TSUZUKI REPORT 2023
Tsuzuki Denki Integrated Report 2023

TOP MESSAGE

PromotingTransformations
to Enhance
Corporate Value
92 Years of Continuous Support forSocial Infrastructure
Founded in 1932, Tsuzuki Denki is now in its 92nd year. We
are one of the oldest companies in the ICT industry, witha long and storied history. We are grateful for the supportof all our stakeholders, which has enabled us to continue
business up to now.
We currently develop business in two segments,
Information Network Solutions and Electronic Devices, but
in 1932, Tsuzuki Denki was established as a distributor of
Fuji Electric Mfg. Co., Ltd. (currently Fujitsu Electric Co.,
Ltd.), engaged in the sales, installation, and maintenanceof telephone equipment. Subsequently, communication via
telephone spread rapidly, and the “phone in every home”
era grew into the “phone in every hand” era, with the adventof mobile phones and other developments. Computers,
which began as large, general-purpose machines, advanced
to the era of personal computing, and the importance ofhardware shifted to a focus on software. The spread of theinternet has also brought about massive changes in thenature of communication. We are now entering the era ofdigital transformation (DX) heralded by keywords such as AI,
IoT, and 5G. Amid these rapid social changes and advances
in information and communication technologies, we havegrown by expanding our business domain and adapting
to changes based on a corporate culture that encourages
taking on challenges.
Even with these major changes in the environment,
one thing will never change at Tsuzuki Denki: Our ongoingcommitment to support information and communication
infrastructure, which are critical for society, with people,
insight, and technology.

1

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

President and CEO

Isao Emori

2

Previous Medium-term Management Plan
Achieves Record-high Profit

operational efficiencies. I think this achievement is the resultof each and every employee adapting themselves to newworkstyles and making efforts to produce results. Of course,
as an ICT company, we were early adopters of telework,and the fact that we already had this system in place also
contributed to this achievement.
I think cost optimization was another factor contributing
to record-high profit. Consideration of appropriate businesscosts is something I have been cognizant of since being
appointed president. Amid global increases in procurement
costs due to soaring energy prices and heightened geopoliticalrisks, procurement costs continued to fall throughout thethree years of the previous medium-term management plan.
We made cutbacks where needed, and expenditures whennecessary. This means we don’t do anything wasteful. We
will maintain efforts to optimize procurement costs, while atthe same time investing for growth.

The three-year previous medium-term management plan
ended with FY03/23 as the final year. This plan, Innovation
2023, targeted net sales of 126.0 billion yen, operating
income of 4.6 billion yen, an operating margin of 3.7%,
and ROE of 9.0%. Actual results were net sales of 123.8
billion yen, operating income of 5.1 billion yen, an operating
margin of 4.1%, and ROE of 10.4%. Although net sales
achieved only 98.3% of the target, the achievement rate
for operating income was111%. Both operating margin and
ROE exceeded the targets.
Looking back on the previous medium-term
management plan, performance dipped slightly in FY03/21,
the first year of the plan, due to the COVID-19 pandemic,
but in FY03/23, the final year of the plan, we were able toachieve record-high profit. I think it was meaningful that wewere able to achieve record-high profit despite the fact thatthe pandemic had drastically changed the way we work.
Similar to many other companies, we also transitioned totelework, with the attendance rate dropping to a low of 30%.
The world is gradually returning to pre-pandemic levels ofactivity with the reclassification of COVID-19 as a Category
V infectious disease in May 2023, and many companies
are seeing attendance rates rise to 70% and even 80%.
We leave the decision of whether to work in-office or fromhome to each individual employee, with attendance rates
remaining at 30%. Given the declining attendance rate, it
should have been difficult to achieve record-high profit fromthe perspectives of communicating with customers andTransforming into Our Ideal Vision for the
Next 10 Years
Although the previous medium-term management planachieved record profit, there was no response from
capital markets. Despite setting numerical targets in theprevious plan, we regret being unable to provide a story
behind those numerical targets. Numbers tell a story,
and because there is a story, we can put the numbers
together. In formulating our long-term vision and mediumterm management plan, we remained conscious ofcommunicating this story outside the Company.

ROE/Operating Margin

ROE (%)
10.8

10.4

7.9
5.9

5.9

2.0

2.3

2.8

FY03/17

FY03/18

FY03/19

3.4

2.3
1.4

8.8

7.7

3.6

4.1

3.4

2.7

1.7

FY03/15

FY03/16

FY03/20

Net sales/Operating Income

105,339

105,619

FY03/21105,149

118,872

111,973

125,366

3,318
1,439

1,773

FY03/15

FY03/162,142

120,004

FY03/17

FY03/18

FY03/19

FY03/23

Operating Income (millions of yen)

119,316

123,899

5,118
4,012
3,202

2,538

FY03/20Make New Value 2020

TSUZUKI REPORT 2023

FY03/22Net sales (millions of yen)

4,457

3

Operating margin (%)

FY03/21

FY03/22

Innovation 2023

FY03/23

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Long-term Vision: Growth Navigator
Regarding long-term vision, we have set Growth Navigator(an organization that navigates growth and creates value
together with stakeholders) as our vision of where we want
to be in 10 years. As Tsuzuki Denki is not a manufacturer, wehave always worked closely with customers and followed
their lead. In this capacity, we provide solutions in responseto requests from customers. Nowadays, even customers
themselves do not have a clear grasp of business issues nor
how to resolve them. These conditions necessitate anavigation-type service that works with customers to
discover the issues they face and helps create solutions.
Over the next 10 years, we aim to become a Grouppositioned to lead customer business and facilitate thegrowth of customer business itself. In terms of numericaltargets, we aim to achieve operating income of 10.0 billion
P.21
yen and net sales of 150.0 billion yen.

Medium-term Management Plan
Transformation 2026
This plan was launched in a business environment where
ICT needs are increasing due to the pandemic. We createda roadmap for achieving our long-term vision that divides
the period ending in the target year FY03/33 into threestages: (1) Shifting resources to growth areas, (2) scaling
growth areas and developing new business areas, and (3)establishing growth areas as core businesses and expanding
into new areas. Our current medium-term management plan,
Transformation 2026, is the first stage, during which we will

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

shift resources and get growth businesses on track.
Our business strategy will focus on expanding growthareas, increasing the profitability of existing businesses, andrestructuring business portfolio companies.
In the Information Network Solutions segment, we will
enhance profitability by strengthening product portfolio
management and pricing management in existing areas
while strengthening six growth business areas with highprofit margins and market growth potential. In growth areas,
we will focus on contact centers and cloud PBX services,where we can leverage our strength in voice platform
technologies, while developing DX services in fruit andvegetable markets and in the logistics industry, where we
P.27
have an established presence.
In the Electronic Devices segment, we will increase
efficiency and profitability in existing areas including
electronic device wholesaling, while attempting to create
P.31
new solutions that will increase profitability.
In terms of financial strategy, we aim for ROE of 10% or
more, based on the premise of maintaining financial
soundness. In the current medium-term management plan,for the first time, we have presented our estimated cost ofshareholders’ equity, which is 9%. We will conduct
management with the aim of achieving ROE higher than 9%
P.35
We will also maketo enhance corporate value.
efforts to enhance human capital to support these
P.37
strategies.
In light of the above, in FY03/26, the final year of the plan,
we are targeting net sales of 130.0 billion yen, operating
income of 6.5 billion yen, an operating margin of 5.0%, andROE of 10.0% or higher.

4

Developing New Business Using theLatest Technologies
To lead our customer growth as a Growth Navigator, which is theobjective of our long-term vision, we must firmly incorporate
the latest technologies and develop them as businesses.
At present, we are particularly focused on the area of AI.
The advent of ChatGPT is having a substantial impact on
business. AI is an area that has attracted attention for sometime, and with ChatGPT, we began to get a sense of how AI
can be used in business. Of course, there are still issues andrisks to be resolved, but we have already started using AI invarious situations within the Company. Using AI allows us tothink about how to use it to increase work productivity. This
generates ideas about how to combine new technologies
with our existing products or utilize them in areas where ourstrengths lie.
In the ICT industry, new things happen all the time.
Personally, I love trying new things. It is probably my nature,but I enjoy being the first to do what no one else is doing.
For example, I was the first person to create a network
within Tsuzuki Denki. At that time, I was in the sales divisionand not an engineer, but my desk was the only one with aninternet terminal. It wasn’t there because I wanted to lookat the internet, but because I wanted to be one of the firstto experience all the new things that were coming out in theworld, let my customers see them, and create new business.
Since joining Tsuzuki Denki, the Company’s culture has
always allowed me to freely take on whatever challenges
I like. This is how new services and products have beencreated. I will continue to cherish this freedom as our
tradition. That being said, as our culture is not the only way
to create new business, we will also invest in the R&D of newtechnologies and services.
In tandem with growth investments, we will also
proactively consider M&A opportunities. A certain amount oftime is required to develop and cultivate human resources in
new areas from the ground up. If we are going to tackle
growth areas and new fields in the short term, it may be
more advantageous to work with companies that havetechnologies we lack or that engage in business activities
that we are unable to emulate. Although it is not easy to findcompanies with which we can maximize synergies, I think
P.24
M&A and capital alliances are also drivers of growth.

Leading Customer Growth to Strengthen
Customer Portfolios
When I think about Tsuzuki Denki’ advantages, about
what strength we possess that other companies in our
industry do not, I believe it boils down to our “frontline
capabilities.” Frontline capabilities enable us to gain the trustof our customers. Customers expressing their satisfaction
in choosing Tsuzuki Denki leads to further business
opportunities.
We have about 20,000 customers, of which around 400
companies account for 70–80% of our sales. Our frontline

5

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Market cap/PBR/PER

Financial andNon-financial Information

Market cap (billions of yen)

12.5

12.1

Foundation Supporting
Transformation

PBR (x)PER (x)

12.4

42.9
9.3

9.1

33.4

7.8

29.8
6.6

6.3
21.5
5.6
12.3

11.7

0.3

0.3

0.3

0.3

FY03/13

FY03/14

FY03/15

FY03/1610.6

0.4

FY03/17

8.6

7.9

24.3

21.0
6.0

16.3

11.7

31.5

0.5

0.5

FY03/18

FY03/19

0.9

0.8

0.8

FY03/22

FY03/231.1

0.6

FY03/20

FY03/21

End-July2023

capabilities have earned the trust of these 400 customers,some of whom we have been doing business with for as
long as 20 or 30 years. While some think it would be efficient
to concentrate management resources only on thesecustomers, we also place a high value on transactions withother customers. Our aim is to become a Growth Navigator,
leading the growth of customers, enabling them to achieve
growth to become a central part of our customer portfolio
in around 10 years. If we are able to connect this to our
own growth, nothing would make me happier. In this era ofchange, it is also possible for customers to achieve rapid
growth. Considering the customer portfolio from a long-term
perspective, we must also value relationships with customers
who are not large in terms of transaction size.
Management, of course, is firmly committed to managing
the profit of each project. However, focusing only on shortterm profits and losses will lead to missing out on long-term
gains. We are conscious of nurturing the future core of ourclient portfolio while also carefully cultivating the core of ourcurrent client portfolio.

provide higher salaries than other companies in our industry,
but this is also an investment in human capital, which we
believe will pay off in the long run as it will enable us to retain
high-level IT personnel.
We have also been proactively engaged in healthmanagement. While it is natural to value the physical andmental health and wellbeing of our employees, I am sendingout the message that we must all remain healthy, including
our families. It is essential for families to be happy, as thisis directly related to work performance. For this reason, I
want to make Tsuzuki Denki a “happy company” for both
employees and their families.
I mentioned earlier that our competitive advantage lies
in our frontline capabilities—each and every one of ouremployees contributes to the creation of these frontline
capabilities. We will create systems and a corporate culture
in which employees can thrive and play active roles, leading
to individual growth and the growth of the Company.

Human Resources are Key to Growth

The Company is being managed with an emphasison corporate value. With an awareness of return on
capital, including ROE, as indicators of corporate valueenhancement, we will achieve a P/B ratio that is consistently
over 1x. However, focusing only on numbers to improve
ROE in the short term may end up damaging intrinsic
corporate value. The essence of a company is to continue
generating profits over the long term that exceed stakeholder
expectations. This of course entails capital costs, but also
includes employee wellbeing and social contributions
through business activities. To enhance our intrinsic
corporate value, we will accumulate high quality profits that
include all these aspects.
Our purpose is to “bring to society ‘yohaku’ filled withpossibilities, through people, insight, and technology,
together.” This means working with stakeholders tocontribute to the expansion of social possibilities. I would likeall our stakeholders to understand our growth story and lookforward to Tsuzuki Denki’s transformation.

Tsuzuki Denki’s value creation depends on people. We are
not manufacturers, and it is safe to say that people are all wehave. In the medium-term management plan, we will
implement measures to develop human resources andimprove our internal environment as initiatives aimed at
P.37
While we will implement
enhancing human capital.
these measures, at the end of the day, I think it all comes
down to whether we can make a Company where
employees are happy. If we can create conditions in which
employees tell us they are happy, I will also feel happy, andthis will definitely lead to the growth of the Company. It
makes no sense for only the Company to grow while leaving
individuals behind; it is important that individuals embody thegrowth of the Company.
There are many factors that contribute to a person’s
sense of well-being, including finances, health, job
satisfaction, and growth. In terms of remuneration, we

Enhancing Intrinsic Corporate Value

6

Purpose

7

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

CONTENTS
Top Message
1

Top Message

Introduction
7 Purpose, Table of Contents, Editorial Policy
9 History of Tsuzuki Denki
10 At a Glance
11 Value Creation Model
13 Tsuzuki Denki Strengths and Business Model
15 The Six Types of Capital
16 Feedback from Customers and Partners
17 Customers and Main Solutions
Long-term Vision andMedium-term Management Plan
21 Long-term Vision: Growth Navigator
23 Medium-term Management Plan: Transformation 2026
25 Business Strategies
25 Information Network Solutions Segment
30 Electronic Devices Segment
33 Message from Director Oyama
35 Financial Strategy
37 Human Resources Strategy
Tsuzuki Denki Human Resources
41 Message from Vice President Yoshii
43 Diversity & Inclusion
45 Workstyle and Workplace Reforms
47 Health Management
48 Human Capital Infographics
Foundation Supporting Transformation
51 Directors
55 Corporate Governance
59 Compliance, Information Security
60 Responding to System Development Risks and Enhancing
Project Quality, Status of Dialogues with Shareholders

61 Sustainability
62 Response to Climate Change
Financial and Non-financial Information
63 Financial and Non-financial Data
65 Corporate Information
66 Stock Information
Caution Regarding Forward-Looking Statements
Statements in this publication regarding earnings forecasts are
based on information currently available to the Company andcertain assumptions that the Company deems reasonable, andare not intended to be a promise by the Company that forecasts
will be achieved. Further, actual results may materially differ due
to various factors.

Editorial Policy
This report identifies the sources of our value and indicates how
we intend to create value centered on the long-term vision andmedium-term management plan announced in 2023. This report
expresses our intentions and determination to envision our ideal
positioning in 10 years’ time and how we will transform ourselvesto achieve this goal.

8

History of Tsuzuki Denki

ICT History in Japan and Abroad
Japan
1926

Founding Period
1932
1941
1945
1958

 stablished in Nagoya as Tsuzuki Shoten, a distributor ofE
Fuji Electric, engaged in the installation, and maintenanceof telephone equipment
Changed company name to Tsuzuki Denwa Kogyo Co.,Ltd.
Head office destroyed in air raid, temporary office openedin TokyoEntered into exclusive distributor agreement with Fuji
Telecommunications Equipment Manufacturing (currently
Fujitsu), launched sales of computers and related
components

Business Establishment
1961
1963
1967
1969

 hanged company name to Tsuzuki Denki Kogyo Co., Ltd.
C
Registered stock with the Japan Securities Dealers
Association for over-the-counter trading (Industry:
Commercial)Established Toshin Electric (later Tsuzuki Densan Co., Ltd.)
as a sales company for semiconductors and electronic
components
Established Tsuzuki CE Center Co., Ltd. (currently Tsuzuki
Techno Service Co., Ltd.), to strengthen total service
structure within computer sales

Start as ICT company(fusing information and communication)1970

 stablished Tsuzuki Software Co., Ltd., in responseEto the growing importance of software in the face oftechnological innovation and increasing popularity ofcomputers

Dramatic Growth in line with
Computerization
1982
1986

 stablished Tsuzuki Kucho Co., Ltd. (currently TSUZUKIEXROSS SUPPORT CO.,LTD.)
Listed shares on the Second Section of the Tokyo Stock
Exchange1930 tep-by-step switching system launched
S
Usage commences in Japan

Advances in telephone switching
technologies
1933 ractical use of No. 3 automated desktop telephonesPcommencesFirst automated immediate long-distance calls (between
Ebara and Tokyo)
Telephone subscriptions exceed one million lines
Birth of ENIAC (forerunner of modern computers)
Birth of UNIVAC-1, the world’s first commercial computerL aunch of Nippon Telegraph and Telephone Public
Corporation
Public Telecommunications Law goes into effectCrossbar switching systems Usage begins in Japan

1935
1946
1950
1952
1953
1955

1960

Digital Advances1961 dvent of Japan-made transistor-type general-purposeA
computers
Birth of the general-purpose computer, System/360 (IBM)L aunch of Midori-no-Madoguchi, Japan’s first data
communications system
Telephone subscriptions exceed 10,000,000 lines

1964
1968

1970
1980

Rapid spread of telephone lines
1972	
1975
1978	
1979

 elephone subscriptions exceed 20,000,000 lines
T
Telephone subscriptions exceed 30,000,000 lines
Birth of word processingCompletion of nationwide automated switching system(phone calls connected immediately)

Spread of personal computers andadvance of office automation (OA)
1981
1985
1987
1988

Business Scale Expansion(Net Sales Top 100.0 billion yen for the First Time)

1991
1994	
1996
1997

 hanged company name to Tsuzuki Denki Co., Ltd.
CStrengthened overseas developments in the Electronic
Devices segment
Established a local subsidiary in Singapore
Concluded a distributor agreement with Lucent
Technologies (currently Avaya LLC)
Established a local subsidiary in Hong KongEntering a New Stage Alongside
Technological Advancements
2006
2011
2012
2016
2018
2020	
2021
2022	

 stablished a local subsidiary in ShanghaiEAcquired Next Vision Co., Ltd., which specializes in travelindustry systems, as a subsidiaryMerged with Tsuzuki Densan Co., LtdA nnounced new TSUZUKI Principles and Company logo.
Changed Tokyo Stock Exchange industry category from“retail” to “information and communication”
Listed on the First Section of the Tokyo Stock Exchange
Acquired ComDesign Inc., a company with unique cloudbased contact center solutions, as a subsidiarySpun off Electronic Devices segment
Established TSUZUKI EMBEDDED SOLUTIONS CO., LTD.
Became a DX Certified Business by the Ministry of
Economy, Trade and Industry
Listed in the Prime Market of the Tokyo Stock ExchangeEstablished Purpose and updated the TSUZUKI Principles

Currently:
 aking on the challenge of creating new value with a focusTon our 100th anniversary in 2032

9TSUZUKI REPORT 2023

1990

 evelopment of MS-DOS
D
Reorganization of Nippon Telegraph and Telephone Public
Corporation into NTT, liberalization of telecommunications
Microsoft announces Windows 1.0
NTT commences mobile phone services
ISDN service starts

Arrival of the Internet Age
19911992	
1993
1995
1999

2000

Global aunch of the world’s first website
LDownsizing advances, PCs become widespread
Ministry of Posts and Telecommunications permits
commercial use of the Internet
Windows 95 is released by Microsoft, and the Internet
spreads rapidly, opening up networks and systems
NTT DoCoMo launches iMode service

IT Revolution
2000s

2010s

In addition to personal computers and the Internet,
mobile phones rapidly spread to offices and homes,
revolutionizing the economy, society, and daily life
IP telephony, which transmits and receives voice overthe Internet, makes significant advances in corporate
telephone systems
Smartphones and tablets replace cell phones, advancing
mobilityUnified communications integrating diverse telephone,e-mail, videoconferencing, and other communication
methods begins to spread
With the spread of cloud computing, IT systems are
shifting from “ownership” to “usage”
A rtificial intelligence (AI) enters its third major expansion
with the practical application of machine learning andthe emergence of deep learning

Currently:
 ntering the era of digital transformation (DX) under theE
keywords AI, IoT, 5G, and smart cities

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Net Sales (millions of yen), Sales Composition (%)
Equipment

Development & Construction

125,366

118,872

Service

23,261

FY03/19

42.9
Billion yen

123,899(As of end-July 2023)

29,993(24.2%)

Electronic
Devicessegment

Customers
Approximately

19,66840,69042,121(34.0%)

14,501

13,840(11.2%)

37,12737,943(30.6%)

14,51844,790FY03/20

Financial andNon-financial Information

Market cap

26,996

39,12236,64739,391(FY03/23)

119,316

22,15537,645

17,665

Foundation Supporting
Transformation

Electronic Devices

120,004

25,168

Tsuzuki Denki
Human Resources

44,207

FY03/21

FY03/22

20,000companies

Information
Network
Solutionssegment

FY03/23TSUZUKI At a glance
Operating Margin (%)

ROE (%)

4.1
3.6
2.8

3.4

10.8
7.9

10.4
7.7

8.8

2.7

FY03/19

FY03/20

FY03/21

FY03/22

FY03/23

FY03/19190.8

FY03/21

FY03/22

FY03/23

Ratio of womenamong all full-time employees (%)

Total shareholder return (TSR) (%)

205.6

FY03/20

207.3
12.2

12.6

FY03/19

FY03/20

13.3

13.8

14.5

FY03/21

FY03/22

FY03/23

136.6
101.8

FY03/19

FY03/20

FY03/21

FY03/22

FY03/23

10

Value Creation Model
PurposeBringing to society “yohaku” filled with possibilities,
through people, insight, and technology, together.

Business Activities
Input
Human capital

Information Network
Solutions Segment

Intellectual
capitalSocial andrelationshipcapitalStrengths

People, insight,
and technology

Financial
capitalManufactured
capitalElectronic Devices
Segment

Natural capital

Financial
FY03/33 Targets

Long-term vision

Growth Navigator
Medium-term
management plan

Transformation 2026

11

TSUZUKI REPORT 2023

Net sales

Operating income

150.0 billion yen 10.0 billion yen

ROE

15%

FY03/26 Targets

Net sales

130.0 billion yen

Operating income

6.5 billion yen

ROE

10% or higher

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

OutcomeResolving issues andtaking on the challenge ofcreating new value
Customers

High-quality, timely, and optimal service
Business continuity, improvement, and transformation
methodologies
Latest ICT solutions reflecting the times
Stakeholder satisfaction improvement

Providing opportunities for
self-actualization andcontinuously growing together

Employees

 pace and opportunity for diverse human resources toSactively participate
Corporate culture encourages freely taking on challenges
Diverse array of workplace and workstyle options
Safe and secure workplace environment

Fulfilling our social responsibility
with the aim of realizing aprosperous world

Society ocial issue resolution measures
S
Safe, secure, and convenient lifestyles
New experiences
Reduced environmental impacts

Pursuing social andeconomic value throughrepeated dialogues
Non-financial
Enhancenon-financial
value

Shareholders
and investors

 hareholder returns through sustainable growth andSenhanced corporate valueE xpanding constructive dialogues and flexible
management
Appropriate information disclosure and transparency

CO 2 emissions

591 t-CO2

12

Tsuzuki Denki Strengths

Business Model

The driving force behind our business activities is the strength of ourpeople, insights, and technology, which we have accumulated over thecourse of our history.
This is the source of our uniqueness, and we maintain its importance in
our Purpose, carried on from our previous management philosophy.
We will continue creating new value for stakeholders by fusing timelesselements of our business that have been passed down over the years
with newer elements that have been updated in line with modern times.

Business flow

Customers:
Approximately

20,000companies
Manufacturing

PeopleOur human resources are the ones who face issues,build, connect, challenge, enjoy, support, and follow
through. Each of them is a professional with a highlevel of expertise. We maximize the performance of ourhuman resources through a culture that encourages thetaking on of challenges and values teamwork, as well as
skills development that heightens the expertise of each
employee.
We have been told that we know the customer better
than the customer knows themselves, and since ourfounding, we have refined our frontline capabilities under
the watchword “customer first.” These are the people
comprising the source of all Tsuzuki Denki value who havesupported the company up to now, and will maintain this
support going forward.

Logistics
RetailFinance
Healthcare
Public sector
EnergyGas
Education

Insight

We guide customers to optimal solutions based on ourability to identify the next generation of ICT cultivatedthrough research into technologies that advance with thetimes, 90 years and 20,000 companies-worth of insightand know-how accumulated by continuously facing
and resolving issues in various types of industries, andcoordination skills developed through these efforts.
Our insight was nurtured in the course of working withcustomers and will continue to be refined. We say thatthese efforts are our history itself, a strength that no othercompany can acquire overnight.

Electronic Devices
Semiconductors(custom LSI, microcomputers, memory)

Technology

13

Having begun as a telephone switching equipment
company, voice platform technology is at the core of ourbusiness. The telephone is an indispensable lifeline that
requires a high level of technical expertise. As company
whose name is synonymous with the telephone, wehave been deepening our technological capabilities andexpanding into new business areas to meet the needs of thetimes. Today, we have thorough knowledge of informationand communication technologies, AI, and other cuttingedge technologies, and our engineers continuously improvetheir technical skills through friendly competition each day
at work. Our ability to maintain the trust of our customers isbased on these solid technological capabilities.

TSUZUKI REPORT 2023

Electronic components(relays, connectors)

LCD panels
ASIC
HDD/SSD
Embedded servers, etc.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Information Network Solutions Segment

DX professionals accurately grasp customer needs
and wants, and coordinate accordingly.

Features

Enhancements

Planning
ProposalEstablished the DX Associate in-house certification
system, working to develop all employees,
including managers, into DX human resources. (At
end-FY03/23, 147 people had been certified)

Procurement

Procurement

People,Insight,
Technology

Facilitates selection of the most suitablehardware, software, and services from Japan andoverseas without being bound to manufacturers.
(Multivendor)

Features

Development
Construction

Introduction

Financial andNon-financial Information

Planning and Proposals

One-stop provision of all flows

MaintenanceOperation

Foundation Supporting
Transformation

Design, Development, Construction, Introduction
Half our employees are engineers with the skills
to handle products from all ICT domains andmanufacturers.

Features

Electronic Devices Segment

Enhancements

Planning
ProposalEngineers are provided with Tsuzuki Style, acompilation comprising 19 volumes of proprietary
Tsuzuki Denki work standardization guidelines, topromote standardization and uniformity, improve
efficiency, and enhance skills.

Maintenance and Operations

People,Insight,
Technology
DeliveryWe operate 89 service bases across Japan.

Features he identification of customer issues and areasTin need of improvement during the maintenanceand operation leads to subsequent planning andproposals. This is how we realize long business
relationships.

Procurement
Enhancements

We designated TManaged, our own brand ofoperation services, as one of the growth areas
targeted in our medium-term management plan
and are working to strengthen our service lineup.
P.28

24 %

76%

Information Network Solutions

Equipment

31%

Sales
Composition(FY03/23)

Equipment

PC
Servers
Storage
Network devices
PBX, etc.

Development
andconstructionInfrastructure construction(information and network systems)
Network design and construction
System and application development
Voice platform system (PBX) design, construction, etc.

Development
and construction
Service

34%

11%Service arious cloud services (CT-e1, TCloud series, etc.)
VCloud infrastructure (Microsoft Azure, etc.)
Device maintenanceMonthly line fees
Maintenance and operation services, etc.

14

The Six Types of Capital
Tsuzuki Denki has accumulated a wealth of capital in its 90 years of business.
To achieve further growth, we must enhance ICT service offerings no other company canmatch leveraging our technologies, know-how, co-creation partners and other forms of capital.
We will maximize the value we provide to our customers and wider society by allocating
financial capital and enhancing human capital, which is the source of all we do.
As of end-FY03/23

Human Capital

Consolidated employees

Intellectual Capital

2,328

219

Proprietary service brands

people2.96

Work engagement index(6.0 points possible)

pointsApproximately

500

R&D investments(including capitalized assets)

million yen

Approximately

200

Education investments

147

DX Associates*

peoplemillion yen

Social and Relationship Capital

Financial Capital

Approximately

20,000

Customers

35,387

Net assets

million yen

companies

Approximately

2,000

Business partners

Shareholders’ equity ratio

companies

Sales by industry

42.0%
Net sales

123.8
billion yen(FY03/23)

Manufactured Capital

Manufacturing

20%

Wholesale,retail, restaurants

10%Service industry

15%

Transportationand construction

10%

Information andcommunication15%

 inance andF
insurance10%

 ealthcare,Hpublic sector

10%Other industries

10%(real estate, power, gas,
water, etc.)

89BasesNatural CapitalGreenhouse gas emissions

719

t-CO 2*Internal certification (requirements: DX certification test and skills assessment via written exam)

15

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Feedback from Customers and Partners

CustomerManager, Keisan Center, Yamazaki Baking Company, Ltd.

Kazuya Ueda

My relationship with Tsuzuki Denki began before I joined Yamazaki
Baking as a new employee, and has continued for more than halfa century. There are two aspects of this long business relationshipfor which I am grateful.
First, is the ability of Tsuzuki Denki to respond to problems.
Yamazaki Baking prepares and delivers food products daily andour plants operate 24 hours a day, 365 days a year, so systemoutages due to equipment failures or network problems canhave a very significant impact on our business. Given our system
environment, I appreciate their rapid response, both during normal
operations and anytime day or night when problems arise.
The second aspect I am grateful for is Tsuzuki Denki’s
excellent maintenance system. Their employees maintainseveral of our systems and networks, and many of them havebeen with us for a long time and are thoroughly familiar with
our environment. Maintenance personnel are also rotatedon a scheduled basis. These personnel are familiar with ourcompany’s environment, and are able to make recommendations
for improvements, which is very reassuring.
In my long relationship with Tsuzuki Denki, their response
during the Great East Japan Earthquake was particularly
impressive. Our Sendai facility was impacted by the disasterand we were unsure of the condition of the servers, but I was
impressed by the fact that their engineers rushed to the plant as
quickly as possible and returned them to working order. During
the subsequent rolling blackouts, these engineers worked
with us on the planning and execution of work on each systeminfrastructure platform. After the earthquake, when we relocatedthe data in our Osaka branch to a highly reliable and robust data
center in line with business continuity planning (BCP), they tookcare of the entire process, from data center selection, to therelocation itself.
We have been doing business with Tsuzuki Denki for morethan half a century because they are always by our side facing
challenges and considering our point of view as a true partner.
At present, we are conducting DX and AI co-creation projects
led by young members from both companies, and Tsuzuki
Denki has introduced us various case studies from different
industries. When Yamazaki began looking at ChatGPT, they werequick to provide us with information, and created a verification
environment based on experience in their own company.
Although the focus up to now has been building infrastructure
and maintaining systems and networks, going forward, we hopeto engage in co-creation with Tsuzuki Denki in new areas as well.

PartnerManaging Executive Officer, Microsoft Japan Co., Ltd.
General Manager, Industry Sales Division; General Manager,
Modern Work & Security Sales Division

Yoshiaki Okada

We have had a long-standing relationship with Tsuzuki Denki
as a partner since Microsoft was mainly selling licenses for
Windows, Office, and other PC products. With the release of
Office 365 and the shift from a licensing sales business model
to cloud services, Tsuzuki Denki began provision of TCloudfor Office 365, which further deepened our relationship andfacilitates the comprehensive provision of Microsoft solutions totheir customers. This is made possible thanks to Tsuzuki Denki’s
advanced technological capabilities and accumulated experiencein both information systems and voice networks including PBX.
Further accelerating this collaboration, at present, Tsuzuki
Denki uses Microsoft Azure as the infrastructure for its main
services, including D-VUE® Cloud Data Lake Platform, DagreeX
for electronic contracts, and the IntrameriT groupware andworkflow tool.
One of Tsuzuki Denki’s strengths is its internal use of thelatest Microsoft technologies, including Microsoft 365, Microsoft
Azure, and Azure OpenAI Service, which are also incorporated
into their proposals to customers.
They utilize knowledge accumulated through the internal useof these technologies in proposals to customers, which is asignificant advantage.
Microsoft’s mission is to empower every person and everyorganization on the planet to achieve more.
Japan lags behind other countries in DX initiatives, and this isparticularly the case among small and medium-sized enterprises(SMEs).
In combining Tsuzuki Denki’s knowledge of various industries
with Microsoft AI, cloud computing, and other digital capabilities,
we want to work together to help as many Japanese customers
as possible to achieve more, and to make Japan as a wholemore vibrant.

16Customers and Main Solutions
Hospitals

Contact Centers

Tsuzuki Denki constructs andsets up networks, systems, andperipheral infrastructure forming thefoundation of customer operations.
Combining these with the latest ICT,
we are able to meet all manner ofcustomer requests.

We provide systems andinfrastructure used by healthcare
professionals, including electronic
health records and businessterminals (tablets, etc.). We havealso launched new initiatives utilizing
AI to help improve the efficiency andsafety of healthcare workplaces andoperations.

We develop and implement callcenter operation systems forcustomer with e-commerce contact
centers or customer service
phone lines. We also contribute toimproved customer and operator
satisfaction by combining advanced
contact center operations withtelework support for operators.

AI Discharge Date
Prediction

CT-e1

ExamplesOffices (common across all industries)

Installation of office communicationequipment (telephones, networks, webconferencing, telework environments, etc.),
development of infrastructure for PCs,printers, etc., introduction of groupware
and other systems, cyber security.

TCloud for Voice (TCV)
TCV is a service facilitating cloud-based
PBX. PBX is a device (or system) thatfacilitates the sending and receiving ofcalls from within and outside the company,
which up to now was mainly located onpremises.* Cloud-based systems do not
require customers to own any equipment,so there is no need for maintenance, andthey make it easy to change extension
numbers or system scale. This highquality, low-cost cloud PBX service ismade possible because Tsuzuki Denki is apioneer in voice technology. P.27
*Arrangement where the customer company owns
and operates their own hardware and software.

17

TSUZUKI REPORT 2023

We have introduced electronic healthrecords and other systems used byhealthcare professionals in a number ofhospitals. Most recently, we have beenworking with Aso Iizuka Hospital and
Aso Information System to research anddevelop an AI-based discharge dateprediction service. AI is used to analyze
patient admissions data and predicts
discharge dates with a high degreeof accuracy, enabling more efficientmanagement of hospital beds. As of theend-July 2023, we were conducting freetrials and plan to release this service basedon the results of these trials.

CT-e1 is a service providing cloud-based
systems for contact center operations. In
addition to basic functions, this system
has advanced functions not available withother services, including AI-based voicerecognition and emotion analysis. It canbe used in any location with as many
operators as necessary, offering superior
customizability. The CT-e1 enables both
upgrading contact center operations andsupporting operator telework. P.27

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Social Issues Resolved by Tsuzuki Denki
Wasteful use ofresources andenvironmental impacts
due to operational
inefficiencies

Declining workforce
due to aging
population

Issues resolved through ICT
provided by Tsuzuki Denki

Lagging behind indigitalization

Efficient

Unmanned

Labor-saving

Advanced

Automated

RemoteMarkets

Convenience Stores

Factories

We develop and implement
systems (sales management) for
the fruit and vegetable market. We
contribute to DX in the fruit andvegetable market by standardizing
and streamlining operations.

We develop, build, and installonboard automotive systems intrucks that transport products from
distribution centers to individualstores. This system contributes tologistics safety and efficiency.

We support factory automation
using IoT technologies to monitor
production lines and performpredictive maintenance.

TCloud SeriesOver the years, we have helped customers in all types of industries. We
have substantial expertise in the logistics, fruit and vegetable market, realestate, and amusement (movie theater) industries, developing and selling
software for production and sales management as proprietary products.
The TCloud Series capitalizes on the recent trend toward cloud computing,with specifications that accurately grasp the needs of customers despite
being in specialized domains. P.28

Total SolutionService Framework (TSF)
TSF is a system encompassing
all the services we provide,with new service development
and functional enhancements
carried out in accordance withthis framework. It is also usefulas a sales tool for drawing out
customer needs, as it conveys
at a glance the variety ofservices we can provide.

Total SolutionService Framework (TSF)
Introduced support
services

Services
Customer systems

Tsuzuki services

D-VUE
DX implementation support®

Cyber security
management support

Common services
D-VUE®
Data Lake Platform
Integrated managed service

Platforms
Cloud

On-premises

Zero trust security service
IoT connectivity service

Partner companies

18Long-term Vision andMedium-termManagement Plan
Transformations Focused on
the 100th Anniversary of the Company’s Founding
Since our founding in 1932, we have supported our customers and society with ICT.
Recently, the speed of social change and technological innovation has accelerated, andthe business environment surrounding Tsuzuki is changing at a dizzying pace.
In this context, how should we transform ourselves to remain the company ofchoice for our stakeholders for the next 100 years?
We have established a long-term vision of where we want to be in 10 years, and are
implementing the first stage of our medium-term management plan,“Transformation 2026.”

19

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

20

Long-term Vision

Growth Navigator

An organization that navigates growth andcreates value together with stakeholders

From Standing by Customers’ Side,
to Becoming a Partner that Leads Growth
The past nearly 90 years of our history, has been marked by our commitment toremaining close to our customers.
However, in an era when new technologies arise on a daily basis and the roleof technology is becoming increasingly sophisticated, we must transform into a
company that guides customers to their destinations without hesitation.

PurposeLong-term Vision Where we want to be in 10 years

Growth Navigator

Medium-term
management plan

An organization that navigates growth andcreates value together with stakeholders

1
Three Axesof Activity

2
3

Value Creation

Targeted
Positioning

Create new value

Expand Customer Reach

From standing by customers’
side, to becoming a partnerthat leads growth

Build connections with diverse customers

Lead the GrowthTargets

Continue to lead growth

Operating income
Net sales

10 billion yen
150 billion yen

Further Enhancement of Return on Capital and Corporate Value
Under our long-term vision and medium-term management plan, Transformation 2026, we are reaffirming ourcommitment to integrated business, financial, and non-financial management, and by steadily implementing thiscommitment and expanding dialogues with capital markets, we aim to achieve sales of 150 billion yen, operating incomeof 10 billion yen, and ROE of 15% by the end of the next 10 years.
We will also further enhance corporate value by strengthening management capital constituting the origin of thiscommitment.

Business
growthStrengthen
management
capitalEnhance nonfinancial value

Operating income

EPS growthROE

10 billion yen

7%

15%

Proactive information disclosure
centered on growth businesses

21

Improve
capitalefficiency

TSUZUKI REPORT 2023

Enhance constructive dialogues
with investors (proactive approach)Strengthen governance to support
strategy execution

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Approach to Business Growth
Creating a Business Portfolio Emphasizing Growth and Profitability
We will organize the areas that we will develop into the pillars of our business over the next 10 years into growth areas and new
business areas, and transform our portfolio to place more emphasis on these areas.
Growth Areas

social issues facing customer industries themselves.

These are areas where needs are already apparent, butmany customers yet to start implementation, which is
expected to increase in the future in light of social trends.
(Examples: Cloud-based services, security products, DX
products)
However, we expect targets to change with theacceleration of technological innovation, and it is importantto firmly ascertain these changes in portfolio management.

1 Refers to ICT solutions that directly approach social
issues. Combining the ICT we provide with customers’
industry know-how, we will develop and nurture “social
issues-based ICT services” as a business that resolves

Expand Information Network
Solutions business by incorporating
cutting-edge technologies such as
Generative AI

New Areas

Growth areas

New Business Areas

2 We will identify and absorb cutting-edge technologies
that will take root in society and become mainstream in
the future.

Socialissuedriven

New techdriven

SocialissuesIndustry(customers)

Createmainstaybusinessthrough active
investment

Technology

Existing areas
Individual
equipment sales
Infrastructure
construction
Traditional SI,
etc.

Improve
profitability
Downsize

Growth Areas
Cloud-based services
Security products
DX products, etc.

Profitability

Improving Management Resource Quality
Tsuzuki Denki will significantly change its approach and stance on four management resources that are key to transformationand improve the quality of these resources.
Organization and Human Resources
Past

FutureBy function (sales/technical/
administration)

Value creation

We will change our systems, training, and organization sothat each and every one of us can become a value creator.
Value creator refers to someone who works toward
the essential growth of customers (society, companies,
and people), creates value, and contributes to the growthof society as a whole and their own company. To thisend, we will enhance our ability to discern potential issues
based on facts and construct hypotheses, devise solutions
on our own or co-create with customers and partners,
and improve skills related to verification, creation, andimprovements. Regarding organization, we will make various
changes including integrating manufacturing and sales anddecentralizing organizational functions.

and cooperative relationships. For customers with whom we
can further strengthen relationships, we aim to inculcate ahigh level of loyalty through daily communications, purchasedata analysis, and the proposal of solutions to potential
issues. To acquire new customers, we will clarify target
markets with a focus on SaaS-type in-house services, andincrease engagement and conversion rates through digitalmarketing measures including digital advertising and the useof social media.
Investments
Past

FutureDefensive investments

Offensive investment

We will redirect investments to the promotion of human andintellectual capital, M&A, and capital and business alliances.
We will also place more emphasis on investing in new
challenges and increasing our business capabilities.

Customers

Business Stance

Past

FutureCultivate existing customers
Individual customer support

Grow loyal and new customers

We will implement marketing strategies that include
maintaining and nurturing loyal customers and acquiring newcustomers.
We will further improve satisfaction among customers
with whom we have already established ongoing business

Past

FutureBased on customer needs
and wants

Addition of social angle

We will develop business adding an ESG perspective tocustomer needs and wants.
Creating social value has become a corporate mission,
and we will transform our business with a focus on balancing
social and economic value.

22Medium-term Management Plan

Transformation 2026
First Stage for Realizing Our Long-term Vision
As the first stage toward realizing our long-term vision,
we formulated the three-year medium-term management plan, Transformation 2026.
By shifting resources to growth areas, we will change the drivers of our earnings and increase our earning power.
To this end, proactive investments in business, including M&A, are essential.
We will focus on acquiring capabilities for growth and new areas,
aim to increase the ratio of these capabilities to the same level as existing areas in 10 years.
100th Anniversary

Growth Navigator

1st Stage

2nd Stage

3rd Stage

Shift resources
to growth areas

Scale growth areas
Develop new business areas

Make growth areas into corebusinesses and expand new areas

Operating income: 10.0 billion yen
New growth areas(including M&A)

Transformation 2026

Growthareas

Information
Network
Solutions

Existing
areasElectronic Devices
FY03/23

FY03/26

FY03/29

FY03/33

Medium-term Management Plan Overview
Under the current medium-term management plan, Transformation 2026, we aim to enhance corporate value throughintegrated efforts based on three pillars: Business strategies, financial strategies, and management base reinforcement.
We place particular emphasis on profitability, targeting operating income of 6.5 billion yen (+27.5% YoY), far exceeding therecord income posted in FY03/23.

Medium-term Management Plan Three Pillars
Businessstrategies

Expand growth areas
Increase profitability of existing businesses
Restructure business portfolio and Group companies

Net sales
123.8 billion yen
Operating income
5.1 billion yen
ROE
10.4%

Financialstrategies

Manage finances while being mindful of the cost of capital
Create growth funds through balance sheet optimization
Optimize capital allocation

CO 2 emissions Scope1+2
719 t-CO 2

Managementbase
reinforcement

FY03/23 results

FY03/26 Targets(vs. FY03/23)
Net sales
130.0 billion yen (+5.0%)
Operating income 6.5 billion yen (+27.5%)
ROEOver 10.0%

Proactively invest in human capital (organizational andhuman resource development)
Further enhance governance
Strengthen sustainability efforts

CO 2 emissions Scope1+2
591 t-CO2 (-17.8%)

Basic Policies by Segment
FY03/26 Targets

Information
Network
Solutions

Policies

Key priorities

Strengthen six
growth areas

1 P
 romote collaborations with other companies by leveraging core technologies
2 Strengthen technical, marketing, and product development capabilities
through human resource development
3 Expand service lineup

Improve profitability
in existing areas

Electronic
Devices

Improve gross profit
margin in existing
devices and systems
business
Expand businessby creating new
solutions

23

TSUZUKI REPORT 2023

1 Strengthen product portfolio management based on TSF concept
2 Ensure thorough pricing management
3 Reorganize business formation

Net sales(vs. FY03/23)

102.2 billion yen(109%)

Operating income (vs. FY03/23)
Operating margin

5.5 billion yen(131%)
5.4%

1 E
 xpand sales of overseas products, power supply modules, and otherproducts with growth and profit potential
2 Enhance outreach to existing small and medium-sized customers
3 Thoroughly implement low-cost operations
1 Expand solutions by co-creating with partners
2 Take on the challenge of entering new areas
3 Strengthen digital marketing and inside sales

27.8 billion yen(93%)

1.0 billion yen(105%)
3.6%

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Organizational Transformations Aimed at Enhancing Medium-termManagement Plan Efficacy and Feasibility
Establishment of the Business Strategy
Planning Office
The Business Strategy Planning Office, established in April
2023, is an organization created to plan various measures
based on Information Network Solutions segment
strategies under our long-term vision and medium-term
management plan, and to incorporate and manage thesemeasures in frontline divisions.
To spread our vision and plan, developing intangible
aspects (corporate climate, constitution, and Corporate
culture) is more critical than tangible aspects (organization,systems, and structure). Therefore, we make it our mission
to foster a culture and climate for transformation change
and create the framework facilitating these changes.
We recognize business investment as one of the mostimportant themes, as it will significantly impact growth overthe next 10 years. Accordingly, we will take an offensive
stance toward business investment.

Business Strategy Planning
Office Mission Scope

Tangible
aspects

Transforming the quality and flow of information
Organization

Systems

Structure

Empathy with purpose and vision
Intangible
aspects

Understanding of strategies and measures
Corporate
climateConstitution

Corporate
cultureIceberg model

MESSAGE

Intended Role of
the Business Strategy
Planning Office
Office Manager

General Manager

DeputyGeneral Manager

Takeyoshi
Hagihara

Shusaku
UeshinShunsuke
Hino

Investment Strategy
Investment strategies are key to achieving our long-term
vision and medium-term management plan. This office is
responsible for various missions related to the execution ofbusiness strategies, among which, we will devote time andeffort to the strategic planning and promotion of M&A.
Up to now, we focused on utilizing and enhancing
internal resources, but in recent years, with the environmentchanging rapidly, we recognize that it will be difficult
to continue growing without increasing our current
competitiveness and taking on new challenges. We will
pursue M&A under a policy of acquiring capabilities
incrementally over a medium- to long-term timespan.
In the medium term, we will examine and absorb
companies with services and technologies that can createsynergies in the growth areas and those with capabilities welack. This also includes companies that have channels that
we do not. In the long term, we aim to expand our businessdomain through M&A to enter new areas and markets andexpand our service lineup.
Currently, we are proactively creating deals in line withthis strategy through partnerships with several M&A advisory
firms. We are also working to strengthen contact with startup

companies. We believe that exposure to startup companies
will lead to the discovery of new technologies and ideas,enabling us to develop a discerning eye for finding the rightprojects for our growth strategy. Through these efforts, wewill realize M&A that truly generate business synergies.

Thoughts on Achieving
the Long-term Vision
We have the will and determination to make the transformation
and we are determined to realize our long-term vision.
First, we must communicate closely with employees
to ensure that the vision and strategy permeate the entire
Company and that each employee understands theimportance of the transformation. Further, the accumulationof short-term results will keep the entire Company motivated,leading to great achievements.
10 years will pass fairly quickly. We strongly hope tobecome a company where employees have a smile on theirfaces and to grow even further. There may be challenges
in the next 10 years, but everyone in our office and all
Tsuzuki employees will do their best to fulfill our mission and
expectations while constantly evolving.

24

Transformation 2026

Business Strategy Information Network Solutions Segment

Information Network Solutions Segment Strategy
In our mainstay Information Network Solutions segment, we sell, develop, and build ICT-related equipment andservices, and provide post-implementation maintenance and operation services, mainly for corporate clients. In
the previous medium-term management plan, we aimed to increase the service ratio, and as a result of efforts
centered on co-creation with partners, sales in the service business grew by approximately 8% over thethree-year period. We will work to further strengthen profitability by shifting resources to growth areas under
the new medium-term management plan.

oday, ICT technologies are expected to resolve social issues. For example,
issues including an aging population and a shrinking workforce resulting from
population decline are areas where ICT can be useful in providing solutions.
For Tsuzuki Denki to achieve further growth, we believe it important to change
our relationship with customers while resolving social issues using the technologies wepossess. In the past, the relationship between Tsuzuki Denki and our customers involved
selling, buying, and the creation and use of systems. Going forward, we will change thisrelationship to one where we resolve social issues together. To resolve issues in theB2B2B and B2B2C businesses requires collaborative partners, and above all, we must
to create new initiatives and mechanisms together with our customers as co-creation
partners. Our goal is to resolve social issues in each of our customers’ industries throughthe building of these relationships, and to bring these solutions to the world in the form ofservices and products.
Under the theme of transformation, the current medium-term management plan is
focused on strengthening the six growth areas and improving the profitability of existing
businesses. We will transform our business structure by focusing on new things andrevising existing businesses. The changes brought about by the pandemic will neverbe reversed. In order to see these changes as opportunities, we must change
what we have done in the past, rather than maintaining the status quo. This is
the key to achieving our medium-term management plan, as well as essential
to realizing our longer-term goals. I see my role as initiating the transformationand ensuring that the organization is able to transform.

TTransformation isnecessary for achieving growth

25

TSUZUKI REPORT 2023

Senior Managing Executive Officer
General Manager of Solution Business Unit

Katsuyuki Yoshida

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

1

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

2

Basic Policy

Financial andNon-financial Information

Basic Policy

Strengthen six growth areas

Improve profitability
in existing areas

 romote collaboration with other companies
Pby leveraging core technologies
Strengthen technical, marketing, and productdevelopment capabilities through humanresource development
Expand service lineup

 trengthen product portfolio management
S
under TSF concept
E nsure thorough pricing management
Reorganize business formation

FY03/26 Targets

Net sales (vs. FY03/23)

Operating income (vs. FY03/23)

Operating margin

102.2 billion yen (109%)

5.5 billion yen (131%)

5.4%

Existing areas
Improve profitability

Eliminate Waste, EnhanceStrengths, and Increase
Earning Power

Pursue expansion strategy(Introduce high value-added services
and expand resources)(Strengthen lineup and functions, concentrate resources)

Six growth areas

Cloud services, data analytics, etc.
Growth potential

We have identified six growthareas in the Information Network
Solutions segment and will enhanceearning power by expanding andstrengthening these areas.
We will also increase efficiency inexisting areas to shift management
resources to growth areas.

Growth areas

Pursue residual profit,
improve profitability

Review of small,
low-profit businesses(Thoroughly streamline by leveraging digital technologies
and Group company strategies)

Individual equipment sales, etc.

On-premises PBX/construction, etc.
Gross profit margin25%

ur business consists of (1) consulting, (2) sales, (3) implementation (development and construction), and (4)maintenance (maintenance and operation). Among these, our challenge is to strengthen consulting services. WithDX in particular, consulting capabilities are the key to success. In this area, we are strengthening problem-solving
consulting services, including the D-VUE® DX implementation support and cybersecurity management support.
Turning to technology, in my view, technology consists of three elements: Structure (methods and approach),architecture (the latest technologies), and the power of people (communication and negotiation skills).
In terms of architecture, we remain informed of the latest technologies and absorb them throughrelationships with partners.
Regarding structure (methods and approach), we created a service system called Total Solution
Service Framework (TSF) P.18 , and in considering how to promote it, we came up with “Tsuzuki
Style.” It is written in an orderly manner, from design and development to the testing process whencreating a program, so that the reader can understand how best to proceed. This has resulted intechnological standardization, and is also linked to enhancing technological capabilities. In
addition, customers will be able to see what Tsuzuki Denki is doing and what
we offer, and our partners will be able to determine how they can cooperatewith us and receive various kinds of support. We believe that we cancompete through a mutually beneficial three-way system comprising
employees, customers, and partners.
I feel we are also making improvements with regard to the power of people(communication and negotiation skills). Over the past six or seven years, Tsuzuki
employees have been energized through increased investments in researchand development, while the organization has transformed into a more open
environment where they can share ideas freely. I hope all our stakeholders continue
to have high expectations as we steadily promote preparations for further growth.

O

Senior Managing Executive Officer
General Manager of Service & Support Unit

Yuji Nishimura

Strengthening
three technological elements

26

Transformation 2026

Business Strategy Information Network Solutions Segment

Strengthen Six
Growth Areas
FY03/23

Aiming to Become the Market Leader
by Leveraging Voice Platform Technologies to
Expand Our Two Communication Businesses
FY03/26

Net sales

Net sales

16.0 billion yen

9.0 billion yen

178%(vs.FY03/23)

FY03/23

4.5

FY03/26(Average annual
growth rate)

6.1

1

Contact Center
Systembillion yen

billion yen

2

Cloud
Communication

1.1
billion yen

billion yen

3ManagedServices

2.8
billion yen

billion yen

4

Security

0.3
billion yen

billion yen

5Market-specific
DX Services

0.1
billion yen

billion yen

6

DX Consulting

billion yen

0.2

billion yen

(11%)

3.0
(41%)

3.8
(11%)

1.5
(71%)

0.6
(81%)

1.0
(82%)

Strengthening these six areas will lead to a more robust
Tsuzuki Denki value chain overall. Each of these can be
categorized as upstream (DX Consulting), midstream(Contact Centers, Cloud Communications, Security,and Market-specific DX Services), and downstream(Managed Services). We will enhance the upstream,
which is the entryway to business, the midstream,
comprising the group of services meeting those needs,
and the downstream, which is the customer contact
point, to enlarge and strengthen the entire value chain
while increasing overall business profitability.

27

TSUZUKI REPORT 2023

1

2

Contact Center
Systems

Cloud
Communications

In communications businesses utilizing voice platform
technologies* upon which our business was founded, we
have established customer trust and a proven track record
over many years. These businesses are one of the growth
drivers that create a variety of services. We aim to provide
new value based on voice platform technologies, not merely
as a means of communication, but to improve businessefficiency and utilize analytical information for marketing
purposes.
Within communications businesses, we must
focus efforts on contact center systems and cloudcommunications in particular.
In contact center systems, we can provide functions thatmeet customer requirements with the highly customizable
CT-e1 P.17 as the mainstay product.
In cloud communications, we can provide fast, highquality telephone line switching functions in the cloudcentered on TCloud for Voice P.17 . Each of these cloudservices is imbued with customer needs and know-how
accumulated through many years of our PBX experience,and is unmatched by any other company in terms offunctionality and price. As voice platform technology
professionals, our strength lies in the ability to provide
products and services, including on-premise services, thatare best suited to the required scale and system constraints.
In these two areas, we have significantly outperformed
the market growth rate over the past three years. We willcontinue to coordinate with peripheral areas to capture
market share.
We have conducted major restructuring in FY03/23. In
addition to integrating sales and engineering departments,
planning departments that formulated and promoted
business models, marketing strategies, and service
development in this area, will be integrated into a single
organization to facilitate information sharing and respondquickly and flexibly to changes in market trends andcustomer needs.
“Voice” offers various possibilities as the ultimate
interface that does not involve special operations. Combining
these with AI and other advanced technologies is expected
to further expand this market. Tsuzuki Denki aims to becomea leading company in this market, pursue synergies with newtechnologies to create unique value and services.

*Voice platform technologies refer to the basic technologies used in the voice andcommunications market, including the transmission, compression, processing,recognition, and synthesis of speech.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Expanding Sales in Our Four Areas of Competitive Advantage
by Extended Service Lineup and Enhanced Technological Capabilities

3

4

Managed Services

Security

For many customers, IT personnel shortages and eliminationof operational tasks are pressing issues. The reality is thatthey are deprived of resources that can be devoted to DX
and lack agility. The trend toward outsourcing existing
operational tasks is expected to expand in the future, anddemand is expected to increase as cloud services become
more prevalent, making operational tasks easier to performfrom an external environment.
Under our TManaged brand, we develop services focusedon ICT-related operations outsourcing. We have a track recordof over 300 companies, and a large number of engineers who
support them. Our strength is that we do not limit ourselves tospecific areas, but maintain an extensive lineup of help desk,
infrastructure, application, and monitoring services that takeadvantage of our business characteristics. Further, we are also
focused on the development of various technologies including
AI, and by combining them together, we can identify issues
from completely new perspectives and apply them in futurebusiness. As points of contact for operations and maintenanceand operation-driven thinking are essential for building mediumto long-term relationships with customers, we will strengthen
TManaged to provide high-value-added services.

Cyber security is another major issue in corporate DX initiatives.
Security measures are becoming more complex as working
environments diversify, with security that is not necessarily
optimal in terms of redundant measures and cost-effectivenesscurrently being provided. Tsuzuki Denki has been addressing
this industry issue since the previous medium-term management
plan and established a specialized security presales organization
led by engineers possessing a wealth of practical experience.
As part of product evaluations and engineer training centered on
Zero Trust Security, Tsuzuki itself has migrated to a Zero Trustenvironment and we are accumulating practical know-how onenvironment construction and operations. We are also promoting
co-creation with partner companies. To provide customers withsecurity achieving overall optimization, we released a security
consulting service that provides objective evaluations in line withindustry and company size. We use proprietary methods toscore customer conditions and provide medium- to long-term
support through the repeated proposal of countermeasures andreevaluations. Further, we believe we can add value to businessoverall by demonstrating our strength in coordinating, both in thearea of security, as well as networks and infrastructure, based on
which security is considered.

56Market-specific DX
Services

DX Consulting

As corporate investment in DX expands, we anticipate thatindustries and small- and medium-sized business customers
that have been in wait-and-see mode will also begin to makefull-scale changes, and we will exploit niche areas with our
specialty, cloud-native, industry-specific software. For many
years, we have been conducting industry-specific softwaredevelopment in-house, accumulating know-how while
responding to the unique characteristics and challenges ofeach industry. For example, TCloud for SCM for the logistics
industry shortens delivery times, reduces transportation costs,
and optimizes inventory management by improving vehicle
routes and inventory management with the aim of resolvingsocial issues, including labor shortages affecting the entire
logistics industry, and the reduction of CO2 emissions. If we
can standardize the proprietary systems of individualcompanies and establish industry standards, we candifferentiate ourselves from our competitors and maintain ourcompetitive edge. With accelerating shift to cloud computing
as a tailwind, we will focus on enhancing functions andexpanding sales to capture market share with the TCloud
series. Going forward, we plan to expand the TCloud series toinclude the real estate and amusement industries. P.18

Although awareness of DX is increasing, the reality is thatmany customers still lack DX promotion know-how. The
formulation of DX strategies, cultivation of digital culture,development of human resources, and the introductionof technologies are precisely the areas in which Tsuzuki
Denki should take the lead, and we are strengthening
DX consulting areas in an effort to resolve this issue.
In the mainstay D-VUE® service*, based on a policy oflineup selection and concentration, we support offensive
DX strategies in three areas: Digital human resource
development support utilizing in-house practices, support
for customer new service developments through ICT, which
we can provide because we understand customer businesscharacteristics, and a data utilization advisory for planningand improving business and services. In the future, wewill incorporate other major themes, such as the use ofgenerative AI, into our services to strengthen our lineup.
Human resource development is essential to enhance thevalue of our services. We will continue to develop consulting
staff, CX/UX personnel, and data scientists in parallel.
*D -VUE® service is an AI system construction and data analysis service provided by
Tsuzuki Denki.

28

Transformation 2026

Business Strategy Information Network Solutions Segment

Improving Profitability in Existing Areas
Pursuing Fair Profit with a Multifaceted Approach
In line with the prevalence of cloud computing, the accelerationof DX, the rise of open-source software, the spread of agile
software development, and other changes in the ICT industry
environment in recent years, IT vendors are working hard
to revise their traditional business models and explore new
directions. For Tsuzuki Denki to survive intensifying competition
and achieve further growth, we must expand in both growthareas and new business areas. To secure the human andfinancial resources that will be allocated in these areas, we will
improve efficiency and profitability in existing areas.
Specifically, this involves 1 strengthening productportfolio management, 2 implementing thorough pricing
management, 3 transforming our sales approach, and 4
increasing customer loyalty.

2 Thorough Pricing Management
To enhance price competitiveness, we will engage incost reduction and efficiency initiatives, optimize supply
chains, and execute effective procurement strategies.
Another crucial point is to strategically set sales prices
commensurate with value provided. As existing areas are
subject to price competition, we will differentiate and add
value by combining consulting, data science, and otherservices. We will monitor all actual responses to pricing andeconomic outcomes, revising pricing strategies in line withchanges in demand and the competitive landscape. While
implementing the PDCA cycle in this way, we will link productdevelopment and marketing strategies, which we believe will
enable us to achieve overall pricing optimization.

1 Strengthening Product Portfolio Management
3 Transforming our sales approach
We will conduct data-driven management based on TSF
P.18 , focusing on resource allocation, human resource
development, and customer proposals more proactively thanever before. Specifically, by analyzing and visualizing sales
management and other data, we devised measures in three
categories, comprising 1 high market growth and low
profitability, 2 low market growth and high profitability, and3 low market growth and low profitability. Regarding 1 , wewill search for products with potential for profit and growth byascertaining changes in demand and market trends, gathering
customer insights, and combining these products to improve
profitability. For 2 , while aiming to acquire new customers
through efficient sales activities utilizing digital technologies
and other tactics, we will maintain and cultivate existingcustomers and pursue residual profit by enhancing the qualityof our services and products. In terms of 3 , we will set stricter
minimum profit margins, limit the number of small-lot projects,
and implement other stringent management measures ,withdownsizing as one option. As dependence on specificbusinesses can lead to uneven revenue sources and aconcentration of risk, we aim to build a well-balanced productportfolio through appropriate management.

It is important to use different approaches depending on
the service or product. Traditionally, we have specialized in
the Account Based Marketing (ABM) approach, and going
forward, we will augment approach with digital marketing,online tools and other efforts. In addition to developing sales
teams and improving sales processes, we will transform
our sales approach with the return on costs associated withthese activities (ROI) set as an onsite KPI.
4 Increasing Customer Loyalty
We will strengthen management to build a portfolio
comprising an ideal customer base. As increasing thenumber of future loyal customers is particularly important,
we will thoroughly provide value focused on the mediumto long-term improvement of customer satisfaction,offering attractive services, improving our support
systems, and promptly resolving problems. The steady
implementation of these efforts will, in turn, lead to crossselling and up-selling opportunities, which we believe willfurther improve profitability.

Promoting Business Formation Reorganization
for Overall Group Optimization
We will focus on strengthening synergies among the fiveGroup companies involved in the Information Network
Solutions segment. In combining the unique technologies
and know-how of Tsuzuki Denki Group companies,
we improve the quality of products and services andcomprehensively optimize business processes, fromupstream to downstream. This will improve customer

29

TSUZUKI REPORT 2023

satisfaction, reduce costs, and improve profitability.
On October 1, 2023, two consolidated subsidiaries
separated into East Japan and West Japan branches
will be merged to launch TSUZUKI XROSS SUPPORT
CO.,LTD. As a regional network and facilities engineering
company, TSUZUKI XROSS SUPPORT CO.,LTD. will
provide uniform on-site services nationwide.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Electronic Devices Segment Strategy
The Electronic Devices segment sells and provides support for semiconductors and electronic components,
mainly to customers in the manufacturing industry. In FY03/23, net sales and operating income increased YoY,
driven by strong sales of semiconductors and electronic components for the factory automation equipment
and industrial markets, as well as power semiconductors for products related to decarbonization and energy
conservation. In the new medium-term management plan, we aim to increase earnings by taking on thechallenge of improving gross profit margins in existing businesses and creating new solutions.

he Tsuzuki Denki Electronic Devices Division was spun off in October 2021 tocreate TSUZUKI EMBEDDED SOLUTIONS CO., LTD. Profitability has improved
substantially over the two years since the spin-off. While decision-making speed
and a semiconductor market tailwind contributed to this improvement, growth of
the solutions business was a major factor.
The Electronic Devices segment has never been highly profitable, as it consists mainly ofpurchasing semiconductors from major manufacturers and selling them to major customer.
As the semiconductor market is doing well, we must maintain a solid presence there while
expanding into other areas to improve profitability and further achieve corporate growth.
So we took on the solution business. Tsuzuki Denki has approximately 1,000 SME
customers to which we have sold office supplies for many years. We ascertain issuesof these customers, then seek the solutions best able to resolve their problems fromamong the solutions we and our partners offer. This is our mission in the solution
business. We are able to generate a virtuous cycle whereby the number of partners
increases with repeated matching of solutions to problems, which, in turn, leads to
new solutions. This story will accelerate our growth and transform Tsuzuki.
When formulating the Tsuzuki Group purpose statement in 2022, wedefined five values (guidelines for behavior): Modesty, Dialog, Mutual
Respect, Joy of Work, and Future Is in Our Hands. I think Mutual Respect
is particularly important. Our aim to be a respectful company, both
toward our customers and internally, to become a business integrator
that joins together the values of our business partners.

T

TSUZUKI EMBEDDED SOLUTIONS CO., LTD.
President and Representative Director

Masato Tozawa

Focusing efforts on the solution
business to improve profitability30

Transformation 2026

Business Strategy Electronic Devices Segment

1

2

Basic Policy

Basic Policy

Improve gross profit margins inexisting device andsystems businesses

Expand businessby creating
new solutions

 xpand sales of overseas products, powerE
supply modules, and other products withgrowth and profit potential
E nhance outreach to existing small andmedium-sized customers
Thoroughly implement low-cost operations

 xpand solutions by co-creating with partners
E
Take on the challenge of entering new areas
S trengthen digital marketing and inside sales

FY03/26 Targets

Sales (vs. FY03/23)

Operating income (vs. FY03/23)

Operating margin27.8 billion yen (93%)

1.0 billion yen (105%)

3.6%

Role of TSUZUKI EMBEDDED SOLUTIONS CO., LTD.
SuppliersTSUZUKI EMBEDDED SOLUTIONS CO., LTD.

ASIC and microcontrollers
Semiconductor devices

Product selection

Primary failure
analysis

Inspection andassembly

Memory storage
LCDs and touch panels
Power sources, fans
GPUs
CPU boards
Servers, FAPCs, edges

Development
support(ASIC, software)

Development andmanufacturing
support (ODM)

Customers

 ulti-vendor capabilities facilitate product proposals bestM
suited to customer needs evelopment and support provided by engineers familiarDwith each productImproving Gross Profit Margins in Existing Device
and Systems Businesses
In TSUZUKI EMBEDDED SOLUTIONS CO., LTD. (TES)
mainstay device and systems businesses, we will focus on
products with growth and profit potential and cross-selling tocustomers with the aim of enhancing profitability.
Specifically, to propose products that anticipate
customer needs, we will seek advanced and competitively
priced products into which we will incorporate TES
knowledge to develop them into strong commercial
products. In addition to existing major customers, we will
expand the sale of these products to SME customers withfewer competitors and cross-selling opportunities.
We will accelerate these efforts through measures that
include increasing the number of personnel to enhance
technical proposals to customers, and implementation of the+One Skilling system, which increases the proportion of timespent on learning and self-development during work hours.
Further, we will streamline and decentralize operationsin an attempt to realize thoroughly low-cost operations andhigher earnings.

31

TSUZUKI REPORT 2023

Net sales/gross profit margin targets
Net sales (Billions of yen)

Gross profit margin (%)

13.4
12.1

27.6

23.8

FY03/23

FY03/26

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Expanding Business by Creating New Solutions
TES aims to expand business by shifting from its traditional
focus on purchasing and selling semiconductors andelectronic components, to seeking and matching the optimal
partners and solutions to customer issues.
Targeting approximately 1,000 SME customers to whom
we have sold office supplies, we will leverage the advantage
of already having business relationships to understand theirissues and incorporate them into sales discussions.
We are particularly focused on an “activity transformation
service” that utilizes ABM*. This service utilizes businessprocess outsourcing (BPO), systemization, and other tools
to reduce non-profit generating activities (cost drivers) andincreases activities that generate profit (profit drivers) withincustomer operations. Through interviews with customers,
man-hour surveys, and workshops, we visualize businessissues with qualitative and quantitative data and provide
optimal solutions. To increase their appeal, TES makes aneffort to propose solutions that are first thoroughly verified
through practical application in-house.

COLUMN

Further, in terms of sales activities, we will also
strengthen non-face-to-face activities, including digitalmarketing and inside sales, with the aim of efficiently
acquiring additional customers.
*Activity Based Management

Net sales/gross profit margin targets
Net sales (Billions of yen)

Gross profit margin (%)

17.5
4.0

12.5

2.4

CAGR

19%

FY03/23

FY03/26

TES IoT Starter Kit Development

We developed the TES IoT Starter Kit for customers
struggling with the selection of hardware and software as
they aim for DX using IoT.
This service is noteworthy in that the edge computer(hardware) is pre-installed with elements required by thecustomer. This makes it easy for customers to get started
with IoT and achieve DX as soon as possible.

TES IoT Starter Kit

On-premises/
Cloud

Edge computer with embedded GPU

GPU serverStarter Kit
Certified Sensors
Temperature

Acceleration

Humidity

WeightDistance

Pressure

Human
presence

Gas

Displacement

CameraInference and Application

Container

Other individualcompany support

ApplicationData
science

Container

Container virtual
Container orchestration

Other processes

Machinelearning

Abnormal values notification
Inference results notification

SpecialFeatures ackaged by TES engineers familiar with the manufacturer’s products and technologies to make it easy to getPstarted with PoC
Devices can be selected from products we handle

Production can be migrated to the same configuration as the PoC

32

Transformation 2026

Financial and Human Resource Strategies
MESSAGEStrengthening Financialand Human Resource
Strategies to Realize
Enhanced Corporate Value
Enhancing Corporate Value by Spreading
Awareness of Capital Costs

Director, Senior Managing Executive Officer
General Manager of Corporate Administration Unit

Kazuhisa Oyama

33

TSUZUKI REPORT 2023

As General Manager of the Corporate Administration Unit, I
am responsible for finance, corporate administration, humanresources, and legal affairs. My mission is to manage whilebalancing three factors that are important for the Company:
Money, people, and compliance. At present, we areparticularly focused on two areas: Enhancing corporate value(market capitalization) and increasing employee happiness.
The relationship between the two is generally proportional,
but in some aspects, there can be conflicts, so it is importantto achieve both.
In FY03/23, operating income amounted to 5.1 billion
yen, exceeding the previous medium-term plan target of
4.6 billion yen and reaching a record high. Although results
were favorable in terms of performance, investors were notsatisfied with our low P/B ratio. Ultimately, performance
will not be appreciated unless it delivers the level of return
expected by the market. Naturally, there are costs involved inmanaging a business, and we must be aware of those costs
and remain mindful of generating returns that exceed them.
In our current medium-term management plan, we explicitly
state the cost of shareholders’ equity at 9% to share thisawareness within and outside the Company. Further, wehave declared our shift to a business model that is consciousof equity spreads and achieves ROE in excess of the cost ofcapital, in other words, ROE that is higher than the 9% costof shareholders’ equity.
To instill an awareness of the cost of capital within the
Company, we raised the hurdle rate for investment decisions
used by business divisions to 7%. We are raising profitability
to the next level and instilling an awareness of costs andreturns among employees working in the field. Additionally,
we established the Budget Committee to ensure investment
decisions are made appropriately. As a third party within the
Company, the Budget Committee checks the profitability ofinvestments during the planning stages, monitors progress
after investments are made, and provides suggestions tofrontline employees. In this way, on-site activities are linked toenhancing corporate value.
We also provide clarification with regard to capital
allocation. Up to now, there has been a high level ofTop Message

Introduction

Long-term Vision
and Medium-termManagement Planawareness with respect to “earning,” especially on-site, but
not enough awareness of what the cash we earn is used
for. When thinking about enhancing corporate value, it isimportant to consider how to use the profits we earn, invest
in growth, and return profits to shareholders, and we havemade this clear within and outside the Company.
Our medium-term management plan, which strongly
focuses on enhancing corporate value in this way, has been
received positively by investors to a certain extent. After weannounced it, our P/B ratio improved to nearly one time.
We must ensure this is a permanent rather than temporary
development. To this end, we have resolved to steadily
implement our medium-term management plan.

Strengthening Our Organization andPeople to Increase Happiness
Human resource strategies have two stories: Making theorganization stronger, and making people stronger. Rather
than a passive gesture, making the organization stronger
means cultivating a corporate culture of autonomously taking
on challenges. Making people stronger means developing
employees to become leaders and professionals. Even if
individuals are strong, they must function as a team, andif the team is taking on challenges, it will only succeed if
individuals are strong. Rather than choosing one or the other,
we strengthen both the organization and the individual as
two wheels on the same axle. We will proactively invest in
human resources development and focus on cultivating thecapabilities necessary for our growth strategy.
I mentioned cultivating a corporate culture of taking onchallenges, but challenges can be scary for people. It isdifficult to create something new when thinking about not
wanting to fail, the effort involved, and the lack of precedent.
To change this, we are reforming our corporate culture
and systems to cultivate a climate conducive to taking on

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

challenges. As a first step, we established the Business
Strategy Planning Office. This organization will take on new
challenges without existing business partners.
In the current business plan, we set work engagement
as the KPI for employee happiness. Work engagement isthe degree to which employees are satisfied with their work,and refers to being energized, and feeling proud, fulfilled,
and enthusiastic about one’s work. To increase happiness,
we must increase both positional wealth, which is valuable
relative to the individual, and non-positional wealth, which
is valuable in itself. Positional wealth is salary and status;
non-positional wealth is health, freedom, and job satisfaction.
Further, each individual has a different standard of happiness.
As an ICT company, we are in an industry where there isno need to adhere to tradition, and we are free to take on new
challenges. Happy employees will provide customers withproducts and services that increase customer happiness.
We will remain as an attractive company that “brings ‘yohaku’filled with possibilities,” as stated in our purpose.

To Our Shareholders and Investors
Companies have a variety of stakeholders, and it is importantfor corporate management to maintain a balance between
them. However, it is the shareholders who bear the greatest
risk, making shareholder returns a critical management
issue. We have introduced the concept of dividend on equity(DOE) and set a lower limit of 3.5%. This means that wewill pay out 3.5% of shareholders’ equity as dividends. We
also raised the dividend payout ratio to 40% to enhanceshareholder returns.
My role is to enhance corporate value by strengthening
the Corporate Administration Unit. Our challenge ofenhancing corporate value has just begun. To start, we will
steadfastly execute our medium-term management plan withthe aim of meeting shareholder expectations.

Medium-term Management Plan Key Priorities and Basic Policies
Key priorities

Basic policies

Manage finances while being
mindful of capital costs

Financial
Strategy

Secure funds for growth throughbalance sheet optimizing
Optimize capital allocation

Key priorities

Human
Resource
Strategy

Business model transformation
Tighten investment discipline
Maintain financial soundness
Asset review/Group-wide fund generation
 nhance investment and boostEshareholder returns

Createcustomervalue

Basic policies

Human resources development

Develop leadership talent
Develop diverse professional talentBuild teams that work autonomously andengage both internally and externallyPrepare internal environment

 reate foundation enabling employees toCautonomously take on challenges
Establish environment supporting the
success of diverse talent

Maximize
corporate
value

Initiatives integrated with business strategy
Business
Strategy34

Transformation 2026

Financial Strategy
Medium term Management Plan Basic Policies
We are conducting financial management aimed at maximizing corporate value, and have set ROE over 10% as a KPI.
Specifically, we are focused on three key priorities: Implementing initiatives with an awareness of capital costs, maintaining
financial soundness and thoroughly streamlining assets, and appropriately and strategically allocating the cash generated fromthese initiatives and business activities to investments and shareholder returns.
We are strongly aware that the success or failure of business enhancement strategies greatly affects corporate value, and we
aim to realize strong and reliable financial management.
Profitability and capital efficiency

Growth potential

ROE
over 10%Growth investments
18.0 billion yen

1

Key Priority

2
3

Optimize capital
allocation

After ensuring funds necessary for business operations, cash
generated through business activities and asset reviews will beallocated strategically and in a balanced manner to investments
and shareholder returns, leading to further profit growth. We
have introduced a system in which a fixed amount is allocated toshareholder returns, and we will also be more proactive in investingby achieving profit growth.

35

DOE
over 3.5%

TSUZUKI REPORT 2023

Shareholders’equityROE

over

Secure funds for growth throughbalance sheet optimizing

While placing the highest priority on ensuring financial soundness,
we also pursue optimal capital and debt structures. As KPIs, wetarget a shareholders’ equity ratio of 40-50%, and a debt-to-equity
ratio of less than 0.4. At the same time, we will work to generate
funds for growth through the continuous reduction of crossshareholdings and the disposal of unnecessary assets, as well as
through improved asset efficiency, which includes shortening the
cash conversion cycle.

Key Priority

Dividend payout ratio
40%

Manage finances while being
mindful of capital costs

Our cost of equity is conservatively estimated to be around 9%. We
have chosen ROE as an indicator of corporate value creation, andwe manage operations with an awareness of how to sustainably
increase equity spreads. From FY03/24, we have raised theinvestment hurdle rate to 7% and established a Budget Committee
to conduct investments leading to value creation.

Key Priority

Shareholder returns

10%around9%

Shareholders’ equity ratio (%)

40.6

41.5

42.0

FY03/22

FY03/2338.4

FY03/20

FY03/21

FY03/24

FY03/25

FY03/26

Capital allocation
Cash flows fromoperating activities* 10.0 billion yen(FY03/24–FY03/26 )Disposal of non-operating
assetsCash conversion
cycle improvement

Cash on hand 20.8 billion yen(FY03/23)

Shareholder returns

Growth investments

Ensure soundness* Cash flows from operating activities of 10.0 billion yen is calculated net of repaymentsof lease obligations of 3.0 billion yen (cash flows from financing activities)

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Proactive Strategic Investments
We must proactively invest to achieve corporate growth.
We plan to invest 8.0 billion yen over the next three years,
focused in three areas: Investments in technology targeting
R&D, the development of new service products, and theenhanced added value of existing services; investments inhuman resources, arguably our greatest asset, targeting
human resource development, improved working
Category

conditions, and the appointment of high-level personnel;
and investments in internal DX targeting internal IT
infrastructure upgrades and business process innovations.
We also aim to achieve discontinuous business growth witha 10.0 billion yen investment in M&A and other activities toexpand our business domain and acquire new businessfields.

AmountDetails
 &D investment (implementation of advanced technology, advancement ofRdevelopment technology)
Service product development
Enhancing added value of existing services

Technology

Human Resources

8.0
billion yen

Training investment to develop ideal talent portfolio
Recruit external expert talent
ERP system update
Business process transformation and advancement

Internal DX

10.0
billion yen

Strategic
investments

M&A(Aimed at expanding business and technical areas, as well as quickly acquiring
business capabilities to take on the challenge of entering new ICT areas, andestablishing businesses that address social issues)
Capital and business tie-ups

Shareholder Returns
We will continue to proactively return profits to ourshareholders based on a sound balance sheet. From
FY03/24, we raised the dividend payout ratio from 30%
to 40% (based on business activity profits excluding
extraordinary gains and losses), and introduced a dividendon equity (DOE) ratio with a lower limit of 3.5%. This
creates a framework enabling us to first significantly raise
the level of dividends, pay stable dividends even in theevent of a temporary decline in business performance, andappropriately distribute profits to shareholders as dividends
when business performance increases. In FY03/24, we plan
to pay a dividend of 76 yen per share, far exceeding the 61
yen per share provided in FY03/23. Going forward, we will
also consider share buybacks to enable flexible return ofprofits, while comprehensively considering our capital policy.

Dividends per ShareDividend per share (yen)Until FY03/23
Dividend payout ratio of about 30%

Dividend payout ratio (%)

FY03/24~
Raise dividend payout ratio to 40%(Minimum dividend payout ratio of 3.5% DOE)

IPO commemorative dividend of 5 yen per share

40.4

40.0

40.0

FY03/25

FY03/26

34.3
30.2

30.3

30.2

30.3

76

61

55
39

30.9

46

48

FY03/21

FY03/2229

FY03/18

FY03/19

FY03/20

FY03/23

FY03/24*Applies to earnings per share excluding extraordinary gains/losses, etc.

36

Transformation 2026

Human Resources Strategy
To become a Growth Navigator, we must transform our organization and human resources.
Our human resources strategy focuses on activities from two perspectives, organizational development (to strengthen theGroup) and human resources development (to strengthen the individual).
Our medium-term management plan addresses both human resources development and internal environmental improvements.
We will promote transformations enabling employees to work as one team to focus on creating value for customers as value
creators without being restricted to individual roles.

Medium-term management plan

Current Situation
Issuescustomers and respond tovarious demands while
reconfirming market needs andcreating new value from various
perspectives.
We must create new value with

We must create ideas based on

the diverse perspectives,
specializations, andconnections possessed byeach and every employee.

Basic Policy
Three Pillars
1 Develop leadership talent
2 Develop diverse professional talent
3 Build teams that work

autonomously and engage bothinternally and externally

Two Pillars

Prepare internal
environment

customers by breaking downboundaries between sales,
engineering, administration,and other functions while
broadening our perspectives.

Human resources
development

We must stay close to

Key Priorities

1 Create a foundation that enables

employees to take on challenges
on their own

2 Establish an environment that

supports the success ofdiverse talent evelop professional talent and enhanceDorganizational capabilities needed
to execute growth strategy
Enhance ability to meet a wide range ofneeds from both organizational
and individual perspectives
 romote individual initiative by reviewing trainingP
programs to be voluntary and recruitment-based
Recruit highly specialized talentImprove in-house talent mobility

Furtherdevelop and enhance frameworks
established during the previous
medium-term management plan
Foster a culture that enables diverse talent
to take on challenges and play an active roleat their own initiative
Developempathy through a fundamental review ofthe personnel system and a change in awarenessand cultureImprove autonomy by promoting intrinsic motivation

Initiatives Under the Medium-term Management Plan
Human Resources Development
Under the Transformation 2026 medium-term management
plan, we will provide consulting services leading to higher
profitability in existing businesses and orders for mid- anddown-stream solutions, which is our strengths, with theaim of increasing profitability to achieve further businessgrowth. To this end, we have set KPIs and will promotevarious measures targeting the development of leadershiptalent, professional talent, and diversity.
Leadership Talent
Leadership talent refers to human resources who, in addition
to improving profitability, can contribute to corporate culture
reforms, with middle managers in particular playing an importantrole in connecting management and the frontline. In developing
middle managers, we emphasize the ability to lead the creation ofteams that enhance organization-wide psychological safety andare able to work autonomously within and outside the Company,
as well as engage in organization management based on a deep
understanding of the profit structure of the businesses we handle
to provide value to wider society. We also monitor employees
who pass assessments and the number of selected training
measures implemented, in an effort to promote the developmentof the next generation of management. Specifically, this entails
creating opportunities for practical education on the perspective
required for business growth and organizational management
through our proprietary TLF*1 selection and training program.

37

TSUZUKI REPORT 2023

Professional Talent
To realize our long-term vision, in addition to providing value
to individual customers, we aim to provide value to an evengreater number of customers by identifying common needs
across industries and business sectors and developing
services to meet those needs. For this reason, it is essential
we have a diverse range of professional talent including
business architects, designers, and CX/UX personnel who
can create and concretize new services. Going forward,
we will continue to recruit and develop professional talent
while monitoring the sufficiency rates of each. In terms ofDX, which is an important human resources requirement, weare currently focused on the talent development, utilizing aninternal certification system of advanced DX talent and DX
associates who will lead DX efforts on the frontlines. Throughcollaborations with both categories of DX talent, we will
support both customer DX and the growth of Tsuzuki Denki.
Diversity (Female Ratio)
Since we began recruiting women for career-track positions in
2010, our ratio of female managers is still low. Based on theview that the opinions and ideas of a diverse range of people
are necessary to create new value, we have designatedgender as a priority area within D&I promotion P.44 , andwill improve our systems and environment to increase the ratioof women in management positions.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

1. TLF: Next generation management talent development training
2. A dvanced DX talent: In-house certification (requires employees to have an external certification
designated by the Company and a passing score on the DX certification test).
3. DX associate: In-house certification that assesses skills by having employees take the DX
certification test and a written exam.

Vision
Key Measures

Investment Amount

FY03/26 KPIs

Ideal Human Resources and Organization

Leadership talent nhance referral recruitment
EActively recruit womenDevelop diverse talent

900

millionyen aunch in-house university
L(Conduct reskilling program)

Professional talent (in-house certification)
Advanced DX talent*2
DX associates*3

Performance-driven system

Open corporate culture reforms
Introduce external
exchange, second job, andmentoring programs

100

millionyen

10 people
240 people

Diversity (Female Ratio)
Full-time
employees

15% ssign work postsAIntroduce remuneration systemthat motivates young employees
Eliminate job classifications

65 people

TLF*1 participants

Recruitment for business growthLong-term Vision

Career-time
employees

Managers

12%

TsuzukiValue creator

GrowthNavigator
Createnew value (ideas andtechnologies) in-house hift from standing alongsideScustomers to becoming apartner that leads growth reate and deepenC
relationships with customers

5%

Engagement

 ead the Company and ourLcustomers toward value
creationGroup average spouse an open culture thatE
encourages ideas

3.2Espousea culture of selfdirected learning and activity

points rovide a platform whereP
diverse human resources canplay active roles

6.0 points possible

Preparing Our Internal Environment
As value creators, all of our employees aim to create and deepen
relationships with our customers. It is not easy to transform
ourselves and create new value as a Growth Navigator (anorganization that navigates growth and grows together withstakeholders) and build connections with diverse customers,
as our strength has been to respond in detail to customer
needs. With our Purpose as the starting point, it is important tocreate a foundation where diverse human resources can takeon challenges, play an active role, and generate ideas, and tocreate an organization and culture that encourages them to doso. To do so, we will approach both positional and non-positional
wealth to transform ourselves more attractively.
In terms of positional wealth, we will revise ourremuneration system to emphasize performance, and inparticular, to increase the sense of satisfaction among
younger employees, making investments to realize higher
levels of compensation and growth. Regarding non-positional
wealth, we will engage in a variety of tangible (systems) andintangible (corporate culture) efforts. Tangible efforts include
human resources system improvements and the creation ofopportunities to take on challenges through the assignmentof work posts, based on the view that roles nurture people.
Intangible efforts will focus on improving autonomy andsupporting growth through the approaches listed on the right.

 workplace facilitating high psychological safety andA
quality relationships (human connection)
2 Opportunities for individuals and teams to learn, take onchallenges, and engage in dialogue (growth opportunities)
3 Support for a sense of meaning in life and work (fulfillment)
4 A corporate culture that accepts diversity and recognizes
it as a source of value (recognition)
5 Diverse choices and discretion in location, attire, hours,
and time off (freedom)
6 Support for the physical and mental health of employees
and their families (health)1

We consider being happy “together” about our growth withvarious stakeholders an important value shared by all employees
and aim to instill a sense of happiness and high engagement
among our diverse range of employees.

38

Tsuzuki Denki
Human Resources
People Are the Source of All Value
Since our founding, we have valued people and created an environment
in which everyone is free to take on challenges.
This is deeply rooted in our corporate culture and has supported oursustained growth over the past 90 years.
To realize our long-term vision and achieve our medium-term management
plan ahead of the 100th anniversary of our founding, we must ensure ourcorporate culture is even better and in step with the times.
Having reaffirmed that people are the source of value creation, we
will continue to transform our work environments and systems so thatour diverse human resources can work happily and energetically withphysical and mental health.

39

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

40

A Culture of Caring for People Since
our Founding

MESSAGE

Tsuzuki Denki
as a Place to Realize
Individual Dreams
Vice President

Kazunori Yoshii

The Company began with our founding as Tsuzuki Shoten in
1932. In those early days, we had a factory, and there were
athletic competitions, company trips, and many other eventsfor employees and their families. I have heard that we werea family-oriented Company, and that employees were close
to each other as well as management. Our founder’s guiding
precepts are that we should be pioneers who create ourown future, cultivate patience as the foundation of discipline,
and work together in harmony. I think our corporate cultureof valuing people is an expression of working together
in harmony, and our corporate culture of freely taking onchallenges is an expression of being pioneers who create
our own future.
Many of our employees love the Company, enjoy teamingwith colleagues, and take their work very seriously, which I thinkindicates high degrees of loyalty and engagement. We are often
praised as a warm and friendly Company by outsiders.

From Conversion to Health Management,
to the Practice of Human CapitalManagement
Around 2015, all our divisions were strongly focused on
improving business performance. Employees were also
working hard to achieve their goals, and overtime work was

41

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Health Management Strategy Map
Management
Anticipatedissues toripple effects
be resolved
from healthusing healthmanagement
management

Health investment effects
Health investments

Repeatmedicalcheckups:
100%

Lower ratio of
persons at risk
due to dietary
habitsIncrease
number ofpeople withappropriate
health status

Specific healthguidance

Implementation
rate: 45%

Lower ratio of
persons at risk
due to exercise
habitsIncrease
number ofpeople withappropriate
lifestyle habitse-learning,seminarsParticipants:
100%

Lower ratio of
persons at risk
due to alcohol
consumption

Percentage of
people gaining
weight:55% or less

Increase work
engagement

Smart life
challenge

Improved
participation
rate

Lower ratio of
smokers

Reduce riskof physicalcomplaints

Increase job
satisfaction

Organizational
intervention forhigh stress

Enhanced
improvement
and satisfaction
rates

Lower ratio of
persons at risk
due to sleep
habitsLow occurrenceof long working
hours

Reduce ratioof people withhigh stress

Increase
employeesatisfaction

Improved
implementation
rate

Improvecommunication

Increase lifestylesatisfaction

Population
approachWorkstylereformmeasures
High-risk
approachWorkstylereformmeasures
Population
approach

Note: Periodic medical checkups, introduction of health management
system, strengthening of industrial health system, officerenewal, data analysis, and other investments.

Increasesubjective viewof health

Reduceloss frompresenteeism

Reduceabsenteeism

1

2

Health management
outcome

Health management
medium-term KPI

3
Healthmanagement KGICreatively
increaseproductivity

Increase
wellbeing

Contributing to social value

Encourage
high-risk
individuals tohave medical
checkups

Final health-related target indicators~Health management numerical targets~

Tsuzuki Group sustainable growth

Awareness andbehavioral change
indicators

Maintaining and promoting the physical and mental health of employees, theirfamilies, and other stakeholders as the foundation supporting the Tsuzuki Group in
taking on challenges

Health investments related to various effects*

Employees receiving regular medical checkups

The four blue boxes indicate numerical targets for executives and employees

100%

Measureimplementation statusindicators

The Health Management Strategy Map organizes health investments and their expected effects, and indicates how each element is connected.
Decisions are made based on discussions by management and the map is used to implement the health management PDCA cycle.

becoming quite frequent. I knew that if these conditions
continued, the vitality of our employees would gradually fade,a situation I felt we needed to avoid.
It was at this time that I came across the concept ofhealth management, with the concept of workstyle reforms
having the biggest impact on my thinking. By focusing on
employee health, we can change the way employees work.
In changing the way employees work, efficiency improves,which in turn reduces employee stress. When employees
are stress-free, they are more energetic and willing to takeon new challenges. From this perspective, similar to capital
investments or investments in R&D, we decided to invest
in health management to improve business performance,
which we have been promoting since 2017.
Initially, these efforts were not always successful. In the
beginning, there was a sense that people did not want tobe repeatedly told to get medical checkups, but over time,
we have been able to instill the idea that the objective is totransform work and improve the workplace environment
so that people can work with health and vigor. Major officerenovations are part of this effort. Employees are now
proactively participating in and rapidly advancing various
projects on their own.
Of course, as health management is an investment, wemust be conscious of the investment effect. Up to now, wehave been creating an environment where individuals canwork in health and without stress by building organizations andsystems that increase efficiency. Going forward, we will further

invest in people and practice human capital management tocreate our story of corporate and social value creation.

Toward Human Resources and an
Organization that Create ValueFor Tsuzuki Denki to create new value, we need to increase
diversity. It is clear from experience that an organization
with people espousing different values and ways of thinking
is more vibrant than one solidly composed of like-mindedpeople. While we recognize that there are still many issues
to be addressed with regard to the active participation of
women, it is important to establish systems enabling womenand seniors to play active roles, creating an environment inwhich everyone can actively contribute.
In terms of making the most of diversity, it is also
important to develop people who excel in a particular areaor who are sharp and make the organization a place where
people can flourish. Increasing the psychological safety of
our organization will lead to a climate in which everyone canfreely take on challenges.
Every year, I tell new employees, “Please make Tsuzuki
Denki a place to pursue your dreams. We will do our utmost
to support you, so please make every effort to realize yourown dreams.” The realization of individual dreams leads
to the growth of the Company. We will continue to makea transformation to realize an environment in which each
employee can thrive and play an active role.

42Diversity & Inclusion

Becoming a Company Where Diverse
Value Creators Can Play Active Roles

Shifting Focus to Value Creation throughD&I Promotion

To realize our Purpose, we are working to develop humanresources and create an environment that embodies ourvalues, the 7 Actions. As a basic approach to achieving ourlong-term vision, we have indicated that our organization andhuman resources will become value creators and focus on
creating value for our customers as a single team.
Accordingly, to promote D&I within the Company,
we established a vision of our ideal state in 10 years: A
Company where diverse value creators actively engage inwork aligned with the three core activities set forth in our
long-term vision.
We are promoting D&I to achieve the following two
objectives.

Although FY03/24 marks our 92nd year in business, we did
not begin recruiting female career-track employees until
2010. In 2016, we formulated a general employer action planand began efforts to retain and promote female employees.
At the same time, we have also been promoting workstylereforms and health management.
Efforts made up to now are now bearing fruit; wehave created an environment in which employees canappropriately choose the workplace and style to work
productively. At the same time, there is still room for growthin terms of creating an environment, developing humanresources, and cultivating a culture that recognizes thediversity of human existence itself in terms of gender,
generation, career, and the absence or presence of disabilities,
while fostering diverse values, including ways of seeing andfeeling. In promoting D&I, management is targeting diversity
in terms of values, human existence, and workstyles.

 stablish and develop an environment that creates diverseEvalue creators
2 Cultivate a corporate culture in which diverse value creators
can take on challenges and continue to thrive1

To become a Company where diverse value creators
can play active roles, it is important to link the developmentof systems and other tangible efforts with intangibles, suchas the cultivation of corporate culture. To achieve these two
objectives, we have established the following framework for
promotion.
Management

Proactive
investment in
human capital
Systems
development(tangible)

Communicationfrom and dialogues
with management

Support for diverse
human resourcesin taking onchallenges andplaying active roles

Culturecultivation(intangible)
Creation ofopportunities toverbalize diversity

Frontlines

43

TSUZUKI REPORT 2023

Perspective

Summary

ExampleDiversity ofvaluesDeep diversity in individual
perspectives, ways of thinking,value and standards, etc.

Generation, belief, interest,
experience, expertise,position

Diversityof human
existence

Respect diversity without
regard to results or outcomes

Gender, age, nationality,
sexual orientation, disabled
or notDiversity inworkstyles

Diversity in working hours,
Caregiving, seniors, childbirth
employment status, and scope and childcare, non-regular
employment, etc.
of work

Source: Diversity Management, a textbook used in “Making the Most of Diverse Human
Resources—Introduction to Diversity Management,” a remote learning course
conducted by SANNO University.

Based on this thinking, we analyzed our situationand determined that the timing is right to shift the focusof activities from enhancing the diversity of work styles,
to respecting each other's diversity of values and humanexistence, linking them to the source of value creation, andwe are developing measures to this end.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Three Strategic Frameworks Approach1
D&I Concept:
Karabari(Colorful Value)

2
Setting D&I priorities
in five categories

3
5 steps of D&I
behavioral
transformation

To increase the speed of penetration both internally andexternally, from FY03/24, we are defining our concept of
D&I promotion as “Colorful Value” (nicknamed “Karabari”).
Starting with employee ideas generated during D&I
training, we created a logo and concept that expresses
the colorful blossoming of value by superimposing sevencolors, representing the 7 Actions constituting our values,
on our logo.
The Karabari Project provides opportunities
to verbalize diversity through voluntary employee
participation. In light of employee needs, we utilize theseideas and develop systems and environments that
support a diverse array of human resources in taking onchallenges and achieving success.

In promoting D&I, it is important to understand thediversity of values, human existence, and workstyles, andto take an approach that channels them into a source ofvalue creation. In promoting D&I, we have narrowed our
focus to five priority areas: Gender, generation, career,cross-border, and para (disabilities, etc.).
We will deepen the understanding of diversity ineach of these areas and foster a culture that leads tovalue creation. Further, we will link business and humanresources strategies and achieve the targeted ratio of
employees with diverse attributes with the aim of realizing
business growth.

7 Actions

Face

Build

Enjoy

Connect

SupportGender

Challenge

Persevere

Generation

Cross-border

Career

Para

5
4
3
2
STEP 1

ActionWe organized D&I behavioral transformation into afive-step cycle and defined behaviors and conditions
for employee behavioral changes aimed at fostering
diverse value creators. In promoting D&I, we strategically
implement measures according to these five steps.
Step 5: Action is specifically defined in accordancewith the three core activities of our long-term vision(creating new value, building connections with diverse
customers, and continuing to lead growth).

Empathy

Acceptance

UnderstandingNo
understanding

Initiative results (FY03/23)
1 Held training and workshops

Held six types of training and workshop event 12 times during the year, with a
total of 242 employees (18.1% of all employees) in attendance.
2 Recommended D&I items in target management

Since 2H FY03/23, recommendations have been provided with specific examples
for the setting of D&I items in the target management (performance evaluation)system. This has resulted in the setting of 260 D&I items in total (116 for generalemployees, and 94 for management).
3 Distributed a maternity and childcare leave guideWe distribute a guide outlining how Tsuzuki Denki can assist employees in
returning to work with peace of mind after childbirth or childcare, and provide
guidance as needed.

On July 12, 2023, we were certified
by the Ministry of Health, Labor andWelfare as a 2-star Eruboshi company.

44

Workstyle and Workplace Reforms

Workstyle and Workplace Changes(Shift to Online and Telework)
Since the introduction of a telework system in 2016, we have
implemented various measures to promote its use. Further,as the external environment surrounding the Company andwork values have changed at an accelerated pace since2020 due to the pandemic, new workstyles have become
widespread. In line with the digital shift, work can now
be performed anywhere, anytime, as long as an internet
connection is available.
An increasing number of people are choosing home as theirpreferred workplace, and increased frequency of working
from home is bringing about significant changes in both
work and life. To keep pace with the changing times, Tsuzuki
Denki is establishing an environment that flexibly embraces
diverse workstyles and the transition to DX, as well as the
new ways of working brought about by these changes.
Specifically, through the development of online (4thplace) and other work environments, employees can choose
among home (1st place), office (2nd place), or mobile work
office (3rd place) in a hybrid manner depending on the day’swork. To this end, we are encouraging employees to shift to
new workstyles through revisions to our telework system andthe elimination of mobile work office (external service) time
restrictions.
1st place

Realizing Decent Work(Work That Is Fulfilling and Humane)
For Tsuzuki Denki, our ideal workstyles and workplaces
involve the realization of decent work, as stated in
Sustainable Development Goals (SDGs) (4) Quality
education, and (8) Decent work and economic growth.
We hope to improve employee satisfaction andperformance by creating a freer, higher quality environment
in which employees can work with a sense of well-being,both mentally and physically. We are rapidly implementing
various initiatives to promote employee autonomy, creativity,and productivity.

1 Promoting employee autonomyIndividual employees are at their own discretion,
respected, and are able to work freely and express theirindividuality and abilities in their own way
Individual employees are able to choose their own
workstyle out of respect for diversity (gender, age, mind
and body, nationality, lifestyle, etc.)
Individual employees are encouraged to think and act on
their own initiative to continue growing
2 Encouraging employee creativity

 e aim to energize the organization, ensureW
psychological safety, and promote open communication
 e foster flexible and innovative ideas and values, andW
enhance competitiveness4th placeHome

OnlineChoosing one’s own workstyle basedon work details.

Office

2nd place

TSUZUKI REPORT 2023

 e encourage the taking on of challenges to exploit
W
opportunities
3 Encouraging employee productivity

 e engage in work efficiently and increase productivityW(fewer manhours and inputs, more results and output)

From going to the officeaimlessly, to going to the office
for a specific purpose.

45

Defining Ideal Workstyles and Workplaces

Mobile work
office

3rd place e ensure stress is at an appropriate level (stretch zone)
W(neither stress zone nor comfort zone)
 e are environmentally friendly, enabling employees toWcontinue working comfortably and with peace of mind

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tokyo Office Renovation

Taking on the Challenge of Co-creation
and Innovation
Tsuzuki Denki’s new Tokyo Office, completed in August
2021, is positioned as a place for supporting and realizing
new employee workstyles with the aim of becoming an
innovation service provider that supports DX and enhances
the competitiveness of our customers.
Management expressed its intention to emphasize
creativity and the ability to take on challenges, the ability totake action, teamwork, and people skills as areas in which it
considers important to maintain awareness and take action,leaving the realization of these goals to younger employees
who will play active roles over the next 10 years.
We asked mostly younger employees about the kind of
office environment they prefer, with responses including “aspace that enhances mutual awareness and inspiration,” “anenvironment that fosters an open and flat mindset,” and “aplace that reaffirms relationships of trust while maintaining a
sense of distance” becoming the pillar of renovation plans.

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Introducing Free-addressing, Paperless
Offices, and Other New Workstyles
Unbound by the Past
In the new office, we eliminated two floors and made threechanges. First, the number of seats was reduced from 1,464
to 570, a reduction of 61%, as all employees switched fromassigned seating to free-addressing. Second, we reduced
the number of private offices and meeting rooms by about
57%, from 37 to 16, by introducing ABW* and establishingnew co-creation spaces with inward-facing offices forinternal operations. Third, we reduced the number of cabinet
tiers approximately 76%, from 2,882 to 692, by introducing
an electronic approval system and promoting zero paperuse. The thorough implementation of initiatives unbound by
the past has facilitated the creation of an office that facilitatesautonomous workstyles.
*ABW: Activity-based working. A workstyle enabling employees to freely choose where
and when they work in accordance with the task at hand and their mood.

An Office Where People Can Work
Autonomously and Create “Priceless Satisfaction”
Constituting the Source of New Value Creation
The Tokyo Office, our central office has redefined the purposeof the central office. The pursuit of employee satisfaction is
the wellspring of new value creation, and to realize this, we
decided to increase employee satisfaction by investing in abalance between positional wealth and non-positional wealth,especially since the priceless satisfaction of non-positional
wealth is highly sustainable. We cannot achieve innovationby continuing to work at a static location for a fixed amountof time as we have in the past. With the aim of empowering
employees to autonomously consider and select the spacethat best facilitates the work they are engaged in, weorganized workspaces into six categories: Thinking, creating,discussing, coordinating, proposing, and negotiating.

Introducing a Live Office to Provide
New Value and Insight through DX
Experiences in the Co-creation Area
We opened a co-creation area as a place where visitors
can actually see and touch our DX initiatives and gain
new value and insight. We have two aims: To visualize ourchallenges and creativity within and outside the Company,
and identify issues and further evolve based on reactions to
the experience. In addition, at TSUZUKI Lab., we plan andconcretize new products and services based on elemental
technologies exhibited in the co-creation area. We engage
with customers in a variety of ways, including workshops,
group discussions, and market research.
In the face of an uncertain and opaque future, the big
realizations made in the co-creation area, which create
yohaku (space) to take on challenges, may be the first stepto drastically changing the future.

SODA! Workstyle Concept
The SODA! workstyle concept is the result of a series ofworkshops and discussions among younger employees. In
the new office, actions required for the workstyle concept
were incorporated into the slogan “SODA!” (Japanese for “I
got it!”) corresponding with the Tsuzuki Group 7 Actions forcreating a space where ideas effervesce like bubbles.

46

Health Management

Health Management Promotion
The Group is united in the promotion of health management
aimed at sustainability activity key issue 1, developing
people and teams that are healthy and loved, both
physically and mentally, part of efforts to build a foundation
supporting our endeavors.
Health is the foundation of human capital. A healthy
body and mind are the cornerstones of a steady approachto originality, ingenuity, challenges, and self-realization.
The challenges and self-realization of each individual will
foster an energetic organizational climate and lead to new
systems and a better environment.
We promote activities aimed at ensuring that
individuals, whether they are aware of it or not, choose
actions that are beneficial for their health and workstyle,and are able to maintain them as a habit.

Resolving Health and Workstlye Issues
to Improve Work Engagement throughout the GroupThe medium-term management plan Transformation 2026
sets forth an internal environment development policy as a
key priority in enhancing human capital. We aim to achievea Group-wide average work engagement score of 3.2
points (6.0 points possible).
The management issue we want to resolve throughhealth management is the maintenance and enhancementof the physical and mental health of our employee, theirfamilies, and all other stakeholders.

Based on our health management strategy, we havecompiled and analyzed data annually since 2017 to provide
a fixed point from which to observe changes in health andworkstyles over time. We formulated a health management
strategy map in 2020 and applied the PDCA cycle to thesemeasures, from planning to improvements.
Specific measures take into consideration quantitative
information derived from data analysis, as well as qualitative
information collected during workshops held at each office.
The Health Management Committee identifies health- andworkstyle-related issues in each office throughout theCompany, making efforts to resolve issues and improvecreative productivity.

Health Management Declaration
We established a Health Management Committee to
implement health management measures tailored to theissues and characteristics of each region and Group
company. The Health Management Declaration is a series ofslogans issued by the chairman of the Health Management
Committee (President and CEO) to promote health management.
 e aim for the physical and mental health of allW
employees and their families so that we can continue totake on the challenge of creating new value
 e will enhance job satisfaction and fulfillment (workW
engagement) through a variety of workstyles
 e will revise our working environment and systems toWenhance productivity and creativity

External Evaluations
Tsuzuki Denki has been
selected as a Certified Health& Productivity Management
Outstanding Organization (White
500) by the Ministry of Economy,
Trade and Industry for the sixth
straight year since 2017.

47

TSUZUKI REPORT 2023

Tsuzuki Denki has been certified asa Sports Yell Company by the JapanSports Agency, as well as a Tokyo
Sports Promotion Company by the
Tokyo Metropolitan Government, forthe fourth straight year since 2019.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Human Capital Infographics
Engagement (consolidated) (points)(6.0 points possible)

Ratio of women among full-time employees (%)

3.20

13.3

13.8

FY03/26(Target)FY03/21

FY03/22

14.5

15.0

FY03/23

FY03/26(Target)

2.96

2.91

FY03/22

FY03/23

TLF next generation management talentdevelopment training program participants (people)

Ratio of women among career-time employees (%)

65

10.7

12.1

9.7
8.3
34

35

32

FY03/21

FY03/22

FY03/23

FY03/26(Target)Advanced DX talent (people)

FY03/21

FY03/22

FY03/23

FY03/26(Target)Ratio of women among managers (%)

10

5.0
4

4

FY03/22

FY03/23

FY03/26(Target)DX associate certifications (people)

2.2

1.9

1.5

FY03/21

FY03/22

FY03/23

FY03/26(Target)Male employees utilizing childcare leave (%)

240

147

48

119
22
0
FY03/22

FY03/23

FY03/26(Target)FY03/21

FY03/22

FY03/23(Result)48

Foundation Supporting
Transformation
49

TSUZUKI REPORT 2023

Top Message

Introduction

71Long-term Vision
and Medium-termManagement Plan

8

2

9

3

10 11

4

12

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

13

5

6

1 Kenji Kusaka
4 Kunio Matsui

2 Hideki Wachi 3 Noriyuki Moriyama
5 Tomoko Tsukahara 6 Kazuhisa Oyama

7 Kazunori Yoshii 8 Hidetoshi Takinaka 9 Kazuhiro Shimura
10 Isao Emori 11 Naoshi Ogasawara 12 Toshihiro Murashima
13 Kiyotake Yokohari

Efforts to Increase Long-term Vision and Medium-termManagement Plan EffectivenessWe will increase governance sophistication and strengthen sustainability efforts as the foundation supporting transformations
aimed at enhancing corporate value. Under the medium-term management plan Transformation 2026, we will focus specificallyon Board of Director reforms based on effectiveness evaluations, introduce an executive compensation system that contributes
to enhancing corporate value, deepen dialogues with investors, and improve sustainability through business activities.
We will also promote efficient and transparent business operations by steadily implementing initiatives aimed at raisingcompliance awareness and strengthening risk management, thereby earning the trust of stakeholders.

50Directors

As of June 27, 2023

In appointing and selecting senior management, Tsuzuki Denki’s policy is to nominate and appoint suitable candidates
capable of fulfilling their duties and responsibilities, regardless of gender or nationality, and with due consideration ofindividual personalities and insight.
The following section highlights the thoughts of all 13 directors and Board of Corporate Auditor members with regard to theconcept of transformation.

Isao Emori
Representative Director, President
and CEO

Years inposition

Sharesheld

14

41,088

Kazunori Yoshii
Representative Director, Vice
President

Years inposition

Sharesheld

18

48,413Kazuhisa Oyama
Director
Senior Managing Executive Officer
General Manager of Corporate
Administration Unit

51

TSUZUKI REPORT 2023

Years inposition

Sharesheld

7

11,061

For me, “transformation” is not new, it is atheme that has always been important to me.
The passion to go beyond our current form
and transform into something better is what
drives me. I will continue to make Tsuzuki
Denki a free and open organization where
people can enjoy taking on an increasing
number of challenges and playing active roles.
By freely and enjoyably taking on challenges,
we will transform into a new Tsuzuki Denki that
surpasses our current levels of achievement.

We will transform ourselves into a Company
that supports the taking on of challenges.
Up to now, we have approached challenges
cautiously out of a fear of failure, but rather
than focusing on failure, we will create a
corporate culture that shines a light on
success stories and the people who sowork hard to celebrate challenges. To thisend, we will create an environment thatencourages the taking on of challenges, aswell as systems and an organization that
stimulates communications within and outside
the Company. We believe this will lead to thedevelopment of the next generation of leaders
and the creation of opportunities for diverse
human resources to play active roles.

We will transform ourselves into a company
with stable earnings. The essence of thistransformation lies in our ability to provide
products that are truly valuable to ourcustomers in a recurring revenue format.
To create products that are appealing
to customers, we will conduct thoroughmarketing and develop products with anawareness of costs and returns. Despite
Japan's shrinking population and declining
workforce, the volume of work remains
unchanged. We will become a Company thatcreates yohaku for customers, society andpeople in the future through efforts to makework more efficient using ICT.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Hidetoshi Takinaka
Director
President and CEO, Aso Information System
Co., Ltd.
Senior Managing Director, ASO CORPORATION

OutsideYears inposition

Sharesheld

3

0

Tomoko Tsukahara
Director
Executive Officer, EVP CQO, FUJITSU LIMITED

OutsideYears inposition

Sharesheld

10

Toshihiro Murashima
Director
Representative Director, President and CEO
Attorney-at-law

OutsideYears inposition

Shares
held

6

5,600

Kunio Matsui
Director
Professor, Department of Information andComputer Science,
College of Engineering, Kanazawa Instituteof Technology

OutsideYears inposition

Shares
held

4

1,079

Foundation Supporting
Transformation

Financial andNon-financial Information

After the pandemic, the future is
no longer an extension of the past.
Over its nearly 100-year history
Tsuzuki Denki has established trust,credibility, and numerous technologicalcapabilities.
With this foundation, we are now at astage where we are launching uniquetransformations more closely alignedwith the new era. There is a positive
attitude and an eagerness to take on
new challenges within the Company.
As director, I will continue to inspirewith a bright, energetic, and forwardlooking attitude.

When revising the business portfolio,
we must be mindful of promoting
further transformations toward datadriven management that segments
businesses into growth and matureareas, strengths and challenges,
tangibles and intangibles, to makedecisions based on data. That being
said, the portfolio contains growth andnon-growth businesses. Considering
how employee motivation andengagement can be enhanced is also
an important role of management.

The IT industry to which we belong isundergoing a wave of unprecedented
major changes referred to as DX. Thesechanges are such that past common
sense and experience do not apply.
Amid such changes, there is a possibility
management will not understand andreject the new opinions of younger
employees, thereby missing theopportunity for transformation. I believe
one of my roles is to communicate thissituation to management and to convey
the importance of continuing to learn
and experience new things.

In my research area, there is a methodreferred to as “inclusive design” thatinvolves actual users in the design
process. Incorporating inclusive
design into software development andcreating products that are truly userfriendly is what differentiates us fromour competitors. Our strength lies in a
corporate culture of carefully handlingeach individual project. I look forward toleveraging this strength and transforming
ourselves into a Company that leads theindustry with inclusive designs.

52

Noriyuki Moriyama
Director
Chairman, Shinkokai medical corporation
Director, Medical Corporation Midtown
Medicine Co., Ltd.
Director, HIMEDIC, Inc.

OutsideYears inposition

Shares
held

3

3,100

Hideki Wachi
Director
Nihon Sogo Service Co., Ltd. Outside
Corporate Auditor

OutsideYears inposition

Sharesheld

10

Naoshi Ogasawara
Director
Representative, President and CEO, Avantia
General Partnership Certified Public Accountant
Auditor, National Institution for Academic
Degrees and Quality Enhancement of Higher
Education
External Director, Topre Corporation
Outside Audit & Supervisory Board Member,
Nikkiso Co., Ltd.

OutsideYears inposition

Sharesheld

10Kazuhiro Shimura
Standing Corporate Auditor

53

TSUZUKI REPORT 2023

Years inposition

Sharesheld

427,882We are a Company in the IT industry, where
technological progress is rapid.
However, pursuing technology alone canlead to products and services that are notuser-friendly. There are many productsin the world that are unnecessary,complicated, and inconvenient for users,or are simply the result of complacency
on the part of the engineers. I believetransformation does not mean change, butchange for the better in accordance withthe trends and values of the times. Tsuzuki
Denki must never forget this.

The IT industry is one of rapid change,
and it exists to realize transformations,both large and small, from yesterday totoday.In an industry where major changes
occur that can change the times, it isnecessary to remain attuned to changes
in society and what society demands. It is
important that Tsuzuki Denki increases thenumber of fields in which it has absolutestrength, as this will be the driving force
to achieve major transformations. All
employees must think about how we canachieve absolute strength.

We have created a 90-year tradition by
adapting to changing environments.
Tradition is the result of transformation. I
believe our challenge is to create dominant
products and services with a commanding
market share in niche areas—products andservices only Tsuzuki Denki can provide.
Our voice-related technologies are highly
regarded outside the Company. I thinktransformation means pursuing further
advances in our traditional areas of strength,
creating dominant products and services,and maintaining traditions.

I believe it will be difficult for us todifferentiate ourselves from competitors
unless we take on the challenge oftransforming from traditional problemsolving to problem-extraction type solution
proposals. At the same time, I hear some
say that they are overly conscious ofcompliance and rules, making it difficult totake on challenges. The original purposeof rules is to protect employees who takeon challenges. As a corporate auditor, I will
work to establish compliance in the true
sense of the word and build an environment
in which it is easy to take on challenges.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Kiyotake Yokohari
AuditorSenior Partner, Trident Lawyer Corporation
Attorney
Certified Public Accountant
Partner, VOVAN & ASSOCIES (Bangkok
Law Office)OutsideYears inposition

Sharesheld

4

0Kenji Kusaka
AuditorOutsideYears inposition

Sharesheld

10Foundation Supporting
Transformation

Financial andNon-financial Information

Companies that cling to old successes
and fail to transform will eventually decline.
Tsuzuki Denki must also create new
businesses without being held back by past
successes. My sense is that only about 10%of new businesses succeed. For this reason,
we need processes that allow for failure. We
must also change internal processes so thatideas generated can be implemented quickly.
I will continue to make recommendations on
the creation of mechanisms and systems
aimed at transformation.

The thinking and actions of individuals inorganizations can become constrainedby the logic of the organization. Further,as an organization grows, organizational
goals become the top priority, andindividuals may be sacrificed. Tsuzuki
Denki is in a period of transformation, withnew ideas and technologies arising fromthe free thinking of individuals. Individuals
must have their own ideas, express theirhonest opinions, and take action. The
organization must respect the opinions
of individuals. I hope Tsuzuki Denkitransforms into this type of organization.

Director and Corporate Auditor Skills Matrix
Corporate
management

ICT industry
knowledge

Innovation and Finance andtransformation accounting

Legal affairs
Riskmanagement

Human
resources
management

ESG andacademic
knowledge

Isao Emori
Kazunori Yoshii
Kazuhisa Oyama
Hidetoshi Takinaka
Tomoko Tsukahara
Toshihiro Murashima
Kunio Matsui
Noriyuki Moriyama
Hideki Wachi
Naoshi Ogasawara
Kazuhiro Shimura
Kiyotake Yokohari
Kenji Kusaka

54

Corporate Governance
Basic Approach
As Tsuzuki Denki’s management philosophy is based on our
purpose of “bringing to society ‘yohaku’ filled with possibilities,
through people, insight, and technology, together,” we aim to fulfill
our social responsibility as a Company and continuously enhance
corporate value through efficient and transparent corporate
management.

Tsuzuki Denki is a company with a Board of Corporate Auditors.
The Board of Directors consists of at least one-third independent
outside directors and a majority of outside directors, including
independent outside directors. A Management Committee has
also been established, consisting of representative directors, senior
managing executive officers, managing executive officers, and astanding corporate auditor to expand the delegation of authority to
executive officers and speed up the management process.

Corporate Governance Structure

General Meeting of Shareholders
Appoints/Dismisses

Nomination andCompensation
Committee

Consults/
Reports

Accounting
auditsBoard ofDirectors

Deliberates/Reports

Appoints/
Dismisses

Appoints/Dismisses

Independent
AuditorAppoints/Dismisses/Monitors

Coordinates

Coordinates

Corporate Auditors/
Board of Corporate
Auditors

Coordinates

Risk Management System

Risk and Compliance
Committee

Representative
Director, President
and CEO

Risk and Compliance
Promotion Committee

Management
Committee

Directs

Reports

Reports

Auditing Office

AuditsAudits byauditors

Executive Officer
Business Divisions and Group Companies

Main Meeting Bodies

55

Meeting

Composition

Meetings in
FY03/23

Board
of Directors

 0 directors (of whom seven are outside directors)1
Three corporate auditors (of whom two are outside
corporate auditors)

13 times esolved matters stipulated by laws, regulations, and the Articles ofR
Incorporation, as well as other important management issues
Reported on business performance progress and the state of Company
assetsBoard ofCorporate
Auditors hree corporate auditors (of whom two are outsideT
corporate auditors)

13 times

 etermined audit policies and examined state of business andD
Company assets

Nomination andCompensation
Committee

 our Nomination and Compensation CommitteeF
members (of whom three are outside directors)

5 times iscussed and considered matters relating to the selection of directorDcandidates and director compensation policies and systems, etc.

Management
Committee

 ix members, including Representative Directors,
S
Senior Managing Executive Officers and Managing
Executive Officers
One Standing Corporate Auditor

27 times s an advisory body to the Representative Director, President andACEO, deliberated and made resolutions on important matters related to
the Group's overall management policies, strategies, and businessexecution based on basic policies determined by the Board of Directors
Advised the Board of Directors as necessary

OutsideDirectors
Meeting even outside directors
STwo outside corporate auditors
One Representative Director and Vice President(Secretariat)

3 times xchanged opinions with outside directors and outside corporateE
auditors
Business strategies
ThemesLong-term vision, medium-term management plans, etc.

TSUZUKI REPORT 2023

Activities

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Efforts to Strengthen Corporate Governance
FY03/16

Reorganized the Compensation Committee into the Nomination and Compensation Committee

FY03/18

Introduced a performance-linked stock compensation plan

FY03/21

Commenced evaluations of Board of Directors effectiveness

FY03/22

 ubstantially revised our basic policy on corporate governance in accordance with Corporate Governance CodeS
revisions

FY03/23 hanged to a Board of Directors comprising more than one-third independent outside directors, appointed anCindependent director as chairman of the Nomination and Compensation Committee

FY03/24

 artially revised stock compensation plan, changing to a system more clearly linking director compensation to thePvalue of Company shares)

Changes in Board of
Directors Compositions

Men /

Women

Outside director

Independent
outside director

8 members

3 members

1 member

7 members

3 members

2 members

7 members

3 members

2 members

3 members

3 members

4 members

3 members

3 members

4 members

Tsuzuki directors

Ratio ofindependent
directors

8%

FY03/2017%

FY03/2117%

FY03/2240%

FY03/2340%

FY03/24

Board of Directors Activities
Meetings

Main items
discussed

Main items
reported

13 times
Medium-term management plan
Executive appointment
Director compensation system
Tsuzuki Denki’s approach to the Corporate
Governance CodeBoard of Directors effectiveness evaluations
Human resources strategy
Project management initiatives
IR activity reports
Business risk countermeasures

Nomination and Compensation
Committee Activities
5 times

Meetings

Members

NaoshiOgasawara

ChairmanNaoshiOgasawara

Independent outside director

MemberToshihiro
Murashima

Outside director

MemberKunio Matsui

Independent outside director

MemberIsao Emori

Representative Director,
President and CEO suzuki Denki and affiliate company executiveT
appointment
R evisions to director and executive officer systems

56

Effectiveness Evaluations
With the aim of improving the Company’s Board of Directors function, we have analyzed and evaluated Board effectivenessevery year since 2020 and disclosed summaries of the results.

Board of Directors Effectiveness Evaluation in FY03/23
Scope of evaluation

All directors and corporate auditors

Process

1

2

Questionnaire submitted
to evaluation targets

 9 questions evaluated on a five-point
2
scaleOutside consultants
provide reports omments and requests are entered forCeach item

 ompares and analyzes reasons forC
differences between Tsuzuki director
and outside director, director andcorporate auditor, and previous andlatest responses

 esponses sent directly to externalR
consultants to ensure anonymityIdentifies issues aimed at increasing
effectiveness

3

Reported to Board of
Directors for discussionAnalysis
results and issues are reportedby the Board of Directors Secretariat
Responses to issues are discussed

Main evaluation items

1

Board of Directors
composition andmanagement

23Management
and businessstrategies

Business
ethics and risk
management

4

Performancemonitoring andmanagement
team evaluations

5
Dialogues withshareholders

Evaluation results summary
Tsuzuki Denki has confirmed that its Board of Directors operates effectively in an atmosphere that encourages frank, free, and vigorous
discussions and ensures effectiveness.

Future initiatives
We are making efforts to resolve the following issues identified in evaluation results with the aim of increasing Board of Directors efficacy.

57

1

Board of Directors
operational revisions

2

Business portfolio optimization
and appropriate allocation ofmanagement resources3

Addressing issues
surrounding sustainability

4Group governanceenhancements

5

Formulation of successor
candidate development plans
for CEO, etc.

6

Dialogues with shareholders

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Executive Remunerations

Cross-shareholdings

Remuneration for directors is determined within the total
amount of remuneration resolved at the General Meetingof Shareholders, and consists of basic remuneration,
performance-linked remuneration, and stock-based
remuneration.
The Company established Nomination andCompensation Committee to ensure transparency andobjectivity in determining director compensation.
The Nomination and Compensation Committee consistsof at least three members (one of whom is the chairman)
appointed from among directors and corporate auditors
based on a resolution by the Board of Directors, and is
responsible for making decisions regarding director andexecutive officer compensation.
Remuneration for corporate auditors is determined within
the scope of remuneration resolved at the General Meetingof Shareholders.

Tsuzuki Denki’s policy is to acquire and hold shares
only when the purpose of said holdings is clear andproactively significant.
The Board of Directors continuously confirms thatthe business benefits of cross-shareholdings, such asreceiving project orders and partnering in transactions
with companies in which it has an interest, arecommensurate with the cost of capital, while conducting
quantitative and qualitative evaluations that include
the history of the investment, the relationship with thecompany in question, and the prospects for futuretransactions, and dispose of holdings deemed unsuitable
for these purposes.
A total of 14 holdings were reduced in FY03/23, someof which were sold for 741 million yen.

Basicremuneration
calculation
methodBasic remuneration is determined according to
officer position and responsibilities in line withbasic remuneration standards.

Performancelinked
remuneration
calculation
methodCalculated based on the degree of achievementof consolidated operating income and nonconsolidated operating income targets for
directors, excluding outside directors.

Shareholdings
80

73
57
43
30

Stock-based remuneration calculation method

Until
FY03/23

FY03/24

At certain times each year, the Company grants
points to directors, excluding outside directors, inaccordance with stock-grant rules based on theamount of basic remuneration and the degree ofachievement of performance targets for each fiscal
year, and delivers the number of Company sharesequivalent to the accumulated number of points
when they leave office.
Revised the method for granting points in proportion
to the amount of basic remuneration for eachposition based on stock-grant rules aimed at sharing
interests with shareholders and further raisingawareness of shareholder-oriented management.

FY03/20

FY03/21

FY03/22

FY03/23

Total Amount on Balance Sheet(Millions of yen)
FY03/19

FY03/20

FY03/21

FY03/22

FY03/23

3,358

2,852

3,738

3,333

2,726

(Totals include listed and unlisted companies)

Protecting Minority Shareholders

Total Amount of Director andCorporate Auditor Remuneration
Officerclassification

FY03/19

Total remuneration by type (Millions of yen)
Total
Applicableremuneration
Performanceofficers
Stock-based(MillionsBasiclinked(People)remunerationof yen)remuneration
remuneration

Tsuzukidirectors

7

278

142

98

37

Outsidedirectors

7

49

49

—

—

Tsuzukicorporate
auditors

1

22

22

—

—

Outsidecorporate
auditors

3

11

11

—

—

Tsuzuki Denki is an affiliate of ASO CORPORATION, whichholds 24.14% of voting rights (as of end-FY03/23). Fujitsu
Limited is a major shareholder, with 12.88% of voting
rights (as of end-FY03/23). We collaborate with thesetwo companies, leveraging their strengths to enhance
Tsuzuki Denki corporate value. Although a director fromeach of these two companies concurrently serves as
Tsuzuki Denki outside directors, we manage our businessindependently based on our own judgement. Further,when transacting with ASO CORPORATION and Fujitsu
Limited, we make appropriate decisions in the samemanner as when transacting with companies with which
we have no capital relationship, thus ensuring the interestsof minority shareholders are protected.

58

Compliance
Basic Approach

SystemThe TSUZUKI Group Code of Conduct was established as afoundation for realizing the “contribution and value provision
to society” expressed in our management principle, as wellas to instill an awareness of compliance through the pledge
to observe the 3 Conduct (Respect, Comply, Will not do).

We established the Risk and Compliance Committee andits advisory body, the Risk and Compliance Promotion
Committee, to ensure the Company's social credibility and tocontribute to its further development.
The Risk and Compliance Committee is chaired by the
Representative Director and President, with the Risk andCompliance Promotion Committee nominated by the Risk
and Compliance Committee chairman from among directors
and executive officers.

Efforts to Spread and Enhance Awareness of Compliance
Complianceeducation and training

Complianceawareness surveys

Compliancevoluntary inspections

We provide compliance training through e-learning for all of directors, employees, and others working for Tsuzuki Denki.
Additionally, we support the implementation of compliance training at Group companies by providing e-learning environments andcompliance training content.
Tsuzuki Denki conducts compliance awareness surveys targeting all Group employees.
Survey results are provided as feedback internally and to all Group companies, and in light of results and free opinions received,
compliance and other issues are identified, and specific measures are formulated and implemented to address and resolve them.
The Group conducts voluntary compliance inspections through e-learning for all officers, employees, and others working for
Tsuzuki Denki.
We issue internal compliance newsletters to raise awareness and educate employees about compliance, providing details on the

Compliance newsletters

implementation status of compliance activities and explanations of compliance issues that were not well understood in compliancetraining sessions.

Information Security
In addition to people, goods, and money, information
has become an important component of modern-day
corporate activities. While the use of information helps
maintain and improve corporate competitiveness,
information leaks, unauthorized access, and various otherthreats are on the rise, posing an ever-increasing risk ofsignificant impacts on corporate activities. Accordingly,
Tsuzuki Denki maintains and manages an information risk
management system and has established information
security standards to ensure information is properly
managed and used proactively and safely.

Personal Information Protection andInformation Security Measures
To comply with laws, national guidelines, and otherregulations regarding the protection of individual andemployee personal information handled in all businessactivities, we established and appropriately implement a
personal information protection management system inaccordance with JISQ15001.
To ensure information security, we formulated the Tsuzuki

59

TSUZUKI REPORT 2023

Information Security Policy and established and appropriately
operate the Tsuzuki Information Security System (TISS).
Our Tokyo Office has also acquired ISO/IEC27001(JISQ27001) certification for the development, construction,
operation, and maintenance of electronic contract services
and groupware systems.

Employee Education
Personal information protection and information security
education is provided at least once a year for all employees,
including directors, with additional training conducted
twice a year for new employees, once when they join the
Company, and once when they are assigned to a specificdepartment. We also conduct targeted e-mail attack drills
twice a year to strengthen our cyber security measures inlight of recent circumstances. Further, we designate thefirst of every month as Information Security (IS) Day, with all
employees conducting monthly departmental inspectionsof compliance items. Internal audits are conducted once a
year for all departments to determine and confirm whether
appropriate operations are being carried out.

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Responding to System Development Risks
and Enhancing Project Quality, Status of
Dialogues with Shareholders
In the event the Tsuzuki Group is unable to execute a
project within the expected scope, budget, delivery date,or quality due to various unexpected events, such as
inadequate determination of specifications, problems withthe project structure, or insufficient technical verification,
Group business results may be affected by increased costs
associated with additional measures.
To address these risks and improve overall project
quality, we have established a project support systemcentered on the Assurance Office, which conducts
monitoring and inspections.
These activities result in the PDCA cycle shown below.
First, the entire project management process is managed
using our proprietary quality framework Tsuzuki Project

Plan

Quality Framework
Project management quality

Management System (TPMS), a standard process structure
for system construction. For design and security quality,
which are particularly important, standard processes andmanagement items have been established for each.
In project monitoring activities, based on these quality
frameworks, review meetings are held at each stage ofbusiness negotiations, estimates, and ongoing processes
to clarify risks, consider countermeasures, and ensure
thorough quality control in both development process
management and deliverables.
We also strive to further improve quality by consolidating,sharing, and evaluating performance information collectedduring projects, then make improvements to our quality
framework and project monitoring activities, as needed.

Do

Project monitoring activities

TPMS

Executive officers, Assurance Office

FORCED esign quality
System development standards (design to test specifications)S ecurity quality Security directives
Security assurance process standards (application of security development guides,
vulnerability assessments, etc.)

Business negotiations
review board

Application

Projects

Estimate
review board

Project meetings

WatchesPlanning, construction, and maintenance of information systems and telecommunications network systems
Collects information

ActionImprovements
Q uality framework TPMS improvements: TPMS2009

TPMS2022

Major improvements in 2009, 2015, and 2022

Project monitoring activities
Revise, as necessary, monitoring checklists used in reviewing business negotiations andestimates, and at project meetings

Project evaluation

CheckQ uality, cost, and delivery (QCD) evaluations of ongoing projects
Post-cutover reviews
Failure response analyses during maintenance and operations phase

Dialogues with Shareholders
Tsuzuki Denki proactively conducts dialogues withshareholders aimed at sustainable growth and enhancing
corporate value over the medium- to long-term.
Details of dialogues held with shareholders in FY03/23
Main
respondents
Shareholder
overview

Main topics andshareholder
concerns

are shown below. Going forward, we will maintain thisproactive approach to expand opportunities for dialogues
and facilitate an even deeper understanding of ourCompany.

President, Managing Executive Officer ofManagement Planning (IR), and IR Manager

Frequency
IR activity reports are submitted to the Board of Directors
annually, with reports on other topics submitted as
appropriate

Investment style Domestic active, overseas active
Interviewers Fund managers, analysts
Main topics
Business model (discussions aimed at facilitating an
understanding of our business) and growth drivers
Market trends, current performance trends, and full-year
forecasts
Medium-term outlook and initiatives
Concerns
Market evaluation, execution progress of measures
Capital policy, M&A and other growth investments, andshareholder returns

FeedbackReported content
Market capitalization, trading volume, and shareholder
composition trends, opinions received during one-on-one
meetings with investors and measures taken in response,
capital market trends and specific activities, etc.

Incorporated
items

Implementation and disclosure of management practices
focused on cost of capital and return on capital

60

Sustainability
Activity Themes Under the Medium-termManagement Plan

Basic Approach
Since our founding, we have engaged in social contributions
through our business, but in light of recent and substantialchanges in society and the environment, we are focusing
efforts on sustainability based on the idea that it is more
important than ever to strike a balance between contributing
to a sustainable and prosperous society and achieving
sustainable growth.
Through these activities, we will contribute to theachievement of the Sustainable Development Goals (SDGs)
adopted by the United Nations.

1

Develop an environment that
nurtures people

P.37

2

Development of an environmentthat fosters insights/technology

P.25-32

3

Promote responsible corporate
behavior

P.55-60

Basic Policy

Promotion Structure

In embodying our Purpose, we will contribute to therealization of a sustainable society.

Activities are conducted under the leadership of two
committees: the Sustainability Management Committee,
led by senior management, who engage in managementthat considers sustainability, and the Sustainability
Promotion Committee, which seeks collaborative solutions
to issues through cooperation on various initiatives.
The Board of Directors receives reports on
discussions and resolutions made by the Management
Committee and the Sustainability Management
Committee, and discusses and supervises response
policies and action plans. In FY03/23, discussed theimportance of strengthening human capital and reducing
adverse environmental impacts.

1

We will develop an environment that fosters people, insights,
and technologies in an effort to provide value to society

2

We will create “yohaku” filled with possibilities through theresolution of social issues

3

We will contribute to society alongside stakeholders
through responsible corporate behavior

Three Key Sustainability Issues and Efforts Targeting Corporate Growth
We have identified three key issues (materiality) byintegrating issues facing society and Tsuzuki Denki. We
aim to be a company that contributes to the realization ofa sustainable and prosperous society, while continuously
increasing corporate value through initiatives aimed atinternal growth and the resolution of important issues.

Develop people and teams that are
healthy and loved, both physicallyand mentally

Contribute to harmonious
coexistence by capturing changes
in people, society, and theglobal environment

Provide reliable and innovative
services through information andcommunication technology

Build a foundation supporting
challenges

Reduce environmental impact

Provide safe and secure services

Corporate
governanceSupport the activities of diverse
human resources

Promote communication withstakeholders

Take on the challenge of resolvingsocial issues

Risk management

Growth Initiatives

Compliance

Information security

61

TSUZUKI REPORT 2023

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

Response to Climate Change
working to reduce our environmental impact. In May 2022,
we endorsed the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations.

One of our key issues (materiality) is to contribute toharmonious coexistence by capturing changes in people,
society, and the global environment, and to this end, we areGreenhouse Gas Emissions and Targets (Unit: t-Co2)
Scope 1+2 emissions

Note: Figures are the combined values of Tsuzuki Denki and TSUZUKI EMBEDDED SOLUTIONS CO., LTD.

Scope category

FY03/14

FY03/23

Scope1183.84

68.23

Scope2929.55650.81

Scope1+2

1113.39719.04

vs. FY03/14—

35.3% reduction

Scope1+2 emissions targets
Scope category

Scope1+2

FY03/26591
46.9% reduction vs. FY03/14

FY03/31

FY03/51

50.0% reduction vs. FY03/14

Net zeroTarget Achievement Efforts

Ongoingmeasures

Reduce company-owned vehicles

Plannedmeasures eplacement of air conditioningR
equipment at some sites
Office renovations and efficiency
enhancements

62

Financial and Non-financial Data
FY03/13

FY03/14

FY03/15

FY03/16

105,619

Financial Data (Millions of yen)
Profit and Loss
Net sales

100,651

110,670

105,339

Gross profit

16,202

17,854

17,16817,483

SG&A expenses

15,256

15,78915,72915,709Operating income
EBITDA*1

945

2,065

1,439

1,773

1,884

3,244

2,589

3,125

446

982

466

717

1,903

Profit (loss) attributable to owners of parent
Cash Flows
Cash flows from operating activities

7,511

4,321

1,833

Cash flows from investing activities

3,820

211

468

586

Free cash flows

11,331

4,109

2,301

1,317

Cash flows from financing activities

6,597

288

787

896

Financial Position
Total assets

64,03670,04869,64968,785

Cash and cash equivalents

16,78413,016

14,661

15,034

Loan balance

13,81914,934

15,13815,120Shareholders' equity

17,586

18,585

18,86819,506

34.37

81.79

38.40

58.40

8

12

10

15

23.3%

14.7%

26.0%

25.7%

16.6%

Per Share Information
Profit (loss) attributable to owners of parent (EPS) (JPY)
Cash dividends (JPY)
Payout ratio
Other Financial Data
Gross profit margin

16.1%

16.1%

16.3%

Operating margin

0.9%

1.9%

1.4%

1.7%

ROE

2.0%

5.3%

2.3%

3.4%

Shareholders' equity ratio
Total return ratio

28.2%

27.1%

30.5%

30.7%

2334.6%

15.1%

28.3%

27.5%

1,829

869

735

330

837

1,085

1,056

1,276

Capital investment
Depreciation and amortization

Non-financial Data
Employees

Workstyles (non-consolidated)

Consolidated employees(People)Non-consolidated
employees (People)
Non-consolidated employees (People)
Men
Women
Men (%)

2,336

2,359

2,408

2,382

87.8

87.4

Women (%)

86.7

2,328

86.2

Attrition rate*2 /Average
hours of overtime*3

Average number of paid
leave days used /Paid leave utilization rate

Attrition rate (%)
Average hours of overtime (hours/month)

Average number of paid leave days used (Days)
Paid leave utilization rate (%)

85.5
30.2

14.6
1,335

1,319

1,319

1,315

FY03/19 FY03/20 FY03/21 FY03/22 FY03/23

1,522

1,510

TSUZUKI REPORT 2023

81.7

80.6

81.7

15.3

15.3

15.5

87.1

16.6

1,295

12.2

12.6

13.3

1,151
1,107
13.8

182

191

203

184

14.5

1.67

2.12

3.60

2.78

1.25

188

FY03/19 FY03/20 FY03/21 FY03/22 FY03/23*1. EBITDA is calculated as operating income + depreciation + amortization of goodwill.
*2. Number of employees who retired during the period (excluding those who reachedretirement age) ÷ Number of employees at the end of the period*3. Prescribed working hours: 7.0

63

78.0

27.2

27.1
1,497

29.9

31.5

FY03/19 FY03/20 FY03/21 FY03/22 FY03/23

FY03/19 FY03/20 FY03/21 FY03/22 FY03/23*4. C umulative number of employees enrolled in the Tsuzuki Leaders Forum (next generation management
talent development training), excluding employees appointed as executive officers and retirees.
*5. N umber of employees certified under the Tsuzuki Certification Program (in-house ICT engineer
certification system).

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information(Millions of yen)
FY03/17

FY03/18

FY03/19

FY03/20

FY03/21

FY03/22

FY03/23

105,149

111,973

118,872

125,366

120,004

119,316

123,899

18,442

19,45921,496

23,075

21,46522,511

24,17816,29916,92018,177

18,61818,263

18,49819,060

2,142

2,538

3,318

4,457

3,202

4,012

5,118

3,435

3,838

5,237

6,704

5,656

6,634

7,333

1,321

1,515

2,212

3,155

2,346

2,798

3,521

4,148

1,768

852

8,025

749

5,560

4,263

554

2,470

140

8

1,271

4

39

3,594

701

992

8,016

521

5,555

4,302

1,056

880

1,551

4,950

2,029

2,413

2,612

71,06876,16978,94477,44876,20079,226

83,207

17,562

15,96815,40918,45615,927

19,13020,845

13,833

11,935

12,151

8,992

9,500

9,581

9,106

21,94925,326

27,07029,62931,07233,15536,022101.6596.10

128.89182.10134.06158.47

197.48

18

29

39

55

46

48

61

17.7%

30.2%

30.3%

30.2%

34.3%

30.3%

30.9%

17.5%

17.4%

18.1%

18.4%

17.9%

18.9%

19.5%

2.0%

2.3%

2.8%

3.6%

2.7%

3.4%

4.1%

5.9%

5.9%

7.9%

10.8%

7.7%

8.8%

10.4%

33.9%

36.2%

36.4%

38.4%

40.6%

41.5%

42.0%

19.5%

32.9%

32.1%

31.7%

36.4%

32.0%

32.3%

565

1,410

1,307

722

1,064

2,023

383

1,293

1,299

1,919

2,247

2,408

2,531

2,124

Human resource development (non-consolidated)

Childcare leave utilization rate
/Male employee childcare
utilization rate

Cumulative TLF participants(People)*4

TCP-certified employees*5/ of which, advanced DX talent/ certified DX associates*6
TCP-certified employees (People)

Childcare leave utilization rate (%)
Male employee childcare utilization rate (%)

Non-consolidated (Points)
Consolidated (Points)

advanced DX talent (People)
Certified DX associates (People)
34

35

58

Engagement*7(6.0 points possible)

147

32

3.25

119
48

3.12

2.91

3.15

2.96

32
22
5

17

19
4

0
FY03/2135

32
14

FY03/22

FY03/23

FY03/21

FY03/22

FY03/234

FY03/19 FY03/20 FY03/21 FY03/22 FY03/23

FY03/21

FY03/22

FY03/23*6. N umber of employees who have obtained internal certifications that assess and determine whether
employees have the basic mindset, knowledge, and experience to promote DX.
*7. Questions based on the Utrecht Work Engagement Scale (17-item version)

64

Corporate Information

As of March 31, 2023

Corporate Name

CapitalTSUZUKI DENKI CO.,LTD.

JPY 9,812,930,540

Enterprise identification number:
9010401054908

Stock Listing

Head Office

Tokyo Stock Exchange Prime Market(Securities Code: 8157)

6-19-15 Shinbashi, Minato-ku,

Net sales (As of March 2023)

Tokyo 105-8665, JAPANTokyo Art Club Building

Consolidated

123,899 million yen

Non-consolidated

82,590 million yen

Contact
Employees(As of March 2023)

TEL: +81 3-6833-7777 (switchboard)
FAX: +81 3-6833-7802

Consolidated

2,328 people

Non-consolidated

1,295 people

Representative
Business Summary
Isao Emori, Representative Director, President and CEO
Design, development, construction, and maintenance ofFoundednetwork and information systems

May 1, 1932, as Tsuzuki Shoten

Main Banks

EstablishedMUFG Bank, Ltd.
Mizuho Bank, Ltd.

March 26, 1941 as Tsuzuki Telephone Business, Co., Ltd.

65

TSUZUKI REPORT 2023

Sumitomo Mitsui Banking Corporation

Top Message

Introduction

Long-term Vision
and Medium-termManagement Plan

Stock Information

Tsuzuki Denki
Human Resources

Foundation Supporting
Transformation

Financial andNon-financial Information

As of March 31, 2023

Stock Price and Trading Volume(JPY)

Stock price (left)

2,500(Shares)Monthly trading volume (right)

7,000,000

2,000

5,600,000

1,500

4,200,000

1,000

2,800,000

500

1,400,000

00FY03/13

FY03/14

FY03/15

FY03/16

FY03/17

Total Shareholders Return
Three-year

Five-year

10-yearTsuzuki Denki

156.2%

207.3%

456.9%

TOPIX

153.4%

131.8%

242.1%

Dividends and Payout Ratio
Dividend per share (yen)FY03/18

FY03/19

FY03/20

FY03/21

FY02/22

Total number of sharesauthorized to be issued

Total number ofshares issued

98,920,000 shares

20,177,894 shares

Number of sharesconstituting one unit

Shareholders

100 shares

6,237 shareholders

Major shareholders (10 largest shareholders)

Payout ratio (%)

34.3
30.3

61

55
46

39

FY03/19

FY03/2030.9

FY03/2148

FY03/22

FY03/23

Rank

30.2

30.3

2.25%

Treasury
share
7.60%

Foreign institutions, etc.
1.33%

Individuals
and othershareholders
27.60%

Financial
institutions

19.43%

Name

Number Shareof shares holding(1,000
ratio
shares)(%)

1

ASO CORPORATION

4,500

24.14

2

Fujitsu Limited

2,402

12.88

3

The Master Trust Bank of Japan, Ltd. (trust
account)

1,200

6.44

4

TSUZUKI DENKI employee stock
ownership

863

4.63

5

FUSO DENTSU CO., LTD.

766

4.11

6

Custody Bank of Japan, Ltd. (trust account)

435

2.33

7

MUFG Bank, Ltd.

296

1.59

8

Mizuho Bank, Ltd.

296

1.59

9

Sumitomo Mitsui Banking Corporation

296

1.59

200

1.07

Shareholder composition
Financial
instrument dealers

FY03/23

End-FY03/23
Other
institutions

41.79%

10 HT Holdings K.K.

1. T he 1,532,000 treasury shares held by the Company, the 420,000 shares held in the Tsuzuki Denki Stock-grant ESOP trust account, the 290,000 shares held in the Tsuzuki Denki
Board Incentive Plan, and the 13,000 shares held in the Tsuzuki Denki Employee Stock Ownership Plan (ESOP) trust account are excluded from the above major shareholders list.
2. T he shareholding ratio is calculated based on the total number of shares issued minus the number of treasury shares.
Treasury shares do not include shares held by the TSUZUKI DENKI ESOP trust account, the TSUZUKI DENKI Board Incentive Plan, and the TSUZUKI DENKI Stock-grant ESOP
trust account.

66

Tsuzuki Denki Co., Ltd.
6-19-15 Shinbashi, Minato-ku, Tokyo 105-8665, Japan(Tokyo Art Club Building)https://www.tsuzuki.co.jp/english/