Financial Results for the FY12/2023
Overview of Consolidated Financial Results andReport on Progress under First Medium-Term Management Plan

https://www.star-m.jp
Code 7718

February 9, 2024
* The projections in this document are based on information available at the time of release of this report and certain assumptions the Company considers reasonable.
* The Company does not promise that these projections will be achieved. Actual results may differ materially from projections due to a variety of factors.

Contents

Financial Results for FY12/2023

2

Report on Progress under First Medium-Term Management Plan
“Building a Foundation for Change”

18Financial Results for FY12/2023

2

Overview of the FY2023
Decrease in Sales, Substantial Decrease in Profits
Year on Year

■Net Sales■Operating Income■Ordinary Income■Net Income Attributableto Owners of Parent¥78.19 billion 10.5% down YoY¥10.35 billion 025.7% down YoY¥10.96 billion 022.8% down YoY¥ 8.17 billion 020.6% down YoYSpecial Products Segment, Sales decreased due to declining demand of mPOS
despite the influence of yen’s depreciation.

Tools Segment, decreased in Sales and Profits mainly due to delays in Machinemarket recovery in China despite the steady filling of backlog orders and theinfluence of yen’s depreciation.
3

Consolidated Operating Results(Millions of Yen)

FY12/2022

FY12/2023

ActualActualIncome Ratio

AmountSales(％)

AmountIncome Ratio

Change(％)(％)

Special Products

17,95916,111(10.3)

Machine Tools

69,40862,084(10.6)

Total

87,36878,196(10.5)

Special Products

3,754

20.9

1,953

12.1

(48.0)

Machine Tools

12,24817.6

10,34916.7(15.5)

Eliminations or Corporate(2,077)

Total

13,92515.9

10,35013.2(25.7)

Ordinary Income

14,19916.3

10,96014.0(22.8)Net Income Attributable to Owners of Parent

10,298

11.8

8,175

10.5

(20.6)

Operating Income(1,951)

15.4

ROE（ ％）¥70

Cash Dividends Applicable to the Year

10.7
*

¥60

*Included a special dividend of ¥10 per share
Exchange
Rate

US＄¥131.45¥140.55

EUR¥138.05¥151.98

GBP¥161.93¥174.854

Consolidated Business Forecast(Millions of Yen)

FY12/2023

FY12/2024 Forecast

ActualIncomeRatio(％ )AmountSales

1st Half

2nd Half

IncomeRatio(％ )AmountAmountFull-Year

IncomeRatio(％ )AmountIncomeRatio(％ )Change(％ )Special Products

16,111

6,650

8,220

14,870(7.7)

Machine Tools

62,084

20,79030,14050,930(18.0)

Total

78,19627,44038,36065,800(15.9)

Operating IncomeSpecial Products

1,953

12.1

340

5.1

970

11.8

1,310

8.8

(32.9)

Machine Tools

10,349

16.7

2,540

12.2

5,180

17.2

7,720

15.2

(25.4)

Eliminations or Corporate(1,951)

Total

10,350

13.2

1,900

6.9

5,100

13.3

7,000

10.6

(32.4)

Ordinary Income

10,960

14.0

2,000

7.3

5,200

13.6

7,200

10.9

(34.3)Net Income Attributable to Owners of Parent

8,175

10.5

1,300

4.7

3,800

9.9

5,100

7.8

(37.6)(980)(1,050)(2,030)ROE(％ )

10.7

6.4

Cash Dividends Applicable to the Year

¥60

¥60

Exchange
Rate

Planned Rate

Foreign Exchange
Sensitivity*US＄¥140.55¥135.00

74million

EUR¥151.98¥150.00

68million

GBP¥174.85¥175.00

7million*Foreign Exchange Sensitivity: Sensitivity of operating income to a ¥1 change in foreign exchange rates.

5

Quarterly Information(Net Sales)
Special Products

Net Sales

Machine Tools(Millions of Yen)
25,71025,00021,71220,00022,405
21,11621,80918,712
17,717

17,841

17,53919,66815,13815,00012,971

17,393
13,183

10,00017,42815,134

18,44916,294

17,64913,977

13,896

14,163

11,304
9,168

5,000
6,041
3,623

3,833

1Q

2Q

4,533

3,578

3,643

4,318

4Q

1Q

2Q

3,955

3Q

4,822

4,160

3,864

3,264

2Q

3Q

4Q

0

3Q
FY12/21

FY12/22

4Q

1Q

FY12/236

Special Products
America
EuropeSales(Millions of Yen)

Sales Volume634

16,111
14,87015,00010,919
8,544

8,509

10,000

7,739

583

600

450

459

360
341

257

300
5,000

3,882

3,803

930

1,127

2,212

2,109

3,724

3,510

1,147

849

2,729

2,771

0

150

0
FY12/21•••

FY12/22

Domestic(Thousand Units)

17,95915,569Asia

FY12/23

FY12/24 Est.

164

135

417

219

106

105

48

50

61

56

41
53

38
53

FY12/21

FY12/22

FY12/23

FY12/24 Est.

Sales in the U.S. market substantially decreased owing to the deterioration in mPOS demand, despite theinfluence of the yen’s depreciation.
In the European market, sales were essentially unchanged from the previous fiscal year due to the impact of suchfactors as the yen’s depreciation despite weak market conditions.
In the domestic market, despite weak market conditions, sales increased significantly owing to the inclusion of
SST in the Company’s scope of consolidation.

7

Machine Tools
America
EuropeSales

Sales Volume

Asia
Domestic(Millions of Yen)

(Units)69,40862,08460,00017,906
14,60848,79045,00030,0009,229

26,514

13,5854,398
300

50,93013,201

20,823

5,043

5,000

17,7063,750

020,22823,86815,365

13,055

5,746

6,809

5,596

6,967

FY12/21

FY12/22

FY12/23

FY12/24 Est.

839

607

3,727
343

3,151

1,027

320

2,500

637
3,110

15,000

497

3,256

1,250

0

2,015

1,745

381

451

342

449

FY12/21

FY12/22

FY12/23

FY12/24 Est.

• Sales in the U.S. declined overall owing to sluggish market condition, which largely reflected such factors as theprolonged upswing in interest rates.
• Sales in the European market increased significantly mainly on automotive-related products.
• In the Asian market, sales decreased substantially mainly attributable to weak sales of automotive and communications.
• In the Domestic market, sales declined significantly due to the continued lackluster performance of the automotive sector.

8Capital Investment / R&D Costs【Main Capital Investment Plans】

Capital Investment

Breakdown

Special ProductHead Office and Others(Millions of Yen)

SpecialProducts
MachineTools

Machine Tools
Depreciation

6,000

Large-scale renovation of of Kikugawa Factory
Construction of Europe Solution Center

5,545
448

5,000
4,000

3,390
606

3,000

1,667

0

2,680
4,886

502

1,925
181

2,000
1,000

Dies for new models, etc.

2,598
2,126

77
FY12/212,413

185
FY12/22

2,042

2,792

2,710

136
FY12/23

R&D Costs

211
FY12/24 Est.
（Millions of Yen）

FY12/21

FY12/221,649

FY12/231,965

FY12/24 Est.

1,849

1,970

9

Balance Sheets
AssetsLiabilities/Net assets

Ratio of Net Cash (to Total Assets)
33.5%

30.2%

31.8%

Equity Ratio
85.6%

35%

28.4%

74.1%

25%

90%
80%

84.7%

73.0%

15%

(Millions of Yen)

70%
(Millions of Yen)

99,538100,000

93,39899,538100,000

94,50012,98882,36082360

30,06929,72175,00026,800Cash and Deposit

12,11575,00027,575

11,967

93,39894,500

3,672

4,100

Trade Notes andAccounts Payable

7,736

8,500

Other Current Liabilities

1,644

1,400

Other long-term
Liabilities

80,34680,500

1,346

7,536
1,128
22,74918,59422,900Trade Notes andAccounts Receivable

50,00050,00018,55325,087

21,762

19,10073,088Inventories

Total Net Assets

61,72825,00017,823

Other Current Assets

2,166
15,696

15,90218,000Property, Plant andEquipment

2,344

3,769

4,138

4,200

Other Fixed Assets

FY12/21

FY12/22

FY12/23

FY12/24 Est.

1,754
14,309

0

3,500

3,277

25,0000FY12/21

FY12/22

FY12/23

FY12/24 Est.

10

Cash FlowsNet Cash Provided by Operating Activities
Net Cash Used in (Provided by) Investing Activities(Millions of Yen)

Free Cash Flow

10,341

10,000

7,500

5,000

9,600

4,889

5,087

7,523

7,126

2,500

0

7,000
1,100

740
(2,633)(2,038)(2,500)(5,900)(5,000)(7,500)FY12/21

FY12/22

FY12/23

FY12/24 Est.

11Key Financial Indicators
EPS (Earnings per Share)
ROE (Return on Equity)

(Yen)

20%

300

15.4%

250

15%
200
10.7%
10.4%
10%

150
¥271.14¥218.89

100¥150.836.4%¥138.94

5%

50

0

0%
FY12/21

FY12/22

FY12/23

FY12/24 Est.

12

Returns to Shareholders< Shareholder Return Policy > From FY12/22

Special Dividend per Share・Progressive Annual Dividend : ¥60 or more

Year-end Dividend per Share・Total Payout Ratio : 50% or moreInterim Dividend per Share

（Yen）

¥70

70
60

¥58

¥10

¥60

¥60

¥29

¥30

¥30

¥30

¥29

¥30

¥30

¥30

FY12/21

FY12/22

FY12/23

FY12/24 Est.

79.3%

44.6%

51.6%

50
40
30
20
10
0
Total Payout
Ratio

50% or more

13

Reference

14Trends in Quarterly Machine Tool Orders
America
EuropeAsia
Domestic(Ordered Unit)(Units)

1,500

1,200

900

600

300

0

America
EuropeAsia
Domestic
Total

1-3

4-6

1-3

4-6

114
282
712
102
1,210

2021

7-9
7-9

111
208
793
111
1,223

144
242
792
101
1,279

10-12

1-3

10-12

1-3

167
380
884
112
1,543

4-6

179
265
848
118
1,410

2022

4-6

171
261
785
133
1,350

7-9

10-12

7-9

10-12

149
260
911
106
1,426

87
168
660
104
1,019

1-3

4-6

1-3

2023

4-6

24
138
538
83
783

7-9

10-12

7-9

10
125
646
74
855

10-12

30
102
339
94
565

33
71
581
62
747

15

Performance Indicators (10-Year Data)

Net Sales(Millions of Yen)

Operating
Income(Millions of Yen)

Ordinary
IncomeIncomeRatio(%)(Millions of Yen)

Net Income
Attributableto Ownersof Parent

IncomeRatio(%)

EPS
(Yen)

IncomeRatio(%)

Dividends
per Share
(Yen)

ROE
(% )

(Millions of Yen)

FY2/2015

50,957

5,476

10.7

6,150

12.1

4,695

9.2

111.369.8

44.00

FY2/2016

54,457

5,735

10.5

5,206

9.6

3,720

6.8

87.98

7.4

46.00

FY2/2017

48,937

3,606

7.4

3,583

7.3

3,181

6.5

81.77

6.9

48.00

FY2/2018

60,772

6,210

10.2

7,015

11.5

5,780

9.5

155.68

12.9

52.00

FY12/2018*1

65,939

9,712

14.7

9,570

14.5

6,795

10.3

186.04

14.3

54.00

FY12/201960,651

5,817

9.6

6,161

10.2

4,053

6.7

113.728.3

56.00

FY12/2020

45,670

2,172

4.8

2,772

6.1

1,731

3.8

49.07

3.5

58.00

FY12/2021

64,360

7,415

11.5

7,795

12.1

5,740

8.9

150.83

10.4

58.00

FY12/2022*2

87,36813,92515.9

14,19916.3

10,29811.8

271.14

15.4

70.00

FY12/2023

78,196

10,35013.2

10,960

14.0

8,175

10.5

218.89

10.7

60.00

FY12/2024(Est.)

65,800

7,000

10.6

7,200

10.9

5,100

7.8

138.94

6.4

60.00*1 The consolidated fiscal period for the fiscal period ended December 31, 2018 is based on and presented for a 10-month period for the Company and consolidated subsidiaries in Japan and a 12-month period
for overseas consolidated subsidiaries.
*2 Cash dividends applicable to the year ending December 2022 includes a special dividend of ¥10 per share.

16

Business Segments and Products
SpecialProducts

MachineTools

Cash Drawer and Receipt PrintermPOP

CNC Swiss Type Automatic Lathe
SD-26 type S

POS Printer
TSP100Ⅳ series

Label PrintermC-Label series
CNC Swiss Type Automatic Lathe
SP-20

Contactless IC card Reader
PitTouch Pro3 series

Peripheral Equipment

CNC Swiss Type Automatic Lathe
SL-10

17

Report on Progress underFirst Medium-Term Management Plan
“Building a Foundation for Change”

18Vision for 2030
Drawing on its corporate philosophy and the management base, human resource
systems, and R&D capabilities that underpin its multi-business structure, Star
Micronics is targeting net sales of ¥100.0 billion and operating income of ¥20.0 billion.

Special Products Segment

Machine Tools Segment

Secure stable revenue whileserving as the driving force

Generate continuous cash

behind commercialization of

as a core businessthe service business

New Business

Evolve as a promising
mainstay third pillar of
business■ Diverse management team in which each individual exhibits characteristics that exemplify theCompany’s action guidelines■ Environment in which all employees can maximize their potential regardless of gender, age, or race
■ R&D capabilities to continuously create unique technologies

19

Vision Roadmap
First Medium-Term Management Plan 2022-2024

Second Medium-Term Management Plan 2025-2027

Building a foundation for change

Driving change

Third Medium-Term Management Plan 2028-2030

Realizing our vision

SpecialProducts
Segment• Make deeper inroads into themPOS/food delivery market• Uncover peripheral areas• Strengthen software technologies
through various measures including
M&As• Commercialize peripheral areas• Nurture the service business into anearnings stream using software
technology• Become a total solution provider
for store operations

MachineTools
Segment• Strengthen the production system• Delve into hardware technologies• Promote the adoption of software
technology• Expand in areas outside the automobile
industry• Commercialize peripheral areas• Strengthen software technologies• Establish a position as a leading
manufacturer of automatic lathes

New
Business• Uncover and commercialize new
segments mainly through M&As

• Uncover and commercialize new segments
by utilizing the Company’s own resources
and collaboration with other companies• Create new business segments• Target net sales of ¥10.0 billion• Target operating income of ¥1.5
billion

SystemMaintenance• Strengthen the management
platform• Strengthen R&D structures andsystems• Reform human resource systems• Put in place a diversity management
structure and systems• Reform the corporate culture based on new
human resource structures and systems• Continue to strengthen the
management platform*FD: Food Delivery, HW: Hardware, SW: Software

20

Progress of “Building a Foundation for Change”
First Medium-Term Management Plan
2022-2024

Building a foundation
for change
SpecialProducts
Segment• Make deeper inroads into the mPOS/FD
market• Uncover peripheral areas• Strengthen software technologies
through various measures including
M&As

MachineTools
Segment• Strengthen the production system• Delve into hardware technologies• Promote the adoption of software
technology• Development of Indian market

SystemMaintenance

Progress

Plans

Launch of label printerConsidered New product ideas
Strengthen SW development capabilities
Preparation of cloud environment•

Completed work to expand production capacity at theThailand factory
Concept determination of renovation of domestic
factories
Promoted the development of HW・SW technology
Planning of sales strategy at India•••• Uncover and commercialize new
segments mainly through M&As

• Strengthen the management platform• Strengthen R&D structures and systems• Reform human resource systems

FY12/2024

•
•
•
•

•

New
Business

FY12/2023

Promoted activities at each Business Domain
Logistics DX :considering idea of service
Production DX: Promotion of the development pf
mechanical technology and processing
estimation support software
Store DX: Expansion of service from SST business• Strengthen business management
systems• Formulated Development Headquartersplans• Put in place a new human resource
structure and systems••

Launch of label printer
Promotion of Planning and Development of New
product idea
Construction and promotion of Cloud-revenue model•• Start of construction of domestic factory• Promotion of the development of HW・

SW technology• Establish the sales base at India•

Maintain of activities at each Business Domain
Logistics DX :POC of idea of service
Production DX: Promotion of development ofadditional function
Store DX: Expansion and new development ofservice from SST• Strengthen business management
systems• Put in place a new human resource
structure and systems*DX: Digital Transformation, HW: Hardware, SW: Software

21

First Medium-Term Management Plan 2022-2024 KPIs Progress
KPI
Operating cash
flow
(cumulative)

Operatingincomeper employee

Target(Next three-year
cumulative/average)¥20.0 billion– ¥25.0
billion

FY12/2022
ActualFY12/2023
ActualFY12/2024
Forecast¥7.5 billion¥7.1 billion¥7.0 billion¥6.00 million¥8.37 million¥6.19 million

ROE

10.0% or more

15.4%

10.7%

Ratio of R&D
expenses
to net sales

5.0%

2.3%

2.4%

(consolidated)

Education andtraining outlays
per employee(nonconsolidated)¥100 thousand¥89 thousand¥70 thousand(cumulative ¥21.6 billion)¥4.11 million(average 6.22
million)

6.4%(average 10.8%)

3.0%(average 2.5%)¥143 thousand(average ¥101
thousand)22

Business Strategy (1) Special Products Segment■First Medium-Term Management Plan
2022-2024 KPIs
Target(Next threeyear
average)

FY12/2022
ActualFY12/2023
Actual

ROA

20.0%

26.4%

13.0%

Operatingincome
ratio

18.0%

20.9%

12.1%

FY12/2024
Forecast

Cash Drawer andReceipt Printer mPOP

Contactless IC card Reader
PitTouch Pro3 series

9.7%(average 16.4%)

8.8%(average13.9%)
POS Printer
TSP100IV series

Label PrintermC-Label series

Peripheral Equipment

Principal Initiatives

FY12/2023 Progress

FY12/2024 Plans

1. Explore and expand sales of
products other than printers used instores

1. Expanding the lineup of label
printers and peripheral equipment
and planning of new products

2. Strengthen cloud-related
technologies with an eye to externalalliances

2. Stable operation of Star Micronics
Cloud Service (SMCS) andreinforce development capabilities

1. Sales promotion of new products
and further progress of planning ,development for demonstration
experiment

3. Optimize production and logistics
through reorganization of EMS
partners

3. Consideration of the optimization of
production and logistics throughreorganization of EMS partners

2 .Promote the sales model buildingby Star Micronics Could Service(SMCS)
3. Promotion of the optimization of
production and logistics throughreorganization of EMS partners

23

Business Strategy (2) Machine Tools Segment■First Medium-Term Management Plan
2022-2024 KPIs
Target(Next threeyear
average)

FY12/2022
ActualFY12/2023
Actual

ROA

15.0%

19.6%

15.4%

Operatingincome
ratio

15.0%

17.6%

16.7%

2. Enhance the development of mechanicaltechnology and before/after-sales service support
softwarePromoted the development pf mechanical technology(like medical application etc.) and processing
estimation support software; commenced to provide
digital content creation

3.

Expand production capacity through threemanufacturing bases(1)A large-scale renovation of domestic factories(Completed the concept, started demolition work ofexisting factory)(2)Upgraded and expanded facilities and equipment at
the Company’s factory in Thailand (essentially inline with plans)

4.

Planning of Indian sales strategy(3) Upgrade and expand facilities and equipment at theSales promotion at Indian market(average 16.5%)

2.

(2) Increase floor area at the Company’s Dalian factory

4.

15.2%

Started operations at the Asia Solution Center
Design of Europe Solution Center completed(1) Undertake a large-scale renovation of domestic factories

CNC Swiss Type Automatic
Lathe SL-10(average 15.7%)

1.

3. Expand production capacity through threemanufacturing bases

Company’s factory in Thailand

12.0%

CNC Swiss Type Automatic
Lathe SD-26 type S

FY12/2023 Progress

Principal Initiatives
1. Globally expand the Company’s Solution Center
Establish solution centers in Europe and Asia,
building a user support system in collaboration
with Japan

FY12/2024
Forecast

CNC Swiss Type Automatic
Lathe SP-20

FY12/2024 Plans
1. Commence construction of Europe Solution Center
Cooperation of between both solution centersat domestic and Asia (Expansion of before /after service)
2. Commence of operation of mechanical technology
and processing estimation support software,
promotion of new mechanical technology
development, to provide digital content.
3. Expand production capacity through threemanufacturing based(1) Commence construction of core factory(Kikugawa South Factory)(2) Planning Makinohara Factory (machineassembly)
4. Establishment of Indian sales subsidiary24

Business Strategy(2) Machine Tools Segment: Globally Expand the Company’s Solution Center

Establish Solution Centers in Japan, Europe, and Asia
Reinforce sales by enhancing before/after-sales services

Scheduled to open in May 2024
*Image is for illustrative purposes only●European Solution Center
Zurich, Switzerland / Star Micronics AG
Progress: Design completed●Asian Solution Center
Shanghai, China / Shanghai Xingang Machinery Co., Ltd.
Completed in September 2023

●Solution Center
Kikukawa, Shizuoka, Japan / Star Micronics
Completed in July 2020

[Features of Solution Centers]
 Displays of state-of-the-art machinery
New product presentations and private shows in person and online
 Sales support through processing technology and maintenance seminars for agents and engineers Providing optimal solutions such as test processing and operator training to enhance customer satisfaction
 Building a user support system in collaboration with each solution center

25

Business Strategy(2) Machine Tools Segment: Development of Indian market

Establish sales subsidiary at Bengaluru, Karnataka, India
Reinforce sales by enhancing technical support system and development of sales distributors
Swiss-Type CNC Automatic Lathes sales volume（Indian market）

Estimated CAGR +50%
（Indian market +9%*）Star Micronics India Pvt. Ltd（tentative）
Planned to be established in July 2024…
<Points for developing the Indian market>
 The global machine tools market is projected to expand at an average annual rate of 4.1%* through to 2032.

Against this backdrop, the Indian market is especially promising with expected to exceed this average at 9.4% by 2030.
* Source: The International Market Analysis Research and Consulting Group The Swiss type CNC automatic lathe market in India is in a phase of user expansion, with growth anticipated across various sectors, particularly inthe medical-related fields
 Promoting the spread of Swiss type CNC automatic lathes by providing technical support for sales agents and operator training
 Establish an optimal sales and service network to cover the vast Indian market.

26

Business Strategy(2) Machine Tools Segment: Advancement of Large-Scale Renovation of Domestic Factories

Further accelerate building production system to become “leading manufacturer of
automatic lathe” with maintaining original concept of renovation of domestic factories
Create new value and inherit technologies
through the fusion of cutting-edge technology andmaster craftsmen’s skills●E nh a nc e Prod uct i o n Ca p aci t y●Ini t i a t e DX

2022

2030

Phase1:Kikugawa South Factory（tentative）
Investment purpose: Enhance production capacity of core parts
Total project cost: Approx. ¥10 billion
Start of operations: November, 2025

●Des i gn f or t he E n vi ro nme n t

Phase2:Makinohara Factory（tentative）
Serve as a sustainable factory that nurtures people,
develops technology, and grows together with society

Investment purpose: Enhance production capacity (machine body assembly)
Total project cost: Approx. ¥50 billion
Start of operations: July, 2026

Phase3:Kikugawa North Factory（tentative）
Investment purpose: Smart logistics (improve profitability and efficiency)
Total project cost: Under consideration
Start of operations: Under consideration (2029 target)

27

Business Strategy(2) Machine Tools Segment: Advancement of Large-Scale Renovation of Domestic
Factories <Phase1>

Cutting-edge factory that takes on the production of core parts for automatic lathes,pursuing efficiency and environmental performance through DX

Overview (plan)※Essentially in line with plans
Name: Kikugawa South Factory (tentative)

Location :Kikugawa City, Shizuoka Prefecture
Total floor area : Approx. 13,700 sqm
Total project cost : Approx. ¥10 billion
Start of construction : July 2024 (planned)
Star of operations : November 2025 (planned)

Image diagram<Investment purpose> Enhance production capacity of core parts
 Smart logistics (improve profitability and efficiency)
 Obtain ZEB certification by persuing environmentally friendly design28

Business Strategy(2) Machine Tools Segment: Advancement of Large-Scale Renovation of Domestic
Factories <Phase2>

The latest factory that takes on the production of the cutting-edge models
and create high added value for the Star Micronics Group

Overview (plan)
Name: Makinohra Factory (tentative)

Location:Makinohara City, Shizuoka Prefecture
Total floor area : Approx. 9,100 sqm
Total project cost : Approx. ¥5 billion
Start of construction : May 2025 (planned)

Image diagram

Star of operations : July 2026 (planned)<Investment purpose> Production base that takes on the production of high added value products andthe cutting-edge models
 Enhance domestic production capacity (50 units/month => 100 units/month) Strengthen ability to respond to geopolitical risks(Strengthening three manufacturing base system)

29

Business Strategy (3) New Business
Create new business value that contributes to improve business efficiency of customers■Business Domain Matrix
New

Principal Initiatives

Logistics
DX

Markets/Customers

Develop and commercialize new businessproposals mainly through the use of M&A’s
TargetConsidering the revenue model of new services
and transitioning to the execution phase

Store DX
Special Products
Segment

Existing■New Business Domains
Business Domain

Low

Value Provided/Business Process

Current
businesses

Production
DX
Machine Tools
Segment

Challenge
Expansion

Adjacent/Core

Business Model
Uncertainty

High

FY12/2023 Progress

Logistics DX

Provide systems to streamline the processes of small andmedium-sized warehousing and distribution operations

Proposed new service businesses and searching for the potential
service partners.

Store DX

Provide hardware and software (systems) that streamline store
operations

Inclusion of Smart Solution Technology, Inc. (SST) in the
Company’s scope of consolidation as a Wholly Owned
Subsidiary, promotion of PMI and store DX service

Production DX

Provide new services related to the Machine Tools Segment

Promoted the development of processing estimation support
software in cooperation with the Machine Tools Segment30

Business Strategy(3)New Business:
Inclusion of SST in the Company’s scope of consolidation as a Wholly Owned Subsidiary■ Inclusion of Smart Solution Technology, Inc. (SST) in the Company’s scope of consolidation as a Wholly Owned Subsidiary■SST has excellent technological development capabilities in a wide range of fields, including software, systems, and mobile applications■ Accelerating the creation of new businesses in each DX business domain, and building a new business segment that will become thethird pillar

Expected synergy（Current assumption）
PurposeActionImpact on business result

Shortterm

Exploring new sales channels for special
product segment’s products and SST’s
products.

• Understanding products and services• Aiming for cross-selling• Sharing product development
technology and know-how• Acquisition of new customers (existing
business)

Midterm・Continuing to promote collaboration
with the special product segment
・Accelerating efforts in the software andservice sectors.

• Strengthening R&D capabilities• Planning and development of new
products and software/services in eachDX business domain.

• Expanding new customers• Improvement of profitability throughstock business• Building a new business segment• Creating new businesses which utilize
technical development capabilities andcore technologies,• Discovering products and services
solving customers' problems.

• Sublimation into a business that will
become a promising third pillar

Longterm

31Cash Allocation
Drawing on operating cash flow and cash on hand over the three years of
the Medium-Term Management Plan, allocate ¥11.0 billion to growth investmentand ¥11.0 billion or more to shareholder returns, etc.
■Fund Allocation Plan (FY12/2022–FY12/2024)

Growthinvestment

Operating cash flow

¥21.6 billion

Cash allocation
resources
About ¥22.0~26.0
billionCash on hand

Considering the use of sustainable finance as a resource
for large-scale renovation of domestic factories

Shareholder
returns, etc.

New businessdevelopment costs¥1.0~5.0 billion

Capital investment(organic)¥7.0 billion

Investment inlarge-scalerenovation ofdomestic factories¥30.0 billion

Total returns andagile capital efficiency¥11.0 billion(dividends + share buybacks)

or more32

Shareholder Return Policy
Commit to achieve a total payout ratio of 50% or more including the repurchases ofown shares, based on a progressive annual dividend of ¥60 or more per share*Please refer to page 4 of the attachment "Notice on Action to Implement Management That is Conscious of Cost of Capital and Stock Price" announced on February 9, 2024.
(Millions of yen)257.3%
Dividends

250%

Repurchases of own shares

Total payout ratio

10,000

8,000

200%

6,000

150%

50.0% or more
100%

50%

118.2%

51.6%

53.1%

39.5%

4,000

79.3%
44.6%

73.8%

2,000

55.2%

52.3%
0%

DPS (yen)0
FY2/2015

FY2/2016

FY2/2017

FY2/2018

FY12/2018

FY12/2019

FY12/2020

FY12/2021

FY12/2022

¥44

¥46

¥48

¥52

¥54

¥56

¥58

¥58

¥70

FY12/20223¥60

Medium-Term
Management Plan
(three-year
average)¥60 or more

*Included a special dividend in FY12/2022

33

Sustainability Policy
The Star Micronics Group aims to help bring about a sustainable society and enhance corporate value by putting into
practice the core concept of the Company and employees growing together and contributing to society.
・Guided by a longer-term vision for the Group, we will provide society with new value created using our proprietary technologies.
・We will draw on the global network we have built up over the years to address common issues facing society worldwide.
・We will realize fair and highly transparent management through dialogue and cooperation with all of our stakeholders.

■Initiatives to Address Material Issues
Material issues

E
Environment

S
Society• Addressing climate change by
reducing CO2 emissions• Creating environmentally friendly
products• Fostering and utilizing diverse humanresources

G
Governance• More rigorous corporate governanceTargets

FY12/2023 Progress• Reducing greenhouse gas emissions• Promoting disclosure under TCFD
and other frameworks• Creating new businesses and products
leveraging proprietary technologies• Building an emission data management system• Declared our endorsement of the TCFD and
implemented disclosure.

• Setting targets for women in management
and monitoring progress; career training
and support• Expanding and sustaining education andtraining programs for global HR
development• Completion of detailed design of new
personnel system• Expansion of education and training programs• Building a more fair and transparent
governance framework by addressing
Corporate Governance Code guidelines• Disclosed details of a skills matrix for
directors• Strengthened the diversity of the Board of
Directors (comprised of a majority of external
directors, including female directors)• Continuing to enhance transparency throughthe Nomination and Compensation Committee

SDGs

34

Carbon Neutral
Addressing
ClimateChangeProgress of environmental materiality
1 Responding to climate change by reducing CO2 emission
Target• Reduction of greenhouse gas emissions• Promotion of disclosure based on TCFD framework

Progress• Built an intra-group emissions data management system including all
consolidated subsidiaries and start operating from FY12/2024• Declared our endorsement of the TCFD and implemented disclosure
following its suggestion

2 Creation of environmentally friendly products
Target• Creation of new businesses and products using
unique technology

Use cases of TSP100IV SK

Progress• Special product segment: Released TSP100IV SK, a linerless sticky label
Printer• Machine Tools segment: Developed ECO mode function to reduce power
consumption

SD-26 equipped with ECO mode function

35

Human Resource Strategy
HR Strategy
Goals

Building an environment in which all employees can maximize their potential
regardless of gender, age, or race

1 Constructing new human resource systems
Strategy

Progress and Plans• Rolling out a system for professionals (specialist training)• Rolling out a benefit framework commensurate with roles
and responsibilities• Completing the detailed design of a new human resource structure and systems(to be introduced in 2025)• Taking steps to reform the Company’s retirement benefits and pension plan (introducing adefined contribution pension plan)• Extending the retirement age (currently implementing a progressive transition from the ageof 60 to 65)

2 Enhancing diversity
Strategy• Enhancing women’s empowerment (KPI: 10% or more
women in managerial positions* by 2030)• *Equivalent to or above the position of subsection leader• Fostering a corporate climate and changing awareness(manager training, developing flexible and diverse
working styles, etc.)

Progress and Plans• Increasing the percentage of women in management(2021: 1.8% => 2022: 5.9% => 2023: 5.9%)• Appointing female directors• Promoting diverse work styles (expansion of flex and work-from-home systems)

3 Reinforcing education and training programs: Developing employee autonomy,
global human resource
Strategy

Progress and Plans• Enhancing upskilling and reskilling initiatives• Strengthening global human resource development(establishing a medium- to long-term HR development
cycle)• Increasing education and training outlays per employee• Introduced DX-related training to promote the DX strategy of each business segment(reskilling)• Expanded self-enlightenment support system to support employees who "continue to learn"(encouragement to acquire qualifications, distance learning, online learning assistance, etc.)• Expanded public training to nurture autonomous personnel(promoting cross-border learning through joint training with other companies, womenrelated training, etc.)

36Enhancing Corporate GovernanceCorporate
Governance
PolicyThe Group strives to achieve appropriate, efficient management with a view to the sustained enhancement ofcorporate value and the realization of a sustainable society, and to distribute the results of these efforts
appropriately to shareholders and other stakeholders. Based on this policy, we are pursuing the following
measures.

 Further reinforcing the supervisory function of the Board of Directors
Strategy

Progress and Plans

Further enhancing deliberations by the Board of Directors regarding thedirection and management strategies of the Group• Working to narrow down items for deliberation through such measures asdelegating decision related to the execution of individual business
operations to executive officers

In light of the Company’s Management Policy and strategies, realizing agovernance structure for the whole Board of Directors that ensures a properbalance of gender and other aspects of diversity and requisite skills• Continuing to secure diversity, including gender aspects, by appointing
female directors• Working to visualize skills by disclosing details of a directors’ skills matrix

Continuing to strengthen a highly transparent and objective governanceframework by maintaining a composition of the Board of Directors with amajority of independent outside directors• Working to maintain a composition of the Board of Directors with amajority of independent outside directors on conclusion of the 98th General
Meeting of Shareholders

Making effective use of the Nomination and Compensation Committee tofurther enhance the transparency and objectivity of procedures related to thenomination and compensation of directors and executive officers• Held a total of four committee meetings during the FY12/2023 and continue
to strengthen the transparency and fairness in the decision-making process
for the nomination and remuneration of directors and executive officers

 Constructing a fair, transparent governance framework through proactive, appropriate disclosure
Strategy

Progress and Plans

Active disclosure of non-financial information (sustainability initiatives, etc.)• Launched a project to develop an integrated report that discloses how
sustainability initiatives and other activities contribute to the creation ofvalue for the Company

Ongoing efforts to proactively disclose information in English• Continue to promote the ongoing timely and simultaneous disclosure ofmaterials in English and Japanese37