船井総研ホールディングス（9757） – Summary of Financial Results for the year ended December 2021

For the Year Ended December 2021Summary of Financial ResultsFunai Soken Holdings Incorporated(TSE 1st section: stock code 9757)February 4, 2022Contents1Executive Summary(1) Consolidated Income(2) Income by Quarter(3) Annual Sales and Operating Income2FY2021 Financial Report(1) Results of Operations by Segment(2) Results of Operations by Segment: Consulting(3) Results of Operations by Segment: Logistics(4) Results of Operations by Segment: Direct Recruiting(5) Results of Operations by Segment: Digital Transformation(6) Consolidated Financial Position34Forecasts & Shareholder ReturnsOutlook and InitiativesStatement Regarding Use of These Materials© 2022 Funai Soken Holdings Inc.1Executive Summary1. Executive Summary(1) Consolidated IncomeCatering to clients’ needs amid Covid-19 resulted in record performance.Sales were solid, with sales of monthly support services and online advertisement agency services up in the consulting segment.Profit margins improved greatly, and we achieved our net income target even after upward revision.FY12/20FY12/21Amount (million yen)% of totalAmount (million yen)% of totalChange(%)Figures revised on Aug. 3, 2021 Amount (million yen)Change(%)Net sales25,027100.0 28,813 100.0+15.129,000-0.6Operating incomeOrdinary incomeNet income attributable to owners of the parent4,9825,0913,49819.920.314.06,3496,4394,37322.0+27.46,400-0.822.3+26.56,450-0.215.2+25.04,300+1.7© 2022 Funai Soken Holdings Inc.31. Executive Summary(2) Income by QuarterSales bottomed out in the second quarter of 2020, and have risen steadily in all quarters since. Income also showed large year-on-year increases in all quarters.Net sales20202021Operating income202020216,547 6,891 6,995 7,081 6,177 6,616 5,687 7,845 (Million yen)1,704 1,475 1,571 1,696 1,375 1,350 1,109 1,047 1Q+5.3％2Q+23.0％3Q+14.6％4Q+18.6％1Q+15.6％2Q+41.7％3Q+31.3％4Q+25.7％Ordinary income20202021Net income 20202021(Million yen)1,732 1,519 1,581 1,121 1,055 1,383 1,395 (Million yen)1,741 1,184 999 1,070 745 899 704 1,218 1,048 1Q+14.0％2Q+41.1％3Q+31.1％4Q+24.8％1Q+18.4％2Q+43.6％3Q+27.7％4Q+16.2％© 2022 Funai Soken Holdings Inc.4(Million yen)6,0004,0002,00001,5001,00050001,5001,00050001,5001,00050001. Executive Summary(3) Annual Sales and Operating IncomeA return to record-setting sales for the first time in two years10-year average growth: Sales: 12.9%, operating income: 12.8%Net sales (million yen)Operating income (million yen)21,69718,68512,485 4,6314,94616,43314,717 3,497 3,8598,5679,03810,0652,992 2,6251,9002,25510,0009,0008,0007,0006,0005,0004,0003,0002,0001,000028,8136,34925,752 25,0275,7054,98230,00025,00020,00015,00010,0005,0000520112012201320142015201620172018201920202021© 2022 Funai Soken Holdings Inc.FY2021 Financial Report2. FY2021 Financial Report(1) Results of Operations by SegmentSales and income increased on the back of strong growth in new orders in the consulting and logistics segments.The size of the net operating loss in the direct recruiting segment decreased, but performance remains subdued.(Intra-group & whole-group transactions)Operating incomeNet salesConsultingLogisticsDirect recruitingOther businessesTotalConsultingLogisticsDirect recruitingOther businessesTotal(Intra-group & whole-group transactions)© 2022 Funai Soken Holdings Inc.FY12/20FY12/21Amount (million yen)19,0582,6382,3319752325,027FY12/20Amount (million yen)4,801311-174-881314,982Amount (million yen)22,2563,3091,9531,2722128,813Change (%)+16.8+25.5-16.2+30.4－+15.1FY12/21Amount (million yen)5,846338-115821956,349Change (%)+21.8+8.7－－－+27.4Ratio ofnet salesRatio of operating incomeConsulting77.3%Logistics11.5%Direct recruiting6.8%Other businesses4.4%Consulting95.1%Logistics5.5%Direct recruiting-1.9%Other businesses1.3%*Percentages exclude intra-group & whole-group transactions72. FY2021 Financial Report(2) Results of Operations by Segment: Consulting—Consulting OrdersOnline seminars and management workshops provided a steady stream of new orders, while referrals from existing clients and direct sales also contributed to a robust increase in orders.Consulting Orders (Jan. thru Dec.)Consulting Orders Outstanding as of Dec.31(Million yen)(Million yen)y-o-y-10.7%12,669 y-o-y+16.7%Record high14,780 14,185 6,585 y-o-y+6.6%6,736 y-o-y-4.0%6,320 16,00014,00012,00010,0008,0006,0004,000FY2019/4QFY2020/4QFY2021/4QFY2019/4QFY2020/4QFY2021/4Q© 2022 Funai Soken Holdings Inc.82. FY2021 Financial Report(2) Results of Operations by Segment: Consulting—Sales by Service CategoryMonthly support sales exceeded pre-Covid levels, finishing 8.2% over the same period in the preceding year.Management workshop subscription income was steady as workshops were shifted online and subscription renewals among existing members held firm.Open seminar sales were up 5.3% y-o-y, buoyed by an increase in fee-paying participants in online seminars.Web ad listings increased 55.0% y-o-y on the back of a solid rise in accounts.(Million yen)16,00014,00012,00010,0008,0006,0004,0002,000012,778 11,815 Monthly support = Consulting services provided through regular visitsProjects = Regular reports, issued over a specific period, regarding investigations, diagnoses, and proposals based on the results of these activities＝ Fees received for industry-specific management workshops and other membership Management workshop subscriptionsactivitiesOpen seminars = Seminars for proprietors focusing on different business modelsListings = Online ad agency servicesJan. – Dec. 2020Jan. – Dec. 2021993 1,128 2,084 2,045 286 301 344 524 5,478 3,534 Monthly supportProjectsOpen seminarsListingsOthersManagement workshopsubscriptions© 2022 Funai Soken Holdings Inc.9+8.2％+13.6％-1.9%+5.3％+55.0％＋52.4％Consulting2. FY2021 Financial Report(2) Results of Operations by Segment: Consulting—Sales by SectorRobust performance was driven by solid sales of consulting services for clients in core segments such as housing, real estate, healthcare, nursing care, and welfare.We have launched a diverse array of digital transformation consulting services, including online sales DX for manufacturing clients, and DX to help clients use AI and robotics to increase the efficiency of work processes.Upper bar: Jan. – Dec. 2021Lower bar: Jan. – Dec. 2020Housing & real estate+12.7%Healthcare, nursing care, and welfare+13.0%Certified professional services+1.1%Specialist services+41.9%Mobility+3.5%Environment, energy-4.6%4,766 4,231 Manufacturing+37.9%Educatio, childcare,schools-2.9%3,067 2,714 1,537 1,521 1,008 710 964 931 605 635 Growth supportRaising business performance to achieve profit-and-loss statement improvementsTalent development supportHRD consulting services to help clients recruit, train, and assess workers, and invigorate their organizationsSupport for improved corporate value, etc.Helping clients achieve balance sheet improvements through assistance with business ownership succession, M&As, and financial matters.Dining+2.6%Food+9.4%HR business-33.2%Amusement-15.6%598 434 588 606 588 573 512 468 450 674 403 478 01,0002,0003,0004,0005,000(Million yen)01,000(Million yen)Figures show total sales of consulting contracts, management workshop subscriptions, and open seminars, grouped in accordance with the company’s industry classifications, for Jan. through Dec. 2020 and 2021.© 2022 Funai Soken Holdings Inc.102. FY2021 Financial Report(2) Results of Operations by Segment: Consulting—Consulting Client Numbers Consulting client numbers rose far above last year’s figures starting in March, reaching our highest ever number of client companies in December.(No. of companies)20202021Monthly Consulting Client Company Numbers3,8003,6003,2003,0002,8003,4003,324 3,347 3,351 3,370 3,443 3,351 3,245 3,119 2,953 2,944 3,566 3,696 3,494 3,507 3,511 3,507 3,465 3,431 3,414 3,395 3,375 3,197 3,229 3,210 Jan.Feb.Mar.Apr.MayJun.Jul.Aug.Sep.Oct.Nov.Dec.*Figures denote number of client companies (in Japan) per month in the consulting segment (excl. intra-group transactions).© 2022 Funai Soken Holdings Inc.112. FY2021 Financial Report(3) Performance by Segment: Logistics—Quarterly Sales by Service CategorySales of highly profitable logistics consulting services tracked level with 2020, but solid performance in the logistics operations segment drove an increase in sales and income.Logistics ConsultingHelping clients reduce logistics costsLogistics OperationsLogistics on behalf of clientsConsulting for logistics companies was strong, with increases in sales and workshop memberships.Orders outstanding from shipper companies increased, indicating that rock bottom has been reached and we are now in a recovery trend.Deep-mining of existing clients and growth in client orders resulted in an increase in sales.Demand for product deliveries was particularly strong, generated by the shift to a stay-at-home economy.Logistics TradingReducing purchasing costs through joint buyingAlthough a decline in movement among people and companies led to lower sales of our main offering in this space, joint purchasing of fuel, the increase in fuel prices ensured sales were up.(Million yen)7002019202020216005004003002001000210157156152139137172164159212206130652444474482385491411341318330321336(Million yen)7006005004003002001000(Million yen)70060050040030020010001Q2Q3Q4Q1Q2Q3Q4Q© 2022 Funai Soken Holdings Inc.1161111071Q122108912Q138118991401231083Q4Q122. FY2021 Financial Report(4) Results of Operations by Segment: Direct RecruitingDespite the ongoing lack of movement in the industry due to Covid-19, renewal rates remain high among Recruiting Cloud clients.Net sales (million yen)Renewal rate93.4%Cloud-based AI recruiting service814 800 658 583 508 558 493 481 530 545 511 ※367 414 356 291 236 90080070060050040030020010001Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q2018201920202021*Includes sales returns for some services.© 2022 Funai Soken Holdings Inc.Uses big data and an automated AI system to create ads that attract response.Automated listing in optimal, cost-effective media reduces cost per response.AI allows for 24-hour 365-day operation and integrated administration of respondents, streamlining hiring work.132. FY2021 Financial Report(5) Results of Operations by Segment: Digital TransformationThe group is investing significant effort into digital transformation services, and performance in this area was strong this year.Digital transformation has become a core driver of our robust overall performance, accounting for more than 30% of total sales.20202021Total: 25,027Total: 28,813 (up 15.1% y-o-y)(Million yen)(Million yen)17,583 7,444 29.7% of total19,277 +9.6% y-o-y9,536 33.1% of total+28.1% y-o-y（※）1,024 3,534 2,332 554 1,359 +32.7% y-o-y5,478 +55.0% y-o-y1,953 -16.3% y-o-y746 +34.7% y-o-yDigital transformation service salesDX-solution-based consulting salesSales of other servicesListing (online ad agency service) sales*With the Accounting Standard for Revenue Recognition applied, sales were 4,056 million yen, percentage of total was 17.7%, and y-o-y change was +19.4%.Recruiting Cloud (AI-powered recruiting service) salesSystems development sales© 2022 Funai Soken Holdings Inc.142. FY2021 Financial Report(6) Consolidated Financial Position—Balance SheetAs of Dec. 31, 2020As of Dec. 31, 2021ChangeMajor factors behind changes(Million yen)Current assets16,30418,996+2,692 Increase in current assets: Mainly increases in cash and deposits, trade notes and accounts receivable; decreases in short-term investment securities.assetsNoncurrent Property, plant, and equipmentIntangible assetsInvestments and other assetsTotal assetsCurrent liabilities5,9876754,9845,917705-70+305,265+280Increase in noncurrent assets: Mainly increase in investment securities.27,95130,8843,9975,037+2,932+1,039 Increase in current liabilities: Mainly increases in trade notes and accounts payable, current portion of long-term loans payable, and income taxes payable.Noncurrent liabilities265160-105Decrease in noncurrent liabilities: Mainly decrease in long-term loans payable.Total liabilitiesTotal net assets4,2635,197+93423,68825,687+1,998 Financial position remains sound with a high equity ratio of80.7%.Total liabilities & net assets27,95130,884+2,932© 2022 Funai Soken Holdings Inc.152. FY2021 Financial Report(6) Consolidated Financial Position—Cash Flow StatementCash earned from operations was 5,214 million yen. This was mainly due to 6,415 million yen in net income before income taxesand other adjustments, 1,610 million yen in income taxes paid, and 540 million yen in income tax refunds.The net use of cash in investing activities was mainly due to expenditure of 218 million yen on acquisition of property, plant, and equipment, and intangible assets.The net use of cash in financing was mainly due to a net use in sale and acquisition of treasury shares, as well as distribution of dividends.(Million yen)FY12/20FY12/21ChangeCash flows from operating activitiesNet cash provided by (used in) operationsNet income before income taxes and other adjustmentsDepreciationDecrease in accounts receivableDecrease (increase) in other assetsIncrease (decrease) in other liabilitiesOther cash provided by (used in) operationsSubtotalInterest and dividends receivedIncome taxes paidIncome tax refundsOthersNet cash provided by (used in) operationsNet cash provided by (used in) investmentsPurchase of short-term and long term investment securitiesProceeds from sales of short-term and long term investment securitiesPurchase of property, plant and equipment and intangible assetsOther cash provided by (used in) investmentsNet cash provided by (used in) investmentsNet cash provided by (used in) financingPurchase of treasury stockDividends paidRedemption of bondsOther cash provided by (used in) financingNet cash provided by (used in) financingChange in cash and cash equivalentsCash and cash equivalents at start of fiscal yearCash and cash equivalents at end of fiscal year© 2022 Funai Soken Holdings Inc.5,176280128(270)(296)(23)4,99541(1,958)454(16)3,515(705)1,192(223)0263(749)(2,135)(500)190(3,194)58511,63012,2166,415240(449)(489)475796,27242(1,610)540(30)5,214(724)721(218)2(219)(266)(2,272)－(8)(2,547)2,45812,21614,6751,239(40)(578)(218)7711031,276134886(13)1,698(19)(470)42(483)483(136)500(199)6471,8725852,458(Million yen)3,515 5,214 Cash flows from investing activities202020212020263 (219)2021Cash flows from financing activities(3,194)(2,547)20202021FY12/20FY12/21(5,000)(3,000)(1,000)1,0003,0005,00016Forecasts & Shareholder Returns3. Forecasts & Shareholder Returns(1) FY2022 Earnings ForecastForecast for FY2022: 25.3 billion yen in net sales and 7.1 billion yen in operating income.1. Due to the company’s adoption of the Accounting Standards Board of Japan’s Accounting Standard for Revenue Recognition starting in FY2022, consolidated net 2.3.4.sales have reduced 7,700 million yen compared with pre-adoption figures.Figures for FY2021 have been adjusted to include the effects of the Accounting Standard for Revenue Recognition for those transactions affected by the new standard—i.e., in which the company is an agent.Starting in FY2022, the direct recruiting segment is now included in the “other businesses” category.Shinwa Computer Service, whose contribution was previously included under “other businesses,” is scheduled to merge with Funai Soken Corporate Relations on July 1. Therefore, its contribution is now shown in the consulting segment.Consolidated mid-year forecast for FY2022Consolidated full-year forecast for FY20222021 (actual) (million yen)2022 forecast (million yen)Change (%)FYI: Pre-adoption forecast (million yen)(See 2)11,073(See 1)12,3002021 (actual) (million yen)2022 forecast (million yen)Change (%)FYI: Pre-adoption forecast (million yen)(See 2)22,789(See 1)25,300+11.033,000Net salesOperating incomeOrdinary income3,2763,3133,6003,6002,400+11.016,000＋9.93,600＋8.63,600Net salesOperating incomeOrdinary income6,3496,439Net income2,255＋6.42,400Net income4,3737,100＋11.87,150＋11.04,800＋9.77,1007,1504,800Sales Forecasts by SegmentOperating Income Forecasts by SegmentConsultingLogisticsOther businesses(See 3 & 4)20,600 mil. yen3,200 mil. yen1,500 mil. yenConsultingLogisticsOther businesses(See 3 & 4)6,630 mil. yen370 mil. yen100 mil. yen© 2022 Funai Soken Holdings Inc.183. Forecasts & Shareholder Returns(2) Annual DividendsIn 2022, we plan to pay a total dividend of 53 yen per share, comprising an interim dividend of 25 yen and a year-end dividend of 28 yen.Initial forecastActual dividendRecord dateFY2017Dividend(per share)39.0DetailsDividend(per sharer)DetailsAnnual Dividend per Share2Q-end 15.0Year end 24.045.02Q-end 15.0Year end 30.0NB: Shares in the company were split 1.5-for-1 in January 2018. For ease of comparison, figures for 2017 have been adjusted by the same ratio; figures in parentheses are the actual figures.FY20181.5-for-1 share split33.02Q-end 15.0Year end 18.035.0FY201940.02Q-end 17.0Year end 23.040.02Q-end 15.0Year end 20.0*including special dividend of 2.02Q-end 17.0Year end 23.0*Including a commemorative dividend of 3.0FY2020FY202145.02Q-end 20.0Year end 25.045.02Q-end 20.0Year end 25.046.02Q-end 21.0Year end 25.048.02Q-end 21.0Year end 27.040.035.0 30.0 （45）Planned dividend for the year: 53 yenYear end48.0 45.0 Year end28.02Q-end25.02Q-end21.02021(Projected)2022(Forecast)19FY2022(Forecast)53.02Q-end 25.0Year end 28.0© 2022 Funai Soken Holdings Inc.2017201820192020(Yen)60.050.040.030.020.010.00.0Outlook and Initiatives4. Outlook and Initiatives(1) Progress toward Achieving the Mid-Range Business PlanIn 2022, the final year of the current Mid-Range Business Plan, our target is sales of 25.3 billion yen (with the new Accounting Standard for Revenue Recognition applied).We are aiming for sustained double-digit growth and operating income of 7.1 billion yen in FY2022.Net sales (million yen)Operating income (million yen)21,69718,685Before Accounting Standard for Revenue Recognition33,000After Accounting Standard for Revenue Recognition25,75225,02728,81325,3004,9465,7054,9826,3497,100201820192020202120222022Previous Mid-Range Business PlanCurrent Mid-range Business Plan4,6312017© 2022 Funai Soken Holdings Inc.7,100214. Outlook and Initiatives(2) Business StrategyWe offer existing clients thorough Post-Covid “new normal” support to help them cope amid the related upheaval, and are stepping up digital transformation consulting for SMEs and comprehensive management consulting services for mid-scale companies. As part of this, we have decided to: 1) Improve our ability to offer digital transformation consulting and solutions by partnering with platform providers worldwide; and 2) Merge two of our subsidiaries to bolster our range of digital services.Implementation support (by industry/subjects)DX supportStrategy proposalsLargeCompany scaelComprehensive management consulting solutions for mid-scale companies- Consulting services for helping clients solve problems according – Proposal of solutions based on industry- and/or subject-specific ConsultingLogisticsDirect recruiting- Support of M&A and business restructuring leveraging our to their growth stagesexpertise in each industryexpertise- Support for DX reconstruction of core systems including for production, sales and labor management2) Merger of two Funai subsidiariesComprehensive management consulting services for SMEsDX consulting services for SMEsConsultingConsultingGrowth supportTalent development supportSupport for improved corporate value＋Support the shift to the new normal*Provide attentive consulting services to clients under the state of emergencyGroup’s strengths since its foundationmedumiSmall and © 2022 Funai Soken Holdings Inc.Digitalization supportSupport for productivity improvement- Support for the adoption of industry-specific digital solutions that Sales DX support- Support for productivity improvement of SMEs from the – Support for the adoption of DX that “improves performance,” by produce resultsperspective of digital shiftsfocusing on sales process.1) Partnership agreement with Zoho Japan to develop a workforce of digital solutions staff22*Support clients’ shift to the new normal in the post-COVID era from the perspective of company management4. Outlook and Initiatives(2) Business Strategy 1) Partnership Agreement with Zoho Japan to Develop Digital Solutions StaffWe entered into a training and certification partnership agreement with Zoho Japan to bridge the digital solutions staffing gap and improve productivity. Under the agreement, Funai Soken Holdings and the rest of the Funai Soken Consulting Group have exclusive use of Zoho* products in Japan for the group’s digital solutions staff training business.Zoho is a suite of cloud-based solutions to help businesses digitalize their operations and improve efficiency. Zoho has more than 70 million users at 250,000 companies worldwide.From left: Kazuhiro Oyama, vice president of Zoho Japan;Manikandan Thangaraj, president of Zoho Japan (on screen); Takayuki Nakatani, president & CEO of Funai Soken Holdings.*The agreement was signed on December 28, 2021.© 2022 Funai Soken Holdings Inc.From left: Hitoshi Nagira, president, Funai Soken Corporate Relations; Kazuhiro Oyama; Hitoshi Nakazawa, VP of Zoho Business, Zoho Japan; Manikandan Thangaraj; Harish Sekar, Manager Business Development, Zoho Japan; Takayuki Nakatani; Satoshi Oka, head of Business Development Office, Funai Soken Holdings; and Daisuke Shingai, president & CEO, Funai Consulting Inc.234. Outlook and Initiatives(2) Business Strategy 2) Merger of Subsidiaries and Change of Trade NameThe Funai Soken Holdings Board of Directors voted on February 4, 2022, to merge two Funai Soken Consulting Group companies and rename the surviving company. The purpose of the merger is to bolster the group’s ability to provide digital services.1. Stronger platform for hiring and developing digital solutions staffDeploying a common method for acquiring and training digital solutions staff will help the group enhance its digital services workforceScheduled to merge and become Funai Soken Digital, Inc., (name TBC) on July 1, 2022Funai Soken Corporate Relations Inc.Online marketing, sales supportBPO, BPO consultingShinwa Computer Service Co., Ltd.Solid track record of reliable systems developmentHiring, training digital solutions staff2. Stronger promotional and sales support capabilitiesLeveraging promotional functionality and the group’s support structure will enhance the merged company’s ability to pursue new outsourced ordersMethod of Merger and Allocation of Stake in New CompanyAn absorption merger, in which Funai Soken Corporate Relations will absorb Shinwa Computer Service and be the surviving company, and Shinwa Computer Service will become defunct.As both merging companies are wholly-owned subsidiaries of Funai Soken Holdings, no allocation of shares or other monies shall arise in this case.© 2022 Funai Soken Holdings Inc.244. Outlook and Initiatives(3) Financial Strategy: (1) Capital Policy and Shareholder Return PolicyAmid residual impact from Covid-19 in 2021, we undertook a share buy-back. By acquiring treasury shares, we aimed to improve capital efficiency to a consolidated ROE of at least 15% and raise the return-to-shareholders ratio to at least 60%. Ultimately, we achieved those goals, with a consolidated ROE of 18.2% and a return-to-shareholders ratio of 60.1%. We remain committed to achieving the targets of 2022, the final year of the current Mid-Range Business Plan.■Consolidated ROE and capital cost: Results and targets■ Total dividends and total shareholder return ratio: Results and targets2020-2022Target: 15% or higher18.2（％）ROECost of Capital15.916.417.415.313.82017-2019Target: 10% or higherTotal dividends(Million yen)Share buy-backTotal shareholder return ratio2020-2022Target: 60% or higher90.685.078.147.39991,50073960.12607.76.88.27.85.54.41,5201,7712,0032,2332,3702016201720182019202020212022(Forecast)201720182019202020212022(Forecast)Previous Mid-range Business PlanMid-range Business PlanPrevious Mid-range Business PlanMid-range Business Plan© 2022 Funai Soken Holdings Inc.(%)201510504,0003,0002,0001,0000(%)10080604020025201510504. Outlook and Initiatives(3) Financial Strategy: (2) Investment for Growth: Allocation of cashflow from operating activities over three yearsIncrease shareholders’ value by allocating cashflow from operating activities and cash reserves to investment for the next stage of growth and to appropriate shareholder returns. Continue investment for growth and shareholder returns.Priority initiatives- Business Strategy- M&As- Hiring and education- Developing talent for digital functions- DX investment- Core systems- Develop new consulting services utilizing big data, AI, etc.Continue investment for further growth as mentioned aboveShareholder returnContinue to enhance shareholder returns with the aim of achieving total shareholder return ratio of 60% or higherInvestment for growthCashflow from operating activities over 3 years12 billion yen*Cash reserves5.0 billion yen(Excluding operating capital of 6.0 billion yen*)*The numbers have been revised reflecting the revised plan© 2022 Funai Soken Holdings Inc.264. Outlook and Initiatives(4) ESG InitiativesWe will further strengthen our initiatives for ESG, recognizing its importance, under the Group philosophy: “We help to build a better future for people, business, and the society.”Our Group’s ESG visionStrengthen ESG initiatives through management consulting and other business activitiesCSR activitiesGreat Company Awards● Contribute to economic growth through consulting onimplementation support for mid-scale companies and SMEs- Profitability- Growth- Uniqueness●Provide diverse personnel with opportunities to unleash their capabilities (emphasizing diversity and inclusion)Awarded 77 companies over twelve years(every year since 2010)● Contribute to the environment through consulting relating to energy savings and renewable energy-related areas● Industry-specific consulting making environmentally-conscious proposals, advice and support (for housing, automotive, food and other industries)© 2022 Funai Soken Holdings Inc.Environmental-friendlinessEnvironmentSocial and educational significanceSocialGovernance● Strengthen corporate governance ●Contribute to development of local societies through consulting for regional revitalization (revitalization of local community, local production local consumption, response measures for declining birthrate)● We support the Great Company Award program run by Funai Foundation helping to find and promote “great companies” that serve as role models for many companies.●Industry-specific consulting providing proposals, advice and support taking social significance into account (for healthcare, certified professional services, preschool and education, and other industries)*We define “great companies” as “companies with sustained growth that demonstrate their unique merits along with social and educational significance, profitability, growth and environmental-friendliness.”274. Outlook and Initiatives(4) ESG Management Initiatives in 2021EnvironmentSocialExamples of ESG-friendly consulting services, seminars, workshopsNew management diagnosis servicesConsulting services as a vehicle Funai SokenConsulting for the goodof all societyGroupESG initiatives© 2022 Funai Soken Holdings Inc.Net-zero energy housing, high-spec smart house management workshopOpen seminar for logistics industry clients on implementing ESGUpper management professional development seminarsManagement Strategy Seminar covering strategies for the age of labor shortagesSeminars to help develop tomorrow’s female leadersCalculating CO2 emissions under the Greenhouse Gas ProtocolTraining to help proprietors understand decarbonization and action on climate changeManagement consulting on decarbonization (from strategy to implementation)Support for installing renewable energy and energy-efficient facilitiesNew business models for the decarbonization market ageSeminars for female employeesOutcome-focused communication skillsProblem-solving for improved productivityHow to set goals in a way that leads to growthNext-generation upper management candidate training…and much moreReducing the environmental impact of the group’s business processesCalculated CO2 emissions caused by electricity useReduced waste and office paper usage through remote working arrangementsGroupwide targets for 2030Women in management positions: 30%Mid-career hires in management positions: 50%Workforce development and promoting diversityStronger information securitySoshiki SanbōHelping clients overcome the obstacles to sustainable organization buildingBusiness Model SanbōHelping clients overcome the obstacles to driving sustainable growthESG DiagnosticsHelping SMEs and mid-scale companies overcome ESG challenges in partnership with the Shoko Chukin BankGovernanceActions implemented and assessed in accordance with the Basic Policy on Information SecurityStudied the level of information security at group companiesRegulations established, manuals compiled, and employees trained accordinglySustainability Committee up and runningAreas for sustainability improvement discussed, goals set28In order to ensure legal compliance in the running of the company’s business and to drive mid-to-long-term corporate value, the company is working to strengthen its corporate governance structure, and established a Sustainability Committee on July 1.ShareholdersAppointments / dismissalsAppointments/ dismissalsAppointments/ dismissalsBoard of DirectorsAuditsAudit and Supervisory CommitteeNominating CommitteeSuccessor Nominating CommitteeCompensation CommitteeSustainability CommitteeRisk Management CommitteeInternal Control CommitteeGovernance CommitteeOversightInternal Oversight Office4. Outlook and Initiatives(5) Corporate Governance StructureNominating CommitteeEnsures objectivity and validity of the process for selecting candidates for director positions.3 out of 4 members are outside directorsSuccessor Nominating CommitteeEnsures fairness and transparency of selection and nurturing of future presidential candidates.3 out of 4 members are outside directorsCompensation CommitteeEnsures objectivity and validity of officer remuneration by keeping remuneration tied to mid-to-long-term business performance.3 out of 4 members are outside directorsGovernance CommitteeDiscusses governance issues from a mid-to-long-term perspective, and endeavor to strengthen governance.All 4 members are outside directorsSustainability CommitteeCoordinates cross-sectional pursuit of sustainability throughout the whole group, and implement ongoing issues under strict governance.2 out of 4 members are outside directorsExecutive CommitteeAccounting auditorsAccounting auditsPrevious Initiatives to Strengthen the Group’s Governance2019 Established a Successor Nominating Committee, appointed outside directors to the boards of the group’s core *As of July 1, 2021companies, appointed in-house attorneys.2020 Appointed 1 female director.2021 Established a Sustainability Committee. The five advisory committees shown to the left are chaired by outside © 2022 Funai Soken Holdings Inc.directors.29Our MissionWe help to build a better future for people, businesses, and societyWe at the Funai Consulting Group will offer solutions for a better future to all the people and businesses we are involved with – and to society as a whole – and will do our best to turn those ideas into reality.Our Vision for the FutureTrusted and respected by society for bringing joy to people and businesses through our workWe are determined to work together as a corporate group to bring joy to the people and businesses we are involved with. By earning the trust and respect of the people and businesses we seek to please, we can also earn the trust and respect of society as a whole.Statement Regarding Use of These MaterialsPlans, outlooks, strategies and otherreasonable judgments made in accordance with information currently available.information contained herein are based onActual results may differ greatly from these forecasts for a number of factors.All possible care has been exercised in preparing these materials, butthe FunaiConsulting Group assumes no responsibility for losses or other damages resulting fromerrors concerning any information.These materials are not intended to encourage any kind of investment. Investmentdecisions are the sole responsibility of the individual investor.Please direct enquiries regarding IR to:Funai Soken Holdings, Inc. IR & PR OfficeTEL: +81-(0)6-6232-2010Mail: ir@funaisoken.co.jp URL: https://hd.funaisoken.co.jp