Fiscal year ended March 31, 2023

Financial Results
TAKACHIHO KOHEKI CO.,LTD. (TSE Code: 2676)
May 12, 2023

Table of Contents
1.

Executive Summary2.

Summary of Financial Results for the Fiscal Year Ended March 31, 2023

3.

Forecast for the Fiscal Year Ending March 31, 2024

4.

Progress of the Medium-Term Management Plan 2022-2024

5.

Appendix[Reference Material] Medium-Term Management Plan 2022-2024
https://www.takachiho-kk.co.jp/pdf/plan_pdf/plan2022-2024(en).pdf
2

Table of Contents
1.

Executive Summary2.

Summary of Financial Results for the Fiscal Year Ended March 31, 2023

3.

Forecast for the Fiscal Year Ending March 31, 2024

4.

Progress of the Medium-Term Management Plan 2022-2024

5.

Appendix3

(1) Executive Summary

Executive Summary◼ Fiscal Year Ended March 31, 2023 <Results>•

Sales and profit increased due to growth in the electronics business and cloud services business

Operating profit and each level of profit reached their highest levels since the Company’s listing•

ROE improved to 7.7% (YoY +1.7 pt)•

Annual dividends per share of 133 yen (up 17 yen from the most recent forecast and 78 yen from the previous year)◼ Fiscal year ending March 31, 2024 <Forecast>•

Sales and profit are forecast to increase•

Sales are expected to increase by focusing on capturing the backlog of orders in the electronics business andgrowth in the cloud services business•Annual dividends per share is forecast at 137 yen (+4 yen from the previous year)[Millions of yen]

FY3/22
ResultFY3/23
Forecast

FY3/23ResultFY3/24
Forecast

Net sales

20,78423,00023,36024,800Operating profit

1,024

1,350

1,376

1,620

Profit attributable toowners of the parent

878

1,040

1,205

1,249

ROE

6.0%

6.8%

7.7%

7.7%

Annual dividends pershare

55 yen116 yen

133 yen

137 yen4(1) Executive Summary

Toward the Final Year of the Medium-Term Management Plan
▍ Summary of the First Year of the Medium-Term
Management Plan
Forecast

Segment

Net sales Achievement
Rate

Operating Forecast
Achievement
profitRate

Cloud services
and support

2,385

91.2%

506

98.8%

Systems

9,630

92.0%

92

40.1%

Devices

11,344114.4%

776

128.1%

Total

23,360101.6%

1,376

101.9%

Cloud Services & Support:(Result) Achieved 98.8% of the operating profit target
due to an increase in the composition ratio of the cloud services business as aresult of conducting a campaign aimed at distributors and expanding humanresources. (Issue) Delay in the progress of sales due to delay in the start of MSP
services at new distributors.
Systems:(Issues) (1) Inability to control the impact of external factors in retail
solutions (business aimed at retailers); (2) Improvement of operational efficiency
to cover the reduction in human resources due to the shift to selling services
Devices: (Results) (1) Increased the scale of sales due to the increased demand
for semiconductors as well as the acquisition of new commercial rights(distributorship agreements); (2) Steady progress in the strategy to focus on highprofit markets led to improvement in operating profit ratio (Issue) Establishment ofa structure less susceptible to market conditions▍ Toward the Final Year of the Medium-Term
Management Plan
(1) Revision of Segment Targets for the Final Year (FY2025)••(2) Initiatives for the Second Year Based on the Review of the First Year

Revised targets based on progress of each segment's strategy
Cloud Services & Support: Expand the cloud business by developing theProceed with resource migration (from Systems to Cloud) toward the final year

"TK Eco System(*)" and adding products subject to MSP services

Segment

Pre-revisionPre-revision Revised net
operatingnet salessales
profitRevisedoperatingprofitCloud services andsupport

4,000

4,000

900

900

Systems

10,900

9,600

400

270

Devices

11,10012,400

750

880

Total

26,00026,000

2,050

2,050

Systems: Increase per capita net sales by expanding cross-selling
performance by leveraging the customer base and improving operational
efficiency through DX and SFA investments, etc.
Devices: Acquire new commercial rights, increase overseas sales, andexpand the sales scale
Increase profit margins by focusing on high-profit markets and strengthening
solution proposals and product planning and development based on our
technological strengths(*) Our proprietary BtoB platform that centrally manages physical security and networks

5

Table of Contents
1.

Executive Summary2.

Summary of Financial Results for the Fiscal Year Ended March 31, 2023

3.

Forecast for the Fiscal Year Ending March 31, 2024

4.

Progress of the Medium-Term Management Plan 2022-2024

5.

Appendix6

(2) Summary of Financial Results for the Fiscal Year Ended March 31, 2023

Consolidated Financial Highlights
Both sales and profit increased, with operating profit and each level of income reached their highest levels since the company's listing.
ROE increased to 7.7% by focusing on highly profitable businesses and improving operating profit ratio

FY3/22
ResultFY3/23
Forecast (*)

FY3/23ResultYear-on-Year

Compared toforecast

Net sales

20,78423,00023,360+12.4%+1.6%

Gross profit on sales

5,099

5,880

5,838

+14.5%(0.7%)

Gross profit ratio (%)

24.5%

25.6%

25.0%

+0.5pt(0.6 pt)

Selling, general andadministrative expenses

4,074

4,530

4,461

+9.5%

(1.5%)

Operating profit

1,024

1,350

1,376

+34.4%+1.9%

Operating profit ratio (%)

4.9%

5.9%

5.9%

+1.0pt+0.0ptForeign exchange gains

191

－

191

+0.0%

－

Ordinary profit

1,247

1,500

1,588

+27.3%+5.9%

Ordinary profit ratio (%)

6.0%

6.5%

6.8%

+0.8pt+0.3ptProfit attributable to owners of
the parent

878

1,040

1,205

+37.2%+15.9%

ROE

6.0%

6.8%

7.7%

+1.7pt+0.9ptEPS

98.61 yen

116.27 yen

134.69 yen+36.08 yen+18.42 yen

Unit: Millions of yen(*) Revised forecast announced on November 8, 20227

(2) Summary of Financial Results for the Fiscal Year Ended March 31, 2023

Results by Segment [Millions of yen]
FY3/22
ResultFY3/23ResultIncrease

PercentagechangeFY3/23
Forecast

Increase

Percentagechange

2,115

2,385

+269

+12.8%

2,615

(229)

(8.8%)

394

506

+112

+28.5%

513(6)(1.2%)

Operating profit ratio

18.6%

21.2%

+2.6pt-19.6%+1.6pt-Net sales

9,895

9,630

(264)

(2.7%)

10,465(834)(8.0%)

135

92

(42)

(31.6%)

231

(138)

(59.9%)

Operating profit ratio

1.4%

1.0%

(0.4pt)-2.2%(1.2 pt)-

Net sales

8,773

11,344+2,571+29.3%

9,920+1,424+14.4%

494

776

+282

+57.1%

606+170+28.1%

5.6%

6.8%+1.2pt-6.1%+0.7pt-Net sales

20,78423,360+2,576+12.4%

23,000

+360

+1.6%

Operating profit

1,024

1,376

+351

+34.4%

1,350

+26

+1.9%

Operating profit ratio

4.9%

5.9%

+1.0pt-5.9%+0.0pt-Cloud Services

Net sales& Support

Operating profit

Systems

Operating profit

Devices

Operating profit
Operating profit ratio

Consolidated total

25,000Net sales

YoY＋12.4%

1,600

2,385
20,00015,0002,115

OperatingprofitYoY＋34.4%

1,200

506

9,630

9,895

800

394

92

135

10,000
5,000

8,773

11,344

400

494

776

0

0

Fiscal year ended March 31, Fiscal year ended March 31,
2022
2023
■ Cloud Systems & Support ■ Systems ■ Devices

Fiscal year ended March 31,
2022

Fiscal year ended March 31,2023■ Cloud Systems & Support ■ Systems ■ Devices

8

(2) Summary of Financial Results for the Fiscal Year Ended March 31, 2023

Cloud Services & Support Results[Millions of yen]

◼ The number of MSP services licenses increased due to the effect of campaigns aimed at distributors, etc. (+)◼ Other cloud services such as the "Employee Baggage Screening" service and "Verkada" integrated security solution also increased (+)◼ Sales fell short of the forecast due to delays in new distributors starting to handle MSP services. The composition ratio of the Cloud Services
business increased, and 98.8% of the operating profit forecast was achieved

Operating profit

Net sales

YoY＋12.8%

YoY＋28.5%

2,385

2,115

741

605

506

394
80

161

107

116

525

556

509

582

121

120

475

505

85

108

Fiscal year ended
March 31, 2022

Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2022

Fiscal year ended
March 31, 2023

1Q

2Q

2,615

3Q

4Q

Fiscal year ended
March 31, 2023
Forecast

21.4%

20.4%

18.0%

2Q

3Q

4Q

Fiscal year ended
March 31, 2023
Forecast

Operating profit ratio: YoY comparison

Operating profit ratio
23.8%

1Q

513

20.7%

20.9%

21.8%

13.3%

1Q

+3.4ptIncrease in profit ratio due to decrease in product failures (+)
Increase in employees due to strengthening segment (-) * Same level of impact from
2Q onward

2Q(3.1 pt)

Decrease in sales transfers (*1) due to decreased sales to retailers (-)

3Q＋0.5ptIncrease in gross profit ratio due to an increase in long-term MSP service contract
customers (+)
Increase in SG&A expenses such as advertising expenses for new cloud services (-)

1Q

2Q

3Q

4Q

1Q

2Q

3Q

Increase in gross profit ratio due to an increase in long-term MSP service contract

4Q

4Q
FY3/22

FY3/23+8.5ptcustomers (+)
Increase in other cloud sales (+), loss from partial business withdrawal in the previous

fiscal year (*2) (+)(*1) Concerning product sales in the Systems segment, the portion of maintenance provided free of charge in the first year after the sale, an amount equivalent to the cost of the maintenance is transferred to Cloud Services & Support sales(*2) The decision to withdraw early from the e-commerce business that was started in the previous medium-term management plan, due to no expectation of earnings, resulted in a loss of approximately 40 million yen in the fiscal year ended March 31, 2022.

9

(2) Summary of Financial Results for the Fiscal Year Ended March 31, 2023

MSP Services Contract Status
MSP Services KPIs

Number of contracts

Number of new contracts

As of March 31, 2023

FY3/23

16,921 licenses

3,966 licenses

Monthly cancellation rate*
Average for the year ended
March 31, 2023

0.33％

■ Number of MSP service contracts
18,00016,00014,000The number of licenses for major apparel stores in Japan acquired in
3Q continued to increase during 4Q.
(as of December 31, 2022: +1,108)

16,921

12,00010,000

8,000

6,000

4,000

2,000

0

(*) Monthly cancellation rate: Number of contract cancellations in a month / Total number of contracts at the end of the previous month10(2) Summary of Financial Results for the Fiscal Year Ended March 31, 2023

Systems Net Sales (by sub-segment)
Retail Solutions

Retail Solutions◼

YoY (16.5%)

◼

3,774

◼

3,152

807

◼

739

950

3,960
◼

888
1,196

755

2Q

Access control systems for offices of foreign companies grew due toincreased demand accompanying returning to the office (+)
Access control systems for data centers of foreign companies remainstrongGlobalFiscal year ended March 31,
2023

1Q

Decrease due to fewer large-scale projects compared to the previous fiscal
year
Increasing utility costs and other factors restrained security investment in
the retail sector (-)
Increased sales due to capturing demand for new and renovated apparelstores and combined proposals (+)

Business Solutions

769

819

Fiscal year ended March 31,
2022[Millions of yen]

3Q

4Q

Fiscal year ended March 31,
2023
Forecast◼
◼

Growth in fire protection systems business in Thailand, recovering from theimpact of lockdowns in the previous year (+)
Positive impact of yen-translated earnings of overseas subsidiaries (+)

Business Solutions (formerly Office Solutions)Global

YoY＋6.1%

YoY＋5.5%
3,390

3,194

3,087

2,926
1,153

1,195

891

1,040
615

538

3,555

1,037

1,037

422

582

Fiscal year ended March 31,
2022

Fiscal year ended March 31,
2023

1Q

2Q

730

774

2,950
758

567

3Q

4Q

Fiscal year ended March 31,
2023
Forecast

544

706

Fiscal year ended March 31,
2022

Fiscal year ended March 31,
2023

1Q

2Q

3Q

4Q

Fiscal year ended March 31,
2023
Forecast* Some reclassification has been made to the results for the fiscal year ended March 31, 2022 due to the change in sub-segment names (Retail +53 million, Business -5.3 million).

11

(2) Summary of Financial Results for the Fiscal Year Ended March 31, 2023

Devices Net Sales (by sub-segment)
Electronics (formerly Semiconductor)◼

Mechatronics (formerly Mechanical Component )Growth in electronic components for home printers due to newcommercial rights acquisition and demand from remote working (+)◼

◼

Sales of electronic components for semiconductor manufacturing
equipment and power supply modules for 5G base stations grew
Sales to the amusement industry increased due to deeper◼

Growth in mechanical parts for money machines (ATMs, etc.) due todemand from the printing of new banknotes (+)◼

Decrease in sales of soft-close components for U.S. housing equipment
due to rising U.S. interest rates (-)

customer relationships (+)◼

Increase in production of copiers due to return to the office, etc., andgrowth of slide rails for overseas copiers (+)

due to strengthening sales, in addition to strong demand (+)◼

[Millions of yen]

4Q was affected by production adjustments at some customers (-)

YoY＋55.9%

YoY＋1.9%
6,941
1,761

4,452
2,016

1,221
1,382

5,180

1,727

1,047
1,435

801
Fiscal year ended March 31,
2022

Fiscal year ended March 31,
2023

1Q

2Q

3Q

Fiscal year ended March 31,
2023
Forecast

4Q* Some sub-segments have been renamed from the fiscal year ended March 31, 2023.

4,320

4,403

1,131

1,107

1,159

1,158

1,067

1,149

961

988

Fiscal year ended March 31,
2022

Fiscal year ended March 31,
2023

1Q

2Q

3Q

4,740

Fiscal year ended March 31,
2023
Forecast

4Q

12

(2) Summary of Financial Results for the Fiscal Year Ended March 31, 2023

Capital Efficiency Improvement Status
Hold inventories to appropriate levels by capturing backlogs of orders and strengthening order control
Review the transaction terms of receivables and payables and aim to improve capital efficiency
Inventories

Trade receivables
108.5

Number of days for turnover

83.1
58.6

103.0

Trade payables
95.4

64.3

63.3

67.8

62.9

2,839

2,984

3,059

6,600
6,121
5,614

Balance Unit: Millions of yen

4,880

3,096

2,431

As of March
31, 2021

As of March As of March
31, 2022
31, 2023

Reason for increase in inventories
1. Procurement of semiconductors and electronic
components progressed
2. Increased advance orders from customers
3. Focus on stable supply under supply chain disruptions

As of March As of March As of March
31, 2021
31, 2022
31, 2023

As of March As of March As of March
31, 2021
31, 2022
31, 2023

Calculation Formula•
Turnover of inventories = Inventories (average balance at beginning and end of period) / Cost of sales x number of days•
Turnover of trade receivables = Trade receivables (average balance at beginning and end of period) / Net sales x
number of days
*Trade receivables = Accounts receivable + Notes receivable + Contract assets + Electronically recorded monetaryclaims (-) Contract liabilities (advances received)•
Turnover of trade payables = Trade payables (average balance at beginning and end of period) / Cost of sales x
number of days•
Number of days = Calculated on a full year of 365 days

13

(2) Summary of Financial Results for the Fiscal Year Ended March 31, 2023

Shareholder Returns
Dividends for the fiscal year ended March 31, 2023 increased by 17 yen from the most recent forecast due to net profit exceeding the forecast.
Annual dividends for the fiscal year ending March 31, 2024 are planned to be 137 yen per share (interim: 53 yen per share, year-end: 84 yen per share)

Shareholder Return Policy in the Medium-Term Management Plan 2022-2024
Maintain a dividend payout ratio of 100% until ROE achieves 8% on average over three fiscal years (*) in an effort to actively
return profits to shareholders without increasing shareholders' equity

100% dividend payout ratio until ROE of 8%
is achieved on average for three fiscal years◼ Annual dividends per share (yen)Special dividend

Actual ROE

Forecast ROE

7.7%

7.7%

+78 yen133+4 yen15

Lower limit ofdividends
24 yen40
24

25

Fiscal year ended March
31, 2020

Fiscal year ended March
31, 2021

Fiscal year ended March
31, 2022

137

Fiscal year ended March
31, 2023

Fiscal year ending March
31, 2024
Forecast(*) Average over three fiscal years: Average of the three most recent fiscal years from the fiscal year ended March 31, 2023, the first year of the Medium-Term Management Plan.

14

Table of Contents
1.

Executive Summary2.

Summary of Financial Results for the Fiscal Year Ended March 31, 2023

3.

Forecast for the Fiscal Year Ending March 31, 2024

4.

Progress of the Medium-Term Management Plan 2022-2024

5.

Appendix15

(3) Forecast for the Fiscal Year Ending March 31, 2024

Consolidated Profit & Loss <Forecast>
Increased sales and profit is forecast by focusing on capturing the backlog of orders in the electronics business and the growth of cloud services
Forecast for FY3/25,

Unit: Millions of yen

FY3/23ResultFY3/24
Forecast

Increase

Year-on-Yearthe final year of theMedium-Term Management
Plan

Net sales

23,36024,800+1,439+6.2%

26,000Gross profit on sales

5,838

6,210

+371

+6.4%

－

Gross profit ratio (%)

25.0%

25.0%

－

+0.0pt－Selling, general andadministrative expenses

4,461

4,590

+128

+2.9%

－

1,376

1,620

+243

+17.7%

2,050

5.9%

6.5%

－

+0.6pt

7.9%

1,588

1,600

+11

+0.7%

2,000

Ordinary profit ratio (%)

6.8%

6.5%

－

(0.3 pt)

7.7%

Profit attributable to ownersof the parent

1,205

1,249

+43

+3.6%

1,400

ROE(%)

7.7%

7.7%

－

+0.0pt

10.0% (target)
8.0% (must achieve)

134.69 yen

137.74 yen+3.05 yen－－

133 yen

137 yen+4 yen－－Operating profit
Operating profit ratio (%)
Ordinary profit

EPS

Annual dividends per share(*)(*1) Annual dividends per share: Calculated by dividing the full amount of net profit by the number of shares at the end of the period, in accordance with the 100% payout ratio policy(EPS is calculated by dividing net profit by the average number of shares outstanding during the period)

16

(3) Forecast for the Fiscal Year Ending March 31, 2024

Net Sales and Operating Profit by Segment <Forecast> [Millions of yen]
FY3/23ResultFY3/24
Forecast

Increase

PercentagechangeFY3/25
Forecast (*)

2,385

2,800

+414

+17.4%

4,000

506

600

+93

+18.4%

900

Operating profit ratio

21.2%

21.4%

+0.2pt-22.5%

Net sales

9,630

9,800

+169

+1.8%

9,600

92

160

+67

+72.5%

270

1.0%

1.6%

+0.6pt-2.8%

11,344

12,200

+855

+7.5%

12,400Operating profit

776

860

+83

+10.7%

880

Operating profit ratio

6.8%

7.0%

+0.2pt-7.1%

Net sales

23,36024,800+1,439+6.2%

26,000Operating profit

1,376

1,620

+243

+17.7%

2,050

Operating profit ratio

5.9%

6.5%

+0.6pt-7.9%

Cloud Services

Net sales& Support

Operating profit

Systems

Operating profit
Operating profit ratio
Devices

Net sales

Consolidated total

Net sales
25,0002,385Operating profit
2,800

4,000

9,800

9,600

20,00015,000

9,630

1,600
1,200

10,000
5,000

2,000

900
600

506

800

11,344

12,20012,400Fiscal year ended
March 31, 2023
ResultFiscal year ending
March 31, 2024
Forecast

Fiscal year ending
March 31, 2025
Forecast

400

776

92

160

270

860

880

0

0

Fiscal year ended March Fiscal year ending March Fiscal year ending March
31, 2023
31, 2024
31, 2025
ResultForecast
Forecast(*) The breakdown of segment targets for the year ending March 31, 2025 have been revised. See p. 5 for details.

17

(3) Forecast for the Fiscal Year Ending March 31, 2024

Cloud Services & Support <Plan>[Millions of yen]

Cloud services and support

Forecast for FY3/24
Net sales 2,800 million yen (+17.4%)

2,800

Operating profit 600 million yen (+18.4%)

2,385

Initiatives for FY3/24

600

506

Cloud Services•

MSP services : In addition to distributor sales, we aim to increase
the number of licenses by selling to customers in the systems

Fiscal year ended March 31,
2023
ResultFiscal year ending March 31,
2024
Forecast

segment.
•■ Net sales ■ Operating profit

Expand the sales of Verkada, an integrated security solution that
responds to labor-saving needs, through the acquisition of
distributors, etc.

•

Strengthen the sales of other cloud services

Maintenance•

Increase the number of new contracts with customers who have notsigned maintenance contracts•

Improve profitability by utilizing historical data in maintenance andinspections and reducing product failures•

Develop new option items that meet customer needs
18

(3) Forecast for the Fiscal Year Ending March 31, 2024

Systems Net Sales (by sub-segment) <Forecast> [Millions of yen]
Initiatives for FY3/24

Systems net sales forecast: +1.8%(Both retail and business) Implement cross-selling by leveraging our extensive customer basePromote operational efficiency to cover the reduction in personnel due to the transition to thesale of services

9,800

9,630

Retail Solutions
Net sales forecast: 3,250 million yen (+3.1% YoY)

Retail
3,152

＋97

3,250

•

Strengthen sales of security systems to the apparel market, which is recovering due to theeasing of Covid-19 restrictions, and to consumer electronics mass retailers, where inbounddemand is expected to increase.

Business Solutions
Net sales forecast: 3,690 million yen (+8.8% YoY)
3,390

Business

3,690

•

＋299

Expand sales of access control systems (for offices and data centers)
Further increase market share by capturing infrastructure demand for new office buildings, ofwhich construction is increasing, and by expanding the global commercial products

3,087

Global
(227)

Global
2,860

Fiscal year ended March 31, Fiscal year ending March 31,
2023
2024
ResultForecast

Net sales forecast: 2,860 million yen (-7.4% YoY)•

Certainly capture fire protection system projects for power generation plants•

A decrease in revenue is forecast due to the risk of uncertain timing of recording someprojects, due to the impact of the Thai government's reworking of their power plant
construction plans

19(3) Forecast for the Fiscal Year Ending March 31, 2024

Devices Net Sales (by sub-segment) <Forecast> [Millions of yen]
Initiatives for FY3/24

Devices net sales forecast: +7.5%

Electronics
Net sales forecast: 7,550 million yen (+8.8% YoY)

12,200•11,344

Despite a slowdown in the semiconductor market, we expect an increase in sales from thecapture of the backlog of orders at the end of the fiscal year.

Electronics

6,941

7,550

＋608

•

Focus on industrial equipment, amusement, and solution businesses•

Increase overseas sales through the new China base opened in April 2023,etc•

Activities to acquire new commercial rights (distributor contracts)•

Expansion of the workforce in line with growth in the scale of sales

Mechatronics
Net sales forecast: 4,650 million yen (+5.6% YoY)•

Continue from the previous fiscal year the increase in sales of mechanical parts for money
machines by capturing demand from the printing of new banknotes in 2024•

Strengthen sales of “Spiral Shaft”(*) for the amusement industry
Increased sales for "Smart Pachinko" and "Smart Pachi-slot" is expected due to our

4,403

Mechatr
onics

4,650

＋246

technology that can be processed according to customer specifications•

Investment in planning and development of products that embody customer needs(*) "Spiral shaft"
It is shaped like a cylinder and has a spiral surface.

Fiscal year ended March 31, Fiscal year ending March
2023
31, 2024
ResultForecast

It is one of the linear motion components that converts rotational
force into linear force.

20

Table of Contents
1.

Executive Summary2.

Summary of Financial Results for the Fiscal Year Ended March 31, 2023

3.

Forecast for the Fiscal Year Ending March 31, 2024

4.

Progress of the Medium-Term Management Plan 2022-2024

5.

Appendix21

(4) Progress of the Medium-Term Management Plan 2022-2024

Overall View of the Medium-Term Management Plan 2022-2024 *Published on February 8, 2022

Medium-term
slogan～Towards our 100th anniversary – Creating new value in a new normal era～

Achieve ordinary income of 2.0 billion JPY and current-term net income of 1.4 billion
JPY for the fiscal year ending in March 2025.
Set the KPI for our new medium-term management plan to an 8% average ROE forthree fiscal years and implement our business plan and capital policies.

◼

Increaseshareholder value◼

Capital strategy◼

Limit increases in equity capital in order to improve return on invested capital and thebalance sheet.

◼
◼

Maintain a dividend payout ratio of 100% until the average ROE for three years exceeds 8%
Consider using interest-bearing debt for control capital costs.
◼

Growth strategy for new business transformation:◼
◼

Strengthening the management baseSet aside a total of 3.0 billion yen over 3 years for a strategic investment framework.

➢ Promotion of strategies for loyal customers/Growth of service business/Creation of future core businesses

Business strategy◼
◼
◼

Governance

Establish an Investment Committee and strengthen supervisory, examination, andmonitoring functions to be carried out at the time of execution.
Establish a Nomination and Compensation Committee to ensure fairness, objectivity, andtransparency.
Set KPIs for capital efficiency in executive compensation to promote management from theperspective of shareholders.

Accelerate the transition from goods to services
22

(4) Progress of the Medium-Term Management Plan 2022-2024

Status of Capital Strategy
Implement the following strategies and set "average ROE of over 8% for 3 years” as a KPI in order to increase shareholder value (ROE > cost of capital)•

Cost of capital uses cost of shareholders' equity since there is no interest-bearing debt as of March 31, 2023•

ROE for the fiscal year ended March 31, 2023 improved to 7.7% (+1.7pt YoY) due to profit growth and stronger shareholder returns•

Accelerate improvement in capital profitability through focusing on highly profitable businesses such as MSP services, reducing working capital,
and growth investment
As a result of progressing management with an awareness of capital(Reference)

As of March 31, 2021

As of March 31, 2022

As of March 31, 2023

profitability, we were in compliance with all of the criteria for maintaining our

Stock price

1,125 yen

1,483 yen

2,473 yenlisting on the prime market (market capitalization of tradable shares, etc.) as of

PBR

0.71x

0.88x

1.37x

the end of March 2023.

ROE

4.0%

6.0%

7.7%

23

(4) Progress of the Medium-Term Management Plan 2022-2024

Progress of the Loyal Customer Strategy
Loyal Customer(*) Strategy
A strategy aimed at creating satisfied customers by providing value-added services and strengthening relationships
First year of Medium-Term Management Plan (ended March
31, 2023)

Numerical Target (2)Numerical Target (1)Loyal customers:

Average net sales to all

Loyal Customers: 109 companies

Over130 companies

customers: up 20%

Average net sales to all customers:
up 11%

9.4M

10.6M

10.7M

11.9M

12.9M

<Average annual net sales to all customers>

Results for the year ended March 31, 2023
◼ Large projects in the systems segment decreased from the previous
year, and the number of loyal customers increased by 1 company.
◼ Cross-selling between segments and sub-segments increased(Of all customers, the number of customers to which cross-selling
was made was +8)◼ In addition to companywide net sales growth, average net sales toall customers increased 11% due to a 10% increase in average
net sales to loyal customers

130
92

93

108

109

◼ Implemented customer introductions and technology study sessions
among business divisions, and acquired multiple orders with uniquesolutions that fuse electronics and mechatronics technologies.

<Number of Loyal Customers>
TargetFiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2022

Fiscal year ended
March 31, 2023

Progress of Initiatives◼ Planned and developed unit products that embody the needs ofloyal customers and applied for patents

Fiscal year ending
March 31, 2025

Electronics(*) Loyal customers: Customers with annual net sales of 30 million yen or more per company

Mechatronics

24

(4) Progress of the Medium-Term Management Plan 2022-2024

Market scale of MSP services••

The replacement of wireless LAN equipment with cloud-based equipment is progressing due to office renovations due to hybrid workand demand for faster speeds from Wi-Fi6. Demand for outsourcing due to labor-saving measures is also strong, and the MSP service
market is expanding.
We aim to increase the number of licenses to 27,000 by March 31, 2025 and to achieve net sales of 1.2 billion yen for MSP services.

Our share of the MSP service market for cloud-based wireless LAN

Cloud-based Wireless LAN MSP Service Market (TAM)

Estimate: 180,000 units (Note)

Target (March 31, 2025)

27,000units Estimated market share: 15%

Expanded TAM withadditional products
enabled with MSP
services

Our Situation (March 31, 2023)
16,921units Estimated market share: 9%(*1 license per unit)(Note) The market for cloud-based wireless LAN services and internet-connected services is 147,800 units in the forecast for FY2024(Source: Fuji Chimera Research Institute, "2022 Communications-Related Marketing Survey Overview"). We have estimated the MSP
service market for cloud-based wireless LAN based on this, while making certain assumptions.

25

(4) Progress of the Medium-Term Management Plan 2022-2024

Progress of "Growth of Service Businesses”▍ Cloud Services & Support Net Sales (unit: millions of yen)

Final year of the Medium-Term Management Plan
Cloud service net sales forecast: 2,300 million yen

2,300
607

1,200

856

Measures to Achieve Goals
1. Accumulate licenses for MSP services (target product: cloud-based

1,508

1,529

1,600

Fiscal year ended
March 31, 2022
ResultFiscal year ended
March 31, 2023
ResultFiscal year ending
March 31, 2024
Forecast

1,700

Fiscal year ending
March 31, 2025
Forecast

wireless LAN) mainly through distributor sales

2. “Increase all cloud contracts with the “TK Eco system"

Maintenance◼

4. Strengthen sales to our extensive customer base in the systems

segment

Cloud

Initiatives for FY3/24

3. Grow other cloud services by converting them into MSP services

Development of "TK Eco system”(*)
・ The vision for the TK Eco system is the provision of "Smart Offices”

Access-control systems/Cloud security

Multi-factor authentication/zero trust・ Development is progressing as a company-wide project, with the aim of achieving results by the
FY3/24.
March 2023
In-house environment
PoC started

Free-WiFi
authentication Integrated service platform◼
Big data

October 2023
Production stage

March 2024
Commercialization

Cloud Services
Number ofcontracts up

Grow other cloud services by converting them into MSP services
Regarding products such as our integrated security solution “Verkada”, we aim to develop systems
that enable maintenance, operation, and management in the cloud, making it an MSP service.

◼

Expand sales of cloud services to customers of the systems segment
Strengthen sales of cloud services such as store analysis tools and baggage inspection services(*) Our proprietary BtoB platform that centrally manages physical security and networks

26

(4) Progress of the Medium-Term Management Plan 2022-2024

Status of Human Resource Development and Investment
1. Status of Membership in Employee Stock Ownership Plan

As of March 31, 2023

Membership rate: 79.6%

Membership rate

+25.7pt

79.6%

53.9%

Amount of contributions: Increased 3.1 times since April 2021

Amount of contributions
Initiatives to make employees shareholders

3.1x◼ Incentive increased to 50% from April 2022.

◼ Solicitations were conducted at in-house information sessions on the
topic of "Asset building through the Employee Stock Ownership Plan.”

2. Return of Profits to Employees◼ Paid a celebration bonus for achieving conformance with the"Criteria for Maintaining Prime Market Listing”

April,
2021
2021年4月

March,
2023
2023年3月

3. Recruitment, Base Wage Increases, Reskilling◼ Increased the number of new hires through the referral
hiring system

In response to achieving the standard two years ahead of the original plan,we paid a congratulatory bonus to thank each employee for their hard workand to further motivate them to achieve the Medium-Term Management
Plan’s targets.

◼ Review of the design of Medium-Term Management Plan incentives
Paid annually according to the level of achievement of the budgeted ROE,

◼ Increased the base wage for younger employees(Increased the starting salary for college graduates by about 3%)◼ Viewing rate for video educational material services: 90%
The establishment of re-skilling is progressing with a large
number of participants, especially in the network engineer training
programetc.

27

(4) Progress of the Medium-Term Management Plan 2022-2024

Strategic Investment in the Creation of New Businesses and Business Models◼ Three-year roadmap under the Medium-Term Management Plan

Third Year of the Medium-Term Management PlanFirst Year of the Medium-Term Management Plan

(Year ending March 31, 2025)(Year ended March 31, 2023)

Develop M&A human resources

Aim to conclude M&As that will contribute to results

We conducted a one-year program ofin the medium- to long-termworkshops and invited experienced
experts as advisors

Second Year of the Medium-Term Management Plan (Year ending March 31, 2024)
Commenced a task force
We aim to form at least one M&A or alliance by March 2024◼

It is envisioned that they will be in areas where there are synergies with existing businesses, niche markets where ourknow-how can be utilized, etc.

◼

By reflecting upon past M&As and making use of the learnings from the previous fiscal year, we will start from smallscale investments and succeed with post-merger integration.

28

Table of Contents
1.

Executive Summary2.

Summary of Financial Results for the Fiscal Year Ended March 31, 2023

3.

Forecast for the Fiscal Year Ending March 31, 2024

4.

Progress of the Medium-Term Management Plan 2022-2024

5.

Appendix

29

[Appendix]

Segments and Main Products/Services◼ Segment System
Old Segment

New Segment

Systems

Cloud services and support
Systems

Devices※ The “Services & Support" product line in the Systems
Segment has been renamed to "Cloud Services & Support"
and converted into a new segment.

Devices

Cloud services and support

From the period of the Medium-Term Management Plan
(fiscal year ended March 31, 2023), from the perspective of"growth potential" and "profitability," the cloud-based
subscription service business and maintenance businessare positioned as "growth businesses" and separated as asegment.

Systems

Devices

Power modules

Access control systems
Silicon microphones
Facial recognition systems

Cloud-based wireless LAN
RetailCloud
Services• MSP and other services that integrate"equipment, cloud services, and operations
management" within the Systems segment

Business(Formerly:
Office)• The electronic article surveillance (EAS) system,
surveillance camera systems• Store management systems• Display products security systems

Soft-close units
Electronics(Formerly:
Semiconductor)• Access control systems• Auto Mailing Insertion Systems
・ Network systems• RFID systems

Mechatronics

Maintena • Maintenance services for products in the
Systems segment
nce

Global• Fire protection systems(Formerly:
Mechanical
Component)• Semiconductors, ICs, electronic
components, sensors• Various types of modules• Slide rails, gas springs• Soft-close units, electronic locks

30

[Appendix]

MSP Services (1)What are MSP (Managed Service Provider) Services?
: Maintenance, operation, and monitoring services for cloud products that can be outsourced

Customer

Cloud
Services

User

◼
◼

IT Department

Help desk

What is a "cloud-based wireless LAN system"?

MSP Service Fee Structure(1) to (3) are provided as an integrated
service on a monthly payment basis(*2)

The management of wireless LAN
access points in the cloud(*1) Not available in some areas✓✓✓

24 hours a day, 365 days a year
Nationwide on-site maintenance(*1)

MSP Service Products

Cloud-based
wireless LAN system

Takachiho Koheki

Configuration& monitoring

Use

Visualization of usage status in the cloudEasy and fast installation and trouble-shooting
Configuration and monitoring can beoutsourced(*2) The purchase of equipment (1) can be paid in a lump sum(1)

Purchase of
equipment(2)

Cloud service license
fee

(3)

Maintenance fees

31

[Appendix]

MSP Services (2)MSP Services Business Model
Maintenanceservice

Supplier

Our
Company

SupplyDistributor

Customers

Sale

Sale

TK
Provision ofequipment andlicenses

Payment
MSP service
provision

Payment

MSP Services
Distributor sales

Payment◼ Examples of Using MSP Services

Offices of small and medium-sized

Nationwide stores with highcompanies suffering from staff shortages inmanagement costs due to the large

the information systems department

number of locations

Also used in factories, nursing homes,
hospitals, schools, and many other locations.
32

[Appendix]

Cloud Services & Support Net Sales Breakdown◼ Cloud Services & Support Net Sales Breakdown◼ Net sales composition ratio (%)(Millions of yen)
2,385
2,115

Cloud
35.9%

Cloud
856

Cloud
607

FY3/23

Net sales

Maintena
nce
1,508

Maintena
nce
1,529

Fiscal year ended March
31, 2022

Fiscal year ended March
31, 2023(1) “Maintenance” net sales breakdown (Millions of yen)

(2) "Cloud Services" net sales breakdown (Millions of yen)

856

1,529

1,508
302

Mainten
ance
64.1%

177

325

143

202

60７
73

1,028

1,060

534
Fiscal year ended March
31, 2022
Scheduled Maintenance

Sales Transfers (*)

Fiscal year ended March
31, 2023
Spot MaintenanceFiscal year ended March
31, 2022

MSP Services

653

Fiscal year ended March
31, 2023

Other Cloud(*) Concerning the maintenance provided free of charge in the first year after the sales of products in the Systems segment, an amount equivalent tothe cost of the maintenance is transferred to Cloud Services & Support sales

33

[Appendix]

Systems Segment Results[Millions of yen]

Net sales
9,895

9,630

3,042

2,815

2,132

2,085

Orders Received / Backlog

10,465

2,556

2,684

2,164

2,045

Fiscal year ended March
31, 2022

Fiscal year ended March
31, 2023

Fiscal year ended March
31, 2023
Forecast

1Q

4Q

2Q

3Q

Fiscal year ended March31,2022

1Q

133
231

2Q

93

▲ 68

1Q

▲ 46

▲ 77

3Q

▲ 86

Fiscal year ended March
31, 2022

Fiscal year ended March
31, 2023

1Q

2Q

3Q

4Q

Backlog

Operating profit ratio

92

101

Fiscal year ended March31,2023

Orders received

135

4Q

4,055

3,715

Operating profit

180

9,971

9,898

Fiscal year ended March
31, 2023
Forecast

2Q

3Q

4Q

Full year

FY3/22(3.2%)

4.0%(3.6%)

5.9%

1.4%

FY3/23(2.3%)

3.5%(4.2%)

4.7%

1.0%

Change+0.9pt(0.5 pt)(0.6 pt)(1.2 pt)(0.4pt)◼ Change factors
1Q: Global gross profit ratio improvement (+)
2Q: Decrease in retail solutions revenue (-)* The increase in sales was mainly due to global yen-translated
revenues (which were almost offset by the cost of sales)
3Q: Decrease in retail solutions revenue (-)
4Q: Decrease in retail solutions and global revenue (-)

34

[Appendix]

Retail Solutions and Business Solutions Net Sales Breakdown◼ Retail Solutions Net Sales
4,000◼ Business Solutions Net Sales
4,000

3,774

3,500

3,390

3,500
1,060

3,194

3,152

3,000

3,000
752

2,500

1,717

2,500
1,646

869
2,000

733

2,000

482

1,500

472

1,000

434

500

350
1,500
326
1,000

500

812
489
111
569

0
GMS
Drug stores
ApparelConsumer electronics
HC/Sports
MobileOther

Fiscal year ended
March 31, 2022
1,060
869
350
326
489
111
569

54
225
Fiscal year ended
March 31, 2023
752
733
482
472
434
54
225

0
Office Security
Network Products
RFID
Mailing

914

301

373

434

386

Fiscal year ended
March 31, 2022
1,646
812
301
434

Fiscal year ended
March 31, 2023
1,717
914
373
386

* Some reclassification has been made to the results for the fiscal year ended March 31, 2022 due to the change in sub-segment names (Retail +53 million, Business -5.3 million).

35

[Appendix]

Devices Segment Results[Millions of yen]

Net sales

Orders Received / Backlog

11,344
13,702
12,276

2,868

8,773
2,352

3,174

7,722

2,541

9,920

5,364

2,877
2,115
1,763

2,424

Fiscal year ended March
31, 2022

Fiscal year ended March
31, 2023

1Q

2Q

3Q

Fiscal year ended March
31, 2023
Forecast

Fiscal year ended March 31,2022

Orders Received

4Q

Operating profit

1Q

150

494
316
606

161
48

163

2Q

3Q

4Q

Full year

FY3/22

2.8%

6.8%

6.3%

6.0%

5.6%

FY3/23

6.0%

5.7%

10.0%

5.3%

6.8%

Change+3.2pt(1.1pt)+3.7pt(0.7pt)+1.2pt◼

Change factors

1Q: Electronics revenue increase effect (+)

143

Fiscal year ended March
31, 2022

Backlog

Operating profit ratio

776

141

Fiscal year ended March 31,2023

145

2Q: Increase in SG&A expenses due to headcount increase, etc. (-),

Fiscal year ended March
31, 2023

1Q

2Q

3Q

Fiscal year ended March
31, 2023
Forecast
4Q

revenue increase effect (+)
3Q: Electronics revenue increase effect (+)
4Q: Increase in SG&A expenses due to headcount increase, etc. (-)

36

[Appendix]

Devices Net Sales Breakdown◼ Electronics Net Sales◼ Mechatronics Net Sales
6,941

7,000

4,500

633

4,403

4,320
158

6,000

119

4,000

1,309

1,160

964
3,500

5,000

4,452

3,000

349
4,000

578

2,500

2,724

1,587
1,852

2,000

3,000
1,757

1,500

230

1,000

Consumers
Businesses
Industrial equipment
Amusement
Auto Vehicles
Modules
Distributor
Other

1,000

341

599

500

1,063
613

0

526

497

2,000

7

30

292

364

Fiscal year ended
March 31, 2022
349
578
1,757
230
599
613
292
30

Fiscal year ended
March 31, 2023
633
1,309
2,724
497
341
1,063
364
7

0
Digital
Living / Lifestyle
Labor Saving
Work and Education
Environment & Energy
Medical and Nursing
Care
Traffic
Amusement
Broad Market

182
446
161
221
Fiscal year ended
March 31, 2022
158
964
1,587
526
182

511
70

77

187
21
241
230
Fiscal year ended
March 31, 2023
119
1,160
1,852
511
187

70

77

446
161
221

21
241
230

37

[Appendix]

Consolidated Balance Sheet [Millions of yen]
As of March 31, 2022

Cash and deposits
6,708

Trade
payables
2,984

As of March 31, 2023

Cash and deposits
4,509

Trade
payables
3,059
Other
liabilities
2,641

Other liabilities
2,584

Trade
receivables
7,547
Trade receivables
6,527
Net assets
15,025Inventories
4,880

Net
assets16,432Inventories
3,096
Other 1,365
Other 1,057
Non-current assets
3,203

Non-current
assets 3,831

End of previous year: +1,406
million(Major Factors)
・ Net income +1,205 million
・ Dividend payment: (603
million)・ Valuation and translation
adjustments +493 million

38

[Appendix]

Company Profile
Company Name

Takachiho Koheki Co., Ltd.

Securities CodeTSE Prime 2676

EstablishedMarch 13, 1952

Head Office Address
Representative

Number of Employees
Consolidated
Subsidiaries

YOTSUYA TOWER 7F, 1-6-1 Yotsuya, Shinjuku-ku, Tokyo
Takanobu Ide, President and Chief Executive Officer

Consolidated: 496, Non-consolidated: 243 (as of March 31, 2023)
One domestic company, eight overseas companies (Shanghai, Hong Kong,
Bangkok, Singapore, Chicago)39Precautions Regarding this Document•

This document contains forward-looking statements. Such statements are not guarantees of future
results and involve risks and uncertainties.
Please note that future results may differ due to changes in the business environment and otherfactors.

•

This document is for informational purposes only and is not intended as a solicitation to trade.

For inquiries, please contact:

Investor Relations, Corporate Planning Office, Takachiho Koheki Co., Ltd.
ir-takachiho@takachiho-kk.co.jp
03-3355-1201

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