Tsuzuki Denki Co., Ltd
Financial Results for the First Halfof the Fiscal Year Ending
March 31, 2022
November 17, 2021
Stock code: 8157
URL https://www.tsuzuki.co.jp

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnAgenda

1

1H FY03/22 Results

2

Progress of Medium-termManagement Plan

3

FY03/22 Forecast

4

Shareholder Return1

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

1

Medium-term
Progress

FY03/22
Forecast

Shareholder
Return1H FY03/22 Results

2

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-termProgress

FY03/22
ForecastShareholder
ReturnHighlights
Net sales and profits rose thanks to steady growth in the service businesses
Electronic Devices business also contributed on the back of a shortage insemiconductors

Information Network Solutions(＋) Growth in service businesses, increase in network reinforcement and security
enhancement projects, recovery of customers severely impacted by COVID-19(－) Absence of major projects seen in 1H FY03/21
COVID-19 impact: Although the impact of restrictions on face-to-face sales activities
remains, the overall impact has been reduced from 1H FY03/21

Electronic Devices(＋) Special demand arising from global shortage of semiconductors(－) Drop in demand caused by shift to in-house production at some customers
3Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
ProgressStatement of Income
1H FY03/21

FY03/22
Forecast

Shareholder
Return(Millions of yen)

1H FY03/22

Change(amount)

Change (YoY)

Net sales

53,006

53,10094+0.2%

Gross profit

9,090

9,789

699

+7.7%

(Cost ratio)(82.8%)(81.6%)(-1.2pt)－

SG&A expenses

8,869

8,990

121+1.4%

Operating income

221798577+260.9%(Operating margin)(0.4%)(1.5%)(1.1pt)－Profit attributable toowners of parent

149492342+229.0%Orders60,677

68,576

7,898+13.0%

Order backlog

28,48737,942

9,455+33.2%

4Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnFactors Affecting Sales(Billions of yen)

53.0

1H FY03/21
Sales

2.1

Growth of service
businesses

3.23253.1(前期比+1)(+0.1YoY)

Specialdemand forElectronicDevices

-4.5

-0.7

Absence ofmajor projects*

Delivery delays
caused bysemiconductor
shortage

1H FY03/22
Sales* Absence of smartphone deals for the insurance industry and server and storage installation
deals for public-sector customers, and decrease in PC installation deals owing to remote work
support demand running its course
5Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnFactors Affecting Operating Income(Millions of yen)+360.9% YoY-56-122＋577

Increase in gross profit:
1H FY03/21
Operatingincome

Higher sales

Improved
cost ratio

Positive factors➢ Higher sales: ＋JPY16mn➢ Improved cost ratio: ＋739mn••＋699
Difference inallowances booked

Higher SG&A
expenses

1H FY03/22
Operating income

Negative factors➢ Difference in allowances booked: -JPY56mn*There were no unprofitable projects in 1H, but webooked a gain of JPY56mn on reversal of allowances in
1H FY03/21, which had a negative YoY impact onoperating income

Growth of service businesses
Improved cost ratio for development andconstruction projects➢ Higher SG&A expenses: -JPY122mn
・Increase in consolidated subsidiaries
6Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnResults by Segment(Millions of yen)

Net sales

Operating income

1H
FY03/211H
FY03/22

Change Change(amount)
(YoY)

1H
FY03/211H
FY03/22

Change Change(amount)(YoY)

Information
NetworkSolutions

43,16240,022-3,14092.7%

185532347 +187.6%

ElectronicDevices

9,843

13,0783,235132.9%

36266

230 +637.3%

Consolidated
Total

53,006

53,10094

100.2%

221798577 +260.9%*Operating income adjustments are excluded.
7

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

FY03/22
Forecast

Medium-term
Progress

Shareholder
ReturnSales by Business Model(Millions of yen)
Ratios in parentheses

56,507Equipment
Development&Construction

20,059(35.5%)
7,524(13.3%)

53,006

53,100YoY

19,073(36.0%)

13,899(26.2%)
6,214(11.7%)

72.9%

19,908(37.5%)

111.7%

6,266(11.8%)

99.2%

Service

17,898(31.7%)

17,822(33.6%)

ElectronicDevices

11,024(19.5%)

9,843(18.6%)

13,078(24.6%)

1H FY03/20

1H FY03/21

1H FY03/22

8132.9%Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnOrders and Backlogs by Business Model(Millions of yen)Order backlog

Orders
68,57664,145(+13.0% YoY)

60,677Equipment
24,74523,975
8,435

Development&9,723
Construction

Service

19,027

ElectronicDevices

37,942(+33.2% YoY)

20,06728,487

14,993

14,201

5,852

14,2177,331
21,672
19,335

7,725
18,40010,64932,593

10,034

3,892

3,775

4,918
3,659

6,874

5,707

13,204

1H FY03/20 1H FY03/21 1H FY03/22 1H FY03/20 1H FY03/21 1H FY03/22
9Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

2

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnProgress of Medium-term Management Plan

10Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnOverview of Medium-term Management Plan (FY03/21 to FY03/23)
Medium-term Management Plan "Innovation 2023”
Help customers achieve digital transformation andboost competitiveness＝VisionCreate a prosperous
societyInnovation Service Provider

Key priorities
1. Reforming our business structure by
expanding the service we offer
2. Promoting data-driven businesses
3. Strengthening our management base

FY03/23
Targets

Sales
JPY126bn

Operating income
JPY4.6bn
11

ESG Activities
SDGs

ROE
9%
Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnOverview of key medium-term priorities
１．Reforming our business structure by expanding the service we offer
Service sales composition rose and service lineup improvements progressed as planned
Service sales composition

31.7％
1H FY03/20

33.6％
1H FY03/21

37.5％
1H FY03/22

２．Promoting data-driven businesses
Steady progress in preparation for the "Next Normal"
Developed & launched electronic contract service
Collaborated with other companies
Trained advanced DX talent

３．Strengthening our management base
Progress in strengthening our management through execution of various initiatives
Launched new company
Co-creation with other companiesGroupwide rollout of healthy management
Implemented new workstyles and zero trust security in-house
12Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnAnnounced TSF, a new service framework for DX➢ Organized service framework to provide quick and reliable support for customer digitaltransformation (DX) efforts➢ New services to be rolled out on TSF

Point

Covers all of the services we offer
Support for a variety of customer environments (cloud-based and on-premises)
Optimal combination of in-house services and collaboration with partners

Total SolutionService Framework (TSF)
Implementation
support service
D-VUE
DX implementation
supportServices
Customersystems

Tsuzukiservices

D-VUE
Cloud Data Lake Platform
Integrated managed service

Platforms
Cyber security
management support

Common services

Onpremises

Cloud

Zero trust security service
IoT connectivity service

Partner companies
13

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

FY03/22
Forecast

Medium-term
Progress

Shareholder
ReturnLaunched DagreeX, a service that digitally transforms contract management➢ Total document management service that goes beyond digital signatures and seals➢ Captures the growing need for cloud storage of transaction-related documents (includinginvoices, etc.) following the revision of the Electronic Books Preservation Act➢ Rolled out signature and storage functions, and will focus on expanding sales in 2H

Overview
Contract
preparation

Mutualagreement

Conclusion ofcontract

RenewalDataaccumulation

Internal approval

Signing of contract

Document storage

Recording function

Sharing function

Signing function

Storage function

Ongoing contract support

Record correspondence
during contract drafting

Share withinorganization or teamRegister businesspartners

Save document

Provide notification ofcontract continuation
or renewal

Analyze accumulated
data

Send reminder
notifications on record
details

Configure approval
process

Send/return contract

Classify and organize
documents

Confirm intent tocontinue or renew
contract

Connect related data

Sign digitally

Search documents

Save signed document

Import paper
documents

Drafting of contract

Contract renewal

Data analysis
Analysis / Utilization

Automatically sort
documents to different
storage locations

Import signeddocuments
Check usage status

14

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-termProgress

FY03/22
ForecastShareholder
ReturnLaunched TCloud for Voice, a new service to support the cloud shift of PBX➢ Build an external/internal phone environment tailored to customer needs to supporta "new normal” work style➢ Enables high-quality low-cost service
Smartphone(app)

PBX-less
operations

Accommodatelines

Reduceoperational
workload
Scalability

Fixed-linephone

TCloud for Voice

Connect toPBX

Integrate with various SaaS
services
・External UC service
・External phonebook appCarrierFMC

Additionalservices

Configured to leverage existing assets
Reduce costs associated with equipment
maintenance, office relocation, layoutchanges, etc.

Aiming for

20,000 user IDs
by March 2024

Location free
Maintenance free
Asset free
15

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnEnhanced CT-e1/SaaS functions➢ Released new version of CT-e1 with dramatically improved functionality❶ Text-to-speech guidance creation function included as a standard feature (integrated with AITalk® system)❷ Real-time sentence recognition feature now available (implemented Ruby Dictation)❸ API integration with speech recognition app AmiVoice Cloud Platform now supported❶ Guidance creation function❷ Sentence recognition

CT-e1

CT-e1

Thank you for calling,
Mr./Mrs./Ms. XXX.

Text datasuch asnames,
addresses,and dates

Ruby
Dictation Converted to text
Yes, this is Comdesign.
Please tell me about ABC.

❸ Integration with speech
recognition app

CT-e1

APIAmiVoice
CloudPlatform

One moment please.

Automatic response system capable ofhandling more complex informationwith natural expressions.

Operators can input questions
converted to text (previously manuallytyped) into the FAQ, speeding up
response times.

Enables users to switch to CT-e1 while
continuing to use AmiVoice, which boasts
the top share of the Japanese speech
recognition market*.

Automated / Unmanned
operation

Improved customer experience
with faster response

Increased target customers*Source: Speech Recognition Market Value Share by Vendor (FY2015-FY2021 Forecast) as shown in ITR Market View: AI Market 2021, published by ITR

16Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
ForecastShareholder
ReturnStrengthening IoT and operation service business through business alliance with JIG-SAW➢

Aiming to explore new areas and create innovative services by leveraging each other's strengths

Data-driven business

IoT technology

Data collection

Data utilization

Forecasting

Various sensor devices

Network and services

AI analysis

Remote operation service

JIG-SAW
NEQTO

Preventive maintenanceimplementation support
Status visualization service

Service business support

Real-time assessment
TsuzukiDenki
D-VUE
Newbusiness
Operational
improvements

JIG-SAWOPSManaged Services
Monitoring service

Incident management

Operational
improvements

Total SolutionService Framework(TSF)
17Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnLateral deployment of AI technology is helping to expand our customer base to other domains➢ Collaboration with Tohto Suisan Co., Ltd. materialized
Expanding business with new industries based on AI technology (D-VUE service)

Agriculture, dairy farming, forestry,and fisheries(primary industries)

Processing andmanufacturing(secondaryindustries)

Distribution, sales, andservice(third industries)

Aiming to automate, streamline, and speed up fish sorting operations using AI
Reduce workload
Improve fish freshness by boosting
fish processing efficiency

AI18Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

3中計進捗
Progress
Medium-term

FY03/22
Forecast

株主還元
ReturnShareholder

FY03/22 Forecast

19Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnFY03/22 Forecast
No change from the initial forecast due to lingering uncertainty overthe impact of COVID-19 and semiconductor shortages, despite
continued strong performance of service businesses(Millions of yen)

FY03/21

FY03/22
Forecast

Change(amount)

Change(YoY)

Net sales

120,004

122,000

1,995

+1.7%

Operatingincome3,202

4,000797+24.9%(Operatingmargin)(2.7％)(3.3％)(0.6pt)－Profit attributableto owners ofparent

2,346

2,700

353

+15.1%

20

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

４

Medium-term
Progress

FY03/22
Forecast

Shareholder
ReturnShareholder Return

21

Copyright © 2021 Tsuzuki Denki Co., Ltd.

1H FY03/22
Results

Shareholder
ReturnMedium-term
Progress

FY03/22
ForecastShareholder
ReturnInterim dividend: JPY23
Total annual dividend: JPY47 (expected dividend
payout ratio of 30.6%)

Dividend per share and payout ratio
34.3%

Dividend yield

IPO
commemorative
dividend JPY5

Year-end
price
JPY1,100

34.0%

4.6%

30.6%

30.3% 30.2%
30.2% 30.2%

2.8%

29.0%

5.0%

3.3%

Year-end
price
JPY1,657

2.8%

JPY55
JPY46 JPY47

24.0%

JPY39
JPY29

FY03/17
17/3期

19.0%

FY03/18
18/3期

FY03/19
19/3期

FY03/20
20/3期

FY03/21
21/3期*Dividend yield = Dividend per share / Share price at theend of the period (final record date)

14.0%

Shareholder benefits
9.0%

FY03/18
18/3期

FY03/19
19/3期

一株当たり配当額
Dividend per share

FY03/20
20/3期

FY03/2121/3期

配当性向
Payout ratio

FY03/22
22/3期（予想）
Forecast

Number of shares heldProducts

Over 100 shares, butless than 1,000 shares

JPY1,000 worth offood items
JPY3,000 worth offood items

Over 1,000 shares
22Donation
JPY1,000

JPY3,000

Copyright © 2021 Tsuzuki Denki Co., Ltd.

ReferencePress Releases
No.

DateContent

12021/11/11 Tsuzuki Denki and JIG-SAW conclude business alliance agreement

22021/11/09 Started providing storage function of electronic contract service DagreeX

32021/11/09 CT-e1/SaaS integrates with AITalk® to provide text to speech guidance creation function

42021/11/09

52021/11/09 CT-e1/SaaS integrates with Advanced Media's speech recognition API

62021/10/14 Launched electronic contract service, DagreeX.

72021/10/08 21 employees received the highest level of DX certification, the "DX Professional Level"

82021/10/07 Launched cloud PBX service, TCloud for Voice

92021/10/05 Revamped service framework to help customers achieve digital transformation (DX)

102021/08/10 Completely renovated corporate headquarters

112021/07/12

122021/06/08 Implemented Avaya OneCloud™ Custom for the first time in Japan at Belluna

Began providing real-time sentence recognition feature as part of the CT-e1/SaaS speech
recognition service

Notice regarding compliance with continued listing requirements for the Prime Market ofTokyo Stock Exchange’s new market segments

23

Copyright © 2021 Tsuzuki Denki Co., Ltd.

Reference

Stock Price History (as of November 16, 2021)(Stock price: Yen)

(Volume: Shares)
200,000

2,500

180,000

160,000

2,000

140,000

120,000

1,500

100,000

80,0001,000

60,00040,000500

20,00002021/4/1
Volume (shares)
出来高(株)

02021/5/1

2021/6/1

2021/7/1

2021/8/1

2021/9/1

2021/10/1

2021/11/1

Closing
終値(円)price (yen)24

Copyright © 2021 Tsuzuki Denki Co., Ltd.

Contact
Contact

Tsuzuki Denki Co., Ltd.
Corporate Planning Division, Management Strategy Office

Address

6-19-15 Shinbashi, Minato-ku, Tokyo 105-8665, Japan (Tokyo Art Club Building)
Phone: 050-3684-7780
ir-tantou@tsuzuki.co.jp
https://www.tsuzuki.co.jp/

DisclaimerThe forward-looking statements, including earnings forecasts, contained in this document are based on
information available to the company at the time of this document's release and are subject to a number ofuncertainties. Please note that actual results may differ significantly due to various factors. Although every
effort has been made to ensure the accuracy of the information contained in this document, please note thatthe accuracy and certainty of its content is not guaranteed. The names of companies, products, and services
mentioned in this document are registered trademarks or trademarks of their respective owners.
25

Copyright © 2021 Tsuzuki Denki Co., Ltd.

Copyright © 2021 Tsuzuki Denki Co., Ltd.