November 6, 2018
Name of Company: KAGA ELECTRONICS CO., LTD.
Stock Code:8154 Tokyo Stock Exchange, First Section

Head Office:20 Kandamatsunagacho, Chiyoda-ku, Tokyo

Representative:

Ryoichi Kado, President & COO
Eiji Kawamura, Managing Director,
Head of Administration Headquarters
Phone: +81-(0)3-5657-0111

Contact:

Notification Regarding Outline of Next Medium Term Management Plan
KAGA ELECTRONICS CO., LTD. (TSE: 8154; hereafter, the “Company”), at the meeting of the Board ofDirectors held on November 6, 2018, determined the “Medium Term Management Plan 2021 (2019-2021)”
which shows the direction of the next management plan to commence with the period ending March 31, 2020,
and therefore is providing the following notice.

The Company, in Nobember 2015, formulated the “Medium Term Management Plan 2018 (2015-2018),”
stated the establishment of “profit-focused management” as a key management policy, and aimed for sustainablegrowth as a company.
As a result of this, the gross profit margin, which is the source of profit, improved to close to 14%, and forthe period ending March 31, 2018, ordinary profit posted record high for the first time in thirteen years.
Furthermore, in addition to autonomous growth achieved through the expansion of the EMS business*1 focusedon overseas and the expansion of the trading company business targeted at growth fields such as automotive andcommunications, as announced on September 10, the Company determined the “Acquisition of Shares in FujitsuElectronics Inc.(and Making It a Subsidiary),” etc. and through such activities has boldly challenged towards
dramatic business expansion with a focus on further industry reorganization.
The performance forecast for the period ending March 31, 2019 (FY2018), which is the final year of this plan,
as announced today, shows that of the management targets indicated in the plan*2, sales (290.0 billion yen) andROE (8.0% or above) have the prospect of being achieved.
The Company celebrated the 50th anniversary of its founding in September,2018, and in order to make a newstarting point towards the creation of the “KAGA ELECTRONICS GROUP of the Future” that looks towards thenext fifty years and further ahead, formulated the “Medium Term Management Plan 2021 (2019 - 2021) ” as athree-year plan spanning from the period ending March 31, 2020 to the period ending March 31, 2022. An
outline of this is provided below:
1.
Basic Policies
Enhancement of Revenue Base
Utilizing the Group’s DNA since the founding in which current trends are always foreseen, we shallfocus on markets that are expected to see high growth and profitability in the future, and shall endeavor tostrengthen the Group’s revenue base.
(1) Strengthening initiatives for growth sectors: Focusing on in-vehicle, communications, environment,
industrial equipment, and medical/healthcare.
(2) Strengthening and expanding the EMS business and overseas business－ 1 －Stabilization of Management Base
Aiming to strengthen the management base towards early improvement of efficiency and financial
soundness after conversion of Fujitsu Electronics to a subsidiary.
(1) Continuation of group-wide cost reduction measures(2) Promotion of the improved group management efficiency through the development of organizationalstructure(3) Strengthening of corporate governance, development of human resources
Creation of New BusinessIn order to strengthen resistance to changes in the external environment, we shall endeavor to create
new business through the proactive use of our own resources and M&A.
(1) Launching of social issues (childcare, welfare, nursing care, etc.) business and materials business(2) Promotion of open innovation through venture investment(3) Active use of M&A

2.

Management Targets
The management targets serving as goals for the period ending March 31, 2022, which is the final year of theplan, are as shown below:
Sales

Operating Income

ROE

500.0 billion yen

13.0 billion yen

8％ or higher

Note: Assumed exchange rate: US$1.00=110 yen

3.

Positioning of the “Medium Term Management Plan 2021 (2019-2021)”
The Company, through the establishment and taking hold of “profit-focused management,” shall form
“Japan’s No. 1 corporate group in the industry,” and furthermore, has adopted a medium to long term
management vision of aiming to become “World Class Company.”
Towards the realization of this vision, in the “Medium Term Management Plan 2021 (2019-2021),” we shall
aim to expand our size through the conversion of Fujitsu Electronics to a subsidiary, and shall consolidate ourbusiness base as “Japan’s No. 1 corporate group in the industry,” with sales in the region of 500.0 billion yen.
Using this as a springboard, on a medium to long term time frame, we shall further expand the EMS business,shall strengthen and expand overseas business, and in addition, shall aim to expand our size by challenging
towards further M&A and industry reorganization, and through this we shall compete with overseas competitorswith sales in the order of trillions of yen, and shall aim to become a “World Class Company” that will survive
even in global competition.

4.

Concepts on Return to Shareholders
The Company has positioned the return of profits to shareholders as one of the most important management
policies, and in addition to endeavoring to strengthen its financial position and management foundation with along term perspective, has the basic policy of maintaining stable and ongoing dividends to all shareholders inconjunction with the consolidated results.
Based on this policy, in the “Medium Term Management Plan 2021 (2019-2022) ” we have stated the targetof stably providing dividends while securing a consolidated dividend ratio of 25 to 35%. In addition, we shallactively use business investment, capital investment, and M&A, etc. to contribute to the future growth of theGroup. It should be noted regarding the acquisition of treasury shares, that decisions on this shall be madeappropriately, in consideration of capital efficiency and the share price, etc.

－ 2 －*1) EMS business: Electronic equipment manufacture contracting services. The Company utilizes its strengths as
an independent electronics trading company to become a leader in the installation of electronic boards.
*2) Management targets of the current “Medium Term Management Plan 2018 (2015-2018)”
Sales

Operating IncomeROE

290.0 billion yen

10.0 billion yen

8% or higher(Caution regarding forward-looking statements)
Forward-looking statements in these materials are based on information available to management at the time thisreport was prepared and assumptions that management believes are reasonable. Actual results may differ
significantly from these statements for a number of reasons.

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