Toyo Denki Seizo Report
Tokyo Tatemono Yaesu Building, 1-4-16, Yaesu, Chuo-ku, Tokyo 103-0028 Tel: +81-3-5202-8121 (General Affairs Division)

https://www.toyodenki.co.jp/

2021

Our Heart and Technology for the Future

Our Long-Term Vision

Toyo Denki Seizo K.K. Contributes to the Development of Social Infrastructure Systems
Based on a firm management foundation, we help build social infrastructure systems that are considerate of the global environment through theglobal provision of high-quality products that integrate our exceptional motor drive technologies since establishment with our breakthroughadvanced technologies.
Business Principles
The Toyo Denki Group will practice the following business principles to ensure the growth ofits business, earn the confidence and understanding of shareholders and stakeholders, andfoster the development of its employees:

Industrial
Systems
Segment

Prioritize ethics and contribute to the prosperity of customers and society as a whole
Encourage creativity and enterprising spirit to meet the challenges of the future
Build trust by focusing on quality first

Information
Equipment
Systems
Segment

Industrial Systems Segment
The Company is extensively contributing to customers at home and abroad through general industrial
machinery and equipment, testing equipment for automobile development and social infrastructure
equipment that is indispensable to the daily lives of people. In addition, we address manufacturing that
contributes to the prevention of global warming, while providing products manufactured through highsystem-building technologies that make full use of energy-saving motors, inverters, FA controllers andnetworks.

Code of Conduct
Automobile testing systems

1. Respond to customers in a timely and speedy manner
2. Tackle all challenges with forethought and creativity
3. Continuous efforts toward self-development and skill improvement
4. Keep a broad perspective and influence each other toward growth
5. Act with awareness and pride of a good member of society and businessman

Company Slogan
Transportation
Systems
Segment

Manufacturing

Our Heart and Technology for the FuturePower generation andsocial infrastructure system
Production and processing
equipment systems

Information Equipment Systems Segment

Transportation Systems Segment
Electrical equipment for rail vehicles manufactured by theCompany using its technological capability developed over 100
years covers a wide range of fields, including propulsion systems (drive systems), auxiliary power supply and door-closing
units of trains, and we contribute to the maintenance and development of railway infrastructure overseas, not to mention in
Japan, by pursuing safety and comfort of trains.

In the Information Equipment Systems segment, we operate in the two fields of railway station operating equipment and remote monitoring systems, by merging advanced telecommunication technologies
and mechatronics.
With regard to railway station operating equipment systems, we develop and manufacture commuter
pass issuing machines that quickly became IC card compliant and portable terminal devices for conductors, and provide systems for smooth toll collection and income management system to railway operators.
Our remote monitoring systems greatly contribute to labor saving and maintenance saving of customers through realization of various equipment monitoring and position monitoring, by leveraging
cloud computing.

Current collectors(pantographs)

Door operating equipment

Facilities management solutions

Driving gear units

Main motors

Passenger information
display system

Railway station operating
equipment systems

CONTENTS
Contents/Editorial Policy/Long-Term Vision…… 1
Over 100-Year History of Toyo Denki Seizo K.K.…… 3
Consolidated Financial Highlights…………… 4
Message from Chairman and President……… 5
Special Report 1 Medium-Term Management Plan
“Revitalize 2022”………………… 7
Special Report 2 Establishment of Sustainability Policy…… 8
Business Report
Transportation Systems Segment………… 9
Industrial Systems Segment……………… 10
Information Equipment Systems Segment…… 11
Topics…………………………………… 12
Research and Development/Intellectual Property…… 13
ESG/CSR Report
Environment
		 Initiatives to Protect the Environment…… 14
Social		 With Our Customers…………………… 16
		 With Our Shareholders and Investors…… 17
		 With Our Local Communities…………… 18
		 With Our Suppliers……………………… 19
		 With Our Employees…………………… 19
Governance		Corporate Governance………………… 21
		Executive Profiles……………………… 23
		 Messages from Outside Directors……… 23
		 Internal Control and Compliance………… 25
		Risk Management……………………… 25
		Risk Factors…………………………… 25
		Information Security…………………… 26
Financial Report
Financial Review………………………… 27
Reference Data for Management Indices…… 28
Consolidated Balance Sheets……………… 29
Consolidated Statements of Income and	Consolidated Statements of Comprehensive Income…… 31
Consolidated Statements of Changes in Net Assets…… 32
	Consolidated Statements of Cash Flows…… 33
Stock Related Information…………………… 34
Company Profile…………………………… 35
Organization Chart…………………………… 36
Editorial Policy
We have been publishing this report since 2013
with the goal of allowing a wide range of stakeholders to have a better understanding of theCompany. This report combines our management
policy with reports on our businesses, ESG/CSR
and finances. We are committed to describing our
initiatives during the year and our future direction
in a manner that is easy to understand.
Period Covered by This Report
This report focuses on our activities in fiscal 2020
(from June 2020 to May 2021), but also contains
some information from outside this period.
Organizations Covered by This Report
This report covers the Toyo Denki Group, including
Toyo Denki Seizo K.K. and its consolidated subsidiaries.

Master controllers
Total train communication
system1

Twin disk couplings
Propulsion inverters (VVVF inverter)

Auxiliary power supply (SIV)

Reference Guidelines
The GRI Sustainability Reporting Standards(GRI Standards)
Toyo Denki Seizo Report 2021

2

Over 100-Year History of Toyo Denki Seizo K.K.
Our company was founded in 1918 with the intention of “domestic production of electrical machinery for railway vehicles”.
A spectacular feeling that we want to export products to domestic as well as to many Orient countries and contribute to thedevelopment of the country has come from the name of “TOYO DENKI SEIZO K.K.”. And this feeling has been handed
down to successive employees, and now our products are contributing to the development of social infrastructure systems
around the world.

1918~1949

1972

From foundation to postwar
1918 Technical cooperation with Brit1919

ish Dick Kerr and establishmentof the company with the capitalof 3 million yen
Operation started at Yokohama
Factory

1920 Control equipments and traction mo-

1921
1926 Start of manufacturing of three-phasecommutator motor (AS motor)

 evelopment of electric equipment for1932 D

trolleybus, first in Japan ompletion of controller with regenerC
ation brake using compound motor,
first in Japanfirst in our country, and delivered to
Sagami Railway

1949 O ur stocks was listed on Tokyo Stock Exchange

drive for Shinkansen testing car
Order received for electric towing locomotive for the Panama CanalDevelopment of constant-speed operation controller for vehicle, first in Japan
Development of hydraulic winch forship, first in Japan

7,839

8,242

7,338

1978
1983
1985
1985

Developed our proprietary AFE chopper device

Operating income(million yen)

1,571

366

557

1,068

423

Net income attributableto owners of the parent (million yen)

1,174

692

690

1,081

977

Comprehensive income  (million yen)

1,513

2,009

(251)

(351)

94

1988 Completion of world-first heat-pipe type 8-unit motor batch con-Capital investment(million yen)

4,606

4,772

1,090

545

632

1989 Development of small VVVF inverter using reverse conductive GTO

Research and development costs (million yen)

927

840

731

792

819

1990~2019

Fiscal Year-End

24,603

26,32724,80424,18324,00858,001

55,16551,967C ompletion of in-train ticket issuing system Panama Canal Agency ElectricThe current Yokohama Planmt was completed

Locomotive for Dredgers

 elivery of world-first superimposed field excitation control for 205
D
series electric train of Japanese National Railways

1965 Development of thyristor static Leonard
equipment series, first in Japan

Japan National Railway Series 0
Shinkansen

1969 Completion of automotive brake test equipment

54,927

63,291

Net assets

(yen)

2,605.09

2,788.01

2,773.87

2,704.61

2,685.28

Net income(yen)

123.87

73.33

75.27

120.98109.38Dividend

(yen)

30

50*2

30

30

30

Shareholders’ equity ratio

(%)

44.8

41.6

42.8

43.8

46.2

Return on equity (ROE)

(%)

4.9

2.7

2.7

4.4

4.1

Operating income ratio

(%)

3.9

0.9

1.4

2.7

1.3

Overseas net sales ratio 

(%)

31.1

25.3

22.9

20.7

15.9

Dividend payout ratio

(%)

24.2

68.2

39.9

24.8

27.4

Number of officers  (non-consolidated)

13

12

11

10

10

Number of employees on a consolidated basis

1,262

1,267

1,226

1,227

1,217

Number of employees at Group
companies in Japan and overseas

430

391

395

386

371

3,895

4,097

4,905

4,185

4,184

647.2

680.3

839.2

743.9

751.6

Major Management IndicesBeijing subway east-west line train2004 Development of electrical equipment for the world’s first micro gas

turbine hybrid vehicle
Joint development of the first full-flat, super-low floor light rail vehicle (LRV) produced in Japan
Succeeded in development and running of in-wheel motor for car

2007 The new public transport smart card Pasmo

goes into service (delivery of automatic commuter ticket vending
machine with support for smart card passes and smart card chargemachines to station facilities)
Start of commercial service of the new N700 series trains on the Tokaido and Sanyo Shinkansen lines (delivery of traction motors, gear units,
pantographs, TD couplings, static conversion equipment, etc.)

2008 S tart of sales of the VF66 inverter
2009 Delivered electric machinery for Tohoku
2012 O rder receipt of handsets for conductor for JR West2018 May, Shiga Ryuo Plant completedJ une, Toyo Denki Seizo K.K. 100th anniversaryOrder received for consigned research and Los Angeles County Metropolitan
development of superconducting flywheel Transportation Bureau P3010 LRV
power storage system for railways
 stablishment of SIAM TOYO DENKI Co., Ltd. in ThailandEEstablishment of Chalco-Toyo Permanent Magnet Motor Co., Ltd. in China

2020 Establishment of TOYO DENKI RAILWAY SERVICE, LLC. in the U.S.

2021

(million yen)

*1

Per Share Informationtor (ED motor)

to Japanese National Railways

Total assets

(million yen) evelopment of light-weight VVVF inverter using 1,500V mass-proD
duction type reverse conductive GTO thyristor, first in our Japan

1997 Completion of in-train ticket issuing2019 elivery of pantograph for Shinkansen
1963 DNet assetsDevelopment of intelligent door system, first in Japan

Shinkansen E5 series

Japan National Railway 151 series
limited express train “Kodama”

Fiscal Year

8,072

device, first in Japan

1959 C ompletion of automatic train stop
1960 C ompletion of traction motor and

Financial Data

9,221

1952 Development of Cardan shaft driving
troller for the Japan National Railways“Kodama”limited express

Fiscal 2020

(million yen)Commutator motor (patented)

Cardan shaft driving device

Fiscal 2019

Gross profit 

1950~1989

1958 Completion of traction motor and con-Fiscal 2018matic drafting machine2000 Completion of permanent-magnet mo- evelopment of ST type three-phase AC
1950 D

Fiscal 201733,143jing subway east-west line train

From postwar reconstruction to high economic growthFiscal 2016

39,071

1998 Delivery of electric equipment for Bei-

AS motor

160th fiscal term

41,172

machine corresponding to automatic
ticket checker

1935 Development of diesel electric railcar,

159th fiscal term

42,527

1991
Early domestic pantograph158th fiscal term

40,668 evelopment of stroke switching type door closing machine, first in Japan
1990 DD evelopment of pantograph, first in Japan

157th fiscal term

(million yen)

Global expansion and to the next 100 years

tors delivered directly to Keihan Electric Railway Co.

156th fiscal term

Net sales

thyristor, first in Japan

Yokohama factory at the start of operations(Hodogaya-ku, Yokohama)Highlights of Toyo Denki Seizo K.K. and Consolidated Subsidiaries for the Consolidated Fiscal Year ended May 31 or as of May 31

1973 C ompletion of commutation ticket issuing system
1977 Completion of large high-speed auto-

trol VVVF inverter and delivery of it to Tokyu Electric Railway Co

Group photo of our employees withtechnical advisors from the partner
British Dick Kerr company.

3 evelopment of brushless motor generator (BLMG), first in the worldDDevelopment of 150kVA 440Hz static CVCF, first in Japan

Consolidated Financial HighlightsO rder received for automobile vehicle testing equipment using in-wheel-well dynamo

Non-financial Data

CO2 emissions on
a non-consolidated basis(t)*3Electricity consumption on a
non-consolidated basis (10,000 kWh)*3*1 The Company has adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 2 8, February 1 6, 2 0 1 8) from the beginning of the158th fiscal term. Accordingly, total assets as of the end of the 157th fiscal term have been calculated by retroactively applying the accounting standard.
*2 The dividend for the 157th fiscal term includes a commemorative dividend of 20 yen for the 100th anniversary.
*3 Aggregate amount of production bases per fiscal year beginning in April and ending in March of the following year
Figures for the Shiga Ryuo Plant since fiscal 2018 include those for TD Drive Co., Ltd.

In-wheel-well dynamo

Toyo Denki Seizo Report 2021

4

Message from the President

We are pressing forward with our initiatives for the second
two years of the medium-term management plan (“Revitalize2022” for the period from fiscal 2020 to fiscal 2021) as “a period foraccumulating earning power and returning to a growth path.”lower sales to clients other than JR Group. Segment profit declined due to decreases in net sales and profits at subsidiaries
despite efforts to step up cost and process control.
In the Industrial Systems segment, orders received fell below
the previous fiscal year due to a decrease in orders for processing
equipment. Net sales declined primarily due to lower sales fortesting equipment and power supply. Segment profit decreased

mainly owing to the impact of lower net sales, despite efforts toenhance cost control.
In the Information Equipment Systems segment, orders received, net sales, and segment profit all declined year on year
mainly due to a negative rebound from the previous fiscal year’srecording of large-scale orders, in addition to the impact of
COVID-19.

Future outlook and message to our stakeholders
Akira Watanabe

Kenzo Terashima

President

Chairman

Results for the fiscal year ended May 2021
Although both net sales and profits decreased year on year due to the impact of
COVID-19, profits exceeded the published forecasts.
The business environment for the fiscal year ended May 2021 remained harsh throughout the year due to the impact of COVID-19
and three declarations of a state of emergency triggered by it.
Amid restrictions imposed on economic activities both in Japanand overseas, the significant decline in tourism demand as wellas the spread of teleworking caused a sharp decrease in thenumber of passengers transported by railway operators. In addition, capital investments were called off in the manufacturing industry due to uncertain outlook. In the latter half of the year, somerecovery was observed thanks to measures to prevent the spreadof infection and large-scale economic packages both in and out
of Japan. China, in particular, experienced an economic recovery
as the impact of COVID-19 quickly subsided.

5

In such an environment, the Group’s orders and sales were impacted as there were some revisions and postponements in railway operators’ plans for rolling stock production and replacement
as well as equipment renewal plans in the manufacturing industry.
As a result, orders received, net sales, and operating income all
decreased year on year to 30.0 billion yen, 33.1 billion yen, and
420 million yen, respectively. However, profits exceeded the published forecasts, helped by improved profitability. Ordinary income
was 750 million yen mainly due to foreign exchange gains, andnet income attributable to owners of the parent was 970 million
yen as a result of efforts to reduce certain cross holdings.
By segment, the Transportation Systems segment saw a yearon-year decrease in both orders received and net sales due to

We will work on measures to establish a “muscular” business management systemthat can generate stable profits and to expand the scale of our business.
While the domestic and overseas economic conditions remain severe due to concerns over the resurgence of COVID-19 caused bymutant strains, there are signs of recovery in the form of visible
effects of various policies and developments in the recovery ofoverseas economies such as China. Measures to prevent the
spread of infection and vaccination are being rolled out both inJapan and overseas, and it is hoped that personal consumption
and capital investment will recover as the easing of movement restrictions will progress with the subsiding of COVID-19.
In the Transportation Systems segment, the number of railway
users in Japan is predicted not to return to the level seen in thepast due to the decline in demand for transport as well as the intensifying population drop and increasingly aging population.
However, in China, the number of passengers on trunk railways
has generally recovered to the past level, raising expectations fora recovery in maintenance demand for high-speed railways andurban transport systems. Projects in overseas markets other thanChina, such as Southeast Asia, have also started to pick up.
In the Industrial Systems segment, production facilities andprinting machines are returning to the levels seen in the past, andthere has been an increasing number of inquiries from the UnitedStates, China, and South Korea. Furthermore, efforts toward therealization of a sustainable society, such as decarbonization, aregathering pace, and test equipment for the electrification of automobiles and autonomous driving as well as dispersed powersource systems are projected to grow. There are also expectations
for the expansion and reinforcement of infrastructure equipment,such as emergency power generators, as part of efforts to build
national resilience.
In the Information Equipment Systems segment, with increasing demand for digitalization and contactless systems, there is a
growing need for compatibility with IC train tickets, including
those for local lines, and as such, demand for products such as IC
car-mounted terminals is expected to rise.
As new customer needs are emerging in the wake of changes
in behavior and values in a post-COVID society, we believe thatthe areas in which our business can make contribution will further
expand.
In response to these changes in the business environment, theGroup reviewed the medium-term management plan “Revitalize
2020,” which will be completed in fiscal 2021, and relaunched it
as “Revitalize 2022” in January 2021. Based on the achievements of efforts to improve profitability during the first two years(from fiscal 2018 to fiscal 2019), we conducted a review to address changes in the business environment and designated thesecond two years (from fiscal 2020 to fiscal 2021) as “a period
for accumulating earning power and returning to a growth path.”
We are working on measures to establish a “muscular” business
management system that can generate stable profits and to expand the scale of our business.
We hope that our stakeholders will look forward to the development and expansion of our business and would like to ask fortheir continued support.

Toyo Denki Seizo Report 2021

6

1Special Report

Medium-Term Management Plan “Revitalize 2022”
The Group reviewed the medium-term management plan “Revitalize 2020” in light of changes in the business environment and issues tobe addressed, and relaunched it as “Revitalize 2022” with new numerical management targets. Measures for the new plan are underway.

Establishment of Sustainability Policy
Considering efforts for the Sustainable Development Goals (SDGs) as an important management issue, the Group has
formulated the Sustainability Policy as a guideline for specific actions.

Achievements of the first two years and future issues

Fundamental policies and major actions

Basic policy	For the first two years (fiscal 2018 through fiscal 2019), theCompany focused on improving profitability and produced desired
results, including hitting profit targets and improving ROE.
	Sales activities have begun to be affected by COVID-19, which
poses a challenge for future sales expansion.

	The existing seven fundamental policies remain in place.
	M ajor actions for each policy were revised by considering
responses to changes in the business environment.

The Toyo Denki Group states its commitment to contributing to society in the business principles and initiatives to protect the global
environment as its priority task in the environmental philosophy. The Group has formulated the Sustainability Policy as a guideline forits efforts to realize these principles and contribute to the sustainable development of society.
Based on the Group’s business principles, environmental philosophy, and slogan, relations
between the Company’s initiatives and the realization of SDGs were summarized from thefollowing three perspectives: “Initiative in Products and Services,” “Initiative in Production
Activities,” and “Initiative in Valuing People and Communities.” While assessing the various
impacts of the Group’s businesses and activities, we will set out specific action targets as aroadmap and implement them.

Major actions added or revised in the plan

Changes in the business environment

Response to the impact of COVID-19
	Establish a business continuity plan (BCP) that can address
the COVID-19 pandemic	Improve business profitability with operating income in mind	Reduce fixed costs through the united efforts of administration,
sales and plants	Domestic and overseas economic conditions are clouded byconcerns over the resurgence of COVID-19.
	On the other hand, there are signs of recovery in the manufacturing industry’s capital investment and demand related tohigh-speed railways and urban transport systems in China.
	Efforts to realize a decarbonized society are gathering pace,and digital transformation (DX) is advancing.
	 Possible areas for contribution by our business, which is
deeply involved in social infrastructure development and global
environmental conservation, will further expand.

Response to the realization of a decarbonized society
and DX advancement
	D evelop products that contribute to the realization of adecarbonized society and bring them to market at an early stage
	Promote the development of test equipment that contributes
to the electrification of automobiles and autonomous driving
	Roll out industrial motors into the Chinese market
	Promote the application of IoT technology to the maintenance field	Commercialize wireless power supply technology at an early stage	Explore production methods that incorporate energy efficiency

Positioning of the second two years
	The second two years (fiscal 2020 through fiscal 2021) wererevised from “a period for creating growth” to “a period foraccumulating earning power and returning to a growth path.”	We will establish a foundation to achieve the initial target of“securing net sales of over 47 billion yen, operating income of
2 billion yen, and ROE of 5%” within the first two years of thenext medium-term management plan.
Numerical management targets (consolidated)

Response to SDGs

Corporate principles
Business Principles
The Toyo Denki Group will practice thefollowing business principles to ensure thegrowth of its business, earn the confidence
and understanding of shareholders andstakeholders, and foster the development of
its employees:P rioritize ethics and contribute to theprosperity of customers and society as a wholeEncourage creativity and an enterprisingspirit to meet the challenges of the future
Build trust by focusing on quality first

Environmental Philosophy
The Toyo Denki Group sets initiatives to protect the global environment as its priority
task and contributes to the development of a sustainable society.
<Action Guidelines>
We will continue to provide products and services that are considerate of the burden on the global
environment by drawing on our “future-oriented technologies friendly to the Earth and mankind.”
1. W
 e will comply with all environmental requirements including those under the relevant laws and regulations.
2. We will strive to minimize environmental burden through a reduction of energy
consumption and other measures at all stages of product lifecycle, namely planning,development, design, production, sales, use and disposal.
 e will establish and execute a system to continuously promote activities to protect the global environment.
3. W
4. W
 e will raise environmental awareness among individuals through enlightenment activities within the Group.

	Establish a sustainability policy and roadmap* For details of the fundamental policies and major actions, please see the IR Release section
on the Company’s website.

Company Slogan of the Toyo Denki GroupOur Heart and Technology for the Future(Unit: 100 million yen)

Revitalize 2020

Specific initiatives

Revitalize 2022

FY ended May 2019
(Result)

FY ended May 2020
(Result)

FY ended May 2021
(Result)

FY ending May 2022
(Plan)FY ending May 2022
(Revised plan)

Net sales

411.7

390.7

331.4

340.0

360.0

Initiative in Products and Services

Initiative in Production Activities

Operating income(Operating margin ratio)

5.5(1.4%)

10.6(2.7%)

4.2(1.3%)

4.5(1.3%)

6.0(1.7%)

4.9

12.0

7.5

7.0

8.0

Net income

6.9

10.8

9.7

8.0

7.0

Investment gain on equity method

0.1

(0.3)

(0.0)

1.7

1.0

S upply of decarbonized energy, such as
small hydroelectric power generation
P o p u l a r i z a t i o n o f e n e r g y - e f f i c i e n ttransportation, such as railroads andelectric vehicles
E fficiency improvement of electricalequipment and the spread of power
storage systems
Improvement of safety through a shift tobarrier-free transportation systemsetc.

 eduction of energy consumption inRproduction
S tudy of solar power generation anddecarbonization of energy currently used
Reduction of energy consumption duringtransportation of materials and products
Recycling activities at production sites
and officesetc.

Toyo Denki Group

Ordinary income

ROE

2.7%

4.4%

4.1%

3.3%

3.0%

Payout ratio

39.9%

24.8%

27.4%

33.5%

30.0%

Net sales by segment

72

Special Report

Transportation Systems

272.3

242.6

215.2

205.0

220.0

Industrial Systems

123.3

130.2

105.4

127.0

130.0

Information Equipment Systems

15.8

17.7

10.6

8.0

10.0

Initiative in Valuing People andCommunities
S upport for school education by offering
university endowed lectures andaccepting school field trips in plants
Promotion of gender equality initiatives
and appointment of female managers
Protection of the global environment tocontribute to nature conservationetc.

Toyo Denki Seizo Report 2021

8

Transportation Systems Segment

Results for fiscal 2020

31.8%

Deliver technologies and gratitude to customers withhighly precise, highly responding and highly efficient
power electronics, for realization of an environmentfriendly society

Segment Income (Unit: Million yen)Orders Received (Unit: Million yen)

Net Sales (Unit: Million yen)Segment Income (Unit: Million yen)

718

1,008
650

10,541

10,541 million yen (Down 19.1% year on year)

13,023

Net Sales

12,339

2,211

2,474

2,427

21,528Segment Income

2,211 million yen (Down 10.6% year on year)

Orders Received

10,597 million yen (Down 5.4% year on year)
24,26918,81821,528 million yen (Down 11.3% year on year)

Net Sales (Unit: Million yen)

27,23525,712Net Sales

26,080Orders Received (Unit: Million yen)

18,818 million yen (Down 26.8% year on year)

Segment Income
2019

2020

2021

2019

2020

2021

2019

2020

2021

Orders received decreased 26.8% compared with the previous fiscal year to 18,818 million yen, due to a decrease in orders from private
railways, Chinese customers, and overseas customers (excluding those in China), despite an increase in orders from the JR Group. Net
sales totaled 21,528 million yen, an 11.3% decrease from the previous fiscal year, due to a decrease in sales for private railways, Chinese
customers, and overseas customers (excluding those in China), offsetting an increase in sales for the JR Group. Segment income decreased 10.6% from the previous fiscal year to 2,211 million yen as a result of lower net sales and profits at subsidiaries, despite the efforts to step up cost and process control.

718 million yen (Down 28.8% year on year)

We will introduce new environmentally friendly products to the market and expand theoverseas maintenance business.

Naoki Okuyama
General Manager ofTransportation Business Unit

2019

2020

2021

2019

2020

2021

2019

2020

2021

Orders received decreased 5.4% compared with the previous fiscal year to 10,597 million yen, due to a decrease in orders for processing
equipment, despite orders for testing equipment maintaining the previous year’s level. Net sales decreased 19.1% compared with the previous
fiscal year to 10,541 million yen mainly as a result of lower sales for testing equipment and power supply. Segment income totaled 718 million yen, a 28.8% decrease compared with the previous fiscal year, mainly due to lower net sales, offsetting efforts to step up cost control.

VOICE

The Transportation Systems segment will naturally continue pursuing safety and reliability of electrical equipment for
railway vehicles, which have to meet strict usage conditions, and at the same time pour our efforts on reducing environmental impact in the form of energy saving, maintenance saving, and noise reduction to provide new environmentallyfriendly products and services.
In the domestic business, there has been a growing number of customers who have chosen our new products, including driving inverters and auxiliary power supply units that realized smaller size and lighter weight as well as
noise-reduced motor and driving gear units. Going forward, we anticipate more customers will choose our new products, together with pantographs and other highly reliable electrical equipment.
As for the overseas business, the maintenance business of electrical equipment for subway trains has been launchedin China, and we will strive to expand the business and provide stable services to meet surging demand.
In North America, we reorganized our local subsidiaries in response to changes in the business environment and set
up a new maintenance business, which has started operations.
We will also continue to work towards improving profitability of the production line at the Yokohama Plant, one of our
production bases, by enhancing production capacity and efficiency.

9Percentage of
total net sales

BUSINESSResults for fiscal 2020

Orders Received

VOICE

Industrial Systems Segment

10,59765.0%

Support railway transportation that connects people andcities with safety and trust, through manufacturing thatmerges electronics technologies and mechanicaltechnologies in a highly advanced mannerBusiness Report

11,198Percentage of
total net sales

BUSINESS

12,833Business Report

We will accelerate our business expansion both in Japan and overseas
to achieve dramatic development in the new era.

While sales activities, local adjustment, and other aspects of the Industrial Systems segment have been affected by the
COVID-19 pandemic that has been devastating the world from the beginning of 2020, efforts for a new era are producing steady results.
At the Shiga Ryuo Plant, we have been embedding thorough cost and process control and improving the quality control
level, raising its maturity as our main plant in three years after it was newly built. In addition, the R&D center attached tothe plant has been accumulating data for the practical application of in-wheel-well dynamo, and local adjustment ofoverseas test equipment now gets remotely completed, which confirm the increasing sophistication of the plant.
Overseas, the two local subsidiaries set up in 2019 are steadily developing their businesses for the future, despiteharsh environments. SIAM TOYO DENKI, a Thai subsidiary, is producing results in expanding its customer base, while
Chalco-Toyo Permanent Magnet Motor Co., Ltd., a Chinese motor production subsidiary, started operations in the fall of2020 and is in full swing to capture the growing demand for high-efficiency motors in China.
In Japan, inquiries for our electrical equipment are growing as corporate capital investment recovers, and demand of
products for small hydroelectric power generation, in which the Company has a strength, is also expanding sharply, as
the world shifts towards carbon-neutrality.
We will continue to strive for dramatic development of the Industrial Systems segment, keeping pace with new trends
in a new era.

Yoshifumi Otsubo
General Manager of Industry
Business Unit

Toyo Denki Seizo Report 2021

10

Business Report

Information Equipment Systems Segment

Percentage of
total net sales

3.2%

BUSINESS

Provision of products that make the execution of operations
on station premises and trains smooth and convenient andM2M solutions based on mobile phone networks and cloudservers using remote monitoring system

Results for fiscal 2020

2019

2020

2021

2019

2020

 evelopment of electrical equipment for rail vehicles with green credenDtials such as energy saving
The Company delivered VVVF inverter, totally enclosed motor, and other products for
Keikyu Corporation’s new 1000 series 20th-batch rolling stock. VVVF inverter uses SiC
elements to achieve smaller size and lighter weight in comparison to the previous
product (for Keikyu Corporation’s 2100 series), with a mass reduction of approximately
37% and a volume reduction of approximately 44%. In addition, totally enclosed motor
realizes maintenance saving, high efficiency, and noise reduction thanks to the totallyenclosed structure. The Company will continue to develop products with green credentials such as energy saving with an aim to realize a sustainable society.

2019

267

2021

2020

VVVF inverter

Totally enclosed motor romotion of the development of test equipment that contributes to thePelectrification of automobiles and autonomous driving

460
290

267 million yen (Down 41.9% year on year)

1,067

Segment Income

TOPICS

TopicsSegment Income (Unit: Million yen)

633

1,067 million yen (Down 39.8% year on year)

Net Sales (Unit: Million yen)

1,583

Net Sales

1,611

633 million yen (Down 60.7% year on year)

1,756

Orders Received (Unit: Million yen)

1,772

Orders Received

Business Report

2021

The Company is developing in-wheel-well dynamo, a new type of test equipment for automobile development, for the purposes of evaluating self-driving vehicles, which are predicted to become widespread in the future, and replacing chassis dynamos. This equipment can be
attached to the tires of an actual vehicle to simulate an actual driving test. The Company has received the first order for test equipment using in-wheel-well dynamo. Going forward, development efforts
will be carried out with a view to the applicability to self-driving
vehicle tests inside a testing room. The Company will continue
to contribute to the realization of a sustainable society, including decarbonization, by supporting automobile development.

Orders received decreased 60.7% compared with the previous fiscal year to 633 million yen, due to the impact of COVID-19 as well as anegative rebound from demand for software improvement projects associated with the consumption tax amendment seen in the previous
fiscal year. Net sales decreased 39.8% from the previous fiscal year to 1,067 million yen for the same reason as orders received. Segment income totaled 267 million yen, a 41.9% decrease from the previous fiscal year, as a result of lower net sales.
Actual vehicle test with in-wheel-well dynamo

IORemoter II, IoT terminal for remote monitoring and control systems,
enables connection with major clouds
VOICE

We will work towards expanding the Information Equipment Systems segment throughproduct development and solutions that meet customer needs, with a focus on railway
station operating equipment.

Capitalizing on the strengths in fare calculation and IC card processing technologies, the Information Equipment Systems
segment provides products ranging from railway station operating equipment such as commuter pass issuing machines
to portable terminal devices for conductors. In response to the spring timetable revision in March 2021, we modified theequipment we had already delivered and were able to complete the work without any major problems. In addition, more
railway lines and zones started using on-board IC ticket checking machines that enable the processing of IC card entry
and exit on trains. These machines are smoothly operating without disruption.
The prolonged COVID-19 pandemic has caused a slew of postponements and scalebacks in railway operators’ plansfor new and renewal projects as well as functional refurbishments, dragging out an extremely difficult situation. However, we will engage in product development with an eye on changes in the times and the post-COVID world and continue
to provide products that satisfy our customers, with the keywords of non-contact, cashless, thin client, and competitive
price.

Toshiaki Asakura
General Manager of IT
Business Unit

11

IORemoter II is a high-speed IoT terminal with a built-in 4G/LTE module. IoT remote monitoring and control of various facilities, controllers,
devices, and mobile entities can be conducted faster and at a larger capacity.
IORemoter II is compatible with multi-carrier and dual SIM operation, enabling proposals for communication lines that are suitable foreach customer’s applications.
Our new initiative is to develop IORemoter II’s connectivity with major cloud computing services. It now connects with Microsoft Azure,
AWS, and Alibaba Cloud IoT Platform. We are also developing connectivity with Google Cloud Platform.
Enabling connection with each cloud computing service reduces the time required for connection verification and makes system provision quicker. In addition, moresecure and high-quality systems
System configuration (e.g. Alibaba Cloud IoT Platform)
can be built. The Company will
Collection
Storage
Processing (ETL)
Analysis
Use
respond to diverse needs of ourcustomers and contribute to acVisualization of simple datacelerating digital transformation.

IORemoter II

IoT Platform

RDS

DataV

Toyo Denki Seizo Report 2021

12

Business Report

Research and Development/Intellectual Property

BUSINESS

R&D to support the development of social infrastructureand supporting frameworks
Research and Development
The Group’s R&D activities are based on seeking to create products that fully satisfy our customers and challenging the creation andexpansion of these products, and we actively promote development of technologies of our existing businesses and basic technology
developments that support this development as well as development of new products that expand our businesses.

ESG/CSR Report

Environment

Initiatives to Protect the Environment
With a view to realizing an environment-friendly society, the Company will further strive to promote the reduction ofenvironmental burden, while providing more efficient products that contribute to energy conservation.

Environmental
Philosophy
Action Guidelines

We will continue to provide products and services that are considerate of the burden on the global
environment by drawing on our “future-oriented technologies friendly to the Earth and mankind.”
We will comply with all environmental requirements including those under the relevant laws and regulations.

Project

Description

2.

To explain the effect of bogie dynamics on the adhesion and wheel slip phenomena of railway vehicles, by building a three-dimensional model,
we recreated the phenomena of false detection of slip due to torque reduction during slip and re-adhesion as well as re-adhesion failure due torepeated slips caused by insufficient torque reduction.

We will strive to minimize environmental burden through a reduction of energy consumption and other measuresat all stages of product lifecycle, namely planning, development, design, production, sales, use and disposal.

3.

We will establish and execute a system to continuously promote activities to protect the global environment.

Development of VVVF inverter
for vehicles with high-functioning control unit

We increased the performance of control unit to almost triple the processing speed compared to before and installed a large-capacity memory. The improvements enabled high-speed re-adhesion control during slipping and sliding, high-precision monitoring data recording, and long-term dynamic recording.

4.

We will raise environmental awareness among individuals through enlightenment activities within the Group

Development of current
collector with ADD for overseas
markets

Building on pantographs for the Japanese market, we developed air-operated type pantograph fitted with ADD (Automatic Dropping Device).

Information
Equipment Industrial Systems
Systems

1.

Development of anti-slip
re-adhesion control
considering three-dimensionalbogie motions

Development of in-wheel-welldynamoWe are studying the application of in-wheel-well dynamo, which can fit inside the automobile’s wheel well, to chassis dynamo. We conducted in-houseproduction of parts and a review to improve the potential of assembly operation, with mass production in mind.

Development of slender-typehigh-speed motor for EV/HEV
system tests

We are developing a motor for testing the multi-axle drive systems of EV/HEV. Using the developed motor for dynamos with a 20,000 rpm speed, thedevelopment process involves reducing the diameter of the frame and changing a part of the frame to cutout construction. Once developed, the motor
will enable tests to create the same layout as if it is installed in an actual vehicle.

Development of 690V large
capacity motor / inverter

We are developing motor and inverter for 690V power supply that can accommodate larger capacities of processing machine systems. A motor for 690V
was developed based on the existing induction motor for 400V power supply. Inverter and converter are undergoing evaluation tests on prototypes.

Development of standardized
data and programs for railway
station operating equipment

Standardized data and programs, which unified fare data (stations, fare, etc.) and fare calculation programs necessary for fare calculation to be processed by various railway station operating equipment, were completed. Standardization is expected to reduce renewal costs associated with fare revision and to improve the processing quality.

Development of IoT terminaland expansion of functions

In addition to the Company’s own existing cloud, it is now possible to connect to major cloud services such as Amazon Web Service, Microsoft Azure,
and Alibaba Cloud. We started developing a next-generation IoT terminal that supports 5G, evolving IORemoter II to a next-generation terminal.

Distributed power source

In collaboration with the Industrial Systems segment, we developed software for grid interconnection inverter VF66G that has already been commercialized, to comply with the grid interconnection regulations for distributed power sources.

Support for overseas EDM
production

With the research laboratory and the Industrial Systems segment, we are assisting production to develop a range of permanent-magnet synchronous
motors CTEDM that are mass-produced by Chalco-Toyo Permanent Magnet Motor Co., Ltd., a joint venture set up in China. Three models with IP55
protection and 1,500 rpm specifications, which meet Chinese standards, were released ahead of others.

Development of automatic
deburring system for cast gearboxes

Cast gear boxes that house gear devices for railway vehicles come in a variety of types, each of which is produced in small quantity, so deburring is performed manually. This development project involved deploying a 3D sensor that acts as a human eye and automating deburring with a robotic arm.

Development of synchronous
operation system withhigh-speed Ethernet
communication

In a system that operates multiple motors in synchronization without mechanically connecting them, communication between each inverter that drives
motors was realized by a high-speed open network using Ethernet. Conventional optical fiber and other types of wiring can be replaced with one LAN
cable, which is expected to save wiring, reduce man-hours, and lower costs.

Research
Laboratory

Transportation Systems

Segment

Intellectual Property
Our intellectual property is placed as a key corporate resource. Our intellectual property department is responsible
for the management of intellectual property and our researchlaboratory and the development divisions in each business
unit actively apply for patents and utility models.
In the overseas markets which we expect to further expand our businesses, we have started to actively engage inactivities concerning our intellectual property in order to protect our technologies and brand.

13

and contributes to the development of a sustainable society.

Expansion of New
Businesses

Results and topics from fiscal 2020

The Toyo Denki Group sets initiatives to protect the global environment as its priority task

Patent applications granted
Patent applications:
Granted cases:(Applications)

80

1

60
40 0
20
0

4
65 27
14
14

2016

0

Overseas
Overseas

66

45

45

Japan
Japan

51
33

1

47

26

24

2017

2018

5

42

36

31

9

9
37

2

36

27

29 34

2019

2020

2
0

15 16 015 16
2021

Aiming for Realization of a Sustainable Society
A sustainable society as envisaged by the Company is the combination of a “low-carbon society,” a “recycling-based society” anda “nature-symbiotic society.”
The environment technologies of the Company have produced
numerous products that contribute to energy conservation, including
high efficiency motors and inverters that capitalize on the amalgamation of our outstanding motor drive technology and other state-of-theart technologies. In the meantime, the Company has been striving toconserve resources through not only the efficient use of energy but
also the reduction of the size and weight of its products.
In addition, the Company is working on the development of
products with lower levels of noise involved in their use to makethem friendlier to the surrounding environment.
The Company will make further contribution to make society
more sustainable, fully utilizing on its environmental technologies
on a global scale, while carrying out various environmental
actions at each of its bases.

Environmental Management System
In order to tackle environmental issues on an independent andcontinuous basis, the Company has developed and operates anenvironmental management system and thereby obtained ISO
14001 certification. This certification has been acquired for all
offices and the production bases Yokohama Plant and Shiga
Ryuo Plant.
Years of ISO 14001 certification

Yokohama Plant
2004

Shiga Ryuo Plant*
2001

Extended to all offices
2010

Low-carbon society
Implementation of measuresagainst global warming

Energy conservation throughthe Company’s technologies
and products
Energy conservation in
production activities
Use of sustainable energy

Recycling-based society
Promotion of 3Rs(reduce, reuse, recycle)

Improvement of logistics
efficiency
Proper treatment of wastes
Reduction of amount of final
disposal of wastes

Nature-symbiotic society

Proper management ofchemical substances

Conservation of biodiversity

Cleanup around offices

Our Website
Information on the
Company’s environmental initiatives canbe found at our website.

https://www.toyodenki.co.jp/
esg_csr/*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.

Toyo Denki Seizo Report 2021

14

Environment

ESG/CSR Report

ESG/CSR Report

Initiatives to Prevent Global Warming

Initiatives for Control over Chemical Substances

Initiatives to reduce greenhouse gas (CO2) emissions

Volatile organic compounds (VOCs) emitted as a result of our businessactivities are adequately controlled and the amount of emission ismonitored under the Pollutant Release and Transfer Register (PRTR).
We will further engage in the reduction of waste through suchmeasures including using non-VOC materials and implementing
recovery and reuse of solvents. PCB waste is also subject to adequate control, storage and disposal in accordance with Japan’s
Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes.

The Company is promoting energy conservation at each of its
production bases and offices to reduce its CO2 emissions. At the
production bases in particular, we are promoting power-savingand streamlining at production facilities. In addition, the Yokohama
Plant uses solar power generation for peak shaving of power demands.

Targeted reduction of CO2 emissions and progress status
Although the CO2 reduction goal for the Company’s production
bases, the Yokohama Plant and Shiga Ryuo Plant, is to reduce
CO2 emissions per unit of production output by 1% year on year,
CO2 emissions on a per unit basis regrettably increased 8.4% at
the Yokohama Plant and 27.9% at the Shiga Ryuo Plant in fiscal
2020, due to lower production output caused by COVID-19. The
Company will make efforts to further reduce CO2 emissions going
forward.
Total energy input (electricity)
Yokohama Plant(Unit: 10,000 kWh)

Shiga Ryuo Plant (formerly Shiga Factory)

1,000
800
600

839.2
680.3
176.5
648.8
647.2
36.0
31.0
31.6

400
200

617.8

615.6

644.3

2015

2016

2017

662.7

2018

743.9
178.3

751.6
171.4

565.6

580.2

2019

2020

(year*)

Total energy input (gas)
Yokohama Plant

500
400
300

286.0

294.1

350.0

200

443.4
74.3

369.1

100

8,000 7,700
6,000

328.0

5,260

2016

2017

2018

2019

2,000
0
2015

2016

4,000
3,000
2,000
1,000

4,905

4,097
3,924
3,895
183
165
161

933

General waste output
Valuable waste output

300

338.6

424.5

(year*)

441.9

246.2

3,734

3,914

109.6

0
2016

2017

3,972

4.1

3,410

2017

2018

2019

2020

5.0

5
(year*)

Shiga Ryuo Plant
Shiga Ryuo Plant

490.6
55.1 402.0
36.9

2019

2020

Yokohama Plant

Shiga Ryuo Plant(year*)

12.4
1.1

10.4

5.0

2.3
2016

2018

15

4,184
774

Yokohama Plant
Yokohama Plant

Volume of landfill waste

0
2015

450.7
48.8

(t)

3,379

(year*)

435.5
365.1
401.9
134.7
134.8
123.6
107.6
17.6
16.6
19.8
115.0
107.0
117.1

10

3,759

2020

2016

2017

7.2
3.2

6.3

0
2015

With Our Customers
The Company makes it one of our business principles to “build trust by focusing on quality first.” As such, we strive
to enhance customer satisfaction through our commitment to thorough-going quality control as we believe delivering safe and secure products and services to customers is the Company’s most important mission.

Quality Control – Providing Safe and High-Quality Products
Basic policy on quality control
The Company’s electrical equipment for rail vehicles is installed inmany rail vehicles. These extremely important products play a
direct role in ensuring the safety of human life and property
during rail transportation. In the Industrial Systems and Information Equipment Systems segments as well, the Company’s products and services are used in customers’ production facilities,
development sites and in the field of social infrastructure, andthey form the foundation supporting the sustainable developmentof a society that is safe and comfortable to live in.
In order to ensure the high quality of our products and services,
the Company has established a quality policy, which is deployed at all
production bases as we strive to maintain and improve our humanresources education, compliance with rules, and our facilities.
Quality Policy

600

Shiga Ryuo Plant (formerly Shiga Factory)

4,185
806

2019

Output of general and valuable waste

2015
Yokohama Plant

5,000

2018

The Company has been thoroughly implementing waste processing rules, sorting metal waste and recycling paper resources. As aresult, its landfill waste rate was 2.3% in fiscal 2020. The increasein the volume of landfill waste at the Yokohama Plant is mainly
due to sewage sludge generated from large-scale maintenance ofwater supply facilities.

Total CO2 emissions
(t)

2017

Initiatives for Reducing Disposed Waste
as Well as Recycling

450 434.3

2020

5,750
6,990
6,490 7,200
6,800
6,700
6,150 6,600

(t)

424.7
86.1

0

15

7,000
5,800

150
2015

Total amount of shift

4,000

Shiga Ryuo Plant (formerly Shiga Factory)

408.2
80.2

Total amount of air emissions

10,000Main actions

0(Unit: 1,000 m3)

Notification volume for Pollutant Release and Transfer Register (PRTR) substances(kg)

Social2018*The fiscal year is from April to March of the following year *Figures for the Shiga Ryuo Plant include those of TD Drive Co., Ltd. from fiscal 2018.
*Prior to fiscal 2017, total energy input (gas) data is available only for the Yokohama Plant due to zero input of the Shiga Plant.
*Prior to fiscal 2017, data on output of general and valuable waste and volume of landfill waste is presented only for the Yokohama Plant.

11.3

2020

Challenge to achieve “zero” complaints.

(year*)

Yokohama Plant
1997

Shiga Ryuo Plant*
2000

Extended to all offices
2005*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.

Responding to the Global Market
Proper export controls
The Export Control Department at Human Resources and General
Affairs Division is responsible for export management as the export management control department. We have created a system
for the proper management of exports in order to ensure compliance with the laws and regulations concerning export management in the countries and regions where we engage in businessactivities as well as to avoid involvement in transactions that could
hinder the maintenance of international peace and safety.
The Export Control Department handles cargo and technology
parameters used in determining whether or not export permits
are required, as well as investigation of transactions. In addition,
the Department carries out employee education and guidanceand support for Group companies.

Promotion framework

Acquisition of International Standards

With regard to quality control, each fiscal year the Company develops policies and the promotion framework aimed at further maintaining and improving quality in each business unit, along withspecific policies pertaining to the reduction of flaws and other issues. The Company’s Corporate Quality Control Division works together with the quality control department or the quality assurance
department in each business unit to put together a report on thestatus of quality control and results in each unit. The report is delivered to top management at the monthly Operating Officer Liaison
Meeting where measures are debated and decided. Furthermore, inthe event that a flaw is discovered after a product has been
shipped, the necessary steps are swiftly taken, mainly by the quality
assurance department in each business unit, while at the sametime the causes that led to the flaw and its mechanism are investigated, and this information is put into a database so that the information can be shared in-house in an effort to prevent recurrence.

High level of safety is essential for rail vehicles. UNIFE, the Association of European Rail Industry, established the International
Railway Industry Standard (IRIS) in 2007 to ensure the quality ofrail vehicles.
In 2013, we became the first company in Japan to obtain an IRIS certification
for auxiliary power supply (SIV).
In 2 0 1 4, we were also accredited to
the China Railway Certification Center’s (CRCC) certification for
driving gear units. CRCC, a state-owned enterprise set up in
April 2003 after obtaining approval of the Certification and Accreditation Administration of the People’s Republic of China, isan organization that mainly manages the quality of railway products. It is necessary to obtain this certification to sell high-speed
rail products in China.
We will continue to acquireinternational standards and further expand our business globally.

Quality Management System

4.0
2019

Quality assurance to satisfy our customers.

Year ISO 9001 certification obtained

The Company has created and operates a quality management
system at its production bases, the Yokohama Plant and theShiga Ryuo Plant, and has obtained ISO 9001 certification.
Toyo Denki Seizo Report 2021

16

ESG/CSR ReportSocialWith Our Shareholders and Investors

Contributions to Local Communities

We strive to ensure transparency of management through the timely and proper disclosure of information and various modes of communication in order to receive an appropriate evaluation of the Company from our shareholders
and investors.

We are committed to various social contribution activities, to contribute to society through our business while facilitating our own co-existence with communities and to foster young people who will represent the next generation.

Towards Enhancement of Corporate Value
Basic philosophy
Through timely and appropriate disclosure of information to ourshareholders and investors, the Company accurately conveys ourmanagement policy and business conditions while making use of
IR tools such as our website to promote a full range of IR activities
that contribute to the improvement of our corporate value.

Dividends
Based on a comprehensive consideration of factors such as maintaining a stable and continuous return of profits, and strengthening the corporate structure, the Company paid a year-end
dividend of 30 yen per share for fiscal 2020. We will continue toaim to pay dividends with reference to the dividend payout ratio of
30%, a management target outlined in the medium-term management plan.
Dividend per share

Development of IR activities
IR activities for institutional investors and securities analysts
The Toyo Denki management team holds a financial results briefing each quarterly period to provide opportunities for institutional
investors and securities analysts to understand the summary of
our financial results. The management team gives a report including the state of progress of the medium-term management plan
and an overview and forecast for each segment as well as neworders received and other topics.
Briefing sessions, which are aimed to help institutional investors to deepen their understanding of the Company, were held
online during fiscal 2020 to prevent COVID-19 infection.
IR activities for individual shareholders and individual investors
The Company website includes a “For Individual Investors” page
which offers a clear introduction to our business activities and our
results, as well as making available a variety of IR materials.

Common dividend

(Yen)

40
30

Commemorative dividend

50
20

50

30

30

30

30

30

30

20
10
0
FY 2016

2017

2018

2019

2020

2021

(Forecast)

Record of 160th Annual General Meeting of Shareholders
Date held: Friday, August 27, 2021

The Company issues Business Reports for shareholders once every six months. They are also available on the website.

We are committed to activities that raise awareness and appreciation of our manufacturing expertise by accepting interns from local technical high schools and providing them with hands-on
experience at manufacturing sites. This internship system serves
as an effective means of recruiting outstanding technical staff on
a consistent basis as some students from these schools apply for
positions at the Company.
Participation in university endowment courses and hands-on
courses
We participated in endowment courses sponsored by the Yokohama Green Purchasing Network so that participants can deepen
their knowledge on history of railway and the environment throughour business activities. These courses were conducted online infiscal 2020 to prevent COVID-19 infection.
We conduct lectures leveraging the know-how
fostered through operations and our business activities in on-site training
courses held by educational institutions including
universities.
Installation of a solar power generation system at the
Yokohama Plant

https://www.toyodenki.co.jp/ir/individual.php

Interim Business Report for Fiscal 202017

Receiving interns

Material used for an endowment course

URL “For Individual Investors”

Plant tour for shareholders

To Convey the Mission and Appeal of
Electrical Industry as Well as of Toyo Denki

Business Report for Fiscal 2020

We installed a solar power generation system (500 kW) on the roofof the Yokohama Plant in 2012. In recent years, the system has
generated 600,000 to 650,000 kWh of electricity annually, all ofwhich is consumed internally. This contributes to reducing greenhouse gas emissions (equivalent to approximately 300 tons of CO2
per year) andcurbing global
warming. The
Company wasawarded by Yokohama City in recognition of thisaccomplishment.
Solar power generation system at
the Yokohama Plant

Cooperation with Yokohama Kyodo no Mori Fund
The Company cooperates in small woodlands conservation activities led mainly by the city of Yokohama by donating part of theproceeds from vending machines installed at the Engineering
Center of the Yokohama Plant to the fund.
Factory tours
Although we had to cancel them in fiscal 2020 due to the impact
of COVID-19, we normally conduct “factory tours” to provide opportunities for members of local communities to actually see our manufacturing facilities and products in order to develop deeper
understanding about the business operations of the Company.
During these tours, we inform the participants of our products aswell as our actions for environmental protection
and factory facilities, in an effort
to build up relationships built on
trust with local
communities.
A factory tour

Cleaning activities around the plants
As part of our efforts to respect people and local communities,
employees at the Shiga Ryuo Plant regularly participate in rivercleanup operations hosted by the Ryuo Clean River Community.
By carrying out river cleanup activities in cooperation with local
governments and companies, we protect the local environmentand contribute tonature conservation.

Cleanup activity

Toyo Denki Seizo Report 2021

18

ESG/CSR ReportSocialWith Our SuppliersWith Our Employees

The Company responds to the needs of our customers
through the strong network we have built with suppliersin line with our unique characteristics as a businessbased on an individual build-to-order/multi-productsmall lot manufacturing model.

To improve corporate value, we strive to be a company
where each and every employee can unleash his or hercapabilities in good health and in safe environments.

Towards Just and Fair Procurement

Striving to be a company where employees can play active roles
in good physical and mental health, the Company promotes“health and productivity management” together with the healthinsurance association and labor union. With the “Health and Productivity Management Declaration” in place, our efforts focus on
the following six priority items.

Communication with suppliers
The Company’s products possess various distinctive characteristics such as being individually built-to-order, manufactured in
multi-product small lots, and demanding high reliability. Therefore,
the Company can be affected by the performance of our suppliers
as a result of issues such as delays in supply due to fluctuationsin production quantity or delays in processing due to the quality of
products received.
In order to reduce these risks as much as possible, the Company carries out instruction and support related to quality, technology, and skills for our suppliers, as well as guidance for
improvement of manufacturing sites, in order to ensure stableprocurement of even better quality products. In addition, we
actively promote information sharing through the “Toyo Denki
Cooperation Association” to which our leading suppliers belong.

Formulation of “Procurement Action Guidelines”(formulated in February 2016)
Procurement Action Guidelines
These guidelines indicate the codes of conduct that the Toyo
Denki Group’s executives and employees should observe in the
procurement of purchased parts and outsourced parts as required for the manufacturing of products ordered by customers(“procurement transactions”).
1. Procurement transactions shall be carried out in observanceof the laws of the relevant countries.
2. Information concerning suppliers in procurement transactions
shall only be obtained within the scope necessary for conducting procurement activities in accordance with contracts. Furthermore, efforts shall be made to carefully manage andobserve the confidentiality of information gained through procurement transactions.
3. Personal interests with suppliers shall be prohibited in procurement transactions, including the lending and borrowing of money.
4. Receiving of support beyond the socially accepted practices or
receiving of money or inappropriate gifts or any other forms of
personal rewards from suppliers shall be prohibited in personaltransactions. In addition, forceful requests for any of the abovefrom suppliers shall be prohibited in procurement transactions.

* Inquiries from outside are accepted via the following phone number
and e-mail address:

Legal Compliance Department, Human Resources and General Affairs Division +81-3-5202-8121
email address for inquiries to Toyo Denki Seizo K.K.: contact@toyodenki.co.jp

19

Promotion of “health and productivity management”

Health and Productivity Management Declaration
The Toyo Denki Group expresses in its business principles
its commitment to “ensure the growth of its business, earn
the confidence and understanding of shareholders andstakeholders, and foster the development of its employees.”
Recognizing that the realization of the commitment involves
each employee to be physically and mentally healthy andable to play an active role with enthusiasm, the Company
will support its employees to achieve good health.

Disease prevention, prevention of illness aggravation
We will maintain a 100% participation rate for regular healthcheckups, improve the take up rate for specific health guidance
aimed to prevent adult diseases, and support the attendance offollow-up examinations.
Work-life balance
We are expanding systems that support flexible working
styles to achieve a balance between work and home. In
addition to a flextime system and annual leave on an hourly
basis, we have a rehiring system for employees who have toleave their jobs due to childbirth, childcare, family care,spouse’s transfer, and other life events. In addition, efforts
are underway to establish staggered commuting and remote
work that are currently in place to prevent COVID-19 infection
as part of a permanent system.
In 2014, we were certified as a “company that supports
child-rearing” and received the “Kurumin” certification logo
from the Tokyo Labor Bureau, in recognition of our efforts
including an extensive childcare-related scheme, educational
activities related to work-lifebalance support, the creation of anenvironment in which it is easy toobtain childcare leave, and thetrack record of male employees
taking childcare leave. We willcontinue to improve the childrearing support program.

Promotion of health and safety activities and realization of acomfortable working environment
To secure a safe working environment and achieve zero
occupational accidents, we have in place the “Company-Wide
Safety and Hygiene Management Policy,” and the Safety andHygiene Committee at each office addresses any issues atworkplace. Information on the committees’ actions is shared at
the Company-Wide Safety and Hygiene Committee, whichconvenes quarterly, in order to raise the level of health andsafety activities at each office.
 Improvement of employee health, communication promotion
and support
We support employees’ voluntary health maintenance andimprovement efforts, internal club activities, and social events
at each workplace. We also hold health events together withthe health insurance association and labor union to improve
the health of employees and promote communication.
Prevention of mental health problems and support for returning
to work
We annually carry out stress checks on our employees toprevent and detect mental health problems at an early stage.
In addition, we provide line care training for managers so thatthey recognize the importance of communication and promptly
coordinate with occupational health staff at each office.
Health management of employees at overseas posts
In addition to properly conducting health checkups before
overseas postings, we aim to regularly check the healthconditions of employees and follow up on the results of healthcheckups after their postings.

Training and skill development of employees
We aim to grow the capabilities of our employees and be acompany where each and every one works as a professional.

Education and training system
The Company’s education and training system is divided into level-specific training, individual training according to job types androles, a support program aimed at helping employees to obtainacademic degrees and official qualifications, and division education conducted by each division. Furthermore, new employees intechnical positions receive lectures and practical training at theTechnical Training Center for one year. They are assigned to each
workplace after receiving basic and specialized training for technical staff.
Skill transfer
Employees with exceptional manufacturing skills or expertise arerecognized as “Technical My Star” and assigned to instruct andtrain younger employees. Three employees of the Company haveaccepted Contemporary Master Craftsman awards from the Minister of Health, Labour and Welfare, and two have been awarded
to the Medal with Yellow Ribbon by the Japanese government.
Moreover, a large number of employees have become certified as
special-grade skilled workers.
Initiatives for employment of the disabled
Aiming to be a company where both the disabled and nondisabledwork together lively, the Company makes improvements to the workplace environment and carries out workplace training. We also offer
work experience in collaboration with local support organizations andspecial-needs schools. The percentage of employees with disabilities
at the Company is 2.67% (as of June 2021).

Data concerning personnel and labor (at Toyo Denki Seizo K.K.)
Item
Number of employees

Unit
Total
Men
Women

Ratio of female employees
Number of administrative professionals

%
Total
Men
Women

Ratio of female administrative professionals
Average age

Average years of employment
Average annual salary
Turnover rate (within 3 years of joining the Company)
Number of employees taking childcare leave
Number of employees taking family care leave
Number of temporary staff (including part-timers)
Notes

Persons

Persons%

OverallMen
Women
Overall
Men
Women

Age

Years
Yen
%
Persons
Persons
Persons

Fiscal 2016
832
768
64
7.7
150
146
4
2.7
40.4
40.4
40.1
15.2
15.2
14.8
5,990,250
2.0
9
0
152

Fiscal 2017
843
771
72
8.5
140
136
4
2.9
40.2
40.3
39.5
14.9
15.1
12.7
6,049,512
2.7
4
0
130

Fiscal 2018
831
762
69
8.3
143
139
4
2.8
40.8
40.8
40.9
15.4
15.5
14.1
5,756,046
6.5
6
0
119

Fiscal 2019
841
773
68
8.1
136
133
3
2.2
41.0
40.9
41.7
15.4
15.5
14.1
5,634,571
4.7
2
0
106

Fiscal 2020
847
766
81
9.6
139
136
3
2.2
41.7
41.6
42.8
16.0
16.2
13.9
5,518,761
2.4
8
0
86

*Number of regular employees including Operating Officers, and number of special employees, temporary employees, contract employees and staff
on loan from other companies, etc.

Toyo Denki Seizo Report 2021

20

ESG/CSR Report

GovernanceIn an effort to continuously enhance its corporate value, the Company is striving to ensure transparency ofmanagement and compliance, along with the maintenance and operation of an adequate governance framework while reinforcing its risk management framework.

Corporate GovernanceOur philosophy of corporate governance
The Group’s business activities are based on the business principles that “prioritize ethics and contribute to the prosperity of customers and society as a whole.” We therefore strive to attainsound corporate management through strengthening and reinforcing corporate governance, fully appreciating the significanceof compliance based on corporate ethics. At the same time, we
review as appropriate our management monitoring system to ensure its conformity to the changes in the business environment
including social environment and relevant legislation.
Corporate governance

21Internal audit and Statutory Auditor’s audit
Internal audit
Internal audits of the Company are carried out by the Audit Division based on internal audit plans decided by the Board of Directors. The Audit Division has staff with qualifications such as theCertified Information Systems Auditor (CISA). It reports its actionplans and internal audit results to the Board of Directors and theBoard of Statutory Auditors.
Statutory Auditors’ audit
Statutory Auditors work with the Audit Division and Accounting
Auditors and exchange information on audit plans and contents ofaccounting audits to perform appropriate auditing tasks. Statutory
Auditors receive the results of quarterly reviews from Accounting

Outside Directors and External Statutory Auditors
The Company’s Outside Executives currently include three Outside
Directors and three External Statutory Auditors as shown below.
Each Outside Executive has excellent insight in each expertiseand satisfies the independence guidelines for Outside Executives
defined by the Company.
Mr. Hirokazu Chinone, Director (Outside Executive)
Mr. Hirokazu Chinone is qualified as a lawyer and provides usefuladvice regarding management in general, drawing on his specialized knowledge regarding corporate law and his wealth of experience developed throughout his career.
Mr. Koji Mizumoto, Director (Outside Executive)
Mr. Koji Mizumoto is expected to provide useful advice, drawing
on his wealth of corporate management experience at a predecessor firm to NIPPON STEEL CORPORATION and his knowledgeof financial accounting as CFO.
Mr. Taizo Makari, Director (Outside Executive)
Mr. Taizo Makari was newly appointed as Director at the 160th
Annual General Meeting of Shareholders on August 27, 2021. He
is expected to provide advice to ensure the legality and appropriateness of the Board of Directors of the Company, drawing on his
extensive insight and global perspectives developed throughout
his career.
Mr. Toshiaki Akechi, Statutory Auditor
Mr. Toshiaki Akechi is engaged in auditing activities, drawing on
his wealth of corporate management experience at a predecessor
firm to JR East Foods Co., Ltd. and other places.

Mr. Yoshinori Kawamura, Statutory Auditor (Outside Executive)
Mr. Yoshinori Kawamura serves as Professor of Faculty of Commerce, Waseda University, and is engaged in auditing activities,
drawing on his expertise regarding corporate finance and accounting
developed thus far. He also has experiences as Secretary and Special Member of the Business Accounting Council of the Financial
Services Agency, and an examiner of the Certified Public Accountant
Examination, etc.
Mr. Yasushi Miki, Statutory Auditor
Mr. Yasushi Miki is engaged in auditing activities, drawing on his
wealth of experience developed at a predecessor bank to MUFG
Bank, Ltd. and other places and his global perspective.
Executive Remuneration
Directors
Remuneration for the Company’s Directors is determined within
the maximum remuneration amount resolved at the Annual General
Meeting of Shareholders held in August 2006, with reference tothe policy for determining remuneration for Directors resolved by
the Board of Directors. To ensure the independence of Outside
Directors, the Company provides no bonuses to them. Decisions
on remuneration for Directors are made at the Nomination andCompensation Advisory Committee set up under the Board of Directors, with the participation of Outside Directors, in order toenhance objectivity and transparency of the decision process for
executive remuneration.
Statutory Auditors
Remuneration for the Company’s Statutory Auditors is determinedthrough discussion among Statutory Auditors within the maximum
total remuneration, which was fixed at the Ordinary General Meeting of Shareholders held in August 2006. It takes form of fixed remuneration for each standing and part-time position. There are nobonuses for Statutory Auditors.

Corporate governance framework
General meeting of shareholders
Appointments/dismissals

Accounting Auditors

Reporting

ReportingAppointments/dismissals

Legal audit

Board of Statutory Auditors

ReportingDirectors

Statutory Auditors
Reporting

Reporting/decisions
Instruction/reporting

Internal Control Committee
Internal audit(Secretariat)

Legal counsel(Contact for whistle-blowers)

Reporting

Reporting

Human Resources andGeneral Affairs Division(Contact for whistle-blowers)(Contact for legal consulting)

Reporting on
business execution

Appointments/dismissals

Business audit

Accounting audit

Audit Division

Appointments/dismissals

Board of Directors

Appointments/
reporting/recommendations
Whistle-blowings
Oversight
Whistle-blowings

President
Management Strategy Meeting
Operating Officer Report Meeting
National and Global Group Company Meetings
Instruction/reporting

Appointments/dismissals

We have corporate bodies established in accordance with laws
and regulations as well as the Articles of Incorporation, including
the General Meeting of Shareholders, Directors and the Board of
Directors, Statutory Auditors and the Board of Statutory Auditors,
and Accounting Auditors. To strengthen corporate governance, thesupervision and execution functions of the Board of Directors are
separated, through the adoption of a structure where the Board of
Directors is mainly in charge of governance, and Operating Officers are primarily in charge of business execution.
The Company strives to ensure that both the supervision function of the Board of Directors and the audit function of (the Boardof) Statutory Auditors work effectively and believes that the current system is sufficiently running.
Specifically, each of the following bodies and meeting bodies isin place to function effectively.
Directors and the Board of Directors
At its regular monthly meetings as well as extraordinary meetings held when appropriate, the Board of Directors, which iscomposed of seven Directors including three Outside Directors,
discusses and decides on important management matterssuch as reports on Operating Officers’ business execution andmatters to be decided solely at the discretion of the Board of
Directors, while supervising the execution of duties by Operating Officers.
 Management Strategy Meeting and Operating Officer Report
Meeting, etc.
The Company has meeting bodies including the Management
Strategy Meeting and Operating Officer Report Meeting. Throughthese bodies, specific matters related to their execution of duties
and critical management matters including those subject to thedeliberation of the Board of Directors are reported to the President by Operating Officers and the general managers of business execution departments, deliberated and discussed

preliminarily. In addition, Outside Directors and Statutory Auditors
attend these meeting bodies, as necessary. As for the matters
discussed at meetings, matters subject to the deliberation of theBoard of Directors are decided by the Board of Directors andother matters are decided by employees with business execution
authority through means such as circulars based on the Management Authority Rules.
Statutory Auditors and the Board of Statutory Auditors
The Board of Statutory Auditors is made up of four members
including three External Statutory Auditors. Statutory Auditors
oversee management by attending the Board of Directors’
meetings, etc. and expressing appropriate opinions in the process of deliberating business execution reports from Operating
Officers and matters to be decided solely at the discretion of
the Board of Directors. In addition, Statutory Auditors audit thebusiness activities and assets of the Company and Group companies in accordance with audit policies and division of duties
set by the Board of Statutory Auditors.
Voluntary committees
a. Nomination and Compensation Advisory Committee
Under the Board of Directors, the Company has in place theNomination and Compensation Advisory Committee, whose
members include Outside Directors. Its purpose is to list
candidates for Directors and Statutory Auditors and nominate Operating Officers, and to ensure transparency andobjectivity regarding decisions on compensation for Directors and Operating Officers.
b. Internal Control Committee
The Internal Control Committee is in place under the Boardof Directors to develop a system stipulated in the basic policy of internal control systems, check the operation status,and conduct constant reviews. The Committee meets quarterly, and the contents of deliberation are reported to theBoard of Directors each time.

Auditors both verbally and in writing, and confirm their actionplans to be taken at a fiscal year-end audit. Statutory Auditors
also receive the results of fiscal year-end audits from Accounting
Auditors in statutory documents along with verbal reviews. Furthermore, Statutory Auditors are in principle required to be present at inventory taking or on-site inspection at subsidiaries by
Accounting Auditors.

Operating Officers
Instruction/reporting

Each business department
Instruction/reporting

Instruction/
reporting

Each Group company

Toyo Denki Seizo Report 2021

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ESG/CSR Report

GovernanceKoji Mizumoto

Executive Profiles (as of October 1, 2021)

Chairman,
Representative
Director

President,
Representative
Director

Director

Akihiko Ishii

Director

Director (Outside)

Director (Outside)

Director (Outside)

Yoshifumi Otsubo Hirokazu Chinone Koji Mizumoto

Taizo Makari

Kenzo Terashima Akira Watanabe
Director Skill Matrix

NameStanding Statutory Auditors

Areas of expertise and experience
OutsideSales/ Research and Manufacturing/ Global Accounting/Directors Corporate
management Marketing development/ Quality control business FinanceTechnology

Kenzo Terashima
Akira Watanabe
Akihiko Ishii
Yoshifumi Otsubo
Hirokazu Chinone
Koji Mizumoto
Taizo Makari

Toshiaki Akechi Kenji Ueda
Legalaffairs

Statutory Auditors

Yoshinori Kawamura Yasushi Miki
Senior Executive Officers

Akihiko Ishii Yoshifumi Otsubo
Executive Officers

Shuji Horie Kenji Tanimoto

Points of discussion and advice at the Board of Directors

The Ministry of Economy, Trade and Industry published practicalguidelines on outside directors to strengthen corporate governance, raising expectation that the independent officer system
will play more serious role.
I worked for a material manufacturer for more than 40 years,
during which I experienced many good and bad things that happened in varying degrees to corporations. I recognize that it is
my main mission entrusted by shareholders to supervise management effectively and positively with the eyes of an outsider
while making the best use of my experience.
Specifically, I hope to give advice to the current executive
team and management for the Company’s future development
based on my experience including past reflections and newstudies. In particular, I would like to fulfill my role in the Company’s efforts to survive and become highly profitable and future-oriented with everyone’s participation through mechanisms(systems).

I think what is often lacking in the resolutions made by boards of directors is the viewpoints of outsiders and perspectives in terms ofwhether they meet the mandates given by various stakeholders.
Below is a checklist that should be reviewed by members of boardsof directors in my opinion. I will participate in discussions and give
advice based on these points.
Clarity of top management’s instructions and responsibility forbusiness earnings
Level of targets, achievements, and internal dissemination of
medium- and long-term management plansM easures to increase our stock price, awareness and actions for SDGs
Information-gathering function and concrete actions for takeover defense
Product pricing power, sales capabilities, material procurement
capabilities, financial positionH ealth and safety track records and measures at plants
B CP and risk managementH uman resource development measures (development of staff andnext management team) and management of personnel systemsF uture orientation of the company, new products and R&D status
General management issues such as the operation status ofcomputer systems

Operating Officers

Naoki Okuyama Toshihito Nakanishi Shini Furutsuki
Takuya Hatakeyama Toshiharu Takagi Chiaki Nakano
Yuji Nagano Hiroyuki Imaizumi Jun Nukina

Taizo Makari

Messages from Outside Directors

Hirokazu Chinone

23

Role of Outside Director

Role of Outside Director

Points of discussion and advice at the Board of Directors

The Companies Act stipulates that the authority of a board of directors is to make decisions on important business execution
matters and oversee the execution of duties, and this also applies to directors who make up the board of directors.
Furthermore, the main role of outside directors is to oversee
the execution of duties in particular. The reason for this is that itis thought to be beneficial to have independent outside directors
who have no ties of obligation to internal directors and few
stakes, in order to prevent illegal and unfair decisions with compliance issues.
I am a lawyer by profession. I don’t have any experience inrunning a company, making it difficult to give useful and appropriate advice to improve the Company’s business performance,
but I believe monitoring business execution is my area of expertise to prevent the Company’s scandals and various risks.

Since my appointment as Director, fortunately no agenda itemor proposal that would become a compliance issue has beenpresented to the Board of Directors.
However, it is generally understood that even when a compliance issue emerges, that information rarely reaches the Boardof Directors, and in many cases, it is too late when the problem
is discovered. In order to avoid this, it is necessary to havemechanisms in place that allow negative information to beraised to executives. Such mechanisms include an internal audit
department that is independent of business divisions and whistleblowing systems. I believe that it is important to ensure thatsuch bodies function successfully and dot not end up just being
a formality.

Role of Outside Director

Points of discussion and advice at the Board of Directors

The enforcement of the revised Companies Act has tightened thecriteria for independence, and the application of the Corporate
Governance Code has made it practically mandatory for listedcompanies to have a certain number of outside directors. My understanding is that outside directors are expected to fulfill the following three roles, from their external and objective viewpoints,
without conflict of interest: monitoring and supervision of corporate governance; advice for and screening and approval of corporate strategies and plans; and appropriate incorporation of
stakeholder opinions into business execution. There are strong
calls for the appropriate involvement of outside directors in response to a number of scandals, including quality frauds in the
manufacturing industry that still continue to occur. I will perform
my job with a strong awareness of these three expected roles.
I am keenly aware that, to effectively fulfill these roles, it isnecessary to not only harness various knowledge and insightgained from the experience of company management, but also
make efforts to understand well the Company’s business operations, history, culture, and feelings, and to continuously grasp thechanges in social needs from the present to the future.

My experiences in business execution include roles for both business implementation and company-wide functions, such as capital investment for domestic and overseas production facilities andengineering in general for my company, engineering business forother companies, governance of overseas group companies as
the president of an overseas supervisory company, director of an
IT company, disaster prevention and safety management of important facilities, energy strategies as part of measures for SDGs,
and utilization of ICT for production. In these roles, I experienced
various failures, difficulties, and recoveries, and I think that I reasonably understand the main points and risks of each issue.
At the Board of Directors, I intend to discuss and advise on
strategic direction in line with future needs and demands of society, particularly in terms of production technology, technology andproduct development, quality control, capital investment, safety
management, measures for SDGs, development of technical human capital, and overseas expansion, which are important aspects for the manufacturing industry. By doing so, I would like tocontribute to the sound development of the Company’s businessand the improvement of corporate value.
Toyo Denki Seizo Report 2021

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ESG/CSR Report

GovernanceInternal Control and ComplianceInternal Control
The Company views the development and operation of an internal
control system to be an important management issue, and it hasdeveloped an efficient, legal and appropriate business execution
system pursuant to Article 362 of the Companies Act and Article
100 of the Ordinance for Enforcement of the Companies Act. The
Internal Control Committee established under the Board of Directors reviews the operational status of the internal control system
and will revise it as necessary.
Principles of compliance
The Company has set “1. adherence to rules,” “2. observance ofconfidentiality,” “3. distinction between private and public matters,” “4. strictness with money,” “5. prohibition of side jobs,” and“6. prohibition of discriminatory and sexually suggestive statements or behavior” as principles of compliance.
Compliance promotion framework
To focus on business principles and fulfill its social responsibility,
the Company has provided all officers and employees with a copyof the Compliance Manual (Toyo Denki Seizo Ethical Standards)
that stipulates its code of conduct. The move is part of an effort tohave the code and the basic rules of work fully known.
The Company has also introduced a whistle-blowing systemthat allows employees to provide information directly to the management. The system is aimed at ensuring that any illegal orinappropriate conduct within the Company is detected at theearliest possible stage and that adequate measures are taken
promptly and as needed so that such conduct is rectified.
Compliance education
We conduct compliance training every year for all employees of
the Group in order to enhance knowledge of compliance and foster awareness to respect corporate ethics.

Risk Management
Basic policy
The Company is engaged in developing rules and a framework forrisk management according to the Basic Rules for Risk Management established in August 2006.

25

Promotion framework
The Company has established the Internal Control Committee under the Board of Directors, chaired by the President. It analyzes
and assesses all the risks that exist in the Group and develops aneffective risk management framework capable of dealing precisely with the risks of the types and degrees that the Group is exposed to. The committee specifically reviews risk verifications andcountermeasures, and periodically reports details of its deliberations to the Board of Directors.

Risk Factors
From the perspective of proactive information disclosure, theGroup intends to disclose a wide range of recognizable risks. Major risks that may affect its earnings and financial position are set
out below. The Group aims for thorough understanding of theserisks in order to establish a necessary risk management framework designed to prevent the risks from materializing or minimize
the impact of risks if they do materialize.
Forward-looking statements below are based on the judgmentof the Group as of the end of the fiscal year ended May 2020.
(1) Changes in domestic and international economic trends
The Group’s sales heavily rely on the Transportation Systems
and Industrial Systems segments. Its customers conduct business operations at home and overseas. As such, business climates and individual spending conditions in different countries
may affect the Group’s business performance.
(2) Large-scale disasters and outbreak of infectious diseases
The great majority of the Group’s production bases for theTransportation Systems segment are located in the Kanto area
and those for the Industrial Systems segment are in the Kansai area. Production capacity may be severely affected bylarge-scale disasters and the outbreak of infectious diseases
in either of these areas. Furthermore, large-scale disasters
and the outbreak of infectious diseases may hinder the entire
supply chain and impact order trends, thus affecting the Company’s production and earnings.
Since January 2020, COVID-19 has been spreading in Japan and overseas. The Group is taking actions to help preventthe spread of infections, while prioritizing the safety and healthof employees through measures such as staggered commuting
and working from home and minimizing hindrance to production. Although the impact on our business operations has been
limited as a whole, orders and sales have been somewhat affected due to restrictions on movement and overseas travel.
The Company’s earnings forecast announced already takesthese effects into account. However, if infections spread morethan expected in the future, the Company’s business may befurther affected.
(3) Intensifying competition
The Japanese market for the Transportation Systems segment
has matured and thus faces intensifying competition. The Industrial Systems segment is also under pressure from intensifying competition for product development. The Group’sbusiness performance may be affected by such intensifying
competition.
(4) Occurrence of large-scale damages
If large-scale damages are incurred due to product defects
and other causes and cannot be covered by insurance, it may
affect the Group’s business performance.
(5) Delays in product development
With a view to providing attractive products to customers, theGroup applies itself to gathering information about customer
needs and leverages it in the development of new products to
support its future growth. However, delays in the developmentof new products to respond to rapid technological or environmental changes may affect the Group’s performance.
(6) Delays and other problems in the supply of materials
Owing to the fact that the Group’s business has various distinctive characteristics, some of the materials it procures are
not easily available due to factors such as a limited number ofsuppliers. Delays in supply or discontinuation in production ofsuch materials may affect the Group’s production. Moreover,the Group’s business performance may be affected by thefluctuation in prices of raw materials, notably steel products
and copper.
(7) Changes in overseas situations
The Group proactively pursues the expansion of overseas operations including the Chinese market. Its business performance may be affected by major changes in situations
overseas.
(8) Litigations and other legal proceedings
If the Group becomes the subject of any litigation or other legal proceeding, its business operations and performance may
be affected. Although the Group particularly attends to theprotection of intellectual property rights, amid drastically advancing technical innovations and accelerating globalization ofbusiness, the Group is inevitably exposed to potential disputes
with third parties over intellectual property rights.
(9) Relationships with business alliance partners
With the aim of business expansion and enhancing competitiveness, the Group proactively pursues various alliances withthird parties. However, if these alliances do not deliver expected results due to a failure in forging favorable relationships
with partners, the Group may face an impact on its performance.

(10) Exchange rate fluctuations
As the Group is aggressively expanding into overseas markets, an increase in foreign currency denominated transactions will heighten the impact of exchange rate fluctuations
on the Group’s performance.
(11) Fluctuations in the value of holding assets
Fluctuations in the fair value of assets held by the Group may
affect its performance.
(12) Changes in financial conditions
The Group’s financing programs may be affected by unexpected changes in financial conditions.
(13) Breach of confidential information
The Group retains customer information related to its business executions. Also, it possesses various types of confidential information concerning the Group’s proprietary
technologies and operations. If these information assets leakoutside the Group for unforeseeable reasons, it may impact
its business operations and performance.
(14) Domestic and foreign laws and regulations
The Group proactively pursues expansion in overseas operations, particularly the Chinese market, and as such, its operations are subject to not only Japanese laws but also the laws
and regulations of each country. Although the Group has established and operates a robust compliance system, its business operations and performance are still at risk from theeffects of unforeseeable events.

Information Security
Basic policy
The Company holds a vast amount of information assets including
information presented by customers related to its businessexecution and confidential information concerning the Group’s
proprietary technologies and its trade. Each Group company istaking various measures in this respect based on an awarenessof shared security under the Group’s Information Security Guidelines, which have been established to adequately manage anduse these information assets.
Information security training
The Company is conducting educational activities to develop
information security awareness among all employees including
various training sessions, some involving the use of educationalDVDs.

Toyo Denki Seizo Report 2021

26

Profit/Loss
Net income
attributable toowners of the parent
YoY -9.6%

From a profit perspective, operating income decreased 60.3% compared with the previous fiscal year to 423 million yen. Ordinary income decreased 37.3% compared with the previous fiscal year to 757 million yen. Net income attributable to owners of the parent decreased 9.6% to 977 million yen, as a result of efforts to cut somecross-shareholdings.

2020

Cash flows from operating activities (Unit: Million yen)

FY 2016

819

840

792

927
FY 2016

2018

2019

2020

2019

FY 2016

2017

2019

2020

FY 2016

2017

2018

2019

Cash flow fromoperating activities
Net cash provided by operating activities amounted to 1,776 million yen (net cash of 2,148 million yen provided
Net cash provided by in the previous fiscal year), principally due to a decrease in trade notes and accounts receivable.
operating activities
1,776 million yen
Cash flow frominvesting activities
Net cash used ininvesting activities
155 million yen

Net cash used in investing activities totaled 155 million yen (net cash of 41 million yen provided in the previous
fiscal year), principally due to purchases of property, plant and equipment.

Cash flow fromfinancing activities
Net cash used infinancing activities
971 million yen

Net cash used in financing activities was 971 million yen (net cash of 1,126 million yen used in the previous fiscal year), primarily owing to repayment of debt.

Japan

China

FY 2016

Others20172020(Unit: Million yen)Overseas net sales ratio

2018

-971

-1,126-2,012
2018

Net sales by region

Cash Flows

2020

2,868

-1,0192018

Cash flows from financing activities (Unit: Million yen)

41

2017

2017

-3,087

Net assets as of May 31, 2021 stood at 24,008 million yen, a decrease of 174 million yen compared with theend of the previous fiscal year. This decrease was largely attributable to a decrease of 924 million yen in unrealized holding gain on available-for-sale securities, offset by an increase of 709 million yen in retained earnings.

2020-4,691

Net assets
Total net assets
24,008 million yen

2019

1,776

Total liabilities as of May 31, 2021 stood at 27,958 million yen, a decrease of 3,023 million yen compared withthe end of the previous fiscal year. This decrease was largely attributable to a decrease of 1,727 million yen in
trade notes and accounts payable and a decrease of 707 million yen in debt.

2,148

Liabilities
Total liabilities
27,958 million yen-1,572

Total assets as of May 31, 2021 stood at 51,967 million yen, a decrease of 3,198 million yen compared with theend of the previous fiscal year. The decrease in total assets was largely attributable to a decrease of 1,554 million yen in trade notes and accounts receivable and a decrease of 1,602 million yen in investment securities, offset by an increase of 670 million yen in cash on hand and in banks.

1,505

AssetsTotal assets
51,967 million yen

2018

Cash flows from investing activities (Unit: Million yen)

3,720

Financial Position

2017

4,140

2019

-155

2018

632

2017

545

1,090
FY 2016

FY 201627

731

Net sales decreased 15.2% compared with the previous fiscal year to 33,143 million yen due to a decrease in
the Transportation Systems segment.

Research and development costs(Unit: Million yen)

1,413

Net sales
YoY -15.2%

Depreciation and amortization (Unit: Million yen)

1,487

Orders received decreased 22.0% compared with the previous fiscal year to 30,055 million yen due to a decrease in orders received in the Transportation Systems segment, the Industrial Systems segment, and the Information Equipment Systems segment.

(Unit: Million yen)801

Orders received
YoY -22.0%

Capital investment 

1,774

Results of Operation

Reference Data for Management Indices

1,237

Consolidated Operating Results, Consolidated Financial Position, and Consolidated Cash Flow for Fiscal
2020 (from June 1, 2020 to May 31, 2021) are as follows:

Financial Report

4,772

Financial Review

4,606

Financial Report

2019

2017

2018

2019

2020

2021

Japan

28,00632,124

31,74530,997

27,876

China

5,882

4,085

3,663

4,282

3,628

Others

6,778

6,317

5,763

3,791

1,638

Total

40,66842,527

41,172

39,07133,143

Overseas net sales ratio

31.1%

25.3%

22.9%

20.7%

15.9%

2020

Toyo Denki Seizo Report 2021

28

TOYO DENKI SEIZO K.K.
Consolidated Balance Sheets

As of

May 31,
2021

May 31,
2020(Millions of yen)

May 31,
2021(Thousands of
U.S. dollars)(Note 1)

AssetsCurrent assets:
Cash on hand and in banks (Notes 16 and 18)¥3,964¥3,293$36,118

Trade notes and accounts receivable (Notes 2 and 16)

13,21814,135

120,426

Electronically recorded receivables (Note 16)

901

1,538

8,209

Inventories (Note 3)

6,901

7,178

62,877

Other current assets

318

139

2,898

Allowance for doubtful accounts

(2)

(0)

(24)

25,30026,284

230,506

Total current assets

Property, plant and equipment (Note 4):
Buildings and structures

6,410

6,753

58,401

Machinery and vehicles

966

1,059

8,805

Land

1,301

1,301

11,855Construction in progress

24

86

227

Other

622

724

5,675

9,325

9,925

84,964

13,832

15,434

126,021

Deferred tax assets (Note 11)

223

170

2,037

Intangible assets

303

490

2,765

Other

2,988

2,865

27,230Allowance for doubtful accounts

(6)

(6)

(62)

Total investments and other assets

17,341

18,954

157,992

Total assets (Note 20)¥51,967¥55,165$473,462

Total property, plant and equipment

Investments and other assets (Note 5):
Investment securities (Notes 5, 16 and 17)

29

As of

May 31,
2021

May 31,
2020(Millions of yen)

LIABILITIES AND NET ASSETS
Current liabilities:
Trade notes and accounts payable (Notes 2 and 16)
Electronically recorded payables (Note 16)
Short-term borrowings and current portion of long-term debt
(Notes 6 and 16)
Income taxes payable (Note 11)
Accrued expenses
Accrued directors’ bonuses
Accrued employees’ bonuses
Reserve for losses on order acknowledgements (Note 3)
Other
Total current liabilities

May 31,
2021(Thousands of
U.S. dollars)(Note 1)

¥1,668
4,705¥2,224
5,877$15,198
42,870

2,085

2,207

18,998

161
611
36
827
871
660
11,628

334
606
36
876
732
773
13,669

1,472
5,574
327
7,539
7,941
6,018
105,942

11,759
427
4,124
17
1
16,33012,344
930
4,010
25
3
17,312

107,134
3,891
37,579158
17148,782

Net assets (Notes 8 and 15):
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity¥4,998
3,177
12,320(1,281)
19,214¥4,998
3,177
11,610(1,280)18,505$45,539
28,949112,251(11,677)
175,062

Accumulated other comprehensive income:Unrealized holding gain on securities
Translation adjustments
Retirement benefits liability adjustments (Note 7)
Total accumulated other comprehensive income
Total net assets

4,803
88
(97)
4,793
24,008

5,727
79
(129)
5,677
24,183

43,760802(887)
43,676
218,738

Total liabilities and net assets¥51,967¥55,165$473,462

Long-term liabilities:
Long-term debt (Notes 6, 16 and 19)
Deferred tax liabilities (Note 11)
Liability for retirement benefits (Note 7)Long-term payables
Other
Total long-term liabilities
Commitments and contingencies (Note 14)

See notes to consolidated financial statements.

Toyo Denki Seizo Report 2021

30

TOYO DENKI SEIZO K.K.
Consolidated Statements of Income

For the Years Ended

Net sales (Note 20)
Cost of sales (Note 3)
Gross profit
Selling, general and administrative expenses (Note 9)
Operating income (Note 20)
Non-operating income (expenses):
Interest and dividend income
Interest expense
Equity in losses of unconsolidated subsidiaries and affiliates
Foreign exchange gain (loss)
Insurance claim income related to disaster
Subsidy income
Disaster recover expenses
Other (expenses) income, net
Ordinary income
Special gains, net (Note 10)
Income before income taxes
Income taxes (Note 11):
Current
Deferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

TOYO DENKI SEIZO K.K.
Consolidated Statements of Changes in Net Assets
May 31,
2021

May 31,
2020(Millions of yen)

May 31,
2021(Thousands of
U.S. dollars)(Note 1)

¥33,143
25,805
7,338¥39,071
30,8288,242$301,962
235,106
66,856

6,914
423

7,174
1,068

62,996
3,860

202
(67)
(4)
133
34
40
—
(5)
333
757
407
1,164

235
(83)
(39)
(56)
104
40
(79)
19
139
1,207
445
1,653

1,848
(615)
(41)
1,214
318
364
—
(50)
3,038
6,899
3,714
10,613

352
(165)
186
977
—
¥977

(Millions of yen)
Shareholders’ equity

577
(5)
571
1,081
—
¥1,0813,209(1,506)
1,703
8,910
—
$8,910

Commonstock

Capitalsurplus31

Translation
adjustments¥(1,280)¥17,693¥7,176¥126¥(192)¥7,110¥24,804

—

—

(268)

—

(268)

—

—

—

—

(268)

—
—

—
—

(0)

—
—

—
—

—
—

—
—

Balance as of May 31, 2020——
¥4,998

Balance as of June 1, 2020

Cash dividends paid
Net income attributable toowners of the parent
Purchases of treasury stock
Net changes in items
other than those inshareholders’ equity
Total changes during the year

1,081

1,081

1,081

—

—
(0)

—
—
¥3,177—813¥11,610—(0)¥(1,280)—812¥18,505(1,448)(1,448)¥5,727

(47)
(47)
¥79

62
62
¥(129)(1,433)(1,433)¥5,677(1,433)(620)¥24,183¥4,998¥3,177¥11,610¥(1,280)¥18,505¥5,727¥79¥(129)¥5,677¥24,183

—

—

(268)

—

(268)

—

—

—

—

(268)

—
—

—
—

977

977
(0)

—
—

—
—

—
—

—
—

977

—

—
(0)

—
—
¥4,998——¥3,177—709¥12,320—(0)¥(1,281)—708¥19,214

(924)
(924)
¥4,803

8
8
¥88

32
32
¥(97)(883)(883)¥4,793(883)(174)¥24,008(0)

Changes during the year
Cash dividends paid
Net income attributable toowners of the parent
Purchases of treasury stock
Net changes in items
other than those inshareholders’ equity
Total changes during the year
Balance as of May 31, 2021

(0)(Thousands of U.S. dollars) (Note 1)
Shareholders’ equity

May 31,
2021

Accumulated other comprehensive income
Total
Retirement
accumulated
benefitsotherliability
comprehensive
adjustments
incomeCommonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equityUnrealized
holding
gain onsecurities$45,539$28,949$105,784$(11,669) $168,603$52,184$724$(1,181)$51,726$220,330——(2,443)—(2,443)

—

—

—

—

(2,443)

—
—

—
—

8,910
—

—
(7)

8,910
(7)

—
—

—
—

—
—

—
—

8,910
(7)

—
—
$45,539——$28,949—6,466$112,251

—
—
(7)
6,458
$(11,677) $175,062(8,423)(8,423)$43,760

78
78
$802

294
294
$  (887)

Translation
adjustments

Total net
assetsChanges during the year
Cash dividends paid
Net income attributable toowners of the parent

May 31,
2020(Millions of yen)

¥977

Total net
assets¥10,797

Purchases of treasury stock¥1,081

May 31,
2021

Net changes in items
other than those inshareholders’ equity(Thousands of
U.S. dollars)(Note 1)

Total changes during the year$8,910

Balance as of May 31, 2021

(8,050)(8,050)(8,050)(1,592)$43,676 $218,738

See notes to consolidated financial statements.

(924)
(6)
32

(1,448)(12)
62(8,423)
(55)
294

14

(34)

133

(883)

(1,433)(8,050)Comprehensive income (loss)¥94¥(351)$859

Comprehensive income (loss) attributable to:
Owners of the parent
Non-controlling interests¥94—¥(351)—$859—

See notes to consolidated financial statements.

Total
shareholders’equity¥3,177

Balance as of June 1, 2020

Other comprehensive loss (Note 12):
Unrealized holding loss on securities
Translation adjustments
Retirement benefits liability adjustments
Share of other comprehensive income (loss) of affiliates accounted forby the equity method
Total other comprehensive loss

Treasury
stock

Total
Retirement
accumulated
benefitsotherliability
comprehensive
adjustments
incomeChanges during the year

TOYO DENKI SEIZO K.K.
Consolidated Statements of Comprehensive Income (Loss)

Net income

Retainedearnings

Unrealized
holding
gain onsecurities¥4,998

Balance as of June 1, 2019

See notes to consolidated financial statements.

For the Years Ended

Accumulated other comprehensive income

Toyo Denki Seizo Report 2021

32

TOYO DENKI SEIZO K.K.
Consolidated Statements of Cash Flows

For the Years Ended

TOYO DENKI SEIZO K.K.
Notes to Consolidated Financial Statements
May 31,
2021

May 31,
2020(Millions of yen)

Operating activities
Income before income taxes
Depreciation and amortization
Reversal of allowance for doubtful accounts
Provision for accrued employees’ bonuses
Increase in liability for retirement benefits
Interest and dividend income
Interest expense
Insurance claim income related to disaster
Subsidy income
Disaster recover expenses
Gain on sales of investment securities
Changes in operating assets and liabilities:
Trade notes and accounts receivable
Inventories
Trade notes and accounts payable
Reserve for losses on order acknowledgements
Advances received
Accrued expenses
Other, net
SubtotalInterest and dividend income received
Interest expense paid
Proceeds from insurance income related to disaster
Subsidies received
Payments for disaster recover expenses
Income taxes paid
Net cash provided by operating activities
Investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales of investment securities
Payments of loans receivableCollection of loans receivable
Payments for investments in capital of subsidiaries and affiliates
Other, net
Net cash (used in) provided by investing activities
Financing activities
Decrease in short-term loans payable
Repayment of long-term debt
Purchases of treasury stock
Cash dividends paid
Other, net
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 18)

May 31,
2021(Thousands of
U.S. dollars)(Note 1)

¥1,164
1,413
2
(49)
97
(202)
67
(34)
(40)
—
(407)

¥1,653
1,487
(7)
57
138
(235)
83
(104)
(40)
79
(447)

$10,613
12,87423(449)
890(1,848)
615
(318)
(364)
—
(3,714)

1,567
274(1,743)
142
(11)
(14)
(86)
2,138
210
(68)
34
40
—
(580)
1,776

(64)
372
(481)
166
(13)
(64)
(164)
2,418
235
(91)
104
40
(79)
(477)
2,148

14,2792,497(15,886)
1,298
(101)
(136)
(787)
19,487
1,919
(622)
318
364
—
(5,285)
16,182

(548)
(43)
(14)
693
(111)
11
(88)
(53)
(155)

(647)
(33)
(14)
1,132
(26)
—
(338)
(31)
41

(5,001)
(399)
(129)
6,318
(1,013)
103
(810)
(484)
(1,415)

(83)
(617)
(0)
(268)
(1)
(971)
21
670
3,293
¥3,964

(287)
(568)
(0)
(268)
(1)
(1,126)
(10)
1,053
2,240
¥3,293(762)(5,624)(7)(2,447)(10)(8,852)
195
6,108
30,009$36,118

1. Summary of Significant Accounting Policies(a) Basis of presentation
The accompanying consolidated financial statements of TOYO DENKI SEIZO K.K. (the “Company”) and consolidated subsidiaries(collectively the “Group”) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain
respects as to the application and disclosure requirements of International Financial Reporting Standards (IFRS), and are compiled
from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act ofJapan.
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation.
Amounts of less than one million yen and one thousand U.S. dollars have been rounded down to the nearest million yen andthousand U.S. dollars, respectively, in the presentation of the accompanying consolidated financial statements. As a result, the totals
in yen and U.S. dollars do not necessarily agree with the sum of the individual amounts.
(b) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements included the accounts of the Company and any significant companies controlled
directly or indirectly by the Company.
Companies over which the Company exercises significant influence in terms of their operating and financial policies have beenaccounted for by the equity method. The Company applies the “Practical Solution of Unification of Accounting Policies Applied toForeign Subsidiaries for Consolidated Financial Statements” (Accounting Standards Board of Japan (ASBJ) Practical Issues Task
Force (PITF) No. 18) and “Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for using Equity
Method” (PITF No. 24). In accordance with these PITF, the accompanying consolidated financial statements have been prepared byusing the accounts of foreign consolidated subsidiaries and affiliates prepared in accordance with either IFRS or accounting principles
generally accepted in the United States as adjusted for certain items including goodwill, actuarial differences and capitalized
development costs.
As of May 31, 2021, the numbers of consolidated subsidiaries and affiliates accounted for by the equity method were 6 and 3 (6and 3 in 2020). A subsidiary, TOYO DENKI USA, INC., for which fiscal year end is December 31, is consolidated by using their pro
forma financial statements as of March 31 which are prepared solely for consolidation purposes and necessary adjustments are madeto their financial statements to reflect any significant transactions from April 1 to May 31. All significant intercompany balances andtransactions have been eliminated in consolidation.
Investments in subsidiaries and affiliates which are neither consolidated nor accounted for by the equity method are carried at costor less. Where there has been a permanent decline in the value of such investments, the Company has written down the investments.
(c) Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the consolidated statements of income.
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets excluding non-controlling interests which are translated at their historicalexchange rates. Revenue and expense accounts are translated at the average rate of exchange in effect during the year. Differences
arising from the translation are presented as translation adjustments in the consolidated financial statements.
(d) Cash and Cash equivalents
Cash and cash equivalents consist of cash on hand, cash in banks which can be withdrawn at any time and short-term investmentswith a maturity of three months or less from the date of purchase, which can easily be converted to cash and are subject to little riskof change in value.
(e) Inventories
Inventories are stated principally at the lower of cost or net realizable value, cost being determined principally by the specificidentification method for finished products and work in process and by the moving average cost method for raw material andsupplies.

See notes to consolidated financial statements.

33

Toyo Denki Seizo Report 2021

34

(f) Short-term investments and investment securities
Securities other than equity securities issued by subsidiaries and affiliates are classified into three categories: trading, held-tomaturity or other securities (available-for-sale securities). Trading securities are carried at fair value and held-to-maturity securities
are carried at amortized cost. Available-for-sale securities with market quotation are carried at fair value with changes in unrealized
holding gain or loss, net of the applicable income taxes, included directly in net assets. Available-for-sale securities without market
quotation are carried at cost. Cost of securities sold is determined by the moving average method.
(g) Property, plant and equipment (except for leased assets) and depreciation
Depreciation of property, plant and equipment of the Company and its consolidated subsidiaries is calculated principally by the
declining-balance method based on the estimated useful lives and the residual value, while buildings except for facilities attached tobuildings acquired on or after April 1, 1998 and facilities attached to buildings and structures acquired on or after June 1, 2016 aredepreciated by the straight-line method. The estimated useful lives of these assets are as follows:
Buildings and structures:		
8 to 60 years
Machinery and vehicles:		
3 to 12 years
Significant renewals and additions are capitalized at cost. Maintenance and repairs are charged to income.
(h) Intangible assets (except for leased assets)
Intangible assets are amortized using the straight-line method. Software for internal use is amortized over the internal available period(5 years) using the straight-line method.
(i) Leases
Leased assets capitalized under the finance lease arrangements which do not transfer ownership to the lessee are depreciated overthe lease period without any residual value using the straight-line method.
All other lease transactions are accounted for as operating leases and related payments are charged to income as incurred.
(j) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on past experience for normal receivables and on an estimate of the collectabilityof receivables from companies in financial difficulty.
(k) Accrued directors’ bonuses
Accrued directors’ bonuses are provided to cover the current fiscal year’s portion of the estimated amounts to be paid in future for the
performance incentive bonuses.
(l) Accrued employees’ bonuses
Accrued employees’ bonuses are provided to cover the current fiscal year’s portion of the estimated amounts to be paid in future.
(m) Reserve for losses on order acknowledgements
Reserve for losses on order acknowledgements is provided based on the amounts expected to be incurred during the current fiscal
year and which are able to estimate the losses reasonably to cover the future losses on order acknowledgements. Provision of reserve
for losses on order acknowledgements in the amounts of ¥142 million ($(1,298) thousand) and ¥166 million is included in cost of
sales for the years ended May 31, 2021 and 2020, respectively.
(n) Retirement benefits
Retirement benefit obligation is attributed to each period by the benefit formula method over the estimated years of service of theeligible employees.
Prior service cost is amortized as incurred by the straight-line method over a fixed period (10 years) within the average remaining
years of service of the employees.
Actuarial differences are amortized by the straight-line method over a fixed period (10 years) within the average remaining years ofservice of the employees from the following year when incurred.

35(o) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial statements with respect to the temporary
differences between the financial reporting and tax bases of the assets and liabilities, and were measured using the enacted tax rates
and laws which will be in effect when the differences are expected to reverse.

(p) Construction revenue and costs
Construction revenue and construction costs are recognized by the percentage-of-completion method, if the outcome of aconstruction contract can be estimated reliably. The percentage of completion is measured based on the percentage of the costs
incurred to the estimated total costs. For other construction contracts, the completed-contract method is applied.
(q) Research and development expenses
Research and development expenses are charged to income when incurred.
(r) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(s) Derivative financial instruments
The Company and certain consolidated subsidiaries enter into various derivative transactions in order to manage certain risks arisingfrom adverse fluctuations in interest rates. Derivative financial instruments are carried at fair value with changes in unrealized gain orloss charged or credited to operations, except for these which meet the criteria for deferred hedge accounting under which unrealized
gain or loss is deferred as a component of net assets.
Deferred hedge accounting is adopted for derivatives which qualify as hedges, under which unrealized gain or loss is deferred.
Hedging instruments are derivative transactions and hedged items are primarily interest on debts. Hedge effectiveness is notassessed if the substantial terms and conditions of the hedging instruments and the hedged items are the same.
(t) Significant accounting estimates(Impairment of certain assets or groups of assets in the Industrial Systems segment)(1) The amount recorded in the consolidated financial statements for the year ended May 31, 2021
Property, plant and equipment, intangible assets and long-term prepaid expenses belonging to certain groups of assets in the
Industrial Systems segment:¥5,928 million ($54,011 thousand)(2) Other information that is useful for the reader of the consolidated financial statements to understand the contents of accounting
estimates
a. Calculation method for the amount recorded in the consolidated financial statements for the year ended May 31, 2021
In preparing the consolidated financial statements, the Group groups its assets so that the estimates on impairment of fixed
assets appropriately reflect the Group’s actual management condition, and assesses indication of impairment. Assessment of
indication of impairment is carried out based on the information available to the Group on the status of profit or loss generated
from operating activities using the assets, etc. and whether the business environment has deteriorated significantly inconnection with the business using the assets or groups of assets. Whenever an indication of impairment is found, the Group
determines whether the aggregated amount of undiscounted future cash flows exceeds the corresponding carrying value.
Certain groups of assets in the Industrial Systems segment have recorded ongoing operating loss for the year ended May 31,
2021 mainly because sales projects were postponed due to the impact of COVID-19, and indication of impairment has been
identified. However, since the aggregated amount of undiscounted future cash flows generated from such groups of assets
exceeds their corresponding carrying value, the Group has not recognized any impairment loss.
The aggregated amount of undiscounted future cash flows generated from such assets or groups of assets are computed
based on the business plan approved by the management and the growth rate for the period that exceeds the business plan
period.
b. Main assumptions used for computing the amount recorded in the consolidated financial statements for the year ended May
31, 2021
In the computation of undiscounted future cash flows, the main assumption is net sales based on the projection of future orderacknowledgements. Net sales based on the projection of future order acknowledgements are computed based on the
management’s evaluation of future trends of the industry, historical performances and internal and external information.
The number of certain sales projects postponed due to the impact of COVID-19 in the year ended May 31, 2021 is expected tobe reduced in the following fiscal year.
c. Effects on the consolidated financial statements for the following fiscal year
Estimates on undiscounted future cash flows involve uncertainties, since they are subject to changes of demand trends ofsome customers and unforeseeable events such as natural disasters. Accordingly, when the undiscounted future cash flows
significantly differ from the assumption by the Group, the assessment of impairment might be significantly affected.
Toyo Denki Seizo Report 2021

36

(Recoverability of deferred tax assets)(1) The amount recorded in the consolidated financial statements for the year ended May 31, 2021
Deferred tax assets, before offsetting deferred tax liabilities: ¥1,983 million ($18,075 thousand)(2) Other information that is useful for the reader of the consolidated financial statements to understand the contents of accounting
estimates
a. Calculation method for the amount recorded in the consolidated financial statements for the year ended May 31, 2021
Regarding deductible temporary differences and the carryforward of unused tax losses, the Group determines the recoverabilityof deferred tax assets based on projected future taxable income and tax planning. Estimates of future taxable income of theCompany are based mainly on its business plan.
b. Main assumptions used for computing the amount recorded in the consolidated financial statements for the year ended May
31, 2021
In preparing the business plan, which forms the basis for estimating future taxable income of the Group, the main assumption
is net sales based on the projection of future order acknowledgements. Net sales based on the projection of future orderacknowledgements are computed based on the management’s evaluation of future trends of the industry, historicalperformances and internal and external information.
The number of certain sales projects postponed due to the impact of COVID-19 in the year ended May 31, 2021 is expected tobe reduced in the following fiscal year.
c. Effects on the consolidated financial statements for the following fiscal year
Deferred tax assets already recorded are assessed for recoverability every fiscal year and the contents are reviewed. However,if the assessment of recoverability of deferred tax assets is changed based on changes in the estimated future taxable income
or due to other factors, net income may fluctuate due to reversal of or additional provision for deferred tax assets.
(u) Accounting standards issued but not yet effective(Accounting Standard for Revenue Recognition and Related Implementation Guidance)
The ASBJ issued “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29) on March 31, 2020 and “Implementation
Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30) on March 26, 2021.
(1) Overview
The International Accounting Standards Board (“IASB”) and the Financial Accounting Standards Board (“FASB”) of the U.S. havejointly developed a comprehensive accounting standard for revenue recognition. In May 2014, the IASB and the FASB each issued“Revenue from Contracts with Customers” (IASB: IFRS 15 and FASB: Topic 606). Considering that IFRS 15 has been applied fromfiscal years beginning on or after January 1, 2018 and Topic 606 has been applied from fiscal years beginning after December 15,
2017, the ASBJ has developed a comprehensive accounting standard for revenue recognition, which was issued together with its
implementation guidance.
As a basic policy in developing the accounting standard for revenue recognition, the ASBJ has incorporated the basic
principles of IFRS 15 from the viewpoint of comparability between financial statements, a factor essential for facilitating
consistency with IFRS 15. In addition, if there are any business practices in Japan for which consideration is required, alternative
accounting treatments shall be added to the accounting standard to the extent that they do not impair comparability.
(2) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending
May 31, 2022.
(3) Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting standard and implementation guidance on its
consolidated financial statements.
(Accounting Standard for Fair Value Measurement and Related Implementation Guidance)
On July 4, 2019, the ASBJ issued “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30), and “Implementation
Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31), along with related updates to “AccountingStandard for Measurement of Inventories” (ASBJ Statement No. 9), and “Accounting Standard for Financial Instruments” (ASBJ
Statement No. 10). In addition, on March 31, 2020, the ASBJ issued “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No.19).

37(1) Overview
In light of the circumstances that the IASB and the FASB provide nearly identical guidance on fair value measurement, that is,
IFRS 13 “Fair Value Measurement” and FASB Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurement,”
the ASBJ had been working to align Japanese accounting standards with international accounting standards mainly concerning
guidance and disclosures about the fair value of financial instruments, and therefore issued “Accounting Standard for Fair Value
Measurement” along with other standards and guidance.
As a basic policy of the ASBJ in developing accounting standards for fair value measurement, from the viewpoint of enhancing
comparability of financial statements among domestic and foreign companies by using unified measurement methods, the ASBJ
determined to incorporate substantially all of the provisions in IFRS 13, and defined other treatments for specific matters as longas they do not significantly impair the comparability among financial statements, in consideration for conventional practices
prevailing in Japan.
(2) Scheduled date of adoption
The Company expects to adopt the accounting standards and related implementation guidance from the beginning of the fiscal
year ending May 31, 2022.
(3) Impact of adoption of revised accounting standard and related implementation guidance
The Company is currently evaluating the effect of the adoption of the accounting standards and related implementation guidanceon its consolidated financial statements.
(v) Change in presentation(Adoption of “Accounting Standard for Disclosure of Accounting Estimates”)
The Company has adopted “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31 issued on March
31, 2020) for the consolidated financial statements as of May 31, 2021 and the note on significant accounting estimates is presented
in the consolidated financial statements.
However, the note does not include the contents for the fiscal year ended May 31, 2020 pursuant to the transitional treatmentprescribed in the proviso of the paragraph 11 of the Accounting Standard.

Toyo Denki Seizo Report 2021

38

2. Other Explanatory Information
Note 1. U.S. Dollar Amounts
The accompanying consolidated financial statements are expressed in yen, and solely for the convenience of the reader, have beentranslated into U.S. dollars at the rate of ¥109.76=U.S.$1, the approximate rate of exchange prevailing at May 31, 2021. Thistranslation should not be construed as a representation that all amounts shown could be converted into U.S. dollars at such rate.
Note 2. Notes Receivable and Payable
As May 31, 2020 fell on a bank holiday, the following notes receivable and payable are deemed to have been settled on the maturity
date:

As of

May 31,
2021

May 31,
2020(Millions of yen)¥——

Notes receivable
Notes payableMay 31,
2021(Thousands of
U.S. dollars)

¥64
6

$—
—

Goods and finished products
Work in process
Raw materials and supplies

May 31,
2021

May 31,
2020(Millions of yen)

¥ 514
3,565
2,821
¥6,901

May 31,
2021(Thousands of
U.S. dollars)

¥ 756
3,424
2,996
¥7,178$ 4,688
32,48025,708$62,877

Inventories were stated at the lower of cost or net realizable value and the Company recognized losses on write-down of
inventories held for the ordinary sales purpose due to a decline in profitability in the amount of ¥190 million ($1,737 thousand) and¥212 million for the years ended May 31, 2021 and 2020, respectively. These amounts were included in “Cost of sales.”Inventories related to construction contracts which are estimated to make losses were stated after deducting the corresponding
reserve for losses on order acknowledgements in the following amounts:

As of

May 31,
2021

May 31,
2020(Millions of yen)

¥ 28
144
¥173

Goods and finished products
Work in process

May 31,
2021(Thousands of
U.S. dollars)

¥ 2
135
¥138

$ 259
1,317
$1,576Note 4. Property, Plant and Equipment
The following table sets forth the acquisition costs and related accumulated depreciation:

As of
Buildings and structures
Machinery and vehicles
Other
Accumulated depreciation

39

For the Years Ended

May 31,
2021

May 31,
2020(Millions of yen)

¥ 12,338
8,397
4,857
25,593(17,593)¥ 7,999¥ 12,269
8,179
4,654
25,103(16,565)¥ 8,538

May 31,
2021(Thousands of
U.S. dollars)$ 112,410
76,50344,258233,172(160,290)$ 72,881

May 31,
2021

May 31,
2020(Millions of yen)

¥1,413

May 31,
2021(Thousands of
U.S. dollars)¥1,487$12,874

Accumulated depreciation of property, plant and equipment amounted to ¥17,593 million ($160,290 thousand) and ¥16,565
million as of May 31, 2021 and 2020, respectively.
Note 5. Investments and Other Assets
Investments in unconsolidated subsidiaries and affiliates included in “Investment securities” as of May 31, 2021 and 2020 were as
follows:

As ofInvestments in capital

Note 3. Inventories
Inventories as of May 31, 2021 and 2020 were as follows:

As ofDepreciation of property, plant and equipment for the years ended May 31, 2021 and 2020 were as follows:

May 31,
2021

May 31,
2020(Millions of yen)

¥2,249May 31,
2021(Thousands of
U.S. dollars)¥2,158$20,496Note 6. Short-Term Borrowings and Long-Term Debt
As of May 31, 2021 and 2020, short-term borrowings and the current portion of long-term debt consisted of the following:

As ofLoans, principally from banks
Current portion of long-term debt

May 31,
2021

May 31,
2020(Millions of yen)

¥1,500585¥2,085

May 31,
2021(Thousands of
U.S. dollars)¥1,590617¥2,207$13,666
5,332$18,998

The annual weighted average interest rates applicable to short-term borrowings and current-portion of long-term debt as of May
31, 2021 were 0.455% and 0.607%, respectively.
As of May 31, 2021 and 2020, long-term debts were as follows:

As of

May 31,
2021

May 31,
2020(Millions of yen)

Long-term debt, excluding current portion, serially due from 2022 through 2032

¥11,759

May 31,
2021(Thousands of
U.S. dollars)¥12,344$107,134

The annual weighted average interest rate applicable to long-term debt as of May 31, 2021 was 0.416%.
The maturities of long-term debt are summarized as follows:

Years ended May 31(Millions of yen)(Thousands of
U.S. dollars)

2022
2023
2024
2025
2026 and thereafter

¥585
585
885
4,525
5,763
¥12,344$  5,332
5,332
8,065
41,22852,507$112,467

Toyo Denki Seizo Report 2021

40

As of May 31, 2021 and 2020, the assets pledged as collateral for short-term borrowings and long-term debt were as follows:

As of
Buildings and structures
Machinery and vehicles
Other property, plant and equipment
Land

May 31,
2021

May 31,
2020(Millions of yen)

¥5,485
596
376
1,232
¥7,691

May 31,
2021(Thousands of
U.S. dollars)¥5,768
588
436
1,232
¥8,025$49,974
5,439
3,432
11,228$70,075

The following assets included in the above are set by factory foundation fixed collateral security for short-term borrowings as of
May 31, 2021 and 2020:

As of
Buildings and structures
Machinery and vehicles
Other property, plant and equipment

May 31,
2021

May 31,
2020(Millions of yen)

¥1,474596
376¥2,447

May 31,
2021(Thousands of
U.S. dollars)¥1,542588
436¥2,566$13,430
5,439
3,432$22,301

Note 7. Retirement Benefit Plans
The Company and its consolidated subsidiaries have retirement benefit plans combined by defined contribution plans and lump-sum
payment plans.
The Company and its consolidated subsidiaries introduced the point system in the lump-sum payment plans, under which
retirement benefit amounts are computed based on the accumulated points granted according to the job ranking and performances.
Under the lump-sum payment plans held by certain consolidated subsidiaries, the liability for retirement benefits and retirement
benefit expenses are calculated using a simplified method.
The changes in the retirement benefit obligation during the years ended May 31, 2021 and 2020 were as follows:

For the Years Ended
Retirement benefit obligation as of June 1
Service cost
Interest cost
Actuarial loss
Retirement benefits paid
Retirement benefit obligation as of May 31

May 31,
2021

May 31,
2020(Millions of yen)

¥4,010
284
15
16
(202)
¥4,124

May 31,
2021(Thousands of
U.S. dollars)¥3,893
290
14
(21)
(166)
¥4,010$36,534
2,596
136
154
(1,843)$37,579

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of
May 31, 2021 and 2020 for the Company’s and the consolidated subsidiaries’ defined benefit plans:

As of

May 31,
2020(Millions of yen)

May 31,2021¥4,124
4,124¥4,0104,010$37,579
37,579Liability for retirement benefits
Net liability (asset) for retirement benefits on the consolidated balance sheets¥4,124
4,124¥4,0104,010$37,579
37,579May 31,2021

For the Years Ended

May 31,
2020

May 31,
2021(Millions of yen)

¥284
15
63
¥363

Service cost
Interest cost
Amortization of actuarial loss
Retirement benefit expenses(Thousands of
U.S. dollars)

¥290
14
68
¥373

$2,596136579$3,312Retirement benefits liability adjustments included in other comprehensive income (before tax effect) as of May 31, 2021 and 2020
were as follows:

May 31,
2021

As of

May 31,
2020

May 31,
2021(Millions of yen)

¥46
¥46

Actuarial gain
Total

(Thousands of
U.S. dollars)

¥90
¥90

$424
$424

Retirement benefits liability adjustments included in accumulated other comprehensive income (before tax effect) as of May 31,
2021 and 2020 were as follows:

May 31,
2021

As of

May 31,
2020

May 31,
2021(Millions of yen)

¥140
¥140

Unrecognized actuarial gain
Total

(Thousands of
U.S. dollars)

¥186
¥186

$1,278$1,278Major actuarial assumptions (weighted average) used in accounting for the above plans as of May 31, 2021 and 2020 were as
follows:

May 31,2021
0.4%

For the Years Ended
Discount rate

May 31,2020
0.4%

Note: The Company does not use the expected rate of salary increase in computing retirement benefit obligation since the Company adopts the point system.

The amounts of the required contribution to the defined contribution plans of the Company and its consolidated subsidiaries were¥118 million ($1,075 thousand) and ¥118 million for the years ended May 31, 2021 and 2020, respectively.
Note 8. Net Assets
Information regarding changes in net assets for the years ended May 31, 2021 and 2020 was as follows:a. Shares issued and outstanding/ Treasury stock
For the year ended May 31, 2021

(Thousands of
U.S. dollars)

Unfunded retirement benefit obligation
Net liability (asset) for retirement benefits on the consolidated balance sheets

Note: The plan adopting the simplified method is included.

41

May 31,
2021

The components of retirement benefit expenses for the years ended May 31, 2021 and 2020 were as follows:

Type of shares

Number ofshares as ofJune 1, 2020

Increase

Decrease

Number ofshares as of
May 31, 2021

(Shares)

Shares issued:
Common stock
Treasury stock:
Common stock
Details of the increase are as follows:
Increase due to purchase of shares of less than standard unit

9,735,000——

9,735,000

793,403

725—

794,128725 shares
Toyo Denki Seizo Report 2021

42

For the year ended May 31, 2020

Number ofshares as ofJune 1, 2019

Type of shares

Increase

Decrease

Number ofshares as of
May 31, 2020

(Shares)

Shares issued:
Common stock
Treasury stock:
Common stock

9,735,000——

9,735,000

792,966

437—

793,403

Details of the increase are as follows:
Increase due to purchase of shares of less than standard unit

437 sharesb. Dividends
1) Dividends paid
For the year ended May 31, 2021
Resolution
Annual general meetingof the shareholders on
August 26, 2020

Type of shares

Total dividends Total dividends
Dividends per(Millions of (Thousands of Dividends per share (U.S.
yen)
U.S. dollars)
share (Yen)dollars)¥268

Common stock$2,443¥30.00$0.27

Cut-off date

Effective date

May 31, 2020 August 27, 2020

For the year ended May 31, 2020
Resolution
Annual general meetingof the shareholders on
August 28, 2019

Type of shares

Total dividends(Millions of Dividends per
yen)share (Yen)Common stock¥268

Cut-off date

Effective date

¥30.00 May 31, 2019 August 29, 20192) Dividends with the cut-off date in the year ended May 31, 2021 and the effective date in the year ending May 31, 2022
Total
dividends Total dividends
Dividends per(Millions of (Thousands of Source of Dividends per share (U.S.
Type of shares
yen)
U.S. dollars) dividends
share (Yen)dollars)Cut-off date Effective date
Resolution
Annual general meetingof the shareholders on
CommonRetained
May 31,
August 30,
August 27, 2021
stock
2021
¥268
$2,443 earnings¥30.00$0.27 2021

Note 10. Special Gains, Net
The components of “Special gains, net” for the years ended May 31, 2021 and 2020 were as follows:

For the Years Ended
Special gains:
Gain on sales of investment securities
Special losses:
Loss on valuation of investment securities
Total

May 31,
2021

May 31,
2020(Millions of yen)

May 31,
2021(Thousands of
U.S. dollars)

¥407

¥447

$3,714

—
¥407

1
¥445

—
$3,714Note 11. Income Taxes
Income taxes in Japan applicable to the Company and its domestic consolidated subsidiaries consist of corporation tax, inhabitants’taxes and enterprise tax, which, in the aggregate, resulted in a statutory rate of approximately 30.6% for the years ended May 31,
2021 and 2020. Income taxes of a foreign consolidated subsidiary are based generally on the tax rates applicable in the country ofincorporation.
The reconciliation between the effective tax rates reflected in the consolidated statements of income and the effective statutory tax
rate for the years ended May 31, 2021 and 2020 was as follows:

For the Years Ended
Effective statutory tax rate
Effect of:
Non-deductible expenses for income tax purpose
Non-taxable income such as dividends income, etc.
Per capita inhabitant tax
Valuation allowance
Income from affiliates accounted for by the equity method
Liquidation of an affiliate
Difference arising from the rates used by subsidiaries
Retained profit of affiliates
Research and development tax credit
Investment incentive tax credit
Other
Effective tax rate

May 31,
2021
30.6%

May 31,
2020
30.6%

1.2
(1.9)
2.5
4.9
(0.1)
(21.0)
1.1
0.3
(1.2)
—
(0.4)
16.0%

1.2
(0.9)
1.7
4.8
0.7
—
1.5
(0.2)
(1.2)
(2.5)
(1.1)
34.6%

Note 9. Selling, General and Administrative Expenses
The main components of “Selling, general and administrative expenses” for the years ended May 31, 2021 and 2020 were as follows:

For the Years Ended
Salaries and allowances
Provision for accrued directors’ bonuses
Provision for accrued employees’ bonuses
Retirement benefit expenses
Provision for allowance for doubtful accounts
Research and development expenses

43

May 31,
2021

May 31,
2020(Millions of yen)

¥1,895
36
322
205
2
819

May 31,
2021(Thousands of
U.S. dollars)¥1,931
36
348
216
(1)
792

$17,265
327
2,934
1,869
23
7,462

Toyo Denki Seizo Report 2021

44

The significant components of deferred tax assets and liabilities as of May 31, 2021 and 2020 were as follows:

May 31,
2021

As of

May 31,
2020(Millions of yen)

Deferred tax assets:
Write-down of inventories
Liability for retirement benefits
Accrued employees’ bonuses
Reserve for losses on order acknowledgements
The carryforward of unused tax losses (Note 1)
Other
Total gross deferred tax assets
Valuation allowance for the carryforward of unused tax losses (Note 1)
Valuation allowance for deductible temporary differences
Total valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized holding gain on securities
Other
Total deferred tax liabilities
Net deferred tax liabilities

Year ended May 31, 2020

May 31,
2021(Thousands of
U.S. dollars)

¥270
1,269
258
157
549
361
2,867
(536)
(346)
(883)
1,983

¥235
1,234
274
104
472
333
2,655
(466)
(359)
(825)
1,830

$2,467
11,562
2,353
1,437
5,008
3,292
26,120(4,886)(3,158)(8,045)
18,075(2,136)(50)(2,187)¥(203)(2,541)(48)(2,589)¥(759)(19,464)(464)(19,928)$(1,853)(Note 1) The breakdown of the carryforward of unused tax losses and valuation allowance by expiry date is as follows:Year ended May 31, 2021

(Millions of yen)
The carryforward of unused
tax losses (a)Valuation allowance
Deferred tax assets(Thousands of U.S.
dollars)
The carryforward of unused
tax losses (a)Valuation allowance
Deferred tax assets

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years

¥435

¥5

¥—

¥—

¥—

¥109

¥549

(435)
—

(5)
—

—
—

—
—

—
—

(96)
13

(536)
13(b)

Due inOne Year or Less

Total

Due inOne Year or Less

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years$3,964

$45

$—

$—

$—

$998

$5,008(3,964)
—

(45)
—

—
—

—
—

—
—

(876)
121

(4,886)121(b)Total(a) The amount is determined by multiplying the corresponding carryforward of unused tax losses by the effective statutory tax rate.
(b) Deferred tax assets of ¥13 million ($121 thousand) is recognized on the carryforward of unused tax losses of ¥549 million($5,008 thousand) (amount multiplied by the effective statutory tax rate). The said deferred tax assets of ¥13 million($121 thousand) is recognized on the carryforward of unused tax losses of ¥13 million ($122 thousand) (amount multiplied by
the effective statutory tax rate) of Toyo Shoji Co., Ltd., which is a consolidated subsidiary of the Company.

(Millions of yen)

Due after
Due after
Due after
Due after
One Year
Two Years
Three Years Four Years
Due inthrough Two through Three through Four through FiveOne Year or Less
Years
Years
Years
Years

The carryforward of unused
tax losses (a)Valuation allowance
Deferred tax assets

Due after
Five Years

Total

¥—

¥—

¥5

¥—

¥39

¥427

¥472

—
—

—
—

(5)
—

—
—

(33)
6

(427)
—

(466)
6(b)

(a) The amount is determined by multiplying the corresponding carryforward of unused tax losses by the effective statutory tax rate.
(b) Deferred tax assets of ¥6 million is recognized on the carryforward of unused tax losses of ¥472 million (amount multiplied by theeffective statutory tax rate). The said deferred tax assets of ¥6 million is recognized on the carryforward of unused tax losses of¥6 million (amount multiplied by the effective statutory tax rate) of Toyo Koki Co., Ltd., which is a consolidated subsidiary of theCompany.
Note 12. Other Comprehensive Loss
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive loss forthe years ended May 31, 2021 and 2020:

For the Years Ended

May 31,
2021

Unrealized holding loss on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effectUnrealized holding loss on securities¥(1,737)407(1,330)405(924)¥(1,653)(447)(2,100)652(1,448)$(15,831)
3,714(12,117)
3,694(8,423)

Translation adjustments
Amount arising during the year
Amount before tax effectTranslation adjustments

(6)
(6)
(6)

(12)
(12)
(12)

(55)
(55)
(55)

Retirement benefits liability adjustments
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effect
Retirement benefits liability adjustments

(16)
63
46
(14)
32

21
68
90
(27)
62

(154)
579
424
(129)
294

14

(34)

133

14
¥(883)(34)¥(1,433)133$(8,050)

Share of other comprehensive income (loss) of affiliates accounted forby the equity method
Amount arising during the year
Share of other comprehensive income (loss) of affiliates accounted forby the equity method
Total other comprehensive loss

May 31,
2020(Millions of yen)

May 31,
2021(Thousands of
U.S. dollars)Note 13. Lease Transactions
The information about finance leases that do not transfer ownership of the leased property to the lessee is omitted since there is nomateriality in terms of value.

45

Toyo Denki Seizo Report 2021

46

Note 14. Contingent Liabilities
As of May 31, 2021 and 2020, the Company was committed to provide guarantees on bank borrowings of the following affiliates:

As of

May 31,
2021

May 31,
2020(Millions of yen)

May 31,
2021(Thousands of
U.S. dollars)

¥374
222

¥334
181

$3,4082,022

For the Years Ended

May 31,
2021

May 31,
2020

May 31,2021

Net income:Basic¥109.38¥120.98

$0.99

As of

May 31,
2021

May 31,
2020

May 31,2021

Net assets¥2,685.28

Changzhou Ruiyang Transmission Technology Co., Ltd.
Beijing Jingche Shuangyang Traction System Co., Ltd.
Note 15. Amounts Per Share(Yen)(U.S. dollars)(Yen)(U.S. dollars)¥2,704.61$24.46

Note: Diluted net income per share is omitted since there is no dilution of equity.

(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies of the Group for managing credit risk arising from receivables, each related division monitors
credit worthiness of their main customers periodically, and monitors due dates and outstanding balances by individual customer. In
addition, the Group is making efforts to identify and mitigate risks of bad debts from customers who are having financial difficulties.
Investment securities are composed of mainly the shares of common stock of highly rated companies with which the Group hasbusiness relationships. Accordingly, the Group believes that the credit risk deriving from such investment securities is insignificant.
The Group also believes that the credit risk of derivatives is insignificant as it enters into derivative transactions only with financial
institutions which have a sound credit profile.
(b) Monitoring of market risks (the risk arising from fluctuations in foreign exchange rates, interest rates and others)
The Group utilizes interest rate swap transactions to reduce interest rate fluctuation risk on long-term debt.
For investment securities, the Group periodically reviews the fair values of such financial instruments and the financial position of
the issuers.
In conducting derivative transactions, the division in charge of each derivative transaction follows the internal policies, which set
forth delegation of authority and maximum upper limit on positions. Monthly reports including actual transactions data are submitted
to the Board of Directors for their review.
(c) Monitoring of liquidation risk (the risk that the Group may not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates its cash flow plans on a timely basis to manage liquidation
risk.

The bases for calculation are as follows:
Basic net income per share

For the Years Ended
Net income attributable to owners of the parent
Net income not attributable to common shareholders
Net income attributable to owners of the parent related to common stock

May 31,
2021

May 31,
2020(Millions of yen)

¥977
—
977

May 31,
2021(Thousands of
U.S. dollars)¥1,081—
1,081$8,910—8,910(Thousand shares)

Average number of shares of common stock during the year

8,941

8,941

Note 16. Financial Instruments
Overview(1) Policy for financial instruments
The Group raises its necessary funds for capital investments to reinforce and renew production facilities and working capital
principally through bank borrowings. The Group manages temporary cash surpluses through low risk financial assets. The Group
uses derivatives in order to avoid the following risks and does not enter into derivatives for speculative or trading purposes.

47(2) Types of financial instruments and related risk
Trade receivables—trade notes and accounts receivable and electronically recorded receivables—are exposed to credit risk in relation
to customers. Trade receivables denominated in foreign currencies arising from international business are exposed to foreignexchange fluctuation risk, but the Group utilizes forward foreign exchange contracts to reduce such risk as a hedging instrument.
Investment securities are composed of mainly the shares of common stock of other companies with which the Group has business
relationships and exposed to market risk.
Certain long-term debt raised for the purpose of making capital investments with variable interest rates is exposed to interest rate
fluctuation risk. However, to reduce such risk and fix interest expense for long-term debt bearing interest at variable rates, the Grouputilizes interest rate swap transactions as a hedging instrument.
Regarding hedging instruments and hedged items in hedge accounting, hedging policy, and assessment of the effectiveness ofhedging activities, etc., please see “1. Summary of Significant Accounting Policies (s) Derivative financial instruments.”(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in Note 19, Derivative
Transactions are not necessarily indicative of the actual market risk involved in derivative transactions.
Estimated Fair value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheets as of May 31, 2021 and 2020 and estimated fair value areshown in the following table. The following table does not include financial instruments for which it is extremely difficult to determine
the fair value (Please refer to Note 2 below):

As of May 31, 2021

Carrying value

Fair value

Difference(Millions of yen)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Electronically recorded receivables
4) Investment securities
Total assets
Liabilities
5) Trade notes and accounts payable6) Electronically recorded payables
7) Short-term borrowings
8) Long-term debt
Total liabilities
9) Derivative transactions*¥3,964
13,218901
12,767¥30,851¥3,964
13,218901
12,767¥30,851

¥—
—
—
—
¥—

¥1,668
4,705
1,500
12,344¥20,218¥—¥1,668
4,705
1,500
12,373¥20,247
¥—

¥—
—
—
29
¥29
¥—

Toyo Denki Seizo Report 2021

48

As of May 31, 2021

Carrying value

Fair value

Difference

2. Financial instruments for which it is extremely difficult to determine the fair value

May 31,
2021(Thousands of U.S. dollars)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Electronically recorded receivables
4) Investment securities
Total assets
Liabilities
5) Trade notes and accounts payable6) Electronically recorded payables
7) Short-term borrowings
8) Long-term debt
Total liabilities
9) Derivative transactions*As of$36,118
120,426
8,209
116,326$281,081$36,118
120,426
8,209
116,326$281,081

$—
—
—
—
$—

$15,198
42,87013,666112,467$184,202$—$15,198
42,87013,666
112,733$184,468
$—

$—
—
—
266
$266
$—

Fair value

Difference(Millions of yen)

¥1,064

Unlisted equity securities

Carrying value(Millions of yen)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Electronically recorded receivables
4) Investment securities
Total assets
Liabilities
5) Trade notes and accounts payable6) Electronically recorded payables
7) Short-term borrowings
8) Long-term debt
Total liabilities
9) Derivative transactions*(Thousands of
U.S. dollars)¥1,065$9,694

3. Redemption schedule for receivables and securities with maturities on May 31, 2021 and 2020 were as follows:

As of May 31, 2021

Due in One Yearor Less

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years(Millions of yen)¥3,962
13,189901¥18,052

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables

As of May 31, 2021

Due in One Yearor Less

¥—
29
—
¥29

¥—
—
—
¥—

¥—
—
—
¥—

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years(Thousands of U.S. dollars)¥3,293
14,135
1,538
14,369¥33,337¥3,293
14,135
1,538
14,369¥33,337

¥—
—
—
—
¥—

¥2,224
5,877
1,590
12,961¥22,653¥—¥2,224
5,877
1,590
13,005¥22,696
¥—

¥—
—
—
43
¥43
¥—

*Derivative transactions are presented in a net amount of receivables and payables and net payables are shown in parenthesis.
Notes:
1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets:Cash on hand and in banks, trade notes and accounts receivable and electronically recorded receivables
Since these items are settled in a short period of time, their carrying value approximates fair value.
However, if they are settled in a long period of time, the fair value of receivables is based on the present value of the receivables classified by definite periods discounted
using interest rates on the corresponding period until settlement.
Investment securities
The fair value of stocks is based on quoted market prices. Investment securities held by the Group are classified as available-for-sale securities and please see Note 17“Securities.”
Liabilities:
Trade notes and accounts payable, electronically recorded payables and short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings
were entered into. The fair value of long-term debt with variable interest rates, which is hedged by the interest rate swaps and to which hedge accounting is applied (referto the following paragraph), is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings wereentered into.
Derivative transactions
The fair value of interest rate swaps accounted for by the hedge accounting is included in the fair value of the related long-term debt, since such interest rate swaps areaccounted for together with long-term debt as hedged items.
The fair value of interest rate swaps accounted for by the normal method is determined based on the price, etc. provided by the financial institutions.

49

May 31,
2021

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not included in the above table.

*Derivative transactions are presented in a net amount of receivables and payables and net payables are shown in parenthesis.

As of May 31, 2020

May 31,
2020

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables

As of May 31, 2020

$36,101
120,162
8,209$164,473
Due in One Yearor Less

$—
264
—
$264

$—
—
—
$—

$—
—
—
$—

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years(Millions of yen)

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables¥3,291
13,9401,538¥18,770

¥—
194
—
¥194

¥—
—
—
¥—

¥—
—
—
¥—

4. The redemption schedule for long-term debt is disclosed in Note 6.
Note 17. Securities
Information regarding securities classified as available-for-sale securities
Available-for-sale securities

As of May 31, 2021

Carrying value Acquisition cost

Unrealized
gain (loss)(Millions of yen)

Securities for which carrying value exceeds acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds carrying value:
Stock
Subtotal
Total¥12,514¥12,514¥5,511¥5,511¥7,003¥7,003¥253¥253¥12,767

¥317
¥317
¥5,828¥(63)¥(63)¥6,939Toyo Denki Seizo Report 2021

50

As of May 31, 2021

Carrying value Acquisition cost

Unrealized
gain (loss)

Hedging policies(Thousands of U.S. dollars)

Securities for which carrying value exceeds acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds carrying value:
Stock
Subtotal
Total$114,015$114,015$50,211$50,211$63,804$63,804$2,310$2,310$116,326$2,889$2,889$53,101$(579)$(579)$63,224

Notes: 1. Unlisted stocks were not included in the above table because there were no quoted market prices available and they were extremely difficult to determine the fairvalue.
2. Acquisition cost in the above table represents carrying value reflecting impairment losses.
If the market value of the securities declines by 50% or more from the acquisition cost as of the end of the fiscal year, the Group recognizes the difference between
the market value and the acquisition cost as an impairment loss. If the decline ranges between about 30% and 50%, the Group recognizes an impairment loss forthe necessary amount considering its recoverability.

As of May 31, 2020

Carrying value Acquisition cost

Unrealized
gain (loss)(Millions of yen)

Securities for which carrying value exceeds their acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds their carrying value:
Stock
Subtotal
Total¥14,218¥14,218¥5,868¥5,868¥8,349¥8,349¥151¥151¥14,369

¥229
¥229
¥6,098¥(78)¥(78)¥8,271

Notes: 1. Unlisted stocks were not included in the above table because there were no quoted market prices available and they were extremely difficult to determine the fairvalue.
2. Acquisition cost in the above table represents carrying value reflecting impairment losses.
If the market value of the securities declines by 50% or more from the acquisition cost as of the end of the fiscal year, the Group recognizes the difference between
the market value and the acquisition cost as an impairment loss. If the decline ranges between about 30% and 50%, the Group recognizes an impairment loss forthe necessary amount considering its recoverability.

Information regarding available-for-sale securities soldFor the Years Ended
Stock:
Sales proceeds
Gain on sales
Loss on sales

May 31,
2021

May 31,
2020(Millions of yen)

¥693
407
—

May 31,
2021(Thousands of
U.S. dollars)

¥780
447
—

Note 19. Derivative Transactions$6,3183,714—

The Company utilizes forward foreign exchange contracts and interest rate swaps for the purpose of hedging its exposure tofluctuations in foreign exchange rates and interest rates, respectively. However, based on internal management rules on financial
market risk approved by the Company’s Board of Directors, Group companies do not enter into transactions involving derivatives for
speculative or trading purposes.
Types and purpose of derivative transactions
The Company primarily uses forward foreign exchange contracts to hedge against the fluctuations in foreign currency exchange rates
on trade receivables denominated in foreign currencies and interest rate swaps to hedge against the adverse impact of fluctuations ininterest rates on interest-bearing debt.
Derivative transactions to which hedge accounting is not applied:
As of May 31, 2021 and 2020, there were no currency-related derivatives.
Derivative transactions to which hedge accounting is applied:Interest-related derivatives:
There were no derivatives as of May 31, 2021.

As of May 31, 2020

Notional amount
Major hedged
Maturing after
item
Contract amount
one year

Fair value(Millions of yen)Interest rate swaps accounted for by the exceptional method:
Receive/floating and pay/fixedLong-term debt

¥32

¥—

Note

Note: Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received
under the swap agreement is recognized and included in interest expenses. Accordingly, the fair value of interest rate swaps is included in the fair value of long-term
debt. The notional amount of long-term debt includes current portion of long-term debt.

Note 20. Segment Information
The reportable segments of the Group are components for which discrete financial information is available and operating results are
regularly reviewed by the Board of Directors to make decisions about resource allocation and to assess performance.
The Group establishes business units by product and each business unit designs domestic and overseas comprehensive strategies
for its products and is developing business activities. Accordingly, the Group consists of the three reportable segments by productbased on the business units, which are Transportation Systems, Industrial Systems and Information Equipment Systems.
The accounting policies of the segments are substantially the same as those described in the significant accounting policies in “1.
Summary of Significant Accounting Policies.” Segment profit is evaluated based on operating income.

Note 18. Supplementary Cash Flow Information
Cash and cash equivalents in the consolidated statements of cash flows for the years ended May 31, 2021 and 2020 were reconciled
to cash on hand and in banks in the consolidated balance sheets as follows:

As ofCash on hand and in banks
Cash and cash equivalents

51

May 31,
2021

May 31,
2020(Millions of yen)

¥3,964¥3,964

May 31,
2021(Thousands of
U.S. dollars)¥3,293¥3,293$36,118$36,118

Toyo Denki Seizo Report 2021

52

Inter-segment sales are recorded at the same prices used in transactions with third parties.

For the year ended May 31, 2020
Reportable segments

For the year ended May 31, 2021

Transportation
Systems

Reportable segments
Transportation
Systems

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

Consolidated(Millions of yen)

Sales, profits orlosses and asset byreportable segments
Net sales:
Sales to third parties
Inter-segment sales
and transfers
Segment profit
Segment assets
Other items:
Depreciation
Capital expenditures¥21,528¥10,541¥1,067¥5¥33,143¥—¥33,143

50
21,579¥2,211¥17,151

0
10,542¥718¥13,838

—
1,067
¥267
¥674

346
352
¥(39)¥479

397
33,541¥3,157¥32,144

(397)
(397)
¥(2,734)¥19,822—
33,143¥423¥51,967

¥607
¥454

¥527
¥113

¥25
¥10

¥4
¥2

¥1,165
¥580

¥247
¥51

¥1,413¥632

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

Consolidated(Millions of yen)

Sales, profits orlosses and asset byreportable segments
Net sales:
Sales to third parties
Inter-segment sales
and transfers¥24,269¥13,023¥1,772¥5¥39,071¥—¥39,071

Segment profit
Segment assets

12
24,282¥2,474¥20,364

1
13,024¥1,008¥13,679

—
1,772
¥460
¥1,062

510
516
¥5
¥536

524
39,595¥3,948¥35,642

(524)
(524)
¥(2,880)¥19,522—
39,071¥1,068¥55,165

Other items:
Depreciation
Capital expenditures

¥592
¥356

¥608
¥111

¥27
¥24

¥4
¥5

¥1,232
¥497

¥255
¥47

¥1,487¥545

Note: “Other” represents business units which are not included in reportable segments and consists of worker dispatching services related activities, etc.

Geographical information

For the year ended May 31, 2021

Net sales to third parties by countries or areas grouped according to geographical classification for the years ended May 31, 2021
and 2020 were summarized as follows:

Reportable segments
Transportation
Systems

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

Consolidated(Thousands of U.S. dollars)

Sales, profits orlosses and asset byreportable segments
Net sales:
Sales to third parties
Inter-segment sales
and transfers$196,145$96,042$9,723$52$301,962$—$301,962

Segment profit
Segment assets

457
196,602$20,152$156,267

7
96,049$6,542$126,079—
9,723$2,433$6,1493,161
3,213$(359)$4,367

3,625
305,588$28,769$292,863(3,625)(3,625)$(24,909)$180,599—
301,962$3,860$473,462

Other items:
Depreciation
Capital expenditures$5,534$4,137$4,810$1,034

$228
$93

$42
$22

$10,616$5,287$2,258$473$12,874$5,761

Note: “Other” represents business units which are not included in reportable segments and consists of worker dispatching services related activities, etc.

For the Years Ended

May 31,
2021

Japan
China
Other
Consolidated¥27,876
3,628
1,638¥33,143

May 31,
2020(Millions of yen)

May 31,
2021(Thousands of
U.S. dollars)¥30,997
4,282
3,791¥39,071$253,973
33,057
14,932$301,962

Note: Net sales information above is based on customers’ location.

Major customer information
Major customer information for the years ended May 31, 2021 and 2020 was omitted since there was no customer to whom sales
exceeds 10% of net sales recorded in the accompanying consolidated statements of income.

Note 21. Significant Subsequent Events
There were no significant subsequent events to be noted.

53

Toyo Denki Seizo Report 2021

54

Report of Independent Auditors

55

Toyo Denki Seizo Report 2021

56

57

Toyo Denki Seizo Report 2021

58

Stock Related Information
Number of shares (As of May 31, 2021)
Number of shares authorized

36,000,000

Number of shares issued

9,735,000

Number of shareholders

5,572

Distribution of shares by type of shareholder
Treasury stock
8.16%

Financial instruments
business operators
0.27%

Major shareholders
Number of shares held
% of
Shareholders(Thousands)
total shares held
The Master Trust Bank of Japan, Ltd. (Trust account)589
6.59
East Japan Railway Company
480
5.36
Employees Stock Ownership Plan
451
5.05
NIPPON LIFE INSURANCE COMPANY
337
3.77
Toyo Denki Subcontractor Factories
287
3.21
Shareholding Association
MUFG Bank, Ltd.
270
3.02
Sanshin Co., Ltd.
270
3.01
BNP PARIBAS SECURITIES SERVICES
216
2.42
LUXEMBOURG/JASDEC/JANUS HENDERSONHORIZON FUND
Custody Bank of Japan, Ltd. (Trust account)
213
2.38
The Bank of Yokohama, Ltd.
207
2.32

Foreigncorporations, etc.
6.90%
Other
corporations
18.05%

Individuals
and others
41.13%

Financial
institutions
25.49%(Note) The percentages of total shares held are calculated excluding 794,128 treasury stocks.

Transition of share price
Share price
(Yen)

2,000
(Yen)

2,000
1,500
1,500
1,000
1,000
500
5000
(Thousands) 2018.6
Trading
volume2019.12020.12021.1(Thousands) 2018.6

2019.12020.12021.11,5000
1,500
1,000
1,000
500
500
0
0

Disclaimer on the forward-looking statements
Information in this corporate report contains forward-looking statements. Such statements were developed based on the information available at the time
when this report was prepared. These forward-looking statements may be largely revised in the future, and the actual outcome could significantly varyfrom the stated or implied contents of such statements subject to various factors. This report is not intended to solicit investment. Investors are kindly
asked to make your investment decision at your own judgment and responsibility. Numbers presented in 100 million yen or million yen are rounded down
to the nearest respective unit.

59

Toyo Denki Seizo Report 2021

60

Company Profile

Organization Chart(as of May 31, 2021)(Revised on Oct 1, 2021)

Management Planning Department
Management Planning Division

Company Profile

Yokohama
BranchOsaka
BranchHead office

NagoyaBranchYokohama plant

Subsidiaries and Affiliates (as of September 1, 2021)
Affiliates accounted for by the equity method

Non-consolidated subsidiaries

Transportation Systems

Affiliates not accounted for by the equity method

Industrial Systems

Japan

TOYOKOUKI Co., Ltd.
Taihei Electric Co., Ltd.

Overseas

Toyo Denki (Beijing) Co., Ltd. (China)	Changzhou Yangdian Zhanyun Transport Equipment Co., Ltd. (China)

Information Equipment Systems

Toyo Shoji
Co., Ltd.

Toyosangyo K.K.
TD Drive Co., Ltd.

	Changzhou Ruiyang Transmission Technology Co., Ltd. (China)	Beijing Jingche Shuangyang Traction System Co., Ltd.
(China)	Chengdu Yonggui Toyo Rolling Stock Equipment Co., Ltd.
(China)	TOYO DENKI RAILWAY SERVICE, LLC. (U.S.)

OthersFinance Department
Accounting Department

Corporate Quality Management Division

Planning and Research Department

Corporate Production Planning Division

Production Planning Department

Purchasing Division

Planning and Research Department

Business Development Division

Development Promotion Department
EV Systems Department
IoT Solutions Department
Transportation Business Planning Division

Transportation Business Unit

Nagoya Sales Division
China Sales Division
Overseas Project DivisionInternational Engineering Division
Engineering Division
Overseas Engineering Division
Development Division
Transportation Systems Works
Production Management Division
Design Division

Audit DivisionInternal Control Committee

Quality Assurance Division
Manufacturing Division
Procurement Division
Industrial Systems Planning Division
Industry Business Unit	SIAM TOYO DENKI Co., Ltd.
(Thailand)	Chalco-Toyo Permanent Magnet
Motor Co., Ltd. (China)

Development Division
Design Division
Quality Assurance Division
Manufacturing Division
Procurement Division

TOYOKOUKI Co., Ltd.

Toyo Denki (Beijing)

Taihei Electric Co., Ltd.
Toyosangyo K.K.

Changzhou Ruiyang
Yonggui Toyo

Yangdian Zhanyun
Chalco-Toyo
SIAM TOYOIT Business Unit

TD Drive Co., Ltd.

TOYO DENKI RAILWAY SERVICE

Toyo Shoji Co., Ltd.
Toyo Denki (Beijing) Co., Ltd.

Research Laboratory

Changzhou Yangdian Zhanyun Transport Equipment Co., Ltd.
SIAM TOYO DENKI Co., Ltd.
Changzhou Ruiyang Transmission Technology Co., Ltd.
Chengdu Yonggui Toyo Rolling Stock Equipment Co., Ltd.
Beijing Jingche Shuangyang Traction System Co., Ltd.
Chalco-Toyo Permanent Magnet Motor Co., Ltd.

* See the table above for the full names of subsidiaries and affiliates.

61

TOYO DENKI RAILWAY SERVICE, LLC.

Sales Division 1
Sales Division 2
Sales Division 3
Sales Division 4
Engineering Division
Industrial Systems Works
Production Management Division

Subsidiaries and Affiliates

Jingche Shuangyang

JR Group Sales Division
Commuter Rail and Subway Sales Division
Osaka Sales Division

Audit
Officer

Hiroshima Branch
Kyushu Branch

Financial Affairs Division

Quality Management Department 1
Quality Management Department 2
National and Global Group
Company Meetings

Niigata Branch

Operating Officer Liaison
Meeting

Sendai Branch

Okinawa
BranchConsolidated subsidiaries

Nomination andCompensation Advisory
Committee

Management Strategy
Meeting

Shiga Ryuo
Plant

President

Code Number
Number of Shares Authorized
Number of Shares Issued
Number of Shareholders

General Affairs Department

Education and Development Department
Export Management Department

Auditors

Stock Exchange Listing

Tokyo Tatemono Yaesu Building,
1-4-16, Yaesu, Chuo-ku, Tokyo,
103-0028, Japan
TEL +81-3-5202-8121 (General
Affairs Division)
https://www.toyodenki.co.jp/
The Tokyo Stock Exchange,
First Section
6505
36,000,000 shares
9,735,000 shares
5,572

PR, IR, and CSR Department
Information Systems Department

Human Resources Department
Legal Compliance Department

Board of Directors

Head Office

Human Resources and General Affairs Division

TOYO DENKI SEIZO K.K.
(TOYO ELECTRIC MFG. CO., LTD.)
June 20, 1918
4,998,390,000 yen
1,217 (Consolidated)
847 (TOYO DENKI SEIZO K.K.)

Board ofAuditors

Established
Capital
Number of Employees

Hokkaido Branch

General Meeting of Shareholders

Company NameGroup Administration OfficeBusiness Reform Promotion Office

Yokohama Plant
Shiga Ryuo Plant
Osaka Branch
Nagoya BranchInformation Systems Planning Division
Information Systems Sales Division
Information Systems Works
Design Division
Quality Assurance Division
Production Engineering Division
Engineering Strategy Division
Engineering Research Division
Engineering Management Division
Administration Division
Administration Division

Kyushu Branch
Hokkaido Branch

Toyo Denki Seizo Report 2021

62