ジャパンエレベーターサービスホールディングス（6544） – [Delayed]FY2022/3 Financial Results

FY2022/3 Financial Results Japan Elevator Service Holdings Copyright © japan elevator service holdings all rights reserved (TSE Prime Market: 6544) May 18, 2022 Contents 2 １ Summary ２ FY2022/3 Financial Highlights 3 FY2023/3 Financial Forecasts ４ Key Topics ５ Medium-Term Plan “VISION 2027” ６ ESG Initiatives Copyright © japan elevator service holdings all rights reserved 3 Summary Copyright © japan elevator service holdings all rights reserved 4 Summary under contract expansion 【Overview of FY2022/3】 Japanese economy still weighed down by COVID-19, but achieved record net sales of ¥29.75bn (+121.3% YoY), OP of ¥4.11bn (+113.9%) by providing support services for social infrastructure Net increase in elevators under contract in Japan of approx. 11,500 to approx. 79,000 Maintenance and Preservation Services business recorded sales of ¥21.13bn (+120.9% YoY) on firm growth in elevators Modernization Services business overcame impact from COVID-19 and focused sales activity on proposals tailored to client needs, underpinning strong growth to ¥8.02bn (+126.7% YoY) We have been proactively recruiting staff, especially maintenance engineers, in preparation for operational and geographical Headcount at year-end 1,618 (+220 YoY), with maintenance engineers topping 1,000 to reach 1,003 (+122 YoY) Full-year dividend per share target ¥14 【Outlook for FY2023/3】 With the Ukraine situation raising uncertainty over the global economic outlook, we also expect a tough environment for the Japanese economy. Corporate cost-cutting will probably gain momentum, underpinning demand for our highly price-competitive services. We forecast sales of ¥32.0bn, OP of ¥4.7bn. In April 2022, we established Japan Elevator Services Chushikoku Co., Ltd., opening new service offices in Hiroshima, Okayama, Tottori, Shimane, and Kagawa We aim to expand market share in each prefecture in Shikoku in collaboration with acquired subsidiaries. We plan to expand into new regions based on the market situation, opening the Akita service office in the Tohoku region and the Kumamoto service office in the Kyushu region. We hired a record 116 new recruits in April 2022 (including 103 maintenance engineers), and aim to bolster our human resources to support longer-term growth. 【Vision 2027】 Set strategic targets for FY2027/3 Step up ESG initiatives to enable sustainable growth Copyright © japan elevator service holdings all rights reserved Summary: Overview of FY2022/3 5 Overview Maintenance and Preservation Services: ・End-March 2022 elevators under maintenance contracts (Japan): around 79,000 ・Full-year net increase: around 11,500 (non-consolidated : around 7,400; M&A: around 4,100) ・Contribution from M&A with Toyota Facility Services, Ehime Elevator Services, Kanto Elevator System One-time modernization: ・Full-year elevators serviced (Japan): around 1,150 ・Much higher than 920 serviced in FY2021/3 (Japan) Quick Renewal: ・Development completed for 16 types of elevator ・Covers all elevators in scope for our maintenance services among those elevators for which parts supply has been stopped LiftSPOT: ・Machines under contract at end-March 2022: around 9,500 ・Aim to raise number of units installed, especially for high ad-effect buildings, to achieve growth in ad revenue Multi-story car parks: ・Over 18,800 car park spaces across the group ・Full-year net increase: around 10,400 spaces ・Large increase in spaces on M&A with EVOTECH in addition to operational expansion into Kyoto, Osaka, Hyogo M&A: Headcount: ・Acquisitions announced in FY2021/3: 7 companies 1: Toyota Facility Service 2: Ehime Elevator Service 3: Shikoku Shoukouki Service 4: Shikoku Elevator Service 5:JAPAN UNIECO ELEVATOR SERVICE (Vietnam) 6:Kanto Elevator System 7:EVOTECH (Maintenance, and repairment of mechanical parking equipment) ・Employee count at end-March 2022: 1,618 (including acquired companies) ・Full-year net increase: 220, 134% higher than the 164 increase in FY2021/3 on proactive hiring of maintenance engineers ・Expanded recruitment, especially of maintenance engineers (including experienced hires), in preparation for nationwide expansion Copyright © japan elevator service holdings all rights reserved 6 FY2022/3 Financial Highlights Copyright © japan elevator service holdings all rights reserved FY2022/3 Financial Results (Performance) FY2021/3 FY2022/3 Actual Actual Ratio to sales (%) Ratio to sales (%) YoY (%) Change （YoY）（%） Forecast (as of Nov 8, 2021) Net sales 24,521 100.0 29,751 100.0 121.3 104.4 28,500 Cost of sales 15,090 61.5 18,253 61.4 121.0 Gross profit 9,431 38.5 11,497 38.6 121.9 SG&A 5,818 23.7 7,384 24.8 126.9 Operating profit 3,612 14.7 4,113 13.8 113.9 100.3 4,100 OP up ¥500mn Non-operating income 136 162 0.5 118.9 Ordinary profit 3,715 15.2 4,225 14.2 113.7 100.6 4,200 0.6 0.1 0.1 0.0 33 15 5 49 0.2 148.5 8 3 0.0 55.0 0.0 65.7 3,725 15.2 4,230 14.2 113.6 Non-operating expenses Extraordinary income Extraordinary losses Profit before income taxes Profit attributable to owners of parent 2,362 9.6 2,726 9.2 115.4 104.9 2,600 Copyright © japan elevator service holdings all rights reserved 7 (million yen) Comments Maintenance & Preservation Services net sales up ¥3,661mn Modernization Services net sales up ¥1,689mn Refund on insurance cancellation ¥114mn Interest paid ¥15mn Gains on fixed asset disposal ¥8mn Losses on fixed asset retirement ¥2mn Increase in net profit attributable to owners of parent ¥364mn FY2022/3 Financial Results (Sales by Business) FY2021/3 FY2022/3 Actual Actual Ratio (%) Ratio (%) YoY (%) Forecast (as of Nov 8, 2021) Maintenance and Preservation Services 17,476 71.3 21,137 71.0 120.9 20,410 Modernization Services 6,330 25.8 8,020 27.0 126.7 7,480 Other Total 714 2.9 593 2.0 83.1 610 24,521 100.0 29,751 100.0 121.3 28,500 8 (million yen) Comments Growth in net sales accompanying increase in elevators under maintenance contract Growth in net sales accompanying increase in number of elevators serviced Copyright © japan elevator service holdings all rights reserved FY2022/3 Financial Results (B/S) 9 (million yen) FY2021/3 FY2022/3 Actual Ratio (%) Actual Ratio (%) YoY (%) Comments Current assets 8,168 39.9 9,822 38.8 120.3 Cash and deposits Notes and accounts receivable Property, plant and equipment Intangible assets Investments and other assets 1,674 8.2 2,179 8.6 130.2 3,606 17.6 4,154 16.4 115.2 8,175 2,610 1,520 39.9 12.7 7.4 9,559 4,307 1,648 37.7 17.0 116.9 Mainly an increase in tools, furniture & fixtures 165.0 Rise in goodwill from M&A ¥885mn 6.5 108.4 Non-current assets 12,305 60.1 15,515 61.2 126.1 Total assets 20,473 100.0 25,338 100.0 123.8 Current liabilities 7,242 35.4 8,706 34.4 120.2 Non-current liabilities Total liabilities Total net assets Total liabilities and net assets 2,725 9,968 10,505 13.3 48.7 51.3 4,876 13,582 11,756 19.2 53.6 46.4 178.9 136.3 111.9 20,473 100.0 25,338 100.0 123.8 Copyright © japan elevator service holdings all rights reserved Increase in portion of long-term liabilities payable within one year ¥863mn Increase in long-term debt ¥1,870mn FY2022/3 Financial Results (Cash Flows) 10 (million yen) FY2021/3 FY2022/3 Actual Actual Change from previous period Comments Cash and cash equivalents at beginning of period Cash flows from operating activities 1,145 3,018 1,660 3,005 Cash flows from investing activities △3,955 △3,279 Free cash flow △937 △273 Cash flows from financing activities Effect of exchange rate change on cash and cash equivalents Cash and cash equivalents at end of period 1,460 △8 1,660 765 9 2,161 514 △12 676 663 △694 17 501 Decline in expenditure on purchase of PPE ¥942mn Increase in expenditure on acquisition of subsidiary equity accompanying changes in scope of consolidation ¥450mn Copyright © japan elevator service holdings all rights reserved FY2022/3 Dividends Annual dividend amount 2nd quarter-end dividend Year-end dividend Commemorative dividend Payout ratio (consolidated) Except for Commemorative dividend DOE (consolidated) FY2021/3 Actual FY2022/3 Actual Change from Previous period ¥12 ¥12 – – 43.6％ 43.6％ 13.4％ ¥14 ¥14 – – 45.6％ 45.6％ 11.3％ 11 +¥2 +¥2 – – +2.0p +2.0p △2.1p Total dividend amount ¥1,062million ¥1,242million +180million ■Basic dividend policy We view the return of profits to our shareholders as one of the most crucial responsibilities of management. Our basic policy is to maintain stable dividends while ensuring sufficient retained earnings to bolster our operating foundation and support future expansion in response to changes in the operating environment. Copyright © japan elevator service holdings all rights reserved 12 FY2023/3 Financial Forecasts Copyright © japan elevator service holdings all rights reserved FY2023/3 Financial Forecasts 13 Unit: million yen; % FY 2022/3 FY2023/3 Forecast FY 2022/3 FY2023/3 Forecast FY 2022/3 FY2023/3 Forecast 1H 2H Full year Amount Amount YoY Amount Amount YoY Amount Amount YoY 13,906 15,500 111.5 15,844 16,500 104.1 29,751 32,000 107.6 2,050 112.1 2,284 2,650 116.0 4,113 4,700 114.3 2,050 106.1 2,293 2,650 115.6 4,225 4,700 111.2 1,212 1,300 107.2 1,514 1,650 109.0 2,726 2,950 108.2 Ratio to sales Ratio to sales Ratio to sales Ratio to sales Ratio to sales Ratio to sales Net sales Operating profit Ordinary profit Profit attributable to owners of parent Gross profit margin SG&A expenses ratio Operating margin Ordinary profit margin Profit margin 1,828 1,932 38.5 25.3 13.2 13.9 8.7 38.6 25.4 13.2 13.2 8.4 38.8 24.4 14.4 14.5 9.6 40.2 24.2 16.1 16.1 10.0 38.6 24.8 13.8 14.2 9.2 39.4 24.8 14.7 14.7 9.2 Copyright © japan elevator service holdings all rights reserved FY2023/3 Financial Forecasts (Sales by Business) 14 1H 2H Full year Unit: million yen; % FY 2022/3 FY2023/3 Forecast FY 2022/3 FY2023/3 Forecast FY 2022/3 FY2023/3 Forecast Maintenance and Preservation Services 10,112 11,100 109.8 11,024 11,500 104.3 21,137 22,600 106.9 Amount Amount YoY Amount Amount YoY Amount Amount YoY Modernization Services 3,483 4,100 117.7 4,536 4,700 103.6 8,020 8,800 109.7 Other Total 310 300 96.6 283 300 105.9 593 600 101.0 13,906 15,500 111.5 15,844 16,500 104.1 29,751 32,000 107.6 Copyright © japan elevator service holdings all rights reserved FY2023/3 Financial Forecasts (Depreciation, Capex) 15 (100 million yen) FY2022/3 FY2023/3（Forecast） Comments Depreciation Capex 9.2 28.4 12.2 33.8 Investment in remote inspection service PRIME (100 million yen) Trends in depreciation and capex 25.8 23.8 30.0 28.4 33.8 Depreciation Capex 4.2 8.4 5.4 6.3 8.1 9.2 FY2018/3FY2019/3FY2020/3FY2021/3FY2022/312.2 FY2023/3(Forecast) Copyright © japan elevator service holdings all rights reserved 40302010016 Key Topics Copyright © japan elevator service holdings all rights reserved FY2022/3 Financial Highlights: Domestic Market Elevators under maintenance contracts in Japan Approx. 79,000 (As of March 31, 2022) Net increase in maintenance contracts in Japan Approx. 11,500 (Non-consolidated :Approx. 7,400) :Approx. 4,100) (M&A (FY2022/3) 17 6,800 Net increase in maintenance contracts Non-consolidated M&A 8,000（unit） 7,0006,0005,0004,0003,0002,0001,00007,000 2,400 5,900 1,500 3,400 3,500 2,700 4,400 4,600 1,900 2,100 4,500 3,800 2,500 1,700 3,000 2,800 FY2018/3FY19/3FY20/3FY21/3FY22/3FY2018/3FY19/3FY20/3FY21/3FY22/31st Half 2nd Half Number of Domestic Locations above 10,000 (inc. M&A) Net increase in FY2022/3 approx. 11,500, comfortably 124 (FY2022/3:Increase of 23 locations) (As of March 31, 2022) M&A（Total） 12 28 companies locations Since listing, we have achieved net growth in elevators under contract every year by expanding our geographical scope and raising client trust and brand recognition Net increase in 2H FY2022/3 was down YoY, owing to commencement of large contracts slipping back to April April contracts showed net increase of over 1,000 YoY Copyright © japan elevator service holdings all rights reserved Areas covered by JES Group’s services Areas covered by Partner companies FY2022/3 Financial Highlights: Expanded Share in New Regions 18 Recruitment aimed at expanding share of maintenance market in new regions Biggest ever recruitment drive in FY2022/3, centered on Tohoku, West Japan, aimed at bolstering operations in new regions Maintenance market share in legacy regions 11% 15% ＜Group Headcount＞ +220 1,618 Tokyo, Saitama, Chiba, Kanagawa Hokkaido 1,398 Maintenance market share in new regions Share expansion through new facility openings, staff allocation 2% 4% 1,234 Tohoku West Japan FY20/3FY21/3FY22/3Based on JES research Strong margins in areas with maintenance market share of over 10%, especially Tokyo, Saitama, Chiba, Kanagawa For FY2022/3, invested upfront in record-high recruitment aimed at further expanding market share in new regions, and focused on bolstering engineering, sales, and administrative functions Operational framework in place in new regions, so aim to rapidly increase market share in thoese areas and lift sales, profit, and margins from FY2023/3 Copyright © japan elevator service holdings all rights reserved FY2023/3 Topics: Completion of New Facilities 19 The Kansai JIC (tentative name) is slated for completion in March 2024, aimed at raising margins in the West Japan area 【Purpose】 ・ Respond to need for Modernization Services in Western Japan region, where we expect major increase in elevators under contract contract ⇒ Stronger Sales and Margin ・ Aim to build trust in JES with latent clientele in West Japan through facility visits ⇒ Higher Maintenance Revenue ・ Currently we deliver from JIC in Wako city to clients in West Japan area, so completion will drastically reduce transportation costs for products and parts ⇒ Higher Margins ・ Possessing a large parts center in West Japan makes the following possible: (1) Greater ability to respond to malfunctions ⇒ Better Service 2024年3月竣工予定 関西JIC(仮称)のイメージ図 (2) Support for partner companies ⇒ Higher Sales Illustration of Kansai JIC (tentative name), slated for completion March 2024 Overview of facility (planned) ・Roof-top greening, solar panel installation ・Sustainable facility design with due consideration of environment ・Expected contribution to CO2 reduction on increase in volume of recycled or refurbished products handled Copyright © japan elevator service holdings all rights reserved Site area3,675.49㎡Gross floor space3,335.00㎡StructureSteel, 3-storyFY2023/3 Topics: New Business Initiatives 20 Multi-front expansion of elevator-related business LiftSPOT Overseas rollout Multi-front expansion of elevator-related business Helps prevent crimes within the elevator, and promotes effective use of the elevator space through display of advertising and other content Obtained patent for security camera with advertising function Independent service providers said to account for 50% share of overseas maintenance market, high likelihood of post-entry growth Recently have been targeting the rapid-growth ASEAN market, expanding into Indonesia, Vietnam Aim to continue market research, expansion overseas Greater crime prevention Display of information or advertising ・Promote installation of LiftSPOT to improve safety and peace-of-mind ・Aiming to expand ad display service and raise the advertising value as an outdoor medium, by driving installation in office buildings Indonesia (Jakarta) PT.Japan Elevator Service Indonesia Vietnam (Hanoi) JAPAN UNIECO ELEVATOR SERVICE LiftSPOT digital signage with security camera function Patent certificate (security camera with ad display function) Markets entered Copyright © japan elevator service holdings all rights reserved FY2023/3 Topics: Expansion into Malaysia 21 Acquired 80% stake in COFRETH, a facility management business in Malaysia, converting into consolidated subsidiary 【Background】 We position expansion into ASEAN as one of our growth strategies, and have continued to grow overseas operations. • March 2020: Established JES Indonesia as JV with local company, expanded into Indonesia market • November 2021: Acquired UNIECO, an independent elevator services firm that operates mainly in Vietnam capital Hanoi Also converted COFRETH (M) Sdn Bhd, Malaysian facilities management business, into subsidiary Item Detail Company name COFRETH(M)SDN.BHD. Place of registration Selangor Darul Ehsan, Malaysia Founded/established 24 March 1986 Nature of business 【Market】 ■Facilities management ■Energy services ■Green expertise ■Smart technology • Malaysia continues to show stable economic growth, and many Japanese companies have entered the market. • Growing preference for high-rise, high-end buildings is underpinning investment in necessary infrastructure •We view elevator installation and maintenance as growth markets. By converting COFRETH into a group company, we aim to generate and tap demand for elevator maintenance arising from the company’s facility management services for commercial facilities and office buildings. Copyright © japan elevator service holdings all rights reserved 22 Medium-Term Plan VISION 2027 Copyright © japan elevator service holdings all rights reserved VISION2027 23 【Basic Strategy】 Over the 28 years since its founding in 1994 through 2022, Japan Elevator Service has grown to become the leading independent elevator service company in Japan, with over 75,000 elevators under maintenance contracts. We aim to build upon the experience cultivated to date to accelerate growth and double the number of elevators under contract to more than 150,000 over the coming five years. As befits our TSE Prime market designation, we also aim to address social and environmental issues, respond to social change, and achieve sustainable growth in operations and corporate value. 【Key Indicators】 Growth Profitability Shareholder returns Elevators under contract of 150,000, Sales of ¥60bn+ OPM 20% (excluding goodwill amortization) Dividend payout ratio of 40% or more Growth and profitability metrics to be met by FY2027/3 OPM excludes goodwill amortization (a transitory item), premised on progress with aggressive M&A 【Growth Strategy】 Growth in Maintenance and Preservation Services sales driven by expanded domestic market Tap demand for modernization through increase in number of elevators under contract Raise profitability by improving business productivity and efficiency through staff training, share (organic & M&A) digitalization Copyright © japan elevator service holdings all rights reserved VISION2027 24 Raise corporate value through growth, prosper together with all stakeholders Double the number of elevators under maintenance contracts in Japan Over 150,000 Net Sales Over 60 billion yen Reduce environmental burden Diversify staff Enhance governance Operational growth Profitability ESG Shareholder returns Operating profit margin 20% Dividend payout ratio 40% or more Copyright © japan elevator service holdings all rights reserved VISION2027：Growth Targets: Elevators under Contract, Sales 25 Raise elevators under contract to over 150,000 by 2027 Trends in elevators under contract, sales Maintenance ContractsSales(100million)After Listing Over 60 billion yen CAGR 15%+ Over 150,000 150,000 320 297 245 213 179 104 118 135 153 56 77 20,000 25,600 32,000 35,000 38,800 43,400 48,800 54,800 67,500 79,000 Copyright © japan elevator service holdings all rights reserved VISION2027：Growth Targets: Elevators under Contract, Sales 26 Carried out upfront investment, focused especially on recruitment, to acquire share in Kansai JIC (tentative name) completion slated for March 2024, should drive growth in West Japan and other new regions sales, margins, service capacity Operating framework has been put in place to enable full-scale nationwide expansion from historical base of Tokyo, Saitama, Chiba, Kanagawa. Aim to double number of elevators under contract to 150,000 over the next five years Number of elevators under contract in Japan (excluding independent service providers) From Japan Elevator Association research (Survey of number of elevators in field in FY2020) Regional weighting for elevators under contract at JES (East Japan vs West Japan) West Japan Approx. 34％ Elevators under maintenance contracts in Japan Approx. 150k As of end-Mar FY2027/3 East Japan Approx. 66％ West Japan Approx. 46％ East Japan Approx. 54％ West Japan Approx. 19％ Elevators under maintenance contracts in Japan Approx. 79k As of end-Mar FY2022/3 East Japan Approx. 81％ Copyright © japan elevator service holdings all rights reserved VISION2027：Growth Targets: Our Share of Market Served by Independent Service Providers 27 Establish overwhelming lead among independent service providers through organic share capture plus M&A-driven operational expansion Current Situation Maintenance Ratio Affiliated to Independent VISION JES Group share amongst independent maintenance companies Target Share: 50% Expand market share Independent Approx. 20% JES Group Approx. 30% Others Manufacturer-affiliated Approx. 80% Source: Mitsubishi UFJ Research & Consulting Copyright © japan elevator service holdings all rights reserved VISION2027：Profitability Targets Operating Profit Margin 28 Productivity-driven profitability improvements through increase in elevators under contract, staff training, digitalization OPM (%) trends 1. Sales growth through increase in elevators under OPM (¥100mn)Operating Margin（%） 20 15 15 14 13 11 9 CAGR 25%+ 47 41 36 5 6 27 20 14 contract area – Win contracts on 100,000 elevators, chiefly in East Japan – Obtain market share of 10%, chiefly in West Japan area -Potential for growth in Modernization revenue in proportion with growth in elevators under contract 2. Raise productivity, service capacity -Increase in number of elevators per employee on increase in number of elevators under contract Improve service capacity through staff training using internal training systems — Higher productivity, service capacity on completion of Kansai JIC (tentative name) ３． Cost reductions – Use recycled or refurbished products to contribute to ESG Reduce indirect fixed costs, procurement costs as increase -in elevators under contract boosts economies of scale Improved profitability in parallel with number of elevators under contract OPM: 20% (When elevators under contract reaches 150,000; ex. goodwill amortization) Copyright © japan elevator service holdings all rights reserved VISION2027： Shareholder Return Targets Stable increase in EPS and DPS; dividend payout ratio of 40% or more Adjusted EPS (¥) Dividend payout ratio (%) 29 45.6 30.7 27.5 21.0 15.8 10.6 4.2 17/318/319/320/321/322/3Adjusted DPS (¥) 14.0 12.0 9.0 6.5 3.5 1.0 42.8 43.6 41.3 33.1 23.6 Keep dividend payout ratio above 40% 17/318/319/320/321/322/317/318/319/320/321/322/3Copyright © japan elevator service holdings all rights reserved 30 ESG Initiatives Copyright © japan elevator service holdings all rights reserved ESG Initiatives 31 ESG investment has been gaining recognition in Europe in particular and is now taking root within Japan. We believe the disclosure of ESG information is crucial, and indeed it is becoming a requirement. One of the reasons we have been able to achieve such rapid growth is that the concepts of environment, society, and governance have always been integral to our operations under the banner of safety and peace-of-mind. ● Keeping existing resources in operation through maintenance ● Supplying recycled and refurbished products ● Contributing to the environment through JIC/JIL Environment ● Facilitating female participation ● Contributing to those with weaker social standing ● Staff training and labor management ● Promoting facility accessibility Social Security and Safety Governance ● Promoting the concepts of safety and peace-of-mind ● Thorough compliance ● Establishing and passing on technical expertise Copyright © japan elevator service holdings all rights reserved E：Environmental Initiatives (1): Recycling/Refurbishing 32 Promoting parts recycling and refurbishment We prioritize the acquisition of recycled parts and maintain them in optimal condition We promote parts refurbishment, contributing to environmental efficiency E Environment Use of recycled products can enable operational expansion without the emission of greenhouse gases. Refurbished products require production processes to bring them into working order, which do generate some greenhouse gases. However, as with recycled products, the use of refurbished products can help reduce emissions. （Shipments） 16,00014,00012,00010,0008,0006,0004,0002,0000＜ Reduction in greenhouse gases ＞ Past one-year period 274 tons* Total for past three-year period 670 tons* * Estimated using data for greenhouse gases per unit of sales in manufacturing industry FY20/3FY21/3FY22/3Copyright © japan elevator service holdings all rights reserved E：Environmental Initiatives (2): Adoption of LED Lighting 33 Adoption of LED Lighting Promoting replacement of fluorescent lighting in elevators with LED lighting Environment E We are working hard to promote the switchover to LED lighting, which is showing rapid growth. In this way, we help our customers lower their greenhouse gas emissions. The reduction in GHG emissions based on the number of LED lights installed over the past year is approximately 950 tons.* * Estimated using data provided by electric power companies for difference between useful economic life of LED lighting and that of general lighting equipment Number of lights replaced Reduction in greenhouse gases （units） 13,00012,00011,00010,0009,0008,0007,0006,0005,0004,000（ton） 1,000900800700600500400FY20/3FY21/3FY22/3FY20/3FY21/3FY22/3Copyright © japan elevator service holdings all rights reserved E：Our Reduction in Greenhouse Gases 34 Contribution to environmental preservation from our business activities The Japanese government aims for carbon neutrality by 2050. We view initiatives to implement green supply-chain platforms as crucial. We have contributed to reducing GHG emissions in parallel with business growth, helping achieve a 1,224 ton reduction over the past year (our estimate for Scope 3 emissions). Environment E １．Promoting use of recycled/refurbished products, LED lights ２．GHG reduction equivalent to over one service sector company’s emissions In this way, we have been working strenuously to reduce GHG across society as a whole. 1,224 1,103 （ton） 1,3001,100900700500300100670 FY20/3FY21/3FY22/3Copyright © japan elevator service holdings all rights reserved E：Environmental Initiatives (3): JIC/JIL Environmental Initiatives 35 Environment E JIC/JIL environmental initiatives; coexistence with local area; greenery development Solar power Solar panels installed on roof, use of renewable energy Improved HVAC efficiency through use of conveying fan Improvement in energy efficiency: around 10% Reuse of cushioning, floor protection (Aobeni) to reduce waste Installation of resource collection box in offices, encourage all employees to put thought into recycling consumables Use of cloud-based electronic workflows to reduce use of paper resources Proactive participation in greening activity around JIC/JIL, in collaboration with Wako City Council of Social Welfare Greening absorbs CO2, and is said to mitigate the creation of heat islands through transpiration. We participate in creating restful, pleasant towns rich in nature by creating beautiful vistas that are also home to birds, insects, and other creatures. Copyright © japan elevator service holdings all rights reserved S：Social Initiatives (1): Facilitating Female Participation 36 Facilitating Female Participation Create a working environment where women and men can work together and fulfill their potential Social S Based on the spirit of the Equal Employment Opportunity Act, and the concept of gender equaltiy in the UN’s SDGs, we have achieved sharp growth in the number of female employees and female managers since listing on TSE, and will create opportunities to increase gender equality in the future. We will continue to build an environment where employees can shine regardless of gender, and to seek gender equality. Female employeesAs proportion of total employeesFemale managementGrowth rate28026024022020018016014012010017.00%16.00%15.00%14.00%13.00%2520151050170.00%150.00%130.00%110.00%90.00%70.00%FY18/3FY19/3FY20/3FY21/3FY22/3FY18/3FY19/3FY20/3FY21/3FY22/3Copyright © japan elevator service holdings all rights reserved S：Social Initiatives (2): Working practices, Employee Benefits 37 Social S Flexible working (direct-to-client travel; remote working) Based on government’s working practice reform, promote teleworking, travel to/from client site without need to check in at office Promote teleworking among head-office staff, diversifying working styles and preventing spread of COVID-19 Employee benefits Employees encouraged to make use of full array of benefits suited to employees’ stage of life Encourage use of full array of benefits Effective use of “child-rearing support”, “nursery allowance“ Ensure safety and peace-of-mind of employees Company housing New company housing built in Wako City (site of JIC/JIL), to be completed June 2022 By having employees on standby within walking distance of JIC Control Center, we have an emergency response system that promotes safety and peace-of-mind. Copyright © japan elevator service holdings all rights reserved S：Social Initiatives (3): Staff Training Initiatives 38 Staff Training Initiatives Enhance competence of maintenance engineers through proprietary training systems, develop diverse HR through tiered training Social S STEP24 (internal qualifications system) Improved technical competence, expanded career paths through internal qualifications system Hold competitions to test technical competence across domestic and overseas group companies Technical Championship Comprehensive training system Provide management training and specialist technical training for new hires, mid-career employees, and managers; provide training suited to diverse career choices Copyright © japan elevator service holdings all rights reserved G：Governance Initiatives (1): Established Sustainability Committee 39 Established Sustainability Committee In May 2022, we established a Sustainability Committee sitting under the board of directors Governance G Incorporates ESG concepts in management alongside former focus on remaining a going concern; considers initiatives and targets for ESG/sustainability matters that should be adopted by the company; can mandate individual divisions or the entire group to adopt specific initiatives Board of Directors Sustainability Committee ESG, Sustainability Measure Request / Information Sharing Each Headquarter/ Group Companies Copyright © japan elevator service holdings all rights reserved S：Social Initiatives (2): Corporate Governance Framework 40 Ratio of external directors Number of external directors increased by one since listing, ratio now at 33% ＜At the time of listing＞ Governance G Adoption of incentive plans (have employees to become shareholders) May 2018 Directors Implemented share-based payment scheme with restrictions on transfer Employees February 2022 Adopted share-based incentives with transfer restrictions, based on employee shareholder association Enhanced compliance systems Established Compliance Committee, to educate company and group directors and employees about compliance Previously established JES Hotline, a completely independent whistleblower hotline for reporting breaches of corporate guidelines, harassment, inappropriate conduct Reduced product failure rate by applying technical guidance and safety education to subsidiaries acquired through M&A Copyright © japan elevator service holdings all rights reserved 41 Financial Supplement Copyright © japan elevator service holdings all rights reserved Reference: Our Growth 42 Net sales ¥29.7bn Elevators under maintenance contracts Approx. 79,000 Net sales ¥24.5bn Elevators under maintenance contracts Approx. 67,500 Net sales ¥21.3bn Elevators under maintenance contracts Approx. 54,800 Net sales ¥13.5bn Elevators under maintenance contracts Approx. 38,800 Net sales ¥10.4bn Elevators under maintenance contracts Approx. 32,000 Net sales ¥7.7bn Elevators under maintenance contracts Approx. 25,600 Net sales ¥5.6bn Elevators under maintenance contracts Approx. 20,000 Release of “PRIME” remote inspection system 1H results End of Mar. 2022 Elevators under maintenance contracts in Japan Approx. 79,000 (1H FY2022/3: Increase of 11,500 units) (1H FY2021/3: Increase of 12,700 units) 20062007200820092010201120122013201420152016201720182019202020212022Note 1: FY2014 is a 6-month period due to the fiscal year-end being adjusted Note 2: Results are on a consolidated basis for FY2015 and onward Copyright © japan elevator service holdings all rights reserved Reference: Coverage As April 1, 2022 128 offices JES HD JES Hokkaido JES Jyonan JES Jyosai JES Kanagawa JES Tokai JES Kansai JES Chushikoku JES Kyusyu Japan Elevator Parts Japan Parking Service 【M&A】 Seiko Elevator Co., Ltd. NS Elevator Co., Ltd. 43 ：3 offices ：9 offices ：17 offices (+1) ：25 offices (+2) ：20 offices (+1) ：9 offices ：7 offices (－2) ：5 offices (+5) ：2 office (+1) ：8 offices ：3 offices ：1 office ：2 offices Miyoshi Elevator Co., Ltd. ：3 offices (ー3) [ ] Cosmo Japan, Inc. ：5 offices Nagano Elevator Co., Ltd. Kansai Elevator Co., Ltd. Tokyo Elevator Co., Ltd. ：1 office ：1 office ：1 office Toyota Facility Service Co., Ltd. : 2 offices (－1) Ehime Elevator Service Co., Ltd. : 3 offices Shikoku Shoukouki Service Co., Ltd. ：1 office Shikoku Elevator Service Co., Ltd. ：1 office Kanto Elevator System Co., Ltd. ：3 office EVOTECH Co., Ltd. ：1 office ( ) Movement from end-March 2022 [ ] Shared office excluded from count Areas covered by JES Group’s services Areas covered by Partner companies Copyright © japan elevator service holdings all rights reserved Reference: Future Business Development (Aiming to Build Up Global Standard Business) 44 Bu sine ss Maintenance and Preservation Modernization Domestic Overseas (mainly Southeast Asia) Now Onwards Now and Onwards Steady increase in number of maintenance contracts in areas where we have a presence One-time Modernization: Reinforced sales to clients and others Quick Renewal: Increasing number of new control cabinets Aiming to reach a business scale on par with EV manufacturer-affiliated companies Provide quality modernization services to meet customer needs Conduct research for local needs and market assessments, etc. to explore possibilities including alliance with overseas manufacturers New Installation Moderni-zation Maintenance / Preservation (Regardless of EV manufacturer) Aiming to build up global standard business by taking a balanced approach to new Installation, Maintenance, and Modernization businesses. New Installation No plan at present (However, substantial new installation of JES EV in Modernization business) New Business (Media Business) Launch Media businesses to capture business opportunities in EV and to add value to maintenance business There are plans to promptly introduce a facial recognition system to add marketing support functionality Developing Media businesses in overseas markets Copyright © japan elevator service holdings all rights reserved Reference: Financial Highlights (1) 45 Net sales Operating profit (Million yen) (Million yen) 29,751 21,339 24,521 15,326 17,900 4,113 3,612 2,717 2,034 1,351 FY18/3FY19/3FY20/3FY21/3FY22/3FY18/3FY19/3FY20/3FY21/3FY22/3Ordinary profit Profit attributable to owners of parent (Million yen) (Million yen) 4,225 3,715 2,726 2,362 2,703 1,700 2,001 1,339 1,265 848 FY18/3FY19/3FY20/3FY21/3FY22/3FY18/3FY19/3FY20/3FY21/3FY22/3Copyright © japan elevator service holdings all rights reserved Reference: Financial Highlights (2) 46 Net assets / total assets (Million yen) Net assetsTotal assets25,338 20,473 10,624 11,484 10,505 11,756 14,297 2,870 3,937 5,177 FY18/3FY19/3FY20/3FY21/3FY22/3Net assets per share Net income per share (Yen) 131.42 (Yen) 115.97 27.51 30.73 48.42 35.13 63.34 21.03 15.75 10.59 FY18/3FY19/3FY20/3FY21/3FY22/3FY18/3FY19/3FY20/3FY21/3FY22/3Note 1: Two-for-one stock split of its common shares was conducted on Jan.1,2021.Figures are considered this stock split. Note 1: Two-for-one stock split of its common shares was conducted on Jan.1,2021.Figures are considered this stock split. Copyright © japan elevator service holdings all rights reserved Disclaimer and Caution Concerning Forward-looking statements 47 Disclaimer Japan Elevator Service Holdings (the “Company”) has prepared these materials for your reference, so that you may understand the current status of the Company While these materials have been prepared based on generally-known economic and social conditions and certain assumptions that we have determined to be reasonable, the information contained herein is subject to change without prior notice for reasons such as changes in the business environment Caution concerning forward-looking statements The data and information in this presentation contains forward-looking statements. These statements are based on certain assumptions underlying current expectations, forecasts, and risks, and carry with them uncertainties which could cause actual results to substantially differ from the projected figures These risks and uncertainties include general industry and market conditions, as well as general domestic and international economic conditions, such as changes in interest rates and exchange rates The Company has no obligation to revise the forward-looking statements contained in this presentation at a later date, even if new information and/or future events emerge Copyright © japan elevator service holdings all rights reserved