FY2016 Toshiba Tec Management Policy（Mid-Term Business Plan）

Takayuki Ikeda
President & Chief Executive Officer
Toshiba Tec Corporation
August 30, 2016
© 2016 Toshiba Tec Corporation

Agenda1. Summary of FY2015

2. Progress of the GCS Business Revitalization Plan
3. Changes in Market Environment
4. Mid and Long Term Vision

5. Retail Solutions Business Development Scenario
6. Printing Solutions Business Development Scenario
7. FY2018 Financial Target
8. CSR Management© 2016 Toshiba Tec Corporation2

1-1. FY2015 Results (overall)(Billion yen)

Actual532.8

Net Sales【Business Trend】

FY15(Growth Rate)

vs. FY2014

524.6

532.8

498.9(102%)

1.6

△15.5

(Rate of sales)(0.3%)(△3.0%)△2.3△12.7(△0.4%)(△2.4％)(Rate of sales)(Net sales/Operating income/ROS)+8.2

Operating Income

Ordinary Loss

(Billion yen)

403.7
350.6

5.0%
3.9%

Loss attributable toowners of parent△103.4△102.3(Rate of sales)(△19.4%)(△19.2％)currency
exchange rate

US$120.77＋11.61(Yen)

EUR

132.74

△6.69

3.3%

3.1%

248108

171

159

0.3%
16201120122013

2014

2015

© 2016 Toshiba Tec Corporation3

1-2. FY2015 Results (by Segment)(Billion yen)

ActualRetailSolutions
BusinessGroup

PrintingSolutions
BusinessGroupNet Sales【Business Trend】

FY2015324.8(Growth rate)

vs. FY2014(Net Sales)+0.4 (Printing Solutions)
213.1(100%)

OperatingLoss

△11.5

△11.1

(Rate of sales)(△3.5%)(△3.4%)Net Sales

220.2

＋7.1

(Growth rate)(Billion yen)

(103%)

Operating
Income13.1△4.4(Rate of sales)(5.9％)(△2.3%)

220.2(Retail Solutions)

324.4

324.8
(Operating income/ROS)(Printing Solutions)

17.5

Net Sales
Consolidated
Total532.8(Growth rate)
Operating
Income(Rate of sales)

+8.2

8.2%

(102%)△0.1%

1.6△15.5(0.3%)(△3.0%)(Note) The figures of FY14 are converted into new segment.

2014

13.1
5.9%

△3.5%
2015 (Retail Solutions)△0.4△11.52014© 2016 Toshiba Tec Corporation

20154

1-3. Issues & Actions（Achieve business growth throughstructural reforms ）Retail Solutions Business
Implement structural reforms in the GCS business Optimization of head counts and office locations

Establish a steadily profitable organization
 Expand sales
 Enhance the range of cost competitive products
 Strengthen maintenance business/focus on major accounts

Achieve business growth through solutions
 Develop products and services responding to market needs【Printing Solutions Business
Achieve business growth through solutions
 Enhance sales by promoting differentiation strategy in ourstrong fields
 Increase solutions for retail, logistics and manufacturing
 Enhance solutions by BCP, Auto-ID and recognition technology© 2016 Toshiba Tec Corporation

5

Agenda1. Summary of FY2015

2. Progress of the GCS Business Revitalization Plan
3. Changes of market environment
4. Mid and Long Term Vision

5. Retail Solutions Business development scenario
6. Printing Solutions Business development scenario
7. FY2018 Financial Target
8. CSR Management© 2016 Toshiba Tec Corporation6

2. Progress of the GCS revitalization plan ①
Current Issues

Actions already taken

Actions to be taken

Extra operatingcosts

 Completed Plan-B major integration
except for maintenance parts
warehouse arrangements

 Minimize additional costs aimed atstrengthening internal control system

 Completed approx. 200 of headcount reductions

 Strengthen sales and service
solutions function

 Pursue further operational efficiency

 Effective usage of existing R&D
resources

Head-countOptimization

Structural Reforms
Restructuring
ofsubsidiaries

 Most effective usage of staff division
 Completed closure of 8 subsidiaries
 Continuously pursue further
restructuring of mainly small sizeoffices

 Pursue further operational efficiency
by executing applicable integrations
 Review sales channel (Direct/BP) andallocate optimized resources

Strengthen
maintenance/service business Review outsourcing expenses andlogistics fees Optimize resource allocation andpursue further operational efficiency

 Promoted integrated management in
Retail and Printing maintenancebusiness Enhance sales by providing solutions
to the increasing demands such as
SCO､ Omni-channel and mobile
applications

Strengthen
responsivenessto major account Promote major accountsmanagement

 Strengthen responsiveness tocustomers by increasing Toshiba
Group’s collaboration

 Strengthen support for global major
customers by increasing total
productivity of HW/SW development© 2016 Toshiba Tec Corporation7

2. Progress of the GCS revitalization plan ②
GCS’ Operating Loss was reduced to 1/5 in 1ST Qtr of FY2016
2015 Q1
Result2016 Q1
ResultPlan0Amortization

OperatingLoss

Gross profit

SG&A<FY2016 Q1 Result of total Retail Solutions Business＞
 Sales:76.4 billon yen (24% progress against FY2016 annual plan) Operating Income: 1.4 billion yen (28％ progress against FY2016 annual plan)※ Retail Solutions Segment© 2016 Toshiba Tec Corporation

8

Agenda1. Summary of FY2015

2. Progress of the GCS Business Revitalization Plan
3. Changes in Market Environment
4. Mid and Long Term Vision

5. Retail Solutions Business development scenario
6. Printing Solutions Business development scenario
7. FY2018 Financial Target
8. CSR Management© 2016 Toshiba Tec Corporation93-1. Changes in Business Environment (Retail)Aim at achieving business growth by providing solutions and services
to the growing market based on our solid customer base of POS H/W
POS Terminal Demand Forecast
Amount of conventional POS terminals is
expected to decrease but the number of units
will increase in emerging countries.
Amt

3,060M$

Outlook of future business development
Spread of Internet
Spread of smartphones

Expansion ofe-Commerce

CAGR
99%

Expansion of smart payment

Unit

Diversification of logistics

CAGR
102%

1,754 K units

Strengthening of O2O、Further shift to omni-channel

IT investment has been increasing(from the investment of current sub-optimization tototal optimization)

More business opportunities
2014

2015

2016

2018

2020

(Source: Toshiba Tec’s estimation )(O2O/CRM/SCM/evolutionary HW/DataAnalysis, etc.)© 2016 Toshiba Tec Corporation10

3-1. Changes in Business Environment (Printing)
Aim at business development by responding to increasing demand forone-stop services among others and cost reduction in mature market
MFP Demand Forecast (A3+A4)
Market will be almost flat amount-wise whilemodest growth can be expected in unitsdue to the solid demand fromemerging countries and A4 MFP

Expansion of IT solutions (MPS/IoT)

AmtCAGR101%

24,934M$

unit

13,834 K units

Outlook of future business development

CAGR
103%

Demand for multiple printing technology(Logistics/RFID)
Increasing demand for cost reduction andA4 MFP

Proposal for higher value-added
services to customers
Competitors pursue business development
by emphasizing their own unique strengths(MPS/Production printing/One-stop solutions)

Expand business into vertical markets
by sharpening our unique strengths
20142015201620182020(Source: Toshiba Tec’s estimation)(Retail customer base, sales/service channel,Various printing technologies, etc.)© 2016 Toshiba Tec Corporation11Agenda
1. Summary of FY2015

2. Progress of the GCS Business Revitalization Plan
3. Changes of market environment
4. Mid and Long Term Vision

5. Retail Solutions Business development scenario
6. Printing Solutions Business development scenario
7. FY2018 Financial Target
8. CSR Management© 2016 Toshiba Tec Corporation12

4-1. Our Vision in FY2018
Growth of global retail business

Expansion of solutions
and service business
Establishment of a steadily profitableorganization through cost reduction &productivity improvement
Alliance among groups
Creativity & Innovation

Globalone-stopsolution
company

Taking advantage ofour retail customer base© 2016 Toshiba Tec Corporation13

4-2. 3 key approaches to achieve our vision
Ensure business expansion through 3 approaches① Strengthen Core Business
Launch products meeting the customer needs(Streamlining/labor saving/energy saving)
Expansion of maintenance/professional services
Expand the GCS business after completing structural reforms② Enhance existing business domains
Establish new business model in areas peripheral to the existingbusiness domains by leveraging Toshiba Tec’s own strengths
Enhance business by utilizing the Group’s products line-up, sales
and service channel and HRGenerate total solutions by effective collaboration with 3 rd parties③ Expand new service・solution business
Develop new solutions business beyond the existing domains
Utilize open innovation© 2016 Toshiba Tec Corporation14

4-3. Expansion of service/solutions business
Expand core domain by branching out into related domain
through closer collaboration with Toshiba Group companies

Related domain

RetailPotentialdomain

OfficeMarketing

Manufacturing

Core domainMediaVehicles
MedicalHealth care

Logistics

FinanceEducation© 2016 Toshiba Tec Corporation15

4-4. Toshiba Tec’s Future Business Direction
Aim at strengthening and expanding the service/solutions businessby creating greater synergy between Retail and Printing Solutions

Retail Biz

Sales channel

Printing Biz

Products

Know-how

Customer baseService channel

HR

Sales channel

Products

Know-how

Customer baseService channel

HR

Strong mutual collaboration
More active utilization of
Global Customer base/Sales・Service Network/HR/Products, etc.
© 2016 Toshiba Tec Corporation

16

4-5. Establishment of Service Solutions Business Development GroupNewlyestablished

Corporate Staff

Service Solutions Business Development Group

RetailRetail Solutions Business Group
Overseas
Retail Solutions Business Group

Printing Solutions Business Group

PrintingAuto-ID Solutions Business Group
Inkjet Solutions Business Group

Production, Procurement & SCM Center© 2016 Toshiba Tec Corporation

17

Agenda1. Summary of FY2015

2. Progress of the GCS Business Revitalization Plan
3. Changes of market environment
4. Mid and Long Term Vision

5. Retail Solutions Business Development Scenario
6. Printing Solutions Business development scenario
7. FY2018 Financial Target
8. CSR Management© 2016 Toshiba Tec Corporation18

5-1. Toshiba Tec’s visionRetail

Expand solutions business based on our global top share customer base
Analysis・Big Data
• Food disposal loss analysis• Customer preference• Trend analysis(Current reaching line)
Integrated Solutions(Shopworks/ShopDirector)
工場

O2O compliance

倉庫

ERP
店舗

消費者

TCxGravity

SolutionsStore SystemPOC※2

Out-Store・Solutions

Omni-channel

OnlineData serviceSolutions• Standardized customer management• CRM/SCM solutions

Total system(Specialty/Food&Beverage)

TCxAmplify

TCxFlight

IS-910T

POS※1

Diversifying checkout/Labor saving

In-Store ・Solutions• Utilization of recognition technology• More efficient checkout• Better services for customers• Better after services※1 POS : Point of Sale、 ※2 POC : Point Of Commerce© 2016 Toshiba Tec Corporation19

Retail5-2. Strengthen core business
More efficient checkout/Labor saving⇒ Strengthen self-checkout business[Japan] Full model change of self-POS
・ [Overseas] Strengthen sales approaches
to major retailers

Respond to various usage scenes⇒ Tablet POS/terminal order

Release of tablet type multi-terminals
Release of self-order terminals

Strengthen maintenance services⇒ Provide a variety ofservice solutions globally

Win new maintenance orders fromcustomers in North America
Enhance service solutions incollaboration with partner enterprises© 2016 Toshiba Tec Corporation20

Retail5-3. Strengthen core business（Proposal ofdeveloping H/W ①）

Proposed development of self-registers for various uses
●Joint・Self-Registers●Slim Self-Registers●Self-Registers for bookstores

Speed up checkout process ofproduct registration
through joint operation by customer
and clerk

Smoother checkout designed forcustomers buying a single item

Easier paymentby smartphone●Circular counter Self-RegistersEnjoy checkout with family/friends© 2016 Toshiba Tec Corporation21

Retail5-3. Strengthen core business（Proposal ofdeveloping H/W ②）

Future solutions for retailers with RFID technology
Smart fitting

Smart shelfSelf-Register

KIOSK/Color receipt

Sa

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● Inventory managementby autonomous runningrobot© 2016 Toshiba Tec Corporation22Retail5-4. Expand business related to core business ①Expand business domain from manufacturers to consumers
with a main focus on business for retailers

Manufacturers••••

ApparelDrinking waterFoods
Consumable goods

New product development

Trend/DemandRetailers

Retail Omni-channel
O2O/CRM/SCM

Business for manufacturers by selling datawith value added analysis after collection

Product DataAnalytical Data••••

Electronic Receipt
Household account bookCouponsRecommendations

Consumers

Services forConsumers
Business for retail customers
based on the platform of smart-receipts

Purchasing Data
IoT Data

Recommendation
dataMembership
Data© 2016 Toshiba Tec Corporation23

Retail5-4. Expand business related to core business ②

Establish “Retail SCM” which is Toshiba Tec’s future Omni-channel
connecting retailers and customers “One on One”
Offer Omni-channel services
As the basis for providing Omni-channel services
Integration of① Membership② Logistic services③ Products Information ④SCM
Anywhere, you can expect
Appli
the same service,Anywhere, you can order ,memberr
and receive the goods

EC・Webﾞmember員MembershipDB④ Integration ofSCM

Shops · Catalog · Kiosk · Web · Mobile · SNS

Omni-channel platform

Shopmember① Integration ofMembership

Customer support

Customers

HQ/Shops② Integration oflogistics

Real Shops
Integrated DB(Products・Prices・Inventory)

EC・Web
③ integration of
Product information

Marketing
Promotion、O2O

WMS

Data
Payment、checkout

SCM© 2016 Toshiba Tec Corporation

24

Agenda1. Summary of FY2015

2. Progress of the GCS Business Revitalization Plan
3. Changes of market environment
4. Mid and Long Term Vision

5. Retail Solutions Business development scenario
6. Printing Solutions Business Development Scenario
7. FY2018 Financial Target
8. CSR Management© 2016 Toshiba Tec Corporation25

Printing

6-1. Toshiba Tec’s vision

Retain our existing customers (MIF) and expand business domain
by differentiation mainly with solutions

Office market【Introduce

Retain existing customers(MIF)

differentiated products】
Recognition Technology【Penetration of Vertical Market】
Digital signage

Expand business domain
by differentiation

RFID

SupplyProposal of differentiated solutions BarcodeSegment No.1

• Utilization ofcustomer base• Printing in the shop(Eco-Crystal/POP)• Digital signage• Inline printing• Image recognition• Utilization of RFID
• One-stop solutions

RetailManufacturing

Printer• Cloud type WMS• eco-Hybrid MFP• Image recognition/ • Paper stockless system
Product search• Digital signage• RFID Inventory
management• Label solutions
ecoLogistics© 2016 Toshiba Tec Corporation26

Printing

6-2. Strengthen core business

Full model change (5 series/20 models)• Standardized platform design⇒ Significantly improved development
speed• Standardized options (DFDS, Sorter)⇒ Reduce the lead time and inventory

User friendly operation panel
Strengthen UI customization capability• User panel designed for ease of use
and intuitive operation, like asmartphone and atablet• The new touch screen user interface
allows for easy customization
adapting to user’s environment

Improve maintenance efficiency

H/W Price

7506AC[Tap]

Color MFP

[Swipe]6506AC
8508A
5506AC[Drag&Drop][Pinch]5005AC
4505AC
3505AC
2505AC

5008A
4508A

3508A

2005AC

6508A

Toshiba Tec’s first launch of
A4 color MFP
Significant improvement in development speed

Monochrome MFP

2508A

Print Speed⇒ Allowing to allocate resources to develop
A4 Color models, etc.
・High-end models/Address to MDS demand© 2016 Toshiba Tec Corporation27

Printing

6-3. Expand business related to core business

Expand vertical markets by leveraging Toshiba Tec’s strengths

ecoRetail<Offer solutions for retail customers>• Utilize our retailbusiness sales channel
and customer basecovering 120 countries<Plan to launch the upgradeversion of World first MFP
with erasable toner>・ eco-****

Manufacturing/Logistics <Offer solutions covering supply chain>
・ Utilization of recognition technology and/or RFID・ Integrated management solutions for troublesome printing jobs

Supplier

Manufacturer

Warehouse

Backyard

Shops

Customer

Leaflet Listl

ShippingLabelRFID© 2016 Toshiba Tec Corporation28

Agenda1. Summary of FY2015

2. Progress of the GCS Business Revitalization Plan
3. Changes of market environment
4. Mid and Long Term Vision

5. Retail Solutions Business development scenario
6. Printing Solutions Business development scenario
7. FY2018 Financial Targets
8. CSR Management© 2016 Toshiba Tec Corporation29

7-1. Financial Targets in FY2018
FY2015FY2016FY2018(Actual)(Forecast)(Target)Net Sales

532.8

520.0540.0

OperatingIncome

1.6

14.0

27.0

Rate of Sales

0.3 ％(Billion yen)

NetIncome(Loss)△103.4

2.7%

5.0 %

0.5

10.0

DividendRatio－(undecided)

30 ％ExchangeRate

120.77 Yen/USD
132.74 Yen/EUR

110 Yen/USD※120 Yen/EUR

105 Yen/USD
115 Yen/EUR※ Changed from 125 Yen/EUR from July, 2016

© 2016 Toshiba Tec Corporation30

7-2. Resources Injection and Free Cash Flow
Operating CF(Billon yen)

Investment CF

26.0

FCF

【Capital investment】
 Approx 35 billion yen for 3 years

15.0
4.6

Main resources injection
for FY16-18

5.0

6.0- Molds/Equipment for new products- Equipment for production increase- Renewal/Rationalization【M&A, etc. 】
 Approx 10 billion yen for 3 years

▲5.2
▲9.8

(For accelerating expansion ofcore business into related domains)

▲10.0

【R&D】
 Approx 90 billion yen for 3 years

▲20.0
2015

2016

2018

(For expansion of core business intorelated domains and new business creation)© 2016 Toshiba Tec Corporation31

7-3. Sales & Operating Income Targets (by segment)【Net Sales】(Billion yen)

Net Sales(excl.FX)

※FY15

FY16

FY18

CAGR

CAGR

ActualForecastTarget(15/18)(15/18)

324.8

322.0

335.0

(3,341)(3,565)

532.8
101

PS

△11.5

Net Sales

220.2

Net Sales

520.0(Printing Solutions)
212.0
220.2

Operating
IncomeOperating
Income

540.0

103

RS

(excl.FX)(Billion yen)

13.1

(excl.FX)

532.8

Operating
Income

1.6

5.0

12.0

212.0

221.0

(229.9)(249.5)

9.0

15.0

520.0

540.0

(550.0)(590.0)

14.0

27.0

221.0
※

CAGR
104%

100104(Retail Solutions)
322.0
324.8

100103

335.0
※

CAGR
103%

Total2015※ excluding foreign exchange rate changes※

CAGR
103%2016© 2016 Toshiba Tec Corporation

2018

32

7-4. Rough image of improved GCS business
Sales and Operating Income recovery image for the GCS businessToshiba Tec’s corporate tax
rate will be corrected to an
appropriate level inaccordance with theexpected GCS’ improvementof performance(Billion yen)

Sales
100

Transition image ofcorporate tax rate

50%0Operating Income2016

2015

2016

2017

2018

2018
© 2016 Toshiba Tec Corporation

33

Agenda1. Summary of FY2015

2. Progress of the GCS Business Revitalization Plan
3. Changes of market environment
4. Mid and Long Term Vision

5. Retail Solutions Business development scenario
6. Printing Solutions Business development scenario
7. FY2018 Financial Target
8. CSR Management© 2016 Toshiba Tec Corporation34

8. CSR Management
Aim to continuously meet all stakeholders’ expectations【Employees】【Customers】

Respect for individuality

Value creation for customers

 Strengthen a structure forcorporate governance【Shareholders】
Maximization ofCorporate value

Toshiba Tec
Group’s

Assigned two independent
outside directors and two
Independent outside
auditorsCommitments withstakeholders【Communities】
Development ofglobal society【Environment】
Environmental protection
Consciousness throughout
all business activities

Improve the efficiency andtransparency of management
Strengthen the functions of the Boardof Directors and the Board ofCorporate Auditors Meeting Strengthen continuouslyinternal control function【Suppliers】
Preferential procurementfrom CSR conscious suppliers

Execution of appropriate process andthorough management
Improvement in transaction processof accounting operation
Observance of Laws
© 2016 Toshiba Tec Corporation35

Forward-looking statements concerning TOSHIBA TEC's future
performance contained in this presentation represent certain
reasonable assumptions based on economic, financial andcompetitive data and information currently available. However,actual results will be affected by the business and competitiveenvironment and may differ materially from forecasts.

© 2016 Toshiba Tec Corporation36

© 2016 Toshiba Tec Corporation37