As of May 14, 2021

Basic Management Policies of the Company

The corporate philosophy of the Company being that we “reciprocate our customers’ continued trust, create dedicated products by harnessing our vibrant knowledge and technology, and contribute to a fulfilling lifestyle as a mainstay of information and culture,” the basic management policy of the Company is to grow and develop with our customers and society.

All employees will share the same sense of purpose and concept of values in taking on the challenge of establishing new technologies and business pursuant to TOPPAN VISION 21, which sets out Toppan’s Corporate Structure and Business Fields for the 21st century, as well as comply with corporate ethics and give due consideration to the environment and safety in conducting corporate activities amid various relationships and interactions with society.

The Toppan Group will seek to expand business domains and generate new income flows through the realization of TOPPAN VISION 21, thereby achieving the Group’s lasting growth and becoming a company that is highly esteemed and trusted not only by its shareholders and customers, but also by consumers and the broader community.

Medium Term Plan

Toppan has devised its Medium Term Plan. The plan takes fiscal 2021 as its first year and covers the period April 2021 to March 2023.

The medium term plan is positioned as the first phase of further growth for the future. Toppan will be focusing efforts on transforming its business and strengthening its management foundations.

The key concept is “Digital & Sustainable Transformation,” and we aim to achieve an ROE of 5% in fiscal 2025 by implementing the measures described below. Toppan will strive to enable a sustainable society and enhance enterprise value as a leader in providing solutions to social issues globally through Digital Transformation (DX) and Sustainable Transformation (SX).

Priority Measures for the Medium to Long Term

【1】Transforming the business portfolio to enhance profitability

To advance transformation of the business portfolio, Toppan will position 1) driving the DX business, 2) expanding the Living & Industry business overseas, and 3) creating new businesses (frontier business) as priorities and target enhanced profitability.

1 - ① Driving the DX business

As business practices and consumer tastes and behavior change significantly and digitalization accelerates, we will aim to use marketing technology to support the customer experience (CX) provided by client companies’ brands, products, and services; create a BPO business based on leveraging data and combining digital technologies with operational know-how; and expand the security business overseas.

Through these efforts we intend to increase the proportion of total operating profit accounted for by DX business to the 30% level in fiscal 2025.

1 - ② Expanding the Living & Industry business overseas

Against a background of increasing needs for sustainability around the world, Toppan will target overseas business expansion centered on Living & Industry products, such as packaging and décor materials.

We will create a global network enabled by M&A and generate synergies with technologies developed in Japan. In packaging, we will leverage sustainable packaging using barrier films, with a focus on Japan, North America, and Indonesia, while in décor materials we will strengthen collaboration with overseas production bases to establish a local production for local consumption model and take in global demand. We will also implement risk control from a global governance perspective as we accelerate overseas expansion.

Based on these initiatives, we are aiming for overseas Living & Industry business to account for at least 15% of total operating profit in fiscal 2025.

1 - ③ Creating new businesses (frontier business)

Centered on a core of technologies and business models with competitive advantages, we will target the creation of new businesses by focusing efforts on digital platforms and macro trend themes, such as those related to sustainability and 5G/6G networks. In terms of our four growth fields of Healthcare & Life Sciences, Education & Cultural Exchange, Urban Space & Mobility, and Energy & Food Resources, we will concentrate efforts on healthcare in particular and aim to promptly establish businesses in the sector.

Based on this, we are aiming for the creation of new businesses to account for at least 10% of total operating profit in fiscal 2025.

【2】Strengthening management foundations to generate new growth

Based on digital transformation (DX), Toppan will strive to further bolster its competitive edge and form a foundation for business transformation by 1) modernizing system infrastructure, 2) advancing smart factories, 3) strengthening R&D functions, and 4) driving human resource development.

2 - ① Modernizing system infrastructure

In addition to enhancing the efficiency and sophistication of sales activities and business operations, we will target data-driven management and the creation of an organically-linked Group system that enables transformation of business models and prompt establishment of new businesses.

Through these activities, in fiscal 2025, we will achieve DX for the entire Toppan Group, link systems throughout the Group organically, and create a framework that enables transformation of business models and prompt establishment of new businesses.

2 - ② Advancing smart factories

At manufacturing sites, we will accelerate efforts to drive change in production methods and target the creation of sustainable smart factories that ensure safety and security, provide high quality, and require less manpower for their operation by taking advantage of AI for automation and labor saving as well as next-generation manufacturing execution systems (MES) for overall optimization. We will also target sustainability through proactive efforts to create carbon neutral and circular factories.

2 - ③ Strengthening R&D functions

In research and development, we will drive transformation of the portfolio by focusing on technology innovation and creating new businesses based on technology. We will concentrate efforts on establishing mechanisms to support these initiatives, enhance R&D efficiency by introducing tools enabled by digital technology, and create a global R&D structure while also reinforcing intellectual property strategy.

2 - ④ Driving human resource development

In alignment with the management strategy, we will secure and develop human resources to drive priority themes such as DX and global business. We will optimize our personnel by acquiring new talent through expanded recruitment channels, enhancing reskilling programs, and implementing integrated measures to shift the allocation of human resources. In addressing the Sustainable Development Goals (SDGs), we aim to create new value by further enhancing working environments through such initiatives as driving diversity and inclusion and establishing a declaration on human rights. Based on these efforts we will accelerate business growth by advancing working styles and talent management that are unique to Toppan.

【3】Expanding ESG initiatives to support sustainable value enhancement

As a company that creates social value, Toppan will proactively promote environmental, social, and governance initiatives and contribute to the creation of a sustainable society.

3 - ① Initiatives related to the environment

Climate change

To enable a sustainable society in which all forms of life can continue to exist into the future, Toppan has formulated the “Toppan Group Environmental Vision 2050,” which sets out long-term initiatives addressing global environmental issues. We will intensify activities in line with this vision and aim to enable fulfilling, sustainable living.

In May 2019, we announced our support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We will assess the risks and opportunities presented by climate change and disclose relevant information.

3 - ② Incorporating approaches to the SDGs into management strategy

From the 17 SDGs, Toppan has selected priority issues to address and classified them into two groups. “Companywide Materiality” encompasses issues to address as a corporate citizen and those forming the foundations for business, while “Business Materiality” covers issues to which Toppan will endeavor to provide solutions through specific business activities. We have set specific targets for business activities and reflected approaches to the SDGs in management strategy. Going forward, we will integrate the SDGs into management further and accelerate related activities.

3 - ③ Initiatives to enhance governance

Toppan will advance efforts to further strengthen corporate governance and enhance the speed and efficiency of management.

Financial Policy and Capital Policy

① Financial policy

We will aim to generate social value together with all our stakeholders for the creation of a sustainable society. To achieve this long-term goal, we will adopt a financial strategy that supports sustainable growth.

  • (1) Enhance profitability through proactive investment
  • (2) Enhance asset efficiency by reorganizing assets held
  • (3) Maintain a sound financial position based on financial discipline

② Capital policy and returns to shareholders

We will allocate cash generated by business activities to growth investment and shareholder returns in a well-balanced manner while maintaining a sound financial position for the medium to long term. We will strive to enhance returns to shareholders while concentrating efforts on increasing cash flows and working to improve profitability and financial health. Specifically, we will provide stable returns to shareholders with a target of a consolidated dividend payout ratio of 30%. We will also consider additional returns to shareholders based on accurate assessment of factors including market conditions, business performance, and financial position.

③ Reduction of strategic shareholdings

Toppan has in the past created a stable foundation for taking orders from a wide range of customers by holding shares of companies with which it does business. In consideration of capital cost and internal financing, in recent years we have advanced the divestment of assets based on assessment of the rationality of holding them. To further increase asset efficiency, we will continue to accelerate the process of reducing strategic shareholdings that have decreased in relevance.