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Mid-term Business Plan

Topcon's Future Direction

Expand our businesses and solve the societal challenges within the growing market of healthcare, agriculture and infrastructure.

Topcon embraces strives to expand our business by applying our solutions towards solving societal challenges in domains of healthcare, agriculture, and infrastructure.

Topcon's Future Direction

In healthcare, we will address the increase in eye disease resulting from global population aging by working to enhance IoT medical network solutions to improve early detection of diseases and increasing medical efficiency. In agriculture, we will address food shortages resulting from global population growth by enhancing our IT Agriculture solutions to improve productivity and quality. For infrastructure, we will enhance IT construction solutions to respond to engineering labor shortages caused by increasing global infrastructure demand.

Topcon's solution

The Second Mid-term Business Plan

On April 28, 2016 Topcon released its Second Mid-term Business Plan for the three-year period from FY2016 to FY2018.

For more details click on a link, The Second Mid-term Business Plan (FY2016 to FY2018)

Mid-term Management Policies

Accelerating Growth Strategy!! To a New Stage

Strategy1 Strengthening the Management Structure

We will restructure our organization into a 1-company, 2 business structure with the Positioning Company (POC) to continue in its current state while the Smart Infrastructure Company (SIC) and the Eye Care Company (ECC) will be changed to the Smart Infrastructure (SI) Business and Eye Care (EC) Business. Total optimization through a function-based structure will enable us to respond to rapid changes in our operating environment. To accomplish this, we will implement the following policies.

Improvement of Business Efficiency

Improvement of Business Efficiency

  1. Operating Base Consolidation
    The total number of Group companies increased from 67 companies in 2013 to 86 companies in FY 2015. Over the next three years, we will implement consolidation and elimination to reduce this number to 75 companies.
  2. Cost reduction towards popular products (Productivity improvement/Raw material cost down)
  3. Procurement cost reduction through the usage of procurement base in China
  4. Improvement of business efficiency through the usage of ERP
Improvement of Cash Flow

Improvement of Cash Flow

We will improve cash flows by improving income and reducing inventory assets in order to promote growth investments.

Strategy2 Advancement of the Growing Business

Positioning Company
Expansion of IT Construction/IT Agriculture
Expansion of IT Construction/IT Agriculture

Growing Business

Expansion of IT Construction

  • Lead the market with the advanced technology which competitors do not have
  • Further expansion of the After market/OEM
    Obtain the Potential market (x 1.5)

Expansion of IT Agriculture

  • Entry to new fields through M&A (acquire new technology)
    Dairy farming solution through the usage of weighting sensor technology
  • Entry to new fields through M&A (Synergy effect: creation of agriculture ERP)
  • Obtain the After market through add-on auto-steering system
  • Further expansion of the after market/OEM

Core Business

GPS

  • Launch Disruptive products (Strengthening competitiveness)

Others

  • Cost reduction

Growth Strategy Regarding Each Business↓

Smart Infrastructure Business
Strengthening the Core Business and Developing the Growing Business
Strengthening the Core Business and Developing the Growing Business

Growing Business

i-Construction

  • Making mandatory of "i-Construction"(Japanese government (MILT) )

3D Measurement Business

  • Maintenance of infrastructure/Measuring management of construction

Core Business

Further Strengthening of Total station

  • Expansion of profit of the high share total station

LN-100(Development of new usage)

  • Market development through various field service applications

Focus on the high growth Indian market

  • Strengthening sales and support network, increase sales personnel through expansion of sales base!!

Growth Strategy Regarding Each Business↓

Eye Care Business
EMR(Electrical Medical record), Entry to the Telemedicine Business
EMR(Electrical Medical record), Entry to the Telemedicine Business

Growing Business

Screening

  • Steady sales of Triton /Maestro
  • Expansion to the Medical check-up market

EMR(Electrical Medical record)(ifa)

  • Unified management of multiple diagnosis information
  • Vendor Neutral

Efforts on Prognosis Management

  • Telemedicine
  • Subscription system

Core Business

Examination/Diagnosis

  • Strengthening cost competiveness through joint platform Further sales advancement for the popular model

Growth Strategy Regarding Each Business↓

Strategy3 Creation of a Subscription Business Model

In addition to our one-time purchase sales business model, we will develop subscription businesses in the IT Construction, IT Agriculture, and Eye Care Business as well as businesses in all domains of healthcare, agriculture and infrastructure.

Creation of a Subscription Business Model

Financial Target

Financial Target (Consolidated)

Financial Target (Consolidated)

Financial Target (by Segment)

Financial Target (by Segment)

Investment Plan for Growth Strategy

Investment Plan for Growth Strategy

Growth Strategy Regarding Each Business

Positioning Company
Expansion of IT Construction/IT Agriculture

1. IT Construction (Growing Business)

Through automation of equipment, construction sites are seeing improved productivity, labor shortage resolution and lowered costs.

Currently, the rate of implementation for IT construction systems in approximately 15%. The latent market remains very large. Topcon will lead the market with advanced technology not available to our competitors while improving implementation rates by nearly 150% over the next three years through aftermarket sales and

IT Construction

2. IT Agriculture (Growing Business)

The automation of Agriculture equipment will increase productivity and respond to global population increases and anticipated global food shortages resulting from a decline in per capita agricultural surface area.

We will add weighing sensors and boom automatic control technology acquired through M&A to conventional auto-steering technology to develop dairy farming solutions and promote the transition to ERP in the agricultural industry

Entry to New Field through M&A

We will obtain aftermarket sales through add-on auto steering systems to further expand both aftermarket and OEM businesses. Due to the decline in the agricultural market since FY 2015, we are expecting FY 2016 to be largely unchanged. We are anticipating market growth from around FY 2017 or FY 2018.

Further Expansion of the After Market/OEM

Smart Infrastructure Business
Strengthening the Core Business and Developing the Growing Business

We will strengthen our core businesses to improve profitability while also focusing on developing growth businesses.

1. i-Construction (Growing Business)

To improve the productivity of Japan's public works projects, the MLIT is considering requiring 100% i-Construction for public works overseen by the government by 2020.

Topcon's solutions cover all processes - surveying, design/planning, construction, and inspection - and as such we are anticipating significant demand.

i-Construction

* "i-Construction" is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, JAPAN.

2. Strengthen Total Station sales (Core Business)

We will common the platform of the Total Station, for which we have a high share, and consolidate the current 300 models down to 30 models in order to improve profitability.

i-Construction Strengthen Total Station sales

3. Focus on rapidly growing India market (Core Business)

We will aim to increase sales significantly by expanding sales locations and increasing sales personnel to capture infrastructure demand growth in India.

Focus on rapidly growing India market

Eye Care Business
EMR(Electrical Medical record), Entry to the Telemedicine Business

We will expand from the examination, diagnosis and treatment fields to the fields of preventative medicine and prognostic management and participate in the electronic medical records (EMR) for ophthalmology and remote diagnosis businesses. We also will expand our subscription businesses.

1. Screening (Growing Business)

We expect sales of the 3D OCT to continue growing in FY 2016 and beyond. In Japan, the Maestro is being used in medical check-up and we expect population aging to result in the rapid expansion of the Maestro in such examinations.

Screening

2. EMR (Growing Business)

We are expanding into the EMR through our investment in ifa (Germany).

ifa's EMR charts are vendor neutral and can be connected to over 500 non-Topcon devices. This enables the uniform management of massive data and diverse examination information in the eye care field.

EMR (Growth Business)

3. Remote Diagnosis (Growing Business)

The use of ifa's systems will also enable remote diagnosis.

Patients will be able to receive examinations in major retail chain shops, optician, and general practitioner to enable medical examinations without having to go to a major hospital, which reduces patient inconvenience.

Remote Diagnosis

4. Subscription System (Growing Business)

A subscription service for the remote diagnosis system will lead to increased income from remote diagnosis systems, including expanded sales for OCT and other existing hardware, and global sales of EMR.

Subscription System