Canon Marketing Japan Group
Medium-Term Management Plan (2022-2025) Progress Report
January 29, 2024

Canon Marketing Japan Inc.
Masachika Adachi, President© Canon Marketing Japan Inc. 2024

Agenda1. Medium-Term Management Plan (2022-2025) progress report
2. Strengthening Our Management Foundation© Canon Marketing Japan Inc. 2024

2

Agenda1. Medium-Term Management Plan (2022-2025) progress report
2. Strengthening Our Management Foundation© Canon Marketing Japan Inc. 2024

3

Key Points

1 The Basic Policies and the Financial Plans are kept unchanged.
2 A focus will be continuously placed on the IT solution businessin accordance with the basic strategy.

3 Investments are going to be accelerated for further growth.

© Canon Marketing Japan Inc. 2024

4Medium-Term Management Plan (2022-2025) Basic Policies
Vision2021-2025
Long-Term
Management
Objectives

Professional corporate group that solves social and customer issues
using ICT and the power of humans
Operating income

Financialtargets

Salesof which, ITS sales

ROE

Expand ITS businesswith profit

2022-2025
Medium-Term
Management
Plan
Basic Policies¥58 Billion¥650 Billion
財務目標¥300 Billion
9.0%

Increase earnings capacity ofexisting businesses Carry out and acceleratestrategies for different customer
groups Implement the service-typebusiness model to expand thestock business

Strengthen specialized areasand create new businesses

 Conduct strategies tailored tocustomer groups Continue growth of the industrial
equipment business Increase the profitability of thebusiness of main products

 Create new businesses

Group management aimed at continuous growth Maximize human capital value
 Establish an engagement improvement cycle
 Speed up business investments towards growth© Canon Marketing Japan Inc. 20245

[Financial Plans] Updated Companywide Consolidated Financial Plan Figures(Billions of yen)

2025

2023
(Actual)2024(Projection)

2025(Projection)

Changes from thefigures announced
2023

Sales

609.5

630.0

650.0

-of which, ITS sales

268.9

290.0

300.0

-

Op. income

52.5

54.0

58.0

-

margin

8.6%

8.6%

8.9%

-

ROE

8.7%

8.4%

9.0%

-

© Canon Marketing Japan Inc. 2024

6

[Financial Plans] Updated Consolidated Financial Plan Figures by Segment(Billions of yen)

2024
(Projection)

2025(Projection)

138.9
14.1

139.3
13.7

127.5
13.0

-

margin

10.1%

9.8%

10.2%

-

Sales

220.319.7

231.2
205

249.0
22.5

-

margin

8.9%

8.9%

9.0%

-

Sales

229.7
17.5

235.0
18.3

245.0
19.5

-

margin

7.6%

7.8%

8.0%

-

Sales

44.0
4.1

46.0
6.0

-

Op. Income

40.2
3.6

margin

9.0%

9.3%

13.0%

-

Sales

■Consumers■Enterprise■Area■Professional© Canon Marketing Japan Inc. 2024

2025

2023
(Actual)Op. Income

Op. Income

Op. Income

Changes from thefigures announced
2023
----7

[Financial Plans] Trend in Gross Profit and SG&A Expenses
Gross profit grew following business expansion with profits and improvement in profitability.
We are shifting to a structure that generates profit by controlling SG&A expenses appropriately.
(Billions of yen)

Trend in SG&A Expenses

Trend in Gross Profit
Amount

40.0%

2,200

35.0%

32.4%

33.8%

34.5%

2,010
201.0

33.9%

1,993
199.3
1,840
184.0

1,800

25.0%

Amount

40.0%

33.6%
2,045
204.5

1,903
190.3

35.0%

2,000

30.0%

27.1%

28.0%

27.3%

25.4%

24.9%

1,800

25.0%

1,600
20.0%

20.0%
1,600

15.0%

1,686
168.6

15.0%

1,527
152.7

1,506
150.6

1,493
149.31,520
152.0

2020
2020年

2021
2021年

2022
2022年

2023
2023年

1,400
1,400

10.0%

10.0%

1,200

1,200

5.0%

5.0%

1,000

0.0%

Ratio

2,200

2,000

30.0%

Ratio

1,000

2019
2019年

© Canon Marketing Japan Inc. 2024

2020
2020年

2021
2021年

2022
2022年

2023
2023年

0.0%

2019
2019年

8

【ITS Business】 Sales Targets by Business Area
We achieved growth in all domains after focusing on the ITS business, centering on the creationand expansion of the service-type business model. We are making steady achievements towards
the targets for 2025.
(Billions of yen)
268.9209.6
SI Services

70.9

221.1
73.0

241.4
82.0

98.8

290.0

300.0

108.0

55.3

64.0

Maintenance andoperation
service/outsourcing

37.2

47.6

50.5

IT products andsystem sales

101.3

100.5

108.8

115.2

118.0

2020

2021

2022

2023

2024

75.0
(25％)

2025

Projection
Projection* FY2020 financial results have been reclassified because network camera business has been counted as an ITS business since FY2021.
** A certain product business was reclassified in FY2022, but FY2021 results were not changed.
*** FY2024 Projection was announced on January 29, 2024.
© Canon Marketing Japan Inc. 2024

9【ITS Business】 Progress on ITS Business KPIs by Customer Segment
Steady rises in KPIs lead to enlargement of the IT solution business. We will capitalize on ourstrength in original technologies to upgrade the IT solution and to expand our areas of focus.

Quasi-major andupper-medium-sizedcompanies

SMEs

Area

Full supportfor customers

Enterprise

Co-creation withCustomers

Sales related toEdge Solutions ※1
2021

2023

2025

¥23B

¥27B

¥45B

HOME※2 / IT maintenanceand operation contracts
2021

2023

2025

135,000

190,000

220,000

Sales
related toSecurity

Sales related to※3ITO
BPO

2021

32.5B

2021

21.5B

2023

37.1B

2023

26.0B

2025

48.5B

2025

32.0B

※1 Edge solutions : Video solution, Digital document service, Mathematical and demand forecasts, Low code development※2 HOME : IT support service※3 ITO : IT Outsourcing© Canon Marketing Japan Inc. 2024

Contribution of the service business model to value creation

Largecompanies

10

【ITS Business】 Edge Solutions
For video solutions, we will actively form capital and business alliances to expand the areas where we offervalue. For digital document services, we will enhance the Digital Work Accelerator services to solve
customers' issues.
Digital document service

Video solution
4 technological area
VSaaS

Cloud

Video analysis software / AI

SI servicesSeries
Business-specific Services

VMS

On premiseProtectprivacy

Analog meterreading

knowhow

Invoicereceipt

Accounting
Integration

IP Camera

Edge
Face
authentication

PeopleCounting

Maintenance andoperation
service/outsourcing

Electronic Transaction
Management Services
Long-term
retention

Centralized managementof transaction documents

Industry-specific Services
Industry A

Industry B

Industry C

Integration

Long-term retention of transaction-related documents incompliance with the Electronic Books Maintenance Act

Approval workflow

External system
integration

concluded a capital and business alliance agreementwith AWL, Inc. in 2023.

© Canon Marketing Japan Inc. 2024

11

【ITS Business】 HOME, IT maintenance and operation services
We will expand the one-stop support service for planning, selection, operation, maintenance and education
on optimal IT solutions to provide comprehensive DX support for SMEs.
 Security packNEW  Management support services

IT coordination services

Securitymeasures

 Maintenance and operation
Data protection

Response to changes inlaws and systems

PCoperational supportservice

Network

operational support
service

Serveroperational support
service

Application

operational support
service

DXシリーズNEW  Educational support services
Sales strategy development support
services / SFA support services

Protection against
information leaks

Skill improvement support services /Training support services

 Services by industry

NEWnursing care solution

PCIndustry A

Industry B・・・

concluded a capital and business alliance agreement withCARE CONNECT JAPAN, Inc. in 2023.
© Canon Marketing Japan Inc. 2024

12

【ITS Business】 Security BusinessWe will help customers resolve security issues by offering comprehensive security solutions for protecting
three management assets of information, personnel and property, in two aspects of security, namely cybersecurity and physical security.
Physical security (video security)

Cyber security (information security)
フィジカルセキュリティ
Assessment

Measures fortightening
security

Operation
monitoring

Network
cameras© Canon Marketing Japan Inc. 2024

Video analysis
and behavior
analysis

Offering physical security solutions including crimeand intrusion prevention measures to help createa safe and secure society by combining network
cameras, recording systems, and video analysis
softwareOffering optimal cyber security solutions thatprotect customers' computers, networks, cloudand other IT infrastructure and environmentsfrom cyberattacks and other threats

Information

Recorded datamanagement

Personnel

Property13

【Existing Businesses】 Printing Business / Camera Business
For the printing business, we will intensively carry out strategies for different customer groups. For the camera
business, we will step up our approaches to the intermediate customer group and carry out strategies for
specific targets to continuously improve profitability.
Strategies for different customer groups
in the printing businessEnterpriseLarge
companies

Enhance services tailoredto specific business
operations and to specificindustries to gain projects
Increase active customers
in the group of uppermedium-sized customers

Quasi-major andupper mediumsized companies

Focus on the intermediate customer groupin the camera business

Professional
Press and advertising

Still subjects

・・・
Intermediate(High amateur)

Secure andincrease thenumber ofusers of the RSeries

Historical sites Flowers andand culture
insects

Moving subjects

AreaSMEs

Promote solutions tocomply with laws andregulations for small- andmedium-sized companies

・・・
SportsRailways

Carry out
one-to-onemarketing

Entry(Beginners)
Recording daily life / travel© Canon Marketing Japan Inc. 202414

【Existing Businesses】 Printing Business / Camera Business
Printing Business
Inkjet PrinterCamera Business

Laser Beam Printer32 consecutive years

2nd
Increase ratio of
Unit Pricecomparing 2018+47%

Wide Format Inkjet PrinterIncrease ratio of
Increaseratio of
Unit Price
Increaseratio of
UnitPricecomparing
2018
Unit Pricecomparing 2018
comparing 2018

© Canon Marketing Japan Inc. 2024

+10%

+26%

Office MFP

1stIncrease ratio of
Unit Pricecomparing 2018

1stDigital Interchangeable Lens Camera
16 consecutive years

1st+73%
Increase ratio ofUnit Pricecomparing 2018

3rd
Increase ratio ofUnit Pricecomparing 2018+14%

Data source : Company research15

【Specialized Area】 Initiatives in Industrial Equipment BusinessWe are working to transform into a platform holder with multi-vendor maintenance capabilities. We
will increase sales of semiconductor services in which profitability and continuity can be ensured
with a view to achieving continued growth in the industrial equipment business.
Transform into a platform holder
with multi-vendor maintenance capabilities

Trend in net sales of
the Industrial equipment business金額単位:億円(Billions of yen)

Customers

Suppliers
222
22.2

Diversified needs

Various seeds
13.9
139

126
12.6

155
15.5

142
14.2

Canon MJ Group
Discovery
Consideration ofnew commercialproducts© Canon Marketing Japan Inc. 2024

Planning/
Sales

Installation/
Maintenance

Expansion ofexisting businessSupport for
multi-vendor
maintenance

2019
2019年

2020
2020年

2021
2021年

2022
2022年

2023
2023年

2025
2025年

16

Agenda1. Medium-Term Management Plan (2022-2025) progress report
2. Strengthening Our Management Foundation© Canon Marketing Japan Inc. 2024

17Basic Policy for Cash Allocation
We have been improving capacity to generate cash and will make an investment for growth and pay
dividends appropriately, utilizing operating cashflow and cash on hand.
Shareholder returns
Domains for investment
Operatingcash flow

ITS business growth
Investment
for growth200

Priority areas• Edge solutions• IT maintenance forSMEs• Data centers• Security etc.

M&A &investment
System investment
Investment in
human resources

New business creation

Reinvestment

Billion yen
Cash onhand

Investment details

Cash and deposits needed: maintain an appropriate level of cash and deposits in handin consideration of emergency situations.

© Canon Marketing Japan Inc. 2024

18M＆As and Investments（ITS Business）
We have been actively pursuing M&As as well as investments to expand our business in the key area of ITS.
In 2023, we acquired Tokyo Nissan Computer Systems (currently TCS) and concluded multiple strategic capitalalliance agreements.
April 2022

Investment

Edge solution

Investment

Edge solution
Concluded a capital andbusiness alliance agreementwith Capital Asset Planning,
Inc.
© Canon Marketing Japan Inc. 2024

Businesstransfer

Healthcare

Concluded a capital andbusiness allianceagreement with Kantsu
Co., Ltd. and with THS,
Inc. respectively.

January 2022

July 2022

June 2022

Reached a basic agreement tointegrate the systems integration
business of Canon Medical
Systems Corporation’s
hospital information system

M&ABPO
Reached an agreementon the acquisition ofshares of QB5 Inc.

September 2022

December 2022

Investment

August 2023

Investment

October 2023

M&A

Edge solution

Edge solution

DX

Concluded a capital andbusiness allianceagreement with CHIeru
Co., Ltd.

Concluded a capitaland businessalliance agreementwith AWL, Inc.

Made Tokyo Nissan
Computer System asubsidiary

Investment

Security solution
Concluded a capital andbusiness alliance agreementwith Asilla, Inc.

June 2023

Investment

nursing caresolution
Concluded a capital andbusiness alliance agreementwith CARE CONNECT JAPAN,Inc.

August 2023

Investment

DX
Concluded a capital andbusiness alliance agreementwith Doctors Co., Ltd.

19

Development of Highly Skilled Personnel
In addition to past initiatives to visualize skills and to raise the base level of skills, we will in the future
step up specialized training and encourage practices in order to develop highly skilled personnel.

Specializedtraining for highly
skilled personnelBusiness Concept

Data Science・・・
Digital MarketingUX/UI

NextStep
Visibility
Raising of the baselevel of skills
Reskilling© Canon Marketing Japan Inc. 2024

Number of employees
who completed design
thinking exams
Approx. 11,100
Number of employees who
had training sessions ofAidemy BusinessApprox. 1,100

DX certification / DX business certification
Number of employees who received standard level or higher
Approx.5,700(of which, professional level Approx. 600)
Number of employees who
had training sessions ofData Literacy
Approx. 14,000

Number of employees who
became certified forIT Passport
Approx. 5,00020

Enhancement of Employee Engagement
We will continue our efforts to visualize and improve engagement scores on the basis of the group
employee employee engagement survey in a bid to establish a loop of improvement in engagement andthereby continuously increase corporate value.
Establishment ofEngagement Improvement Cycle

Group Employee Engagement Survey• Implemented engagement survey targeting Canon MJ Group employees• Four options available to answer survey questions: “agree,” ”somewhat
agree,” ”somewhat disagree,” and “disagree,” with points assigned toeach answer for a total possible score of 1,000

706
678

2021
2021年
© Canon Marketing Japan Inc. 2024

686

2022
2022年

2023
2023年

2025
2025年

21

Investment for growth
We will proactively carry out mergers, acquisitions and financing as well as investments in systems
and personnel.
1,000

Investment for growth ¥200 billion or more

500
50.0

0
2021
2021年
© Canon Marketing Japan Inc. 2024

2022
2022年

2023
2023年

2024
2024年

2025
2025年
22

Shareholder Returns
Our basic policy on profit sharing is to pay dividends based on consolidated payout ratio of around 40% orabove, comprehensively taking into consideration our medium-term profit forecast, investment plans, andcash flows.

Consolidated payout
ratio of around 40%or above

Investment for growth approx.¥90B
Payout ratio

38%

37%

43%
35%

35%

33%

33%

120
Dividend pershare: Yen© Canon Marketing Japan Inc. 2024

60

60

6060

2017
2017年

2018
2018年

2019
2019年

2020
2020年

75

2021
2021年

90

2022
2022年

2023
2023年

2025
2025年
23

Towards theContinuous Growth© Canon Marketing Japan Inc. 2024

24

The performance and future projections made in this document are based on information available at the present time, and include potential risks and inaccuracies.
Please be aware that due to changes in a variety of factors, actual results may differ materially from the projections and other forward-looking statements in these materials.

© Canon Marketing Japan Inc. 2023