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Special 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 isdeeply 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 ServicesInitiative 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 segment72Special 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 20218