Kaga Electronics Group

Contact: Investor Relations & Public Relations Office
20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629, JapanTel:+81-3-5657-0106

Fax:+81-3-3254-7133

Email: webmaster@taxan.co.jp
Web: https://www.taxan.co.jp/en/

Integrated Report2021

INDEX
Focus of our Integrated Report 2021
Kaga Electronics Group Explained
Corporate Philosophy������������������������������������������������������������ 2

Our Medium- to
Long-Term Vision

The Timeline of Our Growth Driven by the Kaga Spirit. . . . 3
Our Hard-Earned Business Strengths Coupledwith a Solid Operating Base Encompassing Regions
around the Globe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Value Creation Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Message from the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Social Issues
We Aim to Address

Message from the COO. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Message from the CFO . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Framework and Implementation of
Corporate Value Creation

Progress underMedium-Term
Management Plan 2021

Special Feature
Driving Growth Toward Becoming No.1 in JapanThe Kaga Electronics Group’s EMS Business ����������������� 17
One More Strength
The Kaga Electronics Group’s One-Stop Solutions��������� 22
Overview of FY2021/3 Results
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23

Outcomes of Our Proactive
M&A Drive

Outline of
Our Financial Discipline

Outline of Business Segments• Electronic Components . . . . . . . . . . . . . . . . . . . . . . . . . .  24• Information Equipment . . . . . . . . . . . . . . . . . . . . . . . . . .  25• Software / Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
ESG Information
Corporate Governance• Directors and Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . .  27• Corporate Governance. . . . . . . . . . . . . . . . . . . . . . . . . . .  29• Internal Control / Compliance. . . . . . . . . . . . . . . . . . . . .  32• Dialogue with Outside Directors . . . . . . . . . . . . . . . . . . .  33• Sustainability Initiatives. . . . . . . . . . . . . . . . . . . . . . . . . .  35
Social Report• Together with Our Customers. . . . . . . . . . . . . . . . . . . . .  37• Together with Our Employees. . . . . . . . . . . . . . . . . . . . .  38• Together with the Community. . . . . . . . . . . . . . . . . . . . .  39
Environmental Report• Together with the Earth. . . . . . . . . . . . . . . . . . . . . . . . . .  41

Future Plans for the
EMS Business

Financial and Corporate Information
Financial Information• 10-Year Financial Summary. . . . . . . . . . . . . . . . . . . . . . .  43• Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . .  45• Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . .  47• Consolidated Statement of Income andComprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . .  49• Consolidated Statement of Cash Flows . . . . . . . . . . . . .  51

Corporate Philosophy

Everything we do
is forour customers
Kaga Electronics Co., Ltd. had very humble beginnings about
50 years ago, starting out in a very small office. We have sincegrown into a general electronics trading company with
operations that now span the globe. Our corporate philosophy,“Everything we do is for our customers,” has remained
unchanged since our earliest days. Based on this philosophy,
we will keep contributing to the creation of an affluent society
by continuing to support the development of our customers.

Corporate Information. . . . . . . . . . . . . . . . . . . . . . . . . . . .  53

Period covered
This report covers the fiscal period from April 1,2020 to March 31, 2021, except certain parts
that include information prior and subsequent
to these dates, as required.
Financial figures
Figures related to financial content in thisreport are rounded to the nearest unit. Ratios
are rounded to one decimal place after
calculation in yen.

1

KAGA ELECTRONICS CO.,LTD.

Scope of report
Data calculation in this report covers Kaga
Electronics Co., Ltd. and its 67 consolidated
subsidiaries (22 in Japan and 45 overseas).
All such companies are included in the scopeof the Company’s consolidated accounting,
except where stated.
Notation and coverage of the Company: Kaga
Electronics Co., Ltd.
The Group: Kaga Electronics Co., Ltd. and its
67 consolidated subsidiaries
Domestic facilities: Kaga Electronics Co., Ltd.
and its 22 domestic consolidated subsidiaries

Forward-looking statements
Certain statements in this document may
constitute “forward-looking statements.”
Such statements are based on currently
available information and certain premises
deemed rational at the time of writing. As
such, actual results may differ from thoseprojected due to various factors. Key factorsthat could cause actual results to differ fromthose projected include, but are not limited to,
general economic conditions in Japan andoverseas surrounding the Company’s businessdomains, as well as trends in demand for theCompany’s products and services, and trends
in foreign exchange rates and stock markets.

Integrated Report 2021
Integrate2

Kaga Electronics Group Explained

The Timeline of Our Growth Driven by the Kaga Spirit

Kaga Spirit(The Words of Isao Tsukamoto)

Personal connections areintangible assets
The Kaga Electronics Group is capable ofresponding quickly and accurately to changes inthe business environment and customer needs
to drive continuous growth. This ability stems
from the personal connections, or businessnetwork, we have built up over the years basedon relationships of trust with customers andsuppliers. These relationships form a vital partof our management foundations in conducting
business as a trading company. The idea that“personal connections are intangible assets”
has been passed down over the years as one ofthe pillars of what we call KAGAism, theessence of who we are.

Never say “no”
Based on the motto “Never say ‘no’,” the Kaga
Electronics Group has been expanding its
business domain from parts procurement tokit-parts sales and even contract production,planning and development, and maintenanceservices, while enhancing the lineup of products
to meet customer needs. The origins of ourglobal “one-stop service system,” an enduring
strength of the Company, lies in this customerfirst approach.

An organization driven
by communication
In order to ensure our ability to quickly seize
opportunities amid a changing businessenvironment full of future uncertainty, it isimportant to have a corporate culture thatmakes maximum use of the individual
capabilities of our personnel. Based on thisphilosophy, the Kaga Electronics Group is
working to build an open workplace thatencourages different ways of communication toachieve common goals.

Inventory is a liability
In our earliest days, a lack of ample working
capital forced us to place each order for
products after receiving an order from acustomer. This gave birth to the idea that“inventory is a liability,” which has evolved into acurrently held principle for how we receive andplace orders, a critical feature of the Company.
Responding as quickly as possible to orderinformation has enabled us to build win-win
relationships with customers and suppliers.

People are a finite asset;
companies are perpetual entities
The Kaga Electronics Group continues to tackle
new challenges with a view that there is no end
goal to corporate activities based on thephilosophy that “people are a finite asset;
companies are perpetual entities.” Pursuing
aggressive M&A activities and developing new
products and services that resolve social issues
are some of the initiatives we are undertaking
to drive sustainable growth. We will remaincommitted to pushing the envelope as a Group
as we head toward a century in business.

3

KAGA ELECTRONICS CO.,LTD.

Pursuing Proactive
Global Expansion sincethe 1980s

Achieving Business
Expansion by Swiftly
Adapting to Changes
Having started out as a handyman businessbased in Akihabara, Tokyo, with an officespace of less than 7 m2, we achieved
business expansion thanks to surging
electronics parts demand in the wake of
rapidly growing popularity of CB
transceivers and arcade game Space
Invaders in the 1970s. In 1980, our net sales
exceeded ¥10 billion. Moreover, we becamea supplier of mask ROMs for use in Family
Computer, a mega-hit gaming unit, in 1983,
thus making an entry into the field of gamesoftware for household gaming devices.

In 1981, our TAXAN brand monitors,
developed in-house for use with Apple
computers, achieved considerable sales athome and abroad. Building on this success,we launched our first overseas base in the
United States and, in 1985, establishedanother in the United Kingdom, significantly
accelerating the pace of our overseas
expansion. In 1986, KAGA ELECTRONICS
stock was listed on the Second Section of
the Tokyo Stock Exchange. In the 1990s, webegan proactively penetrating Asianmarkets outside Japan, to this end securing
the first regional foothold in Hong Kong in
1992. In 1995, we entered the Taiwanesemarket, which, in turn, contributed to amajor sales increase. In 1997, our listing on
the Tokyo Stock Exchange was promoted to
the First Section. In 1999, we launched
KAGA (SHENZHEN) ELECTRONICS LTD., ourfirst factory concurrently serving as anoverseas EMS base.

Net sales(Billions of yen)
4,500
4,000

Net sales exceed

¥50

3,500
3,000

Net sales exceed

2,500

billion¥10

The Kaga Electronics Group’s Business Fields

Proactively Securing Overseas EMS
Production Bases and Executing
M&A from the 2000s onward
Entering the 2000s, we expanded our overseas network of EMS production
bases, which had previously been centered in China, by establishing facilities
in Malaysia, Thailand, the Czech Republic, Indonesia, Mexico, Vietnam, Turkey
and India. In Thailand, we eventually built two bases. At the same time, thenumber of our bases in China grew to four. During the course of theseendeavors, our net sales exceeded ¥100 billion in 2001 and ¥250 billion in2006. From 2019 onward, we executed a rapid series of M&As, with KAGA FEI,KAGA EMS TOWADA, EXCEL and Kyokuto Electric made into
Group companies. Having pursued M&As over the
Aiming to achieve
past several years, we have now enteredtarget net sales ofa second growth phase and are
more thanlooking to achieve net sales inexcess of ¥500 billion in the near
Aiming to achieve net
future.
sales in excess of
Net sales exceed

Net sales exceed
Net sales exceed

¥100

¥250

¥400

¥500

billion¥1

billion

1,000

EMS businessbillionbillion

Provides comprehensive solutions supporting thedesign, development and manufacture of products
ranging from semi-finished to finished products.

billion

Stock listed on theSecond Section of theTokyo Stock Exchange

1,500

Acts as a sales agency handling general electronicparts, semiconductors and other offerings forcustomers at home and abroad.

trillion

Promoted to the First
Section of the Tokyo
Stock Exchange

2,000Electronic components businessInformation equipment business

500
0’69 ’70 ’71 ’72 ’73 ’74 ’75 ’76 ’77 ’78 ’79 ’80 ’81 ’82 ’83 ’84 ’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21

202X

Since 1968

From 2000 onward

Sep. 1968 	KAGA ELECTRONICS CO., LTD. founded at 3-8-3 Soto-Kanda, Chiyoda-ku, Tokyo, with paid-in
capital of ¥1 million.
Mar. 1980 Net sales exceed ¥10 billion.
Jul. 1981 TSK ELECTRONICS CORPORATION established in the United States.
Dec. 1985 	Stock registered on the Japan Securities Dealers Association as an over-the-counter company.
TAXAN (UK) LTD. established in the UK.
Dec. 1986 Stock listed on the Second Section of the Tokyo Stock Exchange.

Jun. 2000 KAGA COMPONENTS (MALAYSIA) SDN. BHD. established in Malaysia.
Aug. 2000 KAGA (SHANGHAI) ELECTRONICS CO., LTD. established in China.
Mar. 2001 Net sales exceed ¥100 billion.
Apr. 2002 KAGA ELECTRONICS (THAILAND) COMPANY LIMITED established in Thailand.
Dec. 2003 KAGA ELECTRONICS (USA) INC. established in the United States.
Aug. 2006 KAGA (DALIAN) ELECTRONICS CO., LTD. established in China.
Apr. 2009 KAGA (EUROPE) ELECTRONICS LTD. established in the UK.
		KD TEC s.r.o. established in the Czech Republic.
Mar. 2014 Transferred to current Head Office building (company-owned building).
Jan. 2017 TAXAN MEXICO, S.A. DE C.V. established in Mexico.
Jul. 2017 KAGA ELECTRONICS (VIETNAM) CO.,LTD. established in Vietnam.
Sep. 2018 KAGA ELECTRONICS (INDIA) PRIVATE LIMITED established in India.
Jan. 2019 Fujitsu Electronics Inc. (currently KAGA FEI Co., Ltd.) made into a Group company.
Oct. 2019 	Towada Pioneer Corporation (currently KAGA EMS TOWADA CO., LTD.) made into aGroup company.
Apr. 2020 EXCEL CO., LTD. made into a Group company.
Nov. 2020 Kyokuto Electric Co., Ltd. made into a Group company.

1990–
Mar. 1991
Jun. 1992
Jul. 1994
Feb. 1995
Dec. 1995
Sep. 1997
Jul. 1999

Net sales exceed ¥50 billion.
KAGA (H.K.) ELECTRONICS LIMITED established in Hong Kong.
KAGA (SINGAPORE) ELECTRONICS PTE. LTD. established in Singapore.
KAGA (KOREA) ELECTRONICS CO., LTD. established in the Republic of Korea.
KAGA (TAIWAN) ELECTRONICS CO., LTD. established in Taiwan.
Promoted to the First Section of the Tokyo Stock Exchange.
KAGA (SHENZHEN) ELECTRONICS LTD. established in China.

Supplies PCs and PC peripherals to domestic andoverseas distribution channels while accommodatingproduct needs in the network solutions field.

Other business

Handles the development, manufacture andmarketing of amusement-related hardware andsoftware in addition to the sale of golf supplies andother operations.

Integrated Report 2021

4

Kaga Electronics Group Explained

Our Hard-Earned Business Strengths Coupled with a Solid
Operating Base Encompassing Regions around the Globe
Overview of Our Primary Business
Segments as Defined under the
Medium-Term Management Plan

Strengths Nurtured over the Course of More than 50 Years of Operations

Electronic components: electronicparts and semiconductor business

Strength (1)In this business, we provide a wide rangeof electronics-related components andmaterials that include semiconductors,
general electronic parts, LEDs, sensors
and liquid crystal displays. We leverage
our network of more than 60 companies in
the United States, Europe, Asia and otherparts of the globe to deliver world-classparts and components to customers. Our
exceptional support system enables us tomeet the needs of customers globally.

Comprehensive capability
in the electronics field

Aiming to Win Global Competition as a General Electronics Trading Company

Meeting customer needs in a swift and flexible mannerby taking full advantage of our global EMS production system,
KAGA MICRO SOLUTION Yamagata Site
which encompasses 21 bases in
KAGA MICRO SOLUTION Niigata Site
10 countries
Niigata Sales Office

The strength of the Kaga Electronics Group lies in the broad range of products and services
it handles. We meet a wide variety of needs by providing modules and finished products inaddition to electronics-related components and materials as well as hardware, softwareand systems. Our business covers everything from large-lot consumer goods to small-lot
industrial devices. This comprehensive capability enables us to deliver one-stop services tomeet customer needs with exceptional precision.

 omestic Sales BasesDDomestic Production Bases

Suzaka Sales Office
Hokuriku Sales Office
Matsumoto Sales Office
Kyokuto Electric Tottori Site

The Kaga Electronics Group utilizes
production facilities in China and other partsof Asia as well as in Europe and theAmericas in a production system that allows
us to manufacture in regions that best suit
our customers. In addition to the design anddevelopment of products, we have developed
a total support system that is geared toflexibly meet different demands from highmix, low-volume production and semifinished to finished products. Moreover, ourglobal supplier network enables us topropose optimal alternative parts andmaterials that best suit each customer.

Software

Others

0.7%

4.2%¥2.9 billion

Fukuoka Sales Office¥422.3billion

The Czech Republic
DalianTurkey(Year ended March 31, 2021)

Information equipment

The Kaga Electronics Group carries out thefunctions of a sales agency in providing such
establishments as domestic consumer
electronics mass retailers, camera stores,
general companies and educational institutes
with PCs and PC peripherals made by major
Japanese and overseas brands. In addition, weoffer a one-stop service for network solutions
from the proposal to the construction andmaintenance of local area network (LAN)systems, security systems and eco-friendly
energy systems for corporations andgovernment agencies.

Informationequipment

11.4%

5

KAGA ELECTRONICS CO.,LTD.

Kita Kanto Sales OfficeHamamatsu Sales OfficeNumazu Sales Office

Sales Composition by Segment

Chicago

South
Korea

83.7%

SuzhouHubei
Shanghai
ShenzhenTaiwanHong Kong

MexicoIndonesia

Strength (2)Strength (3)Global network capability

One-stop service capability

We provide peace of mind to customers
and instill confidence through our sales
and production network, which spans 16
countries and regions worldwide, as wellas our global procurement andinformation-gathering competencies that
we have built up over 50 years, whichhave been reinforced by the addition to
the Group of KAGA FEI Co., Ltd. and
EXCEL CO., LTD.

The Kaga Electronics Group, as anindependent general electronics trading
company, has been expanding its businessdomains in accordance with customer
needs. At present, Group companies
worldwide are working together to build a“one-stop service system” that transcends
the boundaries of a trading company andcovers everything from upstream
processes, including planning and designin addition to parts procurement, todownstream maintenance services. By
doing so, we are providing diverse added
value to customers.

BostonSan Jose

Thailand
Vietnam
Malaysia
Singapore¥353.4 billion

OthersIn addition to the planning, manufactureand sale of amusement related equipment
such as arcade amusement machines, theKaga Electronics Group produces
commercials, movies and animated content
as well as original content using advanced
computer graphics technology. Our diverse
business also includes environmentallyfriendly PC reuse and recycling, and theretail and wholesale of golf supplies.

India

Electronic
components¥48.3 billion

Shin Yokohama Sales Office

Nagoya Business Office
Shizuoka Sales Office

Germany

KAGA MICRO SOLUTION
Fukushima Site

KAGA ELECTRONICS Head
Office / Head Office Annex
KAGA MICRO SOLUTIONTokyo Site

Hiroshima Sales Office¥17.5 billion

Consolidated
net sales

Sendai Sales Office

Mito Sales Office
Toride Sales OfficeOsaka Business OfficeElectronic components: EMS business

KAGA EMS TOWADA

Sales bases
Production bases

Alongside KAGA ELECTRONICS, a total of 67 companies, 45 companies in 16 countries
abroad and 22 companies in Japan, comprise the Kaga Electronics Group
Europe

China

Japan

•E
 stablish a circuit board mounting facility
in the Czech Republic, making it a foothold
supporting our European operations•E nter the Turkish market as part of efforts
to strengthen our European operations• Expand transactions with local Chinese companies• Expand transactions with European and U.S.
companies• Expand transactions with Japanese corporations
engaged in product marketing in China• Expand the EMS business• Expand sales of parts kitting• Develop new customers

Americas•S hift our production bases to Mexico from China and Asia
•S trengthen marketing activities, with our sales office inChicago serving as a main business base

ASEAN
•S
 tep up efforts to reach out toJapanese customers and meettheir demand•A lign our regional production
system with a shift from China

Integrated Report 2021

6

Kaga Electronics Group Explained

Value Creation Process
Guided by its corporate philosophy of “Everything we do is for our customers,” the Kaga Electronics Group has achieved
growth by exercising a venturesome spirit that leads it to seek opportunities emerging from changes in society. Under the
Medium-Term Management Plan 2021, the Group is currently pursuing quantitative growth via the electronics trading company
business while expanding its EMS business, which aims to contribute to qualitative growth in profit. Through these two
endeavors, the Group strives to raise its net sales to ¥1 trillion and become a competitive world-class company. This is how wedeliver greater environmental and social value via our business operations.

Medium-Term Management Plan 2021 (2019-2021)

Everything we do isfor our customers

Social issues (materiality)
Growing call for a reduction in the environmental
burden to counter climate change
Across-the-board efforts to accelerateinnovation to empower a future society
Development of a framework to enable diverse
human resources to pursue career successEnhancement of safety, security and comfort indaily life

Deliver greater
environmental andsocial valueCore markets
TargetNet sales of¥500.0 billion

Become “the Japanese industry’s
No. 1 corporate group”

Communications field

Environmental fieldBasic strategy

Expand trading company business to drive
further growth in the EMS business
Increased
profitratio

Increased
sales

Automotive field

Medical andhealthcare field

Opportunities

Reduced significance ofexistence as a trading
company and loss ofcommercial rights

Generation of new
demand and market for
EMS business

Shortage of humanresources and soaring
labor costs

Growing need for­further automation andefficiency

Increased
environmental cost

Growth of energy-­saving and eco markets

Quantitative
expansionof trading company business

Nonfinancial capitalStrengthen nonfinancial capital through M&As
and others to help realize the basic strategy

Driving force propelling
our strategies forward

Intellectual
capitalManufacturing
capitalCustomers

Group employees

Technical staff

Our ownmanufacturing sites

7,826

1,541

21

worldwide

Further M&As andinvestment in
new businesses

Net sales

Enhancement andexpansion ofoverseas businessthrough the EMS business

Human capitalcompanies

KAGA ELECTRONICS CO.,LTD.

Factory automation(FA) field

Social capital

7,500

7

Qualitative
improvement

Medium- to Long-Term
VisionFurther expansion of
the EMS business

Risks and Opportunities
Risks

Medium- to longterm strategy¥1trillion
Aim to become acompetitive worldclass company

Conduct growth investment

Financial capitalStrengthen
nonfinancial capital

Integrated Report 2021

8

Message from the CEO

Latching onto changewith a first-moveradvantage thatleverages ourentrepreneurial spirit

Doing our utmost while listening closely to customers
How will we ride out the trends of modern times? With “Everything we do is for our customers” as our corporate
philosophy, we listen carefully to our customers and do our utmost to solve their problems. We are able to grow by
striving to solve these problems for our customers and launching new businesses.
To help our customers solve their problems, we ask ourselves every day “what can we do to help?” while trying
out new things based on conversations with our customers and doing what we can without saying “no.” As we do so,
it is essential that we strive to be more receptive to and gather information from our customers. If we do this, wewill be able to find the right people as well as information that provides hints to solving problems, expanding ourbusiness opportunities. Needs for products and services can completely transform overnight when the worldchanges, like it did during the pandemic.
Executives and employees are equals when it comes to launching new businesses and proposing ideas that takeIsao Tsukamoto
Founder & CEO

advantage of these opportunities. Employees can raise their hands and work on projects with the attitude of acorporate manager. When I was president, I encouraged everyone to proactively go with the flow of ideas. We worked
together to find the best way forward, fought together and took responsibility together. While there were plenty of
failures along the way, by taking on these challenges, we were able to grow into a Group of more than 60 companies.
At KAGA ELECTRONICS, it is necessary to cultivate a flexible mindset and the ability to act in order to develop
businesses. Furthermore, it is also necessary to have sufficient sales capabilities as well as information andproduction networks able to respond to all of the needs that have emerged during the pandemic, such as

Timing of changes presents opportunities for strong growth

teleworking and online classes.

The world is undergoing significant changes during the COVID-19 pandemic that are, in turn, bringing changes inpeople’s preferences and ways of working. These changes have only accelerated with the introduction of digitaltransformation (DX) and 5G mobile communications systems in Japan and around the world. The timing of thesechanges present opportunities for significant growth at the Kaga Electronics Group.
Founded in 1968, the Kaga Electronics Group has existed for 53 years. Looking back at this half-century of history,

DNA of trying new businesses with open ideas
With no clear end in sight for the pandemic, DX trends and U.S.-China trade friction, the globalization of supply
chains for manufacturers in Japan and around the world has entered a new stage. Given the inevitability of future

there have been a number of crises, such as the oil shock, the 2008 financial crisis, the Great East Japanchanges in industry structures, we must aim to compete on the global stage against international corporate groups

Earthquake and massive flooding in Thailand. The world has changed considerably as a result of each crisis. Even

with annual sales on a scale of ¥2 to ¥3 trillion.

during these challenging times, the Kaga Electronics Group has turned crisis into growth opportunities without
being swept away by the wave of history, thanks to its strong resilience amid change.
Companies are being increasingly expected by society to address a variety of the social issues that we all face. We

The Kaga Electronics Group’s Medium- to Long-Term Vision targets annual net sales of ¥1 trillion while chartinga new growth trajectory for prospering over the next half century. Over the past few years, KAGA FEI Co., Ltd., KAGAEMS TOWADA CO., LTD., and EXCEL CO., LTD. were added to the Kaga Electronics Group. We are committed tointend to do so through SDG management (sustainability) in ways unique to the Kaga Electronics Group, including

achieving this target by creating synergies among Group companies that exceed what is possible as individual

new businesses.

companies, while focusing on our respective fields of excellence.
I look forward to the Kaga Electronics Group growing strongly while continuing with its entrepreneurial spirit of moving
first, its DNA of taking on new business challenges with open ideas and the enthusiasm of each and every employee.

9

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2021

10

Message from the COO

Evolving our earnings
capabilities while steadily
advancing Post-Merger
Integration

Our response to the COVID-19 pandemic

The Kaga Electronics Group has continued to operate safely
during the COVID-19 pandemic by taking countermeasures that
include introducing teleworking and staggered work hours inaccordance with guidance given by the national and local
governments. We have reduced the movement of people bytargeting a 20% employee attendance ratio in our offices during
the state of emergency. Our production bases in Japan have
KAGA ELECTRONICS (parent)
Sales bases(Japan)Ryoichi Kado

OfficeKAGA ELECTRONICS
attendanceGroup companies
ratio

Production
bases(overseas)

Kaga Electronics Group
加賀電子グループ

Achieved a turnaround despite growing
costs arising from a series of M&A■Operating income (millions of yen)
● Operating income margin (%) ● Gross profit margin (%)

12.4 12.7 12.6 12.8

13.7 13.7 13.8

11.5 12.1 10.6
10.3 10.5 10.7 10.3
0.9

0.6

2.0

3.0

3.4

9.6
2.6

10.6 11.3

8.6
2.7

8.3
2.3

11,467

5,106

11

2.5

3.2

12.1

6,362

7,788 6,879 8,119 7,570

million. As the Company’s earnings power has advanced, I
believe we have put together an earnings structure able toreliably generate operating income in excess of ¥10 billion.
Plotting consolidated operating income on the below left
graph, we can see that the gross profit margin worsened fortwo consecutive years after the acquisition of FujitsuElectronics, Inc. (renamed KAGA FEI Co., Ltd.) in the fiscal year
ended March 31, 2019 as this company had not been as
profitable as the parent company, KAGA ELECTRONICS.
However, the gross profit margin then started to improve again
in the fiscal year ended March 31, 2020.
Next, looking at this trend in terms of KAGA ELECTRONICS
on a non-consolidated basis (see the below right graph), notethat the gross profit margin has continued to increase fromaround 12% to 13% ten years ago to 14.5% in the last fiscal
year. The Company has kept the SG&A expense ratio at roughly
10%, recently getting it below that level to 9.99%.
KAGA ELECTRONICS (parent)

Gross profit improved due tocost reduction efforts

加賀電子本体■Operating income (millions of yen)
● Operating income margin (%) ● Gross profit margin (%)● SG&A expense ratio (%)● SG&A expense ratio (%)

14.5
13.7 13.7 13.8 13.6 13.7
12.4 12.7 12.6 12.8
11.5 12.1

0.9

0.6

10.0

10.6 10.3 10.5 10.7 10.3 10.5 10.4
2.0

3.4

3.1

3.3

2.5

3.2

6,362

7,788 6,879 8,119 7,328 7,927

3.0

4.5

11,083

10,0145,106

2,067 1,260

2,067 1,260

2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3

2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3

KAGA ELECTRONICS CO.,LTD.

Second half

Full year

Number of COVID-19 cases

39.1%

46.5%

42.8%

2 employees

46.2%

52.7%

50.5%

14 employeesFirst half
Thailand, Indonesia, Turkey

During the fiscal year, the global economy remained harsh as
the COVID-19 pandemic led to intermittent lockdowns in thefirst half that caused demand to fall and production to halt atsome manufacturers. Against this backdrop, management at
the Kaga Electronics Group prioritized the safety of its
employees in Japan and around the world. This was the second
fiscal year of the three-year Medium-Term Management Plan
2021 (2019-2021) that started in April 2019. Accordingly, theKaga Electronics Group concentrated on further strengthening
sales competitiveness with the aim of expanding the electronic
components business and the electronics manufacturingservices (EMS) business, the two main aspects of its
growth strategy.
As a result, operating income reached a new record high fora second year in a row, growing 14.5% year on year to ¥11,467

First half

Operations suspended due to the COVID-19 pandemic

President & COO

Review of the fiscal year ended March 31, 2021

continued to operate with strict safety measures in place basedon the guidance of national and local governments. Overseas,
however, some of our bases had to suspend operations due tolocal lockdowns early in the first half of the fiscal year. After the
lockdowns were lifted, operations at these plants resumed withsafety measures in place.

Hubei, China

2/1 ~ 3/15*

Suzhou, China

2/1 ~ 2/9*

Shenzhen, China

2/1 ~ 2/13*

Malaysia

3/18 ~ 4/20

Vietnam

4/1 ~ 4/15

India
Czech Republic

Second half

Number of COVID-19 cases

No disruptions

3/25 ~ 5/31
4/7 ~ 4/9

MexicoNo disruptions(China)0 employees(Asia)
0 employees(Europe)
30 employees(Americas)
25 employees

4/1 ~ 5/30

* Second half of the fiscal year ended March 31, 2020

In order to attain its target for net sales of ¥1 trillion in its
medium- to long-term vision, KAGA ELECTRONICS must
follow through on its M&A strategy. I have run a tight ship withprofit-focused management in the execution of this strategy.
As long as KAGA ELECTRONICS’ earnings structure remains
solid, I am confident that the Kaga Electronics Group cansustain profit growth.

Strengthening competitiveness via the
expansion of the electronic components
business and the EMS business, the two main
aspects of our growth strategy
Over the course of the pandemic, the electronics industry, towhich the Kaga Electronics Group belongs, saw demand
related to personal computers grow briskly as teleworking
and online classes rapidly became the norm. With people
staying at home and restricting their movement during the
pandemic, demand also increased for DIY tools and machine
tools. In the first quarter of 2021, however, sales ofautomobiles, which had been sluggish during the lockdowns
around the world, began to recover, leading to robust growth
in automotive-related markets.
Amid this business environment, in the components sales
business, EXCEL CO., LTD., an electronic components trading

Length of suspended operations

company, became a Group company in April 2020, and weworked to share and expand our customers and the products
handled. In the EMS business, Kyokuto Electric Co., Ltd.
became a Group company in November 2020. The plants it has
in Tottori Prefecture were turned into EMS bases for theWestern Japan region. Along with KAGA EMS TOWADA CO.,LTD. in Aomori Prefecture, the Company made these changes
to strengthen the domestic production structure.
Overseas, in December 2020, construction was completed
on a new plant in Hubei Province, the heart of China’s
automobile industry, as a part of our endeavors to expand
production capacity in Japan and around the world.
We also marked progress on the post-merger integration
with KAGA FEI Co., Ltd., which became a Group company inJanuary 2019.
In the fiscal year ended March 31, 2021, we approached ourexisting 124 leading corporate customers with EMS proposals
and won 11 orders from eight companies for prototype
development and mass production. In addition, we aggressively
developed new products and commenced new transactions
with a total of 90 companies. As a result, sales of new products
totaled ¥12.6 billion in the fiscal year ended March 31, 2021,
and we expect sales to total ¥20 billion in the fiscal year ending
March 31, 2022. We are expanding business by focusing oursales activities on both components and EMS.

Integrated Report 2021

12

Establishment of Nomination andCompensation Committee
KAGA ELECTRONICS increased its number of outside
directors from three to four with the approval of a resolution
to this effect at the General Meeting of Shareholders held on
June 29, 2021, with the objective of improving the strategic
nature and objectivity of management by enhancing thesupervisory functions of the Board of Directors with theadvice and criticism of outside directors. With this change,
outside directors now account for more than one-third of thetotal number of directors.
The Nomination and Compensation Committee wasestablished as a voluntary advisory body to the Board of
Directors in June 2021 with the aim of strengthening thesupervisory functions of the Board of Directors andaugmenting corporate governance.
The Nomination and Compensation Committee is chairedby an independent outside director, and outside directors
constitute a majority of the members. Acting in an advisory
capacity to the Board of Directors, the Committee discusses
matters related to the appointment and dismissal of directors
and auditors, matters related to the appointment anddismissal of directors with titles, matters related tocompensation for directors and auditors, and other importantmanagement matters as deemed necessary by the Board of
Directors. Based on such discussion, the Committee provides
advice to the Board of Directors.

Promotion of sustainability management
The Kaga Electronics Group engages in corporate social
responsibility (CSR) activities as a company that aims to help
create an abundant future through electronics. Moreover,with an eye to furthering the sustainable growth of society,
the Group seeks to create new businesses from thestandpoint of solving social issues in the fields of childcare,welfare and nursing care as a part of its contributions toward
the achievement of sustainable development goals (SDGs)
through business activities.
In April 2021, the Company established the SDGs
Committee to advance sustainability management across theentire Group and enhance its approach to CSR and ESG.

I chair the SDGs Committee, which consists of officers incharge of business divisions. Working groups for theenvironment, society and governance are set up under thecommittee to formulate specific policies, measures andtargets for ESG issues, and monitor progress. The committee
reports directly to the president, just like the Management
Meeting and the CSR Promotion Committee. With thecommitment of top management, the committee works
closely with business divisions to continuously tackle SDGs.
In terms of the environment, we aim to participate in RE100
while examining the proactive use of renewable energy at ourbusiness offices inside and outside Japan, with the intentionof contributing to a carbon-free society.
With information disclosure ramping up based onrecommendations by the Task Force on Climate-related
Financial Disclosures (TCFD), the environment working groupis launching initiatives to augment disclosures in preparation
for a declaration of agreement with the TCFD.
In terms of society, the Company is promoting diversity,
including the empowerment of women, while engaging inwork-style reforms and health management.
For governance, the Company will continue abide by theperiodically revised Corporate Governance Code and remain acompany of value to all stakeholders, including shareholders.

In the electronics industry, to which the Kaga Electronics
Group belongs, there have been some supply chain
disruptions, as demonstrated by tighter supply-demandbalances for semiconductors. However, demand for electronic
components is likely to strengthen over the medium to longterm alongside the increasing electrification and intelligenceof automobiles, as seen in trends toward electric vehicles andconnected, autonomous, shared & services and electric(CASE) technologies, while new demand is emerging in the
ICT domain with the rollout of 5G and the increasing
sophistication and complexity of IoT and AI.
Based on this outlook, the Company has compiled thefollowing estimates for the fiscal year ending March 31, 2022,
the final year of its Medium-Term Management Plan 2021,
and is working toward achieving these targets.
After this management plan was created, several
unanticipated events occurred, namely, major suppliers
cancelled their distribution contracts with KAGA FEI Co., Ltd.
(a loss of around ¥100 billion in sales) and the global COVID19 pandemic. The Company still has some ground to cover
before it will reach its target for net sales of ¥500 billion, butwill continue striving toward this target without changing it.
Despite headwinds, our profit-focused approach to
management has been a success, resulting in record-highoperating income for three straight fiscal years, and we arestill aiming for ¥13 billion. We achieved our ROE target one
year earlier in the fiscal year ended March 31, 2021. We willcontinue to manage operations so that ROE stays above 8%
and surpasses the cost of shareholders’ equity* in the fiscal
year ending March 31, 2022.

Kaga Electronics Group’s businesses and SDG targets

Outlook for the fiscal year ending March 31, 2022
New businesses

External cooperation

Helicopter
businesses

Medical equipment
business

Venture investments

Industry-academia
collaboration

Disaster prevention
applications forgovernment agencies

CT / mammography

Investments in companies
that support SDGs

SDG contribution themes

Aim for a sustainable society
Components
business

EMS businessEncourage development of
SDG applications

Encourage development of
SDG applications

13

KAGA ELECTRONICS CO.,LTD.

* The cost of shareholders’ equity: 7.6%
① Risk-free rate
0.02% (Five-year average yields on 10-year JGBs)② Market risk premium 6.3% (TOPIX yields)③ß
1.2(Five years/weekly)

Based on its corporate philosophy “everything we do is forour customers,” KAGA ELECTRONICS will contribute to therealization of a sustainable society by striking a balance
between solving social issues and sustaining growth as acorporation through its business activities.

Earnings forecasts for the fiscal year ending March 31, 2022

Finished products
business

Recycling business

Sale of PCs for educational
institutions

Reuse and recycling of PCs

Conventional businesses

In the fiscal year ending March 31, 2022, the impact on theworld economy exerted by the pandemic, including variants of
COVID-19, is a lingering concern. Although economic activity
has gradually returned to normal as the number of people
receiving vaccines increases around the world, there is a riskthat variants will spark another surge in cases. As such, theoutlook for economies in Japan and other countries isclouded with uncertainty.

Results for the
fiscal year ended
March 31, 2021

Forecasts for the
fiscal year ending
March 31, 2022

Medium-Term
Management Plan
2021 targets

Year-on-yearchangeNet sales (millions of yen)

422,365

470,000

11.3%

500,000

Operating income (millions of yen)

11,467

13,00013.4%

13,000Ordinary income (millions of yen)

11,241

12,000

6.7%—

Profit attributable to owners of the parent(millions of yen)

11,3998,000-29.8%—EPS (yen)415.07291.20

—

—

ROE

13.5%

8.5%

-5.0pt

8.0% or more

Integrated Report 2021

14

Message from the CFO

Record-High Operating Income for
Two Consecutive Fiscal Years
Despite Pandemic
Eiji Kawamura
Managing Director, Head of Administration Headquarters

Review of the fiscal year ended March 31, 2021
In the fiscal year ended March 31, 2021, net sales declined
4.8% year on year to ¥422,365 million. Although the inclusionof EXCEL CO., LTD. as a Group company boosted sales, net
sales ended the year down due to the termination of
distribution agreements between KAGA FEI Co., Ltd. and its
main business partners, such as Cypress Semiconductor
Corporation. Excluding this special factor, net sales showed asolid bounce back from the effects of the pandemic. Bothoperating income and ordinary income beat earnings
estimates issued on February 4, 2021, reaching record-highlevels for a second straight year. Moreover, due to the postingof a net ¥3,230 million in extraordinary income as a result of a¥7,963 million gain on negative goodwill associated with theacquisition of EXCEL CO., LTD., profit attributable to ownersof the parent grew considerably to ¥11,399 million despite

Net sales (millions of yen)
売上高443,615+866

impairment losses on recently built EMS production facilities
in India and Mexico.
Earnings in the fiscal year ended March 31, 2021 are broken
down by company as follows. Below, KAGA ELECTRONICS
includes all Group companies except for KAGA FEI Co., Ltd.
and EXCEL CO., LTD.
Net sales at KAGA ELECTRONICS increased ¥886 million
despite the pandemic. The addition of EXCEL CO., LTD. to thescope of the consolidation boosted net sales ¥46,535 million,
but this did not fully offset the ¥68,651 million dent in sales
that resulted from the loss of major distribution contracts at
KAGA FEI Co., Ltd. For the Group as a whole, net sales
decreased ¥21,249 million.
Gross profit for the Group increased ¥920 million, reflecting
growth of ¥1,974 million at KAGA ELECTRONICS, a decline of¥3.4 billion at KAGA FEI Co., Ltd., and a contribution of ¥2,365
million from EXCEL CO., LTD.

Gross profit (millions of yen) / Gross profit margin
売上総利益／売上総利益率-68,651

422,365+46,535 -21,249+1,974-3,40047,016+2,36547,936+920

The gross profit margin improved from 13.7% to 14.5% at
KAGA ELECTRONICS and from 6.8% to 7.8% at KAGA FEI Co.,
Ltd. With the addition of EXCEL CO., LTD.’s margin of 5.1%,
the average gross profit margin for the entire Group
increased from 10.6% to 11.3%. EXCEL CO., LTD.’s main
business is low-margin LCDs, but margins in its domestic
operations have been improving markedly thanks to its
emphasis on low-cost operations.
Turning to SG&A expenses, KAGA ELECTRONICS and KAGAFEI Co., Ltd. reduced costs, resulting in reductions in SG&A
expenses amounting to ¥1,011 million at KAGA ELECTRONICSand ¥1,750 million at KAGA FEI Co., Ltd. Even including EXCEL
CO., LTD.’s ¥2,230 million gain of in SG&A expenses, the Group
total still decreased by ¥532 million. At KAGA ELECTRONICS,
SG&A expenses include increases associated with KAGA EMSTOWADA CO., LTD. and Kyokuto Electric Co., Ltd., so theamount noted for SG&A expense reductions is even larger ifthese two companies’ figures are excluded.
Operating income increased ¥3,155 million at KAGAELECTRONICS and decreased ¥1,723 million at KAGA FEI Co.,
Ltd. Meanwhile, EXCEL CO., LTD contributed ¥6 million tooperating income. Thus, overall Group operating income rose
¥1,452 million to ¥11,467 million. The operating income margin
improved from 3.3% to 4.5% at KAGA ELECTRONICS, boosting
the entire Group’s margin from 2.3% to 2.7%.
Looking at our financial condition, total liabilities increased¥20,553 million to ¥141,942 million. Inventories expanded¥6,040 million to ¥37,948 million, and the inventory turnoverrate worsened from 26.3 days to 32.8 days. The receivables
turnover period increased from 75.2 days to 93.7 days, andthe payables turnover period increased from 64.6 days to 79.8
days owing to the inclusion of EXCEL CO., LTD. in the scopeof consolidation.
Since the Company’s founding, the Kagaism that “inventory
is a liability” has persevered, and reducing the inventory

13.7%

6.8%
2020/3KAGA
ELECTRONICS

KAGA FEI

EXCEL

2021/310.6%

2020/3

14.5%

KAGA
ELECTRONICS

2021/337,001
10.4%

8.3% 10.0%
5.8%-1,750+2,23036,469+3,155-532

10,014
3.3%

KAGA
ELECTRONICS

KAGA FEI

2021/3EXCEL

2021/3EXCEL+62021/32020/3

11,467+1,452KAGA ELECTRONICS CO.,LTD.

63.3
49.9

75.2
64.6
26.3

KAGA FEI

79.8
32.8

37,94831,908EXCEL

Reference: Breakdown of net sales from primary segments as
defined under Medium-Term Management Plan 2021 (millions of yen)
Other business
CSI business
EMS business

443,615 13,902 3%
43,466 10%
93,340 21%+6,040Electronic
components 292,905 66%
business

0.0%
2021/3422,365

12,057 3%
48,389 11%99,599 24%

262,318 62%2021/3

Note: G ross profit and operating income figures are shown before consolidated adjustments among the three companies. Consolidated adjustments are –¥19 million for gross profit
and +¥13 million for operating income.

15

77.0

2.7%
0.3%

KAGA
ELECTRONICS■ Inventories (millions of yen)
● Receivables turnover period (days) ● Payables turnover period (days) ● Inventory turnover period (days)

40,026

2.3%

4.8%

棚卸資産
（百万円）
／在庫回転日数（日）（日）／仕入債務回転日数（日）Receivables
turnoverperiod/／売上債権回転日数
Payables turnover
period

93.7

4.5%

1.0%
2020/3-1,723

By segment, net sales decreased by 10.4% to ¥262,318 million
in the electronic components business, increased 6.7% to¥99,599 million in the EMS business, increased 11.3% to¥48,389 million in the CSI business, and decreased 13.3% to¥12,057 million in the other business.
In the EMS business, some overseas production bases were
impacted by lockdowns during the pandemic, but bottomed out
in the first quarter. Demand sharply rebounded, especially for
automotive and industrial equipment applications, frommidway through the fiscal year, driven by a recovery in China,
which was quick to reopen its economy.
We already have an idea of how automotive-related orders
will trend over the next few years and expect automotiverelated demand to double from its current level in three years,
growing to account for over 50% of the total. If we depend too
much on the automobile industry, however, we will be exposed
to emerging trends, so we are aiming for growth in otherareas, including industrial equipment and medical equipment
applications, which have strong growth potential.
In the automotive field, demand for AC inverters has been
firm, and the LED lighting unit sales volume has increased asa result of the expansion of our production bases in Mexico andIndia. With the addition of KAGA FEI Co., Ltd., which is strong
in the microcomputer and system on a chip (SoC) fields, we
anticipate growth in the EMS business now that we canapproach customers from the development stage.

Inventory / Inventory turnover period

5.1%

Operating income (millions of yen) / Operating income margin
売上総利益／売上総利益率

8.6%
7.5%

KAGA FEI

Steady expansion of EMS business

11.3%

2021/3

SG&A expenses (millions of yen) / SG&A expense ratio
販管費／販管費率-1,011

7.8%

turnover period as much as possible has remained one of ourunchanging management issues. Our targets are 15 days forthe components business and 45 days for the EMS business as
appropriate inventory turnover periods, and we will endeavor toreach these targets.

2019/32020/32021/32020/32021/3Integrated Report 2021

16

Framework and Implementation of Corporate Value Creation

Special Feature

Driving Growth Toward Becoming
The Kaga Electronics Group’s EMS

No.1 in Japan
Business

Based on the conviction that key to realizing sustained growth is being a company that benefits society around the world, theKaga Electronics Group is taking on the challenge of developing the capability to win the competition against its global peers

Leveraging our ability
to adapt to change,
gained through trading
company operations

boasting trillions of yen in net sales, backed by its Medium- to Long-Term Vision and Medium-Term Management Plan 2021,
which is aimed at forging a corporate group that is Japan’s No.1 corporate group in the industry.

The Kaga Electronics Group’s Growth Drivers
By leveraging its ability to quickly detect changes in each era

mounting of electronic components onto printed circuitamid a rapidly and constantly changing electronics industry,boards for customers.

the Kaga Electronics Group has enjoyed continuous growth.

The EMS business flexibly addresses needs for high-mix,

In line with our corporate philosophy, “everything we do is for

low-volume production, from the design and development ofour customers,” we have developed a business involving the

products to the SMT mounting of electronic components on“kitting” of multiple products for delivery to customers,

printed circuit boards and assembly of final products. The

which is one step beyond transactions involving individualCompany has built a supply chain that is the opposite ofproducts. In another business addressing customer needs,

mega-EMS firms that maintain large-scale facilities for

we have evolved a value-added EMS business for the

supplying high volumes of undifferentiated products.

Growth expectations for the Kaga
Electronics Group’s EMS business
Growth scenarios for the EMS business

Materials
procurement

Logistics
anddistribution

Production and total support

11%

More than 60 affiliated companies

Consumer electronics /communications,
other

10%

Latest information

Healthcare
equipment

10%

19%
9%
12%

Industrial
machinery

14%
23%

17

Parts andmaterials
selection

Selection of parts and materials
that satisfy requirements

Automotive
parts

KAGA ELECTRONICS CO.,LTD.

Production
requestCompatibility with various applications
and high-mix, low-volume production at
21 production bases on 10 countries,
starting with Japan and including China,
Asia, Europe and the Americas

Advantage (2)Flexible production structure able to
make 3,000 models per month inunits of 100

Local production for local consumption
model with strengths in high reliability
and high-mix, low-volume production

Japanese EMS
vs.
Taiwanese andAsian EMS

European and
U.S. vendors

DesignDevelopment
coordination

Production
Parts andmaterials
supplyOur own plants inJapan
Our own plants
overseas

Partner plants inJapanPartner plants
overseas

Delivery of
products

Larger volumes

Finished product assembly ismain businessDomains of strength for megaEMS firms in Taiwan and Asia
Foxconn, Pegatron,
Flextronics, etc.

Japanese vendors

25%

Target for fiscal
year ending
March 31, 2022

Strength (2)Customers

Parts selection

Asian vendors

23%
Results for fiscal
year ended
March 31, 2019around the world

14%

Air conditioners 20%

Parts selection

2,000 vendors

Proposealternative
products

The flexibility of an independent general
trading company, the ability to combine
and process knowledge derived fromabundant experience as well as toprocure optimal products to meetcustomer requirements

Advantage (1)Strength (3)Built a system from product design todevelopment, one-stop solutions forcircuit board mounting andhalf-finished products to production offinished products

Domains of strength forJapanese EMS
SIIX, UMC,
KAGA ELECTRONICS, etc.
Circuit board mounting is
main business

Smaller volumes

Emphasis on costcompetitiveness¥89.4 billion

10%

More thanGatheringof latest
information

Strength (1)Emphasis onhigh reliability

FEI / M&A

Officeequipment

Independence and Competitive Advantages ofKaga Electronics Group’s EMS Business

EMS business with strengths accumulated over more than 50 years¥140.0 billion

1.5 times

Inventory isa liability

Creation of amulti-faceted,dispersed customer
base that does notdepend on
one industry

KAGA ELECTRONICS

Convenience
store-type EMS

Convenience-type
EMS• Low initial investment (leased land and buildings withstandardized interiors)• Capable of high-mix, low-volume production• A model based on local production for local consumption

Generalmerchandise
store-type EMS

Competition with major Japanese EMS firms

vs.
General merchandise
store-type EMS

a• Large-scale investment• Export-oriented model• High-volume production

Integrated Report 2021

18

Framework and Implementation of Corporate Value Creation

Special Feature

Post-merger integration of acquired companies

Earnings Growth Drivers, EMS Business

KAGA FEI Co., Ltd.

KAGA ELECTRONICS aims to improve profitability and develop a value-added EMS business, its area of expertise, whilequantitatively expanding revenue and profits from trading company operations by leveraging the products and customer basesof KAGA FEI Co., Ltd., KAGA EMS TOWADA CO., LTD., EXCEL CO., LTD. and Kyokuto Electric Company Limited, which wereadded to the Group as a part of proactive M&A over the past few years.
Reference: EMS net sales / sales ratio

Reference: EMS segment profit / segment profit margin■ Net sales (millions of yen) ● Sales ratio (%)■ Segment profit (millions of yen) ● Segment profit margin (%)

89,481

93,34099,599

5,539

4,015

30.6
21.0

23.6

2,667
3.0

5.6

4.3

In January 2019, Fujitsu Electronics, Inc., previously asemiconductor trading company in the Fujitsu Group, was added
to the Kaga Electronics Group and renamed KAGA FEI Co., Ltd.
(KFEI). We aim to expand market share in the electronic
components and semiconductors business via the mutual
utilization of the two companies’ sales channels inside and
EMS Initiatives

Received orders for 11 development, prototyping and mass production projects from eight companies, including automobile equipment
makers and electrical equipment makers (124 companies / new visitations 74 companies / negotiations underway)
Key points

2020/3

2019/32021/3• Set up the EMS/E2MS Business Department, increase acquired projects year on year
• Mass production projects collaborate with EMS plants of Kaga Electronics Group

Cross-selling initiatives
Expanding sales of KAGA ELECTRONICS’ best products to major leading customers
Key points

2019/3outside Japan as well as of products and materials handled.
Furthermore, we aim for inorganic growth in the EMS businessby proposing solutions to the broad customer base of KFEI,
which excels in the automotive and communications fields, theuse of the Kaga Electronics Group’s global EMS bases.

2020/32021/3Major negotiations are under way in various fields, including automotive solutions, network solutions,systems equipment, infrastructure equipment and home appliances

New products and materials initiatives
Expand products and services in wide-ranging fields, including semiconductors, electronic components and unit modules

Key Issues for Growing the EMS Business
Expand production capacity

Strengths

Purpose of recent M&A andanticipated synergies• Independent electronics
general trading company• Global network capabilities• One-stop service
capabilities

Opportunities• Growth in demand in the communications(IoT), automotive and other markets thatare deeply associated with semiconductors• Accelerated restructuring of domestic
semiconductor trading companies

Reinforce engineering
capabilities
Risks• Higher labor costs in China, Japanesecompanies returning production to Japandue to U.S.-China trade friction• Supply capacity unable to keep up with
rapid market growth

KAGA FEI Co., Ltd. (formerly
Fujitsu Electronics)
becomes a Group company
October 2019

A new factory in Fukushima
initiates operations

The second factory inThailand initiates operations• Shortages of proprietary
technologies and products

November 2020

Kyokuto Electric Co., Ltd.
becomes a Group company

April 2020

Key points

The competitiveness of the EMS business is
significantly strengthened

Automotive: Start of mass production of electrical equipment substrates for Japanese Tier 1 firms (July 2020)
Mass production orders for electrical equipment substrates for Japanese Tier 1 firms (from November 2021)
Office automation equipment: M ass production orders for electrical equipment substrates for major Japanese officeequipment makers (2021 onward)
Electrical equipment: Acquisition of certified plant qualifications from major Japanese electrical equipment makers

Medical equipment: Subcontracting of sensor production for Japanese medical equipment makers (December 2020 onward)
Subcontracting of unit production for Japanese medical equipment makers (May 2022 onward)

Initiatives as EMS Mother Plant

Key points

KAGA ELECTRONICS CO.,LTD.

position against our EMS rivals in the growth fields of automotive
equipment and medical equipment, areas of focus for the Kaga
Electronics Group.
Positioning KAGA EMS TOWADA CO., LTD. as a mother plantfor circuit board mounting, we will deepen collaboration withoverseas bases and move toward overall optimization.

Acquisition of new customers: Independent development

EXCEL CO., LTD. becomes a Group
company

19

Restructuring of sales bases (overseas)• Merger of KAGA ELECTRONICS’ U.S. sales company with KFEI’s
U.S. sales company (January 2021)• Merger of KAGA ELECTRONICS’ South Korean sales company with
KFEI’s South Korean sales company (September 2021)

KAGA EMS TOWADA CO., LTD.

Key points

October 2019

KAGA ELECTRONICS develops production facilities throughjoint ventures with Chinese companies

Restructuring of sales bases (Japan) Fiscal year ending March 31, 2022
• Transfer of KFEI’s Nagoya Office operations to KAGAELECTRONICS’ Nagoya Business Office (September 2019)• Merger of KFEI’s Hiroshima Office (closed) with KAGAELECTRONICS’ Kansai Business Office (December 2019)• Merger of KFEI’s Nagaoka Business Office (closed) with KAGAELECTRONICS’ Niigata Business Office (February 2020)• Transfer of KFEI’s Osaka Office operations to KAGA ELECTRONICS’
Kansai Business Office (December 2020)

Acquisition of new customers: Collaboration with KAGA ELECTRONICS

October 2019

December 2019

New products handled for 90 companies (total), forecast sales of about ¥20 billion for the fiscal year ending
March 31, 2022 (vs. ¥12.6 billion in the fiscal year ended March 31, 2021)

In October 2019, Pioneer’s manufacturing subsidiary (Towada
Pioneer) became a Kaga Electronics Group company, and was
renamed KAGA EMS TOWADA CO., LTD. By sharing tangible andintangible resources, such as KAGA EMS TOWADA CO., LTD.’s
excellent manufacturing personnel and abundant production
experience, manufacturing facilities, tool fabrication and quality
assurance system, we aim to establish a dominant competitive

January 2019

KAGA EMS TOWADA CO., LTD. (formerly Towada Pioneer)
becomes a Group company

IssuesEMS• Acquire business scale tosurvive globally• Shortages of manufacturingpersonnel and global
personnel due to faster
growthStrengthen manufacturing
capabilities

Key points• In-house development of production IT tools (management software, development of facilities at Group production bases)• Share standardized know-how about production• Support for overseas production bases, development of personnel for overseas assignments• Accelerate training of personnel in quality management and production technology• Advance IT from a manufacturing perspective (quality management, materials, plant administration, accounting)Integrated Report 2021

20

Framework and Implementation of Corporate Value Creation

Framework and Implementation of Corporate Value Creation

Special Feature

One More Strength

The Kaga Electronics Group’s One-Stop Solutions
EXCEL CO., LTD.
In January 2020, EXCEL CO., LTD., an electronic components
trading company strong in LCD and other display devices, wasadded to the Kaga Electronics Group. The purpose of thisacquisition was to expand market share in the electronic
components business, expand scale in the EMS business andacquire new businesses.

to issues that meet its customers’ requirements, which have evolved over time. Today, operating in the four business fields ofelectronic parts and semiconductors, EMS, information equipment and new business, KAGA ELECTRONICS has a structure for

New business initiatives

delivering products to its customers in the regions where they are needed through its network of suppliers and production plants• Increase sales of photocatalytic disinfection and deodorization equipment made by Kaltech Corporation• Expand sales of EV buses made by AlfaBus in China
Key points

Since its founding in 1968 as an independent electronics trading company, the Kaga Electronics Group has provided optimal solutions

spanning North America, Europe and Asia. In order to respond to customer requests more quickly and flexibly, KAGA ELECTRONICS

EV buses: Two buses introduced in the fiscal year ended March 31, 2021, orders received for two buses in the fiscal year
ending March 31, 2022

supports its customers’ business development through a one-stop support structure offering everything from planning consultation
to engineering development, the contracting of high-mix, low-volume production for both semi-finished and finished products, andfrom sales to after-sales services, leveraging the specializations of Group companies while collaborating together.

Cross-selling initiatives
Established Group Synergy Promotion Office to strengthen collaboration. Special Sales Marketing Division set up to expand handling ofproducts other than electronic components.

Restructuring of sales bases (Japan)

Restructuring of sales bases (overseas)•T ransfer of head office to KAGA ELECTRONICS’ head office (March 2021)• Transfer of Nagoya Business Office to KAGA ELECTRONICS’
Nagoya Business Office (April 2021)• Examining review of other domestic sales bases• Singapore office to be liquidated and transferred to KAGA(SINGAPORE) ELECTRONICS PTE. LTD. (December 2020)• Examining review of other overseas bases

In addition to contract production, the Kaga Electronics Group’s strengths enable it to provide one-stop
services covering sales through after-sales support
Planning,
development
and design

Kyokuto Electric Co., Ltd.
In November 2020, Kyokuto Electric Company Limited, withwhich we had EMS transactions associated with vehiclemounted devices and signed a sponsor agreement for civil
rehabilitation support, was added to the Kaga Electronics Group.
An electrical equipment maker that also does some EMS,
Kyokuto Electric manufactures breakers and earth-leakage

Partsprocurement
and kitting

EMS andcontract
production

Support andafter-sales
services

Sales and
distribution

circuit breakers. It is a top manufacturer with market sharesranging from 75%-100% in Japan in areas that include earthleakage protection plugs, earth-leakage protection relays,
compact earth-leakage circuit breakers and direct current
switches. It became a consolidated subsidiary after spinning off
its China business due to earnings instability.

Purpose of acquisitions• Ensure a continuous supply of products to the Company’s automotive EMS customers• Build EMS bases in western Japan in response to manufacturers returning production to Japan• Contribute to Group earnings by increasing the competitiveness of the Company’s exclusive products
Key points

With KAGA EMS TOWADA CO., LTD.’s bases handling EMS operations positioned in eastern Japan and the Company’s
Tottori plant serving western Japan, we have in place a structure able to broadly address customer needs for returning
production to Japan

Reference: Comparison of global EMS structure to those of rival companies
Overseas, the Kaga Electronics Group’s EMS bases are in four
locations in Hong Kong and China, six locations in the ASEAN
region, two locations in The Czech Republic and Turkey in Europe,and one location in Mexico in the Americas. Recently, an EMS
base was established in India. In Japan, we maintain one EMS

Japan
China

ASEAN region / Asia

Americas
EuropeShenzhen
Dongguan
Hubei
SuzhouShanghaiThailandIndonesia
Malaysia
Vietnam
India
Philippines
Korea
MexicoThe Czech RepublicTurkeySlovakia
Hungarybase each in Yamagata, Niigata, Saitama, Fukushima and Aomori
in addition to operating three such bases in Tottori. The Kaga
Electronics Group has a total of 21 plants around the world, and ispoised to grow further as a global EMS provider.

Kaga Electronics

Company A

Company B

Company C

21 bases in 10 countries

12 bases in 8 countries

8 bases in 4 countries

4 bases in 3 countries

×8

×4

KAGA DEVICES CO., LTD.

KAGA MICRO SOLUTION CO., LTD.
SANKOH ENGINEERING
CO., LTD.

KAGA SOLUTION NETWORK CO., LTD.
KAGA AMUSEMENT
CO., LTD.

AD DEVICE CO., LTD.

DIGITAL MEDIA LAB., INC.

KAGA TECH CO., LTD.

KAGA AMUSEMENT CO., LTD.
KAGA SPORTS CO., LTD.

EXCEL CO., LTD.
KAGA EMS TOWADA CO., LTD. /Kyokuto Electric Co., Ltd.
KAGA FEI Co., Ltd.
KAGA ELECTRONICS (USA) INC.

×2
×2
×2

KAGA TECHNO SERVICE
CO., LTD.

KAGA ELECTRONICS

×2
×2
×2

KAGA (DALIAN)
ELECTRONICS CO., LTD.

TAXAN MEXICO, S.A.
DE C.V.

KAGA (TAIWAN)
ELECTRONICS CO., LTD.

KAGA COMPONENTS(MALAYSIA) SDN.BHD

KAGA (SHANGHAI) ELECTRONICS CO., LTD. /KAGA (H.K.) ELECTRONICS LIMITEDKAGA ELECTRONICS (THAILAND) COMPANY LIMITED /KAGA ELECTRONICS (VIETNAM) CO., LTD.
KAGA (SINGAPORE)
ELECTRONICS PTE. LTD.

KAGA ELECTRONICS
INDIA PRIVATE LIMITEDKD TEC S.R.O. / KD TEC TURKEY ELEKTRONIK* Research by Kaga Electronics

21

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2021

22

Overview of FY2021/3 Results

Overview of FY2021/3 Results

Financial Highlights

Outline of Business Segments

Net sales (millions of yen)

Operating income (millions of yen)

Profit attributable to owners of theparent / Earnings per share■ Profit attributable to owners of the parent (millions of yen)
■ Earnings per share (yen)11,467422,365

11,399415.07415.07

10,014

443,6158,119292,779

83.7%

Electronic components

2021/38,014
6,975
292.076,490
5,852
249.43 236.58
213.21

7,570

6,879

Proportion of
consolidated
net sales

235,921
227,209

Business description
2017/3 2018/3 2019/3 2020/3 2021/3

2017/3 2018/3 2019/3 2020/3 2021/3

2017/3 2018/3 2019/3 2020/3 2021/3

Development, manufacture and sale of semiconductors, general electronic
components and other products, EMS, and other activities

Net sales (millions of yen)Segment income (millions of yen)

Down

Up

6.4%

377,587

Review of FY2021/3 performance
Return on equity (ROE) (%)

Cash flows from operating activities /Free cash flow
■ Cash flows from operating activities (millions of yen)
■ Free cash flow (millions of yen)

13.5
10.9

22,40610.9
9.5

Equity ratio (%)

52.4

18,754
7.6

10,746 10,077
10,487
5,904

54.8

37.7

9,999
7,5457,545
7,545

38.4

Segment performance was buoyed by significant growth in PC demand on theback of the popularization of remote working and online learning as ways tocounter the COVID-19 pandemic in addition to robust showings by DIY-related
tools and machining equipment due to ever stronger demand among thosestaying at home. However, the termination of distribution agreements between
KAGA FEI and its main business partners, including Cypress Semiconductor
Corporation, exerted a negative impact. As a result, net sales decreased
6.4% year on year to ¥353,454 million, while segment income was up 8.6% to¥8,151 million.

2017/3 2018/3 2019/3 2020/3 2021/3

Software

OthersNorth America

Others

0.7%

4.2%

5.4%

3.2%

¥17,589 billion¥22,698 million

Opportunities

Risks• Increasingly high performance ofsmartphones with the full
introduction of 5G and the expansionof the data center market• Decline in demand and greater
restrictions on economic activity
due to the COVID-19 pandemic

Electronic parts
business

In April 2020, EXCEL became a Group
company, with its revenues contributing
to growth in net sales. Moreover, theGroup was successful in seizing
opportunities arising from the rapid
recovery in demand that began in thesecond half in a broad range of sectors.
Nevertheless, the cancellation of sales
agency contracts between KAGA FEI and
its main business partners exerted anegative impact, causing net sales todecline from the previous fiscal year.

• Progress in the application ofelectronic components and AI incars in line with the trend toward
CASE (Connected, Autonomous,
Shared & Services, Electric)• Loss of commercial rights due
to changes in commercial
distribution by customers
and suppliers• Constantly solid showings ofelectronic components due to the
popularization of remote working
and stronger demand among people
staying at home

• Shortage of management-level
human resources both in Japanand overseas

EMS business

Amid the COVID-19 pandemic and theresulting lockdowns enforced in countries
around the globe, a number of overseas
production bases run by the Group and its
customers were forced to temporarilysuspend operations. However, the impactof these negative factors began tapering
off in the first quarter. Furthermore, theGroup has benefitted from a rapid
recovery in demand for such products asvehicle-mounted and industrial devices
from the second half onward as
consumption recovered from stagnationin such fields as automobiles. As a result,net sales increased year on year.

¥13,622billion

Net sales¥422,365

Net sales¥422,365

million2021/323

million2021/3

Information equipment

Electronic components

Asia

Japan

11.4%

83.7%

34.5%

56.9%

¥48,389 million

KAGA ELECTRONICS CO.,LTD.

¥353,454 million

2021/3Business overview
2017/3 2018/3 2019/3 2020/3 2021/3

Net sales by region and composition¥2,932 million

2020/3

8,151

Business overview and risks / opportunities-8,408Net sales by segment and composition

2021/3

7,503

35.8

-1,5472017/3 2018/3 2019/3 2020/3 2021/3

2020/3

353,454

8.6%¥145,804 million¥240,240 million• Growth of new business combining
the IoT with AI• Increase in the number of fablesscompanies and rising demandfor outsourcing• Diluted significance of trading
company business under aglobal economy• Suspension of factory operations
due to earthquake or otherdisaster, the spread of infectious
diseases, and external politicaland economic factors• Growing need for further automationand efficiency

Integrated Report 2021

24

Proportion of
consolidated
net sales

Proportion of
consolidated
net sales

11.4%

Information equipment

2021/3Business description
Sale of PCs, PC peripherals, home electric appliances, photographic andimaging products, and finished products such as original goods

Net sales (millions of yen)Segment income (millions of yen)

Up

Up

11.3%

43,466

Review of FY2021/3 performance

45.3%

48,3892,482

2020/32021/32020/32021/3Business description
Production of computer graphics, planning and development of amusement
products, and other activities
Review of FY2021/3 performance

1,707

Sales of PCs, PC peripherals and security software remained firm. As a result,net sales increased 11.3% year on year to ¥48,389 million, and segment
income was up 45.3% to ¥2,482 million.

0.7%

Software2021/3

Segment performance remained firm thanks mainly to growth in orders
received for such projects as the production of animated CG content and thedevelopment of gaming software along with the acceleration of customers’
ordering schedules with regard to such projects. This trend was attributable to
growing consumer demand arising from the adoption of stay-at-homelifestyles. As a result, net sales increased 5.5% year on year to ¥2,932 million,
and segment income was up 11.4% to ¥263 million.

Net sales (millions of yen)Segment income (millions of yen)

Up

Up

5.5%

11.4%

2,932

2,778

263

236

2020/32021/32020/32021/3Business overview and risks / opportunities

Informationequipment

Business overview

Opportunities

Risks

Sales of PCs, PC peripherals andsecurity software increased due to thegrowing popularization of remote
working among corporations along witha shift to online classes at schools
around the nation. In addition, sales
were firm for thermographic
temperature measurement devices, aswere sales of sterilization anddeodorization equipment with antiviralfunctions, on the back of robust
corporate need for countermeasuresagainst the COVID-19 pandemic.

• Increased demand for PCs and PC
peripherals as the number of people
teleworking grows•L oss of commercial rights andproduct procurement routes due
to changes in the distribution
policy of buyers and suppliers•H eightened demand in the field of
education due to progress in the
Global and Innovation Gateway for
All (GIGA) school concept• Intensifying competition due tolower price and more newentrants

2021/3Business description
Repair and provision of support for electronic equipment, manufacture andsale of amusement equipment, sale of sports goods, and other activities

Countering the COVID-19 pandemic via collaboration with Kaltech Corporation

TURNED K is a piece of equipment capable of sterilization and deodorization developed by Kaltech
Corporation. Thanks to Kaltech’s proprietary photocatalyst technology, the unit boasts world-leading
performance in terms of sterilization and deodorization, with filters not only capable of removing
airborne viruses and malodorous components from the air in indoor spaces but requiring no
replacement. Kaltech and Nihon University School of Medicine conducted the performance verificationof similar units incorporating the former’s photocatalyst technology with the cooperation of RIKEN. As
a result, the technology was found to have decomposed 99.9% of the COVID-19 virus in the sample.
Kaltech products have thus proven effective in countering the spread of COVID-19.
As our Group company EXCEL holds an equity stake in Kaltech, we are acting in collaboration withthis firm in the marketing of TURNED K and the procurement of components to support its
manufacturing. In this way, we strive contribute to the prevention of COVID-19 infection.

KAGA ELECTRONICS CO.,LTD.

4.2%

Others•E xpansion of market demand for
antiviral products

TOPICS

25

Proportion of
consolidated
net sales

Net sales (millions of yen)Segment income (millions of yen)

Down

Up

11.1%

19,781

Review of FY2021/3 performance
Despite the robust performance of the PC and PC peripheral recycling
business, sales of gaming equipment for the amusement industry werestagnant, as were sales of golf supplies, because of the voluntary suspensionof operations at major commercial facilities in the face of the COVID-19
pandemic. As a result, net sales decreased 11.1% year on year to ¥17,589
million, while segment income was up 4.9% to ¥474 million.

2020/3

4.9%

17,589452

474

2021/32020/32021/3

TURNED K (fixed type)

Integrated Report 2021

26

ESG Information

Corporate GovernanceDirectors and Auditors
As of June 29, 2021

Outside Director

Outside Director

1963 Joined Toyota Motor Co., Ltd.
­(currently Toyota Motor Corporation)
2001 Executive Vice President andRepresentative Director
2002 President of Osaka Toyopet Co., Ltd.
(currently Osaka Toyota MotorCo., Ltd.)2005 Advisor to Toyota Motor Corporation
Chairman of Osaka Toyopet Co., Ltd.
2009 Executive Advisor to Maxell
Holdings, Ltd.
2015 Director of the Company

1970 Joined the Bank of Japan
1978 Deputy Director of the International
Finance Bureau, Ministry of Finance1998 Director of Information Systems
Department, the Bank of Japan
2008 Representative Director and Senior
Executive Officer, Sohgo Security
Services Co., Ltd. (ALSOK)2011 Advisor to Okigin Economic ResearchInstitute (present position)2012 Advisor to Niigata Sohgo Security
Services Co., Ltd. (ALSOK)(present position)2015 Director of the Company
2019 Outside Board Director, Solekia
Limited (present position)

Outside Director

Outside Director

1977 Joined Mitsubishi Electric Corporation2009 Director, Chairman of the Nomination
Committee, Chairman of theCompensation Committee, Executive
Officer, in charge of General Affairs,
Human Resources and Public Relations
2012 Director, Chairman of the Nomination
Committee, Chairman of theCompensation Committee, Senior Vice
President, in charge of Corporate
Strategic Planning and Operations of
Associated Companies
2012 Director, Member of the Nomination
Committee, Senior Vice President,
in charge of Corporate Strategic
Planning and Operations of
Associated Companies
2016 Director
2016 Advisor
2019 Director of the Company
2021 Outside Director of IBOKIN CORP.
(present position)

1973 Joined Japan Broadcasting Corporation(Nippon Hoso Kyokai (NHK))1989 General Broadcasting Administration,
NHK and Executive Vice President of
NHK Enterprises America, Inc.
2003 Responsible for Engineering,
Programming Department, NHK
2004 Head of Engineering Department, NHK2005 Executive Board Member, NHK (Chief
Engineering Officer)
2009 Representative Director and Presidentof NHK Media Technology, Inc.
2017 Director and Head of 8K Ecosystem
Business Strategy Office,Sharp Corporation
2021 Director of the Company

Auditor (Full-time)

Auditor (Full-time)1985 Joined The Tokai Bank, Ltd.
­(currently MUFG Bank, Ltd.)2005 Temporarily transferred to
Mitsubishi UFJ Securities Co., Ltd.
(currently Mitsubishi UFJ Morgan
Stanley Securities Co., Ltd.), Division
Manager of Corporate Sales
Support Division2010 Manager of Tsu Branch Office, The
Bank of Tokyo-Mitsubishi UFJ, Ltd.
(currently MUFG Bank, Ltd.)2012 Manager of Tsu Branch2015 Joined KAGA ELECTRONICS CO.,LTD. as Advisor
2015 Auditor (Full-time)1978 Joined The Fuji Bank, Limited­(currently Mizuho Bank, Ltd.)
1994 Deputy Manager ofSingapore Branch
2002 Manager of Senzokucho-Higashi
Branch2015 Joined KAGA ELECTRONICS CO.,LTD. as Advisor
2015 Auditor (Full-time)

Director

Outside Auditor

Outside Auditor

1982 Joined KAGA ELECTRONICS CO., LTD.
1997 General Manager of Domestic Sales
Department No.1, Sales Headquarters
2003 President of KAGA (SHANGHAI)
ELECTRONICS CO., LTD.
2004 President of KAGA ELECTRONICS(USA) INC.
2011 Division Director of Electronics Sales
Division, Components Business Unit2012 Executive Officer
Division Director of Electronics Sales
Division, and Division Director ofSpecial Sales Department
2015 Director, Division Manager ofElectronics Sales Division

1997 Joined Tokyo Office of Tohmatsu& Co. (currently Deloitte Touche
Tohmatsu LLC)
2001 Registered as Certified Public
Accountant
2002 Opened Kitsunai Certified Public
Accountant Office as Representative(present position)
2004 Established Asia Alliance Partner
Co., Ltd.
Representative Director(present position)2018 Auditor of KAGA ELECTRONICS
CO., LTD.

1977 Assistant Judge at Tokyo
District Court
1989 Judge at Tokyo District Court
1996 Judge at Tokyo High Court
2016 Admitted to the bar
Joined Alpha Partners Law Offices(present position)2018 Auditor of KAGA ELECTRONICS
CO., LTD.

Directors

Susumu Miyoshi
Founder & CEO

President & COO

1968 Founded KAGA ELECTRONICS
CO., LTD. (private management)
1968 Established KAGA ELECTRONICS
CO., LTD.
President
2007 Founder & CEO
2021 Outside Director of ITbook
Holdings Co., Ltd.
(present position)

1980 Joined KAGA ELECTRONICS
CO., LTD.
1991 General Manager of Sales
Department, Sales
Headquarters
1995 Director, General Manager of
East Japan Sales Department,
High Tech Business Division
2002 Managing Director
2005 Senior Managing Director, Chiefof Specific Industry Sales
Headquarters
2012 Vice President
2014 President & COO

Isao Tsukamoto

Ryoichi Kado

Noritomo Hashimoto

Senior Managing Director

Senior Managing Director

Shinsuke Takahashi

Shintaro Kakei

1980 Joined KAGA ELECTRONICS CO., LTD.
1991 General Manager of Specific Industry
Sales Department
1995 Director
2002 Managing Director
2005 Senior Managing Director

1980 Joined ITOMAN Co., Ltd.
1993 Joined KAGA ELECTRONICS
CO., LTD.
2000 Division Director of Overseas
Business Division, Electronics Sales
Headquarters
2000 Director
2005 Managing Director
2014 Senior Managing Director

Akira Tamura

Hirokazu Nishiyama

Auditors
Managing Director

Eiji Kawamura
1979 Joined KAGA ELECTRONICS CO., LTD.
1985 President of TAXAN (UK) LTD.
1993 General Manager of Overseas Sales
Department, Sales Headquarters No.2
2005 Executive Officer
General Manager of Accounting
Division and General Manager ofInformation Systems Department
2012 Executive Officer
Chief of Administration Headquarters
and General Manager of
Accounting Division2012 Director, Chief of Administration
Headquarters and General Manager
of Accounting Division2015 Managing Director, Head of
Administration Headquarters

Mitsuhiro Nohara

27

KAGA ELECTRONICS CO.,LTD.

Director

Motonori Toshinari
1982 Joined KAGA ELECTRONICS CO., LTD.
1992 President of KAGA (H.K.)
ELECTRONICS LIMITED1998 President of TAXAN USA CORP.
2004 General Manager of Overseas Sales
Division, Overseas Business Division,
Electronics Sales Headquarters
2010 President of KAGA (H.K.)
ELECTRONICS LIMITED2012 Executive Officer, Division Director of
EMS Business and President of KAGA
(H.K.) ELECTRONICS LIMITED2015 Director, Division Manager of EMS
Business Division

Kazunori Kameda

Susumu Kitsunai

Takahiro Ishii

Yoichi Sato

Integrated Report 2021

28

ESG Information

Corporate GovernanceCorporate Governance
Basic approach and structure of corporate governance
KAGA ELECTRONICS recognizes that enhancing corporate

system based on collaboration among its Board of Directors,

governance is a key management issue. The Company isauditors and Board of Auditors, and the accounting auditor. In

therefore building a corporate governance system with theprinciple, the Board of Directors meets once a month andfundamental policies and aims of ensuring total complianceholds extraordinary meetings on a flexible basis. The Board ofwith corporate ethics, laws and regulations, reinforcing internal

Directors makes decisions on important matters related tocontrol systems, and securing the soundness, efficiency anditems stipulated by laws and regulations as well as totransparency of business operations to improve its corporate

management, and it supervises the execution of duties byvalue. Moreover, in light of the importance of corporate

directors. Consisting of 11 directors, including four outside

governance, the Company maintains the CSR Promotion

directors, the Board of Directors is capable of sufficiently

Committee and established the SDGs Committee and thediscussing the abovementioned matters and making accurate

Nominating and Compensation Committee on April 1 and Juneand swift decisions. The Board of Auditors consists of four

29, 2021, respectively. These three committees are currently

auditors, including two outside auditors. Auditors regularly

working together to strengthen the Company’s corporate

attend Board of Directors meetings while proactively

governance structure.

participating in other important internal meetings as part of

KAGA ELECTRONICS is a company with a board of directors

Audit

Collaboration

Audit

Founder & CEO• Social Issue WorkingGroup• Governance Issue
Working Group• Compliance Committee• Risk Management
Committee• Information Disclosure
Committee• Personal Information
Management
Committee

Group Management
Headquarters Council

Audit

Board of Auditors
Collaboration

Accounting auditor• Environmental Issue
Working GroupCSR Promotion
Committee

chaired by the President & COO that promotes corporate social

ESG issues that the Company has been implementing for a

responsibility (CSR) alongside efforts to enhance corporate value.

number of years. To this end, the committee is taking a cross-

The Compliance Committee, Risk Management Committee,organizational approach to the promotion of sustainability-

Information Disclosure Committee and Personal Information

oriented management that encompasses all Group companies.

Management Committee have been established under the CSR

Under this body, three working groups (the Environmental

Promotion Committee. Each of these committees actively

Issue Working Group, Social Issue Working Group andimplements activities in their respective domains.

The Company has appointed four outside directors and two

deliberation by the Board to all officers including outside

outside auditors. Based on the Tokyo Stock Exchange

officers, ahead of the meeting day. The staff office provides

standards on independence, we appoint outside officers who

supplementary explanations to the outside officers when

do not have any special interests in the Company and whoneeded to ensure that adequate information is imparted inhave extensive experience and broad powers of judgment inadvance. This helps support lively debate at Board of Directors

corporate management. The auditors are also required tomeetings. By the end of each fiscal year, the staff office sets thehave highly specialized knowledge and maintainschedule for the regular Board of Directors meetings for the

independence from management executives.

following fiscal year and notifies all officers, including outside

The Company has established a staff office of the Board ofManagement Meeting
Audit

Attendance at Board of Directors Meetings
Status of attendance atBoard of Directors meetings
held during the year ended
March 31, 2021
Position and assignment
at the Company

Name

17/17

100.0

Ryoichi Kado

President & COO

17/17

100.0

Shinsuke Takahashi

Senior Managing Director

17/17

100.0

Shintaro Kakei

Senior Managing Director

17/17

100.0

17/17

100.0

17/17

100.0

17/17

100.0

Outside Director

17/17

100.0

Outside Director

17/17

100.0

Outside Director

16/17

94.1

Outside Director——

Managing Director
Head of Administration
Headquarters
Director
Division Director of EMS
Business Division
Director
Division Director of Electronics
Sales Division

Motonori Toshinari

The Company has established the Nominating and

The Company has established an Audit Office to handle

Compensation Committee in an effort to secure the transparencyinternal audits in conjunction with the auditors. The Audit

and objectivity of its process for nominating candidates for

Office discusses audit plans with the auditors in advance anddirectors and auditors, evaluating their performance andregularly reports audit findings to the auditors. The Office

determining remuneration for these individuals. This body isalso cooperates with the auditors as required, such as whenthus tasked with strengthening supervisory functions offered byreports are requested.

the Board of Directors, with the aim of enhancing theCompany’s corporate governance structure.

29

KAGA ELECTRONICS CO.,LTD.

Attendance
rate (%)

Founder & CEO

Divisions and Group companies

Audit OfficeAttendance(times)Isao Tsukamoto

Eiji Kawamura

Nominating and Compensation Committee

officers, of this schedule in order to improve attendance.

Directors, which distributes materials related to matters ofCollaboration

President & COO
SDGs Committee

Selection / dismissal

Advice /consultation

Selection / dismissal

Board of Auditors (auditors)

The Company has established a CSR Promotion Committee

upgrading the CSR initiatives and other endeavors addressing

Outside officers

General Meeting of Shareholders

Board of Directors (directors)

Chaired by President, the SDGs Committee is tasked with

relevant issues in their respective areas.

and board of auditors. It has adopted a corporate governanceNominating andCompensation Committee

CSR Promotion Committee

Governance Issue Working Group) are proactively addressing

their duties.

Selection / dismissal

SDGs Committee

Mitsuhiro Nohara
Susumu Miyoshi
Akira Tamura
Noritomo Hashimoto
Hirokazu Nishiyama*
Outside: Outside directors

OutsideIndependent
OutsideIndependent
OutsideIndependent
OutsideIndependent

Independent : Independent directors as defined by the rules of the Tokyo Stock Exchange   Note: Mr. Hirokazu Nishiyama assumed office on June 29, 2021.

Committee membership
Nominating andCompensation CSR Promotion
Committee
Committee

Committee chair

SDGs
Committee

Committee member
Integrated Report 2021

30

ESG Information

Corporate GovernanceInternal Control / Compliance
Areas of specialty of Directors and Auditors

Corporate
management

Name

Globalbusiness

Sales andmarketing

Law and risk
management

Finance andaccounting

Personnel
management
and human
resource
development

Basic approach to internal control systems
Technology
andmanufacturing

IT and digitaltechnology

Isao Tsukamoto
Ryoichi Kado
Shinsuke Takahashi
Shintaro Kakei

Directors

Eiji Kawamura
Motonori Toshinari
Mitsuhiro Nohara
Susumu Miyoshi
Akira Tamura
Noritomo Hashimoto
Hirokazu Nishiyama

OutsideRisk management system

OutsideIndependent
OutsideIndependent
OutsideIndependent

Auditors

Takahiro Ishii

Yoichi Sato

OutsideIndependent
OutsideIndependent

Note: Up to four skill categories are presented per individual in line with the Company’s expectations regarding their contributions in their respective areas of specialty. The above
matrix does not fully describe the expertise possessed by each individual.

The Company’s basic policy regarding remuneration for its

directors comprises basic fixed remuneration, performance-

directors is to structure a remuneration system that is linked

linked remuneration and share-based remuneration.

with shareholder interests and that robustly incentivizes theseRemuneration for outside directors, who are tasked solely withindividuals to strive for ongoing improvement in corporate value,

exercising supervisory functions, consists only of basicwith the aim of securing and retaining excellent humanremuneration due to the nature of their duties.

resources capable of practicing and realizing its corporate

The Company has also made it a rule to ensure thatphilosophy. To this end, the Company strives to set remuneration

procedures for determining remuneration for directors arefor each director at a level commensurate with their assigned

rational, objective and transparent as is the content of such

responsibilities. Specifically, remuneration for executive

remuneration itself.

said risk will immediately make the necessary, appropriate
response to minimize damage under the direction of the risk
control officers and managers.
In addition, the Company strives to ensure that risks
foreseen by the Group are responded to promptly andappropriately. To support these endeavors, the Information
Disclosure, Risk Management, Compliance and Personal
Information Management committees, all of which operate
under the CSR Promotion Committee, hold periodic meetings
to develop solid risk management systems encompassing theirrespective areas.

The Company has established Rules on the Management ofAffiliated Companies to ensure appropriate business
operations at Group companies and executes controls basedon these rules. In addition, it is required that any coordination
among Group companies as well as any action on importantmatters are first discussed by the Company’s Management
Meeting and Board of Directors before decisions are made.
The Company’s Audit Office works in collaboration with theBusiness Administration Department, which is the Company’s
legal affairs division, to conduct audits that primarily focus on

the overall appropriateness of business activities throughout
the Group and to ensure compliance with laws and regulations
as well as the Articles of Incorporation. The Office also
provides guidance for improvements in business activities.
Furthermore, Group companies submit the minutes from all
Board of Directors meetings to the Company and makemonthly reports on business activities, the status of budget
implementation, and important matters relating to ensuring
the appropriateness of business activities.

Efforts toward the elimination of antisocial forces

Total amount of remuneration for the year ended March 31, 2021
Total remuneration, etc. (millions of yen)

Number of recipients

Directors (Of which, outside directors)

569 (30)

10 (3)

Auditors (Of which, outside auditors)

46 (10)4 (2)KAGA ELECTRONICS CO.,LTD.

Potential risks that the Group faces include a wide range offactors relating to economic conditions, exchange rates,
country risks, price competition, product procurement
capabilities, internal brand risks, legal regulation, market
risks, major litigation, severance pay obligations, personal
information, M&A, the spread of infectious diseases, accidents,
the environment and information management.
As part of efforts to create the needed appropriate systems
to manage every risk the Group may face, the Company has
designated divisions tasked with handling specific risks while
appointing risk control officers and managers. In the event thata risk materializes, the division responsible for dealing with

Ensuring appropriate operations at Group companies

Remuneration system for officers

31

company adopting a system of corporate auditors, each
auditor, including each outside auditor, conducts detailed
audits on the execution of duties by directors.
In addition, the Company has formulated the Basic
Compliance Rules, which serve as a code of conduct to ensurecompliance with laws and regulations and the Articles ofIncorporation as a means to enable the proper execution ofduties by employees of the Company and Group companies.
The Company has also established the CSR Promotion
Committee chaired by the President & COO and set up theCompliance Committee, Risk Management Committee,
Information Disclosure Committee and Personal Information
Management Committee under its umbrella. Through these
initiatives, the Company strives to ensure the appropriate
execution of business throughout the Group.

Independent

Kazunori Kameda

Susumu Kitsunai

The Kaga Electronics Group is committed to ensuring thoroughcompliance with corporate ethics, laws and regulations as wellas the soundness, efficiency and transparency of management.
To this end, the Company has defined its basic approach tointernal control systems. Based on this approach, theCompany is working to establish internal control systems andmake sure that they are continually improved.
The Company has established Rules on Officers and Boardof Directors Rules to ensure the proper execution of duties bydirectors and the Board of Directors. The directors monitor
one another’s execution of duties at regular and extraordinary
meetings of the Board of Directors. The Company has alsoestablished Organization Rules, Rules on the Allocation ofWork Duties, Rules on Work Authority and Rules on Internal
Approval to clarify the scope of authority of each director. As a

The basic position of the Kaga Electronics Group is tomaintain no relationships whatsoever with antisocial forcesthat threaten social order and safety and to remain resolute inits refusal of all improper demands from antisocial forces as
set forth in its Fundamental Compliance Rules andEmployment Rules.
In cases where the Company is subject to improper
demands from antisocial forces, the General Affairs
Department and CSR Promotion Committee work together,acting in collaboration with crisis management advisors andcompany attorneys on an as necessary basis in their efforts
to ensure proper and organized responses to such incidents.
The Company also holds regular discussions with thecompany attorneys, meets with police departments and otherexternal specialized organizations, and participates intraining and other activities to gather relevant information on
antisocial forces.
Integrated Report 2021

32

ESG Information

Corporate GovernanceDialogue with Outside Directors

Akira Tamura Outside Director

Susumu Miyoshi Outside Director

Noritomo Hashimoto Outside Director

One of the major features of corporate governance at the Kaga Electronics Group is its outside directors, who have extensive
experience in corporate management.
Here, outside directors Susumu Miyoshi, Akira Tamura and Noritomo Hashimoto discuss the Kaga Electronics Group’s
corporate governance and human resource development, which is essential for growth.

Corporate governance at KAGA ELECTRONICS
Director Susumu Miyoshi When I look at corporate
management, I think four basic stances are primary. The firstis that companies are, in essence, instruments for the public
good. The second is the importance of being a good company.
In working toward becoming an ideal company, compliance is
key to efforts on the corporate side. Meanwhile, CSR activities
are basically efforts to gain favor and positive perceptions fromthe social side. Companies should be viewed from both sides
and evaluated for any problems.
The third is solid business management, or viewing acompany based on six elements: information, time (speed,
timing), spirit (trends, atmosphere) and the traditional aspectsof people, things and money.
The fourth is applying the method referred to as the “5G
approach”, which focuses on: Gemba (real place), Gembutsu(real thing) and Genjitsu (actual conditions), which are analyzed
to understand a company’s “actual position,” in addition to
Genri (principles) and Gensoku (rules) for comparing acompany against its “ideal position.” It is management’s duty toclose the gap between a company’s current and ideal position.
The Company’s level of governance can be viewed as theseventh station on a climb up a high mountain. Governancehas progressed from the fifth station to the seventh station
over the past two to three years, a fast pace of improvement.
While aiming to reach the peak, the Company must clear any
obstacles that get in the way.
Director Akira Tamura Indeed, it is reassuring that the
management structure has been updated at such a rapid pace

33

KAGA ELECTRONICS CO.,LTD.

over the past few years, with the volume of inventories andother issues being systematically managed. To point out anegative aspect of the Company, a very large proportion of theemployees have sales and marketing backgrounds withspecializations in specific fields, probably because KAGAELECTRONICS started out as a trading company. In fact, I
believe the pool of human resources capable of overseeing theentire operations of the Company and the Group as a whole, isless than robust. Furthermore, the Company tends to go on theoffensive and seems to be less interested in taking defensive
measures. And, at the management level there is a strong
focus on avoiding excessive inventories, refraining from using
too many resources and securing an adequate profit, but I see
a need for more risk management.
Director Susumu Miyoshi At meetings of the Board of
Directors, I think directors should ask more questions andstate opinions in fields outside their zone of expertise.
Director Noritomo Hashimoto The way meetings of theBoard of Directors are run sets the tone for outside directors tovoice their opinions about a company’s management. KAGAELECTRONICS’ Board of Directors’ meetings are lively, and all
members are quite open to input from each other. Drawing on
this open-minded atmosphere in place at the Board room, I
intend to help tear down what has been seen as a norm within
the Group but does not make much sense to those observing
from the outside. This is, I believe, our most important role.
The Kaga Electronics Group is currently enjoying a period of
growth, one of many it has experienced in its history. As wehave all experienced before, risks can always accompany
growth periods. While organic growth through stronger
momentum is all good, growth through M&As should beaccompanied by improvements in corporate governance. I
believe one of our core duties is to facilitate the genuine
growth of the Company, growth that will be universally
appreciated, through the give-and-take of opinions. In thecourse of this duty, outside directors must sometimes take anidealistic approach. Corporate governance is something thatmanagers must thoroughly implement, so outside directors
engaging in direct and open governance will ultimately not be
of benefit to a company.
Director Akira Tamura As my companions have said, the factthat all of the outside directors at KAGA ELECTRONICS areexperienced in corporate management makes said
management very effective, in my opinion. The outside
directors have opportunities to talk with the chairman andpresident, for example, and can convey information about
possible problems through the staff office attached to theBoard of Directors, with the intention of contributing to thesolution of these problems through the spread of information
across the organization. Such opportunities have become
limited during the pandemic, but by exchanging informationand opinions, it is possible to discover and identify the humanresources who will lead the Company into the future. Taking
advantage of these opportunities, outside directors can share
their unique perspectives on addressing problems, drawing on
the latest wisdom and the input of general shareholders andother stakeholders.
Director Noritomo Hashimoto The question is how we canhelp make the Company stronger than it is now by working
shoulder to shoulder with top management members, who
directly supervise its operations. And, those of us withmanagement experience who did not come up through theranks of the company must represent shareholders. Can wefully employ our outside perspective to support the Company’s
endeavors? I believe these are essential questions.

Human resource development isessential during periods of growth
Director Susumu Miyoshi KAGA ELECTRONICS is aiming
for net sales of ¥1 trillion, a numerical target that represents
big dreams.
Director Akira Tamura At the root of it all is the chairman’s
motto “everything we do is for our customers,” a KAGAism thatis instilled in the corporate culture. It is quite evident on thefront lines that employees are constantly doing everything they
can for customers. I give high marks to the employees who arealways looking for the next opportunity and making it a reality.
Director Susumu Miyoshi Diverse human resources will beneeded to make the Company capable of earning ¥1 trillion ormore in sales. As a sales-centered company, KAGAELECTRONICS needs to rev up the entire organization a notch
by rotating employees to give them more experience inpersonnel, accounting, administration and business planning,for example. This will empower employees to handle a wider
range of tasks, such as promoting diversity. I believe theCompany needs to focus more on training employees.

One more important thing is how to exercise supervision
over and support the growth of subsidiaries in Japan andoverseas, which account for a large portion of the Kaga
Electronics Group’s sales and profits. I think it is time to create
a division to oversee the management of all these subsidiaries.
Director Akira Tamura Liked by its customers, having
expertise in specific fields and absolute confidence, Kaga
Electronics is like a wandering samurai, but this does notmean it lacks diversity. Many of its employees must have gone
through tough moments in the course of their duties, but theyalso know how fulfilling and rewarding their jobs can be. With
this in mind, it is very important to create a framework thatincorporates evaluation criteria, not just in a specific field, but
in terms of contribution to the Company as a whole, so that
employees are better motivated to take on a more diverse
range of tasks.
Director Noritomo Hashimoto When talking about humanresources, the tendency is to focus on the next generation ofmanagerial candidates or on grooming the next president.
Personnel training should start in a new employee’s first year.
In the course of their training, candidates for future leaders
must be selected based on what the Company expects of themand, therefore, nurtured in accordance with training plans it
prepares for each. It is important to envision how many ofthem will be officers as they rise up through the ranks and who
will become that generation’s leader. Unless tangible plans onthese matters are in place, it may be too late to adequately
train someone who has already become an officer.
Director Susumu Miyoshi In the end, restricting training toconveying “how to” knowledge is insufficient. Proper training
requires actual experience.
Director Noritomo Hashimoto At the heart of this is thequestion of whether Kaga Electronics has the personnel who
can lead the Company after it has grown big enough toconstantly achieve ¥1 trillion in net sales. With the MediumTerm Management Plan 2021 net sales target of ¥500 billion
within reach, it will take a fair amount of time to double sales.
The Company has no time to waste, and it must take fulladvantage of this interval to properly train future leaders. Thereis a huge difference between ¥500 billion and ¥1 trillion. The
future success of the Company will therefore hinge on whether
the right people, that is, those capable of navigating it throughthe new growth stage, can be selected and trained in time.
I hope the people who work for the Kaga Electronics Groupcan be trained to possess the competencies I discussed above,and this ties in with KAGAism, right? As the head of theNomination and Compensation Committee, I will focus our
discussions on this topic.
Kaga Electronics is a company that has grown under theguidance and business sense of Founder Tsukamoto. Thisbusiness sense is reflected in the motto “everything we do isfor our customers,” which is balanced by “profit-focusedmanagement.” Since the realm of electronic components isvast and varied, I believe the top position should be filled bysomeone who has an excellent business sense for what canbe accomplished in this world by leveraging the benefits ofthese products.
Integrated Report 2021

34

ESG Information

Corporate Governance

Sustainability Initiatives
Today, businesses’ efforts to address ESG issues, such as

Chaired by President Ryoichi Kado, the SDGs Committee

climate change-related problems, are being considered amainly consists of officers in charge of supervising various

critical factor affecting their sustainability. This recognition has

divisions. Moreover, three working groups are in place underbecome the norm among investors, and their engagement in

the committee to address environmental, social and

ESG investment is more active now than ever before.

governance issues, respectively. The committee is thus

Against this backdrop, the Company is striving to upgrade

engaged in the formulation of policies, initiatives and targets

CSR and ESG initiatives that it has been implementing for many

regarding the Company’s response to ESG issues and theyears, taking a cross-organizational approach to the promotion

monitoring of their progress.

of sustainability-oriented management that encompasses all

Based on its corporate philosophy “everything we do is forGroup companies. To this end, the SDGs Committee wasour customers,” KAGA ELECTRONICS strives to contribute tolaunched as a decision-making body overseeing the Company’s

the realization of a sustainable society by striking a balancesustainability initiatives.

between solving social issues and sustaining growth as acorporation through its business activities.
SDGs Committee

MissionCommittee members

Discuss and address medium- to long-term management mattersassociated with environmental (E), social (S) and governance (G)issues, with the three theme-specific working groups playing acentral role, to help enhance the Company’s corporate value
through the implementation of cross-organizational initiatives
encompassing the Group

Chair
Members

President
Senior Managing Director
Senior Managing Director
Managing Director
Director
Director

Ryoichi Kado
Shinsuke Takahashi
Shintaro Kakei
Eiji Kawamura
Motonori Toshinari
Mitsuhiro Nohara

Environmental Issue Working Group

Social Issue Working Group

Governance Issue Working Group

LeaderLeaderLeaderDirector
Motonori Toshinari
Division Manager of EMS Business Division

Executive Officer
Yasuhiro Ishihara
Deputy Head of Administration Headquarters

Managing Director
Eiji Kawamura
Head of Administration Headquarters

Identifying Materiality
The Kaga Electronics Group is committed to seriously

issues that are deemed to exert significant impact on its

addressing a variety of issues relevant not only to itself but also

business operations, as listed below. Through its efforts tocommunities around the world and thereby living up to thetackle the materiality of these issues, the Group will practice

expectations of society. In line with this commitment, thecorporate activities aimed at contributing to the realization of aGroup has employed four perspectives— Environmental (E),sustainable society, with the aim of further improving its

Social (S), Governance (G) and Business (B)—to identify priority

corporate value.

Issues specified in the course of identifying materiality
Materiality

Changes in the socio-economic environment• Growing seriousness of global warming and otherenvironmental problems• Urgent call for carbon neutrality

Our initiatives• Provide products and services designed to help resolve
environmental and energy issues• Continue initiatives to reduce the environmental burden

Create an inclusive
S company as well as anaffluent society• Changes in social structure as we move toward the
popularization of the new normal• Human resource shortages attributable to a lowbirthrate and an aging population• Promote workforce diversity and innovative work styles tobetter adapt to the new normal• Develop human resources by passing down andupdating KAGAismCreate a sustainableG
management base• Public calls for more robust corporate governance• Further strengthen corporate governance and compliance• Growing need for business resilience against changes in• Thoroughly practice a profit-focused management approach
the operating environment

Realize sustainableBbusiness growth• Progress in digital transformation• Coming of a “super-smart” society due to the
popularization of ICT, such as IoT and AI• Intensification of global competition

E

35

Create a clean global
environment

KAGA ELECTRONICS CO.,LTD.

ESG issues being addressed by working groups
Environmental Issue Working Group
Promotes the proactive utilization of renewable energy at the Group’s domestic business bases in an effort to contribute to the realization of a“decarbonized society.”

Aiming to raise the ratio of renewableenergy to total energy consumption
to 100%

Domestic sales bases, domestic manufacturing bases and overseas manufacturing bases:
Introduction of renewable energy in a way that ensures a reduction in energy costs from thecurrent level
Information gathering aimed at discovering promising opportunities for investment in biomassenergy generation in Japan

Social Issue Working Group
Strives to push ahead with diversity promotion, work style reforms, health & productivity management and other endeavors, with management
and employees acting in collaboration to adapt to a new normal in the era of living with COVID-19 and better position the Company to contributeto the enhancement of people’s quality of life and the creation of a sustainable society.

Diversity promotion and humanresource management

An optimal balance between work-life
management and productivity improvement

Mandatory item set forth in Corporate Governance Code
(Domestic) F ormulation of targets and frameworks for supporting the active participation of
women and the promotion of women, foreign nationals and midcareer hires tomanagement positions
Mandatory item set forth in Corporate Governance CodeDisclosure of policies for human resource development and internal environment development
to ensure diversity, as well as the status of their implementation• Promote work style reforms upon the revision of various personnel systems with an eye toadapting to the new normal in the era of living with COVID-19 and the post-pandemic period• Consider such labor systems as flextime• Provide information to employees reinstated after taking childcare leave• Revise programs for supporting employees engaged in child rearing and nursing care
• Take necessary steps in response to legal revisions aimed at specifically encouraging male
employees to take childcare leave

Promotion and realization of health &productivity management• Aim to be selected as an outstanding organization under the Certified Health & Productivity
Management Organization Recognition Program

Employment for people with disabilities• Develop a structure to ensure that the mandatory employment rate is met• Publicly disclose our initiatives to secure employment for people with disabilities

Governance Issue Working Group
Develops a corporate governance structure designed to enhance the Company’s competitiveness in keeping with the spirit of compliance withcorporate ethics and legal regulations, so that it remains a valuable company for shareholders and all other stakeholders.

Restructuring the governance structure in
response to the revision of the Corporate
Governance Code and the reorganization ofTokyo Stock Exchange• Increase the number of independent outside directors so that they account for one third of
the Board membership or more Done
• Establish Nominating and Compensation committees Done
• Diversify the composition of the Board of Directors Disclosed the skill matrix of the Board
members via the notice of convocation• Ensure thorough compliance in preparation for the Company’s entry into the premier stock
marketDevelop human resource training policies aimed at securing diversity and disclose suchpolicies; consider information disclosure in line with the TCFD recommendations; create CEO
succession plans; formulate and disclose sustainability policies; and announce businessportfolio policies

Further strengthening the supervisory andoversight functions of top management
over business execution• Consider appointing officers whose duties are defined by commission contracts rather thanemployment contracts• Provide products and services that contribute to thetransition to a digital-driven society• Create new businesses aimed at helping resolve issues
society is confronting• Further promote global expansion
Integrated Report 2021

36

ESG Information

ESG Information

Social ReportSocial Report

Together with Our Customers

Together with Our Employees

The Kaga Electronics Group proposes and provides value-added products and services that swiftly meet changes in the times

The most important management resource for a trading company is undoubtedly its human resources. To drive sustainablegrowth, we promote the development of human resources and the creation of an environment that enables the execution of ouraction guideline FYT (pronounced “fight”). This guideline expresses our commitment to always be Flexible and to think and act
Young when Trying to take on challenges.

based on its corporate philosophy of “Everything we do is for our customers.” By doing so, we support the technologicalinnovation and production streamlining of our customers worldwide.
To deliver high-quality products and services

Quality control system
The Kaga Electronics Group established the Production
Center in its EMS Business Division, thus enabling a systemof quality control that centers on KAGA (SHENZHEN)ELECTRONICS CO., LTD., its flagship base for overseas
production, and KAGA EMS TOWADA CO., LTD., which boasts
a wealth of experience in the manufacture of in-vehicle related
products. At the Center, we manage the entire Group’s
resources as cross-functional capabilities in such areas asproduction technology and quality control and promote theoptimal distribution of resources and the strengthening oftechnological competencies on a global basis.
The Center also liaises with production sites in China andJapan as well as countries in the ASEAN region, Europe andNorth America to advance the standardization of production
facilities, IT systems and operational processes, and thesharing of information, for example, to prevent the recurrenceof issues. Through standardization, the aim is to ensure

Implementing the idea that “everyone is a corporate manager”

Human resource strategy / Diversity management
identical standards, quality and customer service.
In addition, regular exchange meetings are held to reinforce
quality on a Groupwide basis.

As our business activities become more global and the market
environment undergoes abrupt change, diversity and taking onchallenges are keys to driving sustainable growth. This isbecause diversity enables us to look at risk as an opportunity,
and when we take on challenges we can take full advantage ofthese opportunities. To make this a reality, the Kaga Electronics
Group promotes diversity management in terms of making
effective use of diversity in human resources and in work style. At
the same time, we respect our human resources who continue totake on challenges and see each person as a corporate manager.
With this in mind, we will keep protecting our corporate cultureof tolerating failure as a consequence of tackling challenges.

Number of employees / Ratio of female employees (Consolidated)
Number of employees (persons) ■ Male ■ Female ● Ratio of female employees (%)

54.7

55.2

52.7

52.3

6,627

6,731

3,498

3,527

5,216

5,427

2,856

3,000

2,360

2,427

3,129

3,204

2017/3

2018/3

2019/32020/3

53.0
7,826
4,150
3,676

2021/3Pursuing a comfortable working environment

Employee education and benefit programs
A remote customer meeting prior to delivery

Pursuing our philosophy of “Everything we do is for our customers”

Efforts to enhance quality
The Company’s Engineering Department controls thetechnological resources of the entire Group, from planningand development to design, manufacturing and quality
assurance, and works to optimize these resources,
strengthen technological capabilities and expand businessacross the organization. The Quality Assurance Department,
one of the bodies of the Engineering Department, seeks toenhance development quality and manages safety standards
throughout the Group. This department works with otherdepartments responsible for quality within the Groupdepending on the circumstances in order to resolve issues.

At the Kaga Electronics Group, we support the careerdevelopment of employees through training for new recruits,annual training, rank-based training and other forms ofeducation, as well as by providing assistance withcorrespondence courses.
Every year, we grant a total of six days of paid “refresh leave,”which is separate from annual paid leave, to all employees. We
also instituted a sick leave program for those who develop oneof three specified types of serious disease (cancer, cerebral
stroke and myocardial infarction) to help them secure theirincome during their hospitalization and absence from work.

Specifically, employee entitlement for paid sick leave isaccumulated in step with years of service, for a maximum of 20days. Employees are also allowed to take hourly paid leave.
Further, we have established welfare facilities that include
access to resorts in Japan and abroad, a contract golf course, acompany villa and a cruiser boat, with utilization rates at a highlevel. Through such initiatives as these, we aim to strike a goodwork-life balance for a safer work environment for employees.
Also, in the course of responding to the COVID-19 pandemic,
we placed the utmost priority on ensuring safety and security
for our employees at home and abroad.

Average length of service / Job turnover rate

Annual prescribed working hours / Monthly average overtime
work per employee■ Average length of service (years)● Job turnover rate (%)

2.8
13.1

2017/3

3.4

14.9

2018/3

5.1

5.1

4.7

14.7

14.7

15.4

2019/32020/32021/3■ Annual prescribed working hours (hours)

1,815.0

1,822.5

9.2

9.7

2017/3

2018/3■ Monthly average overtime work per employee (hours)

1,822.5
11.3

2019/3

1,815.0
12.7
11.9

1,800.0

2020/32021/3

Prototype evaluation using a measurement device

Response to the COVID-19 pandemic

Status of ISO9001 certification
KAGA ELECTRONICS and the following Group companies have attained ISO9000 series certification, an international standard for
quality management.
The Company is striving to further enhance customer satisfaction through continuous improvement of its quality management system.
Japan:	KAGA ELECTRONICS CO., LTD., KAGA DEVICES CO., LTD., KAGA MICRO SOLUTION CO., LTD.,
KAGA TECHNO SERVICE CO., LTD.
Overseas:	KAGA TAXAN (SUZHOU) ELECTRONICS CO., LTD., KAGA (SHENZHEN) ELECTRONICS LTD.,
KAGA ELECTRONICS (THAILAND) COMPANY LIMITED37

KAGA ELECTRONICS CO.,LTD.

Domestic sales bases
Initiatives to prevent the virus from beingbrought in and transmitted

Thorough implementation of antiviral andantibacterial measures• Deployed body temperature measurement devices • Applied antiviral coating• Installed partition walls in office spaces• Set photocatalytic sterilization and deodorizationequipment

Applied antiviral coating

Overseas production bases
Initiatives to prevent the virus from beingbrought in and transmitted

Thorough observance of social distancing• Made it a rule that the body temperature of every
person entering base premises is measured• All operators wear goggles and masks• Distanced placement of production line workers• Distanced seating in company-owned
commuting buses

All operators wear goggles and masks
Integrated Report 2021

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ESG Information

Social Report

Together with the Community
Cognizant of the importance of its social responsibilities as a company, the Kaga Electronics Group contributes to sports
promotion and to the local community through its business sites worldwide, and actively undertakes activities that help drive
the advancement of education, art and culture.

Contributing to the local community

Social contribution activities in Kanazawa, where it all began
Kanazawa City in Ishikawa Prefecture is the place that theFounder and CEO of KAGA ELECTRONICS Isao Tsukamoto
was born and raised. Building on his ties with this community,
the Company signed an agreement with Kanazawa City in2017 involving the promotion of regional revitalization. As partof its efforts, the Company supported a host town initiative
associated with the Tokyo 2020 Olympic and Paralympic
Games over the following four years, donating to a project
aimed at driving the revitalization of the local area.
We are also taking steps to contribute to the community
through such means as supporting the Kanazawa Marathon,an open to the public event we have supported since its
inception in 2015. Employee volunteers also participate
through such activities as operating a water station.

Sports promotion

Sponsorship of golf tournaments
The Kaga Electronics Group contributes to the promotion ofgolf, primarily through the sponsorship of golf tournaments.
This includes special sponsorship of The Ladies Professional
Golfers’ Association of Japan (JLPGA)’s “JLPGA ROOKIESCHAMPIONSHIP KAGA ELECTRONICS CUP” since 1996.
Many of this tournament’s winners have gone on to do wellon the JLPGA tour, proving that it is a great gateway tosuccess for young female professional golfers.

A Company-sponsored running class for elementary school students

Note: In 2020, the event involved only an online marathon due to the need toprevent the spread of COVID-19.

JLPGA ROOKIES CHAMPIONSHIP KAGA ELECTRONICS CUP 2020

Social contribution activities at sites in Japan and overseas
The Kaga Electronics Group, which conducts business activities
around the world, takes on a variety of social contribution

Contributing to the development of golf
Five professional golfers, both male and female, are on thebooks at KAGA ELECTRONICS. Contracted athletes take partin tournaments around the world wearing clothing and caps
adorned with the Kaga Electronics logo, which plays a part inour PR strategy.
In addition, the Group company KAGA SPORTS CO., LTD.
takes a multifaceted approach to business that includes the
direct sale of golf supplies at its own stores and sellingwholesale to retailers, the running of golf driving ranges andgolf schools, and the introduction of body conditioning
services such as yoga, which contributes to the developmentof the sports industry through golf.

Eric
Sugimoto

SayakaTsuchida

HirokoAzuma

FumikaKawagishi

Professional golfers sponsored by KAGA ELECTRONICS

Miyuu
Yamashita

activities at its sites in Japan and overseas as well.
To give some examples, staff at our production subsidiary inShenzhen, China, organize plant tours for children. Throughthese events, they also provide children with workplace
experience and other programs. Meanwhile, staff at our
production subsidiaries in Japan are involved in periodic
cleanup activities covering neighboring sightseeing spots andother areas around their facilities in addition to campaigns
aimed at helping raise traffic safety awareness among thegeneral public. Moreover, such subsidiaries dispatch trainees tohelp organize local festivals, cooking classes and other events
sponsored by municipalities, helping to strengthen ties with theresidents of the communities in which they operate. Taking a
locally rooted approach in these and other initiatives, we strive
to give back to the communities surrounding us.

A plant tour organized by KAGA (SHENZHEN) ELECTRONICS for local children

Education and welfare support activities

One of the Company’s golf schools

39

KAGA ELECTRONICS CO.,LTD.

GOLF PLAZA ACTIVE

Akiba Golf Studio

At KAGA ELECTRONICS, the Founder & CEO Isao Tsukamoto
gives lectures to students as a specially appointed professor for
the Faculty of Service Innovation, Chiba University ofCommerce. (In 2020, these lectures were conducted remotely
or at the Company’s facilities with a limited number ofattendees.) In addition, Tsukamoto speaks at such events as
study sessions for young corporate managers who run SMEs.
We also contribute to society in a wide range of fields related toeducation and welfare support, including cooperating with theJapan Cancer Society and offering assistance to cancer patientsand their families.

A lecture held at KAGA ELECTRONICS Head Office for a small group of students

Integrated Report 2021

40

ESG Information

Environmental Report

Together with the Earth
The Kaga Electronics Group views the 21st century as the century for protection of the global environment and, with this in

Initiatives to reduce environmental burden

mind, conducts business activities based on an awareness of energy and resource conservation that includes reducing CO2 andother greenhouse gases and verifying the environmental load of the products and services it handles.

Reduction of CO2 emissions
The KAGA ELECTRONICS Head Office building employs an air

Power consumption and CO2 emissions at Head Office building

Environmental Policy

supply type double-skin* curtain wall on the exterior, allowing■ Power consumption (kWh)■ CO2 emissions (kg CO2)

The Kaga Electronics Group looks to the future of electronics at all times, striving to meet customer needs as well as topreserve and enhance the natural environment in order to protect our irreplaceable earth.

providing natural ventilation. The energy efficient design also(1) The Kaga Electronics Group shall establish an environmental management system that involves all employees and promote
ongoing improvement of this system to preserve the global environment and prevent pollution in all of our business activities
to provide products and services.
(2) In executing our business activities, we shall strictly adhere to environmental laws, regulations and related requirements aswell as comply with all other requirements agreed upon by the Kaga Electronics Group.
(3) We shall strive to prevent pollution and enhance the environment through non-wasteful office and business activities based ona philosophy of conserving energy and resources.
(4) We shall set targets for the following requirements to the extent possible for the products and services that the Kaga
Electronics Group handles and regularly review the progress of our activities.
• Must be composed of environmentally friendly substances• Must be able to cut waste through reuse and recycling• Must be designed with energy and resource conservation in mind using the latest electronics technology(5) We shall provide education to all employees to increase their awareness of the need for environmental protection and toensure their understanding of our Environmental Policy.
(6) Our Environmental Policy shall be disseminated widely throughout society through such means as the Kaga Electronics Groupwebsite and corporate profile.

air to flow into the office, thus reducing heat load and706,423

764,780 744,417

provides enhanced sound insulation.

677,957

601,660

In addition, the building features a variety of environmental
technologies, with the use of solar panels on the roof
enabling eco energy and the installation of LED lighting
throughout. These technologies serve to save energy and267,028 289,087 281,388 256,267

227,427

reduce CO2 emissions.
* Double-skin technology refers to a method of construction in which part or all of abuilding exterior is covered by a two-layered double-glazed façade.

2017/3

2018/3

2019/32020/32021/3

PC product reuse and recycling business
The Kaga Electronics Group company KAGA MICROSOLUTION CO., LTD. has flexibly changed and expanded its
business domain to meet a wide range of customer demands,
from the development, production and sale of electronic
products to their repair, maintenance, reuse and recycling.

Environmental management system

The company leverages know-how in the production of

The Kaga Electronics Group established an environmental

and its Group companies. In addition, we have attained

management system based on its Environmental Policy.

ISO14001 certification, an international standard for

Under the system, environmental officers, the ISO Secretariat,

environmental management systems, at the Company and 20

the Environmental Manager Meeting and internalsites at four Group companies in Japan. We are strengthening

environmental auditors team up and, guided by the president,

our system through a PDCA cycle.

conduct environmental management at KAGA ELECTRONICS

electronic equipment and an extensive procurement route forelectronic parts and materials—both of which wereaccumulated in the EMS business, a strength of the Group—
to focus on a reuse and recycling business for PC products inrecent years.
In addition to “reduce programs” that look especially at
cutting CO2 and rubbish levels, the Group will contribute to a
reduction in environmental burden from a reuse andEnvironmental management system

recycling perspective and to the realization of a recyclingFounder & CEO

President (COO)

ISO Secretariat

Environmental officers
Environmental Manager
Meeting
Internal environmental
auditors
Note: K
 AGA FEI, KAGA EMS TOWADA and EXCEL have each acquired ISO 14000
certification for their respective environmental management systems.

41

KAGA ELECTRONICS CO.,LTD.

• KAGA DEVICES CO., LTD.
• AD DEVICE CO., LTD.
• KAGA TECH CO., LTD.
• KAGA SOLUTION NEWORK CO., LTD. (SOLNET Company)• EMS Business Division• Engineering Department• Specific Industry Sales Division• Electronics Sales Division• Communication Network Sales Division• Sales Promotion Division• Audit Office• Investor Relations & Public Relations Office• Secretarial Office

Administration Headquarters• Business Administration Department• Information Systems Department•Personnel Department• Finance & Accounting Department• General Affairs Department• Corporate Planning Department

oriented society.

Repair work at KAGA MICRO SOLUTION

Number of PC products reused(thousands)

102.0

65.8

2017/3

109.0

86.6

76.0

2018/3

2019/32020/32021/3Integrated Report 2021

42

Financial and Corporate Information

10-Year Financial Summary
Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3

Net sales (millions of yen)

229,856

216,405

257,852

255,143

245,387

227,209

235,921292,779

443,615422,365

Gross profit (millions of yen)

28,506

27,46232,522

32,73833,64831,22532,49835,54647,01647,936

Selling, general and administrative (SG&A) expenses (millions of yen)

26,43826,202

27,416

26,37625,85924,346

24,37927,97637,001

36,469Operating income (millions of yen)

2,067

1,260

5,106

6,362

7,788

6,879

8,119

7,570

10,014

11,467

Ordinary income (millions of yen)

2,569

1,931

5,847

7,664

7,908

7,343

8,740

7,859

10,137

11,241

Fiscal year

Profit attributable to owners of the parent (millions of yen)

914

444

3,877

4,416

5,437

6,975

6,490

8,014

5,852

11,399Cash flows from operating activities (millions of yen)

958

7,041

3,334

9,127

9,546

10,746

10,077-1,54722,406

9,999

Cash flows from investing activities (millions of yen)

-2,645-4,910-3,339

-1,465-1,263-258-4,173-6,860-3,651-2,453

Free cash flow (millions of yen)

-1,686

2,131

-5

7,661

8,283

10,487

5,904-8,40818,754

7,545

-242

-403

1,024

-4,431-3,067-6,118-2,811

11,684-7,544-6,851

2,181

2,303

2,418

1,907

1,604

1,452

1,481

1,740

2,754

3,167

2,999

3,748

4,087

2,660

2,166

1,464

4,520

6,712

6,133

2,906

Total assets (millions of yen)

114,714

111,888

126,028

127,948

124,281

125,751

128,755

213,761

207,638

237,004

Net assets (millions of yen)

47,93648,80652,82559,60361,80865,932

70,631

84,25986,25095,062Equity (millions of yen)

46,41048,65652,78659,564

61,76465,87270,55676,60478,28490,967

Interest bearing debt (millions of yen)

14,34915,08917,244

14,573

12,739

9,805

8,900

32,851

28,73638,261

Cash and deposits (millions of yen)

9,775

12,25814,192

18,13022,516

26,42330,80335,00343,38445,636Inventories (millions of yen)

21,554

18,77921,21922,703

19,17519,325

19,45540,02631,90837,948EPS (yen)

33.13

16.09

137.22

156.28192.43249.43236.58292.07213.21415.07

Annual dividend (yen)

30.00

30.00

35.00

40.00

55.00

60.00

70.00

80.00

70.00

80.00

Cash flows from financing activities (millions of yen)
Depreciation (millions of yen)
Capital expenditures/Investment and loans (millions of yen)*

1

Fiscal year end

Per share data

90.5

186.5

25.5

25.6

28.6

24.1

29.6

27.4

32.8

19.3

1,681.73

1,721.86

1,868.07

2,108.04

2,185.94

2,401.00

2,571.79

2,790.97

2,850.99

3,311.24

Gross profit margin (%)*2

12.4

12.7

12.6

12.8

13.7

13.7

13.8

12.1

10.6

11.3

Ratio of SG&A expenses to net sales (%)

11.5

12.1

10.6

10.3

10.5

10.7

10.3

9.6

8.3

8.6

Operating income margin (%)*

0.9

0.6

2.0

2.5

3.2

3.0

3.4

2.6

2.3

2.7

Ordinary income margin (%)*

1.1

0.9

2.3

3.0

3.2

3.2

3.7

2.7

2.3

2.7

Profit attributable to owners of the parent margin (%)

0.4

0.2

1.5

1.7

2.2

3.1

2.8

2.7

1.3

2.7

ROE (%)*

2.0

0.9

7.6

7.8

9.0

10.9

9.5

10.9

7.6

13.5

ROIC (%)

1.1

0.2

5.0

5.2

7.5

8.1

7.2

5.8

6.3

6.9

ROA (%)*6

0.8

0.4

3.3

3.5

4.3

5.6

5.1

4.7

2.8

5.1

40.5

43.5

41.9

46.6

49.7

52.4

54.8

35.8

37.7

38.4

Debt equity ratio (times)*

0.31

0.31

0.33

0.24

0.21

0.15

0.13

0.43

0.37

0.42

CCC (days)*8

52.6

51.4

49.7

49.8

45.9

44.7

40.0

47.1

34.4

46.7

Receivables turnover period (days)*

88.9

92.1

85.9

83.2

81.5

83.6

77.1

77.0

75.2

93.7

10

Inventory turnover period (days)*

34.2

31.7

30.0

32.5

28.5

31.0

30.1

35.1

26.3

32.8

Payables turnover period (days)*11

70.5

72.4

66.2

65.9

64.2

69.9

67.3

65.0

67.0

79.8

Number of employees (persons)

5,239

5,048

4,752

5,092

5,243

5,216

5,427

6,627

6,731

7,826

Payout ratio (%)
BPS (yen)
Major indicators

3

4

5

Equity ratio (%)
79*1.	Including spending associated with the purchase of property, plant and equipment, intangible assets and investment securities as well as the purchase of shares of subsidiaries
resulting in change in scope of consolidation.
*2. Gross profit margin = Gross profit / Net sales × 100 (%)*3. Operating income margin = Operating income / Net sales × 100 (%)*4. Ordinary income margin = Ordinary income / Net sales × 100 (%)*5. ROE = Profit attributable to owners of the parent / Average equity × 100 (%)*6. ROA = Profit attributable to owners of the parent / Average total assets × 100 (%)

43

KAGA ELECTRONICS CO.,LTD.

*7. Debt equity ratio = Interest bearing debt / Equity (times)*8. Cash conversion cycle (CCC) = Receivables turnover period (days) + Inventory turnover period (days) – Payables turnover period (days)*9. Receivables turnover period (days) = Notes and accounts receivable-trade / Net sales x 365 (days)*10. Inventory turnover period (days) = Inventories / Net Sales x 365 (days)*11. Payables turnover period (days) = Notes and accounts payable-trade / Total purchase of goods × 365 (days)

Integrated Report 2021

44

Financial and Corporate Information

Analysis of Financial Condition and Results of Operations
Fiscal year ended March 31, 2021

Analysis of business performance

established overseas EMS production facilities, the provision ofDuring the fiscal year ended March 31, 2021, the interim yearwith major transactional partners, and the recording of otherCash and cash equivalents as of March 31, 2021 increased byof Medium-Term Management Plan 2021 spanning the three

one-off losses reflecting the prolongation of fallout from the¥1,639 million from March 31, 2020 to ¥44,333 million. The

As for the financing of necessary working capital and funds

years from April 2019 to March 2022, the Group strove to

COVID-19 pandemic.

status and factors thereof for each cash flow category in thefor capital expenditure, the Kaga Electronics Group utilizes

fiscal year ended March 31, 2021 are as follows.

such sources as cash on hand and borrowings. Looking

strengthen its competitiveness by focusing on securing

allowance for doubtful accounts (¥1,750 million) associatedBoth operating income and ordinary income hit new highs

Cash flows

Analysis of capital resources
and cash liquidity

business expansion for two pillars of the plan’s growth

for the second consecutive year, while profit attributable tostrategy, namely, the electronic components business and theowners of the parent hit a record high for the first time since

Cash flow from operating activities

funds for capital expenditure that are necessary to support its

EMS business, the latter of which involves manufacturing.

the fiscal year ended March 31, 2019.

Net cash and cash equivalents provided by operating

future operations, with cash flows from operating activities

activities totaled ¥9,999 million, compared with ¥22,406

positioned as its financial base.

Specifically, in the components sales business, the Group
included EXCEL CO., LTD., an electronic parts trading
company, into the scope of consolidation in April 2020. Since
then, efforts have been under way to promote the sharing ofahead, the Group intends to procure working capital andmillion provided by operating activities in the previous fiscal

Analysis of financial condition

year. This was mainly due to the recording of profit before

Funding requirements

income taxes.

The main elements of the Group’s working capitalthe two companies’ products and customer bases while

Total assets as of March 31, 2021 increased by ¥29,366 million

pursuing synergetic business growth. In the EMS business,from the previous fiscal year-end to ¥237,004 million. The main

Cash flow from investing activities

marketed by the Group and for the purchase of raw materials

Kyokuto Electric Co., Ltd. became a Group company initems are as follows.

Net cash and cash equivalents used in investing activities

and components to produce its own products, in addition to

November 2020, with its factories in Tottori Prefecture

requirement are funds for the purchase of products to be

totaled ¥2,453 million, compared with ¥3,651 million used infunds to cover manufacturing costs and selling, general andpositioned as bases for the EMS business in the west Japan

Current assets

the previous fiscal year. This was mainly due to purchases ofadministrative expenses. Funding needed for investmentarea. Thus, the Group augmented its domestic production

Current assets increased by ¥25,847 million to ¥200,179

property, plant and equipment.

purposes is largely in connection with capital expenditures

structure, taking full advantage of combined capacities

million. This is primarily due to the consolidation of EXCEL,

afforded by Kyokuto Electric and KAGA EMS TOWADA CO., LTD.

which has resulted in increases of ¥18,278 million and ¥4,450

Cash flow from financing activities

in Aomori Prefecture.

million, respectively, in notes and accounts receivable—trade

Net cash and cash equivalents used in financing activities

and merchandise and finished goods.

totaled ¥6,851 million, compared with ¥7,544 million used

Financial policyin the previous fiscal year. This was due mainly to theWith respect to the procurement of short-term working

In December 2020, the Group completed a new factory in
Hubei, a Chinese province boasting a concentration ofand costs of M&As for acquisitions of new businesses andcommercial rights.

automobile-related manufacturers. Along with pursuing theNon-current assets

additional acquisition of shares in KAGA FEI and thecapital, the Group’s basic stance is to strive to achieve

expansion of production capacities at home and abroad, theNon-current assets increased by ¥3,518 million to ¥36,825

payment of cash dividends.

optimal capital efficiency within the Group before resorting toGroup stepped up sales activities targeting existing customers of

million. This was primarily because of rises in investee stock

KAGA FEI, rallying all its strengths to achieve business growth.

prices and other positive factors that caused investment

As a result, net sales were buoyed by PC demand associatedwith the popularization of remote working, recovery in demandborrowings from financial institutions.
With respect to the procurement of funds for M&As, capitalsecurities and deferred tax assets to increase by ¥2,269 million

expenditures and long-term working capital, the Group’sand ¥668 million, respectively.

basic stance is to conduct optimal procurement using thein the manufacturing sector and the positive effect of thevarious methods available to it, extending from direct toconsolidation of revenues from EXCEL. Nevertheless, due toTotal liabilities

indirect financing, with due consideration given to financial

the cancellation of sales agency contracts between KAGA FEI

Liabilities increased by ¥20,553 million from March 31, 2020, toconditions at the time of procurement as well as to the term

and its main business partners, net sales decreased by 4.8%

¥141,942 million. This was primarily due to the consolidation ofand purpose of the funding requirement.

year on year to ¥422,365 million.

EXCEL, which has resulted in a ¥9,665 million increase in notes

On the earnings front, gross profit increased due to solid
sales in mainstay businesses. Simultaneously, the Groupand accounts payable—trade and an ¥8,593 million increasein borrowings.

strove to control and reduce selling, general and administrative
expenses, including travel, commuting and entertainment

Total net assets

expenses, while promoting operational streamlining via the

Net assets increased by ¥8,812 million from March 31, 2020, to

introduction of remote working and online meetings. Thanks to¥95,062 million. This was primarily thanks to a ¥9,477 million

these efforts, operating income increased by 14.5% year onincrease in retained earnings due to ¥11,399 million in profit

year to ¥11,467 million, while ordinary income grew by 10.9% toattributable to owners of the parent and other factors.

¥11,241 million.
Profit attributable to owners of the parent rose a significant
94.8% year on year to ¥11,399 million. This was attributable tothe posting of gains on negative goodwill (¥7,963 million) as
extraordinary income in connection with business acquisition,
despite the recording of an extraordinary loss consisting of an
impairment loss (¥1,893 million) mainly related to newly

45

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2021

46

Financial and Corporate Information

Consolidated Balance Sheet
Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
At March 31, 2020 and 2021

ASSETS
CURRENT ASSETS:
Cash and bank deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total CURRENT ASSETSNONCURRENT ASSETS:PROPERTY, PLANT AND EQUIPMENT
Buildings and structures
Accumulated depreciation
Buildings and structures, net

2020¥

43,38485,4955,876
254
25,276
567
6,063
7,601
(188)
174,331

Thousands of
U.S. Dollars(Note)

Millions of Yen

2021

¥

45,636
103,773
4,621
302
29,727
1,280
6,940
9,921
(2,024)200,179

2021$

412,218
937,345
41,741
2,736
268,515
11,56462,694
89,615(18,288)
1,808,143

13,899(6,533)7,365

14,327(7,305)
7,021

129,412(65,988)
63,424

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net

10,163(5,685)
4,477

11,496(6,853)
4,642

103,840(61,903)
41,937

Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net

5,092(4,032)
1,060

5,632
(4,254)
1,378

50,875(38,428)
12,447Land
Construction in progress
Total PROPERTY, PLANT AND EQUIPMENT

4,924
145
17,974

5,074
107
18,22545,836975
164,621INTANGIBLE ASSETS
Goodwill
Software
OthersTotal INTANGIBLE ASSETS

322
1,743
190
2,256

209
2,338
62
2,609

1,889
21,118561
23,570INVESTMENTS AND OTHER ASSETS:
Investment securities
Deferred tax assets
Guarantee deposits
Insurance funds
OthersAllowance for doubtful accounts
Total INVESTMENTS AND OTHER ASSETS

8,502
1,584
857
894
1,791
(552)
13,075

10,771
2,252
931
910
1,629
(504)
15,99097,296
20,334
8,413
8,223
14,715(4,558)144,435

33,30636,825

332,627¥ 207,638¥ 237,004$ 2,140,771

Total NONCURRENT ASSETS
Total ASSETSLIABILITIESCURRENT LIABILITIES:
Notes and accounts payable-trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for directors' bonuses
OthersTotal CURRENT LIABILITIESNONCURRENT LIABILITIES:Long-term loans payable
Deferred tax liabilities
Provision for directors' retirement benefits
Net defined benefit liabilities
Asset retirement obligations
OthersTotal NONCURRENT LIABILITIES
Total LIABILITIESNET ASSETS:SHAREHOLDERS’ EQUITY
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total SHAREHOLDERS’ EQUITYACCUMULATED OTHER COMPREHENSIVE INCOME
Changes in the fair value of available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit obligations
Total ACCUMULATED OTHER COMPREHENSIVE INCOME
Non-controlling interests
Total NET ASSETS
Total LIABILITIES AND NET ASSETS

2020¥

70,188
6,540
5,739
1,884
101
9,201
93,655

Thousands of
U.S. Dollars(Note)

Millions of Yen

2021

¥

79,854
10,800
5,957
2,136
126
9,642
108,5172021$

721,292
97,55853,80919,2981,141
87,097980,196

20,833
1,378
95
1,969
329
3,127
27,732

25,166
1,685
106
2,272
343
3,850
33,424

227,318
15,220960
20,5303,099
34,782301,912

121,388

141,942

1,282,109

12,133
13,87855,091(2,005)79,097

12,133
14,32764,568(1,984)89,045109,597
129,417583,224(17,923)804,315

0
28
(707)
(133)
(812)

1,378
50
470
21
1,921

12,454
457
4,252
191
17,354

7,965
86,250

4,095
95,062

36,992858,662¥ 207,638¥ 237,004$ 2,140,771

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥110.71 to$1, the rate of exchange at March 31, 2021.

47

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2021

48

Financial and Corporate Information

Consolidated Statement of Income andComprehensive Income
Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2021

2020

Thousands of
U.S. Dollars(Note)

Millions of Yen

2021

2021

2020

Thousands of
U.S. Dollars(Note)

Millions of Yen

2021

2021

¥ 443,615¥ 422,365$ 3,815,063

Cost of sales

396,598

374,428

3,382,068

Income taxes-current

3,054

3,207

28,974Gross profit

47,01647,936432,994

Income taxes-deferred

(61)

(51)

(462)

37,001

36,469329,416

Total income taxes

2,992

3,156

28,511

10,014

11,467

103,578

Net income

6,293

11,315102,210

5,852

11,399102,969

441

(84)

(758)

(1,018)1,376

12,436

26

22

205

(1,260)1,218

11,004

Net sales

Selling, general and administrative expenses
Operating income
NON-OPERATING INCOME

Income before income taxes¥

Profit attributable to owners of the parent

9,286

¥

14,472$

130,722

Interest income

269

135

1,227

Profit attributable to non-controlling interests

Dividend income

199

197

1,782

OTHER COMPREHENSIVE INCOME

Commission fee

228

168

1,524

Foreign exchange gains

275

—

—

House rent income

126

116

1,056

Foreign currency translation adjustment

Others

385

539

4,876

Remeasurements of defined benefit obligations, net of tax

68

138

1,254

1,485

1,158

10,467 Share of other comprehensive income of entities accounted forusing equity method

(104)

42

381

Interest expenses

308

317

2,866

(2,288)2,799

25,282

Share of loss of entities accounted for using equity method

905

627

5,664

Foreign exchange losses

—

359

3,248

Others

149

80

725

1,362

1,384

12,504

10,137

11,241

101,541

Gain on sales of property, plant and equipment

61

2

24

Gain on sales of investment securities

135

128

1,164

Gain on bargain purchase

—

7,963

71,930Total NON-OPERATING INCOME
NON-OPERATING EXPENSES

Total NON-OPERATING EXPENSES
Ordinary income

Changes in the fair value of available-for-sale securities
Deferred gains or losses on hedges

Total OTHER COMPREHENSIVE INCOME
Comprehensive income

¥

4,005

¥

14,114$

127,493

¥

3,708

¥

14,101$

127,375

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

297

13

117

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥110.71 to$1, the rate of exchange at March 31, 2021.

EXTRAORDINARY INCOME

Gain on transfer of business

12

7

63

Settlement received

498

—

—

1

20

188

709

8,122

73,371

Loss on disposal of property, plant and equipment

12

101

920

Loss on sales of investment securities

57

36

330

Loss on valuation of investment securities

880

525

4,748

Special retirement expenses

199

24

220

Impairment loss

380

1,893

17,107

Provision of allowance for doubtful accounts

—

1,750

15,811

Estimated loss of funds from U.S. subsidiary

—

480

4,338

Others

30

78

713

OthersTotal EXTRAORDINARY INCOMEEXTRAORDINARY LOSS

Total EXTRAORDINARY LOSS

49

KAGA ELECTRONICS CO.,LTD.

¥

1,560

¥

4,892

$

44,189Integrated Report 2021

50

Financial and Corporate Information

Consolidated Statement of Cash Flows
Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2021

2020

Millions of Yen

2021

Thousands of
U.S. Dollars(Note)

2021

NET CASH PROVIDED BY OPERATING ACTIVITIESMillions of Yen

2021

2021

NET CASH USED IN INVESTING ACTIVITIES

9,286¥ 14,472$ 130,722

2,754

3,167

28,613

Proceeds from withdrawal of time deposits

2,924

753

6,803

Impairment loss

380

1,893

17,107Purchase of property, plant and equipment(3,276)(2,514)(22,713)

Amortization of goodwill

98

114

1,034

Proceeds from sales of property, plant and equipment

271

28

260

(Decrease) Increase in net defined benefit liability

8

(5)

(48)

Purchase of intangible assets(355)(1,059)(9,571)(Decrease) Increase in provision for directors' retirement benefits

(1)

11

101

Purchase of investment securities(2,180)(1,688)(15,252)(Decrease) Increase in provision for directors' bonuses

30

25

225

Proceeds from sales of investment securities

651

723

6,539

Increase in allowance for doubtful accounts

0

1,607

14,521

Interest and dividend income

(469)

(413)

(3,731) Purchase of shares of subsidiaries resulting inchange in scope of consolidation

(321)

(351)

(3,174)

Interest expenses

308

317

2,866

—

2,707

24,455

Share of profit of entities accounted for using equity method

905

627

5,664

Payments of short-term loans receivable

(551)

—

—

Gain on sales of property, plant and equipment

(43)

(0)

(5)

Collection of short-term loans receivable

1

(0)

1

Loss on retirement of property, plant and equipment

12

101

920

Purchase of insurance funds

(2)

(11)

(106)

Gain on sales of investment securities

(78)

(92)

(833)

Proceeds from cancellation of insurance funds

59

58

530

Loss on valuation of investment securities

880

525

4,748

Payments for guarantee deposits

(34)

(77)

(699)

Gain on negative goodwill—(7,963)(71,930)

Proceeds from collection of guarantee deposits

41

63

573

(498)

—

—

Other payments

(96)

(267)

(2,415)

—

480

4,338

Other proceeds

108

87

786

(Increase) Decrease in notes and accounts receivable-trade

9,086(4,303)(38,870)(3,651)(2,453)(22,160)(Increase) Decrease in inventories

7,658

2,997

27,074

Decrease in notes and accounts payable-trade(6,667)

1,495

13,512NET CASH USED IN FINANCING ACTIVITIES

Increase in accounts receivable-other(1,149)

842

7,613

Increase in short-term loans payable(24,038)(4,608)(41,628)

384

(162)

(1,464)

Proceeds from long-term loans payable

20,2665,000

45,163(1,312)(1,279)(11,558)

(0)

(1)

(13)

(2,056)(1,922)(17,363)—(3,441)(31,085)

(402)

(597)

(5,399)(7,544)(6,851)(61,887)

(748)

945

8,539

Net increase in cash and cash equivalents

10,461

1,639

14,810Cash and cash equivalents-beginning balance

32,231

42,693385,633

Cash and cash equivalents-ending balance¥ 42,693¥ 44,333$ 400,444

Income before income taxes
Depreciation and amortization

Settlement received
Estimated loss of funds from U.S. subsidiary

Increase in accrued expenses¥

Payments for time deposits Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation

Net cash used in investing activities(1,431)(349)(3,154)

Repayment of long-term loans payable(Increase) Decrease in consumption taxes refund receivable

266

(164)

(1,482)

Purchase of treasury stock(Increase) Decrease in other current assets

93

(397)

(3,589)Cash dividends paid

Increase in other current liabilities

2,106(1,206)(10,897)

Others, net

(350)

130

1,179

Subtotal

23,571

13,754

124,236

Interest and dividend income received

481

342

3,095

Interest expenses paid

(316)

(322)

(2,910)(1,829)(3,295)(29,764)

Settlement package received

498

—

—

Estimated loss of funds from U.S. subsidiary

—

(480)

(4,338)Others, net

0

—

—

Decrease (Increase) in advance payments

Income taxes paid

Net cash provided by (used in) operating activities

51

2020

Thousands of
U.S. Dollars(Note)KAGA ELECTRONICS CO.,LTD.

¥ 22,406

¥

9,999

$

 Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Others, net
Net cash (used in) provided by financing activities
Effect of exchange rate change on cash and cash equivalents

¥

(893)

¥

(905)

$

(8,178)

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥110.71 to$1, the rate of exchange at March 31, 2021.

90,318Integrated Report 2021

52

Financial and Corporate Information

Corporate Information
As of March 31, 2021

Company overview

Major affiliates in JapanName

KAGA ELECTRONICS CO., LTD.

KAGA TECH CO., LTD.

Sale of electronic parts and electronic equipment, etc.

Address

20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629, JapanKAGA DEVICES CO., LTD.

Sale of electronic parts and electronic equipment, etc.

TEL +81-3-5657-0111

KAGA SOLUTION NETWORK CO., LTD.

Development, design, construction and maintenance of computer network systems, etc.

Sale of electronic parts and semiconductors, provision of EMS,* and sale offinished products such as PCs and PC peripherals, etc.

AD DEVICE CO., LTD.

Sale of electronic parts and electronic equipment, etc.

KAGA MICRO SOLUTION CO., LTD.

Development, manufacture, sale and recycling of PCs and PC peripherals, etc.

* Electronics manufacturing services: Provision of product development andmanufacturing services on a contract basis

DIGITAL MEDIA LAB., INC.

Planning, development and sale of computer graphics

KAGA SPORTS CO., LTD.

Manufacture, wholesale and sale of sporting goods, etc.

KAGA AMUSEMENT CO., LTD.

Sale of electronic parts and electronic equipment, etc.

KAGA TECHNO SERVICE CO., LTD.

Electrical and communication facilities installation, interior work, etc.

KAGA FEI Co., Ltd.

Sale of electronic parts and electronic equipment, etc.

KAGA EMS TOWADA CO., LTD.

Manufacture and sale of electronic parts and electronic equipment, etc.

EXCEL CO., LTD.

Sale of electronic parts and electronic equipment, etc.

Kyokuto Electric Co., Ltd.

Manufacture and sale of electronic parts and electronic equipment, etc.

Business description

Founded

September 12, 1968

Capital¥12,133 million

FAX +81-3-3254-7131

Number of Group companies 67 (22 in Japan, 45 overseas and three accounted for by the equity method)
Number of employees(consolidated)

7,826

Stock Listing

Tokyo Stock Exchange

Securities code

8154

Fiscal year-end

March 31

Board members / Executive Officers
Founder & CEO
President & COO
Senior Managing Director
Senior Managing Director
Managing Director
Director
Director
Outside Director
Outside Director
Outside Director
Outside Director
Auditor (Full-time)
Auditor (Full-time)
Outside Auditor
Outside Auditor

Isao Tsukamoto
Ryoichi Kado
Shinsuke Takahashi
Shintaro Kakei
Eiji Kawamura
Head of Administration
Headquarters
Motonori Toshinari
Division Manager of EMS
Business Division
Mitsuhiro Nohara
Division Manager ofElectronics Sales Division
Susumu Miyoshi
Akira Tamura
Noritomo Hashimoto
Hirokazu Nishiyama
Kazunori Kameda
Takahiro Ishii
Susumu Kitsunai
Yoichi Sato

Stock information
Total number ofshares authorized

80,000,000 shares

Total number ofshares outstanding

28,702,118 shares

Number of sharesconstituting one unit

100 shares

Number of shareholders

6,211

Major affiliates overseas(As of June 29, 2021)

Senior Executive Officer Mitsuhito Ikeda
Executive Officer
Shoji Seki
Executive Officer
Hiroki Suzuki
Executive Officer
Takeshi Tsukamoto

Executive Officer
Executive Officer

President of EXCEL CO., LTD.
President of KAGA SPORTS CO., LTD.
President of DIGITAL MEDIA LAB., INC.
Director and Senior Executive Officer of KAGA FEICo., Ltd.
Takao Okabe
Supervisor of China Headquarters
Hiroaki Maruyama Director and Managing Executive Officer of KAGAFEI Co., Ltd.
Kazuhira Watanabe Division Director of Communication Network
Sales Division
Takahiro Urazawa Division Director of Specific Industry Sales Division
Hironaga Nagasaka Supervisor of ASEAN Headquarters

Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Yasuhiro Ishihara
Katsutoshi Suzuki
Satoshi Eguchi
Mitsuhiro Kumabe
Hitoshi Koujitani

Executive Officer
Executive Officer
Executive Officer

shares24.66%

Other Japanese corporations

27.27%

7,827,993 shares (114)Financial institutions
8,866,379 shares (33)

KAGA ELECTRONICS CO.,LTD.

30.89%

Foreign corporations

16.06%

Financial instruments
business operators  

1.12%

4,609,996 shares (168)

320,715 shares (38)53North America

EuropeKAGA (SHENZHEN)ELECTRONICS LTD.

KAGA TAXAN (SUZHOU)ELECTRONICS CO., LTD.

KAGA COMPONENTS(MALAYSIA) SDN.BHD.

KAGA FEI AMERICA, Inc.

KD TEC s.r.o.

KAGA (SHANGHAI)
ELECTRONICS CO., LTD.

KAGA (H.K.)ELECTRONICS
LIMITEDKAGA ELECTRONICS(THAILAND)COMPANY LIMITEDTAXAN MEXICO, S.A.
DE C.V.

KAGA FEI EUROPE GmbH

Principal shareholders*1, 2

Individuals

7,077,035 shares (5,858)

6,211
28,702,118

Asia

Deputy Head of Administration Headquarters
Division Director of Sales Promotion Division
President of KAGA MICRO SOLUTION CO., LTD.
President of KAGA SOLUTION NETWORK CO., LTD.
General Manager of Corporate Strategy Office

Breakdown by type of shareholder

Total number ofshareholders

China

Name

Number ofshares held
(thousandshares)Percentage
of totalsharesissuedSANKYO CO., LTD.*3

3,824

13.92

OKOZE CO., LTD.

1,840

6.70

Custody Bank of Japan, Ltd.
(Trust Account)

1,717

6.25

The Master Trust Bank of Japan, Ltd.
(Trust Account)

1,461

5.32

MUFG Bank, Ltd

1,212

4.41

Name
Kaga Electronics Employee
Shareowners Association

Number ofshares held
(thousandshares)Percentage
of totalsharesissued

1,198

4.36

Mizuho Bank, Ltd.

950

3.46

Isao Tsukamoto

731

2.66

Mitsubishi Electric Corporation

500

1.82

Nippon Life Insurance Company

459

1.67

*1. In addition to the above, there are 1,227 thousand shares of treasury stock.
*2. Percentage of total shares issued is calculated after excluding treasury stock.
*3. On August 6, 2021, the Company acquired 1,231,000 treasury shares from SANKYO CO., Ltd. through off-floor treasury share repurchase trading (ToSTNeT-3). Reflecting this, thenumber of shares held by SANKYO CO., Ltd. currently amounts to 2,592,000, and its shareholding ratio stands at 9.88%. This ratio is calculated based on the sum of 1,227,000
treasury shares held by the Company as of March 31, 2021 and the 1,231,000 treasury shares repurchased on August 6, 2021, which amounts to 2,459,000 treasury shares.
Integrated Report 2021

54