August 8, 2017

Summary of Consolidated Financial Results
for the First Quarter Ended June 30, 2017 [Japan GAAP]
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Quarterly earnings supplementary explanatory documents:
Quarterly earnings presentation:

KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
http://www.taxan.co.jp/President & COO
Ryoichi Kado
Managing Director, Administration HeadquartersEiji Kawamura+81-(0)3-5657-0111
August 14, 2017

NoNo

(Yen in millions, rounded down)
1. Financial results for the first quarter of the fiscal year ending March 2018 (April 1, 2017 – June 30, 2017)(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 2017

56,174

7.6

2,088

173.0

2,205

262.1

1,750

25.3

First quarter ended June 201652,221(10.5)765(52.1)608(65.7)

1,396

21.7

Note: Comprehensive income: 1Q of FY3/2018: 2,167 million yen ( - %) 1Q of FY3/2017: (422 million yen) (-132.8%)

Earnings per share(diluted)

Earnings per share
Yen

Yen

First quarter ended June 2017

63.79

-First quarter ended June 2016

49.41

-

(2) Financial Position (Consolidated)
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of June 30, 2017

123,952

67,13854.1

As of March 31, 2017

125,751

65,932

52.4

Reference: Shareholders’ equity
As of June 30, 2017: 67,071 million yen

As of March 31, 2017: 65,872 million yen

2. Dividends
Dividend per share

1Q

2Q

3Q

Year-end

Full year

YenYenYenYenYen

Fiscal year ended March 2017
Fiscal year ending March 2018
Fiscal year ending March 2018 (Forecast)

-

25.00

-

35.00

60.00

25.00

-

35.00

60.00

Notes: Change in the dividend forecast from the latest announcement: None
Breakdown of interim dividend for FY3/17: Ordinary dividend: 20.00 yen; Extraordinary dividend: 5.00 yen
Breakdown of year-end dividend for FY3/17: Ordinary dividend: 20.00 yen; Extraordinary dividend: 15.00 yen

3. Forecast for the fiscal year ending March 2018 (Consolidated, April 1, 2017 – March 31, 2018)(Percentage figures represent year on year changes)
Profit attributable toEarnings per
Net sales
Operating income
Ordinary income
owners of parentshareFirst half
Full year

Million yen%

Million yen%

Million yen%

Million yen%

Yen

107,000
230,000

(2.4)
1.2

2,700
7,000

(16.0)
1.8

3,000
7,500

(1.5)
2.1

2,200
5,500(29.3)(21.2)

80.19
200.47

Note: Change in the forecast from the latest announcement: None

* 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, 2017:(b) Treasury shares
As of June 30, 2017:

28,702,118

As of March 31, 2017:

28,702,118

1,266,622

As of March 31, 2017:

1,266,468

Period ended June 30, 2016:

28,255,197(c) Average number of shares (quarterly consolidated during the period)
Period ended June 30, 2017:27,435,584* The quarterly review procedures are not applicable to this Financial Results report.
* Cautionary statement regarding forecasts of operating results and special notes
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.

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 ...................................................................................................2
2. Quarterly Consolidated Financial Statements and Major Notes ...................................................................................................3(1) Quarterly consolidated balance sheet....................................................................................................................................3(2) Quarterly consolidated statements of income and comprehensive income ...........................................................................5
For the first quarter (April 1, 2017 - June 30, 2017).........................................................................................................5(3) Notes to quarterly consolidated financial statements ............................................................................................................6(Notes to going concern assumptions)..............................................................................................................................6(Significant change in shareholders’ equity) ....................................................................................................................6(Additional information) ..................................................................................................................................................6(Segment information, etc.)..............................................................................................................................................61

1. Results of Operations(1) Overview of consolidated business performance
In the first quarter of the fiscal year ending March 31, 2018, the Japanese economy witnessed a gradual recovery as
corporate earnings and employment and income environment improved, and consumer spending also showed a sign ofrecovery.
In the electronics industry, the principal sector of operations of the KAGA ELECTRONICS Group (“the Group”), while
markets for PCs and amusement machines remained stagnant, markets for smartphones and automotive devices showed asteady growth with an increasing use of electronics in automobiles, and new markets for IoT (Note 1), big data, and artificial
intelligence also continued to grow.
Under such environment, based on our corporate philosophy of “Everything we do is for our customers,” the Groupfocused on increasing sales to existing major customers in Japan and expanding overseas businesses.
Consolidated net sales increased 7.6% year on year to 56,174 million yen, operating income increased 173.0% to 2,088
million yen, and ordinary income rose 262.1% to 2,205 million yen. Profit attributable to owners of parent increased 25.3%
to 1,750 million yen.
(Note 1) Internet of Things: New services and business models, or technologies that connect all things through the Internet.
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 (Note 2)), and other activities)
EMS business for electronic equipment in Japan and overseas showed a favorable growth. As a result, net sales
increased 6.3% to 41,721 million yen, and segment income rose 147.1% to 1,539 million yen.
(Note 2) Electronics Manufacturing Service: Provision of product development and manufacturing services on an outsourcing basis(b) Information equipment (Sales of PCs, PC peripherals, home electric appliances, photograph and imaging products,
original brand products, and other products)
While sales of PCs and other consumer products decreased, sales of housing-related products showed a favorable
growth. As a result, net sales increased 10.0% to 11,132 million yen, and segment income rose 240.9% to 358 millionyen.
(c) Software (Production of computer graphics, development of game software, planning and development of amusement
products, and other activities)
The segment focused on production of computer graphics animation, development of consumer software andsmartphone applications, and development of VR (Note 3) and AR (Note 4). As a result, net sales decreased 6.1% to 448
million yen, and segment loss was 0 million yen (segment income of 75 million yen one year earlier).
(Note 3) Virtual Reality(Note 4) Augmented Reality(d) Others (Repair and supports for electronics equipment, and sales of amusement equipment and sports goods, and others)
Sales of arcade amusement machines and golf products in Japan showed solid growth. As a result, net sales increased
20.1% to 2,872 million yen, and segment income was 152 million yen (segment loss of 70 million yen one year earlier).
(2) Overview of financial condition
Assets, liabilities and net assets
Total assets as of June 30, 2017 decreased 1,799 million yen from March 31, 2017 to 123,952 million yen mainly due
to a decrease in notes and accounts receivable - trade.
Liabilities as of June 30, 2017 decreased 3,005 million yen from March 31, 2017 to 56,813 million yen mainly due to adecrease in notes and accounts payable - trade.
Net assets as of June 30, 2017 increased 1,206 million yen from March 31, 2017 to 67,138 million yen as a result ofrecording profit attributable to owners of parent.
(3) Qualitative information on consolidated earnings forecast
There are no revisions to the forecast for the fiscal year ending March 31, 2018 that was announced on May 10, 2017 in“Summary of Consolidated Financial Results for the Year Ended March 2017 [Japan GAAP].”2

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2017
(As of March 31, 2017)

First quarter ended June 2017
(As of June 30, 2017)

ASSETS
Current assets
Cash and deposits

26,42327,803

Notes and accounts receivable - trade

46,77442,362

Electronically recorded monetary claims - operating

5,234

4,597

Securities
Merchandise and finished goods
Work in process

188

189

14,675

15,511

365

731

Raw materials and supplies

4,284

4,347

Deferred tax assets

1,340

1,575

Other

4,562

3,843

Allowance for doubtful accounts

(166)

(159)

103,684

100,803

Buildings and structures, net

4,859

4,878

Machinery, equipment and vehicles, net

2,014

2,054

742

775

4,126

4,126

Total current assets
Non-current assets
Property, plant and equipment

Tools, furniture and fixtures, net
Land

335

11,745

11,871

Goodwill

406

383

Software

363

339

Other

71

67

Total intangible assets

841

790

Investment securities

6,761

7,845

Deferred tax assets

240

233

Guarantee deposits

735

668

Construction in progress
Total property, plant and equipment
Intangible assets

Investments and other assets

Insurance funds
Other

936

940

1,529

1,384

Allowance for doubtful accounts(723)(586)

Total investments and other assets

9,479

10,486

Total non-current assets
Total assets

3

22,067

23,148125,751

123,952

(Million yen)
Fiscal year ended March 2017
(As of March 31, 2017)

First quarter ended June 2017
(As of June 30, 2017)

LIABILITIESCurrent liabilities
Notes and accounts payable - trade37,553

34,845

Short-term loans payable

4,883

4,992

Accrued expenses

3,387

2,622

888

646

Income taxes payable

204

118

Other3,325

3,955

Total current liabilities

50,242

47,181Long-term loans payable4,603

4,114

Deferred tax liabilities

1,213

1,805

Provision for directors’ retirement benefits

1,222

1,224

Net defined benefit liability

1,669

1,640

Asset retirement obligations

144

134

Other

723

713

9,576

9,632

59,81956,813

Capital stock

12,133

12,133

Capital surplus

13,912

13,912Retained earnings

40,476

41,265

Treasury shares(2,040)(2,040)Total shareholders’ equity

64,481

65,271

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

1,159

1,615

0(3)Foreign currency translation adjustment

421359Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests

(190)

(170)

1,391

1,800

5966

Total net assets

65,932

67,138125,751

123,952

Provision for directors’ bonuses

Non-current liabilities

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

Total liabilities and net assets4(2) Quarterly consolidated statements of income and comprehensive income
For the First quarter (April 1, 2017 – June 30, 2017)(Million yen)First quarter ended June 2016
(April 1, 2016 – June 30, 2016)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
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
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

5

First quarter ended June 2017
(April 1, 2017 – June 30, 2017)52,22145,426
6,795
6,030
765

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

12
65
36
67
181

12
73
24
64
174

33
293
11
337
608

26
19
12
58
2,205

0
0
35
35

1
22
12
36

3
100
13
630
212
(983)
(771)
1,401
1,396
5

2
5
7
2,234
320
156
476
1,757
1,750
7(227)

455(5)(1,613)21(1,824)
(422)
(426)

(4)
(62)
20
409
2,167
2,159

3

7

(3) Notes to quarterly consolidated financial statements(Notes to going concern assumptions)Not applicable(Significant change in shareholders’ equity)
Not applicable(Additional information)(Adoption of consolidated taxation system)
From the first quarter of the fiscal year ending March 31, 2018, the Company and its certain domestic subsidiaries haveadopted the consolidated taxation system.

(Segment information, etc.)
Segment information
I. For the first quarter ended June 2016 (April 1, 2016 – June 30, 2016)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segmentsAdjustment(Note 1)

Consolidated(Note 2)

Electronic
components

Informationequipment

Software

39,237

10,116477

2,391

52,221-

52,221

214

133

354

514

1,217

(1,217)-39,452

10,249831

2,905

53,439(1,217)52,221

623

105

75

(70)

734

30

765

OthersTotal

Net sales:
Sales to externalcustomers
Inter-segment sales
or transfers
Total
Segment income(loss)
Notes:

1. Adjustment in segment income of 30 million yen includes 30 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 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

(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:

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.

6