August 7, 2018

Summary of Consolidated Financial Results
for the First Quarter Ended June 30, 2018 [Japan GAAP]
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Quarterly earnings presentation:

KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
https://www.taxan.co.jp/President & COO
Ryoichi Kado
Managing Director, Administration HeadquartersEiji Kawamura+81-(0)3-5657-0111
August 14, 2018

YesNo

(Yen in millions, rounded down)
1. Financial results for the first quarter of the fiscal year ending March 2019 (April 1, 2018 – June 30, 2018)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Profit attributable
Net sales
Operating income
Ordinary income
to owners of parent
Million yen%

Million yen%

Million yen%

Million yen%First quarter ended June 201855,493(1.2)

1,489(28.7)

1,679(23.8)

1,148(34.4)

First quarter ended June 2017

56,174

7.6

2,088

173.0

2,205

262.1

1,750

25.3

Note: Comprehensive income: 1Q of FY3/2019: 1,207 million yen (-44.3%)

Earnings per share

1Q of FY3/2018: (2,167 million yen) (－ %)Earnings per share(diluted)

Yen

Yen

First quarter ended June 2018

41.87

－First quarter ended June 2017

63.79

－

(2) Financial Position (Consolidated)
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of June 30, 2018

130,479

71,001

54.4

As of March 31, 2018

128,755

70,631

54.8

Reference: Shareholders’ equity
As of June 30, 2018: 70,921 million yen

As of March 31, 2018: 70,556 million yen

2. Dividends
Dividend per share

Fiscal year ended March 2018
Fiscal year ending March 2019
Fiscal year ending March 2019 (Forecast)

1Q

2Q

3Q

Year-end

Full year

Yen

Yen

Yen

Yen

Yen

－－

30.00

－

40.00

70.00

30.00

－

40.00

70.00

Notes: Change in the dividend forecast from the latest announcement: None
Breakdown of interim dividend for FY3/18: Ordinary dividend: 25.00 yen; Extraordinary dividend: 5.00 yen
Breakdown of year-end dividend for FY3/18: Ordinary dividend: 35.00 yen; Extraordinary dividend: 5.00 yen

3. Forecast for the fiscal year ending March 2019 (Consolidated, April 1, 2018 – March 31, 2019)
The consolidated earnings forecast for the fiscal year ending March 2019 is not provided. For details, please see “1. Results of Operations, (3)Qualitative information on consolidated earnings forecast”, on page 3 of Supplementary Information.

* Notes(1) Changes in significant subsidiaries (Changes in specified subsidiaries accompanied by changes in the scope of consolidation ):None(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting policies, estimates, and retrospective restatement(a) Changes due to revision of accounting standards: None(b) Changes other than (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury shares)
As of June 30, 2018:(b) Treasury shares
As of June 30, 2018:

28,702,118

As of March 31, 2018:

28,702,118

1,269,535

As of March 31, 2018:

1,267,393

Period ended June 30, 2017:27,435,584(c) Average number of shares (quarterly consolidated during the period)
Period ended June 30, 2018:27,433,124* The quarterly audit procedures by a certified public accountant or auditing firm are not applicable to this Quarterly FinancialResults report.
* Cautionary statement regarding forecasts of operating results and special notes(Caution regarding forward-looking statements)
Forward-looking statements in these materials are based on information available to management at the time this report wasprepared and assumptions that management believes are reasonable. Actual results may differ significantly from thesestatements for a number of reasons. For conditions as assumption for earnings forecast and cautionary statement regarding useof the forecast, please see “1. Results of Operations, (3) Qualitative information on consolidated earnings forecast”.
(How to obtain supplementary materials on quarterly financial results)
Supplementary materials on quarterly financial results are posted on the Company’s web site.
(Change in date format)
Starting from “Summary of Consolidated Financial Results for the First Quarter Ended June 30, 2018”, dates are presented
based on Western calendar instead of Japanese calendar (in the Japanese language report).

Index for Supplementary Information
1. Results of Operations ....................................................................................................................................................................2(1) Overview of consolidated business performance ..................................................................................................................2(2) Overview of financial condition............................................................................................................................................2(3) Qualitative information on consolidated earnings forecast ...................................................................................................3
2. Quarterly Consolidated Financial Statements and Major Notes ...................................................................................................4(1) Quarterly consolidated balance sheet....................................................................................................................................4(2) Quarterly consolidated statements of income and comprehensive income ...........................................................................6For the first quarter (April 1, 2018 - June 30, 2018).........................................................................................................6(3) Notes to quarterly consolidated financial statements ............................................................................................................7(Notes to going concern assumptions)..............................................................................................................................7(Significant change in shareholders’ equity) ....................................................................................................................7(Additional information) ..................................................................................................................................................7(Segment information, etc.)..............................................................................................................................................71

1. Results of Operations(1) Overview of consolidated business performance
In the global economy in the first quarter of the fiscal year ending March 31, 2019, despite looming concerns that theimposition of tariffs by the United States could trigger trade friction with China and the European Union, businessconditions in Japan as well as in the key markets such as the United States, Europe and China continued on a gradual
recovery trend.
In such conditions, based on our corporate philosophy of “Everything we do is for our customers”, the Group further
expanded its overseas production bases in response to calls from existing major customers for overseas development andproduction increase, while in Japan, the Group focused its efforts on expansion of EMS (Note 1) business through suchmeasures as enhancement of domestic production facilities and strengthening of production functions. Furthermore,
although the tight supply situation continued from the previous fiscal year in certain electronic components such as power
semiconductors and condensers, efforts were made to curtail its effect on the Group’s business activities, leveraging theGroup’s comprehensive capabilities as an independent general trading company for procuring parts, making proposals on
alternative products, etc.
As a result, consolidated net sales decreased by 1.2% year on year to 55,493 million yen, operating income decreased by
28.7% to 1,489 million yen, and ordinary income decreased by 23.8% to 1,679 million yen. Profit attributable to owners ofparent decreased by 34.4% to 1,148 million yen.
Net sales by and large maintained the level of the same period of the previous fiscal year, driven by the EMS business.
Income posted a decrease from the same period of the previous fiscal year, due notably to model switching and theresulting production adjustments at major customers as well as upfront expenses of new overseas sites that were at theirstart-up phase. These were all anticipated at the beginning of the period.
(Note 1) Electronics Manufacturing Service: Provision of product development and manufacturing services on an outsourcing basis.
Business segment performance was as follows.
(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, the electronics manufacturing service (EMS), and other activities)
In the electronic components business, the EMS business for automotive and air conditioning devices maintained
steady performance while that for medical equipment was slow due to model switching and the resulting production
adjustments at major customers.
Components sales business remained sluggish notably for home electric appliances from the effect of production
adjustments at major customers.
As a result, consolidated net sales decreased by 2.9% to 40,507 million yen, and segment income declined by 30.4% to
1,071 million yen.
(b) Information equipment (Sales of PCs, PC peripherals, home electric appliances, photograph and imaging products,
original brand products, and other products)
In the information equipment segment, sales of housing-related home electric appliances and commercial facilitiesrelated LED installation business continued the robust trend. On the other hand, sales of PCs and PC peripherals wereslow due to sluggish market conditions.
As a result, consolidated net sales decreased by 6.4% to 10,417 million yen, segment income dropped by 11.5% to 317
million yen.
(c) Software (Production of computer graphics, development of game software, planning and development of amusement
products, and other activities)
In the software business, orders for production of computer graphics animation and development of game software
were robust but upfront expenses were recognized due to postponement of certain projects.
As a result, consolidated net sales increased by 3.8% to 465 million, and a segment loss of 19 million was recorded(loss of 0 million yen in the same period of the previous year).
(d) Others (Repair and support for electronics equipment, and sales of amusement equipment and sports goods, and others)
In others, recycling of PC products continued strong, in contrast with sluggish sales of arcade amusement machines andgolf products.
As a result, consolidated net sales increased by 42.8% to 4,103 million, and segment income decreased by 46.9% to 80
million yen.
(2) Overview of financial condition
Assets, liabilities and net assets
Total assets as of June 30, 2018 increased by 1,724 million yen from March 31, 2018 to 130,479 million yen.
Current assets increased by 911 million yen to 104,981 million yen. This is primarily attributed to increases ininventories reflecting increases of 1,809 million yen in merchandise and finished goods, 961 million yen in raw

2

materials and supplies, and 410 million yen in work in process, offsetting a decrease of 3,083 million yen in notes andaccount receivable – trade.
Non-current assets increased by 812 million yen to 25,498 million yen. This is largely a result of an increase of 849
million yen in investment securities.
Liabilities increased by 1,354 million yen to 59,477 million yen. This is primarily attributed to an increase of 1,055
million yen in notes and accounts payable – trade.
Net assets increased by 369 million yen to 71,001 million yen. This is largely a result of recording 1,148 million yen inprofit attributable to owners of parent.
(3) Qualitative information on consolidated earnings forecast
In the market environment surrounding the Group, growth of demand for electronic components will likely accelerate
amidst expansion in both the automotive devices market where use of electronics in automobiles is increasing and in the
medical/healthcare-related market, as well as development of the new markets such as big data and artificial intelligence on
the back of rapid IoT (Note 1) spread. Meanwhile, the supply side's efforts to increase production tend to fall behind, leading
to a tight supply-demand situation which is becoming tangible in certain components and materials.
Under such circumstances, the Group will strive to further strengthen its sales activities in growing sectors such as
automotive devices, and will continue its efforts to expand value-added businesses led by the EMS business.
With respect to the fiscal year ending March 31, 2019, consolidated earnings forecast is not provided due to the difficulty incalculating such a forecast at this time, given the substantial uncertainties that exist in the rapidly changing environment as
explained above. Still, in this final year of the Medium-term Management Plan 2018 announced on November 4, 2015, theGroup will make greater efforts to “Enhance revenue base”, “Create new businesses”, and “Strengthen managementfoundation”, and achieve the numerical targets (Note 2) set out therein.
For the consolidated performance forecasts, these will be disclosed promptly as soon as a reasonable projection becomespossible.
(Note 1) The Internet of Things: New services and business models, or technologies that connect all things through the Internet.
(Note 2) Medium-term Management Plan 2018 Numerical Targets

Relevant Fiscal YearNet Sales

Ordinary IncomeROE

Fiscal year ending March 2019¥290 billion¥10 billion

8.0% or higher3

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2018
(As of March 31, 2018)

First quarter ended June 2018
(As of June 30, 2018)ASSETS
Current assets
Cash and deposits

30,80330,765

Notes and accounts receivable - trade45,80942,726

Electronically recorded monetary claims - operating

4,032

3,634

SecuritiesMerchandise and finished goods
Work in process

295

236

15,06016,870575

985

Raw materials and supplies

3,818

4,780

Other

3,807

5,122(133)(141)

104,069

104,981

Buildings and structures, net

4,870

4,783

Machinery, equipment and vehicles, net

2,583

2,691

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

709

706

4,036

4,036

1032

12,21012,250Goodwill

317

294

Software515

523

Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets

Other

46

43

Total intangible assets

878

861

Investment securities

8,688

9,537

Deferred tax assets

530

481

Guarantee deposits

657

656

Insurance funds

943

940

Other

1,363

1,355

Allowance for doubtful accounts

(587)

(586)

Total investments and other assets

11,595

12,385

Total non-current assets

24,68525,498

128,755

130,479

Investments and other assets

Total assets

4

(Million yen)
Fiscal year ended March 2018
(As of March 31, 2018)

First quarter ended June 2018
(As of June 30, 2018)

LIABILITIESCurrent liabilities
Notes and accounts payable - trade

36,39237,448

Short-term loans payable

5,385

5,803

Accrued expenses

3,711

3,131

901

764

Income taxes payable

247

0

Other

3,068

3,782

Total current liabilities

49,70750,930Long-term loans payable

3,161

2,850

Deferred tax liabilities

1,276

1,522

Provision for directors’ retirement benefits

1,264

75

Net defined benefit liability

1,737

1,714

Asset retirement obligations

175

176

Other

800

2,208

8,416

8,547

58,12359,477

Capital stock

12,133

12,133

Capital surplus

13,853

13,853Retained earnings

45,18345,368Treasury shares(2,042)(2,047)

Total shareholders’ equity

69,12769,308

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

1,504

1,373

(16)

(1)

Foreign currency translation adjustment

148441Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests

(208)

(201)

1,428

1,612

75

80

Total net assets

70,631

71,001

128,755

130,479

Provision for directors’ bonuses

Non-current liabilities

Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Total liabilities and net assets

5(2) Quarterly consolidated statements of income and comprehensive income
For the First quarter (April 1, 2018 – June 30, 2018)(Million yen)First quarter ended June 2017
(April 1, 2017 – June 30, 2017)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Gain from equity method investments
Commission fee
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on transfer of businessTotal extraordinary income
Extraordinary loss
Loss on retirement of non-current assets
Loss on valuation of investment securities
Loss on valuation of golf club membership
Other
Total extraordinary loss
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to owners of parent
Profit attributable to non-controlling interests
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

First quarter ended June 2018
(April 1, 2018 – June 30, 2018)

56,174
48,292
7,882
5,793
2,088

55,49347,851
7,641
6,152
1,489

1273
24
64
174

2187
1253
101275

26
19
1258
2,205

37
35
1285
1,679

1221236

1
184
7193

2
5
72,234
320
156
476
1,757
1,750
70
104
50
110
1,762
264
345
609
1,152
1,148
3

455

(137)

(4)
(62)
20

6

16
182
6-

(13)

409
2,167
2,159

55
1,207
1,203

74

(3) Notes to quarterly consolidated financial statements(Notes to going concern assumptions)Not applicable(Significant change in shareholders’ equity)
Not applicable(Additional information)(Application of Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.)“Partial Amendments to Accounting Standard for Tax Effect Accounting” etc. (Accounting Standards Board of Japan(ASBJ) Statement No. 28, February 16, 2018) have been adopted from the beginning of the first quarter of the fiscal year
ending March 31, 2019. Accordingly, deferred tax assets are presented under investments and other assets, while deferred
tax liabilities are presented under non-current liabilities section.

(Segment information, etc.)
Segment information
I. For the first quarter ended June 2017 (April 1, 2017 – June 30, 2017)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segments
Adjustment(Note 1)

Consolidated(Note 2)

Electronic
components

Informationequipment

Software41,721

11,132448

2,872

56,174－56,174

261

273

213

161

910

－

Total

41,982

11,405661

3,034

57,084(910)

56,174

Segment income(loss)

1,539

358

(0)

152

2,050

38

2,088

OthersTotal

Net sales:
Sales to externalcustomers
Inter-segment sales
or transfers

Notes:(910)

1. Adjustment in segment income of 38 million yen includes 38 million yen for elimination of inter-segment trade.
2. Segment income (loss) is adjusted for operating income on the quarterly consolidated statements of income and comprehensiveincome.

II. For the first quarter ended June 2018 (April 1, 2018 – June 30, 2018)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segments
Adjustment(Note 1)

Consolidated(Note 2)

55,493－55,493959

1,992－

643

5,062

57,485(1,992)55,493

(19)

80

1,450

38

1,489

Electroniccomponents

Informationequipment

Software40,507

10,417

465

4,103

669

185

177

Total

41,17610,603

Segment income(loss)

1,071

317

OthersTotal

Net sales:
Sales to externalcustomers
Inter-segment sales
or transfers

Notes:(1,992)

1. Adjustment in segment income of 38 million yen includes 38 million yen for elimination of inter-segment trade.
2. Segment income (loss) is adjusted for operating income on the quarterly consolidated statements of income and comprehensive
income.

7