Financial Results
Briefing Material for the
Fiscal Year Ended
March 31, 2022
May 26, 2022

兼松エレクトロニクス株式会社

KANEMATSU ELECTRONICS LTD.

© 2022 Kanematsu Electronics ltd.

Agenda1

Financial Results Overview, Fiscal Year Ended March 31,
2022

2

Review of the Previous Medium-term Management Plan(FY March 2020 ‒ FY March 2022)

3

New Medium-term Management Plan (FY March 2023 ‒FY March 2025)© 2022 Kanematsu Electronics ltd.

2

Financial Results Overview,
Fiscal Year Ended March
31, 2022© 2022 Kanematsu Electronics ltd.

Full-year Financial Results Overview, FY March 2022
(PL)
Ordinary profit grew for the 12th year in a row to set a new record,
thanks to service-oriented businesses centered on the 3Ks as well as
virtual desktop infrastructure (VDI) and security solutions.
IncomeFY Mar 2023
Full-year
forecast

FY Mar 2021
Full-year

FY Mar 2022
Full-year

Year-on-yearchangeNet sales

65,542

71,331

5,788

8.8

72,0000.9

Operating profit

10,87012,687

1,817

16.7

12,7500.5

Ordinary profit

11,041

12,784

1,742

15.8

12,8000.1

Profit attributableto owners of parent

7,382

8,785

1,402

19.0

8,600

(2.1)

(Million yen)

© 2022 Kanematsu Electronics ltd.

Change (%)

Change (%)

4

Full-year Financial Results Overview, FY March 2022
(Segment Profit)(Billion yen)

Net sales

Segment profit
12.56

71.33
65.54

46.40

10.84

50.80

8.53

■IT Systems BusinessNet sales increased 4,395 million
yen (up 9.5% YoY) to 50.8 billion
yen, mainly due to strong
performances in the storage-related
and network security-related
businesses.

7.10■Services and Support Business

19.13

20.53

3.73

4.03

FY March 2021

FY March 2022

FY March 2021

FY March 2022

© 2022 Kanematsu Electronics ltd.

Net sales increased by 1,392 million
yen (up 7.3% YoY) to 20.53 billion
yen, mainly due to an increase insales related to the system operation
business and cloud services.
*Inter-segment transactions have been
eliminated from segment profit.
5

Full-year Financial Results Overview, FY March 2022
(Breakdown By Item & Industry)
(bn
yen)
70.00
60.00

Net Sales by
Item
1.53
3.99
5.50

50.00
40.00
30.00

21.78

1.32
4.41
7.12

60.00
Documents

22.14

50.00
Network

Server

13.59

15.79
Storage

20.00
10.00

Other

19.13

20.53

0.00

FY March 2021
© 2022 Kanematsu Electronics ltd.

(bn
yen)
70.00

FY March 2022

40.00
30.00
20.00

Services &10.00
support

0.00

Net Sales byIndustry

0.27

0.26
23.30
6.71
7.66

25.89

6.41
9.20

Other

Manufacturing

Distribution

Finance

Services

21.53

23.93
Education,

6.06

5.60

FY March 2021

FY March 2022

culture, public
offices6

Full-year Financial Results Overview, FY March 2022
(BS)
Equity ratio rose by 0.1 point from the previous fiscal year end to 75.1％,
owing partly to the 4,637 million yen increase in retained earnings.
Assets, Liabilities and Net Assets
FY March 2021

FY March 2022

Year-on-yearchange(Million yen)

Total assets

75,16482,446

7,281

Liabilities

18,74920,518

1,768

Net assets

56,41561,9285,513

Equity56,361

61,8855,524

Equity ratio

75.0%

75.1%

0.1pt

© 2022 Kanematsu Electronics ltd.

7

Full-year Financial Results Overview, FY March 2022
(C/F)
Consolidated cash and cash equivalents stood at 49,668 million yen,increasing by 2,790 million yen from the previous fiscal year end.
Cash Flows(Million yen)

FY March 2021
Full-year

FY March 2022
Full-year

Cash flows from operating activities

8,610

7,999

Cash flows from investing activities(884)(1,074)

Cash flows from financial activities(3,863)(4,149)

3,867

2,790

46,87749,668

7,725

6,924

Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at end of
periodFree cash flow
© 2022 Kanematsu Electronics ltd.

8

Full-year Financial Results Overview, FY March 2023
(Forecast)
Consolidated ordinary profit for the fiscal year ending March 31, 2023,
is forecast at 12.8 billion yen.
IncomeFY March 2022
Full-year

FY March 2023
Full-year
forecast

Year-on-yearchangeNet sales

71,331

72,000668

0.9Operating profit

12,687

12,75062

0.5

Ordinary profit

12,784

12,80015

0.1

Profit attributable to owners ofparent

8,785

8,600

(185)

(2.1)

(Million yen)

© 2022 Kanematsu Electronics ltd.

Change (%)

9Full-year Financial Results Overview, FY March 2022
（Dividends & Payout Ratio)
For the next fiscal year, we plan an interim dividend of 75 yen and a
year-end dividend of 80 yen (annual dividend of 155 yen), with a payout
ratio of 51.6％.
Dividends
FY March 2020

FY March 2021

FY March 2022

FY March 2023
forecast

Interim dividend

65 yen65 yen75 yen75 yen(forecast)Year-end dividend

70 yen70 yen80 yen80 yen(forecast)

Annual dividend

135 yen

135 yen

155 yen

155 yen(forecast)

52.3%

52.3%

50.5%

51.6%
(forecast)

Payout ratio© 2022 Kanematsu Electronics ltd.

10

Review of the Previous
Medium-term Management
Plan (FY March 31, 2020 ‒FY March 31, 2022)© 2022 Kanematsu Electronics ltd.

Basic Approach to the Previous Medium-termManagement Plan (Key Measures)*Excerpt from briefing material dated May 28, 2019

Basic Approach
Positioning the new three-year Medium-term Management Plan as a period to prepare thegrounds for further progress, we will balance expanding revenue with investments inhuman resources and capital and other alliances.
Key Measures
under the Medium-term Management Plan

Previous Mediumterm Management
Plan Expand businessscale by offering IT
infrastructure Focus on
virtualization,
security and othergrowth areas© 2022 Kanematsu Electronics ltd.

(1) Expand the scope of existing business to offer an
optimal ICT environment
Expand business areas other than application development,such as improving the quality of operation services, inaddition to expanding the infrastructure construction
business.
(2) Strengthen businesses targeting end-users to establish
all-round relationship with our customers as theirstrategic partner(3) Respond flexibly to the ICT environment that is
becoming increasingly sophisticated and complicated
due to technological innovation
Efforts toward alliances for multi-cloud services, digitaltransformation (DX), and flexible IT services(4) Build and strengthen corporate infrastructure forsustainable growth
Active efforts to secure human resources and investment inalliance partner firms with a view to forging a businessalliance

Envisaged Goals
 Further increase
corporate value
 Contribute tosustainable growth Solve social issues

12Numerical Targets for the Previous Medium-termManagement Plan (Final Year)

Ordinary profit

12.0 billion yen
ROE
12 % or more
Payout ratio

50 % or more (stable and continuous dividends)

Investment for growth
Approx.

10.0 billion yen (total for 3 years)© 2022 Kanematsu Electronics ltd.

13

Profit Target Achievements (Final Year)
Profit Target Achievements (Final Year)
Ordinary profit made a leap of over 26% from the 10.1 billion yen in FY March 2019 to 12.7
billion yen, while ROE rose to 14.9％, up from 14.2％. Per share dividend also soared to 155
yen, up from 125 yen.

Consolidated Financial Results
FY March 2019

FY March 2022

Change fromFY March 201910.12 bn yen

12.78 bn yen＋26.3％

ROE

14.2％

14.9％

＋0.7ptAnnualdividend

125 yen

155 yen＋30 yenOrdinary profit© 2022 Kanematsu Electronics ltd.

14

Trends in Consolidated Financial Results(FY March 2013 -)Beforeconsolidating
NOS

Medium-term Management Plan(FY March 2014-FY March 2016)

Medium-term Management Plan(FY March 2017-FY March 2019）(Billion yen)
Ordinary profit

Net sales

63.88
63.9

61.89
61.9

61.28
61.3

Medium-term Management Plan(FY March 2020-FY March 2022）

Ordinary profit to net
sales ratio

72.0
71.96

67.39
67.4

64.16
64.2

65.54
65.5

62.25
62.3
10.99
11.0
9.6
9.63

45.05
45.1

4.90
4.9

10.12
10.1

8.48
8.5

5.46
5.5

10.9%

6.25
6.3

10.1%

15.0%

15.3%

FY 3/2019

FY 3/2020

12.8
12.78

11.04
11.0

16.8%
15.5%

6.51
6.5

71.33
71.3

17.9%

13.2%
10.6%

8.6%

FY 3/2013

FY 3/2014

FY 3/2015© 2022 Kanematsu Electronics ltd.

FY 3/2016

FY 3/2017

FY 3/2018

FY 3/2021

FY 3/2022

15

Trends in Consolidated Financial Results(FY March 2013 -)Beforeconsolidating
NOS

Medium-term Management Plan(FY March 2014-FY March 2016)

Medium-term Management Plan(FY March 2017-FY March 2019）

Profit (Full-year)(Billion yen)

Equity (Full-year)

ROE (Full-year)

34.88
63.88
34.9

41.9
41.94

38.59
38.6

37.8
37.84

6.5
6.49

61.88
61.9

56.4
56.36

52.9
52.86

49.36
49.4

45.86
45.9
36.06
36.1

Medium-term Management Plan(FY March 2020-FY March 2022）

7.4
7.38

8.78
8.8
7.4
7.38

6.7
6.73

5.3
5.26

4.15
4.2
3.46
3.5
3.06
3.1

2.9
2.87

9.0%

8.1%

FY 3/2013

FY 3/2014

9.4%

10.4%

FY 3/2015

FY 3/2016© 2022 Kanematsu Electronics ltd.

13.1%

FY 3/2017

14.8%

14.2%

14.5%

13.5%

FY 3/2018

FY 3/2019

FY 3/2020

FY 3/2021

14.9%

FY 3/2022

16

Trends in Consolidated Financial Results(FY Ended March 31, 2013 -)Beforeconsolidating
NOS

(Yen)

Medium-term Management Plan(FY March 2014-FY March 2016)
Interim dividend
54.7%

53.6%

46.7%

51.6%

Medium-term Management Plan(FY March 2017-FY March 2019）Year-end dividend
48.9%

Payout ratio

48.5%

53.0%

Medium-term Management Plan(FY March 2020-FY March 2022）
52.3%

52.3%

50.5%
155.0

135.0

135.0

125.0
110.0
90.0
75.0
65.0
50.0

30.0

55.0
30.0

35.0

70.0

70.0

65.0

65.0

FY 3/2020

FY 3/2021

70.0
65.0

50.0
40.0

20.0

25.0

30.0

35.0

40.0

FY 3/2013

FY 3/2014

FY 3/2015

FY 3/2016

FY 3/2017© 2022 Kanematsu Electronics ltd.

80.0

45.0

FY 3/2018

55.0

FY 3/2019

75.0

FY 3/2022

17

Investment for Growth(Total of Approx. 10 billion yen in Three Years)
A Review of Specific EffortsStrengthening

business foundation
Improving corporate
infrastructure

Relocated the Engineering Center; renovated/relocated offices;
relocated/integrated affiliates
Commenced full-scale operation of renewed internal core system
Improved information system security in response to remote working

Transitioned to a new personnel system
Obtained recognition as a Certified Health & Productivity Management Outstanding
Organization
Promoted workstyle reform; digitized internal workflow to improve productivityExpanded sales training programs; launched an IT security engineer development project
Investing to secure
human resources

Launched and expanded sales of 3Ks (KBC, KCC, KMS) service businesses
Explored new business domains by strengthening alliances and partnerships
Increased efforts in business targeting public offices, municipalities,
educational/cultural sector and medical institutions© 2022 Kanematsu Electronics ltd.

18

Summary of the Previous Medium-termManagement Plan
Revenue
Expansion

Good
Rating Ordinary profit continued breaking record highs inthe three years.
 Achieved the final year numerical target of 12
billion yen.
 ICT investment has remained strong despite the
COVID-19 crisis.
 DX promotion and demands for strategic
investment has been the tailwind.

HR Investment

Good
Rating

 Introduced/transitioned to a new

personnel system that
accommodates workstyle reform andchanging market trends.
 Continued working to improve
workplace environments.

M&A and Capital
Alliance

NeutralRating

 Several options were considered, but

did not result in adding equity
method affiliates or subsidiaries.
 Pushed forward with co-creation byforging strategic partnership not
involving capital participation.

In order to further enhance corporate value, we willdevelop a basic policy and strategy in accordance withthe corporate governance code and other rules, in linewith the new Medium-term Management Plan.
© 2022 Kanematsu Electronics ltd.

19

New Medium-termManagement Plan(FY March 2023
‒ FY March 2025)© 2022 Kanematsu Electronics ltd.

Issues to be Addressed
Situation Surrounding the Group

Providing hybrid platforms that combine onpremise and cloud solutions now becoming ade facto standard

Digital transformation (DX) going on acrossindustries and growing competition with newrivals as well as with existing system
integrators

Limitation on supply caused by supply
chain disruption, impact of semiconductors
and other parts shortages

Changing awareness of climate change
and decarbonization in society as a whole

Existing business domains are undergoing drasticchanges, while areas are expanding in which theGroup s digital technology can contribute to its
customers and ultimately, society as a whole.
© 2022 Kanematsu Electronics ltd.

21

Key Measures
Key Measures
1

Develop business tailored to specific industries/business formats in which we work as a
strategic partner that follows through with customers digital transformation (DX)2

Provide a platform equipped with optimal services tailored for each customer (Honecompetitive edge in services business spanning from cloud to end point)

3

Engage in capital and business alliances that co-create added value and thedevelopment of new businesses

4Work on green transformation (GX) using cutting-edge technologies

5

Improve the working environment and pay, pursue health and productivity management and otherforms of employee well-being, as well as invest in human capital conducive to sustainable growththrough HR development, Promoting Women's advancement and increased hiring.

6

Strengthen the business foundation through digital investment and achieving solid
IT security while maintaining financial soundness© 2022 Kanematsu Electronics ltd.

22Basic Policy on Business Portfolio
Basic Policy on Business Portfolio
The KEL Group, aiming to grow further and increase corporate value in the medium- to longterm, will work under the basic policy of deepen mainstay businesses and create new
business domains to build a robust business portfolio that features high profitability, highgrowth potential and is also resistant to drastic changes in the environment.
The implementation of business portfolio strategies will be regularly examined and reviewed
by the Board of Directors.
High

Growth potential

Shift towards higher profitability
through co-creation of added value

Cloud & services
AI, applicationGlobal・・・

Replace and renew
businesses in order toimprove profitability

Low© 2022 Kanematsu Electronics ltd.

Establishing newrevenue driver
New/growthbusiness

MainstaybusinessLow
growth/low
profitability
business

Maturebusiness

Profitability

Maintain and improve high profitability byincreasing the scale of business andmaking investment


Virtualization, VDI
Network & securityStorage・・・

Maintain and improve profitability
by enhancing efficiency andrevitalizing business
High

23

Basic Policy on Sustainability
Basic Policy on Sustainability
The KEL Group works towards a sustainable society under the corporate vision, we aim to become atotal IT service provider who creates trust and value.
 We will solve social issues by creating innovation using cutting-edge technologies.
 We will create new value by setting up an environment that maximizes the abilities of individuals andencourage challenges, through which we foster relationships of trust with our stakeholders.
 We will strengthen our group governance to build a sound and transparent business foundation that
underpins value creation.
Environmental

SocialGovernance

CO2 emissions
reduction

Health &productivity
management,
workstyle reform

Promoting
Women'sadvancement

Corporate governance

Renewable energy

Securing anddeveloping
human resources

Personnel
systemInformation security, quality
management

Responding to climatechangeImproving
workplaceenvironments

Partnerships

Compliance, risk
management© 2022 Kanematsu Electronics ltd.

SDGs

24

Engagement in SDGs
We are prioritizing on four material issues selected from among the targets of the 17 SDGs.
Material Issues
To build a social infrastructure
equipped with cutting-edge
technologies
To reduce environmental burdenwith the use of cloud andservices

Relevant SDGs

Our Activities








To develop digital/cyber security
talents and reform workstyle

To offer the expertise earned
through our own businessdigitization process© 2022 Kanematsu Electronics ltd.








Offering ICT infrastructure to medical institutions
Offering “Sakai,” a system that assists classroom-teaching, to educational
institutions
Enhanced ICT infrastructure and security offered to public offices andmunicipalities
Consolidating devices through virtualization and use of cloud; reducing
physical servers
Utilizing data centers that run on renewable energy
Project to develop human resources specializing in IT security incollaboration with alliance partner firms
Building virtual desktop infrastructure (VDI) environment to facilitate
remote working
Offering KEL Managed Service aimed at unburdening customers fromoperational and maintenance work phases
Introduced next generation network/security that accommodate newworkstyles
Improving employee productivity utilizing/implementing digital tools
Turning the skills and mindset within the Company towards offering theexpertise we have earned to our customers and partner firms
25Engagement in Human Capital Investment
Key Measure No. 5
Improve the working environment and pay, pursue health and productivity management andother forms of employee well-being, as well as invest in human capital conducive tosustainable growth through HR development, female empowerment and increased hiring.
Upgrading
workplaceenvironment
Improvingpay

Human capital
investment

Work style reform,
health &productivity
management









Hiring talents
Developing
human
resources
Promoting
Women'sadvancement© 2022 Kanematsu Electronics ltd.










Create a workplace environment where each employee can bring
their ability to full play.
Realize efficient workstyles and raise productivity with the use
and implementation of digital tools.
Continuously improve pay under the performance-linked bonus
scheme.
Further polish the personnel system to appropriately evaluate andcompensate employees according to their roles and abilities.

Improve wellbeing

Improve well-being by allowing flexible workstyles and correcting the practiceof long working hours.
Drive Health & Productivity Management to earn the White 500 enterprise
recognition under the Outstanding Organization Recognition Program..
Boost resources by increasing new graduate and mid-career hires
and through alliance with partners.
Build a diverse portfolio of human resources with no bias forgender, nationality, or other attributes.
Design and implement a HR development plan that allows employees to feel
their own growth and leads to increased diversity
Reskill employees and upgrade HR program in order to cultivate digital talent

RealizesustainablegrowthConduct training for female employees aimed at building aleadership pipeline
Aim to raise the proportion of women in new hires to at least
50%

26

Basic Policy for Digital Transformation (DX)Key Measure No. 6

Strengthen the business foundation through digital investment and achieving solid IT security while
maintaining financial soundness

Take care of our customers entire
ICT needs so that they can shift
their resources to their corebusiness.

Combine our business strategy with theinternal IT system strategy, andoffer/circulate the unique knowledge earned
through repeated self-verification.

Seek business tie-ups and alliances
to explore new business domains,and co-create more added value
together with our partners.

Develop a corporate culture ofadaptability to the ever changing
environment, and work to change theskills and mindset of all employees.

*May 2021: Certified as a DX-certified operator under the Digital Transformation(DX) Certification initiative of the Ministry of Economy, Trade and Industry.
© 2022 Kanematsu Electronics ltd.

27

Engagement in DX (Externally and Internally)
Ａ. Deepen existing business models
using digital technology

External(Customers, stakeholders, society)

External × Deepening of existing business

Ｂ. Change the business format or create
new business using digital technology
External × Exploration of new businesses

Offering services to accelerate and support
customers external sales businessPushing ahead with DX in collaboration
with the KG GroupManagement and utilization of data,
pivoting on customer information

Making a shift to services businesscentered on the 3Ks (KBC, KCC, KMS)

Communicating efforts on digitaltransformation (DX), digital marketing

New business domains by strengthening
alliances and partnerships

Deepen businesses

Explore businesses

Internal × Deepening of existing business

Internal × Exploration of new businesses

Launching operation of new core system,
considering the next system

Mechanism that encourages improvementof operations and efficiency using cuttingedge digital technology

Strengthen network and security to help
make diverse workstyles possible

Creation of corporate culture/climate
where digital technology is actively
employed

Digitizing internal application documents
and going paperlessInternal (Company)© 2022 Kanematsu Electronics ltd.

28

Numerical Targets and Performance Trends(Forecast)Ordinary profit

13.5 billion yen

New Medium-termManagement Plan

Previous Medium-termManagement Plan
140.0

Ordinary
Ordinary profit
profit

120.0

13.50

12.80

12.78

Net
income
11.04

10.99
10.12

ROE

100.0

12 % or more
Payout ratio

80.0

8.78
6.73

60.0
14.2%

7.38

7.38

16.0

14.9%

14.5%

50
% or more(stable and continuous dividends)

9.00

8.60

13.5%

13.4%

40.0

12.0%
or more

14.0

12.0

20.0

Investment for growth
Approx.

10.0 billion yen(total for three years)© 2022 Kanematsu Electronics ltd.

10.0
0.0
FY 3/2019

FY 3/2020

FY 3/2021

FY 3/2022

FY 3/2023

FY 3/2024

FY 3/2025 8.0%

(Note) These forecasts are based on information available as of the present and certain
assumptions. Actual business results may differ due to various risk factors anduncertainties.

29

6.0%

4.0%

2.0%

© 2022 Kanematsu Electronics ltd.