ANNUAL REVIEW 2022
Fiscal year ended January 31, 2022

Connect Everything.
With Technology.
With Ideas.

Ryoyo Electro Annual Review 2022

About the RYOYO Group

About the RYOYO Group

Connect Everything. With
Ryoyo Electro Corporation was founded as a semiconductor distributor of
Mitsubishi Electric Corporation in 1961, at the dawn of the semiconductor
industry. Since our establishment, we have expanded our business lines intandem with the growth of the electronics industry, guided by a management
philosophy of “Creating value in tune with the times.” Today, as an electronics
trading company engaged in both the Semiconductors & Devices and ICT &End-to-end business domain covering the entire supply chain, from upstream to downstream

DeviceNetwork

Platform

Solution

Semiconductors

5G/LPWA

CloudIoT

Electronic
DevicesWi-Fi

On-premises

AI

Sensors

LAN/WAN

Helping to Solve the Social
Issues Faced by Customers
We identify various problems and issues
that affect our customers and their end
users, and then combine the products weoffer as an electronics trading company

 usiness
B
Management
Toolswith our own original technologies toprovide ideal solutions.

Only RYOYO“Only RYOYO” indicates the unique value that only the Ryoyo Group can provide. We do not simply procure existingproducts, but also customize products optimally suited to customer requirements, as well as offering products andservices based on our proprietary technology to address specific customer needs. We also create new value by clarifying the issues our customers face and supporting them all the way through to a swift solution.

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Ryoyo Electro Annual Review 2022

About the RYOYO Group

Technology. With Ideas.
Solutions businesses, the Ryoyo Group will engage not only in the traditional
business centered on the sale of goods, but also promote business that helps tosolve issues by extending our focus to include our customers’ customers (endusers). In doing so, our goal is to transform and realize our new image of a trading
company that can become the No. 1 in customer satisfaction. We will continue
to refine our unique added value and provide it to even more customers.

Only RYOYO

Semiconductors & Devices
In the constantly changing semiconductor market, we have evolved into a trusted business partner with a long track-record of achievements. Drawing on solid relationships with the world’s leading suppliers, we offer optimal proposals to customers.

Strength #1

Strength #2

Strength #3

We propose solutions that leverage

Beyond just selling individual prod-

We actively seek out and supply

the latest information we gain byucts, we propose optimal solutions

cutting-edge, high-added-value

working closely with the world’s

for customer and market needs by

products from in and outside ofleading vendors.

combining multiple products andJapan.

developing original solutions.

ICT & Solutions
We are drawing on knowledge cultivated in the Semiconductors & Devices and ICT & Solutions businesses not only to bring various
ICT products to market, but also to expand the business by integrating consulting, deployment, maintenance, and operation functions. We support the creation of business solutions and innovative business models that reflect the needs not only of our customers
but also their end users.
Strength #1

Strength #2

Strength #3

Our sector and domain-specific

We propose optimal solutions by

We bring proven experience andspecialists can provide broad

combining the world’s leading

expertise to support our customers’

product and technology solutions,products and services to solve theIT life cycle (planning, development,from edge to cloud.

customer’s issues.

operation).

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Ryoyo Electro Annual Review 2022

Top Message

To Our Shareholders
Ryoyo Electro’s Raison d’Être
Ryoyo Electro’s raison d’être is to bring “satisfaction exceeding expectations,” and to provide unique,“emotional” added value. Under the slogan, “Connect everything. With technology. With ideas.”, I am
to become a driving force for the creation of new value and emotion by serving as a valuable connection
or bridge to everyone related to the Company. Since my appointment as president in April 2018, I havebeen working to transform management with an eye to the changes in the environment aroundthe Company and electronics trading companies. I have also been working towards the goal of having
the Company realize a new trading company image by realizing the highest level of customer
satisfaction as an entity connecting the market (customers) and goods (suppliers).

Fiscal Year Ended January 31, 2022
In the fiscal year ended January 31, 2022, despite lingering concern over a resurgence of COVID-19,
the recovery trend grew stronger year on year in a wide range of fields. Supply-chain confusion due
to supply shortages of electronic components such as semiconductors and soaring prices of raw
materials caused extreme tightness in the supply and demand situation, which underpinned overallrampant demand for securing items. In this situation, the Company’s results saw a year-on-year
recovery in both net sales and profits, while ROE reached a 20-year high.

New Three-Year Business Plan
Looking at the recent environment surrounding electronics trading companies, we have seen increasing
competition between trading companies, such asalliances between manufacturers of electronic components such as semiconductors and manufacturers of
IT equipment, and the general acceleration of DX insociety due to the impact of the COVID-19 pandemic.
In this situation, the move towards accelerating theuse of new technologies to drive technology innovation is bringing about dramatic environmental
changes, and the functions and roles required of electronics trading companies are changing.
In our previous three-year business plan, we sawsome results from our reforms, which can be seen in
the recovery of our business performance. However,operating profit did not reach our initial target value.
While I believe that our intended direction was correct,
there is still room for improvement in our initiatives forincreasing profitability and our creation of systems
and frameworks, including the Company’s humanresource development.

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Ryoyo Electro Annual Review 2022

Top Message

Looking back on the Company’s initiatives to date
Reform Phase 1

Reform Phase 2

Preparatory stage

Previous three-year business plan

Recorded declines in bothsales and profits contrary toindustry competitors

Restored performance tosome extent throughmanagement reform

Recorded increase in bothsales and profits for two
consecutive years

Performance declined due
to COVID-19

Three-year business plan:achieved net sales targets,but operating profit fell shortOperating Profit(Billion yen)
1.26
92.2

Initial Targets

2.26

2.16

93.8

108.5

95.8

2019.12020.12021.1

Net sales:¥110 billion

1.27

112.1

Operating profit:¥3 billion

0.25
2018.12022.1In February 2022, we started a new three-year business plan. The most important focus for us
under this plan is to work towards Ryoyo’s Core Promise, “To provide the best solutions for ourcustomers’ issues and problems in a faster and better manner than anyone else.” Even if we offer
excellent goods, simply supplying them is not enough to differentiate the Company. We will therefore pursue new value creation, looking beyond the Company’s immediate interface down to thecustomer (end-user). To this end, we will establish a cycle for recognizing customers' issues andproblems, and a cycle for responding specifically to each issue and problem. For a trading company, it is fundamentally important to fully work through both of these cycles. By establishing themso that they function properly, we will clarify common issues in the market, leading us to focus on
customer needs. It is in regard to this point that we still have room for improvement.
Vision for the Company
Ryoyo’s Core Promise
To provide the best solutions for our customers’ issues andproblems in a faster and better manner than anyone else.

Expand into similarmarkets wherestrengths can beleveraged

Feedback forcustomer
information
Increase ongoingcustomerengagement

Give assistance that
resolves customer
issuesIdentify andunderstandcustomers’ issues
and problems

Know the issues
shared by markets

Narrow down
customer issues andproblems

Provide the bestsolutions in a fasterand better mannerthan anyone else

Accumulate
proprietary expertise

Develop strengths
and expertise

We need to further cultivate contact points with customers, pursue individuality that will
enhance the value of our trading company business centered on product sales, and also strengthen
our systems and organizational aspects. To date we have been working to reform the human4Ryoyo Electro Annual Review 2022

Top Message

resource system and so forth; and going forward, we will go even deeper and work even harder tocreate structures that will support our sales activities. In terms of our business platform, we will
strengthen internal DX systems and make further progress on establishing structure such as environments to support remote working as part of initiatives to improve productivity in terms ofincreasing operating profits per person.
Moreover, up until now, our efforts to renew
management have been mainly through reforms
emphasizing internal enhancements. Now, however,based on the industry environment and our achievements so far, we will examine growth opportunities,
including alliances with other companies, although it
depends on the situation and whether we can findthe right partner.

Improvement of Governance, Sustainability-Related Initiatives
I believe that governance has an extremely important role to play in making a company sustainable.
We have already started work on strengthening our governance system, establishing a Nomination
And Compensation Committee as a discretionary advisory body to the Board of Directors, appointing
an outside Director as chair of the Board of Directors, and increasing the ratio of outside Directors.
To strengthen corporate governance, we will do more than simply enhance our structures; we will
make continuous improvements aimed at increasing management effectiveness and transparency.
We have also positioned sustainability as a management priority and are promoting initiatives toaddress this issue. Most recently, we established our corporate policy on sustainability and posted this,along with our designated materiality, on our website. Further, we have established a Sustainability
Committee, chaired by myself, to develop and implement Company-wide efforts addressing Task Forceon Climate-related Financial Disclosures (TCFD) recommendations, among other matters.

To Our Shareholders
I believe that the environment surrounding the electronics industry and electronics trading companies
is going to continue changing dramatically. I will strive to ensure that we can deliver value to all of
our stakeholders, and I ask for your continued support.

Representative Director, President & Chief Executive Officer

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Ryoyo Electro Annual Review 2022

The New Three-Year Business Plan

The New Three-Year Business Plan
Strategic framework
Ryoyo’s Core Promise
To provide the best solutions for our customers’ issues andproblems in a faster and better manner than anyone else.

New Three-Year Business Plan
(February 2022 – January 2025)
1. Expand and deepen customer engagement

2. Pursue uniquenessMaximize management resources toexpand business base

Combine products and services toprovide unique solutions

3. Increase productivity
Promote the building of a framework to strengthen the business foundation,and increase operating profit per employee (1.4x)

Numerical Targets

Under the new three-year business plan, we have positioned net sales, operating profit,
and ROE as important management indicators.

for the New

Net sales

Operating profit(Operating margin)ROE

2025.1 targets¥110.0 billion¥3.3 billion (3.0%)

5.5%

Reference 2022.1 results¥112.1 billion¥2.26 billion (2.0%)

4.7%

Three-YearBusiness Plan

Net sales
For the first fiscal year of the new three-year business plan, the fiscal year ending
January 31, 2023, a negative impact (approx. ¥18.0 billion) due to future environmental
changes is expected, such as a decrease in sales, mainly due to environmental
changes for our major businesses. However, we will expand customer contact points
and widen the base of our business with new offerings and services.

Operating profit
We aim to achieve an operating margin of at least 3%, by developing high-value-added
businesses that combine products and services, while shifting to a profit structure centered on efforts to increase productivity.

ROE
We aim to achieve ROE of 5% or higher, which the Company recognizes as an indicatorof the cost of capital, by lifting profit levels through various measures.

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Ryoyo Electro Annual Review 2022

The New Three-Year Business Plan

Strategy 1
Expand andDeepen Customer
Engagement

The Company’s important management resources are the outstanding offerings andcustomer relationships it has nurtured over its long history through its two businesses,
Semiconductors & Devices and ICT & Solutions. We will maximize these management
resources to expand our business base.
To create a system that supports this, we will further strengthen our structures
enabling acquisition, sharing, and utilization of information regarding customers, thereby
expanding the scope of business and proposals for each individual sales representative.
Looking ahead, we will continue to develop new offerings, focusing in particular on
those that leverage the Company’s technologies and expertise, and those that can be
expected to grow, as we form fields in which the Company excels.
The Company
Offerings(suppliers)

Factors where issues and weakness remain• Human resource capability• Marketing

Handledproducts

Strategy 2
PursueUniquenessCurrent status• Sales capability

Personassigned tocustomer

Current status

Customers,
includingend users

CustomerIn addition to the traditional business of selling goods, we will combine sales of intangible items, such as services, to create unique solutions. For now, we will promote highvalue-added businesses centered on the service business, IoT platform, and thetechnology services, using these three businesses to build a new earnings foundation.

Service businessIn addition to the conventional hardware product sales, Ryoyo will also
take care of installation, kitting, and maintenance of equipment—troublesome
processes that customers would rather leave to someone else.

IoT platform
Ryoyo will provide packages of sensors, platforms, and applications
according to diverse IoT needs to support quick, inexpensive, and easy
start-up in manufacturing and other fields. This will enable customers tomeet their IoT needs easily.

Technology services
Ryoyo will provide the best solutions for its customers’ issues and needs
by utilizing technologies such as proprietary AI and resources in andoutside Japan, and taking on tasks from hardware and software design
to manufacturing.
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Ryoyo Electro Annual Review 2022

The New Three-Year Business Plan

As a framework to support the strategies of “expand and deepen customer engage-

Strategy 3ment” and “pursue uniqueness,” we will strengthen our business foundation with five

Increase

themes: “sales productivity,” “business process reform,” “DX,” “standardization,” and“remote work,” with the concept that “increasing productivity means increasing earnings

Productivity

per Ryoyo employee.”
In order to support the preceding two strategies (i.e., “expand and deepen customer engagement”
and “pursue uniqueness”), Ryoyo will work on productivity improvement in five themes tostrengthen its business foundation.

Business processes
Create processes that
focus on providing value
to customers

Sales productivity

Digital transformation

Organize a sales teamthat will improve thereproducibility ofsuccesses

Create systems thatcoordinate all information
supporting the Company’sbusiness model

Increased Productivity
Increase earnings per Ryoyo employee
Operating profit per employee
FY2022/1 (result): ¥3.2 million
Standardization

FY2025/1 (target): ¥4.6 million

Remote work

Create a mechanism thatquickly identifies businessissues and implements
specific measures

Create an environment
where employees canwork anywhere

Supporting the Realization of Spaces that Are Convenient and Comfortable for Customers
by Expanding Services Focused on Selling Experiences
We are focusing on the service business as one avenue for theoperations involved with installation of the equipment andpursuit of originality, which is part of the strategic framework ofperipheral devices (assembly, kitting, delivery, explanation of

the three-year business plan. Among these, in services related

operation, removal and storage of old equipment, etc.).

to the installation of ICT equipment we go beyond physicalFlexible spaces are used for more than work and learning

installation to carry out all of the operations that are trouble-

spaces as rooms for telework and studying; they can also besome for customers and support the maintenance of theirused for a wide range of purposes, including relaxation and

ICT environments.

hobbies, such as holding informal social gatherings and small

Recently, we provided this service when installing

events. Through this service, Ryoyo Electro has provided a

KYOCERA multifunction printers in flexible spaces of thehighly convenient environment that offers opportunities for more

properties centered on individual offices developed by Daito

people to use ICT equipment. We will continue to create andKentaku Leasing Co., Ltd. We provided all aspects of the

expand original solutions that combine products and services.

Ryoyo’s Equipment Installation Cycle
1

2

3

4

5

Warehouse kitting(Assembly, pre-setting)

Equipment delivery

On-site installation and setting+ Explanation of operation

Removal of old equipment

Subsequent transportation to
designated site

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Ryoyo Electro Annual Review 2022

Topics

TopicsThe latest news about the Ryoyo Group
Contribution to
Local Communities
through Promotion
of DX

Ryoyo Electro is stepping up initiatives aimed at expanding its portfolio in the area of
wireless communications, where needs are expected to increase further going forward.
One of our initiatives involves LoRaWAN, a type of LPWA telecommunication technology capable of wireless telecommunications over long distances using less electric
power that is being rolled out in mountainous and rural areas. On the back of this trend,
we recently proposed a solution combined with LoRaWAN that is playing an importantrole with a local government promoting vaccinations as a countermeasure against
COVID-19 infections.
To enable smooth roll-outs of vaccinations, local governments throughout Japan
have had to deal with various tasks, including temperature management. In the town of
Hanawa, Fukushima Prefecture, we proposed a system for managing the temperatureof stored vaccines using an existing LoRaWAN system to introduce a temperature management solution provided by Kiwi technology Inc. (“Kiwi”), which proved highly effective. The vaccines need to be stored at a temperature below minus 60°C. Initially, at
Hanawa, it was envisaged that people would be assigned to make a visual inspectionof the temperature gauge to check for abnormalities. However, this required time andeffort, and there were concerns that the temperature would rise as the freezer door was
opened to take measurements, having a detrimental impact on the quality of the vaccines.
With this solution, the temperature can be measured by installing the main unit partof the temperature management sensors, capable of handling temperatures as low as
minus 80°C, on the outside of the storage freezer, installing only the measurement sensors on the inside. The measured data is stored on a cloud-based data server via
LoRaWAN and can be checked in real time from a dedicated website using a smartphone, tablet, or PC and so forth. This enables the vaccine quality to be maintained
while also visualizing its management. Ryoyo Electro will continue to propose applications for LoRaWAN such as automation of water meter inspections, supervision ofseniors, measurement of river levels, and opening up the technology to farmers andfood-related business operators in Hanawa.
We are also accelerating digital transformation (DX) throughout society, partly driven
by COVID-19. Furthermore, as regions continue to experience depopulation and fallingbirthrates, they are facing issues with securing people who understand local regional
characteristics and will take responsibility forthe area, as well as a lack of expertise andso forth. Ryoyo Electro will contribute toresolving the issues and problems faced bycustomers through the provision of optimal
products and services tailored to regionaland customer needs.

9

Photograph supplied by: Hanawa Town,
Fukushima Prefecture - Temperature sensor

Ryoyo Electro Annual Review 2022

TopicsAiming to Promote
Active Participationof Women Even
Further

Female employees account for around 30% of the Group’s workforce, making them asignificant driving force for developing the Company’s business, regardless of division
or work type.
On the other hand, as lifestyles continue to diversify, people are faced with a large
number of choices. Many become concerned regarding work-life balance, career planning, work style, and other matters. It is becoming even more important to provide
opportunities to stop and reevaluate.
In response to this situation, the Company invites people active in all manner offields to give lectures for employees. These include Director Masumi Shiraishi, an outside Director of the Company and pioneer in the field of promoting active participationof women, as well as people who are active in the arts or sports.
At the lectures, our guests speak about topics such as how to approach work, how
to instill motivation, leadership, and the kind of mental attitude needed for breaking
through difficult phases. In addition, they also have discussions with the Company’s
female employees that provide an opportunity to think about their own futures.
KPIs related to promoting active participation by women
End of 2022.1
Number of employees

Workstyle
Reforms541

Number of female employees

137

Ratio of women among all employees

25.3%

Average years of service of women

9.8

Ratio of women among new hires(Past three-year average)

38.5%

Ratio of eligible women who take childcare leave100%

Ryoyo Electro introduced remote work and staggered commuting as part of its countermeasures to prevent COVID-19 infections, formally systemizing these Company-wide inJanuary 2022. Remote work can vary significantly in terms of efficiency depending on
the type of work. For this reason, rather than stipulating a certain location, we havegiven employees the discretion to judge whether to work at the office or remotely inaccordance with the type and status of the work, creating a system that allows employees to select the form of working that allows them to work safely and securely. Throughthis autonomous and diverse workstyle, we aim to increase the satisfaction of both
employees and customers. Looking ahead, we will respond flexibly to changes in theenvironment, reflecting customer feedback and employee opinions as we review oursystems from time to time to increase their effectiveness.

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Ryoyo Electro Annual Review 2022

Corporate GovernanceCorporate Governance
The Ryoyo Group has been working to enhance corporate governance in order toachieve its sustainable growth and create medium- to long-term corporate value.
We recognize enhancing corporate governance as an important task for management.
Therefore, in order to continue to guarantee the soundness, transparency, and effectivenessof management, as well as increase corporate value and fulfill our responsibilities tosociety, we are striving to develop internal systems that ensure the functionality ofcorporate governance.

InsideCorporate
GovernanceInside

50 %

25 %

25 %
Audit &
Supervisory
Board Members

Directors

Highlights

FemaleOutside50 %Male/female
ratio of Officers
Outside

Male

75 %

75 %

Organizational structure of the Company

Company with Audit & Supervisory Board

Chairman of the Board of Directors

Outside Director

Directors

8 (including 4 outside Directors)

Audit & Supervisory Board Members

4 (including 3 outside Audit & Supervisory Board Members)

Independent officers

4 outside Directors and 3 outside Audit & Supervisory Board Members

Voluntarily established advisory committees for the Board of Directors

Nomination and Compensation Committee

Structure of compensation for Directors

Fixed compensation (basic compensation)
Performance-based compensation (monetary)
Medium- to long-term performance-based compensation (restricted stock)

Skill Matrix
Area of expertise the Company expects of Directors in particularCorporate
management

Finance/accounting/capital policy

Legal affairs/riskmanagement

Human resources
development/
Sales/marketing
personnel
management

Technology

Overseasbusiness

DX

Moritaka Nakamura
Kiyoshi Waki
Osamu Sano
Daisuke Aguro
Shinya Takada
Masumi Shiraishi
Masashi Oba
Michiko Aoki
* The above indicates the skills and expertise that are particularly expected of each Director and is not an indication of all of their skills
and expert knowledge.

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Ryoyo Electro Annual Review 2022

Corporate GovernanceCorporate
Governance System
General Shareholders’ Meeting
Appointment/
Dismissal

Appointment/
Dismissal

Delegation of Appointment/
authority
Dismissal

1

2

Audit &
Supervisory
Board

Board of Directors

Audit by Audit &Supervisory
Board Members

Appointment/
Dismissal

ReportFinancial
AuditorFinancial Auditor

Representative
Directors

OrderInternal Auditing
Department

ReportReport43Nomination andCompensation
Committee

Committees• Sustainability Committee• Compliance Committee

Cooperate

Corporate
Attorneys

ReportConsultation

Executive Officers

Appointment/Dismissal

Advice/Guidance

1 Board of Directors
The Board of Directors, which consists of eight Directors, of whom four areoutside Directors, is responsible for making decisions as stipulated in laws,
regulations, and the articles of incorporation; making important decisions;and the Directors mutually oversee their execution of operations.
In principle, the Board of Directors meets once a month and met a total of
13 times during the fiscal year under review.

2 Audit & Supervisory Board
The Company is a Company with an Audit & Supervisory Board as defined by
the Companies Act of Japan, whereby Audit & Supervisory Board Members
act independently of Directors and oversee Directors’ execution of operations.
The Audit & Supervisory Board consists of four Audit & Supervisory Board
Members, of whom three are outside Audit & Supervisory Board Members.
In principle, the Audit & Supervisory Board meets once a month and met a
total of 13 times during the fiscal year under review.

3 Nomination and Compensation Committee
In November 2018, aiming to further enhance our corporate governance bystrengthening the independence, objectivity, and accountability of the Boardof Directors with regard to the nomination of Directors and executive
officers and related matters such as compensation, we established theNomination and Compensation Committee as a voluntary advisory body to
the Board of Directors.

Internal audit

Organization for
Business Execution

The Nomination and Compensation Committee must include three or more
Directors, the majority of whom must be outside Directors; it currently
consists of six members, including four outside Directors, with an outside
Director serving as Chair.
The Committee met three times during the fiscal year under review, deliberating
and reporting to the Board on matters related to: (1) the appointment, dismissal,
and transfer of Directors and executive officers, (2) individual compensation for
Directors and executive officers, (3) the introduction of performance-based
compensation (monetary), and (4) succession planning.

4 Other Voluntary Committees
The Company has set up two voluntary committees chaired by the President.

Sustainability Committee
The committee pursues initiatives related to sustainability (environment,
society, governance, etc.), including measures based on the TCFD Recommendations, and periodically reports on the status of activities to the Boardof Directors.

Compliance Committee
The committee manages and oversees compliance with the Ryoyo Group
Code of Conduct and other internal rules in a timely manner, and reports
quarterly to the Board of Directors on the status of business execution.

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Ryoyo Electro Annual Review 2022

Corporate Governance

List of Officers (As of April 26, 2022)
Board of Directors

Directors

Representative Director,
President & Chief Executive Officer

Director & Managing Executive
Officer

Director & Managing Executive
Officer

Director & Managing Executive
OfficerMoritaka Nakamura

Kiyoshi Waki

Osamu Sano

Daisuke AguroTime in office: 4 years*13/13Time in office: 6 years*13/13In charge of Corporate Planning Division

In charge of Internal Auditing Department

In charge of Corporate Administration Division

In charge of CSR Department

Nomination andCompensation Committee Member

Nomination and Compensation Committee
MemberTime in office: –Time in office: –In charge of Strategic Technology
Development Division

In charge of Semiconductor & Device
Division

Outside Directors

Outside Director (Independent Officer)

Outside Director (Independent Officer)

Outside Director (Independent Officer)

Outside Director (Independent Officer)

Shinya Takada

Masumi Shiraishi

Masashi Oba

Michiko Aoki

Time in office: 2 years*13/13Chairman of the Board of Directors
Chairman of the Nomination and Compensation Committee

Time in office: 3 years*13/13Nomination and Compensation Committee
MemberTime in office: 2 years*13/13Nomination and Compensation Committee
MemberTime in office: –Nomination and Compensation Committee
MemberAudit & Supervisory Board

Audit & Supervisory
Board Member

Full-time Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member (Independent Officer)

Outside Audit & Supervisory
Board Member (Independent Officer)

Outside Audit & Supervisory
Board Member (Independent Officer)

Hiroyuki Kanno

Ryoji Kimura

Kazumi Akiyama

Motomi Oi

Time in office: 2 years

13

Outside Audit & Supervisory
Board Members*13/13 **13/13

Time in office: 10 years*12/13 **13/13

Time in office: 6 years*13/13 **13/13

Time in office: 2 years*13/13 **13/13* A ttendance at meetings of the Board of Directors** A ttendance at meetings of the Board of Audit & Supervisory Board Members

Ryoyo Electro Annual Review 2022

Corporate GovernanceCriteria for the
Selection of
Outside Officers

In order to ensure the independence of the candidates it recommends for outside officer (outside Director and outside Audit & Supervisory Board Member), the Company
has formulated criteria for the selection of outside officers.
Please see the following website for more details
https://www.ryoyo.co.jp/en/csr

Compensation for(i) Organization to Deliberate and Determine Compensation for Directors
The Board of Directors consults the Nomination and Compensation Committee regard-

Directors and Audit

ing the policy on determining compensation, etc., for individual Directors, and then

& Supervisory

makes a resolution on the policy after receiving the report from the committee.

Board Members

With regard to the compensation, etc., for individual Directors for the fiscal year
under review, the Board of Directors has confirmed that the policy on determining com-and Policy

pensation, etc., and the details of the determined compensation, etc., conform with theRegarding Decision

above-mentioned policy resolved by the Board of Directors and that the report from theon Calculation

Nomination and Compensation Committee has been given due weight, and judges that thecompensation, etc., for individual Directors is in accordance with the determination policy.

Method(ii) Structure and Determining Method of Compensation for Directors(1) Compensation Policy
Our aim with Director compensation is to attract highly qualified people who can help realize Ryoyo
Electro’s Management Philosophy and improve our business performance in line with our Management Policy, as well as giving Directors an incentive to play an active role in enhancing our corporate
value over the longer term. When determining the individual compensation of Directors, our basic
policy is to set the compensation at a level suitable for their duties.
Compensation for Directors who serve concurrently as executive officers includes basic compensation, performance-based compensation (monetary), and stock compensation (restricted stock), and theratio of each type of compensation is set based on rank, duties, and trends among other companies andso forth. As an approximate guide to the ratio of compensation by type, basic salary comprises 70%,
performance-based compensation (monetary) 10%, and stock compensation (restricted stock) 20%.
Compensation for Directors who do not serve concurrently as executive officers comprises only
basic compensation. Furthermore, individual compensation depends on each Director’s respective
job description and responsibilities based on the compensation system.

(2) Policy for Determining the Amount, Award Period, and Terms of Basic Compensation for Individuals
Basic compensation is fixed monthly compensation paid in cash while the Director is in office. For
Directors who also serve as executive officers, the basic compensation amount is determined annually at a certain period, based on the Compensation Table for each rank, and reflecting the prior-year
performance of the Company, the degree of contribution of each Director to the Company, and otherfactors. Compensation plans for outside Directors not also serving as executive officers are determined annually at a certain period, taking into account a range of factors, including Company performance, compensation levels at other companies, and the current social context.

(3) Policy for Determining the Content of Performance Indicators, Amount,
Calculation Method, Award Period, and Terms of Performance-Based
Compensation (Monetary)
Directors who serve concurrently as executive officers are paid performance-based compensation(monetary) in an amount determined according to the degree of achievement of target values

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Ryoyo Electro Annual Review 2022

Corporate Governanceallocated and set according to duties for each of the following indicators: consolidated operating
profit, operating profit of each business division, and consolidated net profit for the applicable fiscal
year. The compensation is paid at a certain time each year after the end of the applicable fiscal year.

(4) Policy for Determining the Content, Amount, Calculation Method,Award Period, and Terms of Non-Monetary Compensation, Etc.
The non-monetary compensation, etc., paid by the Company consists of restricted stock compensation. Directors who serve concurrently as executive officers are granted restricted stock at a certain
time each year during their incumbency (restricted stock is common stock of the Company allocatedto Directors who serve concurrently as executive officers based on a restricted stock allocationagreement concluded with them, in which transfer restrictions stipulated in the agreement are
applied for a period from the date of issuance of the stock until the date of retirement of the Director
as a Director of the Company or other position stipulated by the Board of Directors). The number ofshares of stock granted is determined based on the Compensation Table for each position.

(5) Method of Determining Individual Director Compensation
All Director compensation plans are determined by a resolution of the Board of Directors, reflecting
deliberation and reporting from the Nomination and Compensation Committee, the majority of whose
members are independent outside Directors.

(iii) Total Compensation by Class of Directors and Audit & Supervisory
Board Members, Total Compensation by Type, and the Number ofApplicable Individuals
Class of Directors andAudit & Supervisory Board Members
Directors

Compensation by type (millions of yen)
Total
compensation
Restricted
Non-monetary
Fixed(millions ofstockcompensation,compensation
yen)
compensationetc.

Number ofapplicable
individuals

242

163

30

48

10

40

40

-

-

4

Audit & Supervisory Board Members

36

36

-

-

4

Of which, outside Audit & Supervisory
Board Members

21

21

-

-

3

278

199

30

48

14

62

62

-

-

7

Of which, outside Directors

Total
Of which, outside Directors and outside
Audit & Supervisory Board Members(iv) Total Compensation for Individuals Whose Total Amount ofCompensation is ¥100 Million or More
The statement is omitted, since there is no individual whose total amount of consolidated compensation is ¥100 million or more.

Analysis of Boardof Directors’
Effectiveness andResults of
Evaluation

We conduct an annual self-evaluation to gauge the effectiveness of our Board of Directors. The most recent survey looked at such areas as the composition and administration of Board meetings and the content of discussions. The results indicated that the
Directors, including outside Directors, are generally functioning appropriately, and thatthe effectiveness of the Board of Directors is being safeguarded.
Suggestions from various Directors included the idea that there is room for
improvement in providing training opportunities to help Directors fulfill their duties, aswell as for better mutual communication between outside and inside Directors and15

Ryoyo Electro Annual Review 2022

Corporate Governanceother executives. Others expressed their opinion that fuller discussions were neededaround topics such as management strategies from a medium- and long-term perspective, new business creation, and SDGs and ESG.
The Board of Directors will continue to discuss these suggestions as we strive toimprove the Board’s effectiveness to help build an optimal corporate governance structure.

Internal Control
Systems

We formulated basic principles for establishing internal control systems and are working
to maintain a sound control framework.
For information on our internal control systems, please refer to the following section of the Company’s
corporate website.
https://www.ryoyo.co.jp/en/csr/

Risk Management
Systems

Risks that may affect our operations include those related to compliance, the environment, disasters, information security, product quality, foreign exchange rates, and financial reporting. Each department maintains effective risk management systems managed
by employees who are responsible for risk management. In the event that any risk
occurs, these employees will guide their department in responding quickly and effectively to those risks in order to minimize damages.
For more information on business risks, please refer to the following section of the Company’s
corporate website.
https://www.ryoyo.co.jp/en/ir-library/business-risk

Policy for
Proactive
Communication
with Shareholders

The Company endeavors to ensure that disclosure of management information is conducted accurately, impartially, and promptly. In addition, we recognize that facilitating
mutual understanding through proactive communication with shareholders and incorporating feedback from shareholders into management decision-making are crucial to theCompany’s ongoing growth and to the medium- to long-term improvement of corporate
value. Accordingly, the following provisions have been put in place to support proactive
communications activities.
(1) T he Director in charge of the Corporate Planning Division oversees shareholder communications.
(2) T he Public Relations Department of the Corporate Planning Division functions as a venue forshareholder communications, while preparations for such communications are carried out jointly
by the Corporate Planning, General Affairs, and Accounting departments.
(3) E xplanatory forums are held for institutional investors and analysts at which we report on andexplain current business conditions and the future direction of the Company.
(4) S ystems are in place to ensure that feedback received through shareholder communications
activities is shared with management in a timely manner.
(5) In-house workshops regarding insider information are held and other steps are taken to ensure
the appropriate management of insider information.
Note:
The Company strives to ensure timely and appropriate disclosure of management information through its
corporate website and other venues.
https://www.ryoyo.co.jp/en16

Ryoyo Electro Annual Review 2022

Corporate Governance

Message from an Outside Director

Outside Director

Masumi Shiraishi

My Focus as an Outside Director
Based on my experience in academia, I strive to view management using my academic knowledge. I
believe that it is important to supervise objectively from the shareholders’ perspective, particularly withregard to diversity and risk management. For this reason, I think that the Board of Directors needs not
only to be efficient, but also to allow time for discussion and leeway to say “no” when necessary.

Ryoyo Electro’s Current Governance SystemI have really sensed a definite change in the governance system of Ryoyo Electro over these past few
years. In terms of structure, a Nomination and Compensation Committee has been established, and boththe Board of Directors and the Nomination and Compensation Committee are chaired by outside Directors. The system supporting effective discussion in the Board of Directors has also been improved withcareful attention to sharing information before the meetings. The content of the discussions is not limited
to short-term matters for decisions; a lot of time is set aside for discussion on issues with a medium- tolong-term perspective, such as formulation of the medium-term business plan and the human resource
system. While there are still points where improvements can be made, such as the speed of reporting, I
commend the improvements in the content of the matters for discussion.

Issues Facing Ryoyo Electro’s Management
The current external environment is growing increasingly adverse. Geopolitical risks including armed conflict are increasing in addition to COVID-19 and the semiconductor shortage. However, rather than simply
avoiding risk, it is vital that the Company takes risks appropriately and seizes the opportunities that present
themselves by thoroughly examining the negative and positive aspects of each event.

17

Ryoyo Electro Annual Review 2022

Corporate GovernanceDuring the three years since my appointment as outside Director of Ryoyo Electro, the Company has
been working rapidly to implement various reforms. Amid these rapidly changing times, this swift
response is important for overcoming risk and converting it into opportunity. In particular, I have beenhighly impressed by reforms to the personnel and evaluation systems aimed at accommodating diverse
human resources and the start of programs for human resource development. I myself have had theopportunity to give an in-house lecture regarding workstyles for women, and my interactions with employees have also provided points of reference in the Board of Directors meetings. When responding swiftly,
unexpected issues may emerge, but I would like the Company to continue making improvements without
faltering, as it refines the accuracy of its response and its policies.
In addition to this, I think that strengthening Ryoyo Electro’s organizational capabilities will be important for achieving significant growth going forward. Currently, the Company has two businesses, and it
needs to increase the synergies between them and strengthen cooperation between departments. Just
as the Company’s slogan says: “Connect Everything. With Technology. With Ideas.”, by strengthening theinternal operating structure and enhancing cooperation, I believe the Company will be able to demonstrate its unique value even further. Moreover, in order to achieve this, it is important to have an environment where employees can act autonomously. Although they may have connections only with the people
around them as they carry out their daily duties, by moving beyond their own boundaries to work withother divisions and customers, they will create new connections. However, it is not enough simply to say
this as a slogan; management must strengthen the personnel system and education, and change themindset of the entire Company, starting from the recruitment stage.

Towards Sustainable Growth Going Forward
The most important thing for a company is to earn through its
main operations and give back to its stakeholders. In addition
to this, it is also key to pursue health and productivity management in order to be sustainable. Investment in employees
is a sound investment that is bound to yield a return later on.
On the business front, as the population continues to decline
in Japan, areas are certain to emerge where Ryoyo Electro’s
technologies can contribute to increasing productivity throughdigital transformation (DX). It will become important for companies to find ways that they can demonstrate the value of their
existence. Ryoyo can do this by recognizing common issues ineach field and market and providing solutions that leverage its
unique character, and it should be able to contribute to realizing
better standards of living. Naturally, it is the individual efforts ofeach employee that will support these initiatives.
For my part, as outside Director I will dedicate my efforts
to providing supervision and support for management, andI ask all of our shareholders to continue your support for
the Company.

18

Ryoyo Electro Annual Review 2022

Financial Review

Consolidated Financial Highlights
Ryoyo Electro Corporation and Consolidated Subsidiaries
For the years ended January 31, 2022, 2021, 2020, 2019, and 2018
Thousands of U.S.
dollars*

Millions of yen
2022.12021.12020.1

2019.1

2018.12022.1For the Year¥Net sales

112,099¥

95,792¥

108,538¥

93,799¥92,234$

971,061

Gross profit

10,732

9,194

10,361

8,925

7,591

92,973

Selling, general and administrative expenses

8,474

7,927

8,206

7,667

7,339

73,412

Operating profit

2,258

1,266

2,154

1,257

251

19,561

Profit attributable to owners of parent

1,873

806

1,303

1,020

212

16,230Free cash flows(5,535)

13,434697

1,132(4,162)(47,954)

At Year-End¥

Total assets

72,652¥

59,33642,309Total net assets¥

37,992

78,117¥

62,13575,538¥78,111

62,208$629,352
366,50764,404

Per Share of Common Stock (Yen/U.S. dollars)¥

Net income

103.94

¥

35.19

¥

53.06

¥

41.62

¥

8.68

$

0.90

Total net assets

2,130.47

2,188.90

2,524.47

2,531.90

2,625.66

18.45

Cash dividends

120.00180.00

80.00

60.00

60.00

1.03

Gross profit margin

9.6

9.6

9.5

9.5

8.2

Operating margin

2.0

1.3

2.0

1.3

0.3

Net income margin

1.7

0.8

1.2

1.1

0.2

Equity ratio

58.2

64.0

79.4

82.2

82.4

Return on equity

4.7

1.6

2.1

1.6

0.3

19,844,823

17,336,633

24,572,801

24,521,409

24,506,240

715

711

561

526

510

Ratios (%)

Other Information
Number of shares issued**
Number of employees* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥115.44 = U.S.$1.00, the exchange rate prevailing on January 31, 2022.
** Number of shares issued does not include treasury stock.
Notes: 1. The consolidated financial highlights are a translation of the Japanese financial statements. The Japanese version will be used
for matters of a legal nature.
2. Unless otherwise noted, figures are rounded down to the nearest million.

Net Sales

Operating Profit

Total Assets/Total Net Assets

Millions of yen

Millions of yen

Millions of yen

112,099

108,538
95,792

92,234 93,799

2,258

2,154

78,11175,53864,404

78,11772,652

62,208 62,135
59,336

1,266

1,257

37,99242,309

251

18.1

19

19.1

20.1

21.1

22.1

18.1

19.1

20.1

21.1

22.1

18.1

19.1

20.1

21.1

22.1

Ryoyo Electro Annual Review 2022

Financial Review

Consolidated Financial Review
During the fiscal year under review, the fiscal year ended January 31, 2022, Japan’sOperatingeconomy initially saw movement towards recovery in consumer spending and corporate

Environment

earnings as the status of COVID-19 infections eased. However, the future outlook
remains unclear, with the spread of infection by a new variant from the end of 2021.
The electronics industry, in which the Group operates, saw solid capital investment
across a wide range of areas, supported by strong demand. However, supply chain
disruptions became protracted due to supply shortages of electronic components
such as semiconductors and high prices for raw materials. These had impacts on
production activities in every area and an increased sense of difficulty emerged in
procurement of certain ICT products.

Results for the
Fiscal Year Ended
January 31, 2022
Millions of yen

49,854
6,893
3,904
2,650
3,659
23,983In this environment, the Group positioned “building a business foundation that is resilient to changes in the business environment” as a priority measure for the fiscal year
under review. It focused not only on promoting and expanding existing businesses, butalso on bringing new business models to fruition and cultivating new business drivers,
along with working to establish infrastructure to support them.
As a result, consolidated financial results for the fiscal year under review showed

63,793steady recovery in a wide range of areas from the impact of the COVID-19 pandemic in

9,002
4,605
3,059
5,307

the previous fiscal year. In addition, the semiconductor business for digital consumer

35,481

were up 17.0% year on year to ¥112,099 million; operating profit was up 78.2% toelectronics expanded even further, and performance was supported by strong demandamid the semiconductor supply shortage. Mainly as a result of these factors, net sales¥2,258 million; ordinary profit increased 165.2% to ¥2,400 million, and profit attributable

8,765
21.1

6,336
22.1

Analog & power
Logic
MemoryRF & optical
LCDs
Other electronic devices

to owners of parent increased 132.4% to ¥1,873 million.
Sales by Products
Semiconductors & Devices
Net sales were up ¥13,939 million, or 28.0%, year on year to ¥63,793 million.
This mainly reflected a major expansion in sales for digital consumer electronics, primarily televisions,and general underlying support from favorable demand driven by the semiconductor supply
shortage.

Millions of yen
45,93848,305

11,177

13,876

19,23916,353

5,892

6,923

9,630

11,153

ICT & Solutions
Net sales were up ¥2,367 million, or 5.2%, year on year to ¥48,305 million.

21.1

22.1

PC/Server/Network
SoftwareI/O equipment
Embedded devices & others

This reflected generally strong sales of products other than PC software, which decreased following
a surge in special demand in the first half of the previous fiscal year.

Sales by Region
Japan
With support from strong demand driven by a semiconductor supply shortage and the recovery ofcorporate IT-related investment, both Semiconductors & Devices and ICT & Solutions performed
solidly in a wide range of areas and offerings. Sales to external customers in Japan increased ¥7,004
million, or 10.2%, year on year to ¥75,569 million. Operating profit in this regional segment increasedby ¥703 million, or 64.4%, to ¥1,797 million.

20

Ryoyo Electro Annual Review 2022

Financial Review

Asia
Due to an increase in sales of semiconductors for digital consumer electronics, sales to externalcustomers in Asia grew ¥9,302 million, or 34.2%, year on year to ¥36,529 million. Operating profit inthis regional segment increased by ¥367 million, or 166.0%, to ¥589 million.
The figure for operating profit presented in the consolidated statements of profit includes operating
profit from each segment as well as from intersegment transactions.

Financial Position

Total assets at the end of the fiscal year under review amounted to ¥72,652 million, an
increase of ¥13,315 million from the previous fiscal year-end. This was mainly due to anincrease in merchandise and finished goods.
Total liabilities were up ¥8,998 million from the previous fiscal year-end to ¥30,342
million. This was mainly due to an increase in short-term borrowings.
Total net assets were up ¥4,317 million from the previous fiscal year-end to¥42,309 million. This was mainly attributable to a decrease in treasury stock due to theexercise of stock acquisition rights.

Cash Flows

Cash and cash equivalents totaled ¥9,204 million at fiscal year-end, a year-on-yearincrease of ¥1,559 million, mainly reflecting the disposal of treasury stock due to theexercise of stock acquisition rights.
Net cash used in operating activities was ¥8,090 million, a change of ¥11,093 million
from net cash provided in the previous fiscal year. The Company recorded ¥2,526 million in
profit before income taxes, but inventories increased by ¥7,527 million, among other factors.
Net cash provided by investing activities was ¥2,554 million, a year-on-year
decrease of ¥7,876 million. The main inflow was attributable to proceeds from sales ofinvestment securities of ¥2,267 million.
Net cash provided by financing activities was ¥6,872 million, a change of ¥25,200
million from net cash used in the previous fiscal year, mainly due to recording proceedsfrom sales of treasury shares due to the exercise of stock acquisition rights.

Returning Profits
to Shareholders

Basic Policy Regarding the Distribution of Profit
Our basic policy regarding dividend payments is to return profits to shareholders whileconsidering the Company’s financial position and the operating environment, as weseek to maintain a stable operating foundation and pursue future business expansion.
We have set “a dividend on equity ratio (DOE) of 5%” as our target for shareholder returns.
Dividend per share (Yen)
Year-End

Full Year

Payout
Ratio

DOE

50

100

129.7%

4.8%

60

120

115.4%

5.6%

120

180

(Ordinary dividend: 60)(Ordinary dividend: 120)
511.5%(Commemorative dividend: 60) (Commemorative dividend: 60)

7.6%

2023.1

Forecast

50

2022.1Result60

2021.1

21

InterimResult60(Ordinary dividend: 60)

Ryoyo Electro Annual Review 2022

Financial Review

Consolidated Balance Sheets
Ryoyo Electro Corporation and Consolidated Subsidiaries at January 31, 2022 and 2021

Millions of yen
As of January 31, 2021
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims-operating
Securities
Merchandise and finished goods
Work in process
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Tools, furniture and fixtures, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts
Total Investments and other assets
Total noncurrent assets
Total Assets¥¥

Thousands of U.S. dollars

As of January 31, 2022

¥

7,644
23,227
2,257
999
11,614
150
1,535
(6)
47,4239,204
28,6633,494
500
19,466
122
1,505
(5)
62,952

Total Liabilities and net assets¥

79,733
248,299
30,275
4,337
168,627
1,059
13,040(44)545,325

74
5
6
132
219

647
49
54
1,148
1,898

599
245
844

535
297
832

4,639
2,576
7,215

8,143
39
1,520
1,804
(653)
10,854
11,91359,336

5,721
53
1,621
1,737
(485)
8,648
9,700
72,652

49,564463
14,042
15,052(4,208)74,91484,027629,352¥

Millions of yen

¥

$

84
5
4
120
214

As of January 31, 2021
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term borrowings
Income taxes payable
Accrued consumption taxes
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Retirement benefit liability
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Share acquisition rights
Total Net assets

As of January 31, 2022

11,263
6,637
92
231
264
1,335
19,825$

Thousands of U.S. dollars

As of January 31, 2022¥

14,726
11,763
427
35
560
1,370
28,884As of January 31, 2022$

127,568
101,903
3,707
306
4,858
11,873
250,214

79
919
212
308
1,518
21,344

–
865
321
271
1,458
30,342

–
7,494
2,782
2,355
12,630262,845

13,672
13,33633,460(24,461)
36,006

13,672
13,336
31,164(17,978)
40,194

118,434
115,528
269,966(155,739)
348,189

2,119
(0)
(126)
(50)
1,941
43
37,992

1,794
(0)
412
(122)
2,083
30
42,30915,544(4)
3,574(1,062)
18,051
267
366,507

59,336¥72,652$

629,352

22

Ryoyo Electro Annual Review 2022

Financial Review

Consolidated Statements of Income andConsolidated Comprehensive Statements of Income
Ryoyo Electro Corporation and Consolidated Subsidiaries for the Years Ended January 31, 2022 and 2021
Millions of yen
Consolidated Statement of Income
Net sales

Fiscal year ended
January 31, 2021¥

95,792Thousands of U.S. dollars
Fiscal year ended
January 31, 2022¥

Fiscal year ended
January 31, 2022

112,099$

971,061

Cost of sales

86,598101,366

878,087

Gross profit

9,194

10,732

92,973

Selling, general and administrative expenses
(0)

(0)

(7)

Salaries and bonuses

3,286

3,447

29,863

Provision for bonuses

244

504

4,368

Retirement benefit expenses

87

200

1,739

Rent expenses

410

399

3,464

Depreciation

219

149

1,299

Other

3,679

3,773

32,686

Total selling, general and administrative expenses

7,927

8,474

73,412

1,266

2,258

19,561

Provision of allowance for doubtful accounts

Operating profit
Non-operating income
Interest income

34

18

158

Dividend income

160

105

912

Purchase discounts

1

0

3

Gain on investments in investment partnerships

58

134

1,165

Other

81

28

248

Total non-operating income

335

286

2,485

Interest expenses

53

90

784

Sales discounts

37

4

41

Foreign exchange losses

61

9

80

Commission expenses

32

10

88

Loss on abandonment of non-current assets

0

3

34

Commission for purchase of treasury shares

490

–

–

Other

20

26

226

Total non-operating expenses

697

144

1,252

905

2,400

20,794Gain on sales of investment securities

597

291

2,523

Gain on contribution of securities to retirement benefit trust

47

–

–

Total extraordinary income

644

291

2,523

Loss on sales of investment securities

175

23

202

Loss on valuation of investment securities

41

–

–

Loss on valuation of shares of subsidiaries and associates

136

70

610

Provision of allowance for doubtful accounts

47

52

458

Settlement package

119

18

159

Total extraordinary losses

520

164

1,429

Profit before income taxes

1,028

2,526

21,888

Income taxes - current

62

545

4,726

Income taxes - deferred

160

107

932

Total income taxes

222

653

5,658

Non-operating expenses

Ordinary profit
Extraordinary income

Extraordinary losses

ProfitProfit attributable to owners of parent

1,873

806
¥

806

¥

1,873

16,230$

16,230Consolidated Comprehensive Statement of Income
806

1,873

16,230

Valuation difference on available-for-sale securities

(21)

(324)

(2,815)

Deferred gains or losses on hedges

(0)

(0)

(1)

Foreign currency translation adjustment

(151)

538

4,669

Remeasurements of defined benefit plans, net of tax

(148)

(71)

(620)

Total other comprehensive income

(322)

142

1,233

484

2,015

17,463484

2,015

17,463–––

Profit attributable to owners of parent
Other comprehensive income

Comprehensive income(Details)
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

23

Ryoyo Electro Annual Review 2022

Financial Review

Consolidated Statements of Changes
in Net Assets
Ryoyo Electro Corporation and Consolidated Subsidiaries for the Years Ended January 31, 2022 and 2021
Millions of yen
Shareholders’ equity

From February 1,
2020 to January 31, 2021
Balance at the beginning of current period

Accumulated other comprehensive income

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesTotalshareholders'equity

Valuationdifference
on available-for-salesecurities¥13,672¥13,336¥35,337¥(2,630)¥59,715¥2,141

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

¥(0)

¥79

Remeasurements ofSharedefinedacquisition
benefitrights
plans
¥97

¥102

Total net
assets¥62,135

Changes during period
Dividends of surplus
Profit attributable to owners of parent(2,463)(2,463)

806

806

806

(21,960)(21,960)

Purchase of treasury shares(21,960)

Disposal of treasury shares(2,463)

0

0

0

0

Exercise of share acquisition rights

(43)

101

58

58

Restricted stock payment

29

Change in scope of consolidation
Transfer from retained earnings tocapital surplus

13

27

(205)

(13)

–

Net changes in items other thanshareholders’ equity–

Total changes during period
Balance at end of period

56

(205)

56
(53)

(259)
–

(21)

(0)

(151)

(148)

(58)

(380)

–

–

(1,877)(21,831)(23,709)

(21)

(0)

(205)

(148)

(58)

(24,143)¥13,672¥13,336¥33,460¥(24,461)¥36,006¥2,119¥(0)¥(126)¥(50)¥43¥37,992

Remeasurements ofSharedefinedacquisition
benefitrightsplans

Total net
assetsMillions of yen
Shareholders’ equity

From February 1,
2021 to January 31, 2022
Balance at the beginning of current period

Accumulated other comprehensive income

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesTotalshareholders' equity

Valuationdifference
on available-for-salesecurities¥13,672¥13,336¥33,460¥(24,461)¥36,006¥2,119Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment¥(0)¥(126)¥(50)¥43¥37,992

Changes during period
Dividends of surplus(3,142)(3,142)(3,142)

Profit attributable to owners of parent

1,873

1,873

1,873

(1)

(1)

(1)

(0)

0

0

0

(1,028)

6,430

5,401

5,401

54

57

57

–

–

Purchase of treasury shares
Disposal of treasury shares
Exercise of share acquisition rights
Restricted stock payment

2

Transfer from retained earnings tocapital surplus

1,025(1,025)

Net changes in items other thanshareholders’ equity–

Total changes during period
Balance at end of period

(324)

(0)

538

(71)

(13)

129

–

–

(2,295)

6,483

4,188

(324)

(0)

538

(71)

(13)

4,317

¥13,672¥13,336¥31,164¥(17,978)¥40,194¥1,794¥(0)412¥(122)¥30¥42,309

Remeasurements ofSharedefinedacquisition
benefitrightsplans

Total net
assetsThousands of U.S. Dollars
Shareholders’ equity

From February 1,
2021 to January 31, 2022
Balance at the beginning of current period

Accumulated other comprehensive income

SharecapitalCapitalsurplusRetainedearnings

TreasurysharesTotalshareholders' equity

Valuationdifference
on available-for-salesecurities$118,434$115,528$289,848$(211,902)$311,908$18,358

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment$(4)$(1,095)$(442)$380$329,106

Changes during period
Dividends of surplus(27,226)(27,226)(27,226)

Profit attributable to owners of parent

16,230

16,230

16,230

(14)

(14)

(14)

(0)

1

1

1

(8,908)55,702

46,794

46,794

22

475

496

496

–

–

Purchase of treasury shares
Disposal of treasury shares
Exercise of share acquisition rights
Restricted stock payment
Transfer from retained earnings tocapital surplus

8,887(8,887)–(2,815)

(1)

4,669

(620)

(113)

1,120

–

–

(19,882)

56,16336,280(2,815)

(1)

4,669

(620)

(113)

37,401$118,434$115,528$269,966$(155,739)$348,189$15,544$(4)$3,574$(1,062)$267$366,507

Net changes of items other thanshareholders’ equity
Total changes during period
Balance at end of period

24

Ryoyo Electro Annual Review 2022

Financial Review

Consolidated Statements of Cash Flows
Ryoyo Electro Corporation and Consolidated Subsidiaries for the Years Ended January 31, 2022 and 2021

Millions of yen
Consolidated Statement of Income

Fiscal year ended
January 31, 2021

Thousands of U.S. dollars
Fiscal year ended
January 31, 2022

Fiscal year ended
January 31, 2022

Cash flows from operating activities
Profit before income taxes

¥

1,028

¥

2,526

$

21,888Depreciation

241

178

1,547

Amortization of goodwill

42

64

557

Loss (gain) on sales and retirement of non-current assets

0

3

32

Share-based remuneration expenses

51

57

500

Expenses for treasury shares

490

–

–

Loss (gain) on investments in investment partnerships

(58)

(134)

(1,165)

Foreign exchange losses (gains)

(26)

57

497

Increase (decrease) in provisions

(216)

120

1,042

Increase (decrease) in retirement benefit liability

(58)

15

136

Interest and dividend income

(194)

(123)

(1,070)Interest expenses
Loss (gain) on sales of investment securities

53

90

784

(422)

(267)

(2,321)

Loss (gain) on valuation of investment securities

41

–

–

Loss on valuation of shares of subsidiaries and associates

136

70

610

Settlement package
Decrease (increase) in trade receivables

119

18

159

2,860

(5,832)(50,525)

Decrease (increase) in inventories

990(7,527)(65,203)

Increase (decrease) in trade payables

(991)

3,054

26,462

Increase (decrease) in accrued consumption taxes

(27)

(197)

(1,712)Other, net

(153)

(359)

(3,113)

Subtotal

3,908(8,184)(70,895)

Interest and dividends received

201

127

1,108

Interest paid

(53)

(88)

(769)

Settlement package paid

(38)

(9)

(86)

Income taxes (paid) refund(1,015)64

558

Net cash provided by (used in) operating activities

3,003(8,090)(70,084)

Payments into time deposits

(21)

–

–

Proceeds from withdrawal of time deposits

21

–

–

Proceeds from redemption of securities

–

500

4,331

(107)

(152)

(1,321)11

17

Purchase of investment securities(2,484)

(112)

(976)

Proceeds from sales of investment securities

19,639Cash flows from investing activities

Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets

13,4072,267

Purchase of shares of subsidiaries and associates

(98)

–

–

Proceeds from distributions from investment partnerships

86

127

1,103

Purchase of insurance funds

(75)

(165)

(1,437)

–

187

1,621

(383)

(99)

(866)

84

2

20

10,431

2,554

22,130

Proceeds from cancellation of insurance funds
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term borrowings

33,98696,452

835,521

Repayments of short-term borrowings(27,353)(91,799)(795,210)

Dividends paid

(2,458)(3,133)(27,146)

Purchase of treasury shares(22,451)

(1)

(14)

Proceeds from sales of treasury shares

0

0

1

Proceeds from issuance of share acquisition rights

–

19

165

–

5,369

46,515

Repayments of lease obligations

(36)

(34)

(299)

Other, net

(14)

–

–

(18,327)

6,872

59,531

Proceeds from disposal of treasury shares from exercise of subscription rights to shares

Net cash provided by (used in) financing activities

(64)

223

1,932

Net increase (decrease) in cash and cash equivalents(4,958)1,559

13,510Cash and cash equivalents at beginning of period

12,417

7,644

66,223186–

Effect of exchange rate change on cash and cash equivalents

Increase in cash and cash equivalents resulting from inclusion of subsidiaries in consolidation
Cash and cash equivalents at end of period

25

¥

7,644

¥

9,204

–
$

79,733

Ryoyo Electro Annual Review 2022

Corporate Data / Investor Information

Corporate Data/Investor Information
As of January 31, 2022

Company Name

Composition of Shareholders

Ryoyo Electro Corporation

Treasury stock

Head Office

26.0%

1-12-22 Tsukiji, Chuo-ku,

Individuals and other

Securities companies

42.7%

0.6%

Tokyo 104-8408, Japan

Foreign corporations andother foreign investors

Telephone

2.1%+81-3-3543-7711

Financial institutions+81-3-3545-3507

WebsiteOther corporations

11.3%

FAX

17.3%

Major Shareholders

https://www.ryoyo.co.jp/en

Thousands of shares%

SHC Corporation

2,118

10.68

Establishment

The Master Trust Bank of Japan (Trust account)

1,902

9.59

February 27, 1961

Mitsubishi Electric Corporation

1,576

7.95

Sheep Shokai Co.

523

2.64

Nippon Life Insurance Company

409

2.06

Ryoyo Electro Employee Stockholder Association

293

1.48

Yoshihisa Shimada

211

1.06

Yoichiro Ohashi

206

1.04

Ken System Co., Ltd.

200

1.01

Shares Issued

Kenhachiro Ogawa

177

0.89

26,800,000

Note: Calculations for the ownership percentages above do not account for the 6,955,177 sharesof treasury stock.

Capital¥13,672 million

Authorized Shares
119,628,800

Shareholders
22,164

Stock Trading Unit

Stock Price Chart
Nikkei Stock Average

Stock Price

100 shares

yen
4,000

yen
40,000Stock Listing

3,000

30,0002,000

20,0001,000

10,000Tokyo Stock Exchange,
Prime Market(as of April 2022)

Ticker Code8068

Transfer Agent
Mitsubishi UFJ Trust andTrading Volume
Shares9,000,000
6,000,000

Banking Corporation
3,000,000
0

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2019

2020

2021

2022

Caution on Forward-Looking Statements
The contents of this annual review that are not historical fact represent projections based on expectations and plans for the future. These
projections contain elements of risk and uncertainty. As a result, forward-looking statements made in this annual review may differ from actual
results and performance.
Notes on Performance Figures in This Annual Review
The performance figures used in this annual review, including those from previous fiscal years, are based on Ryoyo Electro Corporation’s
audited Japanese financial reviews.

26This product is made of material from well-managed, FSC®-certified forests and other controlled sources.
Additionally, this product is printed using highly biodegradable vegetable oil ink.
Printed in Japan