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    6028   JP3545240008

TECHNOPRO HOLDINGS, INC.

(6028)
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Delayed Japan Exchange  -  02:00 2022-08-08 am EDT
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TechnoPro : Integrated Report 2021 (For the year ended June 30, 2021)

11/30/2021 | 10:41am EDT

.Inc Holdings, TechnoPro

2021 Report Integrated

Integrated Report

2021

For the year ended June 30, 2021

TechnoPro Holdings, Inc.

35F, Roppongi Hills Mori Tower

6-10-1 Roppongi, Minato-ku,

Tokyo 106-6135, Japan

TEL: +81-3-6385-7998

Corporate Philosophy

The TechnoPro Group's business activities are based on "Technology," "People," and "Customer." Through all of our activities, we will contribute to the realization of a society in which technology, people, and customers can develop in a sustainable manner, transcending all boundaries such as organizations, industries, regions, and national borders.

Our Purpose

Driving the Power of Technology and Talent

to Co-create Value Together with our Customers

for a Sustainable Society

Our Value

Technology is the driver that brings transformation to business, lives, and society.

- The challenges and needs of customers and society are diversifying, as dynamic changes occur faster than ever -

We provide solutions to unlimited challenges our customers face by:

Delivering optimal service and

Working squarely on new, evolv-

Always meeting our customers'

solution through our talent, trained

ing domains and honing our capa-

expectations as value-creation

and nurtured well regardless of

bilities thoroughly.

partners.

gender, age, and nationality.

We continue to maximize the potential of engineers and researchers by:

Providing the conditions and pro-

Creating opportunities to not only

Supporting our talent through

grams to encourage learning and

hone their expertise but also to

technology evolutions and envi-

skill development.

switch or acquire new skills.

ronmental changes to stay active.

We contribute to building a sustainable society by:

Solving the challenges of our cus-

Promoting a diverse array of talent

Delivering results that have social

tomers and society as we connect

through continuous enhancement

impact through our business ac-

people to technology, and bridge

of capabilities.

tivities.

Japan to the world, across var-

ious industries and technology

domains.

Corporate Philosophy Framework

Our Six Commitments for Excellence

1

Act with initiative and accountability

4

Be an ultimate professional and

We work with the end goal in mind, selecting the

a trusted team player

best course of action.

We work with other entities, incorporating various

ideas and insights for superb results.

2

Strive to improve expertise and skills

5

Act with insight and speed for

We aspire to greatness in our profession, learning

the success of others

new skills and knowledge every day.

We monitor trends in markets and technology, an-

ticipating needs and offering superior solutions.

3

Communicate effectively and act

6

Be perfect in legal and

with sincerity

ethical compliance

We treat everyone with respect, building relation-

We inspire trust and confidence through perfect

ships of understanding and trust.

compliance with labor laws, information security

statutes and practices, and ethics rules governing

business in general and our industry in particular.

01

TechnoPro Holdings, Inc.

Integrated Report 2021

02

Contents

Operating Results

and Business

Environment

Message from Management

Initiatives Targeting Sustainable Growth

Enhancement of

the Management Financial Report

Foundation to

Create Value

05 Financial and Non-Financial Highlights

07 Engineering Professional Services Market in Japan

  • Trends and Growth in the Engineer Staffing Market
  • The Accelerating Shortage of Advanced IT Engineers

03 TechnoPro Holdings, Inc.

09 Message from the CEO

  • My Aspirations as CEO
  • A Purpose Driven Value-Creation Story
  • Walking the Path of Evolution
  • Build Competitive Advantage Through DX Strategy
  • Aiming to Further Enhance Our Presence

13 Message from the COO

  • My Aspirations as COO
  • Looking Back on the Previous Medi- um-Term Management Plan
  • New Pillars such as the Solution Busi- ness Under the New Medium-Term Management Plan "Evolution 2026"
  • The Growth of Our Group Will Be Achieved Through the Growth of Our Engineers

15 Message from the CFO

  • Numerical Targets in "Evolution 2026"
  • M&A Strategy and Capital Policy
  • Disclose the Progress of Our Strategies through KPIs

17 The Value-Creation Process

Through the evolution of our capabilities and the transforma- tion of our business model, we will steadily promote initiatives to address materiality and create value while pursuing our purpose.

19 Promoting Sustainability- Centered Management

  • TechnoPro Group Sustainability Policy
  • Signing the United Nations Global Compact
  • Revisions to the TechnoPro Group Code of Conduct

21 Material Issues (Materiality) for the TechnoPro Group

  • Material Issues
  • Materiality Definition and Revision Process
  • Examples of Materiality Initiatives

23 Quantitative Indicators (KPIs) and Targets for Material Issues (Materiality)

  • Human Resources
  • Technology
  • Social Responsibility
  • Governance

25 Risk Management

  • Events that may affect the achievement of our strategies and business objectives (both positive and negative)
  1. Business Domain
  2. Management Interviews
  1. Message from the Chairman
    • Integration of Four Companies, Listing, Reinforcement of Finan- cial Structure, and Improvement of Governance System
    • Don't Be Afraid of Change
  2. Corporate Governance
    • An Enhanced Governance System
    • Designing Incentives to Promote Shared Value with Shareholders
    • Demonstrating Corporate Governance Functions
  1. Interview with the Chair of the Nomination and Compensation Committee
  2. Skill Matrix for the Board of Directors and the Audit & Supervisory Board
  1. Total Shareholder Return (TSR)
  2. Interview with the Outside Directors

43 Directors

  1. Audit & Supervisory Board Members
  2. Activities for Compliance, Social Responsibility and Environmental Issues

49 Management's Discussion and Analysis

  1. Consolidated Statement of Financial Position
  2. Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
  3. Consolidated Statement of Changes in Equity

54 Consolidated Statement of Cash Flows

  1. Company Data
  1. Stock Information

Editorial Policy

This report describes the corporate philosophy and management policies of TechnoPro Holding, Inc., the business strategy of our medium-term management plan, and our sustainability initiatives. Our business activities aim to provide value to customers and society, and we believe that this approach will deliver revenue and profits as a result. We sincerely hope that this report will help our stakeholders gain a fuller understanding of our value creation activities and medium- to long-term growth potential.

Organizations Covered

This report covers the entire TechnoPro Group, comprising TechnoPro Holdings, Inc., and its consolidated subsidiaries. In this report, "the Group" or "the TechnoPro Group" refer to the entire Group; "the Company" or "TechnoPro Holdings" indicate TechnoPro Holdings, Inc., only.

Reporting Period

This report covers the fiscal year ended June 30, 2021 (July 1, 2020 to June 30, 2021). The report also refers to certain important matters outside the scope of this fiscal year.

Disclaimer Regarding Forward-Looking Statements

This report contains forward-looking statements related to the Company and the Tech- noPro Group. Such statements are based on the information available at the time this report was published and involve assumptions, inherent in which are uncertainties that could affect future operating performance. Accordingly, such statements are not guar- antees, and actual results may differ substantially from these assumptions. Furthermore, business strategies and other topics that involve predictions of the future reflect the Com- pany's understanding as of the date of publication and incorporate certain risks and uncertainties. For this reason, the future outlook may not coincide with actual results.

Integrated Report 2021

04

Operating Results and Business Environment

Financial and Non-Financial Highlights

  • Revenue grew 1.8% year on year, to ¥161.3 billion, while operating profit grew 23.4% year on year, to ¥19.4 billion
  • Engineers employed in Japan numbered 20,330 (including 921 non-Japanese engineers), down 934 year on year
  • The annual average utilization rate of engineers in Japan was up 0.5 percentage points, to 94.6%
  • The number of newly recruited engineers (including new graduates) in Japan was 1,405, down 2,993 year on year
  • Average monthly unit sales price per engineer at the two major subsidiaries in Japan was ¥634,000, up ¥4,000 year on year

TechnoPro Holdings, Inc. and its subsidiaries

Consolidated fiscal years ended June 30

Millions of Yen

2017

2018

2019

2020

2021

Revenue

100,095

116,529

144,176

158,407

161,316

Gross profit

23,435

29,475

36,466

40,226

39,727

Operating profit

9,647

11,238

13,739

15,772

19,461

Profit before income taxes

9,559

11,163

13,727

15,843

19,472

Net profit attributable to owners of the parent company

7,717

8,498

9,683

10,825

13,245

Basic earnings per share*1 (yen)

225.58

244.81

266.86

299.97

368.88

Diluted earnings per share*1 (yen)

-

244.62

266.79

-

-

Cash dividends per share of common stock*1 (yen)

112.79

120.00

134.00

150.00

185.00

Total assets

70,119

88,201

93,771

107,967

117,989

Total equity

27,696

42,967

46,065

49,509

58,733

Cash flows from operating activities

8,634

10,798

11,270

18,059

22,081

Cash flows from investing activities

(2,864)

(5,361)

(4,429)

(1,498)

(1,374)

Cash flows from financing activities

(4,087)

2,826

(7,184)

(14,927)

(11,114)

Revenue

Operating Prot

Net Prot Attributable to Owners of the Parent

Company/Basic Earnings per Share*1

(Millions of yen)

(Millions of yen)

(Millions of yen)

(Yen)

200,000

20,000

19,461

20,000

800

161,316

158,407

15,772

150,000

144,176

15,000

13,739

15,000

600

13,245

116,529

11,238

10,825

100,000100,095

10,000

9,647

10,000

8,498

9,683

400

7,717

368.88

50,000

5,000

5,000

225.58 244.81 266.86 299.97

200

0

0

0

0

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

(Years ended June 30)

(Years ended June 30)

(Years ended June 30)

Up 1.8%

Up 23.4%

Net profit attributable to owners

Up 22.4%

of the parent company (left scale)

Basic earnings per share

CAGR of 12.7%

CAGR of 19.2%

Up 23.0%

(right scale)

Unit Sales Price per Engineer at the Two

Operating Prot Margin

ROE*2

Major Subsidiaries in Japan*5

(Thousands of yen/month)

(%)

(%)

800

20

40

Gross profit margin (%)

23.4

25.3

25.3

25.4

24.6

Operating profit margin (%)

9.6

9.6

9.5

10.0

12.1

ROE*2 (%)

29.9

24.5

22.4

23.3

25.1

Number of engineers employed in Japan (fiscal year-end)

14,346

16,797

19,293

21,264

20,330

Utilization rate of engineers in Japan*3 (%)

95.3

95.7

95.5

94.0

94.6

Number of newly recruited engineers in Japan*4

2,684

4,151

4,512

4,398

1,405

Unit sales price per engineer at the two major

626

630

630

630

634

subsidiaries in Japan*5 (thousands of yen/month)

*1 Calculated based on the number of shares BEFORE a three-for-one common stock split conducted on July 1, 2021 *2 Higher ROE due to the effect from income tax deduction derived from losses carried forward until year 2018

*3 Utilization rate (%) = The number of engineers on assignment at the end of each month divided by the total number of engineers at the end of the same month (the total number of engineers includes engineers on standby, in training, and on leave)

*4 Including talent acquisition through M&A

*5 Calculated as [Total revenue of TechnoPro, Inc. and TechnoPro Construction, Inc.]/ ∑ [Number of assigned engineers at the end of the month]

626

630

630

630

634

600

400

200

0

2017

2018

2019

2020

2021

(Years ended June 30)

Up ¥4,000

/month

29.9

15

30

12.1

24.5

25.1

22.4

23.3

10

9.6

9.6

9.5

10.0

20

5

10

0

0

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

(Years ended June 30)

(Years ended June 30)

Up 2.1

Up 1.8

percentage points

percentage points

05

TechnoPro Holdings, Inc.

Integrated Report 2021

06

Operating Results and Business Environment

Engineering Professional Services Market in Japan

Trends and Growth in the Engineer Staffing Market

The Accelerating Shortage of Advanced IT Engineers

Out of a whole worker staffing market of approximately

estimated at approximately ¥2.1 trillion ($19.0 billion)*2.

¥7.8 trillion ($70.5 billion)*1 (in 2019) in Japan, the engi-

Even though the TechnoPro Group is far larger than most

neer staffing market, which calls for workers with a high

companies in the sector, its market share is only 7%,

level of expertise such as engineers and researchers, is

which gives it plenty of opportunity for growth.

Even before the COVID-19 pandemic, it was feared that there would be a significant shortage of IT engineers in Japan in the foreseeable future. During the pandemic, however, it became evident that Japan has fallen behind in the adoption of IT. Investment in digital transformation (DX) is expected to further accelerate as society settles into a new way of life known as "the new normal" moving forward.

reskill rate [the rate at which conventional personnel are converted to advanced personnel]).

Further, the labor market for engineers in Japan is still facing issues such as relatively low compensation versus overseas markets and low worker mobility that makes it difficult for engineers to move between industries and companies. In addition, the supply of workers is beginning to decline due to the declining birthrate and

Engineer Stafng

The Japanese

Worker Stafng

Market

¥7.8 trillion

Others

Software

¥319 billion

development

(15.0%)

¥1.1 trillion

Researchers

The Japanese

(52.6%)

¥87 billion

Engineer Stafng

(4.1%)

Construction,

Market

civil, and

¥2.1 trillion

measurement

(10.4%)

¥219 billion

Manufacturing

¥379 billion

(17.9%)

The shortage of IT engineers is intensifying due to growing demand. According to a survey commissioned by the Ministry of Economy, Trade and Industry, while the shortage of conventional IT engineers who develop websites and applications will be eliminated gradually, the shortage of advanced IT engineers who work in AI, Big Data, IoT, and similar fields is expected to grow to more than 540,000 by 2030 (Assuming moderate growth in the IT market, 0.7% growth in productivity, and a 1.0%

aging population, and the shortage of IT engineers may become even greater in the future.

In addition to training and reskilling engineers, the TechnoPro Group is willing to acquire talent beyond domestic supply constraints and employment patterns. By expanding employment possibilities for engineers, who are one of society's important resources, we hope to improve their compensation while helping resolve the shortage of engineers.

Projected Shortage in Advanced and Conventional IT Engineers

*1, *2 TechnoPro Holdings based on "Results of Engineer Dispatching Business Report" and "Engineer Dispatching Business Status as of June 1, 2019," Ministry of Health, Labour and Welfare

Top Nine Firms in the Engineer Staffing Sector

Rank

Company

Revenue (Millions of yen)

Share*1

1

TechnoPro Holdings, Inc.

147,540

7.0%

R&D Outsourcing, Construction Management Outsourcing

2

PERSOL HOLDINGS CO., LTD.

113,095

5.4%

Professional Outsourcing SBU

3

OUTSOUCING Inc.

106,416

5.1%

Domestic Engineering Outsourcing Business

4

BeNext-Yumeshin Group Co. *2

100,765

4.8%

Machinery, Electronics and IT Software, Construction

5

Meitec Corporation

95,521

4.5%

Engineering Solutions Business

6

WDB Holdings Co., Ltd.

44,126

2.1%

7

VSN, Inc.

35,907

1.7%

8

Altech Corporation

34,715

1.7%

The Outsourcing Business

9

Forum Engineering Inc.

27,728

1.3%

*1 Reference figures based on 2019 market size as denominator

*2 Includes pre-merger revenue for YUMESHIN HOLDINGS CO., LTD.

Source: TechnoPro Holdings based on each company data disclosed by August 31, 2021

Assuming moderate growth in the IT market, 0.7% growth in productivity, and a 1.0% reskill rate (the rate at which conventional personnel are converted to advanced personnel)

(Thousands of people)

Shortage of advanced

Expansion of needs for digitalization

IT engineers by 2030

2,000

Shortage of Advanced IT Engineers

Over 540,000

Shortage of Conventional IT Engineers

will lead to continued expansion of

Supply of Advanced IT Engineers

the advanced IT related market

1,500

Supply of Conventional IT Engineers

1,000

500

0

-500

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Source: TechnoPro Holdings based on "Survey Report about Supply and Demand of IT Engineers" by Mizuho Information & Research Institute, Inc., commissioned by the Ministry of Economy, Trade and Industry

07

TechnoPro Holdings, Inc.

Integrated Report 2021

08

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

TechnoPro Holdings Inc. published this content on 01 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 November 2021 15:40:14 UTC.


© Publicnow 2021
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Financials
Sales 2022 176 B 1 305 M 1 305 M
Net income 2022 13 678 M 102 M 102 M
Net cash 2022 20 276 M 151 M 151 M
P/E ratio 2022 24,8x
Yield 2022 1,94%
Capitalization 340 B 2 524 M 2 524 M
EV / Sales 2022 1,82x
EV / Sales 2023 1,62x
Nbr of Employees 21 692
Free-Float 99,4%
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Technical analysis trends TECHNOPRO HOLDINGS, INC.
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TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 7
Last Close Price 3 155,00 JPY
Average target price 3 650,00 JPY
Spread / Average Target 15,7%
EPS Revisions
Managers and Directors
Takeshi Yagi President, CEO & Representative Director
Toshihiro Hagiwara Chief Financial Officer & Director
Yasuji Nishio CFO & Managing Director
Toshiyuki Adachi Executive Officer & Head-Information Systems
Gaku Shimaoka COO, Representative Director & Vice President
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