined contribution plans totaled ¥1,964 million and ¥1,987 million
for the years ended December 31, 2019 and 2018, respectively.
Sustainable Management—ESG Initiatives
Financial, ESG, and Corporate Data

Canon Marketing Japan Inc. I Integrated Report 201969

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13

Income Taxes
The effects of significant temporary differences, which resulted in deferred tax assets and liabilities as of December 31, 2019 and 2018, were as follows:
Millions of yen

DEFERRED TAX ASSETS:
Net defined benefit liabilities
Accrued bonuses to employees
Sales promotion expenses
Excess depreciation of fixed assets
Accrued business tax and business office tax
Excess amortization of software
Loss on disposal and devaluation of inventories
Asset retirement obligations
Allowance for long-term continuous service rewards
Loss carryforward
Loss on devaluation of investments in securities
Provision for loss on orders received
Loss on valuation of golf club membership
Lump-sum depreciable assets
Loss on impairment of fixed assets
Other
Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets
DEFERRED TAX LIABILITIES:Net unrealized gains on available-for-sale securities
Deferred capital gain
Deferred gains or losses on hedges
Uncollected enterprise tax refunds
Other
Total deferred tax liabilities
Net deferred tax assets

2019

2018

¥ 16,769
1,155
1,092
808
804
721
542
487
323
308
281
202
106
84
36
1,184
24,902(986)¥ 23,916¥ 18,630
1,173
893
838
688
585
513
438
316
472
414
139
117
87
93
1,146
26,542(1,045)¥ 25,497¥ (1,747)(1,280)(5)—(91)¥ (3,123)¥ 20,793¥ (1,113)(1,280)
(1)
(9)
(84)
¥ (2,487)¥ 23,010

2019¥ 20,793—¥ 20,793

2018¥ 23,040(30)¥ 23,010

Note: Net deferred tax assets as of March 31, 2019 and 2018 are reflected in the following accounts in the consolidated balance sheet:

Investments and other assets—deferred tax assets
Long-term liabilities—deferred tax liabilities
Net deferred tax assets

A reconciliation between the statutory income tax rate and the effective income tax rate for the years ended December 31, 2019 and 2018 was asfollows:

Statutory income tax rate
Entertainment and other expenses permanently not deductible for tax purposes
Per-capita levy of inhabitants’ taxes
Dividend income not taxable
Other
Effective income tax rate

2019
31.0%
0.7
1.0
(0.1)
0.3
32.9%

2018
—
—
—
—
—
—

Note: In the year ended December 31, 2018, the difference between the statutory income tax rate and the tax rate after applying tax effect accounting was less than 5% and is therefore not presented.

70

Canon Marketing Japan Inc. I Integrated Report 2019

Overview of the Canon MJ Group

14

Segment Information
the visual solutions subsegment of the Professional segment to theEnterprise and Area segments. Consolidating security businessplanning and development work previously spread throughout theGroup within the Marketing Headquarters of the parent company
resulted in changing intersegment transaction amounts. Segment
information for the year ended December 31, 2018, is based on the
post-change segmentation.

Value Creation of the Canon MJ Group

1. Segment Information(1) Description of Reportable Segments
Reportable segments are constituent units of the Group for which
separate financial information is available and they are subject toperiodic reviews by the Board of Directors to determine theallocation of management resources and assess their respective
operating results.
From the year ended December 31, 2019, the Group transferred

Segment Strategies

Major Business Areas and Group Companies
Reportable Segment
Major Business Areas and Group Companies
Consumers
Providing digital cameras and inkjet printers to consumers
Enterprise
Supplying Canon’s input/output equipment and solutions to help resolve the business-specific management issues oflarge customers[Major Group company]
Canon IT Solutions Inc.
Area
Supplying Canon’s input/output equipment and solutions to help resolve the management issues of small-tomedium-sized enterprises around Japan[Major Group company]
Canon System & Support Inc.
Professional
Providing solutions to customers in specialist areas•Production Printing
Focusing on providing fast continuous feed and cut-sheet printers to printing companies[Major Group company]
Canon Production Printing Systems Inc.

Sustainable Management—ESG Initiatives•Industrial Equipment
Supplying semiconductor fabrication and measuring equipment, mainly to semiconductor and other electronic device
manufacturers•Healthcare
Providing modalities, IT systems, and solutions combining modalities to medical institutions and dispensing
machines and IT systems to pharmacies[Major Group companies]
Canon Lifecare Solutions Inc. and Canon ITS Medical Inc.

Financial, ESG, and Corporate Data

Canon Marketing Japan Inc. I Integrated Report 201971

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(2) M
 ethods of measurement for sales, segment income (loss),
assets, and other items for reportable segments
Accounting methods for reportable segments are the same as theaccounting methods described in Note 2 Summary of significant
accounting policies.
Segment income (loss) is measured based on the amount ofoperating income. Intersegment sales and transfers are based onmarket prices.
The Group changed its accounting policy for revenue
recognition as indicated in Note 2. As a result of the change inaccounting policy, Consumers segment sales were ¥1,846 million
lower than under the previous accounting method, with segment
income being ¥20 million higher. In the Enterprise segment,
segment sales and income were down ¥11 million and ¥16 million,
respectively. For the Area segment, segment sales and income were
down ¥85 million and ¥34 million, respectively. In the Professional
segment, segment sales and income increased ¥1 million and ¥0
million, respectively. In Other, segment sales and income declined¥12 million and ¥1 million, respectively.

(3) Information by reportable segment for the years ended December 31, 2019 and 2018 were as follows:
Millions of yen

Year ended or as of December 31

2019
Reportable Segment
Consumers Enterprise

Net sales:
External customers
Intersegment
Total
Segment income (loss)
Segment assets
Other items:
Depreciation and amortization
Changes in the amount of property,
plant and equipment and intangible
assetsArea¥ 132,737 ¥ 186,652 ¥ 256,139
53
9,176
12,171
132,790 195,828 268,310
6,865
10,07014,39844,761
94,42474,465

Professional¥ 41,888
1,788
43,676
1,617
24,737

Other

Total

Adjustments Consolidated¥ 3,718 ¥ 621,134— ¥ 621,134
5,579
28,767 ¥ (28,767)—
9,297 649,901 (28,767) 621,134(714) 32,236
204
32,4402,352 240,739 262,960 503,699

641

7,462

3,218

387

29

11,737520

12,257618

17,723

2,516

544

23

21,42427

21,451

Notes: 1. “Other” includes call center business and BPO service business, which are not included in reportable segments.
2. Adjustments are as follows:	  (1) Adjustment of segment income (loss) eliminates intersegment transactions.
	  (2) Adjustment of segment assets is for corporate assets that do not belong to reportable segments. These assets mainly comprise surplus funds (cash and marketable securities) and assets relating
to head office land, buildings, and head office administrative units.
	  (3) Adjustment of depreciation and amortization is for head office building expenses that do not belong to reportable segments.
	  (4) Adjustment of increase of property, plant and equipment and intangible assets consists of capital investments in head office buildings that do not belong to reportable segments.
3. Total segment income (loss) after adjustments for reportable and other business segments equals operating income in the consolidated statements of income.

72

Canon Marketing Japan Inc. I Integrated Report 2019

Overview of the Canon MJ Group

Millions of yen

Year ended or as of December 31

2018
Reportable Segment
Consumers Enterprise¥ 150,158 ¥ 179,599 ¥ 243,736
87
8,569
13,833150,245 188,168 257,569
7,340
8,724
12,07853,18682,30367,715

Professional¥ 44,656
1,769
46,425851
21,544

Other

Total

¥ 3,442 ¥ 621,591
4,550
28,808
7,992 650,399
88
29,081
2,144 226,892

Adjustments Consolidated— ¥ 621,591¥ (28,808)—(28,808) 621,591(140)
28,941
271,899 498,791

779

7,872

3,359

446

56

12,512770

13,282

681

6,741

3,087

208

19

10,736

9

10,745

Value Creation of the Canon MJ GroupNet sales:
External customers
Intersegment
Total
Segment income
Segment assets
Other items:
Depreciation and amortization
Changes in the amount of property,
plant and equipment and intangible
assetsArea

Segment Strategies

Notes: 1. “Other” includes call center business and BPO service business, which are not included in reportable segments.
2. Adjustments are as follows:	  (1) Adjustment of segment income eliminates intersegment transactions.
	  (2) Adjustment of segment assets is for corporate assets that do not belong to reportable segments. These assets mainly comprise surplus funds (cash and marketable securities) and assets relating
to head office land, buildings, and head office administrative units.
	  (3) Adjustment of depreciation and amortization is for head office building expenses that do not belong to reportable segments.
	  (4) Adjustment of increase of property, plant and equipment and intangible assets consists of capital investments in head office buildings that do not belong to reportable segments.
3. Total segment income after adjustments for reportable and other business segments equals operating income in the consolidated statements of income.

2. Related Information(1) Information by product and service
Disclosure of information by product and service is omitted since the segment information contains the same information.

Sustainable Management—ESG Initiatives(2) Information by geographical area
1. SalesDisclosure of information on sales by geographical area is omitted since sales to domestic external customers accounts for more than 90% ofconsolidated net sales.
2. Property, plant and equipment
Disclosure of information on property, plant and equipment by geographical area is omitted since the amount of domestic property, plant andequipment accounts for more than 90% of total property, plant and equipment recorded on the consolidated balance sheet.
(3) Information by major customers
Disclosure of information by major customers is omitted since no customer accounts for 10% or more of consolidated net sales.

Financial, ESG, and Corporate Data

Canon Marketing Japan Inc. I Integrated Report 201973

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Information on impairment loss on property, plant and equipment by reportable segment
Impairment losses on property, plant and equipment by reportable segment for the years ended 2019 and 2018 were as follows:
Millions of yen

Year ended or as of December 31

2019
Reportable Segment
Consumers Enterprise

Impairment loss

¥ 50

Area

¥ 33

Professional
—

—

Other

Total

Adjustments

Recordedamount

—

¥ 83

—

¥ 83

Note: “Other” represents operating segments which are not included in the reportable segments and includes operations such as the shared-services business.

Millions of yen

Year ended or as of December 31

2018
Reportable Segment
Consumers Enterprise

Impairment loss

¥ 15

—

Area

Professional—

4. Information on amortization and balance of goodwill by reportable segment
There were no applicable items for the years ended December 31, 2019 and 2018.
5. Information on gain on negative goodwill
There were no applicable items for the years ended December 31, 2019 and 2018.

74

Canon Marketing Japan Inc. I Integrated Report 2019

¥1

Other

Total

Adjustments

Recordedamount

—

¥ 16

—

¥ 16

Overview of the Canon MJ Group15

Related Party Transactions
Transaction conditions and policies for deciding transaction conditions, etc. with related party(1) ‌Purchases of products are decided based on price negotiations each fiscal year, after considering market prices and the affiliated company’s
proposals regarding desired prices.
(2) ‌Sales of office equipment and consumables, etc. are subject to similar conditions as general transactions.
(3) ‌With regard to loans of capital, interest rates on loans are decided rationally after considering market interest rates. Furthermore, collateral is
not accepted.

Value Creation of the Canon MJ Group

Transaction with parent company and major corporate stockholders, etc. for the year ended December 31, 2019 and related balance as ofDecember 31, 2019 were as follows:

Name ofCategory company,etc.

Percentage Related contents
Balance at
Capital orTransaction
possession Board
end of fiscal
investment Businessamountof voting members
year
Address
capital contents or
Business Contents of transactions (Millions of Accounts
rightsholding(Millions of(Millions of occupation
yen)(Ownership) concurrent relationships
yen)
yen)
(%)
positionsPurchasesof products

Segment Strategies

OhtaParent
Canon Inc.
ku,Tokyocompany

Development
Accounts¥ 17,878¥ 182,020
andpayableOperatingmanufacturing
Salesof
Manufacture transactionsin the office, (Ownership) 0 holdoffice equipof products¥174,762 imaging Direct 58.5 concurrent
ment andsold bysystem, and Indirect 0.0 positions
Accounts
consumables,
Canon MJ
industrial¥ 7,172 receivable ¥ 1,560
etc.
equipment
and others
areas
NonShort-term
Loans of
¥ 170,000¥ 80,000
operatingloans
capitaltransactions

Note: Transaction amounts do not include consumption tax, etc., however, the account balances include consumption tax, etc.

Name ofCategory company,
etc.

Sustainable Management—ESG Initiatives

Transaction with parent company and major corporate stockholders, etc. for the year ended December 31, 2018 and related balance as ofDecember 31, 2018 were as follows:
Percentage Related contents
Balance at
Capital orTransaction
possession Board
end of fiscal
investment Businessamountof voting members
year
Address
capital contents or
Business Contents of transactions (Millions of Accounts
rightsholding(Millions of(Millions of occupation
relationships
yen)(Ownership) concurrent
yen)
yen)
(%)
positionsPurchasesof products

Financial, ESG, and Corporate Data

OhtaParent
Canon Inc.
ku,Tokyocompany

Development
Accounts¥ 42,070¥ 198,404
andpayableOperating Sales ofmanufacturing
Manufacture transactionsin the office, (Ownership) 0 holdoffice equipof products¥174,762 imaging Direct 58.5 concurrent
ment andsold bysystem, and Indirect 0.0 positions
Accounts
consumables,
Canon MJ
industrial¥ 6,830 receivable ¥ 2,381
etc.
equipment
and others
areas
NonShort-term
Loans of¥ 90,000—
operatingloans
capitaltransactions

Note: Transaction amounts do not include consumption tax, etc., however, the account balances include consumption tax, etc.

Canon Marketing Japan Inc. I Integrated Report 201975

Financial, ESG, and Corporate DataNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16

Asset Retirement Obligations
The Group recognizes restoration obligations under real estate rental
agreements of buildings and other real estates as asset retirement
obligations.
Instead of recognizing liabilities, the Group reasonably estimates
the uncollectible amount of lease deposits relating to the real estate

17

rental agreements, and accounts for the portion of such estimatedamount attributable to the current fiscal year as an expense.
The outstanding balances of lease deposits considered
uncollectible as of December 31, 2019 and 2018 were ¥2,853 millionand ¥2,795 million, respectively.

Lease Obligations, Loans Payable and Deposits
Lease obligations, loans payable and deposits as of December 31, 2019 and 2018 were as follows:
Millions of yen

Average interest rate (2019)
Lease obligations
Current portion of lease obligations
Lease obligations (excluding current portion)
Long-term loans payable (excluding current portion)
Deposits
Total

18

2018

¥    72
103
175
—
3,330
¥ 3,505¥   101
117
218
—
4,034
¥ 4,252

Subsequent Events
1. Transfer of shares in subsidiaryPursuant to a resolution of the Board of Directors on November 26,
2019, the Company transferred all of the shares of consolidated
subsidiary Canon Lifecare Solutions Inc. (hereafter Canon LCS) to
Canon Medical Systems Corporation (hereafter Canon Medical),effective January 1, 2020. Canon LCS was thereby removed fromconsolidation.
(1) Reason for share transfer
The Group’s healthcare business comprises the medical systems
business, centered on diagnostic imaging equipment, and medical
care-related businesses of Canon LCS, as well as the hospital
information systems construction and systems integration
businesses of Canon ITS Medical Inc., centered on electronic healthrecords. The Group concluded that it would be best for the growth ofCanon LCS to make it part of the Canon Medical Group.
This reorganization is in keeping with the Canon Group’s
medical business reorganization policy. The Canon MJ Group willcontinue to cooperate with the Canon Group and endeavor to expand
its medical IT solutions business.
(2) Share recipient
Canon Medical Systems Corporation(3) Share transfer date
January 1, 2020

76

—
0.01%

2019

Canon Marketing Japan Inc. I Integrated Report 2019(4) Name, business, and relationship with the Company
1. Name: Canon Lifecare Solutions Inc.
2. Business: Sales of medical and healthcare devices and related
consumables and medical imaging systems
3. Relationship with the Company: Sells Canon products(5) N umber of shares transferred, transfer price, transfer gain or
loss, and number of shares held after transfer
1. Number of shares transferred: 29
2. Transfer price: ¥3,680 million
3. Transfer gain or loss: ¥738 million
4. Number of shares held after transfer: 0(6) Overview of accounting processThis transaction was accounted for based on Accounting Standard
for Business Combinations (ASBJ Statement No. 21, September 13,2013) and Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business Divestitures(ASBJ Guidance No. 10, September 13, 2013)(7) Name of reporting segment including subsidiary
Professional segment(8) E stimated earnings or loss of subsidiary in Consolidated
Statements of Income for the year ended December 31, 2019
Net sales: ¥11,073 million
Operating income: ¥192 million

(3) Total number of shares canceled
20,000,000(4) Cancelation date
March 11, 2020(5)Total number of issued and outstanding shares after cancelation
131,079,972

Value Creation of the Canon MJ Group19

Overview of the Canon MJ Group

2. Cancelation of treasury stock
On February 26, 2020, the Company’s Board of Directors resolved tocancel treasury stock pursuant to Article 178 of the Companies Act.
(1) Reason for cancelation of treasury stockEliminate possible dilution in the future(2) Type of shares canceled
Shares of common stock

Stockholders’ Equity
stockholders’ meeting. The Company has met said criteria andamended its Articles of Incorporation at the annual generalstockholders’ meeting for fiscal 2006. The Corporate Law provides thatan amount equal to 10% of the amount to be disbursed as
distributions of capital surplus (other than the capital reserve) andretained earnings (other than the legal reserve) be transferred to thecapital reserve and the legal reserve, respectively, until the sum of thecapital reserve and the legal reserve equals 25% of the common
stock account. However, such appropriation cannot be made if theaggregate amount of the legal reserve exceeds 25% of common stock(i.e., the aggregate amount of the Company’s legal reserve has alreadyreached 25% of its common stock).

Segment Strategies

The Corporate Law of Japan went into effect on May 1, 2006, replacing
the Commercial Code. It is applicable to events or transactions ofcompanies in Japan occurring on or after May 1, 2006 and for fiscal
years ending on or after May 1, 2006.
The Corporate Law stipulates that the amounts actually paid in orprovided in consideration for newly issued stock shall be recorded ascommon stock. However, it also allows 50% or less of such amounts
to be recorded as additional paid-in capital.
Under the Corporate Law, a company that meets certain criteria
can establish its Articles of Incorporation so that dividends can be
paid to its existing stockholders by resolution of the Board of
Directors, without requiring the approval of a resolution at a general

Sustainable Management—ESG Initiatives
Financial, ESG, and Corporate Data

Canon Marketing Japan Inc. I Integrated Report 201977

Financial, ESG, and Corporate Data

INDEPENDENT AUDITOR’S REPORT

78

Canon Marketing Japan Inc. I Integrated Report 2019

(THIS PAGE INTENTIONALLY LEFT BLANK)

Overview of the Canon MJ Group

Value Creation of the Canon MJ Group

Segment Strategies

Sustainable Management—ESG Initiatives

Financial, ESG, and Corporate Data

79

Canon Marketing Japan Inc. I Integrated Report 2019

Financial, ESG, and Corporate Data

ESG DATAENVIRONMENT
Contributions to reductions in customer CO2 emissions (t-CO2)
Improved energy savings of products and carbon offset deployment (Note 1)
Efficiencies from IT solutions (Note 2)
Used products and consumables recycling
Total
Canon MJ’s energy consumption (gigajoules)
Electricity
City gas
LPG
Oil
Kerosene
DieselSteamDistrict heating and cooling
Gasoline
Total
Energy intensity (gigajoules per capita)
GHG emissions (Scope 1 and 2) (t-CO2)
Scope 1
Scope 2Total
GHG emissions (Scope 3) (t-CO2)
Category 1. Purchased goods and services (Note 3)
Category 2. Capital goods (Note 4)
Category 3. Fuel- and energy-related activities not included in Category 1 or 2 (Note 5)
Category 4. Upstream transportation and distribution (Note 6)
Category 5. Waste generated in operations (Note 7)
Category 6. Business travel (Note 8)
Category 7. Employee commuting (Note 9)
Category 8. Upstream leased assets (Note 10)
Category 9. Downstream transportation and distribution (Note 11)
Category 10. Processing of sold products
Category 11. Use of sold products (Note 12)
Category 12. End-of-life treatment of sold products (Note 13)
Category 13. Downstream leased assets (Note 14)
Category 14. Franchises
Category 15. Investments
Total
Scope 1 breakdown by GHG type (t-CO2)
CO2
CH4
N2O
HFCS
PFCS
SF6
CH2FCF3
CH2F2
CHF2CF3
Total
Renewable energy deployment (kWh)Solar (Note 15)
Biomass (Note 16)
Emissions trading, etc. (t-CO2)
Amounts of domestic credits invalidated (Note 17)
Water consumption by source (m3)
Tap water
GroundwaterIndustrial water
Total
Management of chemical substances usage (l)Fuel oil A
Industrial waste emissions
Total emissions (metric tons)
Sales units (metric tons per million yen)Amounts recycled (metric tons)
Total volume of products recovered and processed from marketplace
Recycled amount (Note 18)
Recycling rate (%) (Note 19)

80

Canon Marketing Japan Inc. I Integrated Report 2019

2015

2016

2017

2018

2019

64,69844,032
47,113
155,843

21,131
54,37346,068
121,572

19,93950,43352,703123,075

19,546
57,77350,752
128,071

19,70468,78647,024
135,515

205,898
6,281
760
1,191
1,210
940
8,041
24,329123,025
371,675
20.53

216,924
6,159
691
1,165
1,156
699
7,871
24,018118,473
377,157
21.09

238,189
5,534
734
6,082
974
587
8,191
24,792
107,373
392,45622.24

303,248
4,414
753
6,228
1,013
553
7,744
28,192
98,998451,14226.10

332,199
4,762
715
2,287
994
591
7,365
26,54988,533463,993
26.31

8,490
33,82342,313

8,339
32,17440,513

7,995
33,87941,874

7,579
41,207
48,786

6,975
43,80050,775

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

219,377
40,292
4,012
4,701
90
9,918
5,154
0
1,271
0
101,11118,566222
00404,714

199,906
27,726
4,601
4,426
137
9,048
5,401
0
1,118
0
88,59015,749219
00356,921

196,766
65,341
4,727
4,174
153
9,083
5,073
0
1,102
0
83,651
15,118176
00385,364

8,488
0
0
0
0
2
0
0
0
8,490

8,160
0
0
0
0
0
0
0
0
8,160

7,995
0
0
0
0
0
0
0
0
7,995

7,423
0
0
0
0
0
156
0
0
7,579

6,422
0
0
0
0
0
484
12
57
6,975

—
13,000—26,000—112,108—
171,601

565,000—

12,374

10,113

5,704

5,639

4,126

—
—
—
—

120,215
20,3630140,578

148,857
19,9430
168,800

154,283
21,4380
175,721

161,912
21,8950
183,807

30,62229,938156,362

160,105

58,786

19,0460.029

19,9400.032

21,2440.034

20,9470.034

21,3720.034

12,168
12,16099.93

14,424
14,39499.79

13,777
13,77399.97

14,10914,10899.99

14,84014,839
99.99

2018

2019

14,9103,191
18,101

14,681
3,206
17,887

14,502
3,150
17,652

14,202
3,078
17,28013,8903,111
17,001

3,401
75
3,476
—

3,303
80
3,383
—

3,228
85
3,313
60.7

3,131
92
3,223
68.3

3,037
97
3,134
74.5

141
5

134
10

140
7

202
9

144
4

—
—

—
—

98.7
100.0

97.1
87.5

82.4
75.0

249
171
—
—

279
199
—
—

288
189
44.3
18.7

290
175
44.6
18.9

319
163
44.7
19.6

161
2.17

157
2.16

150
2.10

151
2.15

150
2.19

—
—
—
—
—
—
—

—
—
—
—
—
—
—

249
92
341
2.49

266
124
390
2.49

251
153
404
2.74

22
16

29
30

25
23

2015

2016

2017

2018

2019

8
0
8
1
0
1
9

8
0
8
2
0
2
10

8
0
8
2
0
2
10

5
0
5
2
0
2
7

4
0
4
2
0
2
6

2
0
2
3
0
3
5
62.7

2
0
2
3
0
3
5
62.9

2
0
2
3
0
3
5
63.9

2
0
2
3
0
3
5
62.6

2
0
2
3
0
3
5
63.4

20
17

16
16

17
18

15
18

16
20

—

28

23

23

23

Sustainable Management—ESG Initiatives

2017

Segment Strategies

Number of executive officers

2016

Value Creation of the Canon MJ Group

GOVERNANCE
Number of directors
In-house (men)In-house (women)
In-house total
Outside (men)Outside (women)
Outside total
Total
Number of Audit & Supervisory Board members
In-house (men)In-house (women)
In-house total
Outside (men)Outside (women)
Outside total
Total
Average age of corporate officers (Notes 20 and 21)
Number of Board of Directors’ and Audit & Supervisory Board meetings
Number of Board of Directors’ meetings
Number of Audit & Supervisory Board meetings

2015

Overview of the Canon MJ Group

SOCIETY
Group employees
Number of men
Number of women
Total
Group management
Number of men
Number of women
Total
Percentage of Group employees taking paid leave (%)
Number of Group employees taking childcare and nursing care leave
Childcare leave
Nursing care leave
Percentage of Group employees returning to work after taking childcare and nursing care leave (%)
Childcare leave
Nursing care leave
Number of Group retirees and reemployed workers
Number of retirees
Number of reemployed workers
Average age of Group employees
Average length of service of Group employees (years)
Number of parent company employees with disabilities
Number of employees
Percentage of employees (%)
Number of new Group recruits
Number of men
Number of women
Total
Group turnover rate (%)
Number of Group industrial accidents
Occupational accidents
Commuting accidents

ESG Data Notes
Note 11. 	Calculated by determining average transportation distances and weights of products transported by region
multiplied by transportation units
Note 12. 	Calculated by determining lifetime power consumption for each product multiplied by average power consumption units
Note 13. Calculated by classifying products sold by waste disposal units for the weights of each material
Note 14. 	Calculated by determining annual power consumption of each leased product multiplied by average power
consumption units
Note 15. Solar adopted from 2019 by employing the J-Credit Scheme
Note 16. Biomass adopted through 2018 by employing the Green Power Certification System
Note 17. Credits invalidated through multiple CO2 reduction projects, including for upgrading energy-saving facilities
Note 18. 	Total weight after excluding simple incineration and landfill disposal from total volumes of products recovered andprocessed from marketplace
Note 19. Amounts recycled divided by total volume of products recovered and processed from marketplace
Note 20. Averages for directors and Audit & Supervisory Board members
Note 21. At December 31 each year

Canon Marketing Japan Inc. I Integrated Report 2019

Financial, ESG, and Corporate Data

Note 1. Reduced CO2 emissions by deploying carbon offsets for office MFPs and other equipment
Note 2. 	Independently converted into CO2 the reductions in movements, resource consumption, and space as a result of IT solutions
Note 3. Calculated by multiplying weights of product materials and product wastes by materials and process units
Note 4. Calculated by multiplying totals for each capital goods purchases category by category units
Note 5. 	Total fuel and power consumed at each site totaled and multiplied by units from fuel extraction through combustion/
power generation
Note 6. 	Distribution from suppliers to production sites are calculated by multiplying the unit of transportation by seeking the
average transportation distance and transport weight. Logistics from production bases to customers are calculated
by multiplying logistics results by the unit of transportation.
Note 7. Materials-specific waste amounts at each site added, multiplied by materials waste disposal units
Note 8. 	Total payments per transportation mode multiplied by units per mode. For accommodations, total amounts paid
converted into average number of nights, for multiplying by accommodation units
Note 9. 	Total payments per transportation mode multiplied by units per mode. In the case of private car commuting, afterconverting the total mileage associated with commuting to fuel usage, add by multiplying the unit of fuel combustion.
Note 10. Encompassing leased buildings and vehicles and included in Scope 1 and 2

81

Financial, ESG, and Corporate Data

CANON MJ GROUP COMPANIESAS OF JANUARY 1, 2020

Segment

Enterprise BU

Company nameLines of business

Canon IT Solutions Inc.

Systems integration (SI) and consulting, IT services, and softwaredevelopment and sales

SuperStream Inc.

Planning, development, and sales of SuperStream NX management
infrastructure solution for accounting and salaries

Qualysite Technologies Inc.

Java systems development, and data center operations, maintenance,
and auxiliary services

Edifist Learning Inc.

Human resources development consulting, training, and auxiliary
services

Canon Software America, Inc.

Development of business applications software and document solutions
for Group companies

Canon Information Systems (Shanghai) Inc.

SI and consulting for Japanese and Group companies and development
and sales of software relating to Canon products

Canon IT Solutions (Thailand) Co., Ltd.

Supervision of businesses of Group companies in Thailand and Vietnam

Material Automation (Thailand) Co., Ltd.

Proposals, sales, and service related to IT hardware through software

ASAHI-M.A.T. Co., Ltd.

Sales and support for CAD, CAM, and CAE in Thailand

MAT Vietnam Company Limited

Proposals, sales, and service related to IT hardware through software
in Vietnam

Canon System & Support Inc.

IT solutions consulting, sales, support, and maintenance services for
Canon’s and third parties’ products

A&A Co., Ltd.

Exclusive domestic sales of 3D CAD software Vectorworks Japaneseversion and planning, development, and sales of related software

Area BU

Production
Canon Production Printing Systems Inc.
Printing

Sales and maintenance services for production printers andconsumables, development and delivery of workflow systems, andprovision of printing services

Healthcare Canon ITS Medical Inc.

Providing IT solutions for the medical and healthcare field, systems
development, network construction, and hardware sales

Professional BU

Canon BizAttenda Inc.

Consulting, business support BPO, back office BPO, office support
outsourcing, contact center outsourcing, temp staffing, and services

Canon Business Support Inc.

Office services for Group companies and BPO-related services

Canon Customer Support Inc.

Customer inquiry service, service center business, and photoculture
support, primarily for Canon products

BPO Services

Service & Support

The Group comprises 18 consolidated subsidiaries.

82

Canon Marketing Japan Inc. I Integrated Report 2019

CORPORATE DATA
Overview of the Canon MJ GroupAS OF DECEMBER 31, 2019

Number of Shareholders
11,442

Headquarters
Canon S Tower, 16-6, Konan 2-chome, Minato-ku,
Tokyo 108-8011, Japan

Number of Employees
Consolidated: 17,001
Non-consolidated: 5,215

Date of Establishment
February 1, 1968

Number of Shares Issued
151,079,972 shares

Value Creation of the Canon MJ Group

Main Locations of Operations
Headquarters, Konan office, Makuhari office and branches(Sapporo, Sendai, Nagoya, Osaka, Hiroshima, and Fukuoka)

Common Stock¥73,303 million

Stock Listing
Canon Marketing Japan Inc.’s common stock is traded on the First
Section of the Tokyo Stock Exchange. (Ticker Symbol: 8060)
Major Shareholders

Canon Inc.
Canon Marketing Japan Group Employee Stock Ownership Association
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
STATE STREET BANK AND TRUST COMPANY 505001
Japan Trustee Services Bank, Ltd. (Trust Account 9)
THE BANK OF NEW YORK, TREATY JASDEC ACCOUNT
Canon Marketing Japan Group Business Partner Stock Ownership Association
Japan Trustee Services Bank, Ltd. (Trust Account 5)
Mizuho Bank, Ltd.

Percentage of ownership
(%)
58.4%
4.4
2.9
2.0
1.3
1.1
1.0
0.9
0.9
0.8

Segment Strategies

Number of shares held(Thousands)
75,708
5,753
3,752
2,611
1,623
1,405
1,250
1,215
1,139
1,001

Name of shareholder* The company possesses 21,413,743 shares of its treasury shares (14.2% of the total number of issued shares).
* The percentage of ownership is calculated by deducting the number of treasury shares from the total number of issued shares.

Treasury Stock
14.2%

Canon MJ maintains a comprehensive investor relations (IR) website to further
facilitate communication with shareholders. The website contains:• News for investors • IR calendar• Financial results and other financial information• ‌Information on Long-Term Management Objectives Phase III (FY2016–2020) andMedium-Term Management Plan
• Stock information • Annual reports

Financial Institutions
11.3%
Securities Companies
0.7%

Individuals and Others
11.5%

Other Domestic Companies
51.1%

Foreign Companies, etc.
11.2%

Sustainable Management—ESG Initiatives

Canon MJ Investor Relations Website

Shareholder Composition

canon.jp/8060e-ir
Stock Price Range and Trading Volume
Trading Volume (Shares)
10,000,000

2,500

Financial, ESG, and Corporate Data

Stock Price (Yen)
3,000

8,000,000

2,000

6,000,000

1,500
4,000,000

1,000

2,000,000

500
0

2017
1

3

5

7

9

11

2018
1

3

5

7

9

11

2019
1

3

5

7

9

11

2020
1

0
3

Canon Marketing Japan Inc. I Integrated Report 201983

Headquarters

16-6, Konan 2-chome,
Minato-ku, Tokyo 108-8011, Japan
Canon Marketing Japan Website
About the Canon MJ Group
canon.jp/8060(in Japanese only)

Investor Relations
canon.jp/8060e-ir
CSR and Environment
https://cweb.canon.jp/csr/(in Japanese only)